SAUDI ARABIA CLIMATE FOR CHANGE by xcu79604

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									  SAUDI ARABIA: CLIMATE FOR CHANGE




Introducing Reforms and Confronting Extremists
D
         espite the violent conflicts,   Abdullah’s enthronement, the                                the country’s 27 million popula-        try’s economic development,           being overhauled and new text-       giving more Saudis a direct say in
         instability and uncertainty     reforms he has overseen enabled                             tion with increased opportunities       instead of retaining state control.   book and curricula introduced.       decisions that affect them. The
         that continue to afflict the    Saudi Arabia to become the                                  to improve the quality of their         In contrast to previous spending      Furthermore, a scholarship pro-      prospect of the vote being extend-
Middle East, Saudi Arabia, the           149th member of the World                                   lives and, particularly, to provide     sprees in the kingdom, only just      gram is being developed that will    ed to women is also being widely
region’s most powerful state, will       Trade Organization after 12 long                            employment for the young gener-         over 30 percent of the required       send Saudi students abroad for       debated, as are other measures
celebrate its national day later         years of negotiations.                                      ation. With high population             funding for future projects will      further education.                   affecting the role of women in
this week in a mood of confi-                Among other measures                                    growth and many young Saudis            come from the general govern-             Prince Turki says this program   society.
dence and optimism.                      adopted, the kingdom has                                    unemployed, the need to expand          ment budget.                          will enable young Saudis to              Some Saudis are impatient for
     Last month King Abdullah            opened its services sector to for-                          the non-oil economic sectors is              At present, investment oppor-    receive a world-class education,     rapid change, others demand a
completed his first 12 months as         eign participation and committed                            receiving serious attention.            tunities that will be generated       make friends and build new           more cautious pace, while a third
ruler, following the 23-year-long        itself to protect intellectual prop-                            At present there are no less        over the next two decades are         bridges of understanding.            group remain resistant to any
                                                                                                                                                                                                                        change at all.
reign of his brother Fahd. It has        erty. Trade barriers have already                           than 37 new mega-projects under-        currently costed at $700 billion.         In political matters, ground-
                                                                                                                                                                                                                            The challenge facing King
been a year notable for the              been dismantled in the telecom-                             way in a wide range of industries.      The single largest private sector     breaking reforms began last year
                                                                                                                                                                                                                        Abdullah and the ruling family is
smoothness of the transition of          munication, information                                     They include oil and gas produc-        sum – $26.7 billion – is being        when Saudi men were allowed to
                                                                                                                                                                                                                        to maintain equilibrium between
power.                                   technology, pharmaceutical, civil-                          tion facilities, refineries, chemical   invested in the development of        vote in municipal elections, an      these varied desires. ◆
     Although Abdullah, as Crown         ian aircraft and chemical sectors.                          plants and real-estate ventures.        an industrial and financial com-      unprecedented event. More elec-
Prince, had effectively ruled the            These steps are expected to                                 The total cost of projects that     plex to be known as the King          tions are planned with the aim of    By Michael Knipe
kingdom since 1995 when Fahd             further enhance the climate of
suffered a stroke, his formal            economic transformation. A good
enthronement as the Custodian of         example of this is the approach                               “The kingdom is open for business and is
the Two Holy Mosques – the role          that has been adopted by Saudi
from which the ruling Al Saud            Post, the state-run mail service. It                          fostering an environment friendly to inter-
family derives its authority – clear-    has instituted an extensive series                            national trade and investment.”
ly represents an exciting but            of measures to modernize its
challenging new era for the king-        operations, with the aim, says its                                    --Prince Turki Al-Faisal, Saudi ambassador to Washington
dom. And it is one likely to be          president Dr Mohammed Saleh
marked by an increased pace of           bin Zaher Benten, of having it
economic, political and social                                            are either already being built or
                                         running as efficiently as a private                                         Abdullah Economic City, which is
reform.                                  company before offering it to theare in an advanced stage of plan- to be built on a greenfield site
     In economic matters, under          market.                          ning is about $283 billion.                north of Jeddah on the Red Sea
Abdullah’s guidance Saudi Arabia             “Membership of the WTO       Development projects related to            coast.
has liberalized its trade policies,      reassures foreign investors that the oil and gas sector account for             Conceived as a catalyst to
enacted new regulatory laws gov-         Saudi Arabia’s laws and regula-  a quarter of that sum. Defense             attract foreign investment and
erning competition, opened up                                             and security projects will cost
                                         tions are in line with international                                        increased global trade, commerce
to foreign investment and                standards,” says Amr Al Dabbagh, $48.8 billion, while large real-           and industry, the new city is
                                                                          estate developments will account expected to create up to half a
                                                                           Sultan Al Fahed/REUTERS




                                                                          for $40 billion, followed by min- million employment opportunities
                                                                          ing and minerals development               in the various industries and serv-
                                                                          ($11.9 billion).                           ice-oriented companies that will
                                                                               In the opinion of Brad Bour-          operate there.
                                                                          land, Samba’s general manager                  Together with its bold infra-
                                                                          and chief economist, the boom is structure developments, social
                                                                          only beginning. There are signs,           and political reforms are also on
                                                                          he says, that strong oil prices and the Riyadh government’s agenda.
                                                                          revenues will last many years, pro-            Extremist tendencies within
                                                                          ducing a fiscal position for the           the kingdom have evoked great
                                                                          Saudi government that should               concern. Since a triple suicide
                                                                          ensure growth through to 2010 bombing in Riyadh in 2003, the
                                                                          and enable the financing of many government has cracked down
                                                                          more mega projects.                        on al-Qaeda militants and the
                                                                               The kingdom produces 9 mil- religious scholars who have sup-
                                                                          lion barrels of crude oil every day ported them publicly.
Saudi men attending a government-sponsored performance designed to        - more than 10 percent of world                The authorities have also
promote political openness and oppose extremism                           production.                                taken note of the dangers of dis-
                                                                               As it is, even with the extraor- tortions in religious instruction
increased at least a degree of        governor of the Saudi Arabian       dinary range of large scale                and the need to equip young
transparency. A “business friend- Investment Authority (SAGIA).           developments being undertaken, people with an education broad
ly” tax code has also been                 The impetus for reform has     the oil revenues are not being             enough to cope with the con-
introduced and financial services been aided immensely by an eco- spent as quickly as they are being trasts between their traditional
have been liberalized.                nomic boom, spearheaded by the earned. Of the roughly $17 bil-                 culture and the influences of
     Until recently, foreign busi-    high price of oil that continues    lion per month in oil-export               Western culture.
nessmen and women had to              apace. The kingdom will earn        earnings, about $7 billion per                 To meet these demands, the
receive an invitation from a Saudi more than $203 billion in oil          month is accumulating as foreign government has instituted what
before they could make a busi-        exports this year, an all-time      assets at the central bank.                it describes as a long-term mod-
ness trip to the kingdom, a           record. It will be 25 percent more       One of the most striking              ernization of the kingdom’s
requirement that re-enforced the than last year’s record of $162          reform measures has been the               educational system. Critics have
country’s insularity. But the         billion, according to the Samba     Riyadh government’s determined complained that Saudi schools
Riyadh government has now dis- Financial Group, the country’s             campaign to encourage private              promote intolerance of other reli-
pensed with this hindrance.           largest publicly-traded bank.       sector involvement in the coun-            gions, but teacher-training is
     “The kingdom is open for              As a result of this continuing
business and is fostering an envi- windfall, the kingdom, noted             This Special Advertising Supplement was produced by Metropolitan Press, a
                                                                              division of Impact Media Global Ltd, and did not involve the editorial or
ronment friendly to international mostly for its cautious approach to                          reporting staff of The Washington Post.
trade and investment,” says           change, has embarked on an
                                                                                Impact Media Global Ltd., 53 Chandos Place, London WC2N 4HS, UK
Prince Turki Al-Faisal, the influen- ambitious program of reform and                           +44 20 7872 6400, www.metro-press.com
tial Saudi ambassador to              modernization. Economic develop-            Publisher: John Charles Gasser; Managing Editor: Beverley Blythe;
Washington.                           ment is one of its cornerstones.                   Editor: Michael Knipe; Contributor: Marco Venditti;
     Just four months after           The primary purpose is to provide      Feature Director: Natasha Boswell; Editorial Coordinator: Clinton Cossette
                                                                                                                                                        class flights between Jeddah and     ticular service,” says Attiah.

Tourism Gives Airlines Lift-off                                                                                                                         Riyadh. “This is a positive change
                                                                                                                                                        for Saudi Arabia, as the growth
                                                                                                                                                        in the Saudi market is truly
                                                                                                                                                                                             “Golden service includes quick
                                                                                                                                                                                             reservation, fast immigration pro-
                                                                                                                                                                                             cedures, a special meal and
Passenger growth and                 ent destinations,” says Yousef     year. Nevertheless, the company                                                 beyond the capabilities of SAA       entertainment on board and,
liberalization of the                Attiah, the company’s vice-presi-  is still committed to privatization                                             alone,” admits Attiah, hoping to     upon arrival, a special greeting by
                                     dent of customer service.          to create a more competitive                                                    create synergies between his         the ground staff. Should any
industry leads to bigger
                                          Last year SAA carried 16.7    environment and attract foreign                                                 company and future competitors.      problem arise, clients receive
fleets, greater competi-             million passengers and that figure investment.                                                                          The UK low-cost carrier         extra attention in resolving it.”
tion and expansion of                is expected to rise to 18 million        “In two years’ time, SAA                                                  easyJet has also been offered the         E-ticketing is also a priority
airports                             by 2007. “That means that we’ve    must achieve the main function                                                  opportunity to franchise its name    of SAA which is striving to
                                     been increasing our passengers     of privatization, which is the split-                                           in Saudi Arabia through NAS,         become a paperless organization



