Change and Reform: A Conversation with Khaled Al-Seif

January 22, 2012

Editor’s Note:

In 2005 when SUSRIS first talked with distinguished businessman and then-Chairman of the Committee for International Trade, Khaled Al-Seif he was leading the largest ever Saudi trade mission to cities across the United States. He talked about the beginning of a period of significant economic expansion in Saudi Arabia, “What has been happening there is quite exciting. Saudi Arabia is seeing another boom in the making, an economic boom which, in my opinion, will be wider and deeper than the boom in the 70′s.” At that point there were $600 billion worth of investment projects on the table in the Kingdom. Three years later in an exclusive interview at the Arab-Economic Forum in Washington Al-Seif told SUSRIS that number had topped $1 trillion:

“I’m happy to report to you that what I was forecasting several years ago is taking place now. We are living in the midst of this major boom. It is not only the result of oil prices and increased oil production but as I said before it is the result of the economic reforms already underway. With regard to oil revenues, as you know, Saudi Arabia is producing nearly its maximum capability to keep the price of oil as stable as possible. Oil production has doubled in just seven or eight years ago. So that is clearly having an effect on Saudi Arabia’s economic situation. However, the economic reforms that we discussed last time have really started to take hold and we’re seeing the results of some of those reforms.”

Last month on the sidelines of the very successful US-Saudi Business Opportunity Forum in Atlanta Engineer Khaled Al-Seif talked with SUSRIS about the current state of the trade, investment and partnership openings for Americans working with Saudis. The exclusive interview also covered his insightful perspective on the scope and pace of changes being experienced in the Kingdom, especially social reform in the area of women’s empowerment. In this two-part interview SUSRIS is pleased to share Al-Seif’s views on these developments and more.

Engineer Khaled Al-Seif is President and CEO of El Seif Group of Companies, a top 25 business in Saudi Arabia, and a firm responsible for many of the most spectacular construction projects in the Middle East including the landmark Kingdom Tower in Riyadh. In addition to his broad business portfolio Al-Seif works through numerous organizations to develop business connections with the United States and other countries and building international bridges of understanding and friendship between Saudi Arabia and the world.

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Change and Reform: A Conversation with Khaled Al-Seif

[SUSRIS] Thank you for joining us today at the 2nd US-Saudi Business Opportunities Forum. Before we get into the world of business and what’s happening at this important conference, let’s talk about this year of change and challenge for the Kingdom. Tell us what you see as key developments in Saudi Arabia and in the region.

Eng. Khaled Al-Seif

Eng. Khaled Al-Seif

[Eng. Khaled Al-Seif] Thank you for a chance to talk about what has been happening in Saudi Arabia. The year 2011 will be remembered for something that has been very exciting in the Kingdom, and that is progress in the empowerment of women. King Abdullah has been behind major reforms in this area for some time and this year he further opened up the opportunity for women to participate more in public life.

A very important step for many Saudis is bringing women into the decision-making processes. In September King Abdullah announced women will participate in the next round of Municipal Council elections and will be appointed to the Majlis Ash-Shura, the Consultative Council, which is our parliament. These are major developments and they are starting from the top. As you know he had already appointed a women as Deputy Minister of Education for women’s education, with ministerial authority, and women have risen to other leadership positions such as on boards of chambers of commerce.

[SUSRIS] How are these developments being received in Saudi society?

[Al-Seif] What is happening is that changes are propagating very quickly within society as a whole but in particular in the business arena where the employment opportunities are opening. These changes are encouraging to many Saudis, especially to women who see their future opportunities expanding – in both the public and private sectors.

So, I would say people are very excited about advances in women’s empowerment issues. There have been problems with the lack of open job opportunities for women which results in an employment imbalance. Fortunately there are many well-qualified women ready for new opportunities. Women graduates are coming into the marketplace from universities, coming from inside the Kingdom and coming home from study abroad. There is a fantastic program for our youth to study overseas, the King Abdullah Scholarship Program. Tens of thousands of Saudis are enrolled in universities in North America, Europe and Asia. There are 50,000 Saudis studying in American universities alone and one-third of them are young women.

