Vision 2030 putting Saudi Arabia on the map for global investors, experts say

Vision 2030 is continuing to bear fruit. Shutterstock
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Updated 12 April 2024
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Vision 2030 putting Saudi Arabia on the map for global investors, experts say

JEDDAH: Saudi Arabia’s investment landscape is poised for a prosperous future, fueled by its equity and debt markets, a range of economic experts have told Arab News.

Senior figures from the Kingdom’s branch of investment bank J.P. Morgan, financial media outlet Bloomberg, and Saudi tourism funding firm ASFAR all spoke of the positive impact of the Vision 2030 economic diversification strategy. 

By focusing on the growth of various sectors, such as tourism, healthcare, and renewable energy, the Kingdom aims to reduce its economic reliance on fossil fuels, foster innovation, create jobs, and enhance citizens’ quality of life. 

This is already bearing fruit, according to Amine Fichtali, head of investment banking at J.P. Morgan Saudi Arabia.

He told Arab News that the Kingdom stood out as an exciting, compelling investment story for investors.

Fichtali added that Saudi Arabia is a top-down, long-term structural story underpinned by socio-economic transformation and the execution of several regulatory reforms that help to promote the Kingdom globally.

These sentiments were echoed by European Director of Bloomberg Constantin Cotzias. 

He believes that Saudi Arabia — with various reforms in its regulatory framework — is emerging as a favorite destination for international investors. 

Cotzias told Arab News that international investors want three things.

“They want liquidity, a framework of governance and regulation that works, and a balance of good supervision and innovation to be properly balanced. And then they want that framework to encourage them with investment and the growth in that investment,” he said, adding that Saudi Arabia is on the right path.

One of the initiatives to attract businesses to the Kingdom was to offer tax breaks and other incentives to companies that applied to move their regional headquarters to Riyadh before the end of 2023.

This helped encourage some 200 firms to make the shift, including Northern Trust, Bechtel and Pepsico from the US, and IHG Hotels and Resorts, PwC, and Deloitte from the UK.  

Google, Microsoft and IBM as well as Oracle, Pfizer and Amazon, also have regional headquarters in Riyadh.




Saudi Arabia’s Minister of Investment Khalid Al-Falih presented IBM executives with the regional HQ license in January. IBM

Tourism strategy 

Tourism is one of the key sectors driving the economic shift in the Kingdom, and Saudi Arabia has launched several initiatives to grow the industry.

These include the opening of historical sites, easing of visa restrictions, and the promotion of cultural heritage to attract international visitors. 

All these measures are expected to have huge economic returns and boost the tourism sector resulting in the creation of direct and indirect jobs.

The Kingdom is targeting more than 30 million pilgrims and 150 million tourists every year as part of its ambitious Vision 2030, having already met its original goal of 100 million visitors.

Speaking during a ministerial panel session at the Private Sector Forum held in Riyadh in February, Tourism Minister Ahmed Al-Khateeb said that the total number of hotel rooms in the Kingdom reached 280,000 in December.

“The quality of rooms and projects is excellent and will place the Kingdom among the best in the world. The target for 2030 is approximately 550,000 hotel rooms,” the minister informed.

Moreover, the Ministry of Tourism recently unveiled the Tourism Investment Enablers Program, aimed at streamlining business practices and bolstering investment appeal for both local and international investors.

As part of the program, the Ministry of Tourism, in collaboration with the Ministry of Investment, announced the Hospitality Sector Investment Enablers Initiative, aiming to increase and diversify tourism offerings and bolstering the capacity of hospitality facilities in targeted tourist destinations across the Kingdom.

This initiative aims to attract investments in the hospitality sector, with a value of approximately SR42 billion ($11.46 billion), projecting estimated revenues of about SR16 billion to the Kingdom’s gross domestic product by 2030, reported SPA.

Al-Khateeb stated: “We witnessed a 390 percent increase in demand for tourism activity licenses last year, marking the beginning of the Kingdom’s significant investment in the tourism sector over the next decade, providing opportunities and a conducive investment environment for both local and international investors.”

Meanwhile, ASFAR CEO Fahad bin Mushayt told Arab News many regulations have recently changed, and more are yet to come, including the facilitation of visa issuance, be it for business, religious, or tourism purposes.

