Public Policies Generating ITC Opportunities Saudi Arabia Communications and Information Technology Commission

Public Policies Generating
ITC Opportunities
Communications and Information Technology Commission
Saudi Arabia
Casablanca, February 2006
Table of Content
• Sector Reform
• Regulation Framework
• Liberalization of The Saudi ICT Market
• ICT Market In Saudi Arabia
• Enhancing Regulatory Frame work – ICT Policies
• National ICT plan
• ICT Initiatives
Population & Economy of KSA
•
•
•
•
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23 Million
GDP Trillion 1.15 SR 306.7 Billion USD
GDP Growth 2005 Real 8.9%
GDP Growth 2005 Nominal 22.2%
Red Hot stock Market (10 Billion USD
trading volumes per day)
Sector Reform
• Establishment of Saudi Telecom Company (STC) in
1998 and CITC in 2001.
• STC has developed the ICT infrastructure.
• The legal framework has been established.
• Private sector and foreign investment participation
are the focus.
Regulation Framework
Telecommunications Act
6/2001
Telecommunications Ordinance
Telecommunications Bylaw
The adoption of this legislation has opened the
telecommunications market for competition, and
has laid the legal framework for the development
of a competitive telecommunications sector.
Communications and Information
Technology Commission (CITC)
June 2001
Establishment of the “Communications and Information Technology
Commission”
An autonomous entity that enjoys financial and administrative independence.
Responsibilities Include:
• Creating enabling environment that is pro competition.
• Protecting public interest.
• Securing the right to access public network at affordable
prices.
• Fulfilling its mission with transparency and fairness.
• Encouraging investment in information technology
services .
• Developing a national information technology plan .
• Implementing both e-Government and e-Commerce
initiatives and encouraging technology usage.
Liberalization of The Saudi ICT Market
CITC has opened the doors for increased
business opportunities for local and foreign
investment in:
•Mobile services
•Fixed line services
•Data Services
•Internet services
•Other services and advanced technologies
ICT Market In Saudi Arabia
Mobile market growth has been tremendous:
•
•
•
•
•
Sizeable and fast growing subscriber market
Potential for high penetration levels
(2006, 14 Million Subscribers, Penetration 70%)
Attractive demographics
Stable macroeconomic environment
Cellular Subscribers (000s)
Penetration
9,200
40%
7,238
32%
5,008
2002
23%
2003
2004
2002
2003
2004
ICT Market In Saudi Arabia
(Continued)
• Internet services commenced in Saudi Arabia in 1998.
• Today, the number of internet users close to 3 million
approximately representing a penetration rate of about
13%.
• The ISP market is fully competitive, 30 ISPs are
currently operating kingdom-wide
• Further growth in penetration of internet services is
expected due to several initiatives that are under way
The Saudi ICT market is estimated at
$2.20 billion in 2005
Software
18%
Saudi Arabia as
% of global market
Hardware &
maintenanc
e
48%
IT services
34.0%
Spending = $1.78 billion
Source: IDC (2003)
Hardware
0.19%
Software
0.12%
IT services
0.13%
Compared to Saudi GDP, which is 0.7% of
the world’s total, Saudi Arabia ICT sector
is below its potential size
Source: Digital Planet 2003, IDC (2003)
This section will focuses on the IT sector, digital content development, and unregulated value added communication services.
Regulated communication services will be covered in a separate section
Enhancing Regulatory Frame Work
• Telecom Act has been enhanced to include IT and
services and development mandate
• E-Transactions Law has completed its review cycle
and about to be issued
• Computer Crime Law is under review
• Anti SPAM directives under review
The National IT Plan
Vision
 The transformation within two
decades into an information
society and the attainment of
a digital economy so as to
increase productivity and
provide IT services for all
sections of society in all parts
of the country and to build a
solid information industry that
becomes a major source of
income
Components
 Urgent initiatives
 Long-term vision
 5-year plan
Selected Targets in the 5-year
plan
 Local IT industry: 5 billion SR
 IT sector will employ 2% of
the labor force
 Establishment of 1 Tech Free
Zone, 2 technology parks, 6
incubators
 Automation of 50% of
government procedures
 Construction of 10 national
databases
 5% of university students will
specialize in IT majors, and
graduates will reach 3750
annually
 30% of educational curricula
will be interactive
2002
Launch
2004
Draft plan is
published
2006
What is next?
Opportunities In The IT Services Sub-sectors
IT services sub-segment
Hardware & software
support &
deployment
IT training and
education
System integration
Outsourcing total
Customization
Source: IDC (2003)
Market size
2003
($ million)
$208
$50
$205
$42
$83
Market size
2008
($ million)
$295
$105
$307
$91
$141
CAGR Growth
Business opportunities
7%


16%


End customer driven training

Increased subcontracting by
large service providers

Lack of qualified IT staff will
push large companies and
government to outsource

CRM and ERP applications
for SME
11%
16%
11%
SME market
Subcontracting from large IT
service providers
Niche
expertise
Government
training
Strengths and Weaknesses of Saudi ICT
Industry Components
ICT segment
Hardware
Strengths