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                                     numbers by almost a million a      ting of the non-core businesses,                                                although a deal is not expected      by mid-2007, as mandated by
  n a country as vast as Saudi       year since 2002, “ says Attiah.    comprising six different units,”                                                before the end of the year. There    the International Air Transport
  Arabia, good transportation is     The good news for travelers is     explains Attiah.                                                                are great opportunities in this      Association (IATA). “This will be a
  key to the development of          that SAA offers the latest technol-      Catering will be the first unit                                           segment of the industry, as only a   cultural change for the organiza-
tourism. The primary instrument ogy, the most advanced services,        to be privatized, followed by                                                   few budget airlines at present       tion and the country as a
to service this industry is the      good food and reasonable fares.    cargo, maintenance operations,                                                  operate in the Middle East. A        whole,” says Mr. attiah.
kingdom’s national carrier, Saudi         “We are one of the cheapest   technical services and ground
Arabia Airlines (SAA), which last    domestic airlines in the world,    handling, as well as private train-                 Yousef Attiah,
                                                                                                                Vice-president, customer service, SAA   “SAA is the biggest airline in the Middle East
year celebrated its 60th anniver- especially when you consider the      ing through the Prince Sultan
sary.                                standard of services that we       Academy. “We hope to be ready                                                   in both number of aircraft and passengers,
      For the past nine years, since offer,” says Attiah, who is proud  for public offering as a holding      facturer, seven of which have             and domestically it flies to 26 different
the kingdom first opened its         to represent the Saudi culture     company in three years,” says         been delivered. The operation will
                                                                                                              cost $400 million and is self-            destinations.”
                                                                                                              financed by SAA. “We are the                                      --Yousef Attiah, vice-president, customer service, SAA
                                                                                                              first airline in the Middle East to
                                                                                                              purchase this type of aircraft,”
                                                                                                              says Attiah, who stresses that            similar deal has been offered to          To handle the increasing
                                                                                                              Saudi pilots and technicians will         low-cost airline specialist Mango    number of passengers, the Gen-
                                                                                                              undertake extensive training in           Aviation Partners.                   eral Authority of Civil Aviation is
                                                                                                              order to operate the new fleet.                As Middle East destinations     overseeing the expansion of sev-
                                                                                                                    Founded in 1969, Embraer            have grown more professional at      eral of the country’s airports.
                                                                                                              (Empresa Brasileira de Aeronauti-         self-promotion, the numbers of       Works are currently being carried
                                                                                                              ca S.A.) is one of the largest            regional travelers have escalated.   out at King Abdul Aziz Interna-
                                                                                                              aircraft manufacturers in the             Cities such as Cairo, Dubai, Dam-    tional Airport in Jeddah, as well
                                                                                                              world, focusing on light aircraft         ascus, Mecca and Medina are          as at the airports in Ha’il, Medina
                                                                                                              for regional aviation. “These air-        increasingly popular in the Arab     and Bisha. Jeddah’s airport in par-
                                                                                                              crafts have performed                     world. Saudis, in particular, are    ticular is used as the arrival point
                                                                                                              impressively so far. They are eco-        among the Gulf’s most frequent       of millions of tourists worldwide
                                                                                                              nomical and the customers are             flyers and billboards advertising    on their way to Islam’s two holy
                                                                                                              very happy with the services              quick flights in the region are to   cities of Mecca and Medina. The
                                                                                                              offered,” says Attiah.                    be found all over the kingdom.       airport will need to serve about
                                                                                                                    SAA remains the largest air-             But Saudi Arabia is also well   21 million passengers a year over
                                                                                                              line in the kingdom, but Crown            connected to the wider world.        the next 20 years to meet grow-
A busy public square in downtown Riyadh
                                                                                                              Prince Sultan, Deputy Prime Min-          New routes have been opened to       ing demand.
                                                                                                              ister and Minister of Defense and         the east, to Osaka and Hong               Looking at the company’s
                                                                                                              Aviation, has recently created the        Kong, and American visitors can      long-term goals, Mr. attiah says:
doors to tourists, SAA has been       through the airline, defined by   Attiah, who is confident that a       General Authority of Civil Avia-          easily reach the kingdom by SAA      “We have concentrated on the
the country’s only licensed opera- hospitality, honesty and safety.     strategic partner will soon be        tion, to oversee the liberalization       which runs regular flights from      domestic market during 2005
tor of tours, and it plays a          “We want to become a world-       announced. Through privatiza-         of the airline industry, as well as       New York and Washington D.C.         and 2006. This year we will begin
fundamental role in the develop- class airline with a Saudi feel,” he tion, SAA is also looking to move issuing new licensing.                               SAA also offers the “golden     shifting from domestic to region-
ment of the sector.                   adds.                             into a more international sphere.           The Jeddah-based charter            service” route to Europe and         al, and in 2007 and 2008 we will
     “SAA is the biggest airline in       Taking advantage of the             Part of the company’s privati- operator National Air Service              North America, and regionally to     move on to the international
the Middle East in both number        growth of tourism, SAA made a     zation plan is the acquisition of     (NAS), became the first private           Dubai and Beirut. “We have ded-      market.” ◆
of aircraft and passengers, and       $410 million profit in 2005, a 14 15 new Embraer 170 aircraft           airline to operate in the domestic        icated counters in both ticketing
domestically it flies to 26 differ-   percent increase on the previous from the Brazilian aircraft manu- market with exclusive business-                offices and airports for this par-   By Marco Venditti
Plain Speaking Strengthens Saudi-U.S. relations
A “strategic dialogue” set up by President Bush
and King Abdullah to end distrust, fight terrorism,                                                                                                                                                     investment in Saudi Arabia.
                                                                                                                                                                                                              “They need to understand
bring Middle East stability and secure energy sup-
                                                                                                                                                                                                        more about the country and the
plies is helping to mend the wounds of 9/11                                                                                                                                                             opportunities available here,” he
                                                                                                                                                                                                        says. “I hope this message reach-
                                                                                                                                                                                                        es the people who are only



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  n the past 12 months relations        to some lengths to reaffirm their                                                                                                                               receiving bad news and negative
  between Saudi Arabia and the          commitment to each other. They                                                                                                                                  information about our country.”
  United States have emerged            certainly share the view that the                                                                                                                                     However, for citizens of
from five years of what the             world’s major problems – the war                                                                                                                                either country, obtaining a visa to
Riyadh government regards as a          on terrorism, bringing stability to                                                                                                                             visit the other can still a problem.
dark period of deep suspicion,          the Middle East and energy secu-                                                                                                                                      U.S. Assistant Secretary
mistrust and misperception.             rity – cannot be successfully                                                                                                                                   Welch has expressed his keenness
      Saudis were particularly hurt     resolved without their close com-                                                                                                                               to encourage educational
last November when the Senate           mitment and cooperation. In this                                                                                                                                exchanges between the two
Judiciary Committee held a hear-        respect, the U.S. administration                                                                                                                                countries. In an interview with
ing entitled Saudi Arabia, Friend       regards the accession of King                                                                                                                                   the Saudi-US Relations Informa-
or Foe, causing Prince Turki Al-        Abdullah a year ago as an impor-                                                                                                                                tion Service in March, he spoke
Faisal, Riyadh’s ambassador to          tant turning point and believes                                                                                                                                 of his disappointment at the low
Washington, to point out that,          the relationship is now taking a                                                                                                                                number of Saudi students in the
whatever differences have               new course.                                                                                                                                                     U.S. and said this was a situation
occurred, the kingdom had never               For its part, Riyadh believes                                                                                                                             that King Abdullah was keen to
been an enemy of the U.S.               that Washington recognizes that                                                                                                                                 rectify.
      Recalling the embittered          the problems of the Middle East         Launching dialogue: President Bush and the then Crown Prince Abdullah in April 2005                                           “We don’t want to end up
atmosphere in a talk at the Brook-      and the Arab and Islamic worlds                                                                                                                                 with a situation, ten, fifteen,
ings Institution in Washington          can no longer be regarded as                                                                                                                                    twenty years down the road
three months ago, Prince Turki          side issues.                                                                        sometimes been misconstrued.          between Saudis and Americans,” where we take a look at the
said: “It was a horrible period.              As in any relationship there      “They need to under- This, they say, has led to a better says Prince Turki.                                             Saudi cabinet of the day and we
Saudi Arabia, for one, faced brutal     are matters on which the two                                                        understanding and eased some                In his impassioned address to don’t see people like we see
criticism. Our country, our faith and   sides disagree. But in the current
                                                                                stand more about the of the differences of opinion.                               the Brookings Institution, the        today – like, for example, Prince
our national character were             atmosphere they are able to speak       country and the                                   There are working groups        prince noted that since Septem-       Turki and Prince Saud, who had
maligned almost daily in books,         candidly and attempt to work out
                                                                                opportunities available dealing with counter terrorism, ber 11 fewer than 20 members been educated in the United
newspapers and on television.”          solutions. As C. David Welch, the                                                   military affairs, energy, economy of Congress had visited Saudi             States,” said Welch.
      Today, however, both gov-         Assistant Secretary of State for        here,” he says. “I hope and finance, consular affairs and Arabia. “For a country of such                                      “Those are links that are
ernments believe that their             Near Eastern Affairs, has said, “If                                                 matters such as cultural and edu- critical importance to American           enormously beneficial for us in
                                                                                this message reaches
60-year-long alliance has endured       that’s not possible, we at least                                                    cational exchanges.                   regional and global affairs, why      cultivating the kind of relation-
these and other challenges, and         agree on what we disagree on,           the people who are                                Currently, efforts are being    have so few American represen- ship needed to succeed in our
effectively survived its most test-     and can work forward from that.”        only receiving bad                          made to reach agreement on a          tatives come to the Kingdom?”         foreign policy objectives there,
ing time.                                     This was underscored by                                                       merit-based program for Saudi         he asked.                             but also enormously beneficial
      Suspicions of Saudi Arabia        Saudi Arabia’s opposition to the        news and negative                           undergraduates to study in the              “We want them to meet our for Saudis in bringing to develop-
were inflamed by the fact that 15       U.S. invasion of Iraq. However,         information about our                       U.S. under the auspices of the        businessmen. We want them to          ment in the kingdom some of
of the terrorists who carried out       both governments recognize that                                                     King Abdulaziz Al-Saud-Franklin       hear from our citizens – our men, the experience that they gained
the 9/11 attacks in the U.S. were       they need to cooperate on military      country.”                                   Delano Roosevelt Scholarship Pro- our women and our children. I             here in America.”
Saudi citizens. They were exacer-       matters to deal with the issues of                                                  gram.                                 guarantee that if they come to              Both governments are work-
bated by an attack on the U.S.          oil supplies, the war on terrorism,                 --Ibrahim Bin Fahad Al Assaf,         In tackling social matters,     the kingdom, their outlook on us ing to achieve a greater degree
consulate in Jeddah by al- Qaeda        and Middle East stability.                                Executive vice-president, Washington has been pleased by will be changed to the positive.” of access for each other’s citizens
gunmen in December 2004 when                  A key element in overcoming                Al Oula Development Company the decision of the Saudi govern-                  Speaking for many Saudi         while retaining what they regard
five embassy employees were             the distrust that arose after 9/11                                                  ment to form an inter-agency          business leaders, Ibrahim Bin         as the right balance between
killed. Saudis were distressed, in      has been the creation of what is              The working groups meet on group to enforce Saudi laws                      Fahad Al Assaf, executive vice-       openness and protection and,
turn, by American restrictions          termed a “strategic dialogue.”          a continuous or “as needed”                 regarding trafficking in persons. It president of the Al Oula               says Welch, “some significant
placed on visas for Saudis.             This framework was established by       basis to deal with functional               has also welcomed the measures Development Company, one of                  progress has been made in that
      Criticism of the kingdom          President Bush and King Abdullah,       issues and provide a framework              Riyadh has taken to combat            the leading real-estate enterpris- area.” ◆
from Congress was frequently            who at that time was still Crown        through which departments and extremism and intolerance.                          es, says too many Americans are
harsh and the US administration         Prince, at their summit meeting in      ministries from both governments                  The two sides are working       neglecting the potential for          By Michael Knipe
was for some time concerned             Jeddah in April last year. The          can tackle matters of importance together to establish a Junior
over what it regarded as Riyadh’s       objective of the arrangement is to      to both countries.                          Achievement chapter to promote                 A priority for the U.S. in its dealings with Saudi Arabia
failure to fully confront the issue     institutionalize relationships across         Through the framework sen- entrepreneurship and job-skills                      – and a key requirement for membership of the World
of the terrorist groups in the          government departments in both          ior officials from both                     training for Saudi youth, and to          Trade Organization – has been that the kingdom should
kingdom’s midst, and its financ-        countries to ensure that issues are     governments have the opportuni- foster private sector development                     adopt effective measures to protect intellectual property
ing of such groups abroad.              dealt with effectively.                 ty to assess the overall                    in the kingdom. They are com-             rights and combat the trade in fake products.
      However, both Riyadh and                The first formal meeting was      relationship and to exchange                mitted to increasing                           The Saudi government has responded by announcing
Washington now appear to have           between Secretary of State Con-         views on strategic matters,                 people-to-people contacts.                new laws and regulations and taking steps to strengthen
taken heed of each other’s wor-         doleezza Rice and Prince Saud           whether bilateral, regional or                    Riyadh is encouraging its offi-     its enforcement capacities. It is being assisted by Hemaya
ries and concentrated their             Al-Faisal, the Saudi foreign minis-     international.                              cials, business leaders and citizens      Universal, a private Saudi company that specializes in
attention on the fact that, as          ter, last November.                           Officials say the dialogue has to visit the U.S and is particularly             anti-counterfeiting services to protect copyrights.
they are the world’s largest oil-             Dialogue meetings take place      facilitated clear and honest                keen for its students to spend                 Hemaya operates a training program to teach the
producing and oil-consuming             every six months, alternating           exchanges of views and enabled time here. “They will not only be                      kingdom’s customs inspectors how to tell the difference
countries, there is a vital need for    between Saudi Arabia and the            each side to educate the other              receiving a world-class education;        between fake and genuine goods in a range of well-
a strong and reliable partnership.      U.S, to discuss issues of strategic     about aspects of their respective they will be forming the next gen-                  known products.
      They have, therefore, gone        importance.                             societies and systems, which have eration of friendships and bonds




King Opens Doors
                                                                                                                      Jeffrey Hartman




to Tourists
Despite a ban on alcohol and women needing to cover up,
the state hopes to attract 1.5 million non-Muslim visitors by 2020



