Saudi Arabia | 2013 Discovering Business - Squire Sanders

116 Pages·2013·8.73 MB·English

Saudi Arabia
Saudi Arabia
2013|2014 Discovering Business
in association with
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Contents
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Messages SI
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HRH Prince Mohammed bin Nawaf Al Saud: Kingdom of Saudi Arabia’s Ambassador to the UK 4 B
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Sir John Jenkins KCMG LVO: British Ambassador to the Kingdom of Saudi Arabia 5 N
Introduction ERI
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Saudi Arabia - a story of continuing economic development 6 O
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Map of cities & provinces 10 S
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Facilitating Organisations 3
How UK Trade & Investment can help 12 01
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The Saudi Committee for International Trade: Building bridges and expanding trade 14 : A
Business - Legal - Finance BI
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Saudi Arabia: Creates major opportunities for investors - PwC 16 AR
Doing business in Saudi Arabia - Squire Sanders 23 DI
UK plays major role in liberalisation of Saudi financial sector 28 AU
Risk and reward: the Saudi Arabian challenge - Kroll Advisory Solutions 32 S
Energy
New energy investment focuses on value added refinery capacity 36
Renewables are essential to bridging the Saudi energy gap 40
Industry and Manufacturing
Broadening industrial strategy is vital 44
Pioneering development of new economic cities continues 48
Infrastructure - Construction - Civil Engineering
150 years of engineering excellence - Hyder Consulting 52
Wide ranging opportunities from port expansion programme 57
Looking to the future in Saudi Arabia - Parsons Brinckerhoff 60
Huge investment in water infrastructure is crucial 63
Environmental Management
For environmental management BeeA’h means business 66
Mining Major development of mineral wealth 70
Transport
New rail lines herald Saudi transport revolution 74
Air traffic growth fuels major airport expansion programme 77
Retail Retail expansion reflects rapid economic growth 81
Healthcare Investment targets improve healthcare provision 85
Education Education spending rises to meet needs of youthful population 89
Defence & Security UK remains a strong partner in Saudi defence needs 93
Telecoms Telecoms market undergoes rapid expansion 97
Tourism Tourism strategy for both international and domestic markets 101
Trade Organisations
The Arab-British Chamber of Commerce 105
British Expertise 106
The Middle East Association 107
Key Facts 108
Featured Contacts 111
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SAUDIARABIA: 2013 DISCOVERINGBUSINESS
HRH Prince Mohammed bin Nawaf Al Saud:
Kingdom of Saudi Arabia’s Ambassador to the UK
Saudi Arabia is the United Kingdom’s largest trading largest producer and exporter of oil and holds the largest
partner in the Middle East and North Africa region proven oil reserves. We are continually growing and
(MENA). Our long standing good friendship is developing plans to expand and diversify our economic
underpinned by a thriving historic trading relationship and industrial base. It is an exciting time to be doing
as well as our common interests in international business in Saudi Arabia. We are already involved in
stability and security. more than 200 joint ventures with UK companies. They
include a growing number of 'blue chip' British
This new publication Discovering Business in Saudi
companies working in law, mining, the railway sector,
Arabia highlights this trading relationship and the huge
water and engineering and there is room for more.
opportunities for British business in the Kingdom in all
sectors: from oil, gas, construction and finance to The figures speak for themselves, ours is already a
education, health, and housing. proven business relationship; we want it to be even
Saudi Arabia is the largest economy in the MENA better. As the Saudi Committee for International Trade
region and a member of the G20, OPEC and, since (SCIT) recently told a delegation of businessmen and
2005, of the WTO. According to the World Bank we are parliamentarians visiting the Kingdom, we want to see
the 13th most economically competitive country in the more British involvement in the large scale projects in
world. We are an emerging regional market in the the Kingdom.
midst of a massive development programme, building
Alongside the SCIT the Embassy will provide you with
new industrial cities as well as further developing our
the bridge to doing business in the Kingdom. The
current infrastructure to meet the needs of the 21st
Commercial Office at the Embassy of the Kingdom of
century and of our growing young population.
Saudi Arabia in London welcomes enquiries from
We want to see UK businesses and investment at the new and long standing business partners. Come
heart of that development. Our industry is focused and do business with us and you will be welcomed
around our natural resources. Saudi Arabia is the world’s as friends.
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Sir John Jenkins KCMG LVO:
British Ambassador to the Kingdom of Saudi Arabia
I am delighted to have been invited to provide a I am pleased that many new UK companies are now
foreword to the 2013 edition of Discovering Business setting up operations here in response to the
in Saudi Arabia. opportunities available. Maximising local content and
employment of Saudi nationals is increasingly the
The UK has a strong and historic relationship with
route to successful business here.
