Global foreign direct investment (FDI) inflows fell by 13% in 2016 mostly due to global economic fragility and policy uncertainty, according to the United Nations Conference on Trade and Development’s (UNCTAD) investment report.
With current economic challenges and a decline in GDP, most investing markets have adopted a wait and see approach before engaging in any type of investment. The global analyst view that the current challenging times paved the way for opportunities to conduct large-scale investments, as the markets in the future will bounce back with economic expansion and policy clearance.
“Many companies are willing to invest, but due to lack of liquidity, opted to borrow instead, with the hope of achieving desired margins expecting economic growth and prosperity. These investment opportunities remain available for companies with enough liquidity that empowers them to engage in such transactions; thanks to their flexible nature which enables them to achieve a good return on investment,” said Anees Ahmed Moumina, CEO of SEDCO Holding Group.
Moumina added: “Recent economic reforms announced as part of Vision 2030, aim at turning Saudi Arabia into an investment hub, with less dependence on oil which remained as the main source of government revenue in the past. The vision seeks to increase non-oil revenues to $160 billion by 2020 and to $533 billion by 2030. The Public Investment Fund’s capital will be raised from $160 billion to $2 trillion.”
Despite caution on economy and investments market, Moumina stated that many acquisitions and deals have been implemented across both government funds and private sector companies with a solid financial stature. And as part of the National Transformation Program, which emphasizes the role of the private sector in achieving the Kingdom’s Vision 2030, there are many promising opportunities in which SEDCO Group wishes to invest, notably in the education and healthcare sectors. More than one-third of the fiscal year budget is allocated to the two sectors respectively – SR200 billion to education and SR120 billion to health. The National Transformation Program has strategic objectives linked to phased targets until 2020 with the first stage launched early 2016.