Landing GCCPresentation August20 - Final

8/6/2019 Landing GCCPresentation August20 - Final

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OPPORTUNITIES IN THE CONSTRUCTIONINDUSTRY

KINGDOM OF SAUDI ARABIA &THE UNITED ARAB EMIRATES

Export Development Canada

Webinar

August 21st 2008

1:30 2:30 pm


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EDC - Infrastructure & Environment Marie-Claude Erian, Sector Advisor, Ottawa

Canadian Construction Association Dee Miller,Vice-President, Administration & Finance,

JJM Group, Vancouver

EDC Saudi Arabia & United Arab Emirates Klaus Bttner, Regional Vice-President, Africa, Europe,

and Middle East, Ottawa

Jean-Franois Croft, Chief Representative, GCC andYemen, Abu Dhabi

Canadian Trade Commissioner Service Louis-Pierre Emond, Deputy Director, Middle East and

North Africa, Ottawa

Interlocutors


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Agenda

Introduction

Overview of the Gulf Cooperation Council(GCC) market

Construction Opportunities Kingdom of Saudi Arabia (KSA)

United Arab Emirates (UAE)

Conclusion

Question & Answer Period


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Enhancing Global Trade for Companies

Supporting the Canadian Construction Industry

In today's world, we compete with Canadian and foreign companies in winning newbusiness

We are part of a global supply chain even in pursuing Canadian opportunities

In the long run, successful companies will be those who can compete on the Canadian andinternational scene

CCA collaboration with EDC is to provide you with information on constructionopportunities in growing markets where Canadians have had successes


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Business Environment - GCC

The GCC, a trade bloc involving the six Arab states of the Arabic Gulf, hassome of the fastest growing economies in the world, mostly due to a boomin oil and natural gas revenues coupled with a building and investmentboom backed by decades of saved petroleum revenues

The GCC has a desire to establish the region as a financial and tourismcentre and to provide job opportunities to the growing young population byestablishing new industries

If a Canadian company is established in Saudi Arabia, they will benefit fromthe governments membership with the Gulf Co-operation Council (GCC);which will allow them to take advantage of the duty-free arrangements inBahrain, Oman, Kuwait, Qatar and the UAE

GCC corporate and financial champions are becoming international playersas they have an objective to drive expansion beyond the GCC region


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For 2008-2010, construction projects announced or underway for the GCC totals $942 billion, themajority of which is: UAE: $441 billion & KSA: $214 billion.

Growth exceeds capacity such that pronounced bottlenecks are already apparent in many areas ofthe economy. Power, water, real estate, logistics are under immense pressure across the region.

Growth could be constrained by limited labour force and short supply of key inputs such as steel,glass, and cement.

Given demand, there is a strong presence of foreign contractors,EPCers, architects and suppliers. This sometimes results in lowbids in order to acquire market share. Thus, Canadian companies

have to target where they have a competitive advantage.

More than 130 Canadian companies are established in theregion of which approximately 30% or more are related toconstruction activities.



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Inflation is escalating:

Real wage gains are being eroded

Non-oil goods and services exports may lose market share

Ability to attract labour will be undermined, slowing domestic demand

A real estate asset price bubble may be emerging

but keep in mind:

Pace of price growth is not that high

Living standards are still rising

Competitiveness not yet compromised

Balance are still very strong


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Ease of Doing BusinessWorld Bank Rankings1

GCCCountry S&P** Moodys***

Bahrain A A2

Kuwait AA- Aa2

Oman A A2

Qatar AA- Aa2

KSA AA- A1

UAE notrated

Aa2

Country 2007Ranking

USA 3

Canada 7

KSA* 23

Kuwait 40

Mexico 44

Oman 49

UAE 68

China 83

Russia 106

India 120

Brazil 122

Investment Grades

1. www.doingbusiness.org/economyrankings/?direction=Asc&sort=1

*KSAs 10 X 10 Program: goal is to place SaudiArabia among the top ten competitive investment

destinations by the year 2010

** S&P rates borrowers on a scale from AAA to D.Intermediate ratings are offered at each levelbetween AA and CCC (i.e., BBB+, BBB and BBB-).

