The dialogue that took place in this episode of the “Finjan” podcast represents an important event regarding the Saudi economy and its various impacts. Abdul Rahman Abu Mala hosted economist Abdullah Al-Rubadi, where a range of vital topics touching all members of society were discussed. The discussion focused on the challenges facing the Saudi economy in light of the Corona pandemic and before it, and how the excessive reliance on the oil sector has contributed to distorting the economic landscape.
The guest pointed out the necessity of comprehensive economic reforms that include enhancing the role of the private sector and improving competitiveness to create new and varied jobs. Concepts such as the high public debt ratio and the impact of taxes on individuals and companies were also discussed, as well as the government’s role in supporting the economy during crises. The importance of transitioning to a more sustainable economy, away from the fluctuations of oil markets, was also highlighted.
The dialogue also touched upon the repercussions of the Corona pandemic on various sectors, especially the pilgrimage and umrah sectors and retail, and how these crises exposed the fragility of some economic systems. In this context, the need to focus on innovation and develop new sectors that enhance the economic strength of the country was emphasized.
Thus, the discussion in the podcast emerges as a call for deep thinking about the future of the Saudi economy and underscores the importance of joint work between the government and the private sector to achieve the community’s aspirations towards a strong and sustainable economy.
Economic Reforms and Their Impact on the Labor Market
Economic reforms represent a vital part of the future vision of any country, especially in light of the current challenges facing the Saudi market. Among the most prominent of these challenges is creating new job opportunities for the next generation of youth, who represent a large percentage of the population. The current situation requires rethinking how the private sector can play a larger role in job creation, rather than relying solely on the government. Many agree that the solution lies in enhancing the private sector’s capacity and increasing its participation in the GDP.
These economic reforms require concerted efforts to improve the business environment and increase the competitiveness of local companies. When we review the experiences of countries like the United States, we find that the private sector is the main driver of the economy, where jobs are created and growth is achieved through innovations and investments. In Saudi Arabia, we must strive to achieve this growth by supporting entrepreneurship and facilitating the process of establishing companies.
It is important to promote innovation in various sectors, including technology, manufacturing, and services. If we are able to create a conducive environment for investors, we may see an increase in both foreign and local investments, which in turn will lead to the creation of more job opportunities. We need clear strategies to attract investments, such as providing tax incentives or facilities to obtain the necessary permits.
Government support programs, such as “Sanid,” are essential for maintaining existing jobs. However, the focus should be on developing the skills of the workforce to ensure that young Saudis are prepared for available jobs. The government needs to provide the necessary training and education to ensure that the skills acquired match the market needs.
The Challenges Facing the Saudi Economy After the Corona Pandemic
The Corona pandemic is considered one of the greatest challenges facing the Saudi economy, as it led to negative impacts on many sectors, especially small and medium-sized enterprises. When we talk about the impact of the pandemic, we find that the sectors dependent on services, such as tourism and hospitality, were the most affected. This decline in economic activity significantly impacted individuals’ income and led to increased unemployment rates.
After
The pandemic has made it urgent to provide support to the private sector through incentivizing programs. The government has stated that it will work on supporting local companies and providing easy loans to avoid their bankruptcy. However, we must be realistic about the extent of impact these policies may have. Short-term policies may be beneficial, but there needs to be a long-term plan for achieving sustainable recovery.
Furthermore, the government must reconsider how financial resources are distributed and directed towards the sectors that are most in need. Having clear strategies to deal with future crises has become an urgent necessity. There must be plans to reduce dependence on specific sources of sustenance like oil and to seek sustainable alternatives.
We must be prepared to adapt our strategies to face future shocks, whether economic or health-related. By enhancing economic diversification, Saudi Arabia can be more resilient in facing upcoming challenges, ensuring the sustainability of the economy and creating new job opportunities.
Taxes and Their Impact on the Local Economy
Taxes are an essential part of any economic system, but their impact on the local economy requires a precise understanding. With the implementation of value-added tax, the Saudi market has witnessed clear changes in consumption patterns. Initially, it may seem that imposing a high tax may reduce consumption, but in reality, this can lead to improved government revenues if these revenues are used to support economic sectors.
We must remember that taxes are not just a means of collecting money, but also a tool to influence consumer behavior. In the case of Saudi Arabia, the government needs to be aware of how taxes affect businesses. The higher the taxes, the higher the costs for companies, which may lead to a reduction in their investments.
