Industry Overview

7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT
(Prepared for inclusion in the Prospectus) Frost & Sullivan Malaysia Sdn Bhd (S22293Wj Suite E-Q8-1 5, Block E, Plaza Mont’ Kiara, 2 Jalan Kiara, Mont’ Kiara, 50480 Kuala Lumpur, Malaysia. Tel: +603.6204.5800 Fax: +603.6201.7402
www.frost.com The Board of Directors Eversendai Corporation Berhad Lot 19956, Jalan Industri 3/6 Rawang Intergrated Industrial Park 48000 Selangor Dear Sirs, Executive Summary of the Independent Market Report on the Structural Steel Building Industry in the United Arab Emirates (UAE) and Qatar, and an Overview of Other Selected Markets in Asia
This Executive Summary of the Independent Market Report on the Structural Steel Building Industry in the United Arab Emirates (UAE) and Qatar, and an Overview of Other Selected Markets in Asia is prepared by Frost & Sullivan Malaysia Sdn Bhd (“Frost & Sullivan”) for inclusion in the Prospectus of Eversendai Corporation Berhad (“Eversendai” or the “Company”) in connection with its listing on the Main Market of Bursa Malaysia Securities Berhad. For and on behalf of Frost & Sullivan Malaysia Sdn Bhd: Denni~;t..——–o-­Director Bangalore Bangkok Beijing Bogota Buenos Aires CapeTown Chennai Delhi Dubai Frankfurt Kolkata Kuala Lumpur London Melbourne Mexico City Mumbai NewYork Oxford Palo Alto Paris San Antonio Sao Paulo Seoul Shanghai Singapore Sydney Tokyo Toronto 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) © May 2011 Frost & Sullivan The market research process for this study has been undertaken through secondary or desktop research, as well as detailed primary research, which involves discussing the status of the industry with leading industry participants and industry experts. The research methodology used is the Expert Opinion Consensus Methodology. Quantitative market information could be sourced from interviews by way of primary research and therefore, the information is subject to fluctuations due to possible changes in the business and industry climate. This market research was completed in May 2011 This report is prepared for inclusion in the Prospectus of Eversendai Corporation Berhad (ECB) for submission to the Securities Commission Malaysia and other relevant parties including potential shareholders. No part of this research service may be otherwise given, lent, resold, or disclosed to non­customers without our written permission. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without our permission. Frost & Sullivan has prepared this report in an independent and objective manner and has taken adequate care to ensure the accuracy and completeness of the report. We believe that this report presents a true and fair view of the industry within the limitations of, among others, secondary statistics and primary research, and does not purport to be exhaustive. Our research has been conducted with an “overall industry” perspective and may not necessarily reflect the performance of individual companies in the industry. Frost & Sullivan shall not be held responsible for the decisions and/or actions of the readers of this report. This report should also not be considered as a recommendation to buy or not to buy the shares of any company or companies as mentioned in this report or otherwise. For further information, please contact: Frost & Sullivan Malaysia Sdn Bhd Suite E-08-15, Block E, Plaza Mont’ Kiara 2, Jalan Kiara, Mont’ Kiara 50480 Kuala Lumpur. IMR on the Structural Steel Building Industry in the UAE and Qatar ©Frost & Sullivan 2011 114
7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Conf’d) TABLE OF CONTENTS 1 EXECUTIVE SUMMARY 1 1.1 MARKET SEGMENTATION 1 1.2 STRUCTURAL STEEL BUILDING INDUSTRy 1 1.3 INDUSTRY DYNAMICS 2 1.3.1 Risks and Challenges : 2 1.3.2 Barriers to Entry 2
1.4 KEY DEMAND CONDITIONS 4 1.4.1 Industry Drivers 4 1.4.2 Industry Restraints 7
1.5 PRODUCT SUBSTITUTION 8 1.6 RELIANCE AND VULNERABILITY TO IMPORTS 8 1.7 KEY SUPPLY CONDITIONS 9 1.8 KEY INDUSTRY PLAyERS 10

1.9 MARKET SHARE 10 1.9.1 Market Share by Fabrication Capacity 10 1.9.2 Market Share by Structural Steel Consumption 12
1.10 ANALYSIS OF THE UNITED ARAB EMIRATES (UAE) 13 1.10.1 Industry Size and Growth Trends 13 1.10.2 Industry Outlook 15 1.10.3 Relevant Laws and Regulations 16 1.10.4 Key Projects, Market Trends and Development 18
1.11 ANALYSIS OF QATAR 20 1.11.1 Industry Size and Growth Trends 20 1.11.2 Industry Outlook 21 1.11 .3 Relevant Laws and Regulations 23 1.11.4 Key Projects, Market Trends and Development 24
1.12 BRIEF OVERVIEW OF MALAySiA 25 1.12.1 Industry Growth Trends and Outlook 26 1.12.2 Profile of Major Projects 29 1.12.3 Com petitive Overview 30
1.13 BRIEF OVERVIEW OF INDIA 31 1.13.1 Industry Growth Trends and Outlook 32 1.13.2 Profile of Major Projects 34 1.13.3 Competitive Overview 36

1.14 BRIEF OVERVIEW OF OMAN 37 1.14.1 Industry Growth Trends and Outlook 38 1.14.2 Profile of Major Projects 38 1.14.3 Competitive Overview 40

1.15 BRIEF OVERVIEW OF SAUDI ARABIA 40 1.15.1 Industry Growth Trends and Outlook 42 1.15.2 Profile of Major Projects 43 1.15.3 Competitive Overview 44 IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’dj

 

