Business in Saudi Arabia
Business in Saudi Arabia
For a very long time, Saudi Arabia has completely depended on oil production; the government has relied on oil production for about ninety percent of its revenue. The country has been able to run independently and even support other countries such as Egypt. The economy of the country has performed very well until the recent past; Saudi Arabia has experienced sign significant drops in oil prices. The country has shifted from being a windfall producer to deficits; the government of our country is struggling to provide citizens with cushy jobs, tax-free living and expensive state handouts that have for an extended period bought the government domestic obedience. The government is, therefore, opting to cut wasteful subsidies and impose taxes on goods so that to reform its dying economy.
According to Naylor, as a result of the cutting of subsidies, and freezing of hiring, citizens have chosen to look for jobs in other countries that do not entirely depend on oil such as the United States. Instead of applying for jobs in the public sector, they are opting to join the private sectors where the strategy they employ in looking for jobs includes offering their services at a low cost. The need for using this strategy is to deal with the competition and thus secure employment in the private sector or a foreign country. The Saudi citizens are therefore ending up working for foreign investors in and out of the country, so that to at least earn a living.
The Saudi Arabian government should invest in other forms of energy and stop relying entirely on oil for its revenue; analysts say that the country will be crippled if it continues to rely on oil for the next five years. Oil costs are continuously dropping year after the other, marked by the 2015’s drop that has left the Saudi Arabian prince (Mohamed Bin Salman) worried. The Saudi Arabian government needs to diversify its sources of revenue, which will consequently sustain its economy and create more jobs for its citizens (Al-Saleh 654). Most Saudi Arabian’s will be rendered jobless in the next five years if the country continues to rely on oil.
According to Naylor, our government needs to strategize new ways of earning revenue such as investing in the solar energy; the area experiences very high degrees of heat, which can be harnessed and be used in the country. The reliance on oil would significantly drop, which means that the country would stop being severely affected by the lowering prices of the oil. The solar energy in the area is more than enough considering the climate of the area; it could be used to run industries in the country and be supplied for use to citizens. More revenue would be made from solar energy which is a quite reliable source of energy as it never gets depleted, unlike the oil and gas.
Considering that even most automobile companies are shifting to producing solar energy (which is renewable), it would earn Saudi Arabia a good revenue to its economy; the deficit that has resulted from the drop in oil prices would, therefore, be sorted (Al-Saleh 658). The Saudi Arabian government would not have to face a lot of opposition from its citizens when imposing taxes, which have not been there for very many decades. Provision of with cushy jobs, tax-free living, and expensive state handouts is what has earned the leadership domestic obedience, which means that withdrawing the above privileges from the Saudi citizens would result to domestic disobedience; investing in solar energy would prevent this disobedience.
According to Naylor, our government should also invest in technology; being the giant oil producer for a very long time, Saudi Arabia has the capability to acquire modern technology from other developed countries; this would empower citizens and especially the youths who are watching the cushy jobs disappear, to invest in technology. Technological industries should be set up around our towns so that to create employment; industries such as mobile phones, computer, and electronic are contributing significant amounts of revenue to many countries that have invested in technology. The Saudi Arabian government would be able to provide employment to its citizens and maintain a tax-free economy and thus enjoy continuous domestic obedience (Al-Saleh 660). Despite the competition in the technology industry, there is always a gap in the market due to the growing technology; people continuously need improvement in technology, and thus the industry can never overflow with suppliers. The Government should use the revenue it has already acquired from oil to develop the technology industry in the country, which will sustain the country’s economy even after the oil prices have completely gone down.
The government and the people of Saudi Arabia should change their perception; they are over-reliant on oil which has started to frustrate them. Jobs have begun to disappear slowly as there is no hiring of new employees in most public companies; retrenchment has also resulted from this dependency. Lack of employment has led to poor strategies of searching for jobs including undercutting of wages. The Saudi government, therefore, needs to diversify its sources of revenue including investing in other sectors such as the solar energy, and technology industry.
Naylor H. (2016, February 25). Figure 1.14. Oil prices have been falling recently. doi:10.1787/488775237701
Al-Saleh, Y. (2009). Renewable energy scenarios for major oil-producing nations: the case of Saudi Arabia. Futures, 41(9), 650-662.