Economy
From The Report: Saudi Arabia 2018
View in Online Reader

As a member of the G20 and the world’s 17th-largest exporter, Saudi Arabia is an economic powerhouse. Classified as a high-income nation by the World Bank, its population of over 30m has established a consumer market in which domestic and global businesses have prospered. The exploitation of its hydrocarbons resources has driven growth for decades, and the nation’s trading status has been augmented by its geographic advantage as a connector of three continents as well as its proximity to the Red Sea – through which 10% of world trade travels. However, this period of low oil prices has presented a number of challenges, not just to Saudi Arabia but to economies across the region. Consequently, economic reform is taking place in many Gulf countries, and the long-standing goal of diversifying revenues away from hydrocarbons is more preeminent than ever.

This chapter contains interviews with Prince Turki bin Saud bin Mohammed Al Saud, President, King Abdulaziz City for Science and Technology; Abdullah Al Sagheir, Acting Governor, General Authority for Small and Medium Enterprises; and Ahmed S Al Rajhi, Chairman, Riyadh Chamber.

Articles from this Chapter

Overview

More than a modest proposal: A series of reforms and privatisation to boost non-oil revenue
OBG
plus

As a member of the G20 and the world’s 17th-largest exporter, Saudi Arabia is an economic powerhouse. Classified as a high-income nation by the World Bank, its population of over 30m has established a consumer market in which domestic and global businesses have prospered. The exploitation of its hydrocarbons resources has driven growth for decades, and the nation’s trading status has been augmented by its geographic advantage as a connector of three continents as well as its proximity…

Interview

Ripe for industrialisation: Prince Turki bin Saud bin Mohammed Al Saud, President, King Abdulaziz City for Science and Technology (KACST), on the localisation of research and development (R&D) capabilities
OBG
plus

Interview:Prince Turki bin Saud bin Mohammed Al Saud What new technologies are arising in line with National Transformation Programme (NTP) targets? PRINCE TURKI BIN SAUD BIN MOHAMMED AL SAUD: KACST is advancing steadily towards its NTP strategic goals. Published research has continued to rise; while we had originally planned to increase the Kingdom’s research publications to 17,000 in 2016, we were able to produce 18,950. We are also rapidly proceeding towards our 2017 targets regarding…

Analysis

On the plus side: Fiscal reforms could see the Kingdom achieve a budget surplus
OBG
plus

With Vision 2030 and the National Transformation Programme (NTP) already in place, Saudi citizens, businesses and economic observers are keen to see how the government will adjust its expenditure and revenue streams to meet its newly established goals under the Fiscal Balance Programme (FBP) announced in early 2017. The FBP outlines the ways in which the government intends to achieve a fiscal surplus. The plan originally targeted a surplus by 2020; however, this was revised to 2023 in an…

Interview

Aiding growth: Abdullah Al Sagheir, Acting Governor, General Authority for Small and Medium Enterprises, on supporting developing businesses
OBG
plus

Interview:Abdullah Al Sagheir In what ways do small and medium-sized enterprises (SMEs) contribute to the overall economy? ABDULLAH AL SAGHEIR: Given that until 2016 Saudi Arabia had no government agency dedicated to developing the SME ecosystem, it is not surprising that the sector is yet to be fully developed. The GDP contribution of SMEs currently stands at 22%, lower than other countries we benchmarked against – such as the EU – where SMEs contribute up to 58% of GDP. With a 64% employment…

Interview

Market opportunities: Ahmed S Al Rajhi, Chairman, Riyadh Chamber (RC), on preserving and growing the competitiveness of the economy
OBG
plus

Interview:Ahmed S Al Rajhi How will Vision 2030’s fiscal reform agenda affect the private sector in the short term? AHMED S AL RAJHI: Although postponing the fuel subsidy reform to 2023 is positive for the business sector, the Fiscal Balance Programme 2020 – which includes value-added tax, expatriate labour fees, energy subsidy removal and municipal fees – is expected affect economy adversely. Domestic production costs will increase relative to imported products, the domestic private…

Analysis

Private affair: Ambitious privatisation of public assets targets diverse sectors
OBG
plus

According to Vision 2030, the expansion of private sector activity is a key strategic objective of the Ministry of Economy and Planning, which has been charged with creating “an attractive environment for both local and international investors, and enhancing their confidence in our economy”. More specifically, government bodies such as the ministries of health, communications and IT, education and transportation, among others, have all been tasked with expanding “the privatisation of…

Analysis

Concerted effort: Lower oil prices have helped increase Saudiisation rates
OBG
plus

In the third quarter of 2017, 13.76m people were registered as working in the Kingdom, according to the General Authority for Statistics, with Saudi citizens making up just over 3m of the total. Foreign nationals have accounted for the bulk of the workforce for decades, and can be found in all strata of the economy, from CEOs and white-collar positions to blue-collar and manual labourers. While the Kingdom’s ability to attract an international workforce has underpinned its economic development…

Analysis

At the forefront: Sovereign investment fund assets to double under new roadmap, powering the development of new technologies
OBG
plus

Unveiled in October 2017, the Public Investment Fund (PIF) Programme 2018-20 is a development roadmap that aims to position the PIF as one of the world’s top sovereign wealth funds. Key objectives of the plan are to increase assets under management from $230bn to $400bn by 2020 and $2trn by 2030, and achieve average investment returns of 4-5% by 2020, up from 3% in 2017. Yasir Al Rumayyan, managing director of the PIF, was more optimistic for the longer term, telling Bloomberg in October…

Analysis

Starting young: Supporting nascent start-up culture among the youth population
OBG
plus

The government’s recently defined youth employment targets come at a time when the issue has never been more pressing. According to the General Authority for Statistics, the total employment rate in the Kingdom was 94.2% as of the third quarter of 2017, while the employment rate for Saudis was 87.2%. Worryingly, however, youth unemployment has increased, with 536,000 Saudi job-seekers aged 15-29 as of September 2017. The government’s attempts to reorient the economy towards the private…