Despite the absence of a chairman at Hanwha Group, its landmark housing construction project in Iraq will proceed according to plan, said Sami R. Al-Araji, chairman of the Middle Eastern state’s National Investment Commission.

“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 Thursday.

Last August, group chairman Kim Seung-youn was handed a four-year jail term and a 5.1 billion won ($4.8 million) fine for embezzlement and breach of duty. Kim was, however, granted temporary parole on Tuesday for “serious health concerns” and is currently receiving medical treatment at Seoul National University Hospital in central Seoul.

“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,” Al-Araji said.

“Despite concerns and delays, we paid the money and moved ahead with the plan, trusting the feasibility of the project.”

Also, Hanwha made a “courageous” decision to enter the Iraqi market and to discover its potential, which will hopefully set a positive example for other Korean investors, he added.

The NIC chief, along with his crew of technical advisors, paid his third visit to Korea this week to sign a memorandum of understanding with the Korea Trade-Investment Promotion Agency and to review the new town project led by Hanwha Engineering and Construction.

Last year, the company signed the $8 billion contract with the Iraqi government to build 100,000 residential units by 2017 at the earliest in Bismayah, which is to become the largest satellite town of Baghdad.

The order also marked the largest-ever Korean overseas city development project, according to Hanwha officials.

“Investors are often concerned over public order but Iraq is actually a stable and secure country,” the Iraqi official also said.

“There may be protests here and there but what you see on television is highly amplified.”

Despite the hurdles and risks, Iraq is a lucrative market with potential for sustainable growth, he added.

“Even today, Iraq is one of the top 10 suppliers of natural gas and oil, which will continue to add revenue to the state’s treasury,” the NIC chief said.

“This money will be used to rebuild Iraq, and any capable Korean firms are welcome to participate.”

The Korean government, too, pledged to actively support the Bismayah construction project to enhance diplomatic and economic ties between the two governments.

“The project may have been initiated by Hanwha E&C but its result will also affect our entire national image,” said Kim Hyun-myung, the Korean ambassador in Baghdad.

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