 Thank you for being here with us and welcome to this session which aims to discuss the future of economic reform in the Arab world. Oil has been the commodity at the center of economic development in the Arab world. And with the severe slump today of oil prices, how will the Arab economies enact the necessary reforms to promote growth, to promote the jobs that are needed and diversify their economies away from oil? It is a question that we will discuss with our panelists. We have with us today His Excellency, Mr. Anas As-Salih, Deputy Prime Minister of Kuwait, Minister of Finance of Kuwait and Acting Minister of Oil. Thank you very much for being here with us today. Also we have His Excellency, Mr. Suhail Al-Mazru'ayi, Minister of Energy of the UAE. Welcome. We have with us Mr. Khalid Al-Romei, Chief Executive of the Bahrain Economic Development Board. Welcome. Thank you for being here. Also Mr. Ahmed Haikal, Chairman and CEO of Al-Qalaah Holding from Egypt. Mr. Haikal will be representing the oil importing countries on the panel since the other panelists are from oil exporting countries. So thank you very much for being with us. Before we start the discussion, I would like to point out that later on I will be giving the chance to the audience to address your questions to the panelists. So please start preparing your questions. I would like to start with your Excellency, Mr. Al-Mazru'ayi, because the UAE was the first actually to liberalize the oil prices and remove subsidies, basically local energy prices. But also there's something very important that a few days back the Prime Minister of the UAE and Ruler of Dubai, Sheikh Mohammed bin Rashid, tweeted that the ministers of the UAE will be going for a ministerial retreat to discuss not only diversifying the economy away from oil, but shifting the economy away from oil today. The UAE economy is basically only 30 percent reliant on oil and 70 percent non-oil sectors. So can you tell us more about this retreat that is planned? Well, first of all, I'm very delighted to be among this panel. From the Arab Emirates, since the inception, we started the diversification process through investments in investing the revenues of oil in other sectors. Of course, we have evolved from very high percentages to where we are today, but I think under the current stamp of the oil prices, we need to rethink about major reforms that make our budget independent from the oil revenues. Oil revenues are always going to be there, but this is not going to affect, should not affect our budget, government budget. And that's, I think, where the ministers, the ministerial retreat is going to focus. How can we build an economy that is vibrant, that is taking advantage of even the reduction in the oil prices? And what we have done in the United Arab Emirates, when we noticed that the prices of the commodities went down, we saw an opportunity to have the people do the right thing, which is to pay the right cost of energy and electricity and any other form. I think in the future, we need to think of the consumers paying the real cost of energy. That will make us stronger. You already did that. You completely removed the subsidies from gasoline and diesel. So what is next? So what's next is we have electricity sector, for example, which is we have the gas within the countries, the GCC countries, sometimes the oil and gas company sell the gas to the power provider, and they sell it at a subsidized cost or price. If that is the case, then we will never be healthy. You need to look at the commodity as you are buying it from the international market. And that's how we did with the gasoline and diesel. We apply the real international price of that commodity. So it doesn't matter if it comes from United Arab Emirates or it comes from the international market. No one is going to lose money. One might argue that the prices of electricity are already very high in the UAE. So are they subsidized anyway now so that there's room for increasing them more? The majority are not subsidized. But the challenge now in the GCC states is the fact that some of that gas is already either an old contract if it's compressed gas or it's sold at a price that is not the real market price of or compared to the LNG, for example. So there is an opportunity losses here. But currently we are proud that the majority of the tariff is not subsidized, especially at the higher end. I mean, if you want to know the real price, the real cost of electricity, wherever you are, you look at the average international price of electricity, which is in the range of 12 to 15, at least, US cent per kilowatt hour. So if you are closer to that number, then you are healthy. If you are below that number, that means there is a subsidy in the system you need to find it. Your Excellency, Mr. Anas Salih, also we heard that the Ministry of Finance has submitted a plan to parliament for reform as well. But can you tell us, and also we heard from the Royal Court, some orders to review the budget in terms of spending for the Royal Court. So can you explain a bit more what is your plan for reform? Thank you, Nadine. Again, thank you for inviting me and I'm honored to be with you. It's our pleasure. Thank you. I just want to go back to your start. You said with the drop of oil prices, now it's needed, the reforms are needed, let's not tie reforms with the oil prices. But it's a fact, oil prices dropped and suddenly we started hearing from the GCC countries measures to... Let's talk about all the literature that has been written in the last two decades. I'm talking about Kuwait, for example. All those literatures from the specialists, from World Bank, IMF, name them, whoever has an economic specialist, all of them has been calling for unnecessarily reform and today is more important than tomorrow. Now, this is why Kuwait has taken this decision 2013 way before. But you had opposition from parliament, you couldn't go ahead with the plan, right? We do work with our colleagues in parliament, you know, in the shoulder to shoulder. Opposition might show we might disagree on mechanism. But everybody agrees that necessarily steps for sustainability of growth is now no choice. I mean, it's not something we can wait anymore, not because oil prices