Experience strategic partnership for Saudi vision 2030
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Abstract
The Saudi vision 2030 is an outlined strategy composed of various programs to lead towards its realization. Experience strategic partnership program has been discussed on this paper and intends to create cohesion between Saudi Arabia and the targeted states. The research develops a clear picture of the vision intents by majorly focusing on the stated program. An overview of the current situations in Saudi and the ongoing plans has been discussed into details as well as the action plan towards the realization of the goals. A strategic position has been one of the major concerns for the kingdom’s objectives in ensuring that the partners become convicted for the initiative. Through the SWOT analysis, the country’s capabilities and weaknesses have become pinpointed to evaluate the chances of success and failure. A combination of strengths and opportunities has become focused on to provide a method by which the kingdom can eliminate failures and concentrate on deliverables. The final part discusses the recommendations to the Saudi government on the best methods of operation for the achievement of goals for the vision 2030.
Analytical Review (Strategic Analysis) for Saudi Vision 2030
Experience Strategic Partnerships Program
Introduction
Saudi Arabia vision 2030 is a strategic plan to reduce the country’s dependency on oil and diversify the economy to attain sustainability to all sectors. Sectors including education, public health, energy, infrastructure and tourism also comprise parts of the intended improvements. Prince Mohammed Bin Salman announced the plan towards the vision. The Council of Economic and Development Affair has been mandated in foreseeing that the vision come to implementation by laying the proper strategies in the various programs contained in the vision. The current status of gulf in lack of proper investments has great prospects for growth and attracting more investments if the proper strategic plans get in place (Moser et al. 2015). The experience strategic partnerships programs intend to create collaborations with other nations aiming to exchange technological skills for mutual benefits between the nations. The research paper intends to review and explore the experience strategic partnerships as contained in the Saudi’s vision 2030 plan.
Strategic factors
The strategic objectives include development of non-oil sectors by cutting off the sale of hydrocarbons by the year 2020. Then increasing the government’s non-oil income from $43.5b to SR 600b by 2020 and then to one trillion by 2030. Also increasing the GDP of the private sector from 40 to 65 percent remains one of Saudi’s vision 2030 strategic objectives. Finally, raising the non-oil exports GDP from 40 to 65 percent by 2016. The overall objective of the vision is to diversify the production methods from oil sales to concentrate on other methods of economic growth. Such practices would ensure that the kingdom become sustainable throughout the times. Depletion of oil reservoirs in future would cripple the economic activities if no alternatives were sought to compliment the sector (Khan, 2016). Also, the frequent changes in oil prices render it important for Saudi’s diversification of the methods to raise the government’s revenue. A tremendous increase in Saudi population especially in the urban areas causing inflation for commodities raises the need to create a more sustaining economy for the kingdom. The local resources available cannot fully satisfy the developing country in the Middle East and gulf region. A high fertility rate leading to rural-urban migration and international business development in the urban areas creates the urge for expansion of the housing sector to sustain the new developments.
During the period of oil boom, where many residents migrated from the rural areas to the major towns led to the importance of government’s development of the cities to create a sustainable environment for all the citizens. The vision 2030 is mandated to accomplish most of the development plans proposed for the wellbeing of all the citizens in the kingdom of Saudi Arabia. The immense population in the urban centers raised demand for services by residents which the government could not sustain (Foley, 2017).
However, this review will capture the Experience Strategic Partnerships Program which intends to develop collaborative measures of Saudi with other states which have the basic requirements to enhance the realization of the vision for the purpose of economic development. The exchange of technology among the nations intends to bring further developments in the collaborating states. Both local and foreign medium and small enterprises are intended to take part in the national development strategy in the partnership program. Already, numerous foreign SMEs have kicked off in Saudi Arabia’s territories and provide great prospects for the future business practices in the kingdom. Exchange of operational experiences among the local and foreign businesses enhances productivity and success of these enterprises.
