The Kingdom of Saudi Arabia has an oil-dominated economy as it controls the largest reserves of petroleum in the world (259.4 billion barrels, or about 25% of the proved world total). It ranks as the largest exporter of petroleum and plays a leading role in the Organization of Petroleum Exporting Countries (OPEC).

The petroleum sector accounts for roughly 75% of government budget revenues, 40% of GDP, and over 90% of export earnings. Only about 40% of GDP comes from the private sector. Roughly seven million foreign workers are employed in the Saudi economy, particularly in the energy and service sectors.

In 2003 and 2004, Saudi Arabia's economic conditions improved considerably: in 2003 the government debt was 97% of GDP, and in 2004 it fell to 82% of GDP. However, Saudi Arabia still faces long-term economic challenges, including high unemployment rate with fast population growth, and security threats.

The public sector emphasis of the 1970s and 1980s was needed to create the infrastructure to enable industrialization to take place. The intention is now to move away from this emphasis towards a free enterprise, free market economy in which the private sector dominates.

This also embraces the objective of free trade and Saudi Arabia became a full WTO Member on 11 December 2005. It has also created a common external tariff system within the GCC countries.

Trade between Singapore and the Saudi Arabia rose slightly in 2006. Overall, the Saudi Arabia was Singapore's 15th largest trading partner in 2006.

Key exports include ships and boats and civil engineering parts, while main import items are crude petroleum and pertroleum-refined products. 

The Saudi Arabian government officially encourages foreign direct investment, particularly in the case of joint ventures with Saudi partners. Partnerships with Saudis that expand job opportunities in the industrial sector, facilitate technological transfer, or diversify Saudi Arabia's export capabilities are favored. The Saudi Arabian General Investment Authority (SAGIA) promotes investment opportunities in Saudi Arabia and assists foreign investors.

The Saudi government is interested in encouraging foreign investment in the non-oil private sector. Saudi Arabia has revised its investment code and continues to revise its foreign corporate tax code. Associated legislation development is also ongoing. The non-oil sectors under consideration for foreign investment include infrastructure, mining, water desalination, power generation and high technology projects.

In addition to these areas identified as priority areas for investments, the Council of Ministers issued a decision to privatize a number of formerly public sector activities in late 2002.

Besides SAGIA, the government has instituted a number of bodies oriented toward easing the process of foreign investment. These include: the royal commission for Jubail and Yanbu, and the Arriyadh Development Authority, the majority government-owned Saudi Arabian Basic Industries Corporation (SABIC), private investment companies, such as the National Industrialization Corporation, the Saudi Venture Capital Group, the Saudi Industrial Development Company, and the Arabian Industrial Development Company. As well, the Ministry of Industry and Electricity sometimes identifies investment opportunities, as does the Saudi Chambers of Commerce and Industry.

The Industrial Cities

The industrial cities of Jubail on the Gulf and Yanbu on the Red Sea are focused to develop hydrocarbon-based and energy-intensive industries. The basic infrastructure for the two cities was formulated in 1975 by Royal Decree. They both have export terminals for crude oil and liquefied natural gas.

Both Yanbu and Jubail offer sites at low rents and low-cost utilities, as well as a wide range of industrial facilities; for healthcare, education, telecommunications, transport and recreation.

In December 2005, the creation of a new commercial and industrial city called King Abdullah Economic City, at Rabigh on the Red Sea, north of Jeddah is announced.

At an investment cost of SR100billion (US$26.6billion), it will involve the development of a Greenfield site of 55 million square metres, with a 35 kilometre shoreline including a world-class seaport covering an area of 2.6 million square metres. It will also include an industrial district covering eight million square metres for the development of both heavy and light industries and a financial and commercial centre that will provide employment for over 60,000 professionals.

In June 2006, King Abdullah announced plans to build a northern economic city at a cost of US$8 billion in Hail, 720 km north of Riyadh. This will be named Prince Abdul Aziz bin Musaed Economic City, after the first Governor of the Hail region.

The following sectors have been identified as potential areas of collaboration between Saudi and Singapore:

i) Infrastructure Development
ii) Transport and Logistics
iii) Info-Communication Technology
iv) Services (Tourism, Healthcare and Education)
v) Oil & Gas, Petrochemical
vi) Water and Environment
vii) Small and Medium Enterprises