Fine Tuning Development Planning
Saudi Arabia last year embarked on the sixth in a series of five-year
development plans. Development planning is a tried and proven way of achieving
rapid and effective multidimensional socioeconomic progress. Few developing
countries, however, can boast a track record of accomplishment in this field
similar to that of Saudi Arabia. Over a period of less than three decades, the
Kingdom has transformed itself from a largely agricultural country short on the
amenities of modern life to a vibrant community of people enjoying first rate
social, medical and educational services and actively involved in global
economics and commerce.
Many of Saudi Arabia's achievements in this short span of time can be
attributed to judicious planning and exacting implementation of development
programs. The Kingdom's first challenge before embarking on a long-term
development campaign was to find a mechanism that could efficiently marshall the
resources and energies of the public and private sectors in a collective effort
to work for progress and growth in a wide range of areas. Such a mechanism would
have to provide a clear outline of short- and long-term objectives, chart the
course that should be taken to achieve each of those goals and incorporate a
resilience that would allow the country to realize the desired results despite
the changes in regional and international economies that are bound to occur.
Saudi Arabia has witnessed tremendous progress in education (top), industry
(above) and other social and economic fields.
The tool that Saudi Arabia employed to weave together the various aspects and
elements of development in a national drive towards growth and prosperity was the
concept of the development plans. Beginning in 1970, the Kingdom launched a
succession of such plans. Each had a set of objectives that would have to be
achieved before the succeeding plans could be implemented. In essence they are a
series of building blocks, each resting on the achievements of previous ones and
expanding on past accomplishments in new directions.
The first plans focused on building a sound infrastructure. Roads, airports,
seaports and telecommunications facilities fanned out into the remotest parts of
the country. Without such an infrastructure, industrial and commercial growth
would not have been possible. Factories and commercial companies multiplied,
using the new facilities to expand their operations in the Kingdom and abroad. A
first-rate health care and social service system was established to serve
citizens. Modern universities, colleges and schools were built in major urban
centers, towns and villages to educate young Saudis, enabling them to actively
participate in their country's development. Dams and irrigation networks were
built to expand agricultural output to help feed the growing population. The
availability of greater numbers of educated Saudis made possible continued
expansion of industrial, commercial and agricultural activity, which in turn
required more roads, ports, telecommunications, banks and other services to
support the exponential growth of the economy.
Overall, during the first five development plans, between 1970 and the
beginning of 1995, the government invested a total of 3,870 billion Saudi riyals
(1,032 billion U.S. dollars) in various aspects of the country's social and
The major emphasis of Saudi development plans has been on human resource
development. When the Custodian of the Two Holy Mosques King Fahd Bin Abdul Aziz
was serving as the Kingdom's first Minister of Education in 1954, the number of
students in the country stood at fewer than 30,000. At the inception of the first
development plan in 1970, that number had already increased to 547,000 students
enrolled in 3,107 schools. By last year, more than 3.3 million students were
enrolled in approximately 22,000 schools. During the course of the first five
development plans, existing universities and colleges were expanded and new ones
established. While only 7,000 students were enrolled in the Kingdom's handful of
colleges in 1970, that number has grown to more than 170,000 at seven
universities and 83 colleges. The percentage of female students enrolled in the
educational system has grown steadily, now standing at 44 percent in primary and
secondary schools and 46 percent in universities and colleges. In 1993, King Fahd
introduced new provisions for the Higher Education Council and the University
System to further improve the quality of Saudi higher education. Under these
provisions, universities and colleges are introducing degree programs in new
fields, cooperating with other Saudi institutions of higher learning and
increasing the involvement of the teaching staff in the operations of faculties.
During the past quarter century Saudi Arabia has put into place one of the
most sophisticated health care systems in the world. The Kingdom now has a modern
two-tier system that relies first on primary health care centers that provide
preventive, prenatal, emergency and basic health care and second, on a network of
hospitals that offers the most advanced treatments and surgical procedures.
Between 1970 and 1995, the number of primary health care centers rose from 591 to
3,254. The number of hospitals grew from 74 with 9,039 beds to 279 with more than
During the course of the development plans, the Kingdom has established a modern
health care system (above) and a sophisticated transportation network (below).
