Saudi Arabia

Saudi ArabiaSaudi ArabiaOn the road to sustainable growthOn the road to sustainable growth

VISIONTo achieve sustainable rapid economic growth in Saudi Arabia, capitalizing on the Kingdom’s competitive strengths as the global capital of energy, and as a major hub between East and West.

Focusing on Four Strategic Sectors Energy

Transportation

Knowledge Based Industries

Regional Development

Energy: Positioning Saudi Arabia as Energy Capital of the World

Petrochemicals Downstreamto Petrochem Minerals Power & Water

Transportation: Positioning KSA as Regional Launch Pad to 250MM Market

Railways Roads Air/Seaports Logistics

KBI: Transforming KSA to aKnowledge-Based Society

Healthcare Life Sciences Education ICT

Regional Development:Creating Economic Cities

Dammam

Kuwait

Ethiopia

UAEOman

Sudan

Riyadh

Ras Azoor

Jeddah

KAEC

Jazan

Tabouk

PABMEC

KEC

Why invest in Saudi ArabiaWhy invest in Saudi Arabia

Kingdom's political and economic stability. Adoption of open market economic policies. Largest consumer market in the Middle East. Strategic geographic location between regional and

international markets. Modern infrastructure. Abundance of natural resources. Global leader in oil reserves and oil exports. Leading exporter/importer country in the Middle East.

Saudi Arabia’s Trade ProfileSaudi Arabia’s Trade Profile 12th largest global exporter 22nd largest global importer Trade totals $ 282 billion in 2006, equivalent to

81 percent of GDP (Global trade is 17 percent of global GDP)

Trade surpluses in 9 of last 10 years Main sources of imports: US, China, Germany,

Japan, Italy, UK Main buyers of exports: Japan, US, South

Korea, China , India Average tariff on imports: 4 percent Main exports: oil Main imports: electric power equipment, autos,

building materials


Kingdom houses more than 6% of world's petrochemical production (giant based international petrochemical companies with investments in excess of US$50 billion).

Modern and well equipped industrial cities. Rental of industrial sites for long periods and at

nominal charges. Provision of basic utilities (electricity, water, …) at

reasonable rates.


Incentives provided under the protection and promotion of National Industries Act:

I. Exemption from customs duties of machinery and equipment, imports of raw materials and spare-parts if imported for industrial use.

II. Preferential treatment for national products in governmental procurements.

Access to soft capital and commercial financing from lending governmental institutions.

Support for Saudi manpower employment from the Human Resources Development Fund (HRDF).


• SME's Loan-Guarantee Programme (established within the Saudi Industrial Development Fund "SIDF").

• Recent considerable increase in the capital of the Saudi Credit Bank "SCB" with the additional assignment to support and finance SMEs.

• New economic sectors that are poised for substantial growth.

• Promotion of Saudi non-oil exports of products and services by the Saudi Export Development Centre (established under the umbrella of the Council of Saudi Chambers).


Energy intensive industries can enjoy access to cheap fuel.

Strategic location that straddles two continents. The largest market for desalinated water in the

world accounting for approximately 30% of world production.

Growing domestic demand due to increasing population.

Stable exchange rate for Saudi Riyal. Free movement of capital.


Saudi oil related exports have increased from $68bn in 2001 to $195bn in 2006. What was more impressive is that non-oil exports during the same period almost tripled from $7.21bn to $22.6bn.

As the world’s largest oil exporter Saudi Arabia benefited substantially from the sharp rise in oil prices since 2002. Per capita incomes have increased 68% since 2002.


The once-large debt burden has now largely been repaid and Saudi Arabia has accumulated a large net foreign asset position suggesting vulnerability to any future declines in the oil price is now low.

Diversification strategies are well underway and starting to bear fruit. The non-oil sector grew by a healthy rate of 7.9% in 2006.

Many Saudi ministries and government agencies are adopting Private Public Partnership (PPP) frameworks that allow the private sector to take an active partnership role in developing infrastructure projects.


The involvement of some of the large government managed funds like the Pension Fund and the Social Security Fund in financing key development projects.

Strong economic reform movement with its cornerstones the diversification of the economy and enabling the private sector to become the main engine of economic growth for the country. Dozens of new laws were introduced and several ministries were restructured and new government agencies were created to give support to the reform initiatives.


High market liquidity and good access to capital finance.

Vivid and growing domestic stock market. Stable, strong and advancing banking

system. No personal Tax. On going privatization process of public

entities.


