KINGDOM OF SAUDI ARABIA ARRIYADH DEVELOPMENT AUTHORITY · · 2010-03-22KINGDOM OF SAUDI ARABIA...

KINGDOM OF SAUDI ARABIAARRIYADH DEVELOPMENT AUTHORITY

Annual Report 2009 (Eng) .indd 1 12/21/09 8:48:42 AM

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Thanks be to Allah, the Almighty, our blessed country is enjoying prosperity and infinite blessings. Security and stability in all domains prevail throughout the country and these nurture continued political, intellectual, social and economic development. Such remarkable development and economic stability, themselves essential pillars of our country’s stability, can only be achieved in conditions of security. The prosperity and growth witnessed by the economic sectors in the Kingdom of Saudi Arabia are reflected in the various economic activities in the prosperous city of Arriyadh. Allah willing, the many strategic factors provide it with strength and the ability to absorb economic shocks occurring in a fluctuating world economy. At the same time, they provide the capacity to seize opportunities as well as to open doors to new horizons, latest technologies and resources that can be added to the economic inventory of Arriyadh City.

Most prominent of these strategic components, for all cities in the Kingdom and for Arriyadh City in particular, are the abundance of strategic resources that Allah has bestowed on this blessed region. The diversity of fields of economic development in Arriyadh City includes all sectors: service, commercial, industrial and agricultural activities and endeavors. All these fields compete in the promotion of the city’s economy, and are themselves promising investment areas that are based on feasibility, availability of resources, abundant financial resources, the growing demand of the market and the overall stability and security of future economic indicators.

State investment in the constituent projects, society building and rehabilitation are essential to the city’s economy. These contribute an essential long-term strategic advantage of integrated, comprehensive development and focus on human resource development in terms of modern requirements. They all represent important elements for Arriyadh’s development and simultaneously seek to strengthen and improve the city’s future economic environment and add to economic feasibility and thus investment attractiveness.

All institutions involved in the development of Arriyadh’s economy and its management need to be mindful and aware of the search for new economic areas and opportunities as well as the continued development of existing ones to compete in all fields with other world economies. At the same time, they need to take into account changing circumstances, emerging opportunities and continue to focus on the real and meaningful elements of renaissance for the good of the country and our beloved citizens.

H.R.H. Prince Salman Bin AbdulazizChairman, High Commission for the Development of Arriyadh


The city of Arriyadh is like a basket that is filled with economic blessings and viable investment opportunities. This is a blessing from Allah. The many development programs witnessed in the city are supported by a number of privileges and rich resources that help regularly renew its attractiveness despite the changing global economic conditions. The steady growth of the city’s population and the nature of the population that features such qualitative characteristics as academic qualifications, income levels and the demographic preponderance of youth provide a strategic hub upon which many significant economic sectors depend. These provide and replenish opportunities and stimulate investments that meet the population needs for high quality housing, transportation and facilities and the needs for services, education, health and other necessities of life. Furthermore, it is an effective incubator for investments and provision of future needs, as well as a main pillar for the growth of the economy, which in turn needs an abundance of qualified personnel for the many and versatile economic sectors.

Arriyadh enjoys many privileges: the city is strategically located at the center of the administrative regions of the country, is endowed with rich agricultural lands and areas of mineral wealth, is a hub of transportation networks and the headquarters of government. And in addition to what Allah has bestowed by way of natural resources, it still possesses enormous potential which can provide the city with significant economic advantages and attract diverse strategic projects. Strategic projects adopted by the Government of the Custodian of the Two Holy Mosques – may Allah support him in the Eighth Development Plan – play a pivotal role in developing the city’s economy. The strategy is based on comprehensive and balanced development throughout all regions and cities in the Kingdom, as well as the completion of infrastructure projects. It focuses on the comprehensive development of the individual, applied technology, varied resources and strategic investment projects. This will have a positive impact on the future economic capacity of Arriyadh. It will provide the city with opportunities to specialize in economic fields that contribute to providing the city with the underlying capacity of qualitative strategic projects.

It is with Allah’s help that future strategic needs for the urban development of Arriyadh, such as public transport, new suburbs, environmental development, sub-centers, and the organization of land use will take all economic factors into consideration. All these projects constitute a broad area of investment opportunities that are based on sound investment rules and attractive returns that will renovate available resources and provide for new future roles that will in turn result in varied and significant development benefits.

H.E. Abdullatif Bin Abdulmalik Alshaikh Member of the High Commission for the Development of ArriyadhPresident of Arriyadh Development Authority


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Contents

This Report. 13

Kingdom of Saudi Arabia: General Information. 16

Arriyadh City: Ongoing and Promising Investment Opportunities 19

Theme One: Arriyadh City: General Features 20

Theme Two: Infrastructure in Arriyadh City 24

Roads and Communications 24

Airports 24

Ports and Railroads 24

Communications and Information Technology 25

Post 25

Electricity 26

Water and Sanitary Waste 26

Theme Three: Economic and Service Sectors in Arriyadh City 28

Industrial Sector 28

Agricultural Sector 28

Trade Sector 30

Construction (Contracting) Sector 31

Real Estate Sector 32

Insurance Service Sector 32

Education Sector 33

Tourism Sector 34

Health Sector 36

Financial and Banking Services Sector 37

Communication and Information Technology Sector 37

Theme Four: The Role of the High Commission for the Development of Arriyadh in Developing the City

39

Introduction to the High commission for the Development of Arriyadh 39

The Comprehensive Strategic Plan for the City of Arriyadh 39

Theme Five: Riyadh Chamber of Commerce and Industry and Enhancement of Investment Climate

44


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Kingdom of Saudi Arabia and Enhancement of the Investment Climate 47

Theme One: Economic Indicators of the Kingdom of Saudi Arabia 48

State Budget 48

Gross Domestic Product 49

Balance of Payments 49

Foreign Trade 50

Cost of Living Index 50

Wholesale Price Index 51

Per Capita Income 51

Labor Market Structure 51

Transport Infrastructure and Communication 52

Major Producing Sectors 53

Performance and Future Outlook of the Saudi Economy 53

Theme Two: Policies and Measures Supporting Investment In the Kingdom of Saudi Arabia 56

Economic Activities Planned for Privatization 56

Economic Freedom and Enhancement of Investment Climate 56

The Kingdom and the World Trade Organization 59

Saudi Capital Market 62

Real Estate Investment and Companies 67

Development of the Banking System 68

The Economic Cities 70

Theme Three: Finance Services and Credit Funds in the Kingdom 72

Labor Law 72

Foreign Investment Law 72

Capital Market Law 73

Corporate Law 73

Commercial Register Law 75

Trade Agencies Law 75

Trade Marks Law 75

Customs Law 75

Income Tax Law 76

Measures and Weights Law 76

Insurance Law 76


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ContentsSocial Insurance Law 76

General Environmental Law 77

Theme Four: High and Major Authorities Related to Investment in the Kingdom 78

The Supreme Economic Council 78

The Supreme Council for Petroleum and Minerals 78

Saudi Arabian General Investment Authority (SAGIA) 80

Saudi Commission for Tourism and Antiquities 80

Capital Market Authority 82

Communications and Information Technology Commission 83

Royal Commission for Jubail and Yanbu 84

Saudi Organization for Industrial Estates and Technology Zones 85

Saudi Aramco 86

Saudi Basic Industries Corporation (SABIC) 89

Saudi Arabian Mining Company (MAA’DEN) 90

Saudi Ports Authority 91

Theme Five: Finance Services and Credit Funds in the Kingdom of Saudi Arabia 93

Saudi Industrial Development Fund 93

Real Estate Development Fund 93

Public Investment Fund 95

Saudi Fund for Development 95

Saudi Arabian Agriculture Bank 96

Saudi Credit Bank 98

Human Resources Development Fund 99

The Centennial Fund 100

Commercial Banks and Banking Finance 101

Theme Six: The Eighth Development Plan and the Investment Outlook in the Kingdom of Saudi Arabia

102

General Objectives and Strategic Bases of the Eighth Development Plan 103

The Eighth Development Plan and the Economic Policy 105

The Eighth Development Plan and Private Sector Investment 105

The Eighth Development Plan and Investment Requirements 105


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Investment Opportunities in Arriyadh City 109

Theme One: Investment Opportunities Provided by Other Government Authorities and Agencies

110

Investment Opportunities Issuing from Government and Other Agencies 110

Investment Opportunities of Riyadh Chamber of Commerce and Industry 118

Theme Two: Investment Opportunities in the Various Economic and Service Sectors 120

Industrial Investment Opportunities in Arriyadh City 120

Commercial Investment Opportunities in Arriyadh City 120

Real Estate Investment Opportunities in Arriyadh City 121

Educational Investment Opportunities in Arriyadh City 122

Health Investment Opportunities in Arriyadh City 123

Personal Services Investment Opportunities in Arriyadh City 124

Statistical Tables 129

Websites of Some Public Agencies and Private Companies 142


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This Report

This edition of investment climate in Arriyadh City is published by the Arriyadh Development Authority to provide local and foreign businessmen and investors with guidelines and information on policies and procedures, responsible agencies, and the range of investment opportunities available in Arriyadh City. The 2009 edition comprises four parts.

Part One provides background information on the Kingdom of Saudi Arabia.Part Two presents background information on Arriyadh City, including infrastructure, economic and service sectors, and the role of Arriyadh Development Authority in the economic development of the City.

Part Three discusses economic indicators for the Kingdom of Saudi Arabia, and policies and procedures at the national and local levels that enhance investment climate and promote investment opportunities, including the recent Labor, Foreign Investment and Capital Market rules and regulations. Further, this part covers government agencies in the investment domain in the Kingdom and Arriyadh City, such as the Supreme Economic Council, Supreme Council for Petroleum and Minerals, Saudi Arabian General Investment Authority, Saudi Commission for Tourism and Antiquities, Telecommunication and Information Technology Commission, etc., and also includes the agencies which provide funding and investment support, such as Saudi Industrial Development Fund, Real Estate Development Fund, Saudi Fund for Development, Public Investment Fund as well as commercial banks. In addition, this part covers the investment outlook for the Kingdom, the Eighth Development Plan and the proposed investment opportunities covered by this plan.

Part Four handles investment opportunities in Arriyadh City which are provided by various public agencies such as Arriyadh Development Authority, Saudi Commission for Tourism and Antiquities and other agencies. Further, it includes information on investment opportunities in various private economic and service sectors.

The INVESTMENT CLIMATE Report concludes with various statistical tables that review the essential economic, service and social indicators in the Kingdom in general and Arriyadh City in particular accompanied by a list of websites and other useful information on the most important public and private sector organizations involved in investment, administrative and legal procedures activities in Arriyadh City.


KINGDOM OF SAUDI ARABIA GENERAL INFORMATION


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Kingdom of Saudi Arabia: General InformationThe Kingdom of Saudi Arabia is an Arab Islamic country, applying Islamic Sharia law in its judicial system. The constitution of the Kingdom is based on the Holy Qur’an and the Sunna of the Prophet (peace be upon him).The political system is based on absolute monarchy. The executive and legislative powers are exercised by the King and the Council of Ministers in accordance with the teachings of Islam. The Consultative Council was established to provide advice to the King and the Council of Ministers in matters of relevance to the Government and its policies. Regional Municipal Councils (of whom half are elected) were also established to participate in the decision making process.The King of the Kingdom and Prime Minister: The Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz Al-Saud.

Membership in International Economic and Trade Organizations The Kingdom of Saudi Arabia is a member of many trade, economic and international organizations, such as: 1. Organization of Islamic Conference 2. Arab League 3. Gulf Cooperation Council 4. Islamic Development Bank5. United Nations 6. World Trade Organization 7. Arab Monetary Fund8. Arab Investment Guarantee Corporation9. Greater Arab Free Trade Organization

10. World Bank 11. International Monetary Fund

Administrative Regions (Provinces)The Kingdom consists of 13 administrative provinces. Each province consists of a number of governorates. The total number of governorates in the Kingdom amounts to 43 class A and 61 class B. Capital: Arriyadh CityMain Cities: Makkah, Madinah, Jeddah, Dammam, and Taif Religion: Islam Official Language: Arabic

Geographic Features Location: The Kingdom of Saudi Arabia lies in the southernmost part of western Asia. It is bordered by the Red Sea on the west; the Arabian Gulf, the United Arab Emirates and Qatar on the east; Kuwait, Iraq and Jordan on the north and Yemen and Sultanate of Oman on the south.

Area: The Kingdom occupies about 80% of the Arabian Peninsula, with a total land area of around 2,250,000 sq km.

Terrain: There are various types of terrain in the Kingdom resulting from its vast geographical area. In the west is a narrow coastal plain paralleled by a mountainous chain sloping eastwards to the Arabian Gulf. There are also the Empty Quarter and Annufoud Deserts, which occupy the south-eastern and northern parts of the Kingdom respectively.

Climate: The climate of the Kingdom varies from region to region, depending on the type of terrain. In general, it is continental, i.e. hot during summer and cold during the winter, with a low level of rainfall. However, the climate is moderate in the western and south-western highlands. In the central region, the climate is dry and hot in summer and dry and cold in winter. The coastal areas are generally characterized by high degrees of humidity.

Working Hours - Government Sector: 7:30 a.m. to 2:30 p.m. - Banking Sector: 9:30 a.m. to 4: 30 p.m. (Saturday to Wednesday)- Private Sector: Varies, depending on company and location.


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Population According to 2007 Population Survey

Total Population 23.98 million

Population Growth Rate 2.3%

Distribution by Gender

Male 13.31 million (55.5%)

Female 10.67 million (44.5 %)

Distribution by Nationality

Saudi 17.49 million (73%)

Non-Saudi 6.49 million (27%)

Distribution by Age Groups

14 years and below 32.5%

15 – 64 years 64.7%

65 + 2.8%

Percentage of Support 69%

(*) Duration of holidays in the private sector varies from one firm to another.

Distribution of Population by Provinces

Arriyadh City 5.8 million

Makkah 6.1 million

Eastern Province 3.5 million

Asir 1.7 million

Madinah 1.6 million

Others 5.2 million

Official HolidaysBesides the weekends (Thursdays and Fridays), the following official holidays are customary:- Eid Al-Fitr: 25th of Ramadan to 5th of Shawal*- Eid Al-Adha: 5th to 15th of Dhil Hijja*- National Day: 23rd of September

Official TimeThe Kingdom’s official local time is three hours ahead of Greenwich Mean Time.

CurrencyThe currency unit of the Kingdom is the Saudi Riyal, which is divided into 100 Halalas. The main banknote denominations are: 1 riyal, 5 riyals, 10 riyals, 20 riyals, 50 riyals, 100 riyals, 200 riyals and 500 riyals. With main coinage denominations are: 1 riyal, 50 Halalas, 25 Halalas, 10 and 5 Halalas. Custom duty on most imported items is 5%.

Foreign Exchange Control There is no restriction on currency transfer in or out the Kingdom. The exchange rate of the Saudi Riyal is SR 3.75 = 1 US Dollar.

Measures and Weights The Kingdom adopts the metric system in measures and kilograms in weights.

Power Voltage Both 110 and 220 Volts are used.

International Telephone Code + 966 + Area Code (Arriyadh 1, Jeddah 2, and Dammam, Dhahran and Al Khobar 3).


ARRIYADH CITYCONTINUOUS DEVELOPMENT ANDPROMISING INVESTMENT OPPORTUNITIES


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one of the three largest metropolitan areas in the Kingdom, together with Makkah and Jeddah and the conurbation of Dhahran, Dammam and Al Khobar in the Eastern Region(2). The City includes 13 municipalities in addition to Dereya District, as well as 209 quarters (3).

ClimateThe Arriyadh climate is marked by extremes of temperature, with low humidity throughout the year, particularly in the summer season. The temperature varies greatly between night and day. In summer, the highest average temperature ranges between 40oC - 43oC. Humidity ranges from 10% to 13%. In winter it is cold, with the highest temperature ranging between 20oC and 28oC, and the lowest between 8oC and 14oC. The temperature occasionally declines to -2oC, while the humidity ranges between 40% and 49%. Rainfall ranges from 10 cm to 13.1 cm (approximately four inches)(4).

Composition of Population According to the Department of Statistics and Information, the Kingdom’s population reached 23.98 million in 2007, comprising 17.5 million Saudi nationals (73%) and 6.5 million non-Saudi (27%) (5). Arriyadh City is one of the world’s fastest growing cities, and its population has risen steadily at a rate of 4.2% during the period 1990 to 2004(6),In the early 1950s the population of the City was no more than 100,000, mostly of common heritage and following a pattern of life characterized by unified activities, but it now accommodates over 4.6 million people from more than 50 different cultures, languages and interests (7). The increase in population has been responsible for the growth of other sectors that seek to meet people’s needs. From an annual increase of 8% in the mid-20th century, since the 1980s population growth has doubled to 16%, with a consequent change to the way of life(8).According to a population survey for 2007 carried out by Arriyadh Development Authority, the population of Arriyadh City stood at 4.6 million compared with only 3.1 million in 2006. A similar survey in the same year showed the population of Saudi Arabia at three million – 1.7 million male and 1.3 million female. The non-Saudi population is made up about 1.5 million, one million male and half a million female(9).

Theme One:

Arriyadh City: General Features

(6) Arriyadh Development Authority, Arriyadh City population estimates 2004-24.(7) Arriyadh Development Authority website www.ada.gov.sa.(8) Ibid.(9) Arriyadh City website www.arriyadh.com.

(1) Arriyadh City website www.arriyadh.com. (2) Ibid.(3) See Arriyadh Development Authority website www.ada.gov.sa.(4) Ibid.(5) Population and Housing features in the Kingdom of Saudi Arabia according to population survey (2007) Ministry of Economy and Planning, Central Department of Statistics.

History of Arriyadh (1)

Arriyadh is the plural of the Arabic word ‘rawdah’, which means ‘garden’ or ‘meadow’. The city might have taken this name since it was one of the few green areas amid the desert. Historians indicate that it was a vast area with numerous farms and water springs. The City has risen on the ruins of the ancient city (Hajar) atop the highlands rising either side of the small basin formed by the Wadi Watr (Bathaa), a tributary of Wadi Hanifa. The name ‘Arriyadh’ was first used about 300 years ago. Economically, trade and animal grazing acquired special importance in Najd Highlands, in the centre of which Arriyadh City is located. The City used to be a commercial center linking east-west and north-south areas of the Arabian Peninsula. Politically, Arriyadh City played a prominent role in the history of Najd. It was the capital of the area during the era of Imam Turki Bin Abdullah, during the rise of the second Saudi State in the early 1800s. Arriyadh City regained its glory when it was recaptured by the late King Abdulaziz on January 15, 1902.

LocationArriyadh lies within Latitude 38.24°N and Longitude 43.46° E and is about 600 meters above sea level. It is strategically located in the heart of the Kingdom and Arabian Peninsula, and which is itself situated in the east of the Arabian Pensinsula at a the major crossroads of the continents of the world.

AreaWithin a mere half-century, Arriyadh City was transformed from a small village surrounded by walls into a modern city. The two developed areas of Arriyadh City are about 1.782 sq km – larger than most countries and, for example, three times the size of Singapore. The first developed area covers about 632 sq km, the second covers about 1.150 sq km, and the recently developed area amounts to 950 sq km. This expansion of beyond its walls has resulted in Arriyadh City becoming


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(1) Arriyadh City website www.arriyadh.com.

Urban Indicators of Arriyadh City (1)

Number of Population 4,622,421 Illiteracy Rate 8%

Housing Rate of Growth 4.20% Population Density 1,686 individual/km2

Immigration Rate 1.20% Average Family Members 6.3

Males 56% Labor Force 1,692,925

Females 44% Rate of Home Ownership 56%

Saudis 67% Number of Housing Units 748,000

Non-Saudis 33% The Rate of Vacant Units 6%

Population under 15 34% Number of Cars per Family 1.72

Saudi Middle Age 18 Number of Traffic Trips 6 million trips/day

Enrollment in Various Education Stages (6-22) years

92% Average Trip Time/Minute 19


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(1) See Arriyadh City website www.arriyadh.com(2) CDSI, Central Department of Statistics and Information, Statistical Yearbook, Issue 40, 2004.(3) Arriyadh Development Authority, population study of Arriyadh City, 2004.(4)Housing and population features in the Kingdom of Saudi Arabia according to population survey (2007).(5) Ibid.

Population Pyramid (1)

Young people make up the majority of the Arriyadh City population. Those below 15 years of age constitutes about 34% of the total, as shown below, thus the base of the pyramid is wide due to the growing number of youth. This will lead to an increased labor force in the future, and necessitate economic programs and projects in order to increase job opportunities.The Saudi population as a whole is typically younger compared to other countries. The under-15s make up 40% for Saudis and 23% for non-Saudis (as shown below).

GenderSaudi residents of Arriyadh City have high fertility rates and produce roughly equivalent numbers of male and female offspring (2 million and 1.97 million respectively (2)). In contrast, the ratio of male to female non-Saudis is approximately three to one. The distribution and classification of non-Saudis with respect to age and gender is explained by the fact that the majority of expatriates are in the country to work.

HouseholdsThere are two types of households in the Arriyadh region: the nuclear family, consisting of one couple and their children, and the extended family, consisting of married couples and their relatives. The changing pattern of Saudi households shows an increase in numbers of nuclear families – 75% in 2004, compared to 67% in 1996. The percentage of extended family reached 21% in 2004.(3) According to the population survey of 2007 (4), the number of residences reached 1.02 million private houses, villas and flats, the majority of flats (368,000) being occupied by non-Saudi residents.The number of residences occupied by Saudi families in the Arriyadh region reached approximately 657,162 out of a total of 1.02 million, divided between private houses, villas, and flats within villas or other flats. The total of residences occupied by Saudis reached 657,162, of which 269,979 were villas. The home ownership rate stood at 56%.(5)

Saudi Population Pyramid

75+

74-70

69-65

64-60

59-55

54-50

49-45

44-40

39-35

34-30

29-25

24-20

19-15

14-10

09-05

04-00

30

00

00

20

00

00

100

00

0

0 100

00

0

20

00

00

30

00

00

Female

Male

Non- Saudi Population Pyramid

75+

74-70

69-65

64-60

59-55

54-50

49-45

44-40

39-35

34-30

29-25

24-20

19-15

14-10

09-05

04-00

150

00

0

100

00

0

50

00

0

0 50

00

0

100

00

0

150

00

0

Female

Male


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(1) SAMA, 44th Annual Report, 2008, p 28.(2) Ministry of Economy & Planning, Central Department of Statistics, labor force bulletin, 2007.(3) Ministry of Economy & Planning, Economic bulletin,2007

The number of Saudi families in Arriyadh Region reached approximately 657,000, most living in residences with between four and six rooms. The average number for each family is 6.3 individuals.

Labor ForceIn 2007, a healthy growth in employment was noticed in the Kingdom, reaching 3.2%, compared to 2.1% in the previous year. There were 7.5 million laborers in 2006 and 7.8 million in 2007, 95.4 % of the potential labor force. The growth of local employment by 4.5% played a part in increasing national employment figures in the government sector, which reached 10.4% (969,200 workers) in 2007, compared to 878,000 in the previous year. In the private sector, local employment increased from 2,554,000 in 2006 to 2,616,000 in 2007, an average growth rate of 2.4%, while the foreign employment rate was only 2%.This progress led to local employment reaching 3.6 million workers in 2007 compared to 3.4 million in the previous year, reflecting the importance of local labor in the overall employment structure. (1)

In Arriyadh City (2), the total labor force aged over 15 reached 2.1 million of whom 1.9 million were male and 373,000 were female. The unemployment figure stood at approximately 1.74 million – 507,000 male and 1.24 million femaleThe overall number of Saudi employees aged over 15 reached 996,300 in 2007, 832,000 male and 164,000 female, while unemployed Saudis of 15 and over reached 15 million males and 451,000 females.Unemployed residents of Arriyadh are generally dependents, retired or financially independent. Of unemployed residents 688,000 are students. The breakdown of Saudi nationals in Arriyadh City by career, of a total of 2.1 million employees, show, only 661,000 working in the service sector, 459,000 in the main engineering professions and approximately 215,000 as technicians in human, artistic and scientific fields, whereas 211,000 are salespersons and the rest either managers, businessmen, or those employed in agriculture, livestock and fish breeding, or other chemical or industrial jobs.

Cost of LivingIn 2007, the general cost of living index for the Kingdom, including Arriyadh City, increased by 4.1% compared to 2.2 % in the previous year – from 101.8 in 2006 to 106.0 in 2007. Most of the increases were in the categories of rent, water, restoration works (8.1%), food and beverages (7%), other goods and services (5.3%), and medical care (4.2%). In contrast, the average price of clothing and footwear, transportation and telecommunications decreased to 2.4% and 0.9% respectively. Education and luxury items remained at the same level of the previous year, at an average of 0.2%.(3)

2004 2005 2006 2007

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Inflation Growth and Its Related Causal Factors

Inflation Ratio.

The Percentage of Commodity imports of the GDP (gross domestic product).

Domestic Liquidity growth.


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Theme Two:

Infrastructure in Arriyadh City

(1) Arriyadh Development Authority, Transport Unit.(2) Tatweer magazine, Arriyadh Development Authority, 2008, issue 51.(3) Arriyadh Development Authority website www.ada.gov.sa(4) Tatweer magazine , Arriyadh Development Authority, 2007, issue 50.(5) Arriyadh Governorate website http://www.riyadh.gov.sa/RiyadhCity.asp.(6) Statistical Yearbook 2007, GACA.(7) SGRO, Annual Report, 2004

Roads and CommunicationsThe Arriyadh Development Authority has developed a strategy for the development of the transport system within the framework of the City’s comprehensive strategic plan. This strategy encompasses several elements, including upgrading and extending the road network and establishing priorities to meet existing and anticipated transport requirements. The total length of main roads reached 320 km, with 500 km of main arteries. The number of main crossings reached 44, while the number of highway interchanges reached 54. Many elements of the road network were implemented during the First Five-Year Plan at a total cost of SR 2.6 billion. Work has started on the Second Five-Year Plan. It will include the implementation and improvement of 28 main roads during the period 2007-12(1). Traffic studies have unsurprisingly revaealed that traffic movement in Arriyadh City is increasing to keep pace with the growing population. The number of daily car trips reached six million (with an average duration of 19 minutes) compared to five million daily trips in 2006 and approximately one million in 1987. In 2007, urban indicators estimated an average ownership of 1.72 cars for each family(2).Increases are attributed to the rapid population growth, rising income levels and modern society’s requirement for mobility. The road network is being constantly developed and improved to meet the needs of the City, using modern technology to achieve high levels of safety.Arriyadh City is linked to various parts of the Kingdom via a network of expressways, putting Arriyadh at the center of land transportation.The Arriyadh Development Authority’s comprehensive strategy(3) aims to apply a comprehensive and integrated plan to develop the transport system in the City, a strategy with looks 20 years ahead.

There are 28 elements to the Second Five-Year Plan, the most outstanding being: implementing roads network inside Arriyadh’s old airport, developing Prince Salman bin Abdulaziz road, developing Alolayya Street, Al Bathaa Street, Takhasosi Street, King Abdulaziz Road, finishing the second Ring Road and studying the implementation of the third Ring Road. The Plan aims to end the current congestion on the roads.Thanks to the building boom in Arriyadh, the City achieved four awards from international bodies. These awards recognize excellence in environmental improvement, architecture, building, heritage and planning and reflect the level of the progress of Arriyadh and its outstanding, world-class projects(4).

AirportsArriyadh City’s huge King Khaled International Airport links it with the outside world and with other airports in the Kingdom. The airport was initiated by King Fahd bin Abdulaziz, the Custodian of the Two Holy Mosques, in 1984. The airport lies 35 km north of Arriyadh City, covers 225 sq km and is capable of serving 18 million passengers annually. Related accommodation houses more than 2,000 staff and their families. In constructing the airport, Arabic and Islamic heritage were taken into consideration(5). The data of the Statistical Yearbook (2007)(6) issued by the General Authority of Civil Aviation (GACA) shows a significant increase in both international and domestic flights: the average number of the flights in 2007 increased by 6.8% over 2006. International flights increased by 8.2%, and domestic flights by 5.9% . The total number of passengers amounted to more than 11.7 million in 2007 compared to 11 million in 2006.

Ports and RailroadsArriyadh City is linked with the Eastern Province (Dammam and Al-Hasa) by a 556 km-long railroad, and a recently-built stretch with a length of 449 km. The Saudi Government Railroad Organization (SGRO) provides passenger and goods transport services to Arriyadh Dry Port, making it an extension of Dammam Port. Customs clearance and storage take place in this Dry Port(7). Despite the decrease in passenger numbers within the Kingdom, and throughout


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(1) SAMA, Annual Report, 2007, p.191.(2) Middle East Commercial Essence Information, http://www.ameinfo.com/ar.(3) Saudi Post Corporation, Annual Report , 2007.

the line linking Arriyadh City and the Eastern Province (118.3 passengers in 2006, or a 9.6% decrease), the company’s revenue amounted to SR 233.1 million in 2006, compared to SR 210 million the previous year, an increase of 11% which was due to increased fares, and an increase in cargo carried – 110.4 tons in 2006, up 6.8% on the previous year(1). The development of the Kingdom’s railroads gained impetus when SGRO offered an award for the best strategic planner of railroads linking Jeddah and Dammam, via Arriyadh, with the aim of linking north and south and to serve the new phosphate and aluminum plants. A recently-awarded contract aims to provide express trains transporting pilgrims from Jeddah taking 30 minutes to Makkah and two hours to Al Madinah and is under study.The SGRO is currently undertaking a feasibility study for planned routes linking Jeddah with Jizan and Taif with Khamis Mushayt. The last resolution of the Council of Ministers has made progress in regard to granting licenses to railroad service providers who will meet the high technical standards required(2).The proposed US $5 billion land bridge linking Jeddah and Dammam has been held up by legal issues owing to a dispute over ownership of the land on which the railroads are to be built. Four companies have tendered for this project, which comprises building and operating a 945 km-long railroad connecting Jeddah Islamic port with the Arabian Gulf, as well as another of 115 km linking Dammam Port and the industrial city of Jubail. The new routes will be capable of transporting containers between Jeddah and Dammam in only 18 hours – instead of the four or five days sea route around the Arabian Peninsula – and is expected to attract cargoes currently moved through other Gulf ports. Diesel trains with a 400-container capacity will run on this new line at speeds reaching 120 kph, in addition to passenger trains running at twice the previous speed. The assets of SGRO as well as 1,600 staff will be transferred to the new operator. The concession will be valid for not less than 30 years, and could cover the two existing railroads linking Dammam, Riyadh and Hofuf. Granting licenses for passenger transport is also envisaged on completion of this project.

Completion Of The Final PhaseRussian Railroads Corporation has tendered the lowest bid to erect the fourth and final part of the railroad, which is dedicated to transporting metals and linking north with south. The project involves constructing a new railroad of 500 km linking Al Zubair city with King Khaled International Airport in Arriyadh. Contracts were granted for the first three parts of 2,400 km railroad in 2007. According to SGRO’s strategic plans, new lines are expected to operate between Arriyadh and Jeddah, and Riyadh, Jeddah and Makkah. The private sector will contribute to the implementation of these new projects.

Telecommunications and Information TechnologyArriyadh City hosts the headquarters of the Arab Satellite Communications Organization (Arabsat). Various telecommunications services are provided through landlines, mobile telephones, and data transmission services, etc. in Arriyadh City by Saudi Telecom Company (STC) and Etihad Itisalat (Mobily) Company (a Saudi-UAE Joint Stock Company), and, most recently, Zain company (a Saudi-Kuwaiti Joint Stock Company).

PostThe Saudi Post Corporation (SPC) provides all types of postal services in Arriyadh City, such as parcel post, express mail service (EMS), commercial mail, promotional mail, and postal agencies. SPC also supervises mail services provided to customers. The private sector contributes in providing these services through investments in postal agencies, which provide mail services to citizens. The number of post offices in Arriyadh, according to 2006 statistics, reached 93 main offices and 28 express mail offices and 36 postal agencies. The number of street mail boxes reached 561, and the number of subscribers’ post office boxes reached more than 130,000 in addition to 59,500(3) postal agencies boxes. Since early 2006, SPC started offering home mail delivery services through subscription to this service. The mail box is placed in a location determined by the subscriber. Furthermore, mail services are provided by private companies such as


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Growth of Sales by Saudi Electricity Company (Central Region) of Electrical Energy during

2005/2007 (5)

Year Average Energy Sold

2005 44,099.6

2006 48,503.4

2007 52,096.2

Rate of Change in 2007 = 3.8 %

(1) SAMA, 43rd Annual Report, 2007, p.192.(2) Ministry of Economy & Planning, Central Department of Statistics.(3) Saudi Electricity Company, Annual Report, 2007.(4) SAMA, 44th Annual Report, 2008, p.177.(5) Saudi Electricity Company, statistical datum, 2007.(6) Economic Bulletin, 2008, Ministry of Economy & Planning.(7) SAMA, 43rd Statistical Yearbook, 2007.

DHL, ARAMEX, FedEx, UPS and others, which offer express mail service in Arriyadh City, domestically and internationally. The total of all kinds of postal services reached 7,421 locations. In 2006, 858.1 million items were delivered, of which letters accounted for 99.6%. The balance was divided between express mail and parcel post(1).

ElectricityThe development of electricity, water and sanitary waste services is an important indicator of quality of life to most citizens. All three have shown improvement in the Kingdom in recent years. Generated electrical power increased from 188,318 million kilowatt/hours in 2006 to 190,544 million kilowatt/hours in 2007, with greater coverage.In 2007, the Saudi electrical sector witnessed great improvement(2). According to the Saudi Electricity Company (3), the actual generated capacities grew by an average of 7.6%. Available generated capacity grew by 6.1% and the power transmission network expanded by 3.6%. Eelectrical distribution networks grew by 4.8%, while consumers’ connections grew by 4.2% and the peak loads grew by 11.9% . During the same period, sold electrical units grew by 4.1%, while the number of consumers increased by 4.6%. The number of electrified settlements grew by 2.2% and overall electricity consumption in the different areas of the Kingdom grew by 3.8 % in 2007 (4).

Nine electricity generation plants are operating in Arriyadh. The proportional distribution of the Central sector of generating unions in the Kingdom increased to by 25.5% in 2007. The sector’s share reached 22.6% of the total available capacity, and 32.8% of the total transmission network Kingdom-wide, 29.9% for the total transformers of power transmission, and 28.8% of the proportional distribution of these transformers. The Central sector’s share of the total and proportional distribution for the new consumers amounted to 29.8% and about 31.4% of the total consumers. In 2007, the Central sector’s share of the sold power reached 30.7% of the total sold power in the Kingdom.

Water and Sanitary WasteThe General Water Directorate in Arriyadh Region supervises provision of potable water and sanitary waste water services in the Province. It exerts on-going efforts to meet the growing needs for these services in the various development sectors. Drinking water is delivered to the city from two main sources. The first is from desalinated seawater through special pipes from desalination plants in Jubail on the Arabian Gulf, which represents 60% of water feeding the city. The second source is from local artesian wells making up 40% of the total water supply. The extent of coverage of water networks reached 73% of the population in 2007, and sanitary waste water about 38.4% during that year(6). According to Saudi Arabian Monetary Agency, the daily amount of water consumed in Arriyadh City during 2006 reached 1.35 million m3 compared to 1,75 million m3 in 2005. Annual consumption increased from 480.2 million m3 in 2005 to 622.5 million m3 in 2006(7).

195190185180175170165160155150145140

6

5

4

3

2

1

02004 2005 2006 2007

Numbers of Subscribers.

Electrisity Generation Point.


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(1) SR 2 billion is allocated for water projects, mostly in the final stages. Arriyadh daily newspaper, 22 September, 2008, issue 14700.(2) SAMA, 44th Annual Report, 2008, p.176.

According to the guiding program, the provision of treated sanitary waste water to the population of Arriyadh will cease. Solutions will be implemented in order to expand the coming network to cope with the geographical and population growth of the city in a time-line of four stages, with a cost reaching SR 25.04 billion. Each stage will take five years in order to cover the sanitary waste services of the total constructed area of Arriyadh. In 2005 all necessary designs for the first stage were prepared at a cost of SR 5.20 billion. Other executive contracts were also prepared. Some of these projects have been completed, and 45 projects with a total cost of SR 3.32 billion are being carried out. Special designs related to areas located inside the second stage of the city’s constructed area will be implemented according to the level of financial support. In 2010 the second stage will begin at a total cost of SR 5.20 billion, the third in 2015 at a total cost of SR 5.60 billion, and the

fourth and final stage will begin in 2021 with an expected cost of SR 9.06 billion. SR2 billion(1) is allocated to 55 water and sanitary waste projects in Arriyadh. They include: implementing new water networks, enhancing the existing network, implementing new lines and drilling wells, exchanging the existing water networks, in addition to other projects of expanding the recent water treatment plants. Twenty-five projects have been completed and of the 30 unfinished, most are in the final stage. The Annual Report of the Saudi Arabian Monetary Agency (issue 44) showed that advisory contracts were prepared in order to present a contract to specification of Arriyadh water and establish a local water supply company. In December 2006, advisory companies initiated work and deeds of partnerships were signed with the private sector in the first quarter of 2007(2).


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Theme Three: Economic and Service Sectors in Arriyadh City

(1) 257 km² were allocated to the Sudair Industrial City in Arriyadh Region, which is still in the design phase.(2) Saudi Organization for Industrial Estates and Technology Zones, www.soietz.gov.sa.(3) Tatweer magazine, issue 52, ADA, 2008, p.23.(4) Saudi Industrial Development Fund, Annual Report, 2006/2007.(5) Ministry of Agriculture, Agricultural Statistics 2003/2004.

