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Business Outlook

SAUDI ARABIA
MEED online
Read more news,
analysis, commentary
Riyadh puts ties with Canada
and special reports on
the region at on hold over rights criticism
www.meed.com
Canada’s ambassador was given 24 hours to leave Saudi Arabia
and new business between Ottawa and Riyadh has been frozen

S
audi Arabia has expelled the tolerate any external criticism of its
Canadian ambassador and domestic policy.
announced a freeze on “all new “This message is obviously not just
business” with Ottawa being sent to Ottawa,” Giorgio Cafiero,
following criticism by CEO of Washington-based risk
Canadian diplomats of the kingdom’s arrest consultancy Gulf State Analytics, told the
of women’s rights activists. Associated Press. “It’s a message to
State airline Saudia suspended flights to countries across Europe and across the
Canada from 13 August, while Saudi state rest of the world that criticism of Saudi
television revealed plans by the Education Arabia has consequences.”
Ministry to cancel scholarships for close to While it is unclear what impact the
12,000 Saudi students in Canada. measures will have on business between
The measures are a clear indication Canadian and Saudi entities, a freeze on new
that the present government in Riyadh – business will be of deep concern to
under the direction of Crown Prince Canadian firms active in the kingdom.
Mohammed bin Salman – will not John Bambridge

BAHRAIN

BAHRAIN GDP Gulf states make progress on


TO DEBT
BDbn financial aid package for Bahrain
17.09

Bahrain and its GCC allies, along with the fiscal situation. In a statement, the three
15.44

Arab Monetary Fund, are making progress countries said they are “in discussions with
on plans for a multi-year aid programme the authorities to enhance the stability of the
11.7

that involves spending cuts and measures to financial situation in [Bahrain]”.


boost Bahrain’s non-oil revenue. However, growing investor uncertainty
9.67

According to news agency Bloomberg, about the details of the aid programme has
7.73

the Arab Monetary Fund may “also help led to the bond’s recent decline. The
monitor the programme’s implementation”. Bahraini dinar sank to a 17-year low – at
MEED understands the news reversed the BD 0.38261 to the dollar – on 26 June. This
2.87

decline in Bahrain’s dollar-denominated followed hedge funds’ dumping of Bahraini


bonds, for which the yield on securities are bonds because of concern about the
due in 2028. country’s rising public debt. The
20
10

15
20

20

20

Washington-based IMF said in August that


Nominal GDP Financial stability Bahrain’s public debt had increased to 89
Government gross debt Saudi Arabia, Kuwait and the UAE said in per cent of its GDP, while its current account
Source: IMF World Economic
June that they expect to announce an deficit remained unchanged at 4.5 per cent.
Outlook, April 2018 integrated programme to enhance Bahrain’s Jennifer Aguinaldo

52 \ MEED Business Review


SAUDI ARABIA

IMF urges Riyadh to accelerate


public-private partnership plans
The kingdom issued a draft PPP law in early July that is
expected to create up to 12,000 new private sector jobs

T
he Washington-based IMF has
urged Saudi Arabia to The IMF
accelerate its plans to develop says real
projects using public-private GDP growth
partnerships (PPP). in Saudi
The fund said there is still a role for the Arabia is
public sector to develop projects that expected to
serve as a catalyst for broader develop- increase to
ment, but cautioned that these schemes 1.9 per cent
should not crowd out the private sector. in 2018
In early July, Saudi Arabia’s National
Centre for Privatisation issued a draft law ing government assets and create
outlining partnerships between the gov- 10,000-12,000 new private sector jobs
ernment and private sector. Once final- as outlined in the kingdom’s 2020
ised, the law is expected to unlock Delivery Programme.
SR35bn-40bn ($9.3bn-10.7bn) from sell- Colin Foreman

