Saudi Chase of $10 Billion FDI Goal Faltered Before Virus

Saudi Arabia missed its$10 billion target for foreign direct investment by more than half last year, as damage from the coronavirus pandemic and low oil prices now threatens to throw plans further off track.

According to areport by the United Nations Conference on Trade and Development, FDI inflows rose to $4.6 billion in 2019 from $4.2 billion a year earlier, but remained far behind levels seen prior to 2017.

Outward investments slowed significantly from 2018 but were still well above outflows of previous years, potentially due to wealthy Saudis looking for ways tomove money out of the country and state enterprises buying assets abroad.

Attracting more foreign investment is a key goal under Crown Prince Mohammed bin Salman’s “Vision 2030” plan to diversify the economy away from oil. Saudi Arabia’s inward investments increased mainly because of a few large mergers and acquisitions, including majoroil contracts, according to the UN agency known as UNCTAD.

“The new investment policy and a broader economic reform program under the Saudi Vision 2030 initiative are intended to improve the country’s investment environment and promote economic diversification,” it said in the report.

The kingdom’s former commerce and investment minister, Majid Al-Qasabi, last year said the government was actually planning to double its FDI target for 2020. The goal may now be in doubt as the economy heads for its worst contraction since 1999 andausterity measures hurt consumer spending.

Saudi Arabia continued an “encouraging pattern of growth” during the first quarter this year, said Ayedh Al-Otaibi, deputy for investment climate at the Ministry of Investment, “with strong month-by-month increases in the number of international companies setting up in the kingdom recorded in January and February.”

“However, as the economic effects of COVID-19 began to be felt in March, we found that growth began to slow,” he said in a statement.

(An earlier version corrected a reference to Majid Al-Qasabi.)

— With assistance by Vivian Nereim, and Matthew Martin

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