Some of the best companies were born during slowdowns: E&Y CEO

Turley is a panelist on the "Art of Failure" session at the 6th Annual Global Competitiveness Forum (GCF) taking place in Riyadh.

He said: "We’re very proud to be part of the GCF — it’s grown over the years to become a flagship event in the Middle East and North Africa region, and the Saudi Arabian General Investment  Authority (SAGIA) has done a great job with its organization and positioning.”

Turley was speaking to Arab News on the GCF forum which is being held at the Four Seasons Hotel in Riyadh.

“This year’s focus on entrepreneurship is a great fit for us as we’ve worked with entrepreneurs around the world for many years.”

Ernst & Young's 'Entrepreneur Of The Year Program' was started in 1986 to help acknowledge and reward entrepreneurs for their invaluable contribution to society — and it’s the only global program that exists today.

“We’ll be sharing our insights from this program and from our work with entrepreneurs around the world. I’m looking forward to sharing my own views on entrepreneurship on the panel debate that I’m part of called The Art of Failure, which looks at the role of failure in innovation and growth — and why fear of failure can sometimes get in the way of success,” Turley said .

Do you think the SME sector in the Kingdom can be entrusted with creating additional jobs?

Yes, absolutely. Entrepreneurs not only create jobs and wealth but also new products and even new markets. In an increasingly global market, countries that have stronger SME segments are in a better position to drive economic growth and provide opportunity and employment for their people in the longer term. That’s something that the Saudi government has recognized in their program to incentivize SME growth.   

Has the government done enough to incentivize the SME sector?

The best judges of that are probably the entrepreneurs themselves, and our recent survey 'Entrepreneurs Speak Out' found Saudi entrepreneurs to be positive about the role that the government plays in nurturing young companies and aspiring entrepreneurs — they acknowledge the investment that has been made in recent years. The program launched by Custodian of the Two Holy Mosques King Abdullah in 2005 to reduce the burden on start-up companies has resulted in some impressive changes — it took 59 fewer days in 2010 to start a business than it did in 2005, down to just five, and start-up costs have been cut by 80 percent. In terms of the time it takes to start a business, Saudi Arabia is also among the most competitive countries in the G20 group of nations and the most competitive rapid-growth market in the G20.

Is today a good time to start a new business with the euro zone uncertainty looming in 2012?

The economic outlook is without doubt uncertain but it’s important to remember that some of the world’s largest companies and most famous brands were born during slowdowns. Microsoft, Hewlett Packard, General Electric are just some of the big names that come to mind. Entrepreneurs succeed because they identify an unmet need in society, and they develop a product or service to meet that need. Tough times, like we are seeing today, inevitably mean there are a lot more unmet needs.

So, while times are difficult — the opportunities are still out there for those who are bold.

How do education, training and communication in Saudi compare with global levels?

It compares very well.

The commitment to education is clear by the fact that it’s the nation’s second largest budgetary item — few countries can claim that. Saudi entrepreneurs are certainly seeing the benefits. In the survey I mentioned earlier, 80 percent reported improvements in entrepreneurship conferences and seminars and just over 70 percent said that programs at universities or business schools had improved.

The many recent initiatives that have been set up to provide Saudi youth with training and financial resources to establish their own businesses are doing a great job.

How do you see the effect/reality and future of accounting firms in the Kingdom and the region?

The region’s accounting and audit market is growing at probably one of the fastest rates in the world, and is rapidly moving towards a unified accounting model. Robust growth, double digit at least, is likely over the next few years.

Developments in the Kingdom include educational reforms, an influx of foreign businesses setting up, encouragement of the SME sector and manufacturing. Saudi non-oil trade is also growing at a fast pace. Accounting firms are in demand to support this large-scale diversification and will have their hands full over the next decade.

A key challenge facing the profession lies in ensuring that international norms and IFRS are uniformly implemented across the industry, so that businesses are reliably valued. This is important as Saudi is the region’s biggest equity market and when the investment climate improves, IPOs can be floated at a faster pace.

The financial industry in the Kingdom and the region is moving at a cautious pace. How do you see its progress? And what is your opinion on the changes that the Saudi financial market has seen over the past years?

The regional financial industry has become more cautious since the global credit crunch and has taken measures to help mitigate future risks. The Tadawul has become one of the best regulated markets in the region — and it’s seen the results, maturing as an exchange. It led IPO listings in 2011, with the largest number of brokers and investors operating there in the region.

The Saudi financial market is one of the most advanced and reliable exchanges in the region with one of the largest investor bases. If, as some media reports suggest, foreigners are allowed to invest directly in the Tadawul for the first time later this year, then we are bound to see a substantial increase in capital market activity and subsequent growth in the Saudi financial sector.

Saudi Arabia has favorable demographics, a buoyant economy and vast oil wealth. Integrating further with the global economy will benefit both Saudi and the rest of the world.

The Kingdom and other countries in the region have made large strides in promoting transparency, what do you think of these efforts? And what is the importance of the financial industry and its operating mechanism in promoting these efforts in the industry?

The move toward greater transparency is inevitable and is welcomed by big businesses and governments in the region. Transparency is an important piece of the institutional infrastructure that underpins sound economic performance and ultimately drives economic growth. Because they provide the primary means of business financing, the banking and financial services sectors play a pivotal role in the implementation and enforcement of corporate governance principles.

Ernst & Young is a large and well-respected professional organization, what are your plans to promote the local work force in the global network?

We’re very proud that many of Kingdom’s most talented people have chosen to become part of our organization. By joining our global network, they gain experience working all over the world in very different economic environments and with a broad range of cultures — insights and skills that they can use to benefit the local profession. We’re committed to giving our people opportunities to develop diverse careers that span different disciplines and countries, to work on complex issues and to develop leadership skills that we hope will benefit them and benefit the Kingdom for many years to come.