Saudi Arabia opens four new economic zones to boost investment

Saudi Arabia’s Crown Prince and Prime Minister Mohammad bin Salman has launched four new special economic zones (SEZs), as part of the kingdom’s broader strategy to attract more investment and further position the country as a global business hub.

The new zones, King Abdullah Economic City (KAEC), Jazan, Ras Al Khair and Cloud Computing located in King Abdulaziz City for Science and Technology, are strategically situated across Saudi Arabia.

KAEC will serve as an advanced manufacturing and logistics and Jazan is a premium platform for trade with fast-growing markets in Africa and Asia.

Similarly, Ras Al-Khair offers myriad opportunities across shipbuilding and repair, offshore drilling and maritime value chains while Cloud Computing is the ultimate will hub for emerging and disruptive technologies.

“With hugely attractive financial incentives, world-class infrastructure, business-friendly regulations and streamlined procedures for investors, there has never been a better time to be part of Saudi Arabia’s economic success story,” said Nabil Khoja, the Secretary-General of the Special Economic Cities and Zones Authority.

The economic zones are expected to accelerate growth, increase Saudi Arabia’s export competitiveness, attract talent and improve the country’s global links.

Following the direction of our wise leadership to promote investment through the establishment of four new Special Economic Zones, #ECZA will supervise the operation of the zones and offer all the necessary services in support of #SaudiVision2030 goals.​#UniqueGatewaysToGrowth pic.twitter.com/LSQNNshEBd

— هيئة المدن والمناطق الاقتصادية الخاصة (@ECZA_GOV) April 13, 2023

Saudi Arabia defines SEZs as areas that facilitate specific economic activities such as investment, trade and employment by providing competitive advantages and legislative frameworks that differ from the base economy.

The programme, which was first announced in October 2021 and supports Vision 2030, is expected to accelerate certain structural reforms and facilitate the ease of doing business across the country.

The incentives offered to companies operating from SEZs cover both fiscal and non-fiscal incentives including competitive corporate tax rates, duty-free imports of machinery and raw materials, 100 per cent foreign ownership and flexibility in employing foreign labour.

Saudi Arabia’s diversification drive

Meanwhile, Saudi Arabia has undergone a breakneck transformation over the years and Crown Prince Mohammad bin Salman wants to turn the kingdom into an investment powerhouse and a global hub for business and talent as part of the Vision 2030 economic blueprint.

The Gulf state opened its first integrated special-economic zone in Riyadh in October 2022, citing Apple among the first high-profile tenants.

The iPhone maker is expected to base its regional distribution centre there and may undertake activities ranging from assembly line and repair work to light manufacturing in the future.

The kingdom’s gross domestic product (GDP) expanded by 8.7 per cent in 2022, the highest among G20 countries, as the Gulf state recorded positive growth across all economic activities leading to its first budget surplus in almost a decade.

The GDP growth was attributed to a 32.7 per cent growth in crude oil and natural gas activities, a 14.2 per cent increase in government services activities, an 8.6 per cent growth in manufacturing activities except oil refining and restaurants and hotels activity which grew by 8.2 per cent in 2022.

Read: Saudi Arabia’s 2022 GDP grows 8.7 per cent, boosted by higher oil prices

S&P Global, Moody’s and Fitch Ratings revised upward Saudi Arabia’s sovereign ratings, citing significant reform momentum in recent years and the Gulf state’s economic diversification strategy to advance the development of the non-oil sector.

The country’s wealth fund Public Investment Fund (PIF) is central to the government’s economic reform initiatives. PIF unveiled three new initiatives aimed at supporting and augmenting growth in the Gulf state’s private sector in March.

Read: S&P Global, Moody’s raise Saudi Arabia rating on reform agenda