Mohammed bin Salman, or MbS, the all-powerful Crown Prince of Saudi Arabia, is not only powerful. He's also very ambitious.
MbS is famous for his goal of transforming and modernizing the notoriously secretive and conservative country of Saudi Arabia.
So far, in his term, he has implemented changes that reversed the image of Saudi Arabia. From a joyless public space, where one was apt to get in trouble for acting against conservative laws, Saudi Arabia is now becoming more open to changes.
One can safely attribute this to MbS's Vision 2030—which also has its fair share of trouble.
Vision 2030: A Cultural and Economic Step-Up
In 2016, MbS and the Royal Court published the highly ambitious plan, called Vision 2030, to diversify the country's economy. One of its main goals is to reduce the Kingdom's dependence on oil and petroleum significantly.
In a nutshell, the plan is to boost the underdeveloped private sector. The reason is pretty simple: MbS wants it to be the fuel that will drive future economic growth in a country most known for its petroleum and oil production.
This pivot toward the private sector boost is a massive shift from its age-old economic model. At present, the public sector accounts for two-thirds of the Kingdom's GDP. But if one looks at the age demographic, which shows that 70% of the population is under 30 years old, it's easy to see why such status unsustainable.
The Three Pillars
Vision 2030 packs a lot of directional instruction for the future of the Kingdom. It provides definition and clarity to the Kingdom's goals. The plan revolves around three foundational pillars:
- Make the Kingdom of Saudi Arabia the heart of the Arab and Islamic world. The country must fulfill this role successfully.
- Use the Kingdom's massive financial resources as a global investment beacon through growing the economy and diversifying its revenues.
- Leverage the Kingdom's strategic location to serve as a global hub that connects three continents.
The program has already established various initiatives, including the National Industrial Development and Logistics Program.
MbS aims to attract as much as 1.6 trillion riyals, or $429 billion, in private sector investments in the next decade.
The "marketing" for the country's project has been dynamic and continuous, with MbS pressing on with his plans.
However, headwinds and challenges exist concerning both the larger and smaller goals within the Vision 2030.
Highlights from Mohammed bin Salman’s interview on ‘60 minutes’
Global Reputation: Khashoggi Killing
Much can be said about the Kingdom's Crown Prince in terms of progressive shifts and rules. For instance, he has relaxed the law that brands women as legal minors. This required women to seek the permission of their male guardians and relatives before making any decision in their lives.
MbS's relaxation of such a restrictive law made him popular among locals.
But this apparent shift from customs and traditional pales in comparison with MbS's international reputation as a leader that doesn't sit well with dissent. Perhaps most telling was the sensational, widely publicized murder of Jamal Khashoggi.
Khashoggi was a prominent journalist and an even more prominent critic of the Kingdom's Crown Prince. He got murdered on October 2, 2018, in the Saudi consulate in Turkey.
According to various reports, Khashoggi's death in the hands of a hit team of security and intelligence agents sent from Saudi Arabia. He was not only murdered, but also chopped into pieces, with no remains found since.
MbS Denies Participation
MbS is adamant in his denial of knowledge about the operation. Although he takes responsibility for the killing (because it happened "under my watch"), he insists that he didn't have a hand in the murder.
However, the CIA and Turkish intelligence have voice tapes that recorded what went down during that fateful day. The recordings seem to indicate that MbS may have direct knowledge of the murder. The CIA, meanwhile, believes that he may have even ordered the killing.
As a result, the scandal put a hiccup on the trajectory of Vision 2030.
The project lost some much-needed support for the project, with many businesses pulling out of huge events where the Crown Prince was centered.
This fiasco, plus many other controversies revolving around MbS's policies, continue to put the project in a challenging position to succeed in its goals.
Saudi Aramco's Delayed IPO
In line with the Vision 2030's goal, the Kingdom is also planning to sell its most prized assets. One of which is Saudi Aramco, the largest oil producer in the world. By some accounts, it's also the most profitable company around.
The plan is for the company to go public through an initial public offering (IPO). At first, MbS wanted the company to be listed either in London or New York. However, investors weren't too happy with the $2 trillion valuation that MbS put on the company.
After postponing the IPO, the company planned to list locally at first, with local banks and wealthy families backing the program.
However, it recently faced postponement again as the company still struggles to meet the said valuation. According to some people familiar with the matter, the company plans to sell 2% of its business, which would let them raise $40 billion. For comparison, the Chinese e-commerce giant Alibaba Group's 2014 IPO raised $25 billion.
To put it plainly, the Kingdom's plan to take Aramco public is on a bumpy road. Concerning the postponements, analysts are also skeptical over the real value of the company.
In a nutshell, analysts are saying that the $2 trillion valuation may be too much if we compare the company to other similar businesses that have gone public. If compared to Exxon Mobil, the biggest US oil company, Aramco's valuation is closer to only $1.5 trillion.
Attacks on Oil Facilities
Apart from the issue of valuation, Saudi Aramco's IPO's future further gets dimmer after the drone attacks on its oil facilities last September.
September 14 saw drones unleashing attacks that have links to Iran, which is a massive rival for the Kingdom. The attacks cut Saudi Arabia's oil production by 5.7 million barrels of oil per day. As a result, crude output slipped to 8.45 million barrels per day in September.
At the same time, Fitch Ratings downgraded the company's issuer default rating to A from A+, further putting a dent on the company's plan to go public
Last but the Least—the Citizens
Challenges don't end at the international front. Vision 2030 also suffers from internal pressure and concern.
The Kingdom's economy, as we have mentioned, is mainly revolving around the public sector. Vision 2030 aims for privatization. And one area that the project will plow through is the housing market.
According to statistics, 47% of families own homes. The Vision 2030 project aims to increase this rate by five percentage points by the year 2020.
To do this, MbS plans to encourage private sector firms to join the market. Banks will also provide mortgage and solutions for Saudi people. The problem is that underdeveloped "white lands" have prevented growth in the Kingdom. This event means higher taxes for owners.
At the same time, private developers tend to build projects that are more expensive than what citizens can afford.
Overall, Vision 2030 is leading a rocky and turbulent road. But ten years is ten years, and MbS shows eagerness to shape a new Saudi Arabia in the future. Challenges or not, we can expect a massive transformation in the Kingdom of Saudi Arabia.