Oxford Business Group - South Africa 2012 Report Part 2


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Oxford Business Group - South Africa 2012 Report Part 2

  1. 1. 13Country ProfileYoung and rapidly growing population of 27.1mCentral role in Islam as home to the Holy CitiesOil reserves comprise around one-fourth of global totalAt 2.15m sq km, the world’s ninth-largest country
  2. 2. 14 COUNTRY PROFILE At 2.15m sq km, Saudi Arabia is the world’s ninth-largest country Balancing act Striving to maintain long-standing traditions while modernising The Al Saud family, which reigns over Saudi Arabia, has swing-producer status in oil and a prudent manager of held intermittent control over the Arabian Peninsula its currency reserves in the financial sector. since the mid-1700s. It was around this time that the HOLY CITIES: The Kingdom’s central role in the inter- head of the family, Muhammad ibn Saud, joined forces national Muslim community as the host of the two Holy with Muhammad ibn Abd Al Wahhab, a religious Cities of Makkah and Medina is paramount to the coun- reformer, leading to the rise of the Wahhabi move- try’s identity. Makkah was the birthplace of Islam 14 ment in Arabia. By the middle of the 19th century, the centuries ago, and every year the Kingdom welcomes Al Saud family had gained control of the majority of millions of pilgrims from every corner of the globe who modern-day Saudi Arabia, but was faced with the lin- travel to the city to carry out their spiritual duties of gering threat of Ottoman forces stationed throughout Hajj and Umrah – the pilgrimages to Makkah. Islam is the region. The Ottoman army managed to regain con- a key part of the country’s identity abroad as well, as trol of substantial portions of the country in 1891, millions of Muslims around the world face towards when rising tensions ultimately led Al Saud family to seek Makkah every day during their prayers. refuge in Kuwait. The tables started to turn back in ear- GROWTH: Saudi Arabia’s population has expanded rap- ly 1902 when, on January 15th, a young member of the idly, in step with the economy’s quick expansion over royal family, Abdulaziz Al Saud, successfully staged a the years. The growing population has increased the series of night raids and took Riyadh. Thus began the need for the government to diversify the economy and recapture of the family’s former territory and the uni- to create more employment opportunities for future fication of the peninsula’s diverse tribes. Three decades generations. By looking for alternative options for devel- later, on September 23, 1932, the modern Kingdom of opment, the government is preparing for a future when Saudi Arabia was created by Abdulaziz Al Saud. oil export earnings might not contribute as much to A NEW ERA: Through political negotiations, Abdulaz- GDP as they have in the past. iz Al Saud became the first king of the young country, GOVERNMENT: Saudi Arabia is a monarchy governed the third Saudi state. In 1933 he signed an oil explo- by the direct descendants of King Abdulaziz Al Saud. ration agreement with the Standard Oil Company of Cal- The nation’s current monarch, King Abdullah bin Abdu- ifornia, launching a new chapter in the history of the laziz Al Saud, ascended to the throne in 2005 after his nation and marking the beginning of economic suc- brother, King Fahd, passed away. King Abdullah was cess and large-scale development for years to come. granted regency and has been overseeing the opera- Opening the energy sector transformed Saudi Arabia tions of government since 1995, when the late King into one of the world’s most important oil exporters. Fahd suffered a stroke. Having been blessed with 25% of the world’s proven The Kingdom’s political system was first codified by oil reserves, according to the Ministry of Petroleum King Fahd in 1992 with the Basic Law of Saudi Arabia, and Mineral Resources, the country has used its natu- which outlined the responsibilities of the government ral assets to swiftly transform itself into a leading region- and defined the relationship between the ruler, Saudi al economy with global reach. With a GDP in 2010 of citizens, and the various ministries and governing coun- more than $435bn according to the Saudi Arabian cil bodies. The king is advised by the Council of Minis- Monetary Agency, the Kingdom is now the largest econ- ters and the Shura Council. The Council of Ministers, omy in the region, a member of the increasingly influ- the highest governance body, has the primary legisla- ential G20, the dominant player in OPEC, a recognised tive role, a four-year term limitation and by-laws that contributor to global market stabilisation through its govern its interaction with other consultative bodies. www.oxfordbusinessgroup.com/country/Saudi Arabia
