Saudi Arabia has made tremendous progress in carrying out political and economic reforms. The reforms will enhance citizens’ political participation in the decision-making process, boost economic growth, increase foreign investment, expand employment opportunities and strengthen the country’s international reputation.
Plans to hold municipal elections from February into April next year, the decision to privatize 20 major state-owned enterprises, the opening up of the telecom sector by awarding the second GSM license to a consortium led by the UAE’s Etisalat and improving foreign investment laws were some of the major reforms introduced by the country in the past few years.
Riyadh’s efforts to win a seat on the World Trade Organization (WTO) have made remarkable headway and the Kingdom is likely to become a WTO member soon. Saudi Arabia has been updating and modernizing its academic curricula in its bid to cope with the modern world and also achieve scientific and technological progress.
In his recent address to the Shoura Council’s annual session, Custodian of the Two Holy Mosques King Fahd said: “Saudi Arabia is pressing ahead on the path of development and modernization in a manner compatible with the interests of its people, its needs, its specifics, its Arab identity and Shariah.”
In 1992, King Fahd introduced three important political reforms — the Consultative Council (Majlis Al-Shoura), the Regional Consultative Councils and the Basic Law of Governance — as part of his efforts to modernize government and enhance public participation in governance. King Fahd approved amendments to Articles 17 and 23 of the Shoura System on Nov. 29, 2003 granting the advisory body the power to propose new bills or amendments to regulations in force and debate the proposals without prior approval from the king.
The announcement on Oct. 13, 2003 by King Fahd that civic elections would be held was a turning point in the Kingdom’s history. The polls, aimed at selecting half the members of 178 municipal councils in the Kingdom’s 13 regions, are to ensure that citizens have a greater voice in local affairs.
Human Rights Watchdog: The formation of the National Society for Human Rights on March 9, 2004 has been another significant development. “The NSHR’s main task will be the protection of human rights,” said Dr. Abdullah Al-Obaid, chairman of the society. The Riyadh-based organization, he said, would work in accordance with Shariah and the country’s Basic Governing System.
During the past six months, the society has received nearly 400 complaints related to labor, administration, jail, finance, crime and family, a report issued by NSHR said, adding that government was a party in 70 of these cases.
The Kingdom has passed several important regulations in order to ensure a fair and balanced judicial system. In September 2001, it passed the Law of Procedure Before Shariah Courts which regulate the rights of defendants and legal procedures. In addition to granting defendants the right to legal representation, the law also outlines the processes by which pleas, evidence and experts are accepted by the court.
The Code of Law Practice, which went into effect in January 2002, outlines the specific requirements necessary for becoming an attorney, including education, registration and admission to the courts as well as licensing. The law also defines the duties and rights of lawyers, including the right of attorney-client privilege.
The 225-article Criminal Procedure Law was passed in May 2002 to regulate the rights of defendants and suspects before the courts and the police. The law protects a defendant’s rights with regard to interrogation, investigation, and imprisonment. It also outlines a series of regulations that justice and law enforcement authorities must follow during all stages of the judicial process, from arrest and interrogation, to trial and the carrying out of verdicts and sentences.
Empowerment of Women: In his address to the Shoura Council, King Fahd highlighted the role of women in economic and social development, saying the state would work to empower women and broaden their participation in the country’s development process by providing more jobs and ensuring they played a more active role in public affairs.
The Cabinet recently approved a nine-point plan for creating more job and business opportunities for women. It instructed government departments to license women’s businesses “in accordance with the rules and Shariah teachings.” Government departments serving women must open women’s sections within a year. Women’s committees will be set up in chambers of commerce and industry to encourage the creation of new businesses and jobs for women.
The Cabinet also instructed authorities to allocate public land for women-only industrial areas. The Manpower Development Fund was instructed to focus on the training and employment of Saudi women while the Labor Ministry was asked to coordinate with the ministries of civil service and social affairs to help women work from home. The Cabinet told the Labor Ministry to develop a full-fledged national plan for a female work force within a year.
The Saudi Journalists Association elected its first board of directors on June 7, 2004. The nine-member board includes two women: Nawal Al-Rashed, head of the women’s department at Al-Riyadh newspaper, and Nahid Bashateh, a journalist, also at Al-Riyadh. More than 300 journalists took part in the election. The association was set up on Feb. 24, 2003 to protect the rights of journalists in the Kingdom and coordinate their relations with the media establishment.