Industrial SectorAs the political, commercial and financial capital of the Kingdom, Arriyadh City is witnessing growth rates higher than those of other cities. The strength of its economy can be explained by its population growth, increasing job opportunities, which sustain the growth of demand for goods and services, as well as its strategic location at the center of a large regional market represented by the GCC States and other neighboring countries. Arriyadh has also become a financial hub, home to the headquarters of the country’s commercial banks, the Saudi Arabian Monetary Agency (SAMA), the Capital Market Authority (CMA) in addition to other government credit and financial institutions. The private sector, with its growing number of industrial and manufacturing plants,

has likewise played a part in the success of the City. Arriyadh City houses two Industrial Cities, both supervised by the Ministry of Commerce and Industry(1). The total area of the first Industrial City, which lies in the center of Arriyadh City, is 451,000 m2 and includes 58 factories. The second, with an area of 18.8 million m2, lies on the southern outskirts of Arriyadh City and includes 730 factories(2). The Saudi Industrial Property Authority oversees the planning and construction of industrial sites in Arriyadh City. The demand for new sites is estimated at 75% of the entire Kingdom’s requirements (3).The Saudi Industrial Development Fund (SIDF) finances industrial projects through provision of loans to various projects. The total number of loans by SIDF in Arriyadh reached 1,080 to finance 764 projects, representing 27% of the Fund’s total loans from its establishment to the end of 2007. This places Arriyadh Region as first in terms of the number of approved loans and second in terms of accredited loans whose value reached SR 15 billion, representing 23% of the total accredited value of the Fund. In 2007, the fund financed 29 loans for projects located in Arriyadh Region, 30% of the accredited loans during that year. These loans were granted for the purpose of constructing 19 new industrial projects and expanding 10 existing industrial projects. In terms of accredited loans, Arriyadh Region comes in the second place, with SR 1.3 billion and 16% of the total accredited loans of the fund in 2007(4).

Agricultural SectorThe Agricultural sector in Arriyadh Region is of major importance, constituting 35% of the Kingdom’s agricultural production. Arriyadh lies at the center of the main agricultural areas in the Kingdom. This, and its proximity to Al-Kharj Governorate, the largest agricultural region, makes the City pivotal in the distribution of produce(5). Statistics for 2003 indicate that the total arable land in the Arriyadh Region decreased from 344,438 hectares to 314,264 hectares in 2004, then to 286,264 hectares in 2005 and 275,982 hectares in 2006. However, the total area for all crops increased in 2007 to 283,717 hectares, as follows:


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Estimation of the Arable Land for all Crops in Arriyadh (1) (Hectares/Ton)

2003 2004 2005 2006 2007

344,438 314,264 286,264 275,982 283,717

An Estimation of the Assigned Area and Production of Grains in Arriyadh (2) (Hectare/Ton)

2003 2004 2005 2006 2007

Area Production Area Production Area Production Area Production Area Production

148,619 659,952 129,237 622,349 114,544 555,448 112,260 541,540 111,904 541,318

(1) Ministry of Agriculture, Annual Statistical Report, 2008, available on the Ministry of Agriculture website. (2) Ibid.

All winter crop areas gradually decreased from 168,695 hectares in 2003 to 126,500 hectares in 2006. In 2007, it rose to 126,896 hectares. General production decreased from 2003 to 2007, from 148,691 hectares in 2003 to 111,904 hectares by the end of 2007. As a consequence, Arriyadh production of grains decreased from 659,952 tons in 2003 to 541,318 by the end of 2007, as shown in the following table:


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Established Commercial Companies in Arriyadh to 2007 (6)

Year Number

2005 10,980

2006 12,564

2007 17,824

(1)Ibid. (2)Saudi Arabian Agricultural Bank, www.saab.gov.sa.(3) Arriyadh daily newspaper, 24/9/2008. SR 35b in loans and subsidies to the agricultural sector. (4) Saudi Arabian Monetary Agency, 44th Annual Report, 2008.(5) Ministry of Commerce and Industry, a brief of commercial information for the second quarter, 2008.(6) Ibid.

Annual statistics from the Ministry of Agriculture showed a slight decrease in the number camels in Arriyadh, from 122,252 in 2006 to 121,095 in 2007. However; numbers are still higher compared to those of 2004 and 2005 when they were recorded as 99,123 and 95,600 respectively. The number of sheep in Arriyadh also decreased from 1,979,146 in 2006 to 1,952,334 in 2007. Arriyadh City is one of the Kingdom’s largest producers of milk and milk derivatives, having 21 projects with a total production of 645.4 million liters per year representing 74% of the Kingdom’s total production. There are also specialized apiaries with a production of 26,692 kg of honey per year, or 15% of the Kingdom’s production(1).

The Government has subsidized the Saudi agricultural sector(2) with SR 53 billion since the Saudi Agricultural Bank was first established. It provides interest-free loans to meet the needs of the farmers and develop this vital sector.Thus the total accredited loans between 1965, when the bank opened, and 2007 was 428,350, with a total value of SR 39.9 billion.In addition to the Bank’s major role in providing agricultural loans and fiduciary services, it was authorized to grant agricultural subsidies in 1974 for the purpose of developing the agricultural sector in the Kingdom and make it easier for farmers and investors in this vital sector. The total subsidies spent by 2006-7 reached SR 81.5 million, making a total of SR 13.7 billion since the fiscal years 1973-4. These loans were put towards irrigation pumps, agricultural machinery and equipment, drilling wells, irrigation machinery, machinery for pumping water, generators greenhouses, fruit and date palm nurseries, boats and fishing equipment, hives and bee-breeding equipment, as well as seeds, fertilizers, pesticides and fuels. As regards specialized agricultural projects(3), the loans have gone towards establishing 4,723 projects over 44 years. Poultry farmers received 1,032 loans or 21.9% of the total agricultural loans, with a value of SR 2.94 billion, or 30.6% of the projects’ total value. These projects comprise breeding broilers, a second generation of egg layers, a first generation of broilers, in addition to slaughterhouses and automatic hatcheries. Grain and vegetable production projects attracted 2,985 loans, or 63% of total projects,

with a total loan value of SR 3.47 billion or 36% of the total value. This group includes wheat, barley, fruits, vegetables, dates and potatoes. Loans granted for establishing greenhouses numbered 315 or 6.7%, with a total value of SR 1.23 billion, 13% of total project loans. Other projects included fish and shrimp breeding facilities, date processing, sesame and olive mills, as well as cooling stores for agricultural products.

Trade SectorThe trade sector in Saudi Arabia witnessed real growth during 2006-7. The preliminary GDP results by type of activity indicated that growth of this sector was 6.2%, (9.0% nominal growth)(4).In 2007, the number of commercial companies in Arriyadh reached 17,824, increasing by 5,720 by the second quarter of 2008(5).


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Type RegisteredYear

2005 2006

Single Company 9,081 9,912

Company 1,105 1,302

Total 10,186 11,214

The Accumulative Total of Companies (Central/Branch)in Arriyadh to 2006

Description Number Percentage

Limited Responsibility 7,667 76

Collaborative 1,398 13.8

Simple Recommendation 536 5.3

Contribution 501 5

Total 10,093 100

(1) Ministry of Commerce and Industry, Department of Information and Computers.(2) Ibid.(3) Ministry of Municipal and Rural Affairs, Municipal Statistics, 2005.(4) Ibid.

Established commercial registers increased for single institutions and companies (both branch and central ones) as follows(1);

Construction and Building Sector (Contracting)The building and construction sector is crucial to the development and support of infrastructure and other productive sectors. Between 2002 and 2006, the sector experienced a remarkable growth of 7.2%. This sector comprises 4.5% of the total local production’s current prices where a building boom was a remarkable feature in Arriyadh. Buildings licenses issued in Arriyadh Region reached 15,661 in 2005, or 28% of total

In respect of existing companies in Arriyadh, the

total reached 10,093, distributed as follows(2):

55,369 licenses issued in the Kingdom. Most building licenses issued by Arriyadh Region Municipality were intended for construction of residential and commercial buildings, reaching 13,951 licenses, representing 89% of total building licenses issued in 2005(3). State-of-the-art, well-designed buildings, skyscrapers and sophisticated malls constitute the majority of new buildings in Arriyadh City in recent years. A large number of Saudi, foreign and joint

Arriyadh City Construction Licenses 2004 (4)

Type of Building Number %

Residential and Commercial 13,951 89.08

Industrial and Commercial 1,136 7.25

Mosques, Educational and Medical Buildings 512 3.27

Government - social buildings 62 0.48

Total 15,661 100


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(1) Ministry of Commerce and Industry, Department of Industrial Statistics.(2) Ministry of Municipal and Rural Affairs, 2008, see the website.(3) CDSI, Statistical Yearbook, issue 42, 2006(4) Ministry of Municipal and Rural Affairs, Annual Report, issue 46, 2005.(5) Arriyadh Development Authority, Analytical Study of Field Survey of Land Use in Arriyadh City, 2005. (6) The Saudi Insurance Market Survey Report 2007, Insurance Supervision Department, SAMA 2008.

construction companies operate in Arriyadh City. They cover all the sub-sectors of the industry including bridges, residential and commercial buildings, factories and maintenance of facilities. The Arriyadh building and construction sector is further enhanced by the existence of more than 170 licensed factories producing building materials, china, ceramics and glass as well as 74 licenses(1) for new further factories. The sector is also sustained by the concessionary loans provided by the Real Estate Development Fund. In 2008, the number of classified Saudi contractors in Arriyadh reached 750, 48.86% of a total of 1,535 for the Kingdom(2).

Real Estate SectorThe real estate sector’s contribution to the GDP was 8% in 2005-6(3). This sector is supported by the Real Estate Development Fund, which granted special loans to Arriyadh City totaling SR 392.7 million covering 1,309 loans in 2004. The building and construction activity is an important component of the real estate sector. Subdivided vacant land constitutes 44% of total land area in Arriyadh City, whereas un-subdivided developed vacant land constitutes 31%, and planned area 25.2%.(4) The Comprehensive Strategic Plan for Arriyadh City has set up a number of general objectives and policies to develop the housing sector to accommodate the City’s future demands. The City’s housing needs are estimated at 495,000 units, at an annual rate of 27,500 units. This represents a good investment opportunity for the private sector in the areas of building and construction and associated demand for health, education, shops and leisure facilities(5).

Insurance Services SectorThe Saudi insurance sector witnessed significant developments in 2007 with growth of about 24% and gross premiums amounting to SR 6.9 billion in 2006,(6) due to the favorable economical conditions, and expanding compulsory vehicle and health insurance and associated growth of the service industry in the Kingdom.General insurance made up about 60% of the insurance market, growing by 15% to SR 5.2 billion in 2007 compared to SR 4.5 billion in 2006. Thirty-six percent was allocated to health insurance, which grew by 38% to reach SR 3

2005

%37,8

%2,6

%5,1 %7,0 %14,0%0,6%0,0

%6,9

%26,0

2006

%36,9

%3,8 %12,1

%28,8

%11,5

%0,0

%3,0

%0,9%2,9

Energy

Life

Various incidents

Fire

Medical

Engineering

Marine

Cars

Aviation


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(1) SAMA, 44th Annual Report, 2008.(2) General Department of Education in Arriyadh: http://www.riyadhedu.gov.sa/new/websit.html.

billion in 2007 compared to SR 2.2 billion in 2006. The total for rescue and protection was 4% of the insurance market, and it grew by 50% to SR 33 billion in 2007 compared to SR 22 billion in 2006.In 2007, active insurance companies in the Kingdom numbered 42, and by the end of March 2008, 11 insurance companies were licensed, including nine foreign companies. However, 10 insurance companies were approved by the Council of Ministers, and eight more are to be licensed by the Ministry of Commerce and Industry. Among working insurance companies in the Kingdom, only 18 were in the Saudi stock market, although three more will be soon listed.(1)

Education SectorEducation in Arriyadh is provided by public and private sectors at the level of general education for boys and girls of different grades, technical and vocational training and higher education. Enrollment rate within the 6-22 year age range in different educational levels (primary to college) reached 92%. This reflects an improvement on the 88% in 1996. Illiteracy was reduced from 11.5% in 1996 to 8% in 2006.

General EducationEducation in Arriyadh City is provided by government and private sectors for both sexes at all levels – schools, technical and vocational training, and higher education. The following are the latest statistics of the Ministry of Education(2):

The number of primary schools reached 114, • with 41,620 students, among them 35,162 non-Saudi nationals. New student numbers reached 8,405 with 7,008 non-Saudi. Of a total of 3,279 teachers, 666 are non-Saudi. The number of administrative staff is 190. Owned buildings number 25, with 107 being rented.

There are 413 public primary schools • in Arriyadh City, catering for 167,081 students, 132,314 of them non-Saudi. New student numbers reached 25,061, among them 19,449 non-Saudi; there are 10,496 teachers, 10,490 of them non-Saudi. Staff

workers reached 439, including 301 in administration. The number of owned buildings reached 214, with 288 being rented.

Public secondary schools number 94, • accommodating 51,458 students, 38,462 of whom are non-Saudi. New students number 18,577, 14,245 of them non-Saudi. There are 3,334 teachers, 2,882 of them non-Saudi. The number of administration staff is 91 with 74 owned buildings and 12 rented.

There are 80 private secondary schools in • Arriyadh, accommodating 24,355 students, including 21,235 non-Saudis. New students number 6,281, 5,613 of them non-Saudi. There are 1,877 teachers, 464 of them non-Saudi. The number of administrators is 152, with 22 owned buildings and 43 rented.

In terms of private intermediate schools, • there are 107, accommodating 16,634 students, 14,515 of whom are non-Saudi. New students number 6,198, with 1,439 teachers, 488 of them non-Saudi. The number of administration workers is 124, with 18 owned buildings and 71 rented.

There are 206 public intermediate schools • which accommodate 73,511 students, 58,724 of them non-Saudi. New students number 25,420, there are 5,133 teachers, 4,758 of them non-Saudi. The administration staff number 189. Owned buildings reached 114, rented buildings 127.

In 2006 the total number of registered • students in higher education in Arriyadh was 109,760 – 50,438 female and 59,322 male. Total graduates were 16,264, (7,646 male and 8,618 female).


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Note: All colleges in the Kingdom of Saudi Arabia comprise only Bachelor degree students. The above number of colleges includes only colleges granting Bachelor degree.Private higher education comprises three colleges in Arriyadh City: Prince Sultan College, Al Faisal Private College and Arabic Open College, in addition to five private colleges. The number of registered students in private higher education in 2005/2006 reached 2,493. Technical education and vocational training operates through General Organization for Technical Education and Vocational Training (GOTEVOT) and includes seven colleges, with 1,147 teachers and 9,110 students as well as six technical institutes and 328 private centers(2).

Tourism SectorTourism is defined as travel outside the home city whether for one day or for a year, for the purpose of recreation, amusement, shopping, visiting relatives and friends, medical treatment, study, or training. Tourism overlaps other

Higher Education in Arriyadh (Bachelor Degree) 2005-6 (1)

College Name

Registered Students 2005/2006

Graduates 2005/2006 Colleges Number

Male Female Total Male Female Total

Imam Mohamed Bin Saud Islamic University (Arriyadh Colleges)

16,036 13,430 29,466 3,141 1,350 4,491 8

Imam Mohamed Bin Saud Islamic University (total Colleges)

19,569 13,430 32,999 3,461 1,353 4,814 9

King Saud College 28,536 20,800 49,336 3,494 2,919 6,413 14

King Saud Bin Abdulaziz College for Health Sciences (Arriyadh Colleges)

63 269 332 0 38 38 2

Women’s Colleges (Arriyadh Colleges)(*) 0 23,659 22,659 0 4,311 4,311 6

Women’s Colleges (total colleges) 0 252,744 252,744 0 37,098 37,098 87

Teachers’ Colleges and the Faculty of Physical Education 3,531

0 3,531 631 0 631 2

Teachers’ Colleges (total Colleges) 33,870 0 33,870 5,799 0 5,799 18

Technical Colleges in Arriyadh 943 0 943 317 0 317 1

Private Colleges (Arriyadh Colleges) 1,329 1,164 2,493 63 0 63 5

Private Colleges (total Colleges) 2,628 2,439 5,067 130 103 233 17

Total Colleges of Arriyadh City 50,438 59,322 109,760 7,646 8,618 16,264 38

Total Colleges in the Kingdom of Saudi Arabia

186,485 408,326 594,811 28,493 58,747 87,240

sectors, contributes to the economy, increases gross domestic product, and conserves currency reserves, thereby improving the balance of payments, and stabilizing local currency(3).Arriyadh City enjoys several attractive tourist features, including recreational facilities. The City has several historical sties, such as Al-Masmak Palace, Al-Dereya archeological sites, and King Abdulaziz Historical Center, which comprises historical artifacts, museums, libraries, public squares, parks and gardens. Arriyadh City has a number of public parks, the most famous of which is Salam Park at the City center and Al-Watan Park within King Abdulaziz Historical Center, in addition to sport clubs and Malaz Zoo. The Zoo is equipped with recreation and children’s facilities. Arriyadh contains stylish shopping malls, state-of-the-art buildings that are recognized not only in the City but also worldwide. Special sidewalks in some areas of Arriyadh City have land lighting and trees, designed for families for those who like to exercise.

(1) Ministry of Higher Education, statistical book, 2005/2006, see Arriyadh Economy, issue 16.(*) Since 2006/2007 known as Arriyadh College for Women, by 2008/2009 it became Princess Nora Bint Abdul Rahman University.(2) Ministry of Higher Education, statistical book, 2005/2006, see Arriyadh Economy, issue 16.(3) SAMA, 44th Annual Report, 2008


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(1) MAS Center, General Commission for Tourism and Antiquities, key indicators of tourism, (2004/2007).(2) Ibid.(3) Tourism Information and Research Center, Statistics of Housing Sector, 2006.(4) Ibid.(5) MAS, General Commission for Tourism and Antiquities, Statistics Of Arriyadh Summer Festival, 2007, See website: www.mas.gov.sa

According to the Saudi Commission for Tourism and Antiquities (SCTA) (1), the number of tourists in 2007 (Saudi and non-Saudi) reached 28.5 million, compared to 27.1 in 2006, a growth of 5.3%. Tourism from abroad reached 12 million trips in 2007 compared to 8.6 million in 2006 – a percentage growth of 10.63% over 2006(2). Arriyadh City is known for many recreational projects undertaken by the private sector, such as the private and public recreational centers spread all over the City, notably those on the Eastern and Al-Thumamah Road. Several projects are currently underway, which will add to the attraction of Arriyadh City. One such example is the development of areas around Wadi Hanifa and Al-Thamamah Park, which are supervised by the Arriyadh Development Authority. These projects constitute good investment opportunities and serve as additional entertainment and recreational areas for the inhabitants of the City. Arriyadh

hosts the famous annual Janadriya Festival of National Heritage and Culture, which is attended by national and international guests. Arriyadh also hosts important annual and periodical international exhibitions, the most important of which is the international book fair. The fact that the headquarters of all Ministries and Government agencies are located in Arriyadh assists the City in hosting international conferences, which offer more opportunities for ‘conference tourism’. Also, students from all regions come to Arriyadh for university and college education, and for medical treatment, since Arriyadh provides advanced government and private medical facilities.In Arriyadh there are a number of hotels of different classes to accommodate visitors to the City. As of 2006, Arriyadh had 82 hotels, as follows: (3)

Hotels In Arriyadh City, 2006

Class Hotels Number Number of Rooms

Premium Class 9 2,451

Five Star Hotels 23 3,025

Four Star Hotels 30 1,950

Three Star Hotels 17 595

Unclassified 3 69

Total 82 8,090

Furnished Units in Arriyadh, 2006

Class Number of Units Number of Apartments

First Class 85 2,696

Second Class 165 2,831

Third Class 95 1,347

Total 345 6,874

Additionally, there are about 345 units comprising 5,066 furnished apartments which are available for leasing, distributed as follows (4):

Arriyadh Development Authority, in collaboration with the Saudi Commission for Tourism and Antiquities (SCTA) plans to establish many projects such as parks in residential quarters, municipal plazas, botanical gardens, as well as the infrastructure for King Abdullah International Gardens, all of which present investment opportunities for the private sector.The Tourism Information and Research Center (MAS) collaborated with tourism agencies to present statistical studies for festivals and related events held in the summer of 2007 throughout the Kingdom, the most remarkable of which was Arriyadh Festival for Shopping and Entertainment held from 12 June to 12 July, 2007. This festival is now an annual event in Arriyadh City(5).


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Arriyadh Ministry of Health Medical Facilities and Services, 2006 (4)

Description Arriyadh Kingdom

Hospitals 40 220

Medical Centers 361 1925

Dental Centers 1 19

Rehabilitation Center 1 11

Regional and Central Laboratory 1 3

Lazaretto 1 22

Anti-Smoking Clinics 11 42

Health College 2 30

Health Institute 2 16

Medical Jurisprudence 1 18

Health Sector Health services are offered by three major sectors in the Kingdom and Arriyadh, namely the Ministry of Health, other government agencies and the private sector.Arriyadh City houses a number of Ministry of Health hospitals. These include the King Fahad Medical City, Arriyadh Medical Center, the Prince Salman Hospital, Al-Yamamah Hospital, Al-Iman Hospital, the Pediatrics Hospital, the Psychology Health Hospital, Al-Amal Hospital, the TB and Pulmonary Diseases Hospital and the Convalescence Hospital. There are also 63 Primary Health Care Centers spread throughout the City. These hospitals provide free treatment, diagnosis and surgery for citizens. Additionally, there are other medical facilities affiliated with other government agencies. These are: university hospitals, the King Faisal Specialist Hospital, the General Presidency for Youth Welfare Hospital, the Armed Forces Hospital, the King Abdulaziz Medical City of the National Guard, the Security Forces Hospital, the King Khaled Eye Hospital, the General Organization for Social Insurance (GOSI) Hospitals, and the

Schools Health Care Units. King Fahad Medical City in Arriyadh is one of the largest and most modern facilities in the Middle East. It includes a number of specialist hospitals, which employ qualified national and expatriate medical staff. The City includes(1):

Pediatric hospital with a capacity of 246 • beds Gynecology and Obstetrics hospital with a capacity of 236 bedsMedical Rehabilitation Center with a • capacity of 159 bedsGeneral Hospital with a capacity of 459 beds• Outpatient and Support Services Clinics that • include 33 clinics, x-ray facilities, a pharmacy, and a laboratory. A Medical College will be established as part of the final phase(2).

According to the latest statistics from the Ministry of Health, there are 40 hospitals in Arriyadh (of 220 in the Kingdom), 361 medical centers (of 1,925), and one dental center (of 19). Arriyadh City has two of the Kingdom’s 16 medical institutes, and two of its 30 Medical Faculties, and 11 of 42 the Kingdom’s anti-smoking clinics(3).

(1) Ministry of Health, achievements during the years of the Seventh Development Plan, 1999-2004.(2) Ministry of Health Decree No 1/10/66662 in 2004 to establish a college which received 40 students in 2004-5.(3) Ministry of Health Statistical Report, 2006, available on the Ministry’s website.(4) Ministry of Health Statistical Report, 2006, available on the Ministry’s website.


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Finance and Banking Services SectorThe finance and banking sector is one of the most important economic sectors, providing huge investment potential through the expansion of existing banks or the establishment of new ones. Another opportunity lies in the King Abdullah Financial Center, to be opened in Arriyadh in 2009(1). In 2008, 18 banks operate in Arriyadh, including the National Kuwaiti Bank, the Deutsche Bank, the Muscat and Bahrain National Bank (opened in 2000), and the Emirates Bank (opened in 2002). Arriyadh houses the headquarters of ten Saudi commercial banks.. The banking sector of Saudi Arabia is supervised by the Saudi Arabian Monetary Agency (SAMA). The key indicators of Saudi banks at the end of 2007 were as follows(2):

1,353 Bank Branches in the Kingdom, 519 of • which are in Arriyadh Region7,543 ATMs• 252 Investment Funds• 426,085 subscribers to Investment Funds• Credit granted: SR 595.84 billion, of which • SR 347.60 billion is short-term credit (one year or less), SR 83.21 billion medium-term credit (1-3 years) and SR 164.04 billion long-term credit (over three years)Total deposits: SR 717.56 billion• Total assets: SR 1,075 billion. (Unified • Financial Position of Commercial Banks)

Telecommunications and Information Technology SectorTelecommunications and IT play a decisive role in a community’s development process. Information and knowledge have become key factors of new economic production, as they encourage productivity in other sectors. Telecommunication and Internet infrastructures are the nerve centers of modern communities. The telecommunications sector in the Kingdom in general, and in Arriyadh in particular, experienced fundamental changes after the privatization of the sector and the establishment of the Communication and Information Technology Commission (CITC) whose headquarters is in Arriyadh. The Kingdom is heading towards becoming an information and knowledge-based community, through the e-government program, which is based on the National Plan of Information Technology by(3):

Making Telecommunication and IT • services available to all community members Providing an educational and training environment that ensures that the majority of citizens possess adequate skills to deal with Telecommunication and IT applicationsPushing the economic and social sectors • towards achieving advanced levels of IT applicationsMaking the Telecommunications and • IT sectors a major source of revenue

As part of the Government’s initiative to encourage investments in the telecommunications and IT industries and motivate private companies to take advantage of technology applications, such as e-commerce; Arriyadh Development Authority, in collaboration with Arriyadh Chamber of Commerce and Industry, announced plans to create a Telecommunications and IT City on an area of 800,000 m², on land owned by the Public Pension Agency. The City will add new economic dimensions and a gateway to commercial and industrial firms to enter the open market at the regional and international levels. It will also assist in the attraction of foreign investments and large hi-tech companies. Signs indicating that Arriyadh City has become a society of technology are:Application of Information Technology in banking transactions (payment of utility bills, passports, traffic and aviation services, etc).Use of IT in most private and public sectors organizations.Rapid expansion of mobile phone use through the two service providers, Saudi Telecom (Al-Jawal) and Etihad Itisalat (Mobily) and, more recently, Zain. Mobile companies’ services witnessed great progress during the past years in terms of spread, versatile services as well as competitive pricing. The advantages of the competition in the telecom market account for the growth in subscribers in Arriyadh, which grew to 28.4 million in 2007, representing 116%, compared with 12% (2.5 million subscribers) in 2001, an annual average growth of approximately 46%. More than 83% of the subscribers have pre-paid cards.

(1) Future Symposium, Arriyadh 9-10 May, 2006.(2) SAMA, Statistical Tables Supplements: available on the website of the Monetary Agency.(3) Ministry of Economy and Planning, 8th Development Plan 2005-9.


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Landlines (1)

The number of landlines in the Kingdom reached four million by the end of 2007, 2.9 million (73%) of them being home lines, representing 66.5 lines for each one hundred homes. By the end of 2007, the number of phone-lines in the Kingdom reached 16.3,lines (16.5%) for every one hundred individuals. The following diagram shows the growing spread of landlines, and the decrease of using these lines despite being widely spread, and increasing the number of central exchanges. The reason behind this is the rapid growth and spread of mobile services and the facilities available upon subscribing, in addition to a gradual decrease in the price of mobile phones which has led to increasing subscriber demand for more mobile lines. This tendency toward mobile phones and movement away from landlines is a world phenomenon. It is seen in most developed countries and those that witness high penetration and spread of mobile telephone services.

Internet ServiceThe number of Internet users was estimated at one million in 2001, reaching 5.4 million by the end of 2007, a spread rate of approximately 22% of the population with an annual growth average of 32%. The rapid growth is accounted for by people becoming aware of the advantages of the Internet, as well as improvements to broadband services, and the increasing affordability of computers and Internet access.

Broadband Telecom Services(2)

The market of Broadband Telecom Services grew from 14,000 in 2001 to more than 623,000 subscribers by the end of 2007 – a 90% per year growth rate. In spite of this growth, the spread rate is still low compared to developed countries and other comparable countries. It represents a spread rate of no more than 2.5% of the population and 10.3% of residences.Thus, the opportunities for growth of broadband telecoms in the Kingdom are enormous, and likely to leave space for competition in the field of land telecommunications. New companies will spread networks and provide commercial services. This represents one of the most important challenges facing the telecom and information technology sector in the coming years.

(1) Ministry of Telecommunications and Information Technology, see their website.(2) Ministry of Telecommunications and Information Technology, see their website.

RentedLines

DigitalSubscribers’ lines

HousingSpread rate

Subscribers’Spreadrate

BroadBandSubscribers

RentedLines

DigitalSubscribes’ line

HousingSpread rate

SubscribesSpreadrate

BroadBandSubscribes

Growth of Broadband Telecom Services


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Theme Four:

Arriyadh Development Authority and its

Role in the Development of the City

(1) Arriyadh Development Authority, Population Forecasts Study, Arriyadh City, 2004-24.

Introduction to Arriyadh Development Authority (ADA)Arriyadh Development Authority was established by resolution of the Council of Ministers on June 19, 1974. The responsibility of ADA is to implement plans to develop the City in economic, social, cultural, urban and environmental areas. ADA sets up policies that improve the level of services so as to contribute to the welfare and quality of life for its citizens. ADA derives its legality and authority from the Council of Ministers that defined the basis of its role in a series of resolutions including its founding resolution.The major responsibility of ADA is to set up comprehensive plans for the City and emplace basic programs for implementation, coordination and construction of projects.

The Comprehensive Strategic Plan for the City of ArriyadhThe most remarkable efforts of Arriyadh Development Authority are in the area of overall planning and development of the City in the Comprehensive Strategic Plan. It symbolizes integrated and renewable organizational environment of a strategic nature that organize and direct urban, environmental, economic and social activities in a way that accommodates future requirements, benefits from modern facilities and in general avoids the negative aspects of city growth, particularly fast growth, as is the case of Arriyadh City.

The Comprehensive Strategic Plan of Arriyadh City comprises several elements Element One Outlook for the City with the following objectives:Introduce the City as the Capital of the Kingdom

A City of humanity, welfare and prosperity•

A modern oasis in harmony with the desert • environment through the optimum use of technology and environmentally successful structural planningA center of scientific and cultural • enlightenmentA financial and commercial center• A beautiful City with distinguished and • stylish design, integrated with social and cultural life, and a center for Islamic arts and culture

Element Two Arriyadh Urban Plan:The Urban Plan consists of several sub-plans which serve as a mechanism for policy implementation. The most important features of these plans are:

Structural Plan for Arriyadh City, which • reflects all the urban and functional aspects of the objectives, strategies and different urban policies which are incorporated in the Comprehensive Strategic Plan. The Plan defines distribution of land use, major activities, business centers, city transportation system, and network of public utilities. It specifies the environment protection areas, open areas, directions and boundaries of urban development. The Structural Plan covers all parts of Arriyadh City within the boundaries of the development protection having an area of 4,900 km² and forecasted population size of 7.2 million by 2024(1).

Local Structural Plans which aims to clarify • policies and controls for certain areas of great importance for sites. Most important of these plans is the Structural Plan for the City center, Structural Plans for urban areas and Structural Plans for hub centers.

Land Usage Plan, which is considered one • of the most important tools for the plans and policies of the Comprehensive Strategic Plan. It defines the current and future use of land up to 2021.

Zoning Regulations, which divide the • city into zones in accordance with the Land Usage Plan and sets up rules and regulations


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and recommends development standards with respect to density, height and other terms, to ensure privacy and protection of property, the environment, heritage and urban issues. It also lists procedures and steps required for regulations related to planning licenses, building licenses, and encouraging distinguished construction designs.

Element Three Transportation Plan:The objective of this Plan is to secure safe and convenient transportation to accommodate existing and future requirements, taking into consideration the high rate of population growth, and provide a transportation system integrated with the continued urban growth of the City.

Element FourEconomic Development Plan: The objective is to achieve a balanced socio-economic development with a diversified economic base, increase the City’s sources of revenue, limiting the flight of revenue, take full advantage of the City’s characteristics and competitiveness and enhance its role as a financial, commercial and Information Technology center.

Element Five Environment Management and Protection: Aims to achieve a sustainable environment while planning for the City of the future, preserve natural resources, and improve environmental quality. It also aims to achieve the optimum use of resources to accommodate future generations’ needs.

Element SixHousing Availability Plan: Sets up a mechanism for development of the housing sector to address increasing demand, improve residential environment and make available basic needs of the community.

Element SevenPublic Utility Plan:Upgrades the standards of public utility (electricity, water, telephone and sanitary waste),

improving on the current deficit and applying the concept of optimum management resources.

Element Eight Urban Management Plan: Makes arrangements to develop existing systems to ensure the well-coordinated future growth of the City. This will be achieved through integrated planning, application of decentralization of decisions to allow the private sector and residents to participate in the decision-making process.The approval of the Comprehensive Plan for Arriyadh City will undoubtedly reshape the future of the City for the next 20 years. There are significant investment opportunities available to the private sector, including building materials, housing, transportation, tourism and recreational services, health, and educational services.

Arriyadh Development Authority (ADA)

licenses comprehensive development

projects and raises them to 11:Comprehensive development projects for building residential villages in and around Arriyadh City rose to 11 after the approval of Arriyadh Development Authority to license two projects in Alarja and Eshbelia. Arriyadh City needs approximately half a million residential units by 2024, with an average of 27.5 thousand units per year. In order to address these needs, Arriyadh Development Authority controls construction in designated areas to provide more residences in one of the fastest-growing cities in the world.The objectives are multiple, for example organizing services for defined areas, raising the capacity of new residential projects approved by the Authority, and preparing residences with integrated services and utilities in order to enhance the social aspects. At the same time, investors’ needs will be fulfilled in terms of establishing noteworthy buildings and improved services, green areas and sidewalks.Private sector companies have initiated three projects: Durrat Arriyadh, located in the north of the City, Al Qasr in the south and Shams al-Riyadh residential project on King Khaled Road. The three companies involved are expected to start working during this year.


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Arriyadh Municipality has already declared an initiative which adopts nine completely served residential projects to be developed by the private sector. These projects are expected to establish more than 105,000 residential units worth more than SR 131 billion. Development has begun on the villas, apartments, offices, schools, mosques, commercial markets, entertainment centers and medical centers.This and other initiatives are underway under the aegis of Ansenat Arriyadh whose objective is to ensure the harmony of residents and their environment and provide facilities to cater from cradle to grave. Arriyadh Development Authority has resolved to cement the identity of Arriyadh City as a fitting capital for the Kingdom, maximizing its advantages and ensuring attractive returns to investors.

The Effects of Comprehensive Development Projects (residential):Economists and observers consider the Arriyadh City initiative to establish more than 120,000

residential units over the coming five years an essential step towards price stability of the residential units, whether freehold or leasehold. The objectives of this initiative are multiple:

Ensuring reasonable price of residential • units, in the knowledge that there will be increasing demand Establishing villages with full services and • utilities, in order to create socially integrated residential environments.Increasing the number of green areas and • sidewalks in all new projects Improving the provision of electricity, water, • and sanitary waste networks, particularly on major projects Increasing the elevations permitted to • enable the City to grow upwards rather than outwards

Al Saadan project, Eshbelia: The Arriyadh Development Authority issued permission to develop 534,573 m2 of land on King Abdullah bin Abdulaziz road in the Eshbelia district.


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The project’s adjustment comprises the condition of ‘mixed land use’ of the main areas, combining residential units, offices and hotels. The percentage of land allocated for planning is to be not less than 65% devoted to roads, parks and, public areas and green spaces. The remaining 35% is assigned for the development of buildings. A special center has been assigned for the administration.The Authority has increased the permitted heights of buildings on this site, as follows:

Offices• – ground plus five floorsCommercial• Centers – ground plus three floorsCentral• Areas – ground plus five floorsA• partments – ground plus seven floors

The development is to include suitable parking facilities. The developer will be responsible for the administration and maintenance of the project, which is to be completed within five years of commencement.

Taameer Project, Almalkaa: Arriyadh Development Authority agreed on a project to develop 2,226,420 m2 of land located in the Almalkaa quarter, on the western side of

King Khaled road and within the Municipality of Aldaryaa Governorate. The division of use is to be 40% for residential units, 70% for commercial use, 23% for open areas and parks and 30% for utilities and roads services. The project will allocate 30% of the total residential area to apartments, the remainder to be villas and town houses (connected buildings).The maximum height allowed for residential buildings (apartments) is restricted to 10 floors, two floors for villas and three floors for connected residential units. Commercial buildings will reach four floors. In the central area, no than three floors are permitted, and on its fringes, building will be restricted to two or three floors and must accord with their surroundings.The developer will be responsible for the day-to-day administration and maintenance of the project, which is to be completed within eight years of commencement.

Al Yamama Project, Aloraija District: In this project, Arriyadh Development Authority


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has agreed on developing 710,788 m2 of land located in Aloraija district on the Jeddah highway.The allocation of use is to be 30% for commercial and residential use, (26% for residences and hotels, and 4% for commercial purposes), and 70% for utilities, open areas, parks and roads. Height regulations have been adjusted as follows: residential buildings (apartments) to be a maximum of 10 floors, graduated from four to ten floors on all sides, except on the Wadi Laban side, so that surrounding areas are not affected; hotels to be a maximum of 12 floors, and commercial buildings a maximum of two floors.The developer will be responsible for the day-to-day administration and maintenance of the project, which is to be completed within eight years of commencement.

Areez Project, Arrimal district: Arriyadh Development Authority has agreed to the development of 3 million m2 of land located

in Arrimal district to the east of the King Khaled International Airport. Adjustments on land usage allow for residential and recreational buildings, in addition to some commercial and public utilities, divided as follows: 40% for residences and 7% for commercial purposes; 9% for public utilities; 23% for open areas, parks and plazas; 21% for roads and utilities.Building heights are adjusted as follows: nine floors for residential buildings (apartments); two floors for commercial buildings; four floors for medical centers; High buildings (residential) of three to nine floors located only in the central area of the project, not affecting the surrounding areas, and provided that buildings located on the sidelines of the project should be low (two floors) in accordance with the surroundings; the maximum height for buildings located on the fringes is two floors.The developer will be responsible for the day-to-day administration and maintenance of the project, which is to be completed within six years of commencement.


