(MENAFN - Arab News) Economy and Planning Minister Muhammad Al-Jasser has stressed the need to focus on upgrading the science skills of the Saudi workforce.
He also highlighted the youth's role in the Kingdom's economic growth and future development.
The minister was speaking at a recent meeting organized by the Young Businessmen's Committee at the Riyadh Chamber of Commerce and Industry.
The future of the Saudi economy looks promising and prosperous, he said.
The theme of the meeting was 'The Future Vision of the Saudi Economy.'
"Fulfillment of the aspiration to achieve the future vision of the Saudi economy is in your hands as much as it is in the government's. Joining hands of both the youth and the government is needed to achieve the ambition," Al-Jasser said in his speech.
"The vision is our mental picture of what we want our country to be in the future," he said.
It is not just an abstract dream, or a fantasy, but the sum total of our goals, policies, programs and projects with investments in our real potential. It is also the awareness of and interaction with the rapid advances in science, industry and technology with the aim of achieving prosperity for our country as well as bringing our country to the forefront of advanced countries," Al-Jasser added.
The minister also stressed the significant role the private sector has to play in bringing about vast improvements in the production environment as well as diversification of our economic base and skillful engagement of our national workforce.
The minister said:
If planning is the 'art of constructing the future out of the present' and the healthy method to dynamic structuring of the continuous process of reinforcing positive aspects and overcoming hurdles, then let us review some of the Kingdom's achievements in the area of economic growth under the Five Year Development Plans.
1) Diversification of the economic base:
The contribution of the nonoil sector to the real Gross Domestic Product (in constant 1999 prices) rose from 48.5 percent in 1970 to 72.5 percent in 2011 (in spite of increased oil production in 2011):
The ratio of nonpetroleum goods exports to goods imports jumped from 26.25 percent in 2001 to 39.29 percent in 2011.
2) Domestic cement production surged from 24 million tons in 2004 to 62 million in 2011.
3) At the end of 2010, the first year of the 9th Plan, the length of paved roads reached 223,800 km, in addition to 135,000 km of non-paved roads.
(Our borders are far apart and great distances separate our cities)
4) Average life expectancy in the Kingdom reached 74 years in 2011 from 53 in the early 1970s because of improved health and social services provided by the government.
a) The level of vaccination reached 98 percent in 2010 and the Kingdom eradicated polio in children in 1995. No case of whooping cough, diphtheria or similar diseases has been registered in recent years.
b) The mortality rate among children aged below five dropped from 44 deaths per 1,000 births in 1990, to 18.3 in 2011.
c) The maternal mortality rate dropped from 48 deaths per 100,000 deliveries to 14 in 2010.
d) In the first year of the 9th Development Plan, the number of doctors within the Ministry of Health rose by 48 percent compared to 2006, and by 50 percent in the private sector during the same period. The rise in their number in other governmental sectors was 28 percent.
Thus, the list of achievements continues, and could be read in the publications on the achievements of the Kingdom's developmental plans and the report on achieving the Millennium Goals.
It is not my aim to indulge in self-satisfaction. Rather, I am thankful to Almighty God, who said: "If you are grateful, I will add more (favors) unto you."
Saudi Arabia is currently going through a phase referred to as a 'demographic window.'
It is a particular situation that happens only rarely.
This population phenomenon occurs in a society when it shifts from a state characterized by an increase in children's birth and dependency rate to a state characterized by a fall in the rate of birth and number of children under 15, associated with an increase in the working-age population (15 years to 64 years) and a low percentage of the population 65 years and older.
The UN defines the 'Demographic Window' as the period when the proportion of the population under 15 falls below 30 percent and the proportion of people 65 years and older is below 15 percent.
The fall in the proportion of unproductive dependents provides an opportunity to improve the general standard of living since the fall in the dependency ratio results in increased savings and investment opportunities for those in the working age group.
Demographic statistics in the Kingdom for the 1992-2011 period point to the beginning of this phenomenon.
The number of children below 15 decreased from 49.2 percent in 1992 to 35.6 percent in 2011 and the number of the working age population (15-64 years) increased from 47.5 percent in 1992 to 60.9 percent in 2011.
A slight rise in the 65 years and older group from 3.3 percent to 3.5 percent was also observed for that period.
It is evident that this shift in the demographic structure provides the young with the opportunity to save and invest more, so that they can improve their living standard if they employed their full potential and increased their level of education and experience.
The great progress that this country made in education, with initiatives such as opening new universities and specialized institutes to satisfy the demands of the job market and sending large numbers of university students abroad will provide the 'demographic window' with the driving force and ammunition that will ensure its progress towards achieving our ambitious future plans.
Brothers and sisters,
It gives me great pleasure to be standing today before our businessmen including the active youths.
This is significant because the young are concerned more than others in achieving the future vision of our country.
Achievements are made not just because of efforts of the Ministry of Economy and Planning and other ministries.
