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July 26, 2016
VAT in the GCC – How should companies prepare?
Preliminary details reveal that the United Arab Emirates (UAE) and Qatar will be the first states in the GCC to adopt the new tax regime in January 2018. But, all members of the GCC are anticipated to implement VAT by the close of 2018. It is notable that certain essential food items and socially-oriented sectors such as healthcare and education will be exempt from the VAT regime. The approval of the GCC VAT means that the countries and the business...
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July 13, 2016
Planned GCC remittance tax could cost members economies in the long run
Though the idea is enticing and could – assuming a flat-rate remittance tax of 10 per cent – add US$10 billion to the non-oil income of the GCC region on an aggregate basis, the introduction of such as tax has more downsides, in my opinion. Transfer of money by foreign workers to their home countries represents a significant financial outflow from GCC countries. The World Bank estimates that more than $100bn left the GCC last year in the form of...
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June 29, 2016
Brexit: Impact on GCC Investments in Britain
GCC Investors have flocked into British Real Estate Sovereign Wealth Funds (SWFs) & private investors from gulf, particularly Qatar, Kuwait, KSA and UAE, have purchased prolific properties in Britain, largely in London. Indeed, a part of London is referred to as ‘Qatar Quarter’ due to the sizeable investments made by Qataris. London-based Rokstone estate agent estimates that Qataris own property worth more than one billion pounds (USD 1.34mn) in Mayfair, one of London's richest areas. Quantum of Investments Total investments...
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June 27, 2016
Brexit’s multi-level impact on GCC
GCC markets remained relatively unscathed except for UAE markets; Dubai index lost 3.3% while Abu Dhabi lost 1.8%. Dubai being largely a service economy driven by trade & services, tourism and real estate witnessed a fall as British pound lost 7.2% in value against UAE Dirham. Investor’s feared the depreciation of pound against AED would affect real estate investments and tourist’s inflow from Britain. Among non-GCC investors in Dubai, after Indians nationals, British nationals had invested AED 10billion (USD 2.7bn)...
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May 30, 2016
Let us not miss the trees for the woods
Three questions predominate the narrative: Is the current fall in oil price cyclical or structural? When can we see a strong rebound? (2016 or 2017 or beyond) & Can GCC survive a long spell of low oil price? In fact, the second question is related to the first question. If the current fall in oil price is structural, then we cannot expect any strong rebound. So, may be implicitly we should pray that this is just a cyclical phenomenon. From...
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April 17, 2016
Saudi Arabia and its US dollar peg dilemma
Most GCC countries are pegged to the US dollar to avoid currency fluctuation and eliminate uncertainties in international transactions (Kuwait is pegged to a basket of currencies dominated by the US dollar). This comes at the expense of monetary policy flexibility. Stable domestic currency and a fixed exchange rate imply that traders do not have to face currency risks, and therefore will be more willing to invest and facilitate trade. Since oil is the chief commodity in the GCC, and...
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February 29, 2016
Top GCC Risks for 2016 & Beyond
Oil: When will this slide end? With the oil price hovering around $35 per barrel the question remains as to how much longer can OPEC continue with its current policy of pumping as much oil as it can in a quest to win more market share and drive out high cost producers. OPEC member countries produce around 37% of the global crude oil, and disagreements over production ceilings have already affected some of the members. Some of the big producers,...
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January 28, 2016
Kuwait Economic Themes & Investment Implications 2016
Acording to Marmore’s Kuwait economic themes report, Kuwait continues to be extremely reliant on oil for revenues. On an average, hydrocarbon revenues accounted for c.80% of overall revenues in the past five year period (2009-2014). While part of the oil revenue is saved as sovereign wealth fund, most is channelled to the local economy in the form of wages for public sector employees, large scale subsidies (energy, electricity and water), capital transfers and generous grants for its citizens. ...
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January 27, 2016
Qatar Economic Themes & Investment Implications 2016
With the second lowest fiscal breakeven oil price (USD 57.8 per barrel) and the presence of ample fiscal reserves and buffer (172 per cent of GDP), Qatar is expected to withstand the current environment of low oil prices better than its regional peers. According to Marmore’s Qatar Economic Themes report,the country plans to spend USD 200bn on infrastructure as part of its 2030 development plan and this has lured foreign contractors to what promised to be big profits, but project...
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January 26, 2016
UAE Top Economic and Investment Themes for 2016
According to Marmore’s UAE economic themes report, Hydrocarbon sector is expected to contribute positively to real growth in 2016 as the phased increase in oil production happens. UAE had earlier set a target to raise its production capacity by 30% in 2020. Non-hydrocarbon growth is expected to be moderate in 2016, amid the lower oil price environment, as government expenditures are reined in. Diversified & Competitive Economy United Arab Emirates (UAE) has been the forerunner in implementing reforms to strengthen...