In an extensive meeting at Asharqia Chamber that witnessed a large presence of contractors: the Saudi Contractors Authority announces 13 initiatives to solve the financing challenges facing the sector.
The Saudi Contractors Authority has revealed 13 initiatives that have been proposed to solve one of the most important challenges of the sector, especially financing. These initiatives are still being studied by a specialized committee of the Ministry of Finance in preparation for the relevant authorities to approve them, where it involves financing solutions for small enterprises that exceed 90% of contracting enterprises in general.
Asharqia Chamber held a meeting on Thursday 13 September 2018 between the Chairman of the Board of Directors of the Saudi Contractors Authority, Engineer Osama bin Hassan Al-Afalq, with representatives of the construction sector at the headquarter of the Chamber in Dammam.
During the meeting, Al-afaleq said that these initiatives were the result of a study funded by a global consulting firm to examine the funding dilemma in the sector, particularly in small and medium-sized enterprises, which suffer from more serious situations than others.
The Chamber hosted the meeting in the presence of the Chairman of the Chamber, Abdul Hakim bin Hamad Al-Ammar Al-Khalidi, as he affirmed the Chamber's support for all directions of the Authority to develop the sector. He explained that it was one of the first proponents of its launch, believing in the role it plays to serve the national economy.
Furthermore, Al-Afalq mentioned that 4% of the companies operating in the sector are classified, while 96% of them lack classification. He explained that the Authority is currently in contact with the relevant committees of the Ministry of Municipal and Rural Affairs to achieve a better level of classification of contractors.
He pointed out that the Authority is in the process of developing model contracts for all contracting activities in order to guarantee the rights of the contractor and the beneficiary alike.
He stressed that many of the problems that have emerged in the sector due to the lack of clarity or lack of contracts.
He added that the role of the Authority is to organize the contracting sector, raise the level of its employees, and cooperate with all concerned parties to achieve these goals. He added that the Authority has developed many initiatives to improve the sector during the past three years.
Al-Afalq promised that the next three years would be a period of achievements for the Authority after the completion of the internal system. He expressed the readiness to communicate and integration with all the supporting and concerned parties. He stressed that the Authority is in the process of providing free financial advice or symbolic fees for small and micro enterprises.
As for the faltering of some projects, he explained that the Authority is in contact with the National Content Unit to launch several initiatives to support the sector and solve the issue of the projects that are in trouble.
He added that stumbling would be halted if a sound regulatory environment was in place.
Moreover, Hamad bin Hamoud Al-Hammad, a member of the Board of the Chamber and the Chairman of the Contracting Committee on the Chamber, said that the national economy is proceeding according to a reform plan and clear future goals, launched by the vision of the Kingdom 2030. It is based on the restructuring of the national economy in line with the global institutional and regulatory requirements, in order to build a diversified and sustainable economy based on solid foundations and bases in its launch.
The Saudi Contractors Authority is one of the institutional outlets and organizational entities that were launched with the aim of clarifying the principles, standards and procedures related to the contracting sector, publishing all the information and statistics pertaining to it and informing its members about new regulations and decisions, as well as contributing to improving performance and raising transparency and sustainability practices in the construction sector.
In turn, Thabet Al-Swed, the Secretary General of the Saudi Contractors Authority, said that the Authority is serving the sector through six areas of work including mining services, waste and treatment, construction of buildings, specialized construction, building services, and civil engineering.
He explained that the number of establishments operating in the sector are up to 200 thousand establishments, 2086 of which have the membership of the Authority, 94% of them Saudi contractors. Small and micro enterprises represent 96%, which can accommodate about 4 million workers, of which 550 600 thousand Saudi workers that makes up 13% of employment in the sector.
The contractor was part of an integrated system represented by the sector, including project owners, financiers, regulators, the judicial system and advisory bodies.
Thus, the sector faces different challenges depending on the party that deals with it. As with government or government-owned sector, it suffers from the lack of procurement for quality, contracts for neutrality, the staff of these agencies for sufficient experience, and delays the disbursement of extracts subcontractors. Contractors also suffer from delays in the disbursement of dues and credits and the failure of some systems to be implemented.
And with the municipalities, Al-Swed added, "The sector faces a challenge in the process of building permits and approvals that take too long and are difficult. And with suppliers of materials, the contractor faces a problem of frequent changes in prices." He pointed out that the Authority promotes the sector operates through four activities, which are the licenses of contractors, their development, their classification, and attracting the latest innovations.
He pointed out that the Authority provides contractors with a range of services including statistics, consultancy services, dispute settlement, exhibitions, conferences, price indices, training services, research and development, as all that would support the sector, solve problems and raise the level of performance to serve development.
Al-Swed confirmed the launch of "Mazaya program" for all contracting companies to reduce operating costs, as it contracted with 100 companies to offer to contractors, including the issuance of a special insurance policy for contractors, and obtain preferential prices in many services such as airfares, hotels, etc.
