The Majlis Episode 19: Real estate & tourism in Saudi with Abdulrahman AlBassam

hi everyone welcome to the magj my name is and with me today I have ABD bam ABD thank you for being here very much happy to be here ABD rman is the founder and executive chair of own Enterprises the CEO of til real estate development company uh the board director of beij Tourism development company as well as a fourth generation uh member of Al basam and Son's family group so um abdan you have incredibly diverse experience m lot across the board particularly in real estate and tourism uh but just to get us started right for for this session today could you give us a bit of background into why you started own Enterprises um and what that Journey was like all right so this was uh quite a long time ago I mean uh it's been I think back in 2008 that was the first time we've we've thought of uh founding own Enterprises and it it started off I think uh in a very organic way I've always had this idea that I will be um leading my own business uh uh since since my study back in in the university and um I would say that um in 2008 an opportunity have appeared where I used to work for the family business I worked there for a year and I thought that I would be working for more until I found an opportunity where uh um I would uh I found like a Coast Center which is focused in project management and it's it served the real estate pipeline of the family business and that pipeline might go sometimes too busy and then they keep the these uh the steam overheated and over uh you know worked out and then in other times where it just slows down and there is no business for the steam so these are experts sitting there uh just waiting for bu it's a co- Center so my idea was what if I spin off this uh part of the business the small team uh invest in it um give it a license back then and since it has this specialty of project management I can provide the service to Al basam and sons as well as other uh entities as well and make it make it a profit Center rather than a cost center and that was the basically the beginning of of the of the own Enterprises idea uh I thought that I would be doing this under the albas and Sons umbrella but my father made the decision at that time and I think that it is it is a good decision that uh it will the bamis will focus on as as a as a family office and investment level rather than oper operations but he offered uh the help in case I needed it so uh I think that was like the first uh um seat in own Enterprises in the same time a very similar thing was happening with my wife Nora she's she's also uh comes from a Tamimi family business background the group of companies and uh there was this restaurant I don't know I I I know that you grew up in in Lan no so you're familiar with ptis of course yeah so so ptis was Tami part of Tamimi Group but it's not like part of the Core Business it's such a conglomerate a huge business that works in different uh Diversified sectors restaurant is not uh one of them so there was a point in time where they were making a decision of closing that restaurant and you know all of us grew up with with this restaurant in our uh you know memories in childhood so Nora came up and said you know what why not we spin this off and we put it under our the same umbrella and uh we we we we turn it into a business and uh that's been basically what happened so two seats one was the restaurant ptis and the other was M consult which was uh the the project management uh firm and nowadays uh after we're now in 2024 uh we're specialized in two sectors uh all came up came uh from those two seeds the hospitality restaurants and Catering from one end and the other is the real estate uh uh professional services so so that's the whole story for one Enterprises that's that's just the beginning of the story and uh you know you started this journey in 2008 and you've been working on this since you know a while before the vision and now a while after the vision so I would love to know how the announcement of the program has influenced you and your wife's decision making um from an investment perspective from an operations perspective oh wow this this is I could speak hours about this it's I think we a case study of how a company evolved from prevision 2030 and and post Vision 2030 and they are completely different worlds altogether I mean by all uh sense of of the word um I remember back in 2016 with the with the with when when the first program of the vision was announced which is the national transformation plan and it was focused on sustainab of the you know financing of the budget of the government and how we should be cutting down on uh some subsidies and and uh bringing up some uh you know revenue from from other non-oil uh you know income for the government and everybody was skeptical at that time you know um all what we saw was the challenges right uh not the opportunities and to be honest it was a challenging time you know you can imagine a business that was based on subsidization you know incentives um you know zero opportunity cost in in one way or another and then all of a sudden you have to embed all these uh normal standard Global St you know it's like taking the training wheels off the kidik exactly exactly and and actually this reminds me of a of of a one state M that I remember one of the leading uh businessmen at that time uh and it was it's it's in public but I don't I mention the name but it was an interesting uh saying he said that we're like drug addicts who you know uh in in uh uh you all of a sudden push them into a rehab and and uh you know they what they call it the the the phase where where uh withdrawal phas so and and that's I think this was this was said in 2016 so or 2017 so right around this this time and it it does make sense we were as you said had those wheels and then and then all of a sudden remove these third and fourth wheel and you want to drive on your own it took years to to to adjust but and with it with its challenges and losses and and whatnot but at the end of the day now come 2020 before