Custodian of the Two Holy Mosques King Salman unveiled Saudi Arabia’s biggest ever budget in history, demonstrating the Kingdom’s optimism towards economic diversification and private sector expansion.
The budget is projected at $260.8 billion in 2018, which is slightly higher than Saudi Arabia’s 2017 budget of $250 billion.
King Salman announced that dozens of programmes have been launched within the guidelines of Vision 2030 to diversify the economic base, empower the private sector and improve the living standard of citizens.
Through this expansionary budget and additional spending by development funds, the Kingdom plans the highest level of government spending next year, when the expenditure will hit more than SR 1.1 trillion.
The National Development Fund will allocate fund for housing, industrial and mining projects as well as for stimulating private sector. The Public Investment fund (PIF) will also fund new and existing projects in 2018.
Saudi Arabia projects to bring around SR 783 billion in revenue in 2018, in comparison to SR 692 billion in 2017.
Despite huge spending, Kingdom aims at narrowing the budget deficit next year to less than 8 percent of GDP, approximately SR 195 billion. The Kingdom expects to balance the books by 2023.
The expansionary budget for 2018 focuses on redesigning the Saudi economy by reducing the dependence on oil, reducing subsidies, creating jobs for male and female citizens and recommitting to invest in the future productive capacity of the economy. The ease in fiscal policy would help the Kingdom’s economy grow faster.
The government intends to cut energy subsidies next year because of which fuel prices are set to rise by 80 percent in January 2018. The move is widely expected to free up funds for other parts of the economy such as infrastructure.
Saudi economy was heading to a mild recession of minus 0.5 percent in mid-2017. With the rise in oil prices, the economy is expected to leap to 2.7 percent in 2018.
The General authority of Zakat and Tax (GAZT) confirmed that more than 80,000 businesses in Saudi Arabia have registered for Value Added Tax (VAT) which will be implemented on January 1, 2018.
Earlier, GAZT called upon companies and businesses operating in the Kingdom with an annual revenue exceeding SR 1 million to register for VAT before December 20, 2017.
GAZT also warned that companies who fail to complete the registration process before the allocated time will be exposed to a fine of SR 10,000, in addition to other penalties related to non-compliance of tax returns and non-payment of tax on time.
However, registration deadline for entities with annual income between SR 375,000 and SR 1,000,000 is December 20, 2018.
Registration of establishments with annual income between SR 187,500 and SR 375,000 are optional, while businesses with annual revenue less than SR 187,500 are exempted from VAT registration.
Saudi Arabia’s King Salman approved the allocation of 72 billion Saudi riyals ($19.2 billion) to boost the Kingdom’s private sector, Saudi Press Agency reported on Thursday. The measures which primarily focus on housing and SMEs are part of a four-year, 200 billion riyal stimulus programme announced earlier by the government to support private companies, said Fahad Al-Sukait, a cabinet advisor.
The package will allocate 21.3 billion riyals for housing loans, 10 billion riyals to support economic projects and 1.5 billion riyals to help companies in financial crisis. The government will create a 2.8 billion riyal fund to invest and uplift smaller companies. Moreover, the royal decree allocated 7 billion riyals to support SMEs by refunding government service fees.
The package will also focus on developing the Kingdom’s broadband and fibre optics infrastructure as well as developing modern techniques in the construction sector. Through the economic stimulus program the government aims at uplifting the Saudi economy from the recent financial crisis caused by fall in oil prices. The package also includes measures designed to accelerate the growth of private sector companies in the Kingdom.
Saudi Arabia’s Ministry of Finance announced on twitter that the Kingdom is all set to impose monthly levy on expats which will range between SR 300 and SR 400 in 2018 depending on the percentage of foreign employees with respect to Saudi employees in private sector companies.
It added that companies operating in private sector will have to pay levy for their employees. With the implementation of levy, the government aims to replace expatriates with Saudi employees.
Earlier in 2016, the ministry announced a levy of SR 400 in 2018 followed by SR 800 in 2020 for private companies which hire more foreigners than locals.
However, in private companies with greater percentage of local employees than foreigners, expat levy will be limited to SR 300 in 2018 which will gradually rise to SR 700 in 2020.
Recently, Saudi Arabia has been involved in the implementation of expat levy, dependent fee and possible introduction of VAT in 2018, all as a measure to diversify its economy from the oil sector.
Saudi Arabia’s non-oil private sector depicted a sharp growth according to data published by Emirates NBD Saudi Arabia PMI. An upswing in both output and new orders in the Kingdom is promising a positive growth in the non-oil sector. Moreover, there has been an increase in selling price due to rise in cost pressures.
The survey is sponsored by Emirates NBD and produced by IHS market. It is based on data collected from business surveys conducted in Saudi private sector every month.
The sharp growth in output is attributed to increased demand for local goods and services in the Saudi market. Anecdotal evidence also suggested a steep growth in incoming new businesses and new export orders recently.
New business growth index displayed a 27-month high creating a positive vibe in the non-oil sector.
The month of November also witnessed new job opportunities being created in the non-oil private sector. The latest increase extended the current sequence of job creation to 44 months.
New export order growth reached a three-month high in November due to economic upturn in the neighboring countries.
Forecasting further improvement in economic conditions and stronger demand, companies in the non-oil private sector are increasing pre-production stocks at the second-fastest pace in the survey history.
Business confidence and optimism towards future growth prospects improved as a result of active marketing campaigns, business investments and upward economic growth.
Khatija Haque, Head of MENA Research at Emirates NBD, said that the report suggests a solid growth in Saudi Arabia’s non-oil sector.
