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Saudi Arabia – Transition towards a liberalized economy

The Kingdom of Saudi Arabia is one of the main players in the Arab world. It also plays a prominent role in the International Monetary Fund and the World Bank. Being a sovereign Arab state in the Western Asia and the second-largest state in the Arab world, Saudi Arabia witnessed historic changes in the year 2017. Its importance as an oil exporting nation has attracted the West and improved country’s economic stability. This, in turn, has led to the development of strong political and military relationships across the world. The country which was once seen as an espousal of strict rules and regulations is slowly witnessing many changes in its law. Saudi Arabia which is seen as the one of the most restrictive countries for women is being more open to gender equality, and announced tranche of liberalising changes over their repressive rules for women.

Equalisation of the driving rules

Saudi Arabia issued a decree allowing women to drive for the first time. The ultra-conservative kingdom announced the plans as part of wider reforms, including an easing of gender segregation. With this Saudi Arabia becomes the final country in the world to lift the driving ban on women. The order issued by the King Salman bin Abdulaziz Al Saud overturned a longstanding policy which had become a powerful symbol of oppression.

It comes as part of wider moves by Crown Prince Mohammed Bin Salman to reform the country’s gender laws. Liberalising on the laws, the Saudi General Directorate of Traffic said: “Yes, we will authorise women to drive motorcycles as well as trucks.” Driving laws will be ‘equal’ for both men and women, and there will be no special license plate numbers for cars driven by women under the new rules.

The announcement follows a decision to end the car ban, a policy that had drawn condemnation across the world as a symbol of women’s oppression in the deeply conservative country. However, as the idiom goes “a coin has two sides”, this positive impact too faced many negative criticisms across the country. From shrinking brains to ovaries and to violation of the traditional values, some of the Saudi’s who supported the ban put forth their feet to stick on such nasty reasons. It was also argued that having women in the driving seat was a violation of traditional values, which would cause the breakdown of the Saudi family, and lead to promiscuity. However, showing red flag to all these ludicrous comments Saudi government decided to go forward with their decision to allow women to drive vehicles.

Ban on Cinemas Lifted

It was a surprise for the people, when Saudi Arabia decided to lift the 35 years ban on Cinemas. The move was announced by the General Commission for Audio-visual Media, chaired by minister of culture and information Dr. Awwad bin Saleh Al-Awwad. IMAX is also close to sealing a deal that could see it open cinemas in Saudi Arabia. The cinema technology firm’s chief executive Richard Gelfond said that he hopes to open up to 20 theatres in the conservative country within three years. “Since the market is not that price sensitive, and likes premium luxury goods, this will be a strong market for IMAX,” Mr Gelfond added.

Saudi’s earlier cinemas were shuttered in 1982 after clerics persuaded the government to do so.  Many see Censorship as the main reason behind this ban. The Ministry of Culture and Information has said that films now will be subjected to censorship according to media policy standards of the kingdom and in line with its strict social code.

The first cinemas in Saudi Arabia are expected to open in March 2018. Despite there being no movie theatres in Saudi Arabia, the Government has backed a Saudi film festival that’s taken place for the past few years in the eastern city of Dhahran.

There are several reasons for the changes, the more focus will be to develop a stronger cultural and entertainment sector. According to the Saudi Government, the opening of movie theatres will contribute more than 90bn riyals (£17bn) to the economy and create more than 30,000 jobs by 2030, thereby adding revenue to the country.

Saudi Arabia also believes that this initiative would lead to the development of the domestic leisure industry which will persuade the Saudis to spend more money inside the kingdom, rather than heading to more liberal cities in the surrounding region, such as Dubai and Manama. Despite the formal ban, some film festivals have been held in the country in recent years, and local directors have produced some notable works that have done well internationally, including the 2012 film Wadjda by director Haifaa al-Mansour and, more recently, Barakah Meets Barakah by director Mahmoud Sabbagh.

Companies and Shopping complexes have been keeping a close eye on developments, and many are on the run to take the advantage of the latest reform. Shopping mall operator Arabian Malls said earlier this year that it had allocated space for cinemas in up to 10 malls under development around the country. UAE-based Majid Al Futtaim also welcomed the latest announcement. In a statement, it said it could mean the creation of thousands of jobs. It is lining up its Vox Cinemas brand to enter the market in the months ahead. By 2030, there are projected to be over 300 cinemas with more than 2,000 screens.

