‘Saudi Arabia can become a crucial part of the connected world’

Parag Khanna
Updated 23 April 2017
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‘Saudi Arabia can become a crucial part of the connected world’

I would love to chat about Saudi Arabia, says Parag Khanna.
It is an interesting use of the word “chat,” because conversations with Khanna are never teatime tittle-tattle. The 39-year-old author —born in India, educated in the UAE, Europe and America, currently living in Singapore, but really a citizen of the world, has weighty matters on his mind and is not afraid to approach profound and difficult subjects.
His latest book “Connectography,” published last year to much acclaim, is a sweeping review of the economic, social and technological forces that link the great trading centers of the world. In the tradition of the great “futurist” thinkers, like Alvin Toffler or Nassim Nicholas Taleb, it is an integrated theory of the world, no less than a roadmap for the future of mankind.
Saudi Arabia gets a mention, as a country under the influence of sudden wealth and technology, in a transition from the traditional to a more modern form. King Abdullah Economic City (KAEC), which Khanna visited in the course of researching the book, gets a significant section. But he does not drill down in depth into where Saudi Arabia stands in the “connectography” of the modern world.
An interview with Arab News is his opportunity. We have met previously, soon after the book was published, in the lobby of the Jumeirah Emirates Towers hotel in Dubai, where he described his worldview over coffee. But now, via e-mail and phone calls, I get the chance to find out where Saudi Arabia fits into that vision.
He believes that although Saudi Arabia is not yet a fully diversified economy, it is inextricably linked to the rest of the world, and especially the Middle East.
“Saudi (Arabia) is, of course, heavily connected to the world through energy markets. The recycling profits from energy, especially into Arab economies through foreign direct investment (FDI), and capital markets through investment in asset managers, are key roles. This has diminished lately as capital is repatriated because of lower oil prices and the economic strains they imposed. Then, of course, it is ‘connected’ to the world’s Muslims in strong ways, and certainly via the millions who come for Haj each year,” Khanna said.

In Saudi Arabia, there is a modernization movement going back a long time. It is an ongoing debate. Saudi Arabia is not North Korea. There is a discourse, a push and pull between different parts of society. Social media is part of that debate.

He believes in the power of economic policy and technology to lift countries out of dependency on one commodity — in the Saudi case, oil — and achieve a level of modernity that will allow them to participate fully in the “connected” world.


Globally connected societies
Can Saudi Arabia do this via the economic transformation program currently underway as part of the Vision 2030 strategy to reduce oil dependency?
“Most of the truly globally connected societies tend to have a bigger population than Saudi Arabia, which is relatively small compared to others globally and in the region. But countries like that can do it. I am thinking of a country like Malaysia, for example. It is an Islamic country that is investing in infrastructure in a big way. It is investing in education and inviting global companies to invest in it,” he said.
He continues: “I think countries that fail to modernize do so for one of two reasons — either they inflict problems upon themselves, or there are structural reasons. There are often geopolitical reasons for failure, outside their control.
“But Saudi Arabia practices a shrewd version of multi-alignments. They have good relations with Europe, Asia and the US. So, a thing like Saudi Aramco’s initial public offering (IPO), or the big sale of bonds we have seen recently, becomes a global event and links the country to the world,” he said.
But what if geopolitical factors — of which there are plenty in a volatile region like the Middle East — threaten to throw those plans off course?
“Saudi Arabia has partners in the world that can help it with problems like Iran, Syria and Yemen. The Gulf Cooperation Council (GCC) is a crucial bulwark of cooperation. The question of GCC monetary union is one of the critical issues that will have to be addressed at some stage. So I think that relatively small countries like Saudi Arabia can manage the transition to being a crucial part of the ‘connected’ world. I am cautiously optimistic Saudi Arabia can do it,” he said.

