The Ninth Development Plan is based on five main themes, together forming an integrated framework for furtherance and acceleration of balanced comprehensive development in the coming few years, as well as for laying the foundations for sustainable development in the long run. These five themes are: continuing efforts to improve the standard of living and quality of life for citizens, development of national human resources and their employment, restructuring of the Saudi economy, balanced development among regions, [and] enhancement of the competitiveness of the national economy and Saudi products in both the domestic and external markets. In addition, the Plan focused on numerous other issues, such as continued expansion and maintenance of infrastructure, acceleration of the pace of economic and institutional reform, and the privatization program, promotion of technological and informatics development, as well as raising economic efficiency and productivity in the public and private sectors, development of natural resources, especially water, and development of environmental protection systems. 8
The challenges faced by Saudi fiscal authorities during the drafting of the Ninth Plan were numerous: a global financial recession in full swing, an alarmingly high Saudi unemployment rate and a steady inflow of foreign workers, an onerous and growing rate of inflation, higher costs of materials, supply, and labor for major priority construction projects, and a growing influx of foreign goods and commercial competitors challenging locally produced goods and domestic companies.9 Nevertheless, in preparing the Ninth Development Plan, the Kingdom had a strong foundation upon which to build a successive plan.
During the Eighth Development Plan, 2005–2010 (1425–1430), the Kingdom experienced an annualized rate of growth in an already high level of investment of about 11.2 percent. This contributed to an increase in the average ratio of investment to real GDP from 21.1 percent in 2004, the last year of the Seventh Development Plan 2000–2005 (1420–1425 AH), to 28.1 percent.10 Because of historically high world oil prices for oil that had not ameliorated until 2008, the Kingdom's coffers were well cushioned to weather the global economic meltdown.
In moving ahead with the Ninth Plan, the Ministry of Economy and Planning listed its expected accomplishments of the Plan as follows:
During the next five year (2010–2014), the Ninth Development Plan aims to realize an average annual GDP growth rate of 5.2 percent at constant prices of 1999. This would result in increasing the average per capita GDP at constant prices from $12,320 (SR 46,200) in 2009 to approximately $14,186 (SR 53,200) in 2014. 11
The Ministry's expected deliverables at the macroeconomic level were listed as:
• Growth in merchandise and services exports at an average annual rate of 4.5 percent, thus bringing their share of GDP to about 35.7 percent by the end of the Plan in 2014.
• Growth in merchandise and services imports at an average annual rate of 7.7 percent, to bring their share of GDP to around 67.6 percent by the end of the Plan in 2014.
• Growth in final consumption (government and private commodities and services at an average annual rate of 5.4 percent, to constitute around 90 percent of GDP in 2014.
• Increasing the share of national manpower in total labor force (Saudization rate) from 47.9 percent in 2009 to approximately 53.6 percent in 2014 by providing 1.1 million job opportunities to labor market entrants.
• Reducing the unemployment rate among the national workforce from around 9.6 percent in 2009 to about 5.5 percent by the end of the Plan in 201412 (See Table 1.2.).
Table 1.2 Main Indicators of the Ninth Development Plan (2010–2014)
* By end of the Plan.
Judged against its stated economic indicator goals in Table 1.2, in assessing the effectiveness of the Ninth Development Plan, the Kingdom may be seen as having gone a long way toward achieving its goals. Although expecting to bring down the unemployment rate from 10.5 percent in early 2010 to 5.5 percent within a five-year period may have appeared a tad ambitious, they were not far off. The Saudi Department of Central Statistics and Information (CDSI) reported that the unemployment rate in 2013 was 5.6 percent, a figure that held fast into the first quarter of 2014.13 And, more to the thrust of this book, the key indicator of how much more the Saudi private sector is playing a role in contributing to the growth in Saudi GDP is equally impressive. The Saudi private-sector's contribution to GDP at constant prices for 2012 was recorded by the CDSI at 58.8 percent.14 In February 2014, banking sector analysis of this activity for the month of January 2014 confirmed a strong Saudi private-sector performance. The Saudi British Bank (SABB) published the results of the headline “SABB HSBC Saudi Arabia Purchasing Manager's Index (PMI) for January 2014,” a monthly report issued by SABB and Hong Kong Shanghai Banking Corporation (HSBC). In it, the bank reported the Kingdom's non-oil sector activity grew at an accelerated rate for the third successive month to its highest rate since October 2012 because of elevated production and new orders.15
Saudi companies are growing more, producing more, and exporting more non-oil goods than ever before. At the end of 2013, non-oil exports achieved a record high after recording months of moderate gains. Intermediate and tertiary chemicals, plastics, and base metals make up the bulk of non-oil exports. The Saudi non-oil private sector was the main growth driver for the Saudi economy in 2013, registering growth of 5.5 percent, compared to a 0.6 percent contraction in the oil sector because of reduced production out of the Kingdom and lowering world oil prices. In August 2014, SABB reported their PMI results for July 2014 in which the Saudi non-oil sector achieved the fastest pace of growth since September 2012, in sharply improving environments of operating conditions.16 The SABB Emerging Markets Index (EMI), an SABB/HSBC report taken from PMI surveys, reported for August 2014 a 17-month high in the growth of the non-oil sector on backs of stronger output, employment, and new orders.
Does the growth and success of the Saudi private sector owe an overwhelming debt to the Kingdom's development planners? How integrated has the Saudi private sector been into the Kingdom's push for development and diversification away from a purely oil-based economy?
Having worked in both government and the private sector, I am acutely aware of the disconnect that often occurs between government, when it envisions positive change for its constituents and then creates and uses methods to pursue such change, and the private sector, which is often compelled to adhere to new policies as unwitting or reluctant agents of change. On more than one occasion working for government, I witnessed the creation of government-redesigned programs and services without the slightest input from the government workers and their managers on the ground charged with delivering and executing the new initiatives. In these instances, on many occasions there was also a complete lack of consultation with the constituents themselves, private-sector companies for whom the new programs, procedures, and services were being created. Planning for change and the effort put into its execution are always best accomplished through collaboration and close consultation between both the affected and those affecting. In Saudi Arabia today, there is ample evidence to suggest that the Saudi government has achieved and continues to maintain a sincere and active engagement with the country's private sector. There appears to be real collaboration and coordination