[Square] Korea and Spain Anticipate Joint Entry into Third-Country Construction Markets

Lee Geon-gi, President of the Overseas Construction Association

From June 15 to 17, President Moon Jae-in visited Spain as a state guest for the first time since the COVID-19 pandemic, staying for two nights and three days. During his visit, he met with King Felipe VI and Prime Minister S?nchez to strengthen the friendly relations between the two countries and discuss cooperation on joint ventures in third countries.

Historically, Spain has served as an important strategic hub geographically located between Europe and Africa. In other words, it has been highly advantageous as a base for overseas market expansion, including entry into Europe and Africa. Currently, Spain leads the Latin American construction market by leveraging historical, cultural, and linguistic advantages through major companies such as ACS, the world's largest overseas construction firm. As the world's second-largest investor in Latin America after the United States, Spain's influence is so significant that it is essential to procure most bank guarantees and construction materials from Spain for entry into the Latin American construction market. This makes Spain an ideal partner for Korea in jointly entering the Latin American market.

From the perspective of the recent global economic reconstruction trend, development cooperation from developed countries to underdeveloped countries, which is emphasized worldwide, is no longer someone else's issue. One such area is infrastructure development in underdeveloped countries. Accordingly, exploring cooperation measures for joint entry into third-country construction markets between Korea and Spain was a major agenda during this visit.

According to the Ministry of Land, Infrastructure and Transport (as of May 2021), since August 1980 when Korean Dongbu Construction and Spain's Garden Park jointly executed the Riyadh King’s Office and Cabinet Meeting Room construction project in Saudi Arabia (worth $61.86 million), the two countries' companies have jointly carried out 56 construction projects worth $16.2 billion in 25 countries. While the two countries share similarities in political and economic sectors, there are clear differences in construction: Korea excels in construction and policy financing, whereas Spain has strengths in engineering, turnkey contracts, and operations. Despite these differences, bilateral cooperation can complement each other's weaknesses and generate significant synergy effects.

A representative example is the $350 million Bello sewage treatment plant project in Colombia, commissioned by the Colombian Public Works Agency (EPM) in 2013. Hyundai Construction, Hyundai Engineering, and Spain's Acciona Agua jointly secured and executed the entire process from equipment supply to construction and commissioning.

Currently, 11 Spanish companies are included among the top 250 global construction firms selected by ENR in 2019. Spain ranks second in the global overseas construction market share by country for several years following China, making it a construction powerhouse. If joint entry into third countries by Spanish and Korean companies is activated, it is expected to positively impact the diversification of Korean companies' markets.

The Korea Overseas Construction Association signed a Memorandum of Understanding (MOU) with the Spanish Construction Association (SEOPAN) in 2014 for construction cooperation. The MOU includes information exchange and multifaceted cooperation in construction and plant sectors. Based on this, the two associations have continuously maintained a cooperative relationship by regularly holding the Korea-Spain Construction Cooperation Forum for mutual cooperation in the construction field.

2020 marked the 70th anniversary of diplomatic relations between Korea and Spain, established in 1950. Despite the geographical distance between the western edge of the European continent and the eastern edge of the Asian continent, Korea and Spain have solidified their cooperation and achieved tangible results in joint entry into third-country construction markets. It is hoped that President Moon’s visit will not only elevate the friendly relations between the two countries to a higher level but also serve as an opportunity to activate joint entry into third countries.

Lee Geon-gi, President of the Korea Overseas Construction Association

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