Saudi Arabian General Investment Authority SAGIA. Creating a Knowledge Economy in Saudi Arabia

Transcription

1 Saudi Arabian General Investment Authority SAGIA Creating a Knowledge Economy in Saudi Arabia December 16, 2009

2 Building a knowledge based society is one of the kingdom Key economic priorities The Eighth Development Plan of Saudi Arabia placed new levels of emphasis on diversifying the oil-based economy and developing science and technology capabilities To develop the science and technology system, pay attention to informatics, support and encourage scientific research and technology development, with a view to enhancing the efficiency of the Saudi economy, and keeping abreast of the knowledge economy.

3 Developing a knowledge based society will have a direct impact on Developing a Knowledge based economy While there are pockets of innovation in the Saudi economy, the Kingdom remains largely in the investment stage of economic development Knowledge Based Economies Factor Driven Economy Investment Driven Economy Innovation Driven Economy Country is a Source of cheap and abundant natural resources additional value beyond basic manufacturing unique high-value products and services Local Companies occupy a small part of the value chain focus on product design, distribution, and marketing drive advances in technology and business methods Workers are uneducated and focus on low-value added tasks have basic educations but lack technical skills are well educated and highly skilled Example Countries: Nigeria Tajikistan Morocco Saudi Arabia China Brazil United States South Korea Ireland

4 Knowledge Based Economy = World Class Economy Knowledge based economies diffuse knowledge and technology to cultivate national innovation systems that: Increase productivity Drive economic growth Advance the prosperity of a nation The challenge in building a knowledge based economy lays in the development, maintenance and dissemination of this knowledge base

5 The challenge is to help Saudi Arabia harness its young people and move towards a knowledge society Saudi Arabian Population 2005 ( 000s) Male Female ,023 1,226 1,394 1,574 1,732 Opportunities from the Kingdom s Demographics In 2005, a large majority, of Saudi Arabia s population was between the ages of 0 and 14 Based on this demographic profile, the Kingdom s working age population is forecasted to increase by 6.3 million people between 2005 and 2020 The young workforce, properly educated, offers Saudi Arabia huge opportunities for growth in innovative industries Source: Ministry of Economy andplanning

6 The establishment of SAGIA in 2000, was a key milestone in Saudi Arabia s drive to build a world class economy SAGIA encouraged investment, embraced innovation, and enhanced the Kingdom s competitiveness Our Vision is to achieve rapid and sustainable economic growth in Saudi Arabia Our Mission is to position Saudi Arabia among the top ten most competitive nations by 2010 through the creation of a pro-business environment, a knowledge-based society and creating world class economic cities.

7 Saudi Arabia has embarked on its most ambitious project to date The 10 X 10 Program To become one of the world s top 10 competitive investment destinations by 2010

8 The Road to building a world class economy (10x10) Confidential Institutionalizing the Competitiveness Management Process Building Pockets of Competitiveness Building 4 Economic Cities on a Foundation of Competitiveness Becoming Most Competitive in Advantaged Sectors X21-DES-KS-Oct09-NS 8 Copyright 2009 Monitor Company Group, L.P. Confidential DUB

9 Institutionalizing the Competitiveness Management Process Confidential The National Competitive Center (NCC) Benchmarking competitiveness against 300 global indicators WEF, IMD, WB Best Practices Innovative Thinking X21-DES-KS-Oct09-NS 9 Copyright 2009 Monitor Company Group, L.P. Confidential DUB

10 SAGIA has made great strides towards the creation of a pro-business environment and making Saudi Arabia a favorable investment destination 1 Source: World Bank Doing Business

11 An innovation The Economic Cities A global innovation in Public Private Partnership (PPP) New Concept Integrated city Clusters Comprehensive solution SAGIA Facilitator Regulator Promoter Economic City Private Sector Capital provider Land owner Developer

12 The Economic Cities fit naturally with the concept of innovation hubs The ECs are well located to drive innovation throughout the Kingdom The cities have particular advantages over the rest of the Kingdom KEC KAEC JEC PABMEC High quality infrastructure, including best in class fiber networking Purpose-built zones for education, business and living Business-friendly regulatory environment defined by SAGIA to best meet investor needs (60x24x7)

