In April of 2016 the Crown Prince of Saudi Arabia, Mohammed bin Salman (MBS), introduced Vision 2030, an ambitious plan for the development and advancement of Saudi Arabia. Vision 2030 is a holistic plan to transform all aspects of Saudi Arabia and the lives of its citizens, but the path to accomplishing the Vision in its entirety is not as simple as it may appear on paper. [1] Some progress towards the Vision’s goals has been made, but it is far behind set project timelines, as the nation has been grappling with the COVID-19 pandemic and falling oil prices. At the five-year mark of Vision 2030, one thing is clear: the entirety of the plan will not be accomplished at the projected end date, less than ten years down the road. Analysts recognize that its plans as a whole are much grander than what can be completed in just 16 years, but this does not mean that Vision 2030 is a failure. COVID-19 and falling oil prices have only further reassured Saudi officials that Vision 2030 is the necessary pathway towards economic development and prosperity. With just nine years left until completion, the Vision can still be a grand success for the country. However, goals and timelines must be rethought to reflect the new hand the global economy has been dealt throughout the past year.
Background:
When oil prices plunged after their 2014 record high, Saudi Arabia’s economy and society at large were hit hard. Just before oil prices collapsed at the end of 2014, “oil revenues were responsible for 90 percent of export earnings, 87 percent of budget revenues, and 42 percent of GDP”.[2] After the collapse, the government began drawing deficits and increasing debt to make up for losing nearly half of its total revenue earned before oil prices collapsed.[3] This economic crisis was a wake-up call for Saudi leaders in which they recognized economic diversification and decreased oil revenue dependence was crucial for the country moving forward. MBS was inspired by this crisis to create Vision 2030 as a way for the nation to propel itself forward on its pathway towards economic and societal development.
With COVID-19 striking the globe, massive lockdowns, and another drop in oil prices, the need for economic diversification has only been amplified in 2020. Also, as the world begins to understand the perils of climate change, world leaders continue to push towards greener energy sources and initiatives. As of 2019, Saudi Arabia “possesses around 17 percent of the world’s proven petroleum reserves,” with oil and gas making up nearly 50% of the country’s $792 Billion Gross Domestic Product (GDP).[4] [5] Furthermore, approximately 70% of the country’s export revenue is from the oil and gas sector.[6] Much of the Vision is set on directly and indirectly transforming those statistics to create a substantially more diverse economy and additional revenue streams for the government.
Aside from reducing oil revenue dependence, the general goal of the Vision is for Saudi Arabia to be “the heart of the Arab and Islamic worlds, the investment powerhouse, and the hub connecting three continents”.[7] Project creators are drawing on a deep-rooted national identity, the Saudi heritage and Islamic culture, and a moderate Islamic stance to unite the citizens under Vision 2030. As stated on the official Vision 2030 website, MBS and other Vision strategists believe, “[the] real wealth lies in our people and our society”.[8] To accomplish many of the Vision’s 96 strategic objectives, there is an aim to completely transform all aspects of society in a way in which the citizens are at the forefront of development.
At the base of the Vision are three broad themes or pillars, each “draw[ing] on the country’s intrinsic strengths to help the Kingdom’s citizens realize their aspirations,” including a vibrant society, a thriving economy, and an ambitious nation as seen in Figure 1.[9] In addition to those broad themes, thirteen Vision Realization Programs (VRPs) fall under one of the three pillars. These programs are designed as in-depth goals and action plans to develop a sector in focus, such as lifestyle improvements, balancing the fiscal budget, or strengthening the Public Investment Fund.[10]
A Vibrant Society
The first pillar, a vibrant society, focuses on developing and enhancing Saudi society at large. Much of this pillar is geared towards “strengthening Islamic Values and national identity” and “offering a fulfilling and healthy life” to the country’s citizens.[11] Saudi Arabia strives to achieve these goals through the VRPs, specifically the Hajj Experience Program, the Lifestyle Improvement Program, the Housing Program, and the Saudi Character Enrichment Program.[12] Saudi Arabia’s leaders recognize that the country is certainly behind the times in the realms of culture and entertainment, and believe that focusing on their development will not only creating more enjoyable lives for its citizens but also attract more foreign travelers.