1 EXECUTIVE SUMMARY 1.1 MARKET SEGMENTATION The construction industry can be divided into two key major segments, namely the construction of buildings and infrastructure. The construction of buildings can be further categorised into three categories, namely commercial, residential and industrial. Commercial buildings are used for business purposes and this includes office buildings, warehouses, hotels or retail outlets. Residential buildings are meant for dwelling purposes. Industrial plants on the other hands are buildings or structures used for carrying out industrial activities such as manufacturing factories, water treatment plants, power plants and hydro-chemical plants. The construction of buildings constitutes civil works, structural works and mechanical and electrical (M&E) works. There are 2 main types of building materials used to construct the skeleton of buildings, which essentially holds the building together. These 2 types of building materials are reinforced concrete and structural steel. Reinforced concrete is concrete that has been reinforced with steel bars. Reinforcing bars made of steel are commonly used for this purpose and these bars are placed in the mould. Concrete which is a mixture of cement, sand and water are poured into the mould and forms the skeleton of the building. Steel reinforcing bars act as the spine of the concrete which provides extra tensile strength to the concrete.
1.2 STRUCTURAL STEEL BUILDING INDUSTRY Structural steel is increasingly becoming popular as an option for structural works. Structural steel is steel fabricated into shapes and sizes in accordance with the requirements of the architects and building design. As steel is manufactured in a controlled factory environment, its quality can be guaranteed. The different types of bUildings will have different structural steel quantity requirements, which are then erected to form the skeleton of the bUilding. Today, structural steel has been gaining popularity globally as the leading structural framing material, with countries competing against each other to build the world’s tallest building. The cost component on structural works depends on the type of building structure. Frost & Sullivan has identified that structural works constitutes approximately 20.0 percent of a commercial or residential building and approximately 60.0 percent of an industrial project. [The rest of this page is intentionally left blank] IMR on the Structural Steel Building Industry in the UAE and Qatar ©Frost & Sullivan 2011 116 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d)
1.3 INDUSTRY DYNAMICS 1.3.1 Risks and Challenges Difficulty in securing borrowings Due to the effects of the financial crisis, banks are more stringent and pose more restrictions on loan applications. Although the liquidity position of financial institutions in the Middle East has shown improvements, and these institutions are beginning to show signs that they will lend again, they will undoubtedly be more cautious about a loan applicant’s ability to service the debt. Securing finances will be most challenging for new contractors who do not have a track record in the construction industry. Risks of delay in project completion A booming construction industry will face issues such as shortages in construction equipment, raw material and other resources, and the lack of skilled labour, which may potentially delay the delivery schedule of construction projects. These issues can lead to a loss of efficiency and result in higher financing costs or costs in terms of maintaining equipment and keeping a workforce in place. Therefore the credibility of a company lies in its ability to complete a project on time, while fulfilling all the safety standards and the terms outlined in the construction agreement. Safety standards Safety standards are imperative in the construction of buildings, especially high rise and complex structural steel buildings. It is important to note that various countries would have their individual specific regulatory system governing the issue of safety. For instance, the Dubai Municipality Building Construction has issued a safety code known as the ‘Code of Construction Safety Practice’. This code outlines safe working practices and the responsibilities of contractors, sub-contractors, consultant engineers and employees at construction sites. The code states that consultant engineers and contractors are responsible for the overall safety of construction site throughout the implementation of a construction project.
1.3.2 Barriers to Entry High working capital requirement and late payment The nature of construction work requires high working capital and healthy cash flow. Costs are incurred prior to commencement of a project and even at the tender or bidding stage. Contractors are exposed to net cash outflows by having to pay upfront expenses to secure IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) raw material such as steel. Suppliers of raw material and equipment demand advance payments to ensure contractors do not default on payments. It is noted that steel, as the key raw material in this industry, forms 30.0 percent to 40.0 percent of the total contract value of the development project. Hence new contractors will need to pay a rather sizeable advance payment to steel suppliers. These contractors may only experience net cash inflows in the later stages of the project as payments can only be invoiced to clients based on deliverables or project milestones. It is also noted that new players in the industry will face difficulties obtaining project financing without a past project execution track record or a healthy loan repayment history with financial institutions. Besides that, large capital is also required to establish fabrication facilities in this industry. Large capital outlay is required to finance the rental or purchase of land, set up the factory building and equip the building with the necessary machinery or equipment for the steel fabrication process. Prior established track record Most consortium bidders or main contractors will only choose to work with a steel contractor who has an established track record, especially in terms of safety, reliability, quality and strong working relationship. This is critical for them as they are responsible for the timely completion of the projects. The safety and quality of the work done will directly impact the consortium bidders or main contractors themselves. Hence, this would pose a strong challenge to new entrants as they will need time and opportunity to establish their credentials in this market. long established business networking and relationship Building a viable and strong business networking is not an easy task for a new entrant as this process takes time. The business networking and relationship here involves the likes of the many consortium bidders, general or structural and civil contractor and process/trade or specialized contractor in the market. Once the business relationship has bonded to a comfortable stage where trust and confidence is well-established, it would be difficult to break this partnership. New entrants to the industry may find it very hard to influence such established relationships, and it will be equally hard gaining trust and confidence from other industry stakeholders. Further to that, without the comfort of an established business relationship, other issues may crop up, like the collection of payment for completed jobs. This factor is a strong deterrent for any potential entrants. [The rest of this page is intentionally left blank] IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Conf’dj Specific industry expertise, skill and know-how It is important for key players in the structural steel building segment to possess specific industry expertise and skills. Structural steel construction requires specific technical know­how and business processes. Hence, new entrants might find it very difficult to cope with the long learning process and also bear the costs involved in acquiring these skills and expertise. Thus, new entrants require time to fully familiarize themselves with the engineering skills, workings and processes required. This factor poses a medium entry barrier to potential entrants. Dedicated and committed workforce Players in the construction industry need to have a dedicated and committed workforce. This is important to ensure smooth operations and timely project delivery. Interruptions in the work schedule due to erratic manpower supply can adversely affect the construction cost of the project. The economic and subsequent construction industry boom in the Middle East have attracted many foreign talents. Expatriate workers account for almost 100 percent of the workforce in the private sector. Socio-cultural differences in the Middle East The Middle Eastern region holds on to culture as an important cornerstone in their daily lives, and even in business dealings. Core Asian cultures such as respect, integrity and religious values are important to this society. Islam is the major religion in this region and it pervades every aspect of life for this society. Hence new players to the industry in this region must learn to respect this religion and its teachings, and the local cultural practices. 1.4 KEY DEMAND CONDITIONS 1.4.1 Industry Drivers Strong economic growth in the United Arab Emirates (UAE) and Qatar has led to construction boom From 2000 to 2007, the average oil price hovered at above USD26.0 per barrel, but soared to USD140.0 per barrel in middle of 2008, resulting in impressive oil revenues for these countries and faster economic growth for the oil rich countries in the region. After a brief dip in 2009, global crude oil prices hovered between USD70.0 to USD95.5 per barrel throughout 2010 before increasing to over USD100.0 per barrel in early 2011. As at 20 May 2011, crude oil prices were traded globally at approximately USD1 08.0 per barrel. The high oil revenues improved the external trade and current account balances of the UAE and Qatar, leading to fiscal, surpluses. Revenues from crude oil trade have been injected into IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) the domestic economy via public spending on development projects, providing the impetus for growth of several other sectors such as manufacturing and construction. Several mega projects have been undertaken in the Middle East since year 2000, and many more are in the pipeline. The increasing purchasing power of the population in these countries has attracted international investments. In light of this increased attention the Governments have taken steps to reform their investment and tax codes to be more investor friendly. The UAE is viewed as a favoured regional hub among the other countries in this region. The high economic growth and prospects in this region has led to a massive inward migration of foreigners and migrant workers, causing the population of these countries to increase tremendously. Along with the increase in population, the demand for residential and commercial properties has also risen. Within the UAE, both Dubai and Abu Dhabi are key Emirates. Dubai has experienced tremendous economic growth over the last decade, and now is beginning to face slowdowns in its economy. Dubai was relatively affected more compared to other Emirates, especially in the real estate market. However, Dubai’s economy has since begun recovering and the Emirate achieved a 2.5 percent year on year growth in the first 9 months of 2010. The landscape in Abu Dhabi is different from that of Dubai, as this Emirate has been affected to a lesser degree by the sub-prime and global economic crisis. Abu Dhabi is ranked among the top 10 oil producers globally, with an estimated 9.0 percent of global proven oil reserves. This city has the fifth largest gas reserves in its soils. Abu Dhabi is increasingly appearing as a prominent Emirate for modern city planning. As the Government places importance on economic development and large scale investments within this city, opportunities are expected to emerge for the construction sector. The prospects for this city appear brighter over the coming years. Lower construction costs The countries in the Middle East, including UAE and Qatar, are experiencing recovery in the aftermath of the global financial crisis. Since July 2008, the prices of construction materials such as cement and aluminium have dropped by approximately 30.0 percent. Reinforcement steel bars were traded globally at an average price of USD623.0 a tonne in 2010, compared to the USD1 ,550.0 in July 2008. Labour supply has also fallen during the same period. In light of the lower construction cost, developers in the UAE and Qatar have taken the opportunity to re-tender selected projects. Presently, the Middle East has the highest number of energy projects planned and hence the competition between players in the industry is expected to be high. Infrastructure development is also expected to be a key growing segment in this region as Governments look into boosting spending to promote their economies. IMR on the Structural Steel BUilding Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’dj Government initiatives supporting foreign direct investment (FDI) and construction Despite the competition from other countries in the Gulf Arab region, UAE remains as one of the main recipients of FDI in the Middle East. Between 2004 and 2008 alone, FDI inflows to the UAE stood at approximately USD51.5 billion, ranking the UAE only second to Saudi Arabia. Qatar received USD17.4 billion in FDI during this period, with its capital Doha alone benefiting USD5.4 billion in investments. The UAE Government has taken concrete steps over the years to liberalise the economy of the UAE and in certain cases, allowing foreign ownership of projects, in a bid to remain as the preferred investment destination in the Middle East. By keeping spending high, allowing foreign participation in more sectors and introducing new incentives, the Government’s efforts appear to be bearing positive results. A key contributor to the UAE economy’s growth has been in the Government’s move to allow foreign participation via investment and ownership in selected sectors. Presently UAE’s laws stipulate that foreigners can only own up to 49.0 percent of a company registered in the UAE. The controlling share must be owned by a national of the country. However in an effort to remain competitive, the Government has designated areas classified as “free trade zones”. Companies located in this area can have up to 100.0 percent foreign ownership. The Jebel Ali Free Trade Zone, which is one of the success stories for the country, has more than 6,400 companies from approximately 120 countries (as at April 2010). Foreign investors will also be able to hold ownership of up to 100.0 percent for companies investing more than USD272,479.0 (AED1.0 million). In July 2008, the Qatar Government announced that it has USD125.0 billion worth of projects to be completed by 2015, ranging from infrastructure to residential and commercial developments. The Government has encouraged local players in the construction industry to form joint ventures with renowned international companies, in an effort to ensure that these projects are delivered on time. The infrastructure construction segment has received renewed commitment by the Central Government. Qatar’s Expansionary Budget 2009 -10 outlines spending on strategic infrastructure developmental projects to boost the economy. Demand from key end-user sectors The construction industry is highly dependent on demand from other sectors, such as tourism, real estate, manufacturing and energy. The construction industry in Qatar for instance, is highly spurred by the country’s economy and booming tourism and real estate industry. In light of this, the country has various highly publicized projects in various stages of construction. Among them are: • New Doha International Airport (worth USD5.5 billion)
• Lusail real estate project (worth USD5.0 billion)

IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECU1·IVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’dj • Ras Laffan (worth USD3.9 billion)
• Energy City (worth USD2.5 billion)
• Pearl Island (worth USD2.5 billion)
• Qatar Convention Centre (worth USD1.5 billion)
• World Trade Centre (worth USD150.0 million)

