As of the end of April this year, the cumulative overseas construction orders of domestic construction companies have decreased by 20% compared to the same period last year.
The Saudi Arabia "Neom City project" is scaling back due to falling oil prices, and the new nuclear power project in the Czech Republic, which was expected to secure orders in the first quarter, is facing legal issues, casting a shadow over the goal of achieving $500 million in overseas orders this year.
According to the Korea Overseas Construction Association on the 3rd, as of April 30 this year, the cumulative amount of overseas construction orders by domestic construction companies recorded $10.5 billion. This is a 20% decrease compared to $13.2 billion during the same period last year. The cumulative number of orders as of the end of April this year also decreased by 14% to 174, down from 202 last year.
Regionally, orders in the Middle East and Asia have decreased by more than 40% compared to the previous year. In the Middle East, which is regarded as the primary market for overseas construction orders by domestic construction companies, they secured $5.6 billion, which is about a 43% decrease compared to the same period last year. In Asia, they only secured $700 million, down approximately 46%.
On the other hand, orders in North America, the Pacific, Europe, Africa, and South America have increased compared to last year. In North America and the Pacific, they secured $2.5 billion, an increase of about 64% from last year. In Europe and Africa, they secured $900 million and $500 million, respectively, representing increases of about 157% and 371%. In South America, they also secured $400 million, reflecting a 168% increase.
The major orders in April include Samsung C&T "UAE Al Dhafra OCGT IPP," Daewoo E&C "Iraq Al-Faw New Port dredging and reclamation project," Samsung C&T "Australia Noware battery energy storage system (BESS)," Hyundai Engineering "United States HMGMA Hyundai Motor plant specialized design work," and Kyeryong Construction "Uzbekistan pharmaceutical cluster construction project Phase 1."
This year, the government proposed a target amount of $500 million for annual overseas construction orders, which is $100 million more than last year's target of $400 million.
However, officials in the overseas construction industry believe that achieving the order target will be difficult due to a decrease in bids in the Middle East caused by falling international oil prices.
Kim Hwa-rang, a deputy research fellow at the Construction Industry Research Institute, noted, "Saudi Arabia is in a mood to adjust the amount originally intended for infrastructure investment as it becomes difficult to cover construction costs due to the continuous drop in international oil prices," adding, "In particular, I understand that Sungshin Cement, which was supplying ready-mix concrete to the consortium of Samsung C&T and Hyundai E&C, which secured the 'Learning Tunnel Construction' project in Saudi Neom City, has stopped its local plant and reduced its workforce this year."
Additionally, Saudi Arabia is rapidly changing its market environment by restricting the participation of companies without regional headquarters (RHQ) in government-published projects, expanding public-private partnership (PPP) projects, and strengthening localization policies.
Deputy research fellow Kim explained, "Among domestic construction corporations that are establishing or planning to establish RHQs are Samsung C&T, Doosan Enerbility, Samsung E&A, Hyundai E&C, and HanmiGlobal," indicating that "companies other than these will find it difficult to participate in government-published projects in Saudi Arabia."
The new nuclear power construction project in the Czech Republic, which is estimated to cost $18 billion, is also facing delays in contract signing, further obscuring the goal of securing orders this year.
An official in the overseas construction industry analyzed, "Last year, Korea Hydro & Nuclear Power was selected as the preferred bidder for the new nuclear power construction project in the Czech Republic in July, but the Czech court accepted claims made by Electricité de France (EDF) regarding issues in the bidding process, leading to a contract suspension order. Therefore, because we cannot sign the main contract until the administrative lawsuit ruling is finalized, it is uncertain whether orders can be secured within the year."