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The Arriyadh Chamber of Commerce and Industry (RCCI) was established in 1961 to maintain, protect and develop the interests of the private sector in Arriyadh Region through integrated services. The most important services it provides are as follows:

Highlight• investment opportunities within and without the Kingdom and make good use of themHighlight new investment fields and • recommend viable opportunitiesPublish directories and information guides • regarding activities of the private sector and the national economy in generalProvide legal• advice, settle commercial disputes and clarify rules and regulationsPrepare• studies and specialized research and provide advice on economic issues

The Chamber of Commerce and Industry in Arriyadh plays a vital role in investment in the City. The Chamber has prepared a strategy covering the period 2005-9 with the objective of motivating the private sector to invest in sectors of comparative advantage, and to improving the investment environment in Arriyadh. It provides services to its members through a number of administrative and technical units:

Research and Studies Center• Data • CenterEconomic Data Bank• Tools Center• Small and Medium Business • Center

The Chamber provides economic information and guidance to businessmen on different investment opportunities and the appropriate communication channels with respect to import and export across the world(1). It actively participates with other investment agencies in the Kingdom and Arriyadh Region, through the Arriyadh Economic Forum, held every two years. The Third Economic Forum was held from 2-4 December 2007 under the slogan ‘For Better and Continuous Economic Development’, under the direction of the Custodian of the Two Holy Mosques, King Abdullah Bin Abdulaziz, Chief of the Supreme Economic Council. The

(1) For more information see Chamber of Commerce Website, www.riyadhchamber.org.sa.

Theme Five:

Arriyadh Chamber of Commerce and Industry,

Enhancement of Investment Climate


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(1) RCCI, 3rd Economic Forum of Arriyadh, 3 December, 2008, see also their website.

Forum calls for an enhanced role of the private sector, which is an important element and stimulator of economic growth in the face of the socio-economic challenges that face the Kingdom. Leading businessmen were invited to participate in the Forum to discuss critical issues and recommend solutions. These issues included ‘ways to develop efficient public-private sector partnership’, ‘transparency and accountability in the economic sector’, and ‘high-tech industrial zones’ or ‘membership of the WTO’ and other themes to promote awareness among the business community. The Arriyadh Economic Forum produced a set of recommendations intended to improve and promote the investment environment in the Kingdom and Arriyadh Region. The following are the key recommendations (1):

Recommendations of Arriyadh Third Economic Forum according to each themeFinancial Surpluses Study:

Transform the Public Investment Fund (PIF) • into a public and independent joint stock company, under the supervision of Supreme Economic Council.The Forum recommended that the Monetary • Agency fulfill its function as a central bank.Define a specific and • fixed methodology for the purpose of financial surpluses formation. Set • basic tendencies in order to invest the public financial surpluses.

A Vision for Developing Human Resources:The Forum recommended the following policies and legislations:

Upgrade Saudi Human Resources • competences to ensure a competitive world position.Upgrade Human Resources competences • is a societal responsibility and requires a informed political leadership to implement the vision and the integration of all parties concerned

Towards a Continuous Infrastructure Development:

Establish Ministry of Infrastructure• Establish • Infrastructure FundStimulate the private sector to contribute in • developing infrastructure services.

Juridical Environment and Requirements of Economic Development:

Remove • all recent obstacles in the way of developing the legislative environmentRemove all recent obstacles in the way of • developing a just environmentRehabilitate and train all members of the • judiciaryDevelop the judicial system relating to • women’s issues

Recruiting in the Government Sector:All companies involved must set • standards of qualification and tests of performanceExpand the role • of the law-enforcement agencies and monitor them under the supervision of the National Agency for Anti-Corruption.Implement the • website speedily in order to consolidate recent, accurate and comprehensive data and information for all investors and members of society to increase transparency. Instigate electronic methods to enable customers to access educational and information programs without the need to visit service centers, thus involving the public in the development process.Expand methods of reward and punishment, • the evaluation of performance, and monitor staff efficiency, accountability and suitability for promotion.


KINGDOM OF SAUDI ARABIA AND ENHANCEMENT OF THE INVESTMENT CLIMATE


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Theme One: General Economic Indicators of the Kingdom of Saudi Arabia

Balance Sheet Key Features 2009-10 (2)

Main Sector Allocations

Item Amount (1,000 million)

Education and Training 122.1

Medical Services and Social Development 52,3

Municipal Services 18.9

Transport and Telecommunications 19.2

Water, Agriculture and Essential Provisions 35.4

Other Sectors 18

(1) Ministry of Finance statement upon issuing of the budget, 2009-10, see Ministry website www.mof.gov.sa.(2) From the statement of the Ministry of Finance.

State BudgetAccording to figures issued by the Ministry of Finance(1), actual revenues for the fiscal year 2007-8 exceeded SR 1,100 trillion, an increase of 144% on the budget estimate. Oil revenues contributed 90% to the realized gross revenues. The actual expenditures amounted to more than SR 510 billion, an increase of SR 100 billion on the budget as a result of the expenditures and high cost of living allowance and various other projects. The figures also showed a decline of public debt to SR 237 billion, representing approximately 13.5% of the gross domestic product.Regarding the balance sheet of the state for the fiscal year 2009-10, public revenues were estimated at SR 410 billion and public expenditure at SR 475 billion, whereas the deficit was estimated at SR 65 billion. The likely decline in oil prices during late 2009 and early 2010, were taken into consideration in preparing balance sheets for the investment of fiscal resources to achieve the requirements of comprehensive and sustainable development.

Distribution of Budget Allocations for the fiscal year 2008 by Major Sectors:

%0.1

%3.5%25.5

%3.0%4.0

%1.6%3.6 %35.0

%15.4

Defense & NationalSecurity

Subsidies Developmentof infrastructure facilites

Health & Social development

Economic resources development

Human Resource Development

Transport &Communication

General Administation &Pubilc facilities &Items

Special governmentallending institutions


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(1) Ministry of Finance statement upon issuing of the budget, 2009-10, see Ministry website www.mof.gov.sa.(2) SAMA 44th Annual Report, 2008.(3) From the statement of the Ministry of Finance.

increasing efficiency of this sector, particularly in manufacturing industries and services, which continue to develop.

Balance of Payments and Foreign Trade(2):The volume of foreign trade (imports and exports) increased from SR 1,028.6 billion in 2006 to reach SR 1,184.6 billion in 2007. Active trade positively affected the balance of payments and the balance of trade surplus improved, reaching SR 565.6 billion in 2007, compared to SR 549.8 billion in 2006. Thus the accomplished surplus in the current account is SR 356.3 billion. The value of commodity exports increased from SR 791.3 billion in 2006 to SR 874.4 billion in 2007, a 10.5% increase. Oil exports made up the majority of these exports, reaching 68.6% in 2007, compared to 89.2% in 2006. Asian countries were the major receiver of exports from the Kingdom in 2007, receiving 49.5 % of the total exports in that year. This percentage greatly differs from those of North America, Western Europe, Gulf Cooperation Council (GCC) states, and other Arab countries, where percentages reached 17.6%,11.1%, 8.1%, and 5.3% respectively.

Gross Domestic Product (GDP)According to estimates by Central Department of Statistics and Information(1), the volume of GDP for 2007-8 exceeds SR 1,753.5 billion at current prices, realizing a rate of growth of 22%, compared to 7.6% in 2000-7. There was an increase of 34.9% for the oil sector and 8% for the private sector.Based on fixed prices, GDP witnessed a growth of 4.2%, 3% for the government sector and 4.3% for the private sector.All economic activities showed positive growth, reaching 5.4% in the field of non-oil manufacturing industries, 11.4% in telecommunications, transport and storage, 6.3% in electricity, gas and water, 4.1% in construction and building, 4.2% in retail and wholesale trade, hotels and restaurants and 2.2% in real estate, insurance and financial services.However, constantly adapting procedures and resolutions in economic reforms had an impact in realizing positive rates of growth in the private sector, diversifying and expanding the base of the national economy and leading to a GDP growth of 46% (excluding import duties) on the fixed prices. These indicators show the

Kingdom Commodity Exports by Million Riyals (3)

2004 2005 2006* 2007**Rate of Annual

Change

Oil Exports 415,297 605,881 705,811 772,989 9.5

Crude Oil 348,209 513,939 607,509 665,544 9.6

Refined Products 67,088 91,942 98,302 107,445 9.3

Ships’ Fuel 1,246 1,818 2,118 2,318 9.4

Non-Oil Exports 57,194 71,263 85,528 104,468 22.1

Petrochemicals 18,673 42,055 45,936 54,036 17.6

Building Materials 5,317 6,154 7,908 10,778 36.6

Food, Agricultural and Animal Products

3,657 4,361 5,228 7,442 42.3

Other Commodities*** 29,547 18,693 26,456 32,212 21.8

Total 472,491 677,144 791,339 877,457 10.9

* Modified Figures** Actual exports statements according to estimates of SAMA, and non-oil primary exports *** Comprises re-exportation


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Kingdom Imports According to their Main Ingredients (2)

Million Riyals Percent Share Percentage of Annual

Change 20072005 2006* 2007** 2005 2006* 2007**

Machinery, Equipment and Electrical Appliances

54,168 67,302 99,740 24.3 25.7 29.5 48.2

Food stuffs 32,968 35,547 44,815 14.8 13.6 13.3 26.1

Minerals and Chemical Products

30,087 33,394 39,975 13.5 12.8 11.8 19.7

Textiles and Clothing 9,664 10,281 11,640 4.3 3.9 3.4 13.2

Metals and Related Products

23,773 38,262 50,829 10.7 14.8 15.0 31.6

Wood and Jewelry 5,504 4,257 6,019 2.5 1.6 1.8 41.4

Transport Equipment 46,704 50,453 59,440 20.9 19.3 17.6 17.8

Other Commodities 20,117 21,543 25,630 9.0 8.3 7.6 19.0

Total 222,985 261,402 338,088 100.0 100.00 100.00 29.3

(1) Ministry of Economy and Planning website.(2) CDSI in SAMA 44th Annual Report 2008, p.130.

The value of commodity imports increased appreciably from SR 261.6 billion in 2006, to SR 338.1 billion in 2007 (an increase of 29.3%). Western European countries were the main exporters to the Kingdom’s in 2007, making up 32.6% of the total imports, followed by the Asian countries with a similar percentage of 30.1%, and 17% for North American countries,

Cost of Living Index:In 2008 a remarkable rise in the cost of living was witnessed – estimated at 9% compared to 4.1% in 2006-7. This rise was apparent in many categories: repairs, rent fuel and water reached 17.7%, domestic furniture 14%, food and beverages 13.3%, fresh vegetables 21.9%, other commodities and services 3.6%, medical care 2.5%, education and promotion category, textiles and shoes 1.8%, transport and communications 1.2%.

the remaining percentage distributed between the rest of the world.In 2007, the balance of trade surplus achieved a small increase of 1.2% with commodity imports outnumbering exports, and its value rose from SR 529.9 billion in 2006 to SR 536.3 billion in 2007. The GDP percentage decreased from 39.7% in 2006 to 37.5% in 2007(1).


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Monthly Cost of Living Index and Rate Changes From December 2007 to end December 2008(1)

Month (*) General IndexRate change compared to the previous

month

December 2007 110.2 0.6+

January 2008 111.7 1.4+

February 2008 112.8 1.0+

March2008 114.4 1.2+

April 2008 115.2 0.9+

May 2008 115.0 0.2-

June 2008 115.5 0.4+

July 2008 117.3 1.6+

August 2008 117.9 0.5+

September 2008 118.3 0.3+

October 2008 120.1 1.5+

November 2008 119.9 0.2-

December 2008 120.0 0.2+

(1) Check CDSI website, www.cdsi.gov.sa.

(*) The Gregorian calendar was necessarily used.(2) Ministry of Economy and Planning website.

(3) Estimates of Labor Force Research as shown in SAMA, 44th Annual Report, 2008, p 222.

In 2008, the rise in the cost of living was estimated at 4.1% compared to 2.2% the previous year. Price increases were mainly in rent, water and restoration works, food, beverages and other goods, in addition to medical care, and reached 8.1%, 7%, 5.3% and 5.2% respectively. Whereas the average price of clothing and shoes, as well as transport and telecommunications decreased to 2.4%, 0.9% respectively. Increases in cost of education and social recreation were only 0.2%.

Labor Market Structure during 2007(2)

The growth of the labor force by 4.5% in 2007 played a major role in increasing the employment rate to 3.2%. The total number of employees reached 7.8 million compared to 7.5 million in 2006. The national labor force reached 3.6 million in 2007 compared to 3.4 million in 2006.

Labor Force by Nationality and Gender in 2007 (3)

NationalityLabor Force Employed Unemployed

Male Female Total Male Female Total Male Female Total

Saudis 3,362,712 667,343 4,039,955 3,082,301 502,456 3,584,757 380,411 164,787 445,198

Rate to Total 83.4 16.6 100 86 14 100 63 37 100

Rate to Grand Total

40.9 8.1 49 37.5 6.1 43.6 3.4 2 5.4

Non-Saudis 3,596,778 602,921 4,199,699 3,581,716 599,868 4,181,584 15,062 3,053 18,115

Rate to Total 85.6 14.4 100 85.7 14.3 100 83.1 16.9 100

Rate to Grand Total

43.7 7.3 51 43.5 7.3 50.8 0.2 0 0.2

Total 6,959,490 1,270,164 8,229,654 6,664,017 1,102,324 7,766,341 295,473 167,840 463,313

Rate to Grand Total

84.6 15.4 100 81 13.4 94.4 3.6 2 5.6


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(1) SAMA, 44th Annual Report, 2008.(2) Al Hayat Magazine: issue # 4608. May 24 -2006.(3) SAMA, 44th Annual Report, 2008.(4) Saudi Railways Organization, 2007 statistics.(5) Saudi Arabian Airlines, Annual Report, 2007.(6) Saudi Ports Authority, 2007 statistics.(7) SAMA, 44th Annual Report, 2008.

Transport and Telecommunications Infrastructure Roads:The road network in the Kingdom of Saudi Arabia is remarkably safe. The total length of roads in 2007 was approximately 52,100 km, 14,400 km of these being highways linking all cities of the Kingdom as well as international borders. This network also serves large urban areas, 9,000 km link major cities and 28,700 km are branch roads to serve villages and agricultural areas (1). Railways:Railways in the Kingdom experienced remarkable development. Advanced networks, as well as several modern passenger stations, were established. Moreover, high-speed trains were introduced, leading to improved passenger and freight services. Particularly noteworthy is the Council of Ministers approval for the establishment of North-South Railways Company, owned by the Public Investment Fund, which has led to remarkable improvements in the transport of passengers and goods(2), and issuance of the Royal Decree No 26 in 2006 to establish Saudi Railways Organization (SAR) with a capital of SR 1 billion(3). In 2007, the number of passengers in the Kingdom decreased, especially on the line linking Arriyadh and the Eastern Province, by 38,800 passengers, or 3.6% to 1.07 million compared to 1.11 million in the previous year. The volume of freight reached 3.2 million tons, an increase of 576,600 tons or 21.6% on the last year(4).

Airports and Air Transport: The airport network in the Kingdom comprises 27 airports, including 4 international and 23 national airports across the Kingdom. These are equipped with the most advanced equipment and systems. Today, integrated airports are being established in Yanbu and Al Ula. The General Authority of Civil Aviation (GACA) licensed companies to work as either national or international air transporters – such as SAMA, with a capital of SR 187.5 million, which increased to SR 302 million and NAS with an initial capital of SR 308.6 million increasing to SR 356.2 million. King Abdulaziz Airport in Jeddah is being expanded in two stages: the first ends in 2011, the second ends in 2035. In 2007,

the total number of passengers passing through domestic airports amounted to 48.5 million. This represents three million extra passengers or a growth of 8.4%, compared to the total of 35.5 million passengers in 2006. Moreover, a total of 564,200 flights were made, an increase of 279,500 flights (representing a growth of 98.2%) compared to 284,700 flights in 2006(5).

Seaports:There are eight commercial and industrial seaports in the Kingdom. Large volumes of cargo are handled annually at these ports. The total weight of exported commodities in 2007 reached 83.35 million tons (excluding oil exports). The volume of imported commodities amounted to 57.48 million tons during the same year. The total number of passengers reached 1.5 million, and 11,821 ships(6).

Postal Services:The total number of post offices in the Kingdom in 2007 amounted to 470 main offices, 146 branch offices, 83 postal agencies (36 in Arriyadh), 4,933 depots for surface mail and 2,465 street mail boxes. Express mail offices numbered 120, in addition to 5,665 mobile postal services to cover the villages(7).


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(1) SAMA, 44th Annual Report, 2008. p.402.(2) SAMA, 44th Annual Report, 2008.(3) Ibid.(4) Ibid.(5) SAMA 44th Annual Report, 2008.

Telephone Lines:Total number of working land telephone lines in the Kingdom stood at approximately four million land lines, according to 2007 statistics. The number of working mobile telephone lines provided by Saudi Telecom Company and Etihad Itisalat, (Aljawal and Mobily) exceeded 28 million mobile lines, or 46% of annual growth. During the same year, the number of Internet users reached more than 6.4 million(1).

Major Producing Sectors:Agriculture The Kingdom has succeeded in achieving self-sufficiency in basic crops. Moreover, it has begun to export many agricultural products such as wheat, dates, dairy products vegetables, eggs, fish and animal products to overseas markets.

Industry:The cumulative number of operating factories in the Kingdom amounted to 4,048 at the end of 2007, with total financing of SR 334.8 billion. These factories employ around 437,000 workers.(2)

Companies:The cumulative number of operating companies in the Kingdom, based on licenses granted by the Ministry of Commerce and Industry, amounted to 18,861 in 2007, with a gross capital of SR 570.5 billion. The capital of joint stock companies reached 72.3% of the gross capital of existing companies. Limited liability companies made up 25.1%, joint liability companies 1.9%, and 0.7% for limited partnerships(3).

Banks:The Saudi Arabian Monetary Agency (SAMA) is the central bank in the Kingdom. In 2007, there were 18 commercial banks operating in the Kingdom, including The National Kuwaiti Bank, Deutsche Bank, Muscat Bank and National Bank of Bahrain. A further 64 commercial banks have since established, with a total 1,353 branches(4). The foremost banks in the Kingdom are:

National Commercial Bank• Riyadh Bank• Saudi French Bank• Samba Financial Group• Saudi British• Bank (SAAB)

Saudi Hollandi Bank• Al Jazira Bank• Al Rajhi• BankArab National Bank• Saudi Investment Bank• Al Bilad Bank• Al Inma Bank•

Performance of the Saudi Economy and Future OutlookThe Saudi economy represents more than one-third of the combined economies of all Arab countries. The Kingdom is the major partner in the inter-Arab trade and investment. It is also ranked the first among Arab countries in terms of attracting foreign investments.The Saudi economy continued to achieve high rates of growth in all sectors during 2007. The positive conditions in the world oil market combine with persistent efforts aimed at fulfilling structural reformation to enhance continuous economic development. GDP increased by 3.4%, and the role of the private sector achieved a 4.3% increase and the government sector 3%.In 2007, the 44th Annual Report of the Saudi Arabian Monetary Agency(5) showed that public finance witnessed a remarkable improvement, leading to a surplus for the fifth consecutive year with a percentage of 12.3% of GDP. In addition, the report showed a 24.9% surplus of balance of payments of GDP achieved for the ninth consecutive year. Non-oil exports rose by 23.1% annually to reach 7.3% of GDP by the end of 2007. The report also pointed to the acceleration of inflation rates in the Kingdom from 4.1% in 2007 to approximately 11.1% in


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July 2008, falling to 10.9% in August 2008. The report mentioned that signs of inflation started to show in 2006 when demand started to exceed supply and affect prices. Rising prices all over the world and the high expectations of individuals and companies played a major role in increasing the pressure on the available resources and consequently to increase the rate of inflation, particularly after the remarkable improvement in Government income. The report considered the Kingdom’s early versatile procedures an adequate initiation whose objective was controlling causes of inflation that directly impact various categories of society, that cannot readily cope with the impact. The Monetary Agency undertook various measures to prevent national over-liquidity by raising the compulsory reserve rates many times.Moreover, the report pointed to the world crisis that threatens economic development. It assured that the conservative policies and procedures of the Monetary Agency in order to maintain the stability of the national financial system played an essential role in protecting it from any possible shocks it might face due to national and international events.

During the coming ten years 2006/2016, approximately 1,000 billion dollars will be allocated to different sectors in the Kingdom for either development or improvement according to the following: * $/us 180 billion to update the infrastructure * $/us 75 billion to update housing projects * $/us 112 billion to expand the petrochemical industries * $/us 140 billion for electricity generation projects * $/us 100 billion for desalinating * $/us 28 billion for agricultural projects * $/us 80 billion for telecommunications projects * $/us 53 billion for tourism * $/us 150 billion for gas production * $/us 13 billion for mining

From a speech by the Ministry of Commerce and Industry at the Chicago Council for Foreign

Regarding outlook for the Saudi economy, the Eighth Development Plan(1) indicates an increase in economic growth, as well as investments of the Government and private sector, and encouragement of foreign capital investment.Accordingly, the Plan calls for increasing total investment from SR 146.6 billion in 2004, to SR 243.9 billion by 2009, an increase in job opportunities and reduction of unemployment through the creation of 1.2 million jobs during the Plan period. Moreover, the Plan anticipates diversification of economic activities and sources of national revenue through increased contribution of non-oil sectors to GDP. The value-added of these sectors is expected to increase from approximately SR 525.3 billion in 2004 to around SR 677.2 billion in 2009. This is in addition to expansion and development of public services (health, education, housing, etc.). By 2009, the number of government hospitals will increase to 248 and the number of beds to 34,722, in addition to an increase in emergency health centers to 356, and support medical services, education and housing. According to the Plan, demand for housing is estimated to be around one million units during the Plan period, and will attempt to provide housing to needy families.The Government’s strategy aims to increase the total value of crude oil exports, from approximately SR 368.8 billion in 2004 to approximately SR 398.5 billion in 2009, an average annual growth rate of 1.56%. It also expects a surplus in the trade balance as well as development in the agriculture field (annual growth rate of 3.2%), mining and quarrying (7.9%), petrochemicals (7.3%), other manufacturing sectors (6.7%), electricity, gas and water sector (4.2%), construction sector (6.7%), real estate sector (5.8%)(2), as well as all other economic sectors, which will grow in an integrated manner leading to improvements in the standard of living for citizens in conjunction with social and economic stability.

(1) Ministry of Economy and Planning, 8th Development Plan (2005-2009)(2) Ibid.


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Outlook for the Saudi EconomyBy 2025, the Saudi economy will be prosperous and versatile, led by the private sector. It will provide job opportunities, education at all levels, quality medical care as well as social facilities needed by citizens, and protect Islamic principles and the cultural heritage of the Kingdom.The Conference of the Future Outlook of the Saudi Economy.

Top Ten Fastest – growing Saudi Companies in the Kingdom

Established for more than five years Established less than five years

Company Rank 100

Area Company Rank 100

Area

Electronic Security Co. 1 Jeddah Maktoob Co. for Advertising and Media 1 Jeddah

Olalmajd Co. 2 Arriyadh Telco. Services 2 Arriyadh

Security Technology 3 Arriyadh Water and Electricity Arabic Company 3 Arriyadh

Integrated Networks Co. 4 Arriyadh Creative Solutions Co. 4 Arriyadh

Al – Elm Information Security 5 Arriyadh Creative Business Solutions Est. 5 Jeddah

Azizia Panda United 6 Jeddah Hazza tractors & Heavy Mach. co 6Al Khobar

Saudi Delta 7 Arriyadh Amwal Financial Consultants Co. 7 Arriyadh

Applied Technology 8 Arriyadh Tufail information technology Co. 8 Jeddah

Roiyah Co. 9 Jeddah Shumool Real Estate Co. 9 Arriyadh

Alcantara Co. 10 Jeddah DNA Co. 10 Jeddah


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Theme Two: Policies and Measures Supporting Investment in the Kingdom

(1) For further information see 8th Development Plan, SAMA 44th Annual Report and achievements of 7th Development Plan.

The Saudi economy has entered a new stage of economic development and progress which has accelerated growth rates during the last few years. Higher rates of growth are expected in the coming years, in line with the regulatory measures which aim at boosting the economic development process, increasing the volume of domestic and foreign investments and strengthening the capital market. The expected higher growth rates are also in line with the sectoral measures which aim at reorganizing a number of economic sectors to participate effectively in the development process. These sectors include; insurance, tourism, gas and mining. Measures aiming to boost economic growth also include restructuring a number of government agencies to improve their efficiency (restructuring of the Public Pensions Agency, the judiciary, and modernization of the Department of Zakat and Income Tax). This aims also to support the privatization strategy in order to raise production efficiency and to increase the private sector role in economic activities and development (privatization of the industrial parks, postal services, etc.)

Economic Activities Planned for Privatization(1)

Privatization represents one of the most important constituents of the economic policy in the Kingdom. This policy comprises the following:

Water and sanitary waste • Desalination of seawater• Telecommunications • Air transport and related services • Railroads • Roads, which includes:• - Management, operation and maintenance of express roads for which there are alternative roads- Construction and operation of new express roads

Airport services• Postal services• Grain Silos and flour mills• Seaports services• Industrial parks services• Government shares in joint stock companies, • including Saudi Electricity Company, banks, Saudi Basic Industries Corporation (SABIC), Saudi Mining Company (Ma’aden), Saudi Telecom Company as well as government shares in local refineriesGovernment shares in the capital of joint • Arab and Islamic investment companiesGovernment Hotels• Sports Clubs• Municipal services, such as: • - Establishment and operation of abattoirs- Establishment and operation of public markets and sales centers- Establishment, operation and maintenance of public parks- Transport services and collection of municipal revenue- Cleaning and waste disposal servicesEducational Services, such as: • - Construction and maintenance of educational facilities- Printing of textbooksSchool related transport- Students boarding housesLeasing and operation of schools and universities facilitiesSocial services, such as: • - Management and operation of social care institutions- Services related to placement of Saudis in the private sector Agriculture services, such as: • - Services related to health quarantines, - diagnostic laboratories and veterinary clinicsHealth services, such as:• - Construction and operation of health facilities- Patients transportation services

Economic Freedom and the Enhancement of Investment ClimateThe Kingdom has embarked, during the last five years, on implementing an ambitious program of economic reform. This concerted


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(1) SAGIA: Annual Report of Investment Performance, 2005.(2) http://www.heritage.org/research/features/index/countries.cfm.(3) Ministry of Economy and planning, 8th development plan, 2004-9.(4) SAMA, 44th Annual Report, 2008.

effort encouraged foreign capital inflow into the Kingdom, the creation of adequate job opportunities for the growing number of citizens as well as achieving tangible GDP growth. This is attributed to many factors, including the increase in oil prices in the global markets, economic reform policy and the ongoing improvement in the investment climate. These factors contributed together to accelerate economic growth and increase local and foreign investments. Growth prospects inspire optimism. The impact of the same factors is likely to prevail, leading to further growth in all sectors of the Saudi economy. Moreover, the private sector is expected to be a major beneficiary from the improvement in the local business environment. Such improvement will also contribute to attraction of more foreign investment and will enhance the level of confidence, which will, in turn, lead to increase in local investment. Regarding economic freedom and its relationship with the investment climate in the Kingdom, the Economic Freedom Index(1), issued by the Heritage Foundation, indicates that the Kingdom has been ranked in 60th position of 160 countries. This rank is continuously improving(2). This matches its position among world indicators in terms of business and competitive environment, which means that the Saudi economy is ‘Mostly Free’, as indicated by the report.Investment is the main engine of economic growth. It affects growth as it forms an integral part of the aggregate demand. Investment has a direct impact on stimulation of domestic production and contributes to accumulation of productive assets required to maintain production capacity of the economy and enhance its competitiveness. Successive development plans paid due attention to encouragement of investment and growth of fixed capital in order to achieve strategic goals represented in diversifying the economic base and realizing sustainable development. Remarkable achievements were realized in this regard. Foremost among these are the policies of economic reform, economic liberalization, privatization and transparency. This has supported the role of the private sector in the development process, where private non-oil investments, up to 2004, constituted approximately 75.6%(3) of total investments, becoming the main

pillar of national economy. The growing role of the private sector in fixed capital formation represents a positive phenomenon, which is expected to continue in the future, particularly under Government policies which support the investment climate and boost efforts of the private sector. The Government was keen to provide a positive climate and opportunity for maximizing the role of the private sector. The best evidence for that is the privatization strategy, which provides promising investment opportunities for this sector and, in the meantime, enhances its role in socio-economic development. The main activities covered by the recent privatization process include the following(4):

Complete the studies related to privatization • of Saline Water Conversion Corporation and transforming it into a holding company as well as establish related companies with the contribution of the private sectorPrivate sector contribution in generating, • connecting and distribution of electricity, (the plan of 11th generation station in Arriyadh with a capacity of 2000 megawatt) and operating the station in 2014, in addition to the Village project with a capacity of 2000 megawatt starting operation in 2014Issuing the Royal Decree No M/70 on 15 • August 2007, which licenses the Saudi lines to transform strategic units in the sectors to be privatized into companies with the contribution of investors from the private sectorTransform Prince Sultan Aviation Academy • into a private company (mid-2008) Privatization of the Grains Silos and Flour • Mills Corporation from 1 July 2008Sign contracts with the private sector for • the management and operation of water and sanitary waste for a time period of 6-7 yearsPrivatization of Saudi Arabian Mining • Company (Ma’aden) and offering 50% of its capital for public subscriptionIssuing 109 licenses to establish domestic • employment offices in 2008Issuing licenses related to private sector • companies to construct five industrial parks during 2007-8


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(1) Ministry of Economy and Planning website.(2) General Investment Authority website, 2008.(3) Ibid.(4) Ibid., Studies Departure.(5) Arriyadh Chamber of Commerce and Industry, Arriyadh Economy, issue 15, 2006.

In the field of licenses and services, more licenses were granted from the Investment Authority due to many factors such as; the efforts made by the Kingdom for the purpose of improving the economic and investment climate, enhancing the level of confidence in the strong Saudi economy, the rising prices of oil and establishment of integrated economic cities. Hence, in 2006, 1,389 joint Saudi/foreign investments were licensed with a total finance of SR 253 billion, a growth rate of 25% on 2005. The purpose was to attract joint Saudi and foreign investments with more than SR 300 billion during 2007. Service offices were established to serve the investors in King Khaled International Airport in Arriyadh. More advanced

and comprehensive electronic services were provided in these offices where the Authority was represented. Recently, preparations have been made to open optimum service centers in many areas and economic cities in the Kingdom from the first quarter of 2007. New measures have been applied by the Authority to grant licenses for projects that attract significant investments, and avoid investments with meager contribution and low capacities of training, rehabilitating and employing citizens(2).Statistics from the Saudi Arabian General Investment Authority (SAGIA) show that the Authority issued 4,606 licenses for investment projects with a total capital of SR 368.12 billion (3).

Volume and Fields of Private Sector Activities (1)

Number of Companies Number of Laborers (by thousand)

2004 2007 2004 2007

Industry 8,848 9,723 568.9 565.8

Agriculture 1,501 1,559 339.0 364.2

Trade 334,214 431,472 1,148.2 1,499.0

Construction 169,091 177,406 901.1 793.6

Fiscal Services 2,284 3,515 59.5 83.8

Personal Services 66 66 2,476.9 2,564.2

Licenses Granted by the General Investment Authority to 2006 (4)

License Kind Number %Total Finance(billion riyal)

%

Industrial 1,579 34.3% 175.65 47.7%

Agricultural 8 0.2% 0.45 0.1%

Service 3,019 65.5% 192.02 2.2%

Total 4,606 100.0% 368.12 100%

It should be mentioned that 100% foreign-owned investments reached approximately 3,229, licensed with a capital of SR 49.7 billion and represent approximately 70% of the total licensed projects – approximately 13.5% of the total invested and licensed capital(5).


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The Kingdom is still endeavoring to prepare a comprehensive long-term strategy for restructuring the economy. It has endorsed the establishment of many regulatory bodies, issued trade related laws, and negotiated aiming at signing a number of bilateral agreements concerning free trade, and coordination of policies and trade regulations among GCC States. All these efforts are directed towards facing globalization challenges and reaping its fruits in the 21st century.

The Kingdom and the World Trade

Organization (WTO) (2)

The Kingdom signed the accession agreement to join the World Trade Organization on 11 November 2005, to become officially member Number 149, after more than ten years of negotiations. The Kingdom’s accession to WTO aims to integrate the Kingdom into the world economy and to shift the Saudi economy from a local Arab economy to a global one. The agreement comprises three sections; all of them come under the accession protocol document signed by the Minister of Commerce and Industry on behalf of the Government. Signature of the agreement is considered an official endorsement by the Kingdom of accepting the terms and conditions of accession stated in the table of unified commitments concerning agricultural and industrial commodities sector, which amounts to 7,177 commodities representing the first section of the agreement. The service sector includes 12 main activities, 155 sub-activities and four methods for delivery of services, and represents the second section. The report of the working team, which includes 316 paragraphs that explain legislative, legal, investment, economic, trade, financial,

technical, health and environmental policies in the Kingdom represents the third section of the agreement. According to this Agreement, the Kingdom obtained 59 exemptions, foremost among which are:

Using the principle of gradual penetration • to markets in increasing foreign capital invested in services (49% at the time of accession, increasing to 51% after one year of accession and to 70% after three years of accession).Exempting the Kingdom from implementing • the government procurements agreement. It is an agreement of some parties (of specific membership) and not a multilateral one. The country has the right to purchase national products of goods and services and is exempted from the principle of national treatment. Continuing with provision of loans from • industrial and agricultural banks and maintaining exemption of imported products from import duties. This Agreement will bring many benefits to • the Kingdom, the most significant among them are: The consumer is free to choose goods and • services available in the local market, which has become an integral part of the global market. The consumer is free to choose the products of the highest quality at the minimum possible price. Consumer confidence in the available goods • and products will be free of commercial deceit and manipulated prices. This is because local and foreign goods will be subject to strict rules and controls, such as meeting international standards, health

100% Foreign Investments Licenses 17/4/2000 to 30/12/2006 (1)

License Kind Number PercentageTotal Finance (billion riyal)

Percentage

Industrial 634 29.4% 21.4 48%

Service 1,521 70.4% 23.6 52%

Agricultural 4 0.19% 0.1 0.2%

Total 2,159 100.0% 45.1 100.0%

(1) Arriyadh Chamber of Commerce and Industry, Arriyadh Economy, issue 15, 2006.(2) See Ministry of Commerce and Industry website www.commerce.gov.sa.


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measures and the protection of intellectual property rights. More opportunities for Saudi products to • enter into the markets of all WTO member countries, which enjoy low custom ceilings and open economic and trade policies. Moreover, Saudi exports will no longer be subjected to aggressive measures from any country, as was the case prior to accession to the WTO.Resorting to Trade Disputes Settlement • Board of the WTO, characterized by its prompt decisions and enforcement of the measures aimed at achieving fairness to all member states.

The Impact of the Kingdom’s Accession to WTO on the Saudi Economy(1)

The Kingdom’s accession to the WTO is clear evidence of the adequacy of its economic, fiscal and legislative environment. This accession is likely to lead to marked enhancement of Kingdom’s investment climate and higher value-added to the Saudi economy in general. In particular, this accession will enhance the level of confidence in the Saudi capital market and encourage competent companies to enter this market, particularly in the long run. With respect to the capital market, accession to the WTO represents an important event for the financial services sector, mainly securities investment in the Saudi Capital Market. Such importance stems from the commitments resulting from accession, a matter that will enhance the investment climate in general. The commitments are in harmony with general objectives set by the Capital Market Law through activation of the section related to opening the door for non-banking institutions to practice important activities related to securities in the Kingdom (such as activities of dealing and administration). This is also consistent with the strategic objectives set by the Capital Market Authority in this regard. Regarding the impact of accession to WTO on tariff protection, industries depending on continuity of such protection will be affected to a limited degree. Custom duties will decrease for 396 commodities out of 458 currently protected by the 20% category as well as 197 commodities out of 492 currently protected by

category 12%. However, the decrease of tariffs will not be large, since most of them were reduced from 20% to 15% and the protected duties from 12% to 10% or to 6.5%. At the beginning of the accession, the custom duties of some commodities protected by 20%, such as sweets and chocolates, will be reduced to 8%, lubricants to 10%, steel pipes to 8% and plastic products, paper, steel and furniture to 15%. After three years of accession, computer sets and related accessories as well as telephone sets (land and mobile) will be exempted, and after five years from the date of accession, the custom duties of the chemical materials protected by the 20% and 12% categories will be reduced to 6.5%. Such materials include fertilizers, soap, perfumes and plastic products. As a further result of the Kingdom’s accession to the WTO, Saudi companies will face intensive competition from multinational companies. Small enterprises which operated inefficiently in the past while benefiting from protection policy will be forced to exit the market unless they merge with larger national or foreign companies, or improve levels of efficiency and competitiveness. Moreover, some goods and services, which currently enjoy generous government support, will no longer receive such subsidies. Multiplying the productivity of the economy and diversifying its activities, support of foreign investment and its integration with national investment, as well as other strategic bases required for development of the economy and community, will maintain the material and human resources of the economy and cope flexibly with the challenges resulting from accession to the WTO.

(1) See Ministry of Commerce and Industry website www.commerce.gov.sa.


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The Latest on the Kingdom’s Membership of the WTO (1)

1- The Ministry of Commerce and Industry continued its responsibility for coordination between the Government and WTO. Within two years of the Kingdom’s accession to the WTO, the Kingdom pledged to follow up the implementation of the commitment as a part of the requirements of its Accession and commitments in both service and commodities sectors, and the report of the working team.

2- The Council of Ministers issued a decree No (41) in 2/19/2007 which requires the Ministry of Commerce and Industry to implement their responsibilities related to the WTO including the special tasks of the WTO requirements.

