Gulf states could save $165bn of CAPEX by involving private sector – report

Gulf states could avoid $165bn in capital expenditure by 2021 by increasing private sector involvement in their economies, according to a study by PwC consulting unit Strategy&.

In the report, the company estimated Gulf Cooperation Council members could also generate $114bn in revenues from the sale of utility and airport assets and up to $287bn from the sale of shares of publicly listed companies.

It also argued that greater private sector participation could allow Gulf Cooperation Council countries to address some of their key challenges including unbalanced labour markets, a dependence on oil and a growing need for public services.

However, the company said these, and operational benefits of 10 to 20 per cent, could not be realised without proper private sector participation policies and clear legal frameworks despite Kuwait, Dubai, Oman and Bahrain recognising their importance in their national plans.

Strategy& urged governments to align private sector participation with their national policies, implement new laws with a clear framework to facilitate activities and setup privatisation units to fill gaps in their current systems.

“Growing the size, involvement, and capabilities of the private sector by allowing it to participate more in the economy will lead to a lower fiscal burden on the economy. It will also lead to a workforce with improved skills and a broader-based economy less vulnerable to commodity price volatility,” said Karim Aly, partner with Strategy& in Dubai.