Davos 2019 - Next Steps for Saudi Arabia
Saudi Arabia's national transformation plan encountered geopolitical and economic headwinds in 2018. How will the country respond to a new global and regional context?
· James Gorman, Chairman and Chief Executive Officer, Morgan Stanley, USA
· Mohammed Al-Jadaan, Minister of Finance of Saudi Arabia
· Patrick Pouyanné, Chairman of the Board and Chief Executive Officer, Total, France
· Sarah Al Suhaimi, Chairperson of the Board of Directors, Saudi Stock Exchange (Tadawul), Saudi Arabia; Young Global Leader
· Mohammad Al Tuwaijri, Minister of Economy and Planning of Saudi Arabia
Moderated by
· Robin Niblett, Director, Chatham House, United Kingdom
https://youtu.be/UvkI3VKPh4U?si=VSjSsBoa7wgBHKGH
· James Gorman, Chairman and Chief Executive Officer, Morgan Stanley, USA
· Mohammed Al-Jadaan, Minister of Finance of Saudi Arabia
· Patrick Pouyanné, Chairman of the Board and Chief Executive Officer, Total, France
· Sarah Al Suhaimi, Chairperson of the Board of Directors, Saudi Stock Exchange (Tadawul), Saudi Arabia; Young Global Leader
· Mohammad Al Tuwaijri, Minister of Economy and Planning of Saudi Arabia
Moderated by
· Robin Niblett, Director, Chatham House, United Kingdom
https://youtu.be/UvkI3VKPh4U?si=VSjSsBoa7wgBHKGH
Transcript
00:00:00 Welcome, good morning. If you could take your seats.
00:00:03 We have a more compressed annual meeting of the World Economic Forum this year,
00:00:10 finishing at lunchtime tomorrow, so each of the meetings has that much more intensity,
00:00:14 as I think I can see from the faces around the room.
00:00:17 Everyone's trying to make the very most that they can of their annual meeting this year.
00:00:21 And I think it's been a very good idea of the World Economic Forum
00:00:26 to put together this panel on next steps for Saudi Arabia.
00:00:30 Before we start, let me just remind everyone, including especially our panellists,
00:00:34 that this session is on the record, so no Chatham House rule protection on this one.
00:00:39 But we will have, I think, a very interesting conversation,
00:00:44 given the scale of the interest in what is taking place in Saudi Arabia.
00:00:49 Obviously a critical country in the Middle East, a G20 member,
00:00:54 one of the largest economies in the world,
00:00:57 in the midst of a major structural transformation,
00:01:01 and of this extremely important programme
00:01:05 launched by His Majesty King Salman and the Crown Prince Mohammed bin Salman
00:01:11 of Vision 2030,
00:01:13 to boost growth, boost employment, I think most importantly,
00:01:18 which obviously you need the growth for the employment,
00:01:21 to diversify the economy and open up much more to foreign investment.
00:01:26 Now, as we said in the little blurb, I think, at the beginning of this,
00:01:30 2018 has been a pretty bumpy year for Saudi Arabia.
00:01:34 We are in the midst of a very uncertain period following the murder of Jamal Khashoggi,
00:01:41 and preceded, in a way, by a sense of unease
00:01:48 about the very centralised system of leadership,
00:01:52 which appears to have led to some of the drop-off in FDI
00:01:56 that was seen even back in 2017,
00:01:59 which we'll get to in our discussion there as well.
00:02:02 So we're at a moment where the symbol of Saudi Aramco's IPO
00:02:08 being delayed out to 2020, most probably.
00:02:10 There's a lot of questions.
00:02:12 Where is Saudi Arabia going?
00:02:13 Is it going to be able to succeed in this great project that it has laid out for itself?
00:02:19 And let's not forget, a country with the largest proven oil reserves,
00:02:24 a very large population in the Middle East,
00:02:26 one of the most important countries in terms of size as well as population,
00:02:29 as well as of influence in the GCC, etc.
00:02:32 A huge public investment fund, $250 billion or so,
00:02:37 and very important reforms undertaken in recent years
00:02:41 by the Crown Prince and by the government,
00:02:43 obviously symbolised by changing the right of women to drive,
00:02:48 but many more taking place underneath.
00:02:50 And a young population that is excited about what's happening in Saudi Arabia
00:02:54 and wants to take advantage of those opportunities.
00:02:57 So plenty of challenges to explore,
00:02:59 plenty of opportunities to try to tease out as well,
00:03:02 and we've got a superb panel here.
00:03:04 I think you've all had a chance to see them,
00:03:06 and I will run through.
00:03:08 But Minister al-Jardan, the Finance Minister, delighted to have him here.
00:03:12 Obviously Minister al-Tawajiri, who leads up all of the planning and development
00:03:18 and so on and takes a critical role in Vision 2030.
00:03:21 Sari al-Sohaimi, who's leading up Tudawul, the stock exchange,
00:03:25 the exchange there, but is also on the bank,
00:03:30 running NBC Bank's investment arm as well.
00:03:34 James Gorman, the CEO of Morgan Stanley.
00:03:37 And Fatih Pouyanneh, the CEO of Total.
00:03:40 Both of them, as she was discussing earlier,
00:03:42 have had operations in the country for some 40 years,
00:03:45 so bring a wealth of experience and knowledge about the country.
00:03:49 Let me start with you, Minister al-Jardan, if I may,
00:03:51 and just dig in right from the beginning.
00:03:53 Can you just give us a feel at the beginning?
00:03:55 We've got an hour.
00:03:56 We'll have some time for Q&A at about 10 to something like that, quarter to.
00:04:00 But can you just say a word or two about the state of the economy at the moment?
00:04:04 Growth is, at least as I see the statistics, a little sluggish, around 2%,
00:04:09 something like that predicted for this year,
00:04:11 and still a budget deficit being run, et cetera.
00:04:14 But just tell us a little bit about how you see the state of the economy first.
00:04:17 Let's set the scene, then we can dig into some more specific issues.
00:04:20 Thank you very much and welcome, everybody. Good morning.
00:04:25 I think the change--this is our third year to hold this session.
00:04:31 And in the first year, we explained what Vision 2030 is about,
00:04:37 the transformation that Saudi is planning to go through a 15-year journey.
00:04:43 Last year, we gave an update on how the planning is going about
00:04:48 and some of the earlier results.
00:04:53 We ended, as you recall, '17 with minus 0.7 GDP growth.
00:05:02 And this year, we will talk about the way forward, what happened so far, the results.
00:05:10 And I could tell you a few things on the economy that are very positive.
00:05:15 One, we managed to convert the minus 0.7 GDP growth to 2.3 actual growth in '18.
00:05:27 We managed to issue at least 18 new or updates existing laws and regulations,
00:05:36 including insolvency, court system, commercial courts, upgrade, significant structural reform.
00:05:47 We managed to control--when I was here last year, I said,
00:05:52 "We are determined to push ahead with our fiscal reform.
