US-Saudi Arabia sign 18 agreements during President Biden’s visit to the Kingdom

The Ministry of Investment of Saudi Arabia (MISA) facilitated the signing of 13 investment agreements with a range of leading US companies on Saturday. The signing ceremony took place on the side lines of US president Joseph Biden’s state visit to the Kingdom and was attended by ministers from the President’s official delegation.

The agreements cover a range of sectors including energy, aerospace, defence, textiles, manufacturing, education and tourism. The agreements build upon a longstanding economic relationship and illustrate sustained US investor confidence in the unique opportunities on offer in the Kingdom.

Among them, four MOUs were signed in the field of healthcare, demonstrating joint impetus to expand global healthcare capabilities while indicating growing recognition among global healthcare brands of the investment opportunities available in the Saudi life sciences sector.

Agreements signed include a partnership between MISA and aerospace company Boeing in areas relating to aircraft manufacturing, as well as between Saudi’s Ajlan & Bros Holding Group and US smart energy leader SolarEdge to explore investment in renewable energy.

US investment in Saudi Arabia has continued to grow over recent years, with a total of 743 companies present in the Kingdom and nearly 70,000 Saudis employed by US companies.

Saudi Arabia is undergoing an unprecedented transformation, fuelled by the Kingdom’s first National Investment Strategy, which is transforming the business environment and opening new industries to foreign investment.

FDI in Saudi Arabia

The Kingdom has seen strong growth in foreign direct investment (FDI) in recent years as its economic reforms have unlocked a broad range of opportunities for international investors. The IMF’s most recent forecast expects Saudi Arabia to be the second fastest growing economy in the G20 this year.

In fact, Saudi Arabia recorded a surge in foreign direct investment in 2021 to reach $19.3 billion, particularly in H2 of the year as the government has been looking at international capital flows into the country as part of its economic diversification programme.

The cumulative amount of FDI was up 257% annually last year, with the second half showing a 23.7% year-on-year increase, MISA said in its National Investment Strategy report released in March this year.

“A more favourable economic backdrop combined with the government’s ongoing diversification efforts have made the kingdom an attractive prospect for foreign investors,” the report said.

The growth was supported by the government’s efforts to improve the investment environment; strengthening investor sentiment as global economies rebound from the COVID-19 pandemic; an increase in the number of companies choosing to establish their regional headquarters in Riyadh; and the government’s campaign to correct the status of small companies and establishments”, the report noted.

In October 2021, Saudi Arabia’s His Royal Highness Crown Prince Mohammed bin Salman launched the National Investment Strategy, which seeks to raise $103.5 billion in FDI annually by 2030 to support the kingdom’s Vision 2030 economic diversification plan.

As per the strategy, the kingdom aims to increase the contribution of the private sector to its gross domestic product to 65% and increase the share of FDI to 5.7% of its GDP.

Saudi Arabia also plans to establish special economic zones with competitive regulations and sector-focused investor incentives to attract foreign investment in priority sectors. As a result of the strategy, the investment-to-GDP ratio of the Kingdom is expected to rise to 30% in 2030, from 22% in 2019.

In a foreword in the report, Saudi Arabia’s Minister of Investment Khalid Al Falih said that many of the initiatives introduced by the National Investment Strategy were linked to the government’s desire to boost the Kingdom’s attractiveness as an investment destination.

The number of new foreign investment licences issued last year also surged more than three times annually to 4,400, including 3,386 issued in the second half of the year. The number represents a “significant improvement on even pre-pandemic levels”, the report added.