Dubai: Of all Gulf Cooperation Council (GCC) countries, only the UAE and Kuwait succeeded in improving their rankings in a key global indicator related to the ease of doing business.
The rankings were published in the Doing Business 2015 report which is brought out by the World Bank Group and which provides a ranking of 189 economies.
The report offers quantitative comparisons on business regulations and the protection of property rights with regards to small and medium enterprises (SME) within these economies. The SMEs are widely regarded as major sources of new employment opportunities and this region is no exception.
According to the Rethinking Arab Employment report by the World Economic Forum, published this month, unemployment is a root problem in three GCC states — Oman, Bahrain and Saudi Arabia and where jobless rates are 8.1, 7.4 and 5.6 per cent respectively.
The economies listed in the Doing Business 2015 report were ranked on 10 variables deemed essential for enticing and retaining businesses, how quickly they can be set up, issuing of construction permits, getting electricity connections, registering property, access to credit, protection for investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
With regards to the GCC, the UAE stands out for continuing the trend of enhancing its ranking, this time to 22nd globally. This is the best performance within the Middle East and North Africa, and a clear recognition of its achievement.
The country has made progress in areas such as easing property registration by opening new services centres on the one hand and streamlining access to credit on the other. This kind of progress comes on top of reforms such as applying and paying for utility services online, that have been appreciated in earlier reports,
There were other reforms with protecting investors such as stipulating greater disclosure requirements for related-party transactions in annual reports and stock exchange filings. The more recent enhancement dealt with protecting minority investors through regulations holding directors liable for matters involving conflict of interest.
The other GCC countries are ranked way below the UAE. Saudi Arabia, Qatar, Bahrain, Oman and Kuwait are ranked 49th, 50th, 53rd, 66th and 86th respectively. That Saudi Arabia and Qatar are separated by a single point ostensibly reflect relatively similar business practices.
The link between ease of doing business and ability to attract foreign direct investments cannot be overlooked. According to The World Investment Report 2014, issued by the World Conference on Trade and Development (Unctad), the UAE pulled in some $10.5 billion (Dh38.57 billion) in 2013, a remarkable rise of 9.2 per cent.
For its part, Saudi Arabia attracted some $9.3 billion in FDI, down by a 24 per cent. Saudi Arabia had almost $40 billion FDI in 2008.
Judged by rankings, most GCC states need to enhance their business practices by making them more investor-friendly. Regrettably, four GCC members saw their rankings drop in the 2015 report.
There is a need to streamlining laws governing foreign investments by making them easier and friendlier. Some GCC countries continue to place restrictions on foreign ownership in energy under different pretexts. Yet, global firms are the ones with the necessary know-how and technology for exploring alternative energy sources.