*** Aa1, Aa2, Aa3 : According to Moodys rating, Aaare judged to be of high quality and are subject tovery low credit risk.


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Announced Projects 2008-2010

GCC Projects all Sectors($ Millions)

PowerInd

us

try

MEED Projects August 1/08

GCC Projects by Country($ Millions)


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Announced Projects 2008-2010 in the

UAE and the KSAUAE Projects all Sectors

($ Millions)

KSA Projects all Sectors

($ Millions)

MEED Project August 6/2007


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Why Saudi Arabia?Business EnvironmentBusiness Environment

Largest economy in the Middle East and North Africa(MENA) region holding 25% of the total Arab GDP.

Construction industry is the largest in the MENA region andthe largest non-oil economic industry in KSA, both inresidential and industrial building.

Government is attempting to promote growth in the privatesector by privatizing industries such as power and telecom.

The Saudi Arabian General Investment Authority (SAGIA)is undertaking a multi-billion (US) dollar developmentstrategy centred around the building of greenfieldeconomic cities around the country.

The economic cities are designed to attract foreign anddomestic investment into the downstream energy,transport, industry and knowledge-based sectors.

Objective is to create jobs to retain Saudi youth; expectedpopulation growth from 28 to 36 M by 2025.

Other important information:Other important information:

KSA plans to spend a trillion dollars on infrastructure andother project investment over the next 15 years.

The industry growth forecast over 2007-2011 averages5.46%, with government-led activity in infrastructuredriving demand.

GDP: 564 billion (2007)Annual growth rate: 4.1% (2007)Population: 28.1 millionPer capita GDP: $ 37,300 (2007)

Inflation: 4.1% (2007)

CANADA SAUDI ARABIA TRADE (2007)

Canadian Exports to Saudi Arabia $ 648 millionCanadian Imports from Saudi Arabia $ 1.8billion

As a part of the GCC, KSA has approved duty exemptionscovering the import of more than 400 items. The Council hasalso implemented a customs union which has harmonizedcustoms tariff at 5% of an items value.


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The Economic Cities Saudi ArabiaJazan Economic City

(In the Planning Stage)

Investment US$ 27 Billion

Focus Heavy Industries, Lifestyle, AgroIndustries, People development

Link www.jazanecity.com

Tabuk Economic City

New Development Proposed

Ras al-Zour Economic City

New Development Proposed

Knowledge Economic City(Under Development)


Focus Knowledge Based Indutries,Tourism and Services

Link www.madinahkec.com

Prince AbdulAziz bin Mousaed EconomicCity

(Under Development)


Focus Logistics, agribusiness, minerals

and construction materialLink www.pabmec.com

King Abdullah Economic City(Under Development)


Focus Ports, Logistics, Light Industry andServices

Link www.kingabdullahcity.com


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King Abdullah Economic City

Location: 100km north of Jeddah Size: 168 km Cost: 100 billion SAR (US$ 26.6 Billion) Sponsor: EMAAR Jobs: 500,000 Status: Phase 1 completed Industrial Zone Phase 2 is next Completion: estimated between 2025-2030

Project comprises: Sea Port

Capacity of 10 million twenty-footequivalent Unit (TEU) of containersper year.

Industrial district

Will cover 63 million m. Will consist ofindustrial and light industries,

research and development, businessoffice, services, hospitality, educationand community services.

Waterside resort

The number of hotel rooms and suitesare proposed to be 25,000 hotelrooms in more than 120 hotels.

Financial island

The Central Business District will offer3.8 million m of office space, hotelsand mixed-use commercial space.

Residential district

Will include 260,000 apartments and56,000 villas. This area includeresidential, commercial andrecreational areas.

