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U.S. Department of State 
Saudi Arabia Country Commercial Guide 
Office of the Coordinator for Business Affairs 
 
 
 
            SAUDI ARABIA COUNTRY COMMERCIAL GUIDE 
                              FY 1996 
 
 
This Country Commercial Guide (CCG) presents a comprehensive look at 
Saudi Arabia's commercial environment through economic, political and 
market analyses. 
 
The CCGs were established by recommendation of the Trade Promotion 
Coordinating Committee (TPCC), a multi-agency task force, to consolidate 
various reporting documents prepared for the U.S. business community.  
Country Commercial Guides are prepared annually at U.S. Embassies 
through the combined efforts of several U.S. government agencies.  
 
 
                         Table of Contents 
 
I.     EXECUTIVE SUMMARY 
II.    ECONOMIC TRENDS AND OUTLOOK 
III.   POLITICAL ENVIRONMENT 
IV.    MARKETING U.S. PRODUCTS AND SERVICES 
V.     LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT 
VI.    TRADE REGULATIONS AND STANDARDS 
VII.   INVESTMENT CLIMATE 
VIII.  TRADE AND PROJECT FINANCING 
IX.    BUSINESS TRAVEL 
X.     APPENDICES 
 
A.  Country Data 
B.  Domestic Economy 
C.  Trade 
D.  Investment Statistics 
E.  U.S. and Country Contacts 
F.  Market Research 
G.  Trade Event Schedule 
 
 
I.  EXECUTIVE SUMMARY 
 
Although Saudi Gross Domestic Product (GDP) recorded near zero growth in 
1994, the Saudi economy is the largest in the Near East/North Africa 
region and one of the top among non-OECD countries, with output topping 
$120 billion in 1994.  In fact, Saudi per capita gross national product 
surpasses every African and Latin American state, and is exceeded in 
Southeast Asia only by Japan, Singapore and Hong Kong.   
 
Despite declines in public sector expenditures, the Kingdom's private 
sector grew an estimated four percent in 1994.  The Saudi private sector 
is assuming a larger role in the economy.  Diversification of the Saudi 
economy remains a strategic goal of the government to counter abrupt 
fluctuations in world oil prices which, in turn, have dictated the 
upturns and downturns in the economy.  The private sector contribution 
to GDP reached 37 percent in 1994 and is expected to increase further in 
1995. 
 
The United States remains Saudi Arabia's leading trading and joint-
venture partner.  U.S. companies had the leading share of the Saudi 
import market, accounting for more than 20 percent of total Saudi 
imports in 1994.  Price competitiveness, ongoing quality, and service 
should maintain the United States' leading position in this competitive 
market. 
 
U.S. exports for 1995 are estimated to be $6.8 billion, up 13 percent 
from 1994.  During 1994 and 1995, three major projects in 
telecommunications, commercial aircraft, and powerplants have been 
awarded to U.S. manufacturers.  Export opportunities for both goods and 
services should improve as these projects move forward. 
 
The United States has also topped the list of foreign countries 
investing in the Kingdom.  U.S. direct investment in both industrial and 
non-industrial joint ventures was estimated at $4.9 billion in 1994, 
more than 40 percent of total foreign investment in Saudi Arabia.  New 
joint ventures have been signed for pharmaceutical production, car 
battery manufacture, building of electrical turbines and generators, 
aircraft maintenance and electronics manufacturing.    
 
Bearing on its strategic goal to diversify the Kingdom's industrial 
base, the Saudi government is also studying privatization of some of its 
operations and tasks.  The government has proposed the privatization of 
the national airline, the petrochemical industries, the 
telecommunication sector, and the electricity organization, although no 
firm plans have yet emerged.   
 
U.S. exporters will find that the Saudi market is similar to that of 
most intermediate developing nations.  Saudi law requires a local 
sponsor to conduct business in the Kingdom, and generally, the sponsor 
is the agent, representative or distributor the U.S. company has 
selected to promote and market its goods and services.  Import tariffs 
are generally 12 percent but can be, in selected cases, raised to 20 
percent to protect Saudi infant industries.  Staple foods and animal 
feed are duty free.  If the Kingdom moves towards accession to the World 
Trade Organization (WTO) as seems likely, tariffs and tariff bindings 
would be reviewed with Saudi Arabia's chief trading partners.  There are 
no taxes, fees, or controls on remissions of earnings abroad, and the 
Saudi Riyal is freely convertible with other currencies.  Most Saudi 
standards are compatible to U.S. and ISO standards, and do not pose a 
significant problem in conducting business in the Kingdom.  Problems 
still, however, exist in selected sectors including food and electrical 
products. 
 
There are over 250 U.S. companies resident in Saudi Arabia.  U.S. 
companies have done very well in conducting business in Saudi Arabia.  
With economic reform, a move to join the international financial 
community, and a trend to privatize, Saudi Arabia should continue to be 
the most important market for U.S. companies in the North Africa/Near 
East region. 
 
II.  ECONOMIC TRENDS AND OUTLOOK 
 
The State of the Economy 
 
The Saudi economy continued to record low growth in 1994.  According to 
official statistics, GDP rose 0.6 percent in nominal terms to $123.4 
billion, slightly less than the one percent growth seen in 1993 and the 
three percent increase reported in 1992.  Taking inflation into account, 
real growth likely was near zero last year, down from a 0.5-percent 
growth in real terms realized in 1993.  The private sector continued to 
expand last year, growing about four percent, according to official 
statistics, while output in both the oil and government sectors fell 
last year.  Saudi Arabia's per capita income was $6,800 for 1994, a 
decline of 2.8 percent from 1993, an estimate based on official data 
from the 1992 census and a population growth rate of 3.5 percent per 
year. 
 
Nominal GDP growth may be higher in Saudi Arabia in 1995, assuming 
average world oil prices are above the level seen last year.  The 
Embassy estimates nominal GDP may grow at roughly two percent this year.  
The private sector will continue to be the fastest growing segment of 
the economy, with an increase near the rate seen in 1994.  Export 
industries, consumer services, and utility sectors have the best 
prospects for growth this year.  Meanwhile, the increase in world oil 
prices, if sustained, will likely lead to growth in the oil sector's 
contribution to GDP.  The government segment of the economy may record a 
small decline in output, however, if public sector spending is reduced 
as budgeted.  Although the projected growth would be the highest 
recorded in Saudi Arabia since 1992, it is still less than the rate of 
population growth.  As a result, per capita income will again decline, 
possibly to $6,700. 
 
Principal Growth Sectors  
 
Manufacturing 
Manufacturing grew by an estimated 6 percent in 1994 and is expected to 
sustain that same growth rate during 1995.  The growth is mainly 
attributed to impressive sales achieved by the petrochemical industries.  
The national petrochemical company, Saudi Arabian Basic Industries 
Corporation (SABIC), produced more than 20 million tons of various 
petrochemical products in 1994 with sales reaching $5.2 billion.  Loans 
provided by the government reached $58 billion dispersed to 1,216 
projects.   
 
According to a report published by the Saudi Ministry of Industry and 
Electricity, government incentives for the industrial sector have led to 
the creation of over 2,312 manufacturing firms with a total investment 
of $41.26 billion by the end of 1994.  The Kingdom has presently eight 
industrial complexes, the largest of which being the second phase of the 
Riyadh Industrial City.   
 
Consumer oriented industries will experience greater growth than export 
oriented industries.  Expansions at many petrochemical plants are 
already well under way and the launch of several petrochemical projects 
by the private sector will positively influence overall industrial 
production during 1995 and 1996. 
 
Under Saudi offset guidelines, several joint venture companies have been 
established with foreign technology partners in more sophisticated 
areas, particularly related to defense and aviation.  These include 
computer software, avionics, aircraft repair, aircraft engine repair, 
radios for military use, and other electronic components.  Although new 
acquisitions of military equipment do not officially carry any offset 
requirements, recent experience shows that there will be some form of 
offset requirement associated with future major purchases, both in 
military and civilian contracts. 
 
Mining 
 
The Saudi Ministry of Petroleum and Mineral Resources is spearheading 
the initiative to develop new mines to produce iron, phosphates, bauxite 
and other precious and non-precious metals.  Studies conducted by the 
Directorate General of Mineral Resources (DGMR) have revealed large 
quantities of minerals in 42 fields spread throughout the Western and 
Central regions of the Kingdom.   
The government's policy is to prioritize the development of non-oil 
resources.  The Ministry of Petroleum and Mineral Resources is actively 
seeking investors from the U.S., Canada and other countries to establish 
mining joint ventures for a number of major projects.  For this purpose, 
the government has provided many incentives to attract foreign 
investors, such as a tax exemption for five to ten years, and a 30 years 
extraction concession.  
 
Over the next few years, the best opportunities will be in the areas of 
joint ventures, investment, consulting and technical know-how, as the 
Saudis enlist foreign support in the development of new projects.  The 
DGMR is actively soliciting foreign investors and joint-venture partners 
to participate in these opportunities.  The Kingdom at the moment does 
not have the know-how and funding necessary to develop these long-term 
projects. 
 
Utilities 
 
Saudi Arabia has one of the world's highest per capita consumptions of 
electricity, water and gas.  The average annual growth rate of these 
utilities reached more than 3.5 percent in 1994.  In 1995, the Saudi 
government raised the fees of electricity, water, and gas consumption.  
The new fee structure is expected to reduce the growth in consumption 
and boost revenues which will be channeled into new projects. 
 
Over the next few years, additional power generation plants will be 
built which will raise generation capacity by 9,450 MW.  A consortium 
led by General Electric has already been awarded a $1.8 billion contract 
to build a 1,800 MW, combined-cycle power plant outside Riyadh referred 
to as PP9.  The contract contained an expansion option to increase its 
capacity to 2,400 MW, and also involves expanding an existing plant, the 
PP8, by 300 MW.  Similarly, around 260 million gallons a day of 
desalinated water will be added by the Saline water Conversion 
Corporation (SWCC) to the Kingdom's desalinated capacity.  These new 
desalination schemes will cost about $2.1 billion when completed and 
will bring total desalinated capacity to more than 800 million gallons 
per day. 
 
Transportation and Communication 
 
The Saudi government has already committed to purchase 61 aircraft from 
two U.S. firms, Boeing and McDonnell Douglas.  The deal will involve 
five Boeing 747-400, and 22 Boeing 777, as well as four MD-11F, 
configured as cargo aircraft, and 29 MD-90.  The number and type of 
engines is yet to be decided. 
 
The Presidency of Civil Aviation is also evaluating proposals to upgrade 
two domestic airports at Jizan and Tabuk, and build a new airport at 
Dawadmi.  Another project which is also being actively pursued is a $400 
million integrated maintenance hangars and warehouse facilities for the 
national carrier, SAUDIA, at the three international airports in Riyadh, 
Jeddah, and Dhahran. 
 
In August 1994, the Saudi Ministry of Posts, Telephone and Telegraph 
(MOPTT) awarded a $4 billion contract to the U.S. firm AT&T to expand 
the Saudi telephone network.  Known as the Telephone Expansion Project-6 
(TEP-6), the project calls on AT&T to provide a fully digital 
communications network including 1.5 million 5ESS switching lines, 
200,000 GSM (cellular) lines, and thousands of associated network 
components such as transmission, fiber optics, and network management 
products. 
 
Agriculture 
 
Saudi agriculture has shown rapid growth in production over the last 
several years, while food processing has only recently begun significant 
expansion.  The growth in agricultural output had been led until 
recently by wheat, but also with notable increases in livestock, 
vegetables and fruits.  Much of the expansion has relied on imported 
technology and production inputs.  Wheat production is now declining, 
but output continues upward for some crops and livestock.  Thus, the 
prospective demand for inputs is mixed, with a weak near term outlook 
for large machinery and irrigation equipment, but likely growth in 
demand for inputs related to the livestock and poultry or the fruit and 
vegetable segments.  Imports of most processed foods and bulk 
agricultural products, other than a few items such as wheat, eggs, and 
dates, are continuing at a strong pace. 
 
Despite major strides in food production, recent cutbacks in government 
subsidies coupled with delayed payments to farmers have alienated many 
Saudi crop farmers and reduced prospects for growth in agricultural 
output.  Saudi Arabia, thus, remains a major food importer, with imports 
estimated at around $4 to $5 billion annually.  Since Saudi agricultural 
importers are cash customers, the country is considered to be a very 
good market for U.S. food suppliers. 
 
Fiscal Policy and Public Debt 
 
Saudi Arabia embarked on a major austerity program with the release of 
its 1994 government budget, but nevertheless ran a deficit for the year, 
its twelfth consecutive shortfall.  The government planned to cut 
expenditure 19 percent from the level budgeted for 1993, and reduced 
allocations in all categories, with direct subsidies--primarily 
agriculture--and infrastructure receiving the highest percentage cuts. 
 
The Saudi Government has not published official data on its actual 
fiscal accounts for 1994, but the Embassy estimates the shortfall to be 
$9 billion, down 25 percent from the deficit the preceding year and 
equal to seven percent of GDP.  Total revenue last year fell five 
percent to $36 billion, with on-budget oil income accounting for about 
75 percent of the revenues.  Spending on a cash basis fell to an 
estimated $45 billion, meaning that the Saudi Government was successful 
in reducing expenditures.  Some of the reduction in expenditure was 
achieved by postponing or scaling back work on projects, although some 
of the cutback was achieved by delaying payments to contractors.  
Estimates vary, but Saudi Government arrearages may have been over $5 
billion at the end of 1994. 
 
The Saudi Government borrowed from domestic sources to finance the vast 
majority of the 1994 budget deficit, increasing total domestic and 
foreign debt, excluding arrearages, to over $80 billion at the end of 
1994--roughly two-thirds of GDP.  The Kingdom's 12 commercial banks held 
$13.3 billion in Saudi Government development bonds and Treasury bills 
at year end 1994, up from the $11.7 billion at the end of 1993, 
according to the banks' financial statements.  Banks held additional 
Saudi Government debt from direct loans to ministries or state-owned 
entities, and we expect large corporations and some individuals also 
hold Saudi debt instruments. 
 
The government's remaining domestic debt, possibly $60 billion, is "soft 
financing" provided by the autonomous government institutions--the 
General Organization for Social Insurance, the Pension Fund, and the 
Saudi Fund for Development--through the purchase of development bonds 
and direct loans to the Ministry of Finance. 
 
The Saudi Government reduced its outstanding foreign debt to $1.8 
billion at the end of 1994 by beginning payments on schedule on its only 
international loan, a $4.5 billion facility signed in May 1991. 
 
Saudi Arabia introduced broad fiscal reform measures and continued to 
reduce allocations to reduce its budget deficit for 1995.  The Saudi 
Government raised charges on energy, electricity, water, telephone, 
worker and visa fees, and airfares at the start of the year.  Income 
from some of these rate hikes--energy and worker fees-- will go directly 
to the Ministry of Finance, while money from the remaining areas will be 
used to finance the expansion of infrastructure or reduce the losses of 
state-owned utility companies.  Concurrently, the Saudi Government cut 
budgeted expenditures by six percent, reducing allocations for education 
and defense and security but raising allocations for transportation and 
communication, health and social services, and infrastructure. 
 
The government budget accounts will move closer into balance in 1995, if 
the government spends near the amount budgeted and the average oil price 
for the year remains near the level reported for the first part of the 
year.  On-budget oil income may rise by 10 percent over 1994 levels, and 
the funds collected from the hike in some fees could add over $2 billion 
to non-oil income.  The Saudi Government has also addressed some of its 
payment arrears through issuing an estimated $1.4 billion in bonds in 
March and paying small amounts owed to some contractors.  Meanwhile, the 
Kingdom continues to study privatization as a medium-term fiscal reform 
measure, but most observers do not expect the sale of state-owned firms 
to begin in 1995. 
 
Balance of Payments and External Accounts 
 
Saudi Arabia's current account deficit continued to decline in 1994 but 
nevertheless the Kingdom recorded its twelfth consecutive balance of 
payments shortfall.  The Embassy estimates Saudi Arabia's current 
account deficit fell nearly 30 percent to less than $10.0 billion, the 
smallest shortfall since 1990.  Based on figures released by the Saudi 
Government, exports fell eight percent to $41.5 billion, with petroleum 
accounting for 90 percent of the total.  The Embassy estimates imports 
fell 10 percent to $23.5 billion.  The resulting $18 billion merchandise 
trade surplus is slightly less than the surplus recorded in 1993.  Net 
service payments abroad continued to decline, and it is likely transfers 
for government and private services fell because of the decline in 
official spending and slower economic growth in the country.  The 
Embassy expects a large percentage of the 1994 current account deficit 
was financed by an inflow of private capital and the reduction in the 
net foreign position of the commercial banks. 
 
The amount and availability of SAMA's foreign assets are difficult to 
determine.  The Embassy estimates SAMA managed $53 billion in its issue 
and banking departments at the end of 1994.  According to Article 6 of 
the Kingdom's currency law that requires all riyals be covered fully by 
gold or foreign exchange convertible to gold, roughly $20 billion of 
this total is set aside in SAMA's issue department as backing for the 
currency.  SAMA lists its foreign assets in its banking department as 
deposits with banks abroad, investment in foreign securities, and gold 
and silver.  Questions remain as to how much of the foreign assets in 
the banking department are available for use to finance future current 
account deficits as some of them are reportedly held against letters of 
credit or commercial bank deposits or include claims against developing 
countries.   
 
The country's current account deficit is likely to continue to decline 
in 1995.  Total exports will rise because of higher receipts from oil 
sales, leading to an increase in the merchandise trade balance.  
Services payments may fall slightly with a decline in private and 
government transfers, although private remittances are expected to 
remain high.  Meanwhile, the government paid the remaining $1.8 billion 
on its international loan in two payments in February and may of 1995, 
an outflow in the capital account for the year. 
 
Domestic Financial Sector 
 
The profits of Saudi Arabia's 12 commercial banks continued to rise in 
1994.  Collectively, the banks earned $1.28 billion in total net profits 
last year, up four percent from the $1.24 billion earned in 1993.  The 
banks used about 35 percent of their 1994 profits to boost their 
reserves, raising the aggregate capital-asset ratio of the banking 
system to 10.47 percent.  All but one of the Saudi banks have a simple 
capital-adequacy ratio above the eight percent recommended by the Bank 
of International Settlements. 
 
The consolidated balance sheet of the commercial banks grew by 3.0 
percent to $83.4 billion at the end of 1994, the lowest annual increase 
since 1990.  Consolidated bank assets fell the first two quarters of 
1994, but recorded strong gains over the last half of the year.  
According to statistics published by SAMA, claims on the private sector 
rose 11 percent to $30.3 billion and accounted for much of the increase 
in bank assets.  Meanwhile, total deposits rose by only two percent--the 
lowest growth since the Gulf War--to $50.0 billion, most of which came 
from increases in time and savings deposits. 
 
The net foreign assets of the commercial banking system fell $4.2 
billion to $15.5 billion at the end of last year, the lowest end of year 
close since 1983.  The credit-to-total deposit ratio of the consolidated 
banking system rose to 61 percent for the end of 1994 from 56 percent 
for the end of 1993, reflecting a continuing reduction of liquidity in 
the banking system. 
 
Inflation and Monetary Policy 
 
Inflation remained low in Saudi Arabia in 1994.  According to Saudi 
Government statistics, the all-cities cost of living index rose 0.6 
percent last year, a slight decline from the 0.8-percent increase 
reported for 1993.  The housing and transportation and communication 
sectors reported gains last year, while food costs fell slightly.  
Between 1988 and 1994, Saudi Arabia's all-cities cost of living index 
has increased at an average annual rate of 1.4 percent. 
 
Movement of riyal interest rates in the Saudi banking system closely 
follows U.S. Dollar interest rates, and over the past few years, there 
has been a higher than historical premium charged on the riyal.  
Comparing 1994 to 1993, the premium for riyal interest rates was higher 
than most of the same-term dollar rates, with the greatest spreads being 
recorded in the fourth quarter of last year.  For example, there was a 
49 basis point premium for three-month riyal deposits for 1994, up from 
the 36 basis point premium in 1993 and 4 basis point premium in 1992.  
The spread for one-month riyal deposits was 40 basis points in 1994, 
down slightly from 44 basis point in 1993 but higher than the 2 basis 
point premium in 1992. 
 
