RIYADH: The “green room” at the Future Investment Initiative in Riyadh is an inappropriate name.
Like the rest of the King Abdulaziz International Conference Center, next to the five-star Ritz Carlton Hotel, the areas reserved for the elite speakers at the adjacent plenary hall is a melange of white marble, gold and the rich browns of teak and mahogany, with plenty of sparkling crystal in evidence too. Anything but green, really.
Last Thursday morning, Mohammed Al-Tuwaijri entered the room with weighty matters on his mind. The minister of economy and planning for Saudi Arabia was the top billing on a panel of luminaries from Jordan, Russia and Britain, considering the question: “Which model for privatization will prevail?”
Al-Tuwaijri, who got the top job in the Kingdom’s economic policy-making apparatus last year in a government reshuffle, is well able to give an expert view on that issue. A lifetime investment banker with experience at some of the biggest global banks in the world, he has been privy to many of the biggest corporate deals in the Middle East and elsewhere. Privatization is, and always has been, a subject on which the investment bankers have particular expertise.
In the green room, he was confident and composed, and declared himself willing to answer virtually any question on a subject crucial to the success of the Kingdom’s Vision 2030 strategy.
You might argue that privatization is at the heart of the strategy. The Vision’s architects recognized that the Kingdom’s essential challenge was to move away from dependence on the government-owned energy sector, and to increase the portion of the economy driven by the private sector. For an economy like Saudi Arabia, with its history of reliance on the public sector to spur economic growth, that is a big challenge.
As an economic policy, privatization has a fairly recent origin. The British prime minister Margaret Thatcher kicked off the modern version in the 1980s with a strategy to sell shares in government-owned companies, including the telecommunications, aviation and energy sectors, and found imitators around the world.
After the end of Communism in 1990, a tsunami of privatization washed over the former Soviet economies. The post-Soviet privatization model certainly ended state ownership of the economy, but also led to abuses and a concentration of economic power in a few hands — the beginning of the Russian “oligarchy.”
China, meanwhile, was undergoing a form of privatization that provided another possible model for encouragement of private enterprise, but all within the context of a centrally commanded structure that ultimately retained state control of business.
On the plenary stage, Al-Tuwaijri showed that he was acutely aware of the variety of models on offer for a would-be privatizer, but also conscious of the need to fit them to the Saudi context. “We look for our own model. We literally mapped the world, historically and geographically. So there is the good, the bad and the ugly experiences of the past.
“Ultimately we look at it from the point of view of what investors really want. They like to see a stable macro economy, growth, developing labor markets, accessible capital markets, transparency, firmness and quality assets. The government is committed to do these things, which are the big guidelines we are adopting here in Saudi Arabia. We also checked with all government entities and Vision 2030 programs, to make sure that in terms of execution and the time to come to market we are also aligned,” he added.
Alignment means ensuring that the interests of government, citizens and investors are synchronized and coordinated, he said, and gave the example of the housing industry, where Saudi Arabia has big plans to build more units for citizens under private auspices, but which also has implications for power and water generation businesses, as well as the financial investors in the projects. A “center of excellence” has been established in the Kingdom to co-ordinate these policies.
So, the broad principles of the privatization plan have been mapped out. But privatization means different things to different people, and can take a variety of forms.
It can occur in the form of the sale of shares to the general public and investing institutions via initial public offering (IPO) on stock markets; or via partnerships between the public sector and private enterprises on the provision of services previously run by the government, the so-called PPP option; or it can take the form of asset sales to private companies, domestic or foreign, by state-owned organizations.
These are complex concepts. Does Al-Tuwaijri believe that Saudi investors are capable of understanding the processes involved?
“A lot of effort has been dedicated to educating the people about privatization — what are the benefits, what it means, what are the processes, the levels of expectations and engagement. Generally, we agreed that the more governance, transparency and top advisers, the better,” he said.
“I think Saudi investors are ready for privatization. We have a history of privatizing state companies going back to the 1970s, in telecommunications, banking and mining. Our private sector is mature enough, strong enough, to understand privatization, but it is not just the domestic market we need to address. The whole world is interested in Saudi Arabia, and we have many potential investors from Asia and Europe interested in our privatizations,” he added.
