Time: April 29, 2018
In the past three decades, governments in many countries have moved thousands of state-owned businesses to the private sector. Airlines, railroads, postal services, electric utilities, and many other types of businesses, valued at more than $3.3 trillion, have been privatized.
One of the key figures in the history of privatization was the former prime minister of the UK, Margaret Thatcher. She came to power determined to bring the stagnant British economy back to life with market-based reforms. Privatization became her most important and enduring economic legacy.
I remember reading the morning headlines highlighting her bold answers to skeptics in the House of Commons about privatization and the sale of major household businesses, including British Airways, British Telecom, British Steel and British Gas.
During Thatcher’s years in office, almost 50 companies were sold or privatized — including dozens from the power and water industries — raising more than £50 billion for the Exchequer, the UK’s finance ministry.
It is music to my ears to hear about the Saudi Council of Economic and Development Affairs approving the executive plan for the “privatization program,” which has been named “Delivery Plan 2020” and is a key part of the wider Saudi Vision 2030 program that aims to improve the efficiency of the national economy and enhance the services provided to reach as many as possible beneficiaries.
Saudi Arabia aims to raise around $200 billion in the next several years through privatization programs in 16 sectors, ranging from oil to health care, education, airports and grain milling. The Kingdom wants to raise another $100 billion through the sale of a 5 percent stake in Saudi Aramco.
Vision 2030 hopes to increase the private sector’s stake in gross domestic product from 40 percent to 65 percent by 2030.
Saudi Arabia aims to raise around $200 billion in the next several years through privatization programs in 16 sectors, ranging from oil to health care, education, airports and grain milling.
Basil M.K. Al-Ghalayini
The program aims to enhance fairness in transactions with the private sector, increase job opportunities for Saudis, and attract the latest technologies and innovations.
In addition, it seeks to capitalize on the successful previous experiments, with the participation of the private sector, in the field of infrastructure and a broad spectrum of various service sectors, such as energy, water, transportation, telecommunications, petrochemicals and finance.
Privatization has had a huge effect on the global economy. It has spurred economic growth and improved living standards as privatized businesses cut costs, increased service quality, and innovated. The reforms also massively increased the size and efficiency of the world’s capital markets. Many of the largest share offerings in world history have been privatizations, and a large share of global stock market capitalization is from privatized companies.
Learning from the experiences of the UK and other economies, I am confident that Saudi Arabia’s execution of its privatization program will be successful and a role model for other economies to follow.