Saif al-Arab
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Some quick math. That's 55 billion USD each year on average over this 20 year period.
The costs of NEOM are not included here.
Saudi Arabia Economy News & Updates - KSA to spend $1.1 trillion on infrastructure projects
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Some quick math. That's 55 billion USD each year on average over this 20 year period.
The costs of NEOM are not included here.
Saif al-Arab
BANNED
- Joined
- Mar 26, 2015
- Messages
- 8,873
- Reaction score
- 5
- Country
- Location
SAUDI ARABIA BEYOND OIL: THE INVESTMENT AND PRODUCTIVITY TRANSFORMATION
MGI is publishing this report on Saudi Arabia at a time of change in the Kingdom. After a surge in prosperity over the past decade, the economy is at a transition point. We see a real opportunity for the Kingdom to inject new dynamism into the economy through a productivity- and investment-led transformation that could help ensure future growth, employment, and prosperity for all Saudis.
An oil price boom from 2003 to 2013 fueled rising prosperity in Saudi Arabia, which became
the world’s 19th-largest economy. GDP doubled, household income rose by 75 percent, and
1.7 million jobs were created for Saudis, including for a growing number of Saudi women. The
government invested heavily in education, health, and infrastructure and built up reserves
amounting to almost 100 percent of GDP in 2014.
The Kingdom can no longer grow based on oil revenue and public spending, in the face of
a changing global energy market and a demographic transition that will lead to a bulge in
the number of working-age Saudis by 2030. Current labor participation is 41 percent, and
productivity growth of 0.8 percent from 2003 to 2013 lagged behind that of many emerging
economies. Foreign workers on temporary contracts who are paid considerably less than Saudi nationals today constitute more than half the labor force.
We have developed a model that integrates Saudi Arabia’s economic, labor market, and fiscal
perspectives. It shows that even if the Kingdom introduces reactive policy changes such as a
budget freeze or immigration curbs in the face of these challenging conditions, unemployment
will rise rapidly, household income will fall, and the fiscal position of the national government will deteriorate sharply.
However, a productivity-led transformation of the economy could enable Saudi Arabia to again
double its GDP and create as many as six million new Saudi jobs by 2030. We estimate this
would require about $4 trillion in investment. Eight sectors—mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, health care, finance, and construction—have the potential to generate more than 60 percent of this growth opportunity.
To enable this transformation, Saudi Arabia will need to accelerate the shift from its current
government-led economic model to a more market-based approach. In the labor market,
greater workforce participation by Saudi men and women is essentia lto achieve higher
household income. The proportion and number of foreign workers may decline but they would
likely benefit from higher wages and better conditions. Faster productivity growth requires
better business regulation and more openness to competition, trade, and investment. Improved efficiency of spending and new revenue sources, possibly including taxes and higher domestic energy prices, can help ensure fiscal sustainability.
All stakeholders, including the private sector, foreign investors, and households, will need to be
involved in this transformation. The state will have to embrace a new delivery philosophy while
businesses adapt to a more competitive environment and the individual Saudi citizen takes more personal accountability. The transition will be challenging, but the new era of economic growth and employment it could usher in would be more sustainable than the oil booms of the past.
EXECUTIVE SUMMARY
...
THE $4 TRILLION INVESTMENT OPPORTUNITY
These outcomes are not a foregone conclusion. There is another path. In the next 15 years
to 2030, Saudi Arabia could potentially double its GDP again, increase real Saudi household
income by about 60 percent and create as many as six million new Saudi jobs. The GDP
increase amounts to about $800 billion, the equivalent of adding Turkey’s economy today,
or three Finlands. Unemployment would decline to about 7 percent (Exhibit E4).
In this report we have projected outcomes for Saudi households. The size and nature of the foreign workforce in Saudi Arabia is highly changeable, and most of these non-Saudi workers do not permanently settle in the Kingdom. Projecting gains in their living standards and income
is therefore challenging and subject to specific policy implementation. However, foreigners
will benefit—as Saudis will—from changes that will make the entire workforce more
productive, thus raising wages and improving working conditions.
This transformation would wean Saudi Arabia off its heavy dependence on oil: under this
scenario, non-oil revenue could increase from 10 percent of total government revenue
to 70 percent. The change could also fundamentally alter the dominant role of the public
sector in society, with wages from private-sector employment rising from 19 percent of total
household income to 58 percent.
Achieving such growth would require an acceleration of productivity growth combined with
a continued high rate of investment. Together, these would drive a very robust expansion
of the non-oil private sector. We estimate the investment needs at about $4 trillion. This is
about three times the size of the investment made in the Saudi economy during the 2003–13
oil boom, which in itself was three times the investment of the previous decade. Much of it
would come from non-government sources including both Saudi and foreign investors.
While the non-oil private sector is relatively small in Saudi Arabia, it has potential to
drive much of the growth.
Already during the 2003–13 period, the non-oil private sector outperformed the economy as a whole, albeit starting from a low base. It grew at about 10 percent annually, much faster than the overall 6 percent GDP growth rate. Growth was broadly based, with consumption-based sectors such as transport, communications, retail and wholesale trade, and business services growing the fastest. The non-oil private sector’s productivity growth was also more rapid than the rest of the economy, with an average of 2.5 percent per year. Sectors such as manufacturing were among the brightest spots.
Between now and 2030, there are opportunities throughout the economy to supercharge
this non-oil growth. In this report, we highlight eight sectors that analysis suggests have
some of the biggest potential, and could contribute more than 60 percent of the overall
growth needed to double GDP by 2030. They are mining and metals, petrochemicals,
manufacturing, retail and wholesale trade, tourism and hospitality, health care, finance,
and construction.
https://www.mckinsey.com/~/media/McKinsey/Featured Insights/Employment and Growth/Moving Saudi Arabias economy beyond oil/MGI Saudi Arabia_Full report_December 2015.ashx
Saudi Arabia is already the scientific leader of the Arab world, but it is not standing still. Through investment in research and education — and a new focus on maximizing the commercial value of its academic prowess — the country is beating a path to reducing its reliance on oil.
Nature Index | Published: 27 September 2017
Leader of the pack
Nature volume 549, pages S62–S63 (28 September 2017) | Download Citation
This article has been updated
Saudi Arabia leads the way in scientific research in the Arab world, but its position at the top of the pile is reliant on relatively few institutions. By Richard Hodson, infographic by Mohamed Ashour. Data analysis by Aaron Ballagh and Alexander Scherrmann.
Arabian powerhouse
Saudi Arabia is ranked just outside the top 30 nations for high-quality research, 19 places higher than its closest competitor in the Arab world, the United Arab Emirates (a). It maintained its lead over its Arab neighbours in 2016, though Qatar jumped 9 places up the global rankings last year, making it the fastest climber at the top of Arabian research. Despite these gains on the global leaderboard, however, the gulf between Saudi Arabia and its Arab neighbours in terms of the country's contribution to high-quality research remains extremely large (b).
Image: Source: Nature Index
Subject strength
Chemistry is Saudi Arabia's forte, and the main driver of its rise up the Nature Index rankings since 2012. But the physical sciences, a distant second for the past two years, narrowed to gap in 2016. Despite AC remaining relatively unchanged, WFC increased in 2016. This shows that Saudi Arabian authors made a greater contribution to the physical science papers they published than in 2015. A similar change was also seen in chemistry and the life sciences last year.
Image: Source: Nature Index
Research spending
Saudi Arabia ranks 44th in the world for gross domestic expenditure on R&D (GERD) as a percentage of gross domestic product (GDP), based on the latest available data (2013). The United Arab Emirates invests a similar proportion of its GDP in research.
Image: Sources: UNESCO, Web of Science
In the money
A sharp increase in R&D funding in Saudi Arabia in 2010 was matched by an upswing in the quantity of Saudi research. The level of funding is, however, well below the OECD average of 2.4%.
Image: Sources: UNESCO, Web of Science
Investment areas
The natural sciences attract the most funding in Saudi Arabia, and make up the bulk of research publications. The quantity of research produced in engineering and in the health sciences is closer than spending on the two fields might suggest.
Image: Sources: UNESCO, Web of Science (2013)
Who's driving Saudi research?
Image: Source: Nature Index
The big six
Just six institutions account for 95% of Saudi Arabian research, according to WFC (2016).
Image: Source: Nature Index
There's more to research excellence than just quantity of papers. Larger institutions naturally produce more papers than smaller ones. Adjusting for the size advantage (based on an institution's total output of natural science articles in the Web of Science), government body KACST has the highest number of high-quality articles in Index-tracked journals. However, by WFC — which takes into account an institution's contribution to multi-authored papers — KAUST is the clear leader.
Image: Source: Nature Index, Web of Science
Image: Source: Nature Index, Web of Science
In 2016, KAUST was the principal source of high-quality research by WFC not just in Saudi Arabia, but the entire Arab world. Its researchers account for nearly half the region's WFC.
https://www.nature.com/articles/549S62a
Nature Index | Published: 27 September 2017
Drilling for excellence
Nature volume 549, page S61 (28 September 2017) | Download Citation
By a considerable margin, Saudi Arabia is the scientific leader of the Arab world. It ranks just outside the world's top 30 nations for its contribution to high-quality research published in journals monitored by the Nature Index, 19 places higher than the closest Arab states — though even that belies the true scale of the lead it holds (see page S62).
The King Abdullah financial district in Riyadh is a new development in line with the kingdom's plans to change its economic structure. Image: Ali Al Mubarak/Arabianeye/Getty Images
This has not always been the case. An upsurge in funding for research and development came as recently as 2010, and the quantity of research produced within the country has followed a similarly steep trajectory. But the oil money that has supported this rise over the last decade can no longer be relied upon. The price per barrel has tumbled since 2014, leaving Saudi Arabia with a budget deficit of nearly US$100 billion in 2015.
