4.1.2. THE LEADING INVESTMENT POWERHOUSE
In another development of achieving the vision 2030 agenda, the nation strongly connectively ties her long-term investment capabilities and opportunities to harness the economic diversity in real times. The government vision of 2030 on financial sector development; on April 2017, the Council of Economic and Development Affairs (CEDA), reinforce the capacity KSA economic diversity in every way to diversity the key strategic strength in the role of enabling an environment for the vision 2030 projected agenda. These key areas are; a vibrant society with target youthful population, securing them skillful employment opportunities. Thriving the economy, with long-term business opportunities and in a leveraging unique postural position for all citizens (H.R.H Mohammed bin Salman, 2015).
As the diversification of the economy identified as Financial Sector Development aimed at the formation of the advanced capital market, institutionalized support for the private sector development, and promote citizens on savings and retirement packages. The restructuring of the educational needs and program, of course, to move in line with industrial wants and needs to ensure the right caliber of the human resources are provided for our future demands. Innovative ways to support small and medium enterprises and cooperation to expand as part of a measure to create employment and compete well in the international market. The privatization of some state services and organizational industries to perform well in a level playing grounds, in a way to improve the business environment. Open up with capital human dynamics to invest knowledge and technology in the kingdom (H.R.H Mohammed bin Salman, 2015). The economic integration policy is achievable because; the United States, the United Arab Emirates, France, Singapore, Kuwait, and Malaysia are the main investors in Saudi Arabia in 2016. The investments are mainly oriented towards the chemical industry, real estate, tourism, fossil fuels, automobiles and machinery, and the naturally gifted Kaaba and two holy mosques. Many more sector will be open up for investment and cooperation.
Moreover, lack of political and social integration, reduced access to credit and the policy of achievement, the outlined on the favors a domestic labor force, have all been obstacles to FDI. Therefore, the government has invested in national infrastructure to attract investment and investor, and FDI e?ective ways to diversify the economy, integrate and provide employment for younger generations and those unborn. The KSA recently announced the opening of the retail and wholesale sectors to 100% foreign ownership and on privatization programs. Furthermore, The Saudi Capital Market Authority announced measures to ease restrictions on foreign investment in January 2018 and as such, foreign establishments will need to have USD 500 million worth of assets under management instead of USD 1 billion in order to qualify as an investor in the stock market. The authorities welcome FDI due to its ability to transfer technology, employ and train the national workforce, foster economic development and enhance local raw materials. The country’s controlled in?ation and relatively stable exchange rate, openness to foreign capital in upstream gas, as well as extensive privatization programs are among the advantages attracting investors to the country. The dynamic performance of the banking sector is driving the growth of the non-oil sector. And the access to the world’s largest oil reserves, very low energy costs and a high standard of living are decisive factors for foreign investors. Saudi Arabia ranked 92nd out of 190 economies in the World Bank’s report (2017), with a score (62.5) higher than the regional average in the Middle East and North Africa (56.72) (International Monetary Fund, 2015).
Foreign Direct Investment 2015 2016 2017
FDI Stock (million USD) 224,050 231,502 232,228
Number of Greenfield Field Investment***(million USD) 92 90 89
FDI Inwards (% of GFCF****) 4.2 4.5 n/a
FDI Stock (% GDP) 34.4 36.2 n/a
Source: UNCTAD, Latest available data
4.1.3. THE STRATEGIC GEOGRAPHICAL LOCATION
As part of the harnessing of the vision 2030, the strategic location of the Kingdom is geographically inclined to benefit across Europe, Asia, and Africa. The location of KSA is a global hub connectivity in the area of waterways, world trade center and open marketing system to the rest of the universe. The location of the kingdom has benefited naturally from the resources of minerals like; gold, phosphate and uranium, oil and others found in the land. Part of the strategic plans looks beyond these natural resources to capitalize on the hidden potentials of the citizenry and generations yet unborn. The vision of 2030 is linking and connecting with all nations in the globe ready to exchanges bilateral and multilateral ties with KSA to ensure a win-win cooperation. As the research looks to identify integration measures in the FDI inflows and outflows for better future development (Bunte, Desai, Gbala, Parks, ; Runfola, 2018).
