The impact of entertainment ventures on Saudi Arabia’s economy

The impact of entertainment ventures on Saudi Arabia’s economy
The significant rise in net flows from tourism activities indicates the progress made by the government to diversify from a predominantly hydrocarbon-based economy. (SPA)
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Updated 02 September 2023
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The impact of entertainment ventures on Saudi Arabia’s economy

The impact of entertainment ventures on Saudi Arabia’s economy
  • New tourism and entertainment initiatives are among the country’s top drivers for non-hydrocarbon economic growth

RIYADH: Saudi Arabia is reaping the rewards of its substantial investments in diversifying its economy, with a key focus on the entertainment and tourism sectors. These investments have not only improved the nation’s income potential but have also paved the way for a departure from its reliance on hydrocarbons. 

The results of these efforts are evident in the figures published by the Saudi Central Bank for July, which revealed a surplus of $17.7 billion in the Kingdom’s current account balance during the first quarter of 2023. This reflects a significant revenue boost from tourism, reaching $9.8 billion in the first quarter compared to $3 billion in the same period the previous year.  

The OECD Tourism Trends and Policies 2022 report validates Saudi Arabia’s commitment to developing its tourism industry as one of the Kingdom’s fastest-growing sectors, significantly contributing to the national economy while creating a substantial number of jobs.  

Adel Noueihed, managing director of Imagination Middle East, a global creative agency, highlighted that on a global scale, entertainment contributes to 4 percent of gross domestic product, while tourism accounts for 7 percent.  

“When it comes to economic diversification, this is what KSA should aim to achieve when opening up these sectors,” he told Arab News. 

“And these numbers make sense if you’re trying to diversify away from hydrocarbons that these sectors would be two really clear pillars of things the government can do to diversify,” Noueihed added. 

Christophe Castagnera, strategy head of Imagination Middle East, echoed this sentiment, highlighting the untapped potential for experiences in Saudi Arabia.  

“We know in Saudi that in every vertical, there are sports, music, technology and performing artists, whether traditional, hyper modular or futuristic, like NEOM. There is now a whole new opportunity for these spaces to fill, which is brilliant,” he said.  

Castagnera underscored that these ventures are “a big part and a big driver” of what the government is doing with its strategic work and new initiatives.  

At the regional level, the strategy head pointed out that he has never witnessed such a multi-layered approach to building the experience economy, especially in terms of the intricacies involved in planning, investment, creative thinking and imagination required in the projects.

Driving growth

Saudi Arabia’s Vision 2030 is driving specific support measures for the entertainment sector, with a goal of contributing over $23 billion or 3 percent of GDP and creating more than 100,000 jobs by 2030. It also has a $64 billion investment plan to further bolster the sector’s growth.  

“It’s (entertainment) a booming industry globally,” added Noueihed. “I think as people get more prosperous in certain parts of the world, they’ve got more disposable income, more time, and they want to spend that in different cultural entertainment activities. It’s a good play.”  

The tourism sector, too, is undergoing rapid expansion, with the aim of tripling employment to 1.6 million people and tripling its contribution to GDP to 10 percent by 2030. 

There’s an untapped market for experien-ces now in Saudi Arabia, which is brilliant.

Christophe Castagnera, Strategy head of Imagination Middle East

Castagnera outlined two key facets of the entertainment and tourism sectors.  

“There’s the domestic one as well as the international one. I think domestically there’s been entertainment hubs in Saudi Arabia, more from an underground or in-home point of view,” he explained.  

However, with the ambitious Vision 2030 initiative, Castagnera outlined that substantial investments have been made to draw various levels of entertainment ventures.   

He highlighted two prominent ones, saying, “Qiddiya and Seven being the two main ones” as the primary drivers of this transformation.”  

Even in the business sector, the Kingdom has film commissions, film sets and gaming, which are critical drivers for investment in the entertainment industry.

Economic showstoppers

One standout project is Saudi Entertainment Ventures, known as Seven, which recently announced a $346 million amusement destination. This venture is poised to offer immersive experiences and family recreations, enhancing the quality of life for millions of Saudis.  

The unveiling of Seven’s project came at an exciting time for Saudi Arabia as its economy grew by 1.1 percent in the second quarter compared to the year-ago period, spurred by a 5.5 percent surge in non-oil activities.  

