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The Kingdom of Saudi ArabiaThe Gateway to Investment Opportunities in the Middle East
Saudi Arabia – Key Indicators.
Saudi Arabia Underlying Strengths.
Investment in Saudi Arabia.
Foreign Trade of Saudi Arabia.
Saudi Estimated Budget - 2014.
Reforms to Enhance Saudi Economy.
Towards Better UK–SaudiRelations.
2
CONTENTS
• Area: 2000000 km2
• Population: 30 million
• GDP: $745 billion (preliminary)
• GDP per Capita: $24847.
• GDP Growth: 1.5 % (Current)
• GDP Growth: 3.8% (Constant)
• Non-Oil Sector GDP Growth: %7.
• Private Sector Growth rate:
9.4%.
• Exports:$367 billion
• Imports:$153 billion.
SAUDI ARABIA – KEY INDICATORS (2013)
Currency
Saudi Riyal
SAR 3.75 = $1.00
3
Nominal GDP 2010 2011 2012 2013 2014F
$ Billion 526.8 669.5 734 745 767
% change 22.8 27.1 9.6 1.5 3
Real GDP (%
change)
2010 2011 2012 2013 2014F
Oil 0.3 11.0 5.7 -0.6 -1.4
Non-Oil Private Sector 10.3 7.7 6.0 5.5 5.2
Government 7.5 8.7 5.5 3.7 4.0
Total 7.4 8.6 5.8 3.8 3.6
Source: Jadwa Forecasts for 2014
SAUDI ARABIA – KEY INDICATORSCont….
4
External Trade Indicators ($ Billion)
2010 2011 2012 2013 2014F
Oil Export Revenues 215.2 317.6 335.1 322.4 284.8
Total Export Revenues 251.1 264.7 388.4 377.0 342.1
Imports 97.4 120.0 141.8 152.7 159.4
Trade Balance 153.7 244.7 246.6 224.3 182.6
Current Account Balance 66.8 158.5 164.8 134.3 96.7
% GDP 12.7 23.7 22.4 18.0 12.6
Official Foreign Assets 445.1 544.0 656.6 725.7 767.1
Source: Jadwa Forecasts for 2014
SAUDI ARABIA – KEY INDICATORSCont….
5
SAUDI ARABIA -UNDERLYING STRENGTHS
• Strong GDP growth.
• Significant budget surplus .
• Price level stability.
• Owns 25% of world’s Oil reserves .
• Fourth Largest Natural Gas reserve.
• The largest economy in the Arab World, and among the top 20 Economies in the world (G20).
• The Largest producer of Petrochemicals in the Arab World.
• Open economy, a member of WTO.
6
• Political stability, member of many Arab
& International Organizations.
• An attractive environment for investment,
among the top 20 recipients of Foreign
Direct Investment in the world.
• Investment incentives, Income tax free,
financial facilities.
• Ranked 22 in ease of doing businesses
in 2013.
• 10th largest worldwide Exporter
(excluding intra-EU (27) trade).
• 21st largest worldwide Importer
(excluding intra-EU (27) trade).
SAUDI ARABIA-UNDERLYING STRENGTHSCont….
7
727
358
183 17377
270
200
400
600
800
Saudi Arabia U.A.E Qatar Kuwait Oman Bahrain
$ Billion
Saudi Arabia’s GDP vs other Gulf Nations
SAUDI ARABIA – UNDERLYING STRENGTHSCont….
8
727794
549
257 20898
0
200
400
600
800
1000
SaudiArabia
Turkey Iran Egypt Algeria Morocco
$ Billion
Saudi’s GDP among MENA countries
SAUDI ARABIA – UNDERLYING STRENGTHSCont….
9
Saudi Arabia’s ranking in global competitiveness 2013/2014
Indicator Ranking Among Arabic
Countries
Ranking Among
World Countries
Ease of doing businesses 1 22
Global competitiveness 3 20
Institutions 4 20
Infrastructure 4 31
Macroeconomic environment 2 4
Property rights 5 27
Health and primary education 5 53
Higher education and training 3 48
Goods market efficiency 4 27
Financial market development 3 27
Technological readiness 3 41
Market Size 1 23
Business sophistication 3 28
Innovation 3 30
SAUDI ARABIA – UNDERLYING STRENGTHSCont….
10
Saudi Arabia’s ranking in Financial Stability Among MENA Countries
Country Ranking Among
MENA Countries
Ranking Among
World Countries
Saudi Arabia 1 1
Emirates 2 5
Kuwait 3 15
Morocco 4 32
Tunisia 5 35
Bahrain 6 37
Egypt 7 46
Jordan 8 49
Turkey 9 54
SAUDI ARABIA – UNDERLYING STRENGTHSCont….
