Khalid al-Falih was appointed head of Saudi Arabia’s Ministry of Investment on Tuesday, a new ministry which will replace the Saudi Arabian General Investment Authority (SAGIA).
Al-Falih is no stranger to ministerial appointment, having held the influential position of Minister of Energy from 2015-2019. He has also served as health minister and as the CEO of the Kingdom’s energy giant Aramco.
“The return of al-Falih is remarkable after his removal as minister of energy. Looking at the current state of government and the need for a more structural and FDI [foreign direct investment] approach, the appointment of Al Falih however is clear and needed,” Director of Dutch consultancy Verocy, Cyril Widdershoven said.
In a host of royal decrees issued on Tuesday, the Saudi Arabian General Sport Authority was also replaced with a new ministry – the Ministry of Sports – headed by Prince Abdulaziz bin Turki al-Faisal al-Saud. The Kingdom’s Minister of Civil Service Sulaiman bin Abdullah al-Hamdan was also relieved. The ministry will now officially join the Ministry of Labor and Social Development.
Al-Falih took to Twitter to message his thanks for the appointment, noting the importance of his new role in attracting foreign investments into Saudi Arabia to support the Vision 2030 agenda.
As energy minister, al-Falih orchestrated the deal between the Organization of Petroleum Exporting Countries (OPEC) and other oil producers including Russia (known as the OPEC+ group) to cut global oil supply and support market prices.
OPEC has managed to keep world markets relatively stable for the past three years through the OPEC+ agreement. The decision to extend and deepen these supply cuts in December 2019 was “the savior of the market,” OPEC Secretary General Mohammed Barkindo said in January.
Saudi Arabia General Investment Authority (SAGIA) was created in 2000 as the foreign investment license provider for the Kingdom, but is set to be replaced by the new Ministry of Investment.
“It is exciting news to see SAGIA, who have been leading the way to promote foreign entrants of founders and investors into the Kingdom, promoted to a ministry position,” said Philip Bahoshy founder and CEO of startup insight company MAGNiTT.
The Kingdom’s non-oil sector has been a success story for the Saudi economy over the last year, growing significantly while the dominant hydrocarbon sector has tapered in a lower price environment. MAGNiTT’s 2019 KSA Venture Report noted that there was a 92 percent increase in the number of venture investments in the Kingdom, and a 54 percent increase in foreign investor licenses. Overall, funding was up 35 percent.
“[Al-Falih’s] experience as minister of oil will be an advantage as he was, and is, liked by international players in the West, Russia, and Asia. His mediagenic position and network is needed to convince western institutions and corporations to come into Kingdom,” Widdershoven added.
Saudi Arabia’s Vision 2030 plan, which seeks to diversify the Kingdom away from oil and prepare its economy for a post-hydrocarbon world, requires a significant increase in foreign direct investment for success.
The success of the foreign investment and startup landscape is one data point that suggests authorities have had some success in fulfilling these targets.
“These are positive signals for a growing and maturing entrepreneurship ecosystem in the Kingdom. This recent announcement will only further strengthen these efforts and their impact,” Bahoshy added.