September 2023

Introduction

The editorial staff of MEA Business are committed to reporting the as highlighting the business opportunities that already exist in the two regions.

We also want to provide a platform for business leaders to share ideas, engage in constructive debates and form strategic partnerships. Our ultimate aim is to equip business leaders and professionals with the practical and tactical skills to thrive in the Middle East and Africa. With an emphasis on positive news stories, case studies and inspirational interviews, MEA business will inspire readers towards personal development and overall business success.

The magazine is arranged to provide clear and concise informative sections including news sections on the Middle East and Africa, CEO interviews and market updates. The magazine and news service we offer are available on a variety of platforms, these include our printed magazine, e-magazine, website and social media. Furthermore, we include augmented reality elements in some of our features to provide our readers with unparalleled coverage on the latest developments.

MA Business also publishes several sector specials throughout the year. These special issues are produced to coincide with important industry exhibitions and events. This month's issue is an Aviation Awards special. I hope you will also join me in congratulating all the winners.

Kenneth Mitchen Publisher, MEA Business

CONTENTS

NEWS MIDDLE EAST

6 Aldar partners with Nikki Beach Global to bring branded waterfront residences to Ras Al Khaimah

8 Leading British digital logistics company Zencargo launches operations in the UAE to expand in MENA

AVIATION ANNUAL GALA EVENING

10 The Aviation Annual Gala Evening is Back

AVIATION ACHIEVEMENT AWARDS

12 Aviation Achievement Awards 2023

LOGISTICS

14 Emirates SkyCargo advances its digital customer experience with CargoAi

15 Hotpack celebrates

MEA Business

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EMAIL: info@cme-media.com

PUBLISHED BY: Creative Middle East Media FZ LLE, 19th Floor, Creative Tower, Fujairah Creative City, PO Box 4422, Fujairah, UAE

EXECUTIVE DIRECTOR AND PUBLISHER : Kenneth Mitchen

Email: ken.mitchen@mea-finance.com

milestone achievement of reaching 50 retail stores across the MEA

16 Etihad Cargo ramps up cargo capacity for China

17 Aramtec selects Zebra Technologies to digitally transform its warehouse operations

SPOTLIGHT

18 Imad Kazzaz

HR NEWS - LEGAL

20 Unemployment Insurance and Emiratisation Law a Landmark Step to Boost Business in UAE

HR NEWS - CUSTOMER SERVICE

22 Customers First at Ministry of Human Resources UAE

MARKET FOCUS

24 Managing Challenges SUSTAINABLE FINANCE

PARTNER CONTENT

30 Real Estate Income in the UAE –how it is treated for corporate tax purposes

ROBO-ADVISORY

32 Retooling Wealth Management

How Green Projects the Region’s Shift to and Economic Diversification

28 How Green Projects are Fuelling the Region’s Shift to Sustainability and Economic Diversification

15

As oil-rich countries in the Middle East and North Africa seek to reduce their dependence on fossil fuels and diversify their respective local economies, the region is on track to becoming one of the world’s biggest markets for green and sustainable finance

18

SUSTAINABLE FINANCE 32

Aldar partners with Nikki Beach Global to bring branded waterfront residences to Ras Al

Khaimah

The new residential development on Al Marjan Island is set to redefine coastal living in Ras Al Khaimah

Aldar Properties (‘Aldar’) announced recently its partnership Nikki Beach Global (‘Nikki Beach’) a luxury lifestyle hospitality company globally renowned for its upscale branded residences, beach club, and resort concepts. The partnership will see Aldar and Nikki Beach develop three branded residential buildings as part of a larger beachfront community on Al Marjan Island, with residential sales set to launch later this year.

The partnership with Nikki Beach, which is renowned for delivering barefoot luxury, stylish, and relaxed lifestyle experiences, is set to redefine coastal living in Ras Al Khaimah, merging Aldar’s well-designed living with Nikki Beach’s vibrancy and elegance. Marking Aldar’s inaugural residential development in Ras Al Khaimah,

Nikki Beach Residences will be nestled between Rixos Bab Al Bahr and DoubleTree by Hilton Resort & Spa Marjan Island, both acquired by Aldar in 2022.

Jonathan Emery, Chief Executive Officer at Aldar Development, said: “As Aldar continues to expand its footprint in Ras Al Khaimah, our partnership with Nikki Beach is key to developing an unparalleled residential offering in an emirate that is growing as an investment hub and tourism destination. Nikki Beach, with its global prestige and proven track record in upscale hospitality, aligns perfectly with Aldar’s vision to create memorable experiences and thriving communities and we look forward to unveiling more details about the masterplan soon.”

Inspired by the vision of founder Jack

Penrod, and CEO Lucia Pernod, Nikki Beach has built a strong brand reputation as an original luxury beach club concept that combines the elements of music, dining, entertainment, fashion, film, and art into one. Today, the Nikki Beach concept has transcended its international venues and grown into a global, multifaceted luxury lifestyle and hospitality brand with 11 beach clubs, 5 hotels and resorts, branded residences, a fashion division, special events, and Nikki Cares, a 501c3 non-profit charity. Built on a shared commitment to innovation, quality, and customer-centricity, this partnership will merge Aldar’s expertise in creating vibrant communities with Nikki Beach’s flair for crafting unique, immersive experiences, setting new benchmarks in customer satisfaction.

Jihad El Khoury, Chairman and CEO of Nikki Beach EMEA Hotels & Resorts, said: “The Nikki Beach Residences on Al Marjan Island are poised to revolutionize coastal living in Ras Al Khaimah, and we are thrilled to partner with Aldar to bring this luxurious and vibrant concept to life. Our collaboration signifies a perfect blend of Aldar’s expertise in creating thriving communities and Nikki Beach’s reputation for delivering unique lifestyle experiences. These residences will not only offer residents curated living spaces but also a true sense of community that Nikki Beach is known for.”

Lucia Penrod, CEO of Nikki Beach Global: “Nikki Beach Residences will offer the opportunity to secure your own piece of Nikki Beach in this vibrant region and we look forward to working with Aldar on this exciting property development. We are extremely discerning as we expand our global portfolio of residences and are confident that Ras Al Khaimah is the ideal destination to bring our loyal clientele this new way of celebrating life.”

Nikki Beach Residences will offer fully furnished apartments with curated living spaces and expansive balconies that frame captivating vistas of the Arabian Gulf. The common areas, including a club house with a lounge and restaurant, and hospitality suite for hosting gatherings, will foster a unique sense of belonging and shared experiences among residents. The development will also be the first wellness-focused community in Ras Al Khaimah to achieve global FitWel healthy building certification – a testament to Aldar’s commitment to delivering healthy communities that support the wellbeing of its residents.

Aldar Nikki Beach signing ceremony. Image courtesy: Aldar

Leading British digital logistics company Zencargo launches operations in the UAE to expand in MENA

Digital Logistics Pioneer Zencargo Joins UAE Ministry of Economy’s NextGen FDI Program

The Ministry of Economy has announced that Zencargo, a UK-based pioneer in digital freight forwarding, is the latest company to join its NextGenFDI program.

The company plans to establish operations in the Emirates with a view to integrating into the UAE’s technology, trade and logistics ecosystem and using the country as a platform to expand its operations into Africa and South Asia.

Zencargo’s presence in the UAE is an endorsement of the UAE’s Trade Tech initiative, which was launched in partnership with the World Economic Forum to accelerate the digitalization of international supply chains, enhance customs procedures, improve developing countries’ access to the global trading system and spur a new era of trade growth.

