PIF invests in DigitalBridge to set up data centers across Saudi Arabia and GCC

According to a company press release, the partnership will prioritize investments in the data center sector and other segments of digital infrastructure in line with PIF’s strategy. (Shutterstock)
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Updated 24 May 2023
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PIF invests in DigitalBridge to set up data centers across Saudi Arabia and GCC

RIYADH: The Gulf Cooperation Council region will soon emerge as a data center development hub, with Saudi Arabia’s Public Investment Fund investing in a new partnership with global asset manager DigitalBridge. 

According to a company press release, the partnership will prioritize investments in the data center sector and other segments of digital infrastructure in line with PIF’s strategy. 

The note added that the fund’s strategy aims to enable sectors and increase local content by establishing partnerships with the private sector.   

The fund will leverage DigitalBridge’s expertise in investing, building and operating digital infrastructure to support the continued advancement of the Kingdom’s digital economy. 

“We see significant opportunity for continued growth in the sectors in which we specialize and look forward to leveraging our capabilities and expertise to capitalize on the long-term opportunities across this important region,” said Marc Ganzi, CEO at DigitalBridge, in a press statement. 

The investment will aim to localize technologies and support knowledge transfer to develop and operate hyper-scale data centers and database servers in the Kingdom and GCC region.
“As a global leader in digital infrastructure, we are pleased to partner with PIF to further enable the digital infrastructure buildout in Saudi Arabia and across the GCC countries,” Ganzi added. 

Earlier this year, PIF subsidiary Saudi Downtown Co. joined hands with the Kingdom’s Ministry of Communications and Information Technology to develop digitalization projects. 

Saudi Downtown Co. aims to build and develop digital infrastructure and communication technologies in 12 cities in the Kingdom. 

These initiatives are part of the fund’s five-year strategy launched in 2021 to inject $40 billion worth of investment into the domestic economy.  

DigitalBridge is a US-based digital infrastructure firm specializing in investing and operating cell towers, data centers, fiber, small cells and edge infrastructure. 

 


World Bank chooses Saudi Arabia as location for new knowledge hub

Updated 11 sec ago
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World Bank chooses Saudi Arabia as location for new knowledge hub

  • Hub will enable Kingdom to assist other countries looking to boost economic standings

WASHINGTON DC: A knowledge hub will be established in Saudi Arabia in a partnership between the Kingdom’s National Competitiveness Center and the World Bank Group, it was announced in Washington DC on Friday.

The new knowledge center will serve as a hub for sharing Saudi Arabia’s experience of economic reform and enhancing regional and global competitiveness collaborations with other countries looking to boost their economic standings, a statement released by the NCC said.

Saudi Minister of Commerce Majid Al-Qasabi, who is also chairman of the NCC board of directors, said the deal was testament to the significant progress made by the Kingdom in global competitiveness reports and indicators, which had been made possible by the leadership of Crown Prince Mohammed bin Salman.

Saudi ambassador to the US, Princess Reema bint Bandar, the President of the World Bank Group Ajay Banga and the Chief Economist of the World Bank Group Intermit Gill also attended the announcement event.

The hub, currently in the preparatory stage, will be overseen by a founding committee including the ministries of finance, economy, and planning, alongside several relevant government agencies.


Investment opportunities in Saudi Arabia abound beyond major cities 

Updated 9 min ago
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Investment opportunities in Saudi Arabia abound beyond major cities 

  • Decentralized development shifts attention away from the cities to the lesser-explored corners of the Kingdom

JEDDAH: In the heart of Saudi Arabia, amidst the towering skylines of Riyadh, Jeddah and Dammam that have long symbolized the nation’s economic strength, a new narrative is taking shape. It is a story of decentralized development, where attention is shifting away from the bright lights of the cities to the lesser-explored corners of the Kingdom.
In recent years, there has been a noticeable pull towards the untapped potential of smaller towns and regional municipalities, captivating the interest of investors, entrepreneurs, and policymakers alike.
This shift marks a departure from the traditional belief that growth is solely concentrated in urban centers, signaling a fresh era of exploration and diversification.
As Saudi Arabia steers towards a more resilient and inclusive economy, the growing fascination with these areas, which had not received much attention before Saudi Vision 2030 was announced, underscores the evolving priorities and ambitions guiding the Kingdom’s economic trajectory.
Talat Hafiz, a renowned economist, told Arab News that the focus on developing small towns, helps to limit internal movement of people to urban and large cities to seek job opportunities and look for better living.
“It also supports the government efforts in reaching comprehensive sustainable economic development,” he said.