uh where everything is established where a vision is no longer about the year 2030 I would I would argue Vision 2030 is is already here I mean look at the look at the results you know uh uh you're talking about um uh unemployment rate is at all time lows yeah 7% uh 7.3% mind you the goal is 7% in 2030 so we are already there we started off in 2016 at 12.3% almost double what we are in today that was staggering that was a red flag that we did not realize in the private sector uh women participation in the workforce right we started off around 20% the goal is 40% we're at 34% so we're doubling down on all these on all these goals and I can go on on and on about these these these fundamental changes that happened uh in the ecosystem as a whole because of this driving force that is Vision 2030 and it's not uh it's not neom it's it's everything it's it's everything and neom is just one part of it so um today we are a much leaner business Tech driven um focused pretty much about cost which we were we had so many so much fat within our business and we did not realize that we are spending here and there without uh without any actual value that we're generating but when these struct structures came into place and the ecosystem changed because of the vision the business started to become um competitive uh at a regional scale sometimes at a and I can talk about different businesses here and there but as a whole we're starting to be on on bar or even super bar uh to to to others so all in all it's a completely different uh world uh out there when you talk about unemployment rate to me to me is is a main uh thing and I would I would like to explore it a little bit with you um if back in the day we looked at saudization for example as a challenge MH as a as a as something that is we did not have to abide by back then and and now we're looking at uh percentages in the business sector in engineering at above 20 25% and in some sectors 70% 80% saudization requirements back in the day we looked at it as only a challenge but now we realize that when you create more jobs for Saudis it will come back to you I'm as I'm a restaurant business and for example I'm a restaurant if I employ Saudis I have more Saudis who have uh generate who generate income on a regular basis they are comfortable they are happy they want to spend and this comes back to the economy and so on so it's it's it's now even at the level all the whole thing is be became holistic uh the view is holistic we're looking at this on an economic economic scale if I may so yeah I agree I think there's very few countries where you can see everyone is so involved in the transformation plan you know how many other countries can you name where people are aware of the the government's goals and are acting towards them in unison and what you were saying about Vision 2030 already being here really Rings true for me and I think uh the the way a lot of people on the outside talk about Vision 2030 is focusing on you know how many meters of the line is going to be built how many hotels are going to be open and for someone like me and like you who grew up here it's the vision is already here because it's done what it needed to do of dramatically changing people's standards of livings and the more importantly the culture around work and around life here um people are a part of the workforce in a way that they weren't before from from the unemployed to women to families Etc so I'm I'm with you this is a topic that gets me very passionate um so we we're talking a bit on a macro level now I would love to focus on some of the sectors um that you're an expert in let's let's talk real estate first I think this is a sector that has seen incredibly uh dramatic increases in demand in the past couple of years I'm I live in Riad I look at you know every single day there's a giant new apartment complex going up there's more mixed use developments the the need is increasing and the needs are also shifting so how do you see the market as a supplier and where do you see it going well um I would also would like to start with the vision 2030 because this is this is I think that one main driving force for the whole real estate economy MH uh in Saudi which is probably that's the second biggest after after oil and gas um is primarily driven by something called the housing program MH uh which is a main program one of 11 programs of division 2030 and in it there are certain goals and certain I would say um high level uh objectives but then there is details to this and I'll give you an example for example the home ownership percentage for Saudi Nationals in in uh back in the day the Baseline is around uh 47% the goal by 2030 is 70% ownership so 70% of Saudi Nationals own their home or their first home that that should be 70% by 2030 today we're at 63 this is a remarkable change it's it's it's humongous it's nobody could realize this just from the kpi that's just the kpi but you see it physically in cityscape for example I don't know if you have been to cityscape Global in 2024 that's one of the conferences I had to miss oh my God this is November uh and and we we this was our first participation as tilal real estate development company and we were a plat Platinum sponsor in in citycape and we thought that we were you know opening the budget you know for to for our participation we we went there and we saw that no everybody's is going crazy and the reason is everybody believes in this plan and the demand is genuine so unlike other GCC countries for example where they're more investing in um homes that are for as a second home or for investment or for EXs we have a huge gap in the Saudi uh home ownership between Saudis yes and the goal is 70% home the goal is 70% we're at 63% the Gap is not is closing because of the huge lag but it's it's a very challenging goal I'll give you an example so NHC is is a is a market maker yeah uh I just want to I want to tell you a number so just you can imagine how big is the gap M uh NHC is mandated to deliver a pipeline of a 100,000 100,000 residential units every single year up to 2030 