RIYADH, Saudi Arabia – I did something here that I shouldn’t have done.
On Monday, I walked a block or so up bustling Olaya Road and ate lunch at a Hardee’s. I have a personal rule when I travel, especially to countries to which I’ve never been: Don’t eat food from home.
It’s not an easy policy to follow here because almost every major American restaurant chain is represented – from Applebee’s to Subway. The Kingdom Centre mall is anchored by Saks Fifth Avenue and dotted with a Sunglass Hut, Athlete’s Foot and the Limited.
The roads seem to be jammed with more American cars than American roads are.
“People don’t believe me when I say this, but with the exception of Canada, this is the most Americanized country in the world,” said Les Janka, vice chairman of the American Business Group of Riyadh.
The abundance of U.S. retail brands, though, only tells a small part – and perhaps the easiest part – of a private-sector economy that has grown rapidly since 2005.
Saudi Arabia has little trouble attracting foreign investment. Its bigger challenge is creating economic growth that isn’t dependent on oil revenue.
In some ways, it’s similar to the economic challenges that Texas faced 30 years ago, and as the world’s biggest oil producer, Saudi Arabia’s economic and political stability is the only thing standing between U.S. consumers and $200 oil.
Small and midsize businesses account for as much as 90 percent of Saudi companies, and the government wants to encourage their growth to combat unemployment, which is as high as 43 percent among workers in their 20s, the largest piece of the population.
The 100 fastest-growing private companies generated about 15,000 jobs in the past five years. That’s a good start, but not enough to bring down the high unemployment rate.
“It’s not on a scale that can generate the jobs that are needed,” said Robert Jordan, the former U.S. ambassador to Saudi Arabia who now leads the Dubai office of Houston law firm Baker Botts. “People are used to looking to the government.”
King Abdullah Bin Abdul Aziz recently announced he would dole out $36 billion to the people. When the government essentially pays people who don’t work, many simply won’t.
Students, for example, get a stipend, and while they may emerge from college with ideas of starting their own businesses, many lack the experience, having never held even a part-time job.
Employers often favor hiring immigrant workers because they can pay them less. Almost 6 million immigrant workers make up as much as 80 percent of the kingdom’s workforce.
Yet the government has resisted calls from some Saudi workers to form trade unions, which they say are necessary for protecting their rights. Instead, the kingdom adopted a minimum wage in hopes of addressing some worker concerns.
New mortgage laws
It also loosened mortgage laws to encourage homeownership, raising the amount Saudis could borrow to 500,000 riyals – about $133,000 – from 300,000. Saudi banks are prohibited from charging interest, but homeowners who repay their loans on time get 30 percent of the principal forgiven, Khaled Al-Ateeq, an adviser to the minister of culture and information, told me.
“It’s making it easier for people to buy houses,” he said. The government hopes the plan will encourage construction of half a million homes, and some are already under way. Near the airport in Dammam, in the eastern province, streetlights rise from the desert sand, the marker for as many as 100,000 new homes.
For almost a decade, the kingdom has promoted “Saudization,” a plan to encourage companies to hire more Saudis rather than foreign workers. In one case, the government asked taxicab companies to hire 7,000 Saudi drivers, but only 17 interested applicants came forward, and of those, only two actually showed up for job interviews, a cab company told a local newspaper.
The rest, it seems, would rather collect their government check and go to Hardee’s, which may be the kingdom’s greatest challenge in diversifying its economy.