The Kingdom of Saudi Arabia Builds Its Future Economy: Diversifying, Increasing Investment, and Developing Human Capital
January 26, 2018
During a session titled Building Saudi Arabia’s Future Economy, the Kingdom’s Minister of Economy and Planning, Mohammad Al-Tuwaijri, Minister of Finance Mohammed Al-Jadaan, Minister of Commerce and Investment Majid Al-Qasabi, and Princess Reema bint Bandar, President of the Saudi Federation for Community Sports took to the stage to discuss the implementation of Vision 2030 and the vast changes happening within Saudi Arabia- not just economically but socially as well.
Saudi Arabia’s future will move away from being an economy solely oriented around oil; the Kingdom will focus more on developing human capital as its greatest asset. As Princess Reema bint Bandar proclaimed during the discussion, “human capital is the new currency,” and she encouraged people to move away from their myopic preconditions of the Kingdom and instead reconsider an honest look at the real development happening, which includes the developing roles of women in the economy and opportunities in other areas. These steps reflect the best interests of the Kingdom and will help create a flourishing economy and more vibrant society.
The Kingdom’s economy will focus on developing many sectors, such as mining, tourism, and entertainment. Saudi Arabia has mid-term and long-term financial plans for how to propel this growth forward. The deficit target was met: initially set for less than 10%--standing at 8.9%. In addition to new business regulation, significant financial reforms were also introduced; including Value Added Tax (VAT) and reformed energy pricing. To offset subsidy reform and tax implications on the most vulnerable segment of society; social protection measures have also been introduced in addition to a broader stimulus package distilled in the 2018 budget.
The amount of Qualified Foreign Investment (QFI) in the Kingdom has seen a 300% increase between January 2017- January 2018, from an estimated $533 Million to an estimated $2.13 Billion. While there was a brief drop in capital in-flows that coincided with the announcement of the Anti-Corruption Proceedings, QFIs grew to the highest level witnessed by the Kingdom in January of 2018. With respect to foreign investors combined (QFI+Swap), the level of investment has reached $5.46 Billion, close to the highest level that Saudi Arabia has ever achieved- which $5.51 Billion USD. The reforms enacted through Vision 2030 are aimed at ensuring the Kingdom is a viable investment environment.