Editor’s Note:

The recently concluded US-Saudi Business Opportunities Forum featured an assembly of senior government officials, business people and more, all representing a broad swath of industries and sectors. Over three days in December Americans and Saudis explored the commercial openings resulting from the economic boom in the Kingdom. In addition to documenting the insightful presentations and panels for your consideration in these pages, SUSRIS also had an opportunity to talk with many of the participants on the sidelines. One such conversation was with Mr. Khaled Al-Seif, a distinguished Saudi businessman who has been key to much of the bridge building between Americans and Saudis. When we got together to talk about the Forum and progress in the economic sphere he wanted to start our conversation with his observations about women’s issues in the Kingdom:

The year 2011 will be remembered for something that has been very exciting in the Kingdom, and that is progress in the empowerment of women. King Abdullah has been behind major reforms in this area for some time and this year he further opened up the opportunity for women to participate more in public life. A very important step for many Saudis is bringing women into the decision-making processes.. .. I would say people are very excited about advances in women’s empowerment issues. There have been problems with the lack of open job opportunities for women which results in an employment imbalance. Fortunately there are many well-qualified women ready for new opportunities.

US-Saudi Business Opportunities Forum (Dec 5-7, 2011, Atlanta)

The Saudi delegation included some of the well-qualified women representing many of the sectors considered by the participants. Their contributions to the Forum and to the community outreach effort were noted by Ms. Samar Fatany who wrote in Arab News, “The participation by highly competent and professional Saudi women certainly contributed to the success of the US Saudi Business Opportunities Forum,” adding, “Not many people outside our borders are aware of the existence of exceptional women in Saudi Arabia so the presence of such qualified women was a great surprise to a lot of attendees at the forum.” One such exceptional woman delegate was Ms. Samra Al-Kuwaiz, Managing Director of Osool Capital, regarded as among the most influential women in the Middle East financial industry. SUSRIS had an opportunity to talk with Ms Al-Kuwaiz and will provide that exclusive interview in a separate item. Today we have for your consideration her presentation to the Forum as the keynote speaker at the December 7, 2011 luncheon.

The 2nd US-Saudi Business Opportunities Forum in Atlanta was an unparalleled gathering of ministers and senior government officials and corporate and civic leaders from Saudi Arabia and the United States designed to increase understanding and business interactions between the two nations. The one thousand plus attendees, including over two hundred from Saudi Arabia, participated in the many well-organized panels and breakout sessions covering a broad range of high interest topics. The Forum was sponsored by the Saudi Arabian Ministry of Commerce and Industry and organized by the: Committee for International Trade (CIT); the US-Saudi Arabian Business Council; and the Saudi-US Trade Group (SUSTG).

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Samra Al-Kuwaiz
Managing Director, Osool Capitol
U.S.-Saudi Business Opportunities Forum
Atlanta, Georgia
December 7, 2011

Samra Al-Kuwaiz

[Ms. Samra Al-Kuwaiz] Hello everybody. First of all, I’d like to thank everyone who participated in making this forum a success, and I’d also like to thank the people of Atlanta for their generosity and their warmth. We were at the Chamber of Commerce yesterday and the beautiful ladies of Atlanta made us a terrific lunch and we had a great discussion there. I would also like to thank the volunteers. I’m very proud to see our students here, the girls and the boys. That makes us proud as Saudis to see our students participating as volunteers in this forum.

As Dr. Abdulaziz mentioned we’re going to change the agenda. I think we had, “Insight about Investment in the Saudi Stock Market,” but we opted to change it to the topic of the rise of Saudi business women for a number of reasons. First you’re eating lunch so we wanted something you can digest easily, and it’s something that’s very close to my heart. When I was asked to make this speech, I immediately started to research the subject, to research about Saudi women empowerment, Saudi women in business. Then I had a change of heart. I could tell you now how many women had commercial registrations in Saudi Arabia. I could tell you how much in funds are invested from Saudi women. I could tell you how much is invested in real estate by Saudi women. But of course you can, with the click of a button on “Google,” you can get that information.

I wanted to go further than that. I wanted to tell you the story, the story behind these brave Saudi women. I think we can all see some of the Saudi women here with us that are in the business community, but you have to understand a very important fact about the Saudi women. We as Saudi women are usually seen from the outside as oppressed and timid. But I think it goes much more farther than that. We have to understand a very important fact about the Saudi women. These women were probably brought up by illiterate mothers. As Ambassador Smith said yesterday, proper schooling for women started in the early 1960s. At that time it was considered a disgrace for your daughter to enroll in the educational system. These women were probably brought up to think that they were second-class citizens in all aspects. They had no aspirations other than to take care of their family. Men in the past were the only breadwinners of the family, and with this financial control came total control over the family. But the women of today – we’re seeing a different kind of woman – the Saudi women of today are armed with proper education. They’re taking their financial destinies in their own hands. And in this respect, two types of Saudi women have emerged.

The first type of Saudi woman who has taken her financial destiny in her own hands was the woman who entered the workforce. Now we see more Saudi women entering the workforce and they are participating. Thus we have more double income families. And with this disbursement of wealth between men and women, and double income families becoming a norm, the male dominance, the control of the family has become less and less. Of course when we look to the female participation in the workforce, it’s still at 18%, which seems very low. But when we look at the other side of the coin, this has tripled in the last fifteen years. It used to be 5.2% and now it’s at 18%. Of course, we have a long way to go and unemployment between females is at 27%. However I think that the public and private sector has to open new opportunities for women. I also think we need the education system to arm these ladies with the proper education so they can easily enter this workforce.

Then we have the second type of Saudi woman who has taken her financial destiny into her own hands. Most of the women who have funds are the ladies who have inherited their wealth. With this inheritance, from the father to the daughter, the daughters now own a bulk of women’s funds of Saudi Arabia. The problem is these ladies who have entered into the management of their family owned companies do not have the managerial skills and decision making skills that were maybe made available to their male siblings. So these women need proper education to enter in the management of these firms.

We see the future in a very optimistic way. We have a new breed of Saudi women and I think we see some of them in the volunteers that are here with us today. This new breed of Saudi women are armed with the proper education that is needed. As has been said over and over through this forum the number of educated women in Saudi Arabia surpasses the number of educated men. Let’s not forget that this new breed has been brought up in a less restricted society than their mothers. They will ask for further reform in the system.

We are a nation that possesses years of embedded cultural and traditional restrictions and that will not change overnight. There is change coming, but this change has to be balanced with these traditions and cultures. We cannot change that, and we should not change that. We should not disturb the balance that is there. But change will come.

From the change of the mindset of the people – most important in my view – change will come from the Saudi women themselves. They will have to empower themselves and this empowerment has to be grasped by the Saudi women. It will not be given to us. We will have to ask for it. We will ask for reform.

I would like to conclude with a very important message that was shared by Prince Faisal yesterday. He said King Abdullah gave the women their destiny in their own hands, so I think this destiny will eventually be grasped and we will take our position in Saudi society.

Thank you.

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Samra Al-Kuwaiz

ABOUT MS. SAMRA AL-KUWAIZ

Samra Al-Kuwaiz, a lecturer at King Saud University, is a board member and Partner of Osool Capital in Jeddah. Ms. Al-Kuwaiz has often been named among the most influential women in the region’s financial industry.

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Related Material:

• Change and Reform: A Conversation with Khaled Al-Seif – SUSRIS – Jan 22, 2012
• Distinguished Saudi Women Shine at Business Forum – SUSRIS – Dec 26, 2011
• A Resolute Call to Empower Women – Fatany – SUSRIS – Mar 8, 2011
• “Women in Leadership Forum” Calls for Action – SUSRIS – Dec 9, 2010
• Jobs for Women – Arab News Editorial – SUSRIS – Dec 9, 2010
• Institutionalizing Empowerment: A Women’s Ministry – SUSRIS – Dec 9, 2010
• “Women in Leadership Forum” Calls for Action – SUSRIS – Dec 9, 2010
• Saudi Arabia: Participation of Women in National Development – American Bedu – Dec 10, 2010
• Woman empowerment stressed – Arab News – Dec 1, 2010
• Women’s leadership forum kicks off – Saudi Gazette
• Interfaith Dialogue Shared in Chicago – Fatany – SUSRIS – May 16, 2010
• New Media in the Gulf – SUSRIS – Dec 9, 2010
• Women’s Rights Gain Focus in Saudi Arabia – Alshayeb – SUSRIS – May 27, 2010
• Boosting Small and Medium Enterprises in Saudi Arabia – SUSRIS – Dec 4, 2010
• Has 9/11 Changed Saudi Arabia for the Better? – Robert Lacey – SUSRIS – Sep 12, 2010
• Saudi Women to Stand Against Breast Cancer – SUSRIS – Aug 23, 2010
• Saudi Domestic and Regional Policies – Gause – SUSRIS – Jun 22, 2010
• Higher Education Opportunities for Women – SUSRIS – Mar 12, 2010
• King Abdullah: An Outstretched Hand – Sobhani Book – SUSRIS – Mar 6, 2010
• Saudi College Women Build Social Entrepreneurship Skills – SUSRIS – Jul 22, 2009
• U.S.-Saudi Women’s Forum on Social Entrepreneurship Summer Symposium Opens – SUSRIS – Jul 14, 2010
• Saudi Arabia Shuffles Government Posts – SUSRIS – Feb 14, 2009
• Rights Commission Opens Women’s Branch – SUSRIS – Sep 5, 2008
• Women’s Political Participation in the Gulf – SUSRIS – Apr 14, 2008
• Abdullah Pardons ‘Qatif Girl’ – SUSRIS – Dec 18, 2007
• A Slap in the Face of Justice – SUSRIS – Nov 21, 2007
• For Cloaked Saudi Women, Color Is the New Black – SUSRIS – May 30, 2007
• Government Jobs for Saudi Women – SUSRIS – May 29, 2007
• Saudi Businesswomen Seek Greater Participation – Mar 21, 2007
• Challenges and Opportunities: Saudi Arabia in the 21st Century – SUSRIS – Jan 23, 2007
• On Relations and Reforms: A Conversation with Usamah al-Kurdi – SUSRIS – May 30, 2006
• Young and Restless – Afshin Molavi – SUSRIS – May 17, 2006
• The Time is Now in Saudi Arabia – Part 2 – SUSRIS – Apr 27, 2006
• The Time is Now in Saudi Arabia – Part 1 – SUSRIS – Apr 26, 2006
• Saudi Professional Women Advancing – SUSRIS – Dec 28, 2005
• Women Create History in JCCI Poll – SUSRIS – Dec 1, 2005
• U.S. critics miss the real Saudi Arabia – SUSRIS – Nov 30, 2005
• On Relations and Reforms: A Conversation with Usamah al Kurdi – SUSRIS – Sep 30, 2005
• Building Bridges: A Conversation with Princess Loulwa Al-Faisal – SUSRIS – Jun 2, 2005
• Saudi Women Moving Up in Business Remarks by Princess Lolowah Al-Faisal – SUSRIS – May 18, 2005
• Women of the Holy Kingdom By Sharmeen Obaid-Chinoy – SUSRIS – Apr 4, 2005
• Saudi Municipal Elections – Round Two – SUSRIS – Mar 3, 2005
• Reforms and Relations: Saudi Arabia’s Foreign Minister Discusses Developments in the Kingdom – SUSRIS – Feb 24, 2005
• Women’s Employment Initiative – SUSRIS – Jan 27, 2005
• Saudi Women and the Jeddah Economic Forum – SUSRIS – Feb 12, 2004
• “A Saudi Vision For Growth” Women Make Their Mark at Jeddah Economic Forum – Lubna Olayan’s Keynote Address -SUSRIS – Jan 21, 2004
• Al-Ikhbariya Makes Waves – SUSRIS – Jan 15, 2004
• On A Dagger’s Edge — Saudi Women, Long Silent, Gain a Quiet Voice [Part 4 in a Series] – SUSRIS – Jan 14, 2004
• Women’s Rights in Saudi Arabia – SUSRIS – Jun 19, 2003

Editor’s Note:

This week Dr. Tawfiq Al-Rabiah, the new Minister of Commerce and Industry, in his role as Chairman of Modon’s Board of Directors, signed contracts valued at $186 million for electrical infrastructure at five of Saudi Arabia’s industrial cities. Newly named Director General Saleh Al-Rasheed told Arab News that Modon’s next project will focus on the completion of services and infrastructure, so that the existing industrial cities that are under development become integrated services cities.

The agreements for new electrical connectivity for these five industrial cities is just the latest in a very ambitious and farsighted program launched by the government in 2001 to promote industrial and technology zones to facilitate private sector commercial expansion.

So just what is this organization that connects businesses with service ready industrial property but doesn’t necessarily make very many headlines?  The participants at the recently concluded US-Saudi Business Forum in Atlanta were provided a detailed briefing on this independent, self-funded public organization which has been responsible for developing over 34 million square meters of facilities in the last three years and accounts for more than 300,000 jobs and 3,000 factories.  Dr. Rabiah, who served as Modon Director General from 2007 through December 2011 when he was appointed as Commerce Minister, spoke on a panel titled, “Industrial Infrastructure Initiatives: Creating the Foundation for Economic Growth.”

Today we are pleased to provide a profile of Modon, the Saudi Industrial Property Authority, as well as the video and slides from Dr. Rabiah’s Atlanta presentation.

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The Saudi Industrial Property Authority – Modon

Modon is a government agency established in 2001 under Royal Decree to create an entity for the Kingdom’s industrial cities with the goal of establishing Saudi Arabian industry as a regional and global competitor. Modon is charged with the organization and promotion of industrial and technology zones, and to encourage the private sector to invest in the development, operations, and maintenance of these zones. The organization took over the existing industrial cities hoping to increase the pace of development. Modon focuses on mid-stream and down-stream industries all over the Kingdom.

Modon is an independent general authority controlled by a committee headed by the Minister of Trade and Industry. The authority is responsible for planning, supervision, and monitoring of the industrial cities, while the private sector focuses on financing, building, and operation.

Industrial Cities in the Kingdom – Background

The Kingdom of Saudi Arabia has consistently developed its industry in order to help improve the national economy for future generations. The Kingdom initiated its five year strategic plan to develop the local industry in 1970 by considering its industrial sector to be its main source of income. By developing local factories built in fully serviced, fully equipped industrial areas and to operate under eco-friendly guidelines, the goal was to provide employment opportunities for Saudis while distributing growth and development evenly across the nation in order to control migration to the bigger cities in the Kingdom. Starting with three main industrial hubs, cities were built in Riyadh, Jeddah and Dammam with an area not exceeding 1.4 million square meters in 1973. This attracted Saudi investors to enter the industrial field in turn, this surge brought with it further development of industrial zones between 1975-1980 developing an additional 14 industrial cities by 1990-1995. These took up an area of over 92.78 million square meters in Riyadh, Jeddah, Dammam, Makkah, Qassim, Ahsa, Madina, Asir, Al Jouf, Tabuk, Hail and Najran, boasting over 2500 factories with investments of over 200 billion Saudi Riyals and employing over 300,000 workers.

According to Dr. Rabiah in his US-Saudi Business Opportunities Forum remarks, Modon has, “About an area of 75 million square meters developed, and 34.5 million out of these 75 were developed in the last three years, which shows that we have huge development going on.” Nineteen industrial cities are up and running on this land, as well as nine under development and four in the planning process. There are over 3,000 factories in the Modon-operated industrial estates, earning a share of more than 50 percent of manufacturing companies in Saudi Arabia, and employing over 300,000 workers. At the forum, Rabiah said Modon would directly invest $3 billion over the next 4 years to improve infrastructure throughout the nineteen cities.

Modon lists as their strategic goals:

• Building, developing, and operating industrial cities and technology zones throughout the Kingdom.
• Encouraging the private sector to invest in the building, development, operation, and maintenance of the industrial cities and technology zones.
• Attracting new investors, including local and global industries by providing the proper infrastructure and services such as electricity, telecommunications, residential, commercial, medical, entertainment, and educational services.
• Enhancing the heavily populated, less developed economic areas, and providing jobs for inhabitants.
• Increasing exports through improved economic performance and gaining more independence from government financial aid.
• To provide healthier job environments that encourage ongoing development, enhanced group performance, and retain highly qualified personnel.
• To preserve the environment within industrial cities.
• To support the local society by providing job opportunities for Saudi nationals and to support local education and economy as well as supporting those individuals with groundbreaking ideas for projects.

Modon’s strategy for industrial expansion has resulted in a set of tasks. Modon began by planning new areas within established industrial cities throughout the Kingdom as well as completely new areas to be developed elsewhere and by renovating older facilities to suit modern industrial activities. This is achieved all through a newly developed strategy, including the following tasks:

• Improving the standards of current and future industrial cities to become fully integrated including residential, commercial and educational areas fully equipped with telecommunications services, hotel services, banks, occupational training facilities, storage areas, entertainment zones, buildings equipped to house factories, petrol stations, transportation services, showrooms to sell factory products and science and business parks.
• Encouraging the private sector to invest in the building, development, running and maintenance of the industrial cities and technology zones.
• Providing fully connected utility services including electricity, water, telecommunications. Gas and roads with full funding for such government expenses.
• Developing industrial investments in areas with slower growth rates and developing the infrastructure for industrial cities in order to entice the private sector into investing more in the newer cities.
• Improving the services currently provided in industrial cities by renovating their current facilities to global standards in partnership with investors from the private sector using the BOT system (Build, Operate, Transfer).

Available Industrial Cities

Modon is responsible for the development of 19 industrial cities. A management team for every city oversees the project and provides a daily follow up for private sector investors in order to complete the development, operation and maintenance of the industrial cities to the highest of standards. Presently nine are under development and four are in the planning process.

• Investors have choices when obtaining industrial land in the Kingdom of Saudi Arabia. Available industrial areas are located in:
• Industrial Cities supervised by Modon (Saudi Industrial Property Authority).
• Land specified by city municipalities as industrial areas, specifically factories, workshops, service and storage areas.
• Industrial cities in Jubail and Yanbu under the Royal Commission for both cities.
• Private land owned and operated by development companies licensed by Modon.
• Industrial land available to economic cities developed by the Saudi Areabian Government Investment Authority (SAGIA).
• Area and land under Modon available for investors with incentives; these are located in Najran, Madina, Jizan, Arar, Tabuk, Hail, Al Jouf and Asir and elsewhere, with more to come.

Sources: This profile was derived from the Modon Web site, promotional pamphlets and presentations.

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Director General of Modon
Eng. Saleh bin Ibrahim Al-Rasheed

Modon Director General Eng. Saleh Al-Rasheed

The newly appointed Director General, Eng. Saleh bin Ibrahim Al-Rasheed, was selected from “Modon” leadership executive team where he served as Communications and Information Technology Department Manager in Modon since June 2007. During his tenure in Modon, he led many distinctive initiatives and projects and oversaw the building of communication networks and information technology systems within Modon and in the industrial cities, which greatly improved the quality of services offered to both Modon customers and employees.

Eng. Al-Rasheed led the initiative to develop and promote smart industrial cities by providing high-speed, fiber-optic based telecom networks and managed services. The industrial cities were provided with wired and wireless data and voice services, in addition to the electronic physical security solutions for monitoring and controlling city gates, road intersections, high-value locations, as well as solutions for vehicle admissions and tracking, all of which were connected to the Command and Control Center which operates around the clock.

Eng. Al-Rasheed also led the development of Geographical Information System (GIS) for the management of Modon properties such as lands and infrastructure in the industrial cities. The system included a mobile version (Rased, which means “observer” in Arabic), which assists field inspectors to monitors and record their findings and observations in the industrial cities. His efforts culminated in a global SAG Excellence Award for Modon in Geographical Information Systems in the year 2011.

Eng. Al-Rasheed sponsored and oversaw Modon-wide projects for the development of electronic services and for process re-engineering which greatly enhanced business process control, quality, response time, and overall customer satisfaction. The eModon electronic services system was developed which enables the customer to submit requests for industrial or investment lands and view these on the map without having to visit Modon offices. The system generates contracts, invoices and allows the customer to submit factory drawings online. The customer billing system was integrated with SADAD payment gateway to allow online payment through the various channels offered by the local banks.

In addition to that, and under the sponsorship of Eng. Al-Rasheed, several other internal electronic solutions were developed. These included Internet and Intranet portals, Finance and HR management systems and self-services, archiving solutions, project and task management, and several others. He also contributed in improving internal work environment by providing appropriate systems, such as, IP Telephony and Instant Messaging, establishment of a technical support office and providing Modon with appropriate information availability, security, backup and recovery solutions. Each of these systems contributed in serving the customer, leading to Modon securing second position for Best E-services Award in the government sector in the year 2010.

Engr. Al-Rasheed holds Bachelor degree in Computer Science and Information Technology from King Saud University and a leading Advanced Management Certification from IMD Business School. He received various administrative leadership training courses from several universities and institutes worldwide, such as (MIT, GE), with some specialized courses and certificates.

He works as a member of the Board of Directors in the Saudi Industrial Development Fund and also as a member of the Board of Directors in the Saudi Railways Organization.

Source: AMEinfo

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Related Material:

• Modon – Saudi Industrial Property Authority – Briefing – US-Saudi Business Forum – Dec 6, 2012
• Modon – Saudi Industrial Property Authority – Home Page
• SAGIA – Saudi Arabian General Investment Authority – Home Page
• US-Saudi Business Opportunities Forum – SUSRIS Special Section
• Modon inks SR700m electricity deals to spur investment – Arab News – Jan 30, 2012
• Modon Board of Directors delegates Saleh Al-Rasheed as Director General – AMEinfo.com – Jan 23, 2012

Editor’s Note:

The recent US-Saudi Business Opportunities Forum in Atlanta provided a menu of commercial projects and sectors for Americans to connect with investments and partnerships. The incredible economic expansion in the Kingdom, especially compared to the lagging economic prospects for much of the global economy, covered the spectrum: agriculture, education, healthcare, infrastructure, energy production, petrochemicals, electrical generation and desalination, IT and more. Among the exciting prospects that were briefed by Saudi experts were the fields of nuclear and renewable energy. At his scene-setting presentation on the Forum’s objectives and scope Minister of Commerce Abdullah Zainel Alireza tee-ed up the subject:

Saudi Arabia is investing heavily in solar technology, with a potential of $3 billion allocated for solar panel production in Yanbu and Jubail. In addition, Saudi Arabia will spend more than $100 billion to build at least a certain amount of nuclear power plants across the Kingdom. Development of renewable energy is one of our main objectives. In October, Saudi Arabia inaugurated its first solar plant on Farasan Island, down in the south. This will help provide alternative energy, reduce dependence on hydrocarbons, reduce growth in domestic demand on oil, and save oil reserves for future generations.

In 2008 the United States and Saudi Arabia signed a “Memorandum of Understanding on Nuclear Energy Cooperation” during a visit of President George Bush to Riyadh, Saudi Arabia. The MOU said in part:

Today, Secretary of State Condoleezza Rice and Saudi Arabia Foreign Minister Prince Saud Al Faisal signed a Memorandum of Understanding on Civil Nuclear Energy Cooperation. The Government of the United States and the Kingdom of Saudi Arabia will establish a comprehensive framework for cooperation in the development of environmentally sustainable, safe, and secure civilian nuclear energy through a series of complementary agreements. Both of our countries face growing energy needs and we seek to address them in a responsible manner that contributes to reducing the effects of greenhouse gases on the global climate.

The United States will assist the Kingdom of Saudi Arabia to develop civilian nuclear energy for use in medicine, industry, and power generation and will help in development of both the human and infrastructure resources in accordance with evolving International Atomic Energy Agency guidance and standards. Saudi Arabia has stated its intent to rely on international markets for nuclear fuel and to not pursue sensitive nuclear technologies, which stands in direct contrast to the actions of Iran.

Today we are pleased to present a detailed briefing on the nuclear and renewable energy work underway in Saudi Arabia from the perspective of Dr. Hashim Yamani, President of the King Abdullah City for Nuclear and Renewable Energy (KA-CARE). His overview at a plenary session titled, “Nuclear and Renewable Energy: Building Resources for the Future,” was accompanied by a slide briefing. This SUSRIS item provides both the video presentation of Dr. Yamani’s remarks and the slide briefing. [An informative three minute virtual video tour of KA-CARE was embedded in the briefing and starts at the 17:00 minute mark.]

The 2nd US-Saudi Business Opportunities Forum in Atlanta was an unparalleled gathering of ministers and senior government officials and corporate and civic leaders from Saudi Arabia and the United States designed to increase understanding and business interactions between the two nations. The one thousand plus attendees, including over two hundred from Saudi Arabia, participated in the many well-organized panels and breakout sessions covering a broad range of high interest topics. The Forum was sponsored by the Saudi Arabian Ministry of Commerce and Industry and organized by the: Committee for International Trade (CIT); the US-Saudi Arabian Business Council; and the Saudi-US Trade Group (SUSTG).

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Nuclear and Renewable Energy: Building Resources for the Future
US-Saudi Business Opportunities Forum, Atlanta
December 7, 2012

Dr. Hashim Yamani

[Dr. Hashim Yamani] [Arabic greeting] Your Excellencies, distinguished guests, ladies and gentlemen, salaam aleikum.

From the outset, I would like to thank my friend and colleague, His Excellency Abdullah Alireza for inviting me to talk to you about a momentous initiative that the Kingdom undertook on April 17th of last year when it announced the creation of King Abdullah City for Atomic and Renewable Energy, KA-CARE.

The announcement was a culmination of a national discourse on energy from both supply and demand perspectives, taking into account the local, regional, and international markets. The founding Royal Order establishing KA-CARE states explicitly that the creation of the city is to contribute to the sustainable development in Saudi Arabia through the utilization of science, research, and industries related to atomic and renewable energy for peaceful purposes in a way that leads to raising the standards of living and quality of life in Saudi Arabia. This event sets in motion a series of decisions designed to transition Saudi Arabia from total dependence on fossil fuel for electricity generation and water desalinization towards a sustainable energy mix, thereby ushering in a new era during which Saudi Arabia shall be known not only as the Kingdom of energy, but more precisely as the Kingdom of sustainable energy.

I am sure that many of you are asking yourselves the logical question of why Saudi Arabia, which is sitting on the largest oil reserves, is promoting the introduction of alternative energies?

Here are some important facts, which will help us to answer the question.

First, a careful assessment of where we are from the energy point of view and where we are heading reveals a pattern of excessive demand for energy in Saudi Arabia, leading naturally to a rapid growth in the demand for fossil fuel.

Second, the forecast for energy demands in Saudi Arabia over the next 20 years is based on several factors, the most important of which are the expected economic growth together with expected population growth. Saudi Arabia, already the largest economy in the MENA region and member of the G20 is undergoing an extraordinary economic boom. It is expected that electricity demand in Saudi Arabia will exceed 120 gigawatts by 2032.

Thirdly, the demand for oil has also been growing at an alarming rate, with the past four years witnessing the increase of more than twenty-seven percent in consumption. Massive public investment, rapid private sector growth, and new sector initiatives are driving an expansion projected to offer more than 1.3 trillion dollars in trade and investment opportunities over the next decade.

Massive investment requires unprecedented massive energy supplies.

The challenge, therefore, is to meet the growing demand, reaching more than 80 gigawatts of additional required capacity by 2032 in a sustainable way. One option, as you can easily imagine, is to burn more oil and more gas, but there is a catch to this “business as usual scenario.” By 2028, Saudi Arabia will be consuming more than eight million barrels of oil equivalent to fuel its economy. Of course, the Kingdom intends to use its resources to fuel its development requirements. At the same time, the Kingdom is committed to continue being that reliable supplier of oil needed to fuel the development requirements of other nations. To meet these dual challenges, the Kingdom opted to bring in new energy sources. And to spearhead this mission, the Kingdom created KA-CARE.

KA-CARE will help usher in a new energy mix to meet local needs as well as maintain Saudi Arabia’s leadership role in the global energy arena through carefully chartered transition towards greater sustainability. By introducing atomic and renewable sources of energy, we are not alone as evidenced by the increasing global reliance on atomic and renewable energy. KA-CARE’s vision is to be the driving force for making atomic and renewable energy an integral part of the national sustainable energy mix in Saudi Arabia, creating and leveraging the competitive advantages of relevant technologies for the social and economic development of the Kingdom.

This sustainable energy mix, as we envision it, would result in alternative energy gradually replacing fossil-based generation. The target is to ensure that both base-load and seasonal-load variation are met using a sustainable approach, sustainable in its environmental footprint and its economic impact, and inspiring comprehensive social economic development. The balanced deployment of nuclear and renewable energy, together with energy conservation, will gradually and significantly reduce the dependence of fossil fuel for electricity generation and water desalination by 2015.

But before I describe the basic thinking process behind the myriad of options and scenarios for developing this energy mix, I would like to share with you the mandate with which we are working. KA-CARE’s responsibility spans promoting alternative energy policies and formulating the strategies, acting in a regulatory capacity, a role we are preparing to be taken up by an independent authority, conducting and supporting R&D activities, developing human capacity required by the alternative energy sector, investment and business development in relevant technologies, and of course representing the Kingdom internationally.

The reason for KA-CARE having a broad mandate is that the Kingdom with a critical need to upgrade its power sector to sustain economic and industrial development will need to carry out this upgrade in a sustainable manner. The new implementation paradigm of the alternative energy sector will ensure that a nuclear power plant when commissioned in Saudi Arabia will contribute to GDP creation through jobs, value chain development in the manufacturing and services sector, and economic development spill-over to other sectors, in addition to generating electricity. We will carry out this sustainable development in a partnership mode as we have done successfully in the past in various economic sectors such as the petrochemical sector.

Already, the foreign direct investment stock has exceeded $200 billion, and the U.S. is the number one source of FDI, hovering around 18% of the total FDI. We foresee a major role for the U.S. FDI in the upcoming alternative energy sector in Saudi Arabia. This balanced development approach requires comprehensive value chain integration with electricity generation on the local scene. It also demands careful localization of niche products and services, in addition to seamless integration with international product chains and global energy services. By sewing the seeds of sustainability in the newly created alternative energy economic sector, KA-CARE will enable a long-term energy sustainability and economic growth. The broad mandate entrusted to KA-CARE will create the necessary levers to deliver on the fulfilling the task of creating a new and sustainable alternative energy sector.

Now, let’s go back to the energy mix discussion. We started the process of developing the sustainable energy mix of Saudi Arabia by studying the following parameters: how much would increasing efficiency and conservation contribute to demand reduction; the quantity of liquid fuel that will be saved by the proposed energy mix; the generation related matter, such as load factors, dynamic load offsetting, nature size, and efficiency of generation technologies; practical limitations of each technology, capacity building, international product chains, and the Saudi role in the alternative energy sector, local value chain development for atomic and renewable energy.

Understanding the electricity demand profile in Saudi Arabia is very essential to developing suitable energy mix that is both viable and sustainable. First, the seasonal change in peak load in Saudi Arabia exceeds 40 percent. Daily load variation both in summer and in winter is less pronounced than the seasonal variation, and is roughly uniform. Secondly, the average swing between day and night demands is relatively constant through year, all year round. Third, summer average demand – which is higher than average peak load by 20 percent is persistent during 60 percent of the year in Saudi Arabia. Very high summer peak demand where generation capacity is threshed to maximum is with us only two to four percent of the year, depending on the region. This is just the detailed technical analysis, but the implication from the above is that first and foremost, energy solutions are to be crafted for base load, then attention should move to seasonal and peak demand.

The discourse upon which we have based our analysis and strategic development starts from the base and moves upward. Nuclear generation may be suitable for year round base load, including winter, with other types of generation technology fitting the bill for the remaining load. Summer is a bit more complicated, yet nuclear remains viable for base load, with solar energy being suitable for meeting part of the load balance, particularly the difference between day and night year round. And with continuous improvement in energy storage solutions, fossil capacity will gradually be phased out for as a primary energy supply, but will remain the dispatchable solution for peak demand and emergency situations.

I hope that the previous slides have shown you at least a glimpse of the thought process that went into the development of the optimum energy mix. The criteria used to develop and recommend a suitable energy mix include sustainability, economic viability, technical feasibility, and enabling of further development. Of course, any proposed energy mix must deliver the required capacity, both cost effectiveness and in a timely fashion.

And here [slide] is an example of one plausible energy mix that combines new fossil with nuclear and renewable, built on a base of energy efficiency deployment.

We also carried out a cost benefit analysis of each and every plausible scenario that was considered. The development of the proposed energy mix came about following extensive consultations with stakeholders in Saudi Arabia and elsewhere, and benefitted from comprehensive assessment of relevant case studies. KA-CARE teams worked very diligently with assistance from the world’s best consulting houses to assemble and thereafter assimilate relevant insights and learning into the identified solution for developing a viable and sustainable energy mix. Starting with the capital costs and adding operation and maintenance, comparing the cost against the value of oil saved, and factoring in the investment in industry and human capital we find that the introduction of alternative energy is cost effective for Saudi Arabia.

Setting up solar and wind farms and constructing nuclear power plants would undoubtedly generate electricity. Doing the above, however, while affecting comprehensive value chain development would, in addition to generating electricity, foster long-term economic development. Developing the alternative energy value chain in and for Saudi Arabia of course requires tight-knit cooperation among local stakeholders and also with our international partners. We expect that the U.S., being the Kingdom’s largest trading partner and the number one source of FDI in Saudi Arabia, will score high in establishing the alternative energy sector in the Kingdom.

In carrying out renewable and civil nuclear energy sector development, we are committed to the following principles: transparency always, safety first and safety always, and adherence to international best practices, commitment to non-proliferation and the highest standards of safeguard, affecting maximum localization of the nuclear and renewable value chains in Saudi Arabia, commitment to transparent incentives, off taking, and funding mechanism.

The ability of KA-CARE to deliver on its broad and overarching mandate has been bolstered by the planned development of the physical city location where we will first practice what we preach, and second provide a stage for applicable development of alternative energy, technologies, and services. The site where KA-CARE shall reside permanently is unique in its characteristics, which required a thorough analysis, creative thinking, and visionary articulation of how it will materialize. We sought out the best experience, both locally and internationally, to develop our understanding and conceptual vision of the physical city. Here is a conceptual snapshot of KA-CARE’s site’s most valiant features, gathered from a short but hopefully enjoyable virtual tour of our permanent abode. The site itself represents various challenges, but met correctly, it may be transformed into a model of sustainable living, aspects of which may be applicable both locally and internationally.

