This document summarizes key topics from a Middle East seminar on April 22nd, 2015. It discusses:
1) Regional geopolitical instability and falling oil prices are major challenges but the Middle East population is growing rapidly and economic diversification is increasing non-oil sector growth.
2) Countries are working to develop new industries and the private sector to address youth unemployment but still face challenges meeting energy and water demand.
3) Mega-projects and financing models are expanding but governments need to reduce state control and stimulate the private sector and SMEs to sustain growth as oil revenues decline.
4) Iran's economy and trade opportunities are significant but geopolitical tensions remain high in the region
2. Russia sets sights on Middle East – WSJ 21 April
Iraq pushes Isis from Ramadi – BBC 21 April
US sends carrier to Yemen – Reuters 21 April
Oil collapse changes everything – CNBC 21 April
The Middle East is in flames – CNN 20 April
China’s Middle East tightrope – FP 20 April
22 April 2015
3. Kuwait considers new tax rates – MEED 21 April
Egypt opens wind farm bids – MEED 21 April
People are problem for Arabtec – MEED 21 April
Project finance deals rise in Q1 – MEED 21 April
UAE Companies Law misses target – MEED 19 April
UK role grows in Dubai aviation – MEED 19 April
GCC eyes medical tourism – MEED 16 April
22 April 2015
4. One of world’s fastest growing markets
Driven by visionary policy and capital
investment
Challenges include population growth, oil
dependence, poor infrastructure, lack of
capacity, state-driven economy, energy
and water scarcity
Oil markets rise and fall but strategic goals
are fixed
22 April 2015
5. 350m people in 22 countries, and many more cities
Opportunities in every market, along with unique challenges
Know your target market and stay focused
Understand your customers’ needs
Be committed, patient and adaptable
8. 20% global oil supply and 40% reserves
Economy to double to $2tn by 2020
Growth factors:
• Oil and gas
• Economic diversification
• Population growth
• Globalisation
Non-oil sector now main growth driver
led by banking & financial services, real
estate and retail sectors will drive
growth in coming years
22 April 2015
10. Oil prices have fallen 52 per cent in 9 months since June 2014
Biggest annual oil price fall in history
Oil delivers about 46% of the GCC GDP, 75% of exports and 84% of govt revenues
OPEC meeting
27 Nov
Brent oil futures 12 months ($/barrel)
22 April 2015
13. Oil prices
Regional geopolitical instability
Global economy
Leadership changes/succession
22 April 2015
14. • 350 million to 602 million by 2030
Significant challenges
• Youth bulge, more than 50% under
25, 67% under 30
• Need to create jobs and develop
skills
• Meeting expectations of living
standards
• Closing wealth gap and maintaining
social cohesion
• Role of women
22 April 2015
15. • Heart of regional policy for decades
• Dependence on oil is unsustainable
• Region driving new industries
• Manufacturing, tourism, finance,
logistics, ICT
• Private sector is key
• Entrepreneurs are key
22 April 2015
16. • Rising population and growing industrial base
increasing demand for energy
• 34% increase in generation capacity 2020
• 2.2 billion gallons a day of desalination capacity is
required by 2020
• Current supply cannot meet demand
• New sources needed – renewables, nuclear, EOR
• Energy efficiency – new approach
18. • Skill up local workforce to compete – academic and vocational
• Knowledge transfer a priority
• Support diversification, jobs, retain talent and self sufficiency
• Drive investment - $21.8bn projects in GCC
• Also education reform - maths, sciences, and critical thinking
• Dubai, Abu Dhabi and Qatar aim to be regional hubs for higher
education
• Saudi Arabia pushing technical training
19. • Major challenge for policy makers
• Youth bulge – 67% under 30
• 4 million jobs needed in KSA in 5 years
• Saudi unemployment - 12%
• Private sector has only 1 million
• Almost half unemployed have degree
22 April 2015
26. • Major challenge for markets with high debt and
limited hydrocarbons – Dubai, Egypt, Jordan
• Regional banks highly liquid and prepared to lend
• Region looking for innovative financing solutions
Sovereign bond issues
Private finance models e.g. PPP
Equity raising through IPOs
Export credit agency support
Contractor finance
22 April 2015
27. • State main driver of growth and jobs for decades
• Unsustainable -Expensive and inefficient
• Roll back the state and stimulate the private sector
• Reforms will be needed
• Open up for private sector – PPP
• Stimulate entrepreneurship
• Taxation – diversify state revenues
22 April 2015
28. • 60% of UAE GDP in 2011 and 92% of companies
• Businessses relocating to Dubai as hub - Logistics, tourism
• Start ups rising - Most in retail, services and manufacturing
• Initiatives to increase access to capital and reduce costs
• Big family firms dominate and benefit from patronage
• SMEs differentiate on quality but drives up cost
• New regulations – proposed SME law and new companies law
• Red tape, licences and visas
22 April 2015
29. • 77 million people
• World’s biggest gas reserves
• Region’s second biggest economy
• Trade and investment opportunities
But
• Impact on energy prices
• Tense geopolitical relations
22 April 2015
30. • Oil prices will stay low
• Geopolitical tensions will remain high
• Governments will rein in spending
• Business has lots of questions
But this is normal
• Don’t lose sight of what is driving regional policy
• These 10 trends are key but many other drivers
• Many challenges but the opportunities are great
Strategic conclusion
• Stay focused and consistent
• Understand your customer’s needs
• Remain committed
• Be flexible
22 April 2015
