Riyadh has decided it will seek as much as possible to sell its shares in public undertakings as a means towards reducing its $190 billion debt, of which $170 billion is domestic debt. The government is looking at privatisation as a partial remedy, one that can be applied without much delay once it is decided which undertakings should go over to the public. Just recently, Saudi investors oversubscribed to the issue of government shares worth $4 billion in Saudi Telecommunications Company (STC). The shares released to the public amounted to 30 per cent of the company.

The government is also making good its promise to open up the country to foreign investors. Several sectors have already been opened up during the past two years. Since the beginning of this year, overseas investors have been allowed full or partial ownership in telecommunication services, insurance, power transmission, educational services and publishing. The Saudi Arabian General Investment Authority (Sagia), set up in April 2000 to lure foreign investments into the kingdom, has issued licences worth $3 billion.

Transferring ownership to private hands will encourage the new owners to adopt free-market principles and innovate, reasons for the privatisation in the first place. Entrepreneurs tend to maximise their profits and invest in projects that could eventually lead to more nationals entering the workforce and increased consumption.

The kingdom has witnessed considerable industrialisation in the past decade, a welcome sign when one considers it would be better off diversifying its income sources away from reliance on oil which now accounts for 80 per cent of the national income.

Tidings that industrialisation had borne much fruit were given by Minister of Industry and Electricity Dr Hashim Yamani who revealed that non-oil exports grew 23 per cent to SR30.7 billion in 2002. Other sources suggested that the figure accounted for 12.1 per cent of total commodity exports and that non-petrochemical commodities rose 30 percent to account for 35 percent of non-oil exports and re-exports.

As if to highlight the industrialisation trend, government officials were on hand at celebrations to mark the opening of seven new projects at a cost of more than SR1 billion. One was a blanket factory of Al Abdul Latif Group, set up at a cost of SR235 million, another was a textile factory of Al Obaikan Group. Others included a national spinning factory of the Abdullatif group, a factory of Arabian Pipes Company and a factory of the Medical and Beautification Products Company. The stone for the Duplex Carton Factory of the Obaikan Group was laid. The tide of industrialisation promises to be unrelenting with Yamani disclosing plans to establish new industrial cities in Riyadh, Jeddah. Qassim, Al Ahsa, Baha, Qurayat, Arar, Sudair, Zulfi and Dhuba. The Saudi Authority for Industrial Cities and Technological Regions has been tasked with providing better services to investors and overall strengthening the industrial sector.

Yamani has said total industrial investments in the country have grown to SR247 billion, and according to Riyadh Chamber of Commerce and Industry vice-chairman Abdul Aziz Al Athel Saudi industries provided 320,000 jobs and contributed SR58.7 billion to the GDP.

The enthusiasm for non-oil industrialisation has not come a day too soon. Recently Saudi Arabian Monetary Agency Governor Hamad Al Sayari warned: "Our economic challenges stem from modest growth rates, over-dependence on oil incomes and high population growth rates," he said, advising that "fast-paced changes in the world economy require more efforts to boost the growth of non-oil sectors and reduce the impact of fluctuations in oil prices on economic growth." Unemployment is around 15 to 20 per cent and foreigners constitute 65 per cent of the workforce.

Saudi businessmen now lose no time in identifying business opportunities. Earlier this year, the fifth Iranian industrial exhibition was held in Riyadh, but Saudi businesses were already in negotiations for the export of Saudi products.

The move to invest in non-oil industries also follows greater realisation among the Saudi public that notwithstanding high oil prices, there can be no guarantee it will solve economic ills. As Brad Bourland, chief economist of the Saudi American Bank noted: "The past two years have been strong for oil prices and still government deficits remain at 10 per cent of the budget and 3.5 per cent of GDP." Economists have called on Riyadh to seek major cuts in public spending and even consider a tax on personal income.

With greater attention being paid to non-oil industries, the Saudi public is inspired by the fine performance and enterprising attitude of some Saudi businesses.

Sabic's profits for 2002 were SR2.844b billion ($758.4m), a 60 per cent increase over the 2001 profits Total sales for the year were SR34 billion compared with SR29 billion in 2001, an increase of 18 per cent.

Production in the year rose to 40.6 million tonnes compared with 35.4 million tonnes in 2001, an increase of 14.7 per cent.

