Swiss Economics Minister Joseph Deiss has begun a four-day visit to the Middle East, hoping to drum up business in oil-producing Saudi Arabia and Kuwait.This content was published on March 31, 2006 - 07:44
While both countries are flush with funds and trade ties are healthy, Swiss investors have had little impact on local markets.
Economic growth in Saudi Arabia and Kuwait has recently been impressive. Last year, Saudi Arabia – the world's biggest petrol producer – saw its economy grow by 6.5 per cent, while Kuwait's gross domestic product increased by 8.5 per cent.
Deiss, who is heading a delegation of 15 business representatives from major firms, believes Swiss companies can cash in.
In Saudi Arabia, Deiss is set to meet with the local trade and finance ministers, as well as King Abdullah. An agreement on the promotion and reciprocal protection of investments is to be signed during Deiss's visit.
He will also oversee the creation of a joint business council between the local Swiss business association and the Saudi chambers of commerce and industry.
But while bilateral trade is healthy, getting a foot in the Saudi door is far more difficult for investors.
According to the annual globalisation index of Zurich's Institute for Business Cycle Research, Saudi Arabia is the least globalised nation in the world.
Economic pressure is leading to change though.
The kingdom only joined the World Trade Organization late last year, committing it to relinquishing a certain number of trade barriers and tariffs on imports.
Sectors such as banking, insurance, telecommunications and distribution are set to be opened to foreign companies.
The country has also been making slow progress on one of its main domestic goals: attracting foreign investment. Total direct Swiss investments in 2004 were SFr212.3 million.
In 2004 the Saudi cabinet approved a reduction in taxes on foreign direct investment as part of an effort to speed up the economic reform and privatisation process in the country.
Foreign investors can set up companies or become major shareholders in local firms, but several important sectors – including oil production, pipelines, media and publishing – remain closed to 100 per cent foreign ownership.
Deiss will also discuss a possible free trade accord between the European Free Trade Association – Switzerland, Norway, Iceland and Liechtenstein – and the Gulf Cooperation Council. Talks should begin in June.
Saudi Arabia was a prime mover in setting up the council in 1981. Its other members are Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates.
Deiss will talk with the Kuwaitis about the trade agreement, although his visit is expected mainly to improve Switzerland's virtually non-existent relationship with the emirate.
swissinfo with agencies
Switzerland exports goods and services worth more than SFr1 billion ($770 million) to Saudi Arabia, with nearly half made up of pharmaceuticals and machinery.
The kingdom is the second-biggest Swiss trading partner in the Middle East, behind the United Arab Emirates.
Business with Kuwait is marginal at best for Swiss companies despite the emirate's wealth. Last year, exports reached a mere SFr259 million.
The Kingdom of Saudi Arabia is the largest country on the Arabian Peninsula.
In recent years, Saudi Arabia has experienced a significant contraction of oil revenues combined with a high rate of population growth.
Per capita income fell from $25,000 in 1980 to $8,000 in 2003.
Kuwait is a constitutional monarchy and has the first directly elected parliament in the Persian Gulf Arab countries.
Petroleum accounts for nearly half of GDP, 90% of export revenues and 75% of government income.
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