3- With respect to implementing the Kingdom’s commitments toward the members of the Organization, the

Kingdom was committed to implementing its obligations in Accordance with the deadlines included in the report of the working team as the following: - Canceling some activities from the list of the actions exempted from foreign investment system which include: - Insurance services - Movies and video tapes services - Distribution services and wholesale and retail trade including medical retail such as - the special pharmacies- Commercial agents except the ones of international categorized commission No (6) - Telecommunication Services - Services of train transport of citizens within the Kingdom - Air transport services- Space transportation servicesThe Ministry kept the WTO up to date with developments, and a new list has been distributed among businessmen, foreign investors and those interested in different languages.- As long as the Kingdom is committed to implement article No 231 of the working team report, the

Kingdom’s proposal has been presented to the WTO Director General on April 15, 2007. Thus the Kingdom is able to contribute in the meeting of the government purchases committee as an observer. The Kingdom’s proposal has been approved and Saudi delegation is participating in the formal and informal meetings held by the committee.

4- Regarding the Kingdom’s contribution in the multilateral commercial negotiations ‘Doha Development Agenda’. Since the Kingdom’s accession to the WTO on the 6th Ministerial conference held in Hong Kong, the Ministry formed technical negotiation teams from the concerned governments. Each team is headed with an official according to the negotiating subject area: agriculture, commercial of the Kingdom to the WTO on the website, so the specialists and interested people inside and disputes team, trade technical obstacles, health measures, trade and development, the Organization rules, intellectual property rights, trade facilities, services, trade and the environment, industrial commodities. Professionals from the technical teams coordinate with the delegations of the member states according to common interests. As is the case with states that recently joined the WTO, the 6th Ministerial Declaration of Hong Kong Conference was interested in these countries, and it appreciated the efforts exerted and the commitments made during the negotiations to join the WTO.

5- The Ministry has prepared all notices required by the Organization in collaboration with specialists in Government agencies, and 42 notices were provided The Ministry also established a website to answer all inquiries of the member states which are related to implementing agreements related to the Organization.

6- The Kingdom shared in all working teams meetings concerned with the accession of some countries to the WTO, as well as it supported the measures of joining Arab and Islamic countries, developing and under developing ones to the Organization. On the other hand, the Kingdom participated in many negotiations of bilateral meeting with the Russians related to depletion of goods and services of the Russian Union Markets as part of the measures required to Join the WTO. This participation of the Kingdom as a member of the meetings of the working teams concerned with the accession of Russia to the WTO.

7- With regard to the awareness of the businessmen to the impacts of joining the WTO, the Ministry, represented by the agency of technical affairs and the information center, made available on the internet all documents related to the Kingdom’s accessionso as to inform those inside and outside the Kingdom of the depletion of goods and service trade as well as the report of the working team. Many conferences and workshops were held in the commercial chambers and boards of chambers to introduce business sector and government principals concerned with the Organization’s themes and implementing of the commitments.

(1) SAMA, 44th Annual Report, 2008.


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Saudi Capital Market(1)

The Arab Motor Company was the first joint stock company in the Kingdom. It was founded in 1932, but was subsequently liquidated. The Arab Cement Company, founded in 1954, was the first Saudi joint stock company to be listed in the stock market. It was decided, in 1983, to trade securities through commercial banks only. In 1984, SAMA issued a circular explaining the methods and conditions of trading shares. To overcome the constraints in the process of trading shares, the ESIE system was adopted in 1990. This system was replaced by TADAWUL system in 2001, which is based on the latest international technologies. During this period, non-Saudis residing in the Kingdom were

allowed to invest in the Saudi Capital Market via mutual investment funds. Royal Decree No. 9 was issued in 2003, endorsing the Capital Market Law. Royal Decree No. 114/A was also issued in 2004, regarding formation of the Capital Market Authority to be entrusted with management and supervision of the market. It is noteworthy that the Capital Market Authority is an autonomous body.The Saudi Capital Market is one of the most active markets in terms of values of trading and the contracts held. This Market developed positively in 2007 where the value of the general index of the shares rose from 7,933.3 points at the end of 2006 to reach 11,176.0 points at the end of 2007. The companies listed in the market numbered 86 in 2006, rising to 111 companies in 2007.

Key Indicators of the Saudi Capital Market(2)

2006 2007 Annual Change %

General Indicator of Stock Prices (1985= 100) 9,933.3 11,176.0 40.9

Investment Funds Assets (billion riyal) 84.1 105.1 25.0

Commercial Banks’ Investments in Government Capital (billion

riyal)123.3 144.2 16.9

Bank Credit (billion riyal) 497.1 594.8 19.7

Actual Disbursement of Specialized Lending Institution Loans

(billion riyal)10.2 16.5 62.5

(1) SAMA, Economic Updates, 4th quarter, 2005.(2) Ministry of Economy and Planning, www.moep.gov.sa.


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In 2007, the Saudi Capital Market regained its performance when the market general index rose 41% compared to a 35% decrease in 2006(1). All market’s sectors improved during this year and they were topped by the industrial sector that achieved 79% and ended with 28,683 points, 62% for the insurance sector, and 31% for the banking sector. On the other hand, electricity and telecommunication sectors were the lowest, amounting to 13% and 7% respectively. In December 2007 remarkable progress occurred, and the Saudi index increased by 18%. This increase was the main contributor instrumental in achieving total annual profits of 41% in 2007. Generally, market value recorded an increase of 59% to SR 1.94 trillion in 2007 compared to SR 1.22 trillion in 2006. The Insurance sector had lately witnessed the largest increase in market

value with liberalization of the sector from any imposed restraints. The service sector was the second to record an increase in market value of 22.9% to SR 226 billion. In terms of share of total market value, the industrial sector was the largest contributor by 39% (or SR 755 billion), followed by the banking sector with 30% (SR 583 billion). Also, in 2007, the number of traded stocks increased by 8% to reach 58.86 billion compared to 54.44 billion stocks in 2006. In spite of the marginal increase of the traded shares, its value recorded a decline of 50% which underlines the dominance of the shares of small and medium companies on the TSE. All sectors of the Saudi market recorded a decline in the value of traded shares, except for insurance sector. Whereas industry and services sectors were dominant on the traded value, contributing 70% of the total value in the market(2).

Working Companies in the Saudi Capital Market to 2008 (3)

Company Number Company Number

Banks and Fiscal Services 11 Multiple Investments 7

Petrochemical Industries 13 Industrial Investment 11

Cement 8 Construction 12

Retail 8 Real Estate Development 7

Energy and Facilities 2 Transportation 4

Agriculture and Food Industries 15 Media and Publishing 3

Telecommunications and Information Technology

3 Hotels and Tourism 2

Insurance 21

Total of 127 companies

(1) Saudi Stock Market performance, economic strategy and future outlook, ‘Kingdom of Saudi Arabia a Home for World Investment ’ Global, February 2008.(2) SAMA, 44th Annual Report, 2008.(3) TADAWUL website.


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Profits of Companies in Saudi Capital Market:Profits of Companies in the Saudi Capital Market during the period 2003-7 recorded an annual composite rate of 28%. The insurance sector headed the list when it recorded an annual composite rate of 85%, followed by 56% for the service sector and 42% for the industrial sector. In 2007, the gross profits of the Saudi sectors reached SR 85 billion compared to SR 76.7 billion in 2006, up by 11%. It is noteworthy that the Saudi Stock Market has recorded remarkable revenues in 2007. In 2007 the banking sector witnessed a depression when ten of the listed commercial banks recorded a decline of 16.9 % to SR 24 billion compared to SR 29 billion in the same period of the previous year. On the other hand, the industrial sector recorded increased profits of 32.7% or SR 34.7 billion compared to SR26.46 billion in 2006. The service sector also witnessed increased profits of 22.7% to SR 6.13 billion in 2007 compared to SR 1.87 billion in 2006.In 2007 SABIC (one of the biggest Saudi companies in terms of market value) was ranked in first position when it recorded a net profit of SR 27 billion compared to SR 20.3 billion in the previous year, an increase of 33%. SABIC’s share was 32% of the gross profits of the Saudi companies listed in the market. It realized primary net profits in the first half of 2008 of SR 14.5 billion compared to SR 12.8 billion in 2007 – an increase of 13%. The earnings per share were SR 4.82 compared to SR 4.25 in the

same period of the past year (the total shares were three billion) or an increase of 13%. For the first six months of 2008, the primary operating profits amounted to billion compared to SR 19.2 billion in 2007, an increase of 20%. In the second quarter of 2008, the corporation realized the highest profits since it was first established, when the realized net profits reached SR 7.54 billion compared to SR 6.47 in the same second quarter of the past year, an increase of 17% (1). By the end of the first half of 2008, total revenues reached SR 83 billion or a rate of growth by 54% over the same period of the previous year. That is mainly attributed to listing the results of SABIC Innovative Plastics among the consolidated fiscal lists, in addition to the improvement of sales prices of most essential products and the increase of the production and sales volume by 5% and 6% respectively, despite the continuous rise of the price of raw materials due to the high price of oil. The company’s board decided on distributing SR 5.25 billion as cash profits for shareholders on the first half of 2008 or SR 1.75 per share, provided that the owners of the shares and listed in the records of TADAWUL have the priority of the realized profits by 23 July, 2008.(2)

However, the positive action of the market started to decrease in 2008, to start with 7,458 points by the beginning of the year and close at 4,802 points by the end of the year – a negative change rate of 35.60% compared to the year 2006-7.

(1) SABIC website.(2) Ibid.


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Brief of Market Sectors During 2008(1)

Sector TransactionsTo the

market %Traded shares

To the market

%

Value of traded shares

Banks and Financial services

1,111,639 12.24% 4,776,182,806 29.44% 73,081,439,090.50

Petrochemical Industries 2,075,637 22.85% 3,100,286,690 19.11% 98,306,859,539.05

Cement 119,029 1.31% 90,695,387 0.56% 4,326,350,108.45

Retail 374,626 4.12% 375,238,598 2.31% 6,788,872,529.55

Power and Service Facilities

80,158 0.88% 236,063,868 1.46% 2,568,897,846.45

Agriculture and Food Industries

621,555 6.84% 690,007,023 4.25% 13,092,311,563.40

Telecommunications and Information Technology

532,390 5.86% 1,336,705,175 8.24% 23,430,392,984.75

Insurance 905,563 9.97% 655,028,911 4.04% 14,658,345,358.45

Multiple Investment Companies

467,294 5.14% 734,321,606 4.53% 9,127,525,387.35

Industrial Investment 1,005,256 11.06% 1,508,817,841 9.30% 28,009,301,537.70

Construction and Building 874,819 9.63% 656,302,479 4.05% 23,039,176,653.70

Real Estate Development 557,039 6.13% 1,321,300,728 8.15% 18,746,818,701.95

Transport 250,116 2.75% 614,675,339 3.79% 9,105,910,010.75

Media and Publishing 53,638 0.59% 66,956,575 0.41% 1,113,969,737.10

Hotels and Tourism 56,302 0.62% 59,489,485 0.37% 946,227,656.45

The total 9,085,061 100.00% 16,222,072,511 100.00% 326,342,398,705.60

(1) See Saudi Capital Market website www.tadawul.com.


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The Most Important Regulatory Development in Saudi Capital Market in 2007(1)

On January 13, 2006 Capital Market Authority suspended trading shares of Besha Agricultural • Development Company in Saudi Capital Market. From 13/1/2006. On January 18, 2006 Capital Market Authority suspended trading shares of ANAAM • International Group in Saudi Capital Market. From 20/1/2007. On December 31, 2007 CMA approved trading shares of ANAAM International Group (holding • company) out of continuous automatic trading system, according to controls proposed by TADAWUL capital market and endorsed by the Authority Council during a month from this date. By the end of trading on Wednesday 6, June, 2007, Albaha Development Investment Company • (ABDICO) trading shares were stopped for ten days to enable the shareholders to pay back the remaining of shares value of SR 2.5 per share. Trading of shares of Albaha Company resumed after repayments of all installments on • Saturday 23, June, 2007.Both Al Babtain Power and Telecommunication Corporation shares and Fawaz Abdulaziz • Alhokair and his partners’ shares were added to the market indicator (TADAWUL) according to closing price of both shares on January 23, 2007.On February 17, 2007 the shareS of Advanced Polypropylene Corporation (APPC) were added • to market indicator (TADAWUL) according to closing price of shares. Cooperative Insurance (SIIC) shares joined.Seven financial mediation companies joined Saudi Capital Market as working members to • serve financial mediation:- FALCOM for Financial Services, February 24, 2007- Hermes Saudi Financial Group, March 4, 2007 - Jadwa Investment Company, March 10, 2007- Rana Investment Company, March 21, 2007 - Saudi Swiss Securities, April 23, 2007 Alabdulatif Industrial Investment Company shares were added to the market indicator • according to closing price on Saturday, March 3, 2007. Malath Insurance and Cooperative Reinsuring shares as well as the shares of MEDGULF Share to • the market indicator (TADAWUL) According to closing price of Tuesday 6, 2007. [MEC: month?]Saudi Vitrified Clay Pipe (SVCP), SABB Takaful Co, and Saudi IAIC Cooperative Insurance Co. • (SALAMA) shares joined TADAWUL according to closing price of shares on July 30, 2007.On July 1, 2007 Saudi Kayan Petrochemical Co. and Arabian Shield Cooperative Insurance Co. • (ASHIELD) shares joined TADAWUL according to closing price of both shares.On September 30, 2007, Saudi Printing and Packaging Co. (SPPC) shares were added to • TADAWUL according to share’s price. Saudi United Cooperative Insurance Co. (WALAA) shares, Sanad Insurance and Re-insurance Cooperative Co. (SANAD) shares and Saudi Fransi Cooperative Insurance (ALLIANZSF) shares also joined TADAWUL according to closing price of shares on September 30, 2007.On October 3, 2007, AlAhli Takaful Co (ATC) share, and Saudi Indian Co. for TADAWUL according • to closing price for both shares. On November 10, 2007, Allied Cooperative Insurance Group (ACIG) joined TADAWUL according • to closing price of the share.On November 17, 2007, the shares of United International Transportation Company and Saudi • Arabian Cooperative Insurance Co. (SAICO) joined TADAWUL according to closing price of both shares.On November 25, 2007, the share of Gulf Union Cooperative Insurance Co. (GUCIC) joined TADAWUL • according to closing price of the share on that day.On December 31, 2007, the share of Al- Ahlia Insurance Co. joined TADAWUL according to closing • price of the share on that day.



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Saudi Capital Market witnessed remarkable progress during 2007/2008, notably by:

Licensing service providers of securities• Adjusting instructions related to • declaration of companies whose shares are enrolled in the marketImposing sanctions (fines) on some • companies for violating labor laws and regulations of the marketOffering new investment funds• Modifying price change units of 25 halalas • to be variable by the price of traded shares according to three new bands to better reflect price changes in the shares of the listed companies.

New Forms of Price Change Unit (1)

Stock Price Band New Price Change Unit

The First Band: 25 riyal and less 5 halalas

The Second Band: from 25.10 to 50 riyal 10 halalas

The Third Band: 50.25 riyal and more 25 halalas

Real Estate Investment and Companies:The real estate sector in the Kingdom contributes to the GDP by SR 55 billion, and approximately 95% of the non-oil domestic products. This growth is expected to continue to the end of the Eighth Development Plan, with an annual average of 5.8%. The real estate contribution to the GDP is also expected to increase to 7.2%, which makes it an important hub of the development process in the Kingdom.The Saudi real estate sector is of particular importance to national economy. This is reflected in the provision of housing units, buildings, shops, industrial parks and recreational, health and educational facilities required by society and the economy in general. This sector also participates in provision of different government facilities. The real estate sector has forward and backward links with approximately 80-100 sub-sectors of the economy, particularly building materials and contracting sectors. The real estate sector comprises two main sub-sectors: real estate bureaus real estate companies. These are Saudi joint stock companies, which are well known and enjoy the confidence of

different groups benefiting from their services. They are managed by the private sector and are specialized in real estate investment and development. Some have crossed the barriers of the Arab world, and are present particularly in Dubai and Sharjah. Others have gone further to regional and international levels through concluding strategic partnerships and coalitions with a number of the largest international real estate companies. The Real Estate Development Fund provides easy-term loans to support investment in this sector. It is noteworthy in this respect to refer to the Royal Directives regarding increase of the Fund’s capital by SR 9 billion from the State Budget surplus of 2006, to enable the Fund meet the steady growth of demand for loans.This will boost the role of the real estate sector and encourage relevant companies and firms. Private companies operating in this sector will grow during the Eighth Development Plan 2005-9, with approximately 875,000 housing units out of the total expected demand of one million housing units. Around 280 million m² of residential land is likely to be available for the real estate sector so that it can meet housing

(1) TADAWUL Website: www.tadawul.com.


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demands. The Real Estate Development Fund will provide approximately 75,000 loans with a total value of SR 22,500 million for construction of approximately 90,000(1) housing units across the Kingdom. Moreover, relevant studies indicate that total demand for housing is likely to reach approximately 2.4 million units by 2020, requiring an investment of SR 1.2 trillion to meet such demand (2). There is no doubt that the real estate sector in the Kingdom is facing major challenges and

great responsibilities. Hence, it is imperative for it to concentrate on forming joint stock real estate companies. This form is considered the best for the economic activity that believes in separation of ownership from management. It also allows for the attraction of substantial capital as well as coordination with other related agencies such as banks, real estate finance companies, contracting companies, and real estate mortgage and installments companies.

Demand for Housing by Administrative Provinces and Type of Demand during the 8th Development Plan 2004-9 (3)

Provinces

New Demand Replacement Demand Total

Number (Thousand)

%Number

(Thousand)%

Number (Thousand)

%

Arriyadh 160 25.5 20 19.5 180 24.7

Makkah 170 27 25 24.4 195 26.7

Madinah 34 5.4 5 4.9 39 5.3

Qassim 20 3.2 5 4.9 25 3.4

Eastern Province 118 18.8 20 19.5 138 18.9

Asir 30 4.8 5 4.9 35 4.8

Tabuk 13.5 2.2 4 3.9 17.5 2.4

Hail 15 2.4 3 2.9 18 2.5

Northern Frontiers 7 1.1 1.5 1.5 8.5 1.2

Jazan 30 4.8 5 4.9 35 4.8

Najran 7 1.1 2 1.9 9 1.2

Baha 11 1.8 5 4.9 16 2.2

Jouf 12 1.9 2 1.9 14 1.9

Total 627.5 100 102.5 100 730 100

Banking System Development (4):The Kingdom of Saudi Arabia has a modern banking system in terms of the quality of service and efficiency of regulations. The banking sector in the Kingdom comprises eighteen national and joint banks, in addition to branches of Kuwait National Bank, Deutsche Bank, Muscat Bank and Bahrain National Bank.Reserves, capitals and the profits of the commercial banks branches increased during the second quarter of 2008 by 9.6% (SR 9.8 billion). By the end of the second quarter of 2008, the rate of capital and commercial banks reserves to gross bank deposits reached 6.17% compared to 5.16% in the previous year. The annual rate of growth for the capital and commercial bank provisions

(1) All Figures are derived from the 8th Development Plan, 2004-9.(2) Study by SAMBA Financial Group, April 2006.(3) Ministry of Economy and Commerce, Demand Analysis of the 8th Development Plan, 2005.(4) SAMA, 44th Annual Report, 2008.


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increased by 9.29% (SR 8.31 billion). The profits of commercial banks also increased to SR 1.9 billion compared to SR 3.8 billion in the last quarter, an increase of 6.9% (SR 8.0 billion), with an annual rate of growth of 2.1%, or SR 40 billion. During the second quarter of 2008 the number of commercial banks increased to 1,384, with a rate of growth of 9.0% (13 branches) compared to 1,371 in the previous year. At the same time, commercial banks’ branches realized an annual growth of 6.4%, or 61 branches compared to 1,323 the previous year.Regarding development of banking technology, the SARIE system shows that in the second quarter of 2008 total operations carried out by this system reached approximately SR 8,631 billion via 8.9 million transfers. Total personal payments reached SR 8,409 billion, and SR 222 billion for deferred payments. Customer’s payments amounted SR 726 billion, meaning a high percentage of 16. 53% compared to the second quarter of 2007. Gross payment value among the banks reached SR 7,904 billion. The SARIE System will continue in the coming

years, especially in electronic and commercial transactions, as well as personal transfers. In addition, salaries for both private and government sectors will be transferred via this SARIE System. Saudi Pay Network (SPAN) witnessed good progress in terms of transactions made. By the second quarter of 2008, the total of these operations reached 216 million (an estimated total value of SR 96 billion). The number of cash machines (ATMs) reached 8,200, while the ATM cards issued by local banks numbered approximately 4.11 million. Moreover, the operations through points of sale reached 31 million, with a total of SR 14 billion. These continued to grow, reaching 66,000 by the second quarter of 2008. Regarding the clearings statistics for the second quarter of 2008, the cheques issued from clearing houses (imports and exports) reached approximately 1,944,000, whose value was SR 4,196 billion. Company and individual cheques reached 1,681,000 with a total value of SR 8,135 billion. Bank (certified) cheques amounted to 263,000 whose value reached SR 6.60 billion.

Performance Indicators of the Banking Sector in 2007 Compared to 2006 (1)

ItemValue

(thousand riyals/2007)Value (billion riyals/2006)

Total Bank Deposits 717,564 482

Total Bank Liabilities 1,075,221 595.9

Total Claims on Government and Semi Government 181,613 435.9

Total Claims on Private Sector 577,882 159.5

Total Foreign Assets of Commercial Banks 105,213 91.4

Total Foreign Liabilities of Commercial Banks 42,499 65

(1) Statistical Tables Supplement, SAMA.


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Economic and Industrial Cities:The economic strategy of the Government includes, within the economic development program, establishment of multi-activities economic cities, which are more coherent with the new position of the Saudi economy, particularly after the Kingdom’s accession to WTO. That entails the construction of more infrastructure for the establishment of major projects, attracting national and foreign expertise, attracting foreign investments as well as preparation of an investment environment on scientific basis to attract national and international investors and value-added industries. Experience in the field of development and manufacturing reveals that the establishment of economic and industrial cities represents a cornerstone for success. The Kingdom of Saudi Arabia was able to establish many industrial plants during the few past decades, such as King Abdullah Economic City (KAEC) that constitute a turning point for comprehensive development and manufacturing process in the Kingdom. Yet this turning point requires an accurate study and making use of th ample is the newly industrialized Asian countries that have witnessed a revolution of numerous new economic and industrial cities over the past two decades. Comparative experience, particularly in these countries, confirms the success of economic and industrial cities in achieving economic and industrial renaissance. This is particularly the case in Singapore, Taiwan, Hong Kong and Malaysia. Establishment of these cities is a key part of settled areas or free trade industrial zones. They put into the hands of investors various infrastructure capacities and facilities, as well as provide them with a needed skilled workforce. According to SAMA statements (2008), there are 14 industrial cities in the Kingdom, with a total area of 89.50 million m2, accommodating approximately 1,700 plants with 200 more under construction. Twelve government sites are earmarked for the establishment of new industrial cities, with a total area of 448 million m2.

Licenses were granted in Arriyadh to many private sector land areas in order to establish industrial cities with a total area estimated at 4.3 million m2. The Public Pension Agency was also licensed to establish telecommunication and information centers in Arriyadh such as Obaican Industrial Cities, Jar Allah Industrial zone, Tatweer, Ojaimi and Fanar Industrial Cities(1). The prime purpose of establishing and developing these cities was to attract local and foreign companies and investments and this has been successful. In Malaysia for example, most foreign companies work in the free-trade zone whose advantages and merits are not available in other cities. The objective of the investment was export-oriented investments. Thus the share of the companies working in these areas was more than 80% of the gross Malaysian exports of electronics and equipment. It is noteworthy to mention that by 2002, there were more than 105 industrial cities compared to 1970 when such cities did not really exist. These cities were implemented in cooperation with both private and government sectors. Comparing this large number of cities (in a very small country like Malaysia) to existing ones in the Kingdom, leads to the conclusion that despite the relatively long time frame required to reach this objective, the opportunity exists to draw n the experience and make use of available capacity and resources.During the past three years, the Kingdom of Saudi Arabia has initiated four industrial parks: King Abdullah Economic City (KAEC), Prince Abdulaziz Bin Mussaed Economic City in Hail, the City of Economic Knowledge in Madinah and Jazan Economic City. Each one of these cities is located in an industrial area or related industrial areas, such as the ones of King Abdullah, and Prince Abdulaziz Bin Mussaed, or any other areas that feed the industry, such as the case of the City of Economic Knowledge and Jazan.

Expectations of Economic Cities’ Contribution to Saudi Domestic Product by 2020 (2)

Item 2006Economic Cities Contribution to

Domestic Product by 2020

GDP (billion riyal) 1307.5 562.5

Careers (million) 7.5 1.3

Population (million) 23.7 4.5

Average Individual Share from GDP (one thousand riyal)

55.2 125.6

(1) SAMA, 44th Annual Report, 2008.(2) Ibid.


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According to the Saudi Arabian General Investment Authority(1), these cities are expected to increase the domestic product by SR 562,5 billion by 2020, and they are expected to create 1.3 million job opportunities, and their population expected to reach 4.5 million. The Authority also expects that individual share of the gross domestic product to increase by 127.5%, from SR 55,200 in 2006 to reach 125,600 by 2020.

Newly Constructed Economic Cities in 2005 and 2006

Industrial cities

Date of Inauguration Location Space Infrastructure

CostJob

Opportunities Parts of the City

King Abdullah Economic City (KAEC) 20/12/2005 Rabegh 168 k

m²SR 100 billion 500,000

1-a world seaport.2- an industrial park3- coastal resorts4- financial island5- educational zone6- residential district

Prince Abdulaziz Bin Mussaed Economic City

13/6/2006 Hail 156 k m²

SR 100 billion 20,000

1- logistic services and transport center2- dry port3- educational services4- agricultural services5- industrial and mining services6- entertainment services7- residential areas

City of Economic Knowledge

16/6/2006 Madinah 48 k m²


1- TIBA technology and knowledge economy complex2- advanced technological studies institute3- Prophet’s sunna museum4- Islamic civilization studies center5- medical studies and biological science complex6- shopping center and hotels7- residential areas

Jazan Economic City

4/11/2006 Jazan 100 k m²


1- sea port2- logistic center services3- energy, desalination and cooling station4- island of business5- cultural center6- the corniche7- health services district8- educational city9- residential areas

(1) Saudi Arabian General Investment Authority website.


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Theme Three:

Rules of Investment in the

Kingdom and Related Procedures

(1) Ministry of Labor, Labor Law, for more information see www.mol.gov.sa.(2) For more information on Foreign Investment Law and By-laws see SAGIA website: www.sagia.gov.sa. (3) Negative List: Activities which exclude foreign companies from investment in Early Operation in Oil Activities (Exploration, Drilling, and Production), some Industrial Activities, e.g. Military Equipment Industry, Military Uniforms, etc. For more information re the negative list see SAGIA website: www.sagia.gov.sa .

Labor Law (1)

Royal Decree M/21 was issued on November 15, 1969, endorsing the Labor and Workmen’s Law, by-laws, and related decisions which regulate work in companies. The law identifies the duties of employers towards employees as well as the rights of employees. All issues related to this law were assigned to the former Ministry of Labor and Social Affairs. As a result of development witnessed by the economic companies and the need for substantial measures regarding the law, following the transformation of the Ministry of Labor and Social Affairs into two ministries (Ministry of Labor and Ministry of Social Affairs), Royal Decree M/51 was issued on September 27, 2005, endorsing the new labor law under the supervision of the Ministry of Labor. The provisions of this law apply to any contract under which any person undertakes to work for an employer and under his direction or supervision against compensation. The law also applies to workers in government and public corporations including those working in pastures or farming, charity institutions and agricultural firms which employ ten workers or more. It also applies to workers in agricultural facilities processing their products, permanent operators of agricultural machinery, part-time workers, within the limits of safety, occupational hazards, and training contracts regarding those not working with their employer. The following are exempted from the provisions of this law: members of the employer’s family who constitute the only employees of the firm, housemaids, marine workers in vessels with capacities less than 500 tons, agricultural workers other than those stated in Article 5 of the law and non-Saudi workers recruited for a specific task for a duration of not more than two months, in addition to players and directors of sports clubs.

Foreign Investment Law (2)

The Foreign Investment Law was issued by Royal Decree M/1 on October 10, 2000, and relevant by-laws were issued by the Council of Ministers Resolution 1 on October 10, 2000. Both are referred to as Foreign Investment Law. According to this Law, foreigners (other than Saudis and GCC nationals) are not allowed any business or activity inside the Kingdom without obtaining licenses there. The main objective of the Foreign Investment Law is to make investment in the Kingdom more attractive and to streamline licensing procedures. SAGIA is responsible for granting licenses to foreign investors and is also responsible for granting licenses for activities not listed in the ‘Negative List’ (3) and activities not subject to regulation by another law. The Foreign Investment Law and the ‘Negative List’ make investment in the Kingdom clearer and represent a framework regulation rather than a comprehensive regulatory group. Excerpts from the law allowing possession and investment of real estate by foreigners, issued as per Royal Decree M/15 on July 19, 2000: The foreign investor, who obtains a license to undertake a business, shall have the right to possess the required real estate for operation of his business and providing housing for himself and his staff. In case the license includes purchase of buildings or vacant land for construction of buildings, then the total cost of the project should not be less than SR 30 million, while the Council of Ministers has the right to reduce this amount. However, the law stipulates that the property should be utilized within five years. Non-Saudis, residing legally in the Kingdom are allowed to possess real estate for private residence as per a license granted by the Ministry of Interior.

Main Features of the Foreign Investment Law

All foreign investors in the Kingdom should • obtain licenses.Foreign investors may enjoy 100% ownership • of projects they establish in the Kingdom.SAGIA is fully responsible for attracting foreign • investment to the Kingdom and providing licenses through its One-Stop-Shop.


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SAGIA exerts utmost efforts to streamline • foreign investment licensing. It is committed to study and review all applications within 30 days.According to the new Law, all fields are open • to foreign investment except those clearly prohibited.Licensed foreign investors shall enjoy • the same treatment enjoyed by national investors. This makes them eligible for easy-term loans provided to specific projects as well as for custom duty exemption.With respect to expropriation, foreign • investors are treated on an equal footing with national entities. Expropriation or confiscation of foreign investments shall not take place except in cases of public interest and against fair compensation.Foreign businesses in the Kingdom shall • no longer require Saudi sponsorship as per residence regulation. They have the right to sponsor their workers.Reduction of corporate profit tax, which • exceed SR 100,000, from 45% to 30%, and cancellation of temporary tax exemptions. This allows foreign companies to carry forward their losses.

Capital Market LawThe Capital Market Law was issued by Royal Decree M/3 dated 31 July 2003. The Law provides legal and institutional framework for the capital market, and contributes to its development in accordance with latest international standards, as well as enhancing the efficiency of operation and trading systems.

Main Features of the Capital Market Law are (1):

The establishment of the Capital Market • Authority (CMA) as an autonomous body which is financially and administratively independent and reports directly to the Council of Ministers. The CMA enjoys all powers required to perform its tasks as stated in the law. The establishment of a market for trading of • securities in the Kingdom under the name of ‘Saudi Capital Market’ which is incorporated as a joint stock company.The establishment of the ‘Securities Deposit • Center’ as the sole agency in the Kingdom which is authorized to carry out transactions related to deposit of securities traded in the Kingdom, as well as marketing, clearing and registering their ownership. It is also the sole agency authorized to register property rights of securities traded in the market.The forming of a committee for settlement • of disputes related to securities as well as an appeals committee.The consideration of liability for all practices • which are based on deceit and forgery or trading of shares according to information given by insiders and imposing penalties on anyone who commits or helps others to commit such practices.

Corporate Law (2)

The Saudi Corporate Law was issued by Royal Decree M/6 dated 22 July 1965. The law is composed of 234 articles and was amended several times. The law identifies the types of companies in the Kingdom as follows:

Limited Liability CompanyLimited Liability Company is usually referred • to as a Limited Proprietary Partnership

The law related to Non-Saudi Possession of Real Estates and Investments

According to Royal Decree (M/15) on 19 July 2000:• Foreign investors may start any economic work, and possess real estate for this purpose including his residence as well as his employees’.• The total cost should be not less than SR 30 million if the licence includes purchase of buildings, renting and investment by sale. The Council of Ministers has the right to reduce this amount. However, the law stipulates that the property should be utilized within five years. • Non-Saudis residing legally in the Kingdom are allowed to possess real estate for private residences as per a license granted by the Ministry of Interior.

(1) Ministry of Economy and Planning, 8th Development Plan, 2005 - 2009(2) For more information see Ministry of Commerce and Industry Website: www.commerce.gov.sa


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severally or jointly for the debts of the company even from their personal fundsNot allowed to practice banking or insurance • activities or brokerage in gold or silver.Not allowed to offer its shares for public • subscriptionIncorporated in the same manner as a • limited liability company

Simple Liability PartnershipUsually referred to as a mixed liability • companyAt least one partner responsible for the debts • of the company even from his personal fundsNot allowed to practice banking or insurance • activities or brokerage in gold or silverIncorporated in the same manner as a • limited liability companyIn addition to the previous types, there are • other types of companies which are seldom incorporated. These are

Limited Partnership by SharesAt least one partner responsible for the • debts of the company even from his personal fundsAt least four sleeping partners• The subscribed capital should not be less • than SR one million50% of the capital should be paid in cash or • kind upon incorporation of the company

Company with Variable CapitalThe capital might change according to • incorporation documents

Cooperative CompanyA limited liability company or a joint stock • cooperative company might be established to achieve a specific purpose such as reduction of prices for certain products or services

Joint Venture CompanyAn anonymous company known only to the • partners. It does not enjoy any autonomy and is not subject to required procedures of disclosure or obtaining a commercial register.Foreigners are allowed ownership in these • types of companies

Number of partners not less than two and • not more than 50Shares cannot be offered for public • subscriptionNot allowed to practice banking, insurance • or investment activities100% foreign ownership is allowed according • to the new Foreign Investment Law as from 3 November 2001 Minimum amount of capital shared by • partners is SR 500,000 in the event all partners are Saudis. In the event all or some partners are non-Saudis, the minimum amount of capital will depend on the type of activity to be practiced by the company

Joint Stock CompanyThe Joint Stock Company takes two forms: • Public or ‘Open’ Joint Stock Company, where the shares are offered for public subscription; Private or ‘Closed’ Joint Stock Company which does not offer any shares for public subscriptionMinimum subscribed capital is SR 10 • million in case shares are offered for public subscription (This capital may be increased by the Ministry of Commerce in certain situations)Minimum subscribed capital is SR 2 million • in the case of a Closed company (This amount may be increased by the Ministry of Commerce in certain situations)25% of the subscribed capital should be • paid upon incorporation of the company.The number of shareholders should not be • less than fiveThe capital is divided into shares of equal • nominal value of SR 10The legal liability of shareholders is limited • to the value of their sharesThis type of company is the only one allowed • to practice banking and insurance activities in the KingdomEvery member of the Board of Directors • should possess shares with a minimum value of SR 10,000

Joint Liability PartnershipIt is usually referred to as a joint liability • companyTwo or more partners are responsible •


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Commercial Register Law (1)

The Saudi Commercial Register law was issued as per Royal Decree M/1 dated July 10, 1995. According to this law, every merchant whose capital reaches SR 100,000 or more is required to register within 30 days from the date of opening a commercial store, or from the date of possessing a commercial store, or from the date his capital reached the said amount. He shall submit an application to obtain a Commercial Register from the nearest center whether it is a main office or a branch office or an agency. The law also stipulates that all companies incorporated in the Kingdom shall obtain a Commercial Register within 30 days from validation of its articles by the Public Notary. The same applies for the branches of the company. It is conditional to obtain a Commercial Register that the firm must be a member of the nearest Chamber of Commerce and Industry.

Trade Agencies Law (2)

The Saudi Trade Agencies Law was issued by Royal Decree M/11 dated July 22, 1962. This includes the amendments regulating the relations with the trade agencies of the companies which grant such agencies. The law stipulates that the Trade Agent must be Saudi with a Commercial Register, that the capital of the companies assuming the role of the Trade Agencies must be fully owned by Saudis, and that all members of the Board of Directors of such companies and their authorized signatories must be Saudis. Trade Marks Law (3)

The Saudi Trade Marks Law was issued by the Royal Decree M/21 dated February 5, 1984. The law includes procedures for registering, publicizing, renewing, canceling, transferring the ownership, mortgaging and placing a lien on trade marks, as well as licensing contracts, joint trade marks and relevant fees. According to this law, any distinguished names or signatures, words, letters, numbers, pictures, stamps or any sign or combination of signs are considered as trade marks if they are suitable to differentiate industrial, commercial, agricultural or handicraft products or forests utilization projects or a natural resource or to evidence that the item which will carry the trade mark is owned by the

owner of the trade mark for the sake of processing, purifying, inventing or trading or as an evidence of providing a service. According to this law, the following groups are allowed to register trade marks: Naturalized or legal SaudisForeigners residing in the Kingdom who have permission to undertake trade or handicraft worksForeign nationals of countries which have reciprocal relations with the KingdomThe rights of the owner of the registered Trade Mark continue for ten years and may be extended to a similar period upon requesting renewal. It should be noted that this law superseded the former ’Distinctive Trade Marks Registration Regulation‘ issued by Royal Decree 8763 dated September 12, 1939.

Customs Law (4)

The Saudi Customs policy has a religious and security objective represented in preventing the entry of items which are against Islamic beliefs or Saudi traditions and values or cause harm to the society and its stability. It also has an economic objective represented in imposing custom duties on the imported goods according to identified tariff categories, facilitating export procedures and protecting national industries. Moreover, the law has a social objective which aims at exempting necessary goods from custom duties or imposing a very low tariff rate on the imported ordinary goods. The Customs Department, in keeping abreast of the modernization process, simplification of customs procedures as well as provision of necessary information to concerned parties with respect to Customs Law, has issued the following, in line with the Customs Law and relevant By-laws (5):

(1) For more information see Ministry of Commerce and Industry, CR Law or website www.commerce.gov.sa. (2) For more information see Ministry of Commerce and Industry, CR Law or the ministry website: www.commerce.gov.sa.(3) For more information see text of Royal Decree M/21 dated 5/2/1984, or website: www.commerce.gov.sa. (4) Ministry of Finance, Saudi Customs Directorate.(5) See General Customs Directorate website: www.custom.gov.sa.


