The Kingdom major feature is a robust economy as well as stable market, as it adopts open-door policy, based on free competition and market forces of the supply and demand. There are no restraints on the foreign exchange remittance, no prohibition or quantity restrictions on imported merchandises, except for a few commodities that are prohibited either for religious, national security or general health protection reasons.

 

The custom tariffs on imports are generally, low, and some imports are even tax-exempted, i.e. duty-free.

 

National Economy and Development 

 

The Kingdom of Saudi Arabia is the largest duty free market in the Middle East and North Africa (MENA), where it has 25% of the total regional GDP (Gross Domestic Product), partially, because of its geographical location that helps it easily access export and import markets in Europe, Asia and Africa.

 

Oil undoubtedly represents the backbone of the Saudi economy, as the Kingdom is a leading producer as well as exporter of the crude, in addition to being the globally largest nation with proven oil reserves, which stand at about 25% of the total gross international oil reserves. Furthermore, the Kingdom has other natural resources, including a wide range of industrial raw materials and minerals such as Bauxite, Limestone, Gypsum, Phosphate and Iron ore. The Kingdom, heavily, invests in the national economy, in order to achieve the crucial goal of economic diversification, i.e. to include industry, trade, services and other sectors, to contribute to the wealth generation process.

 

The Kingdom has made big strides in this long way and is one of the world’s largest economies and is ranked 9th globally in terms of economic stability and 16th as the best investment attracting environment.

 

All these figures and indicators resulted from relentless efforts since the state budget of the fiscal year 2009 estimated revenues stood at SR 505 billion ($134.6 billion). That budget, is a landmark, as it is the largest in the history of the Kingdom.

 

The estimated expenditure was at more than SR 550 billion, according the Ministry of Finance.

 

On the commercial level, Saudi Arabia has managed to shift its trade from a limited-cum-seasonal one (mainly depending on Hajj season's earnings) to a huge pylon based on constant economic fundamentals. That is the fruit of the Kingdom’s comprehensive development achievements at all arenas, be them industrial, agricultural services and human or otherwise. 

 

Ever Growing Economy 

 

The Kingdom of Saudi Arabia is fully committed to boosting and consolidating partnership with the private sector in the economic development, as it categorically, attaches to the principle of privatization, as the key element in economic liberalization, thus, a wide range of sectors and activities are being opened to the private sector initiatives, notably, in telecommunications, electricity, airlines, postal and railways services.

 

In addition, industrial cities, port services, water facilities and some potential investments areas, are similarly, opened for private sector's activities.

 

The kingdom plans to invest $200 billion in oil, gas, electricity, water desalination and petrochemical industries, in tandem with international oil firms consideration of investing about $100 billion, over an estimated period of 20 years, in the fields of natural gas.

It is also, expected that an equivalent of $6 billion of local capitals, will be invested in the tourism sector. 

Saudi Arabia is a founding signatory member of the Commercial Arbitration Agreement as well as a member of the World Trade Organization (WTO), and many other international and regional organizations.

 

In the light of positive developments in the global oil market, and continued improvement in the local investment environment in the Kingdom, the gross domestic product (GDP) has increased (at current prices, including import fees, by 22.1% to reach $1.8 trillion in 2008, with an annual growth rate of 4.4%. Meanwhile, its value worth SR 848.4 billion at fixed prices, based on 1999 figures, as the basis year.

 

Financial Sector 

 

The Kingdom of Saudi Arabia has established a sound regulatory and financial infrastructure, based on world financial standards and payment systems, this has led to the emergence of a strong banking sector that takes advantage of managerial expertise and the latest advanced technologies.

 

The financial sector provides various financial services for the growing commercial sector, however, what makes the Kingdom an attractive investment destination is the reliable and credible financial infrastructure, in addition to the size of the Saudi market.

 

The Kingdom’s financial system consists of a central bank, namely the Saudi Arabian Monetary Agency  (SAMA), commercial as well as investment banks, specialized lending institutions, and a stock market. Banking sector has been organized according to the Control Regulation for banks, issued by a Royal Decree in 1966. The Cabinet issues licenses for the establishment of banks based on recommendation of the Finance Minister following SAMA’s revision.

 

The government's stake in the commercial banks is less than 10%, as the adequate cash flows enable fair monetary funding.

 

Foreigners may invest in the stock market, however, through investment funds. Whereas the Saudi stock market is considered the largest in the region, the Saudi Riyal (SR) has recorded strong level of stability, with very low interest and inflation rates in the Kingdom.

 

The Kingdom is ranked the 12th largest exporter of goods, the 22nd largest importer, the 21st largest service importer and the 33rd largest service exporter in the world.

