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“Diversification and globalization are the keys to the future” - Fujio Mitarai
Saudi Arabia has embarked on a journey to transform and diversify its oil driven economy. Saudi 2030 vision is in line with Prince Mohammad Bin Salman’s quest of transforming his Arabic Kingdom into a culturally rich and economically resilient state. The country is using its oil money to spread the soft power and change its global image from a violator of human rights to a sporting, tourism and business hub.
Illustration by Geostrata
One of the primary motives of the 2030 vision is to reduce the state’s dependence on oil cash which constitutes 85% of its revenue, and to increase the share of non-oil revenue to 50% by 2030 .
Keeping the agenda of net zero carbon emissions by 2060, the country is investing heavily in the tourism and sports industry.
This will also help the kingdom reduce its unemployment rates and improve women participation.
PUBLIC INVESTMENT FUND
To scale up the effort, the country has set up the Public Investment Fund(PIF) which handles assets worth $700 billion which have invested heavily in sports, particularly sports, infrastructure and technology. The sovereign fund is the catalyst for the Saudi Arabian economy and to achieve its goals of sustainability, promoting local businesses, developing future real estate projects etc. PIF is aiming to double its assets under management and become a global leader as a preferred investment institution.
INFRASTRUCTURE DEVELOPMENT
The Arab nation is looking forward to revolutionize the design and construction of real estate with projects like NEOM, ROSHN, AMAALA, THE RIG etc. These projects are not only going to be pioneers of new design and technology but also the frontiers of new societies and economics. They are built on the foundations of sustainability by adopting a circular economy and advanced technologies like robotics and IOTs to enhance human efficiency.
“A retooled economic model built on advanced technology, best-in-class efficiency, worker welfare and competency – in order to deliver livability and capital projects standards never before witnessed.”
Projects like AMAALA and THE RIG which are being built as ultra luxury and exciting tourist destinations in direct competition to the UAE. AMAALA has attracted over 25 ultra luxury resorts and hotels housing over 3000 rooms and an iconic Yacht Club. It is a new vacation spot for the richest of the world on the coasts of the Red Sea.
THE LINE, a project under NEOM being built at a cost $500 billion has captured headlines all over the world. It is a city being built in between two walls that are 500 meters above sea level and is 170 km in length. Designed as a future of urban living with no roads and cars and operating with 100% sustainable energy. The project is the brainchild of the Saudi Prince and a major part of MBS’s 2030 vision and to showcase himself as the most progressive and liberal leader in the kingdom’s history.
But the question remains, will the technology be able to catch up with THE LINE’s vision or is it just way too ahead of its time.
These investments in tourism are led by the PIF to increase the share of the sector in the economy along with creating employment opportunities for the country’s rapidly expanding and huge young population. Tourism investments also help the nation express its soft power by attracting foreign crowds and showcasing the serene destinations and infrastructure.
SPORTING INVESTMENTS
Another area where the country is investing the most is in the major sporting events. The sovereign fund has spent over 6 billion pounds in acquiring players and getting sports deals since 2021. These sports deals include major football icons like Cristiano Ronaldo, Neymar Jr, Karim Benzema etc. PIF has also taken over 75% stake in all 4 major clubs- Al Hilal, Al Nassr, Al Ittihad, and Al Ahli.
Saudi Arabia is using sports washing in order to diverge people from its human rights violations.
In 2021, PIF bought a 75% stake in the Premier League club NEWCASTLE UNITED. for 300 million pounds. Amidst this acquisition the country also bought the fans of the club who were previously concerned about the patriarchal rule in the kingdom, but are now favoring the nation for supporting the club who was at the bottom of its division and on the verge of demotion. The country has also explored bids to acquire the motorsport giant - Formula 1 from Liberty Media for over $20 billion dollars but the negotiations broke down during early stages.
PROGRESSIVE LEGISLATION
Apart from these quantitative investments, the Saudi Kingdom is also making small strides in qualitative investments. Following the 2030 vision the country has also progressed in bringing gender equity by allowing women to drive, enter stadiums and to seek sports in schools. The country has finally acknowledged women’s contribution to economic development and the female workforce contribution has increased from 16% in 2015 to 33% in 2021. The country is also curbing the powers of religious policing in an attempt to become a more progressive and welcoming society.
CONCLUSION
“Climate action will enhance competitiveness, spark innovation, and create millions of high-quality jobs. Young people, both in the Kingdom and the world, are demanding a cleaner, greener and more inclusive future, and we owe it to them to deliver on this.”
Saudi Kingdom is entering a new era and is keeping sustainability at its core by making investments in green energy and carbon capturing to make the nation carbon neutral by 2060.
Saudi is aiming to generate 50% of the energy mix through renewable sources like solar plants and wind farms.
As the country moves forward with its 2030 vision with diversification , globalization and liberalization of its economy by disinvesting its public sectors and promoting private sectors, the challenge remains is till how long can the country’s deep pockets can handle these overly-ambitious projects and investments whose returns might not be seen till next decade.
VISHUDH JAIN
TEAM GEOSTRATA