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Saudi unveils far-reaching plan to move away from oil


Riyadh: Saudi Arabia today said it would create the world’s largest sovereign investment fund and sell shares in state energy giant Aramco under a vast plan unveiled to transform its oil-dependent economy.

The announcement of the long-term reform programme, dubbed “Vision 2030”, marks the beginning of a hugely ambitious attempt to move Saudi Arabia beyond oil, the backbone of its economy for decades.

“This is not a dream. This is a reality that will be achieved, God willing,” the main architect of the diversification plan, Deputy Crown Prince Mohammed bin Salman, told reporters, many of them invited from around the world.

Although it comes against a steep fall in oil prices, the plan “was not created only” to face that challenge, the sandal-wearing prince said, answering questions for 50 minutes at a royal palace in a rare government press conference.

The plan foresees social change in one of the world’s most conservative societies. There will be more entertainment options, and a greater contribution by women to the workforce.

Saudi Arabia currently employs millions of expatriates who do everything from manual labour to management.

“We will not rest until our nation is a leader in providing opportunities for all through education and training, and high quality services such as employment initiatives, health, housing and entertainment,” Mohammed wrote in an 84-page booklet outlining the plan.

If it works, Saudi Arabia “can live without oil by 2020”.

Earlier, in an interview with the Saudi-owned Al-Arabiya news channel, the 30-year-old prince outlined measures aimed at reshaping the economy of the world’s biggest energy exporter.

“We have all developed an oil addiction in Saudi Arabia and this is dangerous and has hampered development in many sectors during past years,” he said.

Mohammed said part of the plan is “to sell less than five per cent of Aramco” in an Initial Public Offering (IPO) on the stock market, valuing the company at between USD 2 trillion and USD 2.5 trillion.

By “selling even one per cent of Aramco, it will be the largest IPO in the world”, he said.

Part of the funds from the share sale, Mohammed said, will be used to set up a USD 2-trillion sovereign wealth fund which would easily surpass Norway’s USD 865-billion fund as the world’s biggest.

SWFs are commonly used as investment arms for oil-dependent nations seeking to diversify revenue streams.

With so much capital on its hands, the Saudi SWF would make Riyadh one of the single most important global investors.

It will be “by far the largest on the planet”, Mohammed said.

The reform programme aims to propel the kingdom from its ranking as the world’s 19th largest economy to the top 15.

It also includes major structural reforms, privatisations and efforts to increase government efficiency, the prince said. The domestic defence industry will be built up to account for as much as 50 per cent of military spending, from two percent now.

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