JEDDAH, 6 June 2006 — With the government making all-out efforts to woo private and foreign investors, Saudi Arabia attracted SR97.7 billion foreign direct investment (FDI) in 2005.
Japan occupied first position among countries investing in the Kingdom during 2005 with a SR8.7 billion, followed by the United Arab Emirates (UAE), Bahrain and the US. As to cumulative investments, the countries that invested in Saudi Arabia until the end of 2005 were: US with SR35.34 billion invested in 265 projects, Japan with SR17.15 billion in 35 projects, and the UAE with SR11.68 billion in 84 projects, according to a report by the Kuwait-based Global Investment House (Global).
Since its inception on April 10, 2000, Saudi Arabian General Investment Authority (SAGIA) has licensed 3112 projects (up to November 2005) amounting to SR152 billion. Foreign investors, from 82 countries, contributed 57.8 percent, i.e. SR87.9 billion of the total licensed investments, whereas the Saudi share amounted to SR64.1 billion i.e. 42.17 percent of the total investments.
SAGIA, in its second quarter-2005 report for investments in the country reflected a record 4,596 percent increase in licensed investments’ value, a 46-fold increase compared with the same period from 2004. Combining both quarters of 2005, the SR65 billion investment flow for the first half of 2005 shows a net increase of 1,670 percent compared with the figures from 2004 when licensed investments totaled SR3.7 billion.
Saudi Arabia’s industrial sector has also shown strong growth in 2005. The government has provided strong budgetary support to infrastructure development by allocating SR22.5 billion in 2006 budgets which includes SR18 billion worth of new projects.
According to the Global report, most of the foreign investments during the year 2005 were concentrated in the industrial sector.
Saudi Arabia is improving its railway network to improve transportation in the country with SR15 billion railway expansion project that links the Kingdom’s east and west coast regions. The project involves construction of 950 km new tracks between Riyadh and Jeddah and another 115-km line between Dammam and Jubail as well as upgrading of the existing rail link between Riyadh and Dammam.
Saudi Arabia has taken a series of measures to improve the country’s investment climate, removing obstacles facing private investors, allowing foreign manpower recruitment and speeding up licensing procedures. The Supreme Economic Council, in charge of economic reforms, approved the implementation of 17 agreements between the SAGIA and relevant government departments to make Saudi Arabia more investment-friendly.
A Riyadh Chamber of Commerce and Industry (RCCI) report revealed that the total amount of money invested in Saudi Arabia’s industrial sector over the past 30 years has come up to $68 billion. The investments were spread over 3,636 factories and industrial plants. Mineral products, motors and machinery sector are in the forefront, in this respect, as it has 997 functioning factories or 27 percent of the total number of working factories. The chemical and plastic products sector, however, has the major part of these investments, with $42 billion or 62 percent of the total capital invested in these factories.
In order to improve the production of metals within the country and reduce dependence on imports, a group of Saudi investors and businessmen are planning to form a consortium to build the first aluminum smelter in the Kingdom. The gigantic project, which is estimated to cost $2 billion, will be built in the proposed second industrial city of Jubail (Jubail 2). The smelter will have a production capacity of 500,000 tons in the beginning. Saudi Arabian Basic Industries Corp. (SABIC) signed four agreements to increase steel production at the HADEED affiliate in Jubail. By the end of 2006, annual metals production will increase to 5.5 million tons of long and flat steel products, up from 3.9 million tons at the beginning of 2004.
In an effort to provide support to the technology-intensive industry, SAGIA and Intel Capital have announced a cooperative effort to help establish an independent $100 million venture capital investment company fund to invest in technology companies located in, or having a connection with, the Kingdom. Intel will aid in the management of the fund. Intel separately announced a $50 million fund to invest in leading technology companies in the region.
