Latin American SMEs keen to collaborate with Saudi Arabia

In Argentina and Brazil – two major animal protein exporters to the Middle East – most of the trade with Saudi Arabia is conducted by big companies, but SMEs are gradually increasing their participation in that exchange. (Shutterstock)
Short Url
Updated 10 February 2024
Follow

Latin American SMEs keen to collaborate with Saudi Arabia

  • Kingdom diversifying economy away from oil by exploring all available opportunities

SAO PAULO: Saudi Arabia is in overdrive to diversify its economy away from oil by exploring all available opportunities available domestically and abroad.

This very quest took Saudi Investment Minister Khalid Al-Falih to several nations in Latin America between July and August 2023. The aim of the tour was to explore avenues for economic cooperation.

The Kingdom does not seem to be focused only on forging closer ties with big businesses, as is evident from the establishment of a $5 million fund to support small and medium enterprises in Paraguay.

According to the Paraguayan authorities, the resources will be used to form a guarantee fund with up to 10 times the initial investment. The money may be important to boost many businesses in the country, affirmed Guillermina Imlach, who heads an association of industrial SMEs in Paraguay.

“In the country, about 98 percent of all companies are small or medium-sized. Most of them don’t have access to credit, so they can’t make the necessary investments,” she told Arab News.

In order to be able to reach the Middle Eastern markets, Paraguayan SMEs need to improve their productivity first, Imlach said.

“That could be possible with the association of a number of companies that operate in the same segment,” she said. The Saudi fund may help them in that direction.

Colombia, a South American country where Saudi Arabia doesn’t have an embassy, exported goods worth about $80 million to the Kingdom between October 2022 and October 2023. The majority of the items were produced by SMEs, such as imitation jewelry and jewelry, millinery, and perfumes.

“There is much room for smaller companies to grow and enter the Saudi market,” Cecilia Porras Eraso, president of the Arab Colombian Chamber of Commerce, told Arab News. 

These companies are very diversified in terms of their fields of activity and certainly investments such as those sponsored by the Saudi funds could have a special impact on the commercial relationship between Brazil and Saudi Arabia.

Osmar Chohfi, president of Arab Brazilian Chamber of Commerce

The chamber recently became associated with a company that assists businesses from the Arab world that want to establish a branch in Colombia.

“That can be made through partnerships with Colombian companies, including SMEs,” Porras Eraso said.

In Argentina and Brazil — two major animal protein exporters to the Middle East — most of the trade with Saudi Arabia is conducted by big companies, but SMEs are gradually increasing their participation in that exchange.

In 2021, the number of Argentinian SMEs exporting to the Middle East grew 5 percent and reached a total volume of $247 million, with some 30 percent of it going to Saudi Arabia. Most of those exports involved agribusiness products, but industrial items were also part of that list.

During an event for SMEs in Brazil in August of 2023, Tamer Mansour, CEO of the Arab Brazilian Chamber of Commerce, affirmed that a new cycle is beginning in the relationship between the two nations in terms of investment and partnerships. 

“I see (Al-Falih’s) visit as a great sign that Saudi public funds want to come and invest here. This is why medium and small companies, cooperatives, and industries outside of hubs such as Rio Grande do Sul, Santa Catarina, and Sao Paulo must be on the radar,” he said.

According to Osmar Chohfi, president of the chamber, the great potential of Saudi investments in Brazilian SMEs is “evident.” 

“These companies are very diversified in terms of their fields of activity and certainly investments such as those sponsored by the Saudi funds could have a special impact on the commercial relationship between Brazil and Saudi Arabia,” he told Arab News.

In Chohfi’s opinion, Brazilian SMEs operating in segments like clothing, shoes, construction materials, and food and beverages are among the most promising ones to receive Saudi investment.

In Argentina, several small companies have been taking part in international events and getting access to the Arab market, especially those in the field of food and beverage, Walid Al-Kaddour, secretary-general of the Argentine-Arab Chamber of Commerce, told Arab News.

“There’s a great potential not only from SMBs in the agribusiness, but also for companies in the pharmaceutical and medical products segment, in the logging industry, metal tubing, and materials for the oil industry,” he said.

