Foreign AffairsWritten evidence submitted by the Middle East Association
The Middle East Association
The MEA promotes trade between the UK and MENA Region. It was set up in 1961 to re-build relations, post-Suez, through trade. It is a private sector organisation, working closely with Government Departments, and is not-for-profit. It has around 300 active members representing a wide cross-section of British companies with commercial interests in the MENA region. SMEs in the manufacturing and service sectors account for the majority.
The Association organises a variety of in-house and external functions during the year which include trade missions to all open MENA markets; VIP lunches which include British Ambassadors home on leave/duty visits from the Region, Arab Ambassadors in London and other ME experts; seminars; workshops; and other targeted events for visiting business delegations.
I should like to say, if I may, that it is a great pleasure to be sharing this short evidence session with Sir David Wooton. Successive Lord Mayors of London have led high profile business delegations yearly to Saudi Arabia and the Gulf States, which have included various of our Directors General and MEA board members. And one of our key annual events is a formal lunch in October for 200 senior business people at Mansion House where the Lord Mayor graciously presides and speaks.
The Market Place
Our trade connections with MENA countries are underpinned by regular mission visits. We cover all countries from Algeria and Mauretania in the west to Northern Iraq (Kurdistan Region) and Turkey in the east. We also included Iran until UN and EU sanctions came into force.
Historically, our delegations are horizontal, ie non-sectoral. The sort of MEA mission mix on any visit will include: educators and trainers; specialised manufacturers; oil and gas experts; engineering consultants; law firms; financial services providers; infrastructure specialists. Since 2000, the MEA has introduced over 400 SMEs to the Saudi market, the majority of which have worked hard and patiently to establish themselves and to contribute steadily to the UK balance of payments. Most of them have a success story to tell; a number of them are led by some very determined business women. Education and training are probably the top priority in Saudi Arabia and British institutions have much to offer. Currently there are some 14,000 Saudi students at British universities.
Of all our markets, Saudi Arabia is by far the largest and offers the greatest business opportunities. We take two trade missions a year there. As the largest member of the GCC, the Kingdom is also the least easy with which to conduct business, if only because of a very bureaucratic and inefficient visa regime. To the extent that other GCC countries are readily accessible, including Bahrain, the MEA deploys more resources to assisting potential UK exporters to establish themselves in the Saudi market. Our mission format is especially helpful to newcomers and those on follow-up visits.
The value of our trade Jan—August 2012 to Bahrain in goods was £186.9m; and to KSA for the same period £2.1bn, representing respective increases over the same period in 2011 of 35% and 4%. Double those figures to include invisibles. The year-end 2012 figure for Saudi Arabia was in the region of £8bn. The UK’s share of the Saudi market puts us in about 8th place. The total value of UK exports of goods and services to other GCC states for 2012 will have been in the region of £11bn.
UK Presence
Do we have a substantial presence in KSA? Yes. Examples: BAE Systems, Shell, HSBC, Fosters, Atkins, Parsons Brinkerhoff, Kier Group, Invensys, Hyder, Buro Happold, Weir, JCB, Rolls Royce (cars and aero engines), Bentley, Jaguar/Land Rover. British luxury cars have been a major success story over the last 4 years and there is talk of building a Jaguar/Land Rover plant in Kingdom which would be a spectacular investment. In the retail sector: Debenhams, M & S, Harvey Nichols, Burberry, Monsoon, Superdry, Lipsy and Arcadia. These are now common names in Saudi shopping malls which the Al Hokair group are starting to export to Kazakhstan, Georgia and elsewhere.
Could we do better? Yes. There is room for more of our larger companies in the Saudi market, but sometimes there seems to be a reluctance on their part to chase big business. For example, a huge public bus management contract for Riyadh has attracted just one UK bidder and they took some persuading. And more attention/encouragement should be given to SMEs and supply chain opportunities. We are unable to compete at the top of infrastructure projects against the Koreans and Chinese (although others do), but there are huge opportunities along the way. A Saudi-British Energy Week last December by the British Trade Office in Eastern Province, home to the Saudi oil and petrochemical giants, included two UKTI staff from Seoul and a leading Korean contractor, in its day of Workshops, which was inspirational.
The Saudis are well disposed to British businessmen and women and like our products and services if the price and quality are right. They are always courteous in their dealings. But it is a long haul to establish a business presence in the Kingdom, requiring frequent visits and the build-up of a solid working relationship. Once achieved, the doors open. Saudi Arabia is the largest market in the MENA Region and the most inviting and prosperous within relatively easy reach.
Obstacles to Trade
The biggest deterrent to doing business in the Kingdom is the obstructive visa regime. The UK offers 5 year multiple entry visas to Saudi nationals and a 24 hour turn-around process; this is not reciprocated. The issue of a Saudi visa can be quite arbitrary and an application may be refused for no obvious reason which can—and frequently has—thrown out our mission logistics. In the main, visas are single entry and valid for 3 months. To confuse matters, there are two types of visa: the business visa and the businessman’s visa which require different types of information and supporting documents. HMG has made several representations over the years to the Saudis for reciprocal arrangements, but so far to no avail. The Americans have been more successful.
The other deterrent, with one or two honourable exceptions, is the UK media’s consistently disobliging portrayal of Saudi Arabia, whether it is the very conservative variety of Islam which still prevails, allegations of corruption in high places or the role and position of Saudi women. The Saudis do not help themselves by failing to promote the extensive socio-economic reforms that King Abdullah has introduced during his reign; but the fact is that the country is modernising relatively rapidly and social networks are, predictably, having a huge impact especially on the young generation. The Saudi press, may not criticise the ruling family, but is openly critical of anything and everything else: social mores, bureaucracy, municipal corruption, education, health services, unemployment etc.
HMG Support for Exporters
UK Trade and Investment Services at our Posts can be outstanding at one end and lamentable at the other. The result is inconsistency in the delivery of service and a variable quality of product between markets. There are two problems: the first are some of the charges levied by UKTI; the second is the transparent difficulty some Posts have in recruiting, let alone retaining, competent locally engaged staff. The latter is the result of deep budget cuts and is serious. The former relates in particular to the OMIS (Overseas Market Introduction Service) charge for organising an official net-working reception for a visiting (non-UKTI) mission. The minimum charge is £2000 per Post paid in advance. The quality of product, namely those local business people who attend, cannot be guaranteed and, Increasingly, SMEs are baulking at such costs.
12 February 2013