that's the NHC alone we're not considering Roan we're not considering the private sector we're not cons NC's mandate alone is 100,000 each year that is a huge uh number it's unbelievable and if that tells you anything it tells you about the Gap if you provide 600,000 units via NC you're not covering the Gap the Gap is much more uh it's in I think the last time I read it it's about 1.2 million or something like this so double that that number um so what happened with the sector is how the demand did not just pop into existence the but demand was existing all along it was not served how then how did we create this ecosystem how did it happen so they worked on the mortgage uh platform uh the real estate Development Fund where it shifted from being a direct uh Finance year with a smaller amount of money which reached to a point where it cannot make anything uh for for the uh financed um into a complete Off plan sales scheme connected with the mortgage uh scheme connected with the banks connect the whole ecosystem has been integrated now where you can go to Second platform and within a click of a button you actually buy a home you don't even have to go and visit you click on it in the on the on the on the map you get an approval of financing uh an initial approval in financing uh from the from the from a bank you're get or from the Development Fund and then you're connected to a bank and then you make the deal and you close it and you start paying your your your mortgage and you receive your your your unit within a couple of years and sometimes sometimes the next day if if it's if it's if you found one unit that is ready so it's the demand was there what the housing program did uh primarily led by the ministry of housing is create that ecosystem integrate that ecosystem make it work and today the mortgage uh as part of the bank's portfolio have increased significantly where back in the day it resembled peanuts it's nothing uh in in the portfolio of banks now it's uh at certain very healthy numbers and now you see the deal that was announced with the ministry of Housing and black rock MH where uh where there might be a purchase um of the existing mortgage uh portfolio in Saudi that will generate more liquidity so the government is proactive actively seeking out closing that Gap as soon and making the ecosystem friendly enough for businesses uh to grow as they serve the the the demand so that's just an example of what's going on uh in and that's you look at this and you say okay the K kpi is we are at 63% our goal at 70% that is what it means to reach that that kpi and that's just from the public not even the full public housing perspective but partially public housing where where do you see your role into that as as a private sector residential development well uh I can speak for til for example uh we do believe that for the coming few years much of the demand is is going to be driven by first home ownership MH and much of the first home ownership are uh what we call uh uh Ministry of housing beneficiaries now mind you these are not social housing we're not talking about social housing social housing is a different sector uh it's offered for the welfare uh registry and uh and and it's a completely different scheme we're talking about so in the in in Saudi Arabia the definition of a beneficiary for a Ministry minist Ministry of housing beneficiary is not social housing I can be you can be anybody can be a beneficiary of uh the ministry of housing in incentives or or incentive scheme it's much wider it it covers almost the whole population but the incentives or the sub subsidies would would be uh relevant to your income relevant to your ownership to the size of the family and so on there is a Formula around this but everybody almost everybody is a beneficiary of the ministry of housing scheme um and we believe that this is the main driver uh of the demand for the next few years so we believe that uh we we are establishing the Strategic partnership with the NC and we continue to double down on our investment in this partnership uh that constitutes a big portion of our of our business we call it tilal homes uh and it's focused on uh the most value you can generate at the unit level uh at the best price so it's most more FOC focused on affordability I see but without compromising quality another uh uh I would say Focus or product line in tilal is tilal communities that's more of bspoke projects that are studied in a caseby casee basis uh usually on mixed as mixed use developments but it is residentially driven and these are uh the idea behind this this uh this product line is to create create um uh institutional uh grade investment opportunities for our stakeholders or or shareholders as well as our our partners so this is the second uh I would say product line or focus and then we have two more uh product line the the third would be the til app which is our Tech uh I would say initiative uh where we would like to have a super app that is um managing the relationship of our of our uh customer base our residents uh be it with their own Community with their neighborhoods uh the services and so on we would like to have this app to be uh the point of contact for everything that our resident would need in in uh in his uh in his community and the fourth is our community engagement um initiative which which we call T life um tan life is more so into engaging with the professional Community with the stakeholders of the real estate uh ecosystem sharing knowledge uh uh through uh newsletters or periodicals that that come every once in a while uh we have uh just started an initiative with a podcast called uh uh 5 minute uh Snippets that discusses um um things pertaining to the quality of life uh or the livability or and so on sustainability and so on so these are basically the focus of of of tilal for the coming few years which I I love the focus on um Community Development in in terms of the app in terms of actual Outreach uh there there's a risk as as we go towards Rapid urbanization of really losing that sense of community you have as more