11
INVESTMENTS IN
SAUDI ARABIA
12
Country Ranking Among
MENA Countries
Ranking Among
World Countries
Bahrain 1 16
Saudi Arabia 2 17
Emirates 3 22
Kuwait 4 29
Tunisia 5 32
Turkey 6 34
Jordan 7 40
Morocco 8 43
Egypt 9 48
SAUDI ARABIA’S RANKING IN BUSINESS
ENVIRONMENT AMONG MENA COUNTRIES
13
16.4
6.45.5
4.7
1.10.3
0.
4.5
9.
13.5
18.
Saudi Arabia Egypt Emirates Qatar Oman Kuwait
$ Billion
Foreign Direct Investments
(Inflows) US Billions $ - 2011
14
FDI TO SAUDI ARABIA BY COUNTRY - 2011
15
17%
9%
8%9%
8%
5%
4%4%
3% 2% 1%USA
Kuwait
France
Japan
UAE
Bahrain
China
Germany
UK
Netherlands
Jordan
MalaysiaUSA is by far the largest investor in Saudi Arabia.
7%
FDI in Saudi Arabia 2011: 16.4 billion US$
• No bureaucracy and one gate to investment “General Authority for Investment Arabia (SAGIA).
• 100 % land and corporate ownership to foreigners.
• No restrictions on the re-transfer of capital.
• No taxes on personal income , taxes 20 % of the benefits on foreign companies.
INVESTMENT INCENTIVES IN SAUDI ARABIA
• The possibility of loss carry-over to later years rather than factoring them into tax settlements of profitable years.
• Foreign investors have the right to benefit from specialized financial institutions (local and international institutions).
King Abdullah Financial District
16
• Liberalized Market
• Domestic Market of over 29
Million People
• Proximity to big Markets
• Low Labor Costs
• Major source of energy
• Guarantee of Transfers
• National Treatment
• Reliable Investment
Environment
ADVANTAGES OF INVESTING IN SAUDI ARABIA
Kingdom Tower, Jeddah
17
• Topped the list of GCC and West Asian countries in terms of direct foreign investment.
• Topped the list of Arab host in terms of direct foreign investment, with estimated flows of $ 38.2 billion, up 39% of the total.
• Top of the list of Arab host of inter-Arab investment interfaces, with an estimated worth of $ 11.6 billion, up 60.4% of the total.
• Major investments in west Asia go to three countries: KSA, Turkey and UAE.
• Kingdom concluded 41 bilateral agreements with various worldwide countries, including 17 investment agreements, and 24 avoidance of double taxation agreements.
Cont….
18
ADVANTAGES OF INVESTING IN SAUDI ARABIA
Petroleum Projects $400 billion
Physical Infrastructure $200 billion
Petrochemical Expansions $92 billion
Electric Power Generation $90.7 billion
Water Desalination $88 billion
Telecom and IT $70.7 billion
Tourism and Leisure Development $53.5 billion
Natural Gas Production $50 billion
Agricultural Expansion $28.3 billion
Educational and Training $10.7 billion
Railways $99 billion
PLANNED SAUDI INVESTMENTS UP TO 2020
19
INVESTMENT OPPORTUNITIES IN HOUSING
Ò King Abdullah decree to support theHousing Sector through increasedallocations totaling $14.67 billion to theGeneral Housing Authority and theReal Estate Development Fund.
Ò The royal decree to support theHousing Authority in building up to500,000 housing units for citizens.
Ò King’s initiative will bring down theexisting shortage of housing units from1.2 million to 700,000.
Ò The decision to increase the real estateloan from SR300,000 ($80 thousand) toSR500,000 ($133 thousand) and buildas many as 500,000 housing units, wasreflected in the market with a boost indemand for plots of land for buildinghouses and increased activities in thereal estate market.
20
• Saudi Arabia is planning to invest heavily inits railway infrastructure, with about SR 365billion ($99.4 billion), by the year 2040.Riyadh Metro line:
• Saudi Arabia awarded more than $22 billionin contracts to develop a metro line inRiyadh..
• It is the biggest infrastructure project to beundertaken in the Kingdom of Saudi Arabia,and is a cornerstone of the bold future forRiyadh city.
• Six lines will serve the capital city’s center,government facilities, universities,commercial areas, the airport and thefinancial district.
• Construction of the 175-kilometer (109-mile), and 85-station network will be thelongest metro line in the world underconstruction, and will create 15,000 jobsover five years.