His Excellency Dr Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, said: “The UAE is a champion of trade innovation and supports the harnessing of advanced technology to catalyze global trade. Zencargo’s decision to open operations in UAE is the latest example of a ground-breaking company taking advantage of our NextGen FDI program, and the UAE’s dynamic business ecosystem, to pursue their next growth stage, which includes the expansion into new markets. Their utilization of advanced technology to revolutionize freight forwarding is fully aligned with the UAE Trade Tech Initiative, which seeks to deploy the tools of the Fourth Industrial Revolution to bring the global trading system into the 21st Century.”

Commenting on Zencargo’s decision to establish operations in the UAE,

Co-Founder Richard Fattal said: “It’s my pleasure to be here in the UAE. At Zencargo, we’re delighted to be expanding in the GCC region, which is undergoing so much growth and with a clear and open attitude to facilitating global trade that we find deeply encouraging. NextGen FDI and the UAE’s free port strategy are clear examples of this, and we are excited to be helping businesses in the region to unlock smarter shipping decisions and connect them with the tools to gain more control over their supply chains.”

Founded in London in 2017 by Alex Hersham and Richard Fattal, Zencargo is a freight forwarder that uses proprietary software to provide clients with a comprehensive overview of their supply chains. Its platform, powered by machine learning, digitizes the end-to-end inbound supply-chain process, offering complete

visibility at each stage from order to delivery. Zencargo has quickly developed a multinational client base and is adding the UAE to its operations, which currently span offices in the UK, North America, Benelux (Belgium, the Netherlands and Luxembourg), China and East Asia.

The NextGenFDI program, launched in 2022, is supporting the growth of the UAE’s knowledge-based economy by enabling rapid incorporation and licensing, ready access to banking facilities and real estate and facilitated visa issuance for advanced technology companies who seek to operate in the UAE. The initiative comprises government and private sector stakeholders including DIFC, Abu Dhabi Global Market, the Dubai Multi Commodities Centre, Dubai Internet City, Dubai South, Emirates NBD and the digital banking platform Wio.

The Aviation Annual Gala Evening is Back on the 14th November 2023

The Aviation Annual Gala Evening (AAGE), the region’s leading invite only event for Senior Aviation will take place on the 14th November 202 3 . The event will again take place on an exclusive 220ft megayacht berthed outside Pier 7, Dubai Marina. The deluxe venue is lavishly designed with custom-built interiors and first-class amenities. Guests will enjoy an amazing cruise along Dubai’s shoreline, with captivating views of the famous Palm Island, the Dubai skyline and Iconic buildings such as the Burj Al Arab. Guests will also be entertained throughout the evening by a live band and special entertainment.

The Aviation Innovation Awards which also takes place during the Gala Evening will recognize some of the region’s most outstanding aviation individuals and organizations. The awards will honour exceptional technological, operational and sustainability innovations. The Gala Evening and Awards attracts a wide variety of leaders from the Middle East and internationally. For more information on the event visit www.aviationgala.com or contact ken@cme-media.com

Aviation Achievement Awards 2024

The Aviation Achievement Awards will take place on the 29th February 2024 The awards recognized individual and organizations who demonstrated exceptional leadership, innovation and resilience during 2023.

www aviation-awards com

Emirates SkyCargo advances its digital customer experience with CargoAi

Through the CargoMART solution, customers can access Emirates SkyCargo schedules, tariff and contract rates, and real-time access to available capacity, enabling immediate bookings 24/7

Emirates SkyCargo is now live on CargoAi’s marketplace solution, CargoMART, further advancing its digital customer experience and optimising the booking process with real-time information.

The partnership launched in the Netherlands, Spain and France and will open up to customers in select countries across Europe, the Americas, Africa, the Far East and Australasia in the coming months.

Through the CargoMART solution, customers can access Emirates SkyCargo schedules, tariff and contract rates, and real-time access to available capacity, enabling immediate bookings 24/7.

On the backend, the partnership drives greater efficiency and accuracy. Once the system is fully operational, over 10,000 freight forwarders on CargoAi’s database will have access.

Nabil Sultan, Divisional Senior Vice President of Emirates SkyCargo, said, “As we increase our digital connectivity, we can offer more choices for our customers to connect with Emirates SkyCargo’s marketleading capabilities and extensive global network. CargoAi’s digital touchpoint enables both our existing and new customers worldwide to book with Emirates SkyCargo at their convenience, providing an additional channel that further strengthens our world-class customer experience.”

Matt Petot, CEO of CargoAi, said, “We are thrilled to partner with Emirates SkyCargo to enhance their digital customer experience through our marketplace solution, CargoMART. By providing real-time pricing and capacity information, we empower our mutual customers with greater choice and convenience, enabling them to make immediate bookings 24/7.”

Emirates SkyCargo’s five core products are listed on CargoMART, including Emirates Fresh and Emirates Fresh Breathe, an integrated and responsive cool chain designed for perishables; Emirates AOG for time-critical aircraft parts; Emirates Airfreight Priority for urgent shipments that depend on speed and reliability; and Emirates Airfreight for the quick and careful transport of general cargo.

the partnership drives greater efficiency and accuracy. Once the system is fully operational, over 10,000 freight forwarders on CargoAi’s database will have access

Hotpack celebrates milestone achievement of reaching 50 retail stores across the MEA

Hotpack’s expansion of its retail footprint across the Middle East and Africa aligns with its vision to become the premier global food packaging brand by 2030

Hotpack Global, a leading sustainable packaging products manufacturer based in the UAE, marked a significant achievement by expanding its retail presence to 50 stores across the Middle East and Africa.

The milestone was celebrated with the unveiling of a special logo dedicated to these 50 stores by Mr Khaled Al Ameri, a renowned social media star, at Hotpack’s newly relocated flagship store on Al Ittihad Road in Dubai. The event witnessed the presence of senior officials of Hotpack, who gathered to celebrate this remarkable accomplishment.

Reflecting on the accomplishment, Mr. Abdul Jebbar PB said, “We are proud to have achieved this milestone that exemplifies how far we have come since our inception. The increasing demand for packaging products in this market has prompted us to enhance our retail presence in the region. We extend our heartfelt gratitude to our customers for the trust they have placed in us for the last 28 years. We aim to continue meeting their expectations in the future because excellence and quality are cornerstones of the Hotpack brand”. Hotpack, driven by its global vision for 2030, has implemented a robust expansion strategy in the Middle East to meet the ever-increasing demand for food packaging products. Over the past few years, the company has successfully expanded its retail operations into all GCC countries, solidifying its presence in these key markets. In addition to its retail endeavours, Hotpack has expanded its Webstore service in these countries. These strategic expansions further reinforce the company’s commitment to cater to the evolving needs of its customers in these regions.

Hotpack recently launched an innovative sustainability initiative to provide 100 per cent post-consumer recycled (PCR) plastic bags exclusively for Spinneys, as part of their environmental commitment. They have also invested heavily in research and development to provide innovative products with sustainability as the prime focus for their customers.

Hotpack is the largest producer of food packaging products in the Middle East with a portfolio of over 4,000 products. The company has a workforce of 3,800 employees and markets its goods to over 106 countries around the world. Hotpack operates in 16 countries, including the Middle East, the United Kingdom, the United States, India, Malaysia, and Africa.

Hotpack is the largest producer of food packaging products in the Middle East with a portfolio of over 4,000 products.

