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Young and rapidly growing population of 27.1m Central role in Islam as home to the Holy Cities Oil reserves comprise around one-fourth of global total At 2.15m sq km, the world’s ninth-largest country
At 2.15m sq km, Saudi Arabia is the world’s ninth-largest country
Striving to maintain long-standing traditions while modernising
The Al Saud family, which reigns over Saudi Arabia, has held intermittent control over the Arabian Peninsula since the mid-1700s. It was around this time that the head of the family, Muhammad ibn Saud, joined forces with Muhammad ibn Abd Al Wahhab, a religious reformer, leading to the rise of the Wahhabi movement in Arabia. By the middle of the 19th century, the Al Saud family had gained control of the majority of modern-day Saudi Arabia, but was faced with the lingering threat of Ottoman forces stationed throughout the region. The Ottoman army managed to regain control of substantial portions of the country in 1891, when rising tensions ultimately led Al Saud family to seek refuge in Kuwait. The tables started to turn back in early 1902 when, on January 15th, a young member of the royal family, Abdulaziz Al Saud, successfully staged a series of night raids and took Riyadh. Thus began the recapture of the family’s former territory and the unification of the peninsula’s diverse tribes. Three decades later, on September 23, 1932, the modern Kingdom of Saudi Arabia was created by Abdulaziz Al Saud. A NEW ERA: Through political negotiations, Abdulaziz Al Saud became the first king of the young country, the third Saudi state. In 1933 he signed an oil exploration agreement with the Standard Oil Company of California, launching a new chapter in the history of the nation and marking the beginning of economic success and large-scale development for years to come. Opening the energy sector transformed Saudi Arabia into one of the world’s most important oil exporters. Having been blessed with 25% of the world’s proven oil reserves, according to the Ministry of Petroleum and Mineral Resources, the country has used its natural assets to swiftly transform itself into a leading regional economy with global reach. With a GDP in 2010 of more than $435bn according to the Saudi Arabian Monetary Agency, the Kingdom is now the largest economy in the region, a member of the increasingly influential G20, the dominant player in OPEC, a recognised contributor to global market stabilisation through its
swing-producer status in oil and a prudent manager of its currency reserves in the financial sector. HOLY CITIES: The Kingdom’s central role in the international Muslim community as the host of the two Holy Cities of Makkah and Medina is paramount to the country’s identity. Makkah was the birthplace of Islam 14 centuries ago, and every year the Kingdom welcomes millions of pilgrims from every corner of the globe who travel to the city to carry out their spiritual duties of Hajj and Umrah – the pilgrimages to Makkah. Islam is a key part of the country’s identity abroad as well, as millions of Muslims around the world face towards Makkah every day during their prayers. GROWTH: Saudi Arabia’s population has expanded rapidly, in step with the economy’s quick expansion over the years. The growing population has increased the need for the government to diversify the economy and to create more employment opportunities for future generations. By looking for alternative options for development, the government is preparing for a future when oil export earnings might not contribute as much to GDP as they have in the past. GOVERNMENT: Saudi Arabia is a monarchy governed by the direct descendants of King Abdulaziz Al Saud. The nation’s current monarch, King Abdullah bin Abdulaziz Al Saud, ascended to the throne in 2005 after his brother, King Fahd, passed away. King Abdullah was granted regency and has been overseeing the operations of government since 1995, when the late King Fahd suffered a stroke. The Kingdom’s political system was first codified by King Fahd in 1992 with the Basic Law of Saudi Arabia, which outlined the responsibilities of the government and defined the relationship between the ruler, Saudi citizens, and the various ministries and governing council bodies. The king is advised by the Council of Ministers and the Shura Council. The Council of Ministers, the highest governance body, has the primary legislative role, a four-year term limitation and by-laws that govern its interaction with other consultative bodies.
