Change of Hands at ICAK
Daelim Industrial Vice Chairman Lee takes the helm at the association
The International Contractors Association of Korea announced on September 1st that Vice Chairman Lee Yong-koo of the Daelim Industrial Co. has taken over as its new chairman, replacing Yoo Jun-kyu who resigned at the expiry of his term of office. The veteran construction industry executive joined Daelim Industry in 1971 and has enormous experience in the area of overseas construction.
In the meantime, the association said overseas construction projects won by domestic builders amounted to $11.813 billion as of the end of August. The amount is already over $10.858 billion they won for the whole of last year and up 82.7 percent over the same period last year, amounting to $6.466 billion.
ICAK Planning Office Manager Kim Jong-hyun said Korean builders have been going smoothly in their efforts to win overseas project orders this year and they are likely to book $3 billion in additional orders this year, to bring total orders booked to $15 billion. The biggest annual orders booked were in 1997 with $14 billion.
The record project orders have been possible due to vigorous plant construction projects coming out of the Middle East bulging with oil dollars benefiting from high oil prices and successful operations of Korean builders in Africa and Asia.
Regional breakdown of orders show that $7.081 billion came from the Middle East and $2.735 billion from Asia and $1.27 billion from Africa. Orders from Asia and Africa jumped 159.2 percent and 113.6 percent from the same period last year, while those from the Middle East rose 57.3 percent.
Korea recently celebrated its record of overseas construction orders totaling over $200 billion over 41 years since it first entered the overseas construction market with a highway construction project in Thailand in 1965.
Korea building industry has been euphoric over the return of a construction boom in the Middle East for the first time since the Asian financial crisis in 1998 fuelled by high oil prices benefiting Middle East oil-producing countries, Oil-rich Middle East countries began to build plants and commercial buildings with bulging oil dollars once again.
Korean overseas contractors apparently have entered so called, second Overseas Construction Boom in 2004 thanks to a surge in the number of construction projects in the Middle East in particular due to a huge increase in the flow of oil dollars into the region caused by high oil prices.
Korean builders leaped into the revival of the Middle East boom in the 1990s in 2004 when it clinched project orders worth $7.5 billion and chalked up $10.9 billion in total orders for that year, surpassing the $10 billion in total annual orders for the first time in eight years since the Asian financial crisis.
The construction boom in the Middle East is still in progress and $15 billion in project orders from the region is within the grasp of Korean builders for this year. OCAK is confident that the country is likely to celebrate the $300 billion in overseas construction orders accumulated within the next 10 years.
However, some say Korea's overseas construction industry still has a long way to go due to its short-comings in the area of Engineering Procurement Construction(EPC), a method involving all aspects of construction from design, construction, start-up, and project financing, coupled with the stiffening competition with major global players.
Take a look into the Korean overseas construction industry, Yoon Kook-jin, chief of Daewoo E & C overseas business div., spoke about strategies designed to develop the overseas construction industry during a seminar marking the $200 billion mark in overseas project orders, held at the Korean Chamber of Commerce and Industry building on May 17.
Yoon said Daewoo E & C has undertaken approximately 30 projects so far since the early 1990s, including gas plants, gas pipelines, LNG, GTL projects. He also predicted that an expansion of the proportion of environment-related plants in the wake of such environment projection measures a mandatory reductions of greenhouse gas emissions as well as an increase in pharmaceutical, chemical, and food/beverage plant orders riding on the improved income earnings.
The Daewoo construction executive stressed the need for diversifying markets in the business portfolio and sophistication of EPC projects; foreign a strategic alliance with leading contractors to penetrate advanced markets; managing resources data in each of EPC areas; strengthening presence in the newly-emerging GTL, DME, and NGL projects and landing power plant projects ordered by independent power producers. Yoo asked for the government to provide financing, guarantee and insurance support to help contractors win construction orders. nw
New ICAK Chairman Lee Yong-koo