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Middle East Business
   Environment



      Prof. Chris Abraham
       Sr. Vice President
   SPJCM – Dubai & Singapore
Countries in the
 Middle East:
      - Turkey
     - Cyprus
         - Iran
         - Iraq
      - Kuwait
        - Syria...
The Middle East in the Twenty-First Century




           • Regional conflicts – Security issues
           • Bilateral t...
The Middle East in the Twenty-First Century
• Restrictions and trade sanctions (e.g. Iran)

• Dependence on oil revenues a...
Potential Economic Opportunities
• Policies intended to attract FDI and to
  diversify economically.

• Privatization of t...
Potential Economic Opportunities


• Population growth.

• Regional integration efforts.

• Reconstruction efforts in Iraq.
Key Points
• Middle East is culturally, economically and
  politically diverse (Arabs, Kurds, Iranians,
  Turks).

• Resou...
Key Points
• Countries with close trade relationship with
  the rest of the World (e.g., Turkey, United
  Arab Emirates).
...
Key Points
• Region’s rich history, culture and religion,
  and their implications.

• Critical role of government in the ...
Key Points

• Islam is the glue of the Middle Eastern
  social fabric.

• Collectivist, hierarchical and close knit
  soci...
Key Points

• GCC Common Currency

• GCC Central Bank

• GCC Customs Union
Some tips…
• Who you know is key. Relationships and connections
  are vital.
• Get personal and understand face.
• Invest ...
The Middle East – a region of
           opportunities



• UAE (Dubai), Qatar and Saudi Arabia are
  providing senior man...
The Middle East – a region of
       opportunities
quot;The high demand and low supply
of qualified executive talent is
he...
The Middle East Cultural Context
• Values

• Motivators

• Central management concept

• Importance of status

• Method of...
The Middle East Cultural Context
• Method of control

• Fundamental approach to development of new ideas

• Focus of perfo...
MYTHS ABOUT THE REGION
1 IT’S ALL ABOUT OIL

2 EVERYBODY IS RICH

3 GCC CUSTOMERS HATE “OTHERS/US”

4 WOMEN DON’T MATTER

...
REGION’S SUCCESS
          STORIES- A SAMPLING
    EMIRATES       LULU GROUP      DAMAS
 ETIHAD AIRLINES   JUMBO GROUP    ...
UAE – THE REGIONAL HUB
iSignificant visitor , and ex-pat markets
iDevelopment of Jebel Ali & Taweelah Ports
iGrowth of Emi...
Destination    Total
                         City       Projects
                        Dubai         342
 Top Five Glob...
Destination   CAPEX
                         City        ($BN)
                        Dubai         21
 Top Five Global
 ...
Destination   New Jobs
                         City        Created
                      Bucharest      86, 173
 Top Five...
Destination    Total
                        Country      Projects
                          UAE          480
Top Five Des...
Destination   CAPEX
                        Country       ($BN)
                          UAE          35
Top Five Destina...
Destination   New Jobs
                        Country       Created
                          UAE         87, 097
Top Fiv...
LEADING TRADING FAMILIES


        Al Futtaim                                         Al Gurg
                            ...
LEADING TRADING FAMILIES

                                                         Al Naboodah
      Al Habtoor           ...
LEADING TRADING FAMILIES


                                    Al Tayer
      Al Rostamani

                           Al ...
LEADING TRADING FAMILY

                                          Lootah
           Galadari

                            ...
UAE MAJOR PROJECTS

                        Palm Island Projects, Healthcare City
                            Dubai Intern...
UAE MAJOR PROJECTS (Contd…)

 A new national grid linking all power stations &
 distribution networks in Dubai & Abu Dhabi...
KEY ISSUES

 Don’t forget the growing Northern Emirates & Abu Dhabi

 Niche opportunities for companies

 Have a Middle Ea...
DOING BUSINESS IN UAE
Direct Export - Agent/Distributor
Representative Office
Branch Office
Limited Liability
Joint Ventur...
DOING BUSINESS IN UAE
 Direct Export - Agent/Distributor
 No distinction between agent & distributor
 Cultural aspects – r...
DOING BUSINESS IN UAE
 Representative Office

 Branch Office
 Sponsor generally needed – registration/formalities
 Sponsor...
DOING BUSINESS IN UAE

 Limited Liability Company - LLC
At least 51% to be held by UAE national/company
Initial share capi...
DOING BUSINESS IN UAE

 Joint Venture/Participation
 UAE Companies Law permits joint participation
 2 or more partners agr...
DOING BUSINESS IN UAE
 Free Trade Zones
 40+ FTZ’S – existing & proposed
 No customs duties
 No restrictions – profit tran...
iResearch , research , research
iUnderstand cultural issue
iDevelop a regional strategy
iMaintain personal contact
iPlan f...
DUBAI – Located in the Center
  of Future World Economy



