Saudi Govt needs to ease restrictions for foreign companies to do business

There are plenty of people in the construction business that are excited about Saudi Arabia’s new railway plans. Big money is being spent to create an extensive railway service that will connect Jeddah with Makkah, Madinah and eventually Riyadh.

Al Arrab Contracting recently won a SR 6.79 billion contract for a 450-kilometer high-speed rail line that links Jeddah to Makkah and Madinah. This project promises to ease traffic congestion, especially during Haj season, between Jeddah and Makkah.

Ridership is expected to be about 14 million people a year by 2030 with an estimated 5.5 million in 2005. Its initial run when it is completed in 2012 will be about 3 million riders a year.

Another ambitious project is to develop a railway linking Saudi Arabia with the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman. It looks like finally there will be a way to visit Bahrain without enduring the causeway, and we won’t have to book outrageously expensive flights to Kuwait.

When we think of the ongoing construction of the six economic cities and the King Abdullah University of Science and Technology, it’s exciting to see how a railway system falls neatly into King Abdullah’s plans to modernize our society, not to mention creating jobs in the construction industry.

The railway projects furthers our push for economic diversification. The North-South Railway, for example, will link Jubail with Riyadh and eventually connect our neighbors, including Syria and Jordan. Freight trains will begin operation next year and passenger service the year after.

The benefits of moving freight via rail instead of around the Arabian Peninsula from the Red Sea to the Arabian Gulf is obvious. But equally important is the creation of jobs.

Further, the North-South line streamlines the transportation of phosphates in large quantities and put Saudi Arabia second internationally in the exports to fertilizer manufacturers.

But serious obstacles remain. It’s commendable that the Saudi government has moved to wean us from oil revenue. Our reliance on oil as virtually our only export has done some damage, primarily our failure to employ the country’s youth with meaningful non-government jobs. The lack of jobs in the private sector and the over-abundance of what I see as empty jobs – jobs in which the employee is required to do little, if anything, during the workday – has created a generation of Saudis who have no work ethnic or who fail to appreciate the rewards of full-time employment in a meaningful profession.

It may be too late for my generation to enjoy the rewards of employment beyond a paycheck, so we must set our sights on the teenagers and young adults preparing now to enter the workforce. The obstacles I’m referring to is that our move to implement economic diversification comes at the worst possible time with the collapse of the global banking community and the massive layoffs that followed.

Construction companies in the United Arab Emirates have dramatically contracted their workforce, shut down projects and are passing on bids for projects.

Saudi Arabia has seen a slowdown of construction as well, but has moved ahead aggressively with infrastructure projects such as the railways. It’s standard operating procedure for most governments to focus on infrastructure projects during a recession, and this is what Dubai and Abu Dhabi are doing at the moment.

American, British and Asian construction companies hoping to survive and continue doing business in the Middle East have turned their attention to Saudi Arabia. But despite the current economic mood Saudi Arabia doesn’t make it easy for foreign companies to do business here.

According to a London-based construction magazine, a Saudi contractor said recently at a recent construction summit that, “The government sector will be challenging for many non-Saudi companies.”

Another Saudi contractor at the same meeting said Saudi Arabia poses serious logistical issues.

“It is not as easy as you might think for somebody from the UAE or Qatar moving into Saudi Arabia,” he said. “There are a lot of constraints. The restrictions are greater than in Dubai and Abu Dhabi to bring the labor force in. Logistically, moving into Saudi Arabia, including getting the people in and out, is a big issue facing companies.

In times of emergency, and the region is facing an economic emergency, some rules and regulations should be suspended to speed up the process of accomplishing our goals. We have a window of opportunity to accomplish much, but if we obstruct people who want to do business here they will go elsewhere. And if the obstacles are serious enough, they may not return.

Emergency regulations allowing workers and equipment to move more freely between Saudi Arabia and the rest of the GCC will keep the country on schedule, foster stronger ties with foreign companies and create those vital jobs that young Saudis need now.

We don’t need another generation of idle work-age people.

Originally published in the Saudi Gazette.