Women Drivers Better for Saudi Economy than Aramco IPO

Not least because the driving ban is now gone and Aramco's IPO is yet to happen. But Bloomberg has estimated the removal of the ban could add $90 billion to the economy, versus a hypothetical $100 billion from the Aramco IPO. Now I understand the progressiveness.

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Saudi Arabia doesn't have a choice. Most of their population is under 30 year's old. Is China going to buy some Saudia Arabian bonds like they do the U.S., and take on some of their debt? The King is trying to get China to buy some 30 year bonds and hope that oil prices don't tank and that they can get a massive IPO for Aramco. Some forecast it at $500 billion and some say as much as $2 trillion--quite a gap. Saudi Arabia's economy is hemorrhaging right now but never let 'em see you sweat, right? Oil prices have tanked from $100 in '14 to as low as $30 at the beginning of '16. Why do you think Saudi Arabia issued such a huge tax cut from 85% to 50%? They NEED foreign investors as this bond issue only covered a 1/3 of their '17 budget. 60% of Saudi Arabia's income comes from oil and they have a $79 billion dollar deficit. China needs oil, but, how much debt are they willing to assume? Another interesting point is that Saudi Arabia expects its debt to reach 30 per cent of GDP, from less than 8 per cent now, by 2020. 

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There's always tourism revenue to help with the budget gap  ; )

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This will reduce the need for drivers (many from India etc).

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6 minutes ago, Tom Kirkman said:

There's always tourism revenue to help with the budget gap  ; )

The Red Sea coast would be fantastic for diving but thanks to the Saudi attitude to the environment many world class sites are now only good if you like viewing the range drinks cans and carrier bags that get deposited on the sea bed. 

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4 hours ago, Tom Kirkman said:

There's always tourism revenue to help with the budget gap  ; )

"Female solo travellers over the age of 25 will be able to obtain a 30-day tourist visa, but those under 25 will have to be accompanied by a family member."

Unless they happen to be atheists, which will make them criminals. I imagine woman+atheist is just too much. How amusing.

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7 hours ago, Marina Schwarz said:

"Female solo travellers over the age of 25 will be able to obtain a 30-day tourist visa, but those under 25 will have to be accompanied by a family member."

Unless they happen to be atheists, which will make them criminals. I imagine woman+atheist is just too much. How amusing.

Those under-25, single, atheist women who drive cars will cause anarchy.  Anarchy, I tell you. 

And did I mention that some of these women anarchists drink alcohol?  The world is going to heck in a handbasket.

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23 hours ago, HermitMunster said:

Saudi Arabia doesn't have a choice. Most of their population is under 30 year's old. Is China going to buy some Saudia Arabian bonds like they do the U.S., and take on some of their debt? The King is trying to get China to buy some 30 year bonds and hope that oil prices don't tank and that they can get a massive IPO for Aramco. Some forecast it at $500 billion and some say as much as $2 trillion--quite a gap. Saudi Arabia's economy is hemorrhaging right now but never let 'em see you sweat, right? Oil prices have tanked from $100 in '14 to as low as $30 at the beginning of '16. Why do you think Saudi Arabia issued such a huge tax cut from 85% to 50%? They NEED foreign investors as this bond issue only covered a 1/3 of their '17 budget. 60% of Saudi Arabia's income comes from oil and they have a $79 billion dollar deficit. China needs oil, but, how much debt are they willing to assume? Another interesting point is that Saudi Arabia expects its debt to reach 30 per cent of GDP, from less than 8 per cent now, by 2020. 

KSA has 115GBL oil reserves. If we take profit from each barrel as $50, we get total profit of close to 6 trillion dollars. Selling 10% of ARAMCO for a valuation of $2trillion will fetch $200 billion. But oil profit also has to be shared as dividend equally to all shareholders. So, the dividend payable for 6trillion dollars will be $600 billion. Why will KSA sell ARAMCO and endup giving high dividend when entire money can directly go into the country?

Also, KSA may decide to withdraw from petrodollars in the future. In that case, KSA may use the oil to get what it needs rather than dollars. In this case, the IPO will again cause nuisance in sharing the wealth.

 

IPO is an impractical idea.

