BE2C2 Report — Saudi Arabia may offer “almost interest-free” loans to companies in labor-intensive industries, as part of a plan to stimulate an economy squeezed by low oil prices and government spending cuts, Finance Minister Mohammed Al-Jadaan said.
Officials are in talks with private companies about other kinds of government support too, Al-Jadaan said in an interview on Thursday in Washington, where he’s attending International Monetary Fund and World Bank meetings. The proposal will likely be ready by the end of June, he said.
According to some analysts, the move is likely to benefit construction, manufacturing and hospitality industry– job-rich sectors of the economy.
Earlier on Thursday, Saudi authorities said that foreigners will be barred from working in shopping malls, a move expected to put 35,000 Saudis into work.
The Vision 2030 — spearheaded by Deputy Crown Prince Mohammed bin Salman, announced last year, includes strong emphasis on creating jobs for the kingdom’s youthful population and end reliance on expatriate labor, sell shares in state companies and curb government spending.
Over 50% of Saudis are under the age of 25, according to a Harvard Business Review report.
Al-Jadaan said the new lending program will help companies restructure debt, easing the impact of higher domestic energy prices as subsidies are cut.
Authorities are also asking companies “what do you need from the government side, what are the issues you’re suffering in terms of licensing, procedure?” he said.
Policy makers in the Kingdom are also speeding up the approval process for projects.
“We used to review all contracts before they are signed by any government agencies if they are more than 300,000 riyals,” Al-Jadaan said. “We’ve changed that to avoid unnecessary delays. It’s now 5 million, and only for more than a one-year term.”
Projects that are part of Vision 2030 and cost 100 million riyals no longer require an approval from the royal court. “They just need to notify us.”
Prince Mohammed’s plan would introduce value-added taxation, higher visa fees and a levy on expatriates, to reduce revenue-dependence on oil. Al-Jadaan said the government was “absolutely” determined to implement the VAT on Jan. 1, 2018. Other measures are also on track, he said.
(Based on original report by Bloomberg News and HBR)