No plans for income tax, VAT increase is temporary: Saudi Crown Prince Mohammed bin Salman

The crown prince revealed that the Kingdom is in discussions to sell 1 percent of state oil firm Saudi Aramco to a leading global energy company
The crown prince revealed that the Kingdom is in discussions to sell 1 percent of state oil firm Saudi Aramco to a leading global energy company. (Reuters)
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Updated 28 April 2021

No plans for income tax, VAT increase is temporary: Saudi Crown Prince Mohammed bin Salman

No plans for income tax, VAT increase is temporary: Saudi Crown Prince Mohammed bin Salman
  • Crown Prince touched on a wide range of topics during appearance on Liwan Al Mudaifer Show on Rotana Khalijiya TV
  • He tallied the achievements of Vision 2030 to date and outlined what would come in the next phase of implementation

RIYADH: In a wide-ranging TV interview to mark the fifth anniversary of the Saudi Vision 2030 strategy, Crown Prince Mohammed bin Salman has identified increasing home ownership and falling unemployment as two signal achievements, ruled out introduction of income tax and described the current 15 percent value-added tax (VAT) as a temporary measure.

He also revealed that the Kingdom is in discussions to sell 1 percent of state oil firm Saudi Aramco to a leading global energy company. Aramco previously sold a sliver of its shares on the Saudi bourse in December 2019, generating $29.4 billion in the world's biggest initial public offering.

Appearing as a guest on the Liwan Al-Mudaifer Show late on Tuesday, presented by Saudi host Abdullah Al-Mudaifer and broadcast on Rotana Khalijiya TV and state media, the crown prince tallied the achievements of Vision 2030 to date and outlined what would come next.

It was on April 25, 2016, that Prince Mohammed bin Salman, then Saudi Arabia’s deputy crown prince, unveiled a strategic plan designed to transform the Kingdom’s economy, reduce its dependence on oil, and nurture a “vibrant society ... characterized by strong roots and strong foundations that emphasize moderate Islam, national pride, Saudi heritage, and Islamic culture.”

On the same day, in an interview with Al Arabiya news channel, he talked about the Saudi government having targets, key performance indicators and project management offices.

Exactly five years on, Crown Prince Mohammed bin Salman appeared on the Liwan Al Mudaifer Show to say: “We had a housing problem for 20 years that we could not resolve. A citizen would be waiting to receive a loan or a housing subsidy for like15 years.

“The level of housing did not increase beyond 40 and 50 percent. Before Vision 2030 it was 47 percent. And during the reign of (the late) King Abdullah, about SR11 billion was allocated in 2011. From these SR20 to SR50 billion, only SR2 billion was disbursed but not used. The Ministry of Housing could not transfer them to existing projects because the condition of the states was quite weak.

“The ministries were scattered. There wasn’t a public policy, so the Ministry of Housing could not succeed without having a general policy for the state in coordination with the municipalities, the Central Bank and the Ministry of Finance for enacting legislation, private sector, etc.

“So, this SR 250 billion was returned to the treasury and an annual budget was disbursed. But the outcome was that the percentage of housing increased from 47 to 60 percent within four years alone, and this is quite an indicator of where we are heading.”

Moving on to the issue of jobs, the crown prince pointed out that unemployment in Saudi Arabia at the beginning of Vision 2030 was about 14 percent. “In the first quarter of 2020 we reached 11 percent. Because of the pandemic unemployment increased. We were the sixth best country in the G20 in terms of performance and unemployment, but in the last part of the fourth quarter of 2021 we were back to 12 percent. We shall break the 11 percent (barrier) and reach 10 percent and a fraction until we reach a better rate,” he said.

“In the non-oil (sector), we raised revenues from SR66 billion to SR350 billion. The commercial register used to take days to produce a commercial registration, going through six entries. Now (it happens) in a period of half an hour. Foreign investment tripled. The Saudi market was stuck between 4,000 points to 7,000 points. Now we have exceeded the 10,000 (mark), which means that the private sector has started to grow.”

The crown prince explained that these were huge numbers in comparison with past figures. “It would take a lot of time to explain this. Economic growth in the non-oil sector was within an average that was not quite as we were aspiring to. In the fourth quarter in 2019, when the non-oil economy grew about 4.5 percent, and then, if it weren’t for the pandemic in 2020, would have exceeded 5 percent in the non-oil sector. We shall recover these levels hopefully this year and the coming years, and even more in the future.”

