investsaudi.sa Investment Highlights Spring 2021 Inside this report • Opening remarks by Tawfig Al-Rabiah, Minister of Health of Saudi Arabia • Sector highlights on Healthcare and Life Sciences • Deep dive on the quarter’s top investor stories across all sectors • Expert opinion by Tim Callen, IMF Mission Chief to Saudi Arabia • New foreign investment projects data in Q1 • Top 3 investment opportunities by INVEST SAUDI Opening Remarks OPENING REMARKS companies to provide dialysis services to 8,000 beneficiaries through 63 centers throughout the Kingdom, with a value of nearly $2 billion for a period of five years. We have also established partnerships with private companies to build and operate medical cities, hospitals, and primary care centers with an initial investment amount exceeding $3.7 billion. In addition, we launched a project for the private Tawfig sector to build and operate the Al-Ansar Hospital in Medina with a capacity of 244 beds and an initial Al-Rabiah investment of approximately $187 million. We seek Minister of Health to offer 74 primary health care centers in various regions across the Kingdom, with initial investments of Saudi Arabia of nearly $266 million, and are also working to establish two medical cities with a capacity of 1500 beds in Aseer and Al Jouf, with an initial investment volume of approximately $1.6 billion. Radiology and laboratory services is another promising area Saudi Arabia is on a journey of historic transformation with several projects in the pipeline, one of which across all segments of society under the guidance of Vision is to assign radiology services, including equipment, 2030. The healthcare sector is one of the most important personnel, and operating standards, to 7 hospitals components of this transformation. At the same time, in Riyadh. the COVID-19 pandemic has brought new light to the sector’s vital role, offering new investment opportunities We are working on private sector projects to build and to companies in the sector, including the supply of operate hospitals for medical rehabilitation, long- medicines, vaccines, medical devices and medical services term stay centers and home healthcare through PPP to patients. The Ministry of Health has developed strategic models. The project is designed to meet the needs objectives in line with Vision 2030 to ensure that investors of patients who do not require hospitalization but in the sector are supported by the appropriate regulatory need continuous care in Riyadh and Dammam. We frameworks for sustainable growth, digitization, and are targeting a capacity of 600 beds for long-term increased efficiency. stay, 300 beds for medical rehabilitation services, and 10 thousand patients for home healthcare While the peak of the pandemic brought the global services. The initial investment for these extended economy to a near total halt, small and medium-sized care projects exceeds $266 million, and we expect enterprises (SMEs) in the Kingdom played a vital role to sign contracts with different investors during the in ensuring the healthcare sector and the economy third quarter of 2022. overall remained resilient. In addition, some of the most important solutions brought forward during the pandemic A comprehensive privatization plan for the next were offered through home care and digital care, allowing five years will soon present investors with detailed access to vital services such as digital appointments. opportunities. Over the coming few years, e-health, air medical transport, nephrology care, mental The support of the private sector has been fundamental in health, and rehabilitation will be at the center of our enabling such sizeable transformations and we are looking efforts. to enable an ever greater role in the next decade. Saudi Arabia is aiming to grow the private sector’s contribution With the advent of digitalization, the world is to the healthcare market from 25% to 35% by 2030, via entering a new era and we, at the Ministry of Health, a mix of privatizations, public-private partnerships (PPP) are making sure we stay ahead of the game to provide and other incentives for investors. our citizens the best quality healthcare services. The era of transformation under the guidance of Vision We have begun the groundwork for a stronger private 2030 will be most visible in the healthcare sector. sector by signing agreements with leading international 3 Spring 2021 investsaudi.sa Table of Contents Table of Contents DATA HIGHLIGHTS 5 Macroeconomic outlook 6 Kingdom’s non-oil economy rebounds strongly in Q1 6 Industrial production shows promising signs of recovery 9 March sees highest POS transactions on record 9 Foreign reserve assets remain lower than pre-pandemic levels in pursuit of economic stability 10 Expert opinion 11 Tim Callen, IMF Mission Chief to Saudi Arabia 11 Investment data 12 Foreign investment projects break another record 12 FDI reaches highest in 5 years 14 Investments in non-oil manufacturing spike 198% in Q1 14 QFI ownership in Tadawul exceeds $50 billion in Q1 15 REFORM HIGHLIGHTS 16 Shareek to spur private sector investment 16 Saudi Arabia launches “Made in Saudi” program 16 Saudi Arabia approves privatization law 17 Saudi Arabia to become the top destination for regional headquarters 18 The Green Saudi and Green Middle East initiatives to transform the region 18 HEALTHCARE & LIFE SCIENCES SECTOR HIGHLIGHTS 19 Sector outlook 19 Investment opportunities in the HCLS sector 20 Why Saudi Arabia is the destination for HCLS investments? 