The Government of Qatar predicts that its tourism industry will grow by 150.0 percent over the next few years and has taken steps to develop tourism as a key income generator for the country. In catering to this large growth, total hotel rooms are expected to grow by 300.0 percent and many large luxury hotels are expected to be established in the country, driving the demand for building construction materials. Tourism is also an important income generator for the UAE Government. Dubai alone has 70.0 percent of the country’s total hotels and the Emirate’s revenue from tourism surpasses its revenue from oil. Dubai aimed to attract 15.0 million tourists by end 2010. Abu Dhabi is also emerging as a major tourism destination in the UAE, with hotels being planned for construction on the Vas and Saadiyat Islands. In 2009, The Tourism Development and Investment Corporation awarded a contract worth USD544.0 million (AED2.0 billion) for the construction of the St Regis resort and residence on Saadiyat Island. Key players in the building construction industry will stand to benefit from the growing demand from other sectors in the UAE and Qatar over the forecast period. 1.4.2 Industry Restraints After-effects from the global financial crisis The global financial crisis and high oil prices in 2008 led to a real estate crunch in cities such as Dubai. As Dubai faced liquidity issues in 2009, Abu Dhabi increasingly appeared as a more prominent player in the real estate and construction market. While Abu Dhabi has also been exposed to economic issues as Dubai, this Emirate has proven to be more resilient in dealing with the crisis. Demand in Abu Dhabi is primarily driven by its local Government’s consumption and its efforts of promoting the Emirate as a major tourism hub through improvements in the infrastructure and major construction projects. The Abu Dhabi Economic Vision 2030, a plan drafted by the Government which outlines the long term development plan for the Emirate, will drive the construction sector as it involves developing Abu Dhabi’s surrounding islands, creating a new capital city, building a comprehensive public transport system and becoming the cultural and sports hub of the country. Dubai has since experienced recovery in its economy in 2010 as the Emirate recorded a 2.5 percent year on year growth in the first 9 months of 2010. As a result of Government IMR on the Structural Steel Bui/ding Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) intervention and global economic growth, Qatar’s economy rebounded in 2010, with a 16.0 percent year on year growth rate. Labour issues The majority of workers in the private sector labour workforce in Middle Eastern economies such as the UAE and Qatar are foreign workers. Both of these economies are heavily reliant on imported services and labour. Many of the skilled workers in the construction industry originate from countries such as India, Egypt, Malaysia and Pakistan. Among the issues faced by these workers are poor quality of accommodation, failure by companies to make prompt salary payments and heavy interest payments demanded by recruitment agencies in the home countries of these migrant workers. Many of these migrant workers receive monthly wages of less than USD200.0. The safety of working conditions in the construction industry in the Middle East has also come under global scrutiny lately. As there is no Ministry of Labour in Qatar, labour issues fall under the jurisdiction of the Department of Labour, Ministry of Civil Services Affairs and Housing (MCSAH). Both the UAE and Qatar Government maintain a non-involvement stand on the labour issues faced in the construction industry. As these countries look into safer working conditions for migrant workers, the implementation of labour laws and the creation of a minimum wage policy, the impact of this factor is expected to decrease over the forecast period. 1.5 PRODUCT SUBSTITUTION Every building requires a strong structure as a frame. It is upon this frame that other construction materials are attached on to, to eventually form the building. As such, there is no substitute for building structures presently available in the market. However, within the building materials industry, contractors and property developers have 2 options for structure construction. These parties can select from either structural steel or reinforced concrete. While reinforced concrete is the more common option in the industry, structural steel has proven to offer advantages such as time cost savings as pre-fabrication can be done offsite prior to installation at the construction site. Time cost savings can be derived from being able to complete construction of structural steel buildings in significantly shorter time (i.e. the opportunity cost). 1.6 RELIANCE AND VULNERABILITY TO IMPORTS The construction industry in the UAE and Qatar is reliant on imports in terms of building construction materials and skilled labour. Raw materials such as steel are imported either IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) directly from manufacturers in Japan, Taiwan, China, India, South Korea and Western Europe or via locally based traders in these two countries. The construction industry in the UAE and Qatar is reliant on foreign imports of steel as this region does not have its own established steel industry value chain. In view of that, construction costs are impacted by the global fluctuating steel prices and transportation costs. However it must be noted that in the absence of a steel industry value chain in the Middle East, this reliance on imported structural steel is not considered unusual or out of the ordinary. 1.7 KEY SUPPLY CONDITIONS Lower construction cost During the bullish economy in mid 2008, soaring oil prices caused an increase in material prices. However, in light of the recent global economic crisis, construction costs for raw materials such as cement and steel bars had since fallen. In July 2008, steel bar was traded at USD1,550.0 per tonne compared to the 2010 figures of USD545.0 per tonne and USD595.5 per tonne in UAE and Qatar respectively. The Abu Dhabi Statistics Centre reported that cement prices declined by 13.5 percent in 2009 compared to 2008. However, costs of raw materials have since stabilized and marginal increases have been seen. The lower construction cost acts as an impetus for industry stakeholders such as developers and local governments to proceed with previously postponed construction projects, in the hopes of gaining cost savings. The Governments of Abu Dhabi, UAE and Qatar have now commenced awarding major contracts. Availability of raw materials and heavy equipment and machinery The high demand for real estate development and construction projects has created an incidental demand for raw materials, and heavy and moving equipment in the construction industry. The heavy and moving equipment sector has shown dramatic growth in the recent years, with Germany, Japan and the United States emerging as key exporters of construction equipment and building material machinery. China and India have also witnessed increased imports in terms of heavy machinery for the construction sector. The availability of heavy equipment and machinery for the construction industry is viewed as an important key supply condition, which affects the overall completion of construction projects. Raw materials such as steel are also key components, especially taking into account the fact that UAE and Qatar do not produce structural steel. Hence it is a usual practice among the bigger players in the structural steel market such as Eversendai Corporation Berhad (ECB) to import steel from global steel suppliers and carry out fabrication works at their plants in the UAE and Qatar. IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) 1.8 KEY INDUSTRY PLAYERS The construction industry in the UAE and Qatar is competitive with many players present at the different stages of the value chain. The structural steel building industry in UAE and Qatar is likewise competitive as local players have to compete against international players for construction projects. It is noted that very few players in the industry offer total integrated solutions across the structural steel building industry value chain. In the Middle East, key players that offer end-to-end solutions include ECB, Cleveland Bridge, William Hare and Tiger Steel Engineering. Most of the local players in the market primarily compete in the fabrication space. The Governments of UAE and Qatar encourage local firms to form joint ventures with international firms when bidding for landmark projects in the country. This is to facilitate knowledge transfer and also facilitate the entry of foreign players into the local market. It is also noted that players such as ECB have a distinct advantage over the competition as they posses dedicated fabrication facilities for projects executed in the Middle East. Some of the key foreign players in the building construction industry in the UAE and Qatar are described below. • Cleveland Bridge UK Limited (Cleveland Bridge)
• Eversendai Corporation Berhad (ECB)
• Severfield -Rowen Pic (Severfield -Rowen)
• Tiger Steel Engineering LLC (Tiger Steel Engineering)
• Unger Steel Middle East FZE (Unger Steel)
• Victor Buyck Steel Construction NV (Victor Buyck)
• William Hare Group Limited (William Hare)
• Yongnam Holdings Ltd (Yongnam Holdings)

1.9 MARKET SHARE 1.9.1 Market Share by Fabrication Capacity Frost & Sullivan notes that ECB is one of the major players in this segment, with proven capabilities of offering a total end-to-end solution from the designing phase to structural erection. In 2010, the Group had a 26.5 percent market share in terms of annual structural steel fabrication capacity in the UAE and Qatar. ECB positions itself against other international integrated structural steel fabricators in the UAE and Qatar. It is also noted that the Group has an advantage compared to some of the players in this market, as ECB has its own dedicated fabrication facilities in Dubai and Sharjah (UAE) and Doha (Qatar), with a total annual fabrication capacity of 95,000 tonnes of steel. IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Conf’dj Estimated Structural Steel Fabrication Capacity (UAE and Qatar). 2010
Note: Company A, B,C and D consists of Cleveland Bridge, Tiger Steel Engineering, Unger Steel and William Hare ranked in no particular order Company E, F and G consists of Severfield -Rowen, Victor Buyck and Yongnam Holdings ranked in no particular order (a) ECB
(b) Fabrication capacity at Facility A: provided in Company A’s website; fabrication capacity at Facility B: estimated based on comparison of fabrication floor space between sites at Facility A and Facility B
(e) Company B’s website
(d) Company C’s website
(e) Estimated based on comparison between Company D’s UK facility and its distribution partner in the Middle East
(f) Other steel fabricators comprise of various players with estimated fabrication capacities of between 5,000 to 10,000 tonnes per annum, based on estimates from various industry sources
(9) Players in the table above which do not have fabrication facilities in the UAE and Qatar operate in these countries primarily by importing steel from their fabrication facilities outside these countries, and / or purchasing from local fabricators

Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) Estimated Market Share for ECB based on Annual Fabrication Capacity of Structural Steel (UAE and Qatar), 2010
18.2% -23.7% B,14:0% Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan 1.9.2 Market Share by Structural Steel Consumption Structural steel is used in the construction of residential, industrial and commercial buildings. Consumption of structural steel is a measurement of the amount of structural steel used within a country, taking into consideration the imports and exports value of structural steel. Approximately 50.0 percent of the structural steel in the UAE and Qatar is consumed by the oil and gas sector, and between 25.0 percent and 30.0 percent is consumed by the construction sector. The remainder is consumed by the infrastructure sector. In 2008, ECB’s actual fabrication output of structural steel was 50,067 tonnes. Based on that, the market share for ECB in 2008 was 27.1 percent in the structural steel industry within the construction sector in the UAE and Qatar. The remaining 72.9 percent was shared between other players present in the structural steel building industry such as Cleveland Bridge, William Hare, Severfield -Rowen, Yongnam Holdings, Tiger Steel Engineering, Victor Buyck and other local players. This fabrication output is on par with the fabrication capacity of 3 out of the 4 other major players with domestic fabrication facilities, making ECB one of the leading structural steel fabricators in the UAE and Qatar in 2008. [The rest of this page is intentionally left blank] IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) Estimated Consumption of Structural Steel within the Construction Sector (UAE and Qatar), 2008
Notes: 1. EGB’s actual production in the UAE and Qatar was 51,584 tonnes in 2009 and 46,431 tonnes in 2010
2. Data on the total structural steel consumption within the construction sector for UAE and Qatar in 2009 and 2010 was not publicly available at the time ofpublication of this report

Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan Estimated Market Share for ECB in the Structural Steel Industry within the Construction Sector, Based on Fabrication Output (UAE and Qatar), 2008
* Data on the total structural steel consumption within the construction sector for UAE and Qatar in 2009 and 2010 was not publicly available at the time ofpublication of this report Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan 1.10 ANALYSIS OF THE UNITED ARAB EMIRATES (UAE) 1.10.1 Industry Size and Growth Trends The construction industry in the UAE has grown rapidly over the years 2004 to 2008, recording growth rates of more than 10.0 percent annually. Growth in the construction sector was mainly spurred by the booming economy prior to 2008, population growth, and IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) government intervention on public interest infrastructure projects and construction projects for the oil and gas sector. The construction industry recorded a compound annual growth rate (CAGR) of 24.3 percent over the same period. Official data on the construction industry in 2009 and 2010 has yet to be made publicly available by UAE’s Department of Statistics. Historical growth in the structural works building industry in the UAE has closely reflected the growth rates of the construction sector. The structural works building industry has been witnessing steady growth rates of more than 10.0 percent from 2004 to 2008, and a CAGR of 24.3 percent for the same period. The industry size for this industry grew by 26.0 percent in 2008 compared to the previous year, to hit the USD2.4 billion (AED8.6 billion) mark. Size of the Construction Industry and Structural Works Building Industry Based on GOP (UAE), 2004 -2008
CAGR 2004 -2008 -24.3% * The structural works building industry size is derived from the GDP of the construction industry and cost contribution from structural works in residential, commercial and industrial construction projects. IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) .. Data on the construction and structural works building industry for UAE in 2009 and 2010 was not publicly available at the time ofpublication of this report Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan 1.10.2 Industry Outlook The construction industry in the UAE is expected to grow during the forecast period as the Central Government strives to reduce its economic dependency on crude oil in the coming years. The real estate sector is expected to spur growth in the construction sector. Abu Dhabi is a rapid development location, with demand for residential and commercial construction projects fueling the demand for the structural steel building industry. The increase in population and tourism is also viewed as driving factors for this market. However it is noted that the outlook for the construction industry and structural works building industry was affected in 2009 as a result of the sub-prime crisis in Dubai. It is noted that within the UAE, Abu Dhabi and Dubai are two major markets in the construction industry. Dubai is a relatively mature market, which had recorded tremendous growth prior to 2008. Abu Dhabi is increasingly becoming more prominent as a key market for the construction sector in the UAE. The Emirate presently faces a situation of undersupply in terms of both residential and commercial structures to serve both its local and expatriate population. This surging demand is expected to drive the construction sector in Abu Dhabi. “Plan Abu Dhabi 2030” is an effort by the local Emirate Government to fully conceptualize the structured development framework for this Emirate. This plan outlines the development of a central business district, a secondary business district and mixed-use development area within the Emirate. The growth of the structural works industry in the UAE is expected to be slower in 2009, and this is a result of the global financial and debt crisis impacting the real estate sector in Dubai. The construction sector recovered in 2010 and is expected to continue its recovery into 2011. Undersupply of residential and commercial structures in Abu Dhabi will still persist in the long term, hence surging demand is expected to drive the construction sector in Abu Dhabi. In line with all these factors, Frost & Sullivan estimates that the structural works building industry will grow from USD2.8 billion (AED10.1 billion) in 2009 to USD5.6 billion (AED20.4 billion) in 2013 at a CAGR of 19.3 percent. The lower CAGR of 19.3 percent is mostly a result of lower growth rates in 2008 and 2009; growth levels are expected to reach pre-2008 levels after 2010. [The rest of this page is intentionally left blank] IMR on the Structural Steel Building Industry in the UAE and Qatar

7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) Forecast Industry Size of the Structural Works Building Industry (UAE), 2009E -2013F 25~QOO -,———­I 25%
15% 20,000 + .. .. .;——-.-~~—-••••—-~ ;.__.1 20% ~. 15,000+————-­ii.· i c· ‘.. j w 10_000 +—­10%-:( -.. 5000 . !-.-­5% l’ ‘ I i I o .! 0%
E = estimate F = forecast Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan 1.10.3 Relevant Laws and Regulations Federal Law No.5 of 1985 (“the UAE Civil Code”) Contractors and design consultants in the UAE are liable, without fault, for the cost of rectifying structural defects that appear in a building or structure within 10 years of handover, in what is known as “decennial liability”. This is the effect of articles 880 to 883 of the UAE Civil Code.
Decennial liability is strict, in other words it is not necessary to prove any negligence or breach of contract. The key points to note about decennial liability in the UAE are as follows:
• Trigger events are total or partial collapse of a building and/or a defect threatening the stability or safety of a structure; IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cant’d) • Liability lasts for 10 years following handover;
• No fault is necessary in order for liability to arise;
• Contractors and consultants are jointly liable;
• Compensation is payable to the client;
• Liability attaches notwithstanding that the collapse or defect is caused by sub-surface conditions or that the client approved the defective work;
• Claims for compensation must be commenced within 3 years from the collapse or discovery of a defect;
• Agreements purporting to exclude decennial liability are void; and
• Buildings or structures, the life cycle of which is less than 10 years, are exempt.

For contractual claims other than claims for decennial liability (for example for negligent design or defective workmanship), liability continues for a period of 10 years from the due date for fulfilment of the obligation (Le. usually in the context of a construction contract, completion of the works or the end of the defects liability period, depending on the nature of the claim). Local Order No.3 of 1999 Local Order NO.3 of 1999 regulates construction works in the Emirate of Dubai (Order). This Order applies to the construction of buildings (including any steel constructions). It provides that no public or private, natural or corporate person may carry out any whole or partial permanent or temporary constructions works or change the features of a plot or a property without first obtaining a licence from the Governmental BUildings and Housing Department (“Construction Licence”). Other than the lands leased by the Government, the term of a Construction Licence shall be six months from the date of issue. A Construction Licence can be cancelled if the construction works have not commenced within three months of the issue of the Construction Licence or stop for more than three consecutive months. The Order also provides that the Construction Licence will only be issued if the applicant makes certain financial deposits with the Dubai Municipality (to ensure that the work commences and is performed in accordance with the terms of the Construction Licence and that the applicant will indemnify any damages to third parties arising out from the construction works). The amounts and terms of such financial deposits, and the circumstances of forfeiture of such deposits are determined by the Dubai Municipality from time to time. The Order provides for the technical conditions which have to be met as a requirement to obtain the Construction Licence. Some of the requirements shall be fixed by the Dubai Municipality from time to time. Under the Order, in principle the contractor and the engineer are jointly liable for the performance and safety of the construction works during and after the performance of the IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) construction works. Such liability shall extend to the buildings adjacent to the site where such works are carried out and to any public utility in connection with any consequent damages. The Contractor shall also be liable for any defaults committed on the construction sites, whether such defaults are committed by the owner or any third parties, from the date of handover of the site to the contractor until any of the events that may terminate the contractual relationship between the contractor and the owner arise, unless the contractor suspends the work on the site and notifies the Governmental Buildings and Housing Department. The Order provides for the rules in relation to monitoring and inspection of construction works and any penalties to be applied in case of default. Source: Lawrence Graham 1.10.4 Key Projects, Market Trends and Development The prospects for Abu Dhabi are clearly improving and the city is emerging as a key development area in the UAE market. The UAE Government has clearly had a strong hand in shaping the current and future trajectory of Abu Dhabi and remains committed to its expansive development plans, funded by five years of budget surpluses. Short-term prospects for growth in the real estate sector have been affected by diminishing end-user and investor confidence, but the medium to long term outlook appears sound. Dubai too is growing, though its real estate and construction industry is viewed to be more mature than that in Abu Dhabi. Growth in these cities is expected to be driven by population growth and diversification in non-oil revenue generating sectors such as tourism, energy and infrastructure development. Construction projects in the UAE were put on hold in 2008 and 2009 due to the global financial crisis affecting Dubai’s real estate sector, which led to lowered liquidity in the market. At the end of 2009, a total of USD213.9 billion worth of projects were currently in progress, while USD444.0 billion worth of projects were put on hold in the UAE. Selected Major Key Projects Presently Under Development (UAE), 2010 Projects  Commencement Year  Developer  Estimated Project Value (USD billion)  Type of Development  Abu Dhabi International Airport Expansion  ·2005  Abu Dhal:>kAviationl and Etihad Airways  7.0  .Commercial  AI Raha· Beach  2006  Aldar Properties PJSC·  15.0  Mixed use  Yas Island  2007  Aldar Properties PJSC·  39.0  Commercial and residential
IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’dj
In planning .Comlll~’rcial and resiOential Commercial >Infrastructure . Commercial .and resid.ential Commercial commercial Commercial· Commercial
Source: Extracted from the Independent Market Research report prepared by Frost & Suflivan [The rest of this page is intentionally left blank] IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’dj 1.11 ANALYSIS OF QATAR 1.11.1 Industry Size and Growth Trends The construction industry in Qatar has grown at a remarkable pace from 2006 to 2008. Growth in this sector is mainly driven by the increasing population, high per capita GDP and industrial expansion in the crude oil and natural gas sectors. The construction industry recorded a CAGR of 108.9 percent over the period of 2006 to 2008. Official data on the construction industry in 2009 and 2010 has yet to be made publicly available by the Qatar Statistics Authority. Historical growth in the structural works building industry in Qatar has also grown in tandem with the construction industry. The structural works bUilding industry witnessed a growth rate of 146.6 percent in 2007 compared to 2006, as a result of the economic boom experienced by this country. Qatar also experienced this economic growth in the first 3 quarters of 2008, causing the structural works building construction industry to grow by 77.0 percent throughout that year. Qatar’s structural works bUilding industry grew from USDO.2 billion (QRO.6 billion) in 2006 to USDOA billion (QR1A billion) in 2007 and USDO.7 billion (QR2.5 billion) in 2008, at a CAGR of 108.9 percent between 2006 and 2008. Size of the Construction Industry and Structural Works Building Industry Based on GDP (Qatar), 2006 -2008 35,000 -r————————~  30,000 –­——-­- 25,000 – c  .2  20,000  :E  I:t:  15,000  o  10,000  2006 2007 2008  _ Construction Industry _ structural Works
IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cant’e/)
* The structurai works building industry size is derived from the GOP of the construction industry and cost contribution from structural works in residential, commercial and industrial construction projects from 2006 to 2008
* Data on the construction and structural works building industry for Qatar in 2009 and 2010 was not

