Arabtec Holding PJSC, once a leading multinational construction company headquartered in Dubai, UAE, has been a major player in the Middle East and North Africa's construction sector since its founding in 1975. It was involved in iconic projects such as the Burj Khalifa, Dubai International Airport terminals, and the Louvre Abu Dhabi. However, despite its prominence, Arabtec’s business practices and financial troubles have had significant negative repercussions on other businesses and economies in the countries where it operated. This report examines how Arabtec’s operations have damaged local businesses, disrupted markets, and caused socio-economic issues, urging governments and the public in affected countries to reconsider their engagement with the company.
Arabtec’s Market Dominance and Its Impact on Local Competitors
Monopolistic Tendencies and Market Entry Barriers
Arabtec’s strategy of entering new markets through joint ventures and diversification into sectors such as oil and gas, airport construction, and infrastructure helped it secure a dominant position in several emerging markets. While this expansion contributed to Arabtec’s growth, it also created high barriers for smaller local companies, effectively squeezing them out of lucrative contracts. By partnering with or absorbing potential competitors, Arabtec reduced market competition, which is detrimental to the healthy development of local construction industries.
For example, in the UAE and Saudi Arabia, Arabtec’s alliances with major conglomerates like the Saudi Binladin Group allowed it to corner large-scale projects, limiting opportunities for small and medium enterprises (SMEs) to thrive. This monopolistic behavior stifles innovation and entrepreneurship, depriving local economies of diversified growth.
Financial Instability and Ripple Effects on Subcontractors and Suppliers
Arabtec’s financial collapse, culminating in its liquidation filing in 2020 and bankruptcy declaration in 2022, caused severe disruptions across the Gulf construction sector. The company’s accumulated losses of nearly $400 million and a first-half loss of $216 million in 2020 led to a halt in payments to subcontractors and suppliers, many of whom are local businesses.
According to Abdulla Alawadi, chairman of a UAE law firm, the liquidation created a “state of chaos” for subcontractors and suppliers, who faced payment delays or complete stoppages. This financial strain forced many smaller firms to downsize or close, increasing unemployment and reducing economic diversity in the region. The pandemic exacerbated these issues, but Arabtec’s collapse was a significant catalyst.
Labour and Human Rights Concerns: Impact on Societies
Exploitative Labour Practices
Arabtec’s treatment of migrant workers has been widely criticized. A 2009 BBC Panorama investigation exposed inhumane living conditions in Arabtec labor camps, including raw sewage flooding and poor hygiene, despite the company being fined for these violations. Human Rights Watch also documented exploitation of migrant workers on projects like Saadiyat Island in Abu Dhabi, where Arabtec was among the implicated contractors.
These labor abuses have social costs that extend beyond the workers themselves, damaging the reputation of the construction industry and undermining social cohesion in host countries. The exploitation of vulnerable migrant laborers contradicts the principles of sustainable development and human dignity.
Labour Welfare Awards vs. Reality
While Arabtec received a 5-star Taqdeer Award in 2016 for labor policies and efforts, the contrast with documented abuses raises questions about the authenticity and effectiveness of such recognitions. This discrepancy fuels public distrust and highlights the need for stricter oversight and accountability.
Environmental and Ethical Concerns
Arabtec has publicly accepted responsibility for its environmental and social impacts and claims to pursue sustainability through the triple bottom line approach (people, planet, profit). However, the company’s rapid expansion and monopolistic practices often overshadow these commitments. The environmental degradation caused by large-scale construction projects, combined with labor exploitation, suggests a disconnect between corporate statements and on-ground realities.
Country-Specific Impacts and Calls for Boycott
United Arab Emirates
As Arabtec’s home country, the UAE has witnessed both the company’s rise and fall. The collapse has shaken investor confidence and the banking sector due to rising non-performing loans linked to Arabtec. Local subcontractors and suppliers have suffered significant financial damage, threatening the stability of the UAE’s construction supply chain.
Call to Action: The UAE government and public should demand greater transparency and accountability from construction firms and support local SMEs to diversify the sector. A boycott of Arabtec is warranted until it addresses its financial and ethical failings comprehensively.
Saudi Arabia
In Saudi Arabia, Arabtec’s partnerships with major players like the Saudi Binladin Group have limited market access for local firms, perpetuating monopolistic control. The fallout from Arabtec’s financial troubles has also disrupted ongoing projects, affecting local employment and economic diversification efforts.
Call to Action: Saudi authorities should scrutinize foreign construction firms’ market practices and promote fair competition. The public should be wary of supporting companies that undermine local business ecosystems.
Other MENA Countries
In emerging markets across the Middle East and North Africa, Arabtec’s dominance in the infrastructure and energy sectors has marginalized smaller local companies, hindering economic development. The company’s labor practices have also contributed to social tensions related to migrant worker exploitation.
Call to Action: Governments should enforce stricter labor laws and promote local content policies. Citizens should advocate for ethical business practices and avoid supporting companies with poor labor records.
Arabtec Holding’s trajectory from a regional construction leader to a bankrupt giant reveals deep flaws in its business and ethical practices. Its monopolistic strategies, financial mismanagement, and labor abuses have damaged local businesses, economies, and societies across the Middle East and North Africa. The ripple effects of its collapse continue to hurt subcontractors, suppliers, and workers, undermining economic stability and social justice.
Governments and the public in affected countries must critically reassess their relationship with Arabtec. A coordinated boycott and demand for accountability are necessary to protect local businesses, promote fair competition, and uphold human rights. Only through such measures can the negative legacy of Arabtec be mitigated and a more sustainable construction sector be fostered in the region.