Economist Talat Hafiz

Commenting on what sectors or industries within these smaller towns are experiencing the most significant growth, Hafiz said that the case differs from one place to another as each city has its own economic characteristics and competitive advantages.
“In some towns, tourism is the most competitive advantage while the industrial sector is more competitive and advantageous in the others,” he pointed out.
The economist noted that Saudi Vision 2030 has fostered the capabilities of local planning decentralization, which would allow municipalities to undertake tasks that boost the city in collaboration with the private sector.
He added that that, as a result, several small towns and cities have been upgraded to the level of urban cities which in turn has improved the infrastructure and public services.
“Boosting the capability of small towns is coupled with the development of universities and medical and educational facilities, which in turn has attracted investment, created job opportunities and limited internal immigration,” Hafiz said.
Nasser Al-Qaraawi, another economist, said that Saudi Vision 2030 took into consideration the need to alleviate congestion within major cities due to the excessive focus on them.


He added that the excessive population density in these major cities, compared to other cities, has made life difficult, noting that ineffective urban planning strategies contributed to the overcrowding, especially by young people seeking job opportunities and education.
“This was followed by the aftermath of the stock market crisis in 2006,” he told Arab News.
Al-Qaraawi added that when the 2030 plan was announced, developing areas surrounding the larger cities and less developed regions were given the opportunity for growth.
However, he further said, these regions unfortunately vary in success as some municipalities are unable to perform to their full potential due to bureaucratic hurdles.
Al-Qaraawi recommended restructuring the municipalities, as development indicators highlight the pressing need to catch up and enact meaningful change within these local governments to fulfill the state’s goals and meet the citizens’ aspirations.
Investment opportunities in smaller municipalities include the following:

Diverse investment opportunities in EP municipality 

Eastern Province’s urban administration has unveiled 362 diverse investment opportunities, spanning cities and governorates.

Covering over 20,000 assets across 116 million sq. m., the initiative includes sectors like infrastructure, transportation and tourism. Investors were urged to capitalize on incentives like contractual extensions and exemption periods.

These investment portfolios serve as a database for significant investment growth in the region, according to the Saudi Press Agency.

Jazan as key investment hub, coffee capital
With its significant port and refinery, Jazan has experienced a surge in investment, driven by rapid infrastructure expansion. The economic zone aims to attract SR11 billion ($2.93 billion) in foreign investments by 2040, leveraging its untapped mining reserves. The region is poised to become a hub for the mining sector, projected to be Saudi Arabia's third pillar of industry.
Additionally, Jazan’s integrated economic center is expected to generate 17,000 direct jobs by 2040 and contribute significantly to the gross domestic product.
During the Cityscape Global Exhibition, held in Riyadh from Sept. 12-13 last year, Jazan Municipality announced 5,000 investment opportunities to be launched from 2023 to 2027, with a total value exceeding SR5 billion.
Among the most prominent developmental and investment projects presented were the Jazan Gateway, Water Park City, Al-Wadi Park, and Jazan Private University as well as Jazan Private Medical City.
On the other hand, the region’s renowned coffee industry adds to its cultural heritage, with plans for the International Saudi Coffee Exhibition to support local farming initiatives and transform Jazan into a global trade center.
The Sustainable Rural Agricultural Development Program has provided more than SR155 million in support to the coffee sector, benefiting over 3,000 farmers. The Ministry of Environment, Water, and Agriculture, in collaboration with the private sector, is implementing various projects, including opportunities for coffee cultivation.

