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Saudi Arabia is the biggest ICT market in the Middle East, with annual sector spending expected to reach about SR140bn ($37.3bn) by 2017. At a time of shrinking oil revenues, the government has identified ICT as a key driver of smart, cost-effective solutions for government and commerce alike, and as a major pillar of the Kingdom’s long-term development strategy, Vision 2030. However, there are also significant challenges around data security, as well as the need to nurture the human capital required to serve the Kingdom’s rapidly developing digital economy. This chapter contains interviews with Ahmed Farroukh, CEO, Mobily; and Khalid Balkheyour, President and CEO, Arabsat.

Saudi Arabia has long been a major investor in its military, with defence outlays representing a significant portion of the national budget. Despite the drop in oil prices since mid-2014, which in the short term is having a noticeable impact on the government’s military spending, defence outlays are likely to continue to grow, with multi-billion-dollar contracts still being signed. While contracts with foreign military suppliers will remain a key part of the Saudi military composition, an increased emphasis has been placed on developing a domestic defence sector, with strategic partnerships and the funding of research facilities. There is currently a growing industry of domestic defence-related firms in Saudi Arabia, many of them tied to the aeronautics segment. This chapter contains an interview with Ghassan Al Shibl, Senior Advisor to the Board of Directors and Former CEO, Advanced Electronics Company.

In recent years an emphasis has been placed on growing the Kingdom’s non-oil private sector by bringing in manufacturing and other industries to diversify the economy. The National Transformation Programme has replaced the Kingdom’s 10th Development Plan and establishes the means by which the country will meet the objectives set out in Vision 2030, whose main goal is to diversify the economy away from oil. With value-added industry and mining set to play substantial roles, importance has been placed on projects that will utilise the Kingdom’s raw material wealth, including petrochemicals, metals and phosphates, and develop a full chain of upstream and downstream opportunities for both local and international firms.

With some analysts expecting Saudi Arabia’s population to expand by over 10m to reach 39.1m by 2030, alongside continued growth in the Kingdom’s energy-intensive industries, demand for electricity and desalinated water is set to rise considerably in the coming years. Estimates suggest that more than SR500bn ($133.3bn) will need to be invested in the power sector over the next 10 years to ensure that supply keeps pace with demand, while an ever-rising demand for water means that desalination facilities will need capital investments of SR65.4bn ($17.4bn) by 2020. Natural gas meanwhile is set to become the greatest contributor to the Kingdom’s energy mix, with a target of 70%. While the price of oil had rallied in late 2016, reaching $50 a barrel in October, its decline from $115 per barrel in June 2014 to below $30 in January 2016 threw the issue of subsidy reform into sharp relief, leading to various initiatives aimed at curbing energy demand and enhancing efficiency. This chapter contains an interview with Mohammed Abunayyan, Chairman, ACWA Power.

The drop in the price of oil since mid-2014 has had a significant impact on Saudi Arabia, which relies on the stuff for the vast bulk of state revenues – 73% by some estimates – and for around 40% of its GDP. While global demand remains high, the increasing supply of oil on the international market, much of it coming from Russia, US shale oil and Iran, has continued to push prices down. The price of crude in early 2016 was about 70% below its 2014 peak, having declined steadily for a year and a half, from $114 per barrel in June 2014 to $37.30 at the start of 2016. This dropped to a low of $28.50 per barrel in late January before recovering to around $50 as of July 2016. The resulting government budget cuts was one factor that led to discussion of an initial public offering of part of Saudi Aramco, the Kingdom’s state-owned energy giant and the world’s largest crude oil exporter.

Spurred by rapid population growth and mounting public and private investment, Jeddah – Saudi Arabia’s second-largest city – is on the rise. Since the early 1990s the population of its urban area has more than doubled, reaching 4.1m residents as of the end of 2015. While this growth has slowed somewhat over the past half decade, from a high of 3.4% in 2011 to 2.6% in 2015, rising economic uncertainty across much of the Gulf and wider Middle East has driven increased investment in Jeddah over the same period. Indeed, as of January 2016, more than 850 development projects worth a combined SR74bn ($19.7bn) were under way across the municipal region, including state-led initiatives aimed at upgrading and expanding transport infrastructure, power and sewage networks, and education provision. This chapter contains interviews with Mazen Batterjee, Vice-Chairman, Jeddah Chamber of Commerce and Industry; and Hussein S Al Amoudi, Chairman, Shamayel United Development Company.