GCC contractors reel under tough competition

Gulf contracting firms are suffering from strong competition from the much larger and technologically advanced foreign firms and this should prompt them to unite, the head of the region’s private sector said on Thursday.

Abdul Rahim Naqi, secretary general of the Saudi-based federation of the GCC chambers of commerce and industry (FGCCI), said a contractors’ federation would serve their interests and help them face challenges and problems which are putting strong pressure on their profits.

“The contracting companies in the Gulf Cooperation Council (GCC) are facing internal and external challenges, including strong competition from foreign firms as well as classification issues, lack of national manpower and poor funding,” he told Emirates 24/7.

“There has been a proposal for a federation of the contractors…we have it will see light as this body will help support the contracting sector by identifying the problems and challenges facing the companies in order to propose solutions…this federation will also work to convey suggestions to the concerned authorities and this in turn will contributing to enhancing the contracting industry and boosting its contribution to the domestic economy.”

In a study issued this week, the FGCCI proposed the formation of a GCC contractors’ federation to serve their interests and tackle existing problems.

It also urged contracting firms to enter partnerships with foreign companies and to merge to create bigger entities capable of vying with foreigners.

“I don’t see any difficulty in creating this federation from the legal or practical point of view….there are already a number of GCC successful federations and associations which can be taken as an example for the proposed contractors’ federation…contractors’ committees in the GCC could meet and discuss the idea and once there is an agreement, they can present to the FGCCI,” Naqi said.

According to the FGCCI study, the contracting sector in the GCC countries is poised for high growth in the coming few years in line with a projected 5-6% increase in their combined GDP to nearly USD3.6 trillion in 2016 from around USD2.4 trillion in 2012.

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