SAUDI S VISION STRATEGIC FOR 2030 DISCLAIMER: THE ANALYSIS PREPARED BY SAPRAC IN THIS ARTICLE DOES NOT REFLECT THE VIEW OR POSITION OF THE GOVERNMENT OF SAUDI ARABIA, NOR IS IT IN ANY WAY INDICATIVE OF WHAT HAS BEEN OFFICIALLY ANNOUNCED BY THE COUNCIL ON ECONOMIC AND DEVELOPMENT AFFAIRS REGARDING THE SAUDI VISION FOR 2030 ON APRIL 25TH, 2016.
Introduction The Saudi Government, under the directives of the Custodian of the Two Holy Mosques King Salman and Crown Prince Mohammed Bin Naif, Deputy Premier and Minister of Interior, have recently developed and approved a strategic Kingdom-wide vision in collaboration with the Council of Economic and Development Affairs (CEDA). The vision, which aims to fulfill its goals by the year 2030, is poised to usher in a new era for Saudi Arabia, as it will restructure its economy to where it will not rely on oil as its primary source of revenue. Under the leadership of Deputy Crown Prince Mohammed Bin Salman, the vision will also include a much-awaited National Transformation Program (NTP), which will include a drive for efficiency, tax increases, strategic spending cuts, and providing a bigger role to the private sector. According to our analysis here at SAPRAC, this historic vision primarily revolves around -but is not limited to- the following pillars: Privatization Investing in Human Capital Governance Economic Diversification Transformation Through History A country s most valuable resource is its people. In order to better understand where Saudi Arabia is heading as a nation, there is a need to focus on crucial insights from a historical aspect leading the Kingdom into this current day strategic transformation plan. Saudi Arabia shifted from an underdeveloped country to an oil-rich nation, which happened at a rapid pace between 1945 and 1964 during the oil boom. As a rapidly modernizing nation, this first transformation created a national psyche of affluence behavior, which 2
ultimately made the need to pursue financial independence through labor a distant priority for most Saudis. This made room for other players with a different psyche, which was that of a hard work ethic. They were a less expensive source of skilled (trained and educated), semiskilled and unskilled foreign manpower. These non-saudi players flocked into the country where they created a convenient source of learned and more cultured bilingual Arabs (Egyptians, Palestinians, Iraqis, etc.) and migrants from the far East (India, the Philippines, Pakistan, etc.). Fast forward to present time, and you d be hard-pressed to find Saudi mechanics, plumbers, electricians, or even cashiers. Reflecting on a future Saudi Arabia, there are countries like Singapore, Japan and Taiwan that have reached world economic ranking and developed with little to no natural resources - except for their human resources. Thus, history proves that Saudi Arabia can leverage its population and human capital to achieve a successful national transformation by shifting its economy away from an overwhelming dependency on oil. The very positive advantage is that achieving the vision does not require high government spending. It only needs organization and restructuring a lot of sectors 3
2030 Initiatives: To reach the vision of the strategic transformation, major steps will be taken that fall under the previously stated pillars, the aim is to: - Reduce dependency on oil - Review performance of ministries and combat corruption (i.e. establish strong accountability standards) - Achieve maximum efficiency - Develop sectors like tourism and enhance the Hajj and Umrah operations (i.e. improving infrastructure) - Exploit the treasure of minerals as a natural Saudi resource - Create more jobs for Saudi nationals - Utilize resources to support future projects In order to reach equilibrium within the Saudi social community, the environment and economy there need to develop sustainably, which can be achieved in a few ways. These solutions have been proposed and discussed in depth, but in short, there is a list of three catalysts to sustain a healthy pace as Saudi develops: 4
1- Replacing imported products and economic diversification Saudi Arabia should create a specialty industry. For example, the country should produce experts in building and designing carbon fiber vehicles. Such experts can turn Saudi Arabia into a premiere destination for acquiring expertise and logistical advice in the industry in question. For example, Taiwan produces computer chips so cheaply yet effectively that barely any other country bothers making them, leaving Taiwan to reap all the financial and economical benefits. 2. Creating an ecosystem for entrepreneurship Saudi Arabia should also mitigate all hindrances to starting and running business. It can do so by creating more small and medium-size enterprises (SMEs) with more of a variety in supported sectors by the government and lending institutes. I should also not limit each company to a specific number of workers. Creating a one-stop-shop for SMEs can also minimize any potential bureaucracy involved, as well as increase efficiency. These steps can empower entrepreneurs by taking away restrictions on them. Cultural restrictions on the role of women in the economy, their freedom of movement, creativity and social restrictions should also be addressed. 3. Transforming the welfare state Privatizing government services is a crucial part of the national transformation program, as Saudi Arabia s welfare state is to see drastic improvements in all areas pertaining to resources like manpower, money and alternative natural resources. Here are some examples of how Saudi Arabia is bolstering the privatization process through national transformation: We have wonderful Saudi capabilities, especially the young generation, who have strong energy, courage, high culture, and strong professionalism. We work only need to. 5
