| The Saudi government’s 2021 budget suggests there will be renewed focus on infrastructure and critical project investments in a bid to drive economic growth.
“Plans include continuing to spend on mega-projects and VRPs, including the Housing Program and the Quality of Life Program. In addition, private sector development programmes envisaged to continue through stimulus packages in 2021 and shall provide more opportunities for the private sector to participate in investment projects and infrastructure development projects,” the Ministry of Finance said.
The focus on housing will increase the country’s economic base and help more Saudi families achieve the goal of home ownership. The housing programme has already secured 411,000 contracts, with outstanding real estate loans of SAR 371 billion.
The Quality of Life programme also features a number of projects, which will position the kingdom as a regional pioneer in upgrading existing infrastructure to raise living standards of residents and citizens. The programme also aims to expand green and cultural spaces in key cities such as Riyadh, Jeddah, Makkah and Madinah.
Another major area of focus is the privatisation programme, which envisions to raise private sector’s GDP contribution to 60% by 2030, from its current level of 40%.
“In 2020, the first phase of privatising the flour milling sector was completed, which included selling all shares of the first and third companies of the four milling companies to strategic private investors,” the ministry said. “The second phase of selling assets of the second and fourth companies is underway.”
Next year, the privatisation programme will focus on supporting Public Private Partnerships (PPPs) at the domestic and international levels. A key area would be attracting private sector interest in the healthcare sector and encouraging private investments to finance and develop educational buildings through PPPs.
“The initiatives also include several privatisation projects in the environment, water and agriculture sectors, the municipalities sector, and the telecom and information technology sector,” the ministry added.
The Financial Sector Development Program will also see further progress in developing the country’s financial market, facilitating financing of key projects and raising financial institutions’ role in supporting private sector growth.
PROJECT SAUDI
The first half of the year saw 506 new foreign investment projects being licensed, slightly lower than the 586 projects licensed during the same period last year, but still way ahead of previous years, especially considering the challenges faced by the global economy in the first half of the year. According to the Ministry of Investment of Saudi Arabia, the sectors of education, financial services, and housing continued to see the highest number of new foreign investment projects, followed by the industrial and manufacturing, and ICT sectors.
“Investments by newly licensed industrial factories amounted to USD 581 million in June, according to data released by the Ministry of Industry and Mineral Resources. The 118 new factories are expected to generate 2,516 jobs,” MISA noted. “Following a clear slowdown from March to May, June data shows a sharp rebound in non-oil manufacturing investments.”
Other major projects are also making progress. NEOM, Saudi Arabia’s first fully integrated smart city, signed a USD 5 billion deal with the kingdom’s ACWA Power and Air Products, the US chemical industry company, to build a world-scale green hydrogen-based ammonia production facility for export to global markets.
“Harnessing the unique profile of NEOM’s sun and wind to convert water to hydrogen, this project will yield a totally clean source of energy on a massive scale and will save the world over three million tonnes of CO2 emissions annually and eliminate smog-forming emissions and other pollutants from the equivalent of over 700,000 cars,” said Seifi Ghasemi, chairman, president and chief executive officer for Air Products.
NEOM has also started work on creating a cognitive city that rely on leading technology for digital services after signing a contract with STC group to establish a 5G network infrastructure.
“NEOM’s next generation cognitive cities will support its cutting-edge urban environments, improving the lives of residents and businesses far beyond the capabilities of today’s smart cities,” the company said. “NEOM will use one of the most advanced 5G technology in the world, to enable the proactive exchange and analysis of data between NEOM residents and city infrastructure.”
Meanwhile, US infrastructure consulting firm AECOM, has been appointed to design transport and utilities backbone infrastructure for NEOM. In addition to design services, AECOM’s scope will also include environmental and geotechnical support.
The contract builds on AECOM’s appointment in July 2019 to provide project management consultancy services for the first phase of the NEOM project. |
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