Saudi Arabia’s Crown Prince Mohammed bin Salman has a new target in his sights as he looks to press on with his unprecedented economic transformation plan: the country’s largest listed companies.
Six weeks after saying foreign entities must move their regional headquarters to the kingdom or lose business, Prince Mohammed, the nation’s de facto ruler, announced Tuesday that companies from oil giant Saudi Aramco to dairy producer Almarai will be encouraged to reduce their dividends and redirect the money back into the economy.
“We’ve seen the government using a stick to get foreign investors to come into Saudi Arabia, and now they are using it on domestic investors,” said Tarek Fadlallah, the Dubai-based chief executive officer of the Middle East unit of Nomura Asset Management. “I’m not a fan of government intervention in the private sector, but Saudi has limited ways to incentivize companies, so partnering in this way could help encourage more investment.”
The stakes are high. The crown prince’s vision entails combined public- and private-sector spending of 27 trillion riyals ($7 trillion) over the next 10 years in an effort to diversify an economy that got 54% of its revenue from oil last year. And all at a time when foreign direct investment is a fraction of what it used to be, the budget deficit is swelling and the nation is struggling with the after-effects of last year’s slump in crude prices amid the Covid-19 pandemic.
No comments:
Post a Comment