The disclosure by the new British consul general in Jeddah that, despite the opportunities, UK firms are cautious about investing in Saudi Arabia comes as no surprise. It is not only British investors that are noticeable by their absence; there is not much of a rush to set up shop here by anyone else either.
The reason is not red tape. China has plenty, and India even more. But they have no problems attracting foreign companies. That is because their economies are growing strongly — unlike the economy here. Given a choice between investing in Saudi Arabia with a less than one percent growth rate and investing in China with an 8 percent growth rate, investors are going to go for the latter — red tape or not.
Nonetheless, low growth in the Kingdom is no reason to shrug shoulders and say that nothing can be done. A lot can be done — and has to be. Jobs have to be created for the army of young Saudis expecting employment. And it has to done fast. The country’s future social stability requires it. Moreover, if investors can be enticed to the Kingdom and jobs created, it will boost growth. There will be more money in people’s pockets, and much of it could be spent here.
That means that far more has to be done to attract investors here. We are constantly told that red tape is being eliminated, that regulations are being eased. The problem is the time lag between decisions being taken and change implemented. It has proved too long in some instances. Visas are a case in point. Last year a group of leading French potential investors were invited to the Kingdom; 24 hours before they were due to arrive they still did not have visas.
Until foreign businessmen can walk into a Saudi consulate and get a visa over the counter with a minimum of delay, they are not going to think seriously about coming here.
Just as important, there have to be incentives. There is tough competition from other locations in the Middle East, and that competition is about to get tougher as Iraq starts its investment plans. The government has to spend to attract investors from outside. Fortunately, the funds are there; thanks to high oil prices this year, government income for 2003 should be at least a third higher than budgeted.
Bodies such as SAGIA, NIC and the chambers of commerce all work hard to attract investors. Perhaps, though, it is time for a ministry of investment — and one that works as much to repatriate Saudi overseas funds as foreign investment. After all, technically, it does not matter where the money comes from — but it sends a strange message to foreign businessmen if Saudis are not eager to invest in the country.
