Saudi Arabia puts foot on the gas with accelerated strategy for sovereign wealth fund PIF

The next phase of Saudi Vision 2030, unveiled by Crown Prince Mohammed bin Salman during a speech on Sunday outlining the Public Investment Fund’s (PIF) strategy for the next five years, is a road map towards economic diversification. (AFP/File Photo)
The next phase of Saudi Vision 2030, unveiled by Crown Prince Mohammed bin Salman during a speech on Sunday outlining the Public Investment Fund’s (PIF) strategy for the next five years, is a road map towards economic diversification. (AFP/File Photo)
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Updated 27 January 2021

Saudi Arabia puts foot on the gas with accelerated strategy for sovereign wealth fund PIF

The next phase of Saudi Vision 2030, unveiled by Crown Prince Mohammed bin Salman during a speech on Sunday outlining the Public Investment Fund’s (PIF) strategy for the next five years, is a road map towards economic diversification. (AFP/File Photo)
  • Vision Realization Program to launch new sectors of economy and enhance ones already up and running
  • VRP2 expected to cement position of Public Investment Fund as an agency of economic development

DUBAI: The next phase of Saudi Vision 2030, unveiled by Crown Prince Mohammed bin Salman during a speech on Sunday outlining the Public Investment Fund’s (PIF) strategy for the next five years, is a road map towards economic diversification. But it is also much more than that.

“Our goal is to make our country a pioneer for the new human civilization,” said the crown prince, who is the chairman of the PIF, the Saudi sovereign wealth fund. In effect, Saudi Arabia is doubling down on the Vision strategy at a time when the world is reeling from the pandemic and economic strategists are still uncertain about global recovery prospects.

VRP2 — or the Vision Realization Program, as the plan is abbreviated — will launch new sectors of the economy, and enhance ones already up and running from the first VRP, dating to 2017, as part of the transformational strategy.

Yasir Al-Rumayyan, the governor of PIF, echoed the ambitious nature of the plan. “Core to our strategy is our focus on funding new human futures by improving quality of life, driving environmental and economic sustainability, and developing new sectors and jobs,” he said.




Yasir Al-Rumayyan, the governor of PIF, says human development is a core strategy of the plan. (AFP/File Photo)

Along the way in the next five years, VRP2 will also cement the position of the PIF as an agency of economic development, and go a long way to achieving the PIF’s aim of becoming the world’s leading sovereign wealth fund, rivaling the investment giants of Asia, Europe and the US.

Regional economics expert Nasser Saidi says the announcement was a quantum leap in the Kingdom’s plans. “Saudi Arabia has put its foot on the gas of the Vision 2030 strategy with the announcement of the economic plan for the next five years, under the auspices of the PIF,” he told Arab News.

“There can now be no doubting the seriousness of its intentions to push through the plan to deeply transform and diversify the economy, and society, of the Kingdom, in super-fast time.”

The PIF committed itself to $40 billion of investment every year for the next five — a huge amount, equivalent to around 5 percent per year of the Kingdom’s gross domestic product (GDP). It also pledged to contribute $320 billion to non-oil GDP through the companies in which it holds stakes, and create 1.8 million badly needed jobs in the Kingdom by the end of 2025.




The PIF’s role as a job creator will be augmented by the wave of new employment expected on the mega-projects like NEOM, the Red Sea Development and the Qiddiya (pictured), which have been marked for acceleration in 2021. (AFP/File Photo)

For the PIF to be such a pivotal role in the development of the Saudi economy shows how far the fund has come from the time when it was a sleepy backwater in the Kingdom’s financial scene, managing public-sector pensions and other investments.

Under VRP2, the PIF will take big strides towards its goal of having $1.07 trillion in assets under management in five years’ time, and closing in on its 2030 target of $2 trillion — overtaking the huge sovereign wealth funds of China and Norway. 

It is already a good way along the path to that goal. Al-Rumayyan said that over the past four years, the PIF had tripled assets to nearly $400 billion, created 10 new sectors in the economy, and generated 331,000 jobs either directly or indirectly through its investment policies.