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Customs Provisions:Tariff lawsDirectory of temporary entry of imported goods free of duties provided they are re-exportedDirectory of unloading goods in the customs zonesDirectory of customs release documents Directory of goods which are subject to provisions particularly precious goodsDirectory of zones designated for depositing imported and exported goodsThe Kingdom is a member of the World Customs Organization, the Harmonized System of Custom Duties since 1990, and the Custom Cooperation Council in Brussels as per Royal Decree M/68 dated 2 February 1973. The Kingdom also concluded an agreement among the States of the Arab League for facilitation of trade exchange and organization of transit trade since 1953. This is in addition to implementing a unified tariff for all Arab countries.

Income Tax LawThe new Income Tax Law(1) was issued by Royal Decree M/1 dated 6 March 2004. The relevant by-laws were issued by Ministerial Resolution 1535 dated 28 July 2004. The new law includes many direct and indirect tax advantages with the aim of creating an attractive investment climate in the Kingdom, attracting foreign investments and enhancing the role of the private sector in economic development in light of local and international developments. The main features of the new Income Tax Law are as follows:

Clarity and transparency• Adoption of a moderate tax rates• Carrying forward losses for an unlimited • number of yearsAdoption of group and accelerated assets • depreciation approachAdoption of self-allocation• Endorsement of deduction tax for the first • timeClear identification of the rights and duties of • the tax department and tax payersEnhancement of the mechanism of tax • collection (clear measures to prevent tax evasion and irregular provision of tax declarations)Implementing the right of the tax payer to • appeal to the Grievance Board for the first time in the Kingdom(2)

Measures and Weights Law (3)

The Saudi Weights and Measures Law was issued by Royal Decree 29 on January 27, 1964. This law includes identification of the standard decimal units adopted in the Kingdom. These are: Units of Length: The Meter and its partsUnits of Weight: The Kilogram and its parts Units of Volume: The Liter and its partsUnits of Area: The Square Meter and its partsThese units are related to corresponding international standard units. The law stipulates that all companies and firms, importing goods to the Kingdom or producing goods in the Kingdom or exhibiting goods for sale, shall put these units on such goods or packages.

Insurance LawThe Saudi Insurance Law was issued per Royal Decree M/32 on July 31, 2003(4). The law aims at setting a regulatory framework for the local insurance market which includes health insurance, and insurance against vehicle accidents, aviation accidents, fire; engineering, goods as well as miscellaneous accidents. The law also aims at enhancing the regulatory role of SAMA in the field of insurance, identifying management criteria and requirements to ensure the quality of environmental services and to protect customers and investors of this sector. This law will enhance competition in this sector and achieve further improvement of insurance services provided by specialized companies, brokers, agents, consulting bureaus and insurance auditing bureaus.

Social Insurance Law (5)

The Saudi Social Insurance Law was issued by Royal Decree M/2 dated November 15, 1969 and became effective in February 1973. The law was amended by Royal Decree M/33 of 29 November 2000 and became effective on 25 March 2001. This law regulates two types of contributions to the social insurance system: Occupational hazards, where the system provides compensation in case of work injuries (the employer pays 2% of the worker’s wage irrespective of nationality).Pensions, where the system provides compensation in case of occupational disability,

(1) Ministry of Finance, Informative Bulletin of the new Income Tax Law, 2004.(2) For more information see Department of Zakat and Income Tax website www.dzit.gov.sa.(3) Ministry of Commerce and Industry website: www.commerce.gov.sa. (4) 8th Development Plan 2005-9.(5) GOSI, Social Insurance Law.


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old age and death (18% of the wage equally between the worker and employer on 50:50 basis and it is applied for Saudis only). The insurance branches may be expanded to provide other types of compensation in line with the law. The occupational hazards branch is applied, on obligatory basis, on all workers, irrespective of gender, age or nationality. The pension branch is applied, on obligatory basis, on all Saudi workers irrespective of gender. However, worker’s age should be less than sixty at the time of applying the law(1).

General Environment Law (2)

This law aims to protect the environment against pollution, ensure public health; conservation, and the development and rational utilization of natural resources. It also aims to make environmental planning an integral part of the comprehensive development planning in the industrial, agricultural and urban fields. The law also intends to enhance environmental awareness, deepen the sense of responsibility towards environment protection on the part of individuals and groups, and enhance voluntary efforts in this regard. The law obliges everyone who undertakes production or service activities or others to take necessary measures to ensure protection of the environment and not to exceed the approved environmental safety limits as stated in the by-laws. The existing projects, at

(1) For more information see GOSI Website: www.gosi.gov.sa. (2) Presidency of Meteorology and Environment, General Environmental Law, for more information see PME website: www.pme.gov.sa.(3) For more details see www.commerce.gov.sa.(4) Ibid., commercial mortgage law.

the time of issuance of this law, will be given a grace period of five years to rearrange their situation in line with this law. In case it is proved that this period was insufficient, it might be extended by a decision made by the Council of Ministers based on a recommendation by the concerned Minister. Credit funds are to adhere to environmental standards as a prerequisite for financing any project (Articles 15 and 16 of the General Environmental Law).

Competition Law (3)

Competition law and its relevant by-laws were issued by Royal Decree M/75, dated 25 June 2004. This law aims at protecting and encouraging fair competition by enhancing market rules, trading of goods, as well as freedom and pricing transparency against anything that might affect lawful competition by preventing damaging actions.

Commercial Mortgage Law (4) Commercial mortgage law was issued by Royal Decree M/75, dated 1 January 2004. The purpose of this law is to clarify the policies and measures related to commercial mortgage of any money to be transferred as commercial debt for the debtor.Other laws related to investment in the Kingdom are available on the website of the Ministry of Commerce and Industry.


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Theme Four:Higher and Major Investment Authorities in the Kingdom

(1) Supreme Economic Council Resolutions, 2004.(2) Supreme Council for Petroleum and Mineral Affairs, General Municipality, special report from the Council’s Secretary-General Office, 2006.(3) SAMA, 44th Annual Report, 2008.

The Supreme Economic Council (1): The Supreme Economic Council represents the highest economic authority in the Kingdom. It is concerned with works and tasks needed to enable the Council of Ministers to practice its responsibilities and authorities. The Supreme Economic Council is chaired by the Custodian of the Two Holy Mosques, with HRH the Crown Prince as Vice Chairman. The membership of the Council includes Ministers of Labor, Commerce and Industry, Petroleum and Mineral Resources, Finance, Economy and Planning, Water and Electricity and two State Ministers in addition to the Governor of SAMA.

The main authorities of the Council are: Preparation of the economic policy and • appropriate alternativesCoordination among Government agencies • whose works are directly related to national economyFollowing up of economic policy • implementation and related Council of Ministers resolutions regarding economic affairsStudying the general frame of the • development plan, fiscal policy, drafting the State Budget, trade policies at local and external levels as well as rules which govern labor and capital markets, and policies related to improving investment climate and competitionDrafting regulations and rules related to • economic affairs

The Supreme Council for Petroleum and Mineral Affairs (2)

The Supreme Council for Petroleum and Mineral Affairs was formed by Royal Decree 212/A on January 3, 2000. Royal Decree A/171 on October 17, 2007 was issued to reform the Council for four years from October 27, 2007.

Achievements of the Supreme Economic Council in 2007 (3)

In 2007, the Supreme Economic Council issued many resolutions aiming at privatization of some public firms to cooperate with the private sector according to commercial bases whose objective is to make profits. They include:

Approval of the executive program • aiming at privatization of Saudi Arabian AirlinesApproval of the regulations aiming at • the contribution of the private sector to water and sanitary waste sectorApproval of the executive program • aiming at expanding pilgrim halls in King Khaled International AirportApproval of regulations aiming at • applying Government e-dealingsOrganizing of technical education • and health education funds, besides joining women and teachers’ college to high education fundApproval of restructuring of • groundwater and drinking water sectors, in addition to treatment of sanitary waste related to the Ministry of Electricity and Water

The Council is concerned with making decisions related to all affairs of petroleum, gas and other hydrocarbons. In this capacity, the Council’s authorities include:

Identifying and endorsing strategies • and policies concerning oil, gas and other hydrocarbons in light of prevailing circumstances and national interests Setting the general policy for Saudi Aramco • Deciding on all investment matters related • to all post-production stages. This includes endorsement of all agreements and contracts concluded with specialized companies. In this context, Royal Decree M/240 was issued on February 14, 2000 entrusting the Council to decide on works related to gas exploration and other hydrocarbons except oil, including their extraction and production. This also includes approval of agreements and contracts signed with specialized companies.


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Deciding on all investment matters related • to oil, gas and other hydrocarbons. This also includes exploration and production, approval of agreements related to development and operation and other investment contracts with specialized companies.Studying draft international agreements in • oil, gas, and minerals fields Follow-up implementation of these • policies and strategies and requesting any information or reports from specialized agencies, if deemed necessary for carrying out its tasks

The Council is also responsible for studying and approving general policies of mining and reviewing related agreements and contracts. In this context, Royal Decree M/30 was issued on November 1, 2000 endorsing the Council of Ministers Resolution 177 dated October 17, 2000, which entrusts the Supreme Council of Petroleum and Mineral Affairs to assume duties of Supreme Council for Saudi Arabian Oil Company (Saudi Aramco) as of 3 January 2000. The Council approved the gas strategy in the Kingdom per Resolution No. 13 dated 6 June 2001. This strategy aims at ensuring gas supplies from hydrocarbon sources, as well as achieving maximum economic and social returns for the Kingdom from utilization of its natural gas

resources. This will be best realized through a plan that aims to meet local demand for gas and related liquids up to 2025. This strategy looks forward to develop an integrated gas industry and provide gas supplies to the Saudi economy at competitive prices. That will assist in diversifying sources of income through the establishment of prosperous industries, particularly petrochemical industries, along with supply of electricity and water in a manner that ensures the benefit and welfare of the Saudi society. The strategy calls for development of gas supplies and intensifying exploration operations to increase the Kingdom’s gas reserves. It also aims at providing all regions of the Kingdom with gas in a gradual manner, using ethane and methane in an optimal manner that ensures growth of national economy and diversification of income.

Saudi Commission for Tourism and AntiquitiesThe Saudi Commission for Tourism and Antiquities (SCTA) was established in 2000, as an autonomous body entrusted with tourism affairs in the Kingdom, including development of tourism, increasing role of the tourism sector, and removing constraints which impede development of tourism. Tourism is considered a major contributor to the national economy, and the private sector plays a major role in establishing tourism investment facilities.

The Value Added to Tourism Sector and its Contribution to the GDP (by current prices) (1 )

YearTourism GDP

(SR billion)

The GDP of the

Kingdom

(SR billion)

Non-Oil GDP in

the Kingdom

(SR billion)

Tourism

Contribution to

GDP (%)

Tourism

Contribution to

Non-Oil GDP (%)

2005 36.5 1,182.5 554.1 3.1 6.6

2006 35.5 1,335.6 603.9 2.7 5.9

2007 37.0* 1,530.5** 640.4** 2.6 5.8

* Estimated datum ** Primary datum



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(1) Saudi Commission for Tourism and Antiquities; the guidance of the approach and initiatives of SCTA, to implement the general strategy for better national tourism.(2) Saudi Commission for Tourism and Antiquities, MAS Center.(3) Alestethmar Arabic Magazine, issue 8, October 2005 (from an interview with SAGIA Governor).

The vision of the Commission is to achieve unique, valuable tourism development which produces social, cultural, economic, and environmental benefits based on Islamic values(1), transforming the tourism sector into a sector capable of attracting Saudi citizens to tour within the Kingdom, increasing investment opportunities, developing national manpower, and provide job opportunities for Saudis. Accordingly, tourism development would be considered a national economic project. This vision is translated into action through a scientific approach adopted by the Commission. This approach aims at achieving an integrated project for national tourism development and institutional development of the tourism sector, developing tourism regulations (draft national tourism security regulation, draft general tourism regulation), establishing effective partnership and cooperation with related agencies, developing and marketing of tourism related products (tourism promotion and marketing strategy) such as festivals and tourism events, post-Umrah tourism, tourism guidance, etc. The approach also aims at the training Saudis and providing job opportunities in the tourism sector, preparing a social tourism strategy (tourism awareness programs, tourism and society, tourism culture in the educational process), enhancing international tourism relation (Arab e-tourism project), representing the Kingdom in the World Tourism Organization and other organizations, preparing a tourism information strategy, and preparation of a glossary of tourism terms. Moreover, an adequate tourism investment climate will be created through instruments which encourage investment, such as tourism development companies, tourism business services centers, liberalization of the tourism services markets and establishment of an e-tourism market.

MAS center statistics related to the Saudi Commission for Tourism and Antiquities reviews the following (2):

974 direct and indirect job opportunities • will be available in 2010, and may increase to 1,196 opportunities in 2015 to reach 1,459 in 2020Expectedly, domestic tours (domestic and • foreign) will increase to 86.2 million tours in

2010, and may increase to 108.9 million in 2015 and 141.1 million by 2020Tourism allocations of expenditures are • expected to grow to SR 73.7 billion in 2010, and are expected to increase to SR 85.5 billion in 2015 and SR 101.3 billion by 2020

Saudi Arabian General Investment Authority (SAGIA)The Saudi Arabian General Investment Authority (SAGIA) was established in 2000 to achieve the goal of taking care of investment affairs in the Kingdom, including foreign investment, as well as preparing Government policies related to local and foreign investment, proposing executive plans and regulations required for providing an adequate investment climate, follow-up and evaluation of local and foreign investments, and defining investment opportunities in various economic sectors.

The investment climate has improved markedly since the establishment of SAGIA. The Foreign Investment Law was promulgated to provide foreign investors with the following incentives

(3): Allow foreign investors full ownership • (100%) of their investment projectsProvide foreign investments with same • benefits, incentives and guarantees provided to national investmentsReduce Corporate Tax from 45% to 20%• Allow foreign investors to repatriate their • invested capital, profits and accrued interest to their countries of origin


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Partners in any foreign investment project • have the right to waive their shares amongst themselves and othersLicensed foreign investment projects have • the right to obtain industrial loans at easy terms from the Saudi Industrial Development Fund and other credit institutionsLicensed foreign investment projects • have the right to possess commercial and residential buildings needed to implement their licensed industrial activitiesForeign investors have the right to make • use of bilateral agreements of investment protection and promotion signed with the GovernmentIt is forbidden to confiscate or expropriate • any investment, wholly or partially, except upon a decision made by a court of law and after payment of fair compensationForeign investors may obtain more than one • license for practice of the same activity or different activitiesLicensed projects may sponsor foreigners • working in the projectLately, the condition of the minimum capital, • that used to stipulate obtaining a license of the investment, has been cancelled. SAGIA, as an agency responsible for encouraging investment, is responsible for improvement of investment climate and quality of investment services To streamline the procedures of licensing, SAGIA identified a period of not more than 30 days for granting the license, provided that all requirements are met in the application.

SAGIA also endeavors to review and improve investment climate to make it more competitive relative to other countries. This includes

identification and removal of constraints which impede investment activities, increasing degree of transparency, providing relevant information to investors and simplifying procedures. All these contribute effectively to the increase of investment licenses.In a short time, the efforts exerted by SAGIA could place the Kingdom among the top 20 countries for world direct foreign investment. This has been confirmed by the World Investment Report of 2007, and it qualified the Kingdom to issue this important report. The Kingdom’s share of direct foreign investments increased from $ 778 million in 2003 to reach $ 2 billion in 2004. It increased to more than $ 12 billion in 2005, and $ 18.2 billion by the end of 2006, a rate of growth of 51% in 2006 from 2005(1). Hence, the Kingdom topped Arab countries in terms of the volume of foreign flows, simultaneously decreasing half of the Kingdom’s investments abroad in 2006, compared to 2005. This reflects the recent attraction of the Saudi market to both Saudi and foreign investments. According to SAGIA surveys(2), Japan was number one in terms of investments in the Kingdom, exceeding $3.5 billion, followed by France $ 2 billion, Canada $ 1.6 billion, the USA, China and Russia. Russia and China made significant entries since their investments were not noticeable before 2006. The contributions of countries other than Japan, USA and European countries were approximately 38% of the total flows to the Kingdom in 2002. This percentage increased in 2006 to 47%. Chinese, Russian and Malaysian investments led to diversification in the sources of direct foreign investments heading to the Kingdom, which were economic and strategic in nature.

The Development of the Kingdom’s Share of Foreign Investments’ Flows Compared to Other Countries from

2000-6 ($ million) (3)

2000 2003 2004 2005 2006

Saudi Arabia 242 778 1,942 12,097 18,293

Turkey 719 1,752 3,883 9,803 20,120

UAE 18 4,256 10,004 10,900 8,386

Egypt 844 237 2,157 5,376 10,043

(1) World Investment Report, 2007, UNCTAD, datum related to imports and exports investment in the Kingdom.(2) SAGIA, investment flows report, available on the website of the authority.(3) World Investment Report, 2007, UNCTAD.


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Regarding the distribution of foreign investments in the Kingdom, four sectors controlled approximately 76% of the total flows: the industrial sector (16.9%), mining and gas and petroleum exploration (29.8%), finance and insurance (15.4%) as well as refining of petroleum products (14.2%). These percentages of flows distributed in the Kingdom reflected the world changes, where mining and exploration sector had the highest percentage of flows (29.8%), while the finance and insurance rate increased from 5% in 2005, to 15.4%. The share of real estate and rental sector decreased from 16% in 2005 to 5.5% in 2006. Moreover, the share of construction sector witnessed a slight decrease. Thus, the share of the industrial sector, energy and the related products witnessed an increase from 56% in 2005 to 60.9% of the total flows in 2006.

SAGIA also prepared a work strategy for the period 2005-10, which comprised six initiatives: services, marketing, regional development, attraction of new investors, development of sectors that have comparative advantages, and improvement of investment climate. The strategy is based on many criteria, such as effective economic impact, the possibility of fast implementation, low costs, removal of any complications related to implementation and the ability to ensure human resources. During the coming stage SAGIA will focus on attracting local and foreign investment to three major sectors of distribution, power and

information technology with selection made according to their comparative advantages and economic efficiency.

Capital Market Authority (CMA) The Capital Market Authority (CMA) is an autonomous Government agency reporting directly to the Chairman of the Council of Ministers. CMA is responsible for supervision, regulation and development of the capital market as well as issuing rules, regulations and directives required for enforcement of the provisions of the Capital Market Law in order to create a sound investment climate in the market and to enhance trust and confidence in it. CMA is also responsible for ensuring adequate disclosure and transparency for the companies listed in the market as well as protecting investors and traders of securities. CMA has the authority of regulating and developing the Capital Market, developing systems and techniques of agencies dealing with securities trading and protecting investors from illegal practices, forgery and deceit, and from trading according to insider information. By doing so, CMA aims at achieving efficiency, justice and transparency of trading securities and developing measures and controls needed to reduce risks related to trading. It also aims at regulating issue of shares, controlling activities of agencies under its supervision and regulating disclosure of information related to securities and issuing agencies. CMA is managed by a Board of Directors composed of five full-time members appointed by Royal Decree.

In its first action, CMA issued rules organizing the Market on December 14, 2003(1). These are:

Market Conduct Rules, including measures • for prevention of market deception and manipulation, prohibition of trading based on information provided by insiders, measures related to responsibility of incorrect data, controls related to behavior and conduct of the licensed party, etc.Rules of Offers of securities (public and • private) as well as exempt offers and the responsibility regarding invalidity of documents, etc. Rules of Registration and listing provisions • and abiding by such provisions and other

16.90% 15.40%

11.40%3.40%29.80%

5.50%3.40%

14.20%

(1) Al Eqtesadia newspaper, Issue 1427, 2004.

Industry Mining, gas & petroleum exploration

Finance & Insurance Services Refinig of petroleum Products

Electricity, gas, water Real Estate

Constructions Other Sectors


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measures which regulate the process of registration for those willing to register their securities in the official listCMA has listed a number of joint stock • companies, operating in various economic fields, in the Capital Market. It also reduced the nominal value of the shares of the listed companies from SR 50 to SR 10, thereby splitting each share into five shares and allowing non-Saudis residing in the Kingdom to trade in shares. CMA is exerting maximum efforts to develop rules and measures which protect the rights of shareholders and to make the market one of the most effective economic tools in the process of economic development in the Kingdom.

In light of CMA strategy to develop Saudi Capital Market and reduce the risks in line of the progress of the enrolled companies and their multiple activities, the Authority issued the following (1):

The resolution of restructuring capital • market sectors in accordance with each company’s activities, revenues and profits in addition to updating the new indicators that reflect price changes of enrolled company’s shares. This resolution was active from April 5, 2008.The resolution of the Council of Ministers • dated March 19, 2007 of establishing Saudi Joint stock (Saudi Capital Market)Starting a new trading system that comprises • controlling and observing the implemented contracts and making sure of their legality, besides trading of versatile and new investments dated October 20, 2007CMA’s objectives aim at developing and • protecting the capital market, as well as protecting the investors from the risks of the market. In addition to that it guarantees applying the transparency, justice and enclosure. The Authority endeavors to continue the task of actively monitoring the companies, increasing the awareness of the matter of governance, applying international standards in the field of controlling the trading by establishing an e-control system of trading securities and monitoring any irregularity in this market.

Communications and Information Technology Commission (CITC)(2)

The Communications and Information Technology Commission (CITC) is a Government organization founded in 2001. It is responsible for regulation of the telecommunications and information technology sector in the Kingdom so as to provide high quality services at affordable costs. CITC endeavors to create an adequate environment for the growth of communications and information technology market and to encourage fair competition.

CITC also protects interests of service users, controls performance of licensed service providers, and endeavors to provide an adequate climate for investment in communications and information technology sector. The major tasks of CITC are:

Encouraging investment in • communications and information technology servicesGranting licenses for provision of • communications and internet servicesProtecting interests of users and controlling • licensed service providersEncouraging free market for provision of • services Implementing policies, plans and • programs approved for development of the communications and information technology sector

The number of land lines reached 4 million by the end of 2007, while mobile phones were increasingly in demand with their spread rate reaching 116%. Internet users in the Kingdom were estimated at 1 million in 2001, and expected to reach 6.4 million by the end of 2007. It spread to 26% of the population and 36% as an annual rate of growth.Broadband subscribers increased from 24,000 in 2003, to more than 623,000 by the end of 2007. The annual rate of growth was 126% during the past four years. However, 2006 and 2007 witnessed a tenfold increase of subscribers over the previous two years.

(1) CMA, Annual Report, 2007.(2) CITC, Communication and Information Technology Commission, Introductory Bulletin, see: www.citc,gov.sa


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(1) SAMA, 44th Annual Report, issue 44.

Major achievements made by CITC during 2007, include the following(1):

Complete the measures of the third license • to provide mobile phones servicesEstablish land lines market, and granting • licenses for three companies in order to provide this servicePrepare the national plan of the spectrum • frequencyGranting 71 licenses in 2007• Revision and applying the referral offer in • order to reach local connection centersReapply the methods of defining the costs of • wholesale related to telecommunicationsPrepare the conditions of presenting • landlines and mobiles services.Issuing many technical and regulative • measuresDefine the prices related to • telecommunications and information technologyPrepare guidance of transmitting landlines • numbersRevising of more than 2,000 demands • for telecommunications and information technology equipment, and 4,800 requests for licenses and completing their related measuresPrepare, update and apply high quality • servicesPrepare technical measures to supply the • roads with telecommunications networks in both public and private facilities.End the second stage by preparing the • infrastructure required for categorizing internet zones and site selectionsEstablish the national center for information • securitySet a strategic plan for the Commission in • the field of information technology in the KingdomSet a special strategy for improving internet • services in the whole KingdomPrepare regulations required to prevent • spam e-mails Revising approximately 170 irregularities • and issuing the related resolutions in accordance with the Commission’s lawsResolving the 3,200 complaints submitted • to the CommissionPrepare by laws draft required for e-dealings•

Provide high quality telecommunication • services for pilgrims in Makkah and the Holy places during Hajj period and RamadanPrepare any other studies necessary•

Royal Commission for Jubail and YanbuThe Royal Commission for Jubail and Yanbu was established in 1975. Its headquarters are located in Arriyadh. The Commission is governed by a Board of Directors responsible for preparation of policies and managing their implementation, through two General Directorates located in Jubail and Yanbu Industrial Cities. The Commission was entrusted with the responsibility of implementing physical and social infrastructure required for the development of Jubail and Yanbu regions. The major remits of the Commission are:

To promote, assist, service and encourage • the development of basic, downstream and light industries to utilize the Kingdom’s natural resources to produce value added products for local consumption and exportTo plan, develop, construct, operate and • maintain various infrastructure and services needed for these industriesTo urge these industries to employ Saudi • nationals and upgrade their skills and capabilitiesTo maintain balance between industrial • development and protection of the environmentTo encourage Saudi and foreign private • sectors to invest in the two citiesTo coordinate with other related agencies • such as Saudi Aramco, Seaports Authority and others to facilitate supply of feedstock and services needed by such industries

A sum of SR 84 billion was invested for development of Jubail and Yanbu Industrial Cities. The result was establishment of 233 industries with total investments of around SR 244 billion. This brings total investments in the Royal Commission to approximately SR 328 billion and total job opportunities to more than 107,000. Moreover, the 154,000 residents enjoy the most modern life style.

Chairman, Royal Commission for Jubail and Yanbu


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The Royal Commission received many local, regional and international prizes in recognition of its efforts in different fields; environmental protection, city planning, and plantation. The share of the two industrial cities in the GDP amounts to SR 58,202 billion, or 8.06%, and their share of the non-oil GDP is 12.5%. The share of the two cities of the industrial production of the Kingdom is 60% and their share of total non-oil exports is 80%. They provide approximately 19%(1) of the total industrial employment of the Kingdom. The most important investment opportunities in Jubail and Yanbu Industrial Cities are:

Industrial investment opportunities: • establishment of joint industrial ventures with foreign companiesCommercial investment opportunities: • provision of developed commercial lands to companiesResidential investment opportunities: • establishment of housing projects to meet the needs of the two cities

Total investments made by the Royal Commission and the private sector in the two cities increased markedly by the end of 2005, recording approximately SR 12.2 billion, including SR 7.9 billion invested by the Commission and SR 4.3 billion by the private sector. The total number of industrial projects amounted to 358 including 40 basic industries, 70 secondary industries and 248 support industries (2). Investment by the Royal Commission in the Jubail stage-2 Project represents approximately SR 14 billion, of which SR 3.5 billion is for stage-1, completed by 2008. The project is likely to attract around SR 210 billion. The cost of Yanbu stage-2 Project is approximately SR 50 billion, and it comprises many investment opportunities in the fields of research and design, services, construction, operation and maintenance and others, completed by the beginning of 2009(3).Upon completion, Yanbu stage-2 project is expected to attract approximately SR 115 billion of investments leading to establishment of 34 basic and secondary industries and 224 light industries. Hence, total investments in Yanbu Industrial City, after completion of Yanbu stage-2 project by 2019, will exceed SR 200 billion and will provide approximately 116,000 job opportunities in coming years(4).

The Royal Commission for Jubail and Yanbu supervises Jubail Industrial City, with an area of approximately 1,000 sq km, and Yanbu Industrial City, with an area of 185 sq. km. Both cities accommodate 361 plants for basic, support and light industries, and they employ more than 116,000 workers. In 2007, more than 42 industrial projects were awarded with a cost of SR 4.2 billion. There are 67 projects under study and design with an estimated cost of SR 18.2 billion.

Saudi Organization for Industrial Estates and Technology Zones(5)

The basic legislation to set up the Saudi Organization for Industrial Estates and Technology Zones was endorsed by Council of Ministers Resolution 235 on 13 November 2001. The Organization took over the tasks of administering the industrial estates from the Ministry of Commerce and Industry on 27 April 2005 under Council of Ministers Resolution 265 dated 28 November 2004. Since its formation, the Organization prepared its plans in line with the long-term objectives and strategies for industrial development adopted by the Government, and on the basis of offering additional projects for development of industrial land to the private sector to meet the growing demand for services. The Organization also established technology zones to implement the findings and refurbish the existing industrial estates. In 2007(6), the Commission initiated methodology to encourage the private sector. The first part of phase 1 of Sudair Industrial Estate, with a total area of 10 million m², and returns property to the public sector (the Build-Operate-Transfer or BOT scheme) . Then it develops Jeddah’s second Industrial Estate, with land area of 3.5 million m² by BOT system. A similar scheme to develop Jazan Industrial Estate, with land area of two million m², has a total cost of SR 17.5 million as an unretrieved subsidy presented from the government to the Commission. There is also the Phase 4 of Dammam’s second Industrial Estate, with land area of 4 million m². The private sector has been granted licenses for the purpose of establishing five further industrial cities, with a total land area of 4.3

(1) Royal Commission for Jubail and Yanbu, website: www.rcjy.gov.sa. (2) Ibid, Planning and Investment Department, Internal Bulletin,2006.(3) Ibid. (4) Ibid., website: www.rcjy.gov.sa (inauguration of Yanbu 2).(5) Saudi Organization for Industrial Estates and Technology Zones, Projects Report, 2006.(6) SAMA, 44th Annual Report, 2008.


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million m², and a license for Public Pension Agency to establish telecommunications and information technology zones in Arriyadh. The Saudi Organization for Industrial Estates and Technology Zones applied the system of rehabilitation, operation of utilities and returning the property to the public sector (BOT) for the purpose of refurbishing and maintaining all existing industrial cities after finishing the present contracts financed by the government in July 2006. This will run until May 2009. The major achievements of the Commission in 2007 are rehabilitation of usufruct projects, including improvement of water and sanitary waste in the existing industrial estates, and solving the problems of lack of water, sewage and industrial treatment, as well as disposing of waste matter with no damage to the environment, recycling in industry or watering green lands. Projects for the operation and maintenance of existing industrial estates reached 17, with a total cost of SR 20 million. Moreover, the Commission signed 10 advisory and study contracts for the purpose of preparing plans and designs for industrial estates.

Two major Industrial Cities are being supervised by the Royal Commission of Jubail and Yanbu, as mentioned. The Commission has recently established technical zones in many parts of the Kingdom, namely(1):

Information Technology and • Telecommunications Center (ITCC) for the Public Pensions Agency in Alnakhil Quarter, ArriyadhKing Abdullah Bin Abdulaziz Center for • Industrial Research, Dhahran Techno-Valley related to King Fahd University for Petroleum and MineralsKing Saud Science Park (KSSP).• The total cost of establishing these • technology zones in the Kingdom during the Eighth Development Plan 2005-9 is approximately SR 766 million, and the total cost of the Organization’s projects pertaining to expansion in industrial estates and rehabilitation of the existing ones together with establishment of the technology zones is SR 2,656 million during the term of the Plan(2). In 2007, the Commission initiated its methodology to encourage the private sector(3).

Saudi AramcoThe Arabian American Oil Company (Aramco) was established in 1933, when it undertook the concession of oil exploration. The company became wholly owned by the Government of Saudi Arabia in 1980, and in 1988, undertook management and operational responsibilities. A Royal Decree was issued in 1993, which stipulated the merging of all refineries and oil producing facilities in Saudi Aramco, which undertook responsibilities regarding most of the Kingdom’s works in gas and petroleum sectors, starting with exploration and production, up to refining, transportation and marketing. Saudi Aramco is considered a major pillar of the Saudi economy. It obviously contributes towards the GDP growth and provision of Government revenues as well as export proceeds. Saudi Aramco operates 92 oil fields and 13 gas fields throughout the Kingdom, including the Red Sea region.

Saudi Aramco Statistics (2006)(4)

Total annual production of crude oil – 8.5 • billion barrelsTotal reserves of crude oil and condensates • that can be extracted – 259.9 billion barrelsTotal refined energies of the projects’ share • and the common international – 2 billion barrels per dayCrude oil exports – 2,408 million barrels, • 136 million barrels of refined products and 287 million barrels of natural gas liquidsTotal reserves of natural gas – 253.8 trillion • standard cubic feetTotal domestic refined energy (thousand • barrels per day)- Ras Tannura 550- Arriyadh 122- Jeddah 85- Yanbu 237- SAMER F – Yanbu 400- SAMER F – Jubail 305- Rabegh 358 Kinds of Saudi crude oil according to the • American Petroleum Institute:- Arab excellent light oil (more than 40 degrees)- Very light Arabic oil (36-40 degrees)- Arab light oil (32-36)- Arab medium oil (29-32)- Arab heavy oil (less than 29)

(1) For more information see the website www.soietz.gov.sa.(2) Ibid.(3) SAMA, 44th Annual Report, 2008.(4) Saudi Aramco, Annual Report, 2007.


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Crude Oil, Natural Gas and Refined Products (1)

Production/Exportation The Year

Crude Oil and Refined Products (by barrels) 2005 2006

Crude Oil Production, Except Natural Petroleum MixtureCrude Oil Exports Crude Oil Cargos (via owned or rented vehicles)Refined ProductsRefined Products Exports

3,308,601,7272,622,997,627679,212,000591,948,332201,589,157

3,252,943,2412,541,692,569648,969,000595,657,467183,985,356

Natural Gas 2205 2006

Crude Gas Delivered to Gas Plants (billions of standard cubic feet daily)Amount of Gas Delivered and Prepared for Sale (trillions of British thermal units daily)Ethane Gas Prepared to be SoldEthane Total Delivered and Prepared to Sale Gas Quantities

7,871

5,55301,07916,7321

8,224

5,82981,02786,8576

Natural Gas Liquids (production) 2005 2006

Natural Gas Liquid Production of Hydro Carbon (by barrels)Propane Butane Gas CondensatesNatural Petroleum Total of Natural Gas Liquid Production

150,587,51294,148,28189,348,13866,298,617

400,382,548

149,320,19994,338,26893,917,88761,456,003

339,032,357

Natural Gas Liquids (exports) 2005 2006

Natural Gas Liquids Extracted from Hydro Carbonic Gases (by barrels)Propane Butane Gas CondensatesNatural Petroleum Total Exports of Natural Gas Liquids

138,034,13487,142,25510,035,84154,269,189

289,485,392

141,092,58680,170,05411,263,53452,848,817

285,374,991

Sulfur 2005 2006

Sulfur Production (by metric ton)Sulfur Exports (not including sales of SAMREF and SASREF) (by metric ton)

2,716,8322,391,789

2,906,9112,640,250

(1) Annual Report of Saudi Aramco, 2007.


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Main Products Manufactured in the Local Refineries in 2007 (1) (by barrels)

ItemLiquefied

Petroleum Gas

Naphtha Cars FuelAviation

Fuel(Kerosene)

Diesel Fuel Oil

Asphaltand

Related Materials

Total

Ras Tannura

3,392,000 13,040,000 38,198,000 5,658,000 74,210,000 34,377,000 6,035,000 174,910,000

Yanbu 3,394,426 1,538,852- 15,387,757 215,846 31,942,660 31,908,752 0 80,881,897

Arriyadh 2,187,000 0 11,856,000 4,777,000 19,435,000 120,000 6,520,000 44,459,000

Jeddah 1,013,000 3,202,000 5,633,000 238,000- 8,965,000 6,353,000 2,486,000 27,414,000

Rabegh 16,000 21,336,000 0 11,807,000 39,359,000 46,134,000 0 118,652,000

GDP 10,005,426 36,039,148 71,074,757 21,788,154 173,911,660 118,892,752 15,041,000 446,752,897

Distribution of Domestic Products by Areas (by barrels)

ItemYear

2005 2006 2007

Liquefied Petroleum Gas 12,191,864 11,863,947 12,455,625

Gas Fuel 108,789,864 115,300,359 126,713,993

Aviation Fuel (Kerosene) 20,500,122 20,396,003 21,085,223

Diesel 164,572,204 179,037,703 191,899,873

Fuel Oil 94,291,066 100,318,351 108,169,808

Asphalt and Related Materials 15,760,815 17,889,853 18,774,883

Total 416,105,935 444,806,216 479,099,405

Saudi Aramco owns the second largest fleet • of tankers in the worldSaudi Aramco employs approximately • 51,356 employees, 44,702 of whom are Saudis and 6,654 are non-Saudis The Company is 100% owned by the • Government of Saudi ArabiaThe Company has affiliates, joint ventures, • offices and companies in China, Egypt, Greece, Japan, Netherlands, Philippines, South Korea, Singapore, UAE, UK and USAThe main refineries are: Ras Tannura Refinery • with a capacity of 325,000 bpd and 200 barrels condensates; Jeddah Refinery with a capacity of 84,000 bpd; Riyadh Refinery with a capacity of 122,000 bpd; Yanbu Refinery with a capacity of 235,000 bpd, and Rabigh Refinery with a capacity of 370,000 bpdHeadquarters: Dhahran•

Investment opportunities in the Company are reflected in domestic joint ventures refineries projects such as:

Saudi Aramco/Exxon Mobil Refinery • (SAMREF), a joint venture owned 50:50 with Exxon Mobil Company, 400,000 bpd Saudi Aramco/Shell Refinery (SASREF), a • joint venture owned 50:50 with Royal Dutch Shell, 305,000 bpd Saudi Aramco Petroleum Lubricating Oil • Refining Company (Luberef): Saudi Aramco owns 70% while Exxon Mobil owns the remaining shares, 4.4 thousand bpd Saudi Aramco Petroleum Lubricating Oil • Company (Petrolube): Saudi Aramco owns 71% while Exxon Mobil owns the remaining shares, 6.5 million barrels/day.The Company enjoys diversification of its • investment opportunities represented by

(1) The above numbers refer to products that were re-treated to be other refined products.


