#46 - February 2016

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ISSUE 46

“Dubai is a much easier place to do business–time has more value in Dubai. We have grown because our international operations started in Dubai.”

Shamlal Ahamed, Managing Director, Malabar Gold & Diamonds

All that GLITTERS

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INSIDE

Setting up an SME Analysing information

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I hope you enjoy this issue!

Jessica Combes Read my blog at: http://www.cpifinancial.net/blog/author/112/jessica-combes Follow us on Twitter: @FinanceMidEast

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he oil price has been widely discussed recently with Saudi Arabia posting a record budget deficit and sanctions being lifted from Iran. Our Saudi Arabia country report features input from Francesco Pavoni, Director, Value Partners and Zahi Younes, Partner, Baker & McKenzie who discuss the economic outlook of the country as well as the Government’s need for economic diversification (Pg 24). In our news analysis, experts look at what lifting sanctions off Iran will mean for the country, the region and the SME sector (Pg 05).

This issue our cover story is an interview with Shamlal Ahamed, Managing Director, Malabar Gold & Diamonds. He talks about bringing the company from India into the UAE during the recession, and how the company was able to leverage the financial crisis to its benefit. He also discusses the company’s plans to build one of the biggest manufacturing facilities in Jebel Ali as well its recent involvement with the Al Jalila Foundation as part of the company’s CSR initiative (Pg 20).

In terms of growing a business, a major consideration taken into account by larger corporations is risk management.

Ahmad Khamis, Co-Founder & CEO, BLOOVO Middle East FZ LLC and Sunando Mukhopadhyay, Head of Emerging Corporates, Noor Trade explain why and how SMEs should do a proper risk assessment and manage it accordingly; particularly in light of the uncertainty surrounding the oil price and funding pressures facing governments (Pg 32).

Our case study features home grown brand Yas Waterworld and General Manager, Tim Mow, talks about developing the world’s first Emirati-themed waterpark, varying technical considerations that had to be taken into account, and what the park offers in terms of offering rides and experiences that are the first of their kind. He also touches on plans to keep developing the business into 2016 and the future (Pg 36).

Finally, February has been exciting for FinanceME as nominations for the Business Vision Awards 2016 have come in and the turnout looks promising. It looks like the event, taking place on 23 March 2016 at the Jumeirah Emirates Towers, Dubai, is going to be memorable.

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PUBLISHED BY

5

NEWS ANALYSIS Stepping out of sanctions

32

FEATURE Risky business

6

FAST FACTS The QFC supports SMEs

36

CASE STUDY Say Yas to adventure

8

5 TOP TIPS Five things to remember before going solo

40

FACETIME In the zone

10

42

OPINION Command performance

FRANCHISE Spooning up the goods

44

START-UP Fighting fitt

46 48

AWARDS

14

OPINION Enhancing your business

16

LEGAL FOCUS Setting up a business in UAE

18

CHALK TALK Wael Al Sharif

Managing Editor GEORGINA ENZER georgina@cpifinancial.net Tel: +971 4 391 3728 Editors JESSICA COMBES jessica@cpifinancial.net Tel: +971 4 364 2024

LIAM O'CONNOR liam@cpifinancial.net Tel: +971 4 391 4680

52

TECH FOCUS Building business on a data foundation

WILLIAM MULLALLY William@cpifinancial.net Tel: +971 4 391 3718

DANIEL BATEMAN daniel@cpifinancial.net Tel: +971 4 375 2526

54

LAST WORD Safety driven

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COUNTRY REPORT Diversifying Saudi

28

FEATURE 2020 vision

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ISSUE 46

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ISSUE 46

ALL THAT GLITTERS

Shamlal Ahamed, Managing Director, Malabar Gold & Diamonds

+

INSIDE

Setting up an SME Analysing information

Online Content Manager SIYA PAINAYIL siya@cpifinancial.net Tel: +971 4 391 3722 ADVERTISING sales@cpifinancial.net Sales Director OMER HUSSAIN omer@cpifinancial.net Tel: +971 4 391 5419

All that GLITTERS P16

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MOHAMED MAKSOUD mohamed@cpifinancial.net Tel: +971 4 391 5320

SARAH OWERMOHLE sarah@cpifinancial.net Tel: +971 4 375 2527

“Dubai is a much easier place to do business–time has more value in Dubai. We have grown because our international operations started in Dubai.”

Business Development Managers NIKHIL NIDHAN nikhil@cpifinancial.net Tel: +971 4 391 3717

TECH FOCUS Encouraging encryption

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CEO CHAT All that glitters

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REAL ESTATE Dubai’s real estate cools down

Chairman SALEH F. AL AKRABI

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NEWS ANALYSIS

STEPPING OUT OF SANCTIONS As sanctions are lifted off Iran, experts look at

O

n 16 January 2016, known as Implementation Day, the International Atomic Energy Agency, or IAEA, said that Iran had curbed its nuclear programme enough to begin receiving relief on sanctions. The terms were laid out last July by Iran, the US and five other world powers.

“In order to get to this stage, Iran first had to take steps to diminish its nuclear program and render it more transparent to outsiders. Iran was also required to reduce its stockpile of enriched uranium by about 98 per cent, remove two-thirds of its centrifuges, and remove the core of its heavy water reactor at Arak. Now, Iran is set to receive an estimated $100 billion when its assets are unfrozen,” according to Jo Strain, Litigation and Iran Specialist at legal firm, King & Wood Mallesons, Dubai.

Iran’s economy, with a population exceeding 77 million, is expected to develop rapidly, impacting Iran, the GCC region, and the rest of the world.

Strain added that regionally, enterprises in the UAE are expected to benefit from this new landscape as there have long been strong trading ties between Iran and the UAE, which will lead to opportunities across all sectors and at all levels. The UAE’s developed infrastructure and financial

services leave it well placed to operate as a channel of international investment into Iran.

Ladan Saghafi, Associate Partner at consulting firm Frontier Partners added that since the UAE’s economy does not rely on oil as much as other countries in the region so it makes sense for it to let investors into the UAE to do business with Iran.

Saghafi said that the UAE should see a large number of multinationals coming to set up offices to work and invest in Iran which will have a positive effect on the real estate and banking sectors, to name two. The knock-on effect of this business influx would positively affect SMEs in the UAE down the line, as more business is created.

“The lifting of sanctions is definitely good news for the SME sector in Iran, as there will be a boost in business volume owing to the fall in Iran’s cost of doing trade, the ability to transfer money in and out of Iran and the ability to conduct imports / exports easily”, according to U.M. Rao, CEO & Managing Director at oil and gas equipment provider, Petronash.

However, Saghafi said that while the flow of trade into Iran will be helped, the majority of it will be absorbed by the Government and quasi-governmental

entities, as Iran’s SME sector is lagging somewhat. Medium-sized companies make up about two per cent of the SME sector, while small businesses make up about 98 per cent.

“One reason for this has traditionally been a liquidity issue, which can be helped by sanction removal but there are infrastructure issues. In terms of funding these small businesses, there is no proper link between the banking sector and the SMEs. The central bank needs to define a framework to help these businesses,” said Saghafi.

Strain said that the benefits for most companies are not expected to be felt immediately as the process of reconnecting Iran with the global economy after years of isolation will not take place overnight. She added that a number of businesses have adopted a ‘wait and see’ approach in recent months and it is likely that they will continue to exercise caution in the short and medium term.

Sanctions will be re-imposed if Iran breaches the Joint Comprehensive Plan of Action (JCPOA) deal in the next ten years. Strain said any companies dealing with Iran will need to consider and build in contractual protection to deal with that uncertainty.

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what this means in terms of trade, the economy and the SME sector

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EMIRATES DEVELOPMENT BANK HOLDS OPEN DAY FOR EMIRATI ENTREPRENEURS

"GO SMART" TARGETS ENTREPRENEURS WITH HI-TECH SOLUTIONS

Emirates Development Bank (EDB) held its first open day for local UAE business owners and entrepreneurs. Taking place at the Bank’s headquarters in Hazza Bin Zayed Street, Abu Dhabi, the event was attended by a number of existing business owners and entrepreneurs.

Emirates Development Bank provides local SMEs with banking solutions through direct and indirect financing, and helps build alliances with all local and federal authorities.

The open day was the first of a series of similar initiatives the Bank will roll out over the course of 2016 aligned to its strategic objectives to support the growth of the UAE economy.

Rashid Mahboob, Acting CEO of Emirates Development Bank said the bank’s first open day for local businesses and entrepreneurs has been a success.

Its team of experts and advisers met a wide range of local businesses and entrepreneurs and it is clear that the message is getting through to UAE citizens that the bank is there here to help and support the growth of their businesses.

Go Smart, the Dubai-based software and mobile application developer company provides hi-tech solutions, specifically designed for entrepreneurs of start-ups and SMEs. The IT software and services industry was valued at AED 9.9 billion in 2015, according to a BMI Research report.

Statistics released by Dubai SME– an agency of Dubai Government’s Department of Economic Development– suggests that SMEs account for over 95 per cent of the enterprise population in Dubai. However, SMEs still face considerable challenges.

Mazen Ajeeb, CEO, Go Smart said that in the long term GO Smart will help SMEs grow by increasing their access to different areas of technology. Go Smart can also provide SMEs with the ability to integrate software and web solutions with mobile applications, increasing the company’s agility.

“Moreover, Go Smart can increase the use of integrated solutions for decision making in areas like marketing and sales through providing different reporting systems which will increase productivity,” said Ajeeb.

SHUTTERSTOCK.COM

FAST FACTS

THE QFC SUPPORTS SMES The Qatar Financial Centre’s (QFC) plans to broaden its business services by introducing additional tools to streamline its client interfaces is set to positively impact SMEs in the country.

The QFC recognises the longterm importance in supporting the development of SMEs to achieve Qatar’s economic diversification goals as part the Qatar National Vision 2030 strategy.

These laws include enabling QFC-licensed firms to be listed on the Qatar Stock Exchange, as well as the introduction of Companies Limited by Guarantee, which allows business councils and professional associations to set up within the QFC. QFC-registered companies will be able to conduct business more freely across the country and ensure better market stability, which in turn will help to attract more international companies and foreign direct investments (FDI) to Qatar.

“The new laws will provide more scope for SMEs from varied service providers to set up and operate their businesses within a legal infrastructure that aims to adhere to international standards. The services will be implemented by the first quarter of 2016 to encourage the transfer of best practices in its legal system, which is predominantly based on English common law,” said John Martin St. Valery, Founding Partner of consulting service, Links Group.

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FAST FACTS

SHUTTERSTOCK.COM

SHUTTERSTOCK.COM

O OUTLO K FOR 201 6 SME

50%

OF RESPONDENTS– SLIGHTLY POSITIVE

INVESTOR RELATIONS FIRM LAUNCHES IN SAUDI ARABIA H+K Financial, the specialist financial communications and investor relations advisory firm, has launched in the Kingdom of Saudi Arabia to help businesses navigate the turbulent capital markets and the greater demand for rigorous corporate governance and transparency. The launch event was attended by representatives from the Capital Market Authority, and chairmen, chief executives and chief financial officers of many of Saudi Arabia’s leading public companies and family owned businesses.

“We see potential for SMEs to become the growth driver of local economies, harnessing local employment skills, and adding further diversity from oil based economies within the region. In the UAE alone, SMEs accounted for 60 per cent of the non-oil GDP in 2014 and the UAE government seeks to raise the figure to 70 per cent by 2021,” said Bobby Morse, Founding Partner of H+K Financial.

He added that as SMEs continue their growth plans; their needs for access to finance will increase with their investor communications requirements becoming more sophisticated and targeted. It is no longer just about the brand and the reputation of the goods and services being provided by SMEs but more about how these companies offer investment propositions to a range of investors, including institutions, family office and private investors.

ADNIC SIGNS PARTNERSHIP SME SUPPORT Abu Dhabi National Insurance Company (ADNIC) announced the signing of a partnership with the Mohammed Bin Rashid Fund for SME Support an initiative of Dubai SME, the agency of the Department of Economic Development (DED) in Dubai mandated to develop the SME sector, for providing insurance to entrepreneurs supported by the Fund.

