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Country Study on Saudi Arabia
By Group 1
ECONOMIC INDICATORS
Population: 29.2 million (2013)
GDP (PPP): $937.2 billion
3.8% growth
5.5% 5-year compound annual growth
$26,000 per capita( 2014) Est.
Unemployment: 5.5%
Inflation (CPI): 3.5%
FDI Inflow: $9.3 billion
ECONOMY AT A GLANCE
• Saudi Arabia’s economic freedom score is 62.1, making its economy the 77thfreest in the 2015 index.
• Its score is essentially unchanged since last year, with improvements in tradefreedom and freedom from corruption offset by declines in labor freedom,business freedom, and the management of public spending.
• Saudi Arabia evolved from a basic agricultural society into a regional andglobal economic power with a modern infrastructure.
• The private sector is playing an increasingly larger role in the Saudi economy –it now accounts for 48 percent of the gross domestic product (GDP). The sectoris expected to continue growing, especially as Saudi Arabia opens its doorsfurther to foreign investment.
ECONOMIC GROWTH
Saudi Arabia has had a period of relatively high growth and economic progress over the past few years. It ispredicted to grow by at least 3% for the next couple of years.
With 50% of Saudis under 25 years old the Saudi population is one of the fastest growing in the world
Government’s budget for the 2014 fiscal year allocated 46% of total spending on:- Education and training Health and social development Infrastructure
The government is also focused on getting private and foreign investment in important sectors such as: Petrochemicals Automobile assembly Biotechnology
STARTING A BUSINESS
Formal registration of companies has many immediate benefits for thecompanies and for business owners and employees.
Several shareholders join to start a new business Formal registration of companies through court to bank so that there
would be benefit for protection by the law. The companies must pay the minimal paid – capital before registration (or
within 3 months ).
SAUDI ARABIA AND COMPARED ECONOMIES RANK ON THE EASE OF DOING BUSINESS
Strengths of the Saudi Country includes:-
No taxation on personal income Proximity to other Gulf markets Key member of the Gulf Cooperation Council (GCC) Largest economy and population in the Gulf region
Challenges Faced for any New entrant:-
Identifying suitable sponsors for initial entry into the market Finding an appropriate Saudi partner for joint ventures Lead time to establish legal entities and obtain licenses from appropriate
ministries People must apply through the relevant government ministries for licenses to do
business in Saudi Arabia.
The Main Industries in the Arab Nation also includes:- crude oil production,petroleum refining, basic petrochemicals, ammonia, industrial
gases, sodium hydroxide (caustic soda), cement, fertilizer, plastics, metals,commercial ship repair, commercial aircraft repair, construction etc.
MAJOR INDUSTRIES OF SAUDI ARABIA- SAUDI ARAMCO
Saudi Arabia Industry Sectors: Oil and GasSaudi Arabia will account for 20.83% of the Middle Eastern regional oil demand by 2013, while providing39.45% of the supply.Oil use is expected to increase to 12.17 million by 2013.State owned Saudi Aramco’s oil and gas production is expected to rise to 11.05 million by 2013.Saudi Arabia’s oil production is forecasted to grow 14.3% by 2018, with volumes steadily rising to 12.4million by 2018.Oil consumption is expected to increase by 30.9% by 2018.
Saudi Arabia Industry Sectors: Automotive
Saudi Arabia’s automotive sector has remained relatively resilient to theeconomic downturn with several automakers posting good results in 2009.Suzuki Motors posted growth in both volume and sales during 1H 2009.Suzuki Saudi reported growth of 5% in volume sales and an 8% increase inrevenues. Meanwhile, Ford increased its sales by 5% in Saudi Arabia betweenthe beginning of 2009 and late November 2009.
AUTOMATIVE INDUSTRY:- E.A.JUFFALI & BROTHERS
• E. A. Juffali & Brothers was established in 1946 by the three brothers.• Juffali’s initial business was in the fields of electric power, communications and
cement• Juffali build relationships with key multinationals and soon expanded into
manufacturing and importing, developing alliances with many world-leading brandsSECRET TO SUCCESS :
As soon as Juffali began trading withinternational companies, they realized thatsimply importing high quality products wasnever going to be enough. It was essential toensure that qualified technicians were availableto service, repair and maintain the products.
EXPORTS AND IMPORTS
EXPORTS
EXPORTS
IMPORTS
Saudi Arabia is the 19th largest exporter and the 20th largest importmarket in the world. Exports now represent all economic sectors.
Topping the list of exports to some 90 countries are petrochemicals,plastics, metal goods, construction materials, and electrical appliances.
Saudi Arabia’s commercial sector is growing rapidly.SAUDI ARABIA’S IMPORTS
76%
5.70%
3.70%
2.90%
2.50%
Crude Petroleum
Refined Petroleum
Ethlene Polymers
Acyclic Alcohols
Petroleum Gas
11%
5.40%
2.30%
1.80%
1.60%
Cars
Refined Petroleum
PackagedMedicines
Barley
Delivery Trucks
EXPORTS OF PRODUCTS IMPORTS OF PRODUCTS
Major Business Related agenda of the Government:-
(FUTURE PERSPECTIVES)
The UAE government is committed to the development of renewable energy sources and Invests in renewable energy technologies.
Two large projects included in the Abu Dhabi government’s commitment to renewable energy are the 100-MW Shams solar power plant and the Sir Bani Yas wind farm.
Dubai’s Green Building Code.
Latest Economy and Business Trend
The discovery of new reserves, which appears likely, will extend the viability ofthe oil-based economy even further.
To compensate for lower oil revenues, the Saudi government will continue totake steps toward economic diversification, expanding its agricultural, non-oilmining, and tourism sectors.
Saudi Arabia will continue to implement oil policies that are favorable to theWest.
Saudi Arabia will also further its efforts to attract foreign investment, especiallyin heavy industrial sectors where the government is encouraging the creationof public-private partnerships.
Suggestions
Implementing labor market reforms and institution building.
Not to continue autocratic rule in Saudi Arabia.