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international joint ventures reflected in its partnership with five international ventures which are: - Petron Corporation, the Philippine

National Oil Company. Saudi Aramco has owned 40% of Petron since 1994

- Motiva Enterprise: a joint venture between Saudi Aramco (32.5%), Texaco (32.5%), and Shell (35%). Operations of this joint venture are concentrated on the Gulf and Eastern Coasts of the United States. The Company owns four refineries

- Oil Corporation, a South Korean oil refining company. Saudi Aramco owns 35%

- Motor Oil Hellas and Avin Oil: a Greek refining and marketing company. Saudi Aramco owns 50% of the company’s refineries

Saudi Basic Industries Corporation (SABIC)SABIC is the largest non-oil industrial company in the Middle East. It ranks tenth in the list of the top international petrochemical companies. SABIC was established in 1976 (1) to invest in the Kingdom’s natural hydrocarbon and mineral resources. Its headquarters are located in Arriyadh. SABIC’s production network in the Kingdom encompasses 17 industrial companies, most of which are in Jubail Industrial City on the Arabian Gulf Coast, while the others are in Yanbu Industrial City on the Red Sea Coast. Dammam City in the Eastern Province hosts one of these companies. In 2006, a SABIC affiliated company was established in Yanbu Industrial City – Yanbu National Petrochemicals Company (YANSAB). SABIC owns SABIC Europe Petrochemicals Company, with two major manufacturing locations in Geleen in the Netherlands and Gelsenkirchen in Germany, in addition to three industrial complexes in Bahrain with joint Gulf capital funding.

The Government of the Kingdom owns 70% • of SABIC, while the remaining shares are owned by Saudi and other GCC nationals. SABIC’s products account for some 80% of the petrochemicals exports at presentSABIC ranks second in the list of the largest • international companies in the production of ethylene glycol, methanol, MTBE, third in production of polyethylene, fourth in production of polyolefins, and sixth in production of polypropylene

SABIC owns a 20% share of the Bahrain • Aluminum Company, 31.3% of Gulf Aluminum Rolling Company, 20% of the National Chemicals Transportation Company, 25% of the Jubail Yanbu Utility Company, 20% of TAP Line, and 16.67% of ARG

2007 was a remarkable year for SABIC, in terms of technical and strategic systems. Standards numbers reflected that in the production, marketing, and profits domains. It also expanded insider and industrial operations, as well as promising industrial sectors abroad, which enhanced the integrated local investments (2).SABIC‘s output of more than 55 million tons meets the needs of more than 100 countries worldwide. It also meets the local demand, contributing to the development of the construction and agricultural sectors as well as manufacturing industries, in addition to its role in diversification of income sources, and improving balance of payments. SABIC is committed to applying highly accurate systems in the field of industrial safety and environment. It also intensified its efforts to gain long-term customers by expanding and developing the marketing network and providing the customers with modern technology that might achieve a world spread.SABIC continues to expand its industries in the Kingdom, Europe, USA and Asia, enhancing local investments and undertaking executive measures for the Saudi Company KAYAN under construction in Jubail Industrial City, and it is

(1) SABIC, Annual Report, 2004.(2) SABIC, Annual Report, 2007, see SABIC website.


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expected to start producing 6 million tons of cards in 2010. This company represents an integrated link between SABIC and the private sector. Forty-five percent of the company’s capital of SR 15 billion is owned by Saudi nationals. KAYAN petrochemical share is 20%. 2007 represented a turning point when SABIC possessed Plastic Industry Sector, that was related to General Electric American Company, to work now under the name of SABIC INNOVATIVE PLASTICS that was added to SABIC chains of specialized products and high value plastic products. It contributes to the world of specialized industries in line with the strategic project in 2020 aiming at reaching a pioneer world company that is the best in Chemicals industry. The company also aims at expanding the specialized products to represent 20% of the total revenues. SABIC is considered a leader in terms of Saudization, and has attracted thousands of workers with high qualifications and technology. Of course that enriched the industrial culture of the Saudi human resources and established an integrated entity of human resources capable of achieving the goals and overcome world challenges(1).

Saudi Arabian Mining Company (Ma’aden)The Ministry of Petroleum and Mineral Resources supervises mining activities in Saudi Arabia including those of Ma’aden, established in accordance with the Royal Decree M/17 dated 22 March 1996, with a capital of SR 3.8 billion and wholly owned by the State. The Ministry also encourages investment in mining and provides services and advice to support this activity. Furthermore, the Ministry supervises issuance of mining licenses and deeds in line with relevant rules and regulations. On 4 October 2004, the new Mining Investment Law was issued by Royal Decree M/47 to regulate investment in mining in Saudi Arabia. In May 2008, the Company announced its intention to offer 50% of its shares in projects for public subscription.

The activities of Ma’aden are multiple:(2)

Precious and Basic Metals: Ma’aden for Gold and Basic Metals in mines such as:Gold 58,257 ounceSilver 170,116 ounceCopper 737 tonsZinc 800 tons

Sukhaybarat Mine (Al Qassim): 2007 • production approximately 25,000 oz. gold, and 3,259 oz. silverBalgha (Al Madinah): 2007 production • approximately 43,299 oz. gold, and 4,972 oz. silverAl Hajar (Al Aqeq governorate in the south • of the Kingdom): production for 2007 approximately 128,16 oz. golden and 916,111oz. silverAl-Amar (Arriyadh Region): it processes • a gold-rich polymetalic which produces approximately 200 thousand gold doré tons per year of and copper and zinc concentrates which are sold to third parties for toll smelting

Phosphate: through Ma’aden Phosphate Company (MPC). The project has recently undertaken developing, designing, constructing and operating two main locations:

- Al Jalamid Mine with a production capacity of 11.7 million tons per year (raw materials)- Ras Al Zour: a phosphate fertilizer production complex including the infrastructure required for this project

(1) SABIC, Annual Report, 2007, see SABIC website.(2) Saudi Arabian Mining Company, from the company’s website: www.maaden.com.sa.


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Aluminum: through a joint project with Alcan (a limited liability company, the project includes developing, designing and operating two integrated locations:

- Al-Zabirah Raw Bauxite Project and facilities to deliver raw materials (Qassim and Hail Regions): the mine’s capacity reaches 3.5 million ton per year of bauxite, and 1.4 million tons of alumina per year, as well as 650,000 tons of aluminum per year for more than 30 years- Ras Alzour location (Jubail) through establishing alumina refinery and aluminum smelter and its related infrastructure

Chlor Alkali: Ma’aden proposes to construct a facility in a 50:50 joint venture with Sahara Petrochemical Company to produce caustic soda and EDC for export.

Magnesium carbonate: Daraat location (Hail) to produce high quality magnesium oxide.

Low Density Bauxite and Kaolin: the Al Zabirah plant produces bauxite and kaolin with low density in order to supply cement industry with materials of high alumina.

On July 14, 2008, Saudi Arabian Mining Company (Ma’aden) and SABIC as well as the Public Investment Fund under the Ministry of Finance signed a contract that endorses the Fund to grant long-term loans of SR 4,001 billion ($ 1,067 billion) for 16 years including a four-year grace period and it is active since the time of signing the agreement of a loan to finance Ma’aden for Phosphate (1). The deal includes SR 8 billion ($ 2,06 billion) for a period of 16 years, with an insurance coverage from the Korean Company for exports for 16 years and a capital of SR 750 million annually ($ 200 million), in addition to facilities presented by the Korean Imports and Exports Bank of SR 1,500 million ($ 400 million). Operating capital of SR 375 million ($ 100 million) was agreed, and direct finance of SR 506 million ($ 135 million) presented by Saudi Industrial Development Fund(2).

Saudi Ports AuthoritySince its establishment in 1965, the Saudi Ports Authority has taken active measures to realize its objectives of reorganization and upgrading all ports, and increasing efficiency. It implemented a series of projects integrate the eight ports, (six commercial and two industrial) on the Red Sea and Arabian Gulf. These ports encompass

(1) Al Eqtesadia newspaper, issue 4,515, February 20, 2006.(2) See the website of Ma’aden company.


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186 berths at a depth of 11-32 meters with an annual capacity of 266 million tons. These ports are provided with state-of–the art handling equipment and marine craft, as well as support services(1). Following completion of necessary infrastructure in all ports, the Authority followed two paths to keep abreast of new developments in the marine arena, as ports shifted from mere commodity handling facilities to economic entities with direct impact on the economy and trade simultaneously, and as a result of the changing trade patterns and systems:

First: On-going development of the ports’ capabilities through increasing depth at the entrances and basins to receive larger vessels.

Second: Providing new services consistent with contemporary developments as well as a keenness to upgrade the standard of performance and improve productivity in general.

Statistics of Passengers in all Saudi Ports (2)

Number of passengers 2007 2006 2005

Arrivals 721,166 633,007 W

Departures 751,937 683,060 1,095,697

Total 1,473,139 1,316,067 2,180,369

Delivered Goods to All Main Ports in the Kingdom (3)

Per ton

Kind

2007 2006 2005

Packaged Vacated Packaged Vacated Packaged Vacated

Solid Bulk Cargo 19,146,137 6,981,854 17,139,308 6,259,001 18,155,133 5,676,193

(*)Liquid Bulk Cargo

2,695,224 57,105,313 2,802,218 57,268,900 2,812,782 58,009,331

General Cargo 9,806,503 1,093,050 8,815,958 1,001,417 7,609,355 842,424

Containers 24,142,309 18,001,546 22,118,763 16,741,234 21,427,602 15,935,614

Vehicles 1,504,972 220,830 1,201,366 158,834 1,469,281 177,173

Cattle 182,365 223 286,509 36,810 125,725 -

Total 57,477,510 83,348,816 52,364,122 81,466,196 51,599,878 80,640,735

Total Delivered Goods

140,826,326 133,830,318 132,240,613

(1) Saudi Ports Authority, King Fahd Port, Jubail Industrial City, Introductory Bulletin.(2) Saudi Ports Authority website.(3) Ibid.(*) Liquid bulk cargo not including crude oil.


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Theme Five:

Financial Services and Credit

Funds in the Kingdom

(1) SIDF report on activities, achievements, programs and tasks 2005/2006.

Saudi Industrial Development Fund (SIDF)(1)

The Saudi Industrial Development Fund (SIDF) was established in accordance with a Royal Decree in 1973 as a Government financing and developmental body linked with the Ministry of Finance. SIDF assumes a key role in the support and realization of the objectives of the country’s five-year development plans in the field of industrial development, through supporting projects in this sector and creating investment awareness in the Kingdom. This support is represented by providing medium- and long-term soft loans to the private sector as well as providing consulting services in technical, administrative, financial and marketing domains. SIDF started operation with a capital of SR 500 million. Due to the growing and high demand by the private sector for the Fund’s loans, its capital was increased to SR 20 billion after allocation of SR 13 billion from the budget of fiscal year 2006, in accordance with a Royal Decree issued by the Custodian of the Two Holy Mosques. Accordingly, SIDF has raised the maximum limit of industrial projects loans from SR 400 million to SR 600 million.

The following are the most important SIDF strategic objectives in the context of supporting industrial development process in the Kingdom:

Enhance competitiveness and expand the • industrial base of the private sectorEnhance non-oil industrial exports• Realize industrial integration among various • sectorsEncourage and develop the role of small and • medium enterprises (SMEs)Attract foreign capital and ensure technology • transfer and assimilation

The policies and measures adopted by SIDF regarding provision of loans are reflected in providing such loans to industrial projects carried

out by the private sector (including projects with foreign partners), encouraging intensive linkages and making use of other economic sectors, such as adherence to using local materials and procurement of locally produced building materials, and awarding work tenders (engineering, accounting, consulting, etc.) to Saudi firms which possess the necessary experience.

Following are the main policies pertaining to the SIDF’s lending rules:

Individuals, national and foreign companies • with industrial licenses in Saudi Arabia can request loans form the FundThe terms of loans provided by the Fund shall • not exceed 15 years. The loans are repaid in accordance with specific maturity schedules consistent with expected cash flows of the projects enjoying such loans.The Fund finances industrial projects at • a rate that reaches up to 50% of the costs of fixed assets, start-up expenses and working capital, provided that not more than one year has passed since the start of commercial production. The Fund does not finance purchase of used machineryThe Fund mortgages fixed assets of the • project as well as ensuring personal guarantees from partners in limited liability companies The Fund stipulates contribution of projects’ • owners that they finance not less than 25% of their projects’ costsApproved loans shall be disbursed in • accordance with actual implementation of projects and in line with supporting documentsIn order to ensure continued growth of • the industrial sector, SIDF allocated SR 500 million to finance development of infrastructure of industrial cities and technology zones which are established on land owned by the Saudi Organization for Industrial Estates and Technology Zones, as well as technology zones and land owned by the private sector. In the context of its efforts to support small and medium enterprises, SIDF adopted Kafala SME’s Finance Program with a view to overcoming problems of obtaining adequate financing for such enterprises.


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(1) SIDF Annual Report for the fiscal year 2007, p.5.(2) Ibid.(3) REDF, Website: www.redf.gov.sa

This program was established with a capital of SR 200 million with contributions from local banks and the Ministry of Finance. The program depends on the guarantee mechanism, as it guarantees 75% of the value of the finance not exceeding SR 2 million, provided that properties of the enterprise shall be mortgaged in favor of the funding body until the whole finance amount is repaid.

Following are the program’s procedures:Small or medium enterprises interested • in investment shall submit a request to a commercial bank to obtain financing. In the event the firm does not have sufficient collateral, then it requests financing under the Kafala Program The bank submits an application to the • Kafala Program to guarantee the finance requiredKafala Program administered by SIDF shall • review the request in accordance with principles adopted for issuance of the Kafala (Guarantee) in favor of the bank financing the firm

In 2006-7, loan values approved by the Fund reached SR 8.54 billion with an increase of 36% on the previous year. At the same time, sums disbursed reached SR 4.24 billion, the highest value since Fund was established in 1974, and increase of 44% compared to 2005-6.The net industrial loans approved by the Fund since it was first established reached 2,512. These loans were granted for the purpose of establishing 1,667 industrial projects all over the Kingdom. The net approved sums reached SR 59.45 billion, while the total loans disbursed from the Fund reached SR 42.40 billion in that time. The total repaid to the Fund reached SR 28.44 billion. The Fund played a positive role in the Kafala program to finance medium and industrial enterprises in coordination with local commercial banks that are sharing in this program. In the fiscal years 2006-7, the program issued 264 documents of guarantee with a total value of SR 127 million, with conditional bank finance reaching SR 272 million. Thus the total number of guarantees issued by this program since it was started reached 315, with a total value of SR 149 million, in addition to bank finance of SR 321 million on behalf of 247 enterprises.

It is noteworthy that the Fund’s role is not only concerned with the provision of loans for projects benefiting from its service, but also in evaluating the feasibility of these projects and providing financial, technical, marketing and administrative advice from inception to production and full repayment all their its obligations to the Fund(1).The Saudi Industrial Development Fund is the main pillar of financing industry in the Kingdom. The total loans to Saudi industry reached SR 66.8 billion by the end of 2006-7. 69 plants benefited from the loans and services in 2007(2). The loans were distributed among industrial sectors in a balanced and compatible way with the development plans. Chemical industry’s share was 38% of the Fund’s total lending, followed by construction materials sector, engineering industries sector and consumer industries.

Real Estate Development Fund (REDF)The Real Estate Development Fund was established in accordance with the Royal Decree 27 of July 1, 1974, to provide loans to citizens in order to help them establish their own houses as well as for investment purposes. The Fund started with a capital of SR 250 million. The Fund provides exemption of 10% for accelerated repayments only. In 2008, the Fund’s management agreed on financing 4,835 special loans for the purpose of constructing 5,802 residential units, according to the priority of upgrading cities, governorates and villages under its services. The total amount of these loans reached SR 1.35 billion and it represented the third payment from the approved loans in the budget of the fiscal year 2007-8. According to the Fund’s report, the stated loans allocated for this year reached 14,261 loans, with a total value of SR 3.98 billion that will contribute to the building of 17,113 residences. The Fund has received special support from the Custodian of the Two Holy Mosques, that has led to increase the number of loans funded, and enabled thousands of nationals to construct decent housing. Total loans provided by REDF, since the Custodian of the Two Holy Mosques declared the increase of the Fund’s capital, reached 94,465 loans, with a total value of SR 26.16 billion, and the total requests for financing private housing, since the Fund started, amounted 541,614 with a total value exceeding SR 144 billion(3).


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Public Investment Fund (PIF)The Public Investment Fund (PIF) was established by Royal Decree M/24 of August 17, 1971 to finance some business-oriented production projects due to their significant importance to the development of the national economy. The Fund provides the basic factors of such projects, which the private sector cannot solely provide, due to insufficient experience, capital, or both. The Fund provides loans to local refinery projects, manufacturing of lubricants, petroleum products storage facilities, crude oil and petroleum products distribution pipelines, export refineries, steel factories, fertilizers and petrochemicals factories as well as loans for purchasing planes for SAUDIA, water and electricity companies, holy sites projects, etc. It also holds shares in the capitals of such companies as cement, electricity, insurance, public transport, agriculture, gas, petrochemicals, services and real estate.The Fund also holds shares, in the name of the Government, in several joint Arab companies as well as Arab bilateral companies. The value of total loans provided by the Fund up to the end of 2007 reached 69, and the total disbursed stood at approximately SR 76 million, while repayments reached approximately SR 53.4 billion, and the credit by the end of 2007 reached SR 22.5 billion. The Fund’s loans were divided among three main parts: Petromin loans, 27 to SABIC projects, 18 loans to pilgrims’

projects, 28 for petrochemical activities and 16 to public services, transportation, financial services and real estate investments. The biggest share of the total disbursed loans was allocated to Petromin and SABIC Projects (approximately SR 29.4 billion for each), while loans for pilgrims’ projects reached SR 4.4 billion, and SR 13 billion for the rest of the projects(2). Saudi Fund for Development (SFD)The Saudi Fund for Development was established in accordance with Royal Decree M/48 of September 1, 1974 and started operation on March 11, 1975. The objective is to provide soft loans to governments of developing countries with a view to help financing priority development projects. The Fund assumed the task of supporting vital projects that enhance development of the basic infrastructure and vital services. In 2007 the Fund signed loans with a total value of SR 108.2 million in order to finance 17 projects in 12 countries, and it also contributed to 11 projects in seven African countries, as well as six projects in five Asian countries. The following is the distribution of the Fund’s loans according to countries and sectors (3):

(1) SIDF Annual Report, 2008(2) Statistical tables supplement, SAMA.(3) Ibid.

The Distribution of the Fund’s Lending by Sectorsby the end of 2007 (1)

38%23%

20%18%

1%

Chemicals

Construction Materials

Engineering

Consumers Industries

Other Industries


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SFD Loans Granted to Beneficial Countries(by million Riyals)

Country ProjectLoan Total

Date of Signature

Hijri Gregorian

Africa

SenegalDalal Jam HospitalMedina Jonas Road – Guinea BordersWakam Road, Dakar

54.5037.50114.00

18/12/14272/3/14282/3/1428

8/1/200721/3/200721/3/2007

Kenya Dandori – Najabini Road 37.50 10/2/1428 28/2/2007

Burkina Faso Igeriso – Dibjr RoadSamendini Dam

37.5045.00

4/5/142820/11/1428

21/5/200730/11/2007

Morocco Taschort Dam 100.00 1/5/1428 18/5/2007

Tanzania Establishing and paving roads in Zanzibar 21.00 9/7/1428 23/7/2007

Lesotho Mitalong Dam 37.50 15/10/1428 27/10/2007

Egypt

Supporting Social Development Fund ProjectsEstablishing and providing basic medical centers

100.0085.00

6/12/14286/12/1428

16/12/200716/12/2007

Total 669.50

Asia

Azerbaijan Evk-Qanja Road 48.75 24/1/1428 12/2/2007

Nepal Finishing Bjmti irrigation project 56.25 21/8/1428 13/11/2007

YemenTaiz Medicine College and Health Science Hodeidah Central Hospital

45.00112.50

3/11/14283/11/1428

13/11/200713/11/2007

JordanExpanding Albashir Hospital(extra loan)

82.50 25/11/1428 5/12/2007

China Educational buildings in Gansu Province 93.75 20/12/1428 30/7/2007

Sum 438.75

Total 1108.25

Saudi Arabian Agricultural Bank (SAAB)The Saudi Arabian Agricultural Bank (SAAB) was established by Royal Decree 58 of April 30, 1963 as a public credit institution specialized in providing finance for various agricultural activities in all regions of the Kingdom. The Bank also assists in the development of the agriculture sector and enhancement of its production efficiency by introducing the best and state-of-the-art scientific and technical methods through providing interest-free soft loans to farmers to enable them to secure such industry prerequisites as machinery, irrigation pumps, agricultural equipment, livestock, poultry, fish and aviary farming equipment, etc. The Bank’s capital totaled SR 10.84 billion.


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SAAB provides loans and credit facilities to help in the development, promotion and activation of the agricultural sector, including the following(1):Growing, storing and marketing agricultural and forestry products as well as livestock and poultry breeding and fish farmingLand reclamationCredit facilities for providing water supply required for above purposesThe bank’s contributions had a positive impact on the performance and the development of the agricultural sector in the Kingdom. This impact is evident in the recent agricultural boom. The agricultural bank persists with outstanding achievements, where total approved loans reached 428,349 with a total value of SR 39.98 billion between 1965 and 2007. In 2007, 3,770 individuals benefited from these loans, whose value stood at SR 1.04 billion (2 )

Loans and Subsidies Disbursed by SAAB 2003-4 to 2006-7 (3)

Year

Loans Subsidies

Number of LoansThe Value

(million riyal)The Value

(million riyal)

2004 5,136 1043.9 246.2

2005 3,527 896 249.8

2006 4,303 98.2 258.6

2007 3,770 1044.3 32,9

Cumulative Total 428,349 39,978.4 13,025.9

(1) SAAB, introductory bulletin.(2) Statistical tables supplement, SAMA.(2) SAAB, Annual Report, 2007.(3) Ibid.


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These loans went towards machinery, irrigation pumps, agricultural equipment, drilling wells, irrigation machinery, dynamos and electrical plugs, greenhouses, palm seedlings and fruits nurseries, and boats and fishing equipment, hives and bee- breeding equipment, as well as fertilizers, fuels and pesticides. Furthermore, for 43 years the loans contributed to establishing 4,661 specialized agricultural projects. One thousand loans, or 21.5% of total agricultural loans, were allocated to the poultry sector. Total agricultural loans stood at SR 2.84 billion or approximately 30.4% of total projects’ value. This category includes poultry fattening and egg-laying farms in addition to automated hatcheries and abattoirs. Loans granted for botanical projects reached 2,985 or approximately 64% of the total value of SR 3.48 billion ـ approximately 37% of total agricultural loans. Projects funded include wheat, barley, cattle feed, and fruit, uncovered vegetables, date palms and potatoes, in addition to air-conditioned greenhouses for vegetable production. The 304 loans represent approximately 6.5% of the total loans, with a total value of SR 1.21 billion, which represents approximately 13% of total project loans. Moreover, other projects were established such as dairies, fish and shrimp breeding, date processing and olive and sesame presses, as well as cooling stores for agricultural projects (1).

Saudi Credit Bank (SCB)The Saudi Credit Bank (SCB) was established by Royal Decree M/44 on November 9, 1971(2). According to the provisions of its articles of association, the Bank was established as a financially and legally independent entity, eligible for acquisition, disposal and litigation.The Bank was established to extend interest-free loans to Saudi citizens with limited financial resources, to help them overcome their financial difficulties. Its loans are extended in return for sufficient mortgage or acceptable guarantee from a creditworthy individual or firm to ensure repayment of the loan. The Bank extends loans, the value of each not exceeding SR 20,000, according to specific conditions such as:

A loan applicant must be in actual need of the • loanHis annual income should not exceed SR • 36,000 He should not have outstanding loans from • SCB

Submitted guarantee should conform to SCB’s • by-laws and relevant regulations

SCB provides loans for purposes such as marriage, home repair and other social loans including family loans, vocational loans (not exceeding SR 200,000) and taxi drivers’ loans which commenced in May 2002.This bank is considered one of the major government pillars, where it grants soft developing loans for Saudi citizens. Royal Decree M/34 cancelled the previous bank Decree No M/44 and replaced it with a new Decree with the following objectives (3):

Grant interest-free loans for small and medium • enterprises, and for craftsmen and tradesmen to encourage them to be independent and for their own interestsGrant interest-free social loans for low income • citizens to assist them meet difficulties facedFunction as the complimentary coordinator to • sponsor small and medium size enterprisesEncourage citizens to save (at individual and • institutional levels) and provide adequate methods for this purposeThe bank includes 26 branches throughout • the Kingdom, located in; Arriyadh, Jeddah, Dammam, Al Hasa, Khamis Mushayt, Buraidah, Makkah, Taif, Hail, Tabuk, Al Jouf, Jizan, Wadi Aldawaser, Al Kharj, Al Baha, Najran, Al Konfoda, Bisha, Al Majmaa, Al Adwadmi, Qurayat, Hafr Al Batin, Al Namas, Araar, Yanbu.

The bank serves different kinds of loans as the following:1. Social loans include:

Marriage loans• Family loans• House repair loans•

2. Other loans:Small and medium enterprises loans• Vocational loans• Craft loans• Taxi cars and school transportation loans•

These loans are interest-free in return for soft guarantees.According to SAMA statistics, total loans from Saudi Credit and Saving Bank reached SR 1,799 million by the end of 2006, compared to SR 1,313 million by the end of 2007. Total repayments stood at SR 554 million, while the net credits by the end of 2007 reached SR 486 million(4):

(1) SAAB website, www.saab.gov.sa.(2) Ministry of Finance, Saudi Credit Bank, introductory bulletin.(3) Saudi Credit and Saving Bank website, www.scb.gov.sa/Home.aspx.(4) SAMA, 44th Annual Report, 2008.


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Human Resources Development Fund (HRDF) (1)

The establishment of the Human Resources Development Fund, as an administratively and financially independent entity, came as a result of a clear vision for a strategic Saudi objective, the attainment of which represent an unprecedented challenge reflected in Saudization of private sector jobs. The establishment of the Fund came as an effective mechanism to contribute towards providing qualified and well-trained Saudi youth (both male and female), to realize the strategic objective of providing the nation with social, economic and security benefits. The Fund was established by Council of Ministers Resolution 107 of July 31, 2000 and Royal Decree M/18 dated August 5, 2000, as an administratively, financially and legally independent entity located in Riyadh. Its aims are to translate the efforts of those responsible for the country’s policy into actions on the ground, by enabling Saudi youth to acquire knowledge and skills necessary to occupy private sector jobs, thus bringing about a positive impact on the national economy. In order to realize its objectives, the Fund carries out the following activities:

Assistance in training and employment of • national manpower in the private sector Contribution in the costs of training • national manpower to join the private sector Shouldering a percentage of the salaries of those employed in the private sector firms after training them. Supporting the finance of field programs, • plans and studies aimed at the employment of Saudis to replace foreign laborProviding loans to firms involved in training • national manpowerConducting research and studies related • to its activities in the field of national manpower training

The Human Resources Development Fund, between its inception in 2000 and December 2007, succeeded in providing thousands of job opportunities and training for both Saudi young males (93% of total beneficiaries) and females (7% of total beneficiaries). As shown in the following diagram, the Fund succeeded in providing job opportunities and training more than 108,000 unqualified, and more than 87,000 qualified Saudis of both genders.

Furthermore, the Fund succeeded in supporting thousands of youngsters to obtain jobs in the Saudi private sector, particularly in the technical fields, down payment sale, the service sector, clerical, engineering, business, agricultural, administrative and industry. These job opportunities were distributed across the Kingdom. Total opportunities reached more 195,000, mostly concentrated in Arriyadh Region (more than 87,000), Makkah (more than 42,000), Al Madinah and Qassim (more than 4,000 in each). Most opportunities were concentrated in the commercial sector (approximately 77,000), followed by the industrial sector (more than 29,000). The construction sector’s share reached 29,000 as shown in the following diagram:

(1) Human Resources Development Fund, Annual Report, 2004.(2) Human Resources Development Fund, Annual Report, 2007.

Distribution of training and employing opportunities since the fund’s inception till the end of 2007 (2)

Training & employing the qualified

Training & employing the unqualified

Other Sectors

Consulling & Advocacy

Agriculture

Communications & Postal Services

Tourism

Health

Private Education

Teaching

Construction Sector

Industrial

Commercial


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Centenary Fund (1)

The Centenary Fund was established by Royal Decree on July 7, 2004, as a Saudi private charity foundation. The Fund aims at rendering assistance to Saudi youth of both genders to establish their own commercial businesses. The Fund provides interest-free loans ranging between SR 50,000 and SR 200,000, to be repaid within sixth months of commencement of commercial operations. The loan is repaid in monthly installments over five years. The Fund also provides counseling services for three years from the start of commercial operations. This is done through volunteer business people with proven practical experience supporting emerging investors. The Fund also streamlines Government procedures regarding establishment of commercial projects in collaboration with SAGIA. The Centenary Fund recent achievements are witnessed in the successful basis and regulations in the Fund in cooperation with international institutes specialized in the administrative and financial fields. This project has proved successful in terms of the beneficiaries of the Fund’s services. The Fund also succeeded in supporting the emerging investors and resulting in the cooperation of many sectors with the Fund to supply financial support to provide better services for businessmen.The Fund also provides whole or partial finance in the form of interest-free loans for projects whose values range between SR 50,000 to SR 200,000.Advisory services required are provided for three years from inception of the project by making use of experiences related to world consulting services that means approximately 70% of the provided support. Moreover, the project’s owner will receive streamlines and necessary services for establishment of the project, and finish all government procedures via comprehensive services center located in different areas of the Kingdom and related to the Saudi Arabian General Investment Authority. In addition, the Fund provides support in developing self-sufficiency in decision making, and provides bank and insurance services and prepares project links so that the owners of the different projects can communicate with their mentors.The Fund also provides support in marketing, promotion and publicity. The Fund endeavors to obtain special discounts and facilities for the project’s owners through companies that offer

their commodities for nothing or at a discounted rate. More than 7,000 young people benefited from these services, and the Fund seeks to reach 10,000 beneficiaries before the end of 2008. The Fund is only available to the unemployed and private sector staff and the retirees are not eligible.

The Fund’s key achievements in 2007(2): Hosting the first Islamic forum for members • of world youth organizationsThe Fund held a high-level workshop for a • large number of guides (both males and females) from all regions of the KingdomPass the periodic review of ISO 9001 • successfully and without any observationsThe Fund had formally established a branch • in RabeghThe number of existing projects in 2007 • reached 442 (a 21% increase from the original plan), thus the total financed projects stood at 540, with a total value of SR 88.6 millionDelivered payments reached SR 34.8 million, • or 40% of the approved sums.17,231 requests for loans were studied • and categorized according to an approach adopted by the Fund’s administration. 40% of these requests were approvedThe rate of collection was 73% in 2007. • Accordingly, the Fund revised many cases that were in default, and the defaulters with no acceptable excuse were moved to legal affairsDonations to the Fund reached SR 9.8 million • in 2007Appoint approximately 702 guides (male • and female). By the end of 2007 there were 1,207By the end of the third quarter, there were • 80 volunteers (of both genders)31 introductory workshops had been • presented, whose purpose was introduce the Fund’s essential objectivesStrategic objectives and performance • evaluation indicators of the Fund had been set for 2008 to the end of 2021The beneficiaries trained throughout the • Kingdom reached 278, and 423 out of 487 guides from both genders were trained

(1) Eastern Province Chamber of Commerce and Industry, SME 3rd Forum, paper by the Centenary Fund’s Director General, 2005. (2) SAMA, 44th Annual Report, 2008.


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Commercial Banks and Bank FinancingAccording to Saudi Arabian Monetary Agency statistics, the total credit granted by commercial banks by the end of 2008 reached SR 594.9 billion compared to SR 497 billion at the end of 2006. Bank credit was distributed among the following sectors; agriculture, industry, mining, water, electricity, construction, trade, transport, telecommunications, finance and others.Total bank deposits during the second

quarter of 2008 recorded an increase of 8.2% (SR 5.21 billion) to reach SR 1,783 billion compared to an increase of 1.6% (SR 1,440 during the previous quarter). Moreover, by the end of the second quarter of 2008, it witnessed an annual increase of 9.21% (SR 8.14 billion). The total deposits (bank deposits to total money supply N3) by the second quarter of 2008 reached 0.91% compared to 6.9% in the same period of the previous year.

YearAgriculture and Fishing

Manufacturing and Production

Mining and

Mines

Water, Electricity and other services

Construction TradingTransport and

TelecommunicationFinancing Services Other

Government and Quasi-

governmentTotal

2001 2,138 24,659 1,206 1,220 16,746 40,167 9,917 6,703 9,514 64,534 10,817 187,620

2002 2,530 24,324 715 1,094 20,982 42,194 13,555 8,862 9,718 74,724 11,960 210,657

2003 2,549 26,604 650 1,837 21,955 51,886 12,803 11,877 8,839 82,124 25,844 246,967

2004 3,785 26,519 1,252 3,273 23,057 62,808 13,406 33,839 12,337 122,722 29,138 332,126

2005 6,716 34,460 2,2775 3,226 31,726 83,054 14,382 56,747 15,097 173,146 31,672 452,501

2006 6,802 37566 1,802 3,598 37,845 111,511 6,875 61,826 16,735 177,539 34,965 497,067

2007 8,636 54,339 3,897 5,878 43,421 127,473 20,989 62,632 28,286 201,854 37,434 594,840

First quarter

9,503 56,721 4,122 7,427 47,618 142,634 31,392 66,356 28,723 312,151 34,032 640,679

180

160

140

120

100

80

60

40

20

0

89

,6

78

,9

12,5

2,6

11,6

(1) See the supplements to statistical tables, SAMA, Annual Report 2008.

Distribution of Bank Credit the Sectors from 2001 to 2008 (1)

Commercial Bank Foreign Assets and Liabilities

Foreign Assets Foreign Liabilities Net Foreign Assets


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Theme Six:

Eighth Development Plan and

Investment Outlook in The Kingdom (1)

(1) Concerned Agencies in the Ministry of Economy and Planning prepared a guide for the 9th Development Plan by the end of 2008, the report year.

The Eighth Development Plan is expected to achieve preparation and approval of more important national strategies, such as: long term strategy for the Saudi economy up to 2024; national strategy for post secondary education; national strategy for export development and

national strategy for eradication of poverty. In the light of the above, general indicators of national economy are reflected in increased economic growth rates, increased employment rates, growth of private sector contribution to the economy and national income, diversification of the economic base, improvement of the balance of payments in favor of Saudi Arabia, realization of a high degree of economic equilibrium and price stability, and achievement of balanced development in all regions of the Kingdom. Furthermore, these indicators will be reflected in the increased integration among GCC States and enhancement of Arab economic cooperation and accelerated integration in national and international economy.


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(1) Ministry of planning: 8th development plan 2005 - 9

Safeguard Islamic teachings and values, • enhance national unity, enhance the security and social stability and deepen the Arab and Islamic identity of the Kingdom.

Continue to improve services provided to Hajj • and Umrah pilgrims, to ensure performance of religious rites with ease and convenience

Raise the standard of living, improve the • quality of life and provide job opportunities for citizens, through acceleration of the development process and increasing the rates of economic growth, as well as qualitative and quantitative expansion of education, health and social services.

Develop human resources, upgrade • competency and enhance their contribution to meet requirements of national economy.

Diversify the economic base with due emphasis • on promising areas, such as manufacturing industries, particularly energy intensive industries and their derivatives, in addition to mining, tourism and information technology industries.

Improve productivity of the national economy, • enhance its competitiveness and make it adaptable and flexible while facing economic changes and developments at the national, regional and international levels.

Enhance the private sector’s participation in • socio-economic development.

Achieve a balanced development throughout • all regions of the Kingdom and reduce the development gap among them.

Develop science and technology, concentrate • on information, support and encourage scientific research and technology development with a view to enhancing the efficiency of the Saudi economy, and keeping abreast of the knowledge economy.

Conserve and develop water resources and • ensure rational utilization.

Increase the share of Saudi manpower in total • employment in various sectors, pay attention to upgrading their efficiency and productivity through training and retraining, and continue to substitute Saudi manpower for non-Saudis.

Place emphasis on the welfare of women, • upgrade their capabilities and remove constraints which impede their participation in development activities, in line with Islamic values and teachings.

Expand the provision of health care and social • welfare services.

Take care of needy groups of citizens and pay • attention to management and reduction of poverty by concentrating on economic policies and programs which lead to higher economic growth along with achieving balanced development in all regions of the Kingdom.

Develop all aspects of education and training • systems. Upgrade their output in conformity with changing needs of society, labor market and requirements of development process. In addition, keep abreast of advances in knowledge and technology, and pay attention to the promotion and dissemination of culture.

Improve the quality of public services and • increase their supply in line with the growing needs of the population along with improving performance of the responsible agencies.

Enhance the utilization of economic resources • with due emphasis on rationalization as a basic factor as well as improve performance of responsible agencies.

Continue to build infrastructure in line with • growing demand, improve performance and place emphasis on maintenance and replacement of areas in disrepair.

Continue to pay attention to preparing a • climate conducive to boosting private sector participation in socio-economic development, while intensifying government initiatives to encourage private, domestic and foreign investments and bolstering competitiveness of domestic products.

Privatize additional public facilities, activities • and services. Consideration should be given to raising citizens’ share in the ownership of assets within the framework of competition and transparency.

Objectives Strategic Bases

Generd Objectives and Strategic Bases for the 8th Development Plan 2005 - 9 (1)


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Develop tourism and improve associated • services and facilities along with conserving the environment and national heritage.

Adopt a population policy that takes • into consideration the quantitative and qualitative changes of the population and their geographical distribution, and enhances correlation between demographic changes and directions of sustainable development.

Distribute resources and services among the • Kingdom’s regions in a manner that would ensure reduction of development disparities among them and enhance their comparative and competitive advantages.

Create a strong foundation for national • science and technology capable of innovation, expand Information and Telecommunications Technology (ITT) applications and improve databases to support the national economy.

Continue with the process of administrative • development and creation of a regulatory environment conducive to economic development and efficiency.

Adopt fiscal and monetary policies that • contribute to accelerating economic growth, realizing a higher employment level and enhancing economic stability.

Reduce public debt to reasonable levels and • develop appropriate mechanisms to realize financial stability in the long run.

Adopt an integrated management of water • resources and optimize utilization of these resources, while emphasizing their rational use and developing their sources and conservation techniques.

