By Shams Ahsan
Jeddah — The focus of the Kingdom’s Vision 2030 on diversification will help the small and medium-sized enterprises (SMEs) sector, according to Executive Director of the International Trade Center (ITC) Arancha Gonzalez.
“SMEs in Saudi Arabia represent 90 percent of business but they need to be more competitive,” she told Saudi Gazette.
Gonzalez, who was here to strategize the partnership between the Islamic Development Bank (IDB) and the ITC, said that the gap between large and medium-sized enterprises is 20 percent, i.e. medium-sized enterprises are 20 percent less competitive than the large. But the gap between large and small-sized enterprises is over 35 percent. This gap is 10 percentage points larger than in Europe. So there is a huge competitiveness gap.
The Kingdom’s Vision 2030 outlines a key role for SMEs. One of the goals of Vision 2030 is to increase the SME contribution to GDP from 20 percent to 35 percent.
Gonzalez suggested that the Kingdom could make SMEs more competitive by helping them internationalize.
“When SMEs participate in international trade, they become competitive. And only the most competitive participate in international trade,” said Gonzalez, adding that the competitiveness of SMEs has to be put together with diversification which has a huge component of skill development.
She said that the ITC, which is a joint agency of the World Trade Organization (WTO) and the United Nations, is working with the Saudi Ministry of Trade and Commerce to help them map their potential.
“We are also working through the IDB on sectors which can help the Kingdom,” she said.
Gonzalez emphasized the need to diversify, a focus of Vision 2030.
“WTO makes trade possible; it does not make trade happen. To have trade you need to diversify, improving the quantity and quality of supplies by tapping into a portfolio of opportunities.”
She said, “Diversification is a slow game. You don’t change the structure of your economy in a five-year plan.
“One thing that Saudi Arabia has that works in its favor is that it does not have political ups and downs like other countries whose policies change with the change of government.”
Gonzalez, who was here at the invitation of IDB President Bandar Hajjar, said that the IDB and the ITC are drafting a one-year plan for joint projects.
She said that the IDB is very strong on hard infrastructure and the ITC is very strong on soft infrastructure.
“We need to build integrated solutions when the hard and soft come together to help develop the trade potential of Organization of Islamic Cooperation (OIC) countries,” she said, adding that the best option for global trade is rules-based system instead of the deals-based one.
Gonzalez said that Saudi Arabia was on the right track with its focus on diversification that will enhance its participation in global trade.
She concluded by praising Saudi Arabia for its focus on skills development.
Gonzalez said that the Kingdom is a young country with a huge youth potential. So education is very important as an engine of growth and development.