Higher growth in ME is a must to create more jobs
The private sector came down hard on Middle East governments at the World Economic Forum on Tuesday for acting like rivals and not partners, which hampers inter-regional growth.
Alain Bejjani, chief executive of Majid Al Futtaim Holding, said that the Middle East region is very fragmented despite being small in terms of population size and having the same culture and proximity.
"Governments act like rivals - not like partners. So our governments need to act as partners. This region is too small with a population of 600 million people - including Pakistan. We have to wake up and we cannot continue to act as rivals. We are fighting on too little. We are talking about issues that we are facing and dealing with today - not in the future," he said.
The 50th meeting of the World Economic Forum (WEF) got under way in the ski resort of Davos with an avowed focus on climate change, but with starkly different visions over global warming laid bare.
"In the next 10 years, growth in the region is so fragmented despite a cultural factor and proximity. Most of the growth happens in blocks - like the European Union, Asia, and Nafta. We represent a fragment of the global economy. We are not relevant globally because we don't have scale. It is never about growth but about politics and stability. We need to look more as a big region and become more homogenous," Bejjani said, while speaking about the Middle East region during a panel discussion at the forum on Tuesday.
Citing an example, he said that Asia has 256 firms in the Fortune 500 companies but that this region has only two. "Everything is possible, we just need to come together."
The Middle East accounts for just six per cent of the intra-regional trade, as compared to 65 per cent in Europe and 25 per cent with the Asean region.
He noted that the region to focus on over-regulation, how to go about boosting intra-region trade, and to ensure people move and invest in each other country with ease.
Bejjani stressed that growth is key to create jobs for the youth in the region.
"Governments cannot create jobs if there is no growth. We need to create 80 million to 100 million jobs and for that we need growth. One per cent growth is not enough. It is the private sector which is to create growth," he said.
Palestinian Prime Minister Mohammad Ibrahim Shtayyeh said that the Middle East simmers from certain imbalances due to uncertainties in the region and investment is a serious problem because of political uncertainty.
In order to create more jobs, he pointed out that only solution is have economic growth faster than the population growth. He also suggested reduction in tariffs in the region to expedite trade growth.
The Palestinian premier noted that time is shrinking now between one invention to another so the regional government have to come up with relevant solution to create jobs. "We've to live with new emerging realities. There are a so many jobs that will die and many jobs that will be born. We have cancelled 120 majors at local Palestine universities because they are no more relevant. We want to prepare Palestinian graduates to new realities," he added.
Abdullah bin Amer Alswaha, minister of communications and IT in Saudi Arabia, said there is inequality in the region and new realities "dictates us to focus on women, digital divide."
"In the Middle East and GCC, I am bullish that this region will go back to growth. The whole world is complaining of aging population, while 70 per cent of population in Middle East is youth. They have highest penetration of social media. So the question is when it is going to lead the growth and not if. I agree that we need to innovate rather than regulate. Under Fourth Industrial Revolution, the rules of competition have changed - it is about youth, women, ethics and trust worthiness," Alswaha said during the panel discussion at the forum.
Majid Jafar, CEO of Crescent Petroleum, said the region lags in investment in infrastructure and largely spends funds on debt payment and salaries.
"Less than five per cent of GDP is spent on infrastructure in the region but 15 per cent in China," he said adding, that it is not any more about land and agriculture but about knowledge economies.
"We are almost unique because the more educated you are, there is less likelihood of getting the job in the region," he added.
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