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Business Advocates build a new economy
“When Marco Polo was discovering the new world, he probably got his first lesson in market economics at the Jeddah spice souk,” observes Kevin Taecker, a former economist for Saudi American bank. “In many ways, I think the world looks to the Arabs as really the founders of market economics the way we know it today. The point being that when you talk about making a transition to greater participation in the global economy, the Saudis have a deep understanding of how markets work and how business is done.”
According to Taecker, the Saudi government has long pursued a strategy of ensuring the country’s long-term economic security by diversification of its economy and sustaining the success of its private sector. “Thirty-five years ago, Saudi Arabia set out to create an economy that would not only spawn a private sector, but would be strong enough to be of use to it,” says Taecker.
“And they’ve succeeded. Saudi Arabia has an economy that works.”
Helping the private sector assume a greater role in the Saudi economy is the mission of two key trade groups: the Council of Saudi Chambers of Commerce and Industry and the U.S.-Saudi Arabian Business Council.
The primary mission of the Council is to monitor the economic health of the private sector, and to look for ways to improve the Kingdom’s business environment by advocating new financial regulations that – while remaining faithful to cultural and religious traditions – improve business for its members. The Council also performs economic research and analysis, and explains new trade laws to its members and serves as an out-of-court venue for settling contract disputes.
Lately, Saudi Arabia’s recent emphasis on the cultivation of foreign investment has become the Council’s most important mission.
“Many people are surprised to discover that Saudi Arabia is not a protectionist economy,” says Usamah M. Al-Kurdi, secretary general of the Council of Saudi Chamber of Commerce and Industry. “We have indeed imposed limits on foreign investments in certain sectors, but these have been for only a dozen or so sectors...In general, we have never built the kinds of walls around our economy that other countries have.”
In an effort to reach out to potential foreign investors, Al-Kurdi and his colleagues often travel on overseas trade missions. The Council also often invites foreign business officials to visit Saudi Arabia to personally investigate investment opportunities.
“We introduce foreign companies to the very best sectors,” adds Al-Kurdi. “We are playing a lot more attention now to Saudi business - and on ways of enabling it to become an export-focused industrial economy. We think Saudi business will play an increasingly bigger role in the growth of the economy, which already is robust.”
Medlej Al-Medlej, executive director of the Riyadh- and Washington-based U.S.-Saudi Arabian Business Council, shares Al-Kurdi’s views. “We have to be part of global economy,” says Al-Medlej. “But we have to be realistic about what we can and cannot be as a global player.”
Al-Medlej, who serves who serves in the Business Council’s Washington office, believes Saudi Arabia should focus its economic diversification effort on industrial sectors: “We can’t be a huge tourist destination: we simply don’t have enough to see, nor do we have the infrastructure to adequately host huge numbers of visitors. We cannot be an agricultural country; we will always likely need to import much of our food. We won’t be a banking center. Our only choice is to be an industrialized country, manufacturing goods for export.”
Incorporated in the United States in 1993, the Business Council is co-chaired in Riyadh by Abdulaziz Al-Quraishi, former Governor of the Saudi Arabian Monetary Agency, and in Washington by Alfred C. DeCrane, retired Chairman and CEO of Texaco. The organization serves to improve the knowledge and understanding of the business communities in both countries, and – in addition to sponsoring trade missions and keeping members fully informed about business trends – is responsible for certifying any U.S. export bound for the Kingdom.
Al-Medlej sees many opportunities for investment in Saudi Arabia’s industrial sector, but he cautions that the country is still at an economic turning point, and that petrochemicals still dominate.
“The economy of Saudi Arabia will have its foundation in oil for many years. But, every year, we have seen the share of the private sector - the GDP [gross domestic product] - increasing,” says Al-Medlej. “During the next ten years, I foresee the private sector definitely having a larger share of the gross domestic product. And that is the direction that Saudi Arabia is going.”
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Table of Contents Crown Prince Abdullah: A leader with a global vision |
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A market-based economy has been integral to the history of the Arabian Peninsula for three millennia. Today, merchants in this region continue the commercial legacy of their forebears in such diverse industries as agriculture, construction, petrochemicals, trade, and transportation.
Established in Riyadh by Royal Decree in 1980, the Council of Saudi Chambers of Commerce and Industry promotes and protects the interests of the 22 regional Saudi chambers of commerce and industry, acting as a voice for them at both national and international levels.