The Shura Council, also called the National Consultative Council, is a mixture of elected and appointed citizens representing a cross-section of the Saudi public. Initially, the king appointed 100% of the Shura Council; currently, however, the organisation is composed of both elected and appointed representatives. The Council of Ministers recently increased the Shura Council’s responsibilities by including it in the national budgeting process, granting it the ability to advise on the allocation of public spending and question ministers on budgetary use. King Abdullah expanded the Shura Council’s powers to allow it to propose and draft laws and regulations. The body also has the ability to object to, or approve, the passage of a law. In 1993 the council was reformed to make it more efficient and representative of society at large. Primarily, this meant expansion – the organisation grew to 90 members in 1997, 120 members in 2001 and 150 members in 2005. In September 2011, King Abdullah announced that women will have the right to join the council starting in the next term. The king has final approval rights on all new legislation, after an extensive deliberative and consultative process in which the Shura Council, the Council of Ministers and numerous experts engage. In 1993 King Fahd enacted legislation that detailed the local administration of Saudi Arabia’s 13 provinces. In addition to a governor, each province has a council made up of representatives of the local government and 10 prominent community members who are appointed on a four-year, renewable basis. King Abdullah also passed a succession law to ensure that the process by which Saudi Arabia’s monarch was chosen was based on a specific law, rather than simply using the general guidelines codified in the country’s Basic Law. This has resulted in increased stability in terms of succession in the Kingdom. In October 2011, the Crown Prince, Prince Sultan bin Abdulaziz Al Saud, who also served as minister of defence and aviation and deputy prime minister, passed away at the age of 85. Prince Naif bin Abdulaziz, minister of the interior since 2009, was appointed as the new Crown Prince. POPULATION: The most recent census in Saudi Arabia was carried out in 2010 by the Central Department of Statistics and Information (CDSI). According to results from the survey, the Kingdom’s population was estimated at 27.1m. Of this number, around 70% were Saudi nationals and 30% were foreigners – a split between local and expatriates that has remained relatively stable in recent years. The average annual population growth rate between 2006 and 2010 is currently estimated at 3.2% by the CDSI. Saudi Arabia’s demographics and its historically high growth rates have had a direct impact on the country’s long-term development strategy. Providing adequate and affordable housing, health care and education at all levels for the expanding population remains a government priority. Saudi is among the fastest-growing societies globally. The UN estimates the population could double by 2050. The high growth rate in recent years can be attributed primarily to remarkable improvements in living, health and social conditions over the past 25 years.
With a young and growing population, providing adequate education, housing and health care is a priority
The main population centres are the capital, Riyadh, and the western city of Jeddah, which is the country’s commercial centre. Over the past decade the Kingdom’s cities and towns have been transformed by steadily increasing internal migration from rural areas. The Kingdom’s ongoing reliance on expatriate labour is a concern, as in the long run locals need to be trained with the skills to replace foreign workers. Continued economic expansion, large-scale government spending on infrastructure and the private sector’s steadily increasing participation in the economy have contributed to the recruitment of a large non-Saudi workforce – around 8.4m of the Kingdom’s total population in 2010, according to the CDSI. A substantial majority of the foreign labourers currently active in the Kingdom come from South-east Asia. In May 2011, the Ministry of Labour announced a new employment regime entitled Nitaqat. Private sector companies are categorised under one of four zones based on the type of business of the company and the percentage of Saudi nationals employed. The programme aims to increase Saudiisation rates via various incentives and penalties based on the companies’ Nitaqat categorisation. RELIGION: Islam is the state religion, with a large majority of Muslims belonging to the Sunni sect and a minority of Shia followers. Religion plays an essential role in the Kingdom. Sunni Islam is divided into four schools: the Hanbali, Hanafi, Shafi and Maliki schools. Historically Saudi Arabia has strictly adhered to the Hanbali school of Islam, though in early 2009 King Abdullah changed the make-up of the influential Grand Ulema Commission, a leading body of religious scholars, to reflect all Sunni sects, rather than just Hanbali. The government considers all Saudis to be Muslim; public prayer, charity (a requirement in Islamic culture) and fully abiding by sharia law are mandatory for all Saudis. Nonetheless, the significant influx of expatriates in recent years has brought some Christians and followers of various other religions to the Kingdom. Still, Islam touches every feature of life in Saudi Arabia; the king’s
THE REPORT Saudi Arabia 2012
