Saudi, UAE businesses battle cash crunch despite anti-coronavirus stimulus
RIYADH/DUBAI: Saudi Arabia and the United Arab Emirates are spending tens of billions to prop up their economies during the coronavirus crisis and oil price slump but the scaling back of state projects is blunting the impact.
The pain felt by the tourism, retail, hospitality and logistics sectors due to global travel disruptions and closure of most public venues is spreading to the contracting and oil services industries in the Arab world’s biggest economies.
Saudi Arabia last week announced suspension of work on the third phase of a $100 billion expansion of the Grand Mosque in Makkah over coronavirus fears. Two days earlier, construction giant Saudi Binladin Group said in an internal note, seen by Reuters, that two employees on the project had been infected. Riyadh-based MOBCO Civil Construction sent a memo to staff in the Saudi cities of Riyadh, Makkah and Medina notifying them that it plans to cut wages between 25% to 50% due to “unforeseen circumstances of COVID-19”, according to the internal document dated March 25, which was seen by Reuters.
MOBCO, a medium sized firm that handles commercial, residential and infrastructure projects, did not respond to a Reuters request for comment.
A source at a major Gulf contracting firm, who declined to be identified due to sensitivities around discussing business plans, told Reuters he has not seen any new Saudi projects awarded in the last two months.
“There are a lot of concerns, though work has not been suspended in the project we have now,” a Saudi contractor, who also asked not to be identified, told Reuters, voicing fears the state-backed project could be at risk. “These workers eat, drink and sleep in the same place. If one only is infected, the whole project will stop,” he said, adding that it was too costly for contractors to halt work unless there is a government directive to do so. – Reuters