Saudi SMEs at the forefront of the 4th industrial revolution: report 

Saudi SMEs at the forefront of the 4th industrial revolution: report 
The report shed light on the Kingdom’s Future Factories program, dedicated to adopting the best global practices of the fourth industrial revolution. (Shutterstock)
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Updated 06 September 2023
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Saudi SMEs at the forefront of the 4th industrial revolution: report 

Saudi SMEs at the forefront of the 4th industrial revolution: report 

RIYADH: Small and medium enterprises in Saudi Arabia are poised to lead the industrial sector into a new era driven by advanced digital technologies, as outlined by the Centre for the Fourth Industrial Revolution in the Kingdom.   

A report from the think tank underscored the pivotal role SMEs play in the sector and highlights key initiatives currently fostering digital transformation.   

It noted how cutting-edge digital technologies are revolutionizing advanced manufacturing, facilitating connectivity, automation, and artificial intelligence, which, in turn, are boosting production efficiency, productivity, and business resilience.   

Moreover, the report shed light on the Kingdom’s Future Factories program, dedicated to adopting the best global practices of the fourth industrial revolution, as a major driver behind the sector’s digital transformation.    

It also recognized the Knowledge-based Advanced Manufacturing Innovation Network program and the National Productivity program as game-changing strategies currently in place.  

Co-authored by the Saudi Ministry of Industry and Mineral Resources, the Saudi Authority for Industrial Cities and Technology Zones, the World Economic Forum, and Arthur D. Little, it emphasized that SMEs, which operate with constrained resources, require targeted support to develop.  

“The digital transformation of SMEs is crucial for the economic growth and competitiveness of Saudi Arabia,” Al-Badr Foudeh, Saudi deputy minister for industrial development at the Ministry of Industry and Mineral Resources, said.  

He also commended the report for providing insights and recommendations on how to leverage fourth industrial revolution technologies.  

“SMEs play a vital role in the national economy, and it is crucial that they are empowered to adopt and benefit from digital technologies,” Basma Al-Buhairan, managing director of C4IR KSA, said.  

The report further highlighted that SMEs should receive significant support as their impact is as critical as larger enterprises.  

“Digital technology is fundamentally altering the way industries operate, and SMEs should not be left behind. By embracing key enablers such as creating a skilled workforce, increasing access to finance, and upgrading infrastructure, SMEs can overcome challenges and reap the benefits of the digital revolution,” Amer Chahine, senior principal at Arthur D. Little, Middle East, explained. 


MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report

MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report
Updated 18 June 2024
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MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report

MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report

RIYADH: Information technology spending in the Middle East and North Africa region is set to reach $193.7 billion in 2024, a 5.2 percent increase from the previous 12 months, according to a new report. 

In its latest MENA IT Spending forecast, US-based consulting firm Gartner stated that while the outlay in the sector is set to increase, it will be at a slower rate than the 6.6 percent annual rise recorded in 2023.

This comes as tech startups based in the region secured $429 million in funding in the first quarter of the year. Additionally, MENA saw around $1 billion in tech commitments by venture capitals during the first six months of 2024.

Earlier this year, global investment manager Investcorp dedicated $500 million for growth stage tech companies in the region, while venture capital firms Singaporean Golden Gate and UAE’s Polynome Group both dedicated $100 million each for MENA-based tech investments.

Miriam Burt, managing vice president analyst at Gartner, noted that the slowing growth of expenditure in the IT sector is being caused by factors beyond the sector itself.

“While inflation in the region has eased, organizations in the Middle East continue to face challenges due to ongoing uncertainty caused by oil production cuts, downside economic risks linked to regional geopolitical tensions, as well as supply chain disruptions in key shipping routes,” she said.

“As a result, local organizations are becoming more cautious with their IT expenditures,” Burt added. 

Data center spend to fall

Data centers have been the focus of spending in recent years. Shutterstock

The report stated that despite experiencing growth in 2023, spending on data center systems is projected to decline by 0.3 percent in 2024, reflecting a shift toward alternative capabilities. 

