RIYADH, 10 May 2004 — A new IT company — Interactive Saudi Arabia — owned by a consortium of four Saudi and international companies aims to provide IT services to the Saudi government, banks and businesses. The company has been set up under the French Offset Program.
According to William Barilka, managing director of DevCorp International’s Riyadh office, which advised on the company launch, the four investors in the SR4-million project are the Saudi Offset Limited Partnership (SOLP — a joint venture between Thales and Raytheon), Interactive Limited of Dubai, Riyadh-based Hoshanco, and Ram World, a Saudi IT company, also Riyadh-based.
SOLP and Interactive Partnership own 30 percent each, Hoshanco 25 percent and Ram World 15 percent. SOLP was established in 1997 with a $25 million capital injection from Raytheon and $10 million from Thales.
The French company has been criticized for dragging its feet on offset investment since winning substantial contracts with the Royal Saudi Naval Forces (RSNF). France, the fourth biggest investor in the Kingdom, with direct investment amounting to $381 million, is the country’s third largest arms supplier.
As well as contracts to support and upgrade the RSNF’s defense systems, French companies have also sold SAM missiles to the Royal Saudi Air Defense Forces (RSADF) and various personal weapons to the Ministry of the Interior.
In return for military contracts, the Saudi Economic Offset Program envisages a total commitment of SR5 billion by US, British and French companies in joint ventures to diversify the country’s industrial base, facilitate technology transfer, enhance private sector development, and create job opportunities for Saudis.
From the beginning of the offset program in 1984 to the end of 1996, defense contractors from the three countries had reportedly fulfilled only 10 percent of their obligations, and while investment has improved, the increase is seen as marginal.
The launch of ISA nonetheless is viewed as a significant development, since the Kingdom remains the Middle East’s most powerful economy and also the No. 1 market for IT and computer sales — accounting for 40 percent of the Middle East’s IT sales. Internet use and e-commerce are set to increase dramatically over the coming years.
“By investing offset monies in the Saudi Offset Limited Partnership, international businesses put their offset contribution to work in researched and feasible projects chosen and administered by DevCorp,” Barilka said, adding SOLP offered an efficient and effective way for contractors to the Saudi government to fulfill their offset obligations.