France & the Middle East
by Franco-Arab Chamber of Commerce – Paris
One of Middle East Business› objectives is to encourage investment in the region. However, we found that it is also important to showcase investment and trade between European countries and the Arab world.Today we highlight investment exchanges between France and the Middle East in various domains.
The amount of trade between France and the Middle East reached €28.1 billion in 2013, an increase of 1.8% compared to 2012. This result was due both to the reduction by 1% of French exports to the region and increase of just over 5% of its imports. These exchanges have enabled France to achieve a surplus estimated at €2.2 billion instead of the €3 billion made the previous year, a decrease of around 27%. French exports reached €15.1 billion which is almost the equivalent of the amount achieved in 2012.
France’s main partners in the region remain the United Arab Emirates and Saudi Arabia, who take nearly 49% of France’s exports. Egypt and Lebanon are next on the list of importers.
As for French imports from the Middle East, they rose from €12.3 billion in 2012 to €12.9 billion in 2013. The main suppliers to France remain Saudi Arabia, Egypt and the United Arab Emirates.
The sector breakdown of trade between France and the Middle East show a strong disparity between imports and exports, with Oil and other petroleum products continuing to represent nearly 80% of French imports.
Regarding French exports to the Middle East and Arab countries, they are largely concentrated in two areas – transport and mechanical equipment on one hand, and electrical, electronic and computer products on the other.
In 2013, exports of agricultural products, transport equipment and pharmaceuticals increased significantly in many countries in the area. The number of French companies exporting to the region fell from 16,196 to 15,628, a decrease of 3.5%. However, whilst the number of French companies that exported to the Middle East between 2006 and 2013 rose by 0.7%, the total number of French companies exporting decreased by 1.5% during the same period.
Research & Development activities highlight the attractiveness of France in 2013
In 2013, foreign investment projects in R&D and innovation feature much more heavily than ever before: 77 new projects were created, against 58 during 2012. This increase is all the more important as this sector generates highly skilled jobs and are generally more stable in nature.
The United States, Germany and Japan were among the main investors in this area and were responsible for 30 %, 13 % and 9 % of investments respectively.
These investment projects were in the areas of aeronautical and naval equipment (18%), drugs and biotechnology (17%) as well as software and IT services (13%).
For its part, the production function is progressing and increasing again after years of decline. With 209 projects in 2013 against 194 in 2012, these projects represent a major challenge to the extent that the production function is the main contributor in terms of job creation, with 40 % of jobs created. Germany, with 20% of investments in this function is the largest foreign investor with 41 investment decisions contributing to 15% of the jobs created by these investments.
Almost half of the production activities are concentrated in the following sectors: the food industry (13%), metals and metal work (13%), chemicals and plastics (11%), and machinery and mechanical equipment (10 %).
Signs of France‘s business attractiveness
The number of foreign investment projects in 2013 continues to rise year on year, with 341 in 2013, which represents 50% of total investment and 33% of jobs created. At the same time the number of firms in a difficult situation to be bought by foreign investors has doubled. Nearly two-thirds of these investments are the result of European companies that have helped maintain over 6,000 jobs on the French territory.
Finally, “project extensions” remain at a high level – in 2013, 251 extensions were identified, representing 37% of total investment projects and 39% of jobs created. Extensions were predominantly in the production function (56%) of projects.
Presence of Gulf-based companies and European countries in France
In the list of European countries who host Gulf-based companies, France ranks in second place during 2013, with 24% of projects, after Great Britain’s 36%, and hosted 13 new job-creation projects from this region – an increase of 50% compared to 2012.
These projects were split as follows: 46% of production activities and 23% of decision centres (primary locations).
Moreover, these investments have focused on manufacturing with 31% in chemistry, plastics (23%) and aeronautics.
L’Île-de-France and Alsace each host 23% of the businesses from the countries of this area.
Overall, France has more than 70 companies from the Gulf countries on its territory employing more than 3,600 employees and FDI (Foreign Direct Investment) stock of around €3.3 billion.
Saudi Arabian Oil Company
The national oil company of Saudi Arabia, Aramco, established a fuel research centre in partnership with the Institute of French Oil & Energy in Rueil-Malmaison, Île-de-France.
The centre, Aramco Fuel Research Centre, aims to develop technologies to improve the performance of internal combustion engines and reduce pollution. Fifteen jobs were created.
RATP in Saudi Arabia
Saudi Public Transport Company (SAPTCO) awarded a contract of 7.8 billion riyals ($2.1 billion) for the management and bus maintenance in the Saudi capital, Riyadh, to France’s RATP Group, the international arm of the RATP. The SAPTCO and RATP had previously announced a strategic partnership agreement covering the public transport system in Saudi Arabia, which covers the operation and maintenance of future tram and metro networks in the Kingdom. In July 2013, Saudi Arabia awarded projects to three international consortia to create Riyadh Metro, a mega project of $22.5 billion, designed to ease traffic congestion in a city of 6 million people. Saudi Arabia is undergoing an extensive programme to modernise its transport infrastructure, especially its rail infrastructure.
Alstom awarded a contract for the construction of a gas power plant in Iraq
Iraq awarded a contract to construct a central gas power plant with a production capacity of 740 MW at Zubair to Alstom. The amount of the contract is $400 million and includes engineering, construction and commissioning of the plant and the supply of key equipment, including four gas turbines GT13E2 providing high levels of reliability. Technical support and engineering expertise required for the project will be provided by the head of Alstom Power in Baden, Switzerland, and gas turbines will be manufactured in Mannheim, Germany. The centre will contribute to the expansion of the Zubair oil field near Basra. Alstom will become the only original equipment supplier to sign more than one purchase and construction engineering contract (EPC) in Iraq; the first was on a similar project at Al-Mansurya, northeast of Baghdad, in 2011.
Alstom to supply gas turbines in Iraq
Alstom has won a contract worth approximately €225 million for the supply of equipment for a gas-fired combined cycle generation turbines at Al-Anbar, under construction in Iraq’s Anbar province.
A consortium of Metka SA and Metka Overseas Ltd. provides the construction of the centre for the Iraqi Ministry of Electricity. With an output of 1642 MW, commissioning is scheduled for 2016, and will increase the amount of electricity available on the Iraqi network.
As part of this contract, Alstom will supply four high performance turbines GT26 gas generators for heat recovery (HRSG), two steam turbines and six turbo air-cooled alternators. In addition, Alstom is currently holds the contract to construct the central gas power station at Al Mansuriya (728 MW) in the province of Diyala, northeast of Baghdad.
Alstom has also supplied the gas turbine plant at Al- Najaf, commissioned last year. The Group continues to support the rehabilitation of existing Iraqi facilities, including Unit 1 of the gas plant at Najaf, 160 km south of Baghdad.
Ingenico opens in Casablanca
Ingenico, the leading provider of payment solutions that allows banks and retailers to manage their payments through all sales channels (in shop, online and mobile), opened its first office in Morocco last April. By opening in Casablanca, Ingenico hope this will enable them to service the Middle East and African market.