Interview with Dr Abdullah al-Hammudi
(Asharq Al-Awsat) The Saudi Ministry of Trade and Industry deals with a large number of countries in the trade field; what is the total volume of Saudi non-oil exports?
(Al-Hammudi) It is well-known that Saudi Arabia deals with 155 countries. There are two types of exports: oil exports, and non-oil exports. Usually we focus on non-oil products, which have achieved a huge growth in the recent years. Last year, the non-oil exports reached 79 billion riyals targeting the Gulf markets. As for the Saudi trade, there is a huge growth in this field because of the increase in oil prices, as the volume of trade has reflected the growth rate. Also the foreign trade recorded a strong increase of40 percent between 2004 in which the volume was 640.2 billion riyals, and 2005in which it reached more than 900 billion riyals (240 billion dollars) of which79 billions were non-oil exports. If we look at the trade balance, we will find that it has achieved a huge surplus with a large number of countries. There is a deficit in the trade balance with some countries with which we started to deal, especially some central African countries and the central Asian countries that became liberated recently from the Soviet Union as the imports of these countries still are limited because of the weakness of their markets. As for us, we started to introduce the Saudi products, and we started introducing a program for financing exports in order to utilize the products made available by the Saudi Fund for Developing Exports.
(Asharq Al-Awsat) What is your assessment of the increase in the volume of non-oil exports between 2000 and 2006?
(Al-Hammudi) This issue is being monitored at a high level, especially in the Ministry of Trade and Industry. The increase was clear between 2005 and2006; it was some 8 billion riyals, representing 11.26 percent, which was a growth of consecutive increases. If we compare 2006 to 2000, we will find that the non-oil exports in 2000 were 24.8 billion riyals, but they reached 79billion riyals in 2006.
(Asharq Al-Awsat) What is your assessment of the volume of trade exchanges with the 10 most important trade partners of Saudi Arabia during the past five years?
(Al-Hammudi) The list of Saudi Arabia’s trade partners is active and is developing. However, the United States and Japan remain at the top of the list. At the same time, there is continuous growth in trade with some major countries, such as China, where trade exchanges have increased exponentially; in 2000 the trade exchanges did not exceed 4.5 billion riyals, but in 2005 they reached 16.5 billion riyals. The growth in Saudi exports to the Chinese market surpassed the growth in imports; in 2000 the Saudi exports to China were 5.6billion riyals, but they increased to 40.5 billion riyals in 2005, an increase of more than 600 percent. China is one of the fast growing countries, and it deserves attention and monitoring. Also the Saudi exports to India in 2000 were some 12 billion riyals, but in 2005 they exceeded 40 billion riyals.
(Asharq Al-Awsat) Two countries such as China and India are considered among the rising strong economies on the international economic stage. How are your relations with them?
(Al-Hammudi) We can say that the volume of trade exchanges with the two countries is continuously growing in the markets. India and China are two big demand markets; however, this will not be at the expense of other markets in Europe or the United States.
(Asharq Al-Awsat) Has King Abdullah’s visit to China and India had any effect on increasing the volume of trade with the two countries?
(Al-Hammudi) It is certain that the Custodian of the Two Holy Mosques King Abdullah’s visit to these countries has given rise to great positive results. These results include the signing of a number of important agreements, which are considered among the basic mechanisms for encouraging and supporting trade and joint investments. With India, we have prepared a program for trade cooperation, approval has been granted to sign this program, and we are negotiating with the Indian side to sign it. As for China, joint agreements to protect investments and increase trade exchanges have been signed.
(Asharq Al-Awsat) What are the most prominent features of this program?
(Al-Hammudi) The features of the program focus on increasing the trade exchanges, removing obstacles, and cooperation in the field of quality, particularly exports in the field of laboratories and quality control.
(Asharq Al-Awsat) Saudi Arabia is one of the most active countries of the Islamic world in the field of supporting the economic movement. Can you tell us about the latest activities of initiatives undertaken by the government?
(Al-Hammudi) At the Islamic summit in Malaysia, the Custodian of the Two Holy Mosques issued a call for consolidating the work to develop trade exchanges between the Islamic countries. There was a program for financing exports, and it was supported. As a result of this call, the Islamic International Organization for Financing Exports has been established. At the Mecca summit the secondary trade organization’s ten-year program of developing and consolidating trade exchanges was ratified. The program includes consolidating and increasing trade exchanges by 20 percent. The Islamic organization was established with a capital of 3 billion riyals. The program also stressed the need to continue developing trade among the Islamic countries, which has started to increase rapidly, a fact that means that the program is compatible with the aim for which it was drawn up. With regard to the Saudi trade, it is growing with the Islamic countries, and also with the Arab countries, despite the fact that the latter is limited, as the trade among the Arab countries has not exceeded 9 percent. However, there is a tendency to increase these trade exchanges through the Economic and Social Council during the upcoming period. Also work has been progressing to liberate the Arab trade in the hope of completing the establishment of the Arab free trade zone.
(Asharq Al-Awsat) How do you see the future of the trade between Saudi Arabia and the GCC countries?
(Al-Hammudi) Trade between Saudi Arabia and the GCC countries is growing continuously, and it has been strengthened after the establishment of the customs union in 2003, as we find that the Saudi exports to the GCC countries have grown by 47 percent and the imports by 25 percent. All these are positive figures.
(Asharq Al-Awsat) What about the issue of the joint committees with the Arab countries with regard to increasing trade exchanges?
