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Saudi Round-Up: Financial Innovation and Regulation Driving the Diverse Economic Ecosystem

Weekly Roundups

27 Feb 2024

AstroLabs Team

We collate our Saudi Round-Up every week, providing a convenient way for you to stay up-to-date on exciting developments across the Kingdom. This week, Saudi continues to push toward achieving its goals in line with Vision 2030. Our highlights for this round-up are related to the third Saudi Capital Market Forum, held in Riyadh February 19-20, 2024.

From February 20th to February 26th, 2024

Finance: Capital Market Forum

The third Saudi Capital Market Forum held in Riyadh fosters resilience, collaboration, and innovation within the financial sector. The forum is in alignment with Vision 2030’s objectives to establish world-leading governance and to increase both domestic and foreign investments.

Kingdom Set to Regulate Free Float Trading to Bolster Saudi Capital Market

Saudi’s Capital Markets Authority has begun its public consultation for the FMO regulatory framework, which aims to improve the accessibility and liquidity of the market by allowing large shareholders to float more shares within a governed process.

The authority is committed to attracting a wider spectrum of investors by making the market more accessible while also maintaining up-to-date regulations. As a result, the total international investors holding in the Kingdom’s capital market has reached $106 billion.

General Business and Economy

Saudi Non-Oil Exports Up 12% in December 2023

According to the General Authority for Statistics, the value of non-oil exports reached $7.07 billion in December 2023, up from $6.29 billion compared to the same period in 2022.

Chemical and allied products made up the largest part of exported non-oil goods, helping to fuel the economic diversification away from oil that is critical to the Kingdom’s Vision 2030 objectives.

PIF-Owned Alat to Develop Kingdom’s Tech Ecosystem

Speaking at the press launch event for Alat, the Minister of Industry and Mineral Resources outlined how the PIF (public investment fund) company will enhance the Kingdom’s tech ecosystem by reducing imports and increasing localization through the sustainable manufacturing of advanced technologies and electronics.

Furthermore, Minister of Communications and Information Technology Abdullah bin Amer Al-Swaha emphasized Alat’s unique opportunity to take charge and combine industries, minerals, innovation, and technology in this project, thus projecting the type of potential the Kingdom sees in the private sector.

PIF’s Alat to Help Diversify Economy Through Four Deals

PIF-owned Alat is set to develop the Kingdom’s sustainable manufacturing through four global partnerships.

Amit Midha, Global CEO of Alat, underlined the importance of using technology, including AI and fourth industrial revolution innovations, to modernize Saudi businesses. The Saudi tech company’s deals will help their partners reduce emissions in line with Vision 2030.


Thanks to Vision 2030, Kingdom’s Entertainment Industry Reaches 4,000 Firms

At Riyadh’s Saudi Media Forum on February 21st, Faisal Bafarat, CEO of the General Entertainment Authority, noted that 150,000 jobs have been created in the entertainment sector since 2016.

2023 was the pivotal year in which the Kingdom launched the General Entertainment Authority. The media sector’s contribution to Saudi GDP is now predicted to reach $4.27 billion in 2024.

Finance and FinTech

Saudi Interest in Credit Rating Driven by Economic Diversification

According to Moody’s, the Kingdom is attracting a growing interest in credit ratings. The global risk assessment firm points to regulatory changes, expanding global investments, and economic diversification as the primary causes.

The realization of Saudi Arabia’s Vision 2030 objectives has contributed to increased demand for credit ratings from overseas investors, as well as from Saudi regulatory bodies. The regulators’ efforts to stimulate the debt markets has led to the Kingdom’s increased financial transparency which, in turn, has raised the demand for credit rating services.

Saudi Financial Market Receives $106.6 Billion in Foreign Investments

Since opening the Saudi Stock Exchange in 2015, the Kingdom’s financial market has reached $106.6 billion. According to the chairman of the Capital Market Authority, Mohammed El-Kuwaiz, this figure comprises 12% of tradable shares.

El-Kuwaiz pointed to the Kingdom’s steady progress toward its goals in line with Vision 2030, particularly in the economic and financial sectors.

Real Estate

Saudi-Egyptian Deal to Develop Real Estate Projects Worth $1 Billion in the Kingdom

Saudi Arabia and Egypt have agreed to an initiative that will facilitate logistical support and supply for property projects within the Kingdom.

The memorandum of understanding builds on existing collaborative efforts between Cairo and the Saudi-Egyptian Alliance, the latter of which will execute the real estate project initiative. The move will accelerate plans to turn the region into a global hub for logistics.


Kingdom Reaches Third Position in Global Retail Development Index

Saudi has benefited from an increase in non-cash transactions, placing it third in the Global Retail Development Index (GRDI). The index gauges the retail potential of emerging economies by considering their economic health, consumer wealth, and regulatory framework.

Debashish Mukherjee—Middle East and Africa and Consumer and Retail Practice Lead—believes that Saudi Arabia is at the vanguard of retail growth in MENA. Furthermore, Mukherjee stressed that the rise in GRDI reflects the dynamism of the Saudi retail environment and its strategic initiatives to stimulate economic diversity and competition.