Inflation is expected to rise in 1995 because of the hikes in utility 
prices and higher costs of some imports following the decline in the 
value of the riyal against some hard currencies.  According to official 
data, consumer prices rose 4.2 percent in January 1995, largely because 
of the direct effect of the hike in utility prices; there will be other 
indirect inflationary pressures felt throughout the year as some of the 
higher production costs are passed along to consumers.  Meanwhile, the 
premium for riyal interest rates has declined throughout the first five 
months of the year, with the premium near zero for May. 
 
Infrastructure Situation Re: Goods/Service Distribution 
 
Saudi Arabia possesses a good network of infrastructure to facilitate 
the distribution of goods and services.  The business centers of Riyadh, 
Jeddah, and Dammam/Al Khobar/Dhahran each have an international airport 
served by a variety of international airlines with passenger and cargo 
capabilities. 
 
Two domestic airports are undergoing upgrading and expansion works, and 
the government is evaluating proposals to build a new airport at 
Dawadmi.  Air travel is preferred for inter-Kingdom passenger travel 
with public service restricted to the sole national airline, Saudia.  
Most inter-Kingdom freight is hauled by truck over a good highway system 
linking the major business centers.  One rail line carries passengers 
and freight between Damman and Riyadh. 
 
Another rail link is expected to be built between the industrial city of 
Jubail and Damman.  Jeddah and Damman are the main international 
seaports for moving containerized and bulk cargo.  Other ports are 
specially configured for more specialized uses, e.g. Ras Tanura for oil 
shipping, and Jubail and Yanbu for serving the petrochemical sector and 
heavy industry.  A new port was recently inaugurated in Dhuba', which 
will facilitate both passenger and cargo movement between Saudi Arabia 
and Egypt.   
 
Modern communication facilities are available including telephone, fax, 
telex, and courier services.  U.S. database log-on is available through 
a Ministry of Post, Telephone and Telegraph trunk line service, Al-
Waseet.  Use of private satellite communication transponders is not 
allowed.  Facsimile machines are heavily utilized in the conduct of 
business.  There is currently no cellular phone system (due in 1996) and 
radiophones are restricted.  The government is embarking on a large-
scale telecommunications upgrade program but the shortage is expected to 
worsen through 1995.     
 
Major Infrastructure Projects Underway 
 
A number of major infrastructure projects are underway in the areas of 
power generation, water desalination, airport improvement, 
communications, and public transport.  These include: 
 
Telecommunication: The Saudi PTT expansion (TEP 6) contract for 
switching lines, estimated at $4 billion, has been awarded to  AT&T.  
The U.S. firm is expected to complete 1.5 million telephone lines, 
200,000 cellular units, and a fiber-optic network across the Kingdom. 
 
Power: The Saudi Consolidated Electric Company in the Eastern Region 
intends to build a 2400 MW generation facility in Gazlan.  The Saudi 
Consolidated Electric Company in the South envisages a 1000 MW 
generation facility for Asir/Jizan, phase two, another 1000 MW power 
station in Shuqaiq, and a 100 MW generation facility in Tihama.  The 
Saudi Consolidated Electric Company in the Western region also plans a 
1000-2500 MW thermal power plant in Shuaiba.  The Saudi Consolidated 
Electric Company in the Central region awarded a $1.8 billion contract 
to the U.S. firm General Electric for a 2400 MW power station and 
expansion of another, both of which are located in Riyadh. 
 
Desalination:  The Saline Water Conversion Company (SWCC) is 
implementing the third phase of a $830 million reverse osmosis/power 
plant in Al-Khobar on the East Coast of Saudi Arabia.  SWCC is also 
building a $1 billion desalination and power plant at Shuaiba.  
Consisting of a flash evaporation unit, the plant will have a capacity 
of 445,000 cubic meters per day.  The Royal Commission for Jubail and 
Yanbu is building a 2.5 million gallons per day desalination plant for a 
contract valued at $170 million.  Another project which might go ahead 
during 1996 is the second phase of the Madinah-Yanbu desalination and 
power generation plant.  Estimated to cost $669 million, the new phase 
will generate 150 MW of electricity and 227,280 cubic meters of water 
per day. 
 
III.  POLITICAL ENVIRONMENT 
 
Nature of Political Relationship with the United States 
 
The United States and Saudi Arabia have enjoyed a strong, close 
relationship since the establishment of diplomatic relations in November 
1933.  Saudi Arabia's huge oil reserves--one quarter of the world's 
known supply--form one important basis for our close relationship.  U.S. 
geostrategic interests in Saudi Arabia are equally important.  Located 
between two of the world's most critical waterways--the Arabian/Persian 
Gulf and the Red Sea--Saudi Arabia is key to controlling the movement of 
a major part of the world oil trade and a large amount of commercial and 
military traffic, both on the water and in the air.  Saudi Arabia also 
represents a growing market for U.S. goods and services.  Saudi Arabia 
was America's 16th largest trading partner in 1994, consuming $6.0 
billion of non-military U.S. goods. 
 
The Saudi Government has relied heavily on the U.S. Government and 
private U.S. organizations for technical expertise and assistance in 
developing its human and mineral resources.  In addition to the U.S. 
Embassy in Riyadh, the U.S. has Consulates General in Jeddah and 
Dhahran. 
 
The United States has a large Foreign Military Sales program in Saudi 
Arabia, including the F-15, AWACS, missiles, air defense weaponry, 
military vehicles, and other equipment.  A U.S. Military Training 
Mission provides training and support for these weapons and other 
security-related services to the Saudi armed forces.  A similar program 
assists the Saudi Arabian National Guard. 
 
The United States benefits in the promotion of its interests from the 
leadership role Saudi Arabia plays in the Arab and Islamic communities.  
The Saudi Government acts as a behind-the-scenes arbiter and partner in 
encouraging negotiating parties to move forward in the Middle East Peace 
Process.  Saudi and American interests also coincide in support of 
moderate regimes and disapproval of destabilizing elements. 
 
Major Political Issues Affecting Business Climate 
 
The United States and Saudi Arabia share a common concern about regional 
security and stable development.  Military cooperation during the 1991 
Gulf War was extensive.  While supporting the Middle East Peace Process, 
the Saudi Government has chosen to let the parties negotiating bilateral 
peace agreements with Israel take the lead in normalizing relations with 
Israel. 
 
Despite rapid economic development, Saudi society remains strongly 
conservative and religious.  The King supports modernization as long as 
it does not undermine the country's stability and Islamic heritage. 
 
Subsidies have been a burden as finances tightened over the past few 
years.  Health care is free, gasoline costs 60 cents a gallon, diesel 37 
cents.  The 1995 budget, with its increase in utility prices and a 
further cut back in spending, suggests the Kingdom is tackling its 
budget difficulties and moving in the direction of key reforms that will 
improve the trade and investment climate.  Even with the rate increases, 
electricity and desalinated water are still provided below cost. 
 
Synopsis of the Political System 
 
Saudi Arabia is a traditional monarchy.  It is ruled by descendants of 
its founder, King Abdul Aziz Al Saud, who unified the country in the 
early 1920's.  The concept of separation of religion and state is 
foreign to Saudi society.  The legitimacy of the royal regime depends to 
a large degree on its perceived adherence to Wahabism, a conservative 
form of Islam. 
 
Saudi Arabia's legal system, Shari'a law, is based on the body of 
Islamic jurisprudence derived from the Koran and traditional sayings 
(hadiths) of the Prophet Mohamed, and interpreted by the Ulema, a body 
of religious experts.  Shari'a law governs both civil and criminal law.  
In cases not covered by Shari'a law, civil officials make administrative 
decisions. 
 
Judicial appeals are reviewed by the Justice Ministry, the Court of 
Cassation, or the Supreme Judicial Council to ensure that court 
procedures were correct and that judges applied the appropriate legal 
principles and punishments.  In capital cases, the King acts as the 
highest court of appeal and has the power to pardon.  There is no 
written constitution.  There are no elected assemblies and political 
parties are not permitted. 
 
In 1993, the King appointed a 60-member Consultative Council and 13 
provincial councils.  A 35-member Council of Ministers performs 
executive and legislative functions.  The Council of Ministers advises 
and makes recommendations to the King, examines proposed royal decrees, 
and directs the government bureaucracy.  The King promulgates his 
decisions by issuing royal decrees. 
 
Political consensus is formed through traditional means of consultation 
and petition on an individual basis.  Every citizen has the right to 
petition high officials and the King during public audiences.  Political 
expression unfavorable to the government is not allowed.   
 
Saudi Arabia is divided into 13 administrative provinces.  The governors 
are appointed by the King, and are generally princes or close relatives 
of the royal family.  The governors report to the Minister of Interior 
and often directly to the King.   
 
Three independent bodies are charged with security duties.  The Ministry 
of Defense and Aviation uses four uniformed services to protect against 
external military threats.  The Saudi Arabian National Guard is 
responsible for defending vital internal resources (oilfields and 
refineries), internal security, and supporting the Ministry of Defense 
and Aviation as required.  The Ministry of Interior is charged with 
internal security, police functions, and border protection. 
 
IV.  MARKETING U.S. PRODUCTS AND SERVICES 
 
Distribution and Sales Channels 
 
There are three major marketing regions in Saudi Arabia:  the Western 
Region with the commercial center of Jeddah; the Central Region where 
the capital city Riyadh is located; and the Eastern Province where the 
oil and gas industry is most heavily concentrated.  Each has a distinct 
business community and cultural flavor, and there are few truly 
"national" companies dominant in more than one region. 
 
Many companies import goods solely for their own use or for direct sale 
to end-users, making the number and geographical pattern of retail 
outlets a factor of potential significance.  U.S. exporters may find it 
advantageous to appoint different agents or distributors for each region 
having significant market potential.  Multiple agencies and 
distributorships may also be appointed to handle diverse product lines 
or services. 
 
In considering the socio-cultural differences between Saudi Arabia and 
the U.S., in particular, the relative segregation of men and women, it 
should be not be overlooked that the number of Saudi businesses owned 
and managed by women is significant, and growing rapidly.  American 
businesses, especially businesswomen, may want to focus on commercial 
possibilities with the 4.3 percent of registered Saudi businesses that 
are owned by women--i.e. over 15,000 companies.  The majority of Saudi 
businesswomen are in Riyadh; recent statistics indicate that over 2,400 
members of the Riyadh Chamber of Commerce and Industry are female, 
nearly quadruple that in 1987.  Jeddah comes second in terms of women 
members of the Chamber of Commerce. 
 
Of businesses registered to women, 37 percent are in retail; 36 percent 
contracting; 24 percent wholesale; eight percent industry and 
manufacturing.  Informal information available suggests that Saudi women 
business-owners are most actively involved in retail of women's and 
children's clothing, dressmaking, catering and party services, and early 
childhood education (via privately-owned preschools). 
 
While there is no requirement that distributorships be granted on an 
exclusive basis, it is clearly the policy of the Saudi Ministry of 
Commerce that all arrangements be exclusive with respect to either 
product line or geographic region. 
 
Many Saudi companies handle numerous product lines making it difficult 
to promote all products effectively.  Saudi agents typically expect the 
foreign supplier to assume many of the market development costs, such as 
hiring of dedicated sales staff. 
 
Foreign suppliers often detail a sales person to the Saudi distributor 
to provide marketing, training, and technical support.  Absent such an 
arrangement, U.S. firms should expect to make at least four visits per 
year to support their Saudi distributor. 
 
Use of Agents/Distributors; Finding a Partner 
 
U.S. exporters are not required to appoint a local Saudi agent or 
distributor to sell to Saudi companies, but commercial regulations 
restrict importing and direct commercial marketing within the Kingdom to 
Saudi nationals and wholly Saudi-owned companies.  Agent/distributor 
relations are governed by the Commercial Agencies Regulations of the 
Kingdom of Saudi Arabia, administered by the Ministry of Commerce.    
 
Obtaining a business visa for Saudi Arabia requires sponsorship by a 
Saudi national, and Saudi nationals receive strong preference in sales 
to government agencies and parastatal corporations. 
 
Consequently, U.S. firms may find it advantageous to establish local 
representation, especially for product lines requiring strong sales and 
service efforts.  Foreign contractors wishing to bid for government 
contracts must appoint a local service agent, and consultants must be 
represented by a Saudi consulting agency. 
 
Terminating an agent/distributor agreement can be difficult even though 
Saudi policy has changed to permit registration of a new agreement over 
the objections of the existing distributor.  Time is better spent in 
making the proper initial selection than in attempting to end an 
unsatisfactory relationship at a later date.  The U.S. and Foreign 
Commercial Service through its U.S. district offices and overseas posts 
offers a variety of services to assist U.S. firms in selecting a 
reputable and qualified representative.  A complete "Guide to Agency 
Distributor Regulations in Saudi Arabia" is available through the 
National Trade Data Bank in CD-ROM format (Tel: (202) 482-1986 for 
details). 
 
Franchising 
 
Franchising has become a popular and growing approach for local firms to 
establish additional consumer-oriented business in Saudi Arabia.  
Although the franchise market is small relative to the United States, it 
is a market that is rapidly expanding in several business sectors. 
 
Franchising opportunities exist in the following business categories:  
fast-food, laundry and dry cleaning services, office temporary services, 
automotive parts and servicing, mail and package service, printing, and 
convenience stores. 
 
In the case of fast-food, half of the Saudi population is under the age 
of 15 and many will have traveled to the United States and have acquired 
a taste for Western food.  U.S. fast food franchises account for nearly 
20 percent of the fast food franchise market. 
 
Success in the Saudi market is often attributed to finding the 
appropriate franchiser and location.  Usually, fast food franchises are 
situated near shopping centers or areas of high traffic flow.  Non-food 
franchises account for 55 percent to 65 percent of the franchise market.  
Franchising is one of the fastest growing business sectors in Saudi 
Arabia.  This is in part due to a desire among Saudis to own their own 
business, and an appreciation for western methods of conducting 
business.  Competition is particularly fierce between U.S. franchisors 
and local and third country competitors in the following franchise 
sectors:  car rental agencies, laundry and dry cleaning services, and 
auto maintenance. 
 
Direct Marketing 
 
Direct marketing is not widely used in Saudi Arabia.  Personal relations 
between vendors and customers play a more important role than in the 
West; furthermore, many forms of direct marketing practiced in the 
United States are unacceptable due to Islamic precepts regarding gender 
segregation and privacy in the home.  Limitations in the Saudi postal 
system are also a constraint:  No home delivery or postal insurance is 
available; only post office boxes are used. 
 
Direct marketing has been conducted on a very limited basis using 
unsolicited mail campaigns and fax, catalog sales (with local pick-up or 
delivery arranged), and commercials on satellite television providing 
consumers in many nations (including Saudi Arabia) with a local 
telephone number to arrange delivery.   
 
Joint Venture/Licensing 
 
Foreign investment is generally welcomed in Saudi Arabia if it promotes 
economic development, transfers foreign expertise to the Kingdom, and 
involves Saudis in the ownership and management.  Foreign investment is 
regulated under the Foreign Capital Investment Law administered by the 
Ministry of Industry and Electricity, which must approve all 
investments.  Investments involving oil or mineral extraction are 
handled by the Ministry of Petroleum and Mineral Resources. 
 
Foreign investment is normally limited to joint ventures in which the 
Saudi partner holds at least 25 percent up to a majority share.  There 
are no restrictions in the use of currency accounts or on the entry or 
repatriation of capital, profits, dividends, or salaries, provided tax 
requirements have been satisfied and clearance provided by the 
Department of Zakat and Income Tax.  Foreign ownership is not permitted 
in a few sensitive areas or in well-developed sectors where it is 
believed sufficient local investment and expertise already exist. 
 
A variety of incentives are available to foreign investors upon approval 
of the Ministry of Industry and Electricity.  These include tax holidays 
for five years (ten years for industrial and agricultural projects), 
duty free importation of capital equipment, spare parts and raw 
materials for the duration of the project, and access to low cost 
financing, industrial land, and utilities. 
 
Local products receive price preferences of 10-20 percent in government 
tenders.  Most incentives are only available to joint ventures with at 
least 25 percent Saudi ownership. 
 
Licensing is an appropriate method of doing business in the Kingdom 
under some circumstances, but the tax implications should be considered. 
Royalties, license fees, and certain management fees are deemed to be 
100 percent profit, and the full amount will be taxed at the normal 
corporate tax rate for non-Saudi companies.    
 
The procedure for establishing a joint venture is as follows: 
First, the Ministry of Industry and Electricity (MIE) and its 
constituent parts must review and process all applications for 
industrial projects.  Within the MIE, the Industrial Licensing 
Department (ILD) and Foreign Capital Investment Bureau (FCIB) are 
responsible for evaluating and licensing industrial projects.  Non-
industrial projects are handled unilaterally by the FCIB.   
 
The MIE's Industrial Protection and Encouragement Department (IPED) 
studies the project's potential impact on domestic industry and 
determines any tariff protection that may apply.  The MIE's Industrial 
Cities Department (ICD) evaluates requests for sites in Saudi Arabia's 
industrial cities.    
 
In addition, an application must be made to the Foreign Capital 
Investment Committee (FCIC) for a foreign investment license.  The FCIC 
is an inter-ministerial committee that receives recommendations 
forwarded by the MIE/FCIB, and after study makes its recommendation for 
final approval to the MIE.  Following the issuance of the investment 
license, an application for commercial registration is made to the 
Ministry of Commerce (MOC).  
 
In this process, the MOC will approve the joint venture's Articles of 
Association, register the company under the MOC's Companies Regulations, 
and assign a commercial registration number. 
 
Depending on the nature of the foreign investment, the Saudi Arabian 
Standards Organization (SASO) may be involved.  SASO is the Saudi 
authority for establishing product standards for imports and locally-
manufactured goods, and will examine products or processes to be used to 
ensure they meet existing or planned Saudi standards. 
 
The Saudi Industrial Development Fund (SIDF) may be engaged to provide 
up to fifty percent financing for approved industrial joint venture 
projects.  Market intelligence also is available through the SIDF for 
prospective investors. 
 
Other Saudi Arabian government entities that may be involved in the 
process include the Ministry of Foreign Affairs (for visas), the 
Ministry of Interior (residence permits and industrial safety and 
security approvals), the Ministry of Labor and Social Affairs (work 
permits for foreigners), the Royal Commission for Jubail and Yanbu (if 
the project is sited at the Saudi industrial cities of Jubail or Yanbu), 
the Government Organization for Social Insurance (social insurance and 
disability payments for Saudi employees), and the General Organization 
for Technical Education and Vocational Training (training programs for 
Saudis). 
 
Foreign investors may structure their joint venture as a limited 
liability company (the most commonly used approach), as a joint-stock 
company, or as a joint venture.  By law, limited liability companies 
must not have less than two nor more than fifty shareholders and be 
capitalized with at least Sr. 500,000.  Limited liability companies are 
forbidden to deal in insurance or financial enterprise.  Joint stock 
companies are a variety of the limited liability company that can be 
held either privately or publicly.  They resemble U.S. corporations in 
structure and function. 
 
Joint ventures are unincorporated associations in which each party to 
the venture holds title to his mutually agreed contribution.  They 
resemble general partnerships.  The Ministry of Commerce approves 
formation of all joint ventures.   
 
Applications must include the venture's objectives, rights and 
liabilities, as well as the manner in which profits are to be divided.  
A detailed "Guide to Establishing Joint Ventures in Saudi Arabia" is 
available in CD-ROM format on the National Trade Data Bank (Tel: (202) 
482-1986 for details).  A few major U.S. accounting firms with Saudi 
offices also publish very useful guides to the tax and legal aspects of 
doing business in Saudi Arabia. 
 
Steps to Establishing an Office 
 
The procedures to follow in establishing an office in Saudi Arabia 
differ according to the type of business undertaken.  The most common 
and direct method of establishing an office is simply to appoint an 
agent/distributor, who can set up the office under their own commercial 
registry and obtain residency visas for any necessary expatriate 
personnel.  The agent/distributor agreement should be registered with 
the Ministry of Commerce as previously described. 
 
A second method might be to establish a technical and scientific 
services office, which requires a license from the Ministry of Commerce.  
This approach preserves the independence and identity of the foreign 
company's local office as a separate entity from the Saudi 
agent/distributor. 
 
Technical and scientific service offices are not allowed to engage 
directly or indirectly in commercial activities, but they may provide 
technical support to the Saudi distributor as well as conduct market 
surveys and product research. 
 
A third method is to establish a branch office.  Branch offices are 
normally permitted only for foreign defense contractors.  The 
establishment of branch offices is open to wholly foreign-owned 
entities, and requires approval of the Ministry of Industry and 
Electricity's Foreign Capital Investment Committee (FCIC). 
 
