Minister Park Sang-woo Attends Ceremony for Business Resumption in Iraq
Government to Provide Phased Support Including Creation of 15 Additional New Towns
The Bismayah New City development project in Iraq has resumed after 16 months, signaling a positive outlook for Korean companies entering the local reconstruction market. The government plans to strengthen step-by-step support, including policy fund investment, for additional new city development projects in Iraq.
Bismaya New City in Iraq - Bird's-eye View / Image provided by the Ministry of Land, Infrastructure and Transport
According to the Ministry of Land, Infrastructure and Transport on the 26th, an overseas construction order support team led by Minister Park Sang-woo arrived in Iraq on the 25th. This was Minister Park's first overseas business trip since taking office. The reopening ceremony of the Bismayah New City project was also attended by Haider Mohammed Makkiya, Chairman of the Iraqi National Investment Commission (NIC), the client.
The Bismayah New City project is a development to build 100,000 housing units and social overhead capital (SOC) in the southeastern area of Baghdad, Iraq’s capital. It is Korea’s first new city export case where the entire city was contracted as a package. The total project cost reaches 14 trillion won. Hanwha’s construction division won the housing construction and SOC construction contracts in 2012 and 2015 respectively and proceeded with the work, but the project was halted after October 2022 due to NIC’s delayed payment of construction fees.
The project resumption was facilitated by the dispatch of a minister-level order support team in January last year, followed by the joint committee between the two countries held for the first time in six years in June under President Yoon Suk-yeol’s directive to revitalize overseas construction. Government support also included minister-level invitation meetings in September and bilateral summit talks.
NIC paid Hanwha 230 million dollars (about 300 billion won) out of the 629 million dollars (about 840 billion won) in outstanding payments. Accordingly, Hanwha’s construction division will resume the project and complete the construction of 30,000 out of the total 100,000 housing units. Full project resumption can only be discussed after receiving the remaining outstanding payments. In a meeting with the NIC chairman, Minister Park said, "We are well aware of the Iraqi government’s intention to resume the project," and urged, "Please continue to cooperate so that the project can proceed without any setbacks."
Minister Park also mentioned Korea’s experience in new city development and smart city technology, requesting that Korean companies be allowed to participate in 15 follow-up new city projects in Iraq modeled after Bismayah New City. Iraq is planning up to 15 additional new cities in six locations in the capital and central region, four in the south, two in the east, and three in the west.
The Ministry of Land, Infrastructure and Transport plans to support Korean companies’ participation in these new city development projects step-by-step, from project discovery through intergovernmental cooperation to official development assistance (ODA) and policy fund support.
Currently, in Iraq, besides the Bismayah New City, Daewoo Construction has been contracted since 2014 for follow-up works at Al-Faw Port, including breakwaters, terminals, and connecting roads (worth 2 billion dollars). Iraq’s Minister of Transport, Rajak Muhaybis Al Sadawi, requested during a meeting with Minister Park that Korean companies also invest in petrochemical complexes and power plants near the port. Minister Sadawi especially expressed expectations for active participation by Korean companies in a 17 billion dollar railway and road network project for Iraq’s reconstruction.
In response, Minister Park said, "The Korean government and companies, with extensive experience in roads and railways, will work as a team to cooperate on Iraq’s ambitious projects." He emphasized, "Due to population growth and urbanization in developing countries worldwide, overseas urban development projects will expand further," adding, "The resumption of the Bismayah New City project is the first achievement of the paradigm shift in overseas construction declared after my inauguration."
He concluded, "The government will take the lead in supporting Korean companies to actively enter urban development projects not only in Iraq but also around the world."
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