Though some Gulf Cooperation Council member states have fared well in international rankings, GCC still lags behind more competitive regions like Asia with regard to business environment, a specialized economic report showed Sunday.
The report, compiled by the Kuwait-China Investment Company, said that the GCC countries presented a strong business environment in the last few years according to the Economist Intelligence Unit (EIU) and the World Bank 2014 reports.
"This was mainly attributed to the GCC countries' wide fiscal surplus. These countries remain major global suppliers of oil products and, due to high energy product prices, their fiscal surplus continues to widen," reads the report.
"Furthermore, GCC countries are expected to maintain high positions for the period 2014 to 2018 as well. The key driver in the coming years will be the large infrastructure investments planned after Dubai and Qatar won their bids to host the World Expo in 2020 and the World Cup in 2022, respectively." For instance, the World Expo event is expected to attract 25 million people from abroad, and bring around USD 23 billion of investments in Dubai. However, some of the GCC countries such as Bahrain and Saudi Arabia did not fare well due to their internal political instability.
The Economist Intelligence Unit (EIU) recently published its annual "Business Environment Ranking" for 2014.
The EIU report is currently ranking Qatar in the 21st place out of 82 countries, among the top 25 of the world and the highest within GCC countries. Qatar is forecasted to remain in the same position for the period 2014-2018. United Arab Emirates comes in the 29th place, and the country is predicted to fall slightly to the 30th place in the next four years. Bahrain is in the 33rd place, and is estimated to lose a couple of spots to reach the 35th place.
"The Kuwaiti economy is at the bottom of the GCC in the 39th global position, although still in the top 50, and is expected to witness a notable fall to the 45th position. The ranking is led by Asian economies: Hong Kong and Singapore are the first and third top economies and Taiwan and Malaysia lead among emerging economies," noted the report.
The model used by the EIU is based on criteria covering political and macroeconomic environment, policies regarding foreign investment infrastructure and labor market.
Another report that measures economies' business environment is the "Doing Business" by the World Bank. In general, it presents a relatively similar outcome to the EIU's, though the rankings for the GCC vary. Asia occupies the top positions, with five of the top ten countries.
Singapore and Hong Kong lead the ranking, with Malaysia and Korea in positions 6 and 7. In terms of the GCC, the World Bank ranks the United Arab Emirates in the top 13 of the world, in the 23rd place out of 189 countries, followed by Saudi Arabia in the 26th place.
Then come Bahrain, Oman, Qatar in the 46th, 47th, and 48th positions respectively. Kuwait is again the lowest-ranked GCC country in the 104th place, in the percentile 55 of the world.
The quality of the electricity supply and the easiness to register new properties were some of the factors making the UAE the most attractive investment destination. In the case of Kuwait, even though investors are not required to pay taxes, the score was poor due to credit limitations and the difficulty to obtain construction approvals. The World Bank report focuses on measuring how easy it is to start up new businesses by looking at permits for construction, availability of electricity, credit and taxes.
Indeed, some Asian countries such as China, Japan and Vietnam are facing some geopolitical tensions. However, as a whole, Asia remains in a very competitive position in terms of policy environment. GCC countries are overall placed in intermediate positions, but they do benefit from a very solid financial stance which opens up the possibility of exploiting the complementarity of the strengths of these two regions.