An essential element in the FCIC's approval process is that the branch 
office be conducive to the Kingdom's economic development.  FCIC 
approval also requires the foreign company submit a certified copy of 
its charter and bylaws, accompanied by an Arabic translation, as well as 
the company name, address, date of establishment, type of business and 
amount of capital.  The company's board of directors must also provide a 
resolution authorizing the establishment of a Saudi branch office. 
 
Following FCIC approval, the branch office must establish and register 
with the Commercial Register of the Ministry of Commerce.  The 
registration process requires representation by a Saudi attorney. 
 
A fourth method is to establish a representative (or liaison) office.  
This is normally granted only for companies that have multiple contracts 
with the government and require a local office to oversee contract 
implementation.  Representative offices are not allowed to engage in 
direct or indirect commercial activity in the Kingdom.  Establishment 
requires a representative office license from the Ministry of Commerce. 
 
Finally, foreign companies may establish an office by entering into a 
joint venture with a Saudi firm, as described in the previous section.   
 
Costs associated with setting up an office in Saudi Arabia can vary 
considerably.  As a general guide, the following are current costs of 
housing and office rental, as well as costs for employee salaries, 
taxes, and transportation.  Typical rental for a one-bedroom furnished 
apartment is $12,000, and $14,667 for a two-bedroom apartment. 
 
A one-bedroom villa in a western-standard residential compound will rent 
per year for $24,000 to 27,000, with furnishing costs of $2,667; two 
bedrooms, $29,333 with furnishing costs of $2,667; three bedrooms, 
$49,333 with furnishing costs of $4,000; four bedrooms, $52,000 with 
furnishing costs of $4,000.  Residential compounds in Saudi Arabia often 
include a swimming pool, tennis courts, a club house, and not 
infrequently, eating facilities. 
 
Typical management, maintenance, and use charges are $1,600 quarterly, 
and security deposits are in the range of $2,700.  Rental terms are for 
two years with the first year payable in advance.  Office rental costs 
are variable, and are governed largely by the city and business 
location.  Typical rental costs in a modern commercial center are 
approximately $133 per square meter.  A six month rental is the minimum, 
and a fifteen percent maintenance and utility charge is levied monthly. 
 
Saudi law requires that Saudi nationals make up 75 percent of a 
company's work force and 51 percent of its payroll in all businesses.  
However, due to a shortage of qualified Saudis, in practice much of the 
work force is made up of non-Saudi Arabs, Europeans, Americans and 
Asians. 
 
An employee's nationality and level of experience, as well as the nature 
and location of the business will create variations in pay, but a 
typical manager's yearly salary (base) is approximately $30,000 to 
40,000.  Mid-level office workers are paid approximately $20,000 to 
30,000 per year.  A clerical worker's base yearly salary is in the range 
of $8,000 to 10,000.  A support worker (driver, caretaker) earns in the 
range of $6,000 to 7,000 yearly.  Local Saudi employee taxes are fifteen 
percent of base or combined with benefits.  From base salary and 
housing, companies withhold five percent and pay ten percent. 
 
It is customary to provide non-Saudi workers with furnished 
accommodations or a housing allowance as well as round-trip air fare to 
their country of origin on a yearly basis. 
 
Regarding transportation, four-door sedans rent monthly for $1,360, and 
yearly for $13,920.  A new Chevrolet Caprice can be purchased for 
approximately $22,000.  It is important to note that, by law, females in 
Saudi Arabia, regardless of nationality, are forbidden to drive motor 
vehicles. 
 
Additional monies, along the lines mentioned above, should be included 
in an office budget to provide sufficient cars and drivers for 
transportation of female family members and staff. 
 
Business travelers coming to Saudi Arabia to explore business 
opportunities are eligible for a visitor's visa, which is a single-entry 
visa of up to three months' duration. 
 
Currently, the visitor's visa application requires the U.S. company's 
representative to submit to Saudi visa authorities a letter of 
invitation issued by a Saudi company that has agreed to serve as his 
sponsor.  The letter, which must be in Arabic, must be on the Saudi 
company's letterhead, in the original, and must bear an authenticating 
stamp from the Saudi company's local chamber of commerce.  The U.S. 
company's representative must apply for the visa prior to departing the 
U.S. at either the Saudi Embassy in Washington, D.C., or at one of the 
Saudi Consulates in Houston, Los Angeles or New York City.  These 
requirements are very strictly enforced by Saudi visa authorities. 
 
In recognition of the importance of faster and more efficient processing 
of business visas, the Saudi government is in the process of reviewing 
its business visa application and procedures.  Under consideration are 
changes that will allow business visas to be obtained more quickly and 
with fewer bureaucratic requirements. 
 
Once in place these changes will allow visa applicants whose business is 
established in Saudi Arabia, and who must travel frequently outside the 
Kingdom, to obtain from Saudi Embassies and Consulates multiple-entry 
visas. 
 
Selling Factors/Techniques 
 
Expatriate managers have had a strong influence in introducing advanced 
selling techniques into a market that relied heavily on word-of-mouth 
and established buying patterns until a few years ago.  Advertising and 
public relation firms are multiplying in Saudi Arabia, and the Saudis 
themselves have become a discerning, sophisticated clientele. 
 
A large portion of upper and middle class Saudis were educated in the 
U.S. or in Europe, and like to display their knowledge of world affairs 
by discussing them at length as an introduction to a business 
negotiation.  On occasion, a Western executive may have to listen 
through the presentation of the local point of view on the current 
regional issues before business can be addressed. 
 
Meetings are usually conducted at a leisurely pace, with much tea and 
coffee consumed while the parties involved warm up to each other.  It is 
not appropriate to display urgency or to be brief.  Appointments must be 
scheduled taking into consideration the month-long religious holidays of 
Ramadan and Hajj, and the daily prayer breaks.  Although details of a 
transaction can be handled by facsimile, now in widespread use, no 
serious commitment is likely to be made without a face-to-face 
introduction.  Business cards are usually printed in English on one side 
and Arabic on the other. 
 
Saudis have an aversion to talking with outsiders about their family, 
particularly the female members, or having to stare at the sole of a 
visitor's shoe.  Saudis are gracious hosts and will try to put a visitor 
at ease, even during arduous business dealings. 
 
The positive aspect of the Saudis' familiarity with the U.S. is that 
most importers are very receptive to American products because of the 
U.S. reputation for state-of-the-art technology, durability, and stable 
prices.  Of course, this goodwill can be used only as an introduction, 
since a product must be competitively priced and readily available to 
make a sale.  Financing may also be offered as part of a sales proposal, 
usually after a solid relationship has been established.  Financing is 
particularly important these days when dealing with government agencies. 
 
Since the latter are delaying payment of contracts and other obligations 
- delays of six to fifteen months are becoming the norm - exporters 
should adjust pricing and financing accordingly, to cover the 
considerable cost of carrying long-term account receivables. 
 
Foreigners need to find a Saudi partner before they are allowed to 
engage in trade within the Kingdom, but direct sales can be made to 
Saudi private clients without having to use a local agency.  Saudi 
Ministries will purchase only from local agents or distributors, and 
contracts for major projects are usually awarded to joint ventures 
linking foreign and Saudi partners. 
 
An irrevocable letter of credit (L/C) is the instrument normally used 
for Saudi imports; open account, cash in advance and documentary 
collection are also acceptable if both parties agree.  Maximum or 
minimum credit terms are not required.  Export Credit Insurance for 
political and commercial risk is available from the Foreign Credit 
Insurance Association (F.C.I.A) of the U.S. Export-Import Bank in 
Washington, D.C. (Tel: 202-566-8990, or 212-306-5084). 
 
The government maintains a free trade approach to exchange transactions:  
no exchange restrictions apply, exchange for payments abroad is obtained 
freely, and there are no taxes or subsidies on foreign currency 
transactions. 
 
Since 1981, the Saudi Arabian Monetary Authority (SAMA) pegs the Riyal 
to the dollar, to facilitate long term planning and minimize exchange 
risk for the private sector.  The rate has remained stable at $1 = SR 
3.75 since 1986. 
 
Advertising and Trade Promotion  
 
Advertising, once a relatively secondary aspect of sales, has come into 
its own, especially with the recent lifting of a ban on televised 
commercials.  Most companies' advertising budgets now cover the complete 
array of media, such as TV, newspapers, trade magazines and billboards, 
in addition to trade promotion events.  Saudis receive preferential 
rates. 
 
Bright colors such as red, blue, green and black dominate the ads, since 
most buying is still decided by men; pink, cream and other soft colors 
are not as popular.  With some modest exceptions, the female human form 
is not culturally or religiously acceptable in the media.  Landscapes 
and other non-human images are commonly featured.  Ads, packages, 
literature, etc. are frequently in English and Arabic. 
 
Advertising is critical in gaining retail sales and market share.  Both 
television, magazines, and point of sale advertising is common.  Some 
televised commercials are broadcast on the two Saudi channels (Secam 
color system) during limited periods of the day.  One TV channel is in 
Arabic, the second is in English, with broadcasting covering the entire 
Kingdom. 
 
Cost of a time slot varies considerably, depending on timing, and is 
usually less costly for Saudis than foreign firms.  Contents are 
thoroughly screened to conform with strict moral and religious 
standards. 
 
A new approach to presenting products is advertising through 
international TV channels such as CNN and MBC (Middle East Broadcasting 
Corp. in London).  Most major Saudi companies place commercials on the 
popular Middle East Broadcasting Company (MBC) channel on the Arabsat 
satellite.  Other Arabic satellite channels which have been recently 
launched, such as Arab Radio and Television, are also attracting 
numerous advertisers.  These TV channels have succeeded in introducing 
several new products to the market. 
 
Print advertising is also important.  In recent years, several magazines 
have appeared on the local market.  Popular magazines are: Al-Wasat, Al-
Majallah, Al-Yamamah, and Sayidati.  Advertising rates for publications 
vary greatly, however their level is well below the U.S. norm, in 
keeping with the reduced readership. 
 
Newspaper advertising is carried out in both the local English and 
Arabic press, but its effectiveness is somewhat limited by the 
relatively low readership rates. 
 
The three local dailies published in English have circulation in the 
20,000 to 50,000 copies range: Arab News (Jeddah); Saudi Gazette 
(Jeddah);  Riyadh Daily (Riyadh).  The leading Arabic newspapers, with 
nationwide distribution, have circulation in the 70,000 to 100,000 
range:  Al Hayat, Al-Shark Al-Awsat, Okaz.  Other relevant newspapers 
have lower circulation, and some have only regional distribution:  Al 
Bilad, Al Jazira, Al Madina, Al Nadwa, Al Riyadh, Al Youm, Um Al Qura, 
Al-Riyadiya (sports only).  A newcomer, the Al Iqtisadiah economic 
daily, has rapidly earned a loyal readership of executives and 
government officials. 
 
Numerous trade promotion events take place from September through June, 
with most of them held in the modern exhibit centers in the Kingdom's 
three major cities:   
 
Riyadh Exhibition Co. Ltd. 
PO Box 56101 
Riyadh 11554, Saudi Arabia 
Tel: (01) 454-1448, Fax: (01) 454-4846 
Tlx: 406359 EXHB SJ 
Contact:  Bechara Nacouzi, Sales Manager 
 
Al-Harithy Co. for Exhibitions, Ltd. 
PO Box 40740 
Jeddah 21511, Saudi Arabia 
Tel: (02) 654-6384, Fax: (02) 654-6853 
Tlx: 602784 EXPO SJ 
Contact: Saeed Haider, GM 
 
Dhahran International Exhibition 
PO Box 7519 
Damman 31472, Saudi Arabia 
Tel: (03) 857-9111, Fax: (03) 857-2285 
Contact: Najeeb Abdul Rahman Al-Zamil, General Manager 
 
Each exhibit center organizes five to ten events a year, and even though 
the programs have varied over time, the recurrent themes cover most 
industries of interest for U.S. exporters: agriculture, automotive, 
computers, medical and lab equipment, construction, production 
technology, electrical and A/C-heating, and communications.  Smaller 
exhibit facilities are also located in regional centers, and often 
operate in cooperation with or under the sponsorship of the local 
chamber of commerce. 
 
Most chambers have a proactive approach to promotion and trade, organize 
shows and presentations for individual companies or groups, and have 
been eager to attract American and other Western suppliers. 
 
The main Chambers are: 
 
Council of Saudi Chambers of Commerce and Industry 
PO Box 16683 
Riyadh 11474, Saudi Arabia 
Tel: (01) 405-3200, Fax: (01) 402-4747 
 
Riyadh Chamber of Commerce and Industry 
PO Box 596 
Riyadh 11421, Saudi Arabia 
Tel: (01) 404-0044, Fax: (01) 402-1103 
 
Jeddah Chamber of Commerce and Industry 
PO Box 1264  
Jeddah 21431, Saudi Arabia 
Tel: (02) 651-5111, Fax: (02) 651-7373 
 
Damman Chamber of Commerce and Industry 
PO Box 719 
Damman 31421, Saudi Arabia 
Tel: (03) 857-1111, Fax: (03) 857-0607 
 
Makkah Chamber of Commerce and Industry 
PO Box 1086 
Makkah, Saudi Arabia 
Tel: (02) 534-3838, Fax: (02) 534-2904       
 
Medina Chamber of Commerce and Industry 
PO Box 443 
Medina, Saudi Arabia 
Tel: (04) 822-5380, Fax: (04) 826-8965 
 
Taif Chamber of Commerce and Industry 
PO Box 1005 
Taif, Saudi Arabia 
Tel: (02) 736-6800, Fax: (02) 738-0040    
 
NOTE:  Add country code 966 if dialing from the U.S. and drop the zero 
before the first digit of the telephone or fax numbers above. 
 
Product Pricing 
 
A rate of exchange of the dollar to the riyal has been set at 3.75 since 
1986, a competitive dollar value compared to the Japanese and European 
currencies, and reasonable interest rates have greatly facilitated 
market penetration.  Thanks to this, Saudi importers expect U.S. 
producers to practice a more stable pricing policy than their foreign 
competitors.  Products are usually imported on a CIF basis, and mark-ups 
depend almost entirely on what the vendor feels that the market will 
bear relative to the competition.  There is no standard formula to come 
up with the mark-up rates for all product lines at different levels of 
the relatively short distribution chain. 
 
Stability of prices has been a policy of the Saudi Government for years, 
however, the latest utility and gas rates hikes have had a multiplier 
effect across the board.  For the U.S. supplier, some give-and-take is 
expected in preliminary negotiations.  The asking price is usually 
lowered a bit, to entice the client and to bow to the old-fashioned 
Saudi penchant for bargaining and personal exchange.   
 
Financing has become a leading consideration in purchasing, especially 
for investment goods and repeat orders.  As leveraged transactions 
become the norm, Saudis have come to understand that an attractive 
financial package can be even more interesting than an up-front low 
price.  The support and services provided by the U.S. Eximbank attract 
the Saudis' keen interest, and are being considered for several major 
projects.  
 
Sales Service/Customer Support 
 
Saudi Arabia is a relatively open market, which makes it highly 
competitive.  Brand loyalty and established preferences are less 
developed than in other countries.  Consequently, above average sales 
service and customer support are indispensable to win and maintain new 
clients. 
 
As the Saudi market matures, this will become more and more the norm, 
and the recent economic slowdown is adding to the competitive pressure; 
the sell-and-forget techniques still common in the 1980s are definitely 
out. 
 
Saudis view a foreign firm's physical presence in the Kingdom as a 
tangible sign of long-term commitment.  Prompt delivery of goods from 
available stock and the presence of qualified support technicians have 
become more important, and they influence repeat business much more now 
than ten or even five years ago.  Government agencies usually require 
equipment suppliers to commit to providing maintenance and spare parts 
for an average period of three years. 
 
Selling to the Government 
 
Government spending accounts for approximately 35 percent of GDP, making 
it an important albeit diminishing market for U.S. suppliers of goods 
and services, particularly in the military, health care, data 
processing, transportation, engineering, and security sectors.  However, 
payment delays remain an issue for foreign suppliers. 
 
As the situation is fluid, U.S. firms considering sales to the 
government should request a briefing from the Embassy concerning the 
latest situation on payments and how U.S. firms can protect themselves. 
 
As a practical matter, U.S companies seeking sales of goods and services 
to the Saudi government should appoint a reputable agent or distributor 
with experience in the field.  Foreign contractors operating solely for 
the government, if not already registered to do business in Saudi 
Arabia, are required to obtain temporary registration from the Ministry 
of Commerce within 30 days of contract signing and to select a Saudi 
national as an officially registered agent (weapons sales are exempt 
from this agency requirement).  Compensation for agents is limited to a 
maximum of 5 percent of contract value.  Foreign companies also may be 
allowed to establish a branch office by obtaining a foreign capital 
investment license from the Ministry of Industry and Electricity.  
Branch offices are usually approved only for foreign defense 
contractors.  For others, a liaison office may be established to 
supervise work in the Kingdom and to facilitate coordination between the 
government and home offices.  This requires approval of the Ministry of 
Commerce.  Liaison offices are prohibited from conducting commercial 
business in Saudi Arabia. 
 
Foreign contractors involved in public works projects are required to 
subcontract at least 30 percent of the contract value to 100 percent 
Saudi-owned companies.  This requirement also applies to limited 
liability partnerships with less than 51 percent Saudi ownership. 
 
The subcontractor must be qualified to perform the work and may not 
further subcontract any portion of it.  Purchases of Saudi products and 
services and of imported products from Saudi distributors may count 
toward the 30 percent requirement. 
 
Protecting your Product from IPR Infringement 
 
Saudi Arabia has a patent office, but has never issued a patent.  The 
Ministry of Information has made some limited progress on enforcing 
copyrights on software and films.  U.S. firms that wish to sell products 
in Saudi Arabia should work through their local representative to 
register their products with the Ministry of Information and work with 
them on enforcement.  The Saudi Government has taken actions to enforce 
copyrights of U.S. firms, and pirated material has been seized or forced 
off the shelves of a number of stores.  Overall, however, piracy remains 
a problem.    
 
Need for a Local Attorney 
 
Saudi law is based on the Islamic Shari'a and differs considerably from 
U.S. practice.  U.S. firms contemplating a joint venture, licensing, or 
distribution agreement are advised to consult with a local attorney.  
The American Embassy and Consulates can provide a list of attorneys. 
 
V.  LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENTS (US$ millions, 
unless otherwise noted) 
 
1.  AIR CONDITIONING AND REFRIGERATION EQUIPMENT (ACR) 
 
Air conditioning and refrigeration equipment including compressors 
remains one of the most growth oriented markets in Saudi Arabia.  Rapid 
population growth and a harsh climate combine to keep Saudi Arabia a 
lucrative market for HVAC equipment.  After a downturn in 1995, the 
market is expected to pick up again in 1996, growing by an estimated 6 
percent, from $913 million in 1995 to $975 million in 1996.  That growth 
will be mainly attributed to a 7 percent increase in imports, expected 
to reach $839 million in 1996.  U.S. suppliers compete aggressively with 
Japanese manufacturers, but have maintained an average 23 percent share 
of the import market.  Capacity at local factories will increase by 
about four percent from $210 million in 1995 to $220 million in 1996, 
while about 38 percent of the local output is being exported.  In 
particular, mini-split are gaining ground over wall units.  In the 
refrigeration sector, there is ample and continuous need for cold 
storage facilities, both stationary and mobile.  The latest recession 
has negatively affected imports of HVAC equipment, and the downturn is 
expected to subside in early 1996.   
 
                                1994(E)        1995(E)        1996(E) 
 
a. Total Market Size             972            913            975 
b. Total Local Production        200            210            220 
c. Total Exports                  75             80            84 
d. Total Imports                 847            783           839 
e. Imports from the U.S.         195            180           193 
 
2.  OIL & GAS EQUIPMENT AND SERVICES (OGM) 
 
Saudi Arabia is the largest single producer of oil in the world, and 
industry estimates put Saudi reserves at one quarter of the world total.  
The OGM market is large, estimated at less than a $1 billion, but is 
undergoing a rapid contraction which is expected to continue throughout 
1995.  The market was expected to have dropped by an astronomical 20 
percent in 1995, from $1100 million in 1994 to $880 million in 1995.  
Pending higher oil prices in 1996 and beyond, the Saudi market will be 
expected to redress in 1996, growing by more than two percent.  U.S. 
suppliers still hold the lion share, accounting for an average 45 
percent of the market.  Warehouse stocks are high and will be drawn down 
before new purchases are made.  A few sizable projects will go forward, 
however, and U.S. products are considered very competitive in high-
technology areas. 
 
