Why there are not many Saudis utilizing e-market
Saudi Arabia has an average population of up to 28 million people as per the statistics of 2008; more than 14% of population are using the e-Markets services. And this is despite the fact that Saudi Arabia is one of the world’s biggest trade markets and trade destinations. People question why the e-markets have not been fully utilized in the booming economy especially since competitive markets are the best stimulators for innovations in technology (Technology CEO Council, 2000). There are a variety of factors that can be said to be causing this.
For starters, Saudi Arabia is predominantly a Muslim kingdom and like every other Muslim nation, they are controlled by the Holy writings of the Quran. At the inception of the E-commerce system of business, the first concern was whether it contravened the teachings of the Quran. The Quran has its profound definitions of key terminologies which can not be avoided in a trading environment. These include definitions like contract of sale, the meeting place and absentee purchases.
A good example is the Quran’s teaching that a purchase should not be initiated by two parties in one place then later concluded in a totally different place (Tamar, 2010). This presented very unique problems and largely contributed to the laxity of the people to adopt the eMarkets (Alzaagy, 2007). The prince of Saudi however established by royal decree a committee to look into the ecommerce concept and see if it could be seamlessly adopted in the context of the Sheria law. The committee realized that the Sheria law was in fact friendly to E-commerce. Convincing the staunch Muslims of this fact is what has been a white elephant for the government (World Summit on IT, 2005).
There is another reason for the laxity of the people to use the eMarkets; it is the issue of internet availability to the Saudis. The research findings of the Arab Advisors Group established that 46.4% of the internet users in Saudi Arabia access the internet at their work places. 36.6% of the population that access the internet accesses the internet in internet cyber cafes and 34.3% access the internet at WiFi hotspots. The other 23.7 % don’t access the internet except from their homes.
The statistics shows that there are 0.00083276 Internet Service Providers per 1,000 people (NationMaster, 2010). These research findings show that the biggest percentage of internet users is those who use the internet in their offices. They therefore usually use the internet for official reasons and will seldom have the time to go shopping online unless it is business related. There is therefore a big challenge to make the internet as available as possible in order to allow the penetration of the eMarkets into the region.
The other reason why the eMarkets have not taken root as such is the pessimism by most of the population. Anzan, who is the supervisor of the eMarkets as well the director of the postal operations, said that the biggest challenge is that the Saudi nationals perceive the online markets as unsafe and they perceive them as more expensive (Humaidan, 2010). The traditional way of doing commerce is generally preferred since the customer will physically be present and they will see the merchant and the goods physically before the purchase is made. Anzan said that the postal corporation has rolled out a new scheme in which safety will be guaranteed for the goods and parcels sent in a bid to boost the confidence levels of the citizens have in online trading (Humaidan, 2010).
The biggest question has been whether Saudi Arabia can adopt with the technological changes as need be. The Saudi society has a remarkable potentially for information technology driven initiatives. It is also notable that there is a predominant presence of big IT companies in the Saudi Arabia Kingdom. These factors give the Saudi kingdom major competitive advantage in the entire region. The infrastructure of the internet connectivity is also impressive and seemingly getting better by the day. This is a predictor of the readiness of the kingdom to embrace the new technologies that keep coming up.
The most recent estimates reveal that there are slightly over half a million internet subscribers in Saudi Arabia Kingdom. It is further estimated that there are 2.5 users per subscriber on average. This puts the internet users in the kingdom at 5% of the entire population. One may argue that that is a very negligible number but considering the entire Arab region, it is a very impressive percentage. In fact, the only other Arab nation exceeding this is Morocco. Saudi Arabia has 30 licensed Internet Service Providers who provide the internet facilities to the population. Dial-up is the most used form of connectivity for most of the Saudis (Sait and Tawil, 2004).
One of the major drivers for the adoption of eMarkets in Saudi Arabia is the recent embracing of technology by the government. As a result of a royal directive which was issued on the 20th of March 2003, the public investments fund rolled out a program to establish the e-government.
