By TBY | Saudi Arabia | Sep 29, 2017
Ever since the reign of King Faisal in the 1970s, Saudis have heard from their leaders that economic diversification and private-sector empowerment had no alternative. And while over the decades […]
Ever since the reign of King Faisal in the 1970s, Saudis have heard from their leaders that economic diversification and private-sector empowerment had no alternative. And while over the decades the Kingdom has edged closer to a more economically sustainable future, no initiative to-date has been as comprehensive, purposeful and detailed as the Vision 2030, presented in 2015 by Crown Prince Mohammed bin Salman.
Over the past 12 months, TBY took the opportunity to ask business leaders across Saudi Arabia about their confidence in the Vision, and specifically why they felt it differed to previous government efforts.
Overwhelmingly, the answer lied in detail; that is, the careful consideration and accuracy placed on each aspect of the reforms, their projected impact on various sectors of the economy, and the micro steps taken to achieve these goals. In particular, one initiative stood out—the National Transformation Program (NTP) 2020.
According to the 112-page document, launched by the Crown Prince in June 2016, “The National Transformation Program was developed to help fulfill Saudi Arabia’s Vision 2030 and to identify the challenges faced by government bodies in the economic and development sectors… The program identifies, each year, the initiatives necessary for achieving such goals and devises detailed plans on the basis of interim indicators that measure and monitor performance.“
Checks and balances aside, the NTP introduces a number of initiatives—543 to be precise —across 24 government entities to the tune of SAR200 billion (USD53.3 billion), of which 40% is projected to be funded by the private sector.
Private sector engagement indeed remains at the core of the four-year plan, and “strengthening cooperation“ between government and private bodies is listed as a key objective towards nearing Vision 2030 goal of increasing the private sector’s contribution to GDP to 65%. This objective is closely followed by contributing to job creation, more specifically creating over 450,000 jobs in the non-governmental sector by 2020. The third key objective of the NTP relates to an issue particularly affecting the industrial, manufacturing, and oil and gas sectors: maximizing local sourcing. Energy giant Saudi Aramco is in the second year of its localization initiative, IKTVA, which will aim to boost Aramco’s local procurement to 70%. In line with this, the NTP has set a target to “bring home“ up to SAR270 billion (USD71.97 billion) of sourcing across the business landscape. Finally, corresponding to the Vision 2030’s commitment toward developing IT infrastructure throughout the Kingdom, the NTP has identified 29 essential initiatives to support a digital transformation.
Aside from its core objectives, the NTP also touches upon other industries such as tourism, where it aims to boost the number of Umrah pilgrims from 7 million to 15 million, or mining, which is expected to grow its output from SAR64 billion (USD17 billion) to SAR97 billion (USD25.85 billion) by 2020.
All in all, the NTP 2020 is proving to be a vital checkpoint in the Kingdom’s path to achieving its Vision 2030 goals. It has set ambitious, yet realistic, guidelines for government entities and the private sector to follow. It has highlighted key sectors to be developed and, in many ways, gives insight into the Kingdom’s budgetary priorities up until 2020.
Most importantly, however, the NTP is a clear sign that this time around, the government is fully committed to a long-term, sustainable future. By setting clear, detailed goals for economic diversification and private sector cooperation, the Kingdom is drastically reforming its business landscape, making it more expansive and inclusive. Testament to this lies in one of the NTP’s most promising projections: to more than double FDI over the next three years, from SAR30 billion (USD8 billion) to SAR70 billion (USD18.66 billion).