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   n 1853, the British explorer Captain Sir Richard            In 1980, Saudi Arabia was one of the richest
   Burton traveled to Mecca and Medina disguised           countries in the world; today its economy sup-
   as “Abdullah”, a sheikh from Syria. He was              ports twice as many people on an income that is
possibly the first Christian ever to see the two holy      not much higher in real terms. The kingdom is
cities of the Muslim world during Hajj.                    certainly not poor, but surprisingly it is to be
     Modern tourists are not advised to copy his           found way down the list of the Gulf’s richest
deception, as both cities are still off limits to non-     states.
Muslims. Otherwise, the kingdom has recently                   The ruling Saud family has wisely declared that
become a much more accessible place.                       despite continuous high oil prices, the boom years
     In May this year, the Supreme Commission of           are over. The main concern nowadays is the future
Tourism (STC) announced that tourist visas would           of young Saudis, millions of whom are about to
be made available for non-Muslims for the first            enter the labor market. The tourism sector could
time in the country’s history. The following month,        provide plenty of jobs for them.
18 tour operators were granted permission to                   The number of non-religious tourists is at the
issue tourist visas, therefore officially ending the       moment very small, but the SCT hopes to attract                              Ancient symbols and modern buildings: the kingdom’s desert heritage has tourist appeal
career of “professional” Saudi sponsors, a former          1.5 million non-Muslim visitors by 2020, so that
requirement to enter the country.                          the industry’s contribution to GDP will grow to 18
     A long-standing ban on photography was also           percent from the current 5 percent.                                          of the state budget, this will be no small achieve-         bring back strong memories, mostly positive, as
lifted in an effort to attract more visitors wishing to        Clusters such as the King Abdullah Economic                              ment.                                                       long as local customs are respected.
take back some snapshots of the kingdom’s many             City, to be built north of Jeddah on the Red Sea, is                             Economy apart, there is also a genuine desire               Travelers should not expect alcohol and
memorable sights, except military installations.           expected to boost tourism as well as trade and                               to make the country better understood. Saudi                women visitors must wear the abaya, the black
     These welcome changes came about when                 industry. Half a million pilgrims could use the city’s                       Arabia is a symbol of Arab traditions and custodi-          garment that covers them completely. In spite of
King Abdullah decided that tourism was an indus-           tourism facilities, which include 3,500 hotel                                an of the two holy mosques of Islam, but it is also         these constraints, or perhaps because of them,
try worth exploiting, even by the world’s largest          rooms, a marina and golf courses. The various                                paradoxically an ultra-modern state, with futuristic        the kingdom’s fascination should be a big draw to
producer of oil. Economic and international rela-          industries and service-oriented companies that will                          architecture and first-class infrastructure.                Western tourists. ◆
tions also have something to do with this new              be needed are expected to create at least 500,000                                Contrast, in fact, is the kingdom’s most distin-
openness.                                                  jobs. For a country where salaries drain 60 percent                          guishing feature and anybody travelling there will          By Marco Venditti
Stretched to Capacity                                                                                                    American companies are also
                                                                                                                    active in the thriving Saudi market.
                                                                                                                    The Shaw Group, a leading global
                                                                                                                                                                                  extension of the visionary city built
                                                                                                                                                                                  during the 1970s. In the initial
                                                                                                                                                                                  phase, Jubail II will accommodate
                                                                                                                                                                                                                          but is the market about to pick up?
                                                                                                                                                                                                                          Will demand for bottles, fabric and
                                                                                                                                                                                                                          shopping bags continue to rise on
                                                                                                                    provider of technology and engi-                              nine different industries. SIPCHEM      the global market?
Investment in petrochemical plants gathers pace as demand exceeds                                                   neering, based in Baton Rouge,                                is setting up an acetyl projects               The relentless rise of world
expectations and the kingdom’s reforms open up the market to private                                                Louisiana, has recently signed a let-                         complex, scheduled to start com-        manufactured output seems to
sector investment                                                                                                   ter of intent with SABIC’s affiliate                          mercial production as early as          confirm so, but the ethylene boom
                                                                                                                    Yanbu National Petrochemical                                  2009.                                   has not inspired plans for much
                                                                                                                    Company (YANSAB). Shaw will pro-                                    Other companies such as           new capacity in the West. Mean-



D
        uring the 1980s an Ameri-         In the past ten years, more          acquire a license has now shrunk     vide detailed engineering for the                             SAFRA, a leading supplier of envi-      while in the oil states of the Middle
        can consulting firm was      than 40 new laws have been intro- to a couple of weeks, while foreign construction of a butane plant and                                     ronmental-friendly aliphatic and        East it reached almost 13 million
        asked to estimate SABIC’s duced, tax tariffs lowered, red tape firms are finally allowed to own             an aromatic plant, both to be                                 aromatic solvents for local and         tons in 2005, representing 12 per-
long-term prospects. Today, it       reduced and price fixing eliminat-        land and to hold majority stakes in located within YANSAB’s petro-                                 international markets, operates         cent of world demand.
admits that the leading petro-       ed, even for gas feedstock used by almost all the sectors of the nation- chemical complex at the major Red                                   from Yanbu. “We are at the top of             “End-users in North America
chemical and steel producer in       domestic petrochemical companies. al economy, apart from sensitive             Sea industrial port of Yanbu on the                           the industry in terms of environ-       tend to be the most sophisticated
Saudi Arabia is 70 percent bigger         But Riyadh I. Al-Saad, presi-        industries such as upstream oil and west coast of Saudi Arabia.                                    mental protection and community         and they are willing to pay more if
than it predicted 20 years ago.      dent of SFCCL, the first                  military equipment production.            Engineering has already begun                            work,” says Khalid Ibrahim Zag-         they know they are getting a good
     The State-owned Saudi Arabi- privately-owned downstream petro-                 “There are no restrictions on   and the two plants are scheduled                              zoog, the company’s president.          product,” says Al-Saad, who has
an Basic Industries Corporation      chemical company in the industry,         the repatriation of capital either,” to be completed in 2008. A further                                  Established in 1986, SAFRA        recently came back from a business
(SABIC) was established by royal     believes the private sector should        adds Al-Ohali, “and the business-    $40 billion is expected to pour into                          was awarded the King Fahad              trip to the U.S. and Canada.
decree in 1976 and has become        take full control of the downstream friendly environment is exemplified the Middle East’s petrochemical                                      Award for best industry in 1997.              Thanks to a booming con-
the Middle East’s largest industrial industry in Saudi Arabia. “The rev- by the large number of foreign             sector by 2010 and Saudi Arabia                               The company has a capacity of           struction sector, SFCCL’s natural
group, with a production that will   enues downstream have been                companies present in the kingdom. will absorb the majority of it.                                  110,000 tons per annum, and two         market remains in GCC countries,
reach 60 mtpa (million tons per      superior to basic chemicals, and
annum) by 2008.
     Nor is SABIC alone, as other    “The private sector
players such as Saudi International
                                     should take full con-
Petrochemical Company (SIPCHEM)
and Saudi Formaldehyde Chemical trol of the
Company (SFCCL) are fast catching downstream industry
up in both the domestic and inter-
national markets.                    in Saudi Arabia. The
     But what is behind this unfore- revenues downstream
seen growth, especially in a country
renowned for oil wealth, but far     have been superior to
down the list of top producers for   basic chemicals, and
petrochemicals?
     According to Ahmad A. Al-
                                     the costs of establish-
Ohali, president of SIPCHEM, a       ing a plant are also
producer of both basic and inter-
mediary chemicals, the strong
                                     much cheaper,”
performance of the sector is the                --I. Al-Saad, president, SFCCL
result of the economic reforms
implemented by King Abdullah.        the costs of establishing a plant
“The need to diversify away from     are also much cheaper,” he says.
oil was recognized as a priority a        “Although oil continues to
long time ago, but it hasn’t been    dominate Saudi Arabia’s economy,
such an easy mission to accom-       petrochemicals are a major driving
plish, especially with oil prices    force, employing 20,000 people
soaring so high,” he says.           and contributing approximately 10
     The World Trade Organization percent of GDP,” points out Al-
accession certainly had something    Ohali, who feels that cheap
                                                                           Corbis




                                                                          Some of them have been here                                         But the industry faces chal-                                                but Al-Saad would like to develop
                                                                          already for 40 or 50 years”.                                   lenges as well. According to Dr.
                                                                                                                                                                                  “Although oil contin-                   a long-term relationship with
                                                                               For Al-Saad no one in the                                 Robert Eid, CEO of the Arab              ues to dominate Saudi                   American customers as well. SFCCL
                                                                          world “aside from the Chinese,                                 National Bank, the petrochemical                                                 is also building a methanol plant
                                                                          perhaps”, can compete in the long                              industry is becoming too big for
                                                                                                                                                                                  Arabia’s economy,                       which will be completed in 2008.
                                                                          run with Gulf Cooperation Council                              banks to handle. “With interest          petrochemicals are a                    “We won’t be just a formaldehyde
                                                                          (GCC) countries in the production                              rates rising, project finance will                                               company any longer and the com-
                                                                                                                                                                                  major driving force,
                                                                          of downstream chemicals.                                       become more and more expensive                                                   pany’s name will be changed to
                                                                          “Western companies should be                                   and many conservative institutions       employing 20,000                        Chemanol, which means chemicals
                                                                          more cooperative instead of com-                               may look for other ways to invest                                                from methanol,” explains Al-Saad.
                                                                                                                                                                                  people and contribut-
                                                                          petitive,” he says.                                            their money,” he says.                                                                 While the science of predicting
                                                                               New petrochemical projects                                     For Al-Ohali it is very impor-      ing approximately 10                    price fluctuation still needs to be
                                                                          backed by foreign direct investment                            tant to keep the sector open to the      percent of GDP.”                        perfected, the World Bank consid-
                                                                          are already in the pipeline. Sumi-                             participation of international firms.                                            ers that Saudi Arabia has the best
                                                                          toro Chemical from Japan and                                   “They will bring know-how and                                                    overall environment in the region
                                                                                                                                                                                          --Ahmad A. Al-Ohali, president,
                                                                          Saudi Aramco have agreed to build                              capital investment,” he says.                                          SIPCHEM for doing business, outperforming
                                                                          an oil-refining and petrochemical                                   SIPCHEM already works with                                                  even high-flyers such as Dubai. In
                                                                          complex in Rabigh on the Red Sea.                              Canadian and French companies in                                                 the event of a petrochemicals sur-
                                                                               The development, scheduled                                the production of acetic acid and        new plants expected to come             plus, Saudi Arabia would easily stay
Corbis




                                                                          to begin operation in late 2008, is                            vinyl acetate at plants in Jubail, the   online in 2008 will significantly       ahead in the battle for market
to do with it. On its path to mem-    feedstock and a highly developed    estimated to cost $8.5 billion and                             industrial capital, which accounts       increase that output.                   share, because of its abundance of
bership in 2005, Saudi Arabia had     industrial infrastructure are what  produce 1.2 mtpa of polyethylene,                              for more than 7 percent of the                As oil prices continue to soar,    natural resources and the newness
to introduce a number of legisla-     are driving the industry forward.   ethylene glycol and propylene                                  kingdom’s GDP.                           speculation about the future of         and efficiency of its production
tions to improve its business              “Sound government policies     oxide. It will become the world’s                                   SIPCHEM was also the first          petrochemicals is the talk of the       plants. ◆
environment and boost inward          have also encouraged direct foreign largest integrated refining and                                company to be awarded a plot of          day. Supplies are short, prices are
investment.                           investment. The time needed to      petrochemical complex.                                         land in Jubail II, the eastward          high and any output is profitable,      By Marco Venditti
                                                                                                                    photos: PMP Global




Land Bridge Project
Coast to coast railroad will reduce the transit time for freight from
seven days by sea to less than 48 hours by train.




