RIYADH/DUBAI (TIP): In late February, several hundred Saudi officials, company executives and foreign consultants gathered in a luxury Riyadh hotel to discuss how Saudi Arabia’s economy could survive an era of cheap oil.
One company manager at the event told Reuters that officials from about 30 Saudi government bodies manned booths in which they described their challenges. Corporate bosses were encouraged to “figure out ways to do partnerships to address those needs, to offer feedback, to complain, and to plan future ventures or even just future meetings,” the manager said. “It was like a private sector version of a national parliament.”
The workshop was part of Saudi government attempts to work out how to restructure the economy so it no longer relies on oil.
The National Transformation Plan (NTP), as Riyadh has dubbed the changes, is expected to be unveiled in the next few weeks. Much is still secret. Ministries have refused to discuss plans in detail and Western consultancies contacted by Reuters declined to confirm their involvement, let alone policy details.
Officials, consultants and executives, though, say the five-year programme is both ambitious and risky. It includes asset sales, tax increases, spending cuts, changes to the way the state manages its financial reserves, an efficiency drive, and a much bigger role for the private sector.
Such changes have been talked about for years but never put into action. One reason to think this time could be different is that policy-making has in the past year shifted away from conservative bodies such as the finance ministry and central bank. Power is now concentrated in a new 22-member Council of Economic and Development Affairs, formed after King Salman took the throne in January 2015.
The Council is chaired by his son, Deputy Crown Prince Mohammed bin Salman, who is about 30. In his role as defence minister, Prince Mohammed launched Saudi Arabia’s military intervention in Yemen in March 2015. Now, he wants to shake up economic policy.
“Since the foundation of the kingdom there has been no government-led programme that innovates in this way,” said Mohamed al-Afif, a veteran banker who now runs Cash Solutions, a boutique financial services firm.
CONSULTANTS AND WHATSAPP
People familiar with the NTP said it was born late last year in discussions between Prince Mohammed and a few other top officials. At the time, oil was sinking below $30 a barrel, about half the low point that had been expected. That saddled the kingdom with an annual budget deficit near $100 billion and strengthened the case for radical changes.
While Prince Mohammed is the ultimate decider, he has chosen Economy and Planning Minister Adel al-Fakieh, a former food industry executive and mayor of Jeddah, to help with the detail. As labour minister between 2010 and 2015, Fakieh overcame opposition from business to policies that pushed companies to hire more Saudis. People involved in the NTP say Fakieh, 57, uses WhatsApp on his mobile phone obsessively, conducting chats with dozens of groups until the small hours.
Riyadh is spending tens of millions of dollars on foreign consultants for the NTP. London-based Source Global Research estimated in March that total Saudi spending on consultancies – mostly by the government or state-linked bodies – grew over 10 percent in 2015, from $1.06 billion in 2014.