Italian companies urged to make Saudi their ‘second home’

• Countries sign 21 MoUs in Milan
• Relationship must go to ‘next level’
• Acwa Power and Eni link up

Saudi Arabia has invited top Italian companies to make the kingdom their “second home” as both countries aim to boost investment and trade levels.

The Italian-Saudi Investment Forum, which brought together policy makers, business leaders and innovators, witnessed the signing of 21 memoranda of understanding (MoUs) and investment agreements.

They covered sectors including clean energy, real estate, health, waste management, technology and manufacturing.

• Saudi minister Al Falih heads to Milan for trade talks
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“Saudi Arabia is more than open for business. We are inviting all great Italian companies to make the kingdom their second home,” said Khalid Al-Falih, minister of investment.

“We want them to see Saudi Arabia as a platform for accessing not only the Saudi market, which is growing at a high rate, a regional market that is healthy and growing, but a platform for reaching other markets around the world.”

Bilateral non-oil trade between the two countries amounted to around SAR5.6 billion ($1.5 billion) in 2022. Total trade topped $11 billion last year, the bulk from Saudi oil exports.

Italy is among the top 20 countries investing in the kingdom. More than 150 Italian companies have a foreign investment licence in Saudi Arabia, creating jobs for more than 6,000 Saudis.

Italy is also reportedly in talks for a potential investment from Saudi Arabia in its new Made in Italy sovereign fund, which was approved in May and will have initial assets of $756 million in 2023, rising to over $1 billion next year. 

One of the agreements signed at the forum in Milan saw Saudi-listed Acwa Power link up with six Italian partners, including energy major Eni, to bolster cooperation in the fields of green hydrogen, water desalination and research and development.

Other deals included an MoU in healthcare between GKSD Investment Holding Group, the ministry and King Saud University Medical City to set up one or multiple entities, and an agreement between Cipriani Group and Alkholi Holding Company to develop Casa Cipriani in Riyadh.

An MoU in the manufacturing sector between Continuus-Properzi and Bahra Electric to localise the manufacture of copper and aluminium rods in Saudi Arabia was also agreed.

Al Falih said discussions with Italy would continue at the Saudi-EU Investment Forum in October.

It is a challenging time for Italian manufacturers, who remained mired in a downturn during August. Output and new orders fell at severe rates, with market demand reported to be subdued. Job losses were signalled for the first time in three years.

The HCOB Italy Manufacturing Purchasing Managers’ Index posted a score of 45.4 last month, indicating a contraction in the sector for a fifth month running. Foreign sales were especially weak, declining at their fastest rate since May 2020.

Dr Tariq Kamal Chaudhry, economist at Hamburg Commercial Bank, said the manufacturing recession “appears to be exerting influence on the hitherto resilient Italian labour market as well. For the first time since August 2020, manufacturers are trimming their workforce numbers.”

In July it was reported that Italy is in talks with sovereign wealth funds from Saudi Arabia, Norway and Singapore over $1 billion plans to develop a residential area of Milan.

Invimit, an asset management company run by the Italian treasury, is seeking investors for the regeneration of a 388,000 sq m site in Milan’s western suburbs.