Riyadh's Global Rise: Can Saudi Arabia Become a Business Powerhouse?
Long defined by oil wealth, Saudi Arabia is rapidly reshaping its economic identity. In 2025, the Kingdom's ambitious Vision 2030 reform program is positioning it as an emerging global business hub, with data pointing to deepening international integration and a shift toward sustainable, diversified growth.
Pivoting Beyond Oil
The latest GDP figures highlight the shift: non-oil economic activity powered a 4.2% growth in the first quarter of 2025, signaling tangible progress in reducing the Kingdom's long-standing reliance on hydrocarbons.
At the heart of this transformation is the Public Investment Fund (PIF), the sovereign wealth fund now managing over $700 billion in assets.
Its investments span technology, infrastructure, logistics, tourism, and green energy—aligning with Vision 2030's goals of economic diversification and innovation-led development.
Business-Friendly Reforms
Reforms are playing a key role. Saudi Arabia has introduced sweeping changes to attract investors, including allowing 100% foreign ownership in most sectors through licenses issued by the Ministry of Investment (MISA), and drastically reducing business setup times.
The result: improved rankings. The Kingdom climbed in the 2025 Global Intellectual Property Index, reflecting enhanced protections for investors and innovators.
Strategic Growth Zones
Flagship projects like NEOM and the creation of five Special Economic Zones (SEZs) are central to Vision 2030.
These SEZs are tailored to high-growth industries—including FinTech, healthcare, e-commerce, renewable energy, and digital infrastructure—offering tax incentives and regulatory advantages to global investors.
Construction, logistics, and the digital economy are also seeing heightened activity, as Saudi Arabia aims to become a regional—and eventually global—hub for supply chains and innovation.
Rising Global Engagement
Foreign direct investment (FDI) continues to grow. In Q1 2025, net FDI inflows reached SAR 22.2 billion ($5.9 billion), up 44% year-on-year, as investor confidence in the Kingdom's long-term strategy strengthens.
Saudi Arabia also rose to 17th place in the 2025 IMD World Competitiveness Ranking, outperforming several larger economies and reflecting the country's growing business appeal on the global stage.
Outlook: Regional Dominance, Global Reach
With non-oil GDP expanding, investment flows accelerating, and reforms deepening, Saudi Arabia is fast approaching its goal of becoming a major global business hub.
Its growing dominance in logistics and ease of doing business are expected to further solidify its position as both a regional powerhouse and a serious global contender.
The transformation, once viewed with skepticism, is now beginning to yield measurable results—with Riyadh emerging as a city to watch in the global economy.
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Arab News
11 hours ago
- Arab News
How KSA is blending compliance and innovation to build a global startup hub
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'In Saudi Arabia, the central bank has been continuing its mission and its plan of rolling out open banking,' he added. 'This is obviously a multiyear effort, and it's culminating now with the introduction of the PIS, the Payments Initiation Service, which is expected to go live soon,' Al-Falih said. He recalled that when Lean Technologies launched in 2019, few policymakers had a roadmap for modern fintech. 'None of these regulatory kind of bodies really adopted open banking and had plans for it,' he said. 'And so there've been years of discussions and conversations and back and forth with a variety of industry bodies to get to where we're getting to today.' He added that Lean has worked closely with regulators to help shape the emerging framework. Beyond fintech, the Kingdom has implemented comprehensive reforms to the legal framework governing all businesses. In February, the government passed a new Investment Law establishing a unified framework for foreign and domestic investors, with enhanced protections and simplified procedures. At the same time, a revised Companies Law introduced the Simple Joint Stock Co., designed to make it easier to incorporate and operate a startup. Companies were required to update their Articles of Association by Jan. 18, marking a nationwide effort to align corporate governance with international norms. These changes coincide with record-breaking momentum in the broader startup ecosystem. In 2025, Saudi Arabia was recognized as the fastest-growing startup environment in the world, according to the Global Startup Ecosystem Index, which reported Riyadh had climbed 60 places to rank 23rd globally. Venture funding has accelerated sharply, achieving a 49 percent compound annual growth rate from 2020 through 2024, with artificial intelligence startups emerging as a priority. Riyadh's growth was catalyzed by a policy-driven approach that prioritized both scale and specialization. According to the 2025 Global Startup Ecosystem Report by Startup Genome, more than 200 fintech companies now operate in the Kingdom, supported by the Saudi Central Bank's regulatory sandbox and Fintech Saudi's market-building efforts. The report highlighted startups such as Lean Technologies, Rasan, and Tamara as examples of companies attracting substantial regional and international capital, with major financial institutions serving as early adopters and anchor clients. In addition to fintech, the report praised the Kingdom's progress in cybersecurity, noting that Riyadh-based firms like Mozn and sirar by stc are developing artificial intelligence-powered solutions for identity verification, fraud detection, and compliance. Saudi Arabia has emerged as the leading hub for venture capital activity in the Middle East and North Africa, raising $860 million in the first half of the year — a 116 percent year-on-year increase — supported by sovereign initiatives and rising foreign investor interest. According to regional venture platform MAGNiTT, the Kingdom recorded 114 VC deals during the period, representing a 31 percent increase from the same time in 2024, and continuing its momentum from the previous year, when it secured the largest volume of funding in the region for the second consecutive year. This surge in venture activity is further underpinned by structural reforms and policy incentives. As of mid-2025, Saudi Arabia's Ministry of Investment had issued 550 Startup Investment Registrations, known as Riyadi licenses, reflecting a 118 percent annual growth. While Saudi Arabia's ambition to become a digital-first economy is undisputed, Mousilli cautioned that rapid change can overwhelm young companies. 