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Saudi Vision 2030: A beginner’s guide

Saudi Arabia has embarked on Vision 2030, with wide-ranging plans and objectives to diversify its economy. (AFP)
Saudi Arabia has embarked on Vision 2030, with wide-ranging plans and objectives to diversify its economy. (AFP)
20 Oct 2019 10:10:54 GMT9
20 Oct 2019 10:10:54 GMT9

Staff Writer

Saudi Arabia’s geographic position between key global waterways makes the Kingdom an epicenter of trade and the gateway to the world. 

The country is right at the crossroads of important international trade routes, between three continents: Asia, Europe and Africa. 

Although oil and gas are essential pillars of the economy, Saudi Arabia has begun expanding its investments into additional sectors. 

The country is rich in natural resources and does not depend solely on oil for its energy needs. Gold, phosphate, uranium and many other valuable minerals are found beneath its lands. 

In order to build a thriving economy, Saudi Arabia has embarked on Vision 2030, with wide-ranging plans and objectives to diversify its economy. 

“It is my pleasure to present Saudi Arabia’s vision for the future,” Crown Prince Mohammed bin Salman, deputy premier and defense minister, said of the reform plan, which was first released on April 25, 2016.

“It is an ambitious yet achievable blueprint, which expresses our long-term goals and expectations and reflects our country’s strengths and capabilities,” added the crown prince, who is also chairman of the Council of Economic and Development Affairs.

Emphasizing that all success stories start with a vision, and successful visions are based on strong pillars, he outlined the following as the pillars of Vision 2030:

  • First pillar: Status as the heart of the Arab and Islamic worlds. 
  • Second pillar: Determination to become a global investment powerhouse.
  • Third pillar: Transforming a unique strategic location into a global hub connecting Asia, Europe and Africa. 

As the crown prince outlined, the country’s real wealth lies in the ambition of its people and the potential of its younger generation. Vision 2030 aims to achieve the following:

  1. A vibrant society
  • With strong roots.
  • With fulfilling lives.
  • With strong foundations.

   2. A thriving economy

  • Rewarding opportunities.
  • Investing for the long term.
  • Open for business.
  • Leveraging its unique position.

   3. An ambitious nation

  • Effectively governed.
  • Responsibly enabled.

The vision sets some ambitious goals to be achieved by 2030, including:

  • To have three Saudi cities recognized in the top-ranked 100 cities in the world.
  • To increase household spending on cultural and entertainment activities inside the Kingdom from the current level of 2.9 percent to 6 percent.
  • To increase the ratio of individuals exercising once a week from 13 percent of the population to 40 percent.
  • To raise the country’s position from 26 to 10 in the Social Capital Index.
  • To increase average life expectancy from 74 years to 80.

The document also commits to ensuring a more prominent role for families in the education of their children, and efficient and high-quality health care. It also sets the following objectives:

  • To lower the rate of unemployment from 11.6 percent to 7 percent.
  • To increase the contribution of small and medium enterprises (SMEs) to gross domestic product (GDP) from 20 percent to 35 percent.
  • To increase women’s participation in the workforce from 22 percent to 30 percent.

Among the commitments that Vision 2030 makes, the most prominent is ensuring the education that contributes to economic growth. 

“We will close the gap between the outputs of higher education and the requirements of the job market. We will also help our students make careful career decisions, while at the same time training them and facilitating their transition between different educational pathways,” says the document.

“In the year 2030, we aim to have at least five Saudi universities among the top 200 universities in international rankings. We shall help our students achieve results above international averages in global education indicators.” It also outlines a bigger role for SMEs. 

The country understands that there are complicated challenges ahead, but it has long-term plans to overcome them. 

In the past 25 years, the Saudi economy has grown by an annual average rate of more than 4 percent, contributing to the creation of millions of new jobs. 

Although it is already among the 20 largest economies in the world, its ambitions are even greater. 

“We aspire to have an even higher ranking by 2030, despite the headwinds of the global economic slowdown and the expected impact of our structural economic reforms,” the document says.

This requires the country to invest in all its resources in order to diversify the economy, unleash the capabilities of its promising economic sectors, and privatize some government services. The authorities have set the following targets:

  • To move from its current position as the 19th-largest economy in the world into the top 15.
  • To increase the localization of oil and gas sectors from 40 percent to 75 percent.
  • To increase the Public Investment Fund’s assets from SR600 billion ($160 billion) to over SR7 trillion.

Among its commitments is to localize the defense industry. Although the Kingdom is the world’s third-biggest military spender, only 2 percent of this spending is domestic, so it aims to localize over 50 percent of spending on military equipment by 2030.

Other areas being earmarked for enhancement include a mining sector contributing to the national economy at full potential, and a sustainable renewable-energy market.

In order to improve the business environment, the country is pursuing public-private partnerships, continuing to facilitate the flow of private investment, and improving its competitiveness.

The plan to bolster the business environment includes restructuring economic cities, creating special zones, and deregulating the energy market to make it more competitive. This area can be summed up in the following objectives defined under Vision 2030:

  • Improving the business environment.
  • Rehabilitating economic cities.
  • Establishing special zones.
  • Increasing the competitiveness of the energy sector.

The idea is to achieve these tangible targets:

  • To rise from its position of 25 to the top 10 countries in the Global Competitiveness Index.
  • To increase foreign direct investment from 3.8 percent to the international level of 5.7 percent of GDP.
  • To increase the private sector’s contribution from 40 percent to 65 percent of GDP.

The commitments made under Vision 2030 also entail the following:

  • A flourishing retail sector.
  • A developed digital infrastructure.
  • Building a unique regional logistics hub.
  • Integrating regionally and internationally.
  • Supporting national companies.

These lead to the following deliverables:

  • To raise the country’s global ranking in the Logistics Performance Index from 49 to 25 and ensure the Kingdom is a regional leader.
  • To raise the share of non-oil exports in non-oil GDP from 16 percent to 50 percent.

As part of the plan to ensure effective governance, Vision 2030 outlines the following key areas:

  • Embracing transparency.
  • Protecting vital resources.
  • Committing to efficient spending and balanced finances.

These efforts are targeted to lead to the following outcomes:

  • To increase non-oil government revenue from SR163 billion to SR1 trillion.
  • To raise its ranking in the Government Effectiveness Index from 80 to 20.
  • To raise its ranking on the E-Government Survey Index from 36 to be among the top five nations.

The vision also plans to:

  • Increase household savings from 6 percent to 10 percent of total household income.
  • Raise the non-profit sector’s contribution to GDP from less than 1 percent to 5 percent.
  • Rally 1 million volunteers per year, compared to 11,000 now. 

According to the document, a comprehensive and ambitious vision has already been outlined until the year 2030. 

“To achieve our aspirations and hopes, we have already launched many transformative programs that have paved the way for the vision and will help us achieve our goals,” it says. These include:

  • The government restructuring program.
  • The strategic directions program.
  • The fiscal balance program.
  • The project management program.
  • The regulations review program.
  • The performance measurement program.

The document outlines that to ensure the realization of Vision 2030, the Kingdom is preparing to launch a group of executive programs that will have a significant impact on implementation. These include:

  • The Saudi Aramco strategic transformation program.
  • The Public Investment Fund restructuring program.
  • The human capital program.
  • The national transformation program.
  • The program for strengthening public sector governance.
  • The privatization program.
  • The strategic partnerships program.
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