ESG (Environmental, Social and Governance)
To become involved in projects in the GCC, multinationals must meet sustainability criteria or they won’t be considered. This is increasingly the primary deciding factor, ahead of top and bottom-line considerations.
On a very visible level, we can already see this in terms of corporate accommodation with significant interest for District 2020, the legacy development for Expo 2020 Dubai. Expect to see more of this; landlords, developers and whole jurisdictions will have to shift with the times very quickly if they want to retain and attract serious corporate tenants.
This sector will become the major driver of FDI throughout the Middle East in the coming years. The massive impacts of developing a large skilled local labour force, having full R&D functions in the region, and inward skills and technical transfers will all become major drivers of economic growth.
This is also a sector where the region can become a global leader given the size of the projects, the amount of capital to be deployed and staunch political commitment to change, particularly given COP26 net zero commitments.
Competitive FDI attraction policies
Competitive – even aggressive – FDI attraction policies emerged in the GCC in 2021. The rapid unveiling of new rules and policies has distilled what feels like decades worth of reforms into 12 months, and it’s probably not over yet.
The changes make the GCC more competitive in a global context and provide new and improved opportunities for companies already in the region to look at alternative structures and locations.
There are challenges with this, of course, particularly for the SME sector. The development of genuinely collaborative cross-border solutions, between countries or Free Zones, that recognise, welcome and endorse establishments from other regional jurisdictions would be truly exceptional.
OCO Global has partnered with District 2020, Expo Dubai’s human-centric smart city legacy project, for their global entrepreneur programme, Scale2Dubai. We, together with District 2020’s other international partners, will identify eligible start-ups and small businesses with a strong track record, and recommend them to the programme, giving them the opportunity to scale their business into Dubai and gain access to the Middle East market. Scale2Dubai will give these businesses on-the-ground support to establish themselves in the market, including working space, subsidised living, visas, business set up support, and more.
Free Trade Agreement with the UK?
Whether a Free Trade Agreement, or an alternative significant agreement between the UK and the GCC on foundational terms and issues, this could be in reached during 2022. Not only would this benefit both parties, but it would also signal the GCC’s return as a cohesive bloc after the challenges of recent years, something that would benefit all other trading partners and FTA aspirants too.
It’s impossible to overstate the importance of Expo 2020 Dubai and the FIFA World Cup 2022 for the UAE and Qatar, respectively. The economic impacts are expected to continue in the months and years ahead as international investors return to the region following these events.