International Investment Summit:Arab leadership needs compelling vision [Archives:2003/635/Business & Economy]
Dubai Press Club, 5 May_ A strong and compelling vision should be adopted by the leadership of the Arab world, according to Sicre Frederic, Managing Director of the World Economic Forum (WEF).
Summing up the three days of the International Investment Summing here in Dubai, Frederic said on Monday that: ” Needless to say, our world, our institutions, our relations are at a cross roads. For the Arab world, it is an opportunity to either get on board the train or be left behind”.
The WEF Managing Director said it has been persistently mentioned that the economy of the Middle East is performing poorly reflected by the poor levels of foreign direct investment (FDI). But this can change.
Sicre Frederic said the timing of the International Investment Summit right after the conflict in Iraq “is most timely since it gave us the opportunity of, first, taking stock of where the world stands especially concerning investment flows and economic activity, and secondly what this means for the Arab world.
He pointed out that in the present global context, transatlantic relations are at their lowest ebb, there is continued threat to our collective security, confidence needs to be restored in markets and a decisive action needs to be taken to resolve the Israeli-Palestinian conflict.
“Regions around the world are grappling with the task of trying to establish new visions for themselves,” Frederic said.
He said the European Union might have a new constitution following its successful expansion program. Africa is pushing towards a new partnership. Latin America is trying to create a new vision for regional growth as an alternative to the so-called Washington consensus.
Frederic identified five major areas where Arab governments could address themselves.
1. Improve the investment climate:
Regional integration is the entry card for the global village. This could create a per cent growth in GDP, but it needs Arab governments to work hard to get rid of cumbersome regulations; to define and enforce commercial law; strengthen public institutions; and target private and domestic investment In productive sectors rather than just the large public sector.
2. Reform the barking and financial markets:
Privatization must be accelerated and greater central bank independence must be achieved. Also, regulatory frameworks governing capital markets must be implemented, especially in allowing greater participation of institutional investors, creating regional rating agencies and standards and consolidation of Arab financial markets.
3. Harness innovation and technology transfer:
Arab countries need to create a level playing field between national and international players as lack of competition and rivalry stifles innovation. They need to reduce administrative hurdles, which impede economic creativity and create research clusters between industries and universities.
4. Pay attention and invest heavily into the region's human capital:
Arab states need to improve gross enrollment rates in secondary and tertiary levels; provide women with equal access to education; bridge the gap between skills required in the economy and those taught in schools and think in terms of continuous learning and better preparation of teachers.
5. ICT development:
It is needed as a base to nurture a real spirit of entrepreneurship and to enhance productivity. It is also required to encourage the dissemination of knowledge and free flow of ideas.
The World Economic Forum Managing Director also had a five-fold task for the Arab private sector-especially to be done in association with the governments.
Private sector tasks
Sicre Frederic said through common vision, alignment and sheer numbers, the Arab business community can constitute itself into a force for change to be reckoned with-both by Arab governments and on the international scene. ” A united private sector community, with common objectives, can create miracles.”
Reform labor laws is necessary, as currently they are too restrictive. Being able to hire on a basis of meritocracy is essential to compete, as well as the ability to fire under-performers. Linked, is the question of allowing women to work.
Business must make education a business. The Arab Corporation must provide on-the-job training and work with governments to develop the right curricula to satisfy needs of the Arab job market and global competition. The educational system must encourage debate, negotiation and the principle that it is agreeable to disagree.
c. Legal systems:
Clear and consistent legal regulations and lawyers and judges well versed in modern commercial laws, will provide foreign investors better arbitration mechanisms and advisory services and thus provide an incentive to investment.
d. Regional strategy:
If inter-Arab trade is to increase, business can press for more harmonized standards.
e. Capital markets:
Arab corporate can increase the competitiveness of their capital markets. Family businesses can go public, and there could be increased compliance with corporate governance standards.
The World Economic Forum Managing Director quoted a Saudi business leader as telling him that: ” The Arab Corporation must be ready to work twice as hard as our international counterparts. First, we must work as catalysts for change in our own countries and region. Second, we must work to build trust and respect between the Arab community and the rest of the world.”
The third most important element of progress for the Arab world is the support it gets from outside, Frederic said.
” These challenges will only be met if the leaders of Arab business and Arab governments find true support and trust from their Western counterparts,” the World Economic Forum Managing Director concluded.
The International Investment Summit was organized by the Dubai Development and Investment Authority (DDIA) under the patronage of His Highness General Sheikh Mohammed Bin Rashid Al Maktoum, Crow Prince of Dubai and UAE Defense Minister.
Some 700-plus delegates gathered from both within the region and outside to map out a blueprint for attracting larger flows of FDI into the Arab world. They included some of the best minds from both sides of the investment divide.
The summit from May 3rd to 5th provided for the first time a platform for various investment promotion agencies and projects from within the Arab world, to showcase and promote themselves to global investors.