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Local Content …Business and Businesses Localization

Local Content …Business and Businesses Localization

 The main paper was presented by Mr. Muhammad Al-Dandani, elaborated on by Mr. Khaled Al-Othman and Dr. Nouf Al-Ghamdi, and the debate was moderated Dr. Mishari Al-Naeem. The paper addressed the issue of local content and its role in building any society that wants to invest and take advantage of its natural and human resources to advance and join today’s civilization. This is in addition to the society’s role as a national project forming the pillar of stability in a country seeking modernization and transformation. Equally important, the society is a critical element that reflects foreign policy, helps in shaping it, reflects self-sufficiency; thus, strengthening sovereignty locally, regionally, and internationally.

The main paper went on to say that the term “local content” in the Saudi Vision 2030 is a dominant one, thus we see the debate and policies on the multiple sources of income.

The paper identified a number of obstacles to local content, including the quality of academic, technical and vocational education; nonaligned plans with all types of education outputs; prevalence of norms and traditions that reject technical work and dwarf the value of professional work, and the absence of coordination between state ministries and institutions and the private sector.

The comments made on this paper concentrated on that the issue of developing local content was adopted by the Saudi Vision 2030 as one of the most important themes of this vision, and one of the most important keys to diversification of sources of income and comprehensive national transformation. The paper, however, neglected the competition side which national institutions face from foreign entities. It is stated that attracting investments and production centers in Saudi Arabia is not sufficient to realize local content, without real localization of knowledge and intellectual and technical properties associated with these facilities. In addition, the employment of Saudi men and women in these facilities is not sufficient if it is not accompanied by a real empowerment to acquire deep knowledge and applied sciences associated with these businesses.

The comments made on the topic raised some issues related to the problems of local content, its relationship to human resources and technical education, localization of industries, and the Saudi Vision and others.

The comments considered that the major problem regarding the local content is the lack of qualification of the human element. The biggest imbalance lies in the vocational workforce, as the technical education system did not provide any sizeable contribution. Also, the experience of training centers and institutes was unsuccessful, and they turned into superficial centers because they were not directed to specific areas.

Some commentators went on to say that an important procedure followed is the localization of some industries and businesses, because this aims to reduce dependence on external sources and achieve economic returns locally, in addition to creating employment opportunities.

Views varied on the importance of implementing the income tax and its relationship to supporting local content. While some considered it a source of development and spending on infrastructure, others argued that it is not a real-time solution, and avoiding it is the best for a stable society like the Kingdom.

The members also discussed the appropriate mechanisms possible for the income tax, with the development of an integrated system of organizational, legislative, political and strategic frameworks, whether through training or external scholarship, as well as benefiting from some international experiences, such as copying or localization, to save time and effort, with the need to know the obstacles and difficulties that other countries faced in order to avoid it as in Malaysia, India, South Korea, Singapore, Norway, Germany, Turkey and Brazil.

Regarding the relationship between the Saudi Vision 2030 and local content, the contributors agreed that there is harmony between them. There are economic measures that have been taken and applied to achieve the local content. However, this requires time for the results to mature so that we can judge the process.

Among the most important recommendations were the following:

  • Giving technical and vocational education the top priority.
  • Attempting to link technology colleges with existing and upcoming companies to ensure alignment of outputs with the nature of work, as well as ensuring optimal training during study.
  • Developing test and examination standards for all industrial, service and commercial establishments to ensure the quality of the product and service, and to ensure the productivity of the individual and the facility.
  • Protecting the national product internally as well as externally, especially with countries that have commercial relations and interests with the Kingdom, as it guarantees access to the Saudi product.
  • Unifying existing local content programs under one umbrella, and making it a sovereign body or ministry, because of the importance of the project as a national project under Vision 2030.
  • Activating the tax returns in the sectors of industry, trade and services, because of its benefit in spending on infrastructure and services such as education and hospitals … etc.
  • Developing legislation that stimulates investment in the local content, the most important of which are the mechanisms of pre-purchase in the government competition system, in addition to other exemptive and incentive legislation.
  • Sensitizing the society in a scientific and convincing way to the feasibility of the national content and the national products, in terms of quality, price and avoiding emotional advertising.

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