Gulf Cooperation Council - B2C e-Commerce Overview 2011
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Prepared by IMRG International ...

Prepared by IMRG International
Commissioned by Visa Middle East
London - October 2011

The study focuses in particular to the member countries of the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.

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Gulf Cooperation Council - B2C e-Commerce Overview 2011 Document Transcript

  • 1. Gulf Cooperation Council B2C e-Commerce Overview 2011 Prepared by IMRG International Commissioned by Visa Middle East London - October 2011
  • 2. 2 TABLE OF CONTENTS Executive Summary page 3 General Overview page 5 including * About the Gulf Cooperation Council (GCC) page 5 * Economy of the GCC region page 5 * Internet Usage in the GCC region page 6 * Languages Used on the Internet page 7 * e-Commerce and e-Services in the GCC region page 8 * e-Government Initiatives page 10 * Retail in the GCC region page 12 * Conclusion page 12 Country Profiles †): * Bahrain page 13 * Kuwait page 18 * Oman page 23 * Qatar page 27 * Saudi Arabia page 31 * United Arab Emirates page 36 Annex A – GCC Countries compared (2010) page 42 Annex B - Definitions page 43 Acknowledgements and Sources page 45 About IMRG International page 46 About VISA page 46 †) Country profiles contain the following sections: - In Brief - Internet and e-Commerce - Economy Overview - Key data: Population, GDP, Inflation, and Unemployment - Retail Sales - Country Profile and History
  • 3. 3 Executive Summary This study was commissioned by Visa Middle East and prepared by IMRG International to report on trends, data and forecasts concerning B2C e-commerce in the Arabian Peninsula. The study focuses in particular to the member countries of the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. Total B2C e-commerce sales in 2010 in the region are estimated to have grown to around $3.3 billion. United Arab Emirates takes the biggest share: an estimated $1.9 billion or around 60%, followed by the Saudi Arabia ($520 million), Qatar ($375 million), Kuwait ($280 million), Bahrain ($175 million) and Oman ($70 million). Online shopping in the GCC region is still in the early stages, but IMRG is convinced that the future is bright. e-Commerce is facing the same barriers we see around the world: lack of trust, payment security, delivery options, relatively high costs and the like. However several signs point to a rapid growth in online shopping in the area. First, the initiatives taken in all countries with respect to getting businesses online, e- shopping, delivery and payment options and e-government which will increase the services available and contribute to creating a secure environment. We mention in particular here: The Dubai e-government initiative, which is amongst others, a key driver of online payment adoption in the UAE, creating the ePay gateway to enable customers to settle the fees of e- government services on 24/7 basis in a secure environment. The recently announced plans of Google “Getting Saudi Businesses Online”, similar to Google schemes elsewhere in the World, such as “Getting British Business Online” in order to help small businesses to get online. The REDe solution of Aramex, the global provider of comprehensive logistics and transportation solutions. enabling businesses to sell online, offering the MartJack platform to build an online store, and manage orders and payments, securely integrated with Aramex’s delivery solutions and services. Retailers are investing in the region and are set to offer a multi-channel shopping facility, a combination of brick-and-mortar shops and online purchasing. The population of the GCC region is a very young and highly educated population compared to other parts of the world: the median age is around 28, considerably younger than for instance Europe (38), USA (35) and Japan (45). This young population will be more open to embrace internet and the (new) digital devices and media available: tablets, iPads, smart phones, social networks, online news and e-shopping. All the private and government initiatives, plans as well as the trends we indicate, together with a growing economy and high disposable incomes, will strongly increase the further penetration and usage of the Internet and consequently enable and further online shopping. Therefore IMRG International predicts that B2C e-commerce sales will almost triple in the coming years with a year-on-year growth of around 30% and reach close to $15 billion in 2015. This report contains two parts: a general overview followed by country profiles of the six GCC countries (see the table of contents). We have added two annexes: Annex A which contains an overall comparison of the six countries and a total for the GCC region and Annex B containing definitions of the terms used (such as B2C e-commerce) and index rankings used.
  • 4. 4 This study could not have been realised without consulting a great many sources in the region. We have done our utmost to carefully study the available data, making the necessary and hopefully right choices in which information to focus upon and which conclusions to draw. We fully agree with the conclusions of a survey by Madar Research and Orient Planet that for instance population estimates used by international authorities such as the UN and the World Bank often differ widely resulting in distorted socio-economic indicators such as per capita Online shopping in the GCC region has great potential and will certainly grow as we explained above. It is therefore equally important that more becomes known about all aspects of online shopping in terms of data, impact of the internet economy, consumer behaviour and attitude in order to demonstrate the business opportunities for international investors but also initiatives to set up domestic sites. This will not only increase the available offer but will at the same time inspire trust and confidence among consumers. Aad Weening John Andrews Head of International and Research Managing Director Doha - Qatar
  • 5. 5 General Overview This report focuses on the present and the future perspectives of e-commerce in the Gulf Cooperation Council region (GCC). This general overview is followed by profiles of member countries. Attached are Annex A: a comparative overview of the GCC countries and Annex B: definitions of terms used in this report concerning e-commerce and e-services and world rankings. About the Gulf Cooperation Council (GCC) The Cooperation Council for the Arab States of the Gulf (CCASG), also known as the Gulf Cooperation Council (GCC), is a political and economic union of the Arab states bordering the Persian Gulf and constituting the Arabian Peninsula, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates Created on May 25, 1981, the original Council comprised the 2,500,000 sq. km. Persian Gulf states of the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait. The unified economic agreement between the countries of the Gulf Cooperation Council was signed on November 11, 1981 in Abu Dhabi. According to the GCC Charter the basic objectives are to effect coordination, integration and inter-connection between Member States in all fields, strengthening ties between their peoples, formulating similar regulations in various fields such as economy, finance, trade, customs, tourism, legislation, administration, as well as fostering scientific and technical progress in industry, mining, agriculture, water and animal resources, establishing scientific research centres, setting up joint ventures, and encouraging cooperation of the private sector. A GCC common market was launched on January 1, 2008. The common market grants national treatment to all GCC firms and citizens in any other GCC country, and in doing so removes all barriers to cross country investment and services trade. GCC is also considering a shared currency for the region. The economy in the GCC region According to a recent study of the Saudi Arabia Bank Group (SAMBA) strong crude prices boosted the nominal economy of Gulf oil producers by nearly $130 billion in 2010 while real GDP growth sharply rebounded, according to a key Saudi bank. The rise in oil prices also turned the deficit in the combined fiscal balance in the six-nation Gulf Cooperation Council (GCC) into a surplus last year and largely widened their current account. From around $920bn in 2009, the GCC’s combined GDP surged to $1,075bn in current prices in 2010 and could swell further to an all time high of about $1,400bn in 2011 (IMF forecast). The increase last year followed a sharp fall of nearly $141bn in 2009 from a record high of around $1,027bn in 2008, when oil prices climbed to their highest average of nearly $95 a barrel. Real GDP also gained from higher oil prices, which allowed the six members to expand spending to mitigate the repercussions of the 2008 global fiscal distress, with growth surging to nearly 4.8 per cent in 2010 from only 0.7 per cent in 2009, according to SAMBA. “Real GDP growth in the GCC is estimated to have rebounded to 4.8 per cent in 2010 from 0.7 per cent in 2009. Sustained expansionary fiscal policies, supported by higher oil prices, helped spur faster growth in non-oil sectors although the recovery in private sector activity remained tentative,” it said. Growth was thus mainly driven by public spending accompanied by a rebound in the dominant oil sector following the decline in crude oil output in 2009 when OPEC quotas were slashed, the study said.
  • 6. 6 Although the global economy enters 2011 in a state of some uncertainty, the outlook for the GCC economies remains positive. Strong oil prices will sustain robust public spending and buoy confidence, while an easing of bank balance sheet strains, particularly in Saudi Arabia and Qatar, is expected to lead to a faster recycling of the region’s large oil surpluses. Overall the region’s real GDP growth is expected to accelerate to six per cent. A breakdown showed GDP growth in Saudi Arabia would be around 3.8 per cent in 2011 and 4.3 per cent in 2012 while it is projected in the UAE at about 2.2 and 3.3 per cent respectively. Growth was forecast at 2.5 and four per cent in Kuwait, 16 and 18.7 per cent in gas giant Qatar, 4.8 and five per cent in Oman and around four and five per cent in Bahrain. The International Monetary Fund in April last changed its 2011 projection for GCC growth to 7.8 per cent from 5.2 per cent, and said high oil prices would also boost the six-nation group’s current account surplus growth by 124 per cent to $304 billion. IMF said GCC’s growth would gain increased momentum from Qatar, growing at 20 per cent, and Saudi Arabia at 7.5 per cent. The UAE will grow by 3.3 per cent, the Fund said. Overall, GCC’s nominal GDP is estimated to reach $1.402 billion in 2011 from $1.075 billion in 2010. UAE’s nominal GDP is estimated to reach $363.8 billion in 2011 from $301.9 billion in 2010. Consumer price inflation in the GCC is forecast to soar by 5.3 per cent while its pace will be slower in the UAE at 4.5 per cent, the IMF said in its Regional Economic Outlook. Internet Usage and Conditions in the GCC Region Internet and the services it enables are deeply embedded in our modern society. Just around the turn of the century, it seemed that the development would stagnate, but shortly after the upward trend was resumed. During the year 2010, the number of Internet users in the world has exceeded 2 billion or nearly 30% of the world population. This represented an increase of over 450% compared to the year 2000. Internet  impacts  every  aspect  of  businesses  and  society.  Whether  we  check  the  weather  forecast  when  we  plan  to   go  out,  book  a  holiday,  purchase  a  digital  camera  or  renew  our  driver's  license,  the  Internet  provides  opportunities   for  information,  purchase  of  goods  and  provision  of  services. The following graph compares Internet usage in the region in 2010 (source: internetworldstats and ITU): Internet usage in the region has grown a staggering 1500% since the year 2000: from a mere 1.2 million back then to 18.7 million today.
  • 7. 7 Languages used on the Internet As to languages used on the Internet, English was and still is today the most widely used language. However other languages have come up strongly these past years. China has today the most Internet users. It is forecasted that the number will be over 550 million by the end of this year. Most web pages on the Internet are in English. The use of English online has increased by around 281% over the past ten years, however this is far less than Spanish (743%), Chinese (1,277%), Russian (1,826%) or Arabic, which language shows a growth of 2,501% over the same period. The foreign language Internet is rapidly expanding, with English being used by only 27% of users worldwide. The use of languages will rapidly change in the coming years because in many regions in the world other languages than English are rapidly coming up. 65 million users or around 3.3% used the Arab language in 2010, while the Arab language represents close to 19% of world languages. Therefore, we expect the use of the Arab language to grow substantially in the coming years, as Internet is deeper embedded in society. (see the graph hereunder provided by Internetworldstats):
  • 8. 8 e-Commerce and e-Services in the GCC region The Internet, e-Commerce and e-Business have been and still are a crucial driver for the (world) economy as was demonstrated in the past two, three years. Internet has become in many countries already the primary cornerstone for business and communication today. It is essential that the Internet is seen and proves to be secure, reliable and private. According to IMRG global B2C e-commerce sales in 2009 grew around 20% to an estimated $ 675 billion and that in a year of economic downturn. In 2010 global B2C e-sales reached $790 billion and 2011 looks extremely promising also: IMRG predicts global sales to pass the 1 trillion dollar mark and reach $1.1 trillion this year. B2C e-Commerce in the region is still in its early stages because of the barriers we have seen all over the world to the development of e-commerce: lack of trust, a cash-oriented society, relatively high costs involved, lack of secure payment facilities, delivery issues etc. But the future is bright for a strong growth of B2C e-commerce in the coming years as research and the initiatives mentioned hereafter will show. Recently a study was done by GoNabit, the first group-buying website in the region. The daily deal group-buying website partnered with independent research consultancy YouGovSiraj to capture e-shopper sentiment among its registered users in the UAE, Kuwait, Jordan and Lebanon. The study shows that end users are overwhelmingly positive towards online shopping in the region, but that group buying also serves as an entry point for consumers into e-commerce and online transactions. The findings signal a positive outlook for entrepreneurship in e-commerce with consumers’ propensity to spend online improving significantly. Respondents are overwhelmingly positive towards e-commerce (93% positive), despite the known and perceived problems in this region of security, availability and delivery. This suggests the market will continue to grow as these barriers are knocked down. Two thirds of consumers (66%) claimed that if it were cheaper to buy online they would buy more often. In addition, over half (56%) would buy more often if it were more convenient to purchase online. Exclusivity, ease of online transacting and a wider product range are secondary motivators for why people would choose to buy online more often. Research is also an important factor in online purchasing behaviour. The vast majority of people surveyed conduct research before buying a product online (94%). The most popular sources for this information are review websites (73%), which are used more than friends and family ‘in the know’ (64%). Deal websites (54%) and consumer forum websites (49%) are also important research tools, in addition to manufacturers’ websites, which are used by 56% of males. Word of mouth also remains a powerful influencer of online purchases with 77% having bought online after a recommendation from a friend. Meanwhile, 89% of respondents have recommended an online deal to friends and family through word of mouth. The study is one of the first attitudinal studies in the area, an initiative we fully support. The results show that in spite of local habits and attitudes the overall attitude to embracing new technologies, to purchase online both B2C and C2C with marketplaces like souq.com, to use social networks, comparison sites, word-of mouth etc. is comparable with global trends. In September 2011 Google unveiled plans to be developed later this year to get (small) businessesonline, starting in Saudi Arabia, with plans to expand throughout the region. According to Google, only 15% of businesses in the Middle Eastern Gulf region have an online presence, and the newest program plans to do something about it. The initiative offers to develop websites for free for Saudi Arabia’s SMEs (Small and Medium-sized Enterprises), as well as offering one-on-one mentoring in how to turn that online presence into a profit. While large corporations and businesses throughout the Middle East have a strong online presence, smaller businesses have shown a reluctance to follow in their footsteps, and Saudi Arabia has been no exception. Google’ Regional Manager for MENA, Ari Kesisoglu, describes the program as Online Presence 101, adding, “We want to help businesses get online. It’s to make it extremely easy, and to give them some financial benefits so that it’s cheaper than doing it in the normal way.” He goes on to say, ”The idea is that we want to help businesses get online. We want to make it extremely easy for businesses. E-commerce is just in its infancy in the GCC.” Kesisoglu doesn’t see this as a drawback, adding, ”This is not really discouraging, because every single country goes through the same phase.” The initiative comes hot on the heels of a similar project that has launched in the
  • 9. 9 UK and other countries in the world such as Belgium and Australia. Google UK launched “Getting British Business Online” just a few days earlier starting in Liverpool, where the company aims to help 1,500 UK businesses, using the same tools and methods. The Aramex REDe solution enabling business to sell online, offering the MartJack platform to build an online store, and manage orders and payments, securely integrated with Aramex’s delivery solutions and services. With REDe, companies can design their storefronts, update online catalogues, manage orders and payments securely and ship products on time to their customers with Aramex. In 2009 Saudi Post introduced its Internet shopping mall, E-Mall, offering an online platform to help Saudi Arabia’s merchants get into online retail, while also helping to build package volumes for the Post’s delivery services. The E-Mall includes a variety of individual online stores, an electronic payment system and integrated doorstep delivery. Saudi Post has now made its E-Mall accessible through mobile smart phones, with a special iPhone application. Available to Saudi consumers from the iTunes App Store, the E-Mall app allows browsing of the site and completion of the purchase process.
