The chairman of the Saudi Arabian General Investment Authority (SAGIA), Prince Abdullah ibn Faisal ibn Turki, says that the investment climate in the Kingdom has become more attractive for both foreign and local investors and that SAGIA has licensed 200 projects with a combined investment capital of $15 billion.
This figure means the average capital for each project is something in the neighborhood of $7.5 million — which in my view is modest and an indication that the projects are relatively small. These projects will probably not have much impact on the job market in that they will not create a large number of jobs for Saudis. It has been seen that small projects do not offer Saudis handsome salaries or lucrative incentives.
At the same time, the small projects cannot afford to hold training programs for Saudis as large businesses and banks do. Looking at Egypt as an example, we see that it has not benefited greatly from small investments since many of them are limited to assembly plants. The result has been that the Egyptian economy has not improved as originally hoped.
Investing in small projects will not benefit us greatly nor will the products manufactured here be able to compete with foreign ones when the Kingdom formally joins the World Trade Organization as a full member. The investments we should look forward are gas and related products — electricity and desalination, information technology and other such projects.
Many countries have now joined the club of the rich, albeit partially. India, China, Malaysia, Taiwan and South Korea have attracted foreign investments in the vital areas of IT and electronics while the countries of Latin America and South Asia have failed to enter the club because they continue to rely on agriculture and small traditional industries or on one single commodity such as oil.
We must focus our attention on attracting investments in the areas I have mentioned. To encourage foreign companies, investors should enjoy a tax holiday for the first five years in return for providing training and employing Saudis.
— Arab News Local Press 11 December 2003
