Riyadh: Saudi Arabia outlined plans for 192 billion riyals ($51 billion) of investments by local companies including Saudi Aramco and mining giant Maaden under a government incentive program as it seeks to accelerate a plan to diversify its economy away from oil.
The program, called Shareek, was begun in 2021 by Crown Prince Mohammed bin Salman and is part of his “Vision 2030” plan to transform the oil-dependent Gulf kingdom and raise it to the ranks of the world’s top 15-largest economies by 2030. Saudi Arabia was the world’s fastest-growing among the Group of 20 economies in 2022.
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In an event held Wednesday at the Ritz-Carlton hotel in Riyadh, which the crown prince attended briefly, officials said more than 60 per cent of the financing for the projects will come from eight companies led by Saudi Aramco by 2030.
The projects are set to add almost 467 billion riyals to the kingdom’s gross domestic product and create more than 64,000 jobs by 2040, according to Abdulaziz Al-Arifi, chief executive officer of the Shareek program.
MBS - as the crown prince is commonly known - unveiled Shareek at the end of March 2021 during a Zoom call with his top ministers. It was broadcast live on state television, and the prince appeared with his sleeves rolled up and speaking enthusiastically to the camera.
He said the funding from the corporate sector would be coupled with trillions of riyals in government spending and investments. Combined with a rise in consumer spending of 5 trillion riyals, it would all translate into a 27 trillion-riyal injection into the economy over 10 years. There would be more spending over the next decade in Saudi Arabia than during the entire 300-year history of the kingdom, he had said.
“This is a huge opportunity, this is a new Saudi Arabia,” the crown prince said at the time.
The signing ceremony on Wednesday included announcements of projects from many of Saudi Arabia’s heavyweights including Aramco, Saudi Basic Industries Corp., Saudi Arabian Mining Co, as Maaden is formally known, and logistics company Bahri.
“Shareek is a good demonstration of how the government is trying to synchronize investment from the private sector with investment from the government,” said Bandar Al Khorayef, minister of industry and mineral resources. “It is intended to move faster different projects that we know are unlocking certain supply chains, for example in manufacturing.”
Firms are offered investment incentives including government off-take agreements and access to government loans or financing support, said Al Khorayef.
When it was originally presented the plan was described as encouraging private-sector firms to cut back on dividend payments to shareholders and instead use the money to invest in new growth initiatives. So far, none of the companies involved have said anything about trimming shareholder payouts.
Among the first batch of projects receiving support under the Shareek program is Aramco’s Amiral Petrochemical Complex in Jubail, an $11 billion joint venture with TotalEnergies SE, and Maaden’s plan to boost phosphate production by 50 per cent to make it the third-largest fertilizer producer by 2029.