In the first quarter of this year, the overseas construction order performance of domestic companies fell short of expectations. While the government has formed the One Team Korea order support group aiming for an annual order of $35 billion and is actively working on the front lines, it is anticipated that results will begin to appear from the second quarter onward.
According to the Overseas Construction Comprehensive Information Service on the 2nd, the overseas construction order performance in the first quarter of this year was $6.17874 billion, down 8% compared to the same period last year ($6.618906 billion). During the same period, the number of orders decreased from 165 to 156, and the number of participating companies dropped from 197 to 178. Although similar to last year, the results are not significant considering the government's special interest in overseas construction.
President Yoon Suk-yeol showed interest in overseas construction orders at the emergency economic and livelihood meeting he presided over in October last year. Since then, news of surpassing $30 billion in overseas construction orders for three consecutive years was announced, and the Ministry of Land, Infrastructure and Transport set the overseas construction order target at over $35 billion this year, a 13% increase compared to last year, in the presidential work report earlier this year.
Minister of Land, Infrastructure and Transport Won Hee-ryong is leading overseas construction order support with the One Team Korea strategy. In November last year, he visited Saudi Arabia with related organizations such as the Overseas Construction Association and companies from various fields including construction, mobility, and information technology (IT). This was to secure orders for the 'NEOM City' project promoted by Saudi Crown Prince Mohammed bin Salman. This year, he also visited Qatar and Iraq. The most recent visit was to Indonesia, which is undertaking a capital relocation project worth 40 trillion won.
The market expects the results of these efforts to become visible from the second quarter of this year. Korea Investment & Securities reported that the scale of scheduled construction orders in the Middle East and North Africa (MENA) region, a stronghold for orders, amounts to $793.8 billion, which is six times the actual order amount last year. Projects awaiting final selection by the ordering parties after price bidding are also known to total $108.8 billion.
The abundant investment execution capacity of Middle Eastern oil-producing countries, whose oil revenue share has increased, is also a positive factor. The fiscal breakeven oil price is also high. The International Monetary Fund (IMF) forecasted Saudi Arabia's fiscal breakeven oil price at $66.8 per barrel this year, while Dubai crude is currently trading above $70 per barrel.
The Hyundai Construction and Hyundai Engineering consortium is expected to secure the Saudi Amiral project order in the second quarter. The construction cost corresponding to Hyundai Construction's share alone is estimated at 3 trillion won. Korea Investment & Securities said, "The first results in the MENA region will occur from the second quarter," adding, "Attention should also be paid to infrastructure construction related to the NEOM City The Line railway and the northern gas field expansion project of Qatar Gas."
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