The Saudi Arabian development of consumer protection laws is of great significance because of various reasons. To begin with, Saudi Arabia has various attributes that differentiates it from other GCC members. For instance, its wealth and economy, and strict adherence to Islamic. Secondly, consumer protection in the context of Saudi has not been able to attract much of the researchers’ attention. In this country, little has been written down with regards to protection of consumers. This is with reference to Islamic communities. In these communities, discussions have been diverted to consumer credit, financial markets and monopoly. This paper analyses Islamic law (Sheridan) as the foundation for regulating the affairs of the consumer. A comparison between the Sheridan law and the advanced Western legal systems will be made with reference to consumer outcomes. In addition to that, the advertising content will be analyzed and also the ministries responsible for protecting the consumers. Furthermore, the paper will highlight Saudi Arabian government priorities when it comes to protecting of the consumer.
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Numerous cross-national comparisons and national studies have diverted most of their attention to consumerism and consumer protection statutory regulations. Whereas much focus has been directed to consumer protection issues in various countries, there exist fundamental distinction in the consumer protection philosophies between the world’s developing and developed countries. In the industrialized world, consumers are provided with alternative choices. In addition to that, governments have greater faith in the ability of the market to deliver gains to consumers’, thus increasing market mechanisms reliance rather than the regulations set up by the government (Asher, 1998, p.185). Nevertheless, the situation is quite different in underdeveloped and developing economies, where consumerism is still maturing and consumers depends on the intervention government model for protection. Given these circumstances, there is need for research to be carried out on regulations that impacts on consumer protection issues in countries that are developing such as Saudi Arabia.
Saudi Arabia plays a significant role in the Arabic/ Islamic common market and in the Gulf-Corporation Council (GCC). The GCC is constituted of countries such as Kuwait, Qatar, United Arab Emirates, Oman, Saudi Arabia and Bahrain. These countries are developing a common trade and consumer policy with an aim of ensuring economic integration. The formation of these laws will enhance multinational marketing opportunities. Given the fact that Saudi Arabia is the economically strongest and largest GCC member, it will significantly shape the legal regulations meant to control all commercial activities advertising included among the GCC member states. The understanding of regulations related to advertising is an essential ingredient for those marketers interested in GCC regions (So hail & Al-Grande, 2007, p.75).
Various factors influence advertising regulation. They focus on advertising strategies global standardization or specific regulations and their content effect. Standardization proponents argue that, universal appeals are highly feasible because of their ability to converge customer preferences resulting from consumer mobility, exposure to international media and technology. On the other hand, critics put emphasis on a tailored approach whereby, they argue that environmental factors create a significant distinction amongst international consumers. Similarly, some writers’ points out that, standardization boundaries should be determined using decision criteria such as product type, media availability and the extent of market homogeneity. The most influential areas are such as socio-economic conditions, religion, ecological attributes, consumer orientation, media infrastructure and government regulatory structure and control. All these factors are present in Saudi Arabia but two are dominant. To begin with, religion surpasses all cultures. In this context cultures refers to local traditions and customs. From an advertising view point, it is vital if countries are grouped into three groups: religious dominant including Iran and Saudi Arabia, culture dominant, where religion among other factors impacting on culture such as Korea and Japan and finally we have the non-partisan countries where religion and culture have less influence, for instance Australia and Sweden(Yeas, 1988, p.35).
Another predominant factor is the Saudi government control over large sectors of the media infrastructure, ecology and economy. Developmental priorities and public sectors impact significantly on advertising and business activities. In Saudi Arabia, factors such as the socio-economic environment, legal environment and government priority affects advertising content and regulation. Thus, the purpose of this research paper is to document consumer protection laws in Gulf States with reference to Saudi Arabia laws.
With reference to this research paper, Saudi Arabia has been identified as a country for consumer protection law study. In the Kingdom of Saudi Arabia, consumer protection is and still one of the vital issues in the country. The interest in consumer protection has focus on the establishment of organizations that will help in ensuring that consumers are adequately protected. As a matter of fact, Saudi Arabia has obtained World Trade Organization (WTO) membership thus making it imperative for the country to have a trade regime that is more accommodating. The Saudi Arabian leadership has embarked on the restructuring on the restructuring of its entire economy. As a result, numerous policy and economic reforms are in the progress and will enhance a climate that is conducive for foreign investments. Consumer protection regulations are an area that is under review and focus. The Saudi Arabian government development plans whether social or economic has based its focus on its people protection and welfare. This is evidenced from the formation of the Consumer Protection Department in 1954 under the jurisdiction of “Ministry of Commerce and Industry”. With the great increase of work scope, there was creation of the General Administration of Quality Control with an objective of protecting the interest of the consumers. Other departments that are also playing a significant role in the protection of consumers are such as the General Department of Environmental Health, the Saudi Arabian Standards Organizations (SASO), Saudi Chamber of Commerce and Department of Customs.