Saudi Arabia. The Kingdom remains our largest
trading partner in the Middle East. With a population ‘Discovering Business in Saudi Arabia 2013’ will reach
of some 28 million and GDP increasing by some 6% a strong target audience of companies and individuals
a year, the Saudi market is an important source of high interested in doing business in the Kingdom. This
value opportunities. publication will be distributed at major conferences,
trade missions and road shows relating to Saudi Arabia
UK companies are already pursuing a wide range of
and will also be available online. The overviews of key
investment opportunities in Saudi Arabia in a range of
sectors and business opportunities provide up to date
sectors including education, healthcare, infrastructure
information about high value projects and signpost
and financial services.
readers to sources of information, advice and support.
Britain is the Kingdom’s second largest cumulative
I also encourage companies to contact my
investor, with approximately 200 joint ventures worth
experienced UK Trade & Investment team in Saudi
an estimated £11.5 billion. UK exports of goods to
Arabia which is well equipped to advise British
Saudi Arabia amounted to some £3.26 billion in 2012:
companies wishing to enter and compete in the Saudi
an increase of 6% on the previous year: with an
market, as well as to help Saudi companies looking for
estimated further £3 billion in exports of services.
UK partners.
There is considerable Saudi investment in the UK.
Saudi exports to the UK rose by 42% to £1.75 billion I hope you will find this Guide useful. Good luck in
during the same period. your endeavours here!
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Saudi Arabia - a story of
continuing economic development
Fortified by record hydrocarbon revenues and massive financial plans include thousands of kilometres of new roads and railways, as
reserves of more than US$500 billion, Saudi Arabia has the ability to well as airport expansion, new urban transport systems, investments in
continue spending heavily on developing its economy for many years water, sewerage, electricity plants, telecoms and the IT sector and the
ahead, regardless of the price of oil. construction of four million new homes.
Within the next three years new phosphates, aluminium and iron Leading investment areas also include development of oil & gas
smelting industries will add billions of dollars annually to the facilities, the petrochemicals sector, mining and the development of
economy. Much of this new industrial and business development in the new economic cities.
Kingdom is intended to be led or achieved in partnership with both
The non-oil economy is of growing importance, with petrochemical
domestic and foreign investors.
sales at around US$12 billion a year. Saudi Basic Industries
Prospects for increased trade and investment between the UK and Corporation (SABIC) has achieved production in excess of 50 million
Saudi Arabia are significant and growing as a result. The Kingdom is tonnes a year of chemicals and intermediates, industrial polymers,
ranked eighth among the world’s ten high growth economies by the fertilisers and metals and is a significant force in the global
International Monetary Fund (IMF). petrochemicals market.
Regular visits at Prime Ministerial and Ministerial level underline the SABIC, is 70% government owned and the Kingdom’s biggest and
importance of the bilateral relationship, while continuing close contact most diversified manufacturing company, active in chemicals and
between the British and Saudi Royal families highlights the depth of intermediates, industrial polymers, fertilisers and metals.
the relationship.
A joint venture of the country’s oil producer, Saudi Aramco and Dow
The country’s 2013 national budget illustrates the need for Saudi Chemical, will add to petrochemical output when a US$20 billion
Arabia to remain a key target for British export efforts. It envisages State integrated complex comes on stream in an expanded Jubail Industrial
spending of US$218.7 billion, 19% up on 2012, with revenues City in 2016. This venture, known as Sadara Chemical Company, is
projected to reach US$330.5 billion. forecast to become one of the world’s largest industrial companies.
The Kingdom intends to spend more than US$367 billion over the next The Government is focusing a large part of its spending plans on
ten years on a wide range of infrastructure investments. Ambitious development of an ambitious industrial diversification strategy. This is
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Saudi Arabia is pursuing investments and reforms that the
Government is determined will position the Kingdom as one of
the world’s most competitive economies by the beginning of the
”
next decade .
based on the creation of new economic cities and industrial clusters in Rolls-Royce, Shell, HSBC, Tate & Lyle, GlaxoSmithKline (GSK), Marks
sectors unrelated to oil production. The strategy seeks to promote & Spencer (M&S) and Harvey Nichols.
regional economic development and generate hundreds of thousands
In addition, an estimated 6,000 UK companies export to Saudi Arabia
of new jobs for the local population.
and there is room for many others to join them, given the expansion of
The projects are not only aimed at nurturing new industries but also at the economy and the Kingdom’s increasing merchandise imports.
providing attractive residential communities, with social and
Invisible trade is an increasingly important element in bilateral trade and
educational infrastructure developed to international standards, where
likely to grow as the Saudi banking and insurance sectors seek to
people will want to settle for lifestyle and jobs.
expand. Education and training is also a fast growing area. The Foreign
As more globally integrated ways of conducting business become the & Commonwealth Office (FCO) says there are 22,000 Saudi students in
norm, it is expected that much more Foreign Direct Investment the UK, nearly one third of them women, many funded by the King
(FDI) will be attracted to the Kingdom, especially in the new cities
Abdullah Scholarship Programme.
which represent the key to the Kingdom’s economic development
and diversification. The Saudi Government is especially keen to address the problems
associated with a disproportionately high youth population and mitigate
All of this offers a range of long term opportunities for British
unemployment among this group. There is a growing requirement for
companies. UK visible and invisible exports are currently valued at
suppliers of vocational training and scientific education.
more than US$9 billion and the Kingdom is by far the UK’s largest
market for goods and services outside the OECD and the most The record 2013 National Budget continues the Kingdom’s
significant trade and investment partner in the Middle East. expansionary plan to diversify and grow the country’s economy but
also to raise social standards, particularly in education and healthcare.