Some international observers have expressed their frustration that the program of state sales has not yet got underway, more than two years after the Vision 2030 strategy was announced. Al-Tuwaijri was cautious in his response.
“We spoke about market conditions, and in Saudi Arabia we needed to bring the economy back into sustainable growth. That has been achieved now. There was also a need to have a legal structure for privatization, and to develop labor policies. Privatization has a great many implications for labor practices.
And of course the capital markets had to be ready, with the emerging markets status in prospect.
“Could we press a button on some of these assets today? The answer is yes. Are we being optimal if we pressed the button today? Maybe not,” he said.
Nonetheless, there is a shortlist of assets that are at the head of the pipeline for sale between now and the end of the first quarter of 2019. Al-Tuwaijri identified assets in the grain and silo business, in education, health care and in the desalinization industry that were all ready to come to market in that time frame.
Some time ago, Al-Tuwaijri gave an estimate of $200 billion of the total value of the Saudi privatization plan, excluding the $100 billion target from an IPO of Saudi Aramco. He said that was still achievable, depending on what is included in the sell-off portfolio and the state of global markets.
“You have to look at whether you include the Public Investment Fund assets within that or not. Do we include the ‘opportunity discovery,’ which is not today immediately in the program? We’re talking to some of the government entities, the payments systems in the Saudi Arabian Monetary Authority, some of the assets the Ministry of Finance hold. These are also ongoing opportunities that may be very attractive to the private sector,” he said.
So far in the panel discussion the biggest issue in the privatization universe had not been approached: The IPO of Saudi Aramco.
“The company (Aramco) is absolutely ready, in terms of financial statements, to the best global standards and requirements of global listing venues,” Al-Tuwaijri said, adding that the forthcoming acquisition of Saudi Basic Industries Corporation (SABIC) and “potentially other” deals would enhance the Aramco growth strategy.
“But it goes back to the question of alignment. The government has all the right in the world to time that IPO so that it is optimal in terms of value and shareholder benefit,” he said.
Saudi Minister of Economy and Planning Mohammed Al-Tuwaijri: ‘The whole world is interested in Saudi Arabia’
Saudi Minister of Economy and Planning Mohammed Al-Tuwaijri: ‘The whole world is interested in Saudi Arabia’
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- For an economy like Saudi Arabia, with its history of reliance on the public sector to spur economic growth, that is a big challenge
- Saudi investors are ready for privatization
Over 1,300 Saudi industrial licenses awarded in 2024, attracting $13.3bn investment, latest figures show
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JEDDAH: More than 44,000 new jobs are expected in Saudi Arabia after the Kingdom issued 1,346 industry licenses in 2024, an official report has revealed.
The Ministry of Industry and Mineral Resources announced that the permits have also helped attract investments worth over SR50 billion ($13.3 billion), driving economic growth and diversification.
The ministry added that the jobs figure is based on a report by its National Industrial and Mining Information Center, which analyzes key sector changes.
The issuance of the permits aligns with Saudi Arabia’s National Industrial Strategy, launched by Crown Prince Mohammed bin Salman in October 2022, that aims to drive sector growth and increase the number of factories in the Kingdom to about 36,000 by 2035.
The strategy focuses on 12 sub-sectors, targeting more than 800 investment opportunities worth SR1 trillion, striving toward tripling the industrial gross domestic product.
The analysis by the ministry also shows that 1,075 factories began production in 2024, with investments exceeding SR48 billion and a workforce of about 39,000 employees.
The issuance of permits aligns with the Kingdom’s National Industrial Development and Logistics Program, which was launched in 2019 to support the industrial sector and drive sustainable development.
It also furthers the ministry’s goal of strengthening the industry and diversifying the economy under Vision 2030.
NIDLP aims to position Saudi Arabia as an international leader in energy, mining, logistics, and industry. Key components include improving regulations, investing in renewable energy, and boosting local content through initiatives like “Made in Saudi,” all supporting the goal of enhancing industrial capacity and global competitiveness.
In February 2024, the Ministry of Industry reported a 10 percent year-on-year increase in operational factories for 2023, totaling an investment of approximately SR1.5 trillion.
