Located in the south-western region of the Asian continent, the Arabian Peninsula covers about 3 million square kilometres. 6 of the 7 countries located here – namely, the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman – came together to form a trade and security bloc in 1981. The 7th country – Yemen – is in negotiations to join this regional alliance.

With evidence of civilisation dating back to 5,000 BC, the region has traditionally been involved in the sea-faring trade. Today, with the discovery of oil and the resulting vast amounts of wealth, the region plays a significant role in the global economy.

Known as the Gulf Cooperation Council, or GCC, the alliance came into existence in the capital of Saudi Arabia, Riyadh. The decision to form a unified regional grouping was aided by several events in the decade that led up to its forming.

Geographic proximity and shared security threats to their regimes were the primary factors that led the Arab states to the decision to react collectively. Although they differ in their perceptions of threats, the GCC states are unified in their definition of security – the status-quo continuity of each nation’s political regime.

In addition, the 6 members also share common economic and social objectives, including a general adoption of free trade economic policies. Because of its strategic location and history, the GCC has long-established diplomatic and trade relations with Europe, Asia and Africa. Several countries in the GCC have also individually pursued free trade agreements directly with the United States of America.

In response to concerns over security in the region when doing business, political and business leaders in the GCC community had this to say.

A GCC common market was launched in 2008, which grants national treatment to all GCC firms and citizens in any other GCC country. Thus, all barriers across the GCC to inter-state investment and trade have effectively been removed. By the year 2010, inter-state trade is expected to increase by 25%, and international trade is expected to increase by multiples.

The GCC nations have achieved a tremendous growth over the past thirty years, and their transformations do not seem to slow down. Up until the recent global economic crisis, the world heard announcements of eye-popping projects from the region – a palm-shaped man-made island, a one-kilometre high tower, an extension of the Louvre and local branches of top-tier universities.

Most of these fantastic announcements came from the region’s leading city of Dubai. The emirate is seen by many as a Middle East success story, and a leader in innovative ideas within the GCC.

Literally living up to its moniker as the “City of Gold”, Dubai has held on to its position as the world’s leading gold centre. The city has posted spectacular growth in the sale of this precious commodity, and imports an average of about 300 tons every year. One of the pioneer companies in this sector is Emirates Gold DMCC. With a reputation for producing the finest quality and superior service, a purchase here is bound to bring a lifetime of satisfaction.

Individual purchases aside, in reality, the numbers for growth and investment throughout the region are overwhelming. Over the last 5 years, GDP growth among the GCC states rose from about $720 billion in 2006, to over $1,100 billion by the end of 2008, and is predicted to hit $1,210 billion by the end of 2009.

Despite the staggering statistics, it has been indicated that more than financial investment, what is really needed in the GCC from multi-national investors is knowledge and the transfer of know-how.

The GCC is also seen as an attractive consumer market which has one of the highest rates of population growth in the world. A young population, coupled with a high spending power, has led to a huge demand for imported goods. It is estimated that food imports alone will double from about $25 billion in 2008 to nearly $50 billion by 2020.

The GCC states are keen to encourage foreign direct investment into their countries, and have already started simplifying the bureaucratic processes involved. From one-stop shops, to comprehensive purpose-built investment zones, the interested foreign investor no longer has a maze of jargon to stumble through. Other incentives to lure multi-national businesses to set up here include among others, low import duties and taxes.

As with any new venture in a specific region, doing business in the GCC comes with its own set of guidelines. Veteran players point out that what really matters when it comes to achieving success in the region is to understand the culture and have a strong local network.

Human Capitol

While the GCC countries enjoy a vast abundance of natural resources, and have managed to accumulate extensive amounts of wealth, they are keen to diversify their economy. With this aim, various stakeholders in the region regard education as their most important developmental challenge, and revamping the education system is at the top of the reform agenda for many governments in the region.

At present, most GCC countries have a high number of foreign nationals as part of their labour force. A revamp of the education system will hopefully lead to many of their own nationals being able to contribute to the future success of their economy, as one leading player of a GCC country points out.