FASTFACT

Public Investment Fund

* $2 trillion - Target for assets of PIF by 2030.

* 1.8m - Planned new jobs by 2025.

* $40bn - Annual PIF injection into Saudi economy.

Investment experts welcomed the accelerated strategy of VRP2. Tarek Fadlallah, chief executive of Nomura Asset Management in the Middle East, said: The proactive stand — where they use money to incentivize and direct investment into key sectors — is to be welcomed and applauded.”

“The Fund’s role as a separate channel to support the economy at the time of volatile oil prices is of major importance. It will help build savings, secure financing and attract investments,” said Mazen Al-Sudairi, head of research at Al Rajhi Capital.

Other financiers wanted to know further details of the ambitious plan. “It’s an impressive target and a reassurance in these tough times that some people are still thinking big, and thinking strategically. But I would like to know how they will pay for all this,” asked one banker who declined to be identified.

It is a valid question, and one which the PIF will no doubt be explaining in detail and in confidence to investment partners and banking professionals in the coming months. But some of the revenue streams by which PIF could use to bring about such a transformation are already known. It has four principal sources of finance.




For the PIF to be such a pivotal role in the development of the Saudi economy shows how far the fund has come from the time when it was a sleepy backwater in the Kingdom’s financial scene. (AFP/File Photo)

It receives capital injections from the government of Saudi Arabia, as it did with a $40 billion injection from the Saudi Central Bank (SAMA) last year to take advantage of investment opportunities around the world as asset values plunged under the pandemic, and it also has government assets transferred to it.

It receives revenue as dividends from its investment portfolio, which includes some of the biggest names in the Saudi Arabian listed sector, and from the disposal of investments.

The PIF can also raise loans from banks in the normal way, and can raise money through the International and domestic debt markets, in the form of bonds.

Al-Rumayyan has recently given indications of other ways the PIF could provide resources for its big plans. He recently told the Financial Times that the PIF would reduce its International investment exposure to focus more on Saudi Arabia, cutting the proportion of assets invested abroad from 30 to 20 per cent — though the absolute amount would remain little changed as the PIF assets grow.




“Our goal is to make our country a pioneer for the new human civilization,” PIF chairman Saudi Crown Prince Mohammed bin Salman said.

There is also big potential to raise money via the sale of portfolio companies in which PIF owns shares and which are listed on the Tadawul stock market, as well as privately held companies.

Many analysts expect a wave of IPOs and stake sales to come in Saudi Arabia this year as buoyant market conditions encourage investors, including the PIF, to realize paper gains.

The PIF received the $29 billion proceeds of the biggest initial public offering (IPO) in history when Saudi Aramco listed shares on the Tadawul in December, and there have been suggestions that further funds could be raised either through the sale of more Aramco shares, or through the disposal of some of the businesses that make up the Aramco energy grouping.

Al-Rumayyan told the FT that Aramco, of which he is chairman, could sell more shares “if the valuation is right”, and that he was considering sales of other Aramco assets. “If it makes sense for us to divest some of these assets, we’re definitely going to do it. It could include anything except the main operations,” he said.

The PIF’s role as a job creator will be augmented by the wave of new employment expected on the mega-projects like NEOM, the Red Sea Development and the Qiddiya, which have been marked for acceleration in 2021. It can also start new companies in the Kingdom, to add to the 30 or so it has set up in the past three years.




The PIF committed itself to $40 billion of investment every year for the next five — a huge amount, equivalent to around 5 percent per year of the Kingdom’s gross domestic product. (AFP/File Photo)

Electric-car maker Lucent — in which the PIF is majority shareholder — is believed to be in talks to set up a manufacturing plant near Jeddah, its first outside the US. Corporate start-ups are also likely through the opening up of Saudi operations for some of the companies that the PIF has jointly invested inside alongside the Vision Fund, the investment management business in which SoftBank is the leading investor.

