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Saudi Arabia woos investors with lucrative business environment

Situated at the crossroads of Europe, Asia, and Africa, Saudi Arabia boasts a strategic geographical location that makes it a natural hub for international trade, giving it a unique advantage when it comes to Asia-Europe commerce channels. (SPA)
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Updated 12 May 2024
Miguel Hadchity
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Saudi Arabia woos investors with lucrative business environment

  • Vision 2030 aims to reduce the nation’s dependence on oil, diversify its economy, and build a vibrant society
Updated 12 May 2024
Miguel Hadchity

RIYADH: With an average growth rate of 4 percent over the past seven years and an upward trajectory buoyed by a pro-business environment, Saudi Arabia has demonstrated remarkable resilience amid global economic challenges.

Given its strategic location, robust economy, and ambitious Vision 2030, it’s hardly surprising that the Kingdom stands as a beacon of progress and growth in the region.

A key to this has been attracting foreign direct investment, as well as working on agreements with neighboring countries to ensure Saudi Arabia is seen as being open for business.

Economist and policy adviser Mahmoud Khairy told Arab News that the Kingdom has “enhanced trade relations and reduced barriers” in this regard as it seeks to put its Vision 2030 strategy into action.

That plan aims to reduce the nation’s dependence on oil, diversify its economy, and build a vibrant society.

Khairy added: “The Kingdom has already started to take serious steps to capitalize on its exceptional location through the establishment of logistics and free trade zones, coupled with efforts to diversify the economy under Vision 2030, attracts foreign investment and fosters trade partnerships.”

Khairy emphasized that investments in digital infrastructure and e-commerce platforms have further modernized the Kingdom’s trade ecosystem, enhancing its connectivity with global markets.

Furthermore, he said, tremendous efforts have been made to advance the financial ecosystem, with new measures planned to improve the ease of doing business and develop the investment environment further.

Khairy’s analysis was echoed by Saudi-based economist Talat Hafiz, who told Arab News: “One of the main pillars of Saudi Vision 2030 is to create a business environment that supports economic growth in the Kingdom and attract FDI as well as diversify the Kingdom’s economy. The only way to reach such a goal is through facilitating doing business and trade.”

Gateway to global trade

Situated at the crossroads of Europe, Asia, and Africa, Saudi Arabia boasts a strategic geographical location that makes it a natural hub for international trade, giving it a unique advantage when it comes to Asia-Europe commerce channels and distributing goods through the Arabian Peninsula.

With access to over 424 million consumers within a three-hour flight radius, the nation serves as an efficient gateway to markets spanning three continents.

The Saudi freight and logistics industry, supported by state-led investments in infrastructure, is a vital component of the Kingdom’s economic landscape.

Saudi Arabia has undertaken extensive expansion and modernization efforts at its ports, such as the King Abdulaziz Port in Dammam and the King Abdullah Port in Jeddah, incorporating cutting-edge technology for efficient cargo handling.

Khairy said that the development of such modern ports “increases the country’s capacity to handle large volumes of cargo, thereby improving efficiency and reducing transit times for goods entering and leaving the region.” 

When compared to many Western countries, Saudi Arabia’s corporate tax rates are notably lower, with certain industries and regions even benefiting from tax exemptions or reduced rates.

Mahmoud Khairy, Economist and policy adviser

Hafiz added: “With a combined total of 290 berths, Saudi Arabia’s ports comprise the Middle East’s largest seaport network that not only contributes a great deal to national growth but also showcases the Kingdom’s formidable regional and international standing.”

He went on to emphasize that the country’s ports are capable of accommodating any form of vessel, which is what drove the Saudi Port Authority, also known as Mawani, to provide specialized terminals for various types of loads.

Furthermore, substantial investments are being made in expanding rail and road networks to enhance connectivity and streamline the transportation of goods domestically.

According to Khairy, the expansion and improvement of transportation networks, including roads, railways, and airports, enhance connectivity both domestically and internationally.

“This seamless connectivity facilitates the movement of goods and people, supporting supply chain efficiency and enabling businesses to access global markets more effectively,” he added.

Saudi Arabia’s well-established logistics infrastructure offers unparalleled opportunities for logistics companies and manufacturers looking to capitalize on its strategic advantages.

Business-friendly environment 

The Kingdom offers a business-friendly environment characterized by stable economic policies, government incentives, and a youthful, tech-savvy population.

