GCC countries should strengthen supply chains to ensure industrial growth: Oliver Wyman

Special GCC countries should strengthen supply chains to ensure industrial growth: Oliver Wyman
Vulnerabilities in global supply chains came under greater scrutiny in recent years. Shutterstock
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Updated 19 April 2024
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GCC countries should strengthen supply chains to ensure industrial growth: Oliver Wyman

GCC countries should strengthen supply chains to ensure industrial growth: Oliver Wyman

RIYADH: Countries in the Gulf Cooperation Council region should develop supply chain resilience strategies as they embark on large-scale industrialization of their economies, a report said. 

According to management consulting company Oliver Wyman, current risk levels in the logistics sector need to be mitigated, especially for countries like Saudi Arabia and the UAE which depend on high-criticality products such as transformers and minerals which are crucial for industrial growth. 

“In Saudi Arabia, 75 percent of transformer imports originate from only three countries. Any potential disruption in transformer supply could significantly impact several sectors such as power, manufacturing, transportation, and healthcare,” the report said. 

It added that logistical issues could impact power supply, leading to decreased industrial productivity, infrastructure vulnerabilities in systems that require constant energy supply, and economic instability. 

“As GCC countries scale up their economic diversification plans, including their industrial sectors, it is vital that they redouble initiatives to increase supply chain resilience to ensure the smooth functioning of all sectors and aspects of society in the event of unexpected upheavals in the supply chain,” said Frederic Ozeir, partner and head of Automotive and Manufacturing Industries, India, Middle East and Africa region at Oliver Wyman. 

The vitality of supply chain resilience

Oliver Wyman noted that vulnerabilities in global supply chains came under greater scrutiny in recent years following the pandemic and numerous climate-change-induced natural disasters, in addition to cybersecurity threats, logistics challenges, and geopolitical issues. 

During these years, industries across the spectrum have been forced to grapple with production delays, shortages, and an increase in prices, as well as growing demand and unexpected bottlenecks, which have highlighted the critical importance of resilient logistical chains.

“For example, of all the electrical machinery and equipment imported to both Saudi Arabia and the UAE, 60 percent and 65 percent, respectively, are imported from just three countries. Similarly, for excavation machinery and valves, Saudi Arabia and the UAE import 50 percent and 55 percent of the total from three countries,” said Oliver Wyman. 

The US-based firm added that various sectors are directly dependent on the industrial supply chain, and any disruptions could have a domino effect which will amplify vulnerabilities in vital sectors that are important for health, safety, and security.

Highlighting the necessity to maintain a functional supply chain, the report noted that the healthcare industry relies on the timely delivery of medical equipment and pharmaceuticals, while the power sector hinges on a steady inflow of critical machinery and components, such as turbines, generators, and transformers. 

Moreover, GCC countries are heavily reliant on desalination machinery such as membranes, pumps, and valves because desalination is the source of most of the urban water in the region.

Saudi Arabia leading the region to ensure supply chain resilience

Oliver Wyman, in its report, also lauded Saudi Arabia’s efforts to ensure a healthy logistics sector in the Kingdom, as well as the whole region. 

“In 2022, KSA launched the Global Supply Chain Resilience Initiative as part of its National Investment Strategy. This aims to position the Kingdom as a location of choice for leading global industrial companies, attracting investments in supply chains in order to mitigate the impact of global disruptions,” said the report. 

The study added that the UAE is also focussing on improving food supply chains through various programs such as those that support local and sustainable food production, as well as by establishing new logistics hubs and deploying cutting-edge technological solutions. 

Key actions to bolster supply chain resilience in the GCC

According to the report, governments in the GCC region should develop supply chain resilience strategies that seamlessly align with their national industrialization programs. 

Moreover, such strategies should be supported by a set of enablers covering governance, private sector involvement, capabilities, and technology. 

Oliver Wyman also underscored the necessity of having a collaborative governance framework between different countries to strengthen the supply chain in the Middle East region. 

“GCC ministries of industry and mining can work with other ministries, especially those of vital sectors to ensure supply chain resilience. As an example, a GCC Ministry of Industry that collaborates with its counterpart in the Ministry of Health would be able to better develop appropriate actions for ensuring resilience of the supply chain of medical devices,” said the report. 




