One year on since Saudi Arabia courted movers and shakers from across the business world, the kingdom is pressing on with diversifying its economy.
There was palpable excitement at the inaugural Future Investment Initiative last year as executives from the finance and technology industries from across the world descended on Riyadh, eager to play a role in the evolution of the country as it opens up the economy and slates some of the state's crown jewels for privatisation.
The kingdom’s Crown Prince Mohammed bin Salman courted investors with Neom, a $500 billion (Dh1.8 trillion) futuristic economic zone, and invited them to contribute their bit in the drive that is heralding the biggest social and economic change the Arab world has ever seen.
Despite some executives and partnering entities withdrawing from this year's event over the death of Saudi journalist Jamal Khashoggi in Turkey, the three-day event from Tuesday to Thursday is set to attract prominent global executives. Chiefs of certain western banks and corporates may not be attending, but they cannot afford to sever relations with the largest economy in the Arab world as it pursues diversification to wean itself off oil income. Many companies will be sending senior executives to represent them.
Top executives from Asia including Japan's SoftBank, South Korea's Samsung, Citigroup, Raytheon, Mubadala, Investcorp, McKinsey, Roland Berger, Oliver Wyman, Glencore, and France's Total are among those slated to attend. The Russian Direct Investment Fund said it strongly supported transformative and historical reforms in Saudi Arabia undertaken by its leadership and will along with its partners "continue close investment co-operation" with the kingdom. Relations between Moscow and Riyadh have strengthened over the past two years as a result of closer co-operation between the two oil producers.
Executives from Saudi Aramco, Saudi Arabian General Investment Authority, the kingdom's sovereign investment vehicle the Public Investment Fund, the Saudi Stock Exchange, Neom, and the country's Economy Minister Mohammed Al Tuwaijri will feature on different panels during the three-day event.
The fallout from the death of Khashoggi aside, its business as usual in the kingdom. That largely is a testament to what has been achieved in the kingdom since the 2017 gathering. FII, the brainchild of the kingdom’s sovereign wealth fund, is all set to build on the success of last year’s event, which brought together participants from more than 90 countries.
"Davos in the Desert", as the event is dubbed, has more than 150 speakers from 140 different organisations and 17 global partner entities. The message is clear: Opec's top oil exporter is pressing ahead with its reform agenda with an emphasis on building a knowledge-based economy and developing the country's non-oil sector, whose revenue it aims to boost to 1 trillion Saudi riyals (Dh979bn) by 2030, from 163bn riyals.
“This is one of the largest social and political transformations being undertaken anywhere in the world,” said Fahd Iqbal, head of Middle East research at Credit Suisse. “What we are encouraged by is the fact that the economy is moving in the right direction, particularly since the path it was on previously was not long-term sustainable.”
The discussions will focus on a myriad topics that range from: the value and development of human capital; how the shifting geography of investment will change the future of innovation; how the convergence of money and data changes global commerce; and how technology and globalisation is impacting the business of entertainment. Most importantly, business leaders and government officials will discuss what economic models of privatisation the kingdom can present to bring foreign direct investment to an economy where oil still accounts for about 90 per cent of state revenues.
"The time now is to cement a lot of the ideas that have been discussed over the past year," said Ramzi Abu Khadra, chairman of MetLife in Saudi Arabia.
Some observers say the government as part of its grand makeover of the economy has invested too much time and energy in improving the hardware of its economic infrastructure.
“There is no magic wand [for an economic overhaul], there are so many [low] hanging fruit in terms of investing in education and building the next generation of Saudis,” Mr Abu Khadra, said. “Too much has been invested in hardware, we need to do more on having the right software in place.”
Ali Shihabi, a former chairman of private equity firm Rasmala and founder of the Arabia Foundation in Washington DC agrees. “The job skills issue and domestic education are a well-known problem which will take years to solve,” he said. “In the meantime, the scholarship abroad programme helps fill that gap.”
The kingdom educates more than 90,000 Saudis abroad in the United States, Europe and Asia.
______
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Saudi Arabia's PIF forms FII advisory board of international executives
On the cusp of a new era, Saudi Arabia courts the world
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However, since last year's FII, the kingdom has gone through a sea-change on both economic and social fronts. Saudi women secured the right to drive cars, attend football matches in stadiums and take part in public concerts.
The General Entertainment Authority in the kingdom, set up in 2016, is attracting investment into tourism and entertainment industries to help diversify the economy. The authority plans to host 5,000 concerts and festivals this year alone and will invest more than $64bn in the entertainment sector over the next 10 years.
Riyadh wants to capture up to a quarter of the $20bn spent overseas every year by Saudis seeking entertainment.
Cinemas, have opened doors to avid local movie watchers after a ban of three decades and a 334-square kilometre Qiddiya entertainment city, which will also include a safari park, is being built to catapult Riyadh into the list of top 100 cities boasting the best quality of life in the world.
In the kingdom's west coast, where Neom is slowly rising from the ground, PIF is launching an ultra-luxury project for international tourists called Amaala. The fund's other project on the Red Sea coast includes a nature reserve and heritage sites spread across 50 islands.
When oil prices slumped from the peak of $115 per barrel in mid-2014 to less than $30 per barrel in the first quarter of 2016, Saudi Arabia was swift in taking actions to bring about fiscal stability. Energy reforms, cutting subsidies, reducing the country's inflated public servant wage bill, creating jobs, privatising state-controlled assets and increasing the private sector contribution to the GDP underpinned the crown prince's grand vision for the economy.
