-Building up a solid business-
and energy projects are under way as local developers compete
with their international counterparts
New construction projects are under way all the time in Saudi Arabia, from roads, houses and commercial centres to complex medical facilities. The sector not only accounts for about eight per cent of the kingdom's gross domestic product (GDP), but also provides jobs for some 15 per cent of the workforce.
Among the major projects planned is the expansion and modernisation of King Abdul Aziz International Airport in Jeddah, including the building of two new terminals for international and domestic flights. Another big scheme is Saudi Aramco's construction of the huge Haradh gas development plant in the east of the kingdom, which will process 1,400 million cubic feet a day, at an estimated cost of $2 billion. Infrastructure projects are an important part of the construction industry. Dr Abdullah bin Abdel-Aziz bin Muammar, the minister of agriculture and water, recently announced a government decision to build more than 600 dams across the kingdom, including three large ones at Wadi Alalith, Wadi Rabeya in the Mecca region, and Wadi Khali in the Asir region.
One area in which there is significant construction activity is the health sector. In recent months, the German-Saudi Medical Centre Construction Group announced that it was creating medical complexes in five cities across the kingdom: Jeddah, the Asir region, Riyadh, Medina and Kheil. The Al Maghrabi Hospitals and Centres has signed a contract for the opening of the first specialised eye and ear hospital in the Southern Region in Khamis Mushait. The construction companies are almost entirely privately-owned and vary greatly in size. Some are extremely large groups operating joint ventures with foreign companies, while others are small, loosely-organised builders' cooperatives.
The government is the most important client, because of its role in commissioning infrastructure projects, and it has also acted to promote Saudi firms by requiring that 30 per cent of any construction project awarded to a foreign company is sub-contracted locally. One of the most important Saudi organisations is the El Seif Group of companies, whose activities range from construction to healthcare, both in Saudi Arabia and elsewhere in the Middle East.
One of its component parts is El Seif Engineering Contracting, whose projects include commercial centres, hospitals, residential developments, technical facilities and military installations. Two huge projects, which the company is currently undertaking are in Riyadh. One is the Al Tameer Centre, a shopping complex that will be one of the largest in the Middle East.
The other is the Kingdom Centre, which will be more than 300 metres (984 ft) high, and one of the tallest and most modern business and commercial complexes in the region. "Construction has always been an open sector in Saudi Arabia, with no subsidies for Saudi Arabian contractors or beneficial treatment. So we learnt from the start that it is a matter of competition," says Khaled Musaed El Seif, president of the El Seif Group. "In the past, it was only international construction companies that were awarded the specialised jobs. But now we compete in every area and export our services to other countries in the Middle East and Africa."
-Foreign firms are required to employ local contractors-
Another of the large Saudi groups is Ahmad Albinali & Sons, which was first set up in 1937 as a civil contractor to Saudi Aramco and has now diversified its activities into a number of other areas, particularly telecommunications. "In 1985-1986 we looked for further opportunities, and we discovered that communications was a good thing to get into," explains the company's president, Samir al-Binali. "Construction is still our primary business, but the profit margin is not as good as it is in the communications industry."
The company has joint venture agreements with Entrepose Montalev of France and Kvaerner John Brown Ltd of the UK, and it is keen to promote further international cooperation. "What we really need today are the technology companies. If we look at the superhighway technology, this is the future of the whole world," Mr Al-Binali says. "There is great opportunity in the communications industry. We still need a lot of communication in this country, from superhighway communications to regular voice communications. The industry is growing so fast."
Mr Al-Binali says that the large British companies know Saudi Arabia well. "What we need is for the big companies to give the message to the small companies in the UK, and tell them of their experiences in Saudi Arabia. "This is an opportunity that will not come again, and the time is now. We will not keep the door open for every-body forever. One day we will say that we have enough foreign companies in Saudi Arabia."