RIYADH, 19 August 2004 — The Kingdom still remains an attractive destination for overseas investors despite sporadic acts of violence, says the president of French defense giant Thales.
In an interview with Arab News in the wake of recent terror attacks, Jacques Bourgeois, Thales’ president in Saudi Arabia, said: “The Kingdom is suffering unfairly from an image that does not mirror the real situation, which is actually positive in every way. Such a distorted image could make the investors more cautious about coming to the Kingdom and we have to fight against this unjustified image.”
He said that despite these attacks, the Kingdom still remains “a rich country, endowed with exceptional human, financial and natural resources, low taxes, strong currency, no inflation, and especially 22 million inhabitants with 11 million under 20 years which is the real wealth of a country.”
The Thales CEO observed that the Kingdom enjoys certain strategic advantages that would not disappear in the wake of terror attacks. “But in order for the investors to take these realities into account rapidly, it does necessitate that non-Saudi and Saudi assets overseas should be invested rapidly in the Kingdom. On the other hand, the economic reforms started should continue to develop and be more publicized outside the Kingdom,” Bourgeois said.
He said overseas investors are not aware that corporate taxes have been brought down to 20 percent at the maximum level, which is significantly lower than the 45 percent rate prior to the economic reforms program that started in 2000. The Saudi tax system has mainly a double advantage of simplicity and predictability, “which is very important for the investors,” he added.
Referring to overseas concerns over commercial disputes in the Kingdom, Bourgeois said: “The institution of the Board of Grievances to settle disputes involving foreign investors and other such measures are welcome, and need to be developed. Activities under the ‘negative list’ (of sectors where foreign investment is barred) are also likely to be progressively reduced.”
He said alongside the economic reforms the Kingdom has also maintained a firm grip on the security situation.
“For instance, the level of ‘conventional’ crime (killing, rape, robbery, etc.) is very low in the Kingdom, which attests to the excellent global and cosmopolitan character of the population, the efficiency of the rules and the positive impact of law and order regulations of this country. Really, the Saudi security system appears very effective and professional in this respect,” he said, referring to the string of successes scored by the security forces in nabbing or killing terrorists on the wanted list.
Noting that the French Offset Program would maintain its momentum, Bourgeois said it provides an attractive support opportunity for foreign investors to set up industrial projects in Saudi Arabia in line with the thrust, regulations and approaches of the SEOC (Saudi Economic Offset Committee). The projects have to be joint ventures with Saudi partners. The range of activities covers manufacturing, raw materials processing and agro-industrial projects and services, with an emphasis on their technological contribution and their capacity for potential import substitution and/or exports.
In this respect, he pointed out, the results have been significant. Several important elements of the offset obligations have been achieved. The completed or ongoing projects within the framework of the offset program span diverse fields such as defense, precious metals refining, 4X4 vehicles, electronic keys, petrochemicals, and of course, manpower training.
On the question of human resources development, the Thales chief referred to the message from their group’s president: “Thales entities should become Saudi in Saudi Arabia, because the development of common interests between Thales and its Saudi customers will lead to success of everybody.”
In this context he referred to the role of Thales, claimed to be a world leader in the fields of aerospace, defense, security, information technologies and services, and explained how it has facilitated technology transfer to the Kingdom over the years.
Among others, the company developed safety systems for the two holy mosques and several strategic facilities, and helped with the installation of the Riyadh TV center and many TV & Radio broadcast stations in various cities of the Kingdom. The group has developed transmission systems for large Saudi companies and navigation systems aids for various airports in the Kingdom.
Today there are more than 700 people with their families who are directly dependent on these projects in the Kingdom. The group’s concept is that of “domesticity” or localization, which is to become more and more “Saudi in Saudi Arabia”, he added.
