Saudi Arabia announced on Monday its Vision 2030 reform plan, a package of economic and social policies designed to free the kingdom from dependence on oil exports.
Here are the key details of the plan, released in public appearances by deputy crown prince Mohammed bin Salman and in government documents provided to the media.
Aramco will be converted into an energy holding company with an elected board and some subsidiaries will be listed. Prince Mohammed said he expected the parent company to be valued at more than $2 trillion, less than 5 per cent of which would be sold in an initial public offer. Selling even 1 per cent of the firm would constitute the world’s biggest IPO, he added.
* Words courtesy Reuters
PUBLIC INVESTMENT FUND
Restructure the state-owned Public Investment Fund (PIF), which the prince said would turn the world’s top oil exporter into a global investment power. New assets, including state oil giant Saudi Aramco, would be included in the redesigned fund. The prince said the PIF made returns of 30 billion riyals ($8 billion) in 2015 and that it would aim to increase its assets to more than 7 trillion riyals from 600 billion riyals.
Restructuring state assets and agencies, rather than spending cuts, will be key to making government finances viable in the long term; Prince Mohammed said the reforms would not require major new spending by the government but work on existing infrastructure projects would continue. He cited the housing ministry as a target for restructuring. State price subsidies would be targeted more carefully so they went to the people who needed them, not the rich.
The government plans to set up a holding company for military industries that will be fully state-owned at first and later listed on the Saudi bourse. Prince Mohammed said he expected the listing to take place by the end of 2017.
“GREEN CARD” SYSTEM
Saudi Arabia will introduce a “green card” system within five years to give resident expatriates more rights to live and work in the kingdom over the long term. Details were not given.
MINING AND RENEWABLE ENERGY
The plan sets a target for the kingdom to generate 9.5 gigawatts of renewable energy and to have the industry produce more of its equipment locally. It aims to raise the mining industry’s contribution to gross domestic product to 97 billion riyals ($25.9 billion) and to increase the number of jobs in the sector by 90,000 by 2020.
The plan envisages a massive increase in Saudi Arabia’s capacity to receive Islamic pilgrims, to 30 million annually from 8 million.
The plan includes more than a dozen other numerical goals, though it does not give details of how they will be achieved. The deadline to achieve most of the goals appears to be 2030.
For example, the government’s non-oil revenues are to reach 600 billion riyals by 2020 and 1 trillion riyals by 2030, from 163.5 billion riyals in 2015.
Unemployment among Saudi nationals is to fall to 7 per cent from 11.6 per cent.
Financial institutions will be encouraged to allocate up to 20 per cent of their overall funding to small and medium-sized enterprises by 2030. Foreign direct investment will be raised to 5.7 per cent of GDP from 3.8 per cent.
Household savings are to rise to 10 per cent of total household income from 6 per cent.
The share of non-oil exports in GDP is to rise to 50 per cent of GDP from 16 per cent.
Doubling the number of archaeological sites recognised by UNESCO. Having three Saudi cities recognised as among “the top 100 cities in the world”.
Increasing the number of Saudis who play sports at least once a week to 40 per cent from 13 per cent.