In a recent interview, the Minister of State and Chairman of the General Seaports Corporation, Dr. Abdul Aziz Al-Manie, spoke about a new program to develop the Kingdom’s seaports. He highlighted the corporation’s achievements, future objectives and plans to improve relations with investors and enhance the competitiveness of Saudi ports, especially Jeddah and Dammam, with other Gulf ports.
It was a frank talk that also cited the huge potentials of Saudi ports and the expansion they experienced so far, where the number of berths jumped from 31 to more than 180 in the six commercial ports handling around 1,200 ships annually. Navigation and safety standards have also been boosted and the private sector allowed to run services on commercial basis. Dr. Al-Manie seemed confident that the Jeddah Islamic Port is still capable of competing with other Gulf ports that enjoy full freedom away from the crippling centralization choking Saudi ports.
The problem with our ports lies in a rigid administrative system that doesn’t differentiate between a large port like Jeddah or Dammam and a small one like Jizan. It is no wonder that providing quick integrated services was never taken seriously. All this talk about improving port services and introducing flexible measures is welcome, but real progress has been very slow over the past three years.
The appalling conditions at the ports led to them being criticized at local as well as international level, which must have reached the officials. One such report came from the World Bank seven months ago, citing a lack of care between the ports and their customers. The corporation’s direct responsibility is confined to receiving, loading and unloading of goods. This is an important part of the port activity and is greatly influenced by the way the laws and systems are applied by relevant government departments. But the way the laws are applied leads to further complications.
An example is the unloading tariff where 65 percent goes to the state and 35 percent to the contractor. Apart from being very high thus denying our ports the ability to compete with neighboring ports, the tariff is applied at random where in some cases 51 percent goes to the state and 49 percent to the contractor. The World Bank report states that service charges at some ports are so high that the port serves as a “milk cow” for the state coffer even if this means compromising the maritime trade.
Dr. Al-Manie, whom I greatly respect, could have confronted the problem head-on by identifying clearly what is expected from the Kingdom’s ports, especially Jeddah and Dammam. Ports are vital to the economy of the country and government revenues should not be earned through heavy service fees. This will only drive off traders and investors. The port administrative system inherited from more than half a century ago is no longer relevant in a time of efficiency and speed. Saudi ports can only expect to enter the international club after their administrative system is fully overhauled, a more consistent policy is applied or the matter left to the private sector to run it on commercial basis. If none of these is possible, we should seriously consider creating a new body in the form of a Royal Commission for Saudi ports to take full charge. This will enable each port to have a competent administration thus stimulating competition among these ports and prepare them to compete regionally. The least we could do is evaluate and shape up the administrative system and separate genuine port work from government services.
The World Bank report summarized the situation by stating that the ability of the corporation to contribute to the national economy is blocked first by domestic obstacles that weaken its organizational efficiency and second by outside factors that call for preparing a solid competitive base from which Saudi ports can move forward.