Trade minister: French companies committed to increase, diversify investments in Saudi Arabia

Franck Riester, French minister delegate for foreign trade and economic attractiveness (L) at an event with Khalid Al-Falih is Minister of Investment of Saudi Arabia (R). (Supplied)
Franck Riester, French minister delegate for foreign trade and economic attractiveness (L), at an event with Khalid Al-Falih, Minister of Investment of Saudi Arabia (R). (Supplied)
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Updated 07 April 2021

Trade minister: French companies committed to increase, diversify investments in Saudi Arabia

Trade minister: French companies committed to increase, diversify investments in Saudi Arabia
  • Saudi giga projects are a catalyst for French investments, says French Trade Minister Delegate Franck Riester
  • France would be keen to offer its proven expertise to design, build, and manage smart, sustainable cities

RIYADH: With direct investment amounting to more than €3.7 billion ($4.37 billion), France is one of the largest investors in Saudi Arabia. Projects relating to the Vision 2030 program to diversify the Saudi economy offer yet more opportunities for strengthening the bilateral partnership. France is keen to share its expertise in such fields as energy, water, transport, new technology, and aerospace.

For Saudi investors, France’s innovation ecosystem and location make it an ideal gateway for trade with the EU. Franck Riester, French minister delegate for foreign trade and economic attractiveness, touched on these issues and more during an exclusive interview with Arab News.

In particular, the minister said French companies are committed to increasing and diversifying their investments in the Saudi economy and have already identified significant opportunities, from renewable energy to healthcare to tourism.

Q. What are the key objectives of your current visit to Saudi Arabia?

A. France and Saudi Arabia have a long history of rich and fruitful cooperation, which we wish to further develop. I first visited the Kingdom in 2019 as minister of culture for the launch of the breathtaking AlUla project, highlighting the exceptional heritage of Saudi Arabia and the partnership with French cultural organizations.

I am here in Riyadh today to develop the economic relationship between France and Saudi Arabia, especially in the framework of the partnership agreed between President Emmanuel Macron and Crown Prince Mohammed bin Salman during his official visit to France on April 18, 2018.

Our two countries share the same ambition in key sectors such as the ecological transition and technological revolution. This common ground provides for concrete business opportunities. Together with my counterpart, Khaled Al-Falih, with whom I have had the pleasure to exchange regularly, we aim to give shape to the economic component of this partnership by discussing shared investment opportunities in both countries.

My current visit is another step forward in our enduring and flourishing economic relationship, and I already hope to come back to the Kingdom to fully grasp its beauty and potential.




Arab News Assistant Editor in Chief Noor Nugali presenting Minister Riester with a copy of Arab News en Francais 2020 landmark YouGov study on the status of French Arabs (AN photo)

Q. France is one of the largest investors in Saudi Arabia, with direct investment amounting to more than €3.7 billion. Do you see room for growth as Saudi Arabia diversifies its economy under Vision 2030?

A. French companies are committed to increasing and diversifying their investment in the Saudi economy, in line with the priorities of the Vision 2030 especially in renewable energy, hydrogen, water and environment, healthcare, digital economy, smart cities, and of course tourism services and infrastructure.

French companies are renowned all over the world for their know-how and expertise, which make them ideally suited to meet the high expectations of the Vision 2030 program. That includes the tech sector: I am well aware that the French tech ecosystem is not always well identified in the Middle East. And yet, our striving tech scene is one of the most innovative and dynamic in Europe and in the world, now counting 10 “unicorns” and aiming for 25 by 2022.

Q. At a time when many governments are tightening their belts, Saudi Arabia has launched projects across sectors in recent months totaling trillions of dollars. Do you see big opportunities for French companies?

A. Saudi Arabia has made the right call: The time to invest and prepare for the post-COVID-19 world is now. France is on the same page. We have launched a €100 billion recovery and investment plan to support the long-term economic development of our companies, including the green and digital transitions.

I note that France and Saudi Arabia have made the same choices for the future: Our priorities are aligned. Hence, French companies will find huge investment opportunities in those sectors in the Saudi economy.




