SAUDI ARABIA – DEBRIEFING PAPER

10 Pages   |   1,622 Words

Introduction

Saudi Arabia is the second largest country in the Arab world and the largest country in the Arabian Peninsula with a area of ​​over 2 million square kilometers. The country borders on Iraq, Jordan, Kuwait, Oman, Qatar, UAE and Yemen. The economy of the country is largely driven by oil exports even though services and manufacturing sectors are growing at a steady pace. The paper represents a cross-sectional profile of the country keeping in perspective the need of a product manufacturers or service process providers which may be interested in selling into the country as a new market. They will need to know about the potential as a market-place and other relevant environmental or contextual information. The paper discusses the economy of the country, the population make-up, the cultural elements, growth rate of the economy and international trade. Discussion is supported with tables and graphs from credible sources.

Discussion

Economy of Saudia Arabia The economy of Saudi Arabia is based primarily on its oil industry. Since 1938, Dhahran has become the capital of Arab oil. In contrast, the Agriculture of Saudi Arabia has steadily decreased since the year 1960 before receiving government aid. In December 2005, the country became the 149thmember of the World Trade Organization.
 

Yes, We Can Help!

We promise to deliver high quality papers on time which will improve your grades. Get help now!

SAMPLES PLACE ORDER OUR SERVICES
Plagiarism Free Work
Best Price Guarantee
100% Money Back Guarantee
Top Quality Work
Cross-Section of the Economy Manufacturing has grown in Saudi Arabia through a combination of four key factors – the expansion and diversification of oil and the industrial workforce, the rapid growth of population and domestic demand, the increasing availability of both private and government capital. The economy of country is characterized by foreign companies forming joint ventures with Saudi partners, often with the government.
The previous two decades saw a dramatic increase in the number, size and diversity of production units. From the beginning of this adventure, the first launched into industrial sectors as diverse as the food industry, paper and plastics, clothing, or office furniture.  Added products being manufactured in Saudi Arabia has grown to include paints, air conditioning systems, prefabricated buildings in aluminum, iron and an impressive array of other products that use oil or gas as an energy base. Nevertheless, the country remains desperately short of tech industries in various fields such as electronics, computer hardware and optical sector.
Key Economics Statistics of Saudi Arabia
Gross Domestic Product (nominal parity) $ 282 billion
GDP in PPP $ 371.5 billion
GDP growth 4.3%
GDP per capita in PPP $ 13,800
GDP by sector agriculture: 3%
industry: 63.6%
services: 33.4%
Inflation ( CPI ) 2.2%
Human development index (HDI) 76th
Labor force 43.57 million
Labor force agriculture: 12%
industry: 25%
Services: 63%
Unemployment rate 13%
Exports $ 207.8 billion
Exported goods Petroleum products (90%)
Imports $ 64.16 billion
 
Table 1 - Key Economics Statistics of Saudi Arabia 2011 (source: www.economicwatch.com)
 Suffering from a structural shortage of skilled local workforce and experience in technology, Saudi Arabia has long addressed to foreign contractors for the execution of industrial projects.
 
For many of these projects, the contract extended beyond and included the delivery service and often the operation by the manufacturer. Industrial production accounts for more than 9% of GNP. 
 
Figure 2 - Annual GDP growth of Saudi Arabia (self-drawn)
Many incentives from the government have attracted both local capital and foreign investors. It is an interesting study to evaluate different industrial sectors. Employment in health sector has grown steadily in the areas of nursing, midwifery, quarantines, physiotherapy, poison centers, blood banks and pharmacies.

Figure 3 – Annual Oil Exports of Saudi Arabia Mbpd (self-drawn)
Figure 4 - Cross Section of Annual Budget of Saudi Arabia (source: www.sama.gov.sa)
 For foreign companies, there is an obligation to join a Saudi national medical sector with a license to practice. Transport sector - including land and air – has remained steady during the last ten years. Telecommunications is the other segment which has driven growth of the economy comprising not only of voice telephony, but also telex services, telegraph, electronic data interchange, fax, Mobile satellite, electronic mail and data processing. A foreign equity ceiling of 49% is imposed on all venture of telecommunication in the country.
 
Distribution and retail businesses are considered important components of the economy and this area is only open as franchises to foreign companies, provided that their participation is less than 49% stake in the company. This rule also applies to various activities such as brokerage in real estate, services and placement services, audiovisual services and satellite transmission. In open sectors, foreign investors are now treated the same way as domestic investors for access to public subsidies and incentives.
 
