Saudi Arabia on Tuesday announced plans to pump US$3.2 trillion in investments into the national economy by 2030, roping in the oil-reliant kingdom’s biggest companies in a major new economic diversification push.
The announcement by de facto ruler Crown Prince Mohammad bin Salman underscores an effort to jumpstart the domestic economy, as the top crude exporter battles high youth unemployment and a COVID-19-triggered downturn.
“The total investment injected ... into the national economy is expected to reach 12 trillion riyals [US$3.2 trillion] by 2030,” Prince Mohammad said in a speech carried by state television.
Twenty-four of the kingdom’s biggest companies, including energy giant Saudi Arabian Oil Co and petrochemical firm Saudi Basic Industries Corp, are to lead the investment drive by contributing 5 trillion riyals over the next decade, the crown prince told reporters later at a virtual briefing.
He said that the companies, many of them listed, had agreed to lower their dividends and redirect the money into the domestic economy in exchange for incentives, such as subsidies.
The Public Investment Fund, the kingdom’s sovereign wealth fund, is to provide 3 trillion riyals.
The remaining 4 trillion riyals are to come from a new “national investment strategy,” which would soon be announced, Prince Mohammad said.
The initiative would help boost economic growth, create hundreds of thousands of new jobs and strengthen the private sector, he added.
The program is part of a mammoth 27 trillion riyal investment plan over the next decade, which would include huge government spending to spur the domestic economy, the prince said.
It is designed to “promote the development and diversification of the national economy,” the state-run Saudi Press Agency said, adding that it would “strengthen cooperation between public and private sectors.”
However, 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 endeavors,” Wald said.
The announcement comes after the crown prince said in January that the Public Investment Fund would invest US$40 billion annually in the domestic economy over the next five years.
Joblessness in the kingdom touched 14.9 percent in the third quarter of last year, dipping slightly from an all-time high of 15.4 percent in the previous quarter, official data showed.
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