There is an acceleration of investment interest into Gulf States from key Asian markets during Q4 2021 as noted by Sovereign AEI, a strategic partnership between Sovereign Corporate Services and AEI.
Throughout the COVID-19 pandemic, GCC trade with Asia proved to be more resilient than with the Gulf’s traditional partners, remaining at 27% of its total trade between 2019 and 2020. By the end of 2022, trade between the Middle East and Asia is expected to recover to 2019 levels, and should bilateral trade continue to grow at the current average rate, GCC trade with emerging Asia will climb to approximately US$480 billion by 2030, making emerging Asia the GCC’s biggest trading partner.
Specifically, Sovereign notes the accelerating interest around inward investment into Saudi Arabia, and the untapped potential of this market for all sectors including healthcare, industrial, manufacturing, logistics, shipping, and technology. The trend is supported by the economic recovery of both regions during 2021 and the ambitions of business leaders to capitalize on new market opportunities. The IMF’s latest World Economic Outlook, published in October 2021, expects the Middle East region to grow by 4.1 per cent in 2021, whereas emerging Asian economies are forecast to grow by 7.2% in 2021 (IMF, 2021).
The recent Future Investment Initiative Summit (FII 5th Anniversary), held in Riyadh in October 2021 underlined the Kingdom’s ambitions to become a regional powerhouse and a global catalyst for change, attracting the best of global talent and investments that will further the interests of humanity. The Kingdom’s anchor strategy, Vision 2030, provides businesses with a clear mandate for the development of the Kingdom, with a diversification message that opens the country to foreign investment and removes traditional barriers to entry.
To date, the Kingdom has greatly benefited from Chinese investment, which has risen sharply over the past decade, receiving US$30.6 billion between 2010 and 2020, representing a growth rate of around 21%. Investment has mainly focused on infrastructure and expanding the size of the Kingdom’s ports to encourage international trade and shipping as alternative sources of revenue. This has aligned well with China’s BRI vision to connect Asia with Europe and Africa via new infrastructure and economic corridors on land, and maritime trading hubs. Digitisation, e-governance and technological innovation, particularly fintech, have also been a source of Asian-Gulf engagement, representing an alluring market for Asian tech firms. For example, Saudi Arabia has become one of the most significant overseas markets for Huawei. Telecommunications firm Zain KSA has signed a deal with Huawei to use its 5G technology and, in January 2021, Huawei announced plans to establish a flagship store in Riyadh, the largest store outside China (Reuters, 2021).
Paul Arnold, Director, Sovereign AEI, notes: “We are seeing an unprecedented level of interest from clients and a surge of new deals from both Singapore and Hong Kong as markets emerge from COVID and business strategies return to a growth mindset. Saudi Arabia represents vast potential for Asian business, and with the right partner, growing a viable business venture in-Kingdom can be achieved. We are noticing interest from across different sectors, including logistics and infrastructure to tech and e-commerce, and we have the capabilities to help Asian firms shape the landscape of the Kingdom in the years to come. The potential is incredibly exciting as Saudi Arabia becomes an increasingly diversified and sophisticated commercial environment.”
Sovereign Corporate Services, with its partner, AEI has a unique track record in the Kingdom of Saudi Arabia, working with government and international businesses, connecting Saudi Arabia with the world. The team has a strong understanding of the nuances of the market, to help global businesses establish and operate a successful operation.
