1. 1 Saudi Engineering Forum “The Kingdom of Opportunity” Achieving Modernity, Preserving Tradition Fawaz Al-Alamy KFUPM, May 23, 2006

2. 2 contents The new world order The agony of reform 1.Goods 2.Services 3.Legislation KSA Commitments The imminent Saudi boom Your Group in 2020 A proposed strategy

3. 3 Milestones (1996-2005) Joined the WTO on Dec 11, 2005, after 10 years of: 1. 365 Bilateral, 22 Plurilateral & 14 Multilateral rounds of negotiations with 148 members. 2. Answered 3500 questions. 3. Submitted 7600 pages of documentations. 4. Visited 62 countries & signed 38 Bilateral Agreements with 58 commitments. 5. USA was the 38 th country to sign Agreement. 6. Issued 28 Royal Orders with 274 mandates. 7. Produced 42 new laws & regulations.

4. 4 WTO Is it a new world order?

5. 5 A global dominance (1947)? I M FW B GATT The Bretton Woods Institutions

6. 6 A Global Village? )WTO )

7. 7 Harsh realities Total Arab World trade dropped to 3%. 50% of Arab World live on $2/day. Arab World intra-trade is only 4.5%. Is Sudan really our food basket? 17% of education is in Sciences. 40% of World immigrants are Arabs. 0.075% of GDP goes to R&D.

8. 8 World Trade in 2005 Total World Trade - Goods 8654 Billion US $ - Services 1975 Billion US $ - FDI 1108 Billion US $ Total Arab Trade is only 3% * NAFTA18% * EU 15% * China4% * India3.5% Intra-trade in : * Arab World 4.3% * GCC 9.1% * EU 70%

9. 9 A borderless world? TODAY,150 WTO Countries control : 90% OF WORLD TRADE 96% OF FINANCIAL TRANSACTIONS 92% OF TELECOM & IT 97% OF IPR’s 88% OF PETROCHEM MARKET

10. 10 A dynamic organization? MEMBER DRIVEN & MEMBER CONTROLLED SINGLE UNDERTAKING PRINCIPLE 4 PILLARS : 1. MARKET ACCESS; TRANSPARENCY & PREDICTABILITY 2. NATIONAL TREATMENT; NON DISCRIMINATION 3. MFN; WITH FULL RECIPROCITY 4. CONTINUOUS NEGOTIATIONS; MORE OPEN MARKETS

11. 11 A codified globalization? Protocol of Accession Bilateral Multilateral Plurilateral 38 Agreements on Mkt Access Goods & Services Working Party Report Commitments 28 agreements single undertaking Laws & Regulations

12. 12 The Rules of the Game A level playing field

13. 13 A self imposed reform 2000-2005 (5YRS) 1. Establishing new institutions 2. Promulgating effective laws 3. Strengthening market mechanism 4. Restructuring Government agencies 5. Liberalizing our trade regime

14. 14 Economic Security NATIONAL Income Security GAFTA Job Availability Bilateral Agreements GDP Growth Strategic Alliances Trading Blocs Plurilateral Groups GLOBALREGIONAL GCC Economic Union 6

15. 15 Global Trading Blocs Group 77 G20 + China Bretton Woods Earth Summit G 8 QUAD E U NAFTA ASEAN MERCOSOR OECD CAIRNS APEC Poverty Energy Health Biodiversity Water WB IMF WTO OPEC Plurilateral Groups Strategic Alliances 7

16. 16 Regional GAFTA FTA MFN Treatment Goods or Services MFN Exemption Rules of Origin Market Access National Treatment Plurilateral Investment Treaty Single Market Economy Single Port of Entry Single Currency Unified Laws & Regulations Movement of Natural Persons Technical Barriers Bilateral Agreements GCC Economic Union 8

17. 17 National Job Availability Education Agriculture / Water Technical Training Private Sector Women Participation Non - Oil Exports Gas Availability Minerals Development Economic Reform Institutional Restructuring GDP GrowthIncome Security GDP / Population 9

18. 18 Facts & Figures ( 2005 ) 10

19. 19  Number of Universities : * 500 in Muslim World (1.5 Billion) * 5758 in USA (380 Million) * 8407 in India (One Billion)  Literacy Rate : * 40% in Muslim World * 90% in Christian World * 85% in Jewish World 12

20. 20  Scientists Per Million People : * 230 in Muslim World * 4000 in USA * 5000 in Japan  Technicians Per Million People : * 50 in Muslim World * 1000 in Christian World  High Tech Products Exports of Total Exports : * 0.3% in Saudi Arabia * 58% in Singapore * 28% in Malaysia 13

