Saudi Vision 2030 is a plan to reduce Saudi Arabia's dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism. Goals include reinforcing economic and investment activities, increasing non-oil industry trade between countries through goods and consumer products, and increasing government spending on the military, manufacturing equipment and ammunition. The first
details were announced on 25 April 2016 by Crown Prince Mohammad bin Salman (MBS).Â
At the centre of Vision 2030 lies Saudi Aramco, the worldâs largest oil company and perhaps the worldâs largest company as well, as its $2 Trillion valuation says. 42% of Saudiâs GDP is from Oil. 90% of exports of Saudi Arabia are oil. 87% of budget revenues of Saudi Arabia is from oil. Towering these numbers is the company that digs out, refines and exports this oil. 1 out of every 8 barrels of oil in the world is produced by Saudi Aramco. Saudi is planning an IPO for Aramco, initially selling 5% stake for $100 Billion. Like any other oil company,
Aramcoâs main asset is its underground oil reserve which it claims is 261 Billion barrels, this number, without any third party audit has remained constant for nearly 30 years. Aramco is the only company in the world to supposedly produce oil for under $10/barrel and produces approximately 9 Million barrels a day which sums up to roughly 100 Billion barrels over the last 30 years without creating a dent in the 261 Billion barrel number. Listing of Aramco on
stock exchanges like the New York and London Exchanges would require Aramco to disclose its entire financials to the world â something it has never done before and would also attract independent third party audits of its oil reserves. Everyone in Saudi Arabia is in one way or the other a beneficiary of Saudi Aramco. The failure of this IPO makes Vision 2030 a blurry one as the capital required for Vision 2030 needs to come from Aramco.
Over the past year, the government has detained Saudi business people, journalists and social activists who have not responded in the desired way to Riyadh's reform efforts, proving that the state is still the only permissible engine for change and growth in the country. In such an unstable environment, where the government still retains so much control despite trying to foster a private sector, individual Saudis and individual Saudi companies are naturally hesitant
to invest in the country in the long term. This has left the Saudi government as the major source of investment in the Saudi economy, which, ultimately, defeats the objectives of diversification and privatization. Government investment can make Saudi economic numbers look good on paper, but it is a risky strategy. When oil prices fall so does government spending (meaning government spending does not lead to diversification).
Without assurances that the rule of law is respected in Saudi Arabia, foreign businesses will consider Saudi Arabia too risky to enter. Saudi Arabia has tried centralized economic plans before. As in the Soviet Union and China, the centralized plans in Saudi Arabia never quite worked. This plan, Vision2030, seems headed down a similar path. It may be time for Saudi Arabia to rethink the strong hand approach.
Many journalists say that Saudi Arabia has âbitten off more than it can chewâ. Its Vision 2030 is a very ambitious plan, however, due to various issues within the Kingdom, might not be implemented the way it was initially planned.
You are the CSO of MBS and your task is to create a report of not less than 20 pages including but not limited to:
⢠Tier-wise objectives of Vision 2030
⢠Listing and prioritising issues related to Vision 2030
⢠Strategies to resolve the Saudi Aramco IPO keeping in mind volatility of oil prices
⢠Strategies to develop the private sector
⢠Strategies to create an environment suitable for stakeholders interest and not just the interests of the Kingdom
⢠Potential changes in the Government of Saudi Arabia
⢠Main objectives of Neom and funding structure
⢠Strategies to attract investors to Neom
⢠Strategic alliances for Vision 2030
⢠Strategies to develop Health, Education and Tourism sectors in Saudi Arabia
⢠10 year forecasted real GDP and GDP growth rate of Saudi Arabia from 2020-2030
⢠Extensively detailed phase wise plan for Vision 2030. (Extensive details of each phase)
Submission details: Hard copy at 4 PM tomorrow.
For any queries, contact: Aadit Daphatary: 9945500696
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