As the World Economic Forum in Davos comes to a close, here are some of the highlights from Saudi Arabia during the international conference.
A number of high-ranking officials from the Kingdom including Saudi ambassador to the US, Princess Reema Bandar Al Saud and Economy Minister Faisal Alibrahim participated in a number of panel discussions.
Talks highlighted topics including the Saudi mega-project NEOM, and how the country has reacted to a global economic crisis driven by the Russia-Ukraine war.
Saudi Arabia saw the signs of inflation in July 2021 and took action to reduce the impact, the positive signs of which are visible in the economy today, Finance Minister Mohammed al-Jadaan said on Wednesday.
“There is a lot of work being done to insulate the Saudi economy. This also helps the global economy,” the minister added.
Prince Faisal bin Farhan said on Tuesday that the current oil price stability in the market showed that Saudi Arabia was right to take its stance during last year’s disagreement with the US over the OPEC+ decision to reduce oil output targets.
“Energy security is absolutely key. And here what we feel in the Kingdom is that stability is absolutely the key to that energy security,” Farhan said.
OPEC+ – an alliance between the Organization of Petroleum Exporting Countries (OPEC) members and their allies – in October announced plans to cut oil production until the end of 2023 after weeks of lobbying by US officials against such a move.
The US accused Saudi Arabia of kowtowing to Moscow, which objects to a Western cap on the price of Russian oil in response to its invasion of Ukraine, although, the Saudi foreign ministry at the time stressed the “purely economic context” of the oil cut.
Despite the controversy, the decision was supported by many countries including the UAE.
Growth on non-oil activities
Alibrahim, told spectators on Thursday, the Kingdom’s non-oil and private sector activities are growing at the highest rate in over a decade.
Non-oil exports increased by 26.4 percent year-on-year in July 2022 to $7.1 billion, the Kingdom’s General Authority for Statistics reported in September.
“We will continue our plans to diversify the economy. We were very fortunate that we have seen results of Vision 2030 materialize over the last few years, especially in 2022, as Saudi becoming the global growth story,” he said.
Vision 2030 – which includes the development of NEOM and investments into the e-sports and gaming industry – aims to reduce Saudi Arabia’s income dependence on oil revenues.
Successful VAT implementation
Saudi Arabia is “virtually the only country” that was able to successfully raise VAT from five to fifteen percent amid the challenging economic conditions brought about by the COVID-19 pandemic, the Kingdom’s Minister of Economy and Planning said on Thursday.
The Gulf state was able to raise tax revenues without hampering the growth of the country’s economy, Alibrahim said during a panel at the World Economic Forum on Thursday.
“We look at simplifying tax revenues and utilizing them in a way that was never done before, but not at the expense of economic growth or economic development,” he said.
Saudi Arabia tripled VAT in July of 2020 near the height of global COVID-19 lockdowns that caused widespread supply chain disruption.
Innovation, technology exports
The Saudi mega-project NEOM’s advancements will play its part to transition the Kingdom from being known for oil and gas, into a country known for innovation and the export of technology, the Deputy CEO of NEOM Rayan Fayez said on Thursday.
“The idea is not only to build a big and impressive real estate development, but also a real economy behind it,” said Fayez.
NEOM, a planned smart city, will span 26,500-square-km and is set to run on 100 percent renewable energy and be car free.
The development will include TREOJENA skiing destination, luxury island Sindalah, thousands of hectares for agricultural land, and linear city the LINE within the area. OXAGON, a futuristic industrial city will also be part of the plans and could be the largest floating industrial complex in the world.
Saudi Arabia’s economy minister said on Wednesday the Kingdom would continue to tap into non-traditional sectors like entertainment and esports to create jobs, boost the quality of life, and lure talent.
Last year, for instance, Saudi Arabia announced plans to invest 142 billion riyals ($38 billion) in gaming companies through state-owned company Savvy Games Group.
Saudi Arabia is “doubling down” on talent in the country’s industrial metaverse, the Kingdom’s Communications Minister Abdullah Alswaha said during the WEF at Davos on Thursday.
The Kingdom is currently using the metaverse to help develop its futuristic city NEOM and in 2022 NEOM Tech & Digital Company subsidiary Tonomus which has invested $1 billion in products including a digital twin metaverse – a 3D virtual space where people involved in the project could see how it looks in the future.
“I’m a big advocate of the metaverse,” said AlSwaha at the panel, adding that it will be the next wave of technology adding value to industries.
Saudi Arabia’s Finance Minister Mohammed al-Jadaan highlighted the importance of regulating new technology to ensure financial systems across the globe remain stable.
“Obviously we will need space for innovators. But it will need to be regulated or it could put a risk on financial stability and societies,” al-Jadaan.
Saudi Arabia’s Ambassador to the US Princess Reema bint Bandar said the relationship of the two countries is “beyond critically necessary for the world” during a WEF panel.
“There is disagreement sometimes but there is also a strong partnership,” she said. “The partnership creates a more stable world.”
Yemen war, Israel-Palestinian conflict
In other mentions of foreign relations Saudi Arabia‘s Foreign Minister Prince Faisal said on Wednesday progress was being made towards ending the Yemen war, but more work was needed, including reinstating a truce and transitioning to a permanent ceasefire.
He said the eight-year conflict would only be resolved through a political settlement.
He urged Israel’s new government to engage seriously on resolving the Palestinian conflict.