Foreign firms hit Dubai to prevent tender crisis

Old guard of Dubai contracting to face new competition as overseas rivals chase local projects.

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By  Sean Cronin and Angela Giuffrida Published  January 21, 2006

Some of the biggest names in international contracting are set to descend on Dubai, following moves to relax bidding rules on projects worth billions of dollars. Dubai Municipality is already allowing international contractors to bid for major projects before they have established a local company. The move comes as an increasing number of major tender announcements fail to attract even a single bidder. But several overseas contractors have started to respond to Dubai tender calls in recent weeks — including firms from Turkey, Japan and Latin America. Brazil’s largest construction group, Odebrecht, is among the latest arrivals and is bidding for work on Abu Dhabi Airport and the new Garhoud Bridge in Dubai. Malaysian construction giant, Gamuda, is also among the new wave of foreign contractors targeting Dubai, while Taisei of Japan is also understood to be chasing several major projects. At the same time, contractors with bases in free zones are being allowed to participate in contracts, as well as Abu Dhabi-based contractors without offices located in Dubai. Ibrahim Yaqob Ali, director of the contracts and purchasing department at Dubai Municipality, said: “Last Sunday we opened six or seven tenders and we didn’t get a single bidder for two or three of them. “We recently tendered a project which we estimated would cost AED60 million, but we received just one bid for AED140 million.” Existing rules regulating the tendering process for major construction projects in Dubai are contained in Law No 6 of 1997. “The only person with the right to change this is his highness, the ruler of Dubai, although Dubai Municipality has the right to propose a change through the representative on the executive council. “But for the time being the law is flexible enough to work with,” said a DM contract expert. Chinese contractors are also understood to be targeting the emirate. “Until now, Chinese contractors have been quiet in the Middle East,” said Sachin Kerur, senior associate at Masons Galadari in Dubai. But efforts are being made by the Chinese government to encourage more participation. “They want Chinese contractors to develop relations with the major energy producing markets and engage in energy or infrastructure-related projects. There is also significant dialogue between the Chinese and GCC governments, and Saudi Arabia,” he said.

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