Vast opportunities in Saudi Arabia

Try to take a step back from the headlines about terrorism and dangers for Western expatriates. Saudi Arabia has actually made some very strong moves towards liberalizing its previously moribund state-controlled economy over the past few years.

Following an agreement reached with the European Union in 2003, there has been a wave of foreign banking entrants.

HSBC, Deutsche Bank, Gulf International Bank, National Bank of Kuwait, and the National Bank of Bahrain have all obtained licenses to operate in the Kingdom. And Etisalat has famously won the second mobile phone license, and committed vast investment funds.

This sort of openness to foreign investment is very new for the formerly closed Saudi economy. Now the pressure for even more openness is on from the US which is pressing for even more concessions in order for the US to endorse Saudi Arabia's accession to the WTO.

These negotiations are ongoing, and principle concerns surround the heavily subsidized Saudi agricultural sector - whose current cost makes little sense in a global economy - and the liberalization of the health and education sectors.

Only last week the Financial Times Foreign Direct Investment magazine named Jubail Industrial City as the city with the best economic potential in the Middle East.

Jubail has attracted over $46 billion in foreign investments, around half of the total going into the Kingdom. And this title was won against competition from 40 other Middle East cities including Dubai.

The panel of judges alluded to the new Foreign Investment Law as a critical factor in reaching its decision. This allows 100% foreign ownership, expatriate ownership of real estate and unrestricted repatriation of capital and profits.

There are presently over 30 plants under construction in Jubail, and 44 under consideration; while the Jubail Industrial City II envisages an investment of $56 billion to create 55,000 jobs.

Moreover, Saudi Arabian General Investment Authority Governor Amr Al-Dabbagh last week promised that a new investment law to comply with WTO regulations will be released very soon.

This is expected to lower the minimum amounts required for projects in the country to assist introduction of projects that are less capital intensive and more knowledge focused.

'Globalisation has many benefits apart from the challenges its poses. If any industry is closed as a result of globalization, it means it was established on the wrong foundation. It should not have been established in the first place. Saudi Arabia need not have all the industries,' A--Dabbagh told the Al-Jazirah Arabic daily last week.

Such a quantum shift in attitudes at the top of the Saudi Government augurs well for future business and foreign investment opportunities, and WTO membership would be the crowning achievement.