  • 10. 10 e-Government Initiatives Particularly important for further adoption of Internet use and offering e-services are the various e-government initiatives in the region: * The Dubai e-government initiative to provide government services to citizens, residents and visitors (G2C), to businesses (G2B), to other government entities (G2G) and to government employees (G2E), using multiple channels, in line with its vision of easing the lives of people and businesses interacting with the Government. The central ePay gateway of Dubai e-Government enables customers to settle the fees of government services online on a 24/7 basis in a secure environment. More than 25 service providers in the UAE with around 140 online services offer ePay for their customers. These services include Traffic fines enquiry & payment, Pay DEWA electricity, top up one’s Salik (road users fee) credit or pay for parking fines. Online payment services can also be used for the transactions of Dubai Municipality and the services of Dubai Airport, Department of Economic Development, Dubai Health Authority and Dubai Chamber and paying Zakat (money paid to support other people) online. Also, paying online for educational and professional courses through Dubai e-Government’s e-Learn Platform as well as for courses of the Hamdan Bin Mohammed e-University. * The Bahrain Central Informatics Organisation (CIO), developing computer programs, improved data networks, the smart card securely storing information of the holder and a portal to e-government services. * In Kuwait over the past two years there have been continued e-project implementation by various Kuwaiti state organisations, such as the social welfare ministry allowing online submission of forms and email notifications, the New Technology Infrastructure Project aiming to raise the level of IT utilisation in schools etc. These and other e- government initiatives will boost the use of Internet in the country. * eOman, Oman’s e-Governance initiative, to create a Knowledge Society in Oman. Spearheaded by the Information Technology Authority (ITA) which is affiliated to the Minister of National Economy (MoNE), eOman aims to create an effective government-community-citizen infrastructure that provides better public services to people, resulting in improved interactivity and information flow between government and citizens. * Qatar’s National ICT Plan 2015, aiming to improve connectivity, to boost capacity, to foster economic development, to enhance public service delivery and to advance social benefits. The e-Learning Portal is dedicated to share knowledge, educate the citizens and to strengthen the economy. Etisalat – Dubai GTO Telecom – Muscat Qtel Headquarters - Doha
  • 11. 11 * The Saudi e-Government Portal is the central Saudi Arabian government portal through which not only citizens, residents, businesses and visitors but also other government organisations and businesses can access e-Government services online. This approach has been chosen as the best way to enable efficient government services. It also makes e-Services accessible anytime from anywhere through the Internet. Broad e-Service accessibility is achieved by providing e-Services via the portal either by integrating with other government agencies or through links to their websites. The site also offers an e-Payment services through the SADAD Payment system. * In the United Arab Emirates the Telecommunications Authority was designated to create the environment and to promote e-commerce. All the above mentioned private and government initiatives will contribute to the further development of e-services in the region: e-government, e-education and not in the least e- commerce. Two other positive factors need to be mentioned here i.e. the relative young median age of the population in the region, ranging from 24 years in Oman to 31 years in Bahrain and Qatar and the fact that this young population is highly educated. These positive factors will contribute to the further and faster adoption of digital media and devices: e-services, e-commerce using mobile internet, the latest models smart phones and social networks. For further growth of e-commerce in the region it is essential: 1) To provide consistent data through research concerning the further development of Internet usage and adoption of e-commerce and e-services in the region; 2) To attract international and local investors to this highly interesting and fast developing market in order to expand the range of goods and services offered; 3) To increase the overall trust and confidence in using the web; 4) To demonstrate the commercial opportunities and promote initiatives to develop new websites especially domestic ones 5) Increase methods of payment in particular debit cards to be unblocked for B2C e-commerce
  • 12. 12 Retail in the GCC region Grand malls, vibrant shopping festivals, bargain shopping fairs, international supermarkets and traditional souks. These consumer playgrounds are synonymous with the capitals of the GCC, culturally and economically, and have produced a retail sector that's growing faster than any other market in the Middle East region. t is expected that the Middle East retail industry will reach $682 billion by 2013, growing at a compound annual rate of around 13 percent during 2009- 2013, according to a report by research firm rncos. The total current value of the retail sector in the Middle East is around $425 billion. According to the report, the GCC is witnessing many positive trends in consumer demand, a continuing growth in tourism, regional coordination and market access. The factors strengthening the region's retail industry include changing market dynamics, rapid economic development, higher crude oil prices, and strong consumer confidence. On the 2011 Global Retail Development Index of A.T. Kearney, mapping the most interesting countries for retail development, three of the six GCC countries are in the top ten: Kuwait (5), Saudi Arabia (7) and UAE (9). According to Kearney greater opportunities for women to learn and earn are making several Arab economies increasingly attractive markets for fashion retailers. This also opens opportunities for online as fashion is high on the list of most purchased goods. Waterfall at Dubai Mall with Diving Statues Conclusion All the above mentioned private and government initiatives and plans as well as the trends we indicated, together with a growing economy and high disposable incomes, will strongly increase the further penetration and usage of Internet and consequently enable and further online shopping. Therefore IMRG anticipates that B2C e-commerce sales will almost triple in the coming years with a year-on-year growth of around 30 to 35% and reach close to $15 billion in 2015.
  • 13. 13 THE KINGDOM OF BAHRAIN Bahrain in Brief Bahrain or Bahrein, officially Kingdom of Bahrain (Mamlakah al-Bahrain in Arabic), comprises 33 islands on the western side of the Persian Gulf. The main island, also called Bahrain, lies 24 km (15 mi) east of Saudi Arabia and 29 km (18 mi) west of Qatar. The capital and largest city of Bahrain is Manama, with a population of approximately 160,000. The climate is hot and humid from May-September, with average highs ranging from 30 - 40 C. Maximum temperatures average 20 - 30 C the remainder of the year. Population: 1,235,000 Area: 758 sq km Men: 60.6% Capital: Manama (162,000) Women: 39.4% Language: Arabic Retail Sales: $5.4bn (2010 – e) Currency: Bahraini Dinar B2C e-sales: $175mn (2010 - e) Internet : .bh Internet Users: 649,000 ICT Development: # 33 (159) Telephones: 37.7 per 100 Logistics Index: # 32 (155) Mobile: 124.2 per 100 Ease of Business: # 28(183) Dialling Code: +973 e-Readiness: # 30 (138) e-Government: # 13 (192) Internet and e-Commerce in Bahrain The total size of the Bahrain IT market in 2010 is estimated by BMI at nearly US$314mn, up from US$280mn in 2009. BMI expects a market compound annual growth rate (CAGR) of 7% for 2010- 2015. The IT market was expected to pick up in 2010 following a weaker 2009, when lower oil prices, economic uncertainty and tighter credit conditions led to an IT market slowdown. There should still be significant opportunities going forward. Bahrain is becoming an important regional financial hub and there should be substantial spending in this sector. Economic reform and trade liberalisation will fuel spending by public sector organisations and private enterprises to bring their IT levels up to international standards. The country will benefit from trade liberalisation, strong demand from the financial sector, e-government and broadband. Industry Developments In 2009, the Bahraini government started work on a 2011-2014 e- government strategy. The new three-year plan was unveiled in 2010 with approval in time for implementation in 2011. Bahrain’s e- Government Authority (eGA) worked with US networking giant Cisco to develop the plan. The eGA continued to work towards implementation of targets, with the number of cyber services to be increased to 130 in 2009 and 200 by 2010. Three new portals for Bahrain gate, mobile phones and public services were also launched. In 2009, the government cited a study showing 85% satisfaction with its e-government strategy. There was more innovation in the area of e-government in 2009. The High Information and Telecommunications Committee (HITC) announced plans to set up a company to help streamline government services. The National Portal also received an infrastructure upgrade, which increased its capacity tenfold and resulted in a more unified platform. Bahrain has among the highest penetration levels for Internet and telephony of all Arab countries, alongside Qatar. Fees for Internet access have fallen in the past two years, providing a boost to uptake. Bateleco’s 3-5 year BHD21mn ‘Broadband Bahrain’ programme, providing national high-speed access to individuals and corporate users, should also drive adoption of broadband services. Bahrain moved up in the World Economic Forum’s respected Network Readiness Index 2010/2011 to 30th place. Bahrain was third in the region behind the UAE and Qatar. It also rates quite highly in regional rankings for e-government development. With the resulting increase in the number of citizens using e-government services to interact
  • 14. 14 with government departments, the Central Informatics Organisation (CIO) is implementing a training programme to improve the e-literacy of civil servants. The government also claimed to be the first in the Middle East to adopt open standards for its e-government initiatives. With respect to the volume of e-commerce, back in 2002 Ernst & Young did a study on different aspects of e- commerce. The estimate for 2002 amounted to USD 15 million for B2C transactions, doubling to 30 million in 2005. Taking these figures into account as well as the growing number of Internet users IMRG estimates that the B2C volume might be estimated to have reached $175 million last year. According to the ITU the number of Internet users in 2010 was 55 per 100 inhabitants, up around 800% since 2000. Economy of Bahrain In the Middle East, Bahrain has earned the rank of being the most economically progressive country in the Middle East and North Africa area. The Heritage Foundation ranks it worldwide as the 10th freest economy. This economic growth has come about due to the simple administrative and legal systems that have aided the industrialization of Bahrain. There are many incentives offered to investors not the least of which is 100% ownership for certain categories of business. There are no taxing complications because there are no personal, corporate, or withholding taxes applicable to a Bahrain business. Furthermore, there is no sales tax or VAT for goods or services. This economic growth has resulted in a controlled and low rate of inflation over the years that many investors find attractive. The location of Bahrain puts every business in potential contact with over 100 million people that comprise an instant market. This is made possible through the King Fahd Causeway that links Bahrain and Saudi Arabia. Starting a Bahrain business can be done in as little as 7 days. Running a business is also relatively easier in Bahrain because of its multi-lingual labour force that typically operates at a mere 1/3 the cost of other industrial economies. According to UK Trade and Investment (UKTI) the strengths of the Bahraini market are: * The operational costs are amongst the most competitive in the region * Bahrain is strategically located in the Northern Gulf with good communication links into Saudi Arabia and beyond * Bahrain is recognised as having strong and effective regulation in Financial Services and other sectors * Bahrain has the most educated and skilled workforce in the Gulf * Bahrain has the longest track record in business in the region * Bahrain ranks highly for quality of life for expatriates GDP Per Capita in Purchasing Power Parity (USD - IMF)
