A leading member of the Shoura Council has called for the establishment of a national productivity center in Saudi Arabia to address the challenge of boosting the Kingdom’s competitiveness once it accedes to the World Trade Organization (WTO).

The suggestion came from Osama M. Al-Kurdi, member of the Shoura Council and former secretary-general of the Council of Saudi Chambers of Commerce and Industry.

In a special interview with Arab News on the occasion of the Kingdom’s National Day, he said: “I have been trying to create a productivity center in Saudi Arabia for several years. Apparently, the importance of the issue has not yet impacted either on the community or on the government.”

The issue cannot be shoved under the carpet, he pointed out, as long as the labor issue engages the government’s attention. Kurdi also spoke on a range of other issues concerning the Kingdom’s economic reforms, privatization, and the need for a special agency to fund export promotion.

Responding to a question on the private sector’s reluctance to employ Saudis due to concerns over their low productivity, the Shoura member said the problem has to do with the educational set-up and much else. “The depth of the problem could only be gauged by a study of the educational system, the lifestyle and upbringing of Saudi children so as to address the weak points along the way.”

Kurdi said creation of job opportunities was vital for sustainable development and, by extension, the Kingdom’s regional development. An important element of this program was job creation. However, it was important to distinguish between Saudization and the labor issue.

“An overemphasis on Saudization should be avoided; instead, we should talk about the labor issue. If you look at the labor issue and also the working habits of Saudis, then you have to go back to the educational system. But if we only emphasize the problem of Saudization, we would never be able to solve the problem, because we don’t know what they are. There is neither any scientific study on this subject, nor have any reliable statistics been produced on the real dimensions of the problem.”

He said government regulations should distinguish between areas where Saudis are available to fill in jobs and where there is a shortage. Non-Saudis should be allowed to take up jobs where qualified Saudis are in short supply.

Referring to the challenges facing the national economy, Kurdi said a major priority is to ensure sustainable economic development to match the surge in population growth. The second challenge is unemployment and the third one is privatization. “However, progress in that direction is slow and needs to be expedited, given the high liquidity available in the capital market.”

On the subject of economic reforms, Kurdi pointed out, they have followed three axes.” The first axis was to rewrite and reform the existing laws. Thus, the first wave of reforms led to the regulation for foreign investors, including the taxation regime, as well as a code for the tourism industry.

“We produced many new laws and revised the existing ones. The second component of the reforms was the creation of new organizations to support economic development.” This move saw the birth of the Saudi Arabian General Investment Authority, the Supreme Commission for Tourism and the Capital Markets Authority (CMA). Similarly, the insurance sector was brought under the purview of the Saudi Arabian Monetary Agency.

More importantly, the Higher Council for Oil and Mineral Resources was reorganized, while the Supreme Economic Council made its debut as the apex body for steering the path of economic development. Another major development was the restructuring or division of some ministries within the framework of the national plan to promote administrative efficiency and other goals.

Kurdi said the third axis of economic development was the opening up of new areas for the private-sector investors. It is now possible for foreigner investors to own projects 100 percent. Mining has also been thrown open to the private sector along with tourism promotion. Other areas available for private-sector investment include railroad, higher education, power generation and desalination.

These measures were adopted as part of the process of economic restructuring to pave the way for the Kingdom’s accession to the World Trade Organization. At another level, Saudi Arabia has concluded bilateral agreements with over 30 countries, including the US. Kurdi said the Kingdom hopes to accede to the WTO on the occasion of the ministerial meeting due to be held in Hong Kong in December this year.

He said that once the Kingdom becomes a member of the WTO, foreign investors would know what to expect in dealing with economic matters. “They will find it easier to invest in Saudi Arabia due to the transparency of laws. An important offshoot of this development could be the transfer of technology to the Kingdom and opening up of new markets.”

In this context, Kurdi called for the creation of a separate agency to promote Saudi exports. “The one that we have is too small and too weak and has its own scheme of priorities for export financing. The proposed export promotion agency would be a private-sector initiative that could extend credit facilities to all Saudi exporters.”

He said exports were becoming an important element of international economy, and Saudi Arabia was no exception. The Kingdom’s accession to the WTO should help open up the markets of the member countries to Saudi products. Of the SR470 billion worth of total Saudi exports last year, the Kingdom’s non-oil exports stood at SR50 billion. Saudi membership of the WTO could give a shot in the arm to non-oil products which are currently exported to over 120 countries.

He said while it is generally known that Saudi Arabia is a major exporter of petrochemical products, what is not well publicized is the fact that the Kingdom has exported pre-engineered steel buildings to Vietnam, flowers to Holland, itself the flower capital of the world, air conditioners to China and peanuts to the US. It is also the world’s largest exporter of moquettes and dairy products to neighboring states, he added.

— Published in Arab News Saudi National Supplement (Sept. 23, 2005).