Ensuring social stability
The economic measures being taken — like the Saudi Aramco share sale and the privatization program of Vision 2030 — have deep social ramifications if they are seen through. The more traditional parts of Saudi society are being asked to modernize rapidly, and that might cause some tensions, I suggest. Can these proposals succeed?
“The plan is more to modernize the economy than the society, as the latter will certainly be a slower process. Since the population is still not very large, I believe it is feasible to create employment in tradable and non-tradable areas such as infrastructure, health care, education, logistics and so forth, which will be critical to broaden employment and diminish dependency on state subsidies,” he said.
On the question of social stability, Khanna is also optimistic. “Saudi Arabia has a strong, vertically integrated power structure. There are internal tensions between progressives and conservatives, but that is true of many countries and it does not necessarily lead to failure. For example, China has many internal problems, but it has not led to collapse and I do not think it will. Saudi Arabia will remain stable because of the structure of the state,” he said.
Some analysts have pointed to the potentially destabilizing effects of modern social media on a society like Saudi Arabia’s. On the one hand, social media can be a unifying force because of the connectivity and dialogue it enables between government, civil society and citizens. But it can also be a source of instability. As a leading advocate of the “connected” world, what does he think?
“The relationship (between social media and social dissent) is ambiguous since social media is also a platform used by conservative/traditional forces to reach (out to) existing and new audiences. So social media does not itself necessarily represent one type of view, like the liberal. Clearly, we know of many examples of Saudi youth using social media to express liberal values, which both emboldens them while also inviting a reaction.
“In Saudi Arabia, there is a modernization movement going back a long time. It is an ongoing debate. Saudi Arabia is not North Korea. There is a discourse, a push and pull between different parts of society. Social media is part of that debate,” Khanna said.

Global cities
In his book, cities are the dynamos of global growth and connectivity. The great urban hubs of the world often have higher rates of growth than their respective countries, and they form networks that capture commerce and investment. Does he think Saudi Arabia’s two big cities, Riyadh and Jeddah, can become part of the global elite?
“A global city has a formal definition: A city that is in the top tier for the global flows of goods, services, capital, people and data. Dubai is the only ‘global city’ in the region and has first-mover advantage, if you will. Riyadh will, of course, remain a major regional political and economic center, and Jeddah a crucial gateway. What really matters is that the county is promoting its cities,” he said.
“Jeddah is hugely important and will become more so. It is playing a big regional role. KAEC is a positive step and gives important momentum to that part of the country. It is competing to capture trade flows across strategic lanes. I think it is very plausible to see KAEC as the Jebel Ali of the Red Sea. Oman too is trying to do this.”
I ask whether Saudi Arabia can compete with more extrovert countries within the GCC, like the UAE and Qatar.
“It depends on what they want to compete for. In some arenas they have similar objectives, for example the strategic role across the region, and in others they diverge. In truth, GCC economies are more commercially integrated than their own leaders or official statistics would admit, given the flows of business within the region.”
As evidence, he refers to a map he produced entitled “Pax Arabia,” which shows energy and water infrastructure in the Middle East, promoting resource-sharing between resource-rich and resource-poor countries, something that could transform the Arab world into a collection of urban oases better connected to Europe.
Khanna is soon to demonstrate connectivity in a very practical way, by undertaking — in the company of his young daughter Zara — the longest railway journey in the world: The 7,000-mile trip between Scotland and Singapore.
“I don’t anticipate much drama in Europe, but the ‘Indiana Jones’ experience will begin in Turkey, then across Central Asia and down into South East Asia. It will take three months,” he said.
This time, Saudi Arabia and the other cities of the Arabian Gulf will not figure on the itinerary. That will require greater connectivity — or a separate trip.

BIOGRAPHY

BORN:
Kanpur, India 1977
EDUCATION:
Abu Dhabi, UAE; New York City; Germany; Washington DC (Georgetown University); London School of Economics
PUBLICATIONS:
Connectography: Mapping the Future of Global Civilization (2016)
Hybrid Reality: Thriving in the Emerging Human-Technology Civilization (2012, co-authored with his wife Ayesha)
How to Run the World: Charting a Course to the Next Renaissance (2011)
The Second World: Empires and Influence in the New Global Order (2008)
CAREER:
He is a regular attendee at the World Economic Forum, TED talks, and has had several academic tenures across the world. He advises governments and private corporations on strategic matters.
In 2008 he was named one of the “75 Most Influential People of the 21st Century” by Esquire magazine.


