JEDDAH, 12 February 2006 — Governments, especially in the Middle East-Gulf region, could facilitate economic growth if they provide leadership and direction, according to a UAE expert.
“Governments should exit from the core sectors of economy and instead provide leadership and direction to facilitate the private sector to contribute to economic growth,” Mohamed Ali Alabbar, director general of the Dubai Department of Economic Development and chairman of Emaar Properties, said yesterday.
“Barriers to growth can be removed when governments function like private sector corporations,” he told the main plenary session on the opening day of the three-day Jeddah Economic Forum at the Hilton Hotel.
“The role of the government is that of a leader that provides the vision for its people and direction for the economy, while creating and facilitating the environment for growth,” he emphasized while speaking on the “Role of government: Leader, follower, arbitrator.”
Other panelists at the session included Professor Tim Niblock from the Institute of Arab & Islamic Studies of the UK’s University of Exeter, and Hassan Heikal, co-chairman & CEO of the Egypt-based EFG-Hermes Holding. The session was moderated by Mohammad Abdullah El-Khereiji, chairman, El-Khereiji Group.
Alabbar said governments should focus on providing the core framework essential for the efficient operation of complex modern markets. The primary role of government is to remove barriers and facilitate economic growth by initiating investor friendly regulations that encourage foreign investment. This could “only happen” if the public sector adopted the model of private sector corporations in order to provide efficient services.
“Our focus must be on creating improved transparency and disclosure, resulting from government performance-based budgeting systems, linking spending with measured results and outcomes. And this can only happen when the public sector begins to measure itself with the same yardstick as the private sector,” he added.
Alabbar agreed that many mature economies had begun to downplay the role of the government and moved from government-protectionist approaches to policies allowing more open competition and exposure to market forces. He acknowledged the significant responsibility of governments, suggesting that the need for efficient government mechanisms had never been more evident than in present circumstances.
“The role of a government should be largely designed to creating the necessary legal and regulatory systems in line with international best practices since all governments, regardless of political color, are concerned with maximizing output from a nation’s resources,” he said. Alabbar stressed the need for strong public private sector partnerships that would enable the government to provide more efficient services for its citizens. He specially highlighted the significance of education in the knowledge-based economy, calling for greater private sector participation in this sector, with a growing focus on delivering premium quality education that is aligned to the needs of the market.
Niblock said economic freedom did not mean that government should interfere with the private sector. “What governments need to do is to respond to the demands of the citizens, especially those related to job creation,” he said, adding that governments should be proactive to see that their labor becomes competitive in international markets.
Heikal said with the oil prices reaching unprecedented heights, the Kingdom’s economy could be compared with some of the most advanced countries including Belgium and France.
He referred the talk of the Kingdom’s overheated stock market in some quarters and said the Kingdom could divert its surplus liquidity as a result of rising oil prices to serve the market as a whole. “This windfall for the Kingdom is five times higher than many major world markets,” he added.
In the question-answer session that followed, Alabbar, who also later spoke to reporters, said the world was becoming a challenging one. “We want the best system, the best process so that our children can have a great future, but the question is are you willing to run a marathon to succeed. Passion and hard work alone could provide the answer,” he said.
Earlier in the day, Alabbar participated in a special selective session on the ambitious Emaar joint venture with its Saudi partners: “Greenfields for the Future — King Abdullah Economic City,” where he discussed Emaar’s recently launched King Abdullah Economic City. “Representing the single largest private sector investment in Saudi Arabia with an investment of SR100 billion, the King Abdullah Economic City is a signal of the dawn of a new era of economic prosperity for the citizens of the Kingdom,” he said.
The City will be a mixed-use development located north of Jeddah. A massive 55 million square meter greenfield land with a 35 km shoreline close to the Rabigh Industrial City has been earmarked for the master development.
The City will have six distinct components — a modern world-class Seaport, Industrial District, Financial Island, Education Zone, Resorts and The Residential Area. Completion of the overall project will be done in stages with the first batch of businesses and residents moving into the city in 24 to 36 months. It will also create 500,000 jobs for the Kingdom and signify the dawn of a new era of economic prosperity for the citizens of the Kingdom.