21 Who is here already? 22 INVESTOR HIGHLIGHTS 23 Investor spotlights: Roche steps in to enable healthcare sector’s growth in the Kingdom 23 Project groundbreakings and case studies 24 MEGA–PROJECT HIGHLIGHTS 27 THE LINE at NEOM: A revolution in urban living 27 AlUla announces masterplan to reveal 200,000 years of heritage 27 The Red Sea Project launches the ‘Coral Bloom’ resort 28 Qiddiya begins design of world’s fastest roller coaster 28 PIF’s ROSHN to develop over 4,000 homes in Riyadh community project phase one 29 Saudi Arabia launches Soudah Development Company with $2.9bn investment 29 OPPORTUNITY HIGHLIGHTS 30 Top-3 Invest Saudi investment opportunities 30 UPCOMING EVENTS 31 4 Spring 2021 investsaudi.sa Data Highlights DATA HIGHLIGHTS Saudi Arabia’s economic performance in the first quarter of the year highlighted one important theme: economic diversification. The ambitious economic reform agenda followed by the Kingdom to move away from oil dependency started to bear fruit as the non-oil economy showed a strong annual rebound to 2.9% growth. Although the overall GDP declined by 3% during the first quarter due to the ongoing impact of COVID-19, consumer sentiment was on the positive side as POS transactions reached a record $10.9 billion in value in March and a 64.7% year-on-year growth. The impact of Kingdom’s diversification efforts was also visible in non-oil economy’s contribution to GDP. Despite global headwinds, the sector’s contribution to the Saudi economy grew for a third consecutive quarter in Q1 and reached 62.8%, while relative contribution of the oil sector continued to drop. The positive sentiment was also visible in foreign investment projects in the Kingdom. In Q1 2021 the number of new foreign investment licenses awarded by MISA reached a new record of 478, representing a 36.2% increase compared to the previous quarter. Q1 was the fourth consecutive quarter witnessing a rise in the number of new foreign investment projects. Although the economy showed an overall contraction in the first quarter of 2021, all signs are in place for a strong recovery in the Saudi economy throughout 2021. The shifting composition of the economy and the increasing contribution by the non-oil economy signal a period of robust economic activity, with reforms starting to have a more visible impact. 5 Spring 2021 investsaudi.sa 6 2.4%in2021. grow 2022 in Monetary Fund The International oilsector. Kingdom’s inthe significant factors inglobaloildemandwere andthedrop travel passenger to a leading in oilactivities pandemicwithanannual COVID-19 Saudi Arabia’s inQ1 strongly rebounds non-oileconomy Kingdom’s outlook -Macroeconomic Highlights Data MACROECONOMIC OUTLOOK MACROECONOMIC Spring 2021 1.0% Q1 2.1% , following a -4.1% contraction in 2020. The World Bank also expects the Kingdom’s economy to economy Kingdom’s the expects Bank also World The 2020. in -4.1% contraction a following , 1.7% -3% year-on-year contraction year-on-year -3% due to the OPEC+ to cut crude oil production took its toll on the Kingdom’s overall GDP, GDP, overall duetotheOPEC+cut tookitstollontheKingdom’s crudeoilproduction -3.0% growth thefirst activity showed year-on-year non-oil economic Q2 2.9% 2019 0.5% -6.4% Q3 4.3% -0.5% to economy theKingdom’s (IMF)expects Oil sector 2.9% expansion Real GDP growthGDP 2021 Q1 in Real -5.8% Q4 3.8% -0.3% and freight international over limitations The continued . Non-Oil sector Source: GaStat Source: -4.6% Q1 1.6% inthefirst quarter oftheyear. -1.0% -5.3% Q2 GDP growth -8.2% 2020 -7.0% -8.2% Q3 grow 2.1% this year and4.8% 2.1%thisyear grow -2.1% -4.6% sincethebeginningof -11.7% contraction in -11.7% contraction -8.5% The sharpdecrease Q4 -0.8% -3.9% investsaudi.sa -11.7% 2021 Q1 2.9% -3.0% Data Highlights - Macroeconomic outlook Reforms to diversify the economy were also reflected in the non-oil sector’s contribution to GDP. The Kingdom’s non-oil sector’s contribution to GDP rose for the third consecutive quarter in Q1 and reached the highest level in 20 years with 62.8%, while the oil sector’s contribution dropped to 36.6%. Non-oil sector percentage contribution to GDP (2010 constant prices) Source: GaStat 70 65 65 64 63 63 63 63 61 61 60 59 59 58 58 58 58 59 59 60 57 56 56 56 56 56 57 55 55 55 54 54 55 52 51 52 50 49 48 47 44 45 45 45 45 44 40 42 42 42 434343 4343 42 43 40 40 41 40 40 38 38 39 37 35 36 36 36 30 34 34 Q1 Q2 Q3 Q4 Q1 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ’21 Oil sector Non-oil sector The rebound in economic activity was visible across most sectors in the first quarter.