LONDON: A once-distant future of flying cars, household robots and talking appliances is rapidly approaching and no one is sure what to expect.
Technology companies developing innovative artificial intelligence (AI) applications promise a life made easier as machines take over everyday tasks from making coffee to driving to work. People, they say, will be free to focus on rewarding and creative pursuits while benefiting from more leisure time.
But what about those whose jobs can be managed more efficiently by machines?
Alongside the cab drivers replaced by driverless cars and flying taxis, the list of potential cast-offs includes construction workers, couriers, journalists, paralegals, retail sales people and doctors.
In the UAE, the impending arrival of driverless buses, delivery drones and even robot police officers is an indication of how wide-ranging the advance of AI will be.
Some sectors, including banking — no stranger to technological disruption since automated teller machines (ATMs) replaced traditional clerks 50 years ago — have already started adapting to AI.
Mashreq Bank in the UAE recently announced plans to cut 10 percent of its 4,000-strong workforce within 12 months as it makes way for new AI and robotic technologies.
“AI will provide the competitiveness to the early adopters and in a few years these will become generic features with all banks,” said a spokesperson for Mashreq.
“In the region, the banking sector will see an uplift on service quality and enhanced self-service capabilities with the increased penetration of AI tools.”
Research by McKinsey claimed that 60 percent of all occupations could see 30 percent of their constituent activities automated, and last year the Future of Jobs report published by the World Economic Forum estimated that automation could lead to the net loss of 5 million jobs across 15 developed and emerging economies by 2020.
Speaking to Arab News, Rigas Hadzilacos, global leadership fellow at the World Economic Forum said, “This is a very short timeline and probably a conservative estimate so there is a huge amount of urgency attached to finding ways of exploiting the benefits of AI while mediating the negative impact.”
“In the long run AI will also create new jobs related to the development, maintenance and oversight of artificial intelligent agents — and other completely new jobs we cannot imagine at this stage.
“However in the near future, the rate of job displacement will be much higher than the rate of new jobs created. And this is something that every government needs to prepare for.”
Key to this is bolstering the ability of local workforces to harness the AI and robotic revolution. Santhosh Rao, principal research analyst at Gartner, a technology research and advisory firm with offices in the Middle East, described the skills shortage as a major roadblock for regional governments adopting AI.
“AI engineers are a rare commodity globally because it involves not just programming but advanced mathematics, statistics, electronics and complex algorithm designs,” he said.
Meanwhile, a lot of lower-skilled jobs will become obsolete, Hadzilacos added, pointing to the impact on large numbers of expat workers from the Middle East and Asia employed in Gulf states.
“On the flip side, a new flow of expats needed for the high-skilled labor to support this transformation can be expected,” he said.
David Llorente, CEO of Narrativa, an AI startup with a client base in the UAE, Saudi Arabia and Europe, believes AI will change societies across the region and contribute to a shift away from reliance on oil and gas as Gulf countries cultivate knowledge economies.
Countries such as the UAE and Saudi Arabia are ripe for AI adoption, he said, outlining the potential to reduce dependency on foreign labor.
“Gulf states have two standout qualities: Lots of available cash and a very big deficit in human labor,” Llorente said.
“Increasing automation will enable them to do more with less, helping them to become more productive and competitive.”
He spotlighted Saudi Arabia as the next major growth area for AI in the region.
“Saudis love technology and there’s huge market potential,” Llorente said, adding that AI adoption could help companies in the Kingdom to internationalize and place the country on a par with the region’s biggest AI player — the UAE.
Last month, Dubai Ruler Sheikh Mohammed bin Rashid Al-Maktoum tweeted about the appointment of Omar Bin Sultan Al-Olama as the country’s first minister of state for artificial intelligence.
The move followed the launch of the UAE Strategy for Artificial Intelligence, outlining the country’s aims to enhance performance and productivity by investing in AI.
“We believe that by harnessing the potential of the latest technologies we can offer innovative services to enhance citizen experiences in Dubai,” said Aisha Bin Bishr, director general of the Smart Dubai Office, which is providing AI training to government and private-sector employees.
Saudi Arabia, meanwhile, recently unveiled plans to invest $500 billion in Neom, a fully automated city where citizens will travel in driverless vehicles, enjoy access to free Internet and live in zero-carbon homes.
The project website describes a digital oasis in which “repetitive and arduous tasks will be fully automated and handled by robots, which may exceed the population, likely making Neom’s GDP per capita the highest in the world.”
Speaking at the Saudi Future Investment Initiative summit in Riyadh last month, Peter Thiel, a venture capitalist and partner at Founders Fund, described “hybrid solutions” based on people working in synergy with computers.
