Biden’s Saudi Arabia visit to script a new chapter in bilateral trade relations

 

US President Joe Biden’s upcoming visit to Saudi Arabia is expected to rely heavily on improving trade relations and the investment climate between the two nations.

The interactions between the companies and institutions of the two nations have been the highest in 2021, and the Kingdom has partnered with US tech giants such as Microsoft and Amazon to accelerate future economic development and empower women and youth around the world.

Moreover, the Saudi-US partnership is rooted in more than seven decades of close friendship and cooperation, fostering networking opportunities critical to mutual understanding and long-term investments.

In fact, a recent initiative by the Ministry of Investment of Saudi Arabia to reform the country’s legal system for foreign investors could increase international business by creating investment opportunities between the Kingdom and the US.

According to MISA, there has been a significant increase in the number of new investors entering the Kingdom, with entrepreneurship and innovation sectors registering 71 investment deals. Financial services came in second with 10 deals, while sports and petrochemicals recorded four and three, respectively.

The rest of the deals are spread almost equally among other industries. Regarding investment sources, the US was one of the top five Saudi investments in the first quarter, involving five transactions across different sectors.

The Kingdom more than tripled the number of deals closed in the first quarter of 2022 to a total of 101 deals with an estimated investment of SR15.2 billion ($4 billion) compared to 31 transactions during the same period last year, MISA reported.

According to the new investment law, foreign and local investments will be treated equally as the Kingdom seeks to diversify its economy away from oil exports.

More than $936 million in funding was recently announced at the 2022 Global Entrepreneurs Conference in March to facilitate the entry of international companies into the Saudi market.

Before announcing the new law, the World Bank predicted that the country’s gross domestic product would reach $820 billion by the end of 2022, a significant increase from $700 billion in 2020.

However, the new investment law will lead to more foreign investors coming to the Kingdom with neutral treatment, leading to an expected surge in business activity that could exceed World Bank forecasts.

While the Kingdom continues to work with investors worldwide, the US will remain central to its trade policies.

Nasser Alshareef

The Kingdom’s participation in Expo 2020 has also sparked interest among new companies interested in the region, especially its Vision 2030 blueprint and ambitious economic growth agenda.

US President Joe Biden’s upcoming meet with the Crown Prince will undertake formal discussions that will center on many areas of bilateral cooperation and cooperative efforts to solve regional and global problems.

Before Biden’s visit to the Kingdom, the Saudi minister of investments has already met with prominent US CEOs to improve ties between the two nations.

Exploring digital opportunities

The cooperation has also accelerated digital content market growth and improved investment prospects. The IGNITE program, launched by the Kingdom during the first LEAP conference, aimed to produce digital content and host innovative digital media events, showcasing its efforts in innovation and digital economy support globally.

The US is the second-largest trading partner of the Kingdom. The two nations have substantial investment opportunities in fintech, software, and alternative investment management with investment prospects to accelerate the growth rate of the Kingdom’s digital content market and develop the creative skills of the Saudi youth.

With around 37,000 Saudi students attending American colleges and institutions and many visitors coming for educational and cultural exchanges each year, the two nations also hold strong cultural and academic links.

The Kingdom is a crucial player in ensuring a peaceful and prosperous future for the region and a reliable partner in military, diplomatic and financial cooperation as well as security and counterterrorism initiatives.

It believes that trade is followed by investment. The investment will come when healthy trade conditions with few impediments and effective procedures are established. Businesses that succeed in the market seek to keep in touch with their consumers and expand their market presence via investment and innovation.

Bolstering defense tie-ups

The Kingdom and the US have a robust defense partnership. With over $100 billion in foreign military sales, the Kingdom is the largest foreign client of the US. The Department of Defense, the National Guard, and the Department of Interior are the three main US entities that support the Kingdom through FMS.

Since the 1950s, the Kingdom has relied heavily on the US Army Corps of Engineers for military and civilian building projects. Other initiatives encourage stronger institutional, educational, and cultural relations between the two nations.

The US collaborates with the Saudi government to offer technical support in economic growth, commerce and education sectors.

In fact, the Saudi government received plaudits from the US for its economic reforms and dedication to maintaining the economy’s long-term health.

By making adjustments to energy subsidies, the Kingdom also demonstrated true leadership. As a result, the US government and commercial sector are prepared to provide the Kingdom with solutions, best practices and technology to entice investment and creativity.

The Kingdom is also a member of several global institutions, such as the World Bank, the International Monetary Fund, the United Nations, and the World Trade Organization. It is also an observer of the Organization of American States.

The global competition for attracting FDI is fierce, and through bilateral investments, both economies will become more globally competitive.

The Kingdom looks forward to welcoming President Biden and laying out the terms to cement the political and trade ties.

The collaboration between two nations is as important as ever for peace and prosperity at a time when there are numerous issues on a global scale, including the economy, the population’s health, the climate, and stability throughout the world.

While the Kingdom continues to work with investors worldwide, the US will remain central to its trade policies.

The Kingdom recognizes that the opportunity for entrepreneurs to thrive globally is the foundation of an emerging middle class, security and stability, and broad-based investment prosperity.

• Nasser Alshareef is head of Business Administration Department and Faculty Vice Dean for Quality and Development at Majmaah University.