USSaudiForum - Panel 8 - Ali Al-Ayed - Opportunities in the SMEs


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The 3rd US-Saudi Business Opportunities Forum was held Sep 16-18, 2013, bringing together officials, business people, educators and specialists highlighting the U.S.-Saudi trade relationship and how U.S. companies can participate in Saudi Arabia's expansion.

Saudi Arabia is undergoing an extraordinary economic boom. Massive public investment, rapid private-sector growth and new sector initiatives are driving an expansion projected to offer more than $1 trillion in trade and investment opportunities over the next decade.

This panel of distinguished experts highlighted the investment opportunities in small and medium enterprises [SMEs].

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USSaudiForum - Panel 8 - Ali Al-Ayed - Opportunities in the SMEs

  1. 1. 1 OPPORTUNITIES IN THE SMEs 3rd US – Saudi Business Opportunities Forum Los Angeles, USA Tuesday, September 17, 2013
  2. 2. ROLE OF SMEs IN ECONOMIC DEVELOPMENT • In developing countries the SME sector makes a critical contribution to GDP and employment. • Increased SME growth has a direct effect on GDP and employment due to increased output, value addition and profits. • It also impacts GDP indirectly through increased innovation, broadening and diversification of the overall economy. 2
  3. 3. PROBLEMS FACED BY SMEs Common Problems Faced by SMEs include: • Management & technological capability • Access to financing • Availability of skilled manpower • Regulatory environment. 3
  4. 4. SME SECTOR SUPPORT IN SAUDI ARABIA The SMEs account for 90% of the total working enterprises in the Kingdom and employ just above 50% of the manpower. Within the GCC, Saudi Arabia has the largest number of public and private sector SME support programs. Some of these programs are: • Ministry of Finance Soft Loans Programs for SMEs which since its inception has so far provided around 600 loans at a total value of US$ 2.1 billion. • The Saudi Credit and Savings Bank provide interest-free loans to small and emerging enterprises and craftsmen to encourage them to promote their own business. With a capital base of US$ 9.6 billion, the bank has financed 21,000 business ventures with a total value of US$ 837 million by the end of the 1st quarter of 2013. continues… 4
  5. 5. …continued SME SECTOR SUPPORT IN SAUDI ARABIA • Kafalah Program is a collaboration between the Ministry of Finance, represented by the Saudi Industrial Development Fund and Saudi commercial banks, which aims to promote financing to SMEs. - Through this program, the commercial banks provide financing for up to US$ 500,000 and simultaneously, KAFALAH institution issues a guarantee to the bank, covering up to 80 of the financing amount. - Since its inception in 2006 and up to August 2013, the program has issued 6,351 guarantees with total value of finance of US$ 1.7 billion and guarantee worth US$ 838 million. • The Agricultural Development Fund sponsors and supports small agricultural enterprises by giving loans to farmers and food and agricultural plants as well as supporting agricultural cooperative societies which serve many farmers, particularly small ones. continues… 5
  6. 6. …continued SME SECTOR SUPPORT IN SAUDI ARABIA • Commercial Banks have initiated specialized lending programs to support SMEs. • Chambers of Commerce in all regions are actively involved in providing guidance, training, and institutional support to SME owners. • The Saudi Arabian Monetary Agency (SAMA) support SME sector by providing training courses at the Institute of Banking in different regions. • Wa’ed Program from Saudi Aramco focuses on turning new business ideas into established enterprises. 6
  7. 7. SME OPPORTUNITIES IN SAUDI ARABIA • Most of the Saudi SMEs are engaged in traditional business activities. • Huge investment opportunities exists for growth of SMEs focused on high tech manufacturing & services. Saudi Arabia’s total imports stood at US$ 155.59 billion by end of 2012 out of which US$ 11.78 billion were spent on import of spare parts. • Continuous Saudi investment in mega petrochemical, mining, water & electricity and infrastructure projects. • Quality SMEs are needed for: - Technology-based manufacturing (like spare parts) - Skill based training - Information technology - Advanced telecommunication. • Opportunities exist for suppliers of vocational training and scientific education. • Saudi Arabia also offers many SME opportunities in its tourism sector. continues… 7
  8. 8. 8 …continued SME OPPORTUNITIES IN SAUDI ARABIA Saudi government’s emphasis is on providing maximum support with minimum intervention. The government is working to further improve SME sector quality with special focus on: • Developing management capability • Enhancing entrepreneurship and innovation skills • Access to financing where banks are willing to accept higher risk ventures • Identifying local & foreign business opportunities • Developing SMEs’ competitiveness, and • Creating business friendly environment continues…
  9. 9. …continued SME OPPORTUNITIES IN SAUDI ARABIA SME sector development is a major government priority and it invites all investors to come and invest in Saudi Arabia. 9
  10. 10. Thank you 10