The Kingdom of Saudi Arabia is in the process of liberalizing many of its laws, permitting, for example, foreigners to own property and removing the need for sponsors, in a move to attract increasing investment, both domestic and foreign.
'Shell in the Middle East' is granted an exclusive interview with His Highness Prince Abdullah bin Faisal bin Turki Al Abdullah Al-Saud, Governor of the Saudi Arabian General Investment Authority (SAGIA), who explains SAGIA's role in the opening up of the Kingdom to investors, before moving on to talk about Shell's current investments in Saudi Arabia and his hopes for Shell's future in the Kingdom...
"The Saudi Arabian General Investment Authority, or SAGIA as it is called, was established in April 2000," explains His Highness Prince Abdullah bin Faisal bin Turki Al Abdullah Al-Saud, Governor of the Authority.
"When SAGIA is pronounced with a hard 'G' it means 'irrigation canal' in Arabic, and I like to think that SAGIA will be irrigating the deserts of the Kingdom with investments to turn them green.
Our job at SAGIA is to encourage investment in Saudi Arabia and to facilitate the needs and requirements of those wishing to make those investments.
A further role which we must play in this massive task is, of course, to ensure that foreign investors comply fully with our Foreign Investment Law," says Prince Abdullah.
"We plan to assist potential investors by setting up Comprehensive Service Centers [CSCs], which we refer to as 'One Stop Shops'.
Here investors will be able to gain access to representatives from the Kingdom's various Government Departments with whom they need to deal to advance their potential investments and set up their businesses.
These may be representatives from Departments such as Immigration, Finance, Customs and so on, the point being that the investors, or potential investors, do not have to go all over town and waste time gaining access to the individual Departments.
"We have set up the first CSC here in Riyadh, and will be opening a further two in early 2001, in Jeddah and in Dammam. My aim as Governor of SAGIA is to decentralise processes as much as possible.
The goal is that SAGIA will not just be another 'Stop Shop' in the sometimes complex systems of Saudi Arabia, but the opposite, a 'No Stop Shop' for the future.
"With the new policies being implemented by the Government, we expect that investment will come from domestic and foreign investors and SAGIA's role will be to monitor and oversee this investment, both domestic and foreign.
This process has now been reduced in most normal cases to almost a registration formality rather than a licensing application, treating all applicants, all sectors and all investors in the same way whenever possible.
"Our aim is to become a service organization. We will not be making economic decisions for the Saudi market.
We do, however, have to take into account both the negative and positive sides of the impact on any investment, policy, law or procedure and their effect on the country.
If we come across any negative side effect we obviously then try to recommend improvements and changes.
"As for the Government's list of sectors where foreign investment will not be allowed to take place, there are no secrets here.
For example, foreigners will not be allowed to invest in real estate in the Holy Places, the cities of Medina and Mecca.
I also think that it would be unrealistic to expect there to be a big opening up of the financial services.
Likewise, for the moment, investment in the upstream crude oil business will be excluded to foreigners, but who knows what might happen tomorrow? However, the downstream sector and the market place for retail filling stations are wide open, and we have a very big and growing consumer market.
"So far the response to the establishment of our Authority has been very positive and we have received many enquiries, which I feel are due to the many real benefits we can now offer to foreign investors, such as the right to own land and to be treated in the same way as a Saudi investor.
I also think that an increasing number of investors have begun to realize the full potential and size of the Saudi market.
"The Kingdom has a Gross Domestic Product [GDP] which represents 20 per cent of the total GDP of the Middle East put together.
The population is rising rapidly, we have good relations with the G7 countries, and I think that our new Foreign Investment Law has been very beneficial psychologically.
"We have, of course, already had some experience of direct foreign investment, amounting to some US $50 billion through various joint ventures, mostly in petrochemicals and refineries.
Now one of the biggest boosts to the Saudi economy for the future will obviously be strong investment in the Kingdom's 'Gas Initiative'.
At the moment, SAGIA has no involvement with this but we will, of course, be backing the programme, as will other Government Departments.
"The 'Gas Initiative' is, of course, not comparable to a normal, day-to-day investment as it is a project open only to a small number of companies, Shell included.
There has been no need to promote this particular investment, although SAGIA may have a role to play later on once the plans are developed, in which case we can then advise on the particular sectors where we feel the emphasis on investment should be made.
"The idea behind developing the Kingdom's gas fields is to no longer see gas as simply a feedstock for petrochemical plants any more, but as a resource to spark off wide a range of activities to develop and impact on the whole economy, creating the momentum to drive it all forward.
"I hope that the decisions made concerning which companies will be asked to participate in the 'Gas Initiative' will be reached soon so that the programme can get under way.
"I hope that the investments that will be made in due course in the initiative will help us in our drive towards increasing Localization, providing new jobs and, more importantly, transferring technology and training of Saudi people. Our people are very important to us and we must develop their skills and talents as well as our industries.
"With direct foreign investment we are not just looking for money to be invested in the country," Prince Abdullah stresses.
"It is the efficient and practical management of skills and technology that we also require and which we have lacked in the past, and through which we will achieve real growth in the Kingdom."
Prince Abdullah moves on to say, "I also hope that Shell will be one of the companies selected to participate in the 'Gas Initiative'.
"Shell has been very prominent amongst foreign companies investing in Saudi Arabia, and is one of the two biggest foreign investors in the Kingdom.
Shell has done a tremendous job in its joint venture partnerships in the Kingdom, with SABIC [Saudi Basic Industries Company], in Sadaf [Saudi Petrochemical Company], and with Saudi Aramco in SASREF [Saudi Aramco and Shell Refinery Company].
"Shell has also been very active in the private sector, with large investments in two lubricants joint ventures, namely SASLUBCO [Saudi Arabian Markets and Shell Lubricants Company] and JOSLOC [Al-Jomaih and Shell Lubricating Oil Company].
"Furthermore, Shell has become very well-known in Saudi Arabian business and society circles over the last five years.
The company's main representative in the Kingdom, Floris Ansingh, who is President of Shell Companies in Saudi Arabia, has developed a very good reputation for Shell here in Saudi Arabia.
In fact, I feel that he is one of the best representatives of any foreign company in the Kingdom, and he has a very good team working here.
"Shell has always been very highly regarded in the Kingdom. In my earlier job as Governor of the Royal Commission for Al-Jubail and Yanbu, and through my current role, I have had the pleasure of meeting Shell's Chairman, Sir Mark Moody-Stuart.
I found him to be a very special man, and I have also enjoyed meeting many of Shell's other high quality international staff and, of course, local staff on various occasions."
Prince Abdullah concludes, "We feel that Saudi Arabia has great opportunities to offer to foreign investors and the right investors will, in turn, give us good opportunities to grow, and I am confident that we are all up to the task ahead of us."
Source: Shell in the Middle East.com
© 2001 Mena Report (www.menareport.com)