 

 

 Industry 

 

 

In order to diversify its economy, the Government of the Kingdom attaches great importance on the industrial sector, a fact that contributes to its prosperity. In fact, the manufacturing sector in the Kingdom has witnessed a steady development during the last period, with an increase of manufacturing industries' contribution to the GDP, from SR15 billion in 1975 to more than SR92.6 billion at the end of 2006. Its growth rate has kept increasing at an approximate annual growth rate of 6%. This growth rate is among the highest in the industrial sector all over the world.

 

On the other hand, a shift in the productivity composition of the industrial sector, during the past decade, is a clear indicator of the emergence of the manufacturing industry in the Kingdom. Most of the industrial output come from oil refining industry accounting for up to 67% of the total GDP of the industrial sector (at current prices as in 1975), and with the development and growth of other industries (non-refining); it stood at (65%) of the total GDP of the industrial sector, by the end of 2006. This trend reflects the vitality and effectiveness of the Saudi (non-refining) manufacturing sector.

 

Over the past three decades, the industrial base in the Kingdom has seen significant expansion, with the number of operating plants, significantly increasing over these years with massive investments.

 

This development came as an inevitable and expected result of the utmost care, provided by the government to this vital sector, through industrial loans, establishment and development of many industrial cities in various regions of the Kingdom, in addition to providing them with basic services and facilities.

 

To guarantee upgrading of the quality of services provided to the industrial cities; the Saudi Industrial Property Authority  (Modon) was established in 2001, as an independent body, to oversee the establishment and management of industrial cities, as well as operating, maintaining and developing them, in collaboration with the private sector's self-financing.

 

The Kingdom has the prerequisite elements of industry, as capital and mineral ores, such as oil upon which the oil refining industry depends, and some industries (such as: petrochemical, as well as available iron ore, copper, phosphate, gold, along with some plants such as wheat, vegetables and dates.

 

There are also livestock materials such as cattle, leather and other dairy products.

The industry in the Kingdom consists of two sectors: the public and the private sectors, where as the public sector owns military, oil refining and petrochemical industries, while the private sector owns industries vested by individuals or where individuals provide most capital – as the rest of the industries such as cement, equipment, food, tourism and other industries.

 

Workforce

 

Manpower in Saudi Arabia is distributed in three main sectors: Services, which has the highest rate with 28.69%, the technical and scientific sector with 27.98%, and the managerial occupations, which has the lowest rate with only 3.56%. Qualitatively, women workforce is concentrated in the technical and scientific professions.

 

As for the non-Saudi manpower, it is concentrated in the production and construction sectors with 41.07% and the managerial occupations with a rate of 1.14%.

 

However, economic activity wise, whereas the Saudi workforce is, generally concentrated in the following two main sectors, in a descending order: public administration and education the non-Saudi workforce is actively engaged in the following areas, in a descending order: wholesale and retail trades, working with families and fishing.

 

According to results of a manpower survey, conducted by the Department of Public Statistics and Information until the month of Sha’ban 1430 AH, August 2009, the total figure of workforce in Saudi Arabia has reached about 9 million workers, or  49.9% of the total population (15 years and above), of whom 7 million are male.

The number of those actually working in the Kingdom has reached 8 million people accounting for 94.6% of the total workforce, of whom 86.8% are male.

 

The results of the survey indicated that more than two thirds of the Saudi workforce are concentrated in the 25-44 years category which forms 67.5%, with 65.6% male and 77% female.

 

The results showed that the rate of education among the Saudi workforce amounted to 96.5% for males and 98.5% for females, respectively.

 

Statistics indicate that Saudi society is still in need for many investment projects, capable of recruiting higher degrees holder graduates.

 

Human Resources

 

If youth means the potential underlying strength, then the Kingdom of Saudi Arabia has a lot. Demographic facts of the well-educated and trained young, along with the governments focus on human resources development, would provide distinct possibilities for foreign investors. The joint ventures with the Saudi government and the private sector, alike, have helped to create and prepare a generation of managers and specialized technicians, resulting in a situation that presents today, tremendous potentials and opportunities, in the areas of training as well as development.

 

There was a significant rise in the number of Saudi young graduate professionals from Saudi universities, so the government established a Human Resources Development Fund, to train Saudi youth on job skills, as it, at the same, time allows companies to recruit from abroad, if necessity arises.

 

Non-Saudi Labor

 

Non-Saudi labor constitutes 79.1% of the total number of non-Saudi residents aged 15 years and above, representing 99.7% of the total non-Saudi workforce, and their education rate among the non-Saudis workforce is 92.4%.

 

The cost of unskilled labor in the Kingdom of Saudi Arabia is about $1.17 per hour, compared to $2.63 per hour in Mexico and $22.60 per hour in France.

 

The Kingdom provides the basic public and private education, institutes and research and development facilities, while the private sector manages several professional and vocational major institutes as well.