The Saudi cabinet has approved a major plan to diversify the national economy away from oil and aiming to generate 450,000 non-government jobs by 2020.
The National Transformation Programme (NTP) 2020, endorsed by cabinet yesterday, also seeks to cut public expenditures by 40 per cent 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 per cent of state oil firm Saudi Aramco on the stock market.
The proceeds would become part of the world’s largest state investment fund, with USD 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 USD 87 billion this year.
At a press conference early today 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 (USD 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.
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 USD 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.