In a country long dominated by the oil industry, changes are being made to expand the economy and provide longevity for future growth. However, many people and businesses in Saudi Arabia are having difficulties with adapting to the proposed reforms, causing some people to question if the proposals will even make an impact.
Saudi Arabia was under great scrutiny this week with the visit of President Trump, and all eyes were on the proposed reforms. A number of prominent CEOs and officials were on hand to discuss plans to wean the country’s economy off oil, a plan known in the country as Vision 2030.
The proposal is led by Deputy Crown Prince Mohammed bin Salam and includes a number of ways to expand the economy and reduce the country’s dependency on oil, including increasing female employment, expanding real estate and investments within the country, and building an entertainment industry within the country. By making it more appealing to outsiders, bin Salam hopes to draw in more talent.
After oil prices plunged last year, the Saudi Arabian government rolled out austerity measures to repair public finances, but they caused the non-oil private sector to essentially grind to a standstill as energy subsidies were reduced and contractor payments were delayed.
Now that things have recovered somewhat, officials are discussing a stimulus program with companies. As part of the Vision 2030 plan, the government proposes selling off less than 5% of the Saudi Arabian Oil Co. to create the world’s largest sovereign wealth fund and raise non-oil revenue, a move that could greatly benefit non-oil business.
The country also hopes to increase its economic output from small and medium businesses to 35% from 20%, which could greatly boost start-ups and entrepreneurs.
Business Leaders Cautious
Some business leaders, including billionaire woman Lubna Al-Olayan, have admitted that the changes have been difficult, especially given their magnitude and breadth. However, she was complimentary in her remarks of the “open discussion” between the government and the Saudi business community.
“From the private sector point of view, I think we’re very excited about this Vision 2030 and the transformation efforts,” Al-Olayan. “But I think the execution the first year, the execution of this plan has been a little bit—in some ways, we as the private sector have found it too much to absorb. So this has been a challenge.”
While many business leaders accept that the proposal could lead to strong long-term change, actually putting things into practice has been somewhat difficult and has occurred to quickly for some people.
Foreign Leaders Optimistic
Although some local business leaders may still need convincing, the foreign world is generally optimistic about the proposed Vision 2030 reforms. Saudi Arabia has long had issues with human rights violations, but recent moves by Muhammed bin Salam to cut the budget and reform the government have been seen by stepping stones to success and future economic and political growth.
Many of the proposed changes go against Saudi Arabian tradition, which is generally very important to the people. By “westernizing” the country, some locals fear the country will lose its roots, but foreign leaders so far have been praising the government’s ability to walk a fine line between implementing modern reforms and maintaining traditional roles and beliefs.
Vision 2030 has the potential to completely change Saudi Arabia’s economic and political status and revitalize the country, but in order to do so, some adjustments may need to be made to get everyone on board.