Saudi Arabia & Australia Relations

Saudi Arabia & Australia Relations

The Kingdom of Saudi Arabia and Australia have a strong and longstanding relationship,

The bilateral relationship is underpinned by strong trade and investment ties.

Saudi Arabia is one of Australia’s major markets in the Middle East with two-way trade totaling more than $2 billion in 2010, and around 9,400 Saudi students are enrolled in Australian universities and colleges.

Saudi Arabia is Australia’s single largest market for passenger motor vehicles.

The ties of trade are strong and the growing number of Saudi students in Australian universities

has strengthened people-to-people links. This expanding educational relationship is reflected in

the Memorandum of Higher Education Cooperation between the two countries. A large number of

Saudi students study in Australia each year — over 12,000 were enrolled in Australian educational

institutions at the end of September 2010.

And there are other growing people-to-people links. Nearly 5000 tourists from Saudi Arabia visit

Australia each year, while over 4000 Australian citizens work in Saudi Arabia, mainly in health,

education and other specialist areas.

Common interests and values

The Kingdom of Saudi Arabia and Australia share many common interests and values. The two

countries have experienced challenges in common of often harsh and dry environments, building

modern national infrastructures with limited populations, dispersed over large distances, and

endeavouring to deploy their immense wealth of natural resources to ensure the future wellbeing

of their peoples. Both countries achieved nationhood in the 20th Century, yet both have cultures

and values forged from ancient traditions and from solid beliefs that continue to inform and enrich

their everyday life.

Saudi Arabia and Australia are both of considerable strategic importance in their respective regions

of the world. They are energy giants: Saudi Arabia in oil and gas and Australia in coal, uranium and,

increasingly, in natural gas. Both are mindful of the need to conserve and protect what is perhaps their

most precious and precarious resource: water.

This publication provides an in-depth review of the importance and growing potential of the relationship

between these two significant countries — both vital to world trade. In addition to reviewing the many

facets of their commercial engagement and raising awareness of mutual business opportunities, the aim

is to consider the cultural and social aspects of life in both countries that underpin their value systems, and thereby help to bring about a deeper understanding of each other’s

culture and character. Shared economic outlook Saudi Arabia and Australia have weathered the global

financial crisis better than most. Through judicious management of their financial systems and sound

governance principles they have avoided the excesses that have forced many countries into recession and long periods of economic austerity. Australia and Saudi Arabia entered the crisis on a solid

financial footing. Both governments took rapid, decisive action to support aggregate demand, whilst setting early targets to restore budgetary balance. Both are resuming their trajectories of growth — and are well positioned to share in each other’s burgeoning business opportunities.

The commercial environment To many people, the relationship between the Kingdom

of Saudi Arabia and Australia seems largely one of trade of hydrocarbon products swapped for agricultural produce.

Whilst this perception may have had some resonance in the past, the reality is far different today.

In 2009, Saudi Arabia was Australia’s second-largest export market in the Middle East, with merchandise exports exceeding $A1.7 billion. In the same year, Saudi Arabia was Australia’s 17th-largest global market, and the major market for Australian-made passenger motor vehicles, which alone were worth $A811 million. The current leader in automotive exports is Toyota Motor Corporation Australia (TMCA), which in October 2010 exported its 500,000th vehicle to Saudi Arabia. TMCA has been manufacturing vehicles in Australia since 1963, and in 2009–10 the company produced 105,826

Australian-made cars for the Australian and overseas markets. The Toyota Camry has strong acceptance for reliability — and has been a vehicle of choice for the taxi industry in Gulf countries — although competition from Korea and elsewhere is growing.

The General Motors Holden (GMH) Caprice, badged Chevrolet Caprice for the Middle East market, is also a strong performer in Saudi Arabia, appreciated for its rearwheel drive performance, as was its previous stablemate, the Statesman. The Holden Commodore, re-badged the Chevrolet Lumina, is also doing well. The Middle East is the strongest-performing market for GMH. All Australian vehicles are acknowledged as well suited to Saudi Arabia’s hot and dry weather conditions. They have superior dust control and robust airconditioning, built as they are to perform in the extremes of the Australian climate.