The emirate of Dubai, a key player in the GCC, is already focusing on educating its growing population, so that the future generations will be well-prepared to work both in the private and public sectors. Dubai University is one of the main players in helping the emirate to achieve this vision. Offering professional courses in the disciplines of Business Administration and Information Technology, the institute aims to provide students with the highest quality of applied learning based on international academic standards.

The real estate property sector on the other hand, was experiencing a boom unparalleled by any other global region. In just one year, some GCC countries saw property prices double and treble. With the introduction of new property and residence laws in the various GCC states, expatriates flocked to the region.

Today, the reality is that the real estate market is undeniably slowing down, evidenced by the falling trend amongst speculators to quickly dispose of properties. Most property developers are cash-strapped, and several developments have been left standing in various phases of construction for a while now.

Yet despite these signs, the investment bubble in the GCC real estate sector seems not to have completely burst. While the buying trend has slowed down, there has not been a complete halt in buying by end-users – despite the still relatively high prices – attracted no doubt by the favourable property and residential laws still in place in many of the GCC states.

Indeed, while buying a holiday home may be far from the mind of many at present, it has been speculated that just as in the past – following the fallout of 9/11 and the 2003 invasion of Iraq – the GCC real estate sector will come out of this current global financial crisis a winner. The crisis is seen as no more than a slowdown in a bull market, and whatever consolidations emerge in the sector, it can only be healthy in the long run.

Finance

The vast amounts of wealth accumulated over the decades since the discovery of oil has led to an economy with large and variant financing needs. From purchase of real estate to consumer markets, from heavy industries to multi-billion dollar infrastructure projects, there is hardly a sector that does not require an increased amount of financial services. However, the financial services available in the various GCC countries have taken somewhat longer to diversify and meet the needs of its residents.

Recognising the potential to diversify their economy by building up their financial services, the individual GCC countries have embarked on various initiatives. To this effect, they have hired international experts to help them with the task.

The relative size of the financial sector, as reflected by its share in GDP, varies considerably among the GCC countries. Whereas the financial sector accounts for less than 1 per cent of Oman’s GDP, it makes up nearly 4 per cent of Saudi Arabia’s GDP, and over 10 per cent of Qatar’s. In Bahrain, the sector claims nearly one-third of its GDP.

Just as in the real estate sector, the financial sector in the GCC has also begun to pay attention to necessary areas of regulation and reform, ranging from corporate governance to credit bureaus and monetary policy. Government agencies have also reacted to the liquidity crunch by implementing stabilising efforts such as guarantees on bank deposits. For example, the UAE government has been proactive by pumping a massive amount of money – according to some figures, this is over $30 billion – into the banking sector to boost liquidity, and all deposits in local and international banks now have a government guarantee.

The state guarantee on deposits from some GCC countries has proven attractive to rich Arab investors who are exiting Western markets and going back to the Gulf region. International players who have chosen to stay put in the region also advise riding out the storm.

Despite the current economic crisis, the GCC remains a very liquid region. Continued economic growth is forecasted across the countries, with a positive outlook towards the end of the year. The GCC economies are expected to grow by about 4 per cent in 2010, thanks to steps taken by the countries to safeguard their economies and their development plans.

Aided by a strategic geographical location, a strong political continuity, and a large consumer base, ventures into the GCC region will stand to realise positive returns on their investment.

©2012 Manager TV. All Rights Reserved.

The kingdom of Saudi Arabia. The largest economy in the Middle East. Located at the heart of 3 continents. Ideally positioned along major international shipping routes passing through the Red Sea. A market size of over 250 million customers within a 3-hour flying radius.Saudi Arabia surprises most foreign visitors. It is a closed country, but a wealthy one, and has a mix of modern buildings and ancient architecture. The kingdom has much to offer by way of culture, a diverse climate and topography, as well as historical sites.

Already accounting for the world’s largest proven reserves of oil, the kingdom is thinking big when it comes to planning for the future. With the revenues generated from high oil prices, the boom in the country is just beginning, with the government investing heavily in the kingdom’s infrastructure.

