The Report: Saudi Arabia 2022
Saudi Arabia has undergone significant reforms to foster growth and diversification. While some initiatives were delayed during the Covid-19 pandemic, progress in areas such as the digital economy accelerated. Aided by elevated oil prices in 2022, strategies underlined in Vision 2030 continue moving forwards, and the Kingdom today presents ample opportunities for foreign investors, underpinned by efforts to boost private sector participation in the economy.
Country Profile
As the world’s largest oil producer and the only Arab country in the G20, Saudi Arabia is a key geopolitical player on the global stage. Officially established in September 1932, the Kingdom has begun to invest its considerable financial resources into a series of large-scale economic development, diversification and modernisation initiatives in recent years. Saudi Arabia has attracted international attention for the momentum of its socio-economic transformation taking place under the auspices of the Vision 2030 development plan, and the scale of giga-projects being developed across the country in support of emerging economic sectors such as tourism, entertainment and green technologies.
Explore chapterEconomy
With increasing oil and gas prices and an expanding non-oil sector, Saudi Arabia has been logging record trade surpluses in recent years, while securing government revenue for future investment. Saudi Arabia is expected to be among the fastest-growing economies in the G20 in 2022 – and the Kingdom was on track to fulfil that forecast by the middle of the year. Indeed, in the first three months of 2022 GDP expanded by 9.9% year-on-year, and 2.6% quarter-on-quarter. Saudi Arabia has therefore successfully bounced back from the global downturn accompanying the Covid-19 pandemic. It has also left behind the period of slower growth that the Kingdom witnessed prior to the health crisis, following the 2014 downturn in global oil prices.
Explore chapterBanking
Saudi Arabia’s banking sector is dynamic and competitive, comprised of domestic universal banks, foreign specialists and finance companies vying for market share. It is also a sector in the midst of significant and regulation-driven change, as the Kingdom’s leadership works to implement its long-term economic blueprint, outlined in detail in its Vision 2030 programme. Indeed, the financial sector is expected to play a major role in the Kingdom’s diversification initiatives. This cross-sectoral economic transformation is fuelled by technology and innovation-driven process optimisation to create new opportunities. In the banking sector specifically, digitalisation is seen as the key to unlocking a new era of enhanced services, eased connectivity and enhanced financial inclusion. This chapter contains an interview with Tony Cripps, CEO, Saudi British Bank.
Explore chapterCapital Markets
Capital markets in Europe, the US and Asia have experienced challenging times in the wake of the Covid-19 pandemic and Russia’s invasion of Ukraine. However, Saudi Arabia’s capital markets have experienced sustained growth, with high-value initial public offerings (IPOs), robust trading, and the Saudi Exchange showing the largest market capitalisation and liquidity of any country across the GCC as of mid-2022. The short and medium-term outlook appears promising, with a strong IPO pipeline, and confidence among foreign and domestic investors that 2023-24 will be an impressive period for the Saudi economy and capital markets. This chapter contains interviews with Mohammed Al Rumaih, CEO, Saudi Exchange; and Rajiv Shukla, CEO, HSBC Saudi Arabia.
Explore chapterInsurance
Saudi Arabia’s insurance market, the second largest in the Gulf region by gross written premium after the UAE, offers a vibrant and competitive environment. Growth in recent years has been attributed to economic development creating new insurable assets, and new lines of mandatory coverage. Long-term direction is detailed in the country’s Vision 2030 development plan and targets a growing and maturing sector through consolidation, digitalisation and overall capacity building. Like insurers worldwide who responded to the global Covid-19 pandemic by updating their operations and leveraging insurance technology, many Saudi insurance companies have entered a period of rapid digitalisation and modernisation.
Explore chapterEnergy & Utilities
As Saudi Arabia moves to diversify its economy and reduce its reliance on oil revenue, the energy sector is set to remain of paramount importance to future development. The Kingdom is positioning itself to increase its oil exports over the coming decade in a move expected to help the country maintain its role as a reliable and versatile global supplier in an increasingly uncertain market. State-owned energy firm Saudi Aramco is currently working to increase maximum production capacity from 12m barrels per day (bpd) to 13m bpd by 2027. This chapter contains interviews with Turki Al Shehri, CEO, Engie Saudi Arabia; and Gregory Fayet, CEO, EDF Renewables Saudi Arabia.
