JEDDAH, 17 July 2005 — Saudi Arabia has allocated SR15 billion to underwrite credit facilities to boost non-oil exports. Crown Prince Abdullah yesterday approved a decision by the board of the Saudi Fund for Development (SFD). Finance Minister Dr. Ibrahim Al-Assaf, who is chairman of SFD, said that the new financial resources would be used to provide credit facilities to finance national exports.
“This will definitely help Saudi exports,” said economist Dr. Ihsan Bu-Hulaiga. “The goal is to diversify the country’s economic resources by promoting non-oil exports. This has been the aim of the latest development plans and we have seen a 10 percent increase in non-oil exports during the past few years,” Bu-Hulaiga told Arab News.
Al-Assaf said that the Saudi Export Program (SEP) began offering its services to non-oil national exports four years ago. More than 300 Saudi exporters have so far registered with SEP, which has approved finances and guarantees worth SR2 billion to importers of Saudi products in more than 30 countries in Asia, Africa, North America, Europe and Australia.
These exports so far included petrochemicals, plastics, agricultural equipment, construction products and equipment, metallic and food products, the minister said.
Al-Assaf said the SFD was working hard to increase the size of national exports. “In addition to its direct role of financing and guaranteeing exports, the fund has signed several cooperation agreements with banks, companies and international institutions for financing and guaranteeing Saudi exports,” he explained.
Some of the institutions the SFD signed agreements with include Arabian Investment Company, Inter-Arab Investment Guarantee Corporation, Arab Monetary Fund, Islamic Development Bank, the Saudi-Sudanese Bank, El-Neelain Industrial Development Bank, Omdurman National Bank, Khartoum Bank, Export and Finance Bank in Jordan, Yemen’s National Commercial and Investment Bank, Algerian National Bank, Tunisia’s Al-Aman Bank, the Byblos Bank in Lebanon and the Central Bank of Iran.
Al-Assaf urged agencies which have not yet registered to join the program and benefit from its services. “Our current exports of petrochemicals, food products, plastic and others have earned a good reputation in the countries they are being exported to,” Bu-Hulaiga said.
Even though many of the industries and products are oil-based, Bu-Hulaiga pointed out that this is our competitive advantage and we have been able to expand in other industries such as the refining industries in Aramco, for example. “This program is necessary to bolster our competitive ability abroad and with the approaching date of joining the World Trade Organization it will improve and support our products’ competitiveness,” he explained.
In addition, he said that this expansion in industries will create more job opportunities and this would need human resources, better administrative skills and methods. “I think the private sector would benefit a lot from the program and the private sector is always seeking to increase its exports. What the fund and the program can do is not only provide financing but also provide what is called ‘soft infrastructure’ such as information and easier procedures,” he said.
He suggested that the program could be transformed into an independent authority to provide complete services and support, financial and otherwise. “Saudi exporters might be small now, but by increasing their awareness of how to reach markets and produce quality products they can develop and compete, and this would need a competent administrative crew,” he said.