Country Focus: Saudi Arabia

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Saudi Arabia (officially Kingdom of Saudi Arabia) is the largest Arab country in the Middle East. It is bordered by Jordan and Iraq on the north and northeast, Kuwait, Qatar, Bahrain and the United Arab Emirates on the east, Oman on the southeast, and Yemen on the south. The Persian Gulf lies to the northeast and the Red Sea to its west. It has an estimated population of 28m, and its size is approximately 2,149,690 square kilometres.

Key FactsLocal Time: GMT 3+Language: Arabic (official), English (widely spoken in business)Local Currency: Saudi Riyal (SR) (which is tied to the US$ at the rate of 1US$ = SR3. 5)GDP: 2008 – $481. 6bnIntroductionThe Kingdom is sometimes called 'The Land of the Two Holy Mosques' in reference to Mecca and Medina, the two holiest places in Islam. The two mosques are Masjid al–Haram and Masjid Al–Nabawi. The current Kingdom was founded by Abdul–Aziz bin Saud, whose efforts began in 1902 when he captured the Al–Saud's ancestral home of Riyadh, and culminated in 1932 with the proclamation and recognition of the Kingdom of Saudi Arabia, although its national origins go back as far as 1744 with the establishment of the First Saudi State. Saudi Arabia is an Islamic absolute monarchy form of government. Petroleum exports fuel the Saudi economy. Oil accounts for more than 90% of exports and nearly 75% of government revenues, facilitating the creation of a welfare state, which the government has found difficult to fund during periods of low oil prices. Saudi Arabia's Major Cities, 2009Riyadh 6. 5m Jeddah 3. 9m Makkah 1. 8m Medina 1. 6m Al–Hasa 1. 4m Dammam 1. 3m Tabuk 0. 8m Buraidah 0. 7m Khamis Mushait 0. 6m Abha 0. 5m Al–Khubar 0. 4mHigh Growth Market'Designated a 'High Growth Market' by UK Trade & Investment, Saudi Arabia is the UK's largest trading partner in the Middle East with UK's export of goods amounting to £2. 19bn in 2008. The UK is Saudi Arabia's second largest foreign investor after the USA. Saudi Arabia's fast–growing economy is creating opportunities for both exporters and investors. These are further boosted by moves to diversify the economy away from dependence on oil and gas, economic reform, market liberalisation and a growing private sector. In recent years Saudi Arabia has witnessed a period of relatively high growth and economic progress. This has been based on a strong oil sector and record oil revenues, allowing the Kingdom to increase public spending on infrastructure and welfare to match the increasing needs of a fast growing Saudi population. In turn the non–oil private sector is feeding off this upturn in public spending. The government budget for 2009, which was set at record levels, was signed off at a time of falling oil revenues and with global economies heading into recession. Growth in 2009 was static with a lot of projects being re–bid because of falling commodity prices and with the banking system still risk averse as a result of the downturn. There has been another record budget set for 2010, again with an emphasis on infrastructure development. The major projects are now moving forward and economists expect growth at a minimum of 4% in 2010. The Kingdom of Saudi Arabia is the largest economy in the Arab world. It accounts for 25% of the Arab world's GDP, and boasts the world's largest proven reserves (also 25%) of oil, with ever–increasing new discoveries. Infrastructure spending has been a major focus, with $400bn earmarked as a guaranteed stimulus package for capital projects to enhance economic growth and job creation. The spending plans are also geographically diverse, with an emphasis on developing social infrastructure in rural areas and the creation of new Economic Cities. Spending priority is given to education and healthcare in line with a policy that focuses more on the social needs of a rapidly growing population. But demographics mean there is a growing need for investment and jobs. GDP per capita is approximately $17, 000. It is therefore vital for Saudi Arabia to attract substantial amounts of private (i. e. largely foreign) investment and new technology to meet the rapid demand growth. Hence the need for economic reform. For both power and telecommunications sectors, legislation has been approved, providing for a competitive market under an independent regulator and open to foreign participation. Similar legislation, liberalising the insurance and capital markets has been enacted and there has been a reduction in the basic customs tariff from 12% to 5%. The Saudi Electricity Company (SEC), the National Water Company and the Saudi Telecom Company (STC) have been privatised. Most of Saudi Arabian Airways has been privatised and 50% of the national mining company, Ma'adan. New mobile and fixed line telecom licences have also been awarded. If the programme of economic reform is successful, the demographics will create a substantial increase in demand for goods and services over the next two decades. Entering the Saudi marketForeigners wishing to conduct business in Saudi Arabia may do so in one of the following ways:By establishing an