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IPA March 2011

“ INVEST IN SAUDI “ STRATEGY IN THE MAKINGThe Invest in Saudi Strategy, led by MONITOR group, started the kick off with an objective of delivering strategic focus in attracting quality FDI & DDI .

The Invest in Saudi Strategy, led by IPA along with Monitor Group, kicked off earlier this month.  The engagement will follow a proprietary methodology of Monitor Group entitled “Growth path” that will start with assessing the competitive advantage across a broader array of strategic sectors for the Kingdom and identifying the specific opportunities that would be of interest to foreign and domestic investors.  A key objective of the Invest Saudi strategy is to improve the quality of investment. One of the key levers that will be employed is the use of targeted incentives to ensure that investors are motivated to make the 'right kind' of investments in Saudi Arabia.   The unique approach of Monitor will develop a deeper understanding of

the investor landscape through traditional customer segmentation. This will help SAGIA to identify priority 'groups' of investors that share similar perceptions, behaviors and investment parameters across each sector.  With this understanding SAGIA will be able to develop detailed marketing plans that 'activate' the investor segments that are most attractive and promising to Saudi Arabia. A key component of the Invest Saudi strategy will be the collaboration with other stakeholders.  SAGIA will in some serves as the investment promotion agency for all key FDI stakeholders in the Kingdom and as such represent to varying degree's of support the sectors therein.  On one hand this will result in a broader set of sectors for SAGIA to

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support, however with the outputs of the strategy Sector Heads and the Investment Promotion and Attraction department will be in a better position to target specific niche opportunities that will help to realize the desired economic objectives of attracting $150 Bn in DDI and FDI by 2015, which will correspond to the creation of 500,000 new jobs.

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In the increasingly competitive environment for FDI, a fundamental challenge for the investment promotion agency (IPA) in the developing world is to meet the information requirements and facilitate the right opportunity towards the investors needs. The stakes are very high for IPA to position Saudi Arabia as the prime investment destination.

To achieve this, the IPA will continue to drive “awareness” led activations to ultimately drive conversion to attraction to action. This is based on Invest in Saudi Activation strategy to include a dual approach and will also look into reverse engineering which will be action of targeted investors which have a high attraction multiplier factor leading to increased awareness amongst targeted investors; hence bottom up approach

THE WAY FORWARD...

I. Direct targeted AAA:

Activation plan 2011 to drive Awareness, Attraction, & Action targeted operational plan 2011. This will include a massive activation plan to drive IPA & SAGIA presence and activation in the following:

a. Anchor global events

b. Sector premier events

c. Regional events

d. Local events

Dual Approach activation Strategy:

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3 PILLARS

Action

II. Reverse engineer targeted AAA:

Activation plan 2011 to identifying FDI/DDI regional & sector gaps and addressing these gaps by proactively targeting investors to setup operations in the Kingdom.

a. Hit list of targeted investors.

a. Pre-license & licensing of targeted investors.

b. Activation of targeted investors.

All of the above will be coupled with a tailor made activation kit and media plan which will include various tools i.e.:

a. Selective investment opportunities

b. Marketing , sales, incentive kits investment

c. Interactive display and point of sales material.

d. SAGIA investor marketing collaterals

e. Licensing guides, leaflets, intent application forms, etc.

f. Advertorials, press releases, newsletters, web

Awarenes

Attraction

AWARENESS ATTRACTION ACTION

1) Building knowledge of the Kingdom as a competitive investment destination

2) SAGIAs service offerings to potential investors.

3) Building Awareness:

- 1st meetings with potential investors

- Speaking at local & international events

- Sending SAGIA brochure

After creating Awareness of the Kingdom & SAGIA, we then move into engaging potential investors in the investing process, this includes:

1) Promoting specific investment opportunities

2) Explaining licensing procedures

3) Introduction to potential local partners

Issuing investment License !!

AAA ?

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“Targeted Investors at the heart of invest in Saudi IPA Strategy”

With an objective to target 40b USD FDI/DDI equally for the year 2011 and doubling FDI/DDI within the next five years, this initiative is a cornerstone to achieve that.

IPA CRM certified is an initiative with an objective to proactively accelerate converting key quality investments into the Kingdom. This requires a qualified and an empowered team to serve targeted investors wherever they are.

Hence new IPA structure integrates the global coverage of Europe, Americas, Asia/Australia, and Middle East & Africa it is a fortune opportunity to institutionalize targeting

investors via empowerment and training for IPA regarded teams to be fully operational.

Based on various discussions with both OSS & ECA licensing teams we have established a project targets by phase, milestone, timeline, and accountability plan to deliver on this initiative.

IMMEDIATE TERM Q1 2011 MEDIUM TERM Q2 2011 LONG TERM Q3-4 2011

1) IPA to provide a hit list of targeted investors

2) OSS/ECA to develop minimum requirements application process for targeted investors.

3) OSS to validate and issue either a provisional license (pre license) or an active license.

4) IPA team to follow thru on activation in time bounded interval.

1) OSS/ECA to provide all necessary training content relevant to certify IPA CRM initiative.

2) IPA CRM certified training to certify all regional offices to issue either a provisional license (pre license) or an active license independently based on targeted investor’s hit lists by region.

3) IPA CRM international role to follow thru on activation in time bounded interval, fast track, and activate VIP services i.e. Visa issuance etc.

4) IPA to identify additional services based on targeted investors and invest in Saudi strategic work in which outcomes will be institutionalized during this phase.

5) SLA agreement with all stakeholders to be developed jointly.

1) OSS/ECA online licensing new processes & procedures.

