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RIYADH: A stable Middle East is crucial for global prosperity, according to the Saudi minister of economy and planning, who also underlined the Kingdom’s commitment to being a reliable partner for economic growth.

Speaking to Arab News ahead of the World Economic Forum annual meeting in Davos, Switzerland, Faisal Alibrahim said: “We believe in stability and peace as a prerequisite for prosperity, and we believe in the global economies’ need for a more stable Middle East.”

He emphasized that the Kingdom’s own transformative journey plays a significant role in fostering regional stability and prosperity.

“We see our role internally, in unlocking our potential as an economy and society. (We also see) its clear and direct impact on the region’s stability and prosperity,” he said.

Alibrahim conveyed a message of confidence and reassurance. “The message that I would share on top of that is that the Kingdom is a long-term, reliable partner, and will always work toward shaping a prosperous future,” he said.

“If you keep that in mind, and then you keep in mind the opportunities that are being created in the Kingdom with this transformation, you’ll see that there is no better place to invest for results, both commercially and financially but also from an impact point of view, than the Kingdom today.”

He encouraged investors to recognize the significant opportunities that the Kingdom’s transformative journey presents.

Attracting foreign investment

Alibrahim emphasized the Kingdom’s commitment to attracting $100 billion in foreign direct investment (FDI) by 2030, but stressed that the focus is on attracting high-quality, long-term, value-creating investments that contribute significantly to the Kingdom’s economic growth and development.

“Our target is still 5.7 percent of GDP in 2030, which amounts roughly to $100 billion of inflow in 2030. That’s why the National Investment Strategy was launched, and since it was launched, we’ve been exceeding our yearly targets, consistently,” he said.

While acknowledging the challenges, Alibrahim expressed confidence in achieving this target, saying: “This is a long-term journey and we need to continue working with our partners, continue working intra-governmentally to figure out more ways where we can make sure that the momentum we have in attracting foreign capital will continue.”

He highlighted the importance of continuous policy refinement and a proactive approach to identifying and addressing potential roadblocks.

Acknowledging the recent trends in FDI inflows, Alibrahim noted that while 2023 saw figures exceeding initial targets, the first three quarters of 2024 showed a slight decline to around SR17 billion. “We’ll continue to monitor how it progresses, and see what the latest numbers are,” he said.

However, he emphasized that these figures should be viewed within the context of a long-term trajectory. He pointed out that many of the transformative projects undertaken as part of Vision 2030 have long lead times, and their impact on FDI inflows will become increasingly evident in the coming years.

Reiterating the Kingdom’s commitment to creating a conducive environment for foreign investment, he said: “The Kingdom’s approach to unlocking its potential, involves really rewriting the economic playbook.”

He added: “This is not just about investments or the government spending money. This is about creating an environment that’s vibrant, that attracts capital, attracts minds to the opportunities that are being created in the Kingdom led today by the government. Tomorrow, ultimately, we want the private sector to lead it.”

This vision necessitates a continuous process of reform and adaptation, Alibrahim said, adding: “This means that reform is a daily exercise.”

The Kingdom is actively working to enhance its competitiveness by streamlining regulations, improving the ease of doing business, and fostering a more conducive environment for both domestic and international enterprises.

Emphasizing the importance of private-sector engagement, Alibrahim said: “Many laws are being revised. Many laws are being taken to public consultation, and at the heart of all of this is engagement with the private sector and with investors to understand that these laws and the reforms and the regulations, as they evolve, are exactly, what is needed.”

Shielding economy from shocks

Alibrahim acknowledged the inherent challenges posed by the interconnected nature of the global economy. “It’s important to keep in mind that we are shifting the structure of the Saudi economy,” he said. “We’re shifting from an economic structure that relied heavily on oil inflows for its economic activity, to one where we will continue to rely on inflows, but not in the same manner.”

This fundamental shift, according to him, is crucial for mitigating the impact of external shocks and building a more resilient economy.

Highlighting the encouraging growth of the non-oil sector as evidence of this ongoing transformation, he said: “Non-oil activities today represent 52 percent of our total real GDP. Non-oil growth for the last three years on average is 6 percent.

“Our ambition is to take it even further. We are closing 2024 with non-oil growth at 3.9 percent. (In) 2025, we project it to be 4.8 percent. (In) 2026, the Ministry of Economy and Planning projects it to be 6.2 percent.”

He said these figures demonstrated the Kingdom’s progress in restructuring its economy in the right direction.

According to Alibrahim, however, navigating the complexities of the global economy requires a proactive and adaptable approach. “As we shift, whatever plays into our risk assessment is shifting as well,” he said. “In the past, anything that affected the oil market will directly affect our ability to operate as an economy. Today that is shifting.”