Hotpack, launches logo dedicated to 50 stores across MEA

Etihad Cargo ramps up cargo capacity for China

Etihad Cargo now provides additional cargo capacity via a weekly freighter service to Guangzhou

The carrier operates ten freighter services per week to mainland China, including weekly flights to Guangzhou and Ezhou, and eight flights per week to Shanghai.

Etihad Cargo, the cargo and logistics arm of Etihad Airways, has further enhanced the carrier’s freighter network with the addition of a weekly freighter service to Guangzhou. Offering a new freighter route to Guangzhou comes in response to increased demand for cargo capacity for China and bolsters Etihad Cargo’s existing freighter network, bringing the total number of freighter services for mainland China to ten per week.

“With the introduction of a new freighter service between our Abu Dhabi hub and Guangzhou, combined with

increased frequencies across China via Etihad Cargo’s freighter services and the airline’s passenger flights, customers and partners benefit from increased cargo capacity. Expanding the carrier’s reach into the Chinese market not only meets the increased demand for cargo capacity in this region but will also further strengthen ties between the UAE and China, providing more opportunities for increased collaboration between the two countries,” said Leonard Rodrigues, Head of Revenue Management, Fleet and Network at Etihad Cargo. The Head of Marketing Department

of Guangzhou Baiyun International Airport said: “This significant milestone reflects our enduring partnership since the launch of Etihad Airways’ Abu Dhabi-Guangzhou passenger flight route in October last year, which played a vital role in the recovery of the Guangzhou market and the Greater Bay Area in the postpandemic era. The introduction of this all-cargo scheduled flight route will further enhance trade and logistics development between Guangzhou and Abu Dhabi International Airport, while strengthening connectivity between the Middle East, China, and other Belt and Road Initiative economies. We eagerly anticipate a brighter future as we continue to work closely with Etihad Airways.”

In recent months, Etihad Cargo has continued to add depth to the carrier’s Asian network, launching a fourth Chinese gateway to its network, offering a weekly freighter service to the Hubei Province of China. The carrier’s inaugural flight to Ezhou Huahu Airport arrived on 18 August, making Etihad Cargo the first international carrier to operate flights to China’s first professional cargo airport. The carrier also offers eight weekly freighter flights to Shanghai.

Complementing Etihad Cargo’s expanding freighter network, the carrier offers additional belly capacity for China via ten passenger flights per week to Beijing, Guangzhou and Shanghai. Via the carrier’s growing road feeder services network in China, Etihad Cargo also offers customers and partners access to 25 domestic mainland Chinese destinations, providing seamless connectivity across the Chinese market.

Etihad Cargo continuously evaluates its global network and remains committed to increasing frequencies and introducing new destinations to ensure the carrier can fully meet capacity requirements and remain the air cargo partner of choice.

Ministry of Human Resources and Emiratisation

Aramtec selects Zebra Technologies to digitally transform its warehouse operations

Leading Middle Eastern food service distributor to leverage Zebra’s mobile solution to hit 14% productivity target

Zebra Technologies Corporation

(NASDAQ: ZBRA), a leading digital solution provider enabling businesses to intelligently connect data, assets, and people, today announced that Aramtec, a prominent United Arab Emirates (UAE) premium food service distributor, will deploy a Zebra warehouse automation solution to further digitise and enhance its warehouse operations. Through this transformation, Aramtec aims to increase productivity by around 14%.

Since its inception in 1979, Aramtec has operated as a family-run business, supplying premium quality food to the UAE’s hospitality industry. The company imports and distributes worldwide selected food brands and products across the region including Qatar. With over 2,500 stock keeping units (SKUs), it delivers to more than 3,500 customers including luxury hotels, restaurants, airlines and other commercial food and beverage outlets.

Aramtec is modernising its entire warehouse operations through digital transformation so it can respond faster to growing customer reach and changes in its supply chain environment.

“By deploying a more suitable and modern technology solution, we’re able to give our front-line workers the tools they need to meet business goals and customer expectations,” said Edgard Chalhoub, Managing Director, Aramtec. “This Zebra solution will help us improve our end-to-end processes, achieve greater visibility and management of our complex supply chain and distribution network operations, and allow us to

increase overall productivity.”

Aramtec is collaborating with Zebra partner Al Tarmez Digit System Technology LLC who recommended Zebra’s warehouse automation mobile solution including Zebra’s MC3300X mobile computers, MC9300 ultrarugged mobile touch computers, and ZQ320 Plus Series mobile printers with Certified Zebra supplies. Aramtec will also benefit from Zebra’s OneCare support services which includes technical support, comprehensive repair coverage, advance replacement and the latest software releases. Al Tarmez is supporting the implementation which kicked off in June 2023.

Aramtec is deploying the Zebra solution in its Dubai and Abu Dhabi distribution centres for inbound and outbound

material management applications, and the printers are being used for shelf edge labeling in the warehouse and price tags. This Zebra solution offers a better value proposition overall, as the same devices can be used in different warehouse areas. After-sales support will help enable a smooth transition and integration into the customer’s existing warehouse management system (WMS) SAP solution.

“We’re delighted to support Aramtec’s warehouse transformation and business growth,” said Hozefa Saylawala, Regional Director, Middle East, Zebra Technologies. “Aramtec will be wellequipped to respond quickly to customer needs and changes in the supply chain environment, as well as enhancing the services it delivers to existing and new customers.”

Edgard Chalhoub, Managing Director, Aramtec and Hozefa Saylawala, Regional Director, Middle East, Zebra Technologies, during the agreement signing ceremony

Imad Kazzaz

Imad Kazzaz shares his experiences of leaving Lebanon, finding his way to the UAE, and to a role as Regional Director Middle East Ubidy

Tell us about you, your experience, and your time in the Middle East.

I come from Lebanon, a small Mediterranean country, home to Gebran Khalil Gebran, the cedars and Byblos, one of the oldest cities in the world. I obtained my Master of Science in software engineering from France. Subsequently, I moved back to Lebanon where I worked over two decades in the field of business development in the enterprise software industry. I decided to move to the UAE in 2015 to start an exciting new journey that has been a rewarding learning experience and a great networking opportunity with like-minded professionals in the field of technology. It is no secret that the UAE is a vibrant and dynamic business environment, providing access to international markets and empowering innovative start-ups and ideas. Also, and from a social and personal standpoint, my stay in the UAE has been a really great opportunity to learn about different cultures and broadening my personal experience, especially since the UAE is home to around 200 nationalities.

You describe your company as an “agency recruitment marketplace”. In simple terms, what does your company do? And what distinguishes it from recruitment agencies?

Let me start by clarifying a misconception about the role of Ubidy; we are not a recruitment agency, and we are not a job board platform.

Ubidy is an online platform, in other words a ‘digital B2B global marketplace’, where we instantly connect employers to hundreds of the world’s best niche

Imad Kazzaz, Regional Director Mena , Ubidy

and specialist agencies in all corners of the globe. We help employers by providing them with on-demand, at-will access to work with a global panel of pre-qualified and expert recruiting agencies, and we are providing them with connections that they typically wouldn’t have.

What innovative ways are you adopting in helping employers deal with contemporary challenges in their talent acquisition & recruitment processes?

Many employers today are still working with a limited number of agencies in traditional ways, which are time consuming and manual labour intensive. We have taken this process to a whole new level by introducing a platform providing advanced automation capabilities as well as centralised communication with all stakeholders, allowing for real-time visibility into the process.

Employers uniquely can instantly access hundreds of qualified and specialised agencies, tapping into a vast pool of both active and passive candidates that might not have been available otherwise. By the way, around 70% of talents are passive candidates

who are not actively seeking new opportunities.

