Author: 
Hasan Hatrash, Arab News
Publication Date: 
Wed, 2006-07-05 03:00

JEDDAH, 5 July 2006 — Advertising executives interviewed by Arab News yesterday say that new fee increases on public advertisements imposed by the municipality could put about 3,000 employees out of business.

Earlier this year, the Ministry of Rural and Municipal Affairs issued a warning for advert operators to remove their signs and refused to renew location rental contracts with most of them. Now agencies are reporting that the cost of maintaining these city contracts has more than tripled in some cases.

Mujahid Al-Dabbas, development manager at Al-Bayan advertising agency, said the new regulations would result in many negative effects on the market. He suggested that foreign companies seeking to invest in local advertising might think twice if they perceive arbitrary and exorbitant fee increases.

Al-Dabbas said that small- and medium-size advertisement agencies form 60 to 70 percent of the market and most cannot afford the new prices imposed by the municipality. Major companies could resort to increasing the local prices for their advertised goods and services to help cover their local marking expenses, he added. Some may forego public advertising altogether and look toward more economical advertising strategies.

“With the new prices, many signs can be seen empty in the streets. This thing never used to happen at all,” Al-Dabbas noted. He said that previously an agency could pitch for a sign location for SR70,000 to SR100,000 per campaign and the municipality would give an extra free week and other facilities. Now, he says that bids are reaching SR300,000 with no extras or volume discounts.

Abdul Rahman Al-Dufairi, member of the advertisement committee at the Jeddah Chamber of Commerce and Industry (JCCI), said that by implementing these sudden new regulations it seems that the municipality is acting as a competitor with the private sector instead of playing their actual role as a facilitating firm.

Earlier this year, the local media had reported that the move was to reduce number of billboards, considered by some to be an eyesore, even un-Islamic in the cases of advertisement showing human faces.

So far, the municipality is targeting to remove more than 2,000 signs for not meeting the required regulations. They generate more than SR45 million. Signs are now seen empty in many streets after the municipality had stopped renewing rental contracts with sign owners.

Muhammad Manshi, head of investment department at the municipality, said that they were concerned about removing signs that are illegal or violating regulations.

“How can they eliminate signs and not renew contracts for signs that are already on display with the approval of the municipality officials themselves?” asked Ahmad Salim, executive official at a local advertising agency. “How come they change the laws suddenly and force us into new, difficult and expensive schemes?”

Salim had spent a couple of millions on erecting an electronic advertising sign in Tahliah Street and had a renewable annual contract with the municipality for the location of the sign since 2004.

“This year they refused to renew my contract because I couldn’t agree on their new regulations which also included a huge increase in the rental fee,” he said, adding that city officials demolished the sign after he couldn’t pay the new fee.

Al-Dufairi of the JCCI said that many advertisement agency owners have sent a petition to the minister of municipal affairs against the new regulations and pricing scheme.

“Unfortunately, so far nothing is happening and the new regulations are still in place,” he said.

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