Hafiz noted that Saudi Arabia “jumped significant places in the World Bank’s Ease of Doing Business index and IMD, making the Kingdom among the world’s top improvers.”

Ease of Doing Business index ranked economies from 1 to 190, with the Kingdom standing at number 62 in the final report issued in 2020.  

Saudi Arabia ranked 30 in 2023’s IMD World Digital Competitiveness Ranking, which assesses the capacity and readiness of an economy to adopt and explore digital technologies as a key driver for economic transformation in business, government, and wider society.

The government, through Saudi Arabia’s General Investment Authority, also known as SAGIA, offers various incentives to attract foreign investors. These incentives comprise low corporate tax rates, streamlined business regulations, and robust infrastructure development.

“When compared to many Western countries, Saudi Arabia’s corporate tax rates are notably lower, with certain industries and regions even benefiting from tax exemptions or reduced rates,” Khairy pointed out.

He went on to say that “the digitalization of bureaucratic processes makes it easier for investors to navigate the business environment and set up operations in the country.”

The incentives play a significant role in investor decisions by enhancing the attractiveness of Saudi Arabia as an investment destination.

Businesses are drawn to markets with favorable tax regimes and simplified regulatory frameworks, as they contribute to higher profitability and operational efficiency, according to Khairy.

Hafiz added: “These developments, which are aligned with Saudi Arabia’s Vision 2030, will hopefully increase FDI’s contribution to the Kingdom’s gross domestic product from 3.8 percent in 2016 to 5.7 percent by 2030.”

With this, Saudi Arabia presents lucrative opportunities for foreign investors and entrepreneurs seeking to establish their presence in the region.

Furthermore, initiatives such as the establishment of special economic zones and the growth of the venture capital sector underscore the country’s commitment to fostering innovation and entrepreneurship.

The VC sector has over 80 active firms, with more entering the market, highlighting the commitment to nurturing innovative startups.

Adding to this, the continuous infrastructure development initiatives like NEOM and Red Sea Global underscore the dedication to establishing top-tier business environments and fostering opportunities across diverse industries.

Over 200 international firms, including Northern Trust, PepsiCo from the US, IHG Hotels and Resorts, PwC, and Deloitte from the UK, have opened their regional headquarters in Riyadh.

The Kingdom had previously announced that it would not award any deals to any foreign company or commercial entity with a Middle Eastern base outside Saudi Arabia starting from January 1, 2024.

Driving innovation through technology

Embracing the transformative power of artificial intelligence and machine learning, Saudi Arabia is spearheading initiatives to harness these technologies for economic growth.

Under the leadership of Crown Prince Mohammed bin Salman, the nation is investing in AI research, education, and infrastructure to propel its industries into the digital age.

According to Khairy, collaboration between academia, industry, and government can harness AI’s potential to enhance productivity and competitiveness across sectors.

AI adoption can lead to new products, services, and business models, optimizing operations and decision-making, he explained.

Generative AI, a cutting-edge technology, holds immense potential for revolutionizing supply chain and procurement operations in Saudi Arabia.

The National Strategy for Data and AI, initiated in 2019, outlines the country’s commitment to advancing AI capabilities and data-driven decision-making.

Generative AI, powered by large language models like OpenAI’s ChatGPT and Google’s BERT, stands out as a transformative technology with the potential to revolutionize supply chain and procurement operations.

Within the context of Vision 2030, generative AI aligns with goals of economic diversification, localization, and sustainability, positioning Saudi Arabia as a key player in international supply chain management.

“The new National Industrial Strategy of the Kingdom not only focuses on raising the number of factories in Saudi Arabia to 36,000 but also improves its technological capabilities,” according to Hafiz.

A visionary path forward

As Saudi Arabia continues its journey towards economic diversification and innovation, it remains poised to emerge as a global leader in business and technology.

“I believe that the sky is the limit when it comes to business opportunities in Saudi Arabia, especially in economic sectors that could add value to the Kingdom’s economy such as advanced technologies: AI, digital economy, internet of things and other sectors, especially advanced renewable energies,” Hafiz said.

Saudi Arabia’s youth population, combined with its dedication to education and technological advancement, positions it as a powerhouse of talent and innovation.

In the era of supply chain diversification, Saudi Arabia has emerged as a compelling rival in the global logistics market. The Kingdom presents an attractive proposition for businesses seeking to optimize their supply chains and expand their global footprint.