A Thriving Economy
The second pillar, a thriving economy, is focused on making dependence on oil revenues a thing of the past for Saudi Arabia. This pillar of the Vision aims to “grow and diversify the economy [and] increase employment,” goals that are particularly relevant in the wake of the COVID-19 pandemic and low oil prices.[13] Through VRPs such as the National Companies Promotion Program, Financial Sector Development Program, National Industrial Development and Logistics Program, the Public Investment Fund Program, and the Privatization Program, the government is aiming to foster economic growth in both new and old sectors of the economy and in turn, create jobs for Saudi citizens.
An Ambitious Nation:
The third pillar, an ambitious nation, is essentially focused on the realization that the government needs to be better and do better for its citizens through good governance, accountability, and transparency. The overarching objectives under this pillar include “enhance[ing] government effectiveness [and] enable[ing] social responsibility”.[14] VRPs involved in making these goals a reality include the National Transformation Program and the Fiscal Balance Program. Through this pillar, officials aim to establish a government that is responsible, inclusive, and effective for its citizens and businesses.[15]
Timeline
To make the Vision clear and measurable, it is “built on a five-year strategic planning cycle, with annual and quarterly adjustments”.[16] The Vision is designed to first “build the foundation,” then “drive outcomes” and finally “deepen impact” as the project wraps up in 2030.[17] The five-year planning cycles began in 2016, where the Vision’s foundation was established, and critical initiatives were put into action. The second cycle is 2020, where more reforms are implemented, and energy for the project is continuously moving forward. Finally, in 2025 and 2030, the plan aims to reevaluate these key initiatives and formulate a strategy for the future.[18] In addition to 5-year plans, there are also more frequent reviews to ensure the projects are moving forward. The annual strategic review and budget setting assess budgets for ongoing and future projects and redirects any projects that may require a course correction. The quarterly reviews provide updates on recent progress and allow project managers to “deep dive on problem area[s],” that may arise within a specific VRP or strategic objective.[19]
Publicized Progress: 2017-2018
The most recent progress shared on the official Vision 2030 website is from 2017 and 2018, showing that the government certainly hit the ground running after the April 2016 announcement of the plan. There has been visible progress being made under all three pillars, as the government recognizes it must work to develop them in tandem instead of one by one. Based on projects implemented in 2017 and 2018, economic development and reduction of oil revenue dependence are clearly the top priority.
Under the Vibrant Society pillar, work has been made to develop the culture and entertainment sector and improve the Saudi citizens’ quality of life. In 2018, there were “more than 5,000 live events hosted across 56 cities,” encompassing everything from music, to sports, to comedy.[20] Also, the General Sports Authority has surpassed its interim target of “getting 20 percent of Saudis over [age] 15 exercising by 2020,” as the number rose from 13% to 23% with two years to spare.[21] Other cultural changes have been implemented, including allowing women to drive beginning in June of 2018. However, there is still much progress to be made on this front to increase the quality of life and spark an increase in non-pilgrimage-related tourism to the nation.
Compared to the Vibrant Society pillar, the Thriving Economy pillar saw an abundance of new initiatives and programs placed into action between 2017 and 2018. In 2018, the “Saudi stock exchange joined the MSCI Emerging Market Index,” where it is estimated that both passive and active investments could produce “between $30 billion and $45 billion”.[22] The Kingdom is striving to become a global FinTech hub to draw both foreign investors and foreign businesses through the launch of Fintech Saudi in 2018. During quarter one of 2018, the number of foreign investment licenses was up 130%.[23]
In addition to focusing on the financial sector, the Saudis have made significant progress towards developing new industries such as manufacturing, renewable energies, and general industrialization. To encourage the development of new industries, the “capital of the Saudi Industrial Development Fund has been increased by $1.6 billion”.[24] One industry the Saudis have particularly aimed to develop is defense. In 2017, the Saudi Arabian Military Industries company was created, with goals of “becom[ing] one of the world’s to 25 defense companies… directly contribut[ing] around SR14 billion to the Kingdom’s GDP…and creat[ing] over 40,000 highly skilled jobs,” by the end of 2030.[25] Finally, in 2017 the government launched a $500 billion initiative called NEOM, in which a 26,500 sq km zone will be built to foster new businesses and industry.[26] With significant financial investments and initiatives being implemented quickly, it is clear that economic development and diversification are a top priority for the nation’s leaders.
Finally, in the pillar of an Ambitious Society, there have been a few key initiatives, but progress in this realm is certainly not comparable to that of the economic pillar. In 2018 Saudi Arabia climbed 5 points on the World Economic Forum’s efficiency of government spending index to 7th place globally.[27] The fiscal deficit fell by 84% in Q2 of 2018, and “non-oil revenue increased by 42% compared to the same period in the previous year”.[28] Although a balanced budget was a key point in the pillar, there were no developments in governance and transparency within the two years.