The Saudi government is looking to its academic sector to supplement the economy and reduce reliance on oil. Universities are being encouraged to exploit commercial value in their research, with specific targets around patenting and start-up companies laid out in the country's science strategy. They do not, however, operate in a vacuum: the culture outside these institutions' walls must also change if the policy is to be successful (page S75).
Saudi leaders are also taking steps to prepare the human resources required in a scientifically-driven economy. Large numbers of Saudi students choose to study abroad, particularly in the United States. But the expensive, government-funded scholarship programme that enables this is vulnerable to the same falling oil revenues that gave it purpose in the first place. To survive, the scholarship programme must find ways to prove its value to the kingdom (page S64).
It will be these young people, with ideas and values that may challenge Saudi Arabia's entrenched conservatism, who must spearhead the country's science-powered economic transformation. At present, the country's young graduates are not fulfilling their potential — unemployment amongst this group is high, particularly for female graduates. The Nature Index sought out some of the women who have thrived in their science careers in the kingdom (page S70). Saudi Arabia is a country challenging itself to change from the top-down and the bottom-up all at once, and its neighbours and the wider international community will be following its future closely.
https://www.nature.com/articles/549S61a
Nature Index | Published: 27 April 2016
Oiling the wheels on a road to success
Nature volume 532, pages S13–S15 (28 April 2016) | Download Citation
With the benefit of a sustainable plan and the funds to back it, Saudi Arabia is aiming high.
Saudi Arabia's scientific development may be in its infancy, but the oil-rich Kingdom is making strides in terms of research investment and publication — with a clear ambition to one day join those in the highest echelons.
KAUST students embark on a new school year with a commencement ceremony. The relatively new university has quickly made an impact on the Nature Index. Image: KAUST
In 2012, Saudi Arabia had a weighted fractional count (WFC) of 52.84 in the index, sitting behind Turkey, Iran, Mexico, Chile and South Africa. In four years it rose 86.8% to reach a WFC of 98.67, leapfrogging all these countries to compete with Chile and Argentina globally. Saudi Arabia ranks at number 31 in the world in terms of WFC — up from 39 in 2012.
The country has risen even higher in specific subject areas. In chemistry, for example, it has surpassed countries with a strong scientific impact like Finland and Ireland, with its WFC rising to 66.54, achieving almost a three-fold increase from its position in 2012.
Institutionally, the country's leading science hub King Abdullah University of Science and Technology (KAUST) made an impressive leap in its WFC between 2012 and 2015, carving a place for itself to compete with American and European research powerhouses.
In just four years, its WFC has risen to become higher than those of prestigious institutions including the European Organization for Nuclear Research (CERN), Brookhaven National Laboratory (BNL), the University of Georgia, United States, and Dresden University of Technology, Germany, to name a few. The output of all of these institutions dwarfed KAUST's in 2012, but KAUST's impressive trajectory since then has seen its WFC shoot to 72 in 2015, overtaking these heavy-hitters.
The country's science development ambitions have been backed by action. Since 2008, the country has embarked on a multi-tiered strategy that will see the Kingdom overhaul its science infrastructure, build high-spec labs, secure grants for research in priority areas in applied science, and link science to industries that drive the economy.
The strategy, broken into four stages to be implemented by 2030, aims to eventually “see Saudi Arabia become a leader in Asia and give it an economic power based on science,” says Abdulaziz Al-Swailem, vice president of scientific research support at King Abdulaziz City for Science and Technology (KACST).
The Saudi Human Genome Project will sequence 100,000 human genomes to conduct biomedical research in the Saudi population. Image: Fayez Nureldine/AFP/Getty Images
Saudi Arabia's march to the top Saudi Arabia's efforts to boost its scientific research have been paying off, with its output in the Nature Index (WFC) rising steadily over the years. The two graphs below highlight Saudi Arabia's rise compared to other nations, both overall and for chemistry.
Overall output In 2012 Saudi Arabia's overall output in the index was below all the countries shown, but continuous efforts have seen the Kingdom's WFC rise to overtake them all in 2015.
Chemistry More marked than its overall rise, Saudi Arabia has made great strides in chemistry. After accelerated growth, which saw the Kingdom's chemistry WFC triple since 2012, it has outshone many larger players in the field in 2015.
The Kingdom's science investments focus on applied research that feeds directly into the country's industrial interests, particularly the oil and energy sector. But even in its strong subjects, chemistry and the physical sciences, Saudi Arabia's WFC remains modest compared to big players in Asia like China, Japan and South Korea.
“Saudi Arabia could look to some successful emerging economies for inspiration.”
To truly swim comfortably with these bigger fish, Saudi Arabia may benefit from looking at successful emerging economies in Asia.
One inspiration could be India. In addition to multi-disciplinary scientific and technical advancements that have improved its output in the index from 736.5 to 901.4 in the past four years, the subcontinental giant has joined the exclusive club of countries that have launched successful space missions.
Like Saudi Arabia, India's leading research institutes focus on chemistry, and their total output currently outstrips their Saudi Arabian counterparts by almost a factor of seven (the latter surpassing 472 in 2015, while the former is 66.5).
India's prowess in chemistry is something that Saudi Arabia can aspire to, considering that working conditions for researchers in the Kingdom are more conducive.
India's science ecosystem is far from perfect. Research funding cannot keep up with inflation and a general slowdown in the country's economy. In addition, commentators from the research community say the funding processes are lengthy, bureaucratic, and provide little feedback when applications for grants are turned down. Meanwhile, Saudi Arabia's healthy stream of oil revenue provides assured funding for the country's state-of-the-art research facilities.
While India has slightly increased spending and dedicated US$1.19 billion for the next fiscal year (2016–2017) for science, it has around 700 universities and 200,000 full-time researchers drawing on the same funding pot. By contrast, Saudi Arabia has pledged an education and training budget of US$50.9 billion for next year, which includes higher education and scientific research. With a total population of just 30 million, it has a much lower number of full-time researchers competing for the available resources.
Another impressive trajectory that Saudi Arabia might look to emulate is that of Singapore, which has a smaller population as well and has managed to climb high in the index. Like the Kingdom, Singapore also has a focus on chemistry research, and it has put together a similar top-down national science strategy for research institutes across the country. Both countries have strong collaborations with top universities around the world and are welcoming of foreign researchers in their efforts to drive innovation.
Mansour Alghamdi, director of the general directorate of scientific awareness and publishing at KACST, is optimistic that Saudi Arabia can bridge the large gap that currently exists in the volume of scientific output between it and such countries as India and Singapore.
“The Kingdom of Saudi Arabia has a clear plan to do so and it has the resources,” he says.
Future growth
An internationally rising star This graph shows KAUST's rise compared to a selection of other institutions*. *Institutions shown are those that were furthest above KAUST in 2012, have experienced overall growth in WFC by 2015 and have been overtaken by KAUST in 2015. For clarity, only 2012 and 2015 data points are shown.
In 2012, Saudi's ranking in research output, with a WFC of 52.8, meant it was comparable with countries like South Africa, Turkey and Iran, all hovering around the 60–70 mark. Its WFC stood way below countries like Mexico, Hungary, Chile, Greece and Argentina.
Saudi Arabian researchers benefit from cutting-edge labs and generous funding that has boosted the country's R&D. Image: Top: KACST; Bottom: KAUST
Four years later, the country's research outlook is very different and it is surpassing countries like Argentina, Mexico and Hungary in the index, and levelling the playing field with Chile. Chemistry research led the country's rapid rise to surpass these countries, but its life sciences and physical sciences WFCs of 8.5 and 31.5 still lag behind.
However, the Kingdom's AC has been steadily growing in these two fields over the past four years, hinting at the ever-increasing significance of international collaborations. It seems that Saudi Arabian researchers are casting their nets ever wider and are participating in publishing more articles, to the detriment of the WFC accredited for these articles.
Though international collaboration has proved fruitful, Saudi Arabia must keep a focus on nurturing home-grown talent, says Nasser Al-Aqeeli, dean of research at King Fahd University of Petroleum & Minerals (KFUPM), based in Dhahran's 'techno valley' in the eastern region of the Kingdom. In the next five years, he says, the country will focus on a programme for national capacity building.
A good first step was the Saudi government's decision to create a large scholarship programme in 2005, arguably the largest in the world, which has seen more than 200,000 young Saudi Arabians studying abroad. This makes Saudi Arabian students in the United States the fourth largest bloc of expatriate students, following those of China, India and South Korea. The government hopes these students will come back and drive a scientific culture in the country.
“Its rise up the ranks depends on a 'self-correcting mechanism' of a slow start to sustainable growth.”
Saudi Arabia is also looking to increase its applied research focus, which is an integral part of the current phase of its national science strategy, while securing good funding for basic research as well. Al-Aqeeli says that Saudi's journey involves what he termed a “self-correcting mechanism” where the country is having a slow start in high-impact research, but a more sustainable one. An eventual future move towards basic research might help Saudi Arabia's research capacity to mature.
https://www.nature.com/articles/532S13a
And just last month we reached top 29. Meaning we are among the 15% best performing nations out of almost 200. Great stuff and we are just at the early beginning relatively speaking.
MGI is publishing this report on Saudi Arabia at a time of change in the Kingdom. After a surge in prosperity over the past decade, the economy is at a transition point. We see a real opportunity for the Kingdom to inject new dynamism into the economy through a productivity- and investment-led transformation that could help ensure future growth, employment, and prosperity for all Saudis.
