Saudi Crown Prince approves Privatization Program

April 24, 2018

Saudi Gazette report

– Saudi Arabia’s Council of Economic and Development Affairs (CEDA), chaired by Crown Prince Muhammad Bin Salman, deputy premier, minister of defense and chairman of CEDA, approved on Tuesday the executive plan for the Kingdom’s Privatization Program.

This Program has been named Delivery Plan 2020 and is part of the wider Saudi Vision 2030 Realization Program.

The Program’s objective is to strengthen the role of the private sector by unlocking state-owned assets for investment and privatizing selected government services.

The Program aims to increase job opportunities for Saudis and attract the latest technologies and innovations.

It targets realizing goals of Vision 2030 to increase private sector’s stake in gross domestic product (GDP) from 40 percent to 65 percent by 2030. There is a thrust in the Program to enhance fairness in transactions with the private sector.

“The Program’s initiatives will be implemented to take into account the interests of all beneficiaries and enhance the fairness of transactions with the private sector. The program will result in greater control over service providers to ensure that beneficiaries receive the best services and the government agencies will focus on their regulatory and supervisory role more efficiently. It aims to attract both domestic and foreign capital for local investments, as well as to increase competition and enhance the role of the private sector,” the Saudi Press Agency reported.

The Privatization Program also aims at capitalizing on the successful previous experiments, with the participation of the private sector, in the field of infrastructure and a broad spectrum of various service sectors such as energy, water, transportation, telecommunications, petrochemicals and finance.

One of the most important goals set out by the program is to contribute to the achievement of the objectives laid out under the Vision 2030 Plan, including increasing the contribution of the private sector toward the national GDP, number of jobs and non-governmental investments, and the quality of services to the largest number of beneficiaries.

The scope of the Privatization Program encompasses the following three pillars:

1- Establishment of legal and regulatory basis.

2 - Establishing institutional basis that contributes to the existence of capable entities to implement privatization in the manner and mechanism that preserves the interests of the government and guarantees the fairness of the process for participants from the private sector.

3-Steer privatization programs initiatives.

The Program also supports 11 indirect objectives, and these include easing access to healthcare services, developing an advanced capital market, attracting foreign direct investment, establishing and improving the performance of logistics centers, enhancing SME contribution to the economy, diversifying government revenues, designing a leaner and more effective government structure, enhancing performance of government entities, and improving quality of services provided to citizens.

A number of initiatives have been put in place to help change and address key challenges.

These initiatives include 100+ privatization initiatives that have been identified so far across 10 ministries.

Some initiatives are scheduled to be finalized by 2020 and these include sports clubs, grain silos, production sector of Saline Water Conversion Corporation.

10 sectors to be privatized in first phase

The Privatization Program targets privatization of 10 key sectors in the first phase. They are health; housing; education; labor and social affairs; energy, industry and mineral resources; municipalities; transport and aviation; environment, water and agriculture; Haj and Umrah, and communications and IT. There are more than 100 privatization initiatives likely to be implemented in more than 10 sectors.

According to the Program, running of ports will be transferred to companies.

The King Faisal Specialist Hospital and Research Center will be converted from a public entity to a non-profit one.

There will be public and private partnership in the operation of hospitals, establishment of medical cities and running of primary health centers as well as in radiology and laboratory sectors.

There is also a plan to establish four companies to manage grain silos sector.

Saudi Telecom (STC) is one of the best examples for the successful privatization experiments carried out by the Saudi government, it was noted in the Program.

This move helped ease the financial burden on government and contributed to a huge increase in financial returns from the company.

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