Healthcare has been identified as one of the sectors at risk from supply chain disruption. Shutterstock

The report also added that GCC governments should leverage the private sector as a crucial partner in their supply chain strategies. 

According to the report, countries in the region can ensure supply chain durability by incentivizing logistical resilience initiatives among the private sector, and implementing inspection and corrective actions.

Moreover, the consulting firm added that GCC countries should establish specialized teams within their ministries of industry, comprising professionals with expertise in risk assessment and management, logistics operations, data analytics, and technology to build up the logistics network. 

“Various capabilities are also required across the industrial sector, such as risk assessment and management, advanced technology integration and utilization, data analytics and business continuity planning, cybersecurity, and collaboration and information sharing,” the report added. 

The study highlighted that nations in the region should also encourage the adoption of technology through advanced manufacturing policies that will drive the use of 3D printing, robotics, augmented reality, and automation. 

Industrial cybersecurity requirements should also be considered given the connectivity and data sharing within factories, driven by automation and the Internet of Things, the consulting firm added. 

Oliver Wyman noted that GCC countries should adopt a holistic approach that combines localization with other supply chain resilience levers to safeguard the industrial growth of these nations. 

“Achieving supply chain resilience in the industrial sector is not a one-size-fits-all endeavor. The levers deployed to fortify supply chains, such as localization, shoring, and partnerships, must be applied to the supply chain components of products with high criticality and risk,” Ozeir. 

The study concluded that supply chain resilience is not just a choice for GCC nations, but a necessity, and one that will guarantee the sustainability of their burgeoning and all-important industrial sectors.


Closing Bell: Saudi main index slips to 12,233 amid mixed market performance

Closing Bell: Saudi main index slips to 12,233 amid mixed market performance
Updated 18 sec ago
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Closing Bell: Saudi main index slips to 12,233 amid mixed market performance

Closing Bell: Saudi main index slips to 12,233 amid mixed market performance

RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Wednesday, losing 68.58 points, or 0.56 percent, to close at 12,232.65.  

The total trading turnover of the benchmark index was SR5.80 billion ($1.54 billion), as 95 stocks advanced, while 141 retreated.     

The MSCI Tadawul Index also decreased by 10.34 points, or 0.67 percent, to close at 1,532.52.  

Nomu, the Kingdom’s parallel market, rose, gaining 13.50 points, or 0.04 percent, to close at 31,286.23. This comes as 43 stocks advanced, while 33 retreated.  

The best-performing stock was CHUBB Arabia Cooperative Insurance Co., with its share price surging by 10 percent to SR47.85.  

Other top performers included Naseej International Trading Co., which saw its share price rise by 9.64 percent to SR104.60, and East Pipes Integrated Co. for Industry which saw a 4.11 percent increase to SR162.  

Saudi Telecom Co. was also among the top performers with a 3.58 percent increase to reach SR46.30. Jamjoom Pharmaceuticals Factory Co. also increased by 3.11 percent to reach SR172.20.  

The biggest decliner of the day was Saudi Ceramic Co., with its share price dropping 5.29 percent to SR28.65. 

Yanbu National Petrochemical Co. fell 4.21 percent to SR35.25, while Saudi Industrial Investment Group dropped 3.33 percent to SR17.42. 

Arriyadh Development Co. dropped 3.23 percent to SR33, while Saudia Dairy and Foodstuff Co. declined 3.03 percent to SR306.80. 

On the announcements front, Almoosa Health Co. reported a 22.8 percent year-on-year revenue growth in 2024, reaching SR1.20 billion, driven by increased patient volume, higher outpatient revenue, an expanded specialty mix, and a strategic focus on high-end tertiary care.   

The company’s fourth quarter revenue rose 21.7 percent year on year, reflecting strong performance across all segments.  

Almoosa Health maintained profitability despite rising costs, with the cost of revenue increasing by 23.6 percent for 2024 and 25 percent in fourth quarter due to business expansion and increased patient volumes.   

Almoosa Health Co.’s share price dropped 1.12 percent on Wednesday to settle at SR159.20.  

In other financial disclosures, stc reported key financial highlights for 2024, with revenues reaching SR75.9 billion, a 5.7 percent increase from 2023.   

The company’s net profit surged 85.7 percent to SR24.7 billion in 2024. It also announced a fourth-quarter dividend distribution of SR0.55 per share, in line with its approved dividend policy, along with an additional cash dividend of SR2 per share.  