[DR. YAMANI PLAYS KA-CARE VIDEO PRESENTATION – “VIRTUAL TOUR”]

I would like to draw your attention to the proposed Phase I development of the site as conceptualized. I would like to propose to your Excellency, considering holding a future U.S.-Saudi Business Opportunities Forum at the Headquarters of the King Abdullah City for Atomic and Renewable Energy. [Applause]

Finally I would like to leave you with the two basic ideas which summarize what I have stated.

First, Saudi Arabia needs to add more than 80 GW of generation capacity by 2032. The additional capacity, anchored in energy conservation, would include nuclear, and renewable capacity. The investment requires is in the hundreds of billions of U.S. dollars.

Second, Saudi Arabia has been a favorable destination of U.S. FDI and exports, and we would certainly encourage this trend to grow in the renewable and nuclear energy sectors, as well as in energy conservation, conventional energy and energy support services.

Thank you very much.

***

H.E. Dr. Hashim Yamani
President, King Abdullah City for Nuclear and Renewable Energy

Dr. Hashim Yamani

Dr. Hashim Yamani was appointed to serve as President of the newly established King Abdullah City for Atomic and Renewable Energy (KA-CARE) in April 2010. Prior to his appointment, he served as Minister of Industry and Electricity from 1995-2003 and as Minister of Commerce and Industry from 2003-2008.​

Dr. Yamani’s association with King Fahd University of Petroleum & Minerals (KFUPM) dates back to the mid-1970s when he joined the University as a faculty member. He later became Professor and Chairman of the Physics Department. After a brief stay at King Abdulaziz City for Science & Technology (KACST) where he served as Deputy Chairman from 1978 to 1983, he returned to KFUPM in the early 1980s as Manager of the newly established Renewable Energy Division of the KFUPM Industrial Research Institute. Dr. Yamani was also a Guest Professor at the University of Bielfield in West Germany (Summer 1977) and a Post-Doctoral Fellow at the University of Western Ontario in Canada (1975).

Dr. Yamani has served as acting Chairman of the Board of Directors for a number of organizations including the Saudi Standards, Metrology & Quality Organization (2003-2008); Saudi Arabian Industrial Property Authority (MODON) (2001-2008); Saudi Arabian Authority for Auditors (2003-2008); Saudi Council for Engineers (2003-2006); Saudi Electricity Company (SEC) (1995-2003); Saudi Basic Industries Corporation (SABIC) (1995-2003); and Saudi Arabian Consulting House (1995-2001), among others. Dr. Yamani was also Head of the Kingdom’s Delegation to the United Nations Industrial Development Organization (UNIDO) and Head of the Kingdom’s Delegation at the Ministerial Council Meeting of the Organization.

Dr. Yamani is also a Member of the Supreme Economic Council; the Permanent Committee of the Supreme Economic Council; the Supreme Petroleum & Minerals Council; the Coordination Council for Saudi-Yemeni; the Ministerial Committee for Accession to the World Trade Organization; the Board of Directors of the General Investment Fund; the Board of Directors of the Supreme Commission for Tourism; the Board of Directors of the Food & Drug Authority; the Arab Industrial Development & Mining Organization, (Rabat, Morocco); and the Board of Directors of “ALBA” Bahrain. In addition, Dr. Yamani serves on charitable boards such as the King Abdulaziz and His Companions Foundation for the Gifted and Creativity.

Dr. Yamani received his B.A. in Physics and Mathematics from the University of California, Berkeley in 1969; his M.A. in Physics from Harvard University in 1971; and his PhD in Physics from Harvard University in 1974 (Thesis: L2 Approach to Quantum Scattering Theory). He was also the recipient of several awards including the Ministry of Higher Education’s Undergraduate and Graduate Scholarships, as well as KFUPM’s Scholarship.

***

Related Items:

• US-Saudi Business Opportunities Forum – SUSRIS Special Section
• Business Forum: A Common Desire for Greater Cooperation – Alireza – SUSRIS – Dec 10, 2011
• Civilian Nuclear Trade Agreement – SUSRIS Special Section
• Saudi Arabia’s Nuclear Policy – Lippman – SUSRIS – Aug 5, 2011
• Bilateral Civilian Nuclear Trade Talks Set to Open – SUSRIS – Jul 29, 2011
• President Bush in Saudi Arabia – National Security Advisor Hadley Briefing – SUSRIS – May 17, 2008
• Business Forum: Nuclear & Renewable Energy – Bernhard Briefing

Editor’s Note:

The agenda for the 2nd US-Saudi Business Opportunities Forum in Atlanta was not all business. There was ample opportunity for discussions of diplomacy and foreign relations, especially the official ties between the United States and Saudi Arabia.  One such instance was the joint appearance of Ambassadors from each country at the dinner following the first full day of the Forum.  For the Saudi side the Ambassador to the United States, Mr. Adel Al-Jubeir, was not available for the Forum so his spot was ably filled by the Saudi Ambassador to the United Nations, Mr. Abdullah Al-Mouallimi.  He began his remarks with a humorous jab at the all too serious subject of charges against Iranian officials concerning a plot to kill Mr. Al-Jubeir.  Mr. Al-Mouallimi mentions the case in his comments about Iran further in his remarks.  We are providing a video excerpt from his press briefing at the United Nations about this topic from November 18, 2011 to provide background and context.  Mr. Al-Mouallimi’s presentation on several subjects of interest to Saudi policymakers was followed by remarks from United States Ambassador to Saudi Arabia James B. Smith.  His presentation is provided in a separate SUSRIS item. [Link]

The 2nd US-Saudi Business Opportunities Forum in Atlanta was an unparalleled gathering of ministers and senior government officials and corporate and civic leaders from Saudi Arabia and the United States designed to increase understanding and business interactions between the two nations. The one thousand plus attendees, including over two hundred from Saudi Arabia, participated in the many well-organized panels and breakout sessions covering a broad range of high interest topics. The Forum was sponsored by the Saudi Arabian Ministry of Commerce and Industry and organized by the: Committee for International Trade (CIT); the US-Saudi Arabian Business Council; and the Saudi-US Trade Group (SUSTG).

You can find much more about the 2011 Forum at the SUSRIS Special Section. [Link]

***

Ambassador Abdullah Y. Al-Mouallimi: Your Highness, Mr. Lieutenant Governor, Ambassador Smith, excellencies, ladies and gentlemen: it gives me great pleasure to be with you this evening standing in for my friend and colleague, Ambassador Adel Al-Jubeir, the Kingdom’s Ambassador to Washington. I told Adel that I would be happy to fill in for him anytime, anywhere, but when it comes to assassination plots, you’re on your own. Fair deal?  [Laughter and applause]

Having listened to some of the presentations today and yesterday, I feel that you all have had a pretty good dose of Saudi Arabia: its economy, business opportunities, health and education experience, and even some music last night. So I thought I would take you to some of the international issues affecting our region, and attracting the attention of our two nations in the weeks and months ahead.

HE Saudi Ambassador to the UN Abdullah Al-Mouallimi

Time is short, and we want to pace ourselves to Saudi “standard time,” which achieved for Saudi Arabia in two generations what others took centuries to do, Ambassador Smith. Therefore, I will limit myself to three fundamental issues: the Arab-Israeli conflict, relations with Iran, and turmoil in the Arab world.

Let me start with the Arab-Israeli conflict, which appears to be at a dangerous standstill. We have all followed Palestinian attempts to gain recognition and admission to the United Nations. Unfortunately, these efforts have been and continue to be frustrated, mainly by American objections. Our American friends say that the current standstill must be resolved through negotiations. The fact is that we have had no shortage of negotiations. Over the past two decades we’ve had them all, all kinds: secret negotiations, open negotiations, direct and indirect negotiations, proximity talks, grand conferences, you name it, and even private retreats in Camp David, Sharm el Sheikh, and other exotic locations. If anything, we’ve had too much negotiation.

Why have we achieved so little? Very simply because Israel wants to have its cake and eat it too.

Israel continues to occupy Palestinian territories, expand unlawful settlements, impose a blockade on Gaza, turning it into a one and a half million people’s prison, and then they say let’s talk while I keep doing all of that. That doesn’t work anymore. Israel would be well advised to use its overwhelming power to defend a just and lasting peace, rather than to enforce an unsustainable occupation. Israel would be well advised to turn the treaties it signed with President Mubarak and King Hussein into real peace with the peoples of the region. Israel would be well advised to accept the Arab Peace Plan, first introduced by King Abdullah, and later adopted by all Arab countries. A plan that extends a hand of peace and recognition to the state of Israel in return for an end to the occupation and prompt implementation of the two-state solution.

And the United States would be well advised not to frustrate Palestinian ambitions for self-determination and independence, a right that has been recognized by all countries of the world, including the United States itself. Instead of vetoing Palestinian membership in the United Nations, the United States should help Israel adapt to the realities of the 21st century and the new Middle East, and help end the very last occupation in the world, that of Palestine.

Saudi Ambassador Abdullah Al-Mouallimi and UN Secretary General Ban Ki-moon

Let me now turn to Iran. And let me say at the beginning that we respect Iran as a neighbor and a major force in our region. We recognize its proud history and great civilization, and believe that Iran should have a leading place and play a constructive role as a member of the civilized community of nations.

We also acknowledge Iran’s right to develop nuclear energy for civilian purposes under the appropriate guidance of the relevant international organizations. But we reject Iranian attempts to exercise hegemony in the region, and we reject Iran’s interference in the internal affairs of Arab countries, from Lebanon to Yemen, and from Syria to Bahrain, and beyond. And we reject Iran’s efforts to acquire nuclear weapons. We also deplore Iranian terrorist plots, including the latest ones aimed at the Saudi Ambassador in Washington, and the Saudi Ambassador in Bahrain.

This is why we introduced a United Nations General Assembly Resolution that condemned these plots, called upon Iran to cooperate with the investigation, and hand over culprits to justice. This resolution was passed with an overwhelming majority of 106 to 9. We continue to extend our hand of friendship, peace, and dialogue to Iran. We hope that the voice of wisdom will prevail, and that Iran will desist from its current course of reckless, fruitless, and ultimately dangerous behavior.

Finally, I will address the current turmoil in the Arab world. You may have noticed that I did not use the term “Arab Spring.” Spring carries with it images of blossoming roses, refreshing breeze, and everlasting sunshine. Unfortunately, the events in the Arab world have been far from this beautiful image. Let us hope and pray that this turmoil will bring about positive change and stability in all countries of the region.

Saudi Arabia has followed closely the events in the Arab world. We maintain a position of non-interference in the internal affairs of other countries. When the peoples of Tunisia and Egypt brought about a regime change, we respected their will, and rushed to provide massive economic assistance to help overcome the difficulties faced in both countries.

In Yemen and in Bahrain, Saudi Arabia responded to the calls of leaders and provided strategic, economic, and political assistance. Along with our partners in the Gulf Cooperation Council, we restored stability to Bahrain, protected it from external threats, and thereby gave its people an opportunity to find through dialogue and reconciliation a way forward from the crisis.

In Yemen, the GCC initiative was instrumental in getting all parties to sign a comprehensive agreement that allows for a peaceful transition towards a more democratic and representative system of government. In Libya, the GCC states were the first to call for a no-fly zone, thereby preventing Colonel Kaddafi from executing his threat to massacre the people of Benghazi “Zenga Zenga” as he said, or street by street.

In Syria, King Abdullah was the first to break the wall of silence in the Arab world about that country’s continuing tragedy. Saudi Arabia is still working through the Arab League to find a peaceful political solution that would protect the Syrian peoples’ aspirations for liberty and prosperity. As you can see, our plate has been full, and I would say thank God for Saudi Arabia.

Many people ask “will” the Arab Spring reach Saudi Arabia? And some ask more bluntly “when” will the Arab Spring reach Saudi Arabia? My answer is simple. We have had our spring. In 2005, and upon his accession to the throne, King Abdullah gave a comprehensive speech to the Shura Council in which he outlined his vision for wide-ranging reform in the Kingdom.

In 2009, two years before the turmoil in the Arab world began, King Abdullah gave a speech at the Arab Summit in Kuwait in which he urged Arab leaders to undertake major reforms, politically, economically, and socially. He told the summit that business as usual was not sustainable, and that the leaders should initiate reform before having it forced upon them.

Since 2005, King Abdullah has implemented his agenda for reform in the economy, education, judiciary, women rights, and expanded public participation in managing their affairs of state. In 2011, King Abdullah responded to popular demands for providing housing facilities, introducing unemployment benefits, creating more job opportunities, especially for women, and establishing a new agency for combating corruption.

Saudi Arabia might not have developed its democratic institutions to Western standards, but it is a country where citizens feel they have a voice, where hope for a better future for them and their children flourishes, where dignity is protected, and economic opportunity abounds. If that is not spring, I don’t know what is.

Thank you very much.

A presentation by U.S. Ambassador to Saudi Arabia James B. Smith followed. [Link Here]

***

Related Items:

• US-Saudi Business Opportunities Forum 2011 – Atlanta – SUSRIS Special Section
• US-Saudi Business Opportunities Forum 2010 – Chicago – SUSRIS Special Section
• US-Saudi Business Opportunities Forum – Home Page
• Business Forum: Ambassadors Exchange Views – The American Side – SUSRIS – Feb 1, 2012

Editor’s Note:

The Jadwa Investment firm in Riyadh introduced the “Saudi Chartbook” to provide a quick, chart-based briefing on the key developments and trends in the Saudi economy and stock market. SUSRIS is pleased to provide the summary from the February Saudi Chartbook and a link to the complete report, rich with illuminating charts and graphs. SUSRIS thanks Jadwa Investment’s Chief Economist, Brad Bourland, Head of Research, Paul Gamble and Associate Research Director Gasim Abdulkarim, for providing this insightful report for your consideration.

[Complete report with charts, graphs and tables at this link.]

***

Saudi Chartbook
February 2012 

Summary

Real economy: Data for December show that the economy posted the usual post-Eid al-Adha recovery. Guides to consumer spending remained strong both in absolute and year-on-year terms. Cement sales were almost at their all-time high in December.

Bank deposits: Bank deposits jumped in line with the usual trend in December. Private sector deposits accounted for most of the gain. While demand deposits continued to grow rapidly, time deposits recorded their first annual growth for over two years.

Bank lending: Bank lending to the private sector fell a little in December. This appears to be related to seasonal factors rather than a change in risk appetite. Bank lending growth in 2011 was the highest since 2008.

Inflation: Year-on-year inflation was little changed for the fourth consecutive month in December. Domestically-generated sources of inflation continued to rise, offset by a modest fall in food price inflation. Rental inflation was unchanged for the third month in a row.

Trade: Imports and exports both declined during November, probably due to the Eid al-Adha holiday. Both were higher than in November 2010. Data from the ports show that volumes of imports and exports rebounded in December.

Click here for the original report with charts and graphs.

Oil: Oil prices have been fairly stable during January, with concerns around Iranian supply offset by a weakening global economy. The Oil Minister recently said that the Kingdom’s oil production could be increased rapidly within a few days, if required.

Exchange rates: The euro has broken its fall against the dollar, but with the European Central Bank expected to be more active in supporting the Eurozone at the same time as data from the US economy has remained strong, a further fall appears likely.

Stock market: The TASI maintained its upward trend during January, buoyed by strength in global markets, though it underperformed many owing to some disappointment with fourth quarter results and heightening regional political tensions.

Sectoral performance: Thirteen of the 15 sectors were up through January 29. Performance was broadly in line with market perceptions of fourth quarter results.

Fourth quarter results: Net income of listed companies totaled SR21.5 billion in the fourth quarter. As normal, the fourth quarter was the worst for the year, though it was petrochemicals, rather than banks, that pulled earnings down.

***

About Jadwa Investment - Jadwa Investment is a Saudi Closed Joint Stock company operating under the supervision of the Saudi Arabian Capital Markets Authority (CMA). Under the CMA decision published on August 21, 2006, Jadwa was awarded a license to offer all types of investment services including dealing, managing, custody, arranging and advising. All investment services offered by Jadwa Investment are supervised by a Shariah Supervisory Board and are fully Shariah-compliant.

For comments and queries you can contact the authors:

Paul Gamble, Head of Research
pgamble@jadwa.com
and:
Gasim Abdulkarim, Associate Director: Research
gabdulkarim@jadwa.com
or:
Brad Bourland, CFA, Chief Economist
jadwaresearch@jadwa.com

***

Related Items:

• Jadwa January Saudi Chartbook  – SUSRIS – January 10, 2012
• The Saudi Economy in 2012: Jadwa – SUSRIS – December 31, 2011
• Budget for 2012 Reviewed: Jadwa – SUSRIS – December 28, 2011
• Saudi Arabia Inflation Report – November 2011 – Jadwa – December 21, 2011
• Saudi Arabia Inflation Report – October 2011 – Jadwa – November 22, 2011
• Monthly Bulletin – November 2011 – Jadwa – November 3, 2011
• Jadwa November Saudi Chartbook  – SUSRIS – November 1, 2011
• Economic Projections – Jadwa – October 16, 2011
• Key Economic Developments – SUSRIS – September 3, 2011
• Saudi Arabia Inflation Report – Jadwa – August 22, 2011
• Inflation Report – Second Quarter 2011 – Saudi Arabian Monetary Agency
• Saudi Economic Trends – Jadwa Chartbook – August 13, 2011
• Debt, Downgrade and Saudi Arabia – Jadwa – August 9, 2011
• The Saudi Stock Market and Ramadan – July 23, 2011
• Saudi Arabia Inflation Report – Jadwa – July 21, 2011
• Saudi Arabia Economics – June 2011 – BSF – July 21, 2011
• Saudi Economic Trends – Jadwa Chartbook – July 20, 2011
• Short Term Inflation Spike – SUSRIS – Jul 16, 2011
• Energy, Consumption Lift Saudi Q3 Business Confidence – Sfakianakis – SUSRIS – June 28, 2011
• Saudi Arabia Economics – SUSRIS – June 21, 2011
• Saudi Arabia Economics – SUSRIS – May20, 2011
• Real Estate Saudi Arabia – SUSRIS – May 12, 2011
• Saudi Arabia Monetary Indicators – April 2011 – SUSRIS – Apr 28, 2011
• Business Confidence Rides on $100 Plus Oil – SUSRIS – March 2011
• Economics Quarterly: To Spend or Not to Spend? – SUSRIS – March 2011
• Monthly Monetary Indicators – SUSRIS – March 2011
• Reaching Out Again: Financial Support Analyzed – BSF – Mar 23,2011
• Royal decrees, regional unrest and the economy – Jadwa – SUSRIS – Mar 23, 2011
• Saudi Arabia Economics – BSF – Mar 22, 2011
• Monthly Monetary Indicators – March 2011
• Emerging Markets: What is next for Saudi Arabia? – March 2011
• Employment Quandary: Urgency for Reform – SUSRIS – February 2011
• Saudi Arabia Monetary Indicators – SUSRIS – February 2011
• Uprising in Egypt and Financial Volatility – SUSRIS – January 31
• Saudi Arabia Economics – SUSRIS – January 2011
• Saudi Business Leaders Bullish in 2011, BSF Confidence Index Show- SUSRIS
• Why Are Economists Bullish on Saudi Arabia’s 2011 Economic Prospects – SUSRIS
• Saudi Arabia Monetary Indicators – January 2011 – SUSRIS
• Ready to Roll: 2011 Saudi Budget: Sfakianakis – SUSRIS – Dec 21, 2010
• Saudi 2011 Budget Reflects Solid Economy – SUSRISblog – Dec, 21, 2010
• Saudi Arabia Monetary Indicators – December 2010
• Saudi Arabia Economics – December 2010 – SUSRIS – Dec 7, 2010
• Saudi Monetary Indicators – November 2010 – SUSRIS – Nov 12, 2010
• Saudi Arabia Business Confidence Index – 2010Q4 – SUSRIS – Oct 19, 2010
• Saudi Arabia Economics – BSF – October 2010 – SUSRIS – Oct 11, 2010
• Jadwa Monthly Economic Bulletin – September 2010 – SUSRIS – Oct 9, 2010
• Saudi Monthly Monetary Indicators from BSF 10-06-10 – SUSRIS – Oct 7, 2010
• Saudi Monetary Indicators for August 2010 – SUSRIS – Sep 1, 2010
• Saudi Arabia Economics – August 2010 – SUSRIS – Aug 22, 2010
• August Bulletin – Jadwa Investment – SUSRIS – Aug 10, 2010
• Saudi Economic Trends – Jadwa Chartbook – August 2010 – SUSRIS – Jul 31, 2010
• Saudi Monetary Indicators for July 2010 – SUSRIS – Jul 7, 2010
• Saudi Monetary Indicators for June 2010 – SUSRIS – Jun 30, 2010
• Saudi Economic Trends – Jadwa Chartbook – June 2010 – SUSRIS – Jun 1, 2010
• Euro crisis and its impact on Saudi Arabia – Jadwa – SUSRIS – May 29, 2010
• Saudi Arabia Economics – May 2010 – SUSRIS – May 25, 2010
• Saudi Monetary Indicators for April 2010 – SUSRIS – May 25, 2010
• Vulnerability to European “Shockwaves” – Sfakianakis – SUSRIS – May 17, 2010
• Jadwa Investment May 2010 Bulletin – SUSRIS – May 17, 2010
• Greek Debt Crisis and the Kingdom – SUSRIS – May 11, 2010
• Jadwa Investment April 2010 Bulletin – SUSRIS – Apr 28, 2010
• U.S. Exports to Arab World Rebounding – SUSRIS – Apr 16, 2010
• Saudi Economic Trends – Jadwa Chartbook – April 2010
• Saudi Stock Market Report – Jadwa Investment – SUSRIS IOI – Mar 21, 2010
• Jadwa Chartbook – March 2010
• Jadwa Chartbook – February 2010

Editor’s Note:

Ambassador Abdullah Al-Mouallimi, Saudi Arabia’s top diplomat at the United Nations and Ambassador James Smith, America’s envoy in Riyadh presented remarks on the diplomatic and foreign policy dimension of Saudi-US relations at the gala dinner of the US-Saudi Business Opportunities Forum in Atlanta, Dec 5-7, 2011.  We are pleased to provided their remarks to you today.

This presentation was part two from the dinner remarks of Saudi and American ambassadors. Part one was the presentation of Mr. Abdullah Al-Mouallimi, Saudi Ambassador to the United Nations. [Link]

The 2nd US-Saudi Business Opportunities Forum in Atlanta was an unparalleled gathering of ministers and senior government officials and corporate and civic leaders from Saudi Arabia and the United States designed to increase understanding and business interactions between the two nations. The one thousand plus attendees, including over two hundred from Saudi Arabia, participated in the many well-organized panels and breakout sessions covering a broad range of high interest topics. The Forum was sponsored by the Saudi Arabian Ministry of Commerce and Industry and organized by the: Committee for International Trade (CIT); the US-Saudi Arabian Business Council; and the Saudi-US Trade Group (SUSTG).

***

Ambassador James B. Smith
US-Saudi Business Opportunities Forum
Atlanta, Georgia

[Ambassador James Smith] Peter, thanks for the opportunity to stand with you this evening. It is good to be home. I was born in Riverdale, Georgia, about ten miles south of where you’re sitting tonight, and I grew up in Fayette County, Georgia on a dairy farm. After I graduated from high school in 1970, I went off to the Air Force Academy with the goal of seeing the world.

U.S. Ambassador to Saudi Arabia James B. Smith

Now here I’m back, and I bring good tidings from the Middle East, and I bring along 200 outstanding leaders of the Kingdom of Saudi Arabia. For the past two and a half years, Janet and I have had the great honor and privilege to represent our country in the Kingdom. It has been the experience of a lifetime. And for those of you who are considering business opportunities in the Kingdom, you will find the Saudis to be among the most warm, the most generous, and the most hospitable people on the planet.

Tonight, I want to focus my comments on three areas. First, I want to talk to you about what we in the embassy and two consulates are doing to support you and your business activities. Second, I want to give a little different twist, a different view on what’s going on in the region. And then I want to close by talking about who are these Saudis.

First of all, the business relationship is extremely important. Let me describe what we are doing to enhance the bilateral relationship, and improve the business climate between our two countries. And first, let me start with visas. The consulates in Jeddah and Dhahran and the Embassy continue to open doors to qualified travelers. We’ve improved our level of service, while handling a rapidly growing number of travelers. In the fiscal year that just ended, we saw a record number applying for visas – over 121,000 applicants. This is a 32 percent increase from 2010. It represents a 128 percent increase since fiscal year 2008. And by comparison, until 2008 our peak year was 75,000, in the fiscal year of 2001. So we’ve got an increase of over 50,000. And I would tell you that Saudi Arabia has the highest rate of acceptance of visa applicants of any country in the world. Even more remarkably, we have handled this increasing workload with the same facilities we’ve had in the past, and essentially the same staffing levels, employing lean and Six Sigma initiatives to improve our processes. We’ve reduced the average waiting time for visa appointments in Riyadh and Dhahran from 90 days in 2009 to less than two weeks today. And to tell you the truth, the quote “the visa problem” at least on our end is old news. What I do ask is that you continue to remind your business community to plan ahead. And if you start the visa process 60 days ahead of traveling, you stand a 97 percent chance of having a visa in hand when you travel.

But more generally, let me tell you about how the Embassy supports the business community. Our “Econ” section focuses on policy, policy initiatives between our government and the Saudi government. It is working to expand partnership with Saudi institutions, focused on research, training, science, and technology, with a particular focus on the energy sector.

We support Saudi efforts to develop renewable energy sources, wind, solar, and nuclear. We’ve also provided training to modernize the Saudi justice system, and to improve their commercial legal capability. You should know that Saudi Arabia has made remarkable progress in protecting intellectual property rights. And we also work closely with the Saudi Arabian Standards Organization, and the Saudi Food and Drug Authority on issues of concern to U.S. companies. And finally, we’re particularly active in promoting Saudi’s G20 objectives. And these include the combating of corruption, controlling subsidies, and ensuring food security, targeting both the elimination of barriers to U.S. products, as well as the healthy growth of the Saudi economy that will help ensure continued peace and stability in the region.

Our focus on agriculture has been a great success. We have solved several key trade policy restrictions, and these have allowed us to increase our exports of wheat, beef, seed potatoes, and other commodities. Our ag-exports rose 29 percent in 2010. And according to USDA statistics for January through July of 2011, U.S. total agricultural exports to the Kingdom reached $821 million. That is an increase of 59 percent compared to the same period in 2010. Yes, I said 59 percent.

Now, the anchor of our business effort is the Foreign Commercial Service Office, and Amer Kayani and his folks have simply been your champions to promote U.S. business and industry. They assisted more than 1000 U.S. companies in FY11, and this resulted in nearly 200 contracts worth almost a billion dollars. Last fiscal year, we can report that 102 U.S. companies exported to Saudi Arabia for the very first time, and over the last two years, 230 have exported to Saudi Arabia for the first time, and fully 70 percent of those are small to medium enterprises. Rest assured, the U.S.-Saudi relationship is solid, and you can see the many successes in business, trade, education, and medicine.

Now, I do not intend to deliver a political talk this evening, but many of you business people wonder about the events of the last year. Make no mistake, we have had a front row seat to some of the most phenomenal change in the region, perhaps in history. And like Abdullah [al-Mouallimi], I’m not sure that the term “Arab Spring” correctly characterizes the events of the last year, but I would offer a couple of brief observations.

First, Saudi Arabia is stable. Its economy continues to grow amidst the turmoil and crisis that have impacted other countries in the region. Like everywhere else in the region, the younger generation has the most to gain or to lose. In Saudi Arabia, 60 percent of the population is 25 years or younger. But without detailing the specifics of each country, it is my observation that whole populations of people are seeking dignity. They are demanding that their governments be more responsive to their needs, and they are demanding that their governments are transparent and accountable in the process. Where governments have been responsive, there is stability. Where there has been a disconnect between the government and its people, there has been crisis.

The Saudi government under King Abdullah has demonstrated a keen willingness to be responsive on the key issues facing Saudis. These include jobs, housing, corruption, the development of civil society as well as the security apparatus. And there’s still much work to be done, and many of these challenges will require long-term solutions, but people want their governments to care about them. They want their governments to be responsive. And King Abdullah’s focus on growing and diversifying the Saudi economy is part of the evidence of the government’s responsiveness, and it contributes immeasurably to the Kingdom’s stability. Stability does not come from bumper stickers, nor does it come from repression. It comes from real people working together to make their country better. And in this room this evening you’re going to find an assortment of the kind of people that are bringing King Abdullah’s vision of the future to a reality.

First, my dear friend, Abdullah Zain Alireza.

If we can have a hand for [Applause] Minister Alireza, the Minister of Commerce, because he is so diligently focused on transforming the Saudi economy under the umbrella of a knowledge-based economy, and his mission is to create the three million jobs that Saudi Arabia will need in the workforce over the next ten years.

I would also acknowledge Prince Faisal bin Abdullah, who was singled out early, the Minister of Education, because it’s been his task to transform the Saudi education system to make its graduates competitive in a global economy.

Now, for you Americans, who have ever tried to introduce an idea at a PTA meeting, imagine what it is like to try to bring change across an entire country and its education system. That is what Prince Faisal has done. In my opinion, he has the hardest job in Saudi Arabia, and I am his biggest cheerleader.

I believe that the international community owes a great debt of gratitude to two people. Dr. Mohammad Al-Jasser who is the Governor of SAMA, the Saudi Arabian Monetary Agency, because he is behind the discipline and the monetary policy for Saudi Arabia.

Likewise, Finance Minister Assaf has given Saudi Arabia a conservative and disciplined fiscal policy. Not only do they serve the Kingdom well, but they have shown Saudi Arabia to be an island of stability in the rough seas of the international economic uncertainty.

Dr. Abdullah Al-Rabeeah has led a total revamp of the medical system in Saudi Arabia. As Minister of Health, he has reached out to the best and the brightest around the world, and it has been a real pleasure to see American talent welcomed into the Kingdom.

There are business partners here as well. Dr. Abdullah Dabbagh the former President and CEO of Ma’aden Mining, was the brains behind transforming mining and materials in Saudi Arabia. His team, his company, is teamed with Alcoa Aluminum, I think represented here by Ken Wisnoski, I think he is here this evening, on one of the most important joint ventures in the Kingdom.

And as we look to Saudi Arabia’s future, no one has a more daunting task than Dr. Hashim Yamani, who is the President of KA-CARE, the King Abdullah City for Nuclear and Renewable Energy. His task is to look to the future to define the renewable energy strategy, and make the key decision on where Saudi Arabia goes with renewables.

And I would also commend one of our own, Deputy Secretary Dan Poneman of the Energy Department, one of our most gifted public servants in our government, for bringing the vast resources in the United States to support Dr. Yamani’s efforts.

It would be impossible for me to describe the dynamics inside the Kingdom without addressing the positive impacts of women in Saudi Arabia. Earlier I mentioned Prince Faisal bin-Abdullah, his magnificent work in education, but I would offer that there’s someone in his household that is at least as influential as he is. His wife, Princess Adela, very quietly but with great determination supports the National Family Safety Centers, which are a series of domestic abuse centers in Saudi Arabia. Princess Adela is the sponsor of the Carega [phonetic] Center, a magnificent group of women in Jeddah. They focus on women’s empowerment, women entrepreneurship in an Islamic tradition. She’s a role model for countless Saudi women, and it’s fair to say that she is an inspiration to Janet and me, and many others as well.

Early on the first day, some of you heard Rami al-Turki. Rami. Are you out there? Sorry ladies, he’s off the market. He just recently got married. And you heard his wonderful presentation, but you probably don’t know his mother, Sally al-Turki – an American woman who fell in love with and married a distinguished Saudi named Khalid al-Turki. In her time in Saudi Arabia, she’s created and now runs one of the most impressive private schools in the country.

You heard Lubna Olayan this morning. She’s one of the most respected business leaders in the Kingdom, male or female. And she has been at the forefront of women’s education, training, empowerment, and employment. Tomorrow, you’re going to hear from Dr. Selwa al Hazzaa. She’s the head of ophthalmology at King Faisal Specialist Hospital. Dr. Selwa are you with us this evening? There she is. She’s a national expert in ophthalmology. She was King Fahd’s eye doctor, and most importantly she represents a generation of women who have led the way in education, medicine, and business, and they are the pathfinders for a young, energetic, and passionate generation of daughters.

Sixty percent of the college students in Saudi Arabia are women, and they will be a force in the future of this country. I know she’s a pathfinder because we know her daughter, nineteen-year-old Hala, a college student who decided that she was going to organize the first Walk for the Cure breast cancer awareness event in the Kingdom of Saudi Arabia. She did the planning. She got all the permissions. She had some mother’s advice along the way, but she and her fellow students did all the preparation work. And on Thanksgiving Day, November the 24th, something happened that I never thought would happen in the Kingdom during my tenure. Almost 1000 women showed up for a walk for breast cancer. They joined to support survivors of breast cancer, and to support each other as sisters. They represent all that’s good about an emerging generation of adults that want to be a part of building their country. Her work, their work, is truly courageous.

So for those of you that want to know about Saudi Arabia, these people are Saudi Arabia. They are looking to the future. They are looking for partnerships that will allow their country to succeed. And in a closing note, let me add also that they are my friends. These are the kinds of people that Janet and I have come to know and admire these last three years, and it gives me great pleasure to bring them home with me.

Thank you very much.

This presentation was part two from the dinner remarks of Saudi and American ambassadors. Part one was the presentation of Mr. Abdullah Al-Mouallimi, Saudi Ambassador to the United Nations. [Link]

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The Honorable General James B. Smith
United States Ambassador to the Kingdom of Saudi Arabia

Ambassador James Smith was appointed U.S. Ambassador to the Kingdom of Saudi Arabia in September 2009. Prior to his appointment, Ambassador Smith had served in a variety of executive positions with Raytheon Company involving corporate strategic planning, aircraft manufacturing, and international business development.