The smooth environment of operation provided by the government through infrastructure development and regulatory measures has begun to bear fruits. To enhance a continuous success of the program, the government intends to allocate 20 percent of the total funding to the SMEs on local and foreign levels. These foreign SMEs are expected to become the role models for the local enterprises in Saudi. Since the initiation of the vision 2030, visionary partnerships have become strategized towards the fulfillment of the vision. Technology and innovations among the collaborating nations would ensure that the Saudi improves the methods of production of oil and exploitation of the other natural resources. Such moves would ensure that the kingdom exports fully refined materials rather than the raw materials in form of the crude oil and other minerals. Also the diversification of these sources of income for the nation would get facilitated through partnership with the other states whose economies have already diversified (Mitchell, & Alfuraih, 2018).
The vision and mission of the program
The partnership program envisions becoming an integral player and catalyst in the kingdom’s strategic endeavors in building global partnerships.
The program’s mission is to coordinate all the kingdom’s efforts in relation to regional and international strategic partnerships with targeted countries to build, develop and strengthen the partnerships and also co-ordinate and monitor the progress with the relevant agencies (“Saudi Vision 2030,” n.d.).
Strategic goals
The country intends to achieve the following goals by 2020 as a way of ensuring that the efforts motivates and leads towards the realization of vision 2030.
- Intensification of foreign direct investment from 3.8 to 5.7 percent of GDP in line with more developed economies.
- Increase small and medium-sized foreign enterprise GDP input from 20 as at present to 35 percent.
- Strengthening and expanding various economic sectors, develop other sectors, and localize knowledge.
- Diversification of income sources to cater for the intensely growing population rate for sustainability of all Saudi’s residents.
- Negotiating major deals to improve the quality of the economy and the kingdom’s impact both regionally and globally.
The above goals focus on improving the wellbeing of the Saudi Arabia economic status by engaging in international interrelationships with the countries believed to empower the realization of vision 2030. Regional partnership with the ailing gulf countries would also ensure peace and stability to attract investors. Apart from only attracting investors in the local states, Saudi Arabia intends to intensify the partnership by creating an adequate market for the exports.
Strategies
A variety of transformative programs are put in place to ensure the realization of Saudi’s vision 2030. First, the kingdom has restructured the government by organizing the various governmental practices through prioritization of activities. As the vision realization process remains a gradual practice through achievement of objectives throughout the period, the most urgent needs should satisfied within the given duration. The two councils introduced including, Political and Security Affairs and Council of Economic and Development Affairs. Then the strategic direction platform that organizes all the deliverables in a sequence has been put in place to ensure that achievement of one goal leads to the realization of the other. Splitting of the vision into achievable bits simplifies the process and milestones are put across which has to become accomplished failure to which no more steps ahead can be moved. The current social needs are catered for before focusing on development programs (Neil, & Sprusansky, 2017).
To enhance successful accomplishment of each program, the Saudi government needs to have a strategy to manage each project with its resources. The management at each level in every program remains questionable for every action or failure. Co-ordination within each project remains an important aspect in ensuring that all efforts are gathered and maximally utilized to attain the desired goals. A central delivery unit to oversee the entire project ensures that all the stakeholders remain active in their responsibilities. As sometimes the vision achievement process utilizes the trial and error method, a body reformulating the existing laws to fix the ones that align with the goals remain important in the long run (Mitchell, & Alfuraih, 2018).
After everything is put in place, a system to ensure that the instituted programs perform exhaustively as intended through performance review program becomes important. The Saudi Arabia government enhanced this practice by developing a committee to oversee and assess the performance of the various sectors in the vision 2030. The program analyzes all categories of the distinct sectors within and without the government. Such criteria create conviction to the stakeholders that they have the sole mandate to perform. The regulatory measures prevent misappropriation of funds by imposing the liability on the various personnel and everyone involved gets prone to punishment according to the existing law.
Criticism on failures of Saudi’s outlined plans has raised issues on the insufficient management skills in the various programs to drive the vision 2030 goals. Although the plans remain powerful tools towards the achievement according to the strategic management, inadequate skills in the implementation stage may result into more problems than benefits. The inability of the current bureaucratic government system to solve basic development issues such as waste management, water and food security, receives a negative impression on the capability to realize the great vision. Other management failures including inadequate control of catastrophic occurrences such as floods leaves the civil society with unanswered questions on the great capability. Complexity of the local and regional institutions mandated to accomplish the most of the vision’s goals fails to implement some of the required measures to enable success of the programs. The administrative structure composed of numerous councils which are mandated to authorize various development moves face critical challenges when the deliberations fails to come into agreements.