As Saudi Arabia continues on its path to becoming a global supply chain hub and a leader in AI and machine learning, it is prioritizing programs that equip its youth with the skills and knowledge required for these transformative job opportunities.

By all accounts, Saudi Arabia can leverage generative AI to not only enhance its supply chain and procurement processes but also empower its youth to thrive in the workforce of the future.

“The technology sector is experiencing rapid growth, driven by government initiatives and increasing investment in areas such as digital transformation and artificial intelligence,” Khairy said.

Topics: main #10yearchallenge SaudiVision2030 Investment

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Startup of the Week – Egypt’s Qara targets Saudi Arabia following $2.6m funding round

Updated 01 February 2025
Nour El-Shaeri
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Startup of the Week – Egypt’s Qara targets Saudi Arabia following $2.6m funding round

Updated 01 February 2025
Nour El-Shaeri

RIYADH: Egypt-based supply chain technology company Qara is preparing to expand into Saudi Arabia, leveraging a $2.6 million funding round to support its entry into the Kingdom.

The investment will be used to build a local team, implement its technology solutions, and address key challenges in supply chain traceability and product authentication for businesses in the Saudi market.

“This funding round will be helping us accelerate our expansion into Saudi Arabia, a key market for Qara,” said Hassan Abouzeed, founder and CEO of Qara, in an interview with Arab News.

“With this investment, we can scale our operations quickly, set up our local team, and implement our technology solutions. It enables us to deploy our platform, which focuses on supply chain traceability and product authentication, to businesses in Saudi Arabia, helping them address key challenges related to counterfeiting, transparency, and customer loyalty,” Abouzeed added.

Qara’s decision to expand into Saudi Arabia has been significantly supported by the Kingdom’s National Technology Development Program’s Relocate Initiative.

It offers critical incentives, such as financial support, access to local partners, and assistance in navigating regulations, Abouzeed explained.

“The NTDP’s Relocate Initiative has been instrumental in facilitating our smooth entry into Saudi Arabia. The ease of setting up operations and receiving guidance on navigating local regulations was a huge advantage for us,” he said.

“Moreover, Saudi Arabia’s emphasis on becoming a regional tech hub made it an ideal destination for Qara’s next phase of growth. The incentives from the Relocate Initiative, combined with the country’s strategic alignment with Vision 2030, provided a perfect ecosystem for us to expand and bring our solutions to the market,” he added.

Saudi Arabia’s broader emphasis on digital transformation and its Vision 2030 strategy also played a central role in Qara’s plans.

“Saudi Arabia’s emphasis on becoming a regional tech hub made it an ideal destination for Qara’s next phase of growth,” Abouzeed explained, adding: “The Kingdom is open to new innovations, and businesses are increasingly adopting digital solutions to improve efficiency, transparency, and security — areas where Qara’s platform can make a big impact.”

The company’s platform provides tools to combat counterfeiting and enhance visibility.

“Our platform is a comprehensive digital ecosystem that allows producers to authenticate and trace their products throughout the supply chain down to the end consumer,” said Abouzeed.

He noted that the platform has been particularly effective in the Middle East and Africa, where fragmented supply chains often face challenges related to counterfeiting and lack of visibility.

“With Qara, businesses can secure their products with unique digital identities, monitor their distribution in real-time, and foster deeper relationships with customers and distribution parties, ensuring brand integrity and driving growth,” he claimed.

“What truly differentiates us is our ability to not only authenticate and trace products but also establish a direct connection between producers and consumers. As Saudi Arabia’s logistics sector grows, Qara’s solutions will play a critical role in supporting this transformation,” he added.

With the funding secured, the company’s immediate priorities include building a local team and establishing partnerships in Saudi Arabia.

“We’ll also work on forging strategic partnerships with key players in complementary industries. We already started with a loyalty program partner, Walaplus, to expand our points redemption network for Saudi customers,” Abouzeed said.

He added that hiring local talent will be critical to success in the country, and the firm will focus on recruiting professionals who understand the local market, the culture, and the business landscape.

“We already started with hires in sales and product teams, and currently, we are prioritizing roles in our tech team, as these will help us deliver our solutions effectively,” Abouzeed said.

Qara also has ambitious revenue goals for its first year of operations in Saudi Arabia, he revealed, adding: “We are targeting that our business in Saudi Arabia will contribute to 15–20 percent of our overall business by the end of year one.”

