Growth is slow but sure

29 June 2001

Saudi Arabia seems in no hurry to join the World Trade Organisation due to WTO's insistence that the country open up their economy fully. In the Gulf Cooperation Council, Oman is the 139th member of the WTO. Other members of the six nation council which have joined are Kuwait, Bahrain, Qatar and the United Arab Emirates. To attract foreign investors, Saudi Arabia has partly opened the economy to foreign investors. It is no longer necessary for large overseas investors to work under the sponsorship of a local businessman. A foreign national can supply his own labour and can purchase property in any industrial area apart from the two Holy Cities of Mecca and Medina where the government does not want land under foreign ownership. The Kingdom has set up two industrial re-exporting zones, one each in Jeddah and Damman Port. Tanners are said to be hopeful that the air conditioned bonded warehouses will help boost the leather industry. Imported goods can be stored for three years without incurring customs duties. Exports of wet-blue and crust have increased and it is estimated they will reach US$50 million Millions of animals are slaughtered during religious festivals and there is a need for organised removal and processing into wet-blue.. At present a large number are buried in the sand to prevent the outbreak of diseases. Saudi Arabia has also been affected with foot and mouth disease in cattle due to imported animals from Yemen and some African countries but the Saudi Government has taken timely action to control it with the imposition of a ban on the import of animals and raw skins from such areas. The Ministry of Commerce is investigating several importers for allegedly sidestepping government measures to prevent the entry of contaminated skins and meat products into the domestic market. The Ministry of Agriculture and Water recently said the foot and mouth situation had 'stabilized' in 80% of the sites where infected animals had been detected. Nearly 4,000 sheep, goat and cattle in 67 sites were confirmed to have been infected with the disease. Some 170,000 animals, mostly cows in dairy farms, are being vaccinated as part of a nationwide campaign. The outbreak has reportedly cost the Saudi meat industry SR500 million. The Kingdom banned beef imports from the European Union in response to the BSE scare. It has also endured the Rift Valley Fever that killed more than 50 people in the country last year. Besides banning the import of animals, the Saudi Government has regulated the import of raw skins and meat. Now every importer of meat and raw skins has to produce a veterinary certificate from the originating country stating that the animal slaughtered was in good health. To keep the Kingdom free from disease the Saudi Government has also banned the slaughter of animals in private houses which is common in all Muslim countries. Slaughter is allowed only in slaughterhouses under the supervision of veterinarians. Al Dagal Al-Dagal, which was set up in 1981 by Abdul Qadir Al Dagal, has been restructured with the merger of both tanneries, Al Dagal Tannery and Al Tyebba Tannery. Now the company have been renamed Al Dagal Tannery Pvt Ltd with the sharing of administration between the father and sons. Saud Al Dagal, marketing & exports director, told Leather International that they are exporting around 50,000 ft² for shoe uppers to Kuwait and the Gulf. Their monthly production of finished leather is 307,500 ft² of finished leather for shoe upper and garments including sheep and goat, 150,000 ft² of cow and 85,000 ft² of camel. Thus the total exports is around $6 to $7 million per year. The proportion of the leather is 60% sheep and 40% goat. Their idea of training prisoners to make Arabic chappals has been very successful. They provide 20 supervisors for training the prisoners who then produce 1,000 chappals in the factory. All the finished leather which they process in their tannery is consumed in the making of the chappals to meet the demand from all over Saudi Arabia. Saud Al Dagal said that shortage of raw skins was affecting the production in their tannery. Currently they are processing about 6,000 to 7,000 pieces per day into wet-blue instead of 12,000 pieces. To fulfill the demands of their customers they are diverting wet-blue from Algeria and also purchasing Iraqi and Syrian goods, and exporting directly to their clients who rely on their good reputation. Short supply of raw skins and hides and big demand for them is an international phenomenon now-a-days, Saud Al Dagal added. Their main exports are to Korea, China, India, Pakistan, Türkiye, Italy, France, Spain, Holland, UK and Mexico. Investing about half a million dollars, Al Dagal Tannery have constructed a showroom in the Sultan locality of Medina. In these well designed showrooms, the company sell fashion items such as leather garments, Italian Shoes and other fashion items. In addition to their own products they also stock products from Filmanto of Italy, Hard Rock of Hongkong/China and Lamber Lack of Italy. They are producing shoes in a joint venture with Chinese firms who take their wet-blue and process it into high standard finished leather and fashion shoes. Khalid A Dagal a director, supervised the construction of the showroom. Amato Filanto, proprietor of Filanto, who was present at the inauguration ceremony wrote in the visitors' book that 'I have seen such fine design of showrooms in the leather industry either in New York or in Tokyo. Al Ahli Leather Factory The Al Ahli Leather Tannery is the biggest producer of crust and wet-blue in Saudi's organised sector. The group are owned by two friends Mohammed Qaid Mohammed Saeed and Abdullah bin Saeed bin Shaer. They have also added new blood in the shape of Yasir Saeed and Saeed Al Muhaser as managers. Al Ahli have a modern leather factory in the second industrial zone of Riyadh with a total production capacity of 18,000 sheep, 6,000 goat and 5,000 camel pieces daily. The main suppliers of raw hides and skins to Al Ahli are 28 slaughterhouses all over Saudi Arabia which are controlled by their the company. 80% of production is sold as wet-blue with the remaining 20% being crust and finished. Regular markets include Italy, Spain, Korea, France, Indonesia, Pakistan and India. The finished leather is used for in-house production of Arab chappals (slippers) and leathergoods. Yasir Saeed told Leather International that the market for them is very good at the moment. Al Ahli are exporting 20 to 30 containers per month and Yasir Saeed pointed out that during the past twelve months exports have improved a great deal. Al Jabreen Rasheed Abdul Salam, the new general manager, told Leather International that Al Jabreen Leather Industry Factory, located in Riyadh, are one of the top names in the fast growing tanning sector in Saudi Arabia. They have a sister tannery in Taif with all the support facilities for production as the Riyadh tannery. The tannery features modern machinery for the production of high quality wet-blue hides and skins to international standards by skilled technicians. Al Jabreen have planned their expansion into crust and finished leather at their spacious new factory where the civil engineering works have been completed and machinery is now being installed. Daily production capacity at Al Jabreen is around 12,000 to 15,000 pieces of sheep and goat skins and cow and camel hides. They are processed with high quality chemicals from well-known international suppliers. Al Jabreen have a number of branches, located all over Saudi Arabia, in order to collect the fresh raw skins. They are also supported by major suppliers and known slaughterhouses. Al Jabreen export to major markets such as Italy, Korea, Portugal, Spain, France and the sub continent. Under the supervision of the president of the Al Jabreen group of companies, the tannery has achieved its target. The main goal of Al Jabreen, says Rasheed Abdul Salam, is high quality for absolute customer satisfaction: 'When you choose the best you will be our customer.'

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