The current governance by the crown king Salman has enabled the reforms of the finance sector leading to transparency in the sector and this leads to high prospects of realizing the vision’s goals. This success came as a result of instituting an active performance review system mandated to detect improper practices with the fiscal structure in the governmental and private sectors (Neil, & Sprusansky, 2017).
Program implementation
Implementation of the Experience Strategic Partnerships Program would become successful from the various supportive responses from the various nations in the world. For instance, the United Kingdom proposed on total support for the partnership program with Saudi Arabia. The U.K supports in pioneering investment power strategic partnership with the Middle East countries including the Saudi Arabia. The kingdom also proposes to act as a center of dialogue to the world on deliberations to partner with Saudi for the realization of vision 2030 (“Saudi Center for Strategic International Partnerships,” n.d.).
A friendly foreign-investment environment has been set out in the Saudi Arabia territories. Security improvement as well as infrastructure especially in the major cities and towns provides a limelight on the great achievement of the program implementation. The technological developments resulting from the partnership program has become facilitated by the concentration and restructuring of the energy system and the telecommunication networks in the kingdom.
External assessment
The general environment
The program captures both regional and international environment. Saudi plans to engage into strong business partnerships with the countries in the gulf region in the Middle East. As an extension, the partnership program also aims at extending to the other world regions such as the U.K who have already proposed to support the initiative. However, it has become a challenge for Saudi in totally eliminating the current existing challenge of joblessness to the steadily growing population. The challenge of resources to completely develop the kingdom to accommodate as many business partners as possible in the local and international level has not yet been resolved although prospects of development have become witnessed in the major cities (Aina et al. 2019).
A numerous proportion of unemployed youths lead to the social problem in the kingdom and the instituted security measures may face a great challenge to control the congested cities with the large number of the jobless. On the regulatory aspect, Saudi Arabian partnership program might face challenges from the complex style of governance. The overlapping jurisdictions in the Saudi Arabia governing statutes may not fully accommodate partnership as vision 2030 intends. Agreements in the complicated system may pose a great challenge that could inhibit such a program.
Types of partnership to employ in the initiative pose another challenge to the program environment. The three options available for the engagement include, the joint venture, total foreign investment or an initiative where the local business operators take part in the initiative. Getting to an agreement in any of the three forms may render it difficult. Saudi Arabia as a developing country is not fully technologically developed. Industries prospecting for startup may find it challenging to operate under the current situation. However, there is still room for improvement and a chance to import technology for use in the kingdom. Inadequate communication network could also inhibit smooth operations (Alshuwaikhat, & Mohammed, 2017).
The specific environment
The strategic partnership program intends to impact Saudi’s major towns and cities which have developed and attained proper infrastructure for smooth operations. The government’s strive to transform these centers intends to create a friendly and improved environment to ensure that the program succeeds as proposed. A strong link with the other states also facilitates the creation of market base for Saudi’s products. The intentions to invest in the foreign territories also remain part of the plan. The kingdom creates a diverse environment to enlarge the production activities and end the complete reliance on oil as the major economic activity in the country. Partners with the focus on development potentials towards the Saudi’s vision 2030 remain the country’s major concern.
Professional expertise required to lead towards the program’s successful implementation is the most important part in ensuring of proper management of all the factors for successful goal realization. Specificity of the program leads to the concern that the environment created provides a smooth and sufficient operation grounds for foreigners with a variety of competencies in their fields of operation. The local human resource provides the greatest part of the labor required as the plan has the mandate to cater for the unemployment cases in the kingdom (Mitchell, & Alfuraih, 2018).
The situation in Saudi Arabia creates a gap in the investment sector as the country majorly depends on oil for revenue. Therefore, a friendly operating ground is available in the territories with minimal level of competition. Market scanning through assessment of the inadequate supply serves a critical purpose in measuring of the competition. Information from the Saudi’s government on the partnership terms provides an overview of the niches which require the adequate supply of the necessities.
