Saudi Arabia sees nearly 50% surge in investment licenses in Q2 amid rising investor confidence

View shows the King Abdullah Financial District, north of Riyadh, Saudi Arabia. File/Reuters
Short Url
Updated 05 August 2024
Follow

Saudi Arabia sees nearly 50% surge in investment licenses in Q2 amid rising investor confidence

  • Ministry of Investment said figure excludes licenses granted under Kingdom’s anti-concealment campaign
  • FDI inflows increased by 0.6% year-on-year in the first quarter of 2024

RIYADH: Saudi Arabia issued 2,728 investment licenses in the second quarter of this year, a 49.6 percent increase year on year, underscoring its growing appeal as a business destination. 

The Ministry of Investment said that the figure excludes licenses granted under the Kingdom’s “Tasattur” anti-concealment campaign. 

The growth reflects the Kingdom’s enhanced attractiveness due to its stable, supportive business environment and competitive advantages, aligning with Vision 2030’s goals of economic diversification and increased private sector participation. 

According to MISA’s July bulletin, foreign direct investment inflows increased modestly by 0.6 percent year-on-year in the first quarter of 2024, while FDI stock grew by 6.1 percent by the end of the quarter, reflecting rising confidence among international investors in Saudi Arabia’s economic landscape. 

FDI stock represents the total accumulated value of foreign investments in the Kingdom, including all past and current backing in businesses, real estate, and other assets. 

In July, Brendan Marais, a partner at Kearney Middle East & Africa, told Arab News that “one of the key factors that sets Saudi Arabia apart from other emerging markets is its deliberate focus on building FDI-attraction capabilities.” 

This commitment is further highlighted by the increase in the Real Estate Price Index, which rose by 1.7 percent year-on-year, driven by a 2.8 percent rise in residential property prices and a 1.5 percent hike in agricultural real estate prices, although commercial unit prices experienced a slight decline of 0.4 percent. 

Economic activities displayed mixed results in the second quarter of this year, with non-oil sectors growing by 4.4 percent and government activities rising by 3.6 percent. 

Sectors like wholesale and retail trade, as well as restaurants and hotels, grew by 5.9 percent, while the transport, storage, and communication sectors increased by 5 percent. 

Despite a decline in oil activities by 8.5 percent, which contributed to a slight decrease in real gross domestic product by 0.4 percent year-on-year in the second quarter of 2024, the overall economic outlook remains positive with continuous growth in various non-oil sectors, the MISA bulletin noted. 

The Saudi government’s strategic efforts to diversify the economy and reduce dependence on oil revenues are evident in these positive trends. 

The Yazidi nightmare
Ten years after the genocide, their torment continues

Enter


keywords

OPEC further trims global oil demand outlook for 2024, 2025

Updated 17 sec ago
Follow

OPEC further trims global oil demand outlook for 2024, 2025

RIYADH: Global oil consumption will increase by 1.93 billion barrels per day in 2024, down from a previous estimate of 2.03 million bpd, according to OPEC. 

The monthly report of the alliance indicates that global crude demand will rise by 1.64 million bpd in 2025, a decrease from the earlier forecast of 1.74 million bpd. This marks the group’s third consecutive downward revision.

The Vienna-based organization said the revision was “largely due to actual data received combined with slightly lower expectations” for some regions. 

OPEC also said that the world economy will witness a growth of 3 percent and 2.9 percent in 2024 and 2025, respectively – a projection unchanged from last month. 

The organization said that the market remains well above the historical average of 1.4 million bpd seen before the pandemic, primarily propelled by strong air travel and road mobility, as well as growing industrial, agricultural, and construction activities. 

OPEC’s oil demand growth forecast remains above the projection made by the International Energy Agency in September. 

IEA said that global oil demand is on course to increase by 900,000 bpd in 2024 and 950,000 bpd next year, driven by China’s economic slowdown and widespread adoption of electric vehicles. 

OPEC said that global oil demand is expected to reach 104.1 million bpd in 2024 and 105.8 million bpd in 2025. 

