Saudi Arabia is the biggest market in the Middle East, says Dr. Mohamed Al-Turki, chairman and CEO of MTMM Engineering Consultancy.
In an exclusive interview with Diana Al-Jessem of Arab News, Al-Turki says Saudi Arabia needs to have less bureaucracy and better planning. “We should not blame the government for everything.”
The unemployment issue can be tackled once the government sets up a professional agency that shall be responsible for providing accurate unemployment data, the level of education and market demand, he says.
“Saudi Arabia does not have proper statistics to tackle the issue of unemployment. We need to identify the skills of the unemployed,” Al-Turki says.
Al-Turki indicates that the Kingdom has a tendency to shift to the smart country status, but still more time is needed to achieve this goal.
Success recipe
From your point of view what are the qualities of a good businessman?
A good businessman needs to work hard and have the right skills to do his business. Basically, for being a good businessman he should be able to monitor his work and enhance performance and quality offered.
Has the mentality of a successful businessman changed over the years and what all have changed in your business career over the past 20 years?
Yes, definitely. Back in the old days the focus was on family business. Now things have changed. There is a wider spectrum of business community with various interests and is much more competitive.
What words would you choose to describe your success story?
Working hard is the only term that describes my success story. Of course God’s blessing comes first. Maintaining the quality of job is most important. Because of technology, business communication today has become easier.
Saudi real estate portfolio
How do you view the Saudi real estate and building scenario, especially when the Kingdom is moving toward solving the housing problem by launching several projects?
Price of real estate is based on demand. Currently, the prices are somewhat exaggerated mainly due to shortage of housing. The Custodian of the Two Holy Mosques King Abdullah gave his directive to resolve this issue, and we have to wait to see its implementation. Housing is a major issue and it is not the only problem. The population is increasing while citizens’ affordability is still limited.
What are the reasons contributing to the Kingdom’s growing demand for government housing projects? Is it only the rising population or other reasons like globalization and inflation?
Basically, the rising population, exaggerated land prices, lack of infrastructure in lands granted to the citizens by the government and limited resources of a relatively wide spectrum of the society are the main factors that have contributed to the Kingdom’s housing crisis. If the lower income group expands in any society, problems will multiply in all sectors, not only housing.
The government housing projects definitely reflects keen interest of the Custodian of the Two Holy Mosques to address the needs of housing.
According to statistics, Saudi Arabia is the largest market in the Gulf and is poised to be one of the fastest growing markets in the region over the next 3 years. Tell us how many projects your company is presenting to cope up with this rapid growth?
We are involved in industry, all types of infrastructure works and supervision of water and sewerage projects in most of Kingdom cities and villages. We supply equipment to many cement projects across the Kingdom. Incidentally, one of our companies designed the complete Infrastructure of King Abdullah Economic City. We are expanding our field of involvement and currently are in negotiation with some international companies to enter into huge turnkey projects.
Competition amongst construction companies is getting tougher, especially when foreign investors are allowed to join the Saudi market and work with flexibility. Tell us your evaluation of the competition amongst these companies?
The Saudi market is huge and where foreign companies mostly execute many of the major projects, especially industrial and construction projects. International companies have an edge over many of the local companies with regards to experience, building technology and construction techniques.
There are laws with regard to having at least 30 percent of government projects subcontracted to Saudi companies. These have to be strictly applied.
What the business society should do is to merge small companies to form huge conglomerates to be able to compete. Setting up real joint ventures with big foreign companies would be of great value.
Experts expected mortgage law to stop fueling the prices of real estate and raw materials. What is your opinion in this regard?
Mortgage law will definitely help in funding low-income families to own houses. To have mortgage we have to involve banks. In the UK, for example, citizens pay mortgage installments instead of paying rents and end up owning their own houses. Bank interest in Saudi Arabia is unjustifiably high and I believe parity of local bank interest rate with international standard could make mortgage a success.
How does the business environment contribute to green communities in the Kingdom? Do you expect the Kingdom to have environment-friendly projects?