Vision 2030 propels Saudi Arabia to forefront of global investment, says economy minister

Updated 9 sec ago
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Vision 2030 propels Saudi Arabia to forefront of global investment, says economy minister

RIYADH: Saudi Arabia has established itself as a global growth platform for investments, driven by the Kingdom’s Vision 2030 program, which has propelled the expansion of sectors like tourism, a senior minister said. 

Speaking at the World Investment Conference in Riyadh, Saudi Minister of Economy and Planning Faisal Al-Ibrahim highlighted that evolving sectors like tourism are playing a crucial role in sustaining the momentum of the Kingdom’s non-oil economy. 

The National Tourism Strategy, initially targeting 100 million visitors annually by 2030, surpassed its goal in 2023, prompting the Kingdom to revise its target to 150 million visitors by the decade’s end. 

Tourism’s gross domestic product contribution is set to rise from 6 percent to 10 percent, underlining its impact on Saudi Arabia’s economic trajectory. 

Al-Ibrahim attributed this progress to deliberate diversification efforts, emphasizing that Vision 2030 has enabled the Kingdom to unlock inherent potential and foster collaborations with private and global partners. 

“Saudi Arabia, today is a global growth platform. Maybe actually today, the Kingdom is ‘the’ global growth platform. And, we have been lucky enough to prove the power of diversification over the last few years. Tourism is growing fast, and it is helping Saudi Arabia’s non-oil growth remain steady and high for the past 15 quarters,” said Al-Ibrahim. 

He added: “Saudi Vision 2030 is producing results and returns. We are unlocking immense inherent potential everywhere we go.”  

Al-Ibrahim also mentioned that they had “a strong and deliberate start with Vision 2030.” He explained that since then, much of what had happened had been built on political will, cascading with various constituents, and collaboration with the private sector. This, he noted, “has led to the momentum we see today.” 

Al-Ibrahim also underscored that non-oil activities now constitute 52 percent of Saudi Arabia’s real gross domestic product, with the Kingdom’s fixed capital formation climbing to 25 percent of GDP, up from less than 12 percent pre-Vision 2030. 

According to the minister, Saudi Arabia is connecting people and countries to new markets by offering an investment-friendly environment. 

“Saudi Arabia is becoming a more competitive and foundational platform for people who want to access new markets. The Kingdom is playing, not an anchor of stability role, but actually a promoter and driver of stability,” said Al-Ibrahim. 

Discussing global cooperation, the minister noted that Saudi Arabia has been invited to join BRICS, but the decision is currently under assessment, with the final outcome to be unveiled in due course. 

He added that Saudi Arabia is unique in opening new sectors, such as entertainment, while also strengthening existing industries like energy, defense, and healthcare. 

“We have many sectors that existed before, but there is a lot of knowledge that has been accumulated in these sectors. We are moving from traditional hydrocarbon energy to renewables, to carbon removals, to green hydrogen, which requires a lot of innovation and collaboration,” said Al-Ibrahim. 

Earlier this month, a report from the Kingdom’s Ministry of Investment highlighted that the entertainment sector is expected to create 450,000 jobs and contribute 4.2 percent of GDP by 2030. 

The report also revealed that the entertainment sector is driving growth in tourism, with inbound visitors reaching 6.2 million in 2023, a 153.3 percent increase from the previous year. 

IsDB’s efforts 

During the same panel discussion, Muhammad Sulaiman Al-Jasser, chairman of the Islamic Development Bank Group, emphasized the institution’s efforts to empower its member countries’ growth. 

Al-Jasser underscored the importance of basic infrastructure development as a foundation for economic progress, especially among IsDB member nations. 

Caption

“We at the IsDB are very much concerned about the evolution of our member countries in terms of economic growth and development. We also know that the most basic element of any economic development starts with basic infrastructure,” said Al-Jasser. 

He added: “We listen very carefully to our members. We don’t tell them what they need to do. But we listen to them and agree on the activities and strategic projects.” 