An oil price boom from 2003 to 2013 fueled rising prosperity in Saudi Arabia, which became
the world’s 19th-largest economy. GDP doubled, household income rose by 75 percent, and
1.7 million jobs were created for Saudis, including for a growing number of Saudi women. The
government invested heavily in education, health, and infrastructure and built up reserves
amounting to almost 100 percent of GDP in 2014.
The Kingdom can no longer grow based on oil revenue and public spending, in the face of
a changing global energy market and a demographic transition that will lead to a bulge in
the number of working-age Saudis by 2030. Current labor participation is 41 percent, and
productivity growth of 0.8 percent from 2003 to 2013 lagged behind that of many emerging
economies. Foreign workers on temporary contracts who are paid considerably less than Saudi nationals today constitute more than half the labor force.
We have developed a model that integrates Saudi Arabia’s economic, labor market, and fiscal
perspectives. It shows that even if the Kingdom introduces reactive policy changes such as a
budget freeze or immigration curbs in the face of these challenging conditions, unemployment
will rise rapidly, household income will fall, and the fiscal position of the national government will deteriorate sharply.
However, a productivity-led transformation of the economy could enable Saudi Arabia to again
double its GDP and create as many as six million new Saudi jobs by 2030. We estimate this
would require about $4 trillion in investment. Eight sectors—mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, health care, finance, and construction—have the potential to generate more than 60 percent of this growth opportunity.
To enable this transformation, Saudi Arabia will need to accelerate the shift from its current
government-led economic model to a more market-based approach. In the labor market,
greater workforce participation by Saudi men and women is essentia lto achieve higher
household income. The proportion and number of foreign workers may decline but they would
likely benefit from higher wages and better conditions. Faster productivity growth requires
better business regulation and more openness to competition, trade, and investment. Improved efficiency of spending and new revenue sources, possibly including taxes and higher domestic energy prices, can help ensure fiscal sustainability.
All stakeholders, including the private sector, foreign investors, and households, will need to be
involved in this transformation. The state will have to embrace a new delivery philosophy while
businesses adapt to a more competitive environment and the individual Saudi citizen takes more personal accountability. The transition will be challenging, but the new era of economic growth and employment it could usher in would be more sustainable than the oil booms of the past.
EXECUTIVE SUMMARY
...
THE $4 TRILLION INVESTMENT OPPORTUNITY
These outcomes are not a foregone conclusion. There is another path. In the next 15 years
to 2030, Saudi Arabia could potentially double its GDP again, increase real Saudi household
income by about 60 percent and create as many as six million new Saudi jobs. The GDP
increase amounts to about $800 billion, the equivalent of adding Turkey’s economy today,
or three Finlands. Unemployment would decline to about 7 percent (Exhibit E4).
In this report we have projected outcomes for Saudi households. The size and nature of the foreign workforce in Saudi Arabia is highly changeable, and most of these non-Saudi workers do not permanently settle in the Kingdom. Projecting gains in their living standards and income
is therefore challenging and subject to specific policy implementation. However, foreigners
will benefit—as Saudis will—from changes that will make the entire workforce more
productive, thus raising wages and improving working conditions.
This transformation would wean Saudi Arabia off its heavy dependence on oil: under this
scenario, non-oil revenue could increase from 10 percent of total government revenue
to 70 percent. The change could also fundamentally alter the dominant role of the public
sector in society, with wages from private-sector employment rising from 19 percent of total
household income to 58 percent.
Achieving such growth would require an acceleration of productivity growth combined with
a continued high rate of investment. Together, these would drive a very robust expansion
of the non-oil private sector. We estimate the investment needs at about $4 trillion. This is
about three times the size of the investment made in the Saudi economy during the 2003–13
oil boom, which in itself was three times the investment of the previous decade. Much of it
would come from non-government sources including both Saudi and foreign investors.
While the non-oil private sector is relatively small in Saudi Arabia, it has potential to
drive much of the growth.
Already during the 2003–13 period, the non-oil private sector outperformed the economy as a whole, albeit starting from a low base. It grew at about 10 percent annually, much faster than the overall 6 percent GDP growth rate. Growth was broadly based, with consumption-based sectors such as transport, communications, retail and wholesale trade, and business services growing the fastest. The non-oil private sector’s productivity growth was also more rapid than the rest of the economy, with an average of 2.5 percent per year. Sectors such as manufacturing were among the brightest spots.
Between now and 2030, there are opportunities throughout the economy to supercharge
this non-oil growth. In this report, we highlight eight sectors that analysis suggests have
some of the biggest potential, and could contribute more than 60 percent of the overall
growth needed to double GDP by 2030. They are mining and metals, petrochemicals,
manufacturing, retail and wholesale trade, tourism and hospitality, health care, finance,
and construction.
https://www.mckinsey.com/~/media/McKinsey/Featured Insights/Employment and Growth/Moving Saudi Arabias economy beyond oil/MGI Saudi Arabia_Full report_December 2015.ashx
Saudi Arabia is already the scientific leader of the Arab world, but it is not standing still. Through investment in research and education — and a new focus on maximizing the commercial value of its academic prowess — the country is beating a path to reducing its reliance on oil.
Nature Index | Published: 27 September 2017
Leader of the pack
Nature volume 549, pages S62–S63 (28 September 2017) | Download Citation
This article has been updated
Saudi Arabia leads the way in scientific research in the Arab world, but its position at the top of the pile is reliant on relatively few institutions. By Richard Hodson, infographic by Mohamed Ashour. Data analysis by Aaron Ballagh and Alexander Scherrmann.
Arabian powerhouse
Saudi Arabia is ranked just outside the top 30 nations for high-quality research, 19 places higher than its closest competitor in the Arab world, the United Arab Emirates (a). It maintained its lead over its Arab neighbours in 2016, though Qatar jumped 9 places up the global rankings last year, making it the fastest climber at the top of Arabian research. Despite these gains on the global leaderboard, however, the gulf between Saudi Arabia and its Arab neighbours in terms of the country's contribution to high-quality research remains extremely large (b).
Image: Source: Nature Index
Subject strength
Chemistry is Saudi Arabia's forte, and the main driver of its rise up the Nature Index rankings since 2012. But the physical sciences, a distant second for the past two years, narrowed to gap in 2016. Despite AC remaining relatively unchanged, WFC increased in 2016. This shows that Saudi Arabian authors made a greater contribution to the physical science papers they published than in 2015. A similar change was also seen in chemistry and the life sciences last year.
Image: Source: Nature Index
Research spending
Saudi Arabia ranks 44th in the world for gross domestic expenditure on R&D (GERD) as a percentage of gross domestic product (GDP), based on the latest available data (2013). The United Arab Emirates invests a similar proportion of its GDP in research.
Image: Sources: UNESCO, Web of Science
In the money
A sharp increase in R&D funding in Saudi Arabia in 2010 was matched by an upswing in the quantity of Saudi research. The level of funding is, however, well below the OECD average of 2.4%.
Image: Sources: UNESCO, Web of Science
Investment areas
The natural sciences attract the most funding in Saudi Arabia, and make up the bulk of research publications. The quantity of research produced in engineering and in the health sciences is closer than spending on the two fields might suggest.
Image: Sources: UNESCO, Web of Science (2013)
Who's driving Saudi research?
Image: Source: Nature Index
The big six
Just six institutions account for 95% of Saudi Arabian research, according to WFC (2016).
Image: Source: Nature Index
There's more to research excellence than just quantity of papers. Larger institutions naturally produce more papers than smaller ones. Adjusting for the size advantage (based on an institution's total output of natural science articles in the Web of Science), government body KACST has the highest number of high-quality articles in Index-tracked journals. However, by WFC — which takes into account an institution's contribution to multi-authored papers — KAUST is the clear leader.
Image: Source: Nature Index, Web of Science
Image: Source: Nature Index, Web of Science
In 2016, KAUST was the principal source of high-quality research by WFC not just in Saudi Arabia, but the entire Arab world. Its researchers account for nearly half the region's WFC.
https://www.nature.com/articles/549S62a
Nature Index | Published: 27 September 2017
Drilling for excellence
Nature volume 549, page S61 (28 September 2017) | Download Citation
By a considerable margin, Saudi Arabia is the scientific leader of the Arab world. It ranks just outside the world's top 30 nations for its contribution to high-quality research published in journals monitored by the Nature Index, 19 places higher than the closest Arab states — though even that belies the true scale of the lead it holds (see page S62).
The King Abdullah financial district in Riyadh is a new development in line with the kingdom's plans to change its economic structure. Image: Ali Al Mubarak/Arabianeye/Getty Images
This has not always been the case. An upsurge in funding for research and development came as recently as 2010, and the quantity of research produced within the country has followed a similarly steep trajectory. But the oil money that has supported this rise over the last decade can no longer be relied upon. The price per barrel has tumbled since 2014, leaving Saudi Arabia with a budget deficit of nearly US$100 billion in 2015.
The Saudi government is looking to its academic sector to supplement the economy and reduce reliance on oil. Universities are being encouraged to exploit commercial value in their research, with specific targets around patenting and start-up companies laid out in the country's science strategy. They do not, however, operate in a vacuum: the culture outside these institutions' walls must also change if the policy is to be successful (page S75).
Saudi leaders are also taking steps to prepare the human resources required in a scientifically-driven economy. Large numbers of Saudi students choose to study abroad, particularly in the United States. But the expensive, government-funded scholarship programme that enables this is vulnerable to the same falling oil revenues that gave it purpose in the first place. To survive, the scholarship programme must find ways to prove its value to the kingdom (page S64).
