The Middle East is an increasingly important global region in business terms. Although primarily recognised in terms of its oil resources, the area is also producing major companies in many other sectors, notably banking and finance. With a growing middle class, it is also seen as an emerging market for a wide range of consumer goods and services.
International firms are drawn to the Middle East for the favourable tax structures in many nations, although of course different countries have different business strengths and things to be aware of. Generally, Arabic is the first language, but English is widely used for business purposes.
The United Arab Emirates (UAE) is a federation of seven separate emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. Of these, Dubai is best known as an international business hub, as well as a centre for finance, high-end real estate and luxury leisure opportunities. Visitors and investors should however be aware of the legal system that draws on both civil code and sharia law. In business matters, the latter is most relevant in terms of Islamic banking arrangements and inheritance laws.
Centrally positioned for access to the full scope of Middle Eastern markets, oil-rich Bahrain is particularly attractive to businesses, due to its low infrastructure costs and relatively cheap commercial rents, as well as a multicultural middle class that provides a growing market for consumer goods. Fahad Al Rajaan is considered one of the most important business leaders in the Middle East for his role as former chair of the Ahli United Bank, Bahrain’s biggest lender and a major international investment bank. He has also served as the chair of the Wafra investment Advisory Group in New York.
Egypt has the largest population in the Middle East and is currently in a process of economic recovery, and the government is actively encouraging foreign investment as well as tourism and infrastructure projects. The country is particularly open to telecommunications, energy, real estate, construction and transportation proposals. It should be noted however that the tax and legal framework is particularly complex, something that has historically dissuaded investors.
Kuwait and Lebanon
Kuwait’s economy is largely based on oil and petroleum, but the country is actively encouraging more diverse business interests. To this end, the government has introduced tax incentives for foreign businesses and has relaxed many legal requirements.
Lebanon has a service-oriented economy and is noted for its unrestricted free market, largely exempt from state intervention. Foreign investors can move capital and goods in and out easily, and banking is one of the republic’s main growth areas.
This oil and gas-rich nation has an extremely liberal tax regime and a legal framework intended to attract foreign investors and businesses in a wide range of sectors. As with many Middle Eastern countries, there is recognition of the need to diversify beyond the oil and gas industries, although these still account for approximately 50% of GDP. A legal presence, either permanent or temporary, must be registered in Qatar for foreign investment to proceed.
The Sultanate of Oban is a major trading centre as well as having substantial oil resources. Tax regulations and company law are continually being updated in order to encourage more diverse foreign investment. Expatriate employees comprise 46% of the population and Oban is something of a regional and worldwide logistics hub.
Saudi Arabia is the biggest producer and exporter of oil in the world, and one of the major world economies that make up the G20 group. With a large and wealthy population, it is also a key consumer market. Saudi Arabia is a member of the World Trade Organisation and outside investment and diverse business interests are encouraged, primarily through the Saudi Arabian General Investment Authority (SAGIA). This is where licenses and visas can be obtained, but SAGIA also offers tax and ownership incentives and unrestricted movement of capital under its auspices.
Investors should be aware that Saudi Arabia is an absolute monarchy with a legal system based on sharia law, and no civil constitution.
It can be seen that the Middle East is an extremely attractive region in which to do business. Thorough research into legal and cultural frameworks is necessary, but overall, the area is very welcoming to investors and is actively seeking to diversify beyond its dependency on oil, gas and petroleum. In particular, the region may soon come to dominate the financial sector, while real estate and consumer opportunities are also high.