Focusing on Quality
The South Korean government is planning to reach US$200 billion in terms of the total value of overseas construction orders obtained from 2017 to 2021. For reference, the annual total of the value has been on average about US$100 billion for years.
The government’s rather humble goal has to do with a shift of the focus from simple subcontracts and concentration on the quantitative side to public private partnership (PPP) and more promising and diversified projects in the field of new and renewable energy, advanced plant, smart city, etc.
PPP is mainly used in infrastructure construction projects and PPP projects tend to be based on capital investment from abroad. The examples include the suspension bridge construction in Çanakkale, Turkey that was clinched early this year by the Daelim Industrial and SK E&C consortium. The Ministry of Land, Infrastructure and Transport of South Korea is planning to build a new information system by 2019 so that relevant information can be collected, analyzed, and utilized with regard to PPP.
In addition, the ministry raises a global infrastructure venture fund of 100 billion won (US$90 million) with the Korea Development Bank and the Export-Import Bank of Korea. The purpose of the fund is to provide assistance for project feasibility studies, base design, financing, etc. At present, the ministry is providing pre-project assistance along with financing support in the ordering stage based on its Global Infrastructure Fund (GIF) and Korea Overseas Infrastructure Fund. Once the new fund is raised, the gap between the pre-project and financing stages can be filled.
The GIF is scheduled to be more than doubled in size from 373 billion won (US$335 million). When it comes to the new fund, the ministry and the two banks are going to burden 40 billion won (US$36 million), 30 billion won (US$27 million), and 30 billion won (US$27 million), respectively. Up to five billion won can be invested in a project from it.
At the same time, the government modifies its overseas construction information networks from those by country to those by region. It is planning to dispatch infrastructure experts to regions such as the Americas, Asia, the Middle East and Africa while working with local personnel in India, Uzbekistan, Mexico, Chile, Egypt, Tanzania, etc.
According to the International Contractors Association of Korea, South Korean builders clinched construction contracts worth a total of US$16.493 billion abroad in the first half of this year, up 1% from a year ago. These days, international oil prices are showing an upward trend and megaprojects are being launched in Saudi Arabia and so on.