Several sectors in Saudi Arabia are emerging as attractive goals for local and foreign investors, as they are key contributors and as enablers to achieving the country's Vision 2030.
The education system is being reshaped in an effort to improve its quality and outcome. The country is focusing on developing early childhood education, refining national curriculum and training its teachers and educational leaders. In addition, it is reforming the regulations paving the way for investors and the private sectors.
In a rapidly growing & young population as KSA, the government recognizes the importance of Housing sector to its citizens and took completely different approach to realize its commitments: by adopting new technologies like 3D printing, using more prefabricated buildings, leveraging robots for construction, providing many incentives for private sector players like funding and risk sharing.
The Kingdom's financial sector comprises banking, capital markets, insurance, fin-tech and others. The Kingdom's regulatory system matches the international standards for banking supervision. Moreover, the newly introduced capital markets law allows for brokerages, asset managers, and other non-bank financial intermediaries to operate in the country. These large efforts are making the Saudi Arabian financial sector even more stable and very integrated with all main international markets and banking systems.
Saudi Arabia considers education to be its engine of development. As such, KSA is implementing groundbreaking measures that will adorn its youth with the most equipped and sophisticated classrooms available.
Great strides await the largest education system in the GCC as it paves the way for the construction of 2621 new schools to serve over a million new students by 2020. With the private sector on board and the relaxing of restrictive regulations, the education sector is set to more than double in size by 2023. The Saudi government is fully committed to supporting the growing local education market and has allocated the second biggest portion of its fiscal budget towards education, placing it 8th in the world in terms of education expenditure. As the digital age enters maturity, Saudi schools and universities are to benefit from cutting-edge facilities that transform classrooms into technologically interactive learning centers.
The education sector in Saudi Arabia is the largest among the GCC nations for both the K-12 and tertiary education segments. Its infrastructure includes more than 30,000 public schools, 25 public Universities, 27 private universities and a large number of colleges.
KSA accounts for approximately 75% of the total gross enrolment in the K-12 segment, with approximately 300,000 students in kindergartens and 5.6 million students enrolled at the primary and secondary levels. Beyond K-12, Saudi Arabia has the highest gross enrolment ratio in tertiary education compared to others in the GCC (61%). The tertiary education market in KSA consists of approximately 128,000 students in Technical and Vocational Education and Training (TVET) and 1.4 million students in higher education institutes. The size of the education market is expected to significantly increase due to rising participation and the growing student population. Consequently, demand for public/private Kindergartens, schools and universities is set to increase considerably. By 2020, 80,000 additional seats will be needed at the Kindergarten level, 300,000 are needed at the primary level (Grade 1-6), 300,000 at the intermediate level (Grades 7-9), 400,000 at the secondary level (Grades 10-12) and 125,000 at the higher education level.
Over recent years, the KSA education market has seen a shift towards the private sector. Private schools have seen a 4% compound annual growth rate (CAGR) whilst higher education institutes have seen a 15% CAGR. Several trends are driving this shift towards private education; including government incentives for the private sector to play a key role in education reforms, the expanding expat population (5% CAGR over the past 10 years compared to 1% CAGR in Saudi National population) and increasing interest among Saudis seeking better outcomes by enrolling their children in international private schools.
At the current growth rate, it is expected that 70,000 additional private school seats will be needed at the primary level (Grade 1-6), 20,000 will be needed at the intermediate level (Grades 7-9) and 60,000 will be needed at the secondary level (Grades 10-12).
The Saudi Government has set ambitious targets to grow the share of private school students from 12% today to 25% in 2020. Through Vision 2030, KSA is committed to increasing private sector participation in the education sector. Several initiatives to unlock the sector for private investment are underway, with some having already been implemented. These include the acceptance of 100% foreign owned educational institutions and the use of public education buildings for private schools, hence removing the challenge of accessing capital, land and obtaining permits to establish infrastructure - easing the complex regulatory environment surrounding education. As a result, the Saudi private education market is therefore expected to increase from SAR 18.75 billion (USD $ 5 billion) in 2016 to SAR 45 billion (USD $ 12 billion) by 2023.