The PIF will also look to vital foreign direct investment (FDI). “A key element of PIF’s success has been the strategic economic partnerships the Fund has developed with many of the world’s leading investors and businesses. VRP2 will enhance these partnerships, providing investors with access to untapped investment opportunities, creating synergies and value for the global community,” the Fund said this week.

FDI flows into Saudi Arabia actually picked up in the first part of last year, despite the pandemics’ drag on economies everywhere. “External funding will remain critical given the size of its (PIF’s) objective,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

The chance to showcase the opportunities of VRP2 to the outside world begins at the Future Investment Initiative gathering in Riyadh later this week.

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Twitter: @frankkanedubai


King Salman prays for ‘continued security and stability’

King Salman prays for ‘continued security and stability’
Updated 14 May 2021

King Salman prays for ‘continued security and stability’

King Salman prays for ‘continued security and stability’
  • All mosques and prayer areas maintain full health protocols

JEDDAH: King Salman performed Eid prayers in NEOM on Thursday. 

Earlier, he extended greetings to Saudi citizens and residents and Muslims all over the world.

In a tweet on Thursday, the king said: “We thank God Almighty for making the blessed Eid Al-Fitr a sign of good and satisfaction after completing the fasting and prayers of Ramadan. 

“Eid carries hope, optimism, and happiness, and we pray to God to cleanse the entire world of all evil, protect us from harm, and grant us continued security, stability, and tranquility.”

The king said this Eid is an occasion to overcome the ordeal that the world has suffered from the health, social and economic effects of the coronavirus pandemic.

King Salman said he was “optimistic about the positive steps in place to achieve stability in the Arab world, so that security and prosperity prevail for all parts of the globe.”

“Combating this pandemic that has befallen the world requires all of us to adhere to the health measures announced by the Ministry of Health, including social distancing, and the need to receive the vaccine, which will work to immunize our dear community of citizens and residents,” the king said.

Mask-clad worshippers entered Makkah’s Grand Mosque along socially distanced paths to offer Eid prayer. Worshippers at the Prophet’s Mosque in Madinah also followed COVID-19 protocols.

As Saudi families gathered to celebrate the first day of Eid Al-Fitr, the Kingdom’s health minister urged people to follow official health precautions to combat the spread of the coronavirus disease (COVID-19).

“I need your attention on your Eid. Be careful, refrain from shaking hands completely, be sure to practice social distancing, and avoid large gatherings,” Tawfiq Al-Rabiah tweeted on the eve of festivities.

“Go to the Eid prayer with your own prayer mat, wear the mask constantly, sanitize your hands before and after receiving or giving Eidiya, and leave a safe distance between you and others,” he added. The minister also warned parents not to allow children to hug or kiss their grandparents, saying that such practices may endanger older members of the family.

Worshippers across the Kingdom performed Eid Al-Fitr prayers in 20,569 mosques and open-air prayer areas set up by the Ministry of Islamic Affairs, Dawah and Guidance.

Mosques and prayer areas were equipped with facilities in accordance with the health protocols approved by the authorities to prevent the spread of COVID-19. 

The imams spoke during the Eid sermon about the blessing of completing fasting and praying qiyaam, and the importance of the continuation of good deeds after Ramadan.

Meanwhile, Saudi Arabia reported 11 more COVID-19-related deaths on Thursday. The death toll now stands at 7,122.

The Health Ministry reported 1,116 new cases, meaning that 430,505 people have now contracted the disease. There are 9,244 remaining active cases, 1,344 of which are in critical condition.

According to the ministry, 377 of the newly recorded cases were in Riyadh, 320 in Makkah, 134 in the Eastern Province and 71 in Madinah. In addition, 1,129 patients recovered from the disease, bringing the total number of recoveries to 414,139.

Saudi Arabia so far has conducted 17,812,376 PCR tests, with 71,457 carried out in the past 24 hours.

Saudis and expats in the Kingdom continue to receive their COVID-19 jabs, with 11,195,164 people inoculated so far.


