The contribution of the private sector to the Saudi GDP at constant prices increased to 44.1 percent during the first quarter of this year, compared to 41 percent in the same period last year (first quarter 2020), and 41.5 percent in the previous quarter (fourth quarter 2020). .
According to the analysis of the reports unit in the newspaper “Al-Iqtisadiah”, which was based on official data, the private sector’s share of the Saudi economy in the first quarter of 2021 is the highest ever since the base year was amended to 2010.
The sector grew by 4.4 percent (11.7 billion riyals) during the first quarter of this year, to reach 279.7 billion riyals, compared to 268.1 billion riyals in the same period of 2020, which is the highest growth rate in five quarters, which played a major role in mitigating the decline of the oil sector on the whole. The local economy during the same period, which declined by 11.7 percent (30.7 billion riyals), which means that the increase in the domestic product of the private sector has compensated for 38 percent of the decline in the output of the oil sector, which is very positive.
The analysis expects that the sector is heading for accelerated growth that can be described as “jumping barriers” during the coming period, supported by the state’s dependence on it as an engine of the economy, so the “partner” and “privatization” programs were launched within the programs of the Saudi Vision 2030, which is expected to have a very positive impact on the sector over the coming years until 2030.
Crown Prince Mohammed bin Salman had confirmed in March that the “Shareek” program investments would raise the private sector’s contribution to the gross domestic product, to reach the planned target within the goals of the Kingdom’s vision, which is 65 percent by 2030.
What confirms that the private sector is on the right path also is its growth on a quarterly basis of 6.3 percent, as its value was 272.8 billion riyals during the fourth quarter of 2020.
The increase in the private sector’s contribution to the GDP came as a result of the accumulation of a set of government incentives that extended since 2017, even in conjunction with Corona.
The government stimulus comes in light of the Kingdom’s Vision 2030 reliance heavily on the private sector, as it aims to raise its contribution to the GDP to 65 percent by 2030, while its share in 2015 (before the launch of the vision) was about 39.3 percent of the output.
Last March, the “Shareek” program was officially launched, aimed at strengthening the partnership between the public and private sectors, and accelerating the achievement of strategic goals of increasing the economy’s flexibility and supporting prosperity and sustainable growth.
Saudi Arabia launched the privatization program in 2018, while the Council of Ministers approved the privatization system during March 2021.
The system aims to promote investment in the national economy, create attractive investment opportunities for the private sector, and increase its contribution to the domestic product to enhance the sustainability of the Kingdom’s economy.
Muhammad Al-Jadaan, Minister of Finance, said earlier that there will be privatization initiatives that will be launched, and it is a new tributary in the Kingdom’s economy by privatizing some government services and making them available to the local and international private sector in 16 government sectors targeted for privatization.
stimulating the private sector
In December 2016, the Saudi government announced the allocation of 200 billion riyals to support the private sector with long-term loans.
Mohammed Al-Jadaan, Minister of Finance, has repeatedly stressed that supporting the private sector is the engine of growth in the coming years, so the Kingdom is working to facilitate the sector’s work, overcome obstacles and provide support to it.
Since October 2019, the Saudi government has begun to charge expatriate workers in the industrial sector the financial compensation, and this extends for five years.
And at the beginning of 2019, the “Combined Bill” initiative was launched, from which 364,000 establishments benefited, with a value of 11.5 billion riyals, representing payment or exemption from the differences in the financial consideration for work licenses, according to the commitment to certain percentages of Emiratisation.
In conjunction with the outbreak of the Corona virus, the Saudi government provided huge stimulus packages to the private sector, the most prominent of which was 50 billion riyals from the Saudi Central Bank “Sama” for financial institutions and small and medium enterprises, in addition to a first package announced by the Ministry of Finance of about 70 billion riyals represented in exemptions and postponement of some dues. governmental.
The government, through the Sanid system, bore 60 percent of the salaries of Saudi private sector employees, with a total value of nine billion riyals.
Also, a new package announced by the Ministry of Finance, amounting to more than 50 billion riyals, to support, exemptions, and expedite the payment of dues to the private sector.
Economic Reporting Unit