He emphasized the importance of continuous monitoring and proactive risk assessment to anticipate and mitigate potential challenges. “The name of the game, in our view, is agile policymaking, more engagement and more institutional capabilities, engaging with all constituents, being agile in decision-making and continuously investing in your institutional capabilities so that you can have better quality policy responses,” he said.

Of ambition and prudence

Acknowledging the ambitious nature of the Kingdom’s giga-projects, Alibrahim emphasized the need for a balanced approach. “What’s critical is to keep in mind that to achieve vision 2030, we started the planning with confidence like you said, but also delivering with optimism, and we believe optimism is a choice,” he said.

“It’s a decision. It’s a design input. It’s not just a gut or emotional reaction or a feeling, but more importantly, managing with prudence.”

He cited the impressive growth of the tourism sector, exceeding initial targets, as a testament to the Kingdom’s ability to effectively plan and execute ambitious initiatives.

“We had the target of 100 million visitors in 2030. We reached 100 million seven years early. Today, that number has been increased to 150 million.”

This remarkable achievement demonstrates the Kingdom’s capacity to successfully plan, implement and even surpass ambitious goals, according to Alibrahim.

Still, he reiterated the need for evaluation and adjustments. “On top of that, we wanted to make sure as we got more knowledgeable and are aware of how to manage the economy and economic management, we don’t want to create value leakage like what happened before in the 1980s,” he said.

“We also don’t want to overheat the economy and create an inflation environment that might hurt the private sector, the existing private sector or other players outside of these projects, so a decision to revisit how fast we go without really affecting the pace and scale of overall Vision 2030 was looked at.”

These adjustments reflect a commitment to responsible and sustainable development, according to Alibrahim.

He recognized that while the tourism sector has exceeded expectations, other factors, such as the emergence of new projects, necessitate a careful review of timelines and resource allocation.

“In parallel, new inputs came in. We won hosting the Asian Cup for 2027, Asian Winter games in Trojena 2029, World Expo 2030, World Cup 2034. We’re hosting the world twice in four years very soon,” he said.

These new opportunities, while exciting, require careful consideration and integration into the overall development plan, according to Alibrahim.

“We just concluded for the first time a long-term fiscal exercise,” he said. “We decided to shift things. There is agility in decision making, there is prudence in management, and we’re not ashamed to talk about that.”

To ensure the successful and sustainable execution of these ambitious projects, Alibrahim stressed the importance of quality and sustainability. “We need to make sure that the optimal value creation for the local economy (and) minimizing the impact of creating an inflationary environment on the economy as well as in the private sector and then using innovation and using these opportunities to invite quality investors and quality partners that can come in and set up shop,” he said.

He also underscored the need for clarity and transparency in these large-scale projects. “For the first time in a long time, we do have clarity on the types of projects that we will have and what kind of partners we need, which is clarity that the private sector always seeks,” he said.

This clarity, in his opinion, creates an opportunity to attract international partners with the expertise and resources to deliver high-quality infrastructure projects while maximizing knowledge transfer and minimizing risks. “Infrastructure in general is a sector that we see will be witnessing a lot of investment in the Kingdom,” he said.

��������Ƶ heads to Davos

��������Ƶ’s delegation to the WEF annual meeting in Davos this year will feature for the first time a “Saudi House.” This centralized hub will serve as a meeting point for government officials, business leaders and other stakeholders participating in the forum.

Saudi House was designed to bring together all the government entities that are participating in Davos in one convenient location, Alibrahim said.

Using this opportunity to create a positive impact on the global economy, he will champion a key call in Davos for global leadership to move beyond tepid economic growth and embrace a more ambitious, “intrepid leadership-led” approach.

Rewriting the economic playbook: A new era of growth

Alibrahim spoke of the importance of realizing that the Kingdom’s approach to unlocking its potential involves “rewriting the economic playbook.”

This ambitious undertaking extends beyond attracting investment; it’s about cultivating a dynamic and vibrant ecosystem that attracts both capital and talent, according to him.

“This is not just about investments or the government spending money,” he said, elaborating the point. “This is about creating an environment that’s vibrant, that attracts capital, attracts minds to the opportunities that are being created in the Kingdom led today by the government.”

This vision necessitates a continuous process of reform and adaptation, Alibrahim said, adding: “This means that reform is a daily exercise.”

He said the Kingdom is actively working to enhance its competitiveness by streamlining regulations, improving the ease of doing business, and fostering a more conducive environment for both domestic and international enterprises.

A global growth platform

Alibrahim asserted that ��������Ƶ has emerged as a leading global growth platform. “What’s critical for us is the strengths that the Kingdom has in the past,” he said.

He highlighted a key differentiator, saying: “Every country has its strengths, and we need to build on these strengths to transform.”

