High Potential for Linkage with Main Project, Must Secure Early
Expected Leveraging Effect for Entry into European Market
Domestic construction companies are advised to involve key personnel in large-scale Official Development Assistance (ODA) projects for post-war reconstruction in Ukraine to enhance the completeness of feasibility studies and seek linkage with the main projects.
A high-rise apartment building in the southern part of Kyiv, the capital of Ukraine, still stands as it was after being hit by a Russian missile strike in late February. / Photo by Yonhap News
According to the Overseas Construction Association's report on "Global Trends and Response Measures Related to Ukraine Reconstruction Projects" on the 14th, the new international development cooperation projects supporting Ukraine next year, which have passed the Ministry of Foreign Affairs review, amount to a total of 81 billion KRW, expanding 13 times compared to this year. Unless there are policy changes, the projects are expected to be ordered around January next year after the Ministry of Strategy and Finance finalizes the requested amount and the National Assembly reviews and approves it.
The Comprehensive Implementation Plan for International Development Cooperation, announced annually by the International Development Cooperation Committee, is known as Korea's master plan for grant aid. This year, only the humanitarian necessity of supporting Ukraine was mentioned, with only two capacity-building projects worth 6.09 billion KRW being implemented.
However, for next year's Ukraine ODA projects, approximately 55.3 billion KRW, about 70% of the total budget, has been allocated to the construction infrastructure sector. These include feasibility study projects for the Kyiv-border section high-speed railway construction, Boryspil Airport modernization project, and feasibility study for increasing railway capacity on the Odesa-Reni section.
Accordingly, the association emphasized that since a relatively large budget has been submitted for feasibility study projects, the domestic construction industry should actively participate with the main projects in mind.
Kang Se-gi, head of the Middle East, Europe Office at the association, said, "These projects are large-scale and rare in Ukraine, attracting interest not only from Korea but also from advanced infrastructure companies from Japan, the United States, and the European Union (EU). Since there is a high possibility of linkage to the main projects, quick preemption is necessary."
He added, "It is necessary to utilize ODA projects in various ways, such as building initial responsiveness to the local construction market, systems, and practices during the feasibility study phase."
Since Korea first entered the overseas construction market in 1965, it has secured a total of 31 million USD in Ukraine up to September this year. This ranks 83rd out of 155 countries entered, showing poor performance. This is partly because the attractiveness of the Ukrainian construction market is lower compared to Saudi Arabia (Middle East) and Vietnam (Southeast Asia).
However, the association views the active global discussions on Ukraine reconstruction projects as an opportunity to leverage a springboard effect for entering the European market. It also noted the value of utilizing the government's unprecedentedly strong support willingness.
Currently, Luxembourg, Canada, the United States, France, T?rkiye, Japan, Poland, and the Netherlands are actively entering the Ukrainian construction market.
Kang said, "Within a short period of one and a half years after the war, construction private organizations from Poland, Israel, Canada, T?rkiye, Italy, and the United States have proposed collaboration to major local construction organizations such as the Ukraine Construction Association (CBU) and are building networks. The Ukraine reconstruction project is meaningful as a stepping stone not only for entering a single country's construction market but also for entering the advanced European market."
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