Most of the GCC states need to streamline their policies to make them business-friendly. This much can be inferred from the recently released Doing Business 2014 report, produced by the World Bank and the International Finance Corporation and in its 11th edition,
The reviewed economies, numbering 189 and up by four compared with the earlier report, are ranked on results achieved in 10 areas. The variables relate to starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
The report provides quantitative comparisons on business regulations and protection of property rights with regards to small and medium enterprises, considered a key resource for new employment opportunities in many parts of the world.
This is increasingly becoming true in the GCC as a consequence of saturation in employment opportunities in public sector entities. For instance, 90 per cent of Kuwaiti nationals work for government departments and in state-owned entities.
Clearly, there is limit on local employment in the public sector. In fact, Kuwaiti officials have a daunting task of convincing new entrants to the job market to seek employment in SMEs within the private sector.
It is not wrong to link the poor ranking of Kuwait on the index, at 104th spot and undoubtedly the worst performer in the GCC, to public sector employment. The ranking reflects a drop plummeting of 22 notches over a single year.
Of the six nation grouping, only the UAE has succeeded in improving its performance, while Oman has managed to retain its ranking. The others suffered declines in their rankings on the doing business factors.
The UAE improved its position by four notches to be ranked 23rd. This progress coupled with the lower ranking of Saudi Arabia allows the UAE to assume regional leadership.
Saudi Arabia’s ranking has sustained setbacks in recent years, dropping from 10th in 2011 to 26 in the latest. Conversely, the UAE succeeded in strengthening its position by 11 notches in two years.
Certainly, the link between ease of doing business and the ability to attract foreign direct investments (FDI) cannot be overlooked. According to The World Investment Report 2013 issued by United Nations Conference on Trade and Development (Unctad), Saudi Arabia had some $12.1 billion (Dh44 billion) worth of FDI in 2012, down from $16.3 billion in 2011.
The UAE’s inflows increased steadily from $5.5 billion in 2010 to $7.7 billion in 2011 and still further to $9.6 billion in 2012, in part due to the fast-tracking of business opportunities in Dubai.
In fact, the UAE has demonstrated supremacy among GCC economies in the speed of initiating reforms.
The report rightly gives credit for reforms in three separate areas, namely the easy access to power supply connections; registering property via reduced transfer fees; and protecting investors by stipulating greater disclosure requirements for transactions by listed companies in their annual reports and filings with the stock exchange.
The UAE’s case demonstrates the ability of GCC countries in streamlining their international rankings in an ever competitive world, where it pays to excel.
