To meet the growing demand for cloud services in Saudi Arabia, Oracle has announced plans to expand its presence in the country. As part of a $1.5 billion investment, the company will open a third public cloud region in Riyadh, adding to existing facilities in Jeddah and NEOM.
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Oracle's investment will rapidly accelerate the country's cloud transformation across the business and public sector. This expansion will play a key role in unlocking opportunities created by rapid technological advancements. The Ministry of Communications and Information Technology (MCIT), along with the Communications and Information Technology Commission (CITC), will collaborate with Oracle in setting up an additional localized cloud region, tailored according to government regulations on data residency.
According to IDC, spending on public cloud in Saudi Arabia is expected to surge at an estimated CAGR of 26.8% over the upcoming years, reaching overall investments of $3.1 billion in 2026. Furthermore, digital transformation initiatives are poised to drive significant technology spending, which could result in an era of great economic progress throughout the country.
The Saudi Arabian government has announced its plans to establish new special economic zones that will focus on sectors such as advanced production technologies, cloud computing, medical technologies, and maritime navigation. Special economic zones are defined territories offering competitive advantages, including tax benefits for certain types of activities that differ from the basic standards of the economy.
These plans are in line with the current development program of Saudi Arabia's "Vision 2030", which aims to transition to an oil-independent economy and enter the top 15 largest economies in the world by 2030. The country has launched the Global Supply Chain Sustainability Initiative to support more than $10 billion in foreign investment by the end of 2024, aspiring to become a global logistics center. To achieve this, they are providing foreign investors with financial and non-financial incentives worth more than $2.5 billion.
Four new special economic zones are being launched, and they are offering attractive benefits and incentives to foreign investors, such as a competitive income tax rate, no customs duties on the import of equipment and raw materials, the right of 100% foreign ownership, and flexible conditions for hiring foreign workers.
Crown Prince Mohammed bin Salman said that the new special economic zones will create tens of thousands of jobs and contribute billions of rials to Saudi Arabia's gross domestic product. These zones will provide private businesses with favorable business rules and simplified procedures, along with infrastructure meeting the highest standards globally.
The Management of Economic Cities and Special Zones will regulate the activities of these new zones and is already working to solve localization and supply chain problems. Solving these issues can create a differentiated business environment, activate new sectors of the economy, and value chains that could lead to a new leap in Saudi Arabia's economic development.
The expansion by Oracle in Saudi Arabia for cloud services is an important strategic move for the company. By investing $1.5 billion, Oracle aims to strengthen its position in the Middle East and tap into the growing demand for cloud computing solutions in the region.
The investment will involve the construction of new data centers in multiple locations across Saudi Arabia. These data centers will provide local customers with access to Oracle Cloud Infrastructure services, including infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS) offerings.
This expansion also aligns with Saudi Arabia's Vision 2030 initiative, which aims to diversify the country's economy and reduce its reliance on oil revenue. By creating job opportunities and supporting the development of a digital economy, Oracle's investment contributes to the goals of this initiative.
Furthermore, the increased presence of Oracle in Saudi Arabia will help attract and support organizations in various sectors such as finance, healthcare, telecommunications, and government. With local data centers, Oracle can address concerns related to data sovereignty, security, and privacy for its customers.
Oracle's $1.5 billion expansion in Saudi Arabia for cloud services is a significant move in the company's global growth strategy. The investment aims to capitalize on the increasing demand for cloud computing solutions and support the digital transformation efforts in the region.
The expansion includes the construction of new data centers in multiple locations across Saudi Arabia. These data centers will enable Oracle to provide its customers with access to a range of cloud services, including infrastructure, platform, and software offerings.
By establishing a strong presence in Saudi Arabia, Oracle can better serve existing customers in sectors like finance, healthcare, telecommunications, and government. Additionally, the investment opens up opportunities to attract new clients and expand its customer base in the region.
Furthermore, this expansion aligns with Saudi Arabia's Vision 2030 initiative, which focuses on diversifying the economy and driving technological innovation. Oracle's investment supports the goals of this initiative by creating job opportunities and facilitating the development of a digital economy.
With local data centers, Oracle can also address concerns related to data sovereignty and comply with local regulations and data security requirements. This ensures that customers' sensitive information remains within Saudi Arabia and provides added assurance in terms of data privacy and security.
Overall, Oracle's $1.5 billion expansion is a strategic move to capture the growing market for cloud services in Saudi Arabia. It demonstrates Oracle's commitment to the region and its confidence in the potential for cloud computing to drive digital transformation and economic growth.
A CAGR of 26.8% sounds enticing, but it feels more like a marketing ploy than a reflection of genuine market readiness. Are we just creating a cloud ecosystem that will ultimately serve corporate interests rather than the actual needs of local businesses? The partnership with MCIT and CITC is a double-edged sword; while it ensures regulatory compliance, it could also stifle innovation if not managed properly.