According to “The National,” the price of crude oil in the United Arab Emirates (UAE) continues to decrease, as the value of the United States dollar increases. At the same time, on June 14, 2016, the UAE equities closed higher than expected on what was considered a quiet trading day. The economic gains of the UAE are inspiring, even in light of the impending Brexit, which has been depressing shares in Europe. This decline is the result of the volatility associated with the possible exit of the United Kingdom (U.K.) from the European Union (EU). It is these continued gains that will facilitate Saudi Arabia’s economic markets to show promise, including an ability to employ millions, even in times of economic instability elsewhere in the world.
The “Business Standard” reports crude oil is still the UAE’s biggest revenue source. The Dubai Financial Market General Index ended June 14, 2016, at .1 percent higher, but the trading volume was less than half of the daily volume in 2015. The trading on the Abu Dhabi Securities has reached a five-year low, with fewer than 30 companies trading during the day. At the same time, the Qatar Exchange Index finished up .4 percent.
“Arabian Business” addresses the fact that Saudi Arabia has revised its Saudisation program, called “the balanced Nitaqat,” and revealed the specific details earlier in 2016. This is the most recent Saudisation policy, which focuses on imposing quotas associated with who is employed, wages earned, and minimum numbers of female-filled positions. The policies, created to help minimize the UAE’s unemployment rates, explain how Saudi Arabia’s economic markets show promise and an ability to employ millions. These policies can be viewed similarly to “affirmative action,” which placed quotas on the number of minorities, including women, hired by American businesses.
The Ministry of Labor and Social Development has been tasked with creating the Saudisation policies and made their first attempt decades ago. The problem with the earlier policies was the failure to punish businesses who did not comply with the new rules. This, ultimately, made the policies ineffective at reducing the unemployment rates. The first successful policy came in 2011, when the ministry was able to impose stricter rules to ensure women were actually being hired.
It is these types of programs that will aid Saudi Arabia in building their economy and beginning to reduce its focus on oil by looking to other forms of revenue available in the region. The effects of global warming and climate change have made it a necessity for the world to look to alternative forms of energy in order to save the Earth. Crude oil will always have some sort of purpose in the world, but its uses will become limited with the development of sustainable alternative energy sources.
For Saudi Arabia’s economic markets to continue to show promise, it is important to maintain the ability to employ millions. This explains why it is so important to start looking for additional revenue streams within the UAE. As part of reforms intended to increase foreign investment, Saudi Arabia decided to permit foreign retail businesses to open, even if the business is 100 percent foreign-owned. This is the first time legislation like this has ever been passed in the region.
Vision 2030 is an initiative that seeks to boost all non-oil revenues in order to employ as many citizens as possible. The first goal is to employ one million Saudis by 2020. Also important is the initiative to look into increasing the low proportion of e-commerce. Once people are able to make the majority of their purchases online, they will be more likely to use e-commerce, which will add jobs and open up the economy to the modern means of transacting business.
By Kristina Lasher
The National: Gulf stock markets close slightly higher amid thin volumes
Arabian Business: Saudi Arabia plans new ‘balanced’ Saudisation scheme
Business Standard: Saudi opens retail sector to more foreign investment
Image Courtesy of Wajahat Mahmood’s Flickr Page – Creative Commons License