Chambers of commerce: Bridging the PPP gap in Arab world
According to international practices, a 'chamber of commerce' can be defined as a network or cluster of businesspersons and private sector representatives operating to defend their rights and interests within the economy.
Chambers of commerce are non-profit and non-governmental organizations that enjoy financial and administrative independence. Historically, the first chamber of commerce in the world was established in Marseille, France in 1599, while the first Arab chamber was Aleppo Chamber, established in 1885.
After a while, the Arab Federation of Chambers of Commerce came into existence in 1951 in Alexandria, Egypt. However, the role of the chambers of commerce in the Arab world has not been much encouraging on many aspects, especially in developing local economies, marketing investment features and the representation of businesswomen.
Whereas the role of governments receded recently in an oversight and regulatory arena, distancing themselves from providing operative and executive services, private sector took over the role of leading the economy.
Thus, many people count on chambers of commerce to lead the partnership between private and public sectors, or public-private-partnership (PPP) as it is commonly known. According to the World Bank estimates, the partnership size in the emerging economies is around US$71.5bn. In other words, the partnership between both sectors should not be misunderstood.
The private sector is not exclusively executing commercial and industrial projects, but it is ought to be involved in implementing the state's economic plans too. The governments are supposed to utilise knowledge and expertise of chambers of commerce representatives in setting an economy leading to achieve strategic plans set by the state.
The partnership between public and private sectors – a trend that has been rising globally since early 1990s– needs an administrative and regulatory bridge, such as, chambers of commerce where investment priorities are defined and challenges are well-tackled. Then, the chambers of commerce would serve a noble goal in developing economies and refraining from achieving personal interests or just taking decisions that serve senior businesspersons.
To assess the impact of the chambers of commerce on the economy, we need to answer the following questions: What did the chambers of commerce do to help small and medium enterprises (SMEs)? And what is their impact on developing the local economy? Finding the answers for these questions is vital, since the government – represented in entities responsible for monitoring economy and trade – evaluates the role of chambers whether they are organizers as fee collector or institutions with economic and social impact.
Not only has that, but assessment of chambers come parallel to the natural development of the economy and to the needs of each economical phase. It is worth mentioning that the legal and administrative structure of the chambers of commerce is different from one country to another in a way regulations are set to secure electing best of the bests.
There are some chambers that use both election and appointment process in order to achieve economic and investment trends of each phase of economic development as this reflects private sector's maturity in state's economic development. When we look at international practices, we would find them different from one country to another.
For example, companies in the US, Canada and the UK voluntarily join chambers of commerce, whereas companies in Asia and some European countries are obliged to register with the chambers. There are some mature international experiences reflecting the real roles that chambers of commerce are supposed to play. For instance, the German Chamber of Commerce is authorised to issue country of origin licenses, settling disputes through arbitration and effectively contributing in developing human resources (through providing financial and vocational training contributions).
Moreover, the British School is a pioneer in chambers of commerce field. It was established in 1860 and plays a pivotal role in hosting international conferences; for example the international conference attended by senior businesspersons, intellectuals and effective decision makers. Most importantly, the British Chamber organizes an annual gathering for business sector and educational sector alike in order to fill the gap of market requirements taking the initiative in harmonizing between both sectors; let alone preparing youth and equipping them with required skills fulfilling the market requirements.
Without having an effective partnership between private and public sectors, these countries would not have achieved any social and economic development. In other words, since policies are prepared by the governments to sustain development, then such decisions ought to be taken with contribution of all different stakeholders including private sector as an effective player in developing countries.
The lack of effective partnership between private and public sectors also lead to negative impacts. When we look into the Romanian case, we would find out that decisions taken by the government to increase taxes were just aiming to collect cash without paying attention to the full economic structure, so this affected attraction of local and foreign investment. If big companies believe they can swim against the current of the globalization, then they are endangering themselves. They need to realize we are living in an age of lobbying with each other, as it is the professional way to protect their interests.
The chambers of commerce are regional entities and not just local institutions. They reflect commercial diplomacy to attract investment opportunities in crisis times. Whenever there is no vivid belief in the effective role of chambers, the economic development would be disrupted, and the gap between private and public sectors will be widen and chambers’ structure (legally and administratively) will be negatively affected. We need to realize that the ship of development would move slowly if it depends only on one engine (government). In order to accelerate the development, we need to set the right organizational structure for the other engine (private sector).
Ann Said al Kindi
(The author is a board member of the Omani Economic Association. The views and opinions expressed in this article are solely those of the author and do not represent those of Muscat Daily or Apex Press & Publishing).