Saudi Arabia has designed an economic vision called the 2030 Development Plan and has mobilized its resources and policies to achieve it. Their goal is to diversify Saudi Arabia's economy away from oil and create jobs in the private sector for the country's young and growing population. Although the mentioned vision is facing limitations, its implementation as the center of gravity of the new transformation (Saudi Arabia) is on the agenda of reformist governance.
Based on the economic development plan with the horizon of 2030, Saudi Arabia aims to create a net flow of foreign direct investment of 103 billion dollars and domestic investment of about 450 billion dollars. To pursue the mentioned plan, they have promoted Saudi Arabia's Public Investment Fund (PIF) to the level of the Ministry of Investment of the country. Therefore, the Saudi Arabia government has turned its PIF into an international investor and independent wealth fund. Also, Aramco and SABIC, as two large companies, the Saudi oil and petrochemical giants, are the main investors abroad, respectively.
Saudi Arabia has realized exports of 290 billion dollars and imports of 203 billion dollars, with 834 billion dollars of Gross Domestic Product (GDP) in 2021, inflation of 3%, and an unemployment rate of 7%. This year, this country has successfully attracted 19.3 billion dollars of foreign direct capital and has invested about 23.9 billion dollars in other countries. In implementing the ambitious reforms of Vision 2030, the country is looking for foreign investment in growing sectors such as infrastructure, tourism, entertainment, and renewable energy. Also, this country plans to become a major transportation and logistics center that connects Asia, Europe, and Africa. For this purpose, a package of infrastructural plans has been foreseen, which includes economic cities and special economic zones that will act as a hub for petrochemical, mining, logistics, manufacturing, and digital industries. According to the capabilities of domestic companies in some of these areas, the capacity of our country's wide participation in these plans can be considered.
In 2020, Saudi Arabia approved a new law that allows foreign companies to enter the mining sector and invest in the country's mineral resources. Therefore, through the national transportation and logistics strategy, Saudi Arabia seeks to improve its transportation infrastructure and increase the capacity of the air transportation industry by 50 million tons of cargo and 100 million passengers by 2030. This strategy includes the initiative of connecting to other Arab countries of the Persian Gulf, especially connecting to the dry canal project of the Republic of Iraq, 1,200 kilometers long, to the borders of Turkey in the north of this country through the railway and road network. Therefore, Saudi Arabia plans to invest 147 billion dollars in the transportation and logistics industry in the next eight years. This country also announced its national investment strategy in 2021. The goal of this strategy is to grow Saudi Arabia's economy by increasing the private sector's share to 65% of the total GDP and increasing foreign direct investment to 5.7% of the total GDP. Saudi citizens, private companies, and government entities of this country have extensive investments abroad, such that it was the 16th largest holder of US Treasury securities in January 2023, with an equity of $111 billion.
Saudi Arabia's PIF is considered one of the largest sovereign wealth funds in the world, so the assets under its management in 2022 amounted to 620 billion dollars. Meanwhile, the authorities of this country predict that this figure will increase to 1040 billion dollars in 2025 and to 1950 billion dollars in 2030. Currently, this fund is implementing a five-year plan for 2021-2025, which aims to transition from a single-product economy dependent on energy resources to a diverse and plural economy based on investment, an economy in which new and more efficient capital assets can produce products with higher and higher profit margins.
Saudi Arabia, the pioneer of artificial intelligence:
The findings of Research and Markets Company show that the advanced technology market in the Middle East and North Africa region will witness an annual growth of 47.8%. Meanwhile, Saudi Arabia and the United Arab Emirates are more advanced than others. Therefore, it is predicted that by 2026, the artificial intelligence market will account for nearly 70% of job creation. Therefore, the Saudis are investing in this industry at a high speed. In 2019, this country announced its large investment in artificial intelligence and other emerging technologies in the next decade, with an investment of 500 billion dollars. The Saudis have taken several initiatives, including the creation of the Information and Artificial Intelligence Organization and the National Data Management Office, to speed up the implementation of the artificial intelligence plan in this country related to sectors such as banking, government artificial intelligence services, as well as the communication, telecommunications and digital industries, retail, telemedicine, electronic vehicles, augmented reality technology, NEOM Independent Economic Zone, Line Smart City, Amaala Red Sea Development, Qiddiya Entertainment Capital, Asir World Tourism Center, the historical and Diriyah cultural project of the birthplace of the Kingdom of Saudi Arabia, and the King Abdullah Financial District. Based on the results obtained from the IDC Research Institute, Saudi Arabia will invest 135.2 billion dollars annually in artificial intelligence and emerging technologies by 2030, the end of the economic development plan vision, which is equal to 12.4% of the country's GDP.
In December 2022, Saudi Arabia hosted the second World Artificial Intelligence Summit in Riyadh. At this summit, hundreds of representatives from technology companies, startups, investors, entrepreneurs, and academic figures gathered to discuss and negotiate the future of artificial intelligence and Saudi Arabia's participation.
In this summit, the Minister of Communications and Information Technology of Saudi Arabia addressed his country as the largest holder of specialized human resources and experts in the knowledge of coding and data processing and stated that currently, more than 70 thousand trainees are engaged in learning expertise in this field. He also announced that the share of women in his country in emerging technologies exceeds 30%.
Saudi Arabia and the BRI (Belt and Road Initiative):
Since the establishment of diplomatic relations between China and Saudi Arabia in 1990, great progress has been made in various fields of cooperation. In 2008, the two countries agreed to upgrade their bilateral relations to a strategic partnership. In 2013, China became Saudi Arabia's largest trading partner. In January 2016, Chinese President Xi Jinping made a bilateral agreement based on a comprehensive strategic partnership during an official visit to Saudi Arabia. Conversely, in March 2017, Saudi King Salman visited China. While welcoming, the two countries' leaders expressed their support for the BRI vision and 2030 development plan in the context of the partnership strategy.
Thus, China and Saudi Arabia started and developed their bilateral cooperation in many important and strategic fields. The importance of success of China's path was so important that the leadership of this country in 2016, for the first time, explained and published China's Arab policy document, which, in turn, examines the fields of development of cooperation and the principles of China-Saudi relations, and provides a plan for win-win cooperation. Therefore, after the proposal of the 2030 document vision at the Hangzhou G20 Summit in 2016, China and Saudi Arabia created a high-level joint commission for strategic cooperation based on the BRI and 2030 vision plan. After that, the role of the sub-commission for policy-diplomacy responsibility, BRI, key investment cooperation, energy, trade, and emerging technologies, tourism was formed under the supervision of the joint commission, whose main goal is to implement the consensus reached by the top leaders of two countries by strengthening bilateral cooperation in various fields.
Mojtaba Ferdosipour, Manager of West Asia and North Africa Studies Department
(The opinions expressed are those of the authors and do not purport to reflect the opinions or views of the IPIS)