SUSTG attended the C3 Summit in New York City September 13-14, 2012. This was the inaugural event in what the organizers anticipate will be an annual gathering to ‘build new relationships, foster existing partnerships and exchange best practices’ between the U.S. and the Arab world. C3 (Community, Collaboration and Commerce) is looking to host the 2013 edition in Doha and tentatively targeting September. (To view the C3 Summit website, click here).
The agenda featured an interesting mix of academics, business people, seasoned diplomats, public-sector trade experts and others who addressed topics that spanned the MENA geographic spectrum. The combination of speakers and range of issues delivered an intriguing and often informative discussion about the political and strategic challenges facing the United States in the Arab world (the previous day US Ambassador to Libya, Christopher Stevens, and three other Americans had been killed during an attack on the US Consulate in Benghazi). Along with the analysis came a number of thoughtful suggestions on how to positively direct US relationships in an uncertain, post-Arab Spring environment.
Woven throughout the proceedings, however, was a consistent emphasis on commerce; the promise of attractive opportunities throughout the region and practical advice on how to tap into these markets. In this regard, there were some notable presentations and SUSTG will be bringing you those transcripts in the coming days. (To view the C3 Summit agenda, click here).
Saudi businessman and former minister of Commerce and Industry Abdullah Alireza, pictured here at the US-Saudi Business Opportunities Forum in Atlanta.
The Opening Day of the C3 Summit was headlined by two speakers. The Summit Keynote Speech delivered by President Bill Clinton, 42nd President of the United States and founder of the William J. Clinton Foundation and, preceding him onstage as the Afternoon Plenary speaker, HE Abdullah Alireza, former Minister of Commerce and Industry of Saudi Arabia.
The theme of President Clinton’s remarks, “Embracing our Common Humanity,” dovetailed nicely with that of the Summit and was delivered in typical President Clinton fashion (see Democratic National Convention). Following his remarks, he was interviewed on stage by The Hon. Paula Cox, Premier and Minister of Finance of Bermuda. The Government of Bermuda, which is working to become a leading center for Islamic finance, was a major sponsor and Co-Chair of the C3 Summit.
Mr. Alireza also captured the C3 theme with a discussion of the Saudi-US relationship anchored in the metrics of trade and commerce. The full text of his remarks can be read here.
Mr. Alireza noted longstanding commercial Saudi-US ties and encouraged a vigilant focus on further reducing barriers to trade. He also pointed out that Saudi Arabia is well on its way to evolving its economy and trade ‘profile’ to include a dynamic knowledge economy. Some of the key themes were:
Free Trade
We live in challenging times for the global economy. But much has to be done as much as already been damaged. Protectionism will threaten the prospects for recovery and prolong the global downturn. All too long we lived in a world that prized short-term gains based on greed and irresponsibility without considering the long-term consequences. We need to look at a global architecture that at its core is caring and responsible to the human.
During these challenging times, Saudi Arabia has not taken the path of curtailing free trade. Former US Secretary of Commerce, Michael Kantor said, “Strategic considerations have made us allies, but the ties of trade have brought us truly together.” In 2012, Saudi Arabia is forecasted to receive 23% of total U.S. exports to Arab states which is estimated to reach $95 billion. The trade outlook indicates that Saudi Arabia is one of the top markets in the region with potential for U.S. exports forecasted to more than double by 2015.
This is consistent with the major goal of President Obama’s National Export Initiative which will help to create 2 million new jobs for Americans. Saudi Arabia and the U.S. should complement and leverage each other’s comparative advantages to build a value added relationship. Over the years, the leaders of Saudi Arabia and the US have supported the bilateral economic relationship and we are committed to ensuring that our relationship continues to flourish.
This relationship must be broadened to reflect new priorities mainly the creation of intellectual capital and knowledge sharing as the only real guarantee of equality of opportunity for citizens in our countries and stability for the rest of the Middle East.
Fiscal Prudence
Saudi Arabia has weathered the global financial crisis well due to our prudent financial sector regulation, strong record of fiscal responsibility and economic diversification. Moreover, Saudi Arabia will endure the sovereign debt crisis that is hanging over Europe. As a result, GDP growth was 6.8% in 2011, the highest rate in the last eight years.
Four of the top 10 banks in the Middle East are Saudi banks. This is due to good track record of maintaining strong asset quality and adapting adequate lending practices and underwriting standards. Saudi Arabia is one of the world’s fastest growing banking markets with an impressive growth. It is estimated that lending will grow at a compound annual rate of around 10% over the next 3 years due to liquidity and capitalization.
The Saudi economy is poised to continue this robust growth due to low debt levels, strong reserves and continued government infrastructure spending.