21. 21  Goods & Services Annual Production ( GDP ) :- - Muslim World $ 2 Trillion - USA $ 12 Trillion - China $ 8 Trillion - Japan $ 3.8 Trillion - Germany $ 2.4 Trillion - Spain $ 1.5 Trillion - Thailand $ 0.6 Trillion - Poland $ 0.5 Trillion 14

22. 22 New Entrance by Main Study Field Saudi University Students (2005) نسبة انضمام طلاب الجامعات السعودية إلى التخصصات الدراسية ( 2005 م ) 15 أخـرى العلوم الطبيعية الدراسات الإسلامية والعربية والاجتماعية

23. 23 المساهمة النسبية للأنشطة الاقتصادية في الناتج المحلي الإجمالي بالأسعار الجارية ( مصلحة الإحصاءات العامة 2004 م ) % % % % % % % % % % 16

24. 24 % % % % % % % % معدلات النمو في الناتج المحلي الإجمالي حسب نوع النشاط الاقتصادي بالأسعار الجارية ( مصلحة الإحصاءات العامة 2004 م ) 17

25. 25 القنبلـة الموقـوتة : التحـدي الأكبـر  خـلال العقـدين القادميـن :- * نسبة النمو السكاني (57%) ليصبح عدد السكان (41) مليون * نسبة نمو السعوديين (89%) ليصبح عددهم (33) مليون * زيادة أعداد السعوديين المؤهلين للعمل :- * من (5) مليون في 2005 إلى (12) مليون في 2020 * أي بزيادة مقدارها (110%). 24

26. 26 25

27. 27 تقديرات العرض والطلب على العمالة في المملكة ( مصلحة الإحصاءات العامة2005م ) الطلـب العرض الخدمات الحكومية القطـاع الخاص العمالـة السعـوديةالعمالة غير السعودية 2020 م 89% 10.3% 2005 م 23.1% 76.9%. 44.2% 55.8% 85.7% 14.3% 26

28. 28 تطبيق الأنظمة وسرعة نفاذ الأحكام والقرارات تقليص البيروقراطية الحكومية ورفع مستوى الكفاءة الإدارية تحديث البنية التحتية وتوفير الميزات النسبية التنافسية تحسين القدرات التنافسية وتوفير الدعم المسموح به تدريب العمالة السعودية ورفع مستوى أدائها المهني دعم الصادرات وتسهيل نفاذها لأسـواق الـدول التحديات الأساسية الأخرى التي تواجه القطاعات الاقتصادية بالمملكة 27

29. 29 SolutionsChallenges Objectives Income Diversification Capacity Building GDP Growth FDI / DDI Education Economic Zones Value – Added Exports Job Creation Sustainability 29

30. 30 The Political Will Challenges & Solutions Commitments & Exemptions

31. 31 The agony of reform 1. Transparency, Predictability and Due process 2. Enforcing all laws and regulations 3. Fulfilling our WTO commitments 4. Cancellation of all trade distorting measures 5. Increasing market access 6. Further liberalization of trade regime 7. Upgrade and streamline our education system

32. 32 Commitments: Apply full NT & MFN with transparency, predictability and due process. Enforce all Laws & Regulations. Cancel all trade distorted measures: Quotas / TRIMS / AMS / Export Subsidies / Economic Needs Tests / ICCP

33. 33 Exemptions: Morals, Social, Environmental, Health & Security Article 20 GATT & Article 14 GATS National Sovereignty Article 21 GATT & Article 16 GATS National Treatment Saudization, Zakat & Taxes, Subsidized Services Market Access Gradual liberalization of trade regime

34. 34 Goods Commitments (GATT 94) 7177 AG & IND PRODUCTS : 1. INFORMATION TECHNOLOGY, 219 ITEMS 2. CIVIL AIRCRAFT, 209 ITEMS 3. CHEMICAL HARMONIZATION, 1022 ITEMS 4. ZERO-FOR-ZERO INITIATIVE, 2500 ITEMS ( pharmaceuticals, equipment, steel, wood, cotton, toys, fish & paper )

35. 35 Weighted average of customs Tariffs GCCSaudi/WTO Agreement WTO Requests

36. 36 Services Commitments (GATS) 12 MAJOR SECTORS WITH : 155 Sub-sectors & 620 Activities In: Business, Telecom, Distribution, Tourism, Education, Banking, Insurance, Recreation, Audio- Visual,Transportation, Environmental, Engineering, Construction, Health & Energy Services

37. 37 Services Agreement Market Access 199519992001 2005

38. 38 BUSINESS SERVICES Professional Services: 75% FDI & 25% Saudi Other Business Services: 100% FDI Full National Treatment

