P.M. Communications: Al Muhaidib group has been present here in Saudi Arabia for over 60 years. Your father was the start engine for this company, which grew up into a giant diversified group. Could you tell us what made this dream he had possible?

Mr. Al Muhaidib, AL MUHAIDIB GROUP: Of course, number one is demand, and number two is the ability and the wish to do something, this is the start of any business. If you are a businessman and you want to do something, you find the demand, and then you ask yourself: "can I do it?", "would I be competitive?", and "would I be able to deliver the quality?"... These are the three starting things; my father and grandfather were in the business of wheat and food, everything related to trading food. We started in Jeddah since it was the main port of Saudi Arabia for a very long time due to Hajj pilgrimages and because of the Red Sea. Shipments going from Europe to Asia have to go through the Red Sea.

So Jeddah became with time an important place for the relief of ships and also for shipments, that is why you see most of the old trading houses in Saudi Arabia are from Jeddah. We came to the central region when the oil money started to flow into Saudi Arabia.

Most of the traders in the western area are either in food related business or facilities for Hajj and pilgrims. When I joined my father in the business, the majority of the shipments, nearly 70%, came through Jeddah, and from there we sent it to the Eastern province, the Central and the northern part of Saudi Arabia.

Most of the businesses in Saudi Arabia started in the food sector, from Jeddah of course we expanded in Riyadh and Eastern province and started opening up different branches for the food to support our sales. Then after the 1975 boom of the oil prices, the construction started in a heavy way. So we started to import steel, cement, timber, different construction materials and this was brought both from the Dammam port and also from Jeddah. There was a big congestion in the ports at that time, so we used Al-Aqaba port, we used Kuwait port, and even Dubai, because the waiting time at that time reached 6 months. So it was really heavy traffic at that time. Even sometimes we had to use helicopters to load the ships while keeping them at sea, so you can imagine how expensive these operations were. At the time, the demand increased so much we couldn't meet the demand. So it forced us to expand in different areas to fulfil the requirement of the construction boom at that time , and the company focused on two main areas, the building materials and the food. After that we started to expand both vertically and horizontally.

Today we have more than 40 branches in the food business and the building materials, covering most of the main cities in Saudi Arabia. We expanded by creating different companies: Almuhaidib hardware, Almuhaidib steel industries, United Wood, Saudi Industrial Paint Co., and many others. Also in the construction field, where we are doing business with prestigious customers like ARAMCO.

Our companies cover many countries including Kuwait, Dubai, Jordan, Lebanon, and even Canada . We established a retail company called Giantstores ; you may have seen this, we are the first people who came with this idea in Saudi Arabia (of course it's been in the world before that). We started with a small, 3500 square meters, of shopping area, we were not sure whether this will be successful or not. And thanks to God today we have 14 stores. We are expanding; we are opening within the coming years more than five stores. And today we are faced with tough competition, mainly international companies like EUROMARCHE, Geane and Carrefour.

United Wheat is an agricultural company we established Saudi Arabia used to import a lot of barley to feed livestock like sheep and camels, since unfortunately we don't have enough grass., so we are today the biggest importer of barley in the kingdom. We cover more than 40% of the market.

The other sector we expanded into was the industrial division, MUHAIDIBCO industries, and United Wood that manufactures laminated sheets; doors, and windows, and Al Muhaidib steel industries which manufactures aluminium doors, steel doors and other items.

we have a land transport company to support our companies. These companies are all owned 100% by the family. We also have many joint ventures. My father is one of the founders of SAVOLA group in Jeddah. Until today we are one of the main shareholders in this company. We built together with Savola the biggest refinery for sugar in the Middle East.
We also own about one third of Riyadh Cables the largest manufacturer of cables in the region.

Rice is our main business in the food sector, and we are number one in the kingdom with rice, we have five factories supporting us, 2 in Pakistan, 2 in India and one in the U.K.

We also have Universal trading which is mostly a timber holding company, based in Lebanon and our manufacturing is in Romania, where it is known to deliver top quality. It is one of our biggest exporters.

We import the hard wood from Africa or Asia and light wood for construction from Europe or Canada and some from U.S like oak and walnut trees.
One of the new companies we founded is the paper company as a JV. It is a challenging business for Saudi Arabia: the paper industry needs a lot of water and there is barely enough water in Saudi Arabia for regular consumption so we use the waste water and the used paper to recycle and it has become a big industry now in the region.

We are also partners with Hoshan co. which is the 2nd largest co. in the office furniture business; we own 50% of this ventured group. Jeraisy is number 1. As I mentioned before real estate is a growing business in Saudi Arabia so we founded a company, ALOULA and we believe there will be a lot of construction business happening in Saudi Arabia. Today King Abdullah is increasing the funding available for loans to citizens who want to build and own their houses. Until recently, a Saudi would have to wait 10 years to take such a loan but now it will become easier. Of course this will have an impact in the next 2 years on the real estate and construction industry. Our new Company will buy land, develop it and provide the basic services such as water and sewage, build the basic infrastructure and resell it. We founded a company in alliance with EEMAR, the biggest real estate company in Dubai, to start the development. ALOULA will undertake the land and EMMAR the construction then it will be put for sale, whether for commercial use or for business proposes. There is a big project going on in Dammam and another in Jeddah.

We see that most of the country overall is growing in main cities like for example in Dammam and Khobar more petrochemicals industries are coming up, and a lot of supporting industries are coming up, in addition, Aramco is expanding. There is more than one factor in the Eastern province for the growth of business.