00:05:56 We will reduce the deficit from 9% to 5% while we issued one of the largest budgets last year."
00:06:06 And there was some raised eyebrows, you know,
00:06:09 "How can you increase your budget, expansionary budget, and at the same time reduce your deficit?"
00:06:14 And we ended the year exactly where we thought we will,
00:06:19 a deficit reduced from 9% to less than 5% and growth in the economy.
00:06:27 The overall reform planning has taken about two years plus,
00:06:34 and we changed gears in the middle of '18 from planning to execution.
00:06:40 We have seen serious results, both on the private investments,
00:06:46 where we have seen only in the last three months five mega projects
00:06:52 awarded to the private sector infrastructure in the energy, water, diesel, water treatment, and health care.
00:07:02 And there are actually more than that going to be announced only in the next four months.
00:07:07 We said last year that we are planning to do more infrastructure on the telecom,
00:07:14 connecting fiber optic, which we think is the nerve of whatever development that you want to have.
00:07:20 We managed in the year by connecting more than 800,000 households of high-speed fiber optics.
00:07:30 We improved significantly in various areas, including health care, where we managed to reduce waiting time, for example.
00:07:40 These are small but very effective, touching the citizens of Saudi Arabia,
00:07:47 reducing significant parts of appointments with consultants across the kingdom
00:07:53 from three, four months to a couple of weeks in a lot of cases.
00:07:58 So these are the small but actually proven numbers.
00:08:04 Overall, I could tell you the reform is continuing.
00:08:07 In the social, we have seen significant social reform.
00:08:10 His Excellency, we'll talk about the economic reform that we have seen diversification.
00:08:15 On the fiscal, we have seen discipline in spending.
00:08:20 With index, we are now number five out of 138 countries on government efficiency.
00:08:30 So we are focusing on efficiency, efficiency of spending, but also supporting the economic growth,
00:08:35 supporting the private sector.
00:08:37 We went through serious private sector stimulus, particularly SMEs, where a lot of initiatives have actually been launched.
00:08:45 We rebated a lot of government fees to small and medium enterprises just to support their initial businesses.
00:08:53 So a lot is happening actually as we speak, and there is more to come that we'll talk about in the rest of the session.
00:08:59 If I can just pull you back on a couple of points that you raised there.
00:09:03 Number one, as you said, you've imposed a fair amount of fiscal discipline,
00:09:07 squeezing yourself, as you said, that budget deficit down to under 5%.
00:09:11 How worried are you, though, that these steps, in the way they have to be taken,
00:09:15 some with tax increases, VAT tax increases, fees on expatriate workers, et cetera,
00:09:20 how much might you be depressing economic growth?
00:09:24 I know you said you've turned a negative, but a negative is not a good place to be,
00:09:27 obviously with a growing population and the plans for Vision 2030 to an over 2% growth.
00:09:32 Over 2% growth is okay, but again, it needs to drive more,
00:09:36 given the size of the country and the kind of reforms that you're putting in place.
00:09:41 How worried are you that the steps you're having to take as finance minister to control the deficit
00:09:47 actually may end up slowing the growth process and pulling in the horns of consumers as well as the private sector?
00:09:53 We are very conscious of this.
00:09:55 When we plan the fiscal side, we don't forget the economy also.
00:10:00 It is a very balanced game and it goes through serious debate within the government
00:10:06 as to what is the right balance.
00:10:09 Whenever we see something that is not working, we would not be hesitant to actually adjust and change.
00:10:16 Do you see any adjustments coming up this year?
00:10:18 We have seen adjustments before.
00:10:21 We have, for example, the energy price reform, some of the energy price reforms that were planned in 2019,
00:10:29 but they were pushed actually to 20 as a result of this assessment.
00:10:34 What I could tell you is while we are doing a lot of work on the oil revenue,
00:10:41 which grew significantly only in the last four or five years to about 300% of what it was,
00:10:48 we are also spending a lot more.
00:10:51 In 2019, we announced the largest budget ever in Saudi Arabia, 1.1 trillion Saudi riyals.
00:10:58 That is just pushing growth.
00:11:00 We are pro-growth and we are focusing on CAPEX, not only in Awebix.
00:11:04 We increased our CAPEX budget by 20% in 2019.
00:11:07 That is pushing basically growth.
00:11:10 That money goes to the private sector to actually do infrastructure and help the private sector
00:11:17 at the same time helping the growth of the economy, creating more jobs.
00:11:21 Some of these big projects you mentioned for this year, telecom, energy, healthcare, etc., desalination,
00:11:28 how are these being funded?
00:11:30 We will come to foreign investment in a second.
00:11:32 As far as I can see, there was roughly a doubling in foreign direct investment last year,
00:11:37 but that was from a very low 1.7 billion or so to 3.5 billion.
00:11:42 You had over 7 billion back in 2016, higher numbers even earlier.
00:11:46 One of the key engines of Vision 2030, I think the plan was, was foreign investment
00:11:52 and obviously the Future Investment Forum and so on to drive that process.
00:11:55 How are you able to sustain at the moment these critical investments as you described them
00:12:00 given the fact that the money from outside just isn't coming in the way it was hoped?
00:12:05 Actually, if I may, this is actually the other way around.
00:12:09 All of these are actually private sector funded.
00:12:12 These projects, healthcare north of 7 billion Saudi Riyal, energy, significant, a few billions,
00:12:19 I can't remember the numbers.
00:12:21 Desal is north of 10 billion Saudi Riyal.
00:12:26 So all of this are funded 100% by the private sector, a lot of them actually foreign investors, not local investors.
00:12:33 I think one of them is local, the rest are foreign investors, European, Asian, and some US.
00:12:39 So overall, the FDI is coming back.
00:12:43 The PPP projects are actually getting momentum and we are seeing more of them.
00:12:51 As I said, five only in the last four months and we will see another five in the next four months.
00:12:56 So all of these are private sector.
00:12:58 And one last question for you before I turn to Mr. Touaregi.
00:13:01 How important do you think in your mix as finance minister is the Saudi Aramco IPO, the IPO of the 5%?
00:13:09 Was that always part of the model, if you see what I'm saying,
00:13:12 and you're having to kind of work and adjust the plan while you wait for the right time,
00:13:16 the government waits for the right time for this IPO to take place.
00:13:19 How critical was it for your planning and how have you had to adjust to its not taking place in the timeline that you'd hoped?
00:13:25 I think this is actually a very good point to just highlight that Aramco IPO is a very important part of the plan.
00:13:35 But also part of the plan is to say what if we cannot do Aramco IPO in '17 or '18 and what kind of contingency plans we have.
00:13:45 A, from a budget point of view, it has zero impact because the plan was this is not coming to the budget,
00:13:52 it's going for investment because the reason why we are doing it, one part of it is to diversify the economy.
00:13:58 So taking that money and investing somewhere else.
00:14:02 Second, PIF is moving and continuing with its plans.
00:14:07 It was banking for a potential revenue from the IPO, but it has other sources.