This was based on an Action Plan which included the policies of establishing the e-Government projects. The project entailed securing an interrelationship between the different information technology systems in future, providing electronic government services to the Saudis and collaborating of different government wings through the use of Information Communication Technologies. This is a very positive step as it helps establish a precedence of embracing technology for the private sector and the citizens.
Saudi Arabia is one of the most success free markets on the globe. Business men/women travel from far and wide to come for business in the country. The already booming trade environment makes it a very good platform for the adoption of the eMarkets. In a recent research aimed at measuring the e-readiness of a Saudi Arabia, it was established that there is very a competitive market in the Saudi Arabia kingdom.
For instance, Abha, who is a computer engineer working in a hospital said that based on the fact that there are so many companies that deal with Information Communication Technologies retailing, there is a very big competition in the market (Al-Solbi, 2005). It is also worth noting that the recent introduction by the government of the internet regulations and the Code of Practice of e-commerce will help increase the use of eMarkets in the region (World Summit on IT, 2005).
In conclusion, it is worth noting that the biggest challenge for most Saudi Nationals is that the E-commerce platforms that already exist are largely unfriendly for them due to the language barrier. One of the best ways to increase familiarity of the eMarkets to the nationals is to translate the existing platforms to Arabic language which is their national language.
Regulatory on eMarket Places
When the internet came into the kingdom of Saudi Arabia, it brought a new challenge to the government. The government had to take a period of two whole years to put in place the required controls before the implementation could take effect. The government didn’t what to create a situation where the new technologies interfered with the cultural beliefs of the people of Saudi Arabia.
These regulatory mechanisms stem from two main forces, the e-government and the cultural values. The diagram below serves to explain this relationship:-
In summary, both the needs and requirements brought about by the e-government in conjunction with the cultural values of the Saudis both need some form of control. The controls work concurrently and result in a form of a unified regulatory. These regulatory are very important since they provide an environment of checks and balances within the e-commerce environment.
Initially e-commerce activities had no formal regulation. As it was widely thought, regulations were expected to distract the growth of the markets. However, it resulted in many notable legal disputes and security concerns worldwide. Armed with this information the Saudi government decided to have measures to put the trade in good regulation. It all began with the government adoption of technology by introducing the e-Government. This initiative has sent a strong message to the community at large. Information Communication Technologies are now being continually embraced in hospitals, Schools and other businesses. For instance, Saudi Arabia colleges are now using and sharing open source courses (Lewin, 2009).
The e-government, which was established following a royal directive in March 2003, has put in place measures for regulation of eMarkets in the region. A good example is the issue of the blackberry device. The Saudi government almost banned it following concerns that the device had exceptionally high privacy features which could be used by terrorists to escape the authorities. The government however reached a settlement with blackberry by placing a blackberry server in the country to ensure the government monitors its usage (Moyar, 2010).
The Ministry of Finance recently implemented what was called the Saudi Project for Electronic Data Interchange (SaudiEDI). The main aim of this initiative was the securing of speed and transparency in the business environment of eMarkerts. The SaudiEDI applies both to import and export services on the trade market. The SaudiEDI implies that there will be electronic interchange of information of the consignment, the delivery papers, as well as the other main items of information in the context of import and export. These procedures involve different agencies which include customs department, shipping agents, clearing agents, and even general ports department (World Summit on IT, 2005). This has an overall effect of creating a safe environment for trade for the private sector, the international community as well as the citizens.
The cultural issues have also been a factor that has largely contributed to the regulation of the eMarkets. Saudi Arabia is predominantly a Muslim kingdom. Muslims are obligated to implement Sheria law in all aspects concerning their lives. This stems from the fact that Islam is considered by Muslim faithful, as a way of life. From a purely commercial point of view, Islam Sheria law has provided its faithful with guidelines. These guidelines are not to be ignored and neither are they to be infringed. Needless to say, this affects the eMarkets as reference has to be made to what the Sheria law has to say concerning it first before it can be accepted (Edward, 2008).
At the advent of the eMarkets, one of the biggest concerns for the government was whether it contravened the teachings of the Quran. The Sheria law has its laid down procedures and regulations for business. It has is unique terminologies which can not be ignored in a trading environment. They include things like the contract of sale, the meeting place and absentee purchases. For example, the Quran teaches that a purchase should not be initiated by two parties in one place then later wrapped up in a totally different place. This presented very unique problems (and largely contributed to the laxity of the people to adopt the eMarkets (Alzaagy, 2007).
