#47 - March 2016

WWW.FINANCEMIDDLEEAST.NET ISSUE 47 | MARCH 2016

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We have received orders to fabricate several historical replicas such as spears, swords, helmets and accents for the Scandinavian Museums.

– Oddvar Lönnerkrantz, CEO, Viking MRM

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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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his issue our cover story takes in interesting turn towards tradition as we speak to CEO of Viking MRM, Oddvar Lönnerkrantz, a Dubai-based, Swedish blacksmith who uses traditional tools and methods in his metal work. He talks about setting up and growing his niche business of building and modifying cars and bikes (Pg 20).

One of this month’s hot topics was International Monetary Fund Managing Director Christine Lagarde’s visit to the UAE, where she reiterated the IMF’s advice to implement tax in the region to boost Government revenues. One of our features takes a look at the proposed corporate tax and what it means for the business landscape in general, but also how it will impact smaller businesses. Fortunately, Chas Roy-Chowdhury, Head of Global Taxation, Association of Chartered Certified Accountants (ACCA) and Jean Martin St. Valery, Founder of consulting firm, Links Group are able to offer insights that explain what to expect (Pg 28).

Our country focus for this month looks at Oman, particularly in light of the oil price. While the general consensus across the region is one of concern and caution, particularly since S&P dropped the country’s rating twice in 2015, Oman has a few redeeming sectors that are expected to perform well enough not to be impacted too harshly by the low oil price, particularly retail (Pg 24).

Our third feature this month takes a look at auditing, particularly for SMEs–why they should do it, how to prepare and what to look for in an auditor. One advantage discussed is that audited bank records provide greater transparency when applying for loans (Pg 32); which ties in well with our news analysis this month, which looks at banks’ commitment to the SME sector, in spite of small business owners skipping the country, leaving around AED5.5 billion in unpaid loans (Pg 05).

Finally, the month has arrived where we are going to celebrate FinanceME’s first Business Vision Awards where we will celebrate and acknowledge people who have developed and grown businesses, whether a start-up or a mid-sized corporate, in the region.

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PUBLISHED BY

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NEWS ANALYSIS Sustained support for SMEs

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FAST FACTS Entrepreneur Club established in Muscat

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5 TOP TIPS Five tips to build popularity

10

OPINION Closing the gender gap

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OPINION The SME conundrum

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LEGAL FOCUS Pick your battles

18

CHALK TALK Guillaume Cuiry

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CEO CHAT Heavy Metal

FEATURE Crunching the numbers

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CASE STUDY The full package

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FACETIME Speak my language

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BRAND The business of growing business

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START-UP Buying off Biddi

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AWARDS

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COUNTRY REPORT Observing Oman

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FEATURE Corporate tax: evil or opportunity

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PRODUCT FOCUS Mobile payment solutions for SMEs TECH FOCUS Avaya gets SmartDXaaS

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TECH FOCUS Un-clouding the issue

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Chairman SALEH F. AL AKRABI Chief Executive Officer ROBIN AMLÔT robin@cpifinancial.net Tel: +971 4 391 4681 Managing Editor GEORGINA ENZER georgina@cpifinancial.net Tel: +971 4 391 3728 Editors JESSICA COMBES jessica@cpifinancial.net Tel: +971 4 364 2024 SARAH OWERMOHLE sarah@cpifinancial.net Tel: +971 4 375 2527 WILLIAM MULLALLY William@cpifinancial.net Tel: +971 4 391 3718

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Shamlal Ahamed, Managing Director, Malabar Gold & Diamonds

Setting up an SME Analysing information

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– Oddvar Lönnerkrantz, CEO, Viking MRM

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NEWS ANALYSIS

Sustained support for SMEs

In spite of 2015’s exodus of SME owners who defaulted on around AED 5.5 billion in business loans, banks reaffirm their support of the sector businesses are exaggerated, as banks are increasingly working with small businesses to address their short-term cash flow issues.

“The data in terms of NPL and the banking sector as a whole shows that the matter does not pertain only to SMEs issues, although they may be overemphasised; while the SME sector might be at risk in the current environment of tighter liquidity, it is still manageable,” said Tim Fox, Head of Research & Chief Economist, Global Markets & Treasury Emirates NBD. Whilst not trivialising the matter of the defaults and skips of 2015, as it resulted in banks revisiting the financing norms and becoming more selective of specific industry sectors, the situation seems to be returning to normal, with lesser trade volumes compared to the same period last year, according to Sunando Mukhopadhyay, Head of Emerging Corporates, Noor Trade.

“Most banks have reaffirmed their faith in the SME sector which remains the backbone of the economy. The rate of SMEs owners who have been termed as ‘skip debtors’ has declined substantially and the stressed companies are actively engaging with banks to restructure their financing to match their new working capital cycles. It is a matter of time– this market correction will stabilise and confidence will return amongst SMEs and their banks,” he said.

“Obviously, there is a risk that prolonged oil prices could lead to new NPLs, particularly for contractors who face payment problems from government entities. However, as of yet, there is no sign of a crisis emerging,” added Thaker.

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he UAE Banks Federation said at the end of last year that SME borrowers had defaulted on about AED 5.5 billion worth of debt in the first 11 months of the year, with Emirates NBD noting a rise in SME customers fleeing the country to avoid loan payments.

Many of these firms over-borrowed from multiple banks. After the launch of the credit bureau, the actual exposure levels of these firms became apparent, resulting in restrictions on access to more loans. Some customers panicked and ran away, according AbdulAziz Al Ghurair, Chairman of UAE Banks Federation, in November 2015.

Non-Performing Loans (NPLs) in the UAE spiked up from around two per cent after the 2008 crisis, reaching about eight per cent. This came down more recently as there was restructuring with Dubai Government Related Entities and loans to them were reclassified as performing, but were still at about six per cent sector-wide at the end of 2014, said Pat Thaker, Regional Director for Middle East & Africa at The Economist Intelligence Unit.

Alex Thursby, Chief Executive of the National Bank of Abu Dhabi added to this as he spoke on the sidelines of the 10th GCC Regulators Summit in January this year, stating that while NPLs were at low levels at the time, fears of rising defaults among small

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EXTENDED LOW OIL PRICE TO CHALLENGE GCC BANKS' RESILIENCE

ENTREPRENEUR CLUB ESTABLISHED IN MUSCAT

Moody’s says in its annual Credit Analysis Report for the Government of Abu Dhabi that economic growth could come under pressure this year amid government spending cutbacks in response to lower oil prices.

A prolonged period of low oil prices could gradually erode the emirate's fiscal buffers if it does not maintain its prudent budgeting. In 2016, the emirate's deficit will likely widen to 14 per cent of GDP, according to Steven A. Hess, a Moody's Senior Vice President.

Nitish Bhojnagarwala, AVP-Analyst at Moody’s Financial Institutions Group, said the effect of scaling back public spending will impact the SME sector; but given that SMEs are primarily operating in Dubai, which is not directly dependent on oil for Government revenues, and to a large extent in the core sectors of the economy, such as trade, transport and tourism, the impact maybe relatively modest.

Said bin Saleh al-Kayoumi, Chairman of Oman Chamber of Commerce and Industry (OCCI) announced the establishment of the Entrepreneur Club in Muscat as an implementation of the SMEs Development Symposium in Seih Al Shamikhat, which was held in response to the Royal orders of His Majesty the Sultan.

The club will serve as a platform for Omani entrepreneurs to network, discuss challenges and communicate with OCCI in a systematic and standardised manner. To qualify as a member the applicant should be an Omani, owner of an SME and registered member with OCCI. He also said that the aim of the establishment of this club is to enhance integration and improve the quality of communication among entrepreneurs, OCCI and other organisations.

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FAST FACTS

DIFC LAUNCHED MOBILE APP SERVICE FOR CLIENT PORTAL Dubai International Financial Centre (DIFC) launched its first mobile app service that will be connected to the Centre’s Client Portal.

The ‘Lite’ version of the mobile app will empower DIFC-registered clients with access to a wide variety of online services from their mobile device, including access to on-the-spot information about the entity, Government services and processing of requests related to company services, as well as tracking of applications and an array of IT services. Clients will also now easily be able to renew their licenses through the mobile app.

Alya Al Zarouni, Senior Vice President of Government & Registry Services at DIFC said the financial centre is committed to the goal of transforming Dubai into a ‘smart city’, and there is a paradigm shift in the financial services sector today with mega corporations as well as small start-ups increasingly needing to keep pace with cutting-edge technologies and innovation.

“Our system doesn’t distinguish between SMEs or large corporations, as the same process applies to both. We provide the same level of assistance to both types of entities which can go to the extent of having a one to one session with the client.

I believe this will add a lot of value to start ups and SMEs and it makes the process much easier and eliminates any external advise fees,” she said.

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JOB FACTS ACROS TOP SA L E’S ESBUSINES L Z SES L-SIZ INESS IZ BUS B ED U D

SECONDS TIME A RECRUITER TAKES TO READ A CV

TIGHTER LIQUIDITY TRIGGERS SAUDI BANK LIMIT RELAXATION The relaxation of loan-to-deposit ratio limits for Saudi Arabian banks, announced in February, is in response to liquidity tightening in the banking sector. The central bank increased the maximum loan-to-deposit ratio to 90 per cent from 85 per cent to free up liquidity, allowing banks to grow lending and invest in additional Government bonds. The government plans to boost issuance of securities in the local market in 2016 to fund a growing public-sector deficit.

“Before the fall in oil prices many of the Saudi Arabian banks were planning to increase lending to SMEs to improve margins and help reduce sector and single obligor concentrations.

However as SMEs are generally more vulnerable during tougher or volatile macroeconomic conditions, as we are seeing in Saudi Arabia at the moment; and especially where tighter liquidity typically results in a tightening of underwriting standards and a subsequent reduction in lending, the banks will not grow lending to SMEs, and that lending to this sector might even shrink,” said Redmond Ramsdale, Financial Institutions, Fitch Ratings.

Saudi Arabian banks are largely deposit funded and the new 90 per cent limit will still mean that they operate with some of the lowest ratios among Gulf Cooperation Council (GCC) peers. With the exception of Bahrain, other GCC banking sectors work with loan-to-deposit ratios at or in excess of 100 per cent.

