A GLOBAL OUTLOOK

Saudi Arabia 2014 | ECONOMY | INTERVIEW

TBY talks to Dr. Abdulrahman Abdullah Al Zamil, Chairman of Zamil Holding Group Company, on foreign investment, technology transfers, and the petrochemical sector.

Dr. Abdulrahman Abdullah Al Zamil
BIOGRAPHY
Abdulrahman Abdullah Al Zamil PhD serves as the Chairman of the Board of Directors of Zamil Group and of the Riyadh Chamber of Commerce and Industry. He was appointed Deputy Governor of Electricity in 1977, and then served as Deputy Minister of Commerce in the Kingdom of Saudi Arabia from 1980 to 1996. He started his distinguished career in 1973 as Assistant Professor at King Fahd University of Petroleum & Minerals in Dhahran, Saudi Arabia. He is the author of many publications. He received his BA in Law from Cairo University and his PhD in International Relations from the University of Southern California in Los Angeles.

Your group has relationships with many entities all over the world, and does business in numerous markets. How do you leverage partnerships to strengthen your business?

My brother Abdulaziz started moving in this direction with Exxon, Halliburton, and Shell, though many people disagreed, arguing that it was unfeasible to work with three partners simultaneously. We like to start our projects with technology holders and market leaders. We started researching serious partners in 1978, when looking for air-conditioning manufacturers. We chose a small family-owned firm, San Antonio, and set up a license agreement in place of a joint venture. We then started acting as the OEM for major players like GE among others.

How do technology transfers move your business forward?

Sound technology is your base, and will be accompanied by good management. Industrial funds and other suppliers and financiers always choose a partner based on their having something strong to offer. This is important for the export market; 35% of all our products in Saudi Arabia are exported globally.

How have the labor reforms affected your businesses?

We have not experienced any violations of the code because we have been disciplined. Only companies that were acting unethically are feeling the reforms.

What is your outlook for the petrochemical sector in the coming years? How have your expectations influenced the proposed merger between Sipchem and Sahara?

The greatest step that Saudi Arabia has taken came in the mid-1990s when gas allocation was opened up to the private sector. That encouraged companies to join the program, as a result of which 14 large corporations were established. Some were start-ups—after my brother Abdulaziz retired, and I retired from the Ministry of Commerce, we started Sipchem. It was a public company founded on our professional experience, and people were generally supportive. We decided to carry out the merger because we saw that today only international players survive. They have better credibility worldwide, and larger, more diversified companies will be targets for partnerships. International players will turn to SABIC first, and lead the market, while we will likely rank in second position, which will still be financially beneficial. Final decisions regarding the merger will take four or five months, but it is a worthwhile endeavor.

How conducive to foreign investment is Saudi Arabia's regulatory environment with the stock market now open to it, and how does it impact your business specifically?

In this country, rather than cash, what we need are people who are serious about investing here for the long term. First of all, regarding the opening of the stock market, we note that certain markets are prone to much speculation, while here, stock prices are stable and speculation absent. Proctor & Gamble is the largest producer of baby products and shampoo in Saudi Arabia and has been present here for 30 years. They are the best foreign partners in the country; therefore, we started supplying them locally and operating a plant with them, and ended up with two plants in total. Saudi Arabia is the only country in the world where custom duties are 5%. Consumer goods are cheaper here then in most of the world, and this is attractive for foreign companies.

Where do you hope to see Zamil Holding Group in the next five years?

We are moving into the pharmaceutical and medical sectors, and have established Cerna, U.S. IHS Information, and Riyadh Techno Valley. We are also moving into predominantly high-end real estate development.

Beyond hospital management, pharmaceuticals, and real estate, what other activities would you highlight?

We have what is currently the largest ship building operation in the Gulf. We offer maintenance for oilrigs, as well as service ships for Aramco and the port authorities. Some of our ships are based on Rolls-Royce engine technology, and we used to build them in Japan, Singapore, and India before commencing production here. At over 200,000 sqm, our new shipbuilding and maintenance facility in Dammam Port will be opening in early 2014.