Saudi minister visits Austria to bolster economic ties
Updated 05 October 2023
ARAB NEWS
RIYADH: Saudi Arabia’s trade relations with Austria are poised for growth after the Kingdom’s minister of Economy and Planning held high-level meetings during his visit to the European country.
Faisal bin Fadel Al-Ibrahim, who visited Vienna to participate in a roundtable discussion, held talks with the Austrian Industries Federation, a prominent representative of the nation’s manufacturing sector.
The association plays a crucial role in Austria’s economic landscape, with its members accounting for over 80 percent of the country’s assembly workers, as reported by the Saudi Press Agency.
The minister emphasized the importance of fostering collaboration between the two countries across various sectors, including trade and investment and enhancing partnerships with the private sector to serve common interests and promote mutual benefits.
Amid enhancing the economic ties between the Kingdom and other European countries, Al-Ibrahim also led the delegation at the sixth session of the Saudi-Portuguese Joint Committee to strengthen relations between regions.
The meeting reviewed investment opportunities between Saudi Arabia and Portugal and explored avenues for further partnership.
On the sidelines of the event, a new agreement was inked between the Kingdom’s General Authority of Civil Aviation and the Portuguese Ministry of Infrastructure.
The contract plans to establish aviation services that provide the highest levels of safety and security, improve trade interaction, and boost economic growth between the two countries.
According to SPA, the deal is one of several contracts signed during Al-Ibrahim’s visit to Lisbon. These agreements aim to boost commercial ties and increase collaboration between Riyadh and Lisbon.
In September, Saudi Arabia boosted business ties with Slovenia as the Kingdom looks to establish trade links amid its economic diversification drive.
The minister supervised the signing of a memorandum of understanding during a visit to the country to create a specialized business council between the two nations.
These trips align with Vision 2030 objectives and reflect the Kingdom’s commitment to fostering global connections and enriching international ties.
In February, Al-Ibrahim held talks with the French Minister of Economy, Finance and Industrial and Digital Sovereignty, Bruno Le Maire, with the pair discussing boosting economic relations, investment opportunities and topics of common interest.
ACWA Power restructures debt and ownership in Turkish affiliate
Updated 10 sec ago
Arab News
RIYADH: Saudi utility giant ACWA Power has restructured debt and ownership in its Turkish affiliate, converting outstanding loans into equity following an agreement with major lenders and minority shareholders.
ACWA Guc, which operates the 950-megawatt combined cycle gas turbine power plant in Kirikkale, Turkiye, is partially and indirectly owned by ACWA Power.
The deal involves lenders converting their loans into shares of ACWA Guc based on specific shareholding agreements and conversion terms, according to a statement on the Saudi Stock Exchange.
To facilitate the transition, a wholly owned ACWA Power subsidiary will pay SR496.5 million ($132.2 million) to the lenders in installments over three years.
Qatar sees 36% rise in building permits issued in July
Uptick Qatar’s broader economic objectives under the National Vision 2030
Residential permits dominated, industrial buildings led the non-residential category
Updated 34 min 33 sec ago
Arab News
RIYADH: Qatar’s construction sector is experiencing robust growth, with the nation documenting a 36 percent month-on-month rise in building permits in July.
This surge, highlighted in the latest data from the National Planning Council, reflects the increasing momentum in urban development, driven by public and private sector investments.
Data on building permits and completion certificates is of “particular importance” as it sheds light on the construction sector’s performance, which occupies a significant position in the national economy, the body said in the statement.
The uptick in construction activity underscores Qatar’s broader economic objectives under the National Vision 2030 — a strategic plan to transform the country into a diversified and sustainable economy.
The permits entailed various types of buildings, with new constructions comprising 36 percent of the total permits.
Residential permits dominated, particularly for villas, which made up 86 percent of new residential permits.
Industrial buildings led the non-residential category with 39 percent, followed by service infrastructure buildings and mosques.
In July, Al-Rayyan municipality led the issuance of building permits, accounting for 26 percent of the total permits, followed by Doha and Al-Da’ayen with 21 percent and 20 percent, respectively.
Saudi Arabia’s non-oil activities increase by 2.2% in June: GASTAT
Updated 11 August 2024
ARAB NEWS
RIYADH: Saudi Arabia's non-oil activities saw a 2.2 percent increase in June compared to the previous month, signaling ongoing growth in the Kingdom’s efforts to diversify its economy.
According to the General Authority for Statistics, the Kingdom’s Industrial Production Index fell by 1.6 percent in June, a decrease attributed to the oil output reductions agreed upon by OPEC.
The year-on-year comparison showed an even sharper decline, with the IPI dropping 4 percent from June 2023.
