Mohammed bin Salman is trying to reinvent the petrodollar kingdom. Credit: /SPA/AFP via Getty Images
Oil pumps have long dotted Saudi Arabia's desert landscape, but many factories could soon join them.
Crown Prince Mohammed bin Salman wants to turn the country into a Gulf manufacturing hub as it moves away from oil and gas.
The heir to the $2 trillion Saudi throne wants to increase industrial exports to $148 billion (£116 billion) by 2030, tripling the number of factories to 36,000 by 2035, enabling everything from the military to ships to cars.
So far, he has invested in Lucid, an American electric vehicle manufacturer that plans to build a plant in the country, and has also set up a planned joint venture with Navantia, a Spanish government builder. warships.
He has now set his sights on another lucrative, albeit expensive and notoriously difficult market, fighter jets.
Last week it was announced that the controversial ruler was going to visit the UK in the fall, which happened after a flurry of speculation surrounding the accession of Saudi Arabia to one of the largest military projects in the UK.
Downing Street reportedly wants to make the Kingdom part of the £72bn Tempest programme, originally an Anglo-Italian initiative that Japan joined last year.
Saudi Arabia's rich pockets will be welcome, but industry insiders are concerned about the country's technology offerings as well as its political baggage.
The Tempest project aims to bring a sixth-generation fighter into service by the middle of the next decade, replacing the Eurofighter Typhoon.
Remarkably, Saudi Arabia is reportedly looking to become an official partner of the program rather than just buying a finished product as buyer, as was the case with the Typhoon.
Any partnership will require a major capital investment, but it will create new jobs in Saudi Arabia and help develop Tempest, providing the technology expertise the ruler craves.
Saudi Arabia's announcement of joining the Tempest fighter program as an equal partner has caused concern among Japanese officials. Photo: David Rose
However, rumors of state involvement, along with a planned visit, have been revived. concerns about the human rights situation in the Kingdom and its approach to gay rights.
homosexuality is still a capital offense while the country is also embroiled in years of war in Yemen.
This will also be Mohammed bin Salman (MBS)'s first visit to the UK since the assassination of Washington. Post of journalist Jamal Khashoggi, killed and dismembered on the orders of the crown prince, according to CIA analysis.
He denies any involvement.
From a financial point of view, the enormous cost of building ever more sophisticated military equipment makes the country attractive with its wealth and strong position.
But bringing in such a controversial partner has already made Japanese officials uncomfortable.
Another point raised by insiders is that the country can add in terms of high-end aircraft design, only a few countries in the world are capable of building supersonic aircraft.
However, under MBS, Saudi Arabia has increased its investments and ambitions in industry, technology and defense under the Vision 2030 program as the ruler seeks to wean the country off oil.
“Through a national industrial strategy and in partnership with the private sector, the Kingdom will become a leading industrial power that contributes to the security of global supply chains and the export of high-tech products around the world,” MBS said last year.
The brutal assassination of Saudi journalist Jamal Khashoggi in 2018 still casts a shadow over perceptions of the Kingdom today. Photo: MOHAMMED AL SHEIKH/AFP
The country already has a manufacturing champion in the form of the Saudi Arabian Basic Industries Corporation, known as SABIC.< /p>
Being prominent in the chemical sector, the company also produces auto parts, cosmetics ingredients and metals, last year's sales volume was $53 billion.
The country is also liberalizing, says Roxanne Mohammadian-Molina, a former investment banker and fintech entrepreneur who did business in Saudi Arabia.
“When you go there, it's completely unexpected compared to the preconceived notions that people have,” she said. “He is very open. I have gone there alone many times, you really feel completely safe.
“They are very open to doing business. They are very interested in partnering with other countries, especially British universities, which can attract talent.”
She pointed to the recent success of Tamara, a payment platform based in Riyadh, which received a $150 million loan from Goldman Sachs in March.
“The ambition is very high. I think it's a very long process, you won't become a technology hub overnight,” she says. “But the thing is, things move very quickly in Saudi Arabia.”
Liberalization is among the changes taking place in the country, she added.
“You have big cities like Riyadh that are very developed and progressive, with a young population, but you also have small cities that are still very traditional, and it's a great balance for those interests.”
Women are playing an increasingly important role in the Saudi economy as efforts to liberalize the Gulf state gain momentum. Photo: FAYEZ NURELDINE/AFP
Saudi Arabia is likely to attract a wide range of investments before focusing on areas where it can excel,” says Ayham Kamel, head of the Eurasia Group’s Middle East and North Africa research group.
“I think that they need to experiment with different sectors for a while before they redouble their efforts,” he says. “It's really a wide network. I expect it to be more focused in the future, but we are not there yet.”
The country's current investments range from stakes in Nintendo, Uber and Boeing to Newcastle United Football Club and its controversial takeover of the PGA Golf Tour through its rival LIV Golf.
According to recent reports, Saudi Arabia also wants to become a leader in in the field of artificial intelligence and assembles specialized computer chips needed to develop the AI economy. industry and move part of the production to Saudi Arabia,” he adds.
Riyadh's plan to expand its knowledge in the field of the defense industry is already underway.
In December, the Kingdom signed an agreement with the Spanish shipbuilding company Navatia to establish a joint venture to build warships. The final details of the deal will be agreed next year, but the agreement allows all construction to take place in Saudi shipyards.
The deal allowed the country to “localize the military industry,” Defense Minister Prince Khaled bin Salman said at the time.
UK investment executives are now looking to embezzle more of Saudi Arabia's earnings rather than wait for them to disappear. rivals such as Spain.
From gaming to golf: rising spending in Saudi Arabia
A One City veteran with experience investing in the country expressed disappointment at Saudi Arabia's poor media coverage.
He said, “Saudi Arabia is changing for the better at a staggering rate, and frankly, parts of the press coverage here have been almost wasteful in their biased, biased reporting.
“Saudi Arabia is so much more than Khashoggi. And British business is considered good business. Saudi Arabia is the UK's main trading partner in the Middle East, and the UK is Saudi Arabia's closest ally in Europe.”
The country was the UK's 10th largest export buyer of services last year, with a UK trade turnover of 7 billion pounds sterling. excess with Saudi Arabia.
But in the eyes of outside investors and potential clients, its human rights record should improve. Last year, 196 people were executed in the country, the highest since Amnesty International began recording the numbers 30 years ago.
Polly Truscott, Amnesty International's UK foreign policy adviser, said that MBS “should be duly held accountable for violations”. by Saudi officials, including the killing of Khashoggi, the widespread use of torture in Saudi prisons, and the indiscriminate bombing of civilians in Yemen.”
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