The third session of The Arab Strategy Forum

Mamdouh Salameh:

  • Enhancing private sector contribution will ensures a sustainable economy built on innovation

Georges Corm:

  • Stability in the region will reverse migrant Arab capital flows

Dubai, UAE – 14 December 2016:

During the third session of The Arab Strategy Forum, both Dr. Georges Corm, the former Finance Minister of Lebanon and Dr. Mamdouh Salameh, international oil expert, agreed that the economic state of the Arab world in the coming year will be full of challenges.

During the session, which was moderated by Naser El Tibi from Al Arabiya News Channel, Corm observed how the Arab world lives in the shadow of policies tied to oil prices. He suggested that 10% of oil returns should be allocated for investment in the technology sector, along with other sectors, towards economic diversification. Should 5% of returns be invested in farming in Sudan, for example, the Arab world would be able to provide the necessary food required before exporting surpluses to the rest of the world.

Corm invited the Gulf Cooperation Council (GCC) to implement income taxes from which investments can be made in economic diversification, in addition to phasing out fuel subsidies, a definitive action that would ultimately save the region’s economies $170 billion dollars per year.

Mahmoud Salameh described the Arab people as being innovative and creative, on the condition that they are guided by the right degree of wise leadership. He used the story of the United Arab Emirates as an example of how it was able to dramatically reduce its reliance on oil. He continued that, in the near future, the Kingdom of Saudi Arabia will be the biggest producer and supplier of petrochemicals in the world. However, like many experts, he reemphasised the importance the private sector plays in contributing to economic transformation and the importance of investment in technology to guarantee the establishment of a sustainable economy built on innovation.

Salameh cautioned on the need to learn from lessons of the past and to not be apprehensive about policies centred on output reduction. He observed that he expects developing countries to import oil for much longer and that renewable energy only meets 2.7% of energy needs globally, which means that the need for oil will remain and therefore oil producing countries will depend on selling oil as they develop and diversify their economies.

Salameh advised members of the Organization of the Petroleum Exporting Countries (OPEC) to not overreact to the alleged risks posed by American shale oil, even if it were to return to the forefront of attention following a rise in global oil prices. Salameh supported his argument by highlighting that the estimated losses from low oil prices in the period from 2014 to 2015 to be around $320 billion in the GCC and Iraq.

With respect to economic diversification, Corm believes Gulf countries are on the right track but 80% of investments from oil-producing countries goes towards the oil, real-estate and tourism sectors. He suggests it would be advisable to observe the actions of East Asian countries, which have focused on the technology sector. Private companies, such as Samsung, have successfully grown into global giants strongly attributed to a research base of 50,000 engineers.  He advises Arab countries to focus on the technology sector as a means to innovatively diversify their economies and limit the migration of creative Arab minds.

He confirmed that GCC economies have the potential to withstand any economic downturn, as they are cushioned by large financial resources and focus on the enhancement of the investment climate to further ease hurdles towards technological advancement.

Corm continued that in South Korea, a country that is much smaller than the Arab region, there are 55,000 patents. The Arab region’s patent production is negligible. This, he reasons, is why it is important for private and public sectors to work together, especially in providing and using technological solutions to create job opportunities for Arab youth.

He continues to say that the unemployment rate of educated youth is the highest in the world. It is important that there are real dialogues with regional businessmen to encourage competitiveness in the private sector. This would stimulate the technology industry and thus expand employment opportunities.

In response to a question about the impact of current conflicts on Arab economies, Corm said that should peace take hold across the region, migrant Arab capital will come back, attracting foreign investment with it.

-Ends-

About the Arab Strategy Forum
The Arab Strategy Forum was launched in 2001 under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, as a platform to foresee the future and gain a deeper understanding of major political and economic issues affecting the Arab world and the international community. The event brings together world leaders and opinion makers to discuss current regional and global affairs, offering them a platform to draw up measurable and achievable strategies that can help make a positive change in the world.

You can learn more about the Arab Strategy Forum by visiting http://www.arabstrategyforum.org

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© Press Release 2016