JEDDAH, 11 May 2005 — The presentation by the UK Offset team at the Jeddah Chamber of Commerce and Industry (JCCI) yesterday triggered the interest of Saudi businessmen and women in attendance. The event was part of the continuing program to facilitate mutual business and technological transfer between Saudi Arabia and the UK and maintaining the profile of the program in the Kingdom. The team is on a three-city tour, covering Dammam, Jeddah and Riyadh. The Al-Yamamah Offset program is an agreement made between the UK government and Saudi Arabia to attract inward investment through technology transfer exclusively into the Kingdom. Saud Alfozan, the Economic Offset manger at the Offset office in Riyadh, explained that the aim of Offset is to encourage business investment in Saudi Arabia preferably through joint ventures but also through licensing agreements. “We have between 30 to 35 active ideas now in the process of implementation,” said Alfozan.
Offset’s activities are confined to the private sector and has conducted many sector studies for interested investors. Here to identify opportunities in the Saudi market, the team hoped to attract Saudi businessmen to use their services. “We collaborate with SAGIA (Saudi Arabian General Investment Authority) and compliment each other, Offset by providing financial incentives and SAGIA by streamlining the process and paperwork for establishing the business,” said Alfozan. Although most of the projects handled by Offset have been large, it welcomes small good ideas as long as it is commercially viable.
“The maximum we offer as a loan per project is $10 million and the minimum is 500,000 pounds,” he said in an answer to a question. Offset so far has a total 1 billion pounds capital worth of projects. The maximum period to repay the loan is 7 years. “The loan is made to the foreign partner to put in the equity and the process to approve the financing might take less than 5 months,” he said in response to another question. “We want to encourage foreign companies to approach us with ideas for investment here,” he said.
In its current form as business facilitator, the Offset program has been running since 1987 when the agreement between the two governments was made. The program operates both active and passive sides. “We run seminars outside Saudi Arabia - Switzerland, Austria and Germany for example - to promote the program and introduce a wide audience to opportunities here,” said Alfozan. Offset can also help Saudi businessmen with the technological information and contacts. Offset can also arrange non-recourse financing of projects through the BAE Systems Project Finance Initiative as further encouragement for inward investors. “The bulk of our projects is in petrochemicals but we want to focus now on education and training such as specialized vocational training and in healthcare for example, but the problem is that the project has to be commercially viable,” said Steve Kelly from the British Offset Office to Arab News. One of the reasons for this promotion of Offset is that after 9/11 foreign investment here has slowed down but lately it has picked up again. “When you have an incident confidence level drops but once we convince them to come here and they see that perceptions are different from reality they tend to stay,” he said.
Alfozan also told Arab News that the three prime sectors of interest for investment are petrochemical, education and training, and healthcare. “I think this is a great opportunity for investment and we should try to take advantage of it,” said Dr. Mohamed Al-Mutlaq, managing director of Almutlaq trade and industries.