Editor's Note:

The 5th Jeddah Economic Forum, held January 17-19, attracted over a thousand leaders and decision makers from around the globe. In addition to panel appearances by four Saudi cabinet ministers, Lebanese Prime Minister Rafik Hariri and former US President Bill Clinton addressed the regional and global agenda, respectively. However, a milestone reached during this iteration of the JEF was the significant participation of women. Ms. Lubna Olayan, CEO of Olayan Financing Company and ranked among Fortune's top 50 most powerful women outside the US, delivered the keynote address -- "A Saudi Vision for Growth."

Adel Fakieh, Chairman of the Jeddah Chamber of Commerce and Industry, commented on the participation of women in the JEF, "This event has attracted some of the most influential speakers of our age from around the world, and has made Jeddah the heart of economic deliberation and debate in the Middle East. The scope and quality the forum is greatly enhanced by the contribution of many distinguished women whose knowledge and experience add an important dimension to the agenda."

However, the role of women at the JEF has become a hot topic among critics. Grand Mufti Sheikh Abdul Aziz Al-Asheikh, on January 20th, issued a condemnation of Saudi women who showed up unveiled at the Jeddah Economic Forum and mixed with men, according to Arab News. �We followed up what happened at the forum and which should be denounced.. ..namely, the mixing of men and women and the latter�s appearance without wearing the hijab ordered by God,� the mufti said.

This SUSRIS Item of Interest provides the text of Ms. Olayan's speech, "A Saudi Vision of Growth" and links to related articles.

A Saudi Vision For Growth

Lubna Olayan
Jeddah Economic Forum�
17 January 2004

My vision is of a country with a prosperous and diversified economy in which any Saudi citizen, irrespective of gender who is serious about finding employment can find a job in the field for which he or she is best qualified, leading to a thriving middle class and in which all Saudi citizens, residents or visitors to the country feel safe and can live in an atmosphere where mutual respect and tolerance exist amongst all, regardless or their social class, religion or gender.

Now, that's a fairly simple vision. Far less simple, is identifying the path that will take us to that vision and overcoming the obstacles in our way. Recently, there have been numerous articles in the local press:
discussions at conferences, including the recent Riyadh Economic Forum, and many programs on television channels about the issues of employment, education, regulations, infrastructure and social and political reform. And we will certainly have interesting discussions on many of these topics today.

What I would like to do now is to take a broader view and share with you my thoughts regarding the main impediments that we need to overcome and steps that we need to take in order to make the vision that I have outline become a reality.

Jobs and the economy

The Saudi economy in 2003 witnessed one of its best performances in recent years. Revenue exceeded expenditure by SR 45,000 million ($12,000 million), its highest level since 1997. Our GDP of SR 791,000 million ($211,000 million) had an exceptional real growth of 6.4 per cent. The non-oil sector, including petrochemicals, contributed more than 35 per cent to our economy. In 2003, we had a strong real estate market and witnessed a stock market appreciation of 75 per cent. Our market capitalization at SR 590 million ($157,000 million) is the largest in the Middle East and almost as large as Belgium.�

Unemployment

But in spite of this success, we face some huge challenges and the main one facing Saudi Arabia today is growing unemployment and the creation of real opportunities and jobs for our young men and women.

We have a birthrate in excess of 3 per cent, which is amongst the highest in the world and an average of six children per family. Approximately 60 per cent of our population is under the age of 20. The resulting equation is quite simple. Today, the number of young men and women entering the job market far exceeds the number of jobs being created in the private and public sectors. Estimates of the current rate of unemployment range from 9.6 per cent to much higher. And that is without factoring women into the labor force.

Regardless of the exact number, the point is that unemployment is increasing each year compounding the problem and will continue to do so unless we are able to crate more job opportunities at a faster rate.

How can we best address this fundamental economic issue and how can we bring about the vision that I have described?

The two are intimately linked. If we address this fundamental economic issue then the vision is much more likely to become a reality as a natural consequence.

Our resources

Before considering what we have to do, let us briefly consider what we have to work with.

The Saudi government has always encouraged industrialization. They had the vision to create the industrial cities of Jubail and Yanbu and the industrial estates of Riyadh, Dammam and Jeddah. And they provided incentives for local industry and joint ventures with international industrial partners. As a result, we now have a healthy industrial base.

Like most of the Arab world, we in Saudi Arabia had adopted the attitude that the government will always provide for, take care of and shield us, sometimes even from normal market forces. In fact, it did too good a job in the 1970s and early 1980s and even insulated us from taking on certain jobs by allowing foreign laborers to be brought in, in numbers that grew over the years.