Dubai, UAE
Within 8 hours flight distance Dubai can reach:

 The world’s 2nd strongest economy‐ Western Europe

 3 out of 4 “Golden B...
DUBAI – the World’s Fastest Growing City


• From 1996 to 2006, Dubai's GDP
  has grown 270%
DUBAI – the World’s Fastest Growing City
• The ongoing construction projects cost
  around 700 billion USD, including:

  ...
DUBAI – the World’s Fastest Growing City
 – World’s 3 largest manmade islands (Palm
   island)
 – The eighth miracle in th...
DUBAI – the World’s Fastest Growing City
s
DUBAI – a land of opportunity




• International professionals can easily get a
  working visa in Dubai
• 90% of populati...
DUBAI – a land of opportunity


• No income tax- what you earn is what you
  get
• No foreign exchange control
• UAE is th...
DUBAI – a land of opportunity

    Global companies in existing and
•
    forthcoming free zones are
    aggressively hiri...
•Internet City

•Media City

•Knowledge Village

•International
 Financial Center
•Investment Park

•Business Bay

•International
 Academic City

•Outsourcing Zone
•Health Care City

•Silicon Oasis

•Technology Park

•Media Production Zone
•Airport Free Zone

•Car and Automotive Zone

•Maritime Zone

•Biotechnology Zone
• Companies in UAE are booming and
  they are seeking MBAs in large
  numbers.
The Middle East is looking for
future business leaders….
Enjoy the experience & make use of
the opportunity…….
Middle East Business Environment
Middle East Business Environment
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Transcript of "Middle East Business Environment"

