Saudi Round-Up: Maintaining Momentum for Continued Transformation

2 Jan 2024

AstroLabs Team

Our Saudi Round-Up recaps major deals and business moves across sectors in Saudi Arabia. The first round-up of 2024 starts strong with record-breaking success in the Aviation and Tourism sectors, and a positive outlook for insurance, general business, and the economy.

From the 17th of December to the 1st of January

Aviation

2023 marks a record high for the Saudi aviation industry

The Saudi Aviation Strategy Steering Committee announced that 2023 was the Saudi Aviation sector’s most successful year ever. It saw a record-breaking 101 million passengers through November, beating its previous high in 2019 by 2 million passengers.

Saudi aviation has expanded to 149 destinations, a 41% increase since 2019. The sector’s outstanding performance compared to global aviation growth rates is attributable, at least in part, to the Kingdom’s ambitious aim to handle 330 million passengers and connect with 250 destinations by 2030.

Economy

Saudi’s Diversifying Economy Attracts 180 International Companies

The Kingdom’s economic diversification, supported by significant regulatory incentives, such as a 30-year exemption from corporate income tax, has successfully attracted many major businesses to the region, in line with the country’s goals to become a global business destination.

The regional headquarters program in particular incentivized over 180 foreign firms to secure licences to set up their headquarters in the Kingdom by the end of 2030, 20 more than the Kingdom’s initial target.

The Kingdom’s long-term strategy is helping position Saudi as a global hub by developing a favorable ecosystem to attract investment and in which businesses can grow.

Saudi Participation in Private Sector Grew 30% in 2023

According to the Human Resources and Social Development System, Saudi Arabia has had a notable increase in Saudi national participation in the private sector, increasing from 1.7 million in 2019 to 2.3 million in 2023. About 17% of this figure — 360,000 workers — were people entering the labor market for the first time.

National reforms, strategy, and support reduced total unemployment to 8.3 percent in the second quarter of 2023 and is on track to meet Saudi’s goals for continuing Saudization and its ability to meet market demand, which continues to grow in conjunction with the Kingdom’s ambitious economic diversification activities.

Saudi Ministry of Commerce Lays Out 2024 Strategic Roadmap

Unpacking the Ministry of Commerce’s 2024 Strategic Roadmap, Minister of Commerce Majid bin Abdullah Al-Qasabi emphasized the importance of strategic investment in high-potential sectors and making the most of opportunities for regional diversification.

The Ministry of Commerce plays a key role in advancing the commercial system. It continues to ensure the system is aligned with the Kingdom’s key initiatives, including prioritizing technology and digital transformation and also facilitating growth in the private sector through regulations, legislation, qualitative initiatives, and new projects.

Insurance

14.6% Growth for Saudi Insurance Sector

During the third quarter of 2023, the Saudi insurance sector’s net income reached $231.87 million and 14.6 percent year-on-year growth, driven by increases in property, health, and vehicle insurance premiums.

According to the Kingdom’s Insurance Authority, written premiums stood at $3.97 billion during the three months to the end of September 2023, up from $3.47 billion a year earlier.

The Authority’s mission is to regulate the Kingdom’s insurance sector while enhancing its efficiency and stability to create a world-class insurance sector in alignment with Saudi Vision 2030.

Tourism

Visitors to The Kingdom Spend Record $27.36 Billion in First Three Quarters of 2023

According to Saudi Central Bank data, visitors to the Kingdom spent a record $27.36 billion in the first three quarters of 2023. This is a 53% increase compared to the equivalent period of 2022.

A report from the UN’s World Tourism Organization noted that Saudi Arabia had one of the highest inbound tourism growth rates in the G20.

NEOM Announces New Lifestyle Community - Norlana

The Kingdom’s NEOM giga-project has unveiled Norlana, a cutting-edge lifestyle community in the northwest. The community will feature 711 residential properties and expects to support 3000 residents with a combination of luxurious living spaces — deluxe mansions, apartments, and villas in a coastal location — merged with advanced, sustainable technology.

The revelation of this latest location follows announcements of other major sustainable tourism destinations — Leyja, Epicon, Siranna, and Utamo — all in line with Saudi Vision 2030’s goals for growing the tourism sector while prioritizing sustainability.

Historic Growth in Saudi Inbound Tourism

The Kingdom’s inbound tourism grew to 14.6 million in the first 6 months of 2023, a 142% increase compared to the first half of 2022. There has been a corresponding rise in inbound tourism spending, too, with unprecedented growth of 132% and a record-breaking $23.17 billion contribution to the economy from the tourism sector.

The outbound tourism sector saw 37% growth and an increase in spending of 74% compared to the first six months of 2022. Total tourism spending reached $40 billion, setting a new milestone and demonstrating not only the growth but also the resilience of the tourism sector.

Energy

Major EPC Deal to Support AMAALA’s Renewable Energy Generation

Masdar of UAE, France’s EDF, and the construction arm of India’s Larsen & Toubro will collaborate on renewable energy generation and utilities for the Kingdom’s AMAALA project.

The collaboration aims to create an off-grid renewable energy system that will include solar power, battery energy storage, and biofuel-based combustion engines for AMAALA, one of the Red Sea region’s most ambitious projects, aligned with Saudi’s goals for economic diversification and sustainability.

AMAALA spans 4,155 square kilometers and will include 25 hotels and 900 luxury residential villas, apartments, and estate homes. Its construction plans will be significantly beneficial to the retail, wellness, and food & beverage sectors.

While many of us enjoyed end-of-year celebrations last week, our look at the close of 2023 and the beginning of 2024 reveals no slowdown in the Kingdom’s continued progress toward its ambitious goals for Vision 2030. Every day, Saudi Arabia is a more exciting place to live and work, with every key sector contributing to a vibrant, sustainable ecosystem that will serve as a global model for healthy, prosperous, and sustainable living for communities around the world.