B
     ids by nine international consortia to build a       container ships,” says Al-Suraisry. “Vessels that can
     $5 billion railroad that will link Saudi Arabia’s    carry up to 1,000 TEUs [twenty foot equivalent units]
     Red Sea and Arabian Gulf coasts via Riyadh           do not move from one port to another. They need to
were whittled down to four in June.                       go from one mega-port to another mega-port, so we
     The successful consortium will design, finance,      have done studies which we are now implementing.
build and operate a 570-mile railroad between             As a result, I have signed an agreement with two pri-
Riyadh and Jeddah for a concessionary period of 30        vate sector companies, one Saudi and another
years. There will be an additional 70-mile connection     Malaysian, to build a new terminal in Jeddah that
between Dammam and Jubail and the new railroad            will have a capacity of 1.5 million TEUs and this will
will be linked with the existing two lines running        be operational in only three years’ time.
between Riyadh and Dammam.                                      “The expansion of the port should be completed
     The coast to coast railroad – known as the land      before the land bridge is finished, so before we have
bridge project - will reduce the transit time for         the trains moving from one port to the other we will                                                                                         Modern trains will link mega ports on the
freight from seven days by sea to less than 48 hours      have all the prerequisites.”                                                                                                                 kingdom’s east and west coasts.

by train. It is the cornerstone of a plan to transform          Al-Suraisry says that while there is stiff global
the kingdom’s existing rail network, which is minimal     competition between ports, he believes the expan-
at present, into a world-class freight and passenger      sion of Jeddah will give an important edge to the
system.                                                   Saudi ports and that the railroad will also have a pos-
     “Connecting Jeddah port on the Red Sea to the        itive impact.                                                                                                                               Saudi transport sector. “When we announced the
Dammam port on the Gulf coast, the two most                     With regard to road transport, the minister says                         ing comparative advantage. One area cannot suc-              land bridge project, we announced it everywhere,
important ports in the kingdom, will have a profound      that a thousand miles of new highway will be com-                              ceed if it is not connected to other areas. If               including in the American press, and we encouraged
impact, not only on transport development but on          pleted and operational within a couple of years, and                           agricultural centers do not have good roads to con-          American companies to participate. But unfortunate-
economic development in Saudi Arabia in general,”         that work is being started this year on a further                              nect them to larger markets, they won’t thrive and           ly we have not seen any interest.
says Dr Jobarah bin Eid Al-Suraisry, the Minister of      5,000 miles.                                                                   people will migrate to the cities.”                               “However, recently chief executives from some
Transport.                                                      “This business is not just about services,” says                              The minister says the only disappointment is the        companies have come and we hope they will be
     “There has been a huge growth in the size of         Al-Suraisry. “It is about the economy. It’s about tak-                         poor degree of involvement from the U.S. in the              involved. We always welcome them.” ◆
Join                                      sheikh Mohammed Al-Rajhi,
                                     chairman of Al-Rajhi Group of
                                     Companies, happens to be the
                                                                                                                                                           apply in every case. Ayman
                                                                                                                                                           Tamer, president of Tamer
                                                                                                                                                           Group, inherited a pharmaceuti-
                                                                                                                                                                                                      The most impressive will be a
                                                                                                                                                                                                 hotel located in the business dis-
                                                                                                                                                                                                 trict of Riyadh which will boast

the                                  scion of one of the country’s
                                     most successful and diversified
                                     family groups. “I opened my
                                                                                                                                                           cal company established by his
                                                                                                                                                           grandfather in 1922. After com-
                                                                                                                                                           pleting his studies abroad, Tamer
                                                                                                                                                                                                 300 rooms and suites, poolside
                                                                                                                                                                                                 villas, nine conference rooms
                                                                                                                                                                                                 and a ballroom with a capacity

Family                               first grocery shop with about 60
                                     riyals, which is less than 15 dol-
                                     lars; and it wasn’t even my
                                                                                                                                                           changed the company around,
                                                                                                                                                           streamlining the non-performing
                                                                                                                                                           sectors, and formed joint ven-
                                                                                                                                                                                                 for 1,000 guests. The hotel is
                                                                                                                                                                                                 scheduled to open in 2008, fol-


Firm                                 money, I borrowed from my
                                     brother,” he says, laughing.
                                          Rajhi Steel is the group’s flag-
                                                                                                                                                           tures with foreign firms. Today,
                                                                                                                                                           Tamer Group is one of the lead-
                                                                                                                                                           ing companies involved in
                                                                                                                                                                                                 lowed by one in Buraidah in the
                                                                                                                                                                                                 Al-Qassim region and another in
                                                                                                                                                                                                 Yanbu in the north-west of the
                                                                                                                                                                                                 country.
                                     ship and third largest producer                                                                                       healthcare products and con-
In a country where                   of steel in Saudi Arabia, but the                                                                                     sumer goods, with a strong                 Partnership with family busi-
                                     holding operates in diverse sec-                                                                                      commitment to the medical             nesses in Saudi Arabia is proving
tradition is very strong,                                                    Jeddah’s new smelting plant
                                     tors of the economy such as                                                                                           sphere.                               to be a good opportunity for
thriving family                                                                                                                                                                                  foreign companies. A few years
                                     construction, maintenance, sup-                                                                                           But what can second-gener-
businesses are adapting              plies, manufacturing, agriculture,                                             the return is not so great in some     ation ownership bring to Saudi        ago, Shell tried and failed to
to global changes and                trading and consulting.                 King Abdullah is now                   of these areas, they are solid         Arabia’s transforming economy?        enter the Riyadh petrol-station
competitiveness by                        It is estimated that up to 90                                             businesses and they are growing        How many of them will survive         market. Many Saudi business-
                                     percent of companies in Saudi           encouraging speed                      consistently,” says Al-Rajhi.          the transition or welcome the         men commented at the time
offering outsiders
opportunities for joint
                                     Arabia are still wholly family-         of development for                         Few leaders of non-family-         arrival of a professional manager     that the British-Dutch giant
                                     owned, compared to 70 percent                                                  owned companies can afford to          outside the family?                   should have looked for a local
ventures                             in the European Union. At least
                                                                             the country and is                     consider where the business will           Corporate succession may be       partner with indispensable local
                                     500 of them can be classified as        getting involved in                    be decades from now, just              the ultimate test of a family busi-   knowledge if it wanted to be
    “You trust your blood, and       large corporations in terms of                                                 because few will stay in power         ness, but with an average of five
                                                                             making sure that                                                                                                    successful.
that’s it,” goes a Saudi summary     volume of business.                                                            that long. He is also proud of the     children in every Saudi family,
                                                                                                                                                                                                      “The relationship between
of the advantages of family               Whether this is a good thing       reform happens                         company’s charity work which,          businesses in Saudi Arabia have
                                                                                                                                                                                                 the kingdom of Saudi Arabia
business.                            for Saudi Arabia is a current                                                  besides paying 2.5 percent wel-        plenty of choices at this crucial
                                                                             fast.”                                                                                                              and the United States has
    While this may sound old-        topic of discussion in the king-                                               fare tax on wealth in accordance       time. Often the result is that the
                                                                                   --Sheikh Mohammed Al Rajhi,                                                                                   always been very strong and we
fashioned in a globalized world,     dom’s business circles. As the                                                 with Zakah, the fourth pillar of       firm is split at management level,
                                                                                                       Chairman,                                                                                 must maintain what I would
where exchange of ideas and          economic deregulations imple-                     Rajhi Group of Companies
                                                                                                                    Islam, also supports community         according to the individual inter-
business models are as impor-        mented by King Abdullah create                                                 work in several cities around the      ests of the founder’s children or     define as a friendship,” says Al-
tant as the products or services     new opportunities for multina-                                                 kingdom. “Start helping your           close relatives.                      Rajhi. “King Abdullah is now
provided by any given company,       tionals seeking a greater share                                                immediate family, then go fur-             Rajhi Steel, for example,         encouraging speed of develop-
in Saudi Arabia the concept of       of the Saudi market, many won-          unprofessional and exposed to          ther. This is the teaching of the      established in 1984 by Abdul          ment for the country and is
family business takes on a differ-   der about the future of family          internal squabbles at the time of      Prophet,” says Al-Rajhi, who           Rahman Al-Rajhi, one of the           getting involved in making sure
ent dimension.                       businesses, often labeled as            succession.                            believes that this fundamental         founder’s sons, is a spin-off of      that reform happens fast.”
                                                                                  But Al-Rajhi is proud of what     doctrine can be embraced by any        the group. The company now                 Many Saudi firms are cur-
                                                                             his family has achieved. “I believe    society or nation around the           boasts three steel factories, with    rently bringing in new investors
                                                                             that our lines of business, espe-      world, despite its religious belief.   an annual capacity of 250 mil-        to increase liquidity for expan-
                                                                             cially industry and real estate, can   “In our teaching if you fulfil the     lion tons, covering 35 percent of     sion by becoming joint stock
                                                                             really make a difference in a          need of your Muslim brothers           the domestic market share.            companies, thus opening their
                                                                             country and change people              then you can also go to help your          Creditworthiness and stability
                                                                                                                                                                                                 ownership beyond the ranks of
                                                                             lives,” he says, referring to the      Christian brothers and anybody         are two things that the second
                                                                                                                                                                                                 the families that founded them.
                                                                             number of jobs and infrastruc-         else,” he says. “We are working        generation can also count on
                                                                                                                                                                                                 But ultimately, it is not about
                                                                             ture his companies provide for         hard to fill this need locally and,    when taking over the business
                                                                                                                                                                                                 being family or non-family; it is
                                                                             Saudi Arabia.                          God willing, we will be able to do     from their fathers, which come
                                                                                                                                                                                                 about being a good company
                                                                                  One thing is for sure: family     more and more in the future.”          in handy if a company needs to
                                                                             firms can be socially more                 Critics of the family-business     raise money for future expansion      which is professionally run. Plen-
                                                                             responsible and have a longer-         model are plenty: “The first gen-      or diversification projects.          ty of them exist in Saudi Arabia
                                                                             term vision than publicly-traded       eration builds the company, the            A joint project of the Al-Rajhi   and, according to Al-Rajhi,
                                                                             companies, especially because          second lets it stagnate and the        Group at the moment is the            American companies should
                                                                             they don’t have to show con-           third squanders the money.”            development of a chain of             seize on this opportunity ◆
                                                                             stant improvement in their                 While there may be some            hotels in Saudi Arabia with the
                                                                             quarterly results. “Even though        truth to that, it certainly doesn't    Swiss group Mövenpick.                By Marco Venditti
Super Cities Rise from the Sand
In less than three                    million tons in less than 15 years,
decades Saudi                         a world record according to the
construction firms have               company’s management.
                                           Driven by surging oil revenues
transformed the
                                      and population growth, which is
kingdom’s desert sands                expected to double in the next
into modern cities of                 20 years, the construction indus-
prestigious buildings                 try is attracting massive
                                      investment.



A
         little more than thirty           In the past, the state took the
         years ago, Riyadh was a      lion’s share of responsibility for
         small city mostly of mud     housing projects, schools and
bricks, whereas Jeddah, on the        utilities, but the private sector is
Red Sea, relied instead on its        increasingly involved in these seg-
dried-up coral reef as a construc-    ments of the industry.
tion material. Today, thanks to            The kingdom’s infrastructure
decades of continuous economic        has not seen such intensive con-
growth alongside a booming            struction since the 1980s, when
construction industry, they are       companies such as Saudi Oger
both sprawling cities with multi-     and the Saudi Binladen Group lit-
billion dollar projects on the way.   erally built the country up from
     When the Yamama cement           the sand, by interweaving thou-
company started its operation         sands of miles of roads and
                                                                             King Abdul Aziz International Conference Center

