On 25 April 2016, the Council of Ministers of Saudi Arabia approved a new economic initiative - “Saudi Vision 2030”. By way of televised interview the same day, the Deputy Crown Prince HRH Prince Mohammed bin Salman further outlined the proposals, which stand as a blue print for economic reform.
The goal is to create a more diversified economy, reducing dependency on oil, by restructuring entities, approving changes and providing stable programs to increase jobs and promote investment within the country. Prince Mohammed was critical of an “addiction” to oil and expressed a firm intention to ensure the Kingdom is not at the mercy of the commodity price volatility of external markets, with a diversified economy.
The plans and objectives discussed include the following:
- An end to oil dependency, generating income from other natural resources and providing different platforms for foreign investment, by 2020.
- Sale of up to 5% of Saudi Aramco by IPO, a company valued at approximately USD 2 trillion, with the establishment of a sovereign wealth fund partially financed from the sale proceeds.
- A “Green Card” program allowing foreigners to reside in the kingdom for longer periods, facilitating long term contribution and investment in the economy.
- A commitment to the manufacture of military and security equipment, and creation of a 100% government owned holding company for security and military activities, later to be listed on the stock market.
- A commitment to training and development of the Saudi army, without unnecessary costs, with potential to limit a percentage of all security and military dealings to local entities and manufacturers.
- Unemployment reduction from 11% to 7 % within the next 5 years, with emphasis on job creation for locals, and expanding investment sectors to allow more foreign investment and ultimately obtain and strong economy that contributes globally.
- Renewed focus on a sound and stable government structure and reduction in corruption, by providing e-government services to international standards, with increased transparency.
Saudi Vision 2030 has won praise for its sweeping economic reforms. Whilst many consider an "end to oil dependency by 2020" to be aspirational, the objective of diversification has been clearly set out.
The reforms, and in particular the proposed public listing and sale of shares of Aramaco, and establishment of a considerable sovereign wealth fund, are expected to continue to generate a great deal of international interest.