The
Kingdom of Saudi Arabia has announced the vision 2030 in 2016. This explained
vision was a long-term economic blueprint to transform the Kingdom’s economy
aimed at minimizing the country’s reliance on oil. The petroleum sector
accounts for roughly 85% of Saudi budget revenues. However, why the Kingdom
wants to cut down of oil revenue rate in national budget?
The
economy of Saudi Arabia is dependent on oil cause Saudi oil reserves are the
second largest in the world. Also it is the world’s leading oil exporter and
second largest producer.
Meanwhile,
the total export and petroleum revenues have been decreasing franctionally
since 2012 due to starting to decline of OPEC crude oil price.
As
you can see on the above graphic, the total export of Kingdom had gone down
from $387 billion in 2012 to $207 billion in 2016. As for oil export had
decreased from $336 billion to $163 billion in the same period. The reason of
this decline, the average annual OPEC crude oil price was $40 in 2016, just as
$110 in 2012.
Accoording
to many specialists in Kingdom, Saudi Arabia had to minimize their dependence
on petroleum. The expected action was taken in 2016.
Deputy
Crown Prince Mohammed bin Salman, the 32 year-old son of King Salman, announced
in April,2016, his “Saudi Vision 2030” which was expected to set goals for the
next 15 years and a broad policy agenda to reach them. “Vision 2030” is a plan
to reduce country’s dependence on oil, diversify it’s economy and develop
public service sectors such as health,education, infrastructure, recreation and
tourism. Goals include reainforcing economic and investment activities,
enhancing non-oil industry trade between countries through goods and consumer
products and increasing government spending on the military. The Kingdom intends to raise its share of
non-oil exports in non-oil GDP from 16 percent to 50 percent.
“Vision
2030” is based on 3 main pillars. The first one is Saudi Arabia’s status as the
heart of the Arab and Islamic worlds. The second pillar is their determination
to become a global investment powerhouse. The last one is transforming the
Kingdom land’s strategic location into a global hub connecting three
continents; Asia, Europe and Africa. However, this plan is built around three
themes: a vibrant society, a thriving economy and an ambitious nation.
Within
this scope, Prince Mohammed bin Salman plans to sell less than five percent of
the state-owned Saudi Aramco oil company. Saudi’s Aramco market value has been
estimated at between $2 trillion and $10 trillion. This value is making it the
most valuable company in the world. Prince Salman aims $300 billion dollars in
revenue from this public listing.
On
the other hand, the Public Investment Fund of Saudi Arabia will finance about
80 major projects which is expected to be developed in Saudi Arabia.
One
of these major project is to build a new city and business zone (NEOM). The
project that will be backed up by more than $500 billion in investment. Prince
Salman said that NEOM is a planned 26.500 sq km transnational city and economic
zone to be constructed in north-west of the country, extending Egypt and
Jordan. This project will focus
especially food technologhy, energy and water sectors. If they can build this
mega city in that location, it would set to become a new vibrant
destination on the coast of the Red Sea
and the Gulf Aqaba, linking; Asia, Africa and Europe.
The
other big project is that investing $64 billion in developing its entertainment
industry over the next decade. This
investment is part of a social and economic reform programme in “Vision 2030”. Cause
Prince Salman wants to reduce the Kingdom’s reliance on oil by increasing
household spending on culture and entertainment. Even the General Entertainment
Authority announced that 5.000 events were planned in 2018 including Maroon 5.
Also construction of the Saudi Arabia’s first opera house has begun in Riyadh.
Many
believes that the “Vision 2030” has
changed the world’s view of Saudi Arabia. But one question still confuses the
mind of experts in Saudi Arabia: If vision 2030 will not successful?
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