The result was that it became all too easy for us to give jobs at all levels to foreign labor rather than taking on the task of training our own young people. At the present time, there are between 3.5 million and 3.7 million foreign workers who last year sent more than SR 60,000 million ($16,000 million) out of the economy. And over the past 10 years collectively, they have sent home SR 586,000 million ($156,267 million). We could have domesticated some of those jobs and retained some of those funds in our economy.

Over the last decade, the government has tried to wean us from this dependence, and it is now generally accepted that the government and the private sector must work in partnership.

Job creation

We already have sound fundamentals in place for creating real jobs in a diverse range of activities:

• abundant natural resources

• a strong and well-regulated banking sector

• tremendous liquidity and, currently, low interest rates

• a fundamentally sound but increasingly overstretched infrastructure

• a strong industrial base that exports and

• a potentially double-edged asset - a large, young population.

The latter point is an interesting one. Our phenomenal population growth has largely created the fundamental economic challenge that we now face, but at the same time presents some interesting opportunities.

As Europe faces declining or negative birth rates in many countries, our youthful population represents enormous potential, if we can harness it. God willing, as we create more job opportunities, there will be a growing middle class that will present the same demand for consumer and other products that the post-war baby-boomers presented in the US.

The demand for consumer products, services of all kinds, telecommunications, power and water will all increase and this will provide numerous investment opportunities as local companies adapt to meet the growing demand with the added benefit of creating jobs, not only in the core industrial and manufacturing areas, but in the area of related services such as IT, marketing, operations and maintenance and security.

We will need to continue to improve the manufacturing, industrial and service base, but we also need to create the purchasing power necessary to sustain a viable domestic market and demand and that is going to require full co-operation between the government and the private sector, with each having a very important role to play.

The government's task

The first question then is how the government can capture the enthusiasm of the private sector? Let me make some suggestions.

First, speeding up the privatization process. There is clearly an economic benefit to privatization. But there are other, equally valuable benefits, such as efficiency, increased transparency and accountability, the latter two being essential requirements in today's global economy.

Second, speeding up the legislative process. If we look at some of the legislation that was approved by the council of ministers in 2003, we see that on average most regulations were under review by various bodies for 3-4 years prior to their adoption and that even after adoption, there is a lag until implementation.

The insurance regulations make a good example. It took four years to approve, but after six months have yet to be implemented. Consider the consequences of such a delay. Generally, it sends a discouraging message to local and foreign investors and directs them to neighboring countries who have been very eager to welcome investors and quick to adopt a friendly regulatory framework.

We have all heard the expression time is money. Let me try to illustrate the impact of a one-year delay in the implementation of the insurance regulations. Eight-10 companies probably would have been formed with a minimum capital of SR 100 million ($27 million) per company and at least 3,000 employees. This represents lost revenue for the country during the period of the delay. A similar analysis could be applied to the delay in the capital market regulations and other pieces of legislation.

Third, put regulations in place that are clear, that reflect best practices and that-when applied in conjunction with other regulations-result in a comprehensive and internally consistent integrated regulatory regime.

Fourth, the government needs to enforce regulations in a clear, consistent and transparent manner. The decisions of our courts and tribunals should be published. The enforcement of judgments issued by the courts must be expedited.

Fifth, provide more incentives for the creation of job-training and career opportunities for women as well as men. The human resources development fund, which was established to help the private sector in training young Saudis, is a great example of what can be achieved through the government and the private sector working in partnership, and indeed is a very positive step.

Sixth, we must create a fertile ground for local and foreign investment, fostering the development of small and medium-sized businesses, as well as large industrial projects. We need to cut down the bureaucracy and red tape, especially in things like the incorporation of companies as well as the licensing of schools, hospitals and professional offices. The recent steps taken by the Ministry of Commerce & Industry to expedite the process of renewing commercial regulations is a good example of what can be done.

We need, as neighboring countries have been quick to do, to adopt e-commerce, e-banking and e-government. We also need to facilitate the movement of people into and out of the country, whether for business or tourism, and to take a close look at our system for visas and residence permits.

Our economy needs this flow of people and it's time for the rules to be simplified and the process to become friendly and welcoming.

The seventh thing the government can do is to stop being overly protective, especially in relation to the labor market. Our existing laws are too restrictive and protective, favouring the employee over the
employer to a great extent. Ultimately, that is counterproductive in an environment where this is an abundance of people seeking jobs.