ADNIC will provide comprehensive insurance protection to cover the small and medium-sized business owners receiving seed capital from the Fund against a variety of contingencies, from loss or damage to contents and business premises to death, disability, or illness that impairs their ability to work. In addition to this, ADNIC offers insurance protection towards business interruption risks resulting from material damage.

“We are delighted to be the first insurance company to partner with the Fund in the UAE. We are very pleased to support this initiative to promote entrepreneurship among UAE nationals. This agreement provides comprehensive cover to the fund’s customers, which is in line with ADNIC’s commitment to the community to provide insurance solutions to protect businesses against unpredictable risks,” said Ahmad Idris, Chief Executive Officer of ADNIC. The Mohammed Bin Rashid Fund for SME support is a government initiative launched by Dubai SME in April 2015 under a decree issued by HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai.

25%

OF RESPONDENTS– NEUTRAL

12%

OF RESPONDENTS– NEGATIVE

8%

OF RESPONDENTS– VERY POSITIVE

4%

OF RESPONDENTS– UNSURE. Source: Bahrain Economic Development Board

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TOP TIPS

FIVE THINGS to remember before going solo

DUBAI-BASED ENTREPRENEURS SHARE WHAT POTENTIAL BUSINESS OWNERS SHOULD KEEP IN MIND BEFORE TAKING THE PLUNGE

1. Get your family’s support

Chances are good that starting a business is going to take up most, if not all of your free time; even more so if you remain employed in the early stages. That means putting in a lot of late nights, early mornings and hard work and not seeing very much of your friends and family. If your family can be supportive of the sacrifices made in the beginning, the payoff has the potential to benefit all of you.

2. Set milestones

and policies. The same applies doubly for your accounts. An audit is inevitable, so avoid panic by getting in the habit of record keeping early.

won’t have the same drive to see the idea executed. Also, you may be talking to your future investor or business partner.

4. Tap into your networks

5. Ask questions

Don’t be reluctant to ask friends, colleagues or contacts for help.

They could open new doors and the results could be surprising. Also, discuss your idea with everyone you meet; many people worry their idea will be stolen but don’t take into account that other people

Even though embarking on your own business will a subjective experience, you can still save yourself a lot of hassle by learning from the previous mistakes made by people who have done this before you. Ask as many questions of as many people as possible, and don’t be afraid of looking silly.

SHUTTERSTOCK.COM

These need to be determined early and it is important to keep working towards them. Even though challenges are inevitable, it is essential to remain focused on the goal at hand. Although there will more than likely be several setbacks, always remember why you started, pick yourself up and keep moving forward. Remember to celebrate the achievements along the way.

3. Document everything

To build the company from a startup to an enterprise, document everything from day one; be it sales, HR or financial documents. Keep updating and improving paperwork

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OPINION

Command

PERFORMANCE ELIE GEORGIOU-BOTARIS, MIDDLE EAST PRACTICE LEAD FOR TALENT MANAGEMENT AND ORGANISATION ALIGNMENT, WILLIS TOWERS WATSON MIDDLE EAST AND MARJOLA RINTJEMA, MIDDLE EAST LEAD CONSULTANT FOR COMMUNICATION AND CHANGE MANAGEMENT, WILLIS TOWERS WATSON DISCUSS PERFORMANCE MANAGEMENT AND WHY SMES SHOULD CONSIDER IT

P

erformance management is beneficial to all enterprises of all sizes and to all employees because at its core, it is a way of linking the overall business strategy to individual employee performance.

It gives direction and guidance to the execution of the company’s business strategy and the achievement of its goals on an individual level and provides a method to measure each individual’s contribution to these goals.

There are many different ways to shape performance management in an organisation. It may make sense for a large company to have a formal procedure with a human resources system in place in order to keep track of personal targets, performance assessments and ratings of all employees. For a small company, however, this elaborate set-up may not beGary necessary.

Nolan In today’s frantic business

world, many small or medium-sized companies forget to regularly reflect on each employee’s contribution to the larger business goals, if they are still on track or if they need to improve their performance.

In general, performance management in SMEs may not be as cumbersome as it is in largesized companies, due to the size of the workforce involved and the flat structure of the organisation. This will make it easier for managers to have regular dialogue with their employees about the business, their goals and mutual expectations.

EFFECTIVE PERFORMANCE MANAGEMENT

In a smaller organisation it is easier to involve all team members in setting company targets and deciding how to achieve them. Team members can

be invited and encouraged to create their own targets with regard to the ‘what’, business objectives, KPIs, and the ‘how’, technical skills, behaviours, competencies; as long as they cascade upward and link to the overall company goals.

It often makes sense to have both individual and team goals set, especially in SMEs, as they help to enhance collaboration and build joint accountabilities. The more transparent the owner or manager is regarding team and individual goals, and the more he or she consistently involves all team members, the easier it will be to hold the team accountable for reaching the targets.

At one point in time, ideally at the beginning of the year, these targets will have to be drafted, discussed and agreed upon between the employee and the immediate manager and put in cont. overleaf

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OPINION Elie Georgiou-Botaris, Middle East Practice Lead for Talent Management and Organisation Alignment, Willis Towers Watson Middle East

Marjola Rintjema, Middle East Lead Consultant for Communication and Change Management, Willis Towers Watson

cont. from pg. 11

writing. To manage expectations and to increase perceived fairness, it is best to also agree on the way the employee will be evaluated and rewarded at the end of the annual business cycle. This may well be dependent on company results, which shouldn’t be a problem as long as this is clearly communicated in advance and, at the end of the period, executed fairly and consistently.

At regular intervals the manager and employee need to look at the progress of targets’ achievement and discuss possible improvements if and where needed. At the end of the year, the manager and employee will need to have a discussion to assess the past performance against the initial targets and the employee (and team) will be rewarded accordingly.

While having this discussion, the two parties should also try looking

forward towards the future: what new developments are foreseen for the company and what new skills and behaviours will the employee require to develop or enhance in order to support this development or growth?

Many small and medium-sized companies may think that having a proper or sophisticated performance management system and process is too much of a hassle for their company.

They think they don’t need it as they are a small team and everyone knows what to do. However, we have found that even in the smallest companies, it is easy to get side-tracked if you don’t regularly focus on and track goals, values, behaviours and skills of each individual contributor.

Not taking time to reflect, assess and re-align can be a huge missed

opportunity for all parties towards improving the employees’ and overall company performance.

Moreover, performance feedback discussions are a key driver in building employee engagement; involving the team in the achievement of company targets and strategy and giving close attention to their personal development can certainly boost employees’ motivation and the company’s success.

In conclusion, a performance management process need not be complicated or elaborate in SMEs. A simple version will be sufficient for such companies to create a structured process for goal-setting, regularly review and track employees’ performance and evaluate their contribution to your company’s performance during a given year.

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OPINION

Enhancing your BUSINESS ELIAS DIB, PARTNER AND STUDY DIRECTOR AT HUMAN RESOURCES CONSULTANCY AON HEWITT, DISCUSSES ACHIEVING SUSTAINABLE GROWTH THROUGH EMPLOYEE ENGAGEMENT

Elias Dib

I

n recent months, a number of organisations across the region have started to witness a phenomenon that we refer to as an ‘engagement recession’.

Faced with economic uncertainty, fears and doubts begin to surface, which, combined with an increase in unproductive behaviours results in the weakening of the engagement structure.

Gary Nolan While leadership has always played an important part in

building employee engagement, we have observed that, under exceptional conditions, the role of leaders becomes even more crucial.

Employee engagement is primarily a measure of the relationship between an organisation and its employees.

An effectively engaged employee is one who is fully immerged in the organisation and therefore heavily invested in the company’s reputation as well as its future growth.

There are a number of things that small to medium-sized companies can do to increase engagement. Contact between senior managers and frontline employees seems to be crucial for providing employees with a sense of security. Given the size of SMEs, they have a greater opportunity to connect with their employees on a more regular basis, compared to larger, hierarchical organisations.

We found that employees were far more engaged in organisations where senior managers and employees meet regularly and even more so, where there are opportunities for employees to raise questions and / or offer views. In a smaller organisation, it is easier for leaders to show their support for engagement initiatives and determine next steps, so they should adopt these mechanisms as soon as possible.

Another key aspect of engagement comes from employees being able to see the end product and how their efforts have contributed to helping the business succeed. It is also easier for small to medium size businesses to look at talent across the organisation to identify where opportunities should be given to individuals to match their interests and abilities with the needs and goals of the company. Ultimately a business will benefit from matching the individuals talents to the wider business goals–it’s a win-win recipe for engagement success.

Aon Hewitt’s analysis of small to medium-sized companies has

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identified a strong correlation between financial results and the quality of senior management. In particular, when senior managers’ levels of engagement are at a high standard, their ability to connect to others within the organisation increases, inspiring those at mid management level and creating a ripple effect. Furthermore, engaged managers are more likely to build engaged teams. To sum up, participation starts at the top, and without engaged senior leadership, companies cannot inspire the hearts and minds of their employees.

In highly engaged organisations, leaders are perceived as significantly more effective–by approximately 1.7 times–in comparison to their equals at less engaged ones. These leaders set the right direction and mobilise the workforce, but how is this achieved?

Communication is a key element in building the perception of an effective leader. They must communicate the reality of the business environment and its possible implications, while reassuring and recapturing employees’ hearts and minds through transparency which creates trust.

While strong leadership and frequent communication are always important, they are crucial during difficult times in order to maintain employee engagement at stable levels and potentially drive them higher.

Crucial to successful leadership communication is the ongoing ability to answer the questions employees ask. Even if the response is ‘We don’t know’, employees appreciate that their concerns are being heard.

What is clear is that, as well as contributing significant time and effort, there is a strong emotional component to how senior leaders drive engagement within organisations.

They should be personally aligned

with the organisation’s values and utilise various initiatives to bring employees closer to the goals and outcomes of the business.

Aon Hewitt’s ongoing Best Employers research reinforces the value of focusing on leadership behavior. This research shows a high correlation between senior leadership and some of the other drivers of engagement. Therefore improving perceptions of senior leaders will have a positive, indirect impact on other drivers as well–something we refer to as the multiplier effect.

Whilst organisations may implement some initiatives successfully without the involvement of top leaders, if organisations have senior leaders that are not very involved in the business, they miss out. Their involvement demonstrates the organisation’s commitment and brings to life initiatives that drive employee engagement.

Many organisations have learned to deal with economic uncertainty over the years, resulting in more stable engagement levels. However, stability is not something employers can take for granted; they must remain focused on driving employee engagement even in uncertain times.

While managers play a significant role in the day-to-day work experience of their direct reports, the importance of effective senior leadership in employee engagement cannot be underestimated. When senior leaders are themselves engaged, they are more likely to positively affect the involvement of other staff. When they communicate frequently and honestly, clearly charting the course for the organisation and letting employees know what is required of them to help make the business successful, employee engagement rates increase.

And when leaders actively endorse initiatives that drive engagement, the effect is multiplied.

PRACTICES THAT INFLUENCE EMPLOYEE ENGAGEMENT 1. Employers should come across as more connected with their employees: •Effectively communicating the organisation’s goals and objectives.

•Consistently demonstrating the organisation’s values in all behaviors and actions.

•Appropriately balancing employee interests with those of the organisation.

• Filling employees with excitement for the future of the organisation.

2. Employers should be very performance focused by: •Effectively communicating the organisation’s goals and objectives.

•Empowering managers and employees and instilling a culture of accountability.

•Setting aggressive goals at all levels of the organisation.

3. Employers should be genuinely future - and developmentoriented by: •Communicating the importance of spending time on feedback and providing performance coaching.

•Filling employees with excitement about the future of the organisation.

•Effectively communicating the skills/capabilities employees must develop for future success.

•Investing in long-term growth opportunities, even during difficult times.

