Construction

Saudi Arabia’s Nitaqat program blamed for rise in construction costs

Smaller construction companies say that their ability to bid for new projects will be hampered by lack of workers

Construction companies in KSA are worried about the impact the Nitaqat programme will have on their foreign workers.

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Saudi Arabian businessmen have said that the Kingdom’s Nitaqat program has caused construction costs to rise, while wages have jumped up as much as 15%, leading projects stopping operations.

In a report by Arab News, companies said that they have not submitted bids for new work because of the uncertainty over the legal status of foreign construction workers. This has caused further problems for the industry, particularly for smaller companies, developers claimed.

Abdullah Alwan, CEO of SMT Properties, warned that many companies are afraid that their workers would be arrested and deported.

“The problem lies with the sudden manner in which the decision was introduced, not with the decision itself,” he said.

He urged the government to provide incentives for the construction industry because of the difficulty of finding Saudi construction workers. On a positive note, he said the situation was likely to return to normal in “two to three years,” and that many runaway workers had returned to their sponsors.

Bander Al Twaim, a private company owner, pointed out that a number of projects had stopped completed because property developers had been employing workers not under their sponsorship. This has caused massive losses and a rise in costs for developers, he said, in particular those projects that were close to completion.

He also said that there had been a 15% rise in wages.

“It is very difficult to find a company offering construction work these days,” he added.

Al-Twaim said the government is serious about reforming the country’s labor market because no industry has been spared from having to comply with the Nitaqat program.

Abdulaziz Al-Shaiyqi, a contractor, said this was a “temporary crisis” and that the sector would bounce back.

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