Al-Jasser stressed the need for strong policy frameworks to attract investors. 

“We have to advise our members that predictability of policies and robustness of regulatory frameworks are very important. Because investors have so many options, they will pick and choose. They will cherry-pick,” he added. 

Since its inception in 1975, IsDB has financed projects worth over $190 billion across member countries while maintaining a ‘AAA’ credit rating. 

In July, Moody’s affirmed the bank’s AAA rating with a stable outlook, citing its strong risk profile, low leverage, and robust liquid assets relative to debt. 

Regional perspectives 

Speaking at the same panel discussion, Samir Abdelhafidh, Tunisia’s minister of economy and planning, said that the country considers trade and foreign direct investment key potential drivers for economic growth and development. 

Abdelhafidh added that Saudi Arabia and Tunisia could potentially collaborate in multiple industries, including renewable energy, transport and logistics, minerals, tourism, and the information technology sector. 

For his part, Hassan El-Khatib, Egypt’s minister of investment and foreign trade, said that the country is implementing the right policies to attract foreign direct investment, which will play a crucial role in catalyzing its economic growth. 

El-Khatib also invited private companies to invest in Egypt, stating that the country offers clarity and predictability in policies, which could boost investor confidence. 


Supply chain reforms, demographic shifts among key investment drivers: Al-Falih 

Updated 27 min 52 sec ago
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Supply chain reforms, demographic shifts among key investment drivers: Al-Falih 

RIYADH: Sustainability, technological disruption, and supply chain decentralization are redefining global investment dynamics, Saudi Arabia’s investment minister said at an event in Riyadh.

Speaking at the 28th World Investment Conference in Riyadh, Khalid Al-Falih noted that while the global economy is recovering from headwinds, challenges such as geopolitical tensions continue to create instability. 

Running from Nov. 25 to 27, WIC 2024 is focused on digital transformation and sustainable growth, and unites global leaders to discuss investment policies shaping future economies. 

Addressing attendees, Al-Falih said: “There are four major trends that will play a crucial role in shaping the global investment landscape. The first is the importance of investment in sustainability. The second is the unprecedented technological disruption unfolding in front of our own eyes.” 

He added: “The third global trend is the steady reconfiguration of the global supply chain, with the decentralization of supply chains creating hubs in emerging regions that offer new opportunities for investments, infrastructure, and new production capacity.” 

According to the minister, the fourth global trend is demographics, where entities will invest money where talent is available and consumption is high. 

Al-Falih acknowledged both opportunities and challenges for global investment, citing issues such as geopolitical instability and trade barriers but emphasized progress in inflation containment, capital market growth, and consumer confidence restoration. 

“We are confronted with crosswinds to global investments — driven forward on one hand by the tech revolution, booming stock markets, and the onset of promising monetary policies, while constrained on the other hand by geopolitical instabilities, trade barriers, and talent and skill shortages,” said Al-Falih. 

“Let me remind all of us that investments require sound and deliberate stewardship,” he said. 

Saudi Arabia’s investment minister Khalid Al-Falih. Screenshot

Saudi Arabia has made strides under Vision 2030, with gross domestic product up 70 percent to $1.1 trillion, with half of that driven by non-oil activities. 

Al-Falih said that foreign direct investment flows have tripled, and over 550 international firms have established regional headquarters in the Kingdom, surpassing targets. 

This came as the Kingdom offered businesses various incentives if they relocated their Middle East-bases to Riyadh, including a 30-year exemption from corporate income tax and access to discounts and support services. 

In November, US-based Morgan Stanley secured approval to establish its regional headquarters in Saudi Arabia, followed by Citi Group. 

The Kingdom also launched the premium residency program to welcome international investors and talented people. “In the last three years alone, 1,200 investors have been awarded these premium residencies, allowing them to be treated as if they are in their own countries,” said Khalid Al-Falih. 

Global appreciation 

At the conference’s opening ceremony, Nivruti Rai, managing director and CEO of Invest India and president of the World Association of Investment Promotion Agencies, lauded Saudi Arabia’s diversification efforts. 