Metro lines are seen parked at a parking station during an exclusive tour of the Riyadh Metro on April 1, 2021 in the Saudi capital. (AFP)

Q. Will French companies be investing in some of these projects, such as The Line in Neom, or do they primarily see themselves as bidders and executors of project contracts?

A. French companies have great ambition to be major partners in the giga-projects, among them, Neom, and more broadly the Red Sea Project, Amaala, Qiddiya, and AlUla projects. Unique in their scope, these projects act as a catalyst for French investments across many areas, covering new technology and innovative solutions, tourism and entertainment, arts, and culture. The unmatched track records of our industrial and technological flagships speak for themselves. Our companies offer a full array of expertise, from the early stages of any given project to its final implementation. They are used to partnering with foreign companies. I am therefore highly confident in their ability to meet the expectations of the Kingdom.

Q. The recently announced Saudi Green and Middle East Green initiatives call for cooperation to tackle the environmental challenges facing Saudi Arabia and the wider region. As a minister of a country that facilitated the landmark Paris Climate Agreement, what is your take?

A. We welcome and support the crown prince’s initiative. It is essential that Saudi Arabia becomes a regional and global beacon in the fight against climate change. The Green initiative sends a very positive signal in the perspective of the upcoming COP26. In recent years, France has been strongly committed to making globalization more sustainable. I believe that greening international trade is key to reach this goal, hence the need to put environmental considerations at the heart of the multilateral rules which organize trade. It is a priority we defend at the WTO with our European partners. 




French companies are committed to increasing and diversifying their investment  in the Saudi economy, in line with the priorities of the Vision 2030 especially in renewable energy, Franck Riester said. (Supplied)

Q. According to the UN Development Program’s top energy expert, Saudi Arabia could be the leader of the energy revolution of tomorrow. Do you see any role for French expertise and knowhow in such a revolution?

A. Absolutely. The French-Saudi partnership in the energy sector is deep-rooted and mutual trust in terms of expertise and innovation is high. French companies and researchers are working hard to develop with their partners the energy technologies of tomorrow, which will enable us to put the energy transition at the core of the world economic recovery, of our industrial diversification and our common strategies for massive decarbonization of our energy mixes.

For example, French firms have already had great success in accompanying Saudi Arabia with ambitious plans to massively develop renewable energies. Many more concrete joint projects are to come in the field of decarbonized energies, as we are allocating massive means in France to green our economy.

Q. Not many countries have a minister delegate for foreign trade and economic attractiveness. What do you consider to be the highlights of France’s economic attractiveness?

A. Foreign trade and economic attractiveness are two sides of the same coin: It means we implement a pro-business agenda making our economy, and the companies based in our country, more competitive, innovative, and ready to take on the world. This strategy is already bearing tangible results: In 2019, France became the leading country in Europe for inbound foreign investment, for the first time ever — and stayed strong in 2020 despite the global shock on foreign direct investment (FDI).

Investors choose France because of its core assets: A central geographical situation within the EU, a highly qualified workforce, world-class infrastructure, available and cheap energy, and a strong internal market. France is the number one country in Europe for FDI in research and development and in the industrial sector. The €100 billion “France Relance” stimulus package will make it the first green economy and innovation ecosystem in Europe. We work hard to make Saudi companies willing to expand to Europe elect France as their HQ and production hub.




Franck Riester said French companies are committed to increasing and diversifying their investments in the Saudi economy and have already identified significant opportunities. (AFP/File Photo)

Q. French expertise has traditionally been in such sectors as energy, water, transport, innovation, new technology, and aerospace. Are we missing out anything that Saudi Arabia could benefit from?

A. I am convinced that French expertise in healthcare and the dynamism of the health-tech ecosystem could greatly contribute to the Kingdom’s ambitious goals regarding the health sector, and set the foundations for a sustainable relationship between our countries. I know our companies are willing to go in that direction.

France is also one of the world’s leading agrifood exporters. Our products are renowned for their high quality, in both taste and health, as well as for their traceability. Finally, regarding Saudi Arabia’s strong ambitions in terms of urban development, France would be keen to offer more of its proven expertise and best technologies to design, build, and manage smart and sustainable cities, while meeting high environmental and quality standards.

