JEDDAH, 28 October 2003 — Saudi Arabia yesterday announced the formation of a joint stock company for medical services. The announcement comes in the wake of government plans to privatize some state-run hospitals.

The National Company for Medical Care, which has been licensed by Commerce and Industry Minister Dr. Hashim Yamani, is set to boost private sector participation in health services.

“The decision to set up the company is part of the state’s policy to broaden the economic base and encourage the private sector to play an effective role in promoting economic development,” the Saudi Press Agency said.

The new company is licensed to establish, own, furnish, operate, manage and maintain hospitals and other health facilities, the agency said.

“It can also engage in wholesale and retail trade of medical equipment and own vehicles equipped with medical facilities,” it added. The company can also own and develop real estate for its various purposes.

The Riyadh-based company will have a capital of SR300 million divided into six million shares, each with a nominal value of SR50.

The company’s five founders have subscribed to all shares, the agency said. “Under the Kingdom’s company law, it is not allowed to float its shares in the first five fiscal years,” it said.

The company, which has been licensed for 99 years, will have a seven-member board of directors appointed by the general assembly for three years.

Saudi Arabia is engaged in an ambitious economic reform plan that involves opening up vital sectors to local and foreign private investors.

Some state-run health, municipal and social services will be sold under the government’s privatization plan.

A new executive bylaw recently issued by the Health Ministry allows the government to sell and rent some of its hospitals to private investors.

The privatization “can be carried out either by selling a hospital or renting it to a private investor or a company or changing it to a corporation owned by the state and run on a commercial basis,” the law said.

However, the law insists that privatization should not disrupt public health services, reduce the quality of services or make them prohibitively expensive.

The Kingdom is working on closing a two-way accord with the United States, its second trading partner after the European Union, that will enable it to join the World Trade Organization.

Yamani has said that Saudi Arabia hopes to boost foreign investment in the Kingdom and speed up privatization by joining the WTO.