The Korea Herald


Korea ranks 9th in construction competitiveness

By Shin Hyon-hee

Published : Jan. 15, 2012 - 21:08

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Korea’s global competitiveness in the construction sector took 9th place in a ranking launched by the government, underscoring its need to enhance transparency and design skills.

The Land Ministry said Sunday it has developed an index with the Korea Institute of Construction Technology to assess and compare the fundamentals of the industry as well as the capabilities of local builders between 22 leading economies.

The index takes account of four dimensions of each market ― size, growth rate, stability and risks. As for the companies, it focuses on their competitiveness in project execution, design and price, the ministry said.

The U.S. topped the list as it received high marks for its huge market size, low risks and innovative designs.

China came in second with an overall score of 91.4, trailed by Italy, the U.K. and Germany.

Korea earned high grades in price competitiveness and growth pace, but it lagged far behind in areas like market transparency and design competency, the report shows.

“Korean construction firms should make continuing investment in technology and diversify their project portfolio to win stiffening competition with China and other leaders,” said Sohn Tae-hong, a senior researcher at the GS Research Institute of Construction & Economy.

“Despite their increasing overseas orders, they have a long way to go to catch up with those in Japan or Italy in terms of technology.”

Builders led by Samsung, POSCO, Hyundai and GS have been aggressively expanding abroad in recent years, taking advantage of lower project costs relative to their growing technological clout.

At home, however, a chain of bribery, extortion and fraud involving contractors, public officials and their brokers has long plagued the industry, which accounts for almost 20 percent of the nation’s gross domestic product.

Early last year, the ministry was mired in corruption scandals after 17 officials were found to receive lavish entertainment from construction firms on the resort island of Jeju. A few days later, a senior official with the ministry was arrested for taking 32 million won ($28,000) in kickbacks from a real estate brokerage.

The government vowed to step up monitoring and penalties for any malpractice but progress has been slow, critics said.

“Corruption has been hindering the advancement of a sector that has high employment effects and a significant role in the national economy,” Kim Myung-soo, economics professor at the Catholic University of Korea, said in a report.

“We need to acknowledge the gravity of the problem and outline collective measures to stave it off in earnest.”

By Shin Hyon-hee