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Opening of European Chamber in Riyadh Signals New Partnership Era

The European Chamber of Commerce in the Kingdom of Saudi Arabia (ECCKSA) was inaugurated in Riyadh on Wednesday.
The European Chamber of Commerce in the Kingdom of Saudi Arabia (ECCKSA) was inaugurated in Riyadh on Wednesday.
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Opening of European Chamber in Riyadh Signals New Partnership Era

The European Chamber of Commerce in the Kingdom of Saudi Arabia (ECCKSA) was inaugurated in Riyadh on Wednesday.
The European Chamber of Commerce in the Kingdom of Saudi Arabia (ECCKSA) was inaugurated in Riyadh on Wednesday.

The European Chamber of Commerce in the Kingdom of Saudi Arabia (ECCKSA)  officially opened its doors in Riyadh on Wednesday, marking a new phase in trade and economic cooperation between Saudi Arabia and the EU.
The launch event was attended by distinguished guests, including Ibrahim Al-Mubarak, assistant minister of investment; Luigi Di Maio, EU special representative for the Gulf; and Christophe Farnaud, the EU ambassador to Saudi Arabia, Oman, and Bahrain.
Al-Mubarak highlighted how ECCKSA’s initiatives in Saudi Arabia align with the Kingdom’s national transformation plan, Vision 2030, focusing on creating new opportunities in non-oil sectors.
He noted that ECCKSA’s establishment will boost trade, investment, and cross-border cooperation, supporting the Kingdom’s economic diversification efforts.
Al-Mubarak also mentioned that over 300 European companies have been licensed to move their regional headquarters to Riyadh, with a target of attracting 480 such companies by 2030.
He added that foreign direct investment from Europe has doubled to around SAR 218.5 billion over the past five years.
On his part, Di Maio said that the establishment of the ECCKSA marks an important new chapter in the partnership between the EU and Saudi Arabia.
“I am convinced that this initiative will be key in bringing closer and in integrating our economies. The ECCKSA will certainly become a point of reference for European companies doing business in the Kingdom and Saudi companies looking for partners and markets in the EU,” said Di Maio.
“It will facilitate joint ventures and boost trade and investments. There is so much untapped potential and space to grow in our economic cooperation and I am confident that the next months and years will bring about more substantive and sustainable progress,” Di Maio added.
Apart from his prediction that the chamber would become a hub for European companies in Saudi Arabia, Di Maio stressed that it would help strengthen business connections and support Saudi Arabia’s economic diversification efforts under Vision 2030.

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Turkish Companies ‘Paying the Bill’ as Political Crisis Roils Economy

Cats watch as fishermen gather their catch at Besiktas neighborhood in Istanbul on March 28, 2024. (AFP)
Cats watch as fishermen gather their catch at Besiktas neighborhood in Istanbul on March 28, 2024. (AFP)
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Turkish Companies ‘Paying the Bill’ as Political Crisis Roils Economy

Cats watch as fishermen gather their catch at Besiktas neighborhood in Istanbul on March 28, 2024. (AFP)
Cats watch as fishermen gather their catch at Besiktas neighborhood in Istanbul on March 28, 2024. (AFP)

Turmoil unleashed by the arrest of Türkiye’s leading opposition figure last week has sent shockwaves through the private sector, forcing companies to rethink strategy and dig in for a period of uncertainty and potential economic instability.

The detention of Istanbul Mayor Ekrem Imamoglu, who leads long-serving President Recep Tayyip Erdogan in some polls, has provoked the largest anti-government protests in a decade, leading to mass arrests and international condemnation.

The move also sent the lira currency to a record low, fueling a sell-off of Turkish assets that has destabilized company balance sheets and driven up already high borrowing costs.

Company officials told Reuters that Turkish businesses across sectors were scrambling to reassess risk, with some already pausing planned investments and slashing budgets.

"The industrialists now have to pay the bill for a crisis they did not cause," said Seref Fayat, chairman of System Denim, which manufactures garments for leading Western brands and exports them to Europe and the United States.

Fayat, who also heads a garment industry lobby group, said his credit costs have spiked due to the market turmoil.

He had been drawing up budgets for a second-half expansion of his business in anticipation of an expected rebound in customer demand from Europe.

"We immediately shelved these plans following the latest developments," he said.

The lira has recovered somewhat after touching a record low of 42 to the dollar, but only after the central bank stepped in to prop up the currency.

And businesses worry more pain is on the way.

Expectations of declining inflation and lower interest rates following the adoption of an orthodox economic program that had promised Turks future relief after years of soaring prices and currency crashes, now seem in doubt.

In an unscheduled meeting last week, the central bank raised its overnight lending rate by two percentage points to 46%.

According to information provided to Reuters by bankers, short-term commercial loan interest rates have increased from an average of 42-43% to 52-53%, with some rates as high as 60%.

Morgan Stanley now forecasts any cuts to the central bank's policy rate will be shelved until June. And Goldman Sachs said it expected a hike in the policy rate by 350 basis points.

'EVERY COMPANY NEEDS A PLAN'

"The latest developments will affect companies' investment expenditures the most," Hakan Kara, a former central bank chief economist now on faculty at Bilkent University in Ankara, said on X, pointing out that investment had already been slowing.

"This will probably become even more apparent in the short-term."

The government has said the recent economic turmoil would be limited and temporary. But some company officials worry the crisis may only be beginning.

Elections are set for 2028 when Erdogan, who has dominated Turkish politics for more than two decades, will reach his term limit.

Many, however, see the arrest of Imamoglu, who was jailed on Sunday pending trial for graft, as an early indication he could seek to remain in power, either through an early election or constitutional changes that would likely face public opposition.

Mehmet Buyukeksi, a board member at Ziylan, which operates in retail and real estate, said expectations of a more positive business outlook in Türkiye based on government efforts to right the economy as well as strengthening demand were now less certain.

Improvements, including lower borrowing costs, that he had been expecting to see in July, he is now pushing back to September, he said.

And there are other knock-on effects.

One company official said some firms were carrying out human resources risk assessments, worried that they could face blowback if their employees participate in protests or share political content on social media.

Some conglomerates are reevaluating their risks in terms of exchange rates, inflation, funding costs and are significantly increasing the likelihood of negative impacts in their assessments, the company official said.

And a mergers and acquisitions consultant said that, while some foreign firms might look past criticisms that the Turkish government's actions are growing increasingly undemocratic, few will pour investment into an economically fraught environment.

"Everyone will re-do their calculations and books," said Fikret Kaya, the general manager of plastics and industrial equipment manufacturer Kayalar.

"We have had to make monthly evaluations that we used to make quarterly. I think every company needs to make a plan."