This year, Saudi Arabia’s Council of Ministers gathered and agreed to implement the Vision 2030, which promises to enact sweeping changes to reduce the kingdom’s dependence on oil. Not only does Saudi Arabia’s new economic plan seek to create a more productive private sector and workforce, it also hopes to introduce sustainable fiscal management policies and increase investment opportunities within and beyond Saudi’s borders.

One of the biggest steps taken to encourage an investment-driven economy in Saudi Arabia has been the restructuring of the country’s sovereign wealth fund also known as the Public Investment Fund (PIF). By combining the proceeds from Aramco’s initial public offering and various other assets, the PIF, currently holding $100 billion, will eventually be worth an estimated $2 trillion. Ultimately, providing Saudi Arabia with the financial capital needed to create a more diversified economy and become a stronger regional and global player.   

Attracting Foreign Direct Investment to Saudi Arabia

On a recent visit to the U.S.A, the Deputy Crown Prince Mohammed bin Salman, second deputy premier and defense minister, met with senior U.S. officials and business executives to rally support for the recently approved  National Transformation Plan (NTP) of 2020 and convince American companies to invest in Saudi Arabia. This 5-year plan aims to expand Saudi Arabia’s private sector, while simultaneously promoting “Saudization” and foreign investment.

By introducing a number of key policy reforms, such as reducing the average resolution time for commercial cases by 30%, cutting the percentage of delayed projects from 70% to 40% and speeding up the visa issuing process by two-thirds, the NTP aims to make it easier for people to conduct business in Saudi Arabia. In addition to adding more than 450,000 nongovernment jobs by 2020, creating new investment opportunities worth $613 billion and increasing the foreign direct investment in Saudi Arabia from $8 billion to $19 billion.

According to Mckinsey and Company’s recent Saudi Arabia Beyond Oil report, the following 8 sectors will require an estimated $4 trillion in investment to grow in the kingdom: mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, healthcare, finance and construction. To further ease the investment process, the Saudi Arabian General Investment Authority (SAGIA) has even developed an Android and iOs app that investors can use to explore and discover the investment opportunities available in the country.

Saudi Arabia’s Investment in Foreign Economies

Not only does Saudi Arabia’s 2030 Vision aim to expand the worth of the PIF to approximately $2 trillion, it also intends on increasing the portfolio’s foreign investment share from 5% to 50% by 2020, according to Yasir Alrunmayyan, the PIF’s Secretary-General. By increasing foreign investment, Saudi Arabia hopes to support the growth of Saudi investors and companies abroad to further diverse its existing investment portfolio and economic growth.

While the PIF’s recent $3.5 billion investment in Uber has been praised as a bold move from Saudi Arabia to reinvent its economy, there have also been several other promising investment initiatives in the past two months. In April, Saudi Arabia formed a joint coordination council with Jordan to identify potential opportunities for PIF to invest in the Hashemite kingdom. Although the size of the investment fund and the sectors that will receive its support have yet to be determined, it’s clear that the Jordanian economy needs this influx of capital now, more than ever, to generate jobs for its citizens and economically integrate the country’s 1.5 million Syrian refugees.

King Salman bin Abdulaziz Al Saud also visited Cairo in early April to announce the establishment of a $16 billion investment fund to be shared between the PIF and the Egyptian government. Saudi representatives also signed 17 investment deals and memoranda of understanding for cooperation in the agriculture, industry and infrastructure sectors. Other projects in the works include the creation of an economic free trade zone in Sinai and a new industrial city near the Suez Canal.

During this visit, both Saudi Arabia and Egypt also made a historic agreement to construct a bridge over the Red Sea to connect the two countries. When asked about the proposed bridge, Prince Mohammed said that the crossing would link Europe and Asia, provide building and investment opportunities and help move billions of dollars in cargo across the Red Sea. While no detailed plans have been revealed yet, it is expected that the bridge will span from Nabq on the Egyptian side to Ras Al Sheikh Hamid on Saudi Arabia's western coast.

A Role Model of Economic Reform

Since announcing the 2030 Vision, Saudi Arabia has taken great strides to translate this plan into action, which is already strengthening diplomatic relations and re-energizing economies in the MENA region. If the Saudi government is also able to successfully implement the necessary changes required to improve the ability of foreign investors to conduct business within its borders, the kingdom could become a model for economic reform and global community building in the future.