The alliance also trimmed its forecast of Chinese market growth to 580,000 bpd from a previous projection of 650,000 bpd growth. 

Amid these revisions, in September OPEC raised its forecasts for world oil demand for the medium and long term in an annual outlook, driven by growth led by India, Africa, and the Middle East and a slower shift to electric vehicles and cleaner fuels. 

According to the alliance’s annual report, world crude demand in 2028 will reach 111 million bpd and 112.3 million bpd in 2029. The 2028 figure is up 800,000 bpd from last year’s prediction.

OPEC forecasted that there will be 2.9 billion vehicles on the road, up 1.2 billion from 2023. 

Despite electric car growth, vehicles powered by a combustion engine will account for more than 70 percent of the global fleet in 2050, affirming strong oil demand growth for the long term.


Saudi Arabia’s PIF expands green investments to $19bn across 91 projects

Updated 40 min 17 sec ago
Follow

Saudi Arabia’s PIF expands green investments to $19bn across 91 projects

  • Saudi sovereign wealth fund has allocated $457 million for these projects, with $372 million for eight green building projects
  • Remaining $18.9 billion were allocated to 73 under construction projects spanning the same categories

RIYADH: Saudi Arabia’s Public Investment Fund has expanded its green project investment plan to over $19.4 billion, covering 91 eligible projects in areas such as renewable energy and clean transportation.

In its second ‘Allocation and Impact Report,’ PIF provided an update on the allocation and impact of its green bonds as of June 30.

The new paper revealed that “PIF has currently identified a capital expenditure portfolio of over $19.4 billion of eligible green projects, of which $8.5 billion has been earmarked to be allocated under PIF’s two green bonds,” referring to those issued in 2022 and 2023 — totaling a combined $8.5 billion.

According to the report, there are 18 operational projects categorized under renewable energy, energy efficiency, green buildings, clean transportation, as well as sustainable water management, pollution prevention, and sustainable management of living natural resources and land use.

The Saudi sovereign wealth fund has allocated $457 million for these projects, with $372 million for eight green building projects.

The remaining $18.9 billion was allocated to 73 under construction projects spanning the same categories, with green buildings also taking the largest share at $6.3 billion for three projects.

Prominent green projects

PIF’s green bond proceeds are being funneled into a wide range of projects to reshape Saudi Arabia’s future. One of the most prominent undertakings is Red Sea Global, a tourism development owned by PIF. 

According to the report, PIF has allocated $1.7 billion of green financing for The Red Sea and AMAALA, as of 30 June 2024. 

PIF’s investment qualifies under the ‘Green Buildings’ category in the Green Finance Framework, which means that new or existing commercial or residential buildings must get a third-party certified green building standard to be eligible for funding.

The Framework published in 2022 is used as the basis to issue green bonds, sukuk, loans and other debt instruments, known as green financing instruments.

PIF said in the report that RSG is committed to regenerative tourism destinations that preserve and enhance the natural environment. 

Spanning 32,000 square km, RSG’s portfolio includes The Red Sea and AMAALA projects, which will offer up to 11,000 keys across 80 hotels, as well as residential and hospitality assets built with sustainability at their core.

As for the impact of this project, the report added that to date, “there are nine green buildings that are already operational, including four hotels, four residential clusters and one management office.”

On average, these buildings achieve 20 percent energy savings compared to conventional buildings, totaling 18,000 MWh per year. As these assets are independent of the national grid and are 100 percent solar powered, they avoid 36,000 tCO2e annually. 

“When all the assets are completed across both destinations, total avoided emissions will exceed 600,000 tCO2e per year,” the report said.

Under the “Sustainable Water Management” category, the report added the NEOM Water Distribution project. PIF’s contribution to this project included fully funding NEOM’s water transmission and distribution pipelines and allocating over $1 billion to support nine water transmission projects across the region. 

“This key category emphasizes that investments and expenditures in projects and infrastructure must enhance water-use efficiency,” the wealth fund said.