publicly available at the time of publication of this report Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan 1.11.2 Industry Outlook Frost & Sullivan estimates that the structural works building industry in Qatar will grow from USDO.9 billion (QR3.2 billion) in 2009 to USD3.2 billion (QR11.5 billion) in 2013 at a CAGR of 37.7 percent. At the end of 2008 and throughout 2009, Qatar was impacted by the global economic crisis, causing the country to experience a lower economic growth rate of 9.0 in 2009, compared to the 15.8 percent in 2008. The construction industry also experienced a contraction of 23.1 percent in 2009 compared to 2008. This affected the structural works bUilding industry, which experienced a slower growth rate of 30.0 percent in 2009 compared to the 77.0 percent growth rate in 2008. However the prospects for 2010 to 2013 appear positive in light of the efforts taken by the Central Government to drive demand in the construction sector and other key end user segments. It is noted that the Government has plans to invest over USD60.0 billion to develop oil and gas related ventures and its supporting infrastructure, as Qatar strives to become the leading liquefied natural gas provider (LNG) globally. The country is also placing importance on the energy sector and its related supporting infrastructure due to the electricity shortages experienced in the country. It is noted that the Government plays an important role in the industry and has taken concrete steps to diversify its economy from being dependent on the oil and gas sector. As the Government begins to adopt more open business policies, the demand for commercial property, hotels and other business related infrastructure is expected to increase. The structural works building industry is expected to rebound in 2011 as FIFA has announced its decision to appoint Qatar as the host country for the 2021 FIFA Confederations Cup and 2022 FIFA World Cup tournaments. In FIFA’s Bid Evaluation Report of Qatar as a host city for the FIFA World Cup, FIFA outlined Qatar’s plans to construct 9 new stadiums and carry IMR on the Structural Steel Building Industry in the UAE and Qatar 14,000  .—–­ ———­ ……………-.­ -­ – — – -.  –.. ­- -.-..—–­ 50%  12,000  _ –.. —–­——­ -.-…­ —–..  -45% 40%  10,000  . 35%  c g 8,000.­:! ~. 6,000 r————-·-..·—–·c .—­ 30% -­25% ‘20%  4,000 r————————–1.’.­-.–.——–­~oo:tI:= :­ 1’5% 10′<1·’0 -5% 0%
7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) out major renovations on an additional 3 stadiums, namely the Khalifa International Stadium, EI-Gharafa Stadium and AI-Rayyan Stadium, between 2012 and 2020. The design phase for these stadiums is expected to commence in 2011. The total construction and renovation cost for these stadiums is expected to be approximately USD3.0 billion. In its bid to FIFA, Qatar has indicated that all of these stadiums will be connected to the city centers via public transportation links, including rail and road. In catering to the anticipated high influx of tourists during the tournament, a total of 140 new properties are expected to be built by 2020, including the AI-Wakrah cruise ship project with 6,000 rooms. While the FIFA bid report details an expenditure budget of USD900.2 million for both tournaments, the Qatar First National Investment Bank announced in March 2011 that it projects the investment in accommodations and infrastructure to be worth USD12.4 billion and USD44 billion respectively over the period of 2011 and 2020. Forecast Size of the Structural Works Building Industry (Qatar), 2009E -2013F 2009E 2010E 2011F 2012F 2013F Year  Industry Size (QR million)  Growth Rate (%)  2009E  3,184  30.0  2610E  4,128  29.6  201’IF  5,645  36.8  2012F  7,856  39.2  2013F  11,459  45.9
CAGR 2009E -2013F = 37.7% E = estimate F = forecast Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cant’e/) 1.11.3 Relevant Laws and Regulations Qatari Civil Code No. 22 of 2004 (the “Qatari Civil Code”) Under Articles 711 to 715 of the Qatari Civil Code, contractors and design consultants in Qatar are liable, without fault, for the cost of rectifying structural defects that appear in a building or structure within 15 years of handover. This is known as “decennial liability” which is a strict liability. For contractual claims other than claims for decennial liability (for example for negligent design or defective workmanship), liability continues for a period of 15 years from the due date for fulfilment of the obligation (i.e. usually in the context of a construction
contract, completion of the works or the end of the defects liability period, depending on the nature of the claim). The key points to note about decennial liability in Qatar are as follows:
• Trigger events are total or partial collapse of a bUilding and/or a defect threatening the stability or safety of a structure;
• Liability lasts for 10 years following handover;
• No fault is necessary in order for liability to arise;
• Contractors and consultants are jointly liable;
• Compensation is payable to the client;
• Liability attaches notwithstanding that the collapse or defect is caused by sub-surface conditions or that the client approved the defective work;
• Claims for compensation must be commenced within 3 years from the collapse or discovery of a defect;
• Agreements purporting to exclude decennial liability are void;
• Buildings or structures, the life cycle of which is less than 10 years, attract liability for the duration of that life cycle; and
• Contractors/consultants are unable to pass the risk of decennial liability down to their sub-contractors/sub-consultants.

For contractual claims other than claims for decennial liability (for example for negligent design or defective workmanship) liability continues for a period of 15 years from the due date for fulfilment of the obligation (i.e. usually in the context of a construction contract, completion of the works or the end of the defects liability period, depending on the nature of the claim). Source: Lawrence Graham 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) 1.11.4 Key Projects, Market Trends and Development The Government of Qatar is creating a long term vision for its nation, with strong fundamentals of economic, social and physical growth. The core of this vision is in creating sustainable societies for both the local and expatriate population, based on elements of heritage, culture, innovation, favourable economic prospects and quality of life. Proceeds from the reinvestment of the nation’s crude oil and gas revenues, past economic achievement and strong leadership will enable this vision to become a reality. The real estate sector is an important sector which will play role in achieving this vision. Selected Major Key Projects Presently Under Development (Qatar), 2010

7. EXECU1″IVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) 2.6 Commerciaf
~esidentlal, commercial and .. industrial 3.0  Commercial  3.0  Infrastructure .  1.5  Commercial  ·qi::ltar N(;ltipnal. B~hk Heagquarters .Bl.Iildlng ..  2010  0.3  Commercial
Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan 1.12 BRIEF OVERVIEW OF MALAYSIA While the last quarter of year 2008 and throughout 2009 was challenging for the construction industry in the face of the major economic crisis, the local market in Malaysia remained stable. Growth in the domestic economy for 2009 was mainly spurred by the manufacturing and construction sector, which grew by 11.4 percent and 5.2 percent respectively in 2010 as compared to 2009. This is the second highest recorded growth rate to date for the construction industry since 1997. Although the market witnessed an overall decline in revenue stream, the demand for new commercial and industrial buildings remained sturdy. In addition, the new construction plans of institutional buildings such as schools and hospitals, which are consistent with the Government’s commitment in its education and healthcare policies, have strongly sustained the market. The 5.2 percent growth in the construction sector in 2010 was mainly driven by external demand from regional countries and the private sector activity. Bank Negara Malaysia continues to favorably view the performance of the construction sector, as it continues to benefit from the implementation of the remaining projects under the 9th Malaysia Plan (9MP), the 10th Malaysia Plan (10MP) and the Economic Transformation Programme (ETP). 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) Size of the Construction Industry Based on GDP (Malaysia), 2006 -2010 20,000 ..,.————————,
~ sa ~ 2006
CAGR 2006 -2010 =8.4% Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan The structural steel industry in Malaysia is centered mainly on the country’s construction and infrastructure needs. Nonetheless, the construction and infrastructure sector in Malaysia is largely driven by the use of reinforced concrete and is gradually becoming accustomed to structural steel. This augurs well for companies in the structural steel business. 1.12.1 Industry Growth Trends and Outlook Socio-economic Growth In Malaysia, the construction of non-residential and residential buildings constituted between 40.0 to 55.0 percent of the total construction market between 2006 and 2010. The revenues for the building construction industry reached approximately RM24.0 billion in 2008 and RM22.0 billion in 2009. Revenues for the building construction industry are expected to hit the RM30.0 billion mark by 2015. Non-residential construction accounted for between 55.0 to 60.0 percent of the bUilding construction market in terms of revenue and number of projects in 2008 and 2010, and residential building construction for the remaining portion of the market. The growth of the non-residential building construction appeared to traverse better than the residential bUilding segment during economic downtime. The revenue growth of non-residential building construction is expected to be higher than residential building construction by an estimated 3.0 to 5.0 percent annually between 2010 and 2015. Additionally, the growth trend of the former segment in the recent years of economic volatitity suggests that it performs better than the residential building segment. 7. EXECU1″IVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) The Government expects the construction sector to experience an annual growth of 3.7 percent during the 10MP (2011-2015), and contribute to 2.9 percent of the nation’s economy in 2015. Development expenditure by the Government of Malaysia is expected to be approximately RM259.5 billion during this period. The Government has also expressed interest in attracting participation from the private sector and investors to engage in public projects such as the construction and management of schools, hospitals and other community infrastructure. This bodes well for the structural steel building industry as it will provide more opportunities for the selection of structural steel as the material of choice in building construction. Demand from key end-user industries The construction sector in Malaysia is also driven by the demand from various key end-user industries such as manufacturing, real estate and tourism. Malaysia’s manufacturing sector is moving from one that is semi-skilled and low cost to a high technology and modern services sector. In accomplishing this, the Government is building the R&D capabilities of the country, its human resource development and also infrastructure development in the targeted growth areas of renewable energy, information and communication technologies (ICT), biotechnology, medical devices, and machinery and equipment. As Malaysia strives to fulfil this goal, the construction industry is expected to gain from the demand for additional infrastructure, industrial and commercial buildings. The real estate sector in Malaysia has also been relatively shielded from the sub-prime crisis and growth in this sector has been relatively stable over the years. Presently the Government is keen on attracting more foreign investment, particularly from the United Kingdom, Singapore and India. The Government’s move to deregulate foreign ownership of property is seen as a positive step in this direction. The commercial real estate segment is expected to grow, creating subsequent demand for the construction sector, as local and foreign companies expand their existing office locations, relocate to Malaysia, or open new ventures here. The residential real estate sector, and particularly the high end residential property segment, has witnessed growth of late due to the relocation of many foreign companies to Malaysia. The construction sector is expected to remain buoyant and thrive as a result of the demand from the real estate sector. The future of Malaysia’s building construction will see greater deployment of industrialized building systems (IBS) as it is heavily encouraged by the Construction Industry Development Board (CIDB) through the launch of the IBS Roadmap. Building components are manufactured off-site and then coupled or assembled together on-site or off-site with minimum installation work. Suppliers of precast concrete framing, panel and box systems, steel framework systems, prefabricated timber framing systems, steel framing systems and block work systems are likely to benefit from CIDB’s endorsement of IBS. IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Conf’d) Malaysia has a rapidly growing tourism industry, with revenues of RM56.5 billion in 2010. The tourism sector generated RM36.9 billion in gross national income (GNI) in 2009, and the Government further intends to develop this sector to contribute RM103.6 billion by 2020. The ETP has identified 12 entry point projects (EPPs) to stimulate tourism growth including investment in eco-tourism, new construction and refurbishment of hotels, resorts, shopping areas, holiday camps and recreational projects. To further boost the growth of the country’s healthcare tourism industry, the Government recently announced the provision of tax exemptions equivalent to 100.0 percent of the qualifying capital expenditure incurred for the first 5 years in the construction of new hospitals, or expansion, modernization, or refurbishment of existing healthcare centres. The tax exemption application period is between 2010 and 2014. Under the 1OMP, the Government is also giving due consideration to infrastructure development for the economic corridors, namely the Northern Corridor Economic Region, East Coast Economic Region, Iskandar Development Region, Sarawak Corridor Renewable Energy, Sabah Development Corridor and the greater Klang Valley region. To this end, several plans have been identified, including broadband, electricity and water supply expansions and highway development. The construction sector is set to benefit from the high impact projects under the 10MP, which are collectively worth approximately RM60 billion. Among the high impact projects are the development of an integrated urban mass rapid transit (IVIRT) system in Klang Valley, the construction of the high speed rail system which will connect Klang Valley to Singapore, and the development of commercial centers and public housing. The Government also has announced its intention to create a Green Technology Financing Scheme (GTFS) with RM1.5 billion in funds to promote investments in green technology, construction and innovation. The 10MP also outlines the Government’s initiatives to im prove the generation capacity and transmission of electricity. The Government has further announced specific initiatives to increase electricity generation capacity in Malaysia. This includes: • The commissioning of the Ulu Jelai and Hulu Terengganu hydroelectric plants with a combined capacity of 622 megawatts (MW) during the Plan period
• The commissioning of 2 gas fired power plants and 1 coal fired power plant in Sabah with a combined capacity of 700 MW
• The commissioning in stages of the Bakun Hydroelectric Project in Sarawak with a

