Local partner condition may be scrapped to bolster FDI

Updated 07 February 2016

Local partner condition may be scrapped to bolster FDI

JEDDAH: New steps being taken to increase the flow of foreign investments into Saudi Arabia this year have raised the expectations of the business community.
A triple sectorial committee, including Saudi Arabian General Investment Authority (SAGIA), Ministry of Commerce and Industry, and Ministry of Labor, is seriously reviewing factors that hinder investment in the Saudi market, Asharq Al-Awsat reported Saturday.
Quoting sources, the report said that the study is aimed to facilitate global companies’ investment in the Saudi market and to present them with incentives.
The daily also stated that the committee’s review would shift the current situation to a new standpoint, which eliminates all obstacles slowing down global investment.
The condition to have a local partner in a foreign investment project for it to be granted access to the Kingdom’s direct market has reduced the scale of foreign investment in Saudi Arabia.
The condition for the need for a local partner is likely to be removed when the committee concludes its studies, the report indicated.
James Reeve, deputy chief economist and assistant general manager, Samba Financial Group, said: “Saudi Arabia needs to attract FDI to help stem losses of international reserves.”
He told Arab News: “The main obstacle for foreign investors is the lack of clarity on bankruptcy laws. That, and the hiring and firing of nationals.”
Reeve said: “Retail is the main growth sector of the next few years. It is already in pretty good shape. One might expect some consolidation (i.e. fewer smaller independent outlets) and some bigger players.”
Said Al-Shaikh, group chief economist of the National Commercial Bank, commented: “Probably one of the things making it difficult for foreign investors is the issue of legal enforcement.”
The lengthy process of resolving commercial disputes is a major concern, he said. “Within the legal system there are until now no special courts for commercial disputes. They go to general courts.”
Al-Shaikh said: “The lengthy process in obtaining licenses is another hindrance.”
Fawaz Alfawaz, a Riyadh-based economic consultant, told Arab News: “It really depends on the type of investments we the Kingdom aspires to. The existing state of the economy makes energy intensive and distribution more attractive because of the cost structure in the Saudi economy. But as the Kingdom strives to modernize its economy the types of foreign investment we need becomes radically different.”
Alfawaz added: “SAGIA can help with streamlining the bureaucracy, the information, the rules and regulations but the heavy lifting is really on the total eco-system starting with public sector, private sector to find the right partners and the productivity of the Saudi labor market.”


Google Cloud prepares for Black Friday ‘peak on top of peak’

Updated 04 August 2020

Google Cloud prepares for Black Friday ‘peak on top of peak’

  • Cloud technology, used to host websites and store data, is a key part of many retailers’ e-commerce operations

OAKLAND, California: Alphabet’s Google Cloud unit is poised for a surge in fourth-quarter sales from US retailers, as they brace for record online shopping during the holidays because of COVID-19 lockdowns.
Cloud technology, used to host websites and store data, is a key part of many retailers’ e-commerce operations. As fees are often pegged to site traffic, a jump in activity will drive up revenue for the unit.
Carrie Tharp, vice president of retail and consumer at Google Cloud, said that her team had this year tossed out its linear growth model to predict how many servers it will need to process web orders for retailers around Black Friday.
“We’re planning for peak on top of peak,” she said on Monday. That could be a boon for Google Cloud, which has generated about 30 percent of its revenue during the fourth quarter the last two years.
Stores such as Kohls Corp. and Wayfair Inc. lean on Google months in advance to ensure it has enough servers to withstand increased shopping during holiday discount days such as Black Friday and Cyber Monday in November and December.
This year, Black Friday-style demand has flooded shops since March, when the United States began lockdowns, Tharp said.
Holiday shopping is expected to boost demand further, as retailers including Target Corp. and Walmart Inc. have said they will reduce in-store hours because of coronavirus concerns.
Tharp said the pandemic has already benefitted Google Cloud, with some retailers adopting its predictive algorithms years ahead of plan to help them work out the most efficient way of fulfilling orders.
Electronics retailer Best Buy Co., for instance, announced on Tuesday a multi-year deal to centralize customer and product data with Google Cloud to improve its loyalty program and online ad campaigns.
The companies declined to elaborate on the deal, but Tharp said she hopes it leads to Google eventually powering Best Buy’s web ordering system.