Ambassador Smith served in the U.S. Air Force for 28 years. Trained as a fighter pilot, he logged over 4,000 hours of flight time in F-15s and T-38s. He served around the world in a variety of operational assignments and flew combat missions from Dhahran AB during Operation Desert Storm. He commanded the 94th Fighter Squadron, the 325th Operations Group and the 18th Fighter Wing (Kadena AB, Okinawa). In addition, he served in a variety of staff assignments involving coalition partners, and served as Air Force Chair and Professor of Military Strategy at the National War College. During his final assignment at U.S. Joint Forces Command, he led Millennium Challenge, the largest transformation experiment in history. He was promoted to Brigadier General in October 1998, and retired from the Air Force in 2002.

Ambassador Smith was a distinguished graduate of the U. S. Air Force Academy’s Class of 1974 and received the Richard I. Bong award as the Outstanding Cadet in Military History. He received his M.A. in History from Indiana University in 1975, and is also a distinguished graduate from the Naval War College, the Air Command and Staff College and the National War College.

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Related Items:

• US-Saudi Business Opportunities Forum 2011 – Atlanta – SUSRIS Special Section
• US-Saudi Business Opportunities Forum 2010 – Chicago – SUSRIS Special Section
• US-Saudi Business Opportunities Forum – Home Page
• Business Forum: Ambassadors Exchange Views – The Saudi Side

Editor’s Note:

The 2nd US-Saudi Business Opportunities Forum in Atlanta last month brought together a high level delegation of over 200 Saudi officials and business people with over 1000 Americans to explore the $1 trillion-plus commercial openings available in the coming decade in the Kingdom. The response to the Forum – and what it means for American investment and partnerships in Saudi Arabia – was something distinguished businessman Khaled Al-Seif has been working to see for years. Since at least as far back as 2005, when he helped lead a multi-city trade mission to Atlanta, he has been a steadfast champion of the business-to-business relationship between Saudis and Americans.

SUSRIS was there in Atlanta in 2005 to talk with Mr. Al-Seif about the specific purposes of the trade mission, the development of investment and partnerships in what, then, was emerging as a major expansion of economic opportunity in the Kingdom. He told SUSRIS, “Saudi Arabia is seeing another boom in the making, an economic boom which in my opinion will be wider and deeper than the boom in the 70′s… There are so many opportunities in the private sector now that were not dreamed of ten years ago.” We also talked about the context, beyond the dollars and cents of new deals, of the commitment to build bridges with American business people:

“The business relationship between the United States and Saudi Arabia is an old and historic relationship, which has been very beneficial for both Saudis and Americans. Over the years America has been Saudi Arabia’s primary trading partner. Most of the things you see in Saudi Arabia are a result of this relationship — American technology starting from oil exploration to infrastructure and public works. You even see American influence in our standards due to the success of this relationship over the years. The development that has happened in Saudi Arabia we owe to American companies that have worked hard in the Kingdom. They have gained and we have gained. American exports to Saudi Arabia have provided hundreds of thousands of jobs in the US. Likewise, our economy has benefited from American business involvement so it has been the perfect partnership over all those years. What happened on September 11 was a shame. What was also a shame was how a group of terrorists could have damaged the relationship between Saudi Arabia and the US. Just as we have been business partners we are now partners in the war on terrorism. Saudi Arabia and America are cooperating in the fight against the terrorists and we are winning this war together.

“The trade mission’s purpose is not just to attract investments. Many in the private sector in Saudi Arabia are worried about the relationship with our American partners. We consider American companies very talented and great friends and we worked with them for many years. As I mentioned the United States has been our primary trading partner for decades. We saw the relationship deteriorate after Sept 11, including the business ties. With the upturn in Saudi Arabia’s economic prospects a lot of people from other countries started coming to Saudi Arabia for business. What we are worried about is that others will take the place of the US as our trading partner. So given the history of our partnership with Americans we owe it to the relationship to do just what we are doing now — reaching out to American companies, to our old friends, to tell them what is going on in our country, to tell them about all the exciting opportunities out there and to invite them to come over to Saudi Arabia. What we are really saying to them is that Saudi Arabia again welcomes American business partners and we, as Saudis, will be open to work together. There is a great future and great business to be done there and we would love to do it together.”

Six years later the success of the US-Saudi Business Opportunities Forum in Atlanta has been testimony to the forecast that there is “great business to be done” and that Americans and Saudis are doing it together.

This is part two of the exclusive SUSRIS interview with Mr. Al-Seif conducted on the sidelines of the US-Saudi Business Opportunities Forum in Atlanta, Georgia. You can read Part One [“Change and Reform: A Conversation with Khaled Al-Seif”] at this link.

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Connecting Interest with Business Opportunity: A Conversation with Khaled Al-Seif

[SUSRIS] How does the Business Opportunities Forum in Atlanta compare to last year’s event in Chicago and the other bridge building efforts you have championed in the past.

Eng. Khaled Al-Seif

[Eng. Khaled Al-Seif]I was pleased with the results of the Chicago Forum and I am pleased with what is being accomplished here at the Atlanta forum in all the areas we sought to emphasize – a very high level of participation in terms of the quality of the program and the numbers of participants, the chance to network with future partners and build relationships, and the resources available for developing business opportunities.

I spent time going around to the various workshops so I could see the levels of participation among the American and Saudi business people. What I saw was a very high level of energy, and a lot of enthusiasm for the discussions and opportunities that were presented. I could see that these are very seasoned, professional business people attending and I am hopeful that at the end of the day there are going to be a lot of deals done and increased interest among American companies to come and work with Saudi Arabia.

[SUSRIS] How does this forum compare to similar events in the past?

[Al-Seif] Let’s go back to an earlier interview with SUSRIS. It was at the 2005 Saudi Trade Mission, coincidentally here in Atlanta. That was a stop for the Saudi delegation’s visit to five states. We worked very hard to bring American and Saudi business people together to explore what, at the time, was an exceptional range of opportunities – over $600 billion – in the Kingdom. You may recall it was a very large effort. We brought a large contingent of influential business people from Saudi Arabia ready to talk about the commercial opportunities. We invited a lot of people from around the States, but you remember the size of the audience. It was less than 20 percent of what we see here in Atlanta this time. That simple fact really tells the whole story.

So what has changed? Well, American companies are more interested in doing business in Saudi Arabia. They want to take advantage of the incredible opportunities and there has been a rebound in the strength of the relationship between the people. The problems that may have existed five or ten years ago in the relationship are behind us. I feel quite confident looking forward it will be an excellent relationship filled with mutually beneficial partnerships and strengthened bridges between Americans and Saudis.

I’m also very confident that you’ll see many more American businesses and joint ventures. I saw several companies here that are ready to set up shop in Saudi Arabia. They want to export their products there and they want to work there.

[SUSRIS] The forum keynote speaker, Ms. Lubna Olayan, pointed out some of the frictions in the relationship but she argued that business people continue to seek closer ties. Ford Fraker, a distinguished businessman and Middle East old hand in addition to being the most recent US Ambassador, makes a similar argument that the relationship is more than diplomacy and it is to a large extent the business piece that helps keep the rest of it going. How do you see it?

[Al-Seif] I would agree with that. Business people by nature are driven to find solutions to problems and to find ways to make both themselves and their partners winners. There are many old, established ties that continue, that have prospered down the years of the decades-long relationship between Saudi Arabia and the United States. For a time, as our economy was expanding more American companies were needed but they were not showing up. Now we are more confident that our longstanding American partners – and new partners as well – are going to join in to take advantage of the tremendous economic expansion we are experiencing in Saudi Arabia.

[SUSRIS] Saudi Arabia has shown remarkable financial stability through the global recession doing much better than most other economies around the world. What has the Kingdom has been doing right in this regard?

[Al-Seif] Yes, Saudi Arabia has been isolated from much of the global economic troubles. Today Dr. Mohammad Al-Jasser, the Governor of the Saudi Arabia Monetary Agency led a discussion on shared responsibility in the global financial system. In addition to his expert assessment of the global picture – as you know the Kingdom is a member of the Group of Twenty global economic leaders – he was very clear that Saudi Arabia benefited from what he called “safeguarding the home front,” describing a counter-cyclical approach to fiscal strategy. It focuses on paying down debt during a cycle upswing and employing budget deficits during downturns, as a way to protect the economy.

So what did the government do when oil revenue started to increase – the upside of a cycle in Saudi Arabia? The first thing was to settle the debt and to build up reserves. Then they were able to focus on necessary spending and that’s exactly what the government did after 2008 when there was a recession all over the world that could have negatively affected Saudi Arabia. The Kingdom acted by committing an additional $400 billion to what was in the annual budget. It allowed for, among other things, extra projects including needed schools, universities, and hospitals – you know the things that build the infrastructure of the country. What the government did was very intelligent. It stimulated the economy within Saudi Arabia. It increased the liquidity in the market. Moreover the stimulus wasn’t only aimed at the domestic economy. Because we import a lot of things from overseas it also helped trade volumes. More goods and services were flowing into Saudi Arabia from all over the world.

The Saudi stimulus certainly offset some of the recessionary effects in the global economy. It was a tremendous engine for the Saudi economy and an engine for other countries that export to the Kingdom. The government has continued to stimulate the economy. More funds are allocated for a host of projects. You know they’re going to build the whole railway infrastructure, for example, and this is national wealth. When you build a railway it is there for hundreds of years. No individual can do that.

What do these projects lead to? They are part of the national infrastructure that has secondary and tertiary considerations. They open up many other commercial opportunities and help the country diversify the economy and increase prosperity. For example a national railway facilitates expansion in the mining sector. In the case of mining, Saudi Arabia has some of the largest mineral reserves in the world. The Saudi Arabian Mining Company, Ma’aden, is a world-class operation that brings to market phosphates, bauxite for aluminum production, industrial minerals and gold and base metals. You might have seen the briefing at this forum about the $10 billion joint venture between Ma’aden and Alcoa as well as Dr. Rabiah’s presentation on Modon, the Industrial Property Authority. There’s much more being done and much more for American partners to get involved in: power generation, agriculture, healthcare, education, IT, construction, finance, and so forth.

All of these efforts are made possible and sustainable by the government investment in infrastructure, which in turn was boosted by the counter-cyclical stimulus spending philosophy.

[SUSRIS] Can you talk about this aspect of the economy, not just expansion but diversification?

[Al-Seif] Saudi Arabia has done much in terms of diversifying the economy, so that it does not rely so much only on oil exports. That’s why the Industrial Clusters Program, for example, is very helpful and important. It’s not just a concept it’s an actual program that is pushing development in five fast-growing industrial sectors, that emphasize exports. In addition to mining and production of metals that we talked about the Clusters focus on solar energy, plastics, appliances and automotive. These sectors benefit from Saudi Arabia’s advantages of raw materials and energy to be able to add value and produce exports with great promise. The Industrial Clusters are just one more tremendous area where Saudi Arabia is attracting serious minded business partners from the United States. There is much more, of course, and this forum is filled with discussions about the many sectors where opportunities abound for our American partners to get involved in Saudi Arabia.

There is one more idea that deserves attention and that is the focus on Saudi Arabia as a knowledge-based society that you’ve been hearing about. The primary capital in Saudi Arabia as in any country is the human capital. We have to make sure that all Saudi citizens are well-educated, that they receive the proper education, the proper tools, to become healthy, prosperous and productive citizens in the society, for their well being and for the well being of the country.

[SUSRIS] What are you telling the American businesspeople that you meet here about Saudi Arabia, the ones who may not know so much about it, who have questions?

[Al-Seif] The fact that they are spending their valuable time here at the Forum and investigating the opportunities says much about their motivation to do business with partners in Saudi Arabia. As far as answering questions and providing information it’s all here at the Forum. There are top officials from the American and Saudi governments and business communities presenting detailed, authoritative information on the commercial expansion and openings in the Kingdom and how to get started.

Apart from the Forum I would suggest they do their homework, learn about the sectors and opportunities where they have interest. They should contact the organizers of the Forum, contact SAGIA, the General Investment Authority. They should read your material on SUSRIS about doing business in Saudi Arabia. Then they should come visit, make contacts, and grab some of the opportunities that are there.

Today I had conversations with the U.S. Ambassador in Saudi Arabia and the Commercial Attaché, who are here in the Forum. We feel that it’s time to have one of these US-Saudi Business Opportunity Forums in Saudi Arabia. We should invite American businesses to come over there and see it for themselves. I think we’re going to work on that, to organize a forum in Saudi Arabia, because they’ve got to see it, you know. Seeing is believing.

The opportunities are really great, and the market is very, very hospitable to American businesses. Saudis have always held high the relationship with their U.S. partners. American businessmen will tell you they have been very welcomed in the Kingdom. They’ve been offered all the assistance possible through the government and the private sector. If anybody has any difficulty, they can always get help by calling the Committee for International Trade or the Council of Saudi Chambers of Commerce, and we will give them all the assistance that they need.

[SUSRIS] Thank you for sharing your insights on these important questions.

[Al-Seif] You’re very welcome. Thank you for bringing attention to the Forum and the business opportunities.

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ABOUT KHALED AL SEIF

Eng. Khaled Al-Seif

Khaled Musaed Al Seif is a businessman and a leading member of the business community in Saudi Arabia who manages one of the largest business groups in the Kingdom. He is active in various committees and councils dealing with the promotion of international trade and bridging relations with the West.

Mr. Al Seif previously served as Chairman of the Saudi Committee for International Trade (CIT) at the Council of Saudi Chambers of Commerce and Industry. He has officiated as Co-Chairman of the Saudi-British Joint Business Council since 2007; Member of the Board of U.S.-Saudi Arabian Business Council since 2006, Member of the Advisory Board for Economic Affairs at the Saudi Supreme Economic Council since 2005, Board member of Royal Philanthropic Society for Science (Prince Sultan University) since 1999; Board Member of the Arab-British Chamber of Commerce, London, UK since February 1996; on the Board of Directors of Riyadh Chamber of Commerce and Industry, Riyadh, Saudi Arabia (1993-2001 and 2004-2008); and President and CEO of El Seif Group of Companies, Riyadh, Saudi Arabia since 1975.

As the President and CEO of El Seif Group of Companies, Mr. Al Seif is the Chairman of the following Saudi and International companies: El Seif Commercial Investment Company Ltd; Musaed Al Seif & Sons Company; International Management Development Company; Dana Investment and Development Company; El Seif Engineering Contracting Company, and Marina Towers S.A.L.; and El Seif Holding Company in Lebanon. He is Also a Board Member of some other domestic and international companies which include but not limited to: Saudi Medicare Company; National Power Company; Modern Arab Construction Company: Arabian Medicare Company; Universal Advanced Systems Company; and El Seif Development Company.

Mr. Al Seif holds a B.S. in Civil Engineering from the American University in Beirut.

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Related Items:

• US-Saudi Business Opportunities Forum – Special Section – SUSRIS
• Change and Reform: A Conversation with Khaled Al-Seif – SUSRIS Exclusive – Jan 22, 2012
• American Businesses and Saudi Opportunities: A Conversation with Khaled Al-Seif – SUSRIS Exclusive – Sep 4, 2008
• A Man With A Mission: Khaled Al Seif Talks About US-Saudi Business Relations – SUSRIS Exclusive – May 23, 2005

Editor’s Note:

In 2005 when SUSRIS first talked with distinguished businessman and then-Chairman of the Committee for International Trade, Khaled Al-Seif he was leading the largest ever Saudi trade mission to cities across the United States. He talked about the beginning of a period of significant economic expansion in Saudi Arabia, “What has been happening there is quite exciting. Saudi Arabia is seeing another boom in the making, an economic boom which, in my opinion, will be wider and deeper than the boom in the 70′s.” At that point there were $600 billion worth of investment projects on the table in the Kingdom. Three years later in an exclusive interview at the Arab-Economic Forum in Washington Al-Seif told SUSRIS that number had topped $1 trillion:

“I’m happy to report to you that what I was forecasting several years ago is taking place now. We are living in the midst of this major boom. It is not only the result of oil prices and increased oil production but as I said before it is the result of the economic reforms already underway. With regard to oil revenues, as you know, Saudi Arabia is producing nearly its maximum capability to keep the price of oil as stable as possible. Oil production has doubled in just seven or eight years ago. So that is clearly having an effect on Saudi Arabia’s economic situation. However, the economic reforms that we discussed last time have really started to take hold and we’re seeing the results of some of those reforms.”

Last month on the sidelines of the very successful US-Saudi Business Opportunity Forum in Atlanta Engineer Khaled Al-Seif talked with SUSRIS about the current state of the trade, investment and partnership openings for Americans working with Saudis. The exclusive interview also covered his insightful perspective on the scope and pace of changes being experienced in the Kingdom, especially social reform in the area of women’s empowerment. In this two-part interview SUSRIS is pleased to share Al-Seif’s views on these developments and more.

Engineer Khaled Al-Seif is President and CEO of El Seif Group of Companies, a top 25 business in Saudi Arabia, and a firm responsible for many of the most spectacular construction projects in the Middle East including the landmark Kingdom Tower in Riyadh. In addition to his broad business portfolio Al-Seif works through numerous organizations to develop business connections with the United States and other countries and building international bridges of understanding and friendship between Saudi Arabia and the world.

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Change and Reform: A Conversation with Khaled Al-Seif

[SUSRIS] Thank you for joining us today at the 2nd US-Saudi Business Opportunities Forum. Before we get into the world of business and what’s happening at this important conference, let’s talk about this year of change and challenge for the Kingdom. Tell us what you see as key developments in Saudi Arabia and in the region.

Eng. Khaled Al-Seif

[Eng. Khaled Al-Seif] Thank you for a chance to talk about what has been happening in Saudi Arabia. The year 2011 will be remembered for something that has been very exciting in the Kingdom, and that is progress in the empowerment of women. King Abdullah has been behind major reforms in this area for some time and this year he further opened up the opportunity for women to participate more in public life.

A very important step for many Saudis is bringing women into the decision-making processes. In September King Abdullah announced women will participate in the next round of Municipal Council elections and will be appointed to the Majlis Ash-Shura, the Consultative Council, which is our parliament. These are major developments and they are starting from the top. As you know he had already appointed a women as Deputy Minister of Education for women’s education, with ministerial authority, and women have risen to other leadership positions such as on boards of chambers of commerce.

[SUSRIS] How are these developments being received in Saudi society?

[Al-Seif] What is happening is that changes are propagating very quickly within society as a whole but in particular in the business arena where the employment opportunities are opening. These changes are encouraging to many Saudis, especially to women who see their future opportunities expanding – in both the public and private sectors.

So, I would say people are very excited about advances in women’s empowerment issues. There have been problems with the lack of open job opportunities for women which results in an employment imbalance. Fortunately there are many well-qualified women ready for new opportunities. Women graduates are coming into the marketplace from universities, coming from inside the Kingdom and coming home from study abroad. There is a fantastic program for our youth to study overseas, the King Abdullah Scholarship Program. Tens of thousands of Saudis are enrolled in universities in North America, Europe and Asia. There are 50,000 Saudis studying in American universities alone and one-third of them are young women.

[SUSRIS] The recent news about that level of Saudi women participating in the Scholarship Program was somewhat surprising and developments on women’s issues like that don’t seem to be very well appreciated.

[Al-Seif] Well, a lot of the media attention on women in Saudi Arabia highlights what lies on the road ahead and not very much on what has been achieved. But Saudis are more concerned and pleased with the positive changes – to see these changes opening doors – and less concerned with external publicity.

Princess Nora University model inspected by King Abdullah after laying the foundation stone, Oct 29, 2008. (SPA)

Princess Nora University, a women’s institution, should be mentioned here. It was designed and built in two years, the shortest execution period for any university of comparable size in the world. It is a tremendous campus that is starting with an initial capacity of 40,000 and will expand to accommodate 70,000 young Saudi college students. It’s a huge university done to the highest standards possible, in all areas. The University includes a broad spectrum of specialties: education, business administration, medical education, arts and sciences, and so forth. Developments such as these – advances in a country where these things didn’t exist a generation ago – these are the changes that are very exciting.

All of these advancements are major steps in Saudi society because they also affect the prosperity of the country. Business people are very aware of these changes, have been tracking them. It is encouraging that Saudi women are studying very advanced sciences and very advanced technical subjects in addition to a host of other specialties that will be extremely helpful to boost the economy. More opportunities open for women translates into more purchasing power for the household and more effect on the economy as a whole. The economic circle is widened as a result of women’s empowerment.

So business people and others are looking at these developments with a lot of optimism and a large number of Saudi Arabian companies have started new programs for bringing women into their workplaces. This is very important.

[SUSRIS] Political developments, like women voting in Municipal Council elections and serving in the Shura Council along with increased emphasis on women’s education and business opportunities – how do these all fit together in plans for reform?

[Al-Seif] They are clearly interwoven. Actually what you see now are the fruits of decisions started six, seven years ago, perhaps more than that, even ten years ago. But don’t forget that the issue here is not the decisions of the King. The issue here is the society. Saudi Arabia is a very conservative society. There has been a lot of opposition over these subjects and you know it takes time until the society reaches a stage where such reforms can be undertaken.

What King Abdullah has done, which was extremely wise, was that he encouraged local debate. He started with what was called the National Dialogue, and he let the various factions within the society talk, to shine light on these subjects – women’s empowerment and other important areas. When they talk – and it may have started out with negative reactions – but the more people talked about these subjects, the more information they got, the less fears they had of change. They were more comfortable with it.

And as they were more comfortable with it, there was enough support within the society itself to accept these advances. Some people say this is all too slow but I assure you that there are still a lot of people in Saudi Arabia who say this is all too fast. So I think Saudi Arabian leadership and the society are working in a very balanced way and the result is that these reforms will last. They’re not reforms that will not be changed, because they’ve been very well studied and very well prepared for. And you would expect that further things would also change depending on how much the society is ready to accept.

You also have to take into consideration the current situation in the region. We’ve been talking about it today in various panels at the Forum and everyone is trying to understand exactly what is happening with the Arab Spring. Despite everything that is happening in the Arab world the Kingdom has been remarkably stable. It continues to be a good business environment and as many people expected it would, it has shown stability in the transition at the top.

Questions remain. How is all of this impacting women’s empowerment and other ongoing reforms? Is there any impetus derived from the Arab Spring that Saudi Arabia should accelerate these changes? Has any of that contributed to the major announcements of 2011? I would say no. You see, the subject of the reforms, take the case of women’s issues, as I mentioned earlier is something that has been in the making for many years. It has been done in gradual steps. It had to have the National Dialogue as a catalyst.

[SUSRIS] You’re saying the reforms, the women’s issues advancing, were coincidental to the changes of the Arab Spring?

[Al-Seif] They were in the works much earlier than the Arab Spring. The Arab Spring has captured the attention and imagination of some, but the advancements being made in Saudi Arabia were set in motion much earlier. However, I should reiterate that Saudi Arabia has been very stable during this tumultuous year in the Arab World. I would like to think that much of that is attributable to the actions that King Abdullah and the leadership in the Kingdom put in place many years earlier in creating openings for change.

There is also something that many people don’t realize about Saudi Arabia. A very important aspect of life in the Kingdom is dignity. Since the time of King Abdulaziz, when he unified the whole Kingdom, down through the reign of his sons later on, the individual dignity of citizens is not put down. I think this is another factor in the Arab Spring having little internal effect. Leaders have always paid special attention to this. You have complete freedom of work, you have complete freedom of doing business and making money. You have complete control over your house. Nobody would dare come and break into your house, for example, not governmental agencies, not anyone. Your house is your fortress. So the main principles of human dignity have always been guaranteed in Saudi Arabia.

If you look at what happened in Tunisia when it all started, and later on in other countries where there have been upheavals, there were a lot of issues related to the lack of human dignity. There are a lot of issues where people were saying enough is enough, but nothing like that has happened in Saudi Arabia. It is also very important in a discussion of these developments to note that King Abdullah is a very beloved leader. He is an extremely beloved King because he’s been very close to the people; he’s been very close to the peoples’ needs.

King Abdullah and the whole government have been very responsive to the needs of Saudi citizens. Look, for example, at the subject of education. You know, about ten years ago, fifteen years ago, when oil prices went down to $12 a barrel, the government couldn’t spend much money. So programs related to education such as new schools to deal with the explosion of population and universities and so on, these programs could not be funded at the levels needed. It was a stage in education development where schools were crowded, universities were crowded, so people were complaining. And these complaints fell on the ears of King Abdullah, then the Crown Prince. The first thing he did once we got some money to spend was to make sure that every single student was able to go to school, that every single Saudi could go to college if they wished. If they didn’t want to go to college there were vocational schools available. He instructed the Armed Forces and the National Guard to open up their training centers as well, so that the country would produce more qualified people who could come in and fill positions in the private sector.

Let me make one more point on the issue of human dignity. Take the issue of healthcare. As you have heard at the Forum there has been an incredible buildup in the Kingdom’s healthcare capacity to meet the people’s needs exemplified by the doubling of the number of hospitals between 1990 and 2010. However, there were some areas in the south of the country that were neglected. King Abdullah went down himself and he was very disappointed by what he found. He asked why was Jizan forgotten, for example. As you would expect it resulted in laser-like attention, a very big program for the development of the southern area of Saudi Arabia. So, everybody sees that, just as everybody sees all his actions for the well-being of the Saudi individual, Saudi human being, and they really love him. They really love him.

[SUSRIS] That story sounds much like the report that his push for programs to alleviate poverty was spurred by his visit in 2002 to a poor neighborhood in Riyadh.

[Al-Seif] Yes, that is true. The ruling family is very close to the daily needs of the people. And when reports reached him about the neighborhood, he wanted to see it for himself. When he saw it he immediately got the people involved in the various social services into a meeting to decide how to deal with this kind of situation. How to deal with the issue of poverty, how to deal with the issue of educating those people, ensuring they can go to schools, how to help make them productive? The aim was to help people get out of poverty, but also to provide some help and assistance in the short term. So social programs were more than tripled.

[SUSRIS] Last February when King Abdullah returned from his medical treatment abroad, about the time the Arab Spring was gaining momentum, a massive government spending plan was announced for housing, for health care, payrolls, a large human services budget increase. Was that a reaction to the Arab Spring?

[Al-Seif] I can tell you based on first hand knowledge that as far as the construction of the 500,000 new housing units — we were very pleased the King approved that spending — the timing was a coincidence. I was serving on the consultive body of the Supreme Economic Council two years earlier and we were working on the subject of housing. We were looking at the issue of home ownership. It’s been a chronic problem related to the mortgage regulations. As you know because of special Sharia considerations we have to be very careful about the issue of mortgages.

One of the recommendations about housing from the consultive body was for the government to jumpstart the whole operation by providing 500,000 units under certain regulations related to implementation. The proposition was reviewed further by the full Supreme Economic Council and then it had to be raised through the Council of Ministers. It was a long time in the making, but it was clearly coincidental that the announcement came at about the same time as the early days of the Arab Spring.

[SUSRIS] You referred to the transition in leadership, the passing of Crown Prince Sultan and the elevation of Prince Nayef as well other key moves in the government. Some observers wonder about the prospects for continuing in the current direction especially in areas like reforms. How would you assess that question?

[Al-Seif] This is not an issue. The reforms that have been going on are reforms that have been in the making for quite some time. As I mentioned earlier about advancements in areas like women’s empowerment, they have been brought about with a very wide base of support. This is how we like it. Crown Prince Nayef has been within the circle of our government for a long time, and he’s been in the midst of making those reforms. He is fully familiar with everything involved in the process and none of those reforms are going to be reversible. He’s part of the consensus, and these reforms are as solid as anything.

In terms of the succession, King Abdullah has institutionalized the process of succession. So it’s not a matter that there could be a vacuum that would be left. The process is very well institutionalized. The choice of Prince Nayef as Crown Prince was very clear, and he is an excellent Crown Prince. He’s been in government for some time, he has excellent experiences and tremendous capabilities, and Saudi Arabia I think is fortunate to have him as a Crown Prince.

The choice of Prince Salman as Minister of Defense was an excellent selection as well. Prince Salman is a very well liked and respected person in Saudi Arabia. People really appreciated these moves, because you now have a leadership arrangement which is a very complimentary structure.

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Part 2 of this exclusive SUSRIS interview with Engineer Khaled Al-Seif will feature a discussion of the commercial expansion in Saudi Arabia and the business to business relationship between the United States and Saudi Arabia.  It will be provided separately in email, posted on SUSRIS.com and available through the SUSRIS iPhone App.

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ABOUT KHALED AL SEIF

Eng. Khaled Al-Seif

Khaled Musaed Al Seif is a businessman and a leading member of the business community in Saudi Arabia who manages one of the largest business groups in the Kingdom. He is active in various committees and councils dealing with the promotion of international trade and bridging relations with the West.

Mr. Al Seif previously served as Chairman of the Saudi Committee for International Trade (CIT) at the Council of Saudi Chambers of Commerce and Industry. He has officiated as Co-Chairman of the Saudi-British Joint Business Council since 2007; Member of the Board of U.S.-Saudi Arabian Business Council since 2006, Member of the Advisory Board for Economic Affairs at the Saudi Supreme Economic Council since 2005, Board member of Royal Philanthropic Society for Science (Prince Sultan University) since 1999; Board Member of the Arab-British Chamber of Commerce, London, UK since February 1996; on the Board of Directors of Riyadh Chamber of Commerce and Industry, Riyadh, Saudi Arabia (1993-2001 and 2004-2008); and President and CEO of El Seif Group of Companies, Riyadh, Saudi Arabia since 1975.

As the President and CEO of El Seif Group of Companies, Mr. Al Seif is the Chairman of the following Saudi and International companies: El Seif Commercial Investment Company Ltd; Musaed Al Seif & Sons Company; International Management Development Company; Dana Investment and Development Company; El Seif Engineering Contracting Company, and Marina Towers S.A.L.; and El Seif Holding Company in Lebanon. He is Also a Board Member of some other domestic and international companies which include but not limited to: Saudi Medicare Company; National Power Company; Modern Arab Construction Company: Arabian Medicare Company; Universal Advanced Systems Company; and El Seif Development Company.

Mr. Al Seif holds a B.S. in Civil Engineering from the American University in Beirut.

See:

• Saudi Arabia: Women Can Vote, Starting in 2015  - PBS NewsHour – Sep 26, 2011
• King Abdullah Orders Social Benefits Package – SUSRIS – Feb 23, 2011
• Gulf States Seek Stability, Not Status Quo – Koch – SUSRIS – Dec 4, 2011
• Jobs for Women – Arab News Editorial – SUSRIS – Dec 9, 2010
• Institutionalizing Empowerment: A Women’s Ministry?
• Women’s Rights Gain Focus in Saudi Arabia – Alshayeb – SUSRIS – May 27, 2010
• Saudi King appoints first woman to council – CNN – Feb 14, 2009
• American Businesses and Saudi Opportunities: A Conversation with Khaled Al-Seif – SUSRIS – Sep 4, 2008
• A Man With A Mission: Khaled Al Seif Talks About US-Saudi Business Relations – SUSRIS Exclusive Interview – May 23, 2005
• “Women in Leadership Forum” Calls for Action – SUSRIS – Dec 9, 2010
• Jobs for Women – Arab News Editorial – SUSRIS – Dec 9, 2010
• Saudi Arabia: Participation of Women in National Development – American Bedu – Dec 10, 2010
• Woman empowerment stressed – Arab News – Dec 1, 2010
• Women’s leadership forum kicks off – Saudi Gazette
• Interfaith Dialogue Shared in Chicago – Fatany – SUSRIS – May 16, 2010
• New Media in the Gulf – SUSRIS – Dec 9, 2010
• Women’s Rights Gain Focus in Saudi Arabia – Alshayeb – SUSRIS – May 27, 2010
• Boosting Small and Medium Enterprises in Saudi Arabia – SUSRIS – Dec 4, 2010
• Has 9/11 Changed Saudi Arabia for the Better? – Robert Lacey – SUSRIS – Sep 12, 2010
• Saudi Women to Stand Against Breast Cancer – SUSRIS – Aug 23, 2010
• Saudi Domestic and Regional Policies – Gause – SUSRIS – Jun 22, 2010
• Higher Education Opportunities for Women – SUSRIS – Mar 12, 2010
• King Abdullah: An Outstretched Hand – Sobhani Book – SUSRIS – Mar 6, 2010
• Saudi College Women Build Social Entrepreneurship Skills – SUSRIS – Jul 22, 2009
• U.S.-Saudi Women’s Forum on Social Entrepreneurship Summer Symposium Opens – SUSRIS – Jul 14, 2010
• Saudi Arabia Shuffles Government Posts – SUSRIS – Feb 14, 2009
• Rights Commission Opens Women’s Branch – SUSRIS – Sep 5, 2008
• Women’s Political Participation in the Gulf – SUSRIS – Apr 14, 2008
• Abdullah Pardons ‘Qatif Girl’ – SUSRIS – Dec 18, 2007
• A Slap in the Face of Justice – SUSRIS – Nov 21, 2007
• For Cloaked Saudi Women, Color Is the New Black – SUSRIS – May 30, 2007
• Government Jobs for Saudi Women – SUSRIS – May 29, 2007
• Saudi Businesswomen Seek Greater Participation – Mar 21, 2007
• Challenges and Opportunities: Saudi Arabia in the 21st Century – SUSRIS – Jan 23, 2007
• On Relations and Reforms: A Conversation with Usamah al-Kurdi – SUSRIS – May 30, 2006
• Young and Restless – Afshin Molavi – SUSRIS – May 17, 2006
• The Time is Now in Saudi Arabia – Part 2 – SUSRIS – Apr 27, 2006
• The Time is Now in Saudi Arabia – Part 1 – SUSRIS – Apr 26, 2006
• Saudi Professional Women Advancing – SUSRIS – Dec 28, 2005
• Women Create History in JCCI Poll – SUSRIS – Dec 1, 2005
• U.S. critics miss the real Saudi Arabia – SUSRIS – Nov 30, 2005
• On Relations and Reforms: A Conversation with Usamah al Kurdi – SUSRIS – Sep 30, 2005
• Building Bridges: A Conversation with Princess Loulwa Al-Faisal – SUSRIS – Jun 2, 2005
• Saudi Women Moving Up in Business Remarks by Princess Lolowah Al-Faisal – SUSRIS – May 18, 2005
• Women of the Holy Kingdom By Sharmeen Obaid-Chinoy – SUSRIS – Apr 4, 2005
• Saudi Municipal Elections – Round Two – SUSRIS – Mar 3, 2005
• Reforms and Relations: Saudi Arabia’s Foreign Minister Discusses Developments in the Kingdom – SUSRIS – Feb 24, 2005
• Women’s Employment Initiative – SUSRIS – Jan 27, 2005
• Saudi Women and the Jeddah Economic Forum – SUSRIS – Feb 12, 2004
• “A Saudi Vision For Growth” Women Make Their Mark at Jeddah Economic Forum – Lubna Olayan’s Keynote Address -SUSRIS – Jan 21, 2004
• Al-Ikhbariya Makes Waves – SUSRIS – Jan 15, 2004
• On A Dagger’s Edge — Saudi Women, Long Silent, Gain a Quiet Voice [Part 4 in a Series] – SUSRIS – Jan 14, 2004
• Women’s Rights in Saudi Arabia – SUSRIS – Jun 19, 2003

Editor’s Note:

Since 2003 the Saudi-US Relations Information Service (SUSRIS) project has provided thousands of articles, interviews, special reports, maps, photos, videos and other hard to find resources for your use in understanding the past, present and future of the relationship between the Kingdom of Saudi Arabia and the United States. We have constantly sought to improve the delivery of these important on-line information ‘nuggets’ to make them more useful to you and your colleagues.

