Massive Public Sector Projects to Gain Speed as Saudi Arabia Makes Contracting Easier

The Saudi Arabian government is on track to implement what could easily be among the most ambitious programs for an infrastructure upgrade. The Riyadh Metro, pegged at US$20 billion, is among the highlights of this massive infrastructure overhaul. Despite this, international contractors have been unable to access the market because of certain barriers to bidding for public sector projects, and the costs associated with the same.

To change these perceived barriers, the Saudi Arabian government has now announced a slew of programs that will make it easier for international contractors to pump money into this lucrative opportunity. The most noticeable among these will be the Saudi Arabian council of minister easing the stringent requirements under the Government Tenders & Procurement Law.

Since Saudi Arabia earned membership of the Trade Organisation in 2005, its markets have been officially open to international contractors for investments. In fact, Saudi Arabia is among the handful of countries in the MENA region that allows 100% ownership in local establishments by foreign companies. While these factors did create a favorable atmosphere for foreign companies, the country also has numerous licenses and certificates that international contractors need to procure. This, according to market analysts, was posing the biggest impediment to international contractors wanting to foray into the Saudi Arabian public sector. Non-compliance with the stringent rules in Saudi Arabia could potentially mean blacklisting, heavy fines, or even imprisonment.

Given that the country is now investing heavily in metros, healthcare projects, airport expansions and infrastructure projects, the need for foreign technology has been more pressing now than ever for the country.

While market experts are calling the easing of laws a progressive step, it remains to be seen whether the changes are able to bring in tangible results.


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