Interview with Saudi Arabia's Finance Minister (page 1 of 2)

Q. Saudi Arabia has embarked on a number of major reforms in the last few years, especially in the economic sphere. How do you assess what has been accomplished so far, and what do you think the Saudi economy should look like five years from now?

A. The reform process started a few years ago, and we are moving in a very calculated and determined manner to introduce reforms in all sectors and areas - physical, structural and legal - to get the economy onto a sustainable growth path.

The way I see things is that the economy will be more efficient and more balanced in the future, in the sense that the private sector will have a greater share in the economy, bearing more responsibility in terms of both growth and employment in the kingdom.

I could easily say the same thing about the diversification of exports. We are moving in a determined manner to make it easier for our producers to compete in international markets; we are also making it easier for foreign companies to invest in Saudi Arabia.

This involves reforms to the tax system designed to ensure that the financial system is efficient and that our exchange rate is competitive. I'm confident that the reforms in these areas will improve our growth rate and competitiveness in the years to come.

Q. Which major reforms that have been made in the last three years would you point to as key?

A. The reforms closest to my heart are the ones we at the finance ministry initiated or have been mainly responsible for. I will mention three areas: firstly, capital market flow.

We are looking forward to launching the market and the regulatory authority. This will usher in the diversification of market products and make it possible to invest or raise funds through diversified means.

Secondly, the insurance law in the kingdom. As you know, we haven't had a genuinely regulated insurance industry before. Now, with this new legislation, we will be able to set up new insurance companies.

This will add to the depth of the market and the ability of people to use their savings in different ways and to make insurance products available to businesses as well as to individuals.

Thirdly, the tax law, which has just been upheld by the council of ministers. It took us more than five years to get it through.

This is an extremely important law, which not only means that we now have a much lower tax rate, but also includes other important elements. All this will prove very attractive to the business community, and especially to foreign companies.

Q. What happens if there is a good stock market with an efficient regulatory body, but no one wants to go public? How can you address that?

A. No one can force anyone to go public; that's a decision that is up to them. But the tools will be available to help in that process, to make going public transparent and clear to both sides, to companies as well as prospective shareholders.

As you know, this is just one side of the objectives of the capital market law. The other side, of course, is to enable even private companies to raise funds in the market through bonds, Islamic instruments and other means, rather than by either increasing capital or borrowing directly from the banks.

Q. You recently asked the international agencies to rate Saudi Arabia with a view to borrowing. What does this imply about the state of the kingdom's economy?

A. To start with, I think that the solicited sovereign rating has now become a necessity for all countries, even developed countries.