Following the declaration that Saudi Research and Marketing Group would sell one third of its shares to the public as well as Saudi Airlines, one of the biggest airlines of the Arab world, we can say now that we are entering a new and important stage of the open market.
How did privatization and public subscription become acceptable both publicly and officially?
Years of debates in which there was strong criticism when this idea was first suggested, have passed. The World Bank was accused of plotting whilst the owners of enterprises and governments rejected the idea. In time, however, many examples proved that selling shares on the public market did not lessen its value, nor degrade the state in anyway and most importantly, did not put national security at risk. On the contrary, private corporations have now improved, become stronger and even strengthened the state’s character after being blamed for providing poor services. The most prominent example concerning privatization would be Saudi telecommunications. Officials rejected the idea based on three arguments; firstly, that telecommunications is considered the second source of income following the oil revenues. The second reason was that telecommunications play a key role in security of the state and finally that the government has fallen behind in protecting this sector. It was later proved that telecommunications brought in a large share of revenues, maintained security within the state and put an end to the constant criticism of the inefficient services.
The selling of shares in the open market may bring about this success for the national airline. Those who reject the idea are mainly directors who fear for their jobs. When the state sells its national carrier, shareholders would not infringe upon its success but rather would alleviate its financial burdens and increase its revenues similar to the case of telecommunications. Other benefits are the improvement in services to the public as well as the lessening of criticism of the state of poor services.
Following this announcement, the Saudi government declared that it would sell its water services considered one of the most expensive and draining of the state’s resources. The new notion is clear to everyone that nothing is untouchable as long as property or ownership moves from the government to the public in the open market provided it offer better services far from bureaucracy. Finally, the most important advantage of public subscription is that it gives people the opportunity to increase their income, expand the middle class and strengthen the stock market. These are forgotten by those who reject the concept of public subscription.
Results have shown that public subscription has led to success and dynamism as shown by industrial banks and corporations. Directors are keen to satisfy shareholders as well as improving their services. As for the government, I believe that it would definitely be happier as revenues increase, expenses decrease and it is saved from the headache of complaints.