By Damian Reilly
SAGIA boss Amr Al Dabbagh explains why Saudi can really claim to be the most attractive business destination in the Mideast.
HE Amr Al Dabbagh is the man in charge of Saudi's push to break into the world's top ten financial centres and to diversify the economy while attracting direct foreign investment. Can the Kingdom really claim to be the most attractive destination to business in the Middle East?
HE Amr Al Dabbagh is not an easy man to get to. To do it, if you're journalist, you have to talk to people, who talk to people, who, in turn, talk to yet more people. These people talk to his people. And then someone, presumably, talks to him. Then, and then only, does the thumb get raised or lowered.
At the Global Competitiveness Forum in Riyadh, after failed attempts spanning previous months, all this talking finally took place and I suddenly found myself in an anteroom adjacent to which was a room in which the great man was receiving guests. In this anteroom, flunkies flunked frantically. Over there a CNN news crew trying to set up cameras.
Over there voluble Bloomberg journalists wanting to know why they hadn't got an in. The arrival of Tony Blair and his entourage in the next door room did not help to calm matters.
Everybody who spoke to me wanted to know only one thing: what would I be asking His Excellency? My reply - for his thoughts on the Arsenal game the previous night - caused absolutely no one to smile. Instead they looked very concerned.
And then he appeared, calm amongst all this chaos. Politely letting the CNN crew into his room to set up, he ushered me into a corridor and there began immediately to speak lengthily and passionately about the Herculean challenge he has been set and is somehow, demonstrably, pulling off. Namely, dragging the Kingdom of Saudi Arabia's business community into the 21st century.
Saudi wants not only to be taken seriously as the pre-eminent centre of business in the Gulf, but to be mentioned in the same breath as the likes of Singapore and Hong Kong. A laughable goal not so long ago, since Al Dabbagh was put in charge of the mission no one is laughing now, least of all the leaders of the countries with which Saudi Arabia intends to compete for foreign direct investment.
In a recent World Bank list, the Kingdom was ranked thirteenth easiest place to do business in the world. But Dabbagh, who is governor of the Saudi Arabian General Investment Authority (SAGIA), the government authority in charge of domestic business development and investment, has no intention of stopping there.
"We have progressed quite well and we have almost achieved our target. In September the World Bank will publish the annual Ease of Doing Business report and we are optimistic that we will join the club of the top ten most competitive nations in terms of ease of doing business," he says.
He says it matter-of-factedly, deliberately modest, but this is some achievement, particularly when you consider how rapidly Saudi Arabia has climbed this list since the King appointed Dabbagh to spearhead the modernisation push in 2004.
As he says himself with a smile: "We are thirteenth today, the year before we were sixteenth, the year before we were 23rd, the year before we were 38th, and the year before that, 65th."
65th to top ten in six short years is good going by anyone's reckoning, especially given the competition.
For the last five years, SAGIA has overseen dramatic change and liberalisation of Saudi's business community beneath the banner of the 10x10 program (top ten by 2010, that is).
A National Competitiveness Centre has been set up, which constantly monitors the performance of the Kingdom's investment opportunities against more than 300 indicators of global competitiveness, and a nationwide drive to push to create jobs and diversify the economy away from heavy hydrocarbon reliance has been realised spectacularly by the creation of four economic cities.
These cities are mega-projects intended to incubate private-sector activity, indeed to provide the private sector with the ideal environment in which to flourish while taking advantage of Saudi's global geography.
As SAGIA's own literature states: "The Economic Cities will offer investors an unparalleled business friendly environment within a globally competitive regulatory and incentive offering framework."
So then, what will differentiate Saudi Arabia from the other cities and states in the Gulf that are striving to make themselves as attractive as possible to business? Why would a company, for example, look to set up its Middle East headquarters in Saudi rather than in Dubai, say, or Abu Dhabi or Doha?Dabbagh's eyes light up as he explains.
"The elements [of Saudi's attractiveness] are correlated to our competitive advantages. We are the energy hub of the world; we have 25 percent of the global energy resources. And this automatically gives us an edge over other players in terms of energy related matters."
