In this paper, my topic of discussion is about how an international higher education provider, like Ballarat University, would fare

in investing in a place like Saudi Arabia, a country with I call my home. In it, I will discuss the countries cultural, political, legal and economic factors as well as touching on the countrys strengths, weakness, opportunities and threats when it comes to investing in its higher education system. So without further or due, lets begin. With a young, expanding population and a blossoming knowledge-based industry, Saudi Arabias education sector is facing a new, exciting era. Already the worlds 8th highest education spender, Saudi Arabia has recently initiated a complete overhaul of its educational system at a cost of US$3.1 billion. Increasingly, prosperous families in traditionally underserved parts of the country have very strong demands for high-quality education like the one Ballarat would offer. With the implementation of the reform plans of Saudi Ministry of Higher Education (MOHE) through launching several higher education initiatives in technical readiness and infrastructures, Saudi Arabia is starting to take a prominent place in the scientific and technical domains, both regionally and internationally.

A potential to develop home-grown talent Today, over 90% of Saudi students are educated in public schools, with only the wealthiest Saudi and expatriate children attending some 840 private schools. There is clearly substantial room for the private sector to participate more fully at the primary and secondary levels of Saudi Arabias education system, all of which Ballarat could offer. While tertiary education enjoys greater private participation, this clearly remains an underserved market. Many students must pursue scholarships overseas to gain the highest-quality higher education; some 80% of engineers, doctors and scientists are foreigners. In the past, foreign organizations have not been permitted to directly educate Saudi students. Now, for the first time, they are allowing students to benefit from outside skills and knowledge, and this is where Ballarat can step in.

In addition to traditional educational institutions, there is a clear need for a full range of educational and training services, including vocational programs, elearning, content development, seminars, etc.

Since we have discussed some advantages of investing in the Saudi Market, now I will touch on some issues, requirements and problems that may arise if Ballarat ever decides to dive into that market. First of all, the movement of foreigners is tightly controlled in Saudi Arabia, and issuing of visas and other permits is subject to strict bureaucratic procedures. Note also that any visible connection with Israel, e.g. an Israeli passport or an Israeli entry stamp, will disqualify you from entry. Showing them the Money. When the business is registered, you must show the Ministry of Commerce that you have a substantial sum of money to invest. The required sum varies between the states (its between $10,000/6,500 and $50,000/33,500 in most cases) and is regarded as a guarantee against liabilities, although you may withdraw the money shortly afterwards! Now lets discuss Company Registration & Legal Obligations and how your nationality or background will affect your business setup. Corporate law in Saudi Arabia is similar to that in western countries, in that businesses can be run as limited liability operations, private companies or other types of concern. As discussed, setting up a business or buying a going concern can be complex and you must obtain local legal advice and guidance about registration formalities from your sponsor or local partner. Western expatriates (including Australians of course) and businessmen are generally well qualified they dont get work or investment approvals if they arent and these qualifications are carefully checked with the issuing bodies, irrespective

of where they were obtained. Western expatriates therefore tend to occupy senior positions, with adequate salaries and perks. Workers from south-east Asia and the Indian sub-continent (who are sometimes politically incorrectly referred to as Third Country Nationals or TCNs) usually occupy menial, unskilled or semi-skilled jobs and are paid accordingly. This is an unfortunate reality in Saudi Arabia, but a reality nevertheless. Even those with professional qualifications and experience as good as those of a westerner are unlikely to enjoy similar benefits, as the compensation of foreign workers is related to what they would expect to earn in their home countries, which is invariably higher for westerners. However, this situation is beginning to change, hopefully, especially in the field of technology.

The Local Partner or Sponsor Problem. The law requires that you have a local partner who holds the majority interest and can therefore control the business (as well as close it, if he feels like it). The local partner, be it a company or an individual, doesnt need to contribute to the start-up investment or participate financially at all. As with self-employment, there are various ways that a partner can be compensated.

