Overseas Construction Sites Grounded by COVID-19... Challenges for Companies and Government Responses

[Asia Economy Reporter Yuri Kim] The novel coronavirus infection (COVID-19) crisis has also put overseas construction sites on high alert. It is analyzed that not only ongoing projects are being impacted, but sales activities for securing new projects are also expected to be hindered, necessitating proactive responses from the government and companies.

According to the Korea Research Institute for Construction Industry on the 2nd, among 102 overseas construction sites operated by 10 domestic companies, about 36.3% are either suspended or operating on a reduced scale under local government orders. It was found that 24 projects (23.5%) were suspended by government order, and 13 projects (12.7%) are operating on a reduced scale. The remaining 65 projects have not received separate government orders as of the survey date, but due to issues with material and manpower supply, normal operations as before the COVID-19 outbreak are difficult.

The Construction Research Institute emphasized the importance of government and corporate-level responses to overseas construction sites in this emergency situation. The government's response directions include ▲establishing and implementing pandemic response guidelines ▲strengthening diplomatic efforts to ease measures such as entry restrictions ▲providing legal advisory support related to claims ▲sharing COVID-19 response cases of companies conducting overseas projects ▲and preparing market entry strategies after the end of COVID-19.

Researcher Tae-Hong Son of the Construction Research Institute said, "The current crisis caused by the global pandemic of COVID-19 is unprecedented, and there is a need for a response system that individual companies entering overseas markets can utilize," adding, "It is necessary to prepare government-level medical support guidelines, including pandemic response guidelines, that companies can use in case of confirmed cases among domestic personnel working at overseas construction sites."

Diplomatic responses to allow limited entry for essential sales and technical personnel are also deemed necessary. Entry restrictions on essential personnel required for project execution affect not only site operations but also sales activities for securing additional projects. Researcher Son said, "It is necessary to survey the demand for exceptional entry measures to prevent issues such as construction delays for companies currently operating construction sites," and added, "Based on this, it is necessary to establish consultation channels with foreign governments to allow entry for essential personnel for business purposes."

Support for legal advisory related to claims is also required. Even after site closure measures end and sites reopen, if construction delays are not recognized, companies bear the economic losses from not meeting project completion deadlines. When claims are made regarding client actions due to delays, it can lead to contract disputes. Researcher Son said, "Except for some large companies with overseas business legal and contract management organizations, many medium and small enterprises find it difficult to effectively respond to disputes," and emphasized, "It is necessary to establish legal guidelines for dispute resolution and operate a temporary organization that provides related services."

As of the 22nd of last month, 232 domestic companies have entered the overseas construction market, with 1,787 construction projects. The Construction Research Institute pointed out that sharing COVID-19 response cases of companies conducting overseas projects could serve as useful data for companies performing similar projects in the same countries to establish response systems. Furthermore, "After COVID-19 ends, many countries will have increased needs for improving medical systems, i.e., constructing additional medical facilities and securing medical service systems," and added, "Demand for projects including construction and operation of medical facilities may increase, which should be utilized as part of strategies to expand entry into overseas construction markets."

Companies also need to build and implement pandemic response organizations, enhance overseas construction risk management systems, and secure corporate resilience for the post-COVID era. Researcher Son emphasized, "Organizations capable of responding to factors affecting business continuity such as construction delays due to temporary site suspensions from government measures, procurement issues of materials and equipment due to temporary logistics system halts, and manpower supply problems due to entry restrictions are required," and added, "As changes in the overseas construction market are expected, including expanded construction investment for economic stimulus and normalization of delayed projects after COVID-19 ends, companies entering the market need to strengthen market-specific monitoring and procurement system checks for project execution."

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