Economy of the Kingdom of Saudi Arabia - Essay Example

Saudi Arabia The Kingdom of Saudi Arabia is located in a vital maritime location facing the Arabian Gulf and the Red Sea. The Kingdom has approximately 2100 km of coastal beaches attracting tourists seeking a little fun in the sun. These beaches, characterized by a vast variety of marine life, also bring a great deal of benefit to the kingdom’s fishery industry, representing a significant source of food and income for the local populace and businesses. Unfortunately, the Kingdom of Saudi Arabia has traditionally not put much effort into developing this industry. The craftsmen in the fishing trade are still using the traditional fishing boats just off the coastline. Most of these craftsmen continue to fish simply for local consumption, but little of these catches found their way to the local market. When it did hit the local market, the price of fish was relatively higher while those in the interior have found it non-existent or unacceptably cost-prohibitive. A great deal of this is due to the Kingdom’s increase in trade in the traditional fishing market in the 1970s as well as the expansion of fishing activities within the Caribbean. The government of the Kingdom of Saudi Arabia undertook a careful study of the fish resources present in the kingdom’s territorial waters in both the Gulf and the Red Sea in the 1970’s. The study was conducted in partnership with the British White and the Food and Agriculture Organization (FAO). It was discovered that the major fishing centers in these waters possessed large stocks of fish and shrimp, which had not been economically exploited. The Ministry of Fish Resources, affiliated with the Ministry of Agriculture, is now in charge of all fishing enterprises in territorial waters. This organization tracks the status of the various fisheries and conducts studies designed to improve the status of all fisheries under their scope of responsibility. With this supervision, several restrictions and controls have been implemented, which have had the effect of developing fishing seasons and identifying the various types of shrimp and other marketable fish such as Alenagel. Thanks to the modern media, the benefits of modern fishing have been demonstrated to traditional fishermen in Saudi Arabia. With the increasing demand, Khalifa Algosaibi helped establish the kingdom’s first modern fishing company in Dammam, Saudi Arabia. The company introduced modern fishing boats and founded a facility for the manufacturing and storage of fish and fish products. With this introduction, the kingdom witnessed a leap in their economy, marking the foundation of this company as a turning point in the country’s efforts to diversify from its main export – oil. This shift caused a change in the pattern of domestic consumption as well as an increased demand for fish from both the local population and those individuals who have been recruited to work within Saudi Arabia. The primary means for catching fish in both the Gulf and the Red Sea are now benthic trawls and Shanchola nets. The primary seafood caught in the Gulf regions are Kofi shrimp, Gulf shrimp, bathroom fish, Alhamur, Alkanad and others. The primary catches made in the Red Sea are Albagh, shrimp, squid, whiting, Okam, macaroni and shark. The increase in commercial fishing also had a direct impact on more traditional fisheries in the Gulf and the Red Sea. In these areas, much of the available fishing was abandoned by the local fishermen who had opted to work in the more competitive service sectors. This led to a vacuum in the fishing industry, unable to feed the needs of the local marketplace throughout the Gulf. This caused a great deal of concern within the government, who recognized the importance of the fishing sector to the local economy as well as its importance in the policy to increase economic diversification and reduce dependence upon oil. In an effort to help the various players to achieve greater food security and improve the standard of living for a large sector of the citizens in these areas, the Saudi government took a hand in the Gaza fishing industry and its promotion. Due to the status of the fishing sector as well as the importance of the fishing industry to the welfare of the country, the Saudi government decided to establish its own fishing company. The state retains 40 percent of the capital from this company and the remainder is distributed among the private sector industries that have partnered in. Yet the company was apparently not established to boost the infrastructure of the industry. There has been no discussion of the modernization of the fleet, no facilities constructed for even the most temporary reception, processing or distribution of the fish caught. The Kingdom instead works to provide the impetus to entice many local fishermen back to the trade by purchasing their catches at competitive market rates, thereby guaranteeing a market. This more developed fishing industry has contributed greatly to the provision of important food products for the domestic market while still maintaining the highest quality standards. The entry of new investors to the sector has effectively contributed to increased performance and development. Many of the fishermen found in the Arabian Gulf and the Red Sea can be classified as traditional fishermen. Investors, pedestrians and fishing brief workers are required to obtain valid fishing licenses. The main investors are Saudi citizens or companies which invest money in providing modern fishing boats and hiring fishermen. Traditional fishermen, on the other hand, usually work on foot from the shore or pier or are hired onto the fishing boats. Although the boat owners divide their manpower without regard to nationality, the workers remain divided into two main groups: Saudi Nationals and registered non-Saudi workers hired specifically to work on the boats. The advances made in the industry through governmental and commercial efforts not only preserved the fishing industry, but began tracking the production rates from year to year among the various fisheries. The positive effects of this development were most notable in the production of shrimp seen in the 1980s when not only shrimp, but many types of fish were abundantly available. Imports and exports flourished thanks to the tremendous efforts made by the local fishermen and investors, companies, institutions or individuals in the industry. However, there has been an alarming decline in shrimp production in recent years, contributing to a decline in even more items within the general economy. Looking at the quantities of production and imports made to cover the deficit, the country uses approximately 71 thousand tons or 400 million Saudi Riyals worth of fish and fish products. However, domestic production is only shown to be approximately 52 thousand tons, showing a deficit of approximately 19 tons. Imported refrigerated or frozen fish, prepared or preserved crustaceans, dried fish, salt fish and smoked fish are brought in to meet the shortage. The most important countries to import fish from the Kingdom of Saudi Arabia are China, Bangladesh, Thailand, the United Arab Emirates, Oman, Bahrain and Pakistan. All imports are conducted in accordance with the rules and regulations being issued by the Ministry of Health in further accordance with the classifications of the World Health Organization (WHO). In 2000, the kingdom exported 3 thousand tons of fish products, mostly in the form of crustaceans, worth the equivalent of 30 million Saudi Riyals. This does not include the many fresh and frozen shrimp products that were exported to the United States, Japan, South Korea and China. In comparison, exports far outstripped the domestic market, illustrating the need for growth in the domestic sector, especially as estimates indicate the domestic demand for fish and fish products to be approximately 130 thousand tons annually. There can be no doubt about the tremendous impact industrial fisheries have had on the fishing industry in Saudi Arabia. The entry of industrial companies in this sector represents the greatest qualitative leap for this sector in terms of production, processing, marketing and distribution. Thanks to the interest of the government and commercial ventures, this sector has grown enormously and has regained some of its old vitality. Despite some setbacks, the production, manufacturing and marketing of fish and fish products in Saudi Arabia today is one of the most sophisticated in the Near East. Several advances have led to this success: the kingdom has the largest network of retail stores; the consumption capacity of fuel supply companies, supermarkets, hospitals and many other entities; the entrance of numerous investors in the sector interested in the cultivation of shrimp; the introduction of many modern techniques; and the encouragement brought into the sector thanks to the many governmental concessions made. Through these advancements and modernizations, the fish industry in Saudi Arabia created a significant jump in the country’s economy. Considered one of the most profitable industries in the kingdom, many investors have shown interest in further developing farms and plants in order to fill the demands of the consumers. Once an almost forgotten industry, fishing is now considered nearly as precious as oil production. With help from the government, this industry continues to expand its horizons through imports, exports, retail and franchising. This trend continues to create more jobs for Saudi citizens as well as non-Saudis, helping them improve their lives and continue to boost the local and national economy. The procurement of new and modern equipment and facilities has enabled the Saudi fishing industry to develop new products and services and continue to improve these products and services in order to reach and retain their competitiveness in the world market. Read More