Saudi Arabia’s FDI soars to $65bn post-pandemic, among top in West Asia: report

According to the latest World Investment Report by the UN Conference on Trade and Development, the Kingdom's FDI outflows totaled $73.1 billion over the same period, with $16 billion recorded last year alone. Shutterstock
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Updated 23 June 2024
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Saudi Arabia’s FDI soars to $65bn post-pandemic, among top in West Asia: report

RIYADH: Saudi Arabia attracted $65.1 billion in foreign direct investment in the three years post-pandemic until 2023, placing it among West Asia’s top recipients, according to new data.  

According to the latest World Investment Report by the UN Conference on Trade and Development, the Kingdom's FDI outflows totaled $73.1 billion over the same period, with $16 billion recorded last year alone. This places Saudi Arabia among the top 20 economies globally for FDI outflows, ranking 16th. 

In accordance with the goals set out in the National Investment Strategy and Vision 2030 targets, Saudi Arabia has enacted substantial legal, economic, and social reforms aimed at stimulating inflows of foreign direct investment.

Launched in 2021, NIS looks to develop comprehensive investment plans across various sectors such as manufacturing, renewable energy, transport and logistics, tourism, digital infrastructure, and healthcare.

Furthermore, it aims to increase annual FDI flows to over $103 billion and boost annual domestic investment to more than $453 billion by 2030.

The UN report also noted a 55 percent annual increase in the value of international project finance deals in Saudi Arabia in 2023, reaching $22 billion. 

Last year, the nation witnessed 19 deals, marking a 90 percent growth compared to the previous year. 

Additionally, Saudi Arabia saw 389 announced greenfield projects in 2023, totaling $29 billion, reflecting a 108 percent annual increase in value. 

On a global level, FDI experienced a marginal yearly decline of 2 percent in 2023, dropping to $1.3 trillion.  

The analysis highlighted that the overall figure was significantly influenced by substantial financial flows through a few European conduit economies. 

Excluding the impact of these conduits, global FDI flows were more than 10 percent lower than in 2022. 

Conduit economies refer to countries that act as intermediaries for financial flows, especially foreign direct investment. 

These economies attract multinational corporations with favorable tax laws and regulatory environments, allowing funds to pass through on their way to final investment destinations, often for tax optimization and regulatory benefits. Examples include the Netherlands, Luxembourg, and Switzerland, as well as Cyprus and Ireland.  

The challenges  

UNCTAD stated that the global landscape for international investment remains challenging in 2024. Factors such as declining growth prospects, economic fragmentation, and trade and geopolitical tensions are influencing FDI patterns. Industrial policies and the diversification of supply chains also present limitations.  

These factors have prompted many multinational enterprises to adopt a cautious approach to overseas expansion.  

“However, MNE profit levels remain high, financing conditions are easing and increased greenfield project announcements in 2023 will positively affect FDI. Modest growth for the full year appears possible,” the report stated.  

International project finance and cross-border mergers and acquisitions were particularly weak in 2023.  

M&As, which predominantly impact FDI in developed countries, fell in value by 46 percent, while project finance, a crucial factor for infrastructure investment, was down 26 percent.  

According to the report, the principal causes of this decline included tighter financing conditions, investor uncertainty, volatility in financial markets, and increased regulatory scrutiny for M&As.  

In developed countries, the 2023 trend was significantly influenced by MNE financial transactions, partly driven by efforts to implement a minimum tax on the largest MNEs.  

Regional deep dive  

Due to volatility in conduit economies, FDI flows in Europe shifted dramatically from negative $106 billion in 2022 to positive $16 billion in 2023.  

Inflows to the rest of Europe declined by 14 percent, while inflows in other developed countries stagnated, with a 5 percent decline in North America and significant decreases elsewhere.  

FDI flows to developing countries fell by 7 percent to $867 billion, primarily due to an 8 percent decrease in developing Asia.  

Flows fell by 3 percent in Africa and 1 percent in Latin America and the Caribbean. The number of international project finance deals dropped by a quarter.  

Although greenfield project announcements in developing countries increased by over 1,000, these initiatives were highly concentrated in specific regions.  

Greenfield project announcements refer to the initiation of new investment undertakings where companies build operations from scratch on undeveloped land, leading to the construction of new facilities and infrastructure.  

