Saudi Arabia

Saudi Corporate Capital Spending – An Encouraging Boost to Non-Oil GDP

Capital Investment is a harbinger of future growth as the fruits from today’s investments will appear in the future. Saudi Corporate sector has invested large resources in capital expenditure in 2018 which is much higher than their total net income earned during the year. The Corporate sector as represented by 120 (non-financial) listed Companies included in Tadawul All Share Index (TASI) of Saudi Stock Market, was examined to measure change in Property, Plant & Equipment (PPE), gross of depreciation (Capex)...

Bankruptcy law in Saudi Arabia

Saudi New Bankruptcy Law. Saudi Arabia had no single bankruptcy law in place that prescribes procedures for businesses that face financial difficulty. The courts have traditionally refrained from declaring a debtor to be bankrupt until all feasible methods of debt enforcement are exhausted. This brought about a number of problems such as: No set procedure for collection of debts which leads to settlement of some creditors while others are missed out completely. Closure of viable businesses that may be facing...

The “Seesaw” Game of Saudi Liquidity

This article was originally published in Forbes Middle East. The advantages of the U.S dollar peg for Saudi Arabia have been multi-fold. It has resulted in stable export revenues, reduced transactions costs and a simple yet disciplined macroeconomic policy. This peg is especially important for Saudi Arabia as despite certain measures to diversify, their economy is dependent on oil and gas and connected activities. The oil price plunged in mid-2014, and the currency peg has been under pressure since then....

The Burgeoning Entertainment Industry in Saudi Arabia

As a part of its broader economic diversification plans, Saudi Arabia took an unprecedented policy move by framing a new entertainment policy. In line with the Kingdom’s Vision of 2030 of creating a vibrant society, General Entertainment Authority (GEA) has been established and an investment of US$ 64 Bn has been planned (BBC News 2018). GEA is part of the subprogram, Quality of Life under the Vision 2030 which aims for improving lifestyle by increasing entertainment and cultural avenues. Entertainment...

How Inflationary is VAT in the GCC?

The residents of Saudi Arabia and the UAE, who had long enjoyed a tax-free existence, were finally subject to a Value Added Tax of 5% on goods and services, from Jan 1st 2018. The introduction of VAT, which is seen as one of the biggest policy shifts in recent times across the region, is expected to bring in additional revenue to the respective governments. VAT being a consumption based tax, will have implications on customer spending as well as inflation....

World’s Cheapest Power Project: A milestone shift to solar electricity generation?

Saudi Arabia recently registered the cheapest price bid to supply solar electricity ever recorded. Abu Dhabi’s Masdar and Electricite de France SA bid to supply power from a 300-megawatt photovoltaic (PV) plant for as cheap as 1.79 cents a kilowatt hour. If the project is successfully awarded by the Ministry of Renewable Energy Project Development, it would top the leader board beating the previous record for a solar project in Abu Dhabi for 2.42 cents a kilowatt-hour. It is a...

How much more can KSA cut production

Saudi Arabia plans to pump about 9.77mbpd in November, which would be its lowest output since January 2015. According to the Saudi energy ministry, the decrease in allocations for November includes a full 290,000-bpd reduction over and above the 486,000 bpd that Saudi Arabia pledged to cut as part of its commitment. Table: Saudi Arabia Oil Supply (Jan-2015 to Sep-2017) Source: Reuters, Marmore Research Considering Saudi Arabia’s commitment to do whatever it takes to end the oil glut, it is...

Healthcare in Saudi Arabia – where are the opportunities?

The government is benevolent to the extent that it pays for all medical charges even outside the country if it is deemed necessary for a patient to travel abroad for advanced healthcare facilities. Saudi’s healthcare system is comprised of three service providers – the Ministry of Health (MoH) hospitals, government hospitals and private hospitals. However, gaps are evident in the services offered to the people. The kingdom is projected to require 15,888 beds in 2018, accounting for almost 50 per...

Visualizing Saudi Arabia in MSCI EM – Some Questions

When is the inclusion likely to happen: 2018/2019/2020? What will be Saudi Arabia’s weight in the index? And How much fund flows can be expect post inclusion? When is the inclusion likely to happen: 2018/2019/2020? MSCI has lauded the progress in Saudi Arabian capital market ushering its entry into the emerging markets. The kingdom will be third in the GCC league after UAE and Qatar that were included in the index in 2014. Thanks to plethora of reforms implemented by...

Healthcare in Saudi Arabia – Will the future tide move towards private sector?

Saudi Arabia has one of the fastest growing populations in the GCC region, indicating a spiraling future demand for healthcare facilities. Despite huge government spending in healthcare facilities and growth of the sector in the past, health care infrastructure in Saudi Arabia needs to be elevated to match international standards. Apart from the constraints on government expenditure in the current scenario of lower oil prices, healthcare market also needs to overcome challenges such as dependency on imports for medicines and...