Saudi Arabia needs to do more to boost investments, SMEs ecosystem: IMF official

In a moment of praise, the International Monetary Fund Mission Chief for Saudi Arabia, Tim Callen, told Argaam in an exclusive interview that the Saudi government has introduced new reforms to ensure a positive environment for investments and improve the Kingdom’s global competitiveness ranking.

Nevertheless, Callen stressed that more needs to be done in this regard, highlighting the importance of pursuing these efforts to boost investors’ confidence, employment and economic growth.

He said the reforms introduced by the government in recent years should over time pave the way for improving the environment for both domestic and foreign investments.

“Reflecting these reforms, big strides were made by Saudi Arabia in this year’s World Bank Doing Business report. However, foreign direct investment has been pretty weak globally over the past decade and this includes in Saudi Arabia. More needs to be done to continue to implement reforms,” he stated.

Callen called on the government to guarantee an easier process for setting up and growing businesses in the Kingdom, as well as creating an environment of “greater certainty” for investors.

On the role of small and medium enterprises (SMEs) and private sector in diversifying the Saudi economy, IMF mission chief said recent studies have shown that SMEs are very important generators of jobs and future economic growth.

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“At present, the contribution of SMEs to the Gross Domestic Product (GDP) and employment is relatively small in Saudi Arabia and the entry of new firms is low. This will need to change,” Callen affirmed.

He consequently called for supporting young firms and new entrepreneurs who bring “added dynamism” to the economy, through strengthening the SME ecosystem and improving access to finance.

He further explained that ensuring the success of policies aimed at diversifying the economy and creating new sectors entails equipping Saudi workforce with the right skills to accommodate the private sector’s requirements, as well as offering them incentives at competitive wages.

IMF Mission Chief for Saudi Arabia also noted that important steps are being taken to improve the Kingdom’s global competitiveness, which he said was reflected in the progress made in World Bank’s Doing Business 2020 report.

“The report, however, also makes in clear that despite the welcome improvements there is further still to go. One area that needs attention if competitiveness is to be improved is the current gap between wages and productivity,” Callen concluded.