[From Domestic to Overseas] ③ The Key to K Construction Renaissance is 'One Team Korea'

President Yoon Suk-yeol "Will Definitely Realize the Second Overseas Construction Boom as Team Korea"
Renaissance of K-Construction with Technology and Packages in 5G, Nuclear Power, Mobility, and More

?anakkale Bridge in Turkey

The key to the government’s effort to enter the ranks of the world’s top four overseas construction powers and reopen the era of $50 billion annual overseas construction orders is ‘One Team Korea.’ Unlike China, where the government leads overseas construction projects, or Europe and Japan, where the private sector is central, Korea plans to form a ‘Team Korea’ led by the private sector with public support. This approach is based on the judgment that it requires a complex combination of the government’s tailored support strategies and diplomatic capabilities along with the technological prowess of individual companies. On the 31st of last month, President Yoon Suk-yeol personally stated, “Exports and overseas construction orders are the driving force of the economy and play a crucial role in job creation,” adding, “If we all unite tightly as ‘Team Korea,’ I believe the second overseas construction boom will surely be realized.”

◆ K-Construction Renaissance through Public-Private Joint ‘One Team Korea’ = The Jakarta Light Rail Transit (LTR) Phase 1 section (5.8 km) project in Indonesia’s capital is cited as a model case of One Team Korea. The project, valued at $420 million, was carried out from December 2016 to October 2019. The local construction public enterprise PT.WIKA was responsible for civil engineering works, while the Korean consortium handled the systems sector. It is regarded as a fruit of a public-private cooperative bidding support system led by the Korea Rail Network Authority. A Ministry of Land, Infrastructure and Transport official explained, “This was the first case of winning both project management and systems sectors through public-private cooperation,” adding, “It was a case that earned recognition for our technological capabilities and laid the groundwork for participation in Indonesia’s subsequent LRT and MRT Phase 4 projects.”

The 2019 Peru ‘Chinchero New Airport Project’ (valued at $30 million) is also hailed as a remarkable achievement of public-private joint Team Korea, which secured the project management office (PMO) contract through government-to-government (G2G) negotiations. The contract, conducted in the form of project management office (PMO), was Korea’s first G2G contract in the infrastructure sector and a public-private joint entry supported by Team Korea. By managing the construction of the gateway airport to the world-renowned tourist site Machu Picchu, it not only showcased the excellence of domestic technology worldwide but also served as a foothold for Korean companies’ entry into Latin America.

Son Tae-hong, a research fellow at the Korea Construction Industry Research Institute, said, “Winning orders in the overseas construction market is difficult to sustain with the business capabilities of individual companies alone,” emphasizing, “Utilizing national-level capabilities, including construction diplomacy, is essential.”

Key Measures to Revitalize Overseas Infrastructure Orders

◆ Launching Package Export Strategies for Construction, Transportation, and Telecommunications = The government has first embarked on laying the foundation for the re-advancement of K-Construction. Amid growing difficulties for companies due to the ‘three highs’ (high inflation, high interest rates, and high exchange rates) crisis and concerns over a global economic downturn, the government plans to establish regional entry strategies by the end of the year for key overseas infrastructure projects. Through this, it will comprehensively analyze order characteristics and procurement trends in promising regions such as the Middle East, Asia, and Latin America, and maximize the possibility of winning projects with differentiated entry strategies.

Additionally, the government plans to actively discover package orders that encompass infrastructure and content such as 5G communications, drone and robot smart logistics, and renewable energy by leveraging Korea’s infrastructure technology, with both public and private sectors working together. Last month, President Yoon also emphasized strengthening the package strategy, stating, “For the re-advancement of overseas construction, not only diversification of order regions but also new strategic attempts to export everything as a package, including transportation networks and 5G through construction works, are necessary.”

Domestic light rail running in Jakarta, Indonesia

◆ From Business Strategies to Networks... Private Sector Leads, Public Sector Supports = To establish a virtuous cycle system for private infrastructure finance, the Korea Infrastructure and Urban Development Corporation (KIND) will have its statutory capital limit raised from 500 billion won to 2 trillion won to support the acquisition of investment shares by private operators. In addition, amendments to the Loan Business Act are being pursued to allow infrastructure loan receivables to be sold not only to domestic financial institutions but also to overseas financial institutions.

To proactively discover and plan projects, overseas procurement information scattered across organizations such as the Overseas Construction Association and KIND will be integrated and provided. Korean translation services for laws and policies of major ordering countries, along with expanded support for legal, tax, and financial consulting, will also be enhanced. The government plans to actively participate in multilateral infrastructure cooperation systems such as the Global Infrastructure Investment Partnership (PGII) and to revitalize bilateral infrastructure cooperation networks by holding Korea-US public-private roundtables and Korea-China public-private cooperation forums within the year.

Furthermore, the interest rate on Economic Development Promotion Funds (EDPF) for projects with developing country governments will be lowered (from a maximum of 3.5% to 1.4%), and linkage between funds for complex development projects will be strengthened to support smooth financial procurement for Korean companies expanding overseas.

Unit 2 of the UAE Barakah Nuclear Power Plant exported by Korea

◆ Discovering Next-Generation Growth Engines... Mobilizing Diplomatic Capabilities = Diplomatic efforts to secure orders for nuclear power and eco-friendly projects will also be fully mobilized. Following the establishment of the Nuclear Power Export Strategy Promotion Committee on the 18th of last month, country-specific nuclear power order strategies have been prepared, and high-level diplomatic delegations are being dispatched to major nuclear power ordering countries such as the Czech Republic and Poland to support order acquisition.

The Export-Import Bank of Korea has signed basic credit agreements worth $50 billion with major energy and eco-friendly project clients in the Middle East and is additionally establishing a 40 billion won ‘PIS Fund’ (Plant, Infrastructure, Smart City Fund) to expand financial support for eco-friendly projects. For the Middle East, where large-scale orders are expected, the government plans to strengthen domestic companies’ negotiation capabilities through high-level diplomacy, including a visit to Saudi Arabia, and large-scale financial support.

Park Sun-ho, chairman of the Overseas Construction Association, said, “The overseas construction industry must pool its capabilities to export the best infrastructure worldwide and once again create the ‘K-Construction myth,’” adding, “Along with the government’s overseas infrastructure order activation strategy, the private sector is expected to actively engage in order-winning activities backed by government support policies.”

Meanwhile, on the 20th, Minister of Land, Infrastructure and Transport Won Hee-ryong held a meeting with Haifa bint Mohammed Al Saud, Deputy Minister of Tourism of Saudi Arabia, at the Shilla Hotel to discuss infrastructure cooperation between the two countries. Minister Won evaluated, “Saudi Arabia is a key partner country of Korea, having been the first Middle Eastern region where Korean construction workers entered in 1973 and ranking first in cumulative overseas construction orders,” adding, “Especially, the construction infrastructure sector is a foundation for joint development between the two countries.” In response, Deputy Minister Haifa said, “We hope for future mobility cooperation with Korea encompassing aviation, roads, logistics, and more.”

The Ministry of Foreign Affairs stated, “We plan to continue meetings with key Saudi figures using various opportunities such as the 92nd Saudi National Day (September 23),” adding, “We will actively support Korean companies’ order-winning activities by strengthening networks with Saudi Arabia going forward.”

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