Source: Elias Dib, Partner and Study Director, Aon Hewitt

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LEGAL FOCUS

Setting up a business

IN UAE

AHMED ODEH, LEGAL CONSULTANT, MIO LAW FIRM, DISCUSSES CONSIDERATIONS BUSINESS OWNERS NEED TO MAKE BEFORE FORMING THEIR COMPANIES

Ahmed Odeh

O

ne of the hottest topics still being discussed is setting up a business in UAE. Given the wealth of material available from the Department of Economic Development (DED), free zone authorities and other institutions, entrepreneurs are still finding it difficult to decide on where and how to form their companies. To add to the complexity, the new Commercial Companies Law (CCL), which came in force in 2015, clearly specifies that its provisions do not apply to free zones provided that the free zones have special provisions regulating such companies.

This article will provide a short summary of the types of business structures available for entrepreneurs, as well as light comparisons between them depending on the zones in which they can be set up. We will also be providing tips and matters to look out for during the set up so as to avoid any pitfalls down the line.

It’s important to define the company’s trade activity and target market early on. The trade activity of the business will likely determine the most appropriate type of trade license to obtain. This is because there are certain trade activities, such as real estate development, insurance, automotive dealership and contracting activities that cannot be practiced unless they

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licensed by the DED of that emirate.

Moreover, professional licenses, such as law firms, will also require DED approvals.

Be aware that some free zones may provide the activities related to such businesses. However, approvals from other authorities may be required if such businesses wish to practice outside the free zones. During the research stage, business owners may find that there are industrial hubs for manufacturing, logistics and trade across a number of sectors offering various investment incentives which may be beneficial for the chosen trade activity.

The target market is also a crucial factor to setting up any type of business. In general, the law states that any company wishing to perform business activity in a specific emirate should obtain a trade license from that emirate. Moreover, customers should also be identified as either governmental entities, privately owned companies or both. If the majority of customers will be governmental entities, a suggestion would be to request such entities to provide the business with the requirements for supplier registration before setting up.

The second consideration is the place of business. There are two types of places of business in the UAE, onshore and free zones. Onshore zones are mainly governed by DED of the emirate whereas each free zone is governed by a Free Zone Authority (FZA).

The third consideration when setting up a company in the UAE is the cost. Costs are relatively higher than in other countries. The main reason for this is that application and trade activity fees, rents and sponsorship fees can be quite high when added up. This is without taking into consideration potential legal, PRO fees and minimum investment capital required for the establishment of the business.

For onshore companies, costs may vary between AED 30,000 to AED 60,000 whereas free zone costs can vary from AED 25,000 to AED 40,000 depending on the types of trade activities requested.

It is advised to start off with the most necessary trade activities first and then adding further activities later as required.

The activities permitted by an LLC license are also usually very specific. In addition, many authorities will require applicants to provide proof that they are able to practice such activities in the form of educational certificates and cash in the bank.

Finally, many free zone authorities market their services in a manner where they promise to issue a trade license within two to five working days from the date of application. This can be done provided that all the required paperwork is ready at the time of application, which why it is essential to start the paperwork well in advance of the date of submitting the application.

Certain paperwork required for setting up a business such as an LLC can be extensive and take time to prepare.

For example, a Board Resolution from a company outside of the UAE may take up to three weeks to finalise as it has to go through various attestations before it can be approved by the relevant authority.

Furthermore, a draft Memorandum of Association usually has to go through more than one review until all shareholders agree to their respective shareholdings, profit / loss distribution and other terms and conditions.

Hence, it is advised to ensure all the paperwork is processed well in advance of preparing the business application including power of attorney, board resolutions, signatory specimens, lease agreements and memorandum of association. It is best to lay out a long-term plan for the business with a cost-benefit analysis so as to avoid worry about changing the trade license down the line.

RELEVANT BUSINESS TYPES

Establishments • Onshore An onshore establishment is 100 per cent owned by a single shareholder who must be an Emirati national.

• Free Zone A free zone establishment can be fully owned by a non-Emirati national.

• Limited Liability Company (LLC) - Onshore As per the CCL, an LLC shall be comprised of a minimum of two partners where 51 per cent of the ownership should belong to an individual or company that is of Emirati nationality and the remaining 49 per cent of ownership can belong to a non-Emirati national. The new CCL also provides for the possibility of a single Emirati national to own an LLC without any additional shareholders.

- Free Zone A free zone LLC shall be owned by a minimum of two partners. However, neither partner needs to be an Emirati national for this type of structure to take effect.

• Holding company Due to the recent introduction of offshore authorities, many entrepreneurs are leaning towards setting up an offshore holding structure first before setting up any commercial companies. An offshore holding structure is especially useful when there are numerous shareholders involved which allows the shareholders to utilise the offshore entity as a vehicle to invest in many projects with ease.

• Branch office These licenses are highly sought after by companies situated outside the UAE seeking to invest in the country. A branch office is a company which is 100 per cent foreign-owned by the parent company provided that the office has a national service agent. However, there are certain limitations to this type of entity as not all foreign companies may be allowed to own branch offices depending on the nature of their business activity.

Source: Ahmed Odeh, Legal Consultant, MIO Law Firm WWW.FINANCEMIDDLEEAST.NET

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The moment a person believes in himself, he will find a way to overcome his weaknesses and he will develop whatever skills he is missing.

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CHALK TALK

WAEL AL SHARIF

CEO of Takaful Emarat talks about the importance of building the self-confidence of the people who work with him

I

have to start my day with the newspaper. I have to know what is going on. That has been the case throughout my career, even on the weekends. People have to know what is going on in the world. There are so many sources online as well–so I take a quick look at the region and in other countries as well. I spent 18 years working in Jordan, Egypt, Saudi and Dubai.

I am originally from Jordan and I studied management in Switzerland at Webster University in Geneva. I wanted to buy a car and my savings were insufficient, so I took a part time job at a large department store at Christmas time as a gift wrapper. I never thought I would be good at that! At that time of year, everyone goes away on skiing holidays so I got better pay because I was the only one around.

My parents did not want me to get a part-time job at that time as they were financing my studies. But I wanted to buy something that they did not want to buy and that whole experience taught me that you can do anything you want on your own. I had friends who did everything from flipping burgers to administrative work. If you want to do something, you will find a way. Even for a student in Geneva to buy a car, it can be done. It was second-

hand, a very old, grey BMW. My best friend was an Italian mechanic who made sure my car kept running.

I have three children. My son is working here in Dubai and my two daughters are at university and they are going to graduate very soon. They do realise that I have a demanding job with certain pressures. They know perfectly well that when I open that door at seven or eight, I may not have enough energy left to get into a discussion or argument and the two or three hours before bed are to relax. I am an early riser so I go to bed early.

Weekends are entirely different.

I love to spend time with my family. We go out and do things that will alleviate stress. We love playing board games like Scrabble or Monopoly. I like to go out to dinner with my wife and friends and I love to watch action movies. For fun, I play the piano. If I’m frustrated, I play the piano. If I’m happy, I play the piano.

One of my favourite things to do throughout my career has been to develop people. If I look at the people that I met during the course of my career, many of them have become leaders in most of their companies.

When I moved here [Takaful Emarat], I brought in 12 people from my previous companies and they are now the heads of all the departments.

When I joined the company it was collapsing and we had to do a full revamp. I pulled resources from every country and company you could imagine. It is really nice to have them all under one roof. That is what took the company from a deficit to a profit.

Once I crossed over to become a CEO, the best thing for me was seeing others succeed. I’ve had enough of my success. I like to see how others are evolving. So sometimes I’ll go around the company and pull up a chair and sit with someone and see what they’re doing. I like to tell them how great it is when they do things the right way, or better than we have been doing it. These are the things that give me a buzz.

Forget for a moment a person’s technical abilities, his intellectual abilities or his educational background. If there are weaknesses in any of those areas, they can be overcome.

If you build a person’s confidence and self-belief, it is the strongest force someone can have. You just have to make sure that he believes in himself.

That is so important. Because the moment a person believes in himself, he will find a way to overcome his technical weaknesses and he will develop his leadership skills or his managerial skills or whatever skills he is missing. That is the number one focus for me.

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All that GLITTERS

SHAMLAL AHAMED, MANAGING DIRECTOR, MALABAR GOLD & DIAMONDS, EXPLAINS SETTING UP THE BUSINESS IN THE UAE, HOW THE 2008 RECESSION HELPED BUSINESS GROWTH AND PLANS FOR THE COMPANY TO CONTINUE EXPANSION

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alabar Gold & Diamonds, a family jewellery business headquartered in Kerala, India, was established in 1993 and produces jewellery made of gold, diamonds, silver and platinum. Since then, the small business comprising of seven employees working in a small show room has becomes an established brand with 145 show rooms in nine

countries, employing 8,000 employees and boasting a $4 billion global turnover.

The company currently covers the entire value chain of the jewellery industry– bullion, manufacturing, wholesaling, and retailing.

The first country the company expanded into was the UAE in 2008.

Shamlal Ahamed, Managing Director of the group said coming into the

region during the recession actually assisted the company’s growth.

“There was a huge vacuum in the market and other key players were dealing with their own issues brought about by the recession–none of the jewellers here were thinking about expansion and many of them were downsizing their businesses and consolidating their finances. We were

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– Shamlal Ahamed, Managing Director, Malabar Gold & Diamonds

Malabar Gold & Diamonds boasts the largest outlet at Gold Souk, Deira. able to come in and get the best location and the best talent, and that helped our business to grow,” he said.

The initial growth of the company was slow, but steady. 2010 saw the company’s last year of slow growth before gaining momentum in the market.

Factors that attracted the company to Dubai were the logistics of the country, the acceptance of international groups into the area, and the ease of establishing and operating a business.

Ahamed said that choosing Dubai as the company’s international business hub, meant that the business has had a boost outside of India.

“If one compares India and Dubai, Dubai is a much easier place to do

CEO CHAT

Dubai is a much easier place to do business–time has more value in Dubai. We have grown because our international operations started in Dubai.

Shamlal Ahamed business–in India there tends to be a lot of unexpected delays to doing business.

In Dubai, if an answer is needed from the relevant authorities, it’ll be available in two days. Time has more value in Dubai. We have grown because our international operations started in Dubai,” said Ahamed.

2016 AND BEYOND

Ahamed said the next 12 to 24 months will be tough but there will be opportunities for growth, albeit a slow growth with any business decisions made with caution but that the company will still try to get the maximum market share.

“We are honouring all our current business commitments and we will only

consider new business agreements carefully. The team is in negotiations for expansion into new locations and factories, but this will not happen as quickly as before. We do not have the luxury of making decisions as quickly anymore,” said Ahamed.

Although the company has two small factories in Sharjah, one of the upcoming projects for the company is building one of the largest manufacturing facilities in Jebel Ali. Since Dubai imports a lot of its jewellery from the far east, Italy or India, Ahamed said the new facility is designed to produce jewellery that is ‘made in the UAE’.

Ahamed said the new facility should be operational within the next 12 to 18 months and the Government has cont. overleaf

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CEO CHAT

cont. from pg. 21

allocated an area of land of about 18,580 square metres, on which the facility will be built. Ahamed said that establishing the factory will also mean the creation of about 2,000 jobs. The company will also invest in new technology, machinery and software, to ensure a much faster turnaround on production, as the faster the turnaround on production, the faster the increase in capital.

This focus on a quicker turnaround has been influenced as much by a desire for increased capital as by customers’ purchasing behaviour. Where women used to change or upgrade their jewellery once a year, Ahamed said the occurrence has increased to biannual visits.

“This trend is especially prevalent among our Indian clientele as they generally don’t like to wear the same jewellery more than once to social events, so they are upgrading and changing it more frequently,” said Ahamed.

Ahamed said that there are three principles instilled in the company that sets it apart from its competitors.

The first principle is to meet its customers’ expectations regarding products, service, and pricing. As a market leader, he said that Malabar Gold & Diamonds has to be innovative to keep the competition from catching up. Each piece of jewellery sold also carries a free lifetime maintenance agreement, he said.

