SAUDI ARABIA: Saudi Economy Minister Mohammed al-Jasser Speaking at the annual Euromoney Conference in Riyadh says the Kingdom should cut energy subsidies that are burdening public finances

Record ID: 189180

  • Title: SAUDI ARABIA: Saudi Economy Minister Mohammed al-Jasser Speaking at the annual Euromoney Conference in Riyadh says the Kingdom should cut energy subsidies that are burdening public finances
  • Date: 7th May 2013
  • Summary: RIYADH, SAUDI ARABIA (MAY 7, 2013) (REUTERS ) CHAIRMAN OF EUROMONEY INSTITUTIONAL INVESTOR PLC WELCOMING ATTENDEES AT THE FINANCIAL CONFERENCE WIDE OF CONFERENCE BANNER READING IN ENGLISH: 'EUROMONEY SAUDI ARABIA CONFERENCE' WITH FLAG OF SAUDI ARABIA SAUDI MINISTER OF FINANCE AND MINISTER OF HOUSING SEATED AT CONFERENCE (SOUNDBITE) (Arabic) SHWAISH AL DOWAIHY, SAUDI MINISTER OF HOUSING, SAYING: "The acquisition of suitable housing is a basic demand to every citizen and the ministry is making every possible effort to meet this main goal. It is currently working on providing many housing projects in all regions of the Kingdom. The ministry has recently signed flagship infrastructure projects for one of the projects in the city of Riyadh which will provide approximately 7,000 residential units." VARIOUS OF ATTENDEES WIDE OF CONFERENCE (SOUNDBITE) (Arabic ) DR. MOHAMMAD AL JASSER, ECONOMY AND PLANING MINISTER, SAYING: "The main four challenges that we're facing at the moment to increase our productivity are as follows: The first challenge is the imbalances in the labor market, where the labor market suffers from an unhealthy fragmentation in the Kingdom ." AUDIENCE WIDE OF CONFERENCE (SOUNDBITE) (Arabic) DR. MOHAMMAD AL JASSER, ECONOMY AND PLANING MINISTER, SAYING: "The second challenge is to diversify our economic base, we need to establish new industries that will help us compete at a global level over the next coming decades." VARIOUS OF ATTENDEES (SOUNDBITE) (Arabic) DR. MOHAMMAD AL JASSER, ECONOMY AND PLANING MINISTER, SAYING: "The third challenge is attracting global companies, particularly medium-sized enterprises, especially from developed countries because these companies are known for their large dynamics and high absorption rate of the workforce as well as their ability to transfer technology." WIDE OF CONFERENCE (SOUNDBITE) (Arabic) DR. MOHAMMAD AL JASSER, ECONOMY AND PLANING MINISTER, SAYING: "The fourth challenge is the rationalisation of subsidies, particularly on fuels for non-targeted participants, this issue is gaining an increasingly important attention because those subsidies have become costly and are causing tremendous distortions in the economy system." ATTENDEES CLAPPING VARIOUS OF STANDS FOR COMPANIES AND BANKS PARTICIPATING IN EUROMONEY 2013 VARIOUS OF COMPUTER SCREEN SHOWING CURRENCY RATES MORE OF STANDS FOR COMPANIES AND BANKS PARTICIPATING IN EUROMONEY 2013 PEOPLE TOURING THE EXHIBITION
  • Embargoed: 22nd May 2013 13:00
  • Keywords:
  • Location: Saudi Arabia
  • Country: Saudi Arabia
  • Topics: General,Economy,Politics
  • Reuters ID: LVA77MFAU7G8YXOPAW8ED78GBXLW
  • Story Text: The Saudi capital, Riyadh was the venue for the annual Euromoney Conference on Tuesday (May 7) to examine challenges and improvements in its economic and financial sectors.
    The conference was attended by Saudi and foreign investors as well as government representatives.
    Speaking at the conference, Saudi Minister of Housing, Shwaish al-Dowaihy said several measures have been made to tackle the Kingdom's housing problem.
    "The acquisition of suitable housing is a basic demand to every citizen and the ministry is making every possible effort to meet this main goal. It is currently working on providing many housing projects in all regions of the Kingdom. The ministry has recently signed flagship infrastructure projects for one of the projects of the city of Riyadh which will provide approximately 7,000 residential units," said Shwaish.
    The world's top oil exporter and biggest Arab economy is pushing to reform its housing and labour sectors to make it easier for citizens to get places to live and jobs at private companies.
    A shortage of land in big cities has frustrated efforts to build half a million homes - a project ordered by King Abdullah in 2011 which analysts say was one of several steps taken to avert 'Arab Spring'-style unrest.
    Economy and Planning Minister Mohammed al-Jasser addressed delegates on the main challenges faced by the Saudi economy.
    "The main four challenges that we're facing at the moment to increase our productivity are as follows: The first challenge is the imbalances in the labor market, where the labor market suffers from an unhealthy fragmentation in the Kingdom," said al-Jasser.
    Jasser also said it was important for the kingdom to develop its economic base and be able to work with international companies.
    "The second challenge is to diversify our economic base, we need to establish new industries that will help us compete at a global level over the next coming decades," he said.
    "The third challenge is attracting global companies, particularly medium-sized enterprises, especially from developed countries because these companies are known for their large dynamics and high absorption rate of the workforce as well as their ability to transfer technology," Jasser added.
    Jasser also pointed to the challenge of fuel subsidies which, according to him, are distorting the country's economy.
    "The fourth challenge is the rationalisation of subsidies, particularly on fuels for non-targeted participants, this issue is gaining an increasingly important attention because those subsidies have become costly and are causing tremendous distortions in the economy system."
    Rock-bottom prices for gas, power and gasoline have turned the world's 20th biggest economy into its sixth-biggest consumer of oil, producing less than $3.70 of economic output for every kilogram of oil equivalent that it used in 2010, compared with the global average of $6.20, according to World Bank data.
    Saudi Arabia keeps its domestic energy prices low for everyone, regardless of income levels, paying the subsidies out of the hundreds of billions of dollars that the kingdom makes from exporting crude oil.
    This practice limits the potential long-term returns from oil exports. Nearly 40 percent of Saudi electricity is still produced by burning oil.
    Energy-hungry industry has boomed over the past decade, thanks to energy costs that are a fraction of those in most countries. This growth increases the cost burden on state-run companies that supply fuel, power and gas.
    There has been talk before about raising low fuel prices, including domestic natural gas prices, for years, but there is no clear sign that it will happen.
    Al- Jasser did not give details of how Riyadh would tackle fuel subsidies.
    The government is wary of provoking social unrest by hiking gasoline or power prices, especially since the Arab Spring, or of scaring off gas-hungry industries that create jobs for a youthful population.
    Reducing subsidies available to higher income groups while maintaining cheap power supplies for millions of Saudis who are relatively poor could help lighten the burden on Riyadh without sparking unrest.
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