Forum to feature 5,000 investment opportunities in Saudi Arabia

16/02/20

The forum seeks to expand the base of competitors for the investment opportunities presented by all of Saudi Arabia’s municipalities in various economic fields. (SPA)
  • The forum seeks to expand the base of competitors for the investment opportunities presented by all of Saudi Arabia’s municipalities in various economic fields

RIYADH: The Ministry of Municipal and Rural Affairs announced the first Municipal Investments Forum, called Furas — Opportunities — to be held on Feb. 24 at the Riyadh International Convention and Exhibition Center.
“The forum seeks to expand the base of competitors for the investment opportunities presented by all of the Kingdom’s municipalities in various economic fields, which would contribute to the Saudi cities’ development,” said the ministry’s deputy minister for planning and programs, Khalid Al-Dughaither.
“It also introduces investors and the private sector to the initiatives focused on developing the municipal sector’s investment system and the future trends in light of the Kingdom’s Vision 2030,” he said.

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Minister: ‘Mind-blowing’ prospects for Saudi mining

25/01/20

  • Bandar Alkhorayef, the Kingdom’s minister for industry, says multibillion riyal program underway

DAVOS: The opportunities presented by Saudi Arabia’s mining industry are “mind-blowing,” the country’s minister for industry and mineral resources told Arab News.

Speaking on the sidelines of the World Economic Forum in Davos, Bandar Alkhorayef — who was appointed to the newly created post last summer — said many of the Kingdom’s mineral resources were “untapped,” and that a multibillion-riyal investment program was now underway to find and exploit new sources of natural wealth.

Saudi Arabia has launched a five-year geological survey of its natural resources, hoping to identify and quantify new wealth in the form of gold, phosphates and other valuable minerals.

Some experts believe that the Kingdom could be a source of precious earth metals valued in hi-tech production processes.

If these are found in significant quantities, it could help stimulate domestic high-tech manufacturing processes in Saudi Arabia.

“The government has linked mining with industry. We’ll export raw materials of course, but we’re more interested in the wider value chain,” Alkhorayef said.

A new mining law will soon be enacted, allowing for a revamped regulatory regime in the mining industry, and new investment in mining infrastructure that could reach tens of billions of riyals, he said, adding: “It shows you how serious we are about the mining industry.”

He joined the government after 26 years at the top of private sector business, with the Alkhorayef Group industrial conglomerate.

“The core of the Vision 2030 strategy is to diversify the economy, and industry and mining are key parts of that. My view as a minister is to be an enabler for the transformation of those sectors,” he said.

A key agency is the Saudi Industrial Development Fund, which aims to distribute funds to the private sector to encourage expansion.

Its available capital has been increased from SR65 billion ($17.3 billion) to $100 billion, and its mandate has changed to cover new industrial and technological sectors, Alkhorayef said.

“Both industry and mining are capital intensive and need long-term stability and visibility. Our aim is to be profitable in order to compensate investors for the risk they take,” he added.

DECODER

Saudi Arabia’s National Industrial Development and Logistics Program

The National Industrial Development and Logistics Program aims to transform the Saudi economy by encouraging investment in economic growth via the creation of special economic zones across the Kingdom.

“Investors always look at risk and return, and they make decisions based on that. Our vision is to open up opportunities for local and foreign investors.”

His ministry is also closely involved in the rollout of the National Industrial Development and Logistics Program, the big strategy to transform the Saudi economy launched a year ago by encouraging investment in economic growth via the creation of special economic zones across the Kingdom.

“It’s going great,” Alkhorayef said. Two zones have already been opened in Riyadh and Jeddah, and there are further projects under review.

He met with investors in the logistics sector while in Davos, and further investment is expected.

He said in Saudi Arabia’s case, the advantages presented to investors by the Kingdom’s natural resources, demographics and geographical location outweigh any geopolitical risk.

Alkhorayef added that it is relatively risk-free in terms of currency fluctuations because of the dollar peg and freedom of capital. “I worked in a global company, so I understand those kinds of risks,” he said.

This article was first published in Arab News

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SAGIA chief to lead delegation to WEF meeting in Davos as number of overseas firms starting business in Saudi Arabia breaks record

20/01/20

Al-Omar will lead the SAGIA delegation as part of a significant Saudi presence at the World Economic Forum (WEF) annual meeting in Davos, which begins on Tuesday. (Photo/Markus Schreiber)

DUBAI: Foreign investors are flocking to Saudi Arabia as the reform program under the Vision 2030 strategy accelerates, new official figures show.