The economic policies worked, and worked to an extent that the International Monetary Fund in May had to warn the kingdom not to tighten fiscal policy too fast, as rapid bridging of the government’s budget deficit could damage the economy. Riyadh plans to balance its budget, which touched about $80bn last year, by 2020 through cuts to spending and energy subsidies, as well as sharp increases in fees and taxes.
The recovery of oil prices, now surging past $80 a barrel in recent weeks, have also helped augment government policies.
"I see a lot of progress with the restructuring of subsidies and reduction of the deficit," said Mr Shihabi. "I hear many who say it is too fast and I prefer too fast rather than too slow," he said.
Mr Iqbal of Credit Suisse said actions taken thus far – subsidy reform and moves towards social liberalisation – have been a positive surprise for most Saudi observers.
However, the long-term success of the transformation plan lies in the extent to which the private sector – which accounts for about 40 per cent of the country’s GDP – grows.
“We would, therefore, be looking towards signs of expansion in the private sector itself, for instance the split in GDP, employment numbers, wage growth and credit growth,” he said.
Riyadh expects the economy to expand 2.1 per cent in 2018 and 2.3 per cent in 2019. The IMF forecasts growth of 2.2 per cent and 2.4 per cent in the respective years.
Abu Dhabi Commercial Bank’s chief economist Monica Malik, said the government projections for this year are in line with those of the bank’s but the growth forecast for 2019 is “conservative” and ADCB has put it at 2.7 per cent, bolstered by strong oil sector growth.
ADCB expects further pick up in the pace of growth of the kingdom's oil and non-oil economies, supported by the government's expansionary spending policies.
Apart from its success on the fiscal and economic fronts, the kingdom has managed to get the emerging market status by global index providers FTSE Russell and MSCI, whose benchmark gauges are tracked by investors managing trillions of dollars in assets. Tadawul, as the Arab world’s biggest exchange is known, expects to attract tens of billions of dollars in passive flows to the bourse on top of the actively managed funds pouring investments into selected Riyadh-listed companies. The market is up 3.3 per cent year-to-date.
The government, is still firmly committed to its privatisation agenda, the crown prince told Bloomberg earlier this month, pledging the privatisation of more than 20 companies at the start of next year. Riyadh is also prioritising the merger of its oil interests ahead of the anticipated public flotation of Aramco, billed to be the biggest-ever in the world, on the back of Aramco’s plans to acquire a majority stake in petrochemical company Sabic. An IPO of the combined entities makes sense and despite market speculation could happen late 2020, early 2021, according to the crown prince.
Neom and the futuristic vision of the crown prince were the highlights of last year’s event. Knowing his eagerness to present the kingdom as a major frontier of investment for global investors, one should not discount additional awe-inspiring announcements this year.
'Laal Kaptaan'
Director: Navdeep Singh
Stars: Saif Ali Khan, Manav Vij, Deepak Dobriyal, Zoya Hussain
Rating: 2/5
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
The Uefa Awards winners
Uefa Men's Player of the Year: Virgil van Dijk (Liverpool)
Uefa Women's Player of the Year: Lucy Bronze (Lyon)
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Goalkeeper: Alisson (Liverpool)
Defender: Virgil van Dijk (Liverpool)
Midfielder: Frenkie de Jong (Ajax)
Forward: Lionel Messi (Barcelona)
Uefa President's Award: Eric Cantona
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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Red Star Belgrade v Tottenham Hotspur, midnight (Thursday), UAE
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THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
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%3Cp%3E%E2%80%A2%20Juice%20jacking%2C%20in%20the%20simplest%20terms%2C%20is%20using%20a%20rogue%20USB%20cable%20to%20access%20a%20device%20and%20compromise%20its%20contents%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20The%20exploit%20is%20taken%20advantage%20of%20by%20the%20fact%20that%20the%20data%20stream%20and%20power%20supply%20pass%20through%20the%20same%20cable.%20The%20most%20common%20example%20is%20connecting%20a%20smartphone%20to%20a%20PC%20to%20both%20transfer%20data%20and%20charge%20the%20former%20at%20the%20same%20time%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20The%20term%20was%20first%20coined%20in%202011%20after%20researchers%20created%20a%20compromised%20charging%20kiosk%20to%20bring%20awareness%20to%20the%20exploit%3B%20when%20users%20plugged%20in%20their%20devices%2C%20they%20received%20a%20security%20warning%20and%20discovered%20that%20their%20phones%20had%20paired%20to%20the%20kiosk%2C%20according%20to%20US%20cybersecurity%20company%20Norton%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20While%20juice%20jacking%20is%20a%20real%20threat%2C%20there%20have%20been%20no%20known%20widespread%20instances.%20Apple%20and%20Google%20have%20also%20added%20security%20layers%20to%20prevent%20this%20on%20the%20iOS%20and%20Android%20devices%2C%20respectively%3C%2Fp%3E%0A
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Engine: Duel electric motors
Power: 659hp
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Price: On request
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Rating: 3.5/5
The specs: 2018 BMW X2 and X3
Price, as tested: Dh255,150 (X2); Dh383,250 (X3)
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Power 192hp @ 5,000rpm (X2); 355hp @ 5,500rpm (X3)
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Estijaba – 8001717 – number to call to request coronavirus testing
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Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
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The figures behind the event
1) More than 300 in-house cleaning crew
2) 165 staff assigned to sanitise public areas throughout the show
3) 1,000 social distancing stickers
4) 809 hand sanitiser dispensers placed throughout the venue
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Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
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