Experts have renewed calls for the creation of an authority for small and medium enterprises (SMEs) in the Kingdom in a bid to curb the cover-up business.
The experts, speaking to Al-Riyadh daily, stressed the need to raise share of the SME firms to the gross domestic product (GDP) that currently stands at 28 percent to 32 percent which, they said, is much lower than the international rates of 60 percent to 80 percent.
They called for the speedy establishment of the authority, which was earlier proposed and originally meant to save the SME companies from bankruptcy, and the need to provide required funding to keep them growing.
Financial expert Walid Al-Sibaei said in certain countries like America and China SME firms absorb 70 percent of the workforce compared to just 10 percent in the Saudi labor market. This figure gives strong indications on how the SME sector is suffering where many of them had already exited the market for pressures exercised by the Ministry of Labor's programs.
He said bankruptcy of the SME firms does not serve the national economy and will create enormous economic problems and, further, benefit foreign workers who are mushrooming under the cover-up business.
The volume of cover-up business in the Kingdom is estimated at SR236.5 billion or 16.78 percent of the Kingdom’s GDP, which reflects the severity of the problem and transfer of such big amount to abroad illegally, he said.
Economic analyst Naif Al-Eid said there are about 800,000 businesses of which 92 percent are owned by men and the remaining 8 percent by women. The SME sector in the Kingdom creates 9 percent of jobs, which is much lower than the international rates that are ranging 55-75 percent of the available jobs in the markets, he said.
He called for the speedy creation of the proposed authority, which could save the SME firms from possible bankruptcy and minimize jobless rate that currently stands at nearly 12 percent.
In June 2012, the Shoura Council approved a set of draft regulations for a separate authority for SMEs.
The proposed authority would not only improve the Saudi economy but also provide a substantial number of job opportunities for the unemployed youths in the Kingdom, the council was told at the time.
In May 2013, an international forum on the SMEs was held in Riyadh, which highlighted the SME’s leading role in achieving balanced development in the Kingdom.
The forum, organized by the Saudi Industrial Development Fund — Kafalah Program, and Saudi Credit and Saving Bank in cooperation with Al-Iktissad Wal-Aamal, explored the role of banks, private sector and big companies in supporting the sector and initiatives targeting it. It also showcased success stories of young Saudi entrepreneurs in this regard.
Experts call for speedy creation of SME authority to curb cover-up business