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GULF FINANCE SAUDI ARABIA OPENS NEW OFFICE IN JEDDAH The opening of the new Head Office and branch in Jeddah, Saudi Arabia, marks the three year anniversary of Gulf Finance’s presence in The Kingdom.

Gulf Finance has become one of the leading providers of Shari’ahcompliant finance to SMEs in the Kingdom focusing on heavy equipment, plant and machinery.

“Our new office in Jeddah extends our reach in Saudi Arabia and allows us to penetrate further into the SME fabric, where small businesses are estimated to account for 90 per cent of registered business and 60 per cent of employment. With a sizeable SME market and the government’s ambitious policies of diversifying its private sector, there is an increasing need for Shari’ah-compliant lending.

We are excited about our strategic investment in The Kingdom and look forward to offering our customers more efficient and competitive financing solutions,” said Thamer Jan, Chairman of the Board of Directors, Gulf Finance Saudi Arabia.

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SECONDS TIME A BOSS KNOWS IF THEY WILL HIRE THAT CANDIDATE

93% OF RECRUITERS LOOK AT A CANDIDATE’S SOCIAL MEDIA

2% UNEMPLOYMENT IN DUBAI Source: dubizzle’s 2015 job report

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TOP TIPS

Five tips to build popularity Sanjit Gill, General Manager, Middle East, ICLP, gives advice on how to turn channel partners into fans and drive engagement

1

Boost your channel loyalty Looking at your channel partnerships through your partner's eyes is a great way to start to make improvements to their experience. Do you overcommunicate to them? Do you use their data effectively to personalise their experience? Can a partner find need-to-know information when they need it and on any device? Every incremental improvement you make to improve their experience will go a long way to increasing their loyalty.

2

Think about your channel partners as customers Make your channel partners feel valued. They want the same kind of engaging relationship with you that they have as consumers with brands they value.

A customer-centric approach helps them feel appreciated for their expertise and knowledge, and still offers them additional benefits when they participate in activities to help them maximise their relationship with you.

and facilitating partner-to-partner collaboration so they can learn and share from each other all of which helps them build their businesses.

These are just a few of the exciting developments we are seeing today.

4

Differentiate from your competitors Companies need to focus on addressing the main points that are in their control. This will increase partner satisfaction, by addressing channel conflict, reducing the amount of admin involved, and providing pre-sales support when needed.

While these problems are being addressed internally, marketing can focus on creating campaigns and programmes that your partners, competitors and media talk about.

5

Use and analyse customer data to create a personalised experience For large enterprises with hundreds or thousands of partners it’s possible to track who is logging into your portal, how long they stay and the pages they visit, who is opening your emails and what they are reading using a plethora of online tracking tools.

Smaller businesses may not need sophisticated tracking tools but the principles remain the same and that is to capture sales and behavioural information (online and offline) so that it can be analysed. Insights learned through analytics not only help deliver more relevant and personalised experiences for customers, they also help keep track and anticipate trends to continue to stay ahead of the competition.

Improving channel partners' experience with your business will improve engagement.

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SHUTTERSTOCK.COM

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Give your partner programme a consumer facelift Smart companies are investing in tools that to help partners be more efficient and successful, ‘unlocking’ content and making that content responsive so they can access it easily when they need it

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OPINION

Closing the gender gap

Members of the Young Presidents’ Organization address the role women play in the MENA workforce and discuss the need for more female entrepreneurs

Female entrepreneurs in the MENA region are becoming more proactive in growing the female leadership pipeline by promoting mentorship opportunities.

W

hile economic participation of women in the Middle East and Northern African MENA countries are below the global average, a new generation of Arab women business leaders among Young Presidents’ Organization (YPO), a leading network of global chief executives, are working to reverse this trend, creating job opportunities and new role models for Arab women, according to Rola Tassabehji, Regional Marketing Manager for MENA, Africa and Europe, YPO. The latest World Economic Forum Gender Gap Report shows the MENA region closing its overall gender gap by 60 per cent in 2014, marking the largest improvement globally with 93 per cent of the educational gender gap closed.

Gary Nolan Yet the region continues to rank last on the economic participation

and opportunity sub-index, with only 42 per cent of the economic gender gap closed. This means that while women in the MENA region have generally achieved the same level of education as their male counterparts, they tend to lag behind significantly in earning power.

British journalist and author, Shereen El-Feki, PhD, is struck by the seeming contradiction between high rates of female education in many parts of the Arab region and, at the same time, some of the lowest rates of female labour participation in the world.

“The bottom line is that the Arab world has a paradox in employment.

One reason is that women, in general, prefer public sector jobs, which are seen as more suitable for women.

But most of the growth is coming from the private sector. That can be a difficult place for them, in part

because of prevailing notions of what constitutes ‘appropriate woman’s work’,” said El-Feki.

Meanwhile the latest International Finance Corporation (IFC) research from the World Bank Group shows that the share of women-owned SMEs in MENA is among the lowest in the world–only eight per cent of SMEs are owned by women compared to a global average of 34 per cent.

As a result, according to the same study, the region is not reaping the benefits of women-owned SMEs, including creating jobs, promoting greater economic growth, and harnessing the productive capacity of women. Furthermore, women are unable to share the rewards of these returns with others, such as their children, benefitting their health and education. cont. overleaf

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OPINION

As MENA economies continue to expand, empowering women-led SMEs can be the key to addressing the need for more and better job opportunities.”

– Scott Mordell, CEO of Young President’s Organization

cont. from pg. 11

“As MENA economies continue to expand driven by a growing young population, increasing consumption and rising investment opportunities in the region, empowering women-led SMEs can be the key to addressing the need for more and better job opportunities,” said Scott Mordell, CEO of YPO. Mordell added that a new generation of Arab women entrepreneurs at YPO are playing an important role in opening doors for other women in business.

WOMEN ENTREPRENEURS BREAKING BARRIERS Arab media personality and YPO member Muna Abu Sulayman has extensive experience in both information technology and social enterprise since 2002, as a founding co-host of the popular Arab TV program Kalam Nawaem.

She was the first Saudi woman to appear on pan-Arab satellite television and has since become a regional television celebrity and social media maverick with close to one million followers on Twitter and Facebook. In 2004, Abu Sulayman became part of the Forum of Young Economic Global Leaders, and in 2006, she became the first woman from Saudi Arabia appointed as Goodwill Ambassador by the United Nations Development Programme (UNDP).

Abu Sulayman said recent trends are driving women to participate more actively in the business world in Saudi Arabia.

“Because of a lack of gender segmentation in the education system and the wide access of women to higher education, we have a lot of women going into sciences and technology compared to rest of the world. Meanwhile, the internet has opened up avenues to start businesses outside the country, allowing them to set up virtual offices and sell online,” she said.

While recognising that barriers still exist for entrepreneurs and women in particular, she believes that IT has lowered the cost of access to entrepreneurship and cites her career as an example.

“I started two IT companies and actively lead corporate social responsibility initiatives, a number of which are focused on promoting entrepreneurship among women. IT has facilitated the ability of women like me to find employment in a nonwomen friendly work environment in Saudi Arabia,” said Abu Sulayman.

For Jordan’s Information and Communication Minister Majd Shweikeh, another YPO member, her family’s emphasis on education helped her resist the prevalent social pressure to marry young. In a country where only 14 per cent of women are economically active, Shweikeh was an exception, starting her career as an auditor at Arthur Andersen immediately following university.

After getting married to a colleague one year later, she continued to work

in various international organisations while pursuing higher education certifications. Shweikeh accepted her first executive role when Global Systems for Mobile Communications (GSM) operator Orange Mobile offered her a position as chief financial officer, and she discovered a new passion for the telecom industry. By 2006, Shweikeh was appointed CEO of Orange Mobile, the first female chief executive officer for an international GSM operator.

“I sensed a big responsibility to be chosen by an international group to run a subsidiary in Jordan. Since then, my aim has been to empower women, encouraging networking and knowledge transfer,” she said.

As a new CEO, Shweikeh also joined several boards and she became more active in promoting opportunities for mentoring, shadowing and sponsorship programmes for women, in an effort to build their leadership skills and grow the female leadership pipeline.

Since her appointment as minister in March 2015, Shweikeh has been focusing on expanding the reach of information and communication technology sector in Jordan.

“We are committed to ensuring every person has access to the internet.

This indirectly empowers women. IT can be a major enabler for women, and I believe women entrepreneurs are the way forward,” she said.

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OPINION

The SME conundrum

Janardan Dalmia, Founder of investment company Starfish Holdings International Ltd, weighs up the caution exercised by banks in funding small businesses against the need to nurture SMEs

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Janardan Dalmia thinks SMEs should be nurtured and supported during tough times, but they have to play their part as well.

n an economy where the SME sector’s contribution to GDP is sizeable in terms of fiscal growth, job creation, and economic activity, monitoring the health of SMEs is an important tool for judging which direction the economic wind is blowing. In other words, the health of the SME sector can be a valuable indicator for assessing the near term economic situation.

Ironically, while SMEs can act as an indicator of the brewing economic condition in the short term, by nature, businesses are not established with the short term in view, but rather are built upon long-term vision.

Within the current global economic situation, where the larger corporations are reassessing their global presence and growth strategies SMEs can, with proper support, provide a great deal of hope in building the inherent strength of a country’s future.

Unfortunately, no crystal ball exists that can predict the economic condition, and we have seen time and again that economists and research analysts can come up with their forecasts, but such forecasts are more often wrong than right. Those

who try to predict the market’s future use market trends based on market sentiment, and their predictions often overshoot reality–estimating share and commodity prices to rise higher during a bull market or drop lower in a bear market than they ever do. Simply put, economists don’t always get it right. For example, former US Treasury Secretary Laurence Summers recently noted that the IMF failed to predict 220 recessions between 1996 and 2014.

Beyond market trends and sentiment, another economic indicator that can be monitored is the Consumer Confidence Index. The Nielsen Global Survey of Consumer Confidence and Spending Intentions, which measures consumer confidence, major concerns, and spending intentions, offers several insights into current global economic conditions.

For instance, a recent survey suggests that perceptions about the state of personal finances amongst UAE respondents were positively impacted, rising from 60 per cent up to 63 per cent, despite a declining outlook on local job prospects.

