Saudi Arabia invests in startups to achieve Vision 2030 objective

A new age is dawning in the Kingdom as KSA startups work on developing AI solutions. (AFP)
Updated 23 October 2018
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Saudi Arabia invests in startups to achieve Vision 2030 objective

  • Young entrepreneurs are expected to play a key role as the Saudi Arabian General Investment Authority (SAGIA) tries to boost foreign direct investment
  • Saudi Arabia is aiming to be in the top 20 countries measured by ease of doing business by 2020

DUBAI: The Kingdom has been investing heavily in startups as Saudi Arabia focuses on growing its economy to achieve its Vision 2030 objective of moving away from dependency on oil.
Young entrepreneurs are expected to play a key role as the Saudi Arabian General Investment Authority (SAGIA) tries to boost foreign direct investment.
“Value impact is very important,” said Dr. Mazin Al-Zaidi, head of innovation and entrepreneurship at SAGIA. “These startups, being able to establish themselves in the Kingdom will have a value impact.”
The King Abdullah University of Science and Technology (KAUST) is hatching different technologies. Its flagship program, the TAQADAM Startup Accelerator — a partnership with the Saudi British Bank, is a six-month intensive program to help scientists create valuable technologies quickly.
“We’ve seen really good outcomes in terms of specific technologies, such as in energy or artificial intelligence in the last two cohorts,” said Hattan Ahmed, entrepreneurship collaboration manager in Innovation and Economic Development at KAUST.
“They are resolving some key challenges, not just for Saudi Arabia but the world.” Another startup developed laser lights to help crops grow indoors, he added.
Last year, Sadeem Wireless Sensing Systems — a KAUST IP-based startup — won the Global Startup Award at Gitex Future Stars. It describes itself as an “urban real-time flood monitoring system to save lives.”
“It addressed the key challenges in deploying smart city solutions to provide informative analytics to allow decision-makers to control floods in cities,” Ahmed said.
“The key challenge is for entrepreneurs to take a technology and explore creative ways of deploying it in non-obvious ways.”
The government is making it easier for startups in the Kingdom. “When it comes to entrepreneurship, startups and technologies being developed, it’s difficult if you don’t have the connections,” said Mohammed Almajed, adviser to the chairman of the board at the Saudi Technology Development and Investment Company (Taqnia). “With mega-projects, you need credibility, and there are lots of overheads that are impossible for startups to overcome unless there is a government-based company that can minimize the overheads.”

 

Taqnia builds a supportive community for startups. “We’re capable of bringing partners together to solve one problem,” Almajed said. “If you’re alone, you’ll be swept away so we’re the network. We have our own ideas and market, and connections with research and development centers, product development centers, that will be accessible to those working with us.”
Saudi Arabia is aiming to be in the top 20 countries measured by “ease of doing business” by 2020. “This year, Saudi Arabia had the largest number of reforms in the region,” Al-Zaidi said. “For the environment to become healthy, a lot has to be done and we’re working on it. We’re heading in the right direction.”
Cura is one startup that promises to transform medical consultation in the Kingdom. It is the first platform in the Middle East planning to give people consultations with one of its 1,600 doctors using real-time chat and live video calls. It is also the tele-medicine provider for the Kingdom’s Ministry of Health, serving more than 300,000 citizens with 10 contact centers across the country and 400 doctors with around 3,000 virtual visits a day.
Wael Kabli, CEO of Cura, said: “Saudi Arabia wants to increase private sector contribution to the GDP. So they have to bring more companies into the economy and the best way to do that is through entrepreneurship.
“There has been a big movement happening since last year and we have a huge number of startups today,” he said. “A very good example is the increasing number of startups at Gitex this year in comparison with last year.”
Another example is Morni, an interactive mobile application to provide roadside assistance in Saudi Arabia and the Gulf, a startup founded by Salman Al-Suhaibaney in 2015. “In Saudi Arabia, the number of SMEs is relatively higher than corporates — more than 90 percent of companies are SMEs,” said Al-Suhaibaney, Morni CEO. “But they’re not contributing more than 2 to 3 percent of GDP, so supporting these SMEs will contribute more to GDP.”
He said that supporting KSA tech businesses would be a great opportunity to further contribute to the Kingdom’s GDP and help achieve its Vision 2030 objectives. “There are a few entrepreneurs coming to Saudi Arabia now but we’re looking for high-impact entrepreneurs and we’re capitalizing on companies that could expand globally from the Kingdom,” he said.
According to MAGNiTT, a database for startup information across Middle East and North Africa, the region has seen continued growth in startups. Disclosed funding for KSA-founded startups rose from $18.8 million in 2016 to $39.8 million in 2017.
“There is a clear focus at all levels of governments and corporates on the promotion of entrepreneurship and innovation in the Kingdom,” said Philip Bahoshy, founder of MAGNiTT.
“Innovation is a key driver of an economy’s diversification while also helping support employment. As one of the largest populations and economies in the region, the Kingdom is prime for the adoption of innovation to support the creation of efficiency for users and companies alike.”
So far this year $32.8 million has been invested, with 97.9 percent of annual growth of disclosed startup funding from 2014 to 2017 in Saudi Arabia. The trend is expected to continue, with more than 15 registered venture capitalists on the platform and more than 10 incubators and co-working spaces across the Kingdom.

FASTFACTS

Disclosed funding for KSA-founded startups rose from $18.8 million in 2016 to $39.8 million in 2017.