Referring to the decision on July 1 last year to triple value-added tax to 15 percent was temporary, Crown Prince Mohammed bin Salman said: “This step was painful for me personally as I do not want to harm the Saudi citizen in any way shape or form. But my main job is to guarantee and build the citizens’ future in the long term, for the next 20-30 years.”

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He added: “One of the measures to avoid cancelling allowances or reducing salaries was to increase VAT to 15 percent. Of course, it’s a painful measure. The last thing I want to do is to hurt any Saudi citizens. I have no interest in hurting anyone. But what I want is for our homeland to grow and our citizens to be happy and to prosper. It’s my duty to build for them a long-term future that will continue to grow — not just to satisfy them for three or four years, then exhaust all the saving opportunities of the country towards a better future.

“So, there were a number of decisions including the VAT. It’s a temporary decision. It will continue for a year, maximum five years, and then things will go back to what they were. We are targeting it to be between 5 to 10 percent, only till we reinstate our balance after the pandemic. Depending on the economic situation or what may transpire, but maximum five, minimum one year.”

Last month, Crown Prince Mohammed bin Salman announced that the Kingdom would spend more in the next 10 years than it had done in the past 300 years as he unveiled a new program to strengthen public-private sector partnerships. At the announcement of the program, named Shareek, he said Saudi Aramco would lead investments in the private sector to the tune of 5 trillion riyals ($1.3 trillion) by 2030.

On Tuesday, he confirmed that “there is a discussion on the acquisition of 1 percent (of Aramco) by one of the world's leading energy companies, and this will be a very important deal to boost Aramco's sales in that country,” but he did not name the company or the country. He said further Aramco stake sale to international investors could happen in the next one year or two.

Talking about the sovereign wealth fund, the Public Investment Fund (PIF), Crown Prince Mohammed bin Salman said: “Our goal is to ensure that the fund achieves growth. We aim to increase the fund’s assets to SR10 trillion in 2030.”

Under the Vision 2030 strategic plan, Saudi Arabia has launched several multi-billion-dollar projects that aim to put it on the map as a major actor in the world of innovation, tech and youth-driven initiatives. The Kingdom’s non-oil revenues have increased by over 200 per cent since the start of the Vision 2030 plan. “If we look back, oil has helped develop our country for centuries, so we’ve always had that impression to depend on oil. But the increase in population will not be able to depend on oil production at the rate we are going,” Crown Prince Mohammed bin Salman said.

He said Saudi Arabia’s oil revenues were becoming insufficient to cover the needs of the growing population, a fact that was the driving force behind the announcement of the Vision 2030 reform plan to diversify the economy. “We went from a population of 2 to 3 million, to nearly 20 million Saudis since the discovery of oil. So, oil revenues now barely cover the needs and the way of life that we have grown accustomed to since the 1960s, ‘70s, ‘80s and ‘90s. So, had we continued on the same old path, there is no doubt that with the population growth, it would have affected us in the next 20 or 10 years in the quality of life that we have grown used to for the past 50 years,” he said.

The crown prince said the second need for the reform plan was the numerous opportunities in the Kingdom of Saudi Arabia in different sectors other than just the oil sector.

“In mining in tourism, in services, in logistics, in investment, etc. (Because of the) huge opportunities, even if we didn’t have any problem in terms of oil, there would still be enthusiasm and a big drive towards achieving these enablers that we aspire to benefit from as Saudis for our beloved country,” he said.

“So, I believe that was the main emphasis for the Vision 2030, in order to eliminate the challenges that we face and to exploit the untapped opportunities that may constitute 90 percent of our situation today, and we can continue to grow and prosper and compete at the world level.”

He added: “Oil is still the main source of income for the state. My intention is to make sure that the country is secure, safe and has a better future to look forward to.”

Crown Prince Mohammed bin Salman also lauded the progress made in environmental protection, pointing out that vegetation cover across the Kingdom has increased over the past four years by 40 percent, which will likely have a direct impact on tourism and foreign investment. This is no small matter given that, as the crown prince said, the tourism sector alone is expected to create 3 million jobs by 2030.

Despite a challenging 2020 because of the coronavirus pandemic, Crown Prince Mohammed bin Salman said he believed Saudi Arabia is firmly back to growth. “We are close to achieving the overall aims and goals of Vision 2030. We are on the right track. We will see a strong rebound in our economic performance and achievements this year,” he said.

Looking back at the pre-Vision 2030 era, he described 2015 as a particularly difficult year. “We made some serious changes to many ministries and government sectors, including security and the economy by changing strategies and imposing the programs of Vision 2030. Lack of a strong state structure was one of the main challenges we faced in 2015,” he said.

“We managed to restructure various ministries by establishing new councils. The most important thing to have is integrity and passion when making these changes.”