We will see a lot of positive changes. Saudi Arabia represents 25-30% of world trade and Saudi Arabia represents 60-65% of GCC business trade .
In Saudi Arabia there are a lot of factors aiding the economic growth, the market, the demand and infrastructure as well. If you go to other neighbouring countries, they built up factories for outside regions and mainly to import to Saudi Arabia but here we built mostly to cover our market and then to export. Two years back we were doing full production but only 30% was for local market. And the rest was for exporting. Regarding the industry developments, I think Saudi Arabia is the best in the entire region due to the stability and good financing on the long run.
We have in Saudi Investment Funds which finance you up to 50% and when you present a good idea to them it is almost guaranteed to get financed by them or by Banks. For any industry here you can get up to 70% finance and then you have to put you own personal effort in making it work. Plus you get more or less free land in industry area where they charge you little for it but now there are only little left.

P.M. Communications: I see the companies in the list seem to go on and on! Which new activities do you see as a forthcoming? Which of all do you see moving forward?

Mr. Al Muhaidib, AL MUHAIDIB GROUP: I think in the next 5 years it will be construction. Food is growing at the normal 5-8% yearly but of course the market is changing; before we used to be the biggest wholesalers. Before families used to buy in bulks but now as supermarkets are widely spreading people shop maybe daily. We have been noticing the change and that's why you see big hypermarkets opening to test the people's reaction. That's why I said construction and industry are growing, especially petrochemicals, which you should emphasize in your report. Looking 30 years back businesses was mainly in countries like Spain, Italy, Japan and now it is moving to Korea and also Saudi Arabia because of the raw material and cheap energy prices. It's not as competitive to produce in Europe as it is in Saudi Arabia
Today cement is a growing business in our region as well; we have formed an alliance with Italcementi whereby we invested with them in Egypt The industry of cement is shifting from Europe because of environmental issues and competition.

P.M. Communications: How is the accession within the WTO going to affect your business?

Mr. Al Muhaidib, AL MUHAIDIB GROUP: The government took a very wise decision to be part of the WTO. We cannot accept that we'd be out of it. We have a lot of opportunities, but we also have some fundamental issues related to Saudization and labour force; this will come to our advantage because if we take care of our generations and provide them the right education they will be one of our main resources and benefits because they are locals and will work for their own country. On the short term they will face some difficulty but at the end it will turn positive, this is what I think regarding our future to build a labour force through Saudization. Saudi Arabia is one of the biggest countries that export money per capita, because we have a big foreign labour force! If we say that 60% of that force is localized it will keep the money within Saudi Arabia. Which will add to the GDP. It will take time for the transition of course.

The advantage Europe has is their leadership in technology, which today is no longer hidden. Companies build their businesses on selling technology. You see that petrochemicals industries attracts investors and subsidiaries. SABIC has access to local raw material but what happens if we go to downstream petrochemical products ? We will have lots of supporting industry because of the price, quality & manpower. We have achieved a lot in this is a field and there is much more left to be done.

P.M. Communications: Do you think this golden era of the petrochemical source will last for a short term, or do you see the future very bright?

Mr. Al Muhaidib, AL MUHAIDIB GROUP: If you say that petrol prices may go back to 20$ then there is a question mark, but today all the reports predict an increase to 45$ such as the Goldman SACS and Citicorp reports today in order for the oil prices to go down you need more supply than demand. Due to the change in the economy of China and India, the consumption per capita is increased. This cannot be compared to Europe or the U.S.: If they increase their consumption, which they will as their economy is growing, they will need power to get better water, better transportation and that means more demand for oil which is better for us. Although the increase in demand seemed to happen suddenly, it was that the experts neglected to take into account the growth in India & China and the prices of oil were affected by that, not by Europe or the U.S. The Suppliers and the demands are the same, nothing changed. But what changed was that what they predicted as factors of 4 % growth has turned to 27%! I see that China and India will increase their power consumption and that will affects a lot their economy. We don't have enough supply to support these demands. If Iraq's oil production comes within the next 5 years, the world demand will have increased by that time!
Our production will not be able to meet the demand unless we do investments. Are these countries willing to do so? The petrochemicals industry will continue to be in demand, if you see Europe, Middle East, China or Japan... where is the best place to produce these products? Where do you have the raw material and the finance and stability?
This region will be one of the biggest in petrochemicals production.

P.M. Communications: What are the objectives of future developments, new areas of business or new requirements or partnerships?

Mr. Al Muhaidib, AL MUHAIDIB GROUP:
As I mentioned earlier, Saudi Arabia represents 35-40% of the economy of our region. Why can't Saudi companies be the leaders in the region? Today Savola is number 1 in the region and we export to Egypt, Jordan, Iraq, etc. We built a factory in Egypt and we are building one in Iran & Algeria so we are number one in sugar and rice.
Our vision to expand is happening, we are opening in Lebanon and Qatar. Each of our companies is functioning by itself. Each has its own vision guided by the corporate one. We have reached 70% of market shares and that's why we are moving into different fields.

P.M. Communications: So the main secret of your success appears to be decentralization, where you put your trust in each company manager, giving them general guidelines, and then leaving them the freedom to perform accordingly. What makes your strength as a group?

Mr. Al Muhaidib, AL MUHAIDIB GROUP: We are one of the few companies in Saudi Arabia where all of our GMs are Saudis, aside from Sabic and some government organizations.
We talked about the many opportunities in Saudi Arabia as they are today on a big scale; water & power sector, Education, health, petrochemicals, aviation and land transport , trains, real estate, etc. All of this will be big investments for the upcoming years, we have a big room for it but we need sophisticated people to help guide it. It has high value and less risk for investors that come not with money investment but with information.