00:14:12 It raised debt last year very successfully, a very large amount.
00:14:17 And it is now in discussion with Aramco to sell its SABIC shares to Aramco,
00:14:27 but it has actually ample access of liquidity to fund both its onshore and offshore investments.
00:14:34 Let me turn now, thank you very much for those answers to those questions so clearly, let me turn to Minister Al-Tawajiri.
00:14:40 A key role running the many priorities of the Vision 2030 project, especially in the area of diversification, privatization.
00:14:49 I think there is a kind of sense that I've picked up over the last year or so that the danger of Vision 2030 is it has so many priorities.
00:14:59 You know, nothing isn't a priority.
00:15:01 So it would be great to hear from you just to start with what are your priorities right now,
00:15:05 what are the two or three areas on your docket where you're absolutely focused in your ministry?
00:15:12 Thank you. So I recall very well last year when we talked about Vision challenges, I referred to three Cs.
00:15:20 It was capacity, communication and cost.
00:15:23 And we dig detailed into how these challenges are significant.
00:15:26 So all of them have been addressed since then.
00:15:29 So please allow me to also use exactly the same analogy and come out with new three Cs,
00:15:35 which is in the heart of our execution and delivery for the next couple of years.
00:15:40 And they are consistency, confidence and creativity.
00:15:44 So consistency to me and to the system is being very consistent in policy implementation.
00:15:52 This is good for the private sector.
00:15:54 This is very important also for FDI.
00:15:56 And this is a very important link to the second point, which is confidence.
00:16:00 And also confidence won't be there unless we provide evidence.
00:16:05 All what you're going to see in the next couple of years is evidence.
00:16:09 I mean, communications remains to be a challenge,
00:16:11 but unless we provide the local market with the next lane of the metro Riyadh,
00:16:16 the next airport that's being privatized, the next service that's being digitized, et cetera, et cetera,
00:16:21 then our credibility is at stake.
00:16:24 So confidence is very important.
00:16:26 And the last one is creativity.
00:16:27 In the science of delivery, which is critical, we need to also think always out of the box.
00:16:32 Digitization is one solution.
00:16:34 I recall we had seen a statistic last week about how much of the government services are now online.
00:16:40 It's north of 90%.
00:16:42 This makes the ease of doing business, the government bureaucracy and accuracy and data analysis much better.
00:16:51 And we have to also think of creative solutions around everything we do.
00:16:56 Diversification.
00:16:58 As you know, now Vision 2030 has 12 machines, 12 engines that have been launched.
00:17:03 Actually, next Monday, the most important program,
00:17:06 which is the National Industrial and Logistics Program led by His Excellency al-Farih,
00:17:12 will be officially launched, although work has been done the last few months.
00:17:17 This program is important because it looks at exports, local content, logistics,
00:17:25 which again address the geographic location of Saudi Arabia and how will that help the whole FDI story.
00:17:33 Infrastructure, His Excellency Rajed A'an mentioned the laws, regulations, business-friendly environment.
00:17:39 It's very important before we even talk about diversification.
00:17:42 If we need to attract investors globally to Saudi Arabia and encourage the local private sector to do more and expand,
00:17:50 then we need to have the right infrastructure.
00:17:53 So that's also a major thing that you will see improving in the next year or so.
00:17:58 Strategic partnerships.
00:18:00 I mean, we've decided actually where Saudi Arabia has a reciprocity,
00:18:04 where are the situations globally that have a win-win situation,
00:18:09 where people have appetite to our core sectors and vice versa,
00:18:13 whereas the PIF, for example, have appetite for investments abroad to diversify the economy.
00:18:19 And finally, things like we've now put all the development funds under one umbrella
00:18:25 with a massive capital, injected more capital into it.
00:18:28 This will also drive the diversification agenda and the development agenda.
00:18:32 One minute about how we think about budget and how we execute.
00:18:37 So there is the business as usual, which is CAPEX, OPEX, make sure the economy is running.
00:18:42 This will probably drive around 1% growth.
00:18:46 But every year we're increasing the allocation of vision and realization program budget.
00:18:51 So this year is around 173 billion riyal.
00:18:54 And we always have a cushion to stimulate the private sector.
00:18:58 This is the thinking.
00:19:00 So we want to make sure the economy is running on OPEX and CAPEX.
00:19:04 We're committed to our vision realization program, which has 12 years to go.
00:19:08 And we always have a screen or radar looking at the private sector
00:19:13 and how we can stimulate more and do more.
00:19:16 Finally, I want to mention something very important.
00:19:18 Saudi Arabia, through its delivery and execution, have always taken a balanced approach.
00:19:23 It's very important.
00:19:25 When we did the energy price reform, we also introduced citizen accounts
00:19:29 to protect the less privileged.
00:19:31 Our social network is huge.
00:19:33 We spend north of 100 billion riyal a year on social protection.
00:19:37 So this year we are also taking a deep dive into how can we convert this social network
00:19:43 into more job creation, reaching out to regions, reaching out to more sectors
00:19:49 to help job creation and other criteria.
00:19:52 Thank you very much for that update.
00:19:54 On the last point about employment and job creation,
00:19:57 I was wondering if you could say a bit more about the steps you're taking
00:20:00 to really make sure that local, obviously, employment is increasing.
00:20:06 The role of women, where I think some 30% unemployment rate amongst women,
00:20:12 45% or so participation rate.
00:20:15 I know that's one of the big priorities for the government to try to improve that.
00:20:19 Could you say a little bit about what you're doing on the employment side?
00:20:22 When we look at employment, we look at the labor market in general.
00:20:26 We cannot just say Saudization is the solution.
00:20:28 You have to have a labor market mix, policies in place to also help the private sector
00:20:35 to deliver on their role of employment.
00:20:38 So that's one. We're doing that.
00:20:40 The expatriate fee, is that issue balanced right?
00:20:43 Absolutely. I'll come to it.
00:20:45 For example, last year we've introduced 68 initiatives from this labor market policy-making body
00:20:55 to help the private sector.
00:20:56 Things like, if you're really an exporting entity, promoting local content,
00:21:00 and meet certain criteria, we will actually help.
00:21:03 Either through the National Development Fund, SIDF mainly,
00:21:07 or relaxing some of the fees that His Excellency, Ali Jaddan, mentioned.
00:21:13 So that's one. The labor market policy is very important.
00:21:17 Two, I think we also have a responsibility to create new venues and sectors
00:21:22 where employment for Saudis is attractive.
00:21:25 Take for example the hospitality, entertainment, and services sector.
00:21:29 Not only are we going to expand regions and discover new sites,
00:21:35 but also we want to have a quality service where Saudis think of it as a sustainable job for them.
00:21:42 So that's done in many ways, but also we're going to do more of it in the future.
00:21:48 And third, I think also it's very important to think of FDI as a tool to attract foreigners
00:21:55 and foreign investments to create quality jobs, sustainable jobs.