OIC: Continuing Houthi attacks against civilian targets tantamount to war crimes

OIC: Continuing Houthi attacks against civilian targets tantamount to war crimes
Updated 14 May 2021

OIC: Continuing Houthi attacks against civilian targets tantamount to war crimes

OIC: Continuing Houthi attacks against civilian targets tantamount to war crimes
  • The OIC announced on Thursday that it will hold an emergency meeting on Sunday, at the request of Saudi Arabia, to discuss the situation in Jerusalem and Gaza

JEDDAH: The Organization of Islamic Cooperation (OIC) strongly condemned the “cowardly, hostile action” by terrorist Houthi militias in Yemen, which on Thursday launched eight drones and three ballistic missiles at civilian targets in the Kingdom.

The Arab coalition fighting the Houthis in support of Yemen’s internationally recognized government said it intercepted and destroyed the drones and missiles before they reached their targets.

OIC Secretary-General Yousef Al-Othaimeen praised the coalition forces for their vigilance and professionalism in responding to the Houthi’s attack, which took place on the Muslim holiday of Eid Al-Fitr, which marks the end of the fasting month of Ramadan.

“The continued launch of ballistic missiles and drones toward civilians and civilian objects is considered war crimes, and a flagrant defiance of international laws, customs and agreements,” he said.

He also reiterated the OIC’s solidarity with the Kingdom in all the steps Saudi authorities take to deter Houthi aggression and protect civilians.

Hamdan Al-Shehri, a political analyst and international-relations scholar, told Arab News: “This is a particularly special day for Muslims, Eid Al-Fitr, and all Muslims are also preoccupied by what is happening in Palestine.

“We always hear Iran making threats, but instead of standing with Palestine it is targeting Makkah, Madinah and the Kingdom. This demonstrates the Houthi’s futility, and the extent of Tehran’s malice and how it is always standing with the Houthi forces.

“As we’ve seen, such events are always against civilians. Iran and the Iran-backed Houthi militias have their weapons aimed at civilians because they want civilian victims.” Al-Shehri added: “These are war crimes. The global community should do something, especially about the hundreds of ballistic missiles and drones. The world is only watching.” Meanwhile, the OIC announced on Thursday that it will hold an emergency meeting on Sunday, at the request of Saudi Arabia, to discuss the situation in Jerusalem and Gaza. The meeting of the foreign ministers of OIC member nations will address the continuing Israeli attacks in the Palestinian territories, which have escalated since Monday.

Israeli troops were massing at the Gaza border on Thursday. Meanwhile Hamas targeted Israel with rocket attacks. The increasingly intense hostilities have caused international concern and provoked clashes between Jews and Arabs in Israel.

With fears growing that the violence could spiral out of control into full-blown war, the US announced on Wednesday it is sending an envoy, Hady Amr, to the region.


Saudis divided between electronic, traditional Eidiya

Saudis divided between electronic, traditional Eidiya
Updated 14 May 2021

Saudis divided between electronic, traditional Eidiya

Saudis divided between electronic, traditional Eidiya
  • Due to the ongoing pandemic, many Saudis turn to electronic payments to give out Eidiyas this year as opposed to cash in hand

JEDDAH: As Muslims around the world are celebrating Eid Al-Fitr in their own unique ways, children in every nation tend to always steal the spotlight with their tireless demands for Eidiya money.

Similar to Halloween in the west, children wait eagerly for this time of the year so they can dress up, visit one household to the next, and receive as much Eidiya money (and chocolates) as possible.

However, due to the ongoing coronavirus (COVID-19) pandemic, many Saudis turned to electronic payments to give out Eidiyas this year. Still, others prefer the old-fashioned way of handing out Eidiyas in cash while also taking COVID-19 health precautions into consideration.

Saudi dentist Jameela Al-Ghamdi, 29, said being deprived of family gatherings for Eid Al-Fitr last year was frustrating. 