GASTAT defines the IPI as an economic indicator that measures changes in the volume of industrial output. It is calculated using data collected from industrial production surveys.
The authority noted an 11.3 percent decline in Saudi Arabia’s mining and quarrying activities in June compared to the same period in 2023.
This downturn is attributed to the Kingdom’s decision to reduce crude oil production as part of the OPEC+ agreement. In an effort to stabilize the global oil market, Saudi Arabia initially cut its oil output by 500,000 barrels per day in April 2023, with this reduction now extended through December 2024.
“Given the relative importance of the mining and quarrying activity, which accounted for 61.4 percent of the index weight, the trend of the mining and quarrying activity index dominates the overall trend of the industrial production index, followed by the manufacturing industry activity and electricity, gas, steam and air conditioning supply activities with a relative importance of 35 percent and 2.8 percent, respectively,” said GASTAT.
The report further indicated that the sub-index for electricity, gas, steam, and air conditioning supply activities increased by 10.2 percent in June compared to the same month of the previous year.
Additionally, water supply, sewerage, and waste management activities saw a year-on-year rise of 1.7 percent in June.
As Saudi Arabia continues to navigate its economic diversification goals under Vision 2030, the mixed performance in June’s industrial production data highlights the complexities of balancing non-oil sector growth with strategic oil production cuts.
While non-oil activities show promising growth, the overall industrial output remains sensitive to global oil market dynamics and production agreements.
Expat remittances from Saudi Arabia hits $3.2bn in June
This figure underscores the Kingdom’s significant role in global remittance flows and is a testament to the economic dynamics influencing the region
Updated 11 August 2024
Dayan Abou Tine
RIYADH: Expatriate remittances from Saudi Arabia reached $3.2 billion in June, reflecting an annual increase of 11.32 percent, according to the latest data from the Saudi Central Bank, also known as SAMA.
This figure underscores the Kingdom’s significant role in global remittance flows and is a testament to the economic dynamics influencing the region.
The latest SAMA bulletin indicated that remittances sent abroad by the Kingdom’s nationals decreased by 1 percent annually, totaling SR5.12 billion. This follows a peak in May, which was the highest value recorded in a year and a half.
Saudi Arabia has long been a magnet for expatriates seeking lucrative job opportunities. With its robust economic growth and high salary levels, the Kingdom offers an attractive destination for professionals from around the world.
The average executive salary in Saudi Arabia exceeds $100,000 annually, which is not only among the highest in the Middle East but also sets a global benchmark. This competitive compensation is a major draw for expatriates, contributing to the Kingdom’s substantial remittance outflows.
The growth in remittances can be attributed to several interrelated factors. The recovery of the job market in the wake of the COVID-19 pandemic has led to increased employment opportunities and, consequently, higher earnings for expatriates. Additionally, the Saudi government’s strategies to attract and retain foreign workers, including favorable employment policies and incentives, have further bolstered the expatriate workforce.
Technological advancements have also played a pivotal role in facilitating this growth. Innovations in financial technology and mobile banking have made sending money abroad faster, more secure, and less expensive. With the advent of digital payment systems and mobile apps, expatriates can now transfer funds with ease, contributing to the rising volume of remittances.
The demographic composition of Saudi Arabia provides further context for this surge in remittances. Non-Saudis represent 41.6 percent of the Kingdom’s population, amounting to approximately 13.4 million individuals. This diverse expatriate community includes significant numbers from countries such as Bangladesh, India, Pakistan, Yemen, and Egypt. Other countries contributing to the expatriate population include Sudan, the Philippines, Syria, Nepal and Jordan,
The high net migration rate, averaging 79 individuals per day, reflects the Kingdom's strong economic appeal and its role as a hub for international labor.
Saudi Arabia and the UAE are key players in the global remittance landscape. In 2022, the combined remittance outflows from these two countries totaled around $79 billion. Saudi Arabia alone accounted for $39.3 billion, highlighting its significant impact on the economies of remittance-receiving countries. For instance, Pakistan and Bangladesh, two of the primary recipients of Saudi remittances, benefit immensely from these financial inflows, which support households and drive economic development.
In Pakistan, Saudi Arabia remains the largest source of remittance inflows. From July 2022 to March 2023, the Kingdom contributed 50 percent of the total remittances to the country. This is a continuation of a longstanding trend, as Saudi Arabia has historically been a major destination for Pakistani workers. In 2023, nearly 427,000 workers were employed in Saudi Arabia, reflecting the Kingdom’s ongoing role as a vital employment hub for expatriates from the South Asian country.
