UAE Fails to Rank in Top 20 Contracting Countries This Year
"Continued Interest... Selective Bidding Based on Work Type and Project Feasibility"
On May 31, representatives from Korea Electric Power Corporation, Samsung C&T, West Power, and Petrolinkemi are taking a commemorative photo after signing a joint development agreement for the UAE Kizad Green Hydrogen and Ammonia Project in Abu Dhabi, United Arab Emirates (UAE). / Photo by Korea Electric Power Corporation
[Asia Economy Reporter Noh Kyung-jo] The Middle East-driven tailwind, which has started to blow again in the overseas construction market this year amid the high oil price trend, is expected to continue until next year. However, unlike Saudi Arabia, which has strong influence with the Neom City project, the United Arab Emirates (UAE) has disappeared from the ranking of contract-winning countries.
According to the Overseas Construction Comprehensive Information Service of the Overseas Construction Association on the 27th, the UAE did not make it into the top 20 countries by contract amount this year. This contrasts with its 2nd place last year, 7th in 2020, and 9th in 2019. Although contracts worth $248.02 million occurred this year, most were subcontracting contracts for already won projects or exhibition booth installation works.
On the other hand, Saudi Arabia ranks 2nd with a contract amount of $3.42236 billion so far this year. Its recent performance was 2nd in 2019, 6th in 2020, and 1st in 2021. It is expected to remain among the top ranks next year as well.
Although both are Middle Eastern oil-producing countries, the differing atmosphere is attributed by construction industry insiders to selective bidding by domestic companies beyond the individual circumstances of the ordering countries. For example, Egypt, classified as part of the Middle East in performance statistics, did not make the top 20 last year, but this year jumped to 3rd place after Korea Hydro & Nuclear Power won a local El-Dabaa nuclear power plant construction project worth over $2.4 billion.
An association official explained, "In the past, domestic companies flocked to overseas construction orders all at once, described as 'swarm bidding,' but that is no longer the case. We understand that orders in the UAE are still steady. However, companies are placing more emphasis on orders from other countries."
They also said that interest in the UAE has not completely disappeared. In fact, Samsung C&T, Korea Electric Power Corporation, and Korea Western Power formed 'Team Korea' in May and signed a 'Joint Development Agreement for UAE Kizad Green Hydrogen and Ammonia Project' with UAE private developer Petrolinchemie. A green ammonia production plant will be constructed later in the Abu Dhabi Kizad Industrial Zone.
GS Inima, a subsidiary of GS Construction, passed the prequalification (PQ) for the Shuwiehat-4 reverse osmosis (RO) seawater desalination project by Emirates Water and Electricity Company (EWEC), whose bidding closed on September 30. It was confirmed as the lowest bidder, and the final contract award is expected around the end of the year.
A construction industry official said, "Saudi Arabia and the UAE differ in scale," but added, "We are also paying close attention to UAE orders by considering the types of projects and business feasibility."
Meanwhile, the Middle East construction market is expected to grow by more than 10% next year. Global market research firm IHS Markit predicted that only the Middle East (14.4%) will grow by more than 10% next year, supported by expectations of improved ordering conditions in major Middle Eastern countries amid the high oil price trend. This year's growth forecast was revised upward by 1.8 percentage points to 12.0% from the previous 10.2%.
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