UAE

Emirates to maintain Iran flight


schedules despite US sanctions
Dubai-based Emirates Airline expects to and Kuwait Airways operate flights
operate flights to Iranian cities as usual between their home cities and Tehran
despite the US government’s reimposition or Mashhad.
of secondary sanctions. Abu Dhabi-based Etihad Airways
“All flights are running as per normal suspended its flights to Tehran in January
schedules to Iran,” an Emirates Airline this year as part of its strategy review.
spokesperson tells MEED.
Emirates has been operating four daily
“I do not see how Gulf airlines are
directly impacted, nor would they reduce 4
Number of daily flights
flights to Tehran’s Imam Khomeini or stop flights to cities in Iran,” says Saj
International airport and five weekly Ahmad, chief analyst at London-based operated by Emirates
flights to Mashhad, the Islamic Republic’s StrategicAero Research. “If anything, to Tehran
second most populous city, and has plans there is a good argument to be made that
to expand its operations in the country. [because] the sanctions will make travel
difficult for ordinary Iranians, they may 5
Number of weekly flights
GCC airlines have little choice but to fly out of the
Other airlines such as Sharjah-based Air country using GCC airlines.” by the airline to the city
Arabia, Dubai-based Flydubai, Oman Air Jennifer Aguinaldo of Mashhad

MEED Business Review / 53


Contracts

Egypt leads contract value growth in July


Surpassing usual leaders Saudi Arabia and the UAE, Egypt recorded
the highest value of deals signed for the second month in a row

MIDDLE EAST CONTRACT AWARDS TO JULY 2018*


($m)
25,000

20,000

15,000

10,000

5,000

17

18
17

17

17

17

17

17

18

18

18

18
01
20
20

20

20

20

20

20

20
20

20

20

20
r2
v
l

ct

ec

ay
b

ar

l
Ju

Ju
No

Ap
Au

Ja
Se

Ju
Fe
O

M
*=Countries covered include GCC states, Iran, Iraq, Jordan, Lebanon, Syria, Yemen and Egypt. Source: MEED Projects

T
he value of contracts The largest contract to be awarded
awarded in the Middle in the UAE was the $500m deal that
East increased in July, with was signed between Abu Dhabi Poly-
$14.2bn-worth of deals let, mers Company (Borouge) and Italy’s
compared to $12.1bn-worth Maire Tecnimont for the construction
in June. The growth was spurred by of the Polypropylene-5 project located
Egypt, which led the value of contracts in Ruwais.
signed for the second month in a row. The biggest deal signed in Saudi
Egypt recorded $5bn-worth of con- Arabia, meanwhile, was the $590m
tract awards in July, with the petro- contract that was awarded by Saudi
chemicals sector leading the value of Aramco to Tekfen Construction. The
deals let. The largest contract signed deal is for the construction of gas com-
was the $3.6bn deal to construct an pression plants and liquid separation
ethylene cracker at the Tahrir petro- stations that are intended to increase
chemicals complex, awarded by the the gas production capacity
CONTRACT AWARDS local Carbon Holdings to a joint of the Haradh field.
BY COUNTRY venture of Lebanon’s Consolidated Looking forward, Saudi Arabia ap-
Award ($m) Contractors Company, the local Hassan pears to be well-positioned to recover
Egypt 5,004 Allam Construction and Germany’s its position as the region’s most active
2,955
Linde. Deals were also signed to con- projects market, with work starting
UAE
struct polypropylene and polyethylene on megaprojects such as the $500bn
Saudi Arabia 2,850
units at the complex. Neom city and the vast Red Sea tour-
Qatar 1,634 The UAE and Saudi Arabia awarded ism development.
Kuwait 1,072 the second- and third-largest values of Sneha Abraham
Oman 614 contract awards, respectively. The UAE
let close to $3bn-worth of deals, only For a detailed list of all contract awards
Bahrain 42
slightly higher than the $2.9bn-worth in July, visit www.meed.com/middle-
east-contracts-awarded-july-2018
Source: MEED Projects let by Saudi Arabia.

74 \ MEED Business Review