Deepening Saudi-US Business partnership through investment

1 / 2
2 / 2
Updated 19 April 2016

Deepening Saudi-US Business partnership through investment

The 4th US-Saudi Business Opportunities Forum held in Riyadh recently brought together government and business leaders from the United States and Saudi Arabia and demonstrated the commitment between our countries and companies to advance the US-Saudi commercial relationship. It is clear that we have a strong foundation to build upon and we are deeply vested in each other’s success.
At the forum, we shared observations, based on experiences around the world, on how investment is facilitated by trade, innovation, competitiveness and government policies.
We have observed that investment follows trade.
When conditions exist for trade to flourish, with low barriers and efficient processes, investments follow.
When companies successfully sell into a market, they want to stay close to their customers and naturally follow on to establish a presence by investing and innovating in the market.
In Saudi Arabia, I saw an excellent example, at the Dhahran Techno Valley Company (DTVC) in Dhahran, of the US and other international companies that have made investments to be close to their customers, in particular Saudi Aramco.
These companies have setup research and development (R&D) operations here to innovate and meet the needs of their customers, tailored to the conditions of Saudi Arabia.
By creating an innovation-friendly ecosystem, including university connections as well as access to research grants, DTVC promotes talent development and capacity building — and enhances the innovation and competitiveness of the companies that invest.
Through hiring local graduates, many of them women with STEM backgrounds, the talent base developed will be a key factor in attracting new investments.
In any market, the business environment, the ease of doing business, is key to attract investment. Companies have choices and gravitate to those countries where the business environment is the most conducive to obtaining returns and managing risk.
Delays and uncertainties in administrative processes are deterrents to investment.
Concrete policy changes that improve the business environment are therefore a significant element in attracting investment.
Toward this end, we find it valuable for policymakers to obtain early input from private sector stakeholders. Such consultation will help create greater understanding of issues that might hinder investment and a sense of greater predictability.
The global competition for attracting FDI is fierce. Saudi Arabia would benefit by using work force development programs to match Saudization labor policies so that the skill-set of the labor force will meet the needs of international firms.
Investment opportunities may be inhibited rather than helped by offset requirements that make foreign investment a requirement of eligibility for major public tenders. Such a requirement may result in keeping many companies away from this market.
We laud Saudi Arabia’s economic reforms and commitment toward ensuring the long-term health of its economy. The Kingdom has demonstrated real leadership in undertaking energy subsidy reforms.
We also recognize the challenges Saudi Arabia faces when rolling out the National Transformation Program (NTP). The US government and its private sector stand ready to support the Kingdom through lessons learned, solutions and technologies, and best practices to attract investment and innovation.
We are already working on coupling Saudi Arabia’s new needs and priorities with leading American solutions. For example, last October, we brought representatives from 15 US firms to Riyadh and Jeddah as part of an architecture and engineering trade mission focused on energy saving and green buildings.
Next month, we will bring 20 leading American health IT, hospital management and training to the Kingdom in a direct response to Health Minister Khalid Al-Falih’s call for a greater role by the private sector to modernize the operational side of Saudi Arabia’s health care system.
These trade missions often result in partnerships, joint ventures and investments as these companies understand the market.
The US is also keen to share its experiences in enabling entrepreneurship with the Kingdom as this country embarks on its NTP.
Supporting entrepreneurs across the Middle East, and indeed around the world, is a top priority for President Barack Obama. He recognizes that opportunity for business creators to thrive around the world is the foundation for a rising middle class, for security and stability, and for broad-based prosperity.
The Department of Commerce leads the administration’s effort to support and empower aspiring entrepreneurs, both in the United States and across the globe. As America’s innovation agency, my department helps connect the world’s next generation of entrepreneurs with the networks, mentors and investors they need to make their businesses successful.
Investment in both directions will enhance the international competitiveness of our respective economies. While we are undertaking efforts to expand our trade and investment relationship, US companies have already invested $11 billion in the Kingdom, and Saudi companies have similarly invested $13 billion in the United States.
We welcome additional Saudi investment in the US companies and find that by investing in the United States and working with its demanding markets and gaining access to the latest technologies, they become more competitive globally.
We will hold our annual SelectUSA Investment Summit from June 19-21 in Washington, with the participation of Commerce Secretary Penny Pritzker and a number of cabinet members.
We welcome a strong Saudi presence at the conference.
We look forward to collaborating with our friends in this great Kingdom to advance our commercial relationships and the successes of our companies and countries.

— Arun M. Kumar is director general of the US and Foreign Commercial Service and Assistant Secretary for Global Markets US Department of Commerce.

Japan’s households tighten purse strings as sales tax and typhoon hit

Updated 06 December 2019

Japan’s households tighten purse strings as sales tax and typhoon hit

  • Falls in factory output, jobs and retail add to fears of worsening slowdown after Tokyo unveils $122bn stimulus package

TOKYO: Japanese households cut their spending for the first time in almost a year in October as a sales tax hike prompted consumers to rein in expenses and natural disasters disrupted business.

Household spending dropped 5.1 percent in October from a year earlier, government data showed on Friday.

It is the first fall in household spending in 11 months and the biggest fall since March 2016 when spending fell by 5.3 percent. It was also weaker than the median forecast for a 3 percent decline.

That marked a sharp reversal from the 9.5 percent jump in September, the fastest growth on record as consumers rushed to buy goods before the Oct. 1 sales tax hike from 8 percent to 10 percent.

“Not only is the sales tax hike hurting consumer spending but impacts from the typhoon also accelerated the decline in the spending,” said Taro Saito, executive research fellow at NLI Research Institute.

“We expect the economy overall and consumer spending will contract in the current quarter and then moderately pick up January-March, but such recovery won't be strong enough.”

Household spending fell by 4.6 percent in April 2014 when Japan last raised the sales tax to 8 percent from 5 percent. It took more than a year for the sector to return to growth.

Compared with the previous month, household spending fell 11.5 percent in October, the fastest drop since April 2014, a faster decline than the median 9.8 percent forecast.

Analysts said a powerful typhoon in October, which lashed swathes of Japan with heavy rain, also played a factor in the downbeat data. Some shops and restaurants closed during the storm and consumers stayed home.

Separate data also showed the weak state of the economy.

The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales data, fell a preliminary 5.6 points to 94.8 in October from the previous month, the lowest reading since February 2013, the Cabinet Office said on Friday.

It was also the fastest pace of decline since March 2011, according to the data.

Real wages adjusted for inflation, meanwhile, edged up for a second straight month in October, but the higher levy and weak global economy raise worries about the prospect for consumer spending and the overall economy.

While the government has sought to offset the hit to consumers through vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures.

Japan unveiled a $122 billion fiscal package on Thursday to support stalling growth and as policymakers look to sustain activity beyond the 2020 Tokyo Olympics.

A recent spate of weak data, such as exports and factory output, have raised worries about the risk of a sharper-than-expected slowdown. The economy grew by an annualized 0.2 percent in the third quarter, the weakest pace in a year.

Analysts expect the economy to shrink in the current quarter due to the sales tax hike.