Korean contractor Samsung C&T this week signed a memorandum of understanding with Saudi Arabia’s sovereign wealth fund to build a factory making modular building elements in the kingdom.

Samsung’s agreement in principle with Saudi Public Investment Fund (PIF) was finalised during a meeting between Won Hee-ryong, South Korea’s land, infrastructure and transport minister, and Yasir bin Othman Al-Rumayyan, the fund’s governor.

The two will jointly invest in the plant, which may be used in Saudi giga projects such as the Qiddiya resort planned for Riyadh and “The Line”, a futuristic 170 km-long city in Tabuk, in the northwest of the country, which is part of the projected $500bn Neom City.

The agreement will allow Korean companies to establish a foothold in the mega project. The deal follows a visit by Crown Prince Mohammed bin Salman to Seoul in November last year.

Won told the PIF governor that Korean companies with experience in urban development and ICT were looking to step up cooperation with the fund in areas such as green hydrogen production and residential and urban construction.

He said: “Korean companies have been gradually strengthening cooperation with the PIF in green hydrogen production, development cooperation in Qiddiya, and housing complex and urban development projects.

“We hope that Korean companies with accumulative development experience and ICT technology could contribute to realise the Saudi Arabia’s Vision 2030 by participating in the Red Sea and Qiddiya projects.”

The agreement follows South Korea’s plan to help construction companies to win overseas contracts to the value of $50bn a year.

The aim is to promote the country’s construction and engineering industries, which have long suffered stagnation. Advance overseas orders fell from a peak of $72bn in 2010 to $31bn in 2021.