Labor visa limitations pose challenge for contractors

Updated 19 September 2014
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Labor visa limitations pose challenge for contractors

The limited number of labor visas for foreign workers owing to the Kingdom’s nationalization program has led construction companies to look for alternative solutions to deal with the acute shortage of skilled labor required for the completion of the massive projects still underway in several major cities.
The third annual Saudi Mega Transport and Infrastructure conference organized by MEED held recently focused on ways to tackle this issue, the current projects in the Kingdom and labor availability, training Saudi workers, and Nitaqat (nationalization) requirements.
The conference held at Al-Faisaliah Hotel featured a keynote address by Minister of Economy and Planning Dr. Muhammad Al-Jasser and speeches by a number of suppliers in the region.
King Saud Trust Foundation head Prince Khalid Al-Saud was the guest of honor at the event.
As the largest construction market in the Middle East, Saudi Arabia has delivered megaprojects worth $350 billion that will have a long-term impact upon the economic and social development of the country.
Ayman Nahas, vice president and regional director of Louis Berger, said that the main challenge is finding qualified resources in a timely manner.
“The labor shortage forces contractors to go to the local market that often lacks the required skills, but we are working with government agencies to resolve this short-term issue,” he said.
Construction companies are dealing with the 6 percent requirement of Saudi labor by training them from the initial stages of the project.
Mustapha Talha, business development director of Alstom Transport, said that hiring Saudi labor has been challenging but they have the capability to do so as long as extensive training is delivered from the design phase, which gives more time for them to grow accustomed to the regulations.
Saudi manpower companies are working on improving their services for providing trained workers within a few weeks, which previously took several months.
Omar Al-Juraifani, CEO of Esad Manpower Company, pointed out: “The solution to the labor crisis is that companies should focus on their specialization; for instance construction companies shouldn’t do logistics.”
“Foreign companies need to understand that the regulations are constantly evolving,” Al-Juraifani said, adding, “New laws are being introduced by the end of this year, which will give more rights to employees, wages protection, environmental and safety regulations.”
Faisal Al-Fadl, Head of the Organizing Committee of the conference said: “My advice to foreign companies is to develop a partnership with a local company and try to engage at least 30 percent of transference of knowledge to the local community.”
Foreign companies are increasingly managing larger projects, but owing to the labor shortage, about 200,000 construction companies have been forced to leave the market recently.


Huge expectations from Saudi crown prince’s Korea visit

Updated 12 min 26 sec ago
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Huge expectations from Saudi crown prince’s Korea visit

  • The export of South Korea’s APR-1400 nuclear reactor technology to Saudi Arabia is high on the agenda

SEOUL: Saudi Arabia’s Crown Prince Mohammed bin Salman is due to meet South Korean President Moon Jae-in on Wednesday to discuss wider economic ties between the two countries, according to the presidential office.
The crown prince’s visit to South Korea is the first by an heir to the throne of the world’s largest oil exporter since then-Crown Prince Abdullah’s tour in 1998. The crown prince will also attend the G20 Summit next week in Osaka, Japan.
The two-day visit is expected to deliver key agreements with South Korea in a variety of industrial fields, including cooperation on nuclear reactor and defense technologies.
“Saudi Arabia, a key ally of South Korea, is the biggest oil supplier to our government and the largest economic partner among the Middle Eastern countries,” presidential spokeswoman Koh Min-jung told reporters.
“Both leaders are expected to discuss detailed measures to expand bilateral cooperation beyond the traditional areas of construction and energy to the sectors of information and technology, nuclear energy, green cars, health, public service and exchange of human resources.”
The crown prince and his economic advisers are scheduled to have luncheon with South Korean business leaders after his summit with President Moon, she said.
Business leaders attending the luncheon will include Lee Jae-yong, vice chairman of Samsung Electronics; Chung Eui-sun, vice chairman of Hyundai Motor Group; Chey Tae-won, chairman of SK Group, and Koo Kwang-mo, chairman of LG Group.
A Samsung spokesman, who declined to be named, told Arab News that his company has a package of business proposals to present to Saudi Arabia.
“We’re not sure at the moment what business elements the Kingdom wants, but we have a variety of business packages that can meet the Saudi Vision 2030 requirements, ranging from engineering, procurement and construction to information and communications technology, and artificial intelligence,” the spokesman said.
Hyundai Motor Group was cautious about revealing potential business projects with Riyadh.
“We’ll see what’s happening. We have high expectations about potential business cooperation with Saudi Arabia,” a Hyundai Motor spokesman said, while asking not to be named.
The export of South Korea’s APR-1400 nuclear reactor technology to Saudi Arabia is high on the agenda.
Team Korea, led by the Korea Electric Power Corp., was shortlisted last year for a nuclear power plant construction project in Saudi Arabia, along with the US, China, France and Russia. The project by the King Abdullah City for Atomic and Renewable Energy is aimed at building two nuclear power plants by 2030.

HIGHLIGHTS

• Different South Korean companies are reportedly keen to invest in Saudi Arabia and become part of Vision 2030’s success.

• The Saudi leader is also expected to attend a ceremony celebrating the completion of Saudi-owned S-Oil’s residue upgrading facility.

• Crown Prince Mohammed bin Salman will also attend the G20 Summit next week in Osaka, Japan.

With Riyadh reportedly leaning toward the US bidder, Team Korea is considering forming a strategic consortium with the US side, according to government sources.
“The possibility of the Korea-US consortium for the Saudi project is a feasible option,” said Huh Min-ho, a researcher of Shinhan Invest Corp., referring to the US Nuclear Regulatory Commission’s approval of the technical design of South Korea’s APR-1400 reactors.
“For South Korea, joining hands with the US is a feasible option to win the Saudi nuclear reactor contract, though the total order amount would be reduced,” the analyst said. “Once the Saudi project is won, more orders are expected to come from other countries such as the UK, the Czech Republic and Poland.”
South Korea already has a nuclear power footprint in in the Middle East after its construction of the Barakah nuclear power plant in the UAE. The country recently won a five-year maintenance deal for the nuclear plant with Nawah Energy Co., the operator of the plant.
The Saudi crown prince is also interested in South Korea’s weapons development technology, according to defense sources, and is scheduled to visit the Agency for Defense Development, South Korea’s only weapons developing agency, during his stay.
“We heard the crown prince is interested in the transfer of weapons technology when his country imports foreign weapons systems,” a Defense Ministry official told Arab News.
The Saudi leader is also expected to attend a ceremony celebrating the completion of Saudi-owned S-Oil’s residue upgrading facility. S-Oil, which is wholly owned by state-run Saudi Aramco, is third-largest oil refiner in South Korea.