Without the contribution of the youth, the tasks of the ministries lose flavor and energy. Let me sum up the five major props of the future vision of the country's economy.
Looking at the economic future of any country is a complex task, especially in a world that has become a global village where local economies are closely intertwined with the global economic system.
The task becomes all the more complex in the case of Saudi Arabia because of its numerous and diverse commercial, financial and investment ties and the relative size of these ties as measured, for example, by GDP, exports, investments and consumption. One can also add the heavy dependence of the Saudi economy on oil exports to international markets that are subject to unpredictable, let alone controllable, developments, economic and non-economic, in any part of the world."
The economic policy of any country rests on three legs: fiscal policy, monetary policy and structural policy.
The Ministry of Finance, with the backing of the Supreme Economic Council, takes the responsibility of designing and implementing fiscal policy through the government budget. The Kingdom is in an excellent position, with government spending at its peak and government debt at its lowest level (declining from 100 percent to six percent of GDP) together with comfortable reserves even if oil revenues fall.
The Saudi Arabian Monetary Agency shoulders the responsibility of designing and implementing monetary and banking policy, which is also robust and enjoys high credibility.
The Ministry of Economy and Planning, in cooperation with other ministries and government agencies, and with directives and support from the Supreme Economic Council, takes the responsibility of structural economic policy by drafting five-year development plans and the necessary economic policies to achieve their goals.
In light of what I have mentioned, let me return to the pivotal points and the challenges that the Saudi economy could face in the future.
Improving the quality of the Kingdom's human resources is a major pivotal point in our future vision of the Saudi economy.
In light of current global conditions, with economic globalization and rapid developments in knowledge and technology which have become decisive factors in increasing competitiveness among nations, improvements in the quality, productivity and innovative capability of the workforce in the industrial and technological fields have become a pivotal point in keeping pace with the breathtaking scientific developments in a world that is becoming faster and smarter.
A highly skilled and technology savvy workforce will ensure the nation's capacity for integration and competitiveness within the global economy.
The necessary capability of the future will not be restricted to knowledge acquisition, it will also require knowledge production, reflecting it in goods and services.
That is the decisive factor in the progress of nations and their culture.
Hence, it is essential to focus on upgrading the science skills of the Saudi workforce through an educational and training system of high caliber, capable of fulfilling the current and future requirements of the labor market as well as the knowledge and technology of the globalized world economy.
For this, it is essential to have investments that make available superstructures and infrastructures for the various phases of education, including laboratories, workshops, equipment and instruments, and the latest technologies.
The second pivotal point is to strengthen the process of diversification of the economy.
Despite all the achievements to date, this remains important, since it is the main tool for consolidating the foundations for sustained and comprehensive economic development, using a broad and diverse productive base with high linkages and active involvement of large, medium and small enterprises in production, operation and investment based on the Kingdom's comparative advantages as well as advanced technologies. This will tend to favor high value-added products for export, and will result in more balanced development of regions in the Kingdom.
There are also other basic dimensions for economic diversification.
These include institutional diversification, reflected by a higher contribution of the private sector in economic activity.
Very early on, the government embarked on a strategy to broaden the scope for the private sector to enable it to engage in several economic activities, which had a significant positive impact on the economy as well as on developing its capabilities and improving its efficiency.
This enabled the economy not only to mobilize capital for financing projects, but also to expand its adoption of modern administrative systems and advanced technologies.
In order to consolidate the private sector's role, the government introduced special policies and programs to upgrade systems, and established new institutional mechanisms for improving the investment environment and opening new horizons for the private sector to employ its resources and to take advantage of investment opportunities.
Although significant results were realized, they remain short of our aspirations.
The private sector is still facing a number of challenges.
Some of the more important challenges are improving competitiveness to overcome the challenges of globalization; creation of job opportunities for the expanding national workforce; increasing its investments in projects and activities with high value added, especially those linked to national basic industries, and in particular export industries; and increasing the share of non-oil exports in GDP.
It is also important to point out that there are intensified efforts to increase the role of small and medium enterprises (SMEs), which are a major engine of economic growth and are instrumental in creating employment opportunities in contemporary economies.
We at the ministry, together with the relevant government agencies, are striving to evaluate various alternatives to establish a flexible and active institutional framework to support SMEs as well as to develop them."
Ladies and gentlemen,
This leads us to the third pivotal point: strengthening competitiveness.
The economic and technological developments that the world has been witnessing since the early 90s and the accompanying economic and commercial openness in the wake of globalization have brought about new challenges to the Saudi economy and its growth.
These challenges include penetration of local products to foreign markets, increasing competition in the local market between domestically produced products and imports, and stiffening competition worldwide to attract foreign capital.
In the midst of this competitive environment and the challenges it poses in integrating the Saudi economy with the global economy, and with the efforts exerted to develop private sector enterprises and to strengthen their development role, improvement of competitive capabilities with its economic dimensions -both fully and partially - has become a decisive factor in the future economic development strategy of the Kingdom.