  • 15. 15 KEY ECONOMIC INDICATORS including Population In 2010, Bahrain's population grew to 1.235 million, of which more than 54% were non-nationals, up from. Though a majority of the population is ethnically Arab, a sizable number of people from South Asia live in the country. In 2008, approximately 290,000 Indian nationals lived in Bahrain, making them the single largest expatriate community in the country. Hereunder the estimated average population in each year: 2007 2008   2009   2010   2011  (f)   1,039,296 1,106,509 1,178,415 1,234,710 1,290,000 Currency   The dinar (Arabic: Dīnār Baḥrainī) (sign: .BD; code: BHD) is the currency of Bahrain. It is divided into 1000 fils. The name dinar derives from the Roman denarius. The dinar was introduced in 1965, replacing the Gulf rupee at a rate of 10 rupees = 1 dinar. The Bahraini dinar is abbreviated . . (Arabic) or BD (Latin). It is usually represented with three decimal places denoting the fils. In December 1980, the dinar was officially pegged to the IMF's Special Drawing Rights (SDRs). In practice, it is fixed at 1 U.S. dollar = BD 0.376, which translates to approximately 1 dinar = 2.65957 dollars and, consequently, almost 10 Saudi Arabian Riyals. This rate was made official in 2001. Before Malta's adoption of the euro on 1 January 2008, it was the third highest-valued currency unit after the Kuwaiti dinar and Maltese lira. After Malta adopted the Euro, the Bahraini dinar became the second highest-valued currency unit. In this study the amounts are indicated in Dinar (BHD) and in US dollar USD). Hereunder the average rate of exchange of the Dinar against the US dollar and the Euro in the last years and a forecast for 2011:   2008 2009 2010 2011 (f) US Dollar 2.65957 2.65957 2.65957 2.65957 Euro 1,8083 1.9068 2.0062 1.8812     Gross Domestic Product (GDP) Bahrain's economy continues to depend heavily on oil. Petroleum production and refining account for more than 60% of Bahrain's export receipts, 70% of government revenues, and 11% of GDP (exclusive of allied industries). Other major economic activities are production of aluminium - Bahrain's second biggest export after oil - finance, and construction. Bahrain competes with Malaysia as a worldwide centre for Islamic banking and continues to seek new natural gas supplies as feedstock to support its expanding petrochemical and aluminium industries. Unemployment, especially among the young, is a long-term economic problem Bahrain struggles to address. In 2009, to help lower unemployment among Bahraini nationals, Bahrain reduced sponsorship for expatriate workers, increasing the costs of employing foreign labour. 2008   2009   2010   2011  (f)   2012  (f)   Bn  BHD   8.329   7.264   8.520   9.960   10.645   Real  Percentage   Change   6.3%   3.1   4.1%   3.1%   5.1%   Bn  USD   22.1   19.3   22.7   26.5   28.3   USD  per  capita   28,416   18,589   20,475   23,465   24,586   Idem  PPP   34,869   27,214   26,852   27,433   28,658  
  • 16. 16 Inflation - Consumer Price Index Due to the diversification of its economy, Bahrain's inflation will likely remain the lowest in the Gulf, but upward pressures may push it far beyond recent expectations. Hereunder the percentage change at the end of each year: 2008   2009   2010   2011  (f)   2012  (f)   5.1%   2.8%   2.0%   2.7%   2.5%   Retail Sales BMI’s Bahrain Retail Report forecasts that the country’s retail sales will grow around 10% year on year until 2014. Key factors behind the forecast growth in Bahrain’s retail sales are an improving long-term economic outlook, growing interest in Western styles of retailing and a steady rise in disposable income. Retail sub-sectors that are predicted to show strong growth over the forecast period include automotives, with sales forecast to rise by more than 16% during the forecast period. High-end autos sector seems to be withstanding the economic downturn and showing signs of increasing sales as more stable economic market conditions return. With the Bahraini consumer electronics market well positioned to function as an electronics- trading hub, particularly between India and the Far East, sales are predicted to increase from US$0.43bn in 2010 to US$0.52bn by the end of the forecast period, a rise of nearly 21%. BIIC Tower - Manama
  • 17. 17 Country Profile and History Bahrain has a very interesting history. It became a human settlement long back in the past. The gulf country of Bahrain has been a preferred kingdom for various ruling powers in history. Bahrain has even been considered as the appropriate place to call the Biblical Garden of Eden. Bahrain entered recorded history about 5,000 years ago as a commercial trading centre. The site of the ancient Bronze Age civilization of Dilmun, Bahrain was an important centre linking trade routes between Mesopotamia and the Indus Valley as early as 5,000 years ago. The Dilmun civilization began to decline about 2,000 B.C. as trade from India was cut off. From 750 B.C. on, Assyrian kings repeatedly claimed sovereignty over the islands. Shortly after 600 B.C., Dilmun was formally incorporated into the new Babylonian empire. Long under the influence of more powerful neighbours, it came under the domination of Iran in the 17th century. The al-Khalifa family, originating from the central Arabian Peninsula, established themselves as Bahrain’s rulers in 1783 and has ruled ever since. A series of treaties in the 19th century gave Britain control over Bahrain’s defence and foreign affairs. Dominant British influence lasted until Bahrain became independent in 1971. In 1968, when the British Government announced its decision (reaffirmed in March 1971) to end the treaty relationships with the Persian Gulf sheikdoms, Bahrain initially joined the other eight states (Qatar and the seven Trucial Sheikhdoms now the United Arab Emirates) under British protection in an effort to form a union of Arab emirates. Sheikh Hamad bin Isa Al Khalifa acceded to the throne in March 1999, after the death of his father Sheikh Isa bin Hamad Al Khalifa, Bahrain's ruler since 1961. He championed a program of democratic reform shortly after his accession. In November 2000, Sheikh Hamad established a committee to create a blueprint to transform Bahrain from a hereditary emirate to a constitutional monarchy within 2 years. The resulting "National Action Charter" was presented to the Bahraini public in a referendum in February 2001. In the first comprehensive public vote in Bahrain since the 1970s, 94.8% of voters overwhelmingly endorsed the charter. In February and March 2011, Bahrain experienced a period of civil unrest inspired in part by recent revolutions in Egypt and Tunisia and in part by local dissatisfaction with government policies. Bahraini security forces moved quickly to restore order. Bahrain hosted military forces from Saudi Arabia, U.A.E., and Kuwait under the aegis of the GCC Peninsula Shield Force to secure critical infrastructure while Bahraini security forces contained unrest. An ongoing National Dialogue seeks to address political grievances between political societies, civil society groups, and the government to prevent further instances of unrest. More than 60 percent of Bahrain’s population is native-born, in contrast to the populations of the other Persian Gulf states of Kuwait, Qatar, and the United Arab Emirates, where foreign-born inhabitants outnumber the native population. Bahrain also contrasts with its neighbours in that Shias (the major sectarian movement of Islam) outnumber Sunnis (who form the vast majority of Muslims worldwide). In the 1930s Bahrain became the first Arab state in the Persian Gulf region to develop an oil-based economy, but its modest petroleum reserves have caused it to diversify into various manufacturing and service areas.
  • 18. 18 THE STATE OF KUWAIT Kuwait in Brief The State of Kuwait (Arabic: Dawlat al-Kuwayt) is a sovereign Arab nation situated in the north- east of the Arabian Peninsula in Western Asia. It is bordered by Saudi Arabia to the south at Khafji, and Iraq to the north at Basra. It lies on the north-western shore of the Persian Gulf. The name Kuwait is derived from the Arabic "akwat", the plural of "kout", meaning, “fortress built near water”. The Emirate covers an area of 17,820 square kilometres (6,880 sq mi) and has a population of about 3.7 million. Kuwait has a dry desert climate with intensely hot summers and short, cool winters. Population: 3,607,800 (Q1 2011) Area: 17,808 sq. km. Men: 58.8% Capital: Kuwait City Women: 42.2 % Language: Arabic B2C e-sales: $280mn (2010 - e) Currency: Kuwaiti Dinar Retail Sales: $46bn (2010 - e) Internet : .kw Internet Users: 1,100,000 ICT Development: #65 (159) Telephones: 20.7 per 100 Logistics Index: #36 (155) Mobile: 160.8 per 100 Ease of Business: #74 (183) Dialling Code: +965 e-Readiness: # 75 (138) e-Government: # 50 (192) Internet and e-Commerce in Kuwait Kuwait, the third-largest computer market in the Gulf, made a recovery in 2010 from the economic slowdown, and local IT spending is expected by BMI to reach around US$846mn in 2011. The market should continue to provide opportunities for IT vendors with drivers including government projects, population growth, and strong demand from the oil and gas sector. BMI projects a 2011-2015 IT spending compound annual growth rate (CAGR) of 7%. Kuwait's IT market has a number of enduring strengths, including its relatively small but tech-literate and wealthy population, which make the country an important regional testing ground for new products. Kuwait is one of the most advanced technological markets in the Gulf, but high subscription costs continue to restrict Internet penetration. Growth in the numbers of broadband subscribers has been stronger, but numbers are still very low. Competition is limited in the supply of broadband services and thus prices have remained high, deterring many potential subscribers. The government hopes to drive IT development with its broadband access initiative. Alcatel was chosen by Kuwait's State Ministry of Communications to supply a gigabit passive optical network (GPON) solution that will serve about 60% of access areas involved in the ministry's present rollout. The ministry's access network is gradually being upgraded by replacing the existing copper access with a passive optical fibre infrastructure. E-business is still in its infancy in Kuwait and the use of electronic marketplaces is still very limited. Compared to neighbouring countries, the Kuwaiti government takes a liberal attitude towards the use of the Internet. There is as yet no specific legislation in the field of e-business. Young people in Kuwait constitute both the highest concentration of Internet users (estimated to be approximately 63% of all Internet users in Kuwait) and the largest sector of Kuwaiti society. As in other countries in the region B2C e-commerce is still in its early stages but the future is bright as we explained in the General Overview here above. The GCC e-commerce study of Ernst & Young back in 2002 estimated B2C e-commerce to be around $27 million to double in 2005. Based on these figures and given the relatively low penetration of e-commerce, total B2C
  • 19. 19 e-commerce volume is estimated to have reached $280 million in 2010, set to triple in the coming years for the reasons explained in the General Overview. Economy of Kuwait Kuwait is a small, relatively open economy with proven crude oil reserves of about 96 billion barrels, about 9% of world reserves. Petroleum accounts for nearly half of GDP, 90% of export revenues, and 95% of government income. Kuwait lacks water and has practically no arable land, thus preventing development of agriculture. About 75% of potable water must be distilled or imported. Higher oil prices reduced the budget deficit from $5.5 billion to $3 billion in 1999, and prices are expected to remain relatively strong throughout 2000. The government is proceeding slowly with reforms. It inaugurated Kuwait's first free-trade zone in 1999 and will continue discussions with foreign oil companies to develop fields in the northern part of the country. The government in May 2010 passed a privatization bill that allows the government to sell assets to private investors, and in January passed an economic development plan that pledges to spend up to $130 billion in five years to diversify the economy away from oil, attract more investment, and boost private sector participation in the economy. Increasing government expenditures by so large an amount during the planned time frame may be difficult to accomplish. Kuwait is one of the richest countries in the Muslim world. Current GDP per capita reached astonishing peak growth of 439% in the 1970s. But this proved unsustainable and contracted by 58% in the 1980s. However rising global oil demand helped register growth of 91% in the 1990s. Diversification is a long-term issue for this over- exposed economy. GDP Per Capita in Purchasing Power Parity (USD - IMF) KEY ECONOMIC INDICATORS, including Population More that 60% of the total population of Kuwait is made up of foreign inhabitants. There are a number of factors that have resulted in the increase of foreigners in the Kuwait population. The main reasons are: * The local population of Kuwait remained low * Limited availability of indigenous women workers * With the achievement of greater economical development in Kuwait, the availability of lucrative jobs increased, which attracted an ever-larger number of foreign workers. Hereunder the estimated average population in each year (Central Bank/Public Authority for Civil Information):
  • 20. 20 2007 2008 2009 2010 2011 (f) 3,399,600 3,441,800 3,484,900 3,582,100 3,660,000 Currency The dinar was introduced in 1961 to replace the Gulf rupee. It was initially equivalent to one-pound sterling. As the rupee was fixed at 1 shilling 6 pence, this resulted in a conversion rate of 13⅓ rupees to the dinar. When Iraq invaded Kuwait in 1990, the Iraqi dinar replaced the Kuwaiti dinar as the currency and the invading forces stole large quantities of banknotes. After liberation, the Kuwaiti dinar was restored as the country's currency and a new banknote series was introduced, allowing the previous notes, including those stolen, to be demonetized. From March 18, 1975 to January 4, 2003 the dinar was pegged to a weighted currency basket. From January 5, 2003 until May 20, 2007, the pegging was switched to 1 U.S. dollar = 0.29963 dinar with margins of ±3.5%. The central rate translates to approximately 1 dinar = 3.33745 dollars. From June 16, 2007, the Kuwaiti dinar was re-pegged to a basket of currencies, and is now worth about US$3.45 (€2.37). The Kuwaiti Dinar (KWD) is the world's highest-valued currency unit. Gross Domestic Product (GDP - forecast IMF)   2008 2009 2010 2011 (f) 2012 (f) Bn KWD 40.0 31.5 37.8 48.6 52.2 Real Percentage Change 5.0% -5.2% 2.0% 5.3% 5.1% Bn USD 148.7 109.5 131.3 172.8 186.5 USD per capita 43,213 30,960 36,412 46,970 49,439 Idem PPP 40,254 37,503 37,849 39,498 41,277     Inflation - Consumer Price Index Kuwait’s annual inflation slowed to a ten-month low of 5 percent in June 2011 helped by a fall in food prices, but generous government spending is expected to keep levels above those of neighbours this year. Inflation in the world’s fourth-largest oil exporter has been hovering above 5 percent since the beginning of this year, well below double-digit levels seen in 2008. Percentage change at the end of each year (forecast IMF):   2008 2009 2010 2011 (f) 2012 (f) 9.0% 1.2% 4.1% 6.1% 2.7%   Retail Sales Kuwait’s retail sales will grow from US$42.64bn in 2009 to US$59.27bn by 2014. Key factors behind the forecast growth in Kuwait’s retail sales are a favourable long-term economic outlook, a sophisticated consumer base and high levels of disposable income. Approximately 80% of the Kuwaiti population are expatriates, while foreign workers crossing the border from Iraq also stimulate the retail market. In 2005, the UN as economically active described 73.8% of the Kuwaiti population, with 37.9% in the 20-44 age range important to retail sales. In 2010, an estimated 74.6% of the population was active, while the proportion of those in the 20-44-age range reached an estimated 39.4%. A very high level of urbanisation is also contributing to a vibrant retail sector. In 2005, the UN as urban classified more than 96% of the population, and this is forecast to increase to almost 99% by 2015. According to Arabianbusiness.com, the end of 2010 estimated the gross leasable area in Kuwait’s retail sector to stand at