have dropped for many of reasons, for the structure of our budget. We depend, keep in mind that our reserves is not within our budget. If you keep that in mind, all our investment returns on our reserves are separate. So if you keep that in mind, we are dependent on oil over 90% or 95%. So is this right, even if it was $120? No, but then you might... There is a big argument here. Why did the GCC countries wait until now to enact the reforms? Why didn't this happen when oil prices were at $100? Now there is the pain of lower prices, which means lower economic growth in addition to the security and geopolitical situation. And on top of that, we are removing subsidies and there's a trend to even impose taxes. So the pain is now much more than before. I have to disagree with you. I think with the lower oil prices, it's easier to do it for one reason. Even if it was around $100, if you would liberalize the prices, the cost would be on our people. So with the drop of the oil prices, it's the right time even to start with. Now if oil prices goes back, I'm not saying it will, I'm just saying, what if it goes back... Now we will ask His Excellency Mr. Mazruai if he thinks it's going to go up again. But if it goes back up, then we have to look into rationalizing these subsidies. People that need these subsidies, we will see a formation that could support them and not support whom not needed. And this is what we've been talking in Kuwait. We've been saying we're not cutting subsidies, we're rationalizing subsidies. We believe rationalizing subsidies, it's about fairness and it's about sustainability. Can you tell us more about the plan that you submitted for reform? What does it include? Sure. I just said we started 2013, 2013 it was even before me being in the finance office. The government have decided to rationalize subsidies and this was before oil prices drop. And it has formed a committee that has all the stakeholders of subsidies and they've appointed an international consultant to make sure it's well-studied, I mean the cost on household, the cost on the effect on inflation, per good, and it took them two years to finish. The program has submitted to government December and now we're discussing it internally, discussing it with the stakeholders and making sure it's efficient and it has fairness in it where it would not harm the people in need of this subsidy and make sure people who doesn't need it doesn't get it. Now, because with our constitution and our parliament we have to take this to parliament and we will present it transparently and I'm sure my colleagues in parliament would stand for the responsibilities and we will do whatever needs. Your Excellency, the first step was also minimizing the subsidy on local petrol prices, so what other forms of subsidies do you suggest reforming? This is what we're discussing internally now, but the study has studied all the subsidies program. Now keep in mind, in Kuwait, 70% of the subsidies bill is energy, so gasoline, diesel has been taken, the decision has been taken one year ago, gasoline now and electricity. Mr. Khalid Ramayhee, I know also that the Bahrain Economic Development Board has a vision for reform in Bahrain. Can you share with us this vision? Sure. First of all, I want to thank Al-Arabiya for hosting me today. It's an honor to be here. I think I want to put it in context. I think the region is facing numerous challenges. Oil prices declined by 70%. There's a pressure on the fiscal budgets of all of the regional economies. The layer on top of that, the demographic challenge, the youth unemployment we see in the region, which is north of 30%, and fourth, the security challenge. So in that context, numerous challenges facing the region. And in my mind, this period is a blessing in disguise. I think it was Wilson Churchill who said, never let a good crisis go to waste. I'm not sure how popular you will be now if people are watching you on Al-Arabiya. I think it is an unprecedented opportunity for reform. So I will not dwell on what I think the patient, to get out of the ICU, a lot of the measures that are being spoken by my colleagues, and we are doing it in Bahrain, the fiscal diversity, the economic diversity that we need, widening the economic base, investment in education, investment in infrastructure. But I think for the patient to have a healthy living style for him never to be hospitalized again. If we can use that analogy, we have to look at, I think, two themes. The first theme is we need innovation in our economies. Our economies are still trading-based. Goods are imported, very little value is added, and it's sold to the consumer. We're a consuming economy. So I think if you look at the Arab world, 0.1% of the patents that were registered in the United States in the year, I think, 2014 were from the Arab world, 0.1%. So I think we have to look at how do we allow innovation to happen in our economies? How do we allow academia and business, which drives R&D, to intersect in our economies? And I don't think it's a shortage of talent, because we see our educated professors in California, in Oxford, in Cambridge, so the talent is there, but why do they succeed outside and not in our own economies? So we have to create an ecosystem of that, and that's the first theme, innovation. The second is I think we need to allow dynamism in our economies. If you look at the S&P 500 30 years ago, you'll find what it is today is about 80% different. There's been what I call creative destruction. The ability for new jobs, new companies to emerge. I think in our economies, there is too much of a status quo. There is a less of an allowance for competition, which creates innovation and efficiency. And while trading is important, we need to allow that dynamism to enter. And I think we focus in the EDB about not only focusing on sectors, but looking at entrepreneurship, looking at how do we allow new businessmen to emerge? How do we allow our laws to allow failure, which is on the path to success? How do we have bankruptcy laws that allow new job, new entrepreneurs to emerge? And how do we create an ecosystem that allows new job entrants or new businessmen, because we will never create enough jobs in the traditional sense? We're going to have to move