The body also revealed that 1,379 industrial licenses were issued in 2023, attracting investments exceeding SR81 billion. Additionally, production commenced in 1,058 factories during the same period, with total financial commitments reaching SR45 billion.
Closing Bell: Saudi main index ends week in red; Nomu gains
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RIYADH: Saudi Arabia’s Tadawul All Share Index ended the week in the red, as it shed 120.75 points or 0.99 percent to close at 12,111.90 on Thursday.
The total trading turnover of the benchmark index was SR8.32 billion ($2.22 billion), with 69 stocks advancing and 172 retreating.
Nomu, Saudi Arabia’s parallel market, gained 118.24 points to close at 31,404.47.
The MSCI Tadawul Index, however, shed 17.71 points to 1,514.81.
The best-performing stock on the main index was Alkhorayef Water and Power Technologies Co. The firm’s share price increased by 4.48 percent to SR163.20.
The share price of Saudi Paper Manufacturing Co. rose by 2.65 percent to SR65.90.
Banan Real Estate Co. also saw its share price increasing by 2.56 percent to SR6.82.
Conversely, the share price of Mobile Telecommunication Co. Saudi Arabia, also known as Zain KSA declined by 4.57 percent to SR10.86.
On the announcements front, Arabian Pipes Co. reported a net profit of SR168.18 million in 2024, representing a rise of 27.3 percent compared to the previous year.
In a Tadawul statement, the firm attributed the rise in profit to improved sales volumes and new project awards to support the company’s production levels.
The share price of Arabian Pipes Co. declined by 2.51 percent to SR11.64.
The Company for Cooperative Insurance, also known as Tawuniya, said that it witnessed a net profit of SR1.02 billion in 2024, marking a 65.8 percent rise compared to 2023.
According to a Tadawul statement, insurance revenues of the company rose by 19.7 percent year on year in 2024 reaching SR18.27 billion.
Tawuniya’s share price increased by 1.83 percent to SR144.60.
National Gas and Industrialization Co. revealed that its net profit for 2024 reached SR248.7 million, representing a rise of 9.41 percent compared to 2023.
According to a Tadawul statement, the increase in net profits was driven by growth on higher gas sales which went up by SR365 million due to the rise in gas prices and volume.
National Gas and Industrialization Co.’s share price decreased by 1.52 percent to SR103.40.
Conversely, the net profit of Gulf Insurance Group fell to SR98.19 million in 2024, representing a decline of 23.6 percent compared to the previous year.
The group’s share price dropped by 1.54 percent to SR28.85.
Saudi Arabia strengthens halal leadership with 13 new deals at Makkah forum
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JEDDAH: Saudi Arabia saw the signing of 13 agreements at a special event in Makkah, boosting its halal industry leadership by expanding investment, strengthening certification standards, and enhancing food production.
Announced during the second edition of the Makkah Halal Forum, held from Feb. 25 to 27, the deals included partnerships between the Halal Products Development Co., a subsidiary of the Public Investment Fund, and Al-Watania Poultry, Golden Chicken Farms Co., and Ajlan & Bros Holding Group.
The Islamic Chamber of Commerce and Development also signed agreements with Brazil’s Fambras Halal, Thailand’s Halal Science Center, and Slovenia’s KulinWorld to enhance global certification and research in the industry.
Additionally, the Saudi Authority for Industrial Cities and Technology Zones, or MODON, secured deals with First Milling Co. and Ghitha Alzad Food Industries to strengthen halal food production infrastructure.
Held under the theme “Sustainable Development through Halal” and inaugurated by Saudi Commerce Minister Majid Al-Kassabi, the forum aligns with the Kingdom’s Vision 2030 goals of economic diversification and private sector expansion.
As the birthplace of Islam, the Kingdom has long been a trusted source of halal products and is leveraging its influence to lead the $7 trillion global halal market, which is projected to reach $10 trillion by 2030.
Muslim consumer spending on halal-certified products is estimated at $207 billion, according to the American Halal Foundation, underscoring the sector’s economic potential.
With participation from over 150 companies across 15 countries, the forum has become a key platform for driving innovation, enhancing standards, and reinforcing Saudi Arabia’s role as a central hub in the international halal economy.