In terms of industry focus, Qara sees strong demand for its solutions in sectors where product authenticity and traceability are critical.

“We see significant demand for Qara’s solutions in industries such as pharmaceuticals, construction materials, and consumer goods,” Abouzeed said.

“Additionally, with the government’s focus on Vision 2030, we believe that sectors like food security and electronics will also experience a growing demand for digital solutions that enhance product traceability and consumer trust.”

Beyond Saudi Arabia, Qara plans to expand into other Gulf Cooperation Council countries once its operations in the Kingdom are established — with the UAE and Qatar highlighted as having a high demand for innovative supply chain solutions

“We also see opportunities in Kuwait and Oman, where businesses are increasingly adopting digital technologies to improve their operations and protect their brands,” Abouzeed said.

The funding round, while successful, was not without challenges, particularly in the current economic climate with the global uncertainties and shifting market conditions, the CEO revealed.

“What helped us most was that we’ve been profitable since inception, while maintaining a growth of two to three times annually, which demonstrated our ability to build a sustainable and profitable business model even in challenging market conditions,” he said.

Topics: startups Egypt

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Saudi Arabia provides 39.4 percent of Japan’s oil imports in December

Updated 01 February 2025
Arab News Japan
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Saudi Arabia provides 39.4 percent of Japan’s oil imports in December

Updated 01 February 2025
Arab News Japan

TOKYO: Saudi Arabia provided Japan with 39.4 percent of its oil imports in December 2024, amounting to 31.05 million barrels, according to figures released by the Japanese Ministry of Economy, Trade and Industry’s Agency of Natural Resources and Energy.

Japan imported 78.85 million barrels of oil in December, of which the Arab share was 96.3 percent or 75.94 million barrels. 

Arab countries continued to supply a significant proportion of Japan’s oil imports, with most coming from five sources: the UAE, Saudi Arabia, Kuwait, Qatar and Oman.

The UAE emerged as the largest supplier, providing 35.97 million barrels, which accounted for 45.6 percent of the total imports. Kuwait, Qatar and Oman followed, contributing 5 million barrels (6.3 percent), 3.41 million barrels (4.3 percent), and about 0.5 million barrels (0.6 percent), respectively. 

Japan’s oil imports continue to be affected by geopolitical policies. With the ban on importing oil from Iran and Russia, the rest of its oil imports in December were sourced from Central and South America (1.8 percent), the US (1.3 percent), Oceania (0.4 percent) and Southeast Asia (0.2 percent).

Topics: Japan Saudi Arabia

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Saudi banking sector dominating TASI trading, latest report reveals

Updated 01 February 2025
Dayan Abou Tine
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Saudi banking sector dominating TASI trading, latest report reveals

Updated 01 February 2025
Dayan Abou Tine

RIYADH: Saudi Arabia’s banking sector led trading on the Kingdom’s stock exchange in 2024’s fourth quarter with a 17 percent market share, according to Tadawul’s latest report.

The industry was responsible for approximately SR66.42 billion ($17.7 billion) of transactions, ahead of the materials sector with SR45.04 billion, comprising 11.45 percent of the market.

The energy sector had 10.58 percent share in this period, with value traded reaching SR41.58 billion.

The banks industry group also dominated the market for the entire year 2024, leading in share trading value with SR265.57 billion according to Tadawul, accounting for 14.26 percent of the total traded value.

It was followed by the materials sector, which recorded SR249.32 billion, representing 13.39 percent, and the energy sector with SR225.27 billion, contributing 12.10 percent to the total traded value for the year.

These three sectors collectively represent a substantial 62.8 percent weight of the index. This concentration highlights the central role of banking, energy, and materials in shaping the performance of Tadawul, driven by the ongoing economic diversification under Vision 2030 and the Kingdom’s efforts to reduce its reliance on oil revenues.

Even though the energy sector claims the highest market capitalization, primarily influenced by Aramco with a substantial SR6.78 trillion market cap, it does not command the highest weight. This is due to the capped indices calculation methodology, with the banks sector surpassing it in terms of weight.

This methodology is used to prevent any single security from having a dominating influence on an index, and it is part of the Financial Sector Development Program’s key initiative under the Kingdom’s Vision 2030 to enhance the exchange’s product offering.

By balancing sector weights, Tadawul aims to create a more diversified and resilient market structure, reflecting the broader goals of economic transformation and investment appeal.