capacity of 2.000 MW In addition, the Government has also approved a project to increase the capacity of TNB Janamanjung by 1,000 MW, which is estimated to cost between RM6.0 billion and RM7.0 billion. The construction of this project is expected to begin in the latter half of 2011 and be completed by end 2014. The Government has also opened bidding for a second 1,000 MW coal power plant extension project, in which the two contenders are MMC Corporation 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) Berhad (Tanjung Bin Plant) and Jimah Energy Ventures (Jimah Plant). This plant is expected to be operational in the first quarter of 2016. 1.12.2 Profile of Major Projects In the 9MP, the expenditure on development was increased from RM200.0 billion to RM230.0 billion. During the 10MP, the Government committed to an allocation of RM259.5 billion on development expenditure for the period of 2011 to 2015. This additional sum will be channeled to financing priority projects such as the construction of rural roads and low cost housing. The Government has also allocated an estimated RM35.0 billion for infrastructure projects, including the extension of the mass rapid transit system in the Klang Valley. The structural steel building industry too will benefit from these incentives and financial support from the Central Government, especially across landmark commercial and infrastructure projects. Structural steel is increasingly becoming the preferred choice in the construction and infrastructure sector. This is driven by the advantages of structural steel over reinforced concrete. The following are some of the factors driving the gradual adoption of structural steel in the construction and infrastructure sector in Malaysia: • Structural steel is steel fabricated into shapes and sizes in accordance with the requirements of the architects and building design. As steel is manufactured in a controlled factory environment, its quality can be guaranteed.
• Structural steel is a cleaner form of construction material compared to concrete.
• Technological advancement in design programs has enabled engineers to detail and design 3-dimensional (3-D) simulation steel structure models. This enables engineers to conduct proper strength and wind tests. Structural steel erectors can also benefit as they are able to envision the structure that they are building and strategise erection plans systematically.

Selected Major Current and Planned Construction Projects (Malaysia), 2010 Projects  Commencement Year  Developer  Estimated Project Value (RM billion)  Type of Development  Putrajaya 3C5, 3C6 and 3C7 Project  2008  Putrajaya Holdings SdnBhd  0.8  Commercial  Penang Second Bridge  2008  JambatanKedua Sdn Bhd  4.3  Infrastructure  Low Cost Carrier Terminal Expansion  2008  Malaysia Airports Holdings Berhad  2.0  Commercial
IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) ‘;¢UiPagi:Gas FiekhT~lvk Rarnurtia·· ··lhtE;l9tated ….. .. ··’-ra.nsportation ..’,,~rn’lin~f;. .••. . ·~an:~:~rTasik· . ;·$eli:\tah. 2009Malaysi~ Airports Holdings Berhad  .the Waves  2010  ECB  (WarehQuse  r:KT U:>gistics  (M}§dn@MI  TI\IB  .  Alstom Power  ;·d9I1ClrnarJjuD91000 MWCoal  .’  System SA Consortium  Fired Power  .  •(EPCe)  ;; ~Iaht ProjeCf
0.07 Industrial Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan 1.12.3 Competitive Overview There are many players in the construction industry in Malaysia, offering various types of products and services. However, there is a much smaller percentage of players in the domestic market capable of offering integrated structural steel building solutions for commercial, residential and industrial projects. This industry comprises of selected dominant players competing on high end and high priced products and services. Most other players in the market dominate specific segments of the structural steel value chain. Key players in the structural steel building industry in Malaysia are: • Eversendai Corporation Berhad (ECB)
• Kencana Torsco Sdn Bhd (Kencana Torsco)
• Nam Fatt Corporation Berhad (Nam Fatt)
• STAMsteel Sdn Bhd (STAMsteel)
• Victor Buyck Steel Construction Sdn Bhd (Victor Buyck)

IMR on the Structural Steel Building Industry in the UAE and Qatar
7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) 1.13 BRIEF OVERVIEW OF INDIA The construction industry in India is one of the pillars of its economy and acts as a key channel for a substantial part of the nation’s development investment. The industry is highly fragmented with a large number of unorganized players in the industry, which work on a subcontracting basis. Some complex infrastructure and industrial projects call for specific expertise, in which a single contractor may be inept to execute. As a result, the industry is witnessing rising joint ventures which help contractors to share professional and technological expertise. As the construction activity is very labour intensive, construction companies have been focusing on mechanization in recent years. Over the past 4 years, the construction sector as a percentage of India’s GDP has increased from 8.0 percent in 2006 to 8.4 percent in 2010. The multiplier factor between growth rates of construction and GDP has been approximately 1.5 times. The construction industry is expected to witness an effective investment of over USD224.0 billion (Rs.10 trillion) during the 11 th Five Year Plan (2007 -2012). Size of the Construction Industry Based on GOP (India), 2006 -2010 4,500;000 1—‘–‘ 4,000,000 3 500 000 L . ,.§ 3,000,000 .~ 2,500.000 t2. 2.000,000 1,500,000 1,000,000 I o ., 2006 2007 2008 2009 2010 CAGR 2006 -2010 = 20.2% Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan Construction accounts for apprOXimately 50.0 percent of India’s capital expenditure on projects in various sectors such as highways, roads, railways, energy, airports and irrigation among others. As India is one of the fastest growing economies of the world and one of Asia’s most favored destinations for infrastructure investment opportunities, the Central Government has permitted FDI of up to 100.0 percent for the construction industry. This is to support the development of integrated townships and. projects such as biotechnology and information technology (IT) parks. Due to this, there was an influx of international consultants IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) and contractors with proven track record and expertise into India, and this trend is expected to continue due to the increasing infrastructure requirements particularly in the power utilities sector, expansion of existing airports and construction of new airports. The industry is in place for growth due to its industrialization, urbanization, economic development and increasing expectations for better living standards. Domestic demand forms three quarters of this economy, with the growing middle income society creating a strong demand for basic goods and services. The India Foreign Trade Policy 2009-2014, which was launched in November 2009, expects an annual growth of approximately 25.0 percent in India’s construction industry from 2009 to 2014. The provisioning of infrastructure has made a promising start in the structural steel sector. Large projects for urban infrastructure, metro, housing and others are likely to attract massive investments both from the public and private sector, calling for high level of building expertise, adoption of state-of-the-art equipment, utilisation of large quantity of materials and resources, coupled with sophisticated management tools and project management skills from the construction industry. Therefore, the construction and infrastructure sector development poses a robust drive in the structural steel sector. This is also supported by a healthy economic growth. As India has strong public sector investments in infrastructure, this encourages private investments that are capable of boosting the overall economy. 1.13.1 Industry Growth Trends and Outlook The increase in the share of the construction sector in GDP from 2002 to date has primarily been on the account of increased Government spending on physical infrastructure in the last few years, with programmes such as the National Highway Development Programme (NHDP) and Pradhan Mantri Gram Sadak Yojana (PMGSY) -Bharat Nirman Programme receiving a major boost of late. The construction industry is experiencing a great upsurge in the quantum of work load, and has grown at the rate of over 10.0 percent annually during the last 5 years. During India’s 10th Five Year Plan (2002 -2007), many milestones were achieved by the Indian construction industry in the areas of institutional finance, human resource development, dispute resolution, procurement procedures, safety and quality in the construction industry, and disaster mitigation initiatives. The construction industry was accorded Industrial Concern Status under the Industrial Development Bank of India (Amendment) Act, thereby prOViding the much-needed impetus in terms of availability of finance to the construction industry. The rapid growth of India’s economy has placed a heavy demand on electric power. Reforms in this sector, to increase efficiency and competitiveness, have been under way for several years. While there has been some progress, the shortage of power and its lack of access continue to be a major constraint on the economic growth. IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) The projected gross electricity requirement by the end of year 2012 is 1,038 billion units (BU) and peak demand is estimated at 151,000 MW. In order to fulfil the estimated electricity demand requirement, the 11 th Five Year Plan recommends a capacity addition programme of 78,577 MW from 2007 till 2012. The proposed capacity addition is three and a half times of that achieved in the Tenth Plan. India’s Ministry of Power expects to spend approximately USD231.0 billion (Rs.1 ,031 ,600 crore) for this initiative during the implementation of the 11 th Five Year Plan. Additional Power Capacity Requirements (India), 2007 -2012
MW: megawatt Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan The Government has since revised its initial target from 78,577 MW to 62,000 MW during the 11 th Five Year Plan duration, which ends in March 2012. The Ministry of Power has announced the nation’s need for an investment of USD300.0 billion in the electricity sector and welcomed foreign participation in growing the sector. While India has the fifth largest electricity generation capacity globally with more than 164,000 MW and the third largest transmission and distribution network globally, the nation still experiences shortages in meeting demand from the growing manufacturing and residential consumers. In line with the above plan, there will be a flood of projects to support the power utilities sector in India with the Government of India potentially awarding projects to international consultants. During the Union Budget 2010 -2011, India’s Finance Minister announced several initiatives, aimed at further growing the power sector in India. These initiatives include: • Increasing the plan allocation for the power sector, excluding the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) project, from USD501.3 million in the period of 2009 -2010 to USD1.2 billion in 2010 -2011 .
• The establishment of a Coal Regulatory Authority to create a level playing field in the coal sector.