The two holy cities of Mecca and Medina
                                                                      construction of hospitals, confer-            take a 55 percent stake in the         of the infrastructure, from desali-   the single largest private sector
have also seen some astonishing construction                          ence centers, office complexes,               formerly state-owned Turk              nation plants to thousands of         investment in the kingdom. To be
sites from the Binladen Group, such as the                            government buildings and mili-                Telekom. The Oger bid was more         miles of roads.                       built on the Red Sea, north of
                                                                      tary facilities. And recently Oger            than $6 billion and the largest            Considering the geographical      Jeddah and easily reachable from
colossal complex of skyscrapers it is building                        Dubai, a subsidiary of Saudi Oger             privatization in Turkish history.      characteristics of Saudi Arabia, a    the Holy cities of Mecca and
in front of the gate of the Great Mosque for                          Limited, won a $186.4 million                     In tune with the mood of the       huge country mostly dominated         Medina, the project is part of
                                                                      contract to buid the Churchill                time, Oger Telecom spokesman           by desert and a punishing heat        Saudi efforts to take advantage
the Al Saud family.                                                   towers in Dubai City. The project             Mohammed Hariri said that he           throughout the year, the signifi-     of the new oil boom, to diversify
                                                                      will be built on 58 acres and con-            regarded the Turk Telekom deal         cant distances covered by the         the economy and create jobs for
back in the early 1960s, its pro-   connecting Saudi Arabia to the    sist of two towers, comprising of             as a partnership, rather than just     company’s builders will remain an     the new generations.
duction was 300 tons a day,         rest of the Gulf.                 56 floors of residential apart-               a financial investment.                accomplishment for the next               The Binladen Group is part of
covering most of the kingdom’s          The Saudi Oger Group was      ments and 42 floors of                            Operation and maintenance          generation to admire.                 a consortium created to facilitate
demand from Riyadh to Ha’il.        founded in 1978 by the late Rafik commercial and office space.                  of both private and public utilities       The two holy cities of Mecca      investment for the project and is
“And we even had some left          Hariri, former Prime Minister of       Over the years, Saudi Oger               have also taken the company out-       and Medina have also seen some        headed by Emaar Properties, the
over,” says Saud M. Al Dablan,      Lebanon. Right from the start,    has grown into a multi-divisional             side the national borders.             astonishing construction sites        company that has played a lead-
the company’s general manager. the company became renowned organization with interests                              Independent power and water            from the Binladen Group, such as      ing role in developing Dubai.
    By 2007, Yamama’s increased for its professionalism and swift- throughout the Middle East,                      project opportunities are currently    the colossal complex of skyscrap-         The KAEC is expected to cost
production will reach 20,000 tons ness in carrying out massive        Africa and Europe. The World                  being pursued by Saudi Oger in         ers it is building in front of the    $26.7 billion and include a sea-
a day, but that output will not     projects such as the King Abdul   Trade Organization accession has              Jordan, the UAE and other Middle       gate of the Great Mosque for the      port, industrial district, education
even cover the demand in Riyadh. Aziz International Conference        also created new opportunities                Eastern countries, especially con-     Al Saud family.                       and healthcare zone, financial
“This should tell you how far this Center, the operation and main- for a company that does not fear                 cerning water-treatment plants,            The Binladen Group is also        island, resorts and a residential
country has come along,” adds Al tenance of the King Khaled           foreign competition and wel-                  and seawater cooling systems.          taking advantage of international     area. Once completed, the com-
Dablan. Other companies such as International Airport and the         comes strategic alliances.                        The Saudi Binladen Group,          cooperation as the construction       plex hopes to attract foreign
Ittefaq Steel Products, part of the high-profile National Museum.          In 2004, the telecommunica-              which was founded in 1931, has         industry moves into giant devel-      investments and global trade on
Al Tuwairqi Group, went from            During 30 years of activity,  tions arm of the group, Oger                  also left indelible marks on the       opments. The King Abdullah            a scale unseen in Saudi Arabia. ◆
producing 1,000 tons a month of Saudi Oger carried out an impres- Telecom, led a consortium that                    kingdom. The group has made            Economic City (KAEC), launched
hot rolled steel sections to 1,250 sive list of projects, such as the included Telecom Italia SpA, to               major contributions to all aspects     in December 2005, is considered       By Marco Venditti
Master Plan for Mecca
Twin complexes to accommodate pilgrims will include timeshares, shopping malls, restaurants,
conference and exhibition centers and a tower block taller than the Empire State Building




T
       he number of Muslims making
       the Hajj pilgrimage to Mecca is
       expected to increase from the
present four million to 20 million in
future years, pushing up the need for
more accommodation in the holy city.
     To meet the demand, real-estate
developers are estimated to be spend-
ing about $13 billion on a variety of
spectacular projects. Two of the most
ambitious complexes will be Al-Shamiya
and Abraj Al Bait.
     Al Shamiya will be constructed by
the Al Oula Development Company
and accommodate around 250,000                      The towers include 10,000 accom-              The annual pilgrimage to Mecca (above);
                                                                                                     Artist’s rendering of the Abraj Al Bait -
people and 4,000 prayer participants.           modation units, ranging from                     King Abdul Aziz Endowment Project (right)
The first phase of construction will take       apartments and suites to studios. Eighty
three years. Final completion will take         percent will offer direct views of the Al-
ten years and equip the complex with            Haram mosque and 50 percent views            or of other nationalities.
the most modern and luxurious facili-           of Al-Kaabah. When completed, it will             “When we studied the Iranians, we
ties available.                                 be the biggest building in the world by      found that they have different behavior
     Ayedh Bin Farhan Al-Gahtani, the           mass, and the tallest building in Saudi      patterns from Saudis. They like to travel
president of Al Oula, says that the $9.3        Arabia.                                      in large groups and because of this
billion project will be the biggest devel-          Facilities will include a prayer room    they don’t like eating out in restau-
opment taking place in the holy city.           capable of accommodating nearly 4,000        rants, preferring instead to have private
     The area being developed covers            worshippers, a huge shopping mall with       restaurants.
741 acres and will feature hotels, resi-        a restaurant court, and conference and            “With the Africans, many like to                  “It is the first time in this country,        Construction began in 2004 and is
dential apartments, commercial centers,         exhibition centers. These are intended       come two months before Ramadan to                   and we’ve studied the concept togeth-        scheduled to be completed in 2008. All
markets and a capacity for about                to enhance the occupancy rate at the         beat the crowd. The Kuwaitis love hav-              er with the High Commission for              the accommodation units have been
10,500 vehicles.                                towers during the low seasons.               ing bigger washrooms and smaller                    Tourism and shariah scholars, and it will    designed with sufficient flexibility to
     Abraj Al Bait overlooks the Grand              Saleh Al Habib, the executive direc-     living rooms, which doesn’t hold true               soon be approved by the government,”         allow for future amendments according
Mosque and is designed as a city within         tor of Jiwar, the development company        with Saudi and Emirati clients.”                    he says.                                     to the market needs. Most facilities will
a city to accommodate 65,000 people.            responsible for the marketing of Abraj            Al Habib agrees that he is very mar-              The Abraj Al Bait development is          be accessible through bridges and ele-
The palatial complex will have seven            Al Bait, says planners had to take into      ket orientated and, as an example of                considered to be the biggest endow-          vators and in an emergency, say the
towers, the highest of which will be            consideration that 60 percent of the         this aspect of his business approach,               ment investment project in the               designers, the total capacity of 21,000
taller than the Empire State Building at        clientele would not be Saudi citizens.       points out that Jiwar has introduced the            kingdom and the largest of its kind in       people could be evacuated within
1,591 feet.                                     They might be Iranians, Asians, Africans     idea of timeshare to the Saudi market.              the Islamic world.                           twenty minutes. ◆




Real Estate Sector Set to Transform Kingdom
Saudi developers are                    real estate business in the king-      lion to cater for, the kingdom cer-      The lack of mortgage facili-
seeking foreign partners                dom is just starting and the           tainly has a much larger real        ties has acted as a bottle-neck
                                        potential for development is           estate sector than the other Gulf    limiting development, says Al
and expertise to meet
                                        great, due to an alarming short-       states, and so has potential for     Assaf, and when this problem
the king’s demand for                   age of home ownership                  far greater returns on investment. has been resolved he believes
thousands of new                        properties in the kingdom. He               Economic expansion has also the market will expand quickly
homes for his people                    expects to see many more such          increased the need for accom-        with developers selling on a
                                        developments and says that Al          modation as expatriates arrive in mass level. “We are moving



S
      audi Arabia may have plen-        Oula will take the biggest share in    the established industrial centers slowly but surely. In Saudi Arabia
      ty of oil and a great deal of     the market in developing residen-      of Yanbu and Jubail and the          drastic change does not happen
      space, but, remarkably, it        tial units.                            newer sites growing at Rabigh        easily but we are continuously
has a shortage of housing.                   Saudi Arabia lagged behind        and Ha’il.                           changing.”
                                                                                                                                                                               Dr Saleh Al Habib, executive director, Jiwar
    The government estimates            its Gulf neighbors in liberalizing          Dr Saleh Al Habib, executive        The company president, Al-
that more than 500,000 people           its real estate sector. As a conse-    director of Jiwar, a leading real    Gahtani sees himself as a tool,            nies, rather than by an individual      mation was not present. So we
require new homes annually,             quence, the kingdom’s property         estate company, points out that      carrying out King Abdullah’s               or a family and therefore is an         obtained it. We do our studies,
equivalent to about 100,000             development companies, while           60 percent of Saudi citizens do      vision of the kingdom’s future,            institution not a family business       take the numbers and imple-
units a year. To meet the need,         posting impressive profits, have       not own a house.                     and believes that Al Oula will             or any one individual’s dream.          ment them into the design of
scores of house building projects       not so far experienced the                  “They may not own a house,      expand to five times its present               To emphasize the real estate        our projects.”
are rolling off the architectural       hyper-growth that has been             but the money is there to do so,” size in the years to come.                    potential in the kingdom, Al-               What the kingdom needs
drawing boards, and the proper-         achieved in other Gulf states.         he says. Furthermore, with an            He says the changes since              Gahtani says: “Emaar has                now, he says, is more foreign
ty business is booming.                      Many of the larger Saudi          estimated 60 percent of those        King Abdullah’s accession have             completed some incredible proj-         expertise.
    In the last three years, 50         firms have actually made some          citizens aged under 25 and the       been dramatic. “He has chal-               ects in Dubai, but Dubai is only            “We need companies with
new real estate developers have         of their largest investments out-      population growing at the rate of lenged Saudis to repatriate their             the size of one Saudi city. Saudi       the sort of experience that lead-
received licenses from the Saudi        side of the kingdom. Al Oula is        7 percent a year, the demand for     money and has made the king-               Arabia will require probably 20         ing American companies have,”
Arabian General Investment              in Egypt developing a new              new homes is rising fast.            dom a welcoming environment                more projects equal to what is          he says. “Our plan for Jiwar is to
Authority and regional property         diplomatic quarter in Cairo. The            Al Gahtani of Al Oula main-     for investment.”                           the biggest at present, the King        get our name out into the public
                                                                               tains that it would be no                It was this attitude that per-         Abdullah Economic City, to meet         arena and attract some partners.
“The real estate business in the kingdom is                                    exaggeration to say that the real suaded the Dubai-based Emaar                  our society’s needs. So there is            To build the Jiwar brand
                                                                               estate sector in Saudi Arabia is     Properties to enter the Saudi              room for more entrants in this          name, the company invested
just starting and the potential for develop-                                   second only to oil in terms of its   market. In June, Emaar, the                market.”                                $13.3 million in sponsoring The
ment is great due to an alarming shortage                                      economic contribution.               largest listed company in the                  Al Habib of Jiwar has a simi-       World Cup soccer competition
                                                                                    Saudi Arabia is underdevel-     United Arab Emirates, bought               lar enthusiasm for an                   and has hired a leading interna-
of home ownership properties.”                                                 oped in real estate terms, he        John Laing Homes, the second-              international partnership. Jiwar        tional advertising agency to
                           --Ayedh Bin Farhan Al-Gahtani, president, Al Oula   says. This is due to political and   largest privately held U.S.                is a subsidiary of the Saudi Bin-       market its name globally.
                                                                               financial elements. Banks have       homebuilder, for $1.05 billion             laden Group, the kingdom’s                  “This is the time when we
                                                                               been traditionally cautious about    cash, making it one of the                 biggest construction company.           need the American companies
firms are entering the market           project has been embraced by           engaging in real estate develop-     world’s largest property compa-            Launching Jiwar after four years        and businessmen to come and
that, until now, has been mostly        the Egyptian government and a          ment projects because of             nies in terms of capital.                  as a professor specializing in          help us with their knowledge and
centered in Riyadh.                     number of embassies and addi-          regulations that did not allow           When it entered the Saudi              media and marketing, he saw             expertise,” he says. “We have the
     Many of the new develop-           tionally Al Oula is focusing on        them to mortgage the properties. market, Emaar linked up with Al                that the kingdom’s real estate          cash, but we need help to cope
ments are spectacular                   Syria and Jordan.                      This meant that developers had       Oula.                                      sector lacked feasibility studies.      with the change, the booming
mega-projects. The $26.6 billion             Many of the larger Saudi          to raise their own financing, usu-       This, says Al-Gahtani, is                  “An important aspect of real        population, the heavy liquidity
King Abdullah Economic City,            firms have targeted the United         ally through private initiatives.    because the two companies                  estate that was missing was             and the mega-projects.”
which is being built on the Red         Arab Emirates, lured by a more              “Now things are changing        share a common vision and a                identifying the needs of the                Investors in real estate can
Sea coast north of Jeddah, will         open market and higher returns.        on both the political and finan-     common structure. He explains              people. You have to know what           expect returns of not less than
have three luxury residential dis-           Al Hanoo, one of the king-        cial sides,” says Ibrahim Bin        that Al Oula was the first compa-          they want in their homes, what          30 percent, he says, with no
tricts that will house 75,000           dom’s leading real estate              Fahad Al Assaf, Al Oula’s execu-     ny in Saudi Arabia to be                   they want in their malls, what          taxes and an open environ-
residents.                              developers, formed a $136.2 mil-       tive vice-president. “Banks are      established by a group of compa-           services they require. This infor-      ment. ◆
     A second project, Jeddah           lion company called Ewan to            starting to realize the importance
Hills, which is to be built in Jed-     build and sell the first phase of      of real estate development. In
dah at a cost of $11.2 billion,         Star Islands, the largest commer-      the past, they were running
will consist of 20,000 top range        cial, residential and tourism          away from these projects, and
residential units.                      development project in the emi-        today they are running to them.
     Al Oula Development Com-           rate of Sharjah. Another major         Mortgage regulations are in the
pany, operating under the               Saudi company, Tanmiyat,               process of being approved by
umbrella of Emaar Middle East,          acquired the residential and com-      the government. We expect
is responsible for building the         mercial components of Legends,         these to be realized before the
properties on almost half of the        a $2 million theme park and            end of the year. This will set the
5,432 acre site. Ayedh Bin              resort development in Dubai.           groundwork for a mortgage sys-
Farhan Al-Gahtani, president of              Nevertheless the real estate      tem in the kingdom.”
Al Oula, says it will be devel-         business in the kingdom is gath-            Expatriates – from other
oped in phases and will be the          ering pace. High oil prices are        Arab states, the West and the
single biggest residential build-       leading to increasing personal         Indian subcontinent – who have
ing project in Jeddah.                  prosperity for many Saudi citi-        lived in the country for ten years
     Al Oula has projects in all the    zens and a great deal of               continuously can now apply for
kingdom’s major cities, says Al-        liquidity.                             citizenship, and thus qualify to
Gahtani, who believes that the               With a population of 27 mil-      buy property.                       The luxurious Massarah Hotel, Taif
                                                                                                              led to the creation of the Saudi      approval in the U.S.”                 production facility.
                                                                                                              Food and Drug Association                 He adds, however: “In Saudi           Tamer says that the healthcare
                                                                                                              (SFDA) and another new organi-        Arabia, in order to ensure safety     industry is short of technically
                                                                                                              zation, the Health Development        and quality, the authorities are      qualified staff, especially medical
                                                                                                              Council of the Mecca Region,          cautious about the registration       doctors and pharmacists. This is
                                                                                                              which is a private-public partner-    and pricing of certain products.      exacerbated by the pressure from
                                                                                                              ship of various players in the        There is no free and direct pro-      the Ministry of Labor for a
                                                                                                              healthcare industry.                  motion here as there is in the        greater Saudization of the labor
                                                                                                                  “Perhaps some companies           U.S.”                                 force.
                                                                                                              believe that their agency repre-          The Tamer Group is a local            At present, 45 percent of the
                                                                                                              sentation will be at risk, but if     healthcare and beauty care com-       group’s personnel are Saudi if
                                                                                                              you have a good business rela-        pany with an international            pharmacists are excluded. If they
                                                                                                              tionship and add value to the         dimension. Its focus is on person-    are included, the figure is 25 per-
                                                                                                              business, then this relationship is   al care, fragrances and prestige      cent which, says Tamer, is good
                                                                                                              not in jeopardy. Indeed it may        products, as well as pharmaceuti-     compared to other companies.
                                                                                                              evolve over time,” he says.           cal and medical goods, and it is          The group’s growth plan is
                                                                                                                  Tamer agrees that some com-       continuing to increase its pres-      that 300 of the projected 500
                                                                                                              panies that merely act as a           ence in the beauty care market.       new hirings should be Saudi citi-
                                                                                                              sponsor and do not add much               In order to meet the demands      zens. The trouble is that although
                                                                                                              value to the product may find         of the Saudi and regional mar-        a lot of effort is being put into
                                                                                                              that their role will become redun-    kets, it maintains strategic          developing the group’s human
                                                                                                              dant. “But for foreign companies      relationships with the leading        resources, most graduates are not
                                                                                                              to come and do what we can do         international companies in the        inclined to pursue business
                                                                                                              in terms of wholesale distribution    pharmaceutical, medical and con-      careers, he says.
                                                                                                                                                    sumer goods sectors.                      To win recruits to the industry,
                                                                                                              “I don’t see WTO                          Its manufacturing arm, the        the Tamer Group is creating part-

