In a bold move to propel its economy into the future, Saudi Arabia launched Alat, a cutting-edge technology company, in February 2024. Owned by the Public Investment Fund (PIF), Alat is set to receive an impressive $100 billion in investment by 2030. This initiative focuses on harnessing advanced technologies, including artificial intelligence (AI), semiconductors, emissions reduction, robotics, and the development of smart cities.
Driving Innovation: Alat’s Role in Saudi Arabia’s Future
Saudi Arabia’s ambitious transition from an oil-dependent economy is well underway, with Alat at the forefront. The establishment of Alat is expected to significantly impact both foreign and domestic policies, intensifying the race to attract investments from global technology leaders like China and the U.S. Despite some concerns about the long-term growth due to the government’s strong involvement, Alat is poised to enhance the Kingdom’s technological prowess.
When Crown Prince Mohammed bin Salman announced Alat’s creation, he highlighted its pivotal role in the nation’s economic growth. Projections suggest that Alat will create 39,000 direct jobs and contribute $9.3 billion to the non-oil GDP by 2030. The company’s AI infrastructure unit will integrate AI with Industry 4.0 technologies, such as robotics, big data, and automation.
Even as a newcomer, Alat has already secured partnerships with industry titans like Softbank and Dahua Technology. Together with Softbank, Alat plans to construct a “lighthouse factory,” leveraging Industry 4.0 to boost production efficiency and scalability. With Dahua Technology, Alat has committed $200 million to develop an AI-based surveillance system.
Strategic Implications: Alat’s Global and Domestic Impact
Saudi Arabia is actively positioning itself as a prime destination for foreign direct investments (FDI), with Alat playing a crucial role. Amidst fierce competition from regional rivals such as the UAE and Qatar, Saudi Arabia ranked third in the 2024 FDI confidence index for emerging markets, showcasing its growing appeal to investors.
Alat’s influence extends beyond economics, affecting Saudi Arabia’s foreign policy as well. Alat’s CEO, Amit Midha, indicated a willingness to divest from China if requested by the U.S., which is cautious of China’s Middle East engagements. This stance is particularly noteworthy given China’s recent diplomatic achievements in the region, including brokering a significant agreement between Saudi Arabia and Iran.
Balancing Resources: The Path to Technological Advancement
Saudi Arabia’s journey towards economic diversification through technological innovation presents both opportunities and challenges. The Kingdom’s wealth in energy and capital positions it as a leading investor in AI worldwide. However, the reliance on government revenues from oil and gas to fund Alat raises questions about sustainability. Despite Vision 2030’s progress, the private sector’s GDP contribution remains at 41%, lagging behind other competitors, which could hinder the efficient allocation of resources and market-driven decisions.
As Saudi Arabia continues to invest in Alat and similar ventures, it stands at the threshold of transforming into an innovation powerhouse. The Kingdom’s strategic initiatives are paving the way for a new era of technological leadership, inviting investors worldwide to be part of this groundbreaking journey.
