RIYADH, 22 October — The need for a realistic pricing policy for the utilities sector, ending monopolistic situations, promoting transparency in their operations, and further opening up the economy to boost privatization dominated the discussions on "Privatization, pricing and regulation" yesterday.
They were led by Dr. Abdulrahman Al-Tuwaijri, secretary- general of the Supreme Economic Council (SEC) on the third day of the symposium on the "Future Vision for the Saudi Economy" at King Faisal Hall here. The participants stressed the need for greater private sector involvement in the economy as well as a proper regulatory mechanism to hold the price line by fostering a competitive environment. Dr. Al-Tuwaijri said SEC was working on a new list of candidates for privatization. Already, ports, mining, airline, telecom and postal sectors have been privatized as part of the government’s disinvestments program to sell off its shares and bring in private capital.
He disclosed that the power sector alone would need SR 340 billion in capital investment till 2023. The participants felt that the privatization program could succeed only if the current monopolistic situation in the power and telecom sector was replaced by a competitive environment in which other players could compete on a level field.
Dr.Sumter Lee Travers of the World Bank cited, as an example, the high cost of production of desalinated water at the consumer’s end compared to the actual production cost in the Kingdom. An element of transparency in their operations would be helpful in trimming costs and providing relief to consumers, he observed.
In this context, John Speakman, also of the World Bank, suggested that privatization could move forward by using a wide range of options, including a change in the management style, ensuring transparency and the spread of ownership to inject a greater sense of accountability in the organization. However, some key issues need to be addressed. They are, in the Saudi context, a dual work force consisting of nationals and expatriates, different patterns of employment vis-à-vis the Saudis and expats as well as higher expectations of the Saudis in terms of salaries.
He also proposed opening up of family companies by amending the companies law together with rigorous enforcement of the Intellectual Property Rights to instill confidence in the investor.
In the session on "Information and Communication Technology" Karim Sabbagh of Bozz Allen Hamilton referred to a market survey conducted last year which showed that Internet penetration in the Kingdom was still low compared to regional and international benchmarks. In March last year, he pointed out, the penetration rate was estimated at 2.5 percent of the total population and five percent of the total households. A second survey undertaken in November last revised the estimate to put Internet penetration at six percent of the population and 14 percent of the households. He observed that the world’s average ICT-to-GDP ratio increased from 5.6 percent in 1992 to 6.6percent in 1999, with New Zealand leading with a ratio of 10.5 percent, followed by the UK and Sweden at 9.3 percent each.
In his presentation on how a dynamic ICT manufacturing base could boost job opportunities for Saudis, Abdulaziz A. Sugair, president and CEO of Advanced Electronics Co., a Saudi economic offset company, pointed out that some of the manpower issues in the Kingdom that need to be addressed are high male unemployment among graduates and limited job opportunities for females.
He said the electronic industry could thrive, provided remedial measures were taken to deal with issues like absenteeism in the Saudi work force, tardiness, higher salaries, and boosting the competitiveness of the staff.
He said 77 percent of the AEC’s 391 employees were Saudis.