Academicians and business practitioners have continuously investigated the levels of consumer satisfaction with the practices of the marketers since the passing of the “Bill of Consumer Right” in 1962 in USA. Since that day, the phrase consumerism has been utilized routinely in marketing terminology. However, it has been perceived in ways that are different (Swagger, 1994, p.350). According to Kilter et al. (1998), consumerism is “an organized movement of consumers whose aim is to improve the rights and powers of buyers in relation to sellers.” A couple of studies have examined the consumerism influence on marketing decisions. According to conclusions made, consumerism is a significant issue that shapes managerial decisions (Ede and Calcich, 1999; Day & Aaker, 1997; Turner, 1995; Adam, 1995).
Consumer dissatisfaction and subsequent move towards the consumer interest protection have been dominant for various reasons. The carried out studies in developed country settings indicated that the consumers in USA were discounted because of the following two reasons: High lifestyle expectations characterized by high-income levels and sociological changes and the business and government negligence to protect consumers (Jones & Gardner, 2002, p.45). Another study conducted found out that, consumer discontent was as a result of multiple factors including marketers’ incompetence, marketers’ reluctance to resolve consumer complaints and the perception of consumers that the government is pro-business and fails to protect their interests effectively (Andreasen & Best, 1997, p.320). The longitudinal study conducted recently in New Zealand, claims that there is a significant shift in terms of consumer perception between the year 1986 and 2001. The reached conclusion was that, consumers had become less negative with regards to consumerism and marketing issues since the year 1986(Lysonski et al., 2003, p.400).
Consumerism studies issues have not been restricted to nations that are developed, but have extended to less developing and developing nations as well. In 1979, Onah extended the consumerism idea to countries in the third world with an aim of studying the efforts of the government, consumers, and protection agencies to safeguard consumer’s interest from business activities that are unscrupulous. From a developing country perspective, there exist various reasons for consumer protection regulation. It was observed by Kaynak(1982, p.325) that policies and consumerism against some developing country marketing practices expressed itself more in enforcement and legislation by the government. The primary reason behind this is the existence of numerous violations in the market environments that are tasked with products distribution. Some of the elements that are undesirable are such as the practice of deceit and fraud, efforts to a create monopoly, product offerings that are of low quality, lack of product label information with reference to product expiry date and issues that are related to product contents and pricing(Dabes, 1997, p.22).
In most of countries that are developing, consumers are less concerned when it comes to airing complains to the governing bodies. These may be as a result of lack of awareness with regards to their basic rights or due to lack of safety concerns. Besides, consumers in developing and less developed countries might not have the knowledge of the regulatory bodies where they can complain as well as the rules and regulations that take charge of sales. Another major problem is that, regulatory serving officials do not have adequate skills for dealing with consumers complaints. In addition to that, these countries are overwhelmed with bureaucratic procedures when it comes to dealing with procedures and complainants. In these countries, consumerism is in its evolutionary stage. Kaynak(1985, p.63) developed a model that positioned countries at Consumerism life cycle distinct stages on a hypothetical basis. This was based on the extent of the protection legislation and consumer information, Initial and government supported legislation and government consumer agencies. The model identifies four different stages of consumerism activity development. The stages are such as organization, crystallization, conceptualization and crystallization.
Saudi Arabia’s position can be analyzed using the model. In Saudi Arabia, consumerism is said to be in its crystallization stage. This stage is characterized by lack of an organized consumer movement. As such, there exist infrequent attempts by various semi-government and government agencies to protect consumer rights on a gradual basis. Even though a number of previous studies have indicated either limited (Varadarajan & Thirunarayana, 1990; Varadarajan et al., 1991, 1994) or no evidence empirically (Barker, 1987; Barksdale et al., 1982) in support of consumerism life cycle, some empirical supports are in favor of the Kaynak’s model basic underlying assumption (Quazi, 2002, p.38).
Saudi Arabia Consumer Protection
Consumer protection in Saudi Arabia is characterized by an increased consumer durables import, increased competitions in industries dealing with consumer goods and the private sector increased activities for purposes of meeting the needs of the consumer. The Saudi government is increasing diverting its resources to the expansion of distinct developmental projects and machinery administrative improvements. The resulting consequences are the emergence of monopoly and harmful competition. As a result, Harmful products are seen in the market and there is increased rate of inflationary situation as a result of increased demand. As a result of this menace, the government showed concern for taking care of the consumer’s interest. It saw the need to come up with specialized agencies that will protect the interest of the consumers. The consumer interest protection was achieved via prices control, trademark protection and development of laboratories to check and control the quality of products sold to consumers. Numerous agencies resurfaced in order to accomplish the above named purposes as shown in table 1 below.
Saudi Arabian Consumer Protection Agencies
| || |
Data source: Al-Ghamdi & Sohail (2007, p.73).
The consumer protection Association of Saudi Arabia advocates for the reduction in the prices of various commodities. The reduction in products and services prices applies to both wholesalers and retailers. With reference to global conditions, the agency has requested the government to coerce merchants into lowering products and services prices. The association pointed out that,” since merchants have been saying that the rise in prices was in line with global conditions, then, it is logical for prices to decline now in line with the same global conditions.”
