| FIVE SECTORS TO DRIVE SAUDI’S ECONOMIC GROWTH IN 2021 |
Saudi Arabia’s economy is set to accelerate with a number of projects in key sectors, which will help drive growth.
OIL, PETCHEMS SECTOR
Saudi Arabia surprised markets by unilaterally deciding to cut its production by one million barrels per day in February and March, which is widely expected to trigger a price surge in crude oil prices.
Despite the temporary cut, the kingdom is expected to maintain its investment in crude oil, natural gas and petrochemicalprojects in 2021 and beyond.
Saudi Aramco, the country’s state-owned oil company, also discovered four new oil and gas fields in the kingdom late last year, according to the Ministry of Energy. It included Arab extra light crude oil at the Tuwaiq Mountain Formation, which is a relatively new blend for Saudi Arabia.
Near the end of 2020, Aramco and Baker Hughes said they will start construction on a joint venture focused on non-metallic products for multiple applications in the energy sector.
“The JV aligns with Aramco’s strategy to seek new opportunities in oil-based products, which not only offer performance benefits but also aims to reduce carbon emissions,” according to the Saudi Press Agency. “It also supports Saudi Arabia’s efforts to expand its commercial ecosystem and promote domestic investment. The new facility will not only create jobs, but it will also help foster growth of an emerging and innovative sector in alignment with Saudi Arabia’s Vision 2030.”
INDUSTRY
The kingdom’s focus on heavy and light industry will also receive a big boost this year as private sector investment starts streaming into the sector.
The Royal Commission for Jubail and Yanbu (RCJY) signed an investment agreement between Jubail and Yanbu Industrial Estates Services Company and China’s Xinguang Industrial Company, to establish and operate a LED factory in Jubail Industrial City. The factory is expected to provide 267 direct job opportunities with a total investment of SAR 3.383 billion.
Another memorandum of understanding between Saudi Silk Road Industrial Services and Xinguang Industrial Company in Jubail Industrial City was for new materials and transformative industries between China and Saudi Arabia, for a total investment of SAR 3.75 billion.
HEALTH
The kingdom’s health sector will also gain more importance, especially in light of the coronavirus, which remains a global risk.
While the country’s healthcare infrastructure admirably dealt with the virus, the authorities are keen to build out the medical services infrastructure. The 2021 budget envisions the development of four new hospitals and an oasis centres for the elderly.
“The budget for healthcare and social development in 2021 is set to increase by 4.6% to SAR 175 billion, from SAR 167 billion budgeted in 2020,” according to management consultancy KPMG. “Efforts to separate the payor, provider and regulatory functions, and the implementation of the Model of Care and Accountable Care Organizations in the decentralised healthcare clusters will continue to dominate the healthcare agenda. Finally, it is expected that PPPs will accelerate in the coming years to ease the pressure on infrastructure spending.”
INFRASTRUCTURE AND CONSTRUCTION
The launch in January of The Line project in the USD 500 billion NEOM Smart City development marks a new chapter in the creation of innovative communities in the kingdom.
The project will be powered completely by renewable energy and will serve as a blueprint for sustainable living.
The Line is a “city of a million residents with a length of 170 kilometres that preserves 95% of nature within NEOM, with zero cars, zero streets and zero carbon emissions,” Mohammed bin Salman, crown prince and chairman of the NEOM Company board of directors, announced.
The project will create 380,000 jobs of the future and contribute SAR 180 billion to the country’s GDP by 2030, according to NEOM.
Other mega projects are also under way in the kingdom.
Last year saw the completion of the third expansion of the Grand Mosque and Mataf sites, according to the Budget 2021 document. The Grand Mosque expansion is 80% complete, while Mataf is 65% complete. The projects will remain a key priority as the kingdom aims to boost religious tourism once the COVID-19 threat recedes.
A number of Quality of Life Programs, which is part of the overarching Saudi Vision 2030 initiative, will get under way this year. The kingdom has ambitious plans to develop more than 149 art galleries, 27 electronic games facility, 16 family entertainment centres, theme and water parks, 11 museums, 11 public libraries, 45 cinemas, more than 44 public parks, 18 theatres, and an opera house.
Other projects that are already under way include the USD 4 billion Red Sea Touristic Development, both of which have started to take shape.
COMMUNICATIONS
Investment in information, communications and technology (ICT) will take even more importance, as many businesses accelerated remote working, and beefed up their digital presence and cybersecurity protocols.
“Saudi Arabia telecom ICT infrastructure market was valued USD 1510.3 million in 2019 and is forecast to grow at 5.74% until 2025 to reach USD 1879.35 million in the next five years,” according to ReporterLink.“Growing popularity of smart devices coupled with increasing broadband and mobile penetration are driving the telecom ICT infrastructure market of Saudi Arabia.”
The kingdom also outlined a digital economy policy roadmap in December aimed at encouraging investment, accelerating local technical leadership and attracting international partnerships based on transfer of expertise and co-operation in the field of innovation and technical and digital transformation.
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