Today we are very pleased to announced the launch of SUSRIS as an iPhone App available in iTunes. The App will deliver SUSRIS articles, interviews, special reports and much more from a variety of sources to the palm of your hand wherever you travel.

In addition to the SUSRIS content you can easily access news and reports from other sources including the SUSTG News Review, SUSRIS Tweets, SUSRIS Videos and Slides, and content from ArabiaLink, SUSRISBiz and the Saudi British Relations Information Service (SBRIS).

To mark the inauguration of this very special feature of the SUSRIS project we would like to offer the App for no cost to the first 250 people to download it from iTunes. Simply connect your iPhone to the iTunes App store and search for “SUSRIS.” It’s free for the first 250 downloads.

Please share the news of this important development in the history of the SUSRIS project with your friends and colleagues. We are confident that putting “SUSRIS” in your pocket will be a good decision.

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FEATURES OF THE NEW “SUSRIS” iPHONE APP

• SUSRIS Articles – Articles, interviews and special reports from the Saudi-US Relations Information Service (SUSRIS) – www.SUSRIS.com
• SUSTG News – From the Saudi-US Trade Group (SUSTG) – www.SUSTG.org
• SUSRIS Tweets – From @saudius
• Maps – Interactive annotated Google map screen
• SBRIS News – Articles, interviews and special reports from the Saudi-British Relations Information Service (SBRIS) – www.SaudiBrit.com
• SUSRIS Slides – Powerpoint presentations from the SUSRIS Channel of SlideShare.net
• SUSRIS Videos – Video recordings from the SUSRIS Channel of Youtube.com
• SUSRISBiz – Exclusively business articles, interviews and special reports from the SUSRIS Business Web site – www.SUSRISbiz.com
• SUSRIS Family – A description of the various Web sites and in information resources that make up the SUSRIS project and its companion services
• ArabiaLink – Articles, interviews and special reports from the archives of ArabiaLink – www.ArabiaLink.com
• SUSRIS Calendar – Event announcements and other key dates of interest from SUSRIS
• Contact – Information for communicating with the SUSRIS Project staff
• Search – A keyword search function to locate key data across the various iPhone App tabs

Please tell us what you like about the SUSRIS iPhone App and what we can do better to make it more useful to you.

Patrick Ryan
Editor-in-Chief
The SUSRIS Project
Email: patryan@susris.com

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SUSRIS Articles – Articles, interviews and special reports from the Saudi-US Relations Information Service (SUSRIS) – www.SUSRIS.com

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SUSTG News – From the Saudi-US Trade Group (SUSTG) – www.SUSTG.org

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SUSRIS Tweets – From @saudius

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Maps – Interactive annotated Google map screen

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SUSRIS Slides – Powerpoint presentations from the SUSRIS Channel of SlideShare.net

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SUSRIS Videos – Video recordings from the SUSRIS Channel of Youtube.com

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Editor’s Note:

The recently concluded US-Saudi Business Opportunities Forum (Dec 5-7, Atlanta) not only featured an extremely rich assembly of senior government officials, business people and more, but a broad representation of industries and sectors as well. Among those who participated from the Kingdom were three serving ministers in the Government plus the Governor of SAMA, the central bank and dozens of other senior officials — all who provided the most complete and authoritative reviews of their respective areas of responsibility in keynote remarks and panel discussions. Among the sectors represented at panels were: energy and renewables, information technology, petrochemical and plastics, infrastructure, agriculture, education, healthcare, transportation and logistics, and water and electricity. One area where tremendous commercial opportunities for cooperation between Saudi and American business people was apparent is the health and medical services sector. Leading the Saudi delegation in that area was Minister of Health, Dr. Abdullah Al-Rabeeah, who opened the plenary session titled, “Health and Medical Services: Delivering Top Quality Care.”

In addition to providing a comprehensive overview of the Saudi health system – its achievements and its challenges – Dr. Rabeeah talked with SUSRIS on the sidelines of the Forum, saying that:

“There is no question that the relationship between the United States and Saudi Arabia in the health sector is very important. It’s not only the public side of it, but also the private side of it. I think what we have discussed today in terms of initiatives related to industry, pharmaceuticals and research are wide; the scope is huge.

“We hope that the businesses, those who are interested in the healthcare business – those attending this forum, and those outside the forum – will take those opportunities in a strong partnership with the health system of Saudi Arabia. Hopefully that will be reflected in business initiatives and also improving the healthcare system and developing the research and technology.”

And what was his impression of the reaction of American business people to the vast opportunities and their interest in getting involved in Saudi health sector needs? He told SUSRIS, “My impression is positive; I think they are interested. You can see it from their questions and I am optimistic for the future.”

Today we present for your consideration Dr. Rabeeah’s remarks at the US-Saudi Business Opportunity Forum plenary, “Health and Medical Services: Delivering Top Quality Care.” It is accompanied by the slides that were integral to his presentation, also available on the SUSRIS channel on SlideShare.net; and the video recording from his appearance.

Dr. Rabeeah was introduced by Dr. Hanan Balkhy, Executive Director, Infection Control, National Guard Health Affairs.

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Dr. Abdullah Al-Rabeeah, Minister of Health

[H.E. Dr. Abdullah Al-Rabeeah] [Greeting in Arabic]. Your Highness, excellencies, respected audience, ladies and gentlemen. Good morning to all of you, and thank you, Hanan. Dr. Hanan Balkhy is not only a colleague, but she is also a leader in health. She is a Harvard graduate and the Director of her Collaborating Center for Infection Control in the National Guard and GCC countries, and collaborating with the World Health Organization and the CDC. I would like to thank you for this introduction.

And let me start. Being a pediatric surgeon, I will start with the conjoined twins. Your Highness [Prince Faisal], I really enjoyed how you brought scouts to this gathering, and also I complement His Majesty [King Abdullah] for adding the name “Messengers of Peace.” This is well-respected name in which we value, but I should also equally complement the health workers. I’d like to use the words of His Majesty, that the health workers are also the “Messengers of Life.” His Majesty has been actually the driving force for this experience of conjoined twins in Saudi Arabia. The experience has reached now more than 66 cases sponsored by His Majesty. And to show you how His Majesty is so loving for children, he visited most of those children after surgery in a fatherly and actually humane touch for each of those twins.

Now, let’s go to work.

The history of health in Saudi Arabia is fascinating. It only started in 1926 when the first primary health care service was initiated, and in the first few years the development was slow. It wasn’t until the 1950s when the first landmark of the Ministry of Health was created. Before that, it was only a department of health in the Ministry of the Interior. The first Minister of Health was His Royal Highness, Prince Abdullah Faisal. After that, there has been tremendous progress. And to show you the progress, between 1970 and 1990 you see the tremendous increase in hospitals, in the work force, and also in primary health care centers. It doubled again between 1990 and 2010, and we will probably achieve the same again by 2030. Even training was only recently apparent in Saudi Arabia. It wasn’t until 1993 when we had the first Saudi Council for Health Specialties, which is equivalent to the American colleges of different specialties.

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You should know about the law of Saudi Arabia, and the mandate of Saudi Arabia. Chapter five of our Basic Law, in Article 27, that the government guarantees the right of healthcare for citizens and their families in cases of emergencies, sickness, disability, and old age. In Article number 31, the government is responsible for public health in the Kingdom, and provides health care services for every citizen. The mandate of the Ministry of Health, which is established in 1950, dictates that it guarantees the provision of primary healthcare services to all citizens, and also provides secondary and tertiary services, and develops and implements plans to insure the provision of health care services.

If you want to talk about progress in health, look at.. ..I think all of us agree that the health indicators, which have been approved by the World Health Organization, are the key figures for success. In 27 years, we have moved from low numbers to numbers which compete with international standards, and I think the numbers speak for themselves. Our fights with contagious and infectious diseases — Saudi Arabia is a country where the two holy cities, Mecca and Medina are located and we receive visitors for the holy activities from more than 165 countries, so we have to be more than active in infection control. You can see our numbers showing a decline, which is evidence of success. The same also for diseases such as polio – we are a polio-free country. We will be eradicating all types of measles within the coming year, which will be the third country in the world to eradicate measles, and the same applies to tuberculosis and others. If you look at vaccinations, actually we are one of the top five countries in the world where vaccination has approached 98.8% of children aged one year and older.

The health services in Saudi Arabia are spread between three main sectors. The bulk is the Ministry of Health, which gives health services to 60 percent of the population. The other government agencies, whether university hospitals or military hospitals, provide 20 percent of the health services, and the private sector provides 20 percent of the health services.

Like all countries, we have challenges. We have the challenge of increasing expectations of our citizens. We also have the same challenges, like all countries, of increasing costs, limited resources and how to deploy our resources effectively. Like the United States, we have a large country. If we compare population to population, we have a vast country with many challenges and expectations — the sustained growth and the changing disease pattern that pose challenges for the health workers.

Now the cost. You can look at those graphs. It’s clear that looking at Saudi Arabia and the United States you see between the years 2002 and 2010 how the costs have been driven quite high. Also the demand is increasing. We have an increasing growth of population. Our population growth rate is around 2.8. We hope that it will decline a little bit in the future. We have the same factors of an aging population. The more we succeed, the more we increase the costs for health. And chronic diseases also pose a challenge. Psychiatric illness also is a challenge. We have another big challenge, which are road traffic accidents that I’ll talk about later.

Now we have almost close to 28 million now, and in the year 2020 we are expected to be around almost 40 million, and we will double our population above the age of 60, which is going to significantly increase the cost for health. I think we share something in common with the U.S.A. We manage to compete with the U.S.A. in obesity. [Laughter]. We have a 33 percent obesity rate, and 17 percent diabetes rate. We rank next to the USA in diabetes. If you look at the contributing factors for chronic illness, contrary to most countries, road traffic accidents stand first. We lose more than 6000 young people each year from road traffic accidents, and also we have an epidemic of lack of physical activity, approaching more than 34 percent. Unfortunately smoking is not in a state of decline, it’s going up. We have limited resources of bed capacities, and also we are like most countries looking for a professional staff to improve our health parameters.

Hospital beds — just to tell you that the acceptable standard is 3.5 beds per 1000 in population — we are now at 2.2. With our plans, which I’ll show you later, we are aiming for 3.5 per 1000. However, the United States is not far from us. They have 3.1 beds per 1000 population, but we cannot compete with Japan, where they have 13.7 beds per 1000 population.

Physicians per capita — I think we still are close to the bottom and we have to do more. We are a little bit lower than the U.S.A., but you are not doing well with nurses. I think we should do more with the nursing staff. And also this is the challenge, and I think, I’m not sure who’s right – is it us or the United States, or are both of us wrong? We are only giving 3.4 of our GDP for health. I feel it’s not enough. However, the United States is spending 17.4 of their GDP for health. And if you look at the beds, we are not far from each other, the same thing for the number of physicians. So either the United States is spending too much, or we are spending two little, or both of us have to do something to be in the middle.

However, if you look at the satisfaction rate, a recent survey done by an independent worker, our satisfaction rate for patients is 70 percent. And my understanding from our friends in the United States, the satisfaction rate is not far from our numbers. Now, per capita expenditure, we are not doing well. We are only spending in the Ministry of Health $531 per capita. However, I think the U.S.A. is overspending. I think close to $8000 per capita. And the private sector, either there is a shift to the left, which is too much private, or a shift to the right, too much public. Most countries believe that the ratio should be between 70 and 30 percent; in Saudi Arabia, it is 80 to 20 percent.

We have to do better for deploying our resources, which I mentioned. We have studied also the effectiveness of smaller hospitals where we have found hospitals below 100 bed capacity are not productive, and actually they pose a challenge for patient satisfaction. This actually tells you that occupancy rates go higher with larger hospitals and lower with smaller hospitals, so that’s changing our strategy for the future. And this is to tell you the ratios in the Ministry of Health.

We did not forget quality. We have actually gone through the challenge of accreditation, and putting priorities for our resources, and improving the infrastructures for our health facilities.

In our health reform, we have studied carefully 35 health systems, including those in front of you. And we have come to the conclusion that we have to move to the concept of integrated comprehensive health care system, which is ICHC. In the past most of the health systems used to run around the hospitals unfortunately, but they have forgotten the focus, which is the patient. Now we have moved to focus on the patient. We believe that our focus for all of our health reform is the patient. Today we are working somewhat haphazardly and just thinking to build hospitals, but in the future we want to have a system where each province of the country has a center, a base of the primary health care system, followed by secondary and tertiary systems in an organized manner.

And these initiatives gave us eight points. We have to develop and also restructure our hospitals. We have to improve our primary health care services. We have to improve and automate our referral systems. We have to develop our air and land ambulance systems. We have to invest a lot on our e-health. My friend, Minister Abdullah Alireza, he mentioned to you that we are investing close to $3-4 billion in the e-health initiatives. We also develop the human resources, which is an integral part of the health system, and insure adequate supply of pharmaceuticals, and implementation of accreditation at quality standards.

Now, in the past we were moving in a rectangular manner. We want to move in a pyramid, with the base being primary care, then moving towards the quaternary care. We want to actually reorganize our primary health care, which is the base for any good health care system, and to reform not only the buildings and structures, but also the mandate and the function of our primary health care centers. Our referral system, within two months we will be launching one of the largest automated referral systems of any country. It will be a national referral system, which should be referring patients from different villages and cities to bigger hospitals being public or private, and we will start it in a pilot study, and then it will be implemented nationally.

Also we are doing well with our electronic automation, which I will allude to later on. Our main objectives are to provide adequate transportation, and also effective resource utilization and coordination and integration, and also improving our existing services. I think all of you know the importance of e-health. We have gone through a strategic plan for our e-health reform. We have put that for tender, and it was won by IBM, and they have given us a five-year strategic plan – it is available for those of you who are interested — which is to put it in phases based on the integrated health care system of Saudi Arabia. Our e-health system strategy is being phased into different phases over the coming five years, taking initiatives such as cloud computing, national e-health standards, and also hospital information systems, and patient satisfaction, patient referral, Saudi pact system, and the rest of those initiatives.

We have future plans for our e-health strategy, which will not forget most of the health information systems for the hospitals, and putting five major data centers in most of the medical cities, so that they will have an e-health recovery plan. Now, accreditation is an important part of our both public and private health care system. We already started accreditation through our national accreditation program called [unknown] We have started with the Ministry of Health, and next year we will be starting implementing that in our private sector. We hope within the coming four to five years, all hospitals in Saudi Arabia will be accredited. And also we are collaborating well with the GCI of the United States.

Our goals for our integrated health care system are that we should have an easy and timely access to care, comprehensive medical care services, automated referral system, equity to all levels of care, and proper transfer and referral systems. We should not forget quality, safety, and satisfaction, and we know we have challenges. We know that the biggest challenge – I wish actually Abdullah Alireza was here. I wish I’d invited the Minister of Finance here today, because item number one is funding, and next year please invite the Minister of Finance so that you can challenge him here. [Applause]. [Inaudible from audience]. He did not come. [Inaudible from audience]. [Laughter]. You know why? Because of my talk. So funding, and also like any country we have resistance to change. Being a doctor, and I hope the doctors will pardon me, the most difficult people to resist changes are the physicians, so we have to live with them. [Applause].

Now, we challenged our strategy through internal consensus building, through our health workers in the Ministry of Health, and health workers both in the private and public arena in Saudi Arabia. We have gone through a national consensus building for this strategy with the Shura Council, our parliament, and also different health leaders in Saudi Arabia, but we did not forget the international consensus building. We have experts that have studied our health reform from the United States, England, Europe, and different countries, and most of them agreed that integrated comprehensive health care system to be a national project is the way to go. And the last word they mentioned: this approach has been adopted and validated by a world-class health care system that we hope to achieve.

Now, budgets. I know I have businessmen — I tried to remove those slides, but Mohammad told me you cannot remove money from businesspeople, so I have put that one. So we know that the funding for quaternary will at least need 1.8 million per bed operation and the same thing for central beds and general hospitals. Also the number of physicians per bed is .7, and how many staff per primary health care center. I think you are interested in medications, we are spending close to $1.5-2.0 billion a year only for the Ministry of Health, so you may have to double it for the rest. We have to invest in training. I know there are leading people from American colleges and also universities. We have an investment of close to $150 million a year for training of our staff, and the same thing applies for ambulance and mobile clinics. So our integrated health care system is intended actually to go with those initiatives that we will implement in the coming few years.

Our ten-year strategic plan is already out. The Arabic version was out two months ago. We are now finalizing the English version, which we will put on our website, which is open for you to know what we have in the coming few years. One thing which is important, there is a logo which says patients first. We believe that you cannot do any healthcare system without putting the patient first, but you can now read the words below, which are the words of His Majesty that I will mention later on.

Now, I cannot leave this without mentioning the Saudi initiative of mass gatherings. We have the largest mass gathering in the world, which is Hajj. We receive close to four million people a year. They come only for a week, and they gather in a narrow area. We have developed over decades the world experience in how to manage mass gathering medicine, including infection control. And two weeks ago we launched an international conference, and we agreed with the World Health Organization and with the CDC that Saudi Arabia will be the leading force, and will be the reference country for mass gathering medicine that we hope to deliver to the world.

By the way, the clock you saw, it is the tallest and the biggest clock in the world, which has been given by His Majesty King Abdullah to be a timing reference for the world, and it is available for all Muslims in the world as a reference. Our data for mass gathering medicine has been published in the Lancet and there have been many publications that you are welcome to read and know about mass gathering medicine. We will be starting training program next year in mass gathering medicine.

Now, for us we have to talk about innovation. I think the Ministry of Health is no longer healthcares only service provider. We believe the Ministry of Health has to be involved in education, in research, and also in business initiatives. We feel that healthcare and health finance solutions, health industry and technology transfer, and evidence-based medicine, research, and performance measures cannot be forgotten in the health care system of Saudi Arabia.

Now those of you who are in the engineering and construction firms, we have in the coming five years 190 hospitals to be built, five medical cities the size of 1500 beds with centers of excellence, and 1400 primary health care centers. Those who would like to share with us technology transfer, we are interested in the medical device technology transfers, pharmaceutical industries, and e-health initiatives. These are models for our engineers here in the audiences about some of our hospitals and medical cities, and they are more than welcome to critique them. And less than two years ago I signed with the Secretary of Health of the United States in Geneva a Memorandum of Understanding that will strengthen our ties with the U.S. both in the field of clinical expertise and exchange, in the field of training, in the field of transfer of technology, and in the field of collaboration with infection control. We value this collaboration.

I have put this slide to show you that the proposed health care investment, that the Ministry of Health is commissioned to transfer the process of know-how, technical know-how, logistical support and expertise, and technology. There are opportunities for you to know. Training for health care professionals, institutional partnership, public to private partnership, and transfer of technology and research, plus health facility development.

In summary, healthcare is a promising avenue for collaboration, but it requires robust business to government initiatives. Opportunities are numerous and can be identified through the Ministry of Health ten-year strategic plan. This plan has been presented two years ago in its first draft to His Majesty, but let me show you what he said. “At the bottom, nothing is more precious than the health of citizens.” That’s his values, which we value and respect.

Now, I cannot leave without speaking about the conjoined twins. This is the initiative of His Majesty King Abdullah. He has sponsored many twins, and these flags represent sixteen countries where those poor twins came from and have been treated and taken care of and sent back to their home countries. And they were totally sponsored by His Majesty. So he is not only a leader, he is a child lover and helper. Thank you. My time is over, thank you for yours.

[Remarks as delivered]

***

About H.E. Dr. Abdullah Al-Rabeeah

Minister of Health of the Kingdom of Saudi Arabia

Dr. Abdullah Al-Rabeeah was appointed Minister of Health in February 2009.

Born in 1955 in Riyadh, Dr. Al-Rabeeah earned a MA in Pediatric Surgery from Alberta University, Canada in 1985 and a Bachelor of Medicine and Bachelor of Surgery from King Saud University, Saudi Arabia in 1979. In addition, Dr. Al-Rabeeah was board-certified by the Canadian Board of Surgeons in 1985 and the Canadian Board of Pediatric Surgeons in 1987.

Over the course of his career, Dr. Al-Rabeeah has held the following positions: Assistant Professor of Pediatric Surgery, King Saud University; Pediatric Surgery Consultant at King Khaled University, King Khaled National Guard Hospital and King Fahd Specialist Hospital; and Executive Director General of Health Affairs at the National Guard, 2005-2009.

Source: US-Saudi Business Opportunities Forum

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Related Items:

• US-Saudi Business Opportunities Forum – SUSRIS Special Section
• US-Saudi Business Opportunities Forum – Home Page
• SUSRIStube Channel – Youtube.com
• SUSRIS Channel – SlideShare.net
• Ministry of Health Portal – Saudi Arabia
• Key Health Indicators – Saudi Arabia (1431)

Editor’s Note:

The recent U.S.-Saudi Business Opportunities Forum provided exposure of the commercial openings in the Kingdom to American business people, especially those in Georgia and in particular Atlanta. Today we are pleased to bring you reflections on the forum provided by Dr. C. G. Alexandrides, Georgia State University, Professor Emeritus of Management. We thank him for permission to share his article, which appeared January 6, 2012 in Global Atlanta, with you today.

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Saudi Arabia Not Just for Multinationals
C. G. Alexandrides

A guest review of the U.S.-Saudi Business Opportunities Forum held in Atlanta in December

American companies should always be open to new global markets and new overseas business alliances. but many companies miss opportunities because they do not have access to decision makers in foreign markets. A rare chance to meet a large group of decision makers in person came at the U.S.-Saudi Business Opportunities Forum. At the conclusion of the second annual forum, held in December 2011 in Atlanta, Omar Bahlaiwa, Secretary General of the Committee for International Trade (CIT) of the Saudi Chambers of Commerce, called the event a “great success.”

In spite of time constraints, the presence of 1,200 participants, including 300 top-ranking Saudis led by Prince Faisal bin Abdullah Al-Saud, motivated U.S. companies to seek out more business opportunities in the kingdom. The prince made it very clear that while there are many large-scale partnerships already in place, small- to medium-sized companies need to be encouraged to look for opportunities as well.

The objective of the Saudis is to generate business between the U.S. and Saudi Arabia in the amount of $1 trillion in the next five years.  As confirmation of Saudi intentions, Atlanta-based GE Energy announced on the day of the opening of the forum the signing of a $300 million contract with the Saudi Electricity Company for 13 new gas turbines and service. GE Energy has supplied Saudi Arabia with 200 gas turbines in the last five years.  Al Saleh Al Barrak, President and CEO of Saudi Electricity, was among the Saudi participants.

The Saudis were impressed with Atlanta’s welcome and Georgia’s hospitality. Mayor Kasim Reed set the tone with his welcome address and reception at City Hall and made friends, which is important in Saudi business.  Governor Nathan Deal and representatives of the U.S. government from the State Department and the Commerce Department extended their welcome and pledged their cooperation for the success of the Forum, including former Atlanta City Council President and U.S. Senator Wyche Fowler. Mr. Fowler served as ambassador to Saudi Arabia during the Clinton administration. Prince Faisal has had a special friendship with him over the past 35 years.  Participants came also from many U.S. states, our neighbors Canada and Mexico, and countries of the European Union, China, Japan and Korea.

The Atlanta forum benefited from the experience of the first forum held in Chicago in April 2010, which attracted 1,100 participants.  That Chicago forum resulted in more than 100 contracts for U.S. companies doing business in Saudi Arabia. The Atlanta forum is expected to exceed that number of deals because of its even greater number of participants. Many of Atlanta’s Fortune 500 companies including Lockheed Martin Corp., Coca-Cola Co., GE Energy, Delta Air Lines Inc. and United Parcel Service Inc., have long-established strategic partnerships with Saudi companies and government agencies.

The Saudi government was interested in bringing U.S. expertise and technology to Saudi Arabia through joint ventures, while the U.S. government was interested in expanding exports to Saudi Arabia and Saudi investments in the U.S.  The fields of interest of the Saudis are green energy (solar and wind), water purification (desalinization), information technology, education (all levels), public health, transportation and infrastructure. The forum was also designed to show U.S. companies how to do business in Saudi Arabia and for Saudi companies to understand how US companies operate.

Prince Faisal bin Abdullah Al-Saud, Minister of Education, spoke of the vision to transform the Saudi educational system into a world-class system.  He outlined educational reforms, which are now being introduced such as the goal of teaching English beginning in the fourth grade, more autonomy in the selection of curriculum and institution of standards for public and private schools.  ”One of the main strengths of the country is to rely heavily on women,” he said, noting that in spite of the constraints of a woman’s traditional role, Saudi women are now advancing in engineering, science and technology and are encouraged to study abroad.  According to the minister, a national scholarship fund is making it possible for more than 130,000 Saudi students to study abroad, including 47,000 in the U.S.

The U.S. ambassador to Saudi Arabia, James Smith, a native of Georgia, compared the journey toward equal access for women there to the struggles of African-Americans under segregation in the South.  He noted that 60 percent of university graduates in Saudi Arabia are now women, adding that the government is encouraging women to develop their skills to fill the requirements of a growing and fast­ changing Saudi economy.  As an example, the prince stated that the Princess Nora bin Abdulrahman University is the largest all-female institution in the world. He added that women will be allowed to run and participate in local elections in 2015.

The educational and social benefits of the forum were covered by the presentations and panel discussions including the question-and-answer periods.  The forum published a directory of the Saudi members with brief profiles and coordinates to facilitate matchmaking and follow-up.

In Saudi Arabia the follow-up is done by the parties concerned and not by government intermediaries. The American companies should contact the organizing members of the forum for assistance in contacting the interested Saudi companies.  Local universities, law firms, public accounting firms and consultants with experience in Saudi Arabia can be good sources of assistance.

There is interest on the Saudi’s part to return to Atlanta in April 2012 for facilitating company contacts.  The third annual U.S.-Saudi Business Opportunities Forum will be held in California in 2013 to continue the process of generating business toward the goal of $1 trillion.

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DR. COSTAS G. ALEXANDRIDES

Dr. Alexandrides is Professor Emeritus of Management at Georgia State University and President of the International Market Information System Inc. (IMIS). He has served as Visiting Professor of Management and International Business at the University of Missouri at Kansas City, where he led the Executive MBA class on a China Interim Study. He has also taught at New York University, the University of Georgia, Pepperdine University and City University of New York (Baruch). He established the International Business Academy in Atlanta under the sponsorship of GSU, Georgia Tech and the World Trade Center. He is a member of various committees of the World Trade Centers Association in New York. He has published books and articles on international business.

Dr. Alexandrides served as an economic development officer of the United Nations in Korea and New York. He also served as adviser of the Cyprus Mission to the U.N. Under contract, he assisted the export expansion programs of the U.S. Department of Commerce, Greece, Japan and China. He has also consulted with leading international companies including Coca-Cola, BellSouth, Litton, Nissho Iwai, ARCAPITA, Sheraton and Westinghouse.

Dr. Alexandrides has received many awards including NYU’s Founders Day Award and recognition from SUCCESS Magazine. The contribution of IMIS was recognized in the President’s award of the E Star Award to Georgia State University.

C.G. Alexandrides, Ph.D.
Professor Emeritus of Management
Georgia State University
Atlanta, GA 30303
Call 770-846-1498
E-mail: c.alexandrides@att.net

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Related Material:

• US-Saudi Business Opportunities Forum – Atlanta 2011 – SUSRIS Special Section
• US-Saudi Business Opportunities Forum – Chicago 2010 – SUSRIS Special Section
• US-Saudi Business Opportunities Forum – Chicago 2010 – SUSRIStube Videos

Editor’s Note:

The US-Saudi Business Opportunities Forum (Dec 5-7, Atlanta) was an incomparable gathering of top level Saudi Arabian government and business leaders who shared their knowledge of myriad areas of interest bearing on commercial openings for American businessmen in the Kingdom. The Forum, sponsored by the Saudi Arabian Ministry of Commerce and Industry, was organized by the Committee for International Trade (CIT); the US-Saudi Arabian Business Council; and the Saudi-US Trade Group (SUSTG). It featured an extremely rich assembly of senior government officials, business people and more and their American counterparts. Among those who participated form the Kingdom were three serving ministers in the Government plus the Governor of SAMA, the central bank and dozens of other senior officials — all who provided the most complete and authoritative reviews of their respective areas of responsibility in keynote remarks and panel discussions. The Saudi delegation included, among the leadership, the Governor of the Saudi Arabian Monetary Agency (SAMA) Dr. Muhammad Al-Jasser. At the Forum he led a key panel titled, “Maintaining a Stable Global Financial System: Shared Responsibility,” and shared insights only possible from the vantage point of a Group of Twenty (G-20) member nation central bank chief. A week after the Atlanta Forum Dr. Al-Jasser was named by King Abdullah as the next Minister of Economy and Planning.  Governor Al-Jasser was introduced following remarks from Hutham Olayan, President and CEO, Olayan America, who set the scene for the panel discussion of the global financial system.

SUSRIS is pleased to share Dr. Al-Jasser’s remarks from the US-Saudi Business Opportunities Forum with you, along with many other important products from the Forum: articles, transcripts, slide presentations, videos and more. You can check the links below for more information and we suggest you visit the SUSRIS Special Section – US-Saudi Business Opportunities Forum 2011.

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H.E. Dr. Muhammad Al-Jasser, Governor, Saudi Arabian Monetary Agency
Maintaining a Stable Global Financial System: Shared Responsibility
U.S.-Saudi Business Opportunities Forum
Atlanta, Georgia
December 6, 2011

Hutham Olayan, President & CEO, Olayan America

[Hutham Olayan] I’m pleased to welcome you to what I believe will be a very informative and exciting panel discussion. Our topic today is of monumental importance: the shared responsibility of maintaining a stable global financial system. As we have seen over the past three years, this has been a stormy period. This has not been easy. This week alone will witness a meeting of the ECB [European Central Bank] on Thursday [Dec 8, 2011] in preparation for the Euro Summit on Friday.

Yesterday [Dec 5, 2011] President Sarkozy and Chancellor Angela Merkel engaged in another round of discussions in hopes of narrowing their differences. Of course, the Euro Zone is the subject that we are all concerned about. Will Europe find a way out of this abyss, or will it witness the death of the dream of the European project? In fact, this reminds me of the famous Woody Allen line, “I’m not afraid of death, I just don’t want to be there when it happens.”

Clearly, Saudi Arabia and the United States have much to gain from an effective resolution of the ongoing threats to the global financial system, and much to lose from its deepening. Over the last 30 to 40 years, both nations have weathered numerous financial shocks.

Saudi Arabia learned a hard lesson early on, during the precipitous decline of the oil price in the 1980s, followed by years of deficit spending. It learned the value of holding significant reserves to offset decline in aggregate demand, and to support the financial system. Prudent macroeconomic policies today have left the Kingdom in a better shape on these fronts, and able to weather the storm.

Meantime, it’s an open question in this election year whether the United States will eventually be able to muster the political will to solve the long-term debt and dilemma, without derailing the still very fragile economic growth.

Saudi Arabia and the United States share common needs: the need to increase employment, particularly among the young; the need to invest in the infrastructure, both human and physical; and finally both nations share the need to provide social safety nets at an effective cost. The global crisis is really a crisis of confidence. Investors and regulators have lost confidence in the banks. Citizens have lost confidence in their governments. Markets now fear that the sovereign debt in many parts of the world is becoming an issue. Clearly, a well functioning global financial system is at the heart of all of these issues. We are fortunate today to have three distinguished panelists who can guide us through the various issues confronting the global financial system.

Our first panelist is his Excellency Dr. Mohammad Al-Jasser, Governor of the Saudi Arabian Monetary Agency, SAMA. Dr. Al-Jasser was appointed SAMA’s governor in 2009, after having served nearly fifteen years as Vice Governor and Vice Chairman of the Board. In 2010, he was also named the first chairman of the Gulf Monetary Council, which is tasked with creating a united central bank and common currency for the Gulf Cooperation Council. Dr. Al-Jasser will provide us with the view of a central banker, and he will share with us his thoughts on the challenges that the global economy faces. Thank you.

[Dr. Mohammad Al-Jasser] [Greetings in Arabic] Thank you, very much.

It gives me great pleasure to be back at this august gathering of businesspeople from both countries – Saudi Arabia and the United States of America. It is a great pleasure to be here again.

I have been asked to share my views on shared responsibility for maintaining a stable global financial system. I would like to focus first on policy challenges, regulatory reforms, and the issues of the reserve currency, and to briefly touch on the challenge the Euro Zone poses at this moment. Finally, I will conclude with our experience in preserving financial stability in Saudi Arabia, or what I call, “safeguarding the home front.”

