Potential Participation in Post-War Construction

Korea’s construction industry is trying to reap benefits from participation in post-war construction. However, post-war benefits can be different for an each nation.

Hyundai Engineering and Construction is likely to reap benefits if the U.S-Iraq war is finished soon. The company expects to collect construction costs worth 1.104 billion dollars from Iraq, which were frozen due to U.N. economic sanctions on Iraq after the 1991 Gulf War. If the new Iraqi government is established after the war is finished and economic sanctions are lifted, the company is expected to try to collect the outstanding amount.

The Wall Street Journal reported that more than 1.5 billion dollars will go to private companies in the U.S. among construction work. Therefore, whole construction costs are forecast to be more than 1.5 billion dollars.

However, it is not certain for Korean construction companies to participate in the construction process since post-war construction costs are supposed to be paid by construction companies or government funds.

Accordingly, the construction industry puts emphasis on making inroads into neighboring countries. International Contractors Association of Korea Direction Kim Hyo-jin said, “If the Gulf area becomes stable after the war, construction in neighboring countries will be reinvigorated.” In particular, if the economic situation in the oil-producing nations in the Middle East is bright due to high oil prices, construction is expected to be reactivated. Currently, sea oil-drilling construction worth 8 billion dollars remains without order in Iran.

More than 60% of Korean foreign contracts are concentrated in the Middle East. This year Korean construction companies made 75% or 435.5 million dollars of the total contracts worth 576.98 million dollars in the Middle East. That’s the reason that the construction industry is keen on the development of the war. So if the war is prolonged, the loss of Korean companies could be larger. Construction and Research Institute researcher Kim Min-hyeong said, “If war is prolonged, construction companies will likely have financial problems due to increasing costs. Damage could be bigger due to the safety of the equipment at construction sites.”

Ki-Jeong Ko koh@donga.com