Vision 2030
Vision 2030, a comprehensive plan aimed at growing and diversifying KSA’s economy, and nurturing sectors like tourism, entertainment, and technology and seeks to attract foreign investment, promote innovation, and empower the youth. The plan is fostering sustainable growth and job creation. It has also led to the relaxation of certain social norms and the expansion of women's roles in society.
The ambitious blueprint for KSA seeks to transform several sectors, such as the energy, oil, gas and mining, and of course sectors, such as tourism and entertainment are developing sites and capturing the public’s imagination.
Vision 2030 is the catalyst that empowers the private sector and small and medium enterprises through various initiatives, including financing facilitation and creating capital funds. Vision 2030 champions innovation and diversification across KSA’s socioeconomic landscape, shaping a vibrant and promising future for Saudi Arabia's economy.
Saudi Vision 2030, the Saudi government’s roadmap to diversify the economy and address challenges resulting from lower global energy prices, was announced in April 2016. In June 2016, the National Transformation Program 2020 (NTP) was launched, with the aim of meeting interim targets through various strategic initiatives across 24 governmental bodies.
The plans outlined in both Saudi Vision 2030 and the NTP cover wide-ranging business and social elements that will result in fundamental changes and opportunities across all business sectors in the Kingdom. There is a strong emphasis on increased private sector involvement, the privatisation of a large number of government activities, and the development of various industries. The range of initiatives and opportunities spans social and community related projects (e.g. housing, sports centres, public facilities), education, healthcare, municipal services, energy, environmental, industrial & manufacturing, oil & gas, technology and transportation sectors.
Developments since the launch of Saudi Vision 2030 and the NTP provide strong evidence of the fast pace of change. Governmental authorities are being proactive in seeking, and promoting, private sector involvement. A number of privatisations are anticipated, with related opportunities for foreign and local investors, lenders and advisors. Other investments could take the form of joint ventures or public private partnerships, and a new law dealing with public private partnerships is expected.
Expected cost of NTP initiatives from 2016 to 2020:
SAR billion
Percentage
Government
268
60
Private Sector
179
40
Totals
447
100
Particular highlights of Saudi Vision 2030 and the NTP include:
Privatisations - a wide range of Government assets to be privatised;
Saudi Aramco IPO and Overseas Investment - the listing of up to 5% of Saudi Aramco, the government-owned oil company, with proceeds to go to the Public Investment Fund (PIF), making it a globally active sovereign wealth fund valued at up to USD 3 trillion;
Private Sector Investment - increasing the private sector contribution from 40% to 65% of GDP, with particular focus on energy, healthcare, housing and municipal services;
Foreign Investment - increasing direct foreign investment from SAR 30 billion to SAR 70 billion, and plans to speed-up investment approval times;
Defence Industry - 50% of military equipment spending to be localised by 2030;
Mining Industry - to be reformed to stimulate massive growth with target of SAR 97 billion by 2020, and 90,000 job opportunities;
Telecommunications Industry – the development of telecommunications and information technology infrastructure, including high speed broadband;
Transportation – the creation of a regional logistics hub, with linked internal and cross border infrastructure;
Oil & Gas – the continued localisation of the sector from 40% to 75%, development of support sectors, increased gas production, and development of a national gas distribution network;
Renewable Energy Industry - to be developed with private sector participation, with consequent reduced dependence on hydrocarbons;
Retail and Trading Sector - to be developed with a view to creating a million jobs through the easing of foreign investment restrictions;
Education - increasing private sector involvement, with a target of increasing percentage of students in non- government higher education from 6% to 15%;
Health Sector - increasing the private sector contribution to heath care expenditure from 25% to 35%, with a number of public to private partnerships expected;
Housing (the biggest area of Government expenditure under the NTP) - establishment of fast track licences, special finance packages and partnerships to encourage private sector investment in housing projects, and the development of government land for housing projects; and
Royal Commission for Jubail and Yanbu (second only to the Ministry of Housing in its size of budget under the NTP) - increased private sector investment and encouraging diverse and integrative industries with target of increasing number of value added manufacturing and transformation products.
In April 2018, the government issued the Privatization Program (Delivery Plan 2020). Known as the Vision Realization Program, it provides for the privatization programme contemplated in Saudi Vision 2030 to be managed by the recently established National Center for Privatization & Public Private Partnership. The Vision Realization Program also establishes a number of key privatization initiatives that are expected to have an impact by 2020.
Saudi Vision 2030, the NTP, and the Vision Realization Program, are all essential reading for anyone operating in, or investing in, Saudi Arabia - or considering doing so.
Saudi Vision 2030 and the NTP have targeted reform of the mining sector to stimulate massive growth with a target of SAR 97 billion by 2020 and 90,000 job opportunities.
Saudi Arabia has extensive deposits of phosphate and bauxite, and commercially viable deposits of minerals including gold, silver, lead, zinc, copper and iron ore, as well as rare earths. It also has large deposits of many of the key minerals used in the construction industry. The Ministry of Energy, Industry & Mineral Resources has an extensive database of geological data, maps and reports.
A new Mining Code was adopted in 2004 to facilitate investment in the mining sector. There are no mineral royalties. Non-exploitation licences and exploitation licences are available to companies and individuals.
Non-exploitation licences include reconnaissance and material collection licences, valid for two years, and exploration licences, which are valid for three years. Exploration areas are limited to 100 square kilometres.
Exploitation licences include mining and quarry licences, both valid for 30 years. Small mine licences are valid for 20 years and building materials quarry licences for five years.
Licences may be transferred with the approval of the Ministry of Energy, Industry & Mineral Resources.