Another important point I want to mention here, is that in today’s fast-paced business environment, timely recruitment is essential for organisations to meet tight deadlines and budgets while ensuring that the right talent is in place to drive success. The talent acquisition team needs a system, such as Ubidy, to help our customer partners stay agile and competitive in this fast-paced world of business.

Why did Ubidy decide to expand its scope to cover the Middle East region?

The Middle East is heading towards unprecedented growth in terms of projects and expansions related to many sectors such as renewable energy, smart cities, transportation, etc. Such large-scale projects would require top talents. Our significance lies in facilitating the connection between industries and their corresponding recruitment agencies worldwide. Operating internationally enables us to promptly provide access to talents from all domains sought-after by the industry

Employers uniquely can instantly access hundreds of qualified and specialised agencies, tapping into a vast pool of both active and passive candidates that might not have been available otherwise.

Unemployment Insurance and Emiratisation Law a Landmark Step to Boost Business in UAE

Unemployment Insurance is a safety net and raising Emiratisation unravels new horizons for national talents and competencies.

Anew law designed to raise Emiratisation levels and the introduction of Unemployment Insurance is a landmark step in boosting the business environment in the UAE, and aimed at enabling national talents and competencies, strengthening partnership with the private sector, increasing the attractiveness of the UAE labour market and its ability to attract local and international talent by way of incentives and safety nets that support healthy and sustainable economic growth.

The new law on unemployment insurance, and the decision to raise current Emiratisation levels by 2% annually for skilled jobs in private sector establishments with 50 or more employees, and to achieve an increase in the overall rate of Emiratisation of 10% by 2026.

His Excellency Dr. Al Awar also indicated that the priorities of the government focus on economic development and empowerment of human capital to reach the goal of “building the best and most dynamic economy in the world”, which mandates integrated solutions aligned with the needs and aspirations of the individuals and society alike, besides enhancing and supporting local resources, ensuring the flexibility of the economy, and consolidating the UAE’s reputation as a hub for talent, companies and investments.

Advantages for companies

His Excellency Dr. Al Awar said that

the decision to raise the Emiratisation rate annually in the private sector companies offers unprecedented advantages, including reduction of the Ministry of Human Resources and Emiratisation fees by up to about 80% for private companies that make qualitative achievements in hiring and training Emiratis in collaboration with “Nafis”.

Accelerate the integration of national talents

The media briefing also highlighted the opportunities provided by the Cabinet’s decision to raise the current Emiratisation rate by 2% annually for skilled jobs in private sector

establishments with 50 employees or more, as part of the amendments to some provisions of the Cabinet Resolution on the initiatives and programs to increase the competitiveness of Emirati human resources “Nafis”, which opens new horizons for national qualified and skilled talents in private sector companies and growing a flexible workforce.

His Excellency indicated that the resolution will empower the private sector as well, while achieving the goals of Nafis program. He reiterated that the leadership has allocated around AED24 billion to employ 75,000 citizens in the private sector in the next five years.

Protection umbrella

The media briefing also highlighted the Cabinet’s adoption of a federal law on the unemployment insurance scheme through insurance packages, which aims to ensure the availability of income for the workers during their unemployment until alternative job opportunities are made available.

His Excellency said that the UAE aims to be a leader at all levels, and hence it proudly adopts this innovative scheme of unemployment insurance, which enhances the competitiveness of the UAE labour market and its attractiveness to global talents through solutions that include all private and public sector workers.

A pivotal role

His Excellency indicated that the Ministry of Human Resources and Emiratisation will play a pivotal role in this scheme, based on its mission to protect labour rights and improve the business environment.

Dr. Al Awar concluded by emphasizing that the new resolutions, whether the unemployment insurance scheme or increasing Emiratisation rates, support the strategic economic security of the UAE in the medium and long term through enhancing the UAE’s ability to attract talents and skills from around the world.

His Excellency Dr. Abdulrahman Al Awar, Minister of Human Resources and Emiratisation

We are reducing our environmental footprint

Considering the continued growth of the aviation industry and related carbon emissions, our sector needs to become more sustainable. So as KLM, we are taking responsibility for making our business more sustainable. How? By flying on sustainable fuel, with more efficient routing, with cleaner planes and by recycling our waste.

Learn more about our journey to more sustainable aviation on klm.com/flyresponsibly

Customers First at Ministry of Human Resources UAE

MoHRE records 18.6 million communication processes with its customers in H1 2023

The Ministry of Human Resources and Emiratisation (MoHRE) has made around 18.6 million communication processes with its customers in the first half of 2023 via its communication system Tawasul.

The Ministry offers customers and members of the community various channels of communication to submit complaints, inquire about procedures for submitting transactions and requests, receive feedback and suggestions, request technical support, and report violations.

Tawasul channels include MoHRE’s call centre 600590000, WhatsApp service, live chat via website, smart app, and email at ask@mohre. gov.ae, in addition to the Tawasul

platform at the MoHRE offices, which allows for video and audio calls with customers.

The Ministry also offers the ‘Customers’ Voice’ system, the ‘Customer First’ forum, along with its social media accounts @mohre_ uae, interactive voice response system, awareness notifications for employers and employees, and monthly account statement service for establishments.

Hussain Al Alili, Director of the Customer Relations Department at the Ministry, said: “The Tawasul system has proven its efficiency in providing outstanding services to customers, especially in terms of rapid response to inquiries and finding solutions to the challenges they face, relying on innovative

practices that are flexible and proactive.”

He added: “The Ministry is committed to providing customers with the highest-quality services, in line with the requirements of the Global Star Rating System for Services, and to pursuing excellence in communicating with customers, fulfilling their needs, and saving their time and effort.

“MoHRE continuously trains its team members to rapidly and seamlessly process the submitted data and carry out their responsibilities accurately and effectively.”

According to figures from the Ministry, the call centre handled over 1.337 million calls in the first half of the year. The centre offers services in three primary languages: Arabic, English, and Urdu, as well as 17 additional languages. The system responds to consumer inquiries and requests 24 hours a day, seven days a week. Its services meet the demands of establishments, employees, domestic workers, employers who hire domestic workers, as well as national cadres.

More than 269,500 communication processes were done via MoHRE’s digital channels – including email, social media, and online chat. The Customers’ Voice system received 224,000 suggestions and feedback, and the Ministry has sent more than 12 million notifications via email and text messages to raise awareness on relevant legislations, decisions and services it provides, as well as approximately two million monthly account statements.

The Ministry’s WhatsApp service recorded over 178,000 chats, while the ‘Customer First’ forum organised 21 meetings attended by over 3,570 business owners and sent out nearly two million invitations.

Ministry of Human Resources and Emiratisation

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Managing Challenges

Egypt has ramped up efforts to fight inflation including devaluing the pound amid investment inflows from the country’s GCC allies, and with efforts to tempt back investors plus busy M&A activity in the banking sector, the country is working at managing its challenges.

Egypt is among emerging economies that remain exposed to the war in Ukraine as higher energy and commodity prices have pushed up inflation and slowed economic growth. The International Monetary Fund (IMF) said that the war in Ukraine has crystallised pre-existing vulnerabilities, triggering capital outflows and reducing the central bank’s foreign reserves.

The soaring inflation and elevated volatility in global financial markets are contributing to the country’s worst foreign exchange crunch since a dollar shortage five years ago. Egypt’s year-onyear headline inflation accelerated to a record 35.7% in June from 32.7% in May.

