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| Arabia | ||
| 2,500 Saudi Companies Shift to Dubai | ||
| 2003-12-18 | ||
A prominent Saudi businessman yesterday decried the flight of capital funds from the Kingdom and urged authorities to take effective steps to attract domestic and foreign investments. More than 2,500 Saudi companies have chosen to establish investment projects in Dubai rather than Saudi Arabia during the past three years, he said. âWe have to open our country for investment like the outside world opened its doors for us,â said Abdul Mohsen Al-Hokair, chairman of Al-Hokair Group. âUnfortunately we still find it difficult to get licenses. As a result, there are now more than 2,500 Saudi firms registered in Dubai for industrial and commercial projects.â Al-Hokair blamed bureaucracy, complex regulations and slow decision-making process for the massive exodus of capital.
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| Posted by:Fred Pruitt |
| #9 This is a post with very high significance. This and other posts confirm .com's and others comments, and that is that the Saudi govt does not have a clue in taking responsibility for running their country. From this article, the marketplace is going to partially take care of this crisis in govt. I think, though that things will get alot worse in Saudi before they get better. In short, Saudi will have to bottom out before they start going back up. And it will get ugly, but given the mindset over there, I do not see any other way. |
| Posted by: Alaska Paul 2003-12-18 1:09:08 PM |
| #8 Oops, I was typing and didn't see OP's comment - which is dead right. There is a deadbeat requirement on all these JV's with foreign partners to carry some worthless freeloaders. My outfit had 4 on payroll for an office that had 4 worker types - the contractors like me were the prized cash cows that Aramco paid top dollar for - so we funded the whole operation. Profitability is, indeed, heavily impacted - and the costs are passed on to Aramco and the Saudi Govt. A hidden cost of doing business. My company had a minimum profit margin on me of 40%... so you can see that, if SA was a normal market economy, you'd say Aramco was getting screwed Royally. But it's not a market economy and every Saudi citizen is getting screwed by the House of Saud's twisted patronage system. The whole thing is artificial. Aramco and every JV is, in effect and practice, an employment agency -- partially for worthless shits who never even show up. Those that do, well, you wish they'd stay home, too. A bad joke that is now imploding under the weight of their demographics and Royal greed. |
| Posted by: .com 2003-12-18 12:53:57 PM |
| #7 Carl - Indeed, every company doing business in SaoodiLand must be at least 51% Saudi-owned, called JV's (Joint Ventures) in Saoodi. But I would say that it may be just as bad as Abdul Mohsen Al-Hokair, chairman of Al-Hokair Group, is saying - it's real Saudi money flowing out at a high rate. Saudi doesn't export anything but petro products, realistically speaking, so these companies have no product they're trying to push into some external market by buying market share, etc. Saudi companies are largely manpower importers (flesh peddlers), trading companies importing foreign finished products for resale, and franchise games (the Royals' favorite gig: controlling popular money-making markets by granting "franchise rights" for computers, cars, Burger King, etc -- for hefty fees and % with no outlay). Besides oil, they have no product to push... and General Motors doesn't need any phriggin' asshat slimeball Saudi partner to do biz in the UAE... maybe a slimy UAE JV, but no Saudi is needed. So... I'd say it's certain the majority is pure outflow of available money that these Saudis are choosing to move out of the kingdom instead of using for expanding existing biz or funding startups in-kingdom. Pure capital flight. If I were a Royal, I'd be buying into good businesses in stable places with decent returns - especially places where being a Saudi wouldn't automatically be held against me. Someone with better import / export knowledge and vocabulary can make the case clearer, but I think this guy is right to be worried! |
| Posted by: .com 2003-12-18 12:41:17 PM |
| #6 One of the biggest problems is one .com has alluded to, but not directly stated: the high cost of useless Saudis who have to be employed in order to get a license to operate, but who do nothing to generate a profit for the company. There's only so much of that a normal company can absorb, considering the normal number of dead-heads most companies carry around. From my experience in the private sector, I've seen the following: 15% of the people do 60% of the work; another 25% do 30% of the work, 40% do 10% of the work, and the rest are useless. In Saudi land, from what I've heard from others, the 15% becomes 75%, the rest accomplish proportionately less. For most businesses (outside the oil industry, let's say) that raises the cost of doing business beyond what can be done and still expect a reasonable profit. |
| Posted by: Old Patriot 2003-12-18 12:29:26 PM |
| #5 Akmed, we're victims of globilization. We must stage some protests and damage some small businesses. Where are my urine bombs? |
| Posted by: Super Hose 2003-12-18 12:03:52 PM |
| #4 Question, probably answerable by .com: How many of these "Saudi" companies might be foreign companies whose "Saudiness" is just a result of regulations enforced by Saudi bureaucrats ? |
| Posted by: Carl in N.H. 2003-12-18 11:46:47 AM |
| #3 that darn cause and effect thing again. |
| Posted by: B 2003-12-18 10:43:20 AM |
| #2 Yes. |
| Posted by: Fred 2003-12-18 10:03:17 AM |
| #1 Saudi Arabia is the biggest exporter of tourists in the Arab world. Is that "tourist" or "terrorist"? |
| Posted by: Robert Crawford 2003-12-18 9:38:58 AM |