Surviving Saudi Arabia

Nov 28, 2007

Surviving the Saudi kingdom: Learn and adapt to customs

Its commercial capital, Jeddah, seems much like an American city, if not for its tight security and social rules, and yet the country is a land brimming with business opportunities

APART from the odd Charles & Keith shoe shop, there is not much to remind a Singaporean passing through Saudi Arabia of home.

If anything, the gleaming megamalls, posh car showrooms and fast-food joints lining both sides of the motorway make the kingdom's commercial capital - Jeddah - seem much like an American city.

However, the sight of women fully covered in black robes and restaurants split into singles and family sections quickly remind you that you are in Saudi Arabia, a land of tight security and social rules, but also one brimming with business opportunities.

Diversification is the buzzword as the kingdom seeks to lessen its economic dependence from oil and grow other sectors.

With over a quarter of the world's oil reserves and spanning 80 per cent of the Arabian peninsula, Saudi Arabia certainly cannot be ignored. Yet, it seems a mysterious land of untapped potential for most Singapore firms.

Economic hub

The crown jewel of Saudi Arabia's new economic strategy is the US$26.6 billion (S$38.3 billion) King Abdullah Economic City. It is the embodiment of the kingdom's drive for economic diversification and expansion. It is located 200km north of Jeddah on the west coast.

Facts and figures
LAND AREA :2.15 million sq km (roughly the size of Western Europe)

The key to success is being aware of the country's social and religious customs and adapting well to them. They can be disconcerting. The weekend is on Thursday and Friday, women cannot drive and there are no cinemas, no alcohol.

Security is tightest in the capital, Riyadh, most noticeably at government buildings and expatriate housing compounds. Armoured cars with mounted machine guns, high barbwire fences and multiple security checkpoints surrounding the entire housing estate perimeter are common fare.

Enter the compounds of the condominiums, and it is a whole different world. Most come equipped with their own grocery and laundry stores, sports facilities, and lush surroundings similar to a beach resort. Some are French-themed, with exotic street names such as Rue de Paris.

The Saudi Arabia branch manager of Tiong Woon, Mr Jason Low, said: 'It's like a mini-United Nations in compounds. You'll learn many interesting cultures and to get along with people from many countries.'

Overall, the wide income disparity in Saudi Arabia is obvious. On one hand, there are reports of a Saudi prince buying a US$475 million (S$685 million) A-380 superjumbo flying palace, and yet you can see the odd African child begging for money on the streets.

Perks
WHILE the rest of the world struggles with soaring petrol costs, Singaporeans in Saudi Arabia will bristle more at their water bills.

A litre of 95-octane petrol costs just 60 halala, or 23 Singapore cents. The same amount of drinking water costs about 1 Saudi riyal, or 39 Singapore cents.

Cars are also far cheaper. A new Honda Accord will set you back only 60,000 Saudi riyals.
Information technology technical manager Andrew Heng said: 'The money's good, cost of living's low.'

Singapore Airlines' Middle East general manager, Mr Mohamed Rafi, added: 'Living costs are comparatively lower here, due to no GST. In addition, personal income is not taxable.'

Speak to Singaporeans living in the country, and you will find a closely-knit bunch, with frequent dinner gatherings, morning coffee outings among the women, desert excursions and diving trips.

'The conservative culture in Saudi Arabia may provide an ideal place to bring up a young family,' said Singaporean medical scientist Kamal Jalil.

Renaissance
HOWEVER, others also say having to forego cinema trips and the occasional pub outing are social sacrifices they have to put up with.

A new era is dawning over the oil-dominated economy.

It faces demographic challenges - about 75 per cent of its 27 million population is below 30 years of age - and economic ones as it attempts to lessen its reliance on oil.

A key strategy is the building of multibillion-dollar economic cities - development clusters focusing on attracting new businesses to specific sectors.

And Singapore is welcome to jump on the potentially lucrative bandwagon, especially in sectors such as infrastructure development, logistics, and oil and gas support.

'We've about US$624 billion worth of economic projects to be done in the next 10 to 15 years,' said Dr Fahad Al Sultan, secretary-general of the Council of Saudi Chambers of Commerce and Industry.

Dr Hisham Jomah, Jeddah Municipality director of mega projects added: 'It's a fertile soil to plant your businesses... It's open in all directions.'

A recent World Bank report ranked Saudi Arabia 23rd among 178 economies for ease of doing business - up from 38th a year ago.

That placed it a rung above Malaysia and the highest in the Middle East.

Singapore was ranked No. 1 in the report.

Challenges

HOWEVER, there are several challenges. Common grouses include difficulty in acquiring visas for foreign workers, finding well-trained local talent and getting Singaporeans who are willing to be posted there. Temperature is also an issue - the mercury can rise above 50 degrees during summer.

Knowledge of Arabic is a bonus, especially when dealing with government offices. Most firms will hire a Saudi national as a government relations officer.

'If there's a legal dispute, you have to get a Saudi national to represent the company in court; you can't go in to state your case,' said a Singaporean working in the country.

Building bridges

RELATIONSHIPS are key to clinching corporate deals.

IE Singapore's centre director for Jeddah, Mr Nordin Yatim, said: 'Go for coffee or a shisha smoke with them, chit chat, develop mutual trust and confidence.'

Business is usually done over a lengthy meeting with several cups of Arabic coffee or a shisha smoke - part of the Saudi culture of providing warm hospitality.

'A humble, patient attitude is preferred. A high and mighty approach won't work,' said CrimsonLogic project director Jafarulah Khan.

A lot of Saudi businesses are family-run, and some rely on word of mouth in decision-making. Singapore's reputation is quickly gaining ground, and most Saudis hold it in high regard.

Singapore's Ambassador to Saudi Arabia V.P. Hirubalan said: 'The Singapore brand name has been buzzing around in Saudi Arabia and is catching on now more than ever. They see us as a success story.'