ASFAR is a company owned by the Public Investment Fund to drive investments in tourist destinations and projects across the Kingdom. 

“The other target that the country has set as part of Vision 2030 is to drive the contribution of tourism to the gross domestic product from 3 percent to 10 percent by 2030,” he added.




Fahad bin Mushayt, CEO of ASFAR. (Supplied)

National industrial program 

The Saudi industrial sector is significantly contributing to economic diversification through various programs and initiatives.

One of these is the National Industrial Development and Logistics Program, which seeks to elevate the Kingdom into a premier industrial powerhouse and a worldwide logistics center.

NIDLP focuses on optimizing the mining and energy sectors’ value while harnessing the full potential of other local resources. 

Speaking at the NIDLP annual ceremony in December, Minister of Industry and Mineral Resources Bandar Alkhorayef explained that the program acquired five new renewable energy projects to ensure reasonable costs.  

He noted that the NIDLP program has significantly contributed about 35 percent of the non-oil GDP, making up to SR345 billion. 

Furthermore, NIDLP announced investments worth SR206 billion in non-oil exports and SR97 billion in nongovernmental funds.

Alkhorayef also highlighted the mining sector’s record revenues of over SR1.45 billion in 2023. 

Economic journalist Jamal Banoon told Arab News that diversifying the industrial base is a strategic challenge for Saudi Arabia, as it seeks to develop this sector sustainably and achieve economic diversification.

“One of the most important aspects is investing in infrastructure and research and development, while enhancing industrial infrastructure to accommodate investments and develop industrial projects, with the aim of improving production techniques and processes and enhancing efficiency,” he said.

Banoon added that, in recent years, Saudi Arabia has focused on emerging industries, including renewable energy, information and communications technology, robotics, and smart manufacturing. 

Consequently, this direction will drive it toward more alliances with international companies to transfer technologies and experiences, enhance competitiveness, and expand markets.

Furthermore, he added that Saudi Arabia has invested around $50 billion in infrastructure and research and development so far, especially in the field of emerging industries. It has also achieved significant growth in sectors such as aviation, space, and maritime industries.

Renewable energy drive 

Saudi Arabia has been actively pursuing renewable energy initiatives to diversify its energy mix and reduce its reliance on fossil fuels, with Vision 2030 outlining ambitious goals for the Kingdom's renewable energy sector.

The vision aims to increase the share of renewable power in the energy mix to 50 percent by 2030.

NEOM, for instance, is a flagship project aimed at developing a futuristic city powered entirely by renewable energy. It envisions a sustainable and environmentally friendly urban center with a focus on renewable energy and innovation.

Moreover, the Green Riyadh Initiative aims to transform the capital city into a more sustainable and environment-friendly metropolis. It includes plans for expanding green spaces, promoting energy efficiency, and implementing renewable energy projects.

Furthermore, Saudi Arabia has been investing in research and development of renewable energy technologies to drive innovation and enhance the efficiency of renewable power generation.

According to Banoon, Saudi Arabia is expected to become a leader in clean energy and achieve environmental sustainability.

“Within its plans and programs toward further economic liberalization and income source diversification, the Kingdom has invested in renewable energy sources. It aims to increase productivity from the current 300,000 megawatts through the Sakaka solar power plant and the Dumat Al-Jandal wind farm, expecting to reach 2 gigawatts of renewable resources,” he said, adding this project relies on generating electricity from traditional fuel sources.

Healthcare development 

Saudi Arabia’s efforts to diversify its economy through healthcare are commendable and strategically significant.

By focusing on the healthcare sector as a key driver of economic diversification, the Kingdom aims to enhance the quality of healthcare services, improve accessibility, and foster innovation and technological advancement within the industry.

Banoon commented that the healthcare sector diversification strategy is crucial for Saudi Arabia’s economic resilience and sustainability.

“Saudi Arabia’s investments in healthcare infrastructure are pivotal for attracting foreign investment and talent, driving economic growth in the long term,” the economist said, adding that investing in preventive healthcare not only improves public health outcomes but also reduces costs in the long run, contributing to economic stability.


EU states give final endorsement to AI rules

Updated 21 May 2024
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EU states give final endorsement to AI rules

  • The EU says the law will protect citizens from AI’s dangers while harnessing the technology’s potential in Europe

RIYADH: EU states on Tuesday gave their final backing to landmark rules on artificial intelligence that will govern powerful systems like OpenAI’s ChatGPT.