In 2019, according to statistics released by the Saudi Arabian General Investment Authority (SAGIA), there was a 54 percent increase in the number of international companies setting up operations in the Kingdom, with 1,131 new foreign businesses launched — a record year.

“Leading growth sectors include construction, manufacturing and information and computer technology, as demand in these industries increases alongside infrastructural development and progress of the Kingdom’s giga projects driving forward in line with Vision 2030,” said SAGIA’s Invest Saudi report.

“During 2019, 193 new construction, 190 manufacturing and 178 ICT (information and communications technology) companies were established, compared to 111, 113 and 111 established in the three sectors in 2018 respectively.” The pace of new foreign startups accelerated in the final quarter, the report said.

SAGIA Gov. Ibrahim Al-Omar said: “Guided by Saudi Vision 2030, our country is undergoing a remarkable economic transformation. The continued prosperity of the Kingdom depends on sparking innovation, attracting foreign investors and empowering the private sector.”

He added: “The positive growth numbers that we have seen in the final quarter of 2019 — and indeed throughout the entire year — represent a significant milestone on the road to 2030.”

The Kingdom’s growing foreign investment landscape is underpinned by sweeping economic and social reforms made throughout 2019, aimed at improving Saudi Arabia’s business climate and attracting new investments.

The impact of these reforms is being recognized on a global scale: Saudi Arabia was ranked the world’s top improver and reformer by the World Bank, climbing 30 places in its Doing Business 2020 report, SAGIA said.

“The goal of our reform program is to help realize the potential that Saudi Arabia holds for the benefit of Saudi nationals and improve our competitiveness,” said Al-Omar, who will be among the Saudi delegation at the forthcoming World Economic Forum (WEF) annual meeting in Davos.

Snow falling in Davos, Switzerland, where around 3,000 political and business leaders will gather for the World Economic Forum this week. (Shutterstock)

“The investment opportunities that the Kingdom offers international companies also creates opportunities for the transfer of skills, expertise and best practice to local communities across the Kingdom, while providing new private sector job prospects for young Saudi men and women,” he added.

“We consider foreign companies who look to Saudi Arabia as growth partners for their business expansions — whether they seek a joint venture with Saudi companies or choose to set up on their own,” he said.

“Out of the new international companies setting up in Saudi Arabia in 2019, 69 percent were full foreign ownership, while 31 percent were joint venture partnerships with local investors. Our 2019 figures therefore demonstrate how integral new international businesses are to the success of our journey toward 2030.”

The Invest Saudi report found that the growth in the number of foreign startups came from “long-standing and strategically-important Saudi partners” such as the US and UK, with 100 UK companies and 82 US ones setting up in 2019, compared to 24 for both countries in 2018.

India, Egypt, Jordan and China were also among the top countries represented, with India’s share of the market increasing dramatically from 30 companies established in 2018 to 140 in 2019, driven by high-profile royal visits to the country in February 2019.

Other top countries from 2018, Jordan and France, were well-represented in 2019, the report said.

FASTFACT

The number of international companies setting up in Saudi Arabia rose by 54 percent last year.

SAGIA is continuing to introduce new measures to make setting up in the Kingdom easier and more efficient.

“We want to make it easier for foreign companies to set up and do business in Saudi Arabia,” said Al-Omar.

“We have taken global best practice models and combined them with local knowledge and insights in order to eliminate unnecessary barriers to doing business, while making it easier for our new partners from abroad to understand our unique Saudi culture and customs and how they can better integrate and contribute.”

SAGIA has increased its global profile, and will have a prominent presence at the forthcoming WEF annual meeting in Davos.

“We have played an important role in attracting foreign companies to establish operations in the Kingdom throughout 2019, facilitating a series of high-level investor forums in countries such as China, India, Germany and South Korea, as well as hosting delegations to the Kingdom from the US, UK, Japan and Russia,” Al-Omar said.

This article was first published in Arab News

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Saudi Arabia jumps 72 global positions in key World Bank logistics ranking

Time: December 20, 2019

  • The Kingdom jumped 72 global positions in “Trading Across Borders” measure
  • It is an indicator which compares the time and cost of exporting and importing goods

LONDON: Saudi Arabia has been ranked as the world’s top ease of doing business improver by the World Bank Group’s Doing Business 2020 report.

