Thank you, Mr. Chairman, for giving me the opportunity to take part in today's meeting to discuss SNC-Lavalin, our expertise, the work that we do in the Middle East, our current outlook and the difficulties that our company has encountered in the Middle East and more particularly in the GCC countries since the 1970s.
Because of the recent increase in oil prices, GCC countries have an enormous surplus that they have begun to invest in all areas: in infrastructure and highways, electricity, in other words, they are seeking to improve the standard of living for their rapidly growing population.
As you know, GCC countries experience one of the highest growths of population. They have major surpluses. They have no local labour; most of their labour is imported from outside. Consequently, because of these ex-pats coming in, there's demand for housing, electricity, roads, malls, all kinds of things. We see a tremendous opportunity for SNC-Lavalin and other businesses to do business with the GCC.
I have personally been involved with the market there for many, many years, first with CAE Electronics, when I used to work for them, and then with SNC-Lavalin. The market is enormous. The market provides challenges. One of the challenges we are facing there is basically the ownership, but we cannot establish a business, particularly by ourselves. We have to have partners. Things are changing. We see the changes now in the UAE, but they're not changing as fast as we would hope.
For example, in the U.A.E., we established a company with Tabreed to do the district cooling. We've won a lot of jobs accordingly. We started a company called SNC-Lavalin Gulf Contractors. We've been doing business with Aramco for many, many years. But the issue of visas to go into the country is difficult; to get people into Saudi Arabia is difficult. We have to have some kind of bilateral arrangement with them in order to facilitate us, the Canadians, travelling into the region and doing business in the region.
We are also planning to invest at least $25 million in the energy sector in the Middle East alone, in the Gulf Cooperation Council, or GCC countries, in order to meet the demand over the coming five years. That is a huge opportunity for SNC-Lavalin.
As to current projects, our costs are much higher than those of other countries; for example, our travel expenditures are higher. There is no direct flight to the Gulf countries. There is always a stop-over in Europe, so it ends up costing us more and taking us longer to get there. Other companies have a real advantage over us in that area. When the projects involve hundreds of millions, or even billions of dollars, then these amounts are not that significant, but in the case of projects costing $2 million or $3 million, a difference of $200,000 or $300,000 is substantial. It will be difficult for companies that are smaller than SNC-Lavalin to do business there without the help of the government, of our parliamentarians, our ministers and our Prime Minister.
When we were there, we were often asked about Canada. They told us that they wanted to do business with us, but that we were only there once in a while, and that we would have to have a greater presence and be more active if we wanted their business.
There is a move to break up the cartel of European, Japanese or American companies. We are seen as a civilized country with North American expertise, and without the American imperialism or the European colonialism. We must capitalize on that now because within the next few years, once China has made its move into these countries to completely dominate the market, it will be too late. We have to gain a foothold in there now and establish a relationship that will be strong enough to provide future benefits for Canada, our employees and Canadian investors.
I don't want to belabour the point, but I must admit that it has not always been easy. Take Oman, for example.
In Oman at one time we were the incumbent of one of the projects, and Exxon put up a very heavy fight with the backing of the American government. We ended up losing the job. That was a multi-million-dollar job and hundreds of millions, close to a billion dollars. We would have loved to have the support of our government. Sometimes it doesn't stop at the embassador; it has to go much higher. We would love to see our Prime Minister or ministers there often, promoting our product. We can fight companies, but we cannot fight governments. We need you to fight the governments for us; we cannot do it ourselves. We're ready to fight and compete with other companies, but we cannot compete with France at a 25% tax rate. We cannot compete with England at a 30% tax rate, when our tax is 32% to 39%. We cannot compete with the Japanese when they have a 30% tax rate, but they have incentives left and right that we don't have.
From taxation also we have a foreign tax credit. They have what they call territorial taxes; they don't pay taxes if they're doing business in those countries. We have to pay this extra cost for us, and it's really hurting our business.
We have to look at all these issues. We're here today to participate in this discussion. I've opened a lot of doors to things we can discuss. I can give you some inputs.
We're pursuing at the moment close to $3 billion in business. I don't know if we're pursuing a lot, actually, for SNC-Lavalin. The market there is tremendous. We have a token of the market compared to the big international companies that are doing business there. They lead; they get business in the billions and hundreds of billions. We have to be there, leading our other Canadian companies to that market and helping them penetrate that market and establish business there.
Thank you very much.