SAGIA

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Irfan Iftekhar

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How did Al Dabbagh view SAGIA’s mandate differently from his predecessor? How did

his view influence policy design?

Prince Abdullah bin Faisal bin Turki Al Saud was the first governor of the Saudi Arabia General

Investment Authority (SAGIA) and the predecessor of Al Dabbagh. Although Prince Abdullah

bin Faisal in his authority tried to implement SAGIA's mandate by taking measures to change the

proverbial 'bureaucratic mindset' of government officials in the Kingdom. He acted in a

aggressive manner to implement the reforms in order to galvanize bureaucracy, remove

investment barriers which often resulted from the lack of coordination among various

government agencies. He was not diplomatic in his tactics.

Due to his aggressive manners, the government agencies, a lot of them, felt hurt and stung. This

resulted in a forceful confrontational attitude by the agencies that were skeptical of SAGIA

ability to move forward. Prince Abdullah bin Faisal tried to enforce SAGIA's mandate quickly

and forcefully, whether he would have been successful or not is another question because he has

to concentrate on building the damaged image of Saudi Arabia after the September 11 terrorists’

attacks on US. In the year 2004 he retired. Al Dabbagh became his successor. He was young,

educated and brought with him the wisdom of a successful business man. He brought with him

fresh and modern ideas, and wisdom. He knew the broadness of the mandate given to SAGIA by

the Supreme Economic Council and Majlis-e Shura. But he also knew the reasons of earlier

failure. He hire a consultant, conducted workshops, involved the private sector, the business

leaders as well as academics. He knew that SAGIA will one day become the engine of

economical growth for Saudi Arabia. For this Al Dabbagh went all out with humility and honest

attitude, seeking the cooperation of other governmental agencies to make Saudi Arabia the

destination of investors' choice.

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After great deliberations and consultation carried out in a friendly way with all stakeholders, he

went to chart out his line of action. He devised six highly strategic roles for SAGIA, his own

policies. Most important of these were the:

Public Private Partnership

Networked government

Creating a One-Stop Shop

Tackling Saudization

Looking Ahead

How did Al Dabbagh expect to leverage and rearrange his available assets to create public

value? Please relate to aspects related to policy design.

Human resource is the greatest asset for any entity. SAGIA although inherited its work pool but

this work pool was ill equipped in terms of know-how to execute SAGIA's ambitious plans. Al

Dabbagh knew that for hiring new hands he lacks the funds and there were little chances that the

Ministry of Finance would agree to it. So he devised his own strategy and turned to the private

sector and requested them to exchange with SAGIA their own human resources and expertise in

return of SAGIA's help in assisting the private sector by giving information about new

investment opportunities as well as cooperate with the private sector by taking their grievances to

the government sector.

He believed in rewarding employees with such ideas like 'pay for the person; pay for the position

and pay for the performance. He also helped in bringing almost all vital organs of the

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government like, the Ministry of Finance, Labor, Commerce, Justice, etc under one umbrella, the

SAGIA umbrella. This helped him create his vision of One Stop Shop.

Would you expect the benefits of this type of partnership mentioned above to

outweigh the costs?

Cost-benefit analysis used to predict as to whether the benefits of a given policy outweigh its

costs. But in the case of SAGIA the benefits definitely outweigh the cost. This is due to two core

reasons.

a) SAGIA was not given a fat wallet to spend by the conservative Ministry of Finance whose

members had skeptical views of SAGIA's success. It was not their fault either, as their had been

little success during the period of Prince Abdullah bin Faisal bin Turki Al Saud's tenure as the

Governor of SAGIA.

b) SAGIA helped in Saudi share in joint investment projects reach $153 billion from $300

billion. The total exports of joint investments reached SR109.8 billion while exports from nonoil

Saudi investments totaled SR78.1 billion. Joint and foreign investment projects' total sales

reached SR395 billion. SAGIA issued 7,418 commercial registrations until June 2010. SAGIA

has made it mandatory to issue investor's license within 30 days. SAGIA has been the architect

behind the launch of an entirely new global product called “Economic Cities". Only sky is the

limit for SAGIA, once all the economic cities are completed the benefits are bound to be

substantial.

