Small Enterprises: Economic And Political Dimensions

Small enterprises: economic and political dimensions 1

I wrote my previous article titled “7 days in India” and spoke about a visit initiated by a group of Saudi Businessmen in an official diligence by the chamber of commerce and industry in Jeddah to attend the first conference for the Ministry of Small enterprises made in New Delhi and opened by the Indian Prime Minister, and I spoke back then about the positive steps done by the Indian government to develop India as a Global economical power within the next 20 years, and the importance of its conviction of the ultimate importance of activating and supporting the success of small enterprises in all sectors in the country where it even established a specialized Ministry and chose a very well known and active minister that enjoys many authorities, and we have checked by ourselves the success of this ministry embodied with the many enterprises that were created and supported and where each year they create 130 thousand enterprises that brings about 660 thousand new jobs to the market, this sector is now growing by 9% annually and their employment percentage is at a stable increase of 4% annually.

We have enjoyed the presentation from the head of the diligence Mr. Ziad Al-Bassam about the chamber of commerce and industry in Jeddah and the efforts that have been made and still is in the small enterprises development center that he hired all energy, knowledge, experience and time to carry and launch his initiative to do its roll for the community, and due to the importance of this roll I will start by discussing the reasons why those countries are interested in developing small projects with the help of what was presented by Mr. Ziad, as there are subjective and quantum indicators to the roll that can be accomplished by small and medium projects in the growth process.

From the images of subjective indicators:

–          Small projects form the core of all big projects

–          The availability of varied job opportunities with very low capital, thus assisting in helping rates of unemployment.

–          Contributes in creating new ideas for young Saudi’s in the search of new ways of work through accomplishing small enterprises that belongs to them.

–          Decrease the demand on governmental Jobs that already suffers from lack of opportunities.

–          Forms an important factor in developing many areas while minimizing immigration problems to bigger cities and supporting a balanced local development.

–          Contribute in absorbing the benefits of unmoved money and small savings and hire them in investment projects.

–          Form a new generation of young investors on high levels of creativity and efficiency.

–          Contribute in increasing the volume of national investment which contributes in razing levels of economical growth.

–          Produce the necessary products and services that big projects cannot produce for economical reasons.

–          Its ability to provide big projects with many of the production requirements, thus accomplishing complete beneficial trading interaction between different sizes of projects.

–          Minimize the rely on Oil as a major source of income through increasing the base of economical variety while encouraging spirits of trade work, which is the main factor in the success of spreading manufacturing all over the kingdom.

–          Inserting a stable element to the economy for what small enterprises enjoy with flexibility more than bigger projects in facing economical circumstances.

From the images of quantum indicators:

–          Small enterprises form 90% of the industrial projects in developed countries and takes in 30% to 40% of the number of workers in that sector.

–          Small enterprises forms 95% of industrial projects in developing countries and takes in 60% to 80% of the number of workers in that sector.

–          Small enterprises supply about 58% of the total number of jobs available in the United States, and 23% in Canada and 56% in Japan.

–          Small enterprises contribute in about 43% in the Gross domestic production of the U.S.

–          General Motors Company deals with more than 30 thousand suppliers of small projects, the French Renault deals with more than 50 thousand suppliers of small projects.

–          The percentage of contribution by small projects and enterprises in the fields of supplying production requirements for Big projects and enterprises that work in the fields of car manufacturing and electric autos and home appliances in Japan and Korea is between 72% to 94% from the total requirements of those projects, as for locally small projects and enterprises constitutes 90% of the total enterprises in the kingdom and only can absorb less than 35% from the total work force.

As a conclusion, the success if small enterprises contributes a lot in solving many of our problems and supports our economy, and I have warned many countries from the dangers of the subject and have even created specialized ministries to it, and where I believe that this subject is no less important that the ministry of water that was recently established, and where a big part of the economical and political stability comes from the success of small enterprises when they do the are functioning with their vital parts efficiently.

Governments who are aware gives the subject ultimate importance for what it can solve from unemployment problems and its effects on the middle class of the community and increasing the gap between the rich and poor and all the consequences of that in the community and country, and how in supporting those small enterprises we cure unemployment with practical application to the model of ‘Saudinization’ while empowering the middle class of society forming the backbone of political, economical and social stability to any country in the world.

 Small enterprises: economic and political dimensions 2     

In the previous article I spoke about small enterprises and the reason behind countries interests to develop it and its role in providing economical and political support as well as social bonds in any country, and I spoke back then about the subjective and quantum indications the role that can be accomplished by small and medium side projects in the growth process.

And out of importance and interest of the subject to me, I recently started searching about taken efforts and measures to support small enterprises in the kingdom and have listen to the CEO of small enterprises development center presentation in the chamber of commerce and industry in Jeddah (Mr. Ziad Al-Bassam) who provided me with a lot of information and important studies that I based my article on.

And to continue our previous subject, we will speak about the reasons to why we need to design complete programs for development and progress to enterprises and creating a new Ministry specialized for its matters as done in many countries of the world, due to their realization of the implications and dangers to economical, political and social aspects and its role in its support towards them as we elaborated previously.

And there are obvious characteristics that are signified to small projects in the kingdom, those characteristics show the desperate need to find a specialized ministry to support and help this sector and the economical body, from those characteristics:

• The limitation of invested capital in small projects.

• Combining between ownership and management, where the majority of small projects are managed by the owner directly which mostly is lacking of experience and managerial ability that takes to make the project a success.

• The lack of awareness in the role of futuristic planning and its relation to the success of projects in the medium and long terms to small investors.

• The lack and absence of operational efficiency for workers in many projects.

• The absence of organizational experience necessary to overcome internal expected problems.

• The weaknesses of personal abilities that help expand and grow at work and the absence of knowledge about marketing expansion inside the country and outside of it.

• Owners of such enterprises lack the necessary experience to handle various financial resources (outside the family matters) and the intimidation of dealing with banks and financial institutions due to the lack of understanding of the nature to their operations and systems.

As for some of the external environmental disabilities:

• The absence of policies and governmental programs that support small enterprises in comparison to big projects, and where countries did not give much attention that it deserves, with a quick look on the political policies that included the financial support of the kingdom from the beginning of the plan in 1970 until our present time, it becomes clear that any organized programs or long term project guidance or to support and develop it on strategic identified and clear basis, dimensions and goals.

• The absence of an independent and public or private governmental body or system or authority responsible to support and help small and medium projects and work toward its growth and progress in a level that suits its importance as done and applied in many countries of this world.

• The absence of developing laws that support small enterprises, it becomes clear in how laws are only in favor of huge investments in the kingdom from advantages and taxes exemptions, where small projects and enterprises are not spared with those advantages and privileges or any kinds of facilitation, which results in putting it in a very competitive unbalanced environment, and the applied laws do not take in its consideration the economical and political importance of those projects.

I confirm once again in my article that there are many countries who became aware of the dangers of such subject, thus creating specialized ministries for it, but in our case this subject in no less important that creating a water ministry that was recently added due to the major importance of economical and political stability that is confined in the success of small enterprises and to accomplish their vital in curing unemployment, poverty, and strengthen the middle class of society which resembles the backbone of political, economical and social stability to any country in the world.

The success in practically applying the model of ‘Saudinization’ required the country to have a deeper look into its programs and economical mechanism that contributes in supporting enterprises able to embrace the massive amounts of unemployed young Saudi’s and to narrow the increasing gap day by day, between the rich and poor, and the slackness which will definitely have economical and political consequences, and many aware countries who have programs and ministries that are worth to be studied and applied.