A newspaper cartoon some time ago depicted the Kingdom’s Eastern Province as an economic milch cow being sucked dry by Riyadh and Jeddah. That is not only an exaggeration but unfair as well. Eastern Province, with its upstream and downstream oil industries, is the industrial furnace in which much of the Kingdom’s development has been forged, but Riyadh and Jeddah make their contributions as well — the former as the Kingdom’s political hub and the latter as the commercial heart. And there is a good deal of nonoil industry elsewhere in the Kingdom — there are, for example, far more factories in the Riyadh area than in Eastern Province, albeit on far smaller scale. Nonetheless, the widely-held perception persists that Eastern Province is the only motor that drives Saudi prosperity.

Eastern Province is certainly different. It is not just a matter of its being home to the oil wells and the industries that have grown up alongside them; it is the scale of the industry — plus a work ethic that should be the envy of the rest of the country. Saudi officials and businessmen often complain that the outside world is willfully blind to the scale of industrialization and diversification. They rightfully resent the much-used but meaningless mantra the “oil-rich desert Kingdom” so regularly employed in the foreign media. But in Saudi Arabia itself, outside Eastern Province, there is also a “staggering ignorance,” as one Eastern Province businessman put it, about the economic vitality and the professionalism of the place.

It is heaving with industry, largely petrochemical, although far from exclusively so. There are steel, glass, construction materials, foodstuffs, aluminum products, pipes, air-conditioners, electrical equipment, carpets, soap, rubber products — the list is overwhelming and soon there will be a massive minerals industry too. It is no exaggeration to say that Eastern Province is fast becoming one of the world’s top industrial centers — over 150 world-scale manufacturing and production units to date. Many of the province’s admirers are convinced that in a few years it will be the petrochemical industrial center of the world.

To know the full scale of what is planned, I asked an economic analyst in Dammam for details. He looked at me with a mixture of pity and weariness at having to explain. He went over to a filing cabinet and hauled out a mountain of papers listing a cornucopia of projects in both the state and private sector. There were details of at least 45 new major petrochemical and industrial plants planned by Saudi Basic Industries Corp. (SABIC) and private sector companies and over 50 Aramco projects. The total investment comes to around $200 billion. Such a scale of industrialization would be unbelievable anywhere else in the world.

According to Abdul Rahman Al-Rashid, chairman of Eastern Province Chamber of Commerce and Industry (EPCCI), almost 50 percent of investment in all major Saudi industrial projects is already in Eastern Province, despite the population accounting for only 15 percent of the national total. That 50 percent excludes Aramco investment, most of whose activities are also in Eastern Province. It is a regional lead that will continue.

“There will be diversification to new areas elsewhere in the Kingdom, but the bulk (of industry) will remain here,” says Al-Rashid. The facts confirm it. The expansion of Jubail Industrial City, the development of Jubail II, Aramco’s expansion and the new $16 billion petrochemical project at Ras Tanura, Maaden’s mineral processing city at Ras Azzour, a railway connecting it to Hail, the Kingdom’s fifth new SR100 billion economic city as yet unannounced but to be located in Eastern Province, a new $6 billion heavy oil refinery at Jubail and numerous other Aramco and private sector projects all mean that of the total national mega project investments in the next four years, just under 60 percent will be in the Eastern Province.

Investment in Jubail II alone dwarfs that of the rest of Middle East. For Al-Rashid, Eastern Province is developing at such a rate that it can no longer be described merely as the industrial hub of Saudi Arabia; it is the capital of industry for the entire Gulf region. “Eastern Province is the No. 1 place worldwide to invest in hydrocarbon-based industries,” he says. Soon too there will be the Maaden Mineral Project, adding a second major industrial string to Eastern Province’s bow. Officially costed at $8 billion (including a $3 billion water and electricity plant) but now projected at $25 billion, it will bring minerals from the north to be processed at Ras Azzour and then shipped out east. If local rumors that the planned Hail rail link will be extended across into Jordan are correct, raw materials may also come from north of the border.

But it is not just the scale of industry that sets Eastern Province apart in Saudi Arabia; there is the broader business environment. There is a professionalism that is more in keeping with the West or the Far East than the rest of the Kingdom. Unlike Jeddah or Riyadh where people wander into offices at 9.30 a.m. or even later, in Eastern Province, people start at 7.30 a.m. and work through till a break at lunchtime, return in the afternoon and in the evening go to bed early. Similarly, grand gilded offices, of the type beloved in Jeddah and Riyadh, are much less in evidence in Eastern Province. So too is overstaffing. Employees are there to work, not to be on show. The difference even spreads onto the streets. They are tidier and better maintained than in Jeddah and there seems to be better driving than in the rest of the country.