Education and health zone


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King Abdullah Economic City

List of Companies AwardedContracts in Phase 1

Aseer Trading, Tourism and Manufacturing and ContractingSectors

Al-Fozan Co. Manufacturing of construction material

Al-Muhaidib Wholesaling of Building Material

Dallah Al-Baraka Cleaning and Maintenance Construction

Khayyat Group Construction of a cement project

Bin Laden Group Construction conglomerate awarded theconstruction of the residential towers

Orascom Construction, cement plant

AlBabtain Power and Telecommunications

Saudi Oger Construction, Printing, Telecommunication, RealEstate Development, Utilities, IT Services


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EDC Business in KSA

In 2007, EDCsbusiness volume inSaudi Arabia equatedto

$ 192 million insupport of 94Canadian companies

ContractInsurance

Bonding

Financing

Short Term

Insurance

Political RiskInsurance

Transportation

Resource

LightManufacturing

Infrastructureand Environment

ICT

Extraction


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Why United Arab Emirates?Business EnvironmentBusiness Environment

Spectacular growth in 2007

Oil windfalls are financing mega infrastructure and development projects; UAE government pushingeconomic diversification such that non-oil revenues represent 35% of total GDP in 2007.

The construction industry, which as full UAE government backing, has contributed strongly to theUAEs economic boom, accounting for roughly 7.5% of total GDP in 2007.

Political will to turn Dubai into the regions main trade centre, including establishment of commercialfree zones such as Dubai International Financial Centre, Dubai Internet City, and Dubai Media City.

Logically, should see slowdown in growth of residential construction projects (likely by 2010).However, infrastructure, hospitality and commercial projects should grow.

In an effort to build a tax base and economic foundation before the reserves run out, the UAE'sinvestment arms, including Abu Dhabi Investment Authority, retain over $900 billion in assets.

Other important information:Other important information:

The construction industry is forecast to grow by 7.1% in 2008

Announced construction projects in UAE amount toUS$ 300 billion in 2007-2012, concentrated mainly in Dubaiand Abu Dhabi

Abu Dhabi is the centre of the construction boom, with hugepotential for growth in the coming five years as the nationscapital is severely underdeveloped and the government has

clear intentions to maximise investment in construction as apart of the Abu Dhabi 20-30 Plan

GDP: 167 billion (2007) growth rate: 7.3% (2007)Population: 4.4 millionPer capita GDP: $ 23,200 (2007)Inflation: 11% (2007)

CANADA UAE TRADE (2007)

Canadian Exports to UAE $ 995 millionCanadian Imports from UAE $ 30.4 million

As a part of the GCC, UAE has approved duty exemptions coveringthe import of more than 400 items. The Council has also implementeda customs union which has harmonized customs tariff at 5% of anitems value.


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Developer / Project Value

$US million

Dubai Properties

Mohammed Bin Rashid Gardens 55,000

Mudon 15,000

Culture Village 13,500

Tijara Tower 1,635

Executive Towers 500

Signature Towers 400

Others 7,032

Total DUBAI PROPERTIES$94.082


$US million

NAKHEEL

Dubai Waterfront 9,450

Palm Deira 2,500

Dubai Marina 1,200

Redevelopment of Mina Rashid 1,000

Palm Jumeirah 790

Others 11.460

Total NAKHEEL $26,400


$US million

EMAAR PROPERTIES

Dubai Marina 4,300

The Marine (Umm Al Quwain) 3,300

Burj Dubai Development 2,900

Khobar Lakes KSA Non 1,500

Arabian Ranches 500

Views The Golf Towers 300

Park Island 180Others 5856

Total EMAAR Properties $18,836


$US million

ALDAR PROPERTIES

Yas Island Development 37,000

Raha Beach Development 15,000

Mina Zayed Port Redevelopment 15,000

Central Market 1,200

Al Bateen Park 800

Coconut Island 700

Abu Dhabi Grand Prix Track 300

Others 26,841

Total ALDAR Properties$96,841

Key Developers

Source: MEED Magazine, MEED Projetcs July 28/08


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EDC Business in UAE

In 2007, EDCsbusiness volume in theUAE equated to $ 582millionsupporting185 Canadiancompanies.

