Since the inauguration of the President Horacio Cartes in August 2013, Paraguay has quickly shifted away from agriculture and livestock farming dependent industries to open markets, attracting foreign investments. Since 2014 Paraguayan Government has been investing $1 billion annually, planning 17 vast projects. Over $300 million infrastructure development project, $250 million Asuncion
International Airport modernization project and $2.5 billion long-term water treatment project are currently lined up for Government’s construction request. In 2011 Ilsung Construction won Government’s first international construction bidding in Paraguay. Despite serious competition of eight companies from six countries, including Brazil and Argentina, Ilsung managed to succeed and penetrate Paraguayan market, turning it into a bridgehead to expand to all South America.
‘Korea Post’ interviewed Young-Gil Kang, CEO of Ilsung Construction, the first company in the domestic construction industry that entered Paraguayan market and unveil the growth history of Ilsung Construction, on the threshold of next year’s 40th anniversary of company’s establishment, and ‘Vision 2020’ of a company that aims to become a "Global Total Developer".
Question: First of all, would you please briefly introduce Ilsung Construction?
Answer: Our company was established in June 1978 as Ilsung Construction Works Co., Ltd. and changed its name to Ilsung Construction Co., Ltd. in 1997. Ilsung is a comprehensive construction company that provides variety of construction services ranging from civil engineering works such as highway, railway, subway and industrial complex development and construction, landscaping works, residential development works such as apartments, condominiums, new building construction; to SAOC and BTL projects, apartment reconstruction business, FED construction, overseas construction, and environmental plant construction. We are affiliated with Ilsung Development LLC and UCO Marketing Group Co., Ltd. Currently we have 5 subsidiaries in Mongolia, Paraguay and Myanmar, including Ilsung Development LLC, ISUB LLC, Ilsung Victoria Paraguay S.A. and Ilsung Construction Myanmar Co.
Q: Please tell us about your major construction projects to date.
A: Established in 1978, Ilsung Construction is a solid construction company that has been accumulating technological power for almost 40 years. Ilsung’s works has been widely recognized and received various awards, such as the Excellence Prize at the ‘Best apartment to live in’ Contest (2015) and an award from the Building Facilities Division of Korea Land & Housing Corporation (2014) etc. The 'True L', a representative apartment brand of Ilsung Construction, has been recognized as a top-class brand with high residents satisfaction level due to the complete configuration, specialized layout, and luxurious finishing materials, similar to those of big construction companies’ brands.
In fact, in the case of Haeundae Centum True L, supplied by Ilsung Construction last month, the average competition rate was recorded from 205.8 to 1 up to 386 to 1 on average. After the official start of sales 100% of lots were sold out which dragged a lot of public attention. In 2014 when we supplied the ‘Magok Naru Station Ilsung True L’ Officetel in Magok district, 100% lot sales were recorded within the first 3 month.
Among other projects there is a recent ‘Jeju Yon-dong Ilsung True L’, an officetel in Jeju, 260-30 Yon-dong, Jeju-si. It is an officetel ranging from 4 floors under ground to 18 stories above ground with 208 apartments from 31 to 43 square meters. Yon-dong is the center of Jeju's transportation, culture, tourism, etc., and it is the golden location for investment with a rental demand of over 40,000 people. Notably, since officetel vacancy rate is 0%, it is stable and has high profit rate, it is very popular among investors.
Q: Please tell us about the current status and future prospects of Overseas Projects.
A: Ilsung Construction also focuses on developing Southeast Asian market. In October 2016 we received a $ 40 million order from the Philippine Ministry of Transport (DPWH) funded by Japan International Cooperation Agency (JICA), one of the Official Development Assistance (ODA) funds in the Philippines. It is Central Luzon Link Expressway Package – construction of three 4-lane roads 9.2km long. In 2016 Rodrigo Duterte’s Government proclaimed the ‘Golden Age of Infrastructure’. The Government is planning to fulfill various infrastructure projects – airports, railways, sea ports, roads and new city construction. Also, this year Export-Import Bank of Korea, as one of the new core strategies, decided to target one of the Southeast Asian countries as an alternative to the Middle Eastern foreign construction business that has slowed down in the past years.
