EVEN though the Kingdom is booming on the back of sustained strong oil prices, there have been those who have expressed concern that the economy may be overheating due in part to property price inflation and the shortage of local investment opportunities which drives up the price of equities that are available. Now, however, comes highly positive news to the contrary from the respected Financial Times’ Foreign Direct Investment (fDi) magazine which has just rated Jubail as the premier Middle East investment location.
Every investment center in the world tells as good a story as it can about itself. However, the true measure of its virtues comes from independent analysis by specialists with no particular political agenda. On this basis the recognition by the FT magazine of Jubail’s attractiveness for foreign investors is extremely heartening. The truly remarkable achievement by the Saudi Arabian General Investment Authority and the Royal Commission for Jubail and Yanbu is hard to ignore. No less than $46 billion in foreign investment has flowed into the Jubail I industrial city which now contains the world’s largest petrochemical complex and holds some seven percent of the global petrochemical market. Nor has this success been achieved solely on the back of government funding. The Financial Times magazine notes with approval that the Saudi private sector plays a key and still-growing role in capitalizing upon the opportunities offered in Jubail, focusing in particular on high technology projects.
In 1982, when Time magazine rated the plans for Jubail among the world’s most ambitious industrial developments, even the most optimistic probably doubted the project would be such a runaway success. Now, however, the no-less ambitious scheme for Jubail II seem eminently achievable, not least because in the international investment world, success breeds success. The infrastructure in Jubail and Yanbu regions will be augmented by the new 1,065-km railway line to Jeddah via Dammam and Riyadh.
It should be noted, however, that a key to Jubail’s outstanding success has been the liberal commercial and fiscal regime foreign investors have enjoyed there, which includes the right to wholly own businesses and property. While there is a good argument for maintaining this exclusive arrangement and so focusing outside investment flows into a single location, there is also some virtue to proposals that this investment regime should be extended to the whole Kingdom, sooner rather than later — since under WTO rules when Saudi Arabia becomes a full member, the same regulations will eventually have to apply everywhere.
Jubail represents an invaluable proving ground for Saudi workers and managers. When the $56-billion Jubail II extension is completed, no less than 55,000 new jobs will have been created. The planners of the 24 new Saudi industrial cities announced last clearly have in Jubail an excellent template from which to work. The city that was once simply famous for its pearl fishermen has become the undoubted pearl in the Kingdom’s industrial crown.