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
High market growth
Home PC plan
Hydrocarbons industrial
base. May require
customized hardware

High market growth

Software
IT Services



Digital Content


Limitations
High market growth
Well established, well
staffed, and
internationally affiliated
players
Large and growing retail
market
Major government
initiatives in e-learning
Saudi advantage in
religious and Arabic
Business opportunities
Lack of large anchor
industries
Relatively high
production cost
Limited innovation

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Limited and expensive
skilled labor pool
Limited innovation
E-Government
Hydrocarbons industry
specific applications

Limited labor pool

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Relatively low PC and
DSL penetration
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Opportunities in public
and private sectors,
large and small
corporations
Subcontracting 
E-learning
E-entertainment
Mobile value added
services


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PC assembly
Niche applications
(military, etc)
Customized computer
hardware
Current IT Initiatives
Grass Root Initiatives – Through PPP
• Saudi Home Computing Initiative (SaHCI)
– Sold 10,000 PCs in 3 months
– PC+MS office &MSW + Internet + training @
$26.6 USD/month
• E-Government Initiative
• SMB automation initiative
– DSL for 2 years, server, desk top PC, 2
Laptops, training, WLAN, Emails, Printer, web
presence $400 USD/month
E-government initiatives will be worth around $5 billion, and will be an
opportunity to develop locally some e-government platforms
2
Saudi IT Opportunities
Current phase
E-gov Global
Readiness
rank
Budget
($
million)
Saudi Arabia
Phase I
105
5000
UAE
Phase II
38
1000
Kuwait
Phase II
90
450
Oman
Phase I
98
250
Qatar
Phase III
77
200
Bahrain
Phase III
46
150
GCC Country
Source: Madar Research (2004))
Opportunities for Saudi IT
companies
 Large contracts to leading
IT service providers
 Subcontracting by leading
vendors to smaller IT
service providers
 Development of
customized solution by
smaller IT companies to
some Saudi government
agencies
 IT training for public sector
employees (both large and
small players)
 Outsourcing of some
government functions to
both small and large
players)
Current IT Initiatives
Grass Root Initiatives
• Saudi CERT – Security Initiative
• Smart Cities Initiative
– Riyadh transformation into a digital city
• B2B exchanges
Current IT Initiatives
Leading to New opportunities
Requiring Industry development efforts
to push Innovation, Entrepreneurship
and Growth; Therefore :•
•
•
Three Technology Parks are under way
Three VC funds established (300,200, 5o
Million USD) Alll private
The new vision for the City of the future
King Abdullah Economic City
Providing Arabic content is one of the best opportunities for existing
and new Saudi companies
2
Internet Content in Saudi Arabia
Preferred Language on the Internet
The unmet need
Others
1%
76% of those who prefer
Arabic content think that there
is limited Arabic content on the
internet
English
26%
Arabic
73%
Arabic websites 1.2% of total
Source: Arab Advisors / Connexus Survey of 1037 individuals, 2005
What is missing in
Arabic content ?
% stating
Entertainment
52%
Educational
39%
International news
34%
Religious content
34%
Local news
30%
Sports
19%
… and in e-learning
2
E-Learning Opportunities
Business Opportunities
for Saudi Companies
E-Learning in Saudi Arabia
($US million)
Out of the box content customized & arabized to KSA
 Representation of international e-learning publishing houses with
limited customization of content
Locally developed e-learning content




128
Children
Adults for continuous education
Professional education and certification
Religious
Content developed to educational institutions and
government
 Converting official educational curricula (GCC common curricula)
 Development of a complementary e-learning curricula for
existing educational institution
 Religious university and degrees
32
Delivery of content
2003
2008
Global market (2003) $20 billion
Source: Madar Research (2003)
 Online universities that may be affiliated internationally or
regionally.
Services
 Common services offered to schools
 Certification services
To sum up, many business opportunities present themselves in the
Saudi ICT sector
2
Summary of Opportunities
Business
Investment size*
Business
Investment size*
Hardware and software support &
deployment
Medium
Entertainment content development
Medium
IT training & education
Small to Medium
Entertainment service delivery over
the web or mobile
Small to medium
System integrators
Small to medium
E-learning content
Medium
Outsourced government and large
local company functions
Small to medium
E-learning services
Medium
Omra and Hajj e-travel services
Medium
E-learning service delivery
platforms
Medium
Investment Size Legend *
 Small: Less than $1 million
 Medium: $1-10 million
 Large: More than $10 million
National ICT Scene. (Future……)
Fixed Line Penetration

Cellular Penetration

Internet Penetration

PC penetration

E-applications

Prices

E-Readiness
Improving
Broadband
Expanding
Universal Service
Coming Now
Conclusion
It is essential for developing
economies that the Governments
Plays an important role as a
Regulator, Facilitator, and Partner To
the Private sector to realize growth In
Significant ways
Thank you
Dr. Ahmed A. Sindi
[email protected]
Dr. Suliman Mirdad
[email protected]