  • 21. 21 1.15mn m2, compared with the 345,000m2 in use in 2006. Property consultancy Colliers International expected Kuwait to have the third largest supply of retail space in the Gulf by 2010. According to BMI data, retail sub-sectors that are predicted to show strong growth over the forecast period include consumer electronics as youthful population demographics, a regional economic boom and a buoyant real estate sector all drive growth According to BMI data, retail sub-sectors that are predicted to show strong growth over the forecast period include consumer electronics as youthful population demographics, a regional economic boom and a buoyant real estate sector all drive growth. Sales are forecast to increase 25%, from an expected US$752mn in 2011 to US$941mn by 2015. High per-capita income is also likely to mean vehicle sales increase by nearly 20% over the forecast period, from an expected 125,095 units in 2011 to 147,619 units by 2015, with strong demand for high-end passenger cars. Overall food sales in 2011 will represent 31.2% of total retail sales. This proportion is forecast to fall to 26.0% of retail sales by 2015, but value sales will increase between 15 and 20%. The mass grocery retail (MGR) sector is forecasted to represent 50.8% of overall food sales. With a large and high-spending expatriate population and domestic consumers susceptible to Western consumer trends, MGR will increase to a 52.9% share of the food market. (Source: BMI Quarterly Retail Reports) Kuwait Towers – Kuwait City
  • 22. 22 Country profile and History Kuwait is believed to have been part of an early civilization in the 3rd millennium B.C. and to have traded with Mesopotamian cities. Archaeological and historical traces disappeared around the first millennium B.C. At the beginning of the 18th century, the 'Anizah tribe of central Arabia founded Kuwait City, which became autonomous sheikdom by 1756. 'Abd Rahim of the al- Sabah became the first sheik, and his descendants continue to rule Kuwait today. In the late 18th and early 19th centuries, the sheikdom belonged to the fringes of the Ottoman Empire. Oil was discovered in Kuwait in the 1930s, and proved to have 20% of the world's known oil resources. Since 1946 it has been the world's second-largest oil exporter. The sheik, who receives half of the profits, devotes most of them to the education, welfare, and modernization of his kingdom. In 1966, Sheik Sabah designated a relative, Jaber al-Ahmad al-Sabah, as his successor. By 1968, the sheikdom had established a model welfare state, and it sought to establish dominance among the sheikdoms and emirates of the Persian Gulf. In July 1990, Iraqi president Saddam Hussein blamed Kuwait for falling oil prices. After a failed Arab mediation attempt to solve the dispute peacefully, Iraq invaded Kuwait on Aug. 2, 1990, set up a pro-Iraqi provisional government, and drained Kuwait of its economic resources. A coalition of Arab and Western military forces drove Iraqi troops from Kuwait in a mere four days, from Feb. 23–27, 1991, ending the Persian Gulf War. The emir returned to his country from Saudi Arabia in mid-March. Martial law, in effect since the end of the Gulf War, ended in late June. The U.S. sent 2,400 troops to the country in Aug. 1992, ostensibly as part of a training exercise, though it was widely interpreted as a show of strength to Saddam Hussein. Iraqi “training” manoeuvres near the Kuwaiti border in Oct. 1994 renewed fears of aggression in the country. A Kuwaiti appeal brought the quick deployment of U.S. and British troops and equipment. In 1999, the emir gave women the right to vote and run for parliament, but later that year Parliament defeated the ruler's decree. Kuwaiti society has grown increasingly conservative under the influence of Islamic fundamentalists. In 2003, traditionalists won a sweeping victory in parliamentary elections. The emir and crown prince (who served as prime minister) were elderly and ailing; in July 2003, the country's de facto leader, foreign minister Sheik Sabah, replaced the crown prince as prime minister. In May 2005, Kuwait abandoned its 1999 ban on women's suffrage, and in June a woman was appointed to the cabinet. In April 2006, women voted for the first time. In May 2009, three women are elected to parliament, becoming Kuwait's first female MPs. In October, court rulings further expand the rights of women, allowing them to get passports without the approval of their husbands and not requiring women MPs to wear Islamic headscarves. In March 2011, the cabinet of Prime Minister Al Sabah resigned. Two months later, Emir Sheik Sabah approved a new government, which included six new ministers.
  • 23. 23 THE SULTANATE OF OMAN Oman in Brief Oman, officially called the Sultanate of Oman (Arabic: Salṭanat ʻUmān), is located in southwest Asia on the southeast coast of the Arabian Peninsula. Oman is bordered by the United Arab Emirates (UAE) to the northwest, Saudi Arabia to the west, and Yemen to the southwest. The coast is formed by the Arabian Sea on the southeast and the Gulf of Oman on the northeast. The Madha and Musandam enclaves are surrounded by the UAE on their land borders, with the Strait of Hormuz and Gulf of Oman forming Musandam's coastal boundaries. The climate of Oman can be described as subtropical dry, hot desert climate with low annual rainfall, very high temperatures in summer and a big difference between maximum and minimum temperatures, especially in the inland areas. In November 2010 the United Nations Development Programme (UNDP) listed Oman as the most-improved nation over the last 40 years from among 135 countries worldwide. According to international indices, Oman is one of the most developed and stable countries in the region. Population: 2,981,000 Area: 309,500 sq km Men: 55 % Capital: Muscat (797,000) Women: 45 % Language: Arabic B2C e-sales: $70mn Currency: Omani Rial (OMR) Retail Sales: $18bn (2010 - e) Internet Domain: .om Internet Users: 1,866,000 ICT Development: # 71 (159) Telephones: 9.5 per 100 e-Government: # 82 (192) Mobile: 154.5 per 100 Ease of Business: # 57 (183) Dialling Code: +968 Logistics Index: # 60 (155) Network Readiness: # 41 (138) Internet and e-Commerce in Oman An important initiative is the eOman, Oman’s e-Governance initiative, which aims to create a Knowledge Society in Oman. Spearheaded by the Information Technology Authority (ITA) which is affiliated to the Minister of National Economy (MoNE), eOman aims to create an effective government-community-citizen infrastructure that provides better public services to people, resulting in a meaningful information flow between the government and citizens. This and other initiatives will enable further penetration of the Internet and consequently further e-commerce. The relative low volume will grow under the influence of a booming economy, high disposable income, retailers offering a multi-channel offer especially fashion, consumer electronics and the like. Total e-commerce volume was still rather low in 2010 but will exponentially grow in the coming years taken the considerations we mentioned earlier in this report. According to ITU the number of Internet users has increased from 3.52 per hundred inhabitants to 62.6 per hundred or a growth of over 1600% since 2000. Economy of Oman Oman's economic performance improved significantly in 1999 due largely to the mid-year upturn in oil prices. The government is moving ahead with privatization of its utilities, the development of a body of commercial law to facilitate foreign investment, and increased budgetary outlays.
  • 24. 24 Oman  liberalized  its  markets  in  an  effort  to  accede  to  the  World  Trade  Organization  (WTO)  and  gained  membership   in  2000.   When  Oman  declined  as  an  entrepot  for  arms  and  slaves  in  the  mid-­‐19th  century,  much  of  its  former  prosperity  was   lost,   and   the   economy   turned   almost   exclusively   to   agriculture,   camel   and   goat   herding,   fishing,   and   traditional   handicrafts.     Today,  oil  fuels  the  economy  and  revenues  from  petroleum  products  have  enabled  Oman's  dramatic  development   over  the  past  30  years.   Oil  was  first  discovered  in  the  interior  near  Fahud  in  the  western  desert  in  1964.  Petroleum  Development  Oman   (PDO)  began  production  in  August  1967.  The  Omani  Government  owns  60%  of  PDO,  and  foreign  interests  own  40%   (Royal  Dutch  Shell  owns  34%;  the  remaining  6%  is  owned  by  Compagnie  Francaise  des  Petroles  (Total)  and  Partex).     Oman  does  not  have  the  immense  oil  resources  of  some  of  its  neighbours.  Nevertheless,  in  recent  years,  it  has  found   more  oil  than  it  has  produced,  and  total  proven  reserves  rose  to  more  than  5  billion  barrels  (0.8  km³)  by  the  mid-­‐ 1990s.  Oman's  complex  geology  makes  exploration  and  production  an  expensive  challenge.  Recent  improvements  in   technology,  however,  have  enhanced  recovery.                                                            GDP Per Capita in Purchasing Power Parity (USD - IMF)     Agriculture and fishing are the traditional way of life in Oman. Dates and limes, grown extensively in the Batinah coastal plain and the highlands, make up most of the country's agricultural exports. Coconut palms, wheat, and bananas also are grown, and cattle are raised in Dhofar. The Omani economy witnessed significant turnaround in GDP growth in 2010, mostly driven by recovery in crude oil prices in the international markets. Sustained domestic demand, supported by accommodative fiscal and monetary policies, also contributed to the economic recovery amidst global uncertainties. The Sultanate’s Gross Domestic Product (GDP) at current prices increased by 23.4 percent during 2010 in contrast to a decline of 22.6 percent in the previous year. According to the Oxford Business Group the Sultanate’s development model is somewhat different than its neighbours. Oman is more relying on high-quality infrastructure, connectivity, skills and its location to compete and develop new industries. Manufacturing has continued to see growth despite the global recession. The value of non-oil merchandise exports rose from OR502.5m ($1.31bn) to OR785.4 ($2.05bn) between 2009 and 2010. Early 2011 Oman launched its eighth five-year plan investing RO30 billion ($78bn), underlining that the goal would be to achieve an annual growth rate of at least three per cent at constant prices and curtailing inflation. The top priority areas will be economic diversification, stimulating the private sector, human resources development and creation of some 250,000 jobs for nationals.   KEY  ECONOMIC  INDICATORS,  including     Population About 50% of the Oman population live in the capital Muscat and the Batinah coastal plain northwest of the
  • 25. 25 capital. About 200,000 live in the Dhofar (southern) region and about 30,000 live in the remote Musandam Peninsula on the Strait of Hormuz. Some 600,000 expatriates live in Oman, most of whom are guest workers from India, Pakistan, Bangladesh, Morocco, Jordan, and the Philippines. Hereunder the estimated average population in each year:   2007   2008   2009   2010   2011  (f)   2,726,000 2,785,000 2,883,000 2,981,000 3,083,000   Currency The Rial (ISO 4217 code OMR) is the currency of Oman. It is divided into 1000 baisa (also written baiza. From 1973 to 1986, the rial was pegged to U.S. dollar at 1 rial = 2.895 dollars. In 1986, the rate was changed to 1 rial = 2.6008 dollars, which translates to approximately 1 dollar = 0.384497 rial. The Central Bank buys U.S. dollars at 0.384 rial, and sells U.S. dollars at 0.385 rial. After Malta’s adoption of the euro on 1 January 2008 the Omani Rial is the third highest-valued currency unit after the Kuwaiti dinar and the Bahraini dinar.   Gross Domestic Product (GDP) 2008 2009 2010 2011 (f) 2012 (f) Bn OMR 23.3 18.0 21.4 25.4 26.5 Real Percentage Change 12.8% 1.1% 4.2% 4.4% 4.1% Bn USD 60.6 46.9 55.6 66.0 69.0 USD per capita 21,745 16,255 18,657 21,421 21,706 Idem PPP 25,366 25,005 25,439 25,954 26,553 Inflation - Consumer Price Index Percentage change at the end of each year: 2008 2009 2010 2011 (f) 2012 (f) 7.8% 3.4% 3.4% 3.3% 3.0% Retail Sales According to the Oxford Business Group the development model of Oman is somewhat different from its neighbours. Oman is relying on high-quality infrastructure, connectivity, skills and its location to compete and develop new industries. Manufacturing has continued to see growth despite the global recession. The value of non-oil merchandise exports rose from OR502.5m ($1.31bn) to OR785.4 ($2.05bn) between 2009 and 2010. The retail scene in Oman is distinct from those of its Gulf neighbours and relatively underdeveloped. This is partly due to Oman’s different resource base and development policy, and partly due to the nature of the market itself. Although oil accounts for the bulk of government revenue and GDP, Oman does not enjoy as much oil wealth as its neighbours, and purchasing power is correspondingly lower. Oman’s policy in the past 40 years has favoured gradual development, which has discouraged the country from marketing itself as a retail centre. Unlike many other GCC countries, which are essentially city-states, Oman has a relatively small population spread out over a large area, so the  market  lacks  concentration.  
