Integrity is the key to achieving long term economic growth, Shaikh Mohammed bin Essa Al Khalifa, Chief Executive of the Bahrain Economic Development Board (EDB), has told an audience of senior delegates at an OECD regional workshop.
Speaking at the event, titled “Strengthening Integrity in the Private Sector in Arab Countries”, Shaikh Mohammed said that transparency, reliable regulation and effective governance are essential in delivering the sustainable growth needed in today’s re-set world. A private sector built on these foundations will also improve practices and efficiency in the public sector and ultimately act as the “engine” of future economic growth in the region, he added.
“The last few years have seen damage to the integrity of economic systems across the world; one element critical to business has been lost: trust. While our economies have weathered the storm better than most, the nature of modern finance has made this a truly global issue. In this re-set world, it will not be the size of economic growth that matters but whether it is stable and sustainable. It is not a case of turning back the clock and allowing history to repeat itself. It is about re-setting attitudes and approaching the world with new priorities.
“Integrity within the private sector is particularly relevant to the economies of the Gulf as we look to the sector to drive economic diversification and growth. Relying on a subsidised public sector for jobs and growth is no longer an option. A strong and vibrant private sector that people can trust is vital to all our futures.”
Shaikh Mohammed said that the key is to ensure integrity in the private sector so that companies know where they stand as the Gulf economies move to a future beyond oil. He urged for the same regional cooperation that has already seen the transformation of the Gulf Cooperation Council (GCC) into a single market approaching one trillion dollars in terms of GDP – the equivalent of India – with falling barriers and rising cross-border trade, investment and employment.
“Increasing success brings greater scrutiny and with it comes greater responsibility. This isn’t an issue for each nation to deal with on its own. We in the GCC have always seen each other as partners; we know that one of our greatest selling points is what we can achieve together. Such regional cooperation and the close relationships between our peoples can help build integrity and ensure high standards in the private sector as we learn from each other’s examples.”
In Bahrain, itself the first in the region to look beyond oil and now the most diversified economy in the Gulf with oil representing just 17 percent of GDP, guiding principles for both public and private sectors are provided by Vision 2030. The process is being led by the EDB and is designed to drive the private sector as an engine of growth, support further diversification of the economy and ultimately elevate national living standards by creating greater opportunities for Bahrainis. Under the plans, the public sector will move from ‘operator’ to ‘regulator’.
Shaikh Mohammed added: “As the private sector grows across the region, we will need two step-changes to preserve its integrity; to the approach of both the ‘referee’ and ‘the ‘players’. Regulators must be given the tools to ensure that what goes on is to the benefit of society and that it does not put the system at risk. And the companies and individuals working within must have an ethical mindset – doing business in a way that is a benefit to wider society, not just individual wealth. When it comes to integrity, companies are their own best guarantors.”
Bahrain’s own long term strategy of economic diversification is backed by the highest and most transparent regulatory and supervisory standards. The Central Bank of Bahrain (CBB) is the only single regulator in the Middle East and widely considered the best and most progressive in the region.
Shaikh Mohammed said: “You cannot ensure the integrity of the system as a whole without regulation. Regulators must work with the private sector to ensure that regulation is effective, independent and coherent. I am very pleased that in Bahrain we have achieved this through the Central Bank of Bahrain. Having just one referee – and the right referee – has worked very well.”
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