from an employee mindset to an employer mindset. So what you're discussing is very important. This is a structural reform that is needed. But as a first reaction, you need to first adjust the finances. You have this severe drop in oil, severe drop in revenues. And then the first thing you need to do is balance the budgets or minimize the damage. So what are the initial steps that Bahrain is looking into other than decreasing the subsidy on local energy prices, which also Bahrain did? Government has three pillars. The first pillar is to become a more efficient government bureaucracy. We've reduced the size of the ministries or the number of the ministries by a third in the last year. We've gone from 23 ministries to 16 ministries. So we've looked at reducing the size of government. We've merged 10 entities into five. So one is to become more efficient in that regard. The subsidy bill increased from 17% of our GDP, or our government oil revenues, to 34%. So we had to look at redirecting subsidies. So what's next on the subsidies list after oil petrol prices? Well, we've announced that by March, electricity and water will be, the subsidies will be redirected. Oil prices, gasoline prices are effective as of January. Are they eliminated or lowering the subsidies? Well, we've looked at doing it in a gradual way. So the first thing we've done is we want to ensure that the citizen, certainly the one who is most needful of assistance, is unimpacted. So we've looked at every Bahraini as a single household will not see an increase in their electricity and water bill. If you have a second home or a third home, then you're obviously able to pay those rates. And we've tried to do that over a four-year period. So we will gradually remove that subsidy over four years. That's been approved by the government. It's been in consultation with our parliament. The second is gasoline prices. We freed them up, as have our colleagues in the Gulf. And the third is we've looked at, again, food subsidies. We've removed it as of October. And we've ensured that an allotment is given to each Bahraini to ensure that they are protected. So that's the second measure, reducing government efficiency and or increasing government efficiency and reforming the subsidies. The third is reducing costs will never be enough. We've got to increase the revenue. We've got to increase the growth in the economy. So our focus there is what I've touched upon. How do we allow entrepreneurship? How do we allow the economy to grow? And in the EDB, we've identified the sectors we want to focus on. And we've looked at, in Bahrain, we have, and I think this is common across the GCC, our GDP is 80% non-oil. Our growth last year was 3%. Our non-oil sector was 4%. It was really the non-oil sector that drove the growth in the economy. Sorry, what was the contribution of the non-oil sector? 80% of our GDP. Of GDP. Mr. Heikal, allow me just before asking you, I have a question. I don't know who would like to answer it. Because whenever we discuss removing subsidies, the first thing that comes to mind is that the populations of the GCC are not used to that. Maybe it's easier for countries that have a big expat population like the UAE. But for other GCC countries, when you decrease subsidies, the ones who will bear the brunt are the locals. And they are not used to that. Only a few while ago, Kuwait was eliminating the debt of the loans of locals, of national Kuwaitis. Saudi Arabia was increasing, was giving extra salaries for the locals. So shifting the mindset from that suddenly to raising energy prices and removing subsidies is a difficult thing to do. It needs a change of mindset. I don't know who would like to answer that. Again, the way you're leading the discussion is showing that it's like one pillar only and subsidies, removing subsidies or rationalizing subsidies is the savior of our budgets. This is not the fact. Again, we think rationalizing, and I'm sure everybody agrees here, we're rationalizing subsidies. For us, at least, we are making sure it redirects the subsidy to the needed. One, two, and the most important, it redirects the consumption behavior with the subsidized services. So this is the focus. But I can't do this and not talk about growth reforms. I can't do this and not talk about supporting our private sector who's not enough support in Kuwait. And I don't find enough programs for them. So it has to go simultaneously together as a full program reform. I don't want the audience look at it as if this subsidies program would save the budgets. No, we will discuss structural reform later. Talia said you have a very quick comment, Mr. Nathura. I agree 100%. I think the redirecting the subsidy was an opportunity. We took it. We need to continue on this. But this is not going to be the only thing that we do. Our economies are growing. The innovation and attracting talent and developing IPs in the GCC countries and complementing each other economically is needed. But I think the good thing or the cheapest thing is efficiency. And back to your question, how would the people take it? I think if you have a good story and you tell that story to the people, the majority now of the population are youth. And they are different than the previous generations they understand. You need just to talk to the people and you need to convince them. And I think the story we have is a convincing story. It's not something that is very difficult. Also, we reuse this money that we get from the subsidy. We just put it back into the economy. We built better infrastructure. We built world-class schools because education is how we get out. And hospitals. Mr. Heikal. I want to link some of the points that were made. Thank you for hosting me first. You're welcome. You didn't allow me to ask you the question, though. I would like to link something that was said. First, oil prices did not go much higher because oil prices went down. The petroleum products, the removal of subsidies, it could have been much, much worse a couple of years back. So when oil prices were at $110, diesel was $1,000 per tonne. Today, diesel is $300 and some dollars per tonne. As a result of which, the magnitude of the increase in price is extremely palatable. So that's to, however, I have to