Hassan Abdel Aziz, head of the Egyptian Federation for Construction and Building Contractors, told the Daily News Egypt that Egyptian contractors have been awarded a total of over SAR 1.5bn (approximately $400m) worth of contracts in the Saudi market over the past three years, which is the “lion’s share”.
With at least 150 Egyptian key contracting firms operating in the kingdom – the largest Arab economy – Abdel Aziz said the toughest challenge facing these firms is the requirements to have 10% of their technical team of Saudi origin, which is something the federation is working on easing.
How many Egyptian firms in the contracting sector are currently operating in the Kingdom of Saudi Arabia?
There are 150 key firms operating in the kingdom. These include those who bid unilaterally and independently in tenders, and conduct them on their own, as well as those who bid as part of a partnership with a Saudi firm, and sub-contractors. There are many other contracting companies who operate in the market by handling smaller aspects of a contract, such as plumbing or others.
What is the size of the deals and contracts that these companies handle in the Saudi market?
The value of the contracts handled by Egyptian contractors in Saudi is no less than SAR 1.5bn ($400bn) over the past three years. This shows that we had the lion’s share in the Saudi market, bearing in mind that the total value of contracts awarded in the kingdom last year alone was around $200bn. Our presence in this large market is quite satisfying.
What are the main obstacles that face Egyptian contractors operating in the kingdom?
There are certain requirements demanded of Egyptian contractors by Saudi authorities, which they find difficult in fulfilling, but we’re trying to negotiate middle grounds. An example of such conditions is that no less than 10% of the firm’s employees are Saudi, which is a challenge. For instance, this means that out of 1,000 workers, 100 are Saudis, and there are certain professions which Saudis refuse to do. You can find a Saudi engineer or accountant, but not a builder or plumber. This is something we’re trying to negotiate with Saudi officials.
How about some other complaints which contractors have voiced, such as having to provide insurances, like bank guarantees?
Such complaints are baseless. Bank guarantees are required of all contractors in any part of the world.
There have been reports of the federation’s attempt to create a unified classification for Arab contractors, in order to enable firms in this sector to create pan-Arab partnerships, and be involved in projects across the region. Has any progress been made on this front?
Unfortunately, we have completed the unified classification and have repeatedly presented it to the Council of Arab Housing ministers. However, the proposal did not progress any further, due to some Arab countries having certain reservations.
Which countries exactly, and why?
It’s mostly Gulf states who oppose it. They feel strongly about their classifications and have concerns about changing them. But when it comes to the largest market for us, which is the Saudi market, we achieved a breakthrough after the late Saudi King Abdullah bin Abzulaziz Al-Saud issued a decree allowing Egyptian contractors, who are locally classified in the A category in their specialised fields, to compete against Saudi firms in tenders. This is a massive success, and reflects our strong presence in the kingdom’s market.
What will be the next demand you will try to pursue during upcoming talks with Saudi officials?
We are currently pushing for the wider adoption of FIDIC-based contracts, which is the most just form of agreements, clearly outlining the rights of all parties and commitments. Such contracts will further enhance pan-Arab cooperations.
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