LONDON: Brexit will lead to stronger trade and investment opportunities between the UK and Saudi Arabia, and attracting listings such as Saudi Aramco would be among a string of important deals Britain hopes to secure after it breaks with Europe, according to a leading business connector between the two countries.
Chris Innes-Hopkins, UK executive director for the Saudi British Joint Business Council (SBJBC), said it is not a question of the UK choosing whether to have trade with Europe or the rest of the world — it aims to have both, and Saudi Arabia is uppermost in its sights.
“Brexit does provide many opportunities for the UK and Saudi Arabia,” he said, speaking to Arab News after his address at the 12th BMG Economic Forum at the London Stock Exchange Group on Wednesday.
“I think it also has led to a change in perception on the Saudi side that we are raising our horizons.
“We are clear in that we are looking to develop our relationship with Saudi Arabia, and that was highlighted with the forming of the UK-Saudi Arabia Strategic Partnership Council that was launched following the crown prince’s visit here earlier this year.”
In March, the UK and Saudi Arabia agreed a goal of £65 billion ($90 billion) of mutual trade and investment in the coming years during a meeting between the UK’s Prime Minister Theresa May and Crown Prince Mohammed bin Salman.
On attracting the mega-float of part of the oil giant Saudi Aramco, Innes-Hopkins said the London Stock Exchange is a key of member of the SBJBC and they are “very keen to cooperate” with Saudi Arabia.
“This includes the proposed IPO,” he said. “There are lots of areas where they and the Saudi Stock Exchange (Tadawul) can work together. Obviously, post-Brexit, we are very keen for the UK to continue to attract investment from across the board — including from Saudi Arabia which is a very important source of investment to us. Within that context we are very keen to work with the Public Investment Fund of Saudi Arabia to attract more Saudi investment into new sectors in the UK.”
Addressing Saudi Arabia’s Vision 2030 reform plan, Innes-Hopkins described the Kingdom’s blueprint for its future as a “win-win” for both countries.
“I think the Saudi Vision 2030 is a turning point,” he said. “It does represent a realization that there is no alternative to diversify the economy and grow new sectors because Saudi Arabia can no longer rely on oil revenue. We all realize the goals of Saudi Vision 2030 are very ambitious but, in the longer-term, there is no alternative to the vision that has been set out.
“This can provide a win-win situation; there are a lot of new sectors including education and health care reform, smart cities — and not forgetting entertainment and tourism — where UK companies can help and get involved to implement new projects and provide the assistance needed.
“Infrastructure and financial services have traditionally been out bread and butter but now the opportunities are so much wider. We see that as very positive development and one in which the UK can play an important role.”
The UK in particular has a strong part to play in some of the expertise and growing the human capacity needed to implement the reforms set out under the Saudi Vision 2030.
But Innes-Hopkins said UK companies should be looking to build long-term links with Saudi Arabia and playing a central role in making its development vision a reality, rather than just “selling things and going away.”
“What is needed is not such much consultants going in and doing long reports — that may have been necessary to frame the vision — but what we are looking at now is implementation,” he said.
“We as a country, and as a business council, see a big opportunity for UK professional advisers, companies and the British government to provide some of the expertise that is needed working in partnership with our Saudi colleagues to implement these reforms.
“Business in Saudi Arabia is now much more about partnerships; it is not just about British companies trying to sell things and going away — it is about getting companies who can maintain a long-term presence in Saudi Arabia, who can share technology, share skills and invest for the long-term and create a win-win partnership.”
He said an immediate target of the SBJBC is helping build the infrastructure that will support the grown small and medium sized companies (SMEs) in Saudi Arabia, which are important to all economies around the world but will specifically play a major role in the non-oil-reliant Saudi economy.
ELITE, London Stock Exchange Group’s international business support and capital raising program for high-growth companies, announced earlier this year that it has partnered with the Small and Medium Enterprises Authority in Saudi Arabia (Monhsa’at) to support the launch of ELITE in Saudi Arabia.
“I think we do have a good record in the UK of small business creation,” said Innes-Hopkins. “What we think there is room for cooperation is on things like is access to finance for SMEs and access to mentoring and the necessary advice to grow your company. There is definitely room for cooperation and ultimately we want to bring these businesses — and our countries — together.”
