Riyadh - Fahd Al-Murky
Economists: Canadian companies will not be able to sign investment contracts with Saudi counterparts after freezing business
Economists said that major Canadian companies will not be able to obtain investment opportunities in the Kingdom after freezing all new trade and investment dealings because of Canada’s interference in the internal affairs of the Kingdom, pointing out that the magnitude of trade exchange between the two countries during the past ten years reached USD 134 billion.
Former deputy-chairman of Riyadh Chamber of Commerce Dr. Sami Al-Abdulkarim Said that the Canadian economy suffers from limited alternatives on the import of Saudi oil which can be resorted to for the purpose of avoiding effects of the Saudi boycott, pointing out that the Canadian dollar suffered losses due to this boycott.
Al-Abdulkarim added that the Canadian companies would further suffer in case the Saudi boycott of Canadian products continues, especially that many Canadian companies depend on the Saudi market as their largest market in the region, confirming that the Kingdom of Saudi Arabia is the biggest oil exporter so, Canada will suffer from finding alternatives of the Saudi oil.
He pointed out that boycotting a country's products is considered one of the conventional pressure tools. Some historical experiences have demonstrated the effectiveness of the economic boycott and its massive impact on changing the balance of power in case the boycott continues for a long time. For his part, economic analyst Fadl Buainain said that trade relations are from among influential tools in the political positions, affirming that policy is more careful about the economic implications of the political decisions. Therefore, the strict Saudi reaction may prompt Canada to change its position and retreat quickly.
Fadl Al-Bua'inain pointed out that Saudi-Canadian trade exchanges are estimated at SR 134 billion i.e. SR 13.4 billion annual average. Canada was diligent to raise it quickly after signing agreements of understanding and recent contracts. Canada’s recent offensive attitude urgently caused the freezing and cutting off trade relations and investment agreements. This will have a negative impact on the Canadian business sector in addition to provoking money and business lobbies against the Canadian government that does not take into consideration their economic interests, which were severely affected by the positions of their diplomats.
He also added that the commercial and investment sectors are the most affected ones, but the higher education sector will also be affected if the scholarships are frozen to Canada because the Saudi Scholarships provide a great income for Canadian universities. He also expected that decision of freezing trade relations with Saudi Arabia will cause an urgent and strategic impact as well. The Kingdom sent a decisive message not only for Canada but for the whole world as well. The message includes that the Kingdom uses the weapon of trade and investment to confront all those who target or interfere in its affairs
Economist Sa'ad Al-Sa'ad said that the weapon of boycotting caused heavy losses for the Canadian Dollar before the US dollar. This reflects the strength of the Saudi economy, as the Kingdom is the second importer of the Canadian goods in the region. He also add that the trade exchange during the last ten years between the Kingdom and Canada amounted to USD 134 billion and this has a significant impact on the Canadian economy. He also made clear that the trade exchange between the Kingdom and Canada in 2015 amounted to SR 12.5 billion and the surplus is in favor of the Canadian trade balance with SR 314 million. The Saudi exports to Canada in the same year amounted to SR 6 billion. He goes on saying that if the Saudi boycott continues, it will negatively affect Canadian investments in the Kingdom in the long run.
For his part, Abdullah Al-Mghlouth said that the decision to sever relations with Canada has undermined the hopes of Canadian companies to increase their investments in the Kingdom and obtain new investment opportunities. He pointed out that the average annual trade exchange between the Kingdom and Canada is estimated at SR 13.4 billion per year. Car imports from Canada comes first amounting to SR 1.6 per year and machinery comes second at a total value SR 610 million. Al-Mghlouth confirmed that Canada amounts for 1% of the total value of the Kingdom's exports which reached SR 4.9 billion in 2016 and was ranked 28th among the countries to which the Kingdom exports. The most important Saudi exports to Canada are metal products, ores, plastics, fruits and carpets. The Saudi imports from Canada amounted to SR 4 billion with an average 1% of the total value of imports of the Kingdom including cars, their spare parts, machines, mechanical tools and their parts, electrical appliances, pharmaceutical products and others.
He pointed out that the Kingdom is the second largest importer of Canadian goods in the Middle East and North Africa after the UAE. In 2017, the Kingdom imported goods from Canada worth USD 1.12 billion. The decision to sever relations will affect Canada’s military sales to Riyadh. These sales reached 17.5 billion Canadian dollars since 1993. He also made clear that the balance of trade between the two countries is in favor of Canada by USD 879.8 million. Statistics showed that the Kingdom's exports amounted to about USD 89 million last year, while imports of goods amounted to about USD 1.12 billion.