As Saudi Arabia seeks to bolster its economy and reputation, this Middle Eastern kingdom country has reportedly hired consultants to advise on plans to create top global companies in industries from petrochemicals to telecommunications, reported the media quoting people with knowledge of the matter.
The media reports suggested that Saudi Arabia has asked advisers to draw up policies that will boost the international competitiveness and profile of at least five companies that tBottom of Form
he kingdom has identified and includes Saudi Arabian Oil Co., Saudi Basic Industries Corp. and Saudi Telecom Co. which reportedly fit the profile. The media reports did not name the sources as as the plans aren’t public. Sources said that the country is also studying industries in which it can be a leading player and incentives such as access to funding.
The media reported that emulation of South Korea where companies like Samsung Electronics Co Ltd. have become household names is intended to be made by Saudi Arabia. In order to make its financial services industry more internationally competitive, Abu Dhabi is merging its two largest lenders – National Bank of Abu Dhabi PJSC and First Gulf Bank PJSC, regionally.
“Regardless of whether these companies are called champions, it does make sense to name benchmark companies around which activity can cluster,” Richard Segal, a senior analyst at Manulife Asset Management in London said. “It’s worked well in China also. ChemChina is one example. Otherwise efforts could be spread too broadly and might be less effective.”
While Saudi Telecom and Saudi Aramco weren’t immediately available to comment, Sabic declined to comment. The economy ministry didn’t immediately return calls seeking comment.
The media also reported that to reduce overlap between firms and help them focus on their core business, Saudi Arabia is weighing plans to reshuffle assets held by companies including Sabic, Aramco and Saudi Arabian Mining Co., or Maaden, as part of plans to make local companies more competitive. The country has already announced plans to sell a stake in Saudi Aramco in an initial public offering.
“Any reshuffle of assets among the top entities within KSA to get them more focused, more efficient, and better placed to deliver growth is certainly positive in the long run,” said Chavan Bhogaita, head of market insight and strategy at National Bank of Abu Dhabi PJSC.
As it undertakes an unprecedented set of reforms driven by Deputy Crown Prince Mohammed Bin Salman, Saudi Arabia is seeking to increase the role of the private sector in the economy to 65 percent of output by 2030, up from 40 percent. Under an economic transformation plan known as Vision 2030, the kingdom in April unveiled efforts to diversify revenue from oil. The government said in its blue print local companies “with promising growth opportunities” would be supported by it “so they develop into new regional and global leaders.”
(Adapted from Bloomberg)