The agreements signed during the forum support business development and economic growth across various sectors. They establish a framework for halal sciences, contribute to the advancement of scientific and educational materials, and reinforce the forum’s global standing.
Serving as a global gathering for industry leaders, the forum facilitated collaboration on innovations and best practices in the halal sector, with a focus on sustainability and development. As a platform for business partnerships and investment, it reinforced Saudi Arabia’s position in the global halal economy.
Madinah’s economy expands as logistics, tourism, and tech sectors grow
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- Commercial activity expands as business licenses reached 86,000 in 2024
RIYADH: Saudi Arabia’s Madinah region saw its logistics services sector grow 54 percent year on year in 2024, underscoring the city’s growing role as a transport and trade hub, according to the latest official data.
Figures from the Ministry of Commerce also revealed that the region’s commercial activity expanded 37 percent from 2018 to 2024, with registered business licenses reaching 86,000 last year.
Madinah’s rise as a logistics center is fueled by its robust infrastructure, including three airports, an extensive highway network connecting five regions, the Haramain High-Speed Railway, and two major ports — one commercial and one industrial. These facilities supported nearly $1.1 billion in non-oil exports and over $1.4 billion in imports in 2021.
The region’s broader economy also experienced strong growth, with the hotel sector reporting a 42 percent annual increase in 2024, while tourism-related businesses, including organized trip activities, grew by 33 percent.
The technology sector also expanded, with computer programming services growing 28 percent, while date drying, packaging, and manufacturing climbed 14 percent year on year.
This comes as consumer spending in the region continues to rise, with point-of-sale transactions reaching SR536.89 million ($143 million) in the week ending Feb. 22, signaling steady retail growth and stable inflation.
The Madinah region has maintained strong demand growth from 2020 to 2024, underscoring its investment appeal, the Saudi Press Agency reported.
The region’s development aligns with Saudi Arabia’s Vision 2030, which aims to transform Madinah into a key investment and cultural hub.
In February, the Madinah Region Development Authority reported improvements in quality of life, economic growth, and cultural initiatives. The region ranked 88th globally in Euromonitor International’s 2024 Top 100 City Destinations Index and seventh in the Tourism Performance Index, with 3,200 locations registered in the National Urban Heritage Register.
Saudi Arabia has also eased restrictions on foreign investments in real estate, allowing international investors to buy shares in Saudi-listed firms that own property in Makkah and Madinah, a move expected to drive further capital inflows into the region.
Madinah’s digital transformation efforts are also gaining traction, with the Al-Madinah Smart City initiative climbing 11 places in the International Institute for Management Development’s Smart City Index, ranking 74th globally, up from 85th in 2023.
Arab stock markets extend gains, aligning with global rebound: AMF report
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RIYADH: Arab stock markets recorded a positive performance in January for the second consecutive month, mirroring the upward trajectory of global exchanges.
According to the latest Arab Monetary Fund report, the gains came after markets worldwide rebounded from the declines observed in December, driven by improving investor sentiment, monetary policy adjustments, and strong corporate earnings in key industries.
In January, the global uptrend was reflected in Arab stock markets, with major indices such as MSCI and the UK’s FTSE posting strong gains.
The report stated that the composite index for Arab financial markets increased by 0.97 percent at the end of January, reflecting broad-based improvements across regional exchanges.
The positive sentiment was fueled by a combination of factors, including rising corporate profits, enhanced liquidity conditions, and policy measures aimed at strengthening market stability and attracting foreign investment.
Regional market performance
Casablanca’s stock exchange emerged as the top performer among Arab markets in January, with its index surging by 9.98 percent. This was followed by strong performances on the Kuwaiti and Amman bourses, which recorded gains of 5.73 percent and 5.11 percent, respectively.
The Saudi, Tunisian, and Abu Dhabi markets also posted solid gains, rising by 3.15 percent, 2.69 percent, and 1.77 percent, respectively.
Meanwhile, Egypt, Qatar, Palestine, and Dubai registered more modest gains of less than 1 percent, respectively.
Three Arab stock exchanges experienced declines. Bahrain Bourse saw a 5.36 percent fall, Iraq Stock Exchange dropped by 1.8 percent, while Muscat Securities Market fell by 0.73 percent.
