Saudi Arabia is launching a $1300 billion investment campaign in the private sector.
The aim is to wean the country’s economy off its dependence on oil exports.
These account for more than half of the country’s income.
This initiative is part of a colossal $3200 billion program.
Saudi Arabia invests $1300 billion to diversify its economy
Weaning Saudi Arabia off its dependence on oil exports
Mohammed Ben Salmane, Crown Prince of Saudi Arabia, has declared that 24 of the kingdom’s companies will contribute to $1300 billion of investment in the country’s private sector by 2030.
Aramco and its subsidiary SABIC will account for 60% of the total.
This massive investment is part of Shareek’ s plan to diversify the economy.
This is because the Saudi economy is more than half dependent on oil exports.
Prince Mohammed commented:
“The new Shareek plan will help the private sector to create hundreds of thousands of new jobs, and increase the private sector’s contribution to GDP to 65% by the end of the decade”.
Cutting dividends for the largest companies
Saudi Arabia has also announced that participating companies will reduce their dividends in order to increase capital expenditure.
In exchange, Saudi Arabia will offer, among other things, soft loans and tax incentives in free trade zones.
However, the Crown Prince declared that dividends for Aramco shareholders will remain stable.
“We promised them and we will keep that promise,” he declared.
Recycling money
The country plans to divest its shares in certain companies over the next few years.
It is also planning IPOs for future projects.
For example, Aramco is expected to sell more shares as part of plans to strengthen its sovereign wealth fund, the PIF (Public Investment Fund).
“If you own 70% of a company, the PIF must maintain its majority at 30% and sell 40%,” says the Crown Prince.
Global program of $3200 billion
This plan is part of a global program of $3200 billion in investments planned between now and 2030.
This amount also includes $800 billion from the FIP and $1100 billion as part of a new investment strategy.
The twin shocks of the pandemic and falling oil prices have taken their toll on the country’s economy.
Unemployment in Saudi Arabia reached 14.9% in the third quarter of 2020.
This announcement by Crown Prince Mohammed ben Salmane thus underlines the government’s determination to revive the national economy and stimulate job creation.
It also gives a boost to the Vision 2030 economic diversification plan, which aims to increase non-oil revenues.