“It was so strange to go through,” she told Arab News. “We never skipped visiting our families on such special occasions.”

She is now relieved because people in her family susceptible to the virus have received the vaccine jab and these special occasions can happen again. 

“I am so happy to dress up with my sisters and also visit family members I have not seen in an unfairly long time,” Al-Ghamdi said.

Her family, although mostly vaccinated, prefers to give out Eidiyas electronically, as Al-Ghamdi says she is a fan of technology. 

“We tried giving out Eidiyas through STC Pay last year and it was very quick, simple and convenient. No need to break down SR100 at minimarkets anymore,” she said.

Ali Mansour, a 33-year-old Saudi industrial engineer at Saudia airline, said the best part of Eid is visiting family. He also added the occasion is not the same without gatherings. Mansour’s family started giving out Eidiyas electronically long before the pandemic because of its convenience.

HIGHLIGHTS

•Similar to Halloween in the west, children wait eagerly for this time of the year so they can dress up, visit one household to the next, and receive as much Eidiya money (and chocolates) as possible. •However, due to the ongoing coronavirus (COVID-19) pandemic, many Saudis turned to electronic payments to give out Eidiyas this year. Still, others prefer the old-fashioned way of handing out Eidiyas in cash while also taking COVID-19 health precautions into consideration.

“Way before the pandemic and the creations of such platforms like STC Pay, we gave out Eidiyas through bank transfers,” he told Arab News. “Electronic payments are not something new to us. My dad would always transfer the Eidiya into my account, never in cash.” He added that the last time he received Eidiya in cash was probably back in high school.

Young children are the most significant part of the Eid celebration, said Mansour, as they will receive Eidiyas in cash since they cannot use devices.

Saudi Lujain Al-Jehani, 27, said Eid Al-Fitr is extra special this year because people were deprived of the holiday gatherings last year.

“Due to the pandemic, we did not have the opportunity to celebrate together,” she told Arab News. “We are so excited and thrilled. We are going to prepare cakes and activities that we were deprived of last year.”

Al-Jehani’s family prefers to give out Eidiyas in person: “The experience is different, holding cash in your hand,” she said.

Al-Jehani added that most of the elderly in her family do not know how to use electronic payment platforms.

Saudi medical student Renad Bajodah, 25, said Eid celebrations are important experiences and will have a lasting impact on a child’s memory.

“Eid means joy to me. It means coming together and honoring the days of our lives, and celebrating after the completion of the holy month of Ramadan,” Bajodah told Arab News. 

“The excitement of Eid’s eve is what is most beautiful to me, seeing kids wearing their new pajamas all happy on the night of Eid. It also teaches parents how to give to their children. To give them the best experience and beautiful childhood memories.” 

While Bajodah’s family still prefers Eidiyas in cash, they sanitize them thoroughly before delivering in carefully closed envelopes. They like the “traditional old school style,” he said.

Saudi Yara Ahmad, 27, who works in the market research industry, said Eid Al-Fitr means a lot to her. The whole experience from new clothes, delicious food and candy, family gatherings and Eidiya money is something adults and children alike look forward to every year.

Electronic Eidiya did not bode well for her family which continues to distribute cash to children while keeping in mind the sanitization part and necessary precautions.

Saudi Salman Al-Otaibi, 32, who prefers the old-fashioned way of giving out Eidiyas while following hygienic measures, said a new voting poll for Eidiyas that has been circulating a week before Eid Al-Fitr takes away a special element.

“The idea has nothing to do with the purpose of Eidiyas and bringing a smile on children and adults’ faces,” he told Arab News. 

“Because it has become a contest and everyone is running after people in groups and social media sites to vote. I think it is far from what Eidiya is supposed to mean.”


