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M Imran Centre Director (Riyadh, Jeddah), IE Singapore
Second Secretary (Commercial), Singapore Embassy (Riyadh)
Muhammad_IMRAN@iesingapore.gov.sg
5 February 2015
Saudi Arabia:
An Oasis of Stability, A Country of Prosperity
Agenda
1. Why Saudi Arabia?
2. Where are the opportunities?
• How to tap on them?
• Who to work with?
3. Upcoming key initiatives
4. What other considerations to look out for?
Agenda
1. Why Saudi Arabia?
2. Where are the opportunities?
• How to tap on them?
• Who to work with?
3. Upcoming key initiatives
4. What other considerations to look out for?
Saudi Arabia in Numbers
13 provinces, 2.15 mn sq km
LARGE INFRA REQ’D
Population - 30,770,375
LARGEST BASE IN ME
GDP- US$ 777.870 billion
THE LARGEST ECONOMY IN ME
GDP per capita- US$25,401
HIGH POTENTIAL FOR CONSUMPTION
Projected GDP growth (2015-2019) – 4.5%
SECOND LARGEST IN GCC
* All figures are 2014 estimates
Saudi-Singapore Economic Figures
Total Trade - S$20.11 billion in 2014
Trade Growth – 5.2% CAGR over the past 5 years
Saudi is Singapore’s 15th largest trading partner &
2nd largest in GCC
Ease of Doing Business (2014) – The World
Bank
Ease of... 2012 Rank
2013 Rank
2014 Rank
Doing Business 49 22 26
Starting a Business 109 78 84
Dealing with Construction Permits 21 32 17
Getting electricity 22 12 15
Registering Property 20 12 14
Getting Credit 71 53 55
Protecting Investors 62 19 22
Paying Taxes 3 3 3
Trading Across Borders 92 36 69
Enforcing Contracts 108 124 127
Resolving insolvency 163 107 106
An Oasis of Stability, A Country of Prosperity
** Saudi Arabia reputation as a pillar of stability was enhanced after it
came out relatively unscathed during the Arab Spring and the smooth
leadership transition given the passing of the late King Abdullah
Singapore companies have successes in the Saudi Arabia
Consumer Retail
Hospitality
Consumer Food
Infra & Utilities
ICT
Transport & Logistics
Oil & Gas
Aviation
Agenda
1. Why the Saudi Arabia?
2. Where are the opportunities?
• How to tap on them?
• Who to work with?
3. Upcoming key initiatives
4. What other considerations to look out for?
KSA remains a key player in global Oil & Gas
Oil
• 260.2 billion barrels of crude oil reserves (25% of the world's proven recoverable crude oil reserves)
• 3.5 billion barrels of crude oil production (annual)
• 9.5 million barrels of crude oil production (daily average)
Gas
• 284.8 Trillion standard cubic feet of gas reserves (6th in the world)
• 3.9 trillion standard cubic feet of gas production (annual)
• 10.7 billion standard cubic feet of gas production (daily)
Continued heavy spending despite oil price slump
Map of Overall Global Cleantech Innovation Index Scores
Source: Cleantech Group Analysis
Opportunities in the Energy Sector
13
Exploration Production Transport Refining Distribution &
Storage
Upstream Midstream Downstream
Offshore Drilling
Platforms Manifolds
Christmas Tree
FPSO conversion
MPSVs
Crew Utility
Boats
Tugs & Barges
Transmission Pipeline
Systems
Tank
Storage
EPCM : Compressor
Packages
Refinery : Plant Civil
Engineering
Separation
of Oil and
Gas
EPCM : Heat
Exchangers
Storage Tank
services
Recommendations for Singapore companies engaging the KSA O&G sector
Focus on Supply & Services
Partner with conglomerates/ industry leaders
already qualified with NOCs
1
2
Recommendation 1: Focus on Supply & Services
Supply: Accessing the Global Supply Chain
• Increase supply of niche equipment procured from SG
• Capitalize on GSFTA to enjoy tariff savings
• Establish a local presence in partnership with local leading coy to develop local content
Services
• Lack of maintenance and support services in both marine and O&G sectors such as welding, diving, surveying, facilities maintenance
• Set up a presence in KSA to provide much needed services and over time, engage in technology and skills transfer.
• Conglomerates are important to the Saudi economy, with many owning
companies in energy, telecommunications, property, retail trade and
banking. Source for reliable local coys as distributors, stockist and/or
partners to establish local connections.
Recommendation 2: Partner with conglomerates/ industry leaders already qualified with NOCs
• A large percentage of materials and services are sourced by global
established LSTK (lump sum turn key) contractors worldwide, leverage
on or establish r/p for more palatable sizes.