Saudi Arabian Mining Company, which trades as “Ma’aden”, is a diversified mining company (the largest in the Kingdom), formed for the purpose of facilitating the development of Saudi Arabia’s mineral resources. The Government owns 50% of Ma’aden’s shares (through the Public Investment Fund), while the remaining 50% are listed on the Saudi stock exchange (Tadawul).
The success of Saudi Vision 2030 depends in large measure on reforms in the education system generating a better basis for employment for young Saudi nationals. The government contemplates preparing a modern curriculum, focused on rigorous standards in literacy, numeracy, skills and character development, as well as working closely with the private sector to ensure higher education outcomes are in line with the requirements of the job market. The education focus of Saudi Vision 2030 is further reflected in the NTP’s strategic objectives.
Specific plans include:
A comprehensive framework for the professional development of teachers and educational leaders;
Developing a national strategy to upgrade the teaching profession by raising the professional level of teachers, improving the profession’s ecosystem and raising the quality of services provided to teachers;
Shifting to digital education to support teacher and student progress;
Encouraging the private sector to invest in public education including at kindergarten level;
Attracting private investments to finance school construction;
Develop the Independent Schools model to reach 2000 public schools run by small establishments; and
Establishing a practical framework to align university graduates with labour market needs.
Taken together these measures represent a sea change in the education sector in the Kingdom.
There are several broad opportunity areas for the private sector to explore in the education sector, including: setting up privately operated colleges and universities; establishing pre-school institutions and day-care offerings; enhancing labor market linkages and job placement programs to match graduates to jobs; creating and delivering blended learning innovations. In addition, there will be an opportunity for private sector provision of support services to existing public and private education institutions. Examples include site maintenance, canteen operations, cleaning services, IT infrastructure and management services.
The scope of private sector involvement in the financing and construction of education infrastructure is clear, but whether the same access will be given to the actual delivery of educational services is less so. The potential for joint ventures around items such as technical curriculum development and teacher training is significant. The franchise model, adjusted as necessary to accommodate the specific traditions of the Kingdom, also has potential to play a role.
Education is a fundamental building block of the Vision as a whole and its progress is likely to be scrutinized carefully.
Healthcare is another key focus area of Saudi Vision 2030. There is a definite move towards privatisation, with a stated objective in the NTP of increasing private healthcare expenditure from the current 25% to 35% of total healthcare expenditure. This represents a projected increase in revenue generated from SAR 3 billion to SAR 4 billion. In addition to this, the Ministry of Health plans to spend over 23 Billion SAR on new initiatives over the next 5 years.
The NTP has identified various healthcare-focussed strategic objectives, including:
Improve the efficiency and effectiveness of the healthcare sector through the use of information technology and digital transformation;
Increase the attractiveness of nursing and medical support staff as a preferred career path;
Improve healthcare provision before hospitalisation and in the main hospitals (ER & ICU);
Improve the infrastructure, facility management and safety standards in healthcare facilities;
Improve governance in the health system in order to enhance accountability with regards to quality issues and patient safety;
Adopt a national plan for emergency response to public threats in line with international standards;
Improve public health services with focus on obesity and smoking;
Improve the quality of life and healthcare service provided to patients outside hospitals; and
Ensure sufficient supply of basic medicines.
Saudi Vision 2030 offers many opportunities in healthcare for the foreign investor, and these have been identified in the NTP as follows:
Additional private medical facilities;
Increased medical insurance;
Increased use of information technology;
Healthcare Education;
Provision of improved training facilities;
Enhanced professional development; and
Local manufacture of pharmaceuticals.
Foreigners are able to own and manage hospitals in Saudi Arabia but are unable to own or manage other healthcare institutions. It is envisaged that foreign participation and investment in new hospitals will take place through public-private partnerships and joint ventures with Saudi-owned entities.
Medical insurance is already compulsory for expatriates and Saudi nationals (and their dependents) working within the private sector. Citizens working within the public sector currently receive free coverage in government health care centres and public hospitals. It is not known at this stage how medical insurance will develop, but as more public services are privatized and public-private partnerships are entered into, the provision of healthcare will naturally transfer to the private sector. In anticipation of this, current medical insurance providers are developing products that cater for public sector employees.
Digital healthcare innovations are key to supporting Saudi Vision 2030 as the Ministry of Health is aiming for at least 70% of Saudi citizens to have unified digital records by 2020. In addition, information technology solutions, including diagnostic equipment and software, and telemedicine solutions, will improve the performance and productivity of healthcare providers, and improve quality.
There is a recognised need for qualified Saudi healthcare practitioners and support staff. The increased education and training needs will be catered for domestically and internationally, potentially with links to world-renowned institutions and public-private partnerships. Furthermore, this increased need could also be addressed through management and operational arrangements with internationally recognised service providers.
Saudi Arabia is mostly dependent on imports for its pharmaceutical requirements and there is a desire for pharmaceuticals to be manufactured locally to ensure an adequate supply. Foreign pharmaceutical manufacturers are being actively encouraged to establish plants in Saudi Arabia through public-private partnerships and joint ventures with national entities. Incentives are being offered in the form of preferential treatment in future volume tenders. As an additional incentive, foreign owned manufacturers within Saudi Arabia are able to distribute and sell pharmaceuticals within the country, whereas imported pharmaceuticals can only be distributed through a Saudi distributor.
The SAGIA website lists the manufacture of medical devices and equipment as an investment opportunity for foreign investors. Currently, the majority of medical devices and equipment is manufactured abroad and imported into the country. The Ministry of Health is supporting local manufacturing by partnering multinationals with Saudi companies with the incentive of guaranteed volumes for Ministry of Health purchases and preferential treatment in future volume tenders. Furthermore, foreign owned manufacturers within Saudi Arabia have the additional benefit of being able to distribute and sell medical devices within the country, without the need for a local distributor.
