Saudi Arabia a haven for FDI during the COVID-19 crisis
Last year, foreign direct investments dipped across the globe due to the coronavirus disease (COVID-19) pandemic. The Organization for Economic Co-operation and Development expected FDI to fall by more than 30 percent in 2020 due to the measures taken by the governments to address the pandemic and the resulting recession. It was also expected that FDI would suffer a harsher dip in developing countries because their primary and manufacturing sectors account for a larger share of FDI.
But preliminary data released by the
Saudi Central Bank showed a net growth in FDI for the first quarter of 2021 by 11.3 percent, reaching SR20.67 billion ($5.5 billion) compared to the same period in 2020. Likewise, improvement in the Kingdom’s investment climate resulted in the increase of foreign investment flow to SR2 trillion at year end 2020.
Likewise, the number of investment projects licenses issued in Saudi Arabia increased by 36 percent in the first quarter of 2021 compared to the same period last year.
Licenses issued in the construction sector increased by 30 percent and licenses issued in the wholesale and retail trade sectors jumped by 152 percent. These sectors constituted 56 percent of the total licenses registered in the first quarter of 2021.
The Kingdom also reported a 198 percent hike in investments in non-oil industries in the first quarter. The industrial units licensed by the Ministry of Industry and Mineral Resources also recorded a big jump during March, reaching $4.1 billion. The foreign investor ownership flows in the Saudi stock market Tadawul continued to rise and reached $50.2 billion at the end of the first quarter.
The launch of the “Shareek” program and the “Made in Saudi” initiative also supported the vibrant private sector in the Kingdom.
The decision taken by 25 international companies to move their regional headquarters to the Kingdom helped to stimulate and attract foreign investments.
Without doubt, the improvement witnessed in the investment climate in the Kingdom will support in achieving the investment objectives of the Kingdom’s Vision 2030, which are to increase the share of FDI in the nominal gross domestic product to 5.7 percent and increase the private sector contribution to real GDP to reach 65 percent by 2030.
I believe that the significant improvement witnessed in the investment climate in the Kingdom in recent years has led to the outstanding inflow of foreign investment in 2020 and 2021. The ministries of investment, commerce, justice, and other related government entities have played a major role in achieving these remarkable results.