Despite the impact of the RussoUkrainian war and prolonged economic strains, the IMF said the government in Cairo is implementing structural reforms to preserve macroeconomic stability, restore buffers and pave the way for sustainable long-term growth.

However, the fund urged the government to take further steps to foster private-sector development, improve governance and reduce the role of the state as part of a 46-month $3 billion financial support package for Egypt that is aimed at bolstering an economy battered by fallout from the war in Ukraine.

“Decisive progress on deeper fiscal and structural reforms is needed to boost the economy’s competitiveness, improve

governance and strengthen its resilience against shocks,” the IMF executive board said in July.

Egypt’s fiscal reforms have been critical in stabilising the economy and the value of the pound since 2016, until the central bank allowed the currency to weaken as much as 36% against the dollar in 2022. However, the devaluation of the pound is not expected to significantly weaken banks’ capital ratios and Fitch Ratings sees Egypt’s current account deficit declining to 3.5% of GDP in the fiscal year 2022/23 from 4.6% in fiscal 2021/22.

Authorities have ramped up efforts to fight inflation, including devaluing the pound amid investment inflows from the country’s GCC allies as part of Egypt’s broader strategies to hedge the economy against the worst of the problems. Egypt unveiled plans to divest government stakes in 32 companies including Telecom Egypt, United Bank, Banque du Caire and Arab African International Bank earlier in February

Dependable friends

Egypt, one of the world’s largest wheat importers, has raced to secure financial support from its international and regional partners to prop up an economy struggling with higher food and fuel import bills.

The IMF approved a $3 billion loan for Egypt last December that will offer some relief to the economy for almost four years, with the agreement expected to draw in an additional $14 billion.

The deal, known as an extended fund facility arrangement, gave the government immediate access to about $347 million, which the Washington-based fund said will help the Arab world’s most populous nation bolster its balance of payments and budget.

A study by Deutsche Bank revealed that Egypt requires $28 billion through to the end of 2023 to refinance its maturing debt, pay interest and fund its currentaccount deficit with an additional $20 billion required the following year – which

will likely see the government tap debt markets for support.

According to the IMF, “The rapidly changing global environment and spillovers related to the war in Ukraine are posing significant challenges for countries around the world, including Egypt.”

The IMF loan, together with billions of dollars in cash inflows and investments from Egypt’s Gulf allies, are band-aids designed to keep the country afloat. The World Bank also cautioned that the North African state’s overall macroeconomic environment during FY2022/23 will be undermined by the negative spillovers from global economic conditions before it starts improving over the medium term.

The bank approved a new $7 billion partnership agreement with Egypt for FY2023/27 in March to support inclusive and sustainable growth.

Earlier in November 2022, Qatar’s wealth fund, Qatar Investment Authority, deposited $1 billion in the central bank joining the UAE and Saudi Arabia—who too have pledged over $20 billion to bolster Egypt’s economy.

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), launched a company in August to invest in promising sectors throughout Egypt. The wealth fund said the Saudi Egyptian Investment Company (SEIC) will invest in the country’s “promising sectors” from infrastructure and real estate to pharmaceuticals. The kingdom also deposited $5 billion in the Central Bank of Egypt (CBE) in the first quarter of this year.

Abu Dhabi’s wealth fund ADQ acquired stakes in several publicly listed companies in Egypt last August, building on its long-term commitment to invest in the country’s economic growth through its $20 billion joint strategic investment platform. ADQ acquired stakes in five publicly traded companies including Commercial International Bank, Fawry and Misr Fertilisers Production Company.

Egypt’s wealth fund, which was founded in 2018, is part of the country’s broader structural reforms that are aimed at bolstering private investment. The fund

EGYPT’S OVERALL MACROECONOMIC ENVIRONMENT DURING FY2022/23 WILL BE UNDERMINED BY THE NEGATIVE SPILLOVERS FROM GLOBAL ECONOMIC CONDITIONS BEFORE IT STARTS IMPROVING OVER THE MEDIUM TERM

is modelled after those in the GCC and is aimed at generating additional wealth from under-utilised state assets.

PwC said the fund is aimed at helping Egypt better utilise its assets and attract foreign investments that have, so far, been overshadowed by an infusion of overseas cash into the local debt market. With around $12 billion in assets under management, The Sovereign Fund of Egypt ‘is partnering with the private sector to attract domestic and foreign investments as well as build on economic reforms that began in 2016 with the flotation of the currency. It was appointed by the country’s Ministry of Defence to sell part of a portfolio of companies in

what would be the country’s first spin-off of companies owned by the military.

Earlier in February, Egypt unveiled plans to sell stakes in as many as 32 companies including Banque du Caire, United Bank of Egypt and Arab African International Bank by the end of March 2024 as the government seeks to raise as much as $6 billion by selling stakes in state-owned businesses.

Time for action

The support package from the IMF will introduce wide-sweeping economic reforms, including a “durable shift to a flexible exchange rate regime” and a “monetary policy aimed at gradually reducing inflation. ″ It also envisages structural changes to the Egyptian economy to rebalance “the playing field” between the state and private sector.

Under the leadership of President Abdel Fattah Al-Sisi, Egypt is accelerating infrastructure development that includes a rapid development of the road network and an expansion of the Suez Canal. The Egyptian government moved to the New Administrative Capital, a new city that is being built 45 km east of Cairo, in January.

The new city, which has been six years in the making at an estimated cost of $59 billion, is the grandest in a slew of megaprojects being built to reshape Egypt and will eventually house 6.5 million people to ease overcrowding in central Cairo.

Egyptian lawmakers approved the North African country’s $97.41 billion (EGP 3 trillion) for the 2023/24 fiscal year earlier in June. The government allotted

– The World Bank

DECISIVE PROGRESS ON DEEPER FISCAL AND STRUCTURAL REFORMS IS NEEDED TO BOOST THE ECONOMY’S COMPETITIVENESS, IMPROVE GOVERNANCE AND STRENGTHEN ITS RESILIENCE AGAINST SHOCKS”

– The International Monetary Fund

EGP 127.7 billion towards the food subsidy programme for the fiscal year that began on July 1, up from EGP 90 billion a year prior.

The finance ministry is forecasting a budget deficit of EGP 824.4 billion, up from an estimated EGP 723 billion in 2022/23 and EGP 486.5 billion in 2021/22.

Finance Minister Mohamed Maait, in an address to an economic forum last October, said that Egypt aims to cut the public budget deficit to only 4%; a figure that has not been achieved for 42 years.

Fitch Ratings slashed Egypt’s debt rating in May 2023 to ‘B’ from ‘B+’, the first downgrade in a decade after a series of currency devaluations and lack of significant reforms sent the North African nation’s economy reeling.

“The revision of the outlook to negative reflects the deterioration in Egypt’s external liquidity position and reduced prospects for bond market access, leaving the country vulnerable to adverse global conditions at a time of high current account deficits and external debt maturities,” said Fitch Ratings.

Data from the central bank showed that Egypt’s net foreign reserves rose for the tenth straight month to $34.8 billion in June.

Egypt, which left its interest rates unchanged in May, unveiled plans to move to a more flexible currency regime as part of reforms that helped the government clinch the IMF deal. The central bank has devalued the pound three times since early 2022, saying the flexible exchangerate policy leaves the forces of supply and demand to determine the value of the currency against other currencies.

Though a series of economic measures that were unveiled by the central bank last year are expected to result in some short-term economic pain, they will go a long way to restoring the country’s macroeconomic stability.