  3. 3. COUNTRY PROFILE 15The Shura Council, also called the National Consulta-tive Council, is a mixture of elected and appointed cit-izens representing a cross-section of the Saudi public.Initially, the king appointed 100% of the Shura Coun-cil; currently, however, the organisation is composedof both elected and appointed representatives. The Council of Ministers recently increased the Shu-ra Council’s responsibilities by including it in the nation-al budgeting process, granting it the ability to adviseon the allocation of public spending and question min-isters on budgetary use. King Abdullah expanded theShura Council’s powers to allow it to propose and draftlaws and regulations. The body also has the ability toobject to, or approve, the passage of a law. In 1993 thecouncil was reformed to make it more efficient and rep-resentative of society at large. Primarily, this meantexpansion – the organisation grew to 90 members in1997, 120 members in 2001 and 150 members in 2005.In September 2011, King Abdullah announced thatwomen will have the right to join the council starting With a young and growing population, providing adequate education, housing and health care is a priorityin the next term. The king has final approval rights onall new legislation, after an extensive deliberative and The main population centres are the capital, Riyadh, andconsultative process in which the Shura Council, the the western city of Jeddah, which is the country’s com-Council of Ministers and numerous experts engage. mercial centre. Over the past decade the Kingdom’s cities In 1993 King Fahd enacted legislation that detailed and towns have been transformed by steadily increas-the local administration of Saudi Arabia’s 13 provinces. ing internal migration from rural areas.In addition to a governor, each province has a council The Kingdom’s ongoing reliance on expatriate labourmade up of representatives of the local government is a concern, as in the long run locals need to be trainedand 10 prominent community members who are with the skills to replace foreign workers. Continued eco-appointed on a four-year, renewable basis. nomic expansion, large-scale government spending on King Abdullah also passed a succession law to ensure infrastructure and the private sector’s steadily increas-that the process by which Saudi Arabia’s monarch was ing participation in the economy have contributed tochosen was based on a specific law, rather than sim- the recruitment of a large non-Saudi workforce – aroundply using the general guidelines codified in the coun- 8.4m of the Kingdom’s total population in 2010, accord-try’s Basic Law. This has resulted in increased stability ing to the CDSI. A substantial majority of the foreignin terms of succession in the Kingdom. In October 2011, labourers currently active in the Kingdom come fromthe Crown Prince, Prince Sultan bin Abdulaziz Al Saud, South-east Asia. In May 2011, the Ministry of Labourwho also served as minister of defence and aviation announced a new employment regime entitled Nitaqat.and deputy prime minister, passed away at the age of Private sector companies are categorised under one85. Prince Naif bin Abdulaziz, minister of the interior of four zones based on the type of business of thesince 2009, was appointed as the new Crown Prince. company and the percentage of Saudi nationalsPOPULATION: The most recent census in Saudi Ara- employed. The programme aims to increase Saudiisa-bia was carried out in 2010 by the Central Department tion rates via various incentives and penalties based onof Statistics and Information (CDSI). According to results the companies’ Nitaqat categorisation.from the survey, the Kingdom’s population was estimat- RELIGION: Islam is the state religion, with a large major-ed at 27.1m. Of this number, around 70% were Saudi ity of Muslims belonging to the Sunni sect and a minor-nationals and 30% were foreigners – a split between ity of Shia followers. Religion plays an essential role inlocal and expatriates that has remained relatively sta- the Kingdom. Sunni Islam is divided into four schools:ble in recent years. The average annual population the Hanbali, Hanafi, Shafi and Maliki schools. Histori-growth rate between 2006 and 2010 is currently esti- cally Saudi Arabia has strictly adhered to the Hanbalimated at 3.2% by the CDSI. Saudi Arabia’s demograph- school of Islam, though in early 2009 King Abdullahics and its historically high growth rates have had a direct changed the make-up of the influential Grand Ulemaimpact on the country’s long-term development strat- Commission, a leading body of religious scholars, toegy. Providing adequate and affordable housing, health reflect all Sunni sects, rather than just Hanbali. Thecare and education at all levels for the expanding pop- government considers all Saudis to be Muslim; publiculation remains a government priority. prayer, charity (a requirement in Islamic culture) and ful- Saudi is among the fastest-growing societies glob- ly abiding by sharia law are mandatory for all Saudis.ally. The UN estimates the population could double by Nonetheless, the significant influx of expatriates in2050. The high growth rate in recent years can be recent years has brought some Christians and follow-attributed primarily to remarkable improvements in liv- ers of various other religions to the Kingdom. Still, Islaming, health and social conditions over the past 25 years. touches every feature of life in Saudi Arabia; the king’s THE REPORT Saudi Arabia 2012
