Irish firms set sights on Saudi cash

Saudi Arabia has opened the door to Irish companies to get involved in developing its infrastructure in projects worth billions

IF YOU WERE to look around the globe for a country that is the antithesis of Ireland, Saudi Arabia might just top the list. A land of sand and oil where the dominant religion is Islam, alcohol is forbidden and sausages are a no-no, the country’s rainfall amounts to just one or two heavy showers a year. And then, of course, there’s its wealth.

With a quarter of the world’s oil reserves, it’s no surprise Saudi Arabia, with a population of 28 million, is among the top 20 economies in the world. Ranked the world’s 12th biggest exporter and 22nd biggest importer, the country’s gross domestic product is $577 billion (€458 billion).

What’s really impressive, however, is how much Saudi Arabia will spend on domestic projects in the next decade: $140 billion on physical infrastructure, $67 billion on half a million housing units and $11 billion on education. What seems just as surprising is that the country’s business community has extended a hand to Irish companies to get involved.

The invitation has come from the Council of Saudi Chambers of Commerce and Industry, the representative body of 28 chambers of commerce there, which is keen to increase its business links with Ireland. The result is the newly formed Ireland Saudi Arabia Business Council.

“We think there is a lot of potential with our friends from Ireland,” says Saudi Arabia’s assistant secretary general for foreign affairs Khalid Al-Otaibi, whose office was behind the move. “We count on this council to be a driver or a tool to encourage and promote bi-lateral trade and investment,” he says.

The potential is enormous, according to Joseph Lynch, the chairman of the new council. A former Middle East-based Irish diplomat, he was approached by the Saudis to set it up.

So what does the council do? Nothing yet. It took almost 18 months to draw up the memorandum of understanding Lynch and his board signed with the president of the Council of Saudi Chambers of Commerce and Industry, Abdullah Al-Mobty, in June.

Lynch describes the council as still being “at base camp” but, with the first meeting of the joint council taking place in Riyadh in November, he feels opportunities for Irish businesses will follow.

But just how big is the opportunity in Saudi Arabia? Al-Otaibi describes investment, driven by his government’s plans to reduce its dependence on oil of a staggering scale.

“Saudi Arabia has investment opportunities close to $1 trillion up to 2020,” says Al-Otaibi.

He rattles off the dizzying array of spending: $91 billion in electrical power generation; $88 billion in water desalination; close to $70 billion in telecoms and IT; and $54 billion in agriculture.

To Irish construction companies struggling to find small extension projects here to work on, this may seem like nirvana.

Irish council members hoping to profit from the alliance include engineering businesses Sepam and Mercury, food companies Kerry Group and Asbourne Meats, and the Royal College of Surgeons in Ireland and Athlone Institute of Technology. Membership of the council is open to any Irish company interested in the Saudi market.

Al-Otaibi says the joint business council will promote “links and agreements” between the two countries spanning “industrial and technological co-operation, joint ventures and know-how”.

Long out of the traps is Athlone Institute of Technology. “We’ve been working with the Saudis for about eight years now,” says Prof Ciarán Ó Catháin, the president of the institute, which provides up-skilling programmes to Saudi academic staff.

Three years ago, along with the Galway and Waterford institutes, Athlone signed a further deal with a Saudi vocational education body to provide Saudi academic staff with intensive English classes, while also bringing their qualifications in disciplines like engineering and accountancy up to honours level.

He says the deal “is probably worth a couple of million a year” to the three institutes. “It’s a big economic boost to Athlone too,” he says. “The students are well funded when they are here and some bring their wives and families, so it’s feeding into the local economy.”

Between now and Christmas, Athlone is tendering to manage a Saudi-based academic facility. He feels the council will help. “We’ve been working out there very closely with Enterprise Ireland but we find that with the council there now, it will open up more links to government ministries,” says Ó Catháin.

“What we’re hoping to do out there would be a joint venture with a Saudi company. The council network will help with facilitating joint ventures and networking, which is crucial there.”

If the Athlone Institute is successful, in four years’ time there could be up to 3,000 students being taught by its staff on a campus in Saudi Arabia managed by the institute, says Ó Catháin.

While Saudi Arabia has joint business councils with 33 other countries around the world, its move to create one with Ireland and the opening of its first embassy here three years ago bodes well for greater trade between the two countries.

Enterprise Ireland regional manager for the Middle East Sean Davis says trade between the two countries was worth €510 million in 2010 and €532.7 million last year, a 4 per cent increase. To the end of last May, however, total trade is up 11.7 per cent year-on-year, he says.

The opportunities for Irish companies on which Enterprise Ireland is focusing include: building management systems, and Dublin company CES Energy won a €40 million contract this year; construction, where the Saudis will spend $400 billion on projects over the next 10 years; and ICT where the country added 60,000 jobs last year.

Lynch says the council will work hand-in-hand with Enterprise Ireland to develop opportunities. Attending the signing of the Saudi Irish Business Council memorandum of understanding, Ireland’s ambassador to Saudi Arabia Dr Niall Holohan said his staff could issue entry visas for Saudi business people to Ireland within 24 hours. With billions of euro in contracts to play for, some might say the sooner the better.

The Irish Times, September 3, 2012