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Saudi Arabia Develops Contracting Sector by Adopting Gov’t Classification System

Saudi Arabia supports the reform of the contracting sector by adopting the government classification (Asharq Al-Awsat)
Saudi Arabia supports the reform of the contracting sector by adopting the government classification (Asharq Al-Awsat)
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Saudi Arabia Develops Contracting Sector by Adopting Gov’t Classification System

Saudi Arabia supports the reform of the contracting sector by adopting the government classification (Asharq Al-Awsat)
Saudi Arabia supports the reform of the contracting sector by adopting the government classification (Asharq Al-Awsat)

With Saudi Arabia’s Shura Council having greenlit the contractor classification system, experts confirm to Asharq Al-Awsat that the new scheme will compel contractors to raise the degree of classification in the targeted sectors systematically.

According to specialists, this reduces the number of stumbling projects and aligns with the Kingdom’s aspirations.

The Minister of Municipal, Rural Affairs, and Housing Majed Al-Hogail said that the system is based on a balanced assessment that combines quantitative and qualitative criteria.

It enhances competition between contractors and gives new players with distinguished competencies more significant opportunities, added Al-Hogail.

Earlier, the Ministry of Municipal, Rural Affairs, and Housing had launched a point system for contractors to increase healthy competition and sustainability in the Kingdom’s construction sector.

The ministry also filled in the private sector on the point system linked to an e-platform.

As for the Shura Council approving the contractor classification system, the Chairman of Riyadh Contracting Committee Fahad Nasban said that the move reflects a great leap for boosting private sector quality production and performance.

Nasban pointed out that the new system will help raise the level of localization, employee wages, and the level of experience enjoyed by technicians, engineers, project managers, and marketers.

It will also enhance the quality of implemented projects, added Nasban.

The new system will also force contractors to adhere to specific conditions and fulfill several requirements before taking on quality implementation of projects, real estate expert Ibrahim al-Sahn told Asharq Al-Awsat.

High-quality implementation of projects, according to al-Sahn, is vital for realizing the national transformation plan, dubbed Vision 2030.

Al-Sahn maintained that government agencies carefully select contractors to implement their projects and pay attention to high-quality standards in cooperation with competent public authorities.

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Expert: Türkiye Anti-inflation Steps Don’t Go Far Enough

People shop at a bazaar in Istanbul. Reuters
People shop at a bazaar in Istanbul. Reuters
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Expert: Türkiye Anti-inflation Steps Don’t Go Far Enough

People shop at a bazaar in Istanbul. Reuters
People shop at a bazaar in Istanbul. Reuters

Although Turkish inflation slowed in September, it is still raging out of control with the government avoiding difficult decisions that could help tackle it, experts told AFP.

Türkiye has experienced spiraling inflation the past two years, peaking at an annual rate of 85.5 percent in October 2022 and 75.45 percent in May.

The government claims it slowed to 49.4 percent in September.

But the figures are disputed by the ENAG group of independent economists who estimate that year-on-year inflation stood at 88.6 percent in September.

Finance Minister Mehmet Simsek has said Ankara was hoping to bring inflation down to 17.6 percent by the end of 2025 and to “single digits” by 2026.

And President Recep Tayyip Erdogan recently hailed Türkiye’s success in “starting the process of permanent disinflation.”

“The hard times are behind us,” he said.

But economists interviewed by AFP said the surge in consumer prices in Türkiye had become “chronic” and is being exacerbated by some government policies.

“The current drop is simply due to a base effect. The price rises over the course of a month is still high, at 2.97 percent across Türkiye and 3.9 percent in Istanbul.

“You can’t call this a success story,” said Mehmet Sisman, economics professor at Istanbul’s Marmara University.

Spurning conventional economic practice of raising interest rates to curb inflation, Erdogan has long defended a policy of lowering rates. That has sent the lira sliding, further fueling inflation.

But after his reelection in May 2023, he gave Türkiye’s Central Bank free rein to raise its main interest rate from 8.5 to 50 percent between June 2023 and March 2024.

The central bank’s rate remained unchanged in September for the sixth consecutive month.

“The fight against inflation revolves around the priorities of the financial sector. As a result, it is done indirectly and generates uncertainty,” explained Erinc Yeldan, economics professor at Kadir Has University in Istanbul.

But raising interest rates alone is not enough to steady inflation without addressing massive budget deficits, according to Yakup Kucukkale, an economics professor at Karadeniz Technical University.

He pointed to Türkiye’s record budget deficit of 129.6 billion lira (3.45 billion euros).

“Simsek says this is due to expenditure linked to the reconstruction in regions hit by the February 2023 earthquake,” he said of the disaster that killed more than 53,000 people.

“But the real black hole is due to the costly public-private partnership contracts,” he said, referring to infrastructure contracts which critics say are often awarded to firms close to Erdogan’s government.

Such contracts cover construction and management of everything from motorways and bridges to hospitals and airports, and are often accompanied by generous guarantees such as state compensation in the event they are underused.

“We should question these contracts, which are a burden on the budget because this compensation is indexed to the dollar or the euro,” said Kucukkale.

Anti-inflation measures also tend to impact low-income households at a time when the minimum wage hasn’t been raised since January, he said.

“But these people already have little purchasing power. To lower demand, such measures must target higher-income groups, but there is hardly anything affecting them,” he said.