  4. 4. 16 COUNTRY PROFILE formal title is “Custodian of the Two Holy Mosques”. As et for 2011 included SR150bn ($40.0bn) for education the spiritual home of Islam, the country attracts over and training, a 9% increase from the previous year. 2.5m Muslims for the Hajj each year, and 7m pilgrims LANGUAGE: The official language of Saudi Arabia is visit throughout the year to perform the Umrah, which Arabic and the spoken dialect is commonly called Gulf can be undertaken at any time. Arabic. However, English is generally spoken in larger EDUCATION: Free and universal education is available cities and by the majority of businesspeople. to all citizens. Local institutions are segregated by gen- GEOGRAPHY & CLIMATE: At 2.15m sq km, Saudi Ara- der at primary, secondary and tertiary levels. The one bia is the world’s ninth-largest country, and the biggest exception to this is the King Abdullah University of Sci- on the Arabian Peninsula, accounting for 80% of its ter- ence and Technology (KAUST), which opened in 2009. ritory. Half of the nation is desert. The country borders KAUST, a graduate-level, research-focused institution, Iraq and Jordan to the north; Kuwait, Qatar and the UAE will eventually house 800 students. to the east; and Yemen and Oman to the south. The The first boys’ school opened in 1954 and the first Red Sea stretches alongside Saudi Arabia’s 1760-km girls’ school two years later. The Saudi curriculum com- western coastline, from an entry point north of Yemen prises kindergarten, six years of primary school, three in the south to the Gulf of Aqaba in the north. years of intermediate and an additional three years of Saudi Arabia’s climate varies depending on the region. high school. The government has increased spending The Red Sea coast has comfortable temperatures on education in recent years to fulfil the country’s eco- throughout most of the year, with a hot and humid sum- nomic, religious and social objectives. Private sector par- mer. All coastal areas are generally cooler and more ticipation in the education sector is on the rise as well. humid than the central regions, which tend to have a Education has had a positive impact on develop- harsh and dry climate, with temperatures often surpass- ment. A few generations ago Saudi Arabia had a liter- ing 40°C. Winters are generally mild and short. acy rate of 20%, whereas today it has been able to push NATURAL RESOURCES: Saudi Arabia remains arguably that figure to 84.7% for males and 70.8% for females. the most important oil producer in the world, with Around 58% of students enrolled in higher education approximately one-fourth of global conventional institutions are women. Bringing the education system reserves. The country contains around 260bn barrels in line with the needs of the private sector is seen as of known oil reserves – some 2.5bn of which are situ- essential, as the government moves ahead with a far- ated in the Saudi-Kuwaiti neutral zone, otherwise known reaching Saudiisation programme. The national budg- as the Divided Zone. Saudi Arabia’s development has
  5. 5. COUNTRY PROFILE 17been greatly enhanced by its tremendous oil wealth.The Kingdom’s crude deposits are made up of light andextra-light grades of oil, which account for two-thirdsof the reserves, with the remainder consisting of medi-um or heavy grades. The government has a carefullymanaged swing-producer policy, and is committed tomaintaining global oil supply and pricing stability. Allfacets of the oil industry are managed by Saudi Aram-co, the Kingdom’s state-owned national oil companyand the world’s largest oil firm. Although Saudi Arabiahas over 100 oil and gas fields, over half of its reservesare found in just eight fields. Ghawar, the world’s largestoil field, is estimated to have reserves of 70bn barrelsand produces half of the country’s output. The Kingdom has managed to accumulate large cashreserves due to years of high oil prices. This has allowedit to continue its economic diversification programmeand industrial development even during recessionaryyears. Recently, the mining sector has increasingly beenviewed as an area of future growth. The climate varies significantly by region, ranging from cooler coastal areas to hot, dry deserts Due to large reserves of gold, silver, zinc, copper andindustrial minerals, especially in the western moun- tional commerce since long before the Islamic era.tains and the north-eastern regions of the country, Located along the principal trading route between Eastmining is expected to become the third industrial pil- and West, the area benefitted from passing caravans,lar of the economy, after energy and petrochemicals. as traders carried spices, silks and other exotic mer-Legislative changes have made the sector more attrac- chandise through the desert for hundreds of years.tive for both national and international players in the This mercantile spirit lives on today.mining sector in recent years. The majority state-owned DESERT RETREAT: Taking a trip to the desert is a com-Saudi Arabian Mining Company, also known as Ma’aden, mon pastime for Saudi families, where they sit, talk andwas formed in 1997 to develop mineral resources in drink tea with friends and family members. The desert,the Kingdom. Ma’aden and American aluminium pro- which is considered by many to be a necessary retreatducer Alcoa signed an agreement in 2009 to construct from the pressures of modern-day living, plays an impor-an integrated aluminium complex at Ras Al Khair. The tant role in Saudi life and identity. Saudis are also under-$10.8bn development is expected to include a smelter, standably very proud of their long Bedouin ancestry.aluminium refinery, bauxite mine and rolling mill. The king is often presented holding a falcon, which wasCULTURE: Saudi Arabia’s cultural and social norms used by the Bedouin for hunting and is an emblem ofderive from and are very closely related to the King- nobility. Similarly, horse and camel breeding are stilldom’s deep connection with Islam. Its conservative considered pursuits for true gentlemen.nature means that a number of strict social codes, such The ubiquitous Arab hospitality is also a remnant ofas segregation of the sexes, must be adhered to at all life in the desert. Traditionally, visitors were given food,times. Unmarried or