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Saudi Arabia Bolsters Private Sector Partnership to Achieve Economic Sustainability

The Saudi government focuses on supporting the national private sector to reflect positively on its GDP (Asharq Al-Awsat)
The Saudi government focuses on supporting the national private sector to reflect positively on its GDP (Asharq Al-Awsat)
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Saudi Arabia Bolsters Private Sector Partnership to Achieve Economic Sustainability

The Saudi government focuses on supporting the national private sector to reflect positively on its GDP (Asharq Al-Awsat)
The Saudi government focuses on supporting the national private sector to reflect positively on its GDP (Asharq Al-Awsat)

The Saudi Council of Ministers approved the transformation of the Private Sector Partnership Reinforcement Program (Shareek) into a center named “the Private Sector Partnership Reinforcement Center (Shareek).”

Experts told Asharq Al-Awsat that the measure confirms the Saudi government’s seriousness in modifying the path of partnership with the private sector to achieve economic sustainability.

Shareek aims to increase domestic investments of private sector companies (listed and non-listed companies) to reach SAR 5 ($1.3 billion) trillion by 2030 through the support and unlocking of Government-approved incentives.

The decision to transform Shareek into a center, under the leadership of King Salman bin Abdulaziz and Crown Prince Mohammad bin Salman bin Abdulaziz, reflects the government’s interest in the local private sector and keenness to support and increase its contribution to the national economy, the head of the Federation of Saudi Chambers (FSC) Hassan Al-Huwaizi told Asharq Al-Awsat.

Al-Huwaizi added that the center will have a positive effect on advancing the program’s goals.

The FSC head stressed that the center ushers in a new formula and stage in the partnership between the public and private sectors, in line with the directions and objectives of “Vision 2030.”

The newly created Shareek Center supports the creation of more than 100,000 job opportunities and the promotion of local content by 2030, said Al-Huwaizi.

He affirmed that institutional bodies of the business sector in the Kingdom, represented by the FSC and Chambers of Commerce, will work closely with the Sahreek to enable investment opportunities and boost competitiveness in implementing various projects.

Transforming the Sahreek program into a center will support raising the private sector’s contribution to the GDP and the achievement of the goals of Vision 2030, said Osama Al-Obeidi, advisor and professor of international commercial law at the Institute of Public Administration.

It is a step in the right direction to build the relationship between local companies and public agencies, he added.

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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)

Business activity in Saudi Arabia's non-oil sector accelerated to a four-month high in September, driven by strong demand, which led to faster growth in new orders. The Riyad Bank Saudi Arabia Purchasing Managers' Index (PMI), adjusted for seasonal factors, rose to 56.3 points from 54.8 in August, marking the highest reading since May and further distancing itself from the 50.0 level that indicates growth.

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders, alongside challenges in supply. The improvement in business conditions contributed to a significant rise in employment opportunities, although difficulties in finding skilled workers led to a shortage in production capacity.

At the same time, concerns over increasing competition caused a decline in future output expectations. According to the PMI statement, inventories of production inputs remained in good condition, which encouraged some companies to reduce their purchasing efforts.

Growth was strong overall and widespread across all non-oil sectors under study. Dr. Naif Al-Ghaith, Senior Economist at Riyad Bank, said that the rise in Saudi Arabia's PMI points to a notable acceleration in the growth of the non-oil private sector, primarily driven by increased production and new orders, reflecting the sector’s expansionary activity.

Al-Ghaith added that companies responded to the rise in domestic demand, which plays a crucial role in reducing the Kingdom's reliance on oil revenues. The upward trend also indicates improved business confidence, pointing to a healthy environment for increased investment, job creation, and overall economic stability.

He emphasized that this growth in the non-oil sector is particularly important given the current context of reduced oil production and falling global oil prices. With oil revenues under pressure, the strong performance of the non-oil private sector acts as a buffer, helping mitigate the potential impact on the country's economic conditions.

Al-Ghaith continued, noting that diversifying income sources is essential to maintaining growth amid the volatility of oil markets. He explained that increased production levels not only enhance the competitiveness of Saudi companies but also encourage developments aimed at expanding the private sector's participation in the economy.

This shift, he said, provides a more stable foundation for long-term growth, making the economy less susceptible to oil price fluctuations.