formal title is “Custodian of the Two Holy Mosques”. As the spiritual home of Islam, the country attracts over 2.5m Muslims for the Hajj each year, and 7m pilgrims visit throughout the year to perform the Umrah, which can be undertaken at any time. EDUCATION: Free and universal education is available to all citizens. Local institutions are segregated by gender at primary, secondary and tertiary levels. The one exception to this is the King Abdullah University of Science and Technology (KAUST), which opened in 2009. KAUST, a graduate-level, research-focused institution, will eventually house 800 students. The first boys’ school opened in 1954 and the first girls’ school two years later. The Saudi curriculum comprises kindergarten, six years of primary school, three years of intermediate and an additional three years of high school. The government has increased spending on education in recent years to fulfil the country’s economic, religious and social objectives. Private sector participation in the education sector is on the rise as well. Education has had a positive impact on development. A few generations ago Saudi Arabia had a literacy rate of 20%, whereas today it has been able to push that figure to 84.7% for males and 70.8% for females. Around 58% of students enrolled in higher education institutions are women. Bringing the education system in line with the needs of the private sector is seen as essential, as the government moves ahead with a farreaching Saudiisation programme. The national budg-
et for 2011 included SR150bn ($40.0bn) for education and training, a 9% increase from the previous year. LANGUAGE: The official language of Saudi Arabia is Arabic and the spoken dialect is commonly called Gulf Arabic. However, English is generally spoken in larger cities and by the majority of businesspeople. GEOGRAPHY & CLIMATE: At 2.15m sq km, Saudi Arabia is the world’s ninth-largest country, and the biggest on the Arabian Peninsula, accounting for 80% of its territory. Half of the nation is desert. The country borders Iraq and Jordan to the north; Kuwait, Qatar and the UAE to the east; and Yemen and Oman to the south. The Red Sea stretches alongside Saudi Arabia’s 1760-km western coastline, from an entry point north of Yemen in the south to the Gulf of Aqaba in the north. Saudi Arabia’s climate varies depending on the region. The Red Sea coast has comfortable temperatures throughout most of the year, with a hot and humid summer. All coastal areas are generally cooler and more humid than the central regions, which tend to have a harsh and dry climate, with temperatures often surpassing 40°C. Winters are generally mild and short. NATURAL RESOURCES: Saudi Arabia remains arguably the most important oil producer in the world, with approximately one-fourth of global conventional reserves. The country contains around 260bn barrels of known oil reserves – some 2.5bn of which are situated in the Saudi-Kuwaiti neutral zone, otherwise known as the Divided Zone. Saudi Arabia’s development has
been greatly enhanced by its tremendous oil wealth. The Kingdom’s crude deposits are made up of light and extra-light grades of oil, which account for two-thirds of the reserves, with the remainder consisting of medium or heavy grades. The government has a carefully managed swing-producer policy, and is committed to maintaining global oil supply and pricing stability. All facets of the oil industry are managed by Saudi Aramco, the Kingdom’s state-owned national oil company and the world’s largest oil firm. Although Saudi Arabia has over 100 oil and gas fields, over half of its reserves are found in just eight fields. Ghawar, the world’s largest oil field, is estimated to have reserves of 70bn barrels and produces half of the country’s output. The Kingdom has managed to accumulate large cash reserves due to years of high oil prices. This has allowed it to continue its economic diversification programme and industrial development even during recessionary years. Recently, the mining sector has increasingly been viewed as an area of future growth. Due to large reserves of gold, silver, zinc, copper and industrial minerals, especially in the western mountains and the north-eastern regions of the country, mining is expected to become the third industrial pillar of the economy, after energy and petrochemicals. Legislative changes have made the sector more attractive for both national and international players in the mining sector in recent years. The majority state-owned Saudi Arabian Mining Company, also known as Ma’aden, was formed in 1997 to develop mineral resources in the Kingdom. Ma’aden and American aluminium producer Alcoa signed an agreement in 2009 to construct an integrated aluminium complex at Ras Al Khair. The $10.8bn development is expected to include a smelter, aluminium refinery, bauxite mine and rolling mill. CULTURE: Saudi Arabia’s cultural and social norms derive from and are very closely related to the Kingdom’s deep connection with Islam. Its conservative nature means that a number of strict social codes, such as segregation of the sexes, must be adhered to at all times. Unmarried or unrelated men and women are strongly discouraged from mixing. The majority of Saudis wear traditional dress. For men this consists of a thobe, a brilliant-white garment that covers the entire body. Male headwear consists of an aqal, which is a black ring that sits atop the head and holds the head scarf, the ghuttera, a red and white cloth, in place. Women cover themselves in public with the abaya. Although it is common for Saudis from all backgrounds to wear traditional garb, it is becoming increasingly routine to see youths dressed in Westernstyle clothes, especially in cities and other urban areas. While women are not permitted to drive or ride a bicycle on public roads, their role in the economy has grown substantially over the past decade. They have property rights and legal status, which has resulted in women owning a significant percentage of assets. They also have considerable influence in Saudi households, which has made them important consumers in the economy. Women often look after and invest their own money. The Arabian Peninsula has been a centre for interna-