A. Manpower: A1. It is crucial to move into this transformation by first creating a technical working middle class, which is now almost totally comprised of expatriates. A2. Creating jobs for Saudis, as from the onset the Saudi government was very interested in developing its people by sending them on scholarships starting with Colleges in Sri Lanka, Lebanon and Egypt and this continued into the mammoth of late King Abdullah -as academic pursuit stretched out reaching more and more continents across the globe. This created and continues to create a large pool of Saudis filling tens of thousands of vacant positions in both private and public sectors in the nation. A3. Give foreign manpower incentives to invest, by allowing foreigners to buy land locally and incur long term residencies. This will keep foreign capital from leaving the Saudi economy, giving it a chance to recycle and eventually contribute to the country s GDP. Essentially, foreigners should find it more financially attractive to keep their money here instead of solely sending it home. A4. It is also vital for the Saudi economy to introduce more females to the Saudi workforce. In fact, one of the goals of the Saudi vision for 2030, according to a report furnished by the Saudi Press Agency, is to increase female participation in the workforce from 22% to 30%. We believe women have rights in Islam that they ve yet to obtain 6
B. Money: B1. The compiled wealth has left the country as fast as it s been accumulated, as expats transfer up to 90 percent of their income to their home country. Even wealthy Saudis will regularly invest in foreign stock markets or real estate and various savings accounts abroad. Since the slump crisis of 2014 and ongoing, Saudi capitalists have sent out about 73 billion dollars across their country s borders. B2. All 1.2 million college students inside the country receive free University enrollment, free books, free use of labs, dorms and professors. In addition to that, they all receive SR 990 SR monthly under the bend of salary regardless of their economic status (you do the math). A millionaire and a lower class citizen both get the same amount of salary. This is unheard of in any other nation. B3. Traditionally, Saudi Arabia has been a country where money was sent out as quickly as it was made. To build a nation with a robust economy, capital is needed from both private and public sectors. With private sector having no incentives to keep their money inside the country, this will handicap the development and diversification of the economy, hindering a healthy, positive transformation. It is important to gear away from our cradle-to-the-grave social welfare state by introducing taxes to people that can afford them (property tax and VAT tax on retail products). 7
C. Alternative natural resources: C1. Solar energy While Saudi Arabia was reaping the benefits of oil, it was easy to overlook the fact that it also enjoys the world s strongest sunlight intensity per international ratings. We were aware of it, but only gave lip service and time to solar energy utilization. Europe is looking ahead at importing solar energy from North Africa and the Middle East, and we should jump on that bandwagon and take it very seriously to create infrastructure to export solar energy and make wealth equal to crude oil in importance. We will be able to not only use it internally as energy to save money (lower our CO2 print), but also export it as a valuable resource to Russia and Europe as well. C2. Minerals 1/3 of the country lies in hijaz mountainous old volcanic geological shields which are filled with a wealth of minerals including copper, gold, silver, silica and phosphate. The country should plan to exploit them properly and encourage investment in minerals in the red sea area as well. Prince Salman has even pointed out in his recent interview with Al-Arabiyah that only 3 to 5 percent of these minerals were exploited, leaving a huge potential for non-oil based revenue. Only 3 or 5 percent of minerals were exploited. This situation is creating a huge industrial market and revenues for the country 8
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Conclusion Along with KPIs that will help maintain and enforce an effective model for governance and monitor or control progress, the goals that this vision aims to achieve have a huge chance of being realized and fulfilled by the year 2030. Sanctions can also mandate the vision along with its transformation in a technical and recordable platform through this system. Overall, adhering to this vision will ensure a clear path towards a prosperous and brighter future for Saudi Arabia. Work Cited Saudi Vision 2030. Saudi Press Agency, 25 April 2016 Web. <http://www.spa.gov.sa/galupload/ads/saudi_vision2030_en.pdf> Al Arabiya Interview with Deputy Crown Prince Mohammad Bin Salman, 25 April 2016 Web. <http://english.alarabiya.net/en/media/2016/04/25/full-transcript-of-prince-mohammed-bin- Salman-s-Al-Arabiya-interview.html> Waldman, P. (2016, April) The $2,000,000,000,000 Prince, Bloomberg Businessweek (April 25 - May 1 2016) 54-59 License: The reader is authorized to make any use of the article so long as the publisher and producer (SAPRAC) is cited as the source of first publication of the article. 12 Research and writing: Saja Kamal Editing: Nabaa Hashmi Design: Mahmoud Migahed Artwork: Hussein Khattab Creative Management: Hussein Daffa
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