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Saudi Arabia Previous studies Conducted on consumer Protection
With reference to Saudi Arabia, limited research has been conducted in the area of consumer protection. Consumer protection early studies were only limited to Egypt (Afify & Munster, 1981, p.3). The initial studies conducted revealed the risks consumers were exposed to in the developing countries while buying products that dealt with services (Boairah, 1980, p.57). Hence, concluding the need for the government to establish agencies whose main aim is to protect consumers from exploitation. Another study conducted by Arafa (1987, p.63), brought into the limelight the role of Islam as a religion in consumer protection. Another study conducted by (Riyad, 1994), based its focus on issues related to consumer protection against industrial and commercial fraud. Through the review of Egypt regulations pertaining to consumer protection, the study highlighted some measures that would enhance the tightening of government controls on channels of distribution, law modification to ensure compliance to quality, supporting and developing of censorship agencies and most significantly the creation of consumer protection agency. Being conceptual in nature, the literature reviews indicates that previously a number of limited surveys had been conducted.
From the survey conducted in the City of Jeddah, Saudi Arabia, Hadi(1983, p.18) reported the survey findings. From the survey of four hundred (400) consumers and thirty (30) traders, it was concluded that, unreasonable and high prices were among the major concerns among the Saudi Arabian Consumers. From the feedback of the surveyed respondents, it was clear that Saudi Arabian consumer protection agencies did not possess the ability of providing the needed protection to the consumers. In 1991, Al-Qahtan focused his study on the operations of consumer protection agencies. In this study, three hundred and eighty four respondents were interviewed. From the survey results, two thirds of the respondents indicated that agencies tasked with consumer protection did not carry out their functions effectively.
The respondents highlighted various areas of concern. For instance, the consumer protection agencies did not have adequate knowledge of what was happening in the market, the laws pertaining to protection of consumers were ambiguous and there existed conflicts in the capacity of the existing agencies. Another study conducted by Al-Hamad ( 1993) concluded that Saudi Arabian consumers were not used to approaching consumer protection agencies even if they were dissatisfied with the quality of the products. This act was triggered by various reasons. For instance, they believe that taking their complaints to respective agencies consumes a lot of their effort and time. In addition to that, they are not sure of the authorities and agencies concerned with their well being. Bhuian et al.(2001, p.220), in a recent study on business education and its effects on consumerism, found out that, young adults in Saudi Arabia who were equipped with business knowledge were highly disposed towards consumerism and marketing issues in comparison to those with non-business background. Generally, all Saudi Arabian young adults have positive attitudes towards price controls and government regulations that are consumer related.
Saudi Arabia Government Priorities
Saudi Arabian government through royal decrees promulgates new legislations. The king is viewed as the protector of the country’s laws and the nation. The government commitment to issues that are specific has influenced the advertising areas and the legal system. The areas covered are such as ecological and consumer protection and business domestication. Two pieces of legislation are applied under consumer ecological protection. These pieces of legislations are enforced strictly suggesting consumer protection trends. The first piece of legislation outlines that no car should be sold to a consumer without passing through a computerized and sophisticated safety check on forty essential items. This is performed with the intention of protecting the consumers from extreme defects in lighting systems, tires and brakes. The second piece of legislation is responsible for imposing penalties on individuals selling spoiled or contaminated food stuffs. Continuous complaints by consumers as a result of being issued with grocery items that are outdated have resulted to the dismissal of employees that are irresponsible. The protection of consumers is being given more attention, to be precise in extremely sensitive areas such as health, possible deception or safety. These attitudes are present in Saudi regulators and courts while examining advertising practices for infractions.
Consumer protection is also reflected in advertising restrictions where a product is conceived to be harmful to the society. For instance, the ministry of Health has banned the promotion of cigarette. Medicine advertising is also prohibited. This is done with an aim of protecting the illiterate consumers from possible misuse of the medicine. The government has also channeled a lot of its resources to ecological protection. The theme of various government campaigns is to “Keep the environment beautiful.” The regulations and rules put in place include heavy penalties on people and business organizations if they have been found to be damaging the environment. The current utilization of outdoor advertising such as the guardrails, bill boards, bust stop shelters and lamp posts have been assailed by critics as they view them as visual pollution. In terms of business domestication, much effort are in progress in order to enable the participation of Saudi in all business aspects.
All organizations whether local or foreign, are needed to increase their local labor content, ownership, production and management. Coupled with the rapid growing nationalism, this process is changing the advertising content. For example, there is the utilization of Saudi models and more emphasis has been directed to Arabic language, heritage and cultural traditions. Previously, in Saudi Arabia, all advertisements were done in English, perhaps because the utilization of standardized costs was low or partly because the ads were targeting the western-elites. With continued domestication, there is need for localization of ads. Some advertising agencies are already embracing this idea as some of them have already created a copy of bilingual ads for their clients. This requires Arabic creative copywriting, art, calligraphy and design. Some of the companies in Saudi are utilizing a combination of advocacy and image advertising to inform the government and the public of their desire to support domestication. In summary, advertisements in Saudi Arabia are designed with an aim of them being compatible with socio-economic environment, religious standards and priorities of the government.
