By Angela Giuffrida www.gulfnews.com
SINGAPORE // Singaporean construction companies plan to step up their presence in the Gulf as they capitalise on gaps left unfilled by their more cautious Japanese counterparts.
Companies from the island-city state see the financial downturn as an “opportunity” to get involved in upcoming projects in the region, said Chua Taik Him, the deputy chief executive of International Enterprise Singapore (IE Singapore), a ministry of trade agency that promotes the overseas growth of Singaporean companies.
“It is an opportunity because various companies, like some Japanese ones which were involved in large projects, have become very cautious,” said Mr Chua.
“For Singapore companies, while it is true that they are also cautious, most still believe in the mid to long-term prospects.
“The opportunities are quite wide-ranging and in places like Abu Dhabi, Qatar, Saudi Arabia and Oman.”
Japanese builders played a pivotal part in Dubai’s construction boom, spearheading work on the Dh28 billion (US$7.62bn) Metro and helping to build Nakheel’s palm-shaped islands off the emirate’s coast.
But payment problems arose as projects began to stall towards the end of 2008, leading big players such as Obayashi Corporation to reconsider their presence in the country.
The 80 Singaporean companies with operations in the UAE have so far played a smaller, niche role in the country’s development, with those such as Keppel, Sembcorp and Surbana taking on marine or power and water-related projects.
Meanwhile, the transport provider SMRT operates the Palm Monorail on Nakheel’s Palm Jumeirah in Dubai.
But possibly the biggest Singaporean investment to date comes in the shape of Capitala, a development company formed in 2008 between CapitaLand and Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.
CapitaLand, one of the largest property developers in Asia, has a 49 per cent stake in the development company.
Mr Chua said that while Singaporean construction firms last year encountered payment delays linked to clients in the UAE – Singapore’s second-largest trading partner in the Middle East – most of the issues have now been resolved.
“We had several inquiries on how we could assist, with our advice being that they should, as much as possible, go through arbitration to resolve them,” he said.
“Over the last few months, many have found solutions.”
Chong Lit Cheong, the chief executive of IE Singapore, said Singapore’s plans in the Middle East were “not just about Dubai”.
“The Middle East features big in our investment destinations, we’re not shying away from that,” he added.
Saudi Arabia is Singapore’s largest trading partner in the region. The consultancy company Jurong International is the master planner for Sudair Industrial City, one of the seven economic cities planned in the kingdom, while Keppel Land is building 1,000 units in partnership with the Saudi Economic and Development Company at the Keppel Al Numu project in Jeddah.
“One of the challenges we face in the Middle East is that the project plans are very big,” said Mr Chong.
“We still need to see the economics of the plan before we get involved, we have to be pragmatic.”