Saudi non-oil exports build new economy

Non-oil exports increased to $16 billion in 2005 from $12.8 billion the previous year and will go over $20 billion in 2007 according to Abdul Rahman Al-Zamil, chairman of the Saudi Export Development Centre. "We expect tremendous growth in exports during 2007 as our products are being sold to new markets in increasing quantities," according to Al-Zamil.

While petrochemical production from Jubail and Yanbu accounts for about two thirds of Saudi industrial non-crude oil exports, sectors such as metal products, electrical goods, machinery and industrial equipment, construction materials, wood products, textiles and garments as well as food and beverages are growing in importance.

$74bn factories

Saudi Arabia's industrial base has expanded enormously since the Kingdom's first oil boom in the 1970s with the number of operating factories increasing from less than 500 in 1975 to 3,792 by 2005. Capital invested in these similarly has risen from $2.6 billion to $74 billion. Industry and manufacturing now provides employment for some 365,000 people.

Accession to the World Trade Organisation has given the Kingdom's export effort a huge boost in particular by enhancing the competitive advantages enjoyed by the Saudi petrochemical industry and strengthening its position in international markets.

Removal of trade barriers in the EU, US and Japanese markets as a result of membership of is allowing Saudi petrochemical producers to offer substantially lower prices for polystyrene, PVC and polypropylene and other products to previously tariff-protected markets.

The competitiveness of the Saudi petrochemicals industry depends mainly on its advantageously priced feedstock in the form of natural gas .This represents up to 60 per cent of the cost of production. Because of this comparative advantage, Saudi Arabia is rapidly emerging as a global petrochemicals hub and the leading location for foreign direct investment by the world petrochemicals industry.

Saudi Arabian Basic Industries Corporation expects to be producing 48 million tons of basic and intermediate chemicals, polymers, plastics, fertilisers, industrial gases, steel and other metals by 2010.

WTO opportunities

WTO membership is opening up potential opportunities for other sectors as well. In spite of non-petrochemical products representing just 12 per cent of total Saudi exports in 2005, these are growing fast with a widening customer base in the Middle East, Asia and beyond.


Saudi Minister of Trade and Commerce Hashim Yamani has called for greater efforts to increase Saudi non-exports to Europe, Africa and the Americas. This process, he believes will be helped by trade agreements, establishment of free trade zones in the Kingdom, opening up direct shipping lines and by participation of Saudi companies in more business exhibitions.

Saudi export efforts have also been given a major boost as a result of the Saudi Fund for Development's decision in 2005 to allocate $4 billion to underwrite credit facilities for importers of Saudi products in more than 30 countries.