RIYADH, 14 July 2005 — France ranks third as foreign investor with a total of $1.2 billion invested in 67 joint venture projects in the Kingdom. Since its inception, the Saudi Arabian General Investment Authority (SAGIA) has granted France 27 licenses worth more than $1 billion. These projects cover different fields ranging from power, telecommunications and industry to dairy projects and those in the oil and technology sectors.
The latest addition to these joint ventures is that of BNP Bank and the AGEF Insurance Company, giving Saudi-French partnership a diversified look.
An agreement for reciprocal protection and promotion of investments between the two countries was signed on June 26, 2002 in the Kingdom during the visit of the French minister for foreign affairs. Subsequently, it was ratified by both parties early last year. This agreement would further secure and encourage French investment in the Kingdom.
French presence in the Kingdom had long been heavily concentrated in the field of services, especially in the banking sector: the Crédit Agricole-Indosuez Investment in Banque Saudi Fransi (BSF), Saudi Arabia’s 5th largest bank and the 21st largest company in 2001. Its French partner holds 31.1 percent of the shares since 1977 accounting for 75 percent of French FDI in Saudi Arabia, i.e. $150 million out of a total stock of $198 million.
French presence in the industrial sector, including petrochemicals, remained sluggish for a long time. Three French industrial investments that were made prior to June 1999 were: Stesa, a subsidiary of Thales that specializes in the telecommunications sector ($4.6 million of French capital); Schneider, which locally manufactures electrical equipment ($1.6 million of French capital); and Sigma Paints, a subsidiary of SigmaKalon of the Total Fina Elf Group ($1.3 million of French capital).
In the field of services to the oil industry, the Compagnie Générale de Géophysique (CGG) has created a subsidiary in the Eastern Province, Argas, that undertakes seismic projects ($4.7 million of French capital). This company was ranked 87th in terms of the annual turnover of Saudi companies in 2001.
With the adoption of a more attractive foreign investment code in April 2000 and the establishment of SAGIA, French investments in the Kingdom have strongly improved and diversified.
October 2000 saw the acquisition of a large stake of Al Safi by Danone with a total French investment worth $200 million.
It was followed by subsequent industrial investments of Perrier in Al Manhal (mineral water) and of Saint-Gobain in Al Obeikan (technical textiles). At the end of 2002, Systra, one of the largest international engineering firms for rail and urban transport, received a licence for close to $1 billion investment in the rail sector.
Statistics issued by the French Central Bank indicate that the level of French Foreign Direct Investment (FDI) stocks in Saudi Arabia was €475 million at the end of 2001 (more than $600 million). According to the same source, Saudi direct investments in France reached €441 million at the end of 2001.
The implementation of two large-scale projects has further boosted the existing bilateral trade. Total signed together with Saudi Aramco and Shell on Nov. 15, 2003, a $2 billion contract to explore and exploit gas in Rub Al Khali. Furthermore, Bouygues is preparing the first-ever BOT project in Saudi Arabia with a total investment of $100 million for the establishment of a high level recreation center in Jeddah.
BNP Paribas, one of the biggest French banks, has been given a license to operate in the Kingdom. The bank will deal in corporate banking mainly to assist project services
Last year, Accor, the Saudi-French Company for Hotel Management signed an agreement for the establishment of a chain of hotels in the Kingdom.
In addition to its new ventures in the capital, Accor will be the first French hotel to open its outlets in the holy cities of Makkah and Madinah.
France is also the sixth largest trading partner of the Kingdom. Last year, French imports from the Kingdom stood at €2.9 billion, while its exports to Saudi Arabia were valued at €1.3 billion during the same period.
Saudi Arabia remained the third largest oil supplier of France.
Intermediate goods rank first among French exports. They are followed by consumer, agroindustrial and capital goods. Main French exports include barley, perfumes, poultry meat, pharmaceuticals, electrical equipment and clothing items and accessories.
French imports consist mainly of crude oil and refined petroleum products, which make up for almost 95 percent of French imports from the Kingdom. The Kingdom ranks as France’s third largest supplier of crude with a market share set at around 13 percent.
