EUROPE-GCC Trade & Investment Guide 2018-19

A global quest for the best in healthcare

Visions of the future for the GCC region

Higher education outside of the US or UK

See page 16

See page 36

See page 44

Trade & Investment Guide 2018–19

LASTING RELATIONS

The developments in economic relations between the Gulf Cooperation Council (GCC) and the European Union

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

Contents Features Lasting relations – the developments in economic relations between the Gulf Cooperation Council (GCC) and the European Union............................... 10 Opportunities to develop areas of co-operation and joint investment in the industrial sector.......................................................................................... 14 Healthcare tourism: A global quest for the best in healthcare............................... 16 Masters Speciality Pharma – compliance, with science.........................................20 Future of the pharmaceutical industry in the GCC countries................................. 22 Counterfeit medicine: The right prescription........................................................ 25 Crossing the borders............................................................................................. 27 Eight obstacles facing the Gulf investor................................................................ 29 Global tax and transparency..................................................................................30 Which countries have the highest taxes on high incomes?...................................34 Visions of the future for the GCC region...............................................................36 An overview of Islamic finance.............................................................................. 41 Higher education outside of the US or UK............................................................ 44

Europe Country Spotlights Cyprus .................................................................................................................. 52 Germany............................................................................................................... 58 Republic of Ireland................................................................................................64 Macedonia............................................................................................................70 Malta..................................................................................................................... 72 Ethical and Sharia compliant finance in Malta........................................................78 Portugal................................................................................................................80 Romania................................................................................................................86 UK.........................................................................................................................90 The consequences of Brexit for financial market law ............................................96 Islamic finance goes mainstream for UK property.................................................98

GCC Country Spotlights UAE..................................................................................................................... 102 Bahrain................................................................................................................ 110 Saudi Arabia........................................................................................................ 116 Oman.................................................................................................................. 126 Qatar................................................................................................................... 134 Kuwait................................................................................................................. 142 BLS Media are contract publishers of high quality media for prestigious organisations, event organisers, governments and trade associations both in the United Kingdom and internationally.

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Note from the Publisher Sam Hussain Welcome to the third edition of the Europe-GCC Trade and Investment Guide.

The Euro-GCC Trade and Investment Guide came about after we at BLS Media noticed the need for a publication that would bring together two important blocs in the global economic marketplace and help increase bi-lateral trade between them, namely the GCC and Europe. Our third edition will cover the latest developments and trends for trade and investment between the two.

The GCC, or to give it its full title, The Cooperation Council for the Arab States of the Gulf, is a regional intergovernmental economic and political union involving every Arab state of the Persian Gulf, barring Iraq – namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Europe in this case, is mainly focused on the European Union, but encompasses more than the strict confines of the EU bloc.

In this edition you will find our usual country spotlights, of the six GCC nations and of selected European countries as well. These are composed of a general introduction to the country, a more specific breakdown of the salient points for doing business there, and a brief biography of the main political leader in the country – whether president, prime minister, emir or king.

You will also find a gamut of other editorial pieces on trade and relations of interest to, and between the zones.

These cover the evolving relationships, the importance of these relationships, opportunities for developing cooperation and for investment, mergers and acquisitions, Bitcoin and cryptocurrencies, healthcare and pharmaceuticals. You will also find an overview of the current options open for those interested in following an Islamic finance pathway – for companies based in the GCC region, and those wishing to sell in or do business with it.

There is a particular emphasis on the ‘Vision’ plans of the Gulf states – what each have in mind, how they plan to get there, and the differences between the plans, based on where is country is at present.

We hope that you find it an interesting and informative read.

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

Foreword: Abdulrahim H. Naqi I extend the warm greetings of the Federation of GCC Chambers (FGCCC).

Time is indeed moving along very rapidly and doing business today is more challenging than ever before. We all need to expand our horizons, and look for new markets that are economically stable and that will create a good return on our investments.

The GCC countries are considered one of the promising markets in the world. European countries in general, and the United Kingdom in particular, have many historical ties with the GCC region. However, investments coming from the EU into GCC countries, or indeed vice versa, have a long way to go to mature fully.

The European GCC Trade and Investment Guide 2018 is a very useful tool to provide the most up to date information on the economies of both regions. It will certainly bring into light the commonalities in strategy and direction in addressing trade, investments and other relevant economic issues.

ABDULRAHIM H. NAQI secretary general, Federation of GCC Chambers (FGCCC)

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The FGCCC Chambers reiterates its commitment in forwarding the interests of GCC private sector investors in promoting its investment opportunities to European countries. Please accept the full pledge of the FGCCC in support of this milestone edition, and we assure you of our full commitment and cooperation at all times.

With best compliments and regards,

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Foreword: Abdulaziz Al-Mikhlafi 2017 was an exciting year for all of us. We have seen that the Arab countries are reinterpreting their role in the international economy in the face of low oil prices. With transformation programs, reforms, new investment laws and other regulations, the Arab countries have stepped up their efforts to diversify their economies. And despite all challenges in international and regional affairs, the business relations between Germany and Arab countries remain on a high level.

The recent framework for prosperous business relations is set to give an optimistic outlook. Just recently the International Monetary Fund (IMF) raised its outlook on the region’s economic growth to 3.6%. On the other side the German economy – the powerhouse of the European Union – is booming more than ever. In 2017, German exports reached an all-time high of more than €1,279 billion. Economists predict that it will maintain its momentum after expanding last year at the fastest pace since 2011.

With almost 400 million inhabitants, the economy in the Arab region is one of the most promising markets for European companies in the world. And the numbers are confirming this. The trade volume between Germany and Arab countries alone reached almost €50 billion, with the GCC-states accounting for the biggest share.

ABDULAZIZ AL-MIKHLAFI secretary general of Ghorfa Arab-German Chamber of Commerce and Industry

German-GCC business relations are deeply rooted in a wide range of sectors.

From traditional fields, such as construction and infrastructure to highly innovative technologies such as aeronautics and automotive. In all cases, both sides profit highly from the bilateral transfer of know-how.

But we should not forget, that there is still lot to be done. While the German exports are much higher than Arab imports, we are working to meet a more balanced exchange. In this regard, Arab countries seek long-term relationships among equal partners. At the same time, pressure is growing from international competitors. This is why German businesses should be present in the GCC countries now more than ever, with direct investments and by offering a high quality of products and services, for example, as well as scientific excellence. Therefore, this guide will give you first-hand information on business opportunities all over the GCC market.

For us in the Ghorfa, Arab-German cooperation is one our top priorities and our longterm considerations. The Ghorfa Arab-German Chamber of Commerce and Industry is the competence centre for business relations between Germany and the Arab world.

Our chamber pursues non-profit goals to enhance and strengthen business relations in the fields of trade, industry, finance and investment.

I would also take advantage of this article to cordially invite you to our activities and to become a member of our chamber. Take part at one of our delegation visits, or events in Germany or in the Arab world. In April we organised the 11th Arab-German Health Forum in Berlin, where again more than 250 representatives from German and Arab companies came together, and then there was the 21st Arab-German Business Forum, which took place in June 2018. More than 600 representatives from politics, businesses and sciences are expected to attend the forum to further strengthen the ties between Germany and the Arab countries. It would be a pleasure to meet you at one of these, or future events, in order to continue the discussion about further developments in Euro-Arab business relations.

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TÜV RHEINLAND IMPORTS TO THE ARABIC WORLD & CONSIGNMENT BASED CONFORMITY ASSESSMENTS The volume of products imported into the Arabic World has increased significantly over the past 10 years. The purchasing power and the economies of countries like Saudi Arabia, Kuwait, Iraq, Egypt and Algeria have been growing consistently for years. Countries in the Arabic World present immense export opportunities for overseas companies. TÜV Rheinland has the skills and experience to help companies realise these opportunities. Adriana Gomes, an expert in Consignment Based Conformity Assessment (CBCA) and Pre-Export Verification of Conformity (PVoC) programmes at TUV Rheinland explains how the company can help.

Mechanical engineering products, vehicles, Industrial goods, toys, food and a wide variety of consumable goods have shown particularly strong increases in imports to the region.

Our work suggests that products marked "Made in the UK” remain popular, as a result of Britain’s strong historic association with the Middle East. These trade opportunities are expected to increase in importance due to current international political situations and because of the current uncertainty surrounding Britain’s exit from the European Union.

In international trade today, success is triggered by not just the ability to offer the right products, but also being able to comply with importing requirements of the recipient country. Increased globalisation and demand for importing products manufactured around the globe, has increased the risk of products and materials not being delivered on time and/or lacking the quality that is required. At the same time businesses all over the world have the common need for a guarantee that ordered components, materials and equipment align with given specifications. As a result, many governments have implemented and enforced a Pre-Shipment Inspection programme to ensure that imported goods comply with national regulations and market approvals, for example the Gulf Mark (G Mark - an approval for products imported to Gulf States). In our experience, the most common cause for exporters failing to gain market access is not having obtained the required Certificate of Conformity (CoC) prior shipping the consignment to the destination country.

The CoC is a mandatory stage used to verify the compliance of the products that are being imported in the country. Without a valid CoC the products may be stopped at the border and exporters are exposed to risks around delayed delivery and may even end up paying fines to customs.

TÜV Rheinland, an independent third-party company, holds accreditation with numerous governments “Iraq, Kuwait, Dubai, UAE, Egypt, Saudi Arabia & Botswana” to provide Pre-shipment inspection Services to ensure that consignments and relevant documentation conforms to contractual requirements. Our extensive experience in global supply chain projects make us an ideal partner for your business. As regulations are continuously changing, is important to find a service provider that you can rely on. You can benefit from our know-how and tailored solutions for your market.

Please get in touch so I can help you to understand the requirements for your business, now and as regulations evolve.

Adriana Gomes Local Field Manager Government Services TÜV Rheinland UK Ltd. Mobile: +44 (0) 7766 712 380 E-mail: adriana.Gomes@uk.tuv.com Web: http://www.tuv.com

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Investment matters

Will Seivewright corporate partner, Baker McKenzie Habib Al Mulla, UAE For investors unfamiliar to the Middle East it must appear to be a bewildering time to consider investing in the region.

However, many foreign investors are able to look past the regional complexities and uncertainties to make significant and successful investments across a wide range of sectors.

Market sentiment in the region has historically been closely tied to oil prices.

While it’s still a major factor, particularly when considering fiscal deficits and government spending, there are many other factors to consider when weighing up allocation of capital to the region. What is apparent from the sustained levels of regional M&A activity over recent years is that investors are still very much willing to do deals.

The reasons for this willingness are many and varied. For investors looking specifically at local market conditions, the Gulf Cooperation Council (GCC) countries continue to exhibit strong GDP growth. The young, affluent and growing populations across the region present a wealth of opportunity, not just in the consumer facing sectors but also for major infrastructure, renewables and other industries. The United Arab Emirates (UAE) has been the most active jurisdiction for deals in recent years because investors are looking at the UAE for many other reasons: the hub for their regional activities; the headquarters for

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operations and business development into Africa; moving their regional decision making from Europe; using the Dubai International Financial Centre for its neutrality and dispute resolution framework; favourable tax treatment.

The dominant market by size in the region is Saudi Arabia, which has seen an overall dip in activity in recent years. While this is going to remain the case in the short term, with many of the slated IPOs and privatizations on hold, there is no doubt that its unprecedented reform agenda, openness to foreign investment and future infrastructure requirements are going to present enormous opportunities in the medium and long term.

From a legal and regulatory perspective, while many of the long-standing barriers to entry still remain, they are gradually reducing. The key legal restriction for overseas investors has been the foreign ownership restrictions in place in many jurisdictions. The consistent theme across the GCC is that these restrictions are being gradually removed. Saudi Arabia approached this relaxation through allowing foreign investors to conduct certain activities that were historically reserved to Saudis and/or allowing 100% foreign ownership of companies undertaking activities that were previously subject to certain minimum Saudi ownership thresholds. To date, the UAE has adopted a model of permitting 100% foreign ownership in designated ‘free

zones’; however, in October 2017, the UAE government passed landmark legislation that will relax restrictions in certain industry sectors right across the UAE. The precise industries are yet to be confirmed under subsequent legislation. Kuwait and Bahrain have also adopted similar legislation.

The legislative reform agenda across the GCC is also continuing apace as existing legislation is modernised and new legislation is passed to regulate emerging industries such as peer to peer businesses, social media, crowdsourcing and fintech.

Likewise the fiscal reform agenda, commenced in response to the drop in oil price, enters a new era in 2018 with the introduction of 5% value added tax (VAT), fresh on the back of new taxes on tobacco and sugary drinks introduced in October 2017. When judged against international standards, the UAE and Saudi Arabia have done a good job of putting in place the rules and the necessary infrastructure to levy VAT. If the GCC follows international precedent, expect the VAT rates to double in a decade. The impact on fiscal deficits will be swift and significant, particularly in the UAE with its large retail base, which is now expected to return to budget surplus in 2019.

One continuing and fundamental barrier to entry is the absence of available assets of sufficient size and quality to attract international investors, particularly major financial investors. Many of the key targets of interest steadfastly remain under the ownership of the big regional families.

The hope that these families would cede control to outside investors as they pass between generations have so far been largely unfounded.

Contrast this with some of the recent headline deals which involve regional start-ups, particularly in the technology sector, the most important example being Amazon’s acquisition of Souq.com. This is a great example of an international investor making a major regional investment in a highly competitive and developing market place. Hopefully many more will follow.

For foreign investors, trying to judge the constantly changing political landscape is often hard. Longstanding relationships both within the region and internationally are undergoing rapid and unpredictable changes that can have immediate and dramatic effects on currencies, security, business relationships, supply chains, contracts and personnel. While this risk is difficult to hedge against, being able to quickly comprehend and adapt to new situations ensures continued business success in the region.

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Features introduction Welcome to the features section of the Europe-GCC Trade and Investment Guide Overleaf, you’ll find key information and editorial regarding free zones, healthcare tourism, tax, counterfeit medicine and professional services. This edition also features covering cross border transactions and the opportunities of Islamic finance.

Economic relations between the Gulf Cooperation Council (GCC) and the European Union are always a major element in this publication.

We look at the opportunities to develop areas of co-operation and joint investment in the industrial sector, and break that down with a sector guide.

Also included is an interview with Alex Reuter, partner at deNovo Corporate Advisors, who will reflect on cross-border activities, and we are glad to announce that Jan Maarten Slagter, CEO of IBFD has shared his thoughts on international taxation. Zaineb Sefiani at Islamic Finance Navigator has also contributed to the publication by submitting a feature on bitcoins and cryptocurrency, and Will Seivewright, corporate partner, Baker McKenzie Habib Al Mulla, explains why investment matters.

We hope you enjoy this edition of the Guide.

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

Lasting relations The economic relations between the Gulf Cooperation Council (GCC) and the European Union have undergone rapid developments over past few decades, especially since the signing of a framework agreement between the two sides in 1988 to establish a free trade area to help document the various fields of co-operation between the two sides.

Despite faltering negotiations on the FTA, the follow-up to this dialogue has led to a determination to develop GCCEU relations, even given the slow pace of progress over nearly three decades.

The importance of economic relations between the GCC countries and the European Union stems from their regional, Arab and international status.

The success of these relations can serve as a model for successful and fruitful international relations that takes into account the interests of all parties. This

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principle has been affirmed by the GCC states throughout their discussions with the European Union.

In order to help this along, there have been attempts to document the process by taking into consideration: • The strategic and economic importance of both the GCC and the EU • The main indicators of economic co-operation • The progress of negotiations on a free trade agreement between the two sides • The Gulf private sector and GulfEuropean relations.

• Opportunities for co-operation and joint investment between the two sides.

• Britain’s withdrawal from the European Union.

• The obstacles facing the Gulf investor.

The importance of the Gulf Cooperation Council to the EU The Gulf region is one of the most strategically important regions of the world in terms of energy resources, especially in crude oil and natural gas.

The Gulf States have proven reserves of more than 500 billion barrels of crude oil, which accounts for more than a third of total world reserves. Future studies confirm that fossil energy resources will remain active and successful, and oil will remain at the forefront of energy and industrial and commercial needs throughout the 21st century.

Europeans are aware of the importance of oil for the continued functioning of the economic system in EU countries, which accounts for 70% of EU imports from the GCC countries, and this sector is fertile ground for investment from European companies, not to

THE EUROPE-GCC Trade & Investment Guide 2018–2019

mention the revenue from EU taxes on imported oil.

cubic metres (tcm), of which the share of Arab countries is up to 25%.

The GCC produces about 15-16 million barrels per day (bpd), in addition to its production and reserves of natural gas. Studies indicate that the EU’s consumption of oil is increasing. The GCC countries also account for the lion’s share of the petrochemical industries in the Arab world. They have huge investments in EU countries amounting to 50% of Gulf investments abroad.

Most natural gas reserves are concentrated in Qatar, Saudi Arabia and the UAE. New discoveries were made in 2009, which represent only (???) 90% of the oil produced and 110% of the gas production. A number of giant oil and natural gas fields were discovered, such as the Karaa al-Maru field in Kuwait and the Banyan field in Saudi Arabia, while many gas fields have also been discovered, most notably the spinning field in Saudi Arabia.

European countries also export their workforce to the Gulf region, and therefore we must also take into account the flow of wages and salaries, as well as the flow of Gulf tourism to Europe. Then there is also investment and contracting services provided by European institutions to the GCC states, banking services, treatment, education and other unforeseen exports to EU countries.

On the other hand, the large Gulf banks have a strong presence in the financial markets of the European Union and the most important markets of London and Paris, with the establishment of several joint economic projects between the private sector institutions on both sides. These projects enjoy the distinct investment advantages and incentives offered by GCC countries.

The Gulf States have a population of about 40 million people, which represents 11% of the population of Arab countries and less than 0.5% of the world population. Thus, the overwhelming majority of oil and gas production in the GCC countries flows as exports to oilimporting countries, making their exports significant if not decisive in determining the size of the world supply of oil.

The importance of the European Union to the Gulf Cooperation Council: Although Asia is one of the most important regions for GCC oil exports, the EU is second in importance.

As for other exports, the EU absorbs a major share of the Council’s exports of refined petroleum products, petrochemical products and aluminum.

EU member states are the second largest foreign investor in the Gulf after the United States.

The oil and gas sector Studies indicate that proven reserves of oil in the world had exceeded 1,200 billion barrels by the end of 2015, and the Arab Organization of Arab Petroleum Exporting Countries (OAPEC) accounted for 66% of the total. As for natural gas, OAPEC proven reserves were estimated at the end of 2010 at about 170 trillion

Global demand for oil is expected to rise to 112.8 million bpd by 2020, while oil production capacity is expected to average between 87 and 116 million bpd daily, meaning that there could be global supply shortages. For those who control oil production areas this demand creates an ability to control the access to this vital commodity. Oil is the main commodity linking the EU and GCC countries.

The European Community is the largest importer of oil and natural gas from the Gulf. Italy, France, Germany, Spain, the Netherlands, the United Kingdom and Belgium are among the top 15 biggest importers in the world. For EU countries, oil is not only a source of energy, the wealth creates a growing Arab market for European products and services, but also a fertile region for European investment.

Among the seven largest oil companies in the world there are four European companies: Royal Dutch Shell, British Petroleum, French Total and Italian Eni. The European Union is forecast to have a deficit in oil supplies in 2020 by 16 million bpd when compared to energy needs from consumers and from industry.

Future studies indicate that Organization of the Petroleum Exporting Countries (OPEC) may be the only organisation or bloc with a production capacity of around 31 million bpd in 2001 to 60 million bpd in 2020, and within OPEC there are only six countries with the capacity to expand and develop. Production capacity is expected to rise from about 24 million bpd to about 48 million bpd in 2020, with most of the growth accounted for by the GCC countries Saudi Arabia, Kuwait and the UAE, as well as Iraq, Iran and Venezuela. Arab oil production is expected to rise by adding Oman, Algeria and Libya from 32.5 to 45 million bpd by 2020, one factor that explains the frantic race between the United States, the European Union and Japan over the Arab region, especially the Gulf.

As the Gulf States realise this reality, they are still working with the EU on the basis of the importance of the global

oil market to a constant and lasting dialogue between the two parties, to develop energy supply conditions.

The GCC countries, through their membership in the OPEC, must strive to maintain global energy security, and there must be channels of communication between OPEC and the Euro-Gulf partnership.

This will enhance the positive cooperation and will advance the prospects for mutual trust between the GCC and the EU. The dialogue over products like oil and gas insurance must be based on the consensus of all parties, with the price of a barrel of oil determined by the world market according to the supply and demand base. On the issue of natural gas, we find that EU countries seek to secure it in terms of production and marketing, especially with a view to projected increases in the volume of natural gas consumption in Europe over the coming years. This is why the European Union tends to reach direct agreements with gas producing countries. Natural gas is an important factor in EU-GCC economic relations.

This interest has been clearly demonstrated by studies and plans currently under way, such as those exploring the possibility of establishing a gas pipeline between Qatar and Europe.

GCC-European trade exchanges Trade between the GCC countries and the European Union has developed considerably in recent years. The volume of this exchange increased significantly from about €40 billion in 2002 to €99.5 billion in 2010 and to €155.6 billion, an increase of 289%. The development of Gulf imports from the EU was faster than the development of exports to it, with imports rising by 298% from €28 billion in 2002 to €111.6 billion in 2015, while exports increased from €11.6 billion in 2002 to €44 billion in 2015, an increase of 275%.

It is clear that the balance of trade has increasingly slanted in favour of the European Union with a value of €67.6 billion in 2015, compared with €16.4 billion in 2002.

Saudi Arabia is considered the first Gulf trade partner of the EU with a 38% share (second in terms of imports) of total Gulf imports and 93% of the total Gulf exports. Saudi Arabia’s exports are highly valued. This is followed by the United Arab Emirates (the first in terms of imports) with 39% of imports and only 1% of exports. Qatar is third with 9% of imports and 4% of exports. The relative importance of Qatari exports reflects gas and petrochemical exports.

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

Opportunities to develop areas of co-operation and joint investment in the industrial sector

According to study forecasts, the European Union predicts that various growing sectors in the GCC economies will mean closer relations between the two parties. In addition to the oil sector, there are labourintensive sectors such as clothing and textiles, energy-intensive sectors and there will be a need for skilled workers in the petrochemical and metallurgical industries. This will be reflected mainly on the non-oil and technology sectors.

As for the aluminium sector, the GCC countries have been seeking through agreement to achieve the specific goal of reducing the European tariffs on the import of primary aluminium from the GCC countries from 6% to 0%, which contributes to the increase of GCC exports to the European Union of this article.

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When comparing the production cycles in the GCC and EU countries – according to the EU study – EU companies are active in all stages of aluminium production, both in terms of melting and producing semi-finished goods, while the GCC countries focus on deflation. Therefore, the focus was on studying the expected impact on the production of the first aluminium, where the GCC countries are expected to increase their profits in the short term from the elimination of customs duties as a result (6%).

In the long run, as a result of the current GCC plans to raise their aluminium production, the study expects to increase exports of GCC countries to the EU. There will be some impact on the growth (and not on current energy) of the aluminium sector in the EU countries in the future.

Consequently, there is no positive impact on the primary aluminium sector in the EU countries, but it will mean a relative loss in the long term from the signing of the agreement.

This negative impact should be mitigated by including the possibility of unconditional investment of the EU countries in the GCC aluminium sector, to benefit from European energy investments. The conversion of the production of the Gulf smelters is an opportunity for the European Union to step in because smelters are using electric power in a heavy, traditional manner, with consequent thermal emissions. This contributes to the distribution of production stages between the two blocks, Gulf smelters activities spring (upstream), while European plants play a more active role in downstream activities. The nonferrous metal industries are among

THE EUROPE-GCC Trade & Investment Guide 2018–2019

the vital sectors that can be expanded between the two sides, as in the Norwegian Hydronors Agreement with Qatalum, he world’s second largest aluminium plant in Qatar (a joint venture between Qatar Petroleum and Norsk Hydro).

Environmental opportunites Accounting for the effects and problems related to the environment and the need for the work of the GCC states to calculate and limit disadvantages, the study indicates that the GCC countries can benefit from the rich scientific and practical experience of the EU in environmental protection and the promotion of green issues. This includes; laws and procedures related to construction processes, urban and urban planning, engineering services, measurement and control of services, environmental risk analysis and impact studies.

In particular, the EU study highlights specific areas in which the GCC countries can benefit from the European experience. Areas such as water treatment and recycling services, waste disposal of various types and its uses in power generation, engineering and industrial consultancy, the development of eco-responsible infrastructure, education, training and the transfer of knowledge related to the protection and preservation of the environment.

Liberalisation in financial services can also have a positive impact on the environment. For example, the insurance of transit exports is important to try and limit the risk of leakage or dumping of harmful substances due to accidents and natural disasters, which will then require the application of considerable resources and specialised expertise to make safe.

A growing services sector The liberalisation of trade in the services sector lies at the heart of Euro-GCC co-operation. The costs of environmental protection are much lower than the costs of industrial production and transport because many services depend on knowledge rather than the intensive use of other factors of production. Opportunities for technological innovation often goes hand-in-hand with proven environmental benefits.

With the liberalisation of the GCC services sector, it is expected that business services, telecommunications services, construction services and related engineering services, distribution services, environmental services, financial services and

transport services will all increase. The increasing need for medium and highly skilled labour will push national labour markets in these sectors.

The demand for labour Modern economic activity is generating increased specialised employment and a high rate of population growth in the GCC countries – and this is often characterised by a particular growth in foreign labour – while at the same time creating of unemployment among indigenous citizens. The study expects that the increase in manufacturing and exports in the textile sector will have a limited impact on Gulf labour because this sector is characterised by the use of skilled workers and low wages – so its expansion will often attract foreign labour. In addition, GCC states should adopt health policies and appropriate safety policies and develop the social systems and laws necessary to achieve these policies.

On the other hand, any expected expansion in the petrochemical industry will have a positive impact on national labour as this is one of the higher paying sectors. Sectors that are expected to improve for GCC countries are petroleum, mining and mineral extraction. GCC nations should make efforts for local citizens to work in these sectors through appropriate education and training programmes.

infrastructure is still there, the crash in oil prices from 2014-16 has seen major changes to the market and the value of contract awarded has fallen by about $180bn a year in 2016 and 2017. This trend looks set to continue in 2018-19.

“Anyone seeking to do business in the region must be both flexible and patient. The biggest projects will take time to come to the market, and contract awards may never recover to pre-2016 levels. A new approach to project delivery is required. Governments want greater economic sustainability and are seeking innovation improve efficiency and reduce the need for capacity expansions. Private developers are expected to take a larger share of the capital burden through public private partnerships (PPP), as well as through the privatisation of state utilities. And future projects are expected to deliver more ‘in-country’ value in terms of job and supply chain opportunities for local companies,” said Richard Thompson, Editorial Director, MEED.

Low-wage sectors such as food, metallurgy, machinery and machinery industries, will face pressures to reduce labour. The replacement of national labour with foreign labour is an option in these sectors to increase employment.

As mentioned earlier, it is forecast that there will be increased demand for national labour in the service sectors associated with growing imports from the European Union, especially in jobs requiring medium skill levels.

Although the service sector is not as advanced as its counterpart in the EU, it is the leading sector in the employment of national labour and can provide many higher skilled opportunities for employment.

The future With an estimated $2.4 trillion of projects planned across the GCC, the region still offers abundant opportunities as governments seek to develop infrastructure to meet the needs of rapidly expanding populations, and to deliver economic diversification. While the need for

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A global quest for the best in healthcare The movement of people in this global quest is age-old and is now even more extensive.

3000 years ago patients in ancient Mesopotamia traveled to the temple of a healing deity at Tell Brak in Syria to help eye disorders.

When he was discovered in 1991, Otzi, the Tyrolean Iceman or mummy, who lived between 3400 and 3100 BCE, was found to have multiple tattoos, which experts explained as a medical diagram of the body, or perhaps instructions for acupuncture lines that the medically trained in different locations, with different languages, could follow.

The Egyptians, Greeks and Romans would travel all over the Mediterranean to religious centres associated with healing gods. For example, the Asclepeion was a temple dedicated in honour of the Greek god of medicine.

Popular examples where based in Athens and Thessaly. These temples were a place where patients would visit to receive either treatment or some other type of healing, physical or

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spiritual. This continued all through the early Christian church and middle-ages in the form of religious pilgrimages.

The relics of saints would be prayed to, touched, or sometimes ground down and ingested in the hope of a miracle.

The fact that people move from one country to another seeking treatment may not be anything new, but in the modern era it is a controversial subject for lots of reasons. This is why it is important to define exactly what it is about.

It could be that the individual is just looking for the best treatment possible, or the cheapest treatment possible. It could be that they want to avoid waitinglists, or health rationing in their local or national healthcare system. Maybe the treatment isn’t even offered at all locally, maybe it’s a new cutting edge procedure only offered in some specialised centres.

All these reasons have wider implications, but in certain cases this can be one of the most contentious subjects in our globally-connected world. A life or death issue, in fact.

Difficult definitions A traditional definition of medical tourism may have referred to those travelling from less-developed countries to major medical centres in highly developed countries for treatment unavailable at home. More recently it has come to refer to those from developed countries who travel to developing countries for lower priced medical treatments. The motivation may be also for medical services unavailable or illegal in the home country.

Most often this is for specific, limited treatments, or surgeries - often cosmetic surgeries - but patients travel for most medical services, albeit in limited, if increasing, numbers.

Health tourism is a wider term for travel that focus on medical treatments and the use of healthcare services. It covers a wide field of health and wellness tourism ranging from preventive and healthconductive treatment to rehabilitation and curative forms of travel.

Where this begins, and where it becomes simply going on holiday for a rest, is another grey area.

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Push and pull factors

Not always positive

The high costs of healthcare, increasing demand from ageing populations, long waiting times for some procedures, cheap and easy international air travel, and improved standards of care in some locations have all acted as push and pull factors. The relative importance of each will, of course, vary from country to country, and for procedure to procedure.

In places like the EU and the US, with generally high medical standards, outward medical tourism is viewed as risky. In places with free national health services, like the UK, an inward flow has become a highly political issue. This is not helped by the fact it is extremely difficult to quantify, which again depends on definitions.

Surgery performed in medical tourism destinations can cost a fraction of the price they do in other countries. Another draw is convenience and speed.

The OECD estimates that there are upwards of 50 million medical and healthcare tourists worldwide annually, and the figures indicate a significant growth in this industry year on year.

While exact statistics are difficult to confirm, estimates indicate a strong potential for the future - presently growing at a rate of 15-25%, with inbound patient flows highest in Mexico, Southeast and South Asia.

Popular medical travel worldwide destinations include: Costa Rica, India, Israel, Malaysia, Mexico, Singapore, South Korea, Taiwan, Thailand, Turkey and the United States.

Providing a service Healthcare Tourism providers have developed as intermediaries in recent years. These companies usually have nursing case-managers to assist patients with pre- and post-travel medical issues. They may also provide resources for follow-up care upon the patient’s return.

Some of the factors that are taken into account are: healthcare infrastructure; international accreditation, quality assurance, adoption of best practices, and transparency of outcomes; cost savings; general tourism infrastructure, state-of-the-art medical technology, availability of internationally-trained and experienced medics.

Estimates from Britain’s NHS on how much it spent on treating foreign nationals vary wildly, partly because the National Health Service has a tradition of treating all-comers, and not charging upfront (“free at the point of use”). It identifies three very different groups who might make use of the NHS. They are: regular visitors and non-permanent residents, irregular migrants and so-called “health tourists”.

Even Jeremy Hunt, UK health secretary recently admitted “We think that this probably in the range £1.5bn to £1.9bn…

Empirical knowledge on the magnitude and effect of health tourism is lacking”.

The most controversial groups are people who have travelled with a deliberate intention to obtain free healthcare which they wouldn’t receive in their countries of origin, and frequent visitors who take advantage of routine treatment. It’s estimated that these can cost between £70m and £300m (around 0.3% of total health spending), most of which is not recovered.

On the other hand the NHS also brings in revenue from overseas visitors paying for treatment. According to recent reviews this is a “growing market”.

In the US there are potential destabilising implications. The growth in this type of tourism has the potential to cost local healthcare providers billions of dollars in lost revenue.

Additionally, some patients in some First World countries are finding that insurance either does not cover orthopedic surgery (such as knee or hip replacement) or limits the choice of the facility, surgeon, or prosthetics to be used.

The top reasons patients travel are: cosmetic surgery, dentistry, cardiovascular treatments, orthopedics, cancer (often late stage), reproductive health, weight loss, scans, tests, health screenings and second opinions.

Risks, legal issues and ethical responsibilities

Within the next five years it is estimated that the market will be in the region of $165m.

Some countries in Africa and Asia have very different infectious diseases to Europe and North America. Without

All surgery includes an element of risk, but medical tourism carries some risks that locally provided medical care does not.

having built up natural immunity, exposure to these can be a great hazard for weakened individuals, especially regard to gastrointestinal and mosquito-transmitted diseases.

The post-operative care can also dramatically, and the very fact of travelling long distances soon after surgery can increase the risk of complications. Long flights increase the risks of travel-related conditions like deep vein thrombosis.

The World Health Organization has recognised that increased medical travel comes with associated risks. In 2004 it launched the World Alliance for Patient Safety. This body assists hospitals and government around the world in setting patient safety policy and practices, which is particularly relevant when providing medical tourism services. There are other bodies in Canada and the US which aim to regularise international healthcare accreditation, but this is a work-inprogress, and at present there are no legally recognised global standards, and no body to regulate them.

If problems do occur medical tourists suffer from complaints policies that don’t deal appropriately with the issues involved.

Receiving medical care abroad can lead to cross-jurisdiction legal issues. Some destinations present themselves as attractive medical centres but sometimes there isn’t the legal framework that travellers might expect. Patients might not be covered by personal insurance or might be unable to seek compensation. Some hospitals and/or doctors might not have appropriate First World insurance cover. Issues can also arise for patients who seek out services that are illegal in their home country which their home country insurance may refuse to cover.

Assuming the services provided are legitimate, and aren’t offering blatantly quack treatments to the desperate or transplants with black-market organs, medical tourism can still raise ethical issues for the countries in which it is promoted. Often this leads to increased inequalities of service, sucking money and talent from local services.

Sometimes the local health market becomes skewed, and services are so in demand that costs spiral out of the range that local people can afford to pay.

When dealing with foreign and exotic or unproven treatments outside of normal

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channels and regular clinical trials, there may be a danger of over-selling or fraud.

In the US, some employers, controversially, use medical travel programs as a way to cut employee health care costs.

Statistical basis Data is patchy, a baseline 2008 report from McKinsey and Co. discovered that 60,000 and 85,000 general medical tourists were travelling to the United States for the purpose of receiving in-patient medical care. The study estimated that 750,000 American medical tourists travelled from the US in 2007 (up from 500,000 in 2006).

The availability of advanced medical technology and sophisticated training of physicians are cited as driving motivators for growth in foreigners travelling to the US for care, whereas the low costs for hospital stays and major/complex procedures at Westernaccredited medical facilities abroad are cited as major motivators for American travelers.

It’s obvious to say, but currency fluctuations can have an enormous impact of the choice to travel and the destination. The same report pointed to the fact that the decline in value of the US dollar between 2007 and 2013 was a great additional pull factor for foreign travel to the States.

Another report in 2016, issued by VISA and Oxford Economics, judged that the medical tourism industry globally could be valued at $100 billion, and was projected to growth up to 25% year-on-year for the next 10 years as an estimated 3-4% of the world’s population could be travelling internationally for healthcare and health-related treatment.

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VISA’s report accounts for other reasons for growth – like some 340 new international airports over the next decade – and the medical travel market could soar to $3 trillion by 2025.

Industry journal, Medical Tourism Index (MTI), listed the top destinations, and a similar pattern of global growth emerges: that the United States leads in healthcare travel spending, but Asia’s Thailand, Singapore and South Korea continue to thrive. Both VISA’s and MTI’s findings expect China to overtake the US spot within the next 10 years due to the population’s demand for high quality care.

The findings also looked into the age range of patients; VISA expects 13% of all international travel by 2025 to be older travellers. A recent survey of 31,000 18-34 year olds from 134 countries by TopDeck Travel found that some 88% of them travel internationally between one to three times annually and that the number only continues to grow.

“The borders to quality healthcare access have begun to disintegrate.” MTI co-authors, Renée-Marie Stephano, JD president of the Medical Tourism Association and Mark Fetscherin, associate professor of international business and marketing at Rollins College, said. “Speculation about the medical tourism industry as a ‘phenomenon’ is over. This report and the rankings of the the Medical Tourism Index provide a unique opportunity for investors seeking new ventures to make smart choices in destinations driving patient travel.”

VISA said, “We believe that medical tourism is primed for accelerated growth as more of these travellers seek new treatments, as well as lower cost or higher-quality care not available in their home country.”

We believe that medical tourism is primed for accelerated growth as more of these travellers seek new treatments, as well as lower cost or higher-quality care not available in their home country.

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Compliance, with science As a global pharmaceutical company, Masters Speciality Pharma has a vision to provide access to high quality medicines for all, by prioritising emerging markets, including the Middle East. Masters partners with medical professionals and healthcare institutions to supply high quality, life changing medicines that patients need, when they need them.

With a 30+ year track record, Masters has proven supply chain capabilities and unrivalled access to Southern and Central America, the Caribbean and the Middle East. Masters is specialised in sourcing medicines from the UK, Europe and US in the therapy areas of oncology, haematology, pain management and rare and orphan diseases and has ambitious plans to grow the company substantially in the near future.

In the pharmaceutical industry counterfeit medications remain a top concern not only in the MENA region, but globally.

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As a global pharmaceutical company whose vision is to provide access to high quality medicine for all, what is Masters Speciality Pharma doing against the counterfeit of medicine in Europe and the Middle East?

Masters Speciality Pharma is a component of the supply chain process situated between the pharmaceutical industry and patients and their healthcare providers in the emerging markets. Masters therefore has a strict zero-tolerance policy concerning counterfeit medicine and actively applies an anti-counterfeit process to prevent falsified medicines from entering its supply chain.

