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Middle East Business Environment
1. Middle East Business
Environment
Prof. Chris Abraham
Sr. Vice President
SPJCM – Dubai & Singapore
2. Countries in the
Middle East:
- Turkey
- Cyprus
- Iran
- Iraq
- Kuwait
- Syria
- Lebanon
- Israel
- Jordan
- Egypt
- Saudi Arabia
- Oman
- Qatar
- Yemen
- UAE
- Bahrain
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. 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. 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)
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. 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. 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. 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. Key Points
• GCC Common Currency
• GCC Central Bank
• GCC Customs Union
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. 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. 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
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. 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. 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. Destination Total
City Projects
Dubai 342
Top Five Global
London 287
Destination Cities,
2008 Shanghai 264
Beijing 206
Paris 190
21. Destination CAPEX
City ($BN)
Dubai 21
Top Five Global
London 17
Destination Cities,
2008 Shanghai 16
Tunis 15
Bucharest 13
22. Destination New Jobs
City Created
Bucharest 86, 173
Top Five Global
Dubai 58, 161
Destination Cities,
2008 Shanghai 48, 605
Moscow 44, 985
St. 44, 558
Petersburg
23. Destination Total
Country Projects
UAE 480
Top Five Destination KSA 106
Countries in the
Qatar 80
Middle East, 2008
Bahrain 64
Oman 53
Other 186
24. Destination CAPEX
Country ($BN)
UAE 35
Top Five Destination
KSA 21
Countries in the
Middle East, 2008 Iraq 20
Qatar 19
Oman 14
Other 45
25. 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. 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. 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. 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. 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. 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. 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. 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. DOING BUSINESS IN UAE
Direct Export - Agent/Distributor
Representative Office
Branch Office
Limited Liability
Joint Venture/Participation
Freezone or Sponsor/Partner?
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. 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. 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. 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. 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. iResearch , research , research
iUnderstand cultural issue
iDevelop a regional strategy
iMaintain personal contact
iPlan for the long term , not a quick fix
40.
41. DUBAI – Located in the Center
of Future World Economy
Dubai, UAE
43. DUBAI – the World’s Fastest Growing City
• From 1996 to 2006, Dubai's GDP
has grown 270%
44.
45. 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
46. 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
49. DUBAI – a land of opportunity
• International professionals can easily get a
working visa in Dubai
• 90% of population in Dubai are expatriates
50. 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
51. DUBAI – a land of opportunity
Global companies in existing and
•
forthcoming free zones are
aggressively hiring talents