The European Parliament had already approved the law in March and it will now enter into force after being published in the official EU journal in the coming days.

The EU says the law will protect citizens from AI’s dangers while harnessing the technology’s potential in Europe.

First proposed in 2021, the rules took on greater urgency after ChatGPT arrived in 2022, showing generative AI’s human-like ability to produce eloquent text within seconds.

Other examples of generative AI include Dall-E and Midjourney, which can produce images in nearly any style with a simple input in everyday language. The law known as the “AI Act” takes a risk-based approach: if a system is high-risk, a company has a tougher set of obligations to fulfill to protect citizens’ rights.

There are strict bans on using AI for predictive policing and systems that use biometric information to infer an individual’s race, religion or sexual orientation. Companies will have to comply by 2026 but rules covering AI models like ChatGPT will apply 12 months after the law becomes official.

Pledge

The world’s leading companies pledged at the start of a mini summit on AI to develop the technology safely, including pulling the plug if they can’t rein in the most extreme risks.

World leaders are expected to hammer out further agreements on artificial intelligence as they gathered virtually to discuss AI’s potential risks but also ways to promote its benefits and innovation.

The AI Seoul Summit is a low-key follow-up to November’s high-profile AI Safety Summit at Bletchley Park in the UK, where participating countries agreed to work together to contain the potentially “catastrophic” risks posed by breakneck advances in AI.

The two-day meeting — co-hosted by South Korea and the UK — also comes as major tech companies like Meta, OpenAI and Google roll out the latest versions of their AI models.

They’re among 16 AI companies that made voluntary commitments to AI safety as the talks got underway, according to a British government announcement. 

The companies, which also include Amazon, Microsoft, France’s Mistral AI, China’s Zhipu.ai, and G42 of the UAE, vowed to ensure safety of their most cutting edge AI models with promises of accountable governance and public transparency.

The pledge includes publishing safety frameworks setting out how they will measure risks of these models.


Saudi Arabia is a model of sustainable aviation practices: ICAO official

Updated 21 May 2024
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Saudi Arabia is a model of sustainable aviation practices: ICAO official

RIYADH: Saudi Arabia is a “model” for sustainable practices in the aviation section, said president of the International Civil Aviation Organization Council.

In an interview with Arab News during the Future Aviation Forum in Riyadh, Salvatore Sciacchitano emphasized the Kingdom’s position as an emerging leader in sustainable aviation. 

Speaking about the global agenda to reduce carbon emissions, Sciacchitano said: “Saudi Arabia is in this sense a model because their plan of development is in the perspective of sustainability. This is very positive.” 

“They have projects for low-carbon emission fuels. That means fossil fuels but to produce reduced emissions thanks to green energy that is used for the production. So this is a good direction,” he added.  

The ICAO official highlighted the importance of adhering to international standards and practices, saying that Saudi Arabia’s aviation growth aligns with global standards.  

He stated: “The regulations are there, we call SARPs, standards and recommended practices, these are applicable all over the world to all 193 (member) states of ICAO.” 

Highlighting the role of the Kingdom’s General Authority of Civil Aviation, Sciacchitano praised the support of the authority to the Regional Safety Oversight Organization, which is a way to put resources together at the regional level. 

“Let me say that the GACA is well advanced in terms of programs, projects, training, and also providing support at (the) regional level,” he said. 

“In this sense, Saudi Arabia is well prepared, not just to support its own development, but also to support the development of the region,” he added. 

Sciacchitano said ICAO is there to support its member states. Although he believes that the Kingdom is fully capable of achieving its goals independently. “We absolutely support them with our expertise,” he added. 

Sciacchitano predicted a significant increase in global air traffic, with the number of passengers expected to reach 11.5 billion by 2050, up from the current 4.6 billion.  

He emphasized the need for technological advancements to accommodate this growth, stating that technologies will allow the world to accommodate more airplanes in the air and more space on the ground. 


Pakistan approves petrol, diesel supply deal between Aramco, GO Petroleum

Updated 21 May 2024
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Pakistan approves petrol, diesel supply deal between Aramco, GO Petroleum

KARACHI: The Competition Commission of Pakistan has granted a time-bound exemption on relevant clauses of a product supply agreement between Saudi oil giant Aramco and Gas & Oil Pakistan Ltd.,  known as GO Petroleum, for the import and sale of petrol and diesel products to Pakistan, the CCP said on Tuesday.

