The recent elevation of Crown Prince Mohammed bin Salman in Saudi Arabia is a sign that change in the Kingdom is slated to touch all aspects of society, from social to political and economic. Promising indicators have underlined that Saudi Arabia is poised to raise its global profile with the country’s addition to the MSCI watch list, denoting that Saudi Arabia is on track to being classified as an emerging market country.
According to Aruba Khalid of the Delma Institute, a risk advisory firm in Abu Dhabi, the two events highlight that Saudi Arabia is undergoing rapid transformation that is likely to increase in pace. The Crown Prince, who has managed a diverse portfolio of strategic economic and political interests throughout his rise, will now be positioned to advance the agenda outlined his bold Vision 2030 plan. The plan, which was released in early 2016, outlines key milestones that Saudi Arabia aims to achieve in the social development, economic diversification, and political accountability fields over the next two decades.
In recognition of the Kingdom’s goal to attract foreign direct investment and foster international partnerships in key sectors, the country’s naming as a potential emerging market in the region is evidence that Saudi Arabia plays a critical role in the world economy. The announcement of the Kingdom’s listing also underlines that its financial sector is opening up to other nations while easing restrictions on foreign ownership.
By 2014, Saudi Arabia relaxed guidelines on equity markets, thereby inviting international investment. The announcement was hailed as a significant step towards allowing investors access to a market valued at $590 billion, an economic powerhouse that Khalid deems “too large to ignore.”
Due to the size of its economy, Saudi Arabia made the jump immediately to its nomination in the Emerging Markets Index, completely skipping the intermediate step of joining the Frontier Markets Index.
The announcement is expected to further advance the Crown Prince’s ability to boost employment, technology development, and foreign investment, promoting greater transparency and governance across all sectors.
Vision 2030 Reform to Further Boost Saudi Market
Saudi officials expressed their pleasure at the announcement, noting that the pace of reform will continue in order to uphold economic growth.
“Today’s announcement from MSCI is an immense achievement for Tadawul and the Saudi market. However, it is still just another stepping stone toward gaining full Index inclusion,” said Khalid Al Hussan, Chief Executive Officer of Tadawul, the Saudi Stock Exchange. “We must continue to make efforts to further strengthen the market through reforms and build investor confidence so that we may maximize our position in 2018 to be formally listed alongside other global markets in MSCI’s Emerging Market Index.”
Vision 2030 outlines the Government of Saudi Arabia’s plan to immediately adopt wide-ranging transparency and accountability reforms and, through the body set up to measure the performance of government agencies, hold all entities accountable for any shortcomings. It is this agenda to strengthen political and economic oversight in Saudi Arabia that has made the country a prime destination for business executives and investors seeking a stable, forward-thinking partner.
Read more here at Arabian Business.