Ibrahim Al Omar, Governor, Saudi Arabian General Investment Authority: Interview

Interview: Ibrahim Al Omar

What is being done to boost investment?

IBRAHIM AL OMAR: We are taking a number of measures to attract and retain investment in non-oil sectors utilising our new Invest Saudi portal. Prior to setting up a business, investors are provided with intelligence reports and meetings with local stakeholders are facilitated. Particular support is given to financial institutions and businesses with government licences. Furthermore, significant efforts have been made to ensure that Saudi Arabia’s investment climate is attractive. Since the announcement of Vision 2030 we have cooperated with all branches of government on more than 400 reforms. For example, we have reduced the Customs clearance time from two weeks to 24 hours, and the number of documents required for imports and exports from 12 to two and from nine to three, respectively.

Furthermore, we have introduced an insolvency law to encourage investor participation, while our amendments to the companies law means the Kingdom now ranks seventh globally for protection of minority investors, according to the World Bank. In addition, we have established the Saudi Authority for Intellectual Property, the Saudi Centre for Commercial Arbitration and other specialised courts. We have also enabled the issuance of business visas within 24 hours.

How do you expect the Integrated Logistics Bonded Zone (ILBZ) to contribute to capital inflows?

AL OMAR: The ILBZ is a perfect example of how Saudi Arabia is developing unique value propositions for investors. Approximately one year prior to the announcement of the ILBZ we asked top global companies what an ideal logistics zone would look like. We asked them to help us design a regulatory framework that could outperform other special economic zones globally.

This process resulted in the creation of the ILBZ, which includes a vendor-managed inventory, forward-deployed centre and reverse logistics capabilities. The ILBZ allows for a full spectrum of activities, including warehouse storage, staging and testing, maintenance and repair work, light manufacturing and assembly, all without tax or duty charges. In addition, the ILBZ includes bonded corridors for parcel and bulk distribution to and from international markets.

To what extent can the opening of new sectors to full foreign ownership improve service provision?

AL OMAR: For the first time in Saudi Arabia we have opened the door to foreign investors in sectors that have long been restricted to them. Health care, education, retail, military industries and real estate brokerage are just some of the sectors that we have recently opened to 100% foreign ownership.

Saudi Arabia has the largest health care sector expenditure in the MENA region at $34bn. Over the next decade, the sector is expected to grow significantly at an annual rate of 5.5%. This expansion is driven by three main factors. First, the Saudi population is forecast to increase from 33.4m in 2019 to 39.7m in 2030. Second, our population is ageing, with the number of people aged above 50 growing from 4.6m to 12.5m over the same period. Lastly, we expect a 60% increase in the prevalence of chronic conditions. The current system is mostly dependent on the government as a health care provider, while supplies are imported from abroad. The private sector currently contributes only 24% of hospital beds and 54% of clinics in Saudi Arabia, while only 30% of pharmaceuticals and 2% of medical devices are supplied by locally based manufacturers.

The education sector presents a similar picture. The Kingdom has the largest number of students in the GCC, and this is expected to grow from 7.4m to 10.5m by 2030. There is a lot of room for private sector growth, which currently stands at only 12.6% of the $37.2bn industry. These figures for the health care and education sectors underpin the opportunities that we are presenting to investors. We want them to help us meet growing demand through public-private partnerships.