Saudi National Day

Current development plans appropriate 1.445 trillion rials to improve standards of living, enhance economy, human resources

Saudi Arabia’s membership in G-20 attests to its effective role in global economy

Kingdom’s contribution to development, confronting disasters up to 120 billion rials

Prince Faisal bin Sultan: We boast abundant asset of great achievements thanks to our wise leadership

Prince Faisal bin Sultan bin Abdulaziz, the Secretary-General of the Sultan bin Abdulaziz Charity Foundation, speaking on the occasion of the Kingdom of Saudi Arabia’s 80th National Day, said the kingdom has been boasting a flourishing asset of great achievements made by the wise leadership since the time of the founding King Abdulaziz bin Abdulrahman al-Faisal Al Saudi until the time of the Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz.

Prince Faisal praised the “overall renaissance that have changed the features of our nation and catapulted it to progress in a way that we all take pride in”.

“Now, each and every Saudi citizen has to be proud and cherish the civilized development of the nation that covered all aspects of life in the kingdom,” he said.

Meanwhile, the kingdom’s 9th development plan has allocated about 1.4446 trillion rials for development sectors, with an increase of 67% compared to the sum appropriated to the 8th development plan.

The human resources sector obtained the lion’s share, 50.6%, of the total sum, followed by the social development and health sector with 19%.

As noted by Minister of Economy and Planning, the 9th NDP was prepared with the overarching goal of achieving sustained development towards the Kingdom’s 2025 Long-Term Strategy.

An overarching theme of the 9th NDP is therefore “sustaining development”. While the Kingdom has made remarkable achievement in rising to High Human Development status in recent years, various drivers of change pose risks for the sustainability of the Kingdom’s development results towards 2015 and beyond.

The Council of Ministers had endorsed the Ninth Five-Year Development Plan (2010-14), which has allocated SR1.44 trillion ($385 billion) for various infrastructure and welfare projects. The amount is 67 percent more than the previous plan.

Custodian of the Two Holy Mosques King Abdullah, who presided over the Cabinet meeting, urged all government departments to implement all projects earmarked in the plan within their specific periods, and give top priority to those projects that are directly linked with improving the standard of living of citizens.

Under the new plan, the king said, the lion’s share of government spending (50.6 percent) is set aside for the manpower development sector that covers education and training. Social development and health care will receive 19 percent of total allocations, economic resource development 15.7 percent, transportation and telecommunications 7.7 percent while municipal services and housing 7.0 percent.

Economy and Planning Minister Khaled Al-Gosaibi said the five-year plan was prepared in line with a long-term strategic vision aimed at achieving sustained development. Apart from fighting poverty, it focuses on providing housing, employment, education, health care and other services and facilities.

“Increasing economic growth, improving the living standards and quality of life of citizens, and achieving balanced development of the Kingdom’s regions are some of the plan’s main objectives,” the minister said.

It will also help strengthen the Kingdom’s competitiveness and transform it into a knowledge-based economy. It has also given importance to youth issues, he added.

He expected a 5.2 percent growth in gross domestic product (GDP) in 2009. “We also expect that the per capita income would grow from SR46,200 in 2009 to SR53,200 by 2014,” he said. The private sector is expected to grow by 6.6 percent annually while non-oil sectors by 6.3 percent and investment 10.4 percent.

He also pointed out that the Saudi workforce would increase from 47.9 percent in 2009 to 53.6 percent in 2014, bringing down the unemployment rate from 9.6 percent to 5.5 percent.

The government will also establish 117 hospitals including 32 specialist ones with 22,372 beds, 750 primary health care centers and 400 first-aid centers during the period. More primary, intermediate and secondary schools will be constructed to accommodate a total of 5.31 million students while the capacity of universities will be increased to 1.7 million. Twenty-five new colleges of technology, 28 higher technical institutes and 50 industrial training institutes will also be established.

Speaking about plans for the water and electricity sector, the minister said the actual capacity of desalination plants would be doubled from 1.05 billion to 2.07 billion cubic meters annually in 2014. A drinking water pipeline 15,000 km long will be established and 600,000 housing units will be given water connections. Nearly 700,000 housing units will be given sewage pipeline connections and 1.3 million subscribers will be given electricity connections.

Referring to the government’s efforts to meet housing requirements, he said the plan envisages the construction of one million housing units by the public and private sectors to meet 80 percent of the housing demand in various parts of the country. It will provide 266 million cubic meters of land for housing projects.

Al-Gosaibi said the five-year plan has taken into consideration the speedy technological and economic developments in the world. “Efforts will be made to acquire modern technology and innovative systems to increase productivity at industrial and economic sectors,” he added.

