'Future holds definite promise for stronger Indo-Saudi ties'
ARABIA today reflects a modern and competitive economy.
"Now there is an even greater desire to see the Kingdom carry
out even more drastic reforms and at yet a faster pace"
consistent with "the Kingdom's own internal rhythms yet
sensitive to the requirements of competing in the contemporary
His Highness Prince Abdullah bin Faisal bin Turki Al-Saud,
Chairman of Saudi Arabian General Investment Authority (SAGIA)
in an interview with Amitabha Sen.
There is immense scope for India to participate in every imaginable
area of business in Saudi Arabia. "There is good basis for a
constructive, mutually beneficial relationship and we believe the
future holds definite promise for stronger Indo-Saudi ties", he
adds. Stating that Microsoft and Oracle's selecting India as
their software writing bases outside the US, as "indeed an
impressive achievement", the SAGIA Chairman hopes and expects
India to script " the same kinds of successes here as you have
achieved at home...We welcome the Indian IT businesses to come and
look at the rapidly emerging opportunities in the Kingdom".
Since its creation in April, 2000, the Saudi Arabian General
Investment Authority (SAGIA) is creating immense positive impacts on
the country’s industrialization. Its policy frameworks and
decisions are providing the basis to boost investments in the
country, including foreign direct investment (FDI). Within three
years of its existence SAGIA has approved FDI proposals worth in
excess of US$ 14 billion. What’s the key to SAGIA’s success
under your leadership?
cannot take all the credit for what you describe as ‘success’;
it was essentially the Foreign Investment Law (FIL) of April 2000
that set the foundation for a paradigm change in the Saudi Arabian
investment climate. SAGIA
was created as part of that law.
operate under the simple belief that being successful in a very
competitive market means being conscious of market trends, and for
us specifically that means being conscious of what’s expected of
us as an investment promotion agency (IPA), and as a service for
foreign investors. This means continually monitoring the investment
climate, soliciting and studying suggestions from foreign investors
representing diverse sectors and countries, and then acting upon
them by recommending appropriate changes to the system. In addition
to the efforts we’ve made in making the licensing process more
streamlined and user friendly, we’ve recently seen a reduction to
the negative list, something we’ve been pushing for consistently.
Printing and publishing services, a range of telecommunications
services, transmission and distribution of electrical power,
pipeline transmission services, education services and hospital and
health services are areas newly opened to foreign investment.
More recently, SAGIA has been authorized to issue business
visas to help inward investment. A new Insurance Act is expected to become law soon, opening
that sector to foreign participation.
also seen a number of changes in the Foreign Investment Law’s
original by-laws. These were aimed at making the rules more
business-friendly by providing more flexibility to foreign investors
and by strengthening the legal framework of investor rights in the
Kingdom, particularly in relation to property ownership, parity with
national companies and avoidance of double taxation. These, combined
with the passing of the Capital Market Law earlier this year, are
evidence of Saudi Arabia’s commitment to improving the country’s
course, SAGIA considers these as only basic steps toward making
Saudi Arabia an attractive destination for foreign direct investment
(FDI), and we are aware that much more still needs to be done.
Saudi Arabia which is the most influential and powerful country in
the Gulf region, projects a massive US$ 900 billion FDI within in
the next 20 years. Would you kindly throw some light on the key
areas that offer vast scope of FDI? What are the fundamentals that
claim to be major reasons of drawing FDI into those areas?
think that the discerning investor knows better than us about the
opportunities in Saudi Arabia, and so it’s not our policy to
target certain sectors for investment. Yet we are aware that several
sectors are ripe with investment potential, one of which is water,
and for the obvious reasons: as the need
for water resources increase daily, we are relying more and
more on desalinization for our consumption needs, and this means we
must focus on developing more and more efficient technologies to aid
in this process. This is so important to us that HRH Prince Sultan
bin Abdulaziz has offered an encouragement in the way of the Prince
Sultan bin Abdulaziz Prize for water, which aims to reward the
efforts of innovative scientists, academics and organizations who
carry out applied research in the water resources sector worldwide.
