Saudi Arabia's Crown Prince Mohammed bin Salman enters Cheong Wa Dae in Seoul for his meeting with then President Moon Jae-in in this 2019 file photo. Newsis

Saudi Arabia's crown prince unlikely to visit Seoul this fall

By Park Jae-hyuk

Concerns have emerged once again over potential risks inherent in construction projects in the Middle East, since Saudi Arabia's Crown Prince Mohammed bin Salman is said to be skipping his visit to Korea, which was expected to take place next month.

Citing diplomatic sources, a local media outlet reported Monday that the Middle Eastern country's de facto leader decided to visit Japan only, after attending the two-day Asia-Pacific Economic Cooperation (APEC) summit in Bangkok between Nov. 18 and 19.

The reason behind the cancelled visit to Korea remains unknown, but the abrupt decision has been attributed to Saudi Arabia's conflict with the U.S. over crude oil production and Busan's competition with the Saudi Arabian capital of Riyadh to host World Expo 2030.

Korea's Ministry of Land, Infrastructure and Transport is continuing efforts to create a second construction boom in the Middle East and the Saudi crown prince was initially expected to visit Seoul in November to talk with President Yoon Suk-yeol about hiring Korean builders for infrastructure construction projects in the NEOM smart city near the Red Sea.

Expectations have increased for Korean companies to play a major role in the $500 billion project to build a new city on a 26,500-square-kilometer site, since Land Minister Won Hee-ryong met with Saudi Princess Haifa bint Mohammed Al-Saud last month and NEOM Chief Investment Officer (CIO) Manar Almoneef in August in Seoul to discuss cooperation between the two countries for the mega project.

Finance Minister Choo Kyung-ho also met with his Saudi Arabian counterpart, Mohammed bin Abdullah Al-jadaan, at the International Monetary Fund's (IMF) headquarters in Washington, D.C. last week to ask the Middle Eastern country to allow Korean builders to participate in forthcoming large-scale projects there.

In addition, SM Entertainment founder and chief producer Lee Soo-man has helped promote interest in and establish deeper ties with Korea by planning a K-pop concert in Saudi Arabia.

The news report regarding the crown prince's cancelled visit to Korea has therefore frustrated investors in Korean construction firms, dragging down the stock prices of Hyundai E&C, Samsung C&T and HanmiGlobal during trading on Monday morning.

In June, a consortium including Samsung C&T and Hyundai E&C won a $1 billion order to build a tunnel for NEOM's "The Line" project. HanmiGlobal is the construction manager.

"We have focused on winning orders for the project," Hyundai E&C CEO Yoon Young-joon told the land minister in August, indicating his company's intention to win additional orders for other construction work regarding the NEOM project.

Experts advised Korean builders to take into account geopolitical uncertainties when pushing ahead with large-scale projects in the Middle East. In 2013, multiple Korean builders suffered huge losses in the region, due to falling oil prices at that time.

"It is more important for domestic builders to choose profitable projects, rather than trying to win as many orders as possible," Korea Investment & Securities analyst Kang Kyung-tae said.

Earlier this month, Hanwha E&C announced it decided to withdraw from the $10 billion Bismayah project to build a new city in Iraq, citing the Iraqi National Investment Commission's delayed payments.

When the builder announced 10 years ago that it had won the $10 billion project to build the new town southeast of Baghdad, it initially had planned to finish construction by 2020. However, the completion was deferred to 2027, due to the unstable political situation in the Middle East and delayed payments from the Iraqi government.

When contacted by The Korea Times, the Embassy of Saudi Arabia in Korea was not immediately able to comment on the news report and told The Korea Times it would respond after "verifying" the facts.