Strategic Investment/Leveraging Assets
Saudi Arabia has embarked on a five-year $388 billion investment program that emphasizes private sector growth. This plan is funded solely from our national revenue and not from incurring any sovereign debt. Few of you may know that Saudi Arabia’s private sector contributes 48% of the country’s GDP and under this five-year investment program we are aiming for the private sector to grow about 6% per year. The private sector is the engine that drives our economy forward.
Moreover, to accelerate diversification and reduce oil dependence, Saudi Arabia is enhancing more of its already lucrative incentives. Climbing the value added ladder is our guiding principal. That’s why, even though our petrochemical sector has reached global stature, we are targeting industries that will leverage more of the petro-chemical chain such as specialty plastics and other high value added products. Saudi Arabia has 80 new basic petrochemical production projects scheduled for completion by 2015.
The aim of this initiative would be to foster the creation of knowledge societies, to share information and research tools in education enhancement. Saudi financial capital and US expertise in R&D could combine in a way to address some of the most pressing scientific, social and economic challenges today.
In a knowledge-based economy, what you earn depends on what you learn. The real wealth of any nation is its human capital. Saudi Arabia is investing in this asset at an unprecedented rate. It was President Kennedy who said, “Our progress as a nation can be no swifter than our progress in education. The human mind is our fundamental resource.”
Therefore, educational initiatives receive more than a quarter of our national budget in order to ensure that every citizen has access to quality education.
Industrial Policy/Knowledge Economy
The highlight of the country’s drive towards sustainable economic growth and diversification is our national industrial strategy which will greatly enhance the contribution of manufacturing to GDP by 2020. This will position Saudi Arabia as a qualitative manufacturing leader and propel other sectors in the economy to grow and accelerate our diversification goals.
In addition, development of small and medium enterprises (SMEs) is important for Saudi Arabia’s long-term job growth. SMEs promote entrepreneurship and training for young professionals to develop their skills which will positively contribute to our economic growth.
This initiative undoubtedly will open vast opportunities for new investments. We realize that this is a highly ambitious goal but I can assure you we have the determination, commitment and building capacity to achieve it.
Research and development is at the core of this initiative, therefore, we are planning to boost our spending on R&D from its 0.5% of GDP to 3% of GDP by 2020. Such allocated resources will also lay the foundation for a knowledge-based economy and expansion of knowledge clusters.
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FULL TEXT OF ABDULLAH ALIREZA’S SPEECH AT THE C3 CONFERENCE
Abdullah Alireza Speaks to the C3 Conference in New York
I am pleased to be in New York and honored to address such distinguished government officials and business executives. I would like to extend to you the warm wishes of the Custodian of the Two Holy Mosques King Abdullah, Crown Prince Salman and the Saudi people. This summit will lay the foundation that enhances opportunities for partnerships between the US and the Arab world to serve our mutual interests.
Saudi-US Relations: Ensuring that Our Relationship Continues to Flourish
Saudi Arabia and the US have a longstanding relationship that has deepened with our common desire for greater cooperation in all sectors. This cooperation will become even stronger at this time as the US is undergoing a disappointing economic recovery since the financial crisis in 2009, but I am sure that our collaboration will overcome these difficulties. I assure you, Saudi Arabia stands with its friends in good times and bad times.
We live in challenging times for the global economy. But much has to be done as much as already been damaged. Protectionism will threaten the prospects for recovery and prolong the global downturn. All too long we lived in a world that prized short-term gains based on greed and irresponsibility without considering the long-term consequences. We need to look at a global architecture that at its core is caring and responsible to the human.
During these challenging times, Saudi Arabia has not taken the path of curtailing free trade. Former US Secretary of Commerce, Michael Kantor said, “Strategic considerations have made us allies, but the ties of trade have brought us truly together.” In 2012, Saudi Arabia is forecasted to receive 23% of total U.S. exports to Arab states which is estimated to reach $95 billion. The trade outlook indicates that Saudi Arabia is one of the top markets in the region with potential for U.S. exports forecasted to more than double by 2015.
This is consistent with the major goal of President Obama’s National Export Initiative which will help to create 2 million new jobs for Americans. Saudi Arabia and the U.S. should complement and leverage each other’s comparative advantages to build a value added relationship.
Over the years, the leaders of Saudi Arabia and the US have supported the bilateral economic relationship and we are committed to ensuring that our relationship continues to flourish.
This relationship must be broadened to reflect new priorities mainly the creation of intellectual capital and knowledge sharing as the only real guarantee of equality of opportunity for citizens in our countries and stability for the rest of the Middle East.
Saudi-US relations are built on shared values, mutual respect and the commitment to collaborate in developing new value-added elements of our relationship with a stronger focus on building intellectual capital, a knowledge-based economy, educational reform promoting stronger institutional collaboration in order to reinvigorate our mutual interest. Institutional collaboration will inevitably maintain prosperity between Saudi Arabia and the US.