The climate varies significantly by region, ranging from cooler coastal areas to hot, dry deserts
tional commerce since long before the Islamic era. Located along the principal trading route between East and West, the area benefitted from passing caravans, as traders carried spices, silks and other exotic merchandise through the desert for hundreds of years. This mercantile spirit lives on today. DESERT RETREAT: Taking a trip to the desert is a common pastime for Saudi families, where they sit, talk and drink tea with friends and family members. The desert, which is considered by many to be a necessary retreat from the pressures of modern-day living, plays an important role in Saudi life and identity. Saudis are also understandably very proud of their long Bedouin ancestry. The king is often presented holding a falcon, which was used by the Bedouin for hunting and is an emblem of nobility. Similarly, horse and camel breeding are still considered pursuits for true gentlemen. The ubiquitous Arab hospitality is also a remnant of life in the desert. Traditionally, visitors were given food, drink and a bed for the night, away from harsh conditions. Many Saudi artists have found inspiration in the Kingdom’s long history as well. Much work in recent years has focused on rich abstract designs, reminiscent of desert landscapes. This has resulted in an array of stunning Arabic architecture, textiles and jewellery. LANGUAGE: Language, in both its written and spoken forms, is also an important cultural art form. There is a rich history of calligraphy as an art in the Kingdom, particularly as it has related to the decoration of important documents over the years. The spoken word, meanwhile, receives the greatest honour in Saudi Arabia, and poems and stories are often passed down from generation to generation within families. As the Kingdom moves forward economically and its citizens enjoy the benefits of growth and globalisation, Saudis are finding themselves performing a difficult cultural balancing act, as they try to manage the simple lifestyles of their Bedouin ancestors alongside the expectations of modernity. This is a challenge but many Saudis view it as an opportunity for the future.
THE REPORT Saudi Arabia 2012
COUNTRY PROFILE VIEWPOINT
King Abdullah bin Abdulaziz Al Saud
Investing in the future
King Abdullah bin Abdulaziz Al Saud, Custodian of the Two Holy Mosques, on the Kingdom’s development programme
While the world around us has undergone many changes, our country continues to develop and enjoys security and stability in the light of national unity. This clearly reflects the relationship and cohesion between the leaders of this country and its loyal and noble people. We live in a changing world, but we are determined with God’s help to continue the development process and the liberalisation of the economy, while abiding by balanced policies for a bright future. The continuation of the national dialogue as an approach to deal with all issues and broaden the participation among all segments of Saudi society is important for strengthening national unity and addressing local issues. Creating a channel of responsible expression that is based on the objectives of the King Abdulaziz Centre for National Dialogue can provide the proper environment for dialogue. In addition to the importance of national security, water security is no less important, and it is one of the strategic objectives of the Kingdom. It is supported through the expansion of saltwater desalination plants and dams to supplement underground water resources. In the interest of reducing the cost of water production methods, the state has adopted the National Initiative for Water Desalination Using Solar Energy, which will be implemented in three phases over a period of nine years. To preserve this national resource, which forms the backbone of life and is the essence of growth, the state has promulgated many laws and regulations dealing with the exploitation of water resources. Additionally, the government has established centres of advanced research that employ the latest scientific techniques, which has made our country a leader in the field of water desalination. Our state has always sought to improve the living conditions and welfare of its citizens, starting with secure treatment and care for them, in the belief that human health is a measure of the progress of people and advancement. This has been shown very