13 Building Pockets of Competitiveness Hail Madina KAEC Objectives of the Economic Cities: Balanced regional development Economic diversification Job creation Raising GDP-per capita Knowledge creation JEC KAEC

14 Innovation capacity productivity Wealth creation Why the Economic cities Value creation competitiveness Standard of living Foundation condition infrastructure Intellectual capital interaction Driving conditions integrity incentives institutions Strength the foundation and driving conditions

15 World-Class Infrastructure Technology & Communication Transportation & Logistics Health Power Airports Power & Utilities Technology Roads

16 Economic cities role in creating a knowledge economy 1 Promote the Economic Cities as the First Innovation Hubs The Economic Cities will have world-leading facilities and infrastructure, (i.e. ICT) The Economic Cities will be natural focal points for innovative firms, especially in high-tech SAGIA should promote the cities as future hubs of innovation, stressing: Centers of high-tech: firms, education, investment Proximity to KAUST and other research institutions KACST (TDC) Benchmarked against world s most innovative locations 2 Shift Focus of FDI Attraction From Financial Returns to Innovation Returns To date SAGIA has targeted investors making large financial investments However targeted approaches to key innovation leaders across sectors could have greater impact overall SAGIA should actively target investors based on the innovation they can bring to the Kingdom: Identify firms that can anchor an innovative cluster Attract with individualized approaches

17 The Economic Cities By 2020, the Economic Cities will grow to create an economy equivalent to Saudi Economy Today Economic Cities added value 2 x Paris s Population GDP USD 310 bn Increase GDP* Jobs Population GDP/capita 7.5 million 23.8 million USD 13,000 Create 1 million job 4.5 million Substantial Increase in the GDP/capita Singapore, Barcelona s GDP 4 x Hong Kong s Size

18 Investment promotion in three priority areas Energy Transportation Knowledge Based Industries

19 Saudi Arabia offers competitive regulatory, fiscal and financial incentives to investors Regulatory Full foreign ownership of companies and property Accelerated business registration and setup process 38 bilateral trade agreements with partners giving stronger foreign investor rights Treating foreign investors and domestic companies equally Establishment of SAGIA to assist foreign investors in the project application and approval process Streamlining of the investment application process Commitments to reduce the level of administration and bureaucracy Fiscal 20% Corporate Tax Rate for foreign companies (down from 45%) Double taxation agreements with key countries Unlimited loss carryover Tax deductions for training expenditures 100% tax credit for R&D investment Full repatriation of profits VAT exemption on imported manufacturing equipment Tax exemption on earnings from exports Financial Preferential allocations of natural gas Cheap water, power and land Access to soft loans from Saudi Industrial Development Fund (SIDF), Public Investment Fund (PIF), Agricultural Bank, Saudi Development Fund, and BAE Systems (through British Offset) Human Resources Development Fund that provides aid and support for activities related to qualifying, training and recruitment of Saudi labor KACST and KAUST R&D endowments

20 The 10x10 created the right foundation for developing a knowledge economy Institutionalizing the Competitiveness Management Process Building Pockets of Competitiveness Building 4 Economic Cities on a Foundation of Competitiveness Becoming Most Competitive in Advantaged Sectors

21 Many Initiatives to Drive and Support Knowledge Exist in KSA THANK YOU Regulatory Full foreign ownership of companies and property Accelerated business registration and setup process 38 bilateral trade agreements with partners giving stronger foreign investor rights Treating foreign investors and domestic companies equally Establishment of SAGIA to assist foreign investors in the project application and approval process Streamlining of the investment application process Commitments to reduce the level of administration and bureaucracy Fiscal 20% Corporate Tax Rate for foreign companies (down from 45%) Double taxation agreements with key countries Unlimited loss carryover Tax deductions for training expenditures 100% tax credit for R&D investment Greener Opportunities Saudi Arabia Full repatriation of profits VAT exemption on imported manufacturing equipment Tax exemption on earnings from exports Financial Preferential allocations of natural gas Cheap water, power and land Access to soft loans from Saudi Industrial Development Fund (SIDF), Public Investment Fund (PIF), Agricultural Bank, Saudi Development Fund, and BAE Systems (through British Offset) Human Resources Development Fund that provides aid and support for activities related to qualifying, training and recruitment of Saudi labor KACST and KAUST R&D endowments