Exports to Riyadh soar In Arabia they study the Lombardy model

In the challenge between Riyadh and Dubai (or rather between Saudi Arabia and the United Arab Emirates) for the attractiveness of international investments, companies from Lombardy can find fertile ground for opportunities to start or strengthen economic relations in this country. No longer just in the oil & gas sector and no longer the exclusive prerogative of large industrial groups

In fact, the great reform plan launched in 2016 by the Saudi government (the 'Saudi Vision 2030') aims to diversify the Saudi economy, through massive investments and targeted projects, moving it from a system based fundamentally on hydrocarbon rents to a model based on manufacturing, services, culture, and knowledge, also paving the way for small and medium-sized enterprises and start-ups. Hence, the interest in our country, where SMEs play a fundamental role in the economy, and in particular in the 'Lombardy model', also witnessed by the recent visit to the Lombard capital by the Saudi investment minister, H.E. Khalid Al-Falih, on the occasion of the 'Green Shoring Global Initiative,' a conference organised precisely by the Saudi ministry to discuss the reconfiguration of global chains, and reinforced by the institutional mission to Riyadh organised by the Lombardy Region from 17 to 19 September last, on the occasion of the Index Saudi Arabia fair dedicated to the furnishing-design sector, led by President Attilio Fontana, which saw the participation of around thirty subjects including associations and Lombardy companies from various production sectors and universities.

The opportunities for Lombard companies are there for all to see: "The Saudi government has put in place a very attractive investment plan," confirms Francesco Buzzella, president of Confindustria Lombardy. "The decision to diversify economic activities opens the way for many Italian companies willing to invest in that country, across the board, from construction to tourism. Certainly, for many years their revenues will still be mainly linked to oil, but they have in their pipeline numerous projects for futuristic cities, hospitals, infrastructures, luxury resorts, which require skills and specialisations currently absent in that country and on which we Italians, particularly in Lombardy, have a lot to say'. From construction to architecture and design, not to mention the machinery and technology industries. The country's progressive cultural openness to models and lifestyles more similar to Western ones, albeit with gradual and not always consistent steps, also increases the possibilities for the cosmetics, fashion and luxury sectors, as well as the food industry. 'Obviously, our companies will have to have the ability to adapt to their mentality, for example by offering halal products, from cosmetics to food,' Buzzella observes.

But the space is there: 'What happened in the United Arab Emirates a few years ago is happening, so our companies must be ready to seize this opportunity,' adds the president of Confindustria Lombardia. An opportunity linked on the one hand to the realisation of the so-called 'Giga-Projects', and on the other to the major events that the country will host in the coming years, starting with the Expo in 2030 and the Asian Winter Games in 2029. Another interesting aspect is the government's commitment to increase foreign direct investment (FDI), in particular through the model of special economic zones (SEZs) adopted by the neighbouring Emirates, which is one of the pillars of the National Investment Strategy, which has the ambitious goal of reaching 100 billion foreign direct investment per year by 2023. To date, the stock of Italian investments in the country stands at 4.2 billion euro (as of 2023, source: Maeci), a value decidedly lower than the 11.5 billion that our country invests in the Emirates. And vice versa, there is not that interest in entering the capital of Italian companies or acquiring prestigious real estate that has instead characterised other countries in the Gulf area, particularly Qatar: the stock of direct Arab investments in Italy in 2023 was in fact just 299 million euro.

The discourse is different for trade exchanges that, in the last three years, have recorded strong growth, reaching 4.8 billion in 2023 (+19.4% over 2023) and marking a further increase in the first half of 2024 (+23.5% over the same period last year), according to data processed by Confindustria Lombardia. The same dynamic can be seen in trade exchanges with Lombardy, which touched the 2.5 billion mark in 2023, with over 1.6 billion euros in exports and over 842 million in imports. With 34% of the total, Lombardy is the leading Italian region in terms of volume and value of sales to Saudi Arabia, followed by Emilia-Romagna and Veneto. At a provincial level, Milan is the area that weighs most in exports to Riyadh, with almost EUR 600 million worth of goods, which are mainly machinery, electrical appliances and chemical products, but also textiles and clothing.