It is well known that the global financial system was shaped by the developed market economies in the post World War II period, at the time when emerging market economies were not that significant. The recent global credit crisis had its origins in the advanced economies, and consequently has affected the emerging market economies particularly as global leaders withdrew their funding in order to take care of their requirements at home.

Let me highlight macroeconomic policy challenges. The latest IMF Global Financial Stability Report states the risks to stability have grown for the first time since October 2008, so now we’re going into another crisis after 2008. Both the developed market economies and the emerging market economies have problems, but they are not the same, and the contrast is ultimately due to different levels of indebtedness and a different approach to counter-cyclical debt management.

H.E. Dr. Muhammad Al-Jasser, Governor, Saudi Arabian Monetary Agency

The developed market economies ran primary budget deficits during the boom years before the crisis, when they should have been paying down their debts. Their flawed macroeconomic policy was matched by lapses in financial regulation, with the so-called “light touch regulation.” This allowed banks to increase their leverage while an unregulated or lightly regulated shadow banking system mushroomed. Meanwhile, consumers were encouraged to take on excessive debt, particularly housing debt. The end result is that there are high levels of debt in the developed market economies, and many financial institutions have become vulnerable.

Meanwhile, significant expansionary policies, including liquidity support for banks, were put in place while credit ratings of developed market economies were being cut. However, the developed market economies need to shift away from short term and ad hoc measures to support markets and the economy, and move towards a long-term plan to reduce government debt to GDP and cut leverage in the financial system. Only in this way can fiscal sustainability be restored before the demographic wave of aging populations become a more serious fiscal challenge.

In emerging market economies by contrast, fiscal and monetary policies have been on the whole more prudent, but now the need is to prevent overheating of the financial system from damaging the real economy. Credit flows from the developed market economies have been, to say the least, a roller coaster ride for many emerging market economies over the last few years. In the MENA region, our region for example, commercial bank lending from the outside was about $144 billion in 2007, but by 2009, it was negative as funds were withdrawn. This year it is expected to be just about $3 billion.

The first stage in the roller coaster ride was when the crisis broke out. Global banks withdrew their credit lines for local banks in the emerging market economies, and this transmitted the crisis around the world. As emerging market economies tried to shield their growth from the contagion flowing from the developed market economies, one consequence was rapid credit growth. For example, Chinese credit growth was over 50 percent in 2009-2010.

In the second stage, bank lending and portfolio equity flows from the developed market economies flowed again into the emerging market economies as interest rates were cut to near zero in the major economies. So emerging market economies were coping with credit growth locally and flow from abroad that can overwhelm the capacity of local markets to absorb them. Authorities used quantitative measures to mop up excess liquidity through, for example, raising reserve requirements or capital controls of some kind. Now economic prospects have deteriorated in developed market economies once more, and banks and investors are withdrawing liquidity again. The result is that emerging market economy currencies are weakening – as in Brazil, and South Africa, and India – and emerging market economies’ stock markets were trending down.

The most important thing that the developed market economies can do to support the global financial system is to provide a stable fiscal and monetary environment, and prevent the violent shifts in global liquidity conditions that can overwhelm policymaking in the emerging market economies.

One final note or thought to leave with you, this crisis of 2008 and now would not be in vain if, for example, the Chinese rebalance internally their economy where domestic demand and consumption rise and savings decline, and the U.S. and Europe rebalance towards more fiscal prudence and higher saving rates, particularly in the United States.

Let me talk about regulatory reforms. The pre-crisis monetary stability was paradoxically the harbinger of financial instability as it encouraged banks to increase leverage and behave imprudently. Weak financial regulation in the major economies was in my view the single most important cause of the global financial crisis. The banks persuaded regulators that only a light touch approach was needed, and national regulators competed with each other in a race to the bottom in weak oversight to attract financial business. Regulation was in some places separated from the central bank, and the result was suboptimal.

Emerging market economies did not have the same problems, because by and large they kept to a conservative, unified form of regulation. Now, there is growing pressure from bankers and politicians in developed market economies to delay the implementation of Basel III, because they claim it will lead banks to reduce the supply of credit. But the Basel III requirements for more and higher quality capital and tighter liquidity rules are crucial to building a more robust global financial system and avoiding regulatory arbitrage, for example, ensuring a level playing field and a race to the top. Banks will try to minimize the impact on their profits by moving business to tax havens or less heavily regulated jurisdictions.

The Financial Stability Board, or the FSB, has a clear mandate to increase the international coordination among policymakers, financial regulators, supervisors, and standard setters. Central Bank cooperation and timely implementation of Basel III will test our shared responsibility for the international monetary system. Indeed, within Europe there is still debate about how much power Brussels should have, and how much should remain with the national regulators, such as the Bank of England. My own view is that it is better to have national central banks in charge of commercial bank regulation. Meanwhile, SAMA fully intends to implement Basel III requirements on schedule.

Let me say something about reserve currency issues. My third topic for discussion is the future of the reserve currency. After World War II, the international monetary system was built around a single currency, the dollar, or what was called the dollar standard. It does three jobs – any reserve currency has to do three jobs. One, acts as a pricing numeraire for commodities such as oil, facilitates payments, and also serves as a store of value due to the unequaled, unparalleled U.S. market depth, liquidity, and variety of assets. Those were the attributes that made the dollar the ultimate reserve currency. Some protagonists and commentators want to change the system. I agree that the international monetary system must evolve to accommodate more than one global reserve currency and numeraire, but this challenge is in my view not properly understood.

Let me start with a basic economic statement. The world needs a growing supply of liquidity to match the growth of the global economy and trade, because without it, the global price level would fall. That’s actually what happened with gold during the gold standard. This liquidity today comes from the U.S. current account deficit. Running a current account surplus as China, for instance, does means you don’t supply liquidity outside your economy – in fact, you build up foreign exchange reserves and withdraw liquidity. The benefit for the U.S. is that because of world demand for dollars it can run lower interest rates and a wider budget deficit than would otherwise be possible, and sometimes even prudent. In other words, the dollar has an exorbitant privilege. Giscard d’Estaing used that term in the ‘70s. But there is a duty attached to the reserve currency to go with that privilege – i.e. maintaining confidence in the reserve currency, in this case the dollar.

Lately, there have been calls to artificially expand liquidity through the SDR, or the Special Drawing Rights of the IMF to expand the list of reserve currencies. But the SDR is not a currency; it is an artificial reserve asset. At best, the SDR could be an add-on to reserve currencies. It does not intrinsically provide a store of value. Alternative currencies are not obvious, as neither Europe nor Japan run the large deficits required to supply extra liquidity to the international monetary system, and the Euro Zone is facing its own major crisis.

The best approach is not to force the pace of change on such a vital issue. Let the markets themselves decide on whether alternative reserve currencies are worth using and holding. This will encourage China to liberalize its external capital account, and will force U.S. policymakers to improve their policy mix for fear of losing the dollar’s privilege as the prime reserve currency.

On the Euro Zone. There is a brewing risk to the international monetary system as a result of the escalating sovereign debt crisis in Europe. One area of concern is the concept of zero risk weighting for sovereign debt, which is embedded in the banking system, for example for collateral. If banks started to risk weighed sovereign debt, they would have to hold more capital and raise borrowing costs for developed market economies’ sovereigns.

My second concern is that structure reform policies in the Euro Zone may not have time to work. Policymakers may force further austerity, and make the prospects of robust growth a more distant one. Bailouts of banks and sovereigns in Europe could draw on the IMF, but this would be difficult for emerging markets to accept given the wealth of Europe. The ECB is treading a fine line by supporting troubled banks by not buying large amounts of sovereign debt, and we must hope the crisis is satisfactorily resolved.

The markets are jittery, and the political machinations of agreeing what needs to be done is at a very, very sensitive stage. Everybody’s waiting for December 9th, and I wish them all the luck. Currently, the Euro Zone crisis is a headwind for the global economy, and so it needs to be resolved promptly to avoid contagion and growth stagnation. The ECB’s role is critical in the short run as austerity measures take time to work. The long run solution is to amend the European treaties to bind the members to ceilings on debt and borrowing, as was envisioned when the Euro was born.

Finally, the sovereign debt crisis in some of the Euro Zone countries is a wake up call for prudent fiscal management in all countries to avoid having to take emergency measures at a significant financial and social cost. The latest developments indicate that the scale of the crisis is bringing about cooperative measure to deal with it. The rate of interest in central banks’ dollar swap lines has been reduced by fifty basis points recently, and this should help ease the funding pressure for some Euro area banks. The ECB could step up its program of supporting bond markets if the prospects for sorting out the fiscal problem improves. This is all encouraging, but there are still lingering concerns in terms of adequacy of the EFSF resources, policy implementation, and short-term growth prospects in the Euro Zone due to fiscal austerity and the high cost of debt servicing.

Let me brief you on our – Saudi Arabia – on our fiscal focus and approach to financial stability. We have for many years perused a counter-cyclical approach, i.e. paying down our government debt during the upswing of the cycle, and in our case the upswing cycle is higher oil revenues be it through prices or quantities, or both, and running budget deficits during the downswings in order to cushion the economy so it does not go into a tailspin as when oil prices sometimes do.

For example, between 1999 and 2007, government revenue mostly from oil rose from 30 of GDP to 70 of GDP, but government spending stayed at around 30-35 percent level. We use the upswing to run budget surpluses and prudently reduce our government debt to GDP from 100 percent to around seven percent now, and at the same time replenish our foreign exchange reserves. The result was that we were able to shirk the global recession of 2008-2009, and briefly run a budget deficit in 2009.

As for our regulatory framework, SAMA acts both as the central bank and commercial bank regulator. This gives us a better oversight over all aspects of the banking system. In fact, our policy of monetary tightening through policy rates, reserve requirements, and macro-prudential guidelines for bank credit during the period of 2005 until the emergence of the global crisis was very helpful in restraining the pace of credit growth. In the period leading up to the crisis working together with our banks, we made sure that they had minimal exposure to credit derivatives and maintained adequate loan loss reserves. The result was that when the crisis struck, and global banks withdrew their credit lines, the Saudi banking system proved to be fairly resilient.

It is quite obvious now that in a complex financial system it is rather unrealistic to expect that only one specific measure, such as risk-weighted capital ratio, could detect any risk of financial fragility. It is therefore imperative to broaden the scope of risk detectors through macro-prudential rules, for example, credit to GDP ratios, loan to value ratios, dynamic provisioning, etcetera.

Our approach to banking regulation seeks to apply counter-cyclical micro and macro prudential measures, and requiring the banking system to hold more capital on average will not improve the resilience of the financial system as a whole unless there is also a better match of risk taking to risk capacity. Our banking sector is the least leveraged in the region, and we are not complacent about the resiliency of our system. Indeed, we are very much in favor of conducting periodic stress tests to insure that they remain in good health. In short, our priorities are to maintain the Dollar-Riyal exchange rate stability, closely monitor credit growth, and insure that the banking system grows in tandem with nominal GDP.

We are well aware that we are not immune to global developments, as there will always be indirect impact and contagion winds. Of course, it goes without saying that Saudi oil policy has contributed immeasurably to global economic stability. Keeping a comfortable oil production spare capacity has dampened instability in oil as well as financial markets.

Let me conclude. It is in the interest of both developed market economies and emerging market economies to safeguard the openness of the global financial system. It has supported a huge wave of global growth and prosperity in the last 30 years. Indeed, much progress has been made in international cooperation since 2007. For instance, the IMF has set up more flexible loan facilities with less conditionality for economies in need. Central banks have also implemented swap lines. The Financial Stability Board has made much progress in a framework for regulating the systemically important financial institutions, SIFIs or GSIFIs as they are called these days.

The developed market economies bear a heavy burden to move away from their history of free floating their economies through debt and ad hoc measures. They need to reflect upon the lessons of the crisis and follow long-term policies consistent with financial stability. The policy shifts in the developed market economies, especially through quantitative easing and zero interest rates, have led to large shifts in global liquidity conditions, and have placed great stress in emerging market economies.

Government finances in developed market economies have been unbalanced for many years. Keynes would have been horrified to think that his vision of using government spending to stimulate the economy out of the 1930s type depression would lead to permanent budget deficits and debt to GDP levels that ran up in good years as well as bad until they have reach unsustainable heights. Keynes’ thought that a budget deficit in one year would be balanced by a surplus in another year so that debt to GDP level stayed stable over time. That is the counter-cyclical policy for the long run that Saudi Arabia has been following. The political pressure on policymakers has prevented this happening in developed market economies. There are still many commentators who push for even more deficit spending to restore growth, but for global stability it is more important that developed market economies convince the markets they have a long-term plan to fix their finances.

That is the single biggest contribution they can make to preserving the stability of the global financial system. Failures of banking regulations were at the heart of the crisis. Micro-prudential regulation needs to be augmented with macro-prudential measures to protect financial institutions from systemic risks. Crisis may not be avoided, but they could be fewer and milder through better regulation.

Thank you very much for your attention.

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H.E. Dr. Muhammad Al-Jasser, Governor, Saudi Arabian Monetary Agency

H.E. Dr. Muhammad Sulaiman Al-Jasser

[Note: Dr. Al-Jasser was announced as the new Minister of Economy and Planning on December 13, 2011.]

BIO FROM US-SAUDI BUSINESS OPPORTUNITY FORUM [Dec 5-7]:

Dr. Muhammad Sulaiman Al-Jasser was appointed Governor of the Saudi Arabian Monetary Agency (SAMA) in February 2009. He joined SAMA as Vice Governor in 1995. His previous positions included Acting Deputy Minister of Finance for Budget and Organization as well as Executive Director for Saudi Arabia at the International Monetary Fund.

Dr. Al-Jasser was awarded the King Abdulaziz Medal of the First Order. He also received the Euromoney (Emerging Markets) Award for Central Bank Governor MENA Region for the Year 2009, Arab Bankers Association of North America (ABANA) Achievement Award for 2010, and the ‘The Banker’ Award Central Bank Governor of the Year for the Middle East for 2011

Dr. Al-Jasser has been and is still involved as Chairman and Member of the Board/Council in various organizations and projects. They include the GCC Monetary Council, the Supreme Economic Council, the Public Investment Fund, the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets, the Plenary of the Financial Stability Board for Saudi Arabia, the Governing Body of the Basel Committee on Banking Supervision, the Council of the Islamic Financial Services, the Higher Committee of King Saud University Endowment, the Fund for Supporting Research and Educational Programs at King Fahd University of Petroleum and Minerals, Saudi Telecom Company, the Centennial Fund, the Saudi Arabian Negotiation Team on the Accession of Saudi Arabia to the World Trade Organization, The Arab Investment Company, the Saudi Arabian Mining Company, the “Technical Saudi Negotiating Team” for negotiations with “International Oil Companies,” the Saudi Public Pension Agency, Saudi Arabian Airlines, the Eisenhower Fellowships Nominating Committee for Saudi Arabia, and the Consultative Council of Islamic Corporation for the Development of the Private Sector. In addition, Dr. Al-Jasser served as Alternate Governor for the Islamic Development Bank, the International Monetary Fund, and the World Bank Group.

Dr. Al-Jasser received his Bachelor of Arts in Economics with honors from San Diego State University in 1979, his Master of Arts in Economics from the University of California in 1981, and his PhD in Economics from the University of California in 1986.

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Related Material:

• US-Saudi Business Opportunities Forum – Atlanta 2011 – SUSRIS Special Section
• US-Saudi Business Opportunities Forum – Chicago 2010 – SUSRIS Special Section
• US-Saudi Business Opportunities Forum – Chicago 2010 – SUSRIStube Videos
• The “Robust” Saudi Banking Sector: A Conversation with Khaled AlKhattaf – SUSRIS – Oct 20, 2011
• Saudi Central Bank Chief Interview – CNN/SUSRIStube – Feb 11, 2010
• Boosting Small and Medium Enterprises in Saudi Arabia – SUSRIS – Dec 4, 2010
• U.S.-Saudi Relations – Muhammad Al-Jasser (CIT/NAF Forum) – May 15, 2009

Editor’s Note:

The Jadwa Investment firm in Riyadh produces the “Saudi Chartbook” as a quick, chart-based briefing on the key developments and trends in the Saudi economy and stock market for the previous month. SUSRIS is pleased to provide the January 2012 Saudi Chartbook and a link to the complete report which is rich with illuminating charts and graphs.  We also commend to your attention the recently published “Saudi Economy in 2012” by Jadwa which provides an excellent survey of the overall economic and financial picture in the Kingdom.  Other reports are included among links below. SUSRIS thanks Jadwa Investment’s Chief Economist, Brad Bourland, and Head of Research, Paul Gamble, for providing these insightful products for your consideration.

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[Complete report with charts, graphs and tables at this link.]

Summary

Real economy: New data indicate that the economy slowed in November, in line with the norm around Eid al-Adha. In year-on-year terms growth remained strong, though consumer spending probably grew at its lowest rate since the bonus for public-sector workers.

Money supply: Money supply growth dipped in November. Total deposits continued to grow, with demand deposits accounting for an increasing share of the deposit base.

Banking indicators: Growth in bank lending to the private sector slowed in November, though in year-on-year terms it was at its highest since April 2009. With excess deposits large, there is plenty of scope for more lending. Higher lending has contributed to healthy growth in bank profits.

Inflation: Inflation was unchanged in November. A sharp slowdown in the prices of “other expenses and services” offset higher inflation across most other components of the cost of living index, though rental inflation stabilized after five successive months of increases.

Trade: Non-oil exports rose to an all-time high in October, with both petrochemicals and plastics hitting records. As imports also rose, the non-oil trade deficit worsened. The sustained growth in non-oil exports in recent years has not dented the non-oil trade balance.

Oil: Oil prices have jumped over the past few weeks owing to rising international tensions with Iran. New sanctions have been put in place and the EU is planning a ban on Iranian exports.

Click here for the original report with charts and graphs.

Exchange rates: The fall in the euro has picked up pace as concerns continue to mount about the region’s economy at the same time as data show that the US economy is strengthening.

Stock market: Rising oil prices, gains on global markets, an expansionary budget and expectations for solid fourth quarter earnings caused the TASI to post its the second best monthly performance for 2011 in December.

Sectoral performance: In a repeat of last year’s pattern, all 15 sectors posted positive gains in December. Among the best performers were sectors which should benefit from the high level of government spending announced in the budget.

Volumes: Volumes picked up in 2011 with turnover higher in every month compared to 2010.

Valuation: The price-to-earnings ratio of the TASI fell during 2011, but still looks fairly high compared to many other marke of the cost of living index rose, with rental inflation up for the fifth consecutive month.

[Complete report with charts, graphs and tables at this link.]

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About Jadwa Investment – Jadwa Investment is a Saudi Closed Joint Stock company operating under the supervision of the Saudi Arabian Capital Markets Authority (CMA). Under the CMA decision published on August 21, 2006, Jadwa was awarded a license to offer all types of investment services including dealing, managing, custody, arranging and advising. All investment services offered by Jadwa Investment are supervised by a Shariah Supervisory Board and are fully Shariah-compliant.

SUSRIS Reports on Economic Issues:

• The Saudi Economy in 2012 – SUSRIS – Dec 31, 2011
• US-SAUDI BUSINESS OPPORTUNITY FORUM SPECIAL SECTION – SUSRIS
• SUSRISTUBE CHANNEL – YouTube
• SUSRIS CHANNEL – Slide Share
• Saudi Arabia Inflation Report – October 2011 – Jadwa – SUSRIS – Dec 21, 2011
• Saudi Economy: Jadwa December 2011 Chartbook – SUSRIS – Dec 3, 2011
• Saudi Arabia Inflation Report – October 2011 – Jadwa – SUSRIS – Nov 22, 2011
• Monthly Bulletin – November 2011 – Jadwa Investment – SUSRIS – Nov 3, 2011
• Saudi Stock Market Listed Companies’ Foreign Earnings – SUSRIS – Nov 2, 2011
• Saudi Economy: Jadwa November 2011 Chartbook – SUSRIS – Nov 1, 2011
• Saudi Arabia Inflation Report – September 2011 – Jadwa – SUSRIS – Oct 20, 2011
• The “Robust” Saudi Banking Sector: A Conversation with Khaled AlKhattaf – SBRIS – Oct 20 2011
• Economic Projections – Jadwa – SUSRIS – Oct 16, 2011
• Saudi Arabia Inflation Report – August 2011 – Jadwa – SUSRIS – Sep 17, 2011
• Saudi Arabia: Continuing Prosperity – Prince Turki Al-Faisal – SUSRIS – Sep 12, 2011
• September Chartbook – Jadwa – SUSRIS – Sep 9, 2011
• Key Economic Developments – Jadwa – SUSRIS – Sep 3, 2011
• Monthly Bulletin – August 2011 – Jadwa – SUSRIS – Aug 24, 2011
• Saudi Arabia Inflation Report – July 2011 – Jadwa – SUSRIS – Aug 22, 2011
• Inflation Report – Second Quarter 2011 – Saudi Arabian Monetary Agency
• Saudi Economic Trends – Jadwa Chartbook – August 13, 2011
• Debt, Downgrade and Saudi Arabia – Jadwa – August 9, 2011
• The Saudi Stock Market and Ramadan – July 23, 2011
• Saudi Arabia Inflation Report – Jadwa – July 21, 2011
• Saudi Arabia Economics – June 2011 – BSF – July 21, 2011
• Saudi Economic Trends – Jadwa Chartbook – July 20, 2011
• Short Term Inflation Spike – SUSRIS – Jul 16, 2011
• Energy, Consumption Lift Saudi Q3 Business Confidence – Sfakianakis – SUSRIS – June 28, 2011
• Saudi Arabia Economics – SUSRIS – June 21, 2011
• Saudi Arabia Economics – SUSRIS – May20, 2011
• Real Estate Saudi Arabia – SUSRIS – May 12, 2011
• Saudi Arabia Monetary Indicators – April 2011 – SUSRIS – Apr 28, 2011
• Business Confidence Rides on $100 Plus Oil – SUSRIS – March 2011
• Economics Quarterly: To Spend or Not to Spend? – SUSRIS – March 2011
• Monthly Monetary Indicators – SUSRIS – March 2011
• Reaching Out Again: Financial Support Analyzed – BSF – Mar 23,2011
• Royal decrees, regional unrest and the economy – Jadwa – SUSRIS – Mar 23, 2011
• Saudi Arabia Economics – BSF – Mar 22, 2011
• Monthly Monetary Indicators – March 2011
• Emerging Markets: What is next for Saudi Arabia? – March 2011
• Employment Quandary: Urgency for Reform – SUSRIS – February 2011
• Saudi Arabia Monetary Indicators – SUSRIS – February 2011
• Uprising in Egypt and Financial Volatility – SUSRIS – January 31
• Saudi Arabia Economics – SUSRIS – January 2011
• Saudi Business Leaders Bullish in 2011, BSF Confidence Index Show- SUSRIS
• Why Are Economists Bullish on Saudi Arabia’s 2011 Economic Prospects – SUSRIS
• Saudi Arabia Monetary Indicators – January 2011 – SUSRIS
• Ready to Roll: 2011 Saudi Budget: Sfakianakis – SUSRIS – Dec 21, 2010
• Saudi 2011 Budget Reflects Solid Economy – SUSRISblog – Dec, 21, 2010
• Saudi Arabia Monetary Indicators – December 2010
• Saudi Arabia Economics – December 2010 – SUSRIS – Dec 7, 2010
• Saudi Monetary Indicators – November 2010 – SUSRIS – Nov 12, 2010
• Saudi Arabia Business Confidence Index – 2010Q4 – SUSRIS – Oct 19, 2010
• Saudi Arabia Economics – BSF – October 2010 – SUSRIS – Oct 11, 2010
• Jadwa Monthly Economic Bulletin – September 2010 – SUSRIS – Oct 9, 2010
• Saudi Monthly Monetary Indicators from BSF 10-06-10 – SUSRIS – Oct 7, 2010
• Saudi Monetary Indicators for August 2010 – SUSRIS – Sep 1, 2010
• Saudi Arabia Economics – August 2010 – SUSRIS – Aug 22, 2010
• August Bulletin – Jadwa Investment – SUSRIS – Aug 10, 2010
• Saudi Economic Trends – Jadwa Chartbook – August 2010 – SUSRIS – Jul 31, 2010
• Saudi Monetary Indicators for July 2010 – SUSRIS – Jul 7, 2010
• Saudi Monetary Indicators for June 2010 – SUSRIS – Jun 30, 2010
• Saudi Economic Trends – Jadwa Chartbook – June 2010 – SUSRIS – Jun 1, 2010
• Euro crisis and its impact on Saudi Arabia – Jadwa – SUSRIS – May 29, 2010
• Saudi Arabia Economics – May 2010 – SUSRIS – May 25, 2010
• Saudi Monetary Indicators for April 2010 – SUSRIS – May 25, 2010
• Vulnerability to European “Shockwaves” – Sfakianakis – SUSRIS – May 17, 2010
• Jadwa Investment May 2010 Bulletin – SUSRIS – May 17, 2010
• Greek Debt Crisis and the Kingdom – SUSRIS – May 11, 2010
• Jadwa Investment April 2010 Bulletin – SUSRIS – Apr 28, 2010
• U.S. Exports to Arab World Rebounding – SUSRIS – Apr 16, 2010
• Saudi Economic Trends – Jadwa Chartbook – April 2010
• Saudi Stock Market Report – Jadwa Investment – SUSRIS IOI – Mar 21, 2010
• Jadwa Chartbook – March 2010
• Jadwa Chartbook – February 2010

Editor’s Note:

US-Saudi Business Opportunities Forum (Dec 5-7, 2011, Atlanta)

The recently concluded US-Saudi Business Opportunities Forum (Dec 5-7, Atlanta) featured an extremely rich assembly of senior government officials, business people and more. Among those who participated form the Kingdom were three serving ministers in the Government plus the Governor of SAMA, the central bank and dozens of other senior officials — all who provided the most complete and authoritative reviews of their respective areas of responsibility in keynote remarks and panel discussions. The Saudi delegation also included among the leadership HH Prince Faisal Bin Abdullah Al-Saud, Minister of Education who provided an overview of the Kingdom’s education efforts in the first plenary session. Saudi Arabia, as Commerce Minister Alireza told the Forum, is “a knowledge-based economy, [where] what you earn depends on what you learn. The real wealth of any nation is its people. And Saudi Arabia is proud to be investing in this asset.” Today we are pleased to bring you the remarks of Minister of Education, Prince Faisal, with his introduction by moderator Steve Clemons, of the New America Foundation. We have included the video recording of his presentation and suggest you visit the SUSRIS Special Section for more transcripts, reports, slide presentations, videos, and bios from the Forum.  The Forum was sponsored by the Saudi Arabian Ministry of Commerce and Industry and organized by the: Committee for International Trade (CIT); the US-Saudi Arabian Business Council; and the Saudi-US Trade Group (SUSTG).

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[Steve Clemons] Good to be with all of you. I’m Steve Clemons. I am, as noted, with the New America Foundation, but more recently I’ve become editor at large of the Atlantic Monthly magazine. I hope all of you are subscribers.

I am here not only because this is a fantastic forum that I was so pleased to attend last time, but many years ago I met Minister Abdullah Alireza. I didn’t know he was such an important guy actually. He stopped by the New America Foundation. It had been a hot, sweaty day in D.C. – sleeves were rolled up – and we pounded out some ideas. ["US-Saudi Relations in a World Without Equilibrium"]  We had a very honest and interesting exchange. And I think it’s nice to meet people and to become friends and associates without titles and without formalities. I hope we achieve some of that today, although we have an alarmingly distinguished group of people up here.

One of the things that I am very pleased about in this conference is that we’re opening the session by discussing education. It doesn’t happen often enough in our country. Perhaps it happens more in Saudi Arabia.

US-Saudi Business Opportunity Forum - Education Panel. (L-R) Steve Clemons, Minister of Education Prince Faisal, US Deputy Education Secretary Anthony Miller.

Last evening, I had to miss the speakers’ dinner at the World of Coca Cola and the fantastic dinner I heard all of you had. I was hosting and moderating a dinner in Charlotte with the President of the College Board, the former Governor of West Virginia, Gaston Caperton. We had with us the Chancellor of the University of North Carolina at Chapel Hill. Earlier in the day he had been with President Obama and Secretary of Education Arne Duncan in the White House talking about the costs of higher education in the United States. Yesterday evening’s dinner with about twenty people really captured a microcosm, at least in the U.S. case, of the broad backbone of everything from K-12 throughout the educational sector. It also included people from the Chamber of Commerce and the head of the Restaurant Association, folks in different sectors looking at this question. What is the ecosystem that we have in terms of replenishing our youth or creating continuing education opportunities? I have to tell you that while this dinner was great in the diversity of views that were presented, it was a depressing evening. What you saw is that people at different levels cancelled each other out. The conversation on education is one that’s very complex, no silver bullets.

I think we’re going to try to get at some of that, in the Saudi case as well. One of the reasons I think that it’s so important to share best practices and talk about what’s going on across national boundaries, look for other models and examples. That’s a cooperative way to look at education. Because one of the nasty truths about education in the world today is that it’s also becoming a highly tuned in, competitive issue. We’re beginning to see it in particularly China where I’ve just returned from. I’ve been watching in an industrial zone the phenomenal management of educational development, continuing education of hundreds of thousands of workers around one industrial zone. And when I look at that and compare that to, say, what might be going on in New Mexico or Kansas — perhaps Georgia has it figured out — but I have to tell you it’s very, very impressive. An education and the skill sets that a country can bring to bear on its challenges are part of the basic competitiveness of countries today.

We have a fantastic panel to help take us into this terrain, and we’re going to offer each about ten to twelve minutes. I will be friendly, but there will be a hook that comes out if folks go on much longer – we may give you a couple more minutes [refers to Prince Faisal], we’ll see. But with us we have Prince Faisal bin Abdullah al Saud, the Minister of Education of Saudi Arabia, the Honorable Anthony Miller, the Deputy Secretary of Education – so good to have him with us here today. Khaled al Sabti, the Vice Minister of the Ministry of Education. It’s great, we were on the panel two years ago, so good to have you back. General James Smith, as mentioned, our Ambassador to Saudi Arabia, and Jeff Barnes, who heads global leadership development for GE. So, Your Highness, it is your turn.

H.H. Prince Faisal Bin Abdullah Al-Saud, Minister of Education

[Prince Faisal Bin Abdullah Al-Saud] [Greeting in Arabic] Excellencies, honorable guest, ladies and gentleman: good morning, and happy holidays to you.

I’m pleased to be with you today as part of the U.S.-Saudi Business Opportunities Forum. Since the permanent establishment of Saudi Arabia in 1932, the United States has always been a trusted development partner, and we take special pride in celebrating the extraordinary achievements that benefit the people of both countries.

Saudi Arabia is committed to strengthen these ties even further as we move together to seize new opportunities ahead of us. I’m confident that the positive outcomes of this forum will contribute significantly to our shared understanding of these opportunities.

Saudi Arabia is strongly committed to fulfill its national, regional, and international obligations. We are an integral part of this world, and we are strongly oriented towards peace, stability, and international well-being. Our country is at the very heart of the Islamic and Arab world, a role that has been filled with wisdom, moderation, and responsibility. It’s home to Islam’s two Holy Cities of Mecca and Medina. Five times a day more than 1.5 billion people turn to Mecca to offer their prayers. We’re honored to shoulder the responsibility of serving as custodian of these holy places.

At many international platforms, Saudi Arabia has been a strong advocate of peace and stability, which have always been a prerequisites to trade. Saudi Arabia has spearheaded the effort at the United Nations to establish the Center for Counterterrorism aiming to address the root cause of violence globally and to share best practices for dealing with it. Recently, we also worked with many partners to establish King Abdullah bin Abdulaziz International Center for Interfaith and Intercultural Dialogue in Vienna to bring world religions closer to each other. In addition, King Abdullah has funded the “Messengers of Peace” program, which was established by the World Scout Foundation to promote peace globally. We are a nation of peace, and have never spared any effort to work with our partners to promote it on our planet.

Under the vision and the leadership of King Abdullah our country has pursued pro-trade policies and has aspired to become an investor-friendly country. Today, we are one of the leaders in the region for the penetration and the use of broadband networking technologies and in parallel to these investments we have introduced major regulatory reforms to promote private sector participation in the economy. We’re already seeing increased dividends to our policies as illustrated by the number of foreign investors and the leading international companies making the Kingdom their destination.

For these investments to achieve their development objectives, we understand that it is imperative to invest in human capital. Our youth represent the most sustainable resource for the development of the country, providing us with long-term returns, even when the natural resource of oil is depleted. Their creativity, talent, and innovation are what will strengthen and sustain our nation’s competitiveness and consistent advancement.

Speaking of the critical importance of education for the development of the United States. in the 1960s, President Kennedy said, “Our progress as a nation can be no swifter than our progress in education. The human mind is our fundamental resource.” Nowhere is this statement truer perhaps than it is in Saudi Arabia today. The human mind is indeed our fundamental resource that will be developed through a solid, modern, and efficient education system.

Ladies and gentlemen.

Our education development journey is a special example in the Middle East and North Africa. In 1932 when King Abdulaziz unified our country, there were very few schools in the country, serving a very limited number of Saudi youth. Today, there are over 33,000 schools serving close to five million students, or almost one third of the total population of the country.

Taught by close to a half a million teachers, the growth rate of the last 40 years has been remarkable. The number of students, schools, and teachers doubled every ten years, providing equal access opportunities for both male and female throughout the country.

To keep up with the growing enrollment, our K-12 and higher education budget has grown very rapidly. In 2011 alone, it has tripled to reach $40 billion, or 26 percent of our national budget this year. We are confident that the return on our investment will be very high for our country as a whole, as it will make it more competitive on a global scale.

In its 2010 report entitled “The Real Wealth of Nations: Pathway to Human Development,” the United Nations Development Program ranked Saudi Arabia among the top ten achievers in the world in the health and education over the last 40 years. Under the vision and the leadership of the Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz, our country has launched one of the largest human capital development efforts in history.