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Twitter: @NoorNugali


Egypt’s petroleum sector made up 24% of GDP — minister

Egypt’s petroleum sector made up 24% of GDP — minister
Updated 57 min 13 sec ago

Egypt’s petroleum sector made up 24% of GDP — minister

Egypt’s petroleum sector made up 24% of GDP — minister
  • More than 60 international oil and gas companies operate in Egypt, including well-known names such as ExxonMobil and Chevron

CAIRO: The oil and gas sector contributed 24 percent of Egypt’s gross domestic product (GDP) in 2020 and was one of the key sectors that helped rebuild the country’s economy in the wake of the economic challenges since 2011, according to a senior government minister.

Egyptian Petroleum Minister Tariq El-Molla said in a statement that the sector had played a significant role in the economic reforms the government had implemented, which helped to create an appealing environment for investors.

More than 60 international oil and gas companies operate in Egypt, including well-known names such as ExxonMobil and Chevron.

Egypt launched the EastMed Gas Forum in 2018, which was designed to encourage strategic dialogue between Eastern Mediterranean countries — whether they are producers or consumers — in a bid to achieve optimal economic benefits and address common regional challenges.

The minister said that the EastMed Gas Forum charter was signed in September 2020 and had succeeded in attracting the world’s attention. Several countries had expressed their desire to join the forum — including France, which had been approved as a permanent member, and the US as an observer.

El-Molla confirmed that the Natural Gas Advisory Committee has been formed with 29 members and international institutions.

He said that natural gas had emerged as an important transitional fuel due to its environmentally friendly nature and because the Egyptian government had introduced many projects as part of a bid to maximize gas use in homes and cars.

El-Molla added that hydrogen had become an important source of fuel, and gained the support of international institutions. One example was Egypt’s partnering with the EU to establish a special committee to develop a strategy for the use, production and exploration of hydrogen.


Almost half of Jeddah’s hotel rooms were booked in March

Almost half of Jeddah’s hotel rooms were booked in March
Updated 15 April 2021

Almost half of Jeddah’s hotel rooms were booked in March

Almost half of Jeddah’s hotel rooms were booked in March
  • Industry report says occupancy rates were second-highest since pandemic started

JEDDAH: The hotel industry in Saudi Arabia’s commercial center reported one of its highest monthly occupancy levels of the COVID-19 pandemic period, according to preliminary March 2021 data from the hotel management analytics firm Smith Travel Research (STR).

According to the figures, hotel occupancy in Jeddah reached 47.1 percent in March, and the revenue per available room (RevPAR) reached SR318.72 ($84.99).

March occupancy and RevPAR rates were the second-highest since February 2020, just behind figures for January 2021. However, the average daily rate for hotel rooms was SR676.36, remaining in line with the levels recorded in the second half of 2020.

Earlier this month, a report by STR found that Saudi Arabia has the world’s biggest hotel pipeline, anticipating a 67.1 percent increase in room supply over the next three years, the highest among the 50 most populated countries. The data showed 73,057 rooms in the Saudi hotel pipeline, with 16,965 scheduled to come online in 2021. 

The Jeddah hotel market is expected to increase hotel supply by more than 97 percent, with 11,198 rooms under development.


Saudia targets post-pandemic profitability, privatization

Saudia targets post-pandemic profitability, privatization
Updated 15 April 2021

Saudia targets post-pandemic profitability, privatization

Saudia targets post-pandemic profitability, privatization
  • Kingdom’s flag carrier gearing up for resumption of international passenger travel on May 17

RIYADH: A few minutes into our interview and it was clear that the CEO of Saudia, the Kingdom’s state-owned flag carrier, wanted to set the record straight about the aviation sector during the coronavirus disease (COVID-19) pandemic.

“Many people believe that since flying has been reduced, we (the airline industry) have just been able to relax and take a breather,” said Capt. Ibrahim AlKoshy.

“Talking to everybody in the airline industry, it’s been one of the busiest times for anyone … We took that challenge as an opportunity to actually come out stronger.”