Amongst UAE respondents, only 58 per cent were optimistic about the

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Within the current global economic situation SMEs can provide a great deal of hope in building the inherent strength of a country’s future.”

– Janardan Dalmia, Founder of investment company Starfish Holdings International Ltd state of job prospects. Meanwhile, when considering investments and purchases in the near future, respondents revealed a slight increase in optimism, rising from 43 per cent up to 45 per cent. Based on the most recent survey, 53 per cent of UAE respondents believed they were already in a recession, a 10 point increase from the previous quarter.

So what does all this mean? Clearly, the road ahead for SMEs will be bumpy in the short term. Growth is not certain nor should it be taken for granted. The uncertain economic outlook has led several banks to reassess their scale of presence in the region, which is visible in terms of recent job losses and a revamped strategy that focuses only on top-tier clients.

Local banks, which have generally had an ample supply of liquidity during the past few years, are now facing liquidity concerns. These concerns, combined with a fear of the need to provision for bad debt, are creating a latent mistrust of the SME or informal sector. For risk management purposes, the current underlying sentiment of banks is not a concern for doing what is right, but rather a fear of being wrong. If they don’t lend to SMEs, the reasoning goes, then they won’t make any mistakes, and the department will not bear the brunt of any fallout should something go wrong.

Although more avenues exist today for SMEs to raise capital such as niche lending institutions, crowd funding, convertible debt, selling equity, to name a few, all of these options come at a much higher cost.

SMEs represent more than 90 per cent of companies in the UAE, and they account for more than 85 per cent of private-sector jobs. Such companies are, therefore, integral to the health of the local economy. The current state of SMEs creates a difficult conundrum for banks.

On one hand, the government emphasises the importance for banks to provide adequate financing for SMEs because of the role they play in the economy. On another hand, SMEs are expected to face slower growth and higher potential job losses, and as such they will require strong survival instincts.

In economic times like these, banks tend to move towards supporting companies with stronger credit reflected in their balance sheets.

Most SMEs don’t have strong balance sheets. During the summer months in particular, when regional business is generally slower, these companies might be under pressure to fund their fixed costs due to potential difficulties managing the cash flows necessary to run their daily business.

In times like these, SMEs need their bankers to stand by them. In periods of uncertainty, banks need to show their support for such companies and help them get through their working capital requirements.

Ultimately, SMEs are more than just a cog in the wheel of a country’s economy, and they need to be supported and nurtured, particularly during difficult economic times. SMEs play an essential role in developing the economy since they tend to be the source of innovations and new

business creation–they are a powerful driving force for private sector growth and development.

To make SMEs a major contributor to economic growth in the UAE, a number of obstacles need to be overcome and several issues must be addressed.

Although the Government has taken great initiative in encouraging this sector, more steps need to be taken to ensure that SMEs make a greater contribution to the economy.

This sector constitutes more than 60 per cent of the GDP of the country; however, the funding provided to these companies is one of the lowest amounts in the world. Moreover, the lack of management capacity is also proving a challenge for SMEs. With proper support provided to SMEs in the UAE at a grassroots level, this sector is expected to play a major role in the sustainable development and growth of the country.

But SMEs also need to do their part. They need to show more financial discipline by implementing appropriate corporate governance, transparency, accountability, sound business planning, and financial analysis. The ability of SMEs to create, access, and commercialise new knowledge in global markets is fundamental to their sustained competitiveness. In the end, I think the current economic conditions can be good for SMEs, because difficult conditions help separate the wheat from the chaff. By enduring times of trial and testing, businesses prove they are viable and that they can remain competitive in the long term.

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LEGAL FOCUS

Pick your battles Ahmed Odeh, Legal Consultant, MIO Law Firm, discusses considerations all companies should make before pursuing legal recourse

Ahmed Odeh

N

o one ever enters into a court dispute intending to lose. However, it seems that individuals and companies lose cases they have initiated primarily because of improper preparation coupled with the wrong mind-set.

When business relationships do not turn out the way they are intended, there are universal protocols that ought to be taken

into account before taking any legal action, regardless of the size of the business; although smaller business should exercise more care, given the costs involved in litigation.

Businesses should consider alternative dispute resolution (ADR) before filing a lawsuit, especially if there are plans to engage in business with the party in question in the future. The benefits of ADR are that it is cost and time effective.

Additionally, it has the potential to salvage the relationship between the parties.

The most common types of the ADR are discussion and negotiation without the assistance of an independent third party; and mediation, which is a form of negotiation using the assistance of an independent person or body.

Keep in mind that any decisions made as a result of ADR are not binding unless the parties agree to them in writing. Even after filing the case, the onus is on all parties to continue out-of-court negotiations.

The second guideline to consider is the reputation of the parties. Often companies overlook

their image and goodwill when it comes to lawsuits. With the overwhelming presence of social media, a company's reputation that took years to build can be shaken in just minutes.

Moreover, filing a case against a weaker party, such as an employee, may be detrimental to company’s reputation unless there is strong evidence linking the weaker party's actions to the immediate loss of income to the company.

A legal notice is an effective mechanism used to indicate to the other party that there is a serious chance of filing a legal claim if a matter is not settled appropriately.

A legal notice is generally one that would outline one party’s final claims to the other party, which, if not paid, will mean the warning of filing legal proceedings will be followed through.

An official legal notice must be sent from an attorney's office on behalf of the company.

The costs of a legal dispute are likely to be a deterrent to filing a lawsuit. A claimant should be mindful of all the costs of filing

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Smaller business should exercise more care, given the costs involved in litigation.”

– Ahmed Odeh, Legal Consultant, MIO Law Firm

a claim. The costs may run from court fees, expert fees, attorney fees, translation fees, and other miscellaneous expenses. Moreover, a party should be clear of their desired outcome and consider the investment necessary to achieve the desired result for their case.

The next consideration is submission of admissible evidence, which can make or break a case.

Always have a list of all possible evidence to be used, such as account statements, signed receipts of invoices, and so on.

The financial standing of the opposing party is sometimes more important than obtaining the judgment itself. If the defendant has no liquidity whatsoever to pay for the awarded judgment, the chances of seeing this money are quite slim unless the defendant has other assets that can be liquidated.

A claimant should perform a comprehensive credit check on the opposing party's financial status if they are unsure whether the defendant is financially capable of paying out any damages or compensation. In addition, it’s

advisable to check whether the defendant has other cases filed against them already.

Getting into legal battles may take a lot of time, which, if a party has a business to run, can be quite challenging. Aside from the fact that court cases may drag on a long time, a claimant must also be prepared to enter into out-ofcourt negotiations and meetings with the other party’s lawyers or representatives.

In addition, the timing of the case needs to be considered.

For instance, as an investor, it is generally too late to file a real estate case against a developer when the developer has already started handing over the project to the end-users.

Many fail to consider the possibilities of the other party filing a counterclaim against them.

Therefore, claimants should also thoroughly investigate whether they have performed all their obligations as per arrangement with the other party to ensure that the other party does not have grounds for a counterclaim.

This is critical, because if the other party files a counterclaim, perhaps an equal amount or greater amount of time, money, and energ y will be s pent def en d in g a ga in st the counterclaim as would be pursuing the original claim.

Finally, claimants need to consider the possibility of an unfavourable outcome for their case. It may not necessarily be the worst-case scenario, but the outcome could compel parties to file an appeal that would incur further costs for them.

Claimants need to consider the physical and emotional strain on them and their business in the event that an unfavourable outcome occurs.

Filing a lawsuit can take a great deal of time, money, and energy.

Even with hard work, success is not guaranteed. However, there is a method to pursuing litigation.

The most successful judgments are awarded because the claimant was meticulous when analysing and preparing the case to minimise costs and risks.

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17 3/22/16 2:09 PM

Design is the only art work that has functionality– one can sit on the armchair, use the lamp, and sleep on the bed. One uses the art.

Guillaume CUIRY

The Founder of La Galerie Nationale talks about his love of design, hunting down the perfect piece of art and developing an interest for it in the Middle East

M

y story is a colourful accident. It started in the 70s when my parents decorated my bedroom with pieces by the Italian designer Joe Colombo. All my friends who came

into my bedroom liked it. They said it was cool.

After school, my best friend and partner for the last 35 years, Jacques, decided to skip university.

He said he was going to open an art

space in the flea market in Paris. This was my best friend of 10 years at that time. I knew the side of my friend who was into girls, parties and sports and suddenly he was so decisive. I didn’t see it coming. He followed his heart

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piece by Jean Royère in your home or your collection, you’re an idiot.

Finding the right piece was like a treasure hunt. It was the most exciting part. Forget for a moment the internet, smartphones or technology. We would learn, for example, via word of mouth that there was a Picasso in a collection somewhere. Perhaps all the information we would have was the name of the first owner and a town.

Finding that piece was thrilling.

After finding the piece, we would still have to convince the owner to sell it. Sometimes a piece was damaged and we had to restore it. Sometimes we could find the person who worked with the designer and they had the same material originally used for the restoration. Once that was done, it was a great feeling to showcase the piece in the gallery.

We decided to come to the Middle East in 2004. We got some very interesting pieces in Paris but we wanted to see what the market could be like in the Middle East.

I moved between Dubai and Paris between 2004 and 2010, when we finally got our gallery space which we opened in 2011.

We knew the market was almost non-existent. We knew we were going to invest a lot of money for very little for a long time. And we were right. When 2008 arrived it was interesting as we were an SME that chose to invest in the country during the financial crisis, when many other companies were pulling out.

It was very difficult to promote what we were doing to the local community at first. They thought it was very expensive, second-hand furniture. Initially our support came from the expatriate community.

We are in a niche market–all our pieces have functionality.

Design is the only art work where you sit on the armchair, you use the lamp, and you sleep on the bed. If you collect paintings, you dedicate a room and put them on the wall. When it comes to design, you use the art.

At the beginning my strategy wasn’t about making sales. And by the way, it worked. I sold nothing!

But I had a lot of time to promote and explain what we are doing. We were visited by schools, curators, art lovers, and visitors and I could create interest.

