[Let's Run Again Construction Korea] Major Project Wins, Construction Companies Seeking Opportunities Overseas

[Asia Economy Reporter Yoo In-ho] Despite the shock of the novel coronavirus infection (COVID-19) that has spread worldwide, major domestic construction companies are finding new opportunities in overseas markets.

In the post-COVID era, they have established a strategy to focus on overseas development projects with higher profitability rather than simple contract work, based on relatively superior technology and experience.

Large construction companies that struggled earlier this year have been consecutively winning major projects in overseas markets in the second half. As a result, the overall overseas order performance is showing a sharp recovery, overcoming initial concerns.

So far this year, the cumulative order amount of domestic companies reached $26.4 billion (approximately 29.19 trillion KRW as of the 24th), a 47.5% increase compared to the same period last year. Considering additional orders by the end of the year, the industry expects a recovery to the $30 billion range to be certain.

Overseas construction orders maintained around $60 billion until 2014 but sharply contracted after 2015. Although it exceeded $30 billion in 2018 with $32.1 billion, it fell back to $22.3 billion last year. This is attributed to the strong finish by winning large projects in key markets such as the Middle East and good performance in Asian markets like Hong Kong and Taiwan.

In fact, Hyundai Construction recently secured the Qatar Lusail Plaza Tower Plot 3 and 4 project worth $500 million. Earlier, Hyundai also won a massive $2 billion project for the Basra oil refinery construction in Iraq last month.

Samsung Engineering also increased its order volume by winning the $3.6 billion Dos Bocas refinery project in Mexico.

Daewoo Construction succeeded in pioneering new markets by securing the $218 million (approximately 260 billion KRW) Panling Bypass Road construction project in the New Territories of northern Hong Kong this year.

POSCO Construction is also expanding its presence in the European market, which has high entry barriers, by winning the largest-ever Polish project worth 490 billion KRW for the Warsaw waste incineration plant.

Hyundai Engineering secured the $304 million 'Taiwan Datan Combined Cycle Power Plant Expansion Project.' The expansion project involves adding Unit 7 to the 'Datan Power Plant,' located about 50 km west of Taipei, the capital of Taiwan.

The market outlook for next year is also positive. According to global market research firm IHS Markit, the global construction market is expected to grow by 4.8% compared to this year.

However, experts advise focusing on business diversification and creating high added value rather than simply winning orders through traditional contract methods in overseas construction markets.

Kim Jong-gu, Head of External Cooperation at the Overseas Construction Association, said, "To prepare for the post-COVID era, it is necessary to diversify markets and adopt an order-winning strategy that secures the front-end engineering design (FEED), which is the preliminary design phase before the engineering, procurement, and construction (EPC) stages, rather than simply winning orders through traditional contract methods. Since countries are expected to expand social overhead capital (SOC) budgets for economic stimulus, government-level financial and diplomatic support will be necessary."