Brexit ‘good news for Saudi trade’

1 / 2
2 / 2
Britain's Prime Minister David Cameron and his wife Samantha smile as they leave after voting in the EU referendum in London, on Thursday. (AP)
Updated 22 March 2017
0

Brexit ‘good news for Saudi trade’

JEDDAH: Trade between Gulf states including Saudi Arabia and Britain is likely to improve in the aftermath of the Brexit vote, according to economists.

“The fall of sterling will definitely benefit Saudi Arabia in terms of imports,” commented National Commercial Bank’s (NCB) group Chief Economist Said Al-Shaikh.
His remarks came as global stock markets lost about $2 trillion in value on Friday after Britain voted to leave the European Union, while the pound sterling suffered a record one-day plunge to a 31-year low and money poured into safe-haven gold and government bonds.
The sterling pared losses against the US dollar Friday after plunging 10 percent to its weakest in 31 years following Britain’s vote to leave the European Union, but still remained more than 7 percent lower on widespread market uncertainty.
It was last down 7.37 percent against the dollar, at $1.3765, after touching its weakest since before the 1985 Plaza Accord of $1.3228.
“The fall of the sterling will make the dollar stronger than before. As the riyal is pegged to the dollar, it will make the UK’s imports cheaper to Saudi Arabia,” Al-Shaikh told Arab News.
James Reeve, deputy chief economist and assistant general manager at Samba Financial Group, said there is unlikely to be much direct impact in terms of Saudi-UK relations.
“Saudi imports from the UK will be cheaper, but that’s about it. The bigger themes include oil prices which are likely to weaken with a stronger dollar and global equities market,” he told Arab News.
On Friday, Britain’s decision to quit the European Union led to sharp falls in property-related stocks on the expectation that the recent cooling of both residential and commercial markets — a major driving force of the economy for years — will deepen.

KPMG said it would expect companies' appetite to enter new property leases and increase their liabilities would diminish, particularly if Britain's departure from the EU weakens London's financial district.

Speaking to Arab News, Basil Al-Ghalayini, CEO of BMG Financial Group, said private investors of residential properties might find good bargains as a result of price corrections coupled with the decline in the pound sterling against GCC currencies.

John Sfakianakis, director of economic research at the Gulf Research Center, commented: “The initial impact is all about risk aversion. We’re getting big moves now but there will probably be little impact, if any, in the longer term.
“I don’t believe there will be a big long-term impact but in the short term, people are swallowing their gum” in surprise. People don’t want to be long anything at the moment. There’s a flight to safety and the dollar is rising.”
Friday’s blow to investor confidence and the uncertainty the Brexit vote has sparked could keep the US Federal Reserve from raising interest rates as planned this year, and even spark a new round of emergency policy easing from major central banks.
Gulf bourses have already been witnessing low activity because of Ramadan and the summer holidays.
Said Al-Shaikh told Arab News that Saudi stocks might be affected by the same sentiments across global markets because the Kingdom is also part of the global economy.
Al-Shaikh said Tadawul is also expected to fall on Sunday when it resumes trading after the weekend break. Sami A. Al-Nwaisir, chairman of Al-Sami Holding Group, commented: “The Saudi market has more time to absorb the news. So, even if there is negative reaction like other markets, the market reaction will not be deeply negative as time was in their favor.”
Asked about the Brexit’s impact on Saudi and Gulf economies, he added: “The GCC will be in a strong position because most of their assets in the UK are in real estate and especially in London, which is the center city for the ultra wealthy people around the globe.
“This will make London more attractive as far as areas like real estate and weaker pound are concerned, and we anticipate the new government will be friendlier toward doing their best to attract new investments.
“Aside from London, we can say it is a recession-proof city, whereby all the wealthiest people around the globe want to invest as it is a cosmopolitan city.
“Thus, we do anticipate the value of real estate will increase gradually as the demand will increase due to economic factors like weak currency and relaxed rules. The government eventually will enjoy prosperity and growth as we wish the best for the UK all the time.”
Sami A. Al-Nwaisir, added: “Also, we assume the new British government will be more friendly to foreign investors and less aggressive toward imposing taxes unlike the current administration of Prime Minister David Cameron. Besides, I think the university will be more relaxed in trying to acquire more students who were affected by the previous restriction of rules on foreigner visas and universities, and also the austerity measure that was adopted during the current government.”
Al-Ghalayini further commented on the Brexit impact: “Obviously, no one can predict about the impact of this verdict over the long term or even mid term. But, in the short term, we are witnessing the immediate negative impact either on the currency, shares or real estate markets.” 
He added: “As far as the real estate market is concerned, if these international banks and companies do relocate outside the UK as a result of this verdict, there will be an oversupply in the office space segment which will ultimately drive the price down. GCC investors in this segment will suffer as a result.” 
Al-Ghalayini said: “Furthermore, property developers from the GCC might find a noticeable increase in their cost of capital if they are relying on variable rates debt financing terms.”


Saudi shrimp prove to be a hit across the globe

Updated 21 April 2018
0

Saudi shrimp prove to be a hit across the globe

  • The National Aquaculture Group has nearly 3,000 employees from 32 countries who speak 19 languages; 500 of them are Saudi nationals (21 percent) and 149 of them are women
  • Saudi Arabia’s fish stock is considered one of the strategic pillars of economic and social development

JEDDAH: Saudi shrimp roam European and East Asian countries, traveling between the world’s finest restaurants and hotels, and are given a warm welcome in 32 countries.