Saudi Arabia Legal Environment
The legal system in Saudi Arabia is very unique. For instance, the laws are derived from the command of “one and only, God, the Almighty.” All legislation, the proposed and existing are founded within the Islamic law also referred to as sharia. The sharia governs the morals, the duties and all Muslim behaviors both collectively and individually in all aspects of life, commerce included. The primary source of the Sharia law is the Holy Book or Quran, and the Hadith. All these books are founded on the saying, practices and life of Muhammad the prophet. For the sake of advertising regulation, the Quran has three sets of messages that are significant. To begin with, there are taboos (Haraam) which are very strict such as gambling, alcohol, idol worship, cheating, adultery, immodest exposure and usury. Being viewed as both damaging to the society and an individual, these acts affect the advertising control and legitimacy. For instance, the banning of products that are alcoholic. There exists no foreign print media and local advertisements on alcoholic products. In addition to that, the foreign print media are allowed into the country only after all alcoholic beverages advertisements have been censored.
Gambling is prohibited. Advertisers are warned against the use of messages that might be perceived as deceptive with regards to religious standards. From the Islamic point of view, fraud can result when a buyer fails to provide everything promised in the advert. In that case, advisers are required to make use of factual appeals. A second set of message governs the Muslim duties including praying five times in a single day, observing the month of Ramadham through fasting, helping the needy and caring and respecting for the disadvantaged and parents. As a result, the advertisers have to ensure that these obligations are not hindered. For instance, products should not be promoted on TV or Radio while people are in prayers, retail shops should be closed and not performing of any commercial or official transactions during the five times of prayer. The final set of the Quranic injunctions reminds the God’s faithful to be grateful for His blessings such as peace of mind, good health, water, children and food. The advertisers are permitted to use Quranic words to introduce their messages. For example” In the Name of Allah, the Most Gracious, the Most Merciful”, “ By the Grace of God”; “ God is Great( Allah-o-Akbar).”
The table below illustrates the harmonizing of Western-Oriented Advertisement to Saudi Audiences.
|Advertising elements||Adaptation nature||Influencing factor|
|Length of the message||Short copy||Government/ cultural restrictions on media|
|Content of the message||Emphasizing on visual aspects, adding family and parental themes, avoiding perceived benefits of the product and themes; demonstrating tangible benefits of the product||Religious|
|Language of the message||Bilingual(Arabic/ English)||Government priorities religious; cultural/ socio-cultural|
|Symbols||Adding of local symbols, avoiding use of busts and statues||Religious; Cultural|
|Jingles/ Slogans||Utilize with caution||Religious|
|Advertisement characters||Use of parental and male figures; women to be substituted with cartoon characters in ads that are sexually sensitive||Religious|
|Pictorial backgrounds||Add floral designs/ landscapes||Socio-economic|
|Appeals||Increased use factual and informational appeals||Socio-economic; Religious|
|Humor themes||Tone down||Cultural|
|Credibility themes||Use of persuasive advertising||Socio-economic|
|Advertising nature||Institutional, advocacy and image advertising||Government priorities/socio-economic|
Data source: Luqmani et al (1988, p.35).
The consumer and the Islamic law
Throughout history, government studies documents that basic principles moral and ethical values are adopted from religion (Islam, Christianity and Judaism). The principal values are written down continuously into the consequent legislative process. Historically, law is a religious intertwined aspect (Al Thobaity, 1995, p.225). The Islamic law derives its inspiration from God via religious teachings and beliefs. The Islamic legislation main purpose on commerce and economics is to secure individual rights and maintain the society solidarity by introducing high levels of morality to the business world and enforcing god laws in the enterprise environment.
Many societies in the past, never documented their laws but they memorized and passed down from generation to generation. As such, all aspects of domestic, political and social life were permeated. Within Islam in Saudi Arabia, the religion and legislation are united. Furthermore, the primary source of legislative and religious practice is the Quran. The government legislative power lies in the foundation of the legislative assembly. The legislative assembly is responsible for making rules and designing regulations within the Quran scope and domain. These rules and regulations comprise of the Shari’ah. Ideally, the Quran sets down rulings from which the criminal and civil laws are founded. This is what makes the Saudi Law in which the consumer protection regulations are defined. For instance, any deal in business involving cheating, exploitation or injustice is cancellable and strictly prohibited by law even if it has been concluded. Similarly, under present Saudi Law, traders are forbidden to supply consumer with goods that can inflict or result to physical harm (Sorrel & Henry, 1994). For instance, if an individual has been harmed through fire, the fire and police officer will analyze the incident and produce a report. The report is then presented to the Saudi Arabian Standards Organization (SASO) officer. The officer eventually examines the background of the case and tests the materials involved in the fire outbreak. This is performed with an aim of assessing whether or not the product materials met the SASO set standards. This helps in determining where the responsibility lies (Moussa, 1983, p.95).