  1. 1. Middle East Business Environment Prof. Chris Abraham Sr. Vice President SPJCM – Dubai & Singapore
  2. 2. Countries in the Middle East: - Turkey - Cyprus - Iran - Iraq - Kuwait - Syria - Lebanon - Israel - Jordan - Egypt - Saudi Arabia - Oman - Qatar - Yemen - UAE - Bahrain
  3. 3. The Middle East in the Twenty-First Century • Regional conflicts – Security issues • Bilateral trade agreements with the US and EU (e.g., Saudi Arabia, Israel, Jordan) • Gulf Cooperation Council
  4. 4. The Middle East in the Twenty-First Century • Restrictions and trade sanctions (e.g. Iran) • Dependence on oil revenues and state- sponsored subsidiaries • Large cultural/economic/political differences among countries in the Middle East. (e.g. Turkey, Israel, Saudi Arabia)
  5. 5. Potential Economic Opportunities • Policies intended to attract FDI and to diversify economically. • Privatization of traditionally state owned enterprises. • Progress on building institutional infrastructure (e.g., Israel, Turkey, Kuwait)
  6. 6. Potential Economic Opportunities • Population growth. • Regional integration efforts. • Reconstruction efforts in Iraq.
  7. 7. Key Points • Middle East is culturally, economically and politically diverse (Arabs, Kurds, Iranians, Turks). • Resource rich countries with stable governments with high rates of economic development (e.g. Saudi Arabia, Qatar, Kuwait).
  8. 8. Key Points • Countries with close trade relationship with the rest of the World (e.g., Turkey, United Arab Emirates). • Potentially lucrative market but typical developing country market environment. • Less fortunate countries of the Middle East (e.g., Syria, Iran, Iraq, Jordan).
  9. 9. Key Points • Region’s rich history, culture and religion, and their implications. • Critical role of government in the Middle East. • The role of skepticism in the Middle Eastern World.
  10. 10. Key Points • Islam is the glue of the Middle Eastern social fabric. • Collectivist, hierarchical and close knit societies. • The importance of shame / face / honor / consensus / respect for authority / seniority.
  11. 11. Key Points • GCC Common Currency • GCC Central Bank • GCC Customs Union
  12. 12. Some tips… • Who you know is key. Relationships and connections are vital. • Get personal and understand face. • Invest time in building relationships. • Get used to informal agreements. • Appreciate the intertwining of religion and law. • Speak English when making deals. Speaking English is a status symbol. • Show compassion for a business in trouble. • Entertainment and hospitality in business dealings.
  13. 13. The Middle East – a region of opportunities • UAE (Dubai), Qatar and Saudi Arabia are providing senior managers with the highest disposable incomes in the world1
  14. 14. The Middle East – a region of opportunities quot;The high demand and low supply of qualified executive talent is here to stay for at least the next five years“ Magdy Al Zein Managing Director of Boyden Middle East  at the opening of  quot;GCC Executive Talent  Shortage Summit“ in Dubai
  15. 15. The Middle East Cultural Context • Values • Motivators • Central management concept • Importance of status • Method of change
  16. 16. The Middle East Cultural Context • Method of control • Fundamental approach to development of new ideas • Focus of performance evaluation • Attitude to inequality • Conflict resolution • Emotions
  17. 17. MYTHS ABOUT THE REGION 1 IT’S ALL ABOUT OIL 2 EVERYBODY IS RICH 3 GCC CUSTOMERS HATE “OTHERS/US” 4 WOMEN DON’T MATTER 5 MARKETS ARE ENTIRELY ARAB
  18. 18. REGION’S SUCCESS STORIES- A SAMPLING EMIRATES LULU GROUP DAMAS ETIHAD AIRLINES JUMBO GROUP UP QATAR AIRWARS NMC GROUP ARAMEX AIR ARABIA GEMS THE ONE EMARAT SOBHA AME INFO RAK BANK KHIMJI RAMDAS ZAWYA MASHREQ BANK HAWAA WORLD JUMEIRAH GROUP DU ETISALAT
  19. 19. UAE – THE REGIONAL HUB iSignificant visitor , and ex-pat markets iDevelopment of Jebel Ali & Taweelah Ports iGrowth of Emirates & Etihad Airlines iDubai is world’s third largest re-export centre iDubai handled around 73% of UAE foreign trade (2004)
  20. 20. Destination Total City Projects Dubai 342 Top Five Global London 287 Destination Cities, 2008 Shanghai 264 Beijing 206 Paris 190
  21. 21. Destination CAPEX City ($BN) Dubai 21 Top Five Global London 17 Destination Cities, 2008 Shanghai 16 Tunis 15 Bucharest 13
  22. 22. Destination New Jobs City Created Bucharest 86, 173 Top Five Global Dubai 58, 161 Destination Cities, 2008 Shanghai 48, 605 Moscow 44, 985 St. 44, 558 Petersburg
  23. 23. Destination Total Country Projects UAE 480 Top Five Destination KSA 106 Countries in the Qatar 80 Middle East, 2008 Bahrain 64 Oman 53 Other 186
  24. 24. Destination CAPEX Country ($BN) UAE 35 Top Five Destination KSA 21 Countries in the Middle East, 2008 Iraq 20 Qatar 19 Oman 14 Other 45
  25. 25. Destination New Jobs Country Created UAE 87, 097 Top Five Destination KSA 28, 763 Countries in the Oman 21, 034 Middle East, 2008 Jordan 20, 035 Qatar 18, 254 Other 61, 885
  26. 26. LEADING TRADING FAMILIES Al Futtaim Al Gurg Al Ghurair Gulf Extrusions IKEA, ToysRUs, M&S Al Gurg Tyres, Batteries Dubai Polyfilm Al Futtaim Motors & Automobile Arabian can Industry Al Futtaim Electronics - Accessories Burjuman Shopping Sanyo Al Gurg Cigarette Div Center Al Futtaim Auto & Mac Al Gurg Al Ghurair City Machinery (FAMCO) Arabian Explosive Co Mashreq Bank Al Futtaim Real Estate Al Gurg Al Laing Paint Dome Café Benetton Franchise Printing & Publishing www.al-futtaim.com ID Design www.Algurair-pvt.com
  27. 27. LEADING TRADING FAMILIES Al Naboodah Al Habtoor Al Majid Al Naboodah Cont. Al Habtoor Eng. Ent Al Majid Property Al Naboodah Cargo Al Habtoor Motors EMW Lifts & Escalators Travels & Tourism Bentley GENAVCO SMKA Electric Co Aston Martin GULFCO Al Naboodah Laing Mack Truck Taj Hotel O’Rourke Real Estate Skyline Travels Swaidan Trading Hotel Metropolitan Group EPS Publishing-Al Shindagha www.alnaboodah.com www.al-majid.com www.habtoor.com