Northern Borders region attracts more investors 

The Kingdom seeks to establish a logistics zone in Arar, where investors will be granted land plots, according to Minister of Commerce Majid Al-Qasabi, who made the statement during his speech at the Northern Borders Investment Forum, held in November 2023.  
According to a release issued by the Arar Municipality in January 2024, Saudi Arabia’s Northern Borders region saw a 58.3 percent growth in factory numbers in the third quarter of 2023, with total investment hitting SR74.3 billion. 
The statement added that the area, driven by a strategic regional development office, attracted increased corporate spending for business setups during that period, rising from SR73.9 billion in the third quarter of 2023.
In February 2023, Crown Prince Mohammed bin Salman announced the establishment of the Strategic Office for the Development of the Northern Borders region to enhance the quality of life in the area. 

Asir region to exploit huge tourism potential

In September 2021, the crown prince unveiled a SR50 billion tourism strategy for Asir, aiming to attract over 10 million visitors by 2030. Dubbed “The Arabian Highland,” the plan entails comprehensive development, focusing on cultural and natural assets to establish Asir as a year-round destination.

Projects include enhancing tourist attractions on Asir’s mountains, leveraging the region’s rich culture and heritage for social and economic growth. The strategy taps into Asir’s tourism potential, emphasizing geographical diversity and modernizing infrastructure.
In October 2023, the crown prince announced a master plan for the new Abha International Airport, increasing capacity to accommodate 13 million passengers annually and enhancing air connectivity to 250 destinations, aligning with Saudi Vision 2030.
In the same month, he launched Ardara Co. to develop the Abha Valley project, contributing to Saudi Arabia’s National Tourism Strategy to position the Kingdom as a global tourism hub by 2030. These initiatives create opportunities across sectors like hospitality, agriculture, and entertainment, bolstering private sector growth. 

Taif attracts investments of over SR11 billion

Investment agreements exceeding SR11 billion were announced on the first day of the Taif Investment Forum, held in November 2023, according to the Saudi Press Agency. 
Under the theme “Invest in Taif,” the three-day forum saw active participation from industry leaders in the UK, China and South Korea. Several high-ranking officials from Saudi government agencies and the private sector also attended. 
Sultan Al-Saadoun, the general supervisor of the forum, emphasized that the investment agreements are the result of partnerships between the public and private sectors in over 27 projects.
He added that these projects will create more than 10,000 job opportunities for the people of Taif of both genders.  
Ghazi Al-Quthami, president of the city’s Chamber of Commerce and Industry, underscored Taif’s potential for investments in various sectors, such as tourism, agriculture, industry, and healthcare.
He added that the chamber is actively collaborating with relevant entities to expand investment opportunities in the city. 

Al-Jouf provides 700 investment opportunities in 2023

The municipality of the northern region of Al-Jouf, which is home to the Sakaka solar power plant, announced in February 2024 it had introduced more than 700 opportunities in the municipal sector of the region during 2023 through the ‘Furas’ municipal investment portal.
The region’s mayor, Atef Al-Shara’an, emphasized the municipality’s commitment to presenting the available investment opportunities to investors in accordance with the plans of the Ministry of Municipal and Rural Affairs and Housing, and the goals of Vision 2030 of the Kingdom, according to SPA.

Al-Shara’an added that the investment opportunities presented during the past year varied between major, medium, small, and temporary opportunities in all commercial, recreational and tourist as well as sports, service, seasonal events, and other fields.
Recently, the region’s mayoralty announced the bid opening for eight commercial and residential investment opportunities for national investors and institutions at Al-Esawia sub-municipality. The bid evaluation meeting is scheduled for April 15.

Yanbu emerges as entertainment hub 
A contract worth SR1.1 billion has been granted to build a new entertainment hub in Yanbu to boost economic diversification in Saudi Arabia.
The contract was awarded by Public Investment Fund subsidiary Saudi Entertainment Ventures, also known as SEVEN, to a joint venture between Al Bawani Co. and UCC Saudi, according to a press release.
The statement emphasized that the entertainment hub will be located along the seafront promenade on Al Nawras Island, aiming to greatly enhance the city’s local entertainment scene.
In a press statement, issued in September 2023, SEVEN said that the company is investing more than SR50 billion to build 21 entertainment destinations across Saudi Arabia.  
The company has earlier announced that it had already begun construction works on its entertainment destinations in the Al Hamra district of Riyadh and Tabuk. 