slightly disagree because governments in general, all governments across the world do not change unless their back is against the wall. That's a whole mark of all government. So to say that this conversation, which is unprecedented in my view, we could have sat here a couple of years back and none of those topics would have been mentioned. And on the agenda. This topic is on the agenda today as a result of budgetary constraints, budget deficits that have arisen as a result of oil price. So to say that reforms are independent of oil prices, I think in my view is a little bit pushing the envelope. So that's... Let me ask you as a businessman. I wish we had a contribution from someone from the Saudi petrochemical sector, let's say, because they are the ones right now who, or the cement sector, or they are feeling the pain because raising gas prices, energy prices, ethane, so many other raw material that they need for their production definitely is squeezing their margins big time. And the basis of competition has so far been cost advantage. I mean, if you look at GCC industries, the competitive edge has been cost advantage. And now when you squeeze that margin, how can they compete? So tell me from a business perspective, how do you perceive those... We need to move the debate towards efficiency. Let me give you a startling statistic. Egypt has a GDP of roughly $300 billion, $280 billion. It consumes about 80 million tons of various petroleum products. The Turkish economy is $800 trillion. They consume about 120 million tons. This is the inefficiency gap that exists. So when His Excellency, the minister of the UAE, said that efficiency, I think the metrics of efficiency are going to change dramatically by having the proper pricing of every single product. Right now, a whole slew of inefficiencies are being masked as a result of wrong, slower than correct petroleum product prices. I can safely tell you that I can give you at least 20, 30 examples of things that should be done. For example, across the board in all our countries, the utilization of combined cycle as opposed to simple cycle. It is unconscionable today that somebody utilizes simple cycle while you can utilize combined cycle. So there is also a responsibility on the business sector as well. There is. You need to improve efficiency and making investment not only in new businesses but improving efficiencies of utilization of energy so that you are able to, on a per-unit basis, reduce your consumption of energy. So again, to have other advantages as opposed to lower costs of natural gas or lower costs of petroleum products. Mr. Heikal, I would like to continue just to ask you from the perspective of Egypt. Egypt is an oil-important country. What is the net effect of lower oil? Because on one hand, you would argue that lower oil means savings to the budget, especially with the numbers that you just stated. On the other hand, it means less Gulf aid to Egypt which was really so important in the past few years. So what is the net effect and how should Egypt use this lower oil price as an opportunity for reform? Sure. Let's... I have been an advocate of removing subsidies since 2003. The current problem that exists today in our balance of payment, you can trace the origin back in 2003. Why? Because oil prices have started to rise. In Egypt, we did not increase our petroleum product pricing. As a result, we distorted the economics of a lot of industries. People started to make heavy industries that are heavy consumers of energy and this is all as a result of mispricing of energy resources. Let's look at the grand picture now. Egypt consumes 80 million tons and produces roughly 50 million tons. So there is an importation gap of 30 million tons. Grossomot. This 30 million tons of oil equivalents, if oil came down by two-thirds, even more, now a quarter, then the importation bill has decreased by roughly 20 billion dollars. This is a swing in the Egyptian balance of payment of roughly 20 billion dollars. This is huge as far as Egypt is concerned. So both from a budgetary point, from a budget deficit point of view and the balance of payment point of view, Egypt benefits tremendously from oil, lower oil prices. There is no two ways about it. Now, as far as Gulf support, I think the Gulf support has been invaluable as far as Egypt is concerned during the last four years. Anybody who understands half the numbers would tell you that the support that we received from UAE, Saudi, and Kuwait has been invaluable, without which the repercussions would have been probably very tough on normal people. I think this will continue for a while. How long, a while, I'm not a politician. I'm not going to get into that. There are political factors that are involved into those decisions, and I'm not going to venture. However, we have to remember that the support has been coming down substantially as a result of lower oil price. So the bill, I'm sure Minister Mazruai can speak to that, but the bill that Egypt was getting was probably 10, 15 billion a year. Now it's coming down to five, six billion a year. And but the investment support is very much needed. I think Egypt needs a lot of investments in order to generate the growth and to generate the employment that we were talking about. And investment support is extreme, but this is investments with returns. This is not aid, not facilities. This is long-term investments. Your Excellency Minister Mazruai, oil is basically a very important topic, but a short while back, we were discussing the possibility of a rebound in oil to the $60, $70 level in the second half of 2016. Here in Davos, in the past couple of days, I got a feeling that there is a general acceptance that the $30, $40 is a new normal. Do you agree? How do you see the direction of oil prices? And do you have a concern that if oil went back, the oil exporting countries would relax again and not push through the necessary reforms that we are talking about now? First of all, I think the policy, the new policy that the topic members have adopted is people need to understand what was the merits behind that policy. Cartailment of production to fix for a price is unfair to the consumers. It's unethical and it's incentivizing more expensive production to come to the market which you can lose overnight if the real price is achieved. Therefore, even we are seeing years of law, but I think if all the consumers and the producers today agree on one thing, they will tell you that this price is not sustainable, this price is very low, and it's not a sustainable price. The reasons for that is very obvious. Now it does not make sense for producers. Let's not talk about the low cost producers like our countries, but the majority of the oil does not come from our countries. 