SAUDI ARABIA

In 1998 the trade turnover between Russia and Saudi Arabia remained at the previous year level, or US million. According to the Saudi state agency for elevators and mills of the ministry of agriculture and water supply, almost 0.5 million tons of forage barley was delivered from Russia in 1998 to a total of US million, and half of it was for the first time purchased by the private sector. Russian rolled steel exports grew dramatically, to reach US million. US million worth of copper and almost US million worth of timber was delivered from Russia. The export of paper went down as compared with the preceding year.

Russian imports from Saudi Arabia expanded and amounted to US million due to growing supplies of citruses.

Starting from 1997 deliveries of machinery and technical products from Russia were discontinued and the bulk of Russian exports now consists of raw materials.

In mid-1998 the last outlet selling Russian AvtoVAZ cars was closed. Deliveries of Russian lorries to Saudi Arabia were discontinued, a relatively steady demand for them notwithstanding.

Trade relations between the two countries are affected by the Russian side's requests for advance payments, in part or in full, for deliveries which are offered in most cases on f.o.b. terms. Such offers concern timber, cement and some other goods. However, the Saudi customers, who have long got out of the practice of pre-payments for imports, simply reject such offers outright.

In 1998 the number of offers to supply machinery and technical products sharply dropped, and advertising materials which still come are in Russian, of poor design and printing quality. For instance, separators manufactured by Smychka plant (Plavsk, Tula Region) could have successfully competed on the local market with Laval and Westinghouse products. However, this is out of the question due to the absence of decent advertising and unreasonable prices.

Promotion of Russian machinery and technical goods on the Saudi market largely depends on the availability of a local agent or distributor. But due to the above reasons it is ever more difficult to find a firm that would agree to work on such terms. Furthermore, in many cases Saudi agents refuse to fulfil their commitments through the fault of Russian suppliers. For instance, agreements between Stankoimport and Al-Musalrei Est. (machines and tools), AZLK and Al-Saif Motors (Moskvitch cars), GAZexport and Al-Shathri Est. (Volga cars and GAZ lorries), AvtoVAZ and Wouallan for Cars were cancelled in this way. The agreement between Zapsib (Novokuznetsk) and T.M.A.-Trading Est. for the delivery to Saudi Arabia of one million tons of steel annually, which has not been performed for two years, may be terminated at any moment.

In 1998 Machinoimport was registered at the Chamber of Commerce and Industry of Jidda as a full member of the Saudi market. Residence permits have been obtained for two Russian representatives of Transgaz and Techneftegaz firms and office premises taken on lease.

As a result of talks held in July an agency contract was signed in Moscow between Stroitransgaz, a subsidiary of Gazprom, and the Saudi Saad A. Kahail & Partners sponsored by the son of Crown Prince Abdalla Al-Saud. The Saudi side undertakes to obtain registration of the Russian partner as the state oil and gas concern Aramko's potential contractor for the production and transportation of natural gas and to provide the Russian side with corresponding facilities and work to perform.

New prospects for the Russian-Saudi trade and economic cooperation are offered by an agency contract signed in December 1998 by Mubarak Al-Suwaiket Group and the Admiralteisky Shipbuilding Yard (St. Petersburg). Under the agreement signed for a term of five years, the Saudi agency company is granted apriority right to purchase all kinds of vessels built by the Russian shipyard and to build in the Gulf area dry and floating ship repair docks, including for supertankers and liquefied gas and chemical carriers.

The Saudi Al-Babtein Group participated for the first time in the Interlight-98 exhibition held in Moscow in December 1998. The Group specialises in outdoor lighting fixtures, household electric appliances, and it also manufactures posts, towers and supports for electricity transmission lines. In particular, in 1998 Al-Babtein fulfilled an order from the Moscow government for lighting supports for the Moscow ring-road.

Al-Babtein has reached a preliminary understanding with a Russian-Jordanian joint venture, Amira, on financing, jointly with the Siemens, the construction of a small lighting fixture factory. Talks were also held on the Saudis' participation in fitting out one of Moscow airports with lighting masts. The Saudi side views the Russian market as very promising and applied for participation in the next, Interlight ‘99, exhibition on a broader scale.