4.2. WHAT IS ANALYTIC HIERARCHY PROCESS (AHP)
In the decision-making of governance, it comes with complex and huge considerable factors, to organized, structure, consult and analyzed to reach an outcome. An analytic hierarchy process is a tool emerged from Satty 1989, to help make a complex decision; this has been used in the field of mathematics, psychology, social sciences, and humanities by the researcher (Saaty, 2008). In a particular application in decision making, it’s a globally recognized decision situation tool; in the area of government, business, industry, healthcare, shipbuilding, and education (Kristiyanti & Sugiharto, 2007). The analytical hierarchy process (AHP) is a double aimful system of decision makers find one that best suits their goal and their comprehension of outlined policies and strategies in the case of KSA of the problem.
The AHP has made a mark and attracted the interest of many researchers including this study, mainly due to the nice algorism properties of the methodology and required input, output and process IPO and data are rather easy to obtain (Engineering, Triantaphyllou, & Mann, 1995). The AHP is a decision support tool which can be used to solve complex decision-making problems. It uses a multi-level hierarchical structure of objectives, criteria, sub-criteria, and alternatives. The pertinent data are often driven by using a set of pairwise comparisons. These comparisons analysis makes way to obtain the weights of the importance of the decision criteria, and the relative performance measures of the alternatives policies in the decision criterion. If the comparisons are not perfectly consistent, then it provides a mechanism for improving consistency (Engineering et al., 1995).
In explaining the Analytic Hierarchy Process (AHP) is one of Multi-Criteria decision-making method originally developed by Prof. Thomas L. Saaty. It is a methodology to derive ratio scales from paired comparisons. The input can be obtained from actual measurements such as price, weight etc., or from subjective opinions such as satisfaction feelings and preference. AHP allow some small inconsistency in judgment or decision-making because humans are not always consistent. The ratio scales are derived from the principal Eigenvectors and the consistency index is derived from the principal Eigenvalue (Saaty, 2008).
The AHP considers a set of evaluation criteria and a set of alternative options among which the best decision is made. It is significant that some of the criteria could be contrasting; it is not always the case the general best option is the one which optimizes every single criterion, rather the one which achieves the most suitable trade-off among the different criteria. The AHP generates a weight for each evaluation criterion according to the decision maker’s pairwise comparisons of the criteria. The higher the weight, the more important the corresponding criterion (Process, 1980). AHP assigns a score to each option according to the decision maker’s pairwise comparisons of the options based on that criterion. The higher the score, the better the performance of the option with respect to the considered criterion. Finally, the AHP combines the criteria weights and the options scores, thus determining a global score for each option, and a consequent ranking. The global score for a given option is a weighted sum of the scores obtained with respect to all the criteria (Process, 1980).
The AHP is a very flexible and powerful tool that scores the final ranking, are obtained on the basis of the pairwise relative evaluations of both the criteria and the options provided by the user. The computations made by the AHP are always guided by the decision maker’s experience, and the AHP considered as a tool that is able to translate the evaluations (both qualitative and quantitative) made by the decision maker into a multi-criteria ranking. In addition, the AHP is simple because there is no need of building a complex expert system with the decision maker’s knowledge embedded in it. On the other hand, the AHP may require a large number of evaluations by the user, especially for problems with many criteria and options. Although every single evaluation is very simple since it only requires the decision maker to express how two options or criteria compare to each other, the load of the evaluation task may become unreasonable. In fact, the number of pairwise comparisons grows quadratically with the number of criteria and options. For instance, when comparing 10 alternatives on 4 criteria, 4·3/2 = 6 comparisons are requested to build the weight vector, and 4· (10·9/2) =180 pairwise comparisons are needed to build the score matrix (Process, 1980).
However, in order to reduce the decision maker’s workload, the AHP is completely or partially automated by specifying suitable thresholds for automatically deciding some pairwise comparisons. In this instance of the research, AHP is based on the KSA decision-making process of the Arabs in the heart of the world, investment powerhouse and geographical location factor. These strategic facilities will be compared on the KSA over-reliance on oil as compared to the three listed items to boost the economic fortunes of the vision 2030.
The AHP model will far weigh on the principle of comparing the study of achieving the ambitious dreams of the kingdom 2030 visions of prosperity, development and the rest of the globe. These all depend on the economic integration of developed and developing nations in all aspects of human endeavors.