Expanding in the Middle East - New Business Opportunities
Many foreign entrepreneurs say that the Middle East is a “land of promise” for expatriates and even companies wishing to do business in the region. However, there are several drawbacks. Unlike Asian and European markets, it does not have a steady supply of trained manpower. The people are not industrious compared to other populations. Employees do not come cheap. Thus, entrepreneurial risks are greater.
The Middle East is composed of seven countries which are the top oil manufacturers in the world. However, it seems like the oil surge has made ordinary business standards look inappropriate. Too much wealth erased the need to obtain qualifications or craft smart business decisions. Yet, the economies of nations like the United Arab Emirates, Kingdom of Saudi Arabia, Bahrain, Iran, Kuwait, Qatar, Oman, and Yemen are booming. They offer numerous stimulating investment and trade prospects for investors and exporters.
According to a private research study, the Middle East affords potential investors with considerable growth prospects in the defence, maritime, automotive, energy, and chemical industries. Incidentally, statistics released by the International Monetary Fund through its World Economic Outlook Database disclosed that the export value of Middle East was roughly USS1.13 trillion by the end of 2012. This was approximately 6.2 percent of the total worth of global exports. The combined Gross Domestic Product of all Middle Eastern nations was about US$3.96 trillion during the same year.
Opportunities in Top Five Countries
Let us take a look at various investment opportunities in 18 Middle East countries that can help spur exports in the region.
Saudi Arabia is the biggest producer of crude oil worldwide. Despite this stature and riches, the government continues to encourage private sector expansion to reduce the nation’s reliance on oil and increase job opportunities for the country’s growing populace. The Saudi Arabian government offers multiple incentives to foreign investors. The top industry right now is Agriculture.
The climate and terrain does not support much food production. Therefore, most agricultural crops are still imported from neighbouring countries. The only produce that thrives despite the arid and hot weather includes barley, wheat and date palms. There is more demand than supply so you may want to start an enterprise that imports fresh produce from other countries. The other sector is real estate. There is increasing demand for residential units and other buildings as the economy and population keep on growing. The opportunities for property investors are simply overflowing.
The United Arab Emirates specifically the trade capital (Dubai) is a business core. It provides hassle-free access to consumer markets in other Middle East nations, Commonwealth of Independents States, Africa, West Asia, and Eastern Europe. Starting a business at the UAE is not difficult. The progressive administration maintains lenient policies and gives incentives for foreign entrepreneurs. Taxation is nearly non-existent except for tobacco processing, oil and banking. Besides, it formulated a long-term plan that concentrates on growing start-ups.
The foremost industry is construction. The UAE needs engineers and other professionals in the construction and building sector. You can also form businesses that produce or sell raw materials for these two industries. Oil and gas spearhead the country’s economy. There is sufficient room to take in new investors. One option is to begin your businesses from scratch or team up with existing ventures.
Kuwait used to have a law stipulating that any investor should have a local partner with a minimum of 51 percent business equity. However, the enactment of the Foreign Direct Investment Law (8/2001) led to more relaxed requirements. Foreign companies were allowed to incorporate even without a Kuwaiti partner. Foreigners are allowed to participate in industrial activities but not oil/gas exploration and production. So far, the recommended sectors are construction and infrastructure particularly in energy, communications and drainage systems. The other is information technology and development of software applications.
Bahrain boasts of a modern regulatory and legal structure, open border policy, infrastructure, and highly-educated workforce. In short, the country has all the basics making it attractive to investors. The most ideal investment opportunity is the petroleum industry particularly processing and refining. A second alternative is transportation. Bahrain is an excellent location for shipping consignment in and out of the country. This is free of tax. It is a trans-shipment port which is the main reason for the presence of many businesses in the country.
Qatar is a relatively small country but the economy is very strong. Policies are also friendly to investors. The first opportunity you may want to put in resources is the manufacture and marketing of building materials for local consumption. This is lucrative since buildings are constructed every day. Information technology is a rewarding business because there is a scarcity of IT specialists in this country.
Prospects in Other Countries
Cyprus has evolved into a reliable global business hub particularly in the services sector. The shipping business can be a good choice because the country ranks among the foremost maritime nations worldwide. Cyprus merchant vessels represent 16 percent of the fleet with European Union flags. The banking industry is also flourishing with a broad range of local and global services like insurance, investments, mutual fund management, and asset administration.
The strict investment policies in Egypt have been relaxed. Businessmen looking at Egypt should consider the cluster of petroleum, energy generation and transmission, information technology, and telecommunications. On the other hand, tourism is the biggest earner in terms of foreign exchange and employs over 10 percent of the Egyptian workforce.
Iran has an abundance of business opportunities. With a population of 78 million and second biggest gas reserves in the world, this country is one of the first three consumers of Muslim food in the Middle East valued at 77 billion one year ago. Iran is also the second largest market for Muslim clothing.
The top business potentials in Iraq include products and services like pharmaceuticals, dental supplies, industrial valves, construction equipment, and professional consultancy services.
Israel is another very small but highly-developed nation. The Jewish nation has become very competitive in the information technology and pharmaceutical sectors.
Lebanon is the main trading partner of the United States, Italy, Germany, France, and China. Starting an enterprise is rather easy although corruption can be a problem. Nonetheless, opportunities are focused on the electricity sector as well as oil and gas exploration.
Business potentials in Northern Cyprus include retail, restaurants, water sports, construction, property management, and real estate.
It is necessary to undergo a long process and submit numerous requirements if you want to launch a business in Oman. However, the primary investment areas in the country consist of tourism, infrastructure and public utility services.
At the recent Palestine Investment Conference (2010), business leaders and private entrepreneurs met regarding potential businesses in the fields of tourism and manufacturing which are the top two. Other sectors were information and communications technology, housing, agri-business, environment, and tourism.
The economy of Syria is diversified. It circles around the sectors of agriculture, energy and industry. Syria is completely destroyed. Business is not recommended till change of regime.
Turkey has the 16th largest economy in the whole world and the sixth in Europe. The country has a high-growth market with construction and information technology as the top two profitable enterprises for foreigners.
Yemen is a small oil producing nation but does not belong to the OPEC. At present, the leading business prospects are agriculture and industry. However country is in serious political turmoil and not pro-business.
Indeed, there are limitations for entrepreneurs who want to start a business anywhere in the Middle East. Political and economic transformations have opened and closed doors for businesses. Despite the risks, corporations as well as small and medium enterprises remain open to options.