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Saudi Arabia: The Vision 2030 test
00:17:58
How much has Vision 2030 transformed Saudi Arabia's economy so far?
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- [00:00]
Ali Shahabi
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- [00:51]
Sameer Hashmi
Hello and welcome to Business Daily on BBC World Service. I'm Sameer Hashmi in Riyadh. Today we are looking at the sweeping economic changes the kingdom has undergone since the Launch of Vision 2030 nearly a decade ago, a reform drive aimed at reducing its dependence on oil.
- [01:08]
Ali Shahabi
Really, Vision 2030 was a strategy by the crown prince to put his chips on many numbers with the idea that if a few numbers worked, that would diversify the economy.
- [01:19]
Sameer Hashmi
Some of those bets are now beginning to pay off, with a handful of sectors emerging as meaningful contributors to non oil revenues.
- [01:27]
Ahmed Al Khateeb
Our target is 10% by 2030, which means we need to double the 5% in the next five years.
- [01:34]
Sameer Hashmi
But those gains are now being tested as the Iran war adds a new layer of risk.
- [01:38]
Karen Young
I think we do have to prepare for a perhaps extended period of instability, unresolved sort of warm or lukewarm conflict within the region, so that makes it hard for everybody.
- [01:51]
Sameer Hashmi
That's all coming up on Business Daily from the BBC. A young Saudi royal being welcomed on the world stage. It's August 2015. Mohammed bin Salman has been appointed deputy Crown Prince of Saudi Arabia at the age of 30, and this is one of his first overseas visits. He is walking the red carpet in Amman, welcomed by Jordan's King Abdullah. A military band playing, royal guards standing to attention. At the time, few outside the region knew much about him. Within a few years, this young prince would become crown prince of Saudi Arabia and the kingdom's de facto ruler. By the time he became Crown Prince in 2017, he had already pitched a confident economic vision for Saudi Arabia, known as Vision 2030, an ambitious plan to transform the country's economy. In a television interview, he explained what he saw as Saudi Arabia's core economic problem. We have a case of addiction to oil in the Kingdom of Saudi Arabia on the part of everyone. That issue is serious. It disrupted the development of many sectors in the past years, oil should be treated as an investment, nothing more, nothing less. The diagnosis became the foundation of Vision 2030, an economic strategy to reduce Saudi Arabia's dependence on oil and reshape Saudi society itself. Saudi Arabia is the world's largest oil exporter. When Vision 2030 was announced nearly a decade ago, oil accounted for nearly half of the economy. Since then, the Kingdom has poured hundreds of billions of dollars into new sectors, from entertainment and tourism to sports and mining, as well as some of the world's most ambitious infrastructure projects. Concerts, cinemas and global sporting events, once unthinkable, are now routine. Women, who once faced tight social and economic restrictions, are now driving working and visible across public life. Saudi female labor force participation has more than doubled over the past decade, but only around a third of working age women are currently active in the labor market. The non oil economy has expanded sharply, but oil remains the backbone of the economy and the main source of funding for Vision 2030 itself. And despite progress on several fronts, the government has faced major challenges, including delays in scaling back of neom, the trillion dollar futuristic region in the desert that once sat at the heart of the diversification drive. So how should Vision 2030 be judged so far?
- [04:49]
Ali Shahabi
Well, I think people have ignored a lot of the sort of unglamorous but substantive work that has been done.
- [05:00]
Sameer Hashmi
Ali Shahabi is a Saudi analyst and a commentator and a member of NEOM's advisory board.
- [05:06]
Ali Shahabi
First of all, the empowerment of women and the increase in women's participation in the workforce from 16% to 36%. And that was supposed to happen by 2030, it happened by 2023. So women have exploded out really into the workforce. You see them yourself, they are all over the country. And that has had a huge knock on impact in terms of increasing the size of consumer wallets. There's been tremendous legal reform where the legal system has and it's ongoing, where the law is being codified, simplified, digitized to make it easier not just for business people, but for the average person, really. Vision 2030 was a strategy by the Crown Prince to put his chips on many numbers with the idea that if a few numbers worked, that would diversify the economy and that is moving ahead. You still have chips on numbers. You have investments in the auto industry that are happening here. One will have to see whether that works or not. You have big investments being made in technology and AI in data centers.
- [06:17]
Sameer Hashmi
As you said, the Kingdom has placed a lot of chips on many sectors 10 years down the line. Which ones do you think have worked and which ones haven't and where do you think the Saudi Arabia will now focus more on?
- [06:29]
Ali Shahabi
Yes, I think it's too early to tell because it's not really 10 years down the line. 10 years was when the vision was launched, but projects took a number of years to start. But certain of the initiatives that have shown traction will be supported and will be increased and some of the ones that have not shown traction or will not show traction will, will be pulled back.
