JEDDAH, 4 March 2003 — The development of small and medium enterprises (SMEs) holds real potential, according to a top Saudi business leader. “After all, small and medium businesses constitute 80 percent of the non-oil economy, and the chambers of commerce have a crucial role over the next four years as the vehicle by which support for privatization is delivered,” Jeddah Chamber of Commerce and Industry Chairman Abdullah Zainal Alireza on Saturday told a meeting of businessmen Organized by Cercle d’Affaires Francais de Jeddah (CAFDA), an organization of Saudi-French businessmen.
Alireza said in the last decade, there had been a distinct change of approach in handling the economy.
“There has been a mind-shift in the leadership, a move toward diversification,” he said, “In order to capitalize on this shift, we’ve to diversify away from the traditional oil-based economy and develop the private sector. And this is where SMEs can play a big part,” he said.
Alireza reviewed the many threats that the Kingdom had faced in the last 20 years, ranging from war to economic instability. “We may have to live with war,” he said, referring to a possible US-led war in Iraq, “but we also have to hope it is not inevitable. Threats come and go. We’ve been asked this time to support a war that has a just cause in response to what is not an ordinary threat.”
He added he was optimistic about the future of the region. “We’ll survive. (The region) has the potential to do so within its people.”
Alireza defined the Kingdom’s comparative advantage over other industrial countries.
“We cannot compete by producing cheap goods that are already on the world market, and neither should we manufacture just for the sake of production as we did in the 1970’s.”
The economy should diversify away from selling crude oil and gas as products and use them to generate electricity very inexpensively. In other words, the Kingdom required a mind-shift from oil to energy.
Availability of cheap energy together with a young and educated work force would make the Kingdom attractive for incoming manufacturers and local start-up industries. It should be marketed as an energy provider. The diversity of industry would then stem from the variety of incoming and start-up industries and be encouraged with an accelerated program of privatization, he added.
“We’ve to compete in areas where we have the competitive advantage. We have that in our domestic oil prices. Our advantage compared with other countries is that we can produce very cheap energy for industry,” he said, adding: “The Kingdom’s vast reserves of oil and gas will underpin the movement of the economy away from dependence on them as a product and render them more important as a saleable source of energy.”
