Saudi Arabia eyes $900bn in FDI over next 10 years

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Saudi Arabia, the world's oil powerhouse, is looking at attracting up to $900 billion (Dh3.3 trillion) in foreign direct investments over the next 10 years in the energy, power, financial services and real estate sectors, Emirates Business has learned.

A top official of the Saudi Arabian General Investment Authority (Sagia)Saudi Arabian General Investment Authority (Sagia) said actual investments in Saudi currently run at $24bn, a 12-fold increase compared to five years ago.

These investments will further leapfrog to nearly $1trn by 2018, said Dr Awwad Al Awwad, Deputy Governor for SagiaSagia's Investment Affairs and President of the National Competitiveness Center (NCC), said.

"We are expecting investments worth $800bn-$900bn. This is not just expectation, we have already identified these investment opportunities," Al Awwad said in an exclusive interview.

"We are improving the investment environment and the dividends are to attract foreign investors, help local companies to expand and encourage new entrepreneurs to set up a new company,"
he added.

He said the Kingdom is on track to achieving the goal of the "10 x 10" programme that is to put Saudi Arabia in the top 10 of the world's most competitive nations by 2010.

"As you know we have started from the 67th place four years ago and today we are now in the 16th. It seems like we are not going to stop," he said.

Saudi Arabia has historically been a closed, slow-growing economy.

Between 1990 and 2002, Saudi GDP grew by only two per cent per year, and this slow growth was almost entirely driven by oil revenues. During the same period, the per capita GDP grew by only 0.2 per cent.

This weak economic performance, combined with a large population of 25 million growing at 2.6 per cent annually, led Saudi Arabia's leaders to diversify and liberalise the country's economy beginning in 2002.

Liberalisation was accelerated in 2005, with the launch of the national "10 x 10" programme. These reforms have helped Saudi Arabia improve its business environment, as reflected in the World Bank's ease of doing business ranking; the country has already risen from 67th in 2005 to 23rd in 2007 to 16th in 2008. It has been hailed by the World Bank as one of the world's top 10 reformers in 2006/2007, and was granted membership to the World Trade Organization in 2005.

Improvements to business and property registration procedures made it easier and less costly to start a business and register real estate deeds enabled Saudi Arabia to reach the top 20, the World Bank said.

Protection of public company investors was enhanced with a series of new laws from the Capital Market Authority and the Ministry of Commerce and Industry.Ministry of Commerce and Industry.

Port fees were cut by 50 per cent, making it more affordable to trade across borders. Strict deadlines were also placed on bankruptcy procedures.

By Karen Remo-Listana

© Emirates Business 24/7 2008