Flare stacks burn at the Saudi Aramco oilfield complex at Shaybah in the Rub’ Al Khali desert. Up to 5 per cent of the company is expected be sold, possibly raising tens of billions of dollars. Reza / Getty Images
Flare stacks burn at the Saudi Aramco oilfield complex at Shaybah in the Rub’ Al Khali desert. Up to 5 per cent of the company is expected be sold, possibly raising tens of billions of dollars. Reza / Getty Images
Flare stacks burn at the Saudi Aramco oilfield complex at Shaybah in the Rub’ Al Khali desert. Up to 5 per cent of the company is expected be sold, possibly raising tens of billions of dollars. Reza / Getty Images
Flare stacks burn at the Saudi Aramco oilfield complex at Shaybah in the Rub’ Al Khali desert. Up to 5 per cent of the company is expected be sold, possibly raising tens of billions of dollars. Reza /

How Saudi Arabia is planning a new economic era


  • English
  • Arabic

In late February, several hundred Saudi officials, company executives and foreign consultants gathered in a luxury hotel in Riyadh to discuss how Saudi Arabia’s economy could survive an era of cheap oil.

One company manager at the event said that officials from about 30 Saudi government bodies manned booths in which they described their challenges. Corporate bosses were encouraged to “figure out ways to do partnerships to address those needs, to offer feedback, to complain and to plan future ventures or even just future meetings”, the manager said. “It was like a private sector version of a national parliament.”

The workshop was part of Saudi government attempts to work out how to restructure the economy so it no longer relies on oil.

The National Transformation Plan (NTP), as Riyadh has called the changes, is to be unveiled on April 25 as part of a wider “Vision for the Kingdom of Saudi Arabia”. Much is still a secret. Ministries have refused to discuss plans in detail and Western consultancies contacted by Reuters declined to confirm their involvement, let alone policy details.

Officials, consultants and executives are saying that the five-year programme is ambitious and risky. It includes asset sales, tax increases, spending cuts, changes to the way the state manages its financial reserves, an efficiency drive and a much bigger role for the private sector.

Such changes have been talked about for years but never put into action. One reason to think this time could be different is that policy-making has in the past year shifted away from conservative bodies such as the finance ministry and central bank. Power is now concentrated in a new 22-member Council of economic and development affairs, formed after King Salman took the throne in January last year.

The Council is chaired by his son Prince Mohammed bin Salman, the deputy crown prince, who is about 30. In his role as defence minister, Prince Mohammed launched Saudi Arabia’s military intervention in Yemen in March last year. Now, he wants to shake up economic policy.

“Since the foundation of the kingdom there has been no government-led programme that innovates in this way,” said Mohamed Al Afif, a veteran banker who now runs Cash Solutions, a boutique financial services company.

People familiar with the NTP said it was born late last year in discussions between Prince Mohammed and a few other senior officials. At the time, oil was sinking below US$30 a barrel, about half the low point that had been expected. That saddled the country with an annual budget deficit of nearly US$100 billion and strengthened the case for radical changes.

While Prince Mohammed is the ultimate decision maker, he has chosen the economy and planning minister, Adel Al Fakieh, a former food industry executive and mayor of Jeddah, to help with the detail. As labour minister between 2010 and last year, Mr Fakieh overcame opposition from business to policies that pushed companies to hire more Saudis. People involved in the NTP describe Mr Fakieh, 57, as an avid user of WhatsApp, conducting chats with dozens of groups until the small hours.

Riyadh is spending tens of millions of dollars on foreign consultants for the NTP. London-based Source Global Research said in March that total Saudi spending on consultancies – mostly by the government or state-linked bodies – grew by more than 10 per cent last year, from $1.06bn in 2014.

Consultants and ministry officials, many of them young Saudis with western degrees, work at the Khozama office building in Riyadh, thrashing out policy in as many as 40 groups known as “delivery labs”. The plans are heavy on jargon-labelled targets requiring ministries to hit rigid budget and reform goals, according to documents seen by Reuters.