“AI will make certain sectors more efficient and then it will free people up to do other things,” he said.
Jacob Crandall, professor in computer sciences at Brigham Young University, who spent 10 years in Abu Dhabi, agreed. “In my opinion, technologies simply alter job prospects rather than eliminating them. AI is not likely to eliminate the need for human creativity, but rather opportunities create new needs for human creativity.”
But according to Thiel, there is a tipping point at which people could become redundant in an increasingly automated world.
“It’s mainly a game of complementarity; it becomes a game of substitution only at the end if you have an AI that can do everything better, smarter and cheaper than any human being, and then that will be very scary.”
Rise of the machines: Will a robot take your job?
Rise of the machines: Will a robot take your job?
Closing Bell: Saudi main index edges down to close at 12,198
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday losing 0.06 points to close at 12,198.38.
The total trading turnover of the benchmark index was SR4.42 billion ($1.18 billion) as 60 stocks advanced, while 160 retreated.
On the other hand, Nomu, the parallel market, rose 577.98 points, or 2.18 percent, to close at 27,062.01. This comes as 28 stocks advanced while as many as 33 retreated.
Meanwhile, the MSCI Tadawul Index slipped 1.45 points, or 0.09 percent, to close at 1,528.60.
The best-performing stock of the day was Lazurde Co. for Jewelry. The company’s share price surged 10.00 percent to SR16.06.
Other top performers included Middle East Specialized Cables Co. as well as Aldrees Petroleum and Transport Services Co.
The worst performer was Zahrat Al Waha for Trading Co., whose share price dropped by 10 percent to SR45.45.
Makkah Construction and Development Co. as well as Jazan Development and Investment Co also performed poorly.
On the announcements front, Kingdom Holding Co. announced its interim financial results for the period ending March 31.
According to a Tadawul statement, the company’s net profit hit SR196 million in the first quarter of 2024, reflecting a 14.6 percent surge when compared to the similar quarter last year.
The increase is mainly due to a rise in the sale of investment property, a surge in the share of results from equity-accounted investees, and a decrease in financial charges.
It is also linked to an increase in finance income as well as a drop in withholding and income tax.
Moreover, Dar Alarkan Real Estate Development Co. announced its interim financial results for the first three months of 2024.
A bourse filing revealed that the firm’s net profit reached SR153.5 million by the period ending March 31, up 30.57 percent from the corresponding period in 2023. This surge is primarily attributed to higher property sales.
Furthermore, Middle East Paper Co. announced its interim financial results for the year’s first quarter.
According to a Tadawul statement, the company recorded a net loss of SR18 million in the first three months of 2024, compared to a net loss of SR7 million in the same period of the previous year.
This is mainly owed to reduced gross profit, a jump in general and administrative dues, and increased finance and zakat expenses.
Red Sea International Co. also announced its interim financial results for the period ending on March 31.
A bourse filing revealed that the firm’s net profit stood at SR13.3 million at the end of the first quarter of 2024, compared to a net loss of SR19.5 million recorded in the same quarter a year ago.
This is mainly the result of the strategic business transformation, which included acquiring 51 percent of First Fix and effectively executing and delivering projects.
Meanwhile, Saudi Manpower Solutions Co., announced the completion of the institutional book-building process and the determination of the final offer price for its initial public offering on the main market of the Saudi Exchange.
According to a company statement, the final offer price has been set at SR7.5 per share, with a market capitalization of SR3 billion at listing. The price range for the offering was set at SR7 to SR7.5.
The institutional book-building process generated an order book of around SR115 billion and was 128 times oversubscribed, indicating strong investor demand.
Baheej unveils waterfront development project in Yanbu
RIYADH: Saudi Arabia’s tourism sector continues to expand, with Baheej Tourism Development Co. unveiling a new waterfront development project in Yanbu.
This joint venture between ASFAR, a Saudi tourism investment company owned by the Public Investment Fund, and the Tamimi-AWN Alliance, aims to develop the waterfront area of the Royal Commission at Yanbu.
The initial project will cover 32,000 sq. m. and feature three leisure assets: a beach, a tourist activation center, and a hotel. It is set for complete unveiling in 2027.
A fourth component is scheduled to be announced at a later date.
According to a release, each aspect of the project aims to provide memorable and sustainable tourism experiences.
Visitors will soon have the opportunity to explore Yanbu, a city with a rich history dating back to the 16th century, renowned for its architectural heritage and sandy beaches.
Baheej envisions Yanbu as an iconic location that showcases Saudi Arabia’s culture, history, and natural beauty, providing a unique destination to tourists.
