Saudi state investment fund to set up new firms
Riyadh, July 24, 2014
Saudi Arabia's Public Investment Fund (PIF) aims to establish companies in areas including housing, petrochemicals and technology as it expands its investments locally and overseas, Finance Minister Ibrahim Al-Assaf said.
His statement, quoted on Wednesday by the Al-Sharq Al-Awsat newspaper, was a fresh sign that Saudi authorities plan to use government-owned funds more actively to support economic reforms and development.
The PIF was established in 1971 to help finance strategic economic projects. It has assets under management worth about $5.3 billion, according to the Sovereign Wealth Fund institute, which tracks state-run funds.
At a meeting on Monday, the cabinet authorised the PIF to establish companies inside and outside the kingdom, alone or in partnership with other institutions from the public or private sectors.
"This decision aims at...giving the fund more flexibility and enabling it to expand investment activity locally and overseas," Al-Assaf was quoted as saying.
He added: "The fund has initiatives to establish companies working in the petrochemical, housing, housing finance and technology sectors." Previously, the PIF had to obtain cabinet approval for individual projects, a lengthy process.
In March, the cabinet gave permission for the PIF, state oil firm Saudi Aramco and petrochemical giant Saudi Basic Industries Corp to establish an industrial investment company with capital of 2 billion riyals ($530 million).
Saudi economist Abdulwahab Abu Dahesh said the cabinet's decision this week indicated the government wanted to encourage the private sector to participate in big development projects, since government institutions were having trouble managing them alone.
Last month the Shura council, an advisory body to the government, debated a proposal to set up a Saudi Arabian sovereign wealth fund, which could mean more active management of the kingdom's budget surpluses. It did not reach a conclusion. - Reuters