Investment strategy aims to accelerate Saudi’s economic growth

Foreign direct investment into the Kingdom has witnessed historic growth this year, increasing by 1,574 percent during the second quarter

  
Image used for illustrative purpose. The view of Riyadh horizon during a cloudy day.

Image used for illustrative purpose. The view of Riyadh horizon during a cloudy day.

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Crown Prince Mohammed bin Salman recently launched the National Investment Strategy, considered to be an excellent driver for the growth of foreign and local investment in Saudi Arabia.

The initiative is also seen as being a catalyst to deliver the Kingdom’s main investment goals as outlined in the Vision 2030 reform plan by supporting government efforts to diversify the country’s economy.

The Vision 2030 ambition is to raise the private sector’s contribution to gross domestic product from base year of 40 percent to 65 percent and also increase the contribution of foreign direct investment to GDP to 5.7 percent by 2030.

Additionally, the strategy aims through its 40 initiatives to increase the contribution of non-oil exports to GDP from base year of 16 percent to 50 percent, reduce the unemployment rate to 7 percent, and position the Kingdom among the top 10 economies in the Global Competitiveness Index. Additionally, it is expected to attract SR1.7 trillion local investments annually.

In order to achieve such grand investment objectives, the Kingdom has worked hard over the past five years to improve rules and regulations, including laws relating to the improvement of the Saudi investment environment.

The Shareek and Made in Saudi programs are among the most important schemes designed to stimulate investment growth.

The Shareek program was launched to help establish a vibrant and thriving private sector by creating a strong cooperative government framework offering up to SR5 trillion ($1.33 trillion) of private-sector investment by 2030, while also providing support in areas such as finance, operations, regulatory cooperation, and asset investment.

Made in Saudi is a National Industrial Development and Logistics Program initiative led by the Saudi Export Development Authority that aims to help local businesses grow by encouraging consumers to buy more locally made products, and helping firms increase exports to priority markets.

At the launch of the National Investment Strategy, the crown prince said: “Today, the Kingdom embarks on a new investment era to empower Saudi and international private-sector investors with more and better opportunities.

“Investment is without a doubt one of the main routes for us to achieve the ambitions and aspirations of Vision 2030, among them economic development, diversification and sustainability, technology transfer and localization, infrastructure development, better quality of life, job opportunities, and the upskilling of our human resources, leaving a legacy of prosperity for future generations.”

Without doubt the strategy will enhance local investment and attract foreign investment too, since it has drawn a clear roadmap for investors encouraging them to grow their investment in the Kingdom.

Foreign direct investment into the Kingdom has witnessed historic growth this year, increasing by 1,574 percent during the second quarter, and total foreign direct investment in the Saudi economy for the first time exceeded SR2 trillion ($0.53 trillion) at the end of 2020.

• Talat Zaki Hafiz is an economist and financial analyst

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