South-East Asia accounted for almost half of these projects, West Asia for a quarter, while Africa saw a small increase, and Latin America and the Caribbean attracted fewer initiatives.  

FDI inflows to Africa declined by 3 percent in 2023 to $53 billion. Despite several megaproject announcements, including Mauritania’s largest worldwide green hydrogen project, international project finance in Africa fell by a quarter in the number of deals and half in value, negatively affecting infrastructure investment prospects.  

In developing Asia, FDI fell by 8 percent to $621 billion. China, the world’s second-largest FDI recipient, experienced a rare decline in inflows, with significant decreases recorded in India and West and Central Asia.  

The report stated that only South-East Asia held steady, with industrial investment remaining buoyant despite the global downturn in project finance.  

FDI flows to Latin America and the Caribbean were down 1 percent to $193 billion.  

The number of international project finance and greenfield investment announcements fell, but the value of greenfield projects increased due to large investments in commodity sectors, critical minerals and renewable energy as well as green hydrogen, and green ammonia.  

Conversely, FDI flows to structurally weak and vulnerable economies increased. FDI inflows to least developed countries rose to $31 billion, accounting for 2.4 percent of global FDI flows, the report stated.  

“Landlocked developing countries and small island developing states also saw increased FDI. In all three groups, FDI remains concentrated among a few countries,” the report added.  

The global downturn in international project finance disproportionately affected the poorest countries, where such finance is relatively more important.  

Industry trends showed lower investment in infrastructure and the digital economy but strong growth in global value chain-intensive sectors such as manufacturing and critical minerals.  

Weak project finance markets negatively impacted infrastructure investment, and digital economy sectors continued to slow down after the boom ended in 2022.  

The report further stated that global value chain-intensive sectors, including automotive, electronics, and machinery industries, grew strongly, driven by supply chain restructuring pressures. Investment in critical minerals extraction and processing nearly doubled in project numbers and values. 


Riyadh Air signs 5-year deal to use GE Aerospace’s software

Updated 22 July 2024
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Riyadh Air signs 5-year deal to use GE Aerospace’s software

  • Partnership will equip airline with data-driven analytics

LONDON: Riyadh Air signed a five-year agreement on Monday to use GE Aerospace’s flight operations software, the airline has announced.

The partnership will equip the new Saudi Arabian airline with data-driven analytics to optimize fuel consumption, enhance safety measures, and fortify its sustainability initiatives, a statement said.

It added that the Fuel Insight software will help Riyadh Air position itself as a leader in sustainable aviation.

The airline will also use real-time Flight Data Monitoring and Flight Operations Quality Assurance to ensure high standards of safety and quality across its advanced fleet.

Riyadh Air’s use of FlightPulse technology will allow pilots to identify opportunities for improvement and help maintain best practices in safety and efficiency across the airline’s flight operations.

Peter Bellew, chief operating officer at Riyadh Air, said: “Sustainability and efficiency sit at the core of our operations.

“Our collaboration with GE Aerospace represents a significant advancement in adopting state-of-the-art technology to enhance safety protocols, streamline fuel usage, and uphold our dedication to operational excellence, as we are currently preparing for flight trials and working towards obtaining AOC certification, starting (in) September 2024.”

Andrew Coleman, general manager of software at GE Aerospace, said: “With an incredible partner like Riyadh Air, we are thrilled to see our decades of research, development, and innovation empower their transformative digital journey to help them set new benchmarks for operational excellence, safety standards, and more sustainability in the skies.”


Saudi GACA, Germany’s Lilium sign MoU to boost air mobility roadmap   

Updated 22 July 2024
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Saudi GACA, Germany’s Lilium sign MoU to boost air mobility roadmap   

RIYADH: Saudi Arabia’s General Authority of Civil Aviation has inked a deal with German electric vertical take-off and landing vehicle manufacturer Lilium, propelling the Kingdom’s advanced air mobility roadmap.

The memorandum of understanding, signed between the authority and the aerospace firm at the Farnborough International Airshow, supports GACA’s development of AAM solutions in the Kingdom, according to a statement. 

This comes as the authority collaborates with stakeholders and companies globally to create a thorough national plan for AAM. 

This strategy encompasses the essential elements and regulatory framework needed to ensure AAM technologies’ secure and effective integration. During the implementation phase, the focus will be on incorporating eVTOL operations with existing aviation systems and other transportation modes.

