South Africa and Saudi Arabia Commit to Address Trade Imbalance
Saudi Arabia continues to enjoy a huge trade surplus of R 72.6 billion against South Africa. This was said by the Minister of Trade and Industry, Dr Rob Davies. He was speaking at the 6th session of the South Africa/Saudi Arabia Joint Economic Commission (JEC) held in Riyadh, Saudi Arabia today. JEC is co-chaired by Davies and his Saudi counterpart Dr Twafeeq Al Rabeeach.
Davies said the imbalance is due to oil imports that constitute 95% of South Africa’s total imports from Saudi Arabia. According to him, as far as South Africa is concerned the composition of its export basket to Saudi speaks to the need to diversify exports.
“For instance 62% of our export basket to Saudi Arabia consists of primary commodities. In this regard our ambition would be to increase the proportion of high value added products in the export basket. Clearly more needs to be done to realise our ambition for a more balanced trade basket,” said Davies.
Minister Davies said that the level of investment between the two countries is far below potential and said South Africa with its expertise and various technologies could benefit the Saudi economy. For instance, we could point to the Gas to Liquid (GTL), as well as Coal to Liquid (CTL) energy technologies, mining and agricultural technologies, amongst others.
JEC resolved that in order to improve investment between the two, South African and Saudi Arabian companies should explore investments and joint ventures and adopted the following recommendations:
Trade and Investment:
Both sides agreed to enhance trade and investment, through the exchange of high level business delegations, and participation in each other’s country exhibitions such as South African sponsored National Pavilion to be held in October 2015, in Riyadh.
South African side encouraged Saudi business to attend sector specific exhibitions in South Africa, such as Food and Hospitality, Africa Rail, Africa Big 7, Electra Mining and Mining Indaba. Likewise, the Saudi side encouraged South African participation in sector specific exhibitions in Saudi Arabia.
Both sides agreed to participate in priority investment sectors such as agro-processing, the blue economy, mining and petro-chemicals; as well as investment in special economic zones.
Both sides agreed to exchange information on economic imperatives as well as business innovation, and undertook to explore opportunities in their respective markets.
The Saudi side called upon South African companies that have advanced technologies to engage in investment projects in Saudi Arabia and to take advantage of the Avoidance of Double Taxation Agreement signed between the two countries.
The Saudi side informed the South African side of the credit lines available to foreign banks to import goods from Saudi Arabia.
The South African side is keen to collaborate with Saudi Arabia as a member of the Islamic Development Bank (IDB) and Organisation of Islamic Cooperation (OIC), relating to export finance.
Saudi Arabian Basic Industries Corporation (SABIC):
The Saudi side informed South Africa that they find their port charges are high which affects trade. The South African side took note of this and undertook to convey it to the relevant authorities.
The South African side called upon Saudi investors to take advantage of opportunities in the Coega Special Economic Zones (SEZ).
Globally, Saudi Arabia is among South Africa’s top 5 import partners, largely due to the amount of the oil we import from here.
Minister Davies has commended Saudi Arabia for the investment of ACWA Power International, which is a Saudi company that invested an estimated R 4.5 billion into SA’s renewable energy sector. Davies said the investment underscores the attractiveness of South Africa as an investment destination.
Globally, Saudi Arabia is among South Africa’s top five import partners.
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SOURCE: South African Official News