Business & Money | Wednesday 16 March, 2016 7:10 am |

In a complex global environment, it is often difficult to find reliable business partners, staunch geopolitical allies, and longstanding friends.  The relationship between the United States of America and the Kingdom of Saudi Arabia continues to be strong.  The United States is Saudi Arabia’s strongest trading partner in the world with bilateral trade totaling over $66 billion in 2014. With over $19 billion of U.S. exports to Saudi Arabia in 2015, the United States is selling more to the Kingdom than it ever has in its history. Leading sectors for U.S. commercial engagement with Saudi Arabia include: Transportation, Defense, Education and Training, Power Systems, Mining, Engineering Services, Healthcare, ICT, Oil and Gas, Security and Safety, Water Resources Equipment. 

 

Through the Strategic Partnership for the 21st Century announced last September, the United States hopes to work even harder from the perspective of both the public and private sectors to facilitate job-creation, economic diversification, innovation and entrepreneurship in the Kingdom. From the Riyadh metro Project – the largest infrastructure project on earth – to Sadara – a $20 billion U.S. petrochemical investment in the Kingdom – to a myriad of U.S. investments in healthcare, oil and gas, education, transportation, and defense.

 

 

A Historic Relationship Founded on Commerce

 

Starting in the 1930s, U.S. companies partnered with the Saudi government to develop Saudi Arabia’s first modern infrastructure and institutions, including Saudi Aramco, the largest energy company in the world.  In fact, our business ties are older than our diplomatic ties with Saudi Arabia.  In 1933, the United States and Saudi Arabia signed the oil concession agreement; formal diplomatic relations would not begin until six months later.  That historic relationship blossomed over the course of 70 years and has initiated some of the most exciting business deals in the world.  

 

For example in the Eastern Province, the Sadara Joint Venture between The Dow Chemical Company and Saudi Aramco represents over $10 billion U.S. investment ($20 billion of total investment) in one of the largest, most innovative, and most-technically integrated global petrochemical projects in history.  In a similar vein, Kemya, a 50/50 joint venture between SABIC and Exxon Chemical Arabia, Inc., an ExxonMobil affiliate which is worth about $10 billion; Ma’aden Aluminium, a JV between Ma’aden and Alcoa, with capital investment of $10.8 billion, and the Ma’aden/SABIC/Mosaic tri-venture which is worth about $7 billion.  

 

In the Western Region, Pepsi and Bugshan Group have been partners since 1952; soon Pepsi will begin operations at the largest bottling facility under one roof in the world, located in the Jeddah Industrial City #2.   Recently, the Mars Corporation and Naghi Group launched a new manufacturing facility in 2014 located in the King Abdullah Economic City (KAEC), with a total investment of $80m to date. The plant, which counts 60% of its employees as Saudi nationals, supplies Mars’ wide line of food products to the Kingdom and the GCC.  Caterpillar also counts Saudi Arabia as one of its largest export markets beyond North America, working through a partnership with Zahid Group established in 1950.  AECOM and Xenel Group have partnered since 1980, and together have collaborated on critical infrastructure projects affecting the daily life of Saudis, such as the Jeddah Storm Water Drainage Program and the King Abdullah Port at KAEC.  And these are just some of the partnerships – we have more connections happening every day between private Saudi companies, family businesses, and U.S. SMEs.  

 

 

 

 

Education Forms the Ties that Bind

 

Throughout this history, U.S. companies have inculcated an American-style organization and work environment by providing Saudi partners with training, U.S. study opportunities, and new businesses.  Today, thousands of U.S.-educated Saudis hold key government and business positions throughout the Kingdom, and U.S. companies, including almost half of the members of the Saudi Majlis Al Shoura, or Consultative Assembly. 

 

Under innovative and wide ranging programs like the Custodian of the Two Holy Mosques Scholarship Program, almost 60,000 students from Saudi Arabia were studying in the United States in the 2014/15 academic year, up 11.2% from last year, and building on 10 consecutive years of increases. Saudi Arabia is the fourth leading place of origin for students coming to the United States for the 5th year in a row, and is by a wide margin the first among Middle Eastern countries in terms of sending students to the U.S., with 6.1% of total international students.  Last year Saudi Arabian students in U.S. colleges and universities contributed $1.7 billion to the U.S. economy. 