In 2002, KSA announced its plan to privatize In 2002, KSA announced its plan to privatize enterprises in different sectors, such as:enterprises in different sectors, such as:

• telecommunicationtelecommunication

• highways highways managementmanagement

• health serviceshealth services

• education serviceseducation services

• agricultural servicesagricultural services

• cleaning and waste cleaning and waste managementmanagement

• civil aviationcivil aviation

• RailwaysRailways

• government government hotelshotels

• social service social service centerscenters

• construction and construction and management of management of abattoirsabattoirs

• DesalinationDesalination

• sports clubssports clubs

• municipal servicesmunicipal services

• Saudi Saudi employment employment services services

• public parks and public parks and recreation centersrecreation centers

Fields of Major InvestmentFields of Major Investment

Petrochemicals and downstream industry.

Mining.

IT & Telecommunications .

Power generation/ Desalination.

Municipal Projects.

Aviation

Railways.

Tourism.

Higher education

Health & bio Technology

Impact of reforms and economic prosperity on Impact of reforms and economic prosperity on attracting FDI attracting FDI

Licenses Issued by SAGIAAs of April. 10th 2007

Industrial

Non-Industrial

Total

1478

2630

4108

Activity Number Total Finance(US$ Billion)

113.7

59.3

173

Impact of reforms onImpact of reforms onworld rankingworld ranking

Saudi Arabia for the second year Saudi Arabia for the second year running has been selected by the running has been selected by the

World Bank as the best among World Bank as the best among the Arab Countries in the ease of the Arab Countries in the ease of doing business ratings. Its 2007 doing business ratings. Its 2007 Global ranking was 38Global ranking was 38thth ahead of ahead of

some European countries like some European countries like Spain and Portugal.Spain and Portugal.

Investment OpportunitiesInvestment Opportunities

Investment Climate in Saudi ArabiaInvestment Climate in Saudi Arabia

Stable exchange rate for Saudi Riyal.Stable exchange rate for Saudi Riyal. Free movement of capital Free movement of capital Excess liquidity seeking investment Excess liquidity seeking investment

opportunities.opportunities. Largest financial sector in the GCC.Largest financial sector in the GCC. ““A well-managed and well-supervised A well-managed and well-supervised

banking sector” (the IMF Public banking sector” (the IMF Public Information Notice, Dec. 2003)Information Notice, Dec. 2003)

In late 2004 SAGIA the Saudi In late 2004 SAGIA the Saudi General Investment Authority General Investment Authority

estimated that Saudi Arabia will estimated that Saudi Arabia will need investments in excess of need investments in excess of $600bn until the year 2020 to $600bn until the year 2020 to

meet its growth needs. The meet its growth needs. The following table shows a following table shows a

breakdown of the sectors where breakdown of the sectors where these investments are needed.these investments are needed.

$624 Billion Investment Market$624 Billion Investment Market

$140 billion$140 billion physical infrastructurephysical infrastructure

$92 billion$92 billion petrochemical expansionspetrochemical expansions

$90.7 billion$90.7 billion electric power generationelectric power generation

$88 billion$88 billion water desalination water desalination $70.7 billion$70.7 billion telecom and ITtelecom and IT$53.5 billion$53.5 billion tourism and leisure developmenttourism and leisure development$50 billion$50 billion natural gas productionnatural gas production$28.3 billion$28.3 billion agricultural expansionagricultural expansion$10.7 billion$10.7 billion educational and training educational and training

$624 Billion Investment $624 Billion Investment MarketMarket

11%

9%

2%

8%

5%

21%

14%

15%

15%

Physical Infrastructure

petrochemical expansions

electric power generation

water desalination

telecom and IT

tourism and leisure development

natural gas production

agricultural expansion

educational and training


Saudi RailwaysSaudi Railways

Examples of Investment Examples of Investment OpportunitiesOpportunities……

((Saudi RailwaysSaudi Railways))

Three new railways will be constructed:Three new railways will be constructed:1. Saudi Landbridge:1. Saudi Landbridge:

linking Jeddah to Dammam via Riyadh (approx. linking Jeddah to Dammam via Riyadh (approx. 950 km)950 km)

2. Makkah Madinah Rail Link:2. Makkah Madinah Rail Link:linking Makkah, Jeddah, Madinah and Yanbu linking Makkah, Jeddah, Madinah and Yanbu (approx. 600km)(approx. 600km)

3. North-South Railway:3. North-South Railway: linking Jalamid to Jubail via Riyadh and linking Jalamid to Jubail via Riyadh and Dammam Dammam ((115km).115km).

