INTERVIEW: World Economic Forum brings a touch of Davos to Saudi Arabia

(Illustration by Luis Grañena)
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Updated 17 February 2020

INTERVIEW: World Economic Forum brings a touch of Davos to Saudi Arabia

  • Based on the 2030 strategy in Saudi Arabia, there are a lot of trailblazers in innovation and technology

Børge Brende, president of the World Economic Forum (WEF), brought a little flavor of Davos to Saudi Arabia last week. And it was not just that the overnight temperature in the Saudi capital fell to a low of 2 degrees Celsius — only marginally warmer than the Swiss town that hosted the annual gathering of the global elite last month.

It was also the buzz in the lobby of the Four Seasons hotel in Kingdom Tower in Riyadh, which will be the venue for the first-ever regional meeting of WEF to be held in Saudi Arabia. All that was missing was the clatter of snow spikes and the tinkle of Alpine cow bells.

“I’ve brought Davos weather with me,” said the 54-year-old Norwegian, who has been WEF president since 2017, after a ministerial-level career in his country’s government, including a stint as foreign minister. Brende was leading the WEF advance party tasked with agreeing the final details of the meeting, scheduled to be held in early April with around 600 official delegates and speakers as well as a substantial entourage of aides, observers and media.

It will be a big event in what promises to be a busy year for the Kingdom, which will culminate in the G20 Summit of global leaders in November. Preparations for that event — the first time a G20 Summit has been held in the Middle East — are well underway, and the WEF meeting could be seen as an essential trial run for the G20 extravaganza.

The decision to stage the event in Saudi Arabia was announced at a plenary session that Brende moderated with some of the leading policymakers from the Kingdom at Davos in January. Why was Riyadh chosen this time for an event that the WEF has previously staged in Jordan, Egypt and the UAE?

“Saudi Arabia is the first country in the Arab world to hold the G20 presidency, so that merits a lot of focus this year,” Brende said. “We also know that Saudi Arabia is the largest economy in the region, and among our members and partners there’s a lot of interest now to see how the G20 agenda can also reflect the industrial changes we’re faced with through the Fourth Industrial Revolution.”

That concept — abbreviated to 4IR — has been pioneered by WEF founder Klaus Schwab to describe the huge technology-driven changes underway in the global economy and society as information technology and digital communications come together to affect the lives of everyone on the planet.

Technological innovation has been eagerly embraced by the Kingdom’s policymakers as part of the Vision 2030 strategy to diversify its economy away from oil dependency and boost the job-creating potential of the private sector.

Brende suggests there is a challenge of perceptions with regard to rapid economic change in the region. “In the Middle East, you’re faced with two kinds of realities at the same time. It’s one of the youngest populations in the world, and there’s a lot of innovation underway — entrepreneurship and startups. But at the same time there are a lot of conflicts and proxy wars going on in the region,” he said.

“So there are two realities, but we’ll focus mainly on the opportunities. For example, we’ll have 50 startups from the Middle East attending the Riyadh meeting. We want to showcase the silver linings that are there and all the dynamic startups in the region,” he added.

“One of the challenges is that a lot of the media focus on the region is on polarization and proxy conflicts, but we’d also like to underline that based on the 2030 strategy in Saudi Arabia, there are a lot of interesting trailblazers in innovation and technology.”


BIO

BORN: Norway, 1965

EDUCATION: Norwegian University of Science and Technology

CAREER

  • Member of Norwegian Parliament
  • Environment minister
  • Trade and industry minister
  • Foreign minister
  • Secretary-general, Norwegian Red Cross
  • President, World Economic Forum

WEF is not primarily a peace-making or conflict-resolution forum, but its mission statement — “committed to improving the state of the world” — implies an interest in bringing opponents together in some kind of reconciliation. Does Brende see any possibility of resolution to some of the region’s apparently intractable antagonisms from the April meeting?

“I hope that there will be enhanced dialogue in the region, and also with all the young people coming — global shapers and leaders, the startups — there will be inspiration to other countries that will be participating. There are so many opportunities in the region that aren’t sufficiently capitalized on,” he said.

However, Brende does not believe that Iran will be present at the event. “There’s no plan currently to have Iran in Saudi Arabia,” he said. Israel is also unlikely to attend. Brende does not anticipate any problem with Qatari involvement in the meeting, despite the continuing standoff with the Kingdom. “I’ve seen that there are initiatives to improve the relationship with Qatar, and will be discussing that while I’m here,” he said.

Big delegations are expected from all G20 members, with strong participation from European, North American and Asian countries. They will gather at a crucial time for the global economy. “We’re facing a situation of slowing growth, so there has to be a real strategy on how to avoid recession. We think that technology investment is a good way to increase future competitiveness,” Brende said.

But he expressed about the economic implications of the coronavirus outbreak in China, which is certain to impact growth and — significantly for the Kingdom — will reduce demand for oil. “China, the second-largest economy in the world, is growing at the lowest rate of growth for 30 years, and is also struggling with the coronavirus. We at WEF are vigilant and following the situation,” Brende added. 

The meeting will focus on six main “platforms,” each of which has big implications for Saudi Arabia, the Middle East and North Africa (MENA): Employment, training and skills; financial inclusion; energy transformation; urbanization and smart cities; environmental issues; and the growth-enhancing potential of the 4IR.

“As one of the youngest regions in the world, millions of new jobs have to be created every year, and that’s a question of addressing the huge skill gap which exists. We’re trying to do this via the skills ‘accelerator’ that the forum has launched,” Brende said.

