Lessons from comedy: Saudi industries need to diversify
It's time to totally reconsider the manufacturing strategy in Saudi Arabia and our reconsideration must start with how we supporting factories
I recently watched the absurd American comedy movie The Campaign, and I must tell you it's not exactly Hollywood's best movies. I therefore don't recommend watching it unless you're interested in the American electoral system and the process of electing politicians there.
The movie isn't that different from the reality of how greedy wealthy men in the U.S. become politicians by funding their electoral campaigns so they serve them later. To criticize this, the movie intentionally exaggerated the events to make its point.
A twisted plot of economic gain
The plot of the movie follows two men competing over a Congressional seat. They resort to the dirtiest means to distort each other's images. Their campaigns are being funded by two businessmen but the candidates don't know that. These two businessmen are funding both campaigns because they want to guarantee they can later pass a law that allows selling an entire country to the Chinese government.
Is there a long run economic benefit when factories in Saudi are not run by nationals? Isn't it possible to invest and build factories in China or Indonesia or other nearby countries, like Egypt and Tunisia, where there is cheap labor, like American and European companies do?Jamal Khashoggi
This would allow the latter to transfer hundreds of thousands of cheap Chinese labor - including children - to work in factories which China in partnership with the two businessmen will build in the county according to Chinese laws. The laborers transferred to the county will thus be deprived of their right to immigration and will not work under American labor laws on minimum wage, healthcare or rights.
The plan will allow the two corrupt businessmen to make gains as the expansive shipping costs from China to America decreases, allowing their profits to double. This was their greedy and unpatriotic solution to deal with American factories being transferred to China in search of cheap labor. They also hired hordes of journalists and economic experts to convince the public that it's the solution which serves the American economy best.
While this is considered wrong, isn't this what Saudi and the Gulf countries do when we build factories and then bring laborers from East Asia to work in them?
I am not making quick judgments here but I am bringing up the issue for discussion. Is there a long run economic benefit when factories in Saudi are not run by nationals? Isn't it possible to invest and build factories in China or Indonesia or other nearby countries, like Egypt and Tunisia, where there is cheap labor, like American and European companies do?
According to statistics carried out by the Gulf Organization for Industrial Consulting, there are 15,165 factories in all six Gulf countries, and this number is exponentially growing.
There are more than 1.3 million workers in these factories, but how many of them are nationals? I couldn't find an answer in the organization's statistics but they will probably not exceed 20%.
It's an unordinary economic situation and it cannot continue amidst the increase of young Saudi nationals seeking jobs but who are unwilling to work for the same low incomes given to foreign laborers.
Misguided agricultural ambitions
During the 1980's, we fought against food insecurity by planting wheat in the desert and flowers in fertile lands. We were proud and happy that we exported some products to Holland - the land of flowers.
However, we wasted our water and consumed the supplies meant for the future generations. It was weird we did that when water is our scarcest resource. We noticed our mistake when it was too late but better late than never.
A few days ago, the Saudi Minister of Water and Electricity Abdullah al-Hussayen clearly said that the country is not an agricultural country and that it should have never been. He noted how we wasted our non-renewable resources of groundwater to plant wheat, fodder and finally over 13 million olive trees.
He once mockingly said: "We know about olives as much as the Spanish know about the difference between Khalas and Barhi" - the most famous Saudi types of dates.
The minister vowed to make an effort to issue a governmental decision to ban planting fodder, adding that this type of agriculture as well as others will inevitably come to an end either through a governmental decision or the groundwater drying out.
Therefore, the government has officially begun to alter our orientation of planting in our desert by planting in Ethiopia's plateaus. We invested billions there and we still do, and we are studying other locations to be our farms beyond our borders. This falls within a governmental initiative that encourages achieving food safety.
There are some concerns, however. Some think that such projects require a parallel program to store grains in the Saudi kingdom in case war breaks out. Also, it’s risky that Ethiopia has the right to seize Saudi products being grown on its land regardless of any prior agreements.
So now that we've accepted this on the agricultural level, why don't we accept it when it comes to our industry?
Rethinking Saudi’s industries
It's time to totally reconsider the manufacturing strategy in Saudi Arabia and other Gulf countries, and our reconsideration must be based on the gradual decrease of supporting factories - an act currently carried out by providing them with decreased feedstock prices.
These prices must thus be raised to match the global prices. It's no secret that there are discussions to decrease local consumption of energy. Add to that, there's the Saudi labor ministry policy that aims to increase the cost of cheap labor. When all this happens or at least some of it happens, many factories will be out of the competition and will certainly be out of the market and the remaining factories will choose to hire nationals instead of foreigners.
Everyone knows that Gulf countries, and the Saudi kingdom in particular, cannot preferentially treat factory owners forever. At some point, political interest may have called for such treatment in order to create a middle class, distribute fortune and help establish industrial experience hoping it will one day act as a reserve for the gross national product based on oil.
However, another contradictory political interest has begun to surface and to pressure governments - an interest represented in unemployment, low income and absurd consumption of an energy whose value has double in the market.
I am not calling for completely abandoning agriculture and industry in favor of just producing and exporting oil. I am calling for finding smart alternatives in both fields.
The priority must be for Saudi and Gulf citizens for a harmonious national society and for carefree citizens.
Capital owners who only care that our cities be full of millions of cheap foreign laborers and millions of unemployed nationals should come in second. It's a real dramatic movie we're living in and not just an American comedy that entertains us.
This article was first published in al-Hayat on May 3, 2014.
Jamal Khashoggi is a Saudi journalist, columnist, author, and general manager of the upcoming Al Arab News Channel. He previously served as a media aide to Prince Turki al Faisal while he was Saudi Arabia's ambassador to the United States. Khashoggi has written for various daily and weekly Arab newspapers, including Asharq al-Awsat, al-Majalla and al-Hayat, and was editor-in-chief of the Saudi-based al-Watan. He was a foreign correspondent in Afghanistan, Algeria, Kuwait, Sudan, and other Middle Eastern countries. He is also a political commentator for Saudi-based and international news channels.
- Saudi Arabia to launch $9.5bn mining industrial city
- For tourism industry, Saudis are appealing guests
- Saudi Arabia approves $530m industrial investment company
- Saudi’s SABIC says natural gas shortage limiting domestic growth
- Saudi employers to pay for deporting illegal workers
- Saudi employment growth plummets amid crackdown on illegal workers