I recently sat down with Ahmed Yassin, founder of Saudi Arabian blockchain investment firm Avrio Invest. Blockchain in the Kingdom of Saudi Arabia is a relatively new phenomenon, but something which Assin believes will help the Gulf state modernize rapidly in the face of a changing global economy. Initially set up as a real estate investment fund, Avrio Invest together with Espeo Software now has ambitious plans to bring the significant cost-cutting aspects to the healthcare and government sectors.
Thanks for taking the time to talk to me today. What sparked your interest in blockchain initially and especially in real estate tokenization?
[There was a] real estate market collapse in Saudi Arabia in 2017 and then that’s when I came up with the idea of tokenizing real estate through the blockchain because of the benefit from creating a real estate fund through the blockchain. First of all, it opens the doors to foreign investment, which means investors don’t have to open a company in Saudi Arabia to own real estate and to develop real estate. We will obviously take that burden as Avrio Invest.
The difference between a blockchain fund versus a banking real estate fund is that there’s a minimum buy-in when you enter a real estate fund through a bank that could be $100,000 and it could be a $1 million to launch. With blockchain it can be as much or as little — it can be $100. So this opens the door to everyone. You know in Saudi Arabia you have to understand it’s a population of 31 million — not everybody can afford real estate. Real estate was really limited to middle and higher-income earners.
This solution opens the door to pretty much every type of income. And that’s how it came. So initially Avrio Invest was purely a blockchain real estate investment firm, but as time went on we started realizing no, it doesn’t necessarily have to just be real estate. It could be the medical sector and supply chain. It could be the governmental sector in regards to governmental services. And now it’s growing into something bigger than what we originally anticipated.
What are some of the key opportunities for the real estate market in Saudi Arabia? I know you mentioned that cryptocurrency allows more people to enter this market what other opportunities are there?
When we first started this, we needed to make sure that any of this was legal. In Saudi Arabia, we have what’s called shariah compliance. You have common law and religious law. I needed to find out if I tokenize real estate would this be legal. We couldn’t find a lawyer who understood blockchain for almost three months with help from Espeo — we had to get legal advice from the UAE. We found out that because the Avrio token would be backed by a real estate asset, it falls under shariah. Bitcoin is illegal because it’s not backed by anything. Avrio coin is legal because it’s backed by a tangible asset that can be liquidated at any time. This was one of our breakthroughs.
In regards to other opportunities, we’re confronting the Ministry of Health right now to turn it into a law where every hospital, every clinic, every insurance company, every pharmacy is on the blockchain so that the companies can keep track of everything the country can keep track of everything. There’s a huge opioid epidemic and there’s a huge epidemic in loss of records. Basically, hospitals are not communicating with each other. So there’s a long list of issues.
In Saudi Arabia, medical care is by law. If you’re an employee, you need to have it. You have insurance companies that are losing money. We strongly believe that the blockchain will solve the issue that Saudi Arabia has and this also falls in Vision 2030, which is to reorganize the medical sector. There’s a lot of money being lost by the government, by the hospitals, by the industry itself as a whole and we believe that this is a solution to the point where we’ve already started talks with the government in regards to this.
And there is interest in this but one of the biggest issues that we’re facing is that nobody knows what blockchain is. When you go to Dubai or Bahrain and you talk to people and you open the subject of blockchain at least two out of ten people will understand exactly what blockchain is most people will refer to bitcoin. In Saudi Arabia, zero. Nobody knows what it is. So we see that our biggest obstacle right now the worst thing is educating the market. We’re invested in marketing just to educate. If you look at our promotion videos, they’re purely educational, not on the product development level.
There’s bigger awareness for blockchain. When I registered the company in 2017, I didn’t think I was going to invest so much time and money in the project as I have. I thought it was just an idea and i didn’t know if it was going to materialize. It wasn’t until mid-2018 we realized, no this is something that has the potential to change the market. Because it really falls into Vision 2030, which is the most important thing right now. If companies are not in compliance with Vision 2030, they won’t succeed. Every aspect of Avrio fits into the vision of His Royal Highness Crown Prince Mohammad bin Salman.
How do you see blockchains changing Saudi Arabia in the next ten years? You’re removing a lot of the middlemen, right?
I believe it will be a huge contributor to both foreign investment and governmental services in regards to the medical, the educational sectors. I believe it will have a huge impact. In regards to the speed, that’s a delicate question. Although Avrio Invest is moving very quickly, you don’t know how the market will respond to it. At the end of the day, you’re speaking Chinese. You’re literally changing the way people do things.
In real estate, you’re going to receive a lot of tension because you’re removing a lot of the middlemen. removing the banks pretty much. Unless the bank gets on board. The problem is that this is a perfect solution for any bank. Yet they’re very slow. If you look at it in the United States or in Europe, banks are moving very slowly for some reason, which I find mind-boggling. Bankers tend to be very pessimistic on the technology and that’s because it risks putting them in an awkward position. The beauty of blockchain is that we validate, everything is transparent. So our biggest obstacle is with the bank. However, we’re very optimistic because one of the banks that we’re in talks with is co-owned by the government.
And we have a huge relationship with them because one of the companies I’m consulting for has the biggest real estate fund which is through a major local bank. But this is still early stages. We see the banks adapting to it really quickly. Our biggest obstacle. I would say for the real estate sector is basically the government approving the coin — the Avrio token.
You also mentioned discussions with the Saudi Ministry of Health, what sort of solutions do you hope to offer?
In regard to the Ministry of Health, it’s still at a very early-stage discussion. I’ll give you one example. When I was living in Canada or in the UK. Let’s say you go to a doctor and he will give you a paper slip. Then you go to to the pharmacy, the pharmacist would take that slip and give you the medicine. In Saudi Arabia, the pharmacies don’t take the prescription slip. So what the person does is he’ll go to several different pharmacies and buy several boxes. And then you have an issue.
Blockchain I believe will solve this issue. If the whole healthcare system is on the blockchain. For example, if a doctor decides to prescribe you a medication, he doesn’t give you a piece of paper, he puts it on the blockchain. All the pharmacies in Saudi Arabia would be connected to it. Once the pharmacies have given you your medication, it will be validated that a certain medication has been given to a specific person. You get the idea.
So people hoard medication? Or turn around and sell it?
Yes. In Saudi Arabia, the hospitals are not in contact with each other. You’ll have a patient go to one hospital and get treatment. A week later, he’ll go to another hospital and get medication again. One treatment contradicts the other and unfortunately, you have a death.
Connecting all of the hospitals, insurance companies, all of the pharmacies This is something the government needs to implement. I believe it will solve this issue when the whole healthcare system is on the blockchain.
What challenges does Saudi Arabia face in leveraging blockchain technology?
Saudi Arabia has to catch up. In a sense, we’re trying to outdo the UAE in blockchain implementation. And I think Saudi Arabia will succeed. We have the economy to do it. When we started Avrio Invest, though we realized that we wouldn’t be able to have anybody to code because there’s nobody inside Saudi Arabia to code. One of our biggest issues is that were not able to find any nationals to write blockchain code. Great programmers will make or break your company. That’s why we decided to partner with Espeo.