As part of its program to build an efficient transportation and communication
infrastructure, the Kingdom established new intercity highways and roads to every
major city, town and village. The length of roads in the Kingdom grew from 4,985
miles of paved and 2,167 miles of unpaved surfaces in 1970 to 26,137 miles of
paved and 56,000 miles of unpaved last year. During the course of the development
plans, the Kingdom also built a total of 182 wharves, which last year handled
86.8 million tons of industrial and commercial imports and exports. A total of 25
airports, three of them international, have been built. Collectively, they handle
25 million passengers a year.
Industrial growth during the past 25 years has taken two parallel yet
complementary courses. One has focused on the development of the oil industry
into a fully-integrated operation incorporating refining, shipping and marketing
in an effort to add value to Saudi oil exports. Also, the national oil company
Saudi Aramco entered into joint ventures for downstream refining and sales in
major consumer markets abroad.
The long-term objective of Saudi economic planning has been to maximize
earnings from its vast hydrocarbon reserves while at the same time diversifying
away from oil. This has been done through expansion of the non-oil industry and
encouraging the growth of the private sector. The first step in the national
effort to nurture the non-oil industrial sector was the establishment of the
Saudi Basic Industries Corporation (SABIC) in 1976. The idea was to establish
basic industrial units in proximity to refineries and crude production facilities
that could use the natural gas and natural gas liquids and other hydrocarbons
generated by these facilities and convert them to feedstock and products such as
plastics and resins that could be used by secondary industries to produce a
growing variety of consumer goods. Last year, SABIC's 15 plants were
manufacturing 20 million tons of products annually, which fed hundreds of other
Advances in education have led to pioneering scientific research by Saudi scientists.
Simultaneously, Saudi Arabia introduced a unique incentive system to
encourage private sector participation in industrial, commercial and agricultural
ventures. Generous long-term interest-free loans were offered to individuals and
companies investing in new factories and commercial ventures or for the expansion
of existing ones. So far, various government agencies have provided 55.6 billion
riyals (14.82 billion dollars) in such loans for industrial projects and another
55.8 billion riyals (14.88 billion dollars) in commercial ventures. Government
ministries also provide a range of support services, including feasibility
studies and technical consulting for entrepreneurs.
As a result of these and other programs, the Saudi gross domestic product
(GDP) rose from 157.8 billion riyals (42.08 billion dollars) in 1970 to 460
billion riyals (122.66 billion dollars) in 1994. Significantly, contributions of
both the private sector and the non-oil industrial sector to the GDP have grown
steadily over the past decade. The private sector now accounts for more than half
the GDP, while the non-oil sector's share is approaching two-thirds of the GDP.
Last year, 2,303 factories were producing goods for sale on the domestic market
and for export to more than 70 countries.
A similar success story was also being realized in the agricultural sector.
Buoyed by soft loans totalling 28.1 billion riyals (7.49 billion dollars), 6.42
million acres of land grants, a variety of free government services and the
construction of modern dams and irrigation systems, agricultural production has
skyrocketed. Once almost totally reliant on imports of food and agricultural
products, Saudi Arabia is now self-sufficient in many areas, such as wheat,
vegetables and poultry, and is a net exporter of some products.
A vast electricity generation and distribution system was established during
the course of the first five development plans, raising generation capacity from
344 megawatts in 1970 to 17,053 megawatts in 1994. A series of 33 desalination
plants, more than 200 dams and 20,000 miles of water distribution pipes supply
water for urban, industrial and agricultural use across Saudi Arabia today.
The Kingdom has also established an efficient social welfare program that
provides unemployment, retirement and disability insurance for workers and social
security pensions, benefits and relief assistance for the disabled, the elderly,
orphans and widows without income. Government agencies have disbursed 30.7
billion riyals (8.18 billion dollars) in such payments over the past 20 years.
Saudi Arabia has established a vast network of sports complexes and facilities throughout the country.
Saudi Arabia has achieved progress of a similar nature in almost every field
of human endeavor in the last quarter century. It is a regional leader in sports,
environmental conservation and in many other fields, all thanks to careful
planning and studious implementation of its past five development plans.
