Fatima Muhammad Saudi Gazette JEDDAH — Experts assert that the Kingdom does not have enough local qualified contracting companies, leaving major contracts to remain in the hands of a few companies without a chance for small and medium companies. International companies could venture in and operate in the Kingdom, but some believe that foreign contractors fail to finalize Saudi projects due to differences in systems and procedures applied locally. Samir Al-Shubaily of Arabian Roots Group told Saudi Gazette that foreign companies in general have failed to undertake projects here. Efforts to merge smaller Saudi companies to overcome the lack of qualified contracting companies were also proved unsuccessful. He estimated the number of companies that are unqualified to take major contracts to be at 70 percent of the total contracting companies in the Kingdom. At the end of the day, said Al-Shubaily, the organization that needs the project completed will look only for qualified contractors and will not seek start-up companies that may lack enough manpower or qualifications. The increasing demand on project contractors is reflected in the value of contracts, said Al-Shubaily. A contract that could be signed for SR40 million a few years ago is now offered at SR400 million. The demand for contractors will remain at a peak during the next seven years, said Al-Shubialy. Small and medium companies are not offered grand contracts. At the same time, they face credit facility issues, as banks tend to be reluctant to give them loans, added Al-Shubaily. According to economist Abdullah Al-Maglouth, the country has allocated SR250 billion for construction projects in the coming years. This can support and enhance the contracting sector and can as well provide job opportunities. However, the Ministry of Labor's recent decisions can paralyze the growth in this sector due to lack of skilled workers. The projects that are underway in the Kingdom, said Al-Maglouth, are huge and cannot be carried out by small companies. He believes that in order to compete in the market, these companies need to enhance their financial resources as well as skilled manpower. One option before small companies is to pool their resources by merging their operations, he added. The Saudi construction market is expected to grow at a rate of 32-35 percent year-on-year until 2015, according to a recent study.
