JEDDAH, 12 November 2005 — Businessmen and businesswomen expressed optimism over the benefits the Kingdom will get from membership in the World Trade Organization (WTO). However, some also expressed caution against overreaction and saw challenges ahead.

“I think joining the WTO will improve the business environment a lot, but we’ve to get our act together on raising the standards of efficiency and productivity,” said Amr Khashoggi, chairman of Amkest. “A good example is what happened with Mexico when it joined the WTO. Some factories closed, but overall they improved tremendously, and new factories opened.”

Arabian Stores Company President Ghazi Binzagr said the open market could be good for some businesses and bad for others, but consumers should get a better deal.

“It depends on your values and how your business is situated,” Binzagr said. “A value for proaction, out-of-the-box thinking, innovation and efficiency will lead to success; otherwise, it will be a big challenge.”

Binzagr said the WTO should be a wake-up call for Saudi businesses.

“The key to success is to remember that though the outside world may be a challenge to us with its advanced know-how, we still know ourselves best. We need to think about how to add real value. Whether businesses are ready for the competition depends on their attitude and approach toward change,” he said. “Some see it as a crisis, while others find in it new opportunities. Businesses have been talking about the effects of WTO for three years. While some have taken positive steps and found ways to diversify and cooperate with international companies, others only talked but didn’t do anything,” he added.

Arab Business Company President Ghada Ghazzawi agrees with Binzagr that some companies are ready for the competition, but many are not up to standard. “Several companies applied and received international quality licenses and certificates, which is a sign that they’re ready, but these are a minority,” she said.

“Most of our economy is based on small establishments, and many of these lack the capacity and professional standards to compete. They’re barely surviving the local market, so how are they going to survive with international companies entering the market? However, I hope that in the long run they will benefit from the experience,” Ghazzawi said. “I don’t think the local chambers of commerce did enough to prepare small establishments, and they are the ones that will struggle the most.”

Alia Banaja, general manager of 2-the-Point for Computer Services, said that if the local companies don’t cooperate and work together they won’t be able to compete.

“The competition would be good because it will force us to raise our standards and be more up to date, for example, in my company’s field of technology,” Banaja told Arab News. She is not worried about being edged out of the market because she maintains that local and international companies can mutually benefit each other.

“They need us because we know the market better, and we need their experience to expand,” Banaja said.

Rather than push the small, local companies out of the market, she suspects that the big international companies will tap these small companies and maybe merge them together and help make them more competitive.

“In the past few years, we’ve already seen the benefits of joining the WTO with all the new regulations and reforms implemented and I expect more of that,” Banaja said.

Contractor Mohammed Abdullah Al-Kheraiji said that all business sectors would benefit from joining WTO. “The benefits the contractors would gain are many. The competition would improve the local contractors’ standards and will force those out who are in the business as an opportunity and not as professionals,” Al-Kheraiji said.

He also predicts there will be alliances between the local and international companies and an increase in the number of qualified companies established on solid foundations.

“This is good for the Saudi businesses and the consumer,” Al-Kheraiji said. “I don’t think it will hurt other than those businesses that are unqualified.”

Al-Kheraiji expects a period of between three and five years of adjustments in the market after joining WTO before businesses know where they stand.

Similar opinions are shared by Abdul Ghani Sabbagh in the hospitality business.

“It is a new experience, which I think we should go through, and I expect the positives to exceed the negatives,” he told Arab News.

Among the positives, Al-Kheraiji says it will open new markets for local companies, but he fears that some companies are unprepared for increased competition. “There is a need to enlighten the companies about the WTO and how it will benefit them. The chambers of commerce need to do more in that regard,” he said.

Some experts say the investment environment will be fundamentally different.

“The regulators have to fulfill their duties and responsibilities in educating businesses,” said Abdul Aziz Al-Mutlaq, a banker. “There should be an educational campaign for all the sectors and even in the universities about what is WTO,” he said.

Unlike some business owners, Al-Mutlaq sees great potential ahead.

“It will be an opportunity for reform, new regulations, new services, transparency, proper control, but we have to change our attitude and make the threat an opportunity for change and improving things,” said Al-Mutlaq.

Banking is one of the sectors that is expected to undergo many changes. He recommends that the relative agencies, such as the Capital Market Authority, the Ministry of Commerce and Saudi Arabian Monetary Agency, implement the reforms and changes at a faster rate to be ready when the Kingdom effectively enters WTO in 2007.

“They have to make the changes faster and give people enough time to accommodate and adapt instead of being surprised to avoid complaints and problems,” Al-Mutlaq said. “They have to train people. During the next three years, we have to think outside the box, move aggressively in the changes and lead the changes instead of letting change lead us. We can learn from others’ experiences, we don’t have to reinvent the wheel.”

As for banks, he said this will be an opportunity for consolidations and mergers and expects to see the biggest changes — and the greatest opportunities for investment banks, local and foreign.