JEDDAH: A top economic research group is forecasting that Saudi Arabia’s non-oil private sector GDP growth is likely accelerate to 2.8 percent in 2017, mainly due to an expected improvement in private sector activity as it starts benefitting from an increasing number of opportunities made available by the National Transformation Program (NTP).

“This includes attraction of foreign direct investment as part of opening up the retail sector to investment by foreign entities, as well as a pick up in construction activity to develop empty land plots in response to the likely imposition of white land fees by the government. Consumption-oriented sectors will continue to benefit from high consumer spending,” Jadwa Investment stated in its macroeconomic update.

The two largest government bodies to receive public funding as part of the NTP will be the Ministry of Housing and the Royal Commission for Jubail and Yanbu, taking up a combined SR100.8 billion (37.5 percent of total spending), added Jadwa report.

Saudi Arabia’s Council of Ministers approved the National Transformation Program (NTP 2020) on June 6, with it ushering in a major new policy era designed to overhaul the economy.

According to the Jadwa report, the Ministry of Commerce and Investment (MCI) takes charge of enhancing the potential of both commerce and investment, and protect the beneficiaries’ interests by developing effective policies.

It added that strategic objectives concerning the MCI (around SR4 billion of NTP cost) include guaranteeing fair trade between consumers and sellers, with the aim of improving the Kingdom’s score on the consumer confidence index from 106 to 115.

Another set of objectives are aimed at supporting Small and Medium Enterprises (SMEs) by ensuring a higher contribution toward overall GDP (from 33 percent to 35 percent), and increasing their share of total employment in the economy from 51 percent to 53 percent.

A third objective is to increase the competitiveness of locally produced products and services by raising their value added to SR336 billion by 2020, and to increase their value added on imports up to 53 percent.

This will likely mean that MCI will contribute significantly in assuring global partnerships with local private entities, which should increase technological exchange opportunities and allow more room for the private sector to become globally competitive.

Another objective is to increase the culture of entrepreneurship in the Kingdom. An ambitious KPI (key performance indicator) for this objective includes doubling the number of limited liability companies within the Kingdom from 50,000 to 104,000 by 2020.

These objectives imply that MCI will be working to achieve important milestones for other ministries as well, such as the Economy and Planning Ministry’s target of raising the share of non-oil private sector GDP, and the Labor and Social Development Ministry’s target of increasing employment of Saudi nationals. This all reflects the importance of the third step of NTP; promoting joint action toward the achievement of common national goals.

“We believe that this key element of the NTP will be vital in ensuring that targets are met in a timely and satisfactory manner,” stated the Jadwa researchers.

SAGIA is the central agency in charge of inward investment in the Kingdom. It helps attract investments to serve the development goals and participate in the diversification of the Saudi economy.

SAGIA (SR1.1 billion of NTP cost) will take charge of improving administrative and procedural environments to attract $18.7 billion in annual foreign direct investment flows by 2020, up from $8.1 billion in 2015, according to the Jadwa report.

Increasing foreign capital and technology will contribute significantly toward improving the quality and variety of the technical knowhow within the Kingdom.

Many economies benefit form significant exchange of knowhow, and engage in intra-industry trade, all of which can be realized if the Kingdom attracts more FDI inflows.

Another complementary objective is to improve the infrastructure needed to ensure ease of doing business.

KPIs include improving the Kingdom’s ranking in the Ease of Doing Business Index from 82 to 20, and the Global Competitiveness Index (GCI) from 25 to 20.

This would mean SAGIA will have to work with other relevant public entities toward improving areas were the Kingdom scores the lowest, added the Jadwa report.

Resolving insolvency, starting a business, protecting minority investors, are some of the areas the Kingdom needs to improve on. While according to the GCI, innovation, labor market efficiency and business sophistication are areas that need the most work to improve the Kingdom’s rank, added the report.

“We believe SAGIA would have to work continuously with several other public entities in order to ensure that such targets are met. This implies working with regulatory authorities such as the Ministry of Justice and Ministry of Labor and Social Development to ensure the enforcement of commercial and labor contracts,” stated the Jadwa report.

It said that other public entities may also play a vital role in determining the cost of doing business such as MCI (in dealing with trade barriers), and the Ministry of Energy, Industry, and Mineral Resources (in determining the domestic cost of energy products).