COME ONE, COME ALL

Saudi Arabia 2016 | ECONOMY | INTERVIEW

TBY talks to HE Abdullatif A. Al-Othman, Governor and Chairman of the Board of Directors of the Saudi Arabian General Investment Authority (SAGIA), on the openness of the Saudi economy and lucrative opportunities for investors.

HE Abdullatif A. Al-Othman
BIOGRAPHY
HE Abdullatif A. Al-Othman was appointed Governor of the Saudi Arabian General Investment Authority (SAGIA) in 2012. He brings over 30 years of experience of planning and managing oil and gas projects to his current position with SAGIA. Al-Othman began his career with Saudi Aramco in 1981 as an engineer in engineering and project management. In June 2001, he was named executive director of Saudi Aramco Affairs before being appointed Vice President of Saudi Aramco Affairs in 2001. He later served as senior vice president of finance for Saudi Aramco and as Chairman of the Board of Directors for the Sadara Chemical Company.

How would you assess the regulatory environment for business in the kingdom?

The Kingdom is home to one of the world's most progressive regulatory environments for doing business. All sectors are open except for those related to national security. We allow 100% foreign ownership in most sectors, with no income, sales, or property taxes. Companies can enjoy a competitive corporate tax rate and the full repatriation of profits, capital, and dividends. The government is committed to maintaining this, as well as introducing new initiatives to support the Kingdom's business-friendly environment. Most recently, we announced that retailers and wholesalers will be able to own 100% of their business in Saudi Arabia. With other national programs to make our economy more competitive on the horizon, I anticipate that this trend of increasing the ease of doing business in the Kingdom will continue.

What are the sectors that offer the best opportunities for local and global investors?

Due to Saudi Arabia's demographics and its unique location on the map, almost all sectors are open for business and have great opportunities for both local and international investors to enjoy. The Kingdom has a population of approximately 31 million with significant purchasing power. It also has a young population, with 70% under the age of 30. In many currently developing sectors, investors have the chance to gain significant domestic market share before their competitors. Using the Kingdom as their launch pad, investors and companies can expand their reach. Riyadh is a two-hour flight from 150 million people and a four-hour flight from a total of 1.5 billion people in some of the world's fastest growing consumer markets. With these facts in mind, there is a clear and lucrative export opportunity for established companies in Saudi Arabia. As part of our economic diversification strategy, however, there are a number of priority sectors in which we focus on to attract investments through leveraging spending. This integrates the value chain and increases the competitiveness of the Kingdom's sectors. Under the National Investment Plan (NIP), we have worked with a number of government ministries to harness their annual spending. With each, we have created, or are creating, investment plans that identify investment opportunities vis-à-vis annual ministerial procurement practices. These opportunities are worth hundreds of billions of dollars. For example, in the transportation and healthcare sectors alone we have investments worth approximately $400 billion for the coming decade. You can also expect to see similar opportunities in industrial spare parts, downstream chemicals, ICT, and much more. To enjoy these opportunities, we invite foreign and local companies to make direct investments in Saudi Arabia.

What are the main guidelines of SAGIA's plan to increase competitiveness in specific sectors?

It is important for SAGIA and Saudi Arabia to have a positive reciprocal relationship with our local and international investors. For those investors who want to help us add value to the Saudi economy, we want to help them add value to their business here in the kingdom. As part of the RFP process in government entities for megaprojects, we advocate that companies submit localization plans as part of their proposals. These plans will be taken into close consideration when evaluating the overall strength of each proposal. We believe this approach is the right one and it will be mutually beneficial for all parties involved. For investors in particular, the immediate financial benefit of many investment opportunities is only the beginning. The transportation sector illustrates this. Many of its investment projects are developing a single set of manufacturing standards that will be used henceforth. The Jeddah and Mecca metro projects are an example of where this “common envelope" has been found. These same specifications will be used in all Saudi metro projects moving forward. We are taking this approach for other investment projects where appropriate. The company that decides to invest early on will be the first in line to enjoy a steady stream of business from subsequent projects using the same standards for years to come.