Saudi Aramco, the largest player in the industry on the market, recorded the highest activity at SR31.4 billion during the fourth quarter. 

The company’s majority of trades, or 47.15 percent, occurred in November according to data from Bloomberg, coinciding with Aramco announcing its profits and dividends payout for the quarter ending in September. 

The energy firm closed the fourth quarter with a 3.51 percent quarter-to-date increase in price at SR28.05 per share.

Al Rajhi came second in highest trades by value, totaling SR27.02 billion. The stock closed with a quarter-to-date rise of 8.49 percent at 94.6. 

The company’s financial results for the third quarter of 2024 showed SR5.1 billion profit, a 22.82 percent rise compared to the same period of the preceding year.

The Saudi telecom company STC, followed with value traded of SR13.62 billion however the stock price showed a 8.47 percent decline in the quarter-to-date at SR40. The company had reported its financial results for the third quarter of 2024 with profit of SR4.64 billion — an annual decline of 5.32 percent.

The stock with the highest trading volume and the largest price appreciation in the fourth quarter was Al Baha Investment and Development Co. On December 19, the company’s shareholders approved a 26.5 percent reduction in capital, lowering it from SR297 million to SR218.3 million.

Following this reduction, Al Baha announced that it had fully offset its accumulated losses, reducing them to zero percent of its capital. This achievement highlights the company’s efforts to improve its financial position. 

For the fourth quarter, the company saw a 56.67 percent quarter-to-date increase, with a closing price of SR0.47.

Banking sector growth drivers

Saudi Arabia’s banking sector’s dominance reflects its critical role in driving the Kingdom’s economic transformation under Vision 2030.

This performance is closely tied to robust corporate lending, fueled by the ongoing implementation of mega-projects across construction, tourism, and infrastructure.

With corporate credit growth projected at 10 percent annually in 2025 according to a report by S&P Global, banks have been instrumental in financing the ambitious pipeline of Vision 2030 initiatives, particularly as the government pivots from oil dependency to diversifying its economy.

Declining interest rates have further supported lending growth, particularly in residential mortgages, which benefit from expanding demographics and rising urbanization.

The mortgage sector’s steady expansion, aided by accommodative monetary policy and population growth, has complemented the surge in corporate loans, creating a dual engine for credit growth according to S&P Global.

In parallel, Saudi banks’ capital adequacy ratio of 19.2 percent at the end of September highlights their strong capitalization, ensuring sufficient capacity to meet the growing financing needs tied to Vision 2030.

According to the agency’s report, profitability in the sector remains stable despite declining net interest margins, with return on assets expected to hover between 2.2 percent and 2.1 percent, supported by increased loan volumes.

While corporate lending comprises nearly 50 percent of total loans, floating interest rates have allowed banks to quickly adjust to monetary changes, partially offsetting margin pressures, they added.

Additionally, international capital market issuances are increasingly being utilized to fund growth, reflecting the sector’s strategic alignment with the government’s long-term objectives.

This banking sector performance also mirrors broader regional trends in the GCC, where economic diversification, high oil revenues, and infrastructure investments have driven financial market activity.

As Saudi Arabia continues to implement Vision 2030 projects and attract foreign direct investment, its banking sector is expected to remain a key enabler of economic transformation, maintaining its leadership on Tadawul and within the GCC’s financial ecosystem.

Foreign ownership in Saudi equity market

According to the latest report by the Capital Market Authority for the third quarter of 2024, Saudis — primarily government entities — held 95.12 percent ownership in the main stock market.

GCC investors accounted for 0.76 percent, while foreign ownership rose to 4.11 percent, up from 3.2 percent during the same period last year.

In terms of trading activity, foreign investors contributed significantly, accounting for 25.23 percent of the total buy value on the main stock market, equivalent to SR112.48 billion. 

On the sell side, they traded SR117.42 billion, representing 26.34 percent of the total sell value. This resulted in net purchases by foreign investors amounting to SR4.97 billion for the quarter.

In a recent development, Saudi Arabia announced on Jan. 27, 2025, that it will permit foreign investment in publicly listed companies owning real estate in the sacred cities of Makkah and Medina.

This move is part of the Kingdom’s strategy to attract more foreign capital and boost liquidity for projects related to Islamic pilgrimage. These investments will be limited to shares and convertible debt instruments, with a cap of 49 percent ownership by non-Saudi nationals.