UAE a model

One model is the UAE, which began to make important reforms by cutting petrol subsidies last year, said people familiar with the Saudi plan.

Another model is Malaysia, which in 2010 moved to diversify beyond commodity exports and attract more foreign investment. The consultancy McKinsey played a major role in the Malaysian plan and is now at the centre of the Saudi effort.

The NTP echoes Malaysia’s programme in three ways. It puts a single body in charge of implementation to force better cooperation between ministries. It seeks feedback from the private sector early, even during planning. And it aims to boost the private sector’s share of investment, something Saudi planners consider vital as oil revenue sags.

Riyadh wants private companies to develop tourism facilities on some of its islands, plans to create free zones with minimal red tape near airports and even wants private investment in some schools.

New infrastructure such as roads and port facilities will be constructed under build-operate-transfer contracts, in which private firms finance the projects and then operate them to recoup their investments. “The government will take no risk anymore. It will only provide opportunities,” said a Saudi economist who attended a recent workshop.

The NTP will also speed up Saudi Arabia’s long-running but slow-paced privatisation programme. Up to 5 per cent of the national oil company Saudi Aramco will be sold to the public, Prince Mohammed said, possibly raising tens of billions of dollars. Also on the block are chunks of other companies in up to 18 sectors, including health care, mining and transport.

Management of the country’s financial reserves will become more aggressive, according to officials and consultants. The central bank, which acts as the country’s sovereign wealth fund, holds $584bn of foreign assets, mostly in conservative investments such as bank deposits and US Treasuries.

In the future, privatisation proceeds will be invested in corporate assets around the world, generating income and obtaining access to technology and expertise.

Saudi officials have been visiting the Abu Dhabi Investment Authority – which has more than $700bn invested in developed and emerging-market equities, fixed income, private equity, real estate and infrastructure – to see how it works, sources said.

Prince Mohammed said last month that one fund, the Public Investment Fund (PIF), would be expanded to control more than $2 trillion eventually. The fund is now believed to have about $100bn of assets.

In an interview on Thursday at his farm in Diriyah, Prince Salman said the NTP will be launched a month or 45 days after its April 25 announcement.

Senior officials are reviewing proposals, which all the ministries involved were required to submit by March 31, two sources said. “Everyone is waiting for the NTP announcement for a clue about how things will operate going forward,” said a western diplomat who monitors the economy.

Doubts persist

There are many sceptics. Some say the NTP is too late. Local capital markets are too small to absorb a privatisation programme, so attracting foreign money will be vital. Investors are wary of Saudi Arabia’s prospects given the low oil price.

Eliminating the budget deficit by 2020 will require an additional $100bn in spending cuts and tax increases, equivalent to about 16 per cent of gross domestic product. That could stifle growth and deter the investment the NTP seeks.

Some plans are headline-grabbing but may involve little real change. For example, the PIF will take over assets such as Saudi Aramco but will not be able to reinvest that wealth unless it sells big pieces of the company, which would be tough for financial and political reasons.

And then there are the mixed fortunes of some of the models that Saudi Arabia has looked at. “Most of the economic transformation programmes in various countries did not succeed or diverged immensely from the original plans,” said Ihsan Bu-Hulaiga, a prominent Saudi economist. Malaysia, for example, has increased the private sector’s share of investment modestly, to 64 per cent in 2014 from 52 per cent in 2009. But the country’s currency has plunged along with commodity prices, something Riyadh wants to avoid.

Many question the role of highly paid consultants. “You have people in their 30s with laptops helping to determine the direction of the country,” said one foreign consultant. “The potential for change has certainly gone up, but so has the risk.”

Some Saudis think an economic shake-up could lead to the kind of social changes many foreign business executives believe are needed to modernise Saudi’s economy – allowing women to drive, for instance, or opening up the legal system. The planning itself suggests some openness to change. Senior officials, normally given to opulent robes, regularly come to workshops in simple clothes, say some attendees. And unusually, female consultants are working closely with men.

