South Korea’s overseas construction industry has joined semiconductors and automobiles by reaching the $1 trillion mark in cumulative orders. The Ministry of Land, Infrastructure, and Transport (MOLIT) announced that overseas construction contracts amounted to $37.1 billion in 2023, achieving the highest annual total since 2016. This figure represents an 11.4% year-over-year increase, showcasing the sector’s continued growth.
A Historic Achievement 59 Years in the Making
The journey began in 1965 when Hyundai Construction ventured abroad to build the Patani-Narathiwat highway in Thailand. Fast forward 59 years, South Korea’s overseas construction industry has hit a remarkable milestone, becoming the third export sector to achieve $1 trillion in cumulative contracts, following semiconductors and automobiles.
Key Statistics
- 2023 Overseas Construction Orders: $37.1 billion
- Cumulative Total: $1.009 trillion
- Three-Year Growth Trend: $30.6 billion (2021), $31 billion (2022), and $33.3 billion (2023)
Diversification and Structural Shifts
1. Expanding Regional Presence
Historically concentrated in the Middle East and Asia, the sector has recently expanded to North America, Europe, and the Pacific region:
- Top countries (past three years): Saudi Arabia (24.5%), the U.S. (16.9%), Qatar (6.4%), Indonesia (4.8%)
- 2023 Regional Breakdown:
- Middle East: $18.49 billion (49.8%)
- Asia: $7.11 billion (19.2%)
- Europe: $5.05 billion (13.6%)
2. Industry Evolution
Initially focused on civil engineering and building construction, the industry now thrives in plants and industrial facilities, accounting for 52.4% of total orders. Engineering and service contracts are also on the rise, further diversifying the portfolio.
Government and Corporate Synergy
1. Boosting Investment and Development Projects
The combination of government support and corporate interest led to a 3.5-fold increase in investment and development projects, totaling $5.17 billion in 2023 (13.9% of total orders).
- Key initiatives include:
- KIND (Korea Overseas Infrastructure & Urban Development Corporation)
- PIS (Plant, Infrastructure, and Smart City) Fund
2. Leading Companies and Landmark Projects
- Top-performing companies (cumulative): Hyundai Engineering & Construction (14.5%), Samsung C&T (9.2%), Samsung Engineering (9.0%)
- Major projects in 2023:
- Saudi Arabia’s Fadhili Gas Expansion ($7.3 billion)
- UAE Barakah Nuclear Plant ($19.13 billion)
- Iraq Bismayah New City ($8.03 billion)
Korea’s Global Leadership in Construction
Since 2012, South Korea has consistently ranked 1st or 2nd in global construction trade balances. In 2023, South Korea led the 20 largest economies in construction trade as a percentage of both current account surplus (13%) and nominal GDP (0.24%).
Construction Trade Metrics
- Trade surplus as a share of current account surplus: 13%
- Trade surplus as a share of nominal GDP: 0.24%
Looking Ahead: A Vision for Growth
Minister Park Sang-woo stated, “Our companies are evolving beyond traditional construction to explore new growth engines, such as urban development and railways.” With initiatives like K-City and K-Rail, South Korea’s overseas construction industry is poised to lead the way into a $2 trillion era, strengthening its position as a key pillar of the national economy.
Source Korean Policy Briefing (www.korea.kr)
