Saudi Arabia’s economic landscape in the Middle East is seeing a profound shift. The IMF annual review of the country’s economy indicates that extraordinary progress has been observed, particularly in non-oil growth, which has accelerated since 2021, averaging 4.8 percent in 2022.

And one of the main improvements has been driven by diversification. With new laws promoting entrepreneurship, safeguarding investors’ rights, and reducing business costs, there has been substantial growth in new investment deals and licenses, increasing by 95 percent and 267 percent, respectively, in 2022.

Industry veterans in the Middle East recognize the significant opportunity unfolding as, for the first time, global players are not only welcomed but also incentivized to establish their presence in Saudi Arabia, says Roland Daher, CEO of AstroLabs. 

He believes that this bold move aligns with the pillars of Saudi Vision 2030, aiming to elevate innovation, leverage technology to meet growing demand, and introduce fresh global perspectives to business practices.

TECHNOLOGY AT THE FOREFRONT 

The Saudi government is making large technological investments, driven by its Vision 2030 plan and direct government spending. This move creates new opportunities for businesses and individuals but is also helping drive innovation and economic growth.

Daher says, “While we’ve been servicing the growing global interest in the Saudi tech market, expanding teams of all sizes from Europe, the US, and the region to successfully penetrate the Saudi market, the national drive has been crystallizing.”

The Kingdom’s honed focus on fintech has also been a significant catalyst for change. 

To achieve 70% non-cash transactions by 2030 and foster the growth of 525 fintech firms, Saudi Arabia is making substantial investments in technology to revolutionize traditional payment methods and advance its vision of becoming digital-first, adds Daher. 

Along with emerging technologies, the potential impact of AI on Saudi’s economy has been momentous. “AI could be used to automate tasks in a number of industries, such as manufacturing and logistics. This could lead to increased productivity and lower costs. AI could also be used to create new products and services, which could create new jobs and attract foreign investment,” he said. 

Private sector firms in Saudi Arabia are focusing on upskilling to meet the demands of the $40 billion technology market by 2021. Through company-wide innovation programs, they aim to upskill 40% of the local workforce in basic AI and data skills. This aligns with the changing perception of Saudi culture amid nearly 100% internet penetration and digital transformation.

As tech-enabled Saudi trailblazers seize the spotlight, the world focuses on the Kingdom’s ambitious and driven visions. Daher believes its people are instrumental in driving economic growth and fostering diversification. 

VISION 2030: BEYOND OIL

Since the launch of Saudi Vision 2030, there has been an increase in investments across strategic sectors. Investments span various industries, addressing specific economic requirements such as tourism, manufacturing, automotive, and climate-tech.

But, the most significant economic contributors that are at the forefront of driving Saudi Vision 2030 are tourism and construction. 

“Tourism in Saudi is booming,” says Daher. The ambitious plan is to attract 150 million annual tourists by 2030 and an $800 billion investment. By 2030, it’s expected to contribute 10% to the national GDP. This investment surge in tourism is also transforming other sectors in Saudi Arabia.

For example, construction firms are leading the way, creating infrastructure development aligned with the Kingdom’s culture. Meanwhile, the entertainment industry is booming, with theme parks and cultural events becoming integral to tourism.

Mega projects like NEOM, Qiddiya, ROSHN, and Red Sea Global, supported by the Public Investment Fund (PIF), signify the Kingdom’s strong commitment to the sector. 

Daher shares an example of ROSHN, backed by PIF, that aims to create 400,000 homes, 1,000 educational institutions, and over 700 mosques, fostering economic growth, job creation, and GDP diversification. “Grankraft, our expansion partner in Saudi Arabia, contributes to projects like the Sheybarah Hotel in the Red Sea Global initiative.”

Additional sectors, like the gaming industry, show promise in its early stages, with 81% of surveyed gamers and developers expressing high optimism. At the same time, the intersection of real estate and technology is propelling the rise of climate-tech, aligning with the Kingdom’s sustainable and net-zero goals.

Along with these sectors, one sector is particularly growing and also creating impact worldwide. 

Saudi Arabia’s energy sector fuels not just its own growth but also global innovation. International players recognize vast opportunities, partnering with Saudi counterparts for various projects. 

“Saudi Arabia has the potential to spearhead the energy transition in the Middle East and globally, especially hydrogen production,” says Daher. 

NEOM’s green hydrogen plant, a part of the Saudi Green Initiative, propels Saudi Arabia towards ambitious energy goals. The $500-billion megacity spanning 10,000 sq. miles, 33 times larger than New York City, will be entirely powered by clean energy. The $8.4 billion plant shows Saudi’s global impact on energy transition and hydrogen production.

Saudi Arabia’s National Hydrogen Strategy is also committed to clean energy, aiming to produce 4 million tonnes of clean hydrogen annually. 

“A noteworthy contributor in this realm is Yellow Door Energy, one of our expansion partners in Saudi Arabia, offering solar leasing solutions that enable businesses to trim electricity costs and diminish carbon emissions, aligning with the Saudi Green Initiative, part of Saudi Vision 2030, and the Kingdom’s commitment to Net Zero by 2060,” says Daher. 

Lastly, the automotive industry attracts foreign capital, stimulates economic growth, and generates employment. 

The government is investing in developing new automotive technologies, such as electric vehicles and self-driving cars, and building new manufacturing facilities.

Numerous interactions between Saudi government entities and international organizations provide a fertile ground for multinational companies to tap into emerging opportunities, promoting further international collaboration.

The Saudi government’s emphasis on sustainability and innovation in the automotive industry positions it to stay ahead of market challenges. This includes creating a regulatory framework, addressing safety standards, ensuring emissions compliance, managing consumer protections, and establishing import and export regulations.

The Saudi electric vehicle (EV) landscape is rapidly evolving. Ceer, Saudi’s first EV brand, aims to attract over $150 million in foreign direct investment, create 30,000 jobs, and contribute $8 billion to Saudi’s GDP by 2034. Lucid Group, an American luxury EV producer, inaugurated the Kingdom’s first car manufacturing hub, with the Public Investment Fund holding a majority stake and an ambitious goal to produce 155,000 cars annually. Human Horizons has also joined the Saudi EV race this year.

THE FUTURE? ALL GREEN

Saudi has a massive opportunity at hand – it has a unique opportunity to build from scratch and establish a sustainable infrastructure, setting a global precedent for green, long-term strategies, believes Daher.

“The influx of sustainable and climate-conscious companies into mega-projects indicates that Saudi Arabia is perceived as a global testbed for innovation in construction, supported by substantial investments and a strong commitment to fostering innovation and creativity.”

These projects draw on climate technology and offer a chance to embrace sustainability in the construction industry. The combination of starting from scratch, significant investment, and an open mindset toward innovation positions Saudi Arabia as a frontrunner in the global shift towards environmentally friendly mega-projects.

Daher emphasizes that we are witnessing a historic moment in Saudi Arabia’s rapid transformation, observing its culture of evolution and innovation shine. The pace of change is unprecedented, and it feels like Saudi Arabia is on an unstoppable growth journey, buzzing with innovation and cultural evolution.

“It’s all really impressive – for us at AstroLabs, being at the forefront of this opportunity is exhilarating. Our mission aligns with the Kingdom’s future, and we’re thrilled about the journey ahead.”