* Reuters, with additional reporting by Bloomberg

While you're here
The UN General Assembly President in quotes:

YEMEN: “The developments we have seen are promising. We really hope that the parties are going to respect the agreed ceasefire. I think that the sense of really having the political will to have a peace process is vital. There is a little bit of hope and the role that the UN has played is very important.”

PALESTINE: “There is no easy fix. We need to find the political will and comply with the resolutions that we have agreed upon.”

OMAN: “It is a very important country in our system. They have a very important role to play in terms of the balance and peace process of that particular part of the world, in that their position is neutral. That is why it is very important to have a dialogue with the Omani authorities.”

REFORM OF THE SECURITY COUNCIL: “This is complicated and it requires time. It is dependent on the effort that members want to put into the process. It is a process that has been going on for 25 years. That process is slow but the issue is huge. I really hope we will see some progress during my tenure.”

if you go

The flights

Emirates have direct flights from Dubai to Glasgow from Dh3,115. Alternatively, if you want to see a bit of Edinburgh first, then you can fly there direct with Etihad from Abu Dhabi.

The hotel

Located in the heart of Mackintosh's Glasgow, the Dakota Deluxe is perhaps the most refined hotel anywhere in the city. Doubles from Dh850

 Events and tours

There are various Mackintosh specific events throughout 2018 – for more details and to see a map of his surviving designs see glasgowmackintosh.com

For walking tours focussing on the Glasgow Style, see the website of the Glasgow School of Art. 

More information

For ideas on planning a trip to Scotland, visit www.visitscotland.com

UAE currency: the story behind the money in your pockets
Dust and sand storms compared

Sand storm

  • Particle size: Larger, heavier sand grains
  • Visibility: Often dramatic with thick "walls" of sand
  • Duration: Short-lived, typically localised
  • Travel distance: Limited 
  • Source: Open desert areas with strong winds

Dust storm

  • Particle size: Much finer, lightweight particles
  • Visibility: Hazy skies but less intense
  • Duration: Can linger for days
  • Travel distance: Long-range, up to thousands of kilometres
  • Source: Can be carried from distant regions
ESSENTIALS

The flights

Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.

The hotels

Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.

The tours

A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages. 

Tomb%20Raider%20I%E2%80%93III%20Remastered
%3Cp%3EDeveloper%3A%20Aspyr%0D%3Cbr%3EPublisher%3A%20Aspyr%0D%3Cbr%3EConsole%3A%20Nintendo%20Switch%2C%20PlayStation%204%26amp%3B5%2C%20PC%20and%20Xbox%20series%20X%2FS%0D%3Cbr%3ERating%3A%203%2F5%3C%2Fp%3E%0A

Long Shot

Director: Jonathan Levine

Starring: Charlize Theron, Seth Rogan

Four stars

The specs: 2018 Chevrolet Trailblazer

Price, base / as tested Dh99,000 / Dh132,000

Engine 3.6L V6

Transmission: Six-speed automatic

Power 275hp @ 6,000rpm

Torque 350Nm @ 3,700rpm

Fuel economy combined 12.2L / 100km

COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
The White Lotus: Season three

Creator: Mike White

Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell

Rating: 4.5/5

Moon Music

Artist: Coldplay

Label: Parlophone/Atlantic

Number of tracks: 10

Rating: 3/5

How to play the stock market recovery in 2021?

If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.

Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.

Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.

Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).

Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal. 

Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.

By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.

As demand for energy fell, the oil and gas industry had a tough year, too.

Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.

He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.” 

This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”

Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.

UAE currency: the story behind the money in your pockets
While you're here
PREMIER LEAGUE STATS

Romelu Lukaku's goalscoring statistics in the Premier League 
Season/club/appearances (substitute)/goals

2011/12 Chelsea: 8(7) - 0
2012/13 West Brom (loan): 35(15) - 17
2013/14 Chelsea: 2(2) - 0
2013/14 Everton (loan): 31(2) - 15
2014/15 Everton: 36(4) - 10
2015/16 Everton: 37(1) - 18
2016/17 Everton: 37(1) - 25  

Favourite things

Luxury: Enjoys window shopping for high-end bags and jewellery

Discount: She works in luxury retail, but is careful about spending, waits for sales, festivals and only buys on discount

