Saudi Investment Minister Defends Vision 2030, Promotes ‘Green Shoring’ to Attract Foreign Investment

A Shift Away from Oil Dependency

“There were many people who doubted the vision, the ambition, how broad and deep and comprehensive it is,” al-Falih told CNBC’s Steve Sedgwick. He acknowledged that skepticism was particularly high regarding Saudi Arabia’s ability to shift away from its long-standing dependence on oil. However, eight years into Vision 2030, al-Falih emphasized that the kingdom is now “more committed, more determined” to achieving its goals, with 87% of targets already completed or nearing completion.

Vision 2030 is a comprehensive plan to diversify Saudi Arabia’s economy, reducing its reliance on oil revenues and focusing on industries such as infrastructure, technology, and manufacturing. The plan includes 14 mega-projects, such as the Neom industrial complex, and aims to attract more than $3 trillion in domestic investment, with a goal of reaching $100 billion in foreign direct investment annually by 2030.

Market Liberalization and Investment Reforms

Saudi Arabia has taken significant steps to open its market to foreign investors, including reforms to its investment and labor laws. Al-Falih pointed to the increase in foreign investment licenses, nearly doubling in 2023, as well as a 5.6% rise in net foreign direct investment flows in the first quarter of 2024.

However, the country has also implemented controversial policies, such as requiring foreign companies to set up regional headquarters in Saudi Arabia to access government contracts. Critics have raised concerns over the kingdom’s legal framework, particularly in regard to dispute resolution for foreign investors, but al-Falih argued that Saudi Arabia offers both predictability and political stability.

Introducing ‘Green Shoring’

A major component of Saudi Arabia’s investment strategy is “green shoring,” a term coined by the kingdom to promote the decarbonization of supply chains. Al-Falih explained that green shoring involves moving energy-intensive processing and manufacturing to regions where renewable energy and necessary materials are readily available.

“Green shoring is basically saying you need to do more of the high energy processing [and] manufacturing value add in areas where the materials, as well as the energy, are [located],” al-Falih said. He stressed that Saudi Arabia’s logistical capabilities, access to capital, and infrastructure make it well-positioned to lead this initiative.

Balancing Hydrocarbons and Green Resources

While Saudi Arabia aims to achieve net-zero emissions by 2060, it continues to promote the simultaneous use of hydrocarbons and green energy sources. This strategy, supported by other OPEC members, is intended to prevent energy shortages during the transition to net-zero emissions.

Saudi Arabia has faced criticism from climate activists for promoting technologies like carbon capture and storage (CCS) as a means of maintaining its lucrative oil business. Despite these criticisms, al-Falih emphasized that green shoring will help address global supply chain resilience issues and support the shift to a more electric global economy.

As part of this effort, Saudi Arabia aims to enhance the availability of critical materials such as copper, lithium, cobalt, and rare earth metals, which are essential for technologies like semiconductors and green chemicals. “We are building a new global economy that is certainly moving more electric,” al-Falih said.