  • 26. 26 Country Profile and History Oman’s history goes back to the very dawn of civilization. The coastal area fronting on the Gulf of Oman is believed to have been the land known to the Sumerians as Magan, from which as early as 3,000 B.C. they were importing copper. Remains of settlements and distinctive beehive tombs are the legacy of this earliest known culture. The Arab history of the country begins in the 2nd century B.C., with the migration of tribal groups from the region of modern-day Yemen. The Omanis were among the first of the peoples of the Arabian Peninsula to embrace the Islam in the 7th century A.D. The centuries that followed were a golden age, with Omani sailors and traders travelling from India to Africa. In 1507 the Portuguese seized and fortified Muscat harbour, establishing a string of coastal strong points to protect their trade route to India. They were finally expelled around 1650. The Omanis proceeded to build their own empire on the Arabian Peninsula and along the coasts of Persia, India and Africa, becoming the dominant maritime power in the area. In 1741 the founder of the present Al-Said dynasty, Imam Ahmad bin Said, took power, moving the capital from the interior to the former Portuguese stronghold of Muscat. The country thereafter was known as Muscat and Oman. The Brits established a treaty relationship with the sultanate in 1798. Oman was recognized as fully independent in 1951, but the close relationship continued. During the early 1970s relations between Oman and the neighbouring People’s Democratic Republic of Yemen (PDRY united with the Yemen Arab Republic in May 1990) deteriorated, following a conflict in the Dhofar Province with a guerrilla organization, known from 1974 as the People’s Front for the Liberation of Oman, which the PDRY supported. Although a cease-fire was mediated by Saudi Arabia in March 1976, the situation remained tense. Oman’s acceptance of US assistance in defence aroused protests from the PDRY in 1981, but mediation by other Gulf States led to a ´normalization´ agreement in 1982 and diplomatic relations between Oman and the PDRY were resumed in 1983. In October 1988 Oman and the PDRY signed an agreement to increase co-operation in the areas of trade and communication, and in February 1990 the two countries reached an agreement to delineate their common border. The Iranian revolution of 1978-79 and the Iran-Iraq War (1980-88) led to increased international awareness of Oman’s strategic importance, particularly regarding the Strait of Hormuz, a narrow waterway at the mouth of the Persian (Arabian) Gulf, between Oman and Iran, through which, under normal circumstances, about two-thirds of the world’s sea-borne trade in crude petroleum passes.
  • 27. 27 THE STATE OF QATAR Qatar in Brief Qatar (Arabic: ˈqɑtˤɑr]), also known as the State of Qatar or locally Dawlat Qaṭar, is located in the Middle East, occupying the small Qatar Peninsula on the north-easterly coast of the much larger Arabian Peninsula. Its sole land border is with Saudi Arabia to the south, with the rest of its territory surrounded by the Persian Gulf. A strait of the Gulf separates Qatar from the nearby island state of Bahrain. A mild winter and a hot summer characterize the climate. Rainfall in the winter is slight, averaging some 80 millimetres a year. Temperatures range from 7 degrees centigrade in January to around 45 degrees at the height of summer. The name may derive from "Qatara", believed to refer to the Qatari town of Zubara, an important trading port and town in the region in ancient times. The word "Qatara" first appeared on Ptolemy's map of the Arabian Peninsula. Population: 1,700,000 Area: 11,437 sq km Men: 76.0 % Capital: Doha (998,651) Women: 24.0 % Language: Arabic B2C e-sales $375mn (2010 - e) Currency: Qatari Riyal (QAR) Retail Sales: $10bn (e) Internet: .qa Internet Users: 1,170,000 ICT Development: # 45 (159) Telephones: 17.5 per 100 e-Government: # 62 (192) Mobile: 137 per 100 Ease of Business: # 50 (183) Dialling Code: +974 Logistics Index: # 55 (155) e-Readiness: # 25 (138) Internet and e-Commerce in Qatar With its booming economy and ambitious ICT investment programme, Qatar is expected to be the fastest growing IT market in the region over BMI's five-year forecast period. 2011-2015 IT spending CAGR is forecast at 12%, with opportunities in sectors such as infrastructure, hydrocarbon, banking and telecoms. The decision to award Qatar the 2022 FIFA World Cup is expected to fuel a wave of investment in IT products and services. The government's ICT-2015 strategy will also create opportunities. In 2010 vendors reported a pick-up in IT services project flow, with new IT projects in banking, government, real estate and education, and from large organisations such as Qatar Steel and Qatar National Bank. ictQATAR has several priority policy areas, including telecoms liberalisation, online government, e-learning, e-health and small and medium-sized enterprises (SME’s). A government target is to increase utilisation of ICT by SME’s. The government is also implementing a major IT initiative in the healthcare area. Qatar's broadband market continues to suffer from a lack of competition and the sector has been criticised for its high subscription fees. These factors could account for the relatively slow growth that has characterised the broadband market and the wider Internet subscriber market. This was expected to change during 2009, however, as Vodafone Qatar geared up to launch services. Although ADSL will be the strongest driver of broadband subscription growth, an increasing focus on wireless broadband services such as WiMAX is expected. Qatar was one of the regional movers in the UN's most recent e-readiness survey due to government initiatives and expanding broadband penetration. The country performed even better in the e-government rankings, moving from 62nd to 53rd place. The government launched a new e-services portal in 2008 and is rolling out new initiatives in various areas. E-commerce in Qatar is still in its infancy. For 2010 the estimated B2C e-commerce sales were around $375 million, but the future looks bright.
  • 28. 28 Economy of Qatar Oil formed the cornerstone of Qatar's economy well into the 1990s and still accounts for about 62% of total government revenue. In 1973, oil production and revenues increased sizably, moving Qatar out of the rank of the world's poorest countries and providing it with one of the highest per capita incomes. In 2010, Qatar's per capita income of over $76,000 was the fifth highest in the world after Monaco, Liechtenstein, Luxembourg and Norway. The country's economic growth has been stunning. Qatar's nominal GDP was $130 billion for 2010, has recently been growing at an average of 15%, and the 2010 real growth rate was 16%. Qatar's 2011 per capita GDP is forecasted to be $110,000, and projected to soon be the highest in the world. The Qatari Government's strategy is to utilize its wealth to generate more wealth by diversifying the economic base of the country beyond hydrocarbons. Qatar pursues a vigorous program of "Qatarisation," under which all joint venture industries and government departments strive to move Qatari nationals into positions of greater authority. Growing numbers of foreign- educated Qataris, including many educated in the U.S., are returning home to assume key positions formerly occupied by expatriates. In order to control the influx of expatriate workers, Qatar has tightened the administration of its foreign manpower programs over the past several years. Security is the principal basis for Qatar's strict entry and immigration rules and regulations. GDP Per Capita in Purchasing Power Parity (USD - IMF) KEY ECONOMIC INDICATORS, including Population Residents of Qatar can be divided into three groups: the Bedouin, Hadar, and Abd. The Bedouin trace their descent from the nomads of the Arabian Peninsula. The Hadar's ancestors were settled town dwellers. While some Hadar are descendants of Bedouin, most descend from migrants from present-day Iran, Pakistan, and Afghanistan and occasionally are referred to as lrani-Qataris. Alabd , which literally means "slaves," are the descendants of slaves brought from east Africa. All three groups identify themselves as Qatari and their right to citizenship is not challenged, but subtle socio-cultural differences among them are recognized and acknowledged. Most of Qatar's 1.7 million inhabitants live in Doha, the capital. Foreigners with temporary residence status make up about three-fourths of the population. Foreign workers comprise as much as 85% of the total population and make up about 90% of the total labour force. Most are South and Southeast Asians, Egyptians, Palestinians, Jordanians, Lebanese, Syrians, Yemenis, and Iranians. The following graph contains the estimated average population in each year:
  • 29. 29 2007 2008 2009 2010 2011 (f) 1,226,000   1,448,000   1,639,000   1,670,000 1,768,000 Currency The riyal (ISO 4217 code: QAR) is the currency of the State of Qatar. It is divided into 100 dirham and is abbreviated as QR (English). In March 1975, the riyal was officially pegged to the IMF's Special Drawing Rights (SDRs). In practice, it has been fixed at 1 U.S. dollar = 3.64 riyal since 1980, which translates to approximately 1 riyal = 27.4 USD cents. This rate was made official in July 2001. Gross Domestic Product (GDP) 2008 2009 2010 2011 (f) 2012 (f) Bn QAR 403.0 357.9 471.3 707.1 771.1 Real Percentage Change 25.4% 8.6% 16.3% 20.0% 7.1% Bn USD 110.7 98.3 129.5 194.3 211.9 USD per capita 76,435 59,990 76,168 109,881 115,216 Idem PPP 80,760 78,260 88,559 103,276 107,841   Inflation - Consumer Price Index Percentage change at the end of each year: 2008 2009 2010 2011 (f) 2012 (f) 15.0% -4.9% 0.4% 4.2% 4.1% Retail Sales Qatar’s retail sector appears well-placed for solid growth over the next few years, with prospects looking even brighter in the medium term as the economy is expected to gain further momentum as a result of the government’s investment programme and the feel-good factor leading up to hosting the 2022 FIFA World Cup. With per capita GDP the highest in the world at more than $76,000 a year – a figure that is set to grow as the economy continues to expand – Qataris are in a strong position to spend. Local retailers should be buoyed by a groundswell of consumer confidence to accompany the continuing increase in discretionary spending power, with two recently released reports showing that optimism is on the rise. According to the latest quarterly consumer confidence survey conducted by online job site Bayt.com, in conjunction with research specialists YouGov Siraj, Qatar’s consumers are increasingly positive in their outlook, a confidence that is expected to be translated into higher spending in the country’s shops.
  • 30. 30 Country Profile and History Qatar has been inhabited for millennia. The Al Khalifa family of Bahrain dominated the area until 1868 when, at the request of Qatari nobles, the British negotiated the termination of the Bahraini claim, except for the payment oftribute. The tribute ended when the Ottoman Empire occupied Qatar in 1872. When the Ottomans left at the beginning of World War I, the British recognized Sheikh Abdullah bin Jassim Al Thani as ruler. The Al Thani family had lived in Qatar for 200 years. In 1935, a 75-year oil concession was granted to the Qatar Petroleum Company, a subsidiary of the Iraq Petroleum Company, which was owned by Anglo-Dutch, French, and U.S. interests. High-quality oil was discovered in 1940 at Dukhan, on the western side of the Qatari peninsula. During the 1950s and 1960s gradually increasing oil revenues brought prosperity, rapid immigration, substantial social progress, and the beginnings of Qatar's modern history. When the U.K. announced a policy in 1968 (reaffirmed in March 1971) of ending the treaty relationships with the Gulf sheikdoms, Qatar joined the other eight states then under British protection (the seven trucial sheikdoms-- the present United Arab Emirates--and Bahrain) in a plan to form a union of Arab emirates. By mid-1971, as the termination date of the British treaty relationship (end of 1971) approached, the nine still had not agreed on terms of union. Accordingly, Qatar declared independence as a separate entity and became the fully independent State of Qatar on September 3, 1971. In February 1972, the Heir Apparent, Sheikh Khalifa bin Hamad, deposed his cousin, Amir Ahmad, and assumed power. Key members of the Al Thani family supported this move, which took place without violence or signs of political unrest. On June 27, 1995, the Deputy Amir, Sheikh Hamad bin Khalifa, deposed his father Amir Khalifa in a bloodless coup. An unsuccessful counter-coup was staged in 1996. The Amir and his father are now reconciled, though some supporters of the counter-coup remain in prison. The Amir announced his intention for Qatar to move toward democracy and has permitted a freer and more open press and municipal elections as a precursor to expected parliamentary elections. Qatari citizens approved a new constitution via public referendum in April 2003, which came into force in June 2005. The opinions of the people are institutionalized in the Advisory Council, an appointed body that assists the Amir in formulating policy. One woman candidate was elected to the municipal council in 2003. Municipal elections were held for the third time in April 2007.