Similarly, Bangladesh has been a significant beneficiary of remittances from Saudi Arabia. The financial support from Bangladeshi expatriates contributes to improved living standards and economic stability in their home country. Remittance-receiving households in Bangladesh use these funds for essential needs such as food, education, and healthcare, as well as for investments in land and modern farming techniques, thereby fostering economic development.
Globally, the remittance market has shown resilience despite economic uncertainties. During the pandemic, while there were initial fears of a downturn, remittances remained relatively stable. India, the top recipient of global remittances, experienced only a minor decline during the pandemic and saw a rebound in subsequent years.
The country was expected to face a significant decline of 23 percent due to economic slowdowns and falling oil prices in host countries. However, it defied these expectations, maintaining its position as the top recipient, accounting for 12 percent of global remittances, with only a 0.2 percent decline in 2020 and an 8 percent growth in 2021.
The resilience of remittances highlights their critical role in supporting economies and households across low- and middle-income countries.
The broader global trend toward digital and mobile remittances is also noteworthy. According to a February 2024 study by IBS Intelligence, the global digital cross-border transfers market was valued at $148 billion at the start of the year. This market is projected to grow at a compound annual growth rate of 12.58 percent, reaching approximately $340 billion by 2030. This growth is driven by increased mobile phone usage, online shopping, and the demand for quick, secure, and convenient money transfer services.
In summary, the increase in expatriate funds transfer from Saudi Arabia highlights the Kingdom’s pivotal role in the global remittance landscape. The combination of high salaries, favorable employment conditions, technological advancements, and a significant expatriate population contributes to the robust flow of funds to countries around the world. This trend not only reflects the economic dynamics of the region but also underscores the vital support expatriates provide to their families and economies back home.
Saudi Arabia makes significant moves in semiconductor sector with strategic investments
Concentrated supply chain has prompted Saudi Arabia, under its Vision 2030 initiative, to heavily invest in developing local semiconductor manufacturing capabilities
Updated 11 August 2024
MIGUEL HADCHITY
RIYADH: Saudi Arabia is rapidly emerging as a key player in the global semiconductor industry, driven by ambitious initiatives aimed at establishing a strong foothold in this crucial sector.
Semiconductors, which are essential components for powering AI software, electric vehicles, smartphones, and various advanced technologies, have created intense competition among nations and tech giants. Currently, Taiwan leads with 46 percent of global semiconductor foundry capacity, followed by China, South Korea, the US, and Japan.
This concentrated supply chain has prompted Saudi Arabia, under its Vision 2030 initiative, to heavily invest in developing local semiconductor manufacturing capabilities. The goal is to reduce dependency and enhance economic diversification.
Frederic Ozeir, partner and head of automotive and manufacturing industries for India, Middle East, Africa region at Oliver Wyman. Supplied
“Semiconductors are the foundation of modern technology and crucial for economic growth, representing a $500 billion industry today, projected to reach $1 trillion by 2030,” said Frederic Ozeir, partner and head of Automotive and Manufacturing Industries for India, Middle East, and Africa region at Oliver Wyman, in an interview with Arab News.
He added: “For a modern economy, they (semiconductors) are fundamental to nearly all electronics across key sectors like computing, telecom, energy, automotive, and healthcare.”
Ozeir explained that these tech components drive technological innovation, advancing AI, 5G, and autonomous vehicles with significant improvements in speed, efficiency, and capabilities.
Semiconductors also serve as strategic assets for national security, essential for defense systems and infrastructure, with applications ranging from communications equipment to advanced weaponry. Economically, they drive growth, employment, and global competitiveness, similar to oil in energy-dominant economies.
At the forefront of Saudi Arabia’s semiconductor push is the $100 billion Alat project, led by the Kingdom’s wealth fund. Alat aims to address rising domestic demand and position the nation as a global hub for semiconductor innovation and production.
In collaboration with King Abdulaziz City for Science and Technology, Alat is focused on developing local talent and infrastructure necessary for semiconductor design and manufacturing.
“The semiconductor industry represents a transformative opportunity for Saudi Arabia's industrial sector,” emphasized Alat CEO Amit Midha. “Our partnership with KACST is pivotal in advancing our capabilities across key semiconductor technology segments, including power, perception, and processing.”
Saudi Arabia’s semiconductor ambitions extend beyond economic diversification to emphasize a strategic imperative for enhancing national sovereignty and technological independence.
To this end, the Kingdom has launched a billion-riyal investment fund dedicated to semiconductor companies and established the National Semiconductor Hub. At least 50 semiconductor design companies will be established in Saudi Arabia by 2030, supported by a deep tech venture capital fund exceeding SR1 billion ($266 million) as part of a new tech hub.
These initiatives are complemented by efforts to attract global expertise through targeted residency programs aimed at accelerating knowledge transfer and capacity building.
