Saudi Arabia to Invest in Filipino Energy, Industrial and Agricultural Sectors

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Researched by Industrial Info Resources (Sugar Land, Texas)--Saudi Arabian firms have expressed interest in investing in the Philippines' oil and gas, industrial, and agricultural sectors. The announcement was made during Filipino President Gloria Macapagal-Arroyo's state visit to Saudi Arabia. Representatives of Al-Zuwaidi Group (Al-Khobar, Saudi Arabia), Al-Zamil Group (Al-Khobar) and Rawabi Group (Riyadh, Saudi Arabia) met the visiting delegation and discussed fulfilling manpower requirements for domestic projects with workers from the Philippines.

There are more than 1.5 million Filipino workers in Saudi Arabia. Industry representatives expressed interest in hiring more, as they have the reputation of being sincere, loyal and hardworking. They also hoped that the Philippines would assist in the selection of trained and skilled personnel for projects in Saudi Arabia. Officials from the Al-Zuwaidi Group requested the Philippines to expedite the training process and set up skills and competency training centers. Additionally, Saudi Arabia offered to extend scholarships to Filipino students.

The Rawabi and Al-Zamil groups were keen to explore a two-way investment in the agricultural and manufacturing sectors. The Rawabi Group is exploring the option of setting up a joint venture company to identify areas of participation and investment in the island nation. President Arroyo also met officials from engineering and construction company Al-Moushegah Group (Al-Khobar) and Al-Suwaiket Group (Dhahran, Saudi Arabia), which manages large-scale oil and gas projects.

In a related development, 10 Saudi Arabian firms have identified the Philippines as the location for the development of a potential food-processing and distribution center for the Far East. The companies will form a joint venture, Far East Agriculture Company (FEAC), an investment vehicle for agricultural and food-products-based projects in the Philippines. Representatives are expected to make a preliminary visit to the Philippines in November to identify and explore business prospects and joint venture opportunities for supply of food grains, livestock, fruits and poultry. The FEAC venture is likely to be established after this visit.

Saudi Arabia is making focused efforts to ensure domestic food security. Last year, acute water scarcity forced the country to reduce production of wheat. Saudi Arabia is also identifying projects in Turkey, Sudan, Vietnam, Kazakhstan, Ethiopia, Ukraine and Egypt to strengthen the country's food supply. Industry experts have observed that the proposed investment in this sector in the Philippines is a part of this strategy.

Recently, a group of Saudi firms announced plans to invest $533.3 million in agricultural projects globally. A joint venture named International Agriculture and Food Investment Company (Agro Invest) will be formed by the end of the year and begin commercial operations by March 2010.

The Philippines, which consists of 7,107 islands, is located in Southeast Asia. The country, which has an agriculture-based economy, is also rich in natural resources and minerals. The coastline of the Philippines, which is longer than that of the U.S., is rich in marine life. Saudi Arabia and the Philippines share a long and cordial trade association. The Philippines is the largest exporter of bananas to Saudi Arabia. Saudi Arabia is also a very important and key market for Filipino sardines, pineapples and tuna. About 11% of the country's total population of 92 million is employed overseas.

In 2008, Saudi Arabia recorded a gross domestic product growth rate of 4.2%. The oil-rich nation relies heavily on international imports of essential commodities. In 2008, the country's labor force was 6.74 million, of which more than 33% were non-Saudi nationals. The services sector accounted for 71.9% of the labor force, while industrial and agricultural sectors employed 21.4% and 6.7%, respectively. Asian nationals, especially from Southeast Asia and the Far East, make up a large part of the immigrant Saudi Arabian labor workforce. In the recent past, recognizing the long-term business opportunity, Saudi Arabia shifted focus toward South Korea, India, China, and other emerging economies in Asia to build business and bilateral trade relations.

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