Modernising Saudi — The road to Vision 2030

First published 11th November 2019
Middle East| Understanding Your World | Operating in Foreign Environments| Fostering Growth & Opportunity

The Kingdom of Saudi Arabia has seen obvious and large scale changes in the past three years as it progresses toward Vision 2030. The Kingdom’s government has committed tremendous efforts to upgrade and enhance the prosperity of its individuals.

Because of this vital vision, quality of life indicators in the Kingdom, like healthcare, education, and economic development have improved significantly.

An Economic Imperative
The strategy of enormous scale public works embraced by the government, as well as foreign direct investment and the suitability of the banking and financial systems, have empowered the nation to turn itself into a major regional economy.

In any case, the economy of Saudi Arabia is on the whole, dependent on oil. With this context in mind, GDP growth has been in step by step decline since 2015 to a point where the economy moved into a noteworthy downturn in 2017 (- 0.7%). Growth was required to hit 1.9%, with non-oil economic factors becoming quicker at 2.3%. The IMF brought down the growth projections for Saudi Arabia in 2019, from 2.4% to 1.9%, against a backdrop of regional and international geopolitical pressures and suppressed oil costs since the end of 2018.

The Saudi economy recouped from a minor contraction in 2017, essentially because of higher oil production and rising consumer spending. Saudi Arabia’s oil yield hit 10.4 million barrels for every day in June 2018, its most elevated level since December 2016, in front of OPEC and non-OPEC producers’ choice to constrain production. Buyer spending was on the ascent with point-of-sale transactions rising by 6.8% in the principal half of the year from a year earlier.

Non-oil exports also developed significantly in 2018, ascending to SAR236 billion, yet their share fell somewhat as oil trades developed a lot quicker. Inflation gained significantly in 2018 after the presentation of a 5% VAT and is relied upon to remain decently high around 2% in the coming years.

The US successfully supplanted Saudi Arabia as the biggest oil producer on the planet thanks to the shale boom. Saudi specialists chose to lessen yield for March and oil production ought to remain lower than levels seen a year ago until the lapse of OPEC’s present January-June 1.2mn b/d cut arrangement. State debt stayed around 19.4% in 2018 and rose marginally to 20.4 % in 2019.

The Vision 2030 reform program, which was propelled in 2016, began to rebuild Saudi Arabia, not just financially (by means of fiscal unions and monetary diversification) but also socially. New measures were declared to give more rights to women who are now allowed to go to sporting matches for the first times in the nation’s history not to mention the cessation of the driving ban.

Any business investment in the same context would be highly profitable and predictable in terms of risk assessment and all other factors involved.

Cultural Developments
Women are similarly allowed to drive vehicles since June 2018. Saudi politics kept on its dynamic path in 2018, with Mohammad bin Salman’s status for being a reformist head being clouded by the death of the Saudi journalist Jamal Khashoggi in October 2018 inside the Saudi Consulate in Istanbul, Turkey.

While U.S President Donald Trump would not make direct moves against Saudi Arabia, the United States Senate collectively embraced a resolution that held Saudi Crown Prince Mohammed bin Salman answerable for the demise of Khashoggi. The Senate likewise voted a resolution approaching the U.S government to end its military help to Saudi-led intervention in Yemen.

On April 25, 2016, Deputy Crown Prince Mohammed bin Salman announced Vision 2030. This bundle of economic, political and social development is worked around three pillars — a lively society, a flourishing economy and an ambitious country. It expands on the qualities of the Kingdom — a place for investment, situated in the core of the Arab and Islamic world, going about as a territorial centre connecting three main lands. Vision 2030 frameworks include 24 explicit objectives for the Kingdom to accomplish in economic, political and cultural advancement. Vision 2030 further explains 18 responsibilities to accomplish these objectives — with explicit activities in sustainable energy source, manufacturing, governance, e-governance, entertainment and culture.

Vision 2030
For every one of the three pillars of Vision 2030 — a vibrant society, a flourishing economy, and a driven country — the Kingdom has graphed 18 quantifiable objectives to be accomplished continuously by 2030. These objectives are as follows;

1. More than double the number of Saudi heritage sites registered with UNESCO

2. Increase capacity to welcome Umrah visitors from 8 million to 30 million per year

3. Increase household spending on cultural and entertainment activities from 2.9 percent to 6 percent

4. Increase the share of individuals exercising at least once a week from 13 percent to 40 percent

5. Have three Saudi cities be recognised among the Top 100 cities in the world

6. Raise Saudi Arabia’s ranking on the Social Capital Index from 26th to 10th

7. Increase average life expectancy from 74 to 80 years

8. Increase private sector contributions to Gross Domestic Product from 40 percent to 65 percent

9. Raise Saudi Arabia’s ranking on the Global Competitiveness Index from 25th to among the Top 10 nations

10. Increase foreign-direct investment from 3.8 percent of GDP to the international average of 5.7 percent of GDP

11. Rank Saudi Arabia among the Top 15 largest economies in the world from its current position of 19th

12. Increase the assets of the Public Investment Fund from SAR 600 billion to over SAR 7 trillion ($160 billion to over $2 trillion)

13. Increase localisation of oil and gas sectors from 40 percent to 75 percent

14. Increase women’s participation in the workforce from 22 percent to 30 percent

15. Lower rate of unemployment from 11.6 percent to 7 percent

16. Increase contributions of small and medium enterprises from 20 percent to 35 percent of GDP

17. Increase share of non-oil exports from 16 percent to 50 percent of non-oil GDP

18. Raise Saudi Arabia’s global ranking in the Logistics Performance Index from 49th to 25th place.

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