[Changing Landscape of Overseas Construction③] The Biggest Barriers for 'Global Developers' Are Capital and Risk Burdens

More Than 90% of Overseas Orders Remain Traditional Contracts and EPC

"KIND Acts as a Catalyst for Policy Financing and Equity Investment"

While domestic construction companies have begun transforming themselves into global developers, the biggest obstacles remain their financial capacity and risk burden. Due to a lack of cash for initial investment, these companies have not actively engaged in investment development projects that span from planning to operations. As a result, investment development projects have yet to reach a stable trajectory.

According to the Overseas Construction Association as of September 9, the share of investment development projects in total overseas construction orders has shown significant fluctuations. The proportion rose from 8.1% (USD 810 million) in 2019 to 13.9% (USD 5.17 billion) in 2024, but fell back to 3.7% (USD 1.76 billion) last year. In the first half of this year, it stood at 2.5% (USD 290 million). Over 90% of overseas order volume is still handled by simple contracts or engineering, procurement, and construction (EPC) methods.

The reason investment development projects require both financial strength and risk-taking is because they demand expertise ranging from project discovery to financial support. For domestic construction firms that have traditionally grown based on construction capabilities and technology, this approach represents an entirely new challenge.

Reflecting global trends in overseas construction, Korea Overseas Infrastructure & Urban Development Corporation (KIND) was established in 2018. An official from the Ministry of Land, Infrastructure and Transport stated, "The purpose was to supplement the investment capacity of domestic companies in line with the growing trend of overseas clients demanding investment participation in projects."

Whereas previously KIND had only participated as a co-investor in investment development projects discovered by domestic firms, this year the corporation has taken the initiative by launching a "top-down" approach—directly discovering large-scale overseas projects and then proposing them to domestic companies.

According to KIND, the corporation is currently pursuing major overseas projects such as 31 new and renewable energy projects, 49 urban development projects, and 7 petrochemical projects. In the new and renewable energy sector, active projects include Japan's high-voltage Battery Energy Storage System (BESS), the Concho Valley solar power project in the United States, and the Tangkam BESS in Australia.

At the 'Delphin FLNG Unit 1 Contract Signing Ceremony' held in Washington D.C., USA, in June this year, (from left) Dudley Poston, CEO of Delphin Midstream, Jason Calisman, CEO of Talisman Group, Kyungwha Kang, Ambassador to the United States, Steve Carmel, Director of the U.S. Maritime Administration, Seongan Choi, Vice Chairman of Samsung Heavy Industries, Kyle Haustbyte, Deputy Assistant Secretary of the U.S. Department of Energy, and Jaekyun Yoon, Head of Sales at Samsung Heavy Industries, posed for a commemorative photo. As a project to produce LNG off the coast of the United States, our public institution participated as a financial investor in the BlackRock fund leading the business to support contracts for our company. Provided by Samsung Heavy Industries

In the urban development sector, notable projects include residential complexes in Louisiana, economic cooperation industrial complexes in Vietnam, and a data center in Jakarta, Indonesia. Representative petrochemical projects include the FLNG project in Louisiana, an ammonia production facility in Indiana, and a subsea pipeline in Mexico. Industry experts believe that if additional policy financing and equity investment centering on KIND are expanded, domestic companies will have greater opportunities to emerge as global developers.

Han Manhee, President of the Overseas Construction Association, commented, "Investment development projects are difficult to compete in with just construction capability; 'Team Korea,' where project discovery, development, finance, and investment are organically integrated, plays a critical role." He added, "We increasingly see cases where KIND discovers and develops projects and links investments, with policy finance institutions such as the Export-Import Bank of Korea and Korea Trade Insurance Corporation supporting private financial institutions."

Son Taehong, Head of Construction Technology and Management Research at the Korea Institute of Construction Industry, pointed out, "Unlike the oil-rich Middle East, regions like Africa and Central and South America have insufficient cash and hence require investment development projects." He continued, "However, Korean companies still lack capabilities in financial structuring or fundraising." He emphasized, "Unlike simple contracts, investment development projects still have relatively few competitors, so the government and KIND must take a more active leading role until private domestic companies build competitiveness."

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