Aramco Trading Co. Fujairah FZE Ltd. is one of the world’s largest integrated energy and chemicals companies, while GO Petroleum is an oil-marketing company registered in Pakistan that operates a network of retail outlets across the country that sell petrol, diesel and lubricants.

Under the agreement, ATC Fujairah intends to meet GO Petroleum’s demand for essential petroleum products for its outlets, which primarily includes petrol and diesel.

“The parties submitted to the CCP that this arrangement is expected to achieve economies of scale in procurement for GO Petroleum, potentially resulting in better prices for Pakistani consumers,” the CCP said in a statement.

“The exemption sought was on exclusivity aspects of the commercial agreement to supply 100 percent demand of imported products for GO Petroleum’s retail outlets. The CCP has accordingly granted exemption on the product supply agreement with certain conditions included therein.”

The CCP grants exemptions pursuant to Section 9 of the Competition Act, 2010, ensuring that such exemptions have economic benefits that outweigh anti-competitive effects.

“The CCP’s conditions stipulate that both parties must refrain from engaging in anti-competitive activities. Importantly, the exemption does not include approval on any pricing terms and mechanisms related to the products,” the CCP statement read.

“Additionally, as the agreement has referred to certain off specification products, however approval of concerned sector regulator should be ensured for import and sales. The applicants have also been directed to ensure required approvals on their terminals and storage facilities by relevant authorities to be used in the execution of this agreement.”

Subject to the conditions, the CCP said, it had granted the exemption until June 2026 and both applicants could approach it for an extension with required details and also identifying the benefits that have accrued to the improved distribution network of petroleum products and enhanced competition in the market.

Last month, the CCP approved Saudi oil giant Aramco’s move to acquire a 40 percent stake in Go Petroleum, officially marking the Saudi company’s entry into Pakistan’s fuels retail market.

The CCP said it had authorized the merger after determining the acquisition would not result in the acquirers’ “dominance” in the relevant market post-transaction. The acquisition would help bring much-needed foreign direct investment in Pakistan’s energy sector, contributing to economic growth and development of the country, it added.

In February 2019, Pakistan and Saudi Arabia inked investment deals totaling $21 billion during the visit of Saudi Crown Prince Mohammed bin Salman to Islamabad. The agreements included about $10 billion for an Aramco oil refinery and $1 billion for a petrochemical complex at the strategic Gwadar Port in Balochistan.

Both countries have lately been working to increase bilateral trade and investment, and the Kingdom recently reaffirmed its commitment to expedite an investment package worth $5 billion.


Saudi Arabia to reveal new innovative tourism strategy in 2024: top official

Updated 21 May 2024
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Saudi Arabia to reveal new innovative tourism strategy in 2024: top official

RIYADH: Saudi Arabia is set to unveil a new tourism strategy this year utilizing artificial intelligence and seamless technology, according to a top official.

Speaking to Arab News in an interview on the sidelines of the Future Aviation Forum 2024, Gloria Guevara Manzo, chief special adviser at the Ministry of Tourism, noted that the plan seeks to maximize the Kingdom’s assets including culture, history, heritage and hospitality.

“Right now, the ministry, under the leadership of his excellency, is developing the new strategy, and that new strategy is going to include several new things, such as the use of AI, for instance, seamless and many other technologies that are important for growth,” Manzo said.

She added: “(The) strategy, hopefully is going to be released this year and is going to be shared with the world. The strategy that we have right now was developed in 2019. We accomplished the milestone of the 100 million tourists, domestic and international, seven years ahead (of schedule).”

Manzo also discussed the importance of sustainability so people are still “enjoying” the world today while ensuring resources are preserved for future use

This concept involves multiple facets, including economic, environmental, and social considerations.

“For 30 years, we have been measuring and that’s why we know that 10 percent of the global gross domestic product before the pandemic (came from travel and tourism), and we’re going to reach that number this year again,” Manzo said.

She added that before the COVID-19 outbreak there were 330 million jobs in the industry, adding: “This year, we’re hoping to break a record with 348 million. One out of 10 jobs depends on this sector, so the economic aspect is very clear. The social aspect also is quite interesting — 54 percent women, 30 percent youth.”

