Foreign investment heads sharply upwards in Saudi Arabia

Saudi Arabian General Investment Authority governor Amr Al-Dabbagh estimates that investment into the Kingdom last year totalled $3.8 billion. The aim, he says, is to draw in $1 trillion in foreign direct investment over the next 20 years.

Kuwait-based Arab Organisation for Investment Guarantee says that in 2004 the Kingdom ranked the leading country in the region for attracting direct foreign and Arab investment.

Higher FDI ranking

The International Finance Corporation, which acts as the private sector investment arm of the World Bank rates the Kingdom as the best investment location in the Arab world. In its 'Doing Business in 2006' report the IFC puts Saudi Arabia ahead of Kuwait and Oman and 38th out of 155 locations worldwide for investment.

IFC ranks countries according to a number of benchmarks. These include starting a business, dealing with licences, hiring and firing registering property, obtaining credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. In just one year the Kingdom has seen its global investment ranking increase 29 places.

Saudi Arabia is reducing the sectors that are off limits to foreign investors. Retailing, telecommunications and insurance have already been removed from the list. Global corporations are listening increasingly to the message. According to SAGIA:

'The negative list very soon will not exist. It's getting shorter by the day.'

During his latest tour of the US, Mr Al-Dabbagh held meetings with Chicago Mercantile Exchange as well as with more than ten leading companies including Boeing and Guardian Industries. The latter is said to be considering adding another float glass plant to its existing operation in Jubail originally commissioned in 1990.

SAGIA's plan to make the Kingdom 'one of the top ten foreign investment locations by 2010,' is not mere rhetoric. Part of the strategy involves co-operation with the World Bank which is conducting an evaluation of the investment conditions in the Kingdom and helping to set out priorities to achieve a competitive environment both in regional and international terms.

Petrochem FDI focus

Saudi Arabia, for example, is fast emerging as a global hub for petrochemicals. Last year more than 34 million tons of petrochemical products were produced from 15 industrial complexes The Kingdom's petrochemicals industry is growing at an exponential pace and already accounts for 7% of the world's output of basic and intermediary petrochemical products.

Dozens of new projects are under way and by 2009 with the result expected to be that Saudi Arabia will account for 13% of world petrochemicals capacity by 2009.

Mr Al-Dabbagh says that the Kingdom is 'the energy capital of the world, with one quarter of all known oil reserves and the most cost effective feedstock in the region.' Accession to the World Trade Organisation, he believes, will eliminate a number of existing tariffs on Saudi petrochemicals and it will position Riyadh as the gateway to the Middle East.