Revealed Abdul Latif Al-Othman, Governor of the General Investment Authority, revealed that the Kingdom aims to at least double annual foreign direct investment inflows over the next ten years by focusing on attracting investment to new sectors such as mining, healthcare, and information technology.
The plan, announced by Al-Othman during a recent interview with Reuters, as part of sweeping changes to Saudi economic policy designed to adapt to the era of cheap oil by diversifying the economy of the world’s largest crude exporter away from oil, gas, and petrochemicals.
Attracting investment
The drop in oil prices over the past 18 months—from around $120 to below $30 per barrel—has impacted the Kingdom’s revenues, prompting policymakers to implement structural reforms aimed at increasing the non-oil sector’s contribution to the domestic economy.
Al-Othman explained that the Investment Authority is seeking to attract foreign capital and investments to a number of sectors not directly linked to oil.
«Given that the Saudi economy has managed to attract about $10 billion annually in investments in traditional sectors,» he said, "we expect to attract several times that amount directly."
He added, "We hope to increase the volume of foreign direct investment over the next ten years to two or three times its current level, based on the moving average."
The General Investment Authority faces some obstacles, including bureaucracy, which has deterred foreign investment in recent years. Added to this are risks related to the slowdown in the Kingdom’s economic growth due to falling oil prices.
However, Al-Othman said that the Authority is constantly reviewing all regulations and laws related to investment to facilitate the entry of foreign investors into the Kingdom, and that it always encourages foreign investors to submit their suggestions regarding any aspects that require consideration and amendment.
$40 billion in investments
Foreign direct investment peaked at about $40 billion in 2009 but has declined since then, totaling about $8 billion in 2014, according to figures released by the United Nations Conference on Trade and Development.
Al-Othman explained that the mining sector could be one of the sectors attracting foreign investment, given the Kingdom’s mineral wealth—which has not yet been fully explored—including phosphate, bauxite, heavy metals, and gold.
In a joint venture that could serve as a model for future investments, the Saudi Arabian Mining Company (Ma'aden) announced in December that it had begun copper production at one of the Kingdom’s mines in cooperation with the Canadian company Barrick.
Al-Othman said that the Authority is working to attract foreign direct investment to the Kingdom to meet the Kingdom’s need to create hundreds of thousands of jobs for citizens, noting that these investments have the potential to provide suitable and appropriate jobs for citizens.
Creating jobs for citizens
Last September, the Authority announced a plan allowing foreign investors to engage in 100 percent wholesale and retail trade of their products in the Kingdom. The maximum limit for foreign ownership in the sector had previously been 75 percent. Al-Othman said the Authority has received applications from major foreign companies and is currently reviewing them, but he declined to provide further details.
Al-Othman noted that the Authority is holding discussions with companies in the automotive manufacturing sector, particularly those dealing in bus parts.
