June 23, 2006

THE LONDON CONFERENCE ON "INVESTMENT OPPORTUNITIES IN THE KINGDOM OF SAUDI ARABIA" SHEDS LIGHT ON INVESTMENTS IN THE KINGDOM. THE GOVERNOR OF THE EASTERN REGION: SAUDI ARABIA HAS SOUGHT TO CREATE INVESTMENT OPPORTUNITIES IN SEVERAL FIELDS AND BRITAIN'S SHARE IN THIS REGARD IS REPRESENTED IN AL-YAMAMA PROJECT. SAUDI ARABIA'S 8TH FIVE-YEAR DEVELOPMENT PLAN AIMS AT DOUBLING THE INDIVIDUAL INCOME TO REACH $ 27,000 PER ANNUM. THE SAUDI AMBASSADOR TO THE UNITED KINGDOM AND IRELAND: THE CUSTODIAN OF THE HOLY MOSQUES KING ABDULLAH HAS DIRECTED THAT SIGNIFICANT REVENUES BE COMMITTED TO THE DYNAMIC DEVELOPMENT OF OUR COUNTRY. Prince Mohammed Ibn Nawaf Ibn Abdul Aziz, Saudi Ambassador to the United Kingdom and Ireland, opened a conference titled "Investment Opportunities in the Kingdom of Saudi Arabia", organized by the London-based Middle East Economic Digest. In a key address to highlight the event, Prince Mohammed Ibn Nawaf said an excellent elite of senior experts and economists and businessmen from the Kingdom of Saudi Arabia and Britain will take part in the two-day conference, confirming the commitment of the two countries to enhancing the strong and developing relations between the them. He said Saudi Arabia is currently enjoying a real unprecedented economic boom that would last for quite a long time, recalling that the Custodian of the Two Holy Mosques King Abdullah Ibn Abdul Aziz has instructed that the sizable revenues levied from oil yields should go to dynamic developmental projects inside the Kingdom. Last year, King Abdullah announced that the Kingdom was planning to pump as much as $624 billion in new development projects in the Kingdom, the ambassador said, adding that the process has already started. "This is no secret. The Custodian of the Holy Mosques King Abdullah has directed that significant revenues be committed to the dynamic development of our country. It was only last year when King Abdullah announced development projects worth $624 billion in the Kingdom." He drew the attention to the fact that King Abdullah Economic City which will be constructed in the northern areas of Jeddah costs $26.6 billion. He said a similar but a bit smaller economic city would be built in Hail according to an official announcement last week. Other projects, according to Prince Nawaf, include the building of two oil refineries at $6 billion each; multimillion dollar Landbridge railway across the Kingdom and other projects in key sectors ranging from education to health, tourism, transport, energy, electricity, petrochemicals and water. The Prince described the business relations binding the two countries as healthy according to latest statistical reports putting Britain's exports to Saudi Arabia last year at 1.6 billion Sterling Pounds and British imports from Saudi Arabia at more than 1.8 billion Sterling Pounds and a surplus worth 240 million Sterling Pounds in the trade balance of payments in favour of the Kingdom of Saudi Arabia. Prince Mohammed said the size of world trade executed by the Kingdom of Saudi Arabia increased to three folds over the last six years, giving momentum to reach the Kingdom's goal to turn into a modern dynamic state with diversified and developing economy. After having highlighted the Kingdom's previous five-year development plans, the ambassador drew the attention to the fact that the eighth development plan differs from its previous ones in that it has far-sighted plans that would extend beyond its five-year term. He projected two objectives of that plan: to boost the Kingdom's economy to score the highest levels in comparison with the world's most advanced economies and to facilitate the role of the private sector by providing investment opportunities and opening more markets before goods and services. He called on the British business sector, in their capacity as economic allies of the Kingdom, to avail themselves of the new investment climate and the giant opportunities available there. Dashing out the fears of some investors from terrorists in the Kingdom, the Saudi Ambassador said terrorism is an international curse targeting all the civilized world without exception. He cited British Prime Minister Tony Blair as recently telling his listeners that the two kingdoms share the suffering from terrorism and the determination to defeat it. He also quoted British media as saying that after three years of Al Hamra compound explosion, the Kingdom of Saudi Arabia now had control on the threat once coming from Al-Qaeda network in the Kingdom. He said bringing about peace and security in the Kingdom of Saudi Arabia is among the priorities of the country whatever might be. The Saudi senior official said the Kingdom has introduced a package of new flexible regulations to facilitate measures before foreign investors, noting the accession of the Kingdom to the WTO, the stability of the national currency in the world markets, the low rates of economic inflation, the reduced taxes, and the freedom of money transfers. There are strong indications that the Kingdom's economy would continue to remain stable and prosper for several years ahead, he concluded. Addressing the conference, Amr Ibn Abdullah Al-Dabbagh, Governor of Saudi Arabian General Investment Authority (SAGIA), pointed out that the Kingdom has set various initiatives to attract investment including the provision of 300 world indexes for assistance in investment, plans to meet each index, offices in the world to assist foreign investors and creation of strategic investment unit. Al-Dabbagh noted that $170 billion will be invested in electricity and water sector over the coming twenty years. He indicated that the Kingdom will be one of the greatest fertilizer producers in the world. Al-Dabbagh pointed out that there will be six economic specialized zones in the Kingdom by 2006. The first one is King Abdullah