By winning a massive landmark housing construction project in Iraq, Hanwha Group not only notched up the highest-value overseas construction deal in Korea’s history but also solidified a long-term partnership with the Middle Eastern state.

Based on Hanwha’s reputation, other Korean builders, too, won potential opportunities to expand their businesses in the region and participate in the lucrative post-war reconstruction plan.

Group officials, however, are expressing concerns that the prolonged absence of group chairman Kim Seung-youn may affect bilateral ties and eventually thwart the possibility of additional orders.

They insist that, in Kim’s absence, the close cooperation of the government is thus crucial to maintaining the Korean firm’s hard-won initiative in the Iraqi market.

Last Friday, parliamentary speaker Kang Chang-hee took a detour during his trip to Central Africa and visited the construction site of Bismayah, where Hanwha is building a landmark district.

It was last year that the company signed an $8 billion contract with the Iraqi government to create 100,000 residential units in what is to become the largest satellite city of Baghdad.

This single order exceeded 10 percent of Korea’s total amount in overseas construction orders, according to officials.

“This order, which was the outcome of chairman Kim’s global leadership, established a bridgehead for Korean companies to participate in the Iraqi reconstruction project,” Kang said.

“By creating some 550,000 new jobs and achieving shared growth with some 100 cooperative companies, Hanwha also set a model example of a creative economy.”

Kang also met Iraqi Prime Minister Nouri al-Maliki to boost the countries’ bilateral ties and expand Korean companies’ business opportunities in the region.

“We, too, experienced war in the mid-20th century but overcame the distress and achieved fast industrialization,” Kang said.

“Korean companies, including Hanwha, have built up unique capacities in the field of reconstruction.”

The Iraqi prime minister, in response, expressed satisfaction over Hanwha’s achievements and encouraged Korean firms to participate in the country’s reconstruction, which involves a total budget of 300 trillion won ($267 billion) by 2017.

Sami R. Al-Arajji, chairman of the country’s National Investment Commission, said that the management vacuum would not affect the ongoing construction plans.

“Though we are sorry for the management vacuum, we believed that Hanwha and the Korean government had the full commitment to the reconstruction business in Iraq,” Al-Araji told reporters during his visit to Korea earlier this year.

“The incident (of Kim’s arrest and confinement) took place shortly after the signing of the contract and before the payment of the 10 percent advance but we decided to move ahead with the plan, trusting the feasibility of the project.”

Despite the optimistic words, however, Hanwha officials remain anxious over the absence of group chairman Kim Seung-youn, lest it deter future business opportunities.

In April, Kim was handed a three-year jail term for embezzlement and breach of duty. His sentence, however, was suspended for health reasons as Kim is currently receiving medical treatment at Seoul National University.

“Kim was the one who was determined to create a second Middle East boom in Iraq and visited the country over and over with the aim of closing the Bismayah deal,” said an official of the International Contractors’ Association of Korea.

“It is a pity that his absence is slowing down the possibility of additional orders, which may amount up to $10 billion.”

Back in 2010, the Iraqi government announced its National Housing Program to create 1 million new residential units and related infrastructure, as part of its long-term reconstruction plan.

The Middle Eastern country is planning to invest some $275 billion in housing, transportation, energy, information technology and security by 2017, according to officials.

It also established a comprehensive blueprint to expand its energy infrastructure by investing some $500 billion in oil refinery systems, power plants, roads and military facilities by year 2030.

With the reappointment of al-Maliki, the country’s political situation stabilized and its oil production increased, officials said.

“With the rise of the oil money in the region, competitors from China, India, Turkey and Europe are advancing into the Iraqi market,” said Kim Hyun-chung, vice chairman of Hanwha Group.

“Should this stalemate be prolonged, we may lose our hard-won business initiative to such rivals.”

By Bae Hyun-jung (tellme@heraldcorp.com)