Saudi Arabia recently announced plans to pump investments worth about $3.2 trillion into the economy of the nation by 2030 to rope in the oil-reliant kingdom's biggest companies in a major new economic diversification push.
The announcement made by Crown Prince Mohammed bin Salman reiterates the nation’s effort to jumpstart the domestic economy as the leading exporter of crude continues to battle high youth unemployment and a coronavirus-triggered downturn.
"The total investment injected into the national economy is expected to reach 12 trillion riyals ($3.2 trillion) by 2030," Prince Mohammed said in a speech carried by state television.
Twenty-four of the kingdom's biggest companies, including energy giant Aramco and petrochemical firm SABIC, are set to lead the investment drive. The companies are projected to contribute about five trillion riyals over the next ten years, according to a statement from the crown prince.
According to him, many of the listed companies had agreed to lower their dividends with the goal of redirecting the money into the domestic economy in exchange for incentives such as subsidies.
The Public Investment Fund (PIF), the kingdom's sovereign wealth fund, is also said to provide three trillion riyals, with the remaining four trillion riyals to come from a new soon-to-announced "national investment strategy", Prince Mohammed said.
The initiative will help boost economic growth, create hundreds of thousands of new jobs and strengthen the private sector, he added, stating that the programme is part of a mammoth 27 trillion-riyal ($7 trillion) investment plan over the next decade.
The move has come under scrutiny by economic experts. The investment push should be "taken with a grain of salt", said Ellen Wald, president of Transversal Consulting and author of the book "Saudi Inc.". "It doesn't help grow the private sector to compel nominally private sector companies to invest in government programs at the expense of their shareholders or investment in their own endeavours," Wald told AFP.
Saudi Arabia, an absolute monarchy, is pushing to boost job creation and revive businesses decimated by the pandemic. The rate of unemployment hit 14.9% in Q3 2020, a slight drop from an all-time high of 15.4% in the previous quarter. The biggest Arab economy is also struggling to attract foreign investment, a major pillar of the prince's "Vision 2030" economic diversification plan to boost non-oil revenue.
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