RIYADH, 18 September — Saudi non-oil exports, which contributed 11.4 percent of the GDP ($152 billion) in 1999, are expected to increase to 13.89 percent by 2004. The average annual growth rate will be 10 percent over the next 20 years.
This was disclosed by Dr. Abdulrahman Al- Zamil, leader of the 14-member Saudi delegation, during a presentation on Saudi non-oil exports in Rotterdam yesterday. An advance copy of his presentation was provided to Arab News by the Saudi Export Development Center here. It is the first time that the Kingdom is organizing the Saudi Export Forum in the European Union, beginning with the Netherlands.
Presenting Saudi Arabia ‘s case as a re-export center in the Middle East, Dr. Al-Zamil said the Kingdom had come a long way in boosting the efficiency and export capability of its factories that numbered 3,300 till April 2000 with a cumulative investment of $62.674 billion and a manpower of 303,949 employees.
“Export and re-exports were envisioned by the Saudi government as a priority in its development plan for income diversification, boost in production, better utilization of local materials and transfer of technology,” Dr. Al-Zamil said.
He added that the government had realized the importance of exports through many specialized studies which showed that every $1 billion worth of exports helped to create 25,000 new jobs in the US local market, while every pound sterling spent in promoting British exports brings back 80 pounds sterling to its economy. In the US, every dollar adds $250 to the US economy.
He said an important point was that the Kingdom had reduced its import tariff to zero in almost 50 percent of the imports and to five percent on the remaining imports. This had led to a 92 percent increase in re-exports last year, while direct imports were up by only three percent during the same period.
The mission leader said the Saudi exports promotion drive had to overcome several challenges along the way. “The Kingdom follows a path of open market unlike other developing countries which use customs duty as a protection against all foreign goods. Protectionist policies, whether through tariff or non-tariff barriers, were not accepted by the Saudi government and have never been promised to the industries. Financial support from the Saudi Industrial Development Fund (SIDF) was available only to industry that could compete without any consideration of local market barriers.
As a result of this challenging environment, he said, all the local factories had to face severe competition in an open market. This led to the survival of the fittest. “Also, it prevented other industries, such as automobiles, from being manufactured locally, even though they are badly needed at home. As a result, the value of Saudi car imports stands at $6.76 billion annually.”
It is against this background, said Dr. Al-Zamil, that EU countries should consider Saudi Arabia as a strategic option for overseas investment opportunities. The advantages are manifold.
The Kingdom is No.1 in terms of oil exports, non-oil exports, as well as for petrochemicals in the Middle East. By dollar value, exports from the chemical sector claimed the largest share of investment at $3.233 billion followed by plastic ($1.015 billion), mining industry ($529 million), foodstuff production ($453 million), furniture/electrical equipment manufacture ($254 million), he added.