00:21:59 One of the criteria of FDI is to make sure when they come to invest in Saudi Arabia,
00:22:04 they promote skills locally.
00:22:07 And finally, because this is a strategic topic, we now have a dedicated program,
00:22:12 led by a woman by the way, Dr. Imam Muttari,
00:22:15 to look at our education system, human capital from kindergarten to future jobs.
00:22:22 So the whole spectrum now of the job market is under the spotlight in the central government
00:22:28 to make sure not only we align policies, but also we deliver on tactical objectives.
00:22:34 Unemployment rates, we kept steady the last two years,
00:22:38 although we had around 350,000 entrants every year to the job market.
00:22:43 Women, we've improved the unemployment rate for women by around 8% the last two years.
00:22:49 Women participation is key and very important.
00:22:53 There are more than, I think, 2,000 newcomers to the government jobs, women only, every year.
00:23:03 So this is very good.
00:23:05 Well, turning perhaps appropriately now to Sara and Suhaimi,
00:23:09 you've got the big task of making sure that Saudi Arabia,
00:23:14 and today it will become really one of the leading financial centers in the region, if not globally.
00:23:19 It is still lagging, I think, seventh in the region the last time I saw it,
00:23:24 behind some pretty much smaller economies.
00:23:26 But we all know that's a big task, I mean, to build up a financial center the way you're doing.
00:23:32 And the issue that's always applied to it, and we'll get to this, I'm sure, with James Gorman as well in a minute,
00:23:37 is the issue of trust and knowing that the investments that are taking place there
00:23:44 are absolutely legally structured in the right way for them to be fluid and well-connected to the rest of the global economy.
00:23:50 Could you say a word or two about what you're trying to do to drive Tunawal's role further up the chain?
00:23:57 Okay, thank you.
00:23:59 The capital market reform has opened up the Saudi market and is developing further the structure of our capital markets at the center of it.
00:24:12 One of the vision realization programs is the financial sector development program led by His Excellency Al-Jaddan.
00:24:20 And there are objectives and there are expected outcomes of those objectives.
00:24:25 The journey to open up the Saudi market started back in 2015.
00:24:31 In 2015, the Capital Market Authority allowed foreign investors to invest in the Saudi market through the swaps.
00:24:42 And at the time, we have seen some activity, but of course it was not enough.
00:24:47 By 2016, and when the blueprint of the new economy came, the vision 2030, we started to have dialogue with investors,
00:24:58 international investors, asset owners, asset managers, brokers, custodians,
00:25:02 to understand what do they want to see changes in the structure of our market, whether it's structure or regulation.
00:25:12 This effort was of course led by the Capital Market Authority, ourselves with major support from other government institutions,
00:25:24 especially the Ministry of Finance and the Ministry of Economy and Planning.
00:25:28 So as a result of that, the Qualified Investor Program was introduced.
00:25:32 The Qualified Investor Program today is in its third edition, and this is a result of a continuous dialogue.
00:25:43 We do realize that the market change, investors' demands change, international practices change.
00:25:52 One of the major objectives was to join the global community.
00:25:57 So we also had a lot of discussions with leading index providers to understand what does it take for the Saudi market to be part of the emerging market indices.
00:26:12 You know, Saudi Arabia is the only Arab country that is in the G20.
00:26:17 We have 50% of the market cap of all GCC markets combined.
00:26:24 80% of liquidity is in our market, so we have to be part of the emerging market index.
00:26:33 We do consider ourselves to be the axis for international investment to the Middle East, especially to the GCC.
00:26:40 And this was the grand objective.
00:26:44 So throughout this dialogue, we have been put on the watch list last year, and I think their excellencies mentioned this in their session last year.
00:26:55 And back in 2018, it was announced that we are included in all three major indices, MSCI, FTSE, and S&P.
00:27:09 Implementation is going to start very soon, starting in March in FTSE and starting in June for MSCI.
00:27:18 So what are the outcomes?
00:27:20 The outcomes are, if we just get two points, number of QFIs at the end of 2017 was 118.
00:27:31 End of 2018, as His Excellency, the Capital Market Authority Chairman mentioned, was above 450.
00:27:39 As of two days ago, it's 530 QFIs.
00:27:43 So as you can see, the number is rapidly increasing as we come closer to actual inclusion.
00:27:50 And that is, these are facts, those are accounts opening in the kingdom.
00:27:55 And all are getting ready to invest in the Saudi market at the time when the inclusion starts.
00:28:02 Could you say a quick word also about the steps you're taking on the modernization side, on the fintech side,
00:28:09 which I understand is an area where the market is putting particular emphasis at the moment?
00:28:14 Yes. In regards to fintech, there is a program that is a combined program between the Capital Market Authority,
00:28:21 the SAMA, the Central Bank, the Ministry of Finance, and of course, Tadawel is participating in it.
00:28:30 This brings me to an important development that led to the capital market reform,
00:28:36 which is the change in the structure of the Saudi capital markets.
00:28:41 We have, in 2017, we have changed the trading settlement cycle.
00:28:49 We have spun off our depository center.
00:28:52 This year, we're continuing.
00:28:54 Last year, we have implemented, we established our CCP, which is the clearinghouse, to start introducing derivatives.
00:29:05 And all those changes in the structures come also with more advanced technology that we are considering today.
00:29:13 One of the things that we are considering in Tadawel is to invest more in this space,
00:29:19 especially that our aim is to be the region leader stock market.
00:29:25 And I'm sure your competitors will see this as a challenge that they want to take on.
00:29:31 James, can I come to you first?
00:29:33 As we said a minute ago, 40 years, Morgan Stanley has been operating the market.
00:29:37 I think you opened your office there back in 2007.
00:29:42 You promised, obviously, Vision 2030, all the opportunities we've discussed here and some important steps taken.
00:29:48 Where, if I can just do a mix, where do you see the biggest challenges right now as you look at this market,
00:29:54 as a market both for your business but more broadly as a market that's trying to achieve this big turnaround very rapidly?
00:30:00 And then we'll get maybe to the opportunities.
00:30:02 Maybe give me a kind of challenges and opportunities based on what you've heard today.
00:30:04 Any questions you may want to throw back to some of the Saudi interlocutors?
00:30:08 Thank you, Robin, for having me.
00:30:11 The challenge is you're taking a country that is largely, has been historically largely insular,
00:30:22 very little foreign direct investment.
00:30:26 The recent inclusion in the various indices is sort of evidence of that.
00:30:30 It's late to that party.
00:30:33 Going through complicated social reform, operating in a region which has experienced, obviously,
00:30:41 periods of significant trauma and troubles, and embarking upon a very radical series of programs
00:30:53 from changing aspects of the culture through entertainment, women's rights in the society,
00:31:01 financial reforms, building infrastructure, modernizing the country, creating access to foreigners,
00:31:10 restructuring the way that the government interacts with its citizens, changing as a result of that,
00:31:16 things like benefits, entitlements.
00:31:18 This is a very, very significant change.