Data center system expenditures are set to drop from $4.82 billion in 2023 to $4.80 billion in 2024. 

The systems in data centers include servers, external controller-based storage, and enterprise network equipment. 

“This is due to the rise in demand of alternative options such as software-defined storage, hyper-converged infrastructure software, and the ‘storage as a service’ model,” said Burt. 

MENA IT services spending is expected to record an increase of 9.6 percent in 2024 to reach $19 billion, up from $17.3 billion last year. 

“IT leaders in the MENA region are, in the first instance, spending more on professional and consulting services to prepare their businesses for cloud migration, AI (artificial intelligence), generative AI, and IoT (internet of things) implementations, and secondly, taking advantage of the data monetization opportunities resulting from the convergence of these technologies,” Burt added. 

“Security remains a key area for IT services spending, as well as the increasing purchase of products, services, and tools through ‘XaaS’ (Anything-as-a-Service) consumption models – both contributing to the overall growth of this segment,” she added. 

Demand drop of new devices

Shutterstock

Device spending is expected to decline by 4.5 percent in 2024 due to uneven demand for newer devices, such as mobile phones, in different countries within the MENA region. 

The subsector is set to drop from $28.3 billion recorded in 2023 to $27 billion this year. 

Software is set to see the highest growth in 2024, with spending forecasted at $15.2 billion, up from $13.5 billion in the previous 12 months. 

Communications services are expected to account for the bulk of 2024’s IT spending, with $127.5 billion in expenditures, up from $120 billion in 2023. 

“CIOs (chief information officers) in the MENA region are expected to increase their spending on cloud services. While AI/GenAI has some influence on cloud services spending, it is not expected to have an immediate and significant impact on IT spending levels in MENA in 2024,” said Eyad Tachwali, senior director advisory at Gartner. 

“Regional CIOs’ focus today is primarily on everyday lower-cost use cases rather than on costly game-changing AI,” he added. 

Furthermore, the report stated that global hyperscalers, which have the ability to offer extensive infrastructure for storage and computing facilities for AI and GenAI, are accelerating investments in in-country data centers, particularly world-class green data centers. 

“Some have launched sovereign cloud services tailored to the unique needs of specific Gulf Cooperation Council markets,” Burt said. 

Gartner’s IT spending forecast methodology relies heavily on rigorous sales analysis by over a thousand vendors across the entire range of IT products and services. 

On a separate note, other analysts state that Saudi Arabia is the fastest-growing IT market in the Middle East, Turkiye, and Africa. 

Jyoti Lalchandani, regional managing director of research firm IDC, said wider information and communication technology market spending is expected to reach $37.5 billion by the end of 2024. 

The comments were made during the ICT Indicators Forum hosted by the Saudi Ministry of Communication and Information Technology alongside the Saudi Communications, Space, and Technology Commission in Riyadh on April 24.  

It was further noted that spending in this area across the Saudi government sector would exceed $752 million by the end of 2024 as innovative technologies become foundational to building an “experience economy.” 

“AI, big data analytics, IoT, and cybersecurity spending is poised for tremendous growth and will account for almost one-third of overall IT spending in Saudi Arabia in 2024. Spending on AI in Saudi Arabia will surpass $720 million in 2024, reaching $1.9 billion by 2027 at a CAGR (compound annual growth rate) of 40 percent – half of that will be on interpretative AI,” Lalchandani said. 

“We have seen Saudi Arabia emerge as a hub for the cloud,” he added, with spending on public cloud forecasted to surpass $2.4 billion in 2024 and reach $4.7 billion by 2027.  

Software-as-a-Service will account for more than 50 percent of the 2024 spending. 

IDC further highlighted that spending on cybersecurity alone will surpass the $1 billion mark in 2024 and reach $1.6 billion in 2027. 