The story behind the rise of Saudi shrimp started 36 years ago. In the 1970s, a Saudi engineer with a vision and an enthusiasm for marine products traveled to the Philippines to recruit workers for civil engineering projects in Saudi Arabia. During his stay, he went to a restaurant where the Red Sea shrimp was on the menu, which gave him the idea of establishing farms on the Red Sea coast to produce shrimp in his country.

His enthusiasm encouraged Filipino technicians to start working on the shrimp-farming project on the Red Sea. Then came the launch of the National Aquaculture Group. It is considered one of the largest integrated aquaculture projects on the Saharan coasts in the world and the largest in the Middle East and Africa. The group is also the leader in aquaculture in the Kingdom.

The group consists of a staff of nearly 3,000 employees from 32 countries who speak 19 languages; 500 of them are Saudi nationals (21 percent) and 149 of them are women. The group is a founding member of the Global Aquaculture Alliance and had a key role in the establishment of the Saudi Aquaculture Society.

Ahmed Al-Ballaa, the CEO of National Aquaculture Group, said: “The Kingdom launched Vision 2030 as a roadmap for economic and development work. The vision set the Kingdom’s general directions and policies in addition to their objectives and obligations.”

“Among these objectives is the development and expansion of the aquaculture field,” he said. “That’s where the vision is in harmony with the program of the National Agricultural Research and Development Fund under the supervision of the Ministry of Environment, Water and Agriculture. The ministry focused on the aquaculture sector for it to become one of the Kingdom’s development branches. This comes at a time where the Kingdom is witnessing a complete renaissance in various parts of the aquaculture sector,” he said.

“This became possible due to the support of King Salman and his crown prince and their government.”

Al-Ballaa said: “The Kingdom’s fish stock is considered one of the strategic pillars of economic and social development, self-sufficiency of marine products and food security, in addition to providing job opportunities, especially in remote rural areas.”

“This can be accomplished through the development of aquaculture rules and the diversification of outputs. These objectives can also be reached by enhancing economic and marketing efficiency, benefiting from the important comparative advantages and resources found in the Kingdom. These resources are particularly found on the maritime coastlines, the solid base of expansion of the aquaculture industry.”

“The state has encouraged investment in the aquaculture sector through different strategies and policies. The latest was the government’s decision issued in September 2015. It approved the establishment of a national program to develop the fish stock sector in the Kingdom. The program is managed by the Ministry of Environment, Water and Agriculture in collaboration with any party it sees relevant,” Al-Ballaa said.

“As a response to the growing demand for marine products due to population growth, the ministry focused on aquaculture. It pointed out its economic usefulness, profitability and necessity to provide citizens with high-quality healthy food, especially after the shift in consumption patterns.”

Al-Ballaa said that the project “is located 180 kilometers south of Jeddah in Al-Lith province. This project is one of the largest integrated marine farms in the world.”

“The group was established 35 years ago as a project that studied the possibility of shrimp farming from 1982 till 1987. It then established some private facilities to start experimenting with different kinds of shrimp. The first successful breeding was of the Indian white shrimp in 1984 followed by the breeding of Penaeus semisulcatus shrimp in 1985. The last successful breeding trial was of the Penaeus monodon shrimp in 1987.”

“To conduct more experiments, they needed private land. At the time, they had 10 hectares of land and started building 4,000-square-meter tanks. Female P. monodon shrimp were produced and completed 300 shrimp-farming cycles. The greater accomplishment came with the first shipment of farmed shrimp from Saudi Arabia to European countries in 1992,” Al-Ballaa said.

“In the light of the unprecedented success in the Saudi aquaculture sector from 1995 till 2001, the group transitioned to a new phase. It was the commercial operations phase which started with the building of a complete shrimp project.”

“The project included a nursing unit, a shrimp hatchery unit and 100 shrimp-farming tanks. It was made to have a daily shrimp production capacity of five tons. It included laboratories specialized in testing shrimp. The group then moved to the industrial phase that transformed the farm from a small operation that worked in a traditional manner to a complete industrial farm. It was built on scientific and sustainable grounds, contributed to the realization of food security and support of the national economy. The group then changed again from a shrimp-producing company to a number of companies that work to produce a complete marine-products basket. They produced shrimp, different kinds of fish such as Asian sea bass, European sea bass, Dennis fish, in addition to sea cucumber and sea algae.”

Al-Ballaa said: “In March of 2003, the late King Abdullah visited the project to inaugurate the first stage and lay the foundation stone of its second stage.”

“It is considered the main pillar of the group and its main income source. The project’s production capacity reached about 41,500 tons of shrimp in 2017, with a goal of 60,000 tons set for 2018.”

The shrimp project has 17 farms with 547 tanks. The project also includes a specialized unit for mother shrimp and larvae production units (960 larvae produced monthly equal to 32 million larvae daily). It is the largest plant in the world to process and supply shrimp with a capacity of 560 tons daily. The group is working to raise the production capacity of the plant to 700 tons daily.