The government needs to use the revenues generated from taxes to improve infrastructure and develop productive sectors. When funds are directed correctly, the business environment will improve, which supports economic growth. For example, investing money in education and training can enhance skills in the market and boost productivity.
It is clear that taxes can be a double-edged sword, so comprehensive strategies must be established to reduce their negative impacts. There should be transparency in how tax revenues are utilized, which enhances trust between the government and the private sector.
Dependence on Oil and Its Consequences for the Economy
Oil represents the backbone of the Saudi economy, but excessive reliance on it poses a significant problem. With fluctuations in oil prices, we find that the Saudi economy becomes fragile and susceptible to external shocks. Hence, the urgent need to diversify the economy and implement structural reforms has emerged.
Data shows that oil revenues constitute a large percentage of the state’s revenues, meaning that any decrease in oil prices will lead to a reduction in the government budget. Therefore, the existence of alternative sources of revenue has become an urgent necessity. We must invest in new sectors such as tourism, technology, and renewable energy.
When we talk about economic diversification, we must be clear about how this works. Innovation must be enhanced and startups supported, which will help create new job opportunities and attract investments. Having a conducive business environment for investors enhances the economy’s ability to face challenges.
Moreover, we should begin implementing strategies aimed at reducing reliance on oil by 2030. This requires long-term planning and cooperation between different sectors. We must realize that transitioning to a diversified economy is a process that requires time, but the returns will be significant in the long run.
Impact
Aramco and SABIC Management
The discussion about Aramco and SABIC is closely intertwined, as the impact of Aramco on SABIC’s management is one of the sensitive topics in the Saudi market. SABIC represents one of the largest petrochemical companies in the world and operates independently. However, there are fears that Aramco’s management may negatively impact SABIC’s policies and identity as an independent entity. According to some opinions, previous SABIC administrations were more efficient compared to the current management, raising concerns about potential policy changes that could lead to a deterioration in SABIC’s performance. Overall, many emphasize the need to maintain SABIC’s independence, reflecting concerns that Aramco, despite its strength, may harm SABIC’s sustainable performance.
Saudi Investments in Technology and Energy Companies
Information indicates that Saudi Arabia has taken strategic steps in its investments, especially related to startups in the fields of technology and energy. Saudi investments in companies like Tesla and Lucid have been mentioned, as these companies are not just car manufacturers but are turning into major centers for electric power production and car batteries. Saudi Arabia seeks to diversify its investment portfolio and reduce its dependence on oil, reflecting the need for innovation and investment in new fields. By supporting startups, Saudi Arabia can boost its economies and create new job opportunities, contributing to the development of more local competencies.
The Public Investment Fund and its Future Goals
The Public Investment Fund in Saudi Arabia plays a pivotal role in achieving the Kingdom’s Vision 2030. The Fund’s objectives have been radically transformed since Prince Mohammed bin Salman took over as Chairman of its Board, as it now seeks to diversify the national economy and increase investments in new sectors. The fund’s investments include projects in tourism, technology, and renewable energy, contributing to the transfer of knowledge and technology to Saudi Arabia. One example of this is investment in tourism projects like the Red Sea and Qiddiya, where the fund aims to prove that the Saudi market can accommodate such investments. This diversification approach reflects the desire to reduce dependence on oil and enhance economic diversity in the Kingdom.
Taxes on Assets and Their Impact on the Economy
The issue of imposing taxes on assets is an intriguing topic in the context of the Saudi economy. Idle assets, such as undeveloped land, contribute to creating an imbalance in wealth distribution. Land that is held without exploitation leads to wealth monopolization and prevents the community from benefiting from it. Therefore, implementing a tax on idle assets could be a means to enhance resource utilization and encourage owners to invest or sell them. This type of tax could help reduce the wealth gap and improve income distribution, contributing to overall economic growth. The government’s ability to stimulate investment and achieve economic efficiency through taxation is considered a necessary strategy for achieving sustainable development in the country.
Global Economic Challenges and Reshaping Supply Chains
Highlighting global economic challenges, especially after the COVID-19 pandemic, has become imperative. With the emerging need to relocate supply chains, countries are striving to decrease their dependence on the Chinese market. These trends are part of a global strategy to mitigate risks associated with complex supply chains. By reducing reliance on China and increasing dependency on neighboring countries, nations can enhance their economic stability. These trends reflect the need to rethink how to manage the national economy and move towards more independent and flexible strategies in facing future crises.
The episode was summarized using artificial intelligence from ezycontent
Leave a Reply