Taif rose oil a ‘treasure to be discovered’, says French envoy

Taif rose oil a ‘treasure to  be discovered’, says French envoy
Updated 14 May 2021

Taif rose oil a ‘treasure to be discovered’, says French envoy

Taif rose oil a ‘treasure to  be discovered’, says French envoy
  • Taif roses have, throughout history, expressed the cultural identity of Taif city, says Mayor Ahmed Al-Qathami

TAIF: “Treasure to be discovered,” were the words used by the French ambassador to the Kingdom describing the rose oil industry in Taif, after his recent visit to the 14th Taif Rose Festival held at Al-Radf Park and organized by the Taif Chamber of Commerce and Industry.

Ludovic Pouille toured the old town of Taif at night with representatives from the province and the Ministry of Culture, expressing his happiness to discover the vital market on the eve of the celebrations of Eid Al-Fitr, and to drink traditional coffee in the historic neighborhood of the capital of roses.

He also discovered the traditional professions in the old city of Taif, discussing with the mayor the tourist capacity of the city and opportunities to cooperate with France.

Mesmerized by the fragrance and the pink scenery around him, the envoy walked the roses’ stairway in the festival covered in roses from both sides, describing it as a “stairway to heaven.”

French Ambassador Ludovic Pouille

Dr. Ahmed Al-Qathami, mayor of Taif Province, said that the visit of the French envoy reflects the importance and reputation of Taif roses across borders, “one of the most important tools in promoting the Kingdom’s tourism, culture and economy.”

Al-Qathami told Arab News that Taif roses have, throughout history, expressed the cultural identity of Taif city, symbolizing its beauty thanks to their odor and perfume.

“Taif roses are a source of cultural inspiration to all Saudis for whom the roses are a way of life and a cultural destination that attracted dignitaries and important figures throughout history,” he added.

He added that the visit of the French ambassador indicates the depth of friendship and love he has for Saudi Arabia. “This visit reflects his knowledge and appreciation for the efforts made to sustain the Taif rose industry, and develop its products and promote them at local and global levels.”

Al-Qathami pointed out that Taif roses were, and still are, an “honorable image” for Taif province, and all the celebrations and festivals held in the past and the accompanying exhibitions contributed in shaping its identity as a cultural hub that helped in strengthening the
ties of communication between the city and those who love and admire it.

Adel Al-Nimri, a rose factory owner in Al-Hada, Taif, said that the prominent and important figures who visit Taif and admire the great efforts “give us the impetus to continue and improve the product to reach the highest standards of
production, and export them abroad after gaining widespread fame.”

He stressed the importance of caring for the Taif rose industry and teaching people about it for future generations, adding that Taif roses are known for their purity and fragrance.


Saudi interior minister greets security personnel for Umrah success

Saudi interior minister greets security personnel for Umrah success
Updated 13 May 2021

Saudi interior minister greets security personnel for Umrah success

Saudi interior minister greets security personnel for Umrah success

RIYADH: Saudi Interior Minister Prince Abdul Aziz bin Saud bin Naif on Thursday conveyed the congratulations of King Salman and Crown Prince Mohammed bin Salman to the personnel of the Ministry of Interior and security sectors on the success of security plans for the Umrah season and the advent of Eid Al-Fitr.

Prince Abdul Aziz, who is also the chairman of the Umrah Supreme Committee, expressed thanks to the leadership for the support that enabled the security sectors to perform their duties in this year’s exceptional Umrah season, expressing his pride in the efforts made by security men in the service of Umrah performers and visitors.

Muslims performed Eid Al-Fitr prayer throughout Saudi Arabia on Thursday.

In Makkah, the prayer was performed at the Grand Mosque and led by the Imam of the Grand Mosque Sheikh Saleh bin Abdullah bin Humaid. The prayer was attended by Makkah Gov. Prince Khalid Al-Faisal and a number of princes.

In Madinah, the prayer was performed at the Prophet’s Mosque. The prayer was attended by Madinah Gov. Prince Faisal bin Salman.

The prayer was also performed in various regions and attended by regional governors and senior officials.

The imams who led the prayer congratulated Muslims on Eid Al-Fitr, praying to Allah to accept their fasting, prayers, charity and good deeds.