“I do remember a few years ago, the cybersecurity market was estimated at about $500 million. Today, we’re talking about literally double that. We’re talking about $1 billion in the cybersecurity industry, and to hear it be called the fastest growing market in the region is really a testament to our beloved nation,” Salman Faqeeh, CEO of Cisco Saudi Arabia, said while speaking on a panel during the forum. 


Malaysia preparing to join BRICS economic group, media report says

Malaysia preparing to join BRICS economic group, media report says
Updated 18 June 2024
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Malaysia preparing to join BRICS economic group, media report says

Malaysia preparing to join BRICS economic group, media report says

KUALA LUMPUR: Malaysia is preparing to join the BRICS group of emerging economies, Prime Minister Anwar Ibrahim said in an interview with Chinese media outlet Guancha, Reuters reported.

The BRICS group of nations originally included Brazil, Russia, India, China, and South Africa, which gave it the acronym.

The group last year began to expand its membership as it looks to challenge a world order dominated by Western economies, with Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the UAE joining and more than 40 countries expressing interest.

“We have made a decision, we will be placing the formal procedures soon ... we are just waiting for the final results from the government in South Africa,” Anwar said, according to a video of the interview posted by Guancha on Sunday.

A representative from Anwar’s office on Tuesday confirmed his comments to Reuters.

During the interview, he did not provide further details on the application process.

Anwar’s comments came ahead of a three-day visit by Chinese Premier Li Qiang this week, as part of celebrations marking the 50th year of diplomatic relations between Malaysia and China.

Malaysia and China are expected to sign several deals during Li’s visit, including renewing a five-year trade and economic cooperation agreement.


Oil Updates – crude edges down amid cautious demand outlook

Oil Updates – crude edges down amid cautious demand outlook
Updated 18 June 2024
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Oil Updates – crude edges down amid cautious demand outlook

Oil Updates – crude edges down amid cautious demand outlook

SINGAPORE/HOUSTON: Oil prices edged down in Asian trade on Tuesday, after posting gains in the previous session, as markets remained cautious about global demand growth prospects amid expectations of stronger supplies, according to Reuters.

Global benchmark Brent crude futures slipped 12 cents, or 0.14 percent, to $84.13 per barrel at 9:15 a.m. Saudi time. US West Texas Intermediate crude futures fell 14 cents, or 0.17 percent, to $80.19 a barrel.

Both benchmarks gained around 2 percent on Monday, closing at their highest since April.

“The oil market shifted its focus back to fundamentals, which have been soft for some time,” said BoFA commodity and derivatives strategist Francisco Blanch in a client note, adding that global crude oil inventories and refined product storage in the US and Singapore, among other places, was higher.

Meanwhile, global oil demand growth decelerated to 890,000 barrels per day year-on-year in the first quarter, and data suggests consumption growth likely slowed further in the second quarter, he said in the note.

China’s oil refinery output slipped 1.8 percent from year-ago levels in May, statistics bureau data showed on Monday, as refiners undertook planned maintenance overhauls and processing margins were pressured by rising crude costs.

Markets were also looking out for further clues on interest rates, and how the US demand situation would pan out, as several US Federal Reserve representatives will be speaking later on Tuesday.

Some analysts remained bullish on the price impact of an extension by the OPEC+ group of supply cuts in the near-term.

“The latest guidance provided by OPEC+, as well as their unchanged 2.25 million barrels per day demand growth outlook, signals a stagnation in oil supply growth for 2024 and an apparent downside risk to production in 2025,” said Patricio Valdivieso, Rystad Energy vice president and global lead of crude trading analysis.

“Under these conditions — and the disconnect between the OPEC+ demand outlook and all other agencies — it is hard to remain fully bearish when global oil supply growth appears decimated,” he added.

Recent rebounds in complex refining margins, particularly in Europe and Asia, were also supportive to markets, said Sparta Commodities analyst Neil Crosby.

Refining margins at a typical complex refinery in Singapore averaged at $3.60 a barrel for June so far, compared with $2.66 a barrel in May. 


