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 | "We have to dig deeper through technology and innovation. We must bring our people to the standard of global players to compete internationally with the best of nations".
Mohammed H. Almady Vice-Chairman and Chief Executive Officer,
Saudi Basic Industries Corporation (SABIC),
Saudi Arabia |
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 | "We need to see more privatization. If you open your markets and give opportunities to both men and women, this region will do fantastically well."
Stelios Haji-Ioannou Chairman,
easyGroup,
United Kingdom. |
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| Countries in the region must confront obstacles to economic growth such as bureaucracy, inadequate infrastructure and limited technological skills. |
| • | Tenacious reformers are rewarded with higher growth and more investment. |
| • | The region's labour markets need to be open and flexible. |
| • | Infrastructure development, particularly through public-private partnerships, is crucial for regional integration. |
| • | To attract more foreign direct investment, countries should focus on bolstering legal frameworks and cutting red tape to enhance efficiency and productivity. |
| • | Economic diversification, increased investment in information and communications technology and the broadening of the energy sector will boost the region's competitiveness. |
| • | Young people represent the Middle East's most valuable asset. |
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H.E. Sheikh Mohammed Bin Essa Al Khalifa
Chief Executive,
Bahrain
Economic Development Board,
Bahrain |
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The world's greatest economies are led by businesses. Although the Middle East and North Africa (MENA) countries face enormous obstacles to self-sustaining growth, businesses can play a greater role in promoting reform and global competitiveness. The economic reform movement is still in its infancy, and entrepreneurship and investment are all too often strangled by bureaucracy, inadequate infrastructures and limited technological skills. However, the seeds of change - and hope - are being planted. Countries that have embraced reform have been rewarded with accelerated economic growth. A more pragmatic attitude on the part of government and private sector leaders has reduced conflict and encouraged cooperation. This year's World Economic Forum on the Middle East explored both the positive and negative aspects of the region's business climate and developed realistic proposals for its improvement.
Seen from one perspective, the region seems deeply dysfunctional, torn by war and terrorism, badly lagging on many key social and economic indicators and dependent on a handful of resources - especially oil.
From another point of view, however, the MENA countries look like the classic investment bargain - full of under-utilized assets and unrecognized value. As governments embrace market reform and develop their human resources, businesses and investors who move early could reap outsized returns. In other words, a turnaround story may be in the offing. Which view is correct? For many of the participants at the Summit, the question has already been answered. Where some see only risk, they see opportunity. Where others see unemployment and despair, they see a new generation of workers and consumers, who only need the tools to create wealth and improve their lives.
"The region's greatest asset is its young men and women," said Christiaan J. Poortman, Vice-President, Middle East and North Africa Region, World Bank, Washington DC.
Realizing this promise, however, will take sweeping changes - political, social, economic, cultural and psychological. Participants at the Summit focused on identifying the processes to effect such change. Among the topics addressed were: |
| • | Labour market reform: Participants agreed that by reducing artificial job creation barriers and moving skilled workers from the public to the private sector, the region can unlock the creative energies of its people while discouraging the growth of a permanent underclass of low-wage foreign workers in the more affluent countries of the Persian Gulf. "What the private sector needs are free, flexible and fair labour markets," said H.E. Sheikh Mohammed Bin Essa Al Khalifa, Chief Executive, Bahrain Economic Development Board, Bahrain.
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| • | Economic diversification: Despite the region's well-publicized security problems, travel and tourism hold great promise for future growth as some countries, such as Dubai, are already proving. However, governments need to clear away numerous obstacles, such as controls on property ownership, restricted national airline markets and burdensome visa requirements (see Box 1). |
| • | Information and Communications Technology: As of 2004, only 41 out of every 1,000 inhabitants of the MENA region were Internet users (see Figure 1). But that picture is changing, as telecom providers restructure or privatize and entrepreneurial activity accelerates. However, they require compelling content to build a consumer base for broadband and other services. "Does the Internet today provide [Egyptian families] with the right content that serves their needs in the local language? The answer is probably no," said Tarek Kamel, Minister of Communications and Information Technology of Egypt. Developing such content, he added, is a task for the whole society, which is why Egypt is encouraging the convergence of its entertainment and Internet industries and promoting the development of computer clubs and other grassroots ICT organizations.
"Companies don't yet know what is required in terms of transparency. Everybody is in the learning process."
Mohamed A. Alabbar
Chairman, Emaar Properties,
United Arab Emirates; Member
of the Executive Committee of
the Arab Business Council |
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| • | Energy: With oil prices hovering close to US$ 70 per barrel, the energy sector would seem to be the least of the region's worries. However, most oilproducing countries have not yet stimulated the development of related industries - such as exploration, oil field support and professional services - that can boost investment and employment. "This is one of the most important unfulfilled economic potentials in the whole region," said Vahan Zanoyan, President and Chief Executive Officer, The Petroleum Finance Company, Switzerland. |
| • | The Role of women: The MENA countries can never hope to escape the trap of poverty and technological backwardness if over half the population is excluded from meaningful economic activity. Participants debated how to reconcile the need to empower women with the region's prevailing legal and cultural norms (see Box 2). |
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Box 1: Red Carpet In, Red Tape Out:
Rebranding the Middle East |
| Egypt is a case study in Middle Eastern tourism. Rich in culture, tradition and history, tourism is growing faster than the world average but overall receipts are slightly declining. This is due mainly to Egypt's under-developed transport networks, reliance on a few European markets and a lack of tourism promotion spending compared to other resort destinations. |
Source: Booz Allen Hamilton |
| Since these issues are pervasive in the Middle East, business leaders discussed the roles of marketing and branding in promoting the region as a destination for tourism and inward investment. During a WorkSpace session, participants considered how the image of the Middle East might be revolutionized and proposed a number of innovative campaign ideas during the process.
 Participants made a commitment to create a task force of stakeholders from the private sector to fund a marketing campaign for the Middle East under the banner "Red Carpet In, Red Tape Out". Furthermore, there were private sector commitments to ensure that sufficient money is available to fund the campaign. To underpin the effort, participants suggested bringing Middle Eastern leaders together to help stakeholders better understand what the region offers and represents and project Middle Eastern opinion leaders onto the international stage.
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| Box 2: The Women Leaders Programme |
| The Women Leaders Programme of the World Economic Forum gathered leaders - both men and
women - from government, business and civil society to examine the region's gender gap. For the first time, the Forum brought together women ministers from across the region to construct a five-year action plan for public- and private-sector policies to address the region's gender gap. The action plan will be a publicly available resource, aimed primarily at promoting greater cooperation and best practice exchange among the region's governments in their efforts towards greater gender equality. |
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