Al-Henaki: Oil volatility is a major challenge

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Updated 06 November 2012

Al-Henaki: Oil volatility is a major challenge

Boosting education, upgrading the infrastructure and eliminating bureaucratic hurdles are the three main steps that should be taken in the next two decades, says Dr. Saleh bin Abdulrahman Al-Henaki, CEO and vice chairman of Abdulrahman Saleh Al-Henaki Holding Company. Al-Henaki underlined the importance of finding solutions to financial, housing, education and other critical sectors in the Kingdom, and expressed his concern over the unstable political developments worldwide in an exclusive interview with Diana Al-Jassem of Arab News. He also expressed his anxiety about the fluctuating oil prices, and the global economic and financial crises.

Rapid change
What in your opinion are changes that would have a major impact on the lives of Saudi nationals in the coming 20 years?
Major changes are required in education because our old, outdated education system cannot create an intellectual and innovative environment suitable for global markets. When we take a look at China, India and Brazil, we notice how advanced education has positively impacted the people. Our students must be taught to use their creative and thinking skills in order to compete with world economies. The Kingdom should introduce a special education system that can have a positive impact on the thinking of our younger generation. We need to increase job opportunities to accommodate the increasing number of Saudi graduates looking for employment. We have a healthy political environment, rich natural resources and dependable young generation that can shape the future. We should invest in our youth to make our future bright.

Role of leadership
What do you think are the leadership roles regarding organizations in the Kingdom? What are the factors/reasons for their current state?
Leadership is the backbone of any successful organization. This is one of the major issues to be solved in the public and private sectors. Government and semi-government sectors are performing well with a lot of ongoing projects but they still need development. We need capable leaders who can shape the future and develop the country. Our economy is growing fast and our young leaders should be well trained in all areas, including medical, engineering, research and development, and management.

Challenging tasks
What are the most difficult decisions that need to be implemented in the Kingdom within the next 20 years?
The most important decisions that need to be implemented relate to the development of the education system, privatization of service sectors, and streamlining our financial and mortgage systems, increasing Saudis in employment, tackling water shortage and wastewater issues, meeting rising electricity needs, and aiding the poor in Muslim countries. Facilities for both Haj and Umrah pilgrims have improved and they need to be consistently expanded to meet the ever-growing numbers of the guests of God.

Sustainable development
What goals would you set regarding the Kingdom’s development? And how could these goals be achieved through your current position?
The main goals for the Kingdom’s development: Improve the quality of education, carry out infrastructure development projects, augment investments in research and development in all fields of activity, increase the productivity in all types of industries, use solar energy in all economic sectors, prioritize water and wastewater management, and boost foreign investment through multinational joint ventures.

Regarding the Kingdom’s officials, what characteristics do you think are important for such individuals? How would such characteristics contribute toward the Kingdom’s onward development?
The Kingdom’s officials are doing their best for developing the country. But focus needs to be increased on planning, managing, executing and adapting new technology. They should be knowledgeable with experience. Everyone should carry out their tasks with honesty and dedication in the Kingdom’s interest.

Creative project
Give me an example of the most creative project that you wish to establish in the Kingdom?
Being a medical doctor and a real-estate expert, my most creative project is to build a high-class medical city in the Kingdom providing complete medical services in all departments with the most modern technology and introducing the concept of virtual medical assistance, telemedicine, etc. My creative project includes building a paramedical college in collaboration with a foreign medical university that can produce highly qualified medical staff.

KSA in three words
What three words would you use to describe the Kingdom in the coming 20 years?
Country of holy places and religion; country of safety and stability, and country of wealth and leadership.

Human rights
How can we all improve human rights in Saudi Arabia? What are your expectations regarding human rights practices in the coming 20 years?
Most of the countries are falling short of human rights standards, but we shouldn’t have any problem with human rights if we all adhere to the teachings of Islam. The Prophet (Peace be upon him) taught us about human rights 1,400 years ago. We just need to stick to what Prophet Muhammad (pbuh) taught us and conduct ourselves in public accordingly.

Biggest challenge
What is the biggest challenge facing the Kingdom today?
The main challenge: The unstable political situation in neighboring countries will affect the economies of Yemen, Syria, Iraq, Iran and Bahrain. As a result, oil price fluctuations, global economic and financial crisis, Saudi women graduates’ job opportunities, and augmenting revenue from sources other than oil are among the issues that need urgent attention.

Housing growth
There is a huge demand for housing in the Kingdom because of the ever-growing young population. The government also put an emphasis on this sector as it has allocated SR 250 billion in this budget for housing. Do you believe housing needs much attention from the government and private sectors?
Obviously, it needs much attention because housing is a major problem, especially in low- and middle-income classes. After a couple of decades, we will notice that the present younger generation will need individual houses for their own families. The Kingdom is pursuing the right policy and has allocated SR 250 billion to develop housing projects. This is as per the plan announced by Custodian of the Two Holy Mosques King Abdullah last year. The private sector has a major role to play in solving this problem along with the government whose role is to supervise and regulate the real estate business and financial institutions as regards home loans and mortgages. Any delay in boosting housing facilities in the Kingdom is due to the time taken in the issuance of licenses by the Ministry of Municipal Affairs. Issuing a license to start a certain project could take more than a year-and-a-half. Such bureaucratic delays need to be ended as soon as possible.

Role of SMEs
There is a need to boost small and medium enterprises (SMEs) in the Kingdom as it creates various jobs. What role do you see for the SMEs in the Kingdom’s economic development?

SMEs are the main economic power and key to develop the country’s economy around the globe. We have to encourage the establishment of SMEs to reduce the level of unemployed citizens. To make the SME sector successful, we need to have management, marketing, technology, mentoring, research and development plus finance because most of the SMEs work for large corporations and later become big companies. There should be an organized program by banks, and public and private companies to encourage young entrepreneurs to start their own business.