clearly by the continued establishment and expansion of integrated hospitals in cities, as well as the building of health centres in villages. We have issued an order to allocate SR16bn ($4.3bn) for the implementation and expansion of a number of medical cities. With God’s help and guidance, we will continue in the same direction towards improving the health services sector, whether by focusing on the building of new projects, or by improving the environment of existing health facilities and increasing the funds allocated to them. The Ninth Development Plan, will be – with God’s help – a helping hand for us to achieve prosperity and growth, especially as it has provided for social stability and will ensure the protection of human rights and promotion of national unity. It also emphasises raising the quality of life for citizens, continued diversification of the economy, balanced and sustainable development of all regions of the Kingdom, activating the role of the private sector, and supporting small and medium-sized enterprises. Based on the government’s keenness to continue the development in all fields, it has established the Ministry of Housing. The government has also supported the industrial, agricultural and real estate development funds, as well as provided financial facilities and soft loans to citizens to contribute effectively to development. Priority has also been given to the social security system, which now benefits more people. Lastly, there is an emphasis on creating employment opportunities for citizens through the Saudiisation programme and the establishment of training centres in all regions of the Kingdom. I always stress that the citizen is the basis of the development and its target at the same time. Education is one of the pillars of development, so the state has targeted increasing the number of educational and cultural institutions and raised spending for building schools and universities in all regions of the Kingdom. We are heading towards a knowledge
COUNTRY PROFILE VIEWPOINT
economy, and it is important to invest in future generations through training, education and rehabilitation. The educational budget represents the largest allocation of government spending. For the sake of expanding the knowledge of our sons and our daughters, the students, we have extended foreign scholarship programmes to additional countries. For our sons and daughters who are studying at their own expense, they will be able to take advantage of our scholarship programme once they have met its requirements. We believe in creating an atmosphere for our students to dedicate themselves to expanding their knowledge, so that they can become qualified professionals and technicians. The enhancement of the status of women can only be achieved through a vision that believes in the interaction of all society members for the purpose of development. Improving the capabilities of women and removing the obstacles facing them would allow them to increase their participation in society and become a productive factor in economic activities. Our aspirations are limitless in terms of lifting our country to the ranks of developed nations in the field of communications and service sectors. Therefore, the construction and upgrading of infrastructure, including the country’s communications network, airports, ports and roads, is in accordance with the objectives of our development plans. These projects will enhance opportunities for investors to actively participate in the growth of the country. Although the world is undergoing an economic crisis, the balanced financial and economic policies of our state, as well as its rules and mechanisms for financial transactions and investment, have spared us the negative effects of the international crisis, and even strengthened the Kingdom’s position among other countries in terms of attracting global investors. We are determined to invest in largescale projects such that the Kingdom can continue to avoid any impact from the global economic slowdown.
We have continued to pursue a petroleum policy based on the interests of present and future generations, and the efficient exploitation of the wealth that God has granted us, harnessing it for economic and social development. The Kingdom has also continued to adopt policies that improve market stability, taking into account the common interests of producers and consumers and the safety of the global economy, including the less-wealthy economies of developing countries. Considering the world’s dependence on fossil fuels, especially oil, to meet the energy demand for global prosperity and growth in the coming decades, the Kingdom also encourages scientific research in renewable energy and improving the use of fossil fuels. In recognition of this relationship we have established the King Abdullah City for Atomic and Renewable Energy for the development of nuclear and renewable energy to complement our oil and gas resources. The Kingdom also helps ensure peace and security in the Middle East and the rest of the world, with a leading role in achieving stability and prosperity for the region. We stress the right of everyone to use of nuclear energy in accordance with the supervision and control of the International Atomic Energy Agency, and we support the various steps and actions to make the Middle East free of weapons of mass destruction as stipulated in the resolutions of the UN. The call for dialogue among civilisations, cultures and religions is the best way to resolve international disputes and issues by peaceful means. This dialogue will spare the whole world, God willing, the tragedy of conflicts between civilisations and religions, and make us work towards a peaceful coexistence. I call for the world to understand the importance of dialogue, and take it as a key instrument for bringing different nations closer and improving relations between governments and their citizens. Excerpted from public remarks made to the Shura Council on August 25, 2011.
THE REPORT Saudi Arabia 2012
COUNTRY PROFILE INTERVIEW
HRH Prince Faisal bin Bandar bin Abdulaziz Al Saud, Governor,
A regional strategy
OBG talks to HRH Prince Faisal bin Bandar bin Abdulaziz Al Saud, Governor, Qassim region
In what ways does the Qassim region plan to increase its contribution to Saudi Arabia’s economy?