In cases involving defective or expired products, consumers are permitted to call the Trade Ministry. The Trade Ministry have hot mails where they receive consumer complains. The Ministry of Trade then responds by visiting the retailer responsible and carries out an inspection on all the available products in the shop by checking their expiry dates and proof complain consistency. In scenarios where consumption of ill-kept or expired food stuffs affects the consumer, the Ministry of Trade has a special committee who analyzes the contents of the case and come up with a judgment. The judgment gives the way forward on the amount of penalty or punishment to be imposed on the errant retailer. The ministries of Health and Agriculture, Trade are involved closely in the establishment of regulations that impacts on retailing standards and consumer rights. In addition to that, the ministries encourage traders to portray high moral and ethical standards as this form the major component of worshiping Allah (Chapra, 1992, p.680).
Islam establishes ethical and moral basis for its trade. In that case, the trade regulations are based on the Islamic values (Rice, 1999, p.353; Rodson,1995,p 14). One major attribute of these values is being honest. When it comes to protection of consumers, these extends to both the sellers, consumers and manufacturers and all parties in the supply chain such as the supplier of materials and end users. In summary, the basic tenet prescribed by Islam concerning commerce and trade are based on honesty, reliability and straightforwardness (Mannan, 1982, p.250). Similarly, the Islamic economic philosophy moral and ethical imperative are to integrate political, economic and social need but confined within the Islamic morality and faith imperatives (Reich,1992, p.280). Islam put emphasis on duties rather than individuals rights. This forms the key counterpoint to many approaches used in the Western communities regarding consumer regulation which focuses on catalogues of rights or consumer characters.
The reason behind the Islamic approach is that if each and every member of the public fulfills their duties then the pursuit of blind self-interest will be held within limits and all people’s right will be protected (Rice, 1999, p.353). The Islamic law advocates for individuals to say the truth according to Prophet Mohammed words” Whosoever deceives is not one of us.”. Thus, all parties in a contract are expected to trade ethically and fairly. The Islamic law principals are valid and fixed for all times. On the contrary, the interpretation of these principles is detailed in the Shari’ah law. Shari’ah law can evolve to deal with contemporary issues as it provides a room for humans to reason. The Shari’ah laws are derived from four main sources. At the top is the Quran. The Quran is divine as each and every word comes from Allah. Various verses in the Quran deal with trade. For instance, “ woe to those who deal in fraud, those who, when they have to receive by measure from men exact full measure, but when they have to give measure or weight to men gives less than due. Do they not think that they will be called to account on a mighty day, a day when (all) mankind will stand before the Lord of the Worlds?”(Qur’an, Sura, Lxxxiii: Verses 1-6 ).” Make your utterances straight forward”(Qur’an, 33:70).
The second source is the Sunnah. Sunnah is a collection of actions (Hadith) and sayings of Mohammed the prophet as narrated and written down by his companions and followers respectively. Ijma is the third source. It forms the structure for code of conduct and moral principles as elaborated from the sayings of the prophet. Ijma development began when Mohammed died and it continues up to today. The last source is the Ijtihad. It involves the consideration of the new challenges arising in the modern societies with regards to the Islamic law. It is expected to provide the Muslim community with laws that reflects the ever changing circumstances. For instance, the law governing the use of soft drugs is referred to as Qiya. The soft drugs are such as marijuana. Given the fact that alcohol is banned by the Quran, so is the use of soft drugs as both results to family and health damage. The main purpose of the Shariah law is to “secure the rights of the individual and maintain solidarity of the society, to introduce high morality to the world of business.” As such, all markets are supposed to be transparent and open. In addition to that, they should not sell defect products to the consumers irrespective of being in possession of a valid contract. Lastly, honesty should be adhered to in all transactions being performed.
Shari’ah and western law: a comparison
There are considerable significant differences between the sharia commercial laws and western commercial laws. Some of the major differences includes the highlighted below. For starter, the sharia laws are divine thus not subject to change. However, different people apply these laws differently in the contemporary commercial world. Secondly, the sharia law subject matter is not purely based on human being relationship regulations. It as well incorporates other believers’ behaviors and practices such as fasting and prayers. Devotion acts are also separated from everyone common activities and acts. On the other hand, punishment for disobeying the sharia is done both hereafter as a well as in life after death. However, the punishment of violation of manmade laws such as customer protection laws in done here on earth but not in life after death. Moreover, manmade business laws and regulation covers fraud, business cheating as well as similar violations which may occur against the laid down business principles and decencies. In the situation of such an offence, the responsibility is placed upon an individual who have made the harm irrespective of whether the offender was an intentional businessman or a local business man. On the other hand, the harm perpetrators must provide an assurance of financial damage in compensation exercise (Carsky, Dickinson and Canedy 1998, p.133). Additionally, waiving of any damage is always compared to righteous in sheria law.
The development of commercial law
Despite of the inflexibility of sharia law, the Islamic leaders have understood the relevance of introducing a special law to address trade and commerce issues both in Saudi Arabia and in other Islamic and non Islamic countries. However, the commercial and trades laws ought to be in line with the requirement of Shari’ah laws. Any law that contradicts the Shari’ah requirements is assumed to have deviated from Islamic beliefs and trade ideologies therefore not acceptable in Saudi Arabia. The commercial Islamic law has its origin from the common ottoman law which is based on French commercial law. The ottoman commercial court which was founded in 1931comprises of more than six hundred articles that includes land trade, sea trade as well as all commercial transaction which took place in the early 1930s.