I believe a new era has been paved by two great leaders of vision, President Obama and King Abdullah. Remarkably both leaders share a common path and in their own way they have embarked on a campaign toward achieving greater harmony in the global arena. President Obama’s message of renewal and collaboration with the Arab and Muslim world and especially Saudi Arabia has left a very positive imprint.
King Abdullah’s initiative of the “culture of peace” as well as the initiation of the inter-faith dialogue represents the Saudi Arabia’s value propositions to the world of nations. King Abdullah has also pursued reconciliation within the Arab world and has established himself as a respected champion on humanitarian and just causes. We simply cannot afford to waste the opportunity to have our two nations benefit from greater interaction. Our two leaders speak the same language and understand that through dialogue and persuasion stability can be achieved.
Our shared history and mutual interests have brought our nations together into a “partnership.” Both of our nations have a deep respect for values. We both seek stability in the Middle East without which we cannot make any progress in the region either at the political or economic level.
We must move beyond the current notion of region building through creative chaos and destruction to one in which soft power is wielded by intelligently integrating countries into clubs of good citizenship at the global and regional levels. Creative chaos must be replaced by creative restructuring and creative engagement. Both of our leaders are clearly committed to this cause.
Under the leadership of the Custodian of the Two Holy Mosques King Abdullah and Crown Prince Salman, Saudi Arabia has maintained political stability throughout the recent events in the Middle East. Stability is imperative to ensure prosperity for the Saudi people. Saudi Arabia’s political and economic stability bring opportunities that need to be addressed in order to achieve our economic growth and diversification goals.
Saudi Arabia will continue to be the bedrock of stability in the Middle East. This stability provides the framework for Saudi Arabia as a central pillar and the engine of growth in a region currently convoluted with upheaval. Saudi Arabia will look to stability as its hallmark in order to move forward and continue our robust growth. This comes from the close relationship that the Saudi people have with the Custodian of the Two Holy Mosques King Abdullah and Crown Prince Salman.
The Saudi Economy’s Vast Opportunities
I would like to highlight for you a few important facts on the Saudi economy and the vast opportunities it offers. Saudi Arabia is the largest economy in the Middle East and a member of the G-20 with the largest foreign reserves on a per capita basis. According to the 2012 “Ease of Doing Business” report of the World Bank, Saudi Arabia has been ranked as the 12th most business friendly country out of 183 countries. This is a result of King Abdullah’s initiative to create key institutions such as restructuring the court system to ensure that the rule of law prevails and creating a commission to investigate corruption.
Saudi Arabia has weathered the global financial crisis well due to our prudent financial sector regulation, strong record of fiscal responsibility and economic diversification. Moreover, Saudi Arabia will endure the sovereign debt crisis that is hanging over Europe. As a result, GDP growth was 6.8% in 2011, the highest rate in the last eight years.
Four of the top 10 banks in the Middle East are Saudi banks. This is due to good track record of maintaining strong asset quality and adapting adequate lending practices and underwriting standards. Saudi Arabia is one of the world’s fastest growing banking markets with an impressive growth. It is estimated that lending will grow at a compound annual rate of around 10% over the next 3 years due to liquidity and capitalization.
The Saudi economy is poised to continue this robust growth due to low debt levels, strong reserves and continued government infrastructure spending.
In addition, Saudi Arabia has embarked on a five-year $388 billion investment program that emphasizes private sector growth. This plan is funded solely from our national revenue and not from incurring any sovereign debt. Few of you may know that Saudi Arabia’s private sector contributes 48% of the country’s GDP and under this five-year investment program we are aiming for the private sector to grow about 6% per year. The private sector is the engine that drives our economy forward.
Moreover, to accelerate diversification and reduce oil dependence, Saudi Arabia is enhancing more of its already lucrative incentives. Climbing the value added ladder is our guiding principal. That’s why, even though our petrochemical sector has reached global stature, we are targeting industries that will leverage more of the petrochemical chain such as specialty plastics and other high value added products. Saudi Arabia has 80 new basic petrochemical production projects scheduled for completion by 2015.
Saudi Arabia is investing heavily in solar technology with $3 billion allocated for solar panel production in Yanbu and Jubail. In addition, Saudi Arabia will spend more than $100 billion to build at least 16 nuclear power plants across the Kingdom.
Development of renewable energy is one of our main objectives. In 2011, Saudi Arabia inaugurated its first solar power plant on Farasan Island. This will help provide alternative energy, reduce dependence on hydrocarbons, reduce growth in domestic demand on oil, and save oil reserves for future generations.
