- Since 2016, Saudi Arabia has been urgent in pursuing its aggressive economic reform efforts, but since oil prices have risen, these efforts have shifted and slowed.
- Riyadh hopes to grow its foreign investment and private sector activity, but it will struggle as its regulatory environment is continually shifting.
- Everything in the kingdom, from social practices to regulations, is still tightly controlled by the state, which will continue to invite wariness from investors and Saudi citizens.
- Though Riyadh may be tapping the breaks on some of its initiatives, this is not a sign that the troubles Vision 2030 is facing are fatal — or even entirely unexpected; rather, they are part of a familiar cycle.
After Crown Prince Mohammed bin Salman announced the kickoff of Saudi Arabia’s massive Vision 2030 economic reform plan in 2016, his country’s government charged toward implementing many of the sweeping changes it hoped to make over the course of almost a decade and a half. It was going to diversity its economy, boost private industry, make investment easier, reduce unemployment, increase innovation and modernize the country in countless ways both social and economic. Now, only two years later, the mainstream media is already asking if Vision 2030 is failing.
Since introducing its aggressive Vision 2030 economic reform plan in 2016, Saudi Arabia has faced inevitable barriers. As anticipated, Saudis used to receiving hefty benefits from the government have been reticent to revise their expectations about what they deserve in terms of jobs and services. The country has also struggled to open up its economy — one of the largest and yet most closed off in the region — to greater foreign investment. Now that oil prices have risen, Saudi Arabia’s reform drive in some ways is stalling, even while the long-term push to diversify and drum up private sector activity remains a priority, albeit a challenging one.
There are reports that the country is delaying its initial public offering (IPO) for the state-owned Saudi Arabian Oil Co., that vague government decrees are confusing small and medium-sized businesses and making them hesitant to invest, that unemployment rates have remained steady and that citizens are unhappy with many of the economic reforms the government has implemented so far, such as a landmark sales tax. But a project as ambitious and all-encompassing as Vision 2030 cannot be evaluated in terms of success or failure at this early stage, especially not based on indicators such as those above.
In some ways, Vision 2030 was designed to be too big to fail. With so many initiatives being pushed across so many industries and sectors of society, it’s almost guaranteed that some progress will be made. But the huge project can also be viewed as too big not to fail — and the government knows it. Objectives in the text of the plan, such as building a “vibrant society,” a “thriving economy” and an “ambitious nation,” are aspirational and intentionally vague. And while some of Riyadh’s goals have lofty numbers attached, such as a plan to increase non-oil government revenue to 1 trillion Saudi riyals ($267 billion), others are nebulous and tied to tricky social behavior changes, like its intention to “close the outputs of higher education and the requirements of the job market.”