Direct foreign investments in the Saudi economy have reached a record SAR 51.9 billion, or USD 1.3 billion during Q2 of 2021, according to Saudi daily Al-Eqtisadiah.
In an October article, the paper also stated that the value of this year’s investments had increased by SAR 48.8 billion (USD 13 billion), marking not only the highest number recorded yet, but also a staggering 1574 percent increase in comparison to numbers from the same quarter of 2020.
These numbers, when coupled with statistics from the previous year, show the Kingdom’s continued upward trajectory when it comes to matters of foreign investment. As local daily Arab News reported in April of this year, foreign investment in the Kingdom passed the SAR 2 trillion (USD 0.53 trillion) mark at the end of 2020, despite the ongoing novel coronavirus (COVID-19) pandemic affecting both the local and global economy.
As restrictions tighten, interest remains
Foreign investors have also remained undeterred by new regulations requiring foreign companies or commercial institutions contracted by the government to have headquarters in the Kingdom as of early 2024. Despite that, the numbers have continued to climb steadily, with several industry experts predicting further investments from both existing and new investors in the years leading up to 2030.
The Kingdom has been making significant strides towards acquiring foreign investors as part of its ambitious Vision 2030 plan, as it continues to move away from an oil-based economy. Potential sectors for investment range from chemicals, to healthcare and life sciences, to real estate, and perhaps most ambitiously, tourism and entertainment.
Tourism and giga-projects
The tourism sector in particular has attracted a great deal of interest from foreign investors, with foreign investment licenses in the Kingdom increasing by 108 percent in the first half of 2021. The Saudi Cabinet of Ministers also launched a new permanent ministerial committee for examining foreign investments (the CEFI) to review all new foreign investments.
The Kingdom has also made significant progress on several recently announced giga-projects expected to drive the tourism push in the coming decade, most notably the futuristic city of Neom, the Red Sea development project, and the newly announced strategy to develop the region of Asir on the east coast.
According to the latest numbers, the city of Neom has an estimated cost of SAR 1,875 billion (USD 500 billion) with the first section due to be completed in 2025, the Red Sea project has an estimated cost of SAR 30 billion (USD 8 billion) for its first phase, which aims to welcome its first visitors by the end of 2022, and the Asir development project has an estimated cost of SAR 50 billion (USD 13 billion) and aims to attract 10 million visitors by the year of 2030.
Fahd Hamidaddin, CEO of the King Abdullah Economic City and board member of the Saudi Tourism Authority, confirmed at the Arabian Travel Market forum in May of this year that the Kingdom was committed to delivering on all of its mega-tourism projects.
“All of the major projects announced to date have great feasibilities, and there is no reason why they should not materialize,” he said. “What is different about these giga-projects versus all what was announced before is that there are committed to by the government.”
The Saudi Public Investment Fund (PIF), responsible for backing and funding the aforementioned giga-projects, also revealed in January a five-year strategy which aims to double its assets to nearly SAR 4 trillion (USD 1.07 trillion) for the over a dozen major tourism projects in development across the Kingdom.
The PIF also intends to invest a minimum of SAR 150 billion (USD 40 billion) a year into the domestic economy until 2025, and grow assets under management to over SAR 7.5 trillion (USD 2 trillion) by 2030.