Doing Business In Saudi Arabia - Bna

companies to provide financial services and brokerage services from dealing and
managing portfolios to arranging and advisory services, including Morgan Stanley,
Ernst & Young, Merrill Lynch, J.P. Morgan, and Goldman Sachs, among others.
The kingdom’s stock market ended 2007 on a confidence note, the Tadawul All-
Share Index (TASI) closed at 11,175 compared to 7,933 in 2006. Trading volumes
plummeted 20 percent in 2007 bringing down the total value of traded shares to
$682 billion, more than half its value in 2006. Overall market capitalization gained
in 2007 reaching $519 billion compared to $327 billion in 2006.
- Water & Power: Official statistics show that the demand for water will increase to
over 3,000 million M³ a year by 2010, while the Kingdom will need $50.6 billion in
investments to meet its electricity requirements until the year 2015. Ample
opportunities for Independent Water and Power Projects (IWPP) are abound and the
Saudi Government plans to launch ten independent water and power projects
(IWPPs) by 2016 at a total investment of $16 billion. The first phase of this plan
entails building four IWPPs (Shuaiba-3, Shuqaiq-2, Ras Al-Zour, and Jubail-3) at a
total cost of $8 billion that would be carried out by the private sector on buildoperate-transfer
basis.
Saudi Arabia will need close to $93 billion in investments in the water and sewage
treatment sector and another $91 billion for power projects over the next 20 years.
- Insurance: The Saudi insurance market is the largest in the Arabian Gulf,
representing more than 36 percent of the total gross premiums. In 2007, gross
premiums stood at $1.86 billion and are expected to more than double by 2012.
Industry sources expect the insurance sector contribution to GDP to stabilize at 0.5
percent in 2007, but to grow to almost two percent once the sector is organized and
the market mechanisms are in place.
As of the date of this report, there are 18 insurance companies listed on the Saudi
stock exchange and 11 companies that were approved to sell insurance policies in
Saudi Arabia. So far, the Saudi Arabian Monetary Agency approved the licensing for
32 insurance brokers, eight insurance agents, seven insurance consultants, four
surveyors, five insurance administrators, and two actuarial experts.
- Telecommunications: The telecommunications sector continues to be among the
most active sectors in Saudi Arabia. There is currently one land line carrier – the
Saudi Telecom Company (STC), but the Saudi Council of Ministers has officially
approved the right of three consortiums to operate fixed-line licences – Verizon from
the US, PCCW from Hong Kong and Batelco from Bahrain receive the green light
from the Saudi Government to start building their networks. Currently, STC has
about 8 million landline customers, which is expected to grow an average of 15-18
percent in line with the growth in demand for DSL and broadband connections.
Until 2004, STC’s Al-Jawal held a monopoly on mobile phones but lost almost 30
percent of the market to Etisalat’s Mobily within the first 12 months of the latter entry
into the market. The latest available data reveal that total mobile subscribers
reached approximately 18 million with a 78 percent market penetration. In June
2007, the Communications and Information Technology Commission awarded the
third license to Zain (formerly MTC in Kuwait). The company’s bid of $6.11 billion
5/13/2008