The Saudi Arabia General Investment Authority Essay

Custom Student Mr. Teacher ENG 1001-04 29 October 2016

The Saudi Arabia General Investment Authority

1. How would you measure SAGIA’simpacton Saudi Arabia’s competitiveness? Compare the improvement in indicators (number of days to register a business, FDI growth, employments indicators, etc.) between 2005 and 2011by referringto the Global Competitiveness Report, Doing Business Report and other sources.

2. What are the characteristics of effective networked governance? What are the advantages? What are the indications that SAGIA introduced networked governance?

3. What are One-Stop-Shops? How they may improve the business environment? What are the challenges of establishing them?

One-Stop-Shops, also called Investor Service Centers (ISCs), inspired by the notion of a single site offering multiple services to investors and was refined further to eliminate passing through many offices around the building of each government agency to get the investor’s paper stamped. The one-stop shop includes a front desk and a back office; front desk has four to five customer relations managers, who professionally take all requirements and hand them to the back office which includes representatives from several government departments as well as international technologies and firms.

This work Design helped SAGIA ensure high quality customer service and eliminate the potential for corruption while making procedures simpler and faster which reflected in greater firm satisfaction and savings with more businesses being registered, increased financial resources and job opportunities that utilizes the best available local resources. ISCs served as buffer zones, with the SAGIA customer service staff functioning as intermediaries between customers and government agency representatives. One of the challenges of establishing ISC, that it was staffed by government employees and the concern was that public service employees could not perform as well as their private counterparts, but this challenge was resolved by providing the right incentives to the staff by granting bonuses for incremental increases in the number of passports handled. The volume of passports handled was 100 times more than what was used to be handled with same amount of time.

4. What are the pros and cons of the Saudization Policy? What are its implications on the competitiveness of the Saudi Economy?

Pros: * Replacing foreign workers with Saudis, since the Saudi economy is heavily dependent on them. * Lowering the Saudi unemployment rate. * Increase employment for Saudi nationals across all sectors of domestic economy. * Recapture and reinvest income which otherwise would have flowed overseas as remittances to foreign worker home countries.

Cons: * Companies started to make fake mergers and acquisitions of its various divisions in order to meet their quota.

* Saudis are being hired only because they are Saudi and not due to their qualifications.

* Saudization caused Foreign and even Saudi companies to move their operations to UAE or other more business-friendly regional environments.

* Thousands of low wage labors were forced to leave, such as shopkeepers and drivers, there are not always even enough Saudis who even want these job to replace them that resulted with replacing the good, skilled and cost effective labor with a national Saudi who lacks the interest, skill or experience in some cases to perform these jobs

* Higher wage costs being imposed on organizations that discouraged investment in Saudi Arabia

* Since the education system has largely failed to prepare the country’s youth for jobs requiring technical expertise. Compounding this problem is that many graduates refuse to take assignments that are considered commonly as menial.

Saudization clearly creates some disturbances, with some sectors like transport anticipating a catastrophe. The ultimate goal of development and hopefully higher growth comes with a cost in the form of short term transitional disruption. There are two main concerns. First, many firms may feel that Saudization will reduce their competitiveness and for that reason may decide to leave the kingdom for a more business friendly environment. These would most likely be firms in the service sectors such as banking.

The country’s poor regulatory environment only compounds this problem with a reportedly 2,500 Saudi companies opening up shops in Dubai, rather than in Saudi Arabia kingdom. The second main area of impact from Saudization may be a reduction of foreign direct investment (FDI) in the kingdom. Foreign firms may feel that Saudization not only puts them at a disadvantage compared to their foreign competitors, but that the whole Saudization program itself is unpredictable, with rules and quotas changing randomly. 5. Discuss the concept of Special Economic Zones and how they should be established to have maximum positive impact on the national economy and its competitiveness.

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  • University/College: University of California

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 29 October 2016

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