The second is the company’s buy back policy which it has practiced since its inception and applies to any product sold. If a customer wants to upgrade their jewellery or sell it for cash, they know in advance what price they will be paid for it. The only factors affecting the price are the gold price and the price of manufacture, but no other deductions are made.

Finally, the company adheres to a strict policy of honesty and transparency. Whatever the law of the land is where each showroom is situated, it is followed; be it regarding taxes, licensing or any other business practices. Policies have been written

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and framed keeping each location and its laws in mind.

Since 2008 Malabar Gold and Diamonds has expanded into Saudi Arabia, Qatar and Bahrain; although Saudi is not as investor-friendly as Dubai, despite being a much bigger market.

Ahamed said the key to breaking into these markets is fostering good local relationships and that it is important to have the right people in all their locations.

“We have a good team and good associations and they are facilitating the speed of all our processes. Wherever we go, whichever area we try to enter, we makes sure we have good working relationships with the right people–be it a consultant or a broker partner–and we utilise their expertise,” said Ahamed.

The company has also plans set up an office in Singapore with the intention of using it as the central office for business in the far east, just as Dubai is central to its business in the Middle East. Ahamed said while Singapore is administratively stronger than Dubai; the cost of operations is much higher.

CSR

The company’s corporate social responsibility has been in practice since its inception in 1993. Ahamed said this is because the Chairman’s belief was that a company never operates in isolation–it operates with shareholders, its employees, the Government, and society; and whether a company has a turnover of AED 100 or AED 1 million, it has an obligation to the society in which it operates.

The company has identified key focus areas to concentrate its initiatives, mainly providing housing for people, and women empowerment predominantly in India, with a focus on women and child education; and a green initiative to plant more trees and clean up cities.

The final focus of Malabar’s CSR drive is healthcare, and this is done on two fronts. In most of the nine countries where the company is established, the company has provided medicine for the

poor, provided medical treatments, and assisted with repatriation where needed.

“However, here in the UAE healthcare is handled either by the Government or, owing to the number of expats, by private companies. Very few people here need medicine or healthcare support. So they next best thing we could do is look at supporting research into preventing illness,” said Ahamed.

Malabar has just become associated with the Al Jalila Foundation and donated AED 10 million to the group for research into genetic diseases, varying disorders, and mental health.

KEY ACHIEVEMENTS

• Awarded ‘Superbrand’ status by the UAE Superbrands Council in 2013, 2014, and 2015.

• Achieved ‘Regional Retail Chain of the Year’ 2014 at the Retail Jeweller India Awards.

• Awarded ‘Best Retail Chain of the Year’ 2014 by the All India Gems and Jewellery Trade Federation.

• Malabar Gold & Diamonds opened the largest jewellery outlet in Dubai at Gold Souk, Deira in 2014.

Source: Malabar Gold & Diamonds

Customers always know what they are buying in terms of price and weight of the jewellery.

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COUNTRY REPORT

Diversifying SAUDI FRANCESCO PAVONI, DIRECTOR, VALUE PARTNERS AND ZAHI YOUNES, PARTNER, BAKER & MCKENZIE, DISCUSS SAUDI ARABIA’S ECONOMIC OUTLOOK, THE HIGHEST BUDGET DEFICIT IN THE COUNTRY’S HISTORY AND THE NEED FOR ECONOMIC DIVERSIFICATION

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he Saudi Arabian government has placed an increasing emphasis on the need for economic diversification, because oil accounts for 80 per cent of the country’s economy, according to Masood Ahmed, IMF Middle East Department Head. As of January 2016, the International Monetary Fund has almost halved its growth forecast for Saudi Arabia as low oil prices continue to pummel the Kingdom’s economy.

In its latest forecast, the IMF predicted that the Saudi economy will grow by 1.2 per cent in 2016, a downward revision from the 2.2 per cent the fund estimated in October 2015. This downgrade is owing to the oil prices dropping below $30 per barrel.

Saudi Arabia posted a record budget deficit of $98 billion in 2015 and as a result the Government announced its plan to cut spending by 14 per cent in 2016, according to Zahi Younes, Partner at law firm Baker & McKenzie. He added that any sharper decline in the oil price from current levels will mean that government spending will have to be carefully targeted at must-have projects only, particularly in the health, education and defence sectors.

Francesco Pavoni, Director of consulting firm Value Partners said that currently Saudi Arabia is behind many other growing and emerging markets. If it is compared to emerging countries over the last ten years, their growth rate has averaged 2.5 per cent while China

averaged 10 per cent, India at five per cent, and Turkey was at about three per cent. He added that Saudi Arabia would have to work towards adjusting their economy in a way where it is able to gain a competitive advantage in a number of industries, versus only one.

“It is anticipated that the Government does not only want to reduce expenses with the 2016 budget, but is planning a session of privatisations to cover the deficits they have endured so far. These privatisations could be in the form of selling state owned businesses or real estate, for example,” said Pavoni.

He added that at the moment the country is stable as it is relying on its financial reserves of about $400 million, however, the Government

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The IMF predicted that the Saudi economy will grow by 1.2 per cent in 2016.

will have to look at economic diversification if the economy is to survive the slump in the long term.

Improving the competitiveness of the state sectors is a prerequisite for economic diversification; according to some Saudi academics and bankers at the ninth Global Competitiveness Forum, held in Riyadh at the end of January.

According to Fadl bin Saad Al-Buainain, economist and banker, the country is no longer relying on its economy with its own current financial resources; and it has to attract diverse foreign investment to achieve the diversification of revenue sources that would create jobs to meet the growing demand resulting from high population growth.

"In that context, the Government must strive to develop its competitiveness compared to other countries, especially with regard to infrastructure, trade regulations, legislation and legal, as well as some special features relating to production and tax privileges costs and freedom business," he added.

A new Companies Law was issued late last year which will come into effect in May 2016, is designed to facilitate this diversification. The new law introduces a number of incremental reforms to the existing Companies Law enacted in 1965 and reflects the Saudi Arabian economy’s evolution and the necessity for a new framework compatible with a more complex business environment, according to Younes.

“The new law is expected to impact governance and compliance for all Saudi companies, as well as affecting the establishment of new companies as it clarifies certain matters which were previously unclear and introduces new concepts while ending others. These provisions will offer those on the ground in Saudi Arbaia, as well as those looking to invest, the flexibility to organise their businesses as they see fit,� he said.

Pavoni added that the passing of these new laws could see a rise in international cooperation with Saudi Arabia. In the past there has been an increase in interest in investing and expanding within Saudi Arabia and these laws provide the platforms for which that can happen. He added cont. overleaf

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COUNTRY REPORT

cont. from pg. 25

that there are three requirements for economic growth.

The first is political stability or else the Government will not be able to move forward of its developed projects, effectively halting all potential economy and industry growth. This is a very important factor given the country’s geographic location. The region itself is in turmoil but with political stability comes security for both the inhabitants and, ultimately, the economy.

The second requirement for economic growth is external and internal confidence. The new Government and new King announced a transformation plan to restructure and sustain the whole country. For the people to be willing to adapt to the new Government they need to be confident in their decision makers. In addition, for Saudi Arabia to expand internationally it needs the trust of the international market, which in turn should increase global cooperation and foreign direct investment.

The capability to play a crucial role in the international business landscape is the final factor that can either boost the economy or completely hinder it. If Saudi Arabia is not able to continue opening their economy to the external markets, it is to expect certain difficulty with economic growth. A closed economy implies a drop in foreign direct investment and a halt of partnerships with international companies– all factors that have been playing a major role in the country’s GDP growth so far.

Source: Francesco Pavoni, Director, Value Partners

DÉJÀ VU In 1986 Saudi Arabia experienced a four-month, 67 per cent collapse that saw the oil price plummet to just above $10 per barrel in March from a $31.72 per barrel peak in November 1985. During this oil crisis 17 out of 25 of the world’s key oil producers defaulted on their debts, making producers who avoided defaults the exception rather than the rule.

Saudi Arabia could face a tougher situation its population has tripled since the 1980s, meaning subsidies and budget deficits would be directly proportional.

Zahi ZahiYounes, Younes, Partner, Partner, Baker Baker & & McKenzie McKenzie

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Source: Gabriel Sterne, Head of Global Research, Oxford Economics

Francesco Francesco Pavoni, Pavoni, Director, Director,Value Value Partners Partners

OPEN FOR BUSINESS Plans for Saudi Aramco’s possible initial public offering are not being driven by a need for cash amid a global slump in oil prices, but instead signal a desire for greater openness to outside investors, according to its Chairman, Khalid al-Falih.

He said that despite oil prices recently dipping below $30 a barrel, Aramco's investments in oil and gas have not slowed down and that the listing is a sign of the times that Saudi Arabia is open for business, and this initial public offering would not include the kingdom's oil reserves.

Analysts said that Saudi Arabia has kept its oil production levels high in an attempt to keep its market share and stymie the reach of US shale producers in the global market.

Source: BBC

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EXPO 2020

2020 vision

JOHN MARTIN ST. VALERY, FOUNDING PARTNER, THE LINKS GROUP AND VISHAL MAHTANI, GROUP CEO PRICE GLOBAL GROUP (LS), CONSIDER HOW SMES WILL BENEFIT DURING EXPO 2020

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reparations for Expo 2020 are expected to generate many business opportunities across the economy and SMEs are firmly placed to be the biggest beneficiaries of upcoming developments. According to John Martin St. Valery, Founding Partner of consulting firm, The Links Group. Expos have historically acted as economic catalysts; in addition to boosting tourism, creating new job opportunities and increasing hospitality revenues, they also tend to attract investments from outside the country.

“Dubai’s winning of Expo 2020 has elevated overall consumer and business confidence, offering numerous opportunities for SMEs to benefit from the infrastructure and other related developments.

SMEs can take full advantage of this opportunity–whether starting, growing or diversifying their businesses, Expo 2020 Dubai provides much scope for them to benefit,” said St. Valery.

Vishal Mahtani, Group CEO of conference and events company,

Price Global Group (LS) said that Expo 2020 has already started to change the business landscape of the region. Statistics suggest eight million visitors will come to the UAE; and with this major increase of population, the kind of infrastructure and business that will come in the country will be extensive.

“Huge establishments will channel their focus on the major infrastructural changes making SMEs play a crucial role in running daily services. They will act as the hands and legs of the country with big cooperations playing the role of the brain and heart behind it. We can expect this phenomenon to boost UAE’s business market greatly benefiting SMEs,” said Mahtani.

FOREIGN DIRECT INVESTMENTS

The opportunity for growth and development in the lead-up to the Expo is significant. If Expo 2010 Shanghai and Expo Milano 2015 are any indication, the innovation necessary to build a functional,

accessible environment through sustainable infrastructure is set to increase and, as a result, foreign direct investment will be necessary.

Opportunity is rife for companies from engineering, construction, real estate, and transportation and logistics firms to win projects focused on enhancing the local infrastructure in a sustainable way.

The UAE is looking to almost double its contribution to these industries, and St. Valery estimates those contributions will reach nearly 20 per cent of the gross domestic product by 2020.

On a wider scale Mahtani said that the Expo 2020 is a chance for foreign or international companies to showcase their new products to the world, and apart from the people coming in to see the products there are also the exhibitors from all over the world coming in to showcase their strengths.

Accordingly the need will arise for accommodation, office and business facilities through the entire six-month period of the Expo. Therefore there will be a lot of foreign money coming into the region.

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SMEs that position themselves correctly via the most appropriate means of legal incorporation will be well placed to capitalise on the lucrative opportunities Expo 2020 Dubai offers.

– John Martin St. Valery, Founding Partner, The Links Group

“The United Kingdom, United States and Australia are three such markets that have the UAE firmly on their investment radars, and are home to this coveted expertise.

As a receptive market that has a penchant for embracing innovation and diversification, the UAE is set to remain a top-notch FDI destination for the foreseeable future,” said St. Valery.

