One of the fastest growing countries worldwide and boasting the largest economy in the Gulf Region, Saudi Arabia offers tremendous potential for investors. Historically built on a one-product commodity economy, the country has relied on oil for its economic stability for far too long. Petroleum accounts for about 87% of budget yield, 42% of GDP and 90% of export receipts. King Salman bin Abdulaziz is now taking sweeping, active measures to change this and ensure that his country doesn’t get caught in a downward free fall should oil prices not regain their former glory.

Vision 2030 and SAGIA

In 2016, Saudi leadership rolled out its Vision 2030, a document detailing a plan for economic diversification with a focus on foreign investment, and the forward-thinking National Transformation Program featuring over 500 initiatives aimed at supporting the economy and paving the way for outside investment. In addition to having a documented plan for change and growth, the country is seeking to implement more public-private partnerships, with the goal of increasing foreign direct investment to 5.7% of the the nation’s GDP by 2030.

The nation’s leadership has also formed the Saudi Arabian General Investment Authority (SAGIA), an entity created with the task of making the lives of foreign investors easier, assisting with approvals, cutting through paperwork and bureaucracy and reforming taxes and other processes beneficial to enticing outside firms to open for business in the kingdom.

Holistically looking at the nation’s investment landscape, in addition to strengths, there are also weaknesses to be overcome, and these include the laws regarding and culture surrounding women in the workplace, business transparency and corruption and creating a more skilled workforce.

Aramco

The national petroleum and natural gas company headquartered in Dhahran, Saudi Aramco is a powerful company with assets that can be leveraged to assist with the country’s ambitious diversification project. In 2017, the company reported signing approximately $50 billion USD in projects with American firms alone, and a total of $200 billion USD for all deals signed. A generous portion of these deals are expected to enable the country to produce items domestically that were previously imported.

Additionally the government is looking to sell a small part of Aramco, with Saudis close to the king proffering expected IPO values ranging anywhere from $1.4 to $2 trillion USD, a huge money maker which would result in a boost for the nation’s economy.

Industries for Investment in Saudi Arabia

Areas of particular interest for investors in Saudi Arabi include mining, healthcare, real estate, education, entertainment and infrastructure projects such as airports and utilities. Canadian Alcan Primary Metal Group, a Rio Tinto company, joined the Saudi Arabian investment ranks by inking a multi-billion dollar deal to mine bauxite reserves. Renewable energy investors would also do well to take a hard look at opportunities in Saudi Arabia. Phoenix Solar, a German photovoltaics company, has done more than just consider business opportunities in Saudi Arabia; it created two solar panel facilities in the country’s capital city of Riyadh. Big names like GE, Lockheed Martin and Jacobs Engineering are all making a presence for themselves in the country.

A nation with one of the lowest amounts of foreign direct investment in the world, Saudi Arabia is eager to snag investors to bolster the economy and wean it away from its oil-dependency.

To find out about timely opportunities for setting up manufacturing operations in Saudi Arabia, contact Cornfield & Partners at info@cornfieldpartners.com or call +44 (0)20 7692 0873.

Share