RIYADH, 6 June 2004 — Sweden is an ideal destination for Saudi investors looking for profitable ventures abroad, the country’s embassy claims. It offers a comparatively welcoming investment climate and strategic access to world markets. The nation’s location on the Scandinavian Peninsula, in northern Europe and on the rim of the Baltic Sea, has made it a center for international trade.

In the last 10 year, Sweden has been one of the largest receivers of foreign direct investment, which shows its attractiveness on the global investment scene, where foreign investors increasingly seek new products and technologies, innovations and skills, as well as new markets.

Among weak international demand, the Swedish economy remains strong, with public finances in surplus, low inflation and decent growth. The government continues to invest in infrastructure, education and R&D.

A number of international studies have placed Sweden at the top in terms of business climate and the potential to attract foreign investment. Its government aims to maintain and strengthen this position.

Foreign investors will continue to benefit from a business environment that has given rise to some of the most sophisticated and profitable products and technologies in the world.

Many entrepreneurs from abroad contributed to Sweden’s industrial revolution and in turn Swedish companies later went abroad and established themselves on foreign markets all over the world with state-of-the-art products and technologies.

International business experience thus constitutes a fundamental part of Sweden’s heritage, and this is reflected in its attitude to foreign investors.

The figures speak for themselves. Inward stock of foreign direct investment (FDI) to Sweden saw a sevenfold increase in the last decade. Between 1997 and 2001, Sweden was the 11th-largest recipient of FDI in the world, with inflows amounting to almost EUR/USD 130 billion.

FDI takes numerous forms: Greenfield and expansion investment, joint ventures, strategic alliances as well as mergers and acquisitions. Foreign investors acquired an average of 150 Swedish companies per year between 1998 and 2003.

Global Horizons

Despite the surge in FDI inflow, Sweden is still a net outward investor. The country’s open and export-oriented economy has produced a large number of competitive multinationals that have expanded abroad. This indicates that Swedish industry is actively participating in the ongoing restructuring of international business.

Providing Skills

The largest investment in Sweden originates from the US, Finland, UK, the Netherlands and Germany. Inward FDI is dominated by manufacturing, with chemicals and motor vehicles accounting for 25 percent each of inward FDI stock.

In 2002, 8,500 foreign-owned companies employed a total of 530,000 Swedes, or approximately 22 percent of all employees in the private sector. Among the OECD countries, Sweden has the fifth-largest share of the workforce employed by foreign-owned companies.

A Promising Future

Sweden’s skilled work force, R&D facilities, advanced test market and well-informed consumers and suppliers make the country an attractive place for demanding investors. Foreign investors account for one-third of R&D spending, reflecting the attractiveness of Sweden especially for high-tech ventures.

In a 2002, UNCTAD concluded that Sweden had the world’s best potential after the US for attracting foreign investments. Looking ahead, the Economist Intelligence Unit predicted that Sweden will remain among the world’s top 10 business environments between 2003 and 2007.

According to Foreign Policy magazine’s globalization index, Sweden ranked as the second most internationally integrated economy in 2002. Swedish exports amounted to almost SEK 800 billion ($90 billion) in 2002, corresponding to one-third of Sweden’s GDP. Almost half the exports went to countries outside the EU.

An Economy Transformed

The birthplace of many well known international companies, including ABB, AstraZeneca, Electrolux, Ericsson, Saab, SCA, Scania, SKF and Volvo, Sweden has long relied on its export-oriented multinationals operating in traditional industries such as mechanical engineering, energy, chemicals and pulp and paper.

Spurred by financial market reforms, increased international competition and deregulation of a number of formerly protected industries in the transportation, communications, energy and electricity sectors, the Swedish economy began a rapid transformation at the beginning of the 1990s.

By the mid-1990s, Sweden’s information and communications technology (ICT) sector boomed as telecom giant Ericsson became one of the world’s largest and most successful companies.

Accelerating Growth in 2004

Overall, the Swedish economy performed well in 2002 despite the impact of the global recession and setbacks in the important IT and telecom sectors. A growth rate of 1.9 percent was achieved, which was almost twice the average for other EU member states. With an average growth rate of 3.1 percent between 1998 and 2002, Sweden outperformed even the fast growing US.

Although a recovery is under way, economic activity is predicted to remain subdued with growth declining to 1.3 percent in 2003.

According to the National Institute of Economic Research, the Swedish economy will accelerate as the global recovery gains momentum and reach an expected growth rate of 2.4 percent in 2004.

Government Efforts

The Swedish government has adopted long-term policies to attain sustainable and solid economic growth. A number of reforms have been implemented to increase competition in the Swedish economy.

Large public investments have been made in education, R&D and infrastructure. These efforts have been recognized: Sweden is top-ranked in the European Commission’s 2003 study of the member states’ achievements in contributing to the EU becoming the world’s most competitive economy by 2010. Sweden is held up as a role model in such fields as economic reform, employment, environment, research and innovations.

In the World Economic Forum’s Global Competitiveness Report for 2003, Sweden climbed to fifth place in the global ranking of growth competitiveness, taking into account the quality of technology, public institutions and the macroeconomic environment.

Steady Productivity Gains

According to the OECD, productivity in the Swedish business sector increased at an annual average of 2.6 percent between 1993 and 2002, compared to 1.7 percent in the US and 1.4 percent in the EU. The main explanation for the country’s strong performance is the ability of Swedish companies to adopt new technologies to optimize operations. Sweden’s extensive use of IT systems and solutions, large R&D spending and a skilled workforce all contribute to the substantial productivity gains.

Attractive Cost of Business

Contrary to the impressions of many, it is remarkably inexpensive to do business in Sweden. The country’s ample water reserves provide electricity at attractive cost, and telephone and communication services are available at low prices due to early deregulation. Rents for office space in Stockholm and other cities are relatively low. The Swedish public services sector runs smoothly and efficiently and provides many low-cost, high-value services.

A Corporate-Friendly Environment

Sweden offers a favorable corporate tax environment. At 28 percent, Swedish corporate tax is the second lowest in the EU. After deductions, the effective rate is approximately 25 percent.

From July 2003, capital gains on the sale of subsidiaries are tax-exempt. There is also full tax relief on interest, and intra-group dividends are tax-exempt. Furthermore, foreign key personnel may be entitled to a special 25 percent tax relief for three years. By mid-2003, almost 1,000 foreign experts had qualified for this.