Gulf of Oman tanker attacks jolt oil-import dependent Asia

Updated 15 June 2019
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Gulf of Oman tanker attacks jolt oil-import dependent Asia

  • Iranian threats to close the Strait of Hormuz have alarmed Japan, China and South Korea
  • Japan’s conservative prime minister, Shinzo Abe, was in Tehran when the attack happened

SEOUL: The blasts detonated far from the bustling megacities of Asia, but the attack this week on two tankers in the strategic Strait of Hormuz hits at the heart of the region’s oil import-dependent economies.

While the violence only directly jolted two countries in the region — one of the targeted ships was operated by a Tokyo-based company, a nearby South Korean-operated vessel helped rescue sailors — it will unnerve major economies throughout Asia.

Officials, analysts and media commentators on Friday hammered home the importance of the Strait of Hormuz for Asia, calling it a crucial lifeline, and there was deep interest in more details about the still-sketchy attack and what the US and Iran would do in the aftermath.

In the end, whether Asia shrugs it off, as some analysts predict, or its economies shudder as a result, the attack highlights the widespread worries over an extreme reliance on a single strip of water for the oil that fuels much of the region’s shared progress.

Here is a look at how Asia is handling rising tensions in a faraway but economically crucial area, compiled by AP reporters from around the world:

WHY ASIA WORRIES

The oil, of course.

Japan, South Korea and China don’t have enough of it; the Middle East does, and much of it flows through the narrow Strait of Hormuz, which is the passage between the Arabian Gulf and the Gulf of Oman.

This could make Asia vulnerable to supply disruptions from US-Iran tensions or violence in the strait.

The attack comes months after Iran threatened to shut down the Strait of Hormuz to retaliate against US economic sanctions, which tightened in April when  the Trump administration decided to end sanctions exemptions for the five biggest importers of Iranian oil, which included China and US allies South Korea and Japan.

Japan is the world’s fourth-largest consumer of oil — after the US, China and India — and relies on the Middle East for 80 per cent of its crude oil supply. The 2011 Fukushima nuclear disaster led to a dramatic reduction in Japanese nuclear power generation and increased imports of natural gas, crude oil, fuel oil and coal.

In an effort to comply with Washington, Japan says it no longer imports oil from Iran. Officials also say Japanese oil companies are abiding by the embargo because they don’t want to be sanctioned. But Japan still gets oil from other Middle East nations using the Strait of Hormuz for transport.

South Korea, the world’s fifth largest importer of crude oil, also depends on the Middle East for the vast majority of its supplies.

Last month, South Korea halted its Iranian oil imports as its waivers from US sanctions on Teheran expired, and it has reportedly tried to increase oil imports from other countries.

China, the world’s largest importer of Iranian oil, “understands its growth model is vulnerable to a lack of energy sovereignty,” according to market analyst Kyle Rodda of IG, an online trading provider, and has been working over the last several years to diversify its suppliers. That includes looking to Southeast Asia and, increasingly, some oil-producing nations in Africa.

THE GEOGRAPHY AND THE POLITICS

Asia and the Middle East are linked by a flow of oil, much of it coming by sea and dependent on the Strait of Hormuz.

Iran threatened to close the strait in April. It also appears poised to break a 2015 nuclear deal with world powers, an accord that US President Donald Trump withdrew from last year. Under the deal saw Tehran agree to limit its enrichment of uranium in exchange for the lifting of crippling sanctions.

For both Japan and South Korea, there is extreme political unease to go along with the economic worries stirred by the violence in the strait.

Both nations want to nurture their relationship with Washington, a major trading partner and military protector. But they also need to keep their economies humming, which requires an easing of tension between Washington and Tehran.

Japan’s conservative prime minister, Shinzo Abe, was in Tehran, looking to do just that when the attack happened.

His limitations in settling the simmering animosity, however, were highlighted by both the timing of the attack and a comment by Iranian Supreme Leader Ayatollah Ali Khamenei, who told Abe that he had nothing to say to Trump.

In Japan, the world’s third largest economy, the tanker attack was front-page news.

The Nikkei newspaper, Japan’s major business daily, said that if mines are planted in the Strait of Hormuz, “oil trade will be paralyzed.” The Tokyo Shimbun newspaper called the Strait of Hormuz Japan’s “lifeline.”

Although the Japanese economy and industry minister has said there will be no immediate effect on stable energy supplies, the Tokyo Shimbun noted “a possibility that Japanese people’s lives will be affected.”

South Korea, worried about Middle East instability, has worked to diversify its crude sources since the energy crises of the 1970s and 1980s.

THE FUTURE

Analysts said it’s highly unlikely that Iran would follow through on its threat to close the strait. That’s because a closure could also disrupt Iran’s exports to China, which has been working with Russia to build pipelines and other infrastructure that would transport oil and gas into China.

For Japan, the attack in the Strait of Hormuz does not represent an imminent threat to Tokyo’s oil supply, said Paul Sheldon, chief geopolitical adviser at S&P Global Platts Analytics.

“Our sense is that it’s not a crisis yet,” he said of the tensions.

Seoul, meanwhile, will likely be able to withstand a modest jump in oil prices unless there’s a full-blown military confrontation, Seo Sang-young, an analyst from Seoul-based Kiwoom Securities, said.

“The rise in crude prices could hurt areas like the airlines, chemicals and shipping, but it could also actually benefit some businesses, such as energy companies (including refineries) that produce and export fuel products like gasoline,” said Seo, pointing to the diversity of South Korea’s industrial lineup. South Korea’s shipbuilding industry could also benefit as the rise in oil prices could further boost the growing demand for liquefied natural gas, or LNG, which means more orders for giant tankers that transport such gas.