'The challenge comes when compliance is so burdensome or complex that it diverts resources away from core growth,' he said. 'For example, in fintech, a startup may spend months navigating licensing or anti-money laundering requirements — before they've even validated their product-market fit.' As a result, he noted, some founders default to 'we'll deal with it later,' exposing themselves to legal risk. The Kingdom has signaled that it wants to avoid this trap. Regulators are increasingly adopting risk-based supervision models that calibrate oversight according to the size and systemic impact of each company. 'The most effective regulators understand that a small startup doesn't need the same oversight as a multinational bank,' Mousilli said. 'Saudi Arabia is beginning to adopt this risk-based approach, which is a positive sign.' To complement the regulatory overhaul, the government has introduced new compliance mandates around ultimate beneficial ownership disclosures, enhanced anti-money laundering protocols, and environmental, social, and governance reporting, reinforcing transparency and investor confidence. The Digital Government Authority reported that digital transformation readiness exceeded 74 percent in 2025, underscoring a push to digitize public services and reduce administrative delays. For founders, this shift is not merely regulatory — it is cultural. Al-Falih said that collaborative policymaking has become a defining characteristic of the Saudi tech sector. 'We've been working closely with the Central Bank and the associated parties in the ecosystem to provide our feedback, our notes on how their framework is being written, and to obviously engage with them in a productive way,' he said. In the view of many entrepreneurs, these conditions are creating fertile ground for growth. 'I would argue that the region has some of the best regulations and infrastructure set up,' Al-Falih said. 'And so we will be one of the more successful parts of the world to introduce these technologies.' Still, legal experts caution that unresolved issues — such as the enforcement of intellectual property rights, clarity in employment law, and the efficiency of dispute resolution — remain on investors' radar. Mousilli observed that, despite the progress, Saudi Arabia will need to maintain its momentum to consolidate its gains. 'The frameworks are improving, but clarity and consistency, especially in implementation, remain key areas to watch and develop,' he said. Yet for those building the next generation of technology companies, the convergence of regulatory ambition and economic transformation is unmistakable. As Al-Falih put it: 'This is one of the best times to be alive and one of the best times to be a member of the tech community in the GCC.'
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Saudi Sovereign Fund Grows Assets 19% to $913 Billion
Saudi Arabia's Public Investment Fund (PIF) has continued to cement its role as a driving force behind the Kingdom's economic transformation, posting record growth in managed assets and strong financial results in its 2024 annual report. The figures show the fund now contributes 10% of Saudi Arabia's non-oil GDP, with managed assets reaching SAR 3.42 trillion ($913 billion) and more than $171 billion invested in priority sectors since 2021. According to the report, released Wednesday, PIF's managed assets rose 19% year-on-year to SAR 3.42 trillion by the end of 2024, generating an average annual shareholder return of 7.2% since 2017. Revenues climbed 25% over the same period. Liquidity and cash positions remained stable, with the fund maintaining a robust balance sheet. The report highlighted substantial progress in delivering on the fund's strategic investment targets, reinforcing its status as one of the largest and fastest-growing sovereign wealth funds in the world. PIF's cumulative contribution to non-oil GDP from 2021 to 2024 reached SAR 910 billion, with an expected total impact of SAR 1.2 trillion by the end of this year. PIF Governor Yasir Al-Rumayyan said 2024 marked 'a new and promising phase of exceptional performance and qualitative innovation,' characterized by the systematic integration of artificial intelligence, smart automation, and advanced digital capabilities across all operations. He noted that this shift represents not just technological advancement, but a 'transformational approach' in how PIF invests, operates, and delivers economic and social impact globally. For his part, Chief Financial Officer Yasir Alsalman reported that SAR 213 billion were directed to priority sectors in 2024 alone, bringing total investments in such sectors since 2021 to over 642 billion riyals. In turn, Acting Chief Operating Officer and Board Secretary General Maram Al-Johani said PIF maintained its long-term vision while strengthening its influence locally and internationally, continuing to lead Saudi Arabia's economic diversification and generate sustainable returns. The fund's international portfolio expanded further in 2024, targeting sustainable returns through long-term investments and strategic partnerships in key global markets. PIF's overseas investments aim to diversify assets and income streams, secure partnerships with major corporations and investors, and back advanced technologies that support Saudi Arabia's economic ambitions and shape the future global economy. PIF diversified its funding base in 2024, securing SAR 36.855 billion ($9.83 billion) in public loans and nearly SAR 26 billion ($7 billion) in private loans. The fund's stability has earned global recognition, with Moody's upgrading its credit rating from A1 to Aa3 in 2024, and Fitch affirming its A+ rating with a 'stable' outlook. Governance standards also drew praise. PIF scored 96% in the 2024 Governance, Sustainability and Resilience Index from Global SWF — a sharp improvement over 2021 — and ranked first worldwide among 200 sovereign investors, achieving 100% compliance in 2025. It also topped the global list of most valuable sovereign wealth fund brands, with a valuation exceeding SAR 4.13 billion, earning an A+ rating from Brand Finance.
