This year it is projected that the annual overseas construction contract orders for South Korean companies will reach US$40 billion. It is expected that the contract amount will expand compared to previous years through projects such as nuclear power plants, renewable energy, and investment development. Consequently, there are expectations for achieving a cumulative overseas construction contract amount of US$1 trillion.
On Feb. 16, the Ministry of Land, Infrastructure and Transport (MOLIT) held the “One Team Korea Town Hall Meeting” at Dongdaemun Design Plaza (DDP) in Seoul, along with overseas construction officials.
This town hall meeting was organized to explore ways to shift the paradigm of the overseas construction industry as a whole through the value enhancement of overseas construction and the expansion of related industry packages.
The event was attended by companies from various fields such as construction, infrastructure, engineering, information technology (IT), and mobility, as well as relevant policy demanders and public agencies in the overseas construction sector.
Lee Yong-gwang, the head of the International Contractors Association of Korea who attended the event, stated, “Portfolios will diversify into convergence and new industries, and contract awards for investment development projects and urban development projects will expand. This year’s annual overseas construction contract amount is expected to reach US$40 billion, with expectations of achieving a cumulative US$1 trillion.”
He noted, “The expansion of the global construction market and the maintenance of the high oil price trend are considered growth factors in relation to overseas construction contracts.” However, he also pointed out, “Global economic uncertainties and geopolitical risks, such as the Russia-Ukraine war and conflicts in the Middle East region, have been identified as hindering factors.”
Since the first overseas construction contract was awarded in 1965, the cumulative contract amount up to now is US$965.56 billion.
Lee Kwang-bok, director of the Korea Overseas Infrastructure and Urban Development Corporation (KIND), mentioned trends in domestic companies’ overseas investment and development. These include changes in the overseas expansion landscape resulting from the Inflation Reduction Act (IRA) in the United States, a relative decrease in interest from lower-income countries, and the activation and resumption of large-scale urban development projects.
Jung Yeon-woo, a research fellow at the Land and Housing Research Institute of the Korea Land and Housing Corporation (LH), stated, “A rapid growth of smart cities is expected over the next 10 years,” and added, “There will be an increase in global infrastructure investment demand, particularly in the Asia region where overall income growth is forecasted.”
In the future, the MOLIT plans to proactively modularize smart city services in which domestic companies have strengths, select strategic countries and projects, and develop comprehensive support models.
Furthermore, public agencies will take the lead in promoting packaged-type ventures by directly participating in projects. They will alleviate the burden on the private sector step by step, from identifying and commercializing projects to providing investment support and exit strategies as public developers of the projects.
Utilizing available government resources such as Official Development Assistance (ODA) and the K-City Network, efforts will be made to establish a foundation for urban development projects. This includes strengthening the public’s leading role through initiatives like dispatching K-Smart City Development Support Teams and providing networking support.