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Investment
in Arriyadh
State budget allocations
for the fiscal year 2012/2013
by major sectors (%)
30.8
16.1
4.8 1.6
24.3
3.0
8.8
1.6 5.3
Defence and National Security
Subsidies
Economic Sources Development
General Directorate and General Items
Human Resources
Health and Social Development
Specialised Governmental Loaning Institute
Transport and Telecommunications
Development of Infrastructure Facilites
complemented by major strategic acquisitions abroad, such as those
made by Saudi Aramco and SABIC.
The output of oil and gas accounts for around half of the Kingdom’s
$748 billion economy. Saudi Arabia continues to underpin international
oil price stability by acting as a swing producer. As a result, in the
first quarter of 2014, as political upheavals struck at production in
Libya and Iraq, the GNP contribution from hydrocarbon output grew
5.8 percent, up from 4.1 percent in the previous quarter. This was the
strongest increase since 2012.
There has however long been a recognition that the Kingdom needs
to build a parallel non-oil economy. Since joining the World Trade
Organization (WTO) in 2005, Saudi business has worked hard to face
the full force of overseas competitors in key fields such as construction,
engineering and transportation. While Saudi companies have hired
world-class talent and acquired state-of-the-art technology to build
their own capacities, there have been and remain key opportunities for
foreign investors to take a stake in local firms or indeed, if they wish,
establish, stand-alone businesses.
A report ‘How companies in emerging markets are winning at
home’ issued in the summer of 2014 by the highly respected Boston
Consulting Group details the dominant position of two Saudi firms.
One is the world’s largest distributor of Toyota vehicles, while the
other, Arriyadh-based Almarai, which was born of a joint-venture
with an Irish business, is now the largest integrated dairy company in
the world, with 2013 revenues of $3 billion. Private investors are also
deeply involved in major projects. Thus, for instance, the Saudi Arabian
Mining Company (Ma’aden) is in the process of building a $9 billion
phosphate mine at Al Jalamid, which includes, extensive processing
and a range of other downstream factories, to say nothing of a railway
linking it with the Arabian Gulf coast, a power station, water plant and
a small town to sustain its managers and workers.
Arriyadh-based Ma’aden is the Kingdom’s largest mining company.
Established as a state enterprise in 1997, half its shares are now
publicly-owned and quoted on the Saudi Stock Exchange (Tadawul).
It is estimated that Al Jalamid deposits contain 534 million tons of
phosphates. These will be transported for export or local markets on a
1,400-kilometer freight link to the coast, currently being built by Saudi
Railways.
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