Saudi Arabia is taking steps to reform the economy in a speedy manner in the light of the low oil prices over the past 18 months or so. It is widely projected that fiscal year 2015 would end up in a deficit due to the oil plunge.

Fresh economic liberalisation measures, such as the privatisation of airports, should further strengthen the economy. The notion of opening up the economy via reform measures is nothing new, but rather goes back to more than a decade when the kingdom was preparing to join the World Trade Organisation (WTO).

However, the oil price shock is adding more arguments in favour of speeding up the reforms. The petroleum sector is of such vital importance by virtue of accounting for 85 per cent of exports, 70 per cent of treasury revenues and 35 per cent of gross domestic product (GDP).

The stated goals of reforms entail enhancing the role of the private sector in the kingdom. Fortunately, Saudi Arabia is noted for having exceptionally powerful private firms. In the dairy industry, the are Al-Marai, Nada and Nadec that compete for business throughout the Gulf.

Recently, the authorities revealed plans to privatise key elements of the aviation industry. The process is due to commence with the King Khaled International Airport inRiyadh in the first quarter of 2016. This shall be followed by air traffic control and information technology units in the second and third quarters, respectively.

In fact, privatisation of aviation is not a novelty in Saudi Arabia. The catering unit of Saudi Arabian Airlines plus ground services have been privatised and listed on the local bourse.

The kingdom kick-started the original reform process while exerting efforts to be a full member of the WTO, which finally came through in late 2005. The Saudi Arabian General Investment Authority (Sagia), which seeks inward foreign investments, has a proven success record. Notably, Sagia managed to put in place a one-stop-shop process and a 30-day deadline for approvals on investment applications.

In addition, Sagia sought relentlessly to bring down the number of sectors barring foreign investments, dubbed as the ‘negative list’. At one point, the list entailed 22 activities but is now in single digits. Certainly, exploration, drilling and production of oil as well as foreign ownership in holy places remain off limits.

The government liberalised the telecom sector years ago by allowing rivalry in the mobile services, a move bringing untold benefits to consumers via enhanced services at lower prices. Still, the authorities had hoped to involve investors in running electricity, industrial zones, ports, airlines, airports, hospitals and schools.

Not surprisingly, such ambitious plans ended up being put on hold during times of budgetary surpluses.

As part of the reforms, foreign banks were permitted in the form of locally incorporated joint stock companies or as branches of international financial institutions.

Saudi officials should be commended for retiring a significant proportion of public debts in recent years when oil prices were skyrocketing. In 1999, outstanding debt surpassed the GDP, while the latest count puts public debt at around 2 per cent. Certainly, these moves are helping the Saudi economy to adjust to the fall in oil prices for an extended period of time.

Saudi officials appreciate the need to do more to speed up reforms. But they must not effect this out of desperation.