Afterwards, for about 18 months I sold the pieces with the lower prices. It is slightly easier to sell pieces at 15 to 20 per cent lower here as we have no VAT or taxes. However, international buyers have discovered that Dubai is an interesting place for art. But the problem is they are buying pieces here and taking them back to Paris, London, Milan or New York. My focus is to see these pieces remain here in this area.

Friday is the only day the gallery is closed. That is when I have private appointments. I don’t have free time in the traditional sense. But when you like what you’re doing you don’t need it. When you do what you love, it’s not work. Every morning I love coming to the gallery, and every evening I think, ‘Tomorrow will be an interesting day.’

The downside of what I do is I have 35 years’ worth of expertise and I’m here alone. I have invited my competitors out here because the market is new we need to create interest. Nobody has come from Europe or anywhere else. My closest competitor is in Beirut, so we call each other and we talk. We want to talk about the same world, to use the same language. It’s frustrating to be so isolated. So I enjoy going to Beirut to speak to likeminded people.

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CHALK TALK

and his project. The flea market in Paris was open over weekends and I went there with him.

I went to university to study business and I completed my degree. I was a sales manager at ABB and Nokia and I worked with engineers on technical projects. I hated it. It was very difficult to make money following my passion for art.

So I would work at a ‘regular’ job and when I had enough money, I stopped working and I would join Jacques. At that time, I lived for the weekend– not to sleep but to go exhibitions, or to find a piece and spend time around art.

When we started, there were maybe 10 other people like us in Europe. Everyone said we were crazy and stupid, and we would be poor. We are poor. We will always poor because we own all the pieces we show case; nothing is sold on consignment. In the beginning it was really hard, but we slowly kept buying pieces. We eventually created the market for art.

We have to buy the pieces because we cannot always work with the designers. Many of the designers have passed away, so it is impossible to negotiate with them. Sometimes the pieces are in family collections or they feature in auctions; so this is the only way for us to promote, show case, and sell the design.

The beginning of the 80s was amazing. We moved from the flea market into our own space. It was interesting because some big names in design were still alive.

One designer, Jean Royère, passed away in 1981. He was the Picasso of design. When he passed away there was nothing in the media about his death. But for us it was traumatic.

Now the appreciation of his work is so much higher. If you claim to be into design and you don’t have a

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CEO CHAT

Heavy METAL

Oddvar Lönnerkrantz, CEO, Viking MRM, talks about using 100 year old tools and traditional blacksmithing methods to create everything from chandeliers to customised cars

V

iking MRM, a custom fabrication shop, consists of a team of skilled mechanics, smiths, artisans, electricians, fabricators and filmmakers. The Dubai-based business was started three years ago by Swedish CEO, Oddvar Lönnerkrantz, in a small space in Al Quoz 1.

The company does vehicle modification and restoration, custom hot rod design and fabrication, blacksmithing, customised interior design, prop-making, costumes and set-up designs for special events.

The prop swords are made to look as real as possible but with blunted edges, although the blades are made with the same materials one would use to make a real sword and weigh as much as a real one, according to Lönnerkrantz.

The team also makes film equipment such as tripods, cranes, sliders, dollies and specialised equipment for stunts and scenes for films, which includes modifying camera rigs.

Viking MRM also does event management by organising product launches, special events, corporate and private parties. The company can fabricate materials made of metal, fiberglass, wood or plastic, and has also started to incorporate traditional blacksmithing in motorcycle and car designs.

EMBRACING TRADITION Lönnerkrantz’s crew uses blacksmith tools that are over 100 years old that were given to him by his late teacher, blacksmith master Hans Landgren.

Lönnerkrantz was Langren’s student for 15 years and he learned traditional

blacksmithing skills using a hammer and a forge heated using charcoal.

He said the forge gets heated by circulating air underneath it and it can reach up to 1,500 degrees Celsius, which is incomparable to using a gas torch that does not provide an even heat source.

“This technique of heating metal is over 1,000 years old and is still the best way to achieve outstanding results for shaping metal. Blacksmithing is not only limited to making interior decorations, chandeliers and old school museum replicas, but the team also uses it for all types of metal work on all types of vehicles,” he said.

Lönnerkrantz came to Dubai with a vision of being a part of something great and he wanted to share the talent, creativity and expertise in cont. overleaf

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This traditional technique of heating metal is over 1,000 years old and is still the best way to achieve outstanding results for shaping metal.

– Oddvar Lönnerkrantz, CEO, Viking MRM

Oddvar Lönnerkrantz uses a forge heated up 1,500 degrees Celsius.

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CEO CHAT cont. from pg. 21

metal shaping and fabrication in the world of motorcycles and automobiles.

He saw the potential in bringing this skill-set to Dubai to fill the need for special equipment.

The first few projects he did were for an events company doing props for their shows. Viking MRM’s big break came when the team was tasked to build a stage set up for an aerialist’s performance, where she had to move from the stage to the ceiling. Since then, the company has often been contracted to create props for stage shows and events, both in Dubai and abroad.

“We have received orders to fabricate several historical re-enactment replicas such as spears, swords, helmets and accents for the Scandinavian Museums and for historical re-enactment fighters,” he said.

While there is interest in the company’s work, Lönnerkrantz had a trying time setting the business up initially, since it was difficult to justify his skill set and explaining that he creates everything by hand.

“I encountered this in every presentation of our services to government agencies. The explanation of

my abilities made officials wonder why I prefer making things the traditional way.

Luckily my sponsor, took the time from his busy schedule to introduce me, and our business, to local agencies and assisted me with every process the business had to go through to obtain our license,” he said.

While it was a challenge to set up the business, Lönnerkrantz found promoting it to be another issue entirely, as he had to go through the same explanation to potential clients of what it is the company does as he did to government agencies when he was trying to get his business license.

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Viking MRM has received orders for historical re-enactment replicas such as helmets.

Viking MRM has the crew with the right skills to deliver current projects.

“We produce something tangible.

A presentation that only consists of photos usually does not satisfy our more meticulous clients. They need to see and feel what we have crafted in person. We need to showcase the craftsmanship that we have by inviting them to our warehouse, just to give them a feel of what we do. So far, it has been an effective strategy,” he said.

The biggest selling point of the company, according to Lönnerkrantz, is the process used to produce and fabricate clients’ requirements traditionally and creatively. He added

that some clients think Viking MRM is merely an ordinary repair shop that can paint and repair their motorcycles and automobiles to their specifications.

Lönnerkrantz added that the company is still in the process of penetrating the market, which is niche.

But the team is continuously developing ways and means to capture its distinct target market. Even if the fabrication process is old school, he said they are adapting to the changing times by utilising technology, particularly by becoming more active on social media.

“We post the process of how we complete our projects right from the raw material procurement to the production to the finished product.

We are starting to get tremendous exposure and positive feedback on social media, especially on our Instagram account,” he said.

BUILDING PARTNERSHIPS Viking MRM has worked together with a Dubai-based jeweller to produce a replica line of historical jewelleries as attested by the archaeologists of the Swedish museums in Scandinavia.

Viking MRM is in the preparatory stage

of the production of the replica of Captain Nemo’s Nautilus car that was used in the film The League of Extraordinary Gentlemen.

“We intend to build the replica down to the finest details of the originally produced car. But it will be fully drivable and road worthy. Upon completion of the project, we will hold an exclusive auction and the proceeds will be devoted to The Red Crescent, with our sole objective to help the refugees of war in the Middle East region,” he said.

Furthermore Viking MRM has teamed up with a production company to film the creation of the car from start to finish; with the documentary being made into a reality show for international television.

While growing the company is an eventual goal, Lönnerkrantz said that for now, he has an efficient and reliable crew with the right skills to cater to the company’s current projects.

“Our short-term plan is to partner with schools and universities to be able to teach the students how to create something using their hands, using old techniques,” he said.

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23 3/28/16 3:23 PM

COUNTRY REPORT

Observing OMAN

With ratings agencies Moody’s and Standard & Poor’s both lowering the country’s ratings in light of the oil price, Oman will have to diversify its economy away from oil and support its SME sector

S

overeign ratings group Standard & Poor’s lowered the ratings on Oman twice in 2015–from ‘A’ to ‘A-‘ in February, to ‘BBB’ in November–as the country’s fiscal and external balances deteriorated beyond initial expectations.

Moody’s Investors Service cut Oman’s credit rating by two levels to A3 and placed on review for a further downgrade. It is Moody’s first downgrade of the nation since issuing its initial rating in 1999.

The oil price slump has left Oman with a weaker credit profile than it had before the shock, according to Moody’s. Furthermore, Oman has a comparatively weaker asset cushion, with government financial assets amounting to only about three years of spending.

The International Monetary Fund (IMF) estimates Oman’s GDP growth in 2015 to have reached 4.4 per cent, up from 2.9 per cent in 2014, but down slightly on the mid-year forecasts of 4.6 per cent. Furthermore the IMF expects growth to slow to around 2.8 per cent in 2016.

While the Government anticipated a $6.5 billion fiscal deficit for the year, that number was already exceeded in August and was at $8.5 billion by October, according to data released in late December by the National Centre for Statistics and Information.

The 2016 budget includes a deficit of $8.6 billion, of which $3.9 billion will be financed from reserves with remainder funded through a mix of grants, as well domestic and international borrowing which will result in an 80 per cent rise in loan payments in 2016, according to a report by Pricewaterhouse Coopers (PwC).

The IMF has warned that the Government will need to dig deep into its reserves to wipe out the deficit. The Shura Council, an advisory body to the Government, took a vote in December in favour of a series of tax increases, as well as raising the corporate tax rate from 12 to 15 per cent and removing the taxfree ceiling of $77,900, which was approved in January 2016.

Hamood Sangour Al Zadjali, Executive President, Central Bank of

Oman said the Government is able to absorb the losses from foreign exchange reserves and he dismissed speculation that Oman will do away with the dollar peg.

The PwC report added that a 2016 change in tax rates will be effective from 2017. Furthermore the awarding of tax exemptions for companies will be limited and the Government will target efficient collection of taxes.

The first 10 months of 2015 saw the banking sector move strongly into Government debt, buying 32.5 per cent more Government development bonds than in the same period in 2014, according to a January 2016 report by the Oxford Business Group.

The report added that that the Islamic banking segment recorded robust growth as the Government issued its first sovereign Sukuk worth $519.4 million in October. According to the Central bank of Oman, a further sovereign Sukuk could be imminent.