The aviation industry has certainly had its challenges. In February, the regional president of the International Air Transport Association (IATA) told Argaam that airlines in Saudi Arabia incurred $9.6 billion in losses as passenger traffic fell by 70 percent.

The latest figures released by IATA earlier this month showed that for Middle Eastern airlines, demand in February 2021 was down 83.1 percent compared to the same month in 2019.

Capt. Ibrahim AlKoshy
​​​​​

Flights were grounded in the Kingdom in March 2020. While domestic traffic resumed at the end of May last year, and Saudia is gearing up for international flights to restart on May 17, AlKoshy said it will still be some time before a recovery to pre-pandemic levels.

“Our estimates are pretty much in line with IATA and other airlines because we’re sharing data on market recovery,” he added.

“We don’t see that full recovery taking place in international (passenger traffic) until 2024. The remainder of 2021, we do see a strong domestic (and) slight improvement in international … It seems people are still a bit cautious about long-distance traveling.”

A survey in December found that 46 percent of Saudi respondents are looking forward to traveling internationally once restrictions are lifted.

Saudia is putting everything in place to help inspire confidence in travelers to feel safe getting on an aircraft again.

FASTFACT

Operating to 90 destinations in 36 countries, Saudia has a number of code-sharing agreements and partnerships with airlines such as Abu Dhabi’s Etihad Airways and China Southern Airlines.

AlKoshy said on April 19, Saudia will trial a digital travel and health pass developed by IATA, and has implemented around 50 COVID-related health initiatives on its flights, resulting in it being awarded Diamond status by the Airline Passenger Experience Association for its efforts to ensure the highest standards of cleanliness and sanitation across its operations. “The practices that we did at Saudia weren’t done generically. We actually hired infectious disease physicians to work with us on developing the protocols,” he added.

“We’re quite proud of how we actually put that together … It seems to have gained passenger confidence quite well.”

Rebuilding passenger confidence is important, and one of the main reasons that AlKoshy and his team have not been able to take a breather over the last year.

Operating to 90 destinations in 36 countries, Saudia has a number of code-sharing agreements and partnerships with airlines such as Abu Dhabi’s Etihad Airways and China Southern Airlines. (File photo)

“It’s been a complete revisit to the strategy … We’re really looking at a lot of operational efficiencies, better utilization of all resources, aircraft crew etc., not just because of COVID-19 but it’s the right thing to do. We’ll come out much stronger on this one,” he said.

Reuters reported in December that the Kingdom’s Finance Ministry approved SR13.6 billion ($3.6 billion) for Saudia in 2019, and SR6.4 billion in the first half of 2020. AlKoshy acknowledged that like many companies during the pandemic, help from the government was needed.

While he did not get into exact figures, he said the impression that the airline is heavily government-subsidized is not accurate.

“Saudia is a state-owned airline at this stage. We’re working toward privatization, but the truth of the matter is many of the subsidies that historically people believe Saudia receives are no longer received,” he added.

“We’re operating already on our own budget. There’s been some support for staffing etc. for COVID-19, but I think it’s really important to understand that Saudia actually entered with a strong balance sheet at the beginning of this (pandemic) and we’re doing quite well. However, that’s not to say support hasn’t been received during this period. It’s due to COVID-19.”

AlKoshy forecasts that the airline will be back in the black within a few years. “What we’re looking at is … Saudia sees profitability in 2024 without question,” he said.

Privatization of state assets is a core priority for the Saudi government going forward. “Privatization is part of the plan at the Saudia group level and for the airline as well,” he said.

Last month, the airline signed an agreement worth SR11.2 billion to partially finance new aircraft orders up until mid-2024.

According to its 2020 official factsheet Saudia has 144 aircraft, but AlKoshy confirmed that there are plans for new orders.

“Saudia, when looking at its next fleet offers as well, we have our requirements. We’ll definitely be looking at the best options we have with both Boeing and Airbus,” he said. “And there’s another fleet expansion expected that we’ll be going through, so we’ll see how we can work with Boeing and Airbus. They’ve been partners with Saudia for quite a long time. It’s something we’ll look at.”