2) IPA to provide input based on phases I & II based on targeted investors initiative.

3) OSS/ECA/IPA to identify required resources/systems/operations of online licensing.

IPA CRM CERTIFIED

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OUR OPERATIONSAn Insight to the way we monitor things ...

Track’emA monthly reporting mechanism that monitors all AWARENESS, ATTRACTION and ACTION conversion rates , that helps pave the way to achieving our KPI’s.

Diagram below give sample of brief status report for January and February of 2011

For more information please contact Trackem@sagia.gov.sa

0

7.5

15

22.5

30

Awareness

Attraction

Action

January February

HOW ?: the process of collecting and organizing all

the data related to SAGIAs interaction with investors, including:

• Investor contact information

• Investor meeting minutes

• Potential Investor stage: AAA

• Next steps & action items

WHY ?: this data is used to improve the investment conversion process by:

• Providing up to date and sharable information on each investor engaged with any SAGIA employee

• Monitoring the investor attraction process to learn from successes, obstacles…etc

• Using this data to build strategies and action items in support of converting each investor to the Action stage

MONTH AWARENESS ATTRACTION ACTION

January 27 17 0

February 23 6 0

Total 50 23 0

Activities are aimed to enhance conversion rates and achieve higher targets for action.

Key tarket on average 20% converstion rate

TRACK’EM

DID you know ??

at the end of 2010, a total of 918 investors have been tracked: :

• 918 (Aware) as Total Tracked investors.

• 281 (Attracted) Potential investors moved to attraction by signing MOU Or showing more interest in existing Opportunities.

• 53 (Action) Investors Issued new licenses & start business in KSA.

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GLOBALFDI TRENDS :Global Distribution

Emerging markets have a larger share of FDI flows coming out of the recession – Nine non-developed economies are in the top 20 FDI countries (e.g. China and India) ! Companies are increasingly becoming internationalized (as measured by number of foreign affiliates divided by the number of all affiliates) this trend continued accelerated during the recession

! Notable amongst the trends is that Latin American companies are becoming more and more globally; moving from 5% in 2009 to 8% of cross-border M&A sales in 2010

! !West Asia" saw a decline of 29% in FDI in 2009 – However, Saudi Arabia only declined 7%

! Dubai‘s debt crisis and the fall of Turkey greatly impacted !West Asia"

! Countries with stable financial systems, like Saudi Arabia, are strategically positioned to acquire foreign companies coming out of the recession

FDI Watch in the RegionOnly Qatar bucks the trend as economic crisis hits FDI flow into remaining GCC countries.The UAE has attracted more than $73 billion in foreign direct investment (FDI) since it was created nearly four decades ago to emerge as the second top capital recipient in the region, according to UN statistics.Saudi Arabia, the world’s oil basin, remained the largest Arab destination of FDI, attracting nearly $147.1 billion, showed the figures by the United Nations Conference on Trade and Development (UNCTAD).Cumulative FDI flow into the UAE totaled around $73.4 billion, nearly 26 per cent of the combined foreign capital received by the six-nation Gulf Cooperation Council (GCC), which controls over 45 per cent of the world’s oil.Taken together, FDI by the UAE and Saudi Arabia accounted for around 80 per cent of the total FDI of nearly $278 billion received by the 29-year-old GCC.Qatar, the world’s top LNG exporter, emerged as the third largest FDI target within the GCC, receiving nearly $28.1 billion. It was followed by Bahrain, with cumulative FDI of about $14.9 billion, according to UNCTAD.FDI flow into Oman stood at around $13.2 billion while Kuwait emerged as one of the least attractive investment destination in the region, with only $986 million.Outside the GCC, Egypt was the largest FDI recipient and the third in the whole Arab world, with cumulative FDI of about $66.7 billion.It was followed by Morocco with around $40.7 billion, Lebanon, with $32 billion, Tunisia with nearly $31.8 billion, Jordan with $18.7 billion and Algeria with $17.3 billion.

Conflict-battered Iraq has received around $5.06 billion while the occupied Palestinian territories emerged with one of the lowest levels of FDI, which totaled around $1.2 billion due to persistent tensions and Israeli restrictions.The report showed FDI flow into the GCC declined in 2009 for the first time in many years because of the 2008 global fiscal crisis. From around $60 billion during 2008, FDI into GCC dropped to nearly $50 billion last year.A breakdown showed the UAE was the main victim of the downturn, with FDI inflow tumbling from around $13.7 billion in 2008 to nearly $four billion in 2009, one of its lowest levels over the past 15 years.FDI flow into Saudi Arabia slumped from a record high of around $38.1 billion to nearly $35.5 billion in the same period. There was a decline in Bahrain and Oman while Kuwait recorded a net inflow of $145 million in 2009 compared with a negative net flow of nearly $51 million.Qatar was an exception in the Arab region, with FDI inflow more than doubling from around 4.1 billion to $8.7 billion in the same period. Experts attributed the surge to investments by the country’s foreign partners in gas projects, which have turned Qatar into the top LNG supplier in the world, with its current production exceeding 40 million tones per year.Despite the sharp rise in FDI flow into the GCC over the past 10 years, it remained a tiny fraction of the global FDI of nearly $17.74 trillion, not exceeding 1.5 per cent. Compared with FDI flow into developing nations, the GCC also accounted for only around 5.6 per cent of the total capital of $4.89 trillion.As for the UAE it accounted for around 0.4 per cent of the world’s total, 1.5 per cent of the FDI in developing countries and over 10 per cent of the Arab FDI.

Source: Middle East Business News