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Saudi Arabia: New Confidence in Gold Market

Industry Leader Welcomes revised Saudization Rate of 10 percent
Thursday, 22 February 2007

RIYADH: The gold market is brimming with confidence that the Cabinet's revised Saudization target set for it can be achieved, according to a leader of the industry.

Businessman Ahmed Fitaihi, former chairman of Gold Committee, Council of Saudi Chambers and Commerce and Industry (CSCCI), said the gold and jewelry retail market and its manufacturing industry are ready to achieve the 10-percent Saudization rate that was announced by the Council of Ministers after its Monday meeting.

"Young Saudis are coming into the market after getting trained at the country's vocational training colleges, and so there will not be any problem in achieving the set target," said Fitaihi, who owns Fitaihi Co, a leading gold and jewelry chain in the Kingdom.

He was speaking after inaugurating a branch of Fitaihi Showroom for diamond-studded jewelry and accessories in the posh Olaya District of Riyadh, Tuesday.

The Council of Ministers set a minimum 10-percent Saudization target for gold shops and its related businesses including factories, on condition that a five percent increase in job localization is achieved yearly.

The Cabinet decision contrasts sharply with a Saudiazation drive of some two years ago when the gold market plunged into a deep crisis.

Faced with a steep target of 100 percent Saudization of sales jobs and a crackdown on their foreign workers by the Labor Ministry, a majority of gold shop owners at that time decided to close down or take their businesses to neighboring Gulf states.

But even after five months of the strict Saudization campaign that started on July 26, 2004, expatriates were still seen holding sales jobs in the gold market. What ensued was like a hide-and-seek situation between ministry inspection teams and expatriate salesmen in the gold market because the business owners were reluctant to employ untrained and unskilled Saudis.

Now Fitaihi, owner of Fitaihi Company , a Riyadh-based local manufacturer of gold and diamond-studded jewelry says the new target is achievable and such a hide-and-seek problem would not arise again.

The government is spending a lot to train young Saudis and that's starting to show results, he said.

"The job situation in the gold and jewelry businesses is not like before, when young Saudis could not be readily accepted by gold and jewelry businesses merely because they were not fit for the job."

Moreover, unlike in 1994, the sector is booming now with gold price hovering near record highs ($659.80 per ounce Wednesday). This coupled with high spending power as the Kingdom maintains solid economic growth spells good news for the industry.

Jewelry consumption is a barometer of the country's economic condition, said Anis Jamjoom, a member of the Gold Committee at CSCCI and Managing Director and Chief Executive of Fitaihi Co. Fitaihi's expansion is a manifestation of the Kingdom's solid economic growth, he said.

Quoting statistics prepared by a specialized company Jamjoom estimated the market value of jewelry in the Kingdom at around SR6 billion annually.

He expected this assessment to prevail in view of the stable value of diamond and model varieties that "satisfy the most demanding tastes."

He said his company is set to expand by opening similar showrooms in Jeddah and Al-Khobar.

There are around 450 outlets selling gold and diamond-studded jewelry in Saudi Arabia employing some thousands of workers, most of whom are expatriates.

The Labor Ministry could not be reached to comment the mechanism that will be developed for implementation of Cabinet's new decision on Saudiazation.

By Shahid Ali Khan

© The Saudi Gazette 2007