The health of any nation’s economy is sustained by its key industrial sectors, which in turn may be shaped by its natural resources and geographical advantages. In today’s world, inward investment is also a key indicator of economic fitness.
Foreign direct investment (FDI) has been of interest to those leading Saudi Arabia’s move away from fossil fuels to a more sustainable future. The objective of the Kingdom’s National Investment Strategy (NIS) is “to increase the quality and magnitude of investment” in the Kingdom. In turn, this can help drive economic development in line with Vision 2030 and across priority sectors, the NIS mentioning green energy, technology, healthcare, biotechnology, and logistics as “sectors of particular importance”.
Crown Prince and Prime Minister Mohammed bin Salman has prioritised FDI, alongside oil, industry, tourism, and agriculture, with officials mobilising to attract multinational corporations to the Kingdom, in part to boost the Saudi private sector. With foreign capital often comes jobs and a vital source of foreign currency (contributing to exchange rate stability), helping to easing the financial burden on the public purse. It is also a show of confidence in the direction of a state.
Future Investment Initiative (FII)
Investors and business leaders attending the annual Future Investment Initiative (FII) conference flew into Riyadh this week. The first initiative was held in 2017. A year later, at the second FII in 2018, Crown Prince Mohammed bin Salman declared the aim of “transforming the Middle East into the new Europe.” At the Ritz-Carlton, around 600 speakers will convene today (29 October) to discuss the pertinent issues across 180 panel sessions over three days, with organisers expecting up to $28bn in investment deals to be announced over the course of the conference. One panel discussion on geoeconomics, chaired by Saudi Aramco chairman H.E. Yasir Al-Rumayyan, is set to feature no less than eight billionaires.
The delegates arrive at a moment of momentum. In 2023, FDI in Saudi Arabia reached SAR 96bn (about $26bn), surpassing the NIS target of SAR 83bn ($22bn). According to the Ministry of Investment, this is about 2.4% of the Kingdom’s gross domestic product (GDP). The NIS aims to boost FDI to 5.7% of GDP by 2030.
Legislative reforms
Dr Ahmed Al-Rajhi, Vice President of the Saudi Economic Association, said the Saudi government “has focused on improving the investment climate to align with global standards” since the launch of Vision 2030. He was referring to significant developments in the Saudi investment landscape, including legislative reforms and the consolidation of the Kingdom’s investment roadmap.
In August, the government introduced the first major overhaul of foreign investment regulations in 25 years, with a new framework to enhance investor rights by streamlining procedures and relaxing restrictions, ensuring a fair and competitive environment for both domestic and international companies.
