Saudi Arabia country brief
The Kingdom of Saudi Arabia is the largest Arab country of the Middle East. It is bordered by Jordan and Iraq on the north and northeast, Kuwait, Qatar, Bahrain and the United Arab Emirates on the east, Oman on the southeast, and Yemen on the south. The Arab Gulf lies to the northeast and the Red Sea to its west.
The origins of Saudi Arabia go back as far as 1744 with the establishment of the first Saudi State. The formation of the current Kingdom began in 1902, when Abdul-Aziz bin Saud captured the Al-Saud's ancestral home of Riyadh, and culminated in 1932 with the proclamation and recognition of the Kingdom of Saudi Arabia.
Saudi Arabia is a traditional monarchy. King Abdullah succeeded to the throne on 1 August 2005, following the death of his brother, the late King Fahd. The King is assisted by a Council of Ministers that he appoints. In recent years the consultative Shura Council, which consists of 150 individuals appointed by the King, has developed a modest but increasing role in public debate. Municipal elections were held in 2005, and a second round held in 2011.
Saudi Arabia is a member of the Gulf Cooperation Council (GCC). It is a member of the Arab League, the Organization of Islamic Cooperation (OIC), the G20, the United Nations, World Trade Organization (WTO) and Organization of Petroleum Exporting Countries (OPEC).
Australia and Saudi Arabia enjoy a friendly and substantive relationship, underpinned by commercial ties and supported by shared membership in the G20 as well as Australia’s engagement with the Gulf Cooperation Council and Organization of Islamic Cooperation. People-to-people contacts are also an important aspect of the relationship, with over 10,000 Saudi enrolments at Australian education institutions in 2013.
Saudi Arabia is Australia’s second largest trading partner in the Middle East region. There is significant potential for economic ties to grow, given areas of complementarity in agriculture, education and construction. The establishment of the Australia Saudi Business Council in 2013 also supports the promotion of bilateral business ties.
With a population of around 29 million and nearly 20 per cent of the world's conventional oil reserves, Saudi Arabia is the Middle East's largest economy. While the private, non-oil sector's contribution to GDP has increased over the past decade, oil and oil derivatives still account for around 90 per cent of Saudi export earnings and government revenues, and about 30 per cent of GDP. Ambitious plans for further investment in the development of the petrochemicals, oil refining, phosphates and gas sectors could further increase the percentage of oil and oil derivatives in export revenues.
The Kingdom's economy weathered global economic turmoil better than most countries, maintaining GDP growth. Real GDP growth in 2013 was 3.8 per cent. The growing economy has been matched by an increase in demand for imports, driven largely by massive construction projects.
The Saudi Government initiated structural reform measures in the 1990s designed to encourage privatisation, liberalise foreign trade and reform investment regimes. Commercial laws were revised and initial steps were taken to free up foreign investment and privatise parts of the state sector. This agenda continues, with a focus on economic diversity and privatisation. In March 2007, the opening of new sectors to foreign investment including insurance services, wholesale/retail trade, communications services and air/rail transport services, was announced. Education and skills development are a major focus for the government. The approximately $5 billion King Abdullah Scholarship Program (KASP), launched in 2005, funds over 185,000 young Saudis to undertake tertiary studies abroad. The KASP has recently been renewed for another five years to 2019. Australia is an approved destination for Saudi students under the KASP. The Saudi Government is also engaged in a major program for the construction of educational institutions in Saudi Arabia, with a budget allocation of $52 billion in 2013.
Trade and Investment
As Australia's second largest market in the Middle East, Saudi Arabia is an important trading partner for Australia. In 2013, Australia's merchandise exports to Saudi Arabia totaled $2.19 billion. Saudi Arabia was Australia's biggest market for exports of passenger motor vehicles worth $761 million in 2013, though this is due to change as a result of the planned closure of Holden and Toyota manufacturing facilities in Australia in 2017. Other major exports were barley, wheat and meat products excluding beef.
Saudi Arabia is also a substantial market for dairy products, vehicle parts and accessories, as well as a growing market for fresh vegetables, refined metals and information communications technology products.
Services’ exports, notably education, are also significant. A large number of Saudi tertiary students study in Australia, mostly under the King Abdullah Scholarship Program. In 2013, there were 10,300 Saudi enrolments in Australian educational institutions, with Saudi students representing the largest contingent from the Middle East region.
Australia-Saudi business ties have expanded. The March 2013 Joint Ministerial Commission meeting saw the signing of a MoU between the Australia-Saudi Business Council and the Council of Saudi Chambers of Commerce establishing the Australia Saudi Joint Business Council. The establishment of the Saudi-based chapter, the Saudi-Australian Business Council, was formally approved in July 2014. .
Saudi Arabia's needs are well suited to Australian capabilities. Saudi Arabia has a sound economy with a fast-growing and young population, a well-managed banking system, good infrastructure, and generally low import duties and barriers. Its business community is sophisticated and familiar with Western practices. Austrade is represented in both Riyadh and Jeddah.
For information on doing business and opportunities in Saudi-Arabia please see http://www.austrade.gov.au/Export/Export-Markets/Countries/Saudi-Arabia/Market-profile
For further information, please see "Business Guide to Saudi Arabia" and "Accessing Middle East Growth: Business Opportunities in the Arabian Peninsula and Iran".
High level visits
August 2014: Saudi Minister of Higher Education HE Dr Khalid Al-Ankary visited Australia and met Minister for Trade and Investment the Hon Andrew Robb MP.
July 2014: Saudi Minister of Commerce and Industry Dr Tawfig Al-Rabiah visited Australia to attend the G20 Trade Ministers meeting in Sydney.
April 2014: Minister for Trade and Investment, the Hon Andrew Robb MP, visited Saudi Arabia. Minister Robb promoted Australia’s trade and investment links with Saudi Arabia, and supported 27 Australian education institutions exhibiting at the annual International Exhibition and Conference on Higher Education.
April 2014: Minister for Agriculture, the Hon Barnaby Joyce MP, visited Saudi Arabia on his first overseas ministerial visit. Minister Joyce discussed Australia’s agricultural relationship with Saudi Arabia. He was accompanied by a delegation of Australian agriculture and food industry representatives.
March 2013: Saudi Minister of Agriculture, HE Dr Fahd bin Abdul Rahman Balghunaim co-chaired with then Australian Minister for Trade, the Hon Craig Emerson, the 9th Australia-Saudi Joint Ministerial Commission meeting.
June 2012: Then Minister for Foreign Affairs, the Hon Senator Bob Carr visited Saudi Arabia.
May 2010: Saudi Minister of Higher Education HE Dr Khalid Al-Ankary visited to sign a MoU on Higher Education Cooperation with Australia.