Seven, a wholly owned subsidiary of the Public Investment Fund, has begun construction work on its SR1.3 billion ($346.54 million) entertainment destination in Madinah.  

The project, in collaboration with BUJV, a joint venture by Al Bawani Co. and UrbaCon Trading & Contracting, aligns with the Kingdom’s strategy and vision to improve the lives of Saudis, revitalize communities, and boost tourism. 

On a global scale, 4 percent of GDP comes from entertainment, and 7 percent comes from tourism. When it comes to economic diversification, this is what KSA should aim to achieve.

Adel Noueihed, managing director of Imagination Middle East

“Our entertainment destination in Madinah will transform the entertainment landscape of the region and bring new, unique, and exciting experiences to the people of Madinah, supporting Seven’s aims to enrich the quality of life for millions of Saudis,” said Seven Chairman Abdullah Al-Dawood, in a statement at the launch.  

The unveiling of Seven’s project is part of a broader trend in Saudi Arabia’s entertainment and tourism sectors, which have been driving positive economic growth in recent years.   

This growth is evident in the International Monetary Fund’s projection of Saudi Arabia’s non-oil GDP, which is expected to increase from 3.9 percent in 2020 to a solid 4.3 percent in 2023.  

This steady rise in net flows from tourism activities underscores the nation’s successful diversification efforts away from a predominantly hydrocarbon-based economy.

Addressing challenges

While challenges remain, particularly in job creation, there is a push to overcome them.  

What must still be seen is the steady growth of the private sector and the creation of jobs over the next few years for the young Saudi population, among which two-thirds are under 30. This change, too, is happening. 

Our entertainment destination in Madinah will transform the entertainment landscape of the region and bring new, unique, and exciting experiences.

Abdullah Al-Dwood, Seven chairman

“The challenges will take time, but the ambition is there,” said Noueihed. “When it comes to enhancing the local sector, the quick route for a lot of entertainment and even tourism is to import intellectual property.”  

What will transform over time, continued Noueihed, is how local brands and flavors emerge in the Kingdom, encouraging an artistic and cultural renaissance in the region that will grow into a global industry to reckon with.   

“All they need is the right tools, exposure, and funding to create exciting local IP that’s nuanced and relevant to the local market. I think that’s quite important as well. And that will differentiate Saudi from other parts of the GCC and even the Arab world,” Noueihed concluded.


AI can bridge North-South divides, Accenture CEO tells FII summit

AI can bridge North-South divides, Accenture CEO tells FII summit
Updated 6 sec ago
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AI can bridge North-South divides, Accenture CEO tells FII summit

AI can bridge North-South divides, Accenture CEO tells FII summit
  • Julie Sweet: ‘One of the things that’s been great to see is Saudi Arabia taking the lead in many places’
  • ‘It’s really important to always stay focused on what are the opportunities with AI to solve the world’s problems’

MIAMI: Artificial intelligence has the potential to bridge North-South divides, Accenture’s CEO told the Future Investment Initiative Priority summit in Miami on Thursday.

Julie Sweet explored the far-reaching impact of AI on addressing global challenges in a panel discussion titled “FII Priority Compass: What matters most to citizens?”

She said: “The question is how much AI can actually help the Global South and the countries that need help through precision farming, through telemedicine and better healthcare.”

Highlighting Saudi Arabia’s proactive stance in leveraging AI for societal advancement, Sweet stressed the importance of global collaboration in harnessing AI’s potential to tackle complex issues.

“One of the things that’s been great to see is Saudi Arabia taking the lead in many places to think through how can AI help and how can they be a leader.

“So I think it’s really important to always stay focused on what are the opportunities with AI to solve the world’s problems.”

However, Sweet acknowledged that the definitive solution to utilizing AI to close existing divides is not currently available.

Highlighting the vital efforts of organizations such as the UN, she emphasized the urgency of understanding how technology can be harnessed to avoid widening disparities.

Since the increased accessibility of AI in the public market and its “democratization,” experts have emphasized the need to regulate the technology.

“Regulation needs to be the outcome of a very strong public-private partnership, because most governments in the world don’t have the access or the talent inside to know it,” Sweet said, adding that there have been a few successful examples of governments balancing innovation and safety.