In accordance with Vision 2030, education forms a central part in the government’s long-term development plan. The government has prioritized expenditure on domestic education for several years now, enabling it to dramatically increase by 82% over the last decade.
Education spending currently occupies the 2nd largest portion in the annual national budget. In 2018, the government has allocated SAR 192 billion (USD $ 51 billion) for education. This represents 21% of fiscal spending or 7% of GDP on education, placing Saudi Arabia as 8th in the world in terms of education expenditure. This additional funding will enable the introduction of a number of new projects and allow for the expansion and continuation of existing programs. This includes the building of 2621 new schools by 2020 and the renovation of girls’ colleges at various universities.
The Ministry of Education (MoE) has made it a primary objective to support both teachers and students by shifting to digital education. SR 1.6bn (USD $ 426.6 million) has been allocated towards this transformation, which has already started to take effect through paperless education, the introduction of ICT devices in classrooms and the application of e-learning.
Paperless education in the form of ‘phase 1’ began during the 2017/2018 academic year, which has seen 150 schools replace all printed books with digital versions. 1500 more schools will be brought into the program during phase 2 and the goal of phase 3 is to shift all 30,000 schools away from printed books by 2020.
The introduction of ICT to classrooms is set to transform the way students learn through an interactive model that enables students to interact with each other and with their teacher. To apply this model, Saudi Arabia has started capacity building by sending 1,000 teachers to top education institutions abroad for the purpose of learning best practices that can be taught and replicated. Saudi Arabia aims to boost internet user penetration from 2016 levels of 63.7% to 85% by 2020, along with 80% broadband coverage in densely populated urban areas and 55% in other urban areas.
The E-learning program has been started by a Royal Decree in 2011, which mandated the establishment of the Saudi Electronic University (SEU), a specialized distance learning university (e-university) that offers graduate, undergraduate and life-long learning programs to its students.
Growing and attractive housing market for residential developers
New era in housing construction
Government commitment to develop the industry
Aquaculture is one of the fastest growing methods of producing foods in the world and is estimated by 2030 to be responsible for two-thirds of the fish we eat. Saudi Arabia is in the process of significantly developing this sector by exploiting its rich waters that run along the Red Sea. The environmental and climatic conditions here are perfectly placed for the production of a wide range of high quality seafood. Investing in aquaculture is attractive for investors given the growing local market and insatiable international market, which is why the Saudi government has committed itself to growing this sector to its full potential. That means investing in infrastructure, research and development, marketing and supporting the sector with SAR 1.3 billion (US $346 million). KSA is transfixed on meeting the highest of fish farming standards to unlock a sector that is pulsating with potential. Investment opportunities are already available and are set to continue as 15 new locations along the Red Sea were recently identified as ideal for aquaculture development.
Saudi Arabia’s westerly coastline runs 2,400km along the Red Sea, offering direct access to its rich waters for the production of high quality seafood. The Aquaculture conditions are ideal as the water is pristine (DO: 7.04mg/ltr), wave amplitude is low (0.5m-1m) and salinity adequacy ranges from 35 to 41 PPT depending on the location. Suitable cage depths across the coast range from 20m to 50m, allowing for the accessible maintenance of fish farms. Water temperatures along the coast vary from 18°C to the north and 30°C to the south, enabling the production of a wide range of fish species.
In essence, there are very few locations in the world that offer such a favourable environment and climate when it comes to aquaculture.
The local market for seafood in KSA is thriving and consumption rates are expected to grow by 8% per annum until 2030. Population growth and the increase in consumption per capita are forecasted to generate an additional demand of 555,000 tons by 2030. With a declining growth in capture fisheries and stricter safety regulations imposed on imports, aquaculture is set to be the main source of supply of seafood for the Kingdom.
In addition to satisfying the growing demands of local consumption, KSA is strategically located to become a quality seafood exporter serving the GCC market as well as the European and Asian markets.
