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Saudi Economy: Challenges & Opportunities for Growth

Explore the challenges and achievements of the Saudi economy, from oil reliance to education reforms, SME and family businesses, women's role, foreign investment, and labor movement. Discover why investing in Saudi Arabia can be beneficial with its stable political climate, growing infrastructure, and government support for F.D.I.

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Saudi Economy: Challenges & Opportunities for Growth

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  1. An Overview of Saudi economy: challenges ahead KING FAHD UNIVERSITY OF PETROLUME & MINERALS DHAHRAN 31261 SAUDI ARABIA

  2. Saudi Arabia: Major Challenges • Despite diversification of economic base, still reliant on oil and oil-related products for exports, • Despite massive expenditure on education, yet mismatch between market needs and graduate output, • Despite massive government subsidies, yet so little on internal R&D to develop a knowledge based, sustainable economic infrastructure. But there is a light at the end of the tunnel.

  3. Table 1 Achievements and Directions

  4. Table 2 Achievements and Directions (Continue)

  5. Table 2 Achievements and Directions (Continue)

  6. Table 3 Conditions for growth

  7. Table 4 Conditions for growth (Continue) Adapted from the Arab World Competitiveness Report 2005

  8. Table 5 The changing face of the Saudi capital market

  9. Table 6 Saudi Arabia: Legal, commercial and dispute settlement system

  10. The SME Sector: • Previously neglected, concentration on capital intensive, high technology industry. • Available financial resources – state/private • Limited managerial experience • High foreign labor utilization • But they are powerful employment generators. • WTO uncertainties for big industries.

  11. Saudi Family Businesses: • A powerful positive and potentially negative economic force. • Hold around SR 250 billion in domestic investment, with 200 family companies dominating commercial life. • Majority of franchises and agencies owned by no more than 100 of the top Saudi companies. • Time for change

  12. Saudi Women and the National Economy: • More urgency on this matter. Government sympathetic as long as in conformity with Islamic principles. • Substantial women’s investment in domestic economy and impact: • 60% of bank account • Deposits SR 62 billion • 20% corporate shares • 15% of private companies • 10% real estate

  13. Table 7 Saudi businesswomen’s operating barriers:

  14. Table 8 Private sector challenges and solutions

  15. Table 9 Foreign direct investment: Saudi Arabia stock sheet

  16. Table 9 (Continued)

  17. Table 9 (Continued)

  18. Table 11 Saudization impact on selected Saudi industries Source: National Commercial Bank, 2005, SAMA, 2005.

  19. Saudi economy indicators (2006) • GNP for 2006 is $ 373.00 billion dollars (ranking # 20 world wide). • Hard currency reserves up to 2006 is 269 billion dollars • Saudi economy ranks # 12 in the volume of exports and # 20 in the volume of import world wide according to SAMA statistics (2005). • 80 % of Saudi income comes from sales of crude oil • The Growth rate of Saudi economy is in the range of 3.5 to 4 % • Emerging lucrative market in stocks & real state: • Over 500 billion dollars in Saudi stock market • Over 250 billion dollars in Saudi real state market

  20. Why to invest in Saudi Arabia • Saudi Arabia is a full member of WTO since 2005 • Political stability • Free economy system • Excellent infrastructure • Availability of reasonably cheap labor (Mainly from Egypt, India, Pakistan, and Philippine). • Genuine government support they target to have Saudi Arabia among the top 10 countries to attract F.D.I. by 2010 • Saudi Arabia ranks # 38 out of 177 countries in the most favored nations for investment opportunities according to world bank 2006 • Low inflation rate (1% in 2006 & expect to be 2.2% by end of 2007) • Government spending in the next few years for already approved & under execution projects are as follows: • 69 billion dollars in oil & gas section • 45 billion dollars in petrochemicals • 43 billion dollars in infrastructure

  21. Key indications on Saudi labor movement • 60 % of Saudi population are below 50 years old • 24 % of the Saudis labor force work in the industry sector • 31 % of the Saudi labor force work in the commerce sector • 350,000 Saudis enter the labor market every year • The unemployment rate is considerably high among Saudis. • Approximately one million Saudis work in government agencies, out of which 400,000 are women. • About 1.8 million Saudis work in private sector, out of which 20 % are women.

  22. Challenges Facing the education system • High growth rate (3.4%) of Saudi population currently 20 millions • The co density of the population is scattered all over the country (2.1 million K. square) • The cost of education is reasonably high compared to industrial countries (9% of G.N.P. vs. 5% in developed countries). • Lack of certain skills that are needed in the private sector • Slowness in updating the school books. • 50% of the higher education are in non-engineering disciplines

  23. But, As I said there is a light at the end of the tunnelThanks

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