“That’s one of the most important things that governments need to do, particularly because the technology is changing rapidly. And I think the good news is that everyone has agreed that some regulation is needed.”

Regarding AI-related risks in the upcoming US election, Sweet cautioned against relying solely on government regulation. Instead, she advocated for increased collaboration among private entities.

“That’s as important as government regulation,” she said. “It’s responsible companies coming together in an agile fashion to solve the risks.”

Addressing concerns about job displacement due to AI, Sweet said while her role as a lawyer would persist, the nature of the job would evolve. She emphasized the need to reskill workforces and prepare the new generation to use AI.

Sweet highlighted Accenture’s annual investment of $1.1 billion in staff training, and stressed the importance of adapting school curricula to future-proof the younger generation through enhanced communication skills and basic technology education.

“All of us will have to continue to adapt and learn … because our skills have to constantly be improved and there’s so much change,” she concluded.


Oman opens its market to Brazilian live cattle

Oman opens its market to Brazilian live cattle
Updated 23 February 2024
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Oman opens its market to Brazilian live cattle

Oman opens its market to Brazilian live cattle
  • Announcement made following meeting of officials from both countries in Muscat
  • Both sides emphasized interest in expanding governmental cooperation, commercial partnerships

SAO PAULO: The Brazilian livestock sector is now authorized to export live cattle for slaughter and fattening to Oman.

The announcement was made after a meeting between Roberto Perosa, Brazil’s secretary for trade and international relations, and Ahmed Nasir Al-Bakri, undersecretary at Oman’s Agriculture Ministry. There were other members of the Omani government at the meeting.

“This new market adds to the other 14 opened this year, totaling 93 since the beginning of last year, during President Lula’s third term,” Perosa said.

“At the request of (Agriculture) Minister Carlos Favaro, we continue our mission in the Middle East, visiting countries aiming to expand Brazilian agricultural trade, opening new markets, obtaining approvals for plants through the pre-listing system (eliminating the need for local audits), and negotiating the import of nitrogen fertilizers.”

The Brazilian delegation visiting Oman also includes Julio Ramos, deputy secretary for trade and international relations, and Marcel Moreira, director of trade promotion and investments.

These new markets are the result of joint work by Brazil’s ministries of agriculture and livestock, and foreign affairs.

Representatives of both countries’ agriculture ministries emphasized their interest in expanding governmental cooperation and commercial partnerships.

They identified synergies between Oman’s Vision 2040 plan, which includes food security, and the Brazilian program to convert degraded pastures into agricultural areas.

They also discussed the possibility of partnerships in areas such as fertilizers, sugar, grains for animal feed, live animals, chicken meat and fish.

The Brazilian delegation also met with Ibtisam Ahmed Said Al-Farooji, undersecretary for investment promotion at Oman’s Ministry of Commerce, Industry and Investment.

She presented an Omani program that aims to increase investments in her country and abroad, focusing on food security and Oman’s interest in becoming a hub for the Gulf region.

Al-Farooji also underlined Oman’s neutrality and stability, adding that Brazil could be a great partner.

During the meeting, Perosa emphasized the good relations and complementarity between the two countries, saying Brazil could contribute even more to Oman’s food security and encourage Brazilian companies to process their products in Oman, as is the case with chicken and beef.

He added that the program to convert degraded pastures into agricultural areas represents a great opportunity to strengthen this partnership, including the possibility of acquiring nitrogen fertilizers from Oman.

The Omani side welcomed the idea and said that along with the Oman Investment Authority and Nitaj, the government arm for promoting food security, it will help build the partnership strategy between the two countries.


Transformation of Saudi economy creates opportunities, Public Investment Fund official tells investors

Transformation of Saudi economy creates opportunities, Public Investment Fund official tells investors
Updated 23 February 2024
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Transformation of Saudi economy creates opportunities, Public Investment Fund official tells investors

Transformation of Saudi economy creates opportunities, Public Investment Fund official tells investors
  • Jerry Todd tells Future Investment Initiative Priority forum in Miami that structural economic changes in the Kingdom require global resources and talent, capital and operating capacity
  • Former US Treasury Secretary Steven Mnuchin highlights opportunities for investment in clean energy and energy transformation in the wider Middle East

LONDON: It is important that investors understand the long-term structural changes to the Saudi economy that are taking place and the opportunities they offer, the head of the National Development Division at the Saudi Public Investment Fund said on Thursday.

