Saudi Arabia unveils plans to end its reliance on oil

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Saudi Arabia pledges to end its dependence on crude revenue by 2020.
Saudi Arabia pledges to end its dependence on crude revenue by 2020.

Ryadh - Saudi Arabia to introduce expat 'green card' for Arabs, Muslims

By Reuters

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Published: Tue 26 Apr 2016, 7:58 PM

Last updated: Tue 26 Apr 2016, 11:03 PM

Prince Mohammed bin Salman bin Abdulaziz, Deputy Crown Prince, Second Deputy Premier and Minister of Defence of Saudi Arabia, unveiled ambitious plans on Monday aimed at ending the kingdom's reliance on oil and transforming it into a global investment power.
Prince Mohammed said Riyadh would raise the capital of its public investment fund to SR7 trillion ($2 trillion) from SR600 billion ($160 billion) and would sell up to five per cent of shares in state oil giant Aramco.
The plans announced by Prince Mohammed also included changes that would allow women to have a bigger economic role and by offering an improved status to resident expatriates.
Saudi Arabia will introduce a "green card" system within five years to allow resident expatriates in the kingdom to have more rights in order to improve its investment climate, Prince Mohammed said.
He said planned sweeping reforms, of which the proposed green card is one, will be implemented even if oil prices rise back above $70 a barrel.
"We have developed a case of oil addiction in Saudi Arabia," Prince Mohammed said in a televised interview with Al Arabiya news channel, adding that Riyadh needed to cut its dependence on revenue from crude.
At the centre of the "Vision 2030" reforms is the restructuring of its Public Investment Fund (PIF), which Prince Mohammed said would become a hub for Saudi investment abroad, partly by raising money through selling shares in Aramco.
"We restructured the fund. We included new assets in the fund, Aramco and other assets, and we fixed the problems of the current assets that the public investment fund owns, both in terms of companies and other projects," he said.
"Initial data say the fund will have control over more than 10 per cent of global investment capacity."
The part privatisation of Aramco was also central to the plans, and Prince Mohammed said it would be transformed into an energy company that he valued at more than $2 trillion, and that up to five per cent of it would be listed on the stock market.
So big is the state oil company because of its rights to the kingdom's crude reserves, that selling even one per cent of its value would create the biggest initial public offering (IPO) on earth, he said.
He said other Aramco subsidiary companies would also be listed along with other publicly held companies, and added that one major benefit of privatisation was that it would increase transparency and help limit corruption.
The reforms aim at raising the private sector share in the economy to 60 per cent from 40 per cent, reducing unemployment to 7.6 per cent from 11 per cent and growing non-oil income to SR1 trillion ($267 billion) from SR163 billion ($44 billion) were announced.
The plan also envisaged increasing women's participation in the workforce. But the focus was on economic restructuring to help reduce oil dependence.
"I think by 2020, if oil stops we can survive," Prince Mohammed said.
"We need it, we need it, but I think in 2020 we can live without oil."
Stocks jump 2.5%
Meanwhile, Saudi Arabia's stock market recovered from early losses and jumped 2.5 per cent on Monday after the announcement of the economic overhaul.

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