  • 31. 31 THE KINGDOM OF SAUDI ARABIA Saudi Arabia in Brief The Kingdom of Saudi Arabia (Arabic: Al Mamlaka al ʻArabiyya) commonly known as Saudi Arabia is the largest country in the Middle East by land area, constituting the bulk of the Arabian Peninsula, and the second-largest Arab country. Jordan and Iraq border it on the north and northeast, Kuwait, Qatar and the United Arab Emirates on the east, Oman on the southeast, and Yemen on the south. The King Fahd Causeway also connects it to Bahrain. The Persian Gulf lies to the northeast and the Red Sea to its west. From June through August, midday temperatures in the desert can soar to 50 C (122 F). Humidity in the coastal regions may approach 100 percent at times. In contrast, weather in other areas of the country may be mild throughout the year. Winter temperatures in the northern and central regions may drop to below freezing. With the exception of the province of Asir with its towns of Jizan on the western coast and Najran, Saudi Arabia has a desert climate characterized by extreme heat during the day, an abrupt drop in temperature at night, and slight, erratic rainfall. The shamal, sand-laden winds from the northern deserts, is most frequent in early summer and can blow for days at 25-30 miles an hour. Rainfall ranges from none at all for up to 10 years in the Rub Al-Khali, to 20 inches a year in the mountains of Asir Province. Population: 26,106,000 Area: 2,149,690 sq km Men: 54.8% Capital: Riyadh (5,254,560) Women: 45.2 % Language: Arabic B2C e-sales: $520 mn (e) Currency: Saudi Riyal (QAR) Retail Sales: $76bn (e) Internet: .sa Internet Users: 10,700,000 ICT: # 52 (159) Telephones: 15.2 per 100 e-Government: # 58 (192) Mobile: 187.9 per 100 Ease of Business: # 11 (183) Dialling Code: +966 Logistics Index: # 40 (155) e-Readiness: # 33 (138) Internet and e-Commerce in Saudi Arabia In October 2004 the Saudi Arabian Monetary Authority (SAMA) launched SADAD Payment System (SADAD) to serve as the electronic bill-payment system for the kingdom. Customers can pay bills through SADAD through standard banking channels, such as ATMs and online and phone banking. Many companies use the SADAD system including some of the largest in the country: Saudi Telecom Company, Saudi Electricity Company, Mobily (mobile service provider), Saudi Post (the national courier) and Samba Financial Group (one of the largest private banks). Saudi Arabia also has one of the fastest growing rates of Internet use in the Middle East. There remains significant potential for Internet services to grow, both through personal computers and increasingly through third-generation (3G) mobile phones. In turn, this would benefit broader macroeconomic growth since higher use of information and communications technology (ICT) tends to improve productivity. Furthermore, the large proportion of young people in the Saudi population will probably support a stronger expansion of ICT. According to ITU the Internet penetration is 41% or close to 11 million users. A recent survey of Saudi Arabia’s Internet users revealed that around 39% of the adult Internet users in the country buy products and pay for services online through e-commerce services. Electronics are the most popular products bought online, followed by software, while airline tickets booking and hotel reservations are the top services paid for online. Consumers have spent an estimated US$ 520 million on buying products and paying for services through e-commerce transactions in 2010.
  • 32. 32 Electronics are the most popular products bought online, followed by software, with around 58% and 50% of customers who buy products online buying them, respectively. Around 84% of e-commerce users who pay for services online pay for airline tickets booking, while about 49% pay for hotel reservations according to the survey. In 2009 Saudi Post launched an online market initiative (E-Mall) that features a range of merchants, from local artisans to major stores. The organisation said that in 2009 about 5mn ecommerce transactions took place in the, and Saudi Post wanted to encourage and capitalise on the growth of electronic trade. According to data from the Communications and Information Technology Commission (CITC), broadband access in Saudi Arabia has shown remarkable pickup over the last five years, with average annual growth at 123% at the end of 2010. The number of broadband subscriptions grew to more than 4.4m by end-2010, and the broadband penetration rate was around 16%. Penetration and subscription rates of mobile-phone service showed considerable growth since 2001, particularly after the opening of the telecoms market in 2005. The number of mobile-phone subscriptions rose from 2.5m in 2001 to 51.6m in 2010, representing a mobile-phone penetration rate of 12% and 186%, respectively. Although mobile-commerce in Saudi Arabia is still in its growth stage, attitudes towards the industry appear to be positive. Economy of Saudi Arabia Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses about 20% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 80% of budget revenues, 45% of GDP, and 90% of export earnings. GDP Per Capita in Purchasing Power Parity (USD - IMF) Saudi Arabia is encouraging the growth of the private sector in order to diversify its economy and to employ more Saudi nationals. Diversification efforts are focusing on power generation, telecommunications, natural gas exploration, and petrochemical sectors. Almost 6 million foreign workers play an important role in the Saudi Testimony from American Bedu: “So has online shopping caught on yet in Saudi Arabia? In my experience and in discussions with many individuals in Saudi Arabia, online shopping has not really caught on yet in Saudi Arabia. This is due to Saudi Arabia being still overall a ‘cash based’ society when it comes to shopping in addition to the difficulties and challenges of shopping online within the Kingdom. There are difficulties as simple as lack of a physical address to the inability to order some products because of a Saudi address. Additionally Saudi men and women are not yet as active in or see a need for shopping online. For many Saudis, going out to a local mall or souk is part of a social outing as well as a shopping expedition for needed items.”
  • 33. 33 economy, particularly in the oil and service sectors, while Riyadh is struggling to reduce unemployment among its own nationals. Saudi officials are particularly focused on employing its large youth population, which generally lacks the education and technical skills the private sector needs. Riyadh has substantially boosted spending on job training and education, most recently with the opening of the King Abdallah University of Science and Technology - Saudi Arabia's first co-educational university. As part of its effort to attract foreign investment, Saudi Arabia acceded to the WTO in December 2005 after many years of negotiations. The government has begun establishing six "economic cities" in different regions of the country to promote foreign investment and plans to spend $373 billion between 2010 and 2014 on social development and infrastructure projects to advance Saudi Arabia's economic development. According to the International Monetary Fund, Saudi Arabia's short-term economic outlook is favourable but the kingdom should monitor inflationary pressures following a recent increase in social spending and soaring food import prices. KEY ECONOMIC INDICATORS, including Population Most Saudis are ethnically Arab. Some are of mixed ethnic origin and are descended from Turks, Iranians, Indonesians, Indians, Africans, and others, most of who immigrated as pilgrims and reside in the Hijaz region along the Red Sea coast. Many Arabs from nearby countries are employed in the kingdom. There also are significant numbers of Asian expatriates mostly from India, Pakistan, Bangladesh, Indonesia, and the Philippines. Westerners in Saudi Arabia number under 100,000. Saudi Arabia's population includes about 20% resident foreigners. Until the 1960s, most of the population was nomadic or semi nomadic; due to rapid economic and urban growth, more than 95% of the population now is settled. Hereunder the estimated population in each year (IMF - thousands): 2007 2008 2009 2010 2011 (f) 23,981 24,897 25,519 26,106 26,680 Currency The Riyal (ISO 4217 code: SAR) is the currency of Saudi Arabia. It is abbreviated SR (Saudi Riyal). It is subdivided into 100 Halalas. In June 1986, the riyal was officially pegged to the IMF's Special Drawing Rights (SDRs). In practice, it is fixed at 1 U.S. dollar = 3.75 riyals, which translates to approximately 1 riyal = 0.266667 dollar. This rate was made official on January 1, 2003. The riyal briefly rose to a 20-year high after the Federal Reserve cut interest rates on September 18, 2007 and the Saudi Arabian Monetary Agency chose not to follow suit, partially due to concerns about the inflationary effects low interest rates and a lower value for the riyal. The riyal returned to its peg against the U.S. dollar in early December of 2007. Hereunder a table of the exchange rates of the Riyal against the US Dollar and the Euro: 2007 2008 2009 2010 USD 0.2667 0.2667 0.2667 0.2667 EUR 0.2025 0.1815 0.1916 0.2008
  • 34. 34 Gross Domestic Product (GDP)     2008 2009 2010 2011 (f) 2012 (f) Bn SAR 1,786.1 1,409.1 1,661.62 2,166.7 2,269.5 Real Percentage Change 4.2% 0.6% 3.7% 7.5% 3.0% Bn USD 476.9 376.3 443.7 578.6 606.0 USD per capita 19,157 14,745 16,996   21,685   22,225 Idem PPP 23,495 23,272 23,826 25,345 25,900     Inflation - Consumer Price Index Percentage change at the end of each year (IMF):   2008 2009 2008 2009 2010 9.0%   4.2%   5.4%   6.6%   4.5%         Retail Sales BMI forecasts that the country’s retail sales will grow from an expected US$76,7bn in 2011 to almost US$117bn by 2015. Principal factors behind the forecast growth in Saudi Arabia’s retail sales are: strong underlying economic growth, rising disposable incomes, increasing acceptance of the concept of modern retailing, a youthful population and an enlarged consumer base created by the improved position of women in society. The retail sector benefits from the large number of Muslim tourists visiting the country to take part in the hajj and umrah pilgrimages every year. Sales of gifts and souvenirs in 2008 were estimated to have risen by at least SAR4bn (US$1.1bn) due to shopping by hajj pilgrims, according to a Gulf News report. Increasing urbanisation is also driving retail sales. In 2005, nearly 89% of the population was classified by the UN as urban, and this is forecast to increase to more than 90% in 2010. The UN also described more than 57% of the population as economically active in 2005, with this proportion forecast to exceed 59% in 2010 and 66% by 2015. About 38% of the population was in the 20-44 age range important to retail sales in 2005, and the UN forecasts that this will rise to about 45% by 2015. San Francisco-based Gap is among the latest international retailers to enter the market. It plans to open 44 Gap stores and 10 Banana Republic stores in Saudi Arabia by 2012. With the Saudi consumer electronics market one of the largest in the Gulf, accounting for about 40% of regional spending, sales in this sector are forecast to increase from an estimated US$4.03bn in 2011 to US$5.02bn by 2015, a rise of nearly 25%. Youthful demographics, a regional economic boom and a buoyant real estate sector will drive consumer electronics spend.
  • 35. 35 Country Profile and History The Arabian Peninsula has supported agricultural, herding, and hunting cultures for thousands of years. Living on important ancient trade routes, the ancestors of the Saudi Arabians were touched by diverse civilizations, including those of Mesopotamia, Egypt, Greece, Rome, Byzantium, India, Persia, and China. The Qur'an (Koran), the holy book of Islam, was revealed to the Prophet Muhammad in the western Arabian cities of Makkah (Mecca) and Madinah (Medina) beginning about 610 A.D. The birth of the new faith of Islam was one of the most momentous events in history. Inspired by Islam, the Arabs expanded out of Arabia spreading Islam and the Arabic language. Their vast empire soon stretched from the Atlantic Ocean in the west to central Asia in the east, embracing today's southern Italy, Spain, and parts of France. The Muslim Arab civilization remained vigorous for centuries, providing stability and advancing human knowledge while Western civilization was in eclipse during the Middle Ages. The Arabs made extensive and original contributions to chemistry, physics, optics, astronomy, medicine, mathematics, literature, and philosophy. They invented algebra, whose name derives from an Arabic word. They also transmitted the number system, called Arabic numerals, to the West. In the 13th century, the Mongol invasions dealt a devastating blow to the Arabs' eastern lands, and their empire began to decline. The history of modern Saudi Arabia begins with Abdul Aziz Al-Saud, known in the West as Ibn Saud. The Al-Saud family had reigned over much of Arabia in the early 19th century. It lost part of its territory to the Turks later in the century, however, and was driven from its capital, Riyadh, by the rival House of Rashid. In 1902 Abdul Aziz recaptured the city and began to reconquer and reunify the country, which he completed some three decades later. In 1927, Abdul Aziz was officially proclaimed king, and the country was named the Kingdom of Saudi Arabia in 1932. From the discovery of oil in commercial quantities in 1938, rapid economic development and rising prominence in world affairs have dominated the most recent chapter of Saudi Arabia's history. The country remains a leading producer of oil and natural gas and holds more than 20% of the world's proven oil reserves. The government continues to pursue economic reform and diversification, particularly since Saudi Arabia's accession to the WTO in December 2005, and promotes foreign investment in the kingdom. A burgeoning population, aquifer depletion, and an economy largely dependent on petroleum output and prices are all ongoing governmental concerns. The 2010-11 uprising across Middle Eastern and North African countries sparked modest incidents in Saudi cities, predominantly by Shia demonstrators calling for the release of detainees and the withdrawal from Bahrain of the Gulf Cooperation Council's Peninsula Shield Force. Other relatively minor, non- Shia demonstrations focused on labour, prisoner, and infrastructure complaints. Protests in general were met by a strong police presence, with some arrests, but not the bloodshed seen in protests elsewhere in the region. King ABDALLAH in February and March 2011 announced a series of benefits to Saudi citizens including funds to build affordable housing, salary increases for government workers, and unemployment benefits. The King also announced that Riyadh would begin preparations for a second round of municipal elections in September 2011.
