SME development, quality education the need of the hour

The seventh Euromoney Saudi Arabia Conference ended yesterday here with a consensus among the delegates that the Kingdom's economy is resilient and open for viable investments in various sectors in the country.
Silk Road Management Managing Partner Alisher Ali told Arab News that the Kingdom remains a vibrant investment market for profitable ventures.
Ali, who spoke on investment opportunities in emerging markets, said it was encouraging to note that the Kingdom had given several incentives for the development of various projects in the country.
"Developing small and medium enterprises (SMEs) in the country will create plenty of job opportunities for local youths," he said, adding that there should be an added stress on providing quality education for the people.
Regarding the Chinese-Mongolian relations, he described Mongolia as big as Western Europe. "The country has been poor for decades because it hasn't been linked to the global economy and over the recent years the country discovered crucial natural resources, which China massively needs."
Mongolia overtook Qatar as the fastest growing economy with an estimated 30 percent growth in 2013. Despite the slowdown in China, inevitably, he noted that Mongolia being a very low-cost producer compared to Canada or Brazil is well positioned to be the commodity producer for China.
Mongolia has a stock exchange with a consistent growth of 4 percent over the last three years. "The Mongolian financial assets will outperform China simply because these natural resources will triple, or even quadruple the GDP."
"Saudi Arabia is one of the few countries having a vast investment capacity, especially in infrastructure, education, health and transport despite the current depression in the global economy," Senior Investment Manager of Dubai-based ING Investment Management Fadi Al-Said said. He added that the incentives offered by the Saudi government for foreign direct investment (FDI) are very attractive and investors are positive that similar features will be forthcoming when investing in the Saudi stock market too.
Saudi Basic Industries Corporation's (SABIC's) Chief Financial Officer Mutlaq Hamad Al-Murshid said the conference was ideal for members of the private sector to interact with their counterparts from the world over. "It would have taken more time to travel to respective countries to meet these people, Euromoney has brought people together on a common platform to know each another's products and services from various parts of the globe," he said.
Managing Director For Middle East for Russell Investments Jim Leggate said Saudi Arabia is a great opportunity for emerging markets because of its enhanced fiscal policy and also due to its diversified opportunities in the stock market.
Senior Investment Manager of the Oman Brunei Investment Company in Muscat Shahram Hashemi said the Saudi investment market was booming and his company continued to explore new opportunities.
Richard Banks, director of emerging markets of the Euromoney conference, said the presence of delegates from large economies such as the United States, Japan and China at the conference bears eloquent testimony to the success of the whole program. "This was the most successful Euromoney conference we ever had in the Kingdom," he said wrapping up the two-day event.
During an interview conducted by Christopher Garnett, director of Euromoney Conference, Deputy Director General of the Ministry of Finance of Japan Chikahisa Sumi and Undersecretary for Domestic Finance of the United States Mary John Miller, agreed that their most challenging task was to keep investors not only interested but, more importantly, reassure and instill confidence in investors to take appropriate risks.
Miller says part of rebuilding markets next to efficient long-term plans remains in ensuring liquidity in the markets that doesn't drop and that can only be done by reassuring investors. Adding to this comment, Sumi said that investors are also voters, and the voters should not lose faith in the government. In Japan 40 percent of government projects are handled by financial institutions.
Sumi said Japan intended to issue roughly 150 billion yen treasury bills for reconstruction projects following last year's earthquake, which needs funding. Japan is committed to achieve lowering their deficit and reaching a balance by 2020 by gradually issuing less expensive debts, Sumi said.
On the sidelines of the conference, Miller said the current fall in the price of the US treasury bonds is temporary and could be attributed to the crisis in the European economy and its negative impact on the world economy.
It was normal the US treasury bonds received poor turnout in light of the current situation.
On the monetary easing policy planned by her government, she said the plan is aimed to stimulate the national economy, particularly the private sector firms, and will continue to pursue as long as this situation continues. "No immediate plans exist to change the volume of bonds issuance but slight changes are possible depending on the progress of the economy during the coming period," she added.
Regarding the Saudi economy, the US official said they were interested in investments in the Kingdom and also in the government's plans to encourage SMEs, which would create employment opportunities for the Saudi workforce.
"The Kingdom's open market policy is a positive sign for rapid growth in its economy," she added.
"Saudi Arabia has been spending a lot of money in the country, public spending has doubled between 2007 and 2012; and between 2004 and 2012, spending has tripled and this trend will continue. This is sustainable because the debt is very low and the reserve accumulated is very high. If there is no money coming from oil for the next two years the country can still fund its expenditures," Samir Assaf, chief executive officer, global banking and markets, HSBC, said. He added that Saudi Arabia is investing in physical infrastructure and in education as well.
Ali Al-Barrak, president and chief executive officer of Saudi Electricity Company (SEC), said the power expansion over the last five years will continue for next 10 ten years. "The process starts by forecasting economic development, population growth, spot loads, and environment and climate changes. This will help us decide on the capacity needed for the future before we plan for the project. Once decided, it will move toward the EPC or IPP program."
Today, he said the SEC has more than 15,000 megawatts capacity in development, and in the coming years SEC is planning for another 35,000 megawatts capacity, which is almost more than 60-70 percent of the current capacity. The Investment needed is about $60 billion for the next 10 years, he added.
Regarding the issuance of Islamic bonds, Al-Barrak recalled that 10 years ago, SEC used conventional financing, and in 2008 it discovered sukuk as a better tool and had its first issuance followed by the second issuance. "We also looked at international markets for longer maturity and establishing a benchmark for Saudi companies without any sovereign guarantee and it was very successful. Capital markets will continue to be our main financing model in the future."
Regarding the ongoing Saudization program, Al-Barrak said his company had a comprehensive program. Every year, he added, SEC recruits 12,000 high school graduates and enrolls them on a two-year program in its four institutions. On completion of the course, the graduates are given on-the-job training for two additional years and subsequently they become permanent SEC employees. "Today, we have more than 87 percent Saudi workers and are looking forward to reach a target of 90 percent during the next 10 years," he said.
Faisal Al-Sugair, vice president, General Authority of Civil Aviation (GACA), said GACA issued the first major sovereign sukuk in the Kingdom, which was very successful and oversubscribed. He said that during the issuance of sukuk, there was some foreign interest but GACA focused on Saudi investors to bring confidence into the local market. "The market had enough liquidity; it was three times oversubscribed," he added.