ContractInsuranceBonding

Financing

Short TermInsurance

Political RiskInsurance

Transportation

Resource

LightManufacturing

Infrastructureand Environment

ICT

Extraction


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Three Tips for Trading with KSA and UAE

While complex markets with a different culture from Canada, entrepreneurs can be

prepared to do business there. Experts in the region boil their advice down to three

Cs: Commitment, Capacity and Contacts.

Commitment: The first step to success is a triple dose of relationship building byinvesting a long term market development. Arab hospitality is legendary; theyplace a high value on loyalty and respect.

Capacity: The scale of everything in the region is large. Canadian companiesneed to rethink their strategy in the context as purchase orders are largecompared to what Canadians are generally exposed to in North America

Contacts: You must have a partner or agent to navigate this country. Manypeople in KSA and UAE want to be an agent and many want to sign a long-termcontract. The challenge is to find someone who really understands your businessand your expectations.


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Canadian Clients In 2007, we served over 1,100 clients for $9.3 billion of business

in Engineering & Construction, Environment, Power and Tourismindustries.

Key Strategy for GCC: Matchmaking Goal to match Canadian companies with needs of top developers

in the KSA and UAE developing relationships with key decisionmakers and influencers.

EDC local representative, based in Abu Dhabi, to manage andgrow relationships in the region.

Leverage on EDC financial services to facilitate trade.

EDC: A Focus on Infrastructure


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Infrastructure Trade Mission

Presentations on business climate, opportunities, construction norms,

and legal framework Meetings with key developers, local contractors and engineers

In each cities, opportunities of caf style one-on-one meetings withvarious buyers

Canadian panel in each countries addressing their experience andopportunities

Site visits on projects underway

Networking receptions Optional participation at the Big 5 Exhibition, Dubai, November 23-27

Draft Program available for those interested

UAE (Dubai and Abu Dhabi) & KSA (Riyadh and Jeddah)November 13 to 25, 2008

To get more information please [email protected]
mailto:[email protected]:[email protected]


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Construction shows

Cityscape, Dubai, 6-9 October 2008 Attracts regional and international investors, property developers,

governmental and development authorities, leading architects,designers, consultants and all senior professionals involved in theproperty industry. It provides an annual forum that celebrates the very

best in real estate, architecture, urban planning and design fromaround the world.

http://www.cityscape.ae/index.html/

The Big 5 exhibition, Dubai, 23- 27 November 2008 The largest trade show for the Construction industry in the Arabian

Gulf. A unique event, combining five major exhibitions under one roof(Building & Construction; Water technologies; Air conditioning;Cleaning & Maintenance; Glass & Metal). Featuring more than 2,000companies from 67 countries. 50,420 key buyers and decision-makersfrom the public and private sector attended the 2007 event, as well asarchitects, engineers and contractors.

http://www.thebig5exhibition.com/
http://www.cityscape.ae/index.html/http://www.thebig5exhibition.com/http://www.thebig5exhibition.com/http://www.cityscape.ae/index.html/


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Saudi Arabia Riyadh Chamber of Commerce and Industry

www.riyadhchamber.com Jeddah Chamber of Commerce and Industry

www.jcci.org.sa/JCCI/EN

United Arab Emirates

Abu Dhabi Chamber of Commerce and Industry www.abudhabichamber.ae [email protected]

Canadian Business Council Dubai www.cbc-dubai.com

Developers Emmar Properties www.emaar.com

Nakheel www.nakheel.com

Dubai Properties www.dubai-properties.ae

Aldar Properties www.aldar.com

Useful Links and Contacts
http://www.riyadhchamber.com/http://www.jcci.org.sa/JCCI/ENhttp://www.abudhabichamber.ae/mailto:[email protected]://www.cbc-dubai.com/http://www.cbc-dubai.com/mailto:[email protected]://www.abudhabichamber.ae/http://www.jcci.org.sa/JCCI/ENhttp://www.riyadhchamber.com/


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The Canadian Trade Commissioner Service (TCS) helps Canadian companies andorganizations do business abroad by increasing revenues and lowering the costs of globalbusiness through four key services:

