Sweeping overhaul of Saudi economy announced by deputy crown prince
Saudi Arabia, Opecs biggest oil producer, has unveiled the much-anticipated Vision 2030 plan, which outlines economic reforms that will wean the countrys oil-dependent economy off hydrocarbons.
Deputy Crown Prince Mohammed bin Salman al-Saud announced the kingdoms economic agenda in Riyadh at a press conference with international journalists, in which he reiterated some of the highlights from his earlier interviews and laid out several new targets and initiatives.
Among the goals set was to move the kingdoms current position as the 19th-largest economy in the world to within the top 15 by 2030.
Non-oil economy
- Cut kingdoms dependence on sale of hydrocarbons by 2020
- Increase overall non-oil government revenue from SR163bn ($43.5bn) to SR600bn by 2020, increasing it further to SR1 trillion by 2030
- Increase foreign direct investment (FDI) from 3.8 per cent to the international level of 5.7 per cent of GDP
- Increase the private sectors contribution from 40 per cent to 65 per cent of GDP
- Raise Saudi Arabias global ranking in the Logistics Performance Index from the current 49 to 25 and raise the share of non-oil exports in non-oil GDP from the current 16 per cent to 50 per cent
- Implement wide-ranging transparency and accountability reforms. Zero tolerance for all levels of corruption, whether administrative or financial
- Develop mining sector and ensure it reaches SR97bn by 2020, creating 90,000 job opportunities in the process
- Structural reforms of mining sector, including private sector investments, building database of the kingdoms resources, reviewing licensing procedures, investing in infrastructure, developing funding methods and forming international partnerships
- Increase localisation of oil and gas sectors from the current 40 per cent to 75 per cent
- Ensure competitiveness of renewable energy sector through gradual liberalisation of the fuels market
- Launch the King Salman Renewable Energy Initiative and review the legal and regulatory framework that allows the private sector to buy and invest in the renewable energy sector. Kingdom will localise the industry, produce the necessary skill-sets and encourage public-private partnerships (PPPs)
- Establish local military and defence capabilities, including building aircraft, and spend more than 50 per cent of military equipment spending in the local market by 2030. Kingdom currently spends 2 per cent in the local market
Royal Saudi Air Force Tornado
- Privatise government services to encourage private sector investments and increase its contribution to economy from the current 40 per cent of GDP
- Shift the governments role from providing services to regulating and monitoring
- Seek private sector investments, both local and international, in healthcare, municipal services, housing, finance and energy sectors
- SME (small- and medium-sized enterprise) Authority to increase their contribution from 20 per cent of GDP to 70 per cent in 2030
- Increase SME funding from current 5 per cent to 20 per cent by 2030
- Facilitate access to investing and trading in the stock markets, and smooth the process of listing private Saudi companies and state-owned enterprises
- Deepen liquidity in capital markets, fortify the role of debt markets and pave the way for the derivatives markets
- Give incentives for exploration of mineral resources to diversify economy
- Create a new city dedicated to energy, double gas production, and construct a national gas distribution network
- Capitalise on the governments reserves of real estate and allocate prime areas within cities for educational institutions, and retail and entertainment centres. Large areas along coasts will be dedicated to tourist projects and appropriate lands will be allocated for industrial schemes
- Increase contribution of modern trade and e-commerce to 80 per cent of overall retail sector by 2020
Social agenda
- Job Creation and Anti-Unemployment Commission has been established
- Prepare a modern curriculum as part of education reforms
- Lower the rate of unemployment from 11.6 per cent to 7 per cent.
- Increase womens participation in the workforce from 22 per cent to 30 per cent
- Provide job opportunities for an additional 1 million Saudis by 2020 in retail sector
- Better utilise subsidies for fuel, food, water and electricity by redirecting them towards those in need
- Overhaul governments support system and benefits to be redirected to eligible citizens and economic sectors
- Green card system to be introduced in the next five years to allow expatriates to work in the country on long term basis
- Manufacture half of military needs in-kingdom to create more job opportunities for citizens and keep more resources within the country
- Build safe and sufficient strategic food reserves to guard against emergencies
- No taxes on citizens income or wealth, nor on basic goods
- Train 500,000 government employees through distant learning by 2020
Public Investment Fund-Saudi Aramco
- Less than 5 per cent of Saudi Aramco to be sold in initial public offering (IPO)
- Aramco could have a valuation of more than $2 trillion
Saudi Aramco
- Transfer the ownership of Aramco to the Public Investment Fund (PIF), which will become the largest sovereign wealth fund in the world
- Increase the PIFs assets, from SR600bn to more than SR7 trillion
- Become a global investment powerhouse by developing further investment vehicles
- Increase the efficiency of the PIF management and improve its return on investment, with the aim to diversify government resources and the economy
- Transform the PIF into the worlds largest sovereign wealth fund
- The PIF will not compete with the private sector, but instead help unlock strategic sectors requiring intensive capital inputs
- Maximise investment capabilities by participating in large international companies and emerging technologies from around the world
- Encourage major Saudi corporations to expand across borders and compete in global markets
Get full details on Saudi Arabias Vision 2030 website: Arabic - English
See also
- Riyadh to salvage Economic Cities and financial district
- Saudi Arabia sets 9.5GW renewable energy target
- Saudi Arabia confirms Aramco listing
- Cultural change is essential to success of Saudi Arabias reform plans
- Saudi Arabia picks Aramco IPO advisers
- Details are key for Saudi Arabias reform agenda
- Saudi Arabia plans $2 trillion sovereign fund
- Riyadh identifies almost 150 state assets for sale
- Riyadh considers restructuring port authority for IPO
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