Saudi Arabia climbs to 16th place in World Competitiveness Index

Saudi Arabia climbs to 16th place in World Competitiveness Index
Updated 10 min 27 sec ago
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Saudi Arabia climbs to 16th place in World Competitiveness Index

Saudi Arabia climbs to 16th place in World Competitiveness Index

RIYADH: Saudi Arabia’s ongoing economic diversification efforts have propelled the country to the 16th spot in the World Competitiveness Index 2024, up from one place from the previous year.

According to a report from the Switzerland-based International Institute for Management Development, the Kingdom was ranked 24th in 2022 and 32nd in 2021.

The ascent, supported by Saudi Arabia’s Vision 2030 program, is attributed to significant progress in economic performance, government efficiency, and a business-friendly environment.

The report also highlighted that Saudi Arabia ranked higher than several of its G20 peers, including India, the UK, and Japan, as well as other countries like Italy, Argentina, Indonesia, and Brazil and Turkiye.

Majid bin Abdullah Al-Qasabi, Saudi Arabia’s minister of commerce, said that the nation’s growth in the ranking is a testament to the Kingdom’s ongoing economic transformation process, which is being implemented in accordance with the directives of Crown Prince Mohammed bin Salman, according to a press statement. 

Saudi Arabia leading several sub-indicators in the ranking 

The Kingdom also grabbed top spots in several sub-indicators in the ranking, garnering the first position in cybersecurity and long-term employment growth. 

Saudi Arabia was also ranked first in other sub-indicators, including long-term labor market growth and the number of internet users per thousand people. 

The report revealed that the Kingdom was ranked 12th in business efficiency globally, while it secured second place in stock market capitalization and digital transformation implemented in companies. 

Saudi Arabia was also ranked second in indicators such as the availability of venture capital, the development and application of technology, and the availability of financing in technical development. 

Similarly, the nation was ranked third in total early-stage entrepreneurial activity and unemployment legislation. 

The Kingdom also grabbed the 34th spot in the list for infrastructure growth, unchanged from the previous two years. In 2020 and 2021, the country’s ranking in this sub-section was 36. 

However, in terms of economic performance, Saudi Arabia slipped to the 15th spot, down from the sixth position in the previous year but much higher than the 31st and 48th place it procured in 2022 and 2021, respectively. 

When it comes to challenges facing the Kingdom, the report flagged up the need to continue efforts to promote renewable energy and reduce carbon emissions.

It also highlighted how Saudi Arabia must keep enhancing its business environment to increase the private sector’s economic participation, as well as continuing to invest in human capital development across all sectors.

Singapore leads the list

Singapore secured first place in the World Competitiveness Index 2024, climbing three spots from the previous year. 

“The data shows a particularly robust performance for the island nation (Singapore) across the areas of government efficiency and business efficiency,” said the report. 

It added: “In the case of Singapore, potential headwinds to maintaining its position include seizing opportunities and managing disruptions from new technologies, such as AI, by supporting workers in reskilling and businesses in transformation.” 

The release further pointed out that Singapore’s small size and maritime setting have also helped it to top the list. 

Arturo Bris, director of the IMD World Competitiveness Center, said that the ranking, which is published annually, will help nations achieve their economic goals and ensure sustainability. 

“It serves as a benchmark for these countries to measure their progress and identify areas for improvement, offering a clear path toward their economic development but also supporting global goals such as the social development goals,” said Bris. 

He added: “The best-performing economies balance productivity and prosperity, meaning they can generate elevated levels of income and quality of life for their citizens while preserving the environment and social cohesion.” 

Singapore was followed by Switzerland and Denmark in the second and third spots, respectively. 

Ireland was ranked fourth on the list, while Hong Kong and Sweden grabbed the fifth and sixth spots, respectively. 

Climbing three positions compared to 2023, the UAE came in seventh place, followed by Taiwan and the Netherlands in eighth and ninth, respectively. 

On the other hand, Norway climbed four spots from the previous year to 10th place, while Qatar improved its ranking from 12th to 11th this year. 