1. Prepare for International MarketsDetermine if you are internationally competitive; Decide on a target market; Collect marketand industry information; Improve your international business strategy

2. Find Qualified ContactsPotential buyers and partners, Professionals in financial and legal institutions, Technology

sources, Agents, Manufacturers' representatives, Foreign regulatory authorities, Foreign

investment promotion agencies

3. Assess Market PotentialMarket intelligence; Advice on improving your market strategy

4. Resolve ProblemsCustoms clearance and shipping, unfair business treatment, contract bidding, storage and

warehousing, insurance coverage and claims, overdue accounts receivable, and more

TCS Services


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TCS At Home and Abroad13 regional offices across CanadaVancouver, Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Toronto, Montreal, Quebec City, Halifax,Moncton, Charlottetown, St Johns

Canadian Consulate in Dubai, United Arab Emirates John Burbridge, Head of Consulate and Senior Trade Commissioner,

[email protected]

Canadian Embassy in Abu Dhabi, United Arab Emirates: Michael Lazaruk, Senior Trade Commissioner

Imad Arafat, Locally-engaged Trade Commissioner

[email protected]

Canadian Embassy in Riyadh, Saudi Arabia

Jeff Blackstock, Senior Trade Commissioner Joe Fakhri, Locally-engaged Trade Commissioner

[email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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Thank You / Merci

Klaus Bttner, Regional Vice-PresidentInternational Business Development Group Africa, Europe & Middle East

Tel:(613) 598-2760/ Fax:(613) 598-2503Email:[email protected]

Marie-Claude Erian, Sector AdvisorInfrastructure & Environment

Tel:(613) 598-2969/ Fax:(613) 597-8667Email: [email protected]

Jean-Francois Croft, Chief Representative GCC & Yemenbased in Abu Dhabi, UAE

Tel:(613) 597-7882 Fax:(613) 598-2503Email: [email protected]

Visit our website at www.edc.ca
http://c/Documents%20and%20Settings/pichan/Local%20Settings/pichan/Local%20Settings/Temporary%20Internet%20Files/OLK19/[email protected]://c/Documents%20and%20Settings/pichan/Local%20Settings/pichan/Local%20Settings/Temporary%20Internet%20Files/OLK19/[email protected]://c/Documents%20and%20Settings/pichan/Local%20Settings/pichan/Local%20Settings/Temporary%20Internet%20Files/OLK19/[email protected]://www.edc.ca/http://www.edc.ca/http://c/Documents%20and%20Settings/pichan/Local%20Settings/pichan/Local%20Settings/Temporary%20Internet%20Files/OLK19/[email protected]://c/Documents%20and%20Settings/pichan/Local%20Settings/pichan/Local%20Settings/Temporary%20Internet%20Files/OLK19/[email protected]://c/Documents%20and%20Settings/pichan/Local%20Settings/pichan/Local%20Settings/Temporary%20Internet%20Files/OLK19/[email protected]


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Trade Regime in UAE Imports into UAE can only be undertaken by importers who have appropriate trade licenseissued by the respective Department of Economics/ Municipality of each Emirate.

The UAE practices a liberal trade policy with no protective tariff or non-tariff barriers onimports. All goods imported into the UAE are subjected to 5% import duty (only tobaccoattracts 100% import duty) on c.i.f. value at any point in the UAE. C.i.f. value is normallycalculated with reference to commercial invoices covering the relative shipment of the goods.

However, the Customs Department of the UAE is not bound to accept the value as in theinvoices. In such cases, an estimation of value by the customs will be used for calculation ofimport duty. At present the Federal government is discussing the possibility to drop thecustom tax of 5% and to replace it by a VAT (3 to 5%).

Trade practices in Dubai are in line with normal international standards. All correspondenceshould be in English or Arabic. As a sophisticated market, full technical specifications shouldbe provided with CIF Local prices with Middle East references.

Payments are normally effected by letter of credit.

There is no corporate tax in the UAE. The only exceptions are oil producing companies andbranches of foreign banks. There is also no sales tax or personal tax.

Appendix 1