1
Doing Business in Saudi Arabia

• EMITA seminar UAE Saudi Arabia a wealth of
  opportunities

David Lloyd OBE Consultant The Middle East
Association 6 March 2007
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Saudi Arabia has the largest economy in the
Middle East. The manpower requirement to meet the
Kingdoms current level of project development
across the board is for 1.2 m engineers, skilled
and unskilled workers.
Introduction

• Safety and Security Saudi Arabia does a have a
  problem, but it must be seen in context. Security
  is good and the country is no less safe than the
  UK. Some would say safer.
• Ease of Access Poor
• Availability of Market/Country Information FCO
  UKTI websites are always a good starting point
  for travel, business and other advice and may
  allay some misconceptions.

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General

• King Abdullah is and has been the driving force
  behind economical and social reform in the
  Kingdom. He has also assumed international
  stature. Women more in evidence. Media less
  constrained.

• WTO accession in November 2005 very important to
  the Saudis. It is the gateway to encouraging FDI
  and is expected to encourage non-oil export
  growth.

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Economy

• Nominal GDP growth for 2006 12.4. Total
  revenue 174.7bn. Government expenditure
  104bn. Fiscal surplus 70.7 bn. Oil export
  revenues 18 above 2005 191bn. Non-oil exports
  12bn.
• Estimated Saudi oil production levels in 2007 9m
  bpd at an average price of 43 per barrel.
• Inflation 1.8
• Capital Markets and Insurance Laws are now firmly
  in place. IPOs oversubscribed. Foreign bank
  ownership of 60 now allowed and 10 licences
  awarded
• The Tadawul All Share Index crash in March was a
  shock to many small Saudi investors and necessary
  lessons about rapid unchecked growth have been
  learnt.
• 3.0 pa birth rate driving infrastructure
  development. Current population including
  expatriates thought to be about 23m and growing
  younger every year. High unemployment (could be
  as much as 30), generally low level of skills
• Job creation vital. But Saudi-isation of jobs
  probably more of a hindrance than a help.
  Priority requirement is training and education

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Doing business

• A lengthy process, requiring much patience and
  perseverance. But first know your market. In
  Saudi you are looking at 3 centres Jeddah,
  Riyadh and Eastern Province. The best vehicle for
  initial familiarisation is the Trade Mission.
• Allow 2 years to decide on the right sort of
  partner and to establish a good working
  relationship. Imperative to visit and re-visit
  the market to achieve this.
• Joint ventures and local manufacture are very
  welcome and foreign principals can now hold a
  controlling interest.
• Women can also conduct successful business in the
  Kingdom, although it is not always easy. Dont be
  daunted!
• Competition. Most ME markets are price sensitive.
  Saudi Arabia is cash-rich and the Golden Goose
  may lay an egg at Fortnum and Mason prices, if
  the product is special but Sainsbury/Tesco
  prices are the rule of thumb.
• Priority Sectors Training and Education Oil
  Gas Water and Water management Power Health
  Construction.

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Some projects

• Oil production to increase to 12 mbd. 1.8bn
  investment in the Shaybah field to increase
  Arabian extra light by 250,000bd. Major increase
  in refining capacity too of which the 8.5bn
  Rabigh project is the leader.
• Rail landbridge 3000 km Jeddah to Riyadh.
  Jalamid-Al Zabira-Riyadh to Ras Al Zour, the
  Mining Industrial City.
• Mining bauxite and phosphates
• IWPP power and desalination
• King Abdullah Economic City at Rabigh on the West
  coast 26bn. port, marina, business park,
  financial centre, residential and golf course)
  costing USD 26bn of predominantly private sector
  finance. To which add Hail, Madinah and Jizan.
• UK exports last year 1.6 bn in visibles. Double
  that with invisibles.
• KSA is our largest, end-destination ME market.

7
Doing Business in Saudi Arabia

• EMITA seminar UAE Saudi Arabia a wealth of
  opportunities

David Lloyd OBE Consultant The Middle East
Association 6 March 2007