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Development plan favors investment
The new plan, Saudi Arabia's seventh, forecasts next year's gross domestic earnings at $41.87 billion, an increase from 2000 of 3.16 percent. Economic development efforts in the new plan focus on diversification of national revenue resources, expansion of the production base and the creation of more jobs for Saudis.
The plan also anticipates that the Kingdom's non-oil business sectors will grow by a healthy 4.01 percent, with these segments of the economy eventually contributing 71.6 percent to the gross domestic product (GDP) by 2005.
"Privatization should be applied to healthy sectors," says Salah Al-Hejailan, a Riyadh-based lawyer with a roster of multinational clients doing business in Saudi Arabia. "These include the medical sector, of course, perhaps the (national) airline and electricity."
During the next five years, the Planning Ministry expects "Saudization" efforts and economic growth to create 817,000 new jobs for Saudi citizens. (Expatriates currently hold 488,600 of these jobs.) The service sector would see the biggest increase in jobs, growing at an annual projected rate of 3.44 percent.
The new development plan expects the government to continue expanding the Kingdom's infrastructure in order to meet the needs of a growing population and new development efforts.
The new five-year plan says continued privatization of key sectors will enable Saudi Arabia to sustain its economic prosperity. To encourage investment, the plan proposes setting up a "national base for science and technology which will be able to innovations and inventions ... this goal will be achieved by acquiring modern technology and promoting scientific research."
"Prudent use of funds and natural resources" are import components of the new plan, as is the call to "maintain ... existing facilities." These phrases resonate with investors who understand that the Kingdom's hospitals and airports – many which will soon require an infusion of cash to keep pace with new technology and increased demand.
"The plan reflects the continuation of the Kingdom's development policy, which follows a free economic system in line with Islamic values," the report adds. "It also reaffirms the country's commitment to its fundamental principles which aim at protecting Islamic values, defending the religion and the nation, and safeguarding social security and stability."
The plan forecasts an annual growth of 3.05 percent in the agricultural sector, 9.34 percent in the non-oil mining sector, 5.14 percent in industry, 4-62 percent in electricity, gas and water; 6.17 percent in building and construction; 8.29 percent in petrochemicals and other downstream industries.
A sound currency is also important to success of the new economic development plan. The Ministry of Planning affirms the government's plan to strengthen its balance of payments account by converting the current deficit of 3 percent to a surplus of 6.9 percent by the end of 2005. This plan will be supported by ongoing efforts to strengthen the Saudi riyal.
Referring to programs designed to advance social progress within the Kingdom, the new plan calls for the completion of 29 new hospitals with a total of 4,630 beds, and the opening of 250 new primary healthcare centers. By 2005, the plan would begin construction of 71 additional hospitals.
Sustaining high-quality healthcare in the Kingdom will also require the construction of 17 medical colleges, eight of them exclusively for women. According to projections, the medical staff and students at these new medical schools would provide services to 60 on-site primary care health centers.
The education sector will also experience significant enhancement under the new development plan. By 2005, construction will be completed for 1,111 primary, 819 intermediate and 905 secondary schools. The plan would also create ten technical colleges, 17 secondary technical institutes and two institutes for technical supervisors. At the conclusion of this newest development plan, government officials estimate that technical institutions in the Kingdom will have an annual enrollment of 55,000 students.
Infrastructure projects proposed by the new plan include completion of three desalination plants whose construction is currently underway. The Planning Ministry also intends to break ground for 12 new desalination plants, many which will be privately owned.
Other newly privatized sectors to reap benefits from the new development plan are drinking water networks and power grids. Between now and 2005, 7,300 kilometers of new drinking water networks will be needed to supply 300,000 homes. New power connections will be needed for an estimated 793,000 new customers. There is also a plan to construct more than 3,300 kilometers of new roads.
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Table of Contents Crown Prince Abdullah: A leader with a global vision |
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Saudi Arabia's latest five-year development plan (2000-2004) offers foreign investors an opportunity to tap into sectors of the economy that have recently undergone massive privatization: Healthcare, electrical power generation and water desalination.
The government's new plan, released late last August by the Planning Ministry, anticipates budget surpluses within two to three years. Foreign investment, which until now has been meager, is expected to grow at a rate of 6.85 percent a year.
Saudi Arabia's new development plan aims at enhancing the capabilities of Saudi manpower and creating jobs that are personally rewarding. To achieve this goal, new training programs will "enable the national cadre to cope with modern technological developments in various sectors."