SOME NON OIL LUBRICANTS FOR THE SAUDI ECONOMY

Now it is universally acknowledged fact that oil prices will remain depressed for a long time for not one but a variety of factors.

Global experts are predicting a gloomy situation for the oil dependant economies. Their predictions ranges from getting bankrupt by 2018 to regime change in some countries.

In the light of the above what are the steps that need to be taken by the oil dependant economies.

Before getting into solution mode, it is good to start with a story. In the state of Uttar Pradesh, in India is a huge building complex called Bara Imambara built three centuries ago. The story goes that the complex was built during a ravaging famine. And it was built to provide employment to the poor people. And during the day, while the poor buil the complex the king directed the noble men and elite to destroy it in the night. An earliest and crude form of fiscal stimulus....

The moral of story is, in times of impending crisis , conserving resources and cutting down spending may not work. As of now public domain is full of spending cuts planned by the kingdom. Actually what is needed is redirecting the resources from the traditional areas to new areas.

Another news is about expelling the foreign workers and filling the posts with the nationals. Here again what is actually needed is the repalcement of skills. The skill set required today is different from what is availiable in country. So a new set of people are needed while oppurtunities may cease for traditional jobs. Infact this is the time the country needs good talent who can help the country ship out of the crisis. And if Indians lead Microsoft, Google, Pepsi means there is talent in India. Only that these are a different class of people. But the type of employee unfriendly messages in public domain only will repel these class of people. National competitiveness will be severely hurt if skilled and talented people are not part of the game. Innovation will thrive only in a diverse ecosystem.

World trade today is about a lot of give and take. While countries like India are trying to derisk and diversify their oil basket, India also can be reminded about a large population of its countrymen making their livelihood in the Kingdom. Kingdom also can invest in the people intensive industries in India to get brownie points from the government which will help Saudi retain its market share.

Also the sovereign investment from many of these oil rich countries are not countercyclical in nature. If one invest in agriculture with the oil money, this essentially is not a countercyclical investment. Because the commodities always will be together whether they are in the upcycle or downcycle. But if the investments are in the fertilier or airline industry. These are investment which will give good returns when oil is turning bad.

Infact a lot of this might be happneing in this direction, but only the kingdom is missing in projecting it in the right way. To put it point blank, what is missing is the branding of the efforts.

Write to us back on indussprouts@gmail.com