December 10, 2018: Saudi Arabia has experienced tremendous transformation in 2018, bouncing back from low oil prices with the largest expansionary budget and history-making reforms. King Salman’s Vision 2030 was a guiding principle for many of the country’s reforms along with Crown Prince Mohammed’s leadership has lead Saudi Arabia to modernise the Kingdom. Reviewing 2018, we can see major shifts that will impact Saudi Arabia’s future.
One of the major business reforms this year was the introduction of VAT. We also saw other GCC countries undergo the shift with Saudi Arabia. The tax was set at a standard rate of five percent however, there were some exemptions. The exemptions are basic necessities and medical, cultural and educational products, financial and insurance services. The tax helped increase the government’s revenue and despite market conditions, it still saw growth.
Saudi Arabia was promoted to Emerging Market status by FTSE Russell. Through the reforms, and the Kingdom meeting the formal requirements constant analysis, use of advanced technology and unbiased research, Saudi was found to qualify for the FTSE Global Equity Index Series. The advancement, by FTSE Russell standards, acknowledges the Kingdom’s moves to make the market more accessible to foreign investors and improving the environment for investors.
The Saudi government also approved and implemented the Kingdom’s first bankruptcy law. This was needed in the Kingdom as it reduces risk for foreign investors - making the environment more attractive - and gave businesses a viable way to close business should they need to.
On the entertainment spectrum, as the Kingdom aims to create a more vibrant entertainment and leisure scene, the first cinema opened in the Kingdom this year. After the lifting of the 35 year ban in 2017, many entertainment companies have been granted licenses to operate and have opened cinemas in the Kingdom.
Another historic shift in the Kingdom was the lifting of the driving ban on women. Saudi Arabia was the last country in the world to hold a driving ban on women and its’ removal has shown many benefits. As one of the Vision 2030 objectives is to increase female participation in the workforce, we have already seen an increase. Women who previously didn’t have the transport to work are now able to work and it has subsequently boosted the economy.
Saudi Arabia made drastic changes in 2018 and the effects are not just economical but also impact the citizens and expats. Saudi Arabia will continue to make strides to achieving their Vision 2030 in 2019 as they continue to exceed expectations and push boundaries.