He added that World Expos have continued to be one of the largest and most enduring global mega-events, and Dubai’s theme of ‘Connecting Minds, Creating the Future’, is a catalyst for economic, cultural and social transformation that will generate important legacies for years to come.

In particular, the sustainability sub-theme of the Expo has already positioned Dubai as an example of sustainable development and green economy. The UAE Government is committed to making the country a successful global model so that eco-cities become the standard mode of operation around the world.

With world-class infrastructure, a robust and transparent system of governance and a strong entrepreneurial environment, Dubai is developing as a trans-continental hub for trade and commerce, helping to shape and catalyse economic development across the world.

“Dubai’s innovative economic models and extensive global trade footprint will see Expo 2020 Dubai provide participants with a unique and continuous stream of opportunity in the countr y and beyond,” said St. Valery.

The build-up and legacy are sure to be almost incalculable in financial terms and building diplomatic capital.

However, preliminary estimates indicate that the economic impact generated

by Expo 2020 Dubai between now and 2021 will reach approximately $17.7 billion, according to St. Valery.

Expo 2020 will be a stage where the world’s best showcase their newest and best creations. Mahtani said that commodities that have

become necessities today like the television set was first showcased to the world in the New York Expo in 1939. The mobile phone was also first showcased at an Expo in 1970 in Japan.

“This is a stage where business and all types of investors are looking at for the next big thing.

Since this will take place in the UAE, this is a chance for the region and specifically Dubai to show what they can do and how they are an emerging global market player.

The UAE is already a business hub in the Middle East, but Expo 2020 will make it an international business hub on the same level as New York, London or Tokyo,” said Mahtani.

PPPS AND SMES

Public-private partnerships (PPP) developed for Expo 2020 not only have the potential to develop SMEs, but if structured correctly can also help stimulate economic growth in the UAE. Enhancing ties between the public and private sectors will support the business community. cont. overleaf

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EXPO 2020 Vishal Mahtani, Group CEO Price Global Group (LS)

John Martin St. Valery, Founding Partner, The Links Group

cont. from pg. 29

“For the UAE to remain a globally competitive nation against other leading economies around the world, the government must continue to drive public–private sector liaison and help to promote and grow business activities within the country,” he said.

He added that UAE free zones remain at the core of the country’s appeal as a global centre of business and present a massive opportunity for SMEs to establish a business in the country. However, how beneficial that opportunity will be during the build up to the Expo will firstly depend on whether the SME has chosen the best route for their company set up from the get go. Choosing between a free zone versus an onshore legal presence

will vary due to companies’ distinct needs and largely depends on the target audience for the company’s product or service.

There are many routes to setting up a legal commercial presence in the UAE, but not all of them will be able to take businesses where they need to go, St. Valery said. While the roadmap may seem complicated, a trusted company formation specialist will be able to set SMEs on the right path and help avoid potentially costly roadblocks along the way.

“SMEs that position themselves correctly via the most appropriate means of legal incorporation will be well placed to to capitalise on the lucrative opportunities Expo 2020 Dubai offers,” he said.

Free zones encourage both local and international investors to reap the benefits by setting up profitable companies in the Middle East. Expo 2020 has paved way for more opportunities in highly diversified sectors of the economy, which has further enhanced the fundamental benefits enjoyed by international investors which include zero taxation, minimal barriers to entry and 100 per cent ownership in the free zones.

“Over the past years, SMEs which managed to sustain the most challenging scenarios have now been able to establish themselves firmly and benefit to the fullest owing to the continuous initiatives by the government to encourage and support entrepreneurship and development of SME,” said Mahtani.

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RISK MANAGEMENT

Risky BUSINESS AHMAD KHAMIS, CO-FOUNDER & CEO, BLOOVO MIDDLE EAST FZ LLC AND SUNANDO MUKHOPADYAY, HEAD OF EMERGING CORPORATES, NOOR TRADE EXPLAIN WHY SMES SHOULD NOT IGNORE PROPER RISK ASSESSMENT

Ahmad Khamis

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he term ‘risk assessment’ in the corporate world is precarious, whether relating to a start-up, an SME or even a large corporation.

Many experts try to predict risks, develop risk mitigation modules and strategies, and spend countless hours trying to find the right formula for risk mitigation, according to Ahmad Khamis, Co-Founder & CEO, BLOOVO Middle East FZ LLC. “Risk assessment in general is the process of defining the circumstances under which the business can be threatened and negatively impacted. When talking about SMEs, they need to be extra cautious when drawing their risk

Sunando Mukhopadyay

assessment strategies. It is crucial for SMEs to know what types of risks are relevant to them and whether these are internal risk factors, such as operational, financial, marketing, talent, or external risk factors such as macroeconomic, competitive, and environmental, or a combination of both,” said Khamis.

He added that some risks cannot be predicted and thus cannot be considered and managed. As a result, a margin of risk measurement error must be taken into consideration in order to accommodate for events that will have an unmeasured impact on business operations. This can be done through increasing cash reserves or wise diversification

strategies as a means of lessening the impact of those unknown risks should they occur, or any other precautionary measure that is relevant.

SMEs seldom have the scale, capital adequacy, robustness of organisation and fall-back measures for contingencies that corporates would have amassed over time, said Sunando Mukhopadyay, Head of Emerging Corporates, Noor Trade. He added that SMEs remain more vulnerable to the effects of economic cycles, especially during downturns, compared to corporates.

“The risks vary according to the nature of the business, but like corporates, SMEs have to deal with

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Failing to adopt the best risk management practices in SMEs could lead to failures that will in turn lead to economic shocks which will impact the whole economy.

– Ahmad Khamis, Co-Founder & CEO, BLOOVO Middle East FZ LLC

risks associated with the industry and competition, pricing of products and services, affected by fluctuation of prices of raw materials and finished products, currency exchange rates, countries–geo-political and economic risks–of import and export, concentration of buyers and sellers, demand and supply, product obsolescence, environmental, legal and the credit risk associated with the buyers, a collection risk,” he said.

Risk management remains one of the main challenges to SMEs because they are faced with many threats that most large corporates have ways of managing. The size of the enterprise in terms of capital employed, quality and number of employees, and skillset developed by the management team do all contribute to increased levels of business risks.

HOW TO MANAGE RISK

SMEs are exposed to risks all the time and such risks can directly affect day-to-day operations in the form of plummeting revenues or surging expenses that may be critical enough to make the business fail. Mukhopadyay said the assessment and mitigation of

risks has a precursor–identification of the risks that may arise in the business.

He added that business owners tend to underestimate the risks of setting up businesses and running them successfully. They also suffer from the ‘do-it-yourself’ syndrome–where the owner believes that he or she can look after all the aspects of the business– such as vision, mission, strategy, sales, purchases, finance (including reviews, forecasts, projections), trading, services, manufacturing, stocking and inventory management, technology, credit, collection, pricing decisions, infrastructure, people, controls, compliance, continuity, communication, administration, and so on.

“It is important for companies to have the right organisational infrastructure, however small they may be to have the business start up and run its course effectively. This could be done through consultants initially,” said Mukhopadyay.

Challenges aside, doing a proper risk assessment is not something SMEs can ignore. The sources of risk assessment failures range from weak communication, ineffective strategy implementation to erratic participation and interpretation.

“Failing to conduct risk assessment for SMEs has undesirable outcomes that vary from one SME to another. This can range from decreased or loss of profits due to lack of business planning and measurement, which in turn can cause business plan implementation failure, loss of control and eroding revenues, loss of profits, or even business shut down. This all depends on the magnitude of risk implications and the level of correlation with business operations,” said Khamis.

Poor risk management doesn’t affect SMEs in isolation; there can be a ripple effect for larger businesses. Khamis said since SMEs constitute more than 90 per cent of businesses in every country of the GCC region, they are technically driving the performance of GCC economies. This translates into larger percentage of GDP being generated from SMEs sending growth signals about the health of any economy.

The importance of embedding sound risk management practices by SMEs is therefore a prerequisite for economic success and sustainable development leading to improved performance of the economy as a whole.

“Failing to adopt the best risk management practices in SMEs could lead to failures that will in turn lead to cont. overleaf

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RISK MANAGEMENT

cont. from pg. 33

economic shocks which will definitely impact the whole economy including the large businesses which are chiefly driven by the performance of the economy,” said Khamis.

KNOCK-ON EFFECT

Larger businesses depend on SMEs, both local and international, for the supply of raw materials and services and distribution of the finished goods.

SMEs are the lifeline of the supply chain. Poor risk management among SMEs leads to disturbances with continuity of businesses–supplies to and purchases from the corporates are likely to suffer, said Mukhopadyay.

The larger companies are cognisant of this issue and normally manage the concentration risks of buyers and suppliers by having a large number of both. Thus, they can survive easily if a few buyers and suppliers, who can be replaced, fell off the list.

“However during economic turmoil when industry segments get adversely impacted and the majority of the SME suppliers and / or buyers fail to perform, the domino effect affects the larger businesses. How long the latter will be able to sustain the situation depends on how long the wave lasts and how much time the SMEs take to recover,” said Mukhopadyay.

A new report from PwC found that companies that put a premium on risk management are seeing better growth and increased profit margins.

PwC surveyed more than 1,200 senior executives and board members and found that over the past three years, 55 per cent of risk management leaders recorded increased profit margins.

However, Khamis said this has its limitations for SMEs, which do not enjoy generous budget allocations.

Aligning the enterprise’s risk assessment strategies with that of the

enterprise’s strategic direction and business plan is crucial to enhance the financial performance, provided there is continuous performance monitoring and strategy adjustment as and when needed.

Thus, an early awareness and action orientation to riskmanagement is the foundation stone of a successful business that can withstand the tests of time. It is not a one-time exercise but a dynamic function running parallel to the core business, supporting it and constantly endeavouring to improve profitability.

RISK ASSESSMENT CHALLENGES

• The impact of an unstable economy and unpredictable growth patterns is heavier on SMEs when compared to large enterprises that are better armed to face these uncertainties.

• Internal inefficiencies such as lack of employee commitment exposes SMEs to a larger degree of risk and this is mainly attributed to lack of training programmes and uncompetitive salaries, affecting employees’ loyalty and motivation to deliver.

• Limited capital resources is a key challenge for SMEs as this requires a strong capital base and a significant investment in talent and systems which is not available to most of the SMEs leading to higher probability of theoretical failure.

• Lack of a universal view of business trends and the adoption of new technologies as a result of low market exposure, ignorance and the inability to apply modern technologies in their business.

Source: Ahmad Khamis, Co-Founder & CEO, BLOOVO Middle East FZ LLC

THE OUTCOME OF NOT IDENTIFYING RISKS • An engineering ser vices business had to shut down because it took on too many projects in a bid to grow quickly. It was unable to deliver the projects timeously and had insufficient credit facilities for purchasing raw materials. The owners and managers were technically sound, but did not do enough to plan for adequate capacity and match the orders with timely payments.

• A food processing business extended uncontrolled credit to its buyers (groceries, supermarkets and other buyers in certain countries) without having an effective collection policy and infrastructure, leading to an inability to pay its suppliers and financers. The owner is still trying to revive the business and is seeking equity infusion, whilst seeking restructuring of its liabilities amid various hurdles.

• Rice and other commodity trading companies riding high on demand in the past several years suffered immensely when the prices plummeted to 50 per cent in early 2015 and their stocks were severely devalued.

Selling at the new prices meant incurring huge losses and the inability to sustain the business. The same applies to crude oil traders owing to the depression of oil prices in the new economic climate.

Source: Sunando Mukhopadhyay, Head of Emerging Corporates, Noor Trade

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Say YAS to adventure TIM MOW, GENERAL MANAGER, YAS WATERWORLD, ABU DHABI, TALKS ABOUT THE EMIRATI-THEMED AMUSEMENT PARK, ITS INNOVATIVE ATTRACTIONS AND WHAT SETS IT APART

Y

as Waterworld Abu Dhabi is the world’s only Emiratithemed waterpark, set across 15 hectares of the entertainment district of Yas Island.