Al Rajhi Capital Predicts Impressive 2023 Q4 Growth for Retail Sector

According to Al Rajhi Capital, Saudi’s retail sector should report robust growth in the fourth quarter of 2023, amounting to a 44.3% year-on-year increase.

The Riyadh-based investment advisory service provider considers strong sales the primary driver for this substantial increase in the retail sector, pointing to the sector’s resilience and contribution to Vision 2030’s goals to build up the real estate sector.

Saudi Retail Sector Aims for $122 Billion Contribution to GDP by 2025

Majed Al-Hogail, Minister of Municipal and Rural Affairs and Housing, spoke at the 10th Retail Leaders Circle MENA Summit in Riyadh, sharing that the Kingdom’s retail sector currently contributes 23% to the non-oil economy and that the sector aims to beat $122.6 billion by 2025.

He described the importance of developing real estate legislation and regulations to foster effective partnerships with the private sector. He also emphasized job creation and employment incentives to provide an attractive ecosystem for Saudis to work within.


New Regulations Empower Saudi Tourism Authority to Grow Sector

The Saudi government has approved 24 regulations that will help the Saudi Tourism Authority promote the Kingdom’s regions as domestic and international tourist destinations.

Tourism Minister Ahmed Al-Khateeb noted that approval by the Saudi cabinet underscores the government’s commitment to Vision 2030 and its support for the tourism sector.

New GCC Unified Visa Set to Grow Saudi Tourism

The Unified Visa approved by the Gulf Cooperation Council (GCC) in November 2023 is poised for launch between 2024 and 2025. It will enable residents and tourists to move more easily between the six GCC countries.

The Kingdom’s Tourism Authority Spokesperson and Corporate Communications Director Abdullah Al-Dakhil recalled the Saudi Central Bank’s announcement that visitor spending exceeded $26.66 billion in the first three quarters of 2023 and expressed hope that the visa would help the tourism sector contribute 10% to the country’s GDP by 2030.

NEOM Launches Elanan Well-Being and Nature Retreat

NEOM’s latest resort, Elanan, will be a contemporary well-being and nature resort with 80 rooms and suites. As with other NEOM developments, the architecture is designed to integrate seamlessly with the surrounding environment, preserving the natural landscape.

The $500 billion giga-project is also poised to unveil a luxury resort in Trojena. Like Elanan, it is set to offer the best in modern luxury hospitality and attract domestic and international tourists, illustrating NEOM’s commitment to the Kingdom’s growth.

50% Growth in Indian Visitors to Saudi Amidst Tourism Promotion

Thanks to strategic initiatives started in 2023, the number of Indians traveling to the Kingdom has increased by 50%. This builds on strong ties and a growing collaboration between India and Saudi Arabia. The countries signed 47 Memorandums of Understanding on September 11th to encourage and facilitate investment and help Indian companies expand into the Saudi market.

India is expected to become the largest inbound market for the Kingdom. The Saudi Tourism Authority expects the Kingdom to welcome 75 million Indian visitors by 2030, largely driven by the Kingdom’s dynamic leadership, booming tourism, and Vision 2030 initiatives.

Saudi Surpasses Original Target of Welcoming 100 Million Tourists

Saudi Arabia has surpassed the initially set target of Saudi Vision 2030 of welcoming over 100 million tourists. This achievement, acknowledged by the UN World Tourism Organization, underscores the Kingdom's growing prominence in the global tourism sector. Earlier last year, this target was revised to welcoming 150 million tourists by 2030, reflecting the nation's rapid progress as they approached the milestone of 100 million tourists.

The Ministry of Tourism disclosed that the Kingdom hosted 27.4 million international tourists, a remarkable 65 percent increase from the previous year. Additionally, 79.3 million domestic tourists visited Saudi Arabia, reflecting a 2 percent increase compared to 2022.

Economically, the influx of tourists had a substantial impact, with both international and domestic visitors collectively spending more than SAR 250 billion ($67 billion). This expenditure represents over 4 percent of Saudi Arabia's total gross domestic product (GDP) and 7% of its non-oil GDP.


Saudi’s SWCC Receives Nine Guinness World Records for Sustainability Innovations

The Kingdom’s commitment to sustainability has been recognized on a global scale with the award of nine Guinness World Records.

The achievements of Saudi’s Saline Water Conversion Company (SWCC) in sustainable desalination technology include the largest multi-effect distillation water desalination plant in the world (92,000 m3), the world’s lowest energy consumption for a water desalination plant, and the world’s largest water storage facility for the Riyadh Strategic Water Reservoir (4.79 million m3).

SWCC’s Governor Abdullah Al-Abdulkarim shared the corporation’s pride in these change-driven achievements and exporting Saudi leadership throughout the globe.

The finance sector has flown the flag for this week’s Saudi Round-Up, with an exciting but balanced look at the past, present, and future of investment and capital markets in the Kingdom. Join us again next week to keep up with the Kingdom’s dynamic economic environment across the sectors that are important to you.

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