Saudi Arabia’s $300-billion privatization program was billed as the sale of the century when Crown Prince Mohammed bin Salman unveiled his plan to great fanfare.
Nineteen months later, it is moving at a snail’s pace, bankers, investors and analysts familiar with the process say.
The main problems they cite are heavy bureaucracy, an inadequate legal framework, frequent changes of priority in government departments and fatigue among investors.
Some also blame a wait-and-see approach among many investors due to uncertainty about the fallout from an anti-corruption campaign in which dozens of royal family members, ministers and senior officials were rounded up in early November.
The centerpiece listing of state oil company Saudi Aramco – expected alone to raise up to $100 billion – is on track to go ahead next year, Prince Mohammed told Reuters in October. However, Riyadh has yet to select any exchange abroad that will handle – along with the Saudi market – what would be the biggest share flotation in history.
Sectors where the privatization process has been slow include grains, the postal service and healthcare.
“It’s going to take longer (than many expected),” a Saudi banker who has worked on transactions told Reuters. “There are headwinds from the shifting of priorities in government and at a micro-level as these are old institutions that have often never kept books and are not up to the rigors of privatization.”
The sell-off is a cornerstone of Prince Mohammed’s Vision 2030 plan to bring in fresh revenue and diversify the economy – which is recession and blighted by high unemployment – away from energy exports in an era of low oil prices.
But the bankers, investors and analysts are expressing concerns including over the lack of a regulatory framework to assure would-be shareholders about how much control foreign companies could gain as a result of the stake sales, including the right to lay off staff.
Vice Minister for Economy and Planning Mohammed al-Tuwaijri told Reuters in April that, excluding Aramco, the government aimed to make $200 billion by putting large parts of the Saudi economy in private hands.
The Ministry of Economy and Planning did not immediately reply to a Reuters request for comment.