Korean Construction Firms
Korean builders are winning a rapidly-increasing number of construction projects in the Asia-Pacific and North American regions thanks to the fast economic growth of Asia-Pacific countries and the government’s efforts in market diversification. The growth is expected to continue for a while as the countries are planning for many infrastructure development projects.
According to the International Constructors Association of Korea (ICAK), the total value of the orders local builders received this year added up to US$31.59 billion (398 orders), decreasing 4.6% year on year from US$33.12 billion (359 orders). Meanwhile, the value recorded in Asia showed an 89% growth from US$6.91 billion to US$13.08 billion (232 orders).
During the same period, the amount increased from US$1.76 billion to US$2.82 billion in Vietnam, from US$1.61 billion to US$2,8 billion in Singapore, from US$762.19 million to US$1.30 billion in India, from US$3.64 million to US$1.11 billion in Malaysia, and from US$99.55 million to US$897.55 million in Mongolia.
It soared from US$14.02 million (nine orders) to US$6.19 billion (25 orders) in the Pacific and North American region, too. The rapid increase is mainly because of the order for the construction of the Roy Hill iron ore processing plant in Australia obtained in May by Samsung C&T. The contract amount reaches US$5.77 million. In the meantime, the size recorded in the Middle East declined from US$20.69 billion (60 orders) to US$11.07 billion (55 orders) during the period.
Experts are saying that the government and industry’s market diversification efforts are bearing fruit. “As concentration on the Middle East plant engineering market led to cutthroat competition and price dumping, the government and industry began to realize the importance of business portfolios and market diversification,” said ICAK manager Kwon Oh-hoon, adding, “As a result, local builders are successfully increasing their presence in Asia and in an increasing variety of sectors such as urban development.”
The construction companies’ growth in Asia has been accelerating since 2007. The ratio of the orders they won in Asian countries to the total has skyrocketed from 28.19% and 29.20% in the 2000s and the early 2010s to 41.39% this year. The percentage has fallen from 59.97% in the 2000s to 54.9% in the early 2010s and 35.03% in 2013.
“The Asia-Pacific countries are in the process of urbanization and the population is increasing fast, which presents Korean builders with huge business opportunities since the mid-2000s,” Construction Economy Research Institute of Korea researcher Yu Wi-sung explained, continuing, “Their experience and expertise accumulated in the Middle East are appealing to the nations in the region.” He went on, “At the same time, the total value has been on the rise rapidly, owing to the shift from contracted construction to EPC-based projects.”