The Kingdom is now in its Sixth Development Plan (1995-99), which shifts the
emphasis in development planning to improved efficiency of various social and
Approved by the Council of Ministers on July 3, 1995, the plan focuses on
improving the Kingdom's economic efficiency, diversifying the national economy,
promoting the role of the private sector in the national economy and encouraging
While continuing to consolidate and expand on the objectives of the prior
development plans, the Sixth Plan will promote economic stability by seeking to
establish an economic climate conducive to greater domestic and foreign
investment. The strategic objectives of the new plan include: the preservation of
Islamic values; defending religion and homeland; maintaining the country's
security and social stability; training productive working citizens; realizing
balanced development in various provinces; continuing to encourage private sector
participation in the Kingdom's economic and social development process;
diversifying the economic base in the industrial and agricultural sectors;
facilitating the development of mineral resources; improving and upgrading the
performance of public utilities and equipment; completing basic utilities to
achieve comprehensive development; enhancing scientific, cultural and information
activities; realizing the economic and social integration of the six Gulf
Cooperation Council countries; and strengthening the Kingdom's relations with
Arab, Islamic and friendly countries.
To further expand the activities of the private sector, the plan calls for
studying the feasibility of privatizing some government concerns of a commercial
nature. It also urges the establishment of a greater number of joint-stock
companies, attracting foreign investment through joint ventures or individual
projects that are capital- and technology- intensive and expanding the Economic
Offset Program to include large civil projects.
More than 3.3 million Saudis receive free education from kindergarten through
It will also seek to increase the use of private sector capital to finance
government projects, further encourage dialogue between the public and private
sectors, support small businesses, explore small investment opportunities,
improve financing conditions, expand the activities of the Saudi Credit Bank to
provide more loans to the private sector, introduce an incentives program to
encourage small businesses and prepare specialized training programs for them.
The Sixth Plan incorporates programs to facilitate the development of Saudi
manpower and its employment. These include greater emphasis on the quality of
technical training and university education, focusing on education and training
in specializations which coincide with the requirements of the private sector and
expanding the capacity of universities and technical training centers to enroll a
larger number of students in fields which are in greater demand in the private
sector. To achieve this objective, the education system will continue to grow
quantitatively and qualitatively. The number of students will increase from 3.3
million in 1994 to 4.0 million in 1999. The number of students in universities
will rise from 171,000 to 247,000 over the same period. These steps will
facilitate the training of Saudi citizens to fill the 659,000 new jobs that are
expected to be established during the five-year plan.
Parks, playgrounds and other facilities have been
established in all Saudi cities and towns, including Jeddah, to meet the
recreational needs of citizens.
The focus in economic planning will shift from government spending on
programs and projects to boosting economic efficiency in the course of the
current development plan. The objectives of the plan in the economic sector
include achieving an average annual growth rate of 3.8 percent for the nation's
GDP and increasing the GDP growth rate in the non-oil sector to an average 3.9
percent annually, double the rate achieved during the preceding development plan.
Average annual growth rates targeted by the plan are 4.4 percent for the service
sector, 4.9 percent for industry, 3.1 percent for agriculture, 9.0 percent for
mining, 5.5 percent in electricity, gas and water, 4.0 percent in construction,
3.9 percent in oil refining and 8.3 percent in petrochemicals. It also calls for
achieving an average annual growth rate of 8.5 percent in total fixed-capital
formation, 19 percent in government investment and 4.9 percent in private sector
investment. The plan aims to realize a gradual reduction in the balance of
payments deficit and a 12 percent annual growth rate for non-oil exports.
In the health sector, the plan provides for building more hospitals and
primary health care centers and improving the quality of health care. It also
advocates steps to encourage greater private investment in this field.
Over the past quarter century, Saudi Arabia has built a modern infrastructure,
including ports to facilitate the country's growth in various fields. The
establishment of dams and irrigation networks has brought dramatic growth in
During the course of the current plan, the government will continue to
provide interest-free soft loans to citizens. The Saudi Arabian Agricultural Bank
will provide 3.5 billion Saudi riyals (933.3 million U.S. dollars) in loans, the
Industrial Development Bank 5.3 billion riyals (1.41 billion dollars), the Real
Estate Development Fund 12.98 billion riyals (3.46 billion dollars), the Saudi
Credit Bank 1.53 billion riyals (408 million dollars) and other institutions a
further 783 million riyals (208.8 million dollars).
The successful implementation of the current development plan will further
strengthen Saudi society and economy, enabling it to enter the 21st century
prepared for the opportunities and challenges of the future.