Basically, the sponsorship system is an effective form of immigration control. As your sponsor is responsible for you and takes the rap if you misbehave or contravene any regulations (which will also involve him in loss of face in the community, which is a big deal in Saudi customs and traditions where reputation is everything), he automatically checks that youre reliable and trustworthy, as well as ensuring that you dont inadvertently step out of line. For this reason, your sponsor is an important source of help and advice and a valuable ally. However, the local partner requirement is currently under review in some states, in order to encourage foreign investment. So if you plan to set up a Ballarat University center after a year or so, you may have to do without the local partner who mightve turned out to be an ally or a nuisance. A powerful sponsor or employer is a great weapon with Saudi officials, and observing his skilful negotiating can be an enlightening experience. The authorities, however, are usually helpful and dont tend to be difficult unless they have good reason. You will find your business plans in the region easier if youre polite and patient. Smile and seek advice: requesting advice translates to showing respect to the person asked and you will generally find that Arabs are quite friendly, helpful, and exceedingly hospitable. Note that the recruitment of foreign staff is an expensive exercise for employers, including recruitment consultant fees, legal expenses and travel costs. As a result, it would be a good, less expensive idea to hire qualified local teachers for your teaching institution which in this case would be a Ballarat University teaching centre.

Now that I have discussed the various legal government issues, lets become more personal and touch on the cultural aspects. If Ballarat ever wants to strike a deal with the Saudis, itll be a very important advantage if they understood how Saudis operate. When doing business with Arabs, you will probably meet with hard but polite bargaining and find them experts at it. So you need to be completely confident about the contents of your contractual agreement. If there are any gaps, Arabs are brilliant at finding and exploiting them. Nevertheless, in the vast majority of cases, Arab businessmen meet their obligations fully. The experience of doing business with them is likely to be pleasurable and friendly, and the trust built up on both sides tends to be long-lasting. Incidentally, Arabs rarely say a direct no to a proposition out of respect, so you must listen and observe very carefully. If the response is Leave it with me or Ill think about it, theres a good chance that the project will go nowhere. The potential gains of starting and running a Ballarat University teaching center, are great, but it isnt for the faint-hearted. You need to remember that you arent a citizen of the country and when the time comes to leave and sell your interests, your local partner (whos role was explained above) has time on his side, while you might not.

It is also essential for Westerners doing business in the Kingdom to understand Saudi etiquette and the personal manner in which Saudis conduct their business. Preparation, and some basic knowledge of Saudi business culture, can make a huge difference between a successful business deal and a failed negotiation. It is interesting to note, however, that the majority of Saudi business executives and government officials have studied and/or worked abroad, many of them in Australia, the United States and the UK. They are therefore familiar with Western culture and products, and are also comfortable with its differing approach to business, provided respect is shown for Saudi customs which is a must. Scheduling is very important to Saudis. Some Saudi business executives and officials may be reluctant to schedule an appointment until after their visitors have arrived in the Kingdom. Business visitors should inform their Saudi hosts of their travel plans and agenda, but may have a much better success scheduling a specific meeting once they have arrived in Saudi Arabia. The religious holidays of Ramadan and Hajj and the daily prayer breaks must also be taken into consideration when scheduling business meetings. Because unlike a country like Malaysia, all businesses are closed down in Saudi Arabia during the five daily prayers. It is also good to understand that, Saudi businesses are unlikely to finalize any serious negotiation without such a face-to-face meeting, as doing business in the Kingdom is still mostly personal. Proper attire at business meetings is essential, as it is a sign of respect for the person with whom you are meeting. Conservative business suits are recommended. Business cards exchanged are usually printed in English on one side and Arabic on the other for convenience. Meetings are conducted at a leisurely pace, with the parties involved enjoying cordial discussion over coffee and tea. Saudi business executives like to feel comfortable with their business partners before agreements or contracts are signed. This can mean a number of initial meetings where no substantive business is discussed. However, these meetings can be as important as serious business negotiations. Substantial time should be allotted for such business appointments, as they are often long in duration. Saudi business executives are also prone to welcome visitors and outside

phone calls during such meetings; a lack of privacy is not uncommon in personal appointments. Confidentiality is likely to increase when it comes time to actually finalize an agreement.