It will be these young people, with ideas and values that may challenge Saudi Arabia's entrenched conservatism, who must spearhead the country's science-powered economic transformation. At present, the country's young graduates are not fulfilling their potential — unemployment amongst this group is high, particularly for female graduates. The Nature Index sought out some of the women who have thrived in their science careers in the kingdom (page S70). Saudi Arabia is a country challenging itself to change from the top-down and the bottom-up all at once, and its neighbours and the wider international community will be following its future closely.
https://www.nature.com/articles/549S61a
Nature Index | Published: 27 April 2016
Oiling the wheels on a road to success
Nature volume 532, pages S13–S15 (28 April 2016) | Download Citation
With the benefit of a sustainable plan and the funds to back it, Saudi Arabia is aiming high.
Saudi Arabia's scientific development may be in its infancy, but the oil-rich Kingdom is making strides in terms of research investment and publication — with a clear ambition to one day join those in the highest echelons.
KAUST students embark on a new school year with a commencement ceremony. The relatively new university has quickly made an impact on the Nature Index. Image: KAUST
In 2012, Saudi Arabia had a weighted fractional count (WFC) of 52.84 in the index, sitting behind Turkey, Iran, Mexico, Chile and South Africa. In four years it rose 86.8% to reach a WFC of 98.67, leapfrogging all these countries to compete with Chile and Argentina globally. Saudi Arabia ranks at number 31 in the world in terms of WFC — up from 39 in 2012.
The country has risen even higher in specific subject areas. In chemistry, for example, it has surpassed countries with a strong scientific impact like Finland and Ireland, with its WFC rising to 66.54, achieving almost a three-fold increase from its position in 2012.
Institutionally, the country's leading science hub King Abdullah University of Science and Technology (KAUST) made an impressive leap in its WFC between 2012 and 2015, carving a place for itself to compete with American and European research powerhouses.
In just four years, its WFC has risen to become higher than those of prestigious institutions including the European Organization for Nuclear Research (CERN), Brookhaven National Laboratory (BNL), the University of Georgia, United States, and Dresden University of Technology, Germany, to name a few. The output of all of these institutions dwarfed KAUST's in 2012, but KAUST's impressive trajectory since then has seen its WFC shoot to 72 in 2015, overtaking these heavy-hitters.
The country's science development ambitions have been backed by action. Since 2008, the country has embarked on a multi-tiered strategy that will see the Kingdom overhaul its science infrastructure, build high-spec labs, secure grants for research in priority areas in applied science, and link science to industries that drive the economy.
The strategy, broken into four stages to be implemented by 2030, aims to eventually “see Saudi Arabia become a leader in Asia and give it an economic power based on science,” says Abdulaziz Al-Swailem, vice president of scientific research support at King Abdulaziz City for Science and Technology (KACST).
The Saudi Human Genome Project will sequence 100,000 human genomes to conduct biomedical research in the Saudi population. Image: Fayez Nureldine/AFP/Getty Images
Saudi Arabia's march to the top Saudi Arabia's efforts to boost its scientific research have been paying off, with its output in the Nature Index (WFC) rising steadily over the years. The two graphs below highlight Saudi Arabia's rise compared to other nations, both overall and for chemistry.
Overall output In 2012 Saudi Arabia's overall output in the index was below all the countries shown, but continuous efforts have seen the Kingdom's WFC rise to overtake them all in 2015.
Chemistry More marked than its overall rise, Saudi Arabia has made great strides in chemistry. After accelerated growth, which saw the Kingdom's chemistry WFC triple since 2012, it has outshone many larger players in the field in 2015.
The Kingdom's science investments focus on applied research that feeds directly into the country's industrial interests, particularly the oil and energy sector. But even in its strong subjects, chemistry and the physical sciences, Saudi Arabia's WFC remains modest compared to big players in Asia like China, Japan and South Korea.
“Saudi Arabia could look to some successful emerging economies for inspiration.”
To truly swim comfortably with these bigger fish, Saudi Arabia may benefit from looking at successful emerging economies in Asia.
One inspiration could be India. In addition to multi-disciplinary scientific and technical advancements that have improved its output in the index from 736.5 to 901.4 in the past four years, the subcontinental giant has joined the exclusive club of countries that have launched successful space missions.
Like Saudi Arabia, India's leading research institutes focus on chemistry, and their total output currently outstrips their Saudi Arabian counterparts by almost a factor of seven (the latter surpassing 472 in 2015, while the former is 66.5).
India's prowess in chemistry is something that Saudi Arabia can aspire to, considering that working conditions for researchers in the Kingdom are more conducive.
India's science ecosystem is far from perfect. Research funding cannot keep up with inflation and a general slowdown in the country's economy. In addition, commentators from the research community say the funding processes are lengthy, bureaucratic, and provide little feedback when applications for grants are turned down. Meanwhile, Saudi Arabia's healthy stream of oil revenue provides assured funding for the country's state-of-the-art research facilities.
While India has slightly increased spending and dedicated US$1.19 billion for the next fiscal year (2016–2017) for science, it has around 700 universities and 200,000 full-time researchers drawing on the same funding pot. By contrast, Saudi Arabia has pledged an education and training budget of US$50.9 billion for next year, which includes higher education and scientific research. With a total population of just 30 million, it has a much lower number of full-time researchers competing for the available resources.
Another impressive trajectory that Saudi Arabia might look to emulate is that of Singapore, which has a smaller population as well and has managed to climb high in the index. Like the Kingdom, Singapore also has a focus on chemistry research, and it has put together a similar top-down national science strategy for research institutes across the country. Both countries have strong collaborations with top universities around the world and are welcoming of foreign researchers in their efforts to drive innovation.
Mansour Alghamdi, director of the general directorate of scientific awareness and publishing at KACST, is optimistic that Saudi Arabia can bridge the large gap that currently exists in the volume of scientific output between it and such countries as India and Singapore.
“The Kingdom of Saudi Arabia has a clear plan to do so and it has the resources,” he says.
Future growth
An internationally rising star This graph shows KAUST's rise compared to a selection of other institutions*. *Institutions shown are those that were furthest above KAUST in 2012, have experienced overall growth in WFC by 2015 and have been overtaken by KAUST in 2015. For clarity, only 2012 and 2015 data points are shown.
In 2012, Saudi's ranking in research output, with a WFC of 52.8, meant it was comparable with countries like South Africa, Turkey and Iran, all hovering around the 60–70 mark. Its WFC stood way below countries like Mexico, Hungary, Chile, Greece and Argentina.
Saudi Arabian researchers benefit from cutting-edge labs and generous funding that has boosted the country's R&D. Image: Top: KACST; Bottom: KAUST
Four years later, the country's research outlook is very different and it is surpassing countries like Argentina, Mexico and Hungary in the index, and levelling the playing field with Chile. Chemistry research led the country's rapid rise to surpass these countries, but its life sciences and physical sciences WFCs of 8.5 and 31.5 still lag behind.
However, the Kingdom's AC has been steadily growing in these two fields over the past four years, hinting at the ever-increasing significance of international collaborations. It seems that Saudi Arabian researchers are casting their nets ever wider and are participating in publishing more articles, to the detriment of the WFC accredited for these articles.
Though international collaboration has proved fruitful, Saudi Arabia must keep a focus on nurturing home-grown talent, says Nasser Al-Aqeeli, dean of research at King Fahd University of Petroleum & Minerals (KFUPM), based in Dhahran's 'techno valley' in the eastern region of the Kingdom. In the next five years, he says, the country will focus on a programme for national capacity building.
A good first step was the Saudi government's decision to create a large scholarship programme in 2005, arguably the largest in the world, which has seen more than 200,000 young Saudi Arabians studying abroad. This makes Saudi Arabian students in the United States the fourth largest bloc of expatriate students, following those of China, India and South Korea. The government hopes these students will come back and drive a scientific culture in the country.
“Its rise up the ranks depends on a 'self-correcting mechanism' of a slow start to sustainable growth.”
Saudi Arabia is also looking to increase its applied research focus, which is an integral part of the current phase of its national science strategy, while securing good funding for basic research as well. Al-Aqeeli says that Saudi's journey involves what he termed a “self-correcting mechanism” where the country is having a slow start in high-impact research, but a more sustainable one. An eventual future move towards basic research might help Saudi Arabia's research capacity to mature.
https://www.nature.com/articles/532S13a
And just last month we reached top 29. Meaning we are among the 15% best performing nations out of almost 200. Great stuff and we are just at the early beginning relatively speaking.
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Contradictory reports won’t stop Saudi economic reforms
FAISAL MRZA
August 30, 2018
The news agency Reuters carries at least one article daily about Saudi Arabia. In recent articles, negative quotes about the Kingdom have come from “a former senior Western diplomat,” “a senior banker,” “a senior financial adviser,” and “senior industry sources.” Apparently, named sources are now optional in news reports — at least for Reuters.
It was no surprise then that on Aug. 22, the agency put out an “exclusive” story that quoted unnamed “sources” advising that Saudi Aramco’s initial public offering (IPO) was halted. This was contradicted, in the same report, by quotes from the Saudi energy minister in which he denied that the IPO had been called off.
Reuters followed up its initial report on the supposed cancellation of the Saudi Aramco IPO with a second story two days later. In that story, the news agency ran negative quotes concerning the crown prince from an analyst at a Canada-headquartered financial institution, a blogger with a proven record of animosity toward the Kingdom, and an unnamed former senior Western diplomat. The accusations put forward in the Reuters story included personal slights couched in innuendo.
The second story about the supposed cancellation of the Aramco IPO was extremely strange. The headline was negative and the report was peppered with bleak commentary. Yet to make the writing seem fair and balanced, the authors were forced to include facts which showed the Kingdom in a positive light. For instance, the article mentioned that “the reform program was far bigger than the Aramco IPO,” “many changes could still go ahead, or even accelerate,” “the state budget deficit has narrowed sharply,” “MSCI and FTSE Russell decided this year to add Saudi Arabia to their emerging market equity indexes,” and many more positive developments.
