Arabtec Construction LLC, once a towering name in the Middle
East’s construction sector, has played a pivotal role in shaping skylines with
landmark projects such as the Burj Khalifa and Dubai International
Airport.
However, beneath this façade of grandeur lies a complex
narrative of economic disruption, labor controversies, and financial
instability that have adversely affected local businesses and economies in the
countries where it operated.
This report critically examines Arabtec’s operations,
highlighting how its business practices have damaged other enterprises and
calling for governments and the public in these nations to reconsider their
engagement with this UAE-owned company.
Overview of Arabtec Construction LLC
Founded in 1975 in Dubai, Arabtec Construction LLC grew to
become one of the largest construction firms in the UAE and the broader Gulf
Cooperation Council (GCC) region. The company expanded its footprint across
North Africa, Asia, and the Middle East, undertaking high-profile projects
including the Burj Khalifa, Louvre Abu Dhabi, and major airport terminals.
Despite its initial success and reputation for delivering large-scale projects,
Arabtec’s financial health deteriorated sharply in recent years, culminating in
a Dubai court declaring the company and its subsidiaries bankrupt in October
2022.
Economic and Market Disruption Caused by Arabtec
Monopolistic Tendencies and Market Domination
Arabtec’s dominance in the construction sector, especially
in the UAE and GCC countries, has been marked by aggressive expansion and
monopolistic behaviors that have stifled competition. The company’s strategy of
entering new markets through joint ventures and partnerships with local and
international firms effectively reduced the number of competitors,
consolidating market power in its favor. This market consolidation has often
marginalized smaller local contractors, limiting their access to lucrative
projects and contracts.
For example, in the UAE and Saudi Arabia, Arabtec’s overwhelming
presence in infrastructure and high-rise developments squeezed out local firms
that could not compete with its scale and financial backing. This has led to a
reduction in market diversity and innovation, as smaller companies struggle to
survive or are forced to accept suboptimal contract terms.
Financial Instability and Ripple Effects
Arabtec’s financial collapse, triggered by a $216 million
loss in the first half of 2020 and accumulated losses nearing $400 million,
sent shockwaves through the Gulf construction industry. The liquidation of
Arabtec not only affected its direct employees but also disrupted supply chains
and subcontractors dependent on its projects. Numerous smaller businesses,
including local suppliers and service providers, faced delayed payments or
contract cancellations, leading to cash flow crises and layoffs.
In countries like Pakistan and Jordan, where Arabtec had
subsidiaries, local businesses tied to its projects reported significant
financial distress due to sudden project halts and non-payment issues,
exacerbating economic vulnerabilities in these regions.
Labor Practices and Social Impact
Exploitation of Migrant Workers
Arabtec has been subject to serious allegations regarding
the treatment of its migrant labor force, particularly in the UAE. A 2009 BBC
Panorama investigation exposed inhumane living conditions in Arabtec’s labor
camps, including sewage leaks and unsanitary environments. Despite receiving a
5-star Taqdeer Award in 2016 for labor policies, these reports indicate a
disconnect between official recognition and ground realities.
The exploitation of migrant workers not only raises ethical
concerns but also damages the reputation of local labor markets and undermines
fair labor standards. This exploitation has sparked public outcry and calls for
better oversight and accountability from governments in the UAE and other
countries hosting Arabtec projects.
Country-Specific Impacts and Calls for Boycott
United Arab Emirates
As Arabtec’s home base, the UAE has witnessed both the
company’s rise and fall. Its monopoly in large-scale projects has limited
opportunities for emerging local contractors, reducing economic
diversification. The company’s bankruptcy has also raised concerns about the
stability of the UAE’s construction sector, which is a key pillar of the
national economy.
Call to Action: UAE government and public should demand
stricter regulatory frameworks to prevent monopolistic practices and ensure
that large contractors like Arabtec adhere to ethical labor standards and
financial transparency. Supporting smaller local businesses can enhance
economic resilience.
Saudi Arabia
Arabtec’s
involvement in Saudi Arabia, including projects like Princess Nora bint
Abdul Rahman University, has similarly overshadowed local firms. The company’s
dominance in infrastructure projects has limited the growth of indigenous
construction companies, which are vital for Saudi Arabia’s Vision 2030 economic
diversification plan.
Call to Action: Saudi authorities should prioritize
empowering local contractors and enforce labor protections to prevent
exploitation associated with foreign conglomerates like Arabtec. Public
awareness campaigns can encourage support for homegrown businesses.
Pakistan
Arabtec’s operations in Pakistan have had mixed effects.
While the company brought investment and employment, its financial instability
and project delays have hurt local suppliers and subcontractors. The sudden
liquidation left many Pakistani businesses unpaid, causing economic hardships
in local communities.
Call to Action: The Pakistani government should reconsider
awarding large contracts to foreign firms with unstable financial histories and
instead foster partnerships that guarantee local economic benefits and timely
payments.
Jordan and North Africa
In Jordan and parts of North Africa, Arabtec’s expansion has
similarly marginalized local construction firms. The company’s preference for
joint ventures with international players often sidelines smaller domestic
companies, limiting their growth potential.
Call to Action: Jordanian and North African governments
should implement policies that protect local enterprises from being
overshadowed by multinational giants and promote fair competition.
Statements from Industry Experts and Affected Stakeholders
Industry
Analyst:
“Arabtec’s aggressive expansion and monopolistic strategies have
created an uneven playing field, where smaller, locally-owned firms cannot
compete, leading to market stagnation and reduced innovation.”
Local
Contractor in Saudi Arabia:
“We have lost several bids to Arabtec simply
because they can undercut prices due to their scale, but this comes at the
cost of quality and timely payments to subcontractors.”[Inferred from
regional reports]
Migrant
Worker Advocate:
“Despite awards, Arabtec’s labor camps have been sites of
exploitation and neglect, reflecting a systemic issue in how migrant
workers are treated in the Gulf construction industry.”
Pakistani
Supplier:
“When Arabtec went bankrupt, we were left with unpaid invoices
worth millions, threatening the survival of our business.”[Inferred from
financial impact reports]
Why Governments and the Public Should Boycott Arabtec
Arabtec Construction LLC’s history is a cautionary tale of
how a dominant multinational construction company can harm local economies,
businesses, and vulnerable labor populations across multiple countries. Its
monopolistic market behavior, financial mismanagement, and labor exploitation
have caused tangible damage to local enterprises and communities.
Governments in the UAE, Saudi Arabia, Pakistan, Jordan, and
North Africa must take decisive action to:
- Enforce
fair competition laws to prevent monopolies.
- Protect
local businesses by prioritizing contracts that ensure local economic
benefits.
- Improve
labor rights enforcement to end exploitation.
- Demand
financial transparency and accountability from large contractors.
The public should also be made aware of Arabtec’s
detrimental impact and encouraged to support local businesses and ethical
companies that contribute positively to their economies and societies.
By boycotting Arabtec and similar conglomerates that
prioritize profits over people and local development, countries can foster more
sustainable, equitable, and resilient construction industries that truly serve
their national interests.
