CNBC Transcript: Yousef Abdullah Al-Benyan, CEO, Saudi Basic Industries Corporation

Following is the transcript of a CNBC interview with Yousef Abdullah Al-Benyan, CEO, SABIC. The interview was broadcast on CNBC on 20 March 2017.

All references must be sourced to a "CNBC Interview".

Interviewed by Geoff Cutmore, Anchor, CNBC at China Development Forum 2017.

Geoff Cutmore: So let me just start off by noting the fact that you've signed this deal with Sinopec it looks like a very significant deal. And let me ask you does it represent a significant shift now in the way Saudi business is thinking about China?

Yousef Abdullah Al-Benyan: I think it does not really represent a shift but it's bringing it to the next level of a strategic collaborations between you know Saudi Arabia and China specifically SABIC and Sinopec. These strategic agreements have three important components, not only growing in China but also developed some JV, an opportunity in the kingdom, Saudi Arabia and also take it to the next level from technology and innovations collaborations. And I think this is a very important and why it's important because you know the Chinese president, if you have attended Boao conference last year, he was specifically mentioning that China wants to move from low products productions to mid and high end through technology innovations. And I think we would like to capture that to be part of this growth in China. And the same time Sinopec has also have found SABIC is a very good gateway to go into the kingdom Saudi Arabia in terms of investment and opportunity.

GC: Why is now the right time for Chinese money to go in to Saudi Arabia?

YA: Well I think our government with our 2030 vision, they have been very clear that they want to improve the business environments in Saudi Arabia. They want to open up for serious business to come. They are changing their regulations, they are bringing more incentive programs, they have been more strong on governance and transparency. And I think this will attract a lot of people to take, and opportunities, to take this really 2030 vision and really grow with it as well.

GC: And is it perhaps a sign that we might actually see significant Chinese participation now in other Saudi businesses like Saudi Aramco?

YA: I would not be surprised. I think there is plenty of opportunities that 2030 vision has really exhibited. One, it's not only in the energy sector, but also in the health sector, in the construction sector. And I think there are so many opportunities that I would not be surprised seeing more Chinese companies coming to the kingdom.

GC: Let me ask you about the growth here and the opportunity around the growth. It does seem as though the government is still managing expectations around 6.5 percent. Does that concern you that maybe it's not that 7, 8 or 10 percent of old?

YA: Well I think we need to be more realistic. I mean 10 years ago we were looking at 10, 11, 12… I think 6.5 percent, with the growth you know accumulated, the growth for the last 20 years is really a high, a good number in GDP growth. But for SABIC I think we are not short term players, we're looking at it from a long term. We are not concerned at all. In fact our sales didn't really get impacted in China. There is 3 percent growth in sales for the last three years despite the fact 2015 and 16 were quite challenging years for our industry. So it's not a concern. The most important element for us is really we see more high end shift. Our customers are looking for advanced material, differentiated materials, and that's why we have invested in R&D in Shanghai. And we have in fact introduced more than 2,500 solutions for our customers, so that, that's really what we are looking for. It's advancement, differentiation of our offering.

GC: Let me ask you about the oil price, a critical input cost for the chemicals sector. What do you think the oil price is going to do this year and how is that going to affect your margins?

YA: Well it's very difficult to predict what the crude oil price is going to be, but for our industry it's regardless what's the level of the price. Of course the higher is better for us, but we need to have stable crude oil price because not only for us in terms of input for cost but also for the output and for our customers. In my view, 2017 it's going to remain very positive in terms of really stabilizing the crude oil price. I think you know the oil producers are trying to do their best to stabilize it. That's, I think we're looking for, if it's $50, $55, $60, we need to stay below the crude oil price in order for us to manage our production costs and also to make sure that our customers are also comfortable, how to deal with the output of our price as well.

GC: Any disappointment that we start to see some compliance numbers that are not 100 percent? I think around the 60s for the non-OPEC members involved in the agreement?

YA: Well, I am not really involved in this I don't have really a clue what exactly they are doing in terms of compliance. What I really look at, how this is going to really impact the crude oil price stability. And as far as I see right now there is a good effort to stabilize the crude oil price and that's what we are after.

GC: Just to talk about the business. Obviously 2015 and 2016 were quite difficult years for the company. Do you think 2017 is transformational? Will you make a net profit growth this year?

YA: Well it's very difficult to say transformational but I think it's going to be in my view better than 2015 and 16, and 2018 even better. I mean we look at GDP growth, globally 17 and 18 is going to really improve, comparing to 2015 or 2016. But in my view in 2019, second half of 2019, this is the time that we will really see, in my view, a change in the overall world economy and in our industry specifically.

GC: And just one question to finish with, really about the way that the Saudi government is now driving a new push into international markets. Saudi Aramco is going to be a remarkable initial public offering. Do you think that event in itself will shift the needle on how people think about the kingdom and business opportunities in the kingdom?

YA: I think not only Aramco IPO, I think the vision 2030, has already shifted the needle. And how has the business environment in Saudi Arabia and how our government are keen to shift the country into a more sophisticated business environment and look forward to see the result of 2030. I think we're very positive about not only from being a Saudi citizen but also as a business leader.