Home to an estimated 15.7% of the world’s proven oil reserves and the single largest economy in the Middle East and North Africa, Saudi Arabia is a key player not only in the region but also globally. Since the establishment of Saudi Arabia in September 1932, the Kingdom has poured its considerable resources into a series of large-scale economic development, diversification and modernisation initiatives.
The Al Saud family, which today rules Saudi Arabia, has held intermittent control of the Nejd and other parts of central and eastern Arabia since the mid 1700s. In 1744 Muhammad Ibn Saud, then head of Al Saud family, established an alliance with Al Wahhab, with the objective of unifying the Arabian Peninsula under the banner of Islam.
The first Saudi state, which was based in Diriyah, controlled a large area until 1818, when the Ottomans recaptured it during the Ottoman-Saudi war. During the second Saudi state, which was formed in the wake of the war and was based out of Riyadh, the Al Saud ruled over a substantial area in central Arabia from the early 1820s up until 1891, when it succumbed to tribal infighting. In the wake of this defeat, the head of the family at the time, Abdul Rahman bin Faisal Al Saud, fled to Kuwait with his family, including his son Abdulaziz Al Saud, the founder of the third Saudi state, which is synonymous with the modern state of Saudi Arabia.
In 1902, when he was around 26 years old, Abdulaziz Al Saud conquered Riyadh with a small group of men. Over the next few years the young ruler worked to consolidate his control over most of the Najd region, where the Al Saud family remained popular among the population. By 1912 Abdulaziz has gained control of most of central and eastern Arabia. Over the following two decades he continued to expand his reach across the peninsula, negotiating with local rulers and colonial powers.
In September 1932, Abdulaziz announced the formation of the Kingdom of Saudi Arabia, naming himself King. Six years later Standard Oil, an American company, discovered oil in commercial quantities at Dammam, in the vast Eastern Province. The discovery, which eventually revealed the second-largest reserves of crude oil in the world, changed the young country forever. By the mid-1950s oil exports accounted for the majority of the country’s income, and Saudi Arabia was in the midst of a series of large-scale economic development projects funded by these oil revenues.
According to the IMF’s 2014 “World Economic Outlook”, Saudi Arabia is categorized as an “emerging market economy”, a group that includes countries such as Turkey, China, India and Russia. According to latest data from the World Bank, Saudi Arabia ranked as the world’s 19th-largest economy in 2014, based on a GDP of $746.2bn. While oil is expected to continue to account for the vast majority of government revenues in the foreseeable future, the non-oil sector has expanded significantly over recent decades. Although oil prices have dropped significantly from their highs of summer 2014, the economy remains strong and is expected to post 3% growth over the coming year. In 2015 Saudi was the 3rd largest market in the world for defence and security, with $87bn of spending. Only China and the USA beat it. This year approximately 70% of all GCC construction spend is in Saudi from 130 new hospitals to massive new industrial plants.
The Kingdom has a reputation for being an important regional player and a close ally to many of the world’s leading powers. Saudi Arabia remains a stable destination for business and investment. The government has worked hard in terms of opening up the Kingdom to foreign investment in recent years. Saudi Arabia is ranked 49th in the world out of 189 nations in the World Bank’s 2015 ease of doing business report. Its conducive business environment and reputation for stability have made it the single largest destination for foreign direct investment in the region. The country has over half a trillion dollars in reserve; compare that to many Western powers. And though the falling oil price into 2016 is driving change through a major national transformation program this is simply yet another stage of modernisation and opportunity in this huge and ever maturing market.
About AEI Saudi: Arabian Enterprise Incubators is a Saudi Registered company founded as an independent ‘honest broker’. Our aim is to increase accessibility to the Kingdom of Saudi Arabia for foreign companies. Free from political associations we support our clients to explore the Saudi market unimpeded by any influences other than their own strategy and ambition. We provide the infrastructure, services and guidance needed to succeed in what is widely recognized as difficult yet rewarding market. AEI Saudi supports over 100 companies a year on this journey.
We provide a unique incubation process including end to end life support following our Decide > Deploy > Deliver model. Hence our clients are enabled to explore and engage the market armed with relevant knowledge from experienced, independent professionals based in Saudi Arabia and putting them on a level playing field at a cost that makes the return on investment decision straight forward.