[SUSRIS] The recent news about that level of Saudi women participating in the Scholarship Program was somewhat surprising and developments on women’s issues like that don’t seem to be very well appreciated.

[Al-Seif] Well, a lot of the media attention on women in Saudi Arabia highlights what lies on the road ahead and not very much on what has been achieved. But Saudis are more concerned and pleased with the positive changes – to see these changes opening doors – and less concerned with external publicity.

Princess Nora University model inspected by King Abdullah after laying the foundation stone, Oct 29, 2008. (SPA)

Princess Nora University model inspected by King Abdullah after laying the foundation stone, Oct 29, 2008. (SPA)

Princess Nora University, a women’s institution, should be mentioned here. It was designed and built in two years, the shortest execution period for any university of comparable size in the world. It is a tremendous campus that is starting with an initial capacity of 40,000 and will expand to accommodate 70,000 young Saudi college students. It’s a huge university done to the highest standards possible, in all areas. The University includes a broad spectrum of specialties: education, business administration, medical education, arts and sciences, and so forth. Developments such as these – advances in a country where these things didn’t exist a generation ago – these are the changes that are very exciting.

All of these advancements are major steps in Saudi society because they also affect the prosperity of the country. Business people are very aware of these changes, have been tracking them. It is encouraging that Saudi women are studying very advanced sciences and very advanced technical subjects in addition to a host of other specialties that will be extremely helpful to boost the economy. More opportunities open for women translates into more purchasing power for the household and more effect on the economy as a whole. The economic circle is widened as a result of women’s empowerment.

So business people and others are looking at these developments with a lot of optimism and a large number of Saudi Arabian companies have started new programs for bringing women into their workplaces. This is very important.

[SUSRIS] Political developments, like women voting in Municipal Council elections and serving in the Shura Council along with increased emphasis on women’s education and business opportunities – how do these all fit together in plans for reform?

[Al-Seif] They are clearly interwoven. Actually what you see now are the fruits of decisions started six, seven years ago, perhaps more than that, even ten years ago. But don’t forget that the issue here is not the decisions of the King. The issue here is the society. Saudi Arabia is a very conservative society. There has been a lot of opposition over these subjects and you know it takes time until the society reaches a stage where such reforms can be undertaken.

What King Abdullah has done, which was extremely wise, was that he encouraged local debate. He started with what was called the National Dialogue, and he let the various factions within the society talk, to shine light on these subjects – women’s empowerment and other important areas. When they talk – and it may have started out with negative reactions – but the more people talked about these subjects, the more information they got, the less fears they had of change. They were more comfortable with it.

And as they were more comfortable with it, there was enough support within the society itself to accept these advances. Some people say this is all too slow but I assure you that there are still a lot of people in Saudi Arabia who say this is all too fast. So I think Saudi Arabian leadership and the society are working in a very balanced way and the result is that these reforms will last. They’re not reforms that will not be changed, because they’ve been very well studied and very well prepared for. And you would expect that further things would also change depending on how much the society is ready to accept.

You also have to take into consideration the current situation in the region. We’ve been talking about it today in various panels at the Forum and everyone is trying to understand exactly what is happening with the Arab Spring. Despite everything that is happening in the Arab world the Kingdom has been remarkably stable. It continues to be a good business environment and as many people expected it would, it has shown stability in the transition at the top.

Questions remain. How is all of this impacting women’s empowerment and other ongoing reforms? Is there any impetus derived from the Arab Spring that Saudi Arabia should accelerate these changes? Has any of that contributed to the major announcements of 2011? I would say no. You see, the subject of the reforms, take the case of women’s issues, as I mentioned earlier is something that has been in the making for many years. It has been done in gradual steps. It had to have the National Dialogue as a catalyst.

[SUSRIS] You’re saying the reforms, the women’s issues advancing, were coincidental to the changes of the Arab Spring?