Huge investment schemes are already underway. New landmarks are being created, and futuristic skyscrapers will soon be part of the country’s skyline. New cities and economic hubs are being created to meet the foreseen demands. Across the economy, investment projects have been planned to increase growth, develop new sources of revenue and create jobs. The establishment of a knowledge-based economy is part of the development plans. These plans are designed to accelerate growth in both the oil and non-oil sectors of the economy, and act as a further stimulus to private and foreign investment.

The private sector is being encouraged to take part in national development plans, and the groundwork has been laid for the kingdom to be even more investor-friendly.

One company that indeed believes Saudi Arabia is a good place to base itself is the highly-successful Astra. With several subsidies throughout the Gulf region, this fast-expanding industrial conglomerate started its operations about 50 years ago. Today, it is a well-known brand name throughout the Kingdom Saudi Arabia. With varied interests ranging from agriculture to trading, and from pharmaceuticals to steel, Astra is now the second-largest privately-owned group in the country. Astra also plays an active role in supporting the communities within which it operates, for example by building universities and hospitals. The company boasts an excellent reputation based on its mission plan, objectives and strategic direction, and would make a solid partner for any venture in the region.

Saudi Arabia is fast transforming itself into one of the world’s most competitive economies, and one of the most lucrative markets for strategic investment. Market reports show that investment in Saudi Arabia realises high profit ratios with low risk exposures.

In addition to the kingdom’s strong economic climate for investment, one of Saudi Arabia’s strongest advantages and incentives for foreign investment is its people. The majority of the country’s population is young, with 45% of the country under 15 years of age. Recognising this as a potential asset of the country, the government has invested heavily in education and human resource training.

Real Estate

Historically, the real estate sector has played a key role in the Saudi Arabian economy. Its many links with a number of other sectors in the economy has made it crucial to the development of the economy. Playing a major role in the economic diversification plan of the country, the real estate market is undergoing a period of increased demand as well as unprecedented construction activity.

The rapid pace of growth of the real estate sector has prompted the government to take measures in organizing, regulating and systemising activity within the sector. Also, the introduction of the new mortgage law in Saudi would also boost the market further along.

Economic expansion and increased investment opportunities in the country will continue to encourage the influx of expatriates who will require housing. In addition, the local population is forecasted to continue growing at an average annual rate of 2.5%, resulting in nearly 27 million people by the end of 2009.
The new foreign investment law allows investors the right to buy land, which has played a vital role in taking the real estate sector forward. Private sector developers are now rushing to attain a piece of the growing market by erecting multi-billion dollar properties all across the kingdom.

One company which has been participating actively in the real estate sector expansion in Saudi Arabia is Akwaan Properties. Established as a closed stock company in 2007, with an initial capital of US$200 million, it is already developing mega-projects backed by strong partners. The company aims to be involved in future residential, commercial and industrial projects in Saudi Arabia, as well as the larger Middle East and North Africa.

Riyadh, the capital of Saudi Arabia, has an annual growth rate of more than 8%, the city’s population is anticipated to surmount the 10 million mark by 2020A and has been projected to become the first mega-city in the Gulf region within a decade. In the short to medium-term, there is an expected 40% shortage of housing in the city.
Already, the rental prices have sky-rocketed due to this lack of available housing.

The country has already long been one of the world’s most frequented destinations for Muslims taking a pilgrimage to Islam’s holy cities of Mecca and Medina. Given their location, the 2 holy cities of Mecca and Medina are prime real estate areas. Hajj pilgrims demand high quality buildings and multi-billion dollar towers are popping up everywhere. This has led to the price of rent going up tremendously in both cities.

Agriculture

Beginning in the early 1970s, Saudi Arabia adopted a policy aimed towards developing an agricultural sector capable of achieving food self-sufficiency. While still importing some food and feed products, the sector has made great strides over the last 40 years. Today, the country is nearly self-sufficient in wheat production. The government has also established agricultural research stations to help farmers figure out how to adapt their farming methods to the harsh desert climate.

The government has heavily subsidised the sector by providing up to 1,000 acres of free land, as well as machinery and equipment discounts of up to 50%.

