Privatization program set to reap big dividends

Increased job opportunities and the arrival of the world’s most cutting-edge technologies are two of the expected consequences of Saudi Arabia passing an extensive privatization program – know as Delivery Plan 2020 – in the last few weeks.

The program was launched by the country’s Council of Economic and Development Affairs (CEDA), which is chaired by Crown Prince Mohammed bin Salman.

It marks a key stage in Saudi Arabia’s pursuit of one of the central aims of its Vision 2030 development strategy: to boost the private sector as a driver of economic diversification across the country.

Under Vision 2030, Saudi Arabia aims to increase the private-sector share of GDP from 40% to 65%. Vision 2030 says:

“We will … grow our economy and improve the quality of our services, by privatizing some government services, improving the business environment, attracting the finest talent and the best investments globally, and leveraging our unique strategic location in connecting three continents.”

Delivery Plan 2020 will look to implement privatization reforms and initiatives across infrastructure, energy, water, transportation, telecommunications, petrochemicals and finance. Its scope will cover three main objectives^[1]:

• Establishing legal and regulatory frameworks to allow privatization to progress.
• Helping suitable organizations implement privatization by creating “dedicated institutions to execute the policies”.
• Setting deadlines and overseeing the delivery of the privatizations.

Eleven other indirect objectives^[2], such as attracting foreign direct investment and easing access to healthcare services, are also set to be supported through the execution of Delivery Plan 2020.

The program has been widely praised by leading business figures from around the world, who have hailed it as a definitive sign that Saudi Arabia is open for business.

As a result of the initiative, officials hope to raise US$ 11 billion in non-oil revenues by 2020^[3]. A statement from the Council of Economic Development Affairs said:

“The program’s initiatives will be implemented to take into account the interests of all beneficiaries and enhance the fairness of transactions with the private sector. The program will result in greater control over service providers to ensure that beneficiaries receive the best services.”

During the initial stage, 10 sectors – including health, housing, education, and Hajj and Umrah – will be targeted. There has also been long-rumored speculation about the privatization of Saudi Arabia’s state-owned football clubs.

Delivery Plan 2020 is the latest in a series of economic and societal reforms designed to reshape Saudi Arabia and strengthen its position, both within MENA and on a global stage, over the coming decades.

As one of the most trusted partners in Saudi Arabia, Abdul Latif Jameel Investments will continue to work to support the government’s astute reforms and its ambition to secure a brighter future for every citizen. With excellent brand recognition, in-depth market knowledge and strategic links stretching across the business world, we will use our heritage and local understanding to encourage investment and development in Saudi Arabia from companies around the world.