Operating to 90 destinations in 36 countries, Saudia has a number of code-sharing agreements and partnerships with airlines such as Abu Dhabi’s Etihad Airways and China Southern Airlines.

“We have very strong plans to strengthen that virtual network of codeshares, possibly through joint ventures. There are many things that are being looked at. Some of them have been actioned already,” AlKoshy said.

As the airline counts down the days to May 17, he and his team will be looking forward to getting back to some form of normalization.

But, as he was keen to point out, they certainly were not resting on their laurels over the last year.

“It’s been a very challenging time for the airline industry as a whole, but we’ll come out much stronger on this one,” he said. “Saudia has very aggressive growth plans.”


O2, Virgin Media win provisional UK approval for $43bn merger

O2, Virgin Media win provisional UK approval for $43bn merger
Updated 15 April 2021

O2, Virgin Media win provisional UK approval for $43bn merger

O2, Virgin Media win provisional UK approval for $43bn merger
  • The two telecommunications groups agreed last May to merge their British businesses to create a broadband and mobile powerhouse in a challenge to market leader BT Group

LONDON: Britain’s competition watchdog said on Wednesday it had provisionally cleared the £31.4 billion ($43.3 billion) merger between broadband company Virgin Media and Telefonica’s UK mobile network O2.

The Competition and Markets Authority (CMA), addressing one of its primary concerns, said that its investigation had concluded the deal was unlikely to result in a substantial reduction of competition in the supply of wholesale mobile services.

“A thorough analysis of the evidence gathered ... has shown that the deal is unlikely to lead to higher prices or a reduced quality of mobile services — meaning customers should continue to benefit from strong competition,” said Martin Coleman, CMA Panel Inquiry Chair.

The regulator said it believed there was sufficient competition within the market to prevent either player raising wholesale broadband or mobile prices to the detriment of rivals who use its infrastructure.

The decision was welcomed by Virgin Media owner Liberty Global Plc. and Spain-based Telefonica, which took note of the CMA’s provisional conclusions.

“We continue to work constructively with the CMA to achieve a positive outcome and continue to expect closing around the middle of this year,” a spokesman for Telefonica told Reuters on Wednesday.

The two telecommunications groups agreed last May to merge their British businesses to create a broadband and mobile powerhouse in a challenge to market leader BT Group.

The two sides said earlier this month that Virgin Media boss Lutz Schuler would become chief executive of the new company.


PIF-backed fund to help UAE HR firm expand into KSA with $20m investment

PIF-backed fund to help UAE HR firm expand into KSA with $20m investment
Updated 14 April 2021

PIF-backed fund to help UAE HR firm expand into KSA with $20m investment

PIF-backed fund to help UAE HR firm expand into KSA with $20m investment
  • Dubai-based Reach Group first recipient from NBK Capital Partners’ $300m Shariah credit fund

JEDDAH: A Dubai-based human resources consultancy firm has become the first company to receive financing from a new $300 million Shariah credit fund anchored by Saudi Arabia’s sovereign wealth fund, it was announced this week.

Reach Group focuses on supplying skilled and semi-skilled employees to government, private-sector companies and quasi-public entities on long-term contracts.

The company has 6,000 outsourced full-time employees in the UAE, making it among the largest temporary staffing providers in the country.

It is planning to use its new $20 million investment to expand into the Saudi market through the acquisition of a local outsourcing company in the Kingdom.

“This transaction provides additional capital for us to expand into Saudi Arabia, which we’ve viewed as a natural growth area for our business,” said Reach Group’s founder and CEO Malik Melhem.

The $300 million Shariah Credit Opportunities Fund was launched in February by the Dubai-headquartered National Bank of Kuwait Capital Partners (NBKCP), a subsidiary of Kuwait’s biggest bank.

The fund’s anchor investor is the Saudi Public Investment Fund, and is expected to make 10-12 investments of $15-$50 million over the next eight years. Reach Group is the first such investment to be announced.

“Reach is a highly reputable leader in outsourced staffing solutions in the region. We were pleased to work with its founder and management team to structure a financing solution that allowed Reach to enter the Saudi market,” said NBKCP CEO Yaser Moustafa.