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In Gulf investment drive, need for transparency is clear

The single most important thing to attract investment — foreign, regional or even domestic — is legal redress.
You can sing and shout all you want about how great you are, how great the opportunities you offer are, or even how great your support systems are, but until you can successfully demonstrate to potential investors that you have a solid legal system and that no one is above the law, no one will take you seriously.
In the Middle East, and especially in the Arabian Gulf, we have some of the very best legal systems anywhere in the world — but, as always, we seem to struggle with implementation. In particular, for a legal system to have any credibility at all for potential investors, it must be seen to be applied equally and across the board with no exceptions.
This is the key: no exceptions.
Even the best legal system in the world is completely useless to potential investors if it is seen to be manipulated by individuals in power. No one should be above the law — that is the underlying premise of law in the first place.
The world really has evolved into one large village and, today, there really is nowhere to hide particularly when news travels at near instant speeds. More importantly, as interconnectivity continues to increase dramatically, we can no longer expect anything to remain a secret for too long.
Instead people, and investors even more so, have almost instant access to just about as much information as they need to form their decisions. As a result, we need to work harder than ever to develop and subsequently maintain our reputation for transparency and rule of law.
This is as true for Bahrain as it is for other countries in the Arabian Gulf, including the region’s largest and most important economy, Saudi Arabia. This is not criticism, it is fact.
To its credit, Saudi Arabia seems to have already recognised the importance of this fact and is trying to take key steps in the right direction. Earlier this year, for example, Saudi Arabia announced it would wean itself away from its “addiction to oil” and unveiled a revolutionary plan to transform the Kingdom into a global investment power. The Saudi Vision 2030 plan, unveiled by its chief architect, Deputy Crown Prince Mohammed bin Salman, is an extremely ambitious plan but, critically, it is also achievable.
It is also exactly the kind of revolutionary thinking that Saudi Arabia and the rest of the region desperately needs. The kind that challenges the status quo and envisions a future built on sustainable development and social inclusion.
I do not personally believe in strategies developed by international consultants: over the years, and in many different countries, I’ve seen such strategies gradually getting shelved. In this case however, I really hope to be proven wrong and that Vision 2030 proves to be the exception.
Perhaps one of the more imposing hurdles to achieving this plan is the need for transparency. Real transparency. To his credit, Prince Mohammed was candid about this critical need. We simply cannot just gloss this one over and, fortunately, our first key reality check is just around the corner with the partial privatisation of Saudi Aramco in what is set to be the single largest IPO in history.
Other key aspects of Vision 2030 include the creation of the world’s largest sovereign wealth fund and the development of Saudi Arabia’s non-oil related economy, particularly SMEs. All of these require a legal system that inspires confidence, and a system of corporate governance that is well above any reproach. This will bring an unprecedented focus on our legal systems, our corporate governance and our ability to protect investors. We need to be whiter than white. Particularly our administrators.
This is not a new challenge for us in the region, in fact it was clearly spelled out in the very first United Nations Arab Human Development Report that was published in 2002. The report, which has since been widely referenced, highlighted governance as one of the three key areas where Arab institutional structures are hindering performance and crippling human development. Tragically, this seems to be as true today as it was then.
As a result, this has created a now urgent need for a massive cultural shock that changes our collective mindset. We need to institutionalise a culture of accountability, where both actions and inactions have consequences and where people who do not, or cannot deliver must resign. One where officials are publicly held accountable and must show tangible results on a timely basis.
This was a big part of the Vision 2030 narrative and echoes many of the issues identified in the initial Arab Human Development Report, as well as the subsequent reports that have been published.
Perhaps if we had done something about the issues identified then, we wouldn’t be where we are now — and the latest report published in November wouldn’t be so difficult to read.
The change is long overdue, and needs to happen across the region if we expect investors — international, regional or domestic — to take us seriously.
• Khalid Abdulla Janahi serves as the Member of Board of Directors at Gulf Investors Asset Management Company. Khalid Abdulla Janahi is currently the Group Chief Executive Officer of Dar Al-Maal Al- Islami Trust (DMI Trust) with over 30 years of experience in banking and financial services