Saudi Arabia: From Petro economy to 2030 initiative

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Naseebullah Khan
Oil, which contributes 72 percent to the Saudi economy, was discovered there in 1938. It is a natural phenomenon that, the more a natural resource is used the more it will deplete. The same has been happening in the case of Saudi Arabia__according to OPEC, Saudi Arabia has Oil reserves of 267 billion barrels, of which it extracts 12 lac barrels daily. If extraction at the current phase is continued, the reserves will erode by 2070. Owing to meet the challenge, the kingdom initiated its 2030 plan so that to divert its economy to nonpetroleum industries. The plan envisaged to sell 5 pc share of Aramco on 2.5 trillion USD, to establish a sovereign fund of 2 trillion USD, to expand military expansion, to attract sports and tourism activities, to impose taxes, to cut subsidies for the people in the kingdom, to establish entertainment cities, to double the number of pilgrims, to establish Safari parks, to build new cities and resorts near Red sea such as Neom, Aseer, and Amala, so that to attract investment and generate revenue other than petrol. From 2015 to 2020, during those five years, non-petrol revenue increased from 166 billion Saudi Riyal to 358 billion Saudi Riyal. Among the increase, the share of increased tax was 195 billion Riyals (Government imposed 5 pc value-added tax in the country), while 71 billion Riyals were recovered from those royal family members who were alleged for corruption and had been put in the famous Ritz hotel. The rest of 92 billion Riyals were a foreign investment. In 2019, the non-oil industry was just 4.6 billion USD. It should be in consideration that the annual target of foreign investment set in 2030 was 103 billion USD annually. The current scenario reflects a gloomy picture at least for the attraction of the FDI. In compliance with the plan, the kingdom, the initiatives such as flourishing film industry, women participation in the workforce, facilitation in visa, and opening of Cinemas have taken place, but on the other side, the nonpetroleum industry has not cemented and impressive as it expected. The initiative is an admirable step according to the emerging challenges of globalization. The initiative of 2030, lacks fundamental flaws. Until and unless the focus is given to agricultural development, the accumulation of power and economy is in few hands of the royal family, a transparent system of corrupt practices with special reference to economic activities of the royal family, and extravagance of the king family are handled, the success of the new initiative is uncertain.

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