Covid fails to disrupt Riyadh’s long-term goals

26 May 2021
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It is five years since Crown Prince Mohammed bin Salman al-Saud unveiled Vision 2030, a national agenda for economic and social reform aimed at launching a new era of investment in the kingdom to accelerate diversification, plug the housing shortage, open up tourism and expand manufacturing. 

Half a decade on, and despite the impact of Covid-19, Vision 2030 is delivering an economic surge that is creating exciting opportunities for companies and investors in almost every area of the economy.

For real estate developers and construction firms, opportunities are emerging on real estate gigaprojects such as Neom future city, Qiddiya entertainment city, Diriyah Gate, Amaala and the Red Sea Project. Thousands of project packages are still in the pipeline and will drive project opportunities through the decade to 2030.

Political, institutional and financial reforms are also generating prospects in new areas such as renewable energy, advanced technology, transport, shipbuilding, healthcare, food and aerospace. Behind it all is the kingdom’s economic champion, the Public Investment Fund (PIF).

While significant project contracts have already been awarded, it is clear the best is yet to come

While short-term challenges centre on reduced oil income and the need to raise non-oil revenues and cut spending, structural reform, diversification and job creation remain the long-term goals.

Despite making cuts and raising new revenue streams such as the increased 15 per cent VAT rate, fiscal consolidation remains high on the agenda. A return to budget surpluses appears increasingly remote and has added urgency to the privatisation programme.

This year started strongly as the government made economic growth part of the central bank’s  mandate, likely precipitating further transfers of foreign reserves to the PIF. The move signals Riyadh’s intent to mobilise all available asset pools to accelerate future-focused investments.

Localisation targets have been revised to place new hiring obligations on companies, and legislative updates, such as limiting government contracts to Saudi-headquartered firms and the newly launched public-private partnership law, will require businesses to adapt quickly. 

But most firms would rather face these issues in a high-reward market like Saudi Arabia than take on the risks presented by the regional decline in new opportunities.

Saudi Arabia 2021 provides a comprehensive snapshot of the region’s biggest projects market in 2021 and examines the immediate impact of Covid-19 on the country’s outlook, as well as an assessment of the long-term opportunities for business, investment and projects in the kingdom. Learn more here

 

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