Saudi Arabia received $9.7b of FDI inflows in the first half of 2024, according to data from the Saudi General Authority for Statistics. The kingdom was targeting $29b of FDI inflows by the end of the year, a goal which would require a significant turnaround in the coming months.
Higher FDI inflows are a key part of Saudi Arabia’s Vision 2030 growth plan, which looks to diversify the economy away from its oil dependency. The plan hopes to reach $100b of annual FDI inflows by 2030. It’s a relatively high target, between 2017-2022 the kingdom averaged $17b of yearly inflows.
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Weak oil prices have also resulted in some funding constraints for ongoing projects. Neom for example, which is the project under which The Line is being developed, has faced funding cuts. Sources told Bloomberg that the project was allocated 20% less than the target budget in 2024.
The data comes ahead of the implementation of updated FDI laws meant to entice foreign investment.
The kingdom’s Council of Ministers approved the law in August. At the time, Investment Minister Khalid Al Falih highlighted that “the law reaffirms Saudi Arabia’s commitment to creating a welcoming and secure environment for investors, driving economic growth, and enhancing the kingdom’s position as a premier local investment destination.”
The law will replace foreign investor licenses with a streamlined registration process, specialised service centres for investors, alternate dispute resolution options and more. Capital Economics has said the law would be a “game-changer.”
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By GlobalDataIn GlobalData’s latest analyst briefing regarding FDI in Saudi Arabia, economist Ollie Brown noted that “as the Israel-Gaza conflict threatens to further spread throughout the region, threats to attracting and retaining new projects heighten.”
Brown says the country is in a complicated position as the US pressures it to mediate relations between Israel, Palestine, Iran and Lebanon.
He concludes that “the future for Saudi Arabian FDI hinges on whether diplomats can continue leveraging strong international politico-economic relations and attracting business, whilst simultaneously distancing themselves from geopolitical tensions.”
