National Transformation Program 2020 to spur growth

JEDDAH: Saudi Arabia has announced a plan for the next five years to triple revenue from non-oil sources, tax expatriates and goods, reduce water and electricity subsidies, cut public sector salaries and ensure a greater involvement of the private sector in the economy, as part of a long-term initiative to reduce the country’s dependence on oil.

The details of the SR268 billion National Transformation Program (NTP), contained in a 112-page document, were approved late Monday by the Cabinet, chaired by Custodian of the Two Holy Mosques King Salman. The NTP is part of Vision 2030, being spearheaded by the Council of Economic and Development Affairs chaired by Deputy Crown Prince Mohammed bin Salman.
The NTP aims to boost non-oil revenue to SR530 billion by 2020, creating some 450,000 non-government jobs, according to comments by ministers, documents given to the media at a press conference in Jeddah on Monday, and reports from the Saudi Press Agency and other sources.
The plan aims to “enhance the level and quality of services” provided by government and “achieve a prosperous future and sustainable development,” it said. The NTP, which includes over 500 projects and initiatives as well as performance indicators for ministries and other government agencies, will cost around SR270 billion to implement, the document stated.
Minister of State Mohammed Al-Asheikh said the cost would have no impact on Saudi budget spending, and added that a further SR300 billion was expected to be contributed to NTP initiatives by the private sector.
The plan aims to increase the percentage of government debt to gross domestic product from 7.7 percent to 30 percent. Under Vision 2030, new non-oil revenue is expected to come from the introduction of a value-added tax, “sin taxes” on sweet drinks and tobacco, and fees imposed on the private sector.
Al-Asheikh said there were no plans to introduce income tax for citizens. However, the NTP document showed that the government will spend SR150 million to prepare income tax for expatriates, which refers to a tax on remittances recently mooted by the Shoura Council’s finance committee of 6 percent in the first year, reducing to 2 percent permanently from the fifth year of service.
The core goals of the plan is to create more than 450,000 jobs outside the government sector by 2020, have the private sector fund 40 percent of projects during the period, reducing financial pressure on the state, and with more than SR270 billion in goods and services produced locally instead of abroad, reducing imports and creating job opportunities.

The ministers present at the press conference outlined their priorities, including Minister of Civil Service Khalid Al-Araj, Minister of Environment, Water and Agriculture Abdul Rahman Al-Fadli, Minister of Energy, Industry and Mineral Resources Khalid Al-Falih and Minister of Haj and Umrah Mohammed bin Saleh Bentin.
The Justice Ministry is planning to reduce the time taken to resolve commercial cases from 575 days to 395 days, and improve the enforcement of contracts. The aim is to reduce the number of lawsuits handled by the courts and ensure each judge’s caseload is reduced from 455 to 299 by 2020.
The Finance Ministry plans to introduce various tax measures but no details of this was provided in the document; apply fees on the registration of real estate and on profits from real estate; and raise non-oil state revenues from SR163.5 billion in 2015 to SR530 billion by 2020.
In addition, the ministry would cut public salaries and wages as a proportion of the state budget from 45 percent to 40 percent; balance the budget by 2020; raise government debt from 7.7 percent to 30 percent of gross domestic product; raise Saudi Arabia’s credit rating from A1 to Aa2; and increase state assets from SR3 trillion to SR5 trillion.
The Economy and Planning Ministry plans to reduce the percentage of delayed state projects from 70 percent to 40 percent, cut electricity and water subsidies by SR200 billion, and reduce non-oil subsidies by 20 percent, the document stated.
The Energy, Industry and Mineral Resources Ministry is responsible for boosting annual non-oil commodity exports from SR185 billion to SR330 billion; lift the percentage of power plant electricity generation through “strategic partners” from 27 percent to 100 percent; and boost dry gas production capacity from 12 billion standard cubic feet per day to 17.8 billion.
The Health Ministry will spend SR4.7 billion to reform and restructure primary health care; the Communications Ministry will privatize the Saudi Postal Corporation; and the Ministry of Labour and Social Development will increase housing units to very needy families from 10,400 to 101,700.
The Housing Ministry will spend SR2.8 billion on a loan guarantee program and take other steps to promote home ownership; the Saudi Commission for Tourism and National Heritage will raise the number of direct jobs in tourism from 830,000 to 1.2 million; and the Saudi Arabian General Investment Authority will raise direct foreign investment from SR30 billion to SR70 billion.
At the press conference on Monday, Al-Falih said that the ministry was working with King Abdulaziz City for Science and Technology, King Abdullah City for Atomic and Renewable Energy and Royal Commission for Jubail and Yanbu on developing the energy sector.
He said there were more than 130 initiatives to be financed mostly by the private sector at an estimated cost of more than SR103 billion until 2020. Aramco has signed several agreements with international companies for the completion of the World Marine Industries and Services Complex, which will directly and indirectly create 80,000 jobs in the medium term, and reduce the need for billions in imports.
Al-Fadli said the ministry is seeking to achieve 16 strategic objectives, which includes ensuring food security in the Kingdom, through the development of an effective program for strategic storage, agricultural investment abroad, and a national program to reduce waste based on international experiences and standards. Bentin said the Kingdom was spending a great deal to improve services for Haj and Umrah pilgrims.