Prescription for Change                                                                                       accession as a threat
                                                                                                              to the health sector,
                                                                                                                                                    Saudi Japanese Pharmaceutical
                                                                                                                                                    Company (SAJA), a joint-venture
                                                                                                                                                    with a Japanese consortium, pro-
                                                                                                                                                                                          nerships with universities locally
                                                                                                                                                                                          and regionally. “A lot of training
                                                                                                                                                                                          programs are operated through
                                                                                                                                                    duces the latest researched           the Chamber of Commerce and
                                                                                                              but rather as an                      products as well as generics for      other organizations to make the
World tariff regulations           products in the Gulf region,         according to an analysis pub-         opportunity.”                         the Saudi and Middle East mar-        link and improve the recruitment
could force the king-              where consumption of medicines       lished last year by the Gulf                                                kets. It has introduced a             of aspiring professionals,” says
                                   is estimated to be $52 per capita,   Organization for Industrial Con-                                            confectionery supplies unit and is    Tamer. “More effort is needed,
dom’s drugs industry to                                                                                                           --Ayman Tamer,
                                   compared to about $20 in the         sulting, will be that local                       president, Tamer Group,   looking to diversify into this area   but we are heading in the right
become more competi-               rest of the Arab world.              pharmaceutical industries will not                                          by investing in a confectionery       direction.” ◆
tive to survive – and lead             More than $620 million has       be able to compete economically
to healthy reforms                 been invested in 27 manufactur-      with medicines from abroad.           would require tremendous invest-
                                   ing plants which concentrate             But this assumption is strongly   ment, which I don’t see most



W
             hile entry into the   mainly on the production of          disputed by Ayman Tamer, presi-       pharmaceuticals undertaking,” he
             World Trade Organiza- generic medicinal drugs.             dent of the Tamer Group, a            says.
             tion is generally         The largest player in the sec-   leading Jeddah-based manufac-              “Their main concerns tend to
perceived to be broadly positive   tor is the Saudi Pharmaceutical      turer and distributor of              be research, education and mar-
for the Saudi economy, concerns Industries & Medical Appliances         pharmaceuticals and beauty            keting. Distribution is not an area
have been expressed that the       Corporation (Spimaco), a compa-      products. “I don’t see WTO            of major interest to them if there
pharmaceutical sector is one of    ny set up in 1986 as the flagship    accession as a threat to the          are players in the local market
the few that will face a bleak     of a new local industry.             health sector, but rather as an       that can meet their needs.”
future unless it adopts a new          In recent years local produc-    opportunity,” he says. “This has           Tamer says that the environ-
strategy.                          tion has increased to more than      automatically opened the door         ment in Saudi Arabia for getting
    The kingdom has a $1.2 bil-    13 percent of consumption, but       for regulatory reform. Legislation    drugs approved by the SFDA and
lion market in medicines, more     more than $1 billion worth of        will become clear and capital         then to the market is very fast.
than 3,000 pharmacies and more pharmaceutical products are still        investment will become more           “If you have the paperwork in
than 4,600 registered drugs, both imported every year, mostly from      secure for both Saudi and foreign     order, it really takes no time at
generic and patented. Saudi Ara- U.S. and European manufacturers.       companies.”                           all, much less than in most Euro-
bia’s citizens are the largest         A consequence of having to           Tamer points out that expect-     pean countries and certainly
consumers of pharmaceutical        abide by WTO tariff regulations,     ed entry to the WTO has already       much less than getting FDA
What the Patient Ordered
                                                                                                                   think, if you take a close look,
                                                                                                                   you would see that they are as
                                                                                                                   advanced as their Western coun-
                                                                                                                   terparts.”
The growth of private                                                     top-quality standards the respec-            What sets the private sector
specialist hospitals offer-                                               tive institutions share.                 apart, he points out, is the fact
                                                                              Dallah IVF Center is the             that it has to generate its own
ing the latest treatments
                                                                          largest destination in the region        budgets and work within its
is helping to meet the                                                    for the treatment of in-vitro fertil-    means. “Fifteen years ago at Dal-
health demands of a rap-                                                  ization and is considered to be          lah we only worked in general
idly rising population                                                    the most technologically sophisti-       specialities. Now we have many
                                                                          cated. It has 22 women doctors           sub-specialities, like neurosurgery,
                                                                          who provide outstanding treat-           cardiac surgery, the best infertility



T
          he role of the private sec-                                     ment for infertility and assisted        treatment in the country and
          tor in the provision of                                         conception.                              nearly all the diagnostic facilities
          health care services is                                             Established in 1987, the hos-        that you can think of.”
increasing substantially in Saudi                                         pital has 220 beds and an                    The hospital has more than
Arabia. This is exemplified by the                                        out-patient department that is           150 physicians, some of whom
Dallah Hospital in Riyadh, which                                          now visited by more than a thou-         began their careers at Dallah
is one of the largest private hos- Professor Mohammad R. Al-Fagih         sand patients a day. Professor           before gaining specialist qualifica-
pitals in the kingdom with the                                            Mohammad R. Al-Fagih, the                tions either in the kingdom or
widest range of specializations.           A multitude of successful car- medical superintendent of Dallah         abroad.
     The hospital, which belongs      diac catheter procedures and        Healthcare Co. says the burgeon-             Professor Al-Fagih’s associa-
to the Dallah Healthcare Compa- cardiac operations have been              ing role of the private sector in        tion with the Harvard Medical
ny, is headed by Engr. Tarek          provided by the Dallah cardiac      healthcare in the kingdom has            School began in 1995, when he
Othman Al-Qassabi, who has            center, which was the first in the resulted from the government’s            was invited to be a visiting pro-
been involved in healthcare activi- region to introduce intra-coronary inability to meet fully the needs           fessor of cardiac surgery at
ties for more than a decade.          ultrasound and long stents for      of a rapidly growing population          Harvard’s Deaconess Medical
     It is Dallah Healthcare’s mis-   coronary aneurism. It is still the  that is very demanding in its            Center. “I used my relationship         diet includes a high intake of car-       tures used in the U.S. do not
sion, says Engr. Al-Qassabi, to       only private hospital fully-        health needs.                            with Harvard to establish ties          bohydrates, and climatic                  function well in the Gulf region.
serve the healthcare needs of the equipped with an electro-                   “Over the past 20 years we’ve        between Harvard and Dallah              conditions and life patterns limit            “Hospitals have very complex
community by providing a world- physiology diagnostic and treat-          seen many new hospitals and              Hospital in initiating the manage-      the amount of exercise undertak-          management structures,” he
class quality of medical care and     ment center.                        health centers built, as well as         ment of diabetes” he says.              en by older people.                       adds. “That said, there is still
innovative measures, coupled               The hospital’s diabetic center the introduction of much new                  This connection was useful             Professor Al-Fagih believes           great room for foreign invest-
with a responsible use of             was established in close coopera- technology, by both the govern-            because diabetes is an extremely        there is great potential for              ment in the sector that, if
resources and respect for individu- tion with the Deaconess Hospital ment and the private sector.                  common disorder in the king-            growth in private sector hospitals        conducted correctly, could prove
als.                                  in Boston, which is affiliated to       “In Riyadh there are several         dom. Nearly one in five Saudis          across the region but warns that          very profitable. We welcome for-
     “All life is a gift of God and   the Harvard Medical School, and government hospitals with more               beyond the age of 30 suffer from        investors must be careful and             eign entrants and are excited
each person’s life is of great        its relationship with the Dallah    than 500 beds and some with              diabetes mellitus. Research sug-        research the market well before           about the future of the Dallah
value,” he says.                      Hospital is a testament to the      more than a thousand, and I              gests this is because the Saudi         investing, because pricing struc-         Hospital.”❍




