Business in Middle East to flourish despite global turbulence: report
Business in Middle East to flourish despite global turbulence: report/node/2482611/business-economy
Business in Middle East to flourish despite global turbulence: report
The region’s deal market is showing resilience and promise, unaffected by the global macroeconomic and financial turbulence seen in 2023, PwC’s TransAct analysis said.
Business in Middle East to flourish despite global turbulence: report
Updated 26 March 2024
Arab News
RIYADH: The business landscape in the Middle East is projected to grow despite global economic challenges, an industry report has predicted.
Issued by PwC Middle East, the report titled “Strategic growth beyond oil: Economic diversification and decarbonization expected to boost dealmaking in the region,” sheds light on the region’s potential and readiness to embrace a new era of investment diversity and development opportunities.
The region’s deal market is showing resilience and promise, unaffected by the global macroeconomic and financial turbulence seen in 2023, PwC’s TransAct analysis said.
It added that this strength stems from robust economic foundations and supportive government policies across the region, which have maintained investor confidence and market activity even as other areas grapple with financial slowdowns, rising interest rates, and recession concerns.
The study points to the region’s economic fundamentals and strategic policy support as key drivers.
Countries in the Middle East are embracing digital transformation, enhancing their non-oil sectors, and championing energy transition, aligning with broader diversification goals.
PwC Middle East’s experts advise businesses to capitalize on this environment by engaging in strategic transactions like mergers and acquisitions, divestitures, joint ventures, or refinancing.
“Despite notable declines in comparison to 2022, it is anticipated that the deal market will remain active and grow in many sectors in 2024 as governments continue to advance their strategic agendas and diversify their economies,” the report stated.
Furthermore, Romil Radia, regional deals clients and markets leader at PwC Middle East explained that the mergers and acquisitions division has shown remarkable resilience, boosting investor confidence in the region and increasing active dealmaking.
“We anticipate that 2024 will be a year of growth and activity will be driven by economic diversification goals, decarbonization, and a focus on localization and value creation as organizations transform their business models and look to expand capabilities,” Radia added.
The report also casts a spotlight on the burgeoning opportunities in net-zero initiatives and the energy transition, presenting new avenues for investment in essential infrastructure and technologies like hydrogen, solar, wind, and carbon capture.
This shift is paralleled by an increasing eagerness among firms to channel funds into sustainable energy sources, reflecting a broader commitment to environmental stewardship.
Technology stands out as another arena for deals in the coming year, particularly in cybersecurity, cloud computing, and e-commerce.
“The Middle East’s active adoption of the digital revolution has further accelerated this trend, with countries like Saudi Arabia, UAE, Qatar, and Bahrain, outlining economic visions that involve substantial adoption of advanced technologies, including Gen AI,” the study stated.
The report also urged companies to invest in skill development and education, ensuring their teams are equipped for the dynamic shifts in the business environment.
Saudi-UAE drilling giants team up to accelerate international expansion
Updated 25 sec ago
Nour El-Shaeri
RIYADH: Saudi-based Arabian Drilling and the UAE-headquartered Shelf Drilling have entered three global tenders as part of their strategic alliance to expand international operations.
The partnership, formalized through a memorandum of understanding signed in early February, seeks to leverage Arabian Drilling’s fleet of rigs alongside Shelf Drilling’s extensive expertise to accelerate global expansion and unlock new market opportunities.
Greg O’Brien, CEO of Shelf Drilling, confirmed that the alliance has already begun executing its objectives by bidding for project proposals across different regions.
“We have participated in three different opportunities. We have a longer list of target opportunities,” O’Brien said in an interview with Arab News.
He noted that while the alliance is taking an aggressive approach to exploring international prospects, the financial impact of these tenders will likely not be seen until late 2025 or early 2026 due to the time required for rig mobilization and contract execution.
Strategic rationale
As an international offshore extraction contractor, Shelf Drilling operates in multiple regions and continues to seek expansion opportunities while optimizing costs.
O’Brien highlighted that maintaining operational efficiency is a priority, particularly in a competitive market.
“We have 14 rigs right now, all but one of those are contracted, and that one we expect to have contracted really soon, and we see additional opportunities to deploy newer, more capable rigs in other markets where we have a footprint like West Africa and Southeast Asia,” he said.
Greg O’Brien, CEO of Shelf Drilling.
The alliance allows Shelf Drilling to expand its capacity without significant capital expenditure on new assets.
“This alliance with Arabian Drilling gives us access to a few additional rigs that we believe we can deploy in the contract opportunities and markets that we know well without having to buy other assets,” O’Brien stated.
