Saudi Arabia approves economic diversification plan

The National Transformation Programme (NTP) 2020, endorsed by cabinet late Monday, also seeks to cut public expenditures by 40 percent over the next five years and boost the contribution of the private sector.

NTP is one of several programmes designed to achieve the goals of the Saudi Vision 2030, an 84-page document released in April by Deputy Crown Prince Mohammed bin Salman, 30, who is leading the reform charge.

At the heart of Vision 2030 is a plan to float less than five percent of state oil firm Saudi Aramco on the stock market.

The proceeds would become part of the world’s largest state investment fund, with $2 trillion in assets.

Profits from the investment fund would help economic diversification and provide an alternative to oil revenues that have fallen by about half since 2014.

The collapse has accelerated Saudi efforts to move away from petroleum which still accounts for the bulk of government income in the kingdom, which projected a deficit of $87 billion this year.

At a press conference early Tuesday officials described the NTP as the first step in achieving the Vision. The 112-page NTP document is a five-year roadmap that lays out targets to be met by each government ministry, and their cost.

The NTP will be implemented through 543 initiatives across 24 government bodies at a cost of 270 billion riyals ($72 billion) over the next five years, Minister of State Mohammed al-Sheikh told the press conference in the Red Sea city of Jeddah.

“This is Phase One of addressing the challenges,” he said, adding there will be “no substantial fiscal impact” on the state budget, partly because some savings have already been made.

Neither would income taxes be imposed, Sheikh said.

By publishing the extent to which government targets are met, the NTP says it will ensure the transparency crucial to its success.

– Wide-ranging goals –

Saudi Arabia does not allow political parties, and peaceful rights activists have been jailed. But Saudis are avid commentators on social media.

Minister of Energy, Industry and Mineral Resources Khaled al-Falih said that under the programme, Saudi Arabia will be “a very strong competitor in renewable energy,” and will implement “massive” projects to produce more natural gas, while increasing non-oil exports.

Saudi oil production capacity would remain unchanged at 12.5 million barrels a day between now and 2020, the NTP says.

Under the programme, the ministry plans to build an international complex for marine industries that will provide 80,000 jobs and cut imports by $12 billion annually, the minister said.

A number of industrial cities are also planned and slated to generate 150,000 jobs, said Falih who last month replaced long-serving oil minister Ali al-Naimi.

Other diverse targets under the NTP range from the tourism commission’s development of the Farasan Islands in the Red Sea, the licensing of halls for women’s sports, and privatising the Saudi Postal Corp.

Among its wide-ranging goals, the Vision aims to reduce unemployment, increase women’s participation in the workforce, boost private sector economic contributions, and develop cultural and entertainment activities in the kingdom.

Saudi Arabia is one of the world’s most conservative societies, but more than half of its citizen population is younger than 25.

In an unusual display of public accessibility, government ministers are to continue answering questions from local and foreign reporters on national television for a further three days.