Britain is also the second largest foreign investor in Saudi Arabia after
the US, with around 200 UK/Saudi joint ventures. A broad spectrum of Saudi Arabia has allocated US$100 billion for a five year healthcare
British companies are active in the Kingdom, including BAE Systems, improvement programme and the UK is making efforts to contribute to
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this development. In 2011, the Department of Health signed a the pillars of UK/Saudi relations. The Al Yamamah military agreement
Memorandum with the Saudi Ministry of Health to enhance to supply the Royal Saudi Air Force (RSAF) with Tornado aircraft in
cooperation. This is intended to establish clinical partnerships and 1985 represented the largest ever export contract won by the UK.
train Saudi postgraduate medical staff.
This relationship, augmented by investment offset agreements, was
The Kingdom, which is the world’s largest producer of desalinated reinforced with the signing of the Al Salam contract in 2008, to provide
seawater, is also seeking expertise to address an urgent need to Typhoon fighters and other equipment to the RSAF.
economise on the use of water through new technologies and
Saudi Arabia continues to spend heavily on the modernisation and
management methods.
expansion of its armed forces and security agencies. In 2012, BAE
Electricity generation also needs to grow substantially to cope with the Systems signed a US$3 billion contract to supply 22 Hawk trainer jets
demands of an expanding population and industrial development. This to the Saudi Air Force.
is creating opportunities along the whole supply chain for engineering
Defence and internal security remain major areas of opportunity, with
procurement, equipment suppliers, sub-contractors and consultants.
an increasing emphasis on technologies, where UK companies have
An estimated US$90 billion is expected to be invested in water,
proven abilities. Anything that plays to the “Saudisation” agenda and
sewerage and power projects over the next ten years.
domestic manufacturing is favoured, whether civil or military. The Al
Long discussed improvements to urban transportation are also likely to
Salam defence deal, for example, stipulates that an aircraft production
go ahead. Finance Minister, HE Dr. Ibrahim Al-Assaf, says that US$53
line for the Typhoon will be established in Dhahran.
billion from the country’s 2012 surplus is to be allocated to additional
transport spending in 2013, mainly on mass transport systems for Offset investment deals related to previous defence contracts have
Riyadh, Jeddah, Dammam and Mecca. These are huge projects and seen a number of joint ventures, civil and military, established in the
will create multiple contract opportunities over several years for Kingdom, including a Tate & Lyle sugar refinery and a GSK
suitably qualified UK companies. pharmaceutical manufacturing plant.
One sector where British firms are clearly leaders in the Saudi market Such investments blend well with the Saudi Government’s wish to
is defence. For almost half a century following the supply of British develop a broader and more private-sector based economy and equip
Lightning fighters in the 1960s, defence sales have constituted one of graduates who are currently unemployed with the right skills.
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The proportion of private sector schemes is likely to rise in future
as the Government seeks greater private sector participation in
project development. This is likely to be reflected in private
sector power developments, water and wastewater projects and in real
estate development.
The accession of Saudi Arabia to the World Trade Organisation (WTO)
in December 2005, set the stage as the Government indicated that
subsidies to state owned industries were to be scaled back and
management of utilities gradually handed over to the private sector.
Saudi Arabia is pursuing investments and reforms that the Government
is determined will position the Kingdom as one of the world’s most
competitive economies by the beginning of the next decade.
In 2011, the Kingdom achieved its aim of attaining a top ten ranking in
the World Bank’s “Doing Business” Report, which tracks 183
economies and monitors how easy it is in them, to start medium to
small scale enterprises.
While this ranking has since slipped slightly, Saudi Arabia General
While abundant opportunities lie ahead for British firms, contracts are
Investment Authority (SAGIA) is now also seeking a top 15 ranking
seldom easily won in Saudi Arabia. Building relationships requires
for the Kingdom in the World Economic Forum’s “Global
patience and perseverance in a country that, while modernising and
Competitiveness” Report.
expanding its economy, is deeply conservative. Traditional norms
These ambitions are indicative of how the business environment in apply and business is not concluded quickly. However, the rewards
Saudi Arabia is gradually improving for foreign investment. The result for those willing to run the course are likely to be immense and
is an increasingly competitive market. long lasting.
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Map of cities & provinces
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