Saudi Arabia announced a broad-based economic reform plan, known as Vision 2030, which seeks to reduce the reliance on oil and to diversify economy. The plan among other things will give more rights to expats for investment and to buy houses.
Saudi Arabia has also announced that it will sell shares in state oil giant Aramco and to set up the world’s largest wealth fund in line with the plan, Mohamed bin Salman said in an interview to Al Arabiya news channel.
He said Saudi Arabia was restructuring its housing ministry to increase the supply of affordable housing, and creating a “green card” system within five years to give expatriates long-term residence.
“Almost 10 million foreigners send their money back to their country, they can’t invest in this country, so by this green card idea, we are giving more rights to expats for investment or buy houses,” he said. “We plan to sell less than five percent of Aramco. Aramco’s size is very big. It is estimated at between $2 trillion and $2.5 trillion,” he said.
Saudi Arabia’s economy has suffered over the last 12 months due to fall in oil prices. This has caused the budget deficit to increase to $ 98 billion from $87 billion last year. Its reserves also decreased from $746bn two years ago to $616 today.
Aramco is the world’s largest company in the oil business and the backbone of the Saudi economy.
The economy reform package includes kingdom’s desire to shed its ultraconservative image, saying that Saudi Arabia would “open its doors to tourism of all nationalities in line with its tradition and values.” Currently, Saudi Arabia doesn’t issue tourist visas except to Muslim pilgrims.
Prince Mohammed said the government will diversify its revenues by opening up to more privatisation in areas like health care and education, as well as expanding the country’s manufacturing base and investing in alternative energy sources. He also said the kingdom would introduce fees on luxury items, tobacco and sugary drinks.
The prolonged period of cheap oil has put severe strain on Saudi’s economy. Due to this, the Kingdom has cut spending. This month Saudi Arabia also for the first time in 25 years, sealing a $10 billion loan.
It should also be noted that the economic change is announced at a time when the geo politics involving Saudi Arabia is fast changing. The nuclear deal the major powers had with Iran was not in Saudi’s interest. The war Saudi is engaged in Yemen is also causing it dearly.
“We plan to set up a $2 trillion sovereign wealth fund … part of its assets will come from the sale of a small part of Aramco.”
“To implement some of these, you need the collaboration of society. For example, if you want to increase the empowerment of women, you need to liberalise your society,” he said. “In so many more ways, Saudi society needs to contribute to the government for the Vision 2030 to succeed.”