The Saudi investment minister emphasized the importance of 'green shoring' in achieving diversification, despite doubts from many.

• The Saudi Minister of Investment, Khalid al-Falih, countered criticism regarding the country's economic diversification strategy.
• The Saudi-coined initiative of "green shoring" is part of Riyadh's offering to foreign investors, which aims to decarbonize supply chains in areas with renewable energy resources, as stated by Al-Falih.
• "Green shoring involves increasing the high energy processing and manufacturing value add in areas where the materials and energy are located, as stated by al-Falih," said al-Falih.

Saudi Minister of Investment Khalid al-Falih refuted doubts about the country's economic diversification strategy, highlighting "green shoring" investment prospects to attract foreign investment.

Many people doubted the vision, ambition, and comprehensiveness of the development plan for Saudi Arabia, as well as the country's ability to transition from a commodity-based economy to a more diversified one, al-Falih said in an interview with CNBC's Steve Sedgwick at the Ambrosetti Forum in Italy on Saturday.

Saudi Arabia, a major economy in the Middle East and a key U.S. ally, is investing heavily to achieve Crown Prince Mohammed bin Salman's Vision 2030 program, which involves 14 large-scale projects, including the Neom industrial complex.

Riyadh aims to shift away from its reliance on oil revenues, which the International Monetary Fund predicts will peak in 2026 before declining, and aims to attract more financial inflows to its domestic economy, reaching $3 trillion annually, as well as attracting $100 billion in foreign direct investment annually by 2030.

The Saudi minister on Saturday stated that, after eight years of implementing Vision 2030, the kingdom is now "more committed and determined" to the program and has already achieved or is close to achieving 87% of its targets. Despite previous criticism from critics who questioned whether Riyadh would successfully deliver on its goals by its stated deadline, the minister expressed confidence in the program's success.

The kingdom has been working to liberalize its market and enhance its business climate through changes to its investment and labor laws. However, it has also introduced less popular conditions for companies to establish their regional headquarters in Saudi Arabia in order to obtain government contracts.

In 2023, the number of foreign investment licenses issued in Saudi Arabia almost doubled, according to the IMF, with government data indicating a 5.6% annual increase in net flows of foreign direct investment in the first quarter.

Despite lingering concerns about the kingdom's legal framework and dispute resolution system for foreign investment, Al-Falih emphasized that Saudi Arabia offers predictability, domestic political stability, and economic stability.

'Green shoring'

The Saudi-coined initiative of "green shoring" is part of Riyadh's offering to foreign investors, which aims to decarbonize supply chains in areas with renewable energy resources, as stated by the Saudi investment minister.

According to al-Falih, green shoring involves increasing the high energy processing and manufacturing value add in areas where the materials and energy are located. He stated that Saudi Arabia has the logistics, capital, and infrastructure to achieve this.

Riyadh, the world's largest oil exporter, aims to achieve net-zero emissions by 2060 under Vision 2030. Despite being a high-profile presence at climate summits, Riyadh has faced questions about its commitment to decarbonization.

The Organization of the Petroleum Exporting Countries, including Riyadh, has consistently advocated for the concurrent utilization of hydrocarbons and green resources to prevent energy scarcities during the worldwide shift towards net-zero emissions.

Some activists have accused Saudi Arabia of using carbon capture and storage (CCS) technologies as a way to continue its profitable oil business.

Saudi Arabia aims to "address global supply chain resilience issues" and "build a new global economy that is moving more electric" by focusing on "critical materials such as copper, lithium, cobalt, rare earth metals, semiconductors, green fertilizers, and green chemicals," al-Falih emphasized.