Thank you very much for your nice introduction. Let me first say, that really ...... I am very pleased to be in this nice crowd, and thank the US-Saudi Business Council for the excellent job the Council is doing. Thanks to Sheikh Abdul-Aziz and thanks to the rest of the members of the Council.
Let me just say that this is I think my fifth speech today, so please bear with me if my voice is disappearing ...... but I must tell you that although this is my fifth speech, it is to the friendliest crowd and also I want to talk about my favorite subject. Earlier I was talking to a crowd that was saying that no one else’s advice is good for everyone so you can imagine how difficult, how challenging it was for me, ...... but, of course, the subject I want to talk about tonight is a subject that I am sure all of you want to hear about ...... and this is about the economy of Saudi Arabia.
I have spoken to some of you, a few months back, and I would like to update you about the developments and the economy of Saudi Arabia. The discussion today at the IMF was mainly focusing on the impact and the effect of the Asian crisis on the world economy, and of course one of these effects was the oil crisis and the demand for oil. I don’t think that I should elaborate on this subject because we are hoping that the impact should be short lived, and those economies will pick up on their growth, and obviously, they are all in the world economy.
As I mentioned, I want to focus my chat with you, and I call it a chat because as you can see I don’t have a prepared statement ...... with a friendly gathering here, I don’t need to have a prepared statement.
I'd like to talk about the Saudi economy, and focus mainly on what I would like to call the enabling environment in Saudi Arabia. And here I would like to touch on several themes. One is the macro-economic situation; another is the structural issues facing us in Saudi Arabia; and then the privatization; and lastly, the opportunities that our economy offers.
Let me start first with the macro-economic situation. And at the beginning I want to say something that I am sure is obvious to everyone here. It is that the recent development in the oil crisis is posing a chance for us and to any oil exporting country. But, we are looking into measures to litigate the impact of such ...... [cut in tape] ...... but it was 8.6 percent and last year it was 7.1 percent. But the areas that we are looking closely at are showing very impressive results and mainly recently, the area of the industrial sector ...... the industrial sector was showing and is still showing very positive and healthy goals that was reflected in the share of the industrial sector of the economy and also in the share of the non-oil export and our total export. For the local economy, the industrial sector is growing and the development in the last few years grew by five points, and over about twenty-five years or so - this is major growth when compared to any economy.
Besides, in the growth of the non-oil exports the figures are even more amazing. Between 1980 and 1997 the non-oil exports grew by more than 54 points, and this shows how the diversification of the economy is heading; this is indeed a very positive event.
The other element, of course, is the development of the monetary and financial sectors…these developments are really impressive and ...... price index in the country is being very stable, the exchange rate the same thing, and the financial institutions, banking sectors, extremely liquid and well-capitalized compared to any standard in the world. So, looking around at the ways, for reasons, and the basis for the crisis we are seeing in a number of countries, you always face problems in the financial sector and luckily we really ...... by the experience of the 1980s ...... but now we have a sound banking system.
This is the macro-economic situation, but as I mentioned, of course, we are determined to continue the process of the consolidation and rationalization of expenditures. The other area that I would like to return to is the structural issues that we are dealing with now in the Kingdom. Here, we are reviewing the laws and the areas that again, enhance the environment for foreign business, and business. There we are working with different initiatives. One is, we are now finalizing internally the review of the tax law, I think I mentioned that before at some small gathering here, and hopefully, for what we are suggesting now, is really, will improve the tax statement of investment in Saudi Arabia and will make it much more hospitable to investors. And this is something that we really want to do, and of course, looking at the globalization, we have to be at par with the rest of the world.
The other is again, areas in the tax administration and the customs procedures and the investment laws, actually there are many areas that are under review, and hopefully we will finalize them and we will compose the environment for investment. Again, the issue of the private sector and that also will be reviewed.
Let me turn now to the area of privatization. I think all of you have read or heard about the decision by the Council of Ministers on the framework for the privatization in Saudi Arabia and we have again a number of initiatives, some traditional, some probably in non-traditional areas, but one of the first things that will hopefully materialize, I won’t say hopefully, but definitely it will be the first one, and it will be a big one ...... As some of you recall that the Council of Ministers has issued on December 17, 1997, that the telecom should be privatized, should be corporatized in six months. And they aim to do it in that time, and the deadline is June 17, and it's approaching fast. But again, this is just one area and there are other areas.
We have already started, the Ports Authority is leading the participation of the private sector there. It’s underway, it's been successful. We had many responses and participation from international as well as local investors in the Saudi ports.
A third area is that of the power sector and this is something, of course, if you read the report, we have a growth in demand for power in Saudi Arabia; it's tremendous, and obviously we need a lot of investment in that. Clearly the government cannot provide that investment and we will be relying more on the private sector to provide investments. These are just a few areas in the privatization but I want to assure you that we are very serious about this, and we are determined to give the private sector a much larger role in the economy.
And indeed when one looks at the Saudi economy, you could see how the private sector share in the economy is increasing, and as a matter of fact we really think that our statistics underestimate the share of the private sector in the Saudi economy. This is point, that we share other institutions, but nevertheless we want to increase such a role.
Let me just mention another front that is new to us in a sense, and this is the mineral sources of Saudi Arabia. We believe, and the studies and research prove that we have huge potential in mineral resources, whether phosphates, gold or other mineral resources, and then we have established a sort of holding company ...... and that company was promoted with investments, in the mineral resources. The government probably is essential in providing the minimal infrastructure for such investments and I'm sure many of you here are interested in this area. So this is the sector that was not really tapped in the past and we think it has great potential and definitely we are determined to tap it.
I don’t want to, as I mentioned at the beginning, extend this ...... and we had a number of speeches and here of course, this is the most enjoyable one but I don’t want to take your time and so I want to conclude my statement by just saying that indeed we believe that we have a number of challenges in Saudi Arabia. The first one of them, as I indicated at the start, is the declining oil prices, but we still are determined to follow the strategy and the decision that we have made earlier to the fiscal conservation, and the involvement and the environment, the structural areas that have some, perhaps some weaknesses or need some improvement, and I am really positive about the prospects for our economy and I hope that you share that positive prospect, not only sharing it in your mind, but also in your investments in Saudi Arabia.
And at the end I would like to once again thank the Saudi-US Business Council for giving me this opportunity to chat with you and to let you know about what, or some of the things, that we are doing in our country and it's a nice opportunity to meet many of those people before dinner and now. Let me finally say that I really look forward to the Business Council contributing a major role to enhancing the US-Saudi economic relationship: investment, trade, all the segments of the economic relationship, I think that the Council, in collaboration with the US-Arab Chamber of Commerce, will really have an important role in promoting the relationship between the U.S. and Saudi Arabia, and the Arab countries in general.
Thank you very much for your time.