- [06:49]
Sameer Hashmi
Now, GIGA projects were really, you could say, at the heart of the diversification economic program.
- [06:56]
Ali Shahabi
Well, it was at the heart of the image really because they got a lot of media coverage. So I think people attributed more to them than they deserved. If you want, in terms of diversification,
- [07:09]
Sameer Hashmi
specifically on neom, and you've been on the advisory board of neom, so you have an inside view. NEOM was really at the heart of the GIGA projects, as you said, the image of this diversification program. But there is a recalibration happening. Some of the projects within NEOM have been scaled back. What have been the lessons learned? Where do you think things didn't go the way it was anticipated when NEOM was envisaged again?
- [07:35]
Ali Shahabi
NEOM went from being a concept car to building the car for the road. And that process, you acquire a lot of information and you acquire a lot of experience and you get a much better feel for the challenges that you are going to face in implementing your project. And I think as the management acquired that experience and we've had the new CEO come into NEOM a year ago and he has done a total strategic review of the project and we became aware of some of the limitations, some of the challenges. The project has been sort of redesigned to accommodate those changes.
- [08:12]
Sameer Hashmi
You're listening to Business Daily from the BBC World Service. I'm Sameer Hashmi.
- [08:19]
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- [08:47]
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- [09:14]
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Sameer Hashmi
Riyadh, Saudi Arabia's capital. Looking at the big economic changes the kingdoms introduced in the past decade under the banner of Vision 2030. In December, I visited Soundstorm, one of the world's largest electronic dance music festivals held on the outskirts of Riyadh. Just a few years ago, concerts like this were unthinkable in the kingdom. Until 2016, public music events were banned. Organizers estimate that around half a million people attended the 2025 edition over three days. Since it began, Soundstorm has hosted some of the biggest names on the global festival circuit, including David Guetta, Martin Garrix and Swedish House Mafia. Entertainment, alongside sports, has become a big part of Saudi Arabia's tourism strategy. Tourism is one of the main pillars of Vision 2030, creating jobs and attracting international visitors at scale. Saudi Arabia is also preparing to host major global events, including the Men's FIFA World cup in 2034 and the World Expo in 2030. I asked Saudi Arabia's Tourism Minister, Ahmed Al Khateeb, how far the kingdom thinks tourism can really go.
- [10:29]
Ahmed Al Khateeb
Our target was to achieve 100 million by 2030. We achieved 116 million by end of 2024 and we revised our target up to 150 million, out of which 50 million international arrivals. This is a very important sector not only for the economy diversification, but also for social impact and for job creation. We have about 1 million people work in the sector now.
- [11:03]
Sameer Hashmi
The tourism sector is contributing about 5% to the overall solid economy.
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Ahmed Al Khateeb
What's the target?
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Sameer Hashmi
Where do you think it can go?
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Ahmed Al Khateeb
The target is 10% by 2030, which means we need to double the 5% in the next five years. A new 250,000 key rooms and the Riyadh Airlines and the King Salman new airport and many projects under construction now will help us to achieve this number. In addition to Expo 2030 and beyond 2030, we will also host the FIFA World Cup 2034. We doubled the GDP contribution from 2019 to today.
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Sameer Hashmi
Can you give us a sense of what's the breakup like in terms of domestic tourists versus international? 70, 30, 70, 30, 70 domestic and
- [11:55]
Ahmed Al Khateeb
30 and 30% international. Those 30% were 11 million only in 2019, which means we crude the number almost from 2019 to 24 to 24.
- [12:12]
Sameer Hashmi
And what's the target with international travelers? How much are you aiming to reach?
- [12:15]
Ahmed Al Khateeb
50 million by 2030.
- [12:17]
Sameer Hashmi
In terms of ministers, if you look at Saudi Arabia, religious tourism is also a big part of your tourism strategy. How are you going to get more tourists who are looking for leisure travel
- [12:31]
Ahmed Al Khateeb
if we go back to 2020, 60% of the international arrivals are religious and 40% they come for other purposes. They come to visit their family or friends and to do business or to attend conferences and so on, so forth. Only 1 million they come to enjoy their holidays in Saudi Arabia. By the end of 2024, this 60% religious goes down to 46%. The absolute number increased, but the percentage decreased. And this is because of the people traveling. The travelers traveling for other purposes, including enjoying their holidays in Saudi Arabia, have doubled in the last few years.
