Saudi Arabia’s Minister of Investment emphasizes the crucial role of the kingdom’s newly established special economic zones in shaping its current and future status as a prominent global investment hub.
According to Khalid Al Falih, who holds the positions of Minister of Investment and Chairman of the Economic Cities and Special Zones Authority (ECZA), these innovative zones will play a crucial role. They will serve as a catalyst for sustainable business expansion in Saudi Arabia. Additionally, they will enable the country to effectively navigate the changing global economy and geopolitical landscape.
“The zones are part of efforts to strengthen our standing as an investment hub and provide businesses with a launch pad for growth to new targeted markets,” The minister told the Saudi Special Economic Zones Investment Forum in Riyadh on Monday.
Khalid Al Falih states that the newly established special economic zones in Saudi Arabia will play a pivotal role in the kingdom’s economic transformation. The primary objectives of these zones are to enhance the non-oil sector, attract skilled talent, and deliver value for investors. In 2022, Saudi Arabia witnessed a remarkable growth of 31% in capital formation, surpassing one trillion Saudi riyals ($266.6B).
Since their launch last month, the special economic zones have already attracted $12.6B in investments from various sectors such as maritime, mining, manufacturing, logistics, and technology. An additional $31B in investments is currently in progress, as announced during the forum.
The primary objective of establishing these zones is twofold. Firstly, it aims to provide companies with both financial and non-financial incentives in order to attract greater foreign investment. Secondly, it aims to position Saudi Arabia as a global business hub. The special economic zones will specifically focus on key growth sectors, namely advanced manufacturing, cloud computing, medical technology, and the maritime industry.
The special economic zones in Saudi Arabia encompass several locations. These include King Abdullah Economic City, Jazan, Ras Al Khair, and Cloud Computing. During the forum, the authorities granted licenses to each of these zones as part of their official launch.
“Friend-shoring” in Economic Zones
Government officials at the forum emphasized the ongoing significance of economic zones on a global scale. This emphasis was particularly emphasized in light of the changing landscape in foreign direct investment (FDI) flows. As investors become more discerning, there is a growing trend known as “friend-shoring.” This trend prioritizes manufacturing and sourcing from countries that are regarded as allies.
Khalid Al Falih highlighted a crucial aspect during his discussion about special economic zones. He emphasized the significance of “soft incentives” alongside financial incentives and infrastructure in the present-day zones. These soft incentives involve implementing business-enabling regulations that can address supply chain bottlenecks effectively.
In October 2022, Saudi Arabia took a significant step towards enhancing its cargo capacity and strengthening supply chains. They accomplished this by opening the Special Integrated Logistics Zone at King Khalid International Airport in Riyadh.
The development of these special economic zones is a key component of Saudi Arabia’s broader economic transformation under Vision 2030. This initiative aims to reduce the country’s reliance on oil, unlock the potential of the private sector for driving growth, and implement comprehensive reforms to enhance business competitiveness.
The new special economic zones have been strategically designed for a specific purpose. That purpose is to accelerate the growth and development of key sectors within Saudi Arabia. These sectors range from medical technology to maritime industries, with the aim of attracting foreign investors and fostering economic progress.
