Friday, February 26, 2021

Are Egypt’s exports affected by Saudi Arabia’s decision to stop contracting with companies based outside the Kingdom?

Facebook
Twitter
Pinterest
WhatsApp
Telegram

Must Read

Engineering industries: 90% of the sector’s exports to Saudi Arabia are directed to individuals

Electrical tools: The decision impedes the supply of foreign companies

The exporters’ opinions differed on the impact of Saudi Arabia’s decision to stop contracting with any foreign company that has a regional headquarters in a region other than the Kingdom.

A number of Egyptian exporters said that this trend would inevitably hinder the exports of foreign companies operating in Egypt and supplied to the Saudi government, while the other team ruled out that the decision would have any significant impact on exports.

Engineer Atef Abdel Moneim, head of the Electrical Tools Division at the Chamber of Engineering Industries, said that the decision will support attracting international companies’ investments to Saudi Arabia at the expense of neighboring countries.

The Kingdom announced, last week, that it will stop contracting with any foreign commercial company or establishment that has a regional headquarters in the region outside the Kingdom as of the beginning of the year 2024, and that it will include government agencies, institutions and funds or any of its agencies.

He pointed out that the decision shows the extent of other countries ’keenness to increase investments in them, in return for many companies and state-affiliated bodies circumventing the local product preference law and the state’s policy towards supporting national industry.

With regard to foreign companies that have factories in Egypt and are issued to government agencies in Saudi Arabia, he said, “It is certain that they will be negatively affected.”

Sherif Al-Sayyad, head of the Engineering Industries Export Council, said that Saudi plans for this direction will have a limited impact on the engineering sector exports to it.

He said: “This trend will not harm the export of the sector, especially since 90% of the sector’s exports to Saudi Arabia directly address the citizen, but it affects more international companies that supply the Saudi government and do not have regional offices in the Kingdom.”

He said that some sectors, such as cables and belonging to international companies in Egypt, might be negatively affected if there were no offices for them in Saudi Arabia.

Majd Al-Manzalawi, head of the Industry Committee at the Egyptian Businessmen Association, said that the Saudi decision will not affect Egyptian exports, because Egyptian exporters deal with agents and not the Saudi government directly.

Al-Manzlawi added that the decision aims to encourage national industry and provide job opportunities for Saudis, and that it will not affect Egyptian exports.

Dr. Kamal El-Desouki, Vice President of the Building Materials Chamber of the Federation of Industries, said that Saudi Arabia seeks to attract investments to the Kingdom from all major foreign multinational companies that have branches in the region and do not have branches in the Kingdom.

He explained that this decision is reflected in the flow of investments in Saudi Arabia during the coming period.

He stressed the importance of adopting Saudi Arabia’s approach in this regard in government contracts for international companies that have a desire to supply for national projects by having local companies in Egypt.

With regard to international companies present in Egypt and exporting their products to the Saudi government, he indicated that the exports of these companies will not be affected by the decision.

Hazem Bishr, a member of the Export Council for Chemical Industries and Fertilizers, said that Saudi Arabia seeks to tighten control over liquidity in the market and not to leave money outside the country, and this will not affect Egyptian companies’ exports to the Saudi market.

The article Are Egypt’s exports affected by Saudi Arabia’s decision to stop contracting with companies based outside the Kingdom? It was written in the Stock Exchange newspaper.

Facebook
Twitter
Pinterest
WhatsApp
Telegram

Latest News

More Articles Like This

Are Egypt's exports affected by Saudi Arabia’s decision to stop contracting with companies based outside the Kingdom?