Saudi Arabia Reveals Strategies For A New Era Going Beyond Oil In a step that has the potential to bring about a pivotal change in the region's economic prospects, Saudi Arabia is reportedly planning to establish "the largest fund on earth," of over US$2 trillion in value to help reduce its dependency on oil.

By Sindhu Hariharan

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

Shutterstock.com

In a step that has the potential to bring about a pivotal change in the region's economic prospects, Saudi Arabia is reportedly planning to establish "the largest fund on earth," of over US$2 trillion in value to help reduce its dependency on oil. The plans for the sovereign wealth fund were revealed by Saudi's Deputy Crown Prince Mohammed bin Salman over a five-hour conversation with news organization Bloomberg in Riyadh, an interview that covered matters such as Saudi's Public Investment Fund (PIF), proposed IPO of the nation's energy supplier Saudi Aramco and other topics. The Prince also said that they were pushing for Aramco's IPO to happen as early as 2017 and they expect to scale up the PIF fund as soon as Aramco goes public.

"The objective is to diversify income. Therefore, IPO'ing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil," Prince Salman said. The Prince also stated that transferring Saudi Aramco's shares to the PIF will ensure that within 20 years, Saudi will be an economy that doesn't depend mainly on oil and has profits of the PIF and other sources of income. Without disclosing the avenues of investment for the PIF, he said that they had in mind investment opportunities both within and outside of Saudi to capitalize on, to ensure profitability. In the recent past, Saudi Arabia has been unveiling a slew of austerity measures to cope with falling oil prices which includes introduction of new taxes and subsidy cuts. Touching upon other ways the country hopes to boost its non-oil income, Prince Salman said that proposals to impose taxes and levies on luxury items, soda drinks and energy drinks and "restructuring subsidies" were all in the reckoning. He also mentioned that the country was working on a program similar to the Green Card system in the U.S. for expats.

As per the transcript of the conversation released by Bloomberg, on non-oil revenue of Saudi Arabia, Prince Salman said that their target is to have incremental revenue exceeding $100 billion by 2020. "We did a quick fix in 2015 which increased our non-oil revenue by 35%. This year, we're trying to target over $25 billion," he said. On Saudi's stance regarding freezing oil production, the prince said that Saudi will agree to freeze oil production provided that all other producers including Iran, Russia, Venezuela, OPEC countries and others decide to do so.

According to a recent report in The Wall Street Journal, for the first time in months, banks have raised slightly their oil-price forecasts while remaining cautious about crude's outlook. The banks see the international oil-price benchmark Brent crude averaging at around $40 a barrel this year, and West Texas Intermediate, U.S.'s oil indicator, averaging $39 a barrel.

Related: Oil Price Fall A Major Complication In Global Economy, Says NBAD Report

Sindhu Hariharan

Former Features Editor, Entrepreneur Middle East

Sindhu Hariharan is the Features Editor at Entrepreneur Middle East.  She is a financial consultant turned business journalist with a FOMO when it comes to everything technology.

Side Hustle

This Gen Zer's Stylish Side Hustle Earns About $20,000 a Month and Paid Off His Parents' $200,000 Debt: 'I Enjoy the Hands-Off Nature'

Ray Cao went from working as a barista for $8 an hour to being a successful seller on online marketplace StockX.

Finance

"We Got Funded!" Tunisia-Born Clusterlab Secures US$600,000 In A Pre-Seed Funding Round With The Aim To Advance Arabic Artificial Intelligence Tech

ClusterLab is on a mission to revolutionize how Arabic content is created and consumed by leveraging the power of artificial intelligence to ensure it is more accessible and engaging for users worldwide.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Make $177,566 With No Experience in 3 Months: A Popular Online 'Side Hustle' Course Is Under Investigation After Customers Complain About Its Deceptive Claims

"All you need is a phone, a laptop, wi-fi and one to three hours a day," one affiliate marketer said in a video posted to social media.

Growing a Business

5 Tips for Improving Client Relationships

When you strengthen your relationships with existing clients, it increases the likelihood of repeat business and referrals, which sets you and your business up for long-lasting success.