Saudi copycat watchdog destroys 5 million products amid global crackdown

Saudi copycat watchdog destroys 5 million products amid global crackdown
Updated 14 May 2021

Saudi copycat watchdog destroys 5 million products amid global crackdown

Saudi copycat watchdog destroys 5 million products amid global crackdown
  • Saudi move comes amid global push to tackle IP theft
  • Amazon removed 10 billion suspect listings last year

RIYADH: The Saudi Authority for Intellectual Property destroyed about five million products violating intellectual property regulations during the past year.
It was working in tandem with the Zakat, Tax and Customs Authority and the Ministry of Information.
Counterfeit commercial goods accounted for about 40 percent of the tally, amounting to two million goods, while nearly three million products were defined
as a violation of intellectual property rights.
The Authority seized 11,620 products that violated intellectual property in five cities, Al Eqtisadiah reported.
It warned against promoting or trading in any product that violates intellectual property rights, or any behavior that violates intellectual property regulations.
Governments and corporations are increasing their efforts to crack down on counterfeit goods as rogue operators use e-commerce to boost sales.
Amazon said this week that it blocked more than 10 billion suspected listings of counterfeit goods on its platform last year as part of a global crackdown in the face of pressure from consumers, brands and regulators.
The e-commerce giant made the announcement in its first “brand protection report,” as part of its initiative to weed out listings of fakes by third-party sellers, AFP reported.


Saudi Grintafy football scout platform helps clubs to discover the next Messi

Saudi Grintafy football scout platform helps clubs to discover the next Messi
Updated 14 May 2021

Saudi Grintafy football scout platform helps clubs to discover the next Messi

Saudi Grintafy football scout platform helps clubs to discover the next Messi
  • Platform allows players to build their profiles
  • Saudi tech startups boom as sector attracts wave of cash

RIYADH: A Saudi startup aims to help the world’s biggest football clubs make talent scouting more efficient.
The history of football is full of tales of chance sightings by a scout that has led to many a glittering career in the game.
At the same time, across amateur and weekend leagues the world over, there are many talented footballers who are never seen by a scout and never have a professional career.
Saudi startup Grintafy aims to help make that process more efficient by helping footballers build their profile in the game through the ratings of fellow players which can in turn be showcased to potential scouts and clubs.
It is one of several new Saudi technology startups that has started to make international waves as the sector attracts a wave of venture capital.
West Ham United last week become an official club partner for the fledgling platform which will see Grintafy have a presence across the club’s growing global digital channels as well as becoming the presenting partner of all academy match highlights.
The agreement allows coaching and technical staff at West Ham full access to view Grintafy user profiles and stats.
Selected players will then be chosen and invited to an official tryout in England.
The relationship will also see West Ham United Academy coaches deliver coaching programs in the Middle East.
“At West Ham United, we pride ourselves on our ability and capacity to nurture talent. We are excited to work in partnership with Grintafy to create experiences for aspiring players,” said Nathan Thompson, commercial director at West Ham United.
Grintafy will also be holding regular regional and national open tryouts to find the best of the best. Players chosen will have the once in a lifetime opportunity to travel to England and train like a West Ham academy player.
“Grintafy was started so that every young footballer has an opportunity to make their dream come true, regardless of their economic status or access to resources,” said Grintafy CEO Majdi Al-Lulu. “This partnership ensures that we are bringing international opportunities to the Kingdom and keeping our focus on the 2030 vision. West Ham has a rich history and pedigree for developing talent and giving youth a platform to shine. This perfectly aligns with our key values.”


Huge Titanic replica to open in China

Huge Titanic replica to open in China
Updated 14 May 2021

Huge Titanic replica to open in China

Huge Titanic replica to open in China
  • Six-year construction was longer than original Titanic build
  • Site features a replica of Southampton Port seen in James Cameron’s 1997 disaster epic