“Saudi Arabia has inherent competitive advantages for building a successful semiconductor industry,” Ozeir noted. “The country also offers competitive utilities and infrastructure, providing reliable energy, clean water, and extensive land. Political stability and government support are also key, with a stable regulatory environment that includes direct incentives and efficient processes,” he emphasized.
Ozeir elaborated that to develop this sector, the nation needs to create a suitable enabling environment by addressing the need for a specialized workforce, including process engineers, material scientists, and precision technicians. “Additionally, the country must develop its industry ecosystem and ensure access to international markets, as local demand for semiconductors is still nascent,” he said.
Talat Hafiz, Saudi-based Economist. Supplied
Talat Zaki Hafiz, a Saudi economist, highlighted the broader economic benefits, stating: “The semiconductor industry will contribute significantly to both the Kingdom’s economy and the industrial sector in general, especially as Saudi Arabia is engaging and promoting several industries that require significant and sizable amounts of semiconductors.”
For instance, Saudi Arabia is advancing into high-tech industries such as electric cars, helicopters, drones, and advanced ships, which require substantial amounts of semiconductors. This shift will drive significant demand for semiconductors, aligning with Vision 2030’s goals of economic diversification and industrial advancement, according to Hafiz.
The urgency of Saudi Arabia’s semiconductor push is underscored by global supply chain disruptions, which have exposed vulnerabilities in dependent economies. By developing a robust semiconductor ecosystem, Saudi Arabia aims not only to secure its supply chain but also to emerge as a leading exporter of high-tech components in the global market.
“The collaboration with KACST represents a cornerstone in Saudi Arabia’s journey towards semiconductor leadership,” said Muneer bin Mahmoud Al-Dosouqi, president of KACST. “It underscores our commitment to fostering a sustainable industrial ecosystem based on advanced technologies and clean energy sources,” he added.
Ozeir outlined the strategic approach for the coming years: “Saudi Arabia should adopt an integrated, cluster-based approach to develop its semiconductor industry. Initially, this involves front-end manufacturing, backward integration into wafer production and design, and then expanding capacity to forward-integrate into leading-edge fabrication and back-end manufacturing in the medium term.”
Oliver Wyman’s partner noted that the Kingdom could also implement supportive policies similar to leading semiconductor nations, combining direct grants for FDI (foreign direct investments), low-interest loans, investment tax credits, and sovereign funds that boost international investments.
“Specialized visa schemes, financial benefits for foreign manpower with expertise, and elite university programs in semiconductor-related fields will be essential to drive this development,” he added.
Saudi Arabia’s proactive approach in the semiconductor sector reflects a strategic vision aimed at enhancing its global competitiveness.
“Being the largest economy in the Middle East and the fastest-growing economy in the Arab world and internationally, the Kingdom can easily succeed in becoming a competitive player in the global semiconductor market,” Hafiz said.
He added: “It possesses the resources needed for manufacturing semiconductors that can help and support its efforts to play a competitive role and obtain leadership in the global semiconductors market and industry.”
Despite hosting the world’s largest reserves of oil and emerging as a global energy superpower, Saudi Arabia has been very active in pursuing and building capacities in clean energy and reducing the carbon impact on both humanity and the environment.
Hafiz highlighted that the Kingdom is undertaking various actions, such as implementing the Circular Carbon Economy and the Saudi Green Initiative, to achieve its goal of zero neutrality by 2060. He expressed confidence in Saudi Arabia’s capability and eventual success in integrating sustainable practices and clean energy sources into its semiconductor manufacturing processes.
As global demand for high-performance chips continues to surge, the Kingdom’s proactive approach underscores its determination to carve out a prominent place in the global semiconductor landscape. “Several new national initiatives were announced in the Semiconductor Future Forum, confirming the Kingdom’s desire to move forward to develop and localize this industry,” Hafiz shared.
One of these initiatives is the National Capabilities Center for Semiconductors, which aims to “develop and localize the electronic chip industry in the Kingdom,” according to the economist.
In conclusion, Saudi Arabia’s strategic investments and partnerships in the semiconductor industry reflect a bold vision aimed at securing its economic future and asserting its technological prowess on the global stage. As the Kingdom continues to advance its semiconductor capabilities, it stands poised to play a significant role in driving innovation and shaping the next generation of high-tech industries worldwide.
Hafiz expressed his optimism for the future: “I believe that the Kingdom has a bright future in the semiconductor industry over the next decade, simply because it has dedicated its efforts to boost its capabilities in developing such an industry in the Kingdom through building local talents and relying on its longstanding expertise in several industries, especially in high-tech related industries.”
