A fall in Saudi oil revenues opens greater opportunities for the private sector by promoting a shift in spending to domestic companies, the head of the kingdom's chambers of commerce said Tuesday.
“I call it not crisis but opportunity,” Abdulrahman al-Zamil told AFP on the sidelines of the 2nd Saudi-French Business Opportunities Forum.
Saudi Arabia is the world’s biggest exporter of oil, which makes up about 90 percent of government revenue.
But prices have fallen about half from early last year to around $50 a barrel, leaving the kingdom with a growing fiscal deficit.
Last month, the International Monetary Fund warned that the deficit could rapidly erode reserves unless it painful reforms are adopted.
It projected a 2015 budget deficit of 19.5 percent of Gross Domestic Product, or around $130 billion. That compares with $17.5 billion last year, only the second deficit since 2002.
Zamil said cost-cutting will affect “mega-projects” relying on foreign corporations, their consultants and sub-contractors that contribute little to the economy.
“To the Saudi, this is a good thing,” Zamil said of cuts to such projects.
He is chairman of Zamil Group, which employs 21,000 people in a range of sectors including steel fabrication and shipbuilding.
“We want our government from now on to look at smaller projects, medium-sized projects,” which are less appealing to foreign companies and would be implemented by Saudis or joint ventures, he said.
Zamil added that a law to promote the use of local industrial inputs will mean “more money coming to the economy,” as the government intensifies efforts to employ Saudis.
“There will be expansion of industries, not decline,” Zamil said.
The IMF forecasts GDP to grow by 3.4 percent this year and 2.2 percent next year, after 3.5 percent expansion in 2014.
French Prime Minister Manuel Valls on Monday night opened the business forum to promote commercial ties between firms from the two countries.
“Everybody is talking about joint ventures,” Zamil said. “That was not the case last year.”
On Tuesday, Valls announced a series of deals with Saudi Arabia worth 10 billion euros ($11.4 billion) across a range of sectors.