60% of the oil or 70% of the oil comes outside the OPEC group. And most of those will tell you the level of transparency there is very high. They will tell you that it cost them in the North Sea, for example, $60, $50 to $60 to produce a barrel. Okay, why they are selling it at 30, they will have to produce. Otherwise they need to pay for the decommissioning. The sustainability of a fair price for the producers and for the consumers will happen in my view either end of this year or beginning of next year. But that price, the fluctuation on that price, I think is going to be way less than what we used to see in the past because now we will have an order. Whoever is a very expensive producer, he will not jump and spend money in producing because OPEC have reduced their production and they can increase it next day. So OPEC will have in my view in the near future a bigger share of the production because their cost of production is the lowest. So that's how market condition will prevail. Now would the norm is a $40, I don't think so. Would the norm is going to be 100, I don't think so too. I think it's going to be somewhere in between somewhere that is fair. And the price of oil is a finite resources. Yes, we have a bandency of oil but it's not something that rejuvenates itself. And requires investments in infrastructure definitely. And $400 billion, we need to watch this number. $400 billion of planned investment have gone. So that is going to, we will have a problem in two years. We're not going to create oil out of air. Mr. Saleh, we haven't discussed taxation privatization, lower spending, austerity. What is on the table in Kuwait? And let's discuss in general for the GCC countries. Mr. Mehe, I will ask you about this as well. Well, first, you just mentioned that the culture in Kuwait is different. The mindset of the GCC locus is different and it's hard to say, two days ago you were, I just wanted to correct information. In Kuwait, there has never been, what did you call it, debt? Yes, eliminating. Eliminating loans or debt. Maybe in the UAE, that wasn't the UAE. Proposals like this came, but it didn't go through. Programs has been done to support some of the highly-debted individuals. But nothing, it's only like a restructuring of it. Now, what do we have in mind? We have to, one way or another, promote the private sector to start leading. I mean, and it's very important to do so. The government has been saying this for a long time, but in action it has, we didn't see major steps, except now I started to see some legislations that should create the environment to... What kind of legislation? To encourage private sector, you mean? Yes, sure. Anywhere from foreign capital and local capital promotion agencies, that has extreme windows of opportunities they do offer, and now we start to see international, large international names coming into Kuwait, it wasn't the case before. The SMEs, we made a huge fund to support SMEs. On the sideline of that, the industrial bank of Kuwait, only this year has financed 180 projects of SMEs, because the large fund is still under establishment, and it's informing its stuff. But this bank has, I just to give you an idea, this number has never been reached. 180 projects with an investment of 24 million KD, and I'm talking really small SMEs. And you can add on that, the partner, PPP... PPP Lo. Has never, from 2008 until this summer, only one project has been passed, one power generation. Why? I would waste the time of the audience talking about the details of it, but I'll tell you what, I'll tell you, reforming, you know, when the parliament and the government has came in line and agreeing on necessary steps has to be taken, and it has been taken. Now, only this summer, five projects of infrastructure, values of three billion KD. You think now there is a political will? There is the political will, right? Sure, sure, you can't compare these days with the previous days where there was always clashes, political clashes. It doesn't help. Mr. Rumeche, there is a VAT tax that is coming on board for all the GCC countries. My understanding is that it won't take long before it is applied. When do you think this will happen, and are there any other forms of taxation and privatization that Bahrain is looking into? Well, first of all, let me... I want to add to what His Excellency the Minister said. I think that, first of all, in terms of energy and subsidy removal, I think that it is... The reason I think this is a blessing in disguise is because it is forcing resources to be priced correctly, and I think it's forcing the private sector as long as to evaluate and value these resources and to become more efficient. As long as we protect citizens and ensure that this adjustment does not impact citizens too adversely and we allow it to transition well, then I think it forces the right behavior. I think that we have to allow the private sector to play a larger role, and I think that that comes from, most importantly, and I think if you ask the private sector, their main complaint will be, allow us to do business easier, reduce the bureaucracy in the government. And so I think that every Gulf country and every Arab country, because this is really a forum about the Arab economies, is looking at this. And in Bahrain, we take that task extremely seriously. How do we allow business registration to be easy? How do we reduce the minimum capital requirement? How do we allow it to be efficient online? That's the way that we can, the private sector has the capital, has the willingness, can't step into sectors that are right now dominated by the government, but the government needs to retrench and allow that to happen easily. You want to discuss structural reform. What sectors offer potential? We saw the UAE model. The United Arab Emirates was able to diversify its economy by promoting tourism sector, by investing heavily in infrastructure. However, even this model is subject to external shocks. For example, now with the strength of the dollar, with the decline in the ruble, with tourism is a little bit now suffering from that. Real investment in real estate is also suffering. So the model really was very successful in diversifying away from oil, but it is subject to external shocks. So what is Bahrain and Kuwait's vision for structural reform? Which sectors offer potential? Which model do you want to follow? Well, first of all, I would say the economy needs to be diverse. And I think certainly the UAE has done that extremely successfully. Bahrain today has 80% of our GDP in non-oil. 16 or 17% of that is in financial services. 