Economic City which has investment of $26 billion. In another speech, Dr. Fawaz Al-Alami, Under Secretary of the Ministry of Commerce and Industry of Saudi Arabia noted that the Kingdom's economy grew at an average of 6.5 percent last year, stating that the Kingdom ranks 38th among the best investment regions in the world. Basil Al-Ghalayini, CEO of BMG Financial Advisors, the organizer of the conference together with MEED, emphasized that "all eyes are fixated on that region and never before have we seen a huge interest to engage in business both from inside the Kingdom and from investors eying the lucrative market from the outside." The business environment in Saudi Arabia is characterized by a large number of family-owned establishments that are now looking into growth potential by going public. The topic of Initial Public Offerings (IPOs) took center stage and the appetite for IPOs in the Saudi market was analyzed. The results clearly showed that despite the recent slump in the market, the solid business fundamentals of the region still make it very conducive to introduce IPOs into the market given adequate pricing. Overall, the conference provided much needed comprehensive analysis of the Saudi market as seen from several perspectives. The conference was also addressed by David Brower, the Dean of Finance and Business Sector in London. He stressed that commercial relations between the two countries have been built on trust, respect and mutual interests. He indicated that the dean of finance and business sector in London will annually visit the Kingdom of Saudi Arabia to be assured of the continual growth of trade relations between the two countries. The conference on " Saudi Investment Opportunities," held its second session at Park Lane Hotel in London. The Conference is organized by The Middle East Economic Digest magazine (MEED) and BMG Establishment for Investment Consultations. In an address at the session, Turki Al-Malek briefed its participants on the activities of the Capital Market Authority (CMA) and said " the Authority plays an important role in developing the market and protecting investors." On his part, Dr. Sa'eed Al-Sheikh, the Chief Economist of the National Commercial Bank (NCB) highlighted the strength of the Saudi national economy and affirmed that cash availability has a positive impact on the Saudi market and that profit rates in the market are attractive to many investments. " It also helps create job opportunities." A number of senior Economists of Saudi banks also spoke about the Saudi government's efforts to use oil income in investing in many developmental and industrial projects and training schemes. "It is heartening to note that the Saudi economy has grown without any increase in inflation rates," they said. They added that the time is now ripe for foreign companies to invest in Saudi Arabia where its government is offering several incentives for investors. The participants of the second session discussed investment opportunities and made an in-depth review of the progress of the market. "POBA" Health Establishment Director David Matulbi and Director of International World Care Establishment Nasser Manhoul said that the prosperity of the Saudi market is due to hike in oil income and an increase in the number of industrial and developmental companies in the Kingdom. Some of the economists also pointed towards the positive impact of Saudi Arabia joining World Trade Organization (WTO) and referred to increases in foreign investments in various developmental projects, removal of customs barriers, hikes in Saudi exports and imports in addition to upgrading the quality of national products as a result of local competition. During the session, they also talked about privatization in the Kingdom and reiterated that this process attracts foreign capitals for investment in Saudi Arabia and creates job opportunities in several sectors. The conference resumed its proceedings later in the day and listen to several research works presented by an elite group of economists pertaining to investment opportunities in the Kingdom of Saudi Arabia. The conference on "Investment Opportunities in the Kingdom of Saudi Arabia," concluded its deliberations in the presence of Prince Mohammad Ibn Fahd Ibn Abdul Aziz, Governor of Eastern Province and Prince Mohammad Ibn Nawaf Ibn Abdul Aziz, Ambassador of the Kingdom of Saudi Arabia to United Kingdom and Ireland. A large number of economists and businessmen from Saudi Arabia, Britain and Europe attended the conference, which was organized by The Middle East Economic Digest (MEED) and "BMG" Establishment for Investment and Financial Consultations. In an address at the final session, Prince Mohammad Ibn Fahd expressed his pleasure to participate in such an occasion, pointing out to the special relations between Saudi Arabia and Britain that started more than a half century ago. He noted Saudi Arabia's keenness to develop its industry in order to diversify its income sources and lessen its national economy's sole dependence on oil. Prince Mohammad Ibn Fahd affirmed that Saudi Arabia has sought to create investment opportunities in several fields and Britain's share in this regard is represented in Al-Yamama Economic Offset Project, which is considered unique for the transfer of technology. "This project was started in 1989, which positively contributed to importing high-level technology for the Saudi industrial development. He said that the commercial exchange between the two countries amounted to 3.4 billion sterling pounds, pointing out that Britain is the biggest market for Saudi non-oil products. "Moreover, this occasion provides a suitable advantage to explore more investment opportunities, increase economic cooperation and commercial exchange in addition to utilizing the Saudi economic growth." Prince Mohammad Ibn Fahd said "Saudi