Projects to maximise the use of available water resources have also been set up. More than 200 dams, with an estimated capacity of 700 million cubic meters, have been built in order to preserve rainwater. With an increasing population, the load on the available water supply has increased and the government has set in place recycling and conservation initiatives.

Driven by the massive population growth and the increasing demand for food and related products, the industry continues to grow at 8% a year. This makes Saudi Arabia the Middle East’s largest market for agricultural products and technologies.

Telecom & IT

The telecommunications sector in Saudi Arabia is growing rapidly. Telecom service revenues have been steadily increasing at an average of 15% annually.

At the end of 2006, there were nearly 4 million fixed telephone lines, of which 75% were residential lines.

The mobile phone sector is expected to continue to grow at a good pace, with forecasts indicating a penetration of nearly 130% by the end of 2012. The introduction of competition in 2005 has resulted in major developments in service offerings, quality of service as well as reduced prices.

Internet penetration in the country is still relatively low at about 20%. Broadband subscribers grew at about 85% annually, but the penetration rate remains at a low 1%. As a result, there is still a huge growth potential for broadband service in the kingdom.

Overall, with the considerable progress towards the liberalisation of the telecom market and the establishment of regulatory independence, the telecommunications sector in the country is widely believed to have more growth potential and investment opportunity than its smaller GCC neighbours.

Aviation

The Air transport industry in Saudi Arabia is over 60 years old. Saudi Arabian airlines was a pioneer, not only in Saudi Arabia, but across the whole region. It is one of the more successful airlines. Only three years ago, the Saudi Arabian government decided to liberalize and privatise the air transport industry. Since then, many investors saw an opportunity to invest.
Two privately owned airlines are now on the Saudi market and a third one is on the horizon.
With the further liberalization of the air transport sector in Saudi Arabia, the outlook for the future is very optimistic.

Investment Opportunities

There are various investment opportunities available in the Saudi Arabian economy. Of these, the energy, information and communication technology, and life science sectors stand out.

The outlook for the energy sector in Saudi Arabia has never been brighter, nor more secure, as global demand for refined oil products is expected to remain strong. In the last 5 years, the sector has seen a 10% annual increase in contribution to the country’s GDP.

The refining sector in the kingdom will continue to offer excellent opportunities and high returns for its investors. Its strategic location, as well as already existing access to export infrastructure for crude oil and oil products will allow Saudi Arabia a leg-up over its competitors. Further, there are plans to develop 2 new export refineries in the country, as well as upgrades to existing refineries.

The petrochemicals sector is the largest and most important non-oil sector in the kingdom. The country is now one of the leading producers in the industry, and is one of the world’s strategic hubs for petrochemical expansion. It is key to note that Saudi Arabia is the only country in the GCC that has opened up its petrochemical sector for private investment.

The kingdom’s unprecedented population growth has also resulted in severe power and water shortages in many regions. As such, there are excellent opportunities for investors who wish to build long-term assets in the country.

Saudi Arabia aims to transform itself into an information society and a regional leader in the ICT field. It is already the largest telecommunications market in the Middle East in terms of revenue. The government has already initiated several public-private partnerships to boost ICT usage and development. With a young population, the Saudi ICT market holds high potential for interested investors.

Life science is one of the sectors that has been highlighted as being able to provide sustainable growth and prosperity for Saudi Arabia in the long run. To achieve its goals, the kingdom has unveiled a Life Sciences National Plan, under which the government has made available research grants. World-class life science and biotech parks are being built to further develop the biotechnology sector. There will be opportunities for the creation of a huge number of jobs in the sector, as well as focus on research and technology development.

In view of the new efforts supported by the government, the country’s tourism industry now holds considerable promise for potential investors. For Western tourists the kingdom has long been one of the hardest countries to travel in. In 2006, the number of non-religious foreign tourists was at only 7%.

However, lately, the country is slowly trying to loosen its stance on foreign tourism into the country. In April 2007, the government passed a law allowing domestic travel agencies to bring in foreign tours. Part of the government’s new plans for the tourism sector is not just to lure more international visitors to the country, but also, to increase the number of locals who travel within the country for leisure.