At the higher education level, we have launched many initiatives. They have included establishment of many universities led by King Abdullah’s University of Science and Technology, a world class, co-educational university to develop the next generation of scientists and leaders from Muslim and non-Muslim countries. Muslim scholars of the Middle Ages played a major role in the advancement of science in the world as we know it today. We hope that Dar al Hekma, meaning the House of Wisdom as King Abdullah named it, will be the hub for scientific revival.

In the same direction we recently established Princess Nora University — the world’s largest female university — to encourage women’s education in the Kingdom. In addition, our country has launched one of the largest study abroad scholarship programs, allowing more than one hundred thirty-thousand of our female and male students to study at some of the best universities in the world. That includes many top-ranked universities here in the United States, which has received more than 50,000 students.

In the K-12 system that I am honored to lead, the Ministry of Education has embarked on a unique journey to improve the quality of its service. What sets us apart from other education improvement efforts is not just the content of the reform, but also the approach we are adopting to implement it.

A set of strategic directions guided our effort. First, restructuring the education system to make it an active, decentralized, and innovative system.

Second, setting up an innovative arrangement to spearhead our development effort. Thus, we launched King Abdullah bin Abdulaziz Public Education Development Project, “Tatweer,” with $2.4 billion to lead the reform. We also established a government-owned company, the Tatweer Holding Company to implement the reform. It also facilitates building an educational business cluster with the cooperation of local and international partners aiming to bring added value and sustainability to our investment through public-private partnership. We are already in the process of establishing a few subsidiaries for core and non-core education service. The goal of the Tatweer Holding Company is not to compete with the private sector, but to serve as a catalyst for its emergence and growth. Moreover, we are establishing an independent regulator to set world-class standards for both public and private schools, and to evaluate the system as a whole and its main elements such as students, teachers, schools, and curriculum.

Ladies and gentlemen.

This year we have worked with a U.S. firm to develop a long-term strategy to guide our reform. That strategy adopted a systematic approach to improvement, that helps us move away from isolated interventions to a more holistic approach to reform. My colleague, Dr. Khaled Sabti, our vice minister, will speak in more detail about our new education strategy. However, I wish to highlight a few initiatives to illustrate the depth and breadth of our effort. We have launched a major initiative to strengthen the place of STEM — science, technology, engineering, and mathematics — in our education system. We are fully convinced that our ability to compete in an increasingly globalized world depends on our effort to expand the pool of scientists, mathematicians, and engineers, who will be the source of innovation in our economy. As a first step, we have aligned our STEM standards to the standard of the best performing education system in the world, by working with our partner McGraw-Hill to develop a world-class math and science curriculum.

Further, we have launched a major professional development program to train our teachers on the new curriculum. In addition, we are establishing science centers throughout the country building, through public-private partnership, these centers will provide our students, their teachers, and the community at large with a space where they can experience science and innovation.

As you can see, we are going beyond the walls of our schools to leverage the support and commitment of our private and community partners to make our development effort a success.

Starting this year, we have also introduced English in the fourth grade. In an increasingly globalized world that uses English as a language of science, technology, and business, we are committed to giving all our students the capabilities they need to communicate in this very important language. Together with STEM and English, we are expanding access to early childhood education at an unprecedented rate. This is an initiative that is very close to King Abdullah’s heart, who has fully supported since its launch. Last year, we opened one pre-school a day on average. Our target for this year is 2.7 a day. We are committed to providing all our children with a successful early start.

Ladies and gentlemen.

Change of this depth and breadth cannot be dictated solely from the top. No two schools are exactly alike, and therefore, no two schools can be subjected to the exact same development recipe. Only by putting each and every school in the driver’s seat with respect to their own development can we create the enabling conditions to help every boy and girl in the Kingdom succeed.

This is the core of the new vision of our education system of the future, increasing the autonomy of schools and districts, and transforming them into learning organizations. It is in this spirit that we have launched a major initiative to build the capacity of schools and districts to assume their own development role.

As you can see, our reform efforts to transform our current education system seek to serve an emerging, knowledge economy. They do not stop with improving curricula, introducing technologies or investing in teaching training. Critical as they are, they are also accompanied by transformation in the overall government structure of our educational system. The resources and development energy focuses on matters, namely student learning.

Educational change is a long, challenging, and delicate process. It takes vision, determination, hope, and positive attitude. With the vision, leadership and commitment of King Abdullah, however, we have been able to address our reform challenges with a lot of courage and confidence.

Recently, King Abdullah announced that women will participate in the Municipal election and will be members of the Shura Council in the coming term in 2013. This is part of the social infrastructure development, an adaptation of maturity model for opening new space for women to participate in the socio-economic development of their country. It is this vision of inclusion and openness that gives me confidence we will succeed in our journey to transform our education system into a world-class system.

Over the years, Saudi Arabia has benefitted greatly from many U.S. educational models, which have been implemented successfully in the country. We must build on this relationship to advance our objectives of trade, partnership, and shared progress.

Thank you.

[Remarks as delivered. Transcription by SUSRIS.com]

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H.H. Prince Faisal Bin Abdullah Al-Saud
Minister of Education of the Kingdom of Saudi Arabia

H.H. Prince Faisal Bin Abdullah Al-Saud, Minister of Education, was born in Riyadh. He received a bachelor’s degree in business administration from Menlo College and a master’s degree in industrial engineering from Stanford University. Prince Faisal was appointed Minister in February 2009. Prior to his appointment, he worked in the Research and Industrial Development Center at the Ministry of Commerce from 1971-1973, was the Undersecretary for the National Guard’s Western Sector 1992-2003, and was the Deputy Chief of General Intelligence from 2003-2009.

Source: US-Saudi Business Forum

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Related Material:

• US-Saudi Business Opportunities Forum – SUSRIS Special Section
• Business Forum – Reimagining Relationship Challenges: A Conversation with Steve Clemons

Editor’s Note:

The 6th Annual Global Competitiveness Forum (GCF) organized by the Saudi Arabian General Investment Authority (SAGIA) is set to open in Riyadh later this month. This year’s Forum, titled “The Entrepreneurship Imperative,” will touch on all forms of entrepreneurship, according to the GCF Web site, “from social entrepreneurship to government; corporate and intrapreneruship to the importance of failure, the value of risk as well as the anatomy of an entrepreneur, amongst many more.” Among the speakers are Prince Faisal bin Abdullah, Minister of Education and Prince Turki Al-Faisal, Chairman of the King Faisal Center for Research and Islamic Studies. Today we bring you the Forum announcement provided by SAGIA.

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Business, NGO Leaders to Focus on Entrepreneurship at Global Meet - Sixth edition of Global Competitiveness Forum in Riyadh will feature speakers from diverse economic and social sectors

Riyadh, Saudi Arabia, January 2, 2012 –(PR.com)– Hundreds of business and NGO leaders, intellectuals and media persons will converge in Riyadh, Saudi Arabia, from January 21 to 24 to participate in the Sixth Global Competitiveness Forum (GCF). The event is expected to offer insight on the continuing economic and financial problems affecting the world as well as positive ideas to address the most pressing global challenges.

GCF 2012 is hosted by the Saudi Arabian General Investment Authority (SAGIA), which oversees the foreign direct investment (FDI) flow into Saudi Arabia. Every year, the event addresses the concept of competitiveness from diverse perspectives presented by the keynote speakers and panel sessions attended by leaders and experts in various fields. GCF 2012 takes place just before the annual World Economic Forum in Davos, and is expected to provide a foretaste of the economic discussions in the Swiss town.

The event’s key theme is “The Entrepreneurship Imperative.” The speakers’ list for GCF 2012 consists of over 100 business leaders representing diverse sectors such as the Government, NGOs, Education and Training, Arts, Media and Advertising, Information Technology, Entrepreneurship, Finance Consultancy, and industries such as Aviation, Chemicals, Electricals and Automobiles.

Saudi Arabian leaders and Government ministers attending GCF 2012 as speakers and panelists include Prince Turki Al Faisal, Chairman of King Faisal Center for Research and Islamic Studies, Prince Faisal Bin Abdulla, Minister of Education, and Adel Fakih, Minister of labor.

Canada’s former Prime Minister Jean Chretien, South Korea’s former prime minister, Chung un-chan will also address the Forum.

One of the interesting highlights of GCF 2012 is the dominance of NGO leaders in the speakers’ list. The non-profit organizations make up the largest single bloc of speakers at the GCF. Different panel sessions will explore the main theme from different angles. One session titled “Generation C-Click, connect, communicate, collaborate” will discuss the future of digital connectivity and dependence on the virtual world in conducting business. A second session titled “The anatomy of an entrepreneur” explores the evolution of entrepreneurship and how entrepreneurs continue to change their business practices over the years. One of the sessions titled “Artrepreneurship” looks at Art as an industry that creates business opportunities, generates profit and creates jobs.

The SAGIA event is taking place at a time when there is strong global interest in investing in Saudi Arabia, which has been hailed as the most stable of regional economies that offers tremendous growth opportunities. The Saudi Arabian economy has been unaffected by the political turmoil that has swept across the Middle East. According to latest Business Monitor International (BMI) report, new investments in 2012 are expected to result in 10 percent annual growth.

The GCF 2012 will be the first major global gathering of business leaders from around the world. Mr. Abdulla Uzaib, the CEO of GCF, says: “The GCF is a platform where opinions and ideas from around the world converge. We will hear insights from business leaders, NGOs and thinkers not only about our key theme of entrepreneurship, but also about the major economic and social challenges the world is facing now.”

The Forum is also a major networking event for participants from around the world and Saudi and regional businesses. There is considerable emphasis on startups and medium businesses, as they are the most promising sectors in the fast growing Saudi economy, especially in terms of creating new jobs.

The GCF 2012 also consists of major sessions dedicated to youth and business start-ups. Many of the businessmen and businesswomen in the country are of young age, they are the driving force behind the Small and Medium Business sector.

SAGIA has several ongoing initiatives that encourage competitiveness and growth, with considerable focus on the youth. These include the Saudi Fast growth 100 (SFG100), Most competitive Youth, and Saudi Responsible Competitiveness Index.

Source: PR.com

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About SAGIA

SAGIA, the Saudi Arabian General Investment Authority, was established in 2000 as part of the new foreign investment law in Saudi Arabia. SAGIA supervises the attraction of foreign investment into the country, and manages Saudi Arabia’s competitiveness agenda in an effort to improve the country’s business environment. As a result of the efforts of SAGIA’s National Competitiveness Council, and the Saudi Government as a whole, Saudi Arabia is now considered the 8th largest recipient of FDI with inflows of 35 Billion USD in 2009, 11th Easiest Place to Do Business according to the World Bank-IFC’s Doing Business Report, and the 21st most competitive country in the world according to the World Economic Forum’s Global Competitiveness Index.

For more information, please contact:
SAGIA – May Bin Dayel – mad@sagia.gov.sa
Alef International: Ibtihal AlSamaraie – Ibtihal.alsamarie@alefinternational.com

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Related Items:

• Global Competitiveness Forum
• Global Competitiveness Forum Video

Editor’s Note:

The recent “Gulf and the Globe” conference in Riyadh featured top level Saudi and other GCC officials who addressed regional security issues in a global context.   The forum which was held December 4-5, 2011, was jointly organized by the Institute of Diplomatic Studies (IDS) and the Gulf Research Center (GRC).  Prince Turki Al-Faisal, Chairman of the King Faisal Center for Research and Islamic Studies and a former ambassador to the U.S., made headlines with remarks at the conference regarding acquisition of Weapons of Mass Destruction (WMDs).  Prince Turki is not a member of the government but his frequent speeches and comments on foreign affairs are often interpreted as reflecting inside thinking:

“Why shouldn’t we commence the building of a unified military force, with a clear chain of command? We are committed to the Middle East Zone Free of Weapons of Mass Destruction, but if our efforts and the efforts of the world community fail to bring about the dismantling of the Israeli arsenals of nuclear, chemical, and biological weapons and the prevention of Iran acquiring the same by failing to construct such a Zone, then why shouldn’t we at least, and as a duty towards our nations and our peoples, study, seriously, all of the available options, including acquiring WMDs so that future generations will not blame us for neglecting any courses of action that will keep looming dangers away from us?”

In November Prince Turki, in a speech delivered in Washington, gave an account of the current environment and challenges for Saudi Arabia in a “tour d’horizon.” The Gulf and Globe conference address took on the “future” and warned that, “History is not made by spectators from afar and events are not drawn by the shy and insular.”

In addition to posing the WMD question, Prince Turki shared his perspective on “collective sovereignty” among GCC countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE — and called on adoption of reforms to “fortify ourselves from within.”  He outlined eleven obtainable features of a “unified” GCC, including a unified economic system, consultative council and armed forces.

Today we are pleased to provide Prince Turki’s complete remarks at the Gulf and Globe conference for your consideration.

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HRH Prince Turki AlFaisal
Gulf and the Globe Conference
Riyadh, Saudi Arabia
December 5, 2011

I thank HRH Prince Saud Al-Faisal, the Minister of Foreign Affairs and the Chairman of the Board of Trustees of the Diplomatic Institute, for inviting me to address this distinguished audience. Dr. AbdulAziz Bin Saqr, the Founder and the President of the Gulf Research Center and Dr. Abdul Karim Al-Dakheel, the Director-General of the Diplomatic Institute deserve our thanks for organizing this important meeting not only in context but also in level of the participants.

Ladies and Gentlemen,

We witness changes that the world is going through on basic levels of thought, media, diplomacy, economy, financially, socially, and security. We witness also the effects of these changes in the conduct of international affairs and on the challenges imposed on all countries and all societies.

Divining a future of where these changes in national, regional, and global strategy and defining clear views of this strategy will help in crossing into the future with more confidence. It will also encourage the drawing up of plans and programs to navigate the calm or stormy seas of the changes. It is crucial that we, in our area, read these changes, correctly; after all, our area is central in its strategic position, in its historic weight, and in possessing natural resources that are necessary for a modern lifestyle. But, we have to look at the changes in our area and the world as a global challenge that requires a global way of dealing with it and directing it towards the good of all and averting the bad from all.

In reading the future we must also beware that present conditions may quickly change, for practical or unforeseen circumstances, leading to a change in strategy that is built on present conditions. We have lessons to be drawn from the precipitous collapse of the Soviet Union, which nobody predicted. When the collapse occurred, it created a change in the strategic balance in the world. The unipolar world that followed did not last long, as some of its promoters and planners had hoped. We see, today, many poles arising, comprising China, India, Brazil, South Africa, and Turkey, as well as Japan, the European Union, and the Russian Federation. A new and diverse distribution of power is taking the stage, auguring the multipolar world with a new set of criteria that will cover the diplomatic and qualitative practice between nations.

The other lesson for us is the change occurring in Arab countries which was not foretold by anyone nor can anyone predict where it is heading.

Ladies and Gentlemen,

You have discussed in the last two days many issues concerning the Arabian Gulf and the World. You have listened to many wise words about the developments in the Arabian Gulf. I, however, will speak about where we should be in the future, especially in the changing world strategy in light of where the world’s centers of power will be and the challenges we have to overcome so that we can be in the lead of that caravan, and not simply spectators to where it is taking us. Reading our future from present events reveals our exposure in security, demographic, cultural, economic, and development strategy and is witness to our lack thereof, for our future. All of our achievements in state building and fields of development require us to foresee the future and what it will bring in internal, regional and global challenges. We must not take for granted the durability of the circumstances that have allowed us, for a long time, to enjoy stability, growth, and successful accomplishments. History has taught us that change is the only constant factor in life and those who succeed in surviving detrimental changes are those who foresaw them and prepared themselves for them by undertaking the necessary steps to move forward. Therefore, we, as nations and as a Council, have to accept this reality and sweat and strive to cross into the future with confidence and assurance.

Ladies and Gentlemen,

The strategic importance of our region, geographically and in natural resources, for the world, and one must not minimize that importance, is not in itself the guarantee that will keep it untouched by the strategic tumults around us nor will it keep it from the rivalry between the powers that are vying to expand their influence in it and to tap its natural resources. We must not remain mortgaged to changing international policies and victims of diplomatic bargains. We must, however, be forceful actors in all the global engagements that affect our region and not allow the choices of others to be imposed on us because we are militarily weak and are, therefore, followers of others. This imposes on us, as the primary actors, to realize our unity of purpose in our diplomacy, economics, security and the military. We have to transform our recognition of this reality into dynamic action until we achieve our aims.

Thirty years after the founding of our Council, events and developments, internally, regionally, and globally, predicate that our countries review our previous aims to coordinate between and complement each other in order to elevate their role in the world. Why shouldn’t this Council become a union of sovereign states to move forward with a unified unity of purpose?

Why shouldn’t we commence the building of a unified military force, with a clear chain of command? We are committed to the Middle East Zone Free of Weapons of Mass Destruction, but if our efforts and the efforts of the world community fail to bring about the dismantling of the Israeli arsenals of nuclear, chemical, and biological weapons and the prevention of Iran acquiring the same by failing to construct such a Zone, then why shouldn’t we at least, and as a duty towards our nations and our peoples, study, seriously, all of the available options, including acquiring WMDs so that future generations will not blame us for neglecting any courses of action that will keep looming dangers away from us?

To move to this stage requires a new look at national sovereignty, which, taken by its raw definition, becomes a barrier to unification efforts between nations. If we regard the sovereignties of our countries as collective sovereignity, then ceding bits of individual sovereignty of each country to the other is an attractive proposition which reinforces our collective sovereignty. The links that bind our people, even before we became nations, unite us. The security of one people is that of all, the stability of one is that for all, the misfortune of one is that on all. The joint experience of the GCC verifies these principles. Two decades ago, the GCC countries defended Kuwait when it was invaded by Iraq. We have just seen, lately, how the GCC countries responded to the challenges faced by Bahrain and Oman, where all the countries sped to advance an economic package of twenty billion dollars to both countries over the next ten years in addition to security support to Bahrain. More recently, we witnessed the GCCs decisive leadership in mediating in Yemen and pushing the Arab League to rectify the situations in Libya and Syria.

Ladies and Gentlemen,

In view of what I just described and for us to enter into a unified regional gathering that will confidently become a strong advocate for what is good In this world, we have to critically look into ourselves and not let petty differences, which sometimes impede the efforts to realize our great enterprises, affect our courses of action.

We also have to look at our internal affairs and fortify ourselves from within by adopting reforms to meet our current needs. We cannot be actors outside our borders if we do not act within them. We must review our development programs to emphasize the centrality of the citizen and to elevate him to the level of our ambitions for our collective union; acting and affecting events around us. Our economic choices must also be reviewed because they are not innovative and inventive which is affecting our demographic composition and future. We are a market for imported labor while our youngsters are unemployed. Improving our political and cultural institutions in order that they can cope with evolving social and cultural developments in our societies is no longer a choice for us. It is an imperative. The concept of citizenship, with all of its implications, is the core in the relationship that binds the nation to the citizen.

Ladies and Gentlemen,

Let me share with you what we can accomplish, God willing, in the near future.

We can accomplish a unified Arabian Peninsula
We can accomplish an elected Majlis Al-Shura for a unified country
We can accomplish a unified armed forces with a unified armaments industry
We can accomplish an economic system with a unified currency
We can accomplish a unified Space Agency
We can accomplish a unified IT industry
We can accomplish a unified aerospace industry
We can accomplish a unified automotive industry
We can accomplish an educational system with a unified curriculum
We can accomplish a unified energy and petrochemical industry
We can accomplish a unified example of justice and humane practice

Ladies and Gentlemen,

The challenges are varied and great and the responsibilities are equally so. But they are not a mission impossible. If we choose our means well, then our future will be as we want it. I close with a sentence that was in the Riyadh Declaration which was issued by the GCC Summit in Riyadh in the year 1420 of the Hijri Calendar, which is equivalent to the year 1999 in the Christian calendar. I quote: “History is not made by spectators from afar and events are not drawn by the shy and insular.”

Related Items:

• Gulf and Globe Conference – Home Page
• Gulf and Globe Conference – Agenda

In the Media:

• Prince Turki al-Faisal calls for stronger Gulf bloc, says Saudi may join nuke arms race – Al Arabiya – Dec 6, 2011
• Prince Turki calls for a stronger Gulf bloc – Arab News – Dec 6, 2011
• Come clean about nuclear program, GCC officials tell Iran – Arab News – Dec 5, 2011

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HRH Prince Turki Al Faisal Al Saud

Prince Turki Al-Faisal

Prince Turki is Chairman of the King Faisal Center for Research and Islamic Studies and is one of the founders of the King Faisal Foundation. He served as the Ambassador of the Kingdom of Saudi Arabia to the United States of America from September 13, 2005 until February 2, 2007. He also serves as a member of the Boards of Trustees of the International Crisis Group and the Oxford Center for Islamic Studies and is co-chair of the C100 Group, which has been affiliated with the World Economic Forum since 2003. Prince Turki was appointed an Advisor in the Royal Court in 1973. From 1977 to 2001, he served as Director General of the General Intelligence Directorate (GID), the Kingdom’s main foreign intelligence service. In 2002, he was appointed Ambassador to the United Kingdom and Republic of Ireland by then Custodian of the Two Holy Mosques King Fahd bin Abdulaziz.

Born on February 15, 1945 in Makkah, Saudi Arabia, Prince Turki began his schooling at the Taif Model Elementary and Intermediate School. In 1963, he graduated from the Lawrenceville School in Lawrenceville, New Jersey and subsequently pursued undergraduate studies at Georgetown University in Washington, D.C.

The King Faisal International Prizes, awarded by the King Faisal Foundation, are presented to “dedicated men and women whose contributions make a positive difference.” These annual prizes, which are awarded in five fields of endeavor – Service to Islam, Islamic Studies, Arabic Language and Literature, Science, and Medicine – have been likened, for the Arab and Islamic worlds, as similar in stature to, and nearly as coveted as, the more renowned and longer established annual Nobel Prizes. The King Faisal International Prizes, in addition to being bestowed upon Arabs and Muslims, have been granted to outstanding achievers from virtually all corners of the world.

For more information: www.kff.com

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Also:

• Taking Stock of Conditions: Prince Turki Al-Faisal – SUSRIS – Nov 16, 2011
• AUSPC2011: Prince Turki Al-Faisal – SUSRIS – Oct 30, 2011
• Navigating Challenges: Saudi Arabia Sails on Amid Transitions – SUSRIS – Sep 28, 2011
• Saudi Prince: Obama Let Palestinians Down at UN – Talk Radio New – Nov 15, 2011
• “Perry moment” is in the Saudi lexicon, too – Dallas News – Nov 15, 2011
• Saudi prince says ample evidence of Iran plot – AP – Nov 15, 2011
• Saudi Prince: Inevitable Syrian President Will Step Down – VOAnews – Nov 15, 2011
• Saudi Perspective on Palestine UN Vote – Prince Turki Interview – SUSRIS – Sep 21, 2011
• Special Report: Saudi-US Friction Over Palestine at the UN – SUSRIS – Sep 19, 2011
• Saudi Arabia: Continuing Prosperity – Prince Turki Al-Faisal – SUSRIS – Sep 12, 2011
• Is There A Showdown Looming for Saudi-US Relations? – SUSRIS – Jun 13, 2011
• A Conversation with Prince Turki Al-Faisal – SUSRIS Exclusive Interview – Dec 12, 2010
• Prince Turki Al-Faisal on US-Saudi Relations – AUSPC
• Turki Al-Faisal on U.S. Middle East, Afghan Policy – SUSRIS – May 15, 2010
• President Obama On the Middle East and North Africa – SUSRIS – May 19, 2011
• Prince Turki Al-Faisal on US-Saudi Relations – AUSPC – SUSRIS – Oct 25, 2010
• Turki Al-Faisal on U.S. Middle East, Afghan Policy – SUSRIS – May 15, 2010
• When A Handshake is Not Just a Handshake – SUSRIS – Feb 7, 2010
• Land First, Then Peace – Prince Turki Al-Faisal – SUSRIS – Sep 15, 2009
• “Energy Independence” and Kissing Babies: The Politics of Oil – Prince Turki Al-Faisal – SUSRIS – Aug 27, 2009
• Gulf Forum: US-Gulf Relations Post-Election – Prince Turki al-Faisal Critical of US Gaza Stand – SUSRIS – Jan 7, 2009
• Peace for the Mideast Prince Turki al-Faisal – SUSRIS – Dec 29, 2008
• “What does Mr. Kissinger propose”? – Prince Turki Al Faisal – SUSRIS – Nov 25, 2008
• Saudi Ambassador Abruptly Resigns, Leaves Washington – SUSRIS – Dec 12, 2006
• A Voice of Peace; A Move Towards Stability – Prince Turki al Faisal – SUSRIS IOI – Nov 30, 2006
• Saudi Arabian Constitutional Evolution – Prince Turki al Faisal – SUSRIS IOI – Nov 6, 2006
• A Vision for the Future of Saudi-US Relations – Prince Turki al Faisal – SUSRIS IOI – Nov 4, 2006
• Region in Crisis: A Call for American Leadership and a Lasting Peace – Prince Turki al Faisal – SUSRIS IOI – Aug. 3, 2006
• I Think We Need to Talk – Prince Turki Al-Faisal – SUSRIS – Jun 20, 2006
• Educational Reforms in Saudi Arabia: We’re Trying Hard to Change – Prince Turki al-Faisal – SUSRIS – Jun 8, 2006
• Perspectives on Conflicts, Cooperation and Crises: A Conversation with Saudi Arabia’s New Ambassador to the United States – Part 2 – SUSRIS Exclusive Interview – Mar 14, 2006
• Outreach and Engagement: A Conversation with Saudi Arabia’s New Ambassador to the United States – Part 1 – SUSRIS Exclusive Interview – Mar 9, 2006
• Tackling the Information Gap – Saudi Arabia’s New Ambassador to U.S. Promises Openness and Engagement – Patrick W. Ryan – SUSRIS – Mar 8, 2006
• Prince Turki al-Faisal Talks With Charlie Rose – Saudi Arabia’s Ambassador to the US Takes His Message to Americans – Part 1 – Relations, Oil – SUSRIS – Feb 18, 2006
• Prince Turki al-Faisal Talks With Charlie Rose – Saudi Arabia’s Ambassador to the US Takes His Message to Americans – Part 2 – Iraq, Iran, War on Terror – SUSRIS – Feb 18, 2006
• Prince Turki al-Faisal Talks With Charlie Rose – Saudi Arabia’s Ambassador to the US Takes His Message to Americans – Part 3 – Middle East Peace – SUSRIS – Feb 18, 2006
• Issues of the Day: Saudi Ambassador to the US On Sunday Talk Show – SUSRIS – Feb 6, 2006
• Community and Cooperation – Prince Turki Al-Faisal – SUSRIS – Dec 2, 2005
• The Global Scourge of Terrorism: Ambassador Prince Turki al Faisal Shares His Outlook – SUSRIS – Nov 8, 2005
• Prince Turki Al-Faisal’s Views on Terrorist Attacks and Bin Laden – SUSRIS – Dec 7, 2004
• Biography – Prince Turki al-Faisal – SUSRIS

Happy New Year!

As we turn the page from 2011 to 2012 it’s time to take stock of the year past, a remarkable year for the Arab world and for those who follow developments in the historic relationship between the United States and Saudi Arabia. Part of our taking stock is sharing with you a useful list of the 2011 SUSRIS items. Today we present for your use a valuable resource we provide every year, the summary of SUSRIS articles, interviews, special reports and more. Among the highlights are hard to find views and insights of newsmakers and decisionmakers who have shared their perspectives with SUSRIS as well as on-scene, global coverage of critical meetings and conferences like the US-Saudi Business Opportunities Forum, the Arab-US Policymakers Conference, the Saudi-European Economic Forum, and the Opportunity Arabia Conference.

You’ll notice that the SUSRIS family has greatly expanded to include new Web sites and new resources. Take time to review some of the offerings SUSRIS has provided you this year — the SUSRIS Blog, our SUSRIS video site, an all-business site, as well as new companion sites the Saudi-British Relations Information Service (SBRIS), the Saudi-US Trade Group (SUSTG) and ArabiaLink. We also have built SUSRIS channels on YouTube and SlideShare to consolidate important resources for your easy access. More on these resources is below.

For 2012 we will expand our coverage of the Saudi-US relationship and make SUSRIS more valuable to you by bringing more exclusive interviews and coverage of events and developments important to our readers. Part of the “more” is the debut this month of our iPhone App for SUSRIS. With it you will be able to carry around a special resource that permits you to keep up with the latest news and to reach back for reports, videos, presentations, and other resources — available at your fingertip.  We hope you’ll tell us how well it works out for your particular information needs as we examine expanding into other mobile delivery formats like the iPad.

We thank you for your support and remind you to share your enjoyment of SUSRIS with your friends and colleagues. Please suggest that they sign up for the free e-newsletters in the SUSRIS family. As always we look forward to your comments on individual articles and your feedback on the SUSRIS service in general. You can leave a note at the end of every article or drop a note to me at:  PatRyan@SUSRIS.com        THANKS!

Best wishes for a healthy and prosperous 2012!

Patrick W. Ryan
Editor-in-Chief, SUSRIS

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COMING SOON! — SUSRIS iPhone App.  Put the resources of the SUSRIS project in your pocket.  News, articles, interviews, special reports, videos, maps, slide presentations and more.  SUSRIS iPhone App coming in January 2012.

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ABOUT SUSRIS

The SUSRIS project — an independent, private-sector information resource – offers objective, comprehensive news and information on the history, breadth and depth of the US-Saudi Arabia relationship.

SUSRIS through the Web site and e-newsletter service provides information from a variety of sources that would otherwise be difficult for most readers to uncover. In addition, SUSRIS offers original materials such as interviews, essays and more. Since its launch in 2003, the response to this resource has been tremendous with monthly web site hits now measured in the millions. Tens of thousands of interested readers have also signed up to receive the (free) SUSRIS e-newsletter. Moreover, SUSRIS is routinely cited by major international media, scholars and through leaders as an authoritative news source.

SUSRIS provides you information and resources that enable a clear assessment of this important relationship as well as contributing to a better understanding — building bridges — between the people of the United States and Saudi Arabia.

SUSRIS is not connected with or supported by any government entity.  It is produced by Ryan & Associates, an independent editorial consultant firm for the benefit of its readers and with support from private sector organizations such as the Washington-based Saudi-US Trade Group. Contact us to become a sponsor.