Despite all this unprecedented economic movement, it seems that some reporters are working to fulfil an agenda attempting to show that Saudi Arabia is failing in the great national economic reforms.
Faisal Mrza
Reuters’ articles doubting the social and economic reforms of the crown prince’s Vision 2030 program came just after the International Monetary Fund (IMF) released a report praising the economic reforms adopted by the Kingdom and encouraging the government to do even more. The IMF stressed that the continuation of the reforms will help the government achieve fiscal goals and stimulate non-oil income growth, which is the main strategic goal of Saudi Vision 2030.
“Fiscal reforms are continuing,” the report said, adding that “efforts are ongoing to improve the business environment, develop a more vibrant SME sector, deepen the capital markets, increase the involvement of women in the economy, and develop new industries with high potential for growth and job creation.”
The IMF pointed out that the last period witnessed good growth in the Saudi economy coupled with successful control of inflation. The IMF also praised the Saudi move to amend the fiscal balance program and extend it to 2023. The IMF noted that “reform momentum remains strong under Vision 2030. New reform initiatives are being rolled-out under the Vision Realization Programs (VRPs).”
The IMF remarks illustrate Saudi Arabia’s progress since the introduction of Vision 2030. The Kingdom is trying to boost private-sector growth and maximize the assets of the Public Investment Fund (PIF), which amounted to SR840 billion ($224 billion) at the end of 2017, compared to SR570 billion in 2015. The goal is to double the assets of PIF to SR1.5 trillion by 2020.
The PIF Program (2018-2020) is one of the Kingdom’s 12 Vision 2030 VRPs. The program acts as a roadmap for the next three years to strengthen PIF’s position as the engine behind economic diversification in the Kingdom and its role in transforming Saudi Arabia into a global investment powerhouse. PIF aims to complement private sector development in the Kingdom through its new domestic investment, split between PIF’s Saudi Holdings, Saudi Sector Development, Saudi Real Estate & Infrastructure Development and Saudi Giga-Projects.
PIF recently raised an $11 billion international bank loan which was massively oversubscribed by eager lenders. Reports are that Blackstone Group LP is nearing a first close of $5 billion for its inaugural infrastructure fund to which PIF pledged a dollar-for-dollar commitment, up to $20 billion.
PIF has substantial investments in SABIC, Saudi Telecom, National Commercial Bank, the Saudi Arabian Mining Company (MAADEN) and Saudi Electricity. It also has interests in Uber and SoftBank Vision Fund, among others, and is involved in the Red Sea Project, NEOM and Qiddiya developments. All its new initiatives are designed to diversify the fund’s investments, in line with the goals of Vision 2030.
In its report, the IMF mentioned that the Saudi government should continue to work on clearly defining its fiscal objectives. Its focus must be on strengthening fiscal strategy planning, enhancing fiscal reporting and monitoring, and strengthening budget execution. The report also recognized the government’s policies to reduce the large fiscal deficit, strengthen the budget process and the fiscal framework, and increase transparency. The IMF report is a reliable reference for those looking for the truth.
Despite all this unprecedented economic movement, it seems that some reporters are working to fulfil an agenda attempting to show that Saudi Arabia is failing in the great national economic reforms put forward by Vision 2030. Their articles repeatedly question whether the Kingdom can meet its stated goals — with no evidence to the contrary. Such articles are deliberate attacks that aim to sow doubt about Saudi prosperity and the potential of the Kingdom’s young population to thrive.
• Faisal Mrza is an energy and oil market advisor. He was formerly with OPEC and Saudi Aramco. Reach him on Twitter @faisalmrza
Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News' point-of-view
http://www.arabnews.com/node/1364161
IMF Raises Saudi Arabia GDP Forecast, Non-Oil Growth Gains Momentum
- 27-Aug-2018
- James Lee
By B.alotaby [CC BY-SA 4.0 ], from Wikimedia Commons
The International Monetary Fund (IMF) has raised the economic outlook for Saudi Arabia, even as it urged the country to rein in its public spending.
According to a report released by the IMF on August 24, Saudi Arabia’s real GDP is expected to increase by 1.9% on the back of robust non-oil growth, which is projected to strengthen by 2.3%. This rally looks to continue throughout the medium term as oil output increases while the price of the commodity maintains its rise.
Oil prices hit an average of $74 per barrel in July 2018, rebounding after major producers jointly cut output in late 2016. Despite near-term volatility in prices due to concerns over the escalating U.S.-China trade war and slowing global demand, the price recovery has nevertheless come as a boon for Saudi Arabia.
According to the Finance Ministry, the hike in oil prices has fueled a 67% increase in government revenues for the second quarter of 2018.
Another beneficiary of the increased oil export revenues has been the current account balance, which is expected to post a surplus of 9.3% of GDP. Additionally, the fiscal deficit is projected to decline, falling to 4.6% of GDP in 2018 and then to 1.7% in 2019.
The introduction of Value Added Tax (VAT) has been cited as a major driver in closing the spending gap.
The positive figures come as the economic reforms under Vision 2030 continue to gain momentum.
“Fiscal reforms are continuing,” the report said, adding that “efforts are ongoing to improve the business environment, develop a more vibrant SME sector, deepen the capital markets, increase the involvement of women in the economy, and develop new industries with high potential for growth and job creation.”
However, the IMF also cautioned against increases in the Kingdom’s public spending fueled by the rise in oil prices. Continued expenditures could expose the country to market fluctuations, and the Fund stressed the importance of maintaining a budget that can uphold “a sustainable level throughout different oil price environments.”
While the overall unemployment rate among Saudi nationals saw a slight increase to 12.8%, the female unemployment fell to 31% in 2017.
According to the IMF, addressing the challenge of unemployment would require “setting clear expectations about employment prospects in the public sector, reforming the visa system for expatriate workers, strengthening education and training, and addressing remaining constraints to female employment” in addition to the ongoing reforms.
Meanwhile, Saudi Arabia has laid out a medium-term consolidation path with the goal to balance its budget by 2023. Riyadh had posted a budget deficit totaling $260 billion during the past four consecutive years.
https://www.forbesmiddleeast.com/en/imf-raises-saudi-arabia-gdp-forecast/
Non-oil exports amount to 35-40% nowadays and are growing quickly each month.
https://atlas.media.mit.edu/en/profile/country/sau/
A third of Saudi Arabian businesses eye more than 10% growth this year
Annual EY survey reveals optimism among middle-market business leaders
Kelsey Warner
September 9, 2018
Updated: September 9, 2018 04:52 PM
FILE PHOTO: Cars drive past the King Abdullah Financial District, north of Riyadh, Saudi Arabia, March 1, 2017. REUTERS/Faisal Al Nasser/File Photo
A third of middle-market businesses in Saudi Arabia expect growth in excess of 10 per cent this year, according to a survey by consultancy EY.
Businesses in the kingdom, the Arab world’s largest economy, are more optimistic about revenue growth and business opportunities than last year, according to the EY Growth Barometer, an annual survey of growth strategies among entrepreneurs and middle-market leaders. The Vision 2030 reforms set by Crown Prince Mohammed bin Salman look to increase private sector participation and are spurring optimism among business leaders, according to the survey.
Saudi Arabia is pressing ahead with its economic reform agenda with an emphasis on developing the country’s non-oil sector. Riyadh is encouraging foreign investors to help the kingdom build local industries and invest in projects such as the $500 billion Neom, a futurist mega-city scheme launched by the crown prince last year. Among the reforms the kingdom has already implemented as part of its Vision 2030 economic transformation strategy are the introduction of a 5 per cent VAT rate in January, far-reaching reforms to its capital markets and the enactment of new bankruptcy legislation last month to support corporate financial restructuring.
Regulation emerged as a new force in stimulating innovation and revenue growth. More than one third (35 per cent) of Saudi Arabian respondents consider regulation to be the top driver of innovation, up 28 percentage points compared to last year.
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Read more:
532,000 business licences issued in the UAE since start of year
Bahrain approves rules allowing foreign firms to set up independent subsidiaries
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“Contrary to the common belief that regulation stifles growth and innovation, Saudi executives believe that reforms set by the crown prince have been driving change and growth in the kingdom,” said Fahad Altoaimi, EY’s managing partner for Saudi Arabia.
While executives remain confident about growth, they report insufficient cash flow as the biggest challenge to expansion this year. About a third of Saudi companies surveyed currently rely on bank finance for funding.
More business leaders are looking to raise capital through capital markets, with about 73 per cent of executives considering an initial public offering. The kingdom’s Tadawul market is the largest stock exchange in the Arab world with a market capitalisation of more than $500 billion.
Raising funds is crucial to the expansion of businesses, as the survey found 29 per cent of respondents expressing an interest in widening their international reach. Some 58 per cent of respondents are looking to recruit more full-time staff.
https://www.thenational.ae/business...es-eye-more-than-10-growth-this-year-1.768476
Saudi Arabia to restrict 43 retail professions to nationals starting September 11
Employment in 12 sub-categories in retail sector will be restricted to Saudi nationals only as government aims to create jobs
The Riyadh skyline. Saudi Arabia is restricting some retail jobs to nationals only to boost Saudis employment. Faisal Al Nasser / Reuters
Saudi Arabia’s decision to restrict 43 professions in the retail sector to its nationals will be implemented on September 11 as part of the government’s effort to reduce unemployment among its young population.
The labour ministry will restrict employment in 12 retail sub-sectors to Saudi nationals over three phases starting September 11, according to the Saudi Ministry of Labour and Social Development. More than 40 types of retail professions including in cars, clothes and furniture will be off-limits to expats.
