$1 Tn Worth Of MENA Jobs In 2006-15; Big Boom For Korean Contractors.

The scale of the oil-fuelled boom in the MENA region, particularly in the six-country GCC area and Libya and Algeria, is unprecedented. Industry experts estimate MENA has more than US$1 tn worth of construction projects for foreign contractors over the next 10 years. And South Korean builders are riding the boom.

There is an acute shortage of engineering, procurement and construction (EPC) contractors. The demand for turnkey EPC contractors in these eight MENA countries is rising further. There is a shortage of skilled manpower, which has caused contractors' prices to keep rising. South Korean builders are in a premium position as they provide all the elements necessary for the project to be completed on time, including the skilled human resources.

Shares in South Korean construction firms have more than doubled this year helped by booming orders for oil facilities in the eight MENA countries. Iran, however, is a world of its own as the country suffers a budget deficit; a radical faction of the Islamic Revolutionary Guards Corps. is taking over the sectors of petroleum and petrochemicals. Iran is no longer as attractive a market for foreign contractors as it was before newly-elected Ahmadi-Nejad came to the presidency in early August (see newsIranIRGCDec19-05).

South Korean contractors are well placed for further gains given their low valuations. But Seoul government measures to cool the property market at home and tougher competition from China and India for labour intensive road and housing projects within South Korea could put up roadblocks. South Korean builders had their fingers burnt in the MENA before and are still owed more than US$1.8 bn from projects commissioned by Iraq before the Gulf War.

Kim Dong-joon, an analyst at Goodmorning Shinhan Securities, last week said: "Domestic orders could fall next year following the government's anti-speculation measures announced in August, but booming demand from the Middle East will help builders post better earnings". Buoyed by the outlook for overseas orders, the construction sector's sub-index has more than doubled so far this year, outstripping even a 49% gain on the wider market.