South Korea’s cumulative overseas construction orders surpassed the $1 trillion milestone just before the turn of the new year, underscoring the country's sustained growth and global appeal.
The achievement comes 59 years after Hyundai Engineering & Construction secured its first overseas order in November 1965, constructing the Taphani-Narathiwat highway in Thailand.
According to the Transport Ministry on Friday, the cumulative overseas construction order amount exceeded $1 trillion last month, from $996.5 billion in November.
Transport Minister Park Sang-woo highlighted the $1 trillion achievement as a key accomplishment in his New Year’s address, stating it significantly contributed to national economic growth.
However, the government fell short of its annual target of $40 billion in overseas construction orders, with total orders from January to November 2024 reaching $32.69 billion, according to the Overseas Construction Association.
The country's annual overseas construction orders peaked at $71.6 billion during the boom year of 2010. However, that gradually declined to $22.3 billion in 2019, in the face of the US-China trade dispute and a reduced number of projects in the Middle East.
Since then, orders have rebounded, recording $30.6 billion in 2021 and moving up to $33.3 billion in 2023, marking three consecutive years of growth.
Last year, the Middle East played a key role in driving performance.
The region, which accounted for 34 percent of overseas orders in 2023, saw its share grow to about 50 percent. This increase was led by major projects such as Hyundai E&C’s $5.08 billion Amiral Petrochemical Plant in Saudi Arabia, which was followed by other significant orders in the country.
In April last year, Samsung E&A and GS Engineering & Construction secured a $6.08 billion Fadhili Gas Plant project from Saudi Aramco, marking the largest project ever awarded to a Korean construction company in Saudi Arabia.
While setting the $1 trillion milestone in overseas orders is a significant achievement, industry officials anticipate a mix of opportunities and challenges ahead.
"With the nation's political instability following the martial law turmoil, combined with global uncertainties, projections for overseas construction orders this year are realistically tough," an official from a major construction firm here said. "We have to be prepared for increased competition, fluctuating energy prices and the evolving demands of key markets like the Middle East and Southeast Asia."
Looking ahead, the government seeks to transition from contract-based overseas construction to a greater focus on high-value investment-development projects.
Investment-development projects are characterized by participants bearing some or all of the costs, proposing the project and sharing profits and losses based on their stakes. The proportion of such projects in Korea’s overseas construction orders averaged 5.1 percent annually between 2018 and 2022, but rose to double digits last year.
By Kim Hae-yeon (hykim@heraldcorp.com)
