Saudi Arabia strengthening economic transformation plan, says finance minister

Saudi Arabia’s Minister of Finance Mohammed bin Abdullah al-Jadaan attends the Future Investment Initiative (FII) in Riyadh on Wednesday.

Saudi Arabia is strengthening its commitment to a plan designed to wean the economy off oil, its finance minister said on Wednesday, during a business event at which deals were signed to support the country’s economic transformation.

Mohammed al-Jadaan was addressing the second day of the Future Investment Initiative (FII) conference in Riyadh, which is hosting top global business, technology and financial leaders.

“Overall, I think we are very, very excited and happy with what we have achieved in the Saudi ‘Vision 2030’, but we are not complacent. We are doubling down, making sure that we do the right thing,” the finance minister said.

Crown Prince Mohammed bin Salman is overseeing Saudi Arabia’s ambitious economic overhaul, known as “Vision 2030”, which aims to boost non-oil growth, expand the private sector, and create jobs and new industries. The plan, driven by the $925bn PIF sovereign wealth fund, involves massive infrastructure projects, including building entirely new urban and industrial areas, such as a futuristic desert city called NEOM.

The fund, which made its mark on the global stage with high-profile deals, such as investments in Uber and Japanese conglomerate SoftBank, now plans to reduce the share of its overseas investments by about a third as it focuses on domestic projects, its governor told the FII on Tuesday.

Foreign direct investment (FDI), which had stalled in recent years, is key for driving the transformation.

The government has a target to attract $100bn in FDI by 2030, equivalent to almost 6% of its GDP. FDI is on an upward trend, but midway through Vision 2030, FDI numbers indicate that the Kingdom could struggle to meet the objective for the turn of the decade.

Despite diversification efforts, oil is still a mainstay of the Saudi economy and amid lower oil prices and production, government earnings have fallen and the Kingdom has begun a spending review, under which some Vision 2030 projects will be delayed or scaled back, and others prioritised. The high-profile annual FII event is an opportunity for Riyadh to draw in foreign funds and investment into the country.

In one deal signed during the conference, PIF will be an anchor investor in a new $2bn Middle East-focused private equity fund from Canada’s Brookfield Asset Management, which it plans to use for investments in sectors such as industrials, technology and healthcare.

At least half of the capital will be invested in Saudi Arabia and international companies that are looking to expand in the Kingdom, the two companies said in a joint statement on Wednesday.

Jerry Inzerillo, CEO of Diriyah , a $64bn “giga-project” located at a Unesco World Heritage site outside the capital Riyadh, told the audience at FII that the project was “on time and on budget” and that its value and assets could rise to “well over” $100bn by 2030.

“We are having a great FII because we closed so many deals here,” Inzerillo added.

Al-Jadaan told the audience on Wednesday investors were confident in the kingdom’s plans. “I really did not come here for Saudi Vision promises. I came here for what Saudi Vision delivered,” al-Jadaan quoted a “prominent” investor attending the event as telling him.