The park’s design and concept pays homage to the UAE’s rich heritage

and the tradition of pearl diving, with all the 45 rides and attractions at the park following the adventures of ‘Dana’–a young Emirati girl in search of a legendary pearl that brought prosperity to the people of her village.

In February 2011, ALDAR Properties announced their plans to build and create one of the greatest waterpark experiences in the world on Yas Island: Yas Waterworld. PJSC Al Jaber L.E.G.T Engineering and Contracting (ALEC) was announced as

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CASE STUDY

Yas Waterworld is the world’s only Emirati-themed waterpark, set across 15 hectares of Yas Island and pays homage to the UAE’s heritage and the tradition of pearl diving.

– Tim Mow, General Manager, Yas Waterworld

Dhabi, Sultan, Dana and Chubby welcome guests to the park.

the main contractor, with Farah Leisure Parks Management LLC managing all pre-opening planning activities related to the operation of the park.

Yas Waterworld launched its commercial operations in January 2013, alongside attractions such as the Yas Marina Circuit, Yas Marina, Yas Links Golf Club and Ferrari World Abu Dhabi, as well as a hospitality offering on Yas Island to target both residents as well as short-stay and weekend visitors keen on having a fun day out.

“We opened featuring five rides that are the first of their kind in the world, such as ‘Dawwama’, the world’s first hydromagnetic-powered six-person

tornado waterslide, that was awarded the ‘2013 best new waterslide’ by the IAAPA (International Association of Amusement Parks and Attractions), the 550-metre long ‘Bandit Bomber’ coaster, and ‘Bubbles’ Barrel’–the largest FlowBarrel 10 Double sheet wave ride in the world,” said Tim Mow, General Manager, Yas Waterworld.

Yas Waterworld is very much a home-grown brand, born out of the UAE’s culture and heritage. The park is the creation of Aldar Properties, which is based in Abu Dhabi and is one of the largest developers in the MENA region. The park is also managed and operated by Farah Leisure Parks Management, which is a wholly owned subsidiary of Abu Dhabi-based Miral Asset Management LLC. As the first large-scale waterpark to be built in the capital, Yas Waterworld also places the UAE and its history at its core, being the only Emirati-themed waterpark in the world. Pearl diving has always been an integral part of the country’s heritage, being a key source of income before the discovery of oil.

The park’s aim has always been to balance a world-class entertainment experience alongside a truly immersive story with historical roots.

“There was a lot of planning that went in to setting up the business,

and naturally we had to comply with a number of regulations before opening our doors to visitors. We also wanted to create an efficient and sustainable waterpark that provides a safe and secure environment for our guests and colleagues,” said Mow. The management of Yas Waterworld brings more than 150 collective years of experience in operating leading international waterparks, and therefore were well equipped to take on the project. The park was designed utilising the criteria outlined by Estidama– the sustainability programme that promotes sustainable development and is an important part of the Abu Dhabi 2030 plan. Upon completion, Yas Waterworld was the first waterpark in the Middle East to be assigned with the Estidama Pearl One rating.

Yas Waterworld is fitted with intelligent water conservation, filtration and mechanical systems to prevent water wastage and reduce high evaporation rates. The entire waterpark is equipped with energy-efficient systems such as permanent magnet motors, pumps optimised to save energy, as well as the use of LED instead of incandescent lighting.

In addition to this, advanced mechanical, electrical, hydraulic and sanitising technology is cont. overleaf cont. overleaf

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CASE STUDY

Tim Mow, General Manager, Yas Waterworld. cont. from pg. 37

fitted throughout the park to operate all rides and attractions safely, hygienically and energyefficiently. We use non-hazardous green UV sterilization systems as an additional means of pool disinfection, eliminating the need for further chemicals to be added to the water.

“Through a partnership with Ellis & Associates, one of the leading international water safety and lifeguard firms, we are able ensure the safety and security of visitors on all rides, slides and attractions.

Yas Waterworld is also HACCP certified, which is a management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product,” said Mow. In the lead up to its launch in 2013 and throughout its first year of operations, the team geared its communications to generate

awareness of Yas Waterworld as well as showcase its rides and attractions.

In 2014, Yas Waterworld changed its strategy to further familiarise audiences with the overall Yas Waterworld experience and sustain the buzz created around the park.

Another aspect focused on was the park’s ability to take the ‘bored’ out of the boardroom with its exclusive MICE (meetings, incentives, conferencing, exhibitions) activities.

“While we are very lucky to enjoy year-round sunshine in this part of the world, this also means that we need to be constantly reaching out to people living in the UAE and our key source markets to ensure we stand out from entertainment offerings in the region,” said Mow. In 2015, Yas Waterworld brought its theme to life for the year through ‘Legendary Adventures’, which saw its guests enjoy a truly Arabian experience at the park through the inclusion of a real-life camel and falcon, along with the Yas Pearl Diving experience; which gives

guests the chance to plunge to the depths of an underwater tank in a hunt to collect three oysters, which contain precious pearls, in an adventure reminiscent of Emirati pearl diving.

Another key part of its promotions is to leverage the popularity of Yas Island as an entertainment destination in Abu Dhabi, and the management team looks forward to continuing to engage its audiences over the coming years.

Yas Waterworld partnered with world-class designers, engineers and suppliers prior to launching, including ride suppliers such as WS Atkins Global, Water Technology Inc, Whitewater West Industries, WaveLoch, Vekoma Rides Manufacturing and ProSlide Technology Inc. “Through the years, we have also built strong relationships with tour operators from across the world to help drive more traffic to Yas Waterworld. We are also working with PR and marketing agencies in our key source markets such as India

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Dawwama’, Dawwama’, the the world’s world’s first first hydromagnetic-powered hydromagnetic-powered six-person six-person tornado tornado waterslide waterslide can can be be enjoyed enjoyed at at Yas Yas Waterworld.

Waterworld. and China to effectively reach tourists from these locations,” said Mow. While remaining true to its heritage and traditions, as well as maintaining an aesthetic, cultural and environmental harmony, Abu Dhabi has cemented itself as a mustvisit destination with its diverse offering for a variety of audiences.

Yas Island stands out as one of Abu Dhabi’s premier leisure destinations with an array of attractions for local and international visitors. Yas Waterworld, located on the renowned island, rivals the best international waterparks with its varied offering that promises a fun experience for the entire family including five world-first rides.

Whether its enjoying fast-paced rides such as Dawwama’ and Jebel Drop, relaxing on the lazy Al Raha river or diving for pearls with the Yas Pearl Diving Experience–visitors can experience a truly Emirati adventure.

“We have an exciting year planned for our guests filled with events, activities and offers, in addition to our existing rides, slides

and attractions. Ladies Night, which gives our conservative female guests the opportunity to enjoy our offerings in a safe and private setting, is set to be back by popular demand in March 2016. We are also planning activities around Ramadan and Eid al-Adha, as well as specific days such as UAE National Day, Halloween, and the festive season in December,” said Mow. “Furthermore, we are increasing our efforts to reach UAE residents; our resident offer has seen great success, bringing in people from Abu Dhabi as well as the other emirates, which is why we are bringing it back in 2016, along with offers for corporate and school groups, birthday parties and other promotional opportunities.”

The theme park industry is expanding in the UAE, so the management team will continue to highlight its unique proposition in order to stand out from the rest, while also contributing to the wider entertainment offering both on Yas Island and in the UAE.

2015 AT A GLANCE •2.6 million people went on the park’s five iconic rides, exceeding the total female population of the UAE. •3,964 pearls discovered by guests in the pearl diving experience, enough to make a 40 metre pearl necklace.

•38,848 towels sold at the park, which if laid end-to-end would cover the Abu Dhabi Corniche to Yas Waterworld and back.

•55,454 slushies sold, which if stacked would be 43 times taller than the Burj Mohammed Bin Rashid.

•59,576 hours of guest experience training attended by staff, twice the time to build the Burj Khalifa.

•110,000km travelled by The Bandit Bomber, the same distance as travelling around the UAE 61 times.

Source: Yas Waterworld

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SHUTTERSTOCK.COM

The The team team at at Afkar Afkar Capital Capital plan plan to to develop develop asset asset management management within within the the MENA MENA region. region.

In the ZONE

SEIF FIKRY, CEO AND CO-FOUNDER, AFKAR CAPITAL, DISCUSSES BEING AWARDED THE ABU DHABI GLOBAL MARKET FIRST FULL FINANCIAL LICENCE AND WHAT IT MEANS FOR BOTH THE COMPANY AND THE MENA REGION

A

bu Dhabi Global Market (ADGM), the capital’s new investment free zone, has awarded its first full financial licence to Afkar Capital, which is an incubator for asset management fund start-ups, opened in October 2015.

Seif Fikry, CEO and Co-Founder said that Afkar Capital is a new company, this is their first licence

and he feels the company is using the right platform to set up what it wants to do. The DIFC-based asset management company not only provides investors with more variation and investing options than they would have by themselves, but it is also an incubator, which helps new and start-up companies to develop. Fikry said what set it apart in terms of qualifying for the

license was the Afkar Capital’s focus on bringing talent into and starting funds within the region.

“We are an asset manager that is trying to bring the asset management industry home to the MENA region instead of it being outsourced. Most of the region’s assets are being managed in Europe or the US. Other jurisdictions, such as Europe or the US, manage their assets from within,” said Fikry.

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FACETIME

In the next ten years we plan to be positioned as a local asset manager within the MENA region.

– Seif Fikry

Fikry said this outsourcing isn’t due to lack of talent as current asset managers in the region can hold their own when it comes to competing with the global portfolios or funds, and managing client accounts from Europe and the US. But while the region has the talent, the legal structure and framework have previously been prohibitive.

The legal structure in the Middle East offers no support functions to set up an asset management business that can be built into a global presence, according to Fikry.

He said the regulators need to start pushing for a legal framework to allow the custodians to go out of the region and start building a custody business. But custodians will not be able to do that, without having the right framework on shore here that will allow them to go out and build a bigger business.

Fikry added what needs to be considered is where the long term money in the region is and where it is managed and invested. Most of the region’s long-term money, such

as pensions, the sovereign wealth funds and even insurance funds, are mandated offshore; even to the extent that some do not have any onshore mandates.

“With that in mind we are hopeful that in the next five to 10 years this framework will be revisited and some of this money will either be redirected to be managed onshore, or that the offshore mandates will have some sort of requirement that part of the mandates be managed onshore,” he said.

Fikry cited Singapore and Ireland as two countries that have implemented these frameworks successfully. Singapore allows offshore mandates but with the caveat that the fund manager has a presence onshore.

In Ireland, asset management businesses cannot to do any activity without having onshore offices–the legal advisor, custodian and fund management company have to be Irish. Afkar Capital will facilitate asset management businesses that want to be established in the UAE. Fikry left his position as Chief Executive of EFG-Hermes after 18.5 Source: Eros years to focus on setting up Afkar

Capital. He has partnered with Sylvain Vieujot, who runs the DIFC-based Emirates REIT, one of the UAE’s first DFSA regulated real estate investment trusts, according to the company’s website.

Vieujot is the Non-Executive Director of Afkar Capital.

Even though the team at Afkar Capital feel the pressure of being granted the first licence and the standards they have to live up to set by the ADGM, they have a clear understanding of what they want to achieve moving forward. Fikry said the plan is to have at least one product launch this year and over the next five to 10 years develop 10 products.

“We are not only focused on products. Our primary target is to look for talented asset managers. We are more focused on developing the industry here–across private equity, fixed income, or any strategy within any of these asset classes invested anywhere in the world.

Our strategy is very simple–in the next 10 years we plan to be positioned as a local asset manager within the MENA region,” he said.

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Carl Ghossoub looks forward to developing the Orange Leaf franchise in partnership with Two Spoons.

