NCB Survey Reports Optimism Rampant in Saudi Business
A recent National Commercial Bank (or NCB) survey revealed that around 51 percent of businesses working in non-hydrocarbon industries are planning to expand. Despite the present instability throughout the Middle East, this figure is an increase over Q3 when only 48 percent of businesses had expansion plans.
Senior VP of NCB and Group Chief Economist Dr Said Al-Shaikh addressed a press conference earlier this week to report the optimistic findings in the BOI (or Business Optimism Index).
He also noted that around 25 percent of non-hydrocarbon businesses are concerned about the skilled manpower shortage throughout Saudi Arabia. A further 28 percent of survey respondents noted concern regarding inflation.
The BOI results indicated that 46 percent of firms outside of the hydrocarbon industry are not anticipating the influence of negative factors in the fourth quarter.
The composite index score stands at a record high 63 for Q4. Gains were felt as a result of the government’s stimulus package, according to Al-Shaikh. He noted that although oil production in the Kingdom was up this year, averaging 9.72mn bpd for August, it is expected to decline next year when Libyan political stability sets in.
Declines will slow down Saudi growth, moving the GDP increase from the 5.8 percent recorded in 2011 to 2.2 percent growth in 2012.
The manufacturing sector’s BOI recorded a decline, falling seven points to reach 49. Although communications and transportation reported slight reductions, the hospitality, trade and construction sectors reported strong gains, according to Al-Shaikh.
The survey included six parameters for current business conditions. Five hundred owners and business professionals working at the senior level were surveyed through the joint efforts of Dun and Bradstreet and NCB.
Results indicate a high level of business optimism in Saudi Arabia, with the hydrocarbon index reaching record highs of 63 and the index covering non-hydrocarbons coming in at 60.
Non-Oil Trade in Dubai Up 24 Percent
Non-oil trade in Dubai, including imports and exports as well as re-exports, surged by 24 percent in the first six months of 2011, climbing to a level above those seen prior to the economic downturn.
Non-oil trade in the emirate reached Dh 345bn from the beginning of January to the end of June, up from Dh 279bn recorded in the first six months of 2010. Executive chairman of the Ports, Customs and Free Zone, Ahmed Butti stated that this included a 21 percent jump in imports, a figure that reached Dh 214bn.
Exports represented 37 percent, rising from Dh 33bn in 2010 to Dh 45bn this year. Re-exports rose to capture 25 percent of non-oil trade, climbing from Dh 69bn in the opening half of 2010 to Dh 87bn this year.
This activity forecasts development and increasing opportunities for investment in the emirate. Director-general for Dubai Customs noted that record high figures for exports and re-exports are proof of the strategic position Dubai holds as a business hub.
Trade within Dubai’s free zones over the first half of this year also rose by 22 percent, from Dh 155bn to Dh 190bn.
Dubai’s foreign trade figures recorded an average growth of 18 percent over the last six years. That number rose from Dh 151bn in 2006 to Dh 345bn this year.
Foreign trade hit Dh 297bn in 2008, but fell to Dh 238bn as a result of the recession. In the opening half of 2011 the figure rose to Dh 345bn, surpassing pre-recession levels.
Dubai imports goods mainly from China, Japan and India, as well as the UK and the USA. Exports head mostly to Saudi Arabia, Kuwait, India and Switzerland and consist of gold, crude oil, pearls and precious stones, as well as metals, poly ethylene and poly acetyls products.
Software Vendor SAP to Create Thousands of Jobs
SAP’s co-CEO, Bill McDermott reported that the leading enterprise software vendor in the world will be significantly increasing the corporation’s presence in the Middle East over the next twelve months.
SAP, a well known specialist in ERP software, faced a struggle coping with demand in the region. The firm will double its presence in the region within one year, according to McDermott.
He noted that demand far outweighs current capacity and the decision to double operations in the Middle East is a natural result. McDermott stated in an interview with ITP.net that the expansion will create hundreds of new jobs, “if not thousands.”
One hundred new employees were hired by SAP throughout the MENA region since August of 2010. Offices were opening in the UAE, Qatar, Egypt and Saudi Arabia. Qais Gharaibeh has recently been brought in as the UAE’s country manager.
SAP plans to leverage the relationships it enjoys with various universities in the region, such as Zayed and UAEU in the UAE, with the intent of nurturing talented programming staff. Young students will be offered placement in training camps that provide lessons on the SAP system. These lessons would also be released to customers, SAP employees and the ecosystem.
SAP has experienced mixed fortunes recently. The last few financial quarters have reported strong growth patterns, especially in sales of new application licenses. Software revenue was up 28 percent in Q3.
A bitter feud with Oracle over IP theft still haunts the company. Based on a 2010 court order SAP owes Oracle $1.3 billion in penalties, although that amount was recently dropped to $272 million.Paul Holdsworth, Staff Writer, Gulf Jobs Market News