With over 27 million consumers and a number of global enterprises, Saudi Arabia is the largest ICT market by far in the Middle East. For example, the Saudi Arabian telecommunications and information technology industries represent over 55% and 51% of the total Middle East markets, respectively.
Yet, while many of the world’s ICT markets are maturing, the Saudi Arabian market remains substantially under-developed by global standards and remains on a rapid growth trajectory. ICT spending has grown at over 10% per year since 2001 to reach US$7.3 billion in 2006. Liberalization is occurring across the telecom industry, driving increases in competition, service levels, and usage. Numerous Saudi Arabian IT industries show clear signs of rapid growth, driven by the committed presence of major multinationals, and by the expanding skills and confidence of local companies.
A large, emerging market
The size of the Saudi Arabian ICT market provides excellent operational scale, as well as the advantages of locating in a technology hub catering to over 350 million Arabic-speakers in the region. Because Saudi society is young and growing rapidly, its consumer market is weighted heavily towards technologically literate early adopters. Arabization (digital content, software) activities enjoy strong growth prospects due to this large emerging market and the increasing supply of qualified software engineers coming available due to public and private training initiatives.
Leaders in connectivity and ICT
ICT adoption is also increasing rapidly thanks to rising personal wealth and an unprecedented commitment on the part of the public sector to achieving leadership in connectivity and information technology. Saudi Arabia has embarked on a twenty-year ICT plan that will support widespread technology and telecommunications adoption across KSA’s households and enterprises. A combination of deregulation and substantial public investments will create attractive investment opportunities for the private sector. Recent examples of such participation include a US$100 million investment by a venture capital firm in Saudi-based technology companies.
State of the art communications infrastructure
KSA’s unique access to energy makes it an attractive location for a range of activities across the ICT value chain. For example, ICT-enabled services providers (such as data centers) will be able to leverage Saudi Arabia’s unique access to low-cost power and state-of-the-art communications infrastructure to efficiently service global customers. Equipment and component production are also highly energy-intensive and require significant use of petroleum derivatives such as chemicals and plastics. Combined with KSA’s attractive setup incentives, these advantages translate into considerable cost savings for hardware manufacturing and assembly activities.
Meanwhile, software and other content providers enjoy a secure environment for commercialization, thanks to significant progress on intellectual property rights (IPR) laws by the Ministry of Commerce and the CITC.
Good reasons to invest
- Saudi Arabia is the region’s largest ICT market with strong growth in consumer and enterprise end markets
- Deregulation, privatization and WTO accession promoting private-sector opportunities—supported by significant investment incentives
- Public-private funding partnerships such as KACST’s R&D co-funding initiatives by KACST
- Public-private partnerships supporting venture capital funding such as recent collaboration between SAGIA and Intel
- Strong commitment to e-commerce and e-governance initiatives (including IP protection)
- Significant unmet demands for web-based and mobile services; increased enterprise and government usage of web-based services provide large-scale opportunities for contractors and service providers
- Massive public investment in connectivity for Economic Cities provides unique opportunities for green-field projects covering millions of users
- Public investment in computer and Internet literacy programs