                               1994(E)        1995(E)        1996(E) 
 
a.  Total Market Size          1100            880            905 
b.  Total Local Production      n.a.           n.a.           n.a. 
c.  Total Exports               n.a.           n.a.           n.a. 
d.  Total Imports              1100            880            905 
e.  Imports from the U.S.       495            396            407 
 
3 ..AUTOMOTIVE PARTS & SERVICE EQUIPMENT (APS) 
 
Although Saudi Arabia is the fifth largest world market for U.S. auto 
parts and equipment, and while Saudi per capita spending on automobiles 
is among the highest in the world, sales of new automobiles have taken a 
plunge in recent years. 
 
The trend will likely persist till 1996 when, according to some 
estimates, the Saudi economy is expected to recover following a slight 
increase in world oil prices.  
 
On average, the Saudi market for automotive parts continued to grow by 5 
percent annually, reaching $2340 million by 1996.  Imports which 
represent 82 percent of the market, increased by an average 6 percent 
annually, from $1730 million in 1994 to $1850 million in 1995, reaching 
an estimated $1940 million in 1996.  U.S. manufacturers/suppliers' share 
of the market stood at 40 percent.  Local production consists mainly of 
fast-moving items, but is expected to become more varied as more 
licensing arrangements are being formulated.  Local production increased 
more than two percent, from $411 million in 1994 to $420 million in 
1995, and will continue at that level in 1996.  By the same token, 
exports from local facilities will also remain flat at $20 million 
during 1995 and 1996, a slight increase from 1994.   
 
                              1994(E)        1995(E)        1996(E) 
 
a.  Total Market Size         2125           2250           2340 
b.  Total Local Production     411            420            420 
c.  Total Exports               16             20             20 
d.  Total Imports             1730           1850           1940 
e.  Imports from the U.S.      690            740            775 
 
4.  PUMPS, VALVES & COMPRESSORS (PVC) 
 
Imports of pumps, valves and compressors surged to record levels in the 
early 1990s due to a Saudi Aramco capacity expansion program, and low 
inventories in the aftermath of the Gulf War.   
 
Continued expansions and upgrading at refineries, petrochemical plants, 
power and desalination projects will keep the Saudi PVC market buoyant, 
growing between 5-10 percent per annum over the next three to four 
years.  Imports, which represent more than 98 percent of the market, are 
expected to grow 10 percent reaching a high of $392.5 million in 1996. 
 
Local production is minimal and has remained almost unchanged over the 
years at $5 million annually.  This is expected to change as more PVC 
factories are established.  New-to-market U.S. manufacturers of pumps 
and valves will find it hard to get pre-qualified by major purchasers 
such as Saudi Aramco over the next three years unless they are extremely 
competitive.  The market for compressors is a little more open.  
 
While new PVC equipment is of interest, replacement parts and upkeep of 
equipment offer major opportunities to U.S. firms.  American companies 
already enjoy a 35 percent share of the market mainly competing with 
Italian, British, German, and Japanese suppliers.  In order to gain a 
greater market share, U.S. firms need to focus on providing service and 
upkeep, and use higher U.S. quality as a tool to outmaneuver European 
rivals.  Competitive pricing has become of major importance because of 
the country's economic downturn.   
 
                                 1994(E)        1995(E)        1996(E) 
 
a.  Total Market Size            337.5          360.0          397.5 
b.  Total Local Production         5.0            5.0            5.0 
c.  Total Exports                  0.0            0.0            0.0 
d.  Total Imports                332.5          355.0          392.5 
e.  Imports from the U.S.        118.1          126.0          139.1 
 
6.  COMPUTERS AND PERIPHERALS (CPT) 
 
The Saudi market for computers and peripherals remains buoyant.  Various 
Saudi organizations, both public and private, are revamping their 
systems, downsizing while upgrading their computer setup.  The market 
was worth approximately $220 million in 1994, increasing by an average 
two percent annually, and expected to reach $229 million by 1996.  IBM-
compatible manufacturers in the Far East supply about 40 percent of the 
market, followed by U.S. suppliers at 36 percent. 
 
Computer utilization is on the rise and the replacement market for 
upgraded and higher capacity computers is also growing.  Saudi 
businesses and government agencies are shifting away from mainframes and 
mid-range computers to more flexible, faster, and cheaper micro 
computers or PC's in a networking environment.  One industry study 
estimated that there are more than 400,000 personal computers in the 
Kingdom. 
 
                               1994(E)        1995(E)        1996(E) 
 
a.  Total Market Size           220            225            229 
b.  Total Local Production        0              0              0 
c.  Total Exports                 0              0              0 
d.  Total Imports               220            225            229 
e.  Imports from the U.S.        80.5           82.0           83.5 
 
7.   COMPUTER SOFTWARE (CSF) 
 
Beginning in July 1994, the Saudi government started enforcing the 
copyright law.  Since then, sales of computer software have expanded at 
the rate of 10 percent annually, and will be expected to keep the same 
pace over the next three years despite prevailing recessionary 
pressures. 
 
The market is totally dependent on imports, except for some in-house and 
other third-party custom-made software.  In 1994, the market was 
estimated at $300 million which increased to $330 million and $365 
million in 1995 and 1996 respectively.  U.S. software companies dominate 
the market, accounting for more than 70 percent.  Their share will grow 
even further, especially for open architecture software packages.  There 
is also strong demand for Arabized software and tailored-made packages. 
 
                               1994(E)        1995(E)        1996(E) 
 
a.  Total Market Size           300            330            365 
b.  Total Local Production        0              0              0 
c.  Total Exports                 0              0              0 
d.  Total Imports               300            330            365 
e.  Imports from the U.S.       210            230            255 
 
8.   MINING INDUSTRY EQUIPMENT (MIN) 
 
While petroleum is by far Saudi Arabia's most important resource, the 
mining industry is becoming Saudi Arabia's second most valuable source 
of export revenue.  The Directorate General of Mineral Resources (DGMR) 
is actively seeking international investors to establish mining joint 
ventures, providing consulting, equity, and technical know-how for major 
mining projects Kingdom-wide. 
 
The DGMR has listed more than 64 mines throughout the Kingdom for 
private sector investment.  Three of these mines are already being 
tendered out for private sector investment for a total cost of $2.3 
billion.  Investment in the mining sector will have a beneficial 
influence on the market for machinery, engineering services, material 
handling equipment, power generation, safety and security equipment 
among others.  Some of the benefits that foreign investors will receive 
include: tax exemption for five years and a 30 year extraction 
concession among other benefits.     
 
No statistical data is available since any mining project will be 
implemented on a turnkey basis, including, consulting, design and 
engineering, machinery, extraction and shipping. 
 
9.  CHEMICAL PRODUCTION MACHINERY (CHM) 
 
The private sector will be expected to take the lead in spearheading 
further investments in the downstream petrochemical industries.  Major 
expansion work at the 15 plants belonging to the Saudi Arabian Basic 
Industries Corporation (SABIC) is either complete or being implemented.  
Potential for products and services in this sector will emanate from the 
private sector's drive to implement a number of long standing 
petrochemical industrial ventures.  These ventures will involve capital 
outlays in the range of $1-2 billion, 85-90 percent of which will be 
spent on infrastructure, machinery and instrumentations. 
 
At the peak of its expansion program, the petrochemical industry spent 
about $1.3 billion in 1994 on related equipment, machinery and 
instruments.  That figure was expected to drop by almost four percent in 
1995 and recorded zero growth in 1996.  Local production accounted for 
an average 16 percent of the market.    
 
Since many of these plants are awarded on a Lump-Sum-TurnKey basis, many 
U.S. firms will be expected to provide licensing and process engineering 
technology.  Currently, U.S. firms providing process engineering and 
licensing arrangement represent more than 25 percent of this market. 
 
                              1994(E)        1995(E)        1996(E) 
 
a.  Total Market Size         1300           1255           1255 
b.  Total Local Production     200            220            220 
c.  Total Exports              n.a.           n.a.           n.a. 
d.  Total Imports             1100           1035           1035 
e.  Imports from the U.S.      275            265            265 
 
10.  FRANCHISING (FRA) 
 
The Saudi franchise market still presents excellent potential for U.S. 
companies and is virtually untapped in many sectors, especially non-
food.  U.S. franchises in the fast food sector dominate the market 
accounting for three-quarters of sales.  Total sales stood at $238 
million in 1994, increasing to $257 million in 1995 and expected to 
reach $266 million by 1996.  Sales by local outlets are also expanding 
from $36 million in 1994 to $42 million in 1996, an average 8 percent 
growth annually.  
 
There is already a large number of U.S. based fast-food restaurants in 
the country, but the rapid population growth and changing tastes and 
cultural routines offer potential for additional franchises and 
expansion of those already present.  Non-food growth areas include the 
following:  quick printing, dry cleaning, office temporary services, 
laundry, and retail and convenience stores. 
 
                               1994(E)        1995(E)        1996(E) 
 
a.  Total Sales                 238            257            266 
b.  Sales by Local Outlets       36             39             42 
c.  Total Exports                 0              0              0 
d.  Sales by foreign outlets    202            218            224 
e.  Sales by U.S. outlets       167            180            190 
 
11.  OPERATIONS AND MAINTENANCE SERVICES (OMS) 
 
Harsh climatic conditions, limited technical expertise, and industrial 
expansion create a high demand for O&M services in the Kingdom.  Every 
capital project brings with it a maintenance component, especially for 
electrical and mechanical engineering contracts.  Demand for specialized 
O&M services is especially high in sectors dependent on high tech 
equipment and instruments. 
 
Saudi Arabia has a well developed oil and petrochemical industry, and 
preventive maintenance in those areas conform with world norms and 
standards.  The latest state of affairs, which has slowed down capital 
investment in plants and equipment, has also boosted the need to 
preserve and maintain existing infrastructural and capital projects 
pending better business and economic climates.  By 1996, the Saudi 
market for O&M services would have reached $4.9 billion, approximately 
80 percent of which will be handled by either foreign companies and/or 
Saudi-foreign joint ventures.  U.S. companies have the lead in this 
market and their share is estimated at 64 percent.  U.S. participation 
in this sector is expected to grow by 4 percent annually over the next 
couple years, one percentage point more than the growth for the whole 
sector.   
 
Local companies, however, will be expected to gain more expertise in 
this sector and their share, currently estimated at 4.5 percent, will 
grow at an increasing rate over the next three years.  Until oil prices 
surge again, many projects will be delayed and/or canceled; in turn, 
expenditures on the maintenance of existing projects will escalate. 
 
                                1994(E)        1995(E)        1996(E) 
 
a.  Total Sales                 4600           4760           4905 
b.  Sales by Local firms         920            960           1005 
c.  Total Exports                  0              0              0 
d.  Sales by foreign firms      3680           3800           3900 
e.  Sales by U.S. firms         2300           2400           2500 
 
12.  DRUGS/PHARMACEUTICALS (DRG) 
 
Saudi Arabia is the 24th largest market in annual drugs consumption and 
the market is growing by more than 12 percent annually.  There are as 
many as 11 government and parastatal agencies which offer health care 
services in the Kingdom.  These agencies and the private sector consume 
approximately $1 billion worth of medicines and pharmaceutical per year.  
Local production, growing by an average 30 percent annually, is 
increasingly replacing imported items as more facilities will be 
operational over the next 3-4 years.  Nevertheless, about four percent 
of the locally-produced drugs are being exported to neighboring 
countries, and imported medicines and pharmaceuticals still represent 
more than 80 percent of the market.  U.S. pharmaceutical companies' 
share stand at 11.5 percent of the import market.   
 
Currently, there is only one pharmaceutical plant in Saudi Arabia which 
has four licensing agreements with major European and U.S. 
manufacturers.  The Saudi company is also discussing licensing 
agreements with three other companies.  Five more pharmaceutical plants 
are also being considered, two of those are expected to come on stream 
by the end of 1995.  Although local production is expected to assume a 
larger share of this market, imports will still remain an important 
aspect since many licensing pacts will only cover some medicines 
including antibiotics, vitamins, cough syrups, analgesics, and skin 
ointments. 
 
                               1994(E)        1995(E)        1996(E) 
 
a.  Total Market Size          1002           1127           1275 
b.  Total Local Production      152            200            275 
c.  Total Exports                 5              8             16 
d.  Total Imports               855            935           1015 
e.  Imports from the U.S.       103            107            117 
 
13.  FOOD PROCESSING/PACKAGING EQUIPMENT (FPP) 
 
The Saudi food processing and packaging industry is the third largest 
manufacturing sector, excluding petroleum.  There are approximately 329 
factories capitalized at $2.6 billion.  Fifty new industrial licenses 
are pending, 18 of which are looking for joint ventures with foreign 
firms. 
 
The Saudi market is almost totally dependent on imports, which account 
for more than 97 percent of the market.  Growing by an average 5 percent 
annually, the Saudi market for food processing/packaging equipment is 
expected to reach $134 million by 1996.  Although German and Italian 
manufacturers dominate the Saudi market for food processing and 
packaging machinery, U.S. firms can still find a niche especially for 
machinery aimed at the manufacture and processing of snack foods, baby 
foods, ketchup, powder milk, and dairy products.  U.S. suppliers' share 
is almost 20 percent, and expected to reach a high of $28 million by 
1996.  A weak dollar against European currencies will even amplify the 
share of U.S. firms in this market.      
 
                               1994(E)        1995(E)        1996(E) 
 
a.  Total Market Size           122            129            134 
b.  Total Local Production        5              7              7 
c.  Total Exports                 3              3              3 
d.  Total Imports               120            125            130 
e.  Imports from the U.S.        21             25             28 
 
14.  APPAREL (APP) 
 
The Saudi apparel market remains lucrative.  More than half the Saudi 
population is under the age of 18, coupled with a continuous influx of 
expatriates and pilgrims throughout the year make the market quite 
promising. 
 
During the two major Moslem holidays, demand for children clothing is 
buoyant.  On average, the market has grown by more than four percent per 
year since 1994, and will be expected to reach $955 million by 1996.  
More than 94 percent of the Saudi apparel market is imported.  U.S. 
apparel manufacturers have good potential to offer apparel made of 
natural fabrics at more affordable prices than European suppliers that 
command a lion share of the upper end of the market.  U.S. sales were 
estimated at $67 million in 1994, and are expected to expand by an 
average 6 percent annually.  While imports are growing by four percent 
per year, local manufacturers are increasingly replacing a segment of 
that market and their share is growing by an average 10 percent per 
year.  At the lower end of the market, consumers are preferring to spend 
a little more for a better and long lasting product, especially for 
children's and infants fashions.  Far eastern suppliers dominate that 
sector of the market. 
 
                               1994(E)        1995(E)        1996(E) 
 
a.  Total Market Size           870            910            955 
b.  Total Local Production       52             60             63 
c.  Total Exports                12             10             11 
d.  Total Imports               830            860            903 
e.  Imports from the U.S.        67             70             76 
 
15.  AGRICULTURAL BEST PROSPECTS 
 
1.  RICE (0422110) 
 
The market for rice in Saudi Arabia is large and growing.  The country 
relies on imports to cover all of its needs for this product.  More than 
80 percent of Saudis and the majority of expatriates in the Kingdom are 
considered to eat rice in their daily diet.  There are opportunities to 
increase U.S. market share, but the market is very competitive.  The 
U.S. share declined in 1994 as a result of higher prices.  However, it 
appears that the U.S. is regaining market share and prospects for the 
future are promising.   
 
                                1994        1995(E)        1996(E) 
 
a.  Total Market Size            405         410            415 
b.  Total Local Production         0           0              0 
c.  Total Exports                  0           0              0 
d.  Total Imports                405         410            415 
e.  Total Imports from U.S.       94         100            102 
 
Note: This table shows CIF values. 
 
2.  CORN (0440000) 
 
Livestock and poultry farming are growing steadily in the Kingdom.  
Several of the Kingdom's poultry producers, by far the major consumers 
of imported corn, have embarked on major expansion projects which are 
expected to be completed by the end of 1997. Local production costs are 
high relative to the price of imported corn, so most of current demand 
and the market growth are anticipated to be filled by imports.  The U.S. 
is the dominant supplier and is expected to benefit the most from 
increased demand for imports in the next few years.  
 
                               1994        1995(E)        1996(E) 
 
a.  Total Market Size           175         178            180 
b.  Total Local Production        6           7              7 
c.  Total Exports                 0           0              0 
d.  Total Imports               169          171           173 
e.  Total Imports from U.S.     124          126           128 
 
Note: This table shows CIF values. 
 
3.  PROCESSED FRUITS AND VEGETABLES 
 
The demand for processed fruits and vegetables in Saudi Arabia is 
substantial.  The growth of supermarket food sales is helping to broaden 
the market, and good market growth is expected to continue.  Local 
production is just beginning and may provide a market for fruits and 
vegetables to be processed, but the small amount of local fruit and 
vegetable output and the high cost related to importing them for use in 
local processing suggest that most of the demand will continue to be met 
by imports.  Competition is severe, with regular imports from a large 
number of European and Asian countries. 
 
                               1994        1995(E)        1996(E) 
 
a.  Total Market Size           128         131            135 
b.  Total Local Production        3           4              5 
c.  Total Exports                 0           0              0 
d.  Total Imports               125         127            130 
e.  Total Imports from U.S.      35          37             39 
 
4.  SOYBEAN MEAL (0813100) 
 
Soybean meal is used in both poultry and livestock rations.  The largest 
soybean meal users are the poultry producers who are expected to 
increase soybean meal imports significantly by the end of 1997.  The 
major poultry producers prefer to import their soybean meal requirements 
from the U.S. due to the superior quality of U.S. soybean meal.  
However, competition from lower priced suppliers such as India appears 
to have increased in the last few years.  
 
                               1994        1995(E)         1996(E) 
 
a.  Total Market Size           106         108             110 
b.  Total Local Production        0           0               0 
c.  Total Exports                 0           0               0 
d.  Total Imports               106         108             110 
e.  Total Imports from U.S.      53          57              60 
 
Note:  This table shows CIF values. 
 
5.  BEVERAGE BASES & SWEETENERS 
 
Production of soft drinks and other beverages is probably the fastest 
growing part of the Saudi food industry.   Market growth is occurring 
for both juice concentrates and beverage bases. The U.S. market share is 
around 22%, and there are opportunities for improving the market share. 
 
                               1994        1995(E)        1996(E) 
 
a.  Total Market Size            63          70             75 
b.  Total Local Production        0           0              0 
c.  Total Exports                 0           0              0 
d.  Total Imports                63          70             75 
e.  Total Imports from U.S       18          20             25 
 
6.  SNACK FOODS (EXCLUDING NUTS) 
 
The last official census indicated that more than 60 percent of the 
Saudi population is in their teens, which as a group is a heavy user of 
snack foods.  Local production is expected to grow rapidly in the next 
five years.  The U.S. has a strong positive image in the market, since 
U.S. products are associated with quality.  However, U.S. products are 
generally priced at a premium over other products.  Products focusing on 
Saudi trade preferences, which tend to favor sweeter items, generally 
find better market reception. 
 
                               1994        1995(E)        1996(E) 
 
a.  Total Market Sales           52          53             55 
b.  Total Local Production        8           9             10 
c.  Total Exports                 0           0              0 
d.  Total Imports                44          44             45 
e.  Total Imports from U.S.      13          14             15 
 
7.  BREAKFAST CEREALS 
 
The U.S. has been the market leader in this sector.  However, breakfast 
cereals from Europe are very competitive and are making inroads in the 
market.  Promotion and advertising efforts are particularly important to 
acquaint potential consumers with these non-traditional products in 
order to gain wider consumer acceptance. 
 
                               1994        1995(E)        1996 
 
a.  Total Market Size            27          29             31 
b.  Total Local Production        2           2              2 
c.  Total Exports                 0           0              0 
d.  Total Imports                26          27             29 
e.  Total Imports from U.S.      16          12             13 
 
Major Investment Opportunities  
 
The Saudi private sector is expanding and assuming a larger role in 
boosting Saudi GDP.  Whereas total GDP grew by a mere 0.6 percent in 
1994, the Saudi private sector experienced a 4 percent growth.  A major 
indicator of the propensity of the private sector to assume a prominent 
role in the growth of the Saudi economy is an increase in commercial 
banks credit extended to finance various economic activities in the 
industrial, utilities, mining, transport and communication, trade and 
the government sectors.  In addition, many quasi government 
organizations, i.e. SABIC and SCECOs also benefited from this rise in 
credit.  More commercial bank credit will be sought in 1995 and the 
first half of 1996.    
 