Rasan Information Technology Co. reported strong financial results for the fiscal year 2024, with revenue increasing 39.8 percent year on year to SR358.3 million, up from SR256.2 million in the previous year.   

The company attributed this growth to a 25 percent rise in insurance policy sales, particularly in medical insurance, which saw a 69 percent increase despite a decline in average written premiums.   

Additionally, the launch of new products, expanded cross-selling initiatives, and a strengthened network of strategic partners contributed to revenue growth.  

Its net profit for 2024 more than doubled, increasing 106.2 percent to SR94.7 million, compared to SR46.0 million in 2023.   

The company credited this profit growth to an 8.6 percentage point increase in gross profit margin, which reached 66.5 percent in 2024.   

Rasan’s share price dropped by 0.91 percent on Wednesday to settle at SR87.  

Halwani Bros. Co. reported a 9.8 percent year-on-year increase in revenue for 2024, reaching SR969.1 million, compared to SR882.7 million in the previous year.   

The company attributed this growth to higher sales in Saudi Arabia, increased export sales, and geographical expansion through enhanced sales channels and restructuring of the sales department.  

Its net profit rebounded significantly, reaching SR44.7 million, compared to a net loss of SR98 million in 2023.   

The company credited this turnaround to higher domestic and export sales, a better sales mix, reduced selling and administrative expenses, and a SR5.4 million boost from the reversal of certain provisions.  

Halwani Bros. Co.’s share price dropped 0.18 percent on Wednesday to settle at SR56.60. 


First use of sustainable aviation fuel in Saudi Arabia to be at Red Sea International Airport

First use of sustainable aviation fuel in Saudi Arabia to be at Red Sea International Airport
Updated 23 min 56 sec ago
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First use of sustainable aviation fuel in Saudi Arabia to be at Red Sea International Airport

First use of sustainable aviation fuel in Saudi Arabia to be at Red Sea International Airport

RIYADH: Sustainable aviation fuel will be used in Saudi Arabia for the first time after a deal was struck for airplanes using Red Sea International Airport.

An agreement between Red Sea Global, daa International, and Arabian Petroleum Supply Co. will see the airport supplied with a 35 percent SAF blend, cutting direct aircraft emissions by up to 35 percent. 

The deal marks a significant step in reducing aviation-related carbon emissions in the Kingdom, according to a press release. 

This aligns with the company’s goal to power all operations at the Red Sea with renewable energy. It has already installed over solar panels capable of producing 400 megawatts, which is expected to offset up to 600,000 tonnes of carbon dioxide equivalent annually. 

John Pagano, Group CEO of Red Sea Global, said that by introducing SAF to the Kingdom, the company is significantly reducing guests’ personal carbon footprints from the moment they arrive and even after they depart. 

“More than this, we’re supporting the wider aviation sector to start making choices that are better for the environment,” he added. 

SAF is a lower-carbon alternative to traditional jet fuel, designed to reduce greenhouse gas lifecycle emissions. It can be produced from renewable sources, waste-derived materials, or synthesized from clean hydrogen and captured carbon dioxide.  

In accordance with international standards set by the International Civil Aviation Organization and the International Air Transport Association, SAF must be blended with conventional Jet A1 fuel.  

Aviation fuel significantly impacts sustainability, with the industry contributing about 2.5 percent of global carbon emissions annually.  

SAFs can reduce emissions by up to 80 percent but currently account for less than 0.1 percent of jet fuel used by major US airlines.  

Challenges include high production costs and limited availability, hindering widespread adoption. 

“Introducing sustainable aviation fuel at Red Sea International Airport marks a significant milestone in our commitment to environmental stewardship and sustainability. This groundbreaking initiative not only reduces carbon emissions but also aligns with our broader mission to protect the Red Sea’s unique and fragile ecosystem,” said Michael White, chief commercial officer at RSI. 

RSG’s commitment to sustainability extends beyond aviation fuel. Its subsidiary air operator, Fly Red Sea, will exclusively refuel its seaplane fleet with SAF and lower-carbon aviation fuel.  

Additionally, RSG has committed to planting and restoring 50 million mangroves by 2030 to enhance carbon sequestration and biodiversity in collaboration with the National Center for Vegetation Cover.  