Brexit seen boosting UK-Saudi Arabia trade ties
Brexit seen boosting UK-Saudi Arabia trade ties
- UK and Saudi Arabia agreed a goal of £65 billion ($90 billion) of mutual trade and investment in the coming years
- Addressing Saudi Arabia’s Vision 2030 reform plan, Innes-Hopkins described the Kingdom’s blueprint for its future as a “win-win” for both countries
Kuwait PMI climbs to 54.5; Egypt falls to 48.9 in February: S&P Global
RIYADH: Kuwait’s non-oil private sector continued to expand in February, supported by growth in output and new orders, while business conditions in Egypt weakened, an economy tracker showed.
According to the latest Purchasing Managers’ Index surveys released by S&P Global, Kuwait’s PMI rose to 54.5 in February from 53 in January, extending the current run of improving business conditions to a year and a half.
The expansion in Kuwait’s non-oil sector aligns with a broader trend across the Gulf Cooperation Council region, where countries are pursuing diversification strategies to reduce reliance on crude revenues.
The surveys were conducted before regional tensions escalated following US and Israeli strikes on Iran and Tehran’s retaliatory attacks across the Gulf, which have since disrupted markets and energy trade.
Commenting on the February survey, Andrew Harker, economics director at S&P Global Market Intelligence, said: “Growth momentum strengthened in Kuwait’s non-oil private sector in February as companies were again successful in securing new business.”
According to the report, key factors supporting expansions in new orders and business activity included the provision of good-quality products at competitive prices and successful marketing efforts.
The rate of job creation was modest in February and unchanged from January.
Firms continued hiring staff for advertising and project-related work, resulting in a twelfth consecutive monthly increase in employment.
“The main issue facing firms at present is being able to grow workforce numbers quickly enough to keep up with workloads,” said Harker.
He added: “With backlogs rising at a fresh record pace for three months in a row now, fulfilling customer requirements in a timely manner is becoming more difficult, although companies did expand their purchasing activity at a near-record pace in February to help make sure the necessary materials are available going forward.”
Overall input cost inflation hit a nine-month high in February, with both purchase prices and staff costs rising at faster rates compared to January.
The report added that some companies increased their selling prices in response to higher input costs.
Regarding the outlook, companies expressed optimism, with sentiment reaching a 26-month high in February, driven by product variety, competitive pricing and good-quality customer service.
Egypt’s non-oil sector contracts
Egypt’s non-oil private sector contracted in February, driven by rising costs and softer demand, according to S&P Global.
The country’s PMI fell to 48.9 in February from 49.8 in January.
Although the reading remained below the 50 neutral threshold, it was still above its long-run average of 48.3, the report said.
Output declined for the first time in four months in February, and all five sub-components of the PMI indicated weaker business conditions compared to January.
“The February PMI data pointed to a slowdown in the Egyptian non-oil private sector as activity curtailed and new order volumes weakened,” said David Owen, senior economist at S&P Global Market Intelligence.
That said, he added that the dip followed an unusually strong run in business performance, and that the latest figures are consistent with annual GDP growth of approximately 4.5 percent.
Egyptian non-oil companies also reported a decline in order book volumes during the month.
Sales fell across manufacturing, wholesale and retail, and services, while construction was the only monitored sector where new orders improved.
Employment fell for the third consecutive month in February, though at a slower rate, as companies continued active job cuttings and hiring freezes.
The report revealed that cost pressures accelerated across the month, driven by rising global commodity prices, particularly oil and metals.
Selling prices, however, were up only fractionally, with just a small proportion of firms choosing to pass cost increases onto their customers.
“Egyptian non-oil companies were notably exposed to the uplift in global commodity prices, with firms emphasising the impact of higher prices for oil and metals, resulting in the sharpest increase in business costs for nine months and hitting margins at a time when firms are reluctant to raise their selling prices,” said Owen.
He concluded: “Firms will therefore be keen to see commodity markets settle, especially as recent periods of high input cost inflation have typically constrained business output.”