is another area that offers major investment opportunities. The
reasons for this are also obvious: our population is increasing
rapidly, and as industry is forced to grow in order to care for the
needs of this population, we must see to it that more and more
efficient means for producing and using power are created. In the
Kingdom, we tend to think of water and power together because water
desalination plants are also efficient
sources of power.
is also considerable potential in the mining sector. Saudi Arabia
has been proven to be home to the largest mineral deposits in the
Gulf region, thanks largely to the extensive exploration effort
sponsored by the government. We would like to see more investment in
getting these minerals out of the ground and into production and use
worldwide. A good example of the investment potential in mining is
found in phosphates. We have some of the largest yet undeveloped
phosphate deposits in the world, and Ma’aden,
the Saudi Arabian Mining Company, has said that it’s now time for
developing these reserves, referring to it as the company’s priority
for the next decade. Studies indicate that with investment in
developing our phosphate resources, we could become the second
largest producer of fertilizer in the world.
and training is another area in which we would like to see more FDI.
Approximately 74 percent of our population is below 30 years of age,
and 46 percent falls within the adolescent group. This demographic
profile means we will need to set up more schools and colleges with
the goal of developing our human resources to their fullest
areas of immediate investment potential include Information
Technology, telecommunications, and tourism, which has been
identified as a major growth sector for Saudi Arabia. Aside from the
Kingdom’s religious significance, we are blessed with many places
of beauty and historical importance, and it would be our pleasure to
share these with the rest of the world. Of course it goes without
saying that we would all stand to benefit from the process of
cultural exchange usually derived from tourism; for us this would
mean shedding the many misconceptions about Saudi Arabia.
emphasis on the issue that SAGIA, rather than the Kingdom as a
whole, is going for principles rather than programmes and atmosphere
rather than set programmes by bureaucrats in opening up the market,
is a clear message to prospective investors world over. To what
extent, as the head of the country’s investment body, do you feel
the message has reached appropriate quarters?
Arabia has liberalized its investment climate; we have a new foreign
investment law and SAGIA is one of the main instruments created by
the government to see that law put into effect. That, of course, is
the message we are trying to spread. For us this is at minimum a
the first is to dispel the many myths about Saudi Arabia in general,
and the second is much more specific – the targeting of our
message to appropriate quarters, as you noted.
We have already taken the first steps toward this goal of
promoting Saudi Arabia. For
example, SAGIA recently used the launch of its new brand in London
as a platform to communicate several key messages to the media and
business community. Our new corporate logo – with an image
invoking both the coming together of hands and a welcoming arch with
blue skies – is bolstered by our new motto: partnering business.
SAGIA will do everything possible to live up to its promise of
improving the investment climate in Saudi Arabia and offering
excellent services to both potential investors and those who have
already established themselves in the Kingdom. We have a long way to
go in fulfilling our mission, but there’s never been any doubt
about what it is, or that we are moving steadily in the right
major campaign to draw more and more investment into Saudi Arabia is
that it is safe both politically and economically to invest in the
Kingdom. While saying so, as SAGIA chairman what message would you
like to convey to the rest of the world including India?
Saudi Arabia is changing. We have overcome major obstacles in our
short history and have achieved sufficient economic development to
bring about the economic welfare of our people. In order to do this
we have invested most of our oil wealth in economic development,
with the result that in only three decades we have built a modern
and competitive economy. Now there is an even greater desire to see
the Kingdom carry out even more drastic reforms and at yet a faster
pace. A very dynamic internal dialogue is fueling this drive toward
change, while striving to maintain a pace that is both consistent
with the Kingdom’s own internal rhythms yet sensitive to the
requirements of competing in the contemporary marketplace.
you consider that there should not be any ceiling – both at upper
and lower ends – in FDI so that small and medium but
technologically sound companies can think of investment in the
the Kingdom’s IPA, the ideal situation for us would entail no
negative list and no investment ceilings. We are also strong
advocates of SMEs and investments that will bring in new and modern
technology. But as of
now the law does set minimum investment requirements of SR 25
million for agriculture, SR 5 million for industrial, SR 2 million
for other investments, and SR 30 million for real estate. SAGIA is
confident, however, that we can obtain special clearances for
projects that hold great potential and merit.