and more apartment buildings come up and people sort of stop you know going around the neighborhood to see who their neighbors are to to talk to people so it's increasingly important to to manufacture these um just to help people along the way of staying connected well well the the good thing about uh about this is there is realization of this danger if I would call it a danger slash Opportunity by the way because in you know every challenge is an is an opportunity if you look at it from a different point of view but it is recognized at the highest level of government um if you see the initiatives that are led by his Royal Highness Muhammad B Salman you would see the influence his influence in the quality of life of of of of pro of of certain projects of uh walkability yes um culture capture within the architecture and the and the and the Urban Design and so on so I and the community engagement as a whole neighborhood and placemaking and so on I see it I see it in projects like um in misk city in Russian houses Roan uh as well communities so that's that's a good there is a realizing there's a whole quality of of Life program yes that is focusing uh on this it's one of one of the biggest programs of the vision 2030 and uh it has very specific gold pertaining to livability and there are indices related to livability that are worldwide standard so um there are conventions that are accepted around worldwide that the s that the the the government of Saudi Arabia wants to uh you know either match or or exceed in in communities in Saudi Arabia so there is a lot of focus on on what we're discussing today which isn't something that that can happen overnight of course um and I think that's that's something I'm really looking forward to personally and I know a lot of people are of you know as Saudi we've come so far but the the longer challenges of you know how do you turn cities built fundamentally for cars into ones that are walkable and build community is one that we're going to be tackling for for the longer term but I'm I'm excited about the progress we're making and um you know a city that's desirable to live in also desirable to visit so uh another big sector that you're a part of is of course tourism um which is something that didn't really exist prior to Vision 2030 uh so tell me a little bit about how you got into tourism well um back to own Enterprises story we've we've we've turned patis into a a Hospitality restaurants and catering business so we we opened branches of restaurants we uh activated uh certain destinations we've uh catered For events um and so on so we were working uh in that sector which we called at that time horka this a this is a very uh it's a it's a standard name of that sector uh in 2018 we've made uh that was like the our 10th anniversary so uh we've went through extensive uh workshops to revisit our strategy the vision as a as a as a as a strategy was fully realized in terms of uh a plan in 2018 and it was uh fitting at that time to really go through the documentation um the announcement the public record about the vision 2030 and see if there's any alignment between what we're doing today and and vision 2013 and I think this is one of the main success factors for any uh businesses that have been uh you know working uh for the past few years and it's not too late because it's astonishing uh yine how many people who did not read this public record of of vision 2030 I'm shocked every time that I meet someone and start discussing this and I find out that you know they know about Vision 2030 as a as a brand as the pillars and so on but or the themes but in details they they have very and and these these not just business owners or professionals but even leaders within the government uh entities which is astonishing to me because I believe in that was a main success factor that's how we attracted the right Partners so that's how we chose the sectors the right sectors so uh there are many sectors that the vision is focusing on many of them and obviously you have to specialize again that was a main thing that we wanted to to to to you know U build our success upon um and we we had a specialty in real estate Professional Service and another specialty in the hka IND industory so we saw that uh in 2018 that we want to double down on these uh on these sectors and we focus on tourism Hospitality on one end and the other end is uh real estate development because we used to provide services in terms of project management in terms of design in terms of facility management but the cremm which is the development where we bring an idea that is just an idea in in someone's mind into a living breathing Community that's a that's that's something that we did not do holistically so we we thought that this is the next step uh we wanted to build a hotel and operate a hotel of our own and the second was we want to find our uh establish our real estate development company so the whole of 2019 was about planning for that and uh because we've aligned with the vision we've read the documentation we've known exactly what each sector of the government is interested in including the pif um we've aligned with these goals we've spoke the same language and then that's what made made us attractive to Partners uh be it public or or private so and and I believe we have now a very interesting uh partnership uh in the tourism industry as well as the real estate uh industry in the real estate industry til is is an alliance is the smallest part of the alliance but you have Tamimi Group of companies Al and uh kabani group and this Alliance or this partnership have partnered with the government so we have a PPP struct initiative with the NC same in tour in the tourism industry we have attracted the right partner within the PF um conglomerate and uh we found a partner in Asar and Asar found a partner in us and we developed this company called bahij tourism development company in which we have announced our first destination uh back in May in the FHS uh uh in yur which is uh yamb is a beautiful small town at the East coast of the Red Sea um beautiful