University: The only person in her family to go to college, Jiang secured a bachelor’s degree in business management in China

Masters: Studying part-time for a master’s degree in international business marketing in Dubai

Vacation: Heads back home to see family in China

Community work: Member of the Chinese Business Women’s Association of the UAE to encourage other women entrepreneurs

The biog

Name: Shamsa Hassan Safar

Nationality: Emirati

Education: Degree in emergency medical services at Higher Colleges of Technology

Favourite book: Between two hearts- Arabic novels

Favourite music: Mohammed Abdu and modern Arabic songs

Favourite way to spend time off: Family visits and spending time with friends

The National photo project

Chris Whiteoak, a photographer at The National, spent months taking some of Jacqui Allan's props around the UAE, positioning them perfectly in front of some of the country's most recognisable landmarks. He placed a pirate on Kite Beach, in front of the Burj Al Arab, the Cheshire Cat from Alice in Wonderland at the Burj Khalifa, and brought one of Allan's snails (Freddie, which represents her grandfather) to the Dubai Frame. In Abu Dhabi, a dinosaur went to Al Ain's Jebel Hafeet. And a flamingo was taken all the way to the Hatta Mountains. This special project suitably brings to life the quirky nature of Allan's prop shop (and Allan herself!).

Dhadak

Director: Shashank Khaitan

Starring: Janhvi Kapoor, Ishaan Khattar, Ashutosh Rana

Stars: 3

ICC Awards for 2021

MEN

Cricketer of the Year – Shaheen Afridi (Pakistan)

T20 Cricketer of the Year – Mohammad Rizwan (Pakistan)

ODI Cricketer of the Year – Babar Azam (Pakistan)

Test Cricketer of the Year – Joe Root (England)

WOMEN

Cricketer of the Year – Smriti Mandhana (India)

ODI Cricketer of the Year – Lizelle Lee (South Africa)

T20 Cricketer of the Year – Tammy Beaumont (England)

COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%3A%20%3C%2Fstrong%3EEducatly%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2020%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EUAE%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EMohmmed%20El%20Sonbaty%2C%20Joan%20Manuel%20and%20Abdelrahman%20Ayman%3Cbr%3E%3Cstrong%3EIndustry%3A%20%3C%2Fstrong%3EEducation%20technology%3Cbr%3E%3Cstrong%3EFunding%20size%3A%20%3C%2Fstrong%3E%242%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EEnterprise%20Ireland%2C%20Egypt%20venture%2C%20Plus%20VC%2C%20HBAN%2C%20Falak%20Startups%3C%2Fp%3E%0A
RACE SCHEDULE

All times UAE ( 4 GMT)

Friday, September 29
First practice: 7am - 8.30am
Second practice: 11am - 12.30pm

Saturday, September 30
Qualifying: 1pm - 2pm

Sunday, October 1
Race: 11am - 1pm

MATCH INFO

Tottenham 4 (Alli 51', Kane 50', 77'. Aurier 73')

Olympiakos 2 (El-Arabi 06', Semedo')

World Cricket League Division 2

In Windhoek, Namibia - Top two teams qualify for the World Cup Qualifier in Zimbabwe, which starts on March 4.

UAE fixtures

Thursday, February 8 v Kenya; Friday, February v Canada; Sunday, February 11 v Nepal; Monday, February 12 v Oman; Wednesday, February 14 v Namibia; Thursday, February 15 final

Cricket World Cup League 2 Fixtures

Saturday March 5, UAE v Oman, ICC Academy (all matches start at 9.30am)

Sunday March 6, Oman v Namibia, ICC Academy

Tuesday March 8, UAE v Namibia, ICC Academy

Wednesday March 9, UAE v Oman, ICC Academy

Friday March 11, Oman v Namibia, Sharjah Cricket Stadium

Saturday March 12, UAE v Namibia, Sharjah Cricket Stadium

UAE squad

Ahmed Raza (captain), Chirag Suri, Muhammad Waseem, CP Rizwan, Vriitya Aravind, Asif Khan, Basil Hameed, Rohan Mustafa, Kashif Daud, Zahoor Khan, Junaid Siddique, Karthik Meiyappan, Akif Raja, Rahul Bhatia

