Diversification of Business and Market

Sambo Engineering to expand into railroad, tap and wastewater and plant construction markets in the U.S. and Canada

Sambo Engineering Co. has made its name known throughout Southeast Asia for its design and surveillance skills in the construction industry, but it plans to aim far higher and become a leading engineering firm in the world by diversifying its market to advanced countries including the United States and Canada, away from the emerging markets in Southeast Asia. It also plans to expand into railroad, light electric rail and plant construction projects, among others, as part of its ambitious objective to boost Korea’s civil engineering technology prestige around the world.
Following are excerpts of a written interview with NewsWorld:
Question: Can you please tell us about the progress of the project in Cambodia your company and Korea Expressway Corp. (KEC) have been engaged in?
Answers: I would like to first talk about National Highways Nos. 31 and 33, local highway No. 117, and Campot Circular Road design and inspection project in which both companies have been engaged.
In January 2008, our company and KEC got the order from MPWT in Cambodia to conduct surveys on the project sections with the survey fees coming from the Overseas Market Support Fund managed by the Ministry of Land, Transport and Maritime Affairs.
We successfully performed the survey for eight months from March to October 2008 and made a presentation on the results of the survey in front of the minister in charge of the MPWT and other officials and then received a confirmation from the minister.
In April 2009, the Public Works Ministry of Cambodia requested the Ministry of Economy and Finance to secure financing for the project and the ministry asked for funding support from Korea’s Economic Development Cooperation Fund (EDCF) managed by the Korea Export-Import Bank.
Although Sambo and KEC finished the survey, we had to form a consortium to compete with four other competitors and won the rights to design and inspect the public project.
The project involves highways Nos. 31 and 33, local highway No. 117 extending for 103 km for repair and the Campot Circular Road stretching for 4 km for construction, totaling 107 km, which will be financed with $30 million to be provided by loans from EDCF with nine months allotted for design and 30 months for construction; a total of 39 months for completion.
The design of roads for the project started on June 14 and is due to be finished in December. Construction firms will be picked in a bidding, which will be participated in by a number of large Korean builders, although the project is relatively small compared to other works in which they have been engaged.
Q: Please explain to us the special matters that ought to be remembered when designing the project?
A: Cambodia has seen its economy grow fast in recent years, and its trade with neighboring countries such as Vietnam and Thailand has been rising rapidly. But due to a lack of financial independence, the country is having trouble building its infrastructure. Therefore, the country has been relying on financial support from the Asia Development Bank (ADB), China and Japan. The country is trying to build as many roads as possible with its limited financial resources.
One of the special characteristics of building highways in Cambodia is that asphalt is not used, but much more inexpensive DBST highway construction technology is used. The DBST highways’ life spans are half as long as those covered with asphalt, but twice the length of DBST highways can be built with the same costs to build asphalt highways. Another special feature of Cambodia is that most of the land is flat except for the northern regions, making it difficult to secure earthmoving soil. So earthmoving places have to be built for picking soil along both sides of the highways, and during the rainy season, they are used for waterways and pools to reserve water.
Also, Cambodia is the country with the largest number of road accidents. Outside Phnom Penh, the capital of Cambodia, the only lights they have at night are auto headlights. During the hot season, many people sleep on roads, as their houses are too warm to sleep in or take rest. On the other hand, drivers of cars speed up with excessive loads, thus causing many accidents.
Therefore, we have to take special care in designing highways to prevent as many road accidents as possible by designing places where road safety facilities are to be installed, as much as the funds permit.
Q: Can you tell us about overseas projects that Sambo is engaged in right now?
A: Sambo is currently engaged in design and surveillance works in Turkey, Pakistan, Georgia and the Philippines. In 2009, jointly with SK Construction and Yapi Merkezi Co., Sambo clinched the project to build an undersea tunnel connecting Asia (Istanbul) and Europe. Our consortium had to struggle till the end against a French consortium to win the project thanks to a high appraisal of Sambo’s excellent technologies. Our top expertise for designing tunnels, which has been well recognized in Korea, also won global confirmation when we won the tunnel project. We completed the basic design of the tunnel and are ready to have a real test for the design starting in October with construction scheduled to start in 2011.
The Pakistani project is a highway project, the first highway project to be built by private investment in Pakistan, linking Hyderabad and Mirprokas. We started designing the road in August 2009 and completed it in February this year. We began the CM for the project in July and aim to conclude it by March 2012.
The Georgian project concerns the design of the Batumi Circular Road, the first project financed by ADB won by Sambo, which is considered the first MDB project in which Sambo is participating. We won the project as a member of a consortium with an Austrian company. Its first stage work has been completed and the second stage is to be concluded in April next year.
The Philippine project is the GSO No.1 Road Construction Design and Surveillance project that we won. We are in charge of surveillance of the project as commissioned. The project is the first EDCF-financed project ordered by DPWH in the Philippines that Sambo won. We plan to complete the surveillance of the project by the end of this year.
Q: Can you elaborate to us your company’s overseas operation plans?
A: Sambo Engineering began its overseas operation with the establishment of its branch office in Indonesia in 2004. Currently, we maintain branches in the Philippines, Vietnam, Turkey and jobsite liaison offices in Cambodia and Georgia. We set up a wholly-owned subsidiary in Pakistan this year and plan to do likewise in the United States at the end of this year.
We are the first engineering company with seven overseas offices and subsidiaries in Korea.
We set up plans to search for new growth engines overseas to overcome the limited domestic market. From 2004, we tried to secure design projects from EDCF-financed projects, but failed to build a profitable base in overseas projects due to excessive bidding competition.
So, we are trying to participate in international MDB-financed projects backed up by financial policy loans, turning away from ADB, WB, IDB and EDCF projects.
We have been focusing on design-build projects in particular and are searching for projects that can be promoted with private investment so that we can jointly participate with domestic construction firms and financial institutions in those projects overseas.
We also plan to diversify projects from road construction to railroad, high-speed railroad, light electric rail, municipal development, tap water and sewage, and plant construction, among others.
Sambo Engineering also plans to expand our overseas operations to the United States and Canada, among advanced countries, from the emerging countries in Southeast Asia, so that Korea can expand the prestige of its civil engineering know-how abroad and play a key role in the world market in the days to come. nw

President Lee Gye-hwa of Sambo Engineering Co.