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Saudi Arabia is in recovery from petroleum addiction


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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