Internal assessment
Distinctive Capabilities in Saudi involves innovation, marketing, cost and design. The current innovative methods in improvement of infrastructure to create a conducive environment for the wild variety of foreign operations indicate necessary steps taken by the government. Improvement of the same intends for accomplishment through providing a room for technology import from the partners’ states. The current strive to search for alternative methods of operation depict the steps towards innovation and design. A progressive effort to attract foreign investors in the kingdom is the first step towards the marketing process. Regulatory measures to enhance security and protection in the kingdom intend to attract even those with negative attitude towards the kingdom by promising adequate room for operation. On basis of cost, the competitive advantage remains that the foreign partners enter the market with resources derived from the countries of origin. The only bit of cost challenge is when developing the platform to enhance conducive operation environment. In that case, the interested partners such as the United Kingdom provide financial support for the development plan (“Saudi Vision 2030: A Progress Report – Analysis,” 2018).
Saudi’s gaps in the market for technology, goods and services renders it competent for foreign partnership. The partners would utilize the available opportunities to operate businesses which thrive due to the high demand for deficient commodities. Regulatory measures to protect the foreign investors by the law create confidence and opportunity to exercise full potential to the partners. As a result of these operations the main objective towards the diversification of revenue generation methods remains efficient together with the attraction of the required skills.
The centralization in the geographical sphere at the routes of the international trade routes creates a competitive advantage. Asia, Europe and Africa are the three continents which sandwich Saudi and provides great business opportunity. The strategic geographic position remains sufficient for the matters of accessibility and creates confidence to the interested investors. Heavy investments in construction of ports, international airlines, and railways provide a promising environment for the foreign investors. The regional and international integration would also get facilitated by Saudi’s GDP which remains the highest in the Middle East region (Neil, & Sprusansky, 2017).
On the financial strengths and weaknesses, Saudi economy has tremendously grown over the years for the sale of oil and minerals which boost the economy by far. However, the high dependency on such resources poses a challenge when their market falls in the world and hence the importance of diversification. Privatization of most of government sectors has greatly boosted the country’s economy to levels that remain sufficient for investment needs. The structure laid out and great environment for exploration provides a sufficient physical structure that favors growth of new investments.
Fiscal policies to prevent misappropriation of funds enhance the kingdom’s image in the world market. The continuous improvements prevent any doubts that the state has a proper platform for business enterprises. An ever growing population provides a wide variety of labor force for the new developments. However, the government requires enhancing the population’s efficiency by providing education opportunities for the majority for competency in the available opportunities developed by the partnership. The reported high unemployment rate indicates a ready human resource background to cater for any future needs (Moser et al. 2015).
SWOT Analysis
| Strengths
· Proper location in the gulf region for the best foreign opportunities. · A large market gap to attract foreign investment partners. · A high GDP which creates confidence to the new business partners from regional and international spheres. · Well outlaid foreign investment policies to protect investors. · Support from powerful states such as the U.K. · Pleasing grounds for exploration. · A wide chance for industrial growth due to the oil resource. · A wide variety of unexplored opportunities.
|
Weaknesses
· Inadequate technology to meet the current market demands. · Complicated government structures that inhibit some development strategies. · Insufficient ground to accommodate all interested partners. · Struggle for structural development in the infrastructure. · High dependency on oil as the source of revenue. · Heavy investments required to improve operating conditions in the kingdom.
|
| Opportunities
· A great chance to diversify the sources of government revenue other than total dependency on oil. · Technological advancement from the foreigners as they operate in the kingdom. · Employment opportunities for the large population. · New markets for the local commodities on local and international categories.
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Threats
· Competition to the local business enterprises from the foreign investors. · Increased foreign dominance could reduce the country’s GDP. · The partners may not offer the preferable terms of partnership. · Opposition by some of the government agencies. · Importation of labor if the locals lack the necessary skills to serve in the new investments leading to more unemployment cases. |
Financial analysis
On the annual financial report delivered by the CMC in year 2015-2016, the following information can be deduced from the analysis.