The Saudi government is pursuing various policies to reduce budget 
deficits and internal indebtedness.  As such, government expenditures 
are being cut, while some public projects are being put on hold.  Among 
other things, these measures are sending a clear message to the private 
sector to assume some of the government's functions.  The Saudi private 
sector will take the initiative and a number of investments are likely 
to take place in the following sectors: 
 
Petrochemicals: The Saudi Basic Industries Corporation (SABIC) and a 
number of private companies are moving forward with a number of projects 
to build new plants and expand existing ones.   
 
Total investment in these projects is expected to reach $5 billion and 
some of them are already completed.  A number of U.S. firms are 
negotiating licensing, production processes, as well as equity 
participation.  Products range from an aromatics facility, MTBE plants, 
and various other facilities producing plastic resins, petrochemical 
feedstocks, fertilizers, and other industrial products. 
 
Offset: Projects under the various offset programs are expected to 
generate substantial new opportunities through the year 2000 and beyond.  
The U.S. Peace Shield offset program, formerly run and managed by the 
Boeing Company, already has led to five commercial projects: Al-Salam 
Aircraft Co., the Aircraft Accessories & Components Company, the 
Advanced Electronics Company Ltd., the International Systems Engineering 
Company, and the Middle East Propulsion Center.  Hughes Aircraft Systems 
which is currently in charge of the Peace Shield Program also has an 
offset commitment to invest into new ventures in the Kingdom. 
 
General Dynamics Corporation also formalized a Memorandum of Agreement 
which commits it to an Industrial Participation Program in the Kingdom, 
and last, but not least, AT&T agreed to invest into viable industrial 
joint ventures in the Kingdom.  
 
Although moving slower than its American counterpart, the British Al-
Yamama offset program also requires reinvestment by the prime 
contractor, British Aerospace, in viable Saudi projects.  Various Saudi-
British joint ventures are already in the offing, including a sugar 
refinery and a pharmaceutical plant.  A French defense contractor 
Thomson-CSF has already invested in one offset project, a gold refining 
project with a total investment of $48 million.  Other proposals are 
still pending and being evaluated by the offset committee. 
 
Defense: Although government expenditures have been negatively affected 
by recent cut downs in government budgets, allocations to the defense 
sector continue to be the largest.  More than $13 billion was earmarked 
for defense and security in the 1995 government budget.  Already, 
various military hardware is on order, entailing training and 
construction of associated infrastructure.   
 
Telecommunications: The Saudi PTT expansion (TEP 6) contract for 1.5 
million lines, estimated at $4 billion, has been awarded to the U.S. 
firm AT&T.  A number of sub-contracts have already been signed with 
U.S., foreign, and local companies to carry out different aspects of 
that project.  More contracts will be expected to be allotted in the 
future.  
 
Broadcasting: The Ministry of Information plans to purchase and install 
four high-powered short and medium wave radio broadcasting transmitters 
for a total project cost of $2-3 billion.  The project is still been 
reviewed. 
 
Transport: The Saudi Public Transport Company (SAPTCO) plans to buy 
between 800 and 1000 35-40 passengers city buses valued at $400 million 
or more depending on quantity and specifications.  Although no decision 
will be forthcoming soon, the project is still under consideration.  The 
national airline, SAUDIA, has already confirmed an order for 61 aircraft 
valued at $6 billion from Boeing and McDonnell Douglas.  
 
Power: The diversification and growth of the economy, coupled with a 
3.5-percent population growth necessitate that new power plants be built 
to cater to the rising electricity needs.  After a one-year delay, many 
power projects have moved forward.  Over the next few years, the Saudi 
government is expected to spend between $4-5 billion on that sector.  
Major among these projects is a recently signed $1.8 billion contract 
with the U.S. General Electric for a power plant in Riyadh.  Another 
equally important project is a 2,400 MW expansion at Ghazlan for an 
estimated cost of $2 billion.  Two other major projects, valued at $800 
million each, are also expected to be negotiated for two 1,000 MW 
generation facilities at Asir and Shuqaiq. 
 
Petroleum: The national oil company, Saudi Aramco, is expected to 
promote a number of projects during 1995-96.  Foremost among them are: 
the $1.7 billion Ras Tanura refinery upgrade and the Shaybah oil field 
development.  In addition, Aramco plans expansion in gas processing 
capacity and upgrade of the domestic product distribution network.  A 
number of projects are already being  implemented, while others will 
soon get the green light.  Cost of these projects is estimated at $5-6 
billion. 
 
Desalination: The Saline Water Conversion Company is implementing a 
number of projects to boost the Kingdom's desalinated capacity.  Three 
major projects are under construction or being completed, namely, the 
third phase of a $830 million reverse osmosis/power plant in Al-Khobar, 
a $1040 million desalination and power plant at Shuaiba, and a $140 
million R/O plant in Jubail.  Additional projects are on the drawing 
board and will entail investments up to $1.2 billion. 
 
Mining: Over the next few years, the Directorate General for Mineral 
Resources (DGMR) will actively seek investors from the U.S., Canada and 
other countries to establish mining joint ventures for a number of major 
projects. 
 
Saudis will enlist foreign support in the areas of joint ventures, 
investment, consulting and technical know-how to develop these mines. 
 
During 1994, the Directorate General of Mineral Resources (DGMR) invited 
bids on three major deposits, namely, the exploration and manufacturing 
of pellets from the iron ore deposits of Wadi Sawawin, the exploration 
and production of phosphate from the deposits at Al-Jalamid, and 
exploration and evaluation of the bauxite deposits at Az-Zabirah.  Total 
investments in these three projects are estimated at $2.5 billion. 
 
Studies conducted by DGMR have revealed large quantities of minerals in 
42 fields spread throughout the Western and Central regions of the 
Kingdom.  These minerals include copper, zinc, gold, silver, iron, 
bauxite and phosphate, ornamental stones and industrial minerals. 
 
The Government of the United States acknowledges the contribution that 
outward foreign direct investment makes to the U.S. economy.  U.S. 
foreign direct investment is increasingly viewed as a complement or even 
a necessary component of trade.  For example, roughly 60 percent of U.S. 
exports are sold by American firms that have operations abroad.  
Recognizing the benefits that U.S. outward investment brings to the U.S. 
economy, the Government of the United States undertakes initiatives, 
such as Overseas Private Investment Corporation (OPIC) programs, 
investment treaty negotiations and business facilitation programs that 
support U.S.  investors. 
 
VI.  TRADE REGULATIONS AND STANDARDS 
 
Trade Barriers  
 
Only Saudi nationals are permitted to engage in trading activities.  All 
industrial enterprises are open to non-Saudis, and they can also trade 
in the products they manufacture.  Non-Saudis are not permitted to 
register as commercial agents.  
 
The Saudi Arabian Monetary Agency (SAMA), the Saudi central bank, 
regulates and controls the Saudi banking sector.  Financing is available 
to Saudi and non-Saudi businessmen and entities.  Offshore banking and 
trust operations do not exist in Saudi Arabia and there is no 
legislation that permits the establishment of these operations. 
 
The securities market is still not highly developed.  Banks are the sole 
entities that may act as stockbrokers for publicly traded shares or for 
joint stock companies.  Only Gulf Cooperation Council (GCC) nationals--
Saudi Arabia, Kuwait, Qatar, Bahrain, Oman, and the United Arab 
Emirates--are permitted to buy and trade shares in Saudi companies.  
 
Saudi Arabia has a different set of trade barriers, mainly regulatory 
and bureaucratic practices, which restrict the level of trade. 
 
Among these are:  
 
Commercial Disputes Settlements:  Saudi Arabia has signed the New York 
Convention on the Arbitration of Commercial Disputes.  This is an 
encouraging step, but arbitration has yet to be tested in practice.  
Government agencies are not allowed to agree to international 
arbitration without agreement from the Council of Ministers.    
 
Business Visas:  All visitors to Saudi Arabia must have a Saudi sponsor 
in order to obtain a business visa to enter Saudi Arabia.  The Saudi who 
agrees to act as a sponsor accepts certain legal obligations including 
personal liability for the actions of the visitor.  Therefore, a Saudi 
rarely assumes sponsorship unless he has a personal interest in the 
proposed visit. 
 
In practice, this makes it very difficult for an American business 
person to come to Saudi Arabia to investigate the market or to select a 
local representative without incurring some type of obligation to his 
sponsor, i.e. right of first refusal on any business opportunity 
developed.  Although the process of obtaining a visa has been 
streamlined, American citizens of Arab descent and women continue to 
have difficulties in procuring business visas, even when they have a 
sponsor.  
 
Delayed Payments:  This is the top issue for U.S. firms in the Kingdom.  
In the current recession, some Saudi Government agencies have delayed 
payments from 6 to 15 months.  Lengthy payment delays, especially from 
government ministries and agencies, have long been a disincentive to 
doing business in the Kingdom.  This issue stems partly from a 
traditional Saudi reliance on slow payments in order to manage cash 
flow, and partly from a bureaucratic reluctance to make final payments.  
Companies should check with the U.S. Embassy or Consulates for the 
current arrearage situation. 
 
Due to accounting procedures used by the Saudi Government, the 
Department of Zakat and Income Tax will impose taxes even on payments 
which have not been received, arguing that the fact of non-payment is 
essentially immaterial in the tax liability determination process.  
Given the Saudi government's current fiscal position, this problem is 
likely to continue during 1995. 
 
Intellectual Property Protection:  The Saudi legal system protects and 
facilitates acquisition and disposition of all property rights, 
including intellectual property.  The Saudi Arabian government has 
acceded to the Universal Copyright Convention; implementation began July 
13, 1994. 
 
Saudi Arabia has had a Patent Law since 1989 and the Patent Office 
accepts applications, but it has not yet issued a patent. Protection is 
available for product and product-by-process.  Product-by-process 
protection is extended to pharmaceutical.  There are provisions in the 
Patent Law for compulsory licenses for non-working and dependent 
patents.  The term of protection is 15 years.  The patent holder may 
apply for a five year extension.  
 
Saudi Arabia's copyright law does not extend protection to works that 
were first displayed outside of Saudi Arabia, unless the author is a 
Saudi citizen.  However, Saudi Arabia has acceded to the Universal 
Copyright Convention (UCC), and the Saudi Government maintains that this 
is sufficient to extend protection to foreign works.  The Saudi 
Government has taken actions to enforce copyrights of U.S. firms, and 
pirated material has been seized or forced off the shelves of a number 
of stores.  Overall, however, piracy remains a problem.    
 
Trademarks are protected under the Trademark Law.  Trade secrets are not 
specifically protected under any area of Saudi law, however they are 
often protected by contract.  There is no specific protection for 
semiconductor chip layout design, however, it would be protected under 
the Patent Law and the Copyright Law. 
 
Arab League Boycott: The Gulf Cooperation Council, i.e. Saudi Arabia, 
Kuwait, Bahrain, Oman, Qatar, and the United Arab Emirates, announced in 
the Fall of 1994 that its members would no longer enforce the Secondary 
and Tertiary aspects of the Arab League Boycott.  The Primary Boycott 
against Israeli companies and products still applies. 
 
Advice on boycott and anti-boycott related matters is available from the 
U.S. Embassy or from the Office of Anti-boycott Compliance in 
Washington, D.C. at (202) 482-2381. 
 
Protective Tariffs and Non-Tariff Trade Barriers:  Saudi tariff 
protection is generally moderate, but has increased over the years.  A 
number of Saudi "infant industries" now enjoy 20 percent tariff 
protection as opposed to the general rate of 12 percent.  Saudi non-
tariff barriers also are increasing. 
 
Such barriers include preferences for national and GCC products in 
government procurements; a 30 percent of contract value "set-aside" for 
local contractors on major government projects; a requirement that 
foreign contractors obtain their imported goods and services exclusively 
through Saudi agents; some services are reserved for government-owned 
companies, namely, insurance and air transport; and the economic offset 
requirement mandating reinvestment of a portion of contract value in 
indigenous industries for certain high value government contracts, 
particularly in defense. 
 
Customs Valuation  
 
All merchandise moving through Saudi customs ports is appraised  by the 
Department of Customs of the Ministry of Finance.  Import valuation is 
primarily used for collection of import duties and often does not 
reflect the actual transaction value.  Saudi customs valuation 
procedures are not GATT-consistent, nor are they based on invoice value.  
Minimum prices are used, which is contrary to GATT.  Customs agents rely 
on their own experience and local prices, as well as some contact with 
manufacturers, to assess import tariffs. 
 
For statistical purposes, the valuation of imported merchandise is the 
CIF value.  The value of exported merchandise is based on free on board 
valuation (FOB).  The Saudi tariff nomenclature is consistent with the 
Harmonized System.  There does not seem to be a significant body of 
rule-making or documentation available.  Appeals are frequently done 
orally, and an appeals committee, under the Deputy-Director General of 
Customs, meets frequently. 
 
Although Saudi Arabia is a member of the Customs Coordination Council, 
Saudi Customs officers do not have the authority to do investigative 
work on business premises nor do they have enforcement powers.  These 
powers are vested in the Ministry of Interior. 
 
Import Licenses 
 
The importation of certain articles is either prohibited or requires 
special approval from competent authorities.  In addition, import of the 
following products requires special approval by Saudi authorities: 
agricultural seeds; live animals and fresh and frozen meat; books, 
periodicals, movies, and tapes; religious books and tapes; chemicals and 
harmful materials; pharmaceutical products; wireless equipment; horses; 
products containing alcohol, e.g. perfume; natural asphalt; 
archaeological artifacts. 
 
Export Controls 
 
Saudi exporters need to submit a copy of their commercial registration 
which indicates they are allowed to export.  They are also required to 
submit a certificate of origin of Saudi products (issued by the Ministry 
of Commerce).  Certain items such as antiques, Arabian horses, 
livestock, or subsidized items need special approval to export.  Exports 
of oil, petroleum products, natural gas and wheat all require export 
licenses. 
 
Import/Export Documentation 
 
The following documents are required for exporting goods into Saudi 
Arabia: A notarized certificate of origin authenticated at a Saudi 
diplomatic mission and local chamber of commerce or U.S. - Arab Chamber; 
A similarly authenticated invoice (in triplicate) which must state the 
country of origin, name of the carrier, brand and number of goods, and 
description of the goods including weight and value; A clean bill of 
lading; Documents indicating compliance with health regulations, if 
applicable;  
 
Insurance documents if shipments are sent C.I.F.  The original documents 
must be accompanied by an Arabic translation; Saudi Arabian Standards 
Organization (SASO) certificate, if applicable; Radiation Certificate, 
if applicable. 
 
Temporary Entry 
 
For temporary entry of goods for promotional purposes, imports need an 
invoice with the value of the goods endorsed by the local chamber of 
commerce, and a certificate of origin.  The invoice should state that 
the goods are being imported for exhibition purposes only and will be 
re-exported. 
 
Saudi customs requires a deposit for these goods (either 12 percent or 
20 percent of the total value).  This deposit is refundable when the 
exhibition is over.  Additionally, handling charges will be collected by 
the customs authorities. 
 
Labeling, Marking Requirements 
 
Labeling and marking requirements are compulsory for any products to be 
exported to Saudi Arabia.  The Saudi Arabian Standards Organization 
(SASO) is responsible for establishing labeling guidelines in the 
Kingdom. 
 
Labeling is particularly important for companies marketing food 
products, personal care products, health care products, and 
pharmaceutical.  SASO has specific requirements for identifying marks 
and labels for various imported items.  Companies can request a copy of 
the labeling requirements by contacting SASO at Tel: 01-456-9900 or Fax: 
01-452-0086.  
 
Quality control laboratories at ports of entry may reject the entry of 
products that are in violation of existing laws.  Products arriving at 
port having less than one-half of the time remaining between production 
and expiration date will be rejected and cannot be sold on the market.  
U.S. manufacturers are urged to discuss labeling requirements with their 
selected representative or distributor. 
 
Prohibited Imports  
 
Importation of the following products are also prohibited by law:  
Weapons, alcohol, narcotics, pork, pornographic materials, distillery 
equipment, and certain sculptures. 
 
Special approval is required for the import of seeds, food, livestock, 
books, periodicals, religious books, movies, chemicals, pharmaceutical, 
wireless equipment, horses, perfumes, natural asphalt, and 
archaeological pieces. 
There are health and sanitation regulations on all imported foods.  The 
Ministry of Commerce has issued a number of directives aimed at 
preventing outdated goods from entering the Kingdom and requiring Arabic 
and point of origin labeling. 
 
Standards (incl. ISO 9000 Usage) 
 
The Saudi Arabian Standards Organization (SASO) is actively pursuing the 
promulgation of over 1000 Kingdom draft standards including the GCC 
countries.  The development of product standards inconsistent with those 
in the United States has in the past been a significant barrier to U.S. 
exports to the Kingdom, blocking sales of an estimated $100 million to 
$500 million in previous years.  
 
Labeling and expiration date requirements are stringent and an export 
impediment for U.S. fresh eggs and canned baby food products.  Saudi 
Arabia's residential electric power system of 127 volts, 60 Hertz is 
unique, and has caused export problems for many American firms.   
 
A Standards Program Director has been assigned to SASO from the U.S. 
Department of Commerce's National Institute of Standards and Technology 
(NIST) to advise the Saudi government in developing standards and work 
to insure that new standards are not inconsistent with those in the 
United States.  New draft standards are forwarded to U.S. industry 
associations for comments and recommendations, before finalization by 
SASO.  Other developed nations have similar programs.  The U.S. 
Standards advisor can be reached by fax at (9661) 488-3237. 
 
SASO has decided to adopt ISO 9000 as approved standards for Saudi 
Arabia, and act as an accreditation body through the Quality Assurance 
Department.  Compliance will be on a voluntary basis.  However, it would 
be prudent for U.S. industry and services to consider this matter as 
serious. 
 
There may be many cases where procurement agencies will insist on 
purchasing and placing orders only with those companies that are in 
compliance with ISO 9000, or the U.S. equivalent series.  In Saudi 
Arabia, SASO will set up their own certification organization for 
locally manufactured products, as several SASO employees have been 
certified to work as professional auditors in conformance to ISO 9000 
series standards. 
 
Currently, a new customs regulation for food commodities is in effect.  
Effective April 1, 1995, the new regulation restricts the number of 
varieties to not more than ten per container. 
 
In the proposal stage, but expected to be effective within six months, 
is an international conformity certification program.  The new program 
will require that all products shipped to Saudi Arabia be tested and 
approved by a third party laboratory appointed by SASO in the country of 
origin.  Each product shipment will require the testing laboratory to 
issue an assessment certificate.  The names of the testing laboratories 
have not been identified as yet. 
 
Free Trade Zones/Warehouses  
 
There are no free trade zones in Saudi Arabia.  
 
Special Import Provisions 
 
Other than those mentioned above, there are no special import 
provisions.  Unusual cases should be worked out on a case-by-case basis 
with Saudi Customs. 
 
Membership in Free Trade Arrangements 
 
Other than the GCC, Saudi Arabia has no free trade arrangements. 
 
VII.  INVESTMENT CLIMATE 
 
Openness to Foreign Investment 
 
The Saudi Government generally encourages foreign direct investment.  
This is particularly true of foreign investment in joint ventures with 
Saudi partners, though Saudi Arabia allows wholly foreign-owned firms to 
operate.  The government and the private sector actively promote 
investment opportunities in Saudi Arabia.  The government hopes to 
attract investment in infrastructure, but has yet to make such 
investments financial attractive.  The Ministry of Industry and 
Electricity periodically identifies investment opportunities, as do the 
Saudi chambers of commerce and industry and private consulting houses.   
Other government bodies, such as the Royal Commission for Jubail and 
Yanbu and the Arriyadh Development Authority, have also been active in 
promoting opportunities in Saudi Arabia's industrial cities and other 
regions.  In addition to the majority government-owned Saudi Arabian 
Basic Industries Corporation (SABIC), private investment companies--such 
as the National Industrialization Corporation, the Saudi Venture Capital 
Group, the Saudi Industrial Development Company, and the Saudi Export 
Company--have also become increasingly active in project development and 
in seeking out foreign joint venture partners.  These companies have 
tended to concentrate on investment in petrochemical, plastics and 
metals projects, agro-industry, maintenance industries, advanced 
information processing, high-technology engineering projects and 
defense-related industries. 
 