“Those who violate the decision that aims to replace foreign workers with Saudi workers in these activities will be subject to penalties mentioned in the Law,” the ministry said in a statement on its website.
Saudi Arabia is targeting the retail sector to tackle unemployment, which currently stands at 12.8 per cent, underscoring the challenge to create jobs as the economy recovers from the worst slowdown since the 2008 global financial crisis.
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Read more:
Saudi GDP growth to recover on higher oil price, says IIF
Saudi Arabia’s consumer sector is improving, says BMI
IMF expects GCC economic growth to pick up
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Starting September 9, more professions in other sub-sectors were scheduled to be prohibited to expats including in shops selling watches and electrical appliances, according to the labour ministry’s website.
Next year, from January 7 onwards, forty-four designations within five other sub-sectors will be open to Saudi workers only including in medical supplies and equipment, auto parts, building and construction materials, carpets, bikes and confectionery shops.
“The move comes as part of the Ministry of Labor and Social Development’s efforts to empower Saudi men and women in the workforce and raise their participation in the private sector,” the ministry said.
Job creation is a key priority for the kingdom’s Crown Prince Mohammed Bin Salman, who is spearheading the country’s plan to wean the economy off its reliance on oil. Under the National Transformation Plan, the government is aiming to reduce unemployment of its nationals to nine per cent by 2020, according to the NTP website.
Saudi is also targeting to increase women’s participation in the labour force from 22 per cent to 30 per cent over the next 12 years as part of its ambitious program to diversify the economy.
With two-thirds of Saudis employed by the public sector, the government is targeting job creation in the private sector.
“As Saudisation has been an integral pillar of government policy, efforts aimed at increasing national participation in the workforce are likely to continue until lower rates of unemployment exist amongst nationals,” Murtaza Khan, partner at law firm Fragomen Worldwide, said.
Other GCC countries also have nationalisation initiatives relating to the work force that have implemented a hiring freeze or reserved certain jobs in the private sector for their citizens.
https://www.thenational.ae/business...s-to-nationals-starting-september-11-1.768493
In-Line with Achieving Vision 2030: the Saudi Stock Exchange (Tadawul) Launches Derivatives Market in the First Half of 2019
September 04, 2018
The Saudi Stock Exchange (Tadawul) will introduce exchange-traded derivatives in the first half of 2019. Tadawul will launch an index futures contract based on the tradeable index jointly developed with MSCI. Introducing derivatives is part of the Vision 2030 Financial Sector Development Program. It also reflects Tadawul’s commitment to create new opportunities for investors, as well as, to increase institutional investors’ participation in the Saudi market. In June 2018, MSCI, as part of its annual global market classification review, announced the classification of the Kingdom's equity market as an Emerging Market. The planned launch of a derivatives market in Saudi Arabia follows this and others recent significant market developments, including facilitating clearing services and faster settlement cycles, introducing securities borrowing and lending, as well as, covered short-selling frameworks for the first time in the region. The Index will be based on the broader MSCI Saudi Arabia index series that will be part of the MSCI Emerging Markets Index. The joint tradeable index will be available in Q4 2018.
Improved Economic Outlook in Saudi Arabia
The data showed that credit to the private sector climbed for the fourth consecutive month in July while consumers also spent more, with point of sale transactions up by about a quarter on a year earlier.
Cash withdrawls from ATM machines also rose more than 12 percent on a year earlier.
“We continue to believe that steady oil prices and higher oil output coupled with better non-oil growth will aid the Kingdom’s economic recovery this year,” Al-Rajhi said in a note to clients.
The rebounding oil price has improved economic sentiment in the Kingdom and boosted expectations for economic growth.
“In addition, the Public Investment Fund’s first commercial loan worth $11 billion is likely to provide a boost to government spending, thereby helping the Kingdom to transform the economy in future,” Al-Rajhi said.
Last month the IMF said it expected real GDP growth to increase to 1.9 percent in 2018 with non-oil growth strengthening to 2.3 percent.
The IMF was broadly upbeat on the Saudi banking sector with credit and deposit growth although weak, expected to strengthen due to higher spending and non-oil growth.
Bank profitability was also expected to increase as interest margins widen and banks remain well capitalized, the lender said.
https://www.saudiarabianews.media/i...m_source=dlvr.it&utm_medium=twitter#gsc.tab=0
Saudi Vision 2030: The opportunities in healthcare
Nathan Nagel, CEO of the Middle East Medical Portal, highlights the opportunities being presented to foreign healthcare companies
The Kingdom of Saudi Arabia accounts for around half of the GCC’s $1.6trn economy, making it the biggest market in the Arab world and the 19th-largest worldwide. Known for its rich oil reserves, the likes of which have allowed Saudi to remain the world’s biggest oil supplier for decades, times are now changing. On a global scale, tumbling oil prices and subsequent OPEC cuts in oil production over the last two years have dealt heavy blows to Saudi’s economy.
With this in mind the kingdom is shifting from a dependence on oil by restructuring its economy – including the privatisation of healthcare. According to theWorld Health Organisation (WHO), Saudi Arabia’s public health sector is ‘overwhelmingly financed, operated, and monitored by the Ministry of Health (MoH).’ With 2,390 healthcare centres and 279 hospitals there are significant needs to be met.
However, the ministry faces an uphill struggle due to an ageing population. The kingdom’s existing healthcare model will be unable to meet the future healthcare needs of its population. Nor is it sustainable on an operational or financial level.
Large-scale issues include a system which needs an overall quality overhaul and a lack of primary healthcare, the latter of which has resulted in over-stretched services at the tertiary level. According to data from the Open Journal of Emergency Medicine, the average waiting time to be seen at a hospital is three hours, with a quarter of patients waiting more than four.
Source: Saudi Arabian Monetary Agency, Annual Statistics 2016
Furthermore, there are the medical challenges: Saudi Arabia has one of the highest rates of obesity worldwide, with some 80% of its population categorised as such according to data from The Lancet. Provisions will need to be made for the future health complications brought on by an overweight population.
Another key challenge is the fragmentation of provision of care, which has resulted in a silo approach to delivery of healthcare services. Saudi health officials also lack data to help them create an accurate picture of outcomes and costs, and gaps within the country’s education system mean there are not enough healthcare graduates entering the workforce. However, changes are being made. In April 2016 the government announced Saudi Vision 2030, an initiative to transform the kingdom’s economy and pull away from a dependence on oil.
In the meantime the Saudi Cabinet also launched the National Transformation Programme 2020 (NTP). Revealed in June 2016, NTP will assess the progress of Vision 2030, of which one of the key focus areas is healthcare.
The NTP has an objective of increasing private healthcare expenditure from 25% to 35% of total expenditure by 2020. This represents an annual increase in healthcare revenue from SAR3bn to SAR4bn. In addition, the MoH plans to spend more than SAR23bn on new initiatives over the next five years, with the NTP having identified the following strategic objectives for the ministry and the Saudi Food and Drug Authority.
Innovations in digital healthcare are another key part of Vision 2030, with the MoH aiming for at least 70% of citizens to have unified digital records by 2020. It is also hoped that improvements in IT will strengthen the quality of services offered by healthcare providers.
‘Foreign pharmaceutical manufacturers are being actively encouraged to establish plants’
The NTP also places a great deal of emphasis on healthcare education and training, with plans to link up with world-renowned institutions and increase public-private partnerships in order to increase homegrown talent. There is a recognised need for qualified Saudi healthcare practitioners and support staff as healthcare requirements increase. At present the sector is mostly supported by expatriate workers.
Saudi Arabia is mostly dependent on imports for its pharmaceutical requirements and there is a need for medicines to be manufactured locally to ensure a constant and adequate supply.
Foreign pharmaceutical manufacturers are being actively encouraged to establish plants in Saudi Arabia through public-private partnerships and joint ventures with national entities. Incentives are being offered in the form of preferential treatment in future volume tenders. As an additional incentive, foreign pharmaceutical manufacturers already operating in Saudi Arabia can distribute and sell medicines themselves, whereas imported pharmaceuticals can only be distributed through a local distributor.
Currently the majority of medical devices and equipment are manufactured abroad and are imported into the country. The Ministry of Health is supporting
local manufacturers by partnering multinationals with Saudi companies with the incentive of guaranteed volumes for Ministry of Health purchases and preferential treatment in future volume tenders. Furthermore, foreign owned manufacturers within Saudi Arabia have the additional benefit of being able to distribute and sell medical devices within the country without the need of a local distributor.
To discuss these opportunities further, please contact Nathan Nagel, CEO, of Middle East Medical Portal.
Vision 2030 and the NTP also present major opportunities for foreign companies looking to enter the healthcare market by allowing them the ability to:
- Establish medical facilities;
- increase medical insurance;
- use local information technology;
- receive healthcare education;
- access improved training facilities;
- provide professional development; and
- manufacture medicines using local pharmaceuticals.
Saif al-Arab
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Saudi Arabia’s Promising Logistics Role
The kingdom has begun to diversify its non-oil economy. Launching rapidly an ambitious path to become a leading logistics hub in the Gulf area and its environs.
In April 2016, Saudi Arabia has announced its Vision 2030.One of the most important pillars of this vision is to transform the Kingdom into the preferred logistics hub in the area, capable of trade paths effective connectivity between three continents - Asia, Europe, and Africa. Today, about 18 months since the launch of the vision, this path started to be clear with efforts continue to make imports and exports processes more streamlined. Restructuring the regulations and structures logistics sector government and opening the way for market liberalization and private sector participation. Public-private partnerships are formed to finance infrastructure and attract the skills from the experts. Thus, by 2030, Saudi Arabia is expected to be among the most important logistics hub in the area.
