PRINCE Mohammed ibn Khaled Abdullah Al-Faisal, president of the Al-Faisaliah Group, has called for eliminating bureaucracy from government and public-sector organizations as part of a strategy to kick-start economic reforms and overcome the challenges of international competition.
“The economic restructuring program has largely been fine-tuned over the past decade by the Supreme Economic Council and approved by the Shoura Council and the Council of Ministers. What we need is to focus more on the execution of the program in the most appropriate manner,” Prince Mohammed told Arab News in an exclusive interview on the occasion of the Kingdom’s National Day.
The prince observed that the bureaucratic overkill had created a situation in which Saudi capital was either being invested in the stock market or the real estate, which in his view are due to the ease in investing in these sectors, while small and medium enterprises (SMEs), which create jobs, are being starved of funds. According to recent reports, the market capitalization of the Kingdom’s stock market had reached SR1.94 trillion in the first half of this year, while total investments in 53 real estate enterprises had crossed SR14 billion during the same period.
In reply to a question on what more needs to be done to further liberalize the economy to attract overseas investments, he said: “Our challenge, as we move forward, is less on the need for a legislative framework that has largely been done. Our challenge lies in executing what we have already legislated and in ensuring that all responsible civil service organizations are handling these reforms as one project, and working together as a team toward achieving it. The biggest challenge is the need for streamlining the public sector and tackling the bureaucracy.”
The prince said much remains to be done in revamping the civil service machinery and public sector organizations in order to eliminate bureaucratic hurdles and streamline their performance. He pointed out that the Saudi Arabian General Investment Authority, the Supreme Commission for Tourism (SCT) and the Communication and Information Technology Commission (CITC) are working closely with various ministries as part of their efforts to iron out kinks in the system, and tear down the barriers that have hamstrung the flow of FDI into the Kingdom.
A glacial-moving bureaucracy has been recognized as an obstacle on the path of FDI. “A lot more needs to be done in terms of motivating government employees and make short shrift of red-tapism,” he observed.
Al-Faisaliah Group’s president said the current economic environment presents both challenges and opportunities. “It presents an opportunity for repatriating funds from abroad and investing them in productive channels at home. It opens up avenues for the transfer of technology for foreign direct knowledge. More importantly, it will help in the development of the Saudi manpower.”
He said financial resources were not a problem. The problem was how to make use of the resources in the best national interest, how to invest these resources in areas that create value-added jobs. “There is an excellent opportunity for training young Saudis in the knowledge industry, which should be given incentives in the form of tax breaks.”
Prince Mohammed said that apart from such incentives, it was equally important to create an environment that is conducive to profitable growth. “Companies working on tight profit margins cannot afford to hire qualified and competent Saudi manpower and train them. It is important to develop the software industry, the energy industry and the service industry by taking advantage of the Kingdom’s competitive strength, as these businesses are not commodity industries and allow more Saudis to the workforce.”
On the Saudi-US bilateral agreement and the clause relating to Israel, Prince Mohammed said that as he understood the clause relates to the lifting of secondary and tertiary boycott of companies dealing with Israel — a requirement already fulfilled by a Cabinet decision announced early this year. It has nothing to do with the primary boycott of Israeli products. That regulation is still in place. A similar explanation was offered by Minister of Commerce and Industry Dr. Hashim Yamani.
On the question of Saudization and whether it could pose problems for the private sector in the face of stiff international competition, he replied: “In the short term, most definitely, simply because the availability in numbers of the well-prepared Saudis…is still weak. In the long term, I think, there are many factors. Do we have young Saudis who are qualified to be able to handle the job — both in terms of price and productivity? What can be done that those young Saudis are available? It’s important to remember that this is not just a challenge for the Labor Ministry. Other ministries and organizations have to live up to their responsibilities.”
He said that government organizations that are tasked with the responsibility, such as the Ministry of Education, the Ministry of Higher Education and the Presidency of Youth Welfare, have to shoulder their responsibilities for the quality and marketability of their output. “You cannot expect the Ministry of Labor alone to handle the job on the strength of its tools — visa control and training programs for Saudis. Even if they ban visas, it will not make any difference if the education system is not producing Saudis who are employable and have the right work ethics. So, I think, that in the long run the real challenge lies in the education system as a whole. It should produce the kind of graduates who can satisfy the needs of the employers.”
On the question of boosting the productivity of the Saudi manpower, Prince Mohammed said they were meeting this challenge head on. “We are actively pursuing the Saudization program. It’s frustrating sometimes, but there is no other choice. So we continue to employ Saudis, even though there is a high rate of attrition. But we continue to work toward that goal. However, those who stay with us and prove their mettle in terms of knowledge, skills and attitude can move forward on their career path and see an alignment of their interest with the shareholders of the company.”
The company is willing to provide quality training to hone their technical skills. “Their part of the bargain is to have a proper work ethic, right attitude and motivation, so that they could say in hindsight that they had made the right decision by joining the Al-Faisaliah Group, both financially and professionally.”
He said the Al-Faisaliah Group would like to invest in software development for children’s computer games, which have a high profit margin. “We want to be away from the box moving business into areas of intellectual, consulting and IT development. So IT companies in the Kingdom have to make that transition, or else they risk missing the boat.”
Al Faisaliah Group, he explained, was able to remain competitive in the market by creating a professional environment in the work place and a strong work ethic. “This is in addition to a strong Saudi leadership in most of our subsidiaries. We have a disciplined approach to looking at investment opportunities. We have our own criteria to determine where we should look for business opportunities in terms of size or financial feasibility. But we are also quick in realizing when we have screwed up and clear it out speedily. We are fast in realizing our mistakes and also in making amends.”
As he puts it metaphorically: “We look at our business as a garden where some flowers may be blooming and others wilting, with an intervening outcrop of weed which could be uprooted at any given time. Overall, it contributes to a colorful scenario at the end of the day.”
— Published in Arab News Saudi National Supplement (Sept. 23, 2005).