The Kingdom jumped 72 global positions in “Trading Across Borders” measure — an indicator which compares the time and cost of exporting and importing goods.
The reforms included reducing customs clearance from seven to ten days to 24 hours, the reduction of the manual inspection rate at customs from 89 percent to 48 percent, and the reduction of the number of documents required to import from 12 to 2 and to export from 8 to 2.
“The recognition of Saudi Arabia’s progress by the World Bank confirms our sustained efforts to drive efficiency and competitiveness in the country’s logistics sector,” said Saleh bin Nasser Al-Jasser, transport minister and Saudi Logistics Hub chairman. “The Saudi Logistics Hub is now inviting foreign investors and business partners to join our ambitious journey to consolidate Saudi Arabia’s status as a leading logistics hub.”

Earlier this year, the Saudi Logistics Hub unveiled a $35 billion spending plan to transform the Kingdom into a global logistics center.
The Saudi Logistics Hub is currently on a two-month global roadshow, with a final stop in Germany in January 2020, which aims to promote investment opportunities in Saudi Arabia’s logistics industry. It also took in the UAE, Jordan, Egypt, China, Japan, Singapore, India, and Germany.
Saudi Arabia has invested more than $100 billion into transport and logistics infrastructure over the last decade which aims to capitalize on the 12 percent of global maritime trade that passes through the Red Sea.
The Saudi Logistics Hub is a government initiative formed by transport and logistics groups in Saudi Arabia with a mandate to support growth in the sector.

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Saudi Arabia’s government invites investors to open more cinema theaters

26/07/19

Saudis watch composer Yanni perform at Princess Nourah bint Abdulrahman University in Riyadh, Saudi Arabia, December 3, 2017. (Reuters)
  • A statement said the invitation is aimed at easing procedures for investors and provide them with the necessary permits for operation

RIYADH: Saudi Arabia’s General Authority for Audiovisual Media has invited investors who are interested in opening or operating cinema theaters in small cities to communicate with the authority.
A statement issued by the Saudi Press Agency said the invitation is aimed at easing procedures for investors and provide them with the necessary permits for operation.
The move comes after the Kingdom’s cinemas ranked third place across the Middle East for its record ticket sales during the second quarter of 2019.
So far, seven theaters have been established in three main cities in the Kingdom. Around 27 more theaters are expected to open in seven cities by the end of 2019 to meet the increasing demand, SPA added.

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Spotlight on $30bn franchise in the Middle East market

30/06/19

Munir Mohammed Nasser. (SPA)
  • Saudi Arabia has acquired 50 percent of the market value of the franchising market in the Middle East and North Africa

MADINAH: With a market value of $30 billion and an annual growth rate of 27 percent, franchising is the fastest-growing non-oil sector in the Middle East region, according to Munir Mohammed Nasser, chairman of the Madinah Chamber of Commerce and Industry.
Nasser was speaking at the World Franchise Exhibition held at the chamber’s exhibition center in Madinah. The event, which the chamber has organized in cooperation with Three Dimensions for Events and Exhibitions, coincides with the UN’s Micro, Small and Medium-sized Enterprises Day.
Nasser said that the exhibition promotes local talent and products, gathers international brands and develops investment in the province. He said franchising is the ideal model for both the small and medium enterprise (SME) sector as it contributes 4 to 5 percent of a country’s GDP and provides 6 percent of private sector jobs in countries with advanced franchising systems.
The Kingdom has acquired 50 percent of the market value of the franchising market in the Middle East and North Africa, which has become the fastest-growing non-oil sector, he said.
The exhibition has expanded its presence, with 56 participants from around the world, 12 from Madinah and 17 from outside Saudi Arabia. SPA Madinah

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Saudi Arabia relaxes ownership limits for foreign investors

Time: June 27, 2019  

Mohammed El-Kuwaiz, Chairman of the Capital Market Authority (Reuters/File photo)
  • Capital Market Authority chairman, Mohammed El Kuwaiz said, ownership in the Saudi capital market by financial investors had increased threefold this year
  • The move aims to help enhance the market’s efficiency and attractiveness and to expand the institutional investments base

