The agreement has been nine months in the making and follows an earlier deal that saw PIF buy more than $1 billion worth of shares in the engineering unit of Posco, South Korea’s biggest steelmaker.

Posco and PIF will collaborate with a view to setting up a Saudi government-run construction firm as part of a long-term knowledge transfer program. This joint venture would target railroads, hotels and other government-commissioned programs in the Kingdom.

Speaking after the signing, PIF’s Secretary General Abdulrahman Al-Mofadhi said, “This important agreement is in line with the Kingdom’s plans to transfer knowledge, expertise and technology into Saudi Arabia. The agreement will create local job opportunities and provide a strong foundation for the training and development of young Saudis”.

With approximately $46.5 billion of trade exchange between the two countries in 2013, this latest agreement is set to strengthen economic ties and build capacity in an important sector of Saudi Arabia’s economy.