Buraidah Municipality unveils 28 investments opportunities

The Qassim region, home to Buraidah city, stands as a province abundant in natural and agricultural resources. Notably, it hosts the Middle East’s only bauxite mine, yielding approximately 5 million tonnes of ore and contributing to the Kingdom’s aluminum production of 1.8 million tonnes in 2020.
The Buraidah Municipality has recently unveiled 28 investment opportunities for the first quarter of 2024.
These opportunities encompass a wide range of sectors, from commercial, health, and tourism activities to transportation, construction, and entertainment projects. Additionally, investors can explore prospects in agriculture, education, and other sectors, promising diverse avenues for growth and development.

It is apparent that, by tapping into regional potential and spreading development initiatives, the Kingdom aims to reduce reliance on oil revenues, stimulate job creation, and foster widespread prosperity, in line with the goals of Saudi Vision 2030.
 


IMF, World Bank steering committee stresses accountability as reforms advance

Updated 20 April 2024
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IMF, World Bank steering committee stresses accountability as reforms advance

  • Governors of the institutions urged the World Bank to continue to bolster global and regional partnerships

WASHINGTON DC: The steering committee for both International Monetary Fund and the World Bank on Saturday emphasized the need for broader accountability as the institutions implemented reforms to help countries grapple with climate change and other shocks.

“We must hold ourselves accountable more broadly as we become a better and bigger bank,” said Mohammed bin Hadi Al Husseini, the United Arab Emirates’ minister of state for finance, who heads the joint Development Committee this year.

Al-Husseini issued a chair’s statement, rather than a communique, amid disagreements over wars in the Middle East and Ukraine, but referenced economic risks posed by the conflicts. The statement came as this week’s meetings of the IMF and World Bank drew to a close.

Governors of the institutions urged the World Bank to continue to bolster global and regional partnerships, and asked its management to push ahead with country engagement reforms and enhanced country diagnostics.

They also encouraged further collaboration between the World Bank and IMF to help countries mobilize more revenues at home, and on issues such as climate change and pandemic preparedness, as well as debt sustainability.


Saudi chair of IMFC acknowledges impact of global crises, says they should be discussed in other forums

Updated 20 April 2024
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Saudi chair of IMFC acknowledges impact of global crises, says they should be discussed in other forums

  • Thanks expressed to outgoing chair Nadia Calvino for her leadership

RIYADH: The International Monetary and Financial Committee on Friday held its biannual meeting in Washington DC to discuss the global macroeconomic and financial impact of current conflicts.

The IMFC members focused on the war in Ukraine, the humanitarian crisis in Gaza, and shipping disruptions in the Red Sea, said Mohammed Al-Jadaan, the Saudi minister of finance and the body’s chair.

Al-Jadaan said IMFC members acknowledged that the crises had significant impacts on the global economy, but added that the body was not the forum to resolve geopolitical and security issues, and that they should be discussed in other forums.

He said: “The IMFC’s role is to advise and report on the supervision and management of the international monetary and financial system. This includes responses to events that may disrupt the system.

“Of course, the world and the IMF (International Monetary Fund) itself have faced multiple global disruptions over the last few years. Prospects are improving, which is very positive, but numerous challenges remain, and we need to be vigilant and ready to address them. Today’s era must not be of war and conflict.”

The Saudi minister chairs the IMFC, the policy advisory body to the IMF’s board of governors, and was speaking during the committee’s gathering at the Spring Meetings of the IMF and World Bank.

The IMFC thanked outgoing chair Nadia Calvino for her leadership and welcomed Al-Jadaan as her replacement.

Al-Jadaan said: “A soft landing for the global economy appears to be drawing closer.

“Economic activity has proved more resilient than expected in many parts of the world, though it continues to diverge across countries.”

But as ongoing conflicts continue to burden the global economy, this has led to some weak growth prospects in the medium term.