RIYADH,: Saudi Arabia has relaxed a 49 percent limit for foreign strategic investors in shares of listed companies, aiming to attract billions of dollars of foreign funds as the Kingdom opens up the region’s largest bourse to a more diverse investor base.
The country has introduced a raft of reforms in recent years to make its stock market, the region’s biggest, attractive to foreign investors and issuers.
The move aims to help enhance the market’s efficiency and attractiveness and to expand the institutional investments base, the regulator, the Capital Market Authority (CMA), said in a statement on its website.
The Saudi stock market, which opened to foreign investors in 2015, has seen an upsurge in foreign fund flows since the start of the year due to its inclusion in the emerging markets indexes.
“In the beginning of this year, we had only one percent ownership in the Saudi capital market by financial investors, today it is over three percent, that’s more than a threefold increase,” CMA chairman, Mohammed El-Kuwaiz told Reuters in an interview.
“Our hope is that we can see a similar increase in terms of pace and magnitude as we start to create more avenues for foreign investors to come in to the market,” he added.
There will be no minimum or maximum ownership limit, although the owners must hold the shares for two years before they can sell.
Kuwaiz said huge demand from non-financial foreign investors pushed the CMA to grant approval on an exceptional basis to a number of strategic foreign investors to increase their holdings in Saudi listed companies. These included transactions at an insurance firm and a local bank.
Foreign investors have been net buyers of Saudi equities over the past few months, with purchases worth 51.2 billion riyals ($13.6 billion) until May 30. They currently own 6.6 percent of Saudi equities, of which 3.15 percent is owned by strategic foreign investors.
Local shares were incorporated into the FTSE emerging-market index in March and the MSCI emerging market benchmark in May this year. The country’s Tadawul All-Share Index is up 11 percent year-to-date.
Strategic foreign investors can take stakes in listed companies by buying shares directly on the market, or through private transactions and via initial public offerings.
Asked how this move would reflect on the Aramco IPO, planned for 2021, Kuwaiz said it would assure that the market has the physical regulatory and investor infrastructure to accommodate a company as large and as extensive as Saudi Aramco.

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High-level investment forum aims to further boost business between Saudi Arabia and Japan

Time: June 18, 2019  

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More than 300 officials took part in the gathering. (SPA)
  • Japan is one of Saudi Arabia’s most important economic partners

TOKYO: More than 300 government, investment and industry leaders on Monday took part in a high-level gathering aimed at further boosting business opportunities between Saudi Arabia and Japan.

The Saudi Arabian General Investment Authority (SAGIA) welcomed key figures from the public and private sectors to the Saudi-Japan Vision 2030 Business Forum, held in Tokyo.

Hosted in partnership with the Japan External Trade Organization (JETRO), the conference focused on the creation of investment opportunities in strategic sectors of the Kingdom. Delegates also discussed key reforms currently underway to enable easier market access for foreign companies.

Speaking at the event, Saudi Economy and Planning Minister Mohammed Al-Tuwaijri, said: “Today’s forum is a testimony to the success of the strategic direction set by the Saudi-Japanese Vision 2030 two years ago, which seeks to drive private-sector involvement, both by partnering with public-sector entities.”

SAGIA Gov. Ibrahim Al-Omar said: “At SAGIA, we have been working on creating a more attractive and favorable business environment in Saudi Arabia, which is making it easier for foreign companies to access opportunities in the Kingdom.”

Japan is one of Saudi Arabia’s most important economic partners. It is the Kingdom’s second-largest source of foreign capital and third-biggest trading partner, with total trade exceeding $39 billion.

JETRO president, Yasushi Akahoshi, said: “Saudi-Japan Vision 2030 has made great progress since it was first announced. Under this strategic initiative, the number of cooperative projects between our two countries has nearly doubled, from 31 to 61, and represents a diverse range of sectors and stakeholders.”

Since 2016, the Saudi government has delivered 45 percent of more than 500 planned reforms, including the introduction of 100 percent foreign ownership rights, enhancing legal infrastructure and offering greater protection for shareholders.

As a result, the Kingdom has climbed international competitiveness and ease-of-doing-business rankings, with foreign direct investment inflows increasing by 127 percent in 2018 and the number of new companies entering Saudi Arabia rising by 70 percent on a year-on-year basis in the first quarter of 2019.

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Saudi investment fund PIF ‘has $300bn in assets and counting

10/06/19

Saudi Arabia’s Vision 2030 reform plan is expected to transform the country’s key wealth fund into one of the world’s largest sovereign investment vehicles. (Shutterstock)

  • Boost in Kingdom’s wealth fund ‘will improve country’s international investment position,’ study shows

