In what ways is business conducted differently in Jeddah compared to the rest of the Kingdom?
BATTERJEE: The urban development plan that is being implemented according to the directives of King Abdullah bin Abdulaziz has a national scope. As such, there should be no particularities in conducting business in Jeddah as opposed to other cities in the Kingdom.
Of course, it is true that the pivotal geographical location of Jeddah by the Red Sea, with its year-round pleasant weather and important commercial history, has made it an attractive destination for investors today. It can also be said that after the completion of the large-scale infrastructure projects that are currently under way, the city will be able to respond more quickly to the needs of its residents and provide a better and more welcoming business environment.
To what extent are updates to infrastructure influencing investor sentiment and job creation?
BATTERJEE: Jeddah has witnessed several large-scale infrastructure projects in recent years, including bridges, tunnels, roads, parks, high-speed rail, overpasses, underpasses, housing, drainage that links irrigation networks with the sewage treatment plant, and other utilities, for a combined investment of $1.3bn.
Although Jeddah has been a regional hub and global gateway to the holy cities of Makkah and Medina for centuries, its infrastructural development has not kept pace with changes in the business environment. So far 42 projects have been completed and 127 projects are under way. Several leading global construction companies are carrying out these projects in partnership with Saudi joint-venturing companies. These projects aim to cater to the needs of the city's residents and investors over the next 30 years.
How is the implementation of the new labour law affecting the general business environment?
BATTERJEE: Saudi Arabia has recently introduced a policy called “Nitaqat” to remove illegal workers and boost employment opportunities for citizens by reserving 10% of all jobs for them. Over 300,000 firms in the Kingdom reportedly do not employ any locals and the new policy will rectify this situation.
Under the new law, foreigners are only allowed to work for their legal sponsors and as well as this, their spouses will not be allowed to take up jobs. Further to this, expatriates cannot perform any job other than the one mentioned in their job cards. These legal changes will benefit the market in the long run by improving the planning capability of the government.
It is imperative to emphasise that the policy will impact only illegal labourers and non-genuine workers employed in the Kingdom. Legitimate workers have no need to worry, as the changes will only affect people who are not in possession of a proper work permit.
How would you evaluate the role of projects such as the new King Abdulaziz International Airport on Jeddah’s position as an access point to the region?
BATTERJEE: The construction of King Abdul Aziz International Airport project in Jeddah will be completed by the end of 2014. A total of 30,000 workers, including 1250 engineers, are working at the airport site.
Following its opening in 1981, the airport was designed to cater to 7m passengers annually, but of late it has been handling 23m passengers a year. It is currently the second-busiest airport in the region in terms of passenger traffic, and accounts for 41% of the total air passenger traffic within the Kingdom. It has recorded a 16% increase in international passenger traffic and a 12% rise in Hajj and Umrah flights. After the project’s completion, capacity will initially be 30m passengers each year, with this increasing to 80m passengers a year. This extension project, and other major infrastructure updates, are set to improve Jeddah’s economic environment and boost its role as an access point in the western region of the Kingdom for both MENA regional markets and the markets of South Asia, attracting further international investors to the city.
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