“Vision 2030 entails growth through technology, growth through greenification, and growth that also enables tourism, including spiritual tourism,” said Rai. 

She added: “In 1938, Saudi Arabia discovered oil. I am so happy that today we are dreaming of NEOM, a smart city built on technology. To enable that, the one way — and only way — is to unite and ignite the passion that drives digital transformation and the passion that harnesses sustainability.” 

Nivruti Rai, managing director and CEO of Invest India. Screenshot

Rai also highlighted the importance of a green future, noting the need for a mix of energy sources to sustain growth. 

“We all have to work toward greenification, because the world knows that power is directly proportional to GDP. The input to growth is power,” she said. 

Emergence of new markets 

James Zhan, chair and executive director of the World Investment Conference, emphasized the transformative trends shaping the global economy. 

“We are now witnessing the emergence of new markets, new funding sources, new business models, and new industries. All this offers immense potential for global investment promotion and business facilitation,” said Zhan. 

WAIPA’s executive director and CEO, Ismail Ersahin, stressed the significance of WIC in fostering collaboration and actionable outcomes. 

“World Investment Conference is not just a place where we share our experiences, but now we are also addressing investors and telling them, ‘Here are the opportunities, so you should participate,’” said Ersahin. 

New investment paradigms 

In a separate press statement,  Ersahin said that WIC 2024 comes at an “important moment in the global economy,” noting that as the international community navigates the nuances of digital transformation and the push for sustainable growth, the event serves as an essential platform for leaders to explore new investment paradigms shaping the future. 

He added: “The need for investment promotion agencies to drive economic development and foster foreign direct investment has never been more critical. By bringing together key global stakeholders in international development and investment, we are creating an environment where strategic partnerships and actionable solutions can flourish.” 

The conference is hosted by Invest Saudi, the national investment promotion brand overseen by the Saudi Investment Promotion Authority, and focuses on scaling investment opportunities while offering participants practical tools and connections to drive impactful outcomes.


UAE banking sector sees 3.9% growth in deposits

Updated 32 min 55 sec ago
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UAE banking sector sees 3.9% growth in deposits

  • Aggregate loan-to-deposit ratio decreased by 0.3 percentage points

RIYADH: The UAE banking sector recorded a 3.9 percent quarterly increase in deposits during the third quarter, driven primarily by a 5.6 percent rise in time deposits, according to a recent report. This solid growth in deposits outpaced the 3.5 percent rise in loans and advances over the same period.

Retail borrowing was the key driver behind the loan growth, with retail lending increasing by 4.9 percent quarter on quarter.

However, profitability for the UAE’s leading banks declined, as impairment charges surged by 124.9 percent quarter on quarter, reaching 2.9 billion dirhams ($789.5 million), according to Alvarez & Marsal, a global professional services firm.

This sharp increase in impairments led to a 5.5 percent drop in net income, causing a contraction in return on equity by 223 basis points and a decline in return on assets by 16 basis points.

Asad Ahmed, managing director of financial services at Alvarez & Marsal, warned that the sector faces challenges amid shifting monetary policies and economic conditions.

“While lending growth continues, the sector faces challenges with higher impairment charges and cost efficiencies. The focus on digitalization and strategic cost management will be crucial for sustaining profitability and capital strength in the coming quarters,” Ahmed said.

He added: “As anticipated, the Central Bank of the UAE cut its benchmark interest rate by 50bps in Q3’24 to 4.9 percent, in line with the US Fed. Despite some headwinds, cues from management guidance indicate optimism on lending growth momentum to continue while impairments take a cautious outlook.”

The aggregate loan-to-deposit ratio decreased by 0.3 percentage points quarter on quarter, settling at 75.5 percent, as deposit growth outpaced loan growth.

Despite these challenges, total operating income grew by 3.5 percent quarter on quarter, driven by a 7.4 percent increase in non-interest income and an 11.8 percent rise in other operating income. Net interest income also saw a modest 1.5 percent increase during the same period.