[Al-Seif] They were in the works much earlier than the Arab Spring. The Arab Spring has captured the attention and imagination of some, but the advancements being made in Saudi Arabia were set in motion much earlier. However, I should reiterate that Saudi Arabia has been very stable during this tumultuous year in the Arab World. I would like to think that much of that is attributable to the actions that King Abdullah and the leadership in the Kingdom put in place many years earlier in creating openings for change.

There is also something that many people don’t realize about Saudi Arabia. A very important aspect of life in the Kingdom is dignity. Since the time of King Abdulaziz, when he unified the whole Kingdom, down through the reign of his sons later on, the individual dignity of citizens is not put down. I think this is another factor in the Arab Spring having little internal effect. Leaders have always paid special attention to this. You have complete freedom of work, you have complete freedom of doing business and making money. You have complete control over your house. Nobody would dare come and break into your house, for example, not governmental agencies, not anyone. Your house is your fortress. So the main principles of human dignity have always been guaranteed in Saudi Arabia.

If you look at what happened in Tunisia when it all started, and later on in other countries where there have been upheavals, there were a lot of issues related to the lack of human dignity. There are a lot of issues where people were saying enough is enough, but nothing like that has happened in Saudi Arabia. It is also very important in a discussion of these developments to note that King Abdullah is a very beloved leader. He is an extremely beloved King because he’s been very close to the people; he’s been very close to the peoples’ needs.

King Abdullah and the whole government have been very responsive to the needs of Saudi citizens. Look, for example, at the subject of education. You know, about ten years ago, fifteen years ago, when oil prices went down to $12 a barrel, the government couldn’t spend much money. So programs related to education such as new schools to deal with the explosion of population and universities and so on, these programs could not be funded at the levels needed. It was a stage in education development where schools were crowded, universities were crowded, so people were complaining. And these complaints fell on the ears of King Abdullah, then the Crown Prince. The first thing he did once we got some money to spend was to make sure that every single student was able to go to school, that every single Saudi could go to college if they wished. If they didn’t want to go to college there were vocational schools available. He instructed the Armed Forces and the National Guard to open up their training centers as well, so that the country would produce more qualified people who could come in and fill positions in the private sector.

Let me make one more point on the issue of human dignity. Take the issue of healthcare. As you have heard at the Forum there has been an incredible buildup in the Kingdom’s healthcare capacity to meet the people’s needs exemplified by the doubling of the number of hospitals between 1990 and 2010. However, there were some areas in the south of the country that were neglected. King Abdullah went down himself and he was very disappointed by what he found. He asked why was Jizan forgotten, for example. As you would expect it resulted in laser-like attention, a very big program for the development of the southern area of Saudi Arabia. So, everybody sees that, just as everybody sees all his actions for the well-being of the Saudi individual, Saudi human being, and they really love him. They really love him.

[SUSRIS] That story sounds much like the report that his push for programs to alleviate poverty was spurred by his visit in 2002 to a poor neighborhood in Riyadh.

[Al-Seif] Yes, that is true. The ruling family is very close to the daily needs of the people. And when reports reached him about the neighborhood, he wanted to see it for himself. When he saw it he immediately got the people involved in the various social services into a meeting to decide how to deal with this kind of situation. How to deal with the issue of poverty, how to deal with the issue of educating those people, ensuring they can go to schools, how to help make them productive? The aim was to help people get out of poverty, but also to provide some help and assistance in the short term. So social programs were more than tripled.

[SUSRIS] Last February when King Abdullah returned from his medical treatment abroad, about the time the Arab Spring was gaining momentum, a massive government spending plan was announced for housing, for health care, payrolls, a large human services budget increase. Was that a reaction to the Arab Spring?

[Al-Seif] I can tell you based on first hand knowledge that as far as the construction of the 500,000 new housing units — we were very pleased the King approved that spending — the timing was a coincidence. I was serving on the consultive body of the Supreme Economic Council two years earlier and we were working on the subject of housing. We were looking at the issue of home ownership. It’s been a chronic problem related to the mortgage regulations. As you know because of special Sharia considerations we have to be very careful about the issue of mortgages.