The government uses its purchasing power to encourage foreign 
investment.  In 1985, the Saudi government reached an agreement with 
American contractors under the Peace Shield defense procurement program 
for "offset" joint venture investments equivalent to 35 percent of the 
program's value.  One Peace Shield offset program, the Al-Salam Advanced 
Aviation Support Facility in Riyadh, received FAA certification in 
September 1994.  British and French defense firms also have offset 
requirements.  Offset requirements are likely to remain components of 
major defense purchases. 
 
Rules and Regulations Governing Investment 
 
The foreign capital investment code specifies three conditions for 
foreign investments: 
 
(1)  The undertaking must be a "development project";   
(2)  The investment must generate technology transfer; and 
(3)  A Saudi partner should own a minimum of 25 percent equity (though 
this last stipulation can be waived). 
 
"Development projects" were defined in Ministry of Industry and 
Electricity resolution 11/k/w of February 12, 1990 to include 
industrial, agriculture, health, contracting and specialized service 
projects.  High technology projects are generally given priority, while 
projects in construction, and general operations and maintenance are 
discouraged. 
 
Corporate Organization and Liability 
 
While Saudi law permits a variety of corporate structures, joint 
ventures almost always take the form of limited liability partnerships.  
This form of organization does confer limited liability (but see below).  
However, there are disadvantages.  Foreign partners in service and 
contracting ventures organized as limited liability partnerships must 
pay in cash or kind 100 percent of their contribution to authorized 
capital.  Industrial projects normally require 25 percent, although it 
may be higher for some industries.   
 
Additionally, ten percent of profits must be set aside each year in a 
statutory reserve until it equals 50 percent of the venture's authorized 
capital. 
 
The Ministry of Industry and Electricity licenses direct foreign 
investment, except for mineral concessions, which are governed by 
separate agreements.  Otherwise, all proposals for new investments, 
reinvestment, mergers, or acquisitions must go through that ministry's 
licensing process.  For ventures with government participation, the 
process is usually only a formality.  On the other hand, for purely 
private ventures, the process can involve a considerable amount of time 
and effort. 
 
Operating under the "Foreign Capital Investment Code," the Ministry of 
Industry and Electricity's "Foreign Capital Investment Board" screens 
all license applications and counsels prospective investors.  License 
applications must be accompanied by a formidable array of documents 
including a feasibility study, and outline of the venture's proposed 
capital structure and legal form, the partnership agreement, plans to 
train Saudi nationals for technical and managerial positions, and 
procurement plans for machinery and other equipment.  Applicants must 
also submit permits to use specific patents, the foreign partner's 
foreign certificate of registration, and authorization from the foreign 
partner's board of directors. 
 
Following the initial screening, the "Foreign Capital Investment 
Committee" evaluates applications.  The committee is chaired by the 
Deputy Minister of Industry and Electricity and includes representatives 
from other relevant ministries, including the Ministries of Commerce, 
Finance, Agriculture, Planning and Petroleum.  License applications 
approved by the committee then seek the approval of the Minister of 
Industry and Electricity.   
 
Then the new joint venture must apply for a commercial registration 
number from the Ministry of Commerce.  Depending on the type of 
business, additional approvals may be needed, such as from the Ministry 
of Health in the case of a health care business. 
 
The "Foreign Capital Investment Committee" evaluates projects using a 
variety of factors.  Foremost is the project's compatibility with Saudi 
Arabia's basic economic goals:   
 
(1)  Economic diversification,  
(2)  Access to modern technology, and  
(3)  Development of a trained Saudi labor force to reduce dependence on 
foreign labor.   
 
The committee looks with a special favor on projects involving the 
transfer of high technology, preferring firms with experience in the 
proposed field of investment.  The committee evaluates royalty 
arrangements and the price of equipment to be supplied by the foreign 
partner.  Additionally, while there is no minimum foreign equity 
requirement for joint ventures, more than nominal investment is 
encouraged.  Intangible property is not counted towards this investment, 
and a Saudi accountant must evaluate the monetary worth of any 
contributions in kind. 
 
The "Foreign Capital Investment Committee" reportedly will not license a 
second joint venture in a specific industry sector until the committee 
agrees the first venture is "established".  While this has been 
beneficial to initial licensees, it has also allowed individual 
companies to tie up industrial and commercial opportunities for extended 
periods, while they mobilize support for their own ventures.  
 
Professionals, including architects, consultants and consulting 
engineers, are required to register with and be certified by the 
Ministry of Commerce, in accordance with the requirements defined in the 
Ministry of Commerce's resolution 264, published in 1982. 
 
These regulations, in theory, permit the registration of Saudi/foreign 
joint ventures.  However, according to Riyadh business people, the 
regulations have never fully been implemented.  As a result, most 
foreign consulting firms work as adjuncts to established Saudi firms. 
 
Foreign investors are denied national treatment in the following 
sectors: catering, cleaning, maintenance and operations of facilities, 
power generation, trading, transportation, and businesses that affect 
national security.  Saudi privatization efforts are embryonic, and the 
treatment of foreign investors has not yet been decided.  Pronouncements 
by King Fahd in 1994 indicate that privatization will be encouraged in 
the 1996-2000 development plan, with Saudia and Saudi Telecom being 
prime candidates. 
 
Wholly foreign-owned firms are guaranteed the same protection accorded 
Saudi nationals in the Foreign Capital Investment Code.  They are also 
eligible for a wide range of investment incentives, including 
advantageous utility rates, land in industrial estates at nominal rents, 
treatment as domestic producers for government procurement contracts, 
and custom duty exemptions on capital goods and raw materials. 
 
There is a clear hierarchy of privileges and preferences in Saudi Arabia 
that favors Saudi companies and joint ventures with Saudi participation.  
For instance, only firms with at least 25 percent Saudi ownership are 
eligible for tax holidays and interest-free loans from government credit 
institutions such as the Saudi Industrial Development Fund.  Similarly, 
only foreign-owned corporations and the foreign-owned portion of joint 
ventures are subject to the corporate income tax, which can range up to 
45 percent of net profits.  Only Saudi companies or citizens, or those 
of the other Gulf Cooperation Council (GCC) (Kuwait, Bahrain, Qatar, UAE 
and Oman) may own land or engage in internal trading and distribution 
activities.  Similarly, only joint ventures with at least 51 percent GCC 
ownership interest are permitted to export duty-free to other GCC 
countries.  
 
Taken together, the above represent a formidable array of privileges and 
preferences, which can severely disadvantage a foreign investor 
attempting to operate his wholly-owned company in Saudi Arabia.  The 
formerly common practice of Saudis illegally lending their names to a 
foreign-owned and operated business, so-called "cover-ups," was 
curtailed by Royal Decree m/49 of May 21, 1989.  Saudis and foreigners 
who engage in such "cover-ups" to evade Saudi commercial regulations are 
now subject to severe penalties, including imprisonment, stiff fines, 
and deportation for the foreigner. 
 
While, theoretically, American and other foreign firms are able to 
participate in Saudi government financed and/or subsidized research and 
development programs on a national treatment basis, the Embassy is not 
aware of any examples. 
 
One of the leading obstacles for foreign investors are restrictive Saudi 
visa requirements.  Investors or potential investors wishing to visit 
Saudi Arabia must have a Saudi sponsor to obtain the necessary business 
visa.  On rare occasions, the Saudi Embassy or Consulates may grant, at 
their discretion, sponsorless business visas to employees of prominent 
American firms, but this practice is unpredictable.  Business visas are 
valid for only one entry for up to three months, though the Saudi 
Ministry of Foreign Affairs has pledged to give business people from 
well known firms a multiple-entry visa. 
 
If a businessperson went to Saudi Arabia, then departed, to reenter 
Saudi Arabia, he or she would need to reapply for a new visa, including 
a new sponsorship letter.  Business women and Americans of Arab descent 
often face difficulties when requesting visas. 
 
To work in Saudi Arabia, a Saudi company must formally petition the 
Ministry of Foreign Affairs on behalf of the American.  The Saudi firm 
then sends the approved petition to the Saudi Embassy in Washington, or 
to the Saudi consulates in New York, Los Angeles, or Houston.  The 
American would then need to visit either the Embassy or one of the 
consulates to be issued a visa.  
 
Within three days of arrival in Saudi Arabia, the American must go to 
the Ministry of Interior-Passports Office, and apply for a residence 
permit called an "igama".  The Saudi employer holds the American's 
passport, while the American uses the igama for identification purposes.  
Whenever the American wants to leave Saudi Arabia, the sponsor must get 
an exit/re-entry or exit visa, then the American exchanges his or her 
igama for the passport. 
 
Since the Saudi firm holds the passport, it has the potential to exert 
great influence on the foreign employee's movements.  Americans who come 
to Saudi Arabia cannot directly bring their families with them.  The 
employee can apply for his or her family's visas only in Saudi Arabia 
and then must return to the U.S. to accompany the family.  As part of 
the application process, all potential American employees must prove 
they are college graduates. 
 
Conversion and Transfer Policies 
 
There are no restrictions on converting or transferring funds associated 
with an investment (including remittances of investment capital, 
earnings, loan repayments, lease payments) into a freely usable currency 
and at a legal market clearing rate.  There have been no recent changes 
or are there plans to change remittance policies.  There are no delays 
in effect for remitting investment returns such as dividends, return of 
capital, interest and principal on private foreign debt, lease payments, 
royalties and management fees through normal, legal channels.  There is 
no need for a legal parallel market for investor remittances. 
 
There is no limitation on the inflow or outflow of funds for remittances 
of profits, debt service, capital, capital gains, returns on 
intellectual property, imported inputs, etc.  Since 1986 the official 
exchange rate has been 3.75 Saudi Riyals per U.S. Dollar.  Transactions 
occur using rates very close to the official rate.  It is unlikely that 
a devaluation or depreciation of that rate will occur during 1995. 
 
Expropriation and Compensation 
 
The Embassy is not aware of the Saudi government ever expropriating 
property.  There have been no expropriatory actions in the recent past 
or policy shifts which would lead the Embassy to believe there may be 
expropriatory actions in the near future.  
 
Dispute Settlement 
 
Saudi commercial law is still developing, but the Saudis have recently 
taken such positive steps as joining the New York Convention of 1958 on 
the Recognition and Enforcement of Foreign Arbitral Awards.  Dispute 
settlement in Saudi Arabia continues to be time-consuming and uncertain.  
Even after a decision is reached in a dispute, effective enforcement of 
the judgment can still take years. 
 
The Embassy therefore suggests American firms investing in Saudi Arabia 
include in contracts a foreign arbitration clause, but such clauses are 
not allowed in government contracts without a decision by the Saudi 
Council of Ministers.  
 
Saudi litigants have an advantage over foreign parties in almost any 
investment dispute, because of their first-hand knowledge of Saudi law 
and culture and the relatively amorphous dispute settlement processes.  
Foreign partners involved in a dispute find it advisable to hire local 
attorneys with knowledge of Saudi legal practices.  Many Saudi 
attorneys, in turn, retain non-Saudi (and particularly American) lawyers 
to facilitate the handling of disputes involving foreign investors. 
 
In several cases, disputes have caused serious problems for foreign 
investors.  For instance, Saudi partners have blocked foreigners' access 
to exit visas, forcing them to remain in Saudi Arabia against their 
will.  In cases of alleged fraud, foreign partners may also be jailed to 
prevent their departure from the country, while awaiting police 
investigation or adjudication of the case.  Courts can impose 
precautionary restraint of personal property pending the adjudication of 
a commercial dispute, Royal decree no. M/4 of October 2, 1989.  This 
decree has diminished the incentive for individuals to physically detain 
foreign partners pending the resolution of commercial disputes.  Thus, 
it is very important that foreign investors take steps to protect 
themselves, by thoroughly researching the business record of the 
proposed Saudi partner, retaining legal counsel, complying scrupulously 
with all legal steps in the investment process, and securing a well-
drafted agreement. 
 
There have been few investment disputes over the past several years 
involving American or other foreign investors or contractors in Saudi 
Arabia.  A series of older disputes between foreign contractors and the 
Saudi Government have been satisfactorily settled, often raising 
considerable concern in the U.S. Congress.  Although there are still 
several outstanding cases.  
 
The Saudi Arabian legal system is derived from the legal rules of Islam, 
known as the Shari'a.  The Ministry of Justice oversees the Shari'a-
based judicial system, but most ministries have committees to rule on 
matters under their jurisdiction.  Of principal interest to investors 
who have disputes with private individuals are the Committees for Labor 
Disputes (under the Ministry of Labor, see below), the Committee for Tax 
Matters (under the Negotiable Instruments Committee, also called the 
Commercial Paper Committee).  The Ministry of Finance has jurisdiction 
over disputes involving letters of credit and checks, while the Banking 
Disputes Committee of the Saudi Arabian Monetary Agency (SAMA) 
adjudicates disputes between bankers and their clients.  Judgments of a 
foreign court are not yet accepted and enforced by the local courts, but 
the Saudis signature of the New York Convention may change this.  
Monetary judgments are based on the terms of the contract, i.e., if the 
contract is in dollars, the judgment would be in dollars; if unspecified 
the judgment is denominated in Saudi Riyals. 
 
Saudi Arabia has a written and consistently applied commercial law.  The 
country does not have a written bankruptcy law, but there are provisions 
in the law dealing with liquidations and the appointment of receivers.  
Secured interests in property, both chattel and real, are not recognized 
and enforced.  In mid-June 1994, Saudi Arabia deposited Articles of 
Acceptance to the New York Convention of 1958 on the recognition and 
enforcement of foreign arbitral awards.  Saudi Arabia is not a member of 
the International Center for the Settlement of Investment Disputes 
(ICSID - also known as the Washington Convention). 
 
Political Violence 
 
There have been no incidents over the past few years involving 
politically motivated damage to projects and/or installations.  Saudi 
Arabia is not growing increasingly politicized and civil disturbances in 
the short term are not likely.  There are no nascent insurrections, 
however Saudi Arabia shares a border with Iraq and Iran lies to the east 
across the Gulf.  
 
Performance Requirements/Incentives 
 
Under the 1969 labor and workman regulations, 75 percent of a firm's 
work force and 51 percent of its payroll must be Saudi, unless a 
exemption has been obtained from the Ministry of Labor and Social 
Affairs. 
 
However, Saudis represent only about a third of the estimated 7 million 
workers in Saudi Arabia, so few firms have been able to meet these 
requirements.  Foreign firms are under constant pressure to employ more 
Saudis. 
 
Investors are not required to purchase from local sources or export a 
certain percentage of output, and their access to foreign exchange is 
not related to the level of their exports.  There is no requirement that 
the share of foreign equity be reduced over time.  The government does 
not impose conditions on investment such as locating in a specific 
geographical area, a specific percentage of local content or local 
equity, substitution for imports, export requirements or targets, or 
financing only by local sources.  There are no imminent changes to the 
above-listed requirements.  Investors are not required to disclose 
proprietary information to the Saudi government as part of the 
regulatory approval process. 
 
Right to Private Ownership and Establishment 
 
Foreign and domestic private entities have the right to establish and 
own business enterprises and engage in all forms of remunerative 
activity. 
 
Private entities have the right to freely establish, acquire, and 
dispose of interests in business enterprises.  The Embassy is not aware 
of any private enterprises competing with public enterprises, therefore 
the concept of "competitive equality" has not been tested with respect 
to access to markets, credit, and other business operations, such as 
licenses and supplies. 
 
Protection of Property Rights 
 
The Saudi legal system protects and facilitates acquisition and 
disposition of all property rights, including intellectual property.  
The Saudi Arabian government has acceded to the Universal Copyright 
Convention; implementation began July 13, 1994. 
 
Saudi Arabia has had a Patent Law since 1989 and the Patent Office 
accepts applications, but it has not yet issued a patent. Protection is 
available for product and product-by-process.  Product-by-process 
protection is extended to pharmaceutical.  There are provisions in the 
Patent Law for compulsory licenses for non-working and dependent 
patents.  The term of protection is 15 years.  The patent holder may 
apply for a five year extension.  
Saudi Arabia has a Copyright Law.  However, this law does not extend 
protection to works that were first displayed outside of Saudi Arabia, 
unless the author is a Saudi citizen.  Saudi Arabia has acceded to the 
Universal Copyright Convention (UCC). 
 
The Saudi Government maintains that this will be sufficient to extend 
protection to foreign works.  The Saudi Government has taken actions to 
enforce copyrights of U.S. firms, and pirated material has been seized 
or forced off the shelves of a number of stores.  Overall, however, 
piracy remains a problem.     
 
Trademarks are protected under the Trademark Law.  Trade secrets are not 
specifically protected under any area of Saudi law, however they are 
often protected by contract.  There is no specific protection for 
semiconductor chip layout design, however, it would be protected under 
the Patent Law and the Copyright Law. 
 
Regulatory System: Law and Procedures 
 
There are few aspects of the Saudi Government which are transparent, 
though Saudi investment policy tends to be less opaque than most other 
areas.  The Saudi Government does not have a specific policy or laws 
which foster competition. 
 
Saudi tax and labor laws and policies tend to favor high-tech transfers 
and the employment of Saudis, which may not be the most efficient use of 
investment resources.  Saudi health and safety laws and policies are not 
used to distort or impede the efficient mobilization and allocation of 
investments.  Bureaucratic procedures are not streamlined or 
transparent, but Saudi red tape can generally be overcome with 
persistence.  
 
Bilateral Investment Agreements 
 
The Embassy is not aware of any countries which have bilateral 
investment protection agreements with Saudi Arabia, but Saudi Arabia is 
known to be negotiating treaties with some European countries, other GCC 
countries and their nationals receive favorable investment treatment 
derived from GCC agreements. 
 
OPIC and Other Investment Insurance Programs  
 
The Overseas Private Investment Corporation provides 
investment insurance programs for qualifying U.S. investors in Saudi 
Arabia.  Details on OPIC coverage can be obtained by calling (202) 336-
8575.  
 
Labor 
 
Recruitment of expatriate labor is regulated jointly by the Ministry of 
Interior and the Ministry of Labor and Social Affairs.  In general, the 
government encourages the recruitment of Muslim workers, either from 
Muslim countries or from countries such as India and Sri Lanka with 
sizable Muslim minorities.  The largest groups of foreign workers now 
come from Pakistan, the Philippines, and India. 
 
Westerners comprise less that 2 percent of the labor force, and the 
percentage is slowly dropping as they are replaced by Saudis and less 
expensive expatriates from third world countries. 
 
Effective September, 1985, the Ministry of Labor and Social Affairs is 
required to certify that there are no qualified Saudis for a particular 
job, before it can be filled by an expatriate worker.  In addition, the 
Ministry of Interior must approve all transfers of expatriate workers 
from one firm to another.  On the other hand, bloc visas are normally 
available for unskilled workers recruited abroad. 
 
Saudi labor law forbids union activity, strikes, and collective 
bargaining.  However, there is no forced or compulsory labor; any 
required overtime, over and above the usual five and one-half to six-day 
week is compensated, normally at time and a half rates.  The minimum age 
for employment is 13.  The Saudi government does not adhere to the ILO 
Convention protecting worker rights.  Saudis generally prefer to invest 
in labor saving technology rather that utilize foreign labor, when given 
the choice. 
 
Foreign Trade Zones/Free Ports 
 
Saudi Arabia does not have duty-free import zones or freeports. 
 
Capital Outflow Policy 
 
There are no limitations on the export of capital and outward direct 
investment.  There are no known incentives for investment in developing 
countries. 
 
Foreign Direct Investment Statistics 
 
Investment (US$ millions, except where noted): 
 
                                          1993        1994(E) 
 
- Total foreign direct investment          7.1         11.3 
- U.S. Direct investment                   1.8          4.9 
- Percent share of total 
  foreign investment (percent)            25.3         43.4 
 
- Principal foreign investors: 
 
  U.S.A., United Kingdom, Germany, Japan, and Italy 
Source : Ministry of Finance and National Economy; Saudi Arabian 
Monetary Agency (SAMA); International Monetary Fund; Department of 
Commerce; CS estimates; Ministry of Industry & Electricity. 
 
VIII. TRADE AND PROJECT FINANCING 
 
Brief Description of Banking System 
 
Saudi Arabia has a well developed banking system consisting of 12 
commercial banks.  The assets of the consolidated banking system totaled 
$83.4 billion at the end of 1994, an increase of 3.0 percent from the 
start of the year.  The five largest banks account for 70 percent of the 
assets of the banking system.  Three of the commercial banks are wholly 
Saudi-owned, including the largest National Commercial Bank and second 
largest Riyad Bank;  the remaining nine are joint venture banks.  The 
major foreign partners in the Saudi joint venture banks are Citibank, 
Arab Bank Ltd, Banque Indosuez, HSBC Holdings, and ABN Amro. 
 