Cost-efficiency metrics worsened during the quarter, with six out of the top 10 banks reporting higher operating expenses. The cost-to-income ratio rose by 99 basis points to 29 percent, as operating expenses increased by 7.1 percent, outpacing the 3.5 percent growth in operating income.

The cost of risk also worsened, rising by 30 basis points quarter on quarter to 0.6 percent. This marked a reversal from the second quarter, when the cost of risk had reached a multi-year low of 0.3 percent.

Total impairments rose significantly to 2.9 billion dirhams in the third quarter, compared to 1.3 billion dirhams in the second quarter.

Despite these challenges, the sector’s overall capital adequacy ratio remained strong at 17.9 percent, reflecting an increase of 0.37 percentage points quarter on quarter.


Investment strategies must align with SDGs to drive sustainable global growth, WIC hears

Updated 25 November 2024
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Investment strategies must align with SDGs to drive sustainable global growth, WIC hears

RIYADH: Investment strategies must be compatible with sustainable development goals to ensure economically viable and environmentally responsible global growth, a top official said at the World Investment Conference.

Speaking on the first day of the Riyad-based event, James Zhan, chair of the WIC executive board, said reforming the global financial system should be a priority alongside helping to deliver social and environmental reform.

The 28th WIC is being held from Nov. 25 to 27,  and will see global stakeholders gather to explore investment trends and how best to foster sustainable development. 

During a panel discussion titled “Impact Maximization: Leveraging Trade and Investment for Growth and Development,” Zhan said: “We need to embed investment strategies into the SDG implementation plans. We need to transform these international investment regimes into a kind of SDG promotion instrument.”

The SDGs are a set of 17 global objectives established by the UN to address pressing social, economic, and environmental challenges, aiming to achieve a sustainable and equitable future by 2030.

Zhan also called for transforming international investment: “We need to be practicing incentives for investment on the ground.”

Ibrahim Al-Mubarak, assistant minister of investment and CEO of the Saudi Investment Promotion Authority, outlined the Kingdom’s focused approach to investment. 

“Our investment strategy focuses on quality, FDI. That’s a very big word. So, what I like to call it is smart capital,” he said. 

Al-Mubarak also emphasized Saudi Arabia’s reform journey under Vision 2030, saying: “Since the launch of Vision 2030, we have set a very ambitious reform agenda. That reform agenda comes in various ways, be it in the reform of existing laws, launching new laws, removing subsidies.”

These reforms aim to bolster the Kingdom’s investment environment, which has already been recognized as the 16th most competitive economy globally, according to the IMD’s World Competitiveness Index.

Al-Mubarak highlighted the significance of comprehensive and consistent regulatory reforms in enhancing investment appeal. 

One measure of this is the success of Saudi Arabia’s Regional Headquarters Program, which came into effect in January and encouraged multinational companies to set up regional offices in Riyadh.

“We already have exceeded our target by having 550 regional headquarters companies here. Our location, our infrastructure, our youth are enabling us to achieve those (goals), but they have to be clubbed with positive, unified, consistent regulatory reform agenda,” Al-Mubarak said. 

The assistant minister highlighted that attracting investments requires groundwork, adding: “The promotion piece of investment is one thing, but the attraction is a much tougher one because it requires a lot more reforms and work on the ground, on the infrastructure, on the policies, on the procedures.”

Chairman of the Berlin Global Dialogue and Professor of Economics at the European School of Management and Technology Lars-Hendrik Roller called for a broader perspective on global investments. 

“The world is changing, and now I think we need to look eye level (at) Africa and other continents as well,” he said. 

He also cautioned about the interplay of foreign policy and national security with economic agendas, adding: “What is now overarching more and more (is) foreign policy and economic policy, national security issues. And I think we have to be very careful with that.” 

Roller pointed out the distorting effects of subsidies on global markets and stressed the urgency of private investments in the green economy, saying: “We’re not going to solve the climate crisis unless we generate a lot more private investment in the green economy.”


