International Business News Alert: Shifted sands - Australian business opportunities in the Middle East
Last month members of the Joint Standing Committee on Foreign Affairs and Trade met with the Ambassadorial Teams from the Gulf Cooperation Council (GCC) countries which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the U.A.E. This was with a view to, amongst other things, kick start the free trade negotiations that have been in suspense since 2009.
It is clear that the commercial stars are aligning for opportunities in GCC and the wider Middle Eastern and North African markets. Consider this: a proactive market of some 345 million people set to rise to 600 million by 2040, a significant increase in the consumer driven middle classes, a current GDP of US $1.6 trillion and geographically positioned within no more than 6 hours flight to over 100 capital cities. Add to the mix greater business transparency and a raft of liberalised market economies, and the attraction increases.
Whilst there is no doubt the Indian and Chinese markets have occupied our attention over the past three years, it is the GCC that may now offer just as much, if not greater potential for Australian industry, particularly when it comes to exports and investment.
The increase in realised opportunities in the area are, by any measure, astonishing. Since 2001 for example, trade between Australia and the GCC has increased fourfold from US $4 billion in 2001 to a projected US $16 billion by the end of the 2015/16 financial year. Some 150 regular flights leave Australia for the GCC each week and around 350 Australian companies are already ahead of the curve in being active in the region.
As Adjunct Professor at the University of Queensland Simon Harrison, points out:
“The increased liberalisation and transparency of doing business in the region has to be the main facilitators of this growth and going forward the trajectories are nothing but positive”.
The expansion of foreign ownership share allowances in the U.A.E from 25% to 49% and the proposed multi-asset platform being built into the Qatar exchange are just two very recent micro events that shouldn't be underestimated in terms of their impact. Qatar was upgraded from “frontier” to “merging market” status by Morgan Stanley Investment in 2013 and we are seeing this replicated across the region. Oman is also currently enjoying a programme of modernisation and the credit growth in its banking sector is regarded as both strong and steady.
Indeed the sheer scale of developments are more than compatible with what has been happening in India and China. It is expected for example that construction projects worth some US $103 billion are likely to be awarded during 2015 with projects in the building sector in 2014 being worth around US $67 billion completed and a further US $85 billion awarded.
TressCox Lawyers is currently assisting clients in navigating the markets in the GCC region. This is in terms of exports and upselling Australian expertise particularly in the areas of agribusiness and agriclusters as well as innovation and alternative energy. The eagerness of doing business with Australia is evident in the remarkable figures for trade since 2001, but also in the interpersonal relationships that are rapidly developing and paying dividends. There is no sign of a peak any time soon. Indeed most commentators expect this good news story will only get better over the next 5 years, especially if the Free Trade Agreement is eventually signed.
For more information about this News Alert or for a discussion about how to engage in the GCC, please do not hesitate to contact Philip Mitchell for an informal and no charge initial consultation.
Philip Mitchell, Partner