Building on Mid-East trade

Australia has failed to take full advantage of opportunities in the services sector in Saudi Arabia and the greater Middle East, according to Bob Tyson, outgoing Australian ambassador to Saudi Arabia.

But, Mr Tyson told guests at a recent WA Business News Meet the Ambassadors lunch, that didn’t mean the door had been closed to Australian businesses.

This was particularly the case in Saudi Arabia, he said, which was looking to accelerate economic reform and diversify and open its economy to attract foreign investment.

Mr Tyson said that, although Saudi Arabia had 25 per cent of the world’s known oil reserves, equating to 100 years worth of oil at current extraction rates, the fact that oil accounts for 90 per cent of the country’s export income is a “very serious issue”.

“It is 75 per cent of government revenue, 35 per cent GDP and the most serious aspect of these figures is that it employs only 1.5 per cent of the labour force,” he said.

“When you look at the growth rate of the population and then the fact that their primary industry employs 1.5 per cent of the labour force, you get to picture some of the problems Saudi Arabia will face further down the track.”

Mr Tyson said Saudi Arabia had by far the largest economy in the Middle East, but it there also was a “pressing need” to diversify and open up its economy to reduce dependence on oil and to create jobs.

But, because Saudi Arabia’s deteriorating relationship with the US had been traumatic, especially for Westernised Saudis, Mr Tyson said there was more effort being put in to looking for alternatives.

“This is where we [Australia] come in,” he said.

“They are looking for education for their kids and for expertise in a whole variety of areas.

“There has been some impact on tourism and investment and they’ve looked elsewhere for places to holiday.

“They are well aware of the desirability of Australia as a tourist destination and we would like them to be more aware of Australia as an investment destination but that needs a bit more work.”

Mr Tyson said Saudi Arabia was looking for alternatives in several areas including defence, defence training, tertiary studies in Australia, teacher training, IT training, curriculum development, tourism, tourism infrastructure development, health, hospital services, health insurance design and health systems.

“All these areas there are opportunities for Australian experts to go and do a job and get paid for it,” he said.

With annual trade worth $2 billion, Saudi Arabia is Australia’s 14th largest merchandise export destination.

Despite this Mr Tyson said the fact that no Middle Eastern country was in the top 30 markets for Australian services remained a concern.

“We have ignored [opportunities] to project ourselves in the services sector,” he said.

“It is also true that no Middle East country is in the top 25 sources of foreign investment, which is also a great shame because they are looking for investment alternatives. And Australia hasn’t convinced them to invest here.

“My own view is that education and tourism are the most prominent keys to broadening our image, which tends to be that of gigantic theme parks with funny animals.

“We need to project an alternative image of Australia as a modern and sophisticated economy relevant to their needs.”