14% in manufacturing. Around 8% is in ICT in telecoms. And the future focus that we see is on services. It suits our economy, Bahrain. We have an extremely skilled human capital. They are willing to work in the private sector. Half of our labor force, national labor force, works in the private sector. And I think that's quite different from other countries in the GCC. So I think that our focus is on the services sector. We look at the ICT sector specifically as offering huge potential for growth. Here we are in Davos, and the theme is the industrial, fourth industrial revolution. And I think if you look at every session, it is about technology and the contribution of technology. And I go back and say, how can the regional economies, and Bahrain as one of them, I think the Arab economies contribute to that movement rather than just watching that movement. And I think we have to allow our youth, I see the talent in our youth, how can they nurture a business, start a business, be innovative? And I think that's what I wanna touch on is innovation. Now, you mentioned the fiscal and the taxes. I think that that is something that is being studied by all the GCC on the VAT level. And I don't think anything on the corporate and income tax level, at least in Bahrain is currently being it. But if we do a VAT, it will be done together with our GCC leaders. I would like to a quick comment. Are you studying other forms of taxation other than VAT? This is the expert. For the taxation, well, we've decided and this is publicly has been said, we are not targeting an individual income tax. This is a, so we're thinking and we're studying now a corporate tax. We do have a corporate tax on foreign investment and we're thinking too much this foreign and local. We think that with, and I'm not, again, it's not, it won't generate enough money or revenue that would, I would say, well, I'm done and my economies are falsified. No, we believe if this program, we don't see evidence from this program before we do implement it. You're gonna study it very well so that it doesn't affect the competitiveness of your country. It doesn't, and as a matter of the contrary, it should help direct the private sector into the sectors that is needed and which goes in line with our resources. Mr. Mazurai, is the remittances tax on the table because this is really worrying all the expats who are living in the UAE? I don't think UAE is going to do something unilaterally. We are discussing at the DCC and, but I want just if possible to touch on one point. For us in UAE, we're not just concentrating on what's in UAE. In certain industries, we become a global player. I'll give you an example. Airline industry. Airline. I mean, it's airlines. Ports and the services. Dubai ports is managing, is probably a world leader on that sphere. Semiconductors, we're the second largest producer in the world of semiconductors. Through Mubadala subsidiary. Yeah. And if I touch on another, and we pay taxes there, so it can work and we pay taxes wherever we are. Petrochemicals, we are the fifth largest petrochemical producer. And Saudi Arabia also, Saabek is even bigger. So I think the fact that our entities and our factories that are working outside pays tax as a corporate. The fact that if they pay tax back home, it's not going to be something that is going to destroy. I think it's going to add value. Mr. Haikal, first, your reaction to what you've been hearing and the very important question of creating jobs. All the countries in the Arab world, whether exporting countries or importing countries, have a problem with unemployment. So, do you think this is an opportunity and how can we create the needed jobs? Which sectors? Do you think we are in the right frame of mind right now and the right thinking to do that? Whenever you disrupt an energy regime and you disrupt with it the entire equilibrium of various pricing, there are invariantly jobs that will be created and jobs that will be decreased. I look at the change in energy prices throughout our region as a huge economic opportunity to create an endless number of jobs in sectors where the efficiencies of those sectors have been masked. And let me give you a very simple example so that I don't get into too much detail. We have a Nile River business in Egypt. The advantage of Nile River is that on a per tonne kilometer, the consumption of diesel is very low. 90% of Egypt's lives next to the Nile. So it is mind-boggling that the Nile uses only 1% of all the transportation that happens. Why is that? That is simple because diesel prices have been put at a very low bar. Hence what I gain in efficiency is not priced correctly and hence no investments are going into Nile River as a result of wrong energy policies that have prevailed over 15 years. Whenever, and I can give you at least 50 examples of exactly the same logic where energy resources mispricing have caused distortions throughout the pricing of the entire economy and have finally caused loss of jobs in a variety of sectors. And once you address the issues of energy, I think you will create an enormous amount of job opportunities. I would like to take some questions from the audience. So if you have a question for our panelists, please just give me a sign so that we can pass on a microphone and hear your question. Please, can we give him the microphone? Yeah, thank you. I have a question for his accent. You can always