00:31:22 Now, it's captured under the umbrella of 2030, which sounds good, but the execution is enormously complicated,
00:31:31 whether it was Saudi or whether it's where I grew up in Australia or whether it's Canada
00:31:36 or any country in the world going through that kind of transformation.
00:31:39 And Saudi is not a small economy.
00:31:41 It's nearly a trillion-dollar GDP, 30, 32 million citizens and many immigrant workers there,
00:31:49 a very narrow-based economy historically because of its dependence upon oil,
00:31:55 yet an enormously wealthy country because of its oil.
00:32:00 So all of these factors are taking place against a backdrop where there's a wave of populism politically around the world
00:32:11 and a wave of technology change to every industry that people are participating in.
00:32:16 So it's like changing the wheels on the car while it's still driving at 60 miles an hour.
00:32:21 So that's the challenge, is just the sheer complexity of the task.
00:32:27 Obviously, the geopolitical challenges that have come with the region remain.
00:32:33 They don't disappear simply because you're going through economic reform, but that's the essence of the challenge.
00:32:40 And you can take two views of it.
00:32:43 One view is, you know, and you asked a question to the minister about changing back on some of the reforms.
00:32:53 For sure, you're going to overshoot certain things.
00:32:56 You learn by experience of what can the society absorb.
00:33:00 How does the fiscal and monetary changes work together?
00:33:04 How is the international community responding to that?
00:33:07 So all of those things require a more dynamic approach.
00:33:10 You can be critical and say, well, you had a plan and you didn't achieve it.
00:33:13 Or you can say reality is you've got to be dynamic in a world which is extraordinarily dynamic and sometimes extraordinarily volatile.
00:33:21 So that's the essence of the challenge.
00:33:24 And international investors looking at the market admire the scope of the vision and the common sense of becoming a modern society.
00:33:38 If it's going to be truly the center for financial markets in the region.
00:33:44 And with that comes international acceptance and ultimately international investment.
00:33:48 But it's a process and it's going to have some fits and starts.
00:33:51 And I mean, as the leader of a world-renowned financial company in that sense, I mean, do you find that the way the process is being led,
00:34:04 there's been a fair amount of uncertainty and unpredictability that's come into the process, the arrests that took place after the first FII,
00:34:11 just at the moment as the country was launching itself onto the stage,
00:34:16 could be an explanation for that drop-off investment that happened in the following year that has been picked up somewhat in the last year.
00:34:23 You know, to what extent, as you look at it, and you've got a lot of markers to pick from, as Morgan Stanley, where you put your real effort and so on,
00:34:29 it's a huge promise, a very complex process being undertaken.
00:34:34 But how attractive can the market be with that level of unpredictability and uncertainty?
00:34:39 Well, there's always, you know, the way I think about the world is you sort of have your own operations,
00:34:47 the next circle, concentric circle, is what's going on in the economy.
00:34:50 The next is what's going on politically and the next is geopolitically.
00:34:54 And, you know, you don't have to look too far to see what's going on in the US with the government shutdown right now
00:35:00 and the impact that is having directly on economic growth.
00:35:03 You know, we may have zero GDP growth as a result of that shutdown if this keeps going.
00:35:08 You have 800,000 people out of work.
00:35:10 So what goes on politically and geopolitically invariably bleeds in, positive and negative, amplifies economic growth.
00:35:18 You know, what's going on in the trade talks between the US and China will impact the growth of the two largest economies in the world if that is not resolved.
00:35:26 So that's economic impacted by political.
00:35:29 And that's exactly the same with what you've seen within Saudi.
00:35:33 And those issues need to be sorted out for the global markets to have confidence.
00:35:37 Right. So there's a sort of a given a take in this process here.
00:35:42 But it definitely bleeds in. You know, political uncertainty and geopolitical, particularly geopolitical uncertainty,
00:35:48 which has been in the region for decades, bleeds into economic confidence, which bleeds into economic performance.
00:35:56 And depending on what state of sort of alarm those dials are, would directly affect the sentiment of the international investment community.
00:36:04 And what if you had your kind of wish list of the two or three areas where you'd most like to see the Saudi government putting its effort
00:36:11 in terms of the change, which are the one or two of these changes?
00:36:14 We've had a whole series of them here. Where are you looking as Morgan Stanley at the kind of the change that you think would make the biggest difference?
00:36:20 Well, I think it's very hard to have a society which is operating in a global sphere in a sufficiently open way without undertaking the kinds of social reforms which are being undertaken.
00:36:36 So I think the social reforms that, you know, the access to sports and sports stadiums for women, you know, obviously the ability to drive and all the other things that have been going on,
00:36:48 imperfect through the eyes of many Westerners, the progress, but nonetheless progress.
00:36:53 That is an essential part of the Saudi economy, a Saudi country, 32 million people.
00:36:58 I don't know the exact percentage of population under 25, but it's a staggering number.
00:37:03 The unemployment in the women's sector is clearly among women is clearly an issue that needs to be addressed.
00:37:10 So I think the social reforms to me are essential to provide the backbone, if you will, on which the economic reforms can be laid.
00:37:20 Secondly, the diversification of the economy, and you mentioned Aramco earlier, the timing of the IPO, I think, is much less interesting to the investment community than it has been to the media, to be blunt.
00:37:34 This is the world's largest economic organization. It's of staggering size. Speed is not of the essence here.
00:37:44 What's of the essence is getting it right. And I think that, you know, the Saudi government sensibly and the Aramco institution and its board, I think, sensibly will pace getting the timing right when it can properly absorb those changes.
00:38:01 But the combination of social reforms combined with market access, openness, standardized rules that international investors recognize, combined with diversification of the economy, which is the longest term thing that begins in part with Aramco, but not solely, it's all of those things have to come together.
00:38:21 But this is, you know, it's the reason it's 2030 and not 2020, you know, and 2030 might be ambitious, to be blunt. You know, it's a lot of stuff to take on in an economy.
00:38:33 Thanks very much for those points. Patrick, if I can turn to you as well. The country has invested, is investing extensively in Saudi Arabia.
00:38:42 I mean, I almost like to start where I finished up with James Gorman, which is what are you looking for? Where do you see the biggest opportunities in terms of reform? And where are you hitting the blockages that maybe prevent you from doing the things you want to do?
00:38:55 Yeah, before to answer the question, just I would take the opportunity to explain why I was maybe one of the few Western CEOs to go to Riyadh.
00:39:04 I know many questions were asked to me. You're back in November. I think, and I think it's linked to what is happening also here in the way that the web structure, we want a new world, which is having an assertive dialogue between companies and countries is the best way for me to promote our values.
00:39:23 And being in Riyadh for me was clear with the strategy of the group, that it's better we are there to build economic and business bridges, bringing our values and engaging with dialogue with our Saudi friends is for me the best possible attitude.
