Is Saudi Arabia’s diversification paying off as FDI rises across the region? Ali Raza, Chief Investment Officer at Haytham & Company, offers his perspective.
00:00And clearly good news, FDI up across the region, but Saudi Arabia really leading the way.
00:08Some might say this proves that plans to diversify the economy are really paying dividends.
00:12What are your thoughts?
00:13Tom, the question over the last few years has been, can Saudi Arabia really diversify away from the oil economy
00:19and build the kind of global economic powerhouse that it is proposing to do?
00:25And it's been quite a blunt question.
00:26You know, you've heard versions of this across.
00:30Many of the conversations that relate to the various sectors being built from automotive to sports to entertainment and such.
00:37This is a very significant event because, of course, this is a clear demonstration that the efforts that have been underway under Vision 2030 are proving useful.
00:49And, you know, just a few months ago, Tom, actually, you and I were speaking about this.
00:53The FDI numbers being estimated around $20 billion just north off.
00:58And, you know, the expectation being that perhaps this would be somewhat of a decline.
01:03Under the Vision 2030, Saudi Arabia has a FDI inflows target of around $100 billion U.S.
01:08And if we go back a couple of years, I mean, the peak that Saudi Arabia has hit is usually around $22 billion, $23 billion.
01:15So, you know, to reach the $39 billion mark is quite a sizable jump.
01:19And it's not by accident.
01:21I mean, we've talked about many of the industrial reforms that are taking place and the many initiatives and programs underway.
01:27We've seen 600-plus regional headquarters established in Riyadh or in Saudi Arabia.
01:33And, you know, when you have global enterprises establishing their headquarters in a region, it's not simply an injection of capital or resources and such.
01:43There are second-degree consequences, flow-on consequences to the availability of talent.
01:48There's mentorship available to the young, very educated population.
01:52There's new knowledge in the region.
01:55There is, you know, that fact in itself or the existence of those headquarters in themselves are an attractor to further enterprise.
02:04So what you see is a compounding effect.
02:05And we've often spoken about the fact that, and I'm, you know, very often you hear me say that there are some challenges in various aspects of the national investment strategy or, you know, some challenges that may be perceived from some of the economic indicators at times.
02:23But if we look at the story as a whole, the leading indicators, they are telling a positive story.
02:32And, you know, these numbers are the result of that.
02:35It is showing that the economy is heading in the right direction.
02:38There is still a way to go.
02:40We're about halfway through Vision 2030 being in motion, but it's all heading in the right direction.
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