As an EU based company, Masters is obliged to comply with, and strictly adhere to EU Legislation on Wholesale Distribution Directive 2001/83/EC, adhering to Guidelines on Good Distribution Practice of Medicinal Products for Human Use (2013/C 343/01). This requires certain compliance steps including vendor

selection. Masters only works with bona fide suppliers and carries out extensive checks to ensure their licensure is valid in the relevant market(s). A physical inspection is carried out on each and every unit of medicines that is delivered into Masters, with particular attention paid to packaging, labelling and tamper proof closure. Only items that pass this strict observation are accepted into the warehouse and can be further processed for onward distribution.

There are similar bona fide checks in place to ensure that medicines are only delivered to hospitals, clinics and appropriate licence holders in the Middle East. Customer checks also include periodic visits to conduct audits of their systems and procedures. This closed system of logistics ensures medicines do not end up in the hands of those who will engage in counterfeit activities, therefore safeguarding product users against potential hazards arising from poor distribution practice.

Masters was one of the first companies to adopt the Pedigree Papers System of track and trace for medicinal

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Masters is focused on providing high quality medicines at a reasonable price for chronically ill patients in the Middle East and beyond. products and has been operating this since 2006. This paper based system is now a subject to an automated serialisation program which becomes mandatory in February 2019 through the EU’s Falsified Medicines Directive as well as the FDA’s Drug Supply Chain Security Act (DSCSA), which mandates serialised traceability for US wholesale distributors in November 2019. These various directives will require pharmaceutical products to carry unique identifiers which will determine the authenticity of product source thus automating the track and trace procedures. As a pharmaceutical wholesaler and distributor, Masters has committed substantial investments in its systems for adopting the electronic tagging of pharmaceutical products being distributed in the Middle East and further afield, such as the remodelling of its warehouse systems and processes for ease of adoption of 2D barcode identification.

In the unlikely event that a product has to be recalled, Masters is committed to responding in a timely manner, with full product traceability capabilities to provide assurances to governing bodies, SFDA and NUPCO. Does Masters Speciality Pharma have any special mechanism with regards to tracking devices, identification solutions and nano-encryption technology to ensure drugs are authentic upon receipt?

Masters is investing heavily in technology to be fully compliant with the EU Falsified Medicines Directive, effective in February 2019, and FDA’s Drug Supply Chain Security Act (DSCSA). The FDA requirements come in November 2019, and this will include the capacity to handle the unique serial codes on each pack of medicine.

When a product is received, Masters’ systems will be able to authenticate the unique identifier on the product and process correspondingly. Products destined for the Middle East and our other regions of business outside the EU will be decommissioned to

ensure they cannot re-enter the EU supply chain and be flagged under the falsified medicines directive. While Masters does not track packages specifically with tracking devices, all of the shipments include temperature trackers, and use validated air shipping routes which have been mapped for temperature stability. Masters therefore monitors each shipment to ensure that it arrived at the correct destination within the correct temperature specifications. Masters is not a manufacturing company, and it predominantly works with current and future technology at package-level, rather than dose-level technologies, such as nano-encryption, Masters watches these evolving fields of doselevel identification with interest.

With the significant rise in chronic diseases in the Middle East, e.g. diabetes, cancers, cardiovascular diseases, does Masters Speciality Pharma have any new drugs under development for this growing area?

Masters is focused on providing high quality medicines at a reasonable price for chronically ill patients in the Middle East. Currently, Masters boasts access to a diverse portfolio of products, including branded generics and exclusive distribution agreements for branded products in the therapy areas of oncology, pain management, haematology, orphan medicines, thus meeting a broad spectrum of unmet healthcare needs in the Middle East.

The growing pharmaceutical market within the MENA Region has been estimated at over $50 billion. With access to medical knowledge by the general population, the high demand for access to authentic drugs and with the on-going scrutiny by governmental regulators; what is Masters Speciality Pharma’s overall plan of action to ensure that the demand for both new and established medicine is met?

Masters Speciality Medicines (MSM) is a new division of Masters, offering locally

registered medicines from Masters or its partners. Masters aims to leverage its legacy of over 30 years’ access in the emerging markets to licence medicines for the Middle East and other emerging countries so that they can be registered in the local country under its own Masters brand. This will allow patients in the Middle East and Latin America to have wider access to a greater range of high quality, established and locally-licensed medicines for the first time and offer excellence in treatment options.

Is Masters Speciality Pharma looking to partner with any of pharmaceutical establishments in the Middle East over the next 12-18 months?

As Masters’ portfolio increases, there will be a need for local expertise, partnerships and access to sales channels in the Middle East. Masters aims to have at least one Orphan Product on the Market by 2019 and collaboration with establishments in MENA is a key part of that journey.

As Masters continues to grow and expand, maintaining healthy relationships with existing partners and establishing key relationships with new partners remains a top priority.

Simon Clarke COO/CFO

Dr Zulf Masters, OBE Founder and CEO

The responses on this article are a combination of contributions from Dr Zulf Masters, OBE, Founder and CEO and Simon Clarke, COO/CFO.

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Future of the pharmaceutical industry in the GCC countries Feature Abdulaziz Alsaddique, VP CCIC Group and CEO Qimat Taiba Pharmaceutical Biotechnolgy Factory, Saudi Arabia

Introduction The pharmaceutical market in the GCC has made considerable progress due to favourable demographic and economic factors, and strong government support for healthcare. Despite the progress, the pharmaceutical sector in the Gulf is still in an emerging phase, and drug manufacturing is at a relatively nascent stage due to a number of obstacles. The vast majority of pharmaceuticals consumed in the region are imported brands, however governments have been trying to increase local drug manufacturing and reduce reliance on imported products by encouraging joint ventures and licensing deals with multinational pharmaceutical companies.

The Gulf countries are expected to spend US$12 billion on medicines by 2020. Saudi Arabia is the largest market and the per capita share of drugs sales is US$175 annually. It is expected that healthcare investment in the Middle East will reach US$60 billion by 2025, especially because these countries need between 120 and 140 additional hospitals by 2020 to meet the increased demand.

Comparing expenditure on healthcare, Saudi spends the most, followed by Egypt, UAE, Kuwait, and Qatar, and the the recent annual growth rates have been around 10%.

Pharmaceutical industry in the GCC countries The size of the pharmaceutical industry reached US$8.5 billion by the end of 2012. Saudi produces 59.4% of medicine in the region, followed by 18% in UAE, 9.2% in Kuwait, 5.6% in Oman, 4.5% in Qatar and finally 3.1% in Bahrain. Healthcare spending in the GCC will increase as the sector grows, which will lead to a decrease in the percentage spent

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on pharmaceuticals compared to the total healthcare spending to match those of the developed world, expecting a decrease from 14.3% in 2010 to 12.4% by 2020.

The trend in consuming medication is changing due to changes in how diseases are spread. Urban development and the increase per capita income in the GCC lead to a more comfortable lifestyle and increased unbalanced diets. This has lead to an increase in diabetes, heart and cardiovascular diseases.

Recently there have been efforts to pursue international companies for investment in the GCC states. There are between 15 to 20 local and foreign pharmaceutical manufacturers in Saudi. In November 2016, Modern Industrial Investment Holding Group, the Malaysian Pharmaniaga and the American E-Healthline announced signing a memorandum of agreement to build a pharmaceutical industrial complex in Saudi for SAR 600m (US$160m). This increased focus on the development of the pharma industry has motivated and encouraged particular international companies to become more involved in the UAE. Some are looking to start obtaining the necessary approvals from the relevant regulators to establish research and development (R&D) laboratories or manufacturing plants in the Emirates.

Recently the UAE established a biotech factory in collaboration with GL Rapha and Hankook Korus Pharm, two pharmaceutical companies based in South Korea, constructing the factory and marketing the products.

On the other hand, Julphar Company in the UAE is also developing its biosimilar biotechnology pharmaceutical production.

Biotechnology should be considered a national security issue. Governments

should give the utmost priority and support to secure the industry.

Notwithstanding the high investment costs in this industry,it is bvecoming essential for practically all countries across the globe.

The GCC countries are seriously considering the development of their biotechnology sector. They have facilitated foreign investment and signed numerous agreements with international companies. The concern here is whether the industry will flourish as expected, or it will be initiated strongly and then gradually the concern for fast income will dominate, following the same route as the chemical pharmaceutical sector.

Another issue is if the biotechnology factories will complement each other, or they will be competing for the same products and neglect less profitable products? In other words, will they follow the Blue Ocean Strategy or the Red Ocean one?

History gives a clear picture. 30 years since the development of chemical pharmaceutical industry and barely achieved 10% of the GCC needs are being met. Manufacturers are competing for the same products.

There are more than 40 pharma companies in the GCC region and we are still heavily relying on the multinational companies.

Challenges to the industry in the Gulf There are challenges to manufacturing pharmaceuticals in the GCC, such as the lack of expertise and skilled manpower and changing business rules and regulations, which limits the growth and increases the reliance on foreign supply. Gulf manufacturers are primarily focusing on producing general medication and are having difficulty in competing with foreign companies. Another problem is the spread of fake drugs in the GCC region and prices being higher than the global average. Furthermore, Gulf countries rely primarily on importing pharmaceutical manufacturing equipment, and pharmaceutical ingredients and medicines.

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The future The pharmaceutical industry in the Gulf is changing through reform and simplifying government regulations, increasing its efficiency and expanding the infrastructure of healthcare. Based on that, the pharmaceutical industry in GCC will face many changes in the next few years, which will provide important investment opportunities.

Local production is expected to increase thanks to increasing foreign investment in this sector.

Population growth in the GCC will be a key growth driver for the sector.

This grew from 37.5 million in 2007 to nearly 50 million in 2017. High levels of urbanisation and a strong expatriate presence also support pharmaceutical sales growth in the region. The percentage of the population aged 60 years and above is projected to increase from 1.9 million in 2012 to 17.8 million in 2050. The elderly population forms a big slice of the overall pharmaceutical spending in the GCC and will also drive growth.

Vision 2030 in Saudi Arabia gives a great chance to advance the pharmaceutical industry as it will enforce health insurance, privatise/ corporatise healthcare in and invite foreign investment in all aspects of the industry. This comes with great governmental support for foreign investors. Land in industrial areas is given free to investors, with tax breaks for a number of years.

The great concern is that most the pharmaceuticals manufacturers in the GCC countries are producing generics, yet the market is open for international investors. I believe that most, if not all, these international companies will be competing with generics. Most will manufacture their own patented products with some

generics. It is not clear if the original Saudi pharmaceutical companies will be able to stand the competition, or stay in the market.

The demand for pharmaceuticals is currently witnessing robust growth in Saudi Arabia, mainly due to increasing prevalence of non-communicable diseases and improved healthcare infrastructure. The local market is dominated by multinational firms.

Rising health awareness and increased healthcare expenditure are expected to drive market growth in the near future. Macroeconomic factors such as increasing penetration of health insurance and healthcare reforms such as allowing 100% foreign direct investment (FDI) in the sector is further projected to add to this.

Saudi Arabia, being the largest market in GCC region, presents good opportunities for investors, and this is further helped by the mandatory insurance and corporatisation/ privatisation of the healthcare sector in the country. However, lack of indigenous research capabilities, delays in patent registration, and lack of trained Saudi workers are factors expected to hamper overall growth of the local pharmaceutical market.

Conclusion Pharmaceuticals is an essential industry in any country. GCC countries have took the initiative to start with this valuable industry more than 30 years ago. Yet after these years, they are still importing 90% of their needs from international manufacturers.

I am confident that the GCC governments when they funded and supported this industry, were hoping to be self-sufficient within 30 years, not manufacturing only 10% of their needs and competing for the same products.

In my view, the new era of pharma development should be regulated in a manner which assures quality, integration and development of R&D. Another factor which will assure the success of the industry is the training of local nationals. Pharmacy schools should cater their curriculum to provide the necessary education and training to build a new workforce for the industry. It doesn’t need a lot of pharmacists but it does need technical personnel. Training institutes for allied health also should take a lead in providing the necessary training. The universities have a social responsibility to support R&D and require that their staff should be involved in it as part of their career. The workforce can stand up the challenge of this new era, however, they are underutilised, their main task being the teaching of basic academic courses. These very same individuals were involved in research for major pharmaceutical companies during their studies abroad.

Businesses investing in the pharma industry need a broader vision for the future, they should encourage and support R&D because the outcomes of developing a new molecule or formulation can be greatly rewarding.

But it takes patience and a lot of investment as well as comprehensive research to reach this goal.

Biotechnology should be given priority, as biotechnology is the future of medicine. GCC countries should give it priority and support, as part of national security, as well as the new treatment modalities for all diseases.

To ignore it at this stage will mean a continued reliance on multinationals in the future.

With new regulations and the Vision that the GCC countries have set, I feel optimistic for a brighter future for pharmaceuticals in the GCC region.

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Interview with Aileen Culligan, UAE representative for Imperial Private Healthcare Imperial Private Healthcare is the private arm of Imperial College Healthcare NHS Trust – one of the largest teaching hospital groups in London and the UK. Unlike many private hospitals, patients have access to over 500 world-class consultants working across every medical specialty. A multidisciplinary approach to treatment means they can offer an holistic package of care to patients, without the need to refer them elsewhere.

To support Middle Eastern patients in accessing care, Imperial Private Healthcare have appointed Boultbee & Co act as a Dubai based liaison point between patients, the hospitals and the consultants.

Aileen Culligan, MENA regional director for Boultbee & Co in the UAE answers our questions about Imperial Private Healthcare and their role.

What makes Imperial Private Healthcare one of the UK’s leading private hospitals?

Imperial Private Healthcare offers the very best of British healthcare – unparalleled access to some of the best medical experts in London, alongside everything you would expect of a private hospital, including dedicated consultant care, flexible appointment times, en suite rooms and talented chefs on site.

Patients are able to access worldclass expertise in all clinical areas – from cancer, cardiac services, kidney transplants and bone marrow transplants through to fertility and maternity services.

Each hospital has its own heritage and strengths. The Lindo Wing at St Mary’s Hospital in Paddington is probably best known as a maternity hospital and the birthplace of HRH Prince George and Princess Charlotte, but also specialises in a range of other areas, including trauma, weight loss, vascular, gynaecology, urology, ear nose and throat, and general surgery.

Hammersmith Hospital has world-class expertise in cardiology, cardiothoracic surgery, cancer care, renal and hepatobiliary conditions and Charing Cross Hospital is a leading centre for neurosciences, neurorehabilitation, complex surgery, elective orthopaedics and cancer care. Queen Charlotte’s & Chelsea has an outstanding fetal medicine, maternity and gynaecology service and The Western Eye Hospital is a renowned stand-alone site for eye conditions.

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What is the value of being part of the NHS trust for patients?

As a major teaching hospital, patients are among the first in the world to access new treatment options.

The hospitals are affiliated with Imperial College London, so many consultants are also involved in clinical research. Because the consultants run their trials within the NHS environment, these techniques are often available to all patients (private or NHS) very early on. These are often unavailable anywhere else in the country, or indeed, the world.

Private patients can also be transferred quickly to specialist facilities, like intensive care units or high dependency units, which many small private hospitals do not have. There is the added security of knowing that if the need does arise, they can be immediately transferred without having to wait for an ambulance, which gives huge peace of mind.

What advantages does the UK have in attracting patients from the Middle East for healthcare?

Imperial Private Healthcare consultants have enviable reputations and come from some of the most respected medical schools from around the world. There is also the added attraction of being in the heart of London. All the hospitals have excellent transport links to central London and St Mary’s is within walking distance of all the major cultural and retail attractions of central London.

What is Boultbee & Co’s role in supporting Middle Eastern patients to access Imperial Private Healthcare?

We can support referred patients by acting as their local Dubai based liaison point. Patients referred through us benefit as we help with the collation of all medical information to save time in the UK and prepare patients for their stay in London. We also arrange admissions or second opinion consultations. As we work closely with Imperial Private Healthcare’s International Team in London, patients will enjoy a smooth transition of care.

Why do you think Imperial Private Healthcare chose to use your services?

We have over 40 years of collective experience of working and living in the Gulf region. The opening of the Dubai office in 2017 means that Imperial now has a permanent presence on the ground here in the UAE. For more information about Imperial Private Healthcare visit www.imperialprivatehealthcare.co.uk To speak to a representative from Boultbee & Co about referrals to Imperial Private Healthcare contact Elizabeth Boultbee (London) +44 020 7278 1489 or eboultbee@aol.com Aileen Culligan (Dubai) +971 50 457 2796 or Aileen@BoultbeeandCo.com. or reach them via What’s App

THE EUROPE-GCC Trade & Investment Guide 2018–2019

The right prescription The dangers posed by the widespread counterfeiting of medicines are a major concern not only in the MENA region but globally. The appearance and use of ‘fake’ drugs is a massively growing problem with supply seemingly becoming easier and more organised. There is growing evidence that Chinese laboratories are producing industrial amounts of pharmaceutical medicines with much stronger, even dangerous, dosages.

The best-known examples of these are Cialis, Fentanyl and W-18. The first – Cialis – a treatment for erectile dysfunction, has caused terrible side-effects that ruin hundreds of men’s lives every year with incorrect dosage. The second – Fentanyl is an opioid-based anti-depressant that is a 100 times stronger that heroin, and has subsequently become a popular ‘street drug’, it has been linked to the deaths of both the rock stars Prince and Tom Petty. The third example is W-18 and although it is not an opioid, it was developed in Canada in analgesic tests as a painkiller. Never tested on humans, only mice, it is untraceable in the body and is not a controlled substance, never intended for human usage. It can now be easily ordered on the internet however.

The three examples above are the most prominent in the war against counterfeit medicines manufactured illegally without tracks or traces. Web traffickers have found their opportunity to sell their forged goods far and wide directly to patients while completely by-passing legal distribution channels, some countries have even legalised trade in online drugs! The World Health Organisation has stated that 1 in 10 medical products in low and middle-income countries is either sub-standard or fake thus affecting the most vulnerable communities.

The dangers posed by the widespread counterfeiting of

By Don Eales medicines are a major concern not only in the MENA region but globally. The appearance and use of ‘fake’ drugs is a massively growing problem with supply seemingly becoming easier and more organised. There is growing evidence that Chinese laboratories are producing industrial amounts of pharmaceutical medicines with much stronger, even dangerous, dosages.

The best-known examples of these are Cialis, Fentanyl and W-18. The first – Cialis – a treatment for erectile dysfunction, has caused terrible side-effects that ruin hundreds of men’s lives every year with incorrect dosage. The second – Fentanyl is an opioid-based anti-depressant that is a 100 times stronger that heroin, and has subsequently become a popular ‘street drug’, it has been linked to the deaths of both the rock stars Prince and Tom Petty. The third example is W-18 and although it is not an opioid, it was developed in Canada in analgesic tests as a painkiller. Never tested on humans, only mice, it is untraceable in the body and is not a controlled substance, never intended for human usage. It can now be easily ordered on the internet however.

The three examples above are the most prominent in the war against counterfeit medicines manufactured illegally without tracks or traces. Web traffickers have found their opportunity to sell their forged goods far and wide directly to patients while completely by-passing legal distribution channels, some countries have even legalised trade in online drugs! The World

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

Health Organisation has stated that 1 in 10 medical products in low and middle-income countries is either sub-standard or fake thus affecting the most vulnerable communities.

According to legal authorities there are three types of online pharmacies; 1) electronic prescriptions 2) an online questionnaire with the drugs sent directly to patients 3) no control whatsoever as long as the recipient pays.

Only 1) is actually legal, of course, with an estimated half of web-supplied drugs being faked. A tremendous risk indeed and vastly underestimated as to the danger.

Motivations to buy online range from lower prices, anonymity, addiction, the fact that no prescriptions are necessary, to the development of a ‘web culture’ without even needing to leave the house. The illegal aspects are as follows; • misleading information and advertising • deceit and falsification • illegally practising as a pharmacist • unauthorised importation of products • violation of pharmaceutical regulations for the distribution of drugs • breaching of intellectual property rights • money laundering • endangerment of human life and even homicide • identity theft • unsafe packaging A pill for every ill

Good advice from the World Health Organisation.

Their checklist for our protection.

So there is the problem but what are the solutions?

The public should be educated to warn of the risks, and there should be a concentrated effort to increase response and efficiency in clamping down on pharmaceutical cyber-crime.

The last operation – Pangea 1V – targeted and mobilised 81 countries, helping law enforcement to increase expertise and be better prepared to respond to the challenges. Another initiative came from the International Pharmaceutical Federation who have requested that online pharmacies abide by the same standards as all pharmacies regarding registration, sources and labelling. A list of legal sites is also currently pending with which ‘traditional’ pharmacies are being asked to register.

• spam email advertising medicines

The creation of reliable supply chains for authentic medicines between the pharmaceutical industry, healthcare providers and the patient is the first step. Compliance with EU legislation, the Whole Distribution Directive 2001/83/EC, is essential. Vendor selection, licencing, valid packaging, labelling and tamperproof closure of packaging are specified in this new directive as well as physical audits of correct delivery to hospitals, clinics and appropriate licence holders.

• Is it the correct dosage?

Pharmaceutical products can now use unique identifiers to determine authenticity and the source of manufacture, and can activate, track and trace procedures such as Pedigree Papers and Serialisation. In the MENA region alone the market has been estimated at US$50 billion and growing so it is imperative to protect the supply of genuine products that harm no one! In 2019 two new programs will become mandatory – the EU’s Falsified Medicines Directive (2011/62/ EU) and the FDA’s Drug Supply Chain Security Act (DSCSA) – both of which will demand adequate product tagging for easy traceability and tracking.

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• lack of authenticity; no verification logo or certificate • spelling mistakes and poor grammar on the packaging • websites that do not display a physical address or landline • websites offering prescription only medicines without a prescription • suspiciously low-priced products.

• Checklist for medicines purchased online • Is it exactly the medicine ordered?

• Is the packaging in good condition, clean, with a patient information leaflet and in the language in which it was advertised?

• Does the medicine look, feel and smell as it should?

• Are security seals intact with no signs of tampering?

• Does any customs declaration or postal label declare the contents as medicines?

• Does the batch number and expiry date on the primary internal packaging match the batch number and expiry date on the secondary (external) packaging?

• Have you noticed any unusual activity on your credit card since the purchase?

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Crossing the borders The tradition of trading across borders and territories worldwide is ancient, the primary examples being the Silk Road, The Amber Road, and the many salt roads but in recent decades crossborder trade has risen significantly.

The exposure to new markets, products and services has invigorated economies as exports and imports are accounted for in a country’s balance of payments. Industrialisation and advanced technologies have had a tremendous impact on international trade generally and have positively aided globalisation even though it can be more costly due to tariffs etc.

Two good examples are the ‘Newry Effect’ in the Republic of Ireland and the trade agreements between America and China. In the former example; Newry, on the border of Northern Ireland (part of UK) and the

Republic, became the hottest spot in Europe for shopping when the euro increased in value against the British pound, making prices in northern stores so attractive that southerners from as far away as Galway in the remote South West flocked over the border in record numbers with queues up to 4 miles long! Discounts averaged 30% less.

The latter example is regarding the import of labour-intensive goods by the United States from China. Instead of importing Chinese labour, the US imports goods that were produced with Chinese labour. (One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country)

Feature

by BLS Media

The exposure to new markets, products and services has invigorated economies as exports and imports are accounted for in a country’s balance of payments.

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

The chart below shows the volumes of products and services just 2 years ago; Product Name

2015 Export Sales

Crude Oil

$786.3

Cars

$672.9

Processed petroleum oils

$605.9

Phone system devices

$532.2

Integrated circuits/microaccemblies

$516.7

Automobile parts/accessories

$349.2

Medication mixes in dosage

$322.1

Computer, optical readers

$320.4

Gold (unwrought)

$297.1

Petroleum gases

$250.2

Blood fractions (including antisera)

$127.6

Aircraft, spacecraft

$122.4

Computer parts, accessories

$121.3

Diamonds

$121.1

Trucks

$113.4

Insulated wire/cable

$112.4

Solar power diodes/semi-conductors

$112.0

Electro-medical equipment

$107.7

Jewelry

$97.7

Printing machinery

$93.8

Lower-voltage switches, fuses

$93.6

Tv receivers/monitors/projectors

$92.8

Electrical converts/power units

$91.7

Liquid crystal/laser/optical tools

$85.0 $0

The improved business climate within GCC Inspired by Saudi Arabia, a succession of 15 reforms have been passed in the last year, with 103 in the past 15 years. This has dramatically improved the business climate for private enterprises with fairer, transparent and more efficient regulatory practices resulting.

Some direct effects have resulted in the following;

UAE • A strengthening of quality control in national construction has earned them the highest possible score on the International Building Quality Index.

•They have improved access to credit information and scores to financial institutions.

$100

$200

$300

$400

only takes around 8 days and costs 13.4% income per capita.

BAHRAIN After decades of cross trade with America a new contract worth $10bn has recently been agreed and Bahrain is now opening to further trade agreements with other countries, initially by launching its Bahrain Trade Platform which enables financial institutions to trade on their Bourse.

The advantage being that it offers no limits to daily trading routines and further investment in modern technology. An alliance with Khaleeji Commercial Bank has accelerated this process.

SAUDI ARABIA

• In the provision of electricity to their people they have now become the global leader.

• It is now the 2nd best performer (after Brunei) in high-income and G20 countries by improving its distance to frontier score (DTF).

•To register a company now

•The recent reform statistics

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$500

$600 $700

$800

(1 year) in the region state that Saudi Arabia made 6, UAE 4, Kuwait 2, Qatar 2 and Oman 1.

• It has accelerated its property registration process which now takes only 1.5 days to transfer property at no cost.

• Now offers increased protection for investors with improved shareholder rights by clarifying ownership and control along with greater transparency.

• It has improved its online platform for taxation and documentary compliance.

• Increased the ease of cross border trading by reducing the amount of documentation required for customs clearance.

OMAN • Cross border trade has been made much easier with the creation of an online, single window system for exports and imports which reduced the time required for compliance documentation.

The key achievement in GCC nations is the significant improvement in the ease of doing business. In the top global rankings UAE is 21st, Bahrain 66th, Oman 71st, Qatar 83rd, Saudi Arabia 92nd and Kuwait 96th. In the world’s fastest economies for paying taxes the best performers for this are all GCC states – UAE, Bahrain, Qatar and Saudi Arabia.

QATAR • Improved access to credit information to financial institutions.

KUWAIT • To register property has been made easier by improving the land administration system, halving the time previously needed.

•They have made starting a business easier by creating a ‘one-stop shop’ and improving online registration.

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Eight obstacles facing the Gulf investor The GCC investor can run into many potential issues after taking the decision to invest in the European Union (except in Britain), and perhaps the most important of these obstacles are as follows:

Fluctuation of the exchange rate of the euro against the dollar The currencies of four GCC countries (Saudi Arabia, Bahrain, Qatar and Oman) are closely linked to the US dollar, while UAE and Kuwait currencies are linked to a basket of currencies. Any difference in the exchange rate between the dollar and the euro is a problem for the GCC investor.

1

Absence of a free trade agreement between the two parties The failure to reach a free trade agreement more than 30 years ago is considered to be the hurdle to which all trade and investment failures between the EU and the Gulf states are attached.

Perhaps this was in the interest of the EU as the more advanced and dominant trade partner.

2

Ambiguity of opportunities and investment sectors in the EU countries As the Gulf countries are not considered an important trading partner of the European Union, especially after the British decision to withdraw from the European Union, except for the traditional areas of oil and gas and their derivatives, European countries do not pay enough attention to marketing investment opportunities available to the Gulf investor and do not indicate and clarify the required features and the

3

important caveats in each sector (as Britain does, for example).

The expansion of the European market space weakens the concentration of the Gulf investor The Gulf investor is determined to invest in the European Union. The sectors available to him are large and varied. The real estate and agricultural investments and labour supply in eastern Europe are balanced by high-quality local crafts in northern Europe, attracting investments in the textile, leather, tourism, food and meat sectors in central and southern Europe, as well as advanced technology and advanced and heavy industries in western Europe.

4

Visa procedures (Schengen) The GCC investor must obtain a visa to enter any of the EU countries in advance. This process is not very difficult at some times, but at others not very easy at all. It may take a few weeks to complete the process, and the visa holder must first arrive in the country where you first obtain the Schengen visa and then move to another country within the EU.

5

The difficulty of mastering European languages Each European country has its own official language, often multiple official languages in different

6

regions. Knowing which languages to use can create difficulties for the foreign investor. Gulf investors are widely fluent in English, but this is not enough. Official discussions are usually held in the official language of the country and English may be used alongside them, and Arabic is not used widely, except in certain exceptional cases.

Duties and taxes (not clearly included) Many investment opportunities are marketed at attractive prices without explaining the amount of expenses to be paid to other parties to complete the investment. After the investor starts working and pays part of the project receivables, a number of other payments can come to light that were not clearly disclosed initially.

7

The ambiguity of the commercial laws that the investor needs It is difficult for the Gulf investor to know all the laws that he must know in order to make a sound decision to invest in the European Union countries, because of the diversity and complexity of these laws and because of the large number of member states.

Added complexity can be added because of the updating of these laws and procedures from time to time.

8

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Global tax and transparency Author

By Grace Perez-Navarro deputy director of the OECD Centre for Tax Policy and Administration

In the current era of growing cross-border trade and interconnected economies, international cooperation in tax matters is of increasing importance to countries around the globe. The OECD’s work on tax, particularly in respect of tax transparency and tax avoidance, plays a critical role in supporting countries’ efforts to ensure that their tax systems keep pace with the modern world. Gulf Cooperation Council (GCC) countries are participating in these global efforts, working with other countries and jurisdictions to ensure that countries can enforce their respective national tax laws in an increasingly borderless world.

Improving tax transparency and developing exchange of information An absence of international tax transparency allows tax evaders to hide their assets offshore, illegally avoiding their tax obligations. The OECD’s efforts to strengthen transparency and tax cooperation, from exchange of information on request (EOIR), to automatic exchange of information (AEOI), are coming to fruition. It is estimated that, as of June 2018, jurisdictions around the globe have identified EUR 93 billion in additional revenue (tax, interest, penalties) as a result of voluntary compliance mechanisms and other offshore investigations put in place by countries since 2009.

It was in 2009 that the OECD achieved a major breakthrough towards more tax transparency with EOIR becoming the international standard and the restructured Global Forum on Exchange of Information and Transparency for Tax Purposes (GF) mandated by the G20 to monitor the implementation of the EOIR standard. In 2016, the GF finalised its first round of peer reviews of the standard on EOIR with over 250 peer review reports, with hundreds of recommendations for improvements, having been published. The second round of reviews is underway and includes strengthened terms of reference such as ensuring the availability of beneficial ownership information and its access by tax authorities. All GCC countries except Oman are members of the GF and have been reviewed or scheduled to be reviewed, which shows their commitment to EOIR. The latest frontier in the battle for tax transparency is AEOI. In 2014, the OECD established a new international standard – the Common Reporting Standard (CRS). It is a game changer for tax administrations, allowing them to trace offshore funds that were previously unknown and unknowable. It enables financial institutions to share financial account information with tax authorities, which then exchange that information with their foreign counterparts on an agreed, annual basis.

More than 100 jurisdictions, including the GCC countries, have already committed to begin automatically exchanging information with other tax authorities based on the CRS by the end of September 2018.

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The GF monitors and reviews the implementation of AEOI, the commitments made by jurisdictions and lends support to jurisdictions, particularly developing countries, to enable them to also engage in such exchanges so that there will no longer be anywhere for tax evaders to hide. The monitoring and review of the AEOI Standard has started and focuses on the areas which can be assessed before the beginning of such exchanges, such as verifying capacity to maintain data confidentiality safeguards and the quality of the domestic legislative frameworks. The process will continue to build towards full peer reviews of compliance with the standard.

The OECD’s objective criteria established in 2016 to ensure effective implementation by all have been effective in encouraging jurisdictions to implement the EOIR standard. As circumstances have evolved, with second rounds of reviews of EOIR and the implementation of AEOI, the criteria were updated and presented to G20 Ministers in July 2018 to ensure that they remain a lever for progress. The OECD will report to the G20 Leaders at their 2018 summit on the number of jurisdictions that are at risk of being considered as having not satisfactorily implemented the tax transparency standards, and will provide a list of jurisdictions that do not comply with the updated criteria in 2019.

Fighting global tax avoidance: The OECD/G20 Base Erosion and Profit Shifting (BEPS) Project Recognising that the international tax rules had not kept pace with changes in twenty-first century business models and the globalised economy, the OECD/G20 BEPS Project was launched in 2013. In 2015, OECD and G20 countries produced a package of 15 measures including four minimum standards. It was designed to stop multinational enterprises from artificially locating profits where there is no economic activity, and from exploiting loopholes in countries’ tax systems. In 2016, the OECD/G20 Inclusive Framework on BEPS was established to monitor the implementation of the BEPS package. It is open to all interested countries and all members work on an equal footing, allowing them to make a direct impact on the design and implementation of the

THE EUROPE-GCC Trade & Investment Guide 2018–2019

standards. All GCC countries except Kuwait are members of the OECD/G20 Inclusive Framework. To ensure that the members implement the minimum standards, the Inclusive Framework is conducting peer reviews and the first results are now available.

The task ahead: The tax challenges of digitalisation One of the major tax challenges for countries around the world is how the increased digitalization of the economy affects tax systems. A major development in this regard is the recent report by the Inclusive Framework’s over 115 members, Tax Challenges Arising from Digitalization – Interim Report 2018. The report shows that although there are divergences among countries on the tax consequences of digitalisation, there is agreement to revisit fundamental international tax principles such as profit allocation and

nexus rules, touching upon the allocation of taxing rights among countries. Developing a consensus-based solution will take time, and, in some countries, there are pressing calls for governments to take more immediate action. The interim report therefore reflects the framework of design considerations that should be taken into account when considering introducing such short-term measures. The OECD’s Inclusive Framework is continuing to work on a long-term solution and is expected to deliver a final report in 2020, with an update in 2019.

The engagement of GCC countries in all of this work remains important even if they do not currently rely heavily on taxes to finance their public expenditures. The 2020 G20 Presidency of Saudi Arabia will be an important opportunity to strengthen the links between the GCC countries and the OECD in tax matters.

HOW ARE GCC COUNTRIES DOING ON TAX TRANSPARENCY?

Bahrain Kuwait Oman Qatar Saudi United Arab Arabia Emirates OECD’s Global Forum Yes Yes No Yes Yes Yes Membership Exchange of Information Largely Not Not Not Largely Provisionally on Request (EOIR) – Compliant reviewed reviewed reviewed Compliant Largely 1st round of reviews Compliant Exchange of Information Planned in on Request (EOIR) – 2nd half of 2nd round of reviews 2017

Planned in Not Largely 2nd half of Planned Compliant 2019

Planned in 1st half of 2018

Planned in 1st half of 2018

Automatic Exchange First First Not First First First of Information (AEOI) exchanges exchanges Planned exchanges exchanges exchanges

by 2018 by 2018 by 2018 by 2018 by 2018 * These jurisdictions have been reviewed under the Fast-Track review procedure and assigned a provisional overall rating. These jurisdictions have been scheduled to undergo a full review under the strengthened 2016 Terms of Reference in the near future.

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

IBFD, Your Your Portal Portal to toCross-Border Cross-BorderTax TaxExpertise Expertise

taxation, including tax law, tax treaties, permanent establishments, transfer pricing, international tax planning, VAT and more. The expertise available in these publications and collections can be accessed using our online portal, the IBFD Tax Research Platform. IBFD’s International Tax Training includes a wide variety of online and classroom courses that can also be customized to specific needs.

Our Government Consultancy and Tax Research Services help governments and tax administrations to optimize their processes or to ensure compliance with international standards. IBFD’s Academic Department operates as a postdoctoral research centre on international taxation, teaming up with universities worldwide.

Finally, the IBFD Library and Information Centre holds the largest collection of international tax publications in the world, making it the world’s leading resource for

IBFD The global source for accurate, independent tax information

international and comparative taxation.

When did you join IBFD, and what was your Pasquale Pistone and Jan Maarten Slagter previous position?

I have been CEO of IBFD since January 2017. I started my career as a corporate lawyer, before switching to financial journalism, joining the newsroom of the Dutch daily Het Financieele Dagblad and serving as the paper’s correspondent in London from 2004 to 2007.

An interview with Jan Maarten Slagter, CEO of IBFD From 2007 to 2014, I lead the VEB, the Dutch association

What is the purpose of IBFD as an organization?

of investors, representing the interests of (mainly retail)

The International Bureau of Fiscal Documentation (IBFD) is

investors vis-à-vis listed companies, financial institutions,

a unique centre of expertise, offering independent, high-

political institutions and financial regulators.

quality information and education on international taxation.

It is a single organization with three separate functions: as

In the two years before joining IBFD, I divided my time

a research centre, as a publishing house and as a trainer/

between teaching corporate governance at Nyenrode

capacity builder. These three elements complement and

Business University, co-writing a corporate biography of the

strengthen each other so the whole is stronger than the

Dutch telco KPN (De koude kermis van KPN (Prometheus

parts. And all three embody IBFD’s mission: “To disseminate

2016), with Patrick Bernhart) and holding several

high-quality knowledge about international taxation”.

directorships.

IBFD was established in Amsterdam in 1938 as a not-for-

Please share your reflections on the

profit foundation and resource for up-to-date and accurate

international taxation field? What developments

tax intelligence. National governments, Fortune 500

and issues are arising and what is IBFD’s role

companies and international consultancies to tax advisers

here? What future trends and challenges do you

and individuals rely on IBFD for information and services that

foresee?

help them achieve the best solutions to their taxation needs.

