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There is an apparent emphasis on the role of the Saudi private sector in the development of the mining and quarrying sector. This sector is expected to be one of the fastest growing sectors with an annual growth rate of about 9 percent over the period of the sixth development plan.
The increase in domestic demand for oil is expected to stimulate the anticipated 3.9 percent annual growth rate for the petroleum refining industry during the period of the sixth development plan.
The non-oil industrial sector is the prime mechanism through which the Saudi private sector can be mobilized, import substitutes be created, and the whole Saudi economy undergo structural change and diversification. The Royal Commission for Jubail and Yanbu, established in 1975 and chaired by the King, was created to expedite the construction of basic facilities in these twin industrial cities (see appendix I for address). Jubail and Yanbu have been chosen as the headquarters for promoting the petrochemical industry. Other industrial cities are located in various cities and are administered by the Ministry of Industry and Electricity. This sector forms the backbone of the industrialization drive in the Kingdom of Saudi Arabia. The Saudi non-oil industrial sector has already experienced remarkable diversification. In addition to the new export and import substitution opportunities, the deepening of linkages among Saudi industries will help this sector to grow at an estimated annual rate of 4.9 percent.
The Kingdom of Saudi Arabia enjoys a comparative advantage over traditional petrochemical producers due to its large endowment of the necessary raw materials. In addition, the availability of funds from Saudi Arabian financial agencies has made the Kingdom a large exporter of various petrochemicals and fertilizers. The Saudi Basic Industries Corporation (SABIC) is the driving force behind the basic and intermediate petrochemical projects (see ad., page --- ). SABIC was established in 1976 with two main objectives: to undertake joint ventures in the petrochemical and oil related industries and to participate in investment opportunities that support the operation and marketing of products using hydrocarbon and metal resources. While initially financed by the Saudi Arabian government, 30% of SABIC is now owned by Saudi Arabian and other Arab Gulf states citizens following an early 1984 stock offering. SABIC's goal is to increase this private ownership level to 75 percent. The rise in world demand for petrochemicals, higher prices, lowering of barriers to Saudi petrochemical exports in some importing countries, higher productivity, and the rapid development of new markets are the key developments that helped to improve performance of the Saudi petrochemical industry over the last two years. Continuation of this positive trend over the period of the sixth development plan will allow this sector to grow an annual rate of 8.3 percent.
During the fifth development plan period, a number of factors contributed to the rising cost of public utilities. These include the rapidly growing urban population, the strong growth in energy-intensive production activities, and a change in consumption patterns following the reduction of already low and highly subsidized prices. On the 25th of Rajab 1415 H. (corresponding to December 27, 1994) Royal decree number M/8 was issued raising prices of refined petroleum products, telephone services, water and electricity rates and visa, and residence (Igama) fees. This move by the Saudi government was a part of its efforts to bring user charges more in line with production costs and mobilize additional financial resources. Against this background, the output of this sector is expected to grow at an annual average rate of 5.5 percent.
The climax of the Saudi real estate market in the aftermath of the 1990 Gulf crisis subsided toward the end of the fifth development plan period. However, the real estate sector is expected to grow at an annual average rate of 3.3 during the sixth development plan period 1995-1999.
The increase in population and higher level of income during the sixth development plan will revive consumer demand for distribution, food and recreation services. This, together with the expected continuation of high level of general business activities will stimulate this sector to grow at an annual average rate of 6.2 percent
Over the past decade, Saudi Arabia has enjoyed sophisticated transport and telecommunications systems which provide the necessary infrastructure for rapid development. The communications sector has been a key concern since the inception of the first five-year development plan (1970-1974). By 1987, there were 30,233 kilometers of paved roads linking all main regions of the Kingdom as well as neighboring countries. There were also 886 kilometers of railways linking Riyadh to Dammam to facilitate transportation. The maritime transport system of Saudi Arabia is one of the most advanced in the world. The largest and busiest port is located in Jeddah. However, expansion of the ports of Jizan and Yanbu on the Red Sea, and Jubail and Dammam on the Arabian Gulf has relieved some of the Kingdom’s traffic concentration at Jeddah Islamic Port. Most travel within the Kingdom is done by air, given the difficult terrain and distances between population centers. There are 23 airports, three of which are international. King Abdul Aziz International Airport in Jeddah opened in 1981 and is noted for its separate terminal for pilgrims. King Khalid International Airport serves the greater capital city of Riyadh. King Fahd International Airport is currently under construction 36 km (approximately 22 miles) Northwest of Dammam. Latest reports by the Saudi Civil Air Aviation estimate the total cost of this project to exceed SR7.5 billion (U.S. $2 billion) and anticipate it to be operational in few months. The launching of the Arab Satellite in 1985 and the television complex in Riyadh provide up-to- the-minute telecommunications facilities. Access to domestic and international telephone service is available at varying rates and is being modernized at an estimated cost of SR15.00 billion (U.S. $4.00 billion) to be one of the best in the world. The transport and communications sector is expected to grow by 2.9 percent annually during the period of the sixth development plan as a result of higher level of economic activity and anticipated higher demand for communications services. |
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