Saudi Arabia - Country Commercial Guide
Market Opportunities

Overview of best prospect sectors, major infrastructure projects, significant government procurements and business opportunities.

Last published date: 2019-10-13

Saudi Arabia’s Vision 2030 and the National Transformation Program (NTP) suggest a paradigm shift from a public sector-driven economy to one driven by the private sector as the main engine for economic growth and job creation.  This may present some areas of opportunity for U.S. businesses and industry, including: workforce development; IT/big data/geospatial information systems; health care services; electricity generation (including renewables) and distribution/transmission; mining industry; entertainment, and tourism.  The “Leading Sectors for U.S. Exports & Investments” section of this document describes

Saudi Arabia has the Gulf Region’s largest IT market, and the NTP outlines $$4 billion in ICT initiatives over the next five years.  Important growth sectors include cyber security, smart grid, and command/control of major infrastructure utilizing geospatial IT systems.

Saudi Arabia’s ambitious plans to expand and upgrade its infrastructure may offer major opportunities for U.S. firms.  In addition to both light and heavy rail, Saudi Arabia also seeks to expand intermodal connectivity between maritime, bus, rail, and air services.  The SAG has pressed forward with key projects, including an ongoing $27 billion metro project in Riyadh.  The NTP outlines $1.5 billion in transport initiatives over the next four years and sets a goal of increasing the number of cities benefiting from public transport projects from 11 to 16 by 2020. 

Saudi Arabia’s abundant oil and gas reserves have provided the kingdom with a comparative advantage in terms of energy costs while export revenues have helped fund the Kingdom’s ambitious power-sector-capacity expansion plans.  All the state-owned Saudi Electricity Company’s (SEC) fuel for power generation is still supplied under long-term arrangements with Aramco, with the government intervening to set preferential prices.  Saudi Arabia’s need for increased electricity output will continue to underpin its position as the largest oil-consuming country in the Middle East and the sixth largest in the world, according to calculations by the International Energy Agency (IEA).  Source: BMI Research.

The SEC has announced plans to privatize all its power stations but the privatization process has not yet begun.  The SEC and the generation companies will be looking to boost generation capacity, replace outdated distribution infrastructure, implement smart grid technology, and promote international connectivity.  To meet increased demand, the Kingdom must more than double its power generation capacity, supplemented by new investments in solar and wind projects, from 77GW in 2014, to 156GW by the year 2040.  This translates into adding 5GW of capacity at a cost of $5 billion annually during that period. Likewise, the government plans to invest $4 billion annually to upgrade its distribution infrastructure.  Over the long term, Saudi Arabia is expanding minerals mining and diversification of downstream petrochemicals in order to develop a strong manufacturing base for automobiles, electronics, and life-science technologies.  The purpose is to create higher-paying technical jobs for Saudi nationals.

The Saudi healthcare market is expected to continue to provide opportunities for U.S. firms.  The healthcare sector is expected to open further to public-private partnerships.  Saudi Arabia is also facing increased demand for healthcare services to treat non-communicable diseases, such as cardiovascular disease and diabetes.  U.S. e-health and hospital management solutions, pharmaceuticals, and medical devices should continue to find opportunities in this sector.

Saudi Mega Projects

Saudi Arabia is the Middle East’s largest construction site.  More than 80 mega projects, each worth at least $1 billion, being built or planned for construction by 2030 create opportunities for U.S. architects and engineering firms: upgrades to airports including expansions of major airports in Riyadh and Jeddah; several major rail projects are in the pipeline; and contracts have yet to be awarded for the design of the Saudi Land Bridge that will connect ports on the Red Sea to ports in the Arabian (Persian) Gulf.  

These Mega Projects include:

•    Transportation Infrastructure (Saudi Land Bridge, King Fahad Causeway, airports expansion, rail projects)
•    Economic Cities (Neom,  Faisaliah) 
•    Housing/Residential Infrastructure (1.5 million new homes) 
•    Tourism and Entertainment (Red Sea Beach Tourism Project, Al-Qiddiya Entertainment City, Jeddah’s Waterfront Corniche, Souq Okaz City, Ula city, cinemas, museums)
•    Expected increase in hotel and hospitality project spending in both public and private sector (Two Holy Cities).

Expected increase in hotel and hospitality project spending in both public and private sector (Two Holy Cities).

Some of these projects are moving forward but most are moving at less than the anticipated pace and American companies should proceed with caution in signing deals for Mega project work.