The estimate is that Saudis who might take holidays within the country are an untapped $15 billion market.

The economy in Saudi Arabia is ripe for investment now. By streamlining the decision-making process, strengthening the role of the private sector and diversifying the economic base, the government has created a favourable investment climate. Together with the positive ratings received by the country and her recent accession to global trade groupings, the potential investor can be assured that his foray into this market will be a lucrative one.

©2012 Manager TV. All Rights Reserved.

Located in a strategic spot between East and West, in the heart of the 3 continents linking Asia, Europe and Africa, lays the kingdom of Saudi Arabia. It is the largest country in the Middle East and ideally positioned along major international shipping routes.
The country is surrounded by the largest markets in the Middle East and North Africa region, offering investors a market size of over 250 million customers within a 3-hour flying radius. Saudi Arabia also has the world’s largest reserves of oil.

Under its ruler, The Custodian of the Two Holy Mosques, King Abdullah bin Abdul Aziz Al Saud, Saudi Arabia has a bold vision for the future. His Majesty King Adbullah came to the throne in August 2005, following the death of his brother King Fahd. His Majesty King Adbullah has continued to champion economic reform through diversification away from oil, supported the development of the private sector, and focused on debt reduction. Municipal elections have been introduced, and trade missions have been sent to the US. He is a constant supporter of peace and mutual respect among nations, condemning terrorism, and is an appreciated ally of the US.

Saudi Arabia is currently experiencing a major economic boom, thanks to the high oil prices, a steadily growing private sector, and the focus of public spending on human infrastructure. A free market policy is practised, and nearly half the GDP of the country is contributed by the private sector.

Economic reform in the country is expected to accelerate in 2008. The kingdom is aware that its future success lies in a more diversified and liberalised economy in order to ensure sustainability.

The country has undertaken a variety of reforms to its economic system. The reforms over the last 10 years have led to a more efficient and effective public bureaucracy and an investment environment regulated and monitored to international standards.

In 2005, Saudi Arabia joined the World Trade Organisation as the 149th member, with 38 bilateral market access agreements. The country has committed to level the playing field, and honour the principles of transparency, predictability and due process.

The World Bank has recognised Saudi Arabia as one of the world’s top reformers and one of the easiest countries in which to conduct business. The kingdom jumped 15 places ahead to rank 23 out of 178 countries, placing it above all Middle Eastern countries and even ahead of some mature economies such as France and Austria.

Under a direct mandate from His Majesty King Adbullah, Saudi Arabia has embarked upon its most ambitious project to date: the 10 x 10. The country has pledged to become one of the top 10 most competitive economies in the world by 2010 and has set in motion the mechanisms necessary to reach this target.

The strong economic outlook for the kingdom and a positive macroeconomic backdrop means that profit growth is likely to average 10 to 15% per year. With further reform expected, the continuing high prices of oil, and a supportive global backdrop, the country looks set for its strongest period of non-oil growth since the 1970s.

Living in Saudi Arabia

Saudi Arabia has the third largest population in the region. More than 26 million people live in the kingdom, occupying just 2% of the land space. The population is expanding rapidly and has been forecast to reach 36 million by 2020.

The country has world class logistics infrastructure. Where previously most residents had used international courier services for sending and receiving any form of mail, these days the Saudi Post is a dependable option. With the privatisation of Saudi Post in 2002, the previously irregular postal services have now been consolidated into a regular and systematic form of mail delivery. Where previously the mail system had relied solely on humans, now the latest technologies and modern techniques are employed to ensure world-class service standards to its customers.

New projects concerned with assigning comprehensive addresses and zip codes enabling efficient post delivery to business and residential areas have been put in place. One of the latest innovations is a system called Wasel, an electronic zip code registration system. Each residence or business is provided with a unique postal address, which can then be located using the new geographic information systems.

