By Conrad Egbert
Saudi Arabia and Bahrain have been named in a report as the best places in the region to do business.
Saudi Arabia and Bahrain have been named in a report as the best places in the region to do business. Conrad Egbert puts it in a nut shell.
All six GCC states have appeared among the top 60 countries in the world to do business in, according to a report published jointly by the World Bank and the International Finance Corporation (IFC).
A fortnight ago global financial markets took a beating when US investment bank Lehman Brothers filed for bankruptcy protection and Merrill Lynch agreed to be taken over, so news that the GCC is a good place for business couldn't have been better timed.
But despite being the bearer of good news, the report didn't fail to raise a few eyebrows with its rankings.
In an overview of the report Doing Business 2009, it's been revealed that Saudi Arabia and Bahrain are leading the pack when it comes to the best places to do business. Qatar comes in third followed by the UAE in fourth place. Kuwait and Oman are last on the list.
According to the report, the economies have been ranked on their ease of doing business. The index averages the economy's percentile rankings on 10 topics, made up of a variety of indicators giving equal weight to each topic.
They include setting up business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. The data accumulated covers the period from June 2007 to June this year.
But after speaking to contractors and developers working in the region, Construction Week learnt that most have called the report "inaccurate." Can Saudi Arabia really be the easiest place to do business?
"The UAE is the easiest place to do business," said Haytham Al Tajir, chairman of a Dubai-based development firm, Al Tajir Real Estate.
"Nowhere else even comes close. We have property all over the Gulf and I have to say, the UAE is the fastest and quickest place to conduct business. I don't agree with the report."
Some GCC states faired better than the others under different topics.
To start a business based on the procedures, time and cost involved and minimum capital required, Qatar came out tops followed by Bahrain, Saudi Arabia, Oman, UAE and then Kuwait.
Bahrain topped the list for least procedures, time and cost required for acquiring construction permits, with Qatar and UAE following close behind. Saudi Arabia, Kuwait and Oman came in after, in that order.
But Belgian construction firm Six Construct general manager Philippe Dessoy who is currently working on projects in the UAE, Qatar and Oman expressed his doubts over the report and said that if any place was easy to work in, it would have to be the UAE.
"Acquiring construction permits anywhere in the region is difficult. In fact, it's a nightmare, so I wouldn't rate any place higher than the other," he said.
Saudi Arabia was named first with regards to having the least procedures, time and cost to register property followed in order by Bahrain, UAE, Oman, Qatar and Kuwait.
With recent scandals in the UAE involving some developers attempting to cancel already sold-out projects coupled with many high profile arrests on alleged charges of bribery and embezzlement, it comes as no surprise that the UAE was last on the list for best places for investor protection. Kuwait topped this list followed by Saudi Arabia, Bahrain, Oman and Qatar.
Kuwait came in as number one again for the least procedures, time and cost required to enforce contracts. Oman, Bahrain, Qatar, and UAE followed in that order.
Despite Saudi Arabia topping the list on the whole, it came in last in this category.
The ease of pulling out or closing shop again saw the UAE come in last with Bahrain topping the category. Qatar, Saudi Arabia, Oman and Kuwait followed.
But Dahlia Khalida from the IFC and World Bank and co-author of the report said the rankings reflect reforms that have been made by these countries.
"The report is not recommending any country over another as best to do business in. It is based on the speed and level of reforms that have been made in these countries and Saudi Arabia has reformed the most."
"The UAE may still be the best place to do business in, but when based on the levels of reforms in the country, it is not among the top."
And the UAE is not beyond the need for reforms. Construction permits is an area that could do with some attention along with investor protection and contract enforcement.
I work in recruitment and there are some fundamental problems with building any business in The Kingdom. Firstly, most people in the region do not want to go there. Secondly, obtaining visas for those who will go is highly troublesome.