Saudi Arabia’s economy remains a net beneficiary from the annual Haj inflow, both on the back of investments from government entities and spending by pilgrims. This year’s pilgrimage is noted for a number of developments including the return of pilgrims from Iran, who are noted for their willingness to spend on gifts.
Also, the government has made headway in infrastructure development in and around Mecca via investments on trains and road networks.
Understandably, Saudi officials are paying particular attention to Umrah. Officials do not allow Umrah prior, during and immediately after the Haj.
However, this year was an exception, as officials extended the Umrah season by a month to June 10, with untold benefits to Saudi businesses.
In 2016, the kingdom issued 6.4 million visas to perform Umrah, up by 7 per cent from 2015. Yet, the actual numbers performing Umrah is higher when adding nationals from Saudi Arabia as well as those from the Gulf, who do not require permits or visas to perform the “little” Haj.
The Saudi vision 2030 calls for tripling the number of people performing Umrah. Undoubtedly, the move is popular with the Saudi business community, especially the hospitality sector, as this ensures the arrival of pilgrims on a steady basis to the holy shrines.
Four cities in western Saudi Arabia generate substantial benefits from the Haj, namely Makkah, Madinah, Jeddah and Taif. The King Abdul Aziz Airport in Jeddah serves as gateway to Makkah. Yet, others from within the kingdom and other GCC countries travel to the holy sites via Taif.
The advantages go further than the four cities, as Saudi firms throughout the kingdom get the opportunity to market their products to pilgrims. The practice of selling goods during Haj plus during the popular Ramadan Umrah do not require extraordinary marketing skills.
Moreover, the Haj season provides employment opportunities to a vast number of Saudi nationals. Some sell food and prayer beads to pilgrims, while others, including even foreign residents, use their private vehicles to transport pilgrims.
Unfortunately, not all these trading activities are recorded properly in the absence of tax system. Yet, changes are on the way, as the country prepares to introduce VAT at the start of 2018. Of all GCC countries, only Saudi Arabia and the UAE have revealed plans for implementing VAT from January 2018.
Understandably, the Vision 2030 places emphasis on strengthening and broadening the role played by private investors. This is vital in the light of challenges posed by the phenomenon of low prices and the need for streamlining public spending where possible.
The authorities like to see greater involvement of private sector investors assume leadership in critical installations. A plan is underway to privatise the kingdom’s airports.
In fact, Saudi officials are racing against time ahead of a major summit. A diplomatic source has disclosed to me that the kingdom wants to showcase its socioeconomic achievements when hosting the summit of G-20 leaders in 2020 for the first time ever. Two countries are scheduled to host the summit before Saudi Arabia — Argentina in 2018 and Japan in 2019.
The summit should provide the Saudi leadership a golden opportunity to put on display successes made in terms of infrastructure projects and business development plus on overall reforms.
The writer is a Member of Parliament in Bahrain.