ECONOMIC NEWS

STRATEGIC PETROLEUM RESERVE IN JEDDAH

Deputy Prime Minister and Commander of the National Guard Crown Prince Abdullah bin Abdulaziz inaugurated the strategic oil reserve facility in Jeddah on August 27. The site, with the capacity to store 945,000 barrels of gasoline, is one of five in the Kingdom, designed to ensure energy supplies for all sectors of the economy in times of emergency. Each facility is linked by pipeline to Saudi Aramco refineries. The first site was opened in Riyadh in 1999.

NATURAL GAS SECTOR POISED FOR GROWTH

Saudi Aramco’s gas project in Haradh is six weeks ahead of schedule, with over half of the project completed, the national oil company reported in late July. The Haradh gas plant, located about 150 miles southwest of Dhahran, is expected to be operational by next year, and will treat 1.6 billion cubic feet of raw gas as well as extracting 145,000 barrels of oil daily. This will increase Saudi Aramco’s gas network by 1.5 billion cubic feet daily and bring the company’s total output of gas to seven billion cubic feet per day. Meanwhile, Senior Deputy Chairman for Gas Operations at Saudi Aramco, Dhafallah Al-Otaibi said in early July that the Kingdom’s natural gas sector is poised for unprecedented growth in the near future. Observing that the Kingdom ranks fourth worldwide in gas reserves, estimated at 224 trillion standard cubic feet, and is one of the top five producers of gas, Mr. Al-Otaibi said gas production in the country is expected to triple over the next six years.

SABIC REPORTS INCREASED EARNINGS

Saudi Arabian Basic Industries Corporation (SABIC) has achieved a 123 percent increase in quarterly earnings with a net profit of 680 million Saudi riyals (181.33 million U.S. dollars) for the second quarter of 2002, the company announced on July 21. This quarter’s increase is attributable to a slight improvement in petrochemical prices, although still lower than in the corresponding period of 2001. The net profit for the first half of the year, however, was only 985 million riyals (262.66 million dollars), down from 1,503 million riyals (400.43 million dollars) in the same period of 2001. Total production reached 17.8 million metric tons in the first half of 2002. Marketed tonnage increased during the period by 5 percent to 14 million metric tons.

FOREIGN INVESTMENT BYLAWS APPROVED

Governor of the Saudi Arabian General Investment Authority (SAGIA) Prince Abdullah bin Faisal bin Turki has approved the executive by-laws for foreign investment in Saudi Arabia, the agency reported on August 8. The by-laws include 23 articles dealing with areas for investment; conditions, terms and procedures for licensing; and violations. Foreign investors can now own property in Saudi Arabia, sponsor their own employees and enjoy 100 percent ownership of the projects they set up in the Kingdom. In addition, existing projects may be expanded with fresh capital. Meanwhile corporate tax has been reduced from 45 to 30 percent, with tax holidays in place.

MEASURES TO PROMOTE SCIENCE, TECHNOLOGY AND HIGHER EDUCATION

The Council of Ministers on July 8 approved a new national policy for promoting science and technology, and forwarded it to the Ministry of Planning and the King Abdulaziz City for Science and Technology (KACST) for implementation. A joint statement issued by the agencies said the program aims at promoting levels of scientific potential and national technology, as well as ensuring investment of the necessary resources to take advantage of opportunities offered in today’s global economy, and allowing Saudi products to compete successfully in international markets. The policy stresses the provision of an atmosphere conducive to acquiring foreign, while developing local technology, especially in vital and strategic fields such as water desalination and petrochemical industries, as well as defense. After four years of studies involving 35 government agencies, the project has now entered its implementation phase, which will involve formulating a detailed strategy and introducing mechanisms for increasing funding for research and development gradually to reach 1.6 percent of the GDP in 2020. The policy recommends incentives to encourage the private sector to invest in science and technology, and urges the allocation of a fixed percentage of funds from private and governmental institutions to finance research, training and development.

Meanwhile, the Council of Ministers has approved plans for the founding of 26 new private universities in various parts of Saudi Arabia, Minister of Higher Education Dr. Khaled Al-Anqary announced on July 28. These are in addition to two new private colleges established over the past year. Speaking at a ceremony on the occasion of laying the foundation stone of the Taif campus of a new college affiliated to Umm Al-Qura University, he said the Cabinet has instructed the Ministry of Higher Education to provide soft loans, land and a variety of incentives to private investors in this field.