CLLEX Package 3 is based on stable financing of Japan International Cooperation Agency (JICA). Ilsung Constrution’s share is 72% and with Ilsung’s excellent building capacities and project management abilities implemented in this local project, it is possible for the project to proceed in a smooth and stable manner. Construction will take 36 months and is planned to be finished in the second half of 2019. Ilsung Construction is currently executing real estate and infrastructure construction projects in Mongolia and Paraguay. We are entering Philippine market and is further planning to expand to Vietnam, Cambodia and other Southeast Asian countries.
Q: Could you elaborate on the construction of the Paraguayan National Road No.8? What is this project’s background and current status?
A: In 2010, we extended our overseas business areas to Mongolia and Malaysia and gradually expanded our development fields. In 2014, we entered South American infrastructure market by winning a bid for the Paraguayan infrastructure construction project. It is a major project of Horacio Cartes’ Government that implies construction and maintenance of National Road No.8. It is 80 km 2-lane both ways road between Caazapa City and Yuty City. The road passes major cities, including Asuncion. It is also the first large-scale project that was open for international competitive bidding. We have been selected as a sole contractor and we are very proud that Korean company was the one to win this bid. It has a very special meaning to us.
Ilsung Construction is implementing its best construction technologies and when the project is completed in the first half of 2018 after 51 months of work, it is expected that it will contribute to the economy of Paraguay, where logistics mainly relies on road transportation.
Q: What are your plans on other projects in Paraguay?
A: Currently Ilsung Construction is also exerting efforts into follow-up infrastructure and development projects in Paraguay, related to the construction of the National Road No.8. In particular, in the case of the Bioceanica road project, that is about to be tendered in the near future, the project financing (PF) implicates that the contractor is responsible for all stages from financing to design and construction. We feel proud and responsible to be the first Korean construction company in Paraguay to challenge such large-scale infrastructure development projects. Apart from economic gains or losses related to this project, it is extremely important for us to succeed and leave a good impression, and thus open a gate for other international companies that would like to enter Paraguayan market. We will do our best in reaching this goal.
Last month, we also took part in a bid for a $70 million road construction project funded by JICA (Japan International Cooperation Agency), and bid evaluation is underway. We expect to get results in due time.
Q: What would be your other overseas market development plans?
A: Ilsung Construction is engaged in residential, commercial and infrastructure construction projects in Mongolia and Paraguay. We successfully launched our signature apartment complex brand “True L” in Mongolia and currently are working on the parking complex construction project.
Ilsung Construction intends to strengthen its presence in major markets such as Paraguay, the Philippines and Mongolia, and based on that to open new overseas markets in Southeast Asia such as Cambodia, Indonesia and Vietnam, as well as to expand to Central and South America and Central Asia.
Currently, the Hawaii Wastewater Treatment Plant Project is being carried out. This project aims to demonstrate the effectiveness of our wastewater treatment method within the US 25th Division in Honolulu. The State of Hawaii and the US government have recently approved implementation of the project and once the tests are proven, we plan to proceed with the plant sales contract.
Ilsung Construction is also working on the plant construction and maintenance project in Banting region of Malaysia. This project is aimed to transform the by-pass products of the palm oil production plant into energy (BPOM). We are expecting to sign the servicing and maintenance agreement of BPOM through the current J/Vfmf enterprise.
In addition to Government-funded enterprises, we also work on discovering various complex development projects and other infrastructure and diverse portfolio projects funded by EDCF, KOICA, ADB, WB and ODA to secure company's stable growth and support domestic market. One of our strategic directions is to cover external water treatment markets and environmental projects, such as Southeast Asian palm oil sludge processing project. On May 15, we signed a business agreement with four companies, including Korea Investment Management Co., Ltd on new and renewable energy sector development. We aim to elaborate fuel cell power generation and SRF incineration power generation businesses. In addition, we are planning to expand our business model through equity investment and EPC contracts. On the special occasion of next year’s 40th anniversary of company’s establishment, I do believe that Ilsung Construction would fly high to become a true ‘Global Total Developer’ in the years to come.