SHUNEH, Jordan, 22 May 2005 — Arab countries must undertake painful economic reforms at a much faster rate in a bid to catch up with the rest of the world, experts and business leaders told the World Economic Forum yesterday. “Recent movements toward reform must be deepened and accelerated,” Peter Brabeck-Letmathe, co-chair of the WEF in Jordan, told a panel discussion.
“The question is not whether the region is changing, but whether it is changing fast enough to keep up with its competitors elsewhere in the world,” he said.
Brabeck-Letmathe said it is alarming that the population of the MENA (Middle East and North Africa) region is expected to double in 30 years, but is currently receiving just one percent of global foreign direct investments.
The CEO of National Bank of Kuwait (NBK), Ibrahim Dabdoub, told another panel that the size of Arab economies as a whole is between $650 billion to $700 billion, the size of Spain’s gross domestic product.
Over the past year, a group of business leaders, economists and development specialists have prepared a concrete program for “Vision 2010” for economic reforms in the Arab world.
Sean Cleary, managing director, Strategic Concepts, South Africa, said the Vision 2010 agenda sets extremely ambitious goals in four broad areas: Privatization, free trade, labor reform and developing the business environment. “The objective is to integrate the region into the global economy by encouraging specialization, entrepreneurship and support education,” he said.
Based on the program, the region should be able to achieve economic growth rates of six to seven percent per year.
But the minister of economy and planning of the United Arab Emirates, Sheikha Lubna Al-Qasimi, said achieving that would require “painful changes, reforms which have proven difficult to achieve,” even during good times.
“I am cautiously optimistic, but five years is not enough to catch up with the train” of global reforms, she said. Speakers insisted, however, that no reforms can be successful without popular support.
“Unless regional populations see tangible benefits from liberalization, they may be influenced by those who regard economic reform as code words for the Westernization, or worse, the Americanization of the region,” said Mohammed ibn Aa-Zubair, economic adviser to the sultan of Oman.
Dabdoub told AFP that Arab countries, where almost half of the population is under the age of 25, currently have some 60 million jobless people. Within two decades, the number is expected to grow to 80-100 million.
“Economic reforms are inevitable for Arab countries to compete and to avoid certain crises. Reforms need the political will in the first place and liberalization,” he said.
The CEO of Dubai Holding, Mohammad Al-Gergawi, sounded more optimistic. “Some see 100 million unemployed workers, I see 100 million potential opportunities,” he said.
The second Arab Competitveness report, released last month, showed that the region’s countries are lagging far behind most of the rest of the world, including other developing countries.
The report shows that real growth rates in most Arab countries are “some 10 times lower than those of China and India.”
“Among factors of improvement are the regulatory environment — bureaucracy and red tape is a very serious problem across the region,” it said.