In 2007, Saudi Post received 5 major international awards for its ground-breaking achievements in new postal technologies and services. With the booming economy, Saudi Post is confident that it can offer even more services in the future, such as GPRS, E-commerce and Money Transfer.

The kingdom also offers some of the finest education options in the Gulf region. With more than 40 world-class universities in the country, expatriate families can choose from the numerous international options available in every major city.

Healthcare facilities and services are readily available across the country at all levels. Hospitals, clinics and laboratories are equipped with state-of-the-art equipment, and managed according to the highest international standards. Medical personnel are of many nationalities and are trained and qualified to high standards.

Visitors to the country can also rest assured, Saudi Arabia is a very safe place to be and conduct business.
At present, foreigners account for about a third of the total inhabitants in the country, and make up nearly 75% of the work force. Accommodation in Saudi Arabia is top-class and suitable for most budgets. Long-term residents in the country can choose from a wide array of dwelling choices. In addition to increased security, modern apartments in housing compounds offer facilities such as supermarkets, swimming pools as well as other entertainment outlets.

For short-term travellers, there are a multitude of four and five star international hotel chains in every major city, as well as executive apartments.

Economic Cities

Saudi Arabia has developed an Economic Cities concept. 60 of the world’s most successful free zones were studied in order to develop this concept which is an ultimate innovation in public-private-partnership. These cities are comprehensive, fully-integrated developments that feature a “live, work and play” design.

They are expected to contribute between a quarter and a third of the aspired national growth rate, to create over a million jobs, and to become home to about 5 million residents by 2020.

A total of 4 integrated economic cities have already been launched in Rabigh, Hail, Madinah and Jazan. There are plans to launch another economic city in Tabuk as well as one in the kingdom’s eastern region.

The King Abdullah Economic City in Rabigh is the single largest private sector project in the region developed by Emaar, and is expected to usher in a new era of economic prosperity for Saudi Arabia. It has the potential to create 1 million jobs and house 2 million residents. It will also have 6 different zones catering to various needs such as the port, the industrial district, education and residential.

Located 725 kilometres south of Jeddah, Jazan Economic City is expected to create about 500,000 new jobs and attract more than 27 billion USD in investment. Ideally placed at the mouth of the Red Sea, and offering top-notch processing and manufacturing facilities, the economic city is expected to service markets in Europe, Asia and East Africa.

The Knowledge Economic City at Madinah will be purpose-built to serve the needs of the educational sector in the country. The project is expected to add 20,000 new jobs and attract an investment of 7 billion USD.

Investment Opportunities

Throughout this period of expansion, the country is focused on empowering its population to meet the increasingly complex challenges of the modern Saudi economy.

One company that offers a picture of what it’s like to be successful in Saudi Arabia is Astra. Well-established, and diversified, this expanding industrial conglomerate started its operations about half a century ago. Today, it is a well-known brand name throughout the kingdom. With varied interests ranging from agriculture to trading, and from pharmaceuticals to steel, Astra is now the second-largest privately-owned group in the kingdom. The company boasts an excellent reputation based on its mission plan, objectives and strategic direction. Astra also plays an active role in supporting the communities within which it operates, for example by building universities and hospitals. As a strongly-established company with several subsidies throughout the Gulf region, Astra also presents itself as a solid partner for any venture in the region.

The government has already allocated 26% of the budget to education. Private sector involvements in the sector, including foreign investments, are encouraged.

The health sector in the country is one of the regionally largest sectors in terms of size, activity and potential. The country already boasts one of the most sophisticated and technologically advanced medical sectors in the Middle East.

Leveraging its unmatched strategic position at the crossroads of Europe, Asia and Africa, Saudi Arabia has embarked upon a mission to transform itself into a global transport hub. The government has already launched large-scale investment projects in the sector, and has recognised the value of public-private initiatives in developing this crucial sector.

The government’s decision to streamline the decision-making process, diversify the economic base and strengthen the role of the private sector, serves to create a favourable investment climate in the kingdom. Further, recent integration into the world economy via regional and trade groupings further lend to the attractiveness of the country as an investment destination with potentially high returns.

©2012 Manager TV. All Rights Reserved.