SPENDING AND SUBSIDIES The PwC report puts the total budgeted expenditure for 2016

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SHUTTERSTOCK.COM

Oman’s Oman’sIslamic Islamicbanking bankingsegment segment recorded recordedrobust robustgrowth growthas asthe the Government Governmentissued issuedits itsfirst firstsovereign sovereign Sukuk Sukukworth worth$519.4 $519.4million. million.

at $30.9 million, down 11 per cent from the estimated 2015 amount of $34.8 million. Furthermore, one area of spending anticipated to be cut is Government subsidies on housing loans, basic food items, utilities, and petroleum products.

The report added that subsidy reductions have only been announced for petroleum products with consumer fuel prices being deregulated and set monthly as of 15 January.

In the wake of falling oil prices and the curtailing of Government spending, the focus will shift towards alternate, independent income sectors like

tourism, mining, and manufacturing, according to Jonathan Jane, Country Manager, AXA Insurance, Oman.

“From the insurance perspective, healthcare continues to be a strong performer for growth. Increasing demand from all sections of the population, national and expatriate, is expected to continue and will be the main driver, despite very thin margins, for the insurance market in 2016,” said Jane.

STRONGER SECTORS

According the Alpen Capital’s GCC Healthcare Industry Report, released

in February 2016, Oman’s healthcare industry is expected to be worth $4.3 billion by 2020, boosted by a five-year annual growth rate of 12.9 per cent.

The report added that the outpatient and inpatient markets are expected to reach $2.6 billion and $1.6 billion respectively, by 2020.

Oman’s hospital bed requirement is projected to grow at an annual average of 3.1 per cent in the next five years, signifying a demand of more than 7,600 beds by 2020.

Another sector that doesn’t seem to be taking the hit of lower oil prices is the retail sector. cont. overleaf

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COUNTRY REPORT

Given the right support and SMES IN 2016 access to financing, SMEs hold tremendous potential for growth and value addition to the Omani economy.

SMEs make up 65 per cent of businesses in Oman and employ around 40 per cent of the total workforce, but they only contribute 15 per cent to the country’s GDP. They may be directly impacted by weaker oil prices and an overall reduced level of economic activity and reduced Government spending.

cont. from pg. 25

The Alpen Capital GCC Retail Industry Report, released in January 2015, said GCC retail sales are expected to reach $284.5 billion in 2018.

“The impact of the fluctuating oil prices is not going to distract us from our long-term business goals in Oman,” said Yusuf Ali M.A., Chairman of hypermarket chain Lulu, at the opening of the 16th outlet in at Suwaiq, Oman in February this year.

He added that the hypermarket will open seven more outlets in Oman over the next two years.

Lulu is not the only hypermarket chain to push forward with their expansion and hiring plans. Mars International Hypermarkets will open its biggest store in Al Khoud in the coming months, and will employ more than 700 workers, both nationals and expatriates, in varying categories, according to Naveej Vinod, Executive Director.

Vinod added that the company is seeing positive growth in Oman’s retail sector and denied that the dip in oil price had an adverse effect on it.

EXPANDING THE ECONOMY Oman plans to launch a budget airline in Q4 in an effort to diversify its economy away from oil. The airline will be owned and managed by government-backed Muscat National Development and Investment Company (MNDIC), which has received an air services operator

It’s more than likely that while there will be in increase in retail oil prices and increased taxes for corporations, which will translate into an increase in the cost of operations, there will also be a fall in revenue due to the contraction business.

Jonathan Jane, Country Manager, AXA Insurance, Oman

license from the Public Authority for Civil Aviation.

Details about the new airline, including its name and brand identity, will be disclosed in the coming months. Currently the MNDIC is in the process of establishing the company that will be operating the airline as well, according to Khalid bin Hilal Al Yahmadi, CEO, MNDIC. “We are working with the Public Authority for Civil Aviation to launch the new budget airline during the last quarter of 2016 starting with domestic routes and then expanding to destinations within the region including Pakistan and Iran,” he added.

However, the Central Bank of Oman has identified four key sectors as the models of SME opportunity–transport and infrastructure, manufacturing, healthcare, and tourism. It is therefore imperative to safeguard the well-being and growth of SMEs. All the main banks and finance companies are supporting this development. Under the vision of His Majesty Sultan Qaboos bin Said Al Busaidi, the Central Bank of Oman has asked the banks operating in the Sultanate to comply with a stipulation to provide a minimum of five per cent of their total commercial loans to SMEs. Given this support and access to financing, SMEs hold tremendous potential for growth and value addition to the Omani economy.

Source: Jonathan Jane, Country Manager, AXA Insurance, Oman

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CORPORATE TAX

CORPORATE TAX evil or opportunity?

With the announcement that the UAE will implement corporate tax to generate income, John Martin St. Valery, Founding Partner, the Links Group and Chas Roy-Chowdhury, Head of Global Taxation, Association of Chartered Certified Accountants, consider the impact on businesses in general, as well as SMEs

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?

Chas Roy-Choudhury warns the biggest challenge facing business owners will be the administrative implications of the corporate tax.

T

he introduction of a federal corporate tax has been in the offing since as early as 2005.

Although the draft legislation has not yet been published and is yet to go through the legislative process, no implementation date has been set. Nevertheless, the Ministry of Finance’s intentions have been clearly set out in its 2014 annual report, indication the days of taxfree living in the UAE are coming to an end, according to Chas RoyChowdhury, Head of Global Taxation, Association of Chartered Certified Accountants (ACCA).

The International Monetary Fund’s (IMF) Managing Director Christine Lagarde repeated the IMF’s taxation advice to the Gulf Cooperation Council (GCC) at a conference held in Abu Dhabi at the end of February.

She said oil exporters in the MENA region lost more than $340 billion in oil revenue from their budgets last year, which equates to 20 per cent of their combined GDP, and highlighted the need to increase Government revenues and emphasised the need for corporate income taxes, as well as property and excise taxes in order to generate income.

Corporate tax is generally accepted as a levy placed on the profit of a firm, with different rates used for different levels of profits. Corporate taxes are taxes against profits earned by businesses during a given taxable period; after expenses and depreciation have been deducted from revenues.

For long-term economic sustainability, there is a definite need to need to raise taxes in order to diversify revenues and strengthen fiscal positions; cutting subsidies or spending will be difficult to implement at this stage, according to John Martin St. Valery, Founding Partner of consulting firm, Links Group.

He added that since the proposed tax rate is among the lowest in the world, it would help the Government diversify its income but would avoid placing an excessive burden on the other sectors.

Moreover, the introduction of corporate tax is unlike to deter foreign investors from establishing a commercial presence in the UAE, as long as the rate is not too high. The new law should not have too much of an adverse on businesses in the UAE. “However, if the corporate tax amount exceeds what companies are

John Martin St. Valery thinks raising taxes is essential to longterm economic sustainability.

willing to pay, then it could decrease the competitiveness of the region and businesses will be more likely to try finding ways around it. Therefore it is critical for the UAE to set it at the right rate from the start,” said St. Valery.

More important than the comparative tax rates, according to Roy-Chowdhury, will be the implementation of the tax regime. He said the Ministry of Finance faces crucial decisions–how to determine the scope and level of the tax, how to communicate effectively with taxpayers, how to draft tax legislation that is simple, clear, and fair and how to administer the new tax system with a minimum burden for all involved.

IMPLICATIONS FOR SMES One of the drawcards bringing businesses into the UAE has always been the opportunity of operating tax-free. A major concern for smaller businesses is how the draft legislation of the corporate tax will translate practically in terms cash flow management. Without proper planning this may cause added strain in managing their capital in terms of having the cash available to pay tax liabilities as they are due, on top of cont. overleaf

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CORPORATE TAX

Introduction of the corporate tax will offer SMEs a stable environment for sustained prosperity in the wake of the oil prices and the need to create new enterprises.

– John Martin St. Valery, Founding Partner of consulting firm, Links Group cont. from pg. 29

unforeseen expenses such as paying out end of service benefits.

“The biggest factor business owners will need to consider is the administrative implications–taxes will have to be built into management and financial reporting systems, which in turn will be a significant technical and HR investment,” said Roy-Chowdhury.

He added it means, practically, that companies spend approximately two months per year complying with tax regulations–generally 15 days on corporate taxes and 21 days on consumption taxes, such as VAT–and that smaller companies incur up to five times the administrative burden per employee than larger firms.

“Since the UAE provides a sturdy platform for entrepreneurship and innovation, introduction of the corporate tax will offer SMEs a stable environment for inclusive and sustained economic prosperity; particularly in the wake of the oil prices and the need to create new enterprises that can innovate and forge new opportunities at a foundational level,” said St. Valery.

Roy-Chowdhury said there is also potential for tax reliefs to be brought in to support SMEs. Loss reliefs–the ability to carry forward deductible trading losses to offset future taxable profits–could help to smooth out the cash flow impact of fluctuations in trading conditions. Also, tax incentives to providers of capital to encourage the financing of SMEs, either through debt of equity, will be particularly welcome.

POTENTIAL PITFALLS Tax neutrality

Many foreign companies are registered in free zones, which provide guaranteed multi-decade tax holidays on personal and income taxes. These guarantees are very unlikely to be reversed–to retain the UAE’s competitiveness for foreign investment–so the bulk of the new corporation tax charge seems set to fall on local businesses and SMEs. To add to the complexity, each of UAE’s emirates currently has its own laws on corporate taxes for companies operating within the emirate. Ensuring a smooth transition from emirate-specific taxes to federal taxes, while avoiding double taxation and other surprises, could pose a challenge.

Taxing SMEs disproportionately in comparison to international operations, or treating companies registered in one emirate differently from companies registered in another, could result in unintended consequences and ultimately undermine economic stability in the longer term.

Tax transparency

Tax payers need to understand what they are paying, why they are paying it, and what the benefits of paying will be. Paying tax may never be fun, but engagement with a demonstrably fair tax policy will be more palatable. This is particularly important as UAE introduces corporation tax for the first time, to businesses that may be resistant to the move.

