Saudi Arabia takes center stage for US Inc.

The Saudi-US CEO Forum is being held today in Riyadh, Saudi Arabia. (Reuters)
Updated 20 May 2017
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Saudi Arabia takes center stage for US Inc.

DUBAI: The business of America is business, a former US president once said. But for the next two days the business of America will be Saudi Arabia.
Prominent in the entourage of President Donald Trump on his historic visit to the Kingdom will be the cream of American business leaders, industrialists and financiers, gathering for a top-level forum with their counterparts from the Kingdom at the Four Seasons Hotel in Riyadh.
The Saudi-US CEO Forum, held today, is “designed to strengthen KSA-US business relationships by providing a platform to enhance bilateral trade and investment and break down barriers to enable closer economic ties,” according to the special website set up for the event.
At least 90 CEOs and top executives — split roughly evenly between those from Saudi Arabia and the US — are set to attend, according to organizers.
High-profile attendees from the Saudi side will include: Khalid Al-Falih, Saudi Arabia’s energy minister; Majid Al-Qassabi, minister of commerce and investment; Amin H. Nasser, president and CEO of Saudi Aramco; Lubna Olayan, CEO of Olayan Financing Co.; and Yousef Al-Benyan, CEO of Saudi Basic Industries Corporation (SABIC).
Mohammed Al-Jadaan, Saudi minister of finance, and Ali Al-Ghafis, minister of labor and social development, are also expected to attend.
Visitors from the US will include: Andrew Liveris, chairman and CEO of Dow Chemical; Michael Corbat, CEO of Citigroup; Jeff Immelt, chairman and CEO of GE; Chuck Robbins, CEO of Cisco; and Laurence Fink, chairman and CEO of BlackRock.
The first foreign visit by a new president is a big draw, but what the American business leaders are really interested in is what has been called the “Saudi sale of the century” — the program of privatizations and initial public offerings that has been valued at $300 billion, including its centerpiece, the potential $100 billion privatization of Saudi Aramco.
In that respect, one big question was still officially unanswered: would the New York Stock Exchange (NYSE) — considered a possible venue for part of the biggest initial public offering (IPO) in history — be represented at the business forum?
A request to NYSE for confirmation of its attendance in Riyadh went unanswered. When the British Prime Minister Theresa May recently visited the Kingdom, Xavier Rolet, the CEO of the London Stock Exchange, accompanied her. 
But Reuters reported this month that a NYSE delegation will visit Saudi Arabia in late May to try to lure a listing by Aramco. And representatives of the Nasdaq will be attending today’s event in Riyadh, according to organizers.
US industrial groups also have Aramco in their sights for deals, with oil-services companies like Schlumberger, Halliburton and McDermott all tipped to be about to announce new contracts with the Saudi oil giant.
The other big item on the business agenda is the prospect of multibillion-dollar defense contracts as Trump’s America “resets” its relationship with Saudi Arabia and other Gulf nations in the face of Daesh terrorism and a perceived increased threat from Iran.
The value of any such deal — for fighter aircraft, command systems, ships, air missile defense and maritime security — has been estimated at as much as $300 billion over 10 years by some media outlets citing Washington sources, much higher than any previous US defense deal with Saudi Arabia.
Edward Burton, president and CEO of the US-Saudi Business Council, said: “I would never underestimate the purchasing power of Saudi Arabia in defense. They are prolific procurers of defense equipment and one of the top-five spenders in the world. It reflects what is going on in the neighborhood.”
Oil and energy is also likely to figure prominently on the agenda. There could be some tough talking on the price of oil and the ability of the US shale industry to keep increasing its global market share even at prices in the low region of $50 per barrel. Efforts by the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, to limit global oil output and increase prices have been complicated by US exports of shale oil and — to a lesser extent — gas.
Saudi Arabia does, however, remain the second-biggest source of oil imports to the US (after Canada), providing 1.124 million barrels per day out of a total import schedule of just over 8 million barrels, according to figures from the US Energy Information Administration.
Even without the big ticket-items of Aramco, defense and oil deals, there is a wealth of business opportunities on the table for American business leaders in Riyadh.
Burton said: “The Kingdom has made clear its commitment to a long-term strategy of restructuring the economy.
“I am sure (the Saudis) will be drawing attention to the opportunities in economic development projects, in public private partnerships, and in the big program of privatization and IPOs, with as many as 100 companies for sale or public listing.
“At the same time, US business is aware of the need for diversification and localization of the workforce. The companies attending will be committed to working with the Kingdom toward a system of locally sourced vendor-supplier agreements that places a high emphasis on outsourcing to Saudi Arabia small and medium enterprises,” Burton added.
The Wall Street financiers attending the forum will be looking for clarity and commitment to the economic diversification strategy of Vision 2030, with all the transactional opportunities that presents.
One New York banker attending the forum said: “Many of us have been encouraged to commit capital to Saudi Arabia and put resources on the ground there. It is a whole new mindset, for us and for them. This will be an opportunity to get to know their potential local partners and calibrate whether (the diversification strategy) is real and is happening.”
But the forum is by no means a one-way street. Just as important for the Saudi-US business relationship are the opportunities for investment by Saudi Arabia into the US. President Trump has vowed to put “America First” in terms of manufacturing and employment, and is keen to welcome Saudi investment.
At a recent meeting between the US president and Mohammed bin Salman, Saudi Arabia’s deputy crown prince, a package of investment in American infrastructure and other initiatives was discussed. Consultants have proposed investments in states in the US Midwest that have suffered heavily through job losses and industrial change, and which backed the president in last year’s election.
Burton said: “Saudis have already proved to be prolific investors into the US, in portfolio investment and in equity. Companies like SABIC and Aramco have made big commitments to the US, and Prince Alwaleed bin Talal is the biggest individual investor from Saudi Arabia, with hotel and equity investments like Twitter.
“Saudis are also big investors in US real estate in Florida, California and New York. They are no strangers to the financial attraction of America, even before President Trump.”
One of the big issues in recent US-Gulf relations — the strains in aviation policy between the two regions over the “open skies” dispute and the cabin laptop ban imposed by the Americans on travelers from some Middle Eastern states — is unlikely to assume a high profile at the forum.
The three Gulf airlines affected by the “open skies” row — Emirates, Etihad and Qatar Airways — are not participating. Saudi Arabian Airlines (Saudia) was not affected at all by the row over alleged anti-competitive practices by the Gulf airlines, and only to a lesser degree by the laptop ban.


