Investment as a concept is getting a whole new meaning in the Middle East and North Africa (MENA) region. Keeping in view the investment opportunities and the arising challenges in the region, Saudi Arabia’s Public Investment Fund (PIF) organized Future Investment Initiative (FII) in Riyadh (October 24 to 26).
The world’s most powerful investors, business leaders and public officials indulged in a wholesome dialogue over the outlook of investments in the region at the FII. They strategically explored the emerging role of state-owned funds in steering the new-age businesses through innovation, technology and ongoing corporate disruption.
Here are five takeaways from FII, Riyadh
Launch of NEOM
As part of its ongoing diversification drive, Saudi Arabia has announced the launch of NEOM – an independent economic zone. The $500 billion business and industrial zone will be wholly powered by renewable energy and will evolve as an example of innovative and high tech future. The 26,500 square-kilometer zone will extend up to Jordan and Egypt, and will include industries like food, energy and water, advanced manufacturing, biotechnology and entertainment. This mega-city will be also floated on financial markets along with Saudi oil giant Aramco.
Return to moderate Islam
Saudi Arabia’s crown prince Mohammed bin Salman has vowed to return the country to “moderate Islam” and transform it into an open society that empowers citizens and welcomes investors.
Prince Salman said, that extremist ideologies need to be “destroyed” in order to proceed with sweeping cultural and economic reforms that will put the country at par with other nations around the world. Along with the historic decision of letting its women behind the wheels, the Kingdom is currently undertaking the mammoth task of rapidly transforming its economy. During the FII, Prince Salman was quoted saying, “Saudi was not like this before 1979. All we are doing is going back to what we were: a moderate Islam that is open to all religions, the world, traditions and people.”
PIF, the Kingdom’s leading state-owned fund, is on track to becoming the world’s largest sovereign wealth fund. During the FII, Saudi Arabia announced, that it is targeting to increase the fund’s capital to 1.5 trillion riyals ($400 billion) by 2030. The PIF is also aiming to create 20,000 direct domestic jobs and nearly 256,000 construction jobs by 2020.
Sophia: an unparallel approach toward AI, robotics
One of the many historic announcements made during FII was the Sophia’s citizenship. The Kingdom has become the first country to grant a citizenship to an advanced lifelike humanoid robot named Sophia. This move is being seen as a major push toward Artificial Intelligence (AI) and robotics, which are expected to play a crucial role in the forthcoming major projects in the country especially in NEOM, the independent economic city which was announced during the same event. Reacting over the announcement, Sophia said, “Thank you the Kingdom of Saudi Arabia. I am honored and proud for this unique distinction. It is historic to be the first robot in the world to be recognized with citizenship.”
$100 billion investment vehicle
Saudi female banker Nahed Taher has set up a $100 billion joint investment vehicle in collaboration with the investment arm of a US pension fund to support Public Private Partnerships (PPPs), and finance other projects to speed up the kingdom’s privatization agenda. Nahed Taher, is the first female Saudi senior economist at National Commercial Bank and also the founder of Gulf One Investment Bank.
The joint venture between the fund and Seeds Consulting, is set to offer financing aids to large-scale projects across various industries including health care, water, renewable energy, oil and gas, petrochemicals and education. “It has been hard to finance projects in the past because it has been short term debt and very expensive, now it is the time to increase the long-term debt for profitable projects and create serious amount of jobs to compensate for the loss of employment, while restructuring, and creating new jobs for newcomers,” an English Daily quoted her saying.
The Mubadala’s aluminium move
Mubadala Investment Company, the Abu Dhabi government-owned strategic firm, announced its plan to take Emirates Global Aluminium (EGA), one of the largest aluminum companies in the world, through share float in 2018. Mubadala, with $127 billion in assets, is jointly owned by Mubadala Investment and Dubai government’s sovereign wealth fund Investment Corporation of Dubai. This move is being hailed as an interesting chapter in the company’s evolution as a global industrial champion.