Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Hanwha cautious about accepting Iraq's request to resume Bismayah project
Hanwha Group Chairman Kim Seung-youn, left, shakes hands with a local worker at the Bismayah new city construction site in Iraq in this 2014 file photo. Courtesy of Hanwha Group
By Park Jae-hyuk
By Park Jae-hyuk
The Iraqi government has recently asked Hanwha Group to resume the construction of Bismayah New City, southeast of Baghdad, which has been in limbo since the Korean firm decided in October to withdraw from the project, citing the Middle Eastern country's breach of contract, according to industry officials, Tuesday.
Hanwha Corporation/E&C, the group's construction unit, however, has maintained a cautious stance on Iraq's request, in an apparent attempt to have the upper hand in their ongoing negotiations.
Earlier this month, the Iraqi parliament's investment and development committee held a meeting with representatives from Hanwha and the Middle Eastern country's National Investment Commission (NIC), in order to resolve their financial dispute, which has blocked the construction of the project.
The parliamentary committee said in a statement last Wednesday that Hanwha and the NIC agreed to hold talks on the resumption of the Bismayah project.
Their meeting came a week after Hanwha and the NIC held a separate meeting last month.
The NIC said at that time that Chairman Salar Mohammed Ameen expressed the commission's intention to do its best to complete the project.
“The chairman emphasized that the NIC is interested in completing the construction of Bismayah residential city, providing the best services to its residents and addressing all problems,” the commission said in a statement.
The Bismayah New City construction site in Iraq / Courtesy of Hanwha Corporation
The Bismayah project is part of the Iraqi government's post-war restoration effort intended to provide housing to residents living near Baghdad by 2020. Hanwha won a $10 billion order 10 years ago regarding the project.
Hanwha Group Chairman Kim Seung-youn showed a keen interest in this project by personally making multiple visits to the site.
Its completion, however, had been deferred to 2027, due to the unstable political situation in the Middle East as well as the Iraqi government's delayed payments and the COVID-19 pandemic.
Against this backdrop, the NIC even conducted an audit earlier this year to check the financial soundness of the Bismayah project. The commission also opposed Hanwha Corporation's recent acquisition of its subsidiary, Hanwha E&C.
Amid the intensifying conflict, Hanwha eventually informed the NIC on Oct. 7 of its intention to cancel the contract, citing a delayed payment of $629 million. As the contract was canceled on Oct. 30, Hanwha workers gradually left the construction site.
The contract cancellation prompted residents near Bismayah to hold a rally to request Hanwha's return to the project and the resignation of NIC Chairwoman Suha Daoud Najjar. After the election of the new Iraqi president and the prime minister in October, the NIC chairwoman stepped down.
As a result, the Iraqi government began taking a friendlier approach toward Hanwha.
The Korean conglomerate, however, said it is still uncertain whether or not it will resume the construction project.
“If the Iraqi government completes the payment, we may resume the construction,” a Hanwha Corporation/E&C official said. “Because the initial contract was canceled, however, it will take some time for us to rewrite the contract.”