Put quite bluntly, it should not be too difficult to clear out unproductive employees every now and then, especially when more and more bright energetic young Saudi men and women are entering the labour force.

We should focus more resources on technical training and education that prepares our young men and women for the real world and for employers' needs.

I am glad to say that the government is clearly aware of this need and has focused more resources in the 2004 budget in this area.

And finally, and perhaps most importantly, our government, and I believe the private sector as well, needs to abandon its progress without change philosophy.

A progress without change philosophy has a certain comfortable attraction and gained currency in much of the Middle East throughout the 1980s and 1990s. The idea was that we in the Arab world could adopt many of the trappings of the modern West, and in some sense modernize, but not really change, thus preserving our uniqueness and remaining somewhat separate and distinct.

That philosophy grows out of a very basic human fear of change. Change can take away the familiar. Change can challenge us and change can force us to re-examine the way we conduct ourselves, both as members of the business community and as citizens of the kingdom.

Ladies and gentlemen, without real change, there can be no progress.

So, if we in Saudi Arabia want to progress, we have no choice but to embrace change. Not wholesale change or change simply for the sake of it-that has little value. The real value is in the changes that will strengthen us and make us more competitive so that we can overcome the challenges that face us both here in the kingdom and throughout the Arab world.

And those changes can be embraced in a way that preserves our core Islamic values and related traditions. But we need to come to grips with the underlying challenges and at the same time make maximum use of the advantages that we have.

The task for the private sector Make no mistake, we in this case means both the government and the private sector. It is no longer acceptable for the private sector to sit back and expect the government to effect change on its own.

What then must the private sector do?

First, work with the government to define the skills that are needed. The private sector must play a more active role in working with the government to help define the appropriate academic background and the practical skills that will bring the curriculum in line with the real demands of the 21st century workplace.

Second, we have to focus much more attention on human resources: people. We must create an environment in which each individual can achieve his or her full potential and gainful employment in an appropriate position at the right level. We must adopt a system of meritocracy. This means appointing a person to a position solely because he or she is the most talented, rather than because of name, relationships or other considerations. We must hire the most talented and capable, whether as a mechanic or young executive, regardless of family background or connections. And we must challenge them to reach beyond their comfort zone.

And we really must open more jobs and career opportunities for women and make them active participants in and contributors to the national economy.
�
Third, the private sector must lead by example. We in the private sector must become catalysts for change. We must lead by example and practice what we preach in public and in private. We must do so daily, in every hiring decision, every investment choice, every commercial transaction and every report to our boards, to our shareholders and to our government.

Fourth, we must become good corporate citizens, with a keen awareness of social responsibility. Regardless of whether regulations are in place or not and regardless of whether we may be in a position to bend the rules, we must hold ourselves accountable to the highest business and ethical standards.

Now that may be only four proposals, but they are major strategic steps which can help to move Saudi Arabia rapidly forward in its economy, its leadership in the region and with its reputation throughout the world.

All this is quite an agenda, both for the private sector and the government. Is the vision, then, simply my wishful thinking, or is there a basis in reality for believing that it, and all that it entails, is achievable?

Events of this past year suggest that it is achievable. Our stock market broke all records and reached an all-time high. The government restructured several ministries to improve efficiencies. The STC IPO (initial public offering) was a phenomenal success. Agreement was reached with the EU towards full accession to the WTO and WTO discussions progressed. A range of new regulations has been issued, including the capital market and insurance regulations and, hopefully, their implementation will follow shortly. And there has been more open national dialogue and debate regarding economic, social and political issues than ever before.

This forum itself suggests that the vision is achievable. To have the opportunity to speak at this forum in person before an audience that represents all society and with the opportunity for all of us to engage in a dialogue is certainly a great personal honor for me but, more importantly, it represents both real progress and change.�

Let us take advantage of this wonderful opportunity.

Today we will hear from eminent speakers and, after listening to them, I hope that we will together at this forum reach a consensus upon and embrace a common vision for Saudi Arabia and accept the challenge of bringing it to reality.

Additional Reporting

• Jeddah Economic Forum - 2004, MENAFN.com

• Profile - Lubna Olayan

• Jeddah Forum: A step towards reforms - Gulf News

• Over 1,000 business leaders and key influencers to take part in the 2004 Jeddah Economic Forum - AMEinfo

• Grand Mufti Denounces Unveiled Women at JEF

• Saudi women peer out from behind a veil of restrictions

• 2004 Jeddah Economic Forum Firmly Established As A World Class Event

• On A Dagger's Edge -- Saudi Women, Long Silent, Gain a Quiet Voice - SUSRIS IOI