  • 36. 36 UNITED ARAB EMIRATES United Arab Emirates in Brief The United Arab Emirates (Arabic: Al Imārāt al ‘Arabīyah al Muttaḥidah), often abbreviated as UAE or shortened to The Emirates (Arabic: Al Imārāt), is a country situated in the southeast of the Arabian Peninsula in Southwest Asia on the Persian Gulf, bordering Oman and Saudi Arabia and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar and Iran. The United Arab Emirates (UAE) is a federation of seven states formed in 1971 by the then Trucial States after independence from Britain. Since then, it has grown to one of the Middle East's most important economic centres. Although each state - Abu Dhabi, Dubai, Ajman, Fujairah, Ras al Khaimah, Sharjah and Umm al Qaiwain - maintains a large degree of independence, a Supreme Council of Rulers made up of the seven emirs, who appoint the prime minister and the cabinet, governs the UAE. The climate of the U.A.E is subtropical-arid with hot summers and warm winters. The hottest months are July and August, when average maximum temperatures reach above 50 °C (122.0 °F) on the coastal plain. In the Al Hajar Mountains, temperatures are considerably lower, a result of increased altitude. Average minimum temperatures in January and February vary between 10 and 14 °C (50 and 57.2 °F). Population: 8,264,070 Area: 83,600 sq km Men: 74.6% Capital: Abu Dahbi (897,000) Women: 25.4% Language: Arabic B2C e-sales: $1,900mn (2010 - e) Currency: Dirham (AED) Retail Sales: $116bn (e) Internet : .ae Internet Users: 3,555,000 (e) ICT : # 29 (159) Telephones: 19.7 per 100 e-Government: # 49 (192) Mobile: 145.5 per 100 Ease of Business: # 40 (183) Dialling Code: +971 Logistics Index: # 24 (155) e-Readiness: # 24 (138 Internet and e-Commerce in the United Arab Emirates According to a 2007 survey of Arab Advisors Group in 2007 51.2 per cent of Internet users in the UAE reported purchasing products and services online and through their mobile handsets over the past 12 months. The report concluded: “The booming economy of the UAE, its burgeoning population and adoption of Internet, provide an ideal context for a thriving e-commerce scene. Our major survey of Internet users in the UAE revealed a massive size for B2C e-commerce in the country. This presents opportunities for global and regional e-commerce players to tap into this growing market," According to the survey the majority of UAE e-commerce users make their payments through credit cards: 83.8% of E-commerce users reported using credit cards as their e-commerce method of payment. Following credit cards, 31.7% of e-commerce users reported using bank account transfers for their payments. Considering the increased of number of users and better economic conditions IMRG estimates total e-commerce sales for 2010 around 1,900 million USD. e-Commerce is supervised by the UAE Telecommunications Authority (TRA), which mission is: "to promote economic development and technological innovation within the defined parameters of a fair e-Commerce regulatory regime in line with international standards." In  2010,  the  TRA  undertook  an  intensive  survey  focusing  on  the  usage  of  ICT  services  by  households   and  individuals  in  the  UAE.  The  survey  spanned  multiple  services  including  fixed  telephony,  mobile      
  • 37. 37 telephony, and Internet services. 65% of households answered that they had an Internet connection. 78% said that they used the Internet the past three months of which almost thirty percent more than once a day. Over 50% had a broadband speed of 512kbps or lower. Of the individuals not connected to the Internet 41% said ‘that the costs were too high”. Highest on the list were the sending or receiving of emails (81%) and visiting social networks (45%). 26% on getting information on goods and services. Facebook is with 97% the social network with the highest number of visits. Online websites — such as Souq.com in the UAE and Qbay.com in Qatar — are drawing customers into a ‘buy-and- sell’ domain where they do not simply trade among themselves, but also purchase products from stores that have online ‘virtual’ shops. Online shopping also extends beyond the more traditional purchases, such as apparel and accessories, with online grocery shopping gaining momentum, similar to that in more mature markets such as the UK and North America. As online grocery shopping becomes more popular in the UAE, it is likely to have implications for retailers, who may need to assess the impact on their supermarkets and hypermarkets. With Internet usage proliferation and increasing trust in online security, online shopping will only grow. Young shoppers will begin to treat the retail environment as a testing or browsing ground for products and services that are demonstrated locally but purchased online. Physically purchasing the products may actually become more price-competitive because customers have the opportunity to review a number of products and pricing options online. Increasing focus on new market segments more open to online shopping will consequently pave the way for a new breed of retailers. International brands will likely upgrade the local fit-outs of the retail environment to build a showcase for the brands and products that are offered online and may find that, eventually, less shop space will be required (Gulf News August 2011).                                                      
  • 38. 38 According to a recent survey of Joob.com with respect to the UAE online leisure travel market, the UAE traveller’s purchasing behaviour has changed over the years and is poised for further change in the near future. Key findings show that online bookings have overtaken the traditional methods with 80 per cent of respondents saying they were open to the idea of purchasing their travel online, particularly for flights, while credit cards have become the preferred payment option for both hotel and flight bookings. Cost continues to remain the main consideration when planning and purchasing travel both online and offline for UAE residents, with ticket prices being the most challenging issue. Family travel continues to be the key preference. Quality and luxury hotels remain the preference in accommodation among UAE travellers, while recommen- dations and reviews were not necessarily a key consideration. Another interesting find was that car hire was popular with UAE residents while 50 per cent of bookings were made online. However voluntary purchase of travel insurance was still low with only 10 per cent of travellers choosing to purchase it. Recently UAE-based banking group Emirates NBD has entered a partnership with Visa to launch a service which enables Emirates NBD Visa debit cardholders to make online transactions, online media outlet cards.banking- business-review.com reports. Under the terms of the deal, Emirates NBD Visa debit cardholders will be able to make online transactions via Verified by Visa, Visa's e-commerce security service. Verified by Visa allows registered customers to use a personal password to confirm their identity before the online transaction is finalized. Emirates NBD has launched a new service, dubbed DoubleSecure, set to upgrade the security of online transactions made via the existing Emirates NBD credit and debit cards.     Economy of the United Arab Emirates Great oil finds since the 1960's has brought UAE wealth and progress. Oil and natural gas are by far the most important to UAE’s economy. Yet, it is only in 3 of 7 emirates where oil exploitation is of a major scale, but search of new reserves are going on in all the others. Over the last 20-30 years, UAE's success in the Middle East is largely owned to a national focus on developing alternatives to the oil industries. This involves very successful programs to turn designated ports of the Emirates into trade centres, development of industries, refining of oil as well as land reclamation. With many young Emirati graduating from higher education, the government encourages a process of taking back the jobs to nationals. Banking, insurance and human resources are the sectors that have recently seen a growth in its Emirati work force. GDP Per Capita in Purchasing Power Parity (USD - IMF)
  • 39. 39 The   challenge   for   UAE   economic   policy   makers   is   to   boost   bank   credit   growth   to   the   private   sector,   accelerate   infrastructure  spending  to  boost  GDP  growth  and  manage  the  legal/regulatory  frameworks  that  are  a  prerequisite   for  any  long-­‐term  stability  in  the  property  markets.  The  huge  rise  in  commercial  bank  loan  provisions  in  2008-­‐09  is   now  over  and  Abu  Dhabi  will  scale  up  a  new  pipeline  of  infrastructure  projects,  thanks  to  the  recent  oil  and  gas   bonanza.  Bank  credit  growth  and  government  spending  will  boost  the  growth  of  the  non-­‐oil  UAE  economy.  The  UAE,   the  only  successful  model  of  political  federation  in  the  Arab  world,  is  also  destined  to  be  the  region’s  next  economic   tiger,  an  ancient  land  that  is  a  microcosm  of  the  Arab  world’s  most  cosmopolitan  and  tolerant  traditions.     KEY  ECONOMIC  INDICATORS,  including     Population   More  than  42  per  cent  of  Emirati  live  in  Abu  Dhabi  while  around  33  per  cent  are  based  in  Dubai  and  Sharjah.  Umm   Al-­‐Qaiwain,  which  has  the  smallest  population  in  the  UAE,  is  the  only  emirate  where  females  outnumber  males.   Official  data  showed  the  UAE's  total  native  population  stood  at  947,997  in  mid  2010,  nearly  11.4  per  cent  of  the   country's  total  population  of  8.264  million.   The   UAE's   overall   population   includes   7.316   million   expatriates.   Nationals   included   479,109   males   and   468,888   females  while  expatriates  comprised  around  5.682  million  males  and  1.633  million  females.  Among  nationals  males   represented  50.5%  and  females  49.5%.  For  non-­‐nationals  the  figures  are:  males  77.7  %  and  females  22.3%.   As   a   whole,   the   UAE   had   around   6.161   million   males   and   2.102   million   females   in   mid   2010,   the   report   of   the   National  Bureau  of  Statistics  showed.  Hereunder  the  yearly  estimates  (for  2007;  2008  and  2009  the  estimates  refer   to  the  population  at  the  end  of  the  year.  For  2010  and  2011  the  data  refer  to  the  mid-­‐year  population.     Other   sources   such   as   IMF   (2010   –   5,055,000),   World   Bank   (2010   -­‐   4,707,307)   and   the   United   Nations   (2010   -­‐   7,512,000)  all  report  considerably  lower  population  figures,  most  probably  because  the  figures  are  estimates  based   on  the  2005  Census.       2007 2008 2009 2010 2011 (f) 6,219,006 8,073,626 8,199,996 8,264,070 8,350,000     Currency The dirham is the currency of the United Arab Emirates. The ISO 4217 code for the United Arab Emirates dirham is AED. Unofficial abbreviations include DH or Dhs. The dirham is subdivided into 100 fils. On January 28, 1978, the dirham was officially pegged to the IMF's Special Drawing Rights (SDRs). In practice, it is pegged to the U.S. dollar for most of the time. Since November 1997, the dirham has been pegged to the 1 U.S. dollar = 3.6725 dirham, which translates to approximately 1 dirham = 0.272294 dollar. The name Dirham derives from the Greek word Drachmae, literally meaning "handful", through Latin. Due to centuries of old trade and usage of the currency, dirham survived through the Ottoman regime. Gross Domestic Product (GDP) according to IMF According to the GDP per capita in Purchasing Power Parity UAE is ranked sixth in the world.     2008 2009 2010 2011 (f) 2012 (f) Bn AED 1,156.3 992.8 1,108.7 1,336.1 1,411.0 Real Percentage Change 5.3% -3.2% 3.2% 3.3% 3.8% Bn USD 314.9 270.3 301.9 363.8 384.2 USD per capita 66,074 55,081 59,717 69,872 71,638 Idem PPP 50,849 48,251 48,821 49,500 50,550        
  • 40. 40   Inflation - Consumer Price Index Percentage change at the end of each year (IMF): 2008 2009 2010 2011 (f) 2012 (f) 6.6% 1.2% 2.7% 3.7% 2.7% Retail Sales According to BMI forecasts the country's retail sales will grow from US$107.26bn in 2009 to US$150.52bn by 2014. Key factors behind the forecast are strong underlying economic growth, increasing household consumption, growing acceptance of modern retailing concepts and expatriate wealth. Average household spending power in the UAE stands at US$14,400 per annum, according to property consultants Colliers International. Emirati households account for the lions share of this spending, with an average of US$23,000, while Western, other Arab and Asian households have annual spending power of US$19,500, US$13,500 and US$10,000, respectively. While Emirati actively contributed to retail sales, the buying power of the country's expatriate residents was the major source of success, a study by Indian research firm RNCOS said. Tourism is also a massive factor in stimulating retail growth, with the UAE expecting more than 11mn tourists every year by 2010. Growing urbanisation is also factor in the buoyancy of the retail sector. Abu Dhabi in particular is highly urbanised, with the Urban Planning Council (UPC) projecting that Abu Dhabi City's population will rise to 1.3mn by 2013. In 2005, the UN as urban classified 85.5% of the UAE’s population and this is forecast to increase to 86.3% by 2010. Retail sub-sectors predicted to show strong growth over the forecast period include over the counter (OTC) pharmaceuticals, with sales expected to increase by 71%, from US$0.27bn in 2009 to US$0.45bn by 2014. Automotive sales are forecast to rise by 55%, from US$10.01bn to US$15.50bn, during the forecast period. Sales of consumer electronics are predicted to increase from US$2.56bn in 2009 to US$3.62bn by 2014, a rise of 41%.
