Albilad – Maha Al-Awawda
Certainly, the economy of the Kingdom of Saudi Arabia is one of the twenty largest economies in the world, and the largest economy in the Arab world and the Middle East. It has a potential power estimated at tens of trillions of dollars for what it saves from one of the most important natural resources in the world as proven oil reserves, and it is also the largest exporter of oil It has the fifth largest proven natural gas reserves in the world. Therefore, it is considered an “energy superpower” and it is the field on which the global economy depends for growth. In addition, it is considered to have a prominent position in the Arab and Islamic world, and it has human energies and large geographical spaces that enable it to build the future not for itself alone, but in the entire region, especially the Arab countries.
Vision 2030 is a roadmap and plan for change and developing the local capabilities of the Kingdom. After this vision, various projects were launched aimed at improving the quality of life, services and developing infrastructure to support the economic system. We find that there are prominent activities in the economic legislative field, especially in order to improve the environment for doing business and enforcing contracts. We also find that there are very large projects to re-engineer civil life at the level of the Kingdom, such as building cities and urban and modern population centers, in addition to allocating vital areas within cities for educational institutions and industrial projects, while allocating large areas along the coasts for tourism projects. All of this, by extension, means providing millions of jobs for the people of the Kingdom, and it constitutes an attractive element for international and Arab competencies and in attracting local and foreign investments through commodity and service production, which will return with clear results in strengthening the non-oil economy aspect, which is one of the Kingdom’s clear goals.
The private sector needs a set of elements of attraction in order to feel reassured, and it is very noticeable in the Kingdom’s interests in developing the legislative system in order to protect the free movement of funds and the rights of investors such as litigation and arbitration, ease of procedures, approvals, employment, freedom of competition, integrity of government work and ease of access to government contracts. The Kingdom’s recent initiative was also proactive and innovative in that it presented an investment map according to geographical areas and reinforced it with feasibility studies and various advantages. Moreover, the Kingdom’s efforts to enhance the quality of life constitute an important attraction for skills and knowledge, and it is an important requirement for investors for the success of their business. Add to all this, the Kingdom’s provision of liquidity to the market in light of a great driving force of government projects as a locomotive for progress and encouragement of the private sector.
Undoubtedly, the Corona epidemic crisis is considered the greatest economic challenge during the last half century, if not the last century as a whole. And this challenge is not limited to Saudi Arabia alone, but the whole world, and like all other countries, the Kingdom was greatly affected by this epidemic wave in terms of its clear impact on the oil sector due to the low level of demand in the market and then the drop in production and prices, in addition to the suspension of global transport and aviation movement and travel restrictions, which had effects Great economic impact on the global economy.
On the other hand, the Kingdom was able to effectively utilize its cash reserves to maintain the market’s agility, vitality and continuity, as it has set, as it seems to analysts, a clear and strong goal, which is to support the continuity of the market and institutions with work, production and provision of services. By 50% through the unemployment insurance system, soft loans were provided to private institutions, and they were quick to pay the financial dues to the private sector with the government, which were estimated at about 200 billion riyals.
Add to that the volume of spending on the health sector, estimated at about $12 billion. All of these expenditures led to the withdrawal of an estimated 20-30 billion dollars from Saudi cash reserves, a very generous measure that clearly aims to maintain the economy’s agility, health, and forward rotation.
Investment work is considered the most important economic component of any country, and the investor is usually hesitant and skeptical, and this skepticism may hinder him in taking the initiative to invest in building the institutions that make up the economic system. Therefore, we find that removing obstacles and fears in front of the investor is the most important thing that he needs in order to be reassured and set out.
It is remarkable and distinctive that the Kingdom has a special authority (called “Monsha’at”) to support the medium and small economy, and it aims to create a competitive environment that encourages the entry of new enterprises into the market and enables small and medium enterprises to grow and expand, and to find appropriate financing solutions and investment opportunities, in order to raise their contribution to the The GDP will reach 35% by 2030.
We find that the various packages supporting this economic sector will contribute to creating a supportive and stimulating environment for competitiveness, maintaining and developing it, which would support the transition from an oil economy to an economy based on value creation and production.
What will the Kingdom’s post-oil economy look like, especially as efforts seek to avoid the negative repercussions of any future crises, especially those related to the oil and energy markets?
During the last five years, the Saudi economy has gained great advantages, has already gone through the biggest crises, has the experience and the ability to continue, and has known its way. Therefore, the future holds many promises, and we believe that it will be a diversified economy, and the share of the non-oil sector will be predominant, with more than 50% of the national product. But achieving this requirement will not be easy to implement and requires setting it as a sustainable goal for the future that is followed up, continuous measurement of the level of achievement achieved, and corrective measures that may require effort, perseverance and determination to achieve this strategic economic goal.
With a quick look at the internationally recognized achievements in terms of competitiveness indicators, the answer to this question can be based on the reality of international indicators and not on personal estimates.
The Ease of Doing Business report stated that the Kingdom is the most advanced and reformed, as it ranked third in the world for the largest fifth generation networks, and that it is now leading the world in the speed and coverage of the fifth generation of the Internet. It is also among the twenty countries, achieved the second place in the liberalization of frequency bands.
Saudi Arabia’s ranking in the Starting and Doing Business Index in the World Bank’s report rose from 141 to 38 globally, and the Kingdom ranked third among the G20 countries in technical governance, and Riyadh ranked 30th for smart and sustainable cities, according to the evaluation of the United Nations. In addition, the Kingdom also ranked 13th globally in average internet speed.
