The Middle East Market SIS International Research

SIS International Custom Research Middle East Market September 2007 Presented By SIS Global Research Media, a division of SIS International 1

Presentation Contents Executive Summary Introduction: Economic UAE Snapshot •Demographics •Stability Report Qatar Booming Industries •Society Bahrain •Culture Opportunities Barriers Standard Research Disclaimer: SIS International Research Inc. makes no representations about the accuracy or completeness of the information provided in this 2 presentation. Users who base investment, strategic or marketing decisions on the information contained in SIS speeches & presentations do so at their own risk.

Executive Summary • Given opportunities and emerging economic factors, the Gulf region is being considered for investment & commerce. • Although major multinationals are in the region, global midsized companies ($200-800 million) are expanding in the region • US companies are generally slow in entering region vis-à-vis European ones • Region is currently stable, and governments investing heavily in infrastructure 3

GCC Market Gulf Cooperation Council, a customs union involving: • United Arab Emirates: Dubai, Abu Dhabi • Qatar: Doha • Bahrain: Manama • Oman: Muscat • Saudi: Riyadh, Jeddah • Kuwait 4

GCC Market Qualities Characteristics: • Young societies • Rapid economic growth – Strong non-oil businesses and private sector – Growth in some markets rivals that of China • Continuous inflow of foreign capital – Increased liquidity from oil revenues – Arab reinvestment of profits back into region • High standards of living – Wealthy countries – Consumer economies • Countries competing with each other • Economic link between Europe and Asia 5

GCC Population Excluding Saudi Arabia Year 2007 2010 2015 Total 11,769,011 12,993,249 14,979,888 6 Source: IDB Census Data 2007. Chart produced by SIS International.

UAE Demographics Population Growth: 2.39% Sex Ratio: 1.48 Males/1 Female 7 Source: CIA world factbook. Chart produced by SIS International.

Bahrain Demographics Population Growth: 1.4% Sex Ratio: 1.25 Males/1 Female 8 Source: CIA world factbook. Chart produced by SIS International.

Qatar Demographics Population Growth: 2.39% Sex Ratio: 1.85 Males/1 Female 9 Source: CIA world factbook. Chart produced by SIS International.

Social Snapshot: GCC • Significance of Family – Obligations & rules – Impact on the decisions one makes • Modern youth • Importance of Islam in commerce and daily life • Increasing familiarity with technology • Importance of honor and reputation 10

GCC: Stability Report • Stable • Oasis of stability in an volatile region • Business interests a major priority for GCC governments Analysis • Markets heavily reliant on tourism and FDI (e.g. Dubai) could be affected by regional war • Boycotts against branded products a possibility • Markets relying on Arab investment more resistant • Threats: political instability, terrorism, global economic downturns 11

Growth • Strategic business advantages – Achieve competitive edge • Location: Trading hub between Europe and Asia • Currently stable GCC market • High economic growth – Large consumer market – Pro-investment environment • Fear of falling behind competitors – Many multinationals have regional presence – Fear that neglecting region can impair longterm competitiveness 12

Economic Snapshot - UAE Economic Benefits Economic Obstacles • Remarkable growth & opportunity •Liberal overall, except for operating – 8.9% real growth in 2006 [CIA] regulations • Diversifying towards tourism, media & financial –Local sponsors services –Labor rules • Modern, English-speaking •Foreign ownership regulations • Strategic market: Gateway to KSA, other GCC markets –100% ownership only for … • Ranks 32nd most competitive global economy [World –professional companies Economic Forum] –branches of foreign companies – Most competitive Gulf economy –contingent on a local sponsor – Strengthening legal system by 2010 •Inflation from construction and housing prices – Most industries pay no federal corporate •Real estate supply fluctuations income tax •Insufficient urban transportation 13

The Dubai Market • Stable • Current and future banking & financial hub • Regional headquarters for many companies • Internationality, openness • Large Tourist and Expat market 14

