JEDDAH, 21 January — Makkah Governor Prince Abdul Majeed opened the Jeddah Economic Forum yesterday, with speakers stressing the far-reaching impact e-commerce will have on the region. Both the governor and Prince Abdullah ibn Faisal ibn Turki, governor of the Saudi Arabian General Investment Authority, spoke on the importance of the forum in the context of the Kingdom's positive investment climate.
The prestigious event has attracted a large number of national and international businessmen and financial experts for three days of speeches and discussions led by former German Chancellor Dr. Helmut Kohl and former French President Valery Giscard D'Estaing.
"Wealth creation in a knowledge-based economy" is the theme of this year's forum, which focuses on the technological challenges facing companies in today's markets and how information management is essential for achieving and maintaining competitiveness.
Organized by the Jeddah Marketing Board (JMB) with the Massachusetts Institute of Technology Sloan School of Management, the forum aims at giving participants a far-reaching overview of the world's current economic order and of the impact technology-based globalization will have on the Kingdom and the Middle Eastern markets.
"We're privileged that our country is in the heart of the Muslim world and because of that we've a remarkable global position. Islam is the religion of progress and development as well as of love and coexistence bringing all nations together," he said, welcoming all participants and organizers, including JMB of the Jeddah Chamber of Commerce & Industry.
The governor of the General Investment Authority said the establishment of the authority was misconstrued as another one-stop shop because it was involved in licensing on the service side and provided a comprehensive repair center. "But no more. In the last few months we tried to pick up issues related to investors and investment. This new era of globalization, changes, deregulation, etc., all over the world is a challenge for us to keep up with world developments. King Abdul Aziz, the unifier of the Kingdom, had set his sights on becoming part of the world and not just blindly imitated the successes of other countries. Our achievements are tremendous but they are not enough in the context of the fast changing world. Our successes of the past will be a good base for the future. We've good infrastructure, fairly good cash flow and liquidity -- the factors for attracting international investors. We've a great potential and there is every reason to be optimistic. In fact, in the next few months lots of new things will be happening and several ministries are working on them."
He added that the technological breakthroughs that the Kingdom witnessed in recent years had been unprecedented. These advances in technology would inevitably change the way the economy is managed. "To some, this change could be viewed as an opportunity. Others may see this as a threat. We in the Kingdom should look to these knowledge industries as opportunities to diversify our economies and complement the other economic sectors that we have developed in recent decades."
On the education front, the project of Crown Prince Abdullah, the deputy premier and commander of the National Guard, which aims at introducing a computer on every school child's desk, emphasizes the importance the Saudi government is placing in technology education.
Establishing a knowledge-based economy requires a substantial investment in capital when the competition for capital is becoming fierce. There are many new emerging economies that are competing for this capital. However, the ones that succeed are the developing countries that maintain policies which are attractive to investors. The Kingdom in this respect has revised its commercial and foreign investment laws. The WTO also has helped crystallize thinking on such issues, according to the GIA chief.
JMB Chairman Amr A. Dabbagh in his welcome address said this year's event was of special importance as it was the first arranged by the newly formed JMB, a new organization of the JCCI. The board was set up specifically to promote Jeddah, highlight and enhance the city's significant contribution to the region's economic growth and development. "This contribution will be stressed in the forum and open doors to greater levels of cooperation. In turn, this will create new business opportunities for foreign investors, global entrepreneurs and national businessmen. For this reason some of the most proactive global companies are sponsoring this event. We must face up to the challenge of modernizing the economy through information technology (IT) if we're to advance and take a commanding lead," Dabbagh said.
Lester C. Thurow, professor of management and economics at MIT, introduced the theme of the forum and delivered a lecture on "The third industrial revolution." He said the world was in the process of creating a new global economy. His main emphasis was on creativity. "If we don't innovate things then we'll be left behind."
Comparing the Third World with the West, he said: "If the Third World doesn't keep pace with new technology, I'm afraid, it will lag far behind." While China has remained in the forefront, for instance, by manufacturing components and supplying to advanced countries, Africa has failed to keep pace with new developments and adopt new technologies. That was why they still lagged far behind.
According to Thurow, the first industrial revolution came with the invention of the steam engine. The second industrial revolution came with electricity which was a German idea. Germans invested in systematic industrial research, which opened up tremendous potential for science and technology. The third industrial revolution would come after 50 years. "It's not the Internet or the IT, which is revolutionary, but things like robotics, biotechnology and the human gene that will revolutionize the complexion of the world economy."
Thurow, who has been a professor of management and economics at MIT for more than 30 years, said: "Even entrepreneurs will be doomed if they don't go with the time."
Professor Thurow was dean of the MIT Sloan School of Management from 1987-93. In his formal academic work, he focuses on international economics, public finance, macro economics and income distribution economics. He also writes in a number of American and international newspapers. He has been featured twice on "60 Minutes" and has been on the cover of Atlantic magazine. A prolific writer, Thurow is the author of several books, three of them New York Times best sellers. His latest book, "Building Wealth: The New Rules for Individuals, Companies and Nations in a Knowledge-Based Economy," analyzes how a knowledge-based economy works and what it takes to generate wealth in the environment.
Dr. Musallam ibn Musallam, chairman of the SKAB Group, was the discussant and introduced Professor Thurow. Dr. Musallam is a visiting lecturer in international affairs at the King Abdul Aziz University. In 1996, he published a book on the politics of the Gulf region -- "The Iraqi invasion of Kuwait, Saddam Hussein, his state and international power politics."
John E. Pepper, chairman of the Procter & Gamble Company, shared with the audience a short history of the company in the Kingdom. He highlighted some of the lessons taught by his company to assure success in a more competitive and faster changing future. Today, its two plants are providing jobs for 985 people, 47 percent of them Saudi nationals. The high quality and low cost of production are allowing these plants to export over 50 percent of their total volume. Almost half of that comes from the GCC, demonstrating the value of Free Trade Zones. But exports now extend further, reaching 27 countries including Taiwan, Pakistan, Thailand, South Africa, India, Italy and Kenya. The key reasons of its success are: providing best in class performance to consumers, offering an excellent value, understanding the local culture, and capability and character of the people.
"We're using technology in entirely new ways. The ability to exchange knowledge and ideas on our business through the Internet is expanding at lightning speed.
"I'm delighted by the continued priority being placed on increasing the level of education. We strongly support the emphasis being brought to economic diversification," said Pepper who was introduced by Wahib Binzagr, chairman of Beit Binzagr (Unilever partner in Saudi Arabia).
Wahib Binzagr has been a central figure in Jeddah's business life for many years. He was also a founding member of KAAU in 1963.
Marcel Ospel, group CEO, Union Bank of Switzerland AG, speaking last said the third industrial revolution would not have been possible without exchanges between the Arabs and Europeans. "We're witnessing tremendous growth in productivity. Labor productivity in new technology is developing at a fast pace. The third industrial revolution does not limit its positive effects to certain sectors. It also opens tremendous opportunities for knowledge-based industries."
Abdul Hadi Shayif, general manager of the National Commercial Bank, introduced Ospel. Shayif is also chairman of the Islamic Banking Committee.
