Saudi households to be SR239-a-month better off after reforms, report finds

Cars pictured in downtown Riyadh. Recently introduced grants are boosting average Saudi household income but expatriates are being hit. (Reuters)
Updated 12 February 2018
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Saudi households to be SR239-a-month better off after reforms, report finds

LONDON: Saudi households will be SR239-a-month ($63.64) better off on average following the introduction of recently announced government grants, a report found.
It represents a 1.5 percent increase in average household income, Bank of America Merrill Lynch (BoAML) said.
“The combination of royal grants and household allowance disbursements more than fully shelter Saudi households from the cost of fiscal reform costs,” said chief regional economist Jean-Michel Saliba in the report. “Further out, Saudization efforts and targeted stimulus should support consumption.”
Saudi Arabia recently introduced financial grants aimed at easing the impact of removing subsidies and other ongoing economic reforms under the Vision 2030 strategy. That aims to reduce the country’s reliance on oil by developing new industries which will increasingly rely on Saudi citizens rather than expatriates.
There are about 3 million households in the Kingdom eligible to receive the household allowance known as the ‘Citizens Account’ which was announced in December 2017.
That equates to about 10.6 million people — or more than half of the population.
The bank estimates that almost 67 percent of eligible households receive the full amount of SR900 per month.
The smallest partial coverage payment is SR300 per month.
A massive push to employ more Saudis in the Kingdom is unlikely to trigger the mass departure of expatriates, BoAML said.
It found that despite the introduction of expatriate dependent fees and expatriate levies, many foreigners would still be better off financially than at home.
The reform of the Nitaqat Saudization scheme in mid-December could demand hiring as many as 25,000 Saudis just to maintain compliance levels, the report found.
That could be a boon for overall consumption in the Kingdom but may dent corporate profits because it could raise costs as companies pay more for their staff, BoAML said.
The bank also warned that Saudization should be handled carefully because the process risks prolonging labor scarcity in some sectors of the economy.
The government recently announced limiting 12 retail sector job types to Saudi nationals — however the likely impact on expatriates currently holding jobs in those sectors is difficult to determine because of a lack of job data in those areas.
But BoAML notes that there are some 304,865 expatriates working in sales roles of various type.
Employing more citizens in economically productive jobs is a key plank of Vision 2030. Some employers have struggled to fill certain roles because of a lack of vocational skills in particular areas of demand and shortages of graduates with the relevant degrees in others.


Saudi Aramco boss reveals gas and LNG ambitions amid petchems push

Updated 22 January 2019
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Saudi Aramco boss reveals gas and LNG ambitions amid petchems push

  • Saudi Aramco CEO Amin Nasser: We are in discussions in different countries with a lot of partners. We are reviewing these opportunities to make final decisions in terms of investment
  • Amin Nasser: A lot of it is in partnerships with leading companies around the world and it is either in gas investment, LNG investment or both

London: Saudi Aramco is eyeing gas and LNG acquisitions as it also prepares for the potential purchase of the Kingdom’s biggest chemical maker, CEO Amin Nasser revealed on Tuesday.

He made the disclosure in an interview with Bloomberg TV on the sidelines of the World Economic Forum in Davos.

“We are in discussions in different countries currently with a lot of partners. We are reviewing these opportunities to make final decisions in terms of investment,” Nasser said.

“A lot of it is in partnerships with leading companies around the world and it is either in gas investment, LNG investment or both.”

Aramco has also been in discussions with a credit rating agency ahead of a planned bond sale.

It comes ahead of the potential purchase of Saudi Basic Industries Corporation (SABIC), the Kingdom’s biggest chemical maker and a key part of Aramco’s ambitions to grow its global petrochemicals business.

“We will decide soon how much we would like to take from the bond market. Definitely it is going to be an international bond. We are currently in discussion with regard to how much and where,” Nasser said.

He said that the purchase price for SABIC was still under discussion.

“We are in discussion currently with the Public Investment Fund about acquisition of 70 percent of the share of SABIC. We are in discussion with regard to the price at this stage,” he said.

Earlier this month Saudi Energy Minister Khalid Al-Falih said Aramco would issue bonds in the second quarter of 2019.

Aramco’s planned acquisition of SABIC is expected to involve buying all or nearly all of the 70 percent stake in the chemicals company held by the Public Investment Fund (PIF), the Kingdom’s principal sovereign wealth fund.

Nasser said that there was no plan to acquire the 30 percent of the company that is currently publicly traded in Saudi Arabia.