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Do you think that the design reflects forward mapping or backward mapping? Please

justify your answer.

In context of SAGIA after its takeover by Al Dabbagh, it is evident that this was a case backward

mapping. The reason is that when Al Dabbagh took over he has a vision and a mission but

neither the required cooperation nor a competent work pool to enforce the implementation. He

has clearly identified his goals and has thought about how to plan to assess it, and in order to do

this he has to work backwards to determine what he needs to teach and educate his workforce as

well as the proverbial bureaucracy so that he can actually achieve the culminating goals.

Al Dabbagh got a work pool of 200 not so competent fellows from his predecessors, who were

very ill equipped to execute SAGA's goals, but he had also promised not to send them to other

governmental agencies, although he was permitted to do this. So he turned to private firms for

help and asked for the sharing of their expertise with the workforce of SAGIA so that they can

learn from their expertise. While he tried to attract foreign investors in starting their business in

Saudi Arabia, he also has to remove the visions of fear within the local businessmen by giving

them information on existing opportunities in investment. He also started to pay well than his

predecessors to his old staff members so that they can perform well.

Why or why not take on policy reform? Please relate your answer to issues pertaining to

policy implementation. If you approach this issue from Pal’s perspective on “elements for

successful implementation” how would you describe the implementation in this case study?

Saudization policy merely applied a temporary healing approach to local unemployment. Al

Dabbagh introduced two initiatives for the development of a skilled labor pool. The Human

Resources Development Fund which was a new joint government-private sector venture, helped

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in this case, funded in part by contributions from businesses and used to pay for training for

Saudi job-seekers and businesses.

The second policy initiative was to support local businesses, done primarily through

strengthening the nonprofit Centennial Fund, which provided financial assistance and

professional guidance to Saudi entrepreneurs. Al Dabbagh used his position as Vice Chairman of

the board of trustees of the Centennial Fund, as well. The implementation was on the dot. A very

realistic and effective approach was taken in the case of policy implementation and the ultimate

success of SAGIA showed it.

Please analyze the response of SAGIA from the conceptual framework of the

implementation process outlined by Pal?

SAGIA leapt to success from every point of view. From being some sort of non entity it became

the window to Saudi Arabia for the global investors. At the heart of SAGIA’s strategy for growth

is a massive building program. Working in partnership with some of the world’s most prestigious

developers and investors, SAGIA is creating four spectacular Economic Cities in key locations

around the nation at a cost of more than $60 billion. These cities will become powerhouses of

technology, industry and knowledge, and are designed to maximize investment potential and

deliver huge advantages to businesses located there.

For foreign investors, the new Economic Cities create a unique opportunity for private-sector

involvement and business success. SAGIA is dedicated to making it as easy as possible to invest

in or set up and operate a business in the country. Already foreign direct investment inflow is the

14th largest in the world; the Economic Cities will continue to build on this achievement. The

outlook for Saudi Arabia has never been brighter or more secure. This is perhaps one of the

finest implementation process of a policy on the lines of Dubai.

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Besides this, SAGIA is working with leading environmental institutions to ensure that the four

economic cities are developed with minimum negative environmental impact and maximum

energy efficiency and sustainability.

Why or why not take on policy reform? Please relate your answer to issues pertaining to

policy implementation. If you approach this issue from Pal’s perspective on “elements for

successful implementation” (Chapter 5, p. 208), how would you describe the

implementation in this case study?

SAGIA plays an active role in the economic liberalization of Saudi Arabia and is responsible for

fostering investment opportunities in key sectors of the economy, including energy,

transportation, and knowledge-based industries.

