Arab leaders commit to free trade zone Moves to facilitate capital flows

RIYADH, Jan 22, (Agencies): Arab leaders pledged to remove obstacles to finalising a free trade zone this year and agreed to facilitate capital flows, as they wrapped up an economic summit in Riyadh on Tuesday.

“We stress our determination to complete all the prerequisites of (forming) the free trade area before the end of this year,” Arab League chief Nabil al-Arabi said at the end of the third Arab Economic and Social Summit.

The leaders, he added, were determined to clear obstacles to “achieve the Arab customs union fully by 2015.”

Saudi Finance Minister Ibrahim al-Assaf said officials working to facilitate a customs union were struggling to sort out rules on the origin of goods.

“We still have problems with the issue of country of origin... in order to establish which goods are from Arab countries and the percentage of foreign components,” he told reporters.
The regulations of the customs union stipulate that exempted goods should have at least 40 percent local components.

Meanwhile, Arab leaders agreed amendments proposed to strengthen the flow of capital and investments between countries, Arabi said.

The Arab League leader’s assistant for economic affairs, Mohammed al-Tuwaijri, had described investment laws in Arab countries as a “repellent for investments”.

He also highlighted “significant deficiencies” in the 1980 common agreement over capital movement.
Foreign direct investment inflow dropped from $68.7 billion in 2010 to $43 billion in 2011, a year that saw a wave of Arab Spring uprisings hitting several Arab nations.

The Arab leaders called for collective effort to focus on development in the region, mainly on fighting unemployment and poverty and improving living conditions for their peoples.

President of the Comoros, Ikililo Dhonine, called on Arab countries to better use their various resources and double pan-Arab investment.

Dhonine emphasized the importance of the Riyadh summit, which tackled several key files in the economic and social domains, mainly following up decisions of the 2009 and 2011 summits in Kuwait and Sharm El-Sheikh.

For his part, Yemeni President Mansoor Abdrabbuh, noted that the right diagnosis is the way to remedy economic problems in the Arab region.

Abdrabbuh said that this summit is an opportunity to review some of the policies and measures on using Arab manpower, increasing pan-Arab investments, and supporting the private sector.

He said that the current summit is “another step” towards achieving more sustainable development in the region which was swept by several political and economic transformations.

The Yemeni leader called for unifying Arab efforts toward achieving projects in renewable energies, linking land road, increasing inter-Arab trade, concluding a custom union, the Arabization of the internet, and establishing a joint Arab stock market.

For his part, Speaker of Algeria’s Council of Nations Abdelkader Binsalah said that the Riyadh summit comes at a time of the global financial meltdown which adversely affected the Arab region.

Binsalah said that this summit will be a “distinguished station” for Arab economic and social cooperation and integration, mainly in the field of investment and trade.

He called for developing the uses of renewable energy, endorsing the unified agreement on investment, and fighting unemployment and poverty.

He highlighted the great suffering of the Palestinian people under the Israeli occupation.
Binsalah said that wars and conflicts are considered main obstacles that hinder development in any society.

Dr. Khodayer Al-Khozai, Iraqi Vice-President, meanwhile said that the development summit marks a “promising” start for Arab cooperation and solidarity.

Khozai voiced hope that the summit would endorse programs on reducing unemployment, creating job opportunities, and establishing specialized institutions for training and rehabilitating Arab youth and supporting scientific research.

He also called for revising investment legislation, easing the flow of capital among Arab countries, and fighting terror.

Khozai emphasized the need to strengthen the role of women by granting them full civil rights and improving the level of education to higher to match those in advanced nations.

Libyan First Deputy Premier Sadiq Abdulkarim Abdulrahman said that the Arab mind is the greatest investment and should be used to the fullest.

He said the “new Libya” works for stronger ties with Arab states.

“The speech by His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah at the opening session of the Arab Economic, Social, and Development Summit abounds with humane gestures and developmental initiatives,” president of the International Islamic Charitable Organization Dr Abdullah Al-Maatooq told KUNA, Tuesday.
Al-Maatooq said the Amir was keen on means to alleviate the suffering of the Syrian people, and had urged donor countries to actively participate in the international donors’ conference to be hosted in Kuwait, to help secure financial and human resources and qualified professionals required to face the ongoing disastrous situation in Syria and refugee camps.
The speech clearly pointed out the magnitude of the crisis, and strongly and openly demanded joint action within an international framework to stem the bloodshed and destruction, and he openly renewed a call to heads of state to take part and support the donors’ conference.
His Highness the Amir also expressed support of the Saudi initiative of increasing capital of development-oriented organizations, saying that Kuwait strongly believes in the role played by such bodies in bringing prosperity and development to people and in fighting the triangle of poverty, ignorance, and disease.
The IICO chairman also remarked that His Highness had seized the opportunity and recalled the grave humanitarian situation faced by the Palestinian people due to the practices and aggressions of the Israelis, and urged Arab countries to come forth with the aid required to face mounting challenge.
His Highness the Amir also urged Arab countries to join the Kuwaiti initiative of setting up a fund to support small and medium private sector enterprises in the Arab World, with 60 percent of the fund’s $2 billion capital secured so far through contributions by 15 states.
Arab leaders concluded their two-day summit talks here on Tuesday by endorsing the Riyadh declaration, which focused as a whole on fostering Arab cooperation in the various economic and social economic fields.
The summiteers also agreed that the next summit be held in Tunisia in 2015.
The first and second summits were held in Kuwait and Sharm El-Sheikh in 2009 and 2011.
Saudi Arabia can maintain its current high level of government spending for years to come, Finance Minister Ibrahim Alassaf said on Tuesday.

Riyadh has been boosting spending recently on welfare and housing construction partly as a reaction to unrest in the Arab world in order to ease domestic political tensions. It also wants to diversify the economy away from heavy dependence on oil, in case of a future plunge in global oil prices.
Asked whether strong growth in government spending was sustainable, Alassaf told reporters: “We have the ... ability to continue this scale of spending.

“We have the reserves, as well as we are reducing our debt almost to zero. So we can continue in the medium term and even beyond that,” he said on the sidelines of the Arab Summit for Economic and Social Development.

The world’s No.1 oil exporter has set state budget expenditure of 820 billion riyals ($219 billion) for 2013, 19 percent higher than the amount initially budgeted for 2012.

It is slightly below the record estimated 853 billion riyals that the government actually spent in 2012, but analysts have said actual spending is set to continue climbing in 2013.

The oil-rich desert kingdom has overspent its annual budget plans by 24 percent on average over the past decade.

The International Monetary Fund said in September that Saudi Arabia, which has been running big budget surpluses thanks to high oil prices, is expected to see those surpluses shrink gradually in coming years and could post a small deficit as early as 2016.

In October, Alassaf called the IMF prediction a “doomsday scenario” which he did not agree with.
The Saudi government spending has been rising by 12 percent on average in 2002-2012. As a result, the oil price it needs to balance the budget is expected to shoot up to $85.2 per barrel in 2013 from as low as $37.6 in 2008, the IMF said in October.
However, the kingdom has a substantial buffer that would allow it to keep spending even if crude prices were to fall in the future. Its net foreign assets in the central bank, where it stores receipts from oil sales, rose to a record 2.4 trillion riyals in November.

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