unrelated men and women are drink and a bed for the night, away from harsh condi-strongly discouraged from mixing. tions. Many Saudi artists have found inspiration in the The majority of Saudis wear traditional dress. For Kingdom’s long history as well. Much work in recent yearsmen this consists of a thobe, a brilliant-white garment has focused on rich abstract designs, reminiscent ofthat covers the entire body. Male headwear consists desert landscapes. This has resulted in an array of stun-of an aqal, which is a black ring that sits atop the head ning Arabic architecture, textiles and jewellery.and holds the head scarf, the ghuttera, a red and white LANGUAGE: Language, in both its written and spokencloth, in place. Women cover themselves in public with forms, is also an important cultural art form. There is athe abaya. Although it is common for Saudis from all rich history of calligraphy as an art in the Kingdom,backgrounds to wear traditional garb, it is becoming particularly as it has related to the decoration of impor-increasingly routine to see youths dressed in Western- tant documents over the years. The spoken word, mean-style clothes, especially in cities and other urban areas. while, receives the greatest honour in Saudi Arabia, While women are not permitted to drive or ride a bicy- and poems and stories are often passed down from gen-cle on public roads, their role in the economy has grown eration to generation within families.substantially over the past decade. They have proper- As the Kingdom moves forward economically and itsty rights and legal status, which has resulted in women citizens enjoy the benefits of growth and globalisa-owning a significant percentage of assets. They also tion, Saudis are finding themselves performing a diffi-have considerable influence in Saudi households, which cult cultural balancing act, as they try to manage thehas made them important consumers in the economy. simple lifestyles of their Bedouin ancestors alongsideWomen often look after and invest their own money. the expectations of modernity. This is a challenge butThe Arabian Peninsula has been a centre for interna- many Saudis view it as an opportunity for the future. THE REPORT Saudi Arabia 2012
  6. 6. 18 COUNTRY PROFILE VIEWPOINT King Abdullah bin Abdulaziz Al Saud Investing in the future King Abdullah bin Abdulaziz Al Saud, Custodian of the Two Holy Mosques, on the Kingdom’s development programme While the world around us has undergone many clearly by the continued establishment and expan- changes, our country continues to develop and enjoys sion of integrated hospitals in cities, as well as the security and stability in the light of national unity. This building of health centres in villages. clearly reflects the relationship and cohesion between We have issued an order to allocate SR16bn the leaders of this country and its loyal and noble peo- ($4.3bn) for the implementation and expansion of a ple. We live in a changing world, but we are deter- number of medical cities. With God’s help and guid- mined with God’s help to continue the development ance, we will continue in the same direction towards process and the liberalisation of the economy, while improving the health services sector, whether by abiding by balanced policies for a bright future. focusing on the building of new projects, or by improv- The continuation of the national dialogue as an ing the environment of existing health facilities and approach to deal with all issues and broaden the par- increasing the funds allocated to them. ticipation among all segments of Saudi society is The Ninth Development Plan, will be – with God’s important for strengthening national unity and help – a helping hand for us to achieve prosperity addressing local issues. Creating a channel of respon- and growth, especially as it has provided for social sible expression that is based on the objectives of the stability and will ensure the protection of human King Abdulaziz Centre for National Dialogue can pro- rights and promotion of national unity. It also empha- vide the proper environment for dialogue. sises raising the quality of life for citizens, continued In addition to the importance of national securi- diversification of the economy, balanced and sus- ty, water security is no less important, and it is one tainable development of all regions of the Kingdom, of the strategic objectives of the Kingdom. It is sup- activating the role of the private sector, and sup- ported through the expansion of saltwater desalina- porting small and medium-sized enterprises. tion plants and dams to supplement underground Based on the government’s keenness to continue water resources. In the interest of reducing the cost the development in all fields, it has established the of water production methods, the state has adopt- Ministry of Housing. The government has also sup- ed the National Initiative for Water Desalination Using ported the industrial, agricultural and real estate Solar Energy, which will be implemented in three development funds, as well as provided financial facil- phases over a period of nine years. ities and soft loans to citizens to contribute effec- To preserve this national resource, which forms tively to development. Priority has also been given the backbone of life and is the essence of growth, to the social security system, which now benefits the state has promulgated many laws and regulations more people. Lastly, there is an emphasis on creat- dealing with the exploitation of water resources. ing employment