place uh a diamond in the rough I would say and we're developing there a whole Bay with two um Boutique uh hotels as well as a marine uh center with a Diving Center and A Beach Retreat so um so this whole this two stories the bahij story and tilal story the main success factor is aligning with the vision 2030 earlier on and speaking the language down to the kpis of the company um that is the main success factor for those two stories and we're speaking a lot about public private partnership here and how that works successfully um one one of the critiques that you may hear is that the government is also building their own hotels you know particularly looking at the Giga projects their own hotels their own FNB do you feel that as the private sector this encroaches on the space um what would be your response to those comments look I I'll be honest with tackling this uh this subject and I and I do think that people uh in the private sector especially always think like this they're always uh I would say uh you know anxious about uh the PF especially encroaching into to their own uh sectors and that happens sometimes in uh in in a in a in a fastly developing or quickly developing circumstances I mean just yesterday the World Cup uh bid was announced to be that we have won the World Cup bid that's 2034 it's around the corner don't think that it is you know in 20 years time or a generation it's literally 10 years or less than that before that you have number of uh you know huge events the Asian Cup in 2027 the um the Expo in the Expo 2030 the Asian Winter Games in 2029 and and and you can these are huge mandates unbelievable mandates and the government has a responsibility to to be ready when these things come into you know play um so there there is always this danger there is always this tension one thing that I that I love very much is that the the pif at least whenever you speak to to to professionals within the pif they have this in their conscious uh I think there is even an organization within or a department within pif that looks after that to protect the the sector however there is a mandate that sectors that are not developed fast quickly Enough by the private sector they will pitch in they will come in and but the good thing about this is that they always have this uh partnership structure in mind so uh if any organization in the private sector steps up and says I want to do this with you they can't find a way they're always a way to to work together because if you see it all over the place in the documentation of say the PF which is again a program 150 almost 150 pages in the document very detailed of what the PF is going to do in the next few years how much they're going to deploy annually in which sectors that they're interested in in what investment structures what kind of Investments all this is described in the document and it's periodically updated and and reported on you got we should read right um and they would say well this sector we see uh uh that the it lacks what we what the what the country needs we are coming into this sector within a couple of years or within a year let's say we want to do this 50/50 with the public with the private with the uh private uh companies so we're open to business we're open for business so this is the kind of language that needs to be discussed it's no longer uh the government doesn't operate any longer as a um a patriarch of sort or I'm you know I I spend only for infrastructure no no it thinks as literally like a private company uh with with short-term goals and quick ones midterm goals and and strategic goals as well and you need to speak the language that makes a lot of sense and I think because you answered that one so well I'm going to continue playing Devil's Advocate and throw another one at you uh which is the the criticism that a lot of the particularly in the Giga projects the developments of hospitality are too high-end and um people feel essentially priced out of these experiences as as the private sector perhaps you have a better view of um what it looks like holistically if there are price ranges for people well um the the PF and the Giga projects operate like any other business where is the uh the businesses where are the where's the feasibility right but with an additional um I would say mandate which is where is the vision 2030 going where is the plan of the co country going that's that's the that's the difference between a PF company or a giga project and any other uh private uh business um and it's true and I would say PR primarily in the Red Sea for example most of the projects are the majority of the project projects at the Red Sea Coast are for Ultra Luxury and luxury which is which captures a certain Market is that is needed to bring in um uh dollars and and uh you know foreign currency right um there is however big uh opportunities within the other sectors for example in our case uh We've partnered with as far on this yamb destination and uh Asar which is a PF company is one of their mandates is to focus on upper scale or mid mainstream uh products or tourism products uh that can serve a lower price range see so but they're doing it in partnership with with the private sector and they we have the partnership with Asar in in in yur but as far have different partners as well they have someone in ALA they have another and I think uh you know other other towns and and focusing on tier 2 cities as well so there are different initiatives that are maybe lower profile uh that are focusing on on on other uh I would say uh less shiny uh destinations but again Diamonds in the Rough um and lower price range but there maybe lower on a lower profile uh basis yeah that's really the the higher ENT stuff getss more um news but also the the concept of being able to go places that aren't overrun by over tourism you know the way you hear about in in in Europe and even in Japan now is very enticing to bring in foreign tourist and perhaps also to encourage domestic tourism which is something we don't talk about a lot I think but you have a huge population right here who