Business and Entrepreneurship in Saudi Arabia. Burton Edward

private sector has been adequately incorporated into the economic development plans of the Kingdom, it is instructive to review how the Saudi government has interacted with the community and their pronouncements concerning their role.

      Since oil revenues began streaming into the Kingdom in the 1930s, the private sector has been the beneficiary of patronage in the form of contracts doled out by King Abdulaziz and his successors. In part to reward loyalty to his leadership during the challenges faced while he was unifying the country, and in part to grow nascent manufacturing and trading communities across the Kingdom eager to capitalize on the government's spending priorities, the king and his sons succeeding him, awarded contracts to what were then primarily small Saudi businesses to construct government buildings, roads, build bridges, schools, and airports, and to supply goods and services to a young nation. With the exception of the larger merchant firms of Jeddah and a few in the western province, many of the old family-owned businesses began operations and expanded between the 1930s and 1960s as a result Aramco contracts, partnerships with foreign firms in fulfillment of government contracts, and through other government spending that had knock-on effects on the developing Saudi economy. Although business leaders were rarely offered government jobs or asked to help steer economic policy decisions, the business community's value as perceived by the nation's rulers and their economic planners was growing.

      At the time the first Five-Year Development Plan was delivered, the Saudi government said about economic change and the role of the private enterprise:

       The commitment of Saudi Arabia to a free economy derives from the teachings of the nation's religious code and its long-standing social traditions. It is supported by growing evidence that economic and social change cannot be imposed on the country by the actions of the government alone, but must come about through increasing participation of all elements of society in both the process of development and its benefits. Only by continuously encouraging private enterprise – large and small companies, family businesses, and individuals – to pursue those activities that they can undertake more effectively than government agencies, will the economy be able to benefit to the full from the ability and initiative of all of its people. 17

      The Ninth Development Plan echoed the First Development Plan when positioning the private sector in high prominence in setting the Plan's main directions toward shaping its economy. Under its “Main Directions” section, the Plan stated its objectives as:

       [The] objectives further include development of national human resources and raising their efficiency, enhancing contributions of the private sector to the development process, supporting the move toward a knowledge economy, raising the rates of growth and performance efficiency and competitiveness of the Saudi economy in an international environment dominated by globalization and heightened competition based on science and technology achievements. 18

SO, HOW HAS IT ALL WORKED OUT?

      Governments have always made decisions that affect businesses and businesses have always had to comply with any requirements emanating from those decisions. It is when those decisions lead to laws and regulations that, in their view, are unnecessarily in a state of discordance with making profits that businesses voice concern. It is also when the implementation of those laws and regulations is clouded by uncertainty in the application and process that the business community often registers its dissatisfaction. Normally, businesses voice dissent less with the laws and regulations themselves, as opposed to how they are applied and over what turn out to be unintended consequences borne by them.

      1

      U.S. Department of State, Office of the Historian, “Guide to the United States' History of Recognition, Diplomatic, and Consular Relations, by Country, since 1776: Saudi Arabia,” http://history.state.gov/countries/saudi-arabia#diplomatic_relations.

1

U.S. Department of State, Office of the Historian, “Guide to the United States' History of Recognition, Diplomatic, and Consular Relations, by Country, since 1776: Saudi Arabia,” http://history.state.gov/countries/saudi-arabia#diplomatic_relations.

2

The White House, President Barack Obama, Office of the Press Secretary, “Joint Statement on the Meeting between President Barack Obama and King Salman Bin Abd al-Aziz Al Saud,” September 9, 2015, https://www.whitehouse.gov/the-press-office/2015/09/04/joint-statement-meeting-between-president-barack-obama-and-king-salman.

3

U.S. – Saudi Business Opportunities Forum, Los Angeles, CA, September 16, 2013, “Special Session: An Introduction to Doing Business in Saudi Arabia,” link to panel video: https://vimeo.com/74694009.

4

United States Census Bureau, Trade in Goods with Saudi Arabia, http://www.census.gov/foreign-trade/balance/c5170.html.

5

His Excellency Dr. Mohammed Al-Jasser, Minister of Economy and Planning in Seventh International Competitiveness Forums, http://www.mep.gov.sa/themes/GlodenCarpet/index.jsp (January 19, 2014).

6

Kingdom of Saudi Arabia, Ministry of Planning, Riyadh, Third Development Plan for the Kingdom of Saudi Arabia, 1980–1985 (1400–1405 AH), 8.

7

Kingdom of Saudi Arabia, Central Planning Organization, Riyadh, the Development Plan for the Kingdom of Saudi Arabia, 1970–1975 (1390–1395 AH, 23.

8

Kingdom of Saudi Arabia, Ministry of Economy and Planning, Riyadh, Ninth Development Plan for the Kingdom of Saudi Arabia, Preface, 2010–2015 (1431–1436 AH), iii.

9

Kingdom of Saudi Arabia, the Ministry of Economy and Planning, Riyadh, Brief Report on the Ninth Development Plan, 2010–2014 (1431/32–1435/36 AH), 11, 12.

10

Kingdom of Saudi Arabia, Ministry of Economy and Planning, Riyadh, Ninth Development Plan for the Kingdom of Saudi Arabia, 2005–2010 (1431–1436 AH), 2.

11

“Brief Report on the Ninth Development Plan,” 23, 24.

12

Ibid., See Figure 1.2, Main Indicators of the Ninth Development Plan (2010–2014).

13

Central Department of Statistics and Information (CDSI), “Latest Statistical Releases, Key Indicators: Unemployment Rate 2013,” http://www.cdsi.gov.sa/English.

14

Central Department of Statistics and Information (CDSI), “Latest Statistical Releases, Key Indicators: Private Sector's Contribution

17

Kingdom of Saudi Arabia, Central Planning Organization, Riyadh, the Development Plan for the Kingdom of Saudi Arabia, 1970–1975 (1390–1395 AH), 21.

18

Kingdom of Saudi Arabia, Ministry of Economy and Planning, Riyadh, Ninth Development Plan for the Kingdom of Saudi Arabia, Main Direction of the Ninth Development Plan, 2005–2010 (1431–1436 AH), 25.