Known Progress: 2019-2020
Much of the Vision’s recent progress has not been shared by the government on the official Vision 2030 website. The most recent updates regarding initiatives and programs put into action are from 2018, as previously mentioned. Although it is expected that gathering data and sharing updates takes time, it is somewhat troublesome that details of specific progress from 2019 have yet to be made public. For the years of 2019 and 2020, analysts are left to piece together the puzzle through economic statistics such as GDP and Gross National Income (GNI) figures, and any initiatives that the government has decided to showcase publicly.
Pre-Covid: 2019- March 2020
Through statistics and highly publicized programs, one can get a glimpse into the continuing progress made in 2019 and the beginning of 2020. In the realm of business and economics, indicators show that Vision progress continued steadily in 2019. During that year, Saudi Arabia’s ranking in the World Economic Forum’s Global Competitiveness Index, which compares 141 economies and “measures national competitiveness,” rose three ranks to number 36 of 141.[29] The World Bank’s Ease of Doing Business ranking improved significantly for Saudi Arabia in 2019, going from 92 out of 190 economies to 62, an impressive 30 rank jump in just one year.[30] The World Bank’s Doing Business 2020 report goes on to detail that Saudi Arabia “is the most improved economy in Doing Business 2020, with a total of eight reforms,” in the areas of contracts, debt, trade, permits, and starting a business.[31] Much of these reforms involved streamlined processes and online databases in which the government consolidated information, thus producing immense increases in efficiency.[32] Also according to the World Bank, the national GDP rose from $786.5 billion in 2018 to approximately $793 billion in 2019.[33]
When examining the Vibrant Society pillar, figures provided by the World Bank show that in 2019, school enrollment, life expectancy at birth, and GNI all rose from 2018 levels, as the country works to stress the importance of both education and increasing quality of life for its citizens.[34] Although it appears much of the Vision progress is economically focused, it is clear that there have been some efforts in the society-focused pillar as well.
The Impact of COVID-19: March 2020 to Present
It is no surprise that when COVID-19 struck, the global economy took a massive hit. As COVID was ravaging the country, there was also a significant drop in oil prices, further damaging the Saudi economy and depleting government revenues. According to the Saudi General Authority for Statistics (GAS), the Annual Saudi GDP declined by 4.1% in 2020, with negative growth in both the oil and non-oil sectors.[35] However, when comparing Q3 and Q4 of 2020, it is clear that the economy is in the process of bouncing back, with GDP per capita rising 3.8% and national GDP growing by 2.5% in Q4.[36] Through GAS statistical data, it is also apparent that international trade and employment opportunities are bouncing back, as both statistics are moving in a positive direction. Through reforms and initiatives put in place throughout 2020 discussed in depth below, it appears that the Saudi government has managed to create positive economic change heading into 2021.
Government Initiatives to Soften Economic Impact of COVID
To combat the economic effects of the pandemic and falling oil prices, the Saudi government has taken some steps to compensate for lost revenue and soften the blow to the economy. In July of 2020, the Kingdom tripled its Value Added Tax (VAT) rate to 15% from 5%. According to KPMG, the increase is “intended to address the fiscal imbalance,” brought on by increased health care costs, lack of consumer spending, and overall loss significant government revenues.[37] The country also decided to cut 5% of its 2020 budget, amounting to 50 billion SAR, and raise the debt ceiling from 30% of GDP to 50% to provide further cushioning.[38]
The Saudi government and the Saudi Social Development Bank have implemented two main stimulus packages to mitigate the economic impacts of COVID. The government stimulus package supported the country’s businesses through a $32 billion economic stimulus bill in which the banking sector was allocated $13.3 billion and $18.6 billion was allocated towards the private sector.[39] Much of the funds directed towards the private sector and banks are to ensure the continuation of liquidity, employment, and wages for workers.[40] The purpose of the Development Bank’s $3.2 billion package is to support low-income families, entrepreneurs, and small and medium enterprises throughout the nation.[41]
Moving Forward
As nationwide and worldwide lockdowns ease, the vaccine becomes available, and global travel ramps up, there is no doubt that Saudi Arabia will be able to bounce back from the past year of economic and societal turmoil. The pandemic’s destructive impact on the global economy, travel, and health, coupled with falling oil prices, should stand to reassure MBS and the Saudi government that Vision 2030 is something worth pursuing.