One major issues of tax policy such as the introduction of corporation tax here, there is an opportunity for the Ministry of Finance to undertake clear consultations where different options are specified at the start, with each option then being able to be properly considered with an audit trail including unambiguous minutes and written responses explaining the rational of decisions. A welcome indication from the Ministry of Finance is that a grace period of at least a year will be given for corporate tax compliance. Communication about the determination of the first period of assessment, the scope of tax, and the compliance and payment mechanisms, will be key.

Tax competitiveness

The UAE could face competition for foreign capital from neighbouring countries.

To mitigate this it would be prudent to undertake a careful benchmarking exercise to align UAE’s headline rate of corporation tax to those of its neighbours, something the UAE government is no doubt already considering.

However, a ‘race to the bottom’ on tax rates should be resisted. Very low tax rates used to lure inward investment from one country to another can undermine international financial regulation initiatives, and entrench wealth inequality in the region.

Source: Chas Roy-Chowdhury, Head of Global Taxation, AC

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INSURANCE

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AUDITING

Crunching THE NUMBERS While generally accepted that larger conglomerates undergo external audits, the focus is starting to shift to SMEs, and how smaller businesses can benefit from them

Saad Maniar, Managing Partner, Crowe Horwath, DIFC Branch

A

n audit, a deliberate and systematic attempt to independently verify and confirm the financial records of an organisation, is generally associated with larger companies. However, attention is being given to non-regulatory audits, especially with regard to the

benefits of audits to companies in the SME segment.

Independently audited financial statements give confidence to the various stakeholders of a company including its investors, banks, employees, creditors and clients and it creates an atmosphere of transparency

Sunil SunilKumar, Kumar,Chartered Chartered Accountant, Accountant,Chartered Chartered Accounting AccountingSolutions Solutions(CAS) (CAS)

in the economy, thereby instigating economic activity and growth, according to Sunil Kumar, Chartered Accountant, Chartered Accounting Solutions (CAS).

While there are many reasons for a business to get audited, it is important for the business owner to know, going in, what they hope to achieve with

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An audit will actually help an SME to improve the quality of its accounts, as auditors provide useful recommendations to this end.

– Sunil Kumar, Chartered Accountant, Chartered Accounting Solutions (CAS).

the audit. Some desired outcomes include producing financial records to ascertain the business’s financial position, fraud prevention, risk mitigation, regulatory purposes, and the purposes of succession planning or when preparing the business to be sold.

Futhermore, potential business partners have to take into account a company’s financial strength before entering into business dealings with them, therefore relying on the company’s financial statements for this purpose. As an audit provides an independent expert’s opinion on the financial statements, it helps the stakeholders in placing greater reliance on those statements.

This, in turn, helps the company to obtain financial assistance from banks in the form of loans, working capital funding, bank guarantees and more, which enables it to grow its business profitably. The institutional form of funding is significantly cheaper than open market borrowing, therefore audits help a business in reducing its cost of funding, according to Jairaj Jaisinghani, Chief Financial Officer of

electronics distributer, Jumbo Group.

“Based on the strength of audited financials, vendors can obtain credit insurance on the SME which again enables the SME to purchase on credit, lowering working capital requirements and the cost of borrowing.

Auditing of financials eventually enables a business to practice sound financial management, which is a great source of comfort for global or even large local corporations and government organisations, if an SME deals with them. This makes it easy to do business with such companies,” said Jaisinghani.

Companies which regularly undergo external audits tend to have all the right business practices in place, including a proper vision, good employeremployee relations, internal controls, budgeting, proper business plans, and so forth. Independent auditing, as part of good business practices, serves as a fool-proof mechanism whereby the company can identify the areas which require more management attention to see that the company does not collapse due to an oversight, said Kumar.

SIZE IS IRRELEVANT Larger conglomerates have vast capital at their disposal and will have all protocols in place for the proper running of the company and recording of transactions.

The companies generally also have an internal audit wing who, on a continuous basis, audits the various activities and transactions of the company. It is not possible, nor is practical, for the external auditors to check and verify all the transactions of the company within a short period of time and furnish the audit report, said Kumar.

He added that external audits are done to ensure that the financial statements are prepared in accordance with the International Financial Reporting Standards and that there are no material errors in the financial statements.

In contrast to a large conglomerate, an SME is very small and the availability of funds at its disposal is also very limited. The companies may be in the form of limited liability companies having several partners/shareholders or may be a single owner entity with no partners. The capital invested in the company is usually raised from cont. overleaf

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AUDITING

PREPARING FOR AN EXTERNAL AUDIT

An audit can help an SME improve the quality of their accounts. cont. from pg. 33

independent sources, such as friends and relatives. The time needed for the audit of an SME would be considerably lower than that required for a conglomerate. This means the cost of auditing would be lower and easily affordable by the SME. “The key challenge that an auditor may face when auditing the accounts of an SME, as opposed to a large conglomerate, is the quality of book keeping, though this may not be true for all SMEs. However, the plus side is that the audit will actually help an SME to improve the quality of their accounts, as auditors provide useful recommendations to this end,� said Kumar.

He added that although an external financial audit is advantageous for a company in several ways, it is never a foolproof system to ensure the viability

or future profitability of the company; as the auditor can only complete his task based on the financial data submitted before him and on most occasions the auditor needs to rely on sampling and other methods to test the reliability of transactions as a complete audit of all the transactions is not financially viable nor is practical for any company.

In order to prepare for the audit, the SME management has to truly believe in the auditing process and the benefits that come from such an effective corporate governance practice. Next, it should communicate the same message down the line among its staff, so that everyone in the organisation is aligned with the objective and there are no apprehensions. It must be understood by everyone that audits are not a faultfinding process, added Jaisinghani.

Management needs to ensure that; 1. All the financial records are up to date and are prepared in accordance with the International Financial Reporting Standards.

2. The finance staff of the company is properly educated and trained so there is no conflict of interest while the audit is underway.

3. The financial statements, including the balance sheet, profit and loss statement and the cash flow statements are prepared by the company’s finance team and signed by management.

4. A member of the company finance team should be designated as the contact point for the auditors and all the flow of information and documents to and from the auditor should be through them.

5. Proper space and systems are provided for the effective conduct of the audit.

Source: Sunil Kumar, Chartered Accountant, Chartered Accounting Solutions (CAS)

SELECTING AN AUDITOR The recent turbulent events of the global financial crisis have significantly highlighted the importance of having credible, high-quality financial reporting and auditing. This issue is particularly prominent in the UAE as constant changes from regulatory to transparency and audit quality have become the norm.

There are certain traits an SME should look for in an auditor.

- Quality credentials of the firm and their international ranking - Accessibility of the partners - Independence of the auditor - Extent of involvement of partners and managers in audit - Experience of the relevant team assigned for the audit - Auditors understanding about their industry Source: Saad Maniar, Managing Partner, Crowe Horwath, DIFC Branch

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CASE STUDY

THE FULL PACKAGE

entourage Founder and Managing Director, Mohammed Tayem talks about building an agency during 2009 and using the financial crisis to his advantage by competing with global brands

e

ntourage, a Dubai-based communication agency, covers advertising, media, corporate events, production, PR, and branding. It was started during the financial crisis in 2009. While other agencies were shutting doors, downsizing, cutting budgets and terminating staff, entourage was recruiting and preparing for new opportunities, according to Founder and Managing Director, Mohammed Tayem.

“I looked at the crisis from a different perspective; I have always believed that Dubai will bounce back and I wanted entourage to be part of that positive rebound,” he said.

Tayem is proud to have entourage as a home-grown brand and not an offshoot of a global conglomerate.

The staff component has grown from three members at inception to 40 members today. As the company has grown to include a production facility, a film production company and a media

office in Jordan, the total number of employees for the entire entourage group is well over a hundred.

“Today, we operate entourage and its sister companies with several trade licenses, so with the Government’s efficiency in issuing trade licenses and visas, bringing in new employees from overseas is not an issue at all compared to other countries in which we are currently operating, such as Saudi Arabia, Jordan and Egypt,” he said.

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We have developed strong partnerships and we are one of the few agencies that operates within the whole MENA region – Mohammed Tayem

Mohammed Tayem is proud to have a home-grown brand that can compete against larger companies.

He added that while setting up the business from scratch in Dubai was relatively easy, as he had his first trade license within a week; it came with its own set of challenges.

The first challenge he faced, that faces many small businesses, was funding; although Tayem said that the problem of ‘funding’ is actually two-fold. While he started the business with a small amount of capital, he bootstrapped the business a lot of the way, since banks are general quite careful when it comes to financing start-ups. To date, Tayem has not considered offer from investors.

Once a company has received funding, Tayem said the other facet of the funding problem, which most of the companies face, is not just bringing in business but making sure to collect the payments on time in order to manage the cash flow. This process may vary from time to time

depending on market fluctuations, the nature of the project and timeframe for execution.

“In terms of growing the business, we have taken the challenge to improve our company cash flow by following practical steps to operate better controls of the general and administration expenses and operational expenses. We have increased our sales, make sure we collect our receivables timeously, offer pricing discounts where we can, and hold negotiations with suppliers to get better payment terms,” said Tayem.

The second challenge he faced was promoting the agency. He said this was largely due to Dubai being and international hub for business.

Along with the aforementioned ease of set up, Dubai attracts a lot of international agencies to set up their regional offices. He added that working in the UAE market and some of the regional markets in the fields of advertising and events is highly challenging due to the high level of competition, particularly against global brands.

However, it was this tough competition that allowed entourage

used the crisis as an opportunity.

Budgets were being cut and many companies could not afford the international agencies, but at the same time the same levels of quality that were expected by clients still had to be generated.

“That is where we grabbed the opportunity with both hands and we were able to prove we have the ability to produce work on a par with international standards,” said Tayem.

UTILISING ADVERSITY In 2011 a large, global company was looking for an agency to do all their events in the GCC. It was a threeyear contract worth around $2 million.

The condition of being awarded the contract was that entourage had to execute a small event to showcase its capabilities.

“The client asked for very little in terms of merchandise, though I recall they asked for one thing in particular–a roll up stand.

We outsourced the branding to one of the suppliers which we used to work with at the time. The event was supposed to start at 5.30 pm and the supplier did not reach the venue until 5 pm; which had the domino effect of us losing the client forever,” said Tayem. cont. overleaf

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CASE STUDY

our clients and suppliers, and to make sure we continuously add more talent to the entourage group, who in turn will create more success stories for our clients,” said Tayem.

