How a lower oil price created opportunities in the Gulf

As the snow settles on Davos after another World Economic Forum, preparations have begun for this year’s Future Investment Initiative (FII) in Riyadh. Dubbed the ‘Davos of the Desert’ by some newspapers, FII 2017 saw a number of major announcements.

For the first time a robot was granted human citizenship. There were transformative investments announced in sectors from US infrastructure to space tourism. We saw the launch of Neom, a transnational city that will sit between Saudi Arabia, Jordan and Egypt – the first of its kind in the world, which promises to bring together the world’s greatest minds and talents, and bring to life pioneering ideas.

But for me, what the success and the scale of the event really brought home was the magnitude of change the Gulf Cooperation Council (GCC) has been going through in the past few years; and how vital it is that we are able to connect investors with the opportunities this change is creating.

The fall in the oil price and its repercussions on the six oil producing economies of the Gulf is hardly news anymore, but what is interesting to see is how each country has stepped up and taken this challenge as an opportunity for change.

Governments have been forced to ask themselves what they need to do to accelerate economic reform, enable the private sector to become a growth driver in the economy, and move away from a dependency on oil. This is something that would simply not have taken place at this pace with oil at $100 a barrel.

The reforms we have seen so far cover a number of areas – and they are creating new opportunities for international investors to play a role at an incredibly exciting time.

We have seen the announcement of plans to privatise major businesses. This will help to enhance governance and attract new sources of capital, while also giving investors from across the globe the chance to gain exposure to growth in the region. The most notable of these is Saudi Aramco and there are many others.

There have been a number of regulatory reforms designed to encourage competition – including new laws opening up sectors in a number of GCC countries to foreign ownership for the first time, and reforms aimed at making it easier to create and build businesses.

We have seen new mechanisms – such as public private partnerships – that are designed to enable greater participation of private capital in the major infrastructure projects being conducted in the coming years.

And we continue to see investment in the technology we need to be able to unlock innovation and entrepreneurship. For example, Amazon Web Services recently announced its first Middle East Region, which will be based in Bahrain.

As I look to the year ahead with my team at the Economic Development Board, the question that we keep coming back to is: what can we do to connect the world’s corporates, investors and entrepreneurs with the opportunities that are being created?

Governments and the private sector need, now more than ever, to work jointly towards a development model that is led by businesses and open to the world, in order to unleash the exciting potential our region has for investors locally and internationally.

That means the government needs to implement reforms, but it also means it needs to listen and engage. We want to know about the barriers that people continue to face – and we want to be able to help businesses understand their options and work with them to solve their challenges. It is only by doing this that we will be able to turn our ambitions into reality and create a truly innovative economy that fully realises its potential.