- [13:22]
Sameer Hashmi
I'm inside the lavish King Abdulaziz International Conference center in Riyadh. Its marble halls are filled with delegates in sharp suits and Saudi men and women in white thobs and black abayas, respectively. This is the Future Investment Initiative summit. Often dubbed as the Davos in the desert. This is where some of the biggest names from finance, business and technology gather every year. For Saudi Arabia, this event is an opportunity to showcase its latest reforms, project confidence and convince international investors that the Vision 2030 transformation is well underway. But despite gatherings like this, attracting foreign direct investment has remained a challenge over the past decade. And it's not the only one. The execution of multibillion dollar giga projects like Neom, the flagship project of Vision 2030, hasn't gone according to plan right. Groups including Amnesty International have also raised concerns about the treatment of migrant workers, building many of the kingdom's ambitious megaprojects. Falling oil prices in the years leading up to the U. S. Israel war with Iran widened the gap between government revenues and spending. That has forced Saudi Arabia's sovereign wealth fund, the pif, which is leading the economic diversification program, to cut back spending on expensive projects and scale down some major developments, including NEOM and leisure tourism destinations. Under a new strategy announced in April, the fund is now focusing on six key economic areas that could generate faster returns on investments. These range from entertainment and clean energy to advanced manufacturing and logistics. Karen Young is a senior fellow at the Middle East Institute.
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Karen Young
The biggest challenge now, I think, is for the PIF and the government to communicate clearly what its spending and investment priorities are. And they're doing that. And there's a bit of a concentration now on projects that are going to be more closely aligned with industrial policy, with logistics. I'm still looking forward in the tourism, but of course we've seen some of the more vanity projects, the giga projects being scaled back. I don't think that's problematic from a society point of view, but it needs to be communicated clearly.
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Sameer Hashmi
Beyond domestic challenges, the war with Iran has added another layer of pressure on Saudi Arabia's diversification plans. Strikes on its critical energy infrastructure disrupted oil and gas production and exports for some time. The blockade of the Strait of Hormuz, through which Gulf producers ship most of their energy, has had a severe impact. Saudi Arabia, which is the world's largest exporter of oil, had to rely on its east west pipeline, which bypasses the strait for export, but its volumes are lower than what can be shipped. Higher oil prices may offset some of those losses. But uncertainty around the security of shipping routes and tension with Iran raises a bigger question. I asked Dr. Young what impact this war could have on the Saudi economy.
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Karen Young
This could be a prolonged period of threats to exports, both in terms of traffic of the Strait of Hormuz, but also like an unresolved conflict with Iran, where Iran may decide at any point to threaten its neighbors, either directly or indirectly. So I think we do have to prepare for a perhaps extended period of instability, unresolved sort of warm or lukewarm conflict within the region. So, so that makes it hard for everybody. But yes, indeed, the, the pipeline in Saudi Arabia has been super important in terms of, you know, global oil supply, but also for revenue generation for the kingdom. And you know, I think many of the Gulf producers, you know, UAE and Saudi Arabia have used their pipelines and it's been super important, but they'll probably be thinking about building additional ones and having some degree of redundancy just to protect from, you know, things like this happening again. And, you know, so bouncing back though, is not just about oil and gas, it's about the non oil economy. And as long as there is a sense of unresolved conflict and potential threat, that of course, is not conducive to tourism, to logistics and ports, and attracting foreign investment. So, and the, you know, the financial services and investment communities of the Gulf, which are pretty significant now, really rely on that business environment being open and fluid and attracting people from all over the world. And that becomes a more difficult thing to do when there's a sense of insecurity.
- [17:58]
Sameer Hashmi
These are sounds of celebration in Riyadh after Saudi Arabia won the bid to host the 2034 FIFA World Cup. It's a significant moment, one that reflects how the Kingdom is seeking to raise its profile and reposition itself on the global stage. Over the past decade, Saudi Arabia has pushed through wide ranging changes, opening up parts of society, building new industries and spending heavily in an effort to reduce its reliance on oil. That transformation hasn't been without challenges, from volatile oil prices to criticism over regional conflicts and a sustained crackdown on dissent at home. On the economic front, some bets have paid off others have delivered a reality check. Altogether, the results are mixed, but Vision 2030 is already reshaping Saudi Arabia's economy in ways few would have predicted when it was first announced. Whether it ultimately succeeds will depend not just on ambition or spending, but on sustained reforms and how Saudi Arabia navigates an increasingly uncertain world. That's it for today's edition of Business Daily. From me, Sameer Hashmi. Thanks for listening. The Rolling Stones are releasing their 25th album in July. But in a world dominated by streaming, where fans expect ever bigger stadium spectacles, how does one of the world's biggest rock bands actually make its money? Hannah Mullane follows the money behind the Rolling Stones. You'll find that episode in your podcast feed.
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Karen Young
On Tuesday,
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Sameer Hashmi
I cashed out my entire 401k thinking someone stole my identity.
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Karen Young
A fake email cost me my dream home. After I sent my personal information to
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Sameer Hashmi
a scammer, my AI agent wired thousands to an account I'd never seen.
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