For Arabian Drilling, the alliance is a critical step in its broader international growth strategy.
The company, which operates 36 rigs, has three currently suspended. O’Brien explained that these three rigs share similarities with those used by Shelf Drilling, making their international deployment more seamless.
By leveraging Shelf Drilling’s established presence in key markets, Arabian Drilling can re-enter the global scene more efficiently.
Talking to Arab News, Ghassan Mirdad, CEO of Arabian Drilling, emphasized that the partnership aligns with the company’s long-term ambitions to expand beyond the Kingdom.
“When we go back in time to when we were listed, part of our strategy was to grow outside of Saudi Arabia; it was clearly the intention to grow in the land market, not the offshore,” he said. “However, with the suspension of rigs, we had to accelerate the expansion out of Saudi Arabia.”
The alliance provides Arabian Drilling with the necessary framework to establish a presence in global markets without having to build operations from scratch. “And this (alliance) is the license to operate outside of Saudi,” Mirdad added.
Ghassan Mirdad, CEO of Arabian Drilling.
He further underscored the increasing demand for offshore drilling worldwide. “Today, I can easily name on top of my head four or five countries that are in desired need of offshore jack-ups.”
Mirdad noted that while entering these markets independently would require significant investment, partnering with an international player like Shelf Drilling facilitates market access. “With this alliance, automatically we have the license to operate in all of these rigs, we have the local knowledge that Shelf has, and it gives us access to all the tenders,” he said.
Opportunities and plans
Several international markets present promising opportunities for new contracts, with West Africa emerging as a key target region.
“India, Southeast Asia, West Africa are markets we know extremely well. West Africa is a place that has a decent number of new projects that are incremental to existing activity in that region, and it’s not quite as competitive,” O’Brien said.
“Southeast Asia holds great opportunities as well, but we see a better opportunity margin in West Africa,” he added.
Mirdad acknowledged that the alliance’s initial three rigs would not be sufficient to meet the growing demand for offshore drilling services.
“When we looked at the opportunities, we, as Arabian Drilling, looked at each other and realized we don’t have enough rigs,” he said.
He indicated that the company is actively considering further expansion. “The three rigs are not enough. So, I’m very upbeat to giving the market some good news in the short term,” Mirdad said.
When asked about plans for additional rig deployment, he explained that the alliance is a long-term strategic move rather than a short-term fix.
“In the first instance, it might seem like we’re doing this alliance to secure these three rigs, which is true, but this alliance is not a short-term fix; it is long-term.”
He further highlighted that with a strong balance sheet and growing international demand, Arabian Drilling is well-positioned to explore additional rig deployments beyond the initial three.
Financial outlook and growth strategy
When asked about the financial impact of the alliance, Mirdad stated that Arabian Drilling’s strong balance sheet allows it to focus on growth rather than relying solely on financial maneuvers to expand.
“Our relations with the banks are really good, so access to cash is not a problem for growth, but this is a great avenue for us and Shelf to grow and not to miss out on any international opportunities,” he said.
O’Brien added that current oil prices remain at levels that support offshore rig demand, strengthening the alliance’s financial rationale.
He emphasized that while the primary goal is to establish a broader global footprint, the venture is designed to generate long-term profits for both companies.
“The alliance will definitely aim to generate profit and revenue for both companies, and the approach will be opportunity-specific,” O’Brien said.
Global industry trends and long-term demand
O’Brien highlighted that the alliance aligns with global trends in the shallow-water drilling market, particularly as demand for offshore rigs remains strong.
“There are about 425 jack-ups around the world, the Middle East is the biggest market, and Saudi Arabia is the largest market for offshore shallow water drilling, but there is stable demand in other parts of the world,” he said.
He pointed out that the supply of jack-up rigs in markets outside the Middle East has remained relatively stagnant and is expected to decline in the coming years.
This presents an opportunity for drilling contractors to capitalize on increasing demand.
“The supply side in other markets has been flat and would most likely be declining in the years to come, which is a good thing for a drilling contractor,” he added.
O’Brien expressed confidence in long-term global oil demand, which will likely drive continued demand for drilling services.
“We believe oil demand will continue to grow around the world for the next five to 10 years, or even more,” he said.
Mirdad further explained that new jack-up rigs are rarely built, leading to a gradual phasing out of older rigs and creating a supply gap in the offshore drilling market.
“That means that you’ll have demand but not enough rigs available,” he added.
