Saudi Arabia opens to outsiders as it looks to the future

Foreign investment, in a country long assumed to have no need of any, rose from $2bn (
But the more important comparison is that in 1973, the year of the last oil crisis, oil accounted for 72pc of GDP. In 2008, when oil prices peaked again, it was 31pc. The role of the private sector has risen until it is now almost half the economy. Leaving aside the oil gyrations, a clearer, emerging market story is unfolding as the state loosens the reins: long-term, non-oil growth of 5pc annually since 2004.

As in other emerging markets, the evidence is visible as well as statistical: take construction sector growth, which has averaged 5pc a year for a decade, and then look at the massive Kingdom Tower skyscraper, shaped like a bottle-opener, which houses
the Four Seasons. Alternatively, see the red-and-white logo of HSBC, sprinkling the white buildings of Riyadh and Jeddah like the markings on an Arab keffiyeh: financial services liberalisation has allowed foreign banks to operate for the first time, with 10 opening up in the last decade.

Although the countries could not be more different in many ways, the comparison with China is apt. For both, an economic driver has been joining the World Trade Organisation, a step that seems obvious elsewhere but was brave in countries where outsiders are often regarded with suspicion.

“We have opened a lot of sectors to investors,” said Khaldoon Muhassen, head of the National Competitiveness Centre, a body set up to spearhead reform. He said the country had gone beyond WTO commitments by opening government contracts to foreign firms, and held out the possibility of more change to come: reducing the need for outside investors to take local partners and, most shockingly of all, the possibility of business visas on arrival. Currently, all visitors require a letter of invitation, which is often only the starting point in a process lasting days or weeks.

There is a simple political motive for these changes. Unlike neighbours such as Qatar and Abu Dhabi, where oil money is shared among tiny native populations, Saudi Arabia has 25m mouths to feed, many poor and 60pc of them under the age of 25. Newly arriving firms are encouraged to employ as many locals as possible – a tall order, given the religious priorities of the education system.

Telegraph