The future of Saudi Arabia – Commonwealth Trade
Coinciding with Crown Prince HRH Mohammed bin Salman’s visit to the United Kingdom, the CWEIC hosted a roundtable on ‘The future of Saudi Arabia – Commonwealth Trade’ in the Livery Hall, Guildhall.
Attended by senior business leaders and senior representatives of the Saudi delegation including His Excellency Ibrahim Al Omar, Governor of SAGIA, Mr Yousef Abdullah Al-Benyan, Vice Chairman and Chief Executive Officer of SABIC, Eng Ahmed Sulaiman Al-Rajhi, Chairman of the Saudi Chambers of Commerce, and Dr. Lama Al Sulaiman, Vice Chairwoman and Board Member of the Jeddah Chamber of Commerce. Attendees also heard a presentation from Dr Eiman Al-Mutairi on proposals to improve the ease of doing business in Saudi Arabia.
The discussion focused on the growing opportunity for investment in Saudi Arabia and how trade and investment between the Commonwealth and KSA could be increased. Saudi Arabia’s trade outlook is changing as the Crown Prince outlines his vision for the future of Saudi Arabia and the diversification of it’s economy. With a population of 2.4 billion, 60 per cent of whom will be under 30 by 2020 the Commonwealth presents an excellent opportunity for Saudi Arabia.
Saudi Arabia has a new vision for the future, which includes attracting inward investment, diversifying its economy and social progression. At the heart of the Middle East, KSA has been an economic powerhouse fuelled largely by its wealth of oil reserves. Saudi Arabia’s leaders however are recognising that whilst the country has hugely benefited from oil in the past, its over reliance on its reserves could prove risky, given the recent fluctuations in the price of oil.
Saudi Arabia is going through a period of transformation and progress across both the public and private sectors and with this change comes tremendous opportunities. The new Saudi economy is underpinned by the Crown Prince’s ‘Vision 2030’ which provides a framework for the economic and developmental action the Kingdom wants to achieve. A key element of this was discussed at the roundtable – Saudi Arabia’s push to improve the ease of doing business in the country. Strong reforms have already taken place; you can now get a Saudi visa in 24 hours and incorporate a business online in just a few clicks.
Liberalisation of business
The next stage includes, greater marketing of Saudi Arabia as a hub for international business to the wider world. The Kingdom is working to make this a reality, special organisations have been set up and tasked with making Saudi Arabia the 20th most easy country to do business with – 72 places ahead of their current position as 92nd.
This level of ambition will only be achieved through collaborative working. It is extremely positive that Saudi Arabia is reforming in consultation with the private sector, demonstrating the devolution of power and that government understands the need to give businesses more autonomy. In August last year for example, Saudi Arabia amended the ruling that required foreign companies to partner with a Saudi owned firm in the engineering services sector significantly capping on ownership. Liberalisation of business regulation moves Saudi Arabia closer to its more open vision of the future, and is an important step in further establishing itself as an attractive trade hub.
These reforms are catching the eye of investors in Canada and beyond, it is not only UK companies looking further afield for investment opportunity, but also those from across the Commonwealth. Containing a diverse range of both developed and emerging markets, Commonwealth GDP is set to exceed $14 trillion by 2020 and has a burgeoning middle-class. This growing economic prosperity brings opportunity both in terms of inward and outward investment.
An important facet of Vision2030 is an internal focus on SMEs with a goal to increase SMEs’ contribution to GDP from 20 per cent to 35 per cent. Like other Vision2030 reforms, change will be realised with a mix of regulatory, financing and organisational support. Establishment of the General Authority for Small to Medium Enterprises in 2015 for example, and the allocation of a $1 billion fund to give SMEs straightforward access to capital, show the Saudi’s commitment to facilitating private sector growth. It is hoped this will improve the employment outlook for Saudi Arabia’s young population and reduce unemployment. Again, investors are taking note, as Saudi Arabia demonstrates a commitment to non-oil sectors, but also the widening of economic activity beyond a small cohort of state run companies.
Vision 2030 is drastically changing the socio-economic outlook for Saudi Arabia, and the Commonwealth network is well positioned to harness this considerable opportunity. Saudi Arabia is bridging the gap between the government and the private sector and is quickly establishing itself as an attractive hub for business looking to operate across the Middle East.