THE SUSRIS PROJECT:
Saudi-US Relations Information Service (SUSRIS) - www.susris.com
SUSRISTube (Videos) - www.SUSRIStube.com
SUSRISBlog - www.SUSRISblog.com
SUSRISBiz - www.SUSRISbiz.com

SUSRIS COMPANION SITES:
Saudi-US Trade Group (SUSTG) - www.sustg.org
Saudi-British Relations Information Service (SBRIS) - www.saudibrit.com
ArabiaLink - www.arabialink.com

MORE:
SUSRIS Channel on Slide Share - http://www.slideshare.net/SUSRIS/presentations
SUSRIS Channel on YouTube – http://www.youtube.com/user/SUSRIStube

STAFF:
Connie Trisdale Ryan – Editor
Elizabeth Pfiester – London Correspondent
Olivia Jones – Staff Writer
Bill Ryan – Web Design & Tech Development
Colleen Ryan – Research Assistant

CONTACT LINK

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SUSRIS ARTICLES, INTERVIEWS & SPECIAL REPORTS – SUSRIS.COM

• The Saudi Economy in 2012: Jadwa – Dec 31
• Business Forum: Economy Overview and Modon – Dr. Rabiah – Dec 31
• US-Saudi Arms Package Moves Forward – Dec 30
• Budget for 2012 Reviewed: Jadwa – Dec 28
• Distinguished Saudi Women Shine at Business Forum – Dec 26
• 32nd GCC Summit Final Statement and Riyadh Declaration – Dec 21
• The 32nd Supreme Council of the GCC Wrap-up – SPA – Dec 21
• Saudi Arabia Inflation Report – November 2011 – Jadwa – Dec 21
• GCC Summit: Foreign Ministry Press Conference – Dec 20
• Business Forum – Exposure to a Most Promising Market: A Conversation with Abdulaziz Al-Fahad – Dec 19
• The New Minister of Commerce and Industry – Zeigler – Dec 16
• SPECIAL REPORT: Saudi Cabinet “Mini” Shuffle – Dec 13
• Saudi Arabia in the New Middle East – Gause – Dec 13
• Business Forum: A Common Desire for Greater Cooperation – Alireza – Dec 10
• Business Forum – Reimagining Relationship Challenges: A Conversation with Steve Clemons – Dec 8
• Business Forum: The Ties That Bind Us – Olayan – Dec 7
• US-Saudi Business Opportunities Forum Opens in Atlanta – Dec 5
• Gulf States Seek Stability Not Status Quo – Koch – Dec 4
• Saudi Economy: Jadwa December 2011 Chartbook – Dec 3
• U.S.-Saudi Business Opportunities Forum Opens Monday – Dec 3
• Saudi Arabia’s Economic Cities – Dec 2
• King Abdullah Economic City (KAEC) – Dec 2
• Prince AbdulAziz bin Mousaed Economic City (PABMEC) – Dec 2
• Jazan Economic City (JEC) – Dec 2
• Knowledge Economic City (KEC) – Dec 2
• Saudi Arabia Inflation Report – October 2011 – Jadwa – Nov 22
• “Ultimate Gathering of Saudi and American Businesses” – Nov 20
• Change and Succession in Saudi Arabia – Nov 17
• Taking Stock of Conditions: Prince Turki Al-Faisal – Nov 16
• Endlessly Fascinating Times in Business and Diplomacy: A Conversation with Ford Fraker – Nov 5
• Prince Salman Named Defense Minister – Nov 5
• The Hajj in Perspective: A Conversation with David Long – Nov 4
• The Hajj and Its Impact on Saudi Arabia and the Muslim World – David Long – Nov 4
• AUSPC2011: Business, Investment and Financial Development – Nov 3
• Monthly Bulletin – November 2011 – Jadwa – Nov 3
• Saudi Stock Market Listed Companies’ Foreign Earnings – Nov 2
• Saudi Economy: Jadwa November 2011 Chartbook – Nov 1
• Responses to Recent Events: The Annual Arab-US Policymakers Conference – Nov 1
• Another Look Inside the Kingdom: A Conversation with Robert Lacey – Oct 31
• AUSPC2011: Amb Chas Freeman Keynote – Oct 30
• AUSPC2011: Prince Turki Al-Faisal Keynote – Oct 30
• The Riyadh International Trade Expo – Al-Kurdi – Oct 25
• Saudi-US Economic Ties: Joined at the Hip – Oct 24
• Crown Prince Sultan Has Died – Special Report – Oct 21
• Event: Arab-US Policymakers Conference in Washington
• Saudi Arabia Inflation Report – September 2011 – Jadwa – Oct 20
• The “Robust” Saudi Banking Sector: A Conversation with Khaled AlKhattaf – Oct 20
• Economic Projections – Jadwa – Oct 16
• Renewed Efforts to Seize Business Opportunities – Fahad – Oct 16
• Iran Terrorism Plot Charged by US Government – Oct 12
• Iran Showdown – SUSRIS Special Section Launched – Oct 12
• Atlanta Forum Set to Be Prime US-Saudi Business Opportunity: A Conversation with Omar Bahlaiwa – Oct 10
• Atlanta Forum is the Place to Connect to Saudi Business Opportunities – Oct 10
• A View from a British MP – Oct 5
• Navigating Challenges: Saudi Arabia Sails On Amid Transitions – Sep 28
• Saudi UN Address Endorses Statehood for Palestine – Sep 27
• The King’s Speech – Sep 26
• Saudi Perspective on Palestine UN Vote – Prince Turki Interview – Sep 21
• Special Report: Saudi-US Friction Over Palestine at the UN – Sep 19
• Saudi Arabia Inflation Report – August 2011 – Jadwa – Sep 17
• Could UN Palestine Vote Alter US-Saudi Relations? – Sep 16
• Toward a Middle East Weapons of Mass Destruction Free Zone – Sep 12
• Saudi Arabia: Continuing Prosperity – Sep 12
• Special Report: 9/11 10th Anniversary – Sep 11
• September Chartbook – Jadwa – Sep 9
• “What Lies Ahead” Panel Set for Sep 15th – Sep 9
• Riyadh International Trade Expo – Sep 8
• Key Economic Developments – Sep 3
• Monthly Bulletin – August 2011 – Jadwa – Aug 24
• The Politics of Middle East Water Management – Long – Aug 23
• Saudi Arabia Inflation Report – July 2011 – Jadwa – Aug 22
• Saudi Family Major Gift to Mayo Clinic is Emblem of Generosity – Aug 15
• Saudi Economic Trends – Jadwa Chartbook – August 2011 – Aug 13
• Where do the Saudis Stand? – Aug 12
• Debt, Downgrade and Saudi Arabia – Jadwa – Aug 9
• Saudi Minister Wins UK Newspaper Libel Case – Aug 8
• Saudi Arabia’s Nuclear Policy – Lippman – Aug 5
• A Conversation with Dr. Theodore Karasik of INEGMA on the “Arab Spring” – Aug 1
• EIA Short-Term Energy Outlook – July 2011 – Jul 31
• Saudi Arabia’s Coming Oil and Fiscal Challenge – Jul 30
• Bilateral Civilian Nuclear Trade Talks Set to Open – Jul 29
• The Saudi Stock Market and Ramadan – Jul 23
• Annual Arab-US Policymakers Conference Fee ‘Comped’ for SUSRIS Subscribers – Jul 22
• Saudi Arabia Economics – June 2011 – BSF – Jul 21
• Saudi Arabia Inflation Report – June 2011 – Jadwa – Jul 21
• Saudi Economic Trends – Jadwa Chartbook – July 2011 – Jul 20
• Saudi Arabia’s Oil Exports and Domestic Demands – Jul 20
• A Saudi National Security Doctrine for the Next Decade – Jul 11
• Saudi Arabia Monetary Indicators – July 2011 – Jul 7
• Energy, Consumption Lift Saudi Q3 Business Confidence Jun 28
• Saudi Arabia Economics – June 2011 – BSF – Jun 21
• Friday Drivers: Women Take to the Roads – Jun 18
• Saudi Arabia Monetary Indicators – May 2011 – Jun 14
• Is There a Showdown at the UN Looming for Saudi-US Relations? – Jun 13
• Building Intellectual Capital, Knowledge Economy – Alireza – Jun 12
• Middle East North Africa Perspective – Foreign Secretary Hague – Jun 8
• U.S. Policy Towards the Middle East: The Obama Speech – Jun 8
• Emerging Market Focus – GCC building blocs – May 28
• The Meeting of West, East Asia – Molavi – May 25
• Assessing A Changing Landscape: A Conversation with Jean Francois Seznec – May 25
• Saudi Arabia Economics – May 2011 – BSF – May 20
• President Obama On the Middle East and North Africa – May 20
• Dear Mr. President: A Misalignment of Expectations – Burgess – May 19
• U.S.-GCC: Despite Political Differences, Strategic Ties are Strong, for Now – May 17
• Policy Contradictions and Complicated Relations: Freeman Interview – May 16
• Is Riyadh Ready to “Recalibrate the Partnership”? – May 15
• Arab-US Policymakers Conference Dates Set – May 13
• Atlanta Business Forum Postponed – May 13
• Yemen’s Political Crisis: The Role of Saudi Arabia and the Gulf States – May 12
• Real Estate Saudi Arabia – Sfakianakis – May 12
• Iranian and Saudi Competition in the Gulf – Cordesman – May 9
• Saudi Arabia: “This is who we are” – May 9
• Osama Bin Laden Killed – Special Report – May 2
• Saudi Arabia Monetary Indicators – April 2011 – Apr 28
• Perspective of a Shura Council Member: Commerce and Energy – Al-Kurdi – Apr 27
• Reforms the Arab Monarchies Cannot Avoid – Sager – Apr 27
• Perspective of a Shura Council Member: Washington-Riyadh Connections – Al-Kurdi – Apr 26
• Perspective of a Shura Council Member: The Arab Spring – Al-Kurdi – Apr 25
• Saudi Stability in a Time of Change – Cordesman – Apr 22
• Strengthening an Enduring EU-GCC Partnership – Koch – Apr 20
• U.S. Strategy in the Gulf – Cordesman – Apr 18
• Energy Infrastructure Threat Assessments Hyped – Obaid – Apr 18
• Business Confidence Rides on $100 Plus Oil – Apr 14
• The Arab Reawakening and Its Strategic Implications – Freeman – Apr 13
• Top Saudi and American Officials Set for Atlanta Business Forum – Apr 11
• “Conspicuously quiet” in Saudi Arabia – Nawaf Obaid – Apr 10
• International Islamic Relief Organization of Saudi Arabia Celebrates World Health Day – Apr 7
• The Gulf’s Unfinished Spring – Sager – Apr 6
• Why Is the Story Different in Saudi Arabia? – F. Gregory Gause – Apr 5
• Cancer Awareness in the Kingdom – Apr 5
• Saudi Arabia Economics – April 2011 – BSF – Apr 5
• A Changing Landscape in the Middle East – Sager – Mar 31
• EIA Energy Outlook – March 2011 – Mar 31
• Economics Quarterly: To Spend or Not to Spend? – Sfakianakis – Mar 31
• Saudi Arabia Monetary Indicators – March 2011 – Mar 31
• Reaching Out Again: Financial Support Analyzed – BSF – Mar 23
• Royal decrees, regional unrest and the economy – Jadwa – Mar 23
• Saudi Arabia Economics – March 2011 – Mar 22
• Saudi Arabia “not ripe for revolution” – Nawaf Obaid – Mar 10
• In Saudi Arabia, Challenges Aplenty But None Insurmountable – Zeigler – Mar 9
• A Resolute Call to Empower Women – Fatany – Mar 8
• A Letter to the King – Mar 5
• Emerging Markets: What is next for Saudi Arabia? – Sfakianakis – Mar 5
• The Challenge of Change in Saudi Arabia: A Conversation with Thomas Lippman – Mar 2
• Understanding Saudi Stability and Instability – Cordesman – Mar 1
• Monthly Monetary Indicators – March 2011 – Feb 28
• The Current Political Situation in the Middle East – Sager – Feb 24
• King Abdullah Orders Social Benefits Package – Feb 23
• King Abdullah Returns to Saudi Arabia After Medical Care Abroad – Feb 23
• Return of the King: Arab News – Feb 23
• “Arabia 3D” IMAX Film Opening in Washington – Feb 21
• The Challenges of Asia – Freeman – Feb 18
• Employment Quandary: Urgency for Reform – Feb 18
• Assessing Changes in the Middle East: A Conversation with John Moran – Feb 18
• Press Runs With 2007 Wiki-Cable on Oil Reserves, Capacity Despite Challenge by the Source – Feb 16
• Eyewitness to the History of US-Saudi Relations – Feb 16
• President and King, The Meeting at Great Bitter Lake: A Conversation with Rachel Bronson – Feb 15
• Today in History – King Abdulaziz and President Roosevelt Meeting – Feb 14
• Saudi Arabia Monetary Indicators – February 2011 – Feb 6
• A “SME” Authority for Saudi Arabia – Feb 2
• Uprising in Egypt and Financial Volatility – Jan 31
• Saudi Arabia Economics – January 2011- BSF – Jan 27
• “Clear Gold” – Water as a Strategic Resource in the Middle East: A Conversation with Jon Alterman – Jan 25
• King Abdullah Completes U.S. Medical Stay – Jan 23
• Saudi Students at Tennessee Tech: A Conversation with Dr. Robert Bell – Jan 18
• Saudi Business Leaders Bullish in 2011, BSF Confidence Index Shows – Jan 18
• Saudi Student Outreach – Built Any Bridges Lately? – Jan 16
• Saudi-US Commercial Relationship is Solid – Jan 9
• Top Trade Official on Saudi-US Commercial Ties – Jan 9
• Business Leaders on Trade, Investment and the Economy – Jan 9
• Why Are Economists Bullish on Saudi Arabia’s 2011 Economic Prospects – Jan 4
• Saudi Arabia Monetary Indicators – January 2011 – Jan 4
• SUSRIS 2010 Annual Summary – Jan 1

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SUSTG NEWS ON SUSRIS.COM

The Washington-based Saudi-US Trade Group (SUSTG) produces a daily news review that it provides via email to subscribers and to SUSRIS for posting on the Web site. You can get your daily Saudi-US news feed via email (Subscribe -> http://www.sustg.org/subscribe/) and on the SUSRIS.com Web site. You can dig back through previous editions archived at SUSRIS.com through the site search box and through the archives (News -> http://www.susris.com/category/news/)

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POSTS ON SUSRISBLOG.COM

• Consultations, Jan 2-5, 2012 – Dec 30
• Atlanta and US-Saudi Business Forum – Dec 6
• America Fired Itself from a Job: A Saudi View – Nov 17
• The Central Role of Saudi Arabia to U.S. Middle East Interests – Nov 5
• President Obama on Crown Prince Selection – Oct 28
• ‘Arabia’ and the other side of Saudi Arabia – Oct 21
• Palestinian Statehood and Repercussions of a U.S. Veto – Sep 30
• A Driving Issue that Just Won’t Go Away, Until it Does – Sep 30
• September 11 and the Longest Ten Years – Sep 10
• Youth Key to Religious Rapprochment – Bos – Aug 31
• What Does the Economic Underpinning of the “Arab Spring” Mean for Saudi Arabia? – Aug 24
• Will the Kingdom Tower Jeddah Change Saudi Arabia? – Aug 9
• King Abdullah Demands End to Syrian “Killing Machine” – Aug 8
• Bleak Forecast Underscores Need for Water Use Policy Changes – Aug 5
• Airline Diplomacy – Jul 17
• Short Term Inflation Spike – Jul 16
• US Foreign Policy, the Arab Spring and Saudi Arabia – Jul 10
• Women at the Wheel – Jun 16
• President Ahmadinejad: Iran Doesn’t Need Enemies – Al-Mulhim – Jun 8
• Prince Al-Waleed tour d’horizon – May 31
• Prince Al-Waleed on Arab Spring and More – May 30
• Expats and Loyalty – Al-Mulhim – May 29
• U.S. Middle East Policy – Donilon – May 21
• Improving Saudi Tourism Prospects – Al-Mulhim – Apr 14
• James Baker on “Dealing with Saudi Arabia” – Apr 13
• What if Arabs had recognized Israel in 1948? – Apr 5
• Experts Say Saudi Arabia Not at Risk of Destabilizing – Mar 11
• Saudi Arabia Bans Protests – Mar 5
• Petitioning Online for Change – Mar 3
• Saudi Student Arrested on Bomb Charge – Feb 26
• Youth Unemployment and the Promise of Education – Feb 18
• Middle East Awakening – Lippman – Feb 17
• U.S. Urges Mideast Reforms, Democracy Transitions – Feb 5
• Growing Use of English – A Modern Threat to Arab Culture? – Jan 25
• Reflections on the Foundations of US-Saudi Relations – Al-Mulhim Jan 22
• Is there a larger role for Saudi Aramco? – Jan 12
• Saudi-US Commerce Ties Remain Strong – Jan 9

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SUSRISTUBE.COM VIDEOS

• Business Forum: Atlanta City Mayor Kasim Reed Welcome
• Business Forum: Education – Investing – Prince Faisal
• Business Forum: Education Investment – Miller
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• Business Forum: Stable Global Financial System – Bleser
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• Business Forum: Closing – Al-Saeed
• Business Forum: US-Saudi Relations – Amb Mouallimi
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• Business Forum: Remarks from Georgia Lt Gov Cagle
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• Business Forum: Doing Business – Abdulkarim
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• Business Forum: Doing Business – Stewart
• Business Forum: Doing Business – ABA-EP
• Business Forum: Doing Business – “The Right Place”
• Business Forum: Doing Business – Panel Q&A
• Business Forum: Finance & Investment – Al-Khateeb
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• Business Forum: Finance & Investment – Q&A
• Business Forum: Finance & Investment – Cohen
• Business Forum: Governor of Georgia’s Remarks
• Business Forum: Health and Medical Services – Panel Discussion
• Business Forum: Building Healthcare – Hazzaa
• Business Forum: Keynote – Ms. Lubna Olayan
• Business Forum: U.S.-Saudi Trade – Rebecca Blank
• Business Forum: U.S.-Saudi Trade – Alireza
• Business Forum: MOU Signing Ceremony
• Business Forum: Women in Saudi Business – Alkuwaiz
• Revealed: The Hajj
• Business Forum: Industrial Infrastructure – Wisnoski
• Business Forum: Industrial Infrastructure – Wilson
• Business Forum: Industrial Infrastructure – Dr. Tawfiq Rabiah
• Business Forum: Industrial Infrastructure – Otaibi
• Business Forum: Industrial Infrastructure – Osilan
• Business Forum: Stable Global Financial System – Jasser
• Business Forum: Stable Global Financial System – Olayan
• Nuclear Middle East – Prince Turki Al-Faisal
• Healthcare in KSA
• Business Opportunities in Saudi Arabia
• World Energy Outlook 2011
• Inside Story: Crown Prince Nayef
• Security and Safety at Hajj
• Millions of Muslims Begin Hajj Pilgrimage
• American Muslim at Hajj – Nightline
• Concern over Saudi heritage site demolitions
• Crown Prince Sultan Has Died
• Terror Plot: “Somebody Will Have to Pay a Price”
• Iran Showdown
• A Reawakened Rivalry: The GCC v Iran
• The Making of Desert Seas
• What is Key to Mideast Stability?
• Saudi-Yemen Ties in Limelight
• Saudi Troupe at European Expo
• Saudi Women Get Voting Rights
• The King’s Speech
• Future Energy Issues – IEA
• White House View on US-Saudi Relations
• Time for WMD Free Zone in Mid East
• US Warned Over Palestine UN Statehood Vote
• Prince Alwaleed Bin Talal Interview On BBC-World
• Saudi Family Gift to Mayo Clinic
• Saudis to Syria: End the killing
• This week on GPS: Tom Friedman and Saudi Prince Al-Waleed
• Saudi Arabia donates $1bn to boost Jordan economy
• King Abdullah Demands End to Syrian “Killing Machine”
• Prof. Bahgat Korany Remarks at GRM
• HRH Prince Turki Al-Faisal Al-Saud Remarks at GRM
• Saudi Aramco Mega Projects – 60 Minutes
• 9/11 Perspectives: Echoes in Arab World
• Will Tahrir Come to Saudi Arabia? – Carnegie Endowment
• Shadow of the Arab Spring: US-Saudi Relations
• HRH Prince Turki bin Faisal Al Saud Speech at the Maxwell School
• Rami Khouri – The Longest Spring: The struggle to control the Arab World
• National Security Advisor on US-Saudi Relations
• History of the IEF
• Saudi Prince on rising oil prices – CNN
• WikiLeaks: Saudis often warned U.S. about oil speculators
• Saudi woman campaigns for right to drive – Al Jazeera
• President Obama’s Speech on Mideast Policy
• Saudi Prince criticizes US presence in Libya – NBC
• The Arab Uprisings and US Policy: What is the American National Interest?
• Arab-US Energy Relations: Hofmeister
• Recollections of Riyadh in post a 9/11 Saudi Arabia – Robert Jordan
• President Obama on Death of Osama Bin Laden
• Saudi minister rejects foreign interference – NBC
• Saudi Forces Sent to Bahrain Despite U.S. Warnings
• Saudi journalist, Jamal Khashoggi says ‘Bin Laden started very humble’
• Second Chance in Saudi Arabia
• Voters register for Saudi municipal elections
• Laleh Khalili and Jillian Schwedler on Revolution and Protest
• Chas Freeman Excerpt – World Affairs Today
• Saudi Arabia’s counter-revolution
• Saudi Arabia Institutional Tourism Video
• Secretary of State Hillary Rodham Clinton – Remarks to U.S.-Islamic World Forum
• Inside Story: Tensions in the Gulf
• Prince Sultan Bin Salman Bin Abdulaziz Al-Saud: Growth plans for Saudi tourism
• Prince Alwaleed Bin Talal Interview in CNBC Squawk Box Part 1/4
• US Ambassador on Oil Supplies, Arab Spring
• Saudi Arabia’s Economic Pressures
• Saudi Artist and Author Khashoggi on Her NY Show
• Janadria Cultural Festival
• Regional Risks Assessed
• Secretary Clinton at Doha Forum for the Future
• Capitas Group International Introduction
• Introducing “Clear Gold” – CSIS Report on Water Scarcity – Jon Alterman
• Water Scarcity in the Middle East – Yemen: CSIS “Clear Gold” Report
• President Obama on Boosting American Exports
• National Export Initiative
• Boosting American Exports
• Clear Gold: Water as a Strategic Resource in the Middle East
• Riz Khan: Progress in Saudi Arabia
• Inside Look – Diversifying Saudi Arabia’s Economy
• An Energy-Independent Future – Jon Stewart

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POSTS ON SUSRIS COMPANION SITE SAUDI-BRITISH RELATIONS INFORMATION SERVICE (SBRIS) [WWW.SAUDIBRIT.COM]

• Budget for 2012 Reviewed: Jadwa – Dec 28
• 32nd GCC Summit Final Statement and Riyadh Declaration – Dec 22
• The 32nd Supreme Council of the GCC Wrap-up – SPA – Dec 22
• GCC Summit: Foreign Ministry Press Conference – Dec 20
• Building Educational Opportunity Partnerships – Gillies – Dec 16
• Gulf States Seek Stability Not Status Quo – Koch = Dec 4
• Saudi Economy: Jadwa December 2011 Chartbook – Dec 3
• Knowledge Economic City (KEC) – Dec 2
• Jazan Economic City (JEC) – Dec 2
• Prince AbdulAziz bin Mousaed Economic City (PABMEC) – Dec 2
• King Abdullah Economic City (KAEC) – Dec 2
• Saudi Arabia Inflation Report – October 2011 – Jadwa – Nov 22
• Change and Succession in Saudi Arabia – Nov 17
• Taking Stock of Conditions: Prince Turki Al-Faisal – Nov 17
• Educational Ties Sought: UK Universities Minister in KSA – Nov 16
• Prince Salman Named Defense Minister – Nov 5
• Endlessly Fascinating Times in Business and Diplomacy: A Conversation with Ford Fraker – Nov 5
• The Hajj and Its Impact on Saudi Arabia and the Muslim World – David Long – Nov 4
• The Hajj in Perspective: A Conversation with David Long – Nov 4
• Monthly Bulletin – November 2011 – Jadwa – Nov 3
• Saudi Stock Market Listed Companies’ Foreign Earnings – Nov 2
• Saudi Economy: Jadwa November 2011 Chartbook – Nov 1
• Another Look Inside the Kingdom: A Conversation with Robert Lacey – Oct 31
• The Riyadh International Trade Expo – Al-Kurdi – Oct 25
• The Importance of Leadership – Sir Tom Phillips – Oct 22
• Crown Prince Sultan Has Died – Special Report – Oct 22
• Opportunity Arabia 8 Conference: Thamer Jan – The Saudi Economy – Oct 21
• Trade Mission – Nov 21-Dec 1 – Deadline Extended – Oct 20
• Saudi Arabia Inflation Report – September 2011 – Jadwa – Oct 20
• The “Robust” Saudi Banking Sector: A Conversation with Khaled AlKhattaf – Oct 20
• Economic Projections – Jadwa – Oct 16
• Opportunity Arabia 8 Conference: Sir Sherard Cowper-Coles – Responding to the Challenge – Oct 16
• Iran Terrorism Plot Charged by US Government – Oct 12
• Iran Showdown – SUSRIS Special Section Launched – Oct 12
• Opportunity Arabia 8 Conference: Omar Bahlaiwa on the Partnership Details – Oct 11
• Opportunity Arabia 8 Conference Keynote: Baroness Symons of Vernham Dean – Oct 10
• Opportunity Arabia 8 Conference Opening – Oct 10
• Saudi Arabia – British Trade Mission – Nov 21-Dec 1 – Oct 6
• A Custodian of the Saudi-British Relationship: A Conversation with Sir Sherard Cowper-Coles – Oct 6
• Building Bridges Among Parliamentarians and Beyond – Kawczynski – Oct 4
• Saudi-British Relations Information Service Launches Inaugural Newsletter – Oct 1
• A Driving Issue that Just Won’t Go Away, Until it Does – Sep 30
• Palestinian Statehood and Repercussions of a U.S. Veto – Sep 30
• Navigating Challenges: Saudi Arabia Sails On – Sep 29
• Saudi UN Address Endorses Statehood for Palestine – Sep 27
• National Day Message from UK Ambassador – Sep 24
• Saudi Perspective on Palestine UN Vote – Prince Turki Interview – Sep 21
• Special Report: Friction Over Palestine at the UN – Sep 19
• Saudi Arabia Inflation Report – August 2011 – Jadwa – Sep 17
• Could UN Palestine Vote Alter US-Saudi Relations? – Sep 16
• Saudi Arabia: Continuing Prosperity – Prince Turki Al-Faisal – Sep 12
• Special Report: 9/11 10th Anniversary – Sep 11
• September Chartbook – Jadwa – Sep 9
• Riyadh International Trade Expo – Sep 8
• Key Economic Developments – Sep 3
• What Does the Economic Underpinning of the “Arab Spring” Mean for Saudi Arabia? – Aug 24
• Monthly Bulletin – August 2011 – Jadwa – Aug 24
• The Politics of Middle East Water Management – Long – Aug 23
• Helping the Arab Spring succeed is Britain’s cause too – Hague – Aug 22
• Saudi Arabia Inflation Report – July 2011 – Jadwa – Aug 22
• Saudi Economic Trends – Jadwa Chartbook – August 2011 – Aug 13
• Where do the Saudis Stand? – Aug 12
• Saudi Minister Wins UK Newspaper Libel Case – Aug 7
• Saudi Arabia’s Nuclear Policy – Lippman – Aug 5
• Event: The Economics of the Arab Spring – Aug 4
• A Conversation with Dr. Theodore Karasik of INEGMA on the “Arab Spring” – Aug 1
• EIA Short-Term Energy Outlook – July 2011 – Jul 31
• Saudi Arabia’s Coming Oil and Fiscal Challenge – Jul 30
• Arabia Offscreen Competition Seeks Creative Young People – Jul 29
• Bilateral Civilian Nuclear Trade Talks Set to Open – Jul 29
• The Saudi Stock Market and Ramadan – Jul 23
• Saudi Arabia Economics – June 2011 – BSF – Jul 21
• Saudi Arabia Inflation Report – June 2011 – Jadwa – Jul 21
• Saudi Arabia’s Oil Exports and Domestic Demands – Jul 20
• Saudi Economic Trends – Jadwa Chartbook – July 2011 – Jul 20
• “Opportunity Arabia 8″ Announced – Jul 16
• Saudi Arabia and the Knowledge Economy Briefing Offered – Jul 13
• Doing Business in Arab World Seminar Offered – Jul 12
• A Saudi National Security Doctrine for the Next Decade – Jul 11
• Saudi Arabia Monetary Indicators – July 2011 – Jul 7
• Foreign Secretary Hague Arrives for Saudi Arabia Visit – Jul 5
• Energy, Consumption Lift Saudi Q3 Business Confidence – Jun 28
• Saudi Arabia Economics – June 2011 – BSF – Jun 21
• Friday Drivers: Women Take to the Roads – Jun 18
• Saudi Arabia Monetary Indicators – Jun 14
• Is There a Showdown at the UN Looming for Saudi-US Relations? – June 13
• Building Intellectual Capital, Knowledge Economy – Alireza – Jun 12
• Middle East North Africa Perspective – Foreign Secretary Hague – Jun 8
• U.S. Policy Towards the Middle East: The Obama Speech – Jul 6
• Saudi British Joint Business Council Meeting – Jun 5
• British Ministers in Riyadh for Energy, Trade Talks – May 31
• “Global Energy Challenges: Now and in the Future” – Lord Howell Speech – May 31
• Energy Challenges and Collective Action – UK Ministers at IEF – May 31
• Emerging Market Focus – GCC building blocs – May 28
• The Meeting of West, East Asia – Molavi – May 25
• Assessing A Changing Landscape: A Conversation with Jean Francois Seznec – May 25
• Saudi Arabia Economics – May 2011 – BSF – May 20
• Dear Mr. President: A Misalignment of Expectations – Burgess – May 19
• President Obama On the Middle East and North Africa – May 19
• U.S.-GCC: Despite Political Differences, Strategic Ties are Strong, for Now – May 17
• Policy Contradictions and Complicated Relations: Freeman Interview – May 16
• Is Riyadh Ready to “Recalibrate the Partnership” with America? – May 15
• Yemen’s Political Crisis: The Role of Saudi Arabia and the Gulf States – May 12
• Real Estate Saudi Arabia – Sfakianakis – May 12
• Iranian and Saudi Competition in the Gulf – Cordesman – May 9
• Saudi Arabia: “This is who we are” = May 9
• Osama Bin Laden Killed – Special Report – May 2
• Saudi Arabia Monetary Indicators – April 2011 – Apr 28
• Perspective of a Shura Council Member: Commerce and Energy – Al-Kurdi – Apr 28
• Reforms the Arab Monarchies Cannot Avoid – Sager – Apr 27
• Perspective of a Shura Council Member: Washington-Riyadh Connections – Al-Kurdi – Apr 26
• Perspective of a Shura Council Member: The Arab Spring – Al-Kurdi – Apr 25
• Saudi Stability in a Time of Change – Cordesman – Apr 22
• Strengthening an Enduring EU-GCC Partnership – Koch – Apr 20
• Energy Infrastructure Threat Assessments Hyped – Obaid – Apr 18
• U.S. Strategy in the Gulf – Cordesman – Apr 18
• Business Confidence Rides on $100 Plus Oil – Apr 14
• Global Prosperity Fund Announced – Apr 13
• International Islamic Relief Organization of Saudi Arabia Celebrates World Health Day – Apr 13
• “Conspicuously quiet” in Saudi Arabia – Nawaf Obaid – Apr 10
• The Gulf’s Unfinished Spring – Sager – Apr 6
• Kingdom, UK vow stability in oil market – Apr 5
• UK & Saudi discuss high oil price – Apr 5
• Why Is the Story Different in Saudi Arabia? – F. Gregory Gause – Apr 5
• Saudi Arabia Economics – April 2011 – BSF – Apr 5
• Cancer Awareness in the Kingdom – Apr 5
• Economics Quarterly: To Spend or Not to Spend? – Sfakianakis – Mar 31
• EIA Energy Outlook – March 2011 – Mar 31
• A Changing Landscape in the Middle East – Sager – Mar 31
• Saudi Arabia Monetary Indicators – March 2011 – Mar 31
• Reaching Out Again: Financial Support Analyzed – BSF – Mar 23
• Royal decrees, regional unrest and the economy – Jadwa – Mar 23
• Saudi Arabia Economics – March 2011 – Mar 22
• Saudi Arabia “not ripe for revolution” – Nawaf Obaid – Mar 10
• In Saudi Arabia, Challenges Aplenty But None Insurmountable – Zeigler – Mar 10
• A Resolute Call to Empower Women – Fatany – Mar 8
• A Letter to the King – Mar 5
• Emerging Markets: What’s next for Saudi Arabia? – Sfakianakis – Mar 5
• The Challenge of Change in Saudi Arabia: A Conversation with Thomas Lippman – Mar 3
• Saudi Stability and Instability: A Very Different Nation – Mar 1
• Saudi Arabia Monthly Monetary Indicators – March 2011 – Mar 1
• The Current Political Situation in the Middle East – Sager – Feb 24
• Return of the King: Arab News – Feb 23
• King Abdullah Orders Social Benefits Package – Feb 23
• King Abdullah Returns to Saudi Arabia After Medical Care Abroad – Feb 23
• Assessing Changes in the Middle East: A Conversation with John Moran – Feb 18
• Employment Quandary: Urgency for Reform – Feb 18
• The Challenges of Asia – Freeman – Feb 18
• Press Runs With 2007 Wiki-Cable on Oil Reserves, Capacity Despite Challenge by the Source – Feb 16
• Saudi Arabia Monetary Indicators – February 2011 – Feb 6
• A “SME” Authority for Saudi Arabia – Feb 4
• Uprising in Egypt and Financial Volatility – Jan 31
• Saudi Arabia Economics – January 2011- BSF – Jan 27
• “Clear Gold” – Water as a Strategic Resource in the Middle East: A Conversation with Jon Alterman – Jan 25
• King Abdullah Completes U.S. Medical Stay – Jan 23
• Saudi Business Leaders Bullish in 2011, BSF Confidence Index Shows – Jan 18
• Saudi Arabia Monetary Indicators – January 2011 – Jan 4
• Why Are Economists Bullish on Saudi Arabia’s 2011 Economic Prospects – Jan 4

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SUSRIS SPECIAL SECTIONS – 2011

• U.S.-Saudi Business Opportunities Forum – Dec 2011
• Iran Showdown
• Transitions
• Arab-US-Policymakers Conference (AUSPC) 2011
• Jeddah Floods 2011
• Saudi Students in the U.S.
• SME Developments
• Municipal Elections
• Arabia – The IMAX Film
• Global Competitiveness Forum
• The Arab Spring
• Nitaqat
• President Obama: Talk About Change
• Women at the Wheel
• Civilian Nuclear Trade Agreement
• Palestine, the United Nations, Saudi Arabia and the United States
• Women and the Vote

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ABOUT SUSRIS

The SUSRIS project — an independent, private-sector information resource – offers objective, comprehensive news and information on the history, breadth and depth of the US-Saudi Arabia relationship.

SUSRIS through the Web site and e-newsletter service provides information from a variety of sources that would otherwise be difficult for most readers to uncover. In addition, SUSRIS offers original materials such as interviews, essays and more. Since its launch in 2003, the response to this resource has been tremendous with monthly web site hits now measured in the millions. Tens of thousands of interested readers have also signed up to receive the (free) SUSRIS e-newsletter. Moreover, SUSRIS is routinely cited by major international media, scholars and through leaders as an authoritative news source.

SUSRIS provides you information and resources that enable a clear assessment of this important relationship as well as contributing to a better understanding — building bridges — between the people of the United States and Saudi Arabia.

SUSRIS is not connected with or supported by any government entity.  It is produced by Ryan & Associates, an independent editorial consultant firm for the benefit of its readers and with support from private sector organizations such as the Washington-based Saudi-US Trade Group. Contact us to become a sponsor.

THE SUSRIS PROJECT:
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SUSRIS COMPANION SITES
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STAFF:
Connie Trisdale Ryan – Editor
Elizabeth Pfiester – London Correspondent
Olivia Jones – Staff Writer
Bill Ryan – Web Design & Tech Development
Colleen Ryan – Research Assistant

CONTACT LINK

Editor’s Note:

The Jadwa Investment firm in Riyadh released “The Saudi Economy in 2012″ report today.  It is an excellent look at trends and prospects to arm  you with insight and perspective on the direction and challenges for the domestic situation and the Kingdom’s significant role in the global economy. SUSRIS thanks Jadwa Investment’s Chief Economist, Brad Bourland, and Head of Research, Paul Gamble, for providing this important report for your consideration.

We also commend to your attention the Jadwa report on the 2012 Saudi Arabian budget provided in SUSRIS this week as well as the many recent business reports derived from the highly successful US-Saudi Business Opportunities Forum (Dec 5-7, Atlanta). [Link to the SUSRIS Special Section containing transcripts, articles, interviews, videos, biographies, slide presentations, special reports and more.] Among those reports are the presentations provided to panel at the Forum by Jadwa Investment Managing Director and CEO Ahmed Al-Khateeb  [Link]  and Dr. Tawfiq Al-Rabiah, who was named the new Minister of Commerce and Industry a week after the Atlanta event. [Link]  Finally, no appreciation of Saudi Arabia’s commercial standing in the world would be possible without understanding the key role played by H.E. Abdullah Alireza, Minister of Commerce and Industry from March 2008 through December 2011.  He has been a driving force behind the Kingdom’s excellent business relationship with the United States and his important remarks from the Forum can also be found in these pages.  [Link]

[Complete report with charts, graphs and tables at this link.]

