By: Mohamed Idris
Riyadh - Decypha: Contractors dues owed by Saudi ministries, excluding the finance ministry, surpassed SAR 100 billion ($26.66 billion), the head of the contractors committee at the Riyadh Chamber of Commerce and Industry, Saleh Al-Hadban, said Monday.
Most of the payment orders that had reached the finance ministry have already been paid in full to contractors, either at the end of the previous budget or the beginning of the new one, totalling SAR 100 billion. Payment orders have not been sent for the remaining amount, Al-Hadban told Decypha.
There is no doubt that contracting companies are going through some tough circumstances, due to the increase in obligations and shrinkage in revenues, which require restructuring spending patterns in accordance to the extraordinary situation.
Despite austerity measures and their direct effect on the construction section, there is still a positive sentiment towards new projects as the government plans to pump more investment into developmental projects across the country in many fields, Al-Hadban indicated, saying this will support the sector’s recovery.
The solutions begin first with regulating the business environment in all contracting, technical, and managerial aspects, and to provide equal opportunities for both the public and the private sector, he added, noting that the bigger damage was seen by big companies as exiting is easier for smaller firms that do not abide to as many obligations and commitments to banks and other parties.
Al-Hadban also noted that the past years saw reluctance from foreign companies to enter the Saudi market, with some trying and failing, except for some big names that were assigned to projects outside of the contracting sector spectrum.
Al-Hadban does not expect the situation to change unless the environment is drastically changed with comprehensive reforms, explaining that having more foreign companies in the Saudi market - in a way that is considerate towards raising the level of expertise and making best use of the local component - will eventually help the Kingdom achieve its economic and developmental goals.
