SAGIA Gov. Abdullatif Al-Othman outlines opportunities for foreign investors

The governor of the Saudi Arabian General Investment Authority (SAGIA), Abdullatif A. Al-Othman, is bullish about the Kingdom’s growing economy and confident in the important role being played by his organization in the nation’s continuing development.
Before taking the reins of SAGIA in 2012, Al-Othman spent decades with Saudi Aramco, first as an engineer and then in a variety of project management roles before moving to finance where he was assigned to review contracts and ensure cost compliance. He was named the company’s senior vice president of finance in 2005.
He holds a bachelor’s degree in civil engineering and a Master of Business Administration qualification from the Massachusetts Institute of Technology (MIT). Al-Othman also served as president of the Project Management Institute (Arabian Gulf Chapter) and was a member of the International Association for Energy Economics.
Following are excerpts from his interview with Arab News:

What was taken away from the recent Saudi-UK Investment Forum in London?
Our message at the conference was and is that there are a large number of excellent opportunities in Saudi Arabia for international investors who want to benefit from and be part of our economic development. Saudi Arabia is enjoying healthy and sustained growth in many sectors making it a sustainable market for those seeking growth, to not only capture our domestic market but also serve the entire region.

Which areas or projects in the Kingdom are potentially good for foreign investors — rail, airports, infrastructure?
Given the rapid growth of the Saudi economy, there are a large number of areas where investors can play a role. At the London conference we focused on health care, transport and logistics and technology, but energy services, mining, downstream petrochemicals and information communication technology all remain key sectors. We know that the first thing many international investors think about when they look at Saudi Arabia is oil. But these other sectors have fantastic growth potential. We have a young, growing population, coupled with an expanding economy. This means that solid economic fundamentals underpin these excellent prospects for the future.

Can you elaborate on some of the big projects where foreign investment is required?
As an example, in health care, there is a clear need for investment as the population grows and life expectancy increases. Recognizing this, the Ministry of Health is undertaking an ambitious expansion of our health care system with over SR50 billion in committed capital over six years. Our aim in attracting foreign capital is to bring in international expertise — getting the best businesses in the world so that we create a world-class health care sector. In transport, the rapidly growing Saudi economy and population mean that we need to invest money in creating a network that can move people and goods around the country and the wider region. This will enable Saudi Arabia to take full advantage of its strategic location and invest in the most sophisticated supply chain infrastructure including ports and airports. In response to that requirement, 11 rail and metro projects are planned or under way, with a combined value of around $76 billion, most of which are not yet under construction. Britain, of course, is the country that gave the world the steam engine, and we know that British companies can contribute a lot to making this transport network a success.
How is the investment climate in the Kingdom? Can you please share some figures for 2013/2014? Where does Saudi Arabia stand on the ease of doing business index? What are the challenges?
The investment climate in the Kingdom is strong. It is ranked 26th globally in the World Bank’s Ease of Doing Business report, 20th in the Global Competitiveness Index, and in the Top 25 globally for dealing with construction permits, getting electricity, registering property, protecting investors and paying taxes. We are very proud of the work that we have done to boost the Kingdom’s standing in these rankings and to make it easier for businesses to invest in the country. Maintaining a competitive business environment is a priority, and requires collective effort by all agencies on an ongoing basis. Creating an investment climate that attracts international businesses is important. We recently established a customer care and advisory team to fast track and assist target investors including small and innovative ones.

What incentives are being offered to those ready to invest in the Kingdom? What guarantees are in place to protect foreign investors?
As part of our internationally recognized business environment, we have made efforts in several areas. For example, we have signed 38 bilateral trade agreements, easing access into Saudi Arabia for businesses from several of the world’s leading economies. In terms of the financial incentives, Saudi Arabia offers a competitive 20 percent corporate tax rate and full repatriation of profits. To encourage investment, we also provide import duty exemption on imported equipment for manufacturing and tax exemption on export earnings. We have also created a streamlined investment application process and one-stop-shop for licensing approval, and once businesses are here, they can benefit from the low cost of land and utilities that Saudi Arabia is able to provide, access to favorable financing terms and support to recruit and train labor. That means businesses have the people they need, and we are able to create quality jobs for local employees. Last, but certainly not the least, many activities, except retail, engineering and project management consulting, can be owned 100 percent by foreign entities.

The region is going through political turmoil. How do you allay the fears of potential investors?
Saudi Arabia has always been the strongest advocate for peace and stability in the region, and despite regional difficulties, we have demonstrated resilience and growth. Domestically the country’s focus on economic development, raising the standard of living and education have paid off. Saudi Arabia is still seeing robust economic expansion, with real gross domestic product growth of 3.8 percent in 2013 and with the International Monetary Fund projecting more than 4 percent growth in 2014. That investors continue to look to Saudi Arabia even during difficult economic conditions is shown by the fact that we attracted more than $12 billion in foreign direct investment (FDI) in 2012, easily the most in the Middle East North Africa region, and in spite of a global economic downturn and regional unrest in the five years from 2008 to 2012, we still attracted $114 billion in FDI. Clearly the long-term economic fundamentals for the region are strong and will continue to underpin strong levels of growth. A young, growing population, investment of oil revenues in economic diversification and a stable macroeconomic picture mean that investors have every reason to be confident that the growth we see today will continue. Given all this, Saudi Arabia remains resilient and attractive to international investors.