Kingdom of Saudi Arabia (KSA)
The Kingdom of Saudi Arabia is the largest economy in the Arab world, it accounts for 25% of the Arab world’s Gross Domestic Product (GDP). Saudi Arabia has an oil based economy with strong government controls over major economic activities. The Kingdom possesses around 25% of the world’s oil reserves, and plays a leading role in Organization of the Petroleum Exporting Countries (OPEC). The petroleum sector accounts for roughly:
Benefits for UK businesses exporting to Saudi Arabia include:
Strengths of the Saudi market include:
Challenges
A physical presence is very important when establishing a business in Saudi Arabia.
Challenges include:
Economic growth
Saudi Arabia has had a period of relatively high growth and economic progress over the past few years. It is predicted to grow by at least 3% for the next couple of years. With 50% of Saudis under 25 years old the Saudi population is one of the fastest growing in the world. The current population of over 28 million is expected to increase to 29 million by 2020. The large youth population generally lacks the education and technical skills the private sector needs.
Massive investment will be required to meet the needs of this growing population. The Kingdom has substantially increased spending on employer led vocational training and education. This includes opening a number of new women’s colleges and the women only Princess Noura University.
The government is also encouraging foreign companies to invest in vocational and technical training in support of Saudisation.
The government’s budget for the 2015 fiscal year allocated the following to:
The Saudi government is pursuing a strategy of economic diversification and reform to:
The government is also focused on getting private and foreign investment in important sectors such as:
The UK has a strong historic relationship with Saudi Arabia. The Kingdom is our largest trading partner in the Middle East. Over 6,000 UK firms actively export goods to Saudi Arabia, the UK is the Kingdom’s second largest cumulative investor with approximately 200 joint ventures, estimated to be worth around £11.5 billion.
Source : GOV.UK
- 80% of budget revenues
- 45% of GDP
- 90% of export earnings
Benefits for UK businesses exporting to Saudi Arabia include:
- UK’s largest trading partner in the Middle East.
- Growing diversification within Saudi economy.
- Massive government investment in transport, infrastructure, healthcare, education and energy.
- Common use of English in business.
Strengths of the Saudi market include:
- No taxation on personal income.
- Proximity to other Gulf markets.
- Key member of the Gulf Cooperation Council (GCC).
- Largest economy and population in the Gulf region.
Challenges
A physical presence is very important when establishing a business in Saudi Arabia.
Challenges include:
- Identifying suitable sponsors for initial entry into the market
- Finding an appropriate Saudi partner for joint ventures
- Lead time to establish legal entities and obtain licenses from appropriate ministries
Economic growth
Saudi Arabia has had a period of relatively high growth and economic progress over the past few years. It is predicted to grow by at least 3% for the next couple of years. With 50% of Saudis under 25 years old the Saudi population is one of the fastest growing in the world. The current population of over 28 million is expected to increase to 29 million by 2020. The large youth population generally lacks the education and technical skills the private sector needs.
Massive investment will be required to meet the needs of this growing population. The Kingdom has substantially increased spending on employer led vocational training and education. This includes opening a number of new women’s colleges and the women only Princess Noura University.
The government is also encouraging foreign companies to invest in vocational and technical training in support of Saudisation.
The government’s budget for the 2015 fiscal year allocated the following to:
- 25% to education and training
- 19% to health and social development
- 7.3% to infrastructure (a reduction of 5% on 2014 but still £11 billion)
The Saudi government is pursuing a strategy of economic diversification and reform to:
- Grow the private sector and reduce reliance on oil and gas
- Open up previously restricted industries to foreign investment
- Increase employment opportunities for Saudis
The government is also focused on getting private and foreign investment in important sectors such as:
- Petrochemicals
- Automobile assembly
- Biotechnology
- Other knowledge driven industries, particularly those involved in research and development and IT where there is an opportunity for knowledge transfer.
The UK has a strong historic relationship with Saudi Arabia. The Kingdom is our largest trading partner in the Middle East. Over 6,000 UK firms actively export goods to Saudi Arabia, the UK is the Kingdom’s second largest cumulative investor with approximately 200 joint ventures, estimated to be worth around £11.5 billion.
Source : GOV.UK