It is truly a dynamic and turbulent time in the world of

Publications from IBFD cover every aspect of international

international taxation. The looming changes to the US tax

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Visit us at www.ibfd.org

system, BREXIT and the signing of the Multilateral Instrument

into consideration intra-community supply transactions, meaning

(MLI) to prevent base erosion and profit shifting (BEPS) are

transactions that involve more than one country.

just some of the fundamental developments transforming the international taxation industry. These developments have had

How does IBFD help organizations in this GCC

a massive impact, as discussions about these tax issues,

face these challenges?

which were once limited to tax technical experts talking

On the direct tax side, as of the end of November 2017, three

among themselves, are now a topic of general debate at

GCC countries (Oman, Qatar and Saudi Arabia) had joined the

every level of society. We want to feed and contribute to that

Inclusive Framework (IF). The remaining countries are expected to

debate from an unbiased position. Additionally, since IBFD is

sign the IF in the next year, if not earlier (Kuwait already signed the

an independent foundation, it is not beholden to any of the

MLI on 7 June 2017). The IF on BEPS brings together over 100

interests in the field of international taxation, which allows

countries and jurisdictions to collaborate on the implementation

us to credibly and independently play our role in capacity

of the OECD/G20 BEPS Package. The monitoring of the four

building in the developing world and in advising international

minimum standards will ensure that all members, as well as

organizations.

jurisdictions of relevance, will comply with the standards in order to ensure a level playing field. The GCC IF signatory countries

In addition to acting as a thought leader in the international

are therefore requested to comply with the four BEPS minimum

taxation field, we analyse and evaluate the fundamental

standards, which revolve mainly around cross-border tax issues.

developments and respond with new products, research,

This is reflected mainly in the measures related to treaty abuse

teaching and advice that enable tax professionals to work on

(Action 6 of the BEPS Project) and conflict resolution (Action 14

the basis of up-to-date and accurate tax knowledge.

of the BEPS Project). For the purpose of complying with these standards, countries would need to adjust their tax treaties and

Currently, BEPS and the MLI are keys areas where customers

adopt the BEPS recommendations. The most appropriate way

are searching for information. While virtually all publishers

to adjust those treaties would be to sign the MLI. The two other

will produce their own BEPS and MLI tools, only ours will

minimum standards are also related to cross-border tax issues,

adhere to IBFD’s strict standards of quality, independence and

but in a different way. These involve harmful tax practices (Action

completeness. Those standards are what set us apart.

5 of the BEPS Project) and transfer pricing documentation (Action 13 of the BEPS Project).

What do you see as the main international taxation issues and challenges facing

IBFD has supported the tax authorities in most of the GCC

organizations in the GCC?

countries with tax policy advice and developing tailor-made

The main international tax issues facing businesses in the

training programmes for their staff members. In this context, IBFD

GCC region are currently related to the implementation

supplied Kuwait and Qatar with tax policy advice after undertaking

of VAT. The six GCC countries signed the Common VAT

comprehensive reviews of their tax systems. In the case of Saudi

Framework in November 2016. Saudi Arabia and the UAE

Arabia, IBFD has a very strong relationship with the Saudi Arabian

are due to apply VAT as of 1 January 2018 and have already

tax authorities and delivered several trainings – in 2012, 2013 and

published most of the legislation (laws, executive regulations

2015 – on tax treaty negotiation, a review of existing tax treaties

and guidelines) needed to implement it. Other countries have

and the BEPS Action Plan. In the case of Oman, IBFD provided

announced that they will apply VAT in the course of 2018.

courses in 2013 and 2014 on comparative direct taxation aspects

As the six GCC countries have not had a system of indirect

and tax audit and investigation. Furthermore, IBFD contributed

taxation in the past, there is a substantial need for training

several speakers to tax conferences in the region, including for

and capacity building within the tax administrations of all GCC

the GCC branch of the IFA.

countries. Another factor that adds complexity in the context of implementing this new tax is that VAT is meant to apply in

More importantly, in 2012, IBFD launched a hub for tax training in

a customs union that is constituted by the six GCC countries.

Dubai, at which a number of courses on relevant international tax

This is quite similar to the VAT system applicable in the

topics are delivered on a yearly basis. IBFD courses in the region

European Union under the Sixth Directive, and it needs to take

have been very well attended by the tax community.

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Which countries have the highest taxes on high incomes?

Which are the countries with the top tax rates on high incomes, and why does it matter?

Some people believe that placing high tax rates on the wealthy helps to redistribute income throughout society, thereby increasing equality and ensuring that the less well-off have decent housing, healthcare and enough to eat. Others believe that high taxes on wealthy individuals discourage them from working and investing as much as they might at lower tax rates and that this could result in reduction of these two activities that benefit society by leading to advances in technology, medicine and other areas that improve living standards for everyone.

By Amy Fontinelle

Five countries with the top tax rates on high incomes Regardless of which theory resonates with you, there’s no question that tax rates affect the wealthy’s decisions about where and how to live, work and invest, including their activities in the countries with the top marginal tax rates on individuals. The rates shown here include both personal income taxes and employee social security contributions, based on the latest Organisation for Economic Cooperation and Development (OECD) data. We then break down how various taxes are assessed on the wealthy in each country.

Portugal: 61.3% Portugal’s national government taxes employment income, and business and professional income, at progressive rates of up to 48% and investment income, real estate income and increases in net worth and pensions at a flat rate of 28%.

Employees pay social security taxes of 11%, and employers pay another 23.75%. In 2016 Portugal levied an additional 3.5% tax on income above the minimum wage.

Real estate is taxed at the municipal level in the form of property taxes and transfer taxes. If you sell your primary residence in Portugal, your gains are tax exempt if you use the proceeds to buy another permanent residence in Portugal or another state belonging to the European Union.

Portugal allows deductions for health and education expenses, and

34

provides personal tax credits based on the number of family members.

Spouses, descendants and ancestors do not have to pay taxes on gifts and inheritances, but there is a 10% tax on other recipients. Portugal does not assess a net wealth or net worth tax.

Slovenia: 61.1% Slovenia’s national government taxes employment income, business income, income from basic agriculture and forestry, income from rents and royalties, income from capital (dividends, interest and capital gains) and other income. The highest progressive tax rate is 50%.

Employees pay social security taxes of 22.1% on gross income, and employers kick in 16.1%.

Income from capital, certain business activities and rental property is taxed in separate buckets and at sometimes-different rates from all other sources of income.

Capital gains are taxed at 25%, but the longer the holding period, the lower the rate. After holding the investment for five years, the rate drops by 10%, then by another 5% for each five years thereafter. By holding an investment for 20 years, an individual can avoid paying capital gains tax on that investment altogether.

Portugal provides an income tax allowance for individuals, with additional allowances for being disabled or having dependents.

Property owners pay taxes in certain areas based on several factors.

Slovenia levies inheritance and gift taxes at progressive rates based on the property’s worth and the recipient’s

relationship with the deceased or the donor. There is no net wealth or net worth tax.

Belgium: 58.4% Belgium levies both national and regional income taxes on its residents.

Individuals pay taxes on movable and immovable property, professional income and miscellaneous income.

The highest progressive tax rate is 50%, which may be increased further by communal surcharges of 0% to 9%. The social security tax rate on employees is 13.07% of gross income.

Individual capital gains from shares

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Depending on the region, real estate acquisition is taxed at 10% or 12.5%; there are also annual property taxes. Inheritance taxes apply even to spouses, legal cohabitants and descendants; the rate can be as high as 30% for these beneficiaries.

Unrelated beneficiaries and distant relatives may pay inheritance taxes as high as 80%. There is no net wealth or net worth tax.

Finland: 57.5% In Finland the tax authorities fill out residents’ tax returns for them. The country categorises all individual income in one of two ways: Earned income is subject to national, municipal and social security taxes; it is also subject to church taxes for members of one of Finland’s two national churches. National income tax has progressive rates as high as 31.5%; the first €16,900 euros is exempt from national income tax but not from municipal income tax, church tax or social security tax.

Municipal taxes are also applied progressively and max out at 22.5%, and the church tax is 1% to 2.2%.

Income from capital has two tax rates: 30% on income up to €30,000 and 34% on income exceeding that amount.

deductions to capital income, such as home mortgage interest. Real property is taxed at 0.41% to 6.0% at the municipal level, depending on location and property type. There is also a 4% property transfer tax. Inheritance taxes depend on the relationship between the deceased and the inheritor but can be as high as 33%. There is no net wealth or net worth tax.

Sweden: 57.0% Sweden’s national government taxes business income, employment income (which has a top progressive rate of 57%) and capital income (a category that includes capital gains, dividends and interest, taxed at 30%). Employers contribute 31.42% of their employees’ wages to social security.

There are personal allowances against income, and deductions are available for the costs of acquiring or maintaining income, work-related travel expenses and increases in living expenses from work-related travel or the maintenance of more than one home. There are also tax deductions for housekeeping and home-maintenance expenses. In real estate transactions the purchaser pays a real estate stamp duty of 1.5% on the property’s market or transfer value; there are also municipal property taxes. Sweden has no inheritance or estate tax and no net worth or net wealth tax.

Top tax rates in other OECD countries The top tax rates are quite high in a number of other OECD countries as well. Coming in with honourable mentions at six through ten are Japan (56.2%), Denmark (55.8%), France (55.0%), the Netherlands (52.1%) and Ireland (51.0%). The United States is a distant 17 on the list, with a rate of 48.6%.

The bottom line categorised as professional income are typically taxed at the ordinary individual income tax rate, but most capital gains from individuals not engaged in business activities are not taxed. Belgium allows tax deductions for business expenses, social contributions and alimony payments. The country also provides a personal allowance based on whether the taxpayer is single, has dependent children and so on. Tax credits are available for charitable donations, certain life insurance policies, pension plan contributions, real estate investments and other items.

Transfers of Finnish securities incur a 1.6% tax. After deducting the pension income allowance, pension income exceeding €47,000 is subject to a 5.85% surtax. Finnish workers have withheld from their gross pay pension insurance contributions of 6.15%, plus 1.60% for unemployment insurance, as well as 1.58% for health insurance premiums if their annual income is €14,000 or higher.

Finland allows deductions to earned income for work-related expenses, such as commuting costs, professional literature, tools and equipment and certain travel expenses. It also allows

For individuals who earn high incomes from working or investing in Portugal, Slovenia, Belgium, Finland or Sweden, the tax rate percentage on income exceeding a certain threshold can reach into the high 50s and low 60s. Individual taxes on income and investments, plus mandatory contributions to social security, create these high rates. In some countries and situations the wealthy also pay significant taxes on real estate and inherited wealth. Depending on which economist or politician you ask, these high tax rates are either a significant help to the country as a whole or a hindrance to its economic progress.

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Visions of the future for the GCC region All of the six GCC countries are announcing their visions for the future well-being of their nation and their people and although there are similarities each vision is full of immense promise!

UAE Apart from their plan to establish the first inhabitable human settlement on Mars in 2117, they have created a Clean Energy Strategy which will mean that 75% of Dubai’s energy will derive from clean sources. Last year they launched an amazing project to investigate artificial intelligence (AI), the objective being to ensure that future government services rely on AI. This is the first of is kind globally and investment is already forthcoming to provide tools to enhance government performance and efficiency, which is planned to be 100% complete by 2031 for all services and data analysis.

Abu Dhabi has announced a long-term plan to transform their economy to include less reliance on oil revenues and more emphasis and focus on knowledge-based industries. Their

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vision for the environment of their future is based on sustainability – environmental, economic and social, creating a better use of resources and contributing to a greatly improved quality of life.

In 2016 Dubai launched a strategy to elevate itself into being a global platform for knowledge-based, sustainable and innovation-focused businesses to make the country a preferred manufacturing platform.

There is also a plan to transform healthcare into the highest quality in the world.

BAHRAIN The shift from an oil-based economy to a productive, globally competitive economy is their vision. Economic progress has followed a powerful,

THE EUROPE-GCC Trade & Investment Guide 2018–2019

and leading nation in all aspects’. His vision (Saudi Vision 2030) is based on strong pillars, the first being their desire to remain as the heart of the Arab and Islamic world. The second is the determination to become a global investment powerhouse, while the third is to transform the country into a global hub connecting three continents – Asia, Africa and Europe and to be the centre of global trade.

As a country rich in natural resources, and not wholly dependent on oil for their energy requirements, they also have gold, phosphate and uranium in abundance beneath their soil. Their primary vision for the future though is the development and education of young people which is considered to be their real wealth, pride and architects of that future. The aspiration is to transform Aramco into a global industrial conglomerate and to evolve their Public Investment Fund into the world’s largest sovereign wealth fund. To achieve this goal, their major corporations will be encouraged to ‘spread their wings’ internationally and increase their presence in global markets.

upward trajectory for the last 20 years due to remarkable oil revenues, a strong financial sector and the region’s economic boom, and also due to the fact that Bahrain is very attractive for direct foreign investment. Life expectancy has increased along with living standards. In 2008 the King announced his Vision 2030, which is a blueprint for national development on the guiding principles of sustainability, competitiveness and fairness, that would ensure that every household in the country has at least twice as much disposable income by 2030. A decade later their economy has grown by 28% and foreign investment has tripled. The average family income has increased by 47%, which is quite an achievement when the global economy has slowed down, and they are well on track for the fulfilment of their vision.

The composition of their economy has diversified with an increase in tourism and small businesses ably assisted by their government, of course.

SAUDI ARABIA The primary goal of Saudi Arabia has been stated by King Salman Bin Abdulaziz Al-Saud ‘to be an exemplary

Paramount to Saudi Vision 2030 is the intention to expand digital services to reduce bureaucracy and delays with improved transparency and reformed accountability.

The vision is a long-term one; to build a nation that enables their citizens to fulfil their dreams, hopes and ambitions by improving services in education, training, employment, initiatives, health, housing and entertainment to achieve this.

Saudi Arabia welcomes qualified individuals from all over the world to help them make their vision real as well as providing better opportunities in partnerships with the private sector internationally.

OMAN In 2006 the Sultan invited 200 business luminaries to help him shape the future of their country and make it ready for an economy not dependent on oil revenues by identifying the issues of services, bureaucracy, red tape and skill shortages, and then to suggest solutions. The sectors targeted were manufacturing, tourism, transport, logistics, mining and fisheries. The conditions needing change required the trimming of government expenses, the completion of infrastructure projects, borrowing from external sources, grasping

economic solutions, improving services, and more partnering with the private sector.

The essence of Oman’s vision for their future is as follows; • Economic and financial stability • Changing the role of the government in the economy and broadening private sector participation • Diversifying the economic base and sources of national income • Globalising their economy • Upgrading the skills of the workforce and developing human resource QATAR The main thrust of their vision is social welfare including the empowerment of women and the intention is to become an example to the world.

Equal opportunities in education, employment and careers are a prominent goal. Communications between nations, the promotion of coexistence and the development of humanitarian assistance are highlighted.

A highly educated population is paramount to their vision and a world-class education system is already in creation. The goal is also to have a healthy population and a capable, motivated workforce. The balance between development and the protection of the environment is a major consideration with awareness strongly promoted and legal issues swiftly solved.

KUWAIT The primary vision of their Emir for the future is to develop their islands into a financial and commercial centre and activate the Kuwait2035 development plan to attract global investments, provide many new job opportunities for the young in NGOs and to strengthen their GDP. In addition, the launch of Silk City is the first step to reviving the original, historic Silk Road, initially with the Economic Belt linking China with Europe via central and western Asia, which will connect 60 countries with estimated investments of between $4 trillion and $8 trillion to serve 63% of the global population.

The expectancy is £10 trillion in the near future. China (with whom they have strong relations) has, to date, invested $50 billion in countries along the Belt since 2013.

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Mergers & Acquisitions in the GCC Q&A with Alex Reuter, Partner at deNovo Corporate Advisors

Describe deNovo Corporate Advisors deNovo is the leading independent, partner-owned and MENA-based “boutique” investment bank with offices in Dubai and Cairo. The partners and bankers of deNovo have significant international M&A experience, having completed over US$250 billion of M&A and financing transactions in their collective careers. All partners are exMorgan Stanley senior M&A bankers and we established the firm in 2010 based on demand in the market for a best-inclass independent advisor with strong knowledge of the region (GCC, Levant and Egypt). deNovo is highly reputed, having successfully completed over 25 transactions and mandates since our foundation several years ago. We generally work with transaction ranging from c. US$100m to over US$1 billion, with the majority in the US$100-300m range. We are industry agnostic, having worked on transactions in healthcare, education, food and beverage, oil and gas, ICT, industrial and other sectors.

Our detailed credentials can be found on our website: www.denovoca.com.

We pride ourselves on our high-quality execution and advice which is supported by top tier experienced professionals.

Our professionals have had prior international M&A experience in firms such as JP Morgan, Rothschilds, Credit Suisse, Nomura, Messier Partners, BNP Paribas, and others, as well as regional experience gained while working in these institutions.

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We furthermore have established deep institutional and personal connectivity in the region – from government institutions, to family offices, institutional investors and private sector companies.

What is your background?

I am German but was born in Greece and have moved quite a bit before coming to Dubai. I studied business, finance and economics and the US and complemented this with an MBA from London Business School. Inbetween I worked for an asset manager in Germany. During and after my MBA I joined Morgan Stanley’s investment banking division, where I worked in Frankfurt, London and then, since 2007, Dubai. I was early on attracted by the dynamism and growth of the region, coupled with its strategic and geopolitical importance.

Morgan Stanley had just opened their office in Dubai when I joined, under the leadership of May Nasrallah (who is the CEO and Founder of deNovo).

We set up deNovo after Morgan Stanley and other large banks, following the financial crisis, decided to downscale and focus exclusively on “mega” transactions over US$1 billion, mainly with GCC Governmentlinked investment firms. This created a vacuum in the market for a high-quality advisor with significant international transaction experience. We seized the opportunity not least due to our strong belief in and commitment to the region.

Describe the historical and current level of cross-border M&A activity in the GCC? Historical this region was only considered for investment outflows.

However, as the local economies started to develop and experience accelerated growth, financial and strategic investors started to take notice. Many investors and companies saw the potential in the region: large population (ca. 55 million in GCC and c. 326 million in overall MENA) with common language and culture, favorable demographics, wealthy and with stable governments that are fundamentally pro-business.

Initially, most foreign companies franchised their brands, contracted with local agencies or created joint ventures with local families. However, in recent times, coinciding with the loosening of foreign ownership restrictions and the push to diversify the economies, the market entry strategy of global companies has shifted to majority or full ownership of operations in the GCC (and broader MENA region) to complement the geographic portfolio. Most achieved this through regional acquisitions, i.e. by acquiring existing operations, brands, people with regional knowledge and avoiding years of bureaucracy, greenfieldand ramp-up risk. Examples include Amazon’s recent acquisition of Souq. com, Ingram Micro’s acquisition of Aptec, Brazil Food’s acquisition of Sadia, GHS’ (a Chinese media company) acquisition of Citruss TV or Lixil/Grohe’s acquisition of Mesma, amongst others. deNovo advised on three of these transactions.

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Also, major international private equity firms have increased their activity in the region. Examples include TPG’s acquisition of Saudi fast-food firm Kudu, Warburg Pincus’ acquisition (and subsequent sale) of Network International, Blackstone’s investment into GEMS Education or Carlyle’s investment into Alamar Foods.

What are the main drivers of crossborder M&A flows?

The level of outbound M&A has historically been driven by oil prices and hence budgets of governments, government-owned firms and SWFs. GCC outbound M&A generally is still significantly higher than inbound M&A, given SWF multi-billion-dollar strategic investments.

Inbound M&A is a function of several factors when explored from a strategic point of view. Traditionally, the focus has been on natural resources (i.e. oil and gas) and related downstream activities.

M&A in this space is driven by the desire of service providers and technology companies to be close to their clients (e.g. Aramco, SABIC, ADNOC, etc) or invest in downstream capability that benefits from proximity to clients and to low cost resources. Examples include US firm NESR acquiring oilfield service provider NPS and Gulf Energy, Tronox’ acquisition of Tasnee’s titanium dioxide business for US$1.67 billion, or Baker Hughes’ recent acquisition of a 5% stake in ADNOC Drilling.

Equally important for inbound M&A flows are the pro-business initiatives of the stable and long-term focused GCC governments. Given the relatively young nature of foreign operations in the region, the government have rightly realised that their growth and development objectives require the involvement of foreign technology, know-how and capital. The UAE (and Dubai specifically) have spearheaded this effort, but others (in particular Saudi Arabia) are following suit.

This includes (to differing degrees), amongst others: The development of robust and transparent legal systems and frameworks, relaxation of foreign ownership restrictions, development of financial markets and corporate governance, very favorable tax regime, employer friendly regime with regards to labor, investment into world class infrastructure and a generally friendly and pleasant and safe expatriate environment with the required investment in social infrastructure (education, healthcare, etc.) that helps retains talent.

For many strategic investors, the attractiveness is complemented by the growth and the potential of the region: A relatively large market with common language and culture, relatively wealthy, a young and growing population, many of which are internationally educated and a large expat community. This has spurred inbound M&A activity across the consumer-facing sectors, including healthcare (e.g. Mediclinic acquisition of Noor Hospitals), food and beverage (e.g. large international interest in Americana), retail, ICT, infrastructure (e.g. Engie acquisition of Tabreed), banks and finance companies and others.

Finally, many family-owned firms, which still today comprise the main fabric of economic activity, are considering either disposals or allowing foreign buyers into the ownership structure. This is mainly driven by increased competition through the opening of the economies to foreign companies which are forcing large family conglomerates to rethink their strategy and focus and possibly bring foreign know-how and best practices into their companies through majority stake sales.

This is compounded by succession and governance pressures in these companies.

What are the key challenges of foreign M&A investment into the GCC? What are some of the issues a potential acquirer should be aware of?

A key challenge in the region is the identification of targets and the establishment of a dialogue and relationship. It is important to understand who the key decision makers are within the family, management or government (depending on shareholding). Even after identification and contact it is essential to foster a long term and trusted relationship.

Given the trust deNovo has achieved within our network, we can help, in addition to identifying the right parties and individuals, accelerate this process significantly and add credibility to any approach.

One of the more practical challenges is the availability of information – most companies are privately held, and even for publicly listed companies, the information is usually limited and unreliable. As such, it is tremendously valuable to have a local advisor who can provide market intelligence and procur information from targets directly.

Finally, there are several structuring and process considerations a foreign investor needs to consider, including: Foreign ownership limitations (vary

significantly across countries and industries), tax implications of foreign ownership, requisite government and ministry approval processes, including rules on public company acquisitions.

What is deNovo’s experience with cross-border transactions?

We consistently work with foreign investors and global strategics on buy-side mandates or represent sellers seeking international investors. Some examples include advising Khazana, the Malaysian sovereign wealth fund on its stake acquisition of GEMS Education, the sale of Mesma (the 50% owner of Grohe Middle East) to Japanese company Lixil’s German subsidiary Grohe, the sale of Aptec to (at the time) US-listed Ingram Micro, the sale of citruss TV to GHS (China), advising an Asian investor on the potential acquisition of Americana (large Kuwaitilisted food company), leading a target search for a large publicly listed North American pharma company and advising on the potential acquisition of the identified target.

What is your outlook on foreign direct M&A investment into the GCC in the near and long-term future?

Despite the current geopolitical news flow, particularly from Saudi Arabia, we see significant inbound interest and are actively working on behalf of numerous regional clients in transactions where with high certainty the buyer will be from outside of the region. We are also working for international buyers looking to acquire within the region, mainly from Europe, US and Asia.

The interest in the region is based on the factors mentioned above: strong fundamentals; attractive, homogenous and growing markets; continuing reform and improvement in regulations and legal frameworks; maturing financial markets; privatizations and plans for hundreds of billions in domestic investments. Many family, private equity and entrepreneur-led businesses are looking to either sell their businesses (for many reasons, including succession issues, limitation of financing, etc.) or to bring in strategic partners to elevate the business potential significantly, resulting in very interesting investment situations, if one knows where to look.

There are many successful examples of foreign firms operating successfully in the GCC, whether through outright acquisitions or in partnership. There is no reason for this trend not to continue in the long term.

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

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An overview of Islamic finance Author

By Sami Haidar Mona Shah and Associates Global

A burgeoning sector within the international banking system, Islamic finance is growing at a rapid pace.

With a 10-12% annual growth rate, according to the World Bank, and a surge in compliant assets – estimated to be worth roughly US$2 trillion in aggregate, Islamic finance is becoming an increasingly popular financing mechanism. While Islamic financing is

primarily concentrated in a handful of Muslim-majority countries – Malaysia, Iran and various Gulf Cooperation Council (GCC) states, there has also been considerable growth in nonMuslim countries, such as the UK, Luxembourg, South Africa and Hong Kong. In particular, the United Arab Emirates (UAE) has emerged as a hub for this type of finance, accounting for 15.4% of the total market share of the industry.

Despite the substantial growth in the industry, Islamic finance is nonetheless poorly understood. Essentially, the term Islamic Finance refers to financial products and services that are compliant with Islamic law (also known as Sharia law). There are four

key tenets of Islamic financing: a prohibition of riba (interest); a mandate that all financing transactions are linked to some real, tangible asset (a ban on speculation); a prohibition of the financing of “unethical or immoral” businesses (e.g. gambling, tobacco, arms manufacturing); and the principle of profit-loss sharing. While these standards are fairly easy to understand, they are often misconstrued. A prohibition of riba, for example, does not mean that banks are not entitled to earn profits on financing transactions.

Rather, this means that a return must be linked to an underlying asset or the participation of risk-taking in some form of a joint enterprise.

Choosing an option that works for you While there is a wide range of Islamic financing products of varying complexity available, there are three key products: ijarah (Islamic leasing); murabaha (asset-based loans) and musharaka (profit-loss sharing). Ijarah is simply a leasing contract, in which the lending institution purchases the asset (such as a house or manufacturing facility) being financed, and the customer pays a rental fee. Under this arrangement, the customer becomes the beneficial owner while the bank remains the legal owner – ensuring that the bank shares in the risk should something happen to the underlying asset. A variation of this

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form of financing allows the customer to eventually purchase the asset from the lessee at the end of the contract at a predetermined price. This type of transaction ensures complete transparency while also allowing for the bank to earn a return.

Murabaha, also referred to as cost-plus financing, is an asset-based instrument that complies with the principle of the prohibition of riba, and is often used for consumer and corporate loans, as well as the financing of international trade and interbank lending. Murabaha can be used to both obtain capital or acquire an asset. At its core, murabaha provides the same final product to the customer, the key difference is in the process. Through a commodity-based murabaha transaction, for example, the bank or lender purchases an asset (such as a fixed-value commodity), and provides that asset to the customer for a higher valuation than what it is worth, or in other words, the cost of the asset plus a mark-up.

The customer can then sell the asset to another broker or third-party to access the loaned funds, repaying the lending bank in fixed quantities over an agreed-upon time horizon. The expected return on the original loaned asset – i.e. the marked-up value of the loaned asset, functions in much the same way that interest payments do

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for conventional financing. The bank is earning a profit; however, this return is not being earned on money itself (which would constitute interest), but rather, on a tangible asset. Murabaha is the most popular and commonly used Islamic financing transaction.

It should be noted, however, that there is not unanimous agreement amongst religious scholars regarding commodity-based murabaha and that variations exist across jurisdictions.

The final product, musharaka, refers to a profit-loss sharing partnership.

This type of contract can take a variety of forms, but at its essence is a joint partnership whereby two or more partners provide capital to finance a project. This partnership can be on a permanent or diminishing basis. Diminishing musharaka is often used for the financing of homes: one party agrees to buy the equity share of the other until the title of ownership is completely transferred to the purchasing partner. Through musharaka, profits are distributed according to pre-determined ratios, while losses are also shared in proportion to the capital contributed.

This concept of profit-loss sharing also applies to products like high yield savings accounts. The bank invests fixed deposits and distributes returns amongst depositors. If the bank

makes a loss on its investment, it will typically dip into its reserves to pay accountholders.

The three products outlined above comprise the foundational building blocks of Islamic finance. More complex financial instruments are built upon these core concepts. What should be emphasised though is that the end product of Islamic financing is essentially the same – capital is obtained and risk-taking is rewarded with profit. Instead, what varies is the process by which this occurs. Thus, the growing demand for Islamic financing products can be attributed to not only cultural sensitivities, but also to a desire for the transparency and equitable ownership structure of the process.

It is also important to note that the growth in Islamic finance is not limited to the Muslim world. In 2014, Hong Kong issued a $1 billion sukuk (Islamic bond) issuing that attracted more than $4.7 billion in orders – two thirds of the orders originated from outside Muslimmajority countries. While growth and profitability has slowed in the last couple of years due to low oil prices, particularly in GCC countries, S&P still projects the Islamic finance sector to grow to over $6.7 trillion by 2020.

Islamic financial products, therefore, are not a post-recession fad; they are here for the long-run.

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Bitcoin, cryptocurrency and the unfortunate name Zaineb Sefiani ACSI Director of Islamic Finance Navigator and Founder of Carrera Learning

The Sixth Day is a science fiction movie released in 2000 with a self-described near future setting. Although this is a 17-year-old movie, it has managed to predict accurately some of the technological innovations of our time; cars with automatic driving, fridges that order your groceries when you run out, artificial intelligence and many other innovations including fingerprint payment. In one scene Adam Gibson (Arnold Schwarzenegger) wakes up in a taxi and pays his fare by simply touching a screen without using cash or a credit card. In our reality, if someone wants a taxi they can order it directly from the countless taxi apps available on a smartphone and pay through those apps. If they end up jumping in one, the payment can be made with a smartphone using a fingerprint, like Arnold, or (in case of the iPhone X) with your face.

When you authorise a payment with your fingerprint, it means that you have gone through an extensive process of linking products (smartphones, tablets), services (Apple Pay, Android Pay, credit cards) and assets (your money) together to achieve the final transaction. To a taxi driver your fingerprint is of no value alone. However, if you use it to authorise a payment on your smartphone, then that fingerprint becomes more valuable to the taxi driver.

A valuable debate There are differing postures on what is considered of value and what is considered of no value. This sometimes depends on what is judged as valuable, when and where was it considered of value, who thought it was valuable, why and how it became of value.

Determining the value of something then depends on those questions being answered from varying perspectives.

Based on this, perspectives differ in assigning value to anything.

Bitcoin has caused a lot of confusion recently and with it, grabbed an

increased amount of media attention.

There are a lot of financial and nonfinancial professionals who predict that it is a bubble waiting to burst. Jordan Belfort the real-life ‘Wolf of Wall Street’ said that Bitcoin is a ‘huge scam’. Jamie Dimon, chairman, president, and chief executive officer of JPMorgan Chase has stated that a drug dealer or a murderer is better off using bitcoins than US dollars.

Bitcoin did indeed crash several times in the past, wiping out a great amount of its value and making a lot of adopters lose a large amount of money. However, it appears to have now bounced back, and to everyone’s surprise keeps on climbing to new heights never seen before. Many countries don’t know how to deal with cryptocurrency and how to make sure it falls within their legal parameters.

There is a current debate among Muslim scholars on the permissibility of Bitcoin and cryptocurrency in general. Some would consider it on the same level as gambling and therefore forbid it.

Other scholars would consider it to be a currency like any other currency and consider it permissible. Yet others fall in the middle as it depends on the reason of why are you buying it and what are you going to use it for.

In the UAE, a Fintech startup called OneGram created the first Islamic cryptocurrency backed by gold. The country has also announced the creation of the Global Blockchain Council, consisting of 46 members and the central bank of UAE is working with its Saudi counterpart to develop a joint digital currency.

The current demand for buying cryptocurrencies has been compared to the 1848 Californian Gold Rush.

The US dollar was pegged to gold in the past and the subsequent cancellation of that policy during Richard Nixon’s presidency freed the price of gold from the dollar.

That makes the US dollar a piece of paper, and that paper is backed up by a promise – in other words by thin air.

What is then the difference between any physical currency that is exchanged with the US dollar, which is backed up by a government promise, and a virtual currency that is also able to be exchanged with the US dollar?

What’s in a name?

The problem with cryptocurrencies in general and bitcoin in particular is the unfortunate naming they have been given. Part of what makes cryptocurrencies confusing is that they are thought of as a virtual currency but treated more as an asset or an investment. Cryptocurrencies have been programmed to act as physical currencies but in a virtual environment with complex algorithms and a strong encryption on a computer network known as a shared ledger or a blockchain. Their rising popularity and high liquidity has made cryptocurrencies highly volatile to the markets they were exposed to.

The rise and popularity of cryptocurrencies has forced a new reality upon the world. In an interview with Bloomberg, Joseph Stiglitz, a Nobel Prize-winning economist, said “bitcoin is successful only because of its potential for circumvention, lack of oversight.”

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Higher education outside of the US or UK

If you have children finishing their secondary education, it is likely that your search for colleges and universities has already begun. For many, the natural direction to look might be the United States or the United Kingdom. However, it may be wise to expand your search.

For a variety of reasons, everything from cost to quality of education, more and more students, even from the US and UK, are beginning to turn to universities outside of their home country. It turns out there are many potential benefits of doing so.

Before you and your child make any decisions, you should consider the pros and cons of education outside of the English speaking Western World.

Pros of higher education outside of the US or UK: a) Overall cost In recent years, the cost of quality higher education institutions in the United States has skyrocketed. The best universities, typically private, Ivy League institutions, can have average tuition easily ranging between $50,000–$60,000 a year!

Even among their lesser ranking private and public schools, tuition can easily cost $20,000 yearly. Add to this fact that their public universities typically charge non-

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residents anywhere from 110-150% of what their state resident students pay, and it should become obvious that higher education in the US may not be cost effective.

The UK is more reasonable, with the average undergraduate student paying approximately £9,000 (approximately $11,500) in fees per year. The quality is typically equal to or higher than the US’ better schools.

Other universities in Western Europe and outside of it, even Canada, also have much cheaper tuition for the same, if not better quality education. Even some countries, such as Germany, have free tuition not only for their resident students but for international students as well.

Ultimately, you can find quality institutions for significantly less for a US equivalent. Why pay more than double for a quality of education that you can easily find elsewhere? b) English language is still an option Even if you and your child choose a school outside of the US and the UK, finding a program taught partially or entirely in English is still possible, if that is a consideration for you.

There are obvious choices, such as Canada, Australia, and New Zealand to consider that are English speaking countries. But even countries like Germany and France offer courses partially or completely in English and some degrees completely in English. c) International and intercultural experience A more diverse international and intercultural experience is becoming increasingly valued, including in the English-speaking Western World of the US and the UK. It looks better for a new college graduate’s resume to show that they have education and experience from a variety of countries.

It shows that they will have a broader mindset and method of seeing the world and solving problems.

It also demonstrates independence and courage, since they were willing to leave home and their comfort zone to seek education and experiences outside of their own culture and way of life. All of these qualities look good to potential employers. The end result will be a stronger, more well-rounded individual who can more easily navigate the world and life’s problems.

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d) Quality Generally speaking, the quality of education in both the UK and the US is trailing behind the rest of the world. Both fall behind other English speaking nations, including Ireland and Canada, their close neighbours, and fall significantly behind nations like China, Korea, Japan, and even Switzerland and the Netherlands. The US is even further behind, trailing countries like Spain and Russia. In many studies, the United States doesn’t even make it into the top 20-something nations.

If you are looking for competitive, quality education for your child, then, you should not worry about casting your net to even other Western European countries, but should even consider countries such as China and Japan as possibilities.

Cons of higher education outside of the US or UK While there are certainly numerous benefits to choosing higher education outside of the US and UK, there are some potential negatives that must be considered as well: a) Fewer scholarship opportunities While the US may be significantly more expensive, their institutions, private and public, tend to have plentiful opportunities and options for additional aid through scholarships and grants.

Some are merit-based, while others can be purely based on nationality and international status. These scholarships can significantly offset the costs, and

can sometimes be full scholarships, making it essentially tuition free.

Many other countries, on the other hand, including the UK, do not offer any such opportunities. If they have tuition costs, their costs are their costs, and that is that. b) Language barriers While language immersion can be a benefit, it can also be a massive barrier.

If your student has no familiarity with a language (like German or French), life in that country may prove extremely difficult, even if they pursue an Englishbased degree programme.

While English is known by most in Germany, for example, daily life is still conducted in German, though they can often switch into English if needed.

In other countries, however, such as France, switching to English is not practiced. If you do not know French, getting around and doing basic daily life will prove extremely difficult. c) Possible difficulties for employment Depending on where your child wants to work in the future, an education outside of the country may not prove helpful. If your child wants to work and live in the US or UK, pursuing a college education in another country where they cannot begin to network and have internships with potential future employers may make it difficult to make the transition. d) Less opportunity to change While at US institutions, education

tends to have more general education components and provide more time for students to make up their mind and even change their mind about degree programmes, higher education programs in other countries, including the UK, tends to be more specific.

This means your child will need to be certain about their degree path, since there will be much less ability to change his or her mind.

Things to consider Ultimately, when considering higher education outside of the US or UK, there are a number of things that you should seriously consider before taking that leap: 1) As should be considered even before choosing a school in the US or UK, the student should know whether they want a small or large institution, an urban or rural location, etc.

2) It is important to understand that a three to four year education outside of one’s home country is going to be more intense and difficult than one close to home. Be sure that your child has the personality to handle these challenges.

3) You and your child must consider the ultimate goal of what they want to do and where they want to work.

While in a general sense, education outside of the US and UK may be advisable, if they want to practice law in the US, for example, it would probably be easiest for them to accomplish this by being educated in the US from the start.

The UK is more reasonable, with the average undergraduate student paying approximately £9,000 (approximately $11,500) in fees per year. The quality is typically equal to or higher than the US’ better schools.

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See success in action To book a personal visit or for further details, please contact the Registrar: Tel: 01283 559222 Email: registrar@repton.org.uk

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

Derby: UK capital for innovation Q&As Andrew Birchett, International Recruitment Officer – Middle East & North Africa International Recruitment and Collaborations, University of Derby

Since the days of the Industrial Revolution, Derby has inspired thinkers and makers who have changed the world. Today it is a leading hi-tech and cosmopolitan city, home to global names such as Rolls-Royce, Toyota and Bombardier.

The workforce commands the UK’s highest average salaries outside London and the South-East (Source: Office For National Statistics).

Q. Investment in infrastructure and the new industries is a major element in the growth strategies of the Gulf nations, which will require all types of engineering expertise from across the world. Do you feel your graduates would be well placed to compete for and succeed in these positions?

Our focus on real world learning makes us stand out from other universities – and makes our students stand out as a highly employable graduates. With the University of Derby, our students can look forward to the best possible start to their career.

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Strong employer links Partnerships with employers feature in all our courses to keep learning up to date, relevant and engaging.

We work with global businesses and major international organisations such as CERN – for a university with such a broad portfolio of courses, the list of possibilities is endless. These strong links pave the way for students to benefit from placement opportunities, industry visits, guest lectures, networking events and more. Our strong engagement with employers was one of the key factors which enabled us to achieve a Gold rating in the Teaching Excellence Framework in 2017.

Bentley, Porsche, Rolls-Royce, Toyota and IBM.

