Doing Business in Saudi Arabia

In this essay I would like to consider the economy and political side of Saudi Arabia. It should be noted that Saudi Arabia shares borders with Jordan, Iraq and Kuwait in the north, Qatar and United Arab Emirates in the east, Oman in the southeast, and Yemen in the south. Saudi Arabia, with its huge oil reserves is the major state of the Organization of Petroleum Exporting Countries (OPEC). From 1992 to 2009 Saudi Arabia ranked first in the world petroleum production and export. Exports of crude oil is accounting for 95% of country’s export and 75% of income, and making it possible to maintain the welfare state. Thanks to it Saudi Arabia provides free education, including higher education for its citizens and covers all expenses for textbooks for students.
As a matter of fact, Saudi Arabia is divided into 13 provinces: Al-Baha; El-el-Hudud; Shamaliyya; Al-Jawf; Al-Madina; Al-Qasim; Riyadh; El-Sharkiyya; Asher; Ha’il; Jizan; Mecca; Najran and Taboo. Saudi Arabia occupies about 80% of the Arabian Peninsula. Due to the fact that national borders are not clearly defined, the exact area of Saudi Arabia is unknown. However, according to official statistics, it is estimated on the level of 2 217 949 square miles, according to others – from 1 960 582 to 2 240 000 square miles. Anyway, Saudi Arabia occupies 14th place among largest country in the world. Most of the territory of Saudi Arabia is desert or semi-desert, which are populated by nomadic Bedouin tribes. The population is concentrated around several major cities, usually on the west or on the east coast, as described in Saudi Arabia.

The official and the only religion of Saudi Arabia is Islam. Most of the population adheres strictly to the Quran and the Sunnah of Prophet Muhammad, however, 10% of Shiites are concentrated in the eastern provinces. Saudi authorities allow people of another religion to enter the country, but they are forbidden to preach and distribute it. The country has a religious police (muttava). Moreover, so-called Sharia Guard soldiers constantly patrol the streets and public institutions in order to discourage attempts to violate the canons of Islam. In case of violation the offender shall be punished (from fine to cut off the head). In the study of the international charitable Christian organization “Open Doors” for 2010, Saudi Arabia ranks 3rd place in the list of countries where the rights of Christians are most oppressed.

As a matter of fact, Saudi Arabia is the largest economy in the Arab world, which gross domestic product (GDP) per capita is in 38 times larger than in Yemen, and 16 times larger than in Egypt. Moreover, Saudi Arabia is a member of the WTO from 2005. Without any doubts this step has accelerated the international opening of the Saudi market. It is essential to note that in 2006 Saudi Arabia generated the highest State budget surplus ever (about 70 billion U.S. dollars). Moreover, in 2005 there too was the highest State budget surplus (about 55.5 billion U.S. dollars). After the mineral resources, extremely important as economic asset is the service sector, especially tourism with more than a million pilgrims each year. The currency in the Kingdom is the Saudi Riyal; it has a fixed exchange rate peg to the U.S. dollar. It should be noted that 12% of Saudi works in agriculture, which make 3% of GDP, while 25% of workers operate in the industry. With 63.7% of GDP, this sector generates the greatest profit. In turn, 63% of employers work in the service sector, which generates 33% of GDP, as stated in Doing Business in Saudi Arabia.