Construction

Foreign contractors in KSA likely to face annual evaluations

New rules unlikely to affect small and medium Saudi contracting firms, head of NCC says

Foreign contractors operating in the Kingdom will now face annual evaluations.

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Foreign contractors working in Saudi Arabia are likely to face annual evaluations over their operations, local media reports in the Kingdom have claimed.

At present, under a royal decree, these firms are allowed to operate in Saudi Arabia without being subjected to existing rating procedures.

However, the Al-Eqtisadyah daily, said that the royal decision was being ‘observed’ by the Ministry of Municipal and Rural Affairs and the Saudi Arabian General Investment Authority. It cited a memo circulated to a number of government agencies.

Fahed Al-Hammadi, head of the National Contracting Committee, told the paper that the new rules would not negatively affect small and medium Saudi contracting firms.

“On the contrary, we expect the new rules will organize those firms better and enable them to gain experience and culture of good work,” he explained.

He pointed out that the royal follow-up of the evaluation decision would provide more momentum to the issue, which would allow the positive work being done by well-known foreign contractors to be put into focus.

The impact of the new rules means that only major global companies would be able to enter the Saudi market. Al-Hammadi claimed that in earlier years, bogus and small contractors had entered the market under the cover of foreign investment, posing a threat to local companies and not bringing any benefits to the Kingdom.

Al-Hammadi added that the entry of foreign investors would allow local contractors to benefit from foreign expertise and modern technology.

“As Saudi contractors, we will welcome any (foreign) contractor who will cooperate with us to help change some of rules that were behind the stalling of projects,” he was quoted as saying.

The National Contracting Committee will meet with the SAGIA Governor to discuss the latest developments in the wake of the recent decisions, Al-Hammadi said. Issues such as the number of foreign companies looking to work in the Kingdom were likely to be discussed, he added.

He said SAGIA had earlier imposed certain regulations on foreign investors in the area of contracting and they (investors) were not registered in the Saudi market as “contractors” unless well qualified and have long experience in the establishment of projects in their native countries.

This paved the way for the council of ministers to approve the decision (of allowing foreign firms to work in the Kingdom), he said adding that foreign companies were earlier banned from the entry of the Kingdom because categorization (rating) of contractors was an obstacle for them.

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