Manzo emphasized the positive social impacts of travel and tourism, such as poverty reduction and the prevention of illegal migration by providing local job opportunities.

Despite these benefits, there had been a lack of clear measurement regarding the sustainability of this industry.

However, a significant study sponsored by Saudi Arabia, particularly by Minister of Tourism Ahmed Al-Khateeb and the ministry, addressed this gap.

Released last year, this provided comprehensive insights into the environmental impact of travel and tourism, revealing that 8.1 percent of greenhouse emissions are attributable to this sector.

“Now that we know that, then we can go industry by industry to understand what is the impact, and from that 8 percent, 47 percent is due to transportation and it could be aviation, it can be road, it can be cruising all the different aspects,” she said.

Manzo added: “Now, the reality is that aviation counts between 1.5 and 2 percent of the global emissions. But as I said in the panel, we cannot see this in an isolated approach. We need to see this from a holistic point of view. We need to understand what are the quick wins.”

Therefore, she noted that this does not mean stopping flying is the solution, as it has “very severe consequences.”

She said: “Millions of people can lose their jobs. We saw that during the pandemic, travel provides food on the table to millions of people from around the world. That’s a factor that we have to consider.” 

Mazo stated that the right approach should be finding ways to travel in a more sustainable way, as she referred to a statement by Saudi Energy Minister Prince Abdulaziz bin Salman ,when he said that the Kingdom is leading this transition.

Furthermore, the adviser stressed the importance of the Future Aviation Forum as it reflects the significance of connectivity within and outside the Kingdom as emphasized by Al-Khateeb on the first day.

“We need to increase the connectivity within the Kingdom, to the Kingdom and of course outside in order to increase the trade and do business and have more exports, more imports, and all of the above,” she stated.

Manzo continued: “In that regard it is very important to continue with the partnerships, not only at the destination level, but also at the corporate level and with the different entities, with the government. Without transport, we don’t have tourism, and tourism is very important for transport also to grow.”

 

 

 


Saudi Arabia closes May sukuk issuance at $860m 

Updated 21 May 2024
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Saudi Arabia closes May sukuk issuance at $860m 

RIYADH: Saudi Arabia has completed its riyal-denominated sukuk issuance for May at SR3.23 billion ($860 million), according to the National Debt Management Center. 

In April, Saudi Arabia issued sukuk amounting to SR7.39 billion, while it was SR4.44 billion and SR7.87 billion in March and February respectively. 

NDMC revealed that the Shariah-compliant debt product for May was divided into two tranches.

The first tranche valued at SR71 million is set to mature in 2029, while the second one amounting to SR3.16 billion is due in 2036. 

In March 2024, NDMC concluded its second government sukuk savings round, with a total volume of requests reaching SR959 million, allocated to 37,000 applicants.

NDMC, at that time, said that the financial product, also known as Sah, offers a return of 5.64 percent, with a maturity date in March 2025. 

In April, a report released by S&P Global said that sukuk issuance globally is expected to hover between the $160 billion to $170 billion mark in 2024, representing a steady momentum from $168.4 billion in 2023 and $179.4 billion in 2022. 

According to the US-based firm, the issuance of this Shariah-compliant debt product began on a strong footing in 2024, with Saudi Arabia becoming a key contributor to the performance. 

The credit rating agency also noted that the sukuk market will continue to grow in the near term driven by financing needs in core Islamic finance countries, along with the ongoing economic transformation programs which are currently underway in nations like Saudi Arabia. 

“The market has started 2024 on a strong footing, with total issuance reaching $46.8 billion at March 31, 2024, compared with $38.2 billion at March 31, 2023. Saudi Arabia was a key contributor to this performance,” said S&P Global. 

It added: “The drop in issuance volumes in 2023, which mainly resulted from tighter liquidity conditions in Saudi Arabia’s banking system and Indonesia’s lower fiscal deficit, was somewhat compensated by an increase in foreign currency-denominated sukuk issuance.” 

In April, another report released by Fitch Ratings also echoed similar views and noted that global sukuk issuance is expected to continue growing in the coming months of this year. 

Fitch noted that economic diversification efforts and the rapid development of the debt capital market in the Gulf Cooperation Council region will propel the growth of the sukuk market in the coming months.