South Korean builders that have expanded into Iraq are closely watching the escalating unrest in northern Iraq, while drawing up measures for a possible long-term crisis.
Some of the companies operating in the area have evacuated on security concerns.
Seven employees of POSCO Engineering & Construction recently left the construction site of the Khabat Thermal Power Plant in northern Iraq.
The move came amid a recent upsurge in Iraq led by Islamic State fighters coupled with U.S. President Barack Obama’s decision to authorize airstrikes against Islamic State fighters in northern Iraq, which have thrown a damper on the builders’ business plans in the region.
“The U.S. decision for airstrikes may delay construction in Iraq, but most of the Korean builders’ construction sites are located in southern Iraq, so the companies won’t be affected by the crisis,” said Woo Jong-wha, a Ministry of Land, Infrastructure and Transport official.
Aside from POSCO E&C, no Korean firms are reported to carry out projects near northern city of Mosul, an area seized by the jihadist fighters with the Islamic State in Iraq and Syria.
“POSCO E&C instructed the employees to leave because Khabat is just 65 kilometers from Mosul. I believe that the situation won’t hugely impact on our schedule to complete the plant but we will wait and watch,” said Jun Dong-joon, a public relations official.
Hanwha Engineering & Construction, which won an $8 billion order in 2012 to build 100,000 houses in Bismayah, southeast of Bagdad, has not yet ordered its 500 employees to leave the construction site.
“We are carrying on as our construction site is more than 400 kilometers from the northern region,” said Jang Han-eui, a spokesperson for the company.
In June, the South Korean government advised South Korean construction companies to withdraw from regions captured by rebels or nearby areas.
Iraq is one of the biggest markets for Korean construction companies. According to International Contractors Association of Korea and the Ministry of Foreign Affairs, some 1,300 Korean workers from 20 Korean builders are working in Iraq. They are working on some 40 projects worth $24.2 billion.
Currently, some 930 Korean construction workers remain in Iraq.
Most of the business in the region remained intact as the majority of Korean construction sites were located at a far distance from the troubled northern regions of Iraq.
While immediate losses and damages were not detectable, experts warn of the possible negative impact of a protracted civil war.
“If the civil war continues for more than six months, the sales and profit of these companies will suffer,” a researcher at Hana Daetoo Securities said.
By Park Han-na (email@example.com