Axed Saudi Oil Boss Al-Falih Returns as Investment Minister
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(Bloomberg) — Saudi Arabia’s ousted former Energy Minister Khalid Al-Falih returned to government on Tuesday, taking on a key new portfolio as the kingdom seeks to win back foreign investors.
A series of royal orders created a ministry of investment and appointed Al-Falih to head it. Other royal decrees formed new ministries for tourism and sports and replaced the kingdom’s minister of media with Majid Al-Qasabi, on an acting basis. Al-Qasabi is a close adviser of Crown Prince Mohammed bin Salman.
“Al-Falih has experience managing large projects, and that’s something Saudi Arabia needs right now,” said Christof Ruehl, a researcher on energy and policy at both Columbia and Harvard universities. “As the host of the G-20 this year, there’s also a lot of focus on the Saudi economy, so it’s important for the country to show some progress.”
Abruptly removed last year from his posts as energy minister and Saudi Aramco chairman in the lead-up to the oil giant’s initial public offering, Al-Falih’s dismissal prompted many to believe he had been sidelined. He was a chief architect of the deal that the Organization of Petroleum Exporting Countries reached with other oil producers including Russia to cut global output.
Al-Falih has a wide network of contacts around the world — a potential asset as the kingdom struggles to attract foreign direct investment.
Wooing Investors
Drawing investment from abroad is a key part of Prince Mohammed’s economic transformation plan for the world’s largest oil exporter, which calls for diversifying away from crude and building new industries like mining, tourism and entertainment. Despite overhauling regulations and smoothing bureaucracy, however, officials have been unable to restore foreign direct investment to levels it reached a decade ago, when it was about eight times higher than today.
Al-Falih’s appointment came as part of a flurry of royal orders on Tuesday afternoon. Saudi cabinet reshuffles are not uncommon, with the kingdom’s rulers often announcing a slew of appointments at the same time.
The new appointments also further consolidated responsibilities in the hands of a select few officials, some of them close advisers of Prince Mohammed.
Among the most prominent moves, the kingdom’s tourism commission was elevated to become a ministry, with the same official, palace adviser Ahmed Al-Khateeb, as its chief.Similarly, the General Sports Authority will become a sports ministry, with current sports czar Prince Abdulaziz bin Turki remaining in charge of it.The new acting media minister, Al-Qasabi, is also minister of commerce and a board member of the kingdom’s sovereign wealth fund.Al-Qasabi will hand over an additional portfolio he had as acting minister of municipal and rural affairs to Majed Al Hogail. Al Hogail is also minister of housing and will remain in that positionThe civil services minister was removed from his post and that ministry will be combined with the ministry of labor and social development. The new entity will be be named the ministry of human resources and social development.
The kingdom’s investment file was formerly managed by the Saudi Arabian General Investment Authority, which was overseen by a combined ministry of commerce and investment.
SAGIA struggled to revive investments as rapid domestic political changes and a shift to a more aggressive foreign policy spooked investors, though there was a spike last year in the number of international companies setting up operations in the kingdom.
Al-Falih will have his work cut out for him: in 2017, foreign direct investment plunged to the lowest since 2003, down 80% to $1.4 billion. It has recovered only partially since then, reaching an estimated $4.6 billion last year.
“I think it’s good news to bring such an experienced person back into an outward-facing position,” said Karen Young, a resident scholar at the American Enterprise Institute in Washington. “A known expert in the major industry is a good move.”
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