PRINCE FAISAL: Our vision is to build a diverse economy that enhances cooperation among the agriculture, industry and manufacturing sectors to make the most of the industrial base in the region. It will be essential to increase the participation of the region’s private sector and enhance its role in the economy. One way of doing that is focusing on the development of industries that depend on domestic resources. We can also incentivise downstream industries that manufacture and export local natural resources. The Qassim Investment Strategy Project, established in 2008, has been designed with the objective of linking the region’s development strategy with external opportunities. It also involves a major collaborative effort across the region. Qassim will benefit from its traditional strength in agriculture and also promote other industries of interest, particularly minerals, construction materials and assembly line production. with Qassim's educational institutions based on demand for certain skills. To create a better environment for workers, we are developing residential and commercial real estate projects to serve people who settle here.
How can Qassim diversify its economic base and increase its share in the Kingdom’s GDP?
PRINCE FAISAL: Economic diversification has been the top objective of the region’s development plan and remains a major target for sustainable economic growth. The programmes of the Qassim Investment Strategy will create opportunities for entrepreneurs to interact with successful business leaders and facilitate the growth and success of local businesses by enhancing the availability and quality of available support services. Moreover, the region will encourage local investment inflow by increasing investor confidence and creating an environment friendly to business development. As for marketing, Qassim’s communication strategy will highlight the advantages of living in the region with the aim of attracting investors and skilled workers. Through these plans Qassim intends to attract investment and human capital to diversify its economy.
What is being done to attract more business to the region and encourage skilled workers to stay there?
PRINCE FAISAL: The region is committed to accelerating the pace of economic transformation and promoting a friendly business environment where companies and entrepreneurs can flourish and innovate. The objective here is to attract investment in high-value industries, which will bring and retain Saudi skilled workers. To achieve this goal, we will support economic development by engaging the private sector in capacity and quality enhancement. In order to maintain a young, skilled Saudi workforce, the region’s educational programmes are being aligned with local employment opportunities. Studies that match the current needs for local industries are being encouraged. We are also developing a regional workforce attraction programme to target workers with necessary skills. In this way we will be able to initiate recruitment and training programmes in collaboration
How will the region maintain sustainable agricultural growth in the long term?
PRINCE FAISAL: To maintain and promote the sustainability of the agriculture sector in the Kingdom, King Abdullah reformed the Agricultural Development Fund (ADF) in January 2009. The fund aims to ensure sustainable development by providing accessible credit and focusing on research and developing investments for the long-term sustainability of the agricultural sector. A collaborative approach on water use must be taken, as water is critical to the economic success of the whole region. Industries will be encouraged to be involved in improving quality and efficiency. Qassim will secure its position as a regional trade centre for agriculture. The government will support farmers to promote and maintain growth of the agriculture sector.
THE REPORT Saudi Arabia 2012
COUNTRY PROFILE INTERVIEW
Osama Al Bar, Mayor of Makkah
OBG talks to Osama Al Bar, Mayor of Makkah
What residential projects address Makkah’s growth?
AL BAR: The municipality has planned the development of three different areas in and around Makkah to meet the demand and particular requirements of the city. The Umm Al Joud project, north-west of Makkah in the Haram area, measures 670,000 sq metres and consists of 4000 housing units. This project is intended to alleviate the housing demands of Makkah’s residents and is being partly subsidised by the municipality. The first phase of 2500 units is already being marketed, for which we have received 23,000 applications. Secondly, on the border of the Haram area, to the west of the city, we are planning the Makkah Gate development, which will be 86 sq km. This area will allow a more balanced growth, with the construction of schools, hospitals and public services planned. Lastly, the municipality has granted 4.3 sq km of land to the Ministry of Housing, which has been allocated in line with King Abdullah’s decree to build 500,000 housing units.
How can transport systems facilitate the transit of visitors while minimising the impact on residents?
