COVID-19 travel restrictions result in higher domestic activity

COVID-19 travel restrictions result in higher domestic activity
Overseas travel restrictions have resulted in higher local activity with people visiting places such as the high-altitude Saudi city of Al-Baha — a place of lush forests and winding valleys. (Supplied)
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Updated 10 January 2021

COVID-19 travel restrictions result in higher domestic activity

COVID-19 travel restrictions result in higher domestic activity
  • For the healthcare sector, profitability among hospitals will be helped by growth in inpatient revenue

RIYADH: Saudi Arabia’s travel restrictions during the coronavirus (COVID-19) pandemic have resulted in higher local market activity and more money spent domestically, according to the latest quarterly equities forecast issued by Riyadh-based financial services company Al Rajhi Capital.

 “We expect the overall outlook for Q4 2020 to be positive given the improvement in economic activities,” the report said.

For the petrochemical sector, aggregate earnings are likely to improve, both on an annual and quarterly basis, “on the back of sharp improvement in product prices and better product demand,” it said.

In addition, tight supply conditions, mainly due to several planned plant shutdowns, coupled with rising container prices and increased upstream costs, kept the product prices (mostly polymer) at elevated levels during the quarter, ensuring a sharp recovery in profitability of the sector.

Al-Rajhi Capital said it expects all the petchem companies under its review to report strong growth in earnings, except for SABIC Agri-Nutrients, which could witness pressure on its earnings due to a 32-day shutdown at one of its plants.

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Al-Rajhi Capital said it expects all the petchem companies under its review to report strong growth in earnings, except for SABIC Agri-Nutrients, which could witness pressure on its earnings due to a 32-day shutdown at one of its plants.

For the healthcare sector, profitability among hospitals will be helped by growth in inpatient revenue and the steady improvement in outpatient flow, post-COVID-19.

For the banking sector, retail-focused lenders are likely to continue seeing healthy mortgage volumes.

In the cement sector, volumes are expected to continue to remain robust in the quarter, though both revenue and profitability growths are predicted to be under pressure.

 Within the lucrative retail and consumer sectors, the report has forecast a mixed bag of results among Saudi retailers, with higher value-added tax (VAT) likely to have an impact, as is the loss of revenue due to the delay in schools reopening. Saudi Arabia tripled the VAT rate to 15 percent effective from July 1, 2020.

Jarir and Al-Othaim is expected to be affected the most; BinDawood may be less affected as Danube, which caters to the high-end segment, is better protected from any adverse impact of incremental VAT, the report said.

For the telecom sector Q4 is predicted to report a moderate top-line growth, but the volume of local travel and business activity is expected to boost demand for voice and data services.


Indonesia campaign helps SMEs enter Saudi market

Indonesia campaign helps SMEs enter Saudi market
Updated 19 January 2021

Indonesia campaign helps SMEs enter Saudi market

Indonesia campaign helps SMEs enter Saudi market
  • They will be the main target of the export initiative, which is estimated by the Indonesian Ministry of Trade to be able to generate $60 million

JAKARTA: Indonesia has launched a campaign to help small firms in the country compete for millions of dollars-worth of food trade in Saudi Arabia.

The government aims to help small and medium-sized enterprises (SMEs) improve the quality and competitiveness of their products to meet the Kingdom’s required standards, Indonesian trade and commerce officials have said.

Under normal circumstances, before the coronavirus disease (COVID-19) pandemic, around 1.5 million Indonesians a year make the pilgrimage to Saudi Arabia to perform Hajj and Umrah and hundreds of thousands work in the Kingdom.

They will be the main target of the export initiative, which is estimated by the Indonesian Ministry of Trade to be able to generate $60 million.

To meet the Saudi food regulator’s standards, the Indonesian Chamber of Commerce (Kadin), the Ministry of Trade, and the Ministry of Cooperatives and Small-Medium Enterprises have teamed up to assist SMEs in improving products such as bottled chili sauce, soya sauce, coffee, tea, and sugar that are in highest demand among Indonesians in Saudi Arabia.

Kadin chairman, Rosan Roeslani, told Arab News: “We have facilitated five small-medium enterprises that produce soya sauce to obtain Saudi Food and Drug Authority approval for distribution, while nine tea and coffee producers are in the pipeline to also obtain a license. We have also submitted the application for four bottled chili sauce producers.”

While travel and pilgrimage restrictions remain in place due to the COVID-19 outbreak, he said that the time before things get back to normal will be used to prepare the SMEs — which contribute 60 percent to the country’s gross domestic product and employ up to 90 percent of its workforce — for expansion into the Saudi market as soon as the pilgrimage sector resumes.

“We still have time to groom them as there are many aspects such as hygiene, and consistency in their product quality and quantity that they need to improve,” Roeslani added.

In 2014, the Ministry of Religious Affairs issued a regulation obliging catering companies that provided food and drink to Indonesian pilgrims in Saudi Arabia to source their products from Indonesian producers whenever possible.

Indonesia’s vice religious affairs minister, Zainut Tauhid Sa’adi, said that as each Indonesian pilgrim received food from caterers an average 75 times during his or her pilgrimage, demand was high but supply in Saudi Arabia remained limited and similar products from India and Thailand had been used instead.

Kasan Muhri, director general for export development at the Ministry of Trade, told Arab News that the program to prepare the SMEs had been in the making since 2017 and officials eventually decided to launch it this year despite the COVID-19 restrictions.

“Just because there are few Umrah pilgrims now and this year’s Hajj remains uncertain, it does not mean that the market is gone.

“People from around the world would still go to Saudi Arabia to perform the pilgrimage, not just Indonesians, so we are doing this to anticipate the market when the economy revives, and things are recovered. We don’t want to be left behind,” Muhri said.

Besides food and beverage products, officials say they are also looking into the possibility of exporting items such as goodie bags, prayer beads, and other pilgrimage accessories made by Indonesian SMEs.