JEDDAH, 11 June 2007 — The Saudi economy loses SR60 billion ($16 billion) in investments and more than 120,000 jobs annually as a result of bureaucratic practices in addition to other reasons that obstruct the implementation of vital projects, according to a senior official at Saudi Arabian General Investment Authority (SAGIA).
"The main challenges facing investors are the nature of regulations and the internal procedures in addition to a lack of infrastructure," said Dr. Awad ibn Saleh Al-Awad, deputy governor of SAGIA. He said, however, that Saudi Arabia would soon win 10th position among world countries in terms of economic competitiveness.
"SAGIA will not accept less than the 30th position this year in terms of economic competitiveness and we expect the Kingdom will reach the 10th position by 2010," the official said.
At present the Kingdom is in 38th position. He said the Kingdom could, with the support of government departments, become a major attraction for foreign investments. He pointed out that a lack of infrastructure in sectors such as transportation and the decline in private sector productivity were some of the major challenges facing the Kingdom. "In advanced countries, individual productivity is $40,000 to $45,000 annually while in the Kingdom, it is between $18,000 and $20,000."
He said representatives of SAGIA's overseas offices were making tremendous efforts to promote investments in the Kingdom. "They promote Saudi Arabia as the best place for investment in the Middle East."
Recently a SAGIA delegation visited the United States offering investment opportunities worth more than $500 billion to American investors.
Saudi Arabia has launched four mega-economic cities in Rabigh, Hail, Madinah and Jizan during the past two years and the four are expected to attract SR300 billion in domestic and foreign investments and also to create more than a million jobs.
Awad stressed the need for the authorities to make continuous evaluations of the Kingdom's investment environment. "The efforts made by the government to overcome investment challenges will remain weak and ineffective unless they continue on a regular and ongoing basis," he added.
Saudi Arabia has many advantages in strategic sectors at regional and global levels which make it attractive for international investments. The Kingdom is ranked first regarding prices of energy provided for investment projects. Investments in the Kingdom realize high profit ratios for local, foreign and shared projects with low risk exposures, and a simple form of tax and property registration fees. Saudi Arabia occupies fifth position regarding taxes and fourth in property registration costs, according to business performance reports 2006-2007 issued by the World Bank.
According to a study published by Forbes Arabia magazine assessing the performance of 1,616 joint stock companies in the Arab world last year, the first three positions were held by Saudi companies and among the top 50 companies, 22 were Saudi.
Saudi Arabia has made rapid strides in banking services and Saudi banks comfortably rest within the list of the world's biggest 1,000 banks. The three biggest banks in the Arab world are Saudi.
Saudi Arabia, which holds a quarter of the world's oil reserves, is the biggest free economic market in the Middle East, acquiring 25 percent of gross national Arab product that exceeds $300 billion.
