Saudi push to increase capability on exports

Saudi Arabia is to launch a new exports authority that will help overseas sales to 'grow at a much faster pace', according to the country's minister of commerce.

Saudi Arabia is to launch a new exports authority that will help overseas sales to "grow at a much faster pace", according to the country's minister of commerce.

The export development authority, which the ministry of commerce and industry intends to launch by the middle of this year, will focus on helping small to medium sized-enterprises (SMEs) sell their products outside the country, with a focus on the energy industry.

"It will help Saudi manufacturing companies to export their products across all the sectors, but will focus mainly on the downstream [energy products]," said Tawfig Al Rabiah, the minister of commerce and industry of Saudi Arabia, speaking on the sidelines of the MIT pan-Arab conference in Dubai yesterday.

"SMEs are the ones that require support in terms of marketing, attending international exhibitions, financing, export financing, legal support and so on," said Mr Al Rabiah.

Saudi Arabia's industrial exports grew by 4 per cent last year. The minister expects a higher growth rate with the establishment of the new authority.

"Without support they will achieve 4 per cent [growth] but with support I am very optimistic it will grow at a much faster pace. I think we will have huge growth of export products this year," said Mr Al Rabiah. "There is no reason why Saudi cannot become one of the world's manufacturing hubs. We have the resources."

There are 6,305 factories in Saudi Arabia employing 760,000 people.

"In the past 15 years the industrial sector has had tremendous growth. We have doubled the growth of contribution to GDP, which is phenomenal, but we need to support the private sector to develop further," said Mr Al Rabiah.

One of the biggest challenges however is the lack of labour, said the minister.

"We are seeing more experienced generations of local talent being developed, but finding the human resources is a challenge. We are investing in more location training and universities which will have a great impact, but at the current time it is a challenge to find the human resources," said Mr Al Rabiah.

Another challenge is a lack of sufficient support to enable manufacturers to go global, which is an issue that the export development authority aims to tackle.

With 263 billion barrels of proven oil reserves, about a quarter of the world's total reserves, it comes as no surprise that oil accounts for 90 per cent of Saudi Arabia's exports and almost 75 per cent of the government's revenues.

Petrochemical exports are expected to reach 100 million tonnes by 2016, a 250 per cent growth from 2006, but the country is also looking to the car industry and pharmaceuticals to help develop its industrial sector exports.

While the country's main export partners are Japan, China, the United States, South Korea, India and Singapore, Saudi exports to the Arab markets have grown five times in the past five years, according to Mr Al Rabiah.

With consumption in the GCC almost doubling, prospects for manufacturing are optimistic. The labour costs in traditional manufacturing countries such as China and India are rising, opening the market for other countries, say analysts.

According to figures from the consultancy McKinsey and Company manufacturing represents 16 per cent of global GDP and 13 per cent of employment.