Abu Dhabi • Capitol & Largest emirate • Significant oil reserves – 10% of the world’s output [FDI Magazine] • Diversifying – Targeting Arab investment – Encouraging private enterprise • Limits on foreign ownership 15

Key Industries: UAE • Consumer industries – Automotive – Retail (e.g. Mobile phone) • Real Estate & construction – Significant demand for housing • Tourism services and accommodation • Transportation infrastructure • Media • Information Technology • Consulting Services 16

Economic Snapshot - Qatar Economic Benefits • 7.1% growth in 2006 [CIA] – Due to liquidity from oil and the growing non-oil sector • Diversification – Towards a knowledge & technology based economy – Gov’t invested $130 Billion into industrialization policy [Qatar Financial Center] • Aggressive investing policy abroad • Liberal business environment – Few restrictions on corporate remittances Economic Obstacles • Inflation caused by housing prices and construction costs • Time required to start-up a company • Similar ownership regulations as in UAE 17

Key Industries: Qatar • Education services – Universities • Technology – Science and Technology Park • Media Services • Financial services • Consulting Services 18

Economic Snapshot - Bahrain Economic Benefits • Saudi money • One of the fastest growing Arab economies • Liberal economy – 25th Freest economy in the world, according to the Index of Economic Freedom 2006 – Tax free • 7.8% real growth 2006 [CIA] • Effective diversification from oil – Banking & service economy • Free-trade agreement with US Economic Obstacles • High unemployment 19

Key Industries: Bahrain • Islamic banking • Construction & Real Estate • Media • Tourism services – Saudi tourist hot-spot 20

Future Regional Economic Snapshot • GCC Common Currency Plan 2010 for all GCC members – ECB has already consulted on this planned currency union – Economic Benefits: • Limited Foreign Exchange risk, attracting foreign investors • Controls on inflation • Increased competitiveness resulting from integration • Increased international trade • Facilitation of trade among existing trading partners (e.g. EU, US) • Longterm Regional Economic Threats – Threats of political instability, terrorism and global recessions 21

Booming Industries 22

Real Estate & Construction Real Estate • About 25% of world’s cranes in Dubai, according to Gulf News • Housing demand in UAE exceeds supply • Residential & commercial rental prices on steep rise • Ownership restrictions [e.g. freehold system] exist • Major developers – EMAAR – Dubai Properties – Nakheel 23

Developments • Dubailand • Universal Studios • The Palm • Business Bay • Sports City • Media City • Ski Dubai • Knowledge Village 24

Automotive Market • Significant Demand – Due to lack of transportation alternatives, climate – Wealth – Inexpensive petrol • Reselling and exporting • According to Nissan, Middle East market is strategically important • Major sales markets for GM and Toyota 25

Healthcare • Healthcare costs and insurance premiums on the rise • Dubai Healthcare city is to open in 2010 for treatment & research – Mayo Clinic Middle East – Harvard University collaborating with project – J&J, AstraZeneca, & many others are establishing strategic partnerships 26

Banking & Finance • Islamic (Shari’ah) banking niche market – Islamic finance industry worth about $1 trillion dollars – Grew at least 10% each year during the past 10 years – More resistant to fluctuations in finance market – Several listings on London Stock Exchange – European banks already involved: HSBC & BNP Parisbas – High-net worth individuals (HNWIs) • Currently stable • Financial centers: Bahrain & Malaysia • Credit card ownership to rise by 51% by the end of 2007 [Lafferty Group] – High profitability per card in GCC region 27

Retail • Retail spending in UAE estimated to reach $7.6 billion by 2009, according to AME • Mall culture • Ubiquitous foreign brands: – Carrefour, Starbucks, Borders, Zara, H&M, Body Shop, Bally, Aldo, Toys R’ Us, Ikea, etc. 28

Information Technology & Media • Local governments updating IT infrastructure • New developments require IT infrastructure • Bahrain attracting media – MBC • Dubai Media city – CNN – BBC – Reuters – AP 29

The Middle East Market SIS International Research

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