By Andy Sambidge
Global research shows GCC region is more positive about growth plans after downturn.
Businesses in the Gulf have been hard hit by the economic downturn but are more optimistic than most about future growth plans, the new ICAEW Global Enterprise Survey has said.
Businesses across the world, and especially in the Gulf, are increasingly positive, the survey added.
It measured the impact of the downturn and looked at the growth plans of businesses in the Gulf, the UK, EU, Asia (Hong Kong, Malaysia and Singapore) and the US.
The survey found that Gulf businesses were the most positive in their growth expectations, with two-thirds planning annual turnover growth in excess of five percent, ahead of all other regions. Most Gulf businesses also regarded their domestic regulatory and taxation environment as business-friendly (87 percent), in line with those in Asia, but ahead of those in the US and, particularly, Europe.
However, the survey also showed that Gulf businesses were more likely than those in other regions to witness high short-term borrowing costs.
Amanda Line, ICAEW regional director for the Middle East, said: "Last year was a critical one for businesses across the world, but it is heartening to see that the Gulf still remains positive about business and growth prospects not just locally, but also globally.
"Over half of the Gulf businesses surveyed plan to expand the target countries they sell products to, and many plan acquisitions in other countries to enhance their market presence within the next five years.
"However, in order to maintain these levels of confidence, more has to be done to elevate financial reporting standards in the Middle East.
“Consistent and transparent financial reporting is essential to drive confidence and this requires well qualified and technically up-to-date professionals who have been trained within a rigorous and ethical framework."
Businesses in the GCC affected by the downturn anticipate that it will continue for another one to two years (47 percent) but 40 percent of them were expecting the end of its effects within a year, a little less optimistic than those in Asia (nearly 50 percent) but more optimistic than those in the EU and US (around 30 percent).
The survey also showed that businesses in the region saw corruption as the greatest barrier to international expansion and were also more likely than those in other regions to cite access to finance as a barrier to globalisation.
For tha last couple of weeks we are reading on this subject that the business leaders or decision makers in the Gulf are the most optimistic about their business prospects in 2010. Everybody is talking about their growth and expansion plans in 2010. BUT IS IT REALL ? OR JUST BLIND TALKS.. If it is real then where are the Jobs or New recruitments. Are they projecting business growth without people. As far as the new recruitments are concerned, it is still FREEZED as per the HR consultants. So are these optimistic projections are reall ? For any business to expand it needs Strategy, Finance and the right manpower. So if the businesses are so upbeat about the growth in 2010, why hiring is still freezed. Are the companies really looking to hire and source the right talent or just following the same old proccess of "Hire the ones who are available here on visit visa, whether they meet your requirements, or match the skill sets.. that doesnot matter.
It is a comedy of times with the mindset in the current recession driving the conclusion made by a renowned researcher E F Schumacher when he wrote his treatise on "Small Is Beautiful: Economics as if People Mattered (1989). " Everyhwhere, society acknowledges that there is a leverage for thinking big from being small. And this more so when the factors of production are in small manageable units. It is therefore not surprsing that todays solution and otimism comes from Small and Medium Enterprises (SME). "We see two clear stories being told by business owners. Many small businesses are seeing signs of improvement, yet other firms are still struggling to keep their enterprise afloat," said Susan Sobbott, president American Express OPEN. "For the first time since 2007, the majority of small businesses are optimistic about the near-term future. However, some firms are dipping into cash reserves and personal assets to stem the tide of declining sales." Among those businesses reporting growth opportunities for their firms, 44% say these opportunities come as a result of less competition. The ability to renegotiate equipment leases and supply contracts (13%) and lower real estate costs (12%) also contributed to these firms' growth mindset. Overall, when asked for the primary way they address cash flow issues, 32% of business owners said they use personal or private funds, up 9 percentage points from March. More than a third (35%) say the recession has caused them to tap personal assets, on-par with the March reading (37%). Let us wait for the optimism to produce tangible results in early 2010. i-FUN (Intelligent Friends in the University Netowrk)