AL BAR: Transport is a critical factor within Makkah’s development plans. Our target is to efficiently manage the high visitor numbers during the Hajj period and mitigate the impact on the city’s mobility. The municipality is working to design an efficient transport system within the city and also to coordinate with intercity plans. Responding to the unique necessities of Makkah as a pilgrimage destination, the municipality is participating in the development of railway infrastructure that will connect all the Hajj ritual areas, thereby reducing traffic and facilitating the movement of pilgrims between the different sites during their journey. Connected to the rail links, a 182-km, 88-station metro system is also planned, connecting all the sacred sites, and extending to residential areas outside the centre. The metro will allow visitors to perform their pilgrimage without the use of private transport. The technical study for this project is being finalised and should be put out to tender in 2012. To minimise risk for the private sector, the municipality will establish partnerships with developers to provide support in any public-private partnership projects.
How is private sector input being encouraged?
AL BAR: Our target is to conduct these projects in partnership with the private sector to see more efficient development. To increase private sector participation, the new development strategy aims to create attractive conditions for key government projects and public service facilities that will catch the attention of contractors and developers. To make the projects economically attractive, the municipality offers land at an attractive value, ensuring a high yield for the investors and minimising investment risks. In exchange, we expect the private sector to bring a skilled workforce, knowledge and financial capacity to carry out these projects. To ensure reasonable prices for buyers while also maintaining companies’ profit margins, units sold to the public will be subsidised by the government. Nevertheless, projects should be sustainable and generate reasonable turnover. Private sector firms will be able to access information about projects and apply for them using a prequalification system we are developing.
What new opportunities does the city present as an Islamic tourism destination?
AL BAR: We intend to enhance the city’s tourism features and offer a wider range of activities. To carry out this plan, Diafa, a new local tourism organisation, has recently been founded by the municipality. Its focus will be mainly to encourage religious tourism in the region, restore historical and religious areas and create new facilities. In line with this plan, we are studying the construction of an Islamic Civilisation Centre, which would allow visitors to learn about Islamic culture. Being in the boundaries of the Haram area, the museum would be open for non-Muslims as well, so it can attract tourists without access to other locations inside the city. Also, Makkah Gate will offer support services for pilgrims.
COUNTRY PROFILE VIEWPOINT
Huda bint Mohammed Al Ameel, Rector, Princess Nora bint Abdulrahman University, on women in Saudi Arabia
For the West, images of women in Saudi Arabia have mostly been of a marginal individual, without free will or freedom. This image has captured outsiders for most of the last century, despite dramatic changes for Saudi women. These changes have become evident to many people who visit the Kingdom. It is true that 50 years ago women occupied a completely different part of society. However, women in Saudi Arabia today lead a life quite different from their ancestors. It is safe to say we are witnessing the beginning of a golden age for women in the Kingdom. Historians always mention 1960 as an important year for Saudi women, since that year a royal decree established the first governmental school for girls. Although the schools opened for female students then were elementary schools, they were the springboard for Saudi women’s renaissance. These elementary schools gave way to more institutions delivering higher level education, allowing women to climb towards success with fast, steady steps. Visitors to the Kingdom will be astonished by the development of women’s education. According to 2009 statistics, illiteracy rates have dropped among Saudi women to 18% and the percentage of females among undergraduate students has risen to 58%. Today, the Saudi woman is admirably active in almost every academic specialisation, and in many occupational capacities. The Kingdom is proud to be home to many distinguished women who have occupied senior positions and received prestigious awards from the United Nations and international research centres. Saudi women are not only recognised in research and academia alone; several Saudi women are distinguished in social and charity work. In fact, one could say humanitarian work in the Kingdom was established mainly by Saudi women. Many non-governmental organisations offer substantial aid to fight domestic violence, drugs and poverty. Additionally, these NGOs contribute to care for children who are ill or have special needs, as well as working to provide for orphans and others. Social life for Saudi women is unique in its own right. It is a priority to acquire a better education, serve and contribute to the nation’s development, while also maintaining great regard for traditional values. Abiding by authentic identity continues to be characteristic of Saudi women, but this does not equate to her marginalisation, as the West interprets it. In fact, in an address to the Shura Council, King Abdullah bin Abdulaziz Al Saud reasserted that he would not accept marginalisation of women. In an empowering move, the King declared women had the right to membership in the Shura Council, as well as the right to vote and to run for municipal council elections. This is a major step for women in Saudi Arabia. The support and solidarity for women shown by King Abdullah and other members of the royal family will be remembered as an act of social justice. Another form of the King’s support is giving Saudi women an equal chance to receive scholarships for the world’s distinguished universities. For the first time, the Saudi woman has the opportunity to occupy high office in the government. The establishment of Princess Nora bint Abdulrahman University, a single-sex institution, is another sign of support. The King suggested the university should be named after an influential female figure in Saudi history. Although new, the university has 15 colleges and an advanced hospital to train students in health care. The university complex has modern sports centres and student housing. The school is already working to revolutionise its educational system and academic programmes, fulfilling its mission to provide a variety of high-quality educational opportunities for women. This certainly does not mean that women in Saudi Arabia are without challenges, or that they are satisfied with their achievement so far. Like all women, Saudi women should not shrink from obstacles but push to overcome them, helping work towards a better future. Saudi women are determined to continue to work quietly and resiliently to help provide a life of good, love and peace for themselves, their society and the world.