Go on work placement We offer guaranteed work experience for every full-time undergraduate student. Some courses include a year-long placement but students could also choose to go on shorter internships, including during the holidays. Our students have secured placements with the likes of Microsoft,

Professional credibility Over 100 of our undergraduate courses are accredited by prestigious professional, statutory and regulatory bodies. Accreditation means that courses meet high standards, are recognised internationally and delivers all the skills, understanding and experience that the industry expects

Apply theory to practice Employers regularly set live challenges for our students, which helps put learning into context. It could be market research for a company, designing an innovative engineering product, running prestige hospitality events or developing software to improve cyber security – whatever the brief, they will benefit from a genuine idea of what it is like to work in their chosen field. Students could also take part in high-profile competitions to showcase their skills to industry talent-spotters.

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

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We have many existing partnerships.

Student Wellbeing Mainly Rolls-Royce and Aecom Centre but also other large firms such as Atkins, Network Rail, Murphys and Interserve. We deliver all, or part, of Clinical Skills Suite an apprenticeship to these employers, Forensic which benefits learners, employers Training ‘T’ Block Facility and the University.

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Students are at the heart of our Q. In a survey carried out by the Student Learning and Teaching Strategy, Higher Education Statistics Agency Centre which by three pillars; (HESA) in 2015, 96.3% of University Directorate Estatesis2underpinned Kedleston Atrium Kitchen quality and employability, academic of Derby graduates – who had research in the curriculum. We are Shops (Ground completed degree floor) a full-time, first South nowSports 13thHall in the UK Students’ for teaching course during the 2013/14 Tower academic Bus Stops quality and Sunday Times year – were employed or studying Bar (KR (The Gym) Times Union OL1, OL2 and W1 months (Balcony) Good University Guide 2018) and 96% six on, putting Derby 15th of our graduates are in work or further on the UK universities league table.

Main (6 spaces) Post Receptionthis high study within six months of finishing To what do you attribute Room Heap Lecture(HESA Theatre2018).

(1st floor) “Blends”employability rate? their course We are also pioneering the use of technology-enhanced learning – such as lecture recording systems, live All Weather Pitches and Tennis Courts All Weather and Tennis Courts survey toolsPitches and digital assessment technologies – across our courses to improve the quality and availability of teaching resources and help students develop their digital skills.

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It goes without saying that in-depth Centre (1 space) Entrance knowledge is vital to help students embark on their career, but at the University of Derby we excel in developing people as a well-rounded, versatile and adaptable graduates.

Employers today are looking for graduates with a broad range of ‘soft’ University of Derby Sports Centre Q. Your College of Business, Law and skills. This is why, on every course, we Social Sciences offers various online foster creativity, analytical thinking, and part-time/full-time MBA courses communication and problem-solving in Global Finance and Business skills, teamwork and collaboration, Administration at the Kedleston Road time management, multi-tasking and site, Derby. Do you think that the leadership.

Kedleston Road MBA gives recognition, accreditation and a great foundation for the Technical knowledge and practical aspirational future business leader? skills may help secure an interview, but ‘soft’ skills may help you land The key features that make the the job.

University of Derby MBA programmes Estates stand out in a crowded and Q. In June, The University of Derby competitive marketplace for higher was included as one of the world’s education are the flexibility of delivery top 250 new universities, in the modes to suit students’ individual prestigious Times Higher Education and personal circumstances, and (THE) Young University Rankings that the programmes are continually 2018. How are you planning to build reviewed to ensure their currency on this success?

We have a long-standing reputation for teaching excellence of which we are extremely proud – now is the Clinical Skills Suite time to build further on this, through Forensic more focused and integrated applied Training ‘T’ Block research.

FacilityOpportunities are a core element of our academic approach – not only in terms of delivering these, but through a culture of curiosity and drive instilled in our students and staff to seek and create their own. We are proud to be the only university in our city and county as this enriches our connectivity within the region but, North as importantly, we relish the civic Tower responsibilities this brings.

Q. The University of Derby offers a wide range of online courses, some of which are in engineering related Heap Lecture Theatre (1st floor) (4 spaces)which are designed for subjects, Students’ Union (Ground floor) those in current employment. What are the advantages of these courses, and can they be completed remotely?

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and relevance to the needs of both industry and our delegates. Each delegate receives individualised support and consideration given through frequent and small seminar interactions with academics who as well as being at the vanguard of their disciplines, also bring valuable insight from professional backgrounds and consultancy in finance, trade, Staff car park logistics and operations and strategy ‘B’ Block development. The programmes emphasise the interconnectedness (13 spaces) of international and global business Courtroom and trade and accordingly attracts B125 delegates from all over the world.

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With online learning, you can enjoy access to your University of Derby programme and student services at any time through our virtual campus, so you can manage studies around your work and family commitments.

In fact, one of the key advantages of online learning is that there is no need City Centre to relocate to complete; students can study alongside their career and Estates immediately apply learning to the workplace.

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www.derby.ac.uk Contact international@derby.ac.uk or +441332 591698 for more details.

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Europe Country Spotlights Europe has been in the vanguard of economic and industrial development for hundreds of years. From a relatively small percentage of the global market, world powers like Britain and France, and later Germany, emerged and developed internal and external systems of business and trade which allowed them to dominate large sections of the globe from the 18th to the 20th centuries.

Today, wider Europe accounts for around 11% of global population. In 2010, Europe accounted for 30.2% of world GDP. The largest national economies were that of Germany, which ranks fourth globally in nominal GDP, followed by the United Kingdom, ranked fifth by nominal GDP, and then followed by France.

In economic terms, the EU has shrunk as a percentage of the world economy. The EU economy has still grown in size, but the rest of the world economy, on average, has grown faster. As a bloc, the European Union is the second largest economy in the world and represents around 22% of the global economy. Per capita GDP is still high by worldwide standards, and so the EU has a huge influence on exports and imports and the economies of its long-standing trading partners, like the GCC region – as a market for goods, capital, and increasingly inward investment as well.

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President of Cyprus Nicos Anastasiades

Nicos Anastasiades was born in Pera Pedi, Limassol, in 1946.

He has a twin brother and a sister.

He graduated in law from the National and Kapodistrian University of Athens and pursued a postgraduate degree in maritime law at the University College London. He has practiced law since 1972.

During his student years he was an active member of the youth wing of Georgios Papandreou’s Centre Coalition, based in Athens.

In 1971 he married Andri Moustakoudi and they had two daughters, Elsa and Ino. He has four grandchildren, Andys, Nicholas, Giorgos and Nicos.

After his studies he served in the National Guard, first at the Recruits’ Training Centre (KEN) in Larnaca and then at the 4th Higher Military Command.

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Nicos Anastasiades is a founding member of the Youth of the Democratic Rally (NEDISY) – the party which was founded by Glafkos Cleride in 1974 – in which he served in the posts of district secretary, vice president and president.

Anastasiades was first elected to the House of Representatives in 1981, and reached the positions of first vice president and later deputy president until 1997. He has been a member of the Cyprus National Council since 1995.

Nicos Anastasiades was elected as president of the Democratic Rally in 1997, a position that the members and officials of the party re-elected to 1999, 2003, 2007 and 2012.

In March 2012, he was nominated as a Democratic Rally candidate for the 2013 presidential election. In the first round of the presidential election on 17 February 2013, Anastasiades won 45% of votes. He won in the second round with 57.48% of the vote and was sworn in as President on 28 February 2013.

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Cyprus Country Spotlight

Quick Facts Capital city: Nicosia Population: 1,170,125 (Est 2016) GDP growth: 3.9% (Est 2017) Area: 9,251 km2 Government: Unitary presidential constitutional republic President: Nicos Anastasiades The President of the House of Representatives: Demetris Syllouris Currency: Euro (€) (EUR) Dialling code: 357 HDI: 33rd Ease of doing business index: 53rd

Cyprus at a glance Cyprus is an island country situated in the eastern Mediterranean Sea, located south of Turkey, west of Syria and Lebanon, northwest of Israel, north of Egypt and east of Greece. With a sub-tropical climate, it has mild winters and summers that can be extremely warm. With an average temperature along its coast of 24°C, Cyprus has one of the warmest climates in the Mediterranean and as a result it is a popular tourist destination, famed for its beautiful beaches and archaeological sites relating to the cult of Aphrodite, (who legend has it was born in the sea near off Paphos), including ruins of palaces, tombs and mosaic-adorned villas.

Human habitation on the island dates from around 10,000 BC, and it was settled by Greeks from the late Bronze Age. Cyprus’s strategic location has always meant it was a target for invasion and a centre for trade, a hub for Phoenician, Greek and Roman trade routes to the Middle East, Egypt and Africa. Before independence, Cyprus was ruled by the Ottomans and the British.

Its geographical location acts as a bridge between east and west, north and south. It has a long tradition of

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entrepreneurship and an educated, English-speaking population, moderate local costs, good airline connections and telecommunications.

Politics Cyprus has developed a multi-party system but ultimate power lies with the president, who is both chief of state and head of government. The incumbent president, Nicos Anastasiades, has been in power since February 2013 and currently governs with a cabinet of 13 members from a coalition of different parties.

The Cypriot constitution, created in 1960, codifies the principle of separation of powers and, as such, the executive, legislative and judicial branches are all independent of one another in order to avoid abuse of power. The legislative branch consists of a House of Representatives who are represented by 59 members who get elected for a five-year term. The three main parties in Cyprus include that of the current President, DISY, who was elected with 45% of the vote in the first round of the 2013 election and finally 57% of the vote in the second round. The other two prominent parties are the AKEL, who received 27% of the vote in the

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Traditionally Greece has been a major export and import partner of Cyprus, amounting to around 21% of the total exports of Cyprus.

first round, and EDEK, who received 25% of the vote in the first round.

freedoms that go along with that. Cyprus is currently in the process of joining the Schengen area.

The 1960 constitution provides for a Turkish Cypriot vice president with extensive veto rights, but since 1963 the Turkish Cypriots officials abandoned all state positions including the position of the vice president, which has been vacant ever since.

Traditionally Greece has been a major export and import partner of Cyprus. In 2007, it accounted for 21.1% of total exports of Cyprus. Over the same period it was responsible for 17.7% of goods and services imported by Cyprus. Some other important partners are UK and Italy.

The Republic is divided into six districts: Nicosia, Famagusta, Kyrenia, Larnaca, Limassol and Paphos.

The most important sectors of Cyprus’s economy are wholesale and retail trade, transport, accommodation and food services (26.0%), public administration, defence, education, human health and social work activities (20.3%) and financial and insurance activities (10.8%). Surveys suggest more than 2.831 trillion cubic metres of natural gas reserves lie untapped in the Leviathan gas field in the Mediterranean between Cyprus and Israel – almost equal to the world’s total annual consumption of natural gas.

Economy Cyprus is part of the monetary union, the eurozone and the EU single market. Despite joining the EU as a divided island, the whole of Cyprus is EU territory. Turkish Cypriots have, or are eligible for, EU travel documents and are EU citizens.

EU law is suspended in areas where the Cypriot government (Government of the Republic) does not exercise effective control.

It has been an EU member since 1 May 2004 and adopted the Euro on the 1 January 2008, with the consequent travel

The trend is the economy over recent years has been to shift from agriculture to light manufacturing and services. The services sector, including tourism, contributes almost 80% to GDP and employs over 70% of the labour force. 2 million tourists visit Cyprus every year, making it the 40th most

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popular destination in the world. The island has a mature tourism infrastructure, overseen and promoted by the Cyprus Tourism Organisation, a semi-governmental body.

Traditionally Greece has been a major export and import partner of Cyprus, amounting to around 21% of the total exports of Cyprus. In terms of imports, 74% come from EU member states (Greece 21%, Germany 17% and Italy 7%), while outside the EU 8% come from China and 4% from South Korea.

Cyprus has a large shipping management sector, with roughly 50 companies basing themselves there. It has the tenth-largest registered fleet in the world. Historically, and as an island nation, the country has a long history in merchant shipping, and that is only helped by its central hub location and proximity to the Suez Canal.

Starting in the 1990s, Cyprus also became an important hub for investment from the West into Russia and Eastern Europe. More recently, these flows have been directed to Asia, South America and the Middle East. Businesses from outside the EU also use Cyprus as their entry-point for investment into Europe. Business services are the fastest growing sector of the economy, and had overtaken all other sectors in importance. This is aided by work of the Cyprus Investment Promotion Agency (CIPA), the national

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investment promotion agency, which aims to promote the nation’s investment appeal abroad. It is currently focusing on the energy sector, but it also plays a key role continuing to promote the traditionally important sectors of real estate, shipping and tourism.

The Cyprus Securities and Exchange Commission (or CySEC) is the financial regulator in Cyprus. CySEC was launched in 2001, and when the country joined the EU in 2004 CySEC came under, and moved to comply with, general European regulation, giving firms registered in Cyprus access to European markets.

Cyprus’s legal system is founded on the principles of English common law and it is therefore familiar to international financiers. Cyprus’s legislation was altered to align with EU law as part of the process of entering the Union. Restrictions on foreign direct investment were removed, permitting 100% foreign ownership in many cases. Foreign portfolio investment in the Cyprus Stock Exchange was also liberalised. A business-friendly tax system was put in place with a 12.5% corporate tax rate, one of the lowest in the EU. Cyprus has concluded treaties on double taxation with more than 40 countries, and, as a member of the Eurozone, has no exchange restrictions.

Non-residents and foreign investors may freely repatriate proceeds from investments in Cyprus.

The Cypriot debt-to-GDP ratio is now expected to fall to 105% in 2020, and and is thus considered sustainable for the future.

Cyprus does particularly well in international comparisons of trade freedom and monetary freedom. The regulatory framework is relatively transparent and efficient, and the financial sector has stabilised.

Strong economic growth in 2017 — the healthiest figures since 2008 — signalled a sustained recovery. GDP expanded 3.9% against a backdrop of growing monetary stability, which fuelled domestic demand. Fixed investment jumped over a quarter in 2017, and private consumption picked up from 2016, underlined by declining unemployment and subdued inflation. Forecasts are for sustained growth in the short term, driven by improved public finances and booming construction and tourism industries. In the banking sector, healthy growth supported asset values, enhancing borrowers’ repayment capacity and facilitating loan restructuring, which helped banks begin to reduce their stock of non-performing loans.

The economy of Northern Cyprus Economic activity in Turkish-occupied northern Cyprus amounts to about one-fifth of the rest of the island, and GDP per capita is around half.

Because of the international jurisdictional issues, foreign financing is more limited and foreign firms have traditionally hesitated to base themselves there. The economy mainly consists of the tourism sector, while the remainder is largely administratively and agriculturally based – mainly citrus and dairy products.

2012–2013 financial crisis In 2012, following the Greek government-debt crisis, the €22 billion exposure of small Cypriot banks to over-leveraged local property companies became critical. In March 2013, a €10 billion international bailout (or Economic Adjustment Programme for Cyprus) was hurriedly organised by the Troika (the European Commission, the International Monetary Fund, and the European Central Bank) and the Cypriot Government.

Bailout terms include strong austerity measures and a levy on bank deposits over €100,000, implementation of antimoney laundering measures in Cypriot financial institutions, fiscal moves to help bring down the Cypriot governmental budget deficit, structural reforms to restore competitiveness and fix imbalances, a privatisation programme, and an agreement to split the country’s second largest bank, the Cyprus Popular Bank (also known as Laiki Bank), into a “bad” bank, which would be wound down over time and a “good” bank which would be absorbed by the Bank of Cyprus.

Following the financial crisis, Cyprus exceeded expectations with its economic recovery. Its economy exited recession in 2015 and continued to grow into 2016. Progress was achieved in all of the key objectives the international lenders had targeted, resulting in the Eurogroup hailing Cyprus as a success story.

Turkey is the main trading partner of Northern Cyprus, supplying 55% of imports and receiving 48% of exports. In 1994, the European Court of Justice (ECJ) decided that only goods from the Republic of Cyprus could be imported by EU member states. This decision resulted in a large decrease of Turkish Cypriot exports to the EU. Despite that, the EU is still the second-largest trading partner of Northern Cyprus and accounts for a 24.7% share of imports and a 35% share of exports. Turkey has also supplied favourable loans to help support the local economy.

While the euro is widely accepted, the official currency is the Turkish lira, and economy activity is therefore heavily influenced by the success of the Turkish currency and the wider economy.

Northern Cyprus has a free market in foreign exchange and permit residents to hold foreign-currency denominated bank accounts. This encourages transfers from Turkish Cypriots living abroad.

Forecasts are for sustained growth in the short term, driven by improved public finances and booming construction and tourism industries 57

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Chancellor of Germany Angela Merkel

Angela Dorothea Kasner, better known as Angela Merkel, was born in Hamburg, West Germany, on 17 July 1954. Trained as a physicist, Merkel entered politics after the 1989 fall of the Berlin Wall. Rising to the position of chairwoman of the Christian Democratic Union party, Merkel became Germany’s first female chancellor, and one of the leading figures of the European Union, following the 2005 national elections.

Ms Merkel was the daughter of a Lutheran pastor and teacher who moved his family east to pursue his theology studies.

Merkel grew up in a rural area north of Berlin in the then German Democratic Republic. At school, she learned to speak Russian fluently, and was awarded prizes for her proficiency in Russian and mathematics. She studied physics at the University of Leipzig, earning a doctorate in 1986, and worked as a chemist at the Central Institute for Physical Chemistry, Academy of Sciences from 1978 to 1990.

After the fall of the Berlin Wall in 1989, Merkel joined “Demokratischer Aufbruch” (Democratic Awakening), which later merged with the Christian Democratic Union (CDU), and was elected to the Bundestag in 1990. Soon after she was appointed to Helmut Kohl’s cabinet as minister for women and youth and later served as minister for the environment and nuclear safety.

After the Kohl Government was defeated at the 1998 election, she was named secretary-general of the CDU. In 2000, she

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was chosen party leader, but lost the CDU candidacy for chancellor to Edmund Stoiber in 2002.

In the 2005 election, Merkel narrowly defeated Chancellor Gerhard Schröder, winning by just three seats, and after the CDU agreed a coalition deal with the Social Democrats (SPD), she was declared Germany’s first female chancellor. Merkel is also the first former citizen of the German Democratic Republic to lead the reunited Germany and the first woman to lead Germany since it became a modern nation-state in 1871.

She was elected to a second term in 2009.

Merkel made headlines in October 2013 when she accused the US National Security Agency of tapping her cell phone. At a summit of European leaders she chided the United States for this privacy breech, saying that “Spying among friends is never acceptable.” Later reports revealed that the NSA may have been surveilling Merkel since 2002. Merkel was sworn in for a third term in December 2013 with a landslide.

In the 2017 election, Merkel led her party to victory for the fourth time. Both CDU/CSU and SPD received a significantly lower proportion of the vote than they did in the 2013 election, and attempted to form a coalition with the FDP and Greens. The collapse of these talks led to months of stalemate until The German President Frank-Walter Steinmeier appealed to the SPD to change their hard stance and to consider a 3rd grand coalition with the CDU/CSU. This allowed the new government to take office finally on 14 March 2018.

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Germany Country Spotlight

Quick Facts Capital city: Berlin Population: 82,800,000 (Est 2017) GDP growth: 2.2% (Est 2017) Area: 357,168km2 Government: Federal constitutional parliamentary republic President: Frank-Walter Steinmeier Chancellor: Angela Merkel President of the Bundestag: Wolfgang Schäuble President of the Bundesrat: Michael Müller Currency: Euro (€) (EUR) Dialling code: 49 HDI: 4th Ease of doing business index: 20th

Germany at a Glance Germany is a federal parliamentary republic formed from the merger of 16 principal states and is the most populous member of the European Union and the second most popular destination for migration in the world. With the fall of the Berlin Wall, and after a turbulent 20th century, the country was reunited in 1990 to become a thriving economic force once more – the strongest in Europe.

The Federal Republic of Germany is now is a prominent global power with the world’s fourth-largest economy by nominal GDP. It is a highly developed country with a skilled and very productive society and a workforce focused on societal responsibility. It has a social security and universal healthcare system, environmental protection, as well as tuition-free university education. Germany also has a legal system that protects property and the rights of the individual, while its very competitive tax regulations offer a strong framework for investment, with the average tax on corporations being less than 30%. In some regions, due to variable rates of trade tax, it is under 23%. Companies are usually taxed on two levels; corporation tax and in the case of partnerships, personal income tax. Both are levied by the federal government. The former, if based in Germany, pays corporation tax on globally generated income, however, dividends that are

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Germany is the world’s third largest exporter of goods, and has the largest national economy in Europe which is also the world’s fourth largest by nominal GDP.

generated abroad and taxed there may be exempt from taxation in Germany. or at least offset against taxation there. Companies not based in Germany are only taxed on income generated in the country. Taxable income determines the tax rate for corporate income tax. Corporate income tax is levied at a flat rate of 15% with a solidarity surcharge of 5.5%, of that 15%,(0.825%) was introduced in 1995 to fund reunification, therefore the total becomes 15.825%. If a subsidiary German company that sends profits to its foreign owner a 25% withholding tax is charged, which can be repaid if there is a double taxation agreement (DTA) in place. In the case of the latter, partnerships pay 14% if their income exceeds the tax-free allowance of €9,000, or progresses to 42% if income is over €54,950. If income is over €260,532 per annum a 45% rate applies to anything exceeding that.

Germany was a founding member of the European Economic Community (EEC), the forerunner to the European Union, in 1958. It is also a prominent member of the United Nations, NATO, the G8, the G20 and the OECD, and it has been a cultural and intellectual dynamo for hundreds of years. It has produced many influential artists, philosophers, musicians, sportsmen, entrepreneurs, scientists and inventors. After a disastrous 14th century, during which famine and plague decimated populations across Europe, German artists were instrumental in the Northern European Renaissance. Learning and trade flourished and genii

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such as Hans Holbein, Albrecht Dürer and Johannes Gutenberg helped to spread this to the masses through art and the use of moveable type for printing. Martin Luther and the Protestant Reformation again helped ferment ideas and promote literacy.

The excellent healthcare offered in modern day Germany has inspired their Chancellor to reach out to the world with a ‘2030 Sustainable Development Agenda’, to obtain equality for all with clean air, nutrition, liveable cities, an end to poverty and improved education.

The Economy Germany is now the world’s third largest exporter and importer of goods and the largest national economy in Europe (currently growing at around 2.4% this year and with an increased GDP of 0.6% from the third quarter last year), also with large capital stocks and a very low level of corruption. Their service industry contributes 71% of total GDP with very low unemployment and one of the highest levels of industrial innovation. In 2017 it recorded its best performance in a decade and fourth quarter growth was driven by a strong growth in exports, a rising demand for industrial goods both within and outside the country.

A decline in unemployment increased healthy consumption.

The Bundesbank declared the economy as having a strong and broad-based economic upturn. A gauge of private-sector output just rose to the highest level in seven years and wages are also

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rising, particularly for metal workers and engineers whose wage gains averaged an increase of more than 3% this February.

Their automotive industry is unsurpassed globally, winning all the major car awards year in, year out! It is one of the largest employers in the world with a labour force of over 750,000 working in their industry. In the whole world it has the third highest car production and the fourth highest total motor vehicle production. Makes like Audi, BMW, Mercedes-Benz, Opel, Porsche and Volkswagen are recognised and bought globally and represent the pinnacle of German initiative, engineering, production and design.

Berlin, the capital, has developed as an amazingly successful centre for start-ups, particularly in emerging technologies.

Germany’s stability makes it an exceptional place for venture capital investment. Many small and medium-sized enterprises have managed to scale up successfully and become leaders in their respective markets and German products are worldwide export successes across every level of industry.

10% of manufacturing companies in Europe are German and increasingly more foreign companies are placing their faith in the country as a base for production sites, due to its superb business framework and superior rates of productivity.

Germany also has its own economic development agency which supports its nation’s companies abroad, promotes Germany as a business location and assists foreign companies wishing to set up there.

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business regulatory environment. It has been suggested that the near future will witness a boost in public investment in infrastructure with lower taxes and further encouragement for private investment.

Recent spending promises have amounted to €46 billion over the next four year parliament amounting to a fiscal stimulus of 1.2% of gross domestic product. Dieter Kempf head of the BDI, the German employers federation said “You can’t raise taxes when the exchequer is already full and there is international competition on tax”. The restraint has pleased the business community.

Politics Germany remains the most influential member nation in the European Union, both politically and economically, the success of their economy is mainly based on exports of high quality manufactured goods the combined value being 84% of GDP. The country has proved itself to be resilient and a fiercely competitively global player with prudence, hard work and productivity being prevalent. It has a solid manufacturing and services-based economy with several relevant hubs – Berlin – arts and music. Frankfurt – finance, Munich – industry.

The 2017 September election results led an unprecedented six month process in forming a new government in Germany.

After the longest government building process in modern history, Angela Merkel was re-elected as chancellor of a renewed ‘grand coalition’ of Conservatives (CDU/CSU) and Social Democrats (SPD)in March 2018.

In coalition discussions earlier this year, talks produced a vision for the future, with a detailed catalogue of incremental measures to make it fit for peak performance. The state pension is now planned to be pegged at 48% until 2025 and a new ‘top-up’ basic pension will be introduced to prevent elderly people falling into poverty. Primary schools will be obliged to offer full daycare facilities to children and there will be a massive investment in nurseries, schools and universities. There is also now an agreement in place to limit the number of refugees to 220,000 per annum.

With regard to technological innovation there is an excellent study “Technological Innovation and Inclusive Growth in Germany” by Wim Naudé (University of Maastricht) and Paula Nagler (University of Rotterdam) which sheds light on how technological innovations affect inclusive growth. In the public debate, disruptive innovations through trends like digitisation and automatisation are often discussed with plenty of scepticism. These trends are often seen as a threat to jobs and thus the well-being of many in the workforce, however, it is quite clear that these trends are not reversible and are already embedded in today’s economy.

The results of the study show that technological innovations do not hamper inclusive growth. Quite the opposite. The data shows that the stronger technological innovations penetrated the German economy, the stronger the welfare benefits have been. This indicates that economic policy aimed at both pure economic performance and battling inequality at the same time should focus on an environment in which technological innovations can thrive. The authors discuss several shortterm and long-term levers for economic policy conducive to innovations-driven inclusive growth.

Germany’s economic freedom score is 74.2, 25th freest in the 2018 index, an increase of 0.4 points. Business and investment freedom are strong and long-term competitiveness along with entrepreneurial growth are supported by openness to global commerce, well-protected property rights and a sound

A new emphasis on free trade is being considered following a call for a new free trade agreement with Mexico at the Hannover Messe trade fair in April. Chancellor Angela Merkel thanked the European Commission for its success in “achieving the agreement in principle on taking our trade agreement to the next level”. The EU’s trade commissioner Cecilia Malmström has produced excellent work, she added. Angela Merkel also thanked the EU’s Mexican partners and advised, “Work on the technical points should now proceed swiftly.”

Mexico is Germany’s main trading partner in Latin America and at a joint business forum, Germany and Mexico also signed a co-operation agreement. During their opening tour of the trade fair, Angela Merkel and Mexican President Enrique Peña Nieto were able to see the first examples of German-Mexican cooperation. Mexico, said the Chancellor, is Germany’s most important trading partner in Latin America. “Last year the volume of bilateral trade rose to over €20 billion.”

It was apparent at the Hannover Messe that industry is becoming increasingly digitalised, with increased automation, use of energy technology, intralogistics, new IT platforms and increasingly sophisticated artificial intelligence.

The theme of the event, “Integrated Industry – Connect and Collaborate”, was designed to demonstrate the potential offered by these developments.

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Prime Minister of Ireland Leo Varadkar

Leo Varadkar, (born 18 January 1979, in Dublin), is a Irish politician who became leader of the Fine Gael party and taoiseach (prime minister) in June 2017.

Varadkar’s mother, an Irish-born nurse, and his father, an Indian-born doctor, met while working together in England.

Before settling in Dublin, where Varadkar, the youngest of three children, was born, the family also lived in the UK and briefly in India. He attended a state-run Roman Catholic elementary school (St Francis Xavier National School) and a private Protestant secondary school (the King’s Hospital) before studying medicine at Trinity College Dublin.

After completing a medical degree at Trinity (2003), he worked for several years as a junior doctor at St James’s and Connolly hospitals in Dublin, before qualifying, like his father, as a general practitioner (2010).

Varadkar’s interest in politics began early. At Trinity he was an active member of the campus Young Fine Gael organisation.

He also served as the vice president of the youth organisation of the European People’s Party, an amalgam of dozens of centre-right youth political groups from across Europe.

In October 2003 he joined the Fingal County Council and then in 2007, at age 28, Varadkar emerged on the national stage by winning election to the Dáil representing Dublin West.

After the February 2011 election he was named minister for transport, tourism and sport in the Fine Gael

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coalition government. He oversaw “the Gathering”, a nationwide initiative in 2013 to revive tourism in Ireland with the staging of some 5,000 special events celebrating Irish culture and aimed at attracting members of the global Irish diaspora and other visitors to Ireland. During Varadkar’s ministerial tenure, the number of international visitors to Ireland increased by about one million per year. Varadkar was also responsible for the development of a new national ports policy and road safety strategy.

In July 2014 he became minister for health, fulfilling a childhood ambition, and he remained in the post for two years. Beginning in May 2016, Varadkar took over as the minister for social protection.

In May 2017, Varadkar stood for the contest to replace Enda Kenny as leader Fine Gael. Voting for the leadership was apportioned on the basis of 65% for the parliamentary party, 10% for party councillors, and 25% for rank-and-file members. In balloting on 2 June, he finished first among Fine Gael members of the Oireachtas (Parliament) and party councillors to win the weighted contest and become leader.

When his nomination was approved in the Dáil by a vote of 57 to 50 (with 45 abstentions) on 14 June, Varadkar, at age 38, became the youngest taoiseach in Ireland’s history as well as the first to be a member of an ethnic minority

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Ireland Country Spotlight

Quick Facts Capital city: Dublin Population: 4,761,865 (2016) GDP growth: 5.2% (2016) Area: 70,273 km2 Government: Unitary parliamentary republic President: Michael D. Higgins Taoiseach: Leo Varadkar Currency: Euro (€) (EUR) Dialling code: 353 HDI: 8th Ease of doing business index: 17th

Ireland at a glance

The Republic of Ireland is located in north-western Europe facing the Atlantic Ocean, with the Celtic Sea to the south and the Irish Sea to the east. It comprises 26 of the 32 counties, about five-sixths, of the island of Ireland. The capital and largest city is Dublin, which is home to around a third of the country’s 4.76 million population. The state shares a land border with Northern Ireland, a part of the United Kingdom.

Politics

From the Act of Union on 1 January 1801, until 6 December 1922, the island of Ireland was part of the United Kingdom of Great Britain and Ireland. During the Great Famine of the 1840s, the population of over 8 million fell by 30%. One million Irish died of starvation and/or disease and another 1.5 million emigrated, mostly to the United States. This set a pattern of emigration for the century to come, resulting in a consistent population decline up to the 1960s.

The topography of the west mostly consists of rugged landscape, hills and mountains, numerous islands, peninsulas, headlands and bays. Towards the east the lowland soils tend towards glacial deposits of clay and sand, as well as significant areas of bogland and several lakes and rivers. Farming was the main occupation for centuries and now accounts for about 64% of the land area.

The Irish Free State came into being in 1922 as a result of the Anglo-Irish Treaty. This did not extend to Northern Ireland, which decided to remain within the United Kingdom. This led to a civil war in the south and difficult relations with Britain throughout the 1920s and 30s.

The Atlantic and the warming influence of the Gulf Stream give a temperate oceanic climate, temperatures ranging between −5°C in winter or and 26°C in summer. Most of the eastern half of the country has 750-1,000mm of rainfall annually. Rainfall in the west generally averages between 1,000-1,250mm. In many mountainous districts rainfall exceeds 2,000mm per year. The wet, temperate climate is good for plant growth, and this is the main reason Ireland is known as the “Emerald Isle”.

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It had dominion status until 1937 when a new constitution was adopted, with an elected non-executive president as head of state. It joined the European Economic Community (EEC) in 1973. Since the signing of the Good Friday Agreement in 1998, the Irish government and Northern Ireland Executive have co-operated on a number of policy areas under the North-South Ministerial Council.

The legislature consists of a lower house, Dáil Éireann, an upper house, Seanad Éireann, and an elected President (Uachtarán) who is a ceremonial head of state, but with

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some powers and duties. The executive head is the Taoiseach (Prime Minister), is elected by the Dáil and it is he that appoints ministers and a cabinet.

Economy

Ireland started the move to transform itself from an agriculturally based economy to a knowledge-based economy, with the creation of an EU-approved low-tax special economic zone called the International Financial Services Centre (IFSC) in Dublin in 1987. This was later extended to the whole country when the corporate tax rate was cut from 32% to 12.5% (1999-2003). In the subsequent boom, fuelled by borrowing, Ireland started to become known as the “Celtic Tiger”, rivalling growth rates in the Far East. When Irish banks lost access to finance, the ensuing credit collapse caused a severe property collapse and ultimately a full banking collapse. This has left Ireland with one of the highest levels of private and public sector debt in the EU. After the financial crisis, Ireland returned to growth and its “low-tax” model became the largest foreign hub for US technology firms (Apple, Facebook, Google, etc), which now employ roughly 25% of the labour force, and pay 80% of Irish business taxes.

According to EU Commission estimates, the economy grew by 7.3% last year, three times faster than euro average.

That would make the Republic the fastest-growing country in the EU. The growth is being led by the activities multinational companies operating from there, but even removing that from the figures domestic growth would still be 4.9% for 2017 – double that of the eurozone. The commission states “Consumer spending and construction investment are forecast to drive GDP growth in the short term. Strong employment growth should underpin a rise in disposable income and household consumption over the next two years”. They also said that investment in residential and commercial construction will contribute “substantially” to economic expansion. In the medium term growth is expecting to slow slightly, and beyond that outcomes are linked to UK-EU Brexit negotiations.

Inflation is linked to the wider euro area and in Ireland this is expected rise “only gradually”.

Multinationals Since the mid-1980s Ireland has had a deliberate policy of attracting multinationals to its shores. This has only intensified over recent years, now accounting for around 70% of exports. These companies, in particular US technology and pharmaceutical giants, are often global and hugely profitable, agile and year-on-year can move to seek the lowest tax environment possible. In fact the US tax system has encouraged profit to be taxed on a domestic and a foreign basis. The location of customers does not

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determine where a company owes tax on its profits, but it can determine when a US company pays its US tax.

US companies pay 35% tax on the profits earned from sales to US customers, however, they can defer the tax due on sales to non-US customers until the profits are “repatriated” to the US. This offshoring process then leads to a long debate, which the companies will obviously exploit, about where taxes are due and how much they should be.

Various international attempts have been made to regulate “stateless” profits over the years, particularly the wake of the financial crisis of 2007-2008, or after a media storm, but globally agreed standards remain elusive. Ireland, while still remaining an attractive home, has changed its residency laws and handling of assets to regularise the position somewhat.

The common language and cultural links are also a great draw to inward investment from the US, as are the ease of access to the UK and the rest of the EU. With property costs, etc, it could also well be cheaper to set up in Dublin rather than somewhere like London.

Under the Trump administration however tax laws could be due for a substantial revamp, and there could be great implications for Ireland over the longer term. Multinationals have eight years to pay a one-time tax on the accumulated income – and that is likely to suck back capital from abroad.

The benefits of the impressive growth and GDP rates that result from the activities of multinationals, doesn’t necessarily trickle down to the rest of the economy and the populace. Outside of these sectors, wage growth has been sluggish and personal and business debt has remained high, while recovery after the crash could be described as being patchy, particularly in more traditional sectors and the gig economy. These continue to feel squeezed, as they are elsewhere across Europe.

The European Commission is at present continuing with its plans to introduce a digital tax on the big internet companies. By taxing turnover, it is set to override Irish law, and is seen as a serious threat to Ireland, as it could diminish the appeal of the 12.5% corporation tax rate.

Infrastructure

Brexit Outside the political sphere and the issue of the border, a lot hangs for Ireland on the eventual deal agreed between the UK and the EU, as the economic relationship has always been close. The Republic of Ireland is the fifth biggest customer for UK exports. The UK is the second biggest customer for Irish exports, and the Republic is a very important market for exports from Northern Ireland. 13.8% of exports from the Republic of Ireland go to the UK as a whole, and in the other direction, 5.0% of UK exports of goods and services go to the Republic of Ireland.

This encompasses direct investment, trade in services (largely comprised of computer services), royalties and licences, chemicals and related products, machinery and transport equipment, manufactured goods, food, etc.

Uncertainty, and the potential economic threat from rising costs for imports of goods – both to the individual consumers and the wider economy – has been highlighted.

The number of caveats around Brexit make forecasting tricky, but with draft agreements in place the outlook may not be as bad as some feared. Some companies will have to alter their business model no doubt, and for some it will certainly create opportunities.

The common language and cultural links are also a great draw to inward investment from the US, as are the ease of access to the UK and the rest of the EU. With property costs, etc, it could also well be cheaper to set up in Dublin rather than somewhere like London.

In certain areas, parts of Dublin for example, substantial undersupply has been identified in residential accommodation. Fluxuating property prices were a major contributory factor to crash of 2008 and some of the underlying issues still exist.

This is continuing to put pressure on the domestic economy, pushing up rents and house prices. There have been warnings that this trend could lead to diminishing competitiveness.

Investing in infrastructure in general was massively curtailed after the crash. Under the terms of the Economic Adjustment Programme for Ireland, or Bailout programme, the State payed failed banks’ senior bondholders. This added about 10%, or about €5 billion, to the gross costs of the bank rescue. As a result public debt rose sharply and is still high, though falling, at 72.8% of GDP (2016). The Irish took the pain, and then were able to escape from the strict bailout limitations in 2013.

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Macedonia Mini Country Spotlight

Quick Facts Capital city: Skopje Population: 2,103,721 (Est 2017) GDP growth: 0.0% (Est 2017) Area: 25,713 km2 Government: Parliamentary republic President: Gjorge Ivanov Prime Minister: Zoran Zaev Currency: Macedonian denar (MKD) Dialling code: 389 HDI: 80th Ease of doing business index: 11th

Macedonia at a glance The Republic of Macedonia (sometimes abbreviated as FYROM or FYR Macedonia) is a sovereign republic with multi-party parliamentary democracy. Authority in Macedonia is based on the principle of a strict division of functions and responsibilities amongst the holders of legislative, executive, and judicial powers.

