Transcript Winning Business in Dubai”

“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
Introduction
Saudi Arabia has the largest economy in the Middle East. The manpower
requirement to meet the Kingdom’s current level of project development
across the board is for 1.2 m engineers, skilled and unskilled workers.
•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.
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.
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
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. Don’t 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.
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.
“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