January 08, 2025

Saudi’s Inward Shift Reshapes Its FDI Outlook

By: Rachel Ziemba

Saudi Arabia’s Public Investment Fund (PIF) recently hosted its eighth Future Investment Summit, bringing financiers and business leaders to Riyadh in a bid to attract significant foreign direct investment (FDI). Oil revenue declines have dented the country’s steps towards its ambitious Vision 2030 plan to transform its economy and increased the importance of FDI in helping to meet its bold economic development goals.

It has prompted a shake-up in its foreign investment flows, with a refocusing of national attention on domestic rather than outbound investment. The PIF — Saudi Arabia’s sovereign wealth fund (SWF) — is the key mover behind this shift, and has come to epitomise the broader trend of SWFs focusing more extensively at home than abroad, and catalysing inbound capital inflows.

2025 will be pivotal as the government looks to rationalise spending at a time of sluggish oil prices to reposition for the medium term.

As a result, PIF — via its portfolio companies — is even more focused on domestic investment to develop new supply chains that diversify its economy, hoping that it will attract global capital investments. Its annual reports show that international assets at end-2023 accounted for 21% of its total holdings, down from 29% in 2021.

While the fund is still investing abroad, especially via its subsidiaries like Alat, new flows are smaller and tend to have local economic development goals and technology transfer as a priority. The biggest shift has come in portfolio flow rather than FDI, with PIF pulling back on some of its foreign portfolio holdings, including those in the US gaming industry. Some of these sales are just profitable exits, but prioritisation is underway.

Read the full article on fDi Intelligence.

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