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The Saudi Economy in 2012

We expect another year of reasonable economic performance in 2012. Non-oil growth be strong and inflation should ease. Lower oil production will cause total real economic growth to slow, and combined with lower oil prices, will reduce the budget and current account surpluses. High government spending will remain the engine of the non-oil economy.

We expect economic growth to fall to 3.1 percent in 2012, from 6.8 percent in 2011. This sharp decline is because oil production is forecast to drop after a large rise in 2011. Growth in the non-oil economy will be 4.7 percent. Government spending will be supported by greater bank lending and high consumer spending. Construction, the main beneficiary of government spending, should be the fastest growing sector.

Budgeted government spending for 2012 is well below the actual level for 2011, but this latter figure was distorted by one-time payments. Investment is budgeted at a record high and total spending will provide an important stimulus to the economy. We expect another budget surplus in 2012. The government will draw down its foreign assets, which stood at around $520 billion at the end of October, to finance its expenditure plans in the event of any shortfall in revenues.

Inflation is forecast to moderate to an annual average of 4.4 percent in 2012. Negligible external price pressures, due to lower commodity prices, a strong dollar and subdued inflation in trading partners, will underpin the decline. This will be supported by lower rental inflation, as more properties enter the market, though the amount of new supply, and therefore its impact on inflation, is not clear. These factors should offset the local inflationary pressures caused by the high level of consumer and government spending. Interest rates will remain exceptionally low. This will bolster the economy, though it will hinder the government should it need to tackle inflation. We do not expect any change to the riyal’s peg to the dollar.

The main risks to our forecast stem from the external environment. There is a danger that the debt crisis in the Eurozone could spiral out of control, causing renewed global recession and a shock to the global financial sector similar to that of late 2008. The implications for the Kingdom would be serious, but not disastrous, given the government’s willingness and ability to honor its spending commitments. Regional political uncertainty will continue to hang over the economy and any heightening of tensions would hit business and consumer confidence. Absent serious reform, ongoing high growth in government spending and domestic energy consumption mean that 2012 is the last year we can confidently forecast a fiscal surplus in the foreseeable future.

The global economic outlook

Click here for the original report with charts and graphs.

The global economy will face a difficult year in 2012. The Eurozone is likely to be in recession and growth in the other leading economies will be sluggish. Emerging markets are stronger, but also show some vulnerability. A lack of economic policy ammunition is hindering recovery and in many cases policy, or constraints on the ability and willingness to implement policy, is reinforcing negative dynamics. The key problems facing the global economy are the lack of economic growth and rapidly rising public-sector debt, which is feeding into major stresses in the banking sector.

The debt crisis in the Eurozone is taking its toll on the region’s economy. Business and consumer confidence have plunged and financing conditions have become significantly tougher. Eurozone banks are reliant on wholesale markets (rather than deposits) for 60 percent of their funding, but as they are also the main holders of Eurozone debt, other institutions have cut back greatly their exposure to European banks and European banks are reducing lending inside and outside the region. With austerity measures taking effect across the region, the region’s economy has probably stopped growing and is likely to shrink in 2012.

Global GDP Growth (percent; IMF projections)

The US economy has been performing better recently. Its banking sector is in a stronger condition that of the Eurozone, financial conditions are healthier and monetary policy has been more aggressive. Nonetheless, serious weaknesses in the housing and labor markets, recession in the Eurozone and continued deleveraging will hold back growth; this could be aggravated by political tensions ahead of the presidential election. Japan is the only leading economy where growth will be significantly stronger in 2012 than 2011, though this is almost entirely due to the post-natural disaster rebound. We do not expect that growth in the developed world will be sufficient to have a meaningful impact on unemployment or to provide much relief to the growing debt/GDP burden. Subdued economic growth means that inflation will not be a concern. There is still slack in the leading economies and weak demand should keep commodity prices under control. Nonetheless, it is unlikely that the US or EU will experience deflation.

Emerging markets will continue to perform strongly, led by Asia. Robust growth in domestic demand should offset most of the negative impulse from the weaker global economy and banks are much healthier than in developed markets. There is also far more scope to ease fiscal and monetary policy; the Chinese government recently signaled that its policy stance has move from containing inflation to bolstering growth. Recent sharp exchange rate falls in many countries will improve their export competitiveness, though exports will be affected by the recession in the Eurozone. Nonetheless, emerging markets will face the consequences of strong credit growth in recent years and their reliance on developed markets to provide funding for this credit boom.

The main risks to the outlook are on the downside and center on the Eurozone. The steps Eurozone leaders need to take to deal with the crisis are understood, but a lack of political commitment to the necessary concessions is hindering implementation. As a result, the pace of change is much slower than that required by financial markets. The longer the wait, the higher the cost and the greater risk that the situation gets out of control. A disorderly breakup of the euro would cause a global recession and the collapse of some Eurozone financial institutions. For the US, the risks stem from the political environment. The inability of the two main parties to agree on budgetary issues could have an immediate as a well as a long-term impact on the economy. Budgetary problems remain a serious concern for Japan and while the country has been able to maintain a rising debt burden for many years, at some point this will become unsustainable.

The oil market in 2012

Oil prices are forecast to fall in 2012 owing to a weakening of the global economy. We forecast that Saudi export crude will average $92 per barrel (equivalent to $95 per barrel for Brent and $86 per barrel for WTI). With Libyan production likely to return to very close to pre-conflict levels by the end of 2012 and output from Iraq steadily rising, we expect Saudi oil production to fall by 4.4 percent to 8.8 million barrels per day.

• Global oil demand is expected to rise in 2012 as a result of continued solid growth in emerging markets, primarily Asia. According to the International Energy Agency (IEA), Asia will be the source of over 60 percent of global oil demand growth in 2012. Demand growth from elsewhere will be fairly sluggish as economic growth slows. A deep recession in Europe would have a significant impact on oil demand; the fall in demand in Europe in 2009 was greater than the growth in demand from all emerging markets that year.
• Oil supply should rebound after various disruptions in 2011. The largest of these was the civil conflict in Libya, which took about 1.5 million barrels per day off global markets for around seven months. Libyan production has reportedly already reached 1 million barrels per day and should be close to its pre-conflict level by the end of 2012. Iraqi production is also set to continue to rise. In addition, the IEA projects non-Opec supply to rise by 1 million barrels per day, the highest level since 2002 (though these projections tend to be overoptimistic).
• Replenishment of oil stocks should give some support to prices. Oil stocks are at their lowest level, in terms of days of forward demand, since the end of 2008. Total OECD stocks have spent four consecutive months below their five-year average for the first time since 2004.

Geopolitical risks and financial flows also need to be considered when forecasting prices. The turbulence in the Middle East and North Africa added a risk premium to prices in 2011 and this will remain in place in 2012 as uncertainty is likely to linger. Tensions surrounding Iran also have the potential to cause oil prices to jump, particularly given that global spare production capacity is low. Financial flows have also influenced oil prices in recent years, as is clear from the close relationship between oil prices and stock markets and other proxies for sentiment about the global economy. In the tough global environment expected for 2012, gains in global stock markets are likely to be modest, at best, meaning they will not exert much pressure on the oil price.

Economic growth

Economic growth in Saudi Arabia is forecast to fall to 3.1 percent in 2012, from 6.8 percent in 2011. This sharp decline is because oil production is expected to drop after a large rise in 2011. (Note that we assume there will be large revisions to breakdown of growth in the budget that shows oil sector growth of just 4.3 percent and unexpectedly high non-oil private sector growth.) High government spending will continue to be the engine of the non-oil economy, supported by greater bank lending. We expect construction, the main beneficiary of government spending, to be the fastest growing sector. Concern about global economic and regional political risks will weigh on the private sector.

Government spending will remain central to the economy. Investment spending is budgeted at a new all time high and we forecast that total government expenditure will be equivalent to 36 percent of GDP, compared to an average of 30.1 over the five years to 2008. This will be a huge stimulus to the economy. The impact of government spending across the sectors of the economy is likely to be different in 2012 than in 2011. In 2011, bonuses for public-sector employees stimulated very high growth in consumer spending, benefitting the wholesale and retail industries, importers and local producers of consumer goods. With the bonus unlikely to be repeated in 2012, we expect construction companies and producers of associated goods, raw materials and services to be the main gainers from the high level of government spending.

High spending is also psychologically important for the private sector. The government spending packages announced in the first quarter of 2011 reassured businesses and consumers about the government’s commitment to support the economy and gave banks more confidence in the lending environment. This willingness and ability to support the economy will be important in 2012 as events outside the Kingdom are dampening sentiment and have the potential to damage the economy. The main economic risk is from the situation in the Eurozone (see box). The fluid regional political situation will continue to make foreign investors wary and hit the sales of companies that export to the region; it also brings the risk of stock market and oil price volatility.

We expect 2012 to be the fourth consecutive year that the economy is driven by government spending. Non-oil private sector growth is forecast at 4.7 percent, still well below the boom years of the mid- 2000s, when a dynamic non-oil private sector grew at an average of almost 6 percent per year.

Aside from government expenditure, the revival in bank lending growth will be an important supportive factor for the private sector.

Saudi Arabia and the Eurozone crisis

The outlook for the euro is unclear. This produces a range of scenarios that vary from the benign (necessary reforms are enacted and money becomes available to allow the crisis to ease) to the alarming (a collapse of the currency, banking crisis and recession worse than that of 2008). Our core forecast is that the euro will survive, but that the Eurozone will enter recession and the region’s banks will have a tough year. This will impact on the Kingdom in the following ways:

Financial conditions: The abrupt deterioration in financial conditions after the collapse of Lehman Brothers had a significant impact on the Saudi economy in late-2008 and 2009. Now, the Kingdom’s banking sector is in a lot better position. Lending growth more subdued, deposits are much higher (the loan-to-deposit ratio is 80 compared to 90.6 in September 2008) and foreign deposits are a smaller proportion of total deposits (14 percent versus 18 percent in September 2008). In addition, Saudi banks are fully financed through deposits, whereas Eurozone banks are heavily reliant on wholesale funding (funding in excess of their deposit base), which has become a lot less readily available. Our central scenario is that the impact on the Kingdom will be limited to the reduced participation of European banks in project financing and other local activity. A more serious outcome could shut off international bank lending and lessen the lending appetite of local banks, though Saudi government agencies will continue to provide funding. Saudi banks have virtually no holdings of peripheral Eurozone debt, but do own small amounts of Spanish and Italian government debt.

Oil prices: A Eurozone recession will have a notable impact on oil demand, putting downward pressure on oil prices and reducing the requirement for Saudi crude. European members of the OECD consume 50 percent more oil than China and the fall in oil demand from the region in 2009 was greater than increase in total non-OECD demand. We are not convinced that the outlook for the Eurozone is consistent with the buoyant consensus forecasts for oil demand and oil prices. The deeper the recession in the Eurozone gets and the further it spreads, the lower oil price and oil production will fall. We expect the government to draw on its foreign reserves ($519 billion at the end of October) rather than disrupt spending, if there was a sharp fall in oil revenue.

Trade: In 2010, the Eurozone was the destination for around 8.5 percent of the Kingdom’s total exports and 7.5 percent of non-oil exports, much of which were petrochemicals and plastics. Recession would clearly hit sales of these products. It would also hit other trading partners the EU is China’s largest trading partner) and potentially their trade with the Kingdom.

Stock market: Listed company exposure to the Eurozone economy is small and largely confined to the petrochemical producers. More important for the market is the impact of events in the Eurozone on local sentiment. The deteriorating situation in the Eurozone pulled down stock markets throughout the world in 2011 and contributed to the decline in the TASI. With retail investors dominating the local stock market, moves in share prices effect consumer confidence and spending. Stock market volatility would probably influence the timing of any further opening to foreign investors.

Data for the first ten months show that bank lending rose consistently during 2011; if continued, 2011 would be the first year without any monthly declines in lending since 2005. With banks comfortable with lending conditions and their own financial health, year-on-year lending growth should average around 13 percent, the highest since 2008, and much more sustainable than the rates of two-to-three times this level in the mid-2000s. In an environment of very low interest rates and low investment returns available elsewhere, banks are likely to put more emphasis on lending to smaller business that have struggled to access credit in recent years.

Although we expect non-oil economic growth to pick up, the trend varies across the key sectors of the economy. Our expectations for growth in the main sectors are as follows:

• Oil is by far the largest sector of the economy, accounting for around 25 percent in real terms, and the decline in oil production we expect in 2012 is the main reason that economic growth will slow. There were three clear increases in oil production in 2011. A jump occurred in February, when the bulk of Libyan production ceased. There was a further rise in June owing to concern about high prices after that month’s Opec meeting collapsed. Finally, the Oil Minister stated that production exceeded 10 million barrels per day in November (versus 8.3 million barrels per day in November 2010) ahead of the Opec meeting in December. Each of the steps appears to have achieved its goals; the shortfall in Libyan production was covered, oil prices declined and the Kingdom reemphasized its preeminent role within Opec. With Libyan production rapidly returning to the market, Opec agreeing a new production quota (which incorporates Libya and Iraq) that is below current production and troubles in the global economy hitting demand, we think that production will be cut in 2012.

Real GDP Growth (Percent)

• Manufacturing growth is likely to slow in 2012. Up to the third quarter of 2011 the worsening global economy had not caused any impact on the sales volumes of Kingdom’s petrochemical producers, but we think volumes will be hit as the slowdown extends into 2012. Political uncertainty will continue to impact on performance of many other countries in the region, which will dampen demand for other locally manufactured exports. Furthermore, refinery output is expected to fall given lower oil production. However, local demand for manufactured products, especially those used for construction, such as cement and steel, will be pick up. No new major manufacturing projects are set to come on stream in 2012, with the possible exception of Saudi Polymers, which was set to begin production before the end of 2011, but has yet to formally announce whether this has happened. The sector will benefit from the ramp-up of some facilities that entered production towards the end of 2011, notably the Ma’aden phosphate project and Saudi Kayan petrochemicals plant.
• Electricity, gas and water will remain one of the quickest growing parts of the economy. Sectoral growth has averaged 6.4 percent in the past decade and should be faster in 2012 with new housing, commercial and office space coming on stream in addition to rising industrial demand. No major additions to capacity are set to come on stream in 2012, though there will be increases at regional facilities in Qassim, Tabuk and Yanbu. We do not expect any change in utility pricing, even though it would slow consumption growth and promote more efficient use.
• Construction is forecast to be the fastest growing sector in 2012. To date, we think there has been relatively little physical progress in the government’s plan to build 500,000 new housing units, announced in March 2011. Growth in cement sales and imports of construction materials in 2011 was in line with the historical trend. This is probably because of the time it is taking to build momentum at the new housing ministry and because the initial work would involve sourcing the land and designing the properties and associated infrastructure. In 2012 there should be much more construction activity. In addition, there are a vast amount of private-sector projects, infrastructure development and other government schemes that have an element of construction. According to Middle East Economic Digest, there are around $660 billion of projects either planned or under way in the Kingdom, a total that does not include the bulk of the government’s house-building program.
• The wholesale and retail sector benefitted greatly from the award of a two-month salary bonus to government employees in March; point of sale transactions were up by close to 40 percent in 2011. We do not think such a payment will be repeated and therefore forecast a sharp slowdown in growth for this sector. Nonetheless, growth will remain reasonable, as the economy strengthens and the benefits of government spending trickle down. In particular, spending by low income consumers should rise owing to the introduction of unemployment benefit together with the ongoing effect of a higher public-sector minimum wage and the widening of social benefits. Those on low incomes tend to spend a high proportion of their salaries.
• We expect that growth for the telecoms and transport sector will slow. This is because the stimulus resulting from the surge in mobile phone use in recent years will fade. Mobile phone penetration hit 198 percent (1.98 phones per person) at the end of September 2011, a level from which there seems limited room for further growth. Mobile subscriptions were up by 8.7 percent over the first nine months of 2011, compared to an annual average growth of over 30 percent in the previous five years. Broadband and mobile applications will remain an important source of growth. For transport, rising import volumes and the need to move large amounts of construction materials around the country should keep growth healthy.
• Growth in the finance sector will pick up, though it is likely to remain fairly sluggish. Although bank lending and profits should rise, investors will be cautious, with little improvement in the stock market and a slim flow of deals likely. Growth in insurance should continue to rise in line with the increasing take-up of health and vehicle insurance (gross insurance premiums have grown at an annual average of 24 percent over the past five years). The increase in the supply of housing will lift the value added generated by real estate services (such as estate agents). Use of other business services such as legal, marketing and consultancy should rise in line with the growth in the private sector as a whole.

Inflation

Inflation is expected to fall to an average of 4.4 percent owing to an easing of price pressures from outside of the Kingdom. We think there will be some local inflationary pressure as a result of the high level of consumer and government spending. Rental inflation should decline as more properties enter the market, but it has been rising in recent months owing to higher consumer disposable income, which should mean that the drop will not be large.

International conditions provide a benign backdrop to inflation in the Kingdom. Moves in global food prices have been a leading source of inflation in the past few years, but for 2012 these should be more favorable. According to the UN Food and Agriculture Organization (FAO) global food prices have been falling since they hit an all-time high in February 2011. By November they were down by 10 percent from their peak, but still slightly above their level of one year earlier. According to the FAO’s November Food Outlook report, production of food crops is up and stocks have risen. This suggests a further decline in food prices is likely in 2012, though market conditions remain tight, meaning there is potential for sharp price rises in the event of weather-related disruption.

Domestic policies should also moderate food price inflation. It appears that pressure from government agencies across the domestic supply chain prevented local prices from rising in response to the surge in global prices in late-2010 and early-2011. We think there will be further intervention to cap any food price rises in 2012.

The commodity that is currently having the greatest impact on inflation in the Kingdom is gold. Gold, and to a lesser extent other precious metals, is the main material for jewelry, which is a key component of the “other expenses and services” sub-index of the cost of living index. This is currently the area where prices are rising fastest; inflation for “other expenses and services” in November was 9.4 percent, down from a three-year high of 12.3 percent in October. Gold is one of the most difficult commodity prices to forecast as demand for its use as a hedge or safe haven has much greater impact on prices than physical demand and supply conditions. The consensus forecast is for a slight fall in gold prices in 2012.

International raw material prices are expected to rise modestly.

Although growth in the global economy will slow, China, which is the main source of demand for industrial materials, should still grow rapidly. With vast construction work planned, high demand for some building materials in the Kingdom could cause supply bottlenecks and will put upward pressure on the prices. These products are captured in the wholesale price index, rather than the cost of living index, though there would be an impact on the latter. Wholesale price inflation was 4.5 percent year-on-year in the third quarter of 2011, the lowest since the third quarter of 2010.

Lower commodity prices, particularly for oil, will contribute to subdued inflation in the Kingdom’s main trading partners, a key source of local inflation. Lower oil prices will also reduce the cost of transporting goods. In addition, there is still slack in many of the leading global economies following the 2008/09 recession, evidenced by high unemployment rates. With weak growth likely in the US and a renewed recession in the EU (combined, these are the source of 42 percent of the Kingdom’s imports) inflationary pressures in these areas should subside. For advanced economies as a whole, the IMF forecasts that inflation will drop to 1.4 percent in 2012 from 2.6 percent in 2011; for emerging and developing economies the fall is predicted to be to 5.9 percent in 2012 from 7.5 percent in 2011.

Finally, we do not expect the exchange rate to be a source of inflationary pressure. The dollar has retained its safe haven status owing to the liquidity, size and breadth of its capital markets despite a credit rating downgrade of the US earlier in the year. With the Eurozone problems set to linger, consensus forecasts are for a further slight strengthening of the dollar and therefore the riyal (see Exchange rates).

Inflation Breakdown (Percent)

Rents have been the main source of inflation in the Kingdom for most of the past five years. They were surpassed by “other expenses and services” in 2011, but after being on a sustained downward trend since mid-2008, rental inflation picked up in the second half of the year. We think this is the result of the increase in consumers’ disposable incomes raising demand for property and encouraging landlords to raise prices. At the same time, the provision of new property has so far not been sufficient to keep up with demand. Over 2012 we think that more housing will become available, though it will take longer before the government housing-building program announced in March 2011 delivers a significant number of units. It is therefore likely that rental inflation will ease, though it will remain fairly high and will resume its position as the largest single contributor to inflation in the Kingdom.

Inflationary pressures elsewhere in the economy are stronger. High consumer spending, double-digit money supply growth, rising bank lending and exceptionally low interest rates will lift inflation in areas such as home furniture, education and entertainment, transport and telecoms and medical care. However this comes from a low base (inflation for these four sectors averaged 2.1 percent in November). Even if domestically generated inflation is above our forecast we do not see headline inflation getting to anywhere near the highs of 2008, as back then very strong domestic demand was accompanied by rapidly rising commodity prices, a falling dollar and global inflation much higher than today.

Current account

We expect a large fall in the current account surplus in 2012 because of lower oil export revenues. The surplus is forecast to decline to 14.9 percent of GDP from 27.6 percent of GDP in 2012. In dollar terms the surplus is expected to almost halve to $82.2 billion from the all-time high of $159.5 billion recorded in 2011. Imports 20 should grow faster than non-oil exports. The invisibles balance, which consists of flows of remittances, incomes and payments and receipts for services, will stay in a large deficit.

Current Account ($ billion)

Oil revenues constitute between 85 and 90 percent of total export revenue, so the decline in oil production and prices we are forecasting for 2012 will cause a substantial fall in total exports, though they are still forecast to be the second highest on record. Non -oil exports should rise modestly. Non-oil exports hit an all-time high of $4 billion in October, with petrochemicals accounting for one-third of the total. We do not expect much growth in petrochemicals revenue in 2012 as prices are likely to fall and the absence of new capacity coming on stream means there is little room to increase volumes. Exports of plastics and other downstream production should continue to benefit from high demand from Asia.

Import growth is expected to pick up as implementation of the housing construction and other government infrastructure programs lifts the demand for construction raw materials and machinery. High consumer spending will boost imports of household goods, vehicles and electronics. We therefore expect the trade surplus to fall to $162 billion in 2012 from $244 billion in 2011.

Remittances of foreign workers will remain the main source of outflows from the invisibles accounts. The huge amount of construction work will necessitate a continued inflow in foreign workers. Despite measures to increase the number of nationals in the private sector, we think that the total number of foreign workers will rise and their remittances will approach $30 billion in 2012. There will also be higher outflows to foreign companies providing construction and related services. As the economy expands, payments to foreign providers of other services, such as communications, insurance and financial, should also rise.

Returns on the government’s investment portfolio are the main source of non-trade revenues. We expect a little growth in 2012, as the stock of foreign assets will rise further. The bulk of these revenues are invested in foreign government bonds, primarily US, and with global interest rates expected to remain very low, investment inflows will stay well below their total in 2008 and 2009. Receipts from foreign pilgrims, the other main source of non-trade revenues, should continue to grow given the expansion work underway in Mecca.

Fiscal policy

High government spending will continue to underpin the economy. The 2012 budget projects a surplus of SR12 billion, based on revenues of SR702 billion and expenditure of SR690 billion. This is the first year since 2008 that the Kingdom has budgeted for a surplus. Defense, education and healthcare remain the focus of government spending. Allocations for the house-building program are not included in the budget; the full SR250 billion financing for the program has been deposited into a special account at SAMA.

The budget highlights the government’s intention to continue to stimulate the economy. Budgeted investment spending, raised slightly to an all-time high of SR265 billion, will support healthy economic growth and provide encouragement and opportunities for the private sector at a time of global and regional uncertainty. Budgeted spending is some way below the actual level in 2011. This is not a concern. It is normal for the government to exceed the spending projection outlined in the budget and therefore for the budgeted total to be below the actual total for the previous year. Furthermore, large one-time payments in 2011 distorted total spending that year.

The revenue projection is less conservative than in previous years. We estimate that a price of $69 per barrel for Saudi export crude (around $65 per barrel for WTI and $73 per barrel for Brent) and production of 8.8 million barrels per day are consistent with the revenue projection contained in the budget. We expect both revenues and expenditures to be above the budgeted level and forecast a budget surplus of SR91 billion. The oil price level necessary for revenues to balance our forecast level of government spending, the breakeven price, is $74 per barrel for Saudi export crude (equivalent to around $70 per barrel for WTI and $78 per barrel for Brent). In the event of a shortfall in revenues, any deficit can be financed comfortably by drawing from SAMA’s huge stock of foreign assets, which stood at $519 billion at the end of October.

Monetary policy

Interest rates will remain exceptionally low in 2012. This will support the economy, though it will hinder the government should it need to tackle inflation. As a result of the exchange rate peg and the open capital account, interest rates in the Kingdom need to shadow those in the US. Although the US economy is growing, it is still weak and unemployment is stubbornly high. In August the US Federal Reserve (central bank) said that it would not change interest rates for two years and the consensus among economists is that rates will not be increased until the second half of 2013. We therefore expect the Saudi repo and reverse repo rates to remain at 2 percent and 0.25 percent respectively in 2012.

Interbank rate interest rates are expected to rise. These are the rates at which banks lend to one another and provide the basis for much corporate borrowing. Bank nervousness over financial conditions, primarily in the Eurozone, has seen interbank rates rise across the world and until financial makers are comfortable with the Eurozone’s plans for dealing with its problems, they will continue to go up. In the Kingdom, the three-month interbank rate has increased from an all- time low of 0.6 percent at the end of September to 0.74 percent in late December.

It is likely that other monetary policy tools would be used to contain any emerging inflationary pressures. There was active issuance of Treasury bills early in 2011 to mop up liquidity caused by the bonus for public-sector workers. A mooted sukuk by a government agency could also be used for liquidity management, if it is followed by regular issuance. Adjustments to bank reserve requirements and government deposits in the banking sector could also occur if inflation begins to take off. Finally, small changes to the repo and reverse repo rates independent of the US Fed are possible, with the reverse repo being the most likely target, but at present do not see this happening.

Exchange rates

The riyal will remain pegged to the US dollar. We do not expect any threats to the peg to emerge in 2012. The dollar should strengthen against most major currencies in 2012. It will benefit from its status as a safe haven and the liquidity, size and breadth of its capital markets at a time of ongoing uncertainty in the global economy, particularly in the Eurozone. Current consensus forecasts point to only a modest strengthening of the dollar, but there are several conceivable scenarios under which the euro will fall sharply. However, in the event that market concerns about the situation in the Eurozone diminish, the focus could shift to the troubling debt dynamics of the US, which would put downward pressure on the dollar.

The Eurozone is the largest single source of the Kingdom’s imports, at 24 percent in 2010, so the anticipated weakness of the euro against the dollar will ease local inflationary pressure. Exchange rate movements against other currencies are unlikely to be a major source of inflation. Combined, emerging markets accounted for 46 percent of imports in 2010. It is likely that the dollar will decline against most emerging market currencies, though our assumption of high levels of global risk aversion and reasonable US economic performance means the decline will not be too great.

The problems in the Eurozone have made clear the importance of having an appropriate institutional framework for the proposed GCC common currency; in particular, the need for a formal system of budgetary transfers between countries and for a regional central bank to have the authority to purchase the debt of member countries and provide all liquidity necessary. Agreeing to these measures will take strong cross-country support, which the single currency project has lacked in recent years. Countries in the region are watching very closely what happens in the Eurozone and future plans will be shaped heavily by the outcome of the current crisis. We do not expect serious steps toward GCC monetary union in 2012.

The outlook for 2013

Global economic growth will pick up modestly from 2012, but conditions will be far less benign than they were in the few years prior to the global financial crisis. The outlook for the US and EU will improve, though government austerity, banking sector caution, deleveraging and high unemployment will keep growth low. Emerging markets will continue to lead the way and will pull up oil demand. Oil supply is also forecast to be up, both from Opec and non-Opec producers. With the political situation in the Middle East stabilizing, we expect the risk premium on oil prices to fall, and as a result forecast that Saudi export crude will slip to an average of $86.5 per barrel (equivalent to around $84 per barrel for WTI and $88 per barrel for Brent).

An improving global economy and relatively high oil prices provide a reasonable environment for the Kingdom’s economy, but the activity will remain dependent primarily on very high government spending. Work on the housing program will accelerate and infrastructure improvement will continue. Real GDP growth is forecast to rise to 4.3 percent, with oil production expanding in response to higher global demand, and non-oil growth remaining close to 5 percent. Bank lending growth should be in line with 2012. Although interest rates are likely to rise, they will remain low on an historical basis and negative when adjusted for inflation.

With more of the planned supply of housing entering the market, we expect inflation to fall further, to an average of 4 percent. The improvement in the global economy is unlikely to be sufficient to lift global inflation or commodity prices, though it will probably cause a modest weakening of the dollar. Domestic inflationary pressure should lessen. Total oil revenues are expected to be lower than in 2012, with the fall in prices and rise in domestic consumption offsetting the increase in production. With both imports and government spending growing, we therefore expect the current account and budget surpluses to shrink; the budget is likely to be very close to a deficit. We do not foresee any change to the exchange rate peg to the dollar.

Key Data

(see the complete report)

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For comments and queries please contact the author:
Paul Gamble
Head of Research pgamble@jadwa.com
or:
Brad Bourland, CFA
Chief Economistjadwaresearch@jadwa.com

Head office:
Phone +966 1 279-1111
Fax +966 1 279-1571
P.O. Box 60677, Riyadh 11555 Kingdom of Saudi Arabia
www.jadwa.com

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[Complete report with charts, graphs and tables at this link.]

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About Jadwa Investment – Jadwa Investment is a Saudi Closed Joint Stock company operating under the supervision of the Saudi Arabian Capital Markets Authority (CMA). Under the CMA decision published on August 21, 2006, Jadwa was awarded a license to offer all types of investment services including dealing, managing, custody, arranging and advising. All investment services offered by Jadwa Investment are supervised by a Shariah Supervisory Board and are fully Shariah-compliant.

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SUSRIS Reports on Economic Issues:

• The Saudi Economy in 2012: Jadwa – SUSRIS – Dec 31, 2011
• Budget for 2012 Reviewed: Jadwa – SUSRIS – Dec 28, 2011
• US-SAUDI BUSINESS OPPORTUNITY FORUM SPECIAL SECTION – SUSRIS
• SUSRISTUBE CHANNEL – YouTube
• SUSRIS CHANNEL – Slide Share
• Saudi Arabia Inflation Report – October 2011 – Jadwa – SUSRIS – Dec 21, 2011
• Saudi Economy: Jadwa December 2011 Chartbook – SUSRIS – Dec 3, 2011
• Saudi Arabia Inflation Report – October 2011 – Jadwa – SUSRIS – Nov 22, 2011
• Monthly Bulletin – November 2011 – Jadwa Investment – SUSRIS – Nov 3, 2011
• Saudi Stock Market Listed Companies’ Foreign Earnings – SUSRIS – Nov 2, 2011
• Saudi Economy: Jadwa November 2011 Chartbook – SUSRIS – Nov 1, 2011
• Saudi Arabia Inflation Report – September 2011 – Jadwa – SUSRIS – Oct 20, 2011
• The “Robust” Saudi Banking Sector: A Conversation with Khaled AlKhattaf – SBRIS – Oct 20 2011
• Economic Projections – Jadwa – SUSRIS – Oct 16, 2011
• Saudi Arabia Inflation Report – August 2011 – Jadwa – SUSRIS – Sep 17, 2011
• Saudi Arabia: Continuing Prosperity – Prince Turki Al-Faisal – SUSRIS – Sep 12, 2011
• September Chartbook – Jadwa – SUSRIS – Sep 9, 2011
• Key Economic Developments – Jadwa – SUSRIS – Sep 3, 2011
• Monthly Bulletin – August 2011 – Jadwa – SUSRIS – Aug 24, 2011
• Saudi Arabia Inflation Report – July 2011 – Jadwa – SUSRIS – Aug 22, 2011
• Inflation Report – Second Quarter 2011 – Saudi Arabian Monetary Agency
• Saudi Economic Trends – Jadwa Chartbook – August 13, 2011
• Debt, Downgrade and Saudi Arabia – Jadwa – August 9, 2011
• The Saudi Stock Market and Ramadan – July 23, 2011
• Saudi Arabia Inflation Report – Jadwa – July 21, 2011
• Saudi Arabia Economics – June 2011 – BSF – July 21, 2011
• Saudi Economic Trends – Jadwa Chartbook – July 20, 2011
• Short Term Inflation Spike – SUSRIS – Jul 16, 2011
• Energy, Consumption Lift Saudi Q3 Business Confidence – Sfakianakis – SUSRIS – June 28, 2011
• Saudi Arabia Economics – SUSRIS – June 21, 2011
• Saudi Arabia Economics – SUSRIS – May20, 2011
• Real Estate Saudi Arabia – SUSRIS – May 12, 2011
• Saudi Arabia Monetary Indicators – April 2011 – SUSRIS – Apr 28, 2011
• Business Confidence Rides on $100 Plus Oil – SUSRIS – March 2011
• Economics Quarterly: To Spend or Not to Spend? – SUSRIS – March 2011
• Monthly Monetary Indicators – SUSRIS – March 2011
• Reaching Out Again: Financial Support Analyzed – BSF – Mar 23,2011
• Royal decrees, regional unrest and the economy – Jadwa – SUSRIS – Mar 23, 2011
• Saudi Arabia Economics – BSF – Mar 22, 2011
• Monthly Monetary Indicators – March 2011
• Emerging Markets: What is next for Saudi Arabia? – March 2011
• Employment Quandary: Urgency for Reform – SUSRIS – February 2011
• Saudi Arabia Monetary Indicators – SUSRIS – February 2011
• Uprising in Egypt and Financial Volatility – SUSRIS – January 31
• Saudi Arabia Economics – SUSRIS – January 2011
• Saudi Business Leaders Bullish in 2011, BSF Confidence Index Show- SUSRIS
• Why Are Economists Bullish on Saudi Arabia’s 2011 Economic Prospects – SUSRIS
• Saudi Arabia Monetary Indicators – January 2011 – SUSRIS
• Ready to Roll: 2011 Saudi Budget: Sfakianakis – SUSRIS – Dec 21, 2010
• Saudi 2011 Budget Reflects Solid Economy – SUSRISblog – Dec, 21, 2010
• Saudi Arabia Monetary Indicators – December 2010