Saudi ministry calls for small business mergers
The Saudi Ministry of Industry called on small and medium-sized companies with similar product productions to merge to meet future challenges and competition, officials said Wednesday.
The ministry had proposed the idea to the companies several months ago, said Khalid Ghaith, head of the
ministry’s industry encouragement department. Ghaith told Saudi newspapers that competition both in the local market and international market would become strong once the kingdom joins the World Trade Organization (WTO).
Ghaith said the ministry would provide all the necessary support for such mergers, such as approving
an operations license within a week of application, a record time for Saudi bureaucracy. The first sector the ministry approached was the foods industry. But geographic distances and other technical obstacles stood in the way of possible mergers in that sector, Ghaith said.
However, the main obstacle, Ghaith said were factory owners, who still unaware of the future market challenges, prefer to run their own factory without the interference of a partner which a merger would probably bring. The Saudi chambers of commerce and industry could play a role in convincing factories with similar production to merge. But the merger would have to take place before the kingdom becomes a member in the WTO, Ghaith said.
According to recent ministry statistics, there are 3,300 factories in Saudi Arabia. Investment in those factories is more than SAR236 billion ($64 billion). The factories stretch over 36 million square meters in eight industrial cities throughout the kingdom. In 1999, industry value was SAR18.7 billion and none petroleum exports to 118 countries for 1999 was approximately SAR20 billion. – (Albawaba-MEBG)