Investments

Bank Of America Investment By Philip White

- enjoy your journey with your rental car in Saudi Arabia

Investment Opportunity (EUNN)London - Saudi Arabia has embarked on an ambitious 14-year investment offensive over the next few weeks asthe Middle East nationseeks $624 billion in foreign direct investment (FDI) from Western trade partners like Great Britain since Saudi Arabia became a member of the World Trade Organization.

The largest share of final demand at around 70%/$44 Billion, comes from jewellery, accounting India, the world’s largest gold jewellery market by volume for around 555 t, followed in terms of consumption demand by the United States, the global second largest gold jewellery market with 306 t, China with 302 t, the Middle East (Saudi Arabia, Dubai), Turkey and Italy. Gold trade is a chief driver of economic diversification in the Gulf region, exported 287 t into the vigorous Arab and Indian markets. The industrial and dental uses account for around 12% of gold demand, while investment demand is estimated at 18%, around $11, 3 Billion.

Banc Of America Investment Over the next 14 years, the Kingom's FDI programwill attract businesses to invest in its industries,of which some 37 percent is earmarked for the oil and gas industries; 30 percent for water and electricity projects; 26 percent for refining and petrochemicals; and 7 percent for transport.

A revaluation will be negative for the US dollar, but if things stay status quo and Saudi Arabia wins out, then we could see the dollar bounce.

Banking Investment The Kingdom is also embarking on an ambitious privatization program in the wake of its accession to the World Trade Organization (WTO) which will see a further estimated $800 billion worth of state assets sold off over the next 14 years.

Investment Solution Strategic A major Saudi business and investment road show led by Amr Al-Dabbagh, governor of the Saudi Arabian General Investment Authority (SAGIA), will take place in Edinburgh Scotland and Manchester England on Jan. 24 and Jan. 26. These will be similar to those which took place in the United Statesduring 2005.

The capital of the Kingdom of Saudi Arabia, tech city built on funding by Saudi oil. There are some interesting sights here, but Saudi Arabia does not issue tourist visas, so those visiting require an invitation or must arrive on a special tour with the government. Religious visas are issued to Moslems undertaking their Pilgrimage (Haj)

Investment Banking Services In addition, several inward and outward trade missions and exhibitions are planned between the UK and the Kingdom including an UK oil and gas mission to the Kingdom on Jan. 21-26; a Saudi downstream petrochemicals mission to the UK in February 2006; an UK educational trade mission to the Kingdom on March 4-9; and a Middle East Association trade mission to Saudi Arabia in April/May this year. These follow the successful "Opportunity Arabia 2" trade exhibition and seminar organized by the Middle East Association in London in September 2005 and the Association's trade mission to the Kingdom in November 2005.

Bank Investment According to British trade and business figures, some 500 British companies are expected to attend the road shows. The Saudi strategy seems to be to give companies from the West and East Asia a fair crack at co-investing with local and regional partners in this unprecedented investment drive. UK executives also now have easier access to the Saudi capital following the recent launch by bmi of a thrice-a-week direct service to Riyadh from London's Heathrowairport - the only UK carrier to offer these flights.

Alternative Investment As a market, Saudi Arabia boasts probably the best "collateral" in the world- 25 percent of the world's proven oil reserves. And this from an explored area covering only a quarter of the country. The Kingdom's daily oil income, according to the Middle East Association, has increased from $196 million in August 2004 to $630 million in August 2005. This has led to an unprecedented budget surplus and levels of liquidity in the country. In the 2005 budget for instance some SR75.5 billion was earmarked for capital expenditure mainly in education and health sectors. The value of actual construction contracts awarded in the Kingdom in the first six months of 2005 totaled SR61.5 billion. This compared to SR45.8 billion for the whole of 2004. Future project expenditure, according to figures from National Commercial Bank (NCB), is estimated at $326 billion for the period 2005-2010.

Online Investment Services The oil and gas sectors are also planning massive expansion with Saudi Aramcolooking to spend $46 billion over the next five years. At least six mega oil and gas projects are planned to push production capacity to 12 million barrels per day. Saudi Basic Industries Corp. (SABIC), now a major global petrochemicals player is also planning a major expansion with much greater private sector involvement.

Accompany Essential Investment With all the increased industrial activity and the fact that the Kingdom's population of 26.4 million is increasing at an annual rate of 2.31 percent- one of the highest in the world - means that demand for increased electricity capacity is increasing rapidly. Not surprisingly, the Saudi Electricity Company (SEC) spent SR7.1 billion on new capacity in 2005 alone and is planning to double capacity at a cost of SR44 billion by 2020.

Investment Company Water resources are a very scarce commodity and as such the Saline Water Conversion Company (SWCC) is investing SR80 billion by 2019 in new projects and existing plant upgrades.

Investment Management Solution British companies have traditionally had good success in selling to the Kingdom. UK sales to Saudi Aramco in 2005 alone totaled $100 million. But with the changing dynamics of the Saudi economy and demography, the rules of the game are also changing. The Kingdom is looking for new types of commitment such as greater FDI flows and a committed participation in its privatization program. With this comes perceptions of country and political risks.

Investment Management Services While Saudi Arabia is attractive in many respects- huge liquidity, a median population age of only 21.28 years, a life expectancy of 75.4 years; it can also be frustrating place to do business. Some companies still cite payment delays; tough local labor laws especially when employing Saudi nationals; and the bureaucracy of decision-making.

Guide Investment Stock According to Martin Parr, founder of MPCEE, and environmental consultancy which has done much work in the region, "Saudi Arabia is a changing country, and is searching the globe for partners to assist in this change. Saudi business relationships take time to cultivate, but open and frank communication will pay long-term dividends."

Investment Manual Solution SAGIA is one organization that is too aware of the strengths and weaknesses of Saudi Arabia, Inc. Its mandate is to "create a pro-business environment providing comprehensive services to investors and fostering investment opportunities in energy, transportation and knowledge-based industries."

Investment Stock But as Al-Dabbagh stresses, "the creation of a pro-business environment is an on-going process. The investment package is being continually improved in conformity with international best practices, in response to feedback from the investment community, and as an active dialogue between the government and the private sector. We are now a true one-stop shop for facilitation of investment." SAGIA's focus on the energy, transport and knowledge-based sectors is merely because the Kingdom has "natural competitive advantages in these sectors."

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