Saudi Arabia is going through a period of unprecedented transformation and rapid economic diversification. Thanks largely to the regulatory, legal, and social reforms under Vision 2030, the nation is opening up new opportunities for businesses and investors.
The Vision 2030 plan — championed by Crown Prince Mohammed bin Salman — set a clear goal to reduce the country’s dependence on oil. The government is investing in several growing sectors, such as renewable energy, tourism, technology, and education, in a bid to position Saudi as a regional hub of technological innovation, entrepreneurship, and economic opportunity.
Saudi’s Economic Success Story
The government’s strategic investments and reforms have already begun to bear fruit. The Saudi economy has flourished despite the pandemic, with foreign investment at an all-time high and the private sector playing an increasingly important role.
Legal reforms have played a significant role in this success. The government has taken steps to remove investment restrictions and develop a more regulated legal framework for businesses operating within the Kingdom. These reforms have brought Saudi in line with global standards of best practice and improved their positioning in the World Bank’s “ease of doing business” index from 59.16 out of 100 in 2016 to 71.56 in 2020. This figure is expected to grow at a rate of 4.6% each year.
In 2016, the government opened up multiple sectors to 100% foreign investment and ownership, allowing foreigners to fully own their businesses for the first time. In the same year, the process of obtaining a foreign investment licenses was eased dramatically, with the number of required documents reduced to three, and the maximum processing time capped at five days. In 2021, the number of foreign investment licenses issued jumped by 250% compared to the previous year, with 4,431 licenses issued in total.
The Vision 2030 strategy was designed with Saudi’s large youth population in mind and aims to reduce the local population’s reliance on public sector employment. More than half of the population is under 35, making the country one of the most youthful in the world. Saudi’s private sector economy was largely supported by foreign labour until recently, reducing employment opportunities for Saudi citizens. Under Vision 2030, the government has funneled nearly 20% of their total budget into their education system, with the aim of developing a more skilled and employable Saudi workforce.
Emerging Markets Present New Opportunities For British Investors
According to the MSCI, Saudi Arabia topped the Emerging Markets Index in 2021, representing a 27% rise in total market value compared to the previous year. The country presents a unique opportunity for British investors, who are now welcome to visit the country freely since the adoption of a new visitor visa model. Additionally, the Saudi government has approved the issuance of a new foreign investor visa that allows potential investors to reside in the Kingdom, sponsor their family members, and engage in property and business ownership.
Many sectors across the country are growing at an accelerated rate since the start of the pandemic, providing ample opportunity for foreign skill sets and investment. Most notably, the telecommunications and IT sectors have seen a surge in recent years, with the latter expected to grow at a CAGR of 7.78% through 2025. The move towards economic diversification has also meant a shift away from the petrochemical industry, towards renewable energy and other sustainable sectors. In 2021, the government announced its intention to invest $100 billion in the development of the renewable energy sector by 2030.
The government has also paved the way toward developing the nation as a prime tourist destination for travelers seeking to explore Arabia’s rich heritage. The Vision 2030 strategy prioritizes tourism as a key economic enabler, with the aim of increasing the number of tourists to 100 million annual visitors by 2030. The rapid development of this previously unexplored sector presents the need for hospitality industry experts, who can help to develop the necessary infrastructure and establish best practices.
The Bottom Line
Vision 2030 presents a wealth of opportunities for UK investors looking to expand into new and rapidly growing markets. The Saudi government has made a concerted effort towards improving the ease of doing business in the country by focusing on developing a more highly skilled and employable local workforce. Sectors such as telecommunications, IT, renewable energy, and tourism are growing rapidly and offer ample opportunity for foreign investment and skill sets. The government has also made it easier for investors to obtain visas, making Saudi Arabia a more attractive destination for those looking to expand their business operations.