A comment by Al-Rashid may be a generalization but it appears to sum up the difference: “People are more focused in Eastern Province.”

“We see business from a different perspective. You can’t do business in oil and gas in the old traditional ways,” says Khalid Al-Abdulkarim, executive director of the Abdulkarim Group and a member of the board of Eastern Province Chamber of Commerce and Industry. “The two don’t go together.”

There is another aspect to the Eastern Province business mindset that is noticeably different from elsewhere in the country: The relationship between employee and employer. No studies have been done on staff productivity in Saudi Arabia, but it is demonstrably apparent when talking to businessmen in Eastern Province that employees there are given far more responsibility, are better paid and better appreciated than elsewhere. There is a clear understanding that high staff turnover is bad for business. But if staff are better valued in Eastern Province, it is in part a matter of their market value. With all the advanced technology industries in the province, skills are at a premium.

“It’s a job paradise here for Saudis,” explains Abdulkarim. “Anyone who has the skills can walk into a well-paid job.” Consequently, Eastern Province has the lowest unemployment rate in the Kingdom, “dramatically lower than the national average,” says Al-Rashid. And despite the skills shortage and concerns about skills currently being acquired by young Saudis, it also has the highest rate of Saudization in the Kingdom. But it is not only a question of having the right skills. English is also essential. “Without English, you don’t get a job in Eastern Province,” says Al-Abdulkarim.

Everyone has the same one-word answer when asked what gives Eastern Province its distinctive work ethic: “Aramco.”

“Aramco introduced a business culture,” says Abdul Aziz Al-Ayaf, secretary-general of Eastern Province Chamber of Commerce and Industry. “Most companies started their business catering for Aramco.” He cites today’s commercial giants — Olayan, Kanoo, Al-Turki, Zamil, Al-Mojil. “All started as small contractors with Aramco.”

“It is Aramco that created the work ethic,” agrees Khalid Kanoo of Kanoo Group and one of the region’s most respected businessmen. “They supported so many small businesses, giving them contracts. These firms grew with Aramco,” he says, adopting Aramco’s American business culture of going to work early, working hard, paying people well and looking after them. As other businesses set up, they too adopted the Aramco work ethic. “It became the norm to work on time and to work well,” says Khalid Kanoo.

The Aramco fount has not stopped flowing. It plans to increase its 25 percent target figure for buying locally produced goods to 50 percent by 2010. “That is going to make for plenty of new business opportunities,” said Richard Wood of the British Trade Office in Alkhobar.

For Al-Abdulkarim, there is another factor in the success of Eastern Province: Location. The proximity of Kuwait, Bahrain, Qatar and the UAE creates a commercial dynamic of its own and this means competition. This competition has made business in Eastern Province leaner and fitter than elsewhere in the Kingdom; it has had to be.

The EPCCI president also sees location and competition as plus points. “We have to match what Qatar does; King Abdul Aziz Port (in Dammam) has to compete with Mina Sulman (in Bahrain) and with ports in the Emirates.” The challenge these rivals represent is real. A considerable percentage of imports into the Kingdom is shipped through Dubai, Qatar and, as anyone who has seen the queues of trucks on the Bahrain Causeway knows, from Mina Sulman. Competition is stiff, something that ports on the Red Sea do not have to contend with. But Al-Rashid is convinced it has improved the quality of services in Eastern Province. Activity and competition are bound to increase further with the construction of the causeway linking Bahrain to Qatar.

The other location advantage for Al-Abdulkarim is being on the coast, able to ship exports East. “The power of being next to borders, next to other countries, next to the sea — I haven’t heard it discussed much in other locations. If you are in the center, you’re not close to anything except decision-making. You’re not close to economic zones.”

The advantages of being a “front-line” region, bordering six other countries and Iran just across the Gulf, are unbeatable in the view of Al-Ayaf at the chamber of commerce and industry. But there are challenges ahead, he says. The region needs more infrastructure, more and better roads up to Kuwait, to the UAE. And it needs more skilled Saudis.

Notwithstanding such challenges, Eastern Province is the beating heart of Saudi industry, the anvil on which the country’s future prosperity is being hammered into shape. In recent months, new economic cities have been announced. They will add to the overall scale of Saudi industrial development, but they will not steal Eastern Province’s lead. There is a lot that Eastern Province could teach them. A couple of weeks ago, following the announcement of the latest multibillion-riyal economic city in Jizan, it was put to Fawaz Al-Alamy, Saudi Arabia’s chief negotiator at WTO, that the new economic cities should have the Eastern Province work ethic instilled into them from the very beginning, including among other things starting the work day at 7.30 a.m. “A good idea,” he said. “If we leave it now, it will be too late to do anything about it afterward.” It will be interesting to see if the new cities seek to model themselves on what has been highly successful in Eastern Province.