Saudi Arabia provides a bonanza for GCC contractors

06 September 2010

The kingdom’s $385bn spending plan will ensure much-needed work.Gaining a foothold in the market will be a challenge for outsiders

As King Abdullah bin Abdulaziz announces plans to invest $385bn to stimulate the economy and develop infrastructure, it will not just be Saudi nationals taking an interest in the progress of the kingdom’s ninth five-year development plan. Many in the region’s construction sector will be paying close attention to the country’s progress over the next five years.

Saudi Arabia is investing $385bn to catch up on 30 years of under-investment in civil infrastructure development. The kingdom is facing a number of looming social problems.

A serious housing deficit, shortage of skilled labour and outdated social infrastructure are some of the big issues that the spending plan seeks to address.

Despite some reservations from economists about the ambitious growth figures projected in the plan, the world’s largest oil producer will not struggle to bankroll the scheme.

The real crux of the development programme will be whether the kingdom’s public sector is capable of delivering the projects it has budgeted. Previous spending plans have often been hampered by bureaucracy and inefficient project management and implementation.

The success of the latest plan will not only be of importance to the kingdom’s growing population, but also to the region’s construction sector. Its implementation will result in a raft of new projects and much needed work for the region’s contractors.

Construction companies will be keen to see King Abdullah’s proposed infrastructure development plans come to fruition. But the development plan does not mean a quick dollar for international companies. Saudi Arabia is a difficult market for foreign companies to enter and one that few major international contractors have been able to penetrate.

If King Abdullah is to proceed with what is planned, the state will require outside assistance. The success of the plan depends on whether the kingdom and international companies can work together.

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