Gulf

1. Saudi auto industry plans
2. Riyadh’s tourism challenges
3. Gulf borrowing spree
4. UAE expats’ pension options
5. Support for Oman startups

All aboard the ‘Dream of the Desert.’

A hub for Saudi’s auto industry

Saudi Arabia is planning an auto industry hub in King Abdullah Economic City on the Red Sea coast — its latest move to develop new industrial sectors that generate revenue and, just as importantly, create jobs.

The King Salman Automotive Cluster will bring together several existing projects, including assembly plants for two electric vehicle brands the Saudi government has heavily invested in: Lucid and the homegrown Ceer. Public Investment Fund joint ventures with Italian tire manufacturer Pirelli and Korean car giant Hyundai will also be part of the hub.

Saudi Arabia appears serious about building a viable long-term industry. While factories can be developed relatively easily by importing kits for local assembly, a fully fledged industry — where cars are designed and built from scratch — requires a broader supply chain, from metals and plastics to seats and batteries.

Officials expect companies in the new auto hub to contribute a cumulative 92 billion riyals ($24.5 billion) to the Saudi economy by 2035. The nearby King Abdullah Port and Jeddah Islamic Port provide a ready export route.

Saudi tourism’s infrastructure gap

Saudi Arabia’s infrastructure shortcomings could hinder its ability to fully capitalize on its tourism potential for several years, the chief executive of a major European online travel agency told Semafor. The kingdom lacks sufficient hotels, roads, and tour operators to accommodate international visitors. Tourism is central to Saudi Arabia’s push to diversify its economy beyond fossil fuels, with efforts most visible in Riyadh: Non-religious tourist visas are now relatively easy to obtain, and a metro system connects visitors to the capital’s growing lineup of sporting and cultural events.

But more must be done to improve access across the world’s 12th-largest country, the CEO of GetYourGuide said. Saudi Arabia aims to attract 70 million foreign visitors annually by 2030, including religious pilgrims, but remains far from that target — last year, the number stood at around 30 million.

Gulf debt issuances surge

Debts are piling up at a rapid pace in the Gulf, propelled by falling interest rates and huge investments in infrastructure and other diversification projects. Saudi Arabia’s debt capital market could top $500 billion this year, according to Fitch Ratings, cementing its position as one of the largest emerging market issuers. That represents a 16% increase on the $433 billion of outstanding debts at the end of 2024. Across the border in the UAE, the debt capital market grew by 10% last year to more than $300 billion; Fitch expects it could surpass $400 billion in the next few years.

In both countries, a large portion of the debt is owed by the government and other state-owned bodies. Banks are regular issuers of debt and sukuk (Islamic bonds) too, but corporate borrowers are less active, particularly in the UAE. The expectation of falling oil prices could add further momentum — with defaults a rarity, investors are likely to keep buying.

UAE to unlock worker savings

The mandatory employee retirement savings held as cash on UAE companies’ books may soon be funneled into more profitable, and riskier, investments. Abu Dhabi-based investment firm Lunate’s newly launched Ghaf Benefits Scheme will allow companies to transfer these savings into a selection of six investment funds — a game-changer for the UAE’s 85% expat population, who were previously barred from investing these funds in stocks and other assets. Abu Dhabi sovereign wealth fund ADQ — whose portfolio includes Etihad Airways and logistics firm Aramex — is considering adopting the program for potentially tens of thousands of employees. Lunate executives expect the UAE’s market for employer-sponsored savings to expand rapidly from a small base.

Oman’s startup funding push

The minimum valuation required for startups in Oman to be part of the country’s Promising Start-ups Index, a program designed to boost funding for new businesses and encourage founders to list on the Muscat Stock Exchange. The initiative is overseen by the Financial Services Authority. Muscat has a relatively small startup ecosystem, ranking 23rd in the Middle East and 739th globally, according to research firm StartupBlink. (Dubai ranks in the global top 50). But there is strong backing from the highest levels of government. The index is being established by royal decree, and Bilarab bin Haitham Al Said, son of the sultan, serves as the honorary president of an Omani incubator.

Checking In

• More than 10,000 visitors took advantage of Qatar Airways’ stopover program last month, a record level and 58% more than in January 2024. Persuading more transit passengers to leave the airport rather than immediately hop on a connecting flight is a vital element of the country’s tourism industry.

Trade

• The UAE hit a new milestone of 3 trillion dirhams ($816 billion) in foreign trade in 2024, according to Prime Minister Sheikh Mohammed bin Rashid. The country is targeting 4 trillion dirhams by 2031. “At this pace, we will reach it years ahead of schedule,” he wrote on X.

Crypto

• The UAE Ministry of Energy and Infrastructure is partnering with crypto platform Shiba Inu to implement blockchain and other so-called Web3 programs across its portfolio.

Saudi Arabia is getting the Gulf’s first five-star train. The “Dream of the Desert” is a joint project between Saudi Arabia Railways and Italian luxury group Arsenale. Due to hit the tracks in late 2026, the train will house 34 suites with Art Deco-styled bedrooms, with guests able to take in the kingdom’s desert landscapes while feasting on treats from top local and international chefs. Beginning in Riyadh, the 1,300-kilometer route will likely finish up in Qurayyat, close to the northern border with Jordan.

South Africa is considering ways for Elon Musk’s companies to invest in the country without complying with the nation’s Black empowerment laws, three people familiar with the matter told Semafor.

Under the country’s Black economic empowerment policy, introduced nearly 30 years ago to reduce apartheid-era inequality, at least 30% of the South African operation of any foreign-owned company such as Tesla or SpaceX would have to be sold or donated to Black locals. Government officials have discussed allowing Musk’s companies to sidestep these rules by using an “equity equivalent” option, such as social investment, according to the people.