Hanwha gains strong foothold in Iraq

An artist’s illustration of the city development project of Bismaya, 10 kilometers south of Baghdad. Hanwha Engineering and Construction (Hanwha E&C) clinched an $8 billion construction order in May to build the city, the biggest ever overseas contract for a Korean company. / Courtesy of Hanwha E&C

Bismaya project win-win option for both parties

Hanwha Group has rekindled Korea’s building boom in the Middle East with its construction arm successfully gaining a strong foothold in Iraq by winning an order for a mega development project there.

In May, Hanwha Engineering and Construction (Hanwha E&C) won an $8 billion order for a new city development project in Iraq, the largest ever that a Korean builder has clinched from a foreign country.

Hanwha E&C Vice President Kim Hyun-joong signed the deal to develop a satellite city in Bismaya, 10 kilometers south of Baghdad, with Sami R. Al-Araju, head of Iraq’s national investment agency on May 30.

Hanwha Group Chairman Kim Seung-youn and Iraqi Prime Minister Nouri Al-Maliki also took part in the signing ceremony held at the latter’s office, demonstrating the importance of the project both for the company and the country.

“I am sure that Bismaya will be a place of hope for the Iraqi people. I hope that we can be a faithful partner of the country by cooperating in various businesses,” said the chairman Kim in the ceremony.

The Bismaya project is to develop a new city that is 18.3 square kilometers in size, similar to Bundang in Gyeonggi Province. The Korean builder will construct a whole new city by establishing wide avenues and waterways as well as 100,000 houses. These will be classified into three types — 100, 120 and 140 square meters — which combine traditional Islam culture and modern style.

Hanwha said it will use a precast concrete method to shorten its construction period. This is a construction product produced by casting concrete in a reusable mold or “form” which is then cured in a controlled environment, transported to the construction site and lifted into place.

The project is a seven-year “design and build” one in which a single company is in charge of all of the key processes.
Experts say that it is a win-win method both for the Iraqi government and the company as the former could reduce the order price with the one-stop project, while the latter could gain a foothold in the region, which has enormous potential for construction.

The total construction order is worth $7.8 billion, and a quarter will be paid in advance. The total order is expected to reach $8 billion as the contract includes a clause for inflation guaranteeing the cover of increased expense of commodity prices and wages during the construction period.

Hanwha said the project will help small- and medium-sized Korean companies as about 100 suppliers and 1,000 employees are expected to contribute to the project. The firm said it is a good example of so-called “shared growth.” The Lee Myung-bak government has urged big companies to share profits with their small suppliers in a move to create a more balanced society.

Analysts say that Hanwha clinched a big deal stimulating its rivals. Korean builders have sought to enter overseas markets aggressively as local markets are saturated due to fierce competition and the sluggish housing sector. The nation’s real estate market is frozen, hit hard by the global financial crisis of 2008, and experts say recovery won’t take place in the near future.

Iraqi football team prepares for World Cup match here

Hanwha Engineering and Construction said Sunday that the company is sponsoring the Iraqi national football team by paying for the use of a local stadium ahead of its World Cup qualifying match against Japan later this month.

The construction affiliate of Hanwha Group said the Middle Eastern team arrived in Korea Saturday and the company will pay all the team’s expenses for a nine-day training period until Sept. 9 in Cheonan, South Chungcheong Province.

Hanwha expects the sponsorship effort will strengthen its ties with the country. In May, it won an $8 billion construction order to develop Bismaya, a satellite city of Baghdad, the biggest construction order ever for a Korean builder overseas.

“We will do our best to earn the trust of the Iraqi people by completing the Bismaya project perfectly and supporting the country with various activities,” said Koh Kang, a director of Hanwha.

Twenty-five Iraqi footballers and 17 accompanying staff — have arrived here, including the team’s head coach Zico, a former Brazilian star who also managed the Japanese national football team from 2002 to 2006.

The Iraqi team will play a friendly against K-League side Sangju FC to boost its players’ performance ahead of the qualifier against Japan.

Hanwha said its chairman, Kim Seung-youn, suggested the idea of assisting the Iraqi team in a July meeting with the country’s Prime Minister Nouri Kamil Al-Maliki in Baghdad. Kim offered to invite the national team to Korea as the country has a similar climate to Japan.

Iraq shares second place with Australia behind Japan in Asia Group B for the 2014 Brazil World Cup with two draws. <The Korea Times/Kim Jae-won>

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