PSMEC - Private Sector - S1 01 Dr. Imad Shehab


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The Private Sector Middle East Conference, Riyadh, Saudi Arabia, Dec 3rd, 2013. Hosted by the Saudi Chambers of Commerce -- Session 1 - Dr. Imad Shehab, Secretary General, Union of Chambers of Commerce, Industry & Agriculture for Arab Countries

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PSMEC - Private Sector - S1 01 Dr. Imad Shehab

  1. 1.     Global recession emerged due to the economic crisis that erupted in 2008 and its ongoing repercussions. Increased Trade Protectionism. Slowing Growth in FDIs. The developing economies share in world exports increased to nearly half of the total world exports.
  2. 2. Economic Growth Indicators (%) 2012 2013* 2014* World 2.3 2.4 3.1 Developed Economies 1.3 1.3 2 Euro countries -0.4 -0.1 0.9 The United States 1.9 0.8 1.2 Japan 1.9 0.8 1.2 Developing Countries 5.1 5.5 5.7 Source: Global Economic Prospects, January 2013.
  3. 3.    The Region has 22 countries stretching from the Atlantic Ocean to the Indian Ocean. The region has a population of about 360 million people, more than 50 per cent of which are under the age of 25. The Region is highly diversified and classified into three major groups: 1. The oil rich countries. (GCC countries, Libya, Algeria) 2. The oil importing countries. (Lebanon, Jordan, Syria, Egypt). 3. The least developed countries (the Comoros, Mauritania and Djibouti).
  4. 4.  Its GDP Growth is estimated at 3.8 per cent in 2012, following a 2.4 % decline in 2011, mostly due to a pickup in Libyan oil output. Arab Region’s GDP Growth 00-09 GDP at Prices (%) Market 3.9 2010 2011 2012 2013 2014 2015 2.8 -2.4 3.8 3.4 3.9 4.3
  5. 5.   Low level of economic integration among the Arab countries as the Region is considered to have the lowest levels of intra-regional trade in the world despite preferential market access provided by the Greater Arab Free Trade Area (GAFTA). lack of appropriate policies and programs in aggravating the problem of food insecurity made the Region one of the most vulnerable to fluctuations in the prices of food products in the international markets.
  6. 6.     Investment opportunities are very promising in the Arab countries as they constitute a trading bloc under the umbrella of the Greater Arab Free Trade Area (GAFTA). The Arab world constitutes a huge and dense market with high capabilities and literacy levels. The Arab world was also the only region in the world to experience a growth in outward FDI of more than 9% in 2012. The Arab region contains a well established banking sector, whose assets reached $2.3 trillion with $1.2 trillion granted loans.
  7. 7.  Current Instability in the Arab RegionUnprecedented Change: ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ Tunisia. Egypt. Yemen. Syria. Sudan (Independence of South Sudan in July 2010). Lebanon. Bahrain. Libya.
  8. 8. 1. 2. 3. 4. 5. High Unemployment. Immigration. Food insecurity. Poor governance. Inequitable growth.
  9. 9. High Unemployment particularly among the young and educated segments due to: 1. ◦ ◦ ◦ High population growth with moderate to low growth in the Region led to insufficient jobs creation. Weak economic competitiveness. Infrastructure shortages and inefficient Government bureaucracy.
  10. 10. 2. A growing food insecurity in the Arab Region due to: ◦ ◦ ◦ ◦ Rapidly growing populations. Limited water and arable land resources. Significant dependence on international food markets. Low investments in food production and agroactivities in the Arab world. (at only $357 million which is less than 1 per cent of the annual Arab imports bill of major food commodities that is estimated at $41 billion in 2013 and expected to reach $63.5 billion in 2030).
  11. 11. 3. Weak governance in the Arab Region, while there is a need: ◦ ◦ ◦ For policy change towards greater accountability and more transparency in the public sector. To have clear conflict of interest regulations for public and elected officials. To allow greater access to information and to reduce economic concentration by reducing barriers to entry and fostering competition and anti-trust policies.
  12. 12.  Trade potential within the Region exists after removing the trade barriers among its member countries, which could increase trade volume by 10 per cent and create at least 2 million jobs. The existence of vast agricultural potentials in many Arab countries, notably Sudan, and the importance of this sector as a lead sector for economic growth and rural development.
  13. 13. 4. Inequitable Growth ◦ ◦ There are several manifestations of inequitable development in the Arab world, including high levels of poverty and inequality, high levels of unemployment, and unequal rates of regional development. The Region must focus on establishing sustainable social protection systems.
  14. 14. The General Union of Chambers of Commerce, Industry & Agriculture for the Arab Countries (GUCCIAAC) conducted a study on the major obstacles facing the Arab private sector, which are presented in the following:
  15. 15. Most problematic factors for the Arab Private Sector Source: WEF, The Arab World Competitiveness Report, 2013
  16. 16.     Improving competitiveness for the Region to create a higher number of jobs for the growing population. Eliminating non-tariff barriers to trade within the Region and harmonization of trade policies to assure the success of GAFTA. Adopting export diversification policies by improving the investment climate and eliminating obstacles that hinder free market forces. Providing the necessary support for exporters in order to facilitate the flow of trade regionally and internationally.
  17. 17.     Channeling additional investment into upgrading trade-related infrastructure, including roads, ports, airports and storage and handling facilities. Improve access to trade financing, particularly to the small exporters with limited resources. Allocating the necessary qualitative investments into the development of the human resource skills. Formulating a common Arab strategy for food security that relies on three major pillars.