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Saudi IP reform key to post-Covid growth

Saudi IP reform key to post-Covid growth

As G20 leaders convene in Riyadh for their annual leaders’ summit, their most urgent question is how to kickstart economic growth after the Covid crisis.

As holder of the rotating G20 presidency, this question is especially pertinent to Saudi Arabia. Battered by Covid and with the oil price on the floor, it’s clear that the Kingdom will have to re-double its efforts to find new sources of growth.

Even prior to Covid, the government recognised with its Vision 2030 programme that the transition from oil to a knowledge-based economy will be essential to achieve faster economic growth.

“You cannot be depending on oil in a world where the knowledge economy is the driver of economic development — manufacturing is 20th century,” says Fahd Al-Rasheed, CEO of King Abdullah Economic City.

The protection of intellectual property (IP) rights is key to becoming a successful knowledge economy. This point was emphasised in late October by a joint statement issued by the IP offices of all the G20 countries, following a virtual forum organised by Saudi Arabian IP office as part of the Saudi G20 presidency.

In the long-term, there is no reason why Saudi Arabia cannot produce its own innovation multinational. But in the short-term, the Kingdom’s opportunity comes from connecting local businesses and start-ups with existing knowledge-based companies, many of which have multinational operations.

Saudi Arabia today is host to increasing numbers of these large, knowledge-intensive multinational businesses. This knowledge-rich business community includes software giants, agricultural chemicals, technology developers and biopharmaceutical companies.

Companies like these in Saudi Arabia bring huge opportunities for local businesses and entrepreneurs.

Multinational companies often struggle to enter markets and address local problems due to their lack of agility and local knowledge. Collaboration with local businesses is essential.

In order to develop these partnerships, local businesses must confidently speak the language of intellectual property – particularly if they wish to sell their own ideas to be commercialized and scaled by large multinational companies.

Patents, trademarks, copyrights, trade secrets and other forms of intellectual property are the instruments by which multinationals trade with local companies.

When a multinational wants to buy or license ideas or technology from a local company, the conversation will often be held in these terms.

Technology transfer and licensing are the most efficient ways that a promising local company armed with a great idea can follow the traditional Silicon Valley model – introduce an idea, grow the business, and then get bought by a company with capability of developing the idea into a marketable product or service.

In valuable sectors such as life sciences, robust intellectual property rights are essential for local companies looking to partner with multinationals across the innovation value chain, from lab research, clinical trials management to manufacturing.

The Kingdom’s small businesses are sitting on a rich pipeline of technology, brands, technical know-how and other knowledge assets that could thrive internationally if the policy building blocks are in place – and that includes intellectual property rights.

Vision 2030 encourages this ambition, seeking to increase the contribution of small and medium enterprises in the economy from 20 to 35%.

Saudi Arabia has the Intellectual Property basics in place, in line with its World Trade Organization commitments. It further signalled its commitment to IP by establishing in 2017 the Saudi Authority for Intellectual Property (SAIP), improving many aspects of the IP system and clamping down on counterfeit goods.

This is a crucial step towards bringing the quality and scope of the Kingdom’s intellectual property protection to the same level as neighbours such the UAE, Jordan and Turkey, all of which score more highly on the 2020 International IP Index.

If the Kingdom is serious about economic modernisation it needs to put intellectual property at the top of the reform agenda, making it a regional beacon for clearly defined and properly enforced intellectual property rights. It should urgently implement a national IP strategy, reviewing and modernising its laws, which many businesses complain are vague, incomplete and inconsistently applied.

Speaking in October, Crown Prince Mohammed bin Salman called on “all dreamers to join Saudi Arabia in building economies of knowledge.”

With its human resources, connected location and economic reform ambitions, Saudi Arabia could yet emerge from the Covid crisis as a global competitor in knowledge-based industries.  It’s an achievable vision, but it depends on the right incentives – and intellectual property is key.


Mark Schultz is Professor of Law at the University of Akron School of Law, United States. Philip Stevens is Executive Director of Geneva Network, a UK-based think tank focusing on international innovation policy.