Entourage’s talent acquisition department works very hard to hire the right talent, but Tayem said talent acquisition does not stop there.

Occasionally entourage requires the services of external providers; and the company’s procurement department works hard to get the best suppliers in the market who are focused on delivering quality and not just numbers, and who have the same vision for investing in long-term relationships.

“I would say over the past a few years we have developed strong partnerships with all our stakeholders, clients, employees, and suppliers.

I believe we are one of the few agencies that operates within the whole MENA region; while we are headquartered here in Dubai, the team is spread between Saudi Arabia, Jordan and Egypt. That gives us the right coverage to reach and to be able to manage clients in the most effective manner,” he said. entourage entourageFounder Founderand andManaging Managing Director, Director,Mohammed MohammedTayem Tayem cont. from pg. 37

That incident made Tayem decide to establish entourage’s own production house to make the agency less dependent on suppliers and to maximise the quality of what the agency can offer as much as possible. Tayem has since opened en+ Production which has its own carpentry set up, offset printing, digital printing, and acrylic machinery.

“From that point our events department could keep ahead of the competition knowing very well that the output and end result of what we wanted to produce is within our own control. A few months later we

acquired a boutique video production company to help us in developing story boards into corporate videos and TV commercials in addition to filming the events we work on,” he said.

Tayem added that the acquisition of the video production company saw business cycle complete with in-house expertise at every point in the production process; and now the company is completely focused on the quality of each project it delivers which is in line with the company’s growth plans.

“Our target for 2016 is to maintain the strong relationship we have with

HOW TO GROW BEYOND A START-UP 1. Build on client trust by delivering above expectations.

2. Continue to think big–don’t be scared to pitch against competition that is far more established .

3. Conduct steady human resource planning and management and ensure the best talent is acquired and motivated.

4. Cash-flow management has to be a priority–business plans and implementations are centred on it.

Source: Mohammed Tayem , entourage Founder and Managing Director

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FACETIME

speak my LANGUAGE

The growth of internet access for Arabic speakers has not translated into equal growth for digital Arabic content.

Nawaf Felemban, CEO and Founder of Kasra and Mona Ataya, CEO of Mumzworld address the lack of Arabic content online and how that is likely to change quite quickly

B

y 2017, over half of the Arab world, nearly 366 million, will have access to the internet; an increase from the 32 per cent that were online in 2012, according to Digital Arabic Content: an industry brief, a report created by both Jamil Wyne, Head of the Wamda Research Lab (WRL) and Teeb Assaf, research analyst at WRL with support from Google and Taghreedat, an Arabic Digital Content (ADC) initiative aiming at increasing the quality and quantity of Arabic content on the web.

The report added that there is more online content, and more and more people are searching the internet in Arabic their mother tongue; with Arabic being available for several internet apps and services, most of which are under the umbrella of the

internet giant Google or in partnership with it, such as YouTube.

While new initiatives are finding their ways to the internet offering users more space to browse, watch and engage in Arabic, the growth of internet penetration has not translated into equal growth for digital Arabic content, the report concluded.

“Lack of Arabic content was a big issue faced early on with the development of Mumzworld. Arabicspeaking customers, particularly in markets like Qatar, Saudi Arabia or Oman were stuck. The packaging didn’t have comprehensive Arabic information, so mothers couldn’t make informed decisions,” said Mona Ataya, CEO of Mumzworld, one of the largest online baby and children’s shopping sites in the GCC.

As to the reason behind this lack of content, disproportionate to the number of Arabic-speaking internet users, she said it comes down to one, two, or ten people going out there to create content.

Nawaf Felemban, CEO and Founder of Kasra–an Arabic site he developed in response to a lack of online engagement by Arab-speaking youth–said the problem comes down to a lack of skilled Arabic writers, a theme he has heard echoed by others in the industry.

“The underlying drivers we believe are related to education and career opportunities. The Arabic language curriculum is not taught at a consistent quality throughout the Middle East.

Then, when students graduate, there are few attractive careers for aspiring Arabic writers,” he said.

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Users rank Arabic social media FACEBOOK

39%

WHATSAPP

41%

TWITTER

4%

Preferred social media channel

Preferred social media channel

Preferred social media channel

Have access to Facebook

Have access to WhatsApp

Have access to Twitter

Current Facebook users

Current WhatsApp users

Current Twitter users

Access to Facebook daily

Access WhatsApp daily

Access Twitter daily

84%

83%

87%

84%

89%

96%

25% 32%

39%

LINKEDIN

1%

Preferred social media channel

6%

INSTAGRAM

6%

YOUTUBE

Have access to LinkedIn

9%

GOOGLE+

5%

Current LinkedIn users

2%

Preferred social media channel

Preferred social media channel

Preferred social media channel

Have access to Instagram

Have access to YouTube

Have access to Google+

Current Instagram users

Current YouTube users

Current Google+ users

Access Instagram daily

Access YouTube daily

Access Google+ daily

32% 34%

82%

30% 39%

66%

44%

Access LinkedIn daily

16%

29% 59%

Source: Arab Social Media Report 2015

Meanwhile, there are challenges facing digital Arabic content, which include few opportunities to generate revenue through advertising, bureaucracy and legal costs associated with combating piracy and lack of talent, according to the Digital Arabic Content report. “[In terms of investing in Arabic sites], regional investors are very interested in the space, but cautious. On one hand, the Arabic online population is half the size of the US, which means the supplydemand gap presents a tremendous opportunity. On the other hand, there is low awareness of trends from abroad, such as rise of media-tech and native ads. This means investors see the potential, but are not always certain how to monetise,” said Felemban.

Both Ataya and Felemban agreed that the answer to tackling

the problem of the dearth of Arabic content lies in growing use of social media, owing to organic content that is starting to be developed by Arabic speakers.

Felemban focuses on talent, not experience when hiring writers, choosing writers who tend to be professionals from outside the media industry, such as former nurses and engineers who want to pursue their original passion for writing.

Ataya said, “One of our strategies to accommodate Arabic speakers was the division of the company Instagram into two accounts. In terms of marketing, this would be considered a no-no, but it was necessary. The Arabic account, which was started at the beginning of 2016, has 71,500 followers, which shows tremendous levels of engagement. The English account, which is older, has a

mere 23,000 followers, which shows a big difference between the two and how hungry the Arabic-speaking consumer is.”

Felemban added that there are exciting developments on social media and online video, as Arabicspeaking youth are starting to engage with each other by posting content on Instagram and tweeting in Arabic, creating a rich archive of pop culture and conversation.

He added that successful Arabic YouTube channels are starting to produce good video content, a sign that the status quo on the Arabic internet is about to change for the better.

“If you look at Arabic content being generated on Youtube, it is more dialogue-type or community-type content that shows you what is likely to take over this year,” said Ataya.

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BRAND

The business of GROWING BUSINESS Michael Gaebler, Chairman and CEO, AVIAREPS, discusses bringing the brand to the UAE just before the financial crisis, and moving the company’s entire corporate communications department to Dubai

A

VIAREPS, the general sales agent that represents network airlines, niche carriers, and charter operators with marketing tools and PR management was founded in Germany in 1994, where it remains headquartered in Munich. The company currently consists of 58 self-owned offices, which are 100 per cent subsidies of the AVIAREPS group in 43 countries around the world, according to Chairman and CEO Michael Gaebler.

The company provides clients with a platform for market development and the ability to change fixed costs into variable costs, by allowing clients to use AVIAREPS’ base of operations, skilled employees and networks; rather than having to contract their own direct employees and cover all regular fixed costs in the set-up of an overseas office.

“In a similar way that utilising the cloud for IT solutions allows users to economise in paying only for what they need as they develop, so too are clients through the AVIAREPS model able to pay only for exactly what they need and when in terms of marketing, PR and sales representation,” said Gaebler.

He added that this is achieved by sales, marketing and PR activities are all being made on the client’s behalf; while using with the client’s business cards, email addresses, and branding.

So as far as in-market industry partners are concerned they are dealing directly with the client and not a representative.

“Having said that, our clients are aware that AVIAREPS as its own brand represents stability, as we have over 20 years of experience we are extremely well-connected within our industries of focus, and our teams are foccused on what we and our clients do,” he added.

COMING TO THE GCC AVIAREPS established its GCC office in Dubai in 2007, just prior to the world-wide economic crisis of 2008; which presented its own challenges, particularly as clients that were initially looking to invest in the UAE and GCC markets had to halt or postpone their entry.

“Nevertheless, we still managed to expand our presence and operations year on year, as many clients, reeling from the economic crisis, also realised that they needed a mix of international clientele in order to hedge any disruptions in demand from any one or two major markets where they were already well established,” said Gaebler.

Since then, he added, the company’s relationship with the region has continued to grow; not only for overseas clients requesting representation in the region, but for UAE and other Gulf entities seeking representation overseas.

In terms of managing a brand specifically in the UAE, Graebler added factors to consider including promoting clients’ brands with integrity in a way that is culturally meaningful and relevant to the given market.

“For example, for many of our tourism clients here in the Middle East, there is a greater focus on the promotion of family travel and attractions. The promotion of the availability of Halal and Muslimfriendly cuisine in our client’s destinations is another,” he said.

In 2013 the company moved its group corporate communications department to Dubai, owing to its central location and time zone, along with its experienced and multinational professional population. In addition to the Dubai office which conducts sales, marketing and PR activities on behalf of clients throughout the Gulf States, AVIAREPS has a subsidiary office dedicated to IT solutions in Jeddah, Saudi Arabia.

“Further expansion within the region is possible, yet dependent on our clients’ requirements. Currently we see extended interest for Saudi Arabia, and through international client demand, we will be opening a new office early this year just outside of the GCC in Iran,” said Gaebler.

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COMPANY BREAKDOWN 46.46% of shares held by Chairman and CEO Michael Gaebler 17.98% of shares held by board members 25.20% of shares held by OS Int. Sales (Holdings).B.V. 10.36% o f shares held by private investors, predominately AVIAREPS employees

Source: Michael Gaebler, Chairman and CEO, AVIAREPS

PARTNERSHIPS In conjunction with the Orange County, California Visitors Association and the Sheikh Mohammed Cultural Center for Understanding, AVIAREPS produced an online training video for Orange County retailers, hoteliers, restauranteurs and even the County police on how to warmly welcome visitors from the Middle East to Orange County, California.

