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Construction and transport are among the largest sectors in Saudi Arabia.

Public-private partnership 'key to Saudi vision'

RIYADH, May 3, 2016

Creating a successful partnership between private sector investors and the government will be the critical factor in shaping Saudi Arabia’s development over the coming five years, according to a new research report.

Under the ambitious reform agenda being driven by Deputy Crown Prince Mohammed bin Salman Al Saud and the Economy and Planning Minister Adel bin Mohammed Faqih within its recently announced Vision 2030 framework, Saudi Arabia is seeking to drive the non-oil economy and stimulate private investment in state activities.

In its Vision 2030 strategy, Riyadh has set itself the target of increasing the private sector’s contribution to GDP (gross domestic product) from 40 per cent today to 65 per cent by 2030, and growing non-oil government revenues from SR163 billion ($43 billion) to SR1 trillion ($267 billion) by the end of the next decade.

The report, "Saudi Arabia Strategies 2016: Adapting to a new economic reality" from Meed, examines how the Vision 2030 strategy will change the business landscape in the kingdom, the government's priorities and the strategies of businesses seeking to take advantage of the new opportunities being created in the kingdom.  

The report identifies new and emerging opportunities for investors and companies in the region’s biggest market. It also highlights the challenges that companies need to be aware of as the kingdom forges ahead with its economic development plan for the next 14 years.    

The reports provide detailed news and analysis of Saudi Arabia’s $1-trillion project market, by far the region’s biggest market. Construction is the largest sector with a pipeline worth $442 billion, followed by transport with $228 billion and power with $170 billion in the pipeline, it said.

“Construction and transport have traditionally been the largest sectors in Saudi Arabia, awarding $155 billion and $98 billion of major contracts respectively between 2006 and 2015. Nearly‎ $89 billion of power contracts were awarded over the period,” said Meed editorial director Richard Thompson.

With government debt rising sharply in the wake of the collapse in oil prices, Riyadh is exploring using public-private partnerships (PPP) for its most important infrastructure projects. And with a raft of road, rail, port and airport projects planned, the report looks at how PPP and other financing models will be used to deliver transport projects, the report said.

“Saudi Arabia needs to install nearly 48 GW new electricity generation capacity by 2024 in order to meet demand, which is growing by seven per cent a year,” said Thompson. “To deliver this, Riyadh will return to building power and water capacity using the private developer market. It will take the same approach to deliver the estimated $25 billion of planned water and wastewater projects over the next five years."

“The reforms involve rolling back the state as an economic actor in the kingdom and will be painful in the short term. But they are much needed and if implemented properly will provide the basis for sustainable growth and development for the next generation of Saudis,” he said.  -TradeArabia News Service




Tags: Saudi Arabia | economy | Vision |

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