A $624 billion (£350 billion) investment programme and a massive privatisation drive are intended to do two things: open up Saudi Arabia to the world and diversify its economy away from its dependence on oil. Both have huge political and social implications for this conservative and secretive society and both require foreign participation.

There has probably never been a better time to get into Saudi Arabia. Five years ago the country faced an unprecedented economic and political challenge: al-Qaeda had begun a campaign of terrorism, consumption was roaring ahead of income, oil prices were low, relations with America were rocky, the ruling royal family appeared indecisive and the economy was failing to deliver the jobs, opportunities or incomes expected by the well-educated younger generation.

Pulling the country through this tough period has made it stronger and leaner. The terrorist threat is receding. High oil prices are providing the money needed to reduce the fiscal deficit and pay restless contractors. King Abdullah, since his formal accession to the throne, has proved himself a determined, though cautious, reformer. And Saudi Arabia’s determination to plan farther ahead means that it has grasped the nettle of privatisation to wean its people off a debilitating dependence on state largesse.

As the world’s 25th-largest importer-exporter, Saudi Arabia has made strenuous efforts to diversify the economy. The non-oil sector (which includes petro-chemicals) now accounts for more than 60 per cent of GDP. The country’s eighth five-year plan, which runs from 2005 to 2009, fleshes out some of the earlier promises of privatisation.

The programme now covers a huge range of infrastructure and services previously the monopoly of the all-providing State. These fall into 20 sectors and include postal services, water desalination, air transport, airport and seaport services, municipal construction, education, health and social services.

This covers a huge range of business activities in daily life, almost all of them areas where foreign entrepreneurs with experience can find opportunity. In these sectors, Western businessmen could find their expertise invaluable to Saudi partners, who may have the technical training but not the management background.

The Government is also seeking to turn over to the private sector many of the remaining big infrastructure projects. These include the development of mineral industries, the vast relating housing and transport schemes and, of course, the vital issue of desalination and water supplies.

The privatisation programme is being launched against a relatively benign economic background. Inflation has stayed low, growth has been steady rather than spectacular and the 2005 budget was expected to be balanced — for the first time in years.

Any foreign investment, however, must take into account political risks. One is the growing resistance to the large number of foreigners in Saudi Arabia, on which al-Qaeda extremists and religious bigots have played. The inevitable “westernisation” that accompanies the entry of Westerners into the economy may add to the social tensions latent beneath the conservative surface.

Fears that the House of Saud would collapse now look exaggerated; but the efforts to push forward representative democracy may run into the resistance of the religious establishment, and foreign businesses could be caught in the middle.

The greatest risk of all, however, is missing the bus. Saudi Arabia wants to do business largely with established and known Western firms. But those fastest in the door are Asians — and not just the Japanese. Koreans, Indians and Chinese are poised to snatch the best opportunities. If Western entrepreneurs want to make the most of privatisation, they will have to move fast.

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