Adding to the entertainment quotient of the country, Saudi Arabia also hosted its first concert by a female performer in country’s history. Lebanese singer, Hiba Tawaji, who rose to fame from the hit musical show, The Voice, performed in the Saudi capital on her first visit to the country. Earlier, no public concerts have traditionally been allowed to take place in the kingdom, with many Saudis traveling to other Gulf States to see musicians perform live. “This is a very proud moment for Saudi Arabia,” the master of ceremonies said while welcoming Lebanese singer Hiba Tawaji to the stage. “All women should express their appreciation for a fact that a woman for the first time is performing at a concert in Saudi Arabia.”

Introduction of ‘Expat Levy’

Saudi Arabia implemented an “Expat Levy” which was effective from July 2017.The Saudi government imposed an “expat levy” on all foreign workers and their dependents residing in the country. The levy has been introduced to provide firms with greater impetus to hire more Saudis. It is also seen as an additional source of income in the country which has been facing a crisis ever since the US companies started production of Shale oil, thereby affecting crude oil prices adversely.

Companies currently pay a levy of SR200 per month per expat employee, but only for expat employees that exceed the number of Saudi employees.

In the companies in which the number of expats does not exceed the number of Saudis or GCC employees, the fee will be discounted as against a total waiver that existed earlier.

Apart from this, the finance minister ruled out income taxes on Saudi nationals, foreigners or company revenues. Saudi Finance Minister Mohammed Al-Jadaan told reporters in Riyadh on Thursday that these fees do not apply to domestic helpers, such as drivers and cleaners, but only to expats working in commercial entities.

Lifted ban on Male Guardianship

A royal decree passed in May 2017, allowed Saudi women to avail government services such as education and healthcare without the need of consent of a male guardian. The male guardianship system was the most significant impediment to realize women’s rights in the country, effectively rendering adult women legal minors who cannot make key decisions for themselves. As per the male guardianship, every Saudi woman must have a male guardian, normally a father or husband, but in some cases a brother or even a son, who has the power to make a range of critical decisions on her behalf. Every Saudi woman, regardless of her economic or social class, was adversely affected by guardianship policies. Many of them faced barriers linked to the guardianship system when registering to vote, such as a requirement to prove residency in their voting district—a difficult or impossible task for many women whose names are not generally listed on housing deeds or rental agreements—or a requirement to present a family card, often held by a male guardian. As Saudi Arabia took limited steps to reform certain aspects of the guardianship system, the world witnessed small changes aiming towards a liberalized economy.

Election to UN Women’s Rights Commission

The United Nations’ Commission on the Status of Women which is exclusively dedicated to the promotion of gender equality and the empowerment of women elected Saudi Arabia as one of its member. Saudi Arabia, along with 12 other nations, was approved as a member of the Commission for the term of 2018-2022 by the 54 nations that make up the UN Economic and Social Council. It received 47 votes in a secret ballot, fewer than any other country under consideration but enough to pass the majority threshold. Saudi Arabia is now one of the 45 nations sitting on a panel “promoting women’s rights, documenting the reality of women’s lives throughout the world, and shaping global standards on gender equality and the empowerment of women,” noted the UN.

With these liberal reforms, Saudi Arabia ranks 2nd in world’s high-income countries for business reforms for the year 2018. The Kingdom is among the top 20 countries in the world, and second among the most high-income in G-20 countries, at making reforms to improve the business climate. The Kingdom’s strong reforms have led to progress in protecting the minority shareholders, which is a strong signal to those interested in investing in the Kingdom. Apart from these small changes, Saudi Arabia also welcomed many small reforms, one such reform is facilitating payment of taxes by improving the electronic filing system to raise tax returns and pay taxes. It reduced the number of hours required to pay taxes from 67 to 47 hours.

The Kingdom has also facilitated cross-border trade by reducing the number of documents required for customs clearance, reducing the processing time required by nine days for exports (from 90 to 81 days) and imports (from 131 to 122 days).

One of the other reforms undertaken by the Kingdom has been to improve efficiency of the land management system by simplifying registration procedures.

Nevertheless, all this change has brought in much accolades and gathered wide spread attention across the world. These reforms will also encourage women to set up, own and run their own businesses, encouraging female entrepreneurs and bolstering job creation in SMEs. It will also boost the services sector in which women has a comparative advantage, supporting the strategy of economic diversification. In addition to all, these changes will help to bridge the gender gaps in the health, education, economy and political dimension across the country.


Cochin Herald

All stories by: Cochin Herald