DAMMAM, 4 June — While international e-commerce is moving to the trillion-dollar level, in the Gulf it has not even reached its infancy. The Saudi International Conference and Exhibition for E-Commerce, held in May last year in Riyadh, gave some hope that the region had awakened to new market requirements and that it had chosen digital transformation of the market. It was announced at the conference that a new e-commerce law would soon be enacted.
Deputy Minister of Commerce Dr. Fawaz Al-Alamy said that the regulations were being produced from scratch. "We are relying on the provisions of the UN Committee on International Trade Law which will be in conformity with the Shariah." A five-member committee was set up to formulate the new regulations. A master plan was developed including 10 objectives. The main emphasis was to be on planning and development of the King Abdul Aziz City for Science and Technology’s infrastructure, development of a framework for payment and delivery through Saudi Arabian Monetary Agency (SAMA) and development of the Saudi Telecom Company infrastructure for conducting transactions. The deputy minister announced that implementation would be under way within six months.
Now a full year later, no regulations have been announced. Nor is there any report about anything. Such delays will invariably widen the gap between the Gulf and other developed countries which have long been using the digital economy.
Haitham AboAisha, general manager of Sahara Network, a leading Internet service provider in the Eastern Province, blames the failures and lack of coordination on banks, KACST and STC. "In the absence of local regulations, e-commerce cannot flourish. In order to make e-commerce popular, Internet prices must come down. Unless Internet reaches ordinary people, the whole idea of e-commerce is defeated," he said.
AboAisha said the Kingdom’s ISP rates were still among the highest in the world and that STC’s charges of SR3.50 an hour are absolutely the highest in the world. "This is the reason that market penetration in the Kingdom is so low." In comparison, he said, the United Arab Emirates is top in the Arab world with 25 percent of the population online. Bahrain follows with 20 percent online and in Qatar about 12 percent use the Net. In Saudi Arabia, some four percent of a population of 21 million is online. AboAisha said that unless telephone charges were slashed by more than 60 percent, market penetration will remain below average. "How will a user react when it costs SR3.50 to access the Internet to buy something for SR10?" He blamed lack of coordination between STC and KACST as the main obstacle to e-commerce. "It appears each is going its own way without any coordination."
Khaled Al-Mulhiem, president of STC, has announced that 2003 will be the year of reduction. AboAisha and other ISPs in the region hope that STC will bring down Internet phone charges to SR1 per hour. "Even a 50 percent reduction in STC rates will be a big help in penetrating the market." If this happens then there is a ray of hope for the future of the Internet in general and for e-commerce in particular.
There is no doubt that the keys are in the hands of three main players: STC responsible for the telephone, KACST responsible for the Internet and SAMA responsible for the necessary financial mechanisms.
In the midst of this pessimism, a silver lining appeared last week from an unexpected quarter — the Federation of GCC Chambers of Commerce. It announced that SouqAlKhaleej.net — a GCC electronic marketplace — will be officially launched in October of this year. Muhammad Abdulla Al-Mulla, the secretary-general of the federation, said, "SouqAlKhaleej.net is the first project of its kind in the region and is a major initiative to enhance economic prosperity in the GCC countries." The project, undertaken with leading international partners, consists of four primary services: Authentication, electronic document transfer, information service and business opportunities.
One of the main benefits will be the ability of the federation to deliver the service to 500,000 companies in 30 different chambers under a single official umbrella organization.
In addition, the banking sector is taking measures aimed at digital transformation. A survey of Saudi banks by Accenture, a leading international consultant, is under way in order to evaluate e-commerce capabilities.
It would be unfair to say there is total stagnation on the e-commerce front. At the same time, haphazard planning without coordination between the main players will lead to no where. To quote AboAisha, it will be "e-commerce without the e."
The Internet must reach down to the grassroots and that means prices have to be cut drastically. The gap between the Kingdom and developed countries with established e-commerce widens every day. If the process is not accelerated, the gap will grow wider and progressively more difficult to bridge. The time for studies and feasibility reports is over. What is needed at once is immediate action and almost immediate implementation.
