Saudi Competition Czar to Wield More Power With Revamped Law
(Bloomberg) -- Saudi Arabia’s competition enforcement will have more teeth under a revamped law meant to attract investment at a time the kingdom looks to diversify its economy from a decades-long reliance on crude.
The General Authority for Competition will get greater leeway and independence to step in and take action when dealing with violations, Mohammed Al Jasser, chairman of its board of directors, said in an interview in Riyadh. The new law won the approval of the Saudi cabinet last week.
“What we need is to ensure that competition is unhindered and that any violators are taken to task,” said Al Jasser, who’s also a former central bank governor.
The world’s biggest oil exporter needs to create enough momentum to sustain a turnaround in foreign direct investment after it collapsed over 80 percent in 2017 to just $1.4 billion, the lowest in 14 years. Although FDI more than doubled in 2018, business confidence remains fragile after dozens of prominent local entrepreneurs were detained in what the government has described as a crackdown on graft. It took a further hit last October when the murder of government critic Jamal Khashoggi in Istanbul sparked a global outcry.
The outreach to investors has continued under Crown Prince Mohammed bin Salman even as Saudi Arabia has clamped down on dissent at home and grew increasingly embroiled in disputes with countries from Qatar to Canada.
The kingdom faces an uphill climb. It was ranked 92nd out of 190 nations in the World Bank’s latest Ease of Doing Business report, behind Tonga and Samoa.
Saudi Arabia is among nations in the Middle East working to diversify government income away from oil sales and build new industries. To stimulate the private sector and attract capital, it introduced a bankruptcy law in 2018 and opened industries such as retail to full foreign ownership in 2016.
The new competition law applies to all companies except natural monopolies and firms owned by the government, according to Al Jasser. It will come into force 180 days after it’s enacted, he said.
The original legislation dates back almost 15 years, and Al Jasser said it was reworked to better correspond with Prince Mohammed’s “Vision 2030” reforms, which foresee a more open society and a diversified economy.
“This is a dynamic economy, we cannot stay stagnant,” he said. “We have learned a lot during the previous period. So we are updating, reinvigorating the law.”
Under the revamped rules, the authority will wield powers that it says will make punishments more flexible and effective. One of the changes will eliminate the possibility of permanently canceling company licenses to avoid reducing the number of competitors in a market.
“The perception outside will be more positive and therefore the letter of the law will have a much better chance of being adhered to and respected by all competitors, ” Al Jasser said. “When that happens, it will help diversification, attract more investment, make the growth higher and more resilient and will make the economy more attractive to all investors.”
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