What Saudi Arabia’s Vision 2030 means for its job market
Author: PM editorial | Date: 18 May 2016
The Kingdom lays out a plan to diversify the economy and reduce its ‘oil addiction’
Saudi Arabia has announced details of its Vision 2030, which aims to diversify the country’s economy and make it less dependent on oil.
Unemployment in the kingdom for the under 30s is currently 29 per cent and job creation is set to be a major influence the younger generation’s plans for their future. Deputy crown prince Mohammed bin Salman said he wants to reduce overall unemployment from 11.6 per cent to 7 per cent by 2030 by expanding the private sector, promoting of enterprise and improving education.
As part of Vision 2030, five per cent of Saudi Aramco will be sold to investors to create the world’s largest sovereign wealth fund. Reducing oil dependency has become a priority in recent years, with the low price of a barrel of oil reducing government revenue and its ability to invest in other projects.
“The Kingdom of Saudi Arabia was founded by King Abdul Aziz and his companions without the need for oil,” the prince told Al Arabiya News. “Aramco’s reverence by some is a very big problem and we have a state of oil addiction in the kingdom. We will turn Aramco into a holding company and move its operations to companies owned by it.”
“The Kingdom of Saudi Arabia’s Vision 2030 constitutes a roadmap for the kingdom’s development and economic objectives for the next 15 years,” he said.
With the funds from a partial public sale of Aramco, the government could use the funds to expand the size of the private sector from 45 to 60 per cent of the country’s GDP. However, expanding the private sector also means cutting back on what many believe is an excessive public sector.
Plans for a $10 billion specialist banking hub, the King Abdullah Financial District, show it will be similar in size and scope to the Dubai International Financial Centre (DIFC). The Vision 2030 document said it will be “a special zone that has competitive regulations and procedures, with visa exemptions and directly connected to the King Khaled International Airport.” The government will also build other specialist zones, such as tourism and logistics areas, to “boost investment possibilities and diversify government revenues.”
Starting a new business in Saudi Arabia is now considerably cheaper, because the ministry of commerce and investment has reduced the capital needed to establish an organisation from SR 2 million to SR 500,000. This is also part of the 2030 Vision. “Small and medium-sized enterprises (SMEs) are among the most important agents of economic growth; they create jobs, support innovation and boost exports,” said the report. “SMEs in the Kingdom are not yet major contributors to our GDP, especially when compared to advanced economies. Therefore, we will strive to create suitable job opportunities for our citizens by supporting SME entrepreneurship, privatisation and investments in new industries.”