JEDDAH, 31 July  — The Council of Ministers yesterday approved in principle a proposal to establish two private universities in the country. The weekly Cabinet meeting also canceled a law regulating the relationship between a foreign contractor and his Saudi agent in another bid to attract foreign investment.

Information Minister Dr. Fuad Al-Farsi said the Cabinet meeting, chaired by Custodian of the Two Holy Mosques King Fahd, backed the proposal to transform Prince Sultan Private College into a private university and to gather the private colleges of the King Faisal Charitable Foundation into a single non-profitable private university.

The proposals were made by Higher Education Minister Dr. Khaled Al-Anqari. The Cabinet approval for the project comes after Crown Prince Abdullah, deputy premier and commander of the National Guard, and Prince Sultan, second deputy premier and minister of defense and aviation, hinted earlier at plans to establish private universities in the Kingdom to promote education.

At present there are eight universities in the Kingdom: King Abdul Aziz University in Jeddah, Umm Al-Qura University in Makkah, King Saud University and Imam Muhammad ibn Saud Islamic University in Riyadh, King Fahd University for Petroleum and Minerals in Dhahran, King Faisal University in Ahsa, King Khaled University in Abha and the Islamic University in Madinah.

The Saudi government gives top priority to education and manpower development. It has allocated about one-fifth of its general budget, or SR49.38 billion, to the sector this year. There are now 11,856 public schools, including 1,475 secondary schools in the country, in addition to thousands of private schools.

The Presidency for Girls Education runs 13,598 schools, institutes and colleges with 2.22 million students and 214,262 female teachers and administrators.

King Fahd recently approved plans to establish medical and pharmacology colleges at various universities in the country. According to Al-Anqari, pharmacology faculties will be started in both King Abdul Aziz University and King Khaled University.

A dental faculty will also be established at KKU. A medical sciences research center will be set up at the Umm Al-Qura University. Under the current five-year-plan, the government intends to establish 10 colleges of technology.

The new Cabinet decision allowing private universities comes following a number of calls for more private colleges in the country to accommodate the growing number of secondary school graduates.