New privatization law to boost Saudi economy

Saudi Arabia approved a new privatization law this week to boost the private sector’s contribution to the gross domestic product from 40 to 65 percent, which is a key goal of the Vision 2030 strategy.

With the approval of the new law the Kingdom seeks to accelerate its privatization drive to attract investment and move away from its dependence on oil income.

The authorities aim to expedite the privatization of as many as 16 government sectors such as health, transport and education.

Some people in the Kingdom appear to be a little confused about these measures. They feel that the privatization of such vital sectors may not turn out to be in their favor. These fears are unfounded as, despite the privatization, the government will ensure the protection of citizens’ interests and there will also be a foolproof mechanism in place to prevent exploitation of the public.

Following the approval of the law, Saudi Finance Minister Mohammed Al-Jadaan said: “(The new) privatization law aims to create an environment that allows raising the volume and level of services provided to citizens and expatriates.”

Actually, these fears are based on the flawed concepts of privatization that are prevalent among people. We need to understand the concept first. It is simply a process wherein the private sector shoulders the government’s responsibilities in certain sectors and it is achieved by forging public-private partnerships, which sometimes involve the partial or complete sale of assets.

The most important part of privatization is the development of a general legislative framework to oversee the implementation of the privatization plans.

It is necessary, however, to develop a separate legal framework for each sector to address any legislative gap that may cause conflict between the role of government as a regulator and the role of the private sector as an operator.

The ongoing privatization drive is a national project that is not related to the ministries of finance or planning. In order for it to succeed, all ministries, departments and professionals need to play their part.

Privatization will create more job opportunities and improve the level of public service due to the competition that is an important element in the private sector.

However, people will need more assurance on job security, as it exists in the public sector. Continuity will be for those who prove their ability to perform well and adhere to the regulations and achieve the goals set for each employee because, in order for privatization to succeed, there must be a change in the method of operating and managing public projects.

• Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers. Twitter: @dimah_alsharif