GCC contracting firms are being urged to form mergers to be more competitive in light of fierce competition from Asian and global giants.
Such steps would prevent local or regional firms from collapsing while giving them the ability to expand outside their borders and acquire more expertise, says Abdulrahim Naqi, secretary-general of the Federation of Gulf Cooperation Council Chambers (FGCCC).
GCC contractors are facing fierce competition due to the entry of foreign construction firms, which are eager to grab a share of the construction boom in the region.
The GCC contracting sector is expected to grow 22 percent to hit the $ 137 billion mark during the current year compared to last year’s figures, said Naqi.
Addressing a construction conference of the GCC countries in Bahrain, Naqi said the positive trends in the GCC construction market reflect the growth in the GCC states’ gross domestic product (GDP), ranging between 5-6 percent, and is expected to increase to $ 3.6 trillion by 2016 compared to $ 2.4 trillion in 2012.
The local media quoted him as saying that the government sector will remain the key driving force behind new contracting and construction projects in the GCC countries, as the government will acquire more than 50 percent of the overall projects, notably infrastructure projects and other governmental service facilities.
This situation requires priority to be given to the GCC contractors in implementing projects that need no international technical know-how and expertise or, alternatively, to enter into partnerships with global firms in value-added projects such as railways, which require high-technical expertise that does not exist in the GCC countries.
The increased growth in the number of government projects compared to previous years will fuel competition in construction and contracting projects which, in turn, will keep the sector attractive to investments despite low margins, he added.
He urged the GCC contracting firms to form mergers to be more competitive in light of fierce competition with Asian and global giants with a view to preventing local or regional firms from collapsing and giving them the ability to expand outside their borders and acquire more expertise.
He stressed that the FGCCC is keen to ensure that the interests of the contracting firms in the GCC countries are safeguarded. He added that the council reviews the regulations and draft laws relevant to the sector so as to identify the implications on the construction sector and to coordinate with the contractor committees of the FGCCC members.
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