2023 Israel-Hamas War started on October 7, 2023. After Iran’s missile attack on mainland Israel, tension in the Middle East is rising as it is believed that Israel will respond to this attack. Like what happened in the Russia and Ukraine wars, companies are starting to withdraw from the war area. Currently, virtually all of Iran has been withdrawn as international sanctions led by the United States have made it difficult to proceed with the project.
According to the Ministry of Land, Infrastructure and Transport and the Overseas Construction Association on the 19th, BHI, a power generation equipment company, was currently under construction in Israel. The construction site was far from the target area of Iran’s missile and drone attacks. However, BHI and its subcontractors will reportedly withdraw from Israel as soon as the test operation of the generator is completed.
In the case of Construction Company A, they will leave only one local employee in Iran, but this time they decided to withdraw fully. Also, there are a total of 87 domestic construction companies operating in Middle Eastern countries. These construction companies are watching the situation. If they find any signs that indicate the expansion of war. They will also have to withdraw their staff.
Saudi Arabia and the United Arab Emirates (UAE) are the major buyers in the Middle East for Korean construction firms. However, if the war expands, the construction projects and new orders in the Middle East will affect their decisions.
Construction companies expect that the war between Israel and Hamas will spread to Iran. Like the war between Russia and Ukraine. They believe this will continue to have direct and indirect effects due to instability in the supply and demand of raw materials and rising international oil prices.
According to the Overseas Construction Association, Korean companies’ overseas construction orders in the first quarter of 2023 were $5.518,917 million. A large part of the Korean company’s overseas construction orders in the first quarter of this year occurred in the Middle East ($2.43.393 million). The withdrawal of construction company staff from Israel would negatively impact the overseas construction orders.
South Korea can send companies outside of Korea to decrease the damage. However, because the Middle East took the biggest amount in South Korea’s overseas construction orders, it won’t be enough.
By. Jiheon Ryu