November 25, 2024

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South Korean Land Minister Won Hee-ryong (back row, third from left) poses with officials of Saudi Aramco after signing an agreement on the construction of the Amiral petrochemical plant in Saudi Arabia, June 24. (Ministry of Land, Infrastructure and Transport)

The South Korean construction sector is anticipated to maintain its streak of surpassing $30 billion in overseas orders for the fourth consecutive year, approaching the government's target of reaching this year's $35 billion goal.

The total overseas orders that Korean builders have received as of Dec. 15 this year amounted to $29.25 billion, according to the Ministry of Land, Infrastructure and Transport on Monday. The figure is a 7.2 percent increase from the $27.29 billion tallied in the same period last year.

Overseas construction orders have risen steadily over the past few years, recording $22.3 billion in 2019, $35.1 billion in 2020, $30.6 billion in 2021 and $31 billion in 2022.

Given the usual surge in orders toward the year-end, it remains to be seen if this year's $35 billion target will be met.

Korea's biggest clients this year were the United States and Saudi Arabia.

North America and the Pacific dominated with 34.1 percent of total orders amounting to $9.45 billion from January to November this year, according to the International Contractors Association of Korea's statistics report. Subsequent rankings were the Middle East (30.2 percent), Asia (20.4 percent), Europe (6.4 percent), Latin America (5.0 percent) and Africa (3.9 percent).

Compared to the same period last year, orders from North America and the Pacific surged 172.8 percent. The Middle East's increased 11.3 percent, while orders from Asia dropped 48.9 percent.

Breaking down orders by country, the US took the lead with $9.25 billion, followed by Saudi Arabia with $6.48 billion and Taiwan with $1.49 billion.

In the US, Korean companies flocked to establish electric vehicle and battery factories there, in response to the US Inflation Reduction Act signed into law in August last year.

Some of the notable deals include Samsung C&T's $4.7 billion order for Samsung Electronics' semiconductor plant in Texas, the $1.2 billion joint battery plant project between Hyundai Engineering and LG Energy Solution, and another $1.75 billion battery plant project between Hyundai Engineering and SK Innovation's SK On. Hyundai Engineering is also involved in the construction of a new $670 million automobile plant in the US.

The biggest order this year was signed by Hyundai Engineering & Construction, who won packages one and four of Saudi Arabia's Amiral petrochemical project that amounted to a total of $5.07 billion. It marked the largest contract ever obtained by a Korean company in Saudi Arabia.

Another significant deal was clinched by Samsung C&T for the Aozihdi multipurpose development project in Taiwan. The mega project, valued at $612 million, was commissioned by Fubon Life Insurance, a subsidiary of Fubon Financial Group, one of Taiwan’s leading financial groups.

With challenges expected in the domestic real estate market, major construction companies are poised to actively pursue overseas orders in the coming year.

The government plans to set a higher order target for 2024, aligning with the anticipated growth of the global construction market by over 6 percent next year. The goal is to achieve $50 billion in annual overseas construction orders by 2027, positioning South Korea among the world's top four construction powerhouses.

By Kim Hae-yeon  (hykim@heraldcorp.com)