Figure 5 - Trend in Annual Inflation Rate of Saudi Arabia (source: www.sama.gov.sa)
 
Zero-interest loans are often granted to firms in the preferred sectors. Discrimination is considerably high among industries particularly in tax matters. Given below is an overview of the most important components of corporate sector of the country:
Rank  Business / Company Market Capitalization ($ bns)  Sector
1  Saudi Basic Industries Corporation 74 Chemistry
2  Al Rajhi Banking and Investment Co 7.27 Banking
3  Saudi Telecom Co 1.18 Telecom
4  Saudi Electricity Co 8.14 Energy
5  Saudi Arabian Fertilizers Co 1.12 Chemistry
6  Samba Financial Group 5.1 Banking
7  Etihad Etisalat Co 9.9 Telecom
8  Riyad Bank 9.4 Banking
9  Saudi British Bank 7.9 Banking
10  Banque Saudi Fransi 7.5 Banking
Table 2 - Top Corporate Entities of Saudi Arabia (source: www.marketwatch.com) 
 
Demographics of Saudi Arabia The population of Saudi Arabia is estimated at 27 million people including 5.5 million foreign workers. However, there is no published official census. It is surmised that the proportion of immigrants is probably greater than officials claim to be. It estimated that one-third of the population of the country is immigrant population. Until the 1960s, the majority of the population was nomadic (Wilson, 2004). Due to the growth of living standards , 95% of the population now has a sedentary lifestyle .

Figure 6 - Population Age Structure of Saudi Arabia (Source: www.sama.gov.sa)
Saudi Arabia has a population of over 27 million people. Of these, over 6 million people are foreigners living legally in the country. The Saudi population lives mainly in the cities and a few oases. The original inhabitants were almost exclusively Arab. Today, 90 percent of the population is of Arab descent either native Saudis or people from the Arab region, including Egyptians, Jordanians, Palestinians, Syrians and Lebanese. The remaining 10 percent are mostly of African or Asian ancestry. Non-Arab descent is mostly foreigners working as guest workers. The country is inhabited by about 400 tribes, about one tenth of the population are nomadic or semi nomadic. Saudi Arabia is among the countries that have a stable social security but this is only to citizens free of charge.

Figure 7 - Demographics of Saudi Arabia by Age (self-drawn)
In Saudi Arabia, several million foreign workers are employed. They come mostly from Asian countries like India, Pakistan, Bangladesh, Sri Lanka, Maldives, Malaysia, Philippines, Brunei, Indonesia and the African region. They work mainly in areas where Saudis do not want to work.
Demographical Make Up
Population  27,019,731 people
Population Density  13.8 inhab. / Km ²
Rate of population growth 2.18%
Median age (total population)  21.4 years
Men 22.9 years
Women 19.4 years
Age structure
- 0-14 years 38.20%
- 15-64 years 59.40%
- 65 and over 2.40%
Sex ratio (total population)  1.20 male / female
At birth 1.05 male / female
- Under 15 years 1.04 male / female
- 15-64 years 1.33 male / female
- 65 and over 1.13 male / female
Share of urban population 88%
 
Table 3 - Demographical cross section of Saudi Arabia (www.cia.gov)
 Saudi Arabia has a population density of 12 ² per km. 86 percent of people live in the cities of the country. The average life expectancy is 75.7 years, while it is higher in women than in men 77.8 years (73.7 years). Nearly two-thirds of the Saudi population is under 25 years. The average age is 19.4 years for women and for men 22.9 years. The overall average age is 21.4 years. Per thousand births, there are fifty cases of infant mortality and a maternal mortality of 23 per 100,000 births. Thus the Saudi population is growing annually by 2.2 percent. The literacy rate of Arab population is approximately a total of 78.16 percent to the world average level (Miller, Vandome and McBrewster, 2010 ). While 70.8 percent of Saudi women are proficient in reading and writing, the men have a literacy rate of 84.7 percent. Arabic is the official language while English is a language of commerce. The Saudi society has different currents. At least 15% of Saudis speak English as a second language, especially the younger ones. Persian is spoken as a second language especially in the north-east, the region of Dhahran, and towards the border with Bahrain, which has a strong Shiite community.
 Culture of Saudi Arabia The culture of the country is significantly influenced by Islam. The country occupies in the Islamic world a special place, containing two holy cities of Mecca and Medina. The cultural and social life in Saudi Arabia is to follow well-defined rules of Islam. Al Saud royal family considers it is their responsibility to impose injunctions of Islam in the regions. It is forbidden to engage in public theaters, cinemas or theaters. Culture takes place only in a very narrow framework. In terms of Hofstede’s cultural variables, the country has a high valence for power-distance. The culture score high on uncertainty avoidance and the culture is risk averse. The culture is very largely masculine.

Download Full Answer

Order Now