Egypt, a major food importer, has struggled to deal with record grain prices fuelled by the conflict in Europe. The government secured $2 billion in funding from the United Nations’ International

MATURING DEBT, PAY INTEREST AND FUND ITS CURRENT-ACCOUNT DEFICIT WITH AN ADDITIONAL $20 BILLION REQUIRED THE FOLLOWING YEAR—WHICH WILL LIKELY SEE THE GOVERNMENT TAP DEBT MARKETS FOR SUPPORT

– Deutsche Bank

Fund for Agricultural Development and partner organisations to boost food security in the country and drive investment in food, water and energy.

The support package from the IMF includes a comprehensive policy package to preserve macroeconomic stability, restore buffers and seeks to enhance inclusive and private sector growth.

Banking sector

Egypt’s domestic banking sector remains very liquid, with high deposit growth off a low base of financial inclusion. However, Fitch Ratings projected pressures on banks’ core capital ratios last November mainly arising from the depreciation of the pound and fair value losses on government securities as yields are rising.

The rating agency downgraded the National Bank of Egypt, Banque Misr, Banque du Caire and Commercial International Bank to negative from stable citing a deterioration in the country’s external liquidity position and reduced prospects for bond market access.

There has been a wave of dealmaking in Egypt’s banking sector and the operating environment is expected to become highly competitive after investors pulled billions of dollars out of the country’s treasury markets, forcing the central bank to devalue the currency.

FABMISR, First Abu Dhabi Bank’s (FAB) Egyptian unit, completed integrating its banking services with Bank Audi Egypt in

November. This follows FAB’s acquisition of 100% of the share capital of the Egyptian subsidiary of Lebanon’s Bank Audi in 2021.

EFG Holding completed its takeover of state-owned aiBANK in November 2021 – the country’s first privatisation since 2006 when it sold a majority stake in the Bank of Alexandria.

Bahrain’s Arab Banking Corporation (Bank ABC) also completed its acquisition of BLOM Bank Egypt in August 2021 for $425 million. The deal more than doubled Bank ABC’s branches in Egypt while diversifying the lender’s service offerings for wholesale, retail as well as SME and corporate customers.

The scale achieved from these mergers leads to improved liquidity management, enhanced profitability and reduced inefficiencies with better cost-toincome ratios.

Egyptian authorities are leaving no stone unturned in their bid to boost the country’s coffers and lure foreign investors who fled during the 2011 uprising.

The country undertook exchange rate, monetary and fiscal measures to protect the economy from adverse global developments including soaring prices and tightening financial conditions. However, fiscal and structural reforms to enhance private investment, exports and foreign investment remain crucial for the economy’s resilience and competitiveness.

EGYPT REQUIRES $28 BILLION THROUGH END-2023 TO REFINANCE ITS

How Green Projects are Fuelling the Region’s Shift to Sustainability and Economic Diversification

As oil-rich countries in the Middle East and North Africa seek to reduce their dependence on fossil fuels and diversify their respective local economies, the region is on track to becoming one of the world’s biggest markets for green and sustainable finance

While the global sales of green and sustainable bonds plunged by 14 percent in 2022, the Europe, Middle East and Africa (EMEA) market remained resilient and saw staggering growth. In fact, the latest statistics show sustainable finance in the MENA region surged to USD 24.55 billion in 2021, representing a 532 percent year-on-year increase from USD 3.8 billion in 2020.

Complementing this phenomenal growth is the GCC green and sustainable bonds and sukuk market, which reached a value of USD 8.5 billion in 2022, marking a record-breaking 1,304 percent growth.

The UAE and KSA are leading the region’s race in sustainable finance

At the forefront of the region’s quest for enhanced sustainability is the UAE, which is set to host the 2023 United Nations Climate Change Conference, otherwise known as the 28th meeting of the Conference of the Parties (COP 28).

The UAE’s push for renewable projects and green policies has brought significant positive impact to its clean energy and sustainability sectors while advancing its environmental, social and governance (ESG) goals.

In 2021, it unveiled its Net Zero 2050 Charter, which highlights its commitment to cut down its greenhouse gas emissions and reach net zero – the state wherein the number of emissions produced balances out the emissions removed – by 2050.

As part of this strategic initiative, which established the UAE as the first country in MENA to commit to achieving net-zero

George Hojeige Group CEO, Virtugroup

emissions, the UAE Government has revealed its plans to invest AED 600 billion (USD 163.3 billion) in clean and renewable energy sources in the next 30 years.

Furthermore, the UAE detailed in its Energy Strategy 2050 that it is eyeing to supply 44 percent of its energy from clean sources by 2050, generate 50,000 new green jobs by 2030, and invest between AED 150 billion to AED 200 billion (USD 40.8 billion to USD 54.4 billion) to meet the country’s increasing energy demand.

With the government leading the move towards sustainability and encouraging green finance projects, UAE-based companies and financial institutions have followed suit. In June this year, the First Abu Dhabi Bank issued USD 600 million worth of green bonds, while the Commercial Bank of Dubai successfully raised USD 500 million through its inaugural green bonds.

A month prior to these announcements, real estate and retail giant Majid Al Futtaim revealed that it generated USD 500 million via green bonds, four years after it first launched its green sukuk, an Islamic financial instrument that is equivalent to a conventional bond and is Shariah-compliant. Majid Al Futtaim also previously announced that it raised USD 1.25 billion through a Sustainability LinkedLoan in September 2022.

Considering these landmark sustainable finance projects in the UAE, the outlook for the country’s domestic market for green sukuk, bonds and loans indicates an upward trajectory and strong, consistent growth, building further on the sector’s remarkable performance in the past years where it reached a total value of USD 17 billion.

In addition to expanding its local green energy infrastructure and capacity, the UAE has extended its sustainability strategy internationally, having invested approximately USD 16.8 billion in renewable energy ventures across 70 countries, particularly in developing nations. It has also extended USD 400 million in loans for clean energy projects.

However, the UAE is not the only nation in the region making significant leaps

in sustainable finance. Its neighbour, the Kingdom of Saudi Arabia, has been actively laying the groundwork for a robust sustainable finance framework as it also spurs non-oil GDP growth.

The Kingdom, which aims to achieve net-zero emissions by 2060, has stated that its Public Investment Fund (PIF), one of the world’s largest sovereign wealth funds, has raised USD 5.5 billion in February this year by selling a green bond. The deal follows the success of PIF’s debut USD 3 billion green bond issuance in October 2022, which the Kingdom will reportedly use to finance or refinance projects in the areas of renewable energy, energy efficiency, sustainable architecture and green transport.

Aramco, the biggest oil producer in the world, to build a carbon capture and storage (CSS) hub.

The region could unlock USD 2 trillion growth through green finance, study says

According to a report by Strategy&, a global strategy consulting business and part of the PricewaterhouseCoopers network, “developing the right structure and mechanisms for green finance” can help the GCC region unlock USD 2 trillion in economic growth and generate more than one million jobs by 2030. Establishing a sustainable finance framework will also enable the region to accelerate its economic diversification and job creation,

Following the Kingdom’s drive to boost sustainable finance, Riyadh-based Al Rajhi Bank raised USD 1 billion in sustainable Islamic bonds in March. One of the world’s largest Islamic banks, Al Rajhi Bank has committed to contributing to sustainable development goals related to developing and delivering affordable and clean energy, clean water and sanitation, and sustainable cities and communities.