The Monarch of Saudi Arabia established a committee by a royal decree to look into the ecommerce details and if it could be seamlessly adopted in the context of the Sheria law. It was later realized that the Sheria law was in fact friendly to E-commerce. Convincing the staunch Muslims of this fact is what has been a white elephant for the committee (World Summit on IT, 2005). However, in the case of eMarkets there was a need of further scrutiny by Muslim kadhis or jurists to establish the accepted practices in the Quran.
As the Kadhis and Muslim Jurists examined the Sheria Law in the light of eMarkets, it was discovered that the door has been left open. This to them meant that that the market activities can be ruled upon by what the most suitable and convenient approach would be. Usually, it is based on the prevailing trade practices and the prevalent customs of their faith. This precipitated into the gradual entrance of eMarkets into the region.
By and Large, it can be said that the government has recognized the importance of the Information Communication Technologies and has began embracing the emerging trends in a bid to be abreast with the rest of the world. The government envisions a strategic plan for 2020 in the 7th development plan to have fully embraced the necessary Information Communication Technologies. Nationally, the precedence has been set by the government’s ambitious e-government project. The national policy document for information technology was also adopted by the ministers. This document envisages the development of Information Communication Technologies with the needed mechanisms that will be used in meeting this objective. Inline with this, the Saudi Computing Association has been mandated with the task of preparing a national IT plan. The government wants to make sure it is at per with the rest of the world as far as technological advancement is concerned.
There is a direct relationship between the government regulations and the cultural/religious customs of the Saudis. The main reason for this is the fact that Saudi Arabia is predominantly a Muslim kingdom and like every other Muslim nation, the laws that govern the land are the Muslim laws otherwise called the Sheria law. For instance when the internet came to Saudi Arabia in 1998, it was with the presence of control mechanisms by the government to ensure that unwanted content was filtered out. This was to make sure that the internet was not used to violate the teaching of the Islam faith and the cultural beliefs of the Saudi Nationals. It was a balance that would allow the people to enjoy from the benefits of the internet while and at the same time be protected from the malpractices of the internet.
In conclusion, it can be noted that the government’s initiatives in Information Technology like the e-Government, the Saudi project of electronic information interchange; the Saudi system for speedy money transfer in the banking sector, the smart card project as well as the Omrah project for streamlining the process of issuing visas electronically has greatly boosted the infrastructure in the Kingdom. As the different relevant sectors both private and public continue to build on the already established framework, it can only be expected that there is going to be an avalanche of eMarkets in the region of the Saudi Arabia Kingdom. The first step towards having a good e-commerce environment is establishing the relevant Information Technology infrastructure.
References
Alzaagy, A. (2007) The Islamic Concept of Meeting Place and its Application in E-Commerce. 1(1) p. 45.
AmeINfo (2008) Saudi Arabia’s Internet Users Spend Over 3.28b Dollars In B2C E- Commerce During 2007. Web.
Edward, M. ( 2008) Rim To Let Saudi to Monitor Blackberry Data. Web.
Humaidan, M. (2010) Saudi Postpones to Launch E-Markets in Weeks. Web.
‘Saudi Internet Stats’, 2010, NationalMaster. Web.
Sait, A. & Tawil, H. (2004) E-Commerce in Saudi Arabia: Adoption and Perspectives. Masaryk University Journal of Law and Technology 12(1) p.1802 – 1845.
Solbi, M. (2005) Measuring the e-Readiness in Saudi Organizations. Preliminary Results from a Research Study. P.7.
Tamar, L. (2010) Moving Into a Digital Future, Where Textbooks Are History. New York Times. Sunday, p. 8.
Technology CEO Council (2000) Perspective on the Global Economy Infrastructure Web.
World Summit on Information Technology (2005) Information and telecommunication technology in Saudi Arabia. Proceedings of the World Summit on Information Technology of 2005. P.6-15.