rarely travels within the country abely this is I think is the main target for bahij MH um we're focusing on this on the sector on this on these customers primarily Nationals within Saudi Arabia and we believe there is huge opportunity uh there I mean look at the numbers um the 100 million visits annually goal there was a goal in for for 2030 it was achieved last year 70% uh of those visits are internal within the kingdom mostly are Nationals Saudi Nationals the goal now as always with any goal that is achieved in Vision 2030 it gets doubled so now it's 150 million by 2030 and the and and and uh it's going to be 50/50 between inbound and and and internal but 70 million of those visits were internal so obviously this is a number that tells you there is huge Market Saudis are uh statistically among the best tourists that any country any tourist country is seeking after uh they are highly Spenders they are uh good tourists uh good users in the sense that uh there is rarely any issues that comes from a Saudi tourist uh abroad rarely any issues um they are High Spenders they are they travel a lot and they they spend a big chunk of their wallet is is associated with with with entertainment and uh experience uh and and travel so everybody's competing to with on on on Saudi Travelers we should we should do as well that makes a lot of sense um and then I think finally one topic I wanted to touch on with you is something that I also uh person love because I want to get a little bit into the history of things is talk about family businesses and um you're part of one of the oldest family businesses in in the Gulf let alone in Saudi um so I would love it if you could take us you know a trip down memory lane and even before then um to talk about the the evolution of albam and Sons well um uh bam you know we share the same Heritage OFA right so so this this is something we have to say it's something that we have to say sorry um uh so an is a is a merchant Oasis it's it's been known for for that for quite some time and Al basam is as part of from ANA they are they are also well-known family for being merchants and Traders in that sense I think the the oldest document of of trade that I've seen uh pertaining to the to the Bassam family is is in the range of 250 years old or 260 years old which is quite far in history um um so in my personal experience I've I've I've grew with this kind of um Heritage uh which is a privilege but at the same time it's a lot of pressure you you come in with certain expectations and whatnot so um uh my my great-grandfather ABD who's he is the patriarch of of the of of the family um left in about 1902 to uh with his father he was around uh I think he was around 11 uh 10 years old which all of this predates the the Saudi state by the way for viewers 1902 you're talking about years before yeah King abdulaziz have it was his first try to to get intoy mhm so uh that was in the very early times of the unification of of Saudi Arabia uh and because of this you know it's a turmoil time so my family my my my my great-grandfather have left with his father to Mecca uh to try their uh luck it didn't work they came back uh and and then he had to send his son who was around 11 years old at that time Abdul aiz uh to you know find uh work so uh an 11year old but back then an 11y old is is a man by by all sense of the word so he traveled to with a with a with a with a I would say um companion a paid companion to travel him with him to to Basra and Iraq and then from Basra he couldn't find a job uh he uh he stayed with his cousin for for some time um uh and then His companion had a tragedy where uh it was winter time and he was getting closer to the to the fire and he slept and then he turned to at at the fire and he got burned so he had to take him to Kuwait uh because that was the only there was the only hospital that could serve such an injury but unfortunately the man uh passed away and my father my grandfather who was or great great-grandfather who is 11 at that time found himself in Kuwait knowing no one in Kuwait uh Foreigner His companion just died he had to make a choice whether I should go back empty-handed or find something else so he sent a letter to his father to his father Ali who sent him another letter told him one of the uh uh family members in Bahrain would find him a job so you can you imagine a kid at that time who uh never seen the sea before had to jump into a boat and travel to Bahrain and in Bahrain Subhan Allah he found his his L and it's a uh I could speak hours of of this story because it's it's it's a huge um uh there's a lot of inspiration that that I personally uh took I even wrote a book about this in English and I would love to publish it one time um when he came to Bahrain that's when he established himself he worked for some time for other families and in 1914 uh he he established his his business and by 1924 uh he became a big competitor to other uh businesses that was a very young age around 34 35 years old um but already in the workforce for years exactly yeah yeah yeah yeah so that was 1924 that's was where the the government in Bahrain called upon him and said what are you doing you're you're paying all this Customs this taxes and but you're not established in one way or another so they told him to open a CR that was in 1924 and from since then uh it you know the business uh grew into into different sectors my my grandfather took uh when he passed away my grandfather took uh the role of leading the business then my father and then today I have my cousin um who is uh who is managing the business where my father is the chair chairman so I would say uh that you know that is a story in a nutshell that u i I grew up with uh and and it as I said it created this kind of a privileged feeling but at the same time uh some sort of responsibility to to carry this over so that's the story of Al Sam n yeah it's an incredible story I I didn't expect when I asked that question that that was the r it was going to go down um but I I mean I I think going from then to discussing now modern times feels a bit