Key drivers of market gains
One of the primary factors driving the positive performance in Arab stock markets was the robust financial results posted by listed companies, particularly in the banking sector.
Many financial institutions across the region reported strong earnings for the end of 2024, which significantly boosted investor confidence and contributed to the stock market rally.
Global and regional central banks played a crucial role in supporting financial markets by maintaining accommodative monetary policies. Several central banks in the Arab region, including those in Saudi Arabia, the UAE, and Qatar, reduced interest rates to stimulate economic activity.
Similarly, major international central banks, such as the US Federal Reserve and the European Central Bank, signaled a shift toward looser monetary policy to counter slowing economic growth and ease inflationary pressures. These moves improved market liquidity and encouraged risk-taking among investors.
In an effort to attract foreign investment, Arab stock exchanges intensified their market development initiatives. Many bourses focused on improving governance, enhancing transparency, and simplifying regulatory processes to facilitate foreign capital inflows.
Structural reforms, such as digitalization of trading platforms, improved disclosure requirements, and the introduction of new financial instruments, contributed to increasing market attractiveness.
Strong performances in key sectors like banking, real estate, telecommunications, pharmaceuticals, and technology helped drive growth in Arab stock markets.
The surge in these industries contributed to broad-based market gains. Additionally, the insurance and consumer goods sectors saw increased activity, reflecting growing investor confidence in long-term economic stability.
Trading activity and market liquidity
Despite overall market gains, trading values across Arab stock exchanges recorded a mixed performance in January. The total value of traded stocks declined slightly by 2.96 percent compared to December.
However, some markets showed strong growth in trading activity. The Palestinian market recorded the highest surge in traded value, jumping by 261.4 percent.
The Kuwaiti and Amman stock exchanges followed with gains of 31.8 percent and 20.6 percent, respectively.
The Saudi, Qatari, and Abu Dhabi markets also registered healthy increases in trading value, ranging from 12.3 percent to 19.6 percent.
Conversely, markets in Dubai and Egypt experienced declines, with decreases of 2.6 percent and 23.3 percent. The market in Muscat also fell 32.8 percent.
The largest drop was observed in the Tunisian market, which saw a 71.7 percent decline in traded value.
The total market capitalization of Arab financial markets increased by 0.60 percent at the end of January, adding approximately $26.28 billion in value compared to the previous month.
The biggest contributors to this growth were Bourse de Casablanca, which rose by 10.17 percent, followed by Amman Stock Exchange with a gain of 7.55 percent.
Kuwait Stock Exchange recorded an increase of 5.73 percent, while Tunis’s stock market and the Egyptian bourse saw growth of 2.93 percent and 2.76 percent, respectively.
On the other hand, Iraq’s market capitalization dropped by 2.42 percent, Beirut’s by 5.01 percent, and Bahrain’s by 5.36 percent.
Arab markets in a global context
Arab stock markets followed the global trend, where major indices posted strong gains in January.
The MSCI Latin America Index rose by 9.37 percent, while the MSCI Europe Index increased by 8.42 percent.
In France, the CAC 40 advanced by 7.72 percent, and in the UK, the FTSE 100 gained 6.13 percent.
The Dow Jones saw gains of 4.70 percent, while Nasdaq rose by 1.64 percent and the S&P 500 increased by 2.70 percent.
In contrast, Japan’s Nikkei index declined by 0.81 percent, while the MSCI Asia Index showed marginal growth of 0.60 percent.
Additionally, the MSCI Emerging Markets Index for the Arab region increased by 3.21 percent, highlighting the region's resilience in a recovering global economic environment.
Interest rate developments and economic outlook
Central banks worldwide adjusted their monetary policies in response to changing economic conditions.
The US Federal Reserve held its interest rate steady at 4.50 percent to 4.25 percent following three consecutive cuts in 2024, reflecting a cautious approach to inflation management.
Meanwhile, the European Central Bank and the Bank of China reduced their rates to support economic growth.
In the Arab region, interest rate cuts in Saudi Arabia to 5 percent, the UAE to 4.4 percent, and Qatar to 5.1 percent, helped enhance liquidity and investor sentiment.