ECO
Saudi Arabia International Finance
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Quick Facts (2019)
Size:
Population - 34.14 million people
Area – 830.0 mi²
GDP: $779.29 billion (18th largest economy in the world) G20
GDP growth: 0.5% between 2018 to 2019
PPP: $56,879 (12th in the world)
Unemployment: 12.3% (3.5% in US)
Inflation (CPI) : 2.44% (2.28% in US)
Foreign Direct Investments: $12,471,990,00 ($ 12.5 B )
Public Debt: 30% of GDP (78% of GDP in US)
SAR to USD Exchange chart 1 US dollar = 3.75 SR
Advantages of Flexible Exchange Rate:
Country is independent to choose its monetary policy rather than depending on other countries.
Acts as a shock absorber and protects the domestic economy from external disturbances.
Promotes economic development and helps achieve planned objectives of the country.
Promotes international trade with as less restrictions as possible.
Disadvantages of Flexible Exchange Rate:
Low Import and Export elasticities result in unstable market conditions.
Inflation leads to further depreciation of currency value ultimately having adverse effects on the economy.
Exports from Saudi Arabia:
Mineral fuels including oil: US$231.6 billion (78.6% of total exports)
Plastics, plastic articles: $20.9 billion (7.1%)
Organic chemicals: $14.3 billion (4.9%)
Ships, boats: $2.6 billion (0.9%)
Inorganic chemicals: $2.29 billion (0.8%)
Aluminum: $2.26 billion (0.8%)
Machinery including computers: $1.9 billion (0.7%)
Iron, steel: $1.4 billion (0.5%)
Vehicles: $1.29 billion (0.4%)
Fertilizers: $1.26 billion (0.4%)
Export: $182 billion (25th largest in the world)
$ 1.784 B Saudi Aramco on price of Feb 11 /2020 33.45 SR and 200B Stocks
imports into Saudi Arabia:
Machinery including computers: US$12 billion (11.8% of total imports)
Vehicles: $11.3 billion (11.2%)
Electrical machinery, equipment: $9.2 billion (9%)
Cereals: $4.3 billion (4.3%)
Pharmaceuticals: $4.3 billion (4.3%)
Aircraft, spacecraft: $4 billion (4%)
Mineral fuels including oil: $3.5 billion (3.4%)
Optical, technical, medical apparatus: $3.3 billion (3.2%)
Articles of iron or steel: $2.6 billion (2.5%)
Furniture, bedding, lighting, signs, prefab buildings: $2.5 billion (2.4%)
Imports: $167 billion (28th largest in the world)
Foreign Investments Incentives Oil is the biggest source of Saudi Arabia’s foreign exchange, followed by, Aluminum and Diamonds for exports’ and Gold, Wheat, Rice and Barley for imports.
Complete ownership of companies and land plots
Capital deportation allowed
No levy of income tax; corporate tax 20% of annual profit
Carry forward of deferred losses until the existence of the company
Financial support from AFESD, Arab Monetary Fund, Arab Trade Financing Program, Arab Investment Guarantee Corp, Islamic Development Bank, or any other local or international institution of choice
Support from HRDF for rehabilitation, training and employment of labor force
Customs exemption on raw materials, machinery, tools and equipment and their spare parts
Competitive prices
Financial grants for R&D in KAUST and KACST
FDI Tax Incentives
On 24th November, 2008, the Council of Ministers had issued its decision No. 359 to grant conditional 10-year tax incentives commencing from the date on which the project enjoys the tax credit in few of its cities.
Tax credit granted to foreign investors:
50% of annual cost for training of Saudi employees
50% of annual salaries paid to Saudi employees
Additionally, the tax credit for 10 years will be equal to 15% of paid up capital of all their industrial projects; in cash, in kind, or as an increase in the capital of the company.
References:
Burton, E. (2016). Business and Entrepreneurship in Saudi Arabia: Opportunities for Partnering and Investing in Emerging Businesses. John Wiley & Sons.
Barguellil, A., Ben-Salha, O., & Zmami, M. (2018). Exchange rate volatility and economic growth. Journal of Economic Integration, 33(2), 1302-1336.
https://www.jstor.org/stable/26431809
Park, Y. E., Allui, A., & AlSelaimi, R. (2019). Determinants of entry modes choice for MNEs: Exploring major challenges and implications for Saudi Arabia. In Creative Business and Social Innovations for a Sustainable Future (pp. 107-115). Springer, Cham.
https://link.springer.com/chapter/10.1007/978-3-030-01662-3_12
https://www.oxfordcartographers.com/our-maps/peters-projection-map/
Saudi Customs https://www.customs.gov.sa/
King Abdulaziz City for Science and Technology https://www.kacst.edu.sa/
IHS Markit https://ihsmarkit.com/index.html
Tadawul https://www.tadawul.com.sa/
https://en.wikipedia.org/wiki/List_of_public_corporations_by_market_capitalization#2019
BBC