The US, however, slipped by three positions from 2023 to secure the13th rank, followed by Australia, China, and Finland in the next three spots. 

Bahrain was ranked 21st on the list from the Middle East region, while Kuwait secured the 37th spot. 

The promises and challenges offered by artificial intelligence 

According to the report, the widespread adoption of AI seems like a honey pot to economies seeking productivity boosts. 

“At the micro level, the recent surge in AI-based technologies could boost efficiency and productivity significantly,” said World Competitiveness Center Senior Economist Jose Caballero.

He further noted that the rise of AI is also posing significant challenges, with several companies seeming less proficient in implementing this advanced technology. 

“One of the key challenges for companies is how to implement AI systems that improve efficiency without disrupting business activities. Another is ensuring a chosen AI system’s accuracy; inaccurate systems lead to inefficiencies and reduced productivity,” said Caballero. 

He added: “Furthermore, there is a cost-related challenge given that initial investments in AI technology can be substantial while the ongoing costs of maintenance and upgrades to the systems can be significant.” 

The study further pointed out that AI is the top concern for executives from Western Europe, Western Asia and Africa, and Central Asia, as well as, Southern Asia and the Pacific, North America, and South America.

On the other hand, executives from Eastern Asia and Eastern Europe are most concerned about a global recession, while most participants across the board deprioritize environmental risks. 

“With executives under pressure to balance short-term and long-term priorities, environmental risks are being pushed to the back of the queue,” said the report. 

 


Saudi Arabia’s crude production rose to 8.99m bpd in April: JODI

Saudi Arabia’s crude production rose to 8.99m bpd in April: JODI
Updated 17 June 2024
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Saudi Arabia’s crude production rose to 8.99m bpd in April: JODI

Saudi Arabia’s crude production rose to 8.99m bpd in April: JODI

RIYADH: Saudi Arabia’s crude production increased by 13,000 barrels per day in April to reach 8.99 million, according to an analysis from the Joint Organizations Data Initiative. 

The data indicated that exports over the same month saw a decline despite this growth, dipping by 445,000 bpd to 6 million compared to March.

The Kingdom’s direct burn of crude oil, which involves using oil without substantial refining processes, increased by 93,000 bpd in April compared to the previous month – an 11 percent year-on-year growth. 

The decline in the Kingdom’s crude exports and a marginal rise in production can be attributed to the voluntary cuts adopted by members of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+.

In March, Saudi Arabia announced the extension of its 1 million bpd cut, initially implemented in July 2023, until the end of 2024. 

Earlier this month, the Kingdom’s Minister of Energy Prince Abdulaziz bin Salman said Saudi Arabia will increase its oil production capacity from 2025 to 2027 before returning to a production level of 12.3 million bpd in 2028. 

“In 2025, we will have an incremental increase. We will have a bigger incremental increase in 2026 and 2027. And then we will go back to our 12.3 million bpd production in 2028,” said the energy minister. 

According to JODI Data, total oil demand in India, one of the largest crude consumers in Asia, slipped by 156,000 bpd in April compared to March. 

Similarly, the Asian nation’s total product exports also edged down by 85,000 bpd in April. 

On the other hand, India’s overall crude imports rose by 510,000 bpd, marking an 8.1 percent year-on-year increase. 

Earlier this month, OPEC said that oil demand globally would rise by 2.25 million bpd in 2024, driven by growth in markets such as China, India, the Middle East and Latin America. 

On June 6, speaking at the International Economic Forum in St. Petersburg, Haitham Al-Ghais, secretary-general of OPEC, said that the world will witness continued oil demand growth in the coming years. 

“Last year, OPEC’s forecast for oil demand was the best. And all those who criticized OPEC’s forecast kept adjusting their number throughout the year,” said Al-Ghais.

However, the International Energy Agency forecast oil demand growth to slow as the world continues its energy transition journey, although it noted that there would be growth of 1 million bpd in 2024.