The delay produced in the past year reasonably gives rise to concerns for the current timeline and feasibility of the ambitious project. Based on the original timeline, 2020 was supposed to be the first assessment milestone for the Vision’s progress. Broadly, the initial goal of 2020 was that there would be a continuation to “drive outcomes [and] maintain momentum to continue reform”.[42] However, the government has yet to publicly indicate whether this milestone year was actually used to analyze the current state of the Vision.
As the world slowly emerges from the COVID pandemic and the global economy begins to gain traction once again, MBS and the Saudi government must rethink the current timeline and feasibility of Vision 2030. The events of the past year have certainly solidified the importance of the Vision but have also created a significant delay and backlog of projects. The Vision’s leaders must take into account the economic effects of the past year, and work to incorporate them into the Vision’s strategic goals. However, to achieve all 96 strategic objectives of the Vision, the timeline must be extended. Additionally, those 96 objectives must be adjusted or expanded to account for the impact of COVID and falling oil revenue on the Saudi economy, government, and most importantly, the citizens. Overall, Vision 2030 is an ambitious but realistic plan for the development of Saudi Arabia if timelines and goals are adjusted accordingly to account for the global chaos of the past year.
Figure 1[43]
[1] “Saudi Vision 2030,” accessed April 15, 2021, https://www.vision2030.gov.sa/en.
[2] Stephen Grand and Katherine Wolff, “ASSESSING SAUDI VISION 2030: A 2020 REVIEW,” n.d., 80.
[3] Grand and Wolff.
[4] “OPEC : Saudi Arabia,” accessed April 15, 2021, https://www.opec.org/opec_web/en/about_us/169.htm.
[5] “GDP (Current US$) – Saudi Arabia | Data,” accessed April 15, 2021, https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=SA.
[6] “OPEC : Saudi Arabia.”
[7] “Saudi Vision 2030.”
[8] “Vibrant Society | Saudi Vision 2030,” accessed April 15, 2021, https://www.vision2030.gov.sa/en/themes/3.
[9] “Vision Realization Programs Overview.Pdf,” accessed April 16, 2021, https://www.vision2030.gov.sa/sites/default/files/report/Vision%20Realization%20Programs%20Overview.pdf.
[10] “Vision Realization Programs Overview.Pdf.”
[11] “Vision Realization Programs Overview.Pdf.”
[12] “Vision Realization Programs Overview.Pdf.”
[13] “Vision Realization Programs Overview.Pdf.”
[14] “Vision Realization Programs Overview.Pdf.”
[15] “Vision Realization Programs Overview.Pdf.”
[16] “Vision Realization Programs Overview.Pdf.”
[17] “Vision Realization Programs Overview.Pdf.”
[18] “Vision Realization Programs Overview.Pdf.”
[19] “Vision Realization Programs Overview.Pdf.”
[20] “Vision Progress,” n.d., https://www.vision2030.gov.sa/en/vision-progress.
[21] “Vision Progress.”
[22] “Vision Progress.”
[23] “Vision Progress.”
[24] “Vision Progress.”
[25] “Vision Progress.”
[26] “Vision Progress.”
[27] “Vision Progress.”
[28] “Vision Progress.”
[29] Klaus Schwab, “The Global Competitiveness Report 2019,” n.d., 666.
[30] World Bank, Doing Business 2020: Comparing Business Regulation in 190 Economies (Washington, DC: World Bank, 2020), https://doi.org/10.1596/978-1-4648-1440-2.
[31] World Bank.
[32] World Bank.
[33] “Saudi Arabia | Data,” accessed April 20, 2021, https://data.worldbank.org/country/saudi-arabia.
[34] “Saudi Arabia | Data.”
[35] “Gross Domestic Product Annual 2020 EN.Pdf,” accessed April 20, 2021, https://www.stats.gov.sa/sites/default/files/Gross%20Domestic%20Product%20annual%202020%20EN.pdf.
[36] “Gross Domestic Product Fourth Quarter 2020 EN.Pdf,” accessed April 20, 2021, https://www.stats.gov.sa/sites/default/files/Gross%20Domestic%20Product%20fourth%20Quarter%202020%20EN.pdf.
[37] “Saudi Arabia: VAT Rate to Increase to 15% (COVID-19) – KPMG United States,” KPMG, May 11, 2020, https://home.kpmg/us/en/home/insights/2020/05/tnf-saudi-arabia-vat-rate-to-increase-to-15-percent-covid-19.html.