Explore chapterIndustry
The expansion of Saudi Arabia’s industry is a core part of the Kingdom’s Vision 2030 strategy to diversify the economy and reduce reliance on oil revenue. Industry has been targeted as a driver of future non-oil growth and job creation. Expansion plans are under way for the country’s main strategic industrial segments: oil and gas; petrochemicals; and mining, a significant potential contributor to the economy. Petrochemical projects in the pipeline are facilitating significant increases in natural gas production planned for 2030. The Kingdom’s industrial strategy is driven by Vision 2030, Saudi Arabia’s long-term social and economic tansformation plan. This chapter contains interviews with Suliman Almazroua, CEO, National Industrial Development and Logistics Programme; and Robert Wilt, CEO, Ma’aden.
Explore chapterSecurity, Aerospace & Defence
Saudi Arabia’s defence expenditure was the sixth highest worldwide in 2021, behind the US, China, India, Russia and the UK. The localisation of industry, and enhanced research and development are core to Vision 2030, the government’s long-term blueprint for development. Given the defence sector’s traditional prominence in the annual budget, it is among the areas targeted to propel the upskilling of the national workforce and create more jobs. Defence-related business forms a key component of Saudi Arabia’s close economic relationship with the US. While more deals have been signed recently between the two nations, the Kingdom’s drive to expand the industry has led it to broaden its portfolio of strategic partnerships and attract international security, aerospace and defence manufacturing entities to establish operations on Saudi soil.
Explore chapterICT
Saudi Arabia’s ICT sector is primed for considerable expansion in the coming years as digital technologies become ever-more central to cross-sectoral operations and performance. Recently, the government has made significant financial and time savings after successfully shifting many internal processes and public services online, raising efficiency, productivity and coordination across and between its various ministries. Multiple government bodies have been formed over the past decade to oversee the progressive integration of disruptive digital innovations into daily life, with notable expansion in the e-banking and e-commerce spaces signalling an increased public appreciation of and familiarity with electronic processes. This chapter contains interviews with Osama Al Dosary, CEO, Salam; and Omer Alnomany, CEO, solutions by stc.
Explore chapterInnovation
A productive cross-sectoral innovation ecosystem underpins the world’s leading economies, enabling countries such as the US, China and Germany to respond effectively to existential challenges, economic inefficiencies and commercial opportunities that ultimately bolster economic sustainability. In recognition of this, Saudi Arabia’s government is working to plug gaps in the Kingdom’s own innovation ecosystem by ensuring each sector of its economy has a strong research, development and innovation (RDI) component. Saudi Arabia’s sovereign reserves and reformed regulatory frameworks have enabled rapid economic diversification, and its flourishing RDI entities have made significant contributions to the Kingdom’s search for solutions to national challenges, which include water scarcity, genetic diseases, the Covid-19 pandemic, the energy transition and food insecurity. This chapter contains an interview with Munir El Desouki, President, King Abdulaziz City for Science and Technology.
Explore chapterTransport
Saudi Arabia’s transport and logistics sector encompasses a broad range of active facilities and routes. Given the Kingdom’s position between Europe and Asia and its central role in the global energy market, as well as the current importance of imported goods for meeting basic consumer demand, transport and logistics are crucial to the economy. Plans for the sector’s future involve a transformative programme aimed at leveraging geographic advantages and providing key services to the global economy. As the country’s leadership works to implement these steps, major projects at home – including an expansive new metro system for Riyadh, one of the most highly anticipated infrastructure projects – promise to transform the options available to residents. This chapter contains interviews with Faisal Saad Albedah, Managing Director and CEO, SAL Saudi Logistics Services; and Omar Hariri, President, Saudi Ports.
Explore chapterConstruction & Real Estate
The Saudi real estate and construction sectors have been experiencing a period of rapid expansion due in part to a string of giga-projects and an economy rebounding from the Covid-19 pandemic. Indeed, the Kingdom is currently engaged in some of the largest construction projects in the world, including NEOM, the $500bn new city in the north-west, and developments on the Red Sea coast and in the capital city, Riyadh. At the same time, population growth and a young demographic are pushing demand for a range of real estate options and supporting infrastructure such as mass transit. All of this is taking place within the framework of Saudi Arabia’s long-term socio-economic development plan, Vision 2030, which seeks sustainable growth and economic diversification. This chapter contains an interview with Gautam Sashittal, CEO, King Abdullah Financial District.
