Saudi Arabia Achieves Significant Progress in Economic Diversification

Industrials Author: EqualOcean News Apr 11, 2024 07:11 PM (GMT+8)

The Saudi Arabian Ministry of Economy and Planning recently released data showing that, driven by continued growth in investment, consumption, and exports, the country's non-oil economy reached a record high of $453 billion in 2023, accounting for more than half of the total economy. To achieve the goals of economic diversification and sustainable development, Saudi Arabia has taken a series of positive measures, including increasing investment in infrastructure, attracting foreign investment, and promoting the development of the private economy, all under the framework of the "Vision 2030."

In the northwest of Saudi Arabia, a new future city is being planned, covering an area of 26,500 square kilometers. Part of this project involves the construction of a large tourist resort named "Trojena" in the southern end of the Gulf of Aqaba, aimed at boosting tourism in the western region of Saudi Arabia, showcasing the natural beauty of the desert and sea, and introducing special projects such as extreme sports. Additionally, Saudi Arabia has initiated several major projects, including the New Future City, the Red Sea New City, Qiddiya Entertainment City, and the Diriyah Site Project, as well as urban renewal projects such as "Jeddah Downtown" and Riyadh's "New Murabba," to promote the rapid development of non-oil economic sectors like transportation, tourism, entertainment, and clean energy.

In April last year, the Crown Prince and Prime Minister, Mohammed bin Salman, announced the establishment of four economic zones, issuing licenses to the four economic zones located in Riyadh, Jazan, Ras Al Khair, and King Abdullah Economic City. These zones will focus on advanced manufacturing, cloud computing, and medical technology, among other areas, offering preferential tax rates to companies that set up operations there. These measures aim to accelerate the development of Saudi Arabia's industry, technology, and logistics sectors, potentially creating tens of thousands of jobs.

Khalid Al-Falih, the Saudi Minister of Investment and Chairman of the Economic Cities and Special Zones Authority, stated that the economic zones' forward-looking and innovative nature would help attract foreign direct investment. Saudi economist Shuja Al-Bakami noted that Saudi Arabia's push for economic structural diversification would enhance the resilience of its development and improve its ability to face economic challenges. By increasing investment in innovative technologies and building a sustainable economic growth model, the confidence of domestic and international investors is expected to be further boosted.

To promote entrepreneurship and support investment in startups and small and medium-sized enterprises (SMEs), the Saudi government has introduced a series of incentives, including the establishment of a dedicated SME bank, providing up to 20% loan support to SMEs. The food and beverage industry is the most popular among investors, followed by culture, tourism, and information technology sectors. SMEs play a significant role in promoting economic diversification and creating jobs.

To attract foreign investment, the Saudi government also announced tax incentives for foreign companies that establish regional headquarters in the country, including a 30-year exemption from corporate income tax. In the fourth quarter of last year, the scale of foreign direct investment flowing into the country increased by 16% compared to the previous quarter.