SAUDI BUSINESSMEN TO DISCUSS PRIVATE SECTOR

  Saudi Arabian business
  leaders assembled for a conference aimed at thrashing out
  problems facing the private sector of the kingdom's
  oil-dependent economy.
      The meeting of some 500 top businessmen from across Saudi
  Arabia comes at a time of guarded optimism in industry and
  commerce following the OPEC pact to boost world oil prices.
      The four-day conference in this resort town, high in the
  mountains above the Tihamah plain stretching to the Red Sea,
  has been organised by Saudi Arabia's chambers of commerce.
      Finance Minister Mohammed Ali Abal-Khail and Commerce
  Minister Suleiman Abdulaziz al-Salim will attend the first day.
      Bankers and businessmen said the conference will air
  problems facing commerce and industry after last year's slide
  in oil prices and examine ways to promote higher investment in
  a private sector sorely short of finance.
      Government planners have long recognised that Saudi Arabia,
  the world's largest crude exporter, needs to foster private
  enterprise to diversify its oil-based economy.
      The fledgling private sector was hard hit by the Middle
  East recession as early as 1983 and several big manufacturing
  and trading companies ran into problems repaying loans.
      Renewed optimism this year stems largely from the accord
  reached by OPEC last December to curb oil output and boost
  prices to a benchmark level of 18 dlrs per barrel.
      With oil prices recovering, Saudi Arabia went ahead at the
  turn of the year with long-delayed budget plans incorporating a
  52.7 billion riyal deficit to be bridged by drawing down
  foreign reserves.
      The simple act of publishing a budget restored a measure of
  confidence to the business community.
      Some share prices have risen by more than 35 pct since last
  November, while banks are generally reporting a slowdown in the
  number of new non-performing loans.
      But not all bankers are convinced. One senior corporate
  finance manager in Riyadh said: "Banks are still reluctant to
  lend ... There is certainly more optimism in the air, but I am
  not sure if it is firmly based."
      Some businessmen and bankers point out that government
  spending is still under tight control and the non-oil economy
  may still be contracting.
      Capital expenditure on large projects has been cut sharply.
  A U.S. Embassy report on Saudi Arabia published just before the
  budget said: "While industrialisation has continued to be one of
  the government's highest priorities, the recession, the
  payments problem and the lack of financing have reduced Saudi
  and foreign investor interest in industry."
      It is the lack of fresh investment that is expected to be a
  major issue among the businessmen gathered here.
      Official figures show the number of new licences for
  industrial ventures fell 24 pct in the six months to March
  1986, compared with the same period in 1985.
      Lending by the Saudi Industrial Development Fund, a major
  source of industry backing, has fallen steadily since 1983.
      Trading companies have also been hit, some caught with huge
  inventories of construction equipment as recession bit.
      Some firms laid off workers and cut bloated inventories.
  Others have effectively been liquidated. A few have reached
  agreement with bankers to extend debt repayments.
      The latest rescheduling is for the shipping-to-hotels
  conglomerate REDEC. Its negotiators have just initialled a
  draft accord to restructure payments on 1.3 billion riyals of
  bank debt.
      Bankers and businessmen said the conference was also likely
  to discuss the apparent reluctance of U.S. And British firms to
  step up investment in the kingdom.
      A British government delegation has just left Riyadh after
  holding preliminary talks on ways of offsetting the huge Saudi
  outlay on a defence contract to supply 132 fighter aircraft
  worth five billion stg.
  