Encourage private firms, enterprises and • individuals to participate in benevolent and voluntary activities in the social, health and educational domains, along with inculcating the concept and significance of these activities and improving their methods and performance techniques.

Continue to pay due attention to protection • of the environment against pollution. Develop sound environmental protection regulations, protect and promote wildlife, and ensure conservation of natural resources and rationalize their utilization.

Promote integration among the Gulf • Cooperation Council (GCC) States and strengthen the Kingdom’s relations with Arab, Islamic and friendly countries as well as international economic blocks.

Protect the environment and develop suitable • systems within the context of sustainable development requirements.

Continue to strengthen and promote the • Kingdom’s relations with Arab, Islamic and industrial countries.

Objectives Strategic Bases


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(1) Ministry of Economy and Planning, 8th Development Plan.

Eighth Development Plan and Economic PolicyThe Kingdom adopts the market economy principle. However, Government economic policies remain significantly in place to ensure that economic activities are within the framework of the approved development strategy to deal with unexpected and unfavorable economic events. Thus, the Eighth Development Plan demonstrates the significance of integrated functions of macro-economic policies as well as the importance of economic reform policies aimed at enhancing market economy mechanisms. The Plan also highlights the importance of encouraging the private sector in carrying out its tasks in the context of boosting economic growth as well as the importance of Government investment in infrastructure projects with a view to improving the economic climate in general and investment environment in particular, thereby raising economic growth rates, job opportunities and improving standards of living. In the light of the above, the State’s economic role encompasses regulating general economic equilibrium through macro-economic policies, a matter which was adopted by the Eighth Development Plan through maintaining price inflation within 0.6% (1) as an annual rate over the coming five years. This stability of the Saudi Riyal exchange rate is expected to continue. Growth, rationalization and restructuring of public expenditures are also expected to continue with a view to meeting the requirements of socio-economic development in light of high population growth, and to be increasingly financed through actual oil and non-oil sources. In the domain of investment policy, the Eighth Development Plan aims at ensuring an adequate investment climate for Saudi and foreign private sectors along with raising Government investment in vital development projects.

Eighth Development Plan and Private Sector InvestmentsThe Kingdom’s development plans, including the Eighth Development Plan, adopted the strategy of paving the way for the private sector to assume many economic activities. This policy has had its impact on supporting the activity of the private sector, boosting its importance in the economy, developing its capabilities and improving its economic efficiency in its

investment and production concept. This has not only enabled the private sector to mobilize capital to finance projects, but also to use modern management methods and adopt advanced technologies. The Government is keen to ensure a favorable economic climate and opportunities necessary for boosting the developmental role of the private sector. Privatization policy and investment incentive systems, as well as the partnership with the government sector are the best example for that. In 2006 the estimated number of economic institutions working for the private sector stood at 700,000 including 3.5 million workers. The value added by the private sector, excluding non-oil products, to the GDP by fixed prices of 1999, increased from SR 314.9 billion in 2004 (the first year of the Eighth Development Plan) to reach SR 375.4 billion in 2007, meaning the contribution to the GDP over the first three years of the plan increased from 43.6% in 2004 to 46.7% in 2007. Hence, the actual rate of growth for the value added to the private sector is estimated at 6% during the first three years of the Plan. This rate is slightly higher than the expected annual growth rate of the private sector during the Fifth Development Plan, which is estimated at 5.7% (1). The expansion of the private sector during the past three years edged over that of the public sector, and that is obvious on comparing real rate of growth of the GDP which was estimated at 4.1%. The value added to the private sector, excluding non-oil products, (by current prices that reached SR 321.3 in 2004), increased to approximately SR 402.5 billion in 2007, which indicates that the value added to the GDP according to current prices is estimated at 34.2% in 2004. The percentage fell in 2007 to 28.5%. Annual rate of growth of non-oil private sector is estimated at 7.8% for the first three years of the Eighth Development Plan.The expansion of the private sector further reflected its growing contribution to employment, where the number of workers increased from 6,168 in 2004 to 6,641 in 2007 – and additional 473 workers in the private sector during the first three years of the Plan. Thus the realized annual increase reached 2.53% compared to the Plan’s expected increase of 2.2%.These results were realized when private sector investment increased (fixed capital formation by fixed prices of 1999) from SR 118.5 billion in 2004,


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(1) See Ministry of Economy and Planning website.(2) Ibid.

to reach SR 136.6 billion in 2006. That means an annual increase of 7.6% during the first two years of the plan. The Eighth Development Plan aimed at raising the number of investments (fixed capital formation) in the private sector with an annual rate of 10.45%. To date, this target has not been reached. The actual invested capital in the industrial sector increased only from SR 286 billion in 2002, to approximately SR 297 billion in 2006. It is also noteworthy that the investments of the foreign joint private sector (according to current prices) barely increased during the first three years of the plan – SR 128.6 billion in 2004 and SR 128.8 billion in 2007(1).In addition, bank loans granted to the private sector increased from SR 321.1 million in 2004 to SR 594.8 million in 2007, a total increase of 85.2% during the first three years of the Plan. This reflects the progress achieved on the first three years of the Eighth Development Plan in expanding private finance reducing the importance of financing – a source of trouble for the private sector. The private sector contributed in providing job opportunities for most sectors, especially to trade, manufacturing and construction sectors, while investments were concentrated in petroleum, mining, manufacturing, transport and telecommunications sectors. In 2006, the trade sector employed more than 30% of the total manpower in the Kingdom, 25% of the total workforce in this sector being Saudis. The manufacturing industries sector followed with more than 17% of the total workers, with Saudis representing approximately 12% of the total. The construction sector was in the third position in terms of employing workers, estimated at 14% of whom 8% were Saudis. The petroleum and mining sectors’ contribution to employment was low, little more than 2%. Saudi nationals represent 8% of the total workers in this field.Private sector fixed assets represented in equipment, transport, machinery, furniture and lands (fixed capital formation) could achieve the highest percentage in petroleum and mining sector. These assets contributed 28% of the fixed assets purchased by most economic institutions, followed by the sector of manufacturing industries with more than 20%, 12% for transport and communication sector and 7% for the construction sector.

A low percentage of 3% was witnessed in the personal and public services sector. The same is noticed in social and health services (0.7%), 0.8% for hotels and restaurants and 1.1% for the education sector.

Eighth Development Plan and Investment RequirementsThe investment strategy of the Kingdom is based on several key pillars such as (2)

Ensuring integration of Government and • private investmentsIncreasing non-oil Government revenues to • the level of financing a significant part of operational expenditures and Government services away from oil revenuesReducing operational expenditures (current) • through privatization and expanding cooperation between the public and private sectorsIncreasing savings and Government • investments and adopting an investment plan not influenced by fluctuations of oil revenues

Against the above background, the general strategic objectives of development in the Kingdom are reflected in increase of the rate of private and public domestic savings, increase of net Government capital formation and repatriation of Saudi savings and investments from abroad, as well as encouragement of direct foreign investment.


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(1) Ministry of Economy and Planning, 8th Development Plan, 2005-9. (2) Ministry of Economy and Planning, Macro-economic Forecasts, 2005.

Targeted Investments During the 8th Development Plan at Fixed Prices in 1999 (2)

Item

7th Development Plan 1999-2000 to 2003-4

8th Development Plan Target 2004-9

Value (Actual) (billion riyal)

%Value (Expected)

(billion riyal)%

A. Non-Oil sectors 598.1 89.6 920.3 88.1

1. Producing Sectors 277.1 41.5 438.7 42.0

1.1 Agriculture, Forests and Fisheries 18.8 2.8 32.5 3.1

1.2 Non-oil Mining - Quarries 1.4 0.2 3.5 0.3

1.3 Manufacturing industries 94.0 14.1 178.7 17.1

1.3.1 Oil Refining 8.9 1.3 12.1 1.2

1.3.2 Petrochemicals 52.0 7.8 101.5 9.7

1.3.3 Other Manufacturing 33.1 5.0 65.0 6.2

1.4 Electricity, Gas and Water 154.4 23.1 207.8 19.9

1.5 Construction 8.5 1.3 16.4 1.6

2 Services Sector 227.4 34.1 365.2 35.0

2.1 Trade, Restaurants and Hotels 25.6 3.8 35.7 3.4

2.2 Transport and Communication 24.7 3.7 45.3 4.3

2.3 Finance, Insurance, Business and Real Estate Services

166.7 25.0 262.6 25.1

2.3.1 Real Estates Services 145.7 21.8 227.3 21.7

2.3.2 Finance, Business and Insurance Services

21.0 3.1 35.3 3.4

2.4 Community and Personal Services 10.4 1.6 21.5 2.1

Total non-oil Private Sector 504.5 75.6 803.9 77.0

3. Government Services 93.6 14.0 116.4 11.1

B. Crude Oil and Natural Gas 69.0 10.4 124.5 11.9


Investment Opportunities in the City of Arriyadh

Arriyadh is a strategic center for national and foreign investments,

and one of the important commercial centers in the Middle East.

Arriyadh is looking to become a world-class financial center.

Arriyadh’s position is further enhanced by other merits, among

them the fact that it is the administrative capital of the Kingdom

Saudi Arabia, and the location of all investment agencies.

Administrative and legal procedures have been developed

to improve the investment environment. These include the

simplification of customs exemptions procedures to ensure

faster transactions within no more than one month, electronic

information sharing projects, facilities provided by the Saudi Fund

for Development to subsidize export financing, and services of the

Saudi Industrial Development Fund. In addition, visa procedures

have been simplified, allowing easier entry for businessmen

visiting Saudi Arabia, and offices of the Saudi Arabian General

Investment Authority (SAGIA) established in Saudi Embassies

abroad. The Kingdom’s Strategic Investment Plan implemented

through SAGIA aims at making the Kingdom one of the world’s

top ten competitive countries included in the ‘Doing Business

Competitiveness Report’ published by the World Economic

Forum.


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Theme One: Investment Opportunities Issuing from Government and Other Agencies

(1) Al Eqtesadia Saudi Newspaper, 30/8/2008.

Arriyadh Development Authority (ADA)Urban Suburbs ADA has endorsed structural plans,(1) policies and regulatory measures for the north and east suburbs of the city which the Authority aims to commence in cooperation with the private sector. The total area is about 419 square kilometer and will address the expected growing population of the capital in the near future. The authority also plans to find new, well-planned areas that are independent in terms of urban development to meet the executive framework that has the advantage of flexibility to accommodate future developments.The northern suburb involves an essential and important activity: privatization of a special area and preparing it as the center of scientific and technological industries, research centers and support facilities. The initiative of developing the suburbs is one of the major economic opportunities in the Kingdom. The volume of investments required for each suburb is estimated at SR 270 billion. Structural plans, policies and the regulatory measures being prepared for both suburbs are considered as referral documents upon which all future business being implemented depend.In line with the expected population growth in Arriyadh City, and the process of finding new well-planned areas, the ADA’s urban development plan endorsed the establishment of new independent suburbs. These suburbs meet high standards and flexibility for future developments.The establishment of both suburbs will contribute to realizing a sustainable urban environment with a high level of services, housing and public utilities, as well as a level of autonomy from central Government. The private sector’s increased contribution to the development process will reduce the burden

on the city and provide job opportunities. The Authority depends on the private sector to finance all costs of public utilities in both suburbs and to link them to the nearest public utilities network. In doing so, they will improve public utilities and buildings through the system of ‘constructing, leasing, then transferring the property’ as well as enhancing the principal of ‘developing integrated projects inside these suburbs’.By the end of 2007, ADA had endorsed structural plans, policies and regulatory controls for both suburbs and drawn up plans for all future business development. As a consequence, the following objectives of establishing both suburbs will be realized:

Reduce the burden on the city by making • the suburbs largely independent of central GovernmentCreate a sustainable urban environment with • a high level of services, utilities and housingProvide economic opportunities, and achieve • self-sufficiency for the suburbs through a variety of economic activitiesAchieve a balance in terms of distribution of • main needs according to the requirements of the urban areasCreate an executive and flexible frame to • address any future updates Provide adequate opportunities to cooperate • with the private sector in the process of developing the new suburbs, as well as establish projects of integrated utilities

The northern suburb is located in the northern part of Arriyadh City, 20 sq km from the crossroad of King Fahd Road and the northern circular road. It will extend to an area of 205 km2. The city is bordered to the north by development protection areas, to the east by King Khaled International Airport, to the south by a proposed expressway. This is located in the northern area of the Special Security Forces, and to the west by King Khaled Road (previously Salboukh).The northern suburb features many remarkable milestones, such as Prince Sultan Bin Abdulaziz City for Humanitarian Services, located in the center, Banban Village in the eastern part, and Sultana Village in the (North-East). An area has been set aside for development of a specialized Banban Park. More rest houses are located in the northern part of the suburb. The developed


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areas constitute 2.44% of the total suburban area. About 24% of this area has been planned, with schemes for roads and streets network as well as residential and rest house schemes. Vacant unplanned area represents about 73.54% inside the suburb.The main feature of the structural scheme of the northern suburb is represented by allocating a special area for technological industrial activities in the south-east, comprising a science and technology sector as well as research and support utilities sector. The residential area is to be state-of-the-art style. Also a clear hierarchy to distribute the centers serving residents of the suburbs should be available with various needed services, in addition to a planned road network, an efficient transport system and an integrated system for open areas.The development of the northern suburb makes will make it a major economic center for information technology and telecommunications. Its location in the northern hub of Arriyadh City and its proximity to King Khaled International Airport and the railway routes under construction will enable it to serve other regional development centers.

ADA studies reveal that the northern suburb is expected to have a population of 675,000 by 2029. Residential units expected to be housed here may reach 123,000 by 2029.The northern suburb is expected to provide 133,000 job opportunities for a number of sectors such as logistic services and technological industries sector, public services, commercial activities, educational, health and entertaining activities in addition to other support services. In implementing a successful public transport system, the plan takes into consideration the topography of the suburb, the ease of connection between the center and the five residential areas, as well as the expected population increase.Thus the plan identifies major land areas used in the suburb with the principal activities and employment there, the location of central public services, road networks, public utilities and open areas. The following includes the main features of the structural plan of the suburb:

Technological industries area: a special 1. area had been assigned to be the center of technological industries in the south-eastern part of the suburb close to King Khaled International Airport. This area has all activities related to the science and technology sector and research and logistic facilities sector. Both sectors contribute to providing an attractive environment for businesses. The total area is to be 9.43 km2.Mixed–use area: combined commercial and 2. residential use in the center of the suburb. The high-density mixed-area includes; state-of-the–art buildings located in the center, as well as other residential buildings with versatile activities such as retail trade, exhibitions, offices, entertainment centers and a central station for public transport.

All kinds of jobs and retail trade services are available in this area. The suburb’s center will provide high-density residences within walking distance of the services and job opportunities.A variety of services are to be available, as follows:

Suburb center: includes the center, state-• of–the-art, specific high-rise buildings in the central area, residential areas and utilities with associated plazas, shopping centers, cultural centers, security services,


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administrative buildings and a central Eid mosque.Residential area: includes an administrative • center, shopping center, main hall, public library, cultural center, religious and security services and technical school. It serves a population of about 135,000.Quarter center: includes parks, shopping • center, the district’s hall, and a branch of the public library. Each residential quarter accommodates a population of about 30,000.A center for residential neighborhood • quarter: includes plazas, domestic shopping area, a primary school and kindergarten. Each quarter accommodates a population of about 5,000.A distinct pattern of planning has been • adopted for all residences in the suburb in terms of diversification of densities. At the same time, open areas were exploited for this purpose. Urban growth has been limited to certain areas. Moreover, the residential areas imply versatile residences such as apartments, duplexes and different size villas.

Residential development is distributed according population density, starting with 5% for high–density development in the center, 15% in medium-density areas, 65% in low-density areas and 10% for very low-density areas or rest houses. The total residential area constitutes about 55% of the total developed suburb.Besides public services, specific areas were assigned for central and public services in the suburb such as a medical city, college, and sports city, in addition to domestic services provided inside the residential areas.An integrated system has been provided for the open areas in the northern suburb. It makes use of topographical features, such as natural valleys.The open areas concept is based on a center of entertainment, a recreational hub linking Wadi Hanifah with Al Thumamah and including the suburb’s park in the center of the suburb, open spaces inside residential areas, in addition to gardens and playgrounds at the domestic level.The structural scheme will provide a road network of a clear hierarchy that mainly depends on the Qassim and Salboukh roads, with the key hub being a ring road around the central area,

with branch roads linking the suburb’s center with all residential areas.The scheme also includes development of efficient public transport, including electrified trains, buses, a main station in the central area integrated with the suggested north-south railway that will serve the suburb’s eastern borders.Furthermore, master systems and regulatory controls related to development and usage of lands inside the suburb were prepared in a way that is flexible and compatible with any future development in the northern suburb. These systems and controls implied specific usages allowed within the borders of the suburb, in addition to general controls of construction (population density, construction plants and rate of coverage for the buildings). Other guiding controls of development were also set.According to the regulatory controls and policies of the suburb, all lands located inside the suburb are subject to the policies of urban organization, as endorsed by the resolution and by-laws of the Council of Ministers no.157, 2008, to allow vacant and unplanned areas in both northern and eastern suburbs on the following conditions;The first part of the northern suburb, located within the borders of urban development up to 2014, is subject to measures approved by the Council of Ministers (no. 157) which states that when planning, the owner of the land located within the limits of this area must supply electricity, water, telephone lines, sanitary waste disposal facilities as well and adequate drainage and flood control measures.The second part of the northern suburb, between the borders of urban development up to 2014 and the borders of the urban development 2014-19, is subject to measures approved by the Council of Ministers no. 157 which states that when the owner of the land located within the limits of this part is willing to develop his land, in addition to implement all public utilities network; the owner has to construct the minimum of the scheme’s buildings according to either of the following two alternatives:Develop no less than 75% of the total planned areaDevelop no less than 30% of the total planned area, on condition that percentage deducted on


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behalf of streets and public utilities should not be less than 50% of the total areaThe process of advancing and modifying the suburbs’ schemes is undertaken every five years by the Bureau of Suburbs’ Planning and Development Affairs and includes; establishment of an e-system to observe the development and coordinate with the concerned agencies, as well as methods of cooperation with the residents in order to develop their living areas (i.e. as field surveys, workshops, and meeting).In case of willingness to plan lands located between both suburbs, the developers and owners have to submit a request to the above-mentioned bureau and directly to Arriyadh Municipality to follow up all required procedures.The suburb’s development administration represents a major and efficient pillar in applying the structural schemes successfully. The administrative independency of the suburb represented in the decentralization of running the suburb, and reduction of the routine of administrative procedures are part of the main trend toward setting a specific form of the suburbs’ management.The adopted master organizational structure consists of the following:Arriyadh Development authority: responsible for comprehensive planning for both northern and eastern suburbs, and it endorses the structural scheme for each suburbThe committee supervising new suburbs: responsible for adopting major projects in both suburbs. It also endorses all adjustments of the structural schemes and measures approved by the AuthorityThe Bureau of Suburb Planning and Development Affairs: responsible, under ADA supervision, for planning lands, granting licenses, studying development requests and coordinating with the concerned agencies

Sub-Centers (1) Sub-centers are known as urban areas with a variety of activities and services and a space between 2 and 2.5 km2 and they serve approximately 600,000 to one million people in a radius of 20 km provided with comprehensive civil service.The outlook for these sub-centers is based on

the idea of new, mixed-use centers with multi activities and uses. They are linked by highways and public transport to provide a safe and secure environment with residential areas, businesses, entertainment, and recreation, economically viable and providing significant career opportunities. At the same time they reflect sophisticated local culture of the people. These centers will include private and public sector jobs in local administration and governmental centers, offices, companies, banks, shopping centers as well as social, cultural and recreational services.

Objectives of Sub-Centers:Sub-centers represent an advanced urban building pattern with a long-term vision for planning and development of the city. The benefits and objectives of this urban pattern:

Support the current status of the city• Support the department of urban • decentralizationProvide activities and services for new sub-• zones away from the city centerCreate new job opportunities among the • different sectors of the city Reduce traffic in the city center• Improve the urban environment in general • through a high quality and efficient model in planning such centersPromote the participation of public and private • sector in the process of urban development

Functions of Sub-CentersThe sub-centers will provide job opportunities for both public and private sectors in businesses, offices, banks, shopping centers, governmental and administrative centers as well as recreational, cultural and social services. New sub-centers will accommodate the following uses and functions:

Economic FunctionEach sub-center in Arriyadh City will provide great opportunities for the concentration of diverse economic activities that characterize the city center. Thus, they will be easily accessible by transport to the immediate residents. Among these activities are shopping and commercial areas, offices, banks and businesses. The center might also include relatively large development

(1) ADA, Arriyadh City Sub-Centers (a brochure issued by the Authority).


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The Outlook of the Sub-Centers

• New mixed-use centers • High feasibility environment

• Multi activities and uses • A place for specialized educational institutions

• Safe and secure environment for living• A mixture of traditional and modern building techniques

• Adequate environment for commercial business

• Take into account environmental considerations

• Availability of multi recreational facilities

projects including exhibitions, hotels and other places of recreation. The concentration of these economic activities is considered one of the essential objectives of planning these new centers whose economic feasibility is a key incentive to attracting investment, providing job opportunities and energizing the city’s new neighborhoods.

Administrative Function Each sub-center accommodates an administrative center with branches for government administration and ministries (a branch for Arriyadh Region, sub municipality, police office, civil defense, post office, telecommunication center, etc). Hence, sub-centers will be the focus of administrations seeking decentralization and looking to the sub-areas.

Promotional & Cultural FunctionsDeveloping cultural and promotional activities aimed at all classes of the society is one of the urgent requirements, particularly for families who live in neighborhoods away from the city center. Thus, the creation of these new sub-centers is considered an appropriate opportunity to provide such cultural facilities as public libraries, centers to host festivals, ceremonies, art exhibitions and other activities.These centers will also include a variety of attractive areas for family recreation, public parks, playgrounds and green areas.

Health and Educational FunctionsThe sub-centers will be equipped to house major educational institutions such as technical institutes and specialized colleges, as well as health centers to serve the center’s population and those around it and in its turn serve sectors away from the city center. This will contribute to meeting all the needs of

the population locally, avoiding the necessity of travel to remoter areas. Housing FunctionTo avoid what happens in city centers in terms of transformation of residential areas to deserted areas at work time, new sub-centers will provide new housing for various social classes that prefer to live near the center according to different formulas including quality buildings to lease or own. Thus isolated sub-centers will be designed in a way that guarantees privacy and safety for the population within these centers. Residential areas neighboring sub-centers will provide housing units of variable size and least density for big families, while the center will provide high population densities through smaller housing units to meet the needs of new families.

Special Incentives & Advantages Related to Sub-Center DevelopmentThe centers are characterized with a number of advantages over the rest of the city since they are special development zones, where each represents a model city center of integrated services. It is allowed to distinguish them from the surrounding areas with fixed building heights, and they are considered as areas of high building densities. They imply variety of uses and activities at the city level. Upon its development completion, it will represent an attractive urban and economic environment at a city level.


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Spatial Zone of Sub-Center Location

SectorDirections

North South East West

EasternKing Saud Bin Mohammed Bin Mekren

Imam Ahmad Bin Hanbal Street

Janadriah Road Circular Eastern Road

Southern Al Nasir RoadFollow the circle on the approved map

Along the Eastern Ring Road from the south

Al Haeir Road

South-WesternSouth-western Ring Road

Follow the circle on the approved map

Wadi HanifahFollow the circle on the approved map

WesternPrince Meshaal Bin Abdulaziz Street

Al Madinah street Wadi HanifahFollow the circle on the approved map

The private sector will be capable of developing these centers and investing in all services and this will create a significant investment opportunity in Arriyadh City that will contribute to raising the level of economic performance of the city and enhancing the mechanism of partnership between the private and public sectors in the process of urban development.

Real Criteria of Sub-Centers:The key criteria

The centers occupy a space between 20 • and 25 km and extend from the city center (Cairo Field) within the spatial zone.The centers provide services for the • population of the surrounding area within a circular radius of 10 km that serves between 600,000 to one million of the population.They are located in the center of each • sector.The space allocated for each center ranges • between 2 and 2.5 square kilometers.They are close to the highway• They are close to the end of the hubs • mentioned in the city’s structural schemeThe centers are compatible to all close • developed or specialized activities

Development of King Abdullah Road in Arriyadh:Arriyadh Development Authority is exerting major efforts to develop Arriyadh City in a way that promotes Arriyadh as a world capital. This will be evident in its world-class and state-of-the-art projects, centers and road transport. Seeking to streamline the motion in the city, the project of King Abdullah Bin Abdulaziz Road has been started and it is considered the hub and major artery of the city, linking east and west. The objective is to turn King Abdullah Road into an expressway that provides free movement of vehicles, with a high capacity of 520,000 vehicles per day, instead of 200,000 vehicles per day. With a length of over 26 km, it will be an essential hub in the Saudi capital, and is expected on completion to contribute to increasing local income via incentives presented to the owners and developers. That is mainly attributed to various spaces and new investment opportunities in line with the new development through what ADA offers by way of investment and commercial opportunities represented in hotel, housing and restaurant projects. In addition there is a 10 meter allocation of available space to accommodate an electric train (metro). This is considered a step toward improving public transportation and reducing motor vehicle congestion.


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The metro route along King Abdullah Road starts from King Khaled Road at King Saud College, and extends east until it reaches Khaled Bin Alwaleed Street, with a total length of 16 km. There will be 24 stations along both routes including five main stations with bus links. King Abdullah Road will be equipped with a pedestrian route. The development aims at turning the road into one of the biggest highways in Arriyadh City. The project is well equipped to accommodate the metro. Besides this project, King Abdullah Road will be turned into a sophisticated road, and one of the active and main hubs of the city in accordance with the comprehensive strategic scheme. It will also be equipped to fit the latest urban, commercial, recreational, residential, and office activities.The project involves creating three tunnels, each with a length of 185 m. These tunnels will be located at the crossroad of Prince Turki Bin Abdulaziz (the first), with Takhasosi Street and King Abdulaziz Road. In addition there is to be a closed tunnel of 700 m2 extending from the western part of King Fahd to the eastern part of Olaya Street. Besides this tunnel, there will be service roads, open green land and parks. Public utility networks will be implemented including electricity, water, flood drainage, sewerage and telecommunications networks serving the surrounding areas. All these services are considered private sector investment projects and opportunities to enhance its role in development and improvement of Arriyadh City.

Ministry of Municipal & Rural Affairs (MOMRA):

New projects in other cities of the

Kingdom including Arriyadh (1):The Ministry of Municipal and Rural Affairs is establishing many investment projects that constitute investment opportunities for Saudi private and public sectors companies. The following are some examples in Arriyadh City:

Establish gardens and kindergartens for • children in all residential quarters in Arriyadh CityImprove, develop and organize pedestrians • walkways, sidewalks and crossroads in Arriyadh City:Renew and maintain municipal branches • and general management related to ADA

Plant and beautify areas close to waste • disposals in Arriyadh City. These projects are investment opportunities for the private sector in order to contribute in the process of improving and developing the environment of the city

Arriyadh Region MunicipalityArriyadh Region Municipality offers several projects and opportunities to the private sector. The following are the most important investment opportunities launched in 2007 and early 2008(2):

An estimated 200 new infrastructure • projects in Arriyadh with a total cost of SR 44 billionElectricity sector main projects estimated • at SR 22.44 billion, comprising 10 projects for energy generation sector, 62 projects for power transfer sector and 19 projects for energy distributionLease of 440 locations for MegaCom • billboardsMComLease land in scrapyards•

Saudi Commission for Tourism and Antiquities (SCTA)

The Saudi Commission for Tourism and Antiquities took the initiative to develop national tourism with particular focus on resolution of the problems obstructing investment in this sector, and is offering inducements to attract more investment, by liberalizing tourism services markets and reviewing laws that control investments in the sector.

The most important investment opportunities offered by the Saudi Commission for Tourism and Antiquities are (3):

Tourism development companies which • motivate the private sector to invest tourism facilities and servicesTourism service centers that provide • comprehensive services for tourism investment and promotion of investment opportunities in the tourism industryElectronic tourism marketing (SETS) which •

(1) MOMRA website: www.momra.gov.sa.(2) ADA website: www.arriyadh.com.(3) Saudi Commission for Tourism and Antiquities: Guide & Initiatives of the Commission to Implement the General Strategy to Develop National Tourism.


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provides opportunities for the private sector to develop tourism products and present information to tourists which can be sold electronically.Tourism marketing and promotion programs • which are exclusively or partially offered by the private sector in association with the public sector, e.g. festivals and tourism eventsTourism markets which accompany business • tourism such as conferences, cultural, sports, arts and special events, in addition to tourism education and training. These activities bring opportunities to the private sector. Development of tourism sites: There are 168 • tourism sites available for development, 28 of which are inside the tourism development zones. They offer investment opportunities to the private sector. There are other investment opportunities, e.g. tourism village projects, skating facilities, women’s recreational centers, restaurants, picnic organization centers, etc.(1).

Information Initiatives & Tourism ResearchThe Saudi Commission for Tourism and Antiquities, set in 2001 a website on the internet for its General Secretariat, which is updated daily: www.sct.gov.saIn 2003 SCTA developed portals for national tourism on the Internet to be the basic referral

site to the tourist in matters of tourism in the Kingdom: www.sct.gov.saSet-up and operate the Tourism and Information Research Center (MAS) to become the main referral center with respect of collating and providing tourism information, preserving and documenting them, and publication of tourism studies, reports and statistics, accurately and regularly.

Saudi Electricity CompanyAs part of the privatization strategy, the Saudi Electricity Company offers projects and investment opportunities to the private sector throughout the Kingdom. The most important of these opportunities in Arriyadh is the establishment of gas electricity generation plants in some of Arriyadh quarters and provinces. Some of these opportunities are Al-Mezahmiya power station, Salboukh, Al-Ashera, overhead electricity distribution lines and many other projects with costs up to tens of billions of Riyals. (2).The volume of investments in electricity generation and distribution during the next ten years is estimated at SR 53 billion of which SR 8 billion is for the distribution sector. Accordingly, the electricity company has opened several investment projects to the private sector at an estimated cost of SR 48 billion during the period 2006-17 (3).

Electricity Generation Projects in Arriyadh (4)

Project Capacity (mw)Expected date of commencement

Expected date of implementation

The 10th power station 3325 2007 2011

Expansion of Al Janoba power station 50/ 50/50 2007/2008/2009 2008/2009/2011

The 11th power station 2000 2010 2013

Al-Mezahmiya power station 1325 2008 2011

Salboukh power station 1325 2011 2014

(1) For more information about available investment opportunities of the Commission, check the Investment Opportunities in the Kingdom, SAGIA, 2006, or the website www.sagia.org.(2) SAGIA, Available Investments Opportunities in the Kingdom, 2006.(3) SAGIA, Investment Performance Annual Report, 2004-05.(4) Ministry of Electricity & Water, 2008, see the website.


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Riyadh Chamber of Commerce and Industry:The Riyadh Chamber of Commerce and Industry established an independent investment center that endeavors to boost investment climate in general and Arriyadh Region in particular to increase national and foreign investment flows in the Kingdom and its capital, Arriyadh. The center also aims at making new investment opportunities available to small and medium enterprises in Arriyadh Region and the related governorates, as well as promoting the advantages of foreign investment in the Kingdom supervised by General Investment Authority (SAGIA). As part of this effort, the investment center prepares studies and reports needed for investment activity in the Kingdom, as well as its elements of success, and prepares databases specializing on investment opportunities in Arriyadh Region.

Patterns for Investment Opportunities Available and Issued from the Chamber of Commerce & Industry in Arriyadh City 2006 (1)

Investment OpportunityAnnual

Production Capacity

Total of investments

Costs

Average of Annual Profit

Rate of Return on

Investments

Recovery Period of Invested Capital

Home Furniture Store 661,500 314,000 186,876 59.9% 1.5

Electric Appliances Trade 540.000 285,000 81,600 28.6% 2.10

Medical Equipments Trade 495.00 270,000 70,500 26% 2.10

Advertising Agency 460.000 420,963 139,000 31% 3.1

Travel and Tourism Agency 400,000 282,988 94,875 33.5% 2.6

Manufacturing Coolers for the Cars (radiator)

315 ton 3,142,763 708,000 19.1% 4.5

Salt for Industrial Purposes 1,950 ton 1,404,763 361,250 21.4% 4.1

Paper Packaging Industry 425 ton 2,446,544 532,000 18.1% 4.7

Wooden Boards 5,000 ton 4,153,961 1,063,199 21% 4.3

Adhesive Tape 400 ton 693,475 1,077,250 19.2% 4.5

Investment Opportunities for Businesswomen in Arriyadh:The investment center of the Chamber of Commerce and Industry in Arriyadh generated about 38 investment opportunities for businesswomen. The Chamber prepared a preliminary feasibility study in cooperation with many consulting centers. It takes into account many industrial and service activities. The total estimated investments for these projects reached SR 210 million. The Chamber’s objective behind generating investment opportunities guidance for businesswomen is to activate the investment process through providing many versatile investment opportunities, and expanding the

recent zone of activities in which most women’s projects are concentrated. Studies show that the rate of investment estimated for the one project ranges between SR 0.6 to 22 million, with gross profits accumulated within ten years of about SR 428 million. These accumulating profits estimated for each project ranges between SR 1 to 55 of the revenues of each project(2). The Chamber endeavors to encourage joint foreign investment, and create investment opportunities for small and medium enterprises, provided that the capital allocated for any project should not exceed SR 5 million, by providing 391 opportunities in Arriyadh(3).

(1) Arriyadh Chamber of Commerce & Industry, 16th issuance, 2008.(2) Arriyadh Chamber of Commerce website.(3) Ministry of Commerce and Industry: information Depastment.


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Women’s Commercial Registers by Activity in Arriyadh, 2008 (1)

Activity Number

Retail and Wholesale Trade 5,447

Food Products Trade 2,262

Textiles and Fabric Trade 2,795

Import and Export 1,404

Building, Health and Electrical Materials 1,990

Women’s Workshops 633

Fast Food Restaurants 298

Furniture Trade 794

Total 15,653

(1) Ministry of Commerce and Industry: information Depastment.


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Theme Two: Investment Opportunities in Various Economic and Service Sectors

(1) SAMA ,44th Annual Report, 2008.(2) Ibid.

Industrial Investment Opportunities in Arriyadh CityFactories in Arriyadh Region, as in other parts of the Kingdom, enjoy a number of concessions and benefits offered by the State, including provision of land at nominal prices, raw materials, machinery and spare parts custom exempted, supply of electricity at reduced prices, the possibility of obtaining concessionary loans to finance new, or expand existing, factories and support of exports. Several industrial investment opportunities available to the private sector in Arriyadh are offered to both national and foreign investors, such as:

Vehicle tires• Medicines, vaccines, antibiotics, and other •

support medical accessoriesHousehold refrigerators• Pottery and reflective and colored glass • industriesPlastic sanitary ware• Water and gas meters• Garments, threads, blankets and bedding• Elevators and refrigerators and air-• conditioning compressors

Detailed information on the above opportunities such as the production capacity of each project, total cost, and expected revenue, etc. can be found at the website of SAGIA, where investment opportunities, mostly industrial, are featured. Some of the projects are available in Arriyadh.

Commercial Investment Opportunities in Arriyadh CityCommercial works in the area of distribution of goods, wholesale and retail trade, pharmacies, distribution of medicines, commercial agency services, except concession rights, are exclusively for Saudi investors. The State has enacted a number of rules and regulations that control trading activities. Wholesale and retail trade dominates the commercial activity in Arriyadh, where there were 213,297 CRs in 2007 (1).

Existing Commercial Institutions in Arriyadh 2005-2007 (2)

Year Number %

2005 10,980 34.3%

2006 12,564 33.4%

2007 17,824 28.5%

Total Cumulated by End 2008 213,297 30.7%


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Permits issued by Arriyadh Region Municipality offering investment opportunities in wholesale and retail trade to small and medium size enterprises include:

Computers and accessories• Electric appliances• Sanitary ware, plumbing accessories, paints • and electrical materialsGarments and fabrics• Industrial hardware, tools and equipment• Building materials• Office and home furniture•

Real Estate Investment Opportunities in Arriyadh CityThe real estate sector in Arriyadh is characterized by rich investment opportunities, as the City faces a shortage of housing affordable to low and medium income groups. The City also faces a shortage of apartments for rent, and business offices in the city center. Various parts of Arriyadh City, particularly the north and north-west of the City, are witnessing a construction boom. New office space is being built in the city center.

GDP of the private sector is expected to grow by over 5%(1) in the next five years. This growth will multiply demand for quality office space which is currently in limited supply. In general Arriyadh is expected to attract more businesses and capital during coming years, which will increase the demand for office buildings and housing in the City and its suburbs and this will offer excellent investment opportunities in the real estate sector. Building and construction investments are expected to amount to SR 150 billion by 2010(2). According to studies released by the Arriyadh Development Authority, the City will have a need for 495,000 housing units by 2024, an annual growth rate of 27,500 units(3). Studies conducted by one real estate company estimated Arriyadh demand for new housing units growing to 482,000 units during the period 2004-24(4). Commercial buildings, large and medium residential compounds, residential and commercial towers will represent good investment opportunities in Arriyadh’s real estate sector.

Estimated Demand for New Housing in Arriyadh 2005-25 (5)

Period Estimated Units %

2004-09 104,375 21.65

2009-14 113,126 23.46

2014-19 124,965 25.91

2019-24 139,759 28.98

Total 482,225 100.00

Arriyadh Development Authority recently approved new standards and regulations for buildings in certain areas of Arriyadh City. The building codes and regulations were upgraded for the City Hub (the area between King Fahd Road and Olaya Street) and also along King Fahd Road and Olaya Street. According to the new standards, restrictions on the height of buildings at the hub, and the west side of King Fahd Road were removed, whereas the permitted height of buildings east of Olaya Street was doubled. Proprietors and developers will have the choice to apply the new or the old building codes.