opportunities for citizens through Additionally, the government has established centres the Saudiisation programme and the establishment of advanced research that employ the latest scien- of training centres in all regions of the Kingdom. tific techniques, which has made our country a leader I always stress that the citizen is the basis of the in the field of water desalination. development and its target at the same time. Edu- Our state has always sought to improve the living cation is one of the pillars of development, so the conditions and welfare of its citizens, starting with state has targeted increasing the number of educa- secure treatment and care for them, in the belief tional and cultural institutions and raised spending that human health is a measure of the progress of for building schools and universities in all regions of people and advancement. This has been shown very the Kingdom. We are heading towards a knowledge www.oxfordbusinessgroup.com/country/Saudi Arabia
  7. 7. COUNTRY PROFILE VIEWPOINT 19economy, and it is important to invest in future gen- We have continued to pursue a petroleum policyerations through training, education and rehabilita- based on the interests of present and future gener-tion. The educational budget represents the largest ations, and the efficient exploitation of the wealthallocation of government spending. that God has granted us, harnessing it for econom- For the sake of expanding the knowledge of our ic and social development. The Kingdom has alsosons and our daughters, the students, we have extend- continued to adopt policies that improve market sta-ed foreign scholarship programmes to additional bility, taking into account the common interests ofcountries. For our sons and daughters who are study- producers and consumers and the safety of the glob-ing at their own expense, they will be able to take al economy, including the less-wealthy economies ofadvantage of our scholarship programme once they developing countries. Considering the world’shave met its requirements. We believe in creating an dependence on fossil fuels, especially oil, to meet theatmosphere for our students to dedicate themselves energy demand for global prosperity and growth into expanding their knowledge, so that they can the coming decades, the Kingdom also encouragesbecome qualified professionals and technicians. scientific research in renewable energy and improv- The enhancement of the status of women can only ing the use of fossil fuels. In recognition of this rela-be achieved through a vision that believes in the tionship we have established the King Abdullah Cityinteraction of all society members for the purpose for Atomic and Renewable Energy for the develop-of development. Improving the capabilities of women ment of nuclear and renewable energy to comple-and removing the obstacles facing them would allow ment our oil and gas resources.them to increase their participation in society and The Kingdom also helps ensure peace and securi-become a productive factor in economic activities. ty in the Middle East and the rest of the world, with Our aspirations are limitless in terms of lifting our a leading role in achieving stability and prosperity forcountry to the ranks of developed nations in the field the region. We stress the right of everyone to use ofof communications and service sectors. Therefore, nuclear energy in accordance with the supervisionthe construction and upgrading of infrastructure, and control of the International Atomic Energy Agency,including the country’s communications network, and we support the various steps and actions to makeairports, ports and roads, is in accordance with the the Middle East free of weapons of mass destructionobjectives of our development plans. These projects as stipulated in the resolutions of the UN.will enhance opportunities for investors to actively The call for dialogue among civilisations, culturesparticipate in the growth of the country. and religions is the best way to resolve internation- Although the world is undergoing an economic cri- al disputes and issues by peaceful means. This dia-sis, the balanced financial and economic policies of logue will spare the whole world, God willing, theour state, as well as its rules and mechanisms for tragedy of conflicts between civilisations and religions,financial transactions and investment, have spared and make us work towards a peaceful coexistence. Ius the negative effects of the international crisis, call for the world to understand the importance ofand even strengthened the Kingdom’s position dialogue, and take it as a key instrument for bring-among other countries in terms of attracting glob- ing different nations closer and improving relationsal investors. We are determined to invest in large- between governments and their citizens.scale projects such that the Kingdom can continue to Excerpted from public remarks made to the Shuraavoid any impact from the global economic slowdown. Council on August 25, 2011. THE REPORT Saudi Arabia 2012