He also emphasized the Kingdom’s plan to increase investment in infrastructure projects, maintenance, human resource development, natural resource development, and environment protection projects and systems. “The Kingdom will continue its economic and administrative reforms during the plan.”

The minister highlighted the Kingdom’s development achievements in the past years, adding that it would serve as a launching pad for the ninth plan. He said the government is pinning great hopes on the private sector toward realizing the development plan by mobilizing its financial and human resources.

Commenting on the 9th Plan, John Sfakianakis, chief economist at Banque Saudi Fransi, said the government’s move to focus on manpower development would help achieve sustainable economic growth. “Manpower development is crucial if Saudi Arabia wants to move into a knowledge-based economy with real market needs,” he told Arab News.

Saudi Arabia needs to address the issue of disproportionate growth of general education over technical education. Closing the gaps between the labor market and the education system remains a top priority, Sfakianakis said. “Saudi Arabia has accomplished many objectives on the road to better human resources development. There has been a considerable rise in the number of higher education institutions and training research centers,” he added.

Jarmo T. Kotilaine, chief economist of NCB Capital, also welcomed the 9th Plan and its strategic goals. “This is a welcome strategic focus even if it predictably builds on the priorities that have already been laid down in recent years.

The key policy priority must be to deepen and more effectively mobilize the Kingdom’s large pool of human capital which not only has the potential to become a key comparative advantage but also needs to do so if the longer-term diversification objectives are to be met.”

Kotilaine added: “Boosting the development of the non-oil sectors through human capital deepening is a precondition for increasing the long-term sustainable growth rate of the Kingdom. Of particular importance in this regard are efforts to enable people with the necessary knowledge and education to apply it to entrepreneurship, an area where considerable progress remains to be made even if promising steps have been taken in recent years. While more knowledge is important, the critical step remains the translation of this knowledge into production.”

Saudi Arabia's 9th development plan, covering the period 2010 to 2014, attempts to address key challenges facing the kingdom. The plan's key features include allocating more than half of planned expenditures on human resources development, in turn designed into making Saudi nationals equipped with job market requirements in terms of education, training and skills.

Clearly, the authorities appreciate the financial requirements for meeting the challenges, and this possibly explains the logic behind allocating a sum of $385 billion (Dh1,412.95 billion).

The figure is up by 67 per cent when compared to total spending package of the 8th development, undoubtedly a substantial growth. The amount is considerable by virtue of being on par value with the kingdom's gross domestic product (GDP) in 2009.

Implementation of the five-year program has started on a positive note, as evidenced by the agreement to spend $144 billion for fiscal year 2010. Some $70 billion, or almost half of budgetary spending, is destined for developmental projects.

Projects envisaged include expansion of the road network and new power and water plants, construction of numerous educational and training institutes.

Of $385 billion spending package, some 50.6 per cent is allocated for human resources development, 19 per cent for social development and health, 15.7 per cent on economic resources, 7.7 per cent for transportation and telecommunications and 7 per cent on municipality services and housing projects.

The plan is exceptionally generous on human resources and for good causes. One delicate problem the kingdom is encountering unemployment amongst its nationals, a matter that may not be allowed to continue for numerous reasons.

However, the latest development plan calls for reducing the jobless rate from 9.6 per cent in 2009 to 5.5 per cent by end-2014. To be sure, recently published official statistics pointed out to unemployment rate at 10.5 per cent in August 2009, with some 449,000 Saudi nationals being unemployed.

Sadly, a large majority of the unemployed happened to be nationals in the age group of 20 to 24 years. This is a critical age, as extremist groups tend to find recruits amongst unemployed youths.

Also, this level of unemployment suggests that the Saudi economy could not realize the contributions of the youth.

Moreover, the plan calls for developing 25 technical colleges and fitting many other institutes with latest technological means.

Other schemes include opening some 117 hospitals and a number of clinics.

Such investments stand to improve ranking of Saudi Arabia on human development index (HDI). The 2009 Human Development Report, in turn issued by the United Nations Development Program (UNDP), ranked Saudi Arabia number 59 amongst 182 nations.

This was the worst ranking amongst Gulf Cooperation Council (GCC) countries in the annual survey, with Kuwait being in the forefront with ranking number 31 worldwide.

The HDI is based on results of three variables, namely life expectancy at birth or health, education and income based on purchasing power parity basis.

Still, sustained investments on education and training or turning the economy into a knowledge-based one should facilitate achieving the goal of lessening dependence on foreign nationals. The plan calls for increasing the number of nationals into total workforce from around 48 per cent in 2009 to 53.6 per cent by 2014. The goal is a reasonable one and not excessively ambitious for a span of five years.