jarring because you know we're talking about an 11year old kid on a on a boat from qu to bahin but I am curious because I know there's been fundamental changes in how family businesses now have to work um compared to prevision and going back to you know what we had first started talking about of taking off the the training wheels off a kid's bike um this especially prant for family businesses who before could live very you know comfortable lives owning multiple franchise rights that's changing slowly as foreign companies come in and um establish their own uh sort of independent operations how how do you see the role of family businesses evolving in Saudi uh I think uh family business has has been or had an intrinsic role ever since uh and and this is not unique to Saudi Arabia uh if you look at the numbers family businesses on the the liance share in uh every kpi that that constitutes a a thriving economy mhm the biggest employers the majority of the businesses um um uh long-term Visionaries um most successful businesses uh a big portion of the 400 400 uh Fortune uh uh list um so it's not unique to Saudi um but in Saudi family is a central uh concept M and and so so it gives it this this um additional Edge uh as a partner and that's why you see for example again uh as part of the vision 2030 uh a center uh the um a government entity focused entirely to um serve the family family businesses community that how much the the government recognizes the importance of the of the business and it's been um it's been like this ever since the establishment of the of the of the of the new the the Kingdom of Saudi Arabia that we know today at 1932 and I would I would maybe um split it into three uh main I would say eras um I would say the pre-oil era and then uh the post oil uh era and then uh or I would instead of post oil I would say I would call it prevision and then post Vision um obviously this is a very highlevel uh generalistic view but it just gives the the picture so before oil um the the the E economy depended depended on Merchants and Traders who were based in net for example which is the most poverty uh the most of the poverty was was concentrated within you know the cities at the coasts were doing much better than than than Ned itself at that time so they did the whole economy within this this this area depended on family businesses moving in Goods in and out from that region and you can imagine at that time um just to imagine a product such as rice would arrive in jbel Port for example M and you have an agent of of one of the family businesses based Ina Ora or riy um they have an agent in in jport who would receive these products put them on top of camel backs and then depending on what territorial tribal territory they would pass through they need to pay uh um um they call it they call him rag a person who will be a companion from that tribe to walk with this Caravan from the one end of the territory to the other end of the territory until they go through a different territory where they will pay another so security was a main concern so by the time these products reach Ned uh you know thank God it reached n right so so and and you can see this from jida and coming through and the whole uh ecosystem was was Security based basically so the the whole e ecosystem the whole economy depended on those family businesses to move Goods Goods in and out from from n for example come uh oil Discovery everything shifted to aramco and around aramco in the in thean area and the oil uh expansion projects and you would see how individuals the early Pioneers I would call them people who came from all sorts of backgrounds around the Kingdom of Saudi Arabia a man who comes from the mountains of down toan will meet someone from Al uh in inan another person from n coming most of them are either you know orphans uh you know looking for life and the dream of that is called thean right and they would meet in in in in working for aramco and the people at that time in the oil company were uh you know uh Forward Thinking enough to support those people to move them from being an employee employees in the company to business owners and contractors to to arango and that's a completely different you know shift uh in the in the family business economy now today you see that the a majority of the family businesses that are based in the Eastern Province started off this way with contracts with aramco uh their their patriarch or whoever has established the company or the founder started off as an employee of uh in in in aramco and so on uh and that was uh that era was driven by um uh by aramco in in in in general and by a mandate by King ABD aiz himself on the demands of developing the community developing the Saudi people and so on in that in that region that is post oil and then comes prevision which I would say from the discovery uh or from the 70s 70s I would say to to around 2013 14 15 that era was defined by the infrastructure programs of the of the government so there was a lot of liquidity at that time and the government had to you know there was a population growth explo explosion in fact and the government had to have a lot of infrastructure initiatives to to build the country basically from roads and sewer and and water and electricity but up to universities schools and whatnot so the whole Focus shifted into into that kind of business the government spends the contractors build the majority of those contractors are family businesses mhm and then they switch to uh post Vision where it's no longer I pay and you build it's more so we're Partners in this how can we make money out of this how can we make this sustainable for the future and uh uh and how can this all of these programs all of these initiatives depend on themselves and not to be a burden later on on the government or whoever uh it needs to be financed at the end of the day so how can we make this more sustainable via Partnerships and you would see if you go around uh looking at the news uh there were Partners announced between government entities such as uh the pif for example and uh and