[38] Marwa Rashad Chmaytelli Stephen Kalin, Maher, “UPDATE 2-Saudi Arabia Announces Emergency Stimulus, Expects Wider Deficit,” Reuters, March 20, 2020, https://www.reuters.com/article/health-coronavirus-saudi-economy-idUSL8N2BD4T9.
[39] Chmaytelli.
[40] “Kingdom of Saudi Arabia,” KPMG, accessed April 20, 2021, https://home.kpmg/xx/en/home/insights/2020/04/saudi-arabia-government-and-institution-measures-in-response-to-covid.html, https://wknd.site/content/kpmgpublic/xx/en/home/insights/2020/04/saudi-arabia-government-and-institution-measures-in-response-to-covid.html.
[41] Chmaytelli, “UPDATE 2-Saudi Arabia Announces Emergency Stimulus, Expects Wider Deficit.”
[42] “Roadmap | Saudi Vision 2030,” accessed April 15, 2021, https://www.vision2030.gov.sa/en/vision/roadmap.
[43] “Vision Realization Programs Overview.Pdf.”
General Works Cited:
Chmaytelli, Marwa Rashad, Stephen Kalin, Maher. “UPDATE 2-Saudi Arabia Announces Emergency Stimulus, Expects Wider Deficit.” Reuters, March 20, 2020. https://www.reuters.com/article/health-coronavirus-saudi-economy-idUSL8N2BD4T9.
“GDP (Current US$) – Saudi Arabia | Data.” Accessed April 15, 2021. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=SA.
Grand, Stephen, and Katherine Wolff. “ASSESSING SAUDI VISION 2030: A 2020 REVIEW,” n.d., 80.
“Gross Domestic Product Annual 2020 EN.Pdf.” Accessed April 20, 2021. https://www.stats.gov.sa/sites/default/files/Gross%20Domestic%20Product%20annual%202020%20EN.pdf.
“Gross Domestic Product Fourth Quarter 2020 EN.Pdf.” Accessed April 20, 2021. https://www.stats.gov.sa/sites/default/files/Gross%20Domestic%20Product%20fourth%20Quarter%202020%20EN.pdf.
KPMG. “Kingdom of Saudi Arabia.” Accessed April 20, 2021. https://home.kpmg/xx/en/home/insights/2020/04/saudi-arabia-government-and-institution-measures-in-response-to-covid.html, https://wknd.site/content/kpmgpublic/xx/en/home/insights/2020/04/saudi-arabia-government-and-institution-measures-in-response-to-covid.html.
“OPEC : Saudi Arabia.” Accessed April 15, 2021. https://www.opec.org/opec_web/en/about_us/169.htm.
“Roadmap | Saudi Vision 2030.” Accessed April 15, 2021. https://www.vision2030.gov.sa/en/vision/roadmap.
“Saudi Arabia | Data.” Accessed April 20, 2021. https://data.worldbank.org/country/saudi-arabia.
KPMG. “Saudi Arabia: VAT Rate to Increase to 15% (COVID-19) – KPMG United States,” May 11, 2020. https://home.kpmg/us/en/home/insights/2020/05/tnf-saudi-arabia-vat-rate-to-increase-to-15-percent-covid-19.html.
“Saudi Economy Grew 2.8% in Fourth Quarter As Covid Impact Eased.” Bloomberg.Com, February 10, 2021. https://www.bloomberg.com/news/articles/2021-02-10/saudi-fourth-quarter-growth-up-2-8-compared-to-previous-quarter.
“Saudi Vision 2030.” Accessed April 15, 2021. https://www.vision2030.gov.sa/en.
Schwab, Klaus. “The Global Competitiveness Report 2019,” n.d., 666.
“Vibrant Society | Saudi Vision 2030.” Accessed April 15, 2021. https://www.vision2030.gov.sa/en/themes/3.
“Vision Progress,” n.d. https://www.vision2030.gov.sa/en/vision-progress.
“Vision Realization Programs Overview.Pdf.” Accessed April 16, 2021. https://www.vision2030.gov.sa/sites/default/files/report/Vision%20Realization%20Programs%20Overview.pdf.
World Bank. Doing Business 2020: Comparing Business Regulation in 190 Economies. Washington, DC: World Bank, 2020. https://doi.org/10.1596/978-1-4648-1440-2.
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