Saudi Arabia's economic city projects should ride out the economic turmoil, says a senior Saudi official.
City infrastructure projects to go ahead despite global crisis
Saudi Arabia's huge economic city projects will go ahead despite the global financial turmoil, according to a member of the Saudi Arabian General Investment Authority (SAGIA), although an analyst suggests low oil prices could delay developments. Abdulmohsen al Badr, a member of SAGIA and the chief executive of the Global Competitiveness Forum - an annual networking conference to promote business in Saudi Arabia - said the projects remained on course.
"The economic cities are expected to sustain the financial storm; they are a [business] friendly environment," Mr al Badr said in Dubai, where he was promoting the forum to be held in Riyadh later this month. However, Yazan Abdeen, a portfolio manager at the ING Investment Management company in Dubai, warned: "If the oil price stabilises at $40 to $45 on average for three years, we would be worried about delays, though not cancellations."
"No one can tell how long the financial crisis will take, but we are optimistic that Saudi Arabia is one of the safest business environments and believe foreign direct investment will increase compared with other [regional] countries," concluded Mr al Badr. SAGIA, established in the year 2000 to act as a gateway to investments in the kingdom, is expecting increased foreign direct investment this year as part of its policy to position Saudi Arabia among the world's 10 most competitive economies by next year.
In a World Bank survey on the ease of business conduct in more than 135 countries, entitled Doing Business 2009, Saudi Arabia ranked 23rd. Mr al Badr said this ranking had been achieved through reforms and various targeted investments, such as the ones that attracted 12 Chinese companies to set up in the Jazan Economic City two weeks ago in a move to tap into African business opportunities. The kingdom has not been immune to the economic downturn that has sent markets around the world into a freefall with no end in sight, with the Tadawul stock exchange index dropping 57 per cent in the past year.
However, analysts say that the Saudi economy remains resilient due to the fiscal surplus accumulated in the past three to five years because of high oil prices. Those reserves were considered enough to cover budgetary deficits in coming years. "The negative sentiment has affected everyone, but the Saudi economy is more immune to the financial crisis than the other GCC countries [because of its surplus]," concluded Mr Abdeen.
SAGIA has 13 offices around the world to promote business in Saudi Arabia, including representation in Germany, the UK and France. email@example.com