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Thursday, May 23, 2024

Saudi Arabia’s Vision 2030: Bang for the buck

News Analysis |

Kingdom of Saudi Arabia (KSA) articulated a comprehensive strategy under “Vision 2030”. Prince Mohammed, the son of King Salman bin Abdulaziz al-Saud, is the main driver behind the Vision 2030 reform policy that aims to reduce Saudi dependence on oil. Crown Prince Salman is the power behind the Saudi throne, at 32 years of age, he has emerged the most influential figure in the world’s leading oil exporter.

Read more: Vision 2030 vs Saudi ultra-conservatives

What is “Saudi Vision 2030” about?

The plan also visions changing the education curriculum, increasing women’s participation in the workforce, and investing in the entertainment sector to help create jobs for young people. All of this is planned in order to decrease Saudia’s dependence on oil and expand economic opportunities for the country.

Under this vision, it is intended to increase the domestic savings from 6% to 10% of total household income, to raise the non-profit sector’s contribution to GDP from less than 1% to 5% and to rally one million volunteers per year (compared to 11,000 now).

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For effective governance, KSA intends to enhance its non-oil government revenue from SAR 163 billion to SAR 1 trillion. Moreover, it will try to raise its ranking in the Government Effectiveness Index, from 80 to 20.  It also intends to raise KSA’s ranking on the E-Government Survey Index from the current position of 36 to be among the top five countries under vision 2030. It has a plan to increase its private sector’s contribution from 40% to 65% of GDP. Under this vision it aims to KSA’s global ranking in the Logistics Performance Index from 49 to 25 and in order to ensure the Kingdom is a regional leader. In order to diversify its economy, it expects to raise the share of non-oil exports in non-oil GDP from 16% to 50%.

In terms of business and investment sector, the country envisions increasing the Public Investment Fund’s assets, from SAR 600 billion to over 7 trillion, to rise from our current position of 25 to the top 10 countries on the Global Competitiveness Index and to increase foreign direct investment from 3.8% to the international level of 5.7% of GDP.

Read more: Saudi women & Vision 2030: A test of Prince Salman’s reforms

In order to fulfill lives of the people living in KSA, it aims to increase women’s participation in the workforce from 22% to 30%, to move from our current position as the 19th largest economy in the world into the top 15, to increase the localization of oil and gas sectors from 40% to 75%, to lower the rate of unemployment from 11.6% to 7%, to raise our position from 26 to 10 in the Social Capital index, to increase KSA’s capacity to welcome Umrah visitors from 8 million to 30 million every year, to more than double the number of Saudi heritage sites registered with UNESCO, to increase household spending on cultural and entertainment activities inside the Kingdom from the current level of 2.9% to 6% under vision 2030.

Last year a plan was announced for a 334 sq km entertainment city on the edge of Riyadh offering a range of cultural and sporting activities – including a safari park. Furthermore, it envisioned to increase the ratio of individuals exercising at least once a week from 13% of population to 40%.

Will Saudi Vision 2030 prove to be effective?

KSA is progressing for achieving above mentioned goal to some extent. The most recent development the legalization of women’s right to drive, to run their businesses and Pardah (veil) relaxation. Eventually, women will be contributing in the GDP of the country and economy will grow. Prince Salman recently allowed women to watch and cheer at a football match. The young prince Salman is largely celebrated by younger Saudis but is regarded with suspicion by older conservatives. The country is also diversifying its economy in order to lessen dependence on its oil reserves. On May 20th, 2017, U.S. President Donald Trump has signed a US$350 billion arms deal with the KSA. Last month, 2018, Prince has also signed a deal of $100 billion with UK to cooperate in various fields of life.

Read more: Saudi Crown Prince’s visit to UK resulted in protests on Yemen…

Likewise, China and Saudi signed a series of deals worth nearly $70 billion in July, 2017. It reflects that KSA will sustain its momentum to achieve all its goals under Vision 2030 Sufficiently. The modernization of the country may be a part of a policy to attract tourism, more international visitors apart from pilgrims. 

In the current international political environment, KSA is also facing many regional geopolitical issues mainly Yemen crises, Syrian conflict, Libya etc. there is dire need to adopt political reforms in order to bring peace and stability in the whole Middle East and to end an ongoing bloodshed. It is great that economic reforms or diversification are being placed which have some prospects for political reforms in the region. Simultaneously, an effective implementation of all above mentioned policies is required otherwise; KSA will remain oil dependent for the coming decades. In the KSA’s quest for economic reforms, many countries will have massive opportunities of investment in the country to get benefits.  Ed Burton, President and Chief Executive officer of the US-Saudi Arabia Business Council, based in Washington DC told Arab News that KSA and the US have strong economic relations. Both countries have many prospects to cooperate with each other in business sector and in private sector as well.

Saudi Arabia’s Vision 2030, spearheaded by Crown Prince Mohammed bin Salman, has already created billions of dollars’ worth of trade and investment opportunities for US companies across a wide array of industries. Business activities within the Saudi private sector are growing. And within the council, we have recorded a large uptick in the number of American companies contacting us for assistance in market entry or expansion within the Kingdom. The bottom line deliverable of the business council is building partnerships between US and Saudi companies, as well as access to information and to senior decision-makers in both the government and private sector.

Several US fashion and makeup brands operate in Saudia, however they have to adjust their marketing and sales according to the customs in Saudia and they willingly do so. KFC and Subway offer halal menus, clothes shops such as H&M and Marks and Spencer sell clothing lines geared towards Muslim women. Fashion posters feature models wearing fuller clothes. This is evident of the interest US and other countries have for business opportunities in Saudia. Indeed both countries are ready to compromise for a brighter and richer economy.