Vision 2030 has mandated the creation of safe and strategic food reserves by growing the Aquaculture industry. In line with this vision, the Ministry of Environment, Water and Agriculture (MEWA) launched a dedicated program that is committed to reaching the 600,000 tons of fisheries products targeted by 2030. This program has a budget of SAR 1.3 billion (US $346 million) to unlock the sector by investing in infrastructure, R&D and marketing campaigns. Additionally, KSA's strict quality and safety assurance programs have made KSA renowned for its safe and high quality seafood products as well as positioned KSA fisheries to meet the standards required by exporting markets.
With an unparalleled 2,400km of Red Sea coastline, opportunities along the aquaculture value chain are far and wide. Investors are now taking advantage of the various openings within the KSA aquaculture sector, including feed mills, hatcheries, grow-outs and processing plants.
Following a rigorous exploration of the Red Sea shores, 15 locations have been identified by the government as suitable for Aquaculture. As such the areas conform to the standards adopted by the Fisheries Department in 2017 (1438 AH), encouraging investor confidence in this progressively regulated industry.
The Saudi financial services sector is preparing itself for unprecedented growth, reform and privatization. Despite already being a major player in global markets, strong government commitment is to see this sector strengthen even further. Funds are being allocated to stimulate businesses, red tape is being cut to encourage international investment and capital is being raised by some of KSA’s flagship corporations through privatization. As Vision 2030 begins to take shape, global investors should feel very excited about the opportunities that are coming their way.
Saudi Arabia is by far the largest economy among all Arab league countries and is the only Arab country among the G20. Nominal GDP stands at SAR 2.422 trillion (USD $ 646 billion) and is expected to grow significantly by 2030 to reach SAR 6.375 trillion (USD $ 1.7 trillion).
The population of the Kingdom ranks second among all Arab countries at 32.5 million and is expected to grow at an annual rate of 2.5%. Remarkably young demographics and the application of Vision 2030 directives present the Kingdom with unequivocal prospects for GDP growth.
KSA has one of the most robust banking sectors globally in terms of resilience and capital adequacy. Its Capital-to-Assets ratio stands at 15%, ranking above many other G20 countries including the US and Germany. KSA’s net stable funding ratio is a comfortable 126%, signifying a reliable expectation of capital to meet the Kingdom’s liabilities. The financial sector’s total assets to GDP sit at 192%, putting KSA amongst the highest of any nation.
Saudi Arabia also has the largest capital market in MENAT, with deep and liquid domestic debt and equity segments. With 179 listed companies, a stock market capitalization of SAR 1.69 trillion (USD $ 450 billion) and SAR 836 billion (USD $ 223 billion) worth of shares traded on the Tadawul Saudi stock exchange (2017), Saudi Arabia easily presents as one of the world’s leading financial sectors.
Vision 2030 sets out a core goal for the strengthening of KSA’s financial sector, allocating reserves that provide small and medium sized businesses (SMEs) with access to SAR 3.75 billion (US $1 billion) capital through venture capital and private equity funds. Huge opportunities await foreign fund managers who invest in Saudi assets as the government steps up its privatization efforts. Saudi Aramco's IPO is expected to raise SAR 375 billion (US $100 billion) worth of capital alone, providing investors with sizeable access to one of the biggest companies in the world. Furthermore, the relaxation of regulations and bureaucratic processes has led to the opening of previously closed financial opportunities. The Ministry of Finance is now solely responsible for providing licenses to foreign banks that wish to operate in the Kingdom, a role previously reserved for the Council of Ministers. The Capital Market Authority recently amended the Qualified Foreign Investor (QFI) framework by easing qualification requirements and opening up the secondary market (NOMU).
Efforts have been made to align the Saudi Stock Market with leading global settlement practices by shifting the Tadawul Exchange to a two business day settlement cycle. This will increase the level of asset safety for investors and develop an environment that promotes institutional-level investments that meet the necessary requirements for coping with future changes. International Financial Reporting Standards have also been introduced for all listed companies, banks, and insurance companies, which will further align KSA’s financial sector with recognized global practices.
The Saudi Arabian General Investment Authority (SAGIA) revealed that the total
In conjunction with the state visit paid by His Royal Highness Prince Mohammed
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