The Capital Market Authority aims to boost investment, enhance the efficiency and appeal of the Saudi capital market, and strengthen its global competitiveness while supporting the domestic economy.

Part of this effort involves attracting foreign capital and ensuring sufficient liquidity to fund current and future development projects in Makkah and Madinah, solidifying the market as a vital source of financing for these initiatives.

In recent years, the Kingdom has introduced significant reforms, including an updated investment law to create a level playing field for local and foreign investors and eased restrictions on foreign ownership in the stock market, further cementing its position as a global investment hub.

Topics: equities TASI Saudi Arabia Saudi Tadawul

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Green Horizons: Saudi Arabia’s sustainable tourism drive planting seeds for economic growth

Updated 01 February 2025
Reem Walid
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Green Horizons: Saudi Arabia’s sustainable tourism drive planting seeds for economic growth

Updated 01 February 2025
Reem Walid

RIYADH: Eco-friendly holiday destinations being developed across Saudi Arabia are positioning the Kingdom as a leader in sustainable tourism, a host of experts have told Arab News.

Aligning with the Vision 2030 strategy to increase visitor numbers to the Kingdom to 150 million a year by the end of the decade, Saudi Arabia is creating a host of new vacation resorts, as well as reinvigorating existing popular spots.

Alongside this, the Kingdom has made environmental preservation a key tenet of its ambitions for the tourist industry, with ecological and cultural safeguards inserted directly into its strategy.

According to Pascal Armoudom, partner at Kearney Middle East & Africa, this balanced approach ensures that tourism expansion enhances, rather than compromises, the Kingdom’s natural and cultural assets.

“A central element is renewable energy investment across giga-projects like NEOM and the Red Sea Project. These destinations are designed to operate entirely on renewable sources, significantly lowering carbon emissions. By aligning economic growth with clean energy, Saudi Arabia not only attracts environmentally-conscious visitors but also creates sustainable jobs, supporting economic diversification away from oil,” Armoudom said.

Pascal Armoudom, Partner at Kearney Middle East & Africa. (Supplied)

“Conservation commitments further reinforce this balance. The Saudi Green Initiative aims to plant 10 billion trees and restore millions of hectares of land, reducing carbon while enhancing landscapes that are vital to eco-tourism,” he added.

The Kearney partner went on to note that these commitments ensure that as tourism grows, natural habitats are preserved, making Saudi Arabia’s landscapes more resilient and attractive for long-term tourism investment.

“Cultural preservation and community integration are also prioritized. Projects like Diriyah Gate and AlUla involve local communities in heritage conservation and economic opportunities, allowing residents to benefit economically while protecting cultural authenticity. By prioritizing heritage alongside economic incentives, Saudi Arabia creates a tourism model that is inclusive and respects its historical identity,” Armoudom said.

He added that uniting renewable energy, conservation, and cultural preservation enables Saudi Arabia to build a thriving tourism economy that aligns with global sustainability standards, which will in turn foster growth that sustains both the environment and the economy.

Learning from the mistakes of others

Camilla Bevilacqua, partner at management consulting firm Arthur D. Little, explained that Saudi Arabia has the opportunity to learn from more mature global destinations, where tourism significantly contributes to economic growth but can lead to environmental and social degradation when not designed from a systemic perspective.

“To unlock the full potential of regenerative development, it’s crucial to integrate ecological, social, cultural, and economic understanding into a unified approach, creating a community that becomes steward of the development and a development that contributes to the intrinsic value of natural and heritage assets,” she added.

Camilla Bevilacqua, partner at management consulting firm Arthur D. Little. (Supplied)

The ADL partner also suggested that loss of natural and cultural assets requires large investments, especially from the public sector, to restore habitats and communities that can instead drive economic growth.

The notion that economic development in tourism and environmental protection is not a zero-sum game was echoed by Seif Sammakieh, partner in Oliver Wyman’s Government and Public Institutions Practice and the head of the Riyadh office.

He flagged up that Saudi Arabia is already putting this mentality into practice, adding: “Across the ecosystem there is clearly a deep commitment to safeguarding natural and cultural heritage, and a recognition that these resources are essential to the country’s tourism appeal.”

Sammakieh highlighted that part of the attraction of the Red Sea is its rich and diverse coral reef, meaning the economic success of the tourist destination requires a steadfast commitment to environmental preservation.