To date, a 12-bay tanker filling station supplying 18,000 cubic meters per day of potable water and a 30-kilometer section of distribution pipeline is already operational, the report revealed.

It said that an additional three filling stations and over 500 kilometers of water transmission pipeline are currently under construction, adding: “Once completed, these assets will improve resilience and support de-risking of water scarcity in Saudi Arabia.”

Measurable impact and ESG leadership

Projects funded by PIF’s green bonds are set to generate enough renewable energy to power 160,000 homes annually and save 7.7 million MWh through energy-efficient technologies, including the installation of over 211,000 energy-efficient bulbs and 6,000 HVAC systems.

In the area of water sustainability, PIF’s investments in desalination and wastewater treatment are projected to treat 49.4 million cubic meters of wastewater and desalinate 1.2 million cubic meters of seawater each year.

Green building projects funded by the bonds are expected to save 711,000 MWh annually, supporting Saudi Arabia’s efforts to cut energy consumption and carbon emissions.

PIF’s green finance strategy is also setting global benchmarks. As a founding member of the One Planet Sovereign Wealth Funds initiative, PIF is integrating climate change into its investment strategies.

Ranked seventh globally and first in the Middle East in the Global Sovereign Wealth Fund’s Governance, Sustainability, and Resilience Scoreboard, PIF’s efforts highlight its global environmental, social and governance leadership.

To ensure transparency and accountability, PIF has established an ESG and Sustainability Steering Group. 

The body meets quarterly to monitor fund allocation, track project impacts, and ensure all green bond investments align with PIF’s Green Finance Framework. This governance structure underscores PIF’s commitment to sustainability and strong ESG practices.
 
A global first for green bonds

In October 2022, PIF issued its first-ever $3 billion multi-tranche green bond, described as “the first green bond by a Sovereign Wealth Fund.” This was followed by a larger $5.5 billion offering in February 2023, both of which were well-received by global investors.

By June 2023, PIF had allocated $5.2 billion of the $8.5 billion raised to environmentally-focused projects. It had identified a green project portfolio worth $11.7 billion, with $8.5 billion designated for bonds.

Already, $1.3 billion has been used for initiatives like renewable energy, energy efficiency, and sustainable water management. 

Of the $706.2 million from the October issuance, $458.6 million went to green buildings, $138.2 million to energy efficiency, and $45.2 million to water management. Similarly, $629.2 million from the February issuance was allocated to renewable energy, energy efficiency, and clean transportation.

Unallocated funds are managed under PIF’s liquidity policy, ensuring all investments align with its ESG principles. Notably, the October issuance included a 100-year tranche, signaling PIF’s long-term commitment to sustainability.

The success of these bonds is evident in the February issuance being six times oversubscribed, with orders exceeding $33 billion, showing strong global investor confidence in PIF’s leadership in green financing.

Vision 2030 and PIF’s role in economic diversification

PIF’s green bond strategy is deeply intertwined with Saudi Arabia’s Vision 2030 — a transformative blueprint aimed at diversifying the country’s economy away from oil dependency and establishing new economic sectors that are future-facing and sustainable. 

PIF is tasked with leading the charge, playing a key role in supporting the nation’s commitment to achieving net-zero carbon emissions by 2060. 

The fund has set its target to reach net-zero emissions by 2050, positioning itself as an integral player in the global fight against climate change.

The organization’s mandate under Vision 2030 includes expanding non-oil gross domestic product, generating jobs, and enhancing local content, as well as nurturing a thriving private sector. 

PIF is attracting sustainable investments into Saudi Arabia’s eco-conscious economy by issuing green bonds and funding critical projects in renewable energy, energy efficiency, water management, and pollution control, among others. 

The initiatives are expected to contribute significantly to the Kingdom’s economic growth while ensuring environmental sustainability.


Saudi Arabia, Italy to enhance industrial ties during top official’s visit

Updated 14 October 2024
Follow

Saudi Arabia, Italy to enhance industrial ties during top official’s visit

JEDDAH: Saudi Arabia and Italy are set to strengthen their industrial and mining ties thanks to a visit by a senior official of the Kingdom to the European country.