  8. 8. COUNTRY PROFILE INTERVIEW 21 HRH Prince Faisal bin Bandar bin Abdulaziz Al Saud, Governor,A regional strategyOBG talks to HRH Prince Faisal bin Bandar bin Abdulaziz Al Saud,Governor, Qassim regionIn what ways does the Qassim region plan to increase with Qassims educational institutions based on demandits contribution to Saudi Arabia’s economy? for certain skills. To create a better environment for work-PRINCE FAISAL: Our vision is to build a diverse econ- ers, we are developing residential and commercial realomy that enhances cooperation among the agriculture, estate projects to serve people who settle here.industry and manufacturing sectors to make the mostof the industrial base in the region. It will be essential How can Qassim diversify its economic base andto increase the participation of the region’s private increase its share in the Kingdom’s GDP?sector and enhance its role in the economy. One way PRINCE FAISAL: Economic diversification has beenof doing that is focusing on the development of indus- the top objective of the region’s development plan andtries that depend on domestic resources. We can also remains a major target for sustainable economic growth.incentivise downstream industries that manufacture and The programmes of the Qassim Investment Strategy willexport local natural resources. create opportunities for entrepreneurs to interact with The Qassim Investment Strategy Project, established successful business leaders and facilitate the growthin 2008, has been designed with the objective of link- and success of local businesses by enhancing the avail-ing the region’s development strategy with external ability and quality of available support services. More-opportunities. It also involves a major collaborative over, the region will encourage local investment infloweffort across the region. Qassim will benefit from its by increasing investor confidence and creating an envi-traditional strength in agriculture and also promote ronment friendly to business development.other industries of interest, particularly minerals, con- As for marketing, Qassim’s communication strategystruction materials and assembly line production. will highlight the advantages of living in the region with the aim of attracting investors and skilled workers.What is being done to attract more business to the Through these plans Qassim intends to attract invest-region and encourage skilled workers to stay there? ment and human capital to diversify its economy.PRINCE FAISAL: The region is committed to acceler-ating the pace of economic transformation and pro- How will the region maintain sustainable agricul-moting a friendly business environment where com- tural growth in the long term?panies and entrepreneurs can flourish and innovate. PRINCE FAISAL: To maintain and promote the sustain-The objective here is to attract investment in high-val- ability of the agriculture sector in the Kingdom, Kingue industries, which will bring and retain Saudi skilled Abdullah reformed the Agricultural Development Fundworkers. To achieve this goal, we will support econom- (ADF) in January 2009. The fund aims to ensure sus-ic development by engaging the private sector in capac- tainable development by providing accessible credit andity and quality enhancement. focusing on research and developing investments for In order to maintain a young, skilled Saudi workforce, the long-term sustainability of the agricultural sector.the region’s educational programmes are being aligned A collaborative approach on water use must be tak-with local employment opportunities. Studies that en, as water is critical to the economic success of thematch the current needs for local industries are being whole region. Industries will be encouraged to beencouraged. We are also developing a regional work- involved in improving quality and efficiency. Qassim willforce attraction programme to target workers with secure its position as a regional trade centre for agri-necessary skills. In this way we will be able to initiate culture. The government will support farmers to pro-recruitment and training programmes in collaboration mote and maintain growth of the agriculture sector. THE REPORT Saudi Arabia 2012
  9. 9. 22 COUNTRY PROFILE INTERVIEW Osama Al Bar, Mayor of Makkah Meeting demands OBG talks to Osama Al Bar, Mayor of Makkah What residential projects address Makkah’s growth? How can transport systems facilitate the transit of AL BAR: The municipality has planned the development visitors while minimising the impact on residents? of three different areas in and around Makkah to meet AL BAR: Transport is a critical factor within Makkah’s the demand and particular requirements of the city. The development plans. Our target is to efficiently manage Umm Al Joud project, north-west of Makkah in the the high visitor numbers during the Hajj period and mit- Haram area, measures 670,000 sq metres and consists igate the impact on the city’s mobility. The municipal- of 4000 housing units. This project is intended to alle- ity is working to design an efficient transport system viate the housing demands of Makkah’s residents and within the city and also to coordinate with intercity is being partly subsidised by the municipality. The first plans. Responding to the unique necessities of Makkah phase of 2500 units is already being marketed, for as a pilgrimage destination, the municipality is partic- which we have received 23,000 applications. Second- ipating in the development of railway infrastructure ly, on the border of the Haram area, to the west of the that will connect all the Hajj ritual areas, thereby reduc- city, we are planning the Makkah Gate development, ing traffic and facilitating the movement of pilgrims which will be 86 sq km. This area will allow a more bal- between the different sites during their journey. anced growth, with the construction of schools, hos- Connected to the rail links, a 182-km, 88-station pitals and public services planned. Lastly, the munici- metro system is also planned, connecting all the