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, the G20, the United Nations, World Trade Organisation (WTO) and Organization of Petroleum Exporting Countries (OPEC).
With a population of around 27 million, of which around 5.5 million are expatriate, 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 budget revenues, and about 45 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 throughout 2008-2012, averaging 7.6 per cent growth from 2010-2012. 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 130,000 young Saudis to undertake tertiary studies abroad. The KASP has recently been renewed for another five years to 2019. 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.
Australia and Saudi Arabia enjoy a friendly and cooperative relationship, based on extensive trade relations as well as people-to-people contacts. The two countries also cooperate through the G20.
The most recent Australian Federal-level ministerial visit to Saudi Arabia was by then Minister for Foreign Affairs, Senator Bob Carr, in June 2012. A number of other Ministers have also visited Saudi Arabia in recent years.
The most recent senior Saudi visitor to Australia was the Minister of Agriculture, HE Dr Fahd bin Abdul Rahman Balghunaim, in March 2013 who co-chaired with then Australian Minister for Trade, Dr Craig Emerson, the 9th Australia-Saudi Joint Ministerial Commission meeting. The Saudi Higher Education Minister HE Dr Khalid Al-Ankary visited in May 2010, signing an MoU on Higher Education Cooperation with Australia.
As Australia's second largest market in the Middle East, Saudi Arabia is an important trading partner for Australia. In 2012, Australia's merchandise exports to Saudi Arabia totalled A$1.73 billion, making it our 20th largest market. Saudi Arabia was Australia's biggest market for exports of passenger motor vehicles worth A$774 million in 2012. 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 2012, 11,122 Saudi students were enrolled in Australian educational institutions in a wide range of fields including health, IT, business and accounting. Saudi students represent the largest contingent from the Middle East region.
Australia-Saudi business ties have expanded. For instance, the then Australia Gulf Council (now merged with the Australian Arab Chamber of Commerce and Industry) conducted a business mission to Saudi Arabia in December 2012 led by former Deputy PM Mark Vaile, former Queensland Premier, Anna Bligh and Australia Post CEO and then Chair of the Council for Australian-Arab Relations, Ahmed Fahour. The March 2013 Joint Ministerial Commission meeting saw the signing of an MoU between the Australia-Saudi Business Council and the Council of Saudi Chambers of Commerce establishing the Saudi Australia Joint Business Council. There are over 3,000 Australian citizens employed in Saudi Arabia, mainly in health, education and other specialist areas.
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 further information, please see "Business Guide to Saudi Arabia" and "Accessing Middle East Growth: Business Opportunities in the Arabian Peninsula and Iran".
Updated September 2013