Saudi min­is­ter hails ‘bold’ deal with Ja­pan SoftBank Deal un­der­lines re­solve for di­ver­si­fi­ca­tion

Kuwait Times - - BUSINESS -

The Saudi en­ergy min­is­ter said yes­ter­day that a multi-bil­lion-dol­lar tech­nol­ogy in­vest­ment fund the king­dom is de­vel­op­ing in part­ner­ship with Ja­pan’s SoftBank showed its de­ter­mi­na­tion to di­ver­sify its econ­omy.

Khaled Al-Falih told an in­ter­na­tional fo­rum that the pro­posed new fund “is sim­ply one in­di­ca­tion of this de­ter­mi­na­tion and the bold steps be­ing taken” to re­ori­ent the econ­omy of the world’s big­gest oil ex­porter. Since 2014, global oil prices have col­lapsed by about half, ac­cel­er­at­ing Saudi ef­forts to move away from petroleum, which still ac­counts for the bulk of govern­ment in­come.

Falih told the KAPSARC En­ergy Di­a­logue that in the past the king­dom had not im­ple­mented di­ver­si­fi­ca­tion poli­cies “as ef­fi­ciently as we should have”. Vi­sion 2030 — a wide-rang­ing plan re­leased in April­was a “proac­tive re­sponse” to build a di­ver­si­fied econ­omy led by the pri­vate sec­tor and with in­ter­na­tional in­vest­ments pro­vid­ing al­ter­na­tive rev­enue sources, he said.

At the heart of the Vi­sion is a plan to float less than five per­cent of the state oil com­pany, Saudi Aramco, on the stock mar­ket to help cre­ate the world’s big­gest state in­vest­ment fund. Un­der the non-bind­ing agree­ment reached with SoftBank in Oc­to­ber, the king­dom’s con­tri­bu­tion to the new fund could reach $45 bil­lion.

SoftBank said it hoped to raise up to $100 bil­lion for the fund de­signed to in­vest in promis­ing tech­nol­ogy firms. Al­though Saudi Ara­bia wants to seize op­por­tu­ni­ties in a world that will be in­creas­ingly tech­nol­ogy in­ten­sive, Falih said the king­dom would not re­duce the con­tri­bu­tion of its tra­di­tional pil­lars of oil and gas, petro­chem­i­cals and min­ing. It will rather be “en­hanc­ing the de­vel­op­ment of other in­dus­trial and eco­nomic sec­tors to re­bal­ance and ac­cel­er­ate the growth of the over­all econ­omy”. The king­dom projects a bud­get deficit of $87 bil­lion this year. It has taken a series of aus­ter­ity mea­sures, in­clud­ing sub­sidy cuts, salary re­duc­tions and de­lays in ma­jor projects.

Two weeks ago, the king­dom’s first in­ter­na­tional bond is­sue raised $17.5 bil­lion. On Mon­day night King Sal­man, 80, sacked vet­eran Fi­nance Min­is­ter Ibrahim AlAs­saf, 67, who su­per­vised the suc­cess­ful bond of­fer­ing. He is the lat­est long-serv­ing min­is­ter re­placed in a govern­ment where Sal­man’s son, Deputy Crown Prince Mo­hammed bin Sal­man, 31, wields un­usual power and sym­bol­ises the po­ten­tial of youth in a king­dom where more than half of Saudi cit­i­zens are aged un­der 25.

Lon­don-based an­a­lysts at Cap­i­tal Eco­nom­ics said they do not think As­saf’s dis­missal sig­nals a change in the govern­ment’s ap­proach to lower oil prices. “The new fi­nance min­is­ter, Mo­hammed Al­jadaan, is gen­er­ally con­sid­ered to be a re­former within the govern­ment and a close ally” of Prince Mo­hammed, Cap­i­tal Eco­nom­ics said. Al­jadaan headed the king­dom’s stock mar­ket reg­u­la­tor and su­per­vised the bourse’s open­ing last year to for­eign in­vestors. —AFP

TOKYO: Ja­pan’s SoftBank said it hoped to raise up to $100 bil­lion for the Saudi Ara­bian fund de­signed to in­vest in promis­ing tech­nol­ogy firms. —AFP

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