INFORMATION and communication technologies (ICTs) are powerful tools for stimulating economic growth and social change. They cut across all Saudi Arabia’s traditional sectors — health care, community development, national, regional and local government, economic growth and education. They enable groups working on common issues to benefit from each other’s experiences and share best practice. They can provide access to better education and health care in remote or inaccessible areas through distance learning, telemedicine and interactive training. They can improve services to citizens by giving online access to government and public services. Individuals and communities can be empowered to make informed choices in the decision-making process through their use. For businesses, ICTs are most visible in e-commerce and e-business applications.
The government of Saudi Arabia has recognized the high priority of expanding and deepening the use of ICTs as a principal route to both greater national productivity and global competitiveness. It is now appreciated at the highest levels that ICT development must be a centerpiece of national policy.
However, despite impressive and demonstrable progress there are still difficult challenges to be overcome before ICTs truly become a viable part of Saudi life. Technical, institutional, regulatory, human resource and infrastructural obstacles currently constrain greater private and public sector use of ICTs and hamper the ICT sector at the national level. Cooperation between public and private institutions is required to overcome these obstacles and thus facilitate ICT development in a manner that accelerates economic growth and productivity and results in increased international competitiveness.
To ensure progress in the ICT sector’s development, action on ICT development must be innovative, flexible and carefully coordinated. The goal is worthwhile. With government support, it is reckoned that ICT could become Saudi Arabia’s largest industrial sector after oil and gas. It could be the third largest contributor to Saudi GDP by 2010 and the second largest by 2020. But for all this it needs a higher level of investment than that is currently being allocated.
Industry analysts estimated the overall Saudi market for computer software and related services at $300 million in 2000. The rapid expansion of the Internet in the region, along with the increasing acceptance of e-commerce as a business tool, will ensure continued growth of at least two percent in the sector over the next two years. In many cases, current computer systems will require upgrades of hardware or software in order to use the Internet and associated e-commerce applications effectively. Therefore, as the Internet gains a greater regional presence and the need for increased bandwidth expands it is bound to create a subsidiary market for hardware, software and network integration.
By the end of 2001, Saudi Telecom (STC) infrastructure was expected to support some three million Internet users. In recent months, STC secured a $657 million loan from a consortium of Saudi banks to help finance its network and service expansion. But while STC is moving ahead in some areas it still lags behind in others. Saudi Arabia’s Internet service providers (ISPs) face huge challenges working with STC. One is money.
ISPs claim that over 80 percent of their turnover goes to STC and the Internet superproxy at King Abdul Aziz City for Science and Technology (KACST). They are left to scratch a profit out of what remains, something that few have managed to do if their complaints are to be believed.
STC should be making it as easy as possible for Saudis to use the Internet, but instead, thanks to it, prices remain high. It costs around SR230 to use the Internet for 40 hours per month, a cost far above international levels. Of that SR230, SR120 goes straight to STC in call charges, which cost SR3 per hour. The remaining SR110 is paid to the ISP, which then has to hand over 80 percent of this amount to STC.
It is clear that to improve Saudi business competitiveness through increased use of technology, both in the public and private sectors, remedial action has to be taken, and quickly. KACST has a mandate to formulate an ICT national plan for Saudi Arabia. Efforts should be focused on putting out a plan that works — not on the "perfect" plan. ICTs change rapidly and amendments will not only be needed but desirable in the future.
The government needs to implement an improved legal and regulatory framework for e-business, telecommunications, and other ICT matters. The success of e-business, e-government and all forms of electronic transactions are dependent upon a clear legal infrastructure that provides certainty and instills trust in the entities that engage in online transactions. E-business laws would also send a signal that Saudi Arabia is moving forward in the IT marketplace. Fortunately, the Kingdom is in a position to take advantage of legislation already prepared in other countries. It is true that efforts are currently under way to draft such laws, but speed is vital. ICTs and their use are not static. Moreover, this cannot be a one-off affair: Such regulations will need regular review.
An offshoot of regulation would be the start-up of activities centered on electronic financial and payment services, and concerns relating to address security.
A further way in which the government can help promote e-commerce and e-government is by supporting e-government and e-business pilot schemes. These should work on improving cost effectiveness, efficiency and access to government-funded services, particularly those provided to the private sector.
It is noticeable that ICTs do not as yet thrive outside major industrial centers. That puts another onus on the government if such technology is to have such a pivotal position in the country’s economic diversification. It needs to support activities and campaigns that promote awareness of the role ICT can play in increasing efficiencies and improving competitiveness of the Saudi private sector. Ways have to be found to increase the access of individuals and businesses in remote areas to ICTs and support the creation of start-up ICT firms. Perhaps the best way to jumpstart these activities would be through government grants to Saudi non-governmental organizations to bolster activities resulting in the increased development and adoption of ICT in Saudi Arabia. Priority must be given to grant proposals that focus on enhanced ICT adoption and diffusion in non-urban or rural areas.
KACST is currently considering the establishment of an IT industrial development entity. Such an organization could ultimately play a pivotal role in the IT industry in Saudi Arabia. If established, it would serve as a self-regulating entity, certifying IT companies, authenticating e-business transactions, promoting exports, assisting in the development of IT human resources and in developing and overseeing IT parks. Several units within this potential entity have already been identified, although KACST will need international expertise through short-term consultation and services to get such a resource up and running.
In addition to such master plans, regulations, pilot projects and grants, there is one final step that has to be taken to increase the adoption and development of ICT in Saudi Arabia if it is to become Saudi Arabia’s largest industrial sector after oil and gas. It will be difficult, if not impossible, to implement and manage national ICT goals without the establishment of an ICT regulatory authority or ministry. Part of the responsibilities of that organization would be to oversee the development and regulation of the telecommunications sector in Saudi Arabia. Numerous measures to liberalize the ICT sector are also needed. It is useless to discuss e-business and e-government without a commitment to making adequate ICT resources available Kingdom-wide.
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(Nabil M. Kashkoul has a MS in Industrial Engineering. He was the director of Mansoura University Technology Incubator, Egypt. Currently he is the SME’s Department Adviser at the Eastern Province Chamber of Commerce and Industry.)