Gulf

When Saudi Arabia abruptly amended its rules for imports from neighbouring Gulf states, executives at an UAE conglomerate were stunned into action. They ordered company trucks packed with everything from cardboard packaging to steel pallets to return to Dubai from the Saudi border, while officials urgently phoned clients in the kingdom to ask if they would accept the increased cost of tariffs of between 5 per cent and 15 per cent on products that for years had been shipped tariff-free.

“We were in an absolute panic,” says an executive at the company. “We had no idea what to do with the cargo.”

Cross-border trade was disrupted for a week in July before the company’s Saudi-based clients agreed to take the financial hit and move on. But it was a stark warning that the cosy relationship companies based in the United Arab Emirates have enjoyed with Saudi Arabia — the main market for many Gulf businesses — is being shaken up.

The smaller, nimbler UAE has for decades leveraged its proximity to Saudi Arabia and the more liberal lifestyle it offers foreign executives as it built the Gulf’s premier trade and finance hub. Many of the bankers, consultants, lawyers and manufacturers who serve Saudi Arabia, the Middle East’s largest economy and the Gulf’s biggest consumer market, happily set up shop in the UAE, travelling back and forth to the more conservative kingdom when needed.

But as Crown Prince Mohammed bin Salman, Saudi Arabia’s mercurial day-to-day leader, aggressively drives ambitious plans to modernise his nation, develop new industries and create jobs for the kingdom’s youthful population, the message from Riyadh is it will no longer be business as usual.

Instead, he has made it clear that if companies want to do business in his nation, particularly with the state — the main driver of economic activity — he wants them operating in the country; employing Saudis and boosting his aspirations for transforming the once sleepy kingdom into the region’s dominant economic hub.

Construction of the King Abdullah Financial District
Construction of the King Abdullah Financial District in Riyadh was part of efforts by the Saudis to both woo and reassure investors © Andrew England/FT

He and his lieutenants are betting that even if Saudi Arabia lacks many of the attributes that provide comfort to those settled in Dubai — from the independent regulator that oversees the Dubai International Finance Centre (DIFC), to the quality of schools and array of bars and restaurants — size does matter.

“The giant is waking up,” says a senior Saudi official. “While this is not against the UAE, it’s like you were asleep and dust was settling on your body. Then you wake up and shake it off.”

Riyadh calling

The “awakening” is reverberating across the UAE and the boardrooms of local and multinational businesses based in the Gulf state.

In typically robust style, Prince Mohammed began the year by setting foreign businesses an ultimatum — move their regional headquarters to Riyadh by 2024 or forget about the lucrative government contracts that are the main prize for many.

Then, Riyadh altered its regulations on imports from fellow Gulf Cooperation Council members — the UAE, Kuwait, Qatar, Oman and Bahrain. The changes withdrew GCC tariff concessions from goods manufactured in free zones, which are exempt from regulations including the requirement to be majority-owned by a national, or produced by companies where Gulf employees make up less than 25 per cent of the workforce.

Riyadh also suspended travel to the UAE and several other countries, citing coronavirus concerns, but Emiratis interpreted it as another not-so-subtle message. The UAE ban was lifted two days after Prince Mohammed and Sheikh Mohammed bin Zayed al-Nahyan, the UAE’s de facto leader, spoke by phone in September.

Saudi Crown Prince Mohammed bin Salman and Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed al-Nahyan
Saudi Crown Prince Mohammed bin Salman and Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed al-Nahyan © WAM/Handout via Reuters

Executives in Dubai and Abu Dhabi, the UAE’s capital, say Emirati officials and business people were taken by surprise. “Initially there was shell shock. Plenty of clients have been told [by officials] to produce in Saudi Arabia and bring in Saudis or ‘I will put a tax on you or ban your goods’,” says a senior consultant.

International companies are also grappling with whether to heed Prince Mohammed’s call to shift their regional headquarters to Riyadh and upend the lifestyles of executives comfortable in Dubai. Pressure has increased on companies to sign licences formalising their plans ahead of Saudi Arabia’s flagship investor conference, the Future Investment Initiative, which opens on Tuesday, despite the regulatory framework still not being clear, says one executive.

In January, the authorities listed 24 companies, including PepsiCo, oil services group Schlumberger, engineering and construction group Bechtel and PwC, the consultants, that had signed provisional agreements to set up regional headquarters in Riyadh.

Another international banker based in Dubai says if his group was setting up in the region today “we would probably base ourselves in Saudi Arabia”. An executive at one multinational says his group will downsize in Dubai, and boost their operation in Riyadh because of the volume of business in the kingdom.

But some companies complain of being strong-armed, and cite it as another example of Prince Mohammed’s penchant for reverting to the stick rather than the carrot. “The feeling is initially we will be penalised,” says the banker, “but it will become the imperative [to move to Riyadh].”

Riyadh at one point suspended travel to the UAE and other Gulf states, citing coronavirus concerns
Riyadh at one point suspended travel to the UAE and other Gulf states, citing coronavirus concerns © Amr Nabil/AP

Local rivals

Longtime allies, Saudi Arabia and the UAE, the GCC’s powerhouses, have a history of testy relations. In 2009, plans for a GCC central bank and common currency were scuppered when the UAE pulled out because the institution was to be based in Riyadh, not Abu Dhabi.

Relations flourished, however, after Sheikh Mohammed, Abu Dhabi’s crown prince, took on the role of supportive ally — some say mentor — to Prince Mohammed as he rapidly rose to become heir-apparent to his father, King Salman. Analysts say the relationship first began to cool after the 2018 murder of Jamal Khashoggi, with UAE leaders worried about contagion as Prince Mohammed drew widespread condemnation over Riyadh’s alleged role in the killing.

>Recommended News in-depthSaudi Arabia‘Everyone is freaking out’: Saudi Arabia’s ultimatum rattles big businessdiv">>

Source : https://www.ft.com/content/79abe724-0e42-4933-8305-61524f24e1ae

1796
Morgan Freeman interviews police recruits in Gulf Shores

Source:Fox News

Morgan Freeman interviews police recruits in Gulf Shores

Gulf Coast Federal Credit Union review: Texas institution that pays high interest rates

Source:Business Insider

Gulf Coast Federal Credit Union review: Texas institution that pays high interest rates

Gulf Air appoints Bahraini professionals in various operational managerial roles

Source:bna.bh

Gulf Air appoints Bahraini professionals in various operational managerial roles

Alabama Gulf Coast Zoo mourns loss of beloved Bengal tiger

Source:al.com

Alabama Gulf Coast Zoo mourns loss of beloved Bengal tiger