Local firms dominate GCC

20 December 2011

Many of the complex projects that became synonymous with the Gulf have been shelved, reducing job opportunities for foreign companies

It is no surprise that local firms dominated the GCC projects market in 2011. Winning 53 per cent of the $106.6bn worth of contracts awarded during the year highlights the role that they play in their respective economies.

This is particularly true for the construction and infrastructure sectors, which although still challenging, tend not to require the specialised expertise needed for the energy and petrochemicals sectors. These continue to rely on international firms for delivering projects.

As regional economic growth slows, governments are under pressure to support local businesses

The contribution of local firms is expected to increase further. Many of the large-scale, complex projects that became synonymous with the Gulf, and particularly Dubai, have been shelved, meaning that internationals have little extra to offer on a contract that can be accomplished by the local competition.

At the same time, local and regional players gained vital experience on large-scale projects during the boom years, which means that for the complex projects that are still going ahead, clients can rely on local firms to complete them.

Politically, the pressure to support local firms is also growing. As economic growth across the region slows, opportunities for contractors are becoming limited and governments are under pressure to support local businesses. This means that locals will win more work in 2012.

That does not mean a lack of opportunities for internationals. The South Koreans have secured $17.9bn of work during 2011. Many expect them to be followed by Indian and Chinese contracting companies that are prepared to compete aggressively for new work. Indian firms won almost the same amount of work as the South Koreans in the UAE during 2011 and the Chinese were not far behind the South Koreans in Qatar. If the competition intensifies, the South Korean dominance of foreign players could be challenged in the coming years.

While that competition rages on, local firms will continue to dominate.

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