Saudi Arabia launches March ‘Sah’ savings with 4.98% return
Updated 02 March 2025
MOHAMMED AL-KINANI
JEDDAH: Saudi Arabia has launched the third round of its Sah savings product for 2025, offering a 4.98 percent return for March under the Ijarah sukuk structure.
Issued by the Ministry of Finance and managed by the National Debt Management Center, Sah is the Kingdom’s first savings bond designed for individuals. It operates under the Ijarah format, a Shariah-compliant structure akin to leasing, where investors receive returns in exchange for the right to use an asset.
The offering, part of the local bond program and denominated in riyals, aligns with Saudi Vision 2030’s goal of increasing the national savings rate from 6 percent to 10 percent by the end of the decade.
The NDMC said the format will be retained for future issuances as part of ongoing efforts to offer accessible, low-risk savings solutions.
The latest issuance opened at 10:00 a.m. Saudi time on March 2 and will close at 3:00 p.m. on March 4. Redemptions are expected within a year, according to an NDMC post on X.
The bonds, available through digital platforms of approved financial institutions, feature a one-year savings period with fixed returns paid at maturity. The minimum subscription is SR1,000 ($266), while the maximum is SR200,000 per user across all issuances during the program period.
The product is fee-free and offers low-risk returns. Eligible Saudi nationals aged 18 and older can subscribe through Aljazira Capital, Alinma Investment, and SAB Invest, as well as Al-Rajhi Capital and SNB Capital.
In January, the NDMC announced the closure of the year’s first issuance, allocating SR3.724 billion across four tranches. The first tranche, valued at SR1.255 billion, matures in 2029, while the second, worth SR1.405 billion, matures in 2032. The third totaled SR1.036 billion with a 2036 maturity, and the fourth, at SR28 million, matures in 2039.
The previous issuance, which closed on Feb. 4, offered a 4.94 percent return, while the first 2025 issuance concluded on Jan. 7 with a 4.95 percent return. Future rates will depend on market conditions.
Oman’s FDI jumps 17.6% over five years, reaching $69.3bn by Q3 2024
Updated 02 March 2025
Miguel Hadchity
RIYADH: Oman’s foreign direct investment inflows rose by over 17.6 percent over the past five years, reaching 26.6 billion Omani rials ($69.3 billion) by the third quarter of 2024.
As reported by the Oman News Agency, this significant growth highlights the country’s success in solidifying its position as a key global investment hub. The rise has been fueled by strategic initiatives, a conducive capital environment, and advanced infrastructure.
This increase in Oman’s FDI aligns with a global rise of 11 percent in FDI flows in 2024, which reached $1.4 trillion. However, developing Asia saw a 7 percent decline in its FDI inflows, according to the UN Conference on Trade and Development.
According to the National Center for Statistics and Information, the UK led the way with investments totaling 13.6 billion rials, followed by the US with 5.2 billion rials. The UAE contributed 836.5 million rials, while Kuwait invested 833.5 million rials. China invested 817.8 million rials, and Switzerland added 551.9 million rials.
Qatar’s investments in Oman reached 488.3 million rials by the end of the third quarter, with Bahrain contributing 375.7 million rials. Investments from the Netherlands and India amounted to 359.1 million rials and 286.1 million rials, respectively.
Oman’s Minister of Commerce, Industry, and Investment Promotion Qais bin Mohammed Al-Yousef highlighted that high-level directives aimed at improving the capital climate have played a key role in building a promising economic future.
He emphasized that positive indicators in the investment sector reflect the success of Oman’s policies and initiatives in creating a robust environment for attracting projects, as reported by the state-run news agency.
Al-Yousef further noted that efforts to establish the Investment and Commercial Court highlight the government’s commitment to fostering a stable legal framework that encourages foreign investment. The ministry is also focused on offering competitive incentives and streamlining business operations within a dynamic market.
He concluded by emphasizing that improving the investment and business environment remains a top priority for promoting sustainable development. The ministry is actively working on initiatives aimed at diversifying the national economy and generating job opportunities across various sectors.
Ibtisam Ahmed Said Al-Farooji, undersecretary at the Ministry of Commerce, Industry, and Investment Promotion, stated that Oman’s investment sector is actively reviewing and evaluating its investment policies, laws, and incentives.
She further explained that investment opportunities undergo comprehensive feasibility studies before being presented to investors. This thorough evaluation helps drive capital into targeted sectors, enhances economic diversification, and boosts non-oil revenues, thereby strengthening investor confidence and improving Oman’s competitiveness.
The government is focusing on key sectors aligned with the Oman Vision 2040 strategy. These sectors include transportation and logistics, renewable energy, information technology, food security, tourism, mining, and manufacturing. Supportive industries such as the circular economy, healthcare, and education are also part of the focus.
