After the United States, The Kingdom of Saudi Arabia is the top oil-producing country in the world—underwriting 12% of the global supply.
When it struck oil in the fields of Dammam back in March of 1938, Saudi’s revenues have increasingly depended on the “black gold” that powers much of the world’s activities—from manufacturing to transport.
According to OPEC, the oil and gas sector represents 50% of the nation’s GDP, accounting for 70% of export earnings. In 2019 alone, petroleum revenues made the Kingdom $200 billion richer.
No doubt, oil wealth has underpinned much of the Kingdom’s modernizing initiatives and cradle-to-grave welfare policies. But given its finite supply and its realized impact on the environment, the Kingdom has considered two very unwanted, (although unlikely), scenarios:
One, what happens when the oil supply runs out?
Two, what happens when the world turns its back on oil?
Enter “Vision 2030.”
Saudi Vision 2030: Seeing Past Petroleum
In April of 2016, through the leadership of Crown Prince Mohammed bin Salman Al Saud, the nation launched “Saudi Vision 2030.”
Vision 2030 is an ambitious attempt to untether the nation’s fortunes from oil. It’s a government-led, socio-economic action plan to restructure the nation, broaden its economic base and give Saudis a stronger national identity and a more productive society.
Saudi Arabia outlines developments after assessments of Vision 2030 goalshttps://t.co/yrqB06lPe4
— The National (@TheNationalNews) June 10, 2021
Sweeping changes are afoot, all to further invigorate the Saudi economy. Three things are of note: (1) Changes in how the nation’s fiscal objectives are achieved, (2) Unprecedented openness to direct foreign investments, and (3) The welcome support to entrepreneurs and small businesses.
The Kingdom is instituting reforms to improve government functions. To optimise its use of the national budget, public spending and procurement practices were rationalized. Greater transparency was pursued.
The government scaled back on welfare and state subsidies—reforms unimaginable in decades past. To boost revenues, a 5% value-added tax was introduced in 2018. (Given the falling oil prices and the long-ranging effects of the pandemic, this has recently been increased to 15% in 2020.)
As a means of generating extra revenue, fees and tariffs for government services were also raised. In short, the Kingdom is moving away from being a welfare state, looking for ways to boost revenues instead.
In December 2019, for the first time ever, Saudi-Aramco, the nation’s crown jewel—the most profitable company in the world—had a record-breaking initial public offering (IPO). It raised $29.4 billion shattering the previous record held by Alibaba ($25 billion).
Although the IPO took place in Saudi’s very own stock exchange Tadawul, and only 1.5% of total shares were on offer, moves like this point to the Kingdom’s warmer attitude toward foreign investments.
In a similar vein, the nation’s Capital Market Authority (CMA) has announced a major move—relaxing restrictions in foreign ownership, allowing majority stakes in sectors like telecommunications, banking and insurance.
The nation is gearing up for more international commerce, as very recently, Citigroup, Goldman Sachs and Sumitomo Mitsui entered the Saudi market—with a few more big names set to follow.
Saudi Arabia is not just looking for investors, it’s also trying to develop home-grown entrepreneurs.
With Vision 2030, the nation is turning to a standard approach in building a strong economy—on the backs of entrepreneurs, on small and medium enterprises that produce a-thousand-and-one vital products and services.
Despite comprising 97% of the Saudi economy, small and medium enterprises contribute only 22% of its GDP, lower than the Middle East average. (Europe, on average, has its SMEs contribute 55% of GDP.)
Saudi is looking to correct that imbalance. Recognizing this well-spring of untapped potential, it is removing barriers to entry and lowering the cost of business, making the country a good place to start an enterprise.
For example, the Small and Medium Enterprises Authority (SMEA), has three year’s worth of taxes and fees reimbursed for those businesses that have been registered between 2016-2021.
Financing, the lifeblood of any business, is being made available to startups. A start-up in need of capital could raise it through one of the 20 newly licensed international venture capital agencies entering the game. Saudi, for its part, created Saudi Venture Capital Company and Jada Fund of Funds, to provide a flush of cash for those promising entrepreneurs and their brainchildren.
Small businesses and startups are drivers of prosperity. With Saudi set on creating an ecosystem conducive for SMEs, the trickle-down effects can be tremendous.
Small Business, High Impact
Small businesses and start-ups are high impact entities.
Not only do they provide revenue in the form of taxes, but they also create employment. To cap it all off, the innovations embedded in products and services offered raise the standard of living of its citizens. No wonder the state concerns itself with their health and viability.
With SME players in architecture, interior design, solar energy, consulting, manufacturing, food and beverage, healthcare and ICT, Saudi Arabia is well-placed to achieve its economic targets. Although a number of hurdles and challenges still exist, it is undeniable that the Kingdom has become a lot more hospitable to small businesses both domestic and foreign.
As the number of enterprises mushroom all over the Kingdom, Saudi is going to need manpower to fill those positions. It’s going to need marketing assistants, customer service representatives, accountants, draftsmen, legal assistants etc. to run those newly-minted enterprises.
And, as the region’s biggest IT market, Saudi has a special eye on tech. It’s particularly lush for technology-related startups—which means software and app developers, digital marketers, consultants and data scientists will be needed.
Leadership knows that the field has serious growth potential, eyeing the possibility of the Kingdom leapfrogging competitors and positioning itself as the region’s leader in tech.
Saudi has certainly flexed its muscles with some tech initiatives. As a result, Fintech and cloud-related businesses are rapidly gaining a strong foothold.
But with the nation aggressively developing small and medium scale industries, cutting down the time it takes to organically grow talent, who will man these rapidly burgeoning start-ups?
Saudi Is Open For Business. But Who Will Mind The Store?
Technology itself provides the answer.
In the high-paced nature of tech, there might not be time to develop a pool of software developers, app designers, and digital creatives who can immediately make an impact on the business. Meanwhile, the world is full of workers with the requisite skills and who can hit the ground running.
Saudi Arabia can tap all this ready talent and continue its gains.
“Remote staffing” is key. That’s when one hires workers from other countries, offshoring tasks and services. Because of today’s technology—high-speed internet, video conferencing, and cloud computing—companies and small businesses can profitably work with professionals from around the world, benefiting from expert talent in other places.
Kinetic Innovative Staffing helps smalls businesses and companies find remote staff from graphic designers, bookkeepers and project managers, to writers, engineers and software testers. We function as a dedicated HR for your company, finding talent and skill that fit specific needs.
When small/medium enterprises want to find team members or staff to help run their business, we find remote professionals who are experts in those very skills.
An oil giant is weaning itself from crude and Kinetic is ready to supply it with a whole army of qualified and quality labour. When a nation is doing its best to better its future, we can only be so willing to become a part of that endeavour.
We support Saudi Vision 2030.
Kinetic Innovative Staffing has been providing hundreds of companies in the Asia Pacific, North America, the Middle East, and Europe with professionals working remotely from the Philippines since 2013. Get in touch to know more.