Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority Harvard Case Solution & Analysis

Chapter No.2

Description of the Case

Mainly the discussion in the study revolves around the role Saudi Arabia General Investment Authority (SAGIA) in the development of the Kingdom of Saudi Arabia. The study includes a discussion regarding foreign investment in Saudi Arabia, and which were the challenges and other threats Saudi Arabia faced in the country’s development. The need for foreign investment is essential for any country’s development, the same situation is mentioned in the discussion regarding the Kingdom of Saudi Arabia. The role of financial services also included in the study with respect to Saudi Arabia’s development and growth. There are also several factors discussed in the study, which created an impact on the Saudi Arabia General Investment Authority to consider such as: increase in KSA’s population and its impact on government investment in the 1970’s.

Saudization is the state policy of the Kingdom of Saudi Arabia in order to boost employment of Saudi nationals in the private sector. It participated a lot in the development of KSA’s over the last couple of years with the assistance of the private sector. The government of KSA adopted several policies and procedures to encourage Saudi nationals. Before the introduction of SAGIA, it was quite a difficult challenge for the Kingdom of Saudi Arabia to promote foreign investment in the region, it was largely dependent on smaller institutions such as the Foreign Investment Office and the Saudi Consulting House (SCH) both were divisions of the Ministry of Commerce. The major responsibilities of the institutions were only restricted to evaluating the studies that encouraged domestic and foreign investment in diversified sectors of the industries. The government did not facilitate both the institutions while decision-making and imposed several restrictions to operate. Both the institutions were answerable to the government agencies and needed approval to decide investment decision of the country. Due to these boundaries and restrictions, the performance of both the institutions was affected badly.

SAGIA

            Saudi Arabia General Investment Authority (SAGIA) had much more authoritative and independent as compared to the Foreign Investment Office (FIO) and Saudi Consulting House (SCH). The leaders of the SAGIA were much more autonomous and reported directly to the KSA’s King. The government believed that SAGIA would be more efficient practice in the business community of the region. KSA suffered from various economic threats and incidents related to bureaucracies, lack of communication and coordination, jurisdictions and responsibilities; SAGIA objective was to overcome these problems to strengthen the institutions for the betterment of the country. Security Exchange Commission (SEC) realized that the quasi-government model would provide more support for the country’ development to achieve the goals of the private sector. Despite the status of the quasi-independent, its success in promoting economic growth would heavily depend on the resources of government agencies. A little guidance provided to the SAGIA to organize those relationships and plan the task. Its autonomous functions provided the agency with a comprehensive mandate to encourage investment in the country.

            Al Dabbagh worked at a rapid pace to promote the agency’s vision, mission and strategy for the long term. He also had the services of a consultant for the process of research and development to cope up the issues concerned to the Saudi Arabia’s business environment. Along with them, they conducted various interviews with the senior government personnel, domestic and global leaders, and academics that comprises of more than 15 workshops across the country.

Roles of SAGIA

Six roles of SAGIA discussed in the study are as follows:

  • Investor Services
  • Marketing and Promotion
  • Regional Development
  • Stimulating startups
  • Sectoral Focus
  • Creating a Pro-Business Environment

Investor Services

            The role of Saudi Arabia General Investment Authority would be to facilitate the investors in order to plan their business in the region. The institution would become a key source for providing an information on Saudi’s economy, rules and legislation, economic data and research study to the investors.

Marketing and Promotion

            The agency would find opportunities in order to gain competitive advantage and also attract the foreign investment in the region. SAGIA would be responsible to ensure that the KSA is the best place to invest in the long term. SAGIA would also describe the incentives and benefits to the investors in order to become a stakeholder.

Regional Development

                Saudi Arabia General Investment Authority planned to coordinate with the regional authorities in order to organize particular plans and strategies for the sake of the Kingdom of Saudi Arabia. It would provide opportunities in the regions if these plans and strategies would implement efficiently....................................

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