Saudi Arabia unveils world’s largest food park in Jeddah, eyes $5.3bn in investments

Updated 25 November 2024
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Saudi Arabia unveils world’s largest food park in Jeddah, eyes $5.3bn in investments

JEDDAH: Saudi Arabia has officially launched the Jeddah Food Cluster, a major project aimed at transforming the city into a global business hub with an investment target of SR20 billion ($5.3 billion).

Spanning 11 million sq. meters, the cluster is now recognized by Guinness World Records as the largest food park in the world by area. The development is expected to create over 43,000 jobs, driving both local and national economic growth.

The opening ceremony, held on Nov. 24, was led by Prince Saud bin Mishal, deputy governor of Makkah, under the patronage of Prince Khaled Al-Faisal, governor of the Makkah region. It was attended by high-ranking officials, including Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef.

The inauguration of the cluster aligns with Saudi Arabia’s Vision 2030, which seeks to strengthen food security, achieve self-sufficiency, develop food value chains, and establish the Kingdom as a regional hub for attracting both domestic and international investment in the food sector.

Located in Jeddah’s Second and Third Industrial Cities, the Jeddah Food Cluster is part of a larger industrial network in the Makkah region, which also includes industrial cities in Makkah and Taif. This region, which spans more than 50 million sq. meters, hosts over 2,000 industrial facilities specializing in sectors such as food production, pharmaceuticals, metals, and chemicals. The new food cluster is designed to enhance industrial productivity through cutting-edge infrastructure and strategic investments in key enablers.

Currently, the cluster houses 124 operational factories with investments totaling SR4.4 billion. These factories are estimated to produce around 4 million tonnes of goods annually across 10 industrial sectors and provide jobs for over 7,000 workers.

It also features 76 ready-to-use factories that comply with Saudi Food and Drug Authority standards. Additionally, the cluster has built a central laboratory to improve food quality and safety, as well as over 134,000 sq. meters of shared cold and dry storage facilities. By concentrating suppliers in one location, the cluster aims to create a sustainable, efficient supply chain.

The economic impact of the Jeddah Food Cluster is expected to be substantial, with national exports projected to increase by SR8 billion. The development is also anticipated to create thousands of job opportunities, particularly in the industrial and logistics sectors, and contribute approximately SR7 billion to Saudi Arabia’s GDP over the next decade. This aligns with the broader objectives of Saudi Arabia’s National Industrial Strategy and the National Industrial Development and Logistics Program, which aim to foster economic diversification and sustainable growth.

At the ceremony, MODON, the Saudi Authority for Industrial Cities and Technology Zones, announced that the Jeddah Food Cluster had achieved a significant milestone, receiving recognition from a global organization. Prince Saud also toured an exhibition showcasing the involvement of private companies and government entities in the food supply chain. This was followed by the presentation of the global recognition certificate.

Several memorandums of understanding and agreements were signed during the event. These partnerships, which include collaborations with Umm Al-Qura University, the National Academy for Industry, and Halal Products Development Co., focus on developing specialized training programs, improving food safety, and promoting quality control within the food industry.

Alkhorayef, in his speech, emphasized that the Jeddah Food Cluster represents more than just an industrial project—it is a key element in the Kingdom’s broader strategy for sustainable economic growth.

“Through this cluster, we aim to leverage the ministry’s capabilities to serve Jeddah, the Kingdom’s economic hub, and a prime investment destination,” he said.

He also highlighted the importance of connecting manufacturers, suppliers, and service providers to boost innovation and competitiveness, as well as to create new job opportunities, particularly for Saudi youth.

On the sidelines of the event, a panel discussion titled “The Future of Global Food Supply Chain Resilience for Innovation and Sustainability” was held, featuring industry leaders such as Abdullah bin Nasser Al-Badr, CEO of Almarai, Betty Ka, director of supply chain and delivery at the UN World Food Program, and Fabio Maia de Oliveira, general investment director at JBS Saudi Arabia. The panel explored strategies for building resilient and sustainable global food supply chains.

The launch of the Jeddah Food Cluster marks a significant step in Saudi Arabia’s ongoing efforts to diversify its economy and strengthen its position as a global leader in the food industry.