Al-Kaddour argues that Saudi investors should privilege private partners and look to establish joint ventures with local partners.

“That should not involve only large companies, but also smaller businesses,” he said. 

HIGHLIGHT

Colombia, a South American country where Saudi Arabia doesn’t have an embassy, exported goods worth about $80 million to the Kingdom between October 2022 and October 2023. The majority of the items were produced by SMEs, such as imitation jewelry and jewelry, millinery, and perfumes.

Alfredo Abboud, secretary-general of the Argentinian Chamber of Commerce and Services for the UAE, argues that SMEs should gather in order to be able to gain scale and associate with Saudi investors or get into the Kingdom’s market.

That is something that he himself accomplished. Abboud, who owns the alfalfa company Cadaf, and his associate Gabriel Osatinsky, owner of another business, Calif, which also produces the crop, gathered in a project to promote a long-term partnership between a group of Argentine alfalfa firms and Saudi irrigation companies.

“Our idea is to bring irrigation equipment to Argentina from Saudi Arabia and exchange it for products of human or animal nutrition,” he told Arab News.

Over the past three years, Argentina faced long periods of drought, which affected its rural production, including alfalfa. 

“We couldn’t meet the entire demand of exports and needed irrigation equipment. That’s when Osatinsky came up with the idea of working on that partnership,” he said.

The duo has been gathering other alfalfa producers with the goal of attaining 100,000 hectares of irrigated fields. A Saudi irrigation company will establish a branch in Argentina to supply the equipment and accompany the production.

“Paying the Saudi investment with a commodity they need generates a virtuous cycle. It’s more than just selling and buying,” Abboud added.

He said that it would be difficult for a small alfalfa producer to cater to the Saudi market alone. But, by associating with other producers, it’s possible. 

“SMEs from other areas of activity can certainly do the same,” he concluded.


Saudi Arabia introduces clean diesel and gasoline fuels in Kingdom’s market

Updated 27 February 2024
Follow

Saudi Arabia introduces clean diesel and gasoline fuels in Kingdom’s market

RIYADH: Saudi Arabia’s sustainability drive is gaining momentum with the Ministry of Energy announcing the launch of clean diesel and Euro-5 compliant gasoline in the Kingdom’s market. 

According to a Saudi Press Agency report, these newly introduced fuels offer lower emissions than traditional diesel and gasoline.

Like their predecessors, these energy sources are suitable for all means of transportation, and are also expected to contribute to preserving the environment and achieving the goals of the Kingdom’s Vision 2030, the report added. 

Euro-5 is a standard set by the EU to regulate the emissions of vehicles. 

Saudi Arabia is leading the Middle East and North Africa region in sustainable efforts through various undertakings, including the Saudi Green Initiative. 

The Ministry of Energy said that the introduction of these two fuels comes as part of the Kingdom’s efforts to reduce emissions and reach net zero in 2060 through the application of the circular carbon economy approach. 

The report added that the launch of these resources would encourage car manufacturers to introduce the latest energy-efficient vehicle technologies to the Kingdom. 

In January, multi-project developer Red Sea Global announced that it has become the first company in Saudi Arabia to use low-carbon biofuel in all its delivery trucks.

In a press statement, RSG revealed that the entire fleet of land vehicles is now powered by electricity or biofuel. 

The biofuel is produced from used cooking oil sourced within Saudi Arabia. The type of fuel RSG has adopted emits only 0.17 kilograms of carbon dioxide equivalent per liter, compared with 2.7kg CO2e per liter from regular diesel usage.


Johnson & Johnson MedTech begins direct operations in Saudi Arabia 

Updated 27 February 2024
Follow

Johnson & Johnson MedTech begins direct operations in Saudi Arabia 

RIYADH: Saudi healthcare is poised to benefit from advanced medical interventions after Johnson & Johnson’s technology firm, J&J MedTech KSA, announced the launching of its direct operations in the Kingdom.  

The company provides high-tech medical and surgical equipment and aims to bring customers closer to a more streamlined experience, according to a statement.   

This move not only aligns with the firm’s commitment to enhancing medical interventions and improving clinical outcomes but also reflects the company’s ongoing investment in the future of Saudi healthcare, it added.   