SUINING: The Titanic is being brought back from the deep, more than a century after its ill-fated maiden voyage, at a landlocked Chinese theme park where tourists can soon splash out for a night on a fullscale replica.
The project’s main backer was inspired to recreate the world’s most infamous cruise liner by the 1997 box office hit of the same name — once the world’s top-grossing film and wildly popular in China.
The original luxury vessel, the largest of its time and branded “unsinkable” by its owners, has become a byword for hubris ever since it plunged into the depths of the Atlantic in 1912 after striking an iceberg, leaving more than 1,500 people dead.
Investor Su Shaojun says he was motivated to finance the audacious, 260-meter-long (850-foot-long) duplicate to keep memories of the Titanic alive.
“I hope this ship will be here in 100 or 200 years,” Su said.
“We are building a museum for the Titanic.”
It has taken six years — longer than the construction of the original Titanic — plus 23,000 tons of steel, more than a hundred workers and a hefty one billion yuan ($153.5 million) price tag.
Everything from the dining room to the luxury cabins and even the door handles are styled on the original Titanic.
It forms the centerpiece of a Sichuan province theme park more than 1,000 kilometers (620 miles) from the sea.
The site features a replica of Southampton Port seen in James Cameron’s 1997 disaster epic, where Leonardo DiCaprio’s fictional character Jack swings on board after winning his ticket in a bet.
Tour buses play the film’s theme tune, Celine Dion’s “My Heart Will Go On,” on repeat.
It costs up to 2,000 yuan (around $150) to spend one night on the ship for the “five-star cruise service,” Su says, adding that with a functioning steam engine guests will feel that they are really at sea.
He was so excited by the challenge that he sold his energy industry assets, including a stake in several hydropower projects, to invest in the Titanic.
But even before opening, the replica has drawn plenty of controversy.
Online users have questioned whether the famous ship would attract tourists given the disaster that struck its real-life inspiration.
Others feared it would join other ambitious Chinese building projects that turned into white elephants — including a 2008 replica of the USS Enterprise, an American aircraft carrier, which cost over $18 million and was abandoned shortly after it opened.
But Su hopes as many as five million annual visitors will come to see his Titanic.
“This tourist volume should guarantee the return of our investment,” he added.
Project manager Xu Junnian said he felt it was important to preserve the vessel’s memory.
“The greatest significance of building this ship is to carry forward and inherit the great spirit of Titanic,” he said.
Aside from the enduring appeal of the Hollywood blockbuster, the Titanic has stolen headlines in China in recent weeks with the release of a new documentary called “The Six.”
The film tells the story of a group of Chinese travelers on board when the ship sinks, of whom six survived.
But the developers are hoping to rope in some bigger names to help draw visitors.
“We’d like to invite Jack, Rose and James Cameron to the inauguration ceremony,” Su said.


Riyals, euros or dollars: Women money changers at heart of Djibouti’s street economy

Riyals, euros or dollars: Women money changers at heart of Djibouti’s street economy
Updated 14 May 2021

Riyals, euros or dollars: Women money changers at heart of Djibouti’s street economy

Riyals, euros or dollars: Women money changers at heart of Djibouti’s street economy
  • The informal sector drives around two-thirds of economic activity in Djibouti

DJIBOUTI: They are a familiar sight on the busy streets of Djibouti: women clutching handbags bulging with dollars, euros, riyals and rupees, the money changers keeping the informal economy ticking over.
Perched on plastic chairs, feet propped on wooden steps, these “sarifley” as they are locally known are vital to the global cast of migrants, traders and soldiers passing through this tiny nation at the crossroads of Africa and Arabia.
Trading in money offers a safe, reliable way especially for women to feed their families, in a conservative country where they lag men in education and literacy.
“I have it all. Euros, English pounds, Turkish lira, dollars, Indian rupees, anything,” said Medina, who offered just her first name, flashing a purse she estimated held the equivalent of one million Djiboutian francs ($5,600/€4,700) in multiple currencies.
Customers and traders alike say that economic life would suffer a lot more friction without the money changers.
Camped at Rimbaud Square, overlooked by a grand mosque in the heart of Djibouti city, Medina and three other sarifley scan the bustling crowds for customers.
Before long a young man from Yemen, the war-torn country across the Bab-el-Mandeb strait from Djibouti, approaches in a flowing white tunic and turban, wanting to change Saudi riyals.
Medina exchanged a few words with the foreigner, tapped some calculations into her phone, then counted out a wad of crumpled Djiboutian francs retrieved from the depths of her bag.
“We bring Saudi riyals with us (to Djibouti) because our currency, with the war, keeps fluctuating all the time,” said the Yemeni, slipping away into the crowd as a police car crawled by.
Refugees from Yemen, migrants en route to the Gulf, foreign troops stationed in naval bases, Ethiopian truck drivers — Djibouti is a melting pot of cultures, and currencies, on the Horn of Africa.
“We also deal with Djibouti businessmen going abroad for their work, as well as foreigners and tourists,” said Noura Hassan, another sarifley in the capital.
When her husband died a decade ago, the mother-of-three started out with just her savings in francs, before acquiring more currencies.
Every day, Hassan refers to a printout from the local bank to gauge exchange rates and determines what to offer customers for the major currencies.
“It is a good job, and I am proud of it,” said the money changer, wearing a blue veil and black abaya, the traditional floor-length tunic worn by Muslim women.
In PK12, a busy neighborhood where many Ethiopians live, Ahmed jumped out of his tuk-tuk to change some Ethiopian birr on the roadside.
“The difference might be 10 or 20 francs, it’s not much,” said the rickshaw driver about the street rates compared to those officially on offer.
But those exchange offices are far away — whereas the sarifley are on every corner and marketplace.
“Without them, I would say that trade in PK12 would not be possible,” said Faiza, who sells khat, the popular narcotic plant that is a daily staple in Djibouti and other parts of the Horn.
“They make sure to feed their families ... We help each other like that,” the 25-year-old trader said.
The informal sector drives around two-thirds of economic activity in Djibouti, said researcher Abdoulkader Houssein Mohamed from the Djibouti Center for Studies and Research (CERD).
Of those engaged in the sector, three-quarters are women, he added.
Safety might be a concern, but in a country of just under one million inhabitants, even the capital feels like a village, the sarifley said — a reassurance when your line of work requires carrying bundles of cash on the streets.
Zahra, one sarifley in the city, said of thieves: “They don’t come near us. They are afraid.”
She also wasn’t too concerned about being scammed by a forger or unscrupulous seller trying to palm off counterfeit cash.
“Even if I was asleep and you handed me a forgery, I would know... Counterfeit cash, I’ll know. The real thing, I know. That’s my job isn’t it?“


