Dissertation_Dr Faisal Almubarak

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oil exports and infrastructural investment to a free-market in less than 20 years" giving its
eo
traditional culture and values. Islamic teachings strongly discourage interest-baring
lending methods as practiced by Western-like banking firms.
This "conventional" approach emphasizing small-scale private-sector industries, was
altered when, beginning in the early 1960s, the government showed a new interest in
exploiting relatively cheap crude oil and previously wasted natural gas for large-scale
capital-intensive industry. During the course of its developmental experience, the Saudi
polity has come to recognize the great potential for economic diversification, hence
reducing its dependence on the exportation of crude oil. New emphasis was awarded to
petrochemical and heavy industries. The objective was to engage the society in effective,
productive industrial activity using oil and natural gas. In 1960, the government
approached foreign companies with the idea, but to no avail. In 1961, Petromin was
established by the the government to handle the marketing of oil products and to pioneer
mining efforts for other non-fuel natural resources.
State support for industrialization was increased when King Faisal ascended the
throne in 1964. In 1965, the Saudi Arabian Fertilizing Company (SAFCO) was launched
on the concept of utilizing cheap and abundant local natural gas, previously left to burn
unused. A joint-venture contract between Petromin and Dr. Armand Hammer, of the
Occidental Petroleum Corporation was signed to build facilities and assume production.
Following a decade of sluggish functioning, and falling urea prices world wide, SAFCO
performance was improved by late 1979 due to change in management and rising urea
prices. SAFCO provided the backdrop for the petrochemical industry, a benchmark in the
Saudi industrial development during the 1980s, for such shift from "conventional
approach" to that of capital-intensive, petrochemical industries utilizing local oil and natural
gas, offers better prospects for efficient allocation of national resources and minimizing
dependency on foreign labor.
In its announcements and publications, the government has acknowledged the
depletable nature of the country's large oil reserves. The second and third Five-Year Plans
of 1975-85 gave priority to develop the productive sectors of the economy, manufacturing,
non-fuel minerals, and agriculture. The first and second Five-Year Plans were adopted
with the vision of expanding the infrastructure and services deemed essential for the
efficient functioning of the productive sectors such as education and training, water and