Saudi Round-Up: Increased Business Activity in Saudi Drives Economic Growth

Our weekly round-up of business news across the Kingdom helps you stay up-to-date with the major movements in Saudi at a glance. This week’s round-up is dominated by positive results and predictions for the Saudi economy and exciting updates about the transformation of the technology sector, locally and internationally

From the 30th of January to the 5th of February, 2024.

Roundup Spotlight

Business Expansion Activity Across Saudi Arabia Sees 4X Increase Since 2018 - AstroLabs 2023 Saudi Market Entry Report

AstroLabs, the leading business expansion platform in the Gulf, has released the first-of-its-kind “2023 Saudi Market Entry Report,” uncovering the opportunities and challenges companies encounter when entering and operating in Saudi Arabia, a global sought-after market destination for innovation.

The report, which analyzed and collected insight from 660 high-growth companies, from a total of 50+ countries around the globe, provides a holistic view of various aspects pertaining to the business expansion processes, areas requiring post-setup assistance, hiring local talent, and the growing demand for office spaces to accommodate prospective entrants.

Amongst those that are exploring their expansion to the Saudi market, 48% of these prospective entrants plan to register their businesses within the next three to six months, reducing the time taken to enter the market from 8–12 months in 2018 to less than two months in 2024, indicating a four-fold increase in the speed at which businesses complete their market entry to the Kingdom over the period from 2018–2024. Access the report here.

General Business and Economy

Saudi Private Sector Reaches 2.4 Million Workers

The Kingdom’s private sector now employs 2.4 million citizens. Speaking at the Qassim Youth Empowerment Forum, Ahmed Al-Zahrani, Deputy Minister of Human Resources and Social Development for Labor Affairs, emphasized the significance of this sustained growth over 6 years.

Prince Faisal bin Mishaal bin Saud noted that the increase in employment opportunities showcased the Kingdom’s dynamic leadership and pursuit of enhanced economic prospects, positioning Saudi among the strongest G20 countries in terms of economic growth.

Saudi FDI Reached $4.53 Billion in Q3 2023

Following an improved, more transparent calculation method developed by the IMF (International Monetary Fund), the Saudi Central Bank, and the Ministry of Investment, the General Authority for Statistics reported that The Kingdom’s foreign direct investment (FDI) inflows reached $4.53 billion in the third quarter of 2023.

The Ministry of Investment noted that inflows accounted for 3% of 2022’s GDP, beating that year’s target. It also underscored the potential of the improved data quality method to increase the contribution of FDI to GDP to 5.7% and to position the Kingdom among the top 10 economies according to the Global Competitiveness Index by the end of the decade, in alignment with Vision 2030.

Saudi Arabia’s Public Investment Fund (PIF) attracted over $25Bn worth of Investments in 3 years

Saudi Arabia's Public Investment Fund (PIF) and its portfolio companies have amassed a remarkable SR96 billion ($25.6 billion) in investments over less than three years, marking a significant milestone in the Kingdom's economic landscape. Yasir Al-Rumayyan, governor of the wealth fund, shed light on this while emphasizing the fund’s concentration on 13 strategic sectors, highlighting the symbiotic relationship between the PIF and the private sector.

Moreover, the private sector platform launched by PIF offers over 200 opportunities exceeding SR20 billion, fostering economic growth and diversification in alignment with Saudi Arabia's Vision 2030. This strategic move not only nurtures the construction ecosystem but also facilitates projects aimed at enhancing contractors' cash flows, thus underlining the enduring economic impact of PIF's initiatives on the Kingdom's economic development and diversification goals.

Public Investment Fund (PIF) 2nd PIF Private Sector Forum to Drive Economic Growth

Saudi Arabia's Public Investment Fund (PIF) is hosting its second Private Sector Forum this week, from Feb. 6-7 at the King Abdulaziz International Convention Center in Riyadh. This significant event aims to cultivate partnerships between PIF, its portfolio companies, and the private sector, in line with PIF's strategy to boost local content to 60% by 2025 and Vision 2030's objective to elevate private sector contribution to GDP to 65% by 2030.

The forum will convene government ministers, PIF executives, CEOs, and thought leaders, along with representatives from over 80 PIF portfolio companies. With over 100 booths from portfolio companies and government entities, the event expects to attract more than 8,000 private sector participants from various strategic sectors. This platform seeks to empower the local private sector, enhance competitiveness, and drive innovation, aligning with Vision 2030's overarching goals.

The forum's agenda includes the launch of new programs and initiatives aimed at diversifying the local economy, strengthening strategic sectors, boosting competitiveness, increasing local content, and creating job opportunities. Sessions and workshops will delve into topics related to Vision 2030 objectives, private sector empowerment, financing solutions for vendors, future opportunities in local sectors, and collaboration opportunities between PIF, its portfolio companies, and the private sector. PIF's significant role in job creation and its National Development Division's efforts to support national development through private sector participation will also be highlighted.

Automotive

Saudi Arabia Launches National Academy and Automotive Association to Boost Industrial Sector

Saudi Arabia unveiled the National Academy of Vehicles and Cars alongside the establishment of a new Automotive Manufacturers Association during the PIF Private Sector Forum. Minister of Industry and Mineral Resources Bandar Alkhorayef highlighted the ministry's commitment to safeguarding manufacturers' interests and promoting scientific advancements in the industrial sector.

The academy's primary objective is to cultivate expertise in the electric vehicles industry, while the association aims to enhance public awareness about the automotive sector and develop human capital in manufacturing and maintenance within a cutting-edge ecosystem. These initiatives are poised to amplify the utilization of local content, augmenting the contribution of significant projects and bolstering imports of products listed as mandatory, thereby reducing the Kingdom's overall import dependency.

These initiatives epitomize Saudi Arabia's commitment to advancing its industrial capabilities, fostering innovation, and positioning itself as a competitive player in global markets.

Technology

Alat to Transform Kingdom into Advanced Technology Hub

Saudi Crown Prince Mohammed bin Salman announced the launch of a new PIF company called Alat, which will help the Kingdom become a global hub for sustainable technology manufacturing.

Chaired by the Crown Prince, Alat will focus on key strategic business units, including advanced industries, smart buildings, and next-generation infrastructure. The company aims to boost the Saudi technology sector, attract foreign investment, bolster the private sector, and contribute toward transformations within the global industrial sector.

Kingdom Launches “GenAI For All” Initiative

The Saudi-led initiative “Generative Artificial Intelligence for All Initiative for Member States of the Digital Cooperation Organization” was launched by Abdullah Al-Swaha, Saudi Minister of Communications and Information Technology, at the Third General Assembly of the Digital Cooperation Organization to support and develop generative artificial intelligence.

This initiative follows November’s announcement of plans to open a new AI center in Riyadh. AI is expected to contribute more than $135.2 billion to the Saudi economy in 2030, which would represent 12.4% of the country’s GDP.

The Kingdom is an increasingly vibrant place to work and achieve success, especially for those aligned with Saudi’s ambitions for excellence and sustainability. Check in next week for another round-up to keep you abreast of industry developments making the biggest impact across the Kingdom.