00:39:39 And I will tell you, it's very difficult. It's quite brave what is done today in the kingdom. And the leaders in this room like CEOs, when we want to change in a company something, I don't know one CEO who can change, make transformation in a company without having a strong hand on what is happening in this company. It's not true.
00:39:57 You know, when we see that topics like corruption are put on the table in a very clear way, I think it's not easy to face this type of discussion. It's brave. We have here a partnership for dialogue about corruption. The Saudi authorities are clearly engaged.
00:40:14 And I think this is the type of topics which are probably undermining part of the story, the economic prosperity. So I think it's better, frankly, for us to be consistent, to take your words.
00:40:26 I'm investing in Saudi Arabia heavily. We have big investments. We engage into a new $5 billion petrochemical complex. We will announce in the coming days that together with Saudi Aramco we will establish a retail network station in Saudi Arabia, buying a Saudi company.
00:40:43 We are willing to invest in solar. Consistency means I cannot just add myself, you know, and staying in my office and continuing to invest in the kingdom and just say, no, I will not go. It's not consistent.
00:40:57 So I think it's better to engage. And our friends of Saudi Arabia, of the kingdom, have been very clear about it. And so let's look at it. What can we be done?
00:41:09 This modernization, first, what I observe in the kingdom, spending quite a lot of time, there is a strong support of the population. We must not be wrong about it.
00:41:17 It's meeting the expectations of the people to have a more open society. And that's fundamental in terms of politics.
00:41:25 Then, of course, this for-- and you made a statement, by the way. You say you may try to make a link with lower foreign direct investment and political stability.
00:41:36 I'm not sure. In the kingdom, honestly, economy is driven mainly first by the price of oil, like in my company, I will tell you.
00:41:44 And when you have a lower price of oil, as you said, you have to have an efficient allocation of capital.
00:41:49 And I think what changed in the kingdom, and like in my company, I make a parallel. At $100 per barrel, many projects, you know, useful, not useful, I'm not sure sometimes.
00:41:59 You know, when I look today in my past history, even in my company, you know, I have some doubts of things which have been done.
00:42:05 Life was very easy. At $60 or $40, of course, a kingdom like us, we had to see which projects are priority.
00:42:12 And the fact that you have less investments today is just the result of a better governance of the economy in the kingdom, because less revenues.
00:42:20 And this is a fundamental aspect of what has been done, like the minister of finance said, and Mr. as well, is because we have to decide which are the priority projects in the kingdom.
00:42:32 So it's not linked to, don't try to link everything to an event, which of course is unacceptable, to be clear.
00:42:41 But let's look more positively of the future and the way to go forward.
00:42:45 To answer your question--
00:42:46 But you base your price not on the price of oil of a particular year when you think about investment.
00:42:52 From a little I know of energy companies, you're looking 10, 20 years ahead.
00:42:56 Yeah, but you know, you have also, you learn that you can spend what you earn, you know.
00:43:00 I can tell you, even if when you are Saudi Arabia, you can go to the bond market and everything, like total, my stage, but you know there is a limit of what you do.
00:43:09 At the end, it's like managing a country, managing a company, it's not so complex, like I said to my colleagues, like a family of own budget.
00:43:17 If you borrow permanently much more, you have a problem.
00:43:20 Look to your open country today.
00:43:22 So it's not so complex.
00:43:24 So you can, of course you have to prioritize projects in order to diversify the economy, in order to bring jobs.
00:43:31 I like your sentence, it's not only a Saudization policy which can make it.
00:43:35 It's clearly having a vibrant economy which will create a job.
00:43:40 Then the Saudis will take the jobs.
00:43:42 And you know in our ventures, by the way, we can, in my refinery we are today at 70% of Saudi jobs.
00:43:48 So you have plenty of talents there.
00:43:50 So it's a question of investing, training the people, and then they come and they can do it, as everywhere in the world.
00:43:57 And to come back to the question, I think if I had one advice, is to all the authorities, is in the Middle East, you have the, you know, as I was discussing with the foreign minister,
00:44:08 and in particular in Saudi, when you are an investor, you learn the word "passions".
00:44:12 If you are not patient, nothing will move.
00:44:15 But for us, of course, as foreign investors, we like to have, time is of essence, you know.
00:44:20 The value of time in our economics is important.
00:44:23 So I would just like sometimes to have quicker answer, or to be able to move forward in a certain space.
00:44:31 For example, in the solar business, where I try to enter, I'm a little frustrated because there are obvious projects,
00:44:37 and we don't manage to get the right momentum, I know it's new, and the government is making big efforts.
00:44:43 So I think, if you want to attract more foreign investments, you need to be able to interact, to interact in an efficient way.
00:44:51 And that's true that the kingdom, because of its wealth, wealthy revenues, have a lot of time in front of it,
00:44:58 but this is something on which I think it's important for us to have answers, you know,
00:45:03 because when we want to invest in a country like Saudi Arabia, we compare bad opportunities to other opportunities,
00:45:07 and sometimes this element, this statement, not sometimes, it's always taken into account for us.
00:45:13 I know Mr. Touajiri wanted to come back in, and then I want to get some questions from around the audience.
00:45:18 So, yeah, please.
00:45:19 Picking up on the theme, geopolitics, multinationals, FDI, I think this actually takes us to a different level of looking at Saudi Arabia.
00:45:29 What's its regional role, and how do we view Saudi Arabia regionally as a stability factor of the Middle East,
00:45:38 as a role model, as a country with a plan who will give hope to this very young Middle East population as well?
00:45:45 So we do have this sense of ownership also about our neighborhood, and how can we, through our transformation and our plans, help the bigger region?
00:45:57 If I refer to the 50-ish meetings we had in Davos the last few days, I think also the global community starts to see that.
00:46:06 Every time we talk to global investors, they actually think of Saudi Arabia as a regional hub.
00:46:12 And if you go back to the Vision 2030, regional, connecting three continents, and providing this hope for the whole Middle East.
00:46:22 I will let the questions come in, but I will simply say on the geopolitics,
00:46:25 of course, Saudi Arabia is also a country involved in conflict in Yemen, where the relationship with Iran is not being resolved,
00:46:32 where the GCC is not functioning completely effectively in the relationship with Qatar.
00:46:36 So I'm just saying, yes, the geopolitics are incredibly important.
00:46:39 Obviously, Saudi is incredibly importantly placed, but it's difficult to play that role just on one side of the ledger.
00:46:44 I refer to the recent Saudi Arabian Emirates Cooperation Council.
00:46:50 Please take a look at the initiatives, the discipline, the focus, the major KPI we're doing together,
00:46:58 and how these two economies, with their sheer size, big GDPs, global networks, can set a cooperation model for the whole Middle East.
00:47:07 Thank you. We'll take a look at that. Patrick, you wanted to come in as well?
00:47:09 Just a word. I think what is very important for the world, not only for the region, is the stability of the region.
00:47:15 And the stability of the region is going also for the stability of the kingdom, obviously, which is a masterpiece.
00:47:20 So all the initiatives which can be taken to help the stability are welcome, I think.
