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 • • • • • 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     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      Limited and expensive skilled labor pool Limited innovation E-Government Hydrocarbons industry specific applications  Limited labor pool   Relatively low PC and DSL penetration    Opportunities in public and private sectors, large and small corporations Subcontracting  E-learning E-entertainment Mobile value added services    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 asindi@citc.gov.sa Dr. Suliman Mirdad smirdad@citc.gov.sa