One of the recommendations about housing from the consultive body was for the government to jumpstart the whole operation by providing 500,000 units under certain regulations related to implementation. The proposition was reviewed further by the full Supreme Economic Council and then it had to be raised through the Council of Ministers. It was a long time in the making, but it was clearly coincidental that the announcement came at about the same time as the early days of the Arab Spring.

[SUSRIS] You referred to the transition in leadership, the passing of Crown Prince Sultan and the elevation of Prince Nayef as well other key moves in the government. Some observers wonder about the prospects for continuing in the current direction especially in areas like reforms. How would you assess that question?

[Al-Seif] This is not an issue. The reforms that have been going on are reforms that have been in the making for quite some time. As I mentioned earlier about advancements in areas like women’s empowerment, they have been brought about with a very wide base of support. This is how we like it. Crown Prince Nayef has been within the circle of our government for a long time, and he’s been in the midst of making those reforms. He is fully familiar with everything involved in the process and none of those reforms are going to be reversible. He’s part of the consensus, and these reforms are as solid as anything.

In terms of the succession, King Abdullah has institutionalized the process of succession. So it’s not a matter that there could be a vacuum that would be left. The process is very well institutionalized. The choice of Prince Nayef as Crown Prince was very clear, and he is an excellent Crown Prince. He’s been in government for some time, he has excellent experiences and tremendous capabilities, and Saudi Arabia I think is fortunate to have him as a Crown Prince.

The choice of Prince Salman as Minister of Defense was an excellent selection as well. Prince Salman is a very well liked and respected person in Saudi Arabia. People really appreciated these moves, because you now have a leadership arrangement which is a very complimentary structure.

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Part 2 of this exclusive SUSRIS interview with Engineer Khaled Al-Seif will feature a discussion of the commercial expansion in Saudi Arabia and the business to business relationship between the United States and Saudi Arabia.  It will be provided separately in email, posted on SUSRIS.com and available through the SUSRIS iPhone App.

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ABOUT KHALED AL SEIF

Eng. Khaled Al-Seif

Eng. Khaled Al-Seif

Khaled Musaed Al Seif is a businessman and a leading member of the business community in Saudi Arabia who manages one of the largest business groups in the Kingdom. He is active in various committees and councils dealing with the promotion of international trade and bridging relations with the West.

Mr. Al Seif previously served as Chairman of the Saudi Committee for International Trade (CIT) at the Council of Saudi Chambers of Commerce and Industry. He has officiated as Co-Chairman of the Saudi-British Joint Business Council since 2007; Member of the Board of U.S.-Saudi Arabian Business Council since 2006, Member of the Advisory Board for Economic Affairs at the Saudi Supreme Economic Council since 2005, Board member of Royal Philanthropic Society for Science (Prince Sultan University) since 1999; Board Member of the Arab-British Chamber of Commerce, London, UK since February 1996; on the Board of Directors of Riyadh Chamber of Commerce and Industry, Riyadh, Saudi Arabia (1993-2001 and 2004-2008); and President and CEO of El Seif Group of Companies, Riyadh, Saudi Arabia since 1975.

As the President and CEO of El Seif Group of Companies, Mr. Al Seif is the Chairman of the following Saudi and International companies: El Seif Commercial Investment Company Ltd; Musaed Al Seif & Sons Company; International Management Development Company; Dana Investment and Development Company; El Seif Engineering Contracting Company, and Marina Towers S.A.L.; and El Seif Holding Company in Lebanon. He is Also a Board Member of some other domestic and international companies which include but not limited to: Saudi Medicare Company; National Power Company; Modern Arab Construction Company: Arabian Medicare Company; Universal Advanced Systems Company; and El Seif Development Company.

Mr. Al Seif holds a B.S. in Civil Engineering from the American University in Beirut.

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