Saudi Arabia steps up diversification drive

Saudi Arabia is intensifying efforts to attract international investors as it works to diversify its economy away from the energy sector.

Saudi Crown Prince Mohammed bin Salman bin Abdulaziz recently launched the National Industrial Development and Logistics Programme (NIDLP)  in Riyadh, an event in which nearly 40 agreements worth an estimated $53 billion were signed. Among the deals were partnerships in military industries and a major agreement between Saudi Aramco and SABIC to convert oil to petrochemicals, Al Arabiya reported.

Saudi Energy Minister Khalid al-Falih (right), said that by 2030 the NIDLP plans to increase contributions relative to GDP in industry, mining, logistics and energy to $320 billion. The programme seeks to stimulate investments worth more than $453 billion, raise non-oil exports to more than $267 billion and create 1.6 million jobs, he noted.

The Wall Street Journal reported that the Saudi government is looking for partnerships with private international firms to build factories and plants for steel and iron production, medicine, automotive parts, aircraft systems and pharmaceutical devices.

The Kingdom is also offering gold and zinc exploration prospects and land to build solar-power generation parks, the Journal report stated.

“Through its 330 logistics initiatives, NIDLP seeks to develop qualitative industries, increase non-oil exports, reduce imports, raise the contribution of the target sectors to GDP, create major employment opportunities, improve the kingdom’s trade balances, maximise local content and attract foreign investments,” a Saudi statement said.

One of the initiatives under Saudi Vision 2030, the NIDLP’s main goal is to turn the kingdom into an industrial hub by stimulating the industry, mining, energy and logistics sectors. Saudi Vision 2030, announced in April 2016, is designed to wean the kingdom’s economy off its oil dependency while creating jobs and stimulating the private sector.  The Kingdom is also about to begin development of the first area of its mega business zone NEOM, the Saudi Press Agency reported.

NEOM, which is estimated to cost $500 billion, has been set up as a closed joint-stock company fully owned by the Public Investment Fund of Saudi Arabia.

A statement said this “significant change” in NEOM’s legal status would allow the company to create 16 key economic sectors, including the future of energy, water, tourism, media, health and well-being, sport, food, mobility, biotech, manufacturing and liveability. “The new entity will have a unique and historic role to play because it will be responsible for developing a new global destination from scratch on a huge area and a futuristic civilisation that is based on sustainability and liveability,” said NEOM CEO Nadhmi al-Nasr.

“All this aims to turn NEOM into a global centre for attracting investment, knowledge, innovation and technology to compete with all economic capital cities.”

This edited article, with input from The Wall Street Journal, the Arab Weekly and SPA 

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