Al-Farooji highlighted that the manufacturing sector attracted 2.13 billion rials in FDI, followed by financial intermediation with 1.36 billion rials, and real estate activities with 969.1 million rials.
The ministry has organized investment opportunities through the “Invest in Oman” platform, showcasing 20 opportunities in sectors such as tourism, real estate development, aviation, logistics, and manufacturing.
Industrial lands have been allocated in collaboration with the Public Establishment for Industrial Estates, which has sparked investor interest in the industrial cities of Rusayl, Sohar, and Samail.
In 2024, the ministry promoted Oman on the international stage at 21 events, welcomed delegations from 23 countries, hosted eight local promotional forums, and targeted six G20 countries and four markets in collaboration with the Oman Chamber of Commerce and Industry.
Nasser bin Khalifa Al-Kindi, CEO of Invest in Oman, explained that the “Invest in Oman” lounge brings together government institutions under one roof, streamlining the investor journey.
The lounge is designed to attract high-capital investors to strategic sectors and serves as a digital gateway to promote Oman’s investment environment and present new opportunities.
He also noted that 59 investment projects worth 3.2 billion rials are currently under review, with 29 initiatives valued at 1.2 billion rials already localized.
India, China, and Egypt are the top investing countries in Oman, with the industrial sector leading the way in attracting investments, followed by renewable energy and healthcare.
Abu Dhabi Customs sees record 72% pre-arrival clearance rate in 2024
Updated 02 March 2025
Nirmal Narayanan
RIYADH: Abu Dhabi Customs recorded a 72 percent pre-arrival clearance rate in 2024, marking a significant increase as the emirate accelerates digital transformation and streamlines trade operations.
The figure represents a sharp rise from 47 percent in 2023, reflecting a 53 percent annual growth rate, according to the UAE’s state news agency WAM.
The surge underscores efforts to enhance digital customs processes, integrate advanced technologies, and optimize clearance systems.
Pre-arrival clearance for outbound shipments accounted for 85 percent of total exit declarations in 2024, up from 67 percent a year earlier, while inbound shipments made up 60 percent of entry declarations, compared with 31 percent in 2023. Abu Dhabi Customs has also automated the issuance of entry and exit customs certificates to expedite processing.
Pre-arrival customs clearance, available through smart platforms like the Abu Dhabi Government Services Platform, or TAMM, and the Advanced Trade and Logistics Platform, or ATLP, enables importers, exporters, and their representatives to complete customs procedures before goods reach customs centers. This process includes submitting declarations, paying duties, meeting regulatory requirements, if applicable, and finalizing procedures in advance, streamlining operations and improving efficiency.
Freight clearance and shipping companies have benefited from electronic integration with regulatory entities and service-level agreements with key stakeholders, reducing transaction times.
In August, Abu Dhabi Customs reported that the average time for customs clearance transactions in the first half of 2024 was 13.86 minutes, down from 15.47 minutes in the same period of 2023.
In December, the General Administration of Abu Dhabi Customs launched its 2024–2028 Strategic Plan, focused on facilitating secure and legitimate trade through advanced innovations and digital technologies.
The plan is built on six pillars, including enhancing customer experience to position Abu Dhabi as a preferred trade hub, increasing revenue collection, and driving economic growth and competitiveness.
It also emphasizes fostering a culture of excellence through innovation and sustainability, developing professional talent for the future of customs, and leveraging technology to achieve digital leadership.
In November, Abu Dhabi Customs signed an agreement with Brazil’s Tax Authority to launch the pilot phase of the Trusted Digital Trade Corridor project.
The initiative aims to enhance trade, simplify customs procedures, reduce transaction times, strengthen data security, and improve cross-border trade efficiency through advanced technology and digital transformation.
Corporate lending pushes Saudi bank loans past $800bn for the first time
Updated 02 March 2025
Dayan Abou Tine
RIYADH: Saudi bank loans surpassed the SR3 trillion ($801.6 billion) mark for the first time in January, registering a 14.66 percent year-on-year increase.
According to figures from the Saudi Central Bank, also known as SAMA, this growth marks the fastest expansion since October 2022 and is primarily driven by a surge in business financing.
Corporate loans grew 18.5 percent over the past year, outpacing the 10.5 percent rise in retail lending. As a result, corporate credit now accounts for 54.09 percent of total bank lending, up from 52.34 percent in 2024.
Among business sectors, real estate activities continued to command the largest share of corporate loans, making up 21.13 percent of total business lending in January. Loans to this sector surged 30.57 percent year-on-year to SR343.6 billion.