SPOONING up the goods CARL GHOSSOUB, MANAGING DIRECTOR, TWO SPOONS AND TERRITORY DEVELOPER OF ORANGE LEAF IN THE MIDDLE EAST, TALKS ABOUT BRINGING THE FROZEN YOGHURT FRANCHISE TO THE MIDDLE EAST

A

merican frozen yogurt concept Orange Leaf Frozen Yoghurt announced that they will partner with United Arab Emirates–headquartered retail company Two Spoons to open four frozen yogurt outlets in Dubai by the end of 2015.

According to Carl Ghossoub, Managing Director of Two Spoons and Territory Developer of Orange Leaf in the Middle East, the Two Spoons

business model is simple–the focus is on introducing global brands to the Middle East.

Orange Leaf Frozen Yogurt works on a franchisee basis and its proven business model, which encourages owners to become a part of Orange Leaf’s community, has seen the brand expand from its US roots into other markets such as Mexico, Australia and now the UAE. “The first two Orange Leaf locations to debut in the region

opened for business on 2 December 2015 and 6 January 2016 at Mall of the Emirates and Mirdiff City Center respectively. A third outlet will open in February at the mall on Jumeirah Beach Road, followed by a fourth location in The Dubai Mall in March,” said Ghossoub.

Two Spoons has a territory development agreement with Orange Leaf whereby the company has the right to open up to 25 outlets across

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FRANCHISE

Consumer demand for frozen yogurt in the Middle East has grown exponentially and Orange Leaf has a great global brand reputation.

– Carl Ghossoub, Managing Director of Two Spoons and Territory Developer of Orange Leaf in the Middle East

the region, which will be delivered through local franchisee partnerships in the various target markets.

FRANCHISEE SUPPORT

According to Ghossoub, the Orange Leaf is hands-on to ensure the brand is managed smoothly. Orange Leaf provides its franchisees with access to a full spectrum of resources including an extensive training programme and the one-on-one support required to run a successful operation.

“We also have access to Orange Leaf’s operational know-how and the brand provides ongoing support that includes brand training and strategic marketing insight. Considering operations training, for example, this covers the full A-to-Z of operational requirements from back-end systems, proprietary products and recipe knowledge to in-store openings and even advice on screening potential subfranchisees,” he said.

As Two Spoons develops a marketing plan, trains employees, or plans the grand opening, Orange Leaf offers a built-in support system from the beginning. The Orange Leaf team also flies from the US to support physical store openings.

In terms of décor Two Spoons was provided with a comprehensive construction manual that covered every aspect of a store fit-out.

There is a certain degree of flexibility within these parameters, which are evaluated on a case-by-case basis, and given the green light as long as brand fundamentals are met.

Ghossoub attributed Orange Leaf’s success to its commitment to research and development with the goal of continuous innovation, product refinement and service enhancement; and is positioned as an expert in the frozen yoghurt market.

“Consumer demand for frozen yogurt in the Middle East has grown exponentially and Orange Leaf, which was ranked in 2011, 2012 and 2013 as one of the top five fastest-growing chains by US based research firm Technomic, has a great global brand reputation,” he said.

Partnering with Orange Leaf has been mutually beneficial. Two Spoons has boosted its profile in the food and beverage sphere, and the Orange Leaf brand has been brought to a new audience; even though it has an established reputation in North America, Mexico and, more recently, Australia.

Orange Leaf also provides its online marketing portal providing access to more than 1,000 customisable pieces of marketing collateral, social media posts, and local store-focused marketing tools, this is invaluable in promoting the product and provides a competitive advantage.

“We have been able, and will be able in the future, as we expand across the region, to create a concept tailored to a specific market or location. In an extremely challenging business environment, this helps us to stand out from the competition.

Our two openings to date have definitely set the scene for market expansion and in store customer feedback to date has been extremely encouraging,” said Ghossoub.

TACKLING CHALLENGES

• Brand positioning The team was able to leverage the extensive marketing and operations experience along with that of the in-house marketing teams at the malls in order to overcome any potential issues.

• Kiosk design The Two Spoons team had to ensure that the Orange Leaf branding stayed consistent while complying with the individual mall brand guideline policies.

• Site location Two Spoons signed contracts with a number of key locations and when scouting locations, the team took into account the physical site, shopper demographics, footfall statistics and location price.

Source: Carl Ghossoub, Managing Director, Two Spoons

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START-UP

Fighting FITT FITTPASS CO-FOUNDERS FAISEL BASHIR AND HEBA EL DALEEL DISCUSS THEIR ROLE IN THE FITNESS INDUSTRY BY MAKING WORKING OUT CONVENIENT

Faisel Bashir and Heba El Daleel

F

ittPass.com is designed to empower people to exercise flexibly however they want, where and when they want by unlocking facilities across the city through one-day, five-day and 30 day passes as well as three, six and 12 months memberships to any facility within its network at negotiated prices for FittPass consumers, via its website.

Faisel Bashir, CEO and Co-Founder of FittPass said the concept was born out of his own frustration at getting bored with working out at the same fitness facility, but having to continue because he’d already paid for a longterm membership. When collaborating with Co-Founder and CCO, Heba El Daleel, not only did they share this frustration, they wanted to introduce a flexible fitness model that allows people to work out when and how they want in a pay-and-play model. After doing a lot of research together and talking with fitness facilities, the idea of FittPass was born.

As Bashir and El Daleel were trying something new in the UAE, a

major challenge was educating key players in the fitness industry. This entailed understanding the business model that best fit the industry and the local market and made sense for the consumer. Bashir added that they had to develop the entire user experience on their own, and use complex algorithms to ensure that they were able to get close to their vision of making it easy and flexible to work out. He said the final point to worry about was being prudent with their money to ensure maximum return on investment.

“Additionally, facing the challenge of being new to the entrepreneurial scene, one tends to have a lot of doubts with regards to basic setup concerns and finding the guidance to help with the initial decision making,” said El Daleel.

The co-founders have ambitious plans for expansion. They aim to be in Abu Dhabi by Q1 2016 and by Q4, they hope to open their first office outside the UAE. Besides a regional expansion plan, the company also intends to

develop the product further so that users can enjoy the overall FittPass experience when buying fitness passes or memberships online.

“Our mission as a company is to make the region a much healthier place using technology and making getting active extremely flexible by allowing users to choose how and when they exercise,” said Bashir.

Bashir said that clear communication is essential for accountability between partners. He added that a business needs the right suppliers–they must understand the vision of the company as though it’s their own. The co-founders agreed that having mentors and advisors join the business does not only mean they bring their own experiences and learnings, but they can expose entrepreneurs to a wide network. El Daleel added that business success was also a case of finding the right formula that makes the best business sense; what may work for one business may not apply to another.

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AWARDS

LAST CHANCE to book your spot!

T

he FinanceME Business Vision Awards will not only reward people who have developed and grown businesses, whether a start-up or a mid-sized corporate, but also provide nominees the opportunity to network with business leaders.

“We are looking forward to celebrating some of the most powerful ideas and visionary leaders in the SME space today.

Despite recent publicity about the sector’s problems and the increasing stringency of bank lending to SMEs… this is where the future begins, where the job security, the wealth and the economic diversity of tomorrow will spring from!” said Robin Amlôt, CEO, CPI Financial.

Each nominated company qualifies for two free tickets to the awards, but bookings are still open should a nominated company wish to bring its team.

Tables of 10 are available for $2,000 per table. Nominees who book a table are invited to bring along marketing collateral to display in the networking area.

For more information on how to reserve a table at the event, and the display space available, please fill out the booking form on pg. 47 and scan and email it to Rizza Infante on rizza@ cpifinancial.net.

Finance ME ’s Business Vision Awards will take place on 23 March 2016 at the Jumeirah Emirates Towers, Dubai.

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AWARDS FOR BUSINESS SERVICES… • • • • • • •

Best Business Technology Provider Best IT Services Provider Best Business Advisory Service Best Accounting/Auditing Service Best Law Firm Best Business Consultancy Best Business Solutions Provider

AWARDS FOR BUSINESS… • Top Seller 2015 (retailing) • Top Trader 2015 (trading) • Top Manufacturer 2015 (manufacturing) • Top Developer 2015 (construction/development) • Top Services 2015 (service sector) BEST GIVING BACK INITIATIVE OF THE YEAR: This award will go the company, large or small, showing the most commitment to making a difference in their local or regional community.

BEST PRACTICE IN EMPLOYMENT: This award reflects the commitment employers in the GCC need to make to create jobs for GCC Nationals.

BEST START-UP: This category is reserved for new business ventures established within the GCC since 1 January 2015.

MOST IMPROVED COMPANY OF THE YEAR: Open to businesses showing growth in staff, turnover, market penetration, or the most improved business practices in the last 12 months.

BEST ESTABLISHED BUSINESS: This category is open to companies with staff levels between 100250 and turnover that is between $28-$68 million.

BEST SMALL BUSINESS: The ‘Small Business’ category covers those businesses with staff levels of less than 100 and an annual turnover smaller than $28 million.

BEST HOME-GROWN BRAND: This category awards those GCCgrown businesses of all sizes that have shown business development, expansion and growth both in-region and internationally.

BEST FRANCHISE: This award will look at the most successful franchises to hit the shores of the GCC in terms of expansion, turn-over and brand presence.

INSPIRATIONAL BUSINESS PERSON OF THE YEAR: This Award will recognise individuals for their creativity and commitment in business, whether in an established company or in a new venture.

To enter, head to our nominations page on the website www.cpifinancial.net/events and navigate to the Events page to pick your category and submit 300 words explaining why YOUR company deserves to win the award!

Documents illustrating your nomination, such as financials, company growth charts, or products, for example, can be uploaded in PDF format on the nomination form.

We look forward to seeing you there!

HAPPY NOMINATING!

2/22/16 10:31 AM

Table s

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ision awards 2016 Wednesday 23 March 2016

The Godolphin Ballroom, Emirates Towers Hotel, Dubai 7pm cocktail reception followed by dinner and the awards ceremony

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12:15 PM 3/3/16 12:16

REAL ESTATE

Dubai’s real estate COOLS DOWN DEV MAITRA, CEO, INDIGO PROPERTIES LOOKS AT THE EFFECT OF THE LIQUIDITY CRUNCH ON PROPERTY

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Dev Maitra

he year 2015 showed the maturity of the real estate sector in Dubai with several new project launched and many ongoing projects being completed. The purchase price levels, however, were lower than the previous year as there was reduced liquidity available primarily due to the fall in oil price and the mortgage cap. However the rents have not fallen by much.

The slight cooldown of the property market started in the summer of 2014 when things were overheated and this continued throughout 2015, though at a low rate. Overall the prices by the end of 2015 were about 10 to 12 per cent lower than the 2014 peak.

The properties at the lower end seem to have performed better than the luxury sector. We saw prices hit the AED 8,000 per square metre mark last year for our Indigo Spectrum building in International City while they currently stand at around AED 7,500/square metre.

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It is more worthwhile for SMEs to purchase their commercial premises rather than continue to rent as the rents haven’t really fallen much.

– Dev Maitra, CEO, Indigo Properties

The golf course facing villas in our Orange Lake project in Dubai, which were priced at AED 16,000/square metre last year, have transacted closed to AED 14000/square metre levels this year.

IMPACT ON SMES

It is worthwhile for SMEs to purchase their commercial premises rather than continue to rent as rents have not really fallen much. The current low purchasing price of commercial properties in new districts, such as Business Bay and Jumeirah Village, has made this purchasing decision easier. The current high rental yields also make it lucrative for long-term investors looking for stable yet high returns. A couple more free zones in Dubai have been introduced and are expected to become popular soon, namely the Dubai South and Meydan zones. With the abundance of choice of options to setup businesses in Dubai we feel there won’t be need for Dubai based SMEs to look to the

other emirates for cost-effective new company setups.

The primary impact of the liquidity reduction this year has been on cash sales while the number of mortgage-backed purchases has almost remained unchanged. In 2014 most of the purchases in Indigo Properties’ projects were from investors with deep pockets rather than end-users but this trend has changed in 2015 with most of our buyers being end-users, of which most have some kind of mortgage or finance arrangement. This trend is not just with Indigo but it is a Dubaiwide phenomenon.

