The Saudi Arabian public and private sectors are currently transforming, aligned with the Vision 2030 objective to increase the private sector GDP contribution from 40 to 65 percent.
Congruently, the government have created reform plans such as the National Investment Plan (NIP) and the privatization plan to transfer the control of public sector entities over to the private sector, to decrease expenditure and increase revenue. These plans have already made strides in improving the economy, with February 2018 seeing an increase in the private sector credit. Private sector firms even vocalised their positive expectancy for future growth. However, in order for the Saudi government to effectively implement these reforms, the public and private sector must help each other in making the transition as smooth and profitable as possible for both parties.
The government took the first step in assisting private sector entities coming into the Kingdom by decreasing barriers to entry and increasing ease of navigation through the Saudi market. The government identified specific opportunities for foreign investors; under the NIP there are 90 projects available and the privatization plan has also highlighted specific entities that are available for foreign direct investors to bid for. The government also introduced new licenses for business setup, including 100% foreign ownership in certain fields, such as engineering, and the introduction of the entrepreneurs license for the first time in the Kingdom, announced late 2017. The government also introduced the bankruptcy law, which means that foreign direct investors can come into the Kingdom with less risk and allowing leeway for them to restructure debts if need be.
The private sector reciprocates through two main ways; accepting long term investment opportunities and remaining compliant. In order for the Saudi government to effectively achieve the objectives set, the private sector must abide by the regulations set. The private sector, maintaining due diligence, will be able to reap the benefits offered by the government for their compliance. For example, compliance with Saudization to the highest level allows companies to access to the full Ministry of Labour and Social Development (MLSD) service incentives. This includes; work visa, sponsorship visas, profession change, TAQAT posting only required for 7 days, work permit renewals and labour office file for a new branch. Other incentives of compliance include; industrial and property offerings at competitive costs, utilities at globally competitive costs, competitive financing opportunities by the government for loans of up to 75% of total project costs are available and no real estate tax, to name a few.
Moving forward, we can expect more of the public and private sectors collaborations to achieve large goals for the Saudi Arabian economy. The government are continually offering new opportunities for foreign direct investors that will benefit the economy, private sector entities and local job seekers. As long as both sectors continue to work together, the Saudi government can expect large improvements in the economy and the society, as they encourage Saudi graduates and women to seek employment in the private sector.