Saudi Arabia's Ministry of Investment (MISA) said it granted record 466 foreign investor licenses in the fourth quarter of 2020, the highest on record since data compilation began in 2005. Amid exceptional circumstances during the year 2020 and the effects of the coronavirus pandemic, the Saudi economy maintained its resilience and proved its flexibility in facing crises, and began to recover gradually during the second half of the year, the ministry said. The figure represents a 52 percent rise compared to the previous quarter and a 60 percent increase over the same period in 2019. Also, December witnessed the highest number of licenses awarded at 189. The results indicate a continued rebound in Foreign Direct Investment (FDI) that began in June as the Kingdom moved to boost economic activity and relax some lockdown measures. Saudi Arabia's annual results also suggest growth across its investment environment may be returning to pre-COVID-19 levels with a total of 1,278 new foreign companies that obtained licenses in 2020, a 13 percent increase relative to 2019, and a 73 percent increase from the number seen in 2018. Industrial and manufacturing, logistics, retail, e-commerce, and ICT are among the leading industries that attracted FDI in Q4 2020, as non-oil sectors showed momentum recently. The announcement came as MISA released its Winter 2021 Investment Highlights report, which outlines the developments and pro-business reforms across the Saudi investment environment in Q4 2020. Reforms profiled include the Labor Reform Initiative (LRI), which ensures increased protection and mobility for foreign employees, and a new Chambers of Commerce regulation that allows foreign investors to become Board members of Saudi chambers. Eng. Khalid Al Falih, Minister of Investment of Saudi Arabia, said: "These figures indicate that the Saudi economy is maintaining resilience despite current challenging market conditions. It presents strong evidence that we can continue forward with determination and optimism." "The Crown Prince has launched several major economic and investment initiatives and projects, such as the Public Investment Fund Strategy, the Large Companies Investment Program, and other projects that support economic growth and sustainability. In addition, Saudi Arabia is launching its National Investment Strategy this year. As the world reopens, we are reiterating our commitment to providing investors with opportunities and support they need to identify and take advantage of emerging opportunities," Al-Falih added. "This quarter's results indicate that the growth of non-oil sectors is gaining momentum and Vision 2030 policies, such as digitization and infrastructure development, are having a positive, tangible impact. Investors remain confident in the long-term Saudi opportunity — demonstrated by the fact a diverse range of global markets, such as the United States, the United Kingdom, Egypt, and India and sectors are represented in these latest quarterly figures. Industry and manufacturing, alongside logistics, retail, e-commerce, and ICT, have also topped the list for the most attractive sectors for FDI for yet another quarter," the minister further said. Citing additional macro-economic indicators, which point to further signs of ongoing resilience, the report also revealed: FDI inflows into Saudi Arabia reached almost $1.9bn in Q4, with a growth of 80 percent compared to the same period in 2019, and indicated an increase of nearly 20 percent for the entire year of 2020 ($5.5bn). Investments in non-oil manufacturing facilities totaled $6.13bn in 2020, with Q4 seeing a 95 percent year-on-year increase compared to the same period in 2019. Real GDP recovery is gaining pace, with official data showing a 5.9 percent quarter-on-quarter growth in Q4. The report's findings correspond with trends indicated by recent UNCTAD data, which reported FDI into the Saudi economy would increase in 2020 despite a dramatic drop in global FDI. According to the trade agency, the Kingdom's policy interventions in investment promotion and economic diversification were a major factor in driving the upward growth trajectory. The report also details recent progress made across the ICT ecosystem, which plays a vital role in the Vision 2030 transformation. The Kingdom prioritizes digitization of its infrastructure, economy, society, and financial and government services. Led by the Ministry of Communications and Information Technology (MCIT), the ICT industry is expected to increase its GDP contribution to $13.3bn and grow 50 percent in capacity by 2023. Saudi Arabia has long been an early adaptor of new technology thanks to its young, digitally savvy population. According to data in the latest Investment Highlights, the average Saudi consumes 920MB of data daily, triple the global average, and internet usage now numbered 96 percent from just 2 percent two decades ago. The increasing demand for tech among Saudi consumers and businesses is opening up investment opportunities in a range of nascent sectors such as e-commerce and Industry 4.0, which are expected to witness a compound growth rate of 12 percent and 13 percent by 2030, respectively. Other digital industries gaining traction include cloud computing; global giants Alibaba Cloud and Google Cloud recently partnered with Saudi companies STC Group and Aramco to facilitate domestic cloud services investments. — SG