 

However, the connections don’t end at the in the United States, but continue to include our best and brightest colleges and universities like M.I.T., Stanford, Georgia Tech, Columbia, Northeastern.  These institutions and many others maintain strong partnerships with Saudi companies and schools, including King Fahd University of Petroleum and Minerals, Saudi Aramco, and the rapidly expanding Dhahran Techno Valley research park.  One of the hallmarks of this educational collaboration is the MIT/KFUPM Center for Clean Water and Clean Energy, which is pioneering game-changing approaches to the water scarcity issue in the GCC through cooperative research on two continents.

 

Commercial Diplomacy Takes the Relationship to the Next Level

 

In December, U.S. Embassy officials including Ambassador Joseph Westphal led a 120-person Saudi delegation to Power Gen in Las Vegas, NV - the largest Saudi delegation ever convened - which featured senior Saudi Electricity Company executives. Ambassador Westphal took key Saudi decision makers to see the largest concentrated solar power plant in the world, the Ivanpah Power Plant built by Bechtel and owned and operated by NRG, and the Hoover Dam - both of which are U.S. power infrastructure marvels. Over 150 U.S. company representatives participated in the Power Gen Saudi Arabia Technical Seminar, a reflection of the tremendous interest the U.S. has for the Saudi market. 

 

In January 24, 2016, the U.S. Saudi CEO Dialogue took place in Riyadh, the private sector manifestation of the U.S.-Saudi Strategic Partnership for the 21st Century announced during Saudi King Salman's visit to Washington DC last September. The Dialogue is led by the U.S. Chamber of Commerce on the U.S. side and the Council of Saudi Chambers of Commerce on the Saudi side. The goal of the dialogue is to discuss areas of opportunity and interest in the U.S.-Saudi business relationship and best ways to address them from a private sector perspective. 

 

The U.S. delegation consisted of 24 C-level U.S. company executives including the CEOs of Lockheed Martin, Pepsi, Pfizer, Apollo Education, and Blumberg Partners. The Saudi delegation was led by Abdul Rahman Al-Zamil, President of the Council Saudi Chambers of Commerce, and Saudi business luminaries included the heads of SEC, the Olayan Group, Maaden, the El Seif Group, the National Water Company and others. Discussion included supply chain issues, healthcare priorities for the Kingdom, Saudi workforce productivity, and the business environment in general in the wake of lower oil prices. The Dialogue ended on a very positive note and plans are already in the works to institutionalize this as a biannual event.

 

In February, CS Saudi Arabia led a major buyer delegation to DistribuTECH 2016 (DTECH) in Orlando, Florida, one of the world’s largest electricity distribution, efficiency and transmission trade shows in the world.  The Saudi delegation, consisting of 80 delegates, up over 200% from last year’s delegation, represented the largest international delegation and was led by U.S. Embassy’s Deputy Chief of Mission, Timothy Lenderking. This year’s Saudi delegation featured a strong 20-person team from the Saudi Electricity Company. During D-Tech, SEC decision makers presented to a packed room of over 100 U.S. business representatives on plans for power infrastructure growth and the employment of smart energy solutions in the immediate future. 

 

In early March, the Deputy Secretary of the U.S. Department of Commerce Bruce Andrews and the Chairman of the Export-Import Bank of the United States Mr. Fred Hochberg are both visiting the Kingdom to strengthen bilateral commercial ties, and deepen our overall US-Saudi bilateral relationship.

 

The Event: Saudi US Business Opportunities Forum, March 22-23, 2016

 

From historic relations to world-leading JVs and partnerships, to educational collaboration, to strong commercial diplomacy – all of these contribute and build to the crescendo that is the Saudi US Business Opportunities Forum March 22-23, 2016.  This event will feature key U.S. and Saudi speakers presenting on a broad spectrum of issues such as attracting foreign investment, effective supply chains, transportation, agriculture, energy efficiency, healthcare, global competitiveness, among other areas. The next 12 months will see three major U.S. Government-organized Trade Missions coming to Saudi Arabia in Healthcare (April 23-27, 2016), Safety & Security Equipment and Service (November 16-20, 2016 and Power in the middle of March. The U.S. Government is determined to create opportunities for leading U.S. businesses to come and see firsthand the enormous opportunities for partnership and prosperity in the Kingdom of Saudi Arabia and how U.S. technologies, experiences, and solutions in a wide variety of sectors can help contribute to Saudi Arabia’s economic transformation and development.

 

The United States has enjoyed a close and mutually beneficial relationship with the Kingdom of Saudi Arabia for the past 70 years. The Saudi U.S. Business Opportunities Forum will help to craft an even deeper and richer relationship with this fascinating country for the next 70 years to come.