00:47:26 And in particular for Western countries, I think we must take care of what is happening there,
00:47:32 because you know, otherwise, there is another country which is looking very carefully to the Middle East, it's China.
00:47:38 And they are progressing slowly, but surely.
00:47:41 And so for Western economies in the global world, I think it's important to look to this region as a strategic region and helping the stability.
00:47:49 And I think we'll come back maybe to the role of some of the other investors or other countries who are very interested in partnering with Saudi Arabia.
00:47:54 Right. I saw some hands go up. You had your hand up first.
00:47:57 Please wait for the microphone, and let me get some other viewpoints.
00:48:00 I've got two. I'll take, you know, as we've got a panel here, I'll take three or four.
00:48:03 We've got about 12, 13 minutes, which is not a lot of time, but a lot in Davos.
00:48:07 Good morning. My name is Dmitry Zhdanikov. I'm the editor for Energy Markets for Reuters.
00:48:12 I've been coming to this panel for the past three years, and what really impressed me was always how optimistic they were.
00:48:19 From the point of view of Western investors, Black Rock, Blackstone, Mr. Liberis from Dow Chemical were pouring praises on Saudi.
00:48:27 Now, the atmosphere is, of course, slightly different this year, and we all know why.
00:48:33 But what really worries me is that the name of Jamal Khashoggi came only once today, and it was Robert who said it.
00:48:39 No one at the panel sort of said the word Khashoggi.
00:48:42 And sort of when we speak to Mr. Jaddan or Mr. Tawajiri, I understand when they say, let's wait for the probe, let's wait for the trials,
00:48:49 well, especially given who they report to.
00:48:51 What I do not understand is the position of Western business.
00:48:54 I really think we need to talk about it, and we need to discuss.
00:48:58 And every time you try to discuss this issue, people say, well, it's very delicate.
00:49:01 There was nothing delicate about this murder, so let's just talk about it and discuss.
00:49:06 Patrik, Mr. Goldman, what sort of message do you have for the Saudi government?
00:49:10 Right. Let's get a couple more questions in. One here first at the front.
00:49:17 Thank you. John Zephus. I've done various things in Saudi Arabia over the last 40 years.
00:49:21 One of the things that struck me over the last three days, and also two days I had in Houston last week,
00:49:27 consistently people ask me what's really going on in Saudi Arabia.
00:49:32 They read all this stuff, but the question is, what's really going on?
00:49:37 And I think that underlines a certain degree of uncertainty as to how to interpret the series of events we've seen.
00:49:43 The other interesting question, I got this a number of times last night,
00:49:47 what did it mean that so many Western business leaders were at the Aramco reception but weren't at the FII?
00:49:54 And the significance of that question is we're at a time where I think FDI is important.
00:49:59 There's a lot of off-budget financing that's going to be required.
00:50:03 So the question would be, what is the government doing to address, A, the uncertainty?
00:50:08 And by the way, it's shared by Saudi businessmen.
00:50:10 When you speak to them around the dinner table in Riyadh, they're probably just as confused in many ways as foreign business people.
00:50:17 And their criteria for investment are no different than foreigners' criteria for investment.
00:50:22 And then in terms of the business leaders from the West, I know academics, I know some of the leaders of major companies,
00:50:31 including some Americans who did show up, faced quite a bit of criticism,
00:50:37 and in one or two cases actually had money withdrawn from funds they managed.
00:50:40 So what can we do to address those issues?
00:50:44 Right, let me see if there's one more.
00:50:46 I thought I saw one over here, but I didn't.
00:50:48 We've got two pretty big questions there, so let's put them on the table.
00:50:51 Let me start with the second one, if I may, and give you an opportunity, Minister,
00:50:57 to come in and just say a little bit about what can be done.
00:51:01 You're Minister of Finance, so there's certain things you can do, certain things you can't do.
00:51:05 But, Mr. Jalanty, to focus on this issue of addressing uncertainty,
00:51:10 I was struck when Patrick Pouyanné made the point about, you know, that tackling corruption obviously is very important.
00:51:16 That was a very important first step that the Crown Prince undertook.
00:51:19 But what I've heard is there's a lot of uncertainty about how things were resolved.
00:51:22 So, you know, there's an element of opacity which can make it difficult for foreign investors.
00:51:27 I think this is part of the sense I was getting from that second question.
00:51:30 What can be done to address the uncertainty?
00:51:33 I think if you go back very quickly to the Vision 2030 document,
00:51:38 you would read clearly in this context that we are focusing on transparency, integrity,
00:51:44 and anti-corruption in this context.
00:51:47 And just to answer the question even more directly,
00:51:50 I think we have been significantly improving our communication, and we know that we need to do more.
00:51:58 SAGIA is here with us, and they are talking to investors about potential opportunities in the Saudi economy.
00:52:04 I could tell you with confidence that those private sector who were dynamic enough
00:52:11 and able to read the market have actually done very well in the last two or three years.
00:52:17 And you could see it, some of them are public companies.
00:52:20 And obviously with the reform, there are pains,
00:52:25 and the private sector is going through a significant restructuring of its business
00:52:30 and how they do business so that they can cope with these reforms,
00:52:34 but also cope with the changes of the world economy.
00:52:38 I mean, Walmart and the retail businesses are not Saudi businesses,
00:52:43 and they are going through a tough time adapting to a new reality in the world.
00:52:47 So it is a combination of significant reform taking place,
00:52:52 but also the world is changing at the same time.
00:52:58 We need to communicate more, and we are trying.
00:53:01 We are becoming more transparent.
00:53:03 For example, in the Ministry of Finance, we used to publish one report a year,
00:53:06 which is the budget statement, factual numbers.
00:53:10 Now we are publishing eight reports.
00:53:12 We are publishing quarterly reports on the budget.
00:53:14 We are publishing mid-year reports.
00:53:16 We are publishing three budget reports.
00:53:18 So there is a lot of information coming out.
00:53:21 In addition, we are more accessible.
00:53:24 So a lot of the government officials now communicate on a regular basis with the business community.
00:53:29 And I agree with John.
00:53:31 We need just to make sure that we improve that communication more.
00:53:35 I was telling my colleagues, why do we have some of the Saudi investors in this room?
00:53:41 They could meet us in Saudi.
00:53:43 And possibly the answer is we don't communicate enough.
00:53:46 And that's why they take an opportunity like this to come and listen to what we say.
00:53:53 James, you've got to -- sorry, did you want to come in first?
00:53:55 Sorry, I'll miss the point.
00:53:56 Yes, I just wanted to comment about trust and transparency.
00:54:01 The World Economic Forum publishes an index for, for example, shareholder governance.
00:54:10 And because the Capital Market Authority has now a mandatory governance regulation for all companies,
00:54:19 and because of many other reforms, the ranking of Saudi Arabia increased in one year 72 levels.
00:54:29 From 77 last year to now being fifth in the world.
00:54:33 We are the second in the G20 and first in the Arab world.
