As Saudi Arabia continues to diversify its economy away from the traditional pillars of hydrocarbon-based industries, the kingdom is building a growing reputation as a dynamic destination for foreign direct investment.

Towards this, the Saudi government will finalise privatisation agreements valued at SR 2 billion ($533 million) before the end of 2019, the kingdom’s crown prince, Mohammed bin Salman, told Asharq Al-Awsat newspaper, last month.

The Saudi National Center for Privatization (NCP) is currently working on finalising privatisation deals in sectors that include flour mills as well as medical and shipping services, he added.

The privatisation programme is part of Saudi vision 2030 led by Mohammed bin Salman that aims to diversify the economy away from oil-revenue dependency and create jobs for Saudi youth.

The government will offer privatisation projects in the education sector with investments amounting to about SR1 billion in 2020.

In 2019, five deals with as much as SR 12.5 billion in investments have been signed by local and international companies in several sectors with 70 per cent foreign financing from six countries.

In addition, the private sector will be the largest investor in the electricity sector in the future, especially in power generation projects and major renewable energy projects.

ACHIEVES 45PC REFORMS

The kingdom has climbed the rankings of international competitiveness and ease of doing business. Foreign direct investment (FDI) inflows increased by 127 per cent in 2018, and the number of companies entering Saudi Arabia rose by 70 per cent year-on-year in the first quarter of 2019, according to the Saudi Arabian General Investment Authority (SAGIA).

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

Moreover, the government has introduced several initiatives that act as an international platform for expert-led debate between global leaders, investors and innovators. Last month, the Saudi-Japan Vision 2030 Business Forum took place in Tokyo, which focused on creating investment opportunities in strategic sectors in the kingdom.

Following the Forum, new business licenses were also awarded to Japanese businesses, permitting them to establish operations in Saudi Arabia. The deals involved a number of major Japanese firms including MUFG Bank, Yokogawa Electric Corporation and Mizuho Bank, among others.

Commenting on the deals, Ibrahim Al-Omar, Governor of SAGIA, said: “Saudi Arabia is open for business and we are delighted to announce these agreements. Japan is one of our most important economic partners — and we are excited by the potential to expand our partnership as our economy undergoes a wide range of investor-friendly reforms. We look forward to welcoming these companies and many more in the years to come.”

FOREIGN INVESTOR LICENCES

Further, SAGIA has issued as many as 267 new licenses for foreign investors to operate in the kingdom during the first quarter of 2019, marking an increase of 70 per cent when compared to the same period last year.

This number shows that more than four new companies are being set up in the country every day.

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.”

The leading growth sectors include education and healthcare, following the recent lifting of foreign ownership restrictions in these industries. During Q1 2019, nine new education-related companies were established, compared to just one in Q1 2018.

A joint venture with UAE-based NMC Healthcare was established to acquire and develop a pan-Saudi network of health care facilities with a capacity of up to 3,000 beds and total investments up to SR6 billion ($1.6 billion) over the next five years.