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A Nation on the Move
Saudi Arabia Growing to a Dynamic and Robust Economy, Serving as One of the World’s Most Demanding Markets
A Nation on the Move
  • By matthew
  • October 10, 2013, 08:45
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Faisalya Tower in Riyadh, the capital of the Kingdom, is host to the most important of gulf, Arab and International conferences on a regular basis.
Faisalya Tower in Riyadh, the capital of the Kingdom, is host to the most important of gulf, Arab and International conferences on a regular basis.

 

The Kingdom of Saudi Arabia, the birthplace of Islam and home to Islam’s two holiest shrines in Mecca and Medina, has long been recognized as a powerhouse of the Middle East. Now’s it’s poised to become one of the world’s top 10 most competitive nations and one of the most lucrative markets for strategic investment.

Since it was founded by His Majesty King Abdul-Aziz bin Abdurrahman AlSaud, the Kingdom of Saudi Arabia has made remarkable achievements in all areas of development; economic, social, political and cultural. The robust and consistent base provided by his Majesty served as a starting point for the development process and ensured continuity for more than a century, leading to a comprehensive development renaissance that has contributed to upgrading economic growth, raising living standards, improving quality of life, and providing work opportunities for citizens.

These advances have been based on quantitative expansion and qualitative enhancement of educational services, training, healthcare, social services, infrastructure, communications, and municipal services; all within the framework of a genuine partnership between the public and private sectors working together for the delivery of programs and plans, designed to effect balanced and sustainable development across the nation.

Dynamic Economy

The performances of both Saudi Arabia’s economy have exceeded world growth while Saudi’s non-oil sector has delivered accelerating growth rates as the economy diversifies.

Encouraged by robust GDP growth and macroeconomic stability, consumer confidence is well above the regional average. Growing private credit and increased public expenditures on infrastructure and other projects provide a broad basis for strong and sustained growth of the Kingdom. The Kingdom itself has never been more committed to supporting economic growth. Robust growth in government revenues and current account is supporting double-digit increases in government expenditures on social, infrastructure, and other investment projects. Perhaps even more crucial in the long term, an increasingly deregulated and competitive economic environment is supporting an explosion of business formation as the private sector takes an increasingly prominent role in the economy.

The Kingdom of Saudi Arabia is undergoing an exciting transformation. One of the most enterprising nations in the Middle East, Saudi’s vast natural energy combined with the long-term vision and strategic planning of its rulers has helped to create today’s stable, robust economy. Now, Saudi is looking to the future with an ambitious program of accelerated growth and development that will position it firmly as a new global force.

Building a Nation of Sustainable Prosperity

Saudi Arabia, which becomes a member of G20, is now preparing a future that is more inclusive, expansive, sustainable and integrated on both economic and social levels, which revolves around investment. Saudi’s focused investment will deliver new communications infrastructures, new transport routes, state of the art industrial complexes, dynamic training opportunities and a commitment to greater business efficiencies and many more, helping to build a nation of sustainable prosperity.

The Kingdom is investing massively to enhance its value proposition to foreign businesses by providing competitive infrastructure and implementing reform policies At the center of this driving is His Majesty King Abdullah bin AbdulAziz Al Saud, Custodian of the Two Holy Mosques, who has directed the Saudi government to become one of the world’s Top 10 most competitive economies. In pursuit of this goal, the bodies of government have initiated a multi-faceted reform strategy that has made the Kingdom one of the easiest places in the world to do business.

Huge Market, Attractive Environment for Investments

Through such reforms and investments, Saudi Arabia’s rapid improvements in business environment have made the country an increasingly attractive destination for foreign investment.

The World Investment Report measured Saudi Arabia’s FDI inflows to be the 12th largest in the world and the highest amount in the Middle East North Africa (MENA) region.

As the region’s largest economy and the world’s 19th largest, the sheer size of the market that Saudi-based projects serve is “a competitive advantage, allowing Saudi businesses to benefit from economies of scale.” With excellent access to Saudi and other MENA markets, as well as the advanced and emerging economies of nearby Europe and Asia, the market exposure for Saudi-based projects is not only vast but also highly diversified.

In addition, Saudi Arabia’s well established, competitive and efficient domestic industries from energy and chemicals to transportation provide exceptional opportunities for investors. Investors in Saudi Arabia now enjoy increasingly well-developed business clusters and value chains that set the nation apart from its neighbors and from other emerging economies. The World Economic Forum ranks the Kingdom 26th for both Value Chain Breadth and Production Process Sophistication.

Trying to make the nation a global capital of energy and a transport and logistical hub between the east and the west, Saudi Arabia is now transforming its industry into knowledge-based one including ICT, healthcare, life science, education.

In particular, the Kingdom is embarking on a historic ICT investment program that will make the country a regional technology landmark. With over 27 million consumers and a number of global enterprises, Saudi Arabia is the largest ICT market by far in the Middle East. The Saudi Arabian telecommunications and information technology industries represent over 55% and 51% of the total Middle East markets, respectively.

While many of the world’s ICT markets are maturing, the Saudi Arabian market remains substantially under-developed by global standards and remains on a rapid growth trajectory. ICT spending has grown at over 10% per year since 2001 to reach US$7.3 billion in 2006. Liberalization is occurring across the telecom industry, driving increases in competition, service levels, and usage. Numerous Saudi Arabian IT industries show clear signs of rapid growth, driven by the committed presence of major multinationals, and by the expanding skills and confidence of local companies.

Saudi Arabia has embarked on a twenty-year ICT plan that will support widespread technology and telecommunications adoption across the Kingdom’s households and enterprises. A combination of deregulation and substantial public investments will create attractive investment opportunities for the private sector. Recent examples of such participation include a US$100 million investment by a venture capital firm, one of Saudi-based technology companies.

In particular, Saudi Arabia’s unique access to energy makes it an attractive location for a range of activities across the ICT value chain. ICT-enabled services providers (such as data centers) will be able to leverage Saudi Arabia’s unique access to low-cost power and state-of-the-art communications infrastructure to efficiently service global customers. Equipment and component production are also highly energy-intensive and require significant use of petroleum derivatives such as chemicals and plastics. Combined with the Kingdom’s attractive setup incentives, these advantages translate into considerable cost savings for hardware manufacturing and assembly activities. Software and other content providers also enjoy a secure environment for commercialization, thanks to significant progress on intellectual property rights laws by the Ministry of Commerce as well as the Communications and Information Technology Commission (CITC).

In short, Saudi Arabia’s massive public investments and reforms such as WTO accession, deregulation, privatization, private-sector promotion, significant investment incentives have been placing a strong foundation for the Islamic kingdom to be a global force, while providing opportunities for foreign investors as well as for local businesses.