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Saudi Aramco, state-owned oil company of Saudi Arabia and world’s largest oil corporation with the largest proven oil reserve and production, undertakes several major multi-billion-dollar project to boost the Kingdom’s capacity for processing gas. / Courtesy of Saudi Aramco |
In today's global economic slowdown, businesses have tendencies to look at three things: cost cutting, cash management, and sales increases.
Saudi Arabia can help address these objectives as it continues to strive its way toward becoming one of the best investment destinations around the world.
The kingdom is transforming itself into one of the world's top 10 most competitive economies, and therefore, one of the most lucrative markets for strategic investment, by investing massively to enhance its value proposition to foreign businesses, both with infrastructure and with reform.
In 2004, King Abdullah bin AbdulAziz Al Saud, custodian of the two holy mosques, has directed the Saudi government to become one of the world's top 10 most competitive economies by 2010, called the 10x10 mission.
Its vision is to achieve rapid and sustainable economic growth in Saudi Arabia, capitalizing on the kingdom's competitive strength as the global capital of energy and as a major hub between East and West.
In pursuit of this goal, the organs 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.
Design of the strategic plan focused on two core competencies: energy and location.
To complement these competencies, Saudi Arabia has focused on creating both a pro-business and knowledge based society as well as developing world-class economic cities.
Three Major Initiatives
In order to achieve these objectives, three initiatives were created.
First initiative to enhance creating pro-business environment involves institutionalizing the competitiveness management process through process reengineering.
Secondly, Saudi Arabia is investing tens of billions of dollars into the launch of four world-class economic cities: public-private partnerships that will create tomorrow's most attractive investment platforms for foreign companies.
These unprecedented developments combine world-class infrastructure, cutting-edge design principles, and special incentives and streamlined processes to create foreign investment-led hubs in knowledge-based industries and other crucial sectors.
This investment project is expected to add over $150 billion to the Saudi GDP, generate 1.5 million jobs, and provide ultimate living destinations to over 4.5 million people.
These economic cities include King Abdullah Economic Cities in Rabigh, Prince AbdulAziz Bin Musaed Economic City in Hail, Knowledge Economic City in Madina, and Jizan Economic City in Jizan.
Thirdly, the initiative also included efforts to become the most globally competitive nation in three sectors: energy, transportation and knowledge-based industries.
Saudi Arabia is the source to a quarter of world's oil supply, and it is no surprise that Saudi Arabia offers the world's most competitive energy prices to investment projects.
Saudi Arabia has the plan to become the energy capital of the world, investing over $ 300 billion in the energy related industries including petrochemicals, downstream to petrochemical, minerals and power & water.
Moreover, Saudi Arabia plans to attract more than 100 billion in logistics, roads, airports, ports and other facilities to transform Saudi Arabia to world's major transportation base.
This initiative also targeted growth and development in the knowledge based industries, such as areas of healthcare, information communication technology, education and life sciences.
World's Competitiveness
As the world's fastest-reforming economy, Saudi Arabia has seen growing momentum and recognition for its economic transformation.
Under Saudi government's strong commitment and drive toward creating better investment climate for foreign firms and foreigners, Saudi Arabia has risen from 67th to 23rd position out of 181 countries in the World Bank's Ease of Doing Business Index just in three years from 2005 to 2008, and is currently number one in the Middle East, ahead of Bahrain, the UAE and Kuwait.
The kingdom ranks third and seventh in the world, respectively, for ease of registering property and paying taxes.
Moreover, firms in Saudi Arabia thrive in this pro-business environment.
Saudi firms occupied the top three spots in Forbes assessment of 1,616 joint-stock companies in the Arab world in late 2006.
The kingdom's financial institutions are the largest in the region, and compete comfortably with the world's best.
Stable Domestic Economy
Saudi Arabia's economy provides unparalleled security to investors.
The Saudi Riyal is one of the most stable currencies in the world.
Sound macroeconomic management has allowed the kingdom to maintain a fixed exchange rate without any restrictions on foreign exchange and outgoing money transfers.
Inflation rates in Saudi Arabia are very low and the Kingdom is signing bilateral agreements with an increasing number of countries to encourage investor protection and reduce tax burdens.
Ample capital availability, low taxes, and stable prices have earned Saudi Arabia the world's top ranking for the quality of its macroeconomic environment.
In addition to the kingdom's strong economic climate for investment, one of the country's strongest advantages and incentives for foreign investment, however, is its people.
The majority of Saudi Arabia population is young, with 57 percent of the country under 25 years of age.
Recognizing this as the country's greatest potential asset, the government is investing billions of dollars in education in order to train the next generation's highly skilled workforce.
As the world's eighth highest spender on education, Saudi Arabia will provide investors with more opportunities to select the highest quality labor for their projects.
What does all this mean? Higher productivity and profitability, and above all: boundless potential in the world's fastest reforming business climate.
Few obstacles remain for both local and foreign investors in Saudi Arabia.
We look forward to welcoming all Korean companies to take part in our growth, to take advantage of the wide range of investment opportunities in the kingdom.
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