For almost 6 decades now, Saudi Arabia has been all about oil.
Despite oil still accounting for more than 90% of the Kingdom’s revenues, it looks like we all need to get used to the idea that Saudi has other ideas.
The World Economic Forum (WEF) at Davos was the ideal platform yesterday to make that clear.
“Our message to investors is that the kingdom is transformed, we’re serious about change, its comprehensive change,” Saudi Energy Minister Khalid AL-Falih told the media on the occasion of Davos 2018.
“We need to not only be ready for the future but to create the future through initiatives that are not only around our traditional strength in oil and gas, which we’re going to build on, but also about creating new industries,” he told CNBC on Tuesday.
Fahd al Rasheed, managing director and chief executive of King Abdullah Economic City (KAEC), said that Saudi Arabia is entering a post-oil era in which is all about diversifying the economy.
These ideas are born from Saudi Crown Prince Mohammed Bin Salman’s Vision 2030, and below are the key areas of the diversification strategy.
The top 9 non-oil Saudi things
According to Bloomberg News, domestic gasoline prices will reach parity with international levels gradually between 2018 and 2025. Also, local natural gas and ethane prices will be raised to 75% of the international prices between 2020 and 2021.
2. Industrial city
CNBC reveals that the creation of KAEC, a port and manufacturing city on the Red Sea will boost Saudi’s trade relations with the rest of the world.
3. Mega projects
NEOM, a $500bn 100% renewable city, is a super mega project on the Red Sea coast located at a strategic junction linking 3 countries, Saudi, Egypt and Jordan, and connecting Asia, Europe and Africa.
Another Red Sea project covering 34,000sqkm and 50 virgin islands will see luxury developments geared to global travellers.
Jeddah’s 1km tower, valued $1.8 billion is due for completion by March 2020, as well as Mecca’s Abraj Kudai Development, valued at $3.5bn and due for completion by end 2017, which coincides with Mecca’s own $17bn expansion project.
4. Renewable energy
Al-Falih said there are plans to allow for the export of cleanly produced electricity to Europe using solar power.
5. Aramco’s IPO
The plan to float 5% of state-owned Aramco goes in parallel with the Kingdom’s plan to diversify the economy and reduce its dependence on oil.
The plan is to sell 5% of the company, valued at $2 trillion, thus earn $100 bn in revenues.
Saudi Vision 2030 aims to boost the kingdom’s hospitality industry from a current number of tourists visiting the kingdom estimated at 200,000. Reforms for visa issuance and development of historic heritage sites are designed to help achieve these goals.
The PIF set up a $2.7bn company to invest in entertainment, to go along a 334 sqkm sports and entertainment city in Riyadh by 2022 and lifting a 30 year-old ban on movies.
8. Women’s role
Saudi’s lifting of the driving ban paves the way for women to be more involved in the workforce in the kingdom, but also attract interest from hail-a-cab companies like Uber and Careem.
9. Full ownership
Pending certain financing criteria, Saudi Arabia will allow foreign investors to take 100% ownership as ownership restrictions gradually ease on foreign firms, which have previously been required to set up a joint venture with a local partner.