Innovation is key

Saudi Arabia is leading sustainable tourism through innovative, eco-friendly developments that align with Vision 2030’s commitment to environmental conservation and cultural preservation.

Kearney’s Armoudom highlighted Amaala, a luxury wellness destination on the Red Sea coast, as an example of a project that will be fully powered by renewable energy.

Seif Sammakieh, partner in Oliver Wyman’s Government and Public Institutions Practice and the head of the Riyadh office. (Supplied)

He also focused on Diriyah Gate as a project that blends cultural preservation with sustainable practices.

“This historic site is being developed as a cultural hub, incorporating energy-efficient designs, water-saving measures, and native landscaping, allowing visitors to experience Saudi heritage responsibly,” the Kearney partner added.

From ADL’s side, Bevilacqua noted that Saudi Arabia’s Vision 2030 includes sustainable tourism initiatives across multiple projects and organizations, such as Soudah, AlUla, NEOM, the Red Sea, and several Royal Reserves and National Parks. She also stressed that these efforts target ecological restoration, economic transformation, and community empowerment.

“For Soudah Development, ecological restoration plans to plant over 1 million trees by 2030 aim to restore mountain ecosystems, while wildlife reintroduction programs, such as the rewilding of Nubian ibex, enhance biodiversity. Additionally, over 300 locals have been trained as eco-guides and forest stewards, contributing directly to tourism growth and increasing community engagement,” Bevilacqua said.

With regards to the Red Sea Project, the ADL partner emphasized that the coral reef and mangrove restoration efforts aim for a 40 percent biodiversity increase and sequester 500,000 tonnes of carbon dioxide annually as part of marine and coastal ecosystem restoration. Additionally, over 500 jobs have been created, aligning conservation with economic development through ecotourism initiatives.

The rise of eco-tourism

While integrating sustainability and environmental protection into tourism developments is admirable, these projects do ultimately need to attract visitors in order to deliver an economic return.

Nicolas Mayer, PwC Middle East partner and global tourism industry lead, explained that tourists drawn to nature-based experiences tend to be strong spenders, contributing significantly to the local economy.

“Eco-tourism, in particular, has a profound economic impact on more remote and economically weaker regions, where visitor spending can create jobs, stimulate local businesses, and foster infrastructure development that benefits residents and tourists alike,” Mayer said.

Nicolas Mayer, PwC Middle East Partner, Global Tourism Industry Lead. (Supplied)

“This type of tourism is especially appealing for domestic travelers, who bring significant economic benefits while generating a lower ecological impact than international visitors. By encouraging domestic tourism, the Kingdom reduces the carbon footprint associated with air travel, thus aligning with its sustainability goals,” he added.

The PwC representative continued to stress that the concept of regenerative tourism is central to Saudi Arabia’s approach.

“Unlike traditional tourism, which may strain resources, regenerative tourism actively restores and enhances natural and cultural sites. This approach ensures that destinations not only maintain their ecological and cultural value but also improve over time, offering a richer experience for future visitors and a lasting legacy for local communities,” Mayer said.

Topics: tourism sustainable tourism Saudi Arabia Ad Diriyah

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Fitch affirms Saudi Arabia rating at ‘A+’; outlook stable

Updated 01 February 2025
Arab News
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Fitch affirms Saudi Arabia rating at ‘A+’; outlook stable

Updated 01 February 2025
Arab News

RIYADH: Fitch Ratings has affirmed Saudi Arabia’s Long-Term Foreign-Currency Issuer Default Rating at ‘A+’ with a Stable Outlook, the agency said on Friday.
Fitch indicated the rating reflects the Kingdoms strong fiscal and external balance sheets. It said: “government debt/GDP and sovereign net foreign assets considerably stronger than both the ‘A’ and ‘AA’ medians, and significant fiscal buffers in the form of deposits and other public sector assets”.
The agency also noted the Kingdom’s reform program, Saudi Vision 2030, has diversified economic activity in one of the Middle East strongest economies.
And there is positive outlook for growth this year.
“Headline economic growth is set to rebound in 2025 after being held back by cuts to oil production agreed by OPEC+,” a note by the agency said.
In addition Fitch also said that the Kingdom now faces less geopolitical risk.
“Saudi Arabia is exposed to geopolitical risks, but Fitch judges that these have lessened recently, given the dynamics of the regional conflicts.”

Topics: Fitch

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