Mohammed El Etreby-Chairman-Banque Misr

Adjusting expectations: New labour laws are forcing contractors to tighten budgets

While competitive bid prices are putting pressure on margins, contractors in Saudi Arabia are now feeling the effects of new labour regulations on operations and costs. Since the government concluded an amnesty for illegal expatriate workers and began clamping down on illegal labour in November 2013, contractors have been having a more difficult time meeting their labour needs. Riyad Ahmed Al Thagafi, CEO of real estate firm Ewaan, told OBG, “With the Saudiisation policy having been implemented a few years ago, the construction sector is currently experiencing a major labour force deficit.” Visa Regulations Mohamed Alsayed, the general manager of A.S. Alsayed & Partners, told

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Pham Hong Hai-CEO-HSBC Vietnam

Finding finance: New trusts and funding vehicles offer solutions to property investment needs

The opportunities for investors to place capital and for developers to access funding are expanding as Saudi Arabia’s real estate market grows and matures. Indeed, there is an increasing realisation that real estate in the Kingdom is a sound asset class and, consequently, more funds are beginning to eye the market as a means of generating steady returns. Breaking Into The Market Real estate investment trusts (REITs) and funds are a relatively new phenomenon in the Gulf region. The first attempted foray into the trust investment vehicle in the Kingdom occurred in the summer of 2009, when Encore Management, a Swiss-based asset management company, announced

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Mohammed El Etreby-Chairman-Banque Misr

Shaping space: Rethinking the building model to meet housing demand

Given the constricted land environment, development costs and affordability issues in Saudi Arabia, some real estate firms are beginning to rethink the building model in the Kingdom. Indeed, from developing with greater height and density to rolling out fully serviced and planned communities, the built environment across the country is beginning to change. Reconsidering The Villa The Saudi market has traditionally been dominated by stand-alone villas, often developed individually by a family on their own plot of land. Given the available space in the country, and a population density ranking among the 25-lowest globally (at 14 people per sq km in 2013), this has hardly

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Gitahi Gachahi-CEO-EY Eastern Africa

The bottom line: Oversupply of building materials is causing cost fluctuations throughout the industry

The building materials sector serves as both a barometer of the wider health of the construction industry and as a critical factor in the bottom line of local contractors. As with the industry in general, sub-sectors such as cement have entered a period of uncertainty. While the government’s extensive development programme has buoyed cement sales and demand over the last decade, current uncertainties surrounding the labour market and global oil price have led to short-term challenges for producers. A Demanding Market Between 2005 and 2011,

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Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

Striking a balance: Programmes to support both developers and buyers

The basic outline of the Saudi Arabian property market provides a tempting picture of a land of opportunity. The most populous country in the GCC region, the Kingdom has seen disposable income grow strongly. Furthermore, it has a youthful population and a culture that emphasises family formation, as well as the prospect of purchasing a first home. These factors present a rare combination in a region defined by majority-expatriate populations. Saudi Arabia is therefore beginning to stand out as a market offering a variety of opportunities and risk scenarios for investors and developers. Getting on the Ladder Currently, Saudi residents are struggling to get onto

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Stuart Tait-Regional Head of Commercial Banking-Asia Pacific

New chapter: A variety of programmes will ensure the market has the trained workforce it needs

The newest manifestation of Saudi Arabia’s commitment to ensuring its young people have the skills to survive and thrive in a diversified knowledge economy is the Colleges of Excellence (CoE) programme. By August 2015, there were 37 CoE institutions offering free training and education to Saudi citizens across the Kingdom. Under the CoE model international training providers with expertise run a range of vocational courses for men and women, as well as staff and operate their own curricula in purpose-built facilities, which are supplied free of charge by the Saudi government. The purpose of the scheme is to ensure Saudi school leavers acquire useful professional

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Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

Spend away: Government spending for education focuses on new universities and schools

Education accounted for the highest expenditure of any single sector in Saudi Arabia’s budget for 2015, equivalent to 25% of total anticipated spending. The annual statement does not include defence and security spending, but Jadwa Investment says that examination of Saudi Arabian Monetary Agency figures for 2014 suggests that it accounts for 35%. The 2015 budget also showed a 3% rise in the annual spending allocation for education. The financial outlay represents a continued commitment to Saudi Arabia’s young people, but it was a commitment made against the backdrop of an 11% fall in annual net oil export revenues in 2014. Student Population One argument

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Chaim Zach-Managing Director and CEO-Agric International Technology and Trade; Kabiru Rabiu-Group Executive Director-BUA Group; and Aliyu Abbati Abdulhameed-Managing Director

Tech drive: Adopting new technology to enable student-centric learning

Driving forward with reforms to modernise teaching, measure standards and improve spatial diversity by educating people in all corners of the Kingdom, Saudi Arabia is using technology to provide solutions and alternative ways of teaching and learning. Khalil Al Ibrahim, rector of Hail University, told OBG, “In higher education, knowledge moves quickly, technology changes and it is incumbent upon universities to keep up with these changes. This requires investment in top technologies and equipment, as well as research programmes.” In the Middle East, revenues from e-learning are expected to rise from $443m in 2013 to $560.7m by 2016, according to a report by electronic education

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Xi Jinping-President of China

Wider horizons: The King Abdullah Scholarship Programme funds thousands of students to complete their studies abroad

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A central pillar of Saudi Arabia’s drive to become a knowledge-based economy over the last 10 years has been the King Abdullah Scholarship Programme (KASP). In the budget for 2015, the Ministry of Finance announced that SR22.5bn ($6bn) had been allocated for the year to fund 207,000 Saudi citizens living abroad, including the scholars and their dependents and guardians. The sum represented 2.5% of the entire national budget and more than 10% of the allocation for education. It did not include scholarships given to employees

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Sheikh Ahmad Duaij Jaber Al Sabah-Chairman-Commercial Bank of Kuwait

Return to the bond market: The Kingdom taps capital markets to provide additional coverage for the 2015 budget deficit

The recent return to the bond market by Saudi Arabia marks a significant shift in government policy, as the world’s biggest oil exporter taps capital markets to cover budgetary shortfalls and balance drawdowns of foreign reserves. The SR15bn ($4bn) issue in mid-July 2015 was the first sovereign bond offered by the Kingdom since 2007, with senior officials hinting at further forays into the market. The bonds – seven- and 10-year conventional issues with yields of 2.57% and 2.88%, respectively – were sold to quasi-sovereign Saudi

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