Construction in Saudi Arabia: The next big thing?

Analysis

With the decline in the economies of the developed world, many construction and infrastructure companies are broadening their horizons. In particular, there has been huge interest in the Kingdom of Saudi Arabia (KSA) as “the next big thing”-and with good reason!

KSA is the largest construction market in the Arabian Gulf region by some margin. In 2011, contracts worth USD $66 billion were awarded in KSA, a 6% increase on the previous year. The Kingdom's “Ninth Development Plan” forecasts public spending of USD $384 billion between 2010 and 2014. While a large proportion of the KSA economy is driven by oil exports, the Government is making significant efforts to promote other industries (for example, the recent strategic joint venture between Saudi Aramco and Dow Chemicals).

From the in-house lawyers' perspective, this begs the question: what is the contractual landscape for the construction industry in KSA? Not surprisingly, the answer is not straightforward but this article provides an overview of some “big picture” issues.