  28. 28. LEADING TRADING FAMILIES Al Tayer Al Rostamani Al Tayer Motors-Jaguar Thomas Cook Exchange Abb Industries Arabian Automobiles Co Fashion & Jewellery Dubai Int’l Securities Aati Contracts Co Emirates Electrical Eng. Perfume & Cosmetics Federal Bldg Industries Al Nisr Publishing Envo Gulf Steel Motivate Publishing United Diesel www.Altayer.com www.alrostamani.com
  29. 29. LEADING TRADING FAMILY Lootah Galadari Lootah Industries Khaleej Times National Aluminium Mazda Lootah Building & Baskin Robbins Construction Galadari Travel Group Lootah General Trading Dubai Intercontinental Hotel National Readymix Galadari Columbo Galadari Industrial www.lootahgroup.com www.Gabros.com
  30. 30. UAE MAJOR PROJECTS Palm Island Projects, Healthcare City Dubai International Finance Centre The World, Dubailand, Airport Expansions & New Airports Over 100 New Hotels Dubailand, with seven fully themed worlds with 45 mega projects, including another massive $1 billion indoor snow park Burj Tower Business Bay Yas Island
  31. 31. UAE MAJOR PROJECTS (Contd…) A new national grid linking all power stations & distribution networks in Dubai & Abu Dhabi (valued at US$164million) Dolphin Gas Project linking Qatar , UAE & Oman Light Rail system throughout Dubai Dept for Economic Development-New Projects to encourage the development of manufacturing industry over the next 5 years
  32. 32. KEY ISSUES Don’t forget the growing Northern Emirates & Abu Dhabi Niche opportunities for companies Have a Middle East Strategy (and beyond?) not just UAE Understand the wider pricing issues Take legal advice with M.E knowledge Research , research , research
  33. 33. DOING BUSINESS IN UAE Direct Export - Agent/Distributor Representative Office Branch Office Limited Liability Joint Venture/Participation Freezone or Sponsor/Partner?
  34. 34. DOING BUSINESS IN UAE Direct Export - Agent/Distributor No distinction between agent & distributor Cultural aspects – research , research , research Registered or Unregistered agent ? Exclusivity can be via product line / specific service Dubai and Abu Dhabi separate agencies ? Agreement subject to UAE law ? Ensure “getoutability” of contract
  35. 35. DOING BUSINESS IN UAE Representative Office Branch Office Sponsor generally needed – registration/formalities Sponsors – no liability , investment , management Fees are fairly established Specialist UAE firms offer matching service Termination may be difficult
  36. 36. DOING BUSINESS IN UAE Limited Liability Company - LLC At least 51% to be held by UAE national/company Initial share capital 150k dhs/300k dhs for Dubai Profit share may be disproportionate to shares All or most share capital provided by foreign Investor Vast majority of profits passed to foreign investor
  37. 37. DOING BUSINESS IN UAE Joint Venture/Participation UAE Companies Law permits joint participation 2 or more partners agree to share profits/losses Does not need to be formally registered Establishment immediate JP would use name/trade license of local registered Disadvantage – independent financing limited ?
  38. 38. DOING BUSINESS IN UAE Free Trade Zones 40+ FTZ’S – existing & proposed No customs duties No restrictions – profit transfer / capital repatriation Exemption – corporate , withholding , inheritance taxes No personal income tax or currency restrictions BUT need local agent to trade in UAE ICAD may circumvent this – with Executive Council
  39. 39. iResearch , research , research iUnderstand cultural issue iDevelop a regional strategy iMaintain personal contact iPlan for the long term , not a quick fix
  40. 40. DUBAI – Located in the Center of Future World Economy Dubai, UAE
  41. 41. Within 8 hours flight distance Dubai can reach: The world’s 2nd strongest economy‐ Western Europe 3 out of 4 “Golden BRIC” countries*‐ Russia, India, and China 2 of the newest emerging economies‐ Eastern Europe and  South Eastern Asia The future star of world economy ‐ Africa
  42. 42. DUBAI – the World’s Fastest Growing City • From 1996 to 2006, Dubai's GDP has grown 270%
  43. 43. DUBAI – the World’s Fastest Growing City • The ongoing construction projects cost around 700 billion USD, including: – The tallest building in the world- Dubai Tower – The largest airport in the world
  44. 44. DUBAI – the World’s Fastest Growing City – World’s 3 largest manmade islands (Palm island) – The eighth miracle in the world- the World Island – The world’s largest shopping mall- Dubai Mall – The world’s largest theme park- Dubai Land
  45. 45. DUBAI – the World’s Fastest Growing City
  46. 46. s
  47. 47. DUBAI – a land of opportunity • International professionals can easily get a working visa in Dubai • 90% of population in Dubai are expatriates
  48. 48. DUBAI – a land of opportunity • No income tax- what you earn is what you get • No foreign exchange control • UAE is the most liberal country in the middle east
  49. 49. DUBAI – a land of opportunity Global companies in existing and • forthcoming free zones are aggressively hiring talents
  50. 50. •Internet City •Media City •Knowledge Village •International Financial Center
  51. 51. •Investment Park •Business Bay •International Academic City •Outsourcing Zone
  52. 52. •Health Care City •Silicon Oasis •Technology Park •Media Production Zone
  53. 53. •Airport Free Zone •Car and Automotive Zone •Maritime Zone •Biotechnology Zone
  54. 54. • Companies in UAE are booming and they are seeking MBAs in large numbers.
  55. 55. The Middle East is looking for future business leaders….
  56. 56. Enjoy the experience & make use of the opportunity…….
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