Abdullah Ibrahim Alkhorayef, CEO, Alkhorayef Commercial Company

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On collaborating with the private sector to diversify Saudi Arabia’s economy

What are the prospects for greater private sector participation in the economy and the country’s broader economic diversification agenda?

ABDULLAH IBRAHIM ALKHORAYEF: As part of Vision 2030, there is a plan in place designed to increase the contribution of the private sector to GDP and diversify the economy away from hydrocarbons. The government has started analysing its relationship with the private sector and its understanding of the different business segments. Each ministry and government entity is involved in this process.

The government is also shifting towards a business mentality that replicates how a private company operates, focusing on financial sustainability, corporate governance, efficiency and productivity, among other priorities. This also applies to companies that fall under the umbrella of the Public Investment Fund, the Kingdom’s sovereign wealth fund.

Greater participation of the private sector in the economy poses certain challenges, as Saudi Arabia is becoming increasingly connected to the rest of the world. Therefore, any disruption to global business has a tangible impact on domestic performance. Nevertheless, Saudi Arabia’s private businesses have proven to be robust enough to withstand such challenges, and we remain confident that their role in the economic future of the Kingdom will continue to grow in the coming years. 

Where do you see the most significant investment opportunities for research and development and innovation (RDI)?

ALKHORAYEF: Saudi Arabia is rapidly advancing in its understanding of the benefits of investing in RDI, both in the public and private spheres. 

The local private sector sees the need to invest in RDI, although there is not always the financial capacity or capability to do so. In order to bridge the gap and encourage more private sector investment in this area, the government has created a co-investing programme, either with a state-owned entity or with a local university, which have traditionally tended to be more involved in such activities.

This benefits the local private sector as well as the academic community by promoting better communication and amplifying financing mechanisms for RDI. 

Opportunities for RDI investment exist in a wide range of segments, from artificial intelligence to robotics, autonomous systems, data analytics and machine learning. Specifically, within the financial sector we continue to see strong developments in the financial technology space, as well as crowdfunding opportunities, which will necessitate adjustments to the country’s regulatory framework. From an investment point of view, there is interest in the uberisation of services such as home maintenance, online tutoring or health care consultations. Against this backdrop, Saudi Arabia’s RDI future looks promising.

How would you describe the progress being made in Saudi Arabia’s localisation strategies, and what do you identify as the main challenges ahead?

ALKHORAYEF: Despite initial doubts or concerns among economic and business stakeholders, the country’s localisation plan is having a positive impact on our manufacturing capabilities and activities. The Made in Saudi brand is rapidly advancing in terms of quality and recognition, and international companies are showing interest in meeting the government’s localisation strategies, although much remains to be done to facilitate the process for international players. 

We must raise awareness of the impact of the localisation strategy throughout the population, not just in the business community, to make sure that everybody understands its value and future goals, particularly given the current momentum.

To what extent can local authorities enhance the resilience of the private sector against global economic challenges?

ALKHORAYEF: The private sector is responsible for improving resilience against global economic challenges and boosting international competitiveness. However, there are certain areas in which the local government can provide support, such as fees and taxation. We need more clarity on how companies are taxed and on the entity that is responsible for the assessment, collection, and regulation of taxes and zakat (religious charity). Today the system is unclear depending on whether you are a local company, a foreign investor or a 50-50 joint venture. This is especially important to address if we increase foreign direct investment. In turn, the local private sector can expect to see its overall competitiveness improve.

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