Entrepreneurship in the Kingdom of Saudi Arabia

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Drastic reforms needed to spur private enterprises

Apr 12, 2011 00:19 Updated: Apr 12, 2011 00:19

JEDDAH: Key issues facing the Saudi economy and the role of the small- and medium-enterprise (SME) sector as the new engine of growth will be the focus of a major conference to be held in Riyadh next month.

The Euromoney Saudi Arabia Conference takes place amid calls for drastic reforms to enable the private sector to shoulder the burden of creating more jobs in the Kingdom.

The event will be held on May 17 and 18 at Al-Faisaliah Hotel in official partnership with the Ministry of Finance for the sixth consecutive year.

It gains added importance with a recent World Bank report stating that although 90 percent of Saudi firms fell into the SME sector it contributed only a third of the Kingdom’s gross domestic product, employing 25 percent of the total work force.

Conference director Richard Banks said prominent figures from the governmental, financial and commercial sectors would speak at the event, being held under the theme “diversifying sources of finance.”

He stressed the need to develop feasible policies to stimulate the growth of the SME sector to remedy the job situation.

The importance of this year’s theme is highlighted by the fact that only two percent of banks’ total lending is dedicated to SMEs, said the director.

“State-financed mega projects are most often awarded to big contractors and developers, which has tended to restrict the trickle-down benefit to SMEs, thus constraining their ability to generate new jobs,” he said.

“Saudi Arabia has the largest number of public and private sector SME support programs in the region but reforms have to go further,” he added.

“The Shoura Council recently approved the formation of an SME authority. Its role as a driving force in developing regulatory frameworks, which lower barriers to SME development and growth, will be under scrutiny at this year’s Euromoney conference,” Banks said.

“By defining SMEs as companies whose annual sales do not exceed SR30 million, the Ministry of Finance has provided a common starting point from which stakeholders and those concerned can develop programs and services for SMEs.”

Saudi Arabia’s Ninth Economic Plan (2010-2014) recognizes the importance of SMEs in the development of the Kingdom’s economy and articulates many objectives, such as encouraging the private sector to increase spending on research and development, providing soft loans to the private sector, reduce dependence on expatriate labor, supporting investment in new economic cities, and increasing female participation in the work force.

http://arabnews.com/economy/article354630.ece


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