The Kingdom of Saudi Arabia's flag
Crown Prince Mohammed bin Salman recently launched the National Investment Strategy (NIS), which is one of the main enablers to achieve the objectives of the Kingdom's Vision 2030.
The strategy aims to boost the size and quality of investments significantly, including raising the private sector's contribution to the balance of payment and local economy, as well as supporting the development of strategic sectors.
Further, the NIS aims to promote investment, enhance innovation and help develop the local content.
In addition to the traditional sectors, the strategy also targets renewable energy, technology, healthcare and biotech, advanced patterns of transport and logistics, as well as innovative start-ups and entrepreneurship.
According to the NIS, the current estimates show that Vision 2030 requires doubling annual investments three times, which will result in accumulated investments of more than SAR 12.4 trillion.
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National Investment Strategy (All Investment Sources) |
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|
Target |
Value (SAR trln) |
Percentage to total |
|
Shareek Program |
5.0 |
40% |
|
Public Investment Fund |
3.0 |
24% |
|
Other Local Investments |
2.6 |
21% |
|
Foreign Direct Investments |
1.8 |
15% |
|
Total |
12.4 |
100% |
The strategy is based on four pillars:
The first pillar is investment opportunities, which aims to launch the full investment capabilities in the Kingdom, as well as develop and accelerate diversified, strong investment opportunities in all economic sectors through the target programs.
The second pillar is investors and mainly targets to increase the contributions of different investors in the systems of local and international investment, public and private sectors, as well as large companies and small and medium-sized enterprises (SMEs).
The third pillar is financing and aims to diversify the financing options that are available to investors through deepening the capital markets and introducing new financing instruments and platforms.
The fourth pillar is competitiveness and enablers. It targets to enhance the Kingdom's competitiveness for local and international investors through adopting the best laws, regulations and rules related to, but not limited to, promoting the private sector's contribution and increasing transparency, clarity and predictability.
To achieve its objectives, the strategy identified initiatives for implementation under each pillar, as shown in the following table:
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Detailed Pillars of National Investment Strategy |
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First Pillar: Investment opportunities |
Speed 1 initiatives |
Accelerate priority investment deals with appropriate terms and incentives |
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Accelerate public-private partnerships and privatization programs |
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Launch supply chain attraction program |
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Link the "Invest in Saudi Arabia" initiative to all investment opportunities in the Kingdom |
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Define and detail the investment opportunities within the framework of each sector's strategy |
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Speed 2 initiatives |
Detailed review of vertical investment plans for all sectors based on a value chain approach |
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Pool privatization opportunities and public-private partnerships proactively across all areas of development and in all related sectors |
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Launch a program to attract regional headquarters of international firms |
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Second Pillar: Investors |
Speed 1 initiatives |
Engage major Saudi companies in achieving the national investment goals "Shareek Program" |
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Enhance partnership with the private sector |
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Provide distinguished services to major domestic and international strategic investors |
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Clarify the roles of the government and the private sector in investing in various sectors |
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Set up a regional center for start-ups to promote entrepreneurship in the Kingdom |
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|
Speed 2 initiatives |
Set up a renewed “advisory partnership” with the private sector under transparent and effective rules of dealing |
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Increase transparency and trust |
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Improve the overall investor experience |
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Support Saudi investments abroad |
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|
Third Pillar: Financing |
Speed 1 initiatives |
Expand financing models for partnerships between the government and the private sector |
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Establish specialized funds to finance development covering the main sectors |
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|
Create new financing methods to promote capital formation |
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|
Speed 2 initiatives |
Strengthen the Kingdom's position as a financial hub with a wide list of innovative financing options available to investors |
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|
Expand the development of the SMEs sector by providing appropriate support and expanding financing options for the sector |
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|
Fourth Pillar: Competitiveness and Enabling Factors |
Speed 1 initiatives |
Launch 4-5 special economic zones as well as a comprehensive and competitive world-class package of financial incentives and regulatory exemptions |
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Form packages of sectoral incentives and incentives for private projects |
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Ensure that local and international investors are aware of developments currently seen in the Kingdom |
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Speed 2 initiatives |
Coordinate between the role of the Ministry of Investment and the National Competitiveness Center to organize and unify efforts |
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Formulate an investment system that supports the achievement of the objectives of the National Investment Strategy |
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Collect relevant laws and regulations and facilitate access to them |
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Translate investment-related draft laws and regulations |
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Study and monitor opportunities of signing free trade agreements with key trade blocs and to enhance and integrate the role of the Gulf Cooperation Council |
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Endorse and adopt international best practices in investment agreements related to the promotion of investment |
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Establish arbitration centers in cities and special economic zones |
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Encourage consultation with the private sector regarding draft laws and regulations |
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Develop and apply appropriate mechanisms and standards to measure the impact of legislations on the investment environment |
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Review, evaluate and amend existing legislations and laws that negatively affect investors |
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Establish a regulatory framework that enables government agencies to evaluate investment offers submitted without prior request |
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Work to establish specialized courts, including investment courts |
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Review and evaluate tax laws and regulations with the aim of improving the competitiveness of the investment environment |
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According to the ministry's data, the strategy will triple the size of annual investments from SAR 657 billion in 2019 to SAR 2 trillion by 2030, with estimated annual growth rate of 13% over the next 10 years.
The strategy will also increase the gross domestic investments by more than twofold, from SAR 640 billion in 2019 to SAR 1.65 trillion in 2030, with average annual growth of about 9%.
As for foreign direct investments (FDIs), the strategy is expected to contribute to increasing the FDIs by nearly 20 times, from SAR 17 billion in 2019 to SAR 388 billion by 2030.
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Expected Growth of Foreign, Local and Total Direct Investments within the Objectives of Vision 2030 (SAR bln) |
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|
Year |
Foreign Direct Investment |
Local Investment |
Overall Investment |
YoY Variation |
|
2019 |
17 |
640 |
657 |
-- |
|
2020 |
20 |
575 |
595 |
(9%) |
|
2021 |
42 |
614 |
656 |
+10% |
|
2022 |
61 |
686 |
747 |
+14% |
|
2023 |
83 |
766 |
849 |
+14% |
|
2024 |
109 |
855 |
964 |
+14% |
|
2025 |
140 |
955 |
1095 |
+14% |
|
2026 |
176 |
1066 |
1242 |
+13% |
|
2027 |
217 |
1190 |
1407 |
+13% |
|
2028 |
266 |
1328 |
1594 |
+13% |
|
2029 |
323 |
1482 |
1805 |
+13% |
|
2030 |
388 |
1654 |
2042 |
+13% |
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