Explore chapterEducation & Training
In recent years Saudi Arabia’s education sector has received the highest proportion of government spending of all areas of the economy. In line with the goals of Vision 2030, the country’s overarching development strategy, the government has rolled out multiple reform programmes aimed at raising the quality of teaching and curricula, and improving student attainment levels. The education system is being revamped to better prepare the national workforce to compete in the increasingly technology- and information-driven global economy. Instilling technological proficiency alongside critical thinking, problem solving and analytical capabilities will be key to equipping the population to thrive in a shifting global economic landscape. This chapter contains an interview with Hamad Al Sheikh, Former Minister of Education.
Explore chapterHealth & Life Sciences
The health care sector in Saudi Arabia receives an average of 16.5% of the government’s annual budget, reflecting its importance to socio-economic development. The Covid-19 pandemic placed significant pressure on health care systems worldwide, yet the intensified throughput allowed governments to identify weaknesses in their health services and supply chains. Saudi Arabia’s substantial sovereign reserves have seen it emerge from the worst of the pandemic in a strong position to remedy the vulnerabilities exposed by the unprecedented events of 2020-22. Moving forwards, the government plans to increase efforts to create an integrated, high-quality, value-based health care system. Public-private partnerships are targeted at strengthen specific areas of health care infrastructure, while investment in research and development capacity is set to increase. This chapter contains an interview with Hisham bin Saad Aljadhey, CEO, Saudi Food and Drug Authority; and Fahad Al Shebel, CEO, the National Unified Procurement.
Explore chapterTourism
Saudi Arabia is rolling out a broad range of tourism offerings across the country as a central part of its Vision 2030 national transformation strategy. Following the launch of the tourist visa programme in September 2019 and the subsequent downturn from the Covid-19 pandemic, 2021 and 2022 have witnessed an ambitious calendar of events ranging from the Formula 1 Grand Prix to arts and cultural festivals. In October 2021 the Ministry of Tourism announced a $1trn investment over the next 10 years in the sector. This reflects the Kingdom’s ambitions to become one of the top tourist destinations both regionally and worldwide. This chapter contains an interview with John Pagano, Group CEO, The Red Sea Development Company.
Explore chapterEntertainment
The cultural and economic reforms undergone by Saudi Arabia since 2016 are perhaps most visible in the entertainment sector. For over three decades entertainment and cultural outlets, such as cinemas, art galleries and theatres, were banned. So too were artistic practices including film-making and live music. Since being elevated to a position of executive importance, however, Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud has lifted restrictions and targeted the creation of a vibrant arts and entertainment scene as a means to propel tourism, improve the quality of life for citizens and raise international awareness of Saudi Arabia’s increasingly open economy. This chapter contains an interview with Turki Alalshikh, Chairman, General Entertainment Authority.
Explore chapterTax
Saudi Arabia’s income tax rules are governed by the Income Tax Law, which came into force in 2004. The Tax Law is supplemented by implementing regulations. Zakat (a payment under Islamic law that is used for charitable or religious purposes) is governed by the implementing regulations for zakat collection. The Ministry of Finance issues ministerial resolutions concerning aspects of tax and zakat, and the Zakat, Tax and Customs Authority regularly issues circulars and responses to frequently asked questions containing its interpretation or position on regulations. Corporate income tax is assessed on the share of profits of the foreign partner in the local company and a non-resident who conducts business in Saudi Arabia through a permanent establishment. This chapter contains a viewpoint from Tareq al Sunaid, Head of Tax, KPMG Saudi Arabia.
Explore chapterLegal Framework
In recent years Saudi Arabia has committed to a series of wide-ranging reforms that aim to diversify the economy; foster a more open and connected society; and establish a transparent, efficient and accountable government under the country’s Vision 2030 strategic framework. With those objectives in mind, there have been numerous legislative developments related to real estate, foreign investment, judicial processes, financial innovation, tourism, entertainment and civil law that are transforming the landscape and positioning the economy for growth. Saudi Arabia continues to initiate legislative reforms in the digital space. The authorities seek to be proactive and pioneering by providing integrated digital services to government agencies via the Digital Government Authority. This chapter contains a viewpoint from Eyad Reda, Managing Partner, Eyad Reda Law Firm.
Explore chapterThe Guide
The Guide contains listings of accommodation options throughout the country for both business and leisure travellers. Helpful information is provided on visa regulations and business etiquette, as well as public and private transport options for navigating the country during your stay.
Explore chapterTable of Contents
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