The investment funds grew by 19.8 percent in 2016 compared to the previous year summing up SR215.9 b in total investment fund budget. The increase got associated with the growth of the private sector by 66.2 percent. Liquidity ratio in the year from the funds and assets indicates that the country possessed the capability of paying all the debts without any deficit. However, the public funds accounted for 40.4 percent of the total private and public assets indicating a decrease of 15.2% compared to the previous year. The decline resulted from reduction in the number of subscribers despite the rise in the number of funds. Changes in public equities in the same duration of 2015-2016, an overall drop of -32.5 % prevailed in the financial period. However, the private sector indicates an opposite situation in which the funds rose by 66.2 % in the same period (Neil, & Sprusansky, 2017).
The prospected international and regional partnership would well serve in terms of privatized business entities to enhance efficiency. Private sector indicates high solvency ratio due to the keenness and proper management from the business owners. The number of subscribers in the private sector indicates an increase by 1.3 percent. This offers an overall change of 66.2% in the private sector (Khan, 2016). Efficiency ratios on the private sector supersede the ones in the public domain. A continuous decline on the public sector creates the need for a privatized operation as remains the interest of the Saudi’s foreign plan to improve the efficiency as it offers promise on success.
Data analysis
Saudi’s prospected strategic partnership program acts as one of the main areas which will promote the well-being of the kingdom. The government’s strategies towards the vision indicate the great concern on other forms of investments besides the oil and mineral resources. Various strategic objectives prospected for achievement by 2020 poses a challenge as the state continues to struggle with the local issues such as misappropriation of public funds. Ongoing issues on the deficient employment opportunities for the majority youths have been captured in the partnership mission. The kingdom under the new ruler by the name Salman has made steps that directly and indirectly facilitate the program. Previous restrictions majorly on women have been scrapped off to promote the nation building efforts by all individuals in the kingdom.
The program measures put across including the development of the energy sector and the overall infrastructure remain some of the steps for ensuring the goal achievement. Passible roads, rail lines, airports and enhancement of the water supply system under the various ministries has led to the country’s spending a fortune in ensuring all these plans come to accomplishment. Technological adoption and the bargaining power as promised by the United Kingdom indicate signs of prosperity even before the plans come to achievement. Restoration of the gulf region and the peaceful deliberations among the nations offers a proper operational ground for investors. Cases of political instability act as the main bases of fear by investors as the chaos easily lead to loss of property.
A ready market for insufficient goods in the territories of Saudi Arabia supports the partnership program. The program does not benefit the locals only but it also serves the neighboring countries as long as the good relation talks remain among between these countries. For instance, Korea and Saudi Arabia have developed a joint vision 2030 that intends to promote growth on the two states. The partnership tends to promote the exchange of technology, good and services across the national territories. It would mean that the countries eliminate border restrictions and operate on the basis of free trade. The cross-border border operations among Saudi and the partners has a potential to expound the intended diverse operations in the kingdom. Steps already undertaken by the country in making agreements with the gulf countries and international partners indicates a promising future for the plan.
The Council of Economic and Development Affairs introduced by the government proposes to undertake national building affairs to create a better ground for investments. Such plans remain one of the competitive advantages in the nation which will attract many partners who would undertake the national building projects. Also, the Islamic model of moderation intends to allow a diverse of business partners regardless of religion to engage in investment practices (Alshuwaikhat, & Mohammed, 2017). The existing tradition of Islamic dominance with great restrictions to non-Muslims render it possible to offer a level ground for all interested parties as long as the aspect of vision 2030 becomes one of the partners’ mandates. Salman’s leadership has performed numerous adjustments to the law for provision of friendly environment.
Saudi Arabia has the potential to employ the strengths and opportunities to overcome the potential threats and weaknesses. The proposed support by the United Kingdom would improve the bargaining power with the proposed partners who would bring operational changes to diversify the kingdom’s economy. Plans with Korea also target a diversified market where the two states exchange marketing grounds for the locally produced commodities. The oil and mineral resources has the potential to attract manufacturing companies to utilize the raw materials for a wide variety of consumer goods production. Such man aspect reduces the practice of exporting crude oil which brings relatively lower revenue to the government. The imported technology by the partners reduces the government’s strive to improve technology in the kingdom.
