Thursday, June 15, 2006

Why Change Business Rules All Too Frequently?

Dr. Khaled Batarfi

I asked the Honda dealer for a car with window shades, and was told they don't have them. Why not? After years of strict no, the government finally allowed cars to be shaded in the back windows. The dealer smiled sweetly and teased: And what if they changed their minds, again?

He is right. I remember when they changed their minds before and car windows were smashed at the customs before they were allowed in. Luckily, the shaded Chrysler minivan I brought home after I finished my Ph.D. studies in the US was spared such a fate because the law had just changed. Since then, it has changed twice. Each time car and shopowners had to cope with a hefty price. Shades were pealed off cars, and inventories in shops and warehouses were confiscated or wasted with no compensation.

Abrupt rule changes are not new. In the late 1990s, shops in Jeddah had to close down in many areas because the newly appointed mayor revised the commercial zone system. Owners were given until the end of their contracts to move out. If that happened to be only days away, so be it! Many went bankrupt because they had invested their capitals in decorating and establishing their businesses. They couldn't afford to lose all these investments and just move on. "It isn't like a tent you fold and carry," I told the mayor. He wouldn't listen. Nobody cared then, nobody does now.

Today, we have three glaring examples of such arrogant and ignorant bureaucratic attitude. The Shoura Council has just approved a law that prohibits shops remaining open beyond 9 p. m. The committee that designed the law had already listened to representatives of shopowners who explained why a law that works for a village may not work for a city, or what suits school season may not be good for the holidays. The bureaucrats who might never have been in business decided that closing shops earlier will provide jobs for Saudis. How? I understand that more shifts mean more opportunities. But the way they see it is this: Saudis can only work eight hours a day, and if businesses are forced to stick with this time limit then more citizens would be encouraged to work for them.

They forgot that we, Saudis, especially in our typically hot summer, prefer to get out and about only at night. Closing shops earlier deprived both merchants and customers of the best time for conducting business.

While we encourage local tourism, mindless laws like this make it very hard for the industry to thrive and compete with the more alluring regional and international destinations. In Dubai and Bahrain, for instance, malls can stay open as late as past midnight. In hot and humid weather, where else, if not in air-conditioned malls, people can spend their leisure time?

Another example is the order to close live-bird shops. I understand the concern about bird flue, but the question is: Who should shoulder the burden? The shopowner, who may have invested his life's savings in the business or the government? If it is absolutely necessary to close these shops, then the government should compensate the owners or make it up for them by finding ways to recoup their losses and change course. The ever-modified law of furnished apartments is another case in point.

To just make laws, implement them, then wash your hands off the dire consequences for the affected parties is not fair.

The reason why laws had to be changed back and forth is that they were not well studied and conceived.

A good case is the limousine Saudization law. After issuing a decree that forced limousine companies to be fully Saudized within six months, the implementation was first delayed, then forgotten. For a start, there weren't enough Saudi drivers to fill the gap. The King Fund that gives interest-free loans to Saudis to buy taxis has not generated enough interest.

Besides, taxi companies were not consulted. In many instances, even after the concerned parties are consulted regarding a new law, their views are not always taken into account. When the universal rent contract was finally approved by the Shoura Council, the concerns of building owners were not heeded.

For businesses to prosper, we need stable laws and regulations. Investors must be quite sure that their investments won't be spoiled all on a sudden because some smart bureaucrats thought of changing the rules in the middle of the game. If this happens, then the government should shoulder the losses, not the players. This is only fair.

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