Growing Concerns Over Overseas Construction Site 'Shutdown' Due to COVID-19

Daelim, Samsung Halt Construction Due to Malaysia's 'Full Lockdown'
Other Companies Manage with Existing Workforce and Materials
Prolonged Lockdown Makes Construction Suspension Inevitable
Business Trips Blocked, New Orders Also Affected

[Asia Economy Reporter Onyu Lim] Due to the spread of the novel coronavirus infection (COVID-19) crisis, concerns are growing over the shutdown of overseas sites operated by domestic construction companies. Daelim Industrial and Samsung C&T have already suspended operations at their sites in Malaysia. Each company has entered a phase of holding out at key sites in the Middle East and Southeast Asia with existing personnel and materials, but if the situation prolongs, there are concerns not only about project delays due to construction stoppages but also about non-payment of construction costs. Additionally, travel bans imposed by major countries have blocked overseas business trips, causing setbacks in new contract acquisition activities by sales personnel.

According to the construction industry on the 1st, Daelim Industrial has temporarily suspended construction work at the ULSADO refinery plant in Port Dickson, Malaysia. This is because the Malaysian government is implementing an emergency measure called 'Full lockdown' that restricts all movement within the country due to the spread of COVID-19. Currently, in Malaysia, all operations except essential services such as the capital city, post office, and electricity are halted. Samsung C&T has also suspended five building construction projects, including complex malls and offices, in Kuala Lumpur, Malaysia. A Samsung C&T official explained, "The lockdown, which was scheduled to end on the 31st of last month, has been extended until the 14th, so construction has not resumed."

Although limited to some sites so far, the industry forecasts that the possibility of a large-scale shutdown of overseas construction sites cannot be ruled out as signs of a prolonged COVID-19 crisis emerge. With entry restrictions tightened by various countries, companies are facing difficulties in securing local personnel. Especially with restricted personnel movement, continuing to operate sites with only existing staff has raised concerns about accumulated fatigue. A representative from Company A said, "Overseas site personnel have temporarily suspended vacations and continue working, but there are worries about morale decline due to prolonged work." Difficulties in procuring materials have also become an issue. According to HDC Hyundai Development Company, in Bangladesh, the government currently allows material supply only at specific times. Although many companies have secured surplus materials, they acknowledge that if the COVID-19 crisis does not end soon, they will inevitably face limits.

To make matters worse, the failure of the Organization of the Petroleum Exporting Countries (OPEC) and major oil-producing countries to agree on production cuts has caused crude oil prices to plunge, raising concerns about setbacks in overseas orders for domestic construction companies. Since Middle Eastern oil-producing countries, which account for 60% of overseas orders, face financial deterioration, investment is bound to shrink. In fact, overseas order amounts dropped sharply from $5.6 billion (about 6.83 trillion won) in January to $3.7 billion in February and $1.8 billion in March. A representative from Company P said, "Due to government policies in various countries blocking or delaying entry, there are setbacks in acquiring new projects."

This content was produced with the assistance of AI translation services.