sacred pality has granted 4.3 sq km of land to the Ministry of sites, and extending to residential areas outside the cen- Housing, which has been allocated in line with King tre. The metro will allow visitors to perform their pil- Abdullah’s decree to build 500,000 housing units. grimage without the use of private transport. The tech- nical study for this project is being finalised and should How is private sector input being encouraged? be put out to tender in 2012. To minimise risk for the AL BAR: Our target is to conduct these projects in private sector, the municipality will establish partner- partnership with the private sector to see more effi- ships with developers to provide support in any pub- cient development. To increase private sector partici- lic-private partnership projects. pation, the new development strategy aims to create attractive conditions for key government projects and What new opportunities does the city present as public service facilities that will catch the attention of an Islamic tourism destination? contractors and developers. To make the projects eco- AL BAR: We intend to enhance the city’s tourism fea- nomically attractive, the municipality offers land at an tures and offer a wider range of activities. To carry out attractive value, ensuring a high yield for the investors this plan, Diafa, a new local tourism organisation, has and minimising investment risks. In exchange, we expect recently been founded by the municipality. Its focus will the private sector to bring a skilled workforce, knowl- be mainly to encourage religious tourism in the region, edge and financial capacity to carry out these projects. restore historical and religious areas and create new To ensure reasonable prices for buyers while also facilities. In line with this plan, we are studying the con- maintaining companies’ profit margins, units sold to the struction of an Islamic Civilisation Centre, which would public will be subsidised by the government. Neverthe- allow visitors to learn about Islamic culture. Being in the less, projects should be sustainable and generate rea- boundaries of the Haram area, the museum would be sonable turnover. Private sector firms will be able open for non-Muslims as well, so it can attract tourists to access information about projects and apply for without access to other locations inside the city. Also, them using a prequalification system we are developing. Makkah Gate will offer support services for pilgrims. www.oxfordbusinessgroup.com/country/Saudi Arabia
  10. 10. COUNTRY PROFILE VIEWPOINT 25Constant progressHuda bint Mohammed Al Ameel, Rector, Princess Nora bintAbdulrahman University, on women in Saudi ArabiaFor the West, images of women in Saudi Arabia have Social life for Saudi women is unique in its own right.mostly been of a marginal individual, without free will It is a priority to acquire a better education, serve andor freedom. This image has captured outsiders for most contribute to the nation’s development, while alsoof the last century, despite dramatic changes for Sau- maintaining great regard for traditional values. Abid-di women. These changes have become evident to ing by authentic identity continues to be characteris-many people who visit the Kingdom. It is true that 50 tic of Saudi women, but this does not equate to heryears ago women occupied a completely different part marginalisation, as the West interprets it.of society. However, women in Saudi Arabia today lead In fact, in an address to the Shura Council, King Abdul-a life quite different from their ancestors. It is safe to lah bin Abdulaziz Al Saud reasserted that he would notsay we are witnessing the beginning of a golden age accept marginalisation of women. In an empoweringfor women in the Kingdom. move, the King declared women had the right to mem- Historians always mention 1960 as an important bership in the Shura Council, as well as the right to voteyear for Saudi women, since that year a royal decree and to run for municipal council elections. This is aestablished the first governmental school for girls. major step for women in Saudi Arabia. The support andAlthough the schools opened for female students then solidarity for women shown by King Abdullah and oth-were elementary schools, they were the springboard er members of the royal family will be remembered asfor Saudi women’s renaissance. These elementary an act of social justice. Another form of the King’s sup-schools gave way to more institutions delivering high- port is giving Saudi women an equal chance to receiveer level education, allowing women to climb towards scholarships for the world’s distinguished universities.success with fast, steady steps. For the first time, the Saudi woman has the opportu- Visitors to the Kingdom will be astonished by the nity to occupy high office in the government.development of women’s education. According to 2009 The establishment of Princess Nora bint Abdulrah-statistics, illiteracy rates have dropped among Saudi man University, a single-sex institution, is another signwomen to 18% and the percentage of females among of support. The King suggested the university shouldundergraduate students has risen to 58%. be named after an influential female figure in Saudi his- Today, the Saudi woman is admirably active in almost tory. Although new, the university has 15 colleges andevery academic specialisation, and in many occupation- an advanced hospital to train students in health care.al capacities. The Kingdom is proud to be home to many The university complex