The operations of foreign contracting companies are likely to undergo annual evaluation, according to a local report.

Under a royal decree, these firms are being allowed to operate in Saudi Arabia without being subject to existing rating procedures.

The Al-Eqtisadyah daily, citing a memo circulated to a number of government agencies, said the (royal) decision will be observed by the Ministry of Municipal and Rural Affairs and Saudi Arabian General Investment Authority (SAGIA).

According to the report, Fahad Al-Hammadi, head of the National Contracting Committee, said the new rules would not negatively affect small and medium Saudi contracting firms.

He said the royal follow-up of the decision would provide more momentum to the issue, providing a chance to highlight the positive impact from well-known foreign contractors.

He pointed out that the new rules, which were approved by a recent royal decree, would allow only major global companies to enter the Saudi market. Earlier, he said, bogus and small contractors entered the market under the cover of foreign investment, posing a threat to local contractors. They also did not bring any benefit to the Kingdom.

The National Contracting Committee welcomes the entry of foreign investors who are capable of implementing major projects as the country needs them, he said. National contractors will also benefit from foreign expertise and modern technology, he pointed out.

“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 said.

The committee has earlier concluded deals with some countries to bring mega and strong companies to work in the Kingdom, he said.

He said the committee would soon meet with the SAGIA Governor to discuss the latest developments in the wake of the recent decisions. Issues such as the number of foreign companies seeking to work in the Kingdom are likely to be discussed during the talks.

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.

He affirmed that the new rules would not negatively affect small and medium-sized 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 said.

He called for strict application of the new rules which will be positively reflected on mega government projects and the Saudi contracting industry.