Speaking at the Future Investment Initiative Priority forum in Miami, Jerry Todd said the three pillars of this transformation are industrialization of the economy, the development and expansion of service sectors, and the building-up of green energy capacity.

“Vision 2030 is the blueprint for this economic transformation, and it is a national project but it requires global resources, global talent, capital and operating capacity,” he said. “The attraction of those into the Kingdom is embedded into that blueprint.

“The question of what happens next is really a function of whether people in this room, and people in rooms like this, are learning more and trying to understand what’s happening (in the Kingdom). Personally, I’m optimistic, I think there’s a growing awareness of the opportunities being created.

“(Another thing that is changing) is the ability of the domestic economy to absorb longer-term investment, in large part through the industry-building that’s happening as part of Vision 2030. It’s creating chances for people to come in and capture asset-level opportunities.”

Former US Treasury Secretary Steven Mnuchin said there are a lot of opportunities for investment in the wider Middle East region in relation to clean energy and energy transformation. (Screenshot/FII Priority)

Former US Treasury Secretary Steven Mnuchin echoed that sentiment and said there are a lot of opportunities for investment in the wider Middle East region in relation to clean energy and energy transformation.

He warned, however, that if the region is to remain an attractive investment hub, the threat Iran poses to regional stability and security must be addressed, primarily through tougher and more rigidly enforced sanctions on the regime in Tehran.


AI will drive efficiency amid global economic slowdown, leading financiers tell FII Priority Summit

AI will drive efficiency amid global economic slowdown, leading financiers tell FII Priority Summit
Updated 23 February 2024
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AI will drive efficiency amid global economic slowdown, leading financiers tell FII Priority Summit

AI will drive efficiency amid global economic slowdown, leading financiers tell FII Priority Summit
  • 'AI is the bicycle of the minds — we are all going to have to learn how to ride it,' said the head of Claure Group
  • Johnson of Franklin Templeton noted that the supply chain was shifting

MIAMI: The chiefs of four of the world’s leading corporations stressed on Thursday, during the first day of the Future Investment Initiative Miami Summit, that while artificial intelligence has the potential to drive higher investment and economic growth across the world despite the current slowdown, it can cause significant harm if not regulated at the right pace.

Marcelo Claure, founder and CEO of Claure Group, told the “Board of Changemakers” panel that when it comes to AI, it is hard in many cases “to differentiate (between) what is hype versus what is reality,” but regardless, all businesses would have to incorporate the technology into their work if they wanted to succeed in the next few decades.

“AI is the bicycle of the minds — we are all going to have to learn how to ride it,” he said.

Claure pointed out that when the browser was invented 30 years ago, it “made the cost of information zero,” which led to the creation of global companies like Google.

He added that AI is going to “reduce the cost of three very important things to basically zero: cognition, creativity, and problem-solving.”

He said: “In our companies, we hire thousands of people, we pay them to do what? We pay them to think, we pay them to problem solve, we pay them to be creative, and AI is going to enhance that.”

As an example of how Claure’s company utilized AI for higher efficiency, he mentioned that his teams used to require about 100 hours to manage a marketing campaign. However, after employing AI, the same process took less than an hour.

“So, think about a 99 percent efficiency,” he said.

Highlighting that generative AI, such as ChatGPT, will develop an IQ level of 12,000 in the next three to four years, Stephen Schwarzman, chairman and CEO of Blackstone Group, stressed the importance of “ethics in AI.”

He told the panel of CEOs: “In terms of the downsides of the technology, that in the hands of bad actors, call them rogue states, will have the use of this very powerful technology — that is a bad thing.”

Schwarzman highlighted that AI technologies are “moving so quickly,” making it more of a challenge to “catch up” and “protect systems.”

He added that experts in the field, such as MIT (Massachusetts Institute of Technology) scientists, “are really cautious about this technology.”

He said: “In other words, they love it. It can do marvelous things, but unlike most of the business community, they are not against regulation. In fact, they are pretty enthusiastic about regulation because they see the downsides, and they want those downsides addressed.

