Saudi Round-Up: Attracting Foreign Investment and Inspiring Global Trade

Our Saudi Round-Up brings you all the latest Saudi business news across sectors to keep you up-to-date with the country’s urban, digital, societal, and economic transformations. Today’s round-up showcases movement across multiple sectors that converges on the Kingdom’s ambitious objectives in line with Saudi Vision 2030.

From the 13th to the 19th of February, 2024

General Business and Economy

Saudi Tax Revenue Drives Budget Growth

The Kingdom’s non-oil revenues reached $122.06 billion in 2023, largely due to increased revenue from taxes in three areas: income, capital gains, and profits. The Ministry of Finance’s budget performance report for 2023 announced that these taxes increased by 58%, contributing $10.30 billion to non-oil revenues.

The increase in foreign direct investment demonstrates Saudi’s continued positioning as a global investment destination and business center, attracting international businesses and spurring economic growth.

Kingdom 30-Year Tax Exemption to Attract Foreign Companies Is Now Official

Saudi’s initiative to allow qualifying multinational companies a 30-year tax exemption became official on the 16th of February, 2024.

This builds on the economic boost provided by the 200 firms that successfully opened regional headquarters in Riyadh before the close of 2023. All 200 firms were granted eligibility for Saudi government contracts, relaxed Saudization requirements, and streamlined work permit provisions, all intended to fortify both foreign direct investment and the private sector.

Online Services for Foreign Firms with Regional Headquarters in Saudi

The Ministry of Commerce announced that foreign firms with regional headquarters in Saudi Arabia will benefit from comprehensive online services to streamline their expansion.

These online services, accessible via the ministry’s digital and Saudi Business Center platforms, enhance Saudi’s business ecosystem as drivers of digital transformation. Specifically, they help firms establish regional headquarters in the Kingdom, reserve commercial names, and modify the commercial register.

Energy and Sustainability

PIF-Backed ACWA Power Secures $3.4 Billion for Solar Plants

Backed by the Saudi Public Investment Fund, ACWA Power is set to build solar energy plants valued at $3.4 billion across the Kingdom. Saudi Awwal Bank, Banque Saudi Fransi, and Mizuho Bank are part of the consortium helping to finance the project.

This solar initiative is another big step in the National Renewable Energy Program, where the Ministry of Energy mandated the PIF to establish 70% of the program’s target capacity. The fund supports various renewable projects in the private sector, including Ar Raas 2, Saad 2, Shuaibah 2, and Sudair.

Kingdom Issues More Than 37,550 Certificates of Origin

The Ministry of Industry and Mineral Resources issued 37,553 certificates of origin in January, a growth of almost 13.8% compared to February 2024.

A certificate of origin demonstrates that exported products are of national origin or acquired national-origin status. These documents are used extensively in international trade and support national industries via preferential tariffs.

This initiative is a part of the Kingdom’s economic transformation and Vision 2030 goal to increase Saudi’s non-oil contribution to GDP from 16% to 50% by the end of the decade.

FinTech

Open Banking Market Could Grow to $43 Billion in 2026

Speaking at the Open Banking Hackathon 2024 in Riyadh on the 18th of February, Capital Market Authority Chairman Muhammad bin Abdullah Al-Quwaiz emphasized the significant expansion of the open banking market, which is expected to reach $43 billion by the end of 2025, a significant growth from $7 billion in 2018.

Open banking is popular for its transparency, enhanced customer experience, and providing a level playing field between financial institutions. The economic growth of open banking frameworks in the Kingdom is a testament that the technology is increasingly accepted and integrated and will continue to play a critical part in transforming financial services.

Insurance

Saudi Insurance to Exceed $22 Billion by 2028

According to research by UK-based consultancy Global Data, the Kingdom’s insurance industry is set to achieve a CAGR of 5.2% by 2028, reaching $22 billion, up from $18.2 in 2024.

According to the data, the increase will be primarily driven by the health and motor segments of the insurance sector, and bolstered by favorable regulatory developments. These segments are expected to account for 86% of the overall gross written premiums.

Increased construction activities, a preference for specialized healthcare, and rising motor vehicle sales are also set to contribute to growth.

Real Estate

PIF’s ROSHN Signs Deal to Build 400 New Homes

Wholly owned by the Saudi Public Investment Fund, ROSHN Group is set to design and construct more than 400 new single-family homes in the Eastern Province. It is also set to develop public services and facilities in the ALFULWA residential community.

The project is expected to further enhance and diversify the Saudi economy. It aims to support Saudi Vision 2030’s objectives to expand the private sector and stimulate employment through strong investments and opportunities for entrepreneurs.

Tourism

ROSHN Lays the Foundations of MARAFY Gigaproject

ROSHN laid a foundation stone to mark the MARAFY gigaproject, which is set to change the face of the region north of Jeddah.

The ceremony focused on MARAFY’s potential to enhance the region by revitalizing the urban landscape and linking homes with nature, commerce, and world-class amenities. MARAFY will be the group’s largest mixed-use project and an iconic landmark. It is expected to attract worldwide visitors and contribute toward Saudi Vision 2030’s objective to establish three Saudi cities in the top 100 global destinations for tourists.

Alibaba to Partner With Saudi Companies

Following the group’s success working with local partners in the Kingdom, Michael Evans, president of Alibaba Group, has underlined the importance of partnering up in a local market.

Alibaba will launch its Saudi operations in the King Abdullah Financial District. The arrival of this giant in the Saudi business ecosystem further solidifies its role as a burgeoning global financial hub.

These exciting developments through various sectors of the Saudi economy are driven by dynamic leadership, collaborations with talented entrepreneurs and groups committed to Saudi’s global future, and funds that support and facilitate significant change with a visionary look toward the future. Join us next week for another Saudi Round-Up, where we will provide another timely summary of the Kingdom’s continual growth, diversification, and transformation across its growing private sector.