Stock - Saudi economy / Riyadh skyline
The skyline in Riyadh. Most of the $19.3 billion foreign investment in 2021 has come from Saudi Aramco selling part of its pipeline unit. Image Credit: Bloomberg

Saudi Arabia is confident it can attract enough large-scale investment to make significant strides in diversifying the economy of the world’s largest oil exporter, according to a top official.

Authorities believe they have “so many enablers that can attract a lot of partners”, said the Saudi minister of economy and planning, Faisal Alibrahim, citing the kingdom’s access to natural resources, regulatory changes, and its mostly young population.

“We have the right kind of incentive structures and governance and processes in order to attract the right kind of investors for the right kind of returns for them as partners,” Alibrahim said in an interview on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland.

Hitting targets for attracting foreign direct investment as part of Crown Prince Mohammed bin Salman’s plans to overhaul the Saudi economy has been a challenge. That plan envisages lifting foreign investment to 5.7 per cent of economic output.

Yet most of the $19.3 billion foreign investment in 2021 - the most since 2010 - came from state oil company Saudi Aramco selling part of its pipeline unit, rather than going into new industries.

The Saudi government has made more than 700 regulatory changes as it seeks to attract investors, said Alibrahim. “We’re very serious about our diversification efforts,” he said. “We’re open and we’re talking to all partners who’re interested in the Saudi story.”

Saudi Arabia saw the strongest increase in employment in almost five years as business conditions in its non-oil economy - the engine of job creation for the kingdom - improved at a slightly slower pace at the end of last year following a surge.

“We still want to create more jobs and we want to even reach higher levels,” said Alibrahim. He doesn’t see higher interest rates impacting the Saudi private sector.