The Red Sea welcomed its first guests in 2023, with five hotels now open. RSI has been receiving regular domestic flights since September 2023, and international flights began in April with a twice-weekly route to Dubai International Airport.  

Upon full completion in 2030, the Red Sea will feature 50 resorts, offering up to 8,000 hotel rooms and over 1,000 residential properties, alongside marinas, golf courses, entertainment venues, and leisure facilities. 


Egypt wants to move state-owned enterprises to its sovereign wealth fund, minister says

Egypt wants to move state-owned enterprises to its sovereign wealth fund, minister says
Updated 44 min 1 sec ago
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Egypt wants to move state-owned enterprises to its sovereign wealth fund, minister says

Egypt wants to move state-owned enterprises to its sovereign wealth fund, minister says

ABU DHABI: Egypt aims to move state-owned enterprises to be managed by the country’s sovereign wealth fund, to maximize the return on state assets, Investment Minister Hassan El-Khatib said on Wednesday.

Egypt has been divesting state assets under a program to boost the role of the private sector, a requirement imposed by the International Monetary Fund for an expanded $8 billion loan.

“I want to move the state-owned enterprises in batches to the (sovereign wealth) fund to manage, to maximize the return on, say, state assets,” Khatib told the Investopia 2025 conference in Abu Dhabi.

Egypt’s $12 billion sovereign wealth fund was established in 2018 in an aim to foster private sector partnerships and help foreign investment to flow into state-owned companies. But the government and military have been hesitant to relinquish control over some assets.

However, the government has been trying expedite the program, seeking to sell stakes in at least 10 companies in 2025, including two military-owned companies.

“I see we have a lot of good companies. As we move them, get the private sector to run them, have the proper governance, partner with the private sector, list in some cases. So the perception of the sovereign wealth fund will be maximization of yield on the return value and the valuation,” Khatib added.


Saudi residential transactions up 35% over 5 years: Knight Frank report 

Saudi residential transactions up 35% over 5 years: Knight Frank report 
Updated 26 February 2025
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Saudi residential transactions up 35% over 5 years: Knight Frank report 

Saudi residential transactions up 35% over 5 years: Knight Frank report 

RIYADH: Residential transaction values in Saudi Arabia surged 35 percent over the past 5 years to reach SR164.8 billion ($43.94 billion), according to a report from Knight Frank.

The findings showed that these deals, which accounted for 61.5 percent of all real estate agreements by total value, registered a 38 percent increase in the number of sales to just under 202,661 during the same period.

This falls in line with the Kingdom’s Vision 2030 goal to reach a 70 percent homeownership rate by 2030. It also aligns well with Saudi Arabia’s commitment to supporting access to affordable, quality housing for all citizens.

“Undoubtedly, the next big area of focus for developers will be on creating new and additional sources of demand, which may soon materialize in the much-anticipated change in foreign ownership laws,” Partner and Head of Research in the Middle East and North Africa region Faisal Durrani said.

“We continue to march toward an eventual and much-anticipated easing in international ownership laws in the Kingdom. The recent change in investor rules allowing international investors to access the property markets in the Holy Cities through listed companies, announced in January, will help to begin addressing the pent-up demand from international investors hungry to access real estate markets in the Kingdom’s Holy Cities,” he added. 

The study further revealed that several factors have contributed to the growth of residential real estate transactions in Saudi Arabia in recent years. In 2023, over 96,000 families benefited from the Kingdom’s Housing Program, which provides access to affordable home financing options. By the first half of 2024, another 55,000 families had gained from this initiative.

The release further revealed that despite record-high prices in cities like Riyadh, 45 percent of affluent Saudis are still eager to buy a home this year.

It also indicated that while the domestic homeownership rate is nearing the government’s 70 percent target for 2030, rising borrowing costs and escalating house prices are dampening demand. 

Knight Frank’s survey, conducted with YouGov and covering 1,037 households in the Kingdom — including 100 Saudi-based expats — highlighted a reduced interest in property purchases among first-time and current homeowners.

“What we are experiencing now is an organic slowing in demand as the 70 percent home ownership target approaches and as residential values start to peak in the current cycle. The rampant house price growth across the country, too, is curbing the appetite to purchase,” Regional Partner in Strategy and Consulting in Saudi Arabia at Knight Frank, Harmen de Jong, said.