Saudi custom regarding greetings is rather ritualized. When entering a meeting full of people, a Saudi will greet each person individually with a handshake while standing. The same is expected of visitors. Learning some appropriate Arabic phrases for such occasions is appreciated. The Arab people are very hospitable and will go to great lengths to make guests feel welcome and comfortable. Foreign business executives can expect to be served first and will be ushered first through doorways. If an invitation is extended to a Saudi colleague for a meal or coffee, it is customary for the person who issued the invitation to pick up the bill. Some Saudis will decline an offer at least one time out of politeness. When engaged in conversation, Saudis tend to stand much closer to one another than Americans, Australians, North Europeans, and East Asians do. Their conversational distance is more similar to that of Latin Americans and Southern Europeans. Arabs will also employ some body contact to emphasize a point or confirm that they have your attention. It is important not to draw back, however. This may be interpreted as a rebuff or rejection of what is being said. Respect is a value that is held very highly by the Arab people, and this shows in both business and social settings. Various social customs are well known in the Kingdom. Arabs traditionally use the right hand for all public functions including shaking hands, eating, drinking, and passing objects to another person.

It may be discourteous to ask about a mans wife and daughters. One should ask after his "family and children." When tea and coffee are served, it could be considered impolite not to take at least one cup. When one is finished drinking, one should oscillate the cup to signal that a refill is not desired. If one is doing business in the Kingdom during Ramadan, it is best to refrain from drinking and eating when in the company of someone observing the fast.

Doing business in Saudi Arabia is somewhat more challenging for women. There is gender separation in the Kingdom. Many public places, like hotels and restaurants, will have family rooms where women are served with their husbands. Women are expected to dress conservatively, with long skirts most appropriate, sleeves at elbow length or longer, and necklines that are unrevealing. It is generally uncommon for a Muslim man to shake hands with a woman or engage in the conversational body contact that is common when speaking to another man, although Saudis who have experience with Western culture may be inclined to do so. But overall, men and women do not mingle unless they are direct family members, out of respect for other peoples wives, moms and daughters.

Finally there are very important things to remember before going to Saudi Arabia. If you are not a Muslim, you may not enter Saudi Arabia without an invitation and you may not leave without an exit permit. Visitors to Saudi Arabia are subject to the same rigorous Islamic law as Saudis. It is not uncommon for Westerners to be imprisoned for possessing illegal substances such as alcohol, pornography, pork or narcotics. Thieves still have their hands amputated and capital crimes are punished by public beheadings. A philosophy which has worked for them since Saudi Arabia is considered to have one of the lowest crime rates, if not the lowest in the World due to harsh punishment for offenders. So in summary, these are good reasons to invest an international product like Ballarat in Saudi Arabia:
Significant unmet demands exist at every level of the Saudi educational

system. Demographically, Saudi Arabias population is extremely young and growing rapidly, with millions of university age students There is a huge demand for graduates have respectable International Degrees in the job market. Fast-rising new personal wealth among families has allowed them to send their children abroad to receive world-class education, so bringing a quality product like Ballarat to their backyard, will cut the hassle of having to send their loved ones overseas. Although the national curriculum of Saudi Arabia requires English to be taught as a second language, native English-speakers are rarely found in the state education system, cultural differences accounting for this. There is, however, a constant demand for English teachers in the region, as English is the lingua franca between locals and expatriates, and staff in hotels, airports, hospitals and other service businesses are required to speak English. Jobs are usually advertised in the teaching professions publications and national newspaper supplements. So any institution which has a full English curriculum like Ballarat would be most welcome and would definitely get a lot of costumers.

In conclusion, Saudi Arabia, like any other country has its pros and cons when it comes to investing. But it is safe to say that considering the demand for high quality English based education, it seems setting up a Ballarat institution there wouldnt be a bad idea.