Knowledge hunt
Education is always a priority for the Kingdom. What changes do you envisage in the education system to prepare Saudi youth for the knowledge-based economy?
Education is the most important element of economic development. The difference between developed countries and under-developed countries is education. We have to change our education system. All schools, colleges and universities should be under the umbrella of international accreditation. On the other hand, vocational institutes must be regulated and evaluated to fulfill the Kingdom’s economic visions. Finally, there must be a better collaboration between the industrial and education sectors through research and development programs, internships, and knowledge sharing. We are waiting to see the effect of King Abdullah Scholarship Program on the quality of education and the success of returning students in the job market. These results can then be compared with the outcomes of students who graduate locally and then they can be used to improve the quality of our national technical schools and universities.

Fair opportunities
How do you see Saudi women’s contribution in the labor, social and political areas in the coming 20 years?
I am proud of Saudi women. They make exceptional contribution to improve our life. We should work to enlarge their contributions without compromising our religious values. Women should care about their own lives and families first because they shape our upcoming generations. We need to secure women’s economic, financial and social rights. Women’s contribution to the labor market will be greater if they are directed toward the sectors where they are most needed, especially in the teaching and medical fields.
What is required in order for Saudi women to actualize your future vision?
Women, whether professionals or housewives, should take care of themselves and their families first in order to raise the bar of moral standards of our upcoming generations.

Saudi media
What measures and standards are yet to be (and must be) introduced to Saudi media, and what are your expectations in the next 20 years?
Saudi media should ensure that the information they are publishing is accurate, and should be responsible for the information they broadcast or publish. Presenting the facts of unfolding events within the Kingdom and around the globe should be the top goal of media organizations. In terms of journalism, specialist editors and qualified reporters have to work with utmost responsibility. They can excel in their professional work by using accurate information. In terms of standard, our media should be a part of the message they carry and would like to see them to be on par with the international media.

What impact will social media have on traditional media?
Social media is growing fast. Communication networks like Twitter, Facebook, Linked-in, etc., will have a vast and important influence over the traditional media. In fact, the social communication networks’ impact has already taken place, and it has taken over a lot of audience from traditional media. It will have a positive impact on disseminating news, health awareness information, and safety and security. The newest trends in personal wellbeing, entertainment and sports results can all be followed up to the minute because of social media.

Learning from the past
What are the three or four mistakes that have been repeated in the Kingdom during the past 10 decades and how could we eliminate them in order to develop the Kingdom?
Frankly speaking, Saudis are not ready to work in semi-skilled and unskilled jobs, which is not healthy for any society. We must keep improving our human resources becoming less dependent on expatriates. The private sector’s dependence on the governmental support to solve problems is the main mistake repeated over the past decade. We should overcome many bureaucratic governmental obstacles facing the private sector. Consequently, private sector entities have become addicted to governmental support in solving their problems. We have five-year plans, but our strategies are failing to implement these plans. The Ministry of Planning did not fulfill its role in managing major government development projects with other ministries, a situation that must be addressed. Subsidies are also less effective in raising the standard of living. The entire regulatory system needs to be reviewed and overhauled.

Message to youth
Given that the youth make up the majority of the Saudi population, what message would you want conveyed to them? What else would you say to the rest of the population?
My message to youth is believe in yourself, set a goal and target in your life and make serious efforts to reach them. Be creative, work hard and your dream will come true. I also want them to accept their mistakes and try to fix them, and never lose hope because sooner or later they will be leaders, as they are our hope and they will shape the future. I wish to see them in the near future as scientists, writers, engineers, and economic and political thinkers.

OPEC oil ministers gather to discuss production increase

Updated 31 min 52 sec ago

OPEC oil ministers gather to discuss production increase

  • Analysts expect the group to discuss an increase in production of about 1 million barrels a day
  • The officials were arriving in Vienna ahead of the official meeting Friday

VIENNA: The oil ministers of the OPEC cartel were gathering Tuesday to discuss this week whether to increase production of crude and help limit a rise in global energy prices.
The officials were arriving in Vienna ahead of the official meeting Friday, when they will also confer with Russia, a non-OPEC country that since late 2016 has cooperated with the cartel to limit production.
Analysts expect the group to discuss an increase in production of about 1 million barrels a day, ending the output cut agreed on in 2016.
The cut has since then pushed up the price of crude oil by about 50 percent. The US benchmark in May hit its highest level in three and half years, at $72.35 a barrel.
Upon arriving, the energy minister of the United Arab Emirates, Suhail Al Mazrouei, said: “It’s going to be hopefully a good meeting. We look forward to having this gathering with OPEC and non-OPEC.”
The 14 countries in the Organization of the Petroleum Exporting Countries make more money with higher prices, but are mindful of the fact that more expensive crude can encourage a shift to renewable resources and hurt demand.
“Consumers as well as businesses will be hoping that this week’s OPEC meeting succeeds in keeping a lid on prices, and in so doing calling a halt to a period which has seen a steady rise in fuel costs,” said Michael Hewson, chief market analyst at CMC Markets UK
The rise in the cost of oil has been a key factor in driving up consumer price inflation in major economies like the US and Europe in recent months.
Already US President Donald Trump has called on OPEC to cut production, tweeting in April and again this month that “OPEC is at it again” by allowing oil prices to rise.
Within OPEC, an increase in output will not affect all countries equally. While Saudi Arabia, the cartel’s biggest producer, is seen to be open to a rise in production, other countries cannot afford to do so. Those include Iran and Venezuela, whose industries are stymied either by international sanctions or domestic turmoil. Iran is a fierce regional rival to Saudi Arabia, meaning the OPEC deal could also influence the geopolitics in the Middle East.