7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’dj • A 61.0 percent increase from USD139.4 million (2009 -2010) to USD224.8 million (2010 -2011) for the Ministry of New and Renewable Energy.
• To erect several solar, small hydro and micro power projects worth USD112.4 million in the Ladakh region of Jammu and Kashmir.

This provides international companies like ECB, which hold a proven track record and expertise in the structural steel industry with opportunities to further penetrate the power plant construction industry in the country. As the Group plans to gain a stronger foothold of the Indian structural steel industry, the power utilities sector will provide growth prospects for the Grou~. The nation’s economy registered a growth rate of 9.7 percent in 2010 after the brief economy slowdown in 2009. The construction industry, as an integral part of India’s economy and a channel for a sizeable part of its development investment, is poised for growth as a result of industrialization, urbanization, economic development and rising expectations for improved quality of living. There are booming opportunities for the construction and expansion of airports, special economic zones, urban infrastructure and power utilities that include a substantial amount of structural steel work. 1.13.2 Profile of Major Projects India is presently experiencing rapid growth in the construction sector as a result of the Central Government’s initiative in driving developmental projects across the country. The 11 th Five Year Plan saw an allocation of over USD224.0 billion for the construction sector, enabling the Government to carry out various large scale infrastructure projects across the nation. Selected Major Current and Planned Construction Projects (India), 2010 Projects Monorai~System Project Navi Mumbai International Airport (NMIA) Commencement Year
2008
2008
Developer  Estimated Project Value (USD billion)  Type of Development  Mumbai Metropolitan Region Development Authority  ,  0.4  Infrastructure  City and Industrial Development of MaharashtraLtd  2.3  Commercial
IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d)
Ratnagirj· . $Upercritis~I . TherlllaIPQWEJr;·:···· Project Gdjarat PoWer ProjeGts Bangalore AirpCli’t Expansion .. .2010India Tower .. Bangalor$ Metro· .. Infrastructure RailProject Bangalorel\1etro 2010 RailCorporation . Ltd .. …. Rainbow Vistas·· 2010 Ashoka Residential and Developers & commercial Builders Ltd and Cybercity Builders & Developers
Kolkata· 2010 … Infrastnictdre ~erotrop()lis .. JaypeeNldgrr{ . 2010 Larsen & Toubro Super Thermal Limited and Power Station Mitsl.Jbishi Heavy Industry EMCO Thermal 2010 GMR Group 0.6 Industrial Power Project Maharastra Tuticorin Thermal 2010 Bharat Heavy 1.0 Industrial Power Station EJectricals Lim ited Vallur Thermal 2010 Bharat Heavy 0.5 Industrial Power Station Electricals. Limited Thermal Power 2010 GMR Group 0.3 Industrial Plant, Chattisgarh Imperial Tower 2010 Shapoorji Pallonji 1.6 Commercial & Co Ltd Chennai Power 2011 Bharat Heavy 1.3 Industrial 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) Krishnapatirlam’ ….. Ultr,t3rv1eg<:lPbw~r Project· ..  Koradi·Therrnal Power Project  Super CritiCal· ‘ Coal FiredPower .. Project  2011  Thermal Power Project, Gummudipoondi  .Hazira Thermal Power Project  2011 .  TrumpTower  2011  Chhatrapati . Shivaji International Airport  2014
Larsen & l”()’8t>t6(: …. Limited  AnsaldoColdt3ie . Boiler IhdiaPrivate Limited” … Industl”ial  AccQrd Energy: . Corporation Private Limited  Industrial  Mumbai International Airport Pvt,Ltd’ and Larson8t … Toubro Limited:·
Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan 1.13.3 Competitive Overview The construction industry is highly fragmented and labour intensive. It is noted that the larger portion of the local players in the market operate on a subcontracting business model. While there are many players offering their services at various levels of the structural steel building value chain, very feW players have the ability to provide end-to-end solutions. Hence, this has proven to be an opportunity for foreign companies such as ECB to leverage on as they are penetrating the structural steel building industry in India. Key players in the structural steel building industry in India are: • Eversendai Corporation Berhad (ECB)
• JSW Severfield Structures Limited (JSW Severfield)
• Larsen & Toubro Limited (L&T)
• William Hare (India) Private Limited (William Hare)

IMR on the Structural Steel Building Industry in the UAE and Qatar
7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) 1.14 BRIEF OVERVIEW OF OMAN The construction industry in Oman, as in most of the GCC countries, remains robust despite the adverse economic conditions of late 2008 and 2009. This is driven by major expansions in infrastructure projects along with the construction of private and commercial buildings. In 2008, the construction sector contributed US02.9 billion to the country’s GOP. According to the Ministry of National Economy, Oman’s GOP in quarter 3, 2009 increased by 17.3 percent compared to its previous quarter. This was due to the growth in the added value for oil activities, which led to better production levels, and the improved global oil prices in quarter 3 of 2009. In 2010, Oman’s economy grew by 3.2 percent year on year attributed to higher crude oil prices and public spending. The IMF anticipates a growth rate of 5.0 percent for this nation in 2011 on account of favourable oil prices, improving external environment and strong public investment program under the 8th Five Year Plan. Oman has been experiencing a construction boom in recent years, which has been fuelled by demand and strong government and private sector investments. Size of the Construction Industry Based on GDP (Oman), 2006 -2009
1,000 800 600 400 20\1 o 2006 2007 2008 2009
CAGR 2006 -2009 = 27.7% * Data on the construction industry for Oman in 2010 was not publicly available at the time ofpublication of this report Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan The Government of Oman had allocated approximately US05.0 billion (R01.9 billion) towards investment expenditure in 2009. From this amount, the construction sector has IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) received the bulk of the additional appropriations to an extent of USD2.7 billion (R01.1 billion), which includes the construction, dualisation and rehabilitation of roads and bridges in the region. The Government of Oman has taken steps to preserve its economy by reducing the country’s dependency on oil, and investing in various industries such as LNG, minerals, manufacturing, tourism, ports and free trade zones, education, information technology, and agriculture and fisheries. The Central Government has also taken steps to encourage the inflow of foreign investments. Several large scale development and diversification projects have been launched by the Government in recent years, leading to a growth in the construction sector. The country’s real estate sector has been spurred by the increasing surplus available from the high crude oil prices since 2008. 1.14.1 Industry Growth Trends and Outlook Oman is currently committed to modernizing the country and diversifying its economy, as well as continuing its effort to maintain political stability. The Government of Oman is actively encouraging foreign direct investment into the country as part of its effort to promote industrial development and increased employment opportunities for Omani nationals in various sectors including construction. Oman is currently focusing on six industries in the private sector which include transport, storage and communications sector, finance, insurance and real estate and industrial. There are many factors leading to the current rapid growth of the construction industry in Oman. This includes large investments by the Government of Oman in infrastructure, low interest rates, high liquidity, population growth, expansion in the economy and rising wages. Another favourable factor leading to the growth of the construction industry in Oman includes the change made in the laws dealing with the ownership of property by foreigners. As per the new law, freehold designated property in the designated tourism resorts can be purchased by non-Omanis for residential or investment purpose. The drop in the prices of commodities used in construction has lured developers to step up their presence in the affordable housing sector. The outlook for the construction industry in Oman is positive as the Government has announced its intention to spend USD78.0 billion in the nation’s Eight Development Plan (2011 -2015) to develop the oil and gas, infrastructure, construction, medical and education sectors. 1.14.2 Profile of Major Projects There has been rapid expansion in Oman’s building construction sector over the past few years as several large-scale development and diversification projects have been planned IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) involving huge spending by the Central Government. This has resulted in continued expansion in the infrastructure, transportation and other sectors such as hotels and leisure facilities so that the building construction sector grows at the same pace as the tourism sector. Oman’s goals have been set under its long-term development plans. By 2020 the Government aims to derive 3.0 percent of its GDP from the tourism sector and fill approximately 80.0 percent of tourism jobs with Omani citizens. In order to increase revenues and limit the effects of mass tourism on traditional culture, the Sultanate is targeting the luxury tourism segment. Golf courses, high-end marinas, and an international-standard stadium for concerts and sports games are either in the works or already built. Integrated tourism complexes (lTCs), a combination of holiday villas, hotels, resorts and shopping centres, are some of the larger projects under way in the Sultanate today and are expected to become the Iynchpins in future development. However, unlike other major tourism players in the region such as Dubai, Oman has opted for a more subtle style of development to avoid over-building. At the same time, it is seeking to increase capacity to meet its stated goals, with hotel additions and airline expansions under way to meet expected demand. Selected Major Current and Planned Construction Projects (Oman), 2010
0.3 Commercial 0.1 Commercial 1.6 Mixed use nfa Commercial IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) CardiacCentfe; Commercial SultanQaboos Hospital SalalahlW\lVP: SemCorpUtilities 1.0 Industrial &toj~ct Pte Ltd, Oman Investment Corporation and Teejan General Trading Company LLC n/a: not available Source: Extracted from the Independent Market Research report prepared by Frost & SuI/ivan 1.14.3 Competitive Overview There are few players in the structural steel construction industry in Oman. To date, there are no players in the market that are able to provide fully integrated solutions for the structural steel industry. The industry in Oman comprises of selected players which provide limited services within the structural steel value chain e.g. only structural steel fabrication or erection of structural steel buildings. There are significant gaps in the structural steel value chain in Oman, which actually provides opportunities for new players to penetrate the market. ECB for instance, is a player in this space and an integrated structural steel turnkey contractor. Opportunities are abundant in the structural steel industry for such players. Key players in the structural steel building industry in Oman are: • Amana Group
• Eversendai Corporation Berhad (ECB)
• Gulf Structural Steel (GSS).

