RIYADH — Saudi Arabia has achieved initial gains in implementing itsVision 2030, a grand plan targeting the post-oil age through drastic socialand economic reforms.
Supported by King Salman bin Abdulaziz Al Saud, the plan was rolled out bySaudi Crown Prince Mohammed bin Salman Al Saud in April 2016, aiming atseeking economic diversification to reduce the kingdom’s traditional andnonproportional dependence on oil revenues.
The grand plan was introduced following an oil price plunge in mid-2014,which created unprecedented financial difficulties for the major oilproducer in the world.
The sluggish oil market also exposed the vulnerability of Saudi’soil-dependent economy, prompting its rulers to think about seriously how toprepare the kingdom for the coming post-oil age.
REDUCED SUBSIDIES, NEW TAXES AND PRICE HIKES
As part of the efforts to implement the plan, the past two years havewitnessed the hikes of local gasoline prices, electricity tariff and theactivation of the value-added tax, while the government slashed subsidiesfor energy sectors.
The gasoline price has increased three times after two rounds of pricehikes, with premium gas priced at 2.04 riyals (0.544 U.S. dollars) a liter,up from 0.90 riyals (0.24 dollars).
A five-percent tax was also imposed on most goods and services, includingfood, clothes, electronics and gas, as well as phone, water and electricitybills, and hotel reservations, since January 2018 to boost state revenues.
The savings from the new tariffs will be partly used to support a newcitizen-account program to protect the low- and middle-income families fromthe impact of austerity measures.
It is viewed that the price hikes, mainly paid by the 10 million foreignersin Saudi Arabia, will increase government income by dozens of billions ofdollars.
Meanwhile, Saudi Arabia is planning a 5-percent listing of the shares ofits world’s biggest energy firm Saudi Aramco. The listing, which is valuedat approximately 100 billion dollars, would be the world’s largest IPO.
The kingdom also lists tourism as one of the most important economicsectors, which was hard to imagine before.
The Saudi government has eased visa restrictions in order to attracttourists. Foreigners could obtain a Saudi tourist visa from the secondquarter of 2018, in addition to the business visas and Hajj visas which arecurrently the only two types of visas that Saudi Arabia issues toforeigners.
The revenues of tourism are expected rise from 27.9 billion dollars in 2015to an estimated of 46.6 billion dollars in 2020, the vision suggests.
MAJOR REFORMS LEAD TO SOCIAL CHANGES
Moreover, the Saudi government took some dramatic measures in the past twoyears to show its determination to return to a “moderate Islam” like before1979, when Riyadh started implementing the most conservative version ofIslamic rule in the Arab world, including the closure of cinemas.
In September 2017, the Saudi government announced that women will beallowed to drive from June 2018 onward, for the first time in theconservative kingdom since its foundation in 1932.
In October, the King Abdullah Sports City stadium in Jeddah welcomed womenfor the first time, who were seated in the designated family sections.
In December, Saudi Arabia announced a plan to grant licenses to opencinemas in early 2018.
The moves represented more than just significant steps in social reforms,as they are implemented also for economic reasons, including generatingmore income, creating new job opportunities, and boosting the developmentof some industries, including car manufacturing and sports.
The Saudi General Entertainment Authority, formed in May, 2016, presentedover 2,200 foreign performances in 2017, attracting 8.2 million audiencesfrom home and abroad.
The authority is determined to host over 5,000 performances in 2018.
In recent months, Saudi Arabia has organized concerts, a Comic-Con popculture festival and a mixed-gender National Day celebration that sawpeople dancing on the streets to thumping electronic music for the firsttime.
Ahmed Al-Khatib, chairman of Saudi General Entertainment Authority,expected a 61 billion-dollar investment into the entertainment industry forthe next decade, with an ambitious target to increase the annualentertainment spending of Saudis to 9.6 billion dollars in 2030.
The changes are intended to encourage Saudi citizens, who spend 20 billiondollars overseas, by travelling abroad to watch shows and visitingamusement parks in nearby tourist destinations, such as the city of Dubai,the United Arab Emirates (UAE).
WAR ON CORRUPTION GENERATES NEW FUNDS FOR REFORMS
Another major step taken by the conservative kingdom was a war oncorruption launched since last November, when King Salman formed theSupreme Anti-Corruption Committee led by Crown Prince Mohammed.
During the crackdown on corruption, 381 individuals, with an estimatedvalue of settlements standing at over 106 billion dollars, have beendetained.
A total of 56 individuals remain in custody, as the Attorney Generalrefuses to release them because of other pending criminal cases.
The government said the retrieved money would be used to fund economicprojects.
Preliminary achievements of the Vision 2030 were revealed as Saudi Arabiareleased the report on the fiscal balance of 2017, which indicates asmaller deficit with a 34 percent growth of government income.
Saudi Minister of Finance Mohammed Al-Jadaan attributed the recent recoveryof economy to a moderate resurge in the oil price and the economic reformsadopted so far.
Amid growing optimism about the country’s process of economicdiversification, the Saudi government announced its largest-ever budget for2018, projecting its revenues at 208.8 billion dollars, with oil revenuestaking up 63 percent.
King Salman said the government plans to balance the growth of budget by2023, and curb the oil revenues to 50 percent.
Meanwhile, Saudi Arabia is also stepping into the manufacturing sector, bysetting up joint ventures to produce automobiles and aircraft, despitebeing a late starter in the non-oil sectors. – Xinhua