Despite an interest shown by a number of leading Saudi businessmen no tangible progress has been observed so far in Saudi capital investment in the Russian economy. A restraining factor here is the absence of an agreement on investment encouragement and mutual protection, which may be finalised and signed in 1999.

Establishment of partnership relations with Saudi businessmen in Jidda. Positive changes in the Saudi attitude to expanding contacts with Russia suggest that certain prospects have emerged for Russian business people, whether they belong to the Muslim community or not, for operating on the Saudi market and attracting Saudi investments into Russian projects.

The Chamber of Commerce and Industry of Jidda is 54 years in 1999. It has a number of committees which study in detail the situation in every sector of the economy and suggest relevant solutions. The Chamber 60,000 corporate members, 30,000 of which make wide use of its services, such as a computer system of economic activity monitoring on the European, American and Asian markets; regular information on investment opportunities inside the country and abroad; analysis of various market segments' profitability; and generalisation of the experience of world business and individual industries.

The employees of the Chamber of Commerce and Industry (CCI) are well aware of the state of affairs in companies and can recommend reliable partners having good reputation on the local market. The CCI data bank helps to quickly find business partners since the information on the manufacturers and consumers, various kinds of products, transport companies and services is regularly updated.

Jidda is one of the biggest Red Sea port cities, a crossing point of freight flows from Europe, Africa and Asia. This enables Saudi businessmen engage in large-scale and profitable agency services for a whole range of consumer goods, as well as building materials and raw materials for the food industry, which may be effectively used by Russian business people as well.

Of great significance for smooth going bilateral partnership contacts are business visits to Saudi Arabia and proper preparation of all necessary documents. If a business delegation or a group of businessmen is going on a visit to Saudi Arabia, a notice should be sent by the relevant general consulate or embassy to the CCI specifying objectives of the visit. The notice should be enclosed with a list of members of the delegation with their ID data and line of business each of them is engaged in.

No federal or local government officials may be put on the list. The notice also specifies the preferable time and duration of a delegation's stay and cities in Saudi Arabia they would like to visit.

Using this information, the Council of Chambers of Commerce and Industry applies in writing to the Ministry of Trade and then to the Foreign Ministry, and the latter instructs arelevant Saudi embassy to issue entry visas.

According to the local CCI, the Council usually gives favourable replies to such applications from consulates and embassies. The process of obtaining official approval of a business visit can be largely facilitated if its objectives, duration, cities to be visited and the number of delegation members are coordinated beforehand with CCI officers. A visa notice may be enclosed with supplements addressed to departments concerned.

After the visit approval by the Foreign Ministry the CCI undertakes to arrange meetings of the delegation with potential partners and provides its premises for the purpose. Transport and interpreter services, accommodation and escorting of the delegation are to be provided by the initiator of the visit.

Business proposals to Saudi businessmen in English or Arabic can be E-mailed to the CCI address: jcci@mail.gcc.com.bh, while letters, in Arabic only, may be addressed directly to the CCI information centre: nashrat@zajil.net, where they will be analysed by experts and either forwarded to relevant companies or processed at the information centre, included in the summaries of commercial and investment proposals and sent to subscriber firms to the CCI information publications (Investment Opportunities in Arabic and English, and Commerce magazine in Arabic),

The Chamber of Commerce and Industry in the capital-city. Although the significance of the private sector in the Saudi economy is on the upwards, accounting for over 40% of the gross domestic product, the government does not have a special division in charge of small business promotion.

At the same time, Enterprises & Investments Development Centres operate in three major and most influential Chambers of Commerce and Industry in Riyadh (the Central Province), Jidda (the Western Province) and Dammam (the Eastern Province) which are responsible for small and medium-size private business promotion. The leading and most experienced among them is the centre under the CCI of the capital-city: Riyadh Chamber of Commerce & Industry Enterprises & Investment Development Centre, P.O.Box 596, Riyadh 11421, Saudi Arabia, director Mr. Fahad, A. Al-Dowsari. Tel. (966-1) 404 4524 (direct line), 494 0044 extn. 215; Fax: 402 1103.