Al-Hayat, London, Originally posted in Arabic on January 19
The year 2016 opened with several announcements of plans to privatize key industries in the Kingdom. A government spokesperson revealed that, within the next few months, all airports in Saudi Arabia would transition into private management, followed by the country’s entire technology industry.
With such sweeping changes implemented in the first weeks of the year, 2016 is likely to become Saudi’s year of privatization. However, we must take this news with a grain of salt. Privatization, as any economics student will tell you, holds enormous benefits. But, it also poses risks that are often overlooked.
First, bureaucrats could easily hand government projects over to their cronies, paving the way for dreadful corruption. Without government supervision or oversight, many of Saudi Arabia’s leading national projects could suffer from unnecessary waste of money and delays. Crony capitalism would allow ministers to move into key management positions in the private market, and vice versa.
Second, the private sectors is not always more efficient than the public one, as is often claimed. I always use the example of the municipality of Dubai, which year after year receives accolades for its outstanding service standards and extremely efficient performance – despite being a governmental body.
Third, if any of these privatized projects fail the government would be forced to jump in and save them from collapsing, by pouring immense amounts of money on them. Just imagine an international airport or a national communications company declaring bankruptcy. Have no doubt that it is taxpayers’ money that would be used to save the economy in such a case.
All in all, I am not opposed to these proposed reforms. However, a little bit more caution and restraint could go a long way. A healthy economy is one that does not rely on one of two extremes. Let’s not be too quick to bury the public sector. –Abdallah Ibn Rabian