April 4, 2023
Saudi Arabia signed 100 agreements with international partners, and licensed more than 90 companies to open regional headquarters in the Kingdom.
Starting January 2024, Saudi Arabia will not contract with any foreign commercial establishment whose regional headquarters is not in the Kingdom. This decision came at the right time, and includes bodies, institutions, and funds affiliated with the government or any of its agencies.
This is good, but not enough. We need to preserve the reputation of our investment policies. On March 9, 2023, investors requested a refund of $42 billion from Silicon Valley Bank in the USA. The whole world watched how the Federal Deposit Insurance Corporation (FDIC) closed the bank within 24 hours to stop the bleeding of withdrawals.
In addition to the risk reduction factor, limiting Saudi contracts to international companies that have a regional center in the Kingdom is a positive decision. This will create thousands of jobs for citizens, transfer expertise, localize knowledge, and attract more investments to the Kingdom.
Nothing is 100% safe anymore; the loss of Silicon Valley Bank did not result only from investments in high-risk debts, but surprisingly by acquiring strong mortgage-backed securities and Treasury bills, which are among the safest around the world.
This is how Silicon Valley Bank topped the list of failed financial records. We, in Saudi Arabia, must screen foreign institutions who deal with the Saudi government and institutions.
It became clear that Silicon Valley investments were affected by a series of economic events, including supply chain bottlenecks, and soaring inflation rates. However, the demand for credit increased in Saudi Arabia, with relatively few returns, but more efficient and less risk.
As indicated at the Global Priority Summit in the United States this week, the International Monetary Fund expects the Saudi economy to grow by 7.5 percent, as the highest growth rate among developing countries. Also, Saudi investment funds managed $150 billion in assets in 2015, which has now grown to $650 billion, with a target of $1 trillion by the end of 2025. This is what I call “good news”.
Due to improving operational efficiencies, current Saudi investment total net income increased by more than 28 percent to reach 62.7 billion Saudi riyals. Saudi banks will continue the positive track in 2023 as the Saudi Central Bank extends the periods of support packages to avoid potential crises.
We want to succeed in attracting new and "safe" domestic and foreign investments to the Kingdom. We also want to develop economic relations with regional and global partners for a better future for Saudi Arabia and the region.
*Saudi writer
