Mohammad Imdadul Haque

As the Kingdom of Saudi Arabia focuses on Vision 2030, there is an immediate need to establish some big manufacturing industries to create jobs and to generate revenue from non-oil sectors. Automobile is one such sector where demand is very high in the Kingdom. Local manufacturing can create a lot of jobs and revenue. This study tries to analyze the scope of automobile sector in the Kingdom. The objective here is to identify the functional value of cars, which can be useful for potential automobile manufacturers. A sample of population is asked about their satisfaction from cars based on five broad factors, namely safety, comfort, aesthetic, instrumentation and engine, through a recent primary survey conducted in 2018. Using structural equation modeling, the study finds that consumers in the Kingdom give maximum importance to the engine of the car. This finding would be helpful for designing the features of a local brand as per the preferences of the local market. Market dynamics indicates a strong consumer base. Future prospects are also promising, as there is strong domestic demand. This can be tapped if production is localized, leading to a development of an entire new manufacturing sector. Finally, the study discusses some feasible options for automobile manufacturing in the Kingdom.

Two different types of banking systems, Islamic and conventional, dominate the banking structure in Saudi Arabia. The purpose of this paper is to contribute to the ongoing debate as to which of the two is better. Using data for the period 2014–2018, the study compares Islamic and conventional banks. It combines traditional financial ratios, Return on Assets (ROA) and Return on Equity (ROE), with Data Envelopment Analysis (DEA) to perform a comprehensive analysis. In terms of ROA, the performance of conventional banks is better than that of Islamic banks, but in terms of ROE, vice versa. DEA results show that conventional banks are more efficient than Islamic banks. In fact, in terms of ROA and ROE, Al Rajhi Bank, an Islamic bank, is the best performer. But in terms of efficiency scores from DEA, Al Rajhi ranks seventh among all banks, while NCB, a conventional bank, ranks first. Issuing shares and utilizing funds in profitable options, such as loans and advances to increase net income, are the policy recommendations for Islamic banks to further improve. In addition, as the study finds no correlation between the ratio and efficiency scores, it proposes to use a combined measure of ratio analysis and efficiency analysis for a comprehensive assessment of bank performance.

High dependence on a particular category of exports results in fluctuations in income as the price of the export item fluctuates. In Saudi Arabia, a single category of mineral exports forms over 78% of the total exports, exposing the country to revenue volatility. The study aims to assess the magnitude of diversification of the export basket for the country. It uses data from 1984 to 2018 to study the importance of non-mineral exports in total exports. It applies Granger causality, variance decomposition, and impulse response function in the vector autoregressive framework. The study also uses the growth-share matrix to evaluate individual items of non-mineral exports. The results show a long-run relationship with a 1% increase in non-mineral exports, leading to a 0.30% increase in total exports. Non-mineral exports Granger-cause total exports. In the long run, non-mineral exports have a share of 64% of the forecast error variance in total exports. Moreover, a 1% shock in non-mineral exports creates a huge initial impact on total exports. Also, the growth rate of non-mineral products is higher than mineral products. The results indicate the importance of non-mineral exports for a predominantly oil-exporting country. Finally, the study attempts to classify its non-mineral export categories based on growth rates and market shares. Targeted emphasis on export category with a strong growth rate and low market share can be an effective strategy for further export diversification.