Opening Saudi Arabia further for business will boost productivity and smooth our journey to become one of the largest economies in the world. We will improve our business environment, restructure our economic cities, create special zones and deregulate the energy market to make it more competitive.
We will further pursue public-private partnerships, continue to facilitate the flow of private investment and improve our competitiveness. We will develop the necessary capabilities to increase the quality and reliability of our services. We will coordinate with legislative authorities to review current regulations with the aim of improving the business environment and enforcing contracts. Where it exists in strategic locations, we will also capitalize on the government’s reserves of real estate. We will allocate prime areas within cities for educational institutions, retail and entertainment centers, large areas along our coasts will be dedicated to tourist projects and appropriate lands will be allocated for industrial projects. We will enable banks and other financial institutions to adapt their financial products and services to the needs of each sector, ranging from large project capital funding to short-term working capital for small businesses. We will also facilitate and expedite licensing procedures based on our national economic priorities. We will apply international legal and commercial regulations strictly and create a business environment conducive to long-term investment. We will strive to facilitate the movement of people and goods, and to simplify customs procedures at our ports. As a result, we will create an environment attractive to both local and foreign investors, and earn their confidence in the resilience and potential of our national economy.
We are aware that the economic cities of the last decade did not realize their potential. Work has halted in several cities, and others face challenges that threaten their viability. We have worked in cooperation with Aramco to restructure Jizan Economic City. We will strive to salvage other economic cities, especially those with comparative advantages. To achieve this, we will work with the companies owning those cities to revamp them and transfer vital facilities. This effort will depend on the readiness of these companies to work with the government. Our aim is for these cities to contribute in the development of the economy and to attract quality investments as well as local and international talent, all kept in line with our national priorities.
We will create special zones in exceptional and competitive locations. We shall take into account the comparative advantages of the Kingdom’s different regions, assess their feasibility for promising sectors, and then establish special zones, such as logistic, tourist, industrial and financial ones. Special regulations to boost investment possibilities and diversify government revenues will be applied to these zones.
We plan to raise the efficiency of the government’s support system and make the best use of its benefits by redirecting it and targeting eligible citizens and economic sectors. For example, we understand that providing subsidies with no clear eligibility criteria is a substantial obstacle to the energy sector’s competitiveness. Free market prices shall, in the long term, stimulate productivity and competitiveness among utility companies and open the door to investment and diversification of the energy mix in the Kingdom. We will also seek to set clear subsidy criteria based on the maturity of economic sectors, their ability to compete locally and internationally and their actual need for subsidies, without endangering promising and strategic sectors.
In the last decade, works started at the King Abdullah Financial District, without consideration of its economic feasibility. The objective was to prepare the land in order to allow the business and financial communities to invest and build real estate. When this objective was not reached, the government decided back then to develop and rent the real estate. Challenges were deepened by the development of the real estate project in one single phase, which caused a significant increase in construction costs and several delays in delivery. This resulted in large oversupply of commercial space for the years to come. Without any dramatic shift in direction, renting the three million square meters of built-up areas at reasonable prices, or even achieving decent occupancy rates, will be very challenging. With this in mind, we have reviewed the economic feasibility of and designed a new fundamental strategy for the district in order to increase the chances of profitability and success. We will seek to transform the district into a special zone that has competitive regulations and procedures, with visa exemptions, and directly connected to the King Khaled International Airport. We will also seek to repurpose some of the built-up areas and change the real estate mix, increasing the allocation for residential accommodation, services and hospitality areas. We will seek to build and create an integrated and attractive living and working environment. The district will be the headquarters of the Public Investment Fund, the largest sovereign wealth fund, which will contribute to creating an environment attractive to financial, investment and other corporations.A Flourishing Retail Sector
Over the past decade, the retail sector achieved an annual growth rate in excess of 10 percent. It currently employs 1.5 million workers, of which only 0.3 million are Saudis. Traditional retail also still dominates 50 percent of the market in the Kingdom compared to 20 percent in a number of countries in the Gulf Cooperation Council (GCC), with our retail market suffering from limited penetration of modern trade and e-commerce. We aim to provide job opportunities for an additional million Saudis by 2020 in a growing retail sector that attracts modern, local, regional, and international brands across all regions of the country. We also aim to increase the contribution of modern trade and e-commerce to 80 percent of the retail sector by 2020. This will be achieved by attracting both regional and international retail investors and by easing restrictions on ownership and foreign investment. To this end, we will facilitate local and regional flow of goods and develop necessary sectoral regulations. We will also increase financing of small retail enterprises to stimulate their growth and development.A Developed Digital Infrastructure
A sophisticated digital infrastructure is integral to today’s advanced industrial activities. It attracts investors and enhances the fundamental competitiveness of the Saudi economy. We will partner with the private sector to develop the telecommunications and information technology infrastructure, especially high-speed broadband, expanding its coverage and capacity within and around cities and improving its quality. Our specific goal is to exceed 90 percent housing coverage in densely populated cities and 66 percent in other urban zones. We will also develop building standards to facilitate the extension of broadband networks. We will strengthen the governance of digital transformation through a national council. Additionally, we will improve our regulations and establish an effective partnership with telecom operators to better develop this critical infrastructure. We will also support local investments in the telecommunications and information technology sectors.
To rise from our current position of 25 to the top 10 countries on the Global Competitiveness Index
To increase foreign direct investment from 3.8% to the international level of 5.7% of GDP
To increase the private sector's contribution from 40% to 65% of GDP.