Executive authority rests with the Government, which is headed by the Prime Minister. The cabinet ministers are appointed by the Prime Minister Designate and approved by a majority vote in the National Assembly.

The Macedonian legal system is based on civil law. The judiciary is comprised of basic and appellate courts, the Supreme Court, the Constitutional Court, and the Republican Judicial Council. Parliament appoints judges to serve on each of these courts.

Membership to the European Union is of the highest strategic interest and priority for the Government, an objective shared by an overwhelming majority of Macedonia’s citizens and all political parties. Macedonia was the first country in South East Europe to sign a Stabilisation

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and Association Agreement with the European Union in 2001 in Luxemburg. Republic of Macedonia is an aspiring member country of the North Atlantic Treaty Organisation (NATO). Macedonia is a country of nature, the cradle of culture, home to the greatest commander in human history, Alexander the Great, and birthplace of Mother Teresa. It is a crossroads of civilisations, a unique blend of ancient and modern, offering a rich multicultural experience. The beauty of Macedonia and all it has to offer can be experienced year round.

Tourism Although Macedonia is a landlocked country, the coast of the Aegean Sea is only 250km away from the capital city of Skopje, while the country’s tourist hotspot – the UNESCOprotected Lake Ohrid, is only 170km away.

Lake Ohrid is one of the world’s oldest and one of Europe’s deepest lakes. It is over 300 million years old, and has over 200 endemic species not found on any other place on the planet, including the famous delicacy, Ohrid trout. Lake Ohrid is a natural tectonic lake in the south-western part of Macedonia. The town of Ohrid, which rests by the lake, is the birthplace of the Cyrillic alphabet and Slavic literacy.

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Ohrid has 365 churches and monasteries – one for each day of the year. Ohrid’s gallery houses icons from the 5th and 6th centuries that have been on display at the Metropolitan Museum of Art in New York. One of Ohrid’s attractions is the church St. Jovan Bigorski (St. John the Baptist) built in 1020.

In addition to its medieval churches, traditional town architecture, and Roman amphitheater, a must-see are the remains of the ancient Samuel’s Fortress that oversees the lake. The Fortress’s origins date from the time of Alexander the Great, and it is one of the largest medieval fortifications to be preserved in the country.

The Republic of Macedonia abounds with unique monuments, and amongst them is the megalithic observatory Kokino that is fourth on the list of oldest observatories in the world, according to NASA. Gaining in popularity recently are Macedonia’s wine tours. Macedonia can easily be reached by two international airports, International airport in Skopje, and St. Paul the Apostle airport in Ohrid. These international airports connect Macedonia with several major European cities.

Moldova, Serbia, Montenegro, Bosnia and Herzegovina and Kosovo). In addition to the multilateral, Macedonia has also signed two bilateral Free Trade Agreements with Turkey and with Ukraine. These agreements give Macedonia duty free access to more than 650 million consumers.

Macedonia welcomes visitors to experience this timeless land of culture, where the ancient is inextricably blended with the modern, where every city or town echoes the past amidst the sounds of contemporary life.

Macedonia has been a member of the World Trade Organization (WTO) since 2003.

Economy

The Republic of Macedonia has signed investment protection treaties with the following countries: Albania, Austria, Belgium, Bosnia, Bulgaria, China, Croatia, Czech Republic, People’s Republic of Korea, Finland, France, Germany, Hungary, India, Italy, Malaysia, Netherlands, Poland, Romania, Russia, Serbia, Slovenia, Spain, Sweden, Switzerland, Turkey and Ukraine.

The economic performance of the Macedonian economy is expressed through stable GDP growth, low inflation rate of <2 % on average in the past 10 years, fiscal discipline confirmed by the international financial institutions and a well-functioning coordination between fiscal and monetary policy.

Macedonia is at the cross-roads of South Eastern Europe, which makes it an ideal transit and distribution center for products for European markets. The developed road and railway infrastructure, in combination with the small area of the country enables access to every inhabited place in Macedonia in less than three hours.

Some of the significant foreign investors include Johnson Matthey (UK), Mobilkom Austria (Austria), EVN (Austria), Deutsche Telecom (Germany), Kromberg & Schubert (Germany), Dräxlmaier Group (Germany), Van Hool (Belgium), Societe Generale (France), Johnson Controls (USA), KEMET Corporation (USA), the National Bank of Greece (Greece), Hellenic Bottling Company S.A. (Greece), QBE Insurance Group Limited (UK), Mittal Steel (Netherlands), Duferco (Switzerland), and Titan Group (Greece), Marquardt (Germany), Coficab (Tunis), Mensan Otomotiv (Turkey), Endava (UK), Apple Land (Dubai), Anthura (Netherlands), ODW-Elektrik (Germany), Key Safety System (USA), Amphenol (USA), KPME (Ukraine), Vitek (Italy), Prodis (Russia), Grishko (Russia), VPTEX (Netherlands), Accomplast (Germany), Technical Textiles (Germany), Delphi (USA), Arc Automotive (China), Gentherm (USA), Adient Automotive (USA), Lear Corporation (USA), Van Hool (Belgium).

Macedonia is a signatory of three multilateral Free Trade Agreements: SAA (Stabilisation and Association Agreement) with the EU member-states; EFTA (Switzerland, Norway, Iceland and Liechtenstein) and CEFTA (Macedonia, Albania,

Treaties

The Republic of Macedonia has signed agreements for avoidance of double taxation with the following countries: Albania, Austria, Belarus, Belgium, Bulgaria, China, Croatia, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Hungary, Iran, Ireland, Italy, Kosovo, Kuwait, Latvia, Lithuania, Montenegro, Moldova, Morocco, Netherlands, Norway, Poland, Qatar, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Switzerland, Sweden, Taiwan, Turkey, UK, Ukraine.

THE NEW BUSINESS HEAVEN IN EUROPE Tax

Tax rate

Corporate Income Tax

10%

Personal Income Tax

10%

Value Added Tax

General tax rate: 18%

Property Tax

0.1% - 0.2%

Inheritance and Gift Tax

2 - 3% or 4 - 5%

Sales Tax on real estate and rights

2 - 4%

Preferential tax rate: 5%

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President of Malta Marie-Louise Coleiro Preca

Marie-Louise Coleiro Preca was elected as the ninth President of the Republic of Malta on 4 April 2014. At the age of 55, Coleiro Preca is the youngest serving President of Malta and only the second woman to hold the post of head of state.

Coleiro Preca was born in Qormi on 7 December 1958. She was educated at St. George’s Primary School in Qormi, Maria Reġina Girls’ Grammar School at Blata l-Bajda and at the Polytechnic, Imsida. Later she graduated with a BA in legal and humanistic studies (international studies) and obtained a diploma notary public from the University of Malta.

Within the Partit Laburista she has served as a member of the National Executive, assistant general secretary and general secretary. As general secretary (1982-91), she was the only woman to have served in such a senior post of a Maltese political party. Ms Coleiro Preca has also been a member of the National Bureau of Socialist Youths, president of the women’s section of the party, founder member of the Ġuże Ellul Mercer Foundation and publisher of the party’s weekly newspaper, Il-Ħelsien.

her year in office she embarked on a series of reforms and strategies in the social sector.

The main reforms were related to social housing and an integrated ICT strategy aimed at bringing simplification to the social benefits process. Infact by the end of 2014, the retirement and widower’s pension, marriage grant and children’s allowance will be issued automatically.

As Minister she started working on a single-means testing mechanism and on a welfare reform. She also introduced an effective system against benefit fraud. Throughout her year in office she started developing a pensions’ strategy and addressed a number of anomalies faced by retired dockyard workers. The number of social measures taken while in office includes a full widower’s pension and the rescheduling of the children’s allowance payments to help families in their budgeting. She proposed a number of new legislations, including the Child Protection Act. She also set up Malta’s first sexual assault crisis centre known as SART.

She served as MP in the Maltese Parliament from 1998 to 2014. In the 2008 General Election she was the first elected MP. Coleiro Preca has served on the board of directors of Maltacom plc (now known as GO) and Libyan Arab Maltese Holding Company. She was a member of the National Commission for Fiscal Morality. As an opposition MP, she served as shadow minister for social policy, tourism and for health and also as member of the Parliamentary Permanent Committee for Social Affairs and another for the Family Affairs.

In December 2013, with the European Union commissioner for employment, social affairs and inclusion, László Andor, Coleiro Preca launched the LEAP project. This project, co-financed by the European Social Fund, is part of the setting up of family resource centres that will offer services in the heart of the community. In January 2014, together with the Prime Minister of Malta, Coleiro Preca launched a Green Paper: A framework for poverty reduction and for social inclusion. Furthermore, she introduced a number of measures to address poverty including a child supplement aimed at 22,000 children at risk of poverty.

In March 2013 Marie-Louise Coleiro Preca took the oath as the minister for the family and social solidarity. Throughout

Marie-Louise Coleiro Preca is married to Edgar Preca and has a daughter.

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Malta Country Spotlight

Quick Facts Capital city: Valletta Population: 431,864 (Est 2018) GDP growth: 6.6% (Est 2017) Area: 316 km2 Government: Unitary parliamentary republic President: Marie Louise Coleiro Preca Prime Minister: Joseph Muscat Currency: Euro (€) (EUR) Dialling code: 356 HDI: 33rd Ease of doing business index: 84th

Malta at a glance

and economic links through the region.

The Republic of Malta is a small, island country in the Mediterranean Sea that lies south of the island of Sicily. Malta is an archipelago, but only the three largest islands of Malta, Gozo and Comino are inhabited. The landscape of the islands is characterised by terraced fields, dry vegetation, rock and limestone. This is due to the long hours of strong sunshine that they receive throughout the summers, which are usually dry and hot. The average annual temperature is around 23°C.

The islands voluntarily became part of the British Empire in 1800, and the importance of their location greatly increased after the opening of the Suez Canal. During the early years of the Second World War, Malta came under concentrated bombing and naval siege by the Axis powers – so much so that in 1942 King George VI awarded the whole Maltese population the George Cross in recognition of their bravery. A depiction of the medal was then incorporated onto Malta’s national flag.

It is one of the smallest and most densely populated nations in the world and has two official languages, Maltese and English.

Politics

Malta’s location in the middle of the Mediterranean has historically given it great strategic importance as a naval base and a crossroads between Europe, North Africa and the Middle East. A succession of powers, including the Phoenicians, Carthaginians, Greeks, Romans, Byzantines, Arabs, Normans, Sicilians, Spanish, Knights of St. John, French, and British have ruled the islands, each adding to the distinctive mix.

Malta is particularly known for its connection with the Order of the Knights of St. John, who were given the island by the Spanish king Charles V. They introduced the Italian language to the island, built the city of Valletta, and developed the cultural

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Malta gained independence from the United Kingdom on the 21 September 1964, and became a republic in 1974. It joined the European Union in 2004 and in 2008 it became part of the eurozone.

The parliamentary system is closely modelled on the Westminster system. The parliament is made up of the president, a prime minister and the multi-party House of Representatives. The country is also divided into five regions, with each having its own Regional Committee.

The Government of Malta is the executive branch. The Prime Minister is appointed by the President of Malta, with the

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President making their decision based on the situation within the Maltese parliament. The House of Representatives consists of 65 members, 5 members of parliament being elected from each of the thirteen electoral districts.

The role of the President of Malta is largely ceremonial, and he/ she is appointed by the House of Representatives for a five-year term. The Labour Party currently runs the government, the Prime Minister being Joseph Muscat.

Economy Malta is a highly industrialised, high-income, advance servicebased economy – with a standard of living slightly above the EU average. It is a member of the European Union and of the eurozone, having formally adopted the euro on 1 January 2008.

Malta’s main advantage has always been its central location for trade, and the economy reflects that. Being a small island it has limited natural resources and can only produces around 20% of the food requirements for its relatively large population.

The economy therefore is dependent on human resources and foreign trade. Malta’s economy is driven by financial services, tourism, real estate, Igaming and manufacturing, particularly of electronics. Other significant sectors are pharmaceuticals, information technology, and call centres.

Before 1800, most Maltese were farmers or fishermen. The main business activities came from cotton, tobacco and shipyards. During the Napoleonic Wars, and again during the Crimean War, Malta’s economy prospered and became the focal point of a major trading system because of its strategic location. With the opening of the Suez Canal in 1869, Malta saw a substantial rise in the number of ships entering the port, as the Mediterranean became the major global route for trade.

The docks were greatly expanded and a number of banks opened to facilitate trade. HSBC Bank Malta and The Bank of Valletta both trace their origins back to the 19th century.

At the end of the Second World War, Malta lost its strategic importance and had to make decisions about the future direction of its economy. At the time of Maltese independence in 1964, levels of economic activity were minimal, but governmental efforts to push manufacturing and the tourism sector yielded positive results. Aided by generally positive international economic conditions and policies that supported foreign investment, the Maltese economy managed to sustain high levels of growth right to the end of the 20th century.

During the 1990s, Malta generally achieved healthy economic growth rates. Domestic demand was boosted by large increases in government spending, and exports of goods and services fared well.

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There is a strong manufacturing sector for products like electronics and pharmaceuticals, and the manufacturing sector has more than 250 foreign-owned, export-oriented enterprises. Film production is another growing industry, bringing in €35 million between 1997 and 2011. The Maltese government introduced financial incentives for filmmakers in 2005, and currently foreign productions can can get up to 27% back on spending incurred. Malta produces almost all its electricity from oil, and energy costs, sometimes seen as the highest in Europe, have become an issue. The government is looking into the potential of solar and wind power and Malta and Tunisia are currently discussing the commercial exploitation of petrochemicals on their shared continental shelf.

With entry to the EU, the Maltese Government has pursued a policy of gradual economic liberalisation and privatisation, taking steps to shift the emphasis from reliance on direct government intervention and control to policy regimes that allow a greater role for markets. In 2007 the government sold off its 40% in MaltaPost, completing an ongoing privatisation process. In 2010, Malta privatised telecommunications, postal services, shipyards and shipbuilding.

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Malta has managed to maintain a relatively low unemployment rate, mainly because of the constant growth and by policies encouraging continuous training for the labour force. Malta ranks high on global inward foreign direct investment comparisons and is among the top twenty countries most likely to sustain economic growth. Malta didn’t suffer in the same way as other jurisdictions during the eurozone crisis, because of low debt and sound banking. The judiciary, fairly independent and efficient, provides strong protection of property rights.

The World Economic Forum’s Global Competitiveness Index 2015-2016 placed Malta amongst the top 20 financial jurisdictions. The financial regulator, the Malta Financial Services Authority (MFSA), is the single regulator for financial services in Malta. It was established in 2002, taking over supervisory functions previously carried out by the Central Bank of Malta, the Malta Stock Exchange and the Malta Financial Services Centre. The Authority is an autonomous public institution and reports to parliament on an annual basis. It aims to attract businesses, especially aircraft and ship registration, banking licences and also fund administrators. A core part of the growth strategy of the island includes aiding service providers to these industries,

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situation. The advent of low-cost travel has added impetus to this over recent years. In 2017, over 2.2 million tourists visited the island, contributing an estimated 27% to GDP – 307,909 visitors more compared with the preceding year.

There are presently four times more tourists visit than there are residents. Tourist arrivals and foreign exchange earnings derived from tourism have steadily increased over the last 30 years. As part of the Schengen Area, EU visitors can travel freely. While Malta cannot unilaterally drop the requirement for nations it makes agreements with to obtain visas to enter the Schengen Area through its border crossing points, it is permitted to offer visa facilitation agreements to some nationalities.

The sector is overseen by the Malta Tourism Authority, and the Minister for Tourism, the Environment and Culture.

Visitors are attracted by the island’s rich history and culture, and the use of English, but medical tourism has also become popular in recent years, helped by government efforts to market the practice in the UK. The increased numbers of visitors has increasingly stretched resources and put pressure on the existing infrastructure (such as water, waste management, beaches and roads), with overcrowding especially during the summer months.

Tourist arrivals increased by 15.7% in 2017, after increasing by 10.2% in 2016. The total contribution of travel and tourism to GDP was €2,425.5m, 26.7% of GDP in 2016, forecast to rise by 5.6% in 2017, and to rise again by 4.5% pa from 20172027, to €3,992.9m, or 34.6% of total GDP in 2027.

In 2016, the total contribution of travel and tourism to employment, including jobs indirectly supported by the industry was 27.8% of total employment (49,500 jobs). This was expected to rise by 2.5% in 2017 to 50,500 jobs and rise by 2.7% pa to 66,000 jobs by 2027 (37.3% of total).

Visitor exports generated €1,458.0m, 9.9% of total exports in 2016. This was forecast to grow by 7.1% in 2017, and grow by 5.3% pa, from 2017-2027, to €2,616.6m in 2027, or 14.4% of the total.

Travel and tourism investment in 2016 was €230.6m, 10.5% of total investment. Again, it was estimated to rise by 3.5% in 2017, and rise by 3.4% pa over the next ten years to €331.8m in 2027, or 11.7% of the total. including fiduciary and trustee business and encouraging EU compliance. The MFSA forms part of the Single Supervisory Mechanism (SSM) within the European Central Bank and participates in the SSM Supervisory Board decision making.

Other key bodies are The Central Bank of Malta (Bank Ċentrali ta’ Malta), which has responsibility for monetary policy and the promotion of a sound and efficient financial system, and FinanceMalta, which is the quasi-governmental organisation tasked with promoting Malta as a jurisdiction for finance, banking and insurance.

Malta does not have a property tax. Because of pressure from population growth and interest from foreign investors, the property market has been in constant boom, especially in towns like St Julian’s, Sliema and Gzira and around the harbour area.

Tourism Tourism in Malta began to grow from the mid-1960s, fairly consistently to the present day – with some up and downs which were mainly due to rises and falls in the global

The United Kingdom and Italy remained Malta’s most important source markets, accounting for 24.7% and 16.0% of total visitors, respectively. Germany and France remained the next most important markets. Malta’s performance compared positively with other countries. According to the World Tourism Barometer, arrivals in Southern and Mediterranean European countries grew by an annual rate of 12.6%, while the global tourism industry registered a 6.7% increase in 2017. Cruise liner passengers, mostly from the UK and the US, are also an important addition, Numbers rose in 2017, reaching 658,203, an increase of 7.0% on 2016.

The future According to the Central Bank, the economy is expected to see 6.8% GDP growth in 2018, falling to 4.8% in 2019 and 4% in 2020. Aside from these, the Central Bank also has said its projections for the government balance were also looking better than first expected, with the debt-to-GDP ratio falling to 44.6% by 2020. Domestic demand is expected to replace net exports as the main driver of economic growth. The government budget is also forecast to remain in surplus and Malta’s debt-to-GDP should fall below 50% for the first time in more than 20 years.

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Ethical and Sharia compliant finance in Malta

Malta and the Emirates have had commercial and trading connections for years now, as befits nations that have built their prosperity upon trade.

It is only natural that finance should form part of that equation.

It is also to be expected that, when talking of international financial services in connection with Arab nations, Islamic, Sharia compliant finance is of importance. The first item of note when discussing Sharia compliant financial services is that services that abide by Sharia are not incompatible with more general financial services. Essentially, being Sharia compliant means, very simply, being ethical.

The avoidance of interest is, of course, the biggest difference to mainstream finance. However, that is hardly an obstacle: there are other ways of securing payment for services that rely upon participation in an enterprise broadly defined, or upon agreed fees.

The essence is (a) money in and of itself cannot generate added value; (b) exploitation is to be avoided; and (c) investments in industries which may

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Author

By Ivan Grech head of business development, FinanceMalta

be considered to be of dubious ethical standing are to be avoided.

A stable framework None of this is hard to achieve. All of these provisos may be accommodated with ease within the framework provided by Malta’s financial services framework, a framework which also offers the advantages of robust regulation, an investment friendly taxation regime and, crucially, a strong framework for the contracts required for Sharia compliant financial services to operate effectively.

Added to the foregoing, practitioners in Malta now have considerable experience drafting and structuring the contracts necessary for Islamic finance.

Across Europe, Sharia compliant instruments have been making good headway, and Malta is no different.

Sukuk contracts – the equivalent of bonds, with an element of ownership and participation – have not only been accepted across Europe and in Malta, but have even been issued by an ever increasing number of European states.

The opportunities go far beyond the more familiar sukuk, however. Fully Sharia compliant collective investment funds are relatively easy to fit into Malta’s framework, albeit they need to be licensed as professional investor funds (PIFs) to allow for the way such funds rely on the backing of, or need to be based upon, tangible assets.

The element of participation in the ownership of the underlying assets changes the nature of the risk involved in any investment, reducing the risk deriving from purely financial considerations. That does not, however, reduce the overall risk completely but shifts it instead to the risks associated with the underlying asset or property itself.

Beyond sukuk, Malta is a very good jurisdiction for the provision of Islamic insurance contracts, takeful. These again represent an instrument which acts as a communal savings pot, available to participants when needed because of asset impairment.

Participants in a takeful make a

contribution to this common fund, and again the emphasis is on a community contributing and participating in communal protection.

Takeful can, under Maltese regulations, be established as cells of a PCC (a protected cell company), as well as within an ICC (incorporated cell company), adding great flexibility to the way such instruments may be established and, importantly, reducing the cost required to establish and run each individual takeful contract.

Flexible regulation The regulatory regime in Malta is flexible enough to allow contracts like sukuk and takeful to be established and regulated without the need to resort to instrument specific rules and regulations. Again, this greatly facilitates the use of contracts like sukuk or takeful, cutting both the costs involved and any problems which may arise from the need to move outside what is considered the mainstream.

Everything discussed above in relation to both sukuk and takeful applies

equally to other forms of contract available under Sharia. This covers murabaha, ijara, mudharabah, and musharakah contracts, all of which can easily be accommodated within Maltaâ&#x20AC;&#x2122;s regulatory regime.

It is important to remember, when talking about Sharia compliant finance, that the unease with the imposition of interest and the desire to protect people from predatory practices is not unique to Islam. Across most of Europe, there have been laws seeking to outlaw the practice of usury, and while lending was never banned the charging of interest for a loan was banned in much of the continent.

It is also good to further remember that in many parts of Europe, mutual assurance and mutual banks continue to service members who join and contribute, emphasising the same sort of shared savings ideals that underlie takeful and, indeed, all forms of Sharia compliant financial services.

The growth of Islamic instruments outside traditionally Islamic countries as well as across the Islamic works is

testimony to the shared roots of the concerns made explicit in the Sharia requirements.

At the end of the day, it should be kept in mind that each contract, each need that the contract is designed to service, is individual. What is important, however, is that with the basis that Malta, its regulatory regime and its practitioners provide, any investor wishing to set up a Sharia compliant structure can rest assured that the Maltese financial services industry is fully able to provide the expertise needed for a successful and efficient outcome, while ensuring all Sharia requirements are met.

As with any other financial product or structure, all that is required is that the needs be discussed with advisors to establish the best solution for each individual need. Malta, with a Semitic national language based upon Arabic, remains open to business with the Islamic world, in finance as well as in trade.

FinanceMalta is the public-private initiative set up to promote Malta as an International Financial Centre.

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President of Portugal Marcelo Rebelo de Sousa

Marcelo Rebelo de Sousa was born on 12 December 1948 to Baltasar Rebelo de Sousa and Maria das Neves Fernandes Duarte.

After completing high school education, Rebelo de Sousa joined the University of Lisbon to study law and completed a PhD in legal and political sciences in 1985. He became a tenured professor in 1992. He has also been a member of the steering committee and the scientific board of the faculty of law of the University of Oporto, which has awarded him an Honoris Causa Doctorate.

After his undergraduate studies, Marcelo Rebelo de Sousa began his professional career as a lawyer. He was one of the founders of the Popular Democratic Party, later the Social Democratic Party, he worked as a journalist and helped found Expresso, Sedes and Semanário newspapers and draft the Portuguese constitution (1976). He was also a prominent journalist on Portuguese TSF radio, and has been a regular political commentator since the 1960s on radio and television, making weekly appearances on political analysis shows produced by RTP. As well as this Rebelo de Sousa was a member of the committee that drew up the first press law.

Rebelo de Sousa also worked for then PM Francisco Pinto. After rising to regional prominence, he stood for mayor of Lisbon in 1989. However, he suffered a defeat in the elections.

He became leader of the Social Democratic Party on 31 March 1996 and coordinated with the Democratic Alliance and the People’s Party to emerge as a stronger power in Portuguese politics. He left this office on 27 May 1999.

Leaving the party leadership, Rebelo de Sousa moved on to join the Municipal Assembly of Cascais and Celorico de Basto as

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president. Besides mainstream politics, Rebelo de Sousa was also heavily involved in television journalism, making weekly appearances on political analysis shows produced by RTP. He has been secretary of state for the presidency of the Council of Ministers, minister of parliamentary affairs, and a member of the Council of State (2000-2001 and 2006-2016).

Following Rebelo de Sousa’s rapid rise in the Portuguese politics, he ran as an independent for 2016 presidential election. Rebelo de Sousa was elected as President of Portugal in the first round of voting. During his election campaign, he promised to repair political divisions and the hardship of Portugal following the global financial crisis. Unlike his predecessor, Anibal Cavaco Silva, he had never previously held a top state position. In opinion polls he is rated the most popular President of the Republic since 1974. Since taking the office Rebelo de Sousa has been to Vatican City, Spain, and Morocco for official state visits aimed towards strengthening bilateral relations.

He has chaired or been a member of the managing bodies of several associations, social solidarity institutions and the Santa Casa da Misericórdia of São Bento de Arnóia. He has been a member of the managing council and chairman of the board of the Casa de Bragança Foundation and curator at the National Museum of Ancient Art and the Vieira da Silva-Arpad Szenes and António Quadros Foundations, and is a patron of the Celorico de Basto public library.

Rebelo de Sousa has received commendations of the Order of Saint James of the Sword from former president of the republic Mário Soares and the Grand Cross of the Order of Henry the Navigator from former president of the republic Jorge Sampaio.

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Portugal Country Spotlight

Quick Facts Capital city: Lisbon Population: 10,379,57 (Est 2016) GDP growth: 2.5% (Est 2017) Area: 92,212km2 Government: Unitary constitutional republic President: Marcelo Rebelo de Sousa Prime Minister: António Costa Currency: Euro (€) (EUR) Dialling code: 351 HDI: 41st Ease of doing business index: 25th

Portugal at a glance Over 500 years ago, Portugal established the first global empire, becoming one of the world's major economic, political and military powers in what we now call The Age of Discovery.

The nation was famed for its mastery of the seas, and this resulted in voyages which pushed the bounds of European knowledge along the African coast and beyond the Cape of Good Hope, Vasco Da Gama's discovery of the sea route to India, to the coast of Brazil (1500) and beyond. The empire expanded, and they monopolised the spice trade worldwide, thus creating immense wealth.

Portugal is a member of the European Union and was a founding member of NATO, the eurozone and the OECD. It enjoys a high standard of living, a high-income advanced economy and a developed market. There is a low crime rate, little corruption, press freedom, social progress, prosperity and it is ranked as the most peaceful country in Europe and third in the world. It is now a secular state with one of the world's highest rates of moral freedom. Portugal has also been declared Europe's leading destination for golf!

Companies who open in Portugal are often prolific in their praise of a local workforce who exhibit a strong, flexible, committed and productive performance. 61% of the population

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speak at least one foreign language with English being mandatory in schools from an elementary level. There is a very high level of business-oriented education in agriculture, the arts, healthcare, social science, science, mathematics, engineering, manufacturing and computing. Their education system produces around 100,000 graduates annually nationwide.

Below are quotes from just two satisfied customers!

"Bosch has invested in the development and production of innovative solutions and technologies in Portugal for the global market of car multimedia products because it believes in the potential of the country. The Bosch facilities in Braga are highly competitive in terms of quality and productivity in Europe."

Dr-Ing Sven Ost, technical plant manager, Bosch in Braga "At H.B. Fuller, our expanding Portuguese team has quickly gained a reputation for professional expertise, high energy, quick learning and cross-functional teamwork. I am delighted by the quality of the people we can attract and how fast they have developed."

Malcolm Grey, finance director EIMEA, H.B.Fuller Europe

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Bloomberg are reporting an economic boom there, attracting investors due to political tensions elsewhere.

Stocks are thriving and ratings agencies are taking an increasingly positive view, Portugal's PS120 Index has climbed 16% in the past year. The Bank of Portugal forecasts that economic growth will continue to accelerate.

In 2017 it was 2.5%, the fastest rate in a decade and faster than estimates for the EU region.

In Portugal, manufacturing is a leading sector which accounts for 93.9% of industrial production. The biggest segments within manufacturing are: food products (13%); coke, refined petroleum products and fuels (10%); motor vehicles, trailers and semi-trailers (9%); metal products, except machinery and equipment (7%); chemicals and synthetic or artificial fibres, except pharmaceuticals (5%); rubber and plastic products (5%); and paper products (5%).

The shares for football club Benfica gained 63% in the last year.

The International Monetary Fund issued an update report last year stating a strong near-term outlook and an increase in investments and exports. They said, "Sustained strong growth together with continued public debt reduction would reduce vulnerabilities arising from high indebtedness, particularly when monetary accommodation is reduced".

Economy The majority of industries, businesses and financial institutions have traditionally been located around Lisbon and Porto, but after the revolution in 1974 their most notable era of economic expansion ended and since they have tried to adapt to the changing modern global economy, a process that is successfully continuing still. There is now more focus on exports, private investment and developing a high technology sector. Having suffered from a severe recession and the indignity of accepting a bail-out in 2011 (which they have now exited) the national commitment to a reformist momentum endures and unemployment continues to fall.

The World Economic Forum places Portugal 36th on its economic index, a significant rise from 51st in 2013.

Portugal is a notable producer of minerals particularly copper, tin, tungsten and uranium. Lithium is also mined from their subsoil. Portugal is in the top ten producers of lithium, which is increasingly sought after by manufacturers of electric cars and mobile phones who use the element in their batteries. There is great interest in exploring lithium deposits further in the areas from Alto Minho to Beira Baixa, passing through Trás-os-Montes, where Dakota Minerals already is mining the ‘white oil’ in a €370m investment.

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The government set up a Lithium Working Group last December 2016 which has proposed that a mining promotion programme is launched to demonstrate the industrial potential of the metal and the establishment of an experimental mining and metallurgical unit to gain knowledge about the mineral which will become more and more valuable as the adoption of electric increases.

there, it becomes much more attractive. "Anyone who wants to make a 'gigafactory' in Portugal will have the raw material right here," said Dakota’s CEO, David Frances, in January 2017.

Dakota is looking at the car market but also is well aware of the growing demand for storage batteries used in domestic photo-voltaic systems, "this will probably be a more important phenomenon than the electrification of cars."

A technical report was requested in 2016 by the Secretary of State for Energy, Jorge Seguro Sanches, who was faced with a cluster of acronyms all wanting to contribute, including the Directorate General of Energy and Geology (DGEG), the National Laboratory of Energy and Geology (LNEG), the Mining Development Company (EDM), Assimagra - Mineral Resources and the National Association of Extractive and Transformative Industries (ANIET). The conclusions of the report is that, "in the coming decades, Portugal can play a leading role in the global scenario of lithium production."

With many applications pending, the government has to make a choice to become a major player in lithium.

Portugal will have to accept mining on a wider scale if it is to compete but the government, if its oil ambitions are anything to go by, will be approving many more mining licences Público newspaper said that the great challenge for Portugal is to devise a refining process that obtains a high purity and hence high added value.

Another thriving industry is aerospace, electronics and textiles exists, and investment is growing strongly in the biotechnology and IT sectors. Research grants are prolific, particularly for neuroscience and oncology.

Tourism remains extremely important to the country and it is one of the top 20 most visited countries in the world with 13 million tourists every year.

As for electric car manufacturers and the chance of setting up a ‘gigafactory’ in Portugal, if there is a lithium processing facility

For foreign investment, apart from just the beautiful location, they have a strong infrastructure (15th in the world) with

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One of the country's main exports is wine and it is the 7th largest exporter in the world by value. The genesis of this trade dates back to the Roman Empire. Its wine-producing regions, the Douro valley and Pico Island, are protected by UNESCO and offer a large selection of different wines from a vast array of grapes, all distinctive due to variations in soil and climate.

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widespread broadband connectivity and it is also a leader in electronic payments - up and ready for business. There is an open door to a market of 500 million and two years ago the country ranked highest in the Trading Across Borders Rank.

Portugal has a highly developed motorway network and a port system among the best in the world. (Sines was recently the fastest growing container port in the world). Porto Airport was named as the 3rd best European airport in 2013 while the Atlantic Corridor is a rail freight line across Europe which is among the best in the world.

Politics Portugal is a parliamentary republic based on a 1976 constitution, amended in 2004. The government holds the nation's sovereignty and not only has executive powers but also limited legislative powers, mainly concerning its own organisation. The parliament is known as the Assembly of the Republic with 230 deputies who are elected for a maximum term of four years. The legislature is elected by proportional representation, used in 20 multimember constituencies. Power is shared between the president, the assembly, the government and the courts.

As well as the EU, Portugal is a full member of the Latin Union and has a dual-citizenship with its former colony Brazil. Sharing a long history and a common language there is a mutual interest in using their bilateral political capital

to increase trade and investment and to partner together in science, technology, culture and education. Over recent years trade has grown steadily and is relatively balanced with over 600 Portuguese companies having a presence in Brazil and an increase in Brazilian investment in Portugal. Cooperation between the countries extends across the areas of innovation, nanotechnology, biotechnology and energy production.

As well as the EU, Portugal is a full member of the Latin Union and has a dual-citizenship with its former colony â&#x20AC;&#x201C; Brazil. Sharing a long history and a common language there is a mutual interest in using their bilateral political capital to increase trade and investment 85

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Romania Mini Country Spotlight

Quick Facts Capital city: Bucharest Population: 19,638,000 (Est 2017) GDP growth: 6.9% (Est 2017) Area: 238,397 km2 Government: Semi-presidential democratic republic President: Klaus Iohannis Prime Minister: Viorica Dăncilă Currency: Romanian Leu (RON) Dialling code: 40 HDI: 52nd Ease of doing business index: 45th

Romania at a glance

Economy

Romania’s political framework is a semi-presidential representative democratic republic where the Prime Minister is the head of government and the President is the head of state. Executive power is exercised by the President of the republic and the government. Romania has a multi-party system, with legislative power resting with the government and the two chambers of Parliament: the Chamber of Deputies and the Senate. The judiciary is independent of the executive and the legislature.

Romania, as part of the EU single market, is a fast developing, high income mixed economy with a very high Human Development Index and a skilled labour force, the tenth largest in the European Union by total nominal GDP and the eight largest based on purchasing power parity.

The constitution provides for a President, a Parliament, a Constitutional Court and a separate court system which includes the High Court of Cassation and Justice. The right to vote is granted to all citizens over 18 years of age.

Since December 2014 President Klaus Werner Iohannis has been head of state of. The President is directly elected by a two-round system for a five-year term (since 2004, after the Constitution was modified in 2003). An individual may serve two terms. During his/her term in office, the President may not be a member of any political party.

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The economy is a strongly globalised and integrated into the EU market.It is characterised by high productivity rates.

Romania’s main imports are raw materials, machinery and equipment, chemicals, raw diamonds, pharmaceuticals, foodstuffs, transportation equipment, and oil products. Its main exports are machinery and equipment, chemicals, finished diamonds, metals and metal products, and foodstuffs. There are over 300 Smart City projects ongoing.

The Romanian economy is the 41st largest economy in the world (out of 188 countries measured by the IMF) with $435,454m annual output, which ranks 41st in the world in terms of GDP per capita measured by purchasing power parity. The economy is expected to grow by +3.8% in 2019.

Based on current economic growth it’s expected to hit $1 trillion of PPP before 2035.

THE EUROPE-GCC Trade & Investment Guide 2018–2019

Romania continues to be one of the leading attractions in Central and Eastern Europe for foreign direct investment – inward FDI totalling more than $170 billion since 1989.

Romania is the largest electronics producer in the region.

Electronics manufacturing and research are among the main drivers of innovation and economic growth in the country.

In the past 20 years Romania has also grown into a major centre for mobile technology, information security, and related hardware research Dacia automobiles. Up until the financial crisis of the late 2000s, the Romanian economy was referred to as a “Tiger” due to its high growth rates and rapid development.

Until 2009, Romanian economic growth was among the fastest in Europe (officially 8.4% in 2008 and more than three times the EU average). Romania is rich in iron ore, oil, salt, uranium, nickel, copper and natural gas. The country is a regional leader in multiple fields, such as IT and motor vehicle production.

Bucharest, the capital city, is one of the largest financial and industrial centres in Eastern Europe. According to Eurostat Romania achieved the biggest economic growth in the EU in 2016 with an increase of 6% of GDP. The IMF estimated Romania had one of the highest growth rates in the EU in 2017, with further growth expected in 2018 of around 5%.

The top ten exports of Romania are vehicles, machinery, chemical goods, electronic products, electrical equipment, pharmaceuticals, transport equipment, basic metals, food products, and rubber and plastics. Imports of goods and services increased 9.3%, while exports grew 7.6% in 2016, as compared to 2015. Exports of goods and services are expected to grow by 5.6% in 2017, while imports are seen increasing by 8.5%, according to the latest CNP (National Prognosis Commission) projections.

The projections for economic growth in Romania for 2018 and 2019 were both lifted to 4.5% and 4.1%, respectively, the World Bank said in its January 2018 Global Economic Prospects (GEP) report. Industry in Romania, which generated 33.6% of the local gross domestic product (GDP) in the first half of the year 2018, recorded a 4.3% increase in its activity volume and generated 1 percentage point of the 4% economic growth. According to the National Statistics Institute (INS) Romania’s economy increased by 4% in the first half of 2018 compared to the same period of 2017.

Romania’s economy ranks 16th in the EU and represents 1.23% of the EU economy, according to the data published

by Eurostat for 2017, on GDP expressed in euro (nominal values). It has surpassed Greece, and aims to be on parity with Portugal and the Czech Republic in the coming years.

Noteworthy, the advance expressed in euro was 10.7% last year, compared to just 6.9% GDP growth in real terms. meaning the nation would have benefited from the significant increase in the purchasing power in euro, even without significant income increases in RON. Maintaining the average exchange rate at the level of 4.5681 lei/euro had an essential role in this respect.

