Economies of Gulf Cooperation Council (GCC) countries need to address key economic issues in 2013. These challenges include consolidating regional economic integration, strengthening economic liberalisation drive and addressing the job headache in some member countries. On the international front, the challenge entails refreshing efforts to conclude trade agreements with other countries and blocks, notably the European Union.
One such challenge concerns slow pace of regional economic integration with regards to implementation of the Gulf Common Market (GCM). Launched in 2008, the GCM calls for free movement of factors of production within the six-nation grouping. However, complaints are plenty from business leaders and entrepreneurs of untold hurdles for attempting to open up branches in fellow GCC countries.
Another challenge concerns sustaining local economic reforms with implications for regional economies, as in opening the telecom industry. Undoubtedly, all GCC countries have reaped the benefits from liberalising the telecom sector through improvement in services, reduction of costs and introduction of new products and offers. Currently, telecom providers throughout the region are treating prospective customers of iPhone 5 with offers that include free minutes of local calls and message unlimited access to data reflecting advantages of economic reforms.
Similarly, market watchers are anxiously waiting the outcome of contested licences for operating domestic flights inside Saudi Arabia. Competing firms for the prize include Qatar Airways.
Still, another relates to generating a sufficient number of jobs for locals in three GCC countries, namely Saudi Arabia, Bahrain and Oman. For instance, Saudi authorities are under pressure to create 160,000 jobs annually, certainly a hefty number. Tens of thousands of Saudi youths enter the job market every year looking for employment meeting their expectations.
Rightly or wrongly, Saudi authorities have banned expatriates from working in more than 30 job categories, as part of a drive aimed at ensuring availability of jobs for locals. These include training managers, public relations officers, administrative assistants, purchase managers and secretaries. However, Saudi policy makers must be careful with the policy of applying restrictions on expatriates in order to avoid annoying the business community, which can relocate their enterprises to other competing regional places.
The efforts are partly designed to help reduce the unemployment rate in the kingdom from below 10 percent in 2008 to around 5.5 percent in 2014. Separately, joblessness among locals played a part in socio-political disturbances in early 2011 in each of Oman and Bahrain.
On the international level, GCC officials are expected to make fresh efforts towards signing up to trade agreements with other nations, as it is customary nowadays. In reality, the GCC has contracted free trade deals with countries such as Singapore and blocs like the European Free Trade Association (EFTA), which comprise Iceland, Liechtenstein, Norway and Switzerland.
A deal with the biggest trading partner, the 27-nation European Union remains outstanding.
To be sure, comprehensive talks with the EU started in 2003 but was suspended by the GCC in 2008 in order to signal its displeasure with derailed negotiations. Part of the problem concerns the EU side for insisting on inclusion of issues relating to human rights and democracy as preconditions for signing FTA with GCC nations.
Undoubtedly, absence of a trade pact serves the EU, which reportedly enjoys a hefty $20 billion surplus in its trading with GCC countries.
Clearly, the New Year brings with it serious economic challenges that should be addressed and certainly not overlooked.
— The writer is a Member of Parliament in Bahrain
