Saudi Arabia errs on the side of caution.
Then on 13 November, a car bomb exploded at the Saudi National Guard Communications Centre in Riyadh leaving seven people dead. Rumours that Islamic Fundamentalists - who since the Gulf War have spoken out increasingly stridently against Western interference in the kingdom - were responsible for the attack prompted a nervous response from the international business community.
Less than three weeks after the Riyadh bomb blast King Fahd was taken into hospital sparking off fears of a succession crisis.
Rumours that the monarch had died caused oil prices to soar. Only hours after the announcement of King Fahd's decision to hand over the reins of power to Prince Abdullah, prices had stabilised. Fears were quelled as experts such as Robert Mabro of the Oxford Institute for Energy Studies spoke reassuringly about the overall stability of the kingdom's oil policy. "Prince Abdullah may have a different style, but there has been a consistency in Saudi policy since King Abdul Aziz in terms of oil and the relationship with the US." Thus the crisis was averted.
The new budget maintains spending at 1995 levels of SR150 billion. However, a budget deficit of SR18.5 billion is projected for 1996, an increase of SR3 billion on the 1995 estimate. A small reduction in revenues, from SR135 billion in 1995 to SR131.5 billion during 1996, is generally regarded as being realistic.
With the new budget all the signs are that the government has seriously embarked on a programme of curing structural imbalances to the economy which have been allowed to emerge over the last 15 years or so.
For some time the kingdom has espoused diversification away from oil dependency and much headway has been made along these lines. Ports, the industrial cities of Jubail and Yanbu, ambitious agriculture, dairy and animal husbandy projects were all intended to provide the kingdom with an industrial base which would help diversify exports and guarantee income when oil reserves were exhausted. However, it was the economic crisis which followed the Gulf war which really served to drive the message home, prompting the beginnings of a restructuring of the country's economy.
The establisment of the Saudi Export Development Center has become the most recent part of the drive to promote exports from the kingdom. With substantial backing from both the private and public business sectors, the center is facilitating Saudi Arabia's growing export drive and helping decrease the kingdom's reliance on petroleum exports.
The Center, established under the auspices of several ministries, most notably the Ministry of Commerce and Industry, as well as the country's three main chambers of commerce, will provide financial backing and other attractive inducements to exporters.
Aside from long term loans for non-traditional exports from the Islamic Development Bank - one of the many financial organisations cooperating with the Center, exporters will also be afforded special pricing schemes for shipping agricultural and industrial exports by Saudia, the national airline. Other incentives include a decrease of 50% on port charges for national exports.
Complimenting the financial aspects, the Center will also seek to provide businessmen with up-to-date market research concerning the viability of products and the status of foreign markets, ensuring clients are familiar with the latest trends and are able to identify optimum conditions in foreign markets.
Significantly the Center is designed to be suitably integrated within the framework of the kingdom's economic and financial policies and as such will participate in the conclusion of bilateral and multilateral economic agreements to facilitate exports to foreign markets, thus laying a solid framework from which Saudi Arabian exporters will be able to expand into the next century.
The Saudi British Bank (SABB) is not the largest banking institution in the country but it plays an important role in the country's leading syndications. In June 1995 SABB successfully concluded a $155 million package of facilities in support of the SCECO PP9 power project constructed by General Electric. Towards the end of the previous year a $700 million loan for the Saudi Petrochemical Company (SADAF) was underwritten by six local banks, including SABB. The Bank participated with $100 million in SADAF's expansion project.
SABB was established in 1978 as a successor to The British Bank of the Middle East, which had operated in the kingdom for more than 20 years. SABB is 40% owned by HSBC Holdings and 60% by the Saudi Arabian public. HSBC Holdings is one of the largest financial institutions in the world with over 3,000 offices in 69 countries.
SABB operates through more than 60 branches in the kingdom and also has an office in London and an asset management subsidiary in Geneva. It runs a ATM network of more than 90 machines.
The Bank recently launched a unique service in the form of TeleBank. The latter handles all customers' banking needs by telephone 24 hours a day and seven days a week.
SABB's treasury is one of the most sophisticated in the market. The Bank's two investment centres, situated in Riyadh and Jeddah, offer full investment services including dealing in murtual funds and international equities as well as brokerage.
Five investment funds are offered by SABB. Two of them were launched in 1989 (the Managed Currency and International Bond funds) and a further two were established in 1990, the Saudi Riyal Fund and a US Money Market Fund (with investments in short term dollar deposits, FRNs, Cds and other short term fixed income securities).
The Saudi Equity Fund is the latest, whereby investors may channel monies into Saudi shares. These are managed and monitored by SABB's investment committee, including the deputy managing director, the manager of investments and the financial controller. The Bank received approval to establish a further five new money market funds in 1994.
In April 1995 SABB's operations successfully switched to the new Hong Kong Universal Banking System (HUB). The project, which had been in the pipeline for a number of years, cost a total of $16 million to implement. HUB is a multi-purpose automated system covering the whole range of SABB's retail products and services.
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||Special Report|
|Publication:||The Middle East|
|Date:||Feb 1, 1996|
|Previous Article:||Arab governments back stricter patent laws.|
|Next Article:||Privatization: key to growth.|