We are slowly creeping toward this goal. There are several government bodies that are now showing interest to have environmentally friendly projects, like solar energy, smart buildings, but definitely very limited.
The Presidency of Meteorology and Environment (PME) is now playing a much bigger role and all new industries have to meet International Environmental Standards before license is awarded.
The issue lies with existing industry. The situation is really quite serious. There are programs funded by the UN to reduce pollution, but there is very little interest by many of the existing industry.
I believe the PME should step in. Our cities are getting more polluted everyday and a more extensive plan should be prepared to address every issue of pollution in our life.
I also suggest that this subject should be part of our school and education curriculum. This will enhance awareness amongst the citizen in Saudi Arabia and will definitely have positive impact, as it will become part of our culture.
Saudis have been looking to see their country develops projects like other GCC countries, especially the UAE and Qatar. Do you expect the Kingdom’s old construction models to be changed in the coming years?
I think people should not compare our country with Dubai or Qatar. Let’s speak about Dubai. The UAE is relatively small country, while the Kingdom is the size of a continent. What is important is better planning. In Dubai, when an order is issued it is followed up until its implementation. In addition, they tend to work with foreign professional contractors, where financial aspects of the various contracts are taken care of in a planned manner. Projects are properly and realistically budgeted for and FIDIC contracts are implemented.
Everybody in the world is impressed with development in the Emirates. Everything is well organized, no government bureaucracy. The cities are neat and well planned and far superior to many European countries. You can get a license for an industrial project along with manpower visas, etc. within 24 — 48 hours. They have what is called the “electronic government”.
Saudi Arabia has the biggest budget and projects in the Arab world. However, to have the same construction model, we need to address the issue of bureaucracy, decision-making and coordination amongst the different agencies and most of all, the problem of the one-sided government contracts. For many years, the business community has been struggling to convince the authorities to change to FIDIC contracts. FIDIC contracts are adopted worldwide. The relationship between client and contractor is balanced and fair, and additionally eliminates means of corruption.
What are your views about the ongoing Saudization plan, and how it could affect the Saudi market?
We really need to have a proper statistics agency that can tell how many are unemployed, their level of education, market needs, etc. in order to find a proper solution to this problem.
The Ministry of Labor is definitely doing its best to resolve a high profile issue. However, the issue lies with the system of education. I believe that without changing the education system to meet the market demand, the unemployment issue would not be solved. There should be no more universities rather, we should study the market requirement and have more technical colleges. Japan’s Minister of Education refused to open more universities for fear of unemployment and instead is opening more technical colleges to meet the market needs.
Maybe we should also look at the successful Malaysian experience and see how they qualify their citizens for market jobs and train them to be able to deal with future technology. It is worth visiting Malaysia Silicon valley.
Additionally, Saudi culture, with regard to technical jobs, is also a hindrance but I believe with time, people will start to realize reality and accommodate themselves.
The belief of some that private businesses in Saudi Arabia will solve the issue of unemployment is not realistic or feasible. I believe imposing laws has never been and will never be the solution.
To be fair, the government should regulate the relationship between Saudi business community and Saudi employees. Many Saudi nationals leave their jobs without proper contractual notification or handover and this is of major concern to the business community.
I believe many industries are employing Saudis in non-productive jobs to ensure their Nitaqat level is green. This will only add prices to the consumers. We need to study the issue in depth and with openness. We are criticizing the influx of non-Saudis, but in reality, do not realize that we do not have enough Saudi technicians or engineers to replace them.
As I said earlier, we need to address the issue of education to be able to address the issue of unemployment.
Al-Turki’s ID:
Name: Dr. Mohamed Al-Turki
Position: Chairman and CEO of Mohamed Al-Turki Mott MacDonald (MTMM) Engineering Consultancy, Dr. Eng. Experience: CEO of Mohamed Turki Office for Engineering Consultancy (MTEC)
• Mohamed Turki for Environmental Studies (MTEV) and
several trading and contracting companies
• Chairman of IEEE — Western Region, Saudi Arabia and other industrial organizations
Degree: Ph.D. in Electromechanical engineering from London University; Ph.D. in Economics, Texas US
