The Saudi contracting sector is facing many internal challenges, foremost among which are financial and labor pressures and government measures to reduce spending on development projects and the priorities of the Economic Transformation Plan 2030, which has led to a severe crisis and possible restructuring of many large and medium contracting companies and threatens the exit of a large number of small companies.
60% of construction companies face liquidity challenges
60% construction companies face liquidity challenges
A weekly report issued by Al Mazaya Holding showed that the continued pressure will also negatively affect other sectors, especially the petrochemical sector, telecommunications, insurance companies and industrial companies that receive the largest share of government support, noting that a large number of contracting companies operating in the Kingdom, which occupy a good share of the market, are heavily dependent on government spending, and therefore the recorded developments will exacerbate their liquidity crises and double the number of stalled projects to exceed 40% of the total approved projects.
The Mazaya report indicated that more than 60% of Arab contracting companies are facing liquidity challenges and that the decline in the pace of construction activity and government spending on infrastructure projects will exacerbate the situation facing the contracting sector, which requires more discussions, cooperation and partnerships among contracting companies in the region.
The Mazaya report indicated that more than 60% of Arab construction companies are facing liquidity challenges.
Varying causes of contractor defaults
The report called for the need for companies to take advantage of the pace of activity recorded from one market to another and from one period of time to another, which leads to improving their ability to compete externally, while the data shows that the outstanding values of the contracting sector rose to more than 2.5 billion dollars, which reflects the size of the restricted liquidity and the size of the pressures facing the sector during the current period.
The report called for the need for companies to take advantage of the pace of activity recorded from one market to another and from one period of time to another.
The report indicated that the reasons for the failure of contracting companies are many and multifaceted and detailed, and these reasons also vary from one market to another and from one country to another in the region, adding that the package of developments recorded by the economies of major countries and oil countries and the failure to fully recover from the repercussions of the recent financial crisis entered new stages leading to damage to specific markets and specific sectors from time to time, without the markets recovering fully and without coming to all sectors and activities, as the financial system and the global economy is currently exposed to challenges and crises that take on the basis of the specificity of the
Recovery is in the hands of government agencies and private sector companies
According to the report of Al Mazaya Holding Company, the tools of recovery and exit from successive crises will fall on the shoulders of local governments and private sector companies, and Al Mazaya emphasized that the depth of the crisis faced by the contracting sector will have other repercussions on other vital sectors as well, as these repercussions will not be far from the services sector in general and will affect the financial sector and will also put pressure on the volume of available investment financing, in addition to damaging the expansion plans for the industrial sector that has captured government focus during the past ten years.
