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Korean Builders Little Exposed to Troubled Dubai World

Posted November. 28, 2009 02:21,   


Korean builders are downplaying the fallout from Dubai World seeking a debt moratorium, but are vigilant over the possibility of the beleaguered conglomerate having a negative impact on other construction projects in the Middle East.

Industry sources said yesterday that domestic companies this year have secured overseas orders worth 46 billion U.S. dollars, of which Dubai World’s share is a meager 0.07 percent (30 million dollars). Most of Dubai World’s orders are existing ones rather than new.

A large number of Korean builders advanced into the Dubai market in 2006 and 2007, but began withdrawing from early last year when economic conditions of the largest city in the United Arab Emirates grew tight.

Though construction on past orders is underway by Korean companies, the only company who did construction work directly related to Dubai World and its subsidiaries until recently was Samsung C&T Corp.

Samsung stopped working on a bridge to the man-made island Palm Jebel Ali early this month after Nakheel, the real estate developer of Dubai World, failed to make payments. The company that placed an order to Samsung for Burj Dubai, the world’s tallest tower in Dubai, is Emaar Properties, which has no connection to Dubai World.

Korea’s Kumho Engineering and Construction is putting the finishing touches on a new airport terminal in Dubai. Sungwon Corp. is doing road work under a contract with Dubai’s highway corporation.

The two construction projects pose no problem since they are state-sponsored, according to both companies. Bando Engineering & Construction said multi-purpose apartment complexes it built in Dubai have almost all been sold.

The Korean construction industry is closely watching if the Dubai crisis spreads to other Mideast regions. One fear is if the crisis affects Abu Dhabi, the second largest city in the UAE which finances Dubai.

Of 15.3 billion dollars in orders received from the UAE, more than 90 percent were placed by Abu Dhabi.

Stocks of Korean builders tanked yesterday with Hyundai Engineering & Construction suffering a 6.86 percent drop, Daewoo Engineering & Construction 8.3 percent, GS Engineering & Construction 7.86 percent, Samsung C&T 8.14 percent, and Daelim Industrial Company 7.83 percent.

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