Establishing a global logistics hub
Saudi Arabia's insistence to become a leading logistics hub in the area is based on its economic weight and its particular geographical location. The Kingdom have the largest economy in the Arabian Peninsula, Levant and Iraq. Which contribute about 38% of gross domestic product and 21%of the population in this area. Its central location is ideal for the distribution to Arabian Peninsula, Levant, and East Africa. Also, it is located directly on the Asia-Europe trade route, which 12% of the container trade passes annually. (see Figure 1).
Saudi Arabia aims to take advantage of these strategic assets and turn to the best and lowest cost option for distribution to the Arabian Peninsula, Mashriq, Levant, and East Africa while improving the logistic service quality, infrastructure and tracking services to global levels. Figure 2 shows Saudi Arabia's position on the Logistics Performance Index (LPI). That is issued by the World Bank, and the levels that must be reached to achieve the goals set.
The Kingdom strategy and the early gains
TTo achieve its vision to become a logistics hub, the Kingdom launched a program of nine initiatives to promote the logistics service sector (see Figure 3).
Figure 3:: Saudi Arabia logistics sector improving program
1. Imports and exports. Saudi Arabia was able to reduce time and cost, as well as increase the regularity in the import of goods and merchandise by re-engineering the process and relying more on mechanization. The average time of customs clearance in seaports declined by half to 2.2 days and at airports to 1.2 days; The number of paper documents to be attached to import and export work also fell by 75 per cent (see figure 4).
Figure 4: Early gains of Facilitating the customs operations
TThe degree of regularity in the clearance process has improved significantly, with 40% of customs data being released at seaports within 24 hours, and 70% within 48 hours.These results were achieved after the application of data submission before the arrival of shipments system , and the use of technology in clearing the data, increasing customs work hours to 24/7, reducing the level of manual inspection by promoting the risk management process and increasing the cooperation and integration of government authorities that involved in the import / export process.
2. Digital transformation. Technology helps to improve security and transparency in import and export operations. Today, importers can track the case of their cargo and its current location moment by moment. Customs brokers also receive electronic notifications on their mobile phones regarding the case of their shipments, as well as notifications before their shipments arrival, to notify that the shipment statement is available on the portal and thus the possibility of initiating customs data procedures .Newly , the Kingdom has launched the marine ports system to ensure the exchange of information are safe and effective, this system includes operations carried out on board ships, and operations in ports, digital payment, management of trucks and so on . A similar system for airports is being developed now.
3. Transportation and infrastructure. : Saudi Arabia has developed a new main plan for infrastructure in the transport sector that aimed to improve the quality, safety and efficiency level of the sector. The plan aims to develop the infrastructure, including the land bridge project, which will link between east and west coasts of the Kingdom, and a new two tracks which are the railway line, that will link between the GCC countries in the east, and Yanbu- Jeddah in the west (passing through King Abdullah port - King Abdullah Economic City ).Soon enough, new multi-mode logistics stations to meet the increasing demand for interconnections between the sea, the air and between railways and land.
4. Air cargo. . Saudi Arabia is currently upgrading its airports and expanding air cargo facilities to overcome issues caused by the Limited capacity of specialized facilities to air cargo. The objective is to increase the total of specialized capacity for air cargo in the Kingdom from 0.8 million tons / year at present to 6 million tons / year in 2030.
5. -Laws and Regulations. . If Saudi Arabia hopes to attract more competition and participation from the private sector, regulations and laws must be able to meet international standards .The Kingdom is well aware of this, and it will not be long before the customs brokers career becomes available to those who in the manufacturing and logistics sectors, which is a major step towards achieving the required professionalism level .Licensing laws for land transport services and warehouse operators are subject to review in an effort to improve efficiency, quality and safety standards .
6. -Maritime Ports Significant efforts are under way to improve efficiency and quality of service in maritime ports by increasing the level of port privatization, reforming the governance process, and modernizing concession frameworks .The establishment of the concerned company with the organization of the new ports at the beginning of efforts to privatize and institutionalize on the port sector. The company is currently reviewing the concession frameworks to make it more transparent, fair and attractive to operators of international terminals (Who they already enjoying with the firm global position in the Kingdom), As well as for local operators, who are constantly increasing in this time
7. The Railway Sector . is undergoing a similar reforms Last year, the regulatory side of the property was separated and outsourced to an independent regulator ( Public Transport Authority - Railway Sector ).The government is currently integrating the managing all railway operations and planning for the operation and maintenance contracts for freight and passenger services for internationally experienced operators .In the future, new infrastructure in the railway sector could be financed through public-private partnerships.
8. Private sector. The Kingdom has recently franchising a number of private companies to manage operations in some airports to develop and operate a number of services. These airports include King Abdulaziz International Airport in Jeddah and the new cargo terminal at King Fahad International Airport in Dammam .at the moment, plans are under way for King Khalid International Airport in Riyadh to increase private sector participation.
9. Special economic zones. Saudi Arabia aims to reduce costs and reduce issues to business activities, trade support forms, and attracting foreign direct investment. Plans are under study for the development of a number of new special economic areas characterized by convenient procedures for commercial activities, positive tax policies, areas for customs warehouses, and efficiency in linking transport.
New points attract the kingdom economic through promising investments
Saudi Arabia has a central location and a large economy, which is an individual advantage that qualify to transform the Kingdom into an important regional logistics hub. However, since only size and location can be relied upon, the Kingdom has embarked on a program to improve the logistic services, including streamlining of imports and exports, improving infrastructure, governance reform and regulatory aspects, and liberalization and privatization of the market. the Kingdom has already been able to make early gains, including reducing the period of customs clearance, customizing the customs process, expanding the capacity of major transport assets and awarding many concession contracts to private operators. The Kingdom will not stop there. As the logistics sector gains more strength and volubility investors are still looking at opportunities in the sector.
https://mot.gov.sa/en-us/AboutUs/Pages/KSALogisticHub.aspx
Full report:
https://mot.gov.sa/en-us/AboutUs/Documents/KSALogisticsEN.pdf
Saudi Arabia prepares for life after oil as it sinks billions into tech
But, while non-oil revenue is increasing, income from crude exports remains the linchpin of Saudi Arabia's economy
Bloomberg News
Arif Sharif
August 13, 2018
11:03 AM EDT
The world’s biggest crude exporter is attempting to future-proof itself against oil’s decline by investing in futuristic technologies.
Saudi Arabia has accumulated a stake in electric carmaker Tesla Inc. for about US$2 billion through its Public Investment Fund and aims to be part of any investor pool that emerges to take the company private. That’s on top of a US$3.5 billion investment in ride-sharing company Uber Technologies Inc., a US$45 billion commitment to SoftBank Group Corp.’s US$100 billion technology fund and a planned investment of about US$1 billion in Virgin Group’s space companies.
Neom, a planned US$500 billion futuristic city that it’s hoped will host more robots than people on a desolate peninsula in the kingdom’s northwest is also part of the plan. The metropolis will have a link “with artificial intelligence, with the internet of things — everything,” Crown Prince Mohammed bin Salman said in October, when Neom was announced. The project includes a bridge spanning the Red Sea, connecting the proposed city to Egypt and the rest of Africa.
While the International Energy Agency sees oil demand rising more than 10 per cent to 103.5 million barrels a day by 2040, advances in vehicle efficiency, the rise of electric cars, tighter emissions standards and shifts to other fuel sources would result in crude demand much lower than the industry is banking on. About 60 per cent of oil is used in transportation, which is also where the biggest technological changes are emerging.
THREE DAYS
Still, the move away from oil is by no means a sure thing. While non-oil revenue is increasing, income from crude exports remains the linchpin of Saudi Arabia’s economy.
The kingdom’s US$2 billion investment in Tesla is equivalent to less than three days of what it earns selling oil overseas at current prices and output levels, according to Bloomberg calculations based on U.S. Energy Information Administration data. As for the Neom metropolis, critics of the plan point to past failed attempts to overhaul the Saudi economy that also included industrial cities in the desert.
Diversifying the biggest Arab economy away from oil is central to the government’s Vision 2030 program and investments by its sovereign-wealth fund are a key component. The government has called for shares to be sold in state oil company Saudi Aramco and for the PIF to become the world’s biggest sovereign-wealth fund, ultimately controlling more than US$2 trillion.
As part of its Virgin Group deal, the PIF will invest in Virgin Galactic LLC, The Spaceship Co. and Virgin Orbit LLC and have the option to invest an additional US$480 million in the group’s space services, it said in October. Saudi Arabia plans to support the ventures’ plans for human spaceflight and launching satellites into orbit and may cooperate with Virgin to create what the kingdom called a “space-centric entertainment industry” in the country.
The investment reflects the strides Saudi Arabia is making toward a “diversified, knowledge-based economy” by investing in “those sectors and technologies that are driving progress on a global scale,” the Crown Prince said when announcing the deal.
Bloomberg.com
https://business.financialpost.com/...life-after-oil-as-it-sinks-billions-into-tech
The present is already better than 90% of the world's 200 countries in terms of economic size (GDP) (G-20 member state), GDP and PPP per capita, HDI, living standards, law and order, stability, infrastructure, healthcare, KSA being one of the largest welfare states in the world, educational level etc.
However the future will be even significantly greater if just 50% of the plans materialize in relation to Saudi Vision 2030 which everything points to being the case.
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Saif al-Arab
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An interesting article.
