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Riyadh looks to boost FDI

3 October 2024

Commentary
Colin Foreman
Editor

Read the October 2024 issue of MEED Business Review

This year and next will be pivotal years for the Saudi economy. After years of heavy investment in projects by the state and its related entities – most notably the Public Investment Fund (PIF) – the economy is now shifting towards one that is more reliant on foreign investment. 

This is partly due to the kingdom running a budget deficit due to oil production cuts and oil prices, but also because creating business opportunities and attracting foreign direct investment (FDI) was a key part of Vision 2030. 

There are early signs of success, although the largest deals in terms of dollar value have been concentrated on sectors that Saudi Arabia is already well known for, such as oil and gas and, to a lesser extent, industry. 

Other sectors have so far needed more convincing. The new ambitious development projects, including the gigaprojects, follow a business model that involves state actors developing the first phases of a project. The private sector then takes over once the concept or business model has been proven. 

This is a tried-and-tested strategy. The best example in the region in recent decades was in the UAE, with Emaar building the first towers at Dubai Marina before the private sector developed many of the remaining towers.

Many of Saudi Arabia’s projects are nearing that point today as initial phases start to be completed. Over the next few years, the hope is that the development companies leading Saudi Arabia’s projects will be ready to take a slight step sideways and allow the private sector to step in and shoulder more of the investment. 

For that to happen, Saudi Arabia must successfully deliver the initial phases of its projects. If projects fail to meet their stated ambitions, they may risk scaring off FDI rather than attracting it.

Must-read sections in the October 2024 issue of MEED Business Review include:

> AGENDA: 
> Riyadh redoubles efforts to boost inward investment
> Foreign investment trends align with Vision 2030

> CURRENT AFFAIRS:
> Iran benefits from energy disruption in Iraqi Kurdistan
> Jordan election results in Islamist gains

INDUSTRY REPORT:
MEED's 2024 GCC Power Developer Ranking
> Local firms rise in GCC Power Developer Ranking
> Brisk pace of IPP awards set to continue

> IRAQ-CHINA: Chinese companies win 95% of all Iraqi energy projects

> PROJECT SERVICES: Bringing scale to project delivery

> HIGH-SPEED RAIL: UAE’s high-speed rail moves ahead

> INTERVIEW: Ducab undaunted by global market headwinds

> SAUDI ARABIA MARKET REPORT: 

> COMMENT: Riyadh modifies its narrative
> GOVERNMENT: Riyadh is forced to reassess its spending priorities
> BANKING: Saudi banks continue to lend, lend, lend
> UPSTREAM: Aramco spending lifts Saudi upstream market
> DOWNSTREAM: Saudi downstream programmes gain traction
> UTILITIES: Saudi Arabia’s power sector motors on
> CONSTRUCTION: Companies confirm Saudi gigaproject slowdown
> TRANSPORT: Infrastructure schemes support Riyadh’s ambitions

> MEED COMMENTS: 
> More scrutiny for highly paid expatriates in Saudi Arabia
> Economic change is inevitable for major projects
> UAE bucks the trend of rising construction risk
> Riyadh AI goals require colossal mindset and capital shift

> GULF PROJECTS INDEX: Gulf projects index halts its decline

> AUGUST 2024 CONTRACTS: Value of deals signed drops in August

> ECONOMIC DATA: Data drives regional projects

> OPINION: Desperate days drag on

> BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts

To see previous issues of MEED Business Review, please click here
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Colin Foreman

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