Conrad Egbert takes a look at the formation of a GCC Common Market, the advantages this will bring to the region, and the problems being faced in setting it up.
The six-member Gulf Cooperation Council (GCC) has ongoing construction projects valued at around US $2.5 trillion and this figure is expected to increase dramatically once the GCC common market kicks in.
Formed in 1981, the GCC includes Saudi Arabia, Qatar, Bahrain, Oman, Kuwait and the UAE.
The new move requires the GCC markets to realign themselves with each other through harmonising regulations and setting new legislation to encourage investment across the GCC.
Offering a legal insight into the workings of the common market, Paul Taylor, partner in UK law firm, HBJ Gateley Wareing, told Construction Week, that it could be the best thing yet for the GCC if plans are executed well.
"It's not dissimilar to how the European common market was set up a long time ago and the reason why this is so beneficial for the construction industry is because, inevitably, this will increase competition, which is a healthy step forward," said Taylor. "Competition always increases quality. It will also encourage investments across the GCC."
But then there is the question of how the introduction of the common market would be any different from the current scenario?
"At the moment, only the bigger corporates have been looking at investments outside of their own countries, but with the common market, even medium-size contractors will consider taking their business across the border," added Taylor.
All sorts of issues that used to be a hurdle are no longer there; cost issues, setting up businesses, getting over the right skills, getting the right staff - clearly they're at an advantage now. There is a common language and very similar cultures; it's so much different from a western company coming here and setting up in the middle of a Gulf state.
The GCC common market aims to create one market that offers equal opportunities for all GCC citizens, including the right to work in all government and private institutions in member states, buy and sell real estate, move freely between the countries, and receive education and health benefits.
And, according to Guru Iyer, senior quantity surveyor at international construction consultancy firm, DG Jones & Partners, the move will also help balance out the economy.
"Such a move also strengthens the region's combined economy by spreading risk and balancing out the demand and supply curve," he said. "In some countries the growth and demand is very high, so countries that are lagging behind would get more investments and countries that are burdened would be put at ease.
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