Deepening Saudi-US Business partnership through investment

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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.

OECD forecast sees global growth at decade low

Updated 22 November 2019

OECD forecast sees global growth at decade low

  • Governments failing to get to grips with challenges, outlook says

PARIS: The global economy is growing at the slowest pace since the financial crisis as governments leave it to central banks to revive investment, the OECD said on Thursday in an update of its forecasts.

The world economy is projected to grow by a decade-low 2.9 percent this year and next, the Organization for Economic Cooperation and Development said in its Economic Outlook, trimming its 2020 forecast from an estimate of 3 percent in September.

Offering meagre consolation, the Paris-based policy forum forecast growth would edge up to 3 percent in 2021, but only if a myriad of risks ranging from trade wars to an unexpectedly sharp Chinese slowdown is contained.

A bigger concern, however, is that governments are failing to get to grips with global challenges such as climate change, the digitalization of their economies and the crumbling of the multilateral order that emerged after the fall of Communism.

“It would be a policy mistake to consider these shifts as temporary factors that can be addressed with monetary or fiscal policy: they are structural,” OECD chief economist Laurence Boone wrote in the report.

Without clear policy direction on these issues, “uncertainty will continue to loom high, damaging growth prospects,” she added.

Among the major economies, US growth was forecast at 2.3 percent this year, trimmed from 2.4 percent in September as the fiscal impulse from a 2017 tax cut waned and amid weakness among US trading partners.

With the world’s biggest economy seen growing 2 percent in 2020 and 2021, the OECD said further interest rate cuts would be warranted only if growth turned weaker.

China, which is not an OECD member but is tracked by it, was forecast to grow marginally faster in 2019 than had been expected in September, with growth of 6.2 percent rather than 6.1 percent.

However, the OECD said that China would keep losing momentum, with growth of 5.7 percent expected in 2020 and 5.5 percent in 2021 in the face of trade tensions and a gradual rebalancing of activity away from exports to the domestic economy.

In the euro area, growth was seen at 1.2 percent in 2019 and 1.1 percent in 2020, up both years by 0.1 percentage point on the September forecast. It is seen at 1.2 percent in 2021.

The OECD warned that the relaunch of bond buying at the European Central Bank would have a limited impact if euro area countries did not boost investment.

The outlook for Britain improved marginally from September as the prospect of a no-deal exit from the EU recedes.

British growth was upgraded to 1.2 percent this year from 1 percent previously and was seen at 1 percent in 2020.