The newly signed MoU falls in line with the authority’s engagement with global companies to bring new aviation mobility solutions to Saudi Arabia.

It also aligns well with GACA’s continuous efforts across the industry to ensure the Kingdom has regulations that encourage growth, ensure the highest levels of safety, and put passengers first.

“This agreement reflects GACA’s commitment to advancing innovative and sustainable air mobility solutions for Saudi Arabia in support of Vision 2030,” GACA President Abdulaziz Al-Duailej said. 

“By working with global advanced air mobility companies, we aim to establish a robust regulatory framework that ensures the safe and efficient operation of eVTOL aircraft,” Al-Duailej added. 

From Lilium’s side, CEO Klaus Roewe said: “Our goal is to jointly advance regulatory and practical steps for suitable framework conditions for electric aviation and our customers in Saudi Arabia.”

He added: “Today’s agreement delivers on one of the main ingredients required to successfully launch eVTOL operations — a definitive path to all relevant regulatory cornerstones.”

The announcement builds on the momentum of recent successful air taxi trials in support of GACA’s AAM roadmap development, the statement added. 

Last week, Lilium confirmed that it is making its debut in Saudi Arabia with a groundbreaking agreement to supply up to 100 eVTOL vehicles to Saudia, the Kingdom’s first national carrier.

The formalization of this agreement came after a framework deal was initially arranged in late 2022, making Saudia the first airline in the region to invest in sustainable air mobility. 


Saudi logistics platform OTO secures $8m funding for UAE and Turkiye expansion

Updated 22 July 2024
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Saudi logistics platform OTO secures $8m funding for UAE and Turkiye expansion

RIYADH: Saudi logistics platform OTO is set to expand into the UAE and Turkiye, following a successful SR30 million ($8 million) series A funding round. 

The company announced that the financing was led by Sanabil Investments, a wholly-owned entity of the Public Investment Fund, with additional contributions from Sadu Capital, and Iliad Partners. Propeller and Soma Capital also participated in the deal, according to a press release. 

This follows a previous raise of SR12.3 million from venture capital funds and angel investors including Middle East Venture Partners, Derayah Ventures, and 500 Global.  

This investment supports Saudi Arabia's National Logistics Strategy, which seeks to rank the Kingdom among the top 10 countries globally in performance in the sector by the end of the decade, in line with Vision 2030 objectives. 

Mohammad Al-Razaz, co-founder and CEO of OTO, said: “Securing this funding round is a testament to our team’s dedication and our commitment to transforming the shipping and logistics sector in line with Saudi Vision 2030.”   

The company claims its platform integrates with over 250 local and international shipping companies and e-commerce platforms, enabling merchants to manage, ship, track, and analyze their logistics activities.   

The platform also offers merchants the option to connect their own shipping contracts or purchase shipping labels at pre-negotiated rates. 

He added: “We are focused on delivering innovative solutions that enable merchants to streamline their operations and manage logistics with unmatched efficiency.”

Investor confidence in OTO’s platform is bolstered by projections showing Saudi Arabia’s e-commerce revenue is expected to grow at 13.5 percent annually through 2027, outpacing the global average growth rate of 11.2 percent, according to Agility Logistics. 

The platform plans to use this funding to expand its presence in Saudi Arabia, the UAE, and Turkiye by adding new features and enhancing its platform, focusing on small and medium-sized businesses and e-commerce merchants. 

The release stated that the Turkish e-commerce market is projected to grow at an annual rate of 11.58 percent from 2024 to 2029, reaching $49.5 billion by 2029.   

“The last few years have put a significant spotlight on the shipping industry and increased the need for smart shipping solutions. OTO has built a platform with a fully integrated set of functionalities to help companies of all shapes and sizes meet their logistics requirements,” a spokesperson from Sanabil Investments stated.  

OTO serves over 10,000 local and international brands and has seen its revenue double along with a notable increase in orders processed year-over-year. 

Furkan Uzar, chief technology officer and co-founder of OTO, said that this funding propels the company toward its vision of becoming the shipping gateway of the internet.   

“By bridging the tech gap between sales channels and shipping providers, we can accelerate our growth and offer customers streamlined, automated shipping solutions,” he added. 


Closing Bell: Saudi main index slips to close at 12,174

Updated 22 July 2024
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Closing Bell: Saudi main index slips to close at 12,174

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Monday, losing 28.17 points, or 0.23 percent, to close at 12,174.76. 