39. 39 TELECOM Courier Services: Limited Liability 100% FDI Mobile & Fixed: Public Joint Stock 1. 49% FDI upon accession 2. 51% after one year 3. 60% after three years Others: Limited Liability 70% after three years

40. 40 DISTRIBUTION Commission Agents: Saudis only Wholesale, Retail & Franchising: 1. 51% FDI upon accession 2. 75% after three years 3. One outlet/district 4. 20 Million SAR minimum investment Trading rights

41. 41 FINANCIAL SERVICES Banking: 1. Public Joint Stock 60% Foreign ownership 2. Branches Insurance: 1. Cooperative Public Joint Stock 60% Foreign ownership 2. Branches 3. Three years flexibility

42. 42 OTHER SERVICES EDUCATION, TRANSPORTATION, HEALTH, TOURISM, RECREATION, COSTRUCTION, SOCIAL, ENVIRONMENTAL & OTHERS: 100% FDI Audio-visual: DTH as already available

43. 43 Intellectual Property Rights 1. Trade Marks & Trade names 2. Copyrights 3. Patents 4. Geographical Indications 5. Industrial Designs & Integrated Circuits 6. Competition & Trade Secrets 7. Bern & Paris Conventions

44. 44 GOODS I T A Zero Duty SERVICES Telecom Agreement Nominal Cost Pervasive Computing THE ELECTRONIC TAP + + +

45. 45 THE FUTURE OF SAUDI ARABIA The road ahead

46. 46 The second Saudi boom 2006 GDP 1.4 Trillion SAR Nearly twice as total Arab world 18 th largest stock market in the world Government surplus 50% of budget 15% of GDP Nominal growth 23% Trade surplus 30% of GDP

47. 47 GDP Comparison Sources: IMF, World Bank, Samba forecasts

48. 48 The Saudi Boom (2005-2015) $ 140 billions in infrastructure $ 92 billions in petrochemical expansion $ 90 billions for electrical power generations $ 88 billions in water desalination $ 70 billions in telecom $ 53 billions in tourism $ 50 billions in gas production & gathering $ 28 billions for agriculture $ 10 billions for educational systems

49. 49 Value of public contracts in 2005 (SR 174 Billion)

50. 50 Construction contracts (SR Billion) * Construction Component Only

51. 51 IPO Appetite CompanyYear Offering Price (SR) Offered Shares ( Mil.) Over- subscription Money Asked For (SR Mil.) Money Provided (SR Mil.) Saudi Telecom2003170902.4x15,30036,720 Sahara Petrochemicals 2004506125x30037,500 Etihad Itisalat2004502050x1,00050,000 NCCI2004205711x1,43515,785 Bank Al-Bilad2005503051x1,50076,500 SADAFCO20052601.956x5073,042 Al-Marai Dairy20055124.55x2,30411,520 TOTAL159.4522,346231,067

52. 52 Rating Saudi Arabia in 2005 1. FITCH, STANDARD & POOR Credit Rating “A+” 2. WB & IMF RANKED INVESTMENT ENVIRONMENT “38” 3. GDP GROWTH IN 2005 (5.2%) Highest in 20 years

53. 53 The right choice? Did China gain from joining the WTO? 1. 20% Export increase annually 2. Trade surplus rose 3 fold to $682B 3. Services deficit dropped by 33% 4. Wal-Mart is the 6 th largest importer 5. 57% of world textile market 6. FDI increased by 27%

54. 54 How can we succeed In the Global Village?

55. 55 We must apply the 4 C’s 1. Create our MULTI-NATIONAL Alliances 2. Capitalize on our COMPETITIVE EDGE 3. Cherish our LIFE LINE 4. Control our future DESTINY

56. 56 EU CHINA NAFTA GCC INDIAJAPAN MERCOSOURASEAN South Africa GA T AF

57. 57 Our strength will be the result of: 1. Strategic Partnership 2. Global Marketing 3. Market economy Attitude 4. Own IPR brand 5. Fair and equitable Competition

58. 58 Our Objectives must focus on: 1. Generating our own Capital 2. Legalizing our market access 3. Overriding our local behavior 4. Beaming our work ethics 5. Activating our international strategy 6. Levitating our annual growth 7. Identifying our strategic partners 8. Zooming on our ultimate objective 9. Expanding our market coverage

59. 59 We must Remember In a borderless world Geography becomes History

60. 60 Thank you fawazalamy@gmail.com

61. 61 For more information: WWW.COMMERCE.GOV.SA WWW.WTO.ORG