Saudi Arabia courts German direct investments

Organised by Ghorfa and the DIHK, this forum has become the premium showcase for exporters, and was partnered by Saudi Arabia this year. Not surprisingly an array of top speakers came from the Kingdom.

'We have perhaps done too little to promote foreign direct investment,' said Prince Abdulla bin Faisal bin Turki Al Saud, governor of the two-year old Saudi Arabian General Investment Authority. 'For a long time we sat looking out of our window, waiting for higher oil prices.

'In the meantime, the world had changed with the Big Bang, privatization, and globalization. All the important initiatives are coming now from the private sector, and no government can satisfy the needs for scientific and technical advances.

'There is tremendous potential in the Middle East as many areas of the economy have not yet opened up. We think that the Arab world can do much better than in the past and see many new opportunities for German companies. At SAGIA we are very optimistic and see fantastic opportunities opening up'.

Prince Abdulla's message was reinforced by Saudi finance minister Dr Ibrahim Al-Assaf who outlined the major changes now taking place in Saudi Arabia. His message to the conference was that Saudi Arabia is a financially solid country that is embracing economic reforms such as privatization and creating the right legislative framework for business.

However, the Saudi delegation might perhaps have said more about the $25 billion Saudi Gas Initiative that opens this huge sector to foreign direct investment. Mindful, perhaps, of the delicate state of negotiations with the eight participating major oil companies, there was little mention of this highly important FDI project.

At an afternoon workshop the Saudi side reported that so far German FDI commitments totaled $1.1 billion in 94 joint ventures in the kingdom. This was, however, behind the USA at $18 billion, Japan with $4.8 billion and level with the UK, also with $1.1 billion.

Prince Abdulla said that SAGIA had attracted a total of $11 billion in new investment projects since its inception two years' ago. But he reckoned that the Saudi market could absorb new projects worth $20 billion.

One delegate questioned him on the 'negative list' of areas where foreign investment was not allowed, such as aviation, and Prince Abdulla explained that this list was under revision and that SAGIA would like to see no sectors excluded from foreign investment.

It was perhaps a refreshing change that the Ghorfa conference was not dominated by representatives from Dubai pushing inward investment opportunities, although Jebel Ali officials did make a presentation about the free zone. However, Dubai's real estate opportunities and other free zones were a curious absence, as the emirate is far ahead of anywhere else in the Middle East in this regard.

The contrast with slow, but sure, progress towards reform in Syria is marked, for example, and the conference heard from Syrian officials about the reform of private banking. There was also a presentation on the impact of membership of the World Trade Organization on Saudi Arabia, Lebanon and Syria whose accession is pending.

But the opportunities for investment remain considerable, and the keynote speaker, Amr Mousa, secretary general of the Arab League summed it all up: 'German investments in the Arab world are too modest, and there is a need to recognize common interests and move forward together.

The conference was also the launch pad for the Business Gate Middle East project, an ambitious portal that links exporters to their potential clients in the region through the Internet. It was welcomed by the German economics and technology minister Dr Werner Muller in his address to the conference, and is surely a sign that times are changing for German exporters to the Middle East.