Overseas Construction Orders Fell To Half

The orders of overseas construction have shrunk.

According to the construction business circles and the Ministry of Construction and Transportation (MCT) yesterday, the amount of orders received in the first half of this year reached $1.32 billion, which is only 48.5 percent of the amount of orders received in the same period of last year ($2.72 billion). The number of orders fell to 32 cases from 54 cases of the first half of last year. With the decline of the orders of overseas construction, the MCT`s original order target of $8 billion became hardly attainable.

Such a shard decline of the orders has derived from the slumps of the so-called `top three companies` in the overseas construction such as the Hyundai Engineering & Construction (HEC), the Daewoo Engineering & Construction (DEC) and the Dongah Construction.

The HEC had received over 40 percent of the total amount of the overseas construction orders every year. But as it has undergone the financial difficulties from the beginning of last year, it only received the orders of $359 million in the first half of this year, which is just 20 percent of last year ($1.64 billion).

The DEC, who had received the orders of yearly average $1.2 billion since 1990, also recorded the orders of $110 million until June this year, which is just 50 percent of the same period of last year ($206 million), as its orders have sharply dropped due to the dissolution of the mother group and the division of the subsidiaries.

The Dongah had secured the construction of yearly average $0.7 billion through 1990s, but could not receive even an order of construction since the announcement of its bankruptcy in May this year.

Another factor is the East Asian construction market, which has been regarded as the Korean construction companies`s home-ground, has become politically and economically unstable. Hence, the placement of construction orders sharply fell. The Korean construction companies acquired the construction orders of $2.21 billion in the Asian regions in the first half of last year, but received the orders of $825 million in this year, which is just 37 percent.

Regarding the decline of the orders, an official of the MCT told that ``the ministry will lower the order target from $8 billion to $6.4 billion. Because the big construction companies such as the HEC and the DEC have established the foundation for the normalization of management and they will aggressively get into business in the international construction market from the second half of this year, the order target will be satisfied easily``.

An official of the construction business circles told that ``the contracted business abilities of the domestic construction companies will not be easily recovered only by the revival of the HEC and the DEC. The government should support the construction companies to launch the high value-added plant construction business such as the construction of the petrochemical plant and the power plant. And the financial institutions should expand the term of guarantee for the construction companies.

Hwang Jae-Seong jsonhng@donga.com