The Kingdom of Saudi Arabia is peopled by an estimated twenty-eight (28) million generally Arab and Afro-Asian inhabitants, including about 5.6 million resident foreigners, in 2008. A conservative Islamic nation economically growing at 6.1% annually, Saudi Arabia’s estimated gross domestic product (GDP) in 2008 is $527 billion. Its per capita GDP (also in 2008) is $21,062. With just 1.76% of its total land arable and while having natural resources such as hydrocarbons, gold, uranium, bauxite, coal, iron, phosphate, tungsten, zinc, silver and copper, it is un-disputably the oil – of which the Kingdom is the world’s leading oil producer and exporter – that has been responsible for the economic transformation of the nation since 1960’s and 1970’s when large scale production of the “black gold” has ever since shifted to the high gear.
Saudi Arabia has as its trading partners the countries of China, France, Germany, Italy, Japan, Singapore, South Korea, Holland, Taiwan, United Kingdom, United Arab Emirates, Switzerland and the United States of America – netting a total export revenue (2008) in the amount of $364 billion and import costs of $103 billion. With 90% of the country’s export and almost three-quarters (75%) of total government revenues accounted for by the oil, the Kingdom’s current rapid industrial expansion is still being led by the petrochemical sector.
However, after Saudi Arabia made its intention known to join the World Trade Organization (WTO), there has been conscious effort by the Saudi government to diversify its economy as it lessens its reliance on petrochemical and try to develop its other sectors of economy. The steps that are being taken by the Kingdom since 1970’s have been programmatic.
For this, the Saudi government has been observing 5-year development plans to transform its oil-based economy into a modern industrial state. Precise data on foreign direct investment in Saudi Arabia is difficult to obtain. But, according to the World Investment Report 2008, Saudi Arabia’s foreign direct investment (FDI) inflow and outflow in 2007 were $24,318 million and $13,139 million respectively. And these figures are products of the countries’ diligence and determination to transform their economy in particularly and country in genera into one that is enticing to the eyes of the foreign investors. Currently, new laws are being crafted and pertinent laws are being adjusted for the said purpose.
Specifically, there is the new Foreign Investment Law that allows foreigners to invest in most sectors of the economy. Among others, the law has so far enabled foreign investors to own real property for company activities. Too, there is the new Real Estate Law which opens to the foreigners the possibility of owning real estate outside the cities of Makkah and Madinah. Under revision for purposes of increasing transparency and strengthening the country’s global competitiveness are Capital Markets Law, the Companies Law, the Agency Law, the Insurance Law, the Mining Law and the Labor Law.
And, these legislative measures were being matched by the establishment of the Saudi Arabian General Investment Authority (SAGIA), the Saudi Industrial Development Fund (SIDF), privatisation of public companies, and their December 2005 membership in the WTO. Other government bodies were likewise put up to actively promote opportunities in the country’s industrial cities and regions. One of those is the Royal Commission for Jubail and Yanbu.
In addition, complementing Saudi government majority controlled Saudi Arabian Basic Industries Corporations (SABIC), there are private investment companies – e. g., the Saudi Venture Capital Group and the Saudi Industrial Development Company -- that have been playing an increasingly active role in bringing on foreign joint business venture partners.