Saudi National Day: Setting the Stage for a New Era

Saudi Arabia is on track to usher into a new era with the success of Vision 2030 and economic diversification drive as the largest economy in the Arab world has open its door to foreign investors by offering opportunities in key sectors.

Saudi Vision 2030, launched in April 2016, is a transformative economic and social reform blueprint aimed at reducing the kingdom’s dependence on oil and ensuring sustainable development by promoting tourism, entertainment, technology, and renewable energy sectors.

In a recent report, PwC noted that non-oil sector is becoming a driving force in the kingdom’s economic transformation, reflecting the success of its diversification efforts under Vision 2030. The PwC report highlighted the growth of the non-oil private sector, increased expenditures, higher level of home ownership and female participation in the workforce, and aspects of religious tourism.

Additionally, the successful implementation of revenue sources such as value-added tax and excise duty in line with the region’s rapid growth, have significantly increased revenue generation and pave way for the economic

diversification. The series of upcoming global events, such as the 2029 Asian Winter Games, Riyadh Expo 2030, and likely 2034 Fifa World Cup, coupled with already announced other giga projects, is expected to play a vital role in transforming the kingdom away from oil and will help the government in achieving its ambitious Vision 2030 targets, according to GIB Capital.

“These will present robust investment opportunities across major non-oil sectors and create additional job opportunities, resulting in sustainable economic growth over the medium term, says the research study.

As Saudi gross domestic product has surpassed $1 trillion mark, the International Monetary Fund’s executive board recently acknowledged the Vision 2030’s progress. The fund’s board praised the “ongoing economic transformation, supported by commendable reforms under the Vision 2030 agenda”.

Looking ahead, the IMF projects that the Saudi economy could grow to $1.3 trillion by the end of 2028. This ambitious outlook reflects the kingdom’s determination to continue on a path of sustainable economic development, diversification and long-term financial stability.

Private sector plays an important role in promoting economic growth, generating employment opportunities and making investment in development projects of the country. In line with the Vision 2030, the Saudi government is keen to raise the private sector’s contribution to the economy from 40 per cent to 65 per cent.

As part of economic transformation, this major policy shift is being facilitated by significant investments in infrastructure, such as the mega Neom City development — a $500 billion megacity project that aims to attract international investments and talent.

Additionally, the Red Sea project seeks to boost tourism by creating a luxury destination that will not only enhance the tourism sector but also promote cultural exchange and showcase Saudi heritage.

The PwC report highlighted another interesting development by noticing increased female participation in the Saudi workforce, which reached 36 per cent in the first quarter of 2023, surpassing the target of 30 per cent set for 2030 due to the government efforts to empower women by providing good opportunities to them so that they can play an integral part in the society.

Moreover, higher levels of home ownership in the kingdom is another indicator of Vision 2030 success as it increased from baseline 47 per cent to 67 per cent by the end of 2022 due to availability of affordable housing — a key aspect in enhancing citizens’ quality of life and promoting society stability. The kingdom is now closing in on its 2030 target of 70 per cent home ownership much ahead of its set deadline and is expected to exceed in the next five years.

In another strategic initiative to diversify its resources from oil and energy sectors, Saudi Arabia is evolving a space strategy as part of the country’s mission to increase its share in the global space business. The Vision 2030 also highlights the space sector’s role in growing the economy with the support of private sector and other industry players. The kingdom, which is expected to release its national space strategy later this year, will chalk out its plans for space exploration as well as downstream roles such as telecommunications, navigation, and earth observation.

The Saudi space sector generated $400 million in 2022 and this figure is expected to reach $2.2 billion by 2030 as the government promotes space research and innovation as well as looks for commercial opportunities, including space tourism. “As part of its Vision 2030, Saudi Arabia aims to be an international hub for space activities and has been progressively investing in space technology. The upcoming test flight of Halo Space aligns perfectly with Saudi Arabia’s ambitious vision and marks a significant step towards achieving it,” a government statement reads.

The development of Saudi Arabia’s renewable energy sector is also a core objective of Vision 2030, which is considered the kingdom’s blueprint for a modern and diversified economy. Energy experts suggest that Saudi Arabia is transitioning towards a post-oil era by investing in the solar photovoltaics industry to optimise green energy options.

The Saudi government is making significant investment in renewable energy, particularly solar and wind projects, in recognition of the need to transition towards sustainable energy sources. The kingdom plans to generate 58.7 gigawatts (GW) of renewable energy, including 40GW from solar photovoltaics, 16GW from wind energy and 2.7GW from concentrated solar power.

Saudi Arabia has emerged as a key player in the global renewable energy sector with an ambitious goal of sourcing 50 per cent of its electricity from green energy by 2030. Initiatives like the Saudi Green Initiative signal the country’s commitment to reducing carbon emissions and fostering environmental sustainability.

Moreover, the Saudi government has been actively working to improve the business environment by implementing reforms to enhance transparency, ease of doing business, and attract foreign direct investment. These efforts are expected to culminate in a more diversified economy, generating jobs and fostering innovation.

In conclusion, Saudi Arabia’s outlook in the wake of Vision 2030 and its economic diversification policies appears optimistic and fruitful. The kingdom is on a path to becoming a more vibrant economy with reduced dependence on oil, showcasing a dynamic blend of heritage and modernity while aiming for sustainable growth. The success of these initiatives will hinge on effective implementation and ongoing commitment to reforms.

The UAE and Saudi Arabia have been enjoying strong relations on multiple fronts as both the nations share a rich heritage steeped in traditions and values, fostering people-to-people connections through education, tourism, and cultural events. Both the countries share a robust relationship underpinned by historical, cultural and economic ties. Being a founding members of the Gulf Cooperation Council (GCC), the two countries have also been promoting collaboration on regional security, economic development, and cultural exchange.

Economically, both countries benefit from deep trading partnerships, with significant investments flowing between them in sectors such as energy, tourism, and technology. The UAE is among the major trading partners of Saudi Arabi as it exported goods worth SR15.07 billion during the second quarter of 2024, which is 61.8 per cent of total Saudi non-oil commodity trade among GCC countries.

Saudi Arabia’s total non-oil commodity exports, including re-exports, amounted to SR24.392 billion, reflecting an annual growth of 31 per cent. This marks an increase of SR5.765 billion compared to the second quarter of 2023, which recorded SR18.627 billion in exports.

As part of economic diversification policy, the non-oil trade between the Arab world’s two major economies is on the rise, reflecting a strong economic relations between the two countries. The bilateral trade has reached Dh586.75 billion in the past five years, according to Ministry of Economy data.