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Business Profile
Economy: Saudi Arabia is the world’s third largest producer of oil (after the Russian Federation and the USA). Oil and natural gas products now account for 35 per cent of Saudi GDP and 85 per cent of export revenue. Its reserves, about a quarter of the world total, are sufficient to maintain current production levels for another 80 years. The non-oil economy is devoted to agriculture and newly developed industries (considerable effort has been put into ensuring adequate irrigation and industrial water supplies in a country with extremely low rainfall). Agriculture, which supports a little over ten per cent of the workforce, produces wheat, fruit, vegetables, barley, eggs and poultry, in most of which the kingdom is now self-sufficient. In addition to oil and gas, there are other confirmed and exploitable mineral deposits including limestone, gypsum and marble plus phosphates, bauxite and gold.
The industrial sector produces petrochemicals, steel, engineering products and a wide range of consumer goods. Construction is also a key industry. The service sector is the fastest growing part of the economy at present with finance and business services, consultancies and property services prominent. The rapid expansion of the Saudi economy from the 1960s onwards stalled during the 1990s as overstretched finances and persistently low world oil prices forced the Saudi exchequer to rein in its spending plans (government debt is now nearly 100 per cent of GDP – much of which, such as US$40 billion of loans to Iraq, is unlikely to be recovered). This had unfortunate consequences for the large body of foreign labour – an estimated 35 per cent of the workforce – upon which the Saudis rely for much of their technical, managerial and menial labour. Foreigners are now barred from a range of occupations as the government seeks to tackle Saudi unemployment, which is estimated at ten per cent.
Since the late 1990s, the Saudis have gingerly started on the path of economic reform, planning measures to deregulate and privatise the economy, attract foreign investment and recover expatriate capital from abroad. Privatisation, considered essential to improve the state of national finances, has proceeded slowly in the face of strong opposition from elements of the ruling family. Spending cuts and, for the first time, the introduction of income tax, are being considered. It will be some time, however, before any of the measures take effect. The economy was at a virtual standstill during 2002 but, in the wake of higher oil and gas prices, is expected to grow at about three per cent in 2003.
Saudi Arabia is the most influential member of the Organisation of Petroleum Exporting Countries (OPEC) and of the Islamic Development Bank. Japan, the UK and the USA are the largest exporters to Saudi Arabia, while most of the kingdom’s oil is sold to Germany, Italy, France and South Korea.
Business: Appointments are necessary. Visiting cards printed in English with an Arab translation are usually exchanged. Men should wear suits for business meetings and formal social occasions. Thursday and Friday are official holidays. Office hours: Sat-Thurs 0900-1300 and 1630-2000 (Ramadan 2000-0100), with some regional variation. Government office hours: Sat-Wed 0730-1430.
Commercial Information: The following organisation can offer advice: Riyadh Chamber of Commerce and Industry, PO Box 596, Riyadh 11421 (tel: (1) 404 0044; fax: (1) 402 1103; e-mail: rdchamber@rdcci.org.sa; website: www.riyadh-chamber.org).
Conferences/Conventions: Information can be obtained from: Riyadh Exhibitions Company Ltd, PO Box 56010, Riyadh 11554 (tel: (1) 454 1448; fax: (1) 454 4846; e-mail: esales@recexpo.com; website: www.recexpo.com); or the Saudi Arabian Ministry of Commerce (see Contact Addresses section).
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