By Yoo Choonsik
SINGAPORE (Reuters) - Commercial opportunities remain depressed around the world although higher oil prices could help Korean builders find business in oil-producing countries, a medium-ranked South Korean contractor said on Saturday.
Ssangyong Engineering & Construction Co. Ltd. expected revenue to grow some 20 percent next year thanks to contracts awarded as part of stimulus spending in many countries, its chairman and CEO, Kim Suk-joon, said in an interview.
"We will post sales of slightly less than 2 trillion won ($1.73 billion) this year and our contracts awarded this year will amount to around 3 trillion won," Kim said.
That is up from 1.51 trillion won in sales posted last year by the company, among the top 10 contractors in South Korea. Some 60 percent of Ssangyong's revenue comes from overseas contracts.
"There's still a cold spell in the private sector," he said during the interview on top of a 200-metre-high building his firm is building in Singapore, part of the Marina Bay Sands Hotel.
"I am worried because public-sector contracts will begin declining next year whereas private-sector business is not fully back to normal."
The remarks echo concerns among policymakers in South Korea and other Asian countries that private demand remains weak despite talk of a global economic recovery, and that it is premature to unwind loose monetary and fiscal policies.
Kim said rising oil prices in recent months were allowing oil producing countries to resume spending on new construction projects, helping brighten the prospects for Ssangyong and other South Korean construction companies.
"Oil producing countries in the Middle East usually plan on new construction projects when oil prices rise above $40 to $45 (a barrel). Now the oil price is at around double that level and they have some room in government finances," he added.
"More than 80 percent of contracts South Korean companies win (abroad) are related to oil production."
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Saturday, November 14, 2009
By Yoo Choonsik