That is precisely why the situation will not repeat in 2018, even if the estimate of the National Strategy and Prognosis Commission regarding the achievement of the threshold of €200 billion will become reality. The increase in euro would be in this case 6.4%, much closer to the increase estimated

by CNSP in real terms (6.1%), after the average exchange rate went up to 4.65 lei/euro.

Infrastructure The Port of Constanța is located on the western coast of the Black Sea, 332km from the Bosphorus Strait and 157km from the Sulina Branch, through which the Danube flows into the sea. Two breakwaters located to the north and south shelter the port. It is the largest on the Black Sea and the 17th largest in Europe.

Two satellite ports, Midia and Mangalia, located not far from Constanța Port, are part of the Romanian maritime port system under the coordination of the Maritime Ports Administration SA. The Romanian Black Sea resorts stretch from the Danube Delta in the North down to the Bulgarian Black Sea Coast in the South, along the coastline counting over 250km of unspoiled beaches.

The Romanian Black Sea riviera is served by Mihail Kogalniceanu International Airport (Constanta) which is connected to main European capitals through charter flights during the summer season and by Bucharest Henri Coanda International Airport, within a three hours drive.

Nine things you probably don’t know about Romania: 1. Romanian language is one of the five European latin languages (French, Italian, Spanish, Portugese, Romanian).

5. Romania is home to seven UNESCO heritage sites and the only merry cemetery in the world with over 800 colourful headstones.

2. Romania encompasses all major relief forms. The highest point is Mt. Moldoveanu (2,544m), and the lowest the Black Sea.

6. Romania has over 190 castles and palaces. Castle Bran is the most famous due to its connections with Dracula.

3. The river Danube flows into the Black Sea in Romania forming the youngest continental land in Europe: The Danube Delta – which contains over 5,500 flora and fauna species. The Danube Delta is the third largest biodiversity in the world.

7. According to Jeremy Clarkson (Top Gear – 2009), Romania has the best driving road in the world – The Transfagarasan.

4. Romania is home to 1/3 of Europe’s mineral and thermal springs. It also has the largest salt mine in the continent – Slanic Prahova.

8. A tourist can visit Romania’s capital – Bucharest for the equivalent of $28.3 a day.

9. Slate.fr rated Bucharest the second coolest city in the Europe in 2012.

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The future The Government’s priorities for 2018–20 include the improved absorption of European Union funds and a focus on securing investments in infrastructure, improving healthcare, reforming the pension system, and simplifying tax administration. The Government’s programme reconfirms Romania’s roadmap for achieving the Europe 2020 objectives for smart, sustainable, and inclusive growth and prioritises the use of EU funds in line with the European Structural and Investment Funds (ESIF) envelope for 201420, which amounts to approximately €40 billion.

Anti-corruption activities continued to move forward, and Romania’s record in combating corrupt practices is informing similar regional efforts. The credibility of the country’s National Anti-Corruption Directorate (DNA) was bolstered by its indictment of several high-profile figures in recent years.

In line with robust economic growth, the share of the population at risk of poverty or social exclusion decreased

from a peak value of 47% in 2007 to 35.7% in 2017. The high poverty incidence continues to be associated with a reliance on agriculture and life in rural or marginalised areas.

Chamber of Commerce and Industry of Romania (CCIR) is a non-governmental, public-interest organisation set up to promote Romanian trade and industries, both at home and abroad, and to represent the interests of Romanian traders with domestic authorities and in their relations with specialised foreign organisations. Its major goal/mission is “A Thriving Business Community”.

CCIR brings together the whole network of 42 county chambers of commerce and industry throughout the country, as well as other bilateral chambers of commerce, some branch professional associations and companies.

It has the expertise, experience, national and international connections to be able to offer a wide range of services for business performance: organising economic missions, training programmes, seminars or debates, providing valuable information from its databases, general economic information, economic and statistics studies.

The signing of a MOU between TITANIUM CAPITAL represented by its CEO Dr. Henry Abdo and THE ROMANIAN CHAMBER OF COMMERCE AND INDUSTRY represented by its Vice President Mr. Dan Dumitru, giving the majority of the local profits to the blind and handicapped.

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Prime Minister of the UK Theresa May

Theresa had a varied education spanning both the state and private sectors, and both grammar school and comprehensive school. May grew up in Oxfordshire and read geography at St Hugh’s College, Oxford University. She started her career at the Bank of England and went on to hold posts at the Association for Payment Clearing Services (APACS) as head of the European Affairs Unit and senior advisor on international affairs.

Mrs May has been involved in politics at all levels for many years, starting out stuffing envelopes at her local Conservative Association before going on to be a councilor in the London Borough of Merton from 1986 to 1994. During that time she was chairman of education between 1988 and 1990 and deputy group leader and housing spokesman between 1992 and 1994.

Theresa May was elected Member of Parliament for Maidenhead in May 1997. She lives in the constituency and is an active local campaigner. Her local activities have included campaigns to improve local train services, bringing a minor injuries unit to St Mark’s Hospital, and improvements of Maidenhead town centre.

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She has held several positions within Parliament since 1997.

She was a member of the Shadow Cabinet from 1999 to 2010, including the positions of Shadow Transport Secretary and Shadow Work and Pensions Secretary, and from 2002 to 2003 was the first female chairman of the Conservative Party.

Theresa was appointed Home Secretary in May 2010, after the formation of a coalition government and became the longest-serving Conservative Home Secretary for over a century. During this time she oversaw reductions in crime, reform of the police, and the introduction of the landmark Modern Slavery Act. Following her election as leader of the Conservative Party, Theresa May was appointed Prime Minister of the United Kingdom in July 2016, becoming the second female Prime Minister. As Prime Minister, May began the process of withdrawing the UK from the European Union and triggering Article 50 in March 2017.

In June 2017, after a General Election, she was elected Prime Minister but with a hung parliament.

THE EUROPE-GCC Trade & Investment Guide 2018–2019

UK Country Spotlight

Quick Facts Capital city: London Population: 65,648,100 (Est 2016) GDP growth: 1.5% (Est 2018) Area: 242,495 km2 Government: Constitutional monarchy Monarch: Queen Elizabeth II Prime Minister: Theresa May Currency: Pound sterling (£) (GBP) Dialling code: 44 HDI: 16th Ease of doing business index: 7th

History Invaded by Julius Caesar twice, in 55 and 54 BC, and then more successfully by the Emperor Claudius in AD 43, Britannia gradually succumbed to Roman rule, and the focus, at least of the south of the country, was to point southeast towards France and Italy. The withdrawal of the legions left Britain open to other influences, and waves of settlers from Germany, Denmark and Norway, and then from Norman France.

The largest and most powerful kingdom that eventually emerged on the islands was that of the Kingdom of England, which invaded and annexed Wales in the medieval period, and united with the Kingdom of Scotland in 1707 to form the Kingdom of Great Britain, under one monarch. In 1801 of Great Britain joined with the Kingdom of Ireland to form the United Kingdom of Great Britain and Ireland – until the Republic of Ireland separated in 1922.

After the discovery of coffee in the Americas, London coffeehouses soon became a fashionable, and sober, place for gentlemen to meet and discuss news. In the 17th and 18th centuries various houses became synonymous which particular groupings, where men would do business as well. Lloyd’s Coffee House, for example, was frequented by merchants and sailors, and so shipping deals were conducted. Later businessmen were

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to feel that doing business in coffeehouses had its drawbacks, so structures were formalised and institutions were set up – in this case leading to the formation of insurer Lloyd’s of London.

The public press and the early stock exchange began in the same way. The Bank of England was set up in 1694 to regularise public finances and raise money for the government.

From the late 18th century, Britain was a dominant and innovative player in the global economy. This was due to many reasons: the rule of law, absence of large scale internal conflict; the protection of property and an entrepreneurial climate; the geopolitical position Britain had created for itself in the previous century; the preeminence of the navy and its ability to protect trade and push into new markets. Foreign and domestic were mutually supportive.

Britain was a powerhouse in the Industrial Revolution, the transition to new manufacturing machine processes using factory-based methods. The UK had the natural resources to aid this steam-powered change – coal, iron and steel, and a ready workforce. Individuals applied modern science to invent new modes of production, new tools, and new chemical manufacturing techniques. These were applied to huge effect in the textile and iron industries. Small local centres quickly grew into mill towns and huge industrial cities, often around a specific industry – cotton production, shipbuilding, locomotive

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engineering, coal mining, or other secondary industries. Not surprisingly, in 1838 Prime Minister Benjamin Disraeli described the country as being the “Workshop of the World”.

This also went side by side by events in the countryside which was inevitably labelled the Agricultural Revolution. The clearance of land from small scale peasant farming methods, to larger scale arable and livestock farming, designed for profit, and to feed the burgeoning cities, where many of the agricultural labourers had moved, either reluctantly or for better prospects.

UK economy

Hitting a high point around 1900, the British empire stretched from Canada to India, from Africa to Australia. Through its colonies and dominions, Britain exercised authority over one fifth of the world’s entire population, and had the economic muscle that came with that. But empires are also costly.

The Bank of England is the central bank of the UK and the model on which most modern central banks are based. In 1998, it became an independent public body, wholly owned by the Treasury Solicitor on behalf of the government, but with independence in setting monetary policy. The Bank of England has overall responsibility for financial stability, with a regulatory structure consisting of the BoE’s Financial Policy Committee, headed by the Governor, the Prudential Regulation Authority and the Financial Conduct Authority.

The Bank is responsible for issuing notes and coins. Banks in Scotland and Northern Ireland have the right to issue their own notes, subject to Bank of England oversight.

Other nations industrialised, and coupled with economic decline after a depression and two world wars, the United Kingdom began to lose its competitive advantage and heavy industry declined, by degrees, throughout the 20th century.

Manufacturing has a symbolic place in British economics, despite the fact that its importance has declined consistently over the decades. In 1948, it contributed about 36% of GDP. It remains a significant part of the economy but accounted for only 10% of national output in 2015.

The UK has a thriving financial sector and has the fifth largest (nominal) GDP worldwide and the second largest GDP in Europe. The financial hub of London, with its population of 10.3 million, is where the large national and international financial players are located in particular. It is the largest city

by GDP in Europe. London has a long history of financial services, and the impact of this has a huge pull factor across Europe and the wider world.

The UK uses the pound sterling. Always semi-detached from the Eurozone, with Brexit, the chance of the euro replacing

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the pound was removed. The pound sterling is the world’s third-largest reserve currency (after the US dollar and the euro).

As with many other countries, the UK suffered from the effects of the global financial crisis of 2007-2008, which it had not experienced for nearly two decades. After that, the economy recovered, and it had the fastest growing GDP of the G7 members in 2013, 2014 and 2015.

In 2016, Britain and Germany were the fastest growing economies in the G7. But in 2017 Britain fell to the bottom of the table as growth in other countries has picked up, while growth in the UK slowed.

The UK service sector makes up around 80% of the economy.

In 2015, the economic output of the service industries was worth £1.3 trillion. Manufacturing output was worth £162 billion, 10% of the total, and construction output added up to £102 billion, 6% of the total. Employment by industry is broadly in-line with output. In 2014, the service industries employed 23.8m people, 85% of UK workers, manufacturing employed 2.4m people, 8% of the total, and the construction industry employed 1.3m people, 4% of the total.

Over the past few decades, the industrial make-up of the UK has changed markedly. In 1990, the manufacturing industry contributed 18% of UK total economic output, down to 10% in 2015. The service industries contributed 69% of the total in 1990, compared to 80% in 2015.

Employment in industries at regional level broadly follows the national pattern, with the service sector far outweighing the other industries in importance. However, some regions are less heavily reliant on the service sector. In the East Midlands, 13% of employees work in manufacturing and 80% work in the services sector, as opposed to London, where only 2% of employees work in manufacturing, while 94% work in the services sector.

Foreign investment and tax In their January 2018 report on trends in foreign direct

investment to the UK, the Office of National Statistics came to the following conclusions. The values of UK assets and liabilities have been on an upward trend since the 1980s, but FDI assets saw little growth from 2011 to 2015, suggesting that this upward trend may have flattened. The performance of FDI liabilities has been more varied; the value in 2015 was 36.1% higher than in 2011, reflecting continued investment into the UK. Foreign investment into the UK reached a record high in 2016, mainly due to big company mergers and acquisitions completed that year. Britain attracted a net £119.6 billion of foreign investment in 2016, overall the foreign direct investment figured totalled £220.5 billion. These skewed the figures for the most recent yearly figures, so while general growth rates may have plateaued, they still show that Britain is attractive place for investors from most locations.

Post Brexit, a free-market Britain plans to make itself attractive to foreign direct investment. The UK corporation tax rate is one of the lowest of all the developed countries; it currently stands at 20%, dropping to 17% in 2020. Other tax advantages include the fact that a UK company can pay dividends to an offshore shareholder without making a tax deduction, and most offshore subsidiaries of UK companies can pay dividends up to the UK parent without the UK parent company being subject to tax on those dividends.

The UK has a wide range of double tax treaties across Asia and Africa, as well as a treaty with China that reduces withholding

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tax on dividends from a Chinese subsidiary to 5%. Companies can elect to treat all the profits and losses from their overseas branches as being taxable in the relevant overseas jurisdiction only as opposed to being taxable in the UK – and there are other exemptions and grants, which foreign investors can take advantage of.

Property and construction The property market is a significant feature of the economy of the UK, and regulated according to Scottish and English land law.

The commercial property sector is valued around €250 billion, and while domestic property amounts to around £5.1 trillion (on 2014 figures). Foreign investment can play a substantial role in the market, and foreign companies and individuals invested around £20 billion in 2012. Investors from China and the Far East, the Gulf, and from Russia, have all seen UK property, particularly in London, as a safe bet, and heavily subscribe to new builds and high profile developments.

The largest construction project currently ongoing in the UK is Crossrail and the Elizabeth Line. Due to open in stages through 2018 and 2019, this will add a railway connection running east to west through London and into the surrounding countryside, with a branch to Heathrow Airport. The main feature of the project is the construction of 26 miles of new tunnels connecting stations in central London. It is also Europe’s biggest construction project with a £15 billion projected price tag.

Economic outlook UK economic growth slowed in 2017 as inflation rose sharply, squeezing household spending power. PwC projects UK growth to remain modest at around 1.5% in 2018 and 1.6% in 2019, which is due to continued subdued real consumer spending growth and the drag on business investment from ongoing economic and political uncertainty relating to the outcome of the Brexit negotiations.

An estimated £122 billion of property in England and Wales is owned by offshore firms, and the government is planning to introduce more clarity of ownership in that sector.

UK exports have been boosted by the upturn in global growth over the past year, notably in the Eurozone. The weaker pound, although bad for UK consumers, has been helpful to exporters and inbound tourism, and this should continue.

One of most high profile developments over the past few years has been the construction of The Shard, a 95-story skyscraper, and addition to the London skyline – the tallest building in the European Union. The Shard was developed by Sellar Property Group and is 95% owned by the State of Qatar.

PwC also projects that service sector growth should remain modest but positive in 2018-19, while manufacturing retains momentum after ending 2017 strongly. The Bank of England could raise interest rates once or twice this year, though the pace of increase will remain limited and gradual.

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The consequences of Brexit for financial market law Authors Matthias Lehmann and Dirk A. Zetzsche

Whether London will remain the centre for European financial transactions will depend on its access to the Single Market. Under the current circumstances, nobody can predict either what the legal status of the United Kingdom will be after it has left the European Union, or what consequences Brexit will entail for the European financial market. In our new paper “How Does It Feel to Be a Third Country? – The Consequences of Brexit for Financial Market Law”, we analyse the options in financial market law available to British issuers, credit institutions, insurance companies, securities firms, and asset and fund managers in terms of Brexit.

Our analysis is based on the worst-case scenario that the United Kingdom and the European Union will fail to reach an agreement on crossborder financial markets and services.

This case is anything but unlikely, considering the short period of time left for negotiations until 29 March 2019 and the complexity of both UK internal politics and European financial markets law; in practical terms, it is also currently the only predictable case. As part of their risk management requirements, financial firms need to assume the worst, draw up contingency plans and prepare their organisations accordingly.

Assuming that the UK will not be able to convince the EU of the merits of a special deal in financial services, the UK will basically be treated as other third countries or non-Member States.

British firms will therefore have basically four possibilities to maintain access to their clients in the Single Market.

The first is to obtain an ‘equivalence’ assessment for the UK supervisory and regulatory framework, with that of the EU. In our paper, we discuss the legal requirements and the political element involved in the granting of equivalence.

We also discuss conditions that firms operating on the basis of equivalence must respect, e.g. with regard to choice-of-law and choice-of-forum agreements with their customers.

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The second strategy would be to establish a subsidiary in one of the remaining 27 Member States and serve the clients from there. Some British firms are currently toying with the idea of ‘letter-box companies’ that operate in the EU with very little staff and capital, while most of the management decisions take place back in London. We discuss the attitude of the European supervisors towards this strategy and the requirements they impose. Third, UK firms may also seek bilateral access by establishing a branch or providing cross-border services in particular Member States. MiFID II expressly grants national regulators the possibility of defining the conditions for such bilateral access. We elucidate the different ways in which they have used this power, using the example of Germany. Finally, British firms may also want to resort to ‘reverse solicitation’.

Treaty law and MiFID II/MiFIR guarantee customers the freedom to obtain services passively from third-country providers. In our paper, we debate how this freedom can be used by British firms to continue serving European clients, and where EU law sets limits.

The preferred option will depend on respective types of businesses and groups of customers. In our paper, we distinguish between these different types of market access and business models, and consider which type of

access is most suited to each business model. We argue that under either of these options, British companies will have to comply with certain European laws if they want to maintain access to clients on the continent. Moreover, future autonomous British law making will not be free from coordination with the EU in order to ensure market access.

Our conclusion is that Brexit will not impact all business models to the same extent. Depending on the services offered, the clients served and the countries targeted, fundamental changes to business models are to be expected in some sectors of the industry, such as a relocation of the European hub from London to the continent. This seems in particular likely in the banking and primary insurance markets, where equivalence is not an option. In other parts of the industry, services may continue to be provided from London to the continent with few additional barriers even post-Brexit.

ABOUT THE AUTHORS: Matthias Lehmann is Professor of Law and Director of the Institute for International Private and Comparative Law at the University of Bonn.

Dirk Zetzsche is Professor of Law at the University of Luxembourg

How strong is the UK city centre buy-to-let market?

The UK buy-to-let market has earned itself a strong reputation as a profitable asset class with investors from around the world. According to the latest English Housing Survey, published by the Department for Communities and Local Government, more than 20% of all households in the England are rented privately – a figure which has more than doubled since 1990.

This trend is only set to continue, with the most recent estimate from the Office for National Statistics predicting that there will be at least 7.2 million rental households by 2025 thanks to a limited housing supply which is feeding an unaffordability crisis, making it harder for first time buyers to get on the ladder.

Currently there is an annual shortfall in the UK of at least 70,000 new homes according to the UK government, meaning that more and more people are staying in the rental sector long term.

This situation is especially notable in city centre residential markets in the north of England.

The decline of the Central London market has been underway for some time now. Ludicrously high entry prices have caused a runaway increase in the cost of living in the capital and forced many people out of the city. The number of people moving out of London annually has increased by 80% since 2012, and the number of people who left to buy a home increased by 22% in 2016. What does this have to do with northern city centre residential markets?

Put simply, they provide an alternative to

people looking for an affordable lifestyle which still comes with high quality job opportunities.

McLaren Automotive, it looks a lot like now is the perfect time to get ahead of the game and invest in Sheffield.

Of the grand total of more than 70,000 new homes required each year, more than 40,000 will be needed in the big northern cities, according to industry analysts JLL – though of course the true number built each year is far lower than this. Manchester is a great example of the effect this can have on a residential market; the city has seen substantial population growth in the last five years which has led to house price growth of more than 34% being recorded over that period by online property portal, Zoopla.

An additional 28.2% growth is predicted in the city by 2021, according to JLL.

Looking to invest in premium UK buy-tolet property? Knight Knox is a marketleading property consultancy with a particular focus on city centre residential investment in the UK’s main northern property markets. With more than 80 developments launched to a total value of more than £1bn, of which more than 55 are completed and tenanted, Knight Knox is an investment company you can trust.

Sheffield is another very interesting market for investors to look at. Widely touted as the next Manchester, Sheffield has recorded house price growth of more than 26% in the last 5 years. With predicted population growth of approximately 15% by 2035 and major investment from both the UK government and major companies such as HSBC, Boeing, Rolls Royce and

For more information on our available UK property investment opportunities, please email info@knightknox.com or call +44 (0)161 772 1392.

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Islamic finance goes mainstream for UK property Christopher Axford, partner and head of Islamic finance at Druces, discusses the legal background to the increasingly widespread use of Sharia-compliant financial arrangements for the UK property market.

Islamic property finance is becoming increasingly mainstream.

City of London Law firm Druces specialises in Sharia compliant property finance. How do you ensure Sharia compliance and what services do you offer?

The market and demand for Sharia compliant structures has grown markedly in the last decade.

Interestingly, demand for finance from Islamic finance institutions has grown from both the Muslim and nonMuslim community, and is not the sole preserve of Islamic banks. Mainstream financial institutions are increasingly putting together Sharia compliant services and products. In response to this demand, we formed a team in 2012, headed by one of our partners, Christopher Axford, who has had over 15 years of experience in this area.

When advising on Islamic finance one must constantly monitor that the principles of “Sharia compliance”, in services, structures and finance

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transactions, are being complied with.

The Druces team will often advise and liaise with our clients’ Sharia Supervisory Boards when required on those aspects to ensure compliance.

Druces provide a range of services and bespoke Islamic finance advice to both financial institutions and those taking advantage of the products they offer. Our Islamic finance team has particular experience in dealing with the following Sharia compliant structures: Cost Plus and Commodity Murabaha, Wakala, Ijarah, Mudaraba and Musharakah structures.

Islamic property finance work involves close liaison between our banking team and our property teams and the majority of property finance transactions are based on a Murabaha or Musharakah structure. Other areas of Druces also offer Sharia compliant structures, including dealing with Sharia compliant wills in our private client team.

Over the last few years there have been misunderstandings and a lack of communication with regards to Islamic finance and Sharia compliance. Please outline the differences in approach between a conventional financial institution and a Sharia compliant financial institution.

Islamic finance and the possibilities it offers have become more widely known in the last few years. Sharia compliant financial institutions have become more adept, as have their advisors, at leading the parties associated with the transaction through the processes involved in a Sharia compliant transaction.

It is important to note that most UK based transactions are governed by English law, whether dealing with a conventional institution or an Islamic finance institution.

Most of the security aspects involved in a conventional transaction are

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very similar in an Islamic finance transaction. There are nuances to structuring a transaction such that it becomes compliant with Sharia principles but most obstacles can be overcome and Islamic finance has become a useful alternative to conventional finance in the market.

In terms of approach, most Islamic finance and conventional finance institutions will take a very similar approach in deal origination, how they approach reviewing the financial aspects of a transaction and from a risk and credit perspective. Terminology differs between the two, but many structures would look familiar to those used to dealing only in conventional finance, and terminology is always evolving in a fast growing area.

The deadline for Brexit is fast approaching. Financial institutions see Islamic finance as potentially bridging the investment gap. What legal advice is given to banks and other financial institutions in regard to Islamic finance transactions?

The UK is not alone in facing difficulty with its current political environment.

However, the business, regulatory and legal environment remains stable within the UK and is still proving attractive to overseas investment.

Investment flows from the Far and Middle East looking for Sharia compliant structures have found a natural home in the UK financial market, which remains one of the most competitive and innovative in the world.

Druces have been advising financial institutions looking to develop products that are compliant for investor purposes, from a regulatory and Sharia compliant perspective, across our core areas of banking, real estate finance, investment and development. We advise both conventional and Islamic finance institutions, corporate counterparties, advisors and investors in dealing with transactions structured so as to be compliant with Sharia principles.

The UK property market is very attractive for investors from the Middle East. With Brexit on the horizon and with your expertise in Islamic real estate finance, what directives are you giving Middle Eastern clients looking at future investment in the UK property market?

Most commentary regards Brexit as one of the various problems that arise which businesses can face from time to time. There is no doubt that Brexit has presented opportunities for overseas investors, as a result of a weakened UK currency.

However, London’s strength as a major global financial centre has taken generations to develop and while other countries will look to take advantage of the inevitable uncertainty surrounding some of the UK populations’ preferred option to exit Europe, access to significant capital, resources and expertise will not disappear overnight, and more than likely not at all.

London has always adapted to opportunity, and while the situation with the way that Brexit has been handled is far from ideal, most studies show that London will not be too adversely impacted in the short term and, in the medium to long term, the opportunities that may be present could make the UK a more attractive home for international investment, and particularly in property investment from overseas investors.

Islamic finance has grown hugely in London already and the continued availability of expertise in the area combined with a well-respected legal and regulatory system, an independent judiciary, and access to a large market and capital pool should keep London at the forefront of developments.

Islamic finance has grown hugely in London already and the continued availability of expertise in the area combined with a wellrespected legal and regulatory system, an independent judiciary, and access to a large market and capital pool should keep London at the forefront of developments.

Druces are based in London with clients worldwide. In light of your recent merger with Ronaldsons, are there any future plans to open an office in the Gulf region?

Whilst we were founded in 1767, Druces is an ambitious City of London Law Firm with over 250 years’ experience of advising public and privately-owned businesses, financial institutions and wealthy individuals across a range of industry sectors. The recent merger was part of our strategic aims to add strength and depth in our core areas of specialism.

A number of our lawyers act for clients in the Gulf region, and often travel to the Gulf on business, but we have always preferred to build relationships with and utilise local law firms for assistance where local law advice is required.

We believe this allows us to ensure that we obtain and utilise the best and most appropriate advice for our clients for the work required.

Contact: Christopher Axford, partner and head of Islamic finance at Druces LLP Tel: +44 (0)20 7216 5557 Email: c.axford@druces.com www.druces.com

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GCC Country Spotlights In this section we’ll be focusing on each of the six member states in the GCC. Our aim to is provide you with the information necessary to understand patterns of trade and investment in the region.

The GCC has much to offer beyond its oil and gas reserves and huge steps are being taken in each of its constituent countries to diversify each economy. Investment in construction projects, in housing, and in education has been huge across the region and wide ranging directives are in place to improve infrastructure, healthcare and social mobility.

These are their visions for the future, which each of the nations is seeking to promote and concentrate on – including Saudi’s Vision 2030, Bahrain’s 2030 plan and Kuwait2035. Positive and modernised use of large oil and gas reserves will, of course, be important into the foreseeable future, but the region is also seeking to use this advantage to diversify into new industries, and at the same time be less reliant on the the vagaries of global energy markets.

Following through with these diversification plans, there has also been outflows of investment from the region to many places in the world, including into Europe. Spreading investment portfolios has the advantages of following the best returns, as well as creating new long-term partnerships in new areas of the globe, and spreading risk across high-growth and mature markets.

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The GCC is entering a new dawn and its commercial shackles are off. A fervent market culture is starting to appear and new cultural boundaries are emerging. It is our hope that the country spotlights highlight the changing business world of the GCC.

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President of the United Arab Emirates, the Emir of Abu Dhabi and the Supreme Commander of the Union Defence Force His Royal Highness Sheikh Khalifa bin Zayed Bin Sultan Al Nahyan His Royal Highness Sheikh Khalifa bin Zayed Bin Sultan Al Nahyan is the second President of the United Arab Emirates (UAE) and the 16th Ruler of the Emirate of Abu Dhabi, the largest of the seven Emirates which comprise the UAE. Born in 1948, in the eastern region of Abu Dhabi, Sheikh Khalifa is the eldest son of Sheikh Zayed. His mother is Her Highness Sheikha Hessa bint Mohammed bin Khalifa bin Zayed Al Nahyan and his full name is Khalifa bin Zayed bin Sultan bin Zayed bin Khalifa bin Shakhbout bin Theyab bin Issa bin Nahyan bin Falah bin Yas. Sheikh Khalifa is married to Her Highness Sheikha Shamsa bint Suhail Al Mazrouei, and together they have eight children: two sons and six daughters.

His Highness is also a grandfather to several grandchildren.

After his father’s passing and his accession to the role of the President of the UAE, on 3 November 2004, Sheikh Khalifa launched an initiative to evolve the nomination system for members of the Federal National Council, which was seen as

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a first step towards the establishment of direct elections in the UAE. Sheikh Khalifa is renowned as being a good listener, modest, affable and interested in his people, frequently conducting direct outreach through official missions and other occasions. As a result he is much loved and revered.

His Highness has many hobbies, including fishing and falconry, both pastimes he developed a love for from his father, the late Sheikh Zayed.

His environmental ambassadorship led to the appointment of a Minister for the Environment in the first cabinet formed under his Presidency. Sheikh Khalifa often attends sporting events and has championed and honoured the successes of Emirati sporting teams at the local, regional and international levels. His other interests include history and literature.

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United Arab Emirates (UAE) Country Spotlight

Quick Facts Capital city: Abu Dhabi Population: 9,269,612 (Est 2016) GDP growth: 3.4% (projected 2018, IMF) Area: 83,600 km2 Government: Federal constitutional monarchy President: HRH Sheikh Khalifa bin Zayed Bin Sultan Al Nahyan Prime Minister: HH Sheikh Mohammed bin Rashid Al Maktoum Currency : UAE dirham (AED) Dialling code: 971 HDI: 42nd Ease of doing business index: 21st

UAE at a glance Formed in December 1971, the United Arab Emirates is a federation of seven emirates, Abu Dhabi (which serves as the capital), Dubai, Sharjah, Ajman, Umm al-Quwain, Ras al-Khaimah and Fujairah. Located in the Gulf between Oman and the Kingdom of Saudi Arabia, the UAE has a coastline of 1,318km and is a vital transit point for world crude oil to world markets.

In the 16th century, ports in the Gulf came under the direct influence of the Ottoman Empire. At the same time, Portuguese, English and Dutch colonial forces also appeared in the Persian Gulf region, with the entire northern coast remaining under Persian rule throughout. By the 17th century, the Bani Yas confederation was the dominant force in most of the area now known as Abu Dhabi.

During the 19th and early 20th centuries the area came under increasingly British influence, until the discovery of oil and moves towards independence in the different emirates.

The UAE’s economy is the most diversified in the GCC, with its most populous city, Dubai, having developed into a global city and international aviation hub. Nonetheless, the country remains tremendously reliant on its export of petroleum

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and natural gas. The UAE’s oil reserves are the world’s seventh largest, while its natural gas reserves are the world’s seventeenth largest. The late Sheikh Zayed, ruler of Abu Dhabi and the first President of the UAE, managed the development of the Emirates and directed oil revenues into healthcare, education and infrastructure.

Politics Each emirate is ruled by a monarch and together they jointly form the Federal Supreme Council. One monarch is selected as the President of the United Arab Emirates. All powers not granted to the national government are reserved to the emirates. A percentage of revenues from each emirate is allocated to the UAE’s central budget.

Economy The UAE has an open economy with a high per capita income and a sizable annual trade surplus. Successful efforts at economic diversification have reduced the portion of GDP based on oil and gas output to 25%. The GDP growth was at 2% in 2017.

Since the discovery of oil in the UAE nearly 50 years ago, the country has undergone a profound transformation from an

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impoverished region of small desert principalities to a modern state with a high standard of living. The government has increased spending on job creation and infrastructure expansion and is opening up utilities to greater private sector involvement. The country’s free trade zones – offering 100% foreign ownership and zero taxes – are helping to attract foreign investors.

Dependence on oil, a large expatriate workforce, and growing inflation pressures are significant long-term challenges. Low oil prices have prompted the UAE to take steps to reduce its social spending, including eliminating fuel subsidies in August 2015. The UAE’s strategic plan for the next few years focuses on economic diversification and creating more job opportunities for nationals through improved education and increased private sector employment. In line with a GCC-wide initiative the UAE introduced a value added tax (VAT) of 5% on a range of goods and services with a few exceptions such as health and education services.

Abu Dhabi’s aerospace manufacturing secured contracts with Airbus and Boeing, underscoring the commitment to diversification. New bankruptcy and investment laws are also being prepared with a potential positive impact on inward investment.

Diversification Progress in economic diversification has strengthened the resilience of the economy. Diversification remains a priority of the UAE’s Vision 2021 and Abu Dhabi Economic Vision 2030 as the drive to reduce dependence on oil revenues gathers pace. The strategy is to increase investment in industrial and other export-oriented sectors, including heavy industry, transport, petrochemicals, tourism, information technology, telecommunications, renewable energy, aviation and space, and oil and gas services. Much has already been achieved in these fields, especially in satellite and telecommunications, the aviation sector and in renewable energy, and although short-term priorities have been altered to accommodate changing realities, the longterm strategy remains.

The UAE’s economy is the most closely integrated into the global economic system of all the Arab economies and successful efforts continue to enhance its business friendly environment, both to facilitate trade and attract new foreign direct investment. The UAE is increasingly attractive as a popular venue for the relocation of the world’s high-networth individuals (HNWIs). With no taxes on individuals, straightforward administrative procedures and low processing costs, political stability, excellent accessibility,

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good healthcare, a sound education system and sunny weather throughout the year, the UAE is a very attractive option for many investors.

Infrastructure in the UAE is extremely well developed and spending continues to make further improvements to meet the exacting demands of citizens. Education and healthcare, tourist facilities, electricity and water generation, telecommunications, ports and airports continue to receive a major injection of capital. New roads and bridges are being constructed and public transport systems installed. Business Monitor International estimates that the UAE is investing $58 billion on roads and bridges alone, including projects underway and in the planning stage.

At the federal level, the UAE 2021 Vision places innovation, research, science and technology at the centre of a knowledge-based, highly productive and competitive economy by the time of the federation’s golden jubilee in 2021. Significantly, that year is also the target date for the launch of the first Arab Islamic probe to Mars by the newly established Emirates Space Agency.

The UAE possesses the world’s seventh largest proved reserves of both oil and natural gas, estimated at 97.8 million barrels and 215 trillion cubic feet respectively. Therefore it holds 4% of the world’s proven oil reserves and 3.5% of proven gas reserves. Most of these reserves (95% of the nation’s oil reserves and about 94% of its gas reserves) are located in Abu Dhabi, both offshore and onshore.

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Renewable energy is set for growth through to 2016, according to international firms, as more projects are launched. Solar photovoltaic (PV) technology in particular has become cost-competitive compared to conventional energy derived from natural gas which accounts for 97% of the UAE’s power generation output.

The UAE’s sovereign wealth funds (SWFs), which are designed to secure and maintain the future welfare of Emirati citizens, boast assets worth in excess of $733 billion: Abu Dhabi Investment Authority (Adia) is the second richest SWF in the world, investing in a wide range of assets, from equities and fixed-income securities to infrastructure. It plays a leading role in the development and governance of the industry. Other SWFs that play a part in investment are Abu Dhabi Investment Council ($90 billion), International Petroleum Investment Company ($68.4 billion), Mubadala ($60.9 billion) and Emirates Investment Authority ($15 billion).

Individual wealth among citizens within the UAE has increased significantly over recent years. A 2015 analysis from the Strategy& study, formerly Booz & Company, estimated that there were between 1.5 million and 1.6 million wealthy households within the GCC as a whole with total investable assets of around $2.2 trillion. Most of this private wealth resides in Saudi Arabia (44%), but the UAE made notable gains with its share of GCC’s private wealth increasing from 24% to 30% from 2009 to 2013. According to Forbes in 2017, the UAE is now one of the billionaire capitals of the world.

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Dubai welcomed a record 14.9 million visitors in 2016, the city’s tourism department said, an increase of 5% compared to the previous year. It aims to attract 20 million visitors annually by 2020 when it hosts the global trade fair Expo 2020. More than 4.4 million guest arrivals were recorded in Abu Dhabi in 2016, setting a new annual record, with an increase of 8% over 2015.

The number of guest nights reached 12,031,628. Abu Dhabi Tourism & Culture Authority has a target to welcome 4.9 million guests in 2017, which would be a year-on-year rise of 10%.

From October 2020 to April 2021, Dubai will be home Expo 2020, the first World Expo to take place in the Middle East.

Dubai’s Expo is being billed as a festival of human ingenuity, collaboration and partnership. 44 million work hours have been completed at the site, and two years out the organisers are say they are making “good progress”. The legacy plans are “wide-ranging and ambitious”. The plan is to stimulate the development of a knowledge economy at the Expo site.

More than 80 per cent of the site is planned to be reused or repurposed afterwards, which is to include a conference and exhibition centre. Siemens has announced that it would be setting up its global logistics base on the Expo site from 2021, and other companies are expected to follow.

Infrastructure The UAE is a recognised international and regional hub for freight and passenger transport passing through its modern ports and airports. Dubai International Airport, home to Emirates Air Line, retained its position as the world’s busiest hub for international passengers in 2016, handling 83.6 million travellers. Abu Dhabi International Airport registered 24,482,119 passengers using the airport as their point of departure, arrival or transit in 2016, up from 23,286,632 in 2015. Meanwhile, Sharjah International Airport recorded a 10% increase in passenger traffic in 2016 compared to 2015. A total of 11.048 million passengers passed through the airport in 2016 compared to 10.039 million in 2015.

The Hurun Research Institute, a China-based research firm, published on a recent report that the UAE has broken for the first time into the world’s top 20 list of countries with the highest number of ultra-rich residents. The country’s billionaire population jumped by a little more than 30% in 2016 compared to a year earlier. A total of 21 individuals with at least $1 billion are now living in the UAE, up from just 16 a year earlier, making the UAE the 19th most preferred destination for billionaires.

Another HNWIs tracker, New World Wealth, has said that the UAE has been seeing an increase in the influx of wealthy residents, as security issues in a number of countries around the world are driving away the ultra-wealthy. It is estimated that about 5,000 millionaires believed to have moved to the UAE in 2016, according to New World Wealth. The majority of the new wealthy residents came from Turkey, which had a big outflow, approximately 6,000 millionaires, in 2016.

Tourism The UAE’s two world-class airlines, Etihad and Emirates, as well as constant upgrading of aviation infrastructure, have played a major role in the advance of the tourist industry and are key contributors to the economy. Dubai, in particular, expects that the aviation industry will contribute 32% to GDP by 2020. The tourism sector plays an important part in the success of economic diversification and the UAE continues to strengthen its position as a top tourist destination. Tourism is developing in all the emirates.

