JEDDAH: The Saudi construction companies will be able to absorb the huge Saudi government spending for housing and infrastructure, thereby preventing price inflation of raw material, labor and equipment, industry leaders who participated at the recently concluded "Saudi Construction Show 2011" held in Riyadh, said. The exhibition was a success based on the record number of participants and visitors. The robust industry is also a big boost to heavy machinery and equipment rental market, which is estimated at SR1 billion a year. The Ninth Five Year Plan (2009-2014), aims at, among others, achieving an average annual growth in the construction sector of approximately 7.2 percent, and increasing the local production of building materials at an annual average of between 8-9 percent. And amid a steadily growing industry as demand rises, some industry observers said that the time is ripe for Saudi contracting firms to launch initial public offerings. Abdul Rahman Al-Suwailem, chief executive officer, Mohamed Al-Swailem for Trading and Contracting (MASCO), one of the participants in the exhibition, said the time has come for the transformation of companies operating in the construction sector into open joint stock companies … to overcome the difficulties faced by closed joint stock and limited companies, including the ability to grow and expand further, and through other companies via acquisition or the establishment of partnerships with other companies to form large entities able to work on local and regional level as well, which gives companies the construction sector's ability to absorb large existing projects, and projects that will be in the next few years. Formation of large companies through acquisition or the establishment of partnerships with other companies will give companies the ability to absorb large existing projects, and projects that will be in the next few years, he added. Engineer Suwailem further said that the tools offered by the transformation into an open shareholding company will provide adequate funding, adding that the amount of construction projects as a result of recent royal decrees, make the presence of a large base of national companies working in the construction sector to be able to handle large budgets, thus avoiding the market risk of price inflation of raw materials. He pointed out that "this time is the ideal time for the transformation of construction companies to companies listed on the Capital Market Authority." Moreover, transformation into a shareholding company listed in the capital market would spare the family businesses of the risks of sliding. Suwailem hinted that most family businesses in the world doomed to disappear in one form or another as a consequence of transition to an open joint stock company listed on the Capital Market Authority. Engineer Wael Abu Samha, director of sales of heavy equipment in the central region company Zahid Tractor, noted that the greater involvement of Volvo and Caterpillar in the exhibition exceeded the size of the market rental of heavy equipment (over 20 tons) which represents $267 million per year as the Saudi construction sector sustained growth in the Kingdom in the last five years. The recent exhibition further showed that the industry's construction supply equipment is huge though facing enormous challenges, due to above normal growth of the sector, "causing a state of confusion for workers in this sector." Engineer Saad Al Shamari, executive manager of the Saudi Construction Show Center, added that "perhaps we can accommodate an annual growth rate up to 10 percent, and maximum of 20 percent. But if the figure reached to 40-45 percent per annum, or 50 percent in some years, the rates would be "confusing." Consultant engineer Faisal Alfadl, chairman of the organizing committee for the exhibition, said "the exhibition comes to view the latest equipment, products, services and technologies in the industry worth in excess of SR1 billion," adding that the social initiatives undertaken by King Abdullah, Custodian of the Two Holy Mosques, to provide hundreds of billions of riyals to support development projects in the country and the construction sector in Saudi Arabia overcome the difficult challenges in the market. The recent show, the largest-of-its-kind in the region, was hosted by Architect Faisal Alfadl, secretary general of Saudi Green Buildings.