introduce yourself as well. Yes, my name's Brian Grimm. I'm the chairman of the World Economic Forum's Global Agenda Council on the Role of Faith and President of the Religious Freedom and Business Foundation. The United Arab Emirates has an excellent record on diversity and inclusion. And I think that's part of the secret of the UAE's success. I'm myself in Catholic and I was an academic director at Zayed Military College and very welcomed and people of various faiths have been welcomed. So I think it's a great example in a world where we see a lot of tension that the UAE has been able to open their economy in that way. Do you see this openness continuing and do you have any suggestions for the Arab world at large of how this openness could grow? Thank you very much. Thank you very much. And I think it's not only going to continue. I think it's going to increase the level of openingness and the level of inclusiveness in the society in the United Arab Emirates is going to increase. We are opening up as a, let's say a capital of the world where everyone can live in peace and harmony regardless of what's your religion, what's your background. We don't discriminate against people on ethnicity basis. And I think if you ask anyone who lives in the Emirates and you did, they find it a little bit unique. Yes, we have threats from those extremist groups. But I think with the solidarity and the wise of the people and the wise leadership, I think we can defeat them and I think we can build, we can expand that model. And I think it's not only the Emirates, I think the whole Arab world in the Middle East, they are adopting that model because that's the only way out. I have a quick question now about the security issue and spending on security and defense. The GCC governments, of course, have a war ongoing in Yemen and they have the security threats of extremism. So there is a big question today about spending on defense and how will you deal with this within budgets where austerity, you are moving towards more austerity. So I don't know who would like to comment on that. I think nobody wants to comment on that. I can have a stab on it. I'm not the expert, not on spending side, but I think the fact that between us and our bigger neighbor, we need to calm and the science that we see of escalation when people come and say there are 200,000, not 200,000 from their military, 200,000 of our Arab world and Islamic world are marched or could be marched toward the cause or that is causing the countries to become more cautious and that is not going to be good news. We need to, we need peace. I think the last thing that the Middle East needs is another war. We need, we have a duty to our people and that is the prosperity and the peace and we need to promote that and I think our countries are peaceful countries. We've never engaged in a war, we never conquered anyone, but we need also to look at our security. And if that requires us to be prepared, we will have to be prepared. Can we pass on the microphone to Mr. Jared Lollis from Jumeirah Group? Well, thanks for introducing me. Jared Lollis from the Jumeirah Group in Dubai and my wife, Nassan, I have lived in Dubai now almost 30 years starting in 1978 and we left for a few years and came back and absolutely the tolerance that we experience as expatriates living there has always been incredible and also having lived in Bahrain for a few years we experienced the same thing. And I'm really pleased that you mentioned tourism because as Mr. Claddett said, industry needs to be diversified but don't think just because the ruble goes down that we have no other markets. Of course we have. We're diversified in tourism and that we've had huge growth in the Chinese market, in the Saudi Arabian market into Dubai, in the British market into Dubai where currencies are still strong or equal to the currency that we have. Are the figures still resilient? The figures are not. Yes, I mean in Jumeirah and our beach house has been closed at almost 85% occupancy for 2015. Our average room rates are under pressure because of all the increased supply but that's good for the consumer and it's also good actually for more and more tourists coming into Dubai. And the other piece of diversification as well is very much that like Donata, like the ports in Dubai, Jumeirah now operates almost, we have 25 hotels under construction in different parts of the world having done management contracts there. So it does show that the economies are being diversified well away from oil and I think very successfully. So sorry it's not a question but it's just a comment that I'd like to make. Thank you very much. We appreciate it. Mr. Marwan Budaev from Al-Jazeera Airlines if we can pass on the microphone. Yeah, hi, thanks. Ahlan was Ahlan. From Kuwait, Ahlan was Ahlan. My question is to both Mr. Mazruwe and Mr. Saleh. It's great to hear now, special in the GCC that we're liberating the economy and we're more focused on the private sector. So today we have taken a bulletin just two weeks ago to announce that they sell their jewel or part of their jewel. Are you ready in the UAE and Kuwait to liberate the oil sector? Mr. Saleh. I'm faced, again, diversification is the key. See, since mid-40s when our oil industry started in Kuwait at that time, over 60 years, Kuwait is thought of diversification and this is where they, you know, this is why it's the first sovereign wealth fund that we have or among the first. And among the very successful models also. Mr. Badra Saad is here, so hello to Mr. Saad. So this is why, since then we were thinking, what if oil stops? What if oil is not needed? What, what, what, you know, those many questions. So we made sure that we managed during those years, prudently that we have another source of income where we don't put in our budget. This is why people say, is it true that you depend so much on oil and you kept it like this all those years? No, because we think we are conservative in managing it. This is why we keep it off. Whatever goes to the future generation fund stays in the future generation fund, although it gives us great income. So one. Two, I'm stuck with constitutional restrictions to, especially on the upstream and to privatize that. But having said that, we're thinking on our services companies, the large one, the heavy one, they were thinking to start up. Like which companies? I want to go into details now, but because we're studying it all together. I don't want to give hints now, here and there. But we're studying all the companies that are services companies in the oil sectors among the KPC companies, what can we start offering? Do you want to make a quick comment about this? Quick comments. I think we have started that probably 75 years ago when all of the operating companies in United Arab Emirates are based on a partnership model. 