Alarmed by a swelling unemployment rate because of a sharp increase in graduates, Saudi Arabia has announced a set of measures over the past few years aimed at the gradual replacement of the foreign work force that has dominated the labor market for decades. Unemployment in Saudi Arabia is officially estimated at less than 10 percent which experts have blamed on rapid population increases, a slow growth in the economy, the lack of foreign investment and too much reliance on expatriates.
Saudi Arabia has made substantial progress in its bid to win World Trade Organization membership. Dr. Fawaz Al-Alamy, deputy commerce and industry minister, has reported that negotiations with Washington have reached advanced stages.
Economic Reforms: The Council of Ministers passed the Saudi Arabian Capital Markets Law on June 16, 2003 in order to strengthen the economy and increase the participation of Saudi citizens in capital markets. The Saudi Arabian Securities and Exchange Commission (SASEC) will be established to protect investor interests, ensure fair business, promote and develop the capital market, license brokers and offer securities to the public.
On June 9, 2003, the Cabinet passed the Copyright Law, a 28-article document that meets the requirements of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The law protects intellectual property, including print publications, lectures, audio recordings and visual displays as well as computer programs and works of art. The Kingdom has also joined the Universal Copyright Convention and the Bern Convention for the Protection of Literary and Artistic Works which protects intellectual property.
The government slashed customs duties to 5 percent for goods formerly charged between seven and 12 percent and got in line with the GCC Customs Union, which was established on Jan. 1, 2003 to standardize customs duties in the six GCC countries.
The Kingdom has established a number of agencies to help implement economic reform. The Supreme Economic Council (SEC), set up in August 1999, evaluates economic, industrial, agricultural and labor policies to assess their effectiveness. Privatization efforts have gained ground since the creation of the SEC which is chaired by Crown Prince Abdullah.
The Supreme Council for Petroleum and Minerals (SCPM), set up in January 2000, is responsible for policymaking concerning the exploitation of petroleum, gas and other hydrocarbons. The SCPM passed the Gas Initiative in order to develop natural gas fields, pipelines and petrochemical projects in cooperation with either national or international companies.
The Supreme Commission of Tourism was established in April 2000 to aid growth in the tourism sector and encourage private investment in it.
In April 2000, the Saudi Arabian General Investment Authority (SAGIA) was set up to promote foreign investment and serve the business community as a one-stop shop for licenses, permits and other required paperwork. The Foreign Investment Law passed in 2000 included property ownership rights for foreign investors as well as reduced tax rates for businesses. The investment law protects foreign investors from confiscation of property without a court order or expropriation of property, except for public interest, against an equitable compensation. In August 2002, SAGIA passed an amendment to the Executive Rules of the Foreign Investment Act strengthening the legal framework, allowing foreigners to own land and avoid double taxation.
On Jan. 12, 2004, the Cabinet cut income tax on foreign investors from 45 to 20 percent in a move designed to attract badly needed foreign capital and strengthen the economy. Companies set up with capital from non-Saudi shareholders and non-Saudi residents doing business in the Kingdom will be taxed under the law. It will also be imposed on non-resident individuals who have a taxable income from the Kingdom’s resources as well as on investors in gas projects, set at 30 percent, and those in the oil and hydrocarbon sectors at 85 percent.
The Council of Saudi Chambers of Commerce and Industry represents the regional chambers at both national and international levels. It monitors and researches economic issues, helps encourage economic growth, organizes seminars and conferences both within the Kingdom and abroad, and creates foreign investment opportunities through trade missions to other nations. In addition, the council’s work has resulted in the issuing of new regulations that allow foreign businessmen, investors and representatives of foreign firms to acquire entry visas to the Kingdom without having to consult the Foreign Ministry.
Privatization: In November 2002, the Kingdom announced plans to privatize many vital economic sectors. The SEC has taken overall charge of the program, specifying the sectors to be privatized and setting out a strategic plan and timetable for privatization. Sectors open to privatization include: Telecommunications, civil aviation, desalination, highway management, railways, sports clubs, health services, government hotels, municipal services, education services, operation and management of social service centers, Saudi employment services, agricultural services, construction and management of abattoirs, public parks and recreation centers and cleaning and waste collection.
The Cabinet awarded the second mobile phone license to Etisalat Consortium on Aug. 9, 2004 as the consortium offered a bid of SR12.21 billion to win the highly prized license, beating major international contenders such as Vodafone of Britain, Bouygues of France, Telefonica Moviles of Spain and MTN of South Africa. The Cabinet also licensed Etisalat for SR753.75 million to establish and operate the third generation mobile phone network with 3G technology.
