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French Version

Arab private sector urged to take over state services

Former kuwaiti minister urges reform
Chairman of Aref Investment Group says action must be taken to reduce overstaffed and bloated bureaucracies

The public sectors in the Arab countries have become a burden on the governments, and the time has come to do something about it, the chairman of the Kuwaiti company Aref Investment Group, Ali Zumaih, said on Thursday.

The scathing attack on the public sectors by Kuwait's former finance minister reflects the mood of many investors, who say the private sector should take over some state-owned services.

Zumaih's remarks came at the start of a two-day conference in Beirut on investments in the public services.

"The public sectors are bleeding the resources of the countries, and I hope this is the last conference on the public sectors," Zumaih said.

Privatization of state-owned firms in the Arab world has made significant progress over the past few years, but many governments are still reluctant to hand over the public sectors to private companies.

Most Arab states suffer from overstaffed public departments run by bureaucratic individuals.

Zumaih went beyond the issue of privatization to demand greater Arab political reform.

"We cannot have economic reforms if it is not coupled with political reforms," he said.

He also said that Arab states have become social welfare societies, and that this costs Arab treasuries a lot of money.

But Zumaih also criticized the private sector in the Arab world for not doing enough to boost the economy.

"The private sector is only interested in making profits from short-term projects," he said.

Zumaih underlined the need to develop human resources across the Arab world so that Arab states can assume greater responsibilities.

He said many Arab states are obliged to hire non-Arab individuals to do certain tasks.

Many Arab Gulf states are still depending heavily on foreign expatriates to carry out specific projects.

Saudi Arabia and the United Arab Emirates are giving greater incentives to their citizens to help replace the large expatriate community, but these efforts are still far away from their target.

Zumaih also called on Arab states to take advantage of the recent rise in oil prices and invest the surplus in real projects within their own countries.

Echoing similar views, the secretary general of the Economic and Social Commission for Western Asia (Escwa), Mervat Tellawy, said the circumstances in this region are not very conducive for investments.

"The risks that are directly related to the political situation in the region weaken the will to invest in these countries," Tellawy said.

She added that over the past two decades, investments in the Arab states have fallen by 2 percent each year.

"Investments growths fell from 30 percent in 1983 to 16 percent in 2002," Tellawy said.

She added that Arab investments in the West are estimated at $800 billion, and that this figure would reach $2 trillion if the accumulated interest rates were included.

Lebanese Finance Minister Fouad Siniora said Arab citizens feel more comfortable when the state runs the public services, because they feel more secure.

"But the citizens are not aware that the poor quality of services provided by the public sectors are contributing to the rise of the budget deficits," Siniora said.

He also said that the private sectors should more involved in the affairs of the public sectors and that they should benefit from their experience.

Beirut,09 21 2004
Osama Habib
The Daily Star
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