Arabia's 8th Five-year Development Plan (2005-2009) aims at doubling the individual income to reach 27,000 U.S. Dollars a year which is the average of individual's income in the advanced countries." He added that the plan provides for the private sector to expand industrial investments; explore and refine oil and explore gas and other minerals; construct more infrastructures for electricity and water desalination, expand industrial cities and develop transport sector. "As such, there are numerous investment opportunities under the 8th plan. It also provides for ideal foreign investment environment through The General Investment Authority (GIA)." "Moreover, the joining of the Kingdom of Saudi Arabia to the World trade Organization (WTO) would be an important incentive for the foreign investment. WTO has approved the policy of pricing natural gas, specifically for local factories and investors, ensuring a differential margin in the pricing of manufacturing petrochemicals and other non-oil products. This has led the International Monetary Fund (IMF), an affiliate of the World Bank, to rank Saudi Arabia as 38th in the world after it had been 67th; a positive sign of facilitating investment in the Kingdom. Prince Mohammad Ibn Fahd reiterated that Saudi Arabia is witnessing a distinct growth in giant petrochemical, trade, industrial and infrastructure projects. "In addition, it is constructing a huge refinery in the industrial city of Yanbu." He also shed some light on "Al-Jubail 2" project which is being built to become a base for exporting products of petrochemical industries and other mega projects whose costs have exceeded $60 billion and for generating a highly productive and proper investment environment in the region such as the Ras Az Zour mineral city with proposed aluminum and fertilizer plants; and the Dammam Industrial City. He added that Saudi ARAMCO has built a refinery in Jubail with a total cost of $6 billion in cooperation with Total Company; and the New Petrochemical Complex near Ra's Tannourah which is considered one of the biggest refineries in the world is also owned by Saudi ARAMCO. Moreover, he said that there are many gas exploration projects implemented by international companies in "Al-Rub' Al-Khali" region in addition to SABIC's projects. He also said that the Arab Gulf Cooperation Council (GCC) is about to sign an agreement with the European Union that will give Europeans the commercial priority, calling them to contribute to the economic growth and utilize the strategic location of the Eastern Province. Prince Mohammad Ibn Fahd expressed his pleasure for participating in the conference. He also thanked the Saudi embassy in London and the British embassy in Riyadh for their efforts to deepen further the bilateral relations and increase cooperation between the two countries. Sherard Cowper-Coles, Britain's Ambassador to Saudi Arabia, reiterated that there are huge opportunities for British investors and companies in the Kingdom, which he said has one of most investor-friendly climates. He also advised potential British investors, big or small, not to be put off by security fears. Dr. Abdallah Dabbagh, president and CEO of Saudi Arabian Mining Company (Maaden), gave an update on the current projects of Maaden which currently has cash resources of over $1.3 billion. Maaden, which is presently 100 percent state-owned, he confirmed, would float an initial public offering (IPO) at the end of the year aimed at offloading 50 percent of its shares to Saudi public. Maaden also is in the process of creating individual companies for its gold, industrial minerals, phosphate and aluminum interests. The Saudi mineral giant, he added, is also establishing an infrastructure development company which will build and operate common facilities in Ras Az Zour. "We believe the organization and structure envisioned for Maaden not only would provide great opportunities for our fellow Saudi citizens to benefit from the country's wealth but would also provide great opportunities for our strategic partners to benefit from our highly competitive world class projects." In its last night session, the Conference discussed investment opportunities in the transportation field. The Director General of the General Organization of Railways Khaled Al-Yahya spoke about the Kingdom's ambitious program to link all its regions by a well-developed railways that will contribute to the national income. Al-Yahya briefed the audience on the projects that are open to investment, and said there is a giant project to construct a 900 kilometers long rail-line to link Jeddah to Dammam through Riyadh, another project to link Madinah to Makkah and one more to link Madinah with Hail. He added that Dammam-Riyadh-Jeddah rail route will accelerate commercial goods and passengers transportation, the Madinah-Makkah route will serve pilgrims and Hail-Madinah route will reach Jordan and other countries in the future. He disclosed that these projects will be implemented by local and international companies pointing out to the kingdom's incentives such as the strategic location, the promising profit and the Kingdom's strong economy. After that, the participants of the conference discussed the incentives for investing in the electricity, water desalination and telecommunications fields. Saudi Oger Director Baha' Al-Hariri said that there are many construction projects in Saudi Arabia, pointing out that the Kingdom has the strongest economy in the Middle East and it is the biggest oil producer in addition to its unique strategic location. Basil Al-Ghalayini, CEO of BMG Financial Advisors, said that investors should leverage the opportunities in the Kingdom as a result of the boom. Saudi Arabia, he added, ranked in the top 40 most competitive countries in the World, according to a recent World Bank Report, ahead of the UAE and France.