September 23, 2007	Sunday	Ramazan 10, 1428

RIYADH, Sept 22: Riding on high oil prices, Saudi Arabia’s foreign assets, as managed by the Saudi Arabian Monetary Agency (SAMA) will breach the trillion mark in Saudi Riyals as of 2007, having grown by SR16.17 billion per month on average so far this year, the Saudi bank SABB said in a report.

Most of SAMA’s foreign assets are G-7 bonds. Investments in foreign securities now constitute more than 80 per cent of SAMA’s foreign assets.

Saudi Arabia’s acquisitions abroad are also just beginning to take off. So far most large Saudi acquisitions have taken place outside the Middle East due to size and availability of the market opportunities and also to strategic positioning by the government.

From a total of SR141.3 billion in the Gulf Arab acquisitions so far this year, some 59 percent or SR83.5 billion have been invested by Saudi public and private entities in just for deals.

Dr. John Sfakianakis, SABB’s chief economist, said in the report that acquisition of foreign assets by Saudi enterprises will continue, by not only the Saudi Basic Industries Corp. (SABIC) and Saudi Telecom Co. (STC) but also by the private sector.

The Saudi money has particularly found its way widely into the Middle East, with real estate, construction and hotels being the preferred sectors.

The UAE, Egypt, Jordan, Syria, Morocco and Lebanon have been important investment destinations for private Saudi money.

Some 60 per cent of the five-star hotels in Cairo, for instance, are owned by Saudi investors and about 35 per cent of the new construction projects initiated over the past two years in Jordan are Saudi-owned.

If stability could somehow be maintained, Pakistan could also get a significant share in this investment boom. But things back home are disocuraging potential private investment.

Saudi Arabia has also seen an increase in the inward foreign direct investments over the past few years.

According to the latest statistics from the United Nations Conference on Trade and Development (UNCTAD), average annual FDI inflow to Saudi Arabia was a mere SR911.2 million between 1990 and 2000.

Since 2000 to 2005, Saudi Arabia has witnessed an increase of 671 per cent in FDI. For the year 2007, the FDI inflow is expected to increase to surpass SR22.5 billion.

Despite stock market collapse last year, Saudi Arabia’s economy continues to grow at a robust pace.

The SABB sees 3.7pc real GDP for 2007 and 5.8pc in 2008.

Sfakianakis said in the event of buoyancy in oil prices, the nominal GDP might also enter positive territory from the current forecast of two per cent.

According to revised national accounts, real GDP in 2005 was 6.1 per cent (previously 6.5 per cent) and in 2006 4.3 per cent (previously 4.2 per cent, with the economy (real GDP) growing in size since 2003 by 16.44 per cent.