Saudi Arabia Sets Forth “Vision 2030” Economic Reform Agenda

Oil-rich nation seeks to diversify its economy and boost its private sector.

As much as $1 trillion in foreign direct investment could flow into Saudi Arabia over the coming 15 years, as the oil-rich nation seeks to diversify its economy and boost its private sector, according to a study by Oxford Strategic Consulting.

The kingdom has set forth its objectives in a reform agenda it calls “Vision 2030,” that plans for the country to move towards a more open and engaged society and decrease its dependency on oil so as to make for a productive society and boost economic growth.

According to the UK-based consulting firm, “The kingdom is at a critical juncture: its economic model is no longer sustainable in a world of depressed oil prices, and there is a youthful, connected population entering the workforce and eager to integrate with the outside world.”

Among the targets Saudi Arabia has set is to boost its GDP growth and double it by 2030, creating up to 6 million new jobs in the process. Better management of its human resources could unleash as much as $6.44 billion in economic output for the country, Oxford Strategic Consulting expects.

Another aim is to boost foreign direct investment so that it contributes as much as 5.7% to GDP, up from the current 3.8%. This would call for 21% growth in foreign direct investment into the country, taking it to $1 trillion in the next 15 years. To this end, Saudi Arabia is looking to do away with its bureaucratic orientation, make it possible for foreigners to invest in more of the country’s economic sectors, and also do over its regulations.

Also, while the country’s private sector output currently makes up 40% of its GDP, Saudi Arabia is looking to raise this to a 65% stake by 2030. Oxford Strategic Consulting expects that the country would have to boost growth in its private sector by 5 percentage points a year to achieve this goal. Saudi Arabia is looking to promote its small and medium business sector, so that 2.5 million more Saudi Arabian workers are employed in these enterprises, taking the total to 4.1 million workers by 2030, to aid private sector growth.  

And the country is also aiming to diversify its oil-dominated export base and increase its non-hydrocarbon exports by an average of 22% a year, so that they grow twentyfold by 2030.

According to Graham Griffiths, an Oxford Strategic Consulting analyst, “Saudi Arabia is embarking on a radical transition that promises to open up many economic opportunities for investors. However, the kingdom will remain a challenging environment to work in, as the traditional way of doing business – both within the government and in the private sector – meets the new economic model. Informed analysis of the rapidly changing political, economic and social landscape in the kingdom will be vital to seizing the opportunities presented by Saudi Vision 2030.”

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