Purchase OBG Publications

Saudi Arabia is a youthful country, a third of its population being under the age of 15, and in recent years the country’s leaders have invested billions of dollars to educate these young people to lead the planned transformation of the country from an oil-rich state to a diversified, knowledge-based economy. School enrolment numbers and university graduation statistics have improved, though the ultimate goal of realigning the Saudi workforce has proved more elusive. The focus of many of the recent efforts in the education and training sector are on providing young people with the soft skills and vocational qualifications that are required by the private sector job market. This chapter contains interviews with Ahmed Aleissa, Minister of Education; Ahmed Alfahaid, Governor, Technical and Vocational Training Corporation; and Khaleel Alibrahim, Rector, University of Hail.

From 2003 to 2013 Saudi Arabia’s second oil boom brought a decade of prosperity for its construction and engineering sectors, but with the brakes applied to public spending, many businesses face a more challenging landscape in 2016. Work is continuing apace on some of the most prestigious projects, such as the Riyadh Metro and King Abdullah Economic City on the Red Sea, but progress has slowed or stalled on many other schemes, and contractors, developers and suppliers face delays on new developments and payments for work they have already completed. However, there may be increased opportunities to work for a broader range of clients as the government considers ways to stimulate private sector growth in order to meet the needs of an expanding population. This chapter contains an interview with Mounib Hammoud, CEO, Jeddah Economic Company.

Benefitting from rising incomes and a youthful, growing population, Saudi Arabia’s real estate sector has seen steady expansion in the past decade. Although this increase has been more modest than in its GCC neighbours, it is clear that strong demand for residential real estate will continue over the long term thanks to the country’s demographics. In the short term the hospitality and office segments may face a surfeit of supply and a shortage of demand with major new real estate developments in the pipeline. On the residential side rents are stabilising, but tenants face financial obstacles to home ownership. However, the central bank’s announcement that it will allow specialised mortgage companies to increase their contribution to home financing to 85% will greatly improve access to home loans. This chapter contains interviews with Majed Al Hogail, Minister of Housing; and Bader Al Saedan, Managing Director, Al Saedan Real Estate.

Since 2008 the Saudi authorities have invested heavily in transport infrastructure projects as part of efforts to expand and diversify the economy as well as reduce automotive transport for both passengers and cargo. Ports have been built, airports expanded and upgraded, and railway and metro projects initiated – and in some cases already completed. Tens of billions of dollars have already been spent, and many more billions have been earmarked over the next few years. In public transport alone, $141bn will to be spent on infrastructure and operations in the next decade, including the $22.5bn Riyadh Metro project, set for completion in 2019. Despite a scale-back of government expenditure in 2016 due to lower global oil prices, spending on transport infrastructure will likely continue to be prioritised as well-developed networks are seen as key to economic and social growth. The National Transformation Plan announced in June 2016 includes a number of strategic goals and benchmarks for transport in Saudi Arabia. This chapter contains interviews with Suleiman Al Hamdan, Minister of Transport; Nabeel Al Amudi, President, Saudi Ports Authority; and Faysal Elhajjami, Country General Manager, DHL.

With high levels of consumer spending in 2015 and early 2016 despite recent macroeconomic pressures, Saudi Arabia’s retail sector is widely acknowledged to be a bright spot in an otherwise challenging current economic landscape. Over the past decade the industry has posted growth of 12% on an annual basis on the back of steadily rising purchasing power among Saudi households and, concurrently, rapid investment in the Kingdom by domestic and international retailers alike. The most pressing obstacle to ongoing sector expansion is the regional macroeconomic situation, which has seen cuts in state spending and in subsidies for electricity and fuel with the effect of curbing disposable incomes.

Like many places in the world, Saudi Arabia’s media landscape is going through rapid change, primarily brought about by digital technology and the rise of social media – internet penetration rate is estimated at around 65% overall and 93% among Saudi nationals. While traditional media still has a strong footprint and is unlikely to be pushed aside any time soon, legacy media organisations are being forced to rapidly develop their digital offerings in order to maintain their market share. The regulatory environment for media in Saudi Arabia, which many consider among the strictest in the Middle East, also needs to adapt to the new digital reality. There are signs that change is happening, with a new minister of culture and information appointed in 2015 and the potential establishment of a media production city in the Kingdom, which could help to train a new generation of Saudi journalists. This chapter contains an interview with Adel Al Toraifi, Minister of Culture and Information.