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New Legislation Facilitates Investment in Saudi Tourism Sector

Saudi Minister of Tourism Ahmed Al-Khatib (Asharq Al-Awsat)
Saudi Minister of Tourism Ahmed Al-Khatib (Asharq Al-Awsat)
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New Legislation Facilitates Investment in Saudi Tourism Sector

Saudi Minister of Tourism Ahmed Al-Khatib (Asharq Al-Awsat)
Saudi Minister of Tourism Ahmed Al-Khatib (Asharq Al-Awsat)

Saudi Minister of Tourism Ahmed Al-Khatib said, in an interview with Asharq Al-Awsat, that work is underway on new regulations and legislation that will facilitate the investment process in the Kingdom.
Saudi Arabia is witnessing a major transformation in the tourism sector after it enacted and developed a number of regulations and launched mega projects that allowed the country to attract more than 100 million visitors last year, the target initially set for 2030.
During a press conference on Wednesday at the Abu Faraj heritage palaces in Al-Aziza, west of the city of Abha in the southern Aseer region, Al-Khatib revealed the ministry’s moves to provide appropriate long-term funding at a competitive cost in order to encourage investment in the Saudi tourism system.
In his remarks to Asharq Al-Awsat, the minister pointed to the most prominent achievements in the sector, revealing that the Kingdom received 60 million visitors during the first half of 2024, with spending amounting to SAR 143 billion ($38.1 billion), recording about 10 percent growth in the number of tourists and spending.
He added that by the end of the first half of this year, the sector’s contribution to the gross domestic product had reached 5 percent, and was moving steadily toward achieving 10 percent, which is equivalent to SAR 600-700 billion of tourism income.
Moreover, Al-Khatib also spoke about the launch of the Bachelor of International Hospitality Management program, a partnership between the Ministry of Tourism, King Khalid University, and Hong Kong Polytechnic University.
He noted that a memorandum of understanding was signed between the Ministry of Tourism and the Colleges of Excellence Company, with the aim of developing human capabilities and expanding international specialized technical colleges and strategic partnership institutes in the field of tourism and hospitality.
Al-Khateeb said 10,000 training opportunities both inside and outside the Kingdom would be allocated to those working in the Aseer region’s tourism sector.
The National Tourism Strategy aims to reach over 150 million local and international tourists by 2030. In 2023, it reached 109 million.
The minister added: “The Tourism Development Fund plays an important role in providing financing, allocating SAR 7.4 billion to enable over 100 tourism projects around the Kingdom with a value exceeding SAR 35 billion.”
He pointed out that the fund financed 10 major projects in the Aseer region, ranging from international hotels to multi-use projects with a value exceeding one billion riyals. International hotel brands included: InterContinental Residence in Abha, DoubleTree in Khamis Mushait Governorate, and Khayal Walk Boulevard.

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Non-Oil Activities Drive Saudi Economic Diversification Efforts

A view of containers at Jeddah Islamic Port on the western coast of Saudi Arabia (Saudi Ports Authority)
A view of containers at Jeddah Islamic Port on the western coast of Saudi Arabia (Saudi Ports Authority)
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Non-Oil Activities Drive Saudi Economic Diversification Efforts

A view of containers at Jeddah Islamic Port on the western coast of Saudi Arabia (Saudi Ports Authority)
A view of containers at Jeddah Islamic Port on the western coast of Saudi Arabia (Saudi Ports Authority)

Non-oil activities are playing an increasingly pivotal role in diversifying Saudi Arabia’s economy, currently contributing 51% to the total real GDP, with expectations to reach 65% by the decade’s end.

This shift aligns with the country's efforts to rely on varied income sources across multiple sectors and enhance human capital development in line with Vision 2030.

Saudi Arabia leads in cleaner hydrocarbon energy production and is a frontrunner in renewable energy sectors such as green hydrogen, solar, wind, and others. Notably, it is establishing the world’s largest green hydrogen production facility with a total investment of $8.4 billion.

Faisal Al-Ibrahim, Saudi Minister of Economy and Planning, highlighted the sustained strong growth of non-oil activities since the inception of Vision 2030, constituting 51% of the real GDP, surpassing the oil sector's contribution.

He emphasized the Kingdom’s achievements and prioritized accelerating economic diversification and enhancing human capital development.

“We are now on the brink of a new economic era that will witness transformative changes in the coming decades,” affirmed Al-Ibrahim.

Experts speaking to Asharq Al-Awsat anticipate non-oil sector participation to rise to approximately 65% by 2030, driven significantly by private sector contributions. They noted significant economic evolution towards income sources beyond oil, such as investments in coastal infrastructure projects.

Dr. Abdullah Al-Jassar, member of the Saudi Energy Economics Association, believes the current 51% contribution of the non-oil sector will increase to about 65% by the decade’s end, bolstered by substantial private sector involvement.

He highlighted Saudi Arabia’s notable economic shift towards relying on non-oil activities as a primary source of growth, propelled by key factors including ambitious Vision 2030 programs aimed at economic diversification and reducing oil dependency.

Massive government investments in infrastructure and developmental projects in non-oil sectors like tourism, particularly between 2015 and 2020, exceeding billions of riyals, significantly accelerated economic diversification and renewable energy sector development.

Al-Jassar pointed out that “tourism leads the forefront of key sectors currently relied upon by the non-oil economy,” growing at an average annual rate of 10%, contributing 10.4% to the GDP according to the Q1 2024 Statistics Authority report.

This also includes sectors like mining, manufacturing, and agriculture.

He expects expanding promising sectors such as biotechnology, artificial intelligence, digital economy, and developing logistics services infrastructure to be crucial for export operations, advancing non-oil activity growth.

Al-Jassar assumes non-oil activities will continue to accelerate in the coming years, given the clear roadmap for diversifying the non-oil economy, alongside emerging opportunities attracting more investments to fund their activities. This will enhance Saudi Arabia's resilience against future economic challenges triggered by oil price fluctuations.

Financial advisor Ahmed Al-Jubeir emphasized Saudi Arabia’s long-term strategy for non-oil economic growth, aiming to enhance society, tackle inflation, and strengthen economic, financial, and monetary policies under Vision 2030.

He noted that this strategy would diversify revenue sources without relying on oil, ensuring the sustained evolution and prosperity of the Saudi economy.

This includes investing in citizens, improving their income by providing employment opportunities for all, solving unemployment and housing issues, and increasing women's participation in the workforce to support human resources.