Australia’s other major exports to Saudi Arabia include barley, meat products (excluding beef) and dairy goods, as well as vehicle parts and accessories. Saudi Arabia was Australia’s third-largest market in the Middle East for live sheep in 2009 — importing 576,000 head that were valued at $A55 million.

In response, Saudi Arabia’s direct exports to Australia totalled $A631 million in 2009, with approximately half these exports being crude petroleum. The other exports, reflecting the sophistication of the Saudi petrochemical industries, were principally fertilisers, liquefied propane and butane, as well as primary ethylene polymers.

The most prominent producer in this field is Saudi Basic Industries Corporation (SABIC), which is a world

leader in the manufacture of petrochemicals (such as olefins, oxygenates and aromatics, as well as a range of chemical intermediaries used in everyday essentials like textiles, soaps and plastics), fertilisers (including urea and phosphates), and steel production. SABIC is the largest public company in Saudi Arabia, which in 2008 was ranked the No. 1 chemical producer in Asia and No. 4

in the world. In addition to this direct merchandise trade, a substantial indirect trade in petroleum products exists through Singapore’s major oil refining installations, where the refined products of lighter Australian crude oil and those of heavier Saudi crudes are extensively swapped for different market applications throughout the Asia Pacific region.

In the services sector, many Australian companies and more than 4000 Australian professionals, other experts and their families are living in Saudi Arabia, and contributing to Saudi Arabia’s rapid modernization and economic growth. Australians are well represented in construction and engineering, the oil industry, mining and agribusiness, financial services, health, hospitality and education.

In May 2010, Australia and Saudi Arabia signed a memorandum of understanding in higher education to build stronger cooperative ties between their respective higher education institutions, encouraging research cooperation and the exchange of academic staff, researchers and students between the two nations. An example of the quality of this collaboration is the signing of a research collaboration agreement in DNA replication between the prestigious King Abdullah University of Science and Technology (KAUST) and the University of Wollongong in October 2010. This research partnership is similar to ones that KAUST has in place with universities of the calibre of Harvard, Stanford and Oxford.

Other areas of research where there is a special commonality of interest between Saudi Arabia and Australia is in the field of dry-land farming, including the use of medics and other legumes to increase the productivity of land. In this context, it is interesting to note the achievements of South Australian agronomists and farmers in the introduction of exotic legumes to Australian soils. A number of the original medics were sourced from the Middle East early last century and further cultivated in Australia. Both Australian and Saudi Arabian agricultural experts are deeply engaged in redressing the problems of soil salinity that afflict the soils of both countries, as well as the preservation of aquifers and overall water conservation and utilisation.

Saudi students in Australia

There are some 12,500 Saudi students currently enrolled in Australian educational institutions, including undergraduate, postgraduate and research students. Since mid-2010, most, if not all, Saudi students studying in Australia have been on full-support scholarships, provided by the King Abdullah Scholarships Program. Previously, a small number of students covered their own expenses. The new provisions, recently introduced, are not restricted to the types of courses undertaken, although there are guidelines with regard to the institutions selected for those programs.

Saudi students have been well accepted in Australia and play an active role in their local communities. The Saudi Government also provides considerable social support, in addition to financial assistance, to meet the needs of its students studying in Australia, and has established the Saudi Arabian Cultural Mission (SACM) under the aegis of the Royal Embassy of Saudi Arabia and the Saudi Ministry of Higher Education. SACM’s regional office for the Asia- Pacific region was moved to Canberra in 2004, and sees to the interests of Saudi students; it monitors their progress and helps them to overcome issues that may impact their lives and impede their studies.

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References:

1-     Kingdom of Saudi Arabia & Australia Regional Partners Global Leaders – Bayliss, Roger