Musk tweets, doge leaps and bitcoin retreats

Musk tweets, doge leaps and bitcoin retreats
Updated 14 May 2021

Musk tweets, doge leaps and bitcoin retreats

Musk tweets, doge leaps and bitcoin retreats
  • Markets have gyrated to Musk tweets for months since his interest in dogecoin sparked a hundred-fold rally

SINGAPORE: Bitcoin was pinned near its lowest in more than two months on Friday and headed for its worst week since February, while dogecoin leapt by a fifth as tweets from Tesla boss Elon Musk sent the two cryptocurrencies on a wild ride.
Markets have gyrated to Musk tweets for months since his interest in dogecoin sparked a hundred-fold rally in the previously ignored token’s value this year, while Tesla’s $1.5 billion bitcoin purchase helped it break past $50,000 in February.
Yet in an equally surprising U-turn he dented the world’s biggest cryptocurrency this week after announcing Tesla stopped accepting bitcoin in payment owing to environmental concerns, making investors uneasy about Musk’s influence on crypto prices.
Bitcoin is down nearly 15 percent this week at $49,804.
Dogecoin is down about a third since last Friday, having tumbled after Musk referred to it as a “hustle” on Saturday Night Live. It then jumped 20 percent after his latest comments that he was involved in work to improve its efficiency.
“Working with Doge devs to improve system transaction efficiency. Potentially promising,” Musk said on Twitter, vaulting dogecoin from about $0.43 to $0.52 on the Binance exchange.
It was unclear if Musk was referring to efficiency in terms of energy use, ease of use or suitability as a currency, said Mark Humphery-Jenner, an associate professor of finance at the University of New South Wales business school in Sydney.
Dogecoin consumes 0.12 kilowatt hours of electricity per transaction compared with 707 for bitcoin, according to data center provider TRG, but it is near impossible to use it to buy anything.
Almost worthless in late 2020, dogecoin is the latest darling of a frenzy gripping crypto markets that began last year as institutional investors announced big bitcoin purchases.
It has surged to become the fourth-largest cryptocurrency by market cap, according to CoinMarketCap.com. Second-biggest cryptocurrency ether has also soared more than 400 percent this year. It last sat at $3,865, steady for the week so far.
The huge moves have begun to attract regulatory scrutiny, and a Bloomberg report on Thursday which said major exchange Binance was under Justice Department investigation in the US added to some of the price pressure on cryptos this week.
Musk’s tweets and the market’s response may also invite attention, said Edward Moya, an analyst at brokarage OANDA.
“Tesla is drawing tremendous scrutiny for Musk’s cheerleading of Bitcoin,” he said. “If Tesla unveils a bet on dogecoin, regulators may have their eyes on Musk.”
Others, however, say the market might be more comparable to an old fashioned bubble.
“Dogecoin remains a lesson in greater fool theory,” said David Kimberley, analyst at investing app Freetrade, which posits that buying overpriced assets can be profitable, so long as there is a “greater fool” to buy them at ever higher prices.
“It’s being pumped by people that want to get rich quick (and Elon Musk),” he said.