The strong demand for real estate financing aligns with the sector’s growing role in the Saudi economy.
According to the General Authority for Statistics, real gross domestic product from real estate activities reached SR176.18 billion in the first nine months of 2024, accounting for around 7 percent of gross value added.
This marks an increase from SR172 billion in the same period last year, highlighting the sector’s expanding contribution to economic output.
The wholesale and retail trade sector followed, with credit facilities totaling SR204 billion, or 12.54 percent of total corporate loans. Meanwhile, manufacturing accounted for 11.7 percent, with loans rising to SR190.2 billion.
While professional, scientific, and technical activities hold a smaller share of total corporate lending at 0.52 percent, they recorded the highest annual growth rate, soaring 34.2 percent to SR8.38 billion.
Similarly, education loans saw a 33.17 percent increase to SR8.43 billion, while financing for financial and insurance activities grew 32.06 percent to SR137.62 billion.
Real estate boom
The real estate boom has been a key driver of credit expansion, fueled by population growth, rapid urbanization, government-backed initiatives such as the Sakani housing program, and large-scale developments like NEOM, ROSHN, and Diriyah Gate.
The surge in demand for housing and commercial properties has led to increased borrowing by developers and investors looking to capitalize on the sector’s momentum.
Meanwhile, wholesale and retail trade have benefited from rising consumer spending, an expanding middle class, and the rapid growth of e-commerce, which has driven investment in logistics, supply chains, and retail infrastructure.
Government efforts to boost domestic manufacturing and reduce import dependency have also strengthened lending to the industrial sector, particularly in pharmaceuticals, automotive production, and food processing. Incentives and subsidies have further supported local production.
The professional, scientific, and technical services sector has seen robust credit growth as businesses and government projects accelerate digital transformation and infrastructure development, increasing demand for engineering, consultancy, and IT services.
Similarly, the education sector has experienced significant lending expansion, driven by private sector investment in schools, universities, and vocational training centers as part of the Kingdom’s push to develop human capital and align workforce skills with evolving job market demands.
Financial and insurance activities have also emerged as a key growth area, with lending surging due to the expansion of fintech startups, digital banking, and capital market activity. The rise of investment funds, initial public offerings, and sukuk issuances has created new financing opportunities, reflecting Saudi Arabia’s ambition to position itself as a regional financial hub. ‘
Affordability challenges
The Kingdom’s commercial real estate market is grappling with affordability challenges as strong demand and rapid economic expansion push prices higher.
The rise in business activity, foreign investment, and large-scale infrastructure projects has intensified competition for prime commercial spaces, particularly in major urban centers like Riyadh and Jeddah.
As Saudi Arabia continues to position itself as a global business hub, companies are facing mounting pressure to secure office and retail spaces at rising costs.
Recent data from the GASTAT showed that commercial real estate prices rose 5 percent year-on-year in the fourth quarter of 2024, driven primarily by a 5.2 percent increase in commercial land plot prices and a 5.1 percent rise in building costs.
The Real Estate Price Index, a key measure of property price movements, recorded an overall 3.6 percent annual increase in the fourth quarter.
While residential real estate had the largest impact on the index due to its higher weighting, commercial real estate prices saw sharper increases in specific subcategories, highlighting the growing cost burden on businesses.
Several factors are driving this sustained rise in commercial real estate prices. The Kingdom’s Vision 2030 initiatives, focusing on economic diversification and attracting multinational corporations, have significantly boosted demand for office spaces and commercial land.
Saudi Arabia’s Regional Headquarters Program, designed to encourage global firms to establish regional offices in the country, has further fueled demand in key business districts, particularly in Riyadh, where commercial real estate prices jumped 10.2 percent.
Initiatives such as NEOM, Diriyah Gate, and Qiddiya have also contributed to rising property values as businesses seek to position themselves near these emerging economic zones.
At the same time, the supply of prime commercial properties remains relatively constrained, adding further pressure on prices.
While the influx of international businesses has strengthened market dynamics, it has also made affordability a growing concern, particularly for small and medium enterprises.
Despite these challenges, Saudi Arabia remains one of the region’s most attractive commercial real estate markets, supported by strong economic growth, government incentives, and an expanding business ecosystem.
However, ensuring that commercial spaces remain accessible to a broad range of businesses may require policy adjustments, such as increasing the supply of office spaces, revising zoning regulations, or offering incentives to support SMEs.
As demand for commercial real estate rises, balancing growth with affordability will be crucial in sustaining the Kingdom’s economic momentum.
