Germans warm to Gulf as investment partner

23rd February 2005, Comments 0 comments

23 February 2005, CAIRO - When Chancellor Gerhard Schroeder arrives in Riyadh on Sunday at the start of a week-long, seven-nation Gulf tour, several top German businessmen will be disappointed that they did not gain one of the coveted seats on the plane. German sales executives who have worked the oil-rich region longterm say it is no wonder that some of Germany's top business names want a piece of the action: it is more of a surprise that the Germans have taken so long to grasp the opportunities. Sources

23 February 2005

CAIRO - When Chancellor Gerhard Schroeder arrives in Riyadh on Sunday at the start of a week-long, seven-nation Gulf tour, several top German businessmen will be disappointed that they did not gain one of the coveted seats on the plane.

German sales executives who have worked the oil-rich region longterm say it is no wonder that some of Germany's top business names want a piece of the action: it is more of a surprise that the Germans have taken so long to grasp the opportunities.

Sources in Bahrain say it is likely that a joint venture between German industrial plant builder Linde and a Bahrain investor with a volume of USD 1.2 billion will be announced during the chancellor's visit next week.

They say Linde will mainly provide technical know-how for a new petro-chemical plant.

Business leaders from Germany are especially impressed by the United Arab Emirates (UAE) and its dazzling metropolis Dubai. The UAE is regarded as politically the most stable of potential Gulf partners.

Three months ago, automotive group Volkswagen persuaded the Abu Dhabi government to buy into its LeasePlan unit. Not long after, Volkswagen announced plans to assemble trucks in the Abu Dhabi.

Fellow carmaker DaimlerChrysler can claim two Gulf states, Kuwait and Dubai, as major shareholders.

"Up till now, the emirates had not been on the radar screens of many German corporations, although this is a low-cost manufacturing location for especially energy-hungry products," observes Dalia Abu- Samra of the German Chamber of Commerce and Industry in Abu Dhabi.

As a rule, industrial production costs in the emirates with Asian labour forces are comparable with those in eastern Europe.

The emirates however lack large numbers of consumers. Investors can find a bigger market in Saudi Arabia, the most populous nation on the Arabian Peninsula, but the barriers to investment there are much higher than for example in Dubai.

The Saudi authorities are however starting to realise that the monarchy must be more pro-active to attract foreign investment.

"Our bureaucratic system and time-consuming procedures no longer make a good match with the goals of our political leadership," commented a Saudi businessman at an economic forum this month in Jeddah.

"Broadly speaking, the market here has already opened up," said Hans-Diether von Loebbecke, a German who offers consultancy services in Riyadh. "Foreign investors no longer have to go through a Saudi partner to the extent they did 20 years ago."

Saudi-German Development and Investment Corp. says key opportunities for Germans include water supply, waste recycling and pharmaceuticals.

A Saudi official said USD 150 billion needed to be invested in new water supply alone. In this desert nation, that mainly means desalination of seawater. Von Loebbecke said Germany was also qualified to develop rail links on the peninsula.

Germans, like other foreign investors, remain wary about the political situation in the Gulf, where several governments are struggling to suppress terrorist groups. Saudi Arabia has experienced big bombings since May 2003 but the situation is calmer elsewhere.

Some US and British experts have pulled out of Saudi Arabia because of those attacks on foreigners, and sources say Riyadh is moving towards the idea of financial guarantees to offset the political risk. 

DPA

Subject: German news
 

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