60% the NOC, AdNoc, and the rest is international or IOCs. So that model have worked very well for us and I see us continuing that model of a partnership. I want to ask a question about skills and when we talk about creating jobs, about new sectors, investments in new sectors, optimizing non-oil sectors, there is a big question. You need to know how, you need the skills, you need investment in people. So what is your vision towards that? What is Bahrain doing in that sense? Well, we have an institution in Bahrain called Temkin which is tasked with training and with helping entrepreneurs. And we've made a pledge, I think with several institutions here in Davos towards upskilling 100,000 nationals over the next two years, we've committed, Temkin has committed 22,000 to that number, almost 20% of that number. That's about 10,000 per year and of that 22,000 is creating entrepreneurs. We, when we diversify, we've got to look at sectors that will be attractive to nationals, that will pay the wages that nationals will want. And so when we look at- Which sectors are you looking at? And so when we look at that financial services, financial services certainly has employed more nationals as a proportion than any other sector. And you already have the financial harbor. We have the financial services. We also think ICT offers that. It could be engineering, it could be programmers. So that also offers tourism is a wonderful sector, but unfortunately we don't see enough nationals in that sector. So one of the initiatives that we want is to say how can we grow that sector, but how can we also ensure that there's training and there's the right jobs that are created out of that? I think in Bahrain, we look at our people as our strength. We look at the fact that the high participation rate of our people is in these sectors that they are taking management positions, they take our leadership positions as strength. But as we look at diversification, we've got to be conscious. Growth without providing job opportunities is not really going to result in what we want. Mr. Haikal, there has been a big responsibility on the private sector to do that in terms of nationalizing jobs or vocational training, or training, setting up training programs. Today, already the business environment is tough. So how do you see that, on one hand, the responsibility of the private sector towards training and on the other hand, taking into consideration the negative effects that already we are living in and the negative environment that we are already living in? No doubt that the business environment has improved. So the business environment is tough. I think it has improved tremendously. The government has made enormous strides in making sure to solve the problems of the existing investors within the country. They have not fully done that, but they have made significant strides. And the first step towards encouraging investments, jobs you're talking about, then we need to talk about investments, is the fact that you make sure that your existing investor pool is a happy investor pool, because those are the ones that are going to make further investments, and those are the ones that are going to talk positively about the country and thus attracting other people. So to solve the pool of existing investors, the problems of existing investors, I think we've done significant strides. Now the other thing that the Egyptian government has done, which is extremely important in my view, is the issue of various safety nets. Egypt has, as a result of the fear from runaway inflation as a result of lifting subsidies, Egypt was able to put a number of safety nets to make sure that there is a cushion for the, I can, there is the Tadamun and Taqaful programs to give money, cash, conditional cash transfers for individual families. There is the increase in Ma'ashat in the pensions, have been increased substantially. And then there are four pieces of reforms on the fiscal side that are extremely important. One is the issue of the civil service acts, the pension act, the healthcare act, and those three, the solution of those problems have been extremely important. Finally, I should add that giving dollars to investors, the pool of investors that existed and that wanted to get out has been there, has been provided. I'm not saying that in Egypt, all the problems have been solved, but I think we are on the right path. I want to conclude with your excellency, Mr. Anas As-Salih. What is your vision for Kuwait? Now we are discussing reform. How do you see, how would you like to see this reform agenda going forward in your country, concluding remarks after the discussion we just had? I think we are in a much better position now, especially when I didn't elaborate on when your first comment that His Highness the Emir has issued in order to look into, directly to me, to look into his court budget. And this is something that's not been heard of. I mean, the initiative from His Highness the Emir is just to show that he wants to start from the top. So I think we are in a much better position, but we can't look at one pillar alone. We have to look at all pillars together, growth, private sector, privatisation, rationalised subsidies. This is our way and our path and we're determined to do so. And I think the Parliament is in line with us on that. Gentlemen, thank you very much for your presence and your contribution to this very interesting discussion. And for the audience, thank you very much for attending. I hope you found it insightful. We have thus reached the end of this session about economic reforms in the Arab world. I hope you were satisfied with this discussion. Thank you very much.