(Al-Hammudi) It is well known that the joint committees are important tools to follow up the implementation of the economic agreements between Saudi Arabia and the other countries, and trade exchanges are within this framework. Until the end of last year, the ministry presided over the Saudi side in 25joint committees. However, the joint committees have been redistributed among the government authorities. Now, in the Trade and Industry Ministry we have 10committees, the most prominent of which is the one working to increase the Saudi exports. The rest of the committees are convening regularly; the Saudi-Egyptian, the Saudi-Algerian, and the Saudi-Tunisian joint committees will meet soon in Riyadh. The work on trade exchanges is not restricted to the joint committees alone, as other bilateral venues have been established to examine ways to facilitate the trade exchanges between Saudi Arabia and some countries; however, these venues remain under the umbrella of the joint committees.
(Asharq Al-Awsat) Describe to us the nature of the work of the trade Attaché’s offices?
(Al-Hammudi) A large number of trade Attaché’s offices outside Saudi Arabia are affiliated to the ministry. The role of these offices is not restricted to the countries in which they exist, but they also are commissioned to deal with a number of neighboring countries close to their base so that they could perform their trade duties. It is well known that any trade Attaché appointed would have to have passed through a comprehensive work experience within the framework of the foreign trade under secretariat; this is in order to acquire the required attitude and expertise to perform this job, establish relations with the private sector, and identify all the hindrances of trade exchanges and the available mechanisms to overcome them.
(Asharq Al-Awsat) But the trade Attaché’s offices complain about some difficulties, perhaps the most prominent of them is the limited domain available to them, a fact that does not allow them to cover all the regions of the world?
(Al-Hammudi) With regard to expanding the domains of the trade Attaché’s offices, we are conducting a study of the world markets. In our study, we are focusing on some regions, and an august approval has been granted to open a number of trade attachأ©s offices in some countries, including South Africa, Morocco, and India, and a commercial bureau in Yemen.
(Asharq Al-Awsat) Saudi Arabia and the governments of the GCC countries believe in the need for cooperation and coordination, especially in the field of economics. How do you see the bilateral relations between Saudi Arabia and the UAE both of which will be sponsors of the Saudi-UAE economic forum, which is organized by Asharq al-Awsat this week?
(Al-Hammudi) The relations with the GCC countries are growing continuously under the comprehensive umbrella of the GCC. Moreover, there are the bilateral relations between the GCC countries. The forum is a distinguished initiative by Asharq Al-Awsat, because work is needed to consolidate the trade exchanges and to deepen the relations with the private sector in both countries. This work is no longer restricted to the governments or the businessmen themselves, but it has extended to the field of the press. This initiative should be recorded for Asharq Al-Awsat, and it is appreciated. What makes this initiative more fortunate is that it has enjoyed the generous blessings of Governor of Riyadh Region Prince Salman Bin-Abdulaziz, UAE Economy Minister Sheikha Lubna al-Qasimi, and the Saudi trade and industry minister. We expect that positive results will stem from this forum, especially from the business sector in both countries. This is particularly true when we realize that there are 114 UAE joint industrial and service projects in Saudi Arabia, of which 43 are industrial ones. As for the investments that have been pumped into these projects, their total value is 15 billion riyals, of which 10billions riyals are Saudi investments, 1.5 billion riyals are UAE investments, and 3.2 billions are foreign investments. This is as far as the private sector is concerned. We expect that as a result of the forum the volume of the investments will be doubled.
(Asharq Al-Awsat) As you are participating in the forum as the representative of the Trade and Industry Ministry, what is your economic assessment of the trade exchange movement between UAE and Saudi Arabia?
(Al-Hammudi) The two countries represent a great economic value within the GCC system. You can see that the volume of trade exchanges between Saudi Arabia and UAE is the largest within the GCC countries.
(Asharq Al-Awsat) With regard to the Saudi-UAE economic forum, what are your views and aspirations?
(Al-Hammudi) Any economic forum that gathers intellectuals and businessmen will inevitably come up with important recommendations. We are paying attention to our trade with the GCC countries, at the forefront of which his the trade between Saudi Arabia and the UAE. We always cooperate through the customs outlets and the officials in these centers to remove the obstacles in the way of economic exchanges; if there are any issues that are difficult for them to resolve, they resort to the channels of communications within the framework of the customs union, which pursues laying down procedures to facilitate trade exchanges. In order to continue the cooperation between the two countries, a Saudi-UAE bilateral committee has been established to facilitate the trade exchanges and to overcome any obstacles. This committee is chaired from the Saudi side by the trade and industry minister, and from the UAE side by the trade minister; the committee is expected to hold its first meeting soon.
(Asharq Al-Awsat) There are complaints about the procedures of the licenses for exhibitions, forums, and conferences. What do you think of this?
(Al-Hammudi) With regard to the exhibitions, the procedures are simple for the organizing companies; there is an annual program for the exhibitions, and this program is ratified by the exhibitions committee at the ministry, in which a number of government authorities participate. The exhibitions are licensed on time. In order to make it easy for the participants from foreign countries, an agreement has been reached among the Interior Ministry, the Foreign Ministry, and the Trade and Industry Ministry over granting visas to those whose applications are approved by the Trade Ministry; therefore, the Foreign Ministry takes care of the speedy approval of these visas. There are no delays or problems with regard to the exhibitions. If you are talking about the conferences, they take place according to the approval of the trade and industry minister; the forums or conferences have to have controls that should be adhered to.
(Asharq Al-Awsat) After the decision to establish a society to develop exports, what are the organizational procedures required?
(Al-Hammudi) The decision adopted by the Council of Ministers to establish the society for developing exports is due to the leadership’s interest in developing non-oil exports. It is a decision that supports the private sector. The decision specifies the duties of this committee and the formation of its board of directors, and authorizes the society of experts to prepare the organizational procedures for it. In fact, the authorities concerned at the society of experts have been invited to exchange opinions in preparation to submitting the report to the Royal Court.