Report on Saudi Arabia’s Foreign Direct Investment and Sustainable Development Goals

Overview of Foreign Direct Investment Trends

Saudi Arabia’s net foreign direct investment (FDI) experienced a 7% decline in the first quarter of 2025 compared to the previous quarter, according to government data released recently. The kingdom attracted 22.2 billion riyals ($5.92 billion) in FDI during the first three months of 2025, down from 24 billion riyals ($6.40 billion) in the last quarter of 2024. However, net FDI showed a 44% increase compared to the same period in 2024, when it stood at 15.5 billion riyals ($4.13 billion).

Alignment with Vision 2030 and Sustainable Development Goals

Raising FDI is a critical component of Saudi Arabia’s Vision 2030 economic transformation program. This initiative aims to:

1. Reduce the country’s dependence on oil revenues.
2. Expand the private sector.
3. Create sustainable employment opportunities.

These objectives directly support several Sustainable Development Goals (SDGs), including:

• SDG 8: Decent Work and Economic Growth
• SDG 9: Industry, Innovation, and Infrastructure
• SDG 10: Reduced Inequalities

Investment Targets and Challenges

Saudi Arabia has set an ambitious target to attract $100 billion in FDI by 2030. This goal is supported by significant investments in mega-development projects known as “giga projects” and the expansion of sectors such as sports, tourism, and entertainment. Despite these efforts, current FDI inflows remain substantially below the target.

Challenges identified include:

• Perception of Saudi Arabia primarily as a source of capital rather than a destination for investment.
• Complexities and difficulties faced by foreign investors in navigating the local business environment.

Addressing these challenges is essential to achieving SDG 17 (Partnerships for the Goals) by fostering stronger international cooperation and investment partnerships.

Fiscal Context and Economic Stability

The International Monetary Fund (IMF) projects that Saudi Arabia will record a fiscal deficit of approximately $27 billion in 2025, primarily financed through borrowing. Despite this, Saudi Arabia remains one of the least indebted countries globally, with net debt around 17% of GDP.

This fiscal position supports sustainable economic growth (SDG 8) by maintaining macroeconomic stability and enabling continued investment in development projects.

Government Initiatives to Boost Foreign Investment

To enhance the investment climate and promote sustainable development, the Saudi government has implemented several measures:

• Since 2021, companies seeking state contracts are required to establish regional headquarters within Saudi Arabia, encouraging local presence and job creation.
• Plans to update investment laws to improve transparency and ensure equal treatment of local and foreign investors, fostering a fair and inclusive business environment.

These initiatives contribute to SDG 16 (Peace, Justice, and Strong Institutions) by promoting transparent governance and SDG 8 by encouraging inclusive economic participation.

Conclusion

While Saudi Arabia’s FDI inflows have shown year-on-year growth, the kingdom faces significant challenges in meeting its Vision 2030 targets. Continued efforts to improve the investment environment and align economic policies with the Sustainable Development Goals will be vital for achieving long-term sustainable development, economic diversification, and social prosperity.

Exchange rate used: $1 = 3.7504 riyals

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 8: Decent Work and Economic Growth
   • The article discusses Saudi Arabia’s efforts to attract foreign direct investment (FDI) to expand the private sector and create jobs, which aligns with promoting sustained economic growth and productive employment.
2. SDG 9: Industry, Innovation, and Infrastructure
   • References to “giga projects” and expanding sectors such as sports, tourism, and entertainment indicate a focus on building resilient infrastructure and fostering innovation.
3. SDG 17: Partnerships for the Goals
   • The emphasis on attracting foreign investment and improving the business environment reflects strengthening global partnerships and cooperation.

2. Specific Targets Under Those SDGs

1. SDG 8 Targets:
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation.
   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, and encourage formalization and growth of micro-, small- and medium-sized enterprises.
2. SDG 9 Targets:
   • Target 9.1: Develop quality, reliable, sustainable, and resilient infrastructure to support economic development and human well-being.
   • Target 9.5: Enhance scientific research, upgrade technological capabilities, and encourage innovation.
3. SDG 17 Targets:
   • Target 17.5: Adopt and implement investment promotion regimes for least developed countries.
   • Target 17.7: Promote the development, transfer, dissemination, and diffusion of environmentally sound technologies to developing countries.

3. Indicators Mentioned or Implied to Measure Progress

1. Indicator for SDG 8:
   • Net Foreign Direct Investment inflows (measured in USD or local currency) as a percentage of GDP or total investment, reflecting economic productivity and investment climate.
2. Indicator for SDG 9:
   • Investment in infrastructure projects (“giga projects”) and sectoral expansion metrics (e.g., growth in tourism, sports, and entertainment sectors).
3. Indicator for SDG 17:
   • Number and value of foreign companies establishing regional headquarters and securing state contracts, indicating improved investment promotion and partnerships.
   • Legislative updates promoting transparency and equal treatment of investors as qualitative indicators.

4. Table of SDGs, Targets, and Indicators

Source: tradingview.com