Dear Fellow ABGR Members,
Over 38 years both here and the U.S. working on Saudi projects I have often been frustrated with the glacial pace of commercial, legal and social reform, though based on events of the past few days I take it all back.
Some personal reflections follow, based on what I have been hearing and observing over recent days and weeks.
At the Public Investment Fund’s recent Foreign Investment Initiative conference, Crown Prince Mohammed bin Salman announced to the international investment community and the world that Saudi Arabia is open for business on better and stronger foundations, including foreign investment, for new ventures built on imagination, creativity, forward thinking and alignment with the best technology and governance practices.
While the more recent and painful corruption cleanup offers a somber counterpoint, it also sets the stage for a radically new and better paradigm, not to mention a better deal for the Saudi people, based on restoring public resources to public uses, and deploying national wealth more rationally and fairly.
Despite vulnerabilities in the system and the risk of legal, political and social pushback, Prince Mohammed and his team have demonstrated determination and confidence in nipping opposition to Vision 2030 reforms in the bud, disarming potential threats and signaling ever more purposeful changes to come. On thoughtful reflection, these represent sage moves and improved opportunities for foreign investment. Best of all, in the new normal government assets will be viewed more with respect, less with hungry eyes.
Foreign investors are understandably confused; capital is a coward, facing fear born of perceived risk and uncertainty. While the immediate reaction has been to watch and wait, with time the society and economy should attain a new and much better normal, around a new, cleaner and fairer game.
After improperly diverted assets have been frozen and redeployed for public uses, things should settle down under a much different and better set of principles of service, teamwork, sound management, self-betterment, transparency and accountability. Opportunities for American business should become better, not worse. Corruption chills business climate, which will improve as predatory practices become a memory not a current reality.
Once foreign investors discern this new ethical landscape, the value of Vision 2030 should become clear, representing as it does a much more radical change in the social contract than anyone imagined, swiftly and radically changing the rules of the game along principles better aligned with global best practices. Expect further changes that limit the power and access of privilege based on blood and tribal affinity, towards a forward-looking and more globally-competitive economy built on merit and accountability.
General Membership Events
We are looking forward to the following scheduled events:
- November 12: SABIC Home of Innovation Tour;
- November 13: presentation on new Value Added Tax by Rupert Pease of KPMG (Rotana Hotel);
- November 20: Speed-Networking Social (Al-Nakhla Compound);
- November 28: H.E. Dr. Abdullah M. Al Shehri, Governor, Electricity & Co-Generation Regulatory Authority, “The Electric Industry in The Kingdom of Saudi Arabia: Future Outlook,” (Infrastructure Committee); and
- December 5: SAGIA Deputy Governor Sultan Mofti, New Foreign Investment Initiatives (SAGIA headquarters).
The U.S. Embassy has extended invitations to our membership for a number of well-received events, and Chargé d’Affaires Christopher Henzel addressed a general membership meeting.
Commercial Counsellor Nasir Abbasi and his team have been generous in including members of our organization in events around senior Administration officials.
Our Defense and Security Committee, led by Kevin Darnell, held a successful event featuring Jack Midgley of Deloitte, regarding transformation of the Saudi defense system.
Our Issues Committee, which I lead, has held successful events featuring David Hobbs of KAPSARC on the value of energy reforms and John Rinard of Parsons regarding the value of the Riyadh Metro to the city and the nation.
Our Infrastructure Committee under the leadership of Abdulrahman Ghabban of Bechtel and Fouad Khoury of Parsons is planning a visit to the Riyadh Metro, along with our general membership visit to SABIC Home of Innovation.
Our Finance Committee, led by Alan Lowe of Riyad Bank, is recruiting members and identifying speakers.
Our Lawyers Committee, led by Stephen Bodley and myself, organized in cooperation with the Canadian Business Network, participated in a November 5 reception hosted by Chargé d’Affaires Christopher Henzel for a visiting American Bar Association delegation.
Our Young Professionals Committee, led by Tarek Solomon and Michael Lauko, continues to hold organizational meetings, and is organizing a season of membership events.
Our Sports and Entertainment Committee, led by Rene Schwarzenbach, is also in startup mode, with plans for events in coming months.
If you are interested in participating in any of these committees, please contact committee leadership or Manager Claire Bridge.
We have been active through the Middle East Council of American Chambers of Commerce in advocating pro-business reforms both back in Washington and here in the Kingdom, including a proposed shift from taxation based on citizenship for American companies and individuals to a system based on residence.
While it is not yet clear whether and to what extent the new tax bill will include this reform, the Administration’s bill adopts our position, as does the House bill so far regarding corporations.
Office of Management and Budget Director Mick Mulvaney remains committed to the shift to territorial-based taxation as a business promotion initiative; since the tax bill is approaching a critical phase which will need his participation in Washington, he has postponed his visit to Riyadh to late January.
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Thanks to all for your commitment to our organization and participation in our events, and stay tuned for more opportunities to learn and serve as members.
Christopher H. Johnson, Chairman
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