incorporated entity By entering into a partnership By establishing a branch office By establishing a representative office By engaging a service agentDoing business in Saudi ArabiaFor those wishing to do business with Saudi Arabia an understanding of Saudi etiquette and the personal manner in which business is conducted is essential. Generally speaking, business appointments in Saudi Arabia are necessary. However, some Saudi business executives and officials may be reluctant to schedule an appointment until after their visitors have arrived. Appointments should be scheduled in accordance with the five daily prayer times and the religious holidays of Ramadan and Hajj. It is customary to make appointments for times of day rather than precise hours as the relaxed and hospitable nature of Saudi business culture may cause delays in schedule. The Saudi working week begins on Saturday and ends on Wednesday. Thursday and Friday are the official days of rest. Office hours tend to be 0900–1300 and 1630–2000 (Ramadan 2000–0100), with some regional variation. The concept of time in Saudi Arabia is considerably different to that of many Western cultures. Time is not an issue; therefore Saudi Arabians are generally unpunctual compared to Western standards. Despite this, it is unusual for meetings to encroach on daily prayers and business people will be expected to arrive at appointments on time. There exists a distinct dichotomy between subordinates and managers within Saudi Arabian companies. Those with most authority are expected and accepted to issue complete and specific directives to others. Age plays a significant part in the culture of Saudi Arabia. For this reason, greater respect must be shown to elders at all times. When first entering a room for example, or greeting Saudi counterparts for the first time, visitors should shake hands with the most senior person first. Saudi Arabian business people prefer face–to–face meetings, as doing business in the Kingdom is still mostly done against an intensely personal background. Establishing trust is an essential part of Saudi business culture; therefore cultivating solid business relationships before entering into business dealings is key to success. Respect and friendship are values that are held very highly by the Arab people. In a business setting, favours based on mutual benefit and trust are ways of enhancing these cultural values. Due to the personal nature of business in Saudi Arabia, family influence and personal connections often take precedence over other governing factors. CultureSaudi Arabian culture mainly revolves around both Islamic and tribal values. Islam's two holiest sites, Mecca and Medina, are located in the country. Five times every day, Muslims are called to prayer from the minarets of mosques that are scattered around the country. The weekend begins on Thursday due to Friday being the holiest day for Muslims. Most Muslim countries have a Thursday–Friday or Friday–Saturday weekend. Saudi Arabia's cultural heritage is celebrated at the annual Jenadriyah cultural festival. One of Saudi Arabia's most compelling folk rituals is the Al Ardha, the country's national dance. This sword dance is based on ancient Bedouin traditions: drummers beat out a rhythm and a poet chants verses while sword–carrying men dance shoulder to shoulder. Al–sihba folk music, from the Hejaz, has its origins in al–Andalus. In Mecca, Medina and Jeddah, dance and song incorporate the sound of the mizmar, an oboe–like woodwind instrument in the performance of the Mizmar dance. The drum is also an important instrument according to traditional and tribal customs. Samri is a popular traditional form of music and dance in which poetry is sung especially in the Eastern Region of Saudi Arabia. Saudi Arabian Musical tradition depends heavily on the modern Arabian oud. SportEven though football is the most popular sport, Saudi Arabia has recently participated in the Summer Olympic Games and in international competitions in volleyball and other sports. The Saudi Arabian national youth baseball team has also participated in the Little League World Series. The Saudi Arabia national football team is often most known for competing four consecutive times in the FIFA World Cup and six times in the AFC Asian Cup, which the team won three times and was runner–up three times. The Islamic Solidarity Games Federation is based in Saudi Arabia and is the governing body for its eponymous multinational, multi–sport event. The Games involve the elite athletes of the Organisation of the Islamic Conference. The first event was held in 2005 in Saudi Arabia and there are currently 57 members of the Organisation of the Islamic Conference. Non–Muslim citizens in the member countries are also allowed to take part in the Games. A second event, originally scheduled to take place in October 2009 in Iran, and later re–scheduled for April 2010, was cancelled after a dispute arose between Iran and the Arab World over the use of the term 'Persian Gulf' in logos for the Games, as some Arab countries refer to the body of water as the Arabian Gulf.

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