The GRC Gulf Business Weekly Report - Gulf Research Center

Gulf Research Center
Saudi Arabia
Last week, Saudi Arabia announced that it would award one or more new licenses for fixed and mobile
services by end-2006. It also said that it will set up a risk-free fund for low-income Saudis who want to
trade on the stock market. Media reports quoted King Abdullah as saying that the fund would be limited to
a maximum investment of SR 500,000 and that small investors "will be able to buy and sell for two years;
if they win, then this is their luck with God's will. And if they lose, then their capital is preserved with us."
On the other hand, Saudi Arabia’s shopping malls have gone on record as saying their visitors are
spending more time browsing through stores than buying. The bourse crash changed the lives of thousands
of Saudis, and now sales registers show 20 percent drops. Some malls are offering discounts of up to 70
percent to pull in traffic.
Meanwhile, the Saudi government’s plans to launch the Development Bank next year are causing concern
in the local banking industry, which is already facing foreign competition. The government says it plans to
float 70 percent of the bank’s capital (SR 15 billion), making it larger than any of the 11 banks operating
in Saudi Arabia; the new bank will have almost the combined paid up capital of the top two banks – stateowned
National Commercial Bank and private bank Al-Rajhi. PIF, the General Pension Organization, and
the General Organization of Social Insurance (GOSI) will each hold a 10 percent stake in the venture. The
planned IPO will allow every Saudi to become a shareholder, says industry sources.
UAE
Last week, UAE Minister for Government Sector Development Sultan bin Saeed Al Mansoori made it
clear that the privatization of the telecom sector was not on government's immediate agenda. He said that
the UAE was committed to the liberalization of the telecom sector by 2015 under commitments made to
World Trade Organization (WTO).
On the energy front, the UAE and South Korea signed a series of accords, including a memorandum of
understanding (MoU) on stockpiling Emirati oil in South Korea. The MoU, whose terms have yet to be
finalized, stipulates that South Korea will rent out facilities for the stockpiling of UAE crude oil. The two
sides signed a total of six MoUs, including one on energy cooperation, in addition to an agreement on
economic, trade, and technological cooperation. This deal will give the UAE a marketing gateway to
Northeast Asia, one of the fastest-growing markets for oil consumption.
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