Some of the main pressures that led to the introduction of commercial laws in Saudi Arabia includes raising separation in control and ownership of Saudi Arabia companies, increase in complexity nature in international business operation, the necessity to minimize the liabilities to encourage more investors, commercial liberalization, globalization, advanced technology as well as the growth and development international joint venture companies and franchises. Since time in memorial, the Islamic community has always been in the forefront in international trade. However, due to modern technological development, the Saudi Arabia commerce has become more integrated and infiltrated by international market thus forcing it to develop new commercial laws. The introduction of new commercial laws to incorporate other businessmen from non Muslim community has resulted to significant economic development in Saudi Arabia for the last less than forty years. The Saudi Arabia commercial law is based on well planned incorporation of social, economic, managerial, cultural, and legislative laws. The law has also facilitated in the significant investments on major economic infrastructures as well as increase in the number and size of private and public companies. Due to the introduction of significant laws in Saudi, a considerable number of international traders have focused the investments in Saudi Arabia.
Other factors that were responsible for the introduction of the new commercial laws in Saudi Arabia are highlighted below. To start with, the country was made aware of rapid economic transformation as well as traditional values that necessitate random economic transformation. However, despite transformation in commercial law, the government was more focused on maintaining the Islamic and cultural values. Due to the cultural and religion pressure, the government acknowledged the importance of including international organization and agencies in harmonizing international trade activities. The desire to take up international standards and policies forced the Saudi Arabia government to adopt domestic customer protection legislation in 1963. The 1963 metrication law included packaged regulation measures specifically on imported goods. In 1965, the government created a new system which oversaw the regulation of business activities such as fraud inters alia, as well as trademarks. In 1961, the government passed a commercial fraud laws which retaliated on the importance of labeling, advertisement labeling and trustworthiness. In 1984, the government updated the legal position in international trade which prohibited fraudulent in the country import and export. Some of these laws formed the basic guiding principle towards the development of the modern commercial law in Saudi Arabia.
Saudi Arabia development plans
In the late twentieth and early twenty first century, the Saudi Arabia country protected its customers through the introduction of five years development plans. The plans aimed at improving the quality of the products and services consumed by the customers. It also aimed at stimulating the advancement of local industries and agriculture through the use of some measures such as the introduction of tariffs, rise of in the import duties, introducing restrictions on imported goods as well as offering of subsidies to local entrepreneurs. However, to facilitate adequate preparedness, the government recognized and acknowledged the potential shortfalls and conflicts in the new policies. The method applied in solving any potential conflict was intended to favor the country costumers. As a result of the government initiative to protect the country customers from potential exploitative traders, some of the developed polices led to the emergence of frequent conflict between the producers in the agricultural sector and policy makers. To address the conflict of interests between local producers and customers, the ministry of agriculture and commerce developed various policies which included the following. For starter, the government introduced The Second plan (1975-1980).
The policy was reluctant on the issues of customer protection. In this policy, the government used quality mark and development standards as the main aids to facilitate national economic development. The policy led to significant development in the country’s economy. This policy was followed by The Third Plan (1980-1985) which emphasized on the importance of the Second Plan. It talked about the significant of improving the quality in standards of the local products to promote local products in international market. Among the over four hundred standards measures that were in place at that particular time, only less than ten among them concentrated on the field of customer protection and industrial safety. The fourth plan (1985-19910) portrayed the two standard policies as the core strategies of advancing technology as well as in the development the required standards for products, services and utilization of local products. However, this policy was silent on the issues of customer protection. The firth policy (1990-1995) recognized and acknowledged the importance and significant of the country’s customers in advancing the country economic development (Reich 2002, p.259). According to the policy, economic development does not solely represent the country economic development. The country economic development is naturally linked with the country’s institutional requirement and the entire society needs.
Therefore, the introduction of specification and standards was extremely crucial to both the county’s producers and customers. The Fifth policy also talked about the relationship between private sectors and public sectors in international market. The Sixth plan (1995-2000) main agenda was to promote economic development. It emphasized on the important of increasing contribution in the economic development. The plan also talked about the significant of quality standards in service delivery. It emphasized on the significance of improving the quality of domestic products and services to counter increased and unfair competition in the country from high quality imported goods. Saudi Arabia has also promoted and advertised SASO in United States of America and United Kingdom. The Seventh plans covered the years between 2000- 2005. The policy concentrated on the importance of economic production. However, the policy did not offer any protection measures on customers. The policy embarked on infrastructural development in virtual, physical, and human domains. Although all these policies were intended to address customers’ needs, most of them concentrated on dealing with unfair competition in Saudi Arabia market (Bhuian, Abdul-Muhmin, and Kim 2001, p.227).
