(Bloomberg) -- Saudi Arabia has hired consultants to advise on plans to create top global companies in industries from petrochemicals to telecommunications as it seeks to bolster its economy and reputation, according to people with knowledge of the matter.
The kingdom has identified about five companies -- including Saudi Arabian Oil Co., Saudi Basic Industries Corp. and Saudi Telecom Co. -- that fit the profile and has asked advisers to draw up policies that will boost their international competitiveness and profile, the people said, asking not to be identified as the plans aren’t public. The country is also studying industries in which it can be a leading player and incentives such as access to funding, the people said.
Saudi Arabia is keen to emulate the example of South Korea where companies like Samsung Electronics Co Ltd. have become household names, according to the people. Regionally, Abu Dhabi is merging its two largest lenders -- National Bank of Abu Dhabi PJSC and First Gulf Bank PJSC -- to make its financial services industry more internationally competitive.
"Regardless of whether these companies are called champions, it does make sense to name benchmark companies around which activity can cluster," Richard Segal, a senior analyst at Manulife Asset Management in London said. "It’s worked well in China also. ChemChina is one example. Otherwise efforts could be spread too broadly and might be less effective."
Sabic declined to comment, while Saudi Telecom and Saudi Aramco weren’t immediately available to comment. The economy ministry didn’t immediately return calls seeking comment.
As part of plans to make local companies more competitive, Saudi Arabia is weighing plans to reshuffle assets held by companies including Sabic, Aramco and Saudi Arabian Mining Co., or Maaden, to reduce overlap between firms and help them focus on their core business, the people said. The country has already announced plans to sell a stake in Saudi Aramco in an initial public offering.
“Any reshuffle of assets among the top entities within KSA to get them more focused, more efficient, and better placed to deliver growth is certainly positive in the long run," said Chavan Bhogaita, head of market insight and strategy at National Bank of Abu Dhabi PJSC.
Saudi Arabia is seeking to increase the role of the private sector in the economy to 65 percent of output by 2030, up from 40 percent, as it undertakes an unprecedented set of reforms driven by Deputy Crown Prince Mohammed Bin Salman. The kingdom in April unveiled efforts to diversify revenue from oil under an economic transformation plan known as Vision 2030. The government plans to support local companies “with promising growth opportunities so they develop into new regional and global leaders," it said in the blueprint.