the private sector the majority of these are with family businesses and is a recognition uh that the family business are a main partner in in in what's to come and I think one M main reason to this is not just this history of partnership but family business share with the government or the government entities one important thing which is long-term Vision long-term strategy and I'm talking generational uh uh Vision that is something that is unique to to family businesses as well as governments governments think of their people on a generational um Outlook so we build infrastructure today that should be there 30 years from now we build universities today so that in 30 years time we have a Saudi board uh Medical Board that competes with with with the Canadian board you know what I mean that's a generational strategy it's an extremely long-term strategy similarly family businesses think alike they do think generationally unlike for example companies with in the like in the stock market where uh they can't think that far they're thinking quarter to quarter exactly exactly so uh there's obviously uh a room for partnership and still and it's a main I think Focus uh of the government as well as the family businesses that this is an area that you can work together and I'm curious one one last partner um who we haven't mentioned so much so far uh foreign investment or foreign direct um partnership in the Kingdom how has that evolved and what has your um experience been there well looking at the uh the latest report from the national uh investment strategy uh I think this is a strategy that is or a report that is issued by the ministry of investment um it's I think the latest one is 2023 2023 we met the targets of the FDI as per the the the report but the T but the targets or let's say The Inspirations is much more than what we have on on on documents and I don't think it's a matter of shortage of opportunities I think first of all there is a shortage of liquidity worldwide I mean there's a smaller pool that is competed uh that that every is competing on um but I think it's also about awareness um I mean you've mentioned this earlier on the podcast where uh you said uh news always focus on okay they shortened the line from 18 to to 12 this kind of uh uh there is still I would say um uh doubt in what's going on in Saudi Arabia and and to me it's it's it's an amazing thing I don't know why is this I mean a few days back I was in a conference I spoke in a in a conference on family um Family offices International family offices Forum in Dubai where the majority of the attendees are are are either family office management or uh uh investment firms who who who would like to uh you know raise funds from from these family offices and I was again astonished by how little do do they know about what's going on in Saudi Arabia and vision 2030 and mind you the majority even are Arabic speakers I'm not talking about westerners the few of them were westerners but the majority were Arabic speakers and they know nothing about what's going on in Saudi so I don't know if it's a marketing issue or it's much more than that but I think I think there is a huge awareness gap of what's going on in in Saudi and and this is um I would say doubt of how things are gone going on in in in Saudi exists because they're not aware of of the results that are being achieved of the money that's that the investors are are making I mean think about riy for example in the past few years whoever owned a tiny lot in in Riyad have made 10x if he owned it in in in in the in a nergis or what ever 10x just in a couple of years that you make this kind of money in VCS in a much higher risk uh but this obviously this is an extreme uh extreme example I think another reason would be that FDI look for institutional grade Investments that are of high ticket I mean uh thing companies of the like of Black Rock or something like this who who invest in billions yeah in look for infrastructure uh for example projects and so on and I I think uh we still have room to to to establish these institutional grade uh in or package investments in an Institutional grade level uh in other areas that are um less known tourism is one of them for example infrastructure is an obvious thing and we're ging track uh in in this uh oil and gas is is a long uh there's a long history in oil and gas and it it's keep keeps growing FDI or inflow specifically goes there all the time uh but where where other sectors where we need uh uh uh more uh Investments or for Investments to pick up I think we need to package those uh investments in as I said institutional grade making them big bigger tickets and awareness share make share the awareness that it's Vision 2030 is not a real estate project you know it's not just this uh line it's not just this uh and you know the other thing is the the one of the reasons that the vision 2030 strategy is working it's because it's solid but not rigid it because it is because it adapts to uh priorities and circumstances you know changing priorities I mean who knew that we will be hosting World Cup 2030 2034 who know in 2018 it doesn't make sense if you have if you're securing these huge you know country changing uh events and you don't change your plans you know you don't uh reprioritize your your goals so this kind of adaptability this this uh uh solid but not rigid plan I think that's a main character that that uh that we need to be uh give more we need to give more awareness it's Dynamic like like you said earlier it's running the the country as a as a um company rather than as you know as a patriarch as it used to be absolutely I think inshah the the goal with this podcast is to bring that awareness to people so I hope um whoever's listened today has learned a bit more about family offices and a bit more about the Vision as a whole uh thankk you so much ABD once again for all of your insights it's been a pleasure thank you very much and I hope that I've uh you know shared some some insight and I was of benefit

2025-01-04 13:01

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