“We’re looking at a billion new and reskilled jobs by 2030 in cooperation with the private sector, and we’re also setting up a center for the 4IR in Riyadh. The new technologies give the opportunity for many countries that were maybe not the winners of previous industrial revolutions to leapfrog in development.” G20 education ministers will be form a large contingent at the MENA meeting to address these issues, Brende said.

Energy will be a major item on the April agenda. It will discuss what policies are needed to ensure that the transition from fossil fuels does not impact the macroeconomic environment of countries, such as Saudi Arabia and others in the Arabian Gulf, that still depend on hydrocarbons. 

It will also examine the sensitive issue of government subsidies. Along with other regional economies with a big public sector, Saudi Arabia has sought to pare back subsidies in energy, water and food. The WEF meeting in Riyadh will debate what safety nets need to be in place to ensure that vulnerable segments of populations remain protected.

Brende welcomes the relaxation of travel restrictions in the Kingdom, such as the introduction of electronic visas, and hopes to see a big female involvement in the April meeting.

The Davos annual meeting has been criticized in the past for the comparatively low level of women attending as delegates, with some 24 percent at last January’s event. “That’s about the same level as in government and private business, but we’d like to have gender parity. If we can get better than that in Riyadh, it would be great,” he said.

Senior policymakers in the Kingdom have given the event their “full endorsement,” he added, and while in Saudi Arabia he met with Crown Prince Mohammed bin Salman. “We want to underline that the 4IR is a huge opportunity, not a threat, for the Middle East. The region has shown it can deal with conflict and still achieve economic growth. It’s resilient. We hope the meeting will underline how the visions of growth and inclusion win out over conflict and polarization,” Brende said.


Economic boost tipped after UAE company ‘game-changer’

Updated 25 November 2020

Economic boost tipped after UAE company ‘game-changer’

  • Dramatic overhaul of corporate ownership laws follows accelerated reforms to shrug off pandemic slowdown

DUBAI: Radical changes to corporate ownership and investment laws could provide a significant boost to the UAE as it seeks to emerge from the ravages of the coronavirus pandemic lockdowns, business experts told Arab News.

The Emirati authorities have announced a raft of changes that relax restrictions on foreign ownership and make it easier for international businesses to set up and operate in the UAE, as well as new rules that will allow more shares to be listed on the country’s stock exchanges.

Economics expert Nasser Saidi said: “The liberalization of foreign ownership laws breaks down major barriers to the right of establishment. The reform is a game-changer.”

Tarek Fadlallah, CEO of Nomura Asset Management in the Middle East, said: “I would like to see some more detail, but if the deal is that you can leave London or New York and set up easily in the UAE, it’s revolutionary in regional terms.”

The changes were announced in the form of a presidential decree. “Maybe it’s pandemic related, but everything the UAE authorities have done this year has been extremely positive for the business and financial environment,” Fadlallah added.

Under the changes, companies seeking to quote shares on UAE markets will be able to list up to 70 percent of their shares, a big jump from the previous 30 percent limit, in a move that could reinvigorate local stock markets.

“It will encourage foreign direct investment, but also lead to a recapitalization of jointly owned companies and encourage entrepreneurs to invest in businesses and new ventures. Importantly, it will encourage the retention of savings in the UAE,” Saidi added.

The most eye-catching of the planned changes is the move to allow foreign firms to set up outside free zones without the requirement for a majority Emirati shareholder or agent.

The new set-up will in theory open the way for full foreign ownership throughout the UAE, although the Emirati authorities have been pragmatic in the past in their efforts to attract big-name foreigners. Apple was allowed full foreign ownership when it set up its first store in the country five years ago. 

Pandemic restrictions have hit an already sluggish UAE economy. (AFP)

More foreign firms setting up onshore could be seen as a threat for the free-zone model that has been one of the driving forces behind the UAE’s rise to become the regional business hub.

Habib Al-Mulla, executive chairman of Baker & McKenzie Habib Al-Mulla law firm, said: “Free zones will now face a real challenge. They either come up with a new package of incentives or their role ends.”

Other proposed changes also represent a break from the traditional business culture in the region. Rules that required a company chairperson to be an Emirati national, and for company boards to have an Emirati majority, have also been removed.

In addition, the decree allows for the dismissal of a chairman or any other board member if a judicial judgment is issued against them for committing fraud or misuse of power, while enabling stakeholders to sue a company in civil court over any failure of duty that results in damages.

Electronic voting will also be allowed at shareholder meetings, in a departure from the requirement for a physical show of hands.

“The decree is reflective of the UAE’s forward-looking vision to open up its economy by creating a favorable legislative environment that will keep pace with the changes taking place across the global economy and supporting companies operating in the country,” the official UAE news agency, WAM, said.

Some sectors regarded as of strategic importance — such as energy, utilities, and government-owned businesses — will be exempt from the new rules, and there is a certain amount of discretion given to local authorities in setting rules regarding Emirati directors and determining fees and charges payable under the new regulations.

This week’s changes are the latest in a series of reforms that have been accelerated in the UAE since the COVID-19 pandemic recession struck an already sluggish business scene.

New rules on residency visas have been introduced to alleviate problems in the real estate market, especially in Dubai, as well as a range of changes to social and lifestyle reforms.

“Along with the change in visa regulations, the new reforms will boost the UAE’s growth prospects,” Saidi said.

Ziad Daoud, Dubai-based chief emerging markets economist at Bloomberg, said: “Diversifying stock markets away from oil requires attracting foreign investment as well as fixing the distorted labor market. Most other measures are cosmetic. We’ll see how they are implemented, but the initial assessment of the new regulations is positive.”