Country
Gross Domestic Product (GDP) Household consumption expenditure Consumption Expenditure as % of GDP
2011 2012 2013 2011 2012 2013 2011 2012 2013
Bahrain 29,044,085,407 30,756,332,649 32,897,761,327 11,245,621,872 11,686,269,269 13,266,488,785 38.72 38.00 40.33
Kuwait 154,034,939,461 174,044,699,037 175,831,217,319 37,279,655,594 41,071,595,436 42,529,117,946 24.20 23.60 24.19
Oman 69,521,984,671 77,497,360,083 79,655,916,775 21,041,593,443 22,840,362,336 17,593,499,131 30.27 29.47 22.09
Qatar 169,804,736,002 189,944,505,495 202,450,000,000 21,952,110,454 24,088,516,427 28,194,380,225 12.93 12.68 13.93
Saudi Arabia 669,506,763,733 733,955,613,519 748,449,649,075 181,802,933,333 209,441,066,667 222,209,787,781 27.15 28.54 29.69
Singapore 272,316,082,866 284,298,603,868 295,744,026,213 101,483,421,899 109,936,397,599 113,582,753,936 37.27 38.67 38.41
United Arab Emirates 347,454,050,374 372,313,955,071 402,340,095,303 181,076,923,077 178,972,089,857 200,387,474,472 52.12 48.07 49.81
Saudi’s consumption & GDP expenditure is the highest in GCC
Sources: National Accounts Main Aggregates Database; United Nations Statistics Division; Euromonitor
Highest
in the
GCC
This robust consumption is driven by:
Increasingly smaller family sizes, Increase number of households
Recommendations for Singapore consumer companies
Consumer Services: Collaborate with relevant local
consumer giants
Consumer Products: Work with multi-brand retail
operators
1
2
Consumer Services: Collaborate with relevant local consumer giants
• Local consumer giants are companies who are mall developers/ owners, retailers or
franchisees.
• Collaboration models - Leasing, JV, Consignment, Franchising
• Select local franchising coy which has experience in the target consumer segment and consumer profile.
• Landing point for Asian food retail: Jeddah – One of the 3 largest economic cities in KSA with the highest proportion of expatriates.
• Expansion to Riyadh & Eastern Province as the next 2 most dense regions
Food Services
• Shop location is key to reaching target consumer
• Choice of partner is important as financial and social clout is needed to secure ideal location
Fashion Retail
• Taking a long term view of the market
• Branding – Commitment of resources to create brand awareness
• First target consumer would be the Asian expatriate population
Learning points
Consumer Products: Work with multi-brand retail operators
• Local multi-brand operators could be distributors, master/ area franchisees, or
retailers with their own brands and other acquired brands
• Collaboration Models – JV, Franchise, Distribution
•Commitment to brand awareness initiatives
•Natural affinity for western products; hence coys should target primarily the huge Asian expatriate population that numbers approximately 9million in the whole of the Kingdom.
•Packaging is key, especially for premium products.
Brand awareness
•The general consumer is very price sensitive with very little brand loyalty.
•Associate premium products with Western markets. Price sensitive
•When choosing channel partners/distributors, it is important to choose a partner who is experienced with marketing and distributing Asian products.
Choice of Partner
• Important to partner with a local coy with strong traditional trade channels in order to access the other regions of Saudi that are less urbanised
Strong distribution
Sizable opportunities in infrastructure, Transport & Logistics, Construction
• Growth is also being driven by projects in the non‐oil sectors such as
transport and infrastructure, power and water as well as
communications and construction
• SR232.3bn ($62bn) worth of non‐oil projects were awarded in 2013 and
SR76.58bn ($20.4bn) expected to be awarded in 2014.
• Around 37 per cent of upcoming projects under execution belong to the
transport sector with 21 per cent in power and 19 per cent in the
education sectors respectively.
• While SG coys are not able to front the projects, there are opportunities
for niche products & services.
Agenda
1. Why Saudi Arabia?
2. Where are the opportunities?
• How to tap on them?
• Who to work with?
3. Upcoming key initiatives
4. What other considerations to look out for?
2015 Key Initiatives
• Supplier Day to Saudi Arabia & Qatar/Abu Dhabi in 2nd quarter 2015. Roundtable prior to speak about opportunities.
• Key upcoming projects: World class maritime yard in Saudi Arabia between Aramco, Sembcorp, Bahri (currently in FS)
Oil & Gas
• King Abdullah Economic City (KAEC) @ Rabigh
• Focus: Port and logistics, Pharmaceuticals, FMCG, light industry
• Size: 168-180 million square metres
• Master developer: Emaar, The Economic City
• Current anchor tenants: Mars, Total, Pfizer and Sanofi
• Jizan Economic City (JEC) @ Jizan
• Focus: Energy and labour-intensive industries
• Investment: $27bn
• Master developer: Saudi Aramco
Economic Cities –
KAEC, JEC
Agenda
1. Why Saudi Arabia?
2. Where are the opportunities?
• How to tap on them?
• Who to work with?
3. Upcoming key initiatives
4. What other considerations to look out for?
Other macro business considerations
1
2
3
Factor time for business processes
Relationship building is key
Be present in the country, engage in
technology and skills transfer
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