But surely Abu Dhabi and Doha can also offer this advantage, too - neither, after all, is short of energy. Will energy be made available more cheaply than at market prices for companies operating out of Saudi?
"No, we are not in the business of selling energy at cheap rates. It is the whole product that we offer. Not only do we have the energy resources, but also location-wise we have an edge over other players in the region, being a hub between East and West and we have seashores on both the Arabian Gulf and the Red Sea," Dabbagh replies.
"So both the strategic geographic location and the energy play additional roles to the competitiveness environment that make our value proposition. We are ahead of the others in all areas, in the global ranking we are number thirteen, and we are number one in the Middle East and Africa.
In terms of direct inflow of actual foreign direct investment (FDI) we are the 14th biggest recipient in the world and number one in the Middle East and Africa. A recent audit - published in September 2009 - showed that we secured $38.2bn in 2008. The results for 2009 will be published in September this year, and they will raise the bar further. We will raise the bar in all departments - ease of doing business and FDI invested on the ground."
So what will it take now to push Saudi Arabia into the top ten countries in which it is easiest to do business - how, exactly, can a country that seems to have achieved so much in such a short space of time kick on to join the top table of financial centres?
"We are working on a number of areas - like the indicator of contract enforcement and so on - that will hopefully help in improving our ranking and joining the top ten. But this is the last year for the 10x10 initiative, and then we will put it in a maintenance mode which is even more challenging than getting into the top ten club because the most competitive nations in the world like Singapore continue in doing reforms to maintain their competitiveness superiority."
It is at this point in the conversation that Dabbagh begins to talk about an initiative that seems awesome in the scope of its ambition - an initiative that is surely not found even in ultra-efficient European countries such as Switzerland.
"We have just announced the next program [to improve ease of business] which is encapsulated by three numbers, 60/24/7. This means every government service will be offered in no more than 60 minutes, available 24 hours a day, seven days a week. And we will pilot this initiative, first in the economic cities and then once they are fine-tuned, through the base economy.
The 10x10 initiative is seen by the average man in the street as some massive, 40,000ft initiative. Here, with 60/24/7, we are bringing the concept down to the average man in the street so he can feel what competitiveness means, in the form of efficient and timely services."
There are other initiatives about to be launched, too, which will see Saudi through to 2015, but Dabbagh will not announce them yet. "What I can say is that we are looking to bring the big initiatives down to levels where they are actually tangible."
Of the $38.2bn of FDI Saudi attracted in 2008, Dabbagh says that only 25 percent of it went into the oil and gas sector. The other 75 percent, he says, was spread across insurance, real estate, healthcare, education and "so on and so forth." Clearly the process of liberalisation is paying dividends.
Soon, the four economic cities will see this FDI ramped up even further, as Dabbagh is keen to explain.
"These economic cities will remain as private sector-led and we believe that they will be important economic drivers and engines of growth in the regions in which they are located. We have made big progress throughout, and the in the sea port of King Abdullah Economic City, which is the flagship economic city, the sea port is the key economic driver. The first vessel will anchor in November 2011.
The waves of industrial tenants, residents, have started moving in. We have opened our doors as SAGIA inside the economic city, so the city is going live in 2010.That is the important thing. Because unless you go live it is very difficult to secure more tenants, whether industrial or residential."
And once the cities are built and the top ten status is secured, what then for SAGIA and Dabbagh? He smiles.
"Progress never stops. We will keep on introducing new initiatives that will make it extremely hard for our competitors. Before we introduced the 10x10, then the economic cities which are not special economic zones - they are freezones and not processing zones - now we are introducing 60/24/7 and tomorrow we will introduce something else. We will keep on raising the bar."
So how easy will it be to get business travel visas that are not ridiculously short ?
And when will the Kingdom of Saudi Arabia will establish Human Rights and equality of women? No international business destination can operate without international standards by all means.
They must be dreaming ...well no harm in dreaming ..inshallah, mashallah..
Amr Al Dabbagh is the best thing going in Saudi Arabia right now. He has done much in a short time and has the power and drive to do much more.