Seznec is less convinced that MBS will not face any challenge to his power, but he stressed that in phone conversations he has had this week with people in kingdom, there wasn’t much concern shown. “The whole issue is not seen in Saudi Arabia as a major crisis. … People are not about to go out in the street and complain,” he said, though he added that the press is controlled in the country. “The king is very old and knows he has to establish a legacy, and it really is in shambles right now because of this. The U.S. and Europe relationships are in terrible shape, but when you think from a strategic standpoint, the U.S. needs support for the fight against Iran, so can’t just entirely start turning against them.”
The most important commitments for MBS to see through, but which have not been completed, are on a lengthy list of reforms that will be required for private business growth, Iradian said. The Saudi business climate ranking among emerging economies was 90th out of 190 nations, according to a World Bank assessment this year, a weakness which stems from lack of transparency, rule of law, too much red tape, and obstacles in enforcing contracts and resolving insolvency, Iradian said.
Recent statistical measures of the Saudi economic goals are mixed. Fuel subsidies have declined and electricity prices increased by about 45 percent this year, in keeping with plans to make the population less reliant on government subsidies. Government non-oil revenue as percentage of GDP increased to 10 percent in 2017, and should reach 12 percent in 2018, according to Iradian. But the unemployment rate increased in the past two years to around 13 percent as of the second quarter 2018, when the plan is to cut it in half, and despite increased hurdles on employment of foreign labor. Meanwhile, foreign investment is still minimal. The kingdom wants to increase FDI to 5.7 percent in 2030, but it decreased to 0.4 percent of GDP in 2017. And little progress has been made on increasing the contribution of small and medium-sized businesses to the economy.
Many of the companies that are the biggest public companies in Saudi Arabia today, and the ones which are the largest weightings in the stock market, are the older-guard companies in core industries, such as chemicals, materials, telecom and financial services.