The Kingdom’s structural reforms, Red Sea shipping crisis, clean energy, and oil market prospects led the conversation by participating ministers at the World Economic Forum:

“Not spending [as a show of] resilience can be counterproductive,” Finance Minister Mohammed Al Jadaan said in yesterday’s panel headlined “Resilience: What it means and what to do about it” (watch, runtime:44.57), pointing at the necessity of governments preparing in advance for shocks. “You shouldn’t wait for a shock to act, and even when the shock happens, don’t wait for it to end,” he said. He stressed on the importance of “significant” structural reforms in institutional, fiscal and regulatory fronts and the engagement of the private sector in improving resilience.

The Kingdom is doing a good job at capping inflation, Al Jadaan said, attributing it to “proactive approaches in terms of putting a ceiling on energy prices”. He said the government created a strong social safety net against a money supply surplus in 2021. “We ended up with an inflation that did not exceed 4%, now it is back below 2%,” he said.

Low-income countries need investments and employment, which isn’t possible as they grapple with a debt crunch, he said, calling upon the G20, multilateral institutions and commercial banks to fill in that gap as part of a resilience package against shocks. The package should also include online employment for youth, as there is growing demand for labor in economies such as like China, he said.

SUPPLY CHAIN POLITICS

Global supply chains should be steered by market dynamics, not politics,Industry and Mineral Resources Minister Bandar Alkhorayef said at a panel on “supply chains of the future” (watch, runtime: 46:47). “It’s okay to have politics address areas of national interest and security, but it has to be at a minimum scope,” he said. “Saudi Arabia offers a great combination of enablers such as natural resources and our geographical location. We need to discover new areas where there is development, where there is a competitive way for supply chains to be implemented, rather than doing it from a political view,” he added.

RED SEA CRISIS

A prolonged Red Sea shipping crisiscould lead to tanker shortage due to longer trips and supply setbacks, Aramco CEO Amin Nasser told Reuters on the sidelines of the forum yesterday. “If it’s in the short term, tankers might be available … But if it’s longer term, it might be a problem,” he said. “There will be a need for more tankers and they are going to have to take a longer journey,” he added.

Aramco already has a plan in mind where it detours Bab Al-Mandab through a pipeline connecting its eastern oil facilities with its western coast for a quicker entry to Egypt’s Suez Canal, he revealed. However, some oil products might suffer a delay in deliveries because they’ll have to sail around Africa. He shrugged concerns on Houthis renewing attacks on its facilities due to peace talks between Riyadh and Sana’a.

“We’re incredibly concerned for regional security,” Alkhorayef said on a panel on Tuesday. “Freedom of navigation in the Red Sea impacts all of us. We think the priority needs to be deescalation — deescalation in the Red Sea and in the entire region. Part of that is making sure we engage with all stakeholders.”

A SAY ON SUSTAINABILITY

New sources of energy are a necessity, Minister of State for Foreign Affairs and climate envoy Adel Al Jubair said in a session headlined Bold steps for a Sustainable MENA (watch, runtime: 49:36). “The world’s need for energy keeps expanding and that extra need for energy has to be accommodated through alternative sources of energy. We are big investors [in renewables]. We don’t see ourselves as oil exporters, but as energy exporters,” he said. Some USD 186 bn has been allocated to implement the Saudi Green Initiative, he said as he highlighted the government’s sustainability efforts.

And the government wants to set the ball rolling on how to confront climate change, according to Al Jubair. “We want to set the standards for how countries should conduct themselves and what responsibilities they take on and what objectives they set, and what programs and initiatives they put in place domestically, regionally and internationally to help meet the challenge of climate change,” he said.

LURING BIG TECH

Communications and IT Minister Abdullah Al Swaha wants some Big Tech to expand operations in the Kingdom, Arab News reported yesterday. He has met with CEOs and senior execs from Microsoft, IBM, Amazon, Alibaba Group, and NAX Group at the World Economic Forum in Davos, the newspapaer added.

OTHER HIGHLIGHTS

We’re everywhere: The Kingdom is assessing every sector that holds investment prospects, Investment Minister Khalid Al Falih said in a panel headlined Gulf Economies: All In yesterday (watch, runtime: 47:48). “Based on that we find the right partners, we find the right investment scheme, with the right long-term line of sight, and we invest for those long-term journeys,” he said.

State spending will prime the pump if necessary: “If the private sector doesn’t yet have the appetite for [a project], then government entities like sovereign wealth funds will step in to catalyze those sectors. They will go invest with international partners or do it on their own and then gradually exit and turn it to the private sector fully”.

Acwa Power lays out its 2024 map: Acwa Power will work on developing around 70% of the 20 GW annual green hydrogen production quota set by the PIF, company CEO Marco Arcelli told Asharq Business. The company will also work on building “its share in battery storage,” Arcelli added, without specifying the capacity of the projects. Some unannounced projects are in their advanced stages of talks and will be finalized soon, Arcelli said, adding that one of the main goals during the coming period is to enter the Chinese market. 60% of the company’s total projects are based in Kingdom, while the remaining percentage is distributed among 12 countries led by Morocco, South Africa, Uzbekistan and Indonesia.

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