But it also places GCC governments in the unfamiliar role of major shareholder. And the skills required to run a private company are not the same as the skills required to oversee a government agency or a tightly regulated monopoly. Government overseers must thus make unprecedented choices that will enable the public and private sectors to reinforce one another. For example, the Gulf governments are investing hundreds of millions of dollars in strategic industries such as real estate and infrastructure (including power, water, and transportation). The new government-owned companies are designed and managed as free enterprise operations, with commercial-style profit-and-loss accountability; they receive far fewer special privileges than government-owned entities of the past. And as the private sector grows stronger, the need for government support is expected to decrease.
Thus, in 2004, when Abu Dhabi decided it wanted to open the doors to a real estate development industry, it created Aldar Properties PJSC, to be run and operated like a private company. This company was launched not through a government press release, but through a public share offering. Aldar has since become a major real estate development corporation, with $72 billion worth of developments in progress. The Qatari Diar Real Estate Investment Company, wholly owned by the government’s sovereign wealth fund, plays a similar role in Qatar.
These governments are also learning to avoid jumping too quickly into privatization. Without proper controls and oversight in place, an overemphasis on the profit motive can lead to unfortunate excesses — as evidenced in the rapid rise and fall of some of the region’s real estate prices. Now governments in the GCC countries are taking measures to ensure that development is matched to explicit societal benefits — for instance, through regulations and public–private partnerships in which government provides funding and the private sector provides expertise. These partnerships, new to the region, involve shared risk and asset ownership; they help create jobs in the private sector, they provide quality services and facilities for citizens and stakeholders, and they shoulder much of the burden of development. For instance, in numerous infrastructure developments involving water and wastewater, private corporations are now frequently brought in to provide new technologies, increase efficiency, and help governments ensure continuous, universal access to quality water.
Fast and Slow Talent Strategies
In the first months of 2009, the financial-services sector in Saudi Arabia continued to recruit of people with the specialized knowledge to manage sophisticated financial instruments — even as banks elsewhere shuttered their doors or cut their staff. This was just one sign of the shortages of skilled workers that rapid economic growth creates, particularly in such industries as financial services, telecommunications, engineering, and IT. At the same time, there is a human surplus among Gulf nationals, many of whom have liberal arts degrees or other education credentials that leave them unprepared for the particular talent needs of the region.
Gulf state leaders are dealing with this challenge by focusing on new capabilities and ways of thinking. For instance, they are providing greater opportunities for women, and thereby confronting an ongoing set of contradictions in their culture. A growing number of women in the Gulf region have entered the workforce in recent years, and some have the opportunity to achieve substantial success. (Prominent women in the region include Lubna Al Qassimi, the minister of economy and planning in the UAE; Hessa Al-Jaber, the head of ictQATAR; Nora Al-Fayez, the first female deputy education minister for girls’ education in Saudi Arabia; and Maassouma Al-Mubarak, the former health minister of Kuwait.) It is increasingly understood that the promotion of female employment and education is a factor in sustainable economic growth.