Saudi Vision 2030: What is it?

Saudi Vision 2030 is an ambitious framework unveiled by Crown Prince Mohammed bin Salman in 2016, aimed at transforming the Kingdom of Saudi Arabia into a diversified and sustainable economy. This initiative seeks to reduce the nation's dependence on oil, which has long been the cornerstone of its economy, and to foster growth in various non-oil sectors such as tourism, entertainment, and technology.

The primary goals of Vision 2030 revolve around economic diversification and societal transformation. Economically, the plan aims to broaden the Kingdom's income sources by encouraging foreign investment and supporting small and medium-sized enterprises (SMEs). These goals are accompanied by efforts to create a more transparent and efficient government capable of driving sustainable development. Socially, Vision 2030 seeks to foster a vibrant society by promoting cultural openness and improving public services, thereby enhancing the overall quality of life. This blog post will delve into the specifics of Saudi Vision 2030, examining its potential impacts on the nation and the broader region and exploring the challenges and opportunities it presents for the future.

What is Saudi Vision 2030?

Saudi Vision 2030 is a comprehensive government program launched by the Kingdom of Saudi Arabia on April 25, 2016, under the leadership of Crown Prince and Prime Minister Mohammed bin Salman to increase the region's competitiveness. The initiative aims to diversify the nation's economy and reduce its heavy reliance on oil, which currently constitutes approximately 87% of budget revenues, as per data published by the EU in 2023. 

The government established the world's largest sovereign wealth fund, the Public Investment Fund (PIF), to drive investments in sustainability, tourism, and innovation. As per S&P Global, the fund aims to target $40 billion in assets annually in the economy. Other government efforts include privatizing the state-owned oil company Saudi Aramco, slashing energy subsidies, and improving government efficiency.

The plan also emphasizes enhancing the quality of life for its citizens by improving healthcare, education, and infrastructure and promoting cultural and recreational activities. Vision 2030 also aspires to empower women, youth, and the private sector by fostering a more inclusive and dynamic society, positioning Saudi Arabia as a global hub for investment and innovation.

The program emphasizes enhancing Saudi Arabia's global role by promoting sectors like manufacturing, artificial intelligence, healthcare, clean energy, tourism, sports, and entertainment.

The Saudi Vision 2030 is built on three main pillars to position the Kingdom as the "heart of the Arab and Islamic worlds":

1. A Vibrant Society: The first pillar of Vision 2030 focuses on creating a vibrant society through social infrastructure where citizens can lead fulfilling lives. This pillar includes enhancing the quality of life by improving public services, promoting cultural and recreational activities, and fostering a more inclusive society. 

2. A Thriving Economy: The second pillar aims to build a thriving economy by diversifying Saudi Arabia's economic base and reducing its reliance on oil. Achieving this objective involves promoting sectors such as tourism, technology, and manufacturing and encouraging entrepreneurship and private sector growth. Based on the Saudi government's communications, the initiative aims to expand non-oil revenues from 163 billion SAR to 1 trillion SAR.

3. An Ambitious Nation The third pillar of Vision 2030 emphasizes good governance, accountability, and effective public sector management. This pillar seeks to establish Saudi Arabia as a sustainable development and regional cooperation leader.

Economic diversification

Reducing oil dependency

Reducing Saudi Arabia's reliance on oil is crucial for the country's long-term economic stability and sustainability. Currently, oil revenues account for approximately 90% of the Kingdom's export earnings and about 40% of its GDP,  as per an EU report and BNP Paribas research in 2023. This heavy dependence makes the economy vulnerable to fluctuations in global oil prices, which can be affected by geopolitical tensions, economic downturns, and shifts toward renewable energy sources. The volatility of oil prices, as seen during the COVID-19 pandemic and geopolitical events like Russia's invasion of Ukraine, has underscored the need for diversification. As global energy consumption trends shift towards renewable sources, Saudi Arabia aims to reduce its oil dependency significantly by 2030. The Vision 2030 plan emphasizes developing alternative revenue streams to ensure economic resilience. This initiative led to a rise in the annual contribution of non-oil income to total government revenues, averaging 38% between 2016 and 2021, compared to 19% from 1970 to 2014, as per the 'State of the Economy 2022' report by the Saudi government.

Developing new sectors

Saudi Vision 2030 strongly emphasizes diversifying the economy by developing new sectors such as tourism, entertainment, and technology. This diversification is essential for reducing reliance on oil and creating sustainable economic growth. The value of Saudi non-oil exports experienced remarkable growth, reaching SAR 275 billion by the end of 2021, marking a 53% increase compared to the previous year, based on data published by Saudi's General Authority of Statistics.

Some key projects highlighting the focus on new sectors include NEOM and the Red Sea Project.

• NEOM: A futuristic city project planned for the northwestern region of Saudi Arabia, NEOM aims to integrate smart city technologies and promote innovation across various sectors, including biotechnology, food, and energy. It represents a significant investment in creating a new economic hub less reliant on oil.

• The Red Sea Project: This ambitious tourism development aims to create a luxury resort destination along Saudi Arabia's western coast. It is designed to attract international tourists and diversify the economy by promoting tourism as a critical revenue source. According to the developer, the Red Sea project, located between the cities of Umluj and Al-Wajh, will develop 22 of the 90 islands and will be powered entirely by renewable energy. By 2030, the project is expected to feature 50 hotels, 8,000 rooms, and up to 1,000 residential properties.

Investment and business environment

Saudi Vision 2030 aims to attract foreign investment and improve the overall business climate in the Kingdom. The government recognizes that fostering a more favorable investment environment is essential for achieving its economic diversification goals. The Vision includes significant regulatory reforms to simplify business processes, enhance transparency, and protect investors' rights. These reforms are designed to encourage foreign direct investment (FDI) and stimulate private sector growth. These reforms have propelled the Kingdom forward by 29 positions in the World Bank's 'Ease of Doing Business 2020' index, securing the 63rd global rank.