Alinma Bank attained 10th position in the latest brand rankings published by YouGov Brand Index. While Emirates, Apple and iPhone secured first, second and third positions respectively in the 2017 brand advocacy report for Saudi Arabia by international market research and data analysis firm YouGov, Alinma Bank was the only bank to be placed in the top 10.
YouGov produced the report using its daily brand tracking tool, that considered which brands consumers have endorsed the most over the past year by asking respondents, “Would you recommend the brand to a friend or colleague?” and “Would you tell a friend or colleague to avoid the brand?”.
The ranking is the second such recognition for Alinma in 2017. Earlier this year, Alinma Bank was recognized as one among the top 20 brands in Saudi Arabia in a survey by Kantar Millward Brown.
The bank’s leadership and its clarity, reliability, and transparency while servicing its customers has led to its rapid growth and recognition in the Kingdom.
Alinma Bank serves its partners through a network of 143 branches and 1400 ATMs across the Kingdom. It has established itself as the backbone of Saudi economy, through its frequent participation in landmark infrastructure project financing, offering a full array of customer financing products, and addressing important financial issues of citizens.
As the 35-year-old ban on cinema comes to an end in Saudi Arabia, Kingdom’s sovereign wealth fund, the Public Investment Fund (PIF) teams up with US movie exhibition company AMC Entertainment Holdings to explore and invest in cinema business in the Kingdom.
AMC announced signing a deal with PIF to form a joint cinema venture, which was later confirmed by Saudi state media.
Adam Aron, CEO of AMC, stated “This announcement is a historic moment for the theatrical exhibition industry and a tremendous opportunity to connect AMC’s movie products with the Kingdom of Saudi Arabia’s more than 30 million citizens, many of whom we know are movie fans based on their regular visits to cinemas in neighboring countries”.
With over 1,000 theaters and 11,000 screens worldwide, AMC is the biggest cinema operator in the world. Its screens are mainly concentrated in US and Europe, many functioning under the brand name Odeon.
Meanwhile, AMC will face tight competition from other prominent cinema chains. Dubai-based VOX Cinemas has already expressed its desire to open the first movie theater in Saudi Arabia and further expand its business in the Kingdom.
Movie theaters in the Kingdom are expected to start operations in March and the Kingdom expects to open over 300 cinemas with more than 2,000 screens by 2030.
The General Authority of Zakat and Tax (GAZT) announced that all e-commerce businesses in Saudi Arabia will be subject to 5 percent Value Added Tax (VAT) with its implementation from January 1, 2018.
At present Saudi Arabia have 11.1 million e-commerce users which are expected to grow by 6 million in 2020.
All online sales and purchases will be subject to VAT and the due amount will be collected by the Customs Authority at the port of entry.
Goods imported from GCC member countries will also be subject to VAT as a transitional provision until the implementation of intra-GCC electronic service system.
Specific rules will be applied to electronic services such as e-subscriptions, e-content, software and mobile phone applications that determine how VAT is applied to them.
GAZT said that if the supply is a product or service coming from outside Saudi Arabia, then the recipient in the Kingdom, if eligible for VAT, should calculate the due VAT using reverse charge mechanism.
If the recipient is the end consumer as well, then regardless of the supply volume, the non-resident supplier must register in Saudi Arabia for VAT purposes.
GAZT clarified that electronic portals that serve as intermediary for non-resident suppliers are themselves responsible for calculating the due VAT, rather than the non-resident suppliers acting on their behalf.
In a related note, GAZT announced 5 percent VAT on all private healthcare services. However, medicines and medical equipment approved by Ministry of Health and the Saudi Food and Drug Authority (SFDA) will not be subject to VAT.
GAZT called all eligible businesses to prepare for VAT which will be implemented on January 1, 2018, and advised them to visit VAT official website vat.gov.sa for further details.
Saudi Arabia has signed a deal with US group Nasdaq to upgrade its stock market infrastructure by the end of 2020. The Kingdom has a rapidly growing stock market with a capitalization of $450 billion.
Kingdom’s stock exchange Tadawul said that Nasdaq technology would create a new central counter-party clearing system for the Saudi market by upgrading its current registry, depository, clearing and settlement infrastructure that is more than 16 years old.
While the strive to achieve Crown Prince Muhammed bin Salman’s ambitious “Vision 2030” continues, the Kingdom is rapidly developing its stock market to attract foreign investments as it seeks to diversify the economy beyond oil revenue.
The deal with Nasdaq to rebuild the Kingdom’s central securities depository is also part of Saudi Arabia’s efforts to tackle challenges before the forthcoming listing of 5 percent of oil giant Saudi Aramco.
To fulfill its dream of attaining self-sufficiency in nuclear fuel production, Saudi Arabia has invited US companies to cooperate with the Kingdom to set up its nuclear power plants.
Saudi Arabia’s Minister of Energy, Industry and Mineral Resources Khalid Al-Falih emphasized that the Kingdom is only interested in developing nuclear technology for civilian use and will not involve in military purposes.
King Abdullah City for Atomic and Renewable Energy, KACARE, had earlier confirmed active discussions with France’s EDF and Toshiba owned Westinghouse.
Westinghouse is currently involved in discussions with several US companies to form a consortium for a multi-billion-dollar project to build two reactors in the Kingdom.
Nuclear reactors enrich Uranium to around 5 percent purity for domestic purposes, but the same technology can be used to enrich uranium to a higher grade for making weapons. This has been the concern of Western and other countries in the region.
However, Saudi Arabia has confirmed that it aims to attain nuclear power to diversify its energy sources. This would reduce the dependence on crude to generate electricity allowing the Kingdom to increase its crude oil export.
Saudi Arabia plans to gradually install up to 17 reactors with 17.6 gigawatts of atomic capacity by 2032.