SAUDI INVESTMENT CHIEF CALLS FOR MORE U.S.

UNCLAS RIYADH 001426 SENSITIVE SIPDIS STATE PASS TO USTR FOR CHRIS WILSON, JASON BUNTIN USDOC FOR STEVEN GARRETT DEPT FOR NEA/ARP, E U/S HORMATS E.O. 12958: N/A TAGS: ETRD KIPR ECON EINV PREL SA SUBJECT: SAUDI INVESTMENT CHIEF CALLS FOR MORE U.S. INVESTMENT ¶1. (SBU) Summary: The Governor of Saudi Arabian General Investment Authority (SAGIA) told visiting Assistant U.S. Trade Representative Christopher Wilson on October 19 that the protection of intellectual property rights is essential for SAGIA to reach its goals. SAGIA wants to increase Saudi competitiveness to become one of the top ten most attractive places globally to do business by 2010. It also wants to attract more advanced foreign investment, which is dependent on technology-based industries. Al-Dabbagh expressed concern over the relative decline in the share of U.S. investment in Saudi Arabia, and said better bilateral ties would likely increase investment in the United States. End summary. ¶2. (SBU) SAGIA Governor Amr Al-Dabbagh told Wilson that the protection of intellectual property rights (IPR) is essential for his organization to reach its competitiveness and investment goals. For example, the IPR-dependent pharmaceutical sector is the fourth highest targeted industry in the Kingdom's industrial strategy, and 25 to 30 percent of the Kingdom's priority investment industries are technology-based. Al-Dabbagh said he and other Saudi ministries are very familiar with USG goals on IPR in Saudi Arabia, thanks to several years of hard work on the Special 301 process. He noted Saudi Arabia has done a lot to address U.S. concerns. He hoped the USG would recognize these efforts by removing Saudi Arabia from the Watch List. ¶3. (SBU) SAGIA's three roles are to manage the Kingdom's efforts at increasing the competitiveness of its business sector, facilitate the flow of foreign direct investment (FDI),and regulate and promote the economic cities. Al-Dabbagh highlighted Saudi Arabia's progress towards its goal of reaching the top ten of the World Bank's annual "Ease of Doing Business" report, noting the country's rapid ascent to its current ranking, thirteen, up from 67 in 2005. Al-Dabbagh credits the Ministry of Commerce and Industry's significant improvements in processing limited liability company applications for this year's progress, as well as one-day turnaround time to get building permits and improvements in the Capital Market Authority's transparency requirements for corporate governance. In 2010, he said, SAGIA will focus on improving the enforcement of contracts. Contract sanctity is dependent on the creation of commercial courts, he said, emphasizing that capacity building in the judicial sector is critical to improve competitiveness. Al-Dabbagh noted the announcement of the next Global Competitiveness Forum, to be held in Jeddah January 23-26, will include the CEOs of Dell and Cisco Systems, as well as statesmen and 7 Nobel prize economists. ¶4. (SBU) Saudi Arabia was the 14th largest global recipient of FDI in 2008 with $38.2 billion in inflows, a dramatic increase over 2004 levels of just $2 billion. Seventy-five percent of this FDI is outside the energy sector, Al-Dabbagh said, noting the Kingdom needed to increase investment in energy-intensive industries to take advantage of the country's abundant oil reserves. Asked about the impact of Saudi Arabia's accession to the World Trade Organization (WTO),Al-Dabbagh said it had increased confidence in the country, but quickly noted that the U.S. was not "getting its fair share of the Saudi cake." The Kingdom has received an "avalanche" of investment from China, Malaysia, and France, but not from the United States, he said. Al-Dabbagh said SAGIA is keen to work to increase U.S. investment share in Saudi Arabia. He noted SABIC's acquisition of GE plastics as an example of the benefit of Saudi investment in the U.S., and expressed interest in promoting similar agreements. Al-Dabbagh said that bilateral political issues stemming from 9/11 and the resultant problems, such as access to visas, was slowing the amount of Saudi investment in the U.S. ¶5. (SBU) Al-Dabbagh also discussed the economic cities, four of which have been launched to date, and their potential to add $150 billion to the country's GDP. The economic cities embody a "smart city" concept, he said, in which every building will be LEED certified and every government service will be offered within 60 minutes, 24 hours a day, 7 days a week (60-24-7). Each city is designed to focus on a particular technology and foster the development of relatively poorer areas. ¶6. (U) AUSTR Chris Wilson cleared on this cable. SMITH