Investment projects across Saudi Arabia worth SR3.2tr

JEDDAH - Investment projects in Saudi Arabia so far are estimated to be worth a total of SR3. 2 trillion, topped by the civil sector with 39 per cent of the total number of projects, according to Shuaa Capital.

By (By our correspondent)

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Published: Tue 22 Apr 2008, 11:23 AM

Last updated: Sun 5 Apr 2015, 11:42 AM

At 19 per cent, the power industry comes in second followed by the oil and petrochemical industries with 15 and 13 per cent respectively.

According to the report, Saudi Arabia's economy is expected to continue its momentum this year after recording strong GDP growth between 1999 and 2007. In nominal terms, the Saudi economy expanded with an estimated CAGR of 15 per cent between 2003 and 2007. As a result, total nominal GDP is estimated to have exceeded SR1.4 trillion in 2007, compared to SR806 billion in 2002. The CAGR of GDP is projected to be around 8 per cent from 2008 to 2012.

The report said that GDP per capita is expected to have almost doubled from 2002 to 2007, reaching SR56,100 compared to SR32,100. GDP per capita is expected to exceed SR71,000 by 2012 on the back of high GDP growth powered by oil revenues, growing economic liberalisation and diversification, increasing private sector participation and foreign direct investment.

It said that demographic reality in Saudi Arabia, the strategic significance of economic diversification to safeguard long-term national interests and the enhanced spending ability of the government as long as oil prices are above the $40 level, are key drivers behind Saudi Arabia's desire to move into high gear now.

The Saudi government is increasingly liberalising the economy and carrying out reforms which have led the World Bank to recognise the Kingdom as one of the top reformers in the world in 2007, and the best place to do business in the Middle East. SAGIA's objective is to turn Saudi Arabia into one of the world's top-10 most competitive economies, played a pivotal role in this achievement.

Saudi Arabia is the dominant regional economy accounting for around 25 per cent of gross national product of Arab countries and boasting the largest oil reserves in the world. Unlike previous oil booms with single engine economic growth relying on increased government spending, this time Saudi Arabia's growth is being powered by multiple-engines. The government is adopting initiatives encouraging the private sector to join the economic growth drive and to further accelerate the momentum.

Saudi Arabia's current account surplus increased from SR340 billion in 2005 to SR358 billion in 2006. The rising surplus, in turn, has led to the total capital expenditure budget for 2007 being raised to SR140 billion, more than double the 2005 outlay. Much of this will be directed toward improving basic infrastructure, such as roads, water, power and sewerage, the Shuaa Capital report said.

The Saudi Arabian General Investment Authority (Sagia) has taken the lead role in translating the strategic directives, given by the government, to diversify and power the Saudi economy, into an operational plan. In doing so, Sagia devised the economic cities concept to promote balanced regional growth, achieve economic diversification and create jobs and upgrade competitiveness.

The plan is to develop six economic cities which are designed to be economic stimuli throughout the country. The four cities that have already been launched are King Abdullah Economic City, Knowledge Economic City, Jizan Economic City and Prince Abdulaziz Bin Mousaed Economic City and two others have been announced and approved. The comparative advantage of low-cost energy, abundant petrochemical resources and shared infrastructure will be the main drivers of growth and job creation for these cities.

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