Meghan%20podcast
%3Cp%3EMeghan%20Markle%2C%20the%20wife%20of%20Prince%20Harry%2C%20launched%20her%20long-awaited%20podcast%20Tuesday%2C%20with%20tennis%20megastar%20Serena%20Williams%20as%20the%20first%20guest.%3C%2Fp%3E%0A%3Cp%3EThe%20Duchess%20of%20Sussex%20said%20the%2012-part%20series%2C%20called%20%22Archetypes%2C%22%20--%20a%20play%20on%20the%20name%20of%20the%20couple's%20oldest%20child%2C%20Archie%20--%20would%20explore%20the%20female%20experience.%3C%2Fp%3E%0A%3Cp%3ELast%20year%20the%20couple%20told%20Oprah%20Winfrey%20that%20life%20inside%20%22The%20Firm%22%20had%20been%20miserable%2C%20and%20that%20they%20had%20experienced%20racism.%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%22I%20don't%20ever%20remember%20personally%20feeling%20the%20negative%20connotation%20behind%20the%20word%20ambitious%2C%20until%20I%20started%20dating%20my%20now-husband%2C%22%20she%20told%20the%20tennis%20champion.%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3C%2Fp%3E%0A
McIlroy's struggles in 2016/17

European Tour: 6 events, 16 rounds, 5 cuts, 0 wins, 3 top-10s, 4 top-25s, 72,5567 points, ranked 16th

PGA Tour: 8 events, 26 rounds, 6 cuts, 0 wins, 4 top-10s, 5 top-25s, 526 points, ranked 71st

57%20Seconds
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Rusty%20Cundieff%0D%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EJosh%20Hutcherson%2C%20Morgan%20Freeman%2C%20Greg%20Germann%2C%20Lovie%20Simone%0D%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E2%2F5%0D%3Cbr%3E%0D%3Cbr%3E%3C%2Fp%3E%0A
England Test squad

Joe Root (captain), Moeen Ali, James Anderson, Jonny Bairstow (wicketkeeper), Stuart Broad, Jos Buttler, Alastair Cook, Sam Curran, Keaton Jennings, Dawid Malan, Jamie Porter, Adil Rashid, Ben Stokes.

Safety 'top priority' for rival hyperloop company

The chief operating officer of Hyperloop Transportation Technologies, Andres de Leon, said his company's hyperloop technology is “ready” and safe.

He said the company prioritised safety throughout its development and, last year, Munich Re, one of the world's largest reinsurance companies, announced it was ready to insure their technology.

“Our levitation, propulsion, and vacuum technology have all been developed [...] over several decades and have been deployed and tested at full scale,” he said in a statement to The National.

“Only once the system has been certified and approved will it move people,” he said.

HyperloopTT has begun designing and engineering processes for its Abu Dhabi projects and hopes to break ground soon. 

With no delivery date yet announced, Mr de Leon said timelines had to be considered carefully, as government approval, permits, and regulations could create necessary delays.

Jurassic%20Park
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ESteven%20Spielberg%3Cbr%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Sam%20Neill%2C%20Jeff%20Goldblum%20and%20Richard%20Attenborough%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%205%2F5%3C%2Fp%3E%0A
Company%20Profile
%3Cp%3ECompany%20name%3A%20EduPloyment%3Cbr%3EDate%20started%3A%20March%202020%3Cbr%3ECo-Founders%3A%20Mazen%20Omair%20and%20Rana%20Batterjee%3Cbr%3EBase%3A%20Dubai%2C%20UAE%3Cbr%3ESector%3A%20Recruitment%3Cbr%3ESize%3A%2030%20employees%3Cbr%3EInvestment%20stage%3A%20Pre-Seed%3Cbr%3EInvestors%3A%20Angel%20investors%20(investment%20amount%20undisclosed)%3C%2Fp%3E%0A