  • 41. 41 Country Profile and History The UAE’s rich history is rooted in trade and tied to Islam, which came to the region in AD 630. Its location between Europe and the Far East attracted merchants from India and China and was prized by Europeans, in particular the Portuguese, the Dutch and the British. While Europeans sought control of the coasts, inland, the ancestors of the Bedouin made the sandy deserts of Dhabi and Dubai their home. The town of Abu Dhabi became an important centre. In the 19th century, the British signed a series of agreements with the individual emirates that resulted in the area becoming known as “The Trucial States.” They agreed not to dispose of any territory except to the United Kingdom and not to enter into relationships with any foreign government other than the United Kingdom without its consent. In return, the British promised to protect the coast from all aggression by sea and to help in case of land attack. The pearling industry thrived in 19th and early 20th centuries, providing income and employment to the people of the Gulf. Many inhabitants were semi-nomadic, pearling in the summer and tending date gardens in the winter. But the economic depression in the late 1920s and early 1930s, coupled with the Japanese invention of the cultured pearl, irreparably damaged the industry. In the early 1930s the first oil company teams conducted geological surveys. In 1962, the first shipment of crude was exported from Abu Dhabi. With oil revenues growing year by year, the Late Sheikh Zayed bin Sultan Al Nahyan was chosen as Ruler of Abu Dhabi in 1966. He undertook a massive programme of construction of schools, housing, hospitals and roads. One of Sheikh Zayed’s early steps was to increase contributions to the Trucial States Development Fund. Abu Dhabi soon became its largest donor. In the meantime, the Late Sheikh Rashid bin Saeed Al Maktoum, de facto Ruler of Dubai since 1939, developed shipping to replace pearling revenues. When Dubai’s oil exports started in 1969, Sheikh Rashid was able to use oil revenues to improve the quality of life of his people. At the beginning of 1968, when the British announced their intention to withdraw from the Arabian Gulf, Sheikh Zayed acted rapidly to establish closer ties with the emirates. With the Late Sheikh Rashid, the Late Sheikh Zayed called for a federation that would include not only the seven Emirates that together made up the Trucial States, but also Qatar and Bahrain. Agreement was reached between the rulers of six of the Emirates (Abu Dhabi, Dubai, Sharjah, Umm al-Qaiwain, Fujairah and Ajman), and the Federation to be known as the United Arab Emirates was formally established on 2 December 1971. The seventh Emirate, Ra’s al-Khaimah, acceded to the new Federation the following year. Since then, the seven Emirates have forged a distinct national identity. The UAE’s political systcombines traditional and modern and enabled the country to develop a modern administrative structure while ensuring that traditions of the past are maintained, adapted and preserved. Its oil reserves are ranked as the world's sixth-largest and the UAE possesses one of the most-developed economies in West Asia. It is the thirty-fifth-largest economy at market exchange rates, and has a high per capita gross domestic product (GDP), with a nominal per capita GDP of US$59,717 as per the International Monetary Fund (IMF). The IMF classifies the UAE as a high-income developing economy.
  • 42. 42 ANNEX A: GCC Countries Compared BAHRAIN KUWAIT OMAN QATAR SAUDI ARABIA UAE GCC e-Commerce Data B2C 2010 ($mn) 175 280 70 375 520 1,900 3,320 B2C e-commerce 2011 ($mn - f) 250 450 100 600 800 2,800 5,000 Internet Users/000 679 1,380 1,866 1,170 10,700 3,555 19,350 % of population 50.3% 38% 63% 69% 41% 43% 44% Avg. Spend per user 2010 USD 258 203 38 320 49 534 172 Demographics Population/000 1,235 3,608 2,981 1,700 26,108 8,265 43,897 Male % 60.6% 58.8% 55.0% 76.0% 54.8% 74.6% 61.2% Female % 39.4% 42.2% 45.0% 24.0% 45.2% 25.4% 38.8% 15 – 64 years % 77% 72% 66% 77% 68% 79% 72% Median age 31 29 24 31 25 30 28 Economic Data GDP current prices $bn 22.1 131.3 46.9 129.5 443.7 301.9 1,075.4 Real % Growth 4.1% 2.0% 4.2% 16.3% 3.7% 3.2% 4.8% GDP per capita $ 20,475 36,412 18657 76,168 16,996 59,717 24,498 GDP PPP per capita $ 26,852 37,849 25,439 88,558 23,826 48,821 29,015 Retail Sales (($bn) 5.4 46 18 10 76 116 274.4 Inflation end of year 2.0% 4.1% 3.4% 0.4% 5.4% 2.7% 2.9 Telecom Data Fixed telephones/00 37.7 20.7 9.5 17.5 15.2 19.7 16.8 Mobile/00 124.2 160.8 154.5 137.0 187.9 145.5 172.1
  • 43. 43 Annex B - DEFINITIONS related to Internet and e-Commerce and the Index Rankings used in this report The Internet is an open worldwide communication network, linking countless computer networks through a mixture of private and public telephone lines. Mobile Internet refers to using a mobile phone handset device incorporating a web browser to access the World Wide Web. According to the World Wide Web Consortium (W3C - the organisation Tim Berners Lee, the inventor of the World Wide Web, helped founding) the World Wide Web is “the universe of network-accessible information, an embodiment of human knowledge." The World Wide Web, abbreviated as WWW or W3 and commonly known as the Web, is a system of interlinked hypertext documents accessed via the Internet. With a web browser (such as Internet Explorer, Firefox, Opera, Safari) one can view web pages that may contain text, images, videos, and other multimedia and navigate between them via hyperlinks. e-Services are defined as: “Deeds, efforts or performances whose delivery is mediated by information technology. Such e-service includes the service element of e-retailing, customer support, and service delivery”. This definition reflects three main components- service providers, service receiver and the channels of service delivery (i.e., technology). For example, as concerned to public e-service, public agencies are the service provider and citizens as well as businesses are the service receiver. The channel of service delivery is the third requirement of e-service. Internet is the main channel of e-service delivery while other classic channels (e.g. telephone, call centre, public kiosk, mobile phone, television) are also considered.” (Dr. Jennifer Rowley, Professor Information and Communications, Manchester Metropolitan University, UK) e-Business or electronic business refers to commercial activities performed over computers and related technologies mainly through networks such as intranets, extranets, and the Internet to streamline, improve, and extend business operations. e-Business and e-commerce are often viewed to be one and the same, however this is incorrect. e-Commerce is simply a part of e-business, more specifically, the trading aspect of e- business. e-Commerce or electronic commerce, a subset of e-business, is the purchasing, selling, and exchanging of goods and services over computer networks (such as the Internet) through which transactions or terms of sale are performed electronically. Contrary to popular belief, e-commerce is not just on the Web. In fact, e-commerce was alive and well in business-to-business transactions before the Web back in the 70s via EDI (Electronic Data Interchange) through VANs (Value-Added Networks). Another example being the Minitel, a videotext online service for consumers accessible through the telephone lines, introduced in France in 1982. e-Commerce can be broken into five main categories: B2B, B2G, B2C, C2B, and C2C: B2B (Business-to-Business) is the Internet-facilitated activity of companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers B2G (Business-to-Government) is the Internet-facilitated exchange of services, information and/or selling products from a business to a government agency on national, federal, regional or local level
  • 44. 44 B2C (Business-to-Consumer) is the Internet-facilitated activity that involves transactions between businesses and consumers via a multichannel approach using a combination of channels such as shop, catalogue, internet, e- mail, telephone or a pure play approach by companies that originated and do business purely using the Internet as a medium without a physical (brick-and-mortar) store C2B  (Consumer-­‐to-­‐Business)  is  the  Internet-­‐facilitated  activity  of  consumers  posts  their  project  with  a  set  budget   online   and   within   hours   companies   review   the   consumer's   requirements   and   bid   on   the   project.   The   consumer   reviews  the  bids  and  selects  the  company  that  will  complete  the  project.     C2C   (Consumer-­‐to-­‐Consumer)   is   an   electronic   Internet-­‐facilitated   medium   that   involves   transactions   between   consumers   utilizing   a   third-­‐party.   The   most   common   example   of   C2C   is   the   online   auction.   In   this   form   of   C2C,   consumers  post  items  for  sale  and  other  consumers  bid  to  purchase  them.  eBay's  auction  service  is  a  great  example   of  where  person-­‐to-­‐person  transactions  take  place  everyday  since  1995.     e-­‐Retail  (or  online  retail,  e-­‐tail(ing),  electronic  retail(ing),  is  the  selling  of  retail  goods  on  the  Internet.  In  the  limited   sense   of   the   word,   sectors   such   as   online   leisure   travel,   event   tickets,   downloading   music   or   software   are   not   included.     Mobile  Commerce  or  m-­‐Commerce  is  the  ability  to  conduct  commerce,  using  a  mobile  device  e.g.  a  mobile  phone,  a   PDA,  a  smart  phone  and  other  emerging  mobile  equipment  such  as  dashtop  mobile  devices.  e-­‐Government  refers  to   the   use   by   government   agencies   of   information   technologies   that   have   the   ability   to   transform   relations   with   citizens,  businesses,  and  other  arms  of  government.  These  technologies  can  serve  a  variety  of  different  ends:  better   delivery  of  government  services  to  citizens,  improved  interactions  with  business  and  industry,  citizen  empowerment   through  access  to  information,  or  more  efficient  government  management.  Traditionally,  the  interaction  between  a   citizen  or  business  and  a  government  agency  took  place  in  a  government  office.  With  emerging  information  and   communication  technologies  it  is  possible  to  locate  service  centres  closer  to  the  clients.  Analogous  to  e-­‐commerce,   e-­‐government   aims   to   make   the   interaction   between   government   and   citizens   (G2C),   government   and   business   enterprises  (G2B),  and  inter-­‐agency  relationships  (G2G),  G2E  (Government-­‐to-­‐Employee)  more  friendly,  convenient,   transparent,  and  inexpensive  (e-­‐Government  Index,  World  Bank)   The  Logistics  Performance  Index,  developed    by  the  World  Bank  is  an  interactive  benchmarking  tool  created  to  help   countries  identify  the  challenges  and  opportunities  they  face  in  their  performance  on  trade  logistics  and  what  they   can  do  to  improve  their  performance  –  the  LPI  2010  allow  for  comparisons  across  155  countries.     The  Networked  Readiness  Index  (e-­‐Readiness),  developed  by  the  World  Economic  Forum,  measures  the  propensity   for  countries  to  exploit  the  opportunities  offered  by  information  and  communications  technology.  It  is  published   annually.  The  NRI  seeks  to  better  comprehend  the  impact  of  ICT  on  the  competitiveness  of  nations.  The  NRI  is  a   composite  of  three  components:  the  environment  for  ICT  offered  by  a  given  country  or  community  (market,  political   and   regulatory,   infrastructure   environment),   the   readiness   of   the   community’s   key   stakeholders   (individuals,   businesses,  and  governments)  to  use  ICT,  and  finally  the  usage  of  ICT  amongst  these  stakeholders.  The  Index  covers   138  countries.       The  ICT  Development  Index  (IDI)  is  a  benchmark  tool  developed  by  the  International  Communications  Union  (ITU)   benchmarking  tools  to  measure  the  Information  Society.  The  IDI  captures  the  level  of  advancement  of  ICTs  in  159   countries  worldwide  and  compares  progress  made  between  2002  and  2008.  It  also  measures  the  global  digital  divide   and  examines  how  it  has  developed  in  recent  years.     The  Ease  of  Doing  Business  Index,  developed  by  the  World  Bank,  averages  the  country's  percentile  rankings  on  9   topics,   made   up   of   a   variety   of   indicators,   giving   equal   weight   to   each   topic.   The   rankings   for   all   economies   are   benchmarked  to  June  2010.  The  Index  covers  183  countries.  
  • 45. 45       Acknowledgements and Sources This report could not have been realised without consulting a great many sources in the region and elsewhere. and more research is published as the Internet penetrates deeper into society and becomes an ever greater part of our day-to-day lives. Sometimes the information sourced can seem contradictory or different figures and data are given by different sources within the same country. Often the definition of which data are included might differ. We have done our utmost to carefully study the available data, make the necessary and hopefully the right choices in which information to focus upon. The sources we consulted include but are not limited to: ◆ Central Banks of the GCC Countries ◆ Offices of National Statistics ◆ Embassies of the GCC countries London ◆ Telecommunications Regulatory Authorities ◆ International Monetary Fund (IMF) ◆ Economy Watch ◆ European Central Bank (ECB) ◆ World Bank ◆ United Kingdom Trade & Industry (UKTI) ◆ OECD ◆ Saudi Arabia Bank Group (SAMBA) ◆ World Factbook CIA 2011 ◆ US Department of State ◆ Business Monitor International (BMI) ◆ Oxford Business Group ◆ A.T. Kearney: Global Retail Development Index 2011 ◆ International Telecommunications Union (ITU) ◆ Internetworldstats ◆ GoNabit.com – Online Group Buying ◆ Arab Advisers Group ◆ Wikipedia ◆ Lonely Planet (country maps) ◆ Google search engine ◆ Press Releases, Blogs, Comments and Articles ◆ IMRG International estimates and analysis
  • 46. 46 About IMRG International IMRG is the UK’s industry association for global e-retailing. IMRG (Interactive Media in Retail Group) is a membership community, set up to develop and the latest best practice advice to enable retailers to succeed in the world’s most competitive online market. IMRG is the recognised authoritative voice of e-retail, supporting and promoting online shopping and digital commerce since 1990. Interactive Media in Retail (IMR) is transforming the local and global consumer marketplace. The mission of IMRG International is to inform, assist and enable the successful adoption of interactive media by business and government in Europe and worldwide, by providing access to intelligence and know-how. About Visa Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and digital currency. Underpinning digital currency is one of the world's most advanced processing networks--VisaNet--that is capable of handling more than 20,000 transaction messages a second, with fraud protection for consumers and guaranteed payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, ahead of time with prepaid or later with credit products. For more information, visit www.corporate.visa.com. __________________________________________________________________________________________ This report has been commissioned by Visa Middle East to IMRG International (IMRWorld) and has been prepared by Aad Weening, Head of International and Research together with John Andrews, Managing Director and Matthew Turner. London, October 2011 90 Long Acre Covent Garden London WC2E 9RZ United Kingdom Tel: + 44 (0) 207 716 5604 research@imrg.org http://www.imrg.org