KPMG targets Mideast and Asia to boost revenues

Dubai: KPMG, the US-headquartered audit, tax and advisory services provider, hopes to buck its earnings slowdown in the US and Europe with greater revenues from its operations in Asia, the Middle East and South America.

KPMG sees a marked escalation of its audit and advisory business in the Middle East and the emerging markets of China, India and Russia.

"We expect a very high figure [of growth rate], in the high twenties, for the region and a very low figure for the rest of the world because of the US slowdown. America and Western Europe are going nowhere this year. It is a world of two halves this year," said John Griffith-Jones, joint chairman of KPMG Europe.

Griffith-Jones told Gulf News that a large number of global merger and acquisition moves are originating from the Middle East, translating into a big demand for tax and advisory services.

He said though there is not much local tax, but since Middle East companies and government funds are buying more into other countries, tax has now become very important in the region.

"But [financial] advisory is the big area for us. Finding acquisitions, structuring them, working out synergies - there is a big piece of work around to make investments successful."

Griffith-Jones said KPMG's advisory business in the Middle East has doubled in the past two years, and hopes the same growth rate will be maintained in the next two years.

Undue criticism

Admitting that the global acquisition moves of Middle Eastern sovereign wealth funds (SWFs) have attracted undue criticism of their intentions from politicians and economists, he said countries such as the US and some others in Europe have been demanding more, if not absolute, transparency of their activities.

On whether the region's SWFs must adhere to those demands, Griffith-Jones said these funds have been in the Middle East for the past 25 years and nobody criticised them, but now suddenly the world is making a big noise.

That is not because what the Arab SWFs are doing, but because of the emergence of new wealth in Russia and China.

"Transparency is really not the issue. If a fund invests in a company to bring back technology to its country of origin, it is fully transparent. But that does not make anyone happy. The issue is to know how they [SWFs] are going to behave. Some countries want the investments to be passive. I don't think transparency is the finishing point on this."

Griffith-Jones does not see any problem with the standard of corporate accounting in the Middle East. The big companies here are maintaining their books according to international accounting principles because of their global interests and ambitions. There is some lacking among small companies.

"But that is true anywhere. The big companies are forced by the regulators, the smaller companies slowly catch up. That is perfectly all right."

He said the International Financial Reporting Standards (IFRS) and the American system (GAAP - Generally Accepted Accounting Principles) are coming very close together to form a single system, which is the best thing to do.