In addition to the three railway In addition to the three railway projects that have been projects that have been approved by the Saudi approved by the Saudi

Government a Saudi Company is Government a Saudi Company is exploring the reactivation of the exploring the reactivation of the Hijaz railway which started from Hijaz railway which started from Istanbul and ended in Madinah Istanbul and ended in Madinah

Munawarah. Munawarah.


EnergyEnergy

ARAMCO and its partners are ARAMCO and its partners are planning to invest $70 Billion in planning to invest $70 Billion in expanding and updating the oil expanding and updating the oil

and gas capacity of Saudi Arabia and gas capacity of Saudi Arabia over the next five years. This will over the next five years. This will

also include increasing the also include increasing the refining capacity by 2 million refining capacity by 2 million

barrels one million of which will barrels one million of which will be in facilities inside Saudi be in facilities inside Saudi

Arabia.Arabia.

ARAMCO has doubled the gas ARAMCO has doubled the gas reserves of Saudi Arabia over the reserves of Saudi Arabia over the last decade and doubled its gas last decade and doubled its gas

production and processing over the production and processing over the last five years. It has improved its last five years. It has improved its

global ranking from fifth to fourth in global ranking from fifth to fourth in gas reserves in the last few years. gas reserves in the last few years. Furthermore its efforts are ongoing Furthermore its efforts are ongoing

to bring Saudi Arabia to the to bring Saudi Arabia to the forefront of Global gas producers. It forefront of Global gas producers. It is important to note that only 15% is important to note that only 15% of Saudi Arabia has been explored of Saudi Arabia has been explored

for gas by the end of 2005.for gas by the end of 2005.

PetrochemicalsPetrochemicals Saudi Arabia is planning to double its Saudi Arabia is planning to double its

global market share of petrochemical global market share of petrochemical production from the present 6.5% to production from the present 6.5% to 13% in five years.13% in five years.

SABIC the leading regional SABIC the leading regional petrochemical company and one of the petrochemical company and one of the Global 500 companies has announced Global 500 companies has announced plans to spend $25bn over the next five plans to spend $25bn over the next five years to increase its production from 47 years to increase its production from 47 million tons to 130 million tons.million tons to 130 million tons.

Examples of Investment Examples of Investment OpportunitiesOpportunities

Water and Water and ElectricityElectricity

The Saudi Ministry of Water and The Saudi Ministry of Water and Electricity is undertaking a huge Electricity is undertaking a huge expansion and upgrading of the expansion and upgrading of the Saudi water and electricity capacity Saudi water and electricity capacity in cooperation with the private sector in cooperation with the private sector based on a public private partnership based on a public private partnership (PPP) framework. The first of its large (PPP) framework. The first of its large projects was the Shuaiba projects was the Shuaiba Desalination plant which was Desalination plant which was awarded last year to a consortium of awarded last year to a consortium of companies from Saudi Arabia and companies from Saudi Arabia and Malaysia at a cost of around $1.3bn.Malaysia at a cost of around $1.3bn.

The Ministry of Water and Electricity The Ministry of Water and Electricity has already announced plans to has already announced plans to spend approx. $18.7bn over the spend approx. $18.7bn over the next five years on water resource next five years on water resource projects.projects.

Spending on electricity projects will Spending on electricity projects will be between $4.5-6.0bn per annum be between $4.5-6.0bn per annum over the next five years.over the next five years.

Experts estimate that Saudi Arabia Experts estimate that Saudi Arabia needs to spend $100bn on water needs to spend $100bn on water projects in Saudi Arabia and $117bn projects in Saudi Arabia and $117bn on electricity projects over the next on electricity projects over the next 20 years.20 years.


MiningMining

Maaden the government owned Maaden the government owned mining company has announced its mining company has announced its intention to privatize within the intention to privatize within the next five years, and has started next five years, and has started investing in a new industrial investing in a new industrial mining complex in Ras Alzour in mining complex in Ras Alzour in the Eastern Province of Saudi the Eastern Province of Saudi Arabia. It intends to invest Arabia. It intends to invest approximately $10bn over the next approximately $10bn over the next five years in that complex which five years in that complex which will include an aluminum smelter will include an aluminum smelter and a phosphate processing plant. and a phosphate processing plant.