Saudi Arabian Fertiliser Company (Safco) made reduced profits of SR110.4 million in 2002 compared with SR254.7 million in the previous year. But the company pointed out that Safco suffered from the crash of product prices in the wake of the global economic recession. There was also increased competition from new capacities coming up in different parts of the world.

Aluminium Products Company Limited (Alupco), one of the top 100 Saudi companies, is expanding and restructuring its facilities, putting it on course to fulfilling its ambition to become one of the world's great extrusion and surface-finishing facilities.

The company is also poised to become a significant player in the global supply of technically advanced extrusion dies, having already installed a state-of-the-art die-making plant in Jeddah. Alupco is recognised as the first aluminium extrusion company in the Middle East to bag the prestigious ISO 9001 certification. It is investing $75 million in the next few years on new equipment, refurbishing and modernising some existing production lines and constructing new building facilities. The projects cover both the Jeddah and Dammam plants.

Saudi Arabia's Heet Establishment for Industry, the only Gulf company to produce mobile racking systems for the storage industry, believes it will achieve a 35 per cent increase in revenue in 2003.

The revenue could come from increased sales emanating from a planned 50 per cent hike in production capacity. The company has allocated $5 million for the expansion as well as for marketing

The company's management says the plan is basically to introduce a new system of production such as metal pallets instead of wooden pallets. This, it says, will be achieved by increasing production machinery, manpower and investment in the new system and increasing the productivity of its main products.

Heet recorded a turnover of $2.55 million for 2001-2002, 35 per cent of which came from exports. The management says advertising and the company's presence at local and foreign exhibitions contributed to its performance. The Dammam-based firm has signed major deals and more are on the way.

A company that is making waves abroad is Zamil Steel Industries of Dammam. It recently secured a contract to supply and erect one of the largest single factory buildings in Europe. The building, located in Goole in the United Kingdom, is owned by Guardian Glass Industries (UK) Ltd., a subsidiary of Guardian Industries Corp, a leading worldwide manufacturer of float glass and fabricated glass products for commercial and residential construction industries.

The 65,000 sq m building has to be designed, fabricated, shipped and erected, with all its accessories to a very tight schedule. The general manager of Zamil Steel in Poland, who is responsible for the project, described it as quite a challenge taking into consideration the size of the building and the harsh winter weather conditions at Goole.

British companies subscribing to an offset programme recently reached a landmark in investments in Saudi Arabia.

The British Offset Office (BOO) added a 12th successful joint venture project to those already implemented under the Al Yamamah Economic Offset Programme (AYEOP) when the Saudi Polyolefins Company (SPC) was commercially registered recently.

With this project, BOO has achieved its target of providing £1 billion of inward investment into Saudi Arabia.

The programme, which developed as a consequence of the UK Government's sale of military equipment to the Saudi Armed Forces, has sought to assist in diversifying the kingdom's economy through the creation of commercially viable and profitable projects. These projects have delivered new technology into the kingdom, helped to mobilise private capital, created employment opportunities for Saudi nationals and reduced imports

Earlier joint venture projects, set up under this programme, include a world-scale sugar refinery in Jeddah and a vocational training institute in Riyadh. Further projects are currently being developed in the agricultural and manufacturing sectors and a number of downstream petrochemical projects are also under examination.

The Saudi non-oil sector has generated a certain momentum of its own, and business leaders are keen that enterprise and management are rewarded to encourage budding entrepreneurs and young Saudis.

The Jeddah Marketing Board launched the Prince Abdul Majeed Business Excellence Awards for the kingdom's private sector.

The awards have been created by the Jeddah Marketing Board to recognise "exceptional achievement by individuals and companies that positively influence the Kingdom's economy and society".

'The initial sectors to he targeted include industry, health, services, trade, retail construction, IT and agriculture, and the selection criteria will cover efficiency, nationalisation and creation of jobs, innovation, environmental responsibility, social responsibility and customer satisfaction.

'The awards will be further segmented to include large companies with a turnover of more than SR20 million and small and medium-sized enterprises with sales of less than SR20,000. There will also be separate awards for 'Businessman of the Year' and 'Businesswoman of the Year' to recognise outstanding entrepreneurism and initiative amongst today's top Saudi business leaders," a spokesman of the organisation said.