Nora Al-Tamimi, CEO of Baheej, outlines the project’s development in three phases, emphasizing community engagement, sustainability, and minimal environmental impact.
Al-Tamimi said: “We believe that destinations are not just built but discovered, and Baheej’s commitment lies in uncovering Saudi Arabia’s hidden gems. Our strategic collaborations are aimed at curating unparalleled experiences that showcase Saudi Arabia’s rich culture, history, and natural wonders.”
She added: “Yanbu City’s contemporary infrastructure, captivating environment, and attractive coastal landscapes make it an exceptional gateway to the Red Sea Riviera. We anticipate the complete unveiling of our destination and its components by the end of 2027.”
By analyzing risks and investment opportunities, the project aims to position Yanbu as a locally and internationally sought-after tourist destination, explained Al-Tamimi.
Baheej’s role will involve integrating local culture and promoting protection of the planet, enhancing Yanbu’s appeal and supporting regional development.
This approach aims to transform Yanbu’s hospitality sector, blending community heritage with environmental stewardship.
Established in 2023, Baheej aims to create accessible tourism experiences that meet international standards while remaining contextual and sustainable.
These initiatives are part of a broader strategy to transform Saudi towns into thriving, eco-friendly destinations.
Baheej also plans to announce additional projects in other cities by the end of 2024.
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Saudi banks’ money supply surges 8% in March to reach $753bn
RIYADH: Saudi banks’ money supply rose 8 percent in March, as compared to the same month last year, to reach SR2.82 trillion ($753 billion), official data showed.
According to the data released by the Saudi Central Bank, also known as SAMA, the increase was mainly fueled by a roughly 21 percent surge in banks’ term and savings accounts, reaching SR843.25 billion. These deposits represented the second-largest portion, comprising 30 percent of the total money supply, following demand deposits, which constituted 50 percent at SR1.41 trillion.
On the other hand, quasi-money holdings made up 21 percent of the total, experiencing a 1 percent decrease during this period. Meanwhile, currency outside banks accounted for an 8 percent share, showing a 10 percent growth.
Multiple factors influenced the upsurge in term deposits. Firstly, the elevated interest rate environment within the Kingdom, shaped by the US Federal Reserve’s anti-inflationary monetary policy, has spurred individuals and entities to seek higher returns through these accounts.
Moreover, the increase in accounts held by government-related entities played a significant role. As per Fitch Ratings, these entities opted to channel their surplus liquidity into term deposits with commercial banks, thereby boosting the growth trajectory of such accounts.
It is noteworthy that during 2022, SAMA raised key policy rates seven times, followed by an additional four increases in 2023. The central bank’s repo rate was last raised by 25 basis points to 6 percent in its July 2023 meeting, marking its highest level since 2001. Since then, rates have remained unchanged.
Meanwhile, US inflation surged to a six-month high in March, prompting investors to delay their expectations for Federal Reserve rate cuts.
Deposits represent a costly funding source for banks, with heightened competition in the financial market significantly driving up their average cost.
Despite this, the surge in interest rates also strengthened Saudi banks’ profits on the asset side. Higher borrowing rates led to increased income, offsetting the challenges posed by the expensive funding environment.
On the asset side, Saudi bank loans grew by 11 percent during this period to reach SR2.67 trillion; therefore, lending growth among Saudi banks outpaced deposits.
In their April report, S&P Global suggested that Saudi financial institutions would explore alternative funding strategies to manage the rapid increase in lending, driven by rising demand for new mortgages.
The credit-rating agency noted that the funding profiles of financial institutions in the Kingdom will undergo changes, mainly due to a government-supported initiative aimed at boosting homeownership.
According to their analysis, mortgage financing accounted for 23.5 percent of Saudi banks’ total credit allocation by the end of 2023, compared to 12.8 percent in 2019.
They highlighted that the ongoing financing needs of the Vision 2030 economic initiative, coupled with relatively sluggish deposit growth, are likely to prompt banks to seek alternative budget sources, including external funding.
S&P Global anticipated this trend to persist, especially as corporate lending assumes a more significant role in growth in the coming years.
The report indicated that Saudi banks are expected to adopt alternative funding strategies to support this expansion. It also noted that the stability of Saudi deposits mitigates the risk posed by maturity mismatch.
Furthermore, the agency projected an increase in Saudi banks’ foreign liabilities, rising from approximately $19.2 billion by the end of 2023, to meet the funding demands of robust lending growth, particularly amidst slower deposit expansion.
The report emphasized that Saudi banks have already tapped into international capital markets, and S&P Global anticipates this trend to continue over the next three to five years.