Examples of Investment Examples of Investment Opportunities…Opportunities…

((MiningMining))

Al Jalamid Az Zabirah Resource Phosphate rock (19% P2O5)

3.1 billion tons (indicated and inferred) Bauxite ore (57.3% AI2O3) 240.1 million tons (inferred)

Product • Diammonium Phosphate • Phosphoric Acid

• Aluminum Ingot • Alumina

Capacity • 3 million tpa DAP • 640 Ktpa ingot • 1,400 Ktpa alumina

Est. Cost $1.0 to $1.5 billion depending on plant configuration

Est. $3.49 billion including port facilities

Competitive Advantages

Proximity to key markets (India, China)

Low cost local availability of ammonia and ammonia feedstock

Inexpensive phosphate rock

Long term fixed rate power Plant integration Local supply of key process

material low cost bauxite ($13/ ton) Location ($13/ ton)

• Location


KnowledgeKnowledge Based IndustriesBased Industries

Examples of Investment Examples of Investment Opportunities in the IT SectorOpportunities in the IT Sector

Driving forces behind the Driving forces behind the expansion of the IT sector includeexpansion of the IT sector include:: Largest market in the middle east, Largest market in the middle east,

with an average growth rate of 15 with an average growth rate of 15 percent per annum.percent per annum.

Growth in the business world and Growth in the business world and private sector demand for private sector demand for telecommunication services.telecommunication services.

Government initiatives Government initiatives Significant internet potential.Significant internet potential.

Real Estate SectorReal Estate Sector

In 2004, the value of real estate In 2004, the value of real estate transactions including sales of transactions including sales of

existing units amounted to SR 900 existing units amounted to SR 900 billion. The real estate sector is billion. The real estate sector is

driven recently by domestic demand driven recently by domestic demand and not by speculation. Strong and not by speculation. Strong

economic and demographic economic and demographic fundamentals are the core drivers of fundamentals are the core drivers of

growth in real estate.growth in real estate.

Real Estate SectorReal Estate SectorThrough 2010 the forecast is that Through 2010 the forecast is that

total new real estate construction in total new real estate construction in the Kingdom will reach $129 billion.the Kingdom will reach $129 billion.

In order to meet demand, through In order to meet demand, through 2020 a total of 2.62 million housing 2020 a total of 2.62 million housing

units will be built, at an average rate units will be built, at an average rate of 163,750 units per annum. of 163,750 units per annum.

Through 2020, total new investment Through 2020, total new investment in housing will amount to $320 in housing will amount to $320

Billion.Billion.

Economists believe that the real estate Economists believe that the real estate demand is sustainable and expect a demand is sustainable and expect a strengthening of the current set ofstrengthening of the current set of

favorable circumstances with the likely favorable circumstances with the likely introduction of mortgage products in the introduction of mortgage products in the

next few years. The housing sector is at the next few years. The housing sector is at the center of the Kingdomcenter of the Kingdom’’s growth in real s growth in real

estate activityestate activity.. In value terms the housing sector In value terms the housing sector

comprises 75 percent of all real estate comprises 75 percent of all real estate activity in the Kingdomactivity in the Kingdom..

$20$20 billion per annum will be required to billion per annum will be required to meet annual housing demand in themeet annual housing demand in the

Kingdom through 2020Kingdom through 2020..

Real Estate SectorReal Estate Sector

Some of the major projects Some of the major projects announcedannounced

The General Authority for Civil Aviation The General Authority for Civil Aviation is planning to spend $8bn to expand the is planning to spend $8bn to expand the Jeddah, Madinah and Tabouk airports in Jeddah, Madinah and Tabouk airports in Saudi Arabia over the next five years.Saudi Arabia over the next five years.

Four of six planned Special Economic Four of six planned Special Economic Zones with investments expected to Zones with investments expected to exceed $100bn.exceed $100bn.

The ICT center in Riyadh.The ICT center in Riyadh. The Financial center in Riyadh.The Financial center in Riyadh.

Major projects announced Major projects announced recentlyrecently

The Sudair Industrial City in Riyadh with The Sudair Industrial City in Riyadh with a total area of 160 square kilometers.a total area of 160 square kilometers.

The formation of the Jeddah The formation of the Jeddah Development company fully owned by Development company fully owned by the Jeddah Municipality to partner with the Jeddah Municipality to partner with the private sector in developing the city the private sector in developing the city of Jeddah starting with the Jeddah of Jeddah starting with the Jeddah Central Business District.Central Business District.

The development of the Abha Central The development of the Abha Central Business District.Business District.

Thank youThank youandand

alsalamu alaykumalsalamu alaykum

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Saudi Arabia