“This has been evidenced by our survey results, as among our respondents, just 33 percent plan to buy a home or upgrade their accommodation in 2025, which is down on the 40 percent figure we recorded in 2023, which underscores the success the authorities have had in boosting home ownership levels,” he added. 

The analysis unveiled that first-time buyers’ demand for home purchases has decreased to 29 percent, down from 40 percent in 2023 to 84 percent in 2022. 

The property firm highlighted that the government’s initiatives to increase homeownership among Saudi nationals, which reached 63.7 percent by the end of 2023, are now bringing the target of 70 percent by 2030 within close reach.

In Riyadh, apartment prices have increased by 75 percent over the past five years, while villa prices have risen by 39 percent during the same timeframe. 

The high-interest-rate environment, with current levels at 5 percent compared to 1 percent in 2021, is further contributing to the growing factors reducing demand.


Moody’s upgrades Oman’s banking outlook to positive on stronger economy 

Moody’s upgrades Oman’s banking outlook to positive on stronger economy 
Updated 26 February 2025
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Moody’s upgrades Oman’s banking outlook to positive on stronger economy 

Moody’s upgrades Oman’s banking outlook to positive on stronger economy 

RIYADH: Improving economic conditions, stronger loan quality, and a resilient banking sector have led Moody’s Investors Service to upgrade its outlook on Oman’s banking system from “stable” to “positive.” 

The agency cited steady non-oil growth, improving borrower repayment capacity, and the government’s enhanced ability to support banks as key factors in its revised assessment. 

Moody’s expects Oman’s non-oil economy to grow by approximately 3 percent in 2025-26, supported by strong business and consumer confidence, a recovery in tourism, and private sector investments in manufacturing, transportation, and renewable energy. 

The rating agency also projects overall gross domestic product growth to accelerate to 2.4 percent in 2025, up from an estimated 1.7 percent in 2024, partly due to a recovery in oil production. 

Loan quality in Oman’s banking sector is expected to strengthen as economic expansion supports borrowers’ repayment capacity. 

Moody’s anticipates a decline in problem loans — those at risk of default — in 2025-2026, along with a reduction in Stage 2 loans, which carry higher credit risks but remain performing. 

Omani banks’ capital positions remain robust, with tangible common equity to risk-weighted assets expected to stay between 13 percent and 14 percent over the next 12 to 18 months. 

Additionally, profitability levels are projected to remain steady, with net income likely to hover around 11 percent of tangible assets in 2025, Moody’s stated. 

Loan-loss provisioning is expected to decline in a more supportive economic environment, while cost efficiencies from digitalization could offset rising operational expenses.   

Liquidity buffers in Omani banks remain solid, despite continued exposure to funding concentration risks. 

Deposits from the government and public-sector entities make up one-third of the sector’s total deposits, limiting diversification.

However, private sector deposits are increasing, and the loan-to-deposit ratio improved to 95 percent as of September, down from 107 percent in December 2022. 

Government support for the banking system has also strengthened, according to Moody’s, driven by Oman’s reduced debt burden and improved debt affordability. 

Gulf banking systems 

Oman’s banking sector stands out as the only one in the Gulf region to receive a positive outlook, as Moody’s revised the banking outlooks for Saudi Arabia, the UAE, Qatar, Bahrain, and Kuwait to “stable.”   

Saudi Arabia’s downgrade from “positive” reflects tightening funding conditions due to credit growth outpacing deposits. While government spending and economic diversification support growth, banks are increasingly reliant on market funding and term deposits.  

In the UAE, Moody’s shifted the outlook to ‘stable’ as improving loan quality balances against moderating profitability. Non-oil GDP growth is expected to soften to 5 percent in 2025, and while strong business sentiment supports the sector, the easing rate cycle and higher corporate taxes are expected to weigh on bank earnings.  

Meanwhile, Qatar’s banking system remains “stable,” with strong capital and liquidity buffers offsetting weaknesses in real estate lending and continued reliance on foreign funding.  

Bahrain and Kuwait also maintain “stable” outlooks. Bahrain’s banking sector benefits from steady non-oil growth, though high exposure to government debt presents a risk.  

Kuwait’s banks enjoy strong liquidity and expected credit growth from government infrastructure projects, but real estate lending risks and exposure to weaker foreign economies pose challenges.