Saudi aviation sector contributes $21bn to GDP: GACA
RIYADH: Saudi Arabia is experiencing steady growth in its aviation sector, contributing $21 billion to the Kingdom’s gross domestic product in 2023 and solidifying its position as a global tourism hub.
The General Authority for Civil Aviation stated that the aviation industry is creating positive impacts in other key areas of Saudi Arabia’s economy, with the sector responsible for a further $32.2 billion in tourism receipts, according to a press statement.
GACA added that the aviation industry alone has enabled 241,000 jobs in the Kingdom and has contributed to supporting 717,000 jobs in tourism-related areas.
The authority revealed that the nation outperformed global aviation sector growth rates in 2023, achieving 123 percent of international pre-pandemic seat capacity compared with a worldwide and regional average recovery rate of 90 percent and 95 percent, respectively.
GACA will present these findings in an analysis titled “2024 State of Aviation Report” at the Future Aviation Forum on May 20.
Saudi Arabia’s Minister of Transport and Logistics Services and Chairman of GACA, Saleh Al-Jasser, said: “The Saudi aviation sector is providing unprecedented opportunities for global aviation, achieving major leaps in global rankings in support of Vision 2030 and in line with the National Strategy for Transport and Logistics services.”
Saudi Arabia’s National Transport and Logistics Strategy seeks to increase the industry’s contribution to the Kingdom’s GDP to 10 percent from the current 6 percent by 2030.
“The inaugural State of Aviation report highlights the contribution that the aviation sector makes to the Saudi society and economy, with the great support from the Custodian of the Two Holy Mosques and His Highness the Crown Prince,” added Al-Jasser.
Abdulaziz Al-Duailej, president of GACA, said that the Kingdom is building a more resilient, connected, high-performing aviation sector across various verticals, including airlines, airports, cargo and logistics, and human capability and training systems.
“GACA has developed this report to fulfill its role as a strategic aviation regulator, measuring and recording the progress of the sector in line with the targets of the Saudi Aviation Strategy. The report also informs GACA’s ongoing regulatory work and the impacts of new regulations in creating greater competition, value, and choice in Saudi Aviation,” said Al-Duailej.
During the Future Aviation Forum, Saudi Arabia is expected to unveil a roadmap detailing how the Kingdom will grow its aviation sector tenfold into a $2 billion industry by 2030.
This year’s gathering will bring together more than 5,000 sector experts and leaders from more than 100 countries to discuss ways to shape the future of international air travel and freight management.
The Arab Energy Fund and Dussur sign $200m MoU to boost greenfield energy projects
RIYADH: Greenfield energy projects are set to receive a boost, as The Arab Energy Fund has signed a $200 million funding agreement with the Saudi Arabian Industrial Investments Co.
A memorandum of understanding was executed between the energy-focused financial institution TAEF and the Saudi-based industrial investment and development company, also known as Dussur.
This deal aims to fast-track and facilitate prospective financing opportunities for TAEF through bridge financing in selected greenfield projects promoted by Dussur.
Nicolas Thevenot, chief banking officer at TAEF, said: “We are thrilled to sign this MoU with Dussur and enter an era of collaboration to support the advancement of the flourishing energy sector in Saudi Arabia.”
He added: “Our strategic partnership with Dussur is also aligned with our planned investment of up to $1 billion to advancing the energy transition with a focus on decarbonization and related technologies over the next five years.”
The MoU contributes to the Kingdom’s efforts to advance industrialization and economic diversification by defining a broad framework agreement between TAEF and Dussur.
“Dussur is pleased to have signed this MoU with TAEF, which could unveil multiple collaborative opportunities to maximize Dussur’s impact on the Saudi economy,” said Omar Al-Qarawi, director of finance and accounting at Dussur.
He added: “Through this MoU, Dussur and TAEF aim to further their joint efforts to leverage strategic and sustainable industrial investments.”
In February, the Public Investment Fund-backed Dussur launched an oilfield services and industrial chemicals factory in Jubail in collaboration with Bakers Hughes, a Texas-based oilfield services provider.
The Saudi Petrolite Chemicals facility is expected to increase the Kingdom’s supply base of raw materials such as solvents and glycols.
It is intended to accelerate the development of the skills and capabilities of Saudi human resources in manufacturing, thus contributing to the increase in localization rates and the rapid delivery of chemical solutions.
The opening ceremony was attended by Saudi Energy Minister Prince Abdulaziz bin Salman, Investment Minister Khalid Al-Falih, and Minister of Industry and Mineral Resources Bandar Alkhorayef.