00:54:38 So this talks about investor confidence.
00:54:42 Another one, because also of regulations of having, for example, e-voting and e-proxy,
00:54:50 in addition to normal voting, minority shareholder protection,
00:54:58 also in the report of doing business by the World Economic Forum,
00:55:03 the ranking of Saudi Arabia improved from 63 a couple of years ago to number seven as well.
00:55:10 So those are, you know, reports from the World Economic Forum reflecting the results of the changes
00:55:18 that Saudi Arabia is doing, the different regulators,
00:55:23 to have a transparent and trustworthy regulations for international investors.
00:55:30 Thank you for those points. I'm just conscious of time.
00:55:32 James, let me come to you on the first question, which was directed to you.
00:55:36 It almost feels to me like there's a sort of dichotomy between the very practical steps
00:55:40 that are being taken in the government by government ministers following through on the Vision 2030,
00:55:44 doing their best to hit what they can, and a sense that there's almost a -- I'll put it this way --
00:55:49 a separate government that sits at the top-top, which in a way can be unpredictable
00:55:55 in ways that foreign investors need to think about, either very directly,
00:55:59 in the case of the background to the murder of Jamal Khashoggi, or in economic decisions,
00:56:05 because despite what Patrick said, I think the drop-off investment,
00:56:08 my interpretation would have been back prior to that event, was after the Ritz-Carlton arrest and so on,
00:56:14 which just injected that -- you might say no, but you can contradict me again if you want.
00:56:19 But, James, this is a difficult issue.
00:56:22 Can I stay just one minute before, James, if you don't mind?
00:56:26 I think it is very important just to answer this question very directly from us as government.
00:56:34 I have been asked this question on TV twice in the last 48 hours,
00:56:41 and the government is not shy of answering the question very clearly.
00:56:46 I have said very clearly so many times, and I will repeat now,
00:56:50 that we are absolutely sad about what happened to Jamal Khashoggi.
00:56:56 Everyone in Saudi Arabia, go and knock every door in Saudi Arabia, randomly.
00:57:02 Ask them, and they will tell you how sad they are, how alien what happened to our DNA in Saudi Arabia,
00:57:09 how totally against our beliefs, culture, and religion, what happened.
00:57:14 So, just so that we are clear, this is a very sad incident.
00:57:19 That said, the government made it very clear.
00:57:22 The government took, actually, the first step before anyone else on the wall of investigating this,
00:57:27 of actually referring it to the public prosecutor.
00:57:32 For the first time ever in Saudi history, a criminal court hearing is open to the public,
00:57:39 and it was held, I think, two weeks ago.
00:57:42 So, we are taking this very seriously, from bringing those responsible to justice
00:57:47 and making sure that justice prevails.
00:57:49 And the institutional side, the government has taken serious efforts to restructure the intelligence service
00:57:56 and I've announced, I think, even a month ago, that they are forcing even more legal and compliance into the system.
00:58:06 So, that is very clear, and we are very serious about it.
00:58:11 That said, we will continue our reform, and we are committed to continuing the journey
00:58:16 that we started to ensure that we reform not only economically, financially, socially, but also legally.
00:58:23 I'm glad you came in.
00:58:26 James.
00:58:29 I mean, to answer the gentleman directly, the murder of Jamal Khashoggi in the Saudi consulate in Turkey
00:58:37 was utterly unacceptable.
00:58:39 And I think that has been made clear in statements from the Saudi government, the US government,
00:58:44 and most governments around the world, and most corporations.
00:58:48 Obviously, that is something which, ultimately, we need clear light and transparency on exactly what happened.
00:58:55 And that's what people are waiting for.
00:58:57 I think the real question is, then, what does one do in relation to that?
00:59:02 And you have to decide what process you play in a country which has had an incident
00:59:07 versus the 30 million people who are going through an extraordinary reform
00:59:11 and trying to move themselves to a path of a better life.
00:59:15 And that's the process that businesses and governments are working through right now.
00:59:19 So we support the country's economic and social developments.
00:59:23 We obviously believe that you've got to have a criminal justice system that brings to account
00:59:27 those individuals involved in crimes.
00:59:30 Now, you mentioned, or somebody mentioned the Ritz-Carlton thing.
00:59:34 I mean, there are many countries who are tackling corruption issues in lots of creative ways.
00:59:41 That is certainly one of the most creative, you could argue, one of the most efficient.
00:59:47 But if you look at what the Disciplinary Committee in China has been doing for the last several years,
00:59:51 affecting hundreds of thousands of individuals to root out corruption in China.
00:59:56 And, you know, I do not judge the process that individual countries take to deal with their own corruption issues.
01:00:03 And that's for them and their societies to deal with.
01:00:06 Patrick, you want to come in as well?
01:00:08 Maybe you'll not listen to me, but I took the time to answer first why I went to Riyadh in order to address,
01:00:15 and I said it was unacceptable what happened, but I should give it again.
01:00:19 What is the alternative for a company like Total to boycott Saudi Arabia?
01:00:23 This is what you want?
01:00:25 We are always against sanctions and boycotts.
01:00:29 Saudi Arabia, Iran, Russia, Qatar, same thing for me.
01:00:32 Why?
01:00:33 Because what we observe in the world is that who suffers from this type of sanctions?
01:00:37 No, no, I was answering to Mr. Reuters.
01:00:41 Sorry for that, not to you.
01:00:43 Reuters.
01:00:44 He's looking over your head.
01:00:45 Fundamentally, sorry, fundamentally, because at the end, who suffers from boycotts and sanctions?
01:00:53 So no more people, so people in the street.
01:00:55 And if you want really using our values, then I think the empty chair strategy does not work.
01:01:01 It's better frankly to be there, to say we work in your country with our values, rather than just leaving that.
01:01:08 So I think for me, this was the alternative, and I would just want to clarify it once again in order to have no doubt about our position.
01:01:15 Thank you.
01:01:16 Now, I want to check, because we are bang on time, and I'm looking, I know have they run?
01:01:19 Yes, exactly, that means we're done, I think.
01:01:22 So what I want to say here, if anyone else wanted to come in with a last point, I know you had your last comment there.
01:01:28 I did say I'd give everyone an opportunity to make a last comment.
01:01:31 I think they all did in that section of the discussion.
01:01:35 What I would say from my sense is that I think this was an example of what Patrick Bouillonne said earlier, of assertive dialogue.
01:01:41 And in that sense, I think it's welcome and important, and it's an element of transparency and frankness.
01:01:46 We will test the numbers.
01:01:48 If WEF is doing this again next year, we will see whose theory of the drivers of foreign direct investment turns out to be more accurate.
01:01:55 I'm not the CEO of a large company.
01:01:57 But we will have an opportunity to see this project.
01:02:00 It's going through to 2030, so there's plenty of time to be able to investigate it further.
01:02:05 But I want to say a big thank you to the panelists for their frank comments and for some good questions as well.
01:02:10 (applause)