Solving Saudi

Building regulations in Saudi are a challenge and have led to controversial developments, such as those surrounding Makkah's most significant site.

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It’s very fashionable to be targeting Saudi as traditional GCC markets continue to languish in the post-recession Middle East, but working in KSA is not without its problems.

The country has a reputation for lacking the relative organisation and regulation of Dubai and the wider UAE, while working with local partners and developers poses very specific challenges.

Then, of course, there is getting paid – a problem compounded by the difficulty most have gaining entry into Saudi Arabia at all.

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“Out of all the countries in the region, Saudi Arabia is the most difficult to get paid,” said Ross Herdman, who worked in the kingdom for five years before joining Bahrain-based manufacturer Al Shams Advanced Lighting.

“We had to chase our customers all the time, even as a local company. It’s a good place to be, in that there are lots of opportunities, but it is not easy to do business there.”

He says that the situation is different to that of the UAE in the last two years. “In the UAE it was a different situation. There was the financial crisis and people didn’t have the money. But in Saudi, even if they have the money, it doesn’t mean you’re going to get paid on time.”

And it’s not just suppliers that have had their problems. According to a representative from a high-profile architectural firm working in Saudi Arabia, who asked not to be named, firms should not to expect to get paid any earlier than within 90 to 180 days (compared with 30 to 60 days in the UK) and should probably budget on the assumption that they’ll be paid just 90% of their fee.

The last 10% is often held indefinitely as a guarantee.

“It simply takes longer,” he said. “It may take six months, and in extreme cases, people don’t get paid. But that’s rare. It’s more often the case that you won’t get the last 10%.”

The increase in such cases would suggest that the issue is becoming a growing concern in the region, as would details of project delays due to late payments reported in the Saudi Gazette late last month.

According to the report, there are 36 projects currently delayed in Jeddah, including important road works on Prince Majed street, King Abdul Aziz and King Fahd streets, due to “late payments and lack of budgeted financial allocations” among other things.