Intel chief says education is key for Middle East IT sector

04 October 2002

MEED: What is your view of the health of the Middle East economies?

Craig Barrett (CB):The Middle East economy, from an IT perspective, is a very exciting place. There is a relatively small infrastructure in place today, so the build-out of that infrastructure will be good for the IT sector. Perhaps the most significant thing is that, as you travel around the world to emerging economies, you find a very common theme. Just about every government, every set of business leaders and every academic leader recognises that their future depends on a knowledge-based economy, rather than an economy based on natural resources. Certainly, you could argue that petroleum is important in most Middle East countries, but the long-term recognition is that you need an educational infrastructure in place - and a computer and communications infrastructure in place - to take advantage of knowledge-based industries if you want to be competitive in the world marketplace.

MEED:Where is the Middle East on this growth curve?

CB:It is at the beginning. You see some degree of excitement in Dubai, some recognition in Jordan. There is the starting of some recognition in Egypt too.

MEED: Do you think the right government policies are in place?

CB:The Middle East is becoming more aggressive in this area.

MEED: Where, in particular?

CB:The Jordanian government's attitude is: 'We are weak in natural resources. Our only future is in a knowledge-based industry that requires hi-tech infrastructure and strong educational capabilities.' King Abdullah, to some degree, positions himself as one of the hi-tech representatives of government. Also in Dubai - in the infrastructure and the desire to be a digital and media capital.

MEED: In terms of the detailed practicalities of creating the right business environment, have Middle East governments got it right or do they need to make radical changes?

CB:Having classic one-stop shopping is very important. Having the right incentives in place are very important. One of the things the Middle East does not have right is the promise of a huge marketplace. But countries like Singapore, Malaysia and the Philippines have been able to attract strong investment without the promise of a big marketplace, by streamlining government bureaucracy, one-stop shopping and attractive incentives - may they be tax incentives, capital investments, etc. This is, in fact, a worldwide competitive activity.

MEED: A lack of transparency is often cited as one of the regional barriers to investment. What are your views?

CB:Transparency is extremely important in terms of being able to conduct business in a completely open fashion without having any 'secret handshake'. One of the areas we are very involved in is venture capital investing. I think we are the biggest venture capital investor in the world. Transparency in the venture capital world, minority shareholder rights and things like that, are extremely important to us from an investment standpoint.

MEED:Deutsche Bank is about to launch a $100 million venture capital fund, purely dedicated to investing in IT in Dubai. Is that the sort of activity you see yourself piggybacking?

CB: Deutsche Bank is going to help pave the way. I am sure we will be right there with them. The only requirement we have is that there be open investment capabilities, with transparency, minority shareholder rights, etc. The only other things we are interested in are the quality of the idea and the quality of the people.

MEED:Does Intel have any immediate plans to build a manufacturing plant in Egypt or a similar facility in Dubai?

CB:No, there are no such announcements on any manufacturing facility in the Middle East.

MEED:What have you come here to announce?

CB: We'll announce something in Jordan in the educational area, in terms of facilitating educational development. We will also announce what we call competency centres in Dubai, one with IBM and the other with HP.

MEED:In what business areas?

CB: One in petrochemicals and oil and gas, with IBM. With HP, it is in telecommunications. We will bring technical expertise and equipment capabilities with people from those industries, in terms of development of resources, in conjunction with IBM. And HP will provide the integrated hardware.

MEED:For Intel, where is the best opportunity in the Middle East?

CB:One - utilisation of technical resources from the engineering standpoint. By engineering, I mean hardware or software creation. Two - opportunity for venture investment, to help facilitate small entrepreneurial start-up companies. Three - working with local distributors of our technology. One of the things we do is not only support big multinationals but also small distributors of our technology.

MEED:What about your investment in Arabia Online? How have you benefited from that?

CB:Our business is providing building blocks for the internet. So whatever we can do to make the internet more localised is good for our business. That's why we are in the venture capital business.

MEED: The Arab world is an importer of technology and information services. Does it have any prospects of becoming an exporter?

CB: I certainly think so, if you look at India as an example, or Taiwan. India clearly has very strong educational infrastructure. With a national policy to educate a large number of IT professionals, it also aims to become the software capital of the world in the next decade. Even though they continue to import the hardware, they export the software, which is value-adding.

I would look at the Middle East, to a degree, as somewhat similar to India. The hardware and manufacturing infrastructure are more difficult to put in place than the intellectual capital associated with engineering and software value-adding. That's probably the best opportunity for the Middle East. Leverage off the educational institutions, leverage off the immense number of young people in the Middle East. Put the educational infrastructure in place to allow them to participate and then they can add value with their intellectual capital. That is quite different from saying: 'I am a region of low labour rates, and I want to compete just on the lower end of the manufacturing spectrum.' I think there is an opportunity to move ahead of that.

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