SAGIA chief to lead delegation to WEF meeting in Davos as number of overseas firms starting business in Saudi Arabia breaks record

Al-Omar will lead the SAGIA delegation as part of a significant Saudi presence at the World Economic Forum (WEF) annual meeting in Davos, which begins on Tuesday. (Photo/Markus Schreiber)
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Updated 20 January 2020

SAGIA chief to lead delegation to WEF meeting in Davos as number of overseas firms starting business in Saudi Arabia breaks record

DUBAI: Foreign investors are flocking to Saudi Arabia as the reform program under the Vision 2030 strategy accelerates, new official figures show.

In 2019, according to statistics released by the Saudi Arabian General Investment Authority (SAGIA), there was a 54 percent increase in the number of international companies setting up operations in the Kingdom, with 1,131 new foreign businesses launched — a record year.

“Leading growth sectors include construction, manufacturing and information and computer technology, as demand in these industries increases alongside infrastructural development and progress of the Kingdom’s giga projects driving forward in line with Vision 2030,” said SAGIA’s Invest Saudi report.

“During 2019, 193 new construction, 190 manufacturing and 178 ICT (information and communications technology) companies were established, compared to 111, 113 and 111 established in the three sectors in 2018 respectively.” The pace of new foreign startups accelerated in the final quarter, the report said.

SAGIA Gov. Ibrahim Al-Omar said: “Guided by Saudi Vision 2030, our country is undergoing a remarkable economic transformation. The continued prosperity of the Kingdom depends on sparking innovation, attracting foreign investors and empowering the private sector.”

He added: “The positive growth numbers that we have seen in the final quarter of 2019 — and indeed throughout the entire year — represent a significant milestone on the road to 2030.”

The Kingdom’s growing foreign investment landscape is underpinned by sweeping economic and social reforms made throughout 2019, aimed at improving Saudi Arabia’s business climate and attracting new investments.

The impact of these reforms is being recognized on a global scale: Saudi Arabia was ranked the world’s top improver and reformer by the World Bank, climbing 30 places in its Doing Business 2020 report, SAGIA said.

“The goal of our reform program is to help realize the potential that Saudi Arabia holds for the benefit of Saudi nationals and improve our competitiveness,” said Al-Omar, who will be among the Saudi delegation at the forthcoming World Economic Forum (WEF) annual meeting in Davos.




Snow falling in Davos, Switzerland, where around 3,000 political and business leaders will gather for the World Economic Forum this week. (Shutterstock)

“The investment opportunities that the Kingdom offers international companies also creates opportunities for the transfer of skills, expertise and best practice to local communities across the Kingdom, while providing new private sector job prospects for young Saudi men and women,” he added.

“We consider foreign companies who look to Saudi Arabia as growth partners for their business expansions — whether they seek a joint venture with Saudi companies or choose to set up on their own,” he said.

“Out of the new international companies setting up in Saudi Arabia in 2019, 69 percent were full foreign ownership, while 31 percent were joint venture partnerships with local investors. Our 2019 figures therefore demonstrate how integral new international businesses are to the success of our journey toward 2030.”

The Invest Saudi report found that the growth in the number of foreign startups came from “long-standing and strategically-important Saudi partners” such as the US and UK, with 100 UK companies and 82 US ones setting up in 2019, compared to 24 for both countries in 2018.

India, Egypt, Jordan and China were also among the top countries represented, with India’s share of the market increasing dramatically from 30 companies established in 2018 to 140 in 2019, driven by high-profile royal visits to the country in February 2019.

Other top countries from 2018, Jordan and France, were well-represented in 2019, the report said.

FASTFACT

The number of international companies setting up in Saudi Arabia rose by 54 percent last year.

SAGIA is continuing to introduce new measures to make setting up in the Kingdom easier and more efficient.

“We want to make it easier for foreign companies to set up and do business in Saudi Arabia,” said Al-Omar. 

“We have taken global best practice models and combined them with local knowledge and insights in order to eliminate unnecessary barriers to doing business, while making it easier for our new partners from abroad to understand our unique Saudi culture and customs and how they can better integrate and contribute.”

SAGIA has increased its global profile, and will have a prominent presence at the forthcoming WEF annual meeting in Davos.

“We have played an important role in attracting foreign companies to establish operations in the Kingdom throughout 2019, facilitating a series of high-level investor forums in countries such as China, India, Germany and South Korea, as well as hosting delegations to the Kingdom from the US, UK, Japan and Russia,” Al-Omar said.


Rooftop revolution: Pandemic chill upends solar power industry

Updated 10 July 2020

Rooftop revolution: Pandemic chill upends solar power industry

  • Executives in US and Europe rely on tech, finance plans in battle for survival

LOS ANGELES: The booming rooftop solar panel industry nosedived overnight when the coronavirus forced homeowners to rein in spending and keep their distance from would-be installers.

Now, in their struggle to survive, companies on both sides of the Atlantic are turning to online marketing rather than knocking on doors, using drones to inspect roofs, arranging digital permits and coming up with attractive new financing plans, according to interviews with 12 executives.