Chambers of commerce
The core role of chambers of commerce in Saudi Arabia was to assist small scale businesses in establishing a place both in local and international market. Chamber of commerce introduced measures to ensure concrete financial and market assistance to the country local small business owners. The chamber provides a guideline on the most appropriate practices in local commerce and trade. The chamber has a responsibility of offering certification to the country local suppliers and retailers. Additionally, the chambers of commerce conduct regular review and advancement of regulations, guidelines and practices to lime with the adjustment made by the ministry of trade and commerce. The chamber has the mandate of offering guidelines on the products quality and safety. Through the existing regulations in the country, the chambers of commerce have the responsibility and power of detecting the products which are below the required standards. After detection, the chamber of commerce has a role of informing the general public on any substandard product in the market. Due to its advanced customer’s protection responsibilities, the chambers of commerce in Saudi Arabia offer a platform for providing the required customers protection in the market. Due to its mandate in the country’s economy, the chamber of commerce is highly respected and a very powerful local force. It plays a very significant role in addressing any commercial dispute in the country (Sorell and Hendry2004, p. 89).
The Saudi Arabia customer
Currently, there exist very limited literatures on Saudi Arabian customers’ behaviors. However, the available limited information offers a very distinctive pattern of customers’ behaviors in Saudi Arabia which demands customers’ protection. According to the available literature, very limited customers in Saudi Arabia will return a product to the seller due to its low quality. This explains the need for adequate measures that will protect customers’ interests. Their behavior is related to the rapid transformation in the country economy. The reluctance nature of Saudi Arabia customers have as a result made it easy for business people in Arabia to exploit them by selling low quality products in the market places. In most cases, customers in the country do not evaluate the cost of the products with the quality of the product in the market (Mannan 2007, p.89).
The unfavorable practices by the department of customers’ protection in Saudi Arabia have as well played a very crucial role in promoting negative sellers responses. Referring to the available literatures, customers’ affairs official has a will of assisting customers in changing their attitudes. However, their efforts are strongly hindered by poor policies and regulations put in place to address the customer’s needs. On the other hand, customers in Saudi Arabia are ignorance towards the Islamic edicts relating to customers protection. However, despite of the customers ignorance, others players such as employers and sellers are also blamed of ignorance of the existing laws and regulations. On the other hand, despite being aware of their basic rights, most customers do not exercise their basic customers’ protection rights. The available literature has also expounded on the relationship between education and customers. The uneducated Saudi Arabian customers tend to be possibly fatalistic, more apathetic and are less likely to complain on the quality of the product in the market as compared with the educated section of the population. On the other hand, low income earners are less likely to complain on the quality of a product in the market compared to wealth section of the population. Additionally, poor and uneducated people in the society do not complain a lot on the quality of the product sold in the marketplace. By comparing the Saudi Arabia customers with western countries customers, the western customers are more aggressive on their right more than Saudi Arabia population (Tuncalp 2008, p. 21).
Government Intervention with regards to consumer protection
The Saudi Arabian Ministry of commerce is responsible for the supervision of the country’s goods and services. Moreover, it has to make sure that there is availability of basic needs in the market at prices that are reasonable and equitable. The ministry is also responsible for sustaining contact with merchants. Furthermore, the ministry is required to brief these merchants about the situation in the market arena such as what is expected from them by the government, the future requirements and the current supply situation in the market. The ministry also encourages marketers to supply the market with adequate quantities of goods in order to meet the increasing demand of the local markets. Apart from encouraging them to increase in the amount of supplies, the ministry directs and guides suppliers in providing the consumers with the best imports and appropriate rules and procedures that guarantees their rights.
In the light of the above, the ministry also fixes the prices of principle goods in special cases and also specifies the acceptable margins of profit. In addition to that, the ministry also specifies the requirements that need to be met before the distribution of any products and services. For instance, the fixing of labels and price tags on commodities, and storing of specific documents and invoices. Through its agencies that are competent, the ministry supervises merchants. The agencies are such as the Department for Consumer Protection which guarantees rules and instruction enforcement and putting a stop to exaggeration and excessiveness in prices. With the collaboration of various information media, the ministry strives to improve consumer awareness amongst its populations. To discourage hoarding and establish stable consumption, the ministry through the information media raises consciousness among the general public. The merchants are also advised by the ministry not to exploit consumers and exaggerate prices by cooperating with citizens and competent authorities.
Consumer protection location in the government structure
One of the main objectives of the Saudi government is to advance in both the social and economic development. This has been achieved by the development of economic infrastructure to enhance the participation of the public in the development of the economy (Kingdom of Saudi Arabia, 1980). The government of Saudi Arabia has also established numerous agencies entirely financed by the state. The efforts made by the government to protect the consumers began by the establishment of a consumer protection general department.
The General Department of Consumer Protection objectives are such as:
- To shield consumers from commercial frauds
- To guarantee government agencies specifications and regulations conformity
- To guarantee manufactured and imported goods conformity. These goods need to meet the import specifications
- To carry out various tests of metals that are precious such as platinum, gold and silver. In addition to that, it aids in satisfying their true value and also regulating the trading of such metals.
- To develop the utilization of metric standards in volumes, lengths and weights with an aim of unifying the utilization of the aforementioned standards
- To support various government agencies while they are purchasing goods and products. In addition to that, it aims to advise on the inherent guarantees in the goods technical specification and offer the needed technical advice to the traders and the public.