THE REPORT Saudi Arabia 2012
COUNTRY PROFILE INTERVIEW
Jan O’Sullivan, Irish Minister of State
A prospering partnership
OBG talks to Jan O’Sullivan, Irish Minister of State, Department of Foreign Affairs & Trade with responsibility for trade and development
How has Ireland’s economic relationship with Saudi Arabia developed in recent years? What policies are being created to enhance bilateral relations?
O’SULLIVAN: Relations between Ireland and Saudi Arabia have been very warm for a long time and economic relations have been particularly strong in recent years. Trade between the two nations increased by 25% in 2010, which is quite significant. The number of partnerships is also increasing, usually between small Irish companies with specific expertise and larger Saudi firms that are expanding. Saudi Arabia remains a priority market for our trade policy and for this reason we have created a joint economic division and a market plan coordinated from our embassy there. Such relationships work to our mutual benefit: in Ireland, we have developed certain sectors, and with slower growth we have spare capacity that can be used abroad. The largest potential seems to exist in partnerships in the health and education sectors. ticularly for Saudi Arabia. One of the main problems for Europe, the banking crisis, has not affected the Kingdom thanks to its reduced exposure. It should remain unaffected as the banking sector remains protected. The rapid growth taking place in some sectors, such as the real estate market, could cause problems. However, the demographic fundamentals of the country mean it will not become a problem as long as housing prices continue to reflect the real market value. Prospects in the GCC are promising and the best advice would be to keep planning ahead and not relying only on current growth. Diversifying, investing in new sources of energy and developing new sectors will be the key to success in the long term.
How can small and medium-sized enterprises (SMEs) address challenges in developing economies? How can their growth be encouraged in Saudi Arabia?
O’SULLIVAN: SMEs are of tremendous importance in the reduction of unemployment. New expanding companies are particularly eager to bring innovation and create new ideas and opportunities, helping to develop new ideas from within the population as well as to promote new areas of growth. SMEs are the engine of the local economies, particularly given that they are usually run by local people. To encourage the development of SMEs in Saudi Arabia, we must start with education plans that are oriented to practical use, driven by technology and innovation. Universities can promote studies that promote job creation and give young people a crucial role as a source of growth in their community. On the other hand, it is equally important to encourage research and development in the private sector. Entrepreneurship has to be incentivised. Additionally, the creation of incubation centres in universities is also necessary. This enhances the relationship between educational institutions and the private sector and aids in creating connections that promote the inclusion of the youth population as part of the economic system.
What can be done to encourage international companies to invest in the Kingdom?
O’SULLIVAN: Saudi Arabia is a highly attractive destination, with huge potential for growth. Its development opportunities continue to attract new businesses that can meet the economy’s needs. Moreover, local companies are open to establishing partnerships with foreign investors. This enables Saudi firms and the international market to cooperate locally. What is necessary now is to promote these opportunities. The Kingdom has sound fundamentals that guarantee continued economic growth, and government plans are targeting the development of the economy. By making investors more aware of these qualities, the Kingdom will gain more attention.
What can be learned from the global economic crisis and how should future downturns be addressed?
O’SULLIVAN: During the crisis, conditions have been very different for Europe and the GCC region, and parwww.oxfordbusinessgroup.com/country/Saudi Arabia
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