(MENAFN- Arab Times) Â Economic reform is vital in Kuwait's bid to find alternative sources of income, instead of totally depending on oil revenues, says the Kuwait Economic Society (KES). The society made the statement in the Seventh Scientific Conference for Kuwaiti Economists, which it organized recently with the theme, "Defaults in the Kuwaiti Economy: Correction Methods and Role of the Country". During the conference, KES stressed the need to study the structural loopholes in the local economy and expand economic activities as initial steps to develop non-oil sectors and to wean the country off its total dependence on oil. The society underlined the importance of adopting modern economic concepts in the public and private sectors.
According to the society, any reform step must start with a comprehensive development plan for the educational sector by linking the curricula to the labor market, which has been suffering from a number of problems. It also underscored the significance of activating the role of individuals in societal development.
Moreover, the society urged the government to improve public services and adopt modern economic principles like privatization, in addition to allowing the private sector to play a crucial role in national development, indicating that the recommendations of the academicians and other experts should be taken into consideration in any reform initiative. It warned against delaying the implementation of genuine reforms due to the negative impact on future generations. The society also called for strengthening coordination between government authorities, the private sector, public utility organizations and civil societies in the implementation of reforms.
Following are the recommendations of the academicians and experts:
1. Ways to address the structural loopholes
* Improve basic services offered to the people through the privatization of vital sectors.
* Fix structural loopholes as an initial step towards economic reform by laying down strategies for the development of non-oil sectors. The country must support this move by encouraging the private sector and government agencies to coordinate their development efforts; particularly in significant fields like finance, logistics, communications, and information technology.
* The use of traditional theories should not be the only way to achieve structural balance, because this method focuses on the oil industry concept. Other steps must be taken like reactivating the role of the industrial sector, as well as the small and medium enterprises. Actually, the government had earlier taken such steps through EQUATE company; albeit, in a limited manner.
* Emphasize the importance of involving all stakeholders in the adoption of any economic resolution, both in theory and in practice. This initiative must be taken by the private sector, civil societies, public utility organizations and the concerned authorities.
* The importance of the idea of involvement in decision and resolution-making is evident in several existing economic laws, despite the fact that Kuwait lacks advanced economic legislation. However, the recommendations presented in the last few years were ineffective because the political side overshadowed the economic side; similar to what happened in the Build Operate and Transfer (BOT) legislation, among others.
* Any economic development or reform process requires strengthening the developmental role of the private sector, which should take four major steps - make radical changes in public administration, liberate the economic sector from the oil sector, raise standards of education, and intensify efforts to combat corruption.
* The role of foreign investments should be reviewed in a more comprehensive manner because these investments will boost the economy. Stricter measures in the oil sector must be implemented, while taking into consideration the need to conserve oil resources.
2. State governance of the public sector
State authorities and administrations play a crucial role in the administration of the economy without being given enough attention in relation to the government. This comes in concurrence with extensive focus on the monitoring bodies and the media, such as the governance of the private sector; hence, the need for stricter guidelines in the appraisal performance based on competence to guarantee justice for all.
3. Protecting economic decisions from outside interference
This step is aimed at protecting decisions related to the economy from political interference, which restrain ministers and other government officials. The establishment of a supreme economic council that operates away from any political pressure is vital, because its main responsibility is to draft economic policies.
4. Economic role of individuals in the society
* Individuals should realize the importance of combining economic reform plans with awareness campaigns. This is necessary to change the mindset of those who regard the nation as source of funds at the expense of individual production role.
* The same idea goes for correcting the concept of development, considering the development plans in the last decades were based on the idea of huge expenditures, while the real development is about enhancement of individual abilities.
* In contrast, any agitation against the concept of 'revenue state', which is the foundation for the new economic stage, will render government incapable of providing support considering the recent population growth. Therefore, the country should gradually move away from the ideology that makes people regard it as the source of funds.
5. Educational development is a must
* Developing the concept of individual roles as productive entities in the economic life is impossible without the real education revolution in academic institutions. This necessitates review of the curriculum to raise public awareness.
* The basic idea of education development is not limited to consolidating role of individuals, so they should also serve as the right gateway towards eradicating inadequacies in the labor market. Talking about education and development should cover intensive training for employees in the public sector to improve performance.
6. Labor market
* Improving the labor market is a significant factor in the implementation of economic reforms due to the rising unemployment rate, which indicates that creating job opportunities in the future will be a major challenge. There should be 150,000 employment slots within the next 10 years. Only the private sector can absorb new entrants into the labor market, provided the main reforms are implemented.
* Laying down short and medium term economic plans is also important.
* Work in the labor market information system must be completed as soon as possible to pave the way for gathering and analyzing draft policies, in addition to publishing and disseminating information about the labor market.
* Finding the right approach to the current technical lapses is vital, such as the structure of wages in the private and public sectors to narrow the gap and discourage influx of citizens from private companies to public institutions.
7. Correcting misconceptions on taxation
Recommendations for implementing a full tax system have been met with stiff opposition. Nevertheless, the essence of implementing the system is beyond guaranteeing more funds in the national treasury. Citizens must realize the importance of performing their national duties to correct the misconception that the government is a source of income. This policy should be associated with better public service and creating job opportunities through the public sector. The tax system must be implemented only during financial boost, so the state will be able to build its sectors without financial pressure or shortage. Media campaigns should be carried out to explain the importance of the system. In conclusion, the society wished the above recommendations will support efforts of the government to resolve lapses in the local economy and push for sustainable development.
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