Marzena Kulis, managing director of Johnson & Johnson MedTech for Middle East & Africa, said: “We remain deeply vested in Saudi Arabia and in contributing to the Vision 2030 to support in developing the healthcare sector, driving economic growth, nurturing local talent, and fostering innovation.”    

She added: “As an entity, Johnson & Johnson has been present in Saudi Arabia for nearly 40 years, putting the needs of patients, families, physicians, and nurses first, and functioning as advocates for the health of the Saudi community.”   

The senior executive added that as the company transitions into this new direct model, its esteemed partners will have fewer obstacles in providing the best care for their patients.

Moreover, Trad Al-Khelaiwi general manager of J&J MedTech KSA, highlighted: “As a company that is dedicated to fostering local talent, our direct operations are also aimed at creating more opportunities within the Kingdom and supporting the government’s Saudization efforts.”

He added: “In fact, since the start of the project, we’ve made 76 new hires — with our priority and majority being KSA nationals.” 

Furthermore, Al-Khelaiwi emphasized that this transformative shift would bring the customers closer to Johnson & Johnson’s quality standards and help develop the local healthcare market with international know-how.

“By taking this bold step, we are not only embracing the health goals of Vision 2030 and aligning with the National Health Transformation Program but also spotlighting the immense potential of local talent in driving innovation and progress,” Transformation Director at Johnson & Johnson MedTech Peter Lane underscored. 

In November 2022, Johnson & Johnson announced providing digital solutions that will shorten the time patients spend in hospitals.  

According to Marzena Kulis, managing director of Johnson & Johnson MedTech Middle East, the move was crucial in countries with lower bed capacity.  

“The digital solutions that we currently offer help to shorten the time of patients’ stay, so the capacity can absorb more patients, especially in the geographies where capacity is limited,” Kulis said in an exclusive interview with Arab News at the time.


Demand for fossil fuels not likely to diminish anytime soon: Saudi energy minister

Updated 27 February 2024
Follow

Demand for fossil fuels not likely to diminish anytime soon: Saudi energy minister

 

RIYADH: Saudi Arabia aspires to become one of the largest producers and exporters of clean energy, said Energy Minister Prince Abdulaziz bin Salman.

In an interview with the quarterly bulletin issued by the Saudi Association for Energy Economics, the minister said the Kingdom is capable of producing green and clean hydrogen at competitive prices.

Prince Abdulaziz said the Kingdom is focussing on all energy sources including solar, wind and green hydrogen as well as nuclear and geothermal.

This will help the Kingdom to reduce the consumption of liquid fuels in generating electricity and reaching the optimal energy mix, he added.

The minister cited the establishment of the largest green hydrogen production plant in NEOM as an example. The plant will have an annual production capacity of 250,000 tonnes by 2026.

Talking about the fluctuations in the oil market, he said the Organization of the Petroleum Exporting Countries has mechanisms in place to deal with global crude market challenges.

Despite highlighting Saudi Arabia’s energy transition plans, Prince Abdulaziz said the need for fossil fuels, especially oil and gas, will continue for decades as also indicated by several industry reports.

The minister added that Saudi Arabia is working to reduce carbon emissions, and that it has a program to replace liquid fuels.

He explained that the program aims to run industrial facilities to rely on natural gas or alternative fuels as well as building renewable energy sources.

Furthermore, Prince Abdulaziz highlighted how Saudi Arabia has quadrupled its current renewable energy capacity from 700 megawatts to 2,800 MW by the end of 2023, with more than 800 MW of renewable energy sources still under implementation and about 1,300 MW in various stages of development. On top of that, the Kingdom plans to produce 200 additional MW this year.

The energy minister also revealed that work is underway to build one of the largest projects to capture, transport, and store carbon dioxide with an annual capacity of up to 9 million tonnes by 2030 and 44 million tons annually by 2035.

He reiterated the Kingdom’s goal to reduce emissions to 278 million tonnes annually by 2030.


Closing Bell: Saudi main index rebounds to close at 12,602

Updated 27 February 2024
Follow

Closing Bell: Saudi main index rebounds to close at 12,602

RIYADH: Saudi Arabia’s Tadawul All Share Index bounced back on Tuesday after recording declines on two days.

