Arab News, Wed, Oct 30, 2024 | Rabi al-Thani 27, 1446
Saudi Arabia exceeds HQ target with 540 international firms in Riyadh, says Al-Falih
Saudi Arabia:
Saudi Arabia attracted 540 international companies
to establish their regional headquarters in Riyadh, ahead of a 2030 target of
500, according to Khalid Al-Falih, the Kingdom’s minister of investment.
Speaking at the eighth Future Investment
Initiative summit in Riyadh on Oct. 29, Al-Falih said that Saudi Arabia’s
economic growth and investment landscape continues to remain resilient amid
geopolitical tensions in the region.
“Investors are not only coming to Saudi Arabia for
our vibrant market. They are coming to the Kingdom to explore the broader
region. We have initiated a program aimed at targeting 500 regional headquarters
by 2030. And I am glad to announce that we have reached 540 companies,” said
Al-Falih.
Through the regional HQ program, Saudi Arabia
introduced new tax incentives for multinational companies moving their regional
headquarters to the Kingdom. These incentives include a 30-year exemption on
corporate income tax and withholding tax related to headquarters activities,
alongside discounts and support services.
Al-Falih added: “Our economy is in the middle of
the Middle East. We are the center of the Middle East and we feel the pain that
is happening at the human level. The economy of Saudi Arabia under Vision 2030
is navigating these geopolitical tensions, macroeconomic and global challenges
including trade tensions and political conflicts extremely well.”
According to the minister, Saudi Arabia’s gross
domestic product has grown by 70 percent since the launch of Vision 2030, a
program aimed at diversifying the Kingdom’s economy by reducing its dependence
on oil.
Affirming the progress of economic
diversification, the investment minister said that Saudi Arabia’s non-oil
economy has been growing at 4 percent to 5 percent consistently since 2016, when
Vision 2030 was launched.
The comments by Al-Falih come just a few days
after the International Monetary Fund projected the Kingdom’s economy to grow by
1.5 percent in 2024 and 4.6 percent next year. According to IMF, the Kingdom’s
projected growth for 2025 is the second highest among countries in the Gulf
Cooperation Council.
Earlier this month, the World Bank also projected
the Saudi gross domestic product to grow by 1.6 percent this year and later
accelerating to 4.9 percent in 2025.
In September, another report by credit rating
agency S&P Global said that Saudi Arabia’s economic growth will be driven by its
diversification strategy aimed at strengthening the non-oil private sector and
reducing dependence on crude revenues.
The investment minister also added that Saudi
Arabia is targeting $3.3 trillion of gross capital formation by 2030, and it is
currently growing at a pace of 10 percent year on year.
He added that the Saudi Arabia progressing in
every sectors including tourism, with the Kingdom attracting more than 100
million tourists last year.
Al-Falih said that economic conditions are getting
stabilized globally, with inflation moderating and interest rates declining.
“Inflation has now been crushed, and it is now
back to target levels; 2.6 percent in developed countries. Interest rates have
declined, and in many countries have started reducing interest rates and
quantitative easing. There has been no massive recession in most G20 economies,”
said Al-Falih.
He added: “Investor confidence is 15 percent high
compared to three years ago, as measured by IPSOS. Tourism is back to where it
was before the pandemic.”
Geopolitical tensions
Al-Falih expressed his concerns about the growing
geopolitical tensions in the Middle East, and said that Saudi Arabia is
committed to bring peace and stability in the region.
“Geopolitical situation is concerning. The human
aspect of it is truly tragic, look at the region, look at Europe. What is
happening should be not underestimated, and the Kingdom is doing all it can to
bring peace and prosperity,” said the investment minister.
Turkish Finance Minister Mehmet Şimşek said his
country’s economy, with its diversified nature, is well equipped to combat the
effects of tensions in the region.
“We are concerned about the risk of escalation of
the ongoing conflicts, even though I think the risk is small, but it is not
completely ignorable. Typically that would be the worst case scenario because
Turkiye is a highly diversified economy. We are more resilient,” said Şimşek.
He added: “The good news is that we have free
trade countries with 54 countries around the world, and that covers about 60
percent of our trade.”
During the same panel discussion, UK’s Minister of
State for Trade Douglas Alexander said that politics is making a come back to
the business sector, which is creating challenges to the future of economy.
“In the first 40 years of globalization, CEOs and
capital allocators did not have to give much consideration to geopolitics, and
they instead focussing on ensuring flows of capital, services and goods.
However, in recent years, we are seeing politics making a comeback, politics
domestically, and geopolitics internationally,” said Alexander.
Technological shift
During the discussion, Al-Falih said that advanced
technologies like artificial intelligence are expected to fuel optimism in the
minds of investors, thus strengthening market conditions.
“AI, by itself, is fueling not only capital
markets, but it is fueling optimism. It is creating an opportunity for
rebalancing global competitiveness, among companies, among countries, and even
among families and people, who think technological infrastructure will create a
greater future,” said the Saudi minister.
Echoing similar view, Şimşek said that prolonged
economic growth demands green transition and digital transformation.
Al-Falih further added that Saudi Arabia is doing
everything to ensure security and safety of data as AI takes the center stage.
“What we are doing in Saudi Arabia is having a
balanced framework on data privacy, data sovereignty and data security when it
comes to AI,” said Al-Falih.
He added: “AI has a huge demand here. Saudi Arabia
is going to be the disruptor, it is going to be the maker of a different
ecosystem for actually incubating AI, algorithms and data centers that will have
everything.”