By Arab News
The Kingdom announced sweeping economic reforms on Monday to reduce its dependence on oil and ensure long-term sustainable development, with plans for a massive $2 trillion sovereign fund to boost its global investment power.
In an exclusive interview with Al-Arabiya News Channel on Monday, Deputy Crown Prince Mohammed bin Salman, second deputy premier and defense minister, said the implementation of the Vision 2030 plan would likely see the country operate without oil income by 2020, without sacrificing current infrastructure projects.The plan would also see the development of the country’s tourism industry, building the capacity of its military industries, reduced subsidies to save money, job creation initiatives, an education system revamp and a Green Card-style residency system for Arabs and Muslims.
He said the plan includes the setting up of a restructured Public Investment Fund (PIF) worth $2 trillion by including the proceeds of a Saudi Aramco initial public offering (IPO), other assets of $600 billion, and state-owned real estate and industrial assets estimated at $1 trillion. It would have more than 10 percent of global investment capacity, he said.
Prince Mohammed said the sale of 5 percent of oil giant Saudi Aramco would be the “biggest IPO in history.” Aramco would have a holding company with an elected board, with subsidiaries also sold through IPOs. “The 5 percent is from the parent company,” he said. Aramco is the world’s leading oil company, producing about 10 million barrels a day, or about 10 percent of global production.
Prince Mohammad said the partial IPO would help transform Saudi Arabia into an investment-driven economy and turn the Kingdom into a global player. “The Saudi addiction to oil has disrupted the development of many sectors in previous years,” he was quoted as saying.
On the highly-anticipated topic of the American-style Green Card for expatriates in the Kingdom, the prince said the scheme would be ready in five years. “The Green Card will allow Muslims and Arabs to live in Saudi Arabia for a long time and will be a source of revenue for the government,” he said.Prince Mohammed also revealed plans to develop the country’s tourism industry but within the framework of “our beliefs and values,” revitalizing culture and entertainment, and building an Islamic museum. “How can the Kingdom be the holiest place for Muslims and have no Islamic museum?”
The prince said the Aramco IPO is also aimed at ensuring greater transparency to boost the confidence of investors. “In this day and age, no country can afford to not be transparent. There are many benefits to the Aramco proposal, and the most important and major one is transparency.”
He said the lack of transparency of Aramco has “upset” many people. If Aramco is listed then it would have to announce its results quarterly and be open to scrutiny by financial and other institutions locally and abroad, he said.
Prince Mohammed said the government would cut subsidies but limit its impact on low and middle income earners.
However, it would be applied to everyone, “including princes and government ministers. This is a promise.”
The deputy crown prince also confirmed in the interview the government plans to reduce Saudi unemployment from 11.6 percent to 7 percent.
On defense, he said it made no sense for Saudi Arabia to be the world’s third-largest spender on arms but with no manufacturing industry. There were plans underway to set up factories for this purpose by 2017, initially wholly owned by the government but later listed on the Saudi bourse.
Prince Mohammed said that the Kingdom was adopting Vision 2030 “regardless of the oil price,” in reference to prices plunging to a 12-year low of $32 a barrel in January. “The Vision doesn’t require high spending but restructuring.” It focuses on the Kingdom’s strengths, its religion and Arab heritage, ability and location, he said.
Asked about the proposed King Salman Bridge over the Red Sea, announced last week in an agreement with Egypt, Prince Mohammed said the crossing would link Europe and Asia, provide building and investment opportunities, and help move billions’ worth of cargo across the Red Sea.
According to reports, the plan also envisages increasing the participation of women in the workplace, which has been growing rapidly over the past five years, from 22 percent to 30 percent.