Saudi private sector key to realizing ‘Vision 2030’

Saudi private sector key to realizing ‘Vision 2030’

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RIYADH — Creating a successful partnership between private sector investors and the government will be the critical factor in shaping Saudi Arabia’s development over the coming five years, according to a new research report from MEED.

Under the ambitious reform agenda being driven by Deputy Crown Prince Mohammed Bin Salman Al-Saud and the Economy & Planning Minister Adel Bin Mohammed Faqih within its recently announced Vision 2030 framework, Saudi Arabia is seeking to drive the non-oil economy and stimulate private investment in state activities.

In its Vision 2030 strategy, Riyadh has set itself the target of increasing the private sector’s contribution to GDP from 40 percent today to 65 percent by 2030, and growing non-oil government revenues from SR163 billion ($43 billion) to SR1 trillion ($267 billion) by the end of the next decade.

In ‘Saudi Arabia Strategies 2016: Adapting to a new economic reality’, MEED examines how the Vision 2030 strategy will change the business landscape in the kingdom, the government’s priorities and the strategies of businesses seeking to take advantage of the new opportunities being created in the kingdom.

The latest market report on Saudi Arabia by MEED, the leading source of Middle East business intelligence, identifies new and emerging opportunities for investors and companies in the region’s biggest market.

It also highlights the challenges that companies need to be aware of as the kingdom forges ahead with its economic development plan for the next 14 years.

The reports provide detailed news and analysis of Saudi Arabia’s $1trillion project market, by far the region’s biggest market. And it provides the latest data and analysis of plans to deliver the $500 billion-worth of these projects that are still at the pre-execution phase spanning the power and water, transport, hydrocarbons and construction sectors. Construction is the largest sector with a pipeline worth $442 billion, followed transport with $228 billion and power with $170 billion in the pipeline.

“Construction and transport have traditionally been the largest sectors in the Saudi Arabia, awarding $155 billion and $98 billion of major contracts respectively between 2006 and 2015. Nearly‎ $89 billion of power contracts were awarded over the period,” said MEED Editorial Director Richard Thompson.

With government debt rising sharply in the wake of the collapse in oil prices, Riyadh is exploring using public-private partnerships (PPP) for its most important infrastructure projects. And with a raft of road, rail, port and airport projects planned, the report looks at how PPP and other financing models will be used to deliver transport projects.

In addition, MEED’s latest market report provides an up-to-date and expert assessment of Saudi Arabia’s giant power and water sector, which is Riyadh’s priority sector for investment and reform.

“Saudi Arabia needs to install nearly 48GW new electricity generation capacity by 2024 in order to meet demand, which is growing by 7 percent a year,” said Thompson. “To deliver this, Riyadh will return to building power and water capacity using the private developer market. It will take the same approach to deliver the estimated $25 billion of planned water and wastewater projects over the next five years.”

“The reforms involve rolling back the state as an economic actor in the kingdom and will be painful in the short term. But they are much needed and if implemented properly will provide the basis for sustainable growth and development for the next generation of Saudis.”

With a detailed assessment of Riyadh’s plans to award nearly $41 billion of project contracts in 2016, detailing how and when these schemes will be awarded, by whom, and who is likely to win the contracts, the ‘Saudi Arabia Strategies 2016: Adapting to a new economic reality’ explains how Riyadh’s spending constraints are opening the door for alternative financing models to be pursued, in particular public-private partnerships, which will offer new opportunities to those hoping to win work in Saudi Arabia. — SG

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