Saudi Arabia has been warned that uncertainty over its “anti-corruption clampdown” may drive away foreign investors.
Speaking in Dubai, head of Middle East and North Africa research at Japan’s Bank of Tokyo-Mitsubishi, Ehsan Khoman, said: “The speed and magnitude of the anti-corruption clampdown could increase uncertainty in the short-term for some corporates, which could delay investment decisions.”
It has been widely suspected that Crown Prince Mohamed Bin Salman’s apparent shakedown of the Kingdom’s economy was initiated by the prince to intimidate potential opponents and consolidate his grip on the country. His decision to imprison some of the country’s most famous heads of business came under extreme scrutiny. Experts believe it fuelled instability in the country and scared away foreign investors at a time Saudi needed foreign capital the most.
Saudi Arabia’s internationally known billionaire businessman Prince Alwaleed Bin Talal was released from his luxury hotel detention over the weekend but lack of information over the reasons for his detention and eventual release three months after his arrest has done little to allay concerns over the real purpose of the clampdown.
Bin Salman has said that fighting corruption is one of the major goals of his reform agenda but investors will need to see greater transparency in the country before they are confident enough to invest in his Vision 2030 plan.
Khoman was further quoted as saying that more clarity and guidance from authorities on “how far they want to take the anti-corruption drive would be welcomed from the investment community.” The probe itself, Bloomberg pointed out, has been criticised for its lack of transparency.
While uncertainty is said to linger for a while, Khoman, said that in the long run the crackdown may still be good for the Saudi economy if it is able to eradicate the country’s “complex bureaucracy”.
“The anti-corruption probe is net positive for both sentiment as well as investment flows in the long term,” Khoman said. “At the current juncture, some corporates are in a wait-and-see mode, both in terms of seeking further guidance and clarity from the authorities, as well as observing what decisions their peers will take or announce before they make any firm business decisions.”