THE Jeddah Economic Forum, which begins tomorrow after an opening ceremony this evening, has become a fixed star in the Saudi economic and business calendar as the interface between world economic trends and Saudi economic practice and needs. There will be few major Saudi business players who are not in Jeddah today, not only to listen to speeches and ideas but to press the flesh, network, or simply see who is there while making sure they are being seen as well. This year the theme, “Economic Reform: Flourishing Grounds and Expanding Horizons” and sub-themes, such as “The Role of Saudi Arabia in Changing the Global Energy Paradigm” and “Flexicurity in Reform: A Balanced Social Agenda” may sound complex, but they go to the heart of what the Saudi economy requires.
When people think of economic reform, most think of privatization. It is a major element of the Saudi reform agenda and it rightly figures as one of the principal sub-themes at this year’s JEF. There can be no letup in the drive to privatization. The pressure may not be what it was a five or six years ago when government revenues simply could not keep up with exponentially increasing demands driven by population expansion.
But just because government coffers are currently full to overflowing thanks to high oil prices, that is no reason not to maintain the momentum. Who can say what the price of oil or government expenditure will be in two or three years’ time? No one can guarantee that budget deficits are a thing of the past. That, however, is not the point. Privatization is “indispensable” (as one of this year’s JEF sub-themes puts it) not because it is an answer to limited state funds but because it is right in itself. The private sector is the only engine that can meet public demand efficiently and effectively — and drive consistent growth.
However, the government should not be “drowned in a bathtub”, as so eerily stated by US arch-neocon Grover Norquist, a member of the anti-government cabal that, among other things, has turned many American security and rebuilding operations in Iraq over to private contractors who swallow US taxpayer dollars. The government still has a role to play, even in the world of the free marketplace. It should set and maintain standards, protect consumers and nurture private enterprise. What government shouldn’t be doing is playing the role of entrepreneur. That should be the job of business executives, men and women alike.
Without change, Saudi Arabia is the loser. It has to compete for investment in a global market — and not just investment from foreign investors but also from Saudis as well. The competition for funds has never been so intense. Saudi Arabia is just one market among many. Investors demand best practices. They demand ease of operation. They expect a certain amount of transparency and protection from fraud.
After all, the world’s a stage and Saudi Arabia is merely one of the players. Investors can go elsewhere.
