The performance of Saudi Arabia's economy is remarkable in recent years with the national economy, especially since 2002 more than doubled to $ 481.6 billion, mainly due to rising oil
revenues.The combination of an additional government spending in the direction of the ongoing program of economic liberalization and greater foreign participation in the economy has led to many investment projects. Saudi Arabia recently announced a $ 400-billion plan over the next five years aimed at upgrading the energy projects and social and physical infrastructure in areas such as power, water, transport, education and housing."Saudi Arabia is becoming a significant emerging economies significant foreign direct investment (FDI) to attract Since 2000 the investment environment benefited from a substantial progress in structural reforms, liberalization and greater transparency. Real estate represents the largest recipient of foreign investment, with a share of the kingdom are expected to more than 20 percent of the total FDI. It reflects the importance of the construction activities in the national economy, "said John Sfakianakis, chief economist at the Bank of Saudi -Fransi said.According to industry estimates, Saudi Arabia's total transport sector investments $ 100 billion by 2020 more than $ 30 billion allocated for new transport projects in the government's five year plan. The Saudi government's aggressive plans for the existing infrastructure for transporting large investment flows into the major port, airport, rail, road and logistics projects in the coming years to renovate, will probably NCB Capital said Ina recent report.Inflow chemical and petrochemical industries sector will be responsible for more than 10 per cent FDI inflows, while FDI in the mining, oil and gas will be approximately 10 percent of the total.Furthermore, refined petroleum products account for about 1 percent of the total inflow of FDI.Specifically, Ras Tanura, which is a joint refinery and petrochemicals project with an estimated cost of $ 22 billion, involves the creation of a grassroots petrochemicals plant to more than 300 different products to produce. Similarly, the PetroRabigh complex, which is nearing completion, is an important refinery and petrochemicals joint venture, distribution of more than eight square miles and 38,000 workers.Construction cost of the plant has reached $ 10 billion.In 2007, construction began in six planned economic cities in addition to the King Abdullah Financial District in Riyadh. The new urban focus mainly on heavy industry, consisting of oil industry and an integrated petrochemical complex, a copper refinery and smelter, an aluminum complex and an integrated aluminum refinery.Moreover, it is expected that projects worth more than $ 300 billion over the next few years to implement.The variety of domestic and export-oriented investment opportunities in Saudi Arabia has attracted increased foreign direct investment as the economy gradually opened. Saudi Arabia's rapid improvements have made the country an increasingly attractive destination for investment.The country's FDI inflow growth was particularly impressive in light of the global economic downturn.Improvements to the business and property registration procedures made it easier and cheaper for a business and real estate transactions start to register, Saudi Arabia enabled the top 20 of the World Bank said.Protection public company investors to achieve was strengthened with a series of new laws of the Capital Market Authority and the Ministry of Trade and Industry.The government has already made some decisions on the role of local and foreign private sector in expanding the economic base and diversifying the sources of national income to increase. The move is the value of the country's natural resources increased.Saudi Arabia has bold reforms making it one of the world's leading reformers. Saudi Arabia is now the top economy in the Middle East. Saudi Arabia has the number one recipient of foreign direct investment in the Middle East has become.Inflow increased and will continue to do so. With Saudi Aramco's recent expansion of refineries and the building of the Kingdom's economic cities, foreign investment in the country more attractive to investors abroad, mainly due to the liberalization of investment rules."In general, FDI levels, the total volume of investment activity, with perhaps some bias reflects the benefit of the sectors that benefit from a more favorable rules. Ultimately, the key driver of economic opportunities, which in turn is a factor of growth potential supported by population growth, the diversification policy, etc., "says Jarmo T. Kotilaine, chief economist at National Commercial Bank.There will be great opportunities in the big tree infrastructure, energy, water, real estate, etc., but most types of services. In some cases, however, investors may be cautious due to the restrictive regulations on the prices.Health care is a case in point, he said.The mode of FDI can vary depending on the regulatory environment. In some cases, foreign companies will take direct stakes in the projects and works on a fully equal basis. But the fact that the investment environment is more restrictive, does not necessarily mean that foreign investors can benefit from this through investments in outsourcing and service companies."One of the major, still largely open questions, the level of foreign interest in the massive Greenfield projects such as the economic cities. This is the level of involvement will continue to depend on things such as the guarantee of the government / insurance and more clartiy the time line of business, "said Kotilaine.
According to Professor Mohamed A. King Fahd University of Petroleum Ramady and Minerals, Dhahran, the kingdom has come a long way in both domestic and foreign investment to attract, but the road is not easy. The answer, according to Ramady, lies in a combination of factors: a quiet determination to internal obstacles to overcome business, or faced by Saudi companies or multinational companies, assisted by the creation of an autonomous but the responsible government institutions such as the Sagia, a creation of pro-business environment, developing a knowledge-based society, canal and Saudi and foreign investment in mega-economic clusters known as "economic cities."Unlike previous large infrastructure developments is an important element of this strategy reinvigorated local economic diversification and more equitable wealth creation for Saudi citizens.On the surface, the special economic zones and economic mega-cities seems right, but in reality each is planned to specialize in certain niche core activities to build on the region's location advantages "to such mega-investor-friendly projects it is launched in accordance with shipping. Ramady, "the kingdom looks inward investment are undoubted economic potential and the size compared to other Arab and Islamic countries to adapt. The reasons a sluggish bureaucracy, uncompetitive tax regime and incentives, multiple layers of approval from the government, and apparently inflexible labor laws and sponsorship. "But Ramady said several of the regulatory and structural reforms introduced Saudi FDI attractive to begin with the establishment of Sagia as a one stop shop to take care of foreign partner's investment needs and the often senseless bureaucracy of the stamp to overcome to do business in the Kingdom. Sagia was to cut through red tape and assist with the licensing, identification of local Saudi joint venture partners and presenting investment opportunities to foreigners. Corporate tax levels are cut to 20 per cent levels and foreign companies are now able to use properties for their operational requirements as well as sponsoring their own employees, without having to go through local sponsors.Ramady said the gradual whittling the list of "banned" economic activities that the foreigners could not invest has helped to attract foreign investment, and today the prohibited areas are mainly in the security and defense related sectors, but said that "The overriding principle of welcoming FDI to Saudi stayed the same priority to those who through technology transfer and creation of added value. "
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