Saudi Arabia and the modernization have now been the trending topics for more than a year. Saudi’s Crown Prince Mohammad bin Salman, may have portrayed himself as a modernizer who wants to promote equality in the society, but the efforts look to go in vain.
Already hit hard by oil-price collapse, the kingdom is now seeing a drastic fall in its foreign direct investments. The Inward investments into Kingdom is becoming a big issue. According to a report released by UN Conference on Trade and Development (UNCTAD), published last month, foreign direct investment amounted to just $1.4 billion in 2017 falling drastically from $7.5 billion in an years’ time.
The fall meant that the huge economy of Saudi Arabia was outranked by the neighboring allies like the Oman and Jordan who attracted an inward FDI worth $1.9 billion and 1.7 billion respectively. The present situation of Saudi Arabia does not reflect on its economic diversification plans, which state to lessen the reliance on oil.
While the Saudi Economy has been losing big numbers, even after speaking so widely about the changes, its ally Qatar who has faced the diplomatic ties with Egypt, Bahrain, Saudi Arabia and the UAE continued to attract FDI. The country’s number increased from $774 in 2016 million to $986 million in 2017.
The report also highlights how UNCTAD called for major fall major disinvestment in Saudi Arabia. As an example it pointed out the UK/Dutch Shell group, which sold its 50% stake in Sadaf petrochemicals venture to its partner Saudi Basic Industries Corporation for $820 in August.
Uncertainty factors looming over Saudi’s diversification have also triggered a repulsive action, further hollowing the roots of the economy. As of April more than 8, 00,000 expats had left the country, creating an alarming situation in the Kingdom’s private sector.
However, not only the present scenario, the report draws a comparison to FDI since the era of global financial crisis in 2008/09, and the similarity in pattern of fall for Saudi Arabia. The last year’s performance is absolutely worse than any other economy, which promises to do so much.
Therefore, Mohammad bin Salman needs to draw his attention towards the issue and invest his money in the right projects. This would not only channelize the funds in the right direction, but would also lend Saudi Arabia the balance to recover from its deteriorating FDI situation.