Arab News
Arab News, Wed, Mar 12, 2025 | Ramadan 12, 1446
Saudi private sector powers $314bn investment boom, outpacing Vision 2030 target
Saudi Arabia:
Saudi Arabia’s gross fixed capital
formation rose to SR1.18 trillion ($313.68 billion) in 2024, marking a 5.3
percent annual increase, recent data showed.
A report from the Ministry of Investment
attributed this growth to rising non-government sector investments, which
expanded by 7.6 percent during the year.
The Kingdom’s GFCF has outperformed expectations,
with cumulative investments from 2021 to 2024 reaching SR4.11 trillion — 28
percent above the initial target of SR3.22 trillion for the period.
By 2030, the National Investment Strategy, a key
driver of Vision 2030, aims to push total annual GFCF to SR2 trillion,
contributing 30 percent to gross domestic product. The plan also targets SR1.7
trillion in domestic investments within GFCF, reinforcing Saudi Arabia’s
commitment to private sector expansion and sustainable economic growth.
GFCF, which measures the net increase in
physical assets within an economy, is a crucial component of GDP as it reflects
capital accumulation supporting future production capabilities and economic
growth.
In 2024, the private sector accounted for 88
percent of total GFCF, reaching SR1.03 trillion. Meanwhile, the government
sector, which made up 12 percent, saw an 8.3 percent decline to SR144.3 billion,
signaling a strategic shift toward private sector-led growth.
Foreign direct investment has also exceeded
projections, with total inflows from 2021 to the third quarter of 2024 reaching
SR391 billion, including SR104 billion from the Aramco deal, according to the
ministry. This surpasses the SR295 billion target for the period by 33 percent,
reflecting strong investor confidence and Saudi Arabia’s success in attracting
capital under Vision 2030.
The Kingdom has implemented a range of
pro-business reforms, including regulatory streamlining, tax incentives, and the
Regional Headquarters Program to attract multinational corporations.
Giga-projects like NEOM, the Red Sea, and Qiddiya, along with public-private
partnerships and sovereign investment initiatives, are also drawing investor
interest across sectors.
In a recent milestone, the Kingdom approved the
organization of the Saudi Investment Promotion Authority to enhance its
investment ecosystem and attract global capital. Endorsed during a Cabinet
meeting chaired by Crown Prince Mohammed bin Salman earlier in March, the
authority will promote investment opportunities domestically and internationally
while working closely with key stakeholders.
Investment Minister Khalid Al-Falih noted that the
initiative strengthens Saudi Arabia’s position as a premier investment hub,
leveraging its strategic location, investor-friendly policies, and world-class
infrastructure.