Saudi Arabia aims to build buses, operate toll roads

Daimler last May won an order from Riyadh for 600 Mercedes-Benz Citaro buses, the largest order for the vehicles in the history of its bus division. (Photo courtesy of Daimler)
Updated 07 May 2018

Saudi Arabia aims to build buses, operate toll roads

  • Toll road plan under consideration
  • Kingdom looks to cut imports and boost manufacturing

RIYADH: Saudi Arabia has held preliminary discussions with foreign firms about manufacturing buses domestically and plans to convert part of its highway system into toll roads to help make its transport system more efficient, the transport minister said.

“We are developing the public transport system with a lot of buses, so we want to see how we can leverage this to develop domestic industry,” Nabeel Al-Amudi said in an interview on the sidelines of a business conference in Jeddah on Sunday.

He declined to name the companies with which Saudi Arabia had been talking.

The Kingdom, which does not have a significant auto manufacturing industry, is spending billions of dollars to expand public transport systems in the capital Riyadh and other big cities, and has imported thousands of buses in the last few years.

Last May, German vehicle maker Daimler received an order from Riyadh for 600 Mercedes-Benz Citaro buses, the largest order for the vehicles in the history of its bus division. China Yuchai International last month announced the delivery of 800 buses to Saudi Arabia.

Producing the vehicles locally would allow Saudi Arabia to save on import costs while creating jobs and expanding domestic industry — key goals of an economic reform program designed to reduce the economy’s dependence on oil exports.

Amudi said the potential bus project was separate from a memorandum of understanding signed by Toyota Motor Corp. in March last year to conduct a feasibility study on producing vehicles and parts in Saudi Arabia.

The reform program features plans to have the private sector operate much of the Kingdom’s transport infrastructure, including airports and sea ports, with the government keeping a role as regulator.

Amudi said that approach would be extended to the highway network.

The government hopes to establish between four and six toll roads which private companies would operate in exchange for fees, although this may be difficult because of the need to give road users the option of taking a non-toll route in each case, Amudi said.

Draft plans for this project may be ready in six months, he added.

Jordanian cabinet approves new IMF-guided tax law to boost finances

Updated 21 May 2018

Jordanian cabinet approves new IMF-guided tax law to boost finances

AMMAN: Jordan’s cabinet on Monday approved major IMF-guided proposals that aim to double the income tax base, as a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict.
“When only 4 percent of Jordanians pay (personal) income tax, this may not be the right thing,” Finance Minister Omar Malhas said in remarks after the cabinet meeting, adding the goal was to push that to eight percent. The draft legislation was submitted to parliament.
The IMF’s three-year Extended Fund Facility program aims to generate more state revenue to gradually bring down public debt to 77 percent of GDP in 2021, from a record 95 percent.
A few months ago Jordan raised levies on hundreds of food and consumer items by unifying general sales tax (GST) to 16 percent — removing exemptions on many basic goods.
In January subsidies on bread were ended, doubling some prices in a country with rising unemployment and poverty among its eight million people.
The income tax move and the GST reforms will bring an estimated 840 million dinars ($1.2 billion) in extra annual tax revenue that will help reduce chronic budget shortfalls normally covered by foreign aid, officials say.
Corporate income tax on banks, financial institutions and insurance companies will be pushed to 40 percent from 30 percent. Taxes on Jordan’s phosphate and potash mining industry will be raised to 30 percent from 24.
The government argues the reforms will reduce social disparities by progressively taxing high earners while leaving low-paid public sector employees largely untouched.
“This is a fair tax law not an unfair one,” said Malhas, who shrugged off criticism the law is lenient on many businesses connected to politicians whose transactions are not subject to tax scrutiny.
Husam Abu Ali, the head of the Income and Sales Tax Department, said a proposed IMF-recommended Financial Crime Investigations Unit will stiffen penalties for tax evaders. Critics say it will not tackle pervasive corruption in state institutions.
Abu Ali said the government could be losing hundreds of millions of dollars through tax evasion, which is as high as 80 percent in some companies.
The amendments lower the income tax threshold and raise tax rates. Unions said the government was caving in to IMF demands and squeezing more from the same taxpayers.
“It is penalizing a group that has long paid what it owes the state,” the unions syndicate said in a statement.
“It imposes injustice on employees whose salaries have barely coped with price hikes rising madly in recent years.”