October 29, 2024, 2:19 PM
In a strategic pivot, Saudi Arabia’s Public Investment Fund (PIF) is set to reduce its foreign investments to approximately 18% of its total assets under management, as it intensifies its focus on domestic funding and artificial intelligence (AI). PIF Governor Yasir Al-Rumayyan announced this shift during the Future Investment Initiative (FII) in Riyadh on Tuesday.
Al-Rumayyan highlighted the evolution of PIF’s investment strategy, noting that foreign investments initially accounted for less than 2% of a $150 billion portfolio, before peaking at 30%. Currently, with assets reaching about $930 billion, the fund aims to recalibrate foreign investments to a range of 18-20%.
The announcement comes amidst heightened discussions at the FII, where global finance leaders and tech entrepreneurs are convening against a backdrop of regional tensions and the upcoming U.S. presidential election. The conference reflects Saudi Arabia’s ambition to solidify its position as a global economic player, particularly in the AI sector, which the government targets to contribute 12% to its GDP by 2030.
Al-Rumayyan stated, “AI alone could add $20 trillion to the global economy by 2030. By 2027, AI’s role as an economic driver will become a benchmark of national power.” He emphasized Saudi Arabia’s advantages, including low energy costs, ample land, and a diverse energy portfolio that extends beyond fossil fuels.
Additionally, the kingdom recently revised its foreign direct investment (FDI) figures, now reporting $25.5 billion for 2023, a significant increase due to updated methodologies. Despite this, achieving the ambitious target of $100 billion in annual FDI by 2030 remains a challenge, placing additional pressure on PIF to support the nation’s $1.25 trillion economic development plan.
As Saudi Arabia navigates the complexities of the U.S.-China rivalry over AI, experts at the FII expressed concerns regarding the implications of U.S. export restrictions on technology. Laura Cha, a senior advisor at the Hong Kong Exchange, noted that the evolving geopolitical landscape will significantly influence economic policy decisions moving forward.
The PIF’s renewed focus on AI and domestic investment is seen as a critical step in positioning Saudi Arabia as a leader in the global economy while bolstering its own economic diversification efforts.