   A Thirty-year Partnership                                                                                           In 1986, the first accredited
                                                                                                                   respiratory care practitioner
                                                                                                                                                           Hospital extends
   Pioneering U.S. hospital performed kingdom’s first open-heart surgery
                                                                                                                   program to be offered outside
                                                                                                                   the U.S. was opened at the
                                                                                                                   cardiac center in Riyadh.
                                                                                                                                                           Links with U.S.
                                                                                                                       Today, the graduates of this        Saudi medical students                    other educational institution in
                                                                                                                   program are leaders in their            studying the Loma                         Saudi Arabia. “But the govern-
                                                                                                                   field at major Saudi hospitals.                                                   ment told us that it was too
                                                                                                                                                           Linda University pro-
                                                                                                                       Last year, the LLU satellite                                                  sophisticated and that we had to
                                                                                                                   campus - the National Institute
                                                                                                                                                           gram will now be able to                  simplify it. It then took us anoth-
                                                                                                                   for Specialized Health Training –       practice in America                       er year to hire someone from the
                                                                                                                   was established as an inde-             when they graduate                        King Saud University, at consid-
                                                                                                                   pendent, purpose-built,                                                           erable expense, to make our
                                                                                                                   non-profit institution, funded by                                                 curriculum simpler in order to



                                                                                                                                                           A
                                                                                                                   the Dallah Healthcare Company.                   s a result of the success of     get certification, and that has
                                                                                                                       During its centennial cele-                  the Dallah Hospital, its         delayed the project.”
                                                                                                                                                                    proprietor, the Dallah               The professor emphasizes
                                                                                                                   brations, which also fall this
                                                                                                                                                           Healthcare Company, is expand-            that Dallah was not prepared to
                                                                                                                   year, the LLU president, Dr Lyn
                                                                                                                                                           ing its infrastructure and building       compromise the standards of its
                                                                                                                   Behrens, presented Professor
                                                                                                                                                           an 80-bed extension.                      training. “So what we’ve done is
                                                                                                                   Al-Fagih with its Centennial
                                                                                                                                                               “We are also constructing             to make our university an exten-
                                                                                                                   Global Service Award for his
                                                                                                                                                           Dallah Tower, which will be a             sion of the campus of Loma
                                      Loma Linda University physicians (left to right):                            outstanding cardiovascular
               Dr. Roy Jutzy, Dr. C. Joan Coggin, Dr. Mohammed Al Fagih and Dr. Ellsworth Wareham                                                          seven-floor facility for outpa-           Linda University so that our stu-
                                                                                                                   service to the people of Saudi
                                                                                                                                                           tients,” says Professor Al-Fagih.         dents, when they graduate from
                                                                                                                   Arabia, and an award to the


   T
           his year marks the 30th          The team of fully equipped        transferred to the new Riyadh                                                “And, in addition to that, we are         here, can go right to the U.S.
                                                                                                                   nation of Saudi Arabia for its
           anniversary of a global      physicians, nurses, respiratory       Armed Forces Hospital, where                                                 extending our training programs           and practice there like any Amer-
                                                                                                                   role in LLU’s history.
           outreach project that        therapists and support staff,         Dr Al-Fagih led the cardiac                                                  for medical personnel.”                   ican graduate,” he says.
                                                                                                                       The purpose of the cooper-
   links the Loma Linda University      led by Dr Ellsworth Wareham           department. What followed                                                        The expanded facility will be             Is this a first in Saudia Ara-
                                                                                                                   ation is multifaceted, according
   (LLU) of Southern California         and Dr Joan Coggin of the             was a success rate of open-                                                  known as the Dallah Hospital              bia?
   with Saudi Arabia.                   LLU, were joined by a young           heart surgery, particularly for      to Dr Nelson. “We seek to pro-          Medical City. Asked whether it                “Absolutely,” says Professor
    The LLU was the first Ameri-        Saudi surgeon, Dr Mohammad            children, that ranks with the        vide service,” he says. “U.S.           would include a college, Profes-          Al-Fagih. “Such a relationship
   can university to operate an         Al-Fagih who, a decade later,         success rates of the best heart      accredited education is still
   academically and professionally      was instrumental in the estab-        centers of the world.                needed as allied health board
   accredited allied health degree      lishment of the Dallah                    The philosophy of the LLU        certification is still developing
   program in the Middle East           Hospital.                             team from the beginning was          in Saudi Arabia. “Our gradu-
   and today runs the only Ameri-           Recalling that first opera-       to provide training at all levels.   ates can sit for U.S. boards,
   can university clinical campus       tion, Professor Al-Fagih today        One of the heart team, Dr            enabling them to be recog-
   in Saudi Arabia.                     notes with appreciation that          Richard Nelson, proposed and         nized to better support high
       It was in January 1976 that      the LLU team allowed him and          worked to replace on-the-job         standards for their profession.
   a medical treatment team from        other young Saudi surgeons to         training with fully accredited           “Our Saudi alumni have
   LLU first visited the country at     perform the most complicated          university programs. He              demonstrated excellent success
   the invitation of the Saudi gov-     surgeries, while the LLU profes-      became the co-founder with           on the U.S. national boards,
   ernment and performed the            sors assisted as mentors.             Professor Al-Fagih of the Loma       occasionally exceeding our Cal-
   kingdom’s first open-heart               Three years later, the LLU        Linda University Satellite Cam-      ifornian alumni board result
   operation.                           heart team participation was          pus in Riyadh.                       averages,” he adds. ❍




    Making Medical History
   Hospital ventures lead to breakthrough in                                    monitoring system is the only one providing real-time, continuous,
   life-saving machinery                                                        accurate information. It provides long-awaited benefits, especially
                                                                                in live-heart surgery and for critically ill patients with haemody-



  D
            allah Healthcare Company’s venture-capital arm, Afx Inc.,           namic instabilities. Clearance has been obtained from the U.S.             Artist’s rendering of expansion project
            which is based in Silicon Valley, invested about $30 million        Food and Drug Administration and the device is now on sale
            in developing a machine that could read cardiac arrhyth-            worldwide.
   mia – the abnormal beating of the heart – and then sold it for                    “Other machines take from six to eight minutes, but ours gives        sor Al-Fagih said he hoped that           does not exist anywhere else. I
   more than $120 million to Guidant. Use of the machine was                    an instant reading,” says Professor Al-Fagih. “We still haven’t            it would.                                 myself have been joint professor
   approved by the U.S. Food and Drug Administration and it is now              made a profit or even broken even yet, but I don’t think this is too            “We have established a non-          of cardio-pulmonary sciences at
   being sold worldwide.                                                        far off. Once we break even, we will sell, or join a larger company        profit organization called Allied         Loma Linda University.”
       “In these sorts of ventures we are obviously forced to look out-         with a greater distribution network or we will make our own, and           Medical Specialities to give diplo-           The high standards demand-
   side of Saudi Arabia because understanding of venture capital is             this is where we make our profit.” In the meantime, Dallah is con-         mas and, soon, bachelor degrees           ed by Dallah have ensured that
   minimal in the kingdom,” says Professor Al-Fagih.                            tinuing its efforts to promote invention in healthcare technology. ❍       in medical specialities. Unfortu-         many of its departments are rec-
       “There is a lack of supporting sectors here, which is why most                                                                                      nately, however, government               ognized in the U.S. and in the
   medical equipment companies operate in places like Silicon Valley.                                                                                      bureaucracy is delaying the               United Kingdom, as well as by
   But that does not mean that we cannot provide the creative initia-                                   This page was sponsored by:                        licensing of such projects.”              the Saudi Council for Health
                                                                                                        Dallah Hospital
   tive and capital for such projects.                                                                                                                         Professor Al-Fagih says the           Specialities.
                                                                                                        P.O. Box 87833 – Riyadh 11652
       “We are prepared to take risks and are always looking for new                                                                                       curriculum for the proposed col-          “It has taken us a long time to
                                                                                                        Kingdom of Saudi Arabia
   opportunities,” he adds.                                                                                                                                lege was the same as that of the          get where we are,” says Profes-
                                                                                                        Tel: +966 470 2777
       The result is a new project called truCCOMS established by                                                                                          Loma Linda University (LLU) cur-          sor Al-Fagih, “and we are very
                                                                                                        Fax: +966 470 2748
   Omega Critical Care Ltd., a medical devices manufacturer based in                                    www.dallah-hospital.com
                                                                                                                                                           riculum, which, he says, is much          proud of the partnership with
   Scotland and owned by Dallah. The TruCCOMS cardiac output                                                                                               more advanced than that of any            LLU.” ❍
Saudi Movie Makes its Mark
A groundbreaking movie                       The film producer is general          to keep the demographic target         make sure that our films are
with a social message is                manager of Rotana Audiovisual,             market bigger.”                        commercially attractive for release
the first step towards                  owned by reform-minded Saudi                   Prince Alwaleed pointed out        in the United States. And to get
                                        billionaire Prince Alwaleed bin            recently that having researched        any movie released nationwide at
building a film industry in             Talal. Al-Halawani says the objec-         the matter thoroughly, he had          more than 300 screens it has to
the kingdom                             tives of the film are fully                found nothing in Islam that pro-       have some big names.
                                        supported by the prince and that           hibits movies. As media                    “The movie Babel with Brad
                                        it was a bold decision by his boss         communications have developed          Pitt is the kind of movie that can



S
       everal cinemas are being         to go ahead with such a film,              in the West, particularly since the    cross borders. It has to be
       built in Saudi Arabia in         something no producer had done             advent of satellite television, it     designed from the beginning to
       anticipation of the authori-     before.                                    has been increasingly difficult for    achieve that, so the projects we
ties lifting the ban on the public           “We cannot release the movie          the kingdom’s traditionally con-       are working on for the North
showing of movies, says Saudi           in our own country, but due to             servative society to resist them.      American market are co-produc-
film producer Ayman Al-                 Rotana’s size we can distribute it             This has produced many para-       tions and should have a mixed
Halawani.                               in theaters outside the kingdom,           doxes, says Al-Halawani. “For          cast.”
    As one of the team that
made Keif Al Hal, the first ever
feature-length Saudi film, which
this year has been given a pio-
neering presence in movie-houses
across the Middle East, Al-
Halawani is looking forward to
the day when the film can be
shown in the kingdom.
    He is also hoping that the
worldwide interest the film has
aroused, and the enthusiastic
reception it received at this year’s
Cannes film festival, may per-
suade movie distributors that it
would be worth showing in the
U.S.
    “The attention the film has
received is incredible,” says Al-
Halawani. “It was not a big
budget film. If I had known that
it was going to receive so much         Scene from "Kief Al Hal" Saudi Arabia's first feature length film
attention, I would have spent
three times as much.”                   on DVD, on pay-per-view TV and             example, certain scenes on a               Al-Halawani says that, as a
    Keif Al Hal (How Are You) is a      on the Rotana channel,” he says.           DVD are censored, yet they can         producer, he would like to show
comedy-drama, which depicts the             “Also, we wanted to take this          be seen on satellite TV. Saudi reg-    extremists from another perspec-
tension between moderates and           step. If no one did so, it would           ulations do not match with each        tive. “In the West, extremists are
conservatives in the kingdom and        never happen. This is the first            other in terms of the level of         regarded in one view, mainly a
the conflict experienced by the         step to build this industry in             exposure. Nothing is illegal, just     political one. I want to show
young as they try to embrace            Saudi Arabia.”                             banned in the sense that permits       where they come from – the
globalization, while retaining              Al-Halawani’s background is            are not given.”                        social issues involved and how
cherished Islamic values.               in investment banking, from                    Following the success of Keif      they deal with their own society,
    The story it tells is a Saudi one   where he moved into entertain-             Al Hal, Rotana has several other       far away from politics, and why
and it features a cast that is 70       ment finance and film                      projects under way that will show      they become this way.
percent Saudi using the Saudi           production. He emphasizes that             aspects of Saudi culture in a              “I also want to show people
Arabic dialect.                         Keif Al Hal is not a heavy drama           manner that should be of interest      who are in between, who are
    Al-Halawani says one of his         movie. “It presents important              in the West. “We are trying very       normal but influenced by these
goals was to focus on the rights        issues, but in a light way. I              hard not to preach because that        extremists. I want to show that
of Saudi women to work, make            thought this was very important,           dilutes the message,” says Al-         these people are human, that
decisions and have ambitions.           so as not to turn people off and           Halawani. “We also have to             they cry and they laugh.” ◆




    Private Boost for                                                                                       innovation which can be found here in
                                                                                                            Saudi Arabia, especially through partner-
                                                                                                            ships with universities.”