“And one of the things I have tried to do with both AI ethics centers at MIT and at Oxford, is try and be part of that dialogue, encourage people to be thinking about this — there is a lot of stuff going on in the regulatory world.”

Echoing Claure’s observation that AI is advancing rapidly, Schwarzman emphasized the importance of responding with the appropriate regulations at a fast pace.

“This is moving so fast, whatever you come up with, it’ll be obsolete pretty quickly,” he said.

In addition to AI, Jennifer Johnson, president and CEO of Franklin Templeton, identified five broad trends that may define the next decade in investments: demographics, deglobalization, digitization, decarbonization, and debt.

Like the rest of the speakers, Johnson stressed the importance of regulating AI.

“The problem is, it is scary,” she said. “But on the other hand, if we do not create environments where the good folks are learning how to use AI, the bad guys become the experts on it.

“And, so, you have to create and allow for innovation to happen.”

Speaking about deglobalization, Johnson highlighted that the supply chain was shifting.

She said: “It’s the China plus one, the nearshoring, the French shoring. But the key is that capital is moving.”

She added that “capital goes where capital is treated well — where there is a political will to create policies like the Kingdom (of Saudi Arabia) is doing to create opportunities for investment.”

Johnson referred to the shifting of supply chains as “disinflation,” but she also noted that “the raising of interest rates to slow down the economy” means that while there is a global growth slowdown, there are also “pockets of strength … like (in) India.”

Alongside Claure, Johnson and Schwarzman, panelists partaking in the roundtable discussion also included Pierre Beaudoin, chairman of the board of Bombardier, and Pam Liebman, president and CEO of The Corcoran Group.


Saudi Arabia set to be global leader in ‘positive’ use of AI, Public Investment Fund chief predicts

Saudi Arabia set to be global leader in ‘positive’ use of AI, Public Investment Fund chief predicts
Updated 22 February 2024
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Saudi Arabia set to be global leader in ‘positive’ use of AI, Public Investment Fund chief predicts

Saudi Arabia set to be global leader in ‘positive’ use of AI, Public Investment Fund chief predicts
  • Yasir Al-Rumayyan tells Future Investment Initiative Priority forum in Miami the focus should be on harnessing the benefits the technology can offer the global economy
  • Kingdom ‘well positioned to become an AI hub outside of the US’ thanks to its energy supplies, and the political will and financial resources to develop the technology

LONDON: Artificial intelligence will dominate the global investment conversation for the foreseeable future, the governor of the Saudi Public Investment Fund predicted.

Speaking on the opening day of the Future Investment Initiative Priority forum in Miami on Thursday, Yasir Al-Rumayyan said the focus should be on harnessing the benefits AI can offer the global economy, including its potentially game-changing effects on global gross domestic product.

“I think AI is coming, it’s going to come in a big way, and I think the impact will be very positive once we have the right set of regulations that will monitor, control and enable the AI ecosystem,” he said.

Saudi Arabia is on course to become a world leader in AI, in terms of innovation and development, he added.

“We are very well positioned to become an AI hub outside of the US for many reasons,” said Al-Rumayyan.

“Number one … nobody talks about energy; AI (development) will consume a lot of energy. We are the global leaders when it comes to fossil-fuel energy and when it comes to renewable energy. But we also have the political will and we have the funds needed for deployment in this initiative.”

As boss of Public Investment Fund, the main economic engine for Saudi Arabia’s Vision 2030 reforms agenda, Al-Rumayyan also updated delegates on the progress of the economic reforms in the Kingdom.

“The difference between (Saudi Vision 2030) and the visions presented by other countries is we are achieving a lot of the KPIs (key performance indicators) ahead of schedule,” he said.

“One of the numbers I really like to reference is the women in the workplace in the Kingdom; our target was 20 percent by 2030, we achieved 30-plus percent by the year 2020.”

Al-Rumayyan also confirmed that the FII is launching two new forums, in Brazil and the Kenyan capital Nairobi. The potential for investment in Latin America and Africa is huge, he said, but not enough focus was being placed on it.

The Brazil forum will focus on the issues of deforestation and the transition from fossil fuels to renewable energies, which are vital to the development of South America, Al-Rumayyan said. In Nairobi, the discussions will center around the massive opportunities offered by Africa’s expected population growth over the next decade.