H.H. Prince Abdullah bin Faisal bin Turki Al Saud

Saudi Arabia opened its education sector to foreign investment last month, the latest move in a series of economic reforms intended to revitalise the Kingdom's economy with an infusion of new skills and investment from abroad.

Leading the reform process is Prince Abdullah bin Faisal bin Turki Al Saud, governor of the recently created Saudi Arabian General Investment Authority. In an exclusive interview with AMEInfo.com/fn, His Highness explained how his department was proceeding with licensing applications for a rumoured USD100bn in foreign investment.

'Since the new foreign investment law was applied we have seen a 44 per cent rise in applications for foreign investment, and a total of five billion riyals ($1.3 billion) for 2000,' he says. 'It is not as high as some of the press reports suggest. The main reason for the increase is the improvement in the law for foreign investment, and that people see a new direction, and an improvement in the environment. I pray that investment will be at good levels.

'The oil sector is not open yet. But gas is an independent programme and progressing faster than before,' notes Prince Abdullah. 'We do not comment on investment levels. The companies do not like us to discuss their proposals. We are just a licensing and service centre for foreign investors'.

His Highness is a modest and unassuming man, and rather understates the importance his office has assumed in the economic reform process in Saudi Arabia. The chief executive officers of the world's ten largest oil companies have all beaten a path to his door in the hope of obtaining part of what is probably the biggest foreign investment opportunity in the world today.

The much-quoted USD100 billion figure is an estimate of what foreign investment might be worth to the Saudi economy over the next 25 years, and is probably exaggerated. Saudi American Bank economist Brad Bourland, for example, estimates that the true figure may around one-third this sum. However, this is still a total of USD33 billion, and a huge turnaround in Saudi Arabia's attitude to foreign investment.

News of the first memorandums of understanding on three major gas projects is expected before April 1, and further projects will be rolled out thereafter as Sagia completes the very complex task of evaluating investment proposals and awarding licenses.

'At Sagia our first function is to issue licenses as per the foreign investment law, and to offer a one-stop shop,' explains Prince Abdullah. 'People are worried that this is yet another shop, but we hope within a reasonable time to be a no-stop shop.

'Our second function is on the policy side. We have to suggest the changes to laws and procedures and regulations to improve the quality and quantity of investment. We treat all investors the same, whether they are foreign or local. But we recognise that foreign investors bring in both money and expertise, and can plug into developments around the world.

'Our aim is to open up development, and bring more of the economy into the private sector. The announcement last month about the opening up of the education sector to foreign investment is the latest example. And the service sector is a very good investment opportunity.

'In Saudi Arabia we have a highly ambitious young population with high purchasing power which is good for the service sector. For instance the Saudi Telecoms new family phone service has sold 200,000 subscriptions in a very short time. And education is very much in demand. The Riyadh University had 2,500 applicants for 150 places in its medical school this year, so the demand is clearly there'.

For the time being, investment in the financial services sector remains closed, and all banks in Saudi Arabia are majority-owned by Saudi investors. Could this situation change in the future? What are the limits to economic reform in Saudi Arabia?

'The idea is to open things up for all the players,' says Prince Abdullah. 'Be they high net worth individuals, businesses, managers or entrepreneurs. It is up to them to do it, and then the sky is the limit. As we know with globalisation and new technologies there are no boundaries to business any more'.

Prince Abdullah first came to public prominence as the chairman of the Royal Commission for Jubail and Yanbu, the two industrial cities of Saudi Arabia. In this role he supervised the privatisation of the power and water services for these two cities, for which he found a solution that was acceptable both to the Saudi authorities and foreign investors.

'Saudi Arabia has a unique role in the region and certain responsibilities', says His Highness. 'Saudi Arabia has had a unique entry into the modern world. We can not duplicate certain things, or force them onto the Saudi public. There will have to be a balance between development expectations and the sensitivities of people.

But Prince Abdullah concludes: 'It is not just the limitations of oil income, but that you want people to depend on their own efforts and connections with the world. No one country can survive on its own any longer'.