Underlining the Kingdom’s resolute commitment to realising its sustainability goals, it unveiled 13 new renewable energy projects with a capacity of 11.3 gigawatts last year. The projects, which are expected to drastically reduce the country’s carbon emissions by around 20 million tons per year, align with Saudi Arabia’s target of generating 50 percent of its power from renewable sources by 2030.

Additionally, its Ministry of Energy is collaborating with state-owned Saudi

thus making it an even more attractive hub for foreign direct investment (FDI).

Echoing a similar sentiment, the World Bank’s International Finance Corporation has forecast that the Paris Climate Accords, a legally binding international treaty on climate change adopted by 196 Parties at COP21, generated nearly USD 23 trillion of climate-smart investment opportunities in emerging markets from 2016 to 2030.

Taking a look at the milestone green finance projects, market trends and increasing ESG reporting in the region and globally, sustainable finance –complemented with strong governance and responsive green policies – will be key to successfully pivoting the region to having a more sustainable, diversified and long-term economic growth that is less vulnerable to fluctuations in the oil and gas market.

WITH THE GOVERNMENT LEADING THE MOVE TOWARDS SUSTAINABILITY AND ENCOURAGING GREEN FINANCE PROJECTS, UAE-BASED COMPANIES AND FINANCIAL INSTITUTIONS HAVE FOLLOWED SUIT

Real Estate Income in the UAE –how it is treated for corporate tax purposes

Real estate is a significant sector in the UAE but the new corporate tax law was initially silent on many aspects of the real estate businesses. A recent cabinet decision has clarified the taxation of revenue deriving from real estate for companies and individuals

Tax Treatment of the property held by a natural person

A natural person who owns property in the UAE may be subject to taxation under the provisions of Cabinet Decision No. 49 of 2023 if the activity is related to any licensed commercial activity. For example, one of the activities that are subject to license and might apply to privately owned property for

investment purposes is “Leasing and Management of Self-Owned Property” (Activity code no. 6820011).

According to this decision, businesses or business activity of a natural person, be it a resident or a non-resident, are subject to corporate tax if the turnover derived from such activities exceeds AED 1M within a calendar year.

On the contrary, if the activity of the natural person is an investment

Patryk Karczewski Partner, Head of Tax Practice, Amereller

activity that can be conducted without a commercial license that relates to (directly or indirectly) the sale, leasing, sub-leasing and renting of the real estate, then the income from such activity is non-taxable.

Each Emirate has its own laws in regard to real estate business. Hence, natural persons should closely monitor business

licensing laws in the Emirates where they hold their properties to properly assess tax implications on the income received from the real estate.

Tax Treatment of the property held by a company

For a company that owns real estate, there are three categories of property that are treated differently:

Non-commercial property

Commercial property inside a free zone

Commercial property outside a free zone (on the ‘mainland’)

For non-commercial properties, which includes real estate that is used nonexclusively as for a business or business activity and properties used as a place of residence or accommodation including hotels, motels, bed and breakfast establishments, serviced apartments and the like, the income attributable to such property will be subject to corporate tax at 9% as a rule.

For example, if your business holds residential property in a Free Zone (e.g., in DIFC) and you rent it out to your employee as part of his employment package (typically by withholding housing allowance in lieu of collecting rent), then such rental amount will be added to your taxable income and subject to the standard rate.

If the property is commercial and in the Free Zone, then the treatment will be different for owners that have the status of a Qualifying Free Zone Person (QFZP) to those that are treated as typical taxpayers.

Recently, the Ministry of Finance held a Public Consultation regarding the corporate tax regime for Free Zones, allowing businesses and other interested parties to submit their feedback on the promulgated corporate tax rules pertaining to Free Zones by the 9th of August 2023. Hence, it cannot be excluded that certain changes will be introduced to the legislation in the near future.

As described in the Federal DecreeLaw no. 47 of 2022, the Qualifying Free

Zone Person can apply a 0% corporate tax rate to the income that is described as the Qualifying Income. The entity must meet the following conditions to be able to apply for the QFZP status:

The taxpayer maintains adequate substance in the State.

The taxpayer derives the Qualifying Income as defined by the CD No. 55 of 2023 and the MD No. 139 of 2023. The taxpayer has not elected to be subject to corporate tax at a standard rate of 9%.

The taxpayer trades with Related Parties at an arm’s length principle

income sourced from such activity will be considered as the Qualifying Income and subject to corporate tax at 0%.

In any other case, i.e., transacting party is established outside the Free Zone, or the owner does not meet conditions for the QFZP (or made an election to be a regular taxpayer despite meeting conditions for the QFZP status), the income sourced from the commercial property located in the Free Zone will be subject to corporate tax at 9%.

The above is summarised in the below table for ease of reference:

and maintains the transfer pricing documentation.

The taxpayer prepares audited financial statements.

The taxpayer observes de minimis requirements.

If the owner has the status of the QFZP and the other transacting party is also established in the Free Zone, then

non-taxable**

Predominantly non-taxable**

Predominantly non-taxable**

non-taxable**

We at AMERELLER TAX can help you properly assess your obligations resulting from owning a property in the UAE. Taking into account the significant amounts that can be generated by real estate, it is important for the owners to understand and comply with the new tax regulations related to those assets.

Wealth management is facing myriad challenges from mounting operational costs to shrinking margins to growing customer demands. The rising costs side is partly driven by higher technology investments as players seek to offer the kind of seamless customer experience that’s commonplace in other sectors. These challenges mirror the turbulence in the sector, where high inflation and subsequent interest rates precipitated the emergency takeover of Credit Suisse by UBS Group.

“With pressures such as these occurring all along wealth management value chains, incumbents are looking for ways to accelerate digital transformations, bring more of what

Retooling Wealth Management

Meanwhile, the hyper-personalisation inherent in Chat Generic Parser and Transformer (ChatGPT) capabilities hold the potential to transform the financial services landscape radically, setting a new standard for customer experience and engagement.

their clients want to the table and bolster assets under management (AuM),” according to consultancy firm BCG.

Globally, the wealth management sector is evolving, and the GCC market is no exception. Wealth managers across the region have witnessed significant changes in recent years, driven in part by the rapid advancement of financial technologies and the emergence of automated investing platforms, robo-advisors).

Robo-advisors leverage computer algorithms and advanced software to build and manage investment portfolios. These online services make it easier for investors to start planning for their financial goals by providing investment advice at a low cost and with low or no-account minimums.

Wealth managers are being confronted with the task of balancing the traditional approach to risk management with the need to respond quickly to the massive changes in their operating environment. With the UAE poised to welcome 4,500 millionaires in 2023, the Middle East has emerged as a hotbed of wealth creation.

BCG said in 2022 UAE’s AuM grew more rapidly than in any other booking centre, as the country attracted assets not only from other Middle Eastern domiciles but also from Asia-Pacific, Africa and Europe. The country’s projected growth rate for financial wealth through 2027 is a healthy 10% annually.

The changes in demographics, technological innovations, environment and social behaviours have set the ground for rapid transformation in the Gulf region’s wealth management industry.

Wealth managers are being confronted with the task of balancing the traditional approach to risk management with the need to respond quickly to changes in their operating environment

GPT-ifying wealth management

The release of ChatGPT last November transformed the world with its extensive potential, giving rise to a plethora of opportunities across various sectors.

Generative AI is making remarkable progress in a wide array of industries, the financial services sector included, as demonstrated by the rollout of OpenAI’s GPT-4 and Google parent Alphabet’s Bard.

Recognising the power of this innovative technology, Bloomberg unveiled its version of GPT specifically designed for the financial services sector in April 2023. BloombergGPT can analyse company earnings reports and other financial statements to identify potential investment opportunities and risks.

