LONDON, 16 September — Lies, damn lies, and statistics. In Britain, for instance, there are perennial arguments about the way unemployment figures and some other economic or sectoral data are collated. Very often the same statistics of course can be used to justify opposing arguments, depending on how they are presented.

When the Secretary-General of the Supreme Economic Council Abdulrahman Al-Tuwaijiri announced the first official estimate of the jobless figure in Saudi Arabia on Sept. 2, based on new data from the Saudi Department of Statistics in Riyadh, the market responded with both optimism and skeptism. Optimism that at last official statistics relating to important yet hitherto sensitive economic indicators are now being published, and skepticism about the actual figures.

To be fair to the department, until the methodology and data criteria are published, it would be difficult to establish whether the official estimate of 8 percent unemployment for Saudis, and 5.5 percent for the whole of the population including expatriate workers, are valid or not. The general consensus of economists in the banking community is that the guestimate for the current jobless figure in the Kingdom is almost double the official estimate at 15 percent. This is only for the Saudi male labor force.

Nevertheless, this manifestation of creeping transparency and disclosure in the Saudi national economy should be welcomed. In fact, in the last month, a number of pioneering (for the region) economic and legal developments adopted by the Kingdom have gone almost unnoticed, overshadowed by the pre-occupation in international and regional political events.

In July, the Saudi Communications Commission issued new by-laws for the telecommunications sector and its deregulation. In August the first official translation of the laws in English was published, and was hailed by lawyers as one of the most comprehensive deregulation structures in the emerging countries. The by-laws cover a wide spectrum of issues ranging from general provisions, licensing, competition, interconnection, disputes, tariffs, to access and service policies, frequency spectrum, telecommunications equipment, consumer protection, and violations.

The publishing of the by-laws are a precursor to the part-privatization of the Kingdom’s state-owned core telecom operator, Saudi Telecom (STC), scheduled for the end of this year. STC, according to official Saudi estimates, hopes to raise SR15 billion from a 30 percent sell-off with a proposed offer price of around SR170 per share. When it takes place it will be the first major sell-off of a Saudi utility in more than two decades.

The success of this part-privatization will pave the way for a wave of similar public offerings, with the national airline Saudi Arabian Airlines; the postal service; and the desalination plants among the prime targets for the partial sell-off.

Before anyone gets carried away, these reforms and sell-offs will not be easy to institutionalize. It is one thing to have comprehensive rules and regulations in place. It is another to muster the required qualified human resources to implement and monitor these rules and regulations — especially in such a short time lag. More important, a Saudi capital markets law and regulator has still to be adopted and institutionalized. An independent and demutalized stock exchange has yet to materialize. As such the pace and level of privatization in the Kingdom in the short term at least, will be slow and cautious.

One of the core reasons for privatization in addition to raising revenues, is competition by new entrants. Privatized monopolies, as the British experience has shown, are not consumer friendly, and defeats the whole purpose of the exercise. In the case of STC, Saudi Arabian Airlines, the postal service, it would be interesting to see how the government and the state utilities (they will still be state utilities unless they are fully privatized) cope with the opening up of the sector to new operators.

One drawback of the proposed opening up of the Saudi telecom sector is that foreign investment at the time of writing will still be barred. Analysts stress that a political decision regarding the liberalization of this and other sectors to overseas investors will only take place in 2003, when another GSM license is scheduled to be awarded.

The prospects for further market liberalization, however, are good, given that in August the Saudi Arabian General Investment Authority (SAGIA) simplified key sections of the Kingdom’s foreign investment law, which was passed in April 2000. With the result, licensing procedures have been simplified; investors have greater flexibility because of stronger property rights in the Kingdom and through the prevention of double taxation. One banker commended the much-greater investor-friendly basis of the law. For instance, the so-called Negative List, the list of economic activities or sectors barred to foreign investors, will be periodically reviewed precisely with the aim of reducing such barriers to entry.

This momentum stress bankers in London familiar with the Saudi market, is a good sign of the commitment of SAGIA and therefore the Saudi government to economic reforms and liberalization, albeit at a slower pace than they would like.

They would also like to see more entrenched, transparent and internationally-accepted procedures relating to economic reforms and indicators, institutionalized. For instance, coming back to the unemployment figure, the usual methodology on which to base national jobless figures is on a full population census.

The fact that the Saudi job market is unusual rather than complex in that it has a large expatriate labor force, and women are not normally accounted for in the labor market statistics because many sectors are not open to them, should not detract from the institutionalization of internationally-accepted methodologies of calculating jobless figures.

The Kingdom does not have a system of unemployment benefits, a network of employment offices, and of course a system of personal income tax, and national insurance. This makes it more difficult to estimate the true extent of hidden unemployment, which is a scourge of many if not all emerging economies.

Another sign that the Saudi authorities are too aware of the importance and the political and economic significance and sensitivities of unemployment, is the determination of the Supreme Economic Council, according to Abdulrahman Al-Tuwaijiri, not to have "quick-fix Saudization."

The government has recently claimed responsibility for creating 7,000 jobs for Saudis in the private sector. Whether these are real value-added and sustainable jobs or merely subsidized by the government’s human resources fund, only time will tell.