Hani Alsaleh
Hani Alsaleh is the acting CEO of Arabian Hala Co. He has 15 years of experience in the #Logistics and #transportation industry www.hala.com.sa
Sep 13
Saudi Arabia’s Economic Initiatives Relative To Economic Schools Of Thought
Reading an article in The Economist about economic theory provoked my thoughts as to how these theories are applied to the Saudi economy. In this article, I will very briefly explain two main schools of thought in economic theory, Keynesian & Classical (Liberal), and compare them with what Saudi Arabia’s economic school of thought follows.
Keynes (creator of Keynesian economic theory) was an advocate for the liberal economic school of thought. He once stated that “there is social and psychological justification for significant inequalities of incomes and wealth.”
He later changed after living through the great depression as he believed the price is too high for the government not to get involved.
His general explanation for economic prosperity is that the more the population spends, the greater the economic prosperity. Spending allows for increased production that creates more jobs that intern allows for more spending. He argues that countries can spend their way to prosperity, or on the contrary, underspend their way out of it. He believed that if the economy is left to its direction when underspending happens, assets become cheaper as well as diminishing production and employment, resulting in a dangerous cycle that could be extremely vicious. He advocated that the government should initiate demand by investing specifically in equipment, factories, buildings, etc., especially large ambitious works. This is especially powerful when private sector investment is too low as it stimulates the economy.
Another idea that he endorsed was to apply taxes and social insurance during economic growth times and reduce them during difficult times. The benefit of this strategy is that its effect is instantly compared to the planning and scaling up to implement the investment in large-scale projects.
Liberals argue that economic slumps are a result of misdirection of funds rather than the number of funds and thus more liberalism (i.e. let wages fall as much as necessary, flout the currency, privatize government assets) is required to allow an economy to recover. They believe that the recession is a cure to this misdirected investment and thus suggest as much liberalism as possible as the answer. They also are against any government stimulus in terms of fiscal policy maneuvering.
Saudi Arabia’s Current Economic Strategy
Since the 70’s the Saudi economy has been relying on government spending, pegging the SAR to the dollar, and providing subsidies. It was a Keynesian approach to dealing with the economy considering that subsidies are the inverse of taxes but are similar stimuli. Moving forward to 2016, which was a year when the heavy government spending reliant economy couldn’t be sustained anymore. (As per the Minister of Planning, in three years the government would be broke). The government halted a substantial size of subsidies, introduced new taxes, limited the fluidity of the labor market, and reduced the money in the financial sector. The economy basically starved as spending was seriously compromised.
So, what would the two schools of theory recommend to get out of this economic depression?
Liberals would argue that spending is misdirected and the government is too intrusive. They would argue that the solution would be to flout the oil company on the stock market, stop subsidies, stop the currency peg, liberate the labor market, and redirect government spending as efficiently as possible.
Keynesians would argue to stimulate demand by increasing spending in the economy, reduce taxes (increase subsidies), and watch as the economy spends its way to prosperity.
Interestingly, after decades of extreme Keynesian direction, the government has started to adopt liberal initiatives to deal with the economy. However, its traditional Keynesian methodology is still strongly in place. Meaning they still maintain a strong controlling influence on the economy and as things are progressing, it seems they will continue to do so.
The liberal initiative that the government has adopted was to redirect its spending to more efficient assets to stimulate the economy through PIF, the government investment arm. While the traditional private sector is starved of spending, a large amount of investment is redirected toward new industries through PIF. The private sector investment is slowly following the PIF but at a much smaller scale since it lacks a lot of liquidity. Other aspects of the economy are pure Keynesian, especially the tightening of the labor market.
An interesting question that has surfaced: has the government funds under PIF management gone to more efficient assets as what is required by a classical economic direction? This question is very critical because a large part of its investments have happened outside of Saudi Arabia. Keep in mind that this is part of the story as the largest planned investment by PIF, Neom (the futuristic city in the north of Saudi Arabia) is still at the planning phase and probably won’t show any significant spending until a few years down the road. Other major liberal initiatives that have been announced (ARAMCO IPO, health sector privatization, education sector privatization) have not happened and as the details develop further, it seems that they will take a while if happen at all.
Saudi Arabia has adopted some libertarian economic approaches but still is as Keynesian as ever. The questions are how far will they go with the liberal direction? Will they follow through with the announced privatization projects? Will we see the free labor movement? Will we see opening up of the banking sector? Would we even dare to go so far as to ask if they would unpeg the currency? These questions are very critical as they challenge the current thinking of these two schools of economic theory. We should never underestimate the Kingdoms tenacity for change, as evident by the fast social changes that happened over a period of one year, but we should consider that the government is very comfortable in controlling the social structure of the country and might not want to step too far in the other direction worrying, as Keynes did after the great depression, when he said “the price of liberalizing the economy is too high a cost for social stability.”
Hani Alsaleh
Hani Alsaleh is the acting CEO of Arabian Hala Co. He has 15 years of experience in the #Logistics and #transportation industry www.hala.com.sa
Sep 13
Saudi Arabia’s Economic Initiatives Relative To Economic Schools Of Thought
Reading an article in The Economist about economic theory provoked my thoughts as to how these theories are applied to the Saudi economy. In this article, I will very briefly explain two main schools of thought in economic theory, Keynesian & Classical (Liberal), and compare them with what Saudi Arabia’s economic school of thought follows.
Keynes (creator of Keynesian economic theory) was an advocate for the liberal economic school of thought. He once stated that “there is social and psychological justification for significant inequalities of incomes and wealth.”
He later changed after living through the great depression as he believed the price is too high for the government not to get involved.
His general explanation for economic prosperity is that the more the population spends, the greater the economic prosperity. Spending allows for increased production that creates more jobs that intern allows for more spending. He argues that countries can spend their way to prosperity, or on the contrary, underspend their way out of it. He believed that if the economy is left to its direction when underspending happens, assets become cheaper as well as diminishing production and employment, resulting in a dangerous cycle that could be extremely vicious. He advocated that the government should initiate demand by investing specifically in equipment, factories, buildings, etc., especially large ambitious works. This is especially powerful when private sector investment is too low as it stimulates the economy.
Another idea that he endorsed was to apply taxes and social insurance during economic growth times and reduce them during difficult times. The benefit of this strategy is that its effect is instantly compared to the planning and scaling up to implement the investment in large-scale projects.
Liberals argue that economic slumps are a result of misdirection of funds rather than the number of funds and thus more liberalism (i.e. let wages fall as much as necessary, flout the currency, privatize government assets) is required to allow an economy to recover. They believe that the recession is a cure to this misdirected investment and thus suggest as much liberalism as possible as the answer. They also are against any government stimulus in terms of fiscal policy maneuvering.
Saudi Arabia’s Current Economic Strategy
Since the 70’s the Saudi economy has been relying on government spending, pegging the SAR to the dollar, and providing subsidies. It was a Keynesian approach to dealing with the economy considering that subsidies are the inverse of taxes but are similar stimuli. Moving forward to 2016, which was a year when the heavy government spending reliant economy couldn’t be sustained anymore. (As per the Minister of Planning, in three years the government would be broke). The government halted a substantial size of subsidies, introduced new taxes, limited the fluidity of the labor market, and reduced the money in the financial sector. The economy basically starved as spending was seriously compromised.
So, what would the two schools of theory recommend to get out of this economic depression?
Liberals would argue that spending is misdirected and the government is too intrusive. They would argue that the solution would be to flout the oil company on the stock market, stop subsidies, stop the currency peg, liberate the labor market, and redirect government spending as efficiently as possible.
Keynesians would argue to stimulate demand by increasing spending in the economy, reduce taxes (increase subsidies), and watch as the economy spends its way to prosperity.
Interestingly, after decades of extreme Keynesian direction, the government has started to adopt liberal initiatives to deal with the economy. However, its traditional Keynesian methodology is still strongly in place. Meaning they still maintain a strong controlling influence on the economy and as things are progressing, it seems they will continue to do so.
The liberal initiative that the government has adopted was to redirect its spending to more efficient assets to stimulate the economy through PIF, the government investment arm. While the traditional private sector is starved of spending, a large amount of investment is redirected toward new industries through PIF. The private sector investment is slowly following the PIF but at a much smaller scale since it lacks a lot of liquidity. Other aspects of the economy are pure Keynesian, especially the tightening of the labor market.
An interesting question that has surfaced: has the government funds under PIF management gone to more efficient assets as what is required by a classical economic direction? This question is very critical because a large part of its investments have happened outside of Saudi Arabia. Keep in mind that this is part of the story as the largest planned investment by PIF, Neom (the futuristic city in the north of Saudi Arabia) is still at the planning phase and probably won’t show any significant spending until a few years down the road. Other major liberal initiatives that have been announced (ARAMCO IPO, health sector privatization, education sector privatization) have not happened and as the details develop further, it seems that they will take a while if happen at all.
Saudi Arabia has adopted some libertarian economic approaches but still is as Keynesian as ever. The questions are how far will they go with the liberal direction? Will they follow through with the announced privatization projects? Will we see the free labor movement? Will we see opening up of the banking sector? Would we even dare to go so far as to ask if they would unpeg the currency? These questions are very critical as they challenge the current thinking of these two schools of economic theory. We should never underestimate the Kingdoms tenacity for change, as evident by the fast social changes that happened over a period of one year, but we should consider that the government is very comfortable in controlling the social structure of the country and might not want to step too far in the other direction worrying, as Keynes did after the great depression, when he said “the price of liberalizing the economy is too high a cost for social stability.”
Sam.
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Good to see KSA is developing and not entirely dependent on Oil. Being a peninsula both India and KSA have vast opportunity of having trade economies.
If KSA wishes we can partner up in many things including Pharma industry etc.
@Saif al-Arab
If KSA wishes we can partner up in many things including Pharma industry etc.
@Saif al-Arab
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