Saudi Arabia to achieve FDI target of $24b in 2024

RIYADH, Aug 26 (Arab News): The Kingdom of Saudi Arabia's (KSA) updated investment law and a slew of recent reforms could help the country achieve its goal of attracting foreign direct investments worth $24 billion this year, according to an analysis.
In its latest report, Standard Chartered said that the Kingdom's future economic growth will be driven by rising FDI inflow, as well as investments in public capital expenditure and the private sector.
Aligned with its economic diversification efforts, Saudi Arabia aims to attract $100 billion in FDI by the end of this decade.
Earlier this month, the Kingdom approved an updated investment law to elevate FDI into the nation. At that time, the Ministry of Investment said that the law would boost transparency and ease the process of investing in the Kingdom.
The updated law also promises enhanced protections for investors, including adherence to the rule of law, fair treatment, and property rights, while ensuring robust safeguards for intellectual property and facilitating smooth fund transfers.
"We believe Saudi Arabia's inward $24 billion FDI target in 2024 is likely to be attained, although this is some distance away from its $100 billion 2030 FDI target," said Standard Chartered.
The financial institution added: "FDI is likely to remain supported by the slew of reforms implemented since the 2014 oil price crash, the latest being the updated investment law, which effectively levels the legal playing field by broadening the scope of investors to include both domestic and foreign investors."
Amid media speculations regarding the scaling back of high-profile projects, Standard Chartered noted that Saudi Arabia's ability to calibrate its investment decisions more finely bodes well for fiscal flexibility.
The report also added that the investment landscape in the Kingdom is expected to continue strong in the coming years.
"Looking ahead, we think investment will remain in the driving seat, given slowing consumption, with households squeezed by rising house prices and a moderation in mortgage growth," said Standard Chartered, adding: "Indeed, capex is budgeted at its highest level in six years at $50.4 billion, of which more than half was realized in the first half."
Speaking to CNBC earlier this month, Saudi Arabia's Assistant Minister of Investment Ibrahim Al-Mubarak said that the Kingdom is keen to attract more FDI from countries in Europe and Asia, as the nation's economic diversification efforts progress steadily.
He added that the country's financial sector is providing "huge opportunities" for investors due to its strong debt capital market and low debt to gross domestic product ratio.
Meanwhile, Saudi Arabia and Ethiopia are set to strengthen their economic ties with the establishment of a new business council for the 2024-2028 term, the Federation of Saudi Chambers announced.
The Saudi-Ethiopian Business Council, recently approved by the General Authority for Foreign Trade, aims to enhance trade and investment opportunities between the two nations.
Abdullah bin Mohammed Al-Ajmi will lead the council as president, with Omar bin Abdullah Al-Kharashi and Misfer bin Musaad Al-Shahrani serving as vice presidents, according to the Saudi Press Agency.
The formation of the council aligns with Saudi Arabia's strategy to deepen economic relations with Africa, particularly with Ethiopia, which is one of the continent's largest economies with a gross domestic product of approximately $205 billion in 2022.
Despite the substantial economic potential, trade between Saudi Arabia and Ethiopia remains below SR1.3 billion ($346 million). Al-Ajmi emphasized that the council is poised to capitalize on this untapped potential by fostering stronger business partnerships between the two countries.
The council is expected to serve as a pivotal platform for supporting Saudi exports and targeting key sectors in Ethiopia. Al-Ajmi highlighted Ethiopia's attractive investment environment and its strategic role as a trade hub for Central Africa.
He noted that the council will focus on promising sectors such as agriculture, mining, petrochemicals, food industries, tourism, real estate, and construction.
The creation of the council follows an agreement announced nearly three months ago during the Saudi-Ethiopian Business Forum, held on June 5 in Addis Ababa.
The ceremony was attended by Hassan bin Moejeb Al-Huwaizy, chairman of the Federation of Saudi Chambers, along with over 250 investors and several Ethiopian ministers, officials, and representatives from both the public and private sectors.
Al-Huwaizy described the establishment of the council as the result of ongoing efforts and a shared commitment to enhancing economic cooperation.
He underscored that the council will provide a vital platform for Saudi and Ethiopian businesspeople to expand their activities and forge new partnerships, driving mutual growth and investment.
As both countries look to the future, the new business council is set to play a crucial role in unlocking significant economic opportunities, fostering bilateral trade, and creating a more integrated economic landscape between Saudi Arabia and Ethiopia.