Korean and Indian Engineers Make Middle East their Second Home

Korean construction firms are greatly benefiting from Middle East demand for their services. For South Korean companies this is being termed the second Middle East boom, coming after the first in the late 1970s and early 1980s, when Korean companies developed numerous infrastructure projects across the region.

Korean engineering and construction companies were awarded USD11.4 billion of contracts in the Middle East in 2023, according to the International Contractors Association of Korea - a trade body. These include SATORP’s USD5.1bn Amiral project mandated to Hyundai E&C, Saudi Aramco’s USD2.4bn Jafurah Gas Processing Plant project mandated to Hyundai E&C and Hyundai Engineering, and UAE EWEC’s USD540m Shuweihat 4 Desalination project mandated to GS Inima. This is an increase of 26.8% over the same period last year. Indeed in the first quarter of 2024, 44% of the total global contracts for Korean infrastructure builders came from the Middle East, highlighting the ongoing importance of the region to the Asian country.

In April 2024, Samsung E&A and GS E&C won a USD7.2 billion contract for the Fadhili Gas Increment Program in Saudi Arabia – which was the largest construction project ever awarded to a South Korean company in Saudi Arabia. Meanwhile, Korean companies are also close to completing landmark engineering projects that will transform the region's fabric. These projects include the Riyadh Metro project, launched in 2013 and set to open imminently, of which Samsung C&T has been a key contractor.

The engineering arm of one large Indian conglomerate has also enjoyed an increasing share of its global order book and revenues coming from the Middle East. As of 31st March 2024, 35% of all its order book came from the region, while 92% of all its non-Indian orders were from the Middle East.

This conglomerate has recently been heavily involved in the regional renewable energy sector as an engineering, procurement and construction (EPC) contractor for the various solar parks under development that will power both communities and industries alike. In the past four years, the group has secured multiple EPC contracts from government-related entities across the Middle East region, with a combined value in excess of USD5 billion.

The Middle East continues to be a vital source of business for the company and one that looks set to continue. "Our belief is that the investment in Middle East will continue," says one of the conglomerate’s senior executives. "Unlike the previous years, the investment in Middle East is more broad-based. It's not only hydrocarbon, it's also into infrastructure building and developing Middle East as a destination for varied tourism...So, between the infrastructure they need to build and the energy that they need to generate for the infrastructure and also the downstream investments that they do in petrochemical and related areas, [we] would see continued thrust."

HSBC is well equipped to support this kind of Korean and Indian engineering expansion into the MENAT region - though transaction banking, trade finance, cash management and FX. HSBC’s footprint allows Korean and Indian engineering companies that are expanding in the Middle East to set up and complete contracts on time and with sufficient funds and security for the counterparty, ensuring successful project outcomes and furthering business ties between the two regions.