    Public Healthcare                                                                                            The Tamer Group is a shareholder in
                                                                                                            the International Medical Center (IMC) in
                                                                                                            Jeddah. This 300-bed multi-speciality hos-
    Health service may seek private sector funding for medical                                              pital was established by prominent Saudi
    research, drug-production and equipment and technical training                                          businessmen in a joint-venture with the
                                                                                                            Cleveland Clinic Foundation of Ohio, a
                                                                                                            leading provider of healthcare services,



  I
      f the kingdom is to maintain its role as                                                              research and technology.
      the region’s leading provider of medici-          “Obviously it requires a                                 Dr Walid Fitaihi, the chairman and
      nal drugs and healthcare products, the            great deal of capital but,                          chief executive of the IMC, says the hospi-
   Riyadh government believes private sector                                                                tal is equipped with the latest technology,
   investment will be vital to bolster research
                                                        more than that, it requires                         including its own water purification sys-
   and development (R&D), build modern                  innovation which can be                             tem. “The IMC’s focus is on healing the
   plants and production equipment and                                                                      mind, body and soul, and viewing patients
                                                        found here in Saudi Arabia,
   train skilled technical labor.                                                                           as human beings,” he says.
        One of the privately-owned conglom-             especially through partner-                              He intends to maintain the 2:1 nurse
   erates that has led the way in this respect                                                              patient ratio that is practiced at the Cleve-
                                                        ships with universities.”
   has been the Saad Group, the seventh                                                                     land Hospital and, in addition to the
   largest in the kingdom. The Saad Specialist                    --Ayman Tamer, president, Tamer Group     hospital’s medical services, he plans to
   Hospital, which has 507 beds and a range                                                                 provide continuous medical education for
   of associated clinics and laboratories, is
   the first private hospital in the kingdom to
   win endorsement from the international
   arm of the Joint Commission for the
   Accreditation of Healthcare Organizations,
   the accrediting body for more than 18,000
   hospitals in the U.S.
        The Tamer Group is another of the
   kingdom’s private conglomerates looking
   to expand its investment in new projects,
   ranging from manufacturing facilities to
   the fields of industrial, trading, finance
   and real estate.
        The group is a partner in a project
   under construction in Mecca called Arabio
   which will produce vaccines and serum
   developed by Jeddah BioCity, a company
   established under the chairmanship of
   Prince Abdulmajeed Bin Abdulaziz, the
   governor of the Mecca province.
        “R&D will be limited to developmental
   research and formulations,” says Ayman               Saudi Arabia is equipped with state-of-the-art medical equipment and facilities

   Tamer, president of the Tamer Group. “In
   the beginning the company will have to                    Tamer emphasizes that the patent laws          a range of health students and officials.
   license-in know-how from reputable for-              in the kingdom are strong and innovation                Ayman Tamer says his group invested
   eign pharmaceutical companies.”                      is safe. “There is most definitely a possibil-      in the IMC because of the great faith it
        In this respect, negotiations are under-        ity for further investment in R&D in                has in Dr Fitaihi. “I really praise him for his
   way for technology transfers with Berna              emerging countries like Saudi Arabia,” he           philanthropy, his spirit and his dedication
   Biotec (Crucell), Chiron, Pasteur and GSK            says. “Obviously it requires a great deal of        to the community,” he adds. ◆
   Production is scheduled to begin next year.          capital but, more than that, it requires
Banking on Recovery and                                                                                            Arabian Monetary Agency, the
                                                                                                                   kingdom’s central bank, the reg-


Prosperity                                                                                                         ulation of investment funds,
                                                                                                                   real- estate investment trusts,
                                                                                                                   corporate governance and
                                                                                                                   mergers. Part of its role is to
                                                                                                                   promote greater transparency,
Despite the recent collapse of its stock market, the Saudi government hopes                                        encourage more companies to
that reforms will stabilize the market and attract American and European                                           join the market and to educate
investment institutions                                                                                            investors, particularly first-time
                                                                                                                   and smaller ones, in the nuances
                                                                                                                   of stock-market trading.



S
      audi Arabia’s stock market      European investment institutions        national wealth among its citi-           By the end of this year, the
      has bounced back from the       to the Saudi stock market. With         zens. The process was so             authority is scheduled to begin
      massive collapse of confi-      this in mind Saudi financiers           successful, however, that many       the privatization of the Saudi Ara-
dence it suffered between             could be found in New York in           Saudis saw the rash of IPOs as a     bian Financial Exchange (SAFX)
February and May this year,           April in earnest discourse with         way of making a quick profit         which will be the first bourse in
when it shed a third of its value     the likes of JP Morgan, Chase,          rather than as a long-term           the Middle East to become a pub-
– an estimated $350 billion.          Citibank, Soros Capital, the Bank       investment.                          licly listed company.
    Although thousands of small       of NEw York, Goldman Sachs,                 Financial specialists saw the         Despite the stock market
investors lost fortunes, there has    Lehman Brothers and Morgan              collapse coming.                     crash, Saudi banks expect their
been little sign that Saudis have     Stanley.                                    “It was not a surprise,” says    profits this year to be similar to
lost their appetite for the finan-        “It is vital for Saudi Arabia to    Hassounah. “We were preaching        last year, when they recorded
cial market.                          attract American investors,” says       about what was going to happen       record-breaking growth of $7.2
    Initial public offerings (IPOs)   Mazen Hassounah, chief execu-           in the market from September.        billion – 61 percent above the
continue to be issued successfully.   tive of Rana Investment, one of         Now people are beginning to          2004 figure.
    There is good reason for this     the kingdom’s leading finance           understand what it means to               “Profits are strong and the
enthusiasm. Oil prices are            houses. “But to do so, the mar-         have an over-heated market and       threat from foreign institutions is
expected to remain high, the          ket has to be ready for these           how important the need is for        still not too great,” says Robert
economy is booming and, as a          investors. It needs to raise the        fundamental analysis.”               Eid, managing director of the
result, there is a good deal of       level of transparency and we                Rana Investment was estab-       kingdom’s Arab National Bank.
liquidity in the market. Further-     need clear regulations on money         lished in 1986 by some of the        Foreign banks are gradually
more, the kingdom’s long-term         movements in the market.                most distinguished business          entering the market, but are not
investors have done extremely             “The last thing we want is          families in Saudi Arabia who had     regarded as a threat.
well over the years. A basket of                                              liquidated their 25 percent stake         Substantial investment in the
shares purchased on the Saudi         “It is vital for Saudi                  in the American financial servic-    banking sector infrastructure is
market in 1999 has risen by                                                   es firm, Smith Barney. At that       expected with new branches
more than 700 percent.
                                      Arabia to attract                       time, Rana was the only enter-       opening, others being modern-
    Confidence is being               American investors.”                    prise, other than banks, licensed    ized and services being
strengthened by the substantial                                               to provide investment services.      expanded. “At ANB we are
                                                       --Mazen Hassounah,
financial services reform pro-             Chief executive, Rana Investment       Since the establishment of       looking to invest more internally,
gram which is underway. Steps                                                 the kingdom’s Capital Markets        especially into retail banking
are being taken to open up the        for foreign investors to have bad       Authority, it has been licensed to   where we think we can take a
market to foreign institutional       experiences here because the            provide a full range of corporate    larger stake in the market,” says
investors. This is expected to        market is not ready for their           finance.                             Eid.
bring about greater stabilization     involvement.”                               The kingdom’s Capital Mar-            The most profitable Saudi
of the market.                            The government used IPOs            ket Authority was created two        bank last year was Al Rajhi Bank
    One of the government’s           as a way of privatizing public          years ago and is in the process      whose net income increased by
goals is to attract American and      enterprises and spreading the           of taking over from the Saudi        92 percent to $1.5 billion. ◆




   From Desert Dates to
   State-of-the-Art Dairy Farms
                                                                                                     “I believe that it was Prince
                                                                                                     Abdullah Al-Faisal who
                                                                                                     made this project possible
                                                                                                     back in 1982, when he
                                                                                                     bought the first 3,000 cows
                                                                                                     from Holland and the U.S.”
                                                                                                                            --Karim Mansour Dahbi,
                                                                                                                    general manager, Alsafi-Danone.




                                                                                                         Today, Alsafi-Danone boasts a herd of
                                                                                                     35,000 cows at its 8,648-acre state-of-
                                                                                                     the-art farm in Kharaj, and earned a place
                                                                                                     in the Guinness Book of World Records in
                                                                                                     1998.
                                                                                                         Although most Saudis still quench their
                                                                                                     thirst with water sourced from the sea,
                                                                                                     thanks to a network of desalination
                                                                                                     plants, sales of beverages are growing
                                                                                                     fast. “Annual consumption per capita is
   The kingdom has a surprising
                                                        But while consumer industry giants like      only 34 liters [71 pints], but the potential
   agricultural sector and food                     Procter & Gamble and Gillette are forming        for bottled water is huge and growing at
   production industry. Despite                     joint ventures to expand their reach in          6 percent a year,” says Al-Ammari.
   boycotts of some Western                         international markets, local companies like          Desalinated water is also a key issue
   goods, it would like to partner                  FPC make the best of their local portfolio,      for the agriculture industry. “Irrigation
                                                    relying on focus rather than scale.              costs can be as high as 75 percent of all
   and produce fresh products for
                                                        “When I joined FPC in 1999 the first         expenditure for some companies, a level
   leading foreign brands                           thing I did was to close down the loss-          far above Europe or North America,” says
                                                    making entities and concentrate on our           Engr. Abdulaziz Al-Babtain, general man-
                                                    core business,” says Al-Ammari, confident        ager of the National Development



  S
         audi Arabia has become a modern            that the company’s flagship brand Wafra is       Company (NADEC).
         country in terms of its eating habits      excellent value for money.                           The food industry in Saudi Arabia is
         and food production and has devel-             FPC, which boasts annual sales of $50        worth around $26 billion and is increas-
   oped a surprisingly effective agricultural       million, produces a wide range of high-          ing. But international competition for the
   sector.                                          quality foods. Each of the four factories        modern consumer’s attention is ferocious.
       Camel meat and dates may still be very       has its own quality control laboratory, able     Home-grown companies aim to satisfy the
   popular, especially among the more tradi-        to meet the very stringent demands of the        needs of the low-middle market to stay
   tional families, but the new generation of       Saudi Food and Drug Authority.                   competitive.
   Saudis is ever ready to pay for Western              Another company that focuses on base             Producing and packaging for other pri-
   convenience and style when it comes to           products with strong appeal to the local         vate labels is also a growing business in
   food. Walk into any class-A supermarket          market for milk and yogurt is Alsafi-            Saudi Arabia. “Hypermarket chains have
   of Riyadh and you could be anywhere in           Danone. Alsafi, which is part of the Al          recognized that by sourcing locally instead
   Los Angeles, with even better stocked            Faisaliah Group, was established in 1984         of importing, they can make huge savings
   shelves.                                         and merged with the French dairy giant in        in inventories and in logistics,” says Al-
       “Ours is a young society which likes         2000. Together they run and distribute the       Ammari, who would like to partner and
   fast food and expects quality in return for      products of the largest integrated dairy         produce for leading foreign brands, partic-
   its money,” says Mohammad Al-Ammari,             farm in the world.                               ularly from the U.S.
   chairman and managing director of Food               “I believe that it was Prince Abdullah           “If Americans or other foreign compa-
   Production Company (FPC). Al-Ammari              Al-Faisal who made this project possible         nies want to come to the Saudi market, it
   studied in Denver and worked for five            back in 1982, when he bought the first           is much better for them to choose a local
   years as a banker in New York: he knows          3,000 cows from Holland and the U.S.,”           manufacturer. It saves them time and
   the value of a good food at a reasonable         says Karim Mansour Dahbi, general man-           money to produce fresh products here
   price.                                           ager of Alsafi-Danone.                           instead of shipping them,” he says. ◆

								
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