SAGIA also plans to maximize successful investment by encouraging investors with technical

and financial competence, and have a leading track record in home country and internationally

and sound plans.

These measures build upon the findings from more than 1,500 visits made by the follow-up

teams where several licenses were withdrawn due to violations and misuse of privileges. The

National Competitiveness Center established by SAGIA in2006 to act as an independent body to

monitor, assess and support the enhancement of competitiveness in the Kingdom of Saudi

Arabia. The NCC fully supports SAGIA's 10x10 campaign to make Saudi Arabia one of the top

10 most competitive countries in the world by 2010 and is heavily involved in helping SAGIA to

reach this goal.

Today Saudi Arabia is at the forefront of the global discussion on sustainable competitiveness

and it all happened due to the SAGIA’s policy implementation.

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Please analyze the response of SAGIA from the conceptual framework of the

implementation process outlined by Pal?

Due to the highly effective response of SAGIA for its vision implementation process, it has been

possible that today SAGIA Economic Cities Act is leading the development of four new, largely

privately funded economic cities. These aims to: generate $150 billion of economic output a

year; promote balanced regional development; help diversify the economy; create over a million

new jobs; and accommodate 4.5 million people. King Abdullah Economic City is an $86

billion, and will provide around 1 million jobs and will be home to 2 million people by 2025.

Prince Abdulaziz Bin Mousaed Economic City at Hail will cost $8 billion, and will provide

55,000 jobs and accommodate 300,000 people. Medina's Knowledge Economic City will be a $7

billion, and will provide 20,000 jobs and have a population of 150,000.

How would you measure SAGIA’s impact? Number of days to register a business, FDI

growth, employment indicators?

To be candid SAGIA’s impact can be seen all over. The Kingdom of Saudi Arabia received the

most FDI inflows in 2010, which amounted to $28 billion. Egypt came second with $6 billion,

while the United Arab Emirates was ranked fifth with $4 billion approximately.

Saudi Arabia saw a net outflows (percentage of GDP) in 2011 at 0.55, says a World Bank report.

The net inflows of investment for acquiring management interest in any entity, in any economy

which is other than the investors' is FDI.. It is the sum of equity capital, reinvestment of earnings,

other long-term capital, and short-term capital as shown in the balance of payments. This series

shows net outflows of investment from the reporting economy to the rest of the world and is

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divided by GDP. This page includes a historical data chart, news and forecasts for foreign direct

investment; net outflows (% of GDP) in Saudi Arabia. The number of days for an investor to get

business license decreased from 45 to 15 days and is anticipated to come down to just 3 working

days. Thus we can see that there has been success on all fronts.

Please refer to Chapter 7 in Pal book. Which type of evaluation would be more appropriate

for the case of SAGIA? Program/Process/Efficiency? Please substantiate your answer with

concrete examples from the case study?

The more appropriate evaluation in the case of SAGIA is efficiency. This is because of the fact

that programmes can be made; the process to implement can be there but not the required

efficiency. This way it will take a hundred years for a program like SAGIA to be implemented.

SAGIA program was not only efficiently but very tactfully implemented. The best evaluation for

SAGIA is the efficiency that has made it what it is today.

How effective was SAGIA’s work with Monitor on competitiveness indicators? In what

ways was this approach consistent with Al Dabbagh’s original vision?

SAGIA was successful in putting its weight on GCF for the launching of crucial initiatives like

the Saudi Fast Growth 100; Responsible Competitiveness Index SAGIA supervises the attraction

of foreign investment into the country, and manages Saudi Arabia's competitiveness agenda in an

effort to improve the country's business environment. As a result of the efforts of SAGIA's

National Competitiveness Council, and the Saudi Government as a whole, Saudi Arabia is now

considered the 8th largest recipient of FDI with inflows of 35 Billion USD in 2009.

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.

References:

About SAGIA Retreived on 23rd May, 2013http://www.gcf.org.sa/en/About-GCF/About-SAGIA/

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