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  HOME | Business & Economy (Click here for more)

Saudi Arabia Pitches for Foreign Cash after Spooking Investors

DUBAI Ė Saudi Arabia has stepped up efforts to woo investors spooked by the killing of dissident journalist Jamal Khashoggi, as it seeks more than $450 billion in private capital to help reshape its oil-dependent economy.

On Monday, Saudi officials said the government would offer incentives to both local and international investors to help develop its mining, logistics, and manufacturing sectors, according to a statement on the countryís state-controlled news agency. The government didnít say what those incentives would be.

The new plan, dubbed the National Industrial Development and Logistics Program, is part of Crown Prince Mohammed bin Salmanís ambitious social and economic overhaul announced in 2016. Since then, Saudi Arabia has introduced new laws and created funds to invest jointly with international companies to attract foreign cash to diversify the economy away from oil.

But Saudi Arabia has struggled to attract investors, many of whom worry about the kingdomís autocratic and opaque system of governance. Those fears were amplified by a surprise government crackdown on corruption in late 2017 that ensnared several prominent princes, officials, and businessmen. Critics called it a bid by the young crown prince to consolidate power.

The murder of Khashoggi, a well-known Saudi government critic, inside the Saudi consulate in Istanbul last year at the hands of Saudi operatives sparked widespread international criticism and spurred some Western investors to rethink their ties with the kingdom.

Before the killing, Foreign Direct Investment (FDI) had fallen to its lowest level in 14 years in 2017 as the economy contracted on the back of new policies aimed at boosting non-oil revenues. Though FDI picked up last year, it remains far below highs seen before the global financial crisis.

As it tries to cope with the fallout of the Khashoggi murder, Saudi Arabia earlier this month formally called for the death penalty for five of the 11 defendants accused of roles in the journalistís death.

Over the past week, the kingdom has released several high-profile business executives and billionaires imprisoned in the anti-corruption drive.

The investment program, announced Monday, outlined opportunities in Saudi Arabiaís industrial and energy sector. The kingdom wants private firms to work with the government to construct factories and plants for steel and iron production, generic medicines, automotive parts, aircraft systems, and pharmaceutical devices, according to a brochure for potential investors. The kingdom is offering gold and zinc exploration prospects and land to build solar-power generation parks.

Saudi officials expect the industrial program to create 1.6 million additional jobs and boost economic growth by $320 billion a year, or about 50 percent of GDP in 2017, Saudi media reported.

Since Prince Mohammed announced Vision 2030 in 2016, he has started a number of economic and social initiatives, like the industrial plan, to mixed success.

A strategy to develop the financial sector is widely considered to be on track and has attracted billions of dollars of capital into the Riyadh-based stock market.

Social reforms, such as allowing women to drive and opening cinemas and entertainment venues, also have been widely welcomed. But a crackdown on womenís activists has tarnished Prince Mohammedís image as a social reformer.

Other programs, such as a plan to privatize state assets by selling them to domestic and foreign investors, have faced delays. Prince Mohammed has said the listing of Saudi Arabian Oil Co., better known as Aramco, scheduled for 2018 will happen in 2021, but some Saudi officials are skeptical it will happen at all.

The government also has so far struggled to get Saudis into the workforce, with unemployment stubbornly high at 12.8 percent, according to official government statistics.

 

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