In addition, recent royal decrees have provided growth opportunities in the housing and healthcare sectors. The Saudi housing sector has become the fastest growing housing sector in the Middle East. In order to meet the growing demand of housing in Saudi Arabia, the Ministry of Housing received $66 billion for the immediate construction of 500,000 residential units. This growth will continue as housing markets needs are estimated to reach 1.6 million units by 2015.
In the healthcare sector, $4 billion has been allocated for the implementation and expansion of several medical projects that will test new devices designed to streamline hospital procedures and patient care throughout Saudi Arabia. Furthermore, the expansion of the pharmaceutical industry will allow Saudi Arabia to produce 40% of pharmaceutical needs in the next decade.
Simply put, Saudi Arabia is moving away from being the gas station of the world toward a knowledge-based economy with sophisticated laboratory of excellence, innovation and entrepreneurship.
Saudi Arabia’s Industrial Strategy: Positioning Saudi Arabia as a Qualitative Manufacturing Leader
The highlight of the country’s drive towards sustainable economic growth and diversification is our national industrial strategy which will greatly enhance the contribution of manufacturing to GDP by 2020. This will position Saudi Arabia as a qualitative manufacturing leader and propel other sectors in the economy to grow and accelerate our diversification goals.
In addition, development of small and medium enterprises (SMEs) is important for Saudi Arabia’s long-term job growth. SMEs promote entrepreneurship and training for young professionals to develop their skills which will positively contribute to our economic growth.
This initiative undoubtedly will open vast opportunities for new investments. We realize that this is a highly ambitious goal but I can assure you we have the determination, commitment and building capacity to achieve it.
Research and development is at the core of this initiative, therefore, we are planning to boost our spending on R&D from its 0.5% of GDP to 3% of GDP by 2020. Such allocated resources will also lay the foundation for a knowledge-based economy and expansion of knowledge clusters.
The aim of this initiative would be to foster the creation of knowledge societies, to share information and research tools in education enhancement. Saudi financial capital and US expertise in R&D could combine in a way to address some of the most pressing scientific, social and economic challenges today.
In a knowledge-based economy, what you earn depends on what you learn. The real wealth of any nation is its human capital. Saudi Arabia is investing in this asset at an unprecedented rate. It was President Kennedy who said, “Our progress as a nation can be no swifter than our progress in education. The human mind is our fundamental resource.”
Therefore, educational initiatives receive more than a quarter of our national budget in order to ensure that every citizen has access to quality education.
In addition, the King Abdullah Scholarship Program for Study Abroad has allowed more than 120,000 students to study at universities worldwide. There are currently 68,125 students in the US. The number of young Saudis studying abroad has increased by seven fold. This will allow for greater integration into a globalized world and greater understanding between people, which is the cornerstone of King Abdullah’s inter-faith dialogue initiative.
In September 2009, King Abdullah University of Science and Technology (KAUST) began its first academic year, welcoming students and researchers from all over the world. King Abdullah’s vision of KAUST is to be one of the world’s great institutions of research and learning, a house of wisdom and a source of enlightenment.
Also, three technology valleys are being developed in major universities in Riyadh, Jeddah and the Eastern Province as well as 28 technical institutes and 14 university research centers specializing in such areas as chemical engineering, energy research, and nanotechnology.
The productive role of women has been a result of the investment that Saudi Arabia has dedicated to the field of education for all of its citizens, men and women. As a result, Saudi women have been able to earn the highest educational credentials. This has enabled Saudi women to work diligently in different fields and prove their ability to handle responsibilities with great success.
Recent initiatives in labor and education are making good progress to raise the employability and enhance skills of Saudi workers. The Nitaqat program promotes Saudization in the private sector while Hafiz system grants monthly allowance for one year to every Saudi actively looking for a job. Saudi women are making new inroads into the labor market, particularly in retail sectors.
King Abdullah has emphasized the need for balanced modernization that is consistent with the Islamic values and the importance for Saudi women to participate in the Shoura Council as members as well as vote in the next elections of various locality councils. As a result, 30 women will be appointed to the Shoura Council before the consultative body begins its next annual session.
In addition, 11 women will be appointed to leading positions within the Ministry of Education as part of a drive to boost women’s presence in key managerial posts.
Building a Strong US-Saudi Partnership
Saudi Arabia is forging ahead to meet the challenges ahead in building its future. It will anchor itself to its tradition and cultural underpinning conditioned by our Islamic values.
We all have to recognize that in a world in which its contours change rapidly, it is the collaborative effort between our two countries that will assist in overcoming challenges.
I firmly believe that through our solid ties we can forge ahead for a prosperous future of our two countries. Let us build a partnership that nourishes the flowering of the human spirit, our common values and our conviction to bringing peace and stability in the Middle East.
I wish you all the best in your future business endeavors in Saudi Arabia.