We feel that if the current mortgage cap were to be relaxed slightly, for example if expats were allowed 80 or 85 per cent finance instead of the current maximum 75 per cent, then this would give a boost to the mortgage-based real estate transactions. A larger number of buyers would find it easier to arrange for the lower

down payment and banks can divert more money towards the safer assetbacked loans. It’s a win-win situation should it come to pass.

EXTENDED PAYMENT PLANS

In the meantime developers are finding alternate ways to make purchasing easier on the buyer’s pockets without resorting to price drops. The pressure on the selling prices has resulted in several developers offering extended payment plans for their off-plan projects. As an example, the Orange Lake project offers a three-year post-handover payment plan. Along with Indigo Properties, several developers have recently launched projects with relaxed and extended payment plans. These payment plans bring the properties into the reach of end-user buyers with not-so-deep pockets.

Availability of liquidity would be critical to the long term development of the property market however this will depend much on fiscal policies and exchange rates.

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Encouraging ENCRYPTION HADI JAAFARAWI, MANAGING DIRECTOR, QUALYS ME TALKS ABOUT ONLINE BANKING USING THE MOST SECURE INTERNET-CAPABLE DEVICE With 42 per cent of the UAE workforce made up of SME businesses, the impact of a successful financial breach would be devastating due to the size of the firm and would also be more difficult to come back from. Having interacted with many SME companies in the UAE, a common goal is improving security for all their online banking transactions.

It is clear that the endpoints that are used for online banking are high value targets. Fortunately, IT administrators can do a number of things to stay ahead and not become a victim of the struggle. The most important item is to make sure that the computing equipment being used cannot be taken over by the cyber criminals.

While there also may be other options, online banking is a great opportunity to implement security measures adapted to the user. IT administrators can improve the security of their company’s online banking by implementing any of the options listed, except for the use of a normal Windows PC. But securing the client is only one of the components of safe banking transactions. It makes sense to talk to end users about securing the configuration on the banking application side. If the bank offers two-factor authentication (2FA) it should be activated.

Encryption is important to protect a company’s data and transactions

in transit, so when end users are logging into their bank’s website, they should be trained to look for an encrypted connection from the very beginning. This means that the page where they type in the credential information, such as account number and or passwords should already be encrypted. They should verify that they see the green lock in the browser’s URL bar and that the URL matches the name of the bank site that they wanted to contact. They should not accept any exceptions on the certificate that identifies the bank’s site, which will assure that they are actually interacting with the site that they wanted to contact.

SHUTTERSTOCK.COM

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nline banking has become the default way for many to conduct money transactions, in business as well as in private. It combines two important characteristics: it’s convenient and faster for the customer while being cheaper for the provider. This combination explains its popularity. The UAE, which boasts the one of the highest penetration of smartphones in the world, is using online banking more than ever before.

But legitimate users are not the only group interested in online banking– cyber criminals are also attentive to new areas that they can exploit, so it should be no surprise that online banking has seen an increasing volume of successful attacks. Companies have lost millions each year and banks have to stay vigilant by improving their security infrastructure.

Cyber criminals have continuously improved their tools to make sure they have the technical capabilities to counter mechanisms aimed to stop them. So today we are in an escalating action / reaction conflict between banks and cyber criminals with banks focusing on two key tasks; first, to secure the transaction, which implies a maximum of controls and checks, and second, to offer ease of use, which means they cannot be too intrusive in their attempts to affirm identity and integrity.

Online banking is a great opportunity to implement security measures adapted to the user.

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– Hadi Jaafarawi, Managing Director, Qualys ME

THE LEAST TO MOST SECURE OPTIONS FOR A COMPANY TO SECURE THE ENDPOINTS THAT PARTICIPATE IN ONLINE BANKING 1. A Windows PC, also in use for normal office tasks Windows is by far the most popular operating system for desktop and laptops. Unfortunately it is also the most popular operating system to attack by phishing attacks that come in through business and private email and take advantage of browsing habits. Every month Microsoft and other software vendors such as Adobe release updates to their software that address the critical vulnerabilities sought after by cyber criminals.

But even in cases where the IT department maintains updates to security patching, cyber criminals are able to get access and infect these PCs with malware. So, if a user has to use a normal office PC for online banking they can improve the situation by using a different browser for banking transactions. By using a different browser, they can escape a small part of the infections that focus on Microsoft’s Internet Explorer. Google Chrome browser is a robust alternative.

2. PCs running other operating systems PCs running operating system such as Mac OS X and Linux are less likely to be attacked than Windows. This is because exploitation toolkits that are available in the black market are typically only targeted at the Windows operating system.

3. A Windows PC that is used solely for banking A dedicated Windows machine is a good option that is very resistant to attacks by cyber criminals. By keeping the machine updated with patches and security software and maintaining the discipline of not using it for any other tasks, users can reduce the number of possible attacks significantly. The most critical issue is stolen admin credentials, which need to be controlled by configuring different credentials for each machine.

4. Mobile platforms–tablets and smartphones Tablets and smartphones run on new generation operating systems that are better than the average PC. Initial versions of Apple’s iPhone / iOS combo had such strong separations between applications that cut and paste was not even allowed. While some of these limitations have been relaxed over time, the strong security posture continues to be in force and infections numbers in the mobile area are at least two orders of magnitude smaller than in the PC area. Therefore, a tablet is a very good choice for banking needs.

5. Chromebase and similar In its quest to make the browser the universal client side application Google has come out with a new operating system called ChromeOS. ChromeOS is in essence the Chrome browser plus a minimum number of capabilities that are necessary to run the browser, such as networking and user management. That makes ChromeOS more limited in its facilities than even a mobile OS. So far security researchers have been unable to break into ChromeOS machines, even though the reward offered was quite significant reaching the $100,000 range.

Source: Hadi Jaafarawi, Managing Director, Qualys ME

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TECH FOCUS

Companies have lost millions each year and banks have to stay vigilant by improving their security infrastructure.

51 3/9/16 10:07 AM

Building business on a DATA FOUNDATION JULIA BOULLEMIER, MD MENA AT DATA SCIENCE CONSULTANCY PROFUSION, DISCUSSES HOW BUSINESSES CAN USE DATA TO IMPROVE PRODUCTIVITY AND MANAGE RESOURCES

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Julia Boullemier

e are living in a new Age of Enlightenment driven by data.

Ever ybody and everything has the capacity to collect and transmit data. On paper, this should mean we know more about each other and the world around us than ever before. The reality is a little different. This veritable blizzard of information can make differentiating the inane from the meaningful a difficult task. For small businesses with limited resources to analyse information, this problem is even more acute. The challenge is also growing thanks to the rapid development of smart cities and wearable technology across the UAE. However, where there is a challenge for a business, there is also a fantastic opportunity. If a business can collect the right information at the right time and use the best techniques to glean profound insights, it can gain a huge advantage over its competitors.

Thankfully, the basics of creating a data-driven business are not

exceptionally onerous if the right planning is undertaken.

The first step is understanding the goal. That might sound like a glib statement, but the truth is that until a business owner knows exactly what they want to improve or change, they will not be able to put the right structures in place. For example, focusing on customer data can be used to enhance customer service, marketing and business development. Whereas learning more about business processes can help with HR, product development, supply chain management or expansion planning.

Realistically, a business should want to improve every process.

However, trying to do everything at once, especially with limited resources and time, is a recipe for disaster. The best campaigns for SMEs are incremental. By focusing on one objective at a time a company can afford to make mistakes, refine the approach and create manageable change. This does not mean that different issues are tackled as if they

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TECH FOCUS

If a business can collect the right information at the right time and glean insights, it can gain a huge advantage over its competitors.

– Julia Boullemier, MD MENA, Profusion

have no bearing on one another.

Improving customer service will probably have a direct influence on procurement and marketing.

After identifying the most pressing area of improvement, the next step is auditing the data sources.

Every interaction with customers or every action taken in-house is a potential information generator.

So too are external source such as social media platforms, weather data and economic news. The more sources that can be collected, the more clear and more accurate the picture. However, smaller companies generally don’t have the resources to integrate every available data stream. Triaging these sources to prioritise the most relevant is the best approach.

When this background work is done, the next step is ensuring that data can be collected, managed, accessed and updated. This is where most businesses fall down. Legacy (or non-existent) IT systems or poor management structures can be fatal.

If data is not updated in real time it

rapidly loses its value. Like trading stocks on last week’s news–the best decisions are unlikely to be made.

Unfortunately, there is no substitute for investment. Having up-to-date IT infrastructure is a must. So too is having companywide buy in. Every employee needs to understand the value and importance of collecting and using data.

It is only at this point we get to the fun stuff: actually analysing data to reveal hidden insights. Data science is currently the most powerful tool available in this field. For the uninitiated, data science goes beyond pure data analysis. Its practitioners have an arsenal of different weapons at their disposal from machine learning (essentially algorithms that learn as they receive more data) to clustering (understanding the hidden relationships between groups) and a load more in between.

Hiring in-house expertise or instructing a consultancy is not prohibitively expensive, especially when the possible benefits are considered.

When the numbers are crunched and insights revealed, the stakes

are at their highest–it’s time to make the right decisions. Usually, recommendations generated by data science offer a clear way forward.

However, it is tempting to interpret data in such a way that it reinforces preconceived notions or maintains the status quo. Change can be scary and it can be difficult to let go of a certain way of doing things, especially if it has made a business a success. Luckily, the beauty of data science is that it can also be used to better track the impact of the changes made and refine the approach.

Data is one of the greatest resources of our time, especially so in the UAE as new technology and Government initiatives drastically increase the production of data. As more and more businesses realise the untapped potential in sifting through the data that we produce, the role of the data scientist is becoming ever more important.

Companies who embrace data science now will find they are well ahead of the pack.

WWW.FINANCEMIDDLEEAST.NET

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53 2/22/16 10:35 AM

LAST WORD

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Safety DRIVEN

BASSAM ALKASSAR, CEO AT FMS TECH DISCUSSES HIS PASSION FOR HIS ROLE AND THE COMPANY’S EXPANSION INTO THE GCC CO2 using smart solutions such the FMS Tech products. My vision is to make every employee a guardian of our main goal: make the roads a better place to drive.

What is the GCC market place like currently for solutions such as yours?

The GCC countries are among the first to have adopted IVMS (In Vehicle Monitoring System) and FMS (Fleet Management System) solutions worldwide.

What is the most challenging aspect of what you do?

Bassam Alkasser

It’s very challenging to find the right business partners in different countries as well as trying to keep good relations between our team members and focussing on our clients.

What does your current role involve on a day-to-day basis?

How do you strike a work-life balance?

A bit of everything; I discuss planning and execution with department heads and country managers; I find solutions for some challenging problems and always make myself available to lead the team.

I maintain relations with banks, draft policies and procedures for the whole group as well as public and customer relations.

I also think of innovations to solve some challenging problems such as road safety, changing driver behaviour, reduce our clients’ transport expenses, and help clients make their mark on green initiatives by reducing

One of the most difficult tasks for me is maintaining a good balance between work and family. For me life is a combination of everything.

I always try to maintain a good balance between family and work by spending quality time with my relatives and I encourage my employees to do the same.

What is the most challenging aspect of what you do?

Being able to create a stimulating work environment and keeping my colleagues motivated to stand out in every activity they are responsible for.

WHAT IS THE BEST ADVICE YOU WERE EVER GIVEN? Real success does not come easily nor does it come by chance. A person has to work hard and sacrifice lots of good things in life to achieve success.

WHAT IS YOUR FAVOURITE TRAVEL DESTINATION? Where my beloved family lives.

WHAT ARE YOUR HOBBIES? I enjoy reading, swimming, scuba diving, meeting with friends, and playing backgammon and cards.

WHAT IS YOUR FAVOURITE MUSIC? Pop and the oldies.

T t m

WHAT BOOK ARE YOU CURRENTLY READING? The Hunger Games series.

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