Mayar Holding, a Saudi Arabian company that specialises in escalators and elevators, is looking to expand in Iraq and Egypt with a view to diversifying from the Gulf region, the company’s CEO has said.
The economies of the six Gulf Cooperation Council countries - Saudi Arabia, UAE, Qatar, Kuwait, Bahrain and Oman - were hit hard by the sharp decline in global oil prices that began in 2014. Most of the GCC states, especially Saudi Arabia, the world’s top exporter of oil, rely heavily on oil revenues for income.
According to Alshaikh, the Arab world’s most populous nation, Egypt offers “a very big and promising” investment opportunity. Alshaikh said he has been encouraged to expand into Egypt after the country’s decision last year to float its currency as part of a wider economic reform programme.
Egypt’s economic reform plan was needed to secure a loan from the International Monetary Fund (IMF) and attract back investors who were scared away by the political turmoil that hit the country in 2011.
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Alshaikh also added that Iraq “for us is a superb market”. Iraq has witnessed insurgency for more than a decade. But the Iraqi forces, backed by a United States-led coalition, has this year won many battles against the Islamic State, an Islamist militant group with bases in Iraq and Syria.
“Egypt and Iraq are big opportunities for growth,” Alshaikh said.
Alshaikh said his business in Saudi Arabia has continued to do well, despite the economic slowdown following the decline in oil prices.
Mayar Holding is the parent company of Gulf Elevators & Escalators Company (GEEC) – which manufactures elevators and escalators. The company is based in Saudi Arabia and has branches in other GCC countries, including the UAE. It also has ongoing work in Egypt and other African states. Alshaikh said his company is the exclusive distributor of the prominent Japanese elevator brand Fuji in Saudi Arabia, the GCC and other parts of the Middle East, Africa and Europe.
Alshaikh said investors are now more encouraged to enter or stay in the Saudi market as business owners’ trust in the Saudi economy has improved since last year, after the kingdom announced its Vision 2030 strategy.
“When we talk about the Saudi market, surely the oil prices had a direct impact on the economic course in the Saudi market,” Alshaikh said. It reported a record deficit budget of $98 billion in 2015, one year after the start of the fall of oil prices. The deficit shrank to $79 billion in 2016, according to Reuters.
Alshaikh said another major factor impacting the economic situation in Saudi is “the political and economic changes that it (the kingdom) is going through”.
The kingdom's construction market has suffered following a government decision in late 2015 to halt payments while it reassessed its project pipeline. According to Reuters, up to $266.7 billion worth of contracts were cancelled by the government before it began making repayments to contractors last year.
In June this year, Saudi Arabia’s King Salman bin Abdulaziz Al Saud elevated his son, Mohammed bin Salman, to crown price in a surprise move. The king has also granted women in the kingdom the right to drive cars - a long-stated demand by many local and international rights groups.
Last month, Saudi security forces rounded up dozens of princes, politicians and businessmen in what the kingdom described as a clampdown on corruption. Egypt’s prominent businessman and billionaire Naguib Sawiris has condemned the crackdown, Reuters reported last Friday. He said it undermined the rule of law in the Kingdom and would deter investment.
Alshaikh said that “In the beginning of change anywhere, there is direct or indirect impact as we are in a shifting stage”.
During such a phase, he said investors remain alert to developments and their impact on business. Alshaikh praised Saudi’s new economic plan, yet said that investors had concerns about its practical implementation and seriousness.
Alshaikh said that investors’ interest in the kingdom will increase as more businesses “accept the change and have trust in the plan”.
(Reporting by Yasmine Saleh; Editing by Michael Fahy)
© ZAWYA 2017