He explained that while many countries rely primarily on either natural resources or human capital, the Kingdom possesses a unique advantage by leveraging both. This unique combination of abundant natural resources and a dynamic human capital base sets the Kingdom apart from many other emerging markets.

Furthermore, he emphasized the Kingdom’s strategic advantages. “We have a large land area that can be leveraged for (diverse) projects, including AI. We have access to natural resources, specifically cleanest hydrocarbon energy globally, but also renewable energy of the cheapest wind and solar globally delivered by the private sector.

“We also have green hydrogen investments working on blue hydrogen, working on many other sources,” said. These abundant and diverse energy resources provide a strong foundation for sustainable economic growth and attract significant investment in clean energy technologies.

Alibrahim also highlighted the Kingdom’s human capital as a key driver of growth. “We also have access to a talent pool that is today Saudi based,” he said. “Sixty-three percent of the population is below the age of 30, a young and dynamic population full of optimism and full of energy.”

He drew attention to the Kingdom’s strategic location and its growing global influence. “Keep in mind the Kingdom’s location connecting three continents and the Kingdom’s leadership role in the global issues, also connecting the world and helping the world to shape a more prosperous future,” he said.

Strategic partnerships

The growing significance of strategic partnerships with leading global financial institutions is an important aspect to consider, according to Alibraim. “The Kingdom today is a global investment powerhouse that’s leveraging on its diplomatic determination, economic potential, resources with natural and human,” he said.

While the Kingdom has long-standing relationships with many global financial institutions, the nature of these partnerships is evolving.

“What’s different today is that we’re seeing a lot of these firms when we talk about investment firms, we’re looking at the Kingdom as not just a source of capital, but as a capital of opportunities,” he said.

He maintained that leading global financial institutions are increasingly recognizing the Kingdom not just as a destination for investment, but as a partner in growth and development. “They want to invest in the Kingdom,” he said.

He also mentioned the growing confidence of international investors in the Kingdom’s economic transformation. “Almost 571, if I’m not mistaken, multinational companies, investment and otherwise, have signed to re-establish their or establish the region headquarters in the Kingdom well beyond our targets for 2030, six seven years ahead (of schedule).”

This significant influx of multinational companies serves as a powerful testament to the growing attractiveness of the Kingdom as a business and investment hub, he added.

Alibrahim reiterated the long-term nature of these partnerships and the Kingdom’s commitment to fostering mutually beneficial collaborations. “But more importantly, the Kingdom has always been and will continue to be a long-term, reliable partner, so what’s happening in the Kingdom is going to create a lot of opportunities for anyone who wants to come and truly shape what the future looks like,” he said.

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Saudi leadership imperatives

When asked about successful leadership, Alibrahim outlined three key imperatives: a long-term vision, unwavering optimism, and a commitment to building strong institutions.

He spoke of the importance of a long-term perspective, saying: “In the Kingdom, when we started with Vision 2030, it came from a long-term view, and I’m going to always refer to the vision as an evidence and example because we’re living it, so the first thing is having a long-term horizon and continuously thinking with a long-term view,” he said.

According to him, this long-term vision serves as a guiding principle, ensuring that all decisions and initiatives are aligned with the Kingdom’s overarching goals and aspirations.

Furthermore, Alibrahim pointed to the importance of clarity in the planning and effective communication in driving progress. “This is a day-in, day-out exercise that we need to continue living in order to be in a better position to achieve our ambitions,” he said.

“Today in the Kingdom, Vision 2030 has been going on for eight years, and it still feels like the same energy momentum as when it was launched. In fact, maybe some people say it’s even more energy and more momentum.”

Finally, Alibrahim highlighted the crucial role of strong institutions in supporting sustainable development and long-term prosperity. “To continue investing in building institutional capabilities. This is a long-term investment. This is something that will serve the generations to come. Stronger institutions mean better economic performance,” he said.

A common ground

The importance of finding and fostering common ground in an increasingly interconnected yet fragmented world was pointed out by Alibrahim.

“We were in Berlin a few months ago. The theme was Common Ground. We talked about it in Davos two or three years ago. In the blog post, we pushed the common ground is what keeps people at the table, and we need to make sure we maintain that common ground and fight for protecting that common ground, but also work constructively to grow it,” he said.

According to Alibrahim, the global landscape is evolving with increasing trade fragmentation and a shift away from hyper-globalization. “The world is shifting,” he said. “There is more trade fragmentation. Hyper globalization has ended. Today we have a new kind of globalization.”

This new reality necessitates a renewed focus on dialogue and collaboration, he said, adding: “All this means that dialogue is going to be essential, and at the heart of the dialogue is keeping our mind on what we have in common and how we can grow that as we move forward.”