Consumer voice development in Saudi Arabia
In Saudi Arabia, various factors have hindered the development of the voice of consumers. These are such as, the absence of consumers interest promotion by government agencies, lack or absence of standards and publicity in various areas making it extremely difficult for consumers to create up case of product poor performance, the consumer regulations symmetric enforcement absence and the reluctance by Saudi Consumers to air their complaints to respective agencies when they are dissatisfied with a product. Besides the above limitations, various developments are in progress to enhance the voice of the consumer (Jefri, 2000). For instance, the citizens are now making use of the claim court system. Through this court, they are able to pursue their complaints. In this court, individuals are not charged any fee and parties involved represent themselves as they are governed by the Shari’ah law. In addition to that, the Arabic daily newspaper has a column where consumers can publish their complains
The future of Saudi Arabia Consumer Protection Policy
As a result of the continued expansion of commercial activities and diverse products and commodities to meet the needs of the consumer, the Ministry of Commerce and other government departments in collaboration with the SOS( Saudi Standard Organization) have embarked on a thorough study in order to come up with measures and ways that will enhance consumer protection. In addition to that, the government plans to create consumer awareness through information media. The consumption awareness will be based on the Saudi Islamic Values and the society’s traditions. The ministry together with various departments seeks to rationalize consumption and guard the consumers from deception, trickery, cheating, counterfeiting and fraud (Al Dabbagh & David, p.11).
Apart from what has been mentioned above, the consumer role remains a crucial factor when it comes to protecting through attention and awareness creation to assure the quality, validity, and safety of the consumed or purchased products. In addition to that, the consumers are warned against hesitating on advertising of practices that are illegal or harmful so that the bodies concerned can implement rules and regulations content against perpetrators of laid down regulations. The government aims to incorporate the voice of the consumer in the process of policy development and economic planning.
Generally, in Saudi Arabia, the Shari’ah law provides a practical and philosophical basis for consumer protection and consumer legislation activities. Each and every trader has an obligation to trade fairly and take care of the consumers. Various factors tend to limit the development of consumer protection in developing and under developing countries. The Saudi Arabian government has put in place a commercial law that is within the Shari’ah tenets. This helps in regulating business and trade activity in a rapid and open developing economy. Less research has been conducted in Saudi Arabia regarding the protection of consumer. Accordingly, the Saudi government has developed a supply policy whose main aim is to support the private sector in handling the foreign and domestic trade. The ministry of commerce checks basic items prices and there general supply in the market.
The supply policy
The supply policy objective is to achieve the below named goals: to continuously procure vital commodities in order to make them adequate for all markets, to supply basic commodities at reasonable prices and quantities, to expand the choice of the consumer, reinforce a competition that is fair among suppliers, encourage the creation of distribution chains and consequently upgrading the intensity of commercial services and finally, to promote effective corporation and understanding between the government and private commercial sector.
Objectives and Functions of Consumer Protection Laws
The law enhances awareness among the general population. Awareness creation main purpose is to protect the general public from any form of fraud and limiting the incidents of monopoly. In addition to that, the law also promotes the living standards of the Saudi Population and also checks on the prices to ensure that people are not exploited by traders. Furthermore, the law maintains the quality of both locally manufactured and imported products by ensuring that they meet the specified standards. These should be in line with those adopted by Saudi Arabian Standards Organization or international standards. In addition to that, it checks if the manufactured and distributed products conform to the Islam religious requirements. The consumer protection law major functions are such as controlling the price and product, quality and also hall marking and standardization. With the adherence of all this functions and objectives, then the Saudi consumers will be adequately protected from being sold harmful and below standards products (Supply and Consumer Protection, N.D).
Over the last few decades, Saudi Arabia economic development has undergone tremendous transformation. The transformation ranges from development of effective strategies to advance economic development to the implementation of customers’ protection policies. Currently, Saudi Arabia is among the country which has highest foreign investment in the world. Its high population accompanied by relaxed policies and regulations on international trades has forced many investors to consider instigating their investment in the country. However, the need to understand the pattern of customers’ protection in Saudi Arabia is brought about by various unique reasons. To start with, the current Saudi Arabia development stage, economic size, wealth as well as concrete Islamic trade perception has forced many scholars to invest a lot in trying to understand the Saudi Arabia customer protection trend. On the other hand, there is very limited demand and literature available concerning the Saudi Arabian customer culture. The research is also motivated by the need to understand how the prevailing Islamic teachings are incorporated into the international customers’ protection regulations. On the other hand, the Saudi Arabian government has come up with various governmental regulation agencies to address customers’ issues.
The Saudi Arabia chamber of commerce is mandated with the responsibility of ensuring quality service delivery to customers. It also has the mandate of ensuring that all businesses meet the required standard before transacting any business in the country. However, despite of all the effort made to protect the customers’ right in the country, the Saudi Arabia customers require adequate civic education to sensitize them on their rights. On the other hand, the government ought to come up with concrete and severe measures to address customers’ exploitation in the country. There is also dire need to develop string bodies to execute the existing policies and regulations.
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