Overseas Construction Orders Top $20 Billion, Set Milestone
By Cho Jin-seo
Staff Reporter
Soaring oil prices over the past five years have enriched not only Russia and Middle East countries but they also helped South Korean construction firms prosper.
Thanks to the rich inflow of dollars from Gulf nations, overseas construction orders received by Korean builders this year have already passed the $20-billion mark, for the first time in history.
The foreign orders reached $21 billion as of Wednesday when GS Engineering & Construction announced it has won a $1.8 billion oil refinery building project in Egypt, the Ministry of Construction and Transportation said Thursday.
``The overseas construction sector has recovered from 2004 and is now enjoying its prime time,'' the ministry said in a release.
The Middle East region was the main market for Korean builders, as it accounted for 69 percent of the total volume. The United Arab Emirates was the single largest customer, awarding a total of 17 orders, worth $4.9 billion. It was followed by Saudi Arabia and Kuwait.
Because builders are heavily depending on plant orders from oil-producing nations, the rise and fall of Korea's overseas construction business has been in step with global oil prices.
The crude oil price has been around $30 per barrel until 2003 before it began to rise above $70. So did Korea's overseas orders. It reached the bottom level in 2003 at $3.7 billion, and started to soar from the following year.
Firms and the government found another reason for such rapid growth from inside. Doosan Heavy Industries, which ranks second with $2.84 billion after Hyundai Heavy Industries with $3.15 billion, said the firms are now more competitive than before.
``We have increased investment in the R& D sector focusing on the energy and desalination field, and the efforts are now bearing fruits,'' a company spokesman said. ``We also secured core technologies by acquiring foreign firms.''
The ministry projected that the annual total may pass $24 billion as around $3 billion worth of orders are expected to be secured in the last four months of the year. That will be up by 28 percent from last year's.
After Hyundai and Doosan, GS Engineering & Construction and Samsung Engineering came third and fourth with $2.58 billion and $1.97 billion, respectively. Samsung Corp., which is building the world's highest tower in Dubai, was fifth.
By country, the United Arab Emirates was the largest market, awarding $4.95 billion worth of orders. Saudi Arabia came in second with $2.74 billion while Egypt and Kuwait followed with $1.84 billion and $1.67 billion, respectively.
Some industry insiders, however, played down the figure, saying the term ``construction orders'' is rather arbitrarily defined by the ministry.
In fact, 71 percent of the orders are projects of industrial facilities such as oil refineries and marine platforms, and often a big portion of such orders is supplying machinery that goes inside the facilities. Pure construction and civil engineering projects, on the contrary, accounted for only 10 percent of the government's figure.