The fourth pivotal point pertains to the establishment of the basic components of the knowledge-based economy and the expansion of its scope. Let me point out some of the steps that have been taken in this respect.
These include enactment of the National Policy for Sciences, Technology and Innovation; full financing of all programs and projects in its first five-year plan; the significant increase in the number of universities, most important among them is the establishment of King Abdullah University of Science and Technology (KAUST); the creation of technical research institutes including those for nanotechnology; the steady increase in the number of specialties for research and development in universities and research centers; the enactment of The National Plan for Communications and IT and the financing of its implementation; and the enactment of The National Industrial Strategy with the slogan of "Toward a knowledge-based economy" and of a strategy for talent, giftedness and support for innovation.
Despite these steps, we are still a long way from having most of our economic activities based on intensive use of the latest developments in science and technology, and where knowledge and innovation represent a basic element of our production process.
In this respect, Custodian of the Two Holy Mosques King Abdullah requested that a National Strategy be prepared to move Saudi Arabia to a knowledge-based economy, including ambitious vision, programs and projects.
The ministry is preparing such a strategy in cooperation with a Korean team to take advantage of their successful recent experience in this respect.
Ladies and gentlemen,
The center of gravity in the future vision of the economy lies in enhancing labor and total factor productivity.
This represents the ideal way for guaranteeing a successful process of production and its sustainability, in order to realize higher growth, incomes, living standards and quality of life.
Moreover, higher productivity would lead to a fall in the cost of domestic products and an increase in their competitiveness.
Higher productivity, especially of labor, is an effective way to decrease the size of the foreign component of the labor force and to create attractive employment opportunities for Saudi workers.
This is particularly important at the present time in the Kingdom, where low labor productivity sectors and activities are those with heavy presence of unskilled foreign workers.
It is well-known that increasing the capital intensity of productive activities and upgrading technology used in production and administrative systems are effective means for increasing labor productivity.
What is required, therefore, is to encourage and to support firms in investing in the use of machines instead of labor, a process referred to in economics as "capital deepening."
This capital deepening will undoubtedly be accompanied by corresponding progress in the use of new generations of production and administration technologies, which will increase labor and total factor productivity.
Under these conditions, these firms would realize that they can achieve higher levels of production and profit by employing less foreign workers.
This process of capital deepening and technology upgrading can continue and would eventually result in a reduction in the number of foreign workers to much lower levels.
These firms would then realize that they can replace part of their foreign employees with Saudis that have higher academic and technical qualifications, in addition to attracting them to jobs with higher salaries and benefits.
Of course, higher productivity need not be restricted to existing firms (whether in sectors with an overwhelming presence of foreign workers or in others), it also applies to future development projects. Here I would like to point out that the Kingdom is proud of having a number of model firms in the production and service sectors that have achieved consistently high productivity levels.
These firms could be used as models for future projects where the role of the state would be to encourage and support establishment of such projects, including bilateral and trilateral partnerships involving government, local and foreign capital.
On the other hand, increasing productivity is strongly linked to quality improvement of the national workforce.
If the productivity in the private sector is better than that of the government sector, and since the former is sterner and more flexible in remunerating unproductive employees, we in the government sector may need to give some incentive to productive employees so as not to waste their efforts.
Ladies and gentlemen,
God willing, the future of the Saudi economy looks promising and prosperous.
The Kingdom, as you know, is proud of its immense and diverse potentials that can enable it to achieve its goals and to realize the future vision that it aspires to.
The Kingdom's petroleum and natural gas resources are sufficient to meet its capital requirements for the foreseeable future.
It has immense and diverse reserves of non-oil mineral resources, in addition to a geographically strategic location where its seaports are crossroads to three continents: Asia, Africa and Europe.
This enables the Kingdom to provide substantial service facilities including air, sea and land transport, and re-export of goods.
All parts of the Kingdom are covered with advanced utility services in transport, telecommunications, electricity, water, sewage and distribution networks of petroleum products, in addition to health, education, training and social services.
The Kingdom's private sector is characterized by high dynamism.
Its financial and administrative capabilities are self-reliant following an earlier phase of relying heavily on government contracts and public spending, thus making it a major partner in the development process.
The Kingdom enjoys a healthy and attractive business environment supported by economic and political stability.
At the same time, the Kingdom enjoys a business environment suitable for economic and investment activities and reinforced by banks, markets, financial markets and the like.
All these support the government's continuous efforts to attract investment and to continue to train Saudi workers.
If there is a lesson to be learned from the global economic crisis, it is the importance of intensifying efforts in the five pivotal points, which I mentioned earlier.
I thank the Riyadh Chamber of Commerce and Industry and its officials as well as the Young Businessmen's Committee for organizing this meeting.
I appreciate your giving me the opportunity to address this forum.
I also apologize for prolonging my speech elaborating on our country's glory.
May God protect our country, its wise leadership and all of you, and may He safeguard the country's security and stability.