LONDON: Saudi Arabia’s key wealth fund has about $300 billion in assets and its growing size is set to “improve the country’s international investment position,” a new report has found.
Roughly a quarter of the Kingdom’s Public Investment Fund (PIF) holdings are overseas, with investments in companies like electric car maker Tesla and SoftBank’s Vision Fund, according to the Institute of International Finance (IIF) analysis.
A raft of privatization deals and the planned $69 billion sale of a controlling stake in petrochemicals giant Saudi Basic Industries (SABIC) to Saudi Aramco is set to further boost the fund’s coffers, according to the IIF.
That means it is likely PIF will hit a target of $400 billion in assets by 2020, something the fund’s representatives have previously suggested is on track.
“The expected further increase in the PIF’s assets abroad will improve the country’s international investment position,” the IIF report said.
“We now estimate PIF’s assets at about $300 billion, of which one-fourth are invested abroad, including in … Blackstone’s infrastructure fund, Egypt’s investment fund, Russia’s investment fund, and Uber. Proceeds from privatization (a target of about
$200 billion) and the eventual 5 percent sale of Aramco (a target of $100 billion) will further boost the PIF’s assets.”
However, the IIF noted that the privatization drive has been delayed due to legal impediments, concerns about implications for the labor market, and — in the case of the planned sale of a 5 percent stake in Saudi Aramco — regulatory procedures that need to be addressed.
The Vision 2030 reform plan envisions the transformation of the PIF into one of the world’s largest sovereign investment vehicles, managing $2 trillion by 2030.
The Sovereign Wealth Fund Institute estimates PIF’s current assets at $320 billion, higher than the IIF’s assessment, making the Saudi entity the 10th largest fund of its type globally. Representatives of PIF did not immediately respond to a request for comment.
The IIF report also found that Saudi Arabia’s holdings of US government bonds climbed to a peak of $170 billion in March 2019. The Kingdom has also “repositioned” its assets from euro and UK pounds to US dollars, the institute said.
“The increase in the Saudi appetite for US bonds coincided with relatively higher US yields and unfavorable investment sentiment in (emerging markets) and the euro zone,” the report noted.

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Saudi Arabia most improved economy for business

Time: May 28, 2019  

IMD’s chief economist noted the efficiency of public-sector finance and the stability of Saudi Arabia’s tax regime as factors in the improved ranking. (Reuters)
  • The Kingdom rose 13 places in the latest edition of IMD’s annual survey, jumping to 26th in the world
  • IMD’s Christos Cabolis: Saudi Arabia spends 8.8 percent of its gross domestic product on education, against a global average of 4.6 percent

DUBAI: Business competitiveness in Saudi Arabia has improved more than any other country in the world, according to a new survey by Switzerland-based business school and think tank the International Institute for Management Development (IMD).
The Kingdom rose 13 places in the latest edition of the annual survey, jumping to 26th in the world. IMD highlighted Saudi investment in education, where the country achieved the highest ranking in the world, as well as the quality of public and business finance, as factors behind the improvement.
Christos Cabolis, chief economist and head of operations at IMD’s World Competitiveness Center, said the Kingdom invested nearly double the global average on education. “Saudi Arabia spends 8.8 percent of its gross domestic product on education, against a global average of 4.6 percent.”
He also noted the efficiency of public-sector finance and the stability of Saudi Arabia’s tax regime as factors in the improved ranking. “The message is to keep up the good reforms and attempt to be more transparent.”
The UAE was the highest-ranked regional performer in the survey, becoming the first Middle East country to break into the top five, with particular praise for its business efficiency.
Cabolis said that the improvement for both Saudi Arabia and the UAE came despite challenges in the economic performance of their oil-dominated economies. But non-oil exporters in the Middle East, such as Turkey and Jordan, suffered because of inflationary and other fiscal challenges.
Singapore emerged as the most competitive economy in the world, replacing the third-placed US, last year’s top economy. Hong Kong was ranked second.
“Singapore’s rise to the top was driven by its advanced technological infrastructure, the availability of skilled labor, favorable immigration laws, and efficient ways to set up new businesses. Hong Kong SAR held on to second place, helped by a benign tax and business environment and access to business finance,” IMD said.
“The initial boost to confidence from President Donald Trump’s first wave of tax policies appears to have faded in the US, according to the ranking. While still setting the pace globally for levels of infrastructure and economic performance, the competitiveness of the world’s biggest economy was hit by higher fuel prices, weaker hi-tech exports and fluctuations in the value of the dollar,” it added.
Ireland rose five places to rank 7th, while the UK — partly as a result of Brexit uncertainty — slipped to 23rd. In Saudi Arabia, Cabolis said that the strategy of economic diversification under the Vision 2030 plan was “slow but noticeable” and had contributed to the Kingdom’s rise.
However, the Kingdom performed comparatively poorly in some categories, notably international trade, technology and infrastructure, health and environment.
Challenges remain for Saudi competitiveness, IMD said. Policymakers have to continue government efforts to boost the non-oil economy, as well as to increase employment opportunities for young Saudi men and women under the human capability development program.
They should also continue reforms to restructure and streamline procedures and fees for licensing activities, and increase efforts to attract foreign direct investment.
“Economists regard competitiveness as vital for the long-term health of a country’s economy as it empowers businesses to achieve sustainable growth, generate jobs and, ultimately, enhance the welfare of citizens,” IMD said.

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