has modern sports centres anddistinguished women who have occupied senior posi- student housing. The school is already working to rev-tions and received prestigious awards from the United olutionise its educational system and academic pro-Nations and international research centres. Saudi grammes, fulfilling its mission to provide a variety ofwomen are not only recognised in research and aca- high-quality educational opportunities for women.demia alone; several Saudi women are distinguished in This certainly does not mean that women in Saudisocial and charity work. In fact, one could say human- Arabia are without challenges, or that they are satis-itarian work in the Kingdom was established mainly by fied with their achievement so far. Like all women, Sau-Saudi women. Many non-governmental organisations di women should not shrink from obstacles but pushoffer substantial aid to fight domestic violence, drugs to overcome them, helping work towards a better future.and poverty. Additionally, these NGOs contribute Saudi women are determined to continue to work qui-to care for children who are ill or have special needs, etly and resiliently to help provide a life of good, loveas well as working to provide for orphans and others. and peace for themselves, their society and the world. THE REPORT Saudi Arabia 2012
  11. 11. 26 COUNTRY PROFILE INTERVIEW Jan O’Sullivan, Irish Minister of State A prospering partnership OBG talks to Jan O’Sullivan, Irish Minister of State, Department of Foreign Affairs & Trade with responsibility for trade and development How has Ireland’s economic relationship with Sau- ticularly for Saudi Arabia. One of the main problems for di Arabia developed in recent years? What policies Europe, the banking crisis, has not affected the King- are being created to enhance bilateral relations? dom thanks to its reduced exposure. It should remain O’SULLIVAN: Relations between Ireland and Saudi Ara- unaffected as the banking sector remains protected. bia have been very warm for a long time and econom- The rapid growth taking place in some sectors, such ic relations have been particularly strong in recent as the real estate market, could cause problems. How- years. Trade between the two nations increased by 25% ever, the demographic fundamentals of the country in 2010, which is quite significant. The number of part- mean it will not become a problem as long as housing nerships is also increasing, usually between small Irish prices continue to reflect the real market value. companies with specific expertise and larger Saudi Prospects in the GCC are promising and the best firms that are expanding. Saudi Arabia remains a pri- advice would be to keep planning ahead and not rely- ority market for our trade policy and for this reason we ing only on current growth. Diversifying, investing in new have created a joint economic division and a market sources of energy and developing new sectors will be plan coordinated from our embassy there. the key to success in the long term. Such relationships work to our mutual benefit: in Ireland, we have developed certain sectors, and with How can small and medium-sized enterprises (SMEs) slower growth we have spare capacity that can be used address challenges in developing economies? How abroad. The largest potential seems to exist in partner- can their growth be encouraged in Saudi Arabia? ships in the health and education sectors. O’SULLIVAN: SMEs are of tremendous importance in the reduction of unemployment. New expanding com- What can be done to encourage international com- panies are particularly eager to bring innovation and panies to invest in the Kingdom? create new ideas and opportunities, helping to devel- O’SULLIVAN: Saudi Arabia is a highly attractive desti- op new ideas from within the population as well as to nation, with huge potential for growth. Its develop- promote new areas of growth. SMEs are the engine of ment opportunities continue to attract new business- the local economies, particularly given that they are es that can meet the economy’s needs. Moreover, local usually run by local people. companies are open to establishing partnerships with To encourage the development of SMEs in Saudi Ara- foreign investors. This enables Saudi firms and the bia, we must start with education plans that are ori- international market to cooperate locally. ented to practical use, driven by technology and inno- What is necessary now is to promote these oppor- vation. Universities can promote studies that promote tunities. The Kingdom has sound fundamentals that job creation and give young people a crucial role as a guarantee continued economic growth, and govern- source of growth in their community. ment plans are targeting the development of the econ- On the other hand, it is equally important to encour- omy. By making investors more aware of these quali- age research and development in the private sector. ties, the Kingdom will gain more attention. Entrepreneurship has to be incentivised. Additionally, the creation of incubation centres in universities is also What can be learned from the global economic cri- necessary. This enhances the relationship between sis and how should future downturns be addressed? educational institutions and the private sector and aids O’SULLIVAN: During the crisis, conditions have been in creating connections that promote the inclusion of very different for Europe and the GCC region, and par- the youth population as part of the economic system. www.oxfordbusinessgroup.com/country/Saudi Arabia