The total trading turnover of the benchmark index was SR8.34 billion ($2.22 billion) as 127 of the stocks advanced, while 96 retreated.  

The Kingdom’s parallel market Nomu rose 277.53 points, or 1.08 percent, to close at 26,040.47. This comes as 35 of the listed stocks advanced, while 30 fell. 

The MSCI Tadawul Index lost 6.03 points, or 0.39 percent, to close at 1,523.43.

The best-performing stock of the day was Dr. Soliman Abdel Kader Fakeeh Hospital Co. The company’s share price surged 7.02 percent to SR64.

Other top performers were Sadr Logistics Co. as well as United Cooperative Assurance Co.

The worst performer was Al Sagr Cooperative Insurance Co., whose share price dropped by 4.78 percent to SR21.90. 

Other stocks to fall were Miahona Co. and ACWA Power Co.

On the announcements front, Aldrees Petroleum and Transport Services Co. has announced its interim financial results for the period ending on June 30. 

According to a Tadawul statement, the firm’s net profit stood at SR159.8 million at the end of the first six months of 2024, up 13.4 percent from the corresponding period in 2023. 

The increase in net profit is due to the rise in petrol and transport division sales, deposit income, and sukuk, as well as the revenue from the joint venture project investment. 

There was a decrease in the other income and increase marketing, selling, and general costs as well as administrative, financing, and zakat expenses.

Saudi Exchange also announced the listing and trading units of SEDCO Capital Multi Asset Traded Fund as a closed ended investment traded fund on the main market on July 24 with the symbol 4703 and ISIN Code SA162G529FL8, and with +/- 30 percent daily price fluctuation limits and +/- 10 percent static price fluctuation limits.

A bourse filing revealed that these fluctuation limits will be applied during the first three days of listing, and from the fourth trading day onwards, the daily price fluctuation limits will revert to +/- 10 percent and the static price fluctuation limits will no longer apply.


Saudi Arabia awards 4 salt exploration licenses in Eastern Province

Updated 22 July 2024
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Saudi Arabia awards 4 salt exploration licenses in Eastern Province

RIYADH: Saudi Arabia has granted exploration licenses for salt deposits in Eastern Province’s Sabkha Ras Al-Qaryah to four companies following a competitive tendering process.     

The winning firms are Khalid Al-Zahid and Sons Co., Ibrahim Al-Issa and Partner Salt Co., Riyadh Salt Industry Co., and Rastan Limited, as announced by Jarrah bin Muhammad Al-Jarrah, spokesperson for the Ministry of Industry and Mineral Resources.    

Al-Jarrah noted that the ministry received six applications for the exploration licenses, announced in March through a mining platform. Five applications passed the qualification stage, while one did not meet the requirements.  

This aligns with the government’s goal of maximizing the Kingdom’s mineral resources, valued at SR9.3 trillion ($2.4 trillion), in line with Saudi Vision 2030. The initiative aims to enhance licensing transparency, promote national industries, and contribute to local content development and job creation.    

In its earlier release, the ministry revealed that the total area of the four sites offered for competition is 5 sq. km. The Ras Al-Qaryah complex, a coastal sabkha located approximately 4 km from the sea, has naturally exposed salt deposits in some locations on its surface.   

It added that the salt ore in the area is deposited in a stratified form and is suitable for various industrial applications. It supports the manufacturing and petrochemical industries, as well as the production of high-purity table salt and food-grade salt. This ore is refined into high-quality industrial salt with a purity of approximately 99 percent sodium chloride. 

Earlier this week, Saudi Arabia unveiled its largest mineralized belts to date, covering 4,788 sq. km and granting five new exploration licenses. 

Three of these licenses are allocated to the Jabal Sayid site in Madinah, spanning 2,892 sq. km and containing minerals such as gold, silver, copper, zinc, and lead. 

The remaining two licenses are for the Al-Hajjar site in the Asir region, which covers 1,896 sq. km and also includes gold, silver, copper, zinc, and lead, according to a statement from the ministry.

According to a MineHutte and Mining Journal report, Saudi Arabia has experienced the fastest global growth in mining sector investments. Over the past five years, the Kingdom has enhanced its regulatory and infrastructural environment, achieving the second-best global ranking for mining licensing.