Econ 220: Saudi Economy - Topic 7: Privatization
Econ 220: Saudi Economy - Topic 7: Privatization
Econ 220: Saudi Economy - Topic 7: Privatization
Privatization
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Privatization
It is an instrument of economic policy through which
there is a transfer of property or control of assets, usually
owned by the state, to the private sector.
Privatization includes the privatization of management
and ownership.
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Privatization
Privatization often requires a restructuring of a whole
sector rather than one firm for example the restructure of
communication and transportation sector in Saudi.
It also requires a legal and regulatory mechanisms to
ensure that private providers do not overlook the public
dimensions and responsibilities of the services they are
licensed to deliver, and ensure they meet the pre-agreed
targets and policy objectives, such as coverage to certain
areas and access for the public.
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The Aim of Privatization
Increase the role of the private sector.
Move from a state controlled and dominated economy to a
free market-based economy.
Diversify the economic base.
Sign for foreign investment that a country has improve its
political, economic, legal and regulatory situation.
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The Saudi vision of Privatization
Reduce the heavy dependence on oil market and has
opted for decentralized, private market-based economic
activities.
Saudi aims to achieve this through a three pronged
approaches:
Saudi will join WTO to enable a bigger Saudi world market
share.
It will initiate a domestic privatization program of core
government services.
Saudi will use foreign direct investment to foster technology
transfer and domestic economic stimulus.
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The Saudi vision of Privatization
Saudi Arabia has succeed in joining WTO and Saudi
companies are on the way to expand the Saudi world
market share “such as SABIC”.
Saudi started privatization program of core government
services in 2002 by privatize STC.
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Saudi government planning to privatize 18
economic sector
Telecommunications Water and sewage
Civil aviation Highway constructions
Desalination Airport services
Highway management Postal services
Railways Grain and flour silos
Sports clubs Hotels
Health services Seaport services
Municipality services Industrial city services
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The Saudi Government Objectives of Privatization
according to Supreme Economic Council
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References
Ramady, M. (2005). “The Saudi Arabian
Economy”. Springer. Chapter 11
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