Commencing his trip on Oct. 14, Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim Alkhorayef is set to explore mutual opportunities in key industrial sectors that align with the national strategy for manufacturing development, including the automotive, food, space, and marine industries.

The visit, which will continue until Oct. 16, includes stops in the capital, Rome, and Milan. It also aims to leverage the latest industrial innovation solutions and attract investments into promising sectors in Saudi Arabia, as stated by the Kingdom’s Ministry of Industry and Mineral Resources.

Saudi Arabia’s non-oil exports to Italy amounted to SR2.8 billion ($747 million) in 2023, while total non-oil imports from the European country reached SR21.8 billion during the same year.

The Saudi minister will engage with government officials and leaders in the private sector. He will also visit prominent Italian companies with the aim to facilitate knowledge transfer and smart manufacturing solutions for the Saudi industry while strengthening the economic ties between the two countries.

Alkhorayef is set to meet with Yousef Al-Mimni, vice chairman of the Saudi-Italian Business Council and will engage in discussions with Gilberto Pichetto Fratin, Italy’s minister of environment and energy security.

He is also scheduled to meet with Adolfo Urso, the minister of enterprises, to discuss enhancing industrial cooperation between the two nations.

Alkhorayef will further participate in a multilateral meeting organized by the Italian General Confederation of Industry, known as Confindustria, where he will engage with Barbara Cimmino, the federation’s vice president for export and investment attraction, along with prominent leaders from the Italian private sector.

The minister’s agenda includes a bilateral meeting in Rome with Toni Piech, chairman of Piech Automotive, a leading global automotive manufacturer, and Pierroberto Folgiero, CEO of Fincantieri, a company specialized in shipbuilding and marine products.

In Milan, Alkhorayef will kick off his visit with a tour of the Alessi Center, visit Leonardo’s aerospace division, and hold discussions with the company’s CEO.

The industry minister will also meet with Attilio Fontana, president of Lombardy’s regional government – whom he met in September – to explore ways to enhance bilateral ties in sectors crucial to the Kingdom’s Vision 2030 diversification strategy.

Alkhorayef is also scheduled to meet with Gianluca Di Tondo, CEO of Barilla, a leading food manufacturing company.


Qatar’s inbound visitors see annual surge of 24.5%

Updated 11 min 10 sec ago
Follow

Qatar’s inbound visitors see annual surge of 24.5%

  • Highest number of visitors was from the GCC, representing 41% of the total
  • Air travel was the most popular method for visiting the country, accounting for 64% of all transit options

RIYADH: Qatar recorded a 24.5 percent annual increase in the total number of inbound visitors in August, reaching 328,000, new figures revealed. 

Data from the National Planning Council’s Monthly Statistics bulletin showed that the highest number of visitors was from the Gulf Cooperation Council, representing 41 percent of the total. 

Air travel was the most popular method for visiting the country, accounting for 64 percent of all transit options. 
The increase aligns with the goal of Qatar’s National Tourism Sector Strategy 2030 to welcome over 6 million annual visitors, positioning the country as the Middle East’s fastest-growing tourist destination. 

The bulletin further disclosed a monthly increase in total new driving licenses by 0.6 percent, along with an increase in total new registered vehicles by 11.3 percent, compared to July, with a registration of 8,605 new vehicles. 

In the banking sector, the broad money supply reached 731 billion Qatari riyals ($200 billion) in August, marking a 6.7 percent annual increase. 

Cash equivalents, including commercial bank deposits, totaled 1.035 trillion riyals in August, reflecting an 11.6 percent increase year on year. 

Regarding building permits, Qatar issued 721 approvals in August, representing an 8.3 percent annual increase. 

As part of its diversification efforts, the state is prioritizing the tourism sector, achieving a milestone by welcoming over 4 million visitors in 2023, the highest in five years. 