Dubai Ports at Port Rashid in Dubai City and Jebel Ali south of the city play a pivotal role in trade in the UAE. Both are operated

by DP World, the largest marine terminal and port operator in the Middle East. DP World also operates Port Hamriyah and Fujairah Container Terminal and is a major international player, operating 60 terminals across six continents. Jebel Ali Port, which is complemented by Jebel Ali Free Zone, services more than 170 shipping lines and more than 90 plus weekly services connecting the port to over 100 ports worldwide. Meanwhile, Sharjah is the only emirate with a port on both UAE coasts and Khor Fakkan Container Terminal, the only natural deepwater port in the region, has a strategic position on its east coast.

Financial services Abu Dhabi has a newly named financial district in Abu Dhabi Global Market (ADGM) Square on Al Maryah Island. As an international financial centre for local, regional and international institutions and home to more than 40 global blue chip companies, ADGM has drawn comparisons with London’s Canary Wharf. Sowwah Square is the commercial epicentre of Al Maryah Island, “Abu Dhabi’s dynamic mixed-use central business district,” according to project developer Mubadala Development.

Insurance Insurance regulations set investment limits for the sector with a ceiling of 30% for overall exposures to real estate assets.

For equity assets including units in mutual funds in listed and unlisted companies within the UAE, the overall ceiling is set at 30%; for equities outside the UAE the limit is 20%. The authority has also set a limit for exposure to cash and deposits at 5%.

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Seven reasons why now is the time to relocate to the UAE UAE’s latest business-related initiatives prove its credentials for more affordable, more profitable relocation.

John Hanafin CEO at Next Generation Equity (NGE) The UAE has been one of the most popular destinations for expats and businesspeople for a while – and that reputation is only growing, thanks to several recent government initiatives.

Andrew Staples, chief business reporter for Gulf News, recently wrote a special report on these changes, noting that “wide-ranging policy measures will make [the] economy more competitive while significantly improving social welfare”. Here we look at the seven most impactful, to prove the case for relocating and doing business from the UAE right now.

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Freeze on government fees

In February this year the UAE decided to freeze federal fees for the next three years – a move cheered by those living in the Emirates. The decision comes in the context of the introduction of 5% VAT earlier this year, intended to bolster UAE revenues following low oil prices. The fee freeze is the perfect counterbalance, promoting the continued competitiveness of the UAE despite recent tax changes.

His Highness Sheikh Mohammad Bin Rashid Al Maktoum said of the decision: “We decided not to increase federal fees during the next three years to consolidate economic and social stability of the state. This will also support our industrial and commercial sectors and attract more foreign investments.” This notion of stability is important. The UAE usually raises some 70% of its revenue through fees like transport, parking, real estate or business licensing – this move gives investors and anyone living in the UAE peace of mind that the cost of living and doing business won’t spiral.

These changes make the UAE highly competitive amongst international peers, especially when uncertainty reigns in other areas.

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2

Economic stimulus package in Dubai and Abu Dhabi

In April, Dubai announced a widereaching stimulus package designed to boost the emirates’ attractiveness for investors by lowering the cost of doing business. Notable inclusions are the introduction of a council to represent the interests of international companies operating in Dubai and a commitment to allocate 20% of government contracts to SMEs. There are also measures like fine and fee waivers for business, new payment options to spread business costs and legal reviews to make foreign investment into real estate more attractive. If you’re considering relocating to Dubai, there’s no better time than now, when the government has proved its total commitment to foreign investment and economic growth. Then Abu Dhabi joined the fold very recently, announcing a AED 50 billion economic stimulus package aimed at driving economic growth and diversifying the economy.

Measures include, like Dubai, the introduction of a council to attract and support investment, plus changes to licensing that make doing business significantly easier. His Highness Sheikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, said via Twitter: “The new economic initiatives and incentives cover ease of doing business, supporting new sectors, developing SMEs, stimulating tourism, developing local economy and creating jobs, so as to build a unique investment environment that enhances Abu Dhabi’s competitiveness.” In both emirates doing business is getting simpler– with bureaucracy minimised and costs spread or lowered. If you’re in business, especially in the SME world, now is a very profitable time to move.

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Dubai freezes school fees

Broad economic initiatives make doing business easier, which impacts the money coming in, but many parents will be relieved at the June announcement that a major source of money going out – private school fees – will be frozen for the 2018-2019 academic year. This comes in the wake of nearly 5% fee hikes in the academic year 2017-2018 in many schools. A recent report, “Doing Well, Being Well: The Health and Happiness of Dubai’s Private Schools”, finds the average fee is nearly AED 27,000, and private schools make an average of AED 7.5 billion in revenue each year. This move to freeze fees will mean high-quality education is available to more students and parents have transparency over prices. Which means now is a fantastic time to consider relocation if you’ve got school-age children.

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100% foreign ownership and 10-year visa

In May the UAE federal government announced a new ten-year residence visa for international investors and professionals in medical, research, scientific and technical fields. These visas also extend to family members, encouraging long-term relocation to the Emirates, especially for those in entrepreneurial or research-based fields.

His Highness Sheikh Mohammad Bin Rashid Al Maktoum announced: “The UAE will remain a global incubator for exceptional talents and a permanent destination for international investors.

Our open environment, tolerant values, infrastructure and flexible legislation are the best plan to attract global investment and exceptional talent to the UAE.” This ten-year visa also comes hand-in-hand with the decision to allow

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100% foreign ownership of companies in the UAE – not only in trade-restricted free zones, as before. Previously companies outside free zones had to have a local partner with a minimum 51% ownership, which meant they were able to trade outside that free zone. Culling this rule will make forming and running an international company from the UAE much more attractive, as foreign businesspeople can now have 100% ownership while also being able to trade freely across the Emirates.

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Changes to UAE employment and visa rules

Previously private companies had to pay a AED 3,000 deposit when recruiting new employees, which arguably disincentivised hiring and slowed the employment market. Since June, the UAE adopted a new policy where private companies only pay AED 60 per employee, to cover various employee costs and benefits like holiday cover and insurance. From an employer perspective, then, hiring across the UAE has just become more attractive and less cost-prohibitive. Then there’s the individual perspective. These changes make it more affordable and less hassle to enter, live and work in the Emirates – aiming to attract international talent to the country. For instance, jobseekers can now gain a six-month visa without fees, and can change their visa status without having to leave and re-enter the Emirates. Anyone overstaying their visa can now leave voluntarily without getting a return ban.

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Measures to attract top students

Recognising that future prosperity starts with attracting the brightest and best student minds from across the world, the Emirates have this year introduced a series of measures designed to cement the UAE’s position as a global education hub. One of the previous limiting factors was visa difficulty, with most students having to renew their visa each year. In May, the government addressed this by announcing five-year residence visas for students, and ten-year residence visas for exceptional students. Then more recently the government introduced two-year residence visas for top students after they graduate, to encourage them to stay in the UAE and pursue career opportunities. If you’ve got children, especially those currently at higher-education age, moving to the UAE is an opportunity that will genuinely open doors.

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Dubai Land Department waives penalty fees

Land development is a thriving area of investment but the Dubai Land Department (DLD) requires all properties to register in order to, as Sameer Lakhani, managing director at Global Capital Partners, notes, ‘streamline private sector activity’.

As such the DLD introduced a late registration penalty of 4%-of-value if buyers or developers didn’t register units. Despite an extension from an end-2016 deadline for registration to Q1-2017, many still haven’t registered.

In June this year Sheikh Hamdan Bin

Mohammad Bin Rashid Al Maktoum directed the DLDt to waive this penalty, to encourage all land developers and buyers back into the fold. This waiver will hold until the start of August, 60days from the June 7th announcement.

After that, the 4% penalty will be incorporated earlier in the process, to avoid similar situations and keep the sector running smoothly. For investors who already hold land in Dubai, this means you can currently register that land despite having missed the original deadline, without incurring late fees and so saving considerably. It also means future prospective investors have the security of a well-regulated, transparent sector that you can trust.

Relocating to the UAE is affordable, profitable and simple For a traditionally oil-reliant economy facing oil price downturn, you might expect the UAE to be facing some significant economic turmoil. Thanks to a wide-reaching and visionary series of initiatives from the UAE government, however, the region is proactively transforming into an international hub for expats and investors from every walk of life. These initiatives touch almost every element of UAE life, providing stability, encouraging investment, reducing bureaucracy and overall proving the Emirates’ credentials for more affordable, more profitable relocation.

So, how do you get there?

The new visa rules above make getting a long-term residence visa simpler for many, or you can secure permanent UAE residency through the UAE residency-by-investment programme, either through investing in real estate, entering a contract of employment or establishing a company here. The latter will be especially appealing given the new 100% foreign ownership rules.

Overall there’s never been a better time to consider moving to the UAE than now – and relocating is easier than ever.

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King of Bahrain His Majesty King Hamad Bin Isa Al Khalifa

King Hamad bin Isa Al Khalifa is the eldest son of Shaikh Isa bin Salman Al Khalifa and Hessa bint Salman Al Khalifa. He was born in Riffa on 28 January 1950.

From his teenage years, His Majesty the king had shown a great interest in aviation and, in October 1977, he began his theoretical and practical training in flying helicopters.

In 1964, following the completion of primary education with honours, His Majesty the king was proclaimed Crown Prince on 27 June 1964.

His Majestyâ&#x20AC;&#x2122;s interest in sports and youth was enhanced by his appointment as President of the Supreme Council of Youth and Sports in 1975 and with Amiri decree number 2 the King has always shown interest in sports, especially horse riding.

He completed his secondary schooling from Leys public school in Cambridge, England, returning to Bahrain in the summer of 1967. He joined the Mons Officer Cadet School at Aldershot in England graduating in September 1968.

He also studied at Sandhurst Academy and the United States Army Command and General Staff College at Fort Leavenworth in Kansas.

In 1969 he was appointed as the commander-in-chief of the Bahrain Defence Force, becoming head of the Bahraini department of defence and the vice-chairman of the administrative council in 1970. From 1971 to 1988 he was the minister of state for defence.

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His keen interest in Arabian horses caused him to establish the Amiri stables in June 1977 which was registered in the World Arabian Horses Organization in September 1978.

His Majesty the king has always emphasised the importance of bolstering scientific research and technology, coordinating such activities in the service of Bahrain.

These activities were given a boost with the establishment of the Bahrain Centre for Studies and Research in 1981 and his heading of the BSCR. On the death of his father, Hamad became Emir of Bahrain on 6 March 1999, and in 2002, he became King.

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Bahrain Country Spotlight

Quick Facts Capital city:

Manama

Population:

1,415,484 (May 2017)

GDP growth: 2.9% (Est 2017) Area:

765.3 km2

Government: Unitary parliamentary constitutional monarchy King:

HM King Hamad Bin Isa Al Khalifa

Crown Prince: Prince Salman bin Hamad bin Isa Al Khalifa Prime Minister: Prince Khalifa bin Salman Al Khalifa Currency :

Bahraini dinar (BHD)

Dialling code: 973 HDI:

47th

Ease of doing business index: 66th Bahrain at a glance The Kingdom of Bahrain is a small island nation situated between the Qatar peninsula and the north eastern coast of Saudi Arabia, to which it is connected by the 25km King Fahd Causeway. Iran lies 200km to the north, across the Persian Gulf.

Bahrain is the site of the ancient Dilmun civilisation. It was one of the earliest areas to convert to Islam, doing so in 628 AD. Following a period of Arab rule, Bahrain was occupied by the Portuguese in 1521, who in turn were expelled in 1602

by Shah Abbas I of the Safavid dynasty under the Persian Empire. In 1783, the Bani Utbah clan captured Bahrain from Nasr Al-Madhkur and it has since been ruled by the Al Khalifa royal family, with Ahmed al Fateh as Bahrain’s first hakim. In the late 1800s, following successive treaties with the British, Bahrain became a protectorate of the United Kingdom. In 1971, Bahrain declared independence from the UK. Formerly a state, Bahrain was declared a Kingdom in 2002.

Bahrain has the first “post-oil” economy in the Persian Gulf.

Since the late 20th century, Bahrain has invested heavily in its banking and tourism sectors and the country’s capital, Manama, is home to many large financial structures. Bahrain ranks highly on the Human Development Index (47th in the world) and has been recognised by the World Bank as a high income economy.

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Bahrain is sometimes described as “Middle East-lite”, due to its combination of modern infrastructure with a Persian Gulf identity. While Islam is the main religion, Bahrainis are known for their tolerance towards the practice of other faiths and are generally relaxed and liberal. Bahrain is home to many multinational companies as a result of their open attitudes toward business, cultures and faiths.

Bahrain has a well-developed road network, particularly in Manama. The discovery of oil in the early 1930s accelerated the creation of multiple roads and highways in Bahrain, connecting several isolated villages, such as Budaiya, to Manama.

Politics Bahrain under the Al-Khalifa regime promotes itself as a constitutional monarchy headed by the King, Shaikh Hamad bin Isa Al Khalifa. HM King Hamad enjoys wide executive authority which includes appointing the Prime Minister and his ministers, commanding the army, chairing the Higher Judicial Council, appointing the parliament’s upper half and dissolving its elected lower half.

The head of government is the unelected Prime Minister, Shaikh Khalifa bin Salman Al Khalifa, the uncle of the current king who has served in this position since 1971, making him the longest serving prime minister in the world. In 2010, about half of the government was composed of Al Khalifa family.

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Since the Arab Spring in 2011, the government has introduced judicial, law enforcement and intelligence reforms. The tensions between the Shia and Sunni community were resolved through national dialogue led by the ruling family.

Economy Bahrain’s growth and prosperity have been largely achieved as a result of its adoption of a transparent regulatory system and ease of doing business, helping it to attract swathes of foreign investors. Economic reforms – hailed as the most ambitious in the Gulf – have succeeded in delivering higher standards of living, reducing dependence on oil, and laying the foundations for the Kingdom’s sustainable development plan. As a result, the country can today boast a fast-growing financial sector and an increasingly diversified economy.

Bahrain is pursuing ambitious plans to develop the non-oil sector, which according to the IMF accounts for 76% of total GDP. In 2016, the country secured a total of $280 million of foreign inward investment from 40 new companies.

Attracting foreign investment is seen as key to the successful implementation of Economic Vision 2030’s long-term plan for improving the competitiveness of the economy, creating skilled jobs for Bahraini nationals and enhancing living standards. Bahrain is committed to building on its existing advantages, aiming to create the Middle East’s most attractive hub for business.

The country is determined to maintain the region’s most liberal business environment, with zero taxation for private companies, few indirect taxes for private enterprises and individuals, and free repatriation of capital. Bahrain is also the only country in the region offering 100% foreign ownership of business assets and real estate in most sectors. Bahrain boasts a fully liberalised telecommunications sector and generally it is seen to be one of the most open economies in the world.

Bahrain’s strategic location makes it an attractive Gulf gateway hub to access key international markets. With its highly developed communications, infrastructure and transport facilities, Bahrain is home to numerous multinational firms with business in the Gulf and internationally. Harbour Towers is only 10 minutes drive from Bahrain International Airport, headquarters to Gulf Air the best connected airline for regional flights. Major centres including Riyadh, Kuwait, Abu Dhabi, Dubai and Doha are around an hour’s flight time.

Market attractions Companies and investors are attracted by the Kingdom’s many advantages. The Khalifa Bin Salman Port is the most efficient port in the region with less than three hours container clearance time on average and less than one hour truck turn-around time. A liberalised regulatory environment with international companies able to setup wholly owned regional distribution centres. Bahrain offers the most efficient entry point to the Eastern Province of Saudi Arabia

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through the King Fahad Causeway. It has the shortest travel time between key logistics processing zones (International Airport, Seaport, BIIP and BLZ), ad there is availability of highly skilled human capital.

Information and communication technology Bahrain offers technology companies several advantages: easy access to the high-growth GCC and Middle East markets; excellent modern infrastructure, including air, road and telecoms; a deregulated telecoms market with fibre optic cable links to the rest of the Gulf and fast internet speeds; a competitive cost environment for business operations and an attractive place to take up residence; a competitive taxation system; and robust intellectual property laws protecting IP products. The market enjoys Free Trade Agreements throughout the GCC, and with leading countries around the world, which help facilitate technology exchange.

Many leading corporations have based their regional headquarters in the Kingdom.

Manufacturing sector Bahrain’s central location reduces freight costs considerably while its excellent road, sea and air links to regional markets are an important attraction: it is one hour’s drive from Saudi Arabia and its Riyadh business hub only four hours away.

National carrier, Gulf Air, has the largest regional network connecting to over 50 destinations worldwide. It is also home to one of the Gulf’s largest trans-shipment hubs.

Membership of the GCC common market guarantees duty-free trade. In addition, Bahrain has bilateral trade and economic agreements with over 60 countries, including China, France, India and Singapore, as well as a Free Trade Agreement with the United States and a Double Taxation Agreement with the UK. There is no shortage of skilled labour in the market. The supply of specialist, skilled and semi-skilled workers is plentiful and labour costs are competitive as are the costs of industrial land and energy supply.

Tourism Bahrain’s tourism industry is growing rapidly and is expected to reach $1 billion by 2020, according to figures released ahead of the Arabian Travel Market 2017, held 24-27 April in Dubai. In April 2016, Bahrain unveiled a new tourism brand with the marketing slogan, “Ours. Yours. Bahrain”.

Bahrain witnessed an 8.4% increase in inbound traffic in the third quarter of 2016 and a peak of 1.4 million arrivals during August that year. The kingdom expects to welcome 15.8 million annual visitors by 2018. This will represent an increase of 36.2% on current figures and will place the country’s tourism industry on track to reach its $1 billion 2020 target.

Leisure tourism is expected to drive growth in Bahrain, rising to BD1.2 billion in 2026 while business arrivals will generate BD219.3m per annum in the same period. As activity continues to increase, GDP contributions from tourism will also rise, from the 10.6% witnessed in 2015 to a predicted 13% towards GDP in 2026. Investment in tourism is expected to reach BD217.9m in 2026, which will be 8.6% of the national total. The $1.1 billion expansion of Bahrain International Airport is expected to double capacity from 7 million to 14 million passengers per year by 2020.

Alongside the airport’s expansion, national carrier, Gulf Air, plans to expand its aircraft fleet with an order valued at $7.6 billion for 16 Boeing 787-9 Dreamliner, 17 Airbus A321neo and 12 Airbus A320neo aircraft.

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Meanwhile, the hotel and restaurant sector is witnessing robust growth which is indicated by plans by several top international hotel chains to establish 15 new five and fourstar hotels and beachfront resorts, at a total investment value of more than $10 billion over the five years from 2017.

These investments are expected to increase hotel capacity by around 4,000 hotel rooms by 2020 and fill gaps in the market, especially in the mid-market and luxury sectors.

According to EDB Bahrain, the top hotel brands planning to open up in the market include The One&Only Resort, Wyndham Grand Hotel, Fairmont, Vida Hotel & Resort, The Address Hotel & Resort, Ibis Hotel and Pullman Hotel. The new hotels will add to an existing portfolio of over 190 hotels and resorts, including 18 five star hotels, 48 four-star hotels, 35 three star hotels, 81 serviced apartments and 11 resorts.

Expansion of cruise-ship visitors is one target for the growth of tourism in the Kingdom, Bahrain having received over 90,000 cruise passengers during the 2016-2017 Gulf cruise season.

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Financial services Bahrainâ&#x20AC;&#x2122;s financial sector includes over 400 financial institutions which contribute just over 17% towards the countryâ&#x20AC;&#x2122;s $34.3 billion GDP (est 2017). The sector is welldeveloped and diversified, consisting of a wide range of conventional and Islamic financial institutions and markets, including retail and wholesale banks, specialised banks, insurance companies, finance companies, investment advisors, money changers, insurance brokers, securities brokers and mutual funds.

There is a single regulatory authority, the Central Bank of Bahrain (CBB), for all banking and financial services. The CBB consults thoroughly with all practitioners in the field to ensure that proposed regulations make practical sense and that they also apply to domestic laws and regulations.

One important development is the Bahrain Investment Market (BIM), launched in March 2017 by the Bahrain Bourse, as an equity market for growing business ventures

in Bahrain and the wider MENA. BIM is specifically designed for companies who are looking to raise capital to fund their future growth, such as entrepreneurial ventures and mature family businesses. Among its numerous benefits and features are easier admission and financial disclosure rules, access to global investors, guidance services through specialised professional advisory firms, and a dedicated Tamkeen support programme.

According to the Index of Economic Freedom 2016, a report published by The Wall Street Journal and The Heritage Foundation which evaluates countries in four broad policy areas that affect economic freedom, Bahrain ranks 18th globally and is the only country from the MENA region to feature in the Top 20. The report noted the ability of foreign and domestic investors to have access to modern financial services, the presence of a streamlined regulatory framework, allowance for 100% foreign ownership, as well as other factors.

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King of Saudi Arabia, Prime Minister of Saudi Arabia, and Custodian of the Two Holy Mosques His Majesty King Salman Bin Abdulaziz Al Saud Salman bin Abdulaziz bin Abdul Rahman bin Faisal bin Turki bin Abdullah bin Mohammed bin Saud was born on 31 December 1935. Son of King Abdulaziz (b. 1875-1953), the first monarch and founder of Saudi Arabia, and Hussa bint Ahmed Al Sudairi (b. 1900-1969). Salman and his six brothers made up what is referred to as the Sudairi Seven. He was raised in Murabba Palace.

The Crown Prince received his early education in the Prince’s School in Riyadh, which was founded by his father, King Abdulaziz, to provide education to his children. Crown Prince Salman bin Abdulaziz Al Saud studied religion and modern science.

At the age of nineteen Crown Prince Salman bin Abdulaziz Al Saud started his governmental work, when his father appointed him as Emir and Mayor of Riyadh in March 1954.

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In April 1955, he was appointed by his half-brother, King Saud (b. 1902-1969) as mayor of Riyadh with the rank of minister.

In February 1963, Crown Prince Salman bin Abdulaziz was appointed deputy governor and later governor of the Riyadh Province. He stayed in this office until 2011. During his time in office he contributed in the transformation of Riyadh from a mid-sized town into a major urban metropolis, while also attracting tourism, capital projects, and foreign investment to the country.

On 18 June 2012, Salman was appointed as Crown Prince of Saudi Arabia, and Prince Salman was also made First Deputy Prime Minister. Then on 23 January 2015, Salman, aged 79, succeeded his half-brother Abdullah as king.

His major initiatives include Saudi Vision 2030.

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Saudi Arabia Country Spotlight

Quick Facts Population: 33,292,778 (Est 2017) GDP growth: 1.6% (Est 2018) Area: 2,149,690 km2 Government: Unitary Islamic absolute monarchy King/Prime Minister: His Majesty King Salman Bin Abdulaziz Al Saud Crown Prince: Prince Mohammad bin Salman bin Abdulaziz Al Saud Currency: Saudi riyal (SR/SAR) Dialling code: 966 HDI: 38th Ease of doing business index: 92nd

Saudi Arabia at a glance Saudi Arabia is a desert country making up most of the Arabian peninsula, with Red Sea and Persian Gulf coastlines. It is home to the Islam’s two most sacred mosques: Masjid al-Haram, in Mecca, destination of the yearly Hajj pilgrimage, and Medina’s Masjid an-Nabawi, burial place of the prophet Muhammad.

Riyadh, the capital, is a skyscraper-filled conurbation.

There is a very compelling contrast between high-tech, fast paced cities such as Riyadh and Jeddah and the more traditional residential areas in which citizens live humble and devotional lifestyles, which many find attractive.

The emergence of what was to become the Saudi royal family, known as the Al Saud, goes back to the 18th century and remains the basis of the present day state. Modern Saudi Arabia consists of four distinct areas: Hejaz, Najd, and parts of Eastern Arabia (Al-Ahsa) and Southern Arabia (‘Asir). The Kingdom of Saudi Arabia was formed in 1932 by Abdulaziz ‘Ibn Saud’. He unified the four regions into a single state through a series of takeovers beginning in 1902 with the capture of Riyadh, the ancestral home of his family.

The new kingdom was dependent on agriculture and pilgrimage revenues, however, that changed in 1938, when

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massive reserves of oil were discovered in the Al-Ahsa area along the shore of the Persian Gulf, and full-blown expansion of the oil fields commenced in 1941 organised by the UScontrolled Aramco (Arabian American Oil Company). Oil was to deliver Saudi Arabia economic affluence post WW2 and considerable political leverage globally. Cultural life quickly developed, chiefly in the Hejaz, which was the centre for newspapers and other media.

Wahhabism or Salafism, an Islamic doctrine and religious movement, has been called “the predominant feature of Saudi culture”. Saudi Arabia is also referred to as “the Land of the Two Holy Mosques” in reference to Al-Masjid al-Haram (in Mecca), and Al-Masjid an-Nabawi (in Medina), the two holiest dwellings in Islam, and the Saudi ruler is often called their Custodian, or Protector.

Politics Saudi Arabia is an absolute monarchy, however, according to the Basic Law of Saudi Arabia assumed by royal decree in 1992, the king must obey Sharia (Islamic law) and the Quran, while the Quran and the Sunnah (the traditions of Muhammad) are acknowledged to be the country’s constitution. There are no political parties or national elections.

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By custom, all males of full age have the right to appeal to the king via the traditional tribal assembly, which is called the majlis. These traditions have their basis in tribal rule. Tribal identity is still solid and, apart from the royal family, political influence is often frequently decided by tribal affiliations, with sheikhs having a substantial amount of sway over local and national events. In recent years there have been steps to broaden political contribution, for example the formation of the Consultative Council in the early 1990s and the National Dialogue Forum in 2003.

Education The school system consists of elementary, intermediate, and secondary schools. Much of the curriculum is devoted to Islam and Islamic teachings, so much of the educational curriculum includes learning by rote large sections of the Qu’ran. At the secondary level students are allowed to decide whether to continue religious education or whether to pursue a more technical field of education as well. All schooling and educational establishments are free of charge for citizens.

The late 2000s in particular saw a large boost in the numbers of universities and education has been a particular priority for the Saudi government. The country has a literacy rate of 90.4% for males and 81.3% for females and men and women are segregated throughout the country’s educational establishments.

Legal system Saudi Arabia uses Sharia law as its legal system and has no codified constitution. It is quite unique in that judges are not forced to consider precedent – judgements that were given by other judges in prior cases – when coming to a decision. Instead, judges have full discretion and can apply their own interpretation of Sharia law when determining a judgement in their own case.

This can lead to legal uncertainty as in what seem to be identical cases, different judges may rule different verdicts depending on interpretations of the law. The Sharia court system constitutes the basic judiciary of Saudi Arabia and its judges (qadi) and lawyers form part of the ulema, the country’s Islamic scholars.

Foreign relations Saudi Arabia joined the UN in 1945 and is a founding member of the Arab League, Gulf Cooperation Council, Muslim World League, and the Organisation of the Islamic Conference (now the Organisation of Islamic Cooperation). It plays a role in the International Monetary Fund and the World Bank, and in 2005 joined the World Trade Organization. Saudi Arabia supports the formation of an Arab common market by 2020, as announced at the 2009 Arab League summit.

Economy The Kingdom of Saudi Arabia has introduced a series of important reforms over the past year and set out plans for a bold and ambitious transformation of the economy in its Vision 2030 and accompanying National Transformation Program (NTP). Diversifying the economy, creating jobs for Saudi nationals in the private sector, and implementing a gradual, but sizable and sustained fiscal consolidation to reach budget balance in five years are strategic policy priorities. The Saudi economy is “open for business”, and, as its Vision 2030 states, “We will improve our business environment, restructure our economic cities, create special zones and deregulate the energy market to make it more competitive”.

The Kingdom plans to increase the economic role of the private sector by focusing on privatisation and development of public-private partnerships, improving the business environment, developing local capital markets, encouraging

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We will improve our business environment, restructure our economic cities, create special zones and deregulate the energy market to make it more competitive.

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FDI, and supporting small and medium enterprises (SMEs).

The Saudi economy is the largest economy in the Middle East. Growth is being driven by investment in the non-oil sectors of the economy as well as the setting up of strategic partnerships in major sectors such as energy, gas, mining and others, which aims to raise economic productivity.

Privatisation of selected projects and the promotion of public-private partnerships are key initiatives. The private sector has a major role in attracting investment for key projects and boosting business confidence. SMEs are taking a larger role in the economy particularly after the creation of the General Authority of Small and Medium Enterprises, according to KPMG. The direct purchase of shares in Saudi companies listed on the Kingdom’s stock exchange has been available since 2015, opening up the market to foreign institutional investors.

Saudi Vision 2030 In 2016, the Kingdom unveiled Saudi Vision 2030, a major economic reform plan which aims to diversify the Kingdom’s economic base. The long-term plan seeks to increase foreign investment and enhance the overall competitiveness of the economy. Its features include economic diversification through development of the private sector and targets raising its contribution to GDP from 40% to 60% by 2030.

Much of the future economic growth is expected to come from SMEs, whose contribution is projected to rise from 20% to 35% by 2030.

Among the Kingdom’s main goals to be achieved by 2030 are: To increase non-oil revenue from SR163 billion to SR1 trillion; To raise the Kingdom’s ranking in the Government Effectiveness Index from 80 to 20; To raise the ranking on the E-Government Survey Index from a current position of 36 to among the top five nations.

As part of its economic diversification strategy, the Kingdom plans to increase women’s participation in the workforce from 22% to 28% by 2020. The NTP is set to increase foreign investment and boost private sector participation in the economy. Under capital markets reforms, qualified foreign investors (QFIs) will have access to a broader range of capital market products, including listed securities.

Strong foundations According to the Kingdom’s finance minister HE Mohammed Al-Jadaan, “Through the Kingdom’s Vision 2030, a number of concrete structural measures have already been rolled out, with the twin goals of decreasing the Kingdom’s fiscal dependence on hydrocarbons and encouraging economic diversification”, the Minister said, adding that “the government has also made considerable progress in enhancing efficiency by reigning in overspending and optimising expenditure”.

Education sector It is estimated that Saudi Arabia will need over a million new school places by 2020. The number of private schools in the Kingdom has been growing at 3% per annum, with the strongest growth being seen at the primary level, where enrolment in public schools has declined.

Saudi Vision 2030 has set out new proposals for creating “an education that contributes to economic growth”, pledging that, “In the year 2030, we aim to have at least five Saudi universities among the top 200 universities in international rankings. We shall help our students achieve results above international averages in global education indicators.”

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SMEs Saudi Vision 2030 wants to see “a bigger role for small and medium-sized enterprises”, stating that, “SMEs contribute only 20% of our GDP whereas in advanced economies, this contribution can reach up to 70%. Despite the efforts made to improve the business environment in the Kingdom, SMEs can still endure unnecessarily slow and complex legal and administrative procedures. They also struggle to attract the necessary skills, capabilities and funding with financial institutions providing no more than 5% of the overall funding – a far lower percentage than the global average.

We will strive to facilitate enhanced access to funding and to encourage our financial institutions to allocate up to 20% of overall funding to SMEs by 2030.

“The recently established SME Authority plans to review laws and regulations thoroughly, remove obstacles, facilitate access to funding, and enable youth and entrepreneurs to market their ideas and products. At the same time, we will establish additional new business incubators, specialised training institutions and venture capital funds. These will aid entrepreneurs in developing their skills and networks.

We will also support SMEs in marketing and help export their products and services, by leveraging e-commerce and collaborating with international stakeholders.”

Towards a thriving economy Saudi Vision 2030 is aimed at achieving a thriving economy by “investing for the long-term”. It states that, “Diversifying our economy is vital for its sustainability. Although oil and gas are essential pillars of our economy, we have begun expanding our investments into additional sectors. We understand that there are complicated challenges ahead but we have long-term plans to overcome them. In the past 25

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years, the Saudi economy has grown by an annual average rate of more than 4%, contributing to the creation of millions of new jobs. Although we are already among the 20 largest economies in the world, our ambitions are even greater.

We aspire to have an even higher ranking by 2030, despite the headwinds of the global economic slowdown and the expected impact of our structural economic reforms. This requires us to invest in all our resources in order to diversify the economy, unleash the capabilities of our promising economic sectors and privatise some government services.”

The Saudi Vision 2030 also indicates that its goal is to “create a comprehensive privatisation programme” and states that it is “in the process of determining additional sectors suitable for privatisation”. The Kingdom intends to make use of international best practice, transfer knowledge to achieve its goals in a balanced and scientific manner.

Saudi is seeking to partner with the private sector to develop the telecommunications and information technology infrastructure, especially high-speed broadband, in order to expand its coverage and capacity within and around cities and to improve its quality. A specific “goal is to exceed 90% housing coverage in densely populated cities and 66% in other urban zones”.

One of the best examples of the scale of this is the Neom project, a planned purpose-built cross-border city planned for construction – which is probably the world’s most ambitious project. It is located in the far north-west of Saudi Arabia and includes marine land located within the Egyptian and Jordanian borders. The city is planned to house advanced industries, innovation and technology, and tourism and the first phase is expected to be completed by 2025. The project was supported and funded by the Saudi Public Investment Fund of $ 500 billion.

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THE EUROPE-GCC Trade & Investment Guide 2018–2019

Economic Focus, Saudi Arabia

I am delighted to contribute this article to celebrate the successful visit of HRH Crown Prince Mohammad bin Salman to the UK on 7-9 March 2018, and the high level Saudi/UK CEO Forum on 8 March which I was honoured to chair.

Over 100 years ago in 1915, Britain signed the Treaty of Darin with Prince Mohammed’s grandfather, Abdulaziz Ibn Saud, the founder of Saudi Arabia.

Britain was one of the first countries to recognise the Kingdom’s unification in 1932, and our historical ties remain as strong as ever.

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By Rt Hon Baroness Symons of Vernham Dean

Co-chair, Saudi British Joint Business Council

The UK now stands ready to partner with Saudi Arabia as it embarks on an ambitious process of economic and social reform under Saudi Vision 2030.

With two-way trade exceeding £10 billion in 2017, Saudi Arabia is the UK’s largest trading partner in the region, and by far the largest economy. UK investors such as HSBC, BAE Systems, Rolls Royce and GlaxoSmithKline play an important part in the Saudi economy, and Saudi investors are active across the UK in commercial and residential property, infrastructure and technology.

Under Vision 2030 and HRH the Crown Prince’s energetic leadership, Saudi Arabia now seeks to diversify its economy and make it less dependent on hydrocarbon revenues. It is also investing massively in the creation of jobs for it’s predominantly young population, as well as the upgrading of vocational and professional skills.

An ambitious renewable energy programme has been launched. By the end of 2018, Saudi Arabia aims to invest up to $7 billion to develop seven new solar plants and a big wind farm.

It is planned that renewables, which

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now represent a negligible amount of the energy used, will be able to provide as much as 10 percent of Saudi power generation by the end of 2023.

Saudi Colleges of Excellence; and UK healthcare providers are actively involved in the healthcare modernisation programme.

And at the Future Investment Initiative Forum in Riyadh in October 2017, HRH Prince Mohammad bin Salman unveiled the futuristic $500 billion NEOM Smart City Project spread over 10,000 square miles of desert in Saudi Arabia’s northwestern corner, to be powered entirely by renewable energy and based on new technologies such as robotics and artificial intelligence.

Promotion of small and medium sized businesses and the creative sector is another key target under Vision 2030.

SBJBC has therefore worked closely with the Saudi SME Authority to encourage the development of SME ecosystems and promote knowledge exchange.

We hosted our third SME Partnership Forum in London on 24 April to facilitate partnerships between innovative Saudi and UK SME’s in the smart cities, fintech, e-commerce and cyber security sectors.

New sectors opening up for cooperation include an ambitious privatisation and PPP programme to increase the role of the private sector in the economy, digitalisation of healthcare, smart city technologies, and sports, leisure and entertainment.

In all these fields the UK has the expertise which Saudi Arabia needs.

That is why the Saudi British Joint Business Council (SBJBC), which I cochair with my Saudi counterpart Sheikh Nasser AlMutawa Alotaibi, is actively involved in promoting knowledge transfer and two-way partnerships.

Our professional and legal service members are working closely with Saudi Ministries and agencies to upgrade regulatory standards and improve the business environment; our designers and consulting engineers are engaged in new urban transport and smart city projects; UK vocational training providers are managing over half the

It is very welcome news that some 40% of business start-ups in Saudi Arabia are by women, and that women no longer need the permission of a male guardian to start their own business. Women now account for 30% of the private sector workforce – a rise of 130% over the previous four years. The lifting of the previous restriction on women driving is another welcome step, and will help more women to enter the labour force.

An active programme of sports, leisure and tourism development is also underway. The Public Investment Fund has unveiled an ambitious new tourism project between the cities of Umluj and Al Wajh on Saudi Arabia’s northern Red Sea coast covering over 50 islands and 34,000 square kilometers – an area larger than Belgium. And the General Entertainment Authority has announced that entertainment sector investments over the next decade will reach $64 billion, UK advisers such as Portas Consulting are working closely with the Saudi General Sports Authority to get more people into regular exercise.

SBJBC member Cultural Innovations has partnered with the Saudi Commission for Tourism & Cultural Heritage in museum development and cultural heritage projects. And Vue Cinemas in the UK has agreed a partnership for the development of 30 multiplex cinemas, following the lifting of previous restrictions.

UK companies entering the market can expect a warm welcome provided they commit to a long-term presence and transfer of skills and expertise in the market. But Saudi Arabia is no longer just a market to sell to. The opportunities lie more in joint ventures and partnerships that create jobs and increase local content.

SBJBC has an invaluable network of over 150 Saudi and British corporate members who are willing and able to assist. We work closely with both governments and Saudi and British Chambers of Commerce to facilitate business relations at all levels. We also have an active programme of events and partner with other organisations on specific sector-based initiatives such as our recent PPP and Infrastructure Forum with the National Centre for Privatisation.

The British Government has rightly said that it wants to be a strategic partner of Saudi Arabia in Vision 2030 implementation. The very welcome visit by HRH Prince Mohammad bin Salman and the accompanying high level business delegation has helped Saudi and UK businesses to play a key part in this to mutual benefit. Exciting times lie ahead in both our countries, and the Saudi British Joint Business Council and it’s members look forward to playing a full role.