Saudi Aramco's partial initial public offering (IPO) in 2019 was a landmark event that aimed to raise capital for the Public Investment Fund (PIF) and support Vision 2030 projects. The IPO was part of a broader strategy to open the economy to private investment and reduce the state's reliance on oil revenues. Establishing the Public Investment Fund (PIF) is also a critical component of Vision 2030, as it seeks to invest in various domestic and international sectors, generating returns that can help fund the Kingdom's diversification efforts.

Social and cultural transformation

Enhancing quality of life

Saudi Arabia's Vision 2030 encompasses a range of initiatives to enhance healthcare, education, and infrastructure to improve the quality of life for its citizens. In healthcare, the government is investing in expanding access to facilities and improving the efficiency of service delivery, focusing on high-quality care and preventive health measures. A KPMG report states that the government allocated $11 billion for investment opportunities by 2020, targeting areas such as tertiary and secondary care, procurement and manufacture of medical devices, education, and insurance.

Education is another key focus area, with efforts to enhance curricula, promote vocational training, and expand access to higher education to prepare a skilled workforce for the future. In 2022, the Saudi administration allocated approximately $47.8 billion to education, higher than any other sector, per the Director of Trade & Investment for Saudi Arabia and Deputy Trade Commissioner for the Middle East.

Infrastructure development is also a priority, with significant investments in urban development, public transportation, and smart cities to enhance living conditions. Additionally, establishing cultural and entertainment hubs, such as museums, theaters, and sports facilities, under the Quality of Life Program aims to provide diverse recreational options and promote cultural exchange.

Empowering women

Saudi Vision 2030 has made significant strides in increasing women's participation in the workforce and public life, acknowledging their crucial role in the nation's development. One of the most notable changes was lifting the driving ban on women in June 2018, which legally allowed women to drive and granted them greater mobility and independence. The government aims to raise female employment rates from 22% to 30% by 2030, supporting this goal through initiatives that promote female entrepreneurship, provide training programs, and create job opportunities across various sectors. Additionally, legal reforms have been introduced to enhance women's rights, including amendments to guardianship laws that now permit women to travel, work, and access services without needing permission from a male guardian.

Promoting arts and culture

The emphasis on arts and culture is central to Saudi Vision 2030, with various initiatives designed to foster cultural programs and events. One notable initiative is the launch of Riyadh Season in 2019, an entertainment and cultural festival featuring concerts, theatrical performances, and sporting events. This festival aims to promote tourism, highlight Saudi Arabia's rich cultural heritage, and create jobs. The Quality of Life Program further supports these efforts by investing in cultural initiatives to increase the number and variety of cultural events across the Kingdom and provide opportunities for artistic expression. Additionally, the government is committed to supporting local artists and cultural institutions by offering funding and resources to promote the arts and preserve Saudi heritage.

Infrastructure and technological advancements

Smart cities

As part of Saudi Vision 2030, the development of smart cities is a key initiative to transform urban living through advanced technology and sustainable practices. One of the flagship projects under this initiative is NEOM, a planned smart city located in the northwestern region of Saudi Arabia. NEOM aims to incorporate cutting-edge technologies and sustainable living practices, making it a hub for innovation and a model for future urban developments. NEOM is designed to include smart infrastructure, AI-driven services, and advanced mobility solutions. The city will utilize renewable energy sources, such as solar and wind, to power its operations, ensuring minimal environmental impact. NEOM will focus on sectors like biotechnology, food, entertainment, and advanced manufacturing to attract global talent and investment.

Digital Economy

Saudi Vision 2030 strongly emphasizes building a robust digital economy through technology and innovation. Saudi Arabia's National Digital Transformation Program, part of Vision 2030, aims to modernize the economy and enhance citizens' lives. Some of the nation's key achievements include transitioning 97% of government services online, developing robust digital infrastructure, and promoting innovation to diversify the economy. The program also established a National Government Digital Academy for workforce training and a regulatory framework for digital security. Future goals include achieving 92% digital maturity for critical services by 2025 and creating new job opportunities in emerging sectors. 

Renewable Energy

Saudi Arabia is advancing its Vision 2030 with the Public Investment Fund (PIF), targeting to develop 70% of the nation's renewable energy capacity by 2030. One notable project in the Kingdom is the development of the world's largest solar farm, a landmark project spearheaded by ACWA Power and Badeel, supported by the PIF. This massive solar farm is set to significantly boost the Kingdom's renewable energy output, contributing to its goal of generating 40 GW of solar power by 2030. Beyond its environmental benefits, the project aims to position Saudi Arabia as the lowest-cost solar energy producer while freeing up oil and gas for export, aligning with the country's broader economic and reputational goals.

Environmental sustainability

Saudi Vision 2030 aligns closely with the United Nations Sustainable Development Goals (SDGs), particularly in promoting sustainable urban development and conserving natural resources. The Vision emphasizes the importance of integrating the SDGs into national policies and strategies, ensuring that efforts to achieve economic growth do not compromise environmental sustainability.

Saudi is dedicated to environmental conservation, actively promoting large-scale tree planting, combating desertification, and enhancing biodiversity. One of the cornerstone initiatives is the Saudi Green Initiative, which aims to work toward achieving the nation's goal of net zero emissions by 2060 through the Circular Carbon Economy method. This initiative is part of a broader effort to combat climate change, reduce carbon emissions, and enhance citizens' quality of life. One program goal is to plant 10 billion trees across the Kingdom over the coming decades. The program also includes plans to rehabilitate 40 million hectares of degraded land and promote sustainable agricultural practices.