Al-Jadaan said: “Even though inflation has fallen in most regions, owing to the unwinding of supply shocks and the effects of tight monetary policy, its persistence warrants caution.

“While risks to the outlook are now broadly balanced, downside risks remain, hinging on the near-term paths for inflation and interest rates, asset prices and financial stability, fiscal policy actions, as well as geopolitical developments.”

Other pressing challenges were also affecting the global economy, such as climate change, elevated debt vulnerabilities, rising inequality, and the risk of geoeconomic fragmentation, he added.

The Saudi minister said: “Against this background, our policy priorities are to achieve price stability, strengthen fiscal sustainability, and safeguard financial stability, while promoting inclusive and sustainable growth.

“We will proceed with rebuilding fiscal buffers, carefully tailoring actions to country-specific circumstances, while protecting the most vulnerable and growth-enhancing investment.”

Al-Jadaan said central banks remained strongly committed to achieving price stability and would continue to communicate policy objectives to help limit negative spillovers.

He added: “We continue working to address data, supervisory, and regulatory gaps in the financial sector, especially nonbank financial institutions, where relevant, and stand ready to deploy macroprudential policy tools to mitigate systemic risks.”

He said the IMF stresses the importance of international cooperation to improve the resilience of the global economy and the international monetary system, adding that members will “act collectively, as appropriate, to support climate and digital transitions, including artificial intelligence, while accounting for country-specific circumstances.”

During the meeting, which was held in the presence of the IMF’s Managing Director Kristalina Georgieva, Al-Jadaan reiterated the IMF’s commitments on exchange rates, addressing excessive global imbalances, governance, and avoiding protectionist measures.

He said: “We will also continue working together to strengthen the global financial safety net, address global debt vulnerabilities (and support) vulnerable countries as they undertake reforms to tackle their vulnerabilities and address their financing needs.”

Al-Jadaan also said the IMF would continue its “critical and catalytic role in providing financial assistance to help members address their balance of payments problems and achieve economic stability and inclusive growth.”

He added that the body was looking to welcome a new 25th chair on the IMF’s Executive Board for Sub-Saharan Africa in November to improve representation and the overall balance of regional representation.

He said: “We support the IMF’s strengthened efforts to attract and develop talent to support existing and new priority areas, and to further improve staff diversity and inclusion, responding to the specific challenges identified in the FY2022-FY2023 Diversity and Inclusion Report.”

He also announced that the next IMFC 24 members’ meeting was expected to be held in October. Representatives usually meet twice a year, at the Bank-Fund Annual and Spring Meetings, to outline the proposed agenda for the IMF’s work program.


GCC countries should strengthen supply chains to ensure industrial growth: Oliver Wyman

Updated 19 April 2024
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GCC countries should strengthen supply chains to ensure industrial growth: Oliver Wyman

RIYADH: Countries in the Gulf Cooperation Council region should develop supply chain resilience strategies as they embark on large-scale industrialization of their economies, a report said. 

According to management consulting company Oliver Wyman, current risk levels in the logistics sector need to be mitigated, especially for countries like Saudi Arabia and the UAE which depend on high-criticality products such as transformers and minerals which are crucial for industrial growth. 

“In Saudi Arabia, 75 percent of transformer imports originate from only three countries. Any potential disruption in transformer supply could significantly impact several sectors such as power, manufacturing, transportation, and healthcare,” the report said. 

It added that logistical issues could impact power supply, leading to decreased industrial productivity, infrastructure vulnerabilities in systems that require constant energy supply, and economic instability. 

“As GCC countries scale up their economic diversification plans, including their industrial sectors, it is vital that they redouble initiatives to increase supply chain resilience to ensure the smooth functioning of all sectors and aspects of society in the event of unexpected upheavals in the supply chain,” said Frederic Ozeir, partner and head of Automotive and Manufacturing Industries, India, Middle East and Africa region at Oliver Wyman. 

The vitality of supply chain resilience

Oliver Wyman noted that vulnerabilities in global supply chains came under greater scrutiny in recent years following the pandemic and numerous climate-change-induced natural disasters, in addition to cybersecurity threats, logistics challenges, and geopolitical issues. 

