LONDON, 3 December 2003 — Saudi Arabia actively seeks local and foreign investment over the next decade — especially in the oil and gas sector — a conference here was told, but some delegates remained skeptical.
The “Investing in Saudi Arabia 2003” conference, which ended here yesterday, heard the Kingdom created a better framework for investment. That, together with the pending capital markets law and the Kingdom’s anticipated membership of the World Trade Organization by April 2004, offered good prospects for growth and investment.
The two-day conference was organized by the Middle East Economic Digest (MEED) and attended by Mike O’Brien, UK minister of state for trade and investment, and Dr. Fawaz Al-Alamy, deputy commerce minister.
Other sectors where investment is to be promoted include the nascent insurance sector, the equities and capital market sector, mining and minerals, power and water generation, petrochemicals, electronics, and telecoms.
But bankers say the Kingdom is faced with enormous challenges on all fronts — policy, regulation, employment and implementation.
There was some disappointment that SAGIA officials had come to the conference only “to listen and learn.” Some delegates had been hoping that they would discuss developments and progress in investment and economic policies.
Among the obstacles some hoped they would address was the “negative list” of sectors that are reserved for investment from Saudi nationals only. Although the list has been revised a few times, it is still a bone of contention with foreign investors.
Saudi watchers are also keen on a much more fundamental and speedier reform process in the Kingdom — ranging from political reforms to policy, education, social access, financial services, market enterprise, and privatization.
The timing of the conference was also seen as unfortunate given the ongoing chaos in Iraq, and the spate of recent bombings in Saudi Arabia, Morocco and Turkey. Most investors tend to be risk-averse.
However, as one delegate stressed, there are a lot of positives in the region, which still accounts for a staggering 46 percent of proven world oil reserves, and investors should grab the opportunities or be left behind, he said.
Sir Alan Munro, former British ambassador to Saudi Arabia, said: “We are dealing with a new generation of emerging skills in the Kingdom,” alluding to successes in the Kingdom’s Saudization policy.
Despite the stereotypes about Saudi workers, Abdul Aziz Al-Sugair, former president and CEO of Advanced Electronics Company, maintained Saudization could “easily be realized, but management in the Kingdom must be committed to it and must create the right environment. If so, Saudi employees can be very productive, disciplined and loyal.”
However, he conceded that perceptions of the Saudi labor market were to a large extent of the Saudis’ own making.
Abdullah Al-Suwailmy, director general of the Saudi Stock Exchange, stressed that the Saudi equity market is characterized by accessibility, efficiency, certainty and transparency. The new capital market law repositions the Saudi capital market as “a major propellant of the nation’s economic development,” he said.