These achievements are considered very distinguished and put the Kingdom on the right path towards the world of the fifth generation and empower the digital economy to contribute to building the national economy in a more robust and robust manner. Its investments in technological infrastructure will play a pivotal role in enabling digital innovation and supporting the development of social and economic ecosystems. The Kingdom can contribute to the dissemination of these practices and their knowledge locally and regionally to be a contributing factor to the growth of all Arab economies, in harmony with the initiative of the Arab Vision for the Digital Economy launched by the Council of Arab Economic Unity.
The march of the Arab vision of the digital economy has gone through several important stages during the past period, some of which can be summarized, for example, here.
A fund of $250 million was established at the Arab Economic Summit that was held in Beirut in 2019 to support digital economy projects in the Arab countries, and there is a set of initiatives consistent with the Arab vision, worth $200 million, implemented by some Arab governments and supervised by the Council of Arab Economic Unity. . It is planned to announce during the coming period some strategic initiatives in the areas of the digital economy related to the sectors of government digital transformation, e-commerce, smart agriculture and digital education.
Also, after receiving the constructive opinions and observations of Arab countries, the Arab vision for the digital economy was updated and the third version was issued, and it was published on the website of the Arab Union for the Digital Economy. We also participate in the development of the Arab strategy for information and communication systems in cooperation with the Arab Ministerial Council of the Ministries of Communications and Information Systems, and in coordination with the United Nations ESCWA, which considered the Arab vision of the digital economy a main entry point for this strategy.
We are also about to announce a qualitative indicator of the digital economy that we believe is a precedent in the world, and it will be announced soon at an international conference to be organized this year, as the indicator will provide an analytical and detailed reading of the position and capacity of each individual country in the field of the digital economy and with the aim of completing the required support for Arab countries and helping Decision makers to take the necessary initiatives and solutions according to the situation of each country.
We have seen an important change in the Arab reality, which has become more aware of the importance of the digital economy and has become a term in circulation among those concerned with the economy permanently now, which we consider an important indicator of an upward trend that believes in the importance of cooperation and participation and the importance of the digital economy as a lever for the Arab economy.
It is worth noting that the digital economy has become a living reality, and a pivotal basis in Arab economic planning, and we find that many Arab countries have designated ministries for the digital economy.
In terms of procedures, as I mentioned earlier, we find that the Arab Economic Summit held in Beirut in March 2019 decided to allocate a fund to support digital economy projects with a value of $200 million, subject to increase.
But in fact, in terms of collaborative work, many still prefer to work alone. But the conviction that we have and we push with, is that the Arab region can enhance its capabilities to support stability, production and levels of growth by working together, and that individual action will not be feasible in a world of uncertainty.
Moreover, the Arab political map still requires a course correction and serious work to realize the magnitude of the dangers surrounding the Arab countries, and the necessity of cohesion and interdependence with a common destiny.
The Arab countries should also consider the important lesson deduced from the Corona pandemic and the global health crisis, which teaches us that building the foundations of economic security and national security cannot be built unilaterally, but rather requires more cooperation at all levels, in light of foreign ambitions in the capabilities of the Arab region. .
Therefore, we call to change our competitive reality and turn it into an integrative reality, building it together and complementing each other. Integration and the ability to effectively communicate has become easy with cross-border technologies, and all that is needed is a sincere determination to make the various forms of strategic cooperation that guarantee stability, security and growth in the Arab region succeed.
We seek optimism and believe that success is preceded by insistence on success and not the other way around. We seek this through the work team of the Arab Federation for Digital Economy and the Council of Arab Economic Unity with determination and faith to push the efforts forward. We must note that the success of joint Arab action remains the responsibility of Arab leaders, and we hope that the crises that have befallen the region in the last decade – which have followed since the first appearance of turmoil in the Arab countries, through the crisis of oil prices and global deflation, and ending with the Corona crisis – will be enough to awaken and stimulate joint Arab action again. This is what we see has happened historically, as Europe did not unite until after fighting bitter world wars and difficult crises. The time has come for us, as Arabs, not to take the lesson too long and to be content with the above, to rush to absorb the lessons, and to reconsider our calculations, in order to at least decide on economic unity. We believe that the future will be more promising with these hopes, God willing.
The digital economy is one of the most important possibilities that help the movement of the economy automatically and intelligently, as it is known, and intra-trade is one of the most important aspects. The Arabs own the Arab Trade Free Market Agreement, which was launched in 2005, and was moving rapidly forward until the year 2011 and political and popular problems began in some countries, which hindered the progress and acceleration of that agreement.
According to our studies, intra-Arab trade currently represents 10% of the total Arab foreign trade, and if we compare it with intra-European trade, we will find that it represents 66%. This difference illustrates the extent of the problem, and assuming that half of Arab trade is intertwined, this will mean very much at the level of exchange rates, economic prosperity and integrative production.
If we look in detail and exclude political problems, the certificate of origin constitutes one of the most important obstacles to the smooth inter-Arab trade to enjoy the advantage of customs zeroing. This problem can be overcome by employing digital technology such as “Blockchain” to provide integrated solutions and trading platforms that bring together all the inter-components of the business process – which includes the registration of exporting facilities, shipping destinations, insurance, inspection, testing and the foundations of issuing certificates of origin to be digital. I believe that the launch of this initiative will be in the event that half of the Arab countries agree on it as a starting point, which could constitute a large and important pillar in the history of inter-trade and the Arab economy as a whole.