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On ‎6‎/‎26‎/‎2018 at 9:56 AM, NickW said:

This will reduce the need for drivers (many from India etc).

relationship between Arab and Indian drivers was worse than that between cyclist and motorist - I can only imagine hell on the roads when chicks start attracting a lot of attention from young males... Driving H3 may be a good idea;) 

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6 hours ago, Bhimsen Pachawry said:

If we take profit from each barrel as $50, we get total profit of close to 6 trillion dollars.

If being the key word here. They don't take profit from each barrel at $50, not really.

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1 hour ago, Marina Schwarz said:

If being the key word here. They don't take profit from each barrel at $50, not really.

It's estimated that Saudi Arabia currently needs around $88 oil in order to balance its budget.

Last year was $70 something, I forget the more precise figure.

The budget is higher this year due to some of the grandiose plans for Vision 2030 are being started up, and all that costs money.

Wonder how much it's going to cost MbS to build that 60 km moat in front of Qatar?  Bids were submitted on 25th, and project is to be awarded within 90 days after bid deadline.

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3 hours ago, Marina Schwarz said:

If being the key word here. They don't take profit from each barrel at $50, not really.

Actually the extraction cost of oil is less than $10 for KSA. Taking other expense of $10 for investment returns and other overhead, at oil price of $70 we have $50 as profit. This is what I meant.

Even if KSA imposes 40% taxes on profit, we still have $30 dollar a barrel of profit. The profit itself for 115GBl oil comes at 3.5 trillion.

2 hours ago, Tom Kirkman said:

It's estimated that Saudi Arabia currently needs around $88 oil in order to balance its budget.

Last year was $70 something, I forget the more precise figure.

The budget is higher this year due to some of the grandiose plans for Vision 2030 are being started up, and all that costs money.

Wonder how much it's going to cost MbS to build that 60 km moat in front of Qatar?  Bids were submitted on 25th, and project is to be awarded within 90 days after bid deadline.

The KSA gets its money from profit of ARAMCO as dividend. If the ARAMCO has got IPO, dividend will be divided among shareholders

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4 hours ago, Tom Kirkman said:

Wonder how much it's going to cost MbS to build that 60 km moat in front of Qatar?  Bids were submitted on 25th, and project is to be awarded within 90 days after bid deadline.

A saudi website estimated the cost to build the 60km long and 200m wide moat to be 2,8 milllions rials ($ 750 millions) and said it would be built in just one year.

But it's from a saudi website...

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14 hours ago, Tom Kirkman said:

It's estimated that Saudi Arabia currently needs around $88 oil in order to balance its budget.

Last year was $70 something, I forget the more precise figure.

The budget is higher this year due to some of the grandiose plans for Vision 2030 are being started up, and all that costs money.

Wonder how much it's going to cost MbS to build that 60 km moat in front of Qatar?  Bids were submitted on 25th, and project is to be awarded within 90 days after bid deadline.

I suspect the Bin Ladens will be the Winner....

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On 6/26/2018 at 12:42 AM, Marina Schwarz said:

"Female solo travellers over the age of 25 will be able to obtain a 30-day tourist visa, but those under 25 will have to be accompanied by a family member."

Unless they happen to be atheists, which will make them criminals. I imagine woman+atheist is just too much. How amusing.

I suspect, but have zero information to back this up, that the real reason women under 25 are not let in is to put a lid on amateur prostitution. 

Remember that Arab men have no sexual access to women while passing into adulthood, but they do have access to lots of money.  That will attract amateur prostitutes, especially from countries such as Albania and Bulgaria. And the older, more connected men prefer flight attendants from Sweden, and shower them with a vast cornucopia of cash and goods to "put out."  It is (or was) perfectly reasonable to be given gifts of a fabulous mink coat and jewels and cash to be a weekend mistress while on layover.  And those girls got in way over their heads.  But the rulers are not about to go bust up their private access, now are they?

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3 hours ago, NickW said:

I suspect the Bin Ladens will be the Winner....

Yes, they seem to control a lot of the construction industry there.

