Saudi Arabia's Vision 2030 And Corporate Governance: A Critical Comparison With The United Kingdom

Abstract

Saudi Arabia set out a bold ‘but achievable blueprint’ in Vision 2030 which sought to revolutionize and modernize the Kingdom under three main pillars: a vibrant society, a thriving economy, and an ambitious nation. While Vision 2030 includes over 96 strategic objectives, at its heart is the ambition to turn Saudi Arabia into a global industrial power which is not entirely reliant on petrochemicals, which currently account for 87% of Saudi Budget revenues and 42% of total GDP. Following a number of major regulatory and institutional changes, Saudi Arabia was included in the Morgan Stanley Capital International Index (MSCI), Standard and Poor’s (S&P), FTSE, and JP Morgan Emerging Markets Indexes in 2019 resulting in an additional $53bn of foreign capital inflow into the country. Considering that the Kingdom of Saudi Arabia was only formally founded in 1932 by Ibn Saud, and is the only Arab country to be part of the G-20, this level of development has become an intense academic focal point. In particular, the intricate and unique socio-cultural and religious backdrop to the kingdom has served as an interesting juxtaposition to the heavily Western-influenced approaches to corporate governance, capital markets, and regulation. This is especially the case in the modern day where the academic and market focus has intensified on areas such as corporate governance in light of a number of high-profile corporate governance failures, collapses, and accounting scandals. To this end, this dissertation will seek to consider the extent to which the existing academic discourse in relation to corporate governance is compatible with Saudi Arabia and its unique context which historically has favoured an Islamic approach to governance and corporations more akin to stakeholder theory as opposed to the dominant shareholder primacy approach taken in much of the West. The dissertation considers whether its heavily inspired corporate governance regime (predominantly influenced by the UK) is likely to be fit for purpose on account of the aims and aspirations of Vision 2030. Ultimately it concludes that the widespread nature of concentrated ownership and the strong religious and cultural norms present in Saudi Arabia are likely to present major challenges to more large-scale institutional and foreign capital investment in the future. This will necessitate a more nuanced and considered approach to governance standards which should strive to strike an appropriate and context-aware balance.