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SINGAPORE : Mainboard-listed Tiong Woon Corporation (TWC) has become the first Singapore company to get a licence to run a 100% foreign-owned business entity in Saudi Arabia.
The oil and gas services provider rents out construction cranes and puts together heavy equipment on site.
And it is planning to use Saudi Arabia as a entry point into the Gulf region.
Armed with a licence to own 100% of its investment firm in Saudi Arabia, TWC expects to have easier control and better protection of its assets when it expands in the Middle East.
The mainboard-listed firm is eyeing to tap into billions of dollars of opportunities in the region's oil, gas, power and petrochemical industries.
"We can use Saudi as a hub for the other Middle East countries. A lot of MNC (multi-national corporations) contractors encourage us to go there because there is shortage of equipment and reliable contractors," says Ang Kah Hong, TWC's chairman and MD.
The company plans to invest $20 million over the next two to three years to build up its fleet in Saudi Arabia.
The Saudi Arabian General Investment Authority (SAGIA) based in Singapore says it wants to encourage local companies to have a major stake in their investments in the Gulf state.
The agency is now focusing on bringing investments into the country's energy, transportation and knowledge-based sectors.
It grants licences and mediates potential disputes for Singapore companies investing there.
But it warns that local firms need to be thorough in their research, and keep expectations in check.
Meshari Al-Khaled, Director General of SAGIA says: "I've noticed that many people think it's a very rich country, with deep pockets and that they can benefit from it. That's actually not the case. They need to be careful as it's not an easy market. You need to do your homework, conduct your business plans with due diligence, whether you go in there as a 100% foreign company or joint venture with a local company.
"Our role is to help them find an ideal local partner and in getting licenses. We also want to make sure that the company will be able to survive and prosper in the market."
The latest World Energy Outlook report expects oil and gas sector investment needs in Saudi Arabia to amount to more than US$200 billion from 2004 to 2030. - CNA /ls
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