Commercial banks operating in Saudi Arabia as measured by total assets: 
 
The National Commercial Bank 
Riyad Bank 
Saudi American Bank 
Arab National Bank 
Al-Rajhi Banking and Investment Corporation 
Saudi British Bank 
Saudi French Bank 
Saudi Cairo Bank 
Saudi Hollandi Bank 
United Saudi Commercial Bank 
Saudi Investment Bank 
Bank Al-Jazira 
 
Foreign Exchange Controls Affecting Trading 
 
Saudi Arabia imposes no foreign exchange restrictions on capital 
receipts or payments by residents or nonresidents, beyond a prohibition 
against transactions with Israel.  Saudi Arabia in practice pegs its 
currency, the riyal, to the dollar after it suspended ties to the IMF's 
Special Drawing Right in 1981. 
 
Saudi Arabia last devalued the riyal in June 1986 when it set the 
official selling rate at SR 3.75 = $1.  The Saudi Arabian Monetary 
Agency and all residents may freely and without license buy, hold, sell, 
import, and export gold, with the exception of gold of 14 karat or less. 
 
Efficient Capital Markets and Portfolio Investment 
 
Saudi policies facilitate the free flow of financial resources.  Credit 
from the commercial banks is allocated on market terms, and foreign 
investors can obtain credit on the local market.  The private sector has 
access to a variety of credit instruments.   
 
Soft financing is available from specialized credit institutions:  the 
Saudi Agricultural Bank, the Saudi Credit Bank, the Public Investment 
Fund, the Saudi Industrial Development Fund, and the Real Estate 
Development Fund.   
 
Legal and regulatory systems are generally consistent with Shari'a or 
Islamic law, not with international norms.  Saudi systems are seldom 
transparent.  Accounting practices are transparent and generally 
consistent with international norms.  Portfolio investment occurs in 
Saudi Arabia, but the Embassy is unsure of the effectiveness of its 
regulatory system. 
 
Saudi Arabia's five largest banks (National Commercial Bank, Riyad Bank, 
Saudi American Bank, Arab National Bank, and Al-Rajhi Banking and 
Investment Corporation) had assets of totaling $60.4 billion at the end 
of 1994.  These banks comprise 68 percent of the total assets of the 12 
Saudi banks. 
 
The Saudi banking system is well capitalized and well provisioned.  The 
Embassy is not aware of any "cross-shareholding" or "stable shareholder" 
arrangements being used by private firms to restrict foreign investment 
through mergers and acquisitions. 
 
Few private firms have explicit defenses to prevent unsolicited or 
"hostile" takeovers.  The Embassy is aware of only one having taken 
place, Prince Walid bin Talal bin Abdulaziz Al-Saud's unsolicited 1993 
takeover of the convenience food chain "Panda".  No foreign hostile 
takeovers have occurred. 
 
The Embassy is not aware of any laws or regulations which specifically 
authorize private firms to adopt articles of incorporation/association 
which limit or prohibit foreign investment, participation, or control.  
Foreign participation in the Saudi Arabian Standards Organization (SASO) 
is not possible. 
 
How to Finance Exports/Methods of Payment 
 
Most trade with the Kingdom is financed through standard letters of 
credit.   
 
Types of Available Export Financing and Insurance  
 
Eximbank and the other export credit agencies have been involved in 
Saudi Arabia supporting trade with private Saudi companies.  The 
government of Saudi Arabia may use the facilities of the export credit 
agencies to support major infrastructure projects. 
 
The Islamic Development Bank fosters the economic development and social 
progress of member countries and Muslim communities.  It participates in 
equity capital and grants loans for productive projects and enterprises, 
besides providing financial assistance to member countries in other 
forms for economic and social development.   
 
Project Financing Available, Including Lending from Multilateral 
Institutions and Types of Projects Supported 
 
Project financing is available in the Kingdom from longer-term loans by 
the local commercial banks and Saudi specialized credit institutions 
such as the Saudi Industrial Development Fund or the Public Investment 
Fund.  The Saudi government does not receive project financing from 
multilateral institutions such as the World Bank. 
 
List of Banks with Correspondent U.S. Banking Arrangement 
 
Because of their ownership structure, Saudi American Bank (Citibank) and 
Saudi Investment Bank (Chase Manhattan) have direct correspondent 
relationships with U.S. banks. 
 
The Embassy assumes that the other Saudi banks also have correspondent 
relationships with the U.S. institutions, whether the home office in the 
United States or branches in Europe or Bahrain. 
 
IX.  BUSINESS TRAVEL 
 
Business Customs 
 
The official language of Saudi Arabia is Arabic, but English is widely 
used in business and on signs and notices, making it easy for the non-
Arabic speaker to live and work in the Kingdom.  Modern Saudi Arabia has 
adopted many of the business methods and styles of the West, but some 
differences remain.  Most important is that business will be only be 
conducted after a degree of trust and familiarity have been established.  
Considerable time may be spent exchanging courtesies, and several visits 
may be needed to secure business.  Business visitors should arrange 
their itineraries to allow for long meetings, as traditional Saudis 
often maintain an "open office" in which they will sign papers, take 
telephone calls, and converse with friends or colleagues who drop by.  
Tea, soft drinks, and traditional Saudi coffee are usually offered.  One 
to three cups of Saudi coffee should be taken for politeness, after 
which the cup should be wiggled between thumb and forefinger when 
returning it to the server to indicate that you have finished. 
 
Many Saudi businessmen have been educated or have traveled extensively 
in the West and are sophisticated in dealing with Americans.  For the 
most part travelers can rely on the usual Western manners and standards 
of politeness to see them through, with a few additional rules that may 
be observed.  One should eat with the right hand and avoid sitting at 
any time with the sole of the foot pointed at the host or other guest.  
It may be discourteous to ask after a man's wife or daughters; ask 
instead after his family.  Shoes are sometimes removed before entering a 
Saudi majlis (living room).  If you are invited to the home of a Saudi 
for a party or reception, a meal is normally served at the end of the 
evening, and guests will not linger long after finishing.  If you invite 
a Saudi to dine with you, expect to be refused at least once.  Customs 
and manners differ, so be observant and adapt your behavior to that of 
your host. 
 
Saudi Arabia is a Muslim country that requires strict adherence to 
Islamic principles.  Five times a day Muslims are obliged to pray in the 
direction of the holy city, Makkah.  The prayer times are published in 
the newspaper and come at dawn, noon, afternoon, sunset, and evening.  
Stores and restaurants close for approximately one-half hour at these 
times.  When staging promotional events or product demonstrations, these 
prayer breaks should be scheduled. 
 
Dress is conservative for both men and women.  Men should not wear 
shorts or tank tops, while women are advised to wear loose-fitting and 
concealing clothing with long skirts, elbow-length sleeves, and modest 
necklines.  There is strict gender separation in the Kingdom and 
restaurants maintain separate sections for single men and families.  
Wives are often excluded from social gatherings or are entertained 
separately. 
 
Business hours vary in different parts of the country.  Saudi companies 
usually close for two hours in the afternoon and remain open through the 
early evening.  Retail stores close for the noon prayer and reopen 
around 4:00 P.M.  The normal work week runs from Saturday through 
Wednesday with many companies also requiring a half or full day on 
Thursday.  Friday is the Muslim holy day. 
 
Travel Advisories and Visas 
 
Travelers may not carry alcohol, firearms, pork products, religious 
items, or items deemed pornographic into the Kingdom.  On occasion 
catalogs and videos deemed appropriate in the West are confiscated if 
they show men and women socializing together or in revealing dress.  It 
is advisable to carry prescription drugs in their original labeled 
containers. 
 
Photography of sensitive installations such as airports, seaports, oil 
and petrochemical facilities, and military bases is prohibited, as is 
photography that constitutes an invasion of privacy.  Theft or street 
crime is not a serious problem in Saudi Arabia, but normal precautions 
should be taken.    
 
Travel to Saudi Arabia is not allowed without a visa issued with the 
assistance of a Saudi sponsor.  All visitor's visas are single entry and 
allow for a maximum 60-day stay.  To obtain a visitor's visa for 
business purposes, each U.S. company representative must have a letter 
of invitation from the Saudi sponsor.  This letter must be in Arabic, 
the U.S. applicant must have the original copy (no faxes allowed), the 
letter must be on the Saudi company letterhead, and must bear an 
authenticating stamp of the local Saudi Chamber of Commerce.  The visa 
applicant must apply for and receive the visa prior to departing the 
United States at either the Saudi Embassy in Washington or at Saudi 
Consulates in Houston, Los Angeles, or New York City. 
 
The letter should name the visa applicant, passport number, company name 
and address, approximate dates of visit, and reason for visit (e.g. 
business meetings).  The U.S. visa applicant may hold the letter for up 
to 60 days prior to making application.  It is further recommended that 
the U.S. applicant's company use the company's letterhead when 
requesting the Saudi Embassy's/Consulates' cooperation in issuing the 
visa.  Once the visa is stamped on the passport, it must be used or 
officially canceled before a subsequent visa will be issued. 
 
The visa may be extended at the discretion of the Saudi Embassy or 
consulate prior to the expiration date.  Occasionally, the Saudi 
consular officer may require the applicant to obtain the visa through a 
more time-consuming process involving approval by the Saudi Foreign 
Ministry.  These procedures are well-known in the Kingdom and will be 
handled by the Saudi sponsor.  Women traveling alone, Americans of Arab 
origin, and private consultants are often required to use this process.  
Resident visas also are available through a separate process.  
 
If the U.S. applicant does not have a Saudi sponsor, the U.S.-Arab 
Chamber of Commerce may be able to assist (tel: 202-331-8010).  U.S. and 
Foreign Commercial Service offices also can advise on how to make 
initial contacts with potential sponsors, but cannot arrange visas for 
unofficial business travelers.        
 
Holidays 
 
There are two Islamic religious holidays around which most businesses 
close for at least three working days.  Eid al-Fitr occurs at the end of 
the holy month of Ramadan.  Eid al-Adha celebrates the time of year when 
pilgrims arrive from around the world to perform the Hajj.  Their timing 
is governed by the Islamic lunar calendar.  In 1996, the Eid al-Fitr 
holiday will begin on or about February 18 and the Eid al-Adha holiday 
on or about April 26. 
 
Business travel to the Kingdom during the holy month of Ramadan is best 
avoided.  During Ramadan devout Muslims abstain from food and drink 
during daylight hours.  Office hours are shortened and shifted to the 
evening, and people may be affected by the fasting and customary late 
night social gatherings.  During Ramadan business travelers should not 
drink, eat, or smoke in public during daylight or in the presence of 
fasting Muslims.  Hotels offer special daytime food services for their 
non-Muslim guests.  In 1996, Ramadan will start on or about January 21 
and ends on or about February 18.  The Saudi national day is celebrated 
September 22.  Almost all businesses and government offices remain open, 
with the notable exception of Saudi Aramco. 
 
Business Infrastructure 
 
The business centers of Riyadh, Jeddah, and Dammam/Al Khobar/ 
Dhahran each have an international airport served by a variety of 
international airlines.  Air travel is preferred for inter-Kingdom 
travel with public service restricted to the sole national airline, 
Saudia. 
 
The Kingdom has a good highway system and rental cars and 
taxis/limousines are available at all airports; driving is U.S.-style, 
on the right.  One rail line carries passengers and freight between 
Dammam and Riyadh.  Jeddah and Dammam are the main international 
seaports for moving containerized and bulk cargo. 
 
Modern communication facilities are available including telephone, fax, 
telex, and courier services.  U.S. database log-on is available through 
a PTT Ministry trunk line service, Al-Waseet.  Use of private satellite 
communication transponders is not allowed.  Facsimile machines are 
heavily utilized in the conduct of business.  There is currently no 
cellular phone system and radiophones are restricted.  There is a 
shortage of telephone lines which makes it very difficult to obtain 
lines for a new business or residence.  The government is embarking on a 
large-scale telecommunications upgrade program but the shortage is 
expected to worsen through 1995.     
 
Four and five star hotel accommodations are readily available in the 
major business centers, and most of the better restaurants are located 
in the hotels.  The food reflects the diversity of the country's 
expatriate population and generally can be considered safe.  Use of 
bottled water is preferred although most tap water is potable in the 
major cities.  Supermarkets are well stocked with Western products. 
 
Housing for expatriate employees residing in the Kingdom is usually 
provided by the employer or through a housing allowance given to the 
employee.  The major cities offer a wide variety of houses and 
apartments for rents considered high by U.S. metropolitan standards.  
Most Western expatriates live in housing compounds that provide 
additional services such as cable television, recreation facilities, 
child care, limousine services for women (who are not allowed to drive 
in the Kingdom), and security. 
 
The quality of health care is variable, ranging from excellent to poor 
depending on the region, hospital, and specialty.  Most Western 
expatriates find it adequate for routine care and minor surgery.  Only a 
few drugs available in the U.S. may not be available in Saudi Arabia. 
 
There is a good network of private American schools serving communities 
with a high concentration of U.S. expatriates, including all the major 
business and industrial centers.  The schools offer only grades K-9 as 
Saudi government policy requires expatriate children to receive their 
high school and college education outside the Kingdom. 
 
X.  APPENDICES 
 
Appendix A:  Country Data 
 
Population (1994, estimates): 18.1 million 
Population Growth Rate: 3.5%  
Religion  : Islam 
Government: Monarchy headed by King Fahd, a Council of Ministers 
appointed by the King, and a Consultative Council. 
Languages : Official language is Arabic but English is widely used in 
business and government. 
 
Work Week: 
a. U.S. Embassy: 8:00 - 17:00 Sat. thru Wed. 
b. Government: 8:00 - 14:30 Sat. thru Wed. 
c. Banks:   9:00 - 12:00 and 
            17:00 - 19:00 Sat. thru Wed. 
            9:00 - 12:00 Thursdays. 
d. Others:  8:00 - 12:00 and 
            16:00 - 20:00 Sat. thru Wed. 
            8:00 - 13:00 Thursdays. 
 
Appendix B: Domestic Economy (US$ millions, except as noted) 
 
                               1994        1995(E)        1996(E) 
 
- GDP (current, US$ Billions)   123.4       125.9          128.4 
- GDP projected average growth 
  rate through 1996 (percent):    2.0% 
- GDP per capita                800.0      6700.0         6600.0 
- Government spending  
  (percent of GDP)               35.0        32.0           32.0 
- Inflation (per cent)            0.6         5.0            3.0 
- Unemployment (percent)         n.a.        n.a.           n.a. 
- Foreign exchange reserves       7.4        n.a            n.a. 
- Average exchange rate for  
  $1.00                           3.75        3.75           3.75 
- Foreign debt                 1800.0         0.0            0.0 
- Debt service ratio (ratio of 
  principal and interest payments 
  on foreign debt to  
  foreign income)                 0.055       n.a           n.a. 
- U.S. economic/military  
  assistance                      0.0         0.0            0.0 
 
Appendix C: Trade (US$ millions, except where noted) 
 
                                    1994        1995(E)        1996(E) 
- Total country exports (US$  
  Billions)                         41.5         n.a.           n.a. 
- Total country imports (US$  
  Billions)                         23.5         n.a.           n.a. 
- U.S. exports (US$ Billions)        6.0         6.8            n.a. 
- U.S. imports (US$ Billions)        7.2         7.4            n.a. 
 
Appendix D: Investment (US$ millions, except where noted) 
 
                                    1994        1995(E)        1996(E) 
- Total foreign direct investment 
  (US$ billions)                     11.3        n.a.           n.a. 
- U.S. direct investment 
   (US$ billions)                     4.9        n.a.           n.a. 
- Percent share of total 
  foreign investment (percent)       43.4        n.a.           n.a. 
- Principal foreign investors 
  U.S.A., United Kingdom, Germany, Japan, and Italy 
 
Source : Ministry of Finance and National Economy; Saudi Arabian 
Monetary Agency (SAMA); International Monetary Fund; Department of 
Commerce; FCS estimates; Ministry of Industry & Electricity. 
 
Appendix E:  U.S. and Country Contacts  
 
U.S. Embassy Trade Personnel 
 
1) U.S. Embassy 
   US&FCS - Riyadh 
   Unit 61307 
   APO AE 09803-1307   
   Phone: 966 1 488-3800, Fax: 966 1 488-3237 
   Contacts:    John Steuber, Counselor for Commercial Affairs 
                Michael Bender, Commercial Attache 
                Erik Hunt, Assistant Commercial Attache 
                Benjamin Watson, Assistant Commercial Attache 
                Edward Wunder, Standards Advisor 
 
2) U.S. Consulate General 
   US&FCS - Dhahran 
   Unit 66803 
   APO AE 09858-6803 
   Phone: 966 3 891-3200, Fax: 966 3 891-8332 
   Contact:   Vacant 
 
3) U.S. Consulate General 
   US&FCS - Jeddah 
   Unit 62112 
   APO AE 09811-2112 
   Phone: 966 2 667-0040, Fax: 966 2 665-8106 
   Contacts:  Joseph Kaessaeffer, Principal Commercial Officer 
 
4)  U.S. Embassy Riyadh 
    Agricultural Trade Office 
    Phone:  966-1-488-3800 
    Fax:    966-1-482-4364 
    Contact: John Wilson, Agricultural Trade Officer 
 
5)  U.S. Embassy Riaydh 
    Economic Section 
    Phone: 966-1-488-3800 
    Fax: 966-1-488-3278 
    Contact:  Frank Parker, Counselor for Economic Affairs 
 
Country Government Agencies 
 
1) Board of Grievances 
   Riyadh 11138, Saudi Arabia 
   Phone:  (966 1) 402-1724, Fax: (966 1) 403-4296 
   Contact:  H.E. Sheikh Nasser Al-Rashed, President 
 
2) Saudi Ports Authority 
   Riyadh 11188, Saudi Arabia 
   Phone: (966 1) 405-0005, Fax: (966 1) 405-9974 
   Contact:  H.E. Mohammad Bakr, Director General 
 
3) General Organization for Technical Education and Vocational Training 
   PO Box 7823, Riyadh 11472, Saudi Arabia 
   Phone: (966 1) 405-2770, Fax: (966 1) 406-5876 
   Contact:  H.E. Mohammad Suleiman Al-Dalaan, Governor 
 
4) General Organization for Grain Silos and Flour Mills 
   PO Box 3402, Riyadh 11471, Saudi Arabia 
   Phone: (966 1) 464-3500, Fax: (966 1) 463-1943 
   Contact:  Mr. Saleh Mohammad Al-Solemn, Director General 
 
5) King Abdul Aziz City for Science and Technology 
   PO Box 6086, Riyadh 11442, Saudi Arabia 
   Phone: (966 1) 488-3555, Fax: (966 1) 488-3118 
   Contact:  H.E. Dr. Saleh Abdel Rahman Al-Athel, President 
 
6) King Faisal Foundation 
   PO Box 352, Riyadh 11411, Saudi Arabia 
   Phone: (966 1) 465-2255, Fax: (966 1) 465-6524 
   Contact:  HRH Prince Khalid Al-Faisal, Managing Director 
 
7) Ministry of Agriculture and Water 
   PO Box 2639, Riyadh 11195, Saudi Arabia 
   Phone: (966 1) 401-2777/403-0030, Fax: (966 1) 404-4592 
   Contact:  H.E. Dr. Abdul Aziz Al-Khuwaiter, Acting Minister 
 
8) Ministry of Commerce 
   PO Box 1774, Riyadh 11162, Saudi Arabia 
   Phone: (966 1) 401-2222, Fax: (966 1) 402-6640 
   Contact:  H.E. Dr. Suleiman Abdul Aziz Al-Solaim, Minister 
 
9) Ministry of Communications 
   PO Box 3813, Riyadh 11178, Saudi Arabia 
   Phone: (966 1) 404-3000/2928, Fax: (966 1) 403-1401 
   Contact:  H.E. Hussein Ibrahim Mansouri, Minister 
 
10) Ministry of Defense and Aviation 
    Riyadh 11165, Saudi Arabia 
    Phone: (966 1) 478-5900/477-7313, Tlx: 401188 MODA SJ  
    Contact:  HRH Prince Sultan Bin Abdul Aziz Al-Saud, Minister 
 
11) Ministry of Education 
    Riyadh 11148, Saudi Arabia 
    Phone: (966 1) 404-2888, Fax: (966 1) 403-7229 
    Contact:  H.E. Dr. Abdul Aziz Al-Khuwaiter, Minister 
 
