Saudi Arabia falls back from grace with foreign investments
2 Min Read
Forbes reported on the declining foreign investment into Saudi Arabia after the kingdom hit a record in the second quarter of 2021.
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Riyadh, Saudi Arabia
Foreign investments in Saudi Arabia have drastically dipped after skyrocketing into a new high earlier in the year.
The latest figures from the Saudi Central Bank (Sama), released this week, show that Foreign Direct Investment (FDI) into the kingdom was $1.75 billion in the third quarter of 2021. That constituted a drastic decline from the $13.8 billion in the second quarter, which was a record high for Saudi Arabia and had been boosted by a deal for the pipeline network of Saudi Aramco, Saudi Arabia's national energy company.
The latest figures are in line with Saudi's performance in late 2020 and early 2021, which could be attributed to the government struggling to attract investors, especially as Crown Prince Mohammed bin Salman is under fire for being involved in killing journalist Jamal Khashoggi and other human rights violations.
The lack of FDI is impeding MBS' plan to restructure the economy, which requires them in order to succeed.
Saudi's inward FDI collapsed in 2017 and, despite making up some lost ground, it is not near the level or amount required for the kingdom to fund its major projects, which include Neom, a "futuristic" city announced by bin Salman that year.
Saudi aimed in 2016 for an FDI of some $19 billion by 2020, when MBS launched his Vision 2030 economic strategy; however, inward FDI levels into KSA were only $5.4 billion that year.
Other than human rights issues and the murder of Khashoggi, the government crackdown on senior business executives and other figures in 2017, which was labeled anti-corruption efforts, as well as the COVID-19 pandemic, have adversely affected the inward FDI into the kingdom.
The government shook off all its failures and set a new FDI target of $100 billion for 2030, but everyone seems skeptical about how realistic of a target that is, especially after the 2020 failure when KSA only made a fraction of what it was supposed to.