1.15 BRIEF OVERVIEW OF SAUDI ARABIA Saudi Arabia is the largest Arab economy and country in the lVIiddle East. The country’s economy is largely dependent on crude oil and the Central Government takes an active role in most economic activities. The construction sector is the third largest sector of the Saudi economy after oil, and ICT, and has experienced rapid growth in recent years. Saudi Arabia IMR on the Structural Steel BUilding Industry in the UAE and Qatar 7. EXECU1″IVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) currently accounts for more than 50.0 percent of the total construction market in the GCC. The entry of large real estate developers from the UAE like Emaar Properties PJSC and Deyaar Development Company into Saudi Arabia post-2006 has contributed to the growth of the Saudi real estate and construction sector. One of the crucial factors driving the building and construction industry is the growing population with increased per capita income. Saudi Arabia has a very young demographic profile with people aged below 20 years constituting almost 50.0 percent of its total population. This is driving the demand for affordable housing and at the same time touting the industry to record exceptional growth in the coming years. The Government has planned to invest USD400.0 billion on projects over the next 5 years, and will rely on public-private partnerships, in addition to public spending to finance these developments. Other factors driving the industry include the spillover revenues from the oil sector, steady growth in religious tourism, and the impending implementation of the new mortgage laws in addition to the upcoming Economic City developments in the country. Size of the Construction Industry Based onGDP (Saudi Arabia), 2006 -2009 61.000 60,000 59,000
c 58,000 o ._ 57,000 ::!a.: 56,000 o 55,000 54,000 53,000 52,000
51.000 2006
CAGR 2006 -2009 = 3.4% * Data on the construction industry for Saudi Arabia in 2010 was not publicly available at the time of publication of this report Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan The development in Saudi Arabia has been funded by revenues from the country’s oil and gas sector. The Government of Saudi Arabia has taken steps to plan the development of the country into knowledge clusters and industrial parks. These efforts are in the aim of making Saudi Arabia one of the 10 most competitive economies in the world, and the Government IMR on the Structural Steel BUilding Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) views purpose built sites for large scale industry developments as the most efficient way of leveraging on its competitive advantage in achieving this goal. The construction industry in Saudi Arabia is expected to grow, partly in line with the growing demand for residential, commercial, industrial and infrastructure construction. The construction sector will also playa main part in nation’s development, through the National Industrial Cluster Development Program and the construction of the six Economic Cities. The Government will continue to be a major stakeholder in the construction industry, generating a large portion of the demand. 1.15.1 Industry Growth Trends and Outlook In February 2009, the Government of Saudi Arabia announced its intention to pump USD400.0 billion into the economy over the next 5 years, executing infrastructure projects which will rely on public-private partnerships in addition to public spending, to finance these developments which require a substantial quantity of structural steel related works. The Government’s intervention to spur domestic spending is viewed favorably as it acts as a catalyst to boost private spending. The rapid growth rate of Saudi Arabia’s major cities is also an important factor driving the construction industry, and particularly the structural steel sector. The creation of new airports, highways and even new cities has attracted construction professionals from all over the world. Saudi Arabian General Investment Authority is carrying out development strategy involving billions of dollars in expenditure, to build greenfield economic cities around the country. The 5 main areas for construction in Saudi Arabia are Jeddah, Riyadh, AI-Khobar, Yanbu and Hail. Among the major growth drivers for the construction industry is the scale of development. The real estate sector has been predicted as one of the major factors driving the regional economic growth within Saudi Arabia. The real estate projects announced in Saudi Arabia like the six economic cities are mammoth and unprecedented in terms of size and cost involved. Four among these six economic cities will require an area of around 500.0 square kilometers for development. According to the activities scheduled in the 8th Development Plan, real estate activity is expected to register a CAGR growth of 5.8 percent during the period of 2004 to 2009, increasing the share of real estate in real Saudi Arabia’s GOP from 6.8 percent in 2004 to 7.2 percent in 2009. In March 2011, the country’s ruler King Abdullah Bin Abdul Aziz announced a USD93.0 billion social handout on top of the USD37.0 billion announced in the previous month, to create new jobs, increase wages and construct houses for the needy population in the country. This new package, distributed in a bid to stave anti-government protests in the country, is the largest direct financial support to be given to the population of the country and is expected to increase the domestic circulation of money. Growth in the construction industry over the IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d) period of 2009 to 2013 is expected to be strongly driven by the Government driven infrastructure projects which are expected to be carried out between 2009 and 2013. 1.15.2 Profile of Major Projects The construction industry in Saudi Arabia was previously driven by the Government. However, the Government is now looking into attracting participation from the private sector. The 2009 Budget allocated USD127.0 billion in continued investments in sustainable and balanced economic development projects. This capital budget is a 36.0 percent increase from the previous 2008 Budget, with 7.0 percent allocated to infrastructure development. Selected Major Current and Planned Construction Projects (Saudi Arabia), 2010 Estimated . Commencement . Type ofProjects y Developer Project Value D I t ear (USD billion) eve opmen KhigAbdlltlah …’ 2006 ResidentialEmaarProperties•…. . … Economic City· I PJSC (KAEC) I;’ . Jaian’ . MMC Corporation ….. 27.02006 Residential Economic City . Berhad and Saudi … BinladenGroup …. I …;..’ .King Abdulaziz . 2007. General Authority of ……•……. ~. ‘. ~; ….,;;”
.’ . CommerCial . . Civil Aviation …:.’;” .••..’ ,·1nternational Air’port'(KAIA) .. ‘.. ;’,.:… . 2008.Landbridge . SaudI RailWay’ Organisf.3tion(SR¢I) ·1····Pr(:jject’ . Lanlar Towers, 2008 .Cayarlrnve.stment’ .’.;

J.eddah Knowledge Economic City  2009  and t)evel()p’lT\erit Knowledge’ Economic City Developers  . 8.0  .’  .  ..  …….•… :.:……. . .. COlT\lT\ercial  Haramain High Speed Rail Project  2009  Saudi Railway Organisation  4;0  Infrastructure  Capital Market Authority (CMA) Headquarters Tower, King Abdullah Financial District  2010  Central Market Authority  3.7  –C Commercial  Shams AI­Riyadh Development  2010  Dar AI-Arkan Real Estate Development Co  Residential  Mile Tower, Jeddah  2010  Kingdom Holding Co  15.0  Mixed use
IMR on the Structural Steel Building Industry in the UAE and Qatar 7. EXECUTIVE SUMMARY OF THE INDEPENDENT MARKET RESEARCH REPORT (Cont’d)
Source: Extracted from the Independent Market Research report prepared by Frost & Sullivan 1.15.3 Competitive Overview As Saudi Arabia is now a favourable place for long term investment, contractors previously working in Abu Dhabi, Dubai and Qatar are now penetrating this country and establishing facilities here. These are mostly in fabrication and contracting and there is a noticeable rise of many pre-cast plants and steel fabrication operations. Hence the structural steel industry in Saudi Arabia offers opportunities for new entrants to the market. ECB, as an integrated structural steel turnkey contractor will fit well in the value chain of this market and can also export fabricated steel by road from the factories in Qatar, Dubai and Sharjah. Key players in the structural steel building industry in Saudi Arabia are: • HIDADA
• Zamil Steel Industries (Zamil Steel)

IMR on the Structural Steel Building Industry in the UAE and Qatar

 

 

 

 

Comments are closed