12) Ministry of Finance and National Economy 
    PO Box 6902, Riyadh 11177, Saudi Arabia 
    Phone: (966 1) 405-0080/0000, Fax: (966 1) 405-9202 
    Contact:  H.E. Mohammad Aba Al-Kheil, Minister 
 
13) Ministry of Foreign Affairs 
    Riyadh 11124, Saudi Arabia 
    Phone: (966 1) 406-7777, Fax: (966 1) 402-0100 
    Contact:  HRH Prince Saud Al-Faisal, Minister 
 
14) Ministry of Health 
    PO Box 21217, Riyadh 11176, Saudi Arabia 
    Phone: (966 1) 401-2220, Fax: (966 1) 402-6395 
    Contact:  H.E. Faisal Al-Hujeilan, Minister 
 
15) Ministry of Higher Education 
    Riyadh 11153, Saudi Arabia 
    Phone: (966 1) 441-5555, Fax: (966 1) 441-9004 
    Contact: H.E. Dr. Khalid Al-Angari, Minister 
 
16) Ministry of Industry and Electricity 
    PO Box 5729, Riyadh 11127, Saudi Arabia 
    Phone: (966 1) 477-6666, Fax: (966 1) 477-5488 
    Contact:  H.E. Eng. Abdul Aziz Al-Zamil, Minister 
 
17) Ministry of Information 
    PO Box 843, Riyadh 11161, Saudi Arabia 
    Phone: (966 1) 406-8888, Fax: (966 1) 405-0674  
    Contact:  H.E. Ali Hassan Al-Shaer, Minister 
 
18) Ministry of Interior 
    PO Box 3743, Riyadh 11481, Saudi Arabia 
    Phone: (966 1) 401-1111, Fax: (966 1) 403-3614 
    Contact:  HRH Prince Naif Bin Abdul Aziz Al Saud, Minister 
 
19) Ministry of Labor and Social Affairs 
    Riyadh 11157, Saudi Arabia  
    Phone: (966 1) 477-1480/477-8888, Fax: (966 1) 477-2250  
    Contact: H.E. Mohammad Ali Al-Fayez, Minister 
 
20) Ministry of Municipalities and Rural Affairs 
    Riyadh 11136, Saudi Arabia 
    Phone: (966 1) 456-9999, Fax: (966 1) 456-3196 
    Contact:  H.E. Dr. Mohammad Al-Sheikh, Minister 
 
21) Ministry of Petroleum and Mineral Resources 
    Riyadh 11191, Saudi Arabia  
    Phone: (966 1) 478-1661/1133/7777, Fax: (966 1) 478-1980 
    Contact:  H.E. Hisham Nazer, Minister 
 
22) Ministry of Planning 
    PO Box 358, Riyadh 11182, Saudi Arabia 
    Phone: (966 1) 401-3333/1444, Fax: (966 1) 401-0385 
    Contact:  H.E. Dr. Abdul Wahab Attar, Minister 
 
23) Ministry of Posts, Telephone and Telegraph 
    Riyadh 11112, Saudi Arabia   
    Phone: (966 1) 463-4444, Fax: (966 1) 463-7072 
    Contact:  H.E. Dr. Alawi Darwish Kayal, Minister 
 
24) Ministry of Public Works and Housing  
    PO Box 56059, Riyadh 11554, Saudi Arabia 
    Phone: (966 1) 405-8300, Fax: (966 1) 402-2723 
    Contact:  HRH Prince Mitieb Bin Abdul Aziz Al Saud, Minister 
 
25) Public Investment Fund 
    PO Box 6847, Riyadh 11252, Saudi Arabia 
    Phone: (966 1) 478-4466, Fax: (966 1) 477-8993  
    Contact:  Mohammad Al-Bassam, Secretary General 
 
26) Royal Commission for Jubail and Yanbu 
    PO Box 5964, Riyadh 11432, Saudi Arabia 
    Phone: (966 1) 479-4445, Fax: (966 1) 477-5404 
    Contact:  HH Prince Abdallah Bin Faisal Bin Turki Al Saud, 
    President 
 
27) Saudi Arabian Basic Industries 
    PO Box 5101, Riyadh 11422, Saudi Arabia 
    Phone: (966 1) 401-2033, Fax: (966 1) 403-9190 
    Contact:  H.E. Eng. Ibrahim Bin Salamah, Vice Chairman & 
    Managing Director 
 
28) Saline Water Conversion Corporation 
    PO Box 1897, Riyadh 11441, Saudi Arabia 
    Phone: (966 1) 463-1111, Fax: (966 1) 463-1952 
    Contact:  Dr. Abdallah Balghneim, Governor 
 
29) Saudi Arabian Monetary Agency 
    PO Box 2992, Riyadh 11169, Saudi Arabia 
    Phone: (966 1) 463-3000, Fax: (966 1) 463-4262  
    Contact:  H.E. Hamad Saud Al-Sayyari, Governor 
 
30) Saudi Arabian National Guard 
    Riyadh 11173, Saudi Arabia 
    Phone: (966 1) 491-2222, Fax: (966 1) 491-4429 
    Contact: HRH Prince Badr Bin Abdul Aziz Al-Saud, Deputy 
    Commander 
 
31) Saudi Arabian Public Transport Company 
    PO Box 10667, Riyadh 11443, Saudi Arabia 
    Phone: (966 1) 454-5000, Fax: (966 1) 454-2100 
    Contact:  Dr. Abdul Aziz Al-Ohali, Director General 
 
32) Saudi Arabian Standards Organization 
    PO Box 3437, Riyadh 11471, Saudi Arabia 
    Phone: (966 1) 456-9900, Fax: (966 1) 452-0086 
    Contact:  Dr. Khalid Youssef Al-Khalaf, Director General 
 
33) Saudi Consolidated Electric Company, Central Province 
    PO Box 57, Riyadh 11411, Saudi Arabia 
    Phone: (966 1) 403-1033, Fax: (966 1) 405-1191 
    Contact:  Eng. Abdul Aziz Abdul Wahed, Director General 
 
34) Saudi Consulting House 
    PO Box 1267, Riyadh 11431, Saudi Arabia 
    Phone: (966 1) 448-4533, Fax: (966 1) 448-1234 
    Contact:  Mohammad Al-Ali Musallam, Director General 
 
35) Saudi Fund for Development 
    PO Box 50483, Riyadh 11523, Saudi Arabia 
    Phone: (966 1) 464-0292, Fax: (966 1) 464-7450 
    Contact:  H.E. Mohammad Al-Soghair, Director General 
 
36) Saudi Industrial Development Fund 
    PO Box 4143, Riyadh 11491, Saudi Arabia 
    Phone: (966 1) 477-4002, Fax: (966 1) 479-0165 
    Contact:  H.E. Saleh Al-Noaim, Director General 
 
37) Saudi National Shipping Company 
    PO Box 8931, Riyadh 11492, Saudi Arabia 
    Phone: (966 1) 478-5454, Fax: (966 1) 477-8036 
    Contact:  H.E. Mohammad Al-Jarbou, Director General 
 
38) Saudi Arabian Airlines Corporation 
    PO Box 620, Jeddah 21231, Saudi Arabia 
    Phone: (966 2) 686-0000, Fax: (966 2) 686-4552 
    Contact:  Dr. Khaled A. Al-Bakr, Director General 
 
39) Saudi Arabian Oil Company (Saudi Aramco) 
    PO Box 5000, Dhahran Airport 31311, Saudi Arabia 
    Phone: (966 3) 875-5229, Fax: (966 3) 876-6520 
    Contact:  H.E. Ali Al-Noaimi, President 
 
40) Saudi Arabian Railway Organization 
    PO Box 36, Dammam 31241, Saudi Arabia 
    Phone: (966 3) 871-5151/3001, Fax: (966 3) 871-2293/833-6337 
    Contact:  Dr. Faisal Al-Shuhail, President 
 
41) Arab Satellite Communication Organization 
    PO Box 1038, Riyadh 11431, Saudi Arabia 
    Phone: (966 1) 464-6666, Fax: (966 1) 465-6983 
    Contact:  Eng. Saad Al-Badana, Director General 
 
42) Arab Center for Security Studies and Training 
    PO Box 6830, Riyadh 11452, Saudi Arabia 
    Phone: (966 1) 246-3444, Fax: (966 1) 246-4713 
    Contact:  Dr. Abdallah Al-Ibrahim, President 
 
43) Presidency of Civil Aviation 
    PO Box 15441, Jeddah 21444, Saudi Arabia 
    Phone: (966 2) 671-7717, Fax: (966 2) 671-7376 
    Contact:  Dr. Ali Al-Khalaf, Director General 
 
44) Saudi Red Crescent Society 
    Riyadh 11129, Saudi Arabia 
    Phone: (966 1) 406-7956, Fax: (966 1) 404-2541 
    Contact:  Dr. Hamad Al-Sughair, President     
 
Country Trade Associations/Chambers of Commerce 
 
1) Riyadh Chamber of Commerce and Industry 
   PO Box 596, Riyadh 11421, Saudi Arabia 
   Phone: (966 1) 404-0044, Fax: (966 1) 402-1103 
   Contact:  Sheikh Saleh Al-Toaimi, Secretary General 
 
2) Council of Saudi Chambers of Commerce and Industry 
   PO Box 16683, Riyadh 11474, Saudi Arabia 
   Phone: (966 1) 405-3200, Fax: (966 1) 402-4747 
   Contact:  Mr. Abdallah Al-Dabbagh, Secretary General 
 
3) Jeddah Chamber of Commerce and Industry 
   PO Box 1264, Jeddah 21431, Saudi Arabia 
   Phone: (966 2) 651-5111, Fax: (966 2) 651-7373 
   Contact:  Dr. Abdallah Al-Dahlan, Secretary General 
 
4) Chamber of Commerce and Industry for the Eastern Province 
   PO Box 719, Dammam 31421, Saudi Arabia 
   Phone: (966 3) 857-1111, Fax: (966 3) 857-0607 
   Contact:  Hamdan Al-Sreihi, Secretary General, Ext. 4555 
 
5) Federation of GCC Chambers 
   PO Box 2198, Dammam 31451, Saudi Arabia 
   Phone: (966 3) 826-5943/3792, Fax: (966 3) 826-6794 
   Contact:  Mohammad Abdallah Al-Mulla, Secretary General  
 
Country Market Research Firms 
 
1) Al-Saif Management and Economic Consultants 
   PO Box 60944, Riyadh 11555, Saudi Arabia 
   Phone: (966 1) 465-1982, Fax: (966 1) 464-4668 
   Contact:  Dr. Mohammed E. Ghanim, Executive Director 
 
2) Consultancy & Research Center 
   PO Box 7188, Riyadh 11462, Saudi Arabia 
   Phone: (966 1) 479-3321/2673, Fax: (966 1) 479-4122 
   Contact:  Dr. Nicos Rossides, General Manager 
 
3) Business Consultants International Group 
   PO Box 91450, Riyadh 11633, Saudi Arabia 
   Phone: (966 1) 478-6154/4275, Fax: (966 1) 478-3794 
   Contact:  Eric C. Westermark, Managing Director 
 
4) The Consulting Center for Finance and Investment 
   PO Box 2462, Riyadh 11451, Saudi Arabia 
   Phone: (966 1) 478-2525, Fax: (966 1) 476-8021 
   Contact:  Dr. Abdulaziz M. Al-Dukheil, President 
 
5) Arthur D. Little International 
   PO Box 3266, Riyadh 11471, Saudi Arabia 
   Phone: (966 1) 477-0153/0227, Fax: (966 1) 477-0134 
   Contact:  Ghassan Barrage, General Manager  
 
Country Commercial Banks 
 
1) Arab National Bank 
   PO Box 56921, Riyadh 11564, Saudi Arabia 
   Phone: (966 1) 402-9000, Fax: (966 1) 402-7747 
   Contact:  Elie Al-Haj, Managing Director 
 
2) Saudi French Bank 
   PO Box 56006, Riyadh 11554, Saudi Arabia 
   Phone: (966 1) 404-2222, Fax: (966 1) 404-2311 
   Contact:  Gerard Delaforge, Managing Director 
 
3) Saudi American Bank 
   PO Box 833, Riyadh 11421, Saudi Arabia 
   Phone: (966 1) 477-4770, Fax: (966 1) 477-4770 Ext. 200 
   Contact:  Mehli Mistri, Managing Director	 
 
4) Saudi Hollandi Bank 
   PO Box 1467, Riyadh 11431, Saudi Arabia 
   Phone: (966 1) 406-7888/401-0288, Fax: (966 1) 403-1104 
   Contact:  R.L. Van Es, Managing Director 
 
5) Saudi British Bank 
   PO Box 9084, Riyadh 11413, Saudi Arabia 
   Phone: (966 1) 405-0677, Fax: (966 1) 405-0660 
   Contact:  Rondell Lee Shaw, Managing Director   
 
6) United Saudi Commercial Bank 
   PO Box 25895, Riyadh 11476, Saudi Arabia 
   Phone: (966 1) 478-4200/8075, Fax: (966 1) 478-3197 
   Contact:  Maher Kassem Al-Aujan, General Manager & Managing Director  
 
7) Al-Rajhi Investment and Banking Corporation 
   PO Box 28, Riyadh 11411, Saudi Arabia 
   Phone: (966 1) 405-4244, Fax: (966 1) 403-2969 
   Contact:  Suleiman Abdul Aziz Al-Rajhi, General Manager & Managing 
   Director 
 
8) Riyad Bank 
   PO Box 22622, Riyadh 11416, Saudi Arabia 
   Phone: (966 1) 401-3030, Fax: (966 1) 404-2705 
   Contact:  Rashed Abdul Aziz Al-Rashed, Managing Director 
 
9) The Saudi Investment Bank 
   PO Box 3533, Riyadh 11481, Saudi Arabia 
   Phone: (966 1) 477-8433, Fax: (966 1) 476-1976 
   Contact:  Jack Knippenberg, General Manager 
 
10) Bank Al-Jazira 
    PO Box 6277, Jeddah 21442, Saudi Arabia 
    Phone: (966 2) 651-8070, Fax: (966 2) 653-2478 
    Contact:  Mishari Ibrahim Al-Mishari, General Manager    
 
11) Saudi Cairo Bank 
    PO Box 11222, Jeddah 21453, Saudi Arabia 
    Phone: (966 2) 660-8820, Fax: (966 2) 660-8820 Ext. 548  
    Contact:  Issa K. Al-Rifai, General Manager 
 
12) National Commercial Bank 
    PO Box 3555, Jeddah 21481, Saudi Arabia 
    Phone: (966 2) 644-6644, Fax: (966 2) 644-6644 Ext. 3254 
    Contact:  Salem Ahmad Bin Mahfouz, General Manager 
 
Washington-based USG Country Contacts 
 
1) U.S. Department of Commerce 
   14th & Constitution Ave., N.W. 
   Washington, D.C. 20230 
   Phone: (202) 482-4836 
   Contact:  Ben Brown, Director, US&FCS/ANESA 
             Shakir Farsakh, Assistant Director 
 
2) U.S. Department of Commerce 
   14th & Constitution Ave., N.W. 
   Washington, D.C. 20230 
   Phone: (202) 482-1860 
    Contact:  David Gugliemi, Desk Officer, IEP/ANESA/ONE 
 
U.S.-based Multipliers Relevant for Country 
 
1) National U.S.-Arab Chamber of Commerce 
   1825 K Street, NW, Suite 1107 
   Washington, D.C. 20006 
   Phone: (202) 331-8010, Fax: (202) 331-8297 
 
2) National U.S.-Arab Chamber of Commerce 
   135 S. LaSalle Street, Suite 1020 
   Chicago, IL 60603 
   Phone: (312) 782-0320, Fax: (312) 782-7379 
 
3) U.S.-Arab Chamber of Commerce (Pacific) Inc. 
   PO Box 422218, San Francisco, CA 94142-2218 
   Phone: (415) 9200, Fax: (415) 398-7111 
 
4) U.S.-Arab Chamber of Commerce, Southwest Region 
   2711 LBJ Freeway, Suite 122 
   Dallas, TX 75234 
   Phone: (214) 241-9999, Fax: (214) 241-0114 
 
5) U.S.-Arab Chamber of Commerce, Northeast Region 
   60 State Street, 20th Floor 
   Boston, MA 02109 
   Phone: (617) 864-1432, Fax: (617) 864-8448 
 
6) U.S.-Arab Chamber of Commerce, Rocky Mountain Region 
   6440 South Pontiac Ct. 
   Englewood, CO 80111 
   Phone: (303) 694-9125, Fax: (303) 770-9105 
 
7) American Business Council of the Gulf Countries (ABCGC) 
   c/o Intercom International Consultants 
   1101 30th Street, NW, Suite 500 
   Washington, D.C. 20007 
   Phone: (202) 887-1887, Fax: (202) 887-1888 
 
Appendix F: Market Research  
 
FCS reports are available on the NTDB (Tel: 202/482-1986) and FAS 
reports are available from Reports Office/USDA/FAS, Washington, D.C. 
20250. 
 
Code      Report Topic               Completion Date         Drafter 
 
WRE        Desalination Projects     November 25, 1995       A. Noman 
PVC        Pumps                     November 25, 1995       J. Wathen 
GIE/OMS    Industrial Cleaning Eq.   November 25, 1995       H. Saeed 
APS        Automotive Tires & Tubes  December 25, 1995       A. Malas 
APS        Automotive Batteries      December 25, 1995       J. Quadri 
DRG        Drugs & Pharmaceuticals   January 25, 1996        M. Farooqi 
ACR        Air Conditioning Equip- 
             ment                    March 25, 1996          R. Saab 
APP        Men's & Kids' Fashions    March 25, 1996          K. Mazhar 
FPP        Food Processing & Pack- 
             aging                   April 25, 1996          M. Zahid 
CSF        Multimedia Systems        August 25, 1996         T. Garfaoui 
CPT        Point of Sale Systems     August 25, 1996         A. Khayat 
 
Scheduled Periodic Reports (SPR) and Scheduled Commodity Reports (SCR) 
 
US&FCS Saudi Arabia will submit the following SPRs: 
 
SPR                        REPORT TITLE                    DUE DATE 
 
1218                       Annual listing of holidays      11/30/95 
1219                       Annual listing of trade fairs   11/30/95 
1205                       Share of market report - U.S.  
                           three main competitors  
                           (statistics and brief analysis) 06/30/96 
 
The U.S. Agricultural Trade Office (ATO) will produce the following 
reports: 
 
COMMODITY                                 DUE DATE 
 
Poultry Semi-Annual                       November 20, 1995 
Grain and Feed                            March 1, 1996 
Poultry Annual                            June 20, 1996 
Livestock Annual                          August 1, 1996 
Seed Annual                               August 20, 1996 
 
The above scheduled reports may be obtained from ATO/Riyadh or from  
FAS/Washington 15 days after the due dates. 
 
International Market Insight Reports 
 
US&FCS will closely monitor the following sectors and topics and submit 
alert reports on significant developments. 
 
1.  Expansion and upgrading of the petroleum and petrochemical 
industries. 
2.  Diversification of the Saudi economy through increased investment in 
industrial projects representing opportunities for U.S. firms. 
3.  Regulations for contract procurement. 
4.  Changes in government practices for resolving commercial disputes 
and other grievances. 
5.  Cases of patent trademark and copyright infringement including 
counterfeiting and pirating. 
6.  Changes in SAG import regulations including tariff systems, rates, 
and new product standards issued by SASO. 
7.  Privatization: An overview. 
 
Appendix G: Trade Event Schedule 
 
10/8-12, 1995          Saudi Agriculture Show '95    Riyadh        ATO 
10/24-27, 1995         Automotive Aftermarket        FBP           
                                                     J. Quadri/A. Saeed 
11/1995                APAA                          RTM"   "     "    " 
11/15-18, 1995         Medtrade/NHHCE                FBP      M. Farooqi 
January 1996           AHR Expo '96                  RTM      R. Saab 
January 1996           Kids Fashion, New York        RTM      K. Mazhar 
03/17-22, 1996         Jeddah Food '96 Jeddah        ATO 
May 1996               FMI/NASDA Show '96, Chicago   RTM       ATO 
05/06-09, 1996         Offshore Technology Conf.     FBP      A. Malas 
06/03-06, 1996         Comdex Spring/Windows         FBP      A. Khayat 
07/16-18, 1996         NSGA World Sports Expo        FBP      A.. Saeed 
August 1996            National Hardware Show        RTM      H. Saeed  
09/09-12, 1996         Minexpo International         FBP      A. Noman 
09/09-12, 1996         ASIS                          RTM      J. Wathen 
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