Strategic position between the three continents of Africa, Asia, and Europe offers a competitive edge in terms of accessibility. Strategic location offers a great chance for partnership operations with the other countries. The landlocked states might have an acceptable ground for operation but lacks accessibility hence, fails to attract investors. The position also enables the neighboring landlocked countries to use the route for delivery of goods and services. Moreover, the large GDP compared to those of the Middle East countries offer a better chance for attracting investments than the neighbors. Transformed government policies pose an attractive ground for investments as the business personnel gets assurance of security and low chance of local exploitation.
The heavy investment on infrastructure to improve the energy and transport systems reduces business struggles due to lack of such resources. These changes tend to transform the current situation of oil dominance and promote other revenue raising practices for the country. Current accommodation of a variety of partners regardless of the religion creates a chance for the kingdom to access a variety of methods of operations (Khan, 2016).
Recommendations
Saudi strategy to attract investment through regional and international partnership indicates a development strategy never again experienced in the kingdom. The regulatory measures to attract the foreign investors should the first step worth considering as the partners would feel more secure when the existing law supports them by security guarantee. These policies including the changes in the Islamic laws to offer more freedom and room for operations tends to create awareness to those who could fear some restrictive measures put across by the law. On the same note, Saudi government should extend these security measures to the neighboring countries to completely eliminate the chaos that frequently arise in the gulf region.
Although the kingdom intends to diversify the economy from oil dependency to rely on other revenue generating methods, it should employ the oil sector as the bait to attract investors. The diverse methods of developing oil products create a great room for investment. Generation of other commodities from oil could play a major role in the diversification process. The government should also reconsider the local enterprises to prevent unnecessary competition with the foreign initiatives by employing regulatory measure beyond which the foreign investments should not go. Kingdom’s development in terms of infrastructure has already cost and continues to expend a fortune and hence care should be taken to prevent excessive spending of resources on infrastructure but fail in other categories of development.
The overall development cost intends to cost a fortune in billions if the laid plans have to succeed. What the government has already done for the program is quite promising and investors have a level ground to start their operations. The plans which are not yet implemented should be put in practice early enough to prevent inhibition of the project and the intended outcomes.
References
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Alshuwaikhat, H., & Mohammed, I. (2017). Sustainability matters in national development visions—Evidence from Saudi Arabia’s Vision for 2030. Sustainability, 9(3), 408.
Foley, S. (2017). When Oil Is Not Enough: Sino-Saudi Relations and Vision 2030. Asian Journal of Middle Eastern and Islamic Studies, 11(1), 107-120.
Khan, M. (2016). Saudi Arabia’s Vision 2030. Defence Journal, 119(11), 36-42.
Khashan, H. (2017). Saudi Arabia’s Flawed” Vision 2030″. Middle East Quarterly.
Mitchell, B., & Alfuraih, A. (2018). The Kingdom of Saudi Arabia: Achieving the Aspirations of the National Transformation Program 2020 and Saudi Vision 2030 Through Education. Journal of Education and Development, 2(3), 36.
Moser, S., Swain, M., & Alkhabbaz, M. H. (2015). King Abdullah economic city: Engineering Saudi Arabia’s post-oil future. Cities, 45, 71-80.
Neil, E., & Sprusansky, D. (2017). A look at Saudi Arabia Vision 2030. The Washington Report on Middle East Affairs, 36(1), 53.
Saudi Center for Strategic International Partnerships. (n.d.). Retrieved from http://www.scisp.gov.sa
Saudi Vision 2030. (n.d.). Retrieved from https://vision2030.gov.sa/en
Saudi Vision 2030: A Progress Report – Analysis. (2018, October 13). Retrieved from https://www.eurasiareview.com/13102018-saudi-vision-2030-a-progress-report-analysisMission & Mandate – Strategic Partnerships. (n.d.). Retrieved from http://www.scisp.gov.sa/en/mnmMission & Mandate – Strategic Partnerships,” n.d.
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