INVESTMENT OPPORTUNITIES IN METRO &RAILWAYS
21
INVESTMENT OPPORTUNITIES IN METRO &RAILWAYS
• North-South railway:• Is considers the largest freight rail project,
2,750 km long, and valued at an estimatedSR 37.87 billion ($10.1 billion).
• The project is of strategic importance interms of freight exports to the Gulf.
• Land bridge project:• Is another important freight line valued at
SR 26.6 billion ($7.1 billion).• The line links the port cities of Jeddah,
Dammam and Jubail, passing throughRiyadh.
• Haramain High Speed rail project:• Is valued at SR 42 billion ($11.2 billion) and
built to transport pilgrims.• Jeddah metro:• Is another planned project valued at SR 35
billion ($9.3).billion).
Cont….
22
FOREIGN TRADE OF
SAUDI ARABIA
23
DEVELOPMENT OF SAUDI ARABIA’S FOREIGN TRADE
0
150
300
450
600
2007 2008 2009 2010 2011 2012
233
313
192
251
365388
90115
95 107132
156
323
428
287
358
497
544
Billion Dollars
EXPORTS IMPORTS TRADE VOLUME
Today, Saudi Arabia is the 10th biggest exporter and the 21st
largest importer in the world. (excluding intra-EU (27) trade).
24
TOP (10) FOREIGN TRADE PARTNERS -2012
SAUDI ARABIA EXPORTS TO
• USA 14%
• Japan 13%
• China 13%
• S . Korea 9.2%
• India 8.3%
• Singapore 3.6%
• Taiwan 3.4%
• Italy 2.7%
• Bahrain 2.7%
• U.A.E 2.6%
SAUDI ARABIA IMPORTS FROM
• USA 13.5%
• China 12.7%
• Germany 7%
• Japan 6.7%
• S. Korea 6%
• U.A.E 4.1%
• India 3.3%
• France 3.2%
• Italy 3%
• UKs 2.5%
25
MAIN EXPORTS OF SAUDI ARABIA
• Petrochemical Products
• Electric Power Towers (High
Tension)
• Paper Industries
• Medicine
• Prefab. Steel Structure
Buildings
• Air Conditioning Materials
• Cleaning Materials
• Plastic Textiles
• Insulating Materials
• Plastic pipes and fittings and
bottles
• Miscellaneous Plastic Material
• Electric Cables
• Irrigation Industries
• Electric Poles
• Steel Angles for Electric Power
Towers
• Transparent Glass
• Carpets
• Cement
• Foodstuff
• Copper Wire , bars and jewelry
26
SECTORAL BREAKDOWN OF SAUDI’S IMPORTS -2012
27
14%
12%
3%
14%26%
31%
Food stuffs
Chemical products
Textiles& Textiles Articles
Base metals
Electrical machines
Others
Machines appliances &electrical gadgets have the highest
imports value during 2012 at rate of 26% of the total
imports value of Saudi Arabia.
ADVANTAGES OF SAUDI’S EXPORTED PRODUCTS
• More than 2000 commodity within 17
groups.
• Applying International Standard &
Specification.
• Accessibility to more than 148
International Markets.
• High Quality of Packaging.
• Suitable & competitive price.
• Financing programs.
• Ease of Transport.
• Air, sea & land cargo from various ports.
28
SAUDI ESTIMATED BUDGET - 2014
29
Expenditure $228 Billion
8%
7%
25%
13%
10%
SECTORAL BREAKDOWN OF EXPENDITURE )%(
Transport & Communications
Water, Agriculture, Industry
Education
Health & Social Development
Development Funds
Revenues $228 Billion
REFORMS TO ENHANCE SAUDI’S ECONOMY
• Re-evaluation and issuance of new laws.
• Developing IT and Communication platforms.
• Attention to sectors in which Saudi Arabia has comparative and
competitive advantages.
• Creating more jobs for Saud youth.
• Enhance PPP Private / Public partnership.
• Accelerating Privatization Program.
• Support SME’s and Family Business.
• Promotion of Non-Oil Export.
30
TOWARDS BETTER UK–SAUDI
RELATIONS
31
2008 2009 2010 2011 2012
Exports to UK 950 697 923 1528 2040
Imports from UK 4060 3424 3442 3817 4192
Trade Volume 5010 4121 4365 5345 6232
Balance of Trade -3110 -2727 -2519 -2289 -2152
DEVELOPMENT OF KSA’S FOREIGN TRADE WITH UK
(MILLION US $)
32
