Saudi Government, Banning Exports, Cement
In 2009, the ban was partially lifted following an upsurge in demand in the Middle Eastern countries. Other factor was the continued fall in country's GDP growth rate projections for the past 2 years forcing the adjustment on foreign trade policies to boost the balance of payments. The outlaw has had slight effect on the cement manufacturers. According to Jimaa (2011), cement sales in the Saudi Arabian market (local market) had grown from 3.61 million tons to 4.61 million tons between April 2010 and April 2011 despite the 2009 export ban (p. 2). In 2011, domestic demand for cement in Saudi Arabia rose to 48 million tons, and Economists predict that the demand is likely to rise to more than 50 million tons by 2013.Based on the increasing construction projects currently taking place in Saudi Arabia, economists have predicted growth in demand throughout this year (2012). This means that companies will have sufficient demand in the local market.Therefore,the government ban on exports will not affect the sales for the companies.
The figure below shows forecasts for demand in cement since 2007. It is evident that the demand has been increasing gradually throughout the years.Economists predict similar trend between 2011 and 2013. This implies that sales per company shall increase within the local market now that the government has banned the export of cement.
[...] Such is the case in the Saudi Arabia, the world's largest oil producer, where the government has sole control over the oil industry, which accounts for approximately 45% of the Kingdom's Gross National Product. In recent years, the Saudi Government has looked to an economic growth strategy of diversification to reduce its economic dependence on oil and as such, has targeted the cement industry. In order to implement this growth strategy and create a monopoly, the Saudi government has created several barriers to entry. Sloman and Jones (2011, p122) considers several forms of monopolistic entry barriers; two of which are particularly relevant to the situation in Saudi Arabia. [...]
[...] The ban has had little effect on local cement manufacturers. According to Jimaa (2011), cement sales in Saudi Arabia has increased by 1 million tones in 1998-1999. Conclusion Lasting monopolies are those sustained through government policies. With the GDP growth rate in Saudi Arabia projected at an average of over the past 4 years and in view of the immense expenditure on infrastructure alongside the anticipated population, growth of the demand for cement in the building and construction industry seems secure- for the moment. [...]
[...] Why the Saudi Government Implemented Banning Exports of Cement? Introduction Amongst the GCC states, Saudi Arabia ranks as the leading producer of cement. This is nevertheless, a far weep from the rising cement and building materials shortages that reached a peak in 2008. In rejoinder, the regime imposed a prohibition on cement exports from the country. The ban was partially lifted in 2009 following further discussions and considerations between the ministry officials and stakeholders in the local building and construction industry. [...]
[...] Since this trend has continued, the government responded by banning exports of cement to alleviate the shortage in the local market. In 2009, the ban was partially lifted following an upsurge in demand in the Middle Eastern countries. Other factor was the continued fall in country's GDP growth rate projections for the past 2 years forcing the adjustment on foreign trade policies to boost the balance of payments. The outlaw has had slight effect on the cement manufacturers. According to Jimaa (2011), cement sales in the Saudi Arabian market (local market) hadgrown from 3.61 million tons to 4.61 million tons between April 2010 and April 2011” despite the 2009 export ban (p. [...]
[...] With all these in place, many construction projects have been commenced and commissioned. This in turn has led to the rapid growth of this economy. In addition to that, it is one of the largest oil producing economy. With this monopoly that the government has over industries engaged in production of cement, they are able to compensate on subsidies from the sale of oil. By doing this, the government ensures that all projects in Saudi Arabia are done with the required speed and period. [...]
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