JEDDAH, 8 October 2005 — Saudi Arabia’s accession to the World Trade Organization (WTO) will make it the gateway to the Middle East, says Amr Al-Dabbagh, governor of the Saudi Arabian General Investment Authority (SAGIA).
Dabbagh refuted suggestions that the Kingdom’s political and economic reforms were aimed at just winning the WTO membership. “Reform is a necessity. It’s not a luxury,” the AFP news agency quoted him saying during a recent trade visit to Chicago.
“It should not be linked to accession to the WTO because it is a process that every nation that wants to survive and wants to remain competitive should go through,” he stated.
The SAGIA chief said the Kingdom had reduced the sectors previously protected from foreign ownership, known as the negative list. “The negative list very soon will not exist,” Dabbagh said, noting that the retail sector, telecom and insurance have already been removed from the list. “It’s getting shorter by the day.”
Accession to the WTO will serve two critical purposes, he said. “It will eliminate a number of existing tariffs on Saudi petrochemicals and will position Riyadh as the gateway to the Middle East,” he added.
Recent economic and legislative reforms have already shown strong dividends, Dabbagh said, adding that the Kingdom had recorded a nearly 4,600 percent increase in investments in the second quarter of 2005 with investments licenses amounting to SR24.4 billion ($6.5 billion), compared with SR2.8 billion ($747 million) in the second quarter of 2004.
“We expect the trend of growth that we have just witnessed and reported will continue,” he said, adding that the investment authority aimed to attract $1 trillion in direct foreign investment over the next 20 years.
The value of that investment must be measured in more than just dollar terms, Dabbagh said. With the revenue from its massive oil reserves, Saudi Arabia is a net exporter of investment and is very selective when it comes to soliciting foreign investment.
“We need foreign investment for knowledge transfer and technology transfer,” the governor said. One aim of the investment authority is to aid in diversifying the energy sector and adding value to exports.
Saudi Aramco, the national oil company, is embarked on plans to build three new export-oriented refineries in Rabigh, Yanbu and Ras Tanura.
The governor also underplayed the impact that terrorism and political unrest in the region might play when it comes to attracting foreign investment. Calling terrorism a global challenge, Dabbagh said Saudi Arabia is “a much safer place than many places around the world” and said security concerns were overblown by the Western media.
The business opportunities offered are also simply too rich to ignore, he said. “The business community understands competitiveness and capital will always go to where the highest returns are.”
The political reforms already enacted are “significant,” Dabbagh said, noting a recent decision to allow Saudi women to stand in elections to the board of the Jeddah Chamber of Commerce and Industry. While Dabbagh admitted that there is still room for improvement he said the pace of reform is right on track. “Saudi Arabia is a young nation. We are about 70 years old and what we have seen happening in this country in such a short period of time is significant,” he said.