During these years, industries across the spectrum have been forced to grapple with production delays, shortages, and an increase in prices, as well as growing demand and unexpected bottlenecks, which have highlighted the critical importance of resilient logistical chains.

“For example, of all the electrical machinery and equipment imported to both Saudi Arabia and the UAE, 60 percent and 65 percent, respectively, are imported from just three countries. Similarly, for excavation machinery and valves, Saudi Arabia and the UAE import 50 percent and 55 percent of the total from three countries,” said Oliver Wyman. 

The US-based firm added that various sectors are directly dependent on the industrial supply chain, and any disruptions could have a domino effect which will amplify vulnerabilities in vital sectors that are important for health, safety, and security.

Highlighting the necessity to maintain a functional supply chain, the report noted that the healthcare industry relies on the timely delivery of medical equipment and pharmaceuticals, while the power sector hinges on a steady inflow of critical machinery and components, such as turbines, generators, and transformers. 

Moreover, GCC countries are heavily reliant on desalination machinery such as membranes, pumps, and valves because desalination is the source of most of the urban water in the region.

Saudi Arabia leading the region to ensure supply chain resilience

Oliver Wyman, in its report, also lauded Saudi Arabia’s efforts to ensure a healthy logistics sector in the Kingdom, as well as the whole region. 

“In 2022, KSA launched the Global Supply Chain Resilience Initiative as part of its National Investment Strategy. This aims to position the Kingdom as a location of choice for leading global industrial companies, attracting investments in supply chains in order to mitigate the impact of global disruptions,” said the report. 

The study added that the UAE is also focussing on improving food supply chains through various programs such as those that support local and sustainable food production, as well as by establishing new logistics hubs and deploying cutting-edge technological solutions. 

Key actions to bolster supply chain resilience in the GCC

According to the report, governments in the GCC region should develop supply chain resilience strategies that seamlessly align with their national industrialization programs. 

Moreover, such strategies should be supported by a set of enablers covering governance, private sector involvement, capabilities, and technology. 

Oliver Wyman also underscored the necessity of having a collaborative governance framework between different countries to strengthen the supply chain in the Middle East region. 

“GCC ministries of industry and mining can work with other ministries, especially those of vital sectors to ensure supply chain resilience. As an example, a GCC Ministry of Industry that collaborates with its counterpart in the Ministry of Health would be able to better develop appropriate actions for ensuring resilience of the supply chain of medical devices,” said the report. 

Healthcare has been identified as one of the sectors at risk from supply chain disruption. Shutterstock

The report also added that GCC governments should leverage the private sector as a crucial partner in their supply chain strategies. 

According to the report, countries in the region can ensure supply chain durability by incentivizing logistical resilience initiatives among the private sector, and implementing inspection and corrective actions.

Moreover, the consulting firm added that GCC countries should establish specialized teams within their ministries of industry, comprising professionals with expertise in risk assessment and management, logistics operations, data analytics, and technology to build up the logistics network. 

“Various capabilities are also required across the industrial sector, such as risk assessment and management, advanced technology integration and utilization, data analytics and business continuity planning, cybersecurity, and collaboration and information sharing,” the report added. 

The study highlighted that nations in the region should also encourage the adoption of technology through advanced manufacturing policies that will drive the use of 3D printing, robotics, augmented reality, and automation. 

Industrial cybersecurity requirements should also be considered given the connectivity and data sharing within factories, driven by automation and the Internet of Things, the consulting firm added. 

Oliver Wyman noted that GCC countries should adopt a holistic approach that combines localization with other supply chain resilience levers to safeguard the industrial growth of these nations. 

“Achieving supply chain resilience in the industrial sector is not a one-size-fits-all endeavor. The levers deployed to fortify supply chains, such as localization, shoring, and partnerships, must be applied to the supply chain components of products with high criticality and risk,” Ozeir. 

The study concluded that supply chain resilience is not just a choice for GCC nations, but a necessity, and one that will guarantee the sustainability of their burgeoning and all-important industrial sectors.