The platform can also examine news articles and social media posts to provide real-time sentiment analysis, enabling wealth managers to react quickly to market trends and changing investor sentiment.

“The complexity and unique terminology of the financial domain necessitated a domain-specific model, and BloombergGPT represents the first step in developing and applying this technology to the financial industry,” said PwC.

The adoption of AI in the wealth management space will have a significant impact by providing more personalised, data-driven advice in areas such as portfolio optimisation, risk management, fraud detection, tax analysis and even relationship management.

BloombergGPT can automate many tasks that are currently performed by relationship managers, such as answering client questions and responding to customer service inquiries. PwC projected that the model has the potential to disrupt the wealth management industry - an industry based on human interaction that provides tailored advice in the context of specific wealth ambitions.

As ChatGPT’s capabilities expand, the traditional roles of wealth management and financial advisors may soon become obsolete, paving the way for a new era of customised and intelligent financial

solutions. Generative AI will allow affluent investors and HNWIs to access an incredible amount of information and ask questions in a language that the client is comfortable with and receive answers.

It remains to be seen whether the GCC financial services sector will adapt swiftly enough to harness the full potential of generative AI and beyond or if it will be left behind in the tech revolution.

Globally, fintech firms such as Stripe announced integrations of ChatGTP-4 while banks including Morgan Stanley Wealth and JPMorgan Chase have unveiled plans to internally adopt the technology.

Unpacking the digital premium Ultra-high-net-worth individuals (UHNWIs) and wealthy enterprising families

digital transformation, deploying artificial intelligence (AI), robotics and other financial technologies to enhance clients’ experience and trust.

The growing interest in digital advice models, including robo-advisor and hybrid advisor models, has also motivated wealth managers to expand into and innovate in this channel.

“Wealth managers should prioritise the integration of digital platforms and enhanced dashboard reporting to cater to the growing demand for digital services from UHNWIs, particularly among younger investors,” Oliver Ripplinger, Partner, Customer Transformation at PwC Switzerland said in a report.

Though traditional banks in the Gulf region are working on strengthening their

in the GCC are increasingly looking for institutions that can provide them with omnichannel access, integration of banking and wealth management services, and personalised offerings.

“One of the clearest disruptions triggered by the pandemic has been the sharp acceleration of digital adoption across consumer segments - including wealthier and older clients who were previously less digitally inclined with respect to financial advice,” said McKinsey.

Once a laggard in the adoption of technology, players in the wealth management industry are accelerating

wealth management businesses, they are facing growing competition from wealth technology platforms that are developing advanced business-to-business and business-to-consumer digital solutions.

Robo-advisory platforms in the region are quickly taking off, with several homegrown players having recently joined the onrush. The growth is revolutionising the wealth management industry with unprecedented force.

Kenneth Research said that the Middle East and Africa’s Robo-advisory market is projected to grow at an overall compound annual growth rate (CAGR) of 55.9% to

WITH PRESSURES SUCH AS THESE OCCURRING ALL ALONG WEALTH MANAGEMENT VALUE CHAINS, INCUMBENTS ARE LOOKING FOR WAYS TO ACCELERATE DIGITAL TRANSFORMATIONS , BRING MORE OF WHAT THEIR CLIENTS WANT TO THE TABLE AND BOLSTER ASSETS UNDER MANAGEMENT

– Boston Consulting Group

$3.8 billion by 2023. The UAE is the most significant revenue contributor to this market; thus, it is expected to drive the demand for digital advice across the Middle East.

The UAE and Saudi Arabia’s regulatory environments are driving the roboadvisory market growth in the Middle East and Africa region.

Commercial Bank of Dubai unveiled its robo-advisory platform CBD Investr in April 2021. The platform offers the bank’s clients access to globally diversified and personalised portfolios of stocks, bonds and other asset classes using low-cost exchange-traded funds.

CBD Investr is competing with Sarwa, StashAway and FinaMaze in the UAE. Sarwa offers curated portfolios, including conventional, halal and bitcoin offerings while FinaMaze’s AI-powered hybrid roboadvisory solution is used to identify the natural financial behaviour, risk appetite and goals of each investor.

By leveraging algorithms to offer financial advice for a fraction of the price of a real-life client advisor, the roboadvisory model is growing at a rapid pace, doubling AuM every few months.

Bahrain’s central bank issued directives on robo-advisory in 2019 as the small Gulf state affirmed its position as the region’s leading digital financial hub. Meanwhile, in Saudi Arabia, Derayah Smart offers retail investors access to a globally diversified and multiassets-based strategy managed by investment specialists.

The platform’s Shariah-compliant competitor, Haseed Invest, provides investment opportunities in globally diversified Islamic assets using ExchangeTraded Funds and mutual funds.

The regulatory push for open Application Programming Interfaces infrastructure across the region is expected to make it easier for wealth managers to deliver consolidated client views of multiple relationships.

The Abu Dhabi Global Market’s Financial Services Regulatory Authority issued its regulatory framework for digital

investment managers operating in the financial hub – a move that was hailed by Moody’s.

Within the GCC, dramatic changes in the wealth management landscape are driving wealth managers to re-evaluate and modernise their existing operating models. Buoying the growth of wealthtech is a new generation of digitally savvy investors.

Trends in the GCC region

The Gulf region, one of the world’s hotbeds of wealth creation, has seen an acceleration in trends relating to succession planning, alternate investment vehicles such as private equity, wealth preservation and an increased interest in sustainable investing.

Swiss wealth manager, Julius Baer, said that there is a substantial shift in client base as women and younger investors are having an increasingly larger role in the wealth manager’s discussions in the region.

Family wealth in the Middle East makes up a sizeable proportion of the region’s non-oil economy and in these challenging times, the need for adaptability and action to ensure that potential isn’t wasted, and the future is secured has never been paramount.

“As HNW business families in the Middle East are quite young (led by first/ second generation), succession planning will become increasingly important as these families grow,” said KPMG.

Though succession demand is low, Middle East HNW families are adopting

protocols to regulate succession, conflict resolution, business valuations and other key issues to preserve wealth and ensure a smooth transition between generations.

Abu Dhabi issued a new family business ownership governance law in January 2022 that prevents selling shares or dividends of family-owned businesses to individuals or companies outside the family. The law requires prior approval from family partners before a shareholder sells an equity stake to a non-family member.

Dubai Centre for Family Businesses opened its doors for business in June 2023 to provide technical and administrative support to ensure smooth generational succession. The Centre, which is under the umbrella of Dubai Chambers, aims to support effective succession planning and contribute to the growth and sustainability of family businesses in the emirate.

The country’s milestone in putting in place tools to govern wealth transfer has seen several global offices flocking to the UAE in the past two years including The Dalio Family Office, which opened its regional offices in Abu Dhabi.

Wealth management clients have access to an increasing range of novel asset classes. Investor demand and the opening of private markets by regulators are democratising private markets and other alternative assets including non-fungible tokens (NFTs) and cryptocurrencies. This growing complexity of the investment landscape presents unique challenges and opportunities for different client demographics.

THE COMPLEXITY AND UNIQUE TERMINOLOGY OF THE FINANCIAL DOMAIN NECESSITATED A DOMAIN-SPECIFIC MODEL, AND BLOOMBERGGPT REPRESENTS THE FIRST STEP IN DEVELOPING AND APPLYING THIS TECHNOLOGY TO THE FINANCIAL INDUSTRY

– PwC

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