At stake is the future of a key driver of the global transition from fossil fuels to renewable energy: solar power was the second-fastest growing renewable source after wind in 2019, according to the International Energy Agency.

And rooftop installations, which generate electricity used by homes or businesses rather than feeding into the grid, made up more than 40 percent of the market before COVID-19 struck.

Energy research firm Wood Mackenzie has slashed its rooftop solar installation forecasts for Europe and the US by a whopping 30 percent this year, while lifting its forecast by 3 percent in Asia, where China provides strong government support.

Joana Palau, 42, a council worker on the Spanish island of Ibiza, was one of the few in her neighborhood who pressed ahead with a plan to install 12 solar panels on her farmhouse in June: “If I had not been working and did not have the stability of a salary every month, I definitely wouldn’t have done it.”

A housing estate with solar panels in Duesseldorf, Germany. European firms are offering innovative finance plans to entice wary clients amid rising job insecurity. (AFP)

By contrast, large-scale solar installations that power the grid have fared relatively well. Wood Mackenzie trimmed its forecast by less than 10 percent for Europe and barely touched its US outlook as rock-bottom prices, subsidies and government mandates helped insulate larger projects from the pandemic. In the US, the third biggest rooftop solar market after China and Japan, about 80 percent of the 100,000 job losses in the solar sector so far have been at rooftop installers, the Solar Energy Industries Association said.

Many of the staff who were not laid off, however, began to focus on one of the industry’s most persistent challenges: How to cut the cost of identifying homeowners with suitable roofs, and then persuading them to buy panels, executives said.

Quickly, companies made sales appointments virtual.

Leading US installers SunPower Corp., Vivint Solar Inc. and Sunrun Inc. said that reassured potential clients worried about the virus. It also cut the cost of acquiring customers, which Wood Mackenzie puts at nearly $4,000, or 22 percent of the average $18,000 cost of a US system.

Normally reliant on door-to-door visits, an effective but expensive sales tactic, Vivint trained hundreds of salespeople to canvass by phone as its sales slumped 60 percent following state lockdowns, CEO David Bywater said.

By early May, sales were down only 30 percent. “It was a radical shift,” said Bywater, adding that it had hastened Vivint’s plan to diversify sales strategies and cut costs: “I hope we never lose that and we accelerate that.”

In fact, the strategy was so successful that larger rival Sunrun announced on July 7 that it had agreed to buy Vivint in an all-stock deal valued at $3.2 billion, saving $90 million a year and creating a solar player with half a million customers.

Sunrun bought Vivint because of its focus on direct selling, a model Sunrun CEO Lynn Jurich said had become even more durable during the COVID-19 pandemic: “Both companies are delivering above where we expected.”

HIGHLIGHTS

  • Solar panel firms go digital as lockdowns hit sales.
  • New sales strategies cut costs as firms battle to survive.
  • Solar power seen as key driver in climate change fight.

Rival SunPower has also seen a massive shift to digital sales, with about three-quarters of consultations now happening via video chat, up from a 10th previously.

CEO Tom Werner said he expected half of its sales would be digital from now on. He said it was harder to close deals in virtual chats but that was offset by cutting out travel time between appointments.

“Ideally, you have the day when solar is like Amazon, so you can buy and be fulfilled in a very efficient process,” he said.

Sunrun, meanwhile, had to pull its salespeople out of stores such as Costco and Home Depot during lockdowns, outlets that had been bringing in nearly a third of its sales. Within two weeks, Sunrun had moved its field sales team online and launched a promotion offering six months of home solar power for $6. While initial online commitments were lower, the percentage of customers following through was higher.

Sunrun said innovations like virtual sales and automating permits to avoid physical processing by authorities will trim about $2,000 off the cost of an array over the next year or so.

EmPower Solar, a rooftop installer based in Long Island, spent New York’s lockdown on “game-changing initiatives” such as digitising sales and paperwork, and using satellite imagery and drones to inspect roofs, said CEO David Schieren.

However, he said that it was harder to build rapport with customers without face-to-face contact.

In Europe, rooftop solar firms developed more enticing finance plans as the pandemic made clients wary about spending.

SotySolar in Gijon in northern Spain accelerated the roll-out of a “Netflix-style” subscription model. It installs panels and charges a monthly fee though homeowners can buy them or end their contract when they like, said co-founder Daniel Fernandez.

“We have been thinking about doing this for a while, but we brought it forward because of this situation,” he said, adding that he expected to triple installations with the offer.

In Barcelona, renewable energy utility Holaluz has accelerated an initiative to install panels free for people with available roof space — and use them to generate power for all its customers. It aims to extend the plan to apartment blocks and commercial buildings.

Holaluz expects to boost clients to one million and carry out 50,000 rooftop solar installations by 2023. It estimates fewer than 10,000 Spanish homes currently have panels.

“This is the rooftop revolution,” said co-founder Carlota Pi. “We have spent so much time at home, we have become much more conscious of the value you can create by transforming your roof into a source of energy generation.”