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18 hours ago, Bhimsen Pachawry said:

Actually the extraction cost of oil is less than $10 for KSA. Taking other expense of $10 for investment returns and other overhead, at oil price of $70 we have $50 as profit. This is what I meant.

Even if KSA imposes 40% taxes on profit, we still have $30 dollar a barrel of profit. The profit itself for 115GBl oil comes at 3.5 trillion.

The KSA gets its money from profit of ARAMCO as dividend. If the ARAMCO has got IPO, dividend will be divided among shareholders

Yes, we've heard a lot about the lowest production cost ever but the whole country runs on oil money, meaning there is no actual profit of the kind you can put aside for a rainy day to talk about, as evidenced by the latest price crash and the budget deficit it brought about. As @Tom Kirkman pointed out, S Arabia actually needs oil at over $80 a barrel to break even.

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On 6/25/2018 at 6:51 PM, Tom Kirkman said:

There's always tourism revenue to help with the budget gap  ; )

Actually tourism is huge, think Mecca and Madina. Most

expensive hotel rooms in the world are in Mecca during the Haj.

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3 hours ago, Marina Schwarz said:

Yes, we've heard a lot about the lowest production cost ever but the whole country runs on oil money, meaning there is no actual profit of the kind you can put aside for a rainy day to talk about, as evidenced by the latest price crash and the budget deficit it brought about. As @Tom Kirkman pointed out, S Arabia actually needs oil at over $80 a barrel to break even.

 

The point here ia that the oil money comes to KSA as dividend from ARAMCO. If ARAMCO has IPO, then dividend has to be shared with shareholders.

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Ah, what's 5%. And they really need all those billions. 

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12 hours ago, Marina Schwarz said:

Ah, what's 5%. And they really need all those billions. 

KSA doesn't need the money from IPO. KSA already has over $400 billion in cash and over a trillion dollars in assets and equity across the world as sovereign wealth fund.

The budget deficit of KSA also includes several other funds for covert activity, investment in foreign countries as political tools etc. With oil price around 70$, the budget deficit will be minimal and the $400 billion dollars cash will ladt over a decade at this rate even with all the assistance and investment done.

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So, the country has all the cash it needs and more, and it's doing the IPO just for kicks? That's certainly an interesting perspective though I couldn't say I agree with it. 

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3 hours ago, Marina Schwarz said:

So, the country has all the cash it needs and more, and it's doing the IPO just for kicks? That's certainly an interesting perspective though I couldn't say I agree with it. 

If you adk me, KSA will never do the IPO. It is just a hoax or speculation at best

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The country IS still one of the wealthiest in the world despite lower oil prices and high population growth - it just has no idea how to properly harness that wealth, and the expectations of a very richly subsidized lifestyle coupled with very little work held by many nationals are outrageous. And though in my experience of the region women are often willing to work harder then the men on average, these expectations exist across gender lines.


These estimates of women adding a lot to the economy must be taken with a grain of salt. Things like higher post-secondary educational attainment among Saudi women as compared to men are often sited as part of the justification for the unfounded optimism of everyone, including the Vision 2030 creators of many a myth. These people would be well advised to look into the fields that most of these degrees are in - and those fields are, by and large, very far from anything related to the job market. Furthermore, a huge chunk of the population remains staunchly conservative, and even if a women has an education, believes strongly that especially once she is married, there is one place for her, and one place only (well, that and the mall :), though even this gets contentious in that ragingly insane society).

Another reason given is that these measures could increase the output of the male workforce, because the 'I have to drive my wife' excuse will no longer fly. This is just one excuse out of a litany used by those whose position in society is such that they can get away with not working. Official numbers say that only 5 mil paid jobs out of 12 mil are held by Saudi nationals - and in reality, these numbers are probably off. For years the KSA has been creating jobs that only nationals are eligible for. A huge part of those jobs works like this - you hire a national, who does nothing/cuts ribbons, and then you create yet another position with a different title, for a person who does the work of the national. Again, a disaster in terms of financial impact. 

As an aside, 
we may make fun of their 'tourism' BS from their 'Vision Never' action plans - but as someone mentioned above, the 'temple economy' of the hajj and umrah brings in an incredible amount of money in addition to the oil, and it will continue to grow at a robust pace.
 

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