Commentary: Is Saudi Arabia’s opening like China’s? Yes and no

HONG KONG: Saudi Arabia’s unprecedented attempt to diversify from an oil economy to something more sustainable seems to be churning along nicely. The female labour participation rate has nearly doubled to 36 per cent from 2016, the year Crown Prince Mohammed bin Salman laid out his Vision 2030. Unemployment is at a record low. Last year, the number of domestic and foreign tourists exceeded 100 million for the first time. 

Headline statistics aside, what’s Saudi Arabia really like? Curious, I did some sightseeing myself in early November, taking advantage of a new route between Hong Kong and Riyadh.

The two financial centres have been strengthening economic ties, cross-investing and offering exchange-traded funds on each other’s bourses. Cathay Pacific started a direct flight late last month.

Before the trip, my friend and I were fussing over our outfits, worrying that we might get stopped on the street for not dressing conservatively enough. We were also a bit nervous about our road trip – after all, women were forbidden from driving until mid-2018.

VISITORS WELCOME

What we saw was an open, friendly nation that welcomed visitors. We blended in as well as any foreigners would in Abu Dhabi or Dubai, and we didn’t spot the much-feared religious police. In Medina, we accidentally roamed into the courtyard of the Prophet’s Mosque, not knowing that it was for Muslims only. When a policeman asked us to leave, his tone was apologetic.

In just a few years, entertainment options have ballooned in a nation where the median age is only 30. Perhaps because of the desert heat, nightlife there is booming. From Riyadh’s Boulevard City – a sprawling commercial development that includes an amusement park, outdoor cinemas and retail stores – to Jeddah’s Red Sea waterfront, people crowded into the streets, singing, dancing and hanging out in cafes and hookah lounges well into the night.

Female drivers are now commonplace. And while most Saudi women are still wearing long, flowing abayas as well as face coverings, fashionistas have tossed off their hijab and are wearing their abaya like a cloak. No one judges or casts disapproving glances.

What about men? We took plenty of Uber rides and talked to Saudi drivers. One laughingly quipped that traffic in Riyadh got a lot worse since women began driving.

A 69-year-old in Jeddah said he was okay that two of his five adult children were unmarried. One 22-year-old said he was a huge fan of American rapper Eminem, who will perform in Riyadh next month. And people just assumed we were in the Kingdom for business, as if career women were a fact of life. 

CHANGING LIFESTYLES

Anecdotes aside, there’s also statistical evidence that cultural and social reforms are profoundly changing families and how they live and consume.

The share of spending on restaurants, hotels, recreation and culture has increased from about 12 per cent in 2017 to nearly 20 per cent this year, according to Capital Economics.

Home ownership among Saudi citizens has increased to 64 per cent of households from 47 per cent in 2016, when the government slashed payments for mortgages and taxed land owners who left plots undeveloped. Mortgage lending now accounts for nearly a quarter of banks’ total outstanding credit.

As testament to the buzzing economy, rents are growing at a brisk 11 per cent, amid inflows of expatriate workers and large redevelopment plans in Riyadh and Jeddah.

As part of Vision 2030, Riyadh aims to lower the country’s unemployment rate and increase small businesses’ contribution to the economy. It’s making progress on both fronts, while a cultural opening is giving young Saudis incentives to work.

FALLING SHORT ON SOME METRICS

The prince is falling short on some of his metrics, and the nation’s human rights record remains a serious concern.

Women who posted online about gender inequality can suffer decades-long jail sentences. The 2022 Personal Status Law requires women to obtain a male guardian’s permission to marry.

This perhaps explains why Saudi Arabia is not getting as much foreign capital as Riyadh desires. In 2023, Norway’s largest pension fund KLP blacklisted some of Saudi’s telecom and real estate companies, citing “human rights abuses”.

Last year, net foreign direct investment accounted for only 1.2 per cent of gross domestic product, well below Vision 2030’s 5.7 per cent target. In addition, foreigners are still mostly visiting for the pilgrimages of hajj and umrah, even though the country is building ambitious ski slopes in the desert and lavish resorts by the Red Sea that cater to non-religious tourists. The government is aiming for the sector to account for 10 per cent of non-oil GDP.

Foreign fund managers have likened Saudi Arabia’s 2016 opening to China’s. I don’t think that’s quite fair, because Saudi is already a developed country in terms of infrastructure. Its roads are well-built and its malls are full of American chain stores – nothing like the 1980s China I knew.

But if we look at the speed of cultural changes, the parallel is eerily accurate.