Time to tear down Mideast trade barriers, Davos panel hears

Updated 23 January 2019
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Time to tear down Mideast trade barriers, Davos panel hears

  • Mohammad Al-Tuwaijri, Saudi minister of economy and planning, said a move to ease movement of traffic across the border could be followed elsewhere
  • Majid Al Futtaim CEO Alain Bejjani: Now there’s this seriousness between Saudi Arabia and the UAE, I hope it gets to frictionless trade

DAVOS: Amid global trade wars and the rise of protectionism, Middle East economic and business leaders on Tuesday issued a clarion call for the exact opposite: To ease customs restrictions in the region.
A panel at Davos heard how an agreement between Saudi Arabia and the UAE to boost cooperation — including the reduction of obstacles to trade across the shared border — could be a blueprint for the wider region.
Mohammad Al-Tuwaijri, Saudi minister of economy and planning, said a move to ease movement of traffic across the border — partly through the use of technology — could be followed elsewhere. “We want to establish a reference for others to follow,” he said.
Alain Bejjani, CEO of retail and leisure group Majid Al Futtaim, said “frictionless trade” would give the region a boost.
“Now there’s this seriousness between Saudi Arabia and the UAE, I hope it gets to frictionless trade,” he told Arab News on the sidelines of the Davos forum.
Bejjani declined to say whether that would involve a customs union, a common market or a common currency. Given the imposition of trade tariffs between the US and China, and the rise of Brexit, globalization — something espoused by many Davos delegates — is seen as on the wane.
But Bejjani said breaking down barriers in the Middle East could help it better compete with Western Europe and the US.
“For the past almost century now… we’ve been ingeniously working on making sure we put barriers across the Arab world. The reality is we have a market that’s as big as most of the largest markets in the world… if we’re smart enough to work together,” he told the Davos panel.
Khalid Al-Rumaihi, chief executive of the Bahrain Economic Development Board, agreed that Saudi-UAE cooperation was “a great template” for others to follow.
Aside from “opening up” Middle East markets, Al-Rumaihi said harmonizing regulation in the region would also be beneficial to businesses and entrepreneurs.
“If the rules are changing in each country, if they’re not harmonized, it’s very difficult… for an entrepreneur (to understand) the regulatory environment. So they don’t scale very quickly, and that’s something we need to solve,” he said. Talk of freer trade within the Middle East is especially relevant when it comes to the Palestinian territories, which are subject to Israeli occupation and blockade.
Palestinian Prime Minister Rami Hamdallah said freer movement and a reduction of duties would help the economy grow.
“We need to see our products being waived (of) customs,” he said. “We need mobility — we’re under occupation.”