‘After five years, Vision 2030 is succeeding in building a better future for kingdom’s people’
▶ Saudi Crown Prince says any deal is aimed at securing sales abroad
Crown Prince Mohammed bin Salman has launched multibillion-dollar projects to put Saudi Arabia on the map for innovation, technology and youth-driven initiatives.
“We have big opportunities in front of us in different sectors and we have to exploit them to continue to grow and prosper,” the Crown Prince said on the Liwan Al Mudaifer Show.
Appearing on the fifth anniversary of the launch of the kingdom’s Vision 2030 reform programme, he said Saudi Arabia’s oil reserves were crucial to the next stage of the plans, but it was important to diversify.
“Oil has helped develop our country for centuries” he said. “But the increase in population will not be able to depend on oil production.”
Saudi Arabia’s non-oil revenue has increased by more than 200 per cent since the start of the Vision 2030 plan.
“Oil is still the main source of income for the state,” Prince Mohammed said.
“My intention is to make sure that the country is secure, safe and has a better future to look forward to.”
Last month, he disclosed that Saudi energy company Aramco would be investing 5 trillion riyals, or about $1.3tn, in the private sector by 2030. The strategy is already paying dividends.
“We have solved many issues in the economic sector, including the housing sector, within the last five years since launching Vision 2030,” Prince Mohammed said.
“The percentage of people owning houses before Vision 2030 was only 47 per cent. Now it has increased to 60 per cent.
“Unemployment has decreased. Before Vision 2030 it was 14 per cent and it’s gone down to 11 per cent this year.
“We are aiming to reach unemployment rates in 2030 of 7 per cent.”
Visions 2030’s main pillars are an ambitious nation, with effective governance; a thriving economy with a robust non-oil private sector; and a strong Islamic national identity and a fulfilling and healthy life for all.
Prince Mohammed said political reform had preceded the vision’s implementation.
“Lack of a strong state structure was one of the main challenges we faced,” he said.
Some of the most striking changes are in women’s rights.
Saudi women make up 33 per cent of workers, up from 19 per cent in 2017.
A ban on women driving was removed and measures introduced to increase their independence from male guardians in areas such as employment, education and health.
Opening up Saudi society does not, however, mean long-held traditions are being jettisoned.
“The holy Quran is our constitution and the government’s policies and statutes depend on it,” Prince Mohammed said.
He said education would be transformed, with the aim of having three universities in the world’s top 200 by 2030, and the health sector overhauled.
One of the cornerstones of Vision 2030 is increasing tourism revenue by preserving and enhancing the environment.
The $500 billion megacity of Neom will combine sustainability, tourism and innovation.
A series of resorts called the Red Sea Project, spanning 90 islands, is being developed at a cost of almost $4bn.
“We are close to achieving the overall aims and goals of Vision 2030,” the Crown Prince said.
“Our goal is to ensure that the [public investment] fund achieves growth. We aim to increase the fund’s assets to 10 trillion riyals in 2030.”
Saudi Arabia is in talks to sell a 1 per cent stake in Saudi Aramco, the world’s biggest oil exporter, to a leading global energy company.
The transaction may take place within the next two years, Saudi Crown Prince Mohammed bin Salman told state TV on Tuesday.
It is expected to be worth about $19 billion, based on the company’s current market capitalisation of 7.11 trillion riyals ($1.9tn).
“I do not want to make promises before deals are finalised but there is a discussion now about an acquisition of 1 per cent by one of the leading energy companies globally and this will be a very important deal in cementing Aramco’s sales in ... a major country,” said Prince Mohammed.
“If it gets the 1 per cent [stake], it will bolster Aramco’s
sales in Saudi Arabia and demand for Aramco’s products in the country where the company buys the 1 per cent stake,” he said.
“There are also discussions with other companies to buy different stakes. Part of Aramco’s shares could be moved to the PIF and a part to be listed in annual listing on the Saudi market.”
He did not provide a timetable for the plans.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, said “the current oil and Aramco share price makes sense timing-wise, and a private placement will also likely be easier.”
The global energy company that could potentially buy a 1 per cent stake in Aramco is expected to be from Asia, where the Saudi oil company’s largest customers are based, according to Vijay Valecha, chief investment officer at Century Financial.
“There is a high probability that it will be a Chinese company as the country accounts for 30 per cent of Saudi oil exports,” he said.
“The intention might be to lock in supplies. Saudi Arabia, on the other hand, is trying to raise funds for its Vision 2030 plans.”
Aramco could also offer international investors stakes in its non-core assets such as pipelines, gasfields and other upstream assets but is unlikely to offer stakes in its most significant oilfields, said Mr Valecha.
Prince Mohammed was speaking in an interview to mark the fifth anniversary of the Vision 2030 programme that seeks to diversify the economy and reduce its reliance on oil revenue.
Privatisation is an important pillar of the reform programme.
In 2019, Aramco listed its shares on the Tadawul, Saudi Arabia’s stock exchange, in the world’s largest public offering.
It raised an initial $25.6bn from the sale of a 1.5 per cent stake, or about 3 billion shares.
This rose to 1.72 per cent in a subsequent sale, taking total proceeds to $29.4bn.
The shares were offered to retail and institutional investors.
Aramco’s listing was a major element of the kingdom’s push to attract more foreign investment.
Proceeds were transferred to the PIF to help fund non-oil projects, cultivate domestic industries and diversify the economy.
Saudi Arabia, the Arab world’s largest economy, is expected to grow by 2.9 per cent this year, up from a January forecast of 2.6 per cent, according to the International Monetary Fund.
In the wide-ranging 90-minute interview, Prince Mohammed said unemployment in the kingdom dropped to 11 per cent in the first quarter of this year as the economy follows a “V-shaped” recovery from the Covid-19 pandemic.
The kingdom plans to bring the rate down 7 per cent by 2030.
Unemployment among Saudi citizens fell to 12.6 per cent at the end of last year, according to government data.
The kingdom has no plans to introduce income tax, said Prince Mohammed.
He said the country’s move to raise VAT from 5 per cent to 15 per cent last year “will be temporary and may continue for one year to a maximum of five years, with VAT target at 5 per cent to 10 per cent only to regain our balance after the pandemic”.
I do not want to make promises but this will be a very important deal in cementing Aramco’s sales in a major country PRINCE MOHAMMED BIN SALMAN Saudi Crown Prince