How to ensure a desert new city doesn't turn into a mirage

On Wednesday, I had the opportunity to visit the 'Discover Neom' Seoul exhibition at Dongdaemun Design Plaza (DDP) in Seoul. The exhibition introduces the Neom City project, which envisions the construction of a new city 44 times the size of Seoul, with a budget of 640 trillion won, in the desert region of northwestern Saudi Arabia. Although it was noon on a weekday, at least 20 to 30 people were taking pictures and watching videos at the exhibition. Some attendees seemed to be there for professional reasons. Still, there were also elderly people with their grandchildren, which could mean that the NeomCity project is well known to the general public. Notably, a video explaining the project's goals emphasized Neom's role as a showcase for sustainable future housing, offering an alternative for a world grappling with climate crises and energy challenges. The video also encouraged visitors to become part of this inspiring 'project for humanity.'

With the exception of a few regions, the domestic housing market remains weak, while rising commodity prices are reducing profitability. As a result, more and more construction companies are looking to expand overseas. However, price competitiveness has long caught up with latecomers such as China. Achieving the desired results with simple subcontracting is no longer possible. Just like the shipbuilding industry has found a new growth engine in eco-friendly ships, the construction industry also needs new technologies to open up new areas.

The new technologies could be advanced construction technology, such as modular construction or building information modeling (BIM). However, it could also be a 'technology’ in an entirely different area, such as the ability to determine the viability of a project, decide whether to invest in it and secure funding, and even manage the facility post-construction to generate long-term revenues.

In particular, the roadshow held in conjunction with the exhibition's opening was an opportunity for Korean companies to showcase our technology to Neom. But at the same time, it served as a pitch for Neom to seek investment from Korean companies. This signifies that Neom is not merely looking for subcontractors but investors and partners who can bring new technologies and funds. This trend is not limited to Neom; most of the major projects recently announced follow a similar approach. As a result, winning significant overseas construction orders has become challenging for simple subcontractors.

To be sure, this type of Public-Private Partnership (PPP) project requires a large initial investment and involves significant risks. This is especially true for large, time-consuming projects like Neom. Although plans for a 170-kilometer-long underground tunnel, 'The Line,' are being put into action, the project's feasibility remains as questionable as its size.

In the end, it is the government's role to bridge the gap between risk and possibility. 'One Team Korea' has indeed been traveling to Saudi Arabia, Indonesia, Poland, and other countries as an overseas order supporter. However, there are questions about the extent to which the government is fulfilling its responsibilities in determining business feasibility or providing the necessary financial support that companies need the most. Public enterprises, which have accumulated a wide range of experience in Korea, should also play a more active role. As Hyundai Group founder Chung Ju-yung famously said, 'Have you tried it?' If you don't try, you won't succeed, and you won't accumulate know-how. For the 'second construction boom in the Middle East,' companies and governments must take a step forward.