5 Trillion Won Unpaid for Middle East Projects... Construction Industry Under Strain

Office of Assemblyman Lee Jongwook: "Accounts for 70% of All Overseas Unpaid Receivables"


"Government Must Strengthen Support Measures in Preparation for Prolonged War"

As the war between the United States and Iran continues for the 11th day as of March 11, it has been revealed that South Korean companies have about 500 billion won in overdue receivables from construction projects in the Middle East as of last year. This amount approaches 70% of all overseas long-term receivables.

As the war between the United States and Iran shows signs of prolonging, it has been revealed that South Korean companies have overdue receivables exceeding 500 billion won from construction projects across the Middle East. Tehran, the capital of Iran, which was targeted in a U.S. airstrike, is covered in smoke. Photo by AFP Yonhap News Agency

According to data received by Assemblyman Lee Jongwook, a member of the National Assembly's Land, Infrastructure and Transport Committee from the Ministry of Land, Infrastructure and Transport, as of the end of June last year, South Korean companies had approximately $494.92 million (about 728.3 billion won) in overdue receivables from overseas construction projects where payments have been outstanding for more than one year.

Of these long-term receivables, $343.93 million, or 69% of the total, originated from the Middle East and neighboring regions. By country, the largest amount of overdue receivables was in Iraq, totaling $275.44 million. This was followed by ▲Iran $33.39 million ▲Libya $23.82 million ▲Bahrain $6.23 million ▲Jordan $2.65 million.

In the case of Iran, approximately $12.97 million in long-term receivables arose from a refinery improvement project, and an additional $10.85 million remains unpaid from a refinery expansion project ordered by a local state-owned construction company.

Notably, $210.03 million, or 42% of these long-term receivables, have not been collected for more than five years, making them classified as "bad receivables."

The Ministry of Land, Infrastructure and Transport identified disputes arising from differences of opinion between ordering parties and contractors, as well as a lack of funds on the part of the ordering parties, as causes for the occurrence of these receivables.

The industry is increasingly concerned that if the war between the United States and Iran is prolonged, not only will it be difficult to recover unpaid construction costs, but there could also be delays in ongoing projects across the Middle East, and a prolonged suspension of new orders in the Middle East, which is the largest market for South Korean construction companies.

Assemblyman Lee stated, "Overseas construction projects carry increased payment recovery risks depending on political and diplomatic situations between countries. Therefore, systematic management and response at the government level is necessary. We must strengthen measures to manage and support the recovery of outstanding receivables for our companies to prepare for the possibility of prolonged instability in the Middle East."

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