(1) Al Hayat Newspaper, Economy Page, Issue 15724, April 23, 2006. (2) Eastern Province Chamber of Commerce & Industry, Al Eqtesad Magazine, Issue 40, 2006.(3) Arriyadh Development Authority, Population Study of Arriyadh City, 2004.(4) Al Eqtesadia Saudi Newspaper, Real Estate Page, Issue 4552, March 2006 .(5) Ibid.


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(1) SAMA, 44th Annual Report, 2008.(2) Ministry of Economy and Planning, 8th Development Plan, 2004-09.(3) Ibid.(4) GOTEVOT, as stated in the 8th Development Plan.

Educational Investment Opportunities in Arriyadh CityInvestment in human development is the cornerstone of a nation’s growth and prosperity. During the past years, the Government of Saudi Arabia has spent billions of riyals on the education sector. SR 105 billion was allocated to the education sector in the 2008 budget (1). The Government continues to encourage the private sector to invest in the education sector where rules and regulations were established for this purpose. Licenses for private educational facilities are issued by a number of agencies, as follows:

Primary, intermediate and secondary schools • are licensed and supervised by the Ministry of Education.Technical colleges and vocational training • centers are licensed and supervised by General Organization for Technical Education & Vocational Training (GOTEVOT).Universities and university colleges are • licensed and supervised by the Ministry of Higher Education.

The Government offers the private sector the opportunity to build and furnish schools for lease to the State. At the end of the lease period the Government will own the building. There are also investment opportunities in the area of printing schoolbooks, transportation and housing for students. The Government is expected to allocate over US $ 8 billion (2) during the next ten

years in support of higher education projects and make this available to the private sector which will motivate investors to respond to the market requirements for private universities and colleges.The demand for private university education for both genders and the inability of Government universities to accommodate the current students will attract private sector investment. Statistics of the Eighth Development Plan show that, by the end of 2009, Arriyadh Region will have a capacity for 55,584 kindergarten students, 102,616 primary school students, 41,000 higher education students(3). This will require significant educational infrastructure and offer a good investment opportunity to the private sector. The establishment of Human Resources Development Fund is evidence of the Government’s commitment to the expansion of education and training towards a higher level of employment among the Saudi citizens. Major financial concessions are available to national and foreign investors, particularly to those able to bring new experience and advanced hi-tech educational aids and instructional materials. The private sector is currently establishing education and training companies in light of the General Organization for Technical Education and Vocational Training (GOTEVOT) estimates that over 16,000 students will join technical colleges and over 14,000 will join training institutes during the period 2005-9(4).


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Moreover, colleges, institutes and schools owned by foreign investors will generate investment opportunities in the area of transportation of students and printing of books. A mega project will be jointly implemented by a group of investors, to build 3,000 schools on a BOT basis at a total cost of SR 13 billion (US $ 3.4 billion). The private sector will continue to establish joint stock companies which will serve in the education sector (primary, secondary and higher education) as an investment in knowledge-based industry to supply skilled workforce which is critical to economic growth and social coherence. Existing investment opportunities in Arriyadh are as follows:

Establish University Colleges such as • Dentistry College and othersPrince Nora Bint Abdurrahman College • Project (previously Arriyadh Women’s College) including university residence for all faculty teaching members, students and other support services.King Saud College for Women Project and • the university residence and other facilitiesSchool Compound Project• Housing Project for all faculty members • in King Saud University, in addition to car parking floors in the college, and expansion of the King Khaled Hospital and women’s departmentOther colleges and private centers such as:• Information Technology College.• Tourism and Hotels College• Talent Development Centers (children and • youth)Vocational Training Centers•

As well as many other significant investment opportunities (1)

Health Sector Investment Opportunities The health sector of the Kingdom of Saudi Arabia is the largest in the region with respect to volume, activity and opportunities, with an average annual expenditure of SR 30 billion, 80% of which is public sector and 20% private sector (2). A world-class health infrastructure of hospitals and medical centers has been implemented during the past years throughout the Kingdom. The private health sector in Arriyadh is expected to grow in terms of medical facilities for

treatment and diagnosis, and cooperative medical insurance. The latter is expected to experience rapid growth, benefiting from the Royal Decree M/10 dated August 12, 1999(3) which mandates the medical insurance coverage of resident foreigners. The decree formed a Council of Medical Insurance headed by the Minister of Health. The Council will be responsible for qualifying cooperative insurance companies and approving medical facilities which will be selected to provide medical treatment for insured patients. The by-laws of medical insurance were issued by Minister of Health Resolution 460/23/S dated June 7, 2002(4). In support of these measures, the Saudi Government has already transferred ownership of some public hospitals to the private sector. The Comprehensive Health Care Program is currently being prepared. It is expected to produce a series of opportunities to national and foreign investors in the area of medical equipment, medical care, pharmaceutical industries, management and consultations, in addition to the establishment and operation of medical facilities which will in turn generate more opportunities to the private sector. The Eighth Development Plan 2005-9 estimates Arriyadh requirements at 235 primary health care centers, eight hospitals, five health colleges and 98 emergency centers(5). In addition, there are other investment opportunities available in fitness, weight loss, cosmetic surgery, medical rehabilitation, care of persons with special needs, and opportunities available in the hospital and medical facilities such as:

Lease ATMs and vending machines• Lease vending booths • Lease cafeterias• Lease supermarkets, flowers stores and • photography studiosLease billboards• Lease tourist offices• Lease pharmacies• Management of health economics calls all • investors to discuss study and implement any new investment project (6).

Investment Opportunities in Personal ServicesIn addition to large-scale investment opportunities and the mega projects which require large capital investments and

(1) SAGIA – Available Investment Opportunities, 2006.(2) Ministry of Economy & Planning, 8th Development Plan, 2004-9.(3) Ministry of Health Website: www.moh.gov.sa .(4) Arriyadh Trade Magazine, Terms of Medical Cooperative Insurance By-laws, Issue 479, 2002.(5) Ministry of Economy & Planning, 8th Development Plan, 2004-9.(6) See SAGIA’s Website for more Available Opportunities in the Health Sector, and General Management for Medical Affairs in Arriyadh: www. riyadhealth.med.sa.


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sophisticated technologies stated within this report, there are several investment projects available to individuals or small to medium enterprises. Despite the absence of studies providing detailed information on the actual requirements of the City, there is clear evidence that a significant need for personal and household services exists. Examples are: The urban development and expansion during the last three decades of the last century was not accompanied by equal growth of modern establishments which provide personal services to residentsWhilst there are a number of sophisticated firms of medium size which provide personal services to Arriyadh City residents, the vast majority of firms still offer modest services due to the small volume of its services, provided in the traditional way by firms owned and managed by individuals.Implementation of the Eighth Development Plan, will lead to further expansion in the City’s facilities, in addition to mega projects which are currently being established, such as the Financial Quarter in Arriyadh. This will increase the demand for personal services and will therefore open the door for new investments in these services. Accordingly, there will be a need for sophisticated firms which are capable of providing high quality services, particularly in, but not limited to, the following areas:

Auto Repair Workshops and Vehicle Service CentersExcept for auto dealers, the vast majority of workshops are of an individual nature and offer modest services. The City provides several investment opportunities to set up state-of-the-art integrated workshops capable of providing full repair and maintenance services, e.g. mechanical, electrical, body repairs, paint jobs, valeting, car washing and polishing, wheel alignment.and tire replacement, oil change, parts sales, towing, and options for maintenance services on a contract basis.

Car ParksDue to the increased number of vehicles and the lack of adequate parking lots, the City is currently in need of multi-storey parking, particularly in areas with commercial activities, providing parking services on temporary basis or long term during vacations.

Household Maintenance ServicesA vast majority of Arriyadh households will require periodic maintenance services in areas of electricity, air-conditioning, water networks, sanitary connections etc. Such services are mostly provided by individually-owned establishments, which provide only one type of maintenance of poor quality by unqualified staff. Arriyadh City provides great investment opportunities where qualified household maintenance companies can be established to provide professional maintenance services by qualified technicians, guaranteed and with fixed prices.

Laundry ServicesAlthough laundry shops are available throughout Arriyadh, few of them provide good quality service. There is a need for companies that can provide good services, collect from and deliver laundry to homes.

Personal Services Offered to LadiesAlthough there are large numbers of modest establishments which provide personal services for ladies, e.g. hairdressing, bridal shops, seamstresses, the City still has a requirement for modern and integrated beauty services.


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Taxi Services with Paging SystemDespite the large number of taxis and limousine services operating in Arriyadh City, there is still a need computer-controlled car hire companies. Such companies could also provide school transportation services.

Family RestaurantsArriyadh City has a large number of restaurants which serve fast food, traditional Oriental and Western dishes. However, Arriyadh still provides excellent investment opportunities in this line

of business. Demand exists for restaurants that provide good service to customers, a family ambiance, with diversified menus, parking and children’s playgrounds.

Gas StationsThe majority of gas stations still request cash payments. A chain of gas stations that will accept credit card payments and offer other services, such washing, oil change, etc. will be a welcome addition to Arriyadh City


Tables Index


128


129

PageDescriptionS/N

130Population Distribution in Arriyadh City by Nationality1

130Population Distribution in Arriyadh City by Gender (males/Females)2

130 Labor Force Working in the Private Sector by Main Careers, Gender and Nationality in Arriyadh City2005/2006

3

131Labor Force Working In the Private Sector by Careers,Gender and Nationality in Arriyadh Region, 2005/2006

4

131Producing Plants in Arriyadh Region till 20065

132Industrial Licenses Issued by SAGIA During 2006 by Industrial Activity in Arriyadh6

132Existing Industrial Cities in Arriyadh City till the Third Quarter of 20087

132 Area of Developed and Unused Lands (planned and unplanned) in Arriyadh City by End of2005/2006

8

133Building Licenses Issued in Arriyadh During 20069

133License of Shops Issued in Arriyadh City During 200610

133Lengths of Existing, Under Construction & Proposed Roads in Arriyadh Cityby end of 2006

11

134Contractors in Arriyadh Region by Careers and Classification, 200712

135Cultivated Land & Total Production in Arriyadh Region as of 2005/200613

135Active Phone Lines and the Capacity Used in Arriyadh City, 200714

135Mobile Lines and Digital Subscription DSL in Arriyadh City, 200715

136Postal Services Network in Arriyadh as of 2005/200616

136Air Traffic in King Khaled Airport in Arriyadh17

137Number of Subscribers and Electricity Consumption in theCentral Region for 2005/2006

18

137Ministry of Health Medical Services & Facilities in Arriyadh Region as of 200619

138Private Medical Facilities and Health Services in Arriyadh City as of 200620

139Higher Education in Arriyadh City and Kingdom (Undergraduate) during 2005/200621

140Selected Economic Indicators of the Kingdom22

141General & Higher Education for Males and Females in Arriyadh City 2005/200623


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Table No 1 (1)

Population Distribution in Arriyadh City by Nationality (forecasts of population survey, 2007)

Nationality Number %

Saudi 3,097,032 67%

Non- Saudi 1,525,399 33%

Total 4,622,421 100%

Table No 2Population Distribution in Arriyadh City by Gender (males/Females)

(forecasts of population survey, 2007) (2)

Gender Number %

Males 2,588,556 56%

Females 2,033,865 44%

Total 4,622,421 100%

Table No 3Labor Force Working in the Private Sector by Main Careers, Gender and Nationality in Arriyadh City 2005/2006 (3)

Main CareersSaudi Non-Saudi Total

Male Female Whole Male Female Whole Male Female Whole

Managers and Businessmen

21,255 439 21,694 2,998 12 3,010 24,253 451 24,704

Scientific, Vocational and Human Specialists

20,425 2,897 23,322 106,805 3,669 110,474 127,230 6,566 133,796

Vocational, Human and Scientific Technicians

16,628 4,1333 30,761 92,037 14,771 106,808 108,665 18,904 127,569

Writing Careers 56,388 3,496 59,884 6,387 206 6,593 62,775 3,702 66,477

Sales Careers 29,674 2,501 32,175 74,969 34 75,003 104,643 2,535 107,178

Services Careers 60,821 2,949 63,770 616,345 14,222 630,567 677,166 17,171 694,337

Agriculture, Birds and Animal Breeding and Hunting Careers

1,912 49 1,961 76,431 97 76,528 78,343 146 87,489

Industrial and Chemical Careers and Food Industries

4,097 341 4,438 59,038 2,359 61,397 63,135 2,700 65,835

Assisting Main Engineering Careers

25,154 871 26,025 485,898 637 486,535 511,052 1,508 512,560

Other Careers 2 - 2 2 - 2 4 - 4

Total 236,356 17,676 254,032 1,520,910 36,007 1,556,917 1,757,266 53,683 1,810,949

(1+2) Arriyadh City website: www.arriyadh.com.(3) Ministry of Labor, Information Department .


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Table No 4Labor Force Working In the Private Sector by Careers,

Gender and Nationality in Arriyadh Region, 2005/2006 (1)

Economic ActivitySaudi Non-Saudi The Total

Male Female Whole Male Female Whole Male Female Whole

Agriculture, Forestry, Hunting and Fishing

3,293 1 3,294 72,806 41 72,847 76,099 42 76,141

Mines, Gas and Petroleum Exploration and Quarries

515 - 515 2,977 1 2,078 2,592 1 2,593

Manufacturing Industries

24,098 951 25,094 149,478 2,089 151,567 173,576 3,040 176,616

Electricity, Gas and Water

482 47 529 2,525 1 2,526 3,007 48 3,055

Building and Construction

77,704 2,558 80,262 625,402 13,597 638,999 703,106 16,155 719,261

Retail & Wholesale Trade

68,328 3,734 72,062 414,675 5,587 420,262 483,003 9,321 492,324

Transportation, Storage & Communication

5,034 15 5,049 28,309 117 28,426 33,343 132 33,475

Finance, Insurance & Real Estate Services

13,238 842 14,080 29,362 691 30,053 42,600 1,533 44,133

Social & Personal Services

38,733 9,227 47,960 152,388 13,630 166,028 191,121 22,867 213,988

Other Activities 4,931 301 5,232 43,888 243 44,131 48,819 544 49,363

Total 236,356 17,676 254,032 1,520,910 36,007 1,556,917 1,757,266 53,683 1,810,949

Table No. 5Producing Plants in Arriyadh Region till 2006(2)

Industrial Activity No. of FactoriesWorkforce

Total finance (million riyal)

Work Force

Foodstuff and beverages 185 9,690.28 21,829

Textiles, garments and leather 87 2,369.71 13,295

Wood products and furniture 85 1,205.99 13,295

Paper, printing & publishing 92 2,274.04 7,461

Chemical industries & plastic products 304 7,939.61 8,264

Building material, chinaware, ceramics & glass 207 8,388.64 25,944

Basic metal industries 248 2,665.23 20,686

Metal products, machinery and equipment 209 7,868.13 20,167

Transport and storage 2 18.02 52

Miscellaneous industries 30 502.07 3,202

Total 1.449 45,921.71 144,761

(1) Ministry of Labor, Information Department(2) Ministry of Commerce & Industry: Industrial Database, Information Department.


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Table No 6Industrial Licenses Issued by SAGIA During 2006 by Industrial Activity in Arriyadh (1)

M Activity NumberWork Force

Finance (million riyal)

1 Foodstuff and beverages 16 1,081 308,63

2 Textiles, garments and leather industries 10 292 1,630

3 Furniture and wood products industries 12 295 16,10

4 Paper printing and publishing industries 2 50 2,00

5 Chemicals and plastic products 40 2,096 3,505.94

6 Building materials, china ware, ceramics and glass industries 15 382 1990

7 Basic metal industries 50 1,260 7753

8 Metal, and manufacturing materials, machinery and equipment industries 23 850 165,67

9 Miscellaneous industries 6 180 9,50

The Total 174 6,487 4,121,56

Table No. 7Existing Industrial Cities in Arriyadh City till the Third Quarter of 2008 (2)

Industrial City Total Area m²Developed Area

m²Factory Workers Number of Factories

First 451,000 451,000 5,080 59

Second 18,786,000 15,409,000 65,256 80.6

Total 19,237,000 15,860,000 70,336 8065

Table No. 8 Area of Developed and Unused Lands (planned and unplanned) in Arriyadh City by End of 2005/2006 (3) (by hectares)

Type of LandType of Use

Developed Planned Unplanned

Residential 23,332 80,704 32,888

Industrial 6,530 27,435 11,327

Agricultural 5,354 3,819 781,8

Greenland 688 4,029,8 897,01

Others 24,535 4,641,6 9,758.4

Total 60,419 120,926.49 55,651.51

(1) Ministry of Commerce & Industry: Industrial Database, Information Department.(2) Ministry of Commerce & Industry website www.soietz.gov.sa.(3) MOMRA: Statistical Yearbook, issue 58.


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Table No. 9Building Licenses Issued in Arriyadh During 2006 (1)

Type of Use LicensesLand space

(m²)Built Space

( m²)Building levels

Level space ( m²)

Walls Length (m)

Commercial / Residential 11,116 10,401,966 5,332,291 32,498 -------- 1,065,492

Commercial / Industrial 1,007 8,598,046 3,073,390 2,633 7,760,844 72,952

Education /Health / Mosques 284 1,600,538 601,688 895 4,496,571 60,340

Social / Government 16 8,558,692 108,879 55 337,753 6,149

Total 12,423 29,159,242 9,116,248 36,081 1,204,933

Table No. 10License of Shops Issued in Arriyadh City During 2006 (2)

LicenseType of License

New Renewal Total Kingdom % to Kingdom

Grocery 1,538 7,855 9,939 50,402 18.64

Supermarket 317 1,775 2,092 3,489 59.96

Commercial Establishments. 1,741 1,619 3,360 31.290 10.74

Industrial workshops 365 228 493 5,261 937[?]

Furniture & Decoration 371 1,111 1,482 9,743 1512

Maintenance of appliances 857 1,963 2,280 12,494 2257

Auto repairs 367 1,016 1,383 14,152 9.77

Plumbing 228 589 817 5,542 14.99

Fuel and auto service 194 524 718 8,596 835

Personal services 1,037 3,581 4,618 31,370 14.72

Others 2,433 7,287 9,720 44,614 21.79

Total 9,348 27,548 36,896 216,863 17.01

Table No. 11Lengths of Existing, Under Construction & Proposed Roads in Arriyadh City

by end of 2006 (Km) (3)

ActivityType

Asphalt, tree-lined with street lights

Asphalt Only

Number of Lamp posts

Existing Roads 1,350 6,160 79,900

Highways Under Construction 250 2,900 1,600

Proposed Roads 250 700 8,800

(1) MOMRA, Statistical Yearbook, 2007.(2) Ibid.(3) Ibid.


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Table No. 12Contractors in Arriyadh Region by Careers and Classification, 2007 (1)

DegreeActivity

First Second Third Fourth FifthThe

Total

Buildings 10 17 28 70 76 201

Roads 4 6 8 24 43 85

Water and sanitary waste works 2 6 5 44 49 106

Electrical works 2 3 9 57 57 128

Mechanical works 1 1 3 47 35 87

Industrial works - - 2 1 1 4

Marine works - - - 3 4 7

Dams 1 5 5 11 8 30

Electronic works 6 5 10 23 11 55

Garden planting and site organization 2 1 3 15 7 28

Abattoirs - - - 1 - 1

Buildings maintenance 3 5 15 20 - 52

Roads maintenance 4 1 9 24 39

Maintain, and operate water and sanitary waste works - 3 2 4 8 17

Maintain and operate electrical works 1 3 3 14 15 3

Maintain and operate mechanical works 1 3 2 8 7 21

City cleanliness 1 - - 23 11 35

Medical centers maintenance 3 1 1 16 11 32

Maintain and operate abattoirs - - 1 1 4 6

Maintain and operate industrial works 1 - - - - 1

Maintain and operate marine works - - - - - -

Maintain and operate e-works 2 3 4 7 5 21

Dams maintenance - - 2 - 2

Gardens and parks maintenance 1 - - 10 - 11

Food and service provisions of medical centers 3 1 - 1 7 12

Individuals service and insurance 1 5 3 2 3 14

Total 50 68 105 413 386 1022

(1) MOMRA: Statistical Yearbook, 2007.


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Table No. 13

Cultivated Land & Total Production in Arriyadh Region as of 2005/2006 (1)

Description

Kingdom Arriyadh % to Kingdom

Area/hectares

Production/thousand tons

Area/hectares


Area/hectares


Grains 602,653 3,042 113,014 545 18.75% 17.92%

Vegetables 110,566 2,617 50,790 1,124 45.94% 42.95%

Fodder 137,357 2,369 64,647 1,120 47.06% 47.28%

Fruits 223,579 1,549 47,531 295 21.26% 19.04%

Total 1,074,155 9,577 275,982 3,084 25.7% 32.2%

Table No. 14Active Phone Lines and the Capacity Used in Arriyadh City, 2007 (2)

Item Arriyadh City The Kingdom % to Kingdom

Active 1,024,086 3,996,493 25.6%

Used Capacity 810,987 3,317,543 24.4%

Table No. 15Mobile Lines and Digital Subscription DSL in Arriyadh City, 2007 (3)

Item Arriyadh The Kingdom % to Kingdom

Mobile Lines 1,094,868 4,321,483 25.3%

Digital Subscription Lines DSL 184,674 595,121 31%

(2) Ministry of Agriculture, Statistics Department, 2007 statistics.(3) Central Department of Statistics and Information, Statistical Yearbook, 2007.(4) Ibid.


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Table No. 16 Postal Services Network in Arriyadh as of 2005/2006 (1)

Description Arriyadh City Kingdom % to Kingdom

Main Post Offices 93 470 19.8%

Post Sub-Centers 16 146 11%

Postal Agencies 36 83 43.4%

Surface Post Points (tawaaf) 1,025 4,632 22.1%

Street Post Boxes 561 2,367 23.7%

Customers Post Office Boxes 132,478 458,759 28.9%

Post Boxes Agencies 59,572 120,158 49.6%

Table No. 17Air Traffic in King Khaled Airport in Arriyadh (2)

Saudi Air Traffic (international)

Number of flights

Arrival Departure

passengersFreight by

tonMail by

tonpassengers

Freight by ton

Mail by ton

37,517 4,473,845 104,574 1,070 4,333,177 77,087 1,070

Saudi Air Traffic (domestic)

Passengers Freight

Arrival Departure Arrival Departure

4,473,845 4,333,177 10,457,598 77,085,589

(1) Saudi Postal Corporation, according to the Statistical Yearbook, 2007 issued from CDSI.(2) Saudi Arabian Airlines, according to the Statistical Yearbook, 2007 issued from CDSI.


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Table No. 18 Number of Subscribers and Electricity Consumption in the

Central Region for 2005/2006 (1)

Item 2005 2006 Rate of Growth %

Number of Subscribers 1,498,370 1,560,735 4.2

Total sold Power (mega watt/hour) 44,099,567 48,503,374 10

Average of Consumption (mega watt/hour) 29,4 31,1 5.8

Individual Consumption (mega watt/hour) 7,8 8,4 7.7

Table No. 19Ministry of Health Medical Services & Facilities in Arriyadh Region as of 2006 (2)

Description Arriyadh Kingdom %

Number of Hospitals 40 220 18.18

Beds 5,791 1,877 18.17

Health Care Centers 361 1,925 18.75

Physicians 3,831 21,265 18

Nurses 8,321 495 18.74

Pharmacists 216 1,023 21.12

Medical Assistants 4,116 25,052 16.43

Technical Non-Medical Staff 978 6,475 15.24

Administrative 1,540 10,889 14.14

Helpers 7,390 42,676 17.32

(1) Table derived from Central Electricity Company, 2006 statistics.(2) Ministry of Health, Statistical Yearbook, 2006.


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Table No. 20Private Medical Facilities and Health Services in Arriyadh City as of 2006 (1)

Descriptions Arriyadh Kingdom %

Number of Hospitals 28 127 22

Number of Beds 3,892 12,590 30.9

Number of Dispensaries 373 1,075 32.3

Private Clinics (Private, Companies, Polyclinics) 568 1,326 42.8

Number of Laboratories 22 84 26.2

Physiotherapy Centers 19 44 43.2

Optical Shops 572 1,534 37.3

Pharmacies 1,413 4,747 29.2

Doctors* 3,772 14,091 26.77

Nursing Staff 4,590 18,985 24.18

Pharmacists 340 1,526 22.28

Medical Assistants 1,292 7,782 17.06

Technical Non-Medical Staff 1,189 4,598 25.86

Administrative 3,026 11,906 25.42

Helpers 2,577 10,819 23.82

(1) Ibid.(*) Includes Dentists.


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Table No. 21Higher Education in Arriyadh City and Kingdom (Undergraduate) during 2005/2006 (1)

College

Enrolled Students Graduates

Males FemalesThe

TotalMales Females

The Total

Number of Colleges (*)

Imam Mohammed Bin Saud Islamic College (Arriyadh Colleges) 16,036 13,430 29,466 3,141 1,350 4.491 8

Imam Mohammed Bin Saud Islamic College (total) 19,569 13,430 32,999 3,461 1,353 4.814 9

King Saud University 28,536 20,800 49,336 3,494 2,919 6.413 14

King Saud Bin Abdulaziz College for Health Sciences 63 269 332 0 38 38 2

Women’s Colleges (Arriyadh Colleges) (*) 0 23,659 23,659 0 4,311 4.311 6

Women’s Colleges (total) 0 252,744 252,744 0 37,098 7.098 87

Teachers’ Colleges and Physical Education College in Arriyadh 3,531 0 3,531 631 0 631 2

Teachers’ Colleges (total) 33,870 0 33,870 5,799 0 5.799 18

Technical Colleges in Arriyadh 943 0 943 317 0 317 1

Private colleges (Arriyadh colleges) 1,329 1,164 2,493 63 0 63 5

Private colleges (total) 2,628 2,439 5,067 130 103 233 17

Arriyadh City: Total Colleges 50,438 59,322 109,760 7,646 8,618 16.264 38

Total Colleges in the whole Kingdom 186,485 408,326 594,811 28,439 58,747 87,240

(1) Ministry of Education, Statistical Yearbook, 2006.(*) The number includes only colleges that grant Bachelor Degree.


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Table No. 22Selected Economic Indicators of the Kingdom (1)

2003 2004 2005 2006 2007

Population Estimates (million) 22.02 22.67 23.1 23.68 23.98

GDP in Current Prices (SR billion) 804.6 938.8 1182.5 1335.6 1430.5

GDP in Fixed Prices (SR billion) 1999 = 100 686 722.2 762.3 786.3 813

Retraction Ratio of Non-Oil GDP Prices 102.1 105.9 110.3 114.4 115.8

Inflation Rate (Consumer Prices) 0.6 0.3 0.7 2.2 4.1

Total Money Supply (M3) (SR billion) 417.5 496.1 553.7 660.6 789.8

Average Oil Prices / Barrel, Arabian Light (*)(US$) 27.69 34.53 50.15 61.05 68.74

Average of Real Exchange Rate of the SR (Year 2000=100) 90.5 84.4 82.3 80.8 78.5

Currency Circulated to Total Money Supply (%) 13.3 12.1 11.6 10.5 10.5

Deposits to Total Money Supply (%) 86.7 87.9 88.4 89.5 89.5

Net Foreign Assets at Local Banks (SR billion) 41 47.1 26.4 70.6 42.5

Interest Rates, Average 3-Month Deposits (Local Currency) 1.63 1.73 3.75 5.02 4.79

Banks Capital Adequacy Ratio (Basel Standards) 19.4 17.8 17.8 21.9 20.6

Actual Public Revenues (SR billion) 293 392.3 564.3 673.7 642.8

Actual Public Expenditures (SR billion) 257 285.2 346.5 393.3 466.2

Budget Surplus or Deficit to GDP 4.5 11.4 18.4 21.0 12.3

Commodity Exports (SR billion) (**) 349.7 472.5 677.1 791.3 877.5

Imports (CIF) (SR billion) 138.4 167.8 223 261.4 338.1

Current Account Surplus to GDP 13.1 20.7 28.5 27.8 24.9

Current Account (SR billion) 105.2 184.9 337.5 371 356.3

Local Stock Market Index (1985 = 1000) 4437.6 8206.2 16712.6 7933.3 11176


(*) According to OPEC Figuses

(**) Including (oil exports, not oil exports, re exports + shapes’ fuel.


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Table No. 23 General & Higher Education for Males and Females in Arriyadh City 2005/2006 (1)

Item

Males Females Total

Arriyadh Region

Kingdom %Arriyadh Region

Kingdom %

Arriyadh Region

(Males & Females)

Kingdom (Males & Females)

%

Number of Schools

2,456 13,386 18,3 2,174 14,839 21,4 5,630 28,225 20

Number of Students

457,257 2,177,422 21 475,193 2,115,914 22,5 504,850 4,293,336 11.8

Number of Teachers

35,900 180,739 19,9 50,764 214,701 23,6 86,664 395,440 22

(1) Ministry of Education, Statistical Yearbook, 2006.


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S/N Address Telephone Fax Mailing Address

56 King Saud University 467000 4678126PO Box 2454

Arriyadh11451

57 Imam Mohammed bin Saud Islamic University 2580000 2580707

58 Nayef Security Sciences Arab University 2463444 2464713PO Box 6830

Arriyadh11452

59 Prince Sultan Private University 4548489 4548317PO Box 66833Arriyadh11586

60 Institute of Public Administration 476888 4768878PO Box 205

Arriyadh11141

61 General Presidency for Youth Welfare 4018888 4010376PO Box 956

Arriyadh11185

62 General Audit Bureau 4056770 4032057PO Box 7185

Arriyadh11128

63 Saudi Arabian Red Crescent 4740027 4740430 Arriyadh11129

64General Presidency for Environment Protection and Meteorology

2211584 2211581PO Box 1158Jeddah21431

65 Saudi Arabian Basic Industries (SABIC) 2258000 4013831PO Box 5101

Arriyadh11422

66 National Shipping Company of Saudi Arabia 4785454 4777478PO Box 8931

Arriyadh11492

67 Saudi Arabian Mining Company (Ma’aden) 4740857 4721333PO Box 68861Arriyadh11537

68 Saudi Telecom Company 4527000 4525229PO Box 87912Arriyadh11652

69 Ittihad Itisalat Company 2735050 0560631667PO Box 9979

Arriyadh11423

70 Saudi Aramco 4410200 03/8738190PO Box 5000

Dhahran31311

71 National Company for Cooperative Insurance 2180100 2180102PO Box 86959Arriyadh11632

72 Council of Saudi Chambers of Commerce & Industry 4053200 4024747PO Box 1183

Arriyadh11474

73 Riyadh Chamber of Commerce & Industry 4040044 4020110PO Box 596

Arriyadh11421

74 National Commercial BankJeddah 4693333

Arriyadh 4787877PO Box 3555Jeddah21481

75 Al-Bilad Bank 4798888 4798898PO Box 140

Arriyadh11411

76 Al Rajhi Bank 4601000 4776781PO Box 28

Arriyadh 11481

77 Al-Jazira Bank 2/6158070 2/6533278PO Box 6277Jeddah21442

78 Arab National Bank40235034029000

4027747PO Box 56921Arriyadh11564

79 Riyad Bank 4013030 4042707PO Box 22622Arriyadh11416

80 Saudi Investment Bank 4778433 4776781PO Box 3533

Arriyadh11481

81 SAMBA Financial Group 47747704774770Ext.1200

PO Box 833Arriyadh11421

82 SABB 4050677 4050660PO Box 9084

Arriyadh11413

83 Banque Saudi Fransi 4042222 4042331PO Box 56006Arriyadh11554

84 Saudi Hollandi Bank 40102884067888Ext: 656

PO Box 1467Arriyadh11431

85 Al Inma Bank 2185555 2185000PO Box 66674

Arriyadh 11586


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Name of Organization Web Address

Ministry of Water & Electricity www.mowe.gov.sa

Ministry of Economy & Planning www.planning.gov.sa

Ministry of Higher Education www.mohe.gov.sa

Ministry of Education www.moe.gov.sa

Ministry of Foreign Affairs www.mofa.gov.sa

Ministry of Civil Service www.mcs.gov.sa

Ministry of Petroleum & Mineral Resources www.mopm.gov.sa

Ministry of Labor www.mol.gov.sa

Ministry of Social Affairs www.mol.gov.sa

Ministry of Information & Culture www.saudinf.com

Ministry of Commerce & Industry www.commerce.gov.sa

Ministry of Justice www.moj.gov.sa

Ministry of Health www.moh.gov.sa

Ministry of Agriculture www.agrwat.gov.sa

Ministry of Transportation www.mot.gov.sa

Ministry of Finance www.mof.gov.sa

Ministry of Interior – General Security www.security.gov.sa

Ministry of Municipal & Rural Affairs www.momra.gov.sa

Shura Council www.shura.gov.sa

Governorates

Governorate of Arriyadh www.riyadh.gov.sa

Governorate of Eastern Province www.easternemara.gov.sa

Governorate of Madinah www.imaratalmadinah.gov.sa

Governorate of Tabuk www.tabuk.gov.sa

Governorate of Hail www.hail.gov.sa

Governorate of Al-Baha region www.bahaimarah.gov.sa

Governorate of Makkah Region www.makkah.gov.sa

Governorate of Aseer Region www.emartaseer.gov.sa

Governorate of Al Jouf Region www.aljouf.gov.sa

Governorate of Jazan Region www.jazan.gov.sa

Governorate of Qassim Region www.qassim.gov.sa

Governorate of Najran Region www.najran.gov.sa (under construction)

Governorate of Northern Borders Region www.northernborder.gov.sa (under construction)


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Government Organizations


Saudi Commission for Tourism and Antiquities (SCTA) www.sct.gov.sa

Arriyadh Development Authority www.ada.gov.sa

Saudi Arabian General Investment Authority (SAGIA) www.sagia.gov.sa

Royal Commission for Jubail & Yanbu www.rcjubail.gov.sa

Communications & Information TechnologyCommission (CITC) www.citc.gov.sa

Saudi Arabian Standards Organization (SASO) www.saso.org.sa

Saudi Geological Survey (SGS) www.sgs.org.sa

Saudi Commission for Health Specialties www.scfhs.org

Capital Market Authority (CMA) www.cma.org.sa

National Commission for Wildlife Conservation & Development www.ncwed.gov.sa

Saudi Organization of Certified Public Accountants (SOCPA) www.socpa.org.sa

National Shipping Company of Saudi Arabia www.nscsa.com

Public Pension Agency www.pension,gov.sa

Saudi Ports Authority www.ports.gov.sa

Saudi Arabian Monetary Agency (SAMA) www.sama.gov.sa

General Organization for Social Insurance (GOSI) www.gosi.gov.sa

Saudi Fund for Development www.sfd.gov.sa

Saudi Industrial Development Fund (SIDF) www.sidf.gov.sa

Real Estate Development Fund www.redf.gov.sa

General Presidency for Environment Protection & Meteorology www.mepa.org.sa

Saudi Customs www.customs.gov.sa

King Abdulaziz City for Science & Technology (KACST) www.kacst.edu.sa

General Audit Bureau www.gab.gov.sa

General Directorate for Passports www.passport.gov.sa

Saudi Arabian Agricultural Bank www.saab.gov.sa

King Abdulaziz Foundation for Research & Archive www.darh.org.sa

Arriyadh Traffic Department www.r-t.gov.sa

Department of Zakat & Income Tax (DZIT) www.dzit.gov.sa

Saudi Stock Market www.tadawul.com.sa

Saudi Money & Business Directory www.allsaudi.com/defaultara.asp

Saudi Press Agency (SPA) www.spa.gov.sa

Saudi Airlines Companies

Saudi Arabian Airlines www.saudiairlines.com

NAS Airlines www.flynas.com

SAMA Airlines www.flysama.com

Kayala Airlines www.kayala.com


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Chambers of Commerce

Council of Saudi Chambers of Commerce & Industry www.saudichambers.org.sa

Riyadh Chamber of Commerce & Industry www.riyadhchamber.org.sa

Chamber of Commerce & Industry – Eastern Province www.chamber.org.sa

Chamber of Commerce & Industry – Madinah www.madcci.org.sa

Chamber of Commerce & Industry- Jeddah www.jcci.org.sa

Chamber of Commerce & Industry - Makkah www.makcci.com

Saudi Daily Newspapers

Riyadh Newspaper www.alriyadh-np.com

Al-Jazeera Newspaper www.al-jazirah.com

Al-Watan Newspaper www.alwatan.com.sa

Al-Eqtesadia Newspaper www.aleqt.com

Al-Yaum Newspaper www.alyaum.com

Arab News www.arabnews.com

Okaz Newspaper www.okaz.com.sa

Saudi Gazette www.saudigazette.com.sa

Al Madinah Newspaper www.al-madina.com

Asharq Alawsat Newspaper www.asharqalawsat.com

Albilad Newspaper www.albilad-daily.com

Local Banks

Al Rajhi Bank www.alrajhibank.com.sa

Al Bilad Bank www.bankalbilad.com.sa

National Commercial Bank www.alahli.com

Riyad Bank www.riyadhbank.com

SAMBA Financial Group www.samba.com.

Arab National Bank www.anb.com.sa

SAAB www.sabb.com.sa

Al Jazeera Bank www.baj.com.sa

Banque Saudi Fransi www.alfransi.com.sa

Saudi Investment Bank www.saib.com.sa

Saudi Hollandi Bank www.shb.com.sa

Al Inma ww.alinma.com


This Report Was Prepared ByMiddle East Consulting Center

CHANGE MANAGEMENT EXPERTS

P.O.Box 27925 Riyadh 11427Tel: +966-1-216 8740 / 216 8840

Fax: +966-1-216 [email protected]

License No. 6


148

Tel: +966 1 488 3331

Fax: +966 1 482 9331

P.O.Box: 94501 Riyadh 11614

Kingdom of Saudi Arabia

www.arriyadh.com

ARRIYADH DEVELOPMENT AUTHORITY


KINGDOM OF SAUDI ARABIA ARRIYADH DEVELOPMENT AUTHORITY · · 2010-03-22KINGDOM OF SAUDI ARABIA...

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