WHEN a lawyer as experienced and highly regarded as Majed Garoub makes a suggestion to the government, as he did the other day in Jeddah, then it deserves to be taken seriously. His suggestion, that the Saudi budget surplus should be used to create more jobs, should be acted on. The lack of job opportunities is the single most important domestic issue facing Saudi Arabia. The equation is unchallengeable: Insufficient job opportunities + rapidly expanding population = social tension and alienation.
Providing the price of oil does not plummet, there will be a massive budget surplus this year. Exactly how much is unpredictable at this point. It is bound to be much higher than SR 214 billion ($57 billion), the official estimated surplus in the 2006. It may well be in the region of SR 400 billion. The government’s policy is to use surpluses to repay public debt, pay for infrastructural projects and replenish development funds. All this is important and has to be done; but creating jobs is every bit as important, if not more so. Fortunately the funds are there to do both.
There must, however, be no utilization of any surplus to create and subsidize jobs directly. That would be wrong — not just because it would result in charges of unfair commercial practice and trigger WTO sanctions but because it is simply bad policy. What happens in years when there is no surplus?
The best way to use the surplus to create jobs is by investing in infrastructure. That will enable business to flourish and will encourage both new and foreign industries to locate in the Kingdom. That means greater investment in communications — more and better roads, better airports, more railways. The plans are there. They need to be dusted off or brought forward. Imagine the jobs that would result if the planned land bridge project, linking Jeddah and Dammam by rail, were built, or the proposed railway line running the length of the Gulf from Kuwait to Oman. Investment in highways is particularly needed; some in the Eastern Province are in dire need of repair and upgrading. Investment in communications also involves the government getting out of business. The decision last month to license two private domestic airlines is a step in the right direction; likewise, more Internet and cell-phone providers should also be licensed.
The government’s role is to facilitate the growth of business through investment in infrastructure, in education and training schemes, so that business can provide the jobs young Saudis need — and also have the pool of Saudi skills it requires.
Investment, though, is only part of the picture. There has to be a parallel and simultaneous reduction in red tape. Things are better but they are still not good. True, it would be an exaggeration to say investment would flow in and the jobs come only when it is as easy for businessmen to fly in and out of Riyadh as it is for them to get in and out of Dubai or Bahrain, but a reduction in red tape is also an important investment in infrastructure. The two go together — and can create even greater economic success.