The benchmark index gained 69.79 points to close at 12,601.55 with an overall trading value of SR7.31 billion ($1.95 billion), with 169 stocks advancing and 52 declining. 

The Kingdom’s parallel market, Nomu, also gained 661.67 points to close at 26,254.28 and the MSCI Tadawul Index also edged up by 0.68 percent to 1,627.71. 

The best-performing stock of the day was Middle East Pharmaceutical Industries Co., also known as Avalon Pharma, which debuted on the main market on Tuesday. The company’s share price soared by 30 percent to SR106.60. 

Other top performers were Saudi Steel Pipe Co. and Batic Investments and Logistics Co., whose share prices surged by 9.93 percent and 9.87 percent, respectively. 

The worst performer of the day was Saudi Arabian Amiantit Co., as its share price slipped by 5.24 percent to SR29.85. 

On the announcements front, Arabian Centers Co., also known as Cenomi Centers, said that its board of directors approved issuing dollar-denominated sukuk under its international sukuk program. 

In a Tadawul statement, Cenomi Centers revealed that the amount and the terms of offerings will be announced later, depending on the market conditions. 

The lifestyle center operator added that the sukuk issuance is subject to the approval of the relevant regulatory authorities. 

Meanwhile, National Medical Care Co. revealed that it witnessed a net profit rise of 42 percent in 2023 to SR240.9 million compared to the previous year. 

The medical service provider said the rise in net profit was driven by higher revenue, gross profit, and interest income, along with lower sales costs and zakat charges. 

National Medical Care Co. added that the net profit for the fourth quarter of 2023 also witnessed a surge of 15 percent to SR63.5 million compared to the same period in 2022. 

Saudi Basic Industries Corp. also revealed its financial results for 2023 on Tuesday. 

The company, also known as SABIC, reported a net loss of SR2.58 billion in 2023, compared to a net profit of SR16.5 billion in 2022. 

In a statement to Tadawul, the company attributed the accumulation of losses to a decline in revenue due to a decrease in average selling prices and sales volumes. 


Aramco signs procurement agreements worth $6bn to enhance local supply chain

Updated 27 February 2024
Follow

Aramco signs procurement agreements worth $6bn to enhance local supply chain

RIYADH: Saudi Aramco’s domestic supply chain is poised for further improvement as it signed procurement agreements worth $6 billion with suppliers in the Kingdom. 

According to a press statement, these 40 procurement agreements were inked as a part of the company’s strategic localization program and are expected to strengthen the firm’s supply chain ecosystem and contribute to the development of the energy services sector in Saudi Arabia. 

The deals will also provide suppliers with long-term demand visibility, enabling them to capture future growth and advance localization efforts.

Wail Al-Jaafari, executive vice president of technical services at Saudi Aramco, said: “The 40 new agreements signed today are expected to contribute to the domestic value chain and further enhance the ecosystem that Aramco is helping to build.” 

Moreover, these procurement agreements will also contribute to achieving the objectives of Aramco’s iktva program, an initiative to drive the growth of a vibrant economy in the Kingdom and create new opportunities for Saudi nationals.

These new corporate deals span the supply of a range of products comprising strategic commodities, such as instrumentation and electrical and drilling equipment. 

“These agreements move us toward a more prosperous, diverse and resilient supply chain, which will help ensure business continuity. They also represent a key milestone on our iktva journey and provide our partners an opportunity to benefit from a dynamic and increasingly diversified operating environment,” added Al-Jaafari. 

Additionally, Saudi Aramco signed two memorandum of understanding with its strategic partners to collaborate on localization and supply chain development. 

Earlier in February, speaking at the International Petroleum Technology Conference in Dhahran, Amin Nasser, CEO of Saudi Aramco, said that the company is very active in its localization efforts. 

“We hired more than 5,000 people, mostly Saudis, but also from 60 nationalities,” said Nasser.

He also added that Aramco has the full capability to grow in any sector to create profitable companies.

In January, a report released by strategic consulting firm Brand Finance revealed that Saudi Aramco has retained its position as the most valuable company in the Middle East region, with a value amounting to $41.6 billion.