The achievement, reported by the Qatar Tourism Authority in January, highlights the country’s success in capitalizing on the momentum from the FIFA World Cup Qatar 2022, according to a press release issued at the time.  

The increase coincided with Qatar’s strategic move to streamline travel, notably by implementing the Hayya platform earlier in 2023, which simplified entry procedures for travelers. 

The initiative complemented Qatar’s liberal travel policies, allowing visas on arrival for citizens from 95 countries. 

A year-long calendar of events and engaging marketing campaigns has also played a vital role in boosting tourism. Since the start of last year, visitors from Saudi Arabia have led the influx, accounting for 25.3 percent of total international arrivals, the release added at the time. 

They were followed by travelers from India at 10.4 percent, Germany at 4.1 percent, the UK at 3.9 percent, and Kuwait at 3.5 percent. 


Top German executive sees Saudi facilities management sector doubling by 2030

Updated 14 October 2024
Follow

Top German executive sees Saudi facilities management sector doubling by 2030

RIYADH: Saudi Arabia’s facilities management market is set to double in value by 2030, a Dussmann Group executive forecast as the company inaugurated its regional headquarters in Riyadh.

Hakan Lanfredi, executive board member of the Berlin-based firm, believes the industry in the Kingdom is currently worth $25 billion, but will see rapid growth by the end of the decade as Saudi Arabia pushes ahead with its numerous Vision 2030 projects.

Dussmann Group moved its regional headquarters to Riyadh from the UAE as it seeks to capitalize on the expansion of the Kingdom’s facilities management sector.

The company’s relocation to the Saudi capital is the latest in a line of firms opting to have their Gulf base in Riyadh, after the Kingdom launched a special initiative to attract multinational businesses.

Incentives – which have attracted the likes of PepsiCo, PwC, and Deloitte – include zero percent corporate income tax for 30 years, as well as the ability to bid for government contracts.

Speaking to Arab News at the inauguration of Dussmann Group’s new office, Lanfredi said: “I believe the need for facility management consulting is growing due to all of the projects.”

He added: “We see that there is a huge market potential here in KSA … it will reach almost $50 billion in 2030 – which is very huge.”

Reflecting on why the company moved from the UAE, Lanfredi was clear that to become one of the biggest players in the Saudi market, “we need to follow Vision 2030.”

He added: “The growth and expectations are huge, and the potential is huge … compared to the market in the UAE for example, who has the highest maturation in the GCC region.” 

Dussmann Group’s presence in Riyadh is part of a joint venture formed in 2020 with Saudi investment conglomerate Ajlan & Bros Holding.

Ajlan Al-Ajlan, group managing director of the firm, highlighted that this was the first JV the investment organization had been involved with.

When asked about the decision to move its headquarters from the UAE to Saudi Arabia, Al-Ajlan said: “We see the growth and we see the massive potential opportunities within KSA, and we wanted to make sure that we are being a part of it.”

Speaking on the topic of job creation, Al-Ajlan highlighted that the JV started with “a couple of hundreds” of employees, and as of today there are over 4,000 staff members.

“In the next three to four years we are aiming to have more than 10,000 employees and the majority will be in KSA, this shows the direct impact of moving the headquarters KSA reflects directly onto the job creation,” he said.

“Our aim is to capture a decent market share and to be one of the prominent players within the market,” the managing director said.

Al-Ajlan said his company’s aim is to capture a “decent market share” and to be one of the prominent players within the sector – and this will be helped by the expertise at Dussmann Group.

“We are not here to reinvent the wheel, they have their operation in more than 25 countries, with more than 60,000 employees so we are intending to have the know-how brought to the region and more specifically KSA,” Al-Ajlan said.

The German Ambassador to Saudi Arabia Michael Kindsgrab attended the ribbon-cutting ceremony as the guest of honor and described it as a “happy day for German-Saudi business relations.”

He added: “If we have such a performer taking foot in Saudi Arabia, opening its regional headquarters here, expanding into the region, moving from 4,000 to 10,000 jobs, I think this is nothing but good news.”