SBJBC UK 23 Grafton Street London W1S 4EY www.sbjbc.org

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Sultan of Oman His Majesty Sultan Sayyid Qaboos bin Said Al Said

His Majesty Sultan Qaboos was born in Salalah, the most southerly city of the state then known as the Sultanate of Muscat and Oman, on 18 November 1940. He was the only son of the late Sultan Said bin Taimur and the eighth direct descendant of the royal Al Bu Sa’id line founded in 1744 by Imam Ahmed bin Said. Sultan Qaboos spent his childhood in Salalah. When he reached the age of 16, his father sent him to a private school in England, and in 1960 he entered The Royal Military Academy Sandhurst as an officer cadet.

Having finished his military service, His Majesty studied local government in England and then embarked on a tour of the world. When he returned to Oman, he spent six years studying Islam and Omani history in Salalah. On the abdication of his father and his subsequent accession on 23 July 1970, Sultan Qaboos moved to Muscat to implement his vision for the country’s development.

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His Majesty loves the land and sea trips this hobby practiced within the annual programs which keen to inspect the conditions of his people. During these trips His Majesty, accompanied by certain ministers and advisers, travels around the country - sometimes for several weeks at a time stopping off in various places to meet local citizens, sheikhs and dignitaries. These meetings take place either at Royal Camp sites or on the road in more spontaneous encounters.

The Sultan’s birthday, 18 November, is celebrated as Oman’s national holiday. The first day of his reign, 23 July, is celebrated as Renaissance Day.

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Oman Country Spotlight

Quick Facts Capital city: Muscat Population: 4,739,334 (April 2017) GDP growth: 1.8% (Est 2016) Area: 309,500 km2 Government: Unitary parliamentary absolute monarchy Sultan/Prime Minister: HM Sultan Sayyid Qaboos bin Said al Said Deputy Prime Minister: HH Sayyid Fahad bin Mahmood Al-Said Currency : Omani rial (OR) Dialling code: 968 HDI: 52nd Ease of doing business index: 71st

Oman at a glance The Sultanate of Oman enjoys certain advantages because of its location. It is less than two hours journey time from major business centres in Asia and fast sailing times to Asia, Africa, Europe and North America. Oman is at the centre of the eastwest trade nexus joining markets in Europe, Asia and North America. Oman is situated on the southeastern coast of the Arabian peninsula bordered by the UAE to its northwest, the Kingdom of Saudi Arabia to its west and Yemen to the southwest.

The vast majority of Oman consists of a desert plain as a base, however various mountain ranges can be located on the outskirts of the country. The climate is hot and dry in the interior and humid along the coast. Between May and September temperatures can soar as high as 50°C. There is a little rainfall; the rain it does experience is usually limited to January.

The Ottoman Turks captured Muscat from the Portuguese in 1581 and held it until 1588. The first of the current line of ruling sultans began in 1741. Except for a brief Persian invasion in the late 1740s, Oman has been self-governing ever since.

Oman has been experiencing its fastest rate of population growth in at least fifty years and it has one of the fastest growing populations in the world with a growth rate of more

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than 9% per year. From 2012 to 2013 alone, Oman added more than 227,000 people. This rapid growth has been partly attributed to improvements in its healthcare system.

Politics The Sultan is chief of staff of the armed forces, minister of defence, minister of foreign affairs and chairman of the Central Bank. He has ruled since 1970 and is currently the longest serving ruler in the Middle East. The country operates in accordance with Sharia law.

Oman is developing into a constitutional monarchy. The country has no political parties, but the state bodies provide the Sultan with advice. Administratively, the populated regions are divided into 59 districts. The governors of these districts are responsible for maintaining peace and collecting taxes.

Economy The country has made good progress in diversifying its economy and attracts growing private foreign investors, especially in the industrial, IT, tourism and higher education sectors. Oman’s industrial development focuses on gas resources, metal manufacturing, petrochemicals, and international transhipment ports.

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Oman is party to numerous important trade agreements as a signatory to the WTO, the GCC common market, GAFTA. These multinational agreements are complemented by free trade deals with individual countries such as the US, Singapore, Iceland, Norway and Switzerland.

The country provides a safe environment for investors boasting transparent legislation and business procedures, no restrictions on the repatriation of capital or profits and 100% foreign ownership in special economic zones.

Oman has some of the most strategically placed ports in the world.

Although ports, airports and roads are already globally ranked, the country has been investing to improve its key infrastructure to enhance its attractiveness to investors. Indeed, it has been undergoing a significant business transformation as it develops and launches new ports, free zones, industrial estates, airports, roads and other infrastructure. Combined, these initiatives are significantly improving Oman’s international business appeal.

Telecommunications infrastructure is well advanced with a high rate of mobile penetration.

Growth forecasts The World Bank forecasts gradual economic growth in Oman to reach 3% by 2019 as a projected recovery in oil prices improves

confidence and encourages private sector investment, reported ONA, 18 April 2017. The World Bank Middle East and North Africa Region (MENA) Economic Monitor Report hailed the Sultanate’s diversification and control of public finance. The adoption of probusiness reforms, such as the Foreign Ownership Law and the Foreign Direct Investment Law, are expected to increase trade and investment opportunities in the country.

Moreover, the adoption of a 5% value added tax (VAT) expected in 2018, higher corporate income tax and increase in excise duties and fee for government services are expected to narrow the fiscal deficit to 7.4% in 2019, according to the bank which further noted that inflation was expected to ease to 1.1% by 2019.

Successful recovery of economic growth seen as necessary to the securing of employment opportunities depends on timely implementation of diversification programmes. Major infrastructure spending programme forms part of Oman’s 9th FiveYear Development Plan.

“The industrialisation plan is set to boost demand for power which would require prioritisation of natural gas projects. The government will look towards increasing public-private partnerships,” the World Bank report observed. “While oil and gas revenues fell by 29% in 2016, non-hydrocarbon revenues are estimated to increase by 20% due to higher customs and investment income,” the report added.

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Key sectors The country’s investment and export development agency, Ithraa produced a series of briefings covering opportunities in the key sectors of manufacturing, tourism, logistics, agriculture and fisheries, highlighting some of the ambitious projects and innovative business initiatives that are driving growth in each of these five key sectors.

Oman’s Vision Oman set out its key economic and social goals in its Vision 2020 plan. These are: economic and financial stability; the reshaping of the government’s role in the economy and broadening private sector participation; diversifying the economic base and sources of national income; continued globalisation of the economy; the upgrading of labour skills and the developing of human resources.

Renewable energy Development of renewable energy in Oman could unlock the enormous potential for the country to remain a leading energy

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exporter beyond oil and gas. Calculations have shown that Oman possesses sufficient solar energy to power not only its own needs but all of the UK as well. While solar would be the most obvious target for a national renewable energy solution, research carried out at Sultan Qaboos University has shown that there is a role for all other forms of renewable energies in Oman including wind, marine and biomass.

Logistics Oman is looking to boost investment in its transport and logistics sector, one of five pillars targeted under the country’s Ninth Five-Year Development Plan (2016-20). Plans to develop the sector are to be carried out through the Sultanate of Oman Logistics Strategy (SOLS) 2040, which aims to double employment in the sector to 80,000, as well as double its GDP contribution to OR3 billion ($7.8 billion) by 2020, OBG, November 2016. It has established a holding company – Oman Global Logistics Group (OGLG) – to consolidate state holdings in seaports, free zones, and maritime and land transport companies. The company will also be responsible for implementing SOLS, supervised by the Ministry of Transport and Communications.

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Tourism Oman has launched a number of new developments in its tourism sector as part of a drive to diversify its economy.

Tourism is one of the five key sectors identified in Vision 2020 national development strategy to encourage economic growth and expand the role of the private sector. Under the plan, Oman aims to increase tourism’s contribution to GDP to 5% by 2020, up from 2.5% of GDP in 2015.

The country sees potential in the development of cultural tourism and is investing in a number of projects that take advantage of the country’s rich heritage. In 2015, it pledged investments of $2.5 billion for the Omagine Project – a mixeduse development set on 245 acres of prime beachfront facing the Gulf of Oman, which is an integration of cultural, heritage, educational, entertainment and residential elements.

Omran, an agency established by Oman in 2005, drives the investment, growth and development of the rapidly growing tourism sector. The agency is master developer of major tourism, heritage and urban developments, delivering some of the nation’s most important projects. Omran takes a pivotal role in developing tourism infrastructure, investing in tourism enterprises, and managing hospitality assets.

Part of the plan is to encourage “hyperlocal tourism” – for tourists seeking more authenticity, real experiences rather than fake culture packages. Whether it is mountain climbing, crossing deserts, sailing, relaxing on a beach or simply shopping, tourists demand a more authentic experience. The number of travellers looking for exotic locations where they expect to find unique real-life experiences is now a global market worth around $140 billion. Oman’s tourism industry is expected to expand significantly over the next decade, offering new opportunities for local SMEs, especially niche firms that can best take advantage of this new hyperlocal trend.

Agriculture

Commercial ports The creation of OGLG comes as Oman continues to inject money into its three major commercial ports at Duqm, Salalah and Sohar in a bid to attract investors and shipping lines. A 2040 master plan for Sohar Port and Free Zone – located about two hours from Muscat – is currently being finalised, according to media reports in October. The 2000-ha port area, which has already received $26 billion in investment over a decade of operations, has a capacity of 1.5 million twenty-foot equivalent units (TEUs). This is expected to increase to 5 million TEUs by 2020 following the completion of a new container terminal. With 95% of the free zone already developed or leased to investors, there are also plans to expand the industrial area by up to 50% in the near future.

Oman’s two other major commercial ports are also expected to undergo expansions. The southern Port of Salalah will see the investment to develop three new container berths and a dedicated cruise terminal, among other projects. Meanwhile, the Port of Duqm is to receive substantial investment following the recent awarding of a contract to build the terminal infrastructure for its 2.2km commercial quay, which was completed in 2012.

Oman is carrying out ambitious plans to expand its agriculture and fisheries sector to increase its contribution to the economy and reduce dependence on imported foodstuffs. Agriculture is a key employer and important as a source of export earnings.

Oman’s Vision 2020 sets the target of raising agriculture’s contribution to GDP to 3.1% by 2020. It also seeks to boost the fishing sector to around 2% of GDP by 2020.

Online business services Oman’s Invest Easy portal is a one-stop shop for investment and business procedures. According to figures from Oman’s Ministry of Commerce and Industry, more than 193,000 commercial transactions were carried out through the online service in 2016 – representing a 448.6% increase on 2015. New company registrations, amendments to commercial names and import licence applications were among the procedures completed online.

Corporate governance A corporate governance code, in line with international practice, has been developed for public sector companies following an agreement between the Ministry of Finance and Oman Centre for Governance and Stability (OCGS). The code will apply to the more than 60 government-owned companies in the country

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Prepared for takeoff Oman Airports is a government owned company, responsible for the management and operations of the civil airports in the Sultanate of Oman. Here Oman Airports answers our questions about their plans for the future and how they feel those plans will fit with wider economic developments across the region.

What are the main purposes behind the major development of Muscat International and Salalah International Airport?

The Sultanate of Oman has always been known as a country which is beautiful in its serenity and which aims to help protect and treasure that, and the people of Oman have always preserved their heritage and culture without letting modernity adversely affect it. When redesigning and redeveloping the new airport, the thought process was to build a facility that would not just benefit the economy of the country through tourism and other business but which would also allow people from all walks of life to enter an airport that showcases local traditional beauty with modern day facilities and structure.

What will be the main selling points of the airports when this is complete, for passenger and freight traffic?

We constructed the Muscat International Airport to ensure passengers and other stakeholders would be satisfied with the services and facilities provided. Our main aim was to increase the passenger flow by 20 million a year, and to achieve this a four-phase plan was designed to ensure that we as an airport could handle the flow. We have introduced 29 aero bridges, 40 gates, 86 check-in counters, and ten baggage claims to add convenience and save time for passengers. We are also widening runways by 20% for a smooth and safe take-off and landing, which will allow for

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the capability to handle 40 flights an hour, including for the Airbus A380 and Boeing 747.

What are your current estimates for growth?

Well, at the moment our current motive is to ensure that our passenger flow increases both in Muscat and Salalah and we are able to grow and widen horizons to enable connectivity to more destinations. Our aim is to be one of the top 20 airports in the world by 2020, and for this to be achieved it is essential that Muscat Airport completes its four-phase strategy successfully and maintains the escalation in growth of the wider economy. Our focus is also on the regional airports of the Sultanate, including Duqum and Sohar, where operations have commenced but growth and infrastructural facilities are still ongoing.

As it is one of your stated aims, are you on target to be among the top 20 airports of the world by 2020?

By successfully opening two new state-of-the-art airports in less than three years, Oman Airports is very much on track to achieve its vision to be top 20 in 2020.

In 2017, Salalah Airport received the most important international recognition in passenger satisfaction from the Airports Council International (ACI) World in the Airport

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Our main aim was to increase the passenger flow by 20 million a year, and to achieve this a four-phase plan was designed to ensure that we as an airport could handle the flow. ensure that this is integral and presented to visitors seamlessly through craft, design and ambience throughout the airport.

Our aim was to open an airport that highlights the importance of our culture and heritage – along with the modernity that people would naturally expect to see. Travelling passengers will also be pampered by the wide selection of duty-free shopping and high-class airport hotel facilities. We have ensured that we make journeys as comfortable as possible and that we keep our passengers happy by providing them with all the services that they might require while awaiting connecting flights, such as spa services, a gourmet continental food selection, rest areas, lounges and business centres.

What airlines are going to be using the new flight capacity and will they be flying to any new destinations directly?

As we have moved to a significantly wider building with higher capacity, we are planning to receive more international airlines. We are Oman’s Gate of Beauty and Opportunity and this is a top priority to be fulfilled. With the opening of the new building, our strategic partners announced their new routes to be launched later this year. Oman Air will begin operating direct flights to Istanbul, Casablanca and Moscow by the end of 2018. Also, Salam Air has begun flying to Azerbaijan, Iran, Sudan, Nepal, India, Kuwait and Bangladesh.

We are providing our full support, energy and commitment to this increase in traveller numbers, and we’re using our experience and expertise to make sure that process is smooth and professional.

Service Quality Programme – being named as the eighth best airport in the world in the category <2 million passengers and one of the most appreciated airports in the Middle East. ASQ is one of the world’s most renowned and premier passenger service benchmarking programmes for airports globally.

Only four weeks after the airport had opened, Muscat Airport was awarded with the Oscar of the travel industry as the “2018 Middle East Leading Tourism Development Project”.

It was the first time Oman Airports had participated in the glamorous World Travel Awards. The World Travel Awards are based on votes from industry travel and tourism professionals from around the world and were established in 1993 to acknowledge, reward and celebrate excellence across all key sectors of the travel, tourism and hospitality industry.

The brand is globally recognised as the ultimate hallmark of quality in the travel industry.

All of these great achievements give us great confidence and independently proves that Oman Airports is focusing on satisfying its customers and their needs to make every journey a memorable event which will reflect warm Omani hospitality.

What will passengers notice most about their improved experience?

When the airport was being designed and was still at a foundation stage, it was well stated and decided that we would capture the essence of Omani beauty and culture, and

Will there be other infrastructure developments in and around the airports to help Muscat and Salalah grow as major regional air and transport hub?

Oman Airports will spare no effort to help Oman be recognised as the remarkable destination it really is. Oman’s location already makes it a significant hub for airline traffic.

Hence, we believe in providing the best experience to our travellers and we are making these significant changes to enhance that. The new building for Muscat International Airport, as well as all developments at Salalah International Airport, are important first leaps. Further leaps will follow.

How important is the relationship between Europe and the GCC region for Oman Airports?

Oman greatly values its relations with its neighbours and with most of the world’s countries, as this is the approach of our wise Sultan, H.M. Sultan Qaboos. As a part of GCC, we consider its rich relations with Europe to be a fundamental part of its peaceful nature. Oman Airports represents this in all aspects of our business, and we offer a warm welcome and the best hospitality to visitors from Europe, the GCC and all the nations of the world. Of course, Europe is also an important and beautiful destination for tourists across the world, and specifically for GCC nationals. It’s our pleasure in Oman Airports to enrich these strong bonds by helping to link travellers with other parts of the world.

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Emir of Qatar His Highness Sheikh Tamim bin Hamad Al Thani

Born on 3 June 1980, His Highness Sheikh Tamim bin Hamad Al Thani is the eighth Emir of Qatar and the fourth son of His Highness the Father Emir, Sheikh Hamad bin Khalifa Al Thani, and second son of Sheikha Mozah bint Nasser Al Missned. He was appointed as Qatar’s Heir Apparent on 5 August 2003. He became Emir of Qatar on 25 June 2013.

HH The Emir received his education at Great Britain’s Sherborne School (International College) and at Harrow School. He then attended the Royal Military Academy Sandhurst, graduating in 1998. In 2005, Sheikh Tamim founded Qatar Sport Investments, which owns Paris Saint-Germain Football Club, among other investments. In 2006, he chaired the organising committee of the 15th Asian Games in Doha.

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Under his leadership, Qatar won the rights to host the 2014 FINA Swimming World Championships. Sheikh Tamim is a member of the International Olympic Committee and the National Olympic Committee chairman. He headed Doha’s bid for the 2020 Olympics.

Sheikh Tamim heads up the Qatar Investment Authority board of directors. Under his leadership, the fund has invested billions in British businesses. It owns large stakes in Barclays Bank, Sainsbury’s, and Harrods. The fund also owns a share of Europe’s tallest building, the Shard.

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Qatar Country Spotlight

Quick Facts Capital city: Doha Population: 2,673,886 (Est 2018) GDP growth: 1.9% (2017) Area: 11,586 km2 Government: Unitary constitutional monarchy Emir: HH Sheikh Tamim bin Hamad Al Thani Deputy Emir: Abdullah bin Hamad Al Thani Prime Minister: Abdullah bin Nasser bin Khalifa Al Thani Currency: Qatari riyal (QAR) Dialling code: 974 HDI: 32nd Ease of doing business index: 83rd

Qatar at a glance

being non-Arab expatriates, showing its diversity in populace.

Qatar is a sovereign nation state, occupying the small Qatar peninsula on the northeastern coast of the Arabian peninsula.

It borders Saudi Arabia to the south, with the rest of its land surrounded by the Persian Gulf. A strait in the Gulf separates Qatar from the nearby island kingdom, Bahrain.

Qatar is a high-income economy based on its huge natural gas and oil reserves. The country has the highest per capita income in the world, and has the second highest standard of living in the Middle East and the seventh highest in Asia. It was ranked between fifth and seventh for world GDP per capita for 2015 and 2016 by the World Bank, United Nations, and IMF.

Following Ottoman rule, Qatar became a British protectorate in the early 20th century until gaining independence from the UK in 1971. Qatar has been ruled by the Al Thani family since the mid-19th century and is accordingly a hereditary constitutional monarchy. The constitution was overwhelmingly approved in a constitutional referendum in 2003, with almost 98% approval.

Qatar is a conservative society and most Qataris adhere strictly to the Wahhabi/Salafi interpretation of Islam. Sharia law is the main source of Qatari legislation according to Qatar’s Constitution.

Prior to the discovery of oil, the Qatari economy focused mainly on fishing and pearl hunting. After the introduction of the Japanese cultured pearl onto the world market during the 1920s and 30s, Qatar’s pearling industry crashed.

In 2018, Qatar’s total estimated population is around 2.7 million – roughly 12% are Qatari citizens, with the majority of the rest

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Qatar is a hugely influential state in the Arab world, both financially and through its globally expanding media group, Al Jazeera Media Network. Qatar will host the 2022 FIFA World Cup, becoming the first Arab country to do so.

In June 2017, some of the other Gulf states cut off diplomatic relations with Qatar and began an embargo of the country.

Since then there been local and international moves to resolve the situation.

Politics The eighth Emir of Qatar is His Highness Sheikh Tamim bin Hamad Al Thani, whose father Hamad bin Khalifa Al Thani passed power to him on 25 June 2013. The Supreme Chancellor holds the sole power to assign and remove the Prime Minister and cabinet ministers, whom together constitute the Council

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of Ministers, which is the supreme executive authority in the country. Qatar’s royal family is the Al Thani family, who have been ruling the country since the house was established in 1825. There is no independent legislature or political parties, however, in 2003, Qatar approved a constitution that provided for the direct election of 30 of the 45 members of the Legislative Council.

The Council of Ministers also initiates legislative procedures.

Laws and decrees proposed by the Council of Ministers are referred to the Advisory Council (Majilis Al Shura) for discussion, after which they are sent to the Emir for authorisation. A Consultative Assembly has limited legislative authority to draft and approve laws, but the Emir has final say on all matters.

Economy Qatar has the third largest gas reserves in the world and over the past 15 years has experienced considerable economic growth driven by the huge investment in local projects. The ongoing drive for economic diversification and a growing economy means that the market offers many opportunities for investment. Companies and individuals wishing to expand their business opportunities in the Gulf will find a legal environment in Qatar that is accessible and well regulated.

Despite this petroleum and natural gas are still the cornerstones of Qatar’s economy and account for more than 70% of total government revenue, more than 60% of gross domestic product, and roughly 85% of export earnings. Qatar has the world›s third largest proven natural gas reserve and is the second-largest exporter of natural gas.

Natural gas production is a major growth driver in Qatar and over the past decade the country has been one of the world’s fastest growing economies. Production increased 260% between 2006 and 2015, to 3.3 million barrels per day (b/d) of oil equivalent; this was accompanied by a 65% increase in oil production (including crude oil, shale oil, oil sands and natural gas liquids) to 1.9 million b/d.

Making effective use of its oil and gas revenues, Qatar has embarked on one of the largest and most ambitious infrastructure programmes in the world with a projected spend of around £160 billion to deliver its 2030 Qatar National Vision.

This strategy is focused on economic, social, human and environmental development. In addition, the 2022 FIFA World Cup is providing a stimulus for major construction activities.

Large-scale infrastructure projects include Lusail City and tram system, a three line, the Doha Metro system, the New Hamad Port and some major road construction.

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Qatar’s economy staged a turnaround in the third quarter of 2017 when real GDP grew sharply by 5.5%, compared to the previous quarter. On year-on-year, the GDP showed a growth of 1.9% to QR 208.92 billion, according to preliminary data released by the Ministry of Development Planning and Statistics.

On April 12 2018, Qatar raised $12bn from its first bond issuance on the international market since 2016. “The overall success of the issue clearly reflects the strength of the Qatari economy and the confidence the state enjoys from international investors,” a Qatari official said.

Incentives to investors Qatar has opened up its economy to foreign participation and has relaxed business regulations. In order to attract foreign investment to help diversify its economy, Qatar offers a wide range of incentives, including subsidised or nominal rates for gas and electricity supplies, no import duty on machinery, equipment and spare parts for industrial projects, tax exemptions on corporate tax for pre-determined periods and no export duty. Other benefits include tax free salaries, excellent medical and educational facilities and state-of-the-art telecommunication facilities and infrastructure.

Since 2004, Qatar has issued new laws aimed at creating a more favourable business environment. Originally, 100% foreign ownership of companies in the financial sector and the science and technology sector was permitted on ministerial approval. The new legislation has expanded these sectors to include the employment sector, real estate, science and technology, financial centres, financial markets, telecommunications and information technology. In 2010 these sectors were added to allowing foreign ownership in business consultancy and technical services, information and communication services, cultural, sports and entertainment services and distribution services.

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Qatar National Vision 2030 Qatar National Vision 2030 sets out four guiding principles on the basis of which Qatar aims to create a sustainable economy and advance the standard of living of its citizens. Development in both the public and private sectors will be based on these principles: Human development – in particular the development and promotion of education among all citizens to create a sustainable and prosperous society; Social development – the development of a just and caring society, capable of playing a key role in establishing global partnerships; Economic development – the development of a diversified economic base to secure and maintain a high standard of living in the future; Environmental development: to maintain a balance between economic and social development and ways of protecting the environment.

Qatar Investment Authority Formed in 2005, Qatar Investment Authority is the sovereign wealth fund of the State of Qatar. Over the past decade the QIA has built a major global portfolio that now spans a broad range of asset classes and regions. As a respected global investor, the QIA has key assets in Volkswagen, Barclays, Canary Wharf, Harrods, Credit Suisse, Heathrow, Glencore and Tiffany & Co. It acts as an important building block of the Qatar National Vision 2030.

Intellectual property rights Intellectual property law in Qatar is overseen by the Ministry of Economy and Commerce. In June 2015, Qatar became the first GCC state to open a Patent Cooperation Treaty (PCT) Registration Office in collaboration with the World Intellectual Property Organisation (WIPO). The office aims at making the process of international patent application filing easier and more efficient: by filing one international patent application under PCT, applicants can seek protection for an invention

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in 148 countries across the world, which brings significant advantages for firms operating in the Qatar market.

while Islamic lenders had continued to show profitability partly attributed to their lower exposure to financial volatility.

Qatar Financial Centre

Qatar Science and Technology Park

The Qatar Financial Centre (QFC) operated by the Qatar Financial Centre Authority, is a financial and business centre established by the Government of Qatar in February 2005. The QFC Law permits 100% ownership of authorised institutions by non-nationals and a complete repatriation of profits. The QFC’s commercial and regulatory environment fully conforms to international standards.

The QFC Regulatory Authority manages and enforces the QFC’s regulatory systems, while the QFC Companies Registration Office, registers limited liability companies and limited liability partnerships within the centre.

The Qatar Science and Technology Park (QSTP) provides “free zone” legal and business environment to foreign or local technology-based companies. In order to set up operations within the QSTP a company’s main activity must relate to the advancement of technology. This reflects the primary purpose of the park which is to promote scientific research rather than provide simple business park facilities.

Banking sector Qatar boasts one of the healthiest banking sectors in the Gulf.

According to Qatar Central Bank (QCB) banking remained healthy, with high capital ratios and a low level of delinquent loans. The QCB has worked to strengthen and promote financial stability, which has played a key role in ensuring sustainable economic growth. “Currently in Qatar, 18 banks serve a population of only 2.6 million, and Qatar National Bank (QNB) ¬– the largest bank in the GCC – dominates with a market share of more than 40% of domestic assets,” (Moody’s Investors Service, 2017).

Banks accounted for almost half of the $6 billion in net profits generated by companies listed on the Qatar Stock Exchange (QSE) in the first six months of 2016, according to OBG; the 13 QSElisted banking and financial entities reported a 3.5% year-on-year rise in cumulative net profits to $3 billion over this period. The QNB saw its profits increase by 12% year-on-year to $1.7 billion,

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Information and communication technology (ICT) The ICT sector in Qatar continues to make a valuable contribution to the national economy and is now seeing a mature market develop. Service providers are adapting well to macro change by diversifying their businesses and becoming more efficient.

Telecommunications contributed 1.7% to Qatar’s GDP in 2016, up from 1.3% in 2014. Qatar has one of the highest penetration rates in the whole MENA region of 176% behind only the UAE and Bahrain. Fixed line network development in Qatar is dominated

by Ooredoo, and 99% of households are in areas covered by a fibre optic network. Ooredoo’s market share remains stable with around 97%.

The Communications Regulatory Authority (CRA) reported that the telecoms market saw investment of around QR1.25 billion towards the development of infrastructure and services, and in preparation for future technologies during 2016. “This is positive for consumers as the impact of competition in the mobile market has reduced prices and increased the range and quality of services that are available,” commented Mohammed Ali Al Mannai, president of CRA.

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Emir of Kuwait His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah

Born in 1926, Sheikh Jaber was the son of the former ruler of Kuwait, Sheikh Ahmad Al-Jaber Al-Sabah.

As a young boy Sheikh Jaber received his primary education at Al-Mubarakiya School, the first school to open in Kuwait. He was subsequently tutored privately in religion, Arabic literature, English, and the basic sciences.

At the age of 23 Sheikh Jaber began his career in public service by holding the post of director of public security for the Ahmadi region. In 1955, Sheikh Jaber became the head of the Department of Press and Publications, then in 1962 he became Minister of Guidance and Information â&#x20AC;&#x201C; in the first cabinet that took power after independence.

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In January 1963 His Highness was assigned the post of Foreign Minister, which he held from independence until April 1991 in all the governments. In the period from February 1971 to February 1975, he was Deputy Minister of Information, in addition to his post as Minister of Foreign Affairs. In 1978, he became Deputy Prime Minister, also in addition to his post as Minister of Foreign Affairs. In the period from March 1981 to February 1982, he added the role Minister of Information to his responsibilities. In July 2003, he became Prime Minister by Amiri Decree and then on 29 January 2006, he was unanimously proclaimed as Emir of the State of Kuwait.

The Emir is a father to three sons and one daughter. He is a member of the Organisational Body of the Higher Council and the Building and Construction Council. His Highness is also an Honorary Trustee of the Metropolitan Museum of Art in New York.

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Kuwait Country Spotlight

Kuwait at a glance The State of Kuwait shares borders with Iraq and the Kingdom of Saudi Arabia and has a coastline on the Gulf. The densest settlement is in Kuwait City and on Bubiyan Island. The country’s terrain mainly consists of a flat to slightly undulating desert plain. The population amounts to about 4.1 million including non-nationals who make up around 70% of the total.

Because its natural freshwater resources are limited, Kuwait has developed large and sophisticated desalination facilities to provide much of the water supply needed for its citizens and industry. Its main natural resources are oil and natural gas, fish and shrimp.

During the eighteenth and nineteenth centuries Kuwait was the centre of boat building in the Persian Gulf. Vessels made in Kuwait carried the bulk of trade between the ports of India, East Africa and the Red Sea. Kuwaiti ships were renowned throughout the Indian Ocean.

The Sheikhdom of Kuwait became a British protectorate in 1899, and then in June 1961 became independent. Kuwait’s national day, however, is celebrated on 25 February, the anniversary of the coronation of Sheikh Abdullah. Under the terms of the constitution, Kuwait held its first parliamentary elections in 1963. Kuwait was the first of the Arab states of the Persian Gulf to establish a constitution and parliament.

The weather of the State of Kuwait is tropical due to its location in the desert geographical region. The weather is distinguished with a long dry hot summer with temperatures reaching sometimes up to 50oC in shaded areas and a short warm winter, which is mostly rainy.

Politics The National Assembly in Kuwait is democratically elected every four years. The executive branch is the Al Sabah monarchy, which includes the Emir and the Crown Prince. The Emir chooses the members of the cabinet, with at least one member having to be chosen from the National Assembly.

Kuwait is an ally of the United States, and its democratic values reflect its commitment to openness and a competitive economy.

Kuwait’s media is known to enjoy an openness and freedom that is uncharacteristic of the region as a whole.

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Quick Facts Capital city: Kuwait City Population: 4,052,584 (Est 2016) GDP growth: 0.9% (2017) Area: 17,818 km2 Government: Constitutional emirate Chief of State: His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah (Emir of Kuwait) Crown Prince: Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah Prime Minister: Jaber Al-Mubarak Al-Hamad Al-Sabah Currency : Kuwaiti dinar (KD) Dialling code: 965 HDI: 51st Ease of doing business index: 96th Economy The Kuwait economy benefits from high levels of openness to global commerce and good monetary stability. Kuwait is well positioned to mitigate the impact of lower oil prices, the IMF observed. Non-oil growth is projected to regain momentum to about 4% over the medium term supported by a continued improvement in project implementation under a five-year development plan. The government strategy is focused on reforming public finances and promoting a greater role for the private sector in the economy, by which Kuwait aims to generate growth, foster diversification and create more jobs for nationals.

The budget for the financial year 2017-2018 focuses capital expenditure on oil and gas activities in an effort to create more jobs, offset falling crude export revenue and capitalise on rising regional demand for refined products. It is taking steps to expand private sector participation in the economy, including through planned power projects and a US dollar-denominated bond issue in a first for Kuwait. Combined with efforts to boost value-added oil and gas production, these moves should help foreign investment and see state revenue expand steadily over the medium term.

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Oil and gas

network, and considerable investment is expected to follow.

Kuwait is investing $100 billion to improve the efficiencies of its facilities in line with its five-year plan, the Social & Economic Objectives 2015-2020, even as about 34% of all project investments in the country currently are in the oil and gas sector. As part of its strategy to extend and modernise refining capacities, the Kuwait National Petroleum Company (KNPC) plans to invest $40 billion, to increase total refining capacity to 1.4 million barrels per day (mbpd) in 2022, which includes the new Al-Zour refinery and the Clean Fuels Project. Around $16 billion is expected to be spent on the Al-Zour New Refinery Project (NRP) (capacity of 615,000 bpd), that will supply both the domestic and global demand for ultra-low-sulphur petroleum products.

The SME sector contributes just 3% to Kuwait’s GDP, compared to an average of 50% in high-income economies, according to World Bank figures. SMEs account for around 23% of Kuwait’s workforce, about half of the average in high-income and emerging economies. Kuwait recognises that there is significant room for growth in its SMEs and has adopted measures to foster their growth such as the $6.6 billion National Fund for SME Development founded in 2013 as the first single entity for SMEs in the Gulf region. The fund assumes responsibility for everything from business licensing to financing up to 80% of capital for feasible projects.

Industry

As of April 2017, Kuwait had 722 active construction projects worth approximately $234.4 billion, Construction Week reported. The construction sector has been growing at a steady pace, with the majority of government funding focussed on infrastructure, utilities, and housing as part of Kuwait Development Plan 2020. During March 2017 alone, the country awarded contracts for a $492m runway at Kuwait International Airport, a $1.3 billion engineering, procurement, and construction project for the Burgan oilfield, and the $817m Kuwait New Maternity Hospital. In addition, Korea Land & Housing Corporation won a $41m contract for the planning and design of Saad Al-Abdullah City.

Kuwait is hoping to diversify the economy through industrial expansion on the back of petrochemicals and plastics. In September 2016, Mohammad Al Ajmi, director-general of the country’s Public Authority for Industry (PAI), announced plans to boost industrial output by 25% in coming years, while the sector’s current contribution to GDP stood at 9%.

Industrial expansion is critical to offset falling revenues due to low global oil prices and has led Kuwait to intensify efforts to expand the non-oil economy. The Kuwait Development Plan (KDP) 2015-20, for example, targeted 4% non-oil growth in 2016, before accelerating to 5-6% per annum in the following years, according to OBG, November 2016. High-potential chemicals and plastics segments and expected to form a crucial component of its diversification.

In July 2018, Kuwaiti Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah and President Xi Jinping of China shooks hands on an agreement to establish a strategic partnership between the two countries. Kuwait is expected to become a maritime terminus on China’s Belt and Road Initiative, intended as a global transport

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Infrastructure

A boom in construction with infrastructure developments, educational facilities and new housing projects is propelling the sector, which is set to reach $15.6 billion in 2020, said a report.

The top 10 construction projects in Kuwait are estimated to be worth $12 billion, with healthcare investments being one of the major drivers of growth in 2016, according to a GCC Kuwait Healthcare Report 2016 from BNC. Out of the top 10 projects, six are in fact devoted to the development of new or existing hospitals and valued at $5.5 billion, the report stated. According

THE EUROPE-GCC Trade & Investment Guide 2018–2019

to BNC, the size of the healthcare economy in the GCC was around $40.3 billion last year, and is expected to increase at a projected rate of 12% per year, reaching $71.3 billion in 2020.

Smart City A smart city that will accommodate 25,000 to 40,000 households and construction is expected begin construction in 2019. A consortium of South Korean construction companies plans to build the eco-friendly $4 billion residential city, South Korea’s infrastructure ministry has said in a statement, April 2017. The consortium will be led by Posco A&C and Hyundai Architects and Engineers Associates Co. The South Korean government is to help form the consortium in 2018 and set up a special purpose company in 2019 to push forward the project. “It is the first export of the ‘smart city’ project which has been strongly pushed by the ministry,” the Ministry of Land, Infrastructure and Transport statement said. It is hoped that the Kuwaiti project could be a model for similar eco-friendly city construction projects elsewhere in the Middle East.

Education Kuwait is working to transform its education sector by building excellent world-class universities and encouraging higher education. As an example, China State Construction Engineering Corporation (CSCEC)’s Middle East unit won a $580m contract in June 2016, to build Sabah Al-Salem University City, run by the Kuwait government. The establishment would be set up as one of the largest campuses in the world and would feature world-class educational facilities. The development would comprise seven uniquelyshaped buildings. The project’s management facilities would be constructed, operated and maintained by CSCEC. Rising demand for English medium schools from expats has led to a rise in the number of international schools establishing in Kuwait. Growth in the number of private

colleges is also anticipated with public institutions reaching full utilised levels amid increasing enrolments. The private sector is also gaining prominence with a rise in demand for international curriculum and initiatives to form public private partnerships (PPPs).

To develop effective learning, Kuwait is gradually introducing information and communications technology (ICT) as part of its investment in modernising the education system. In May 2016, the Ministry of Education in collaboration with Microsoft conducted training sessions on technology for teachers aimed at driving learning transformation in schools. An education net project was launched to connect every state school to a nationwide data network. There is a huge market for providers of e-learning content, tools and technology. There is also potential for e-learning as universities set up online education programmes.

Healthcare Reforming Kuwait’s healthcare system forms a key part of the government’s $102.9 billion Kuwait Development Plan (KDP).

Taking the form of a series of five-year plans, with the most recent blueprint for 2015-2020, the KDP envisages a raft of initiatives and legislation supporting project development in health care as well as across other areas of the economy.

In line with the KDP framework, the Ministry of Health plans to construct eight hospitals and hospital extensions at a cost of $1 billion, OBG reported June 2016. In line with the KDP framework, there are plans to construct eight hospitals and hospital extensions at a cost of $1 billion. The Ministry of Public Works has also allocated $4.2 billion to build nine additional hospitals, which will boost the number of beds available in public facilities by 3334, while creating an estimated 15,000 new jobs. The Ministry has also allocated $4.2 billion to build nine additional hospitals, which will boost the number of beds available in public facilities by 3334, while creating an estimated 15,000 new jobs.

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Thank you for reading!

As the edition draws to a close, we would like to say thank you to all of our editorial contributors. It was a pleasure to work with them to highlight the importance of Europe-GCC relations, and to further future dialogue surrounding issues that stem from bilateral trade and investment.

The next edition of the Europe-GCC Trade and Investment Guide will continue to focus on promoting prosperous, strong relations between the trade blocs.

To stay up to date on the latest happenings with the Europe-GCC Guide, please subscribe to updates by emailing our team on media@blsmedia.co.uk

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