there are 55 joint ventures in Saudi Arabia and 40 Indo-Saudi
ventures in India. In areas of Oil and Gas, Petrochemicals,
Fertilizers, Telecommunication, Pharmaceuticals and Healthcare,
India could be a major partner in progress of Saudi Arabia in coming
years. Is there any move at the governmental level on either side
for future investments in those areas?
true that our two countries have a history of close cooperation. During
the last few years a number of trade and industry delegations have
exchanged visits to explore the opportunities for long-term
partnerships and cooperation, including joint ventures,
resulting in a growing awareness on both sides of the many potential
areas of investment that exist, and a greater capacity for
identifying new markets of strategic interest. These delegations
typically include members from the government and private sector,
strong support from the Council of Saudi Chambers of Commerce &
Industry and the Regional Chambers in Riyadh, Jeddah and Dammam.
Also, Indian and Saudi companies have been regularly taking part in
trade fairs, and lately Indian
investors have been receiving even more attention
from Saudi businessmen.
But beyond India’s attraction as an obvious natural trading
partner, the Indian community – presently the largest expatriate
community in the Kingdom, numbering well over a million – has
earned a well-deserved reputation for high quality work.
is the leading Software nation in the world today. On the other
hand, the Saudi market is enriched with all the characteristics to
be one of the best markets for investment in the field of IT. How do
you find the prospect of India in the Saudi IT market? What do you
expect of Indian IT firms aspiring to put up business in the
look forward to India’s participation in the IT market. India has
earned itself quite a reputation in the IT industry – that you
were the first location outside the US selected by Microsoft and
Oracle to serve as their software writing bases, is indeed an
impressive achievement. As for what we would expect from India, we
would hope to see the same kinds of successes here as you have
achieved at home. The IT sector is rapidly expanding in the Kingdom
to service other growing sectors, and there has been a definite
surge of investor interest in new IT-related businesses.
We welcome the Indian IT businesses to come and look at the
rapidly emerging opportunities in the Kingdom.
are the areas where Saudi Arabia would like to take up more and more
joint ventures and take investment decisions?
think that would be a long list, and would likely include just about
every imaginable area of business, including agriculture, management
and consultancy services, construction projects, telecommunications,
information technology, pharmaceuticals, etc. There is presently
considerable collaboration between Indian and Saudi companies in the
areas of consultancy, financial services and software development.
In any case, there is good basis for a constructive, mutually
beneficial relationship and we believe the future holds definite
promise for stronger Indo-Saudi ties.
far Indo-Saudi bilateral trade is limited to commodities and
agricultural products. Could you please focus on new areas where
both countries can expand trade relations?
economic relations and trade between India and Saudi Arabia has
grown considerably over the years. The Indo-Saudi Joint
Commission for economic, trade, scientific, technical and cultural
cooperation (JCM) is the official bilateral body pursuing expansion
of trade relations.
do you rate the prospect of India having a long term pact with the
Kingdom in the oil front – backed up by a sustainable and
reasonable pricing policy – that may lead to greater FDI in the
has been a large and reliable market for our crude oil and petroleum
products for years, and Saudi Arabia is India’s largest supplier
of crude oil. It will be good for both countries to capitalize on
this relationship in whatever way they can. On behalf of SAGIA, I
can only say that we wholeheartedly welcome, encourage and support
any move that will lead to greater FDI in Saudi Arabia.
do you rate the prospect of joint Indo-Saudi ventures in third
countries, specifically in Iraq in view of the restructuring and
rehabilitation programmes being undertaken in the country after the
have seen some reports in the media to that effect, but the prospect
of doing joint ventures is not limited to Iraq. This is an agenda
for the private sectors of both countries to pursue, but I am
confident there is good potential for more Indo-Saudi joint ventures
and more Indian investment in Saudi Arabia.