The company has also expanded its Dubai and GCC-based clientele for representation in other international markets around the world. This includes clients such as;

• the Government of Dubai, Department of Tourism and Commerce Marketing (DTCM) • the Abu Dhabi Tourism & Cultural Authority (ADTCA) • Dubai Exports • Emirates • Etihad Airways • Gulf Air • Air Arabia Source: Michael Gaebler, Chairman and CEO, AVIAREPS

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START-UP

Buying off BIDDI Carl Ghossoub, Managing Director, Biddi.com, talks about growing a start-up off the back of the UAE’s growing e-commerce industry

Carl Ghossoub wants to encourage smaller sellers to sell their goods online.

B

iddi.com, a free e-commerce and listing site, was created as an ecosystem for buyers and sellers to interact seamlessly, backed by door-to-door delivery and secure payments, including cash on delivery, according to Managing Director, Carl Ghossoub.

“Furthermore, due to the growth of online shopping, we felt that a social online marketplace was necessary in the UAE to allow buyers and sellers to connect and interact,” said Ghossoub.

Ghossoub said Biddi.com sets itself apart in a couple of ways.

First, it was designed to give small boutique owners the chance to share their offerings with a wider audience,

as well as giving them a voice to communicate with consumers about how their brand was established and built.

Second, the social engagement of storeowners and users on Biddi. com has made the marketplace experience more personal as users are able to communicate directly with storeowners to customise their requirements and enquire about latest designs and updates.

He added one of the main obstacles to overcome was postponing the launch more than once, as elements of the site that would make it faster and more engaging were being changed on a daily basis. Being Dubai-based worked

in the company’s favour, as due to the rapid evolving nature of the e-commerce industry, the team was able to adapt to online demands almost immediately.

Ghossoub attributes the success of Biddi.com primarily to the growth of the e-commerce industry in the UAE and MENA region as a whole, and there are many boutique owners who want to sell goods online and be part of the e-commerce environment.

However, he said they do not have the means to do so, whether in terms of logistics or inventory management, and Biddi.com handles these elements for them.

“Since it is free to post items on the site, they also avoid the monetary involvement of building the whole e-commerce infrastructure on their own.

So the ease of use of the site has played a role in its success,” said Ghossoub.

While Ghossoub is proud that Biddi. com is a technology company started and launched locally in Dubai, he said he plans to expand to different parts of the MENA region to allow people from multiple countries to be able to engage with stores on the site.

“I hope Biddi.com will provide a platform for stores in other parts of the region to start posting on the site, as there is an extreme array of talent in the region that should be showcased, and I would love for Biddi.com to facilitate that,” he said.

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AWARDS

WINNERS announced F

inanceME ’s Business Vision Awards took place on 23 March 2016 at the Jumeirah Emirates Towers, Dubai. The evening had a great turnout and the guests and winners enjoyed the evening immensely.

“The first-ever Business Vision Awards marks the true beginning of our direct dialogue with the foundations of the economic future of the region. We are proud to recognise the achievements of our winners and congratulate them on their successes on the journey they have undertaken to create real value for the future,” said Robin Amlôt, CEO, CPI Financial.

THE WINNERS OF FINANCEME’S FIRST BUSINESS VISION AWARDS ARE AS FOLLOWS: AWARDS FOR BUSINESS SERVICES •Best Business Technology Provider Winner: Tablix Technology LLc • Best IT Services Provider Winner: Flagship Projects • Best Business Advisory Service Winner: Genero Capital • Best Business Consultancy Winner: James Pass Design • Best Business Solutions Provider Winner: Mashreq Bank

AWARDS FOR BUSINESS • Top Trader 2015Winner: Emirates Pearl General Trading LLC

• Top Services 2015 Winner: Ethos Integrated Solutions Highly Commended: Flat6Labs Highly Commended: WOMENA

• Best Home-Grown Brand: Winner: Compareit4me Highly Commended: Mumzworld Highly Commended: Adventure HQ

• Best giving back initiative of the year: Winner: BioD Packing & Packaging Highly Commended: Charicycles

• Best Franchise: Winner: Heritage for Henna

• Best Practice in Employment: Winner: Bin Touq Fire & Safety • Best Start-up: Winner: Fetchr Highly Commended: KinTrans

• Most Improved Company: Winner: Feathers Fashion Highly Commended: Linkviva • Inspirational Business Person of the Year: Winner: Mohammed Sharif Al Zarooni, CEO, Dimara International

• Best Established Business: Winner: Doctor Vending LLC • Best Small Business: Winner: Links Group Highly Commended: Beehive Highly Commended: Dubomedy

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PRODUCT FOCUS

MOBILE PAYMENT solution for SMEs Pankaj Kundra, Head of Payments at Mashreq discusses the facility that allows any smartphone to become a full-fledged acceptance terminal for all credit and debit cards

S

Pankaj Kundra

MEs contribute around 40 per cent to the UAE GPD and the 300,000 SMEs in the country employ approximately 42 per cent of the UAE’s workforce.

As per the Muhammed Bin Rashed Establishment for SME Development, the SME sector is expected to grow by five per cent in 2016.

Historically, the odds have been stacked against small businesses trying to accept card payments. Traditional payment processing systems are difficult to implement: payment terminals, such as cash registers, are expensive to install and maintain, disturb customer traffic, take up space and have dependency on third party providers to manage the systems.

In the field, SMEs who deliver goods and services door-to-door also have little choice but to force their customers to pay cash, or lose the sale when the customer does not have cash at home or the SME employee is unable to provide the appropriate change.

As a result, even in the 21st century, SME owners were left with no choice but to continue to demand cash from their customers.

Mashreq, a leading bank in the Middle East and North Africa, decided to change that.

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PayPort takes away the hassle of managing cash and lets SMEs give their customers a convenient way to pay.

– Pankaj Kundra, Head of Payments at Mashreq

The bank carefully aligned its business strategy and vision to that of the countries where it operates.

It did the same while developing solutions for SMEs in the UAE. The vision of Dubai SME, a division of the Dubai Economic Department (DED), is to make Dubai a global center for innovative SMEs and their mission is to foster the development of a flourishing entrepreneurial culture and a competitive SME sector to support Dubai’s economic development.

Enter Mashreq PayPort, the region’s first fully EMV Chip and PIN compliant mobile POS solution that is convenient, secure and inexpensive.

With Mashreq Payport, any standard smart phone can be converted into a full-fledged payment acceptance terminal. All that is needed is the Mashreq Payport app, and a handy chip card reader.

Whether accepting payments or shortening the queue in a retail outlet, or accepting card payments while doing a home delivery, Mashreq PayPort takes away the hassle of managing cash and lets SMEs give their customers a convenient way to pay.

Payport also offers a webportal that enables small-to-medium businesses get access to data and analytics that are usually available only to big businesses. This gives them the chance to be at the forefront of technology in the commerce sector and, on a practical note, unlimited flexibility in terms of where they can accept payments.

Mashreq Payport was recently upgraded and includes features such as cash monitoring, reconciliation, barcode reading, an automatic tip calculation feature for restaurants, and currency conversion for international customers, which also allows them to pay in their home currency. All these features are ideal for SME businesses looking to transact using credit cards as a mode of payment.

There are already more than 800 PayPort devices in the market, serving over 100 SMEs across a wide range of industries including restaurants, retailers, delivery companies, distribution companies and more.

These clients accept payments over AED 100 million a year and the number is growing exponentially.

DIGITISING CASH ACROSS SMALL BUSINESS

• Security PayPort features the highest level of security certification while maintaining a simple user experience.

Cardholder data is never stored on the mobile devices so consumers can enjoy a more secure payment experience.

• User-friendly mobility A convenient, secure, low cost solution that enables payments on the go and drives new business opportunities through higher customer engagement.

No additional phone line is required as it uses the merchant’s existing mobile phone connection.

• Quality, speed and flexibility A thoughtfully designed and rigorously tested card reader that is able to withstand thousands of transactions.

Payments can be processed in real time, resulting in the fast and efficient funding of merchants’ bank accounts.

• Data insights Insightful consumer data analytics lets the merchant improve the service in real time, it gives the merchant a data lead basis on which to make smart decisions about how to grow the business long term.

It helps the trader or a mobile business to take payments on the go, and on the spot. No more invoices need to be issued and clients no longer have to be chased for late payments. This style of payment processing is particularly well suited to mobile business owners such as private taxi drivers, travelling personal trainers, as well as tradespeople such as electricians and decorators, market stall holders and so forth.

Mobile businesses face challenges around being able to accept card payments, which usually means they have to carry large amounts of cash around–an unwieldy and not particularly secure solution–and may lose customers who can only pay with a card.

Accepting cheques as payment or providing invoices often results in a delay for payment of goods and services, and opens small business owners up to the risk of disputes over unpaid bills. This may raise legal costs at a time when the business owner is already out of pocket.

BENEFITS OF PAYPORT

Source: Pankaj Kundra, Head of Payments at Mashreq WWW.FINANCEMIDDLEEAST.NET

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TECH FOCUS

AVAYA GETS SMARTDXAAS Avaya Introduces Smart Digital Transformation-as-a-Service to emerging markets

Avaya provides smart, digital solutions for businesses of all sizes.

A

vaya introduced its concept of Digital Transformation-asa -S e r v i c e –S m a r t DX a a S – t o emerging markets, with the company highlighting its range of cloud-based solutions, designed to help organisations achieve their digital transformation objectives more easily and cost-effectively, at The Avaya Technology Forum, which took place at the Intercontinental Festival City Hotel, Dubai.

According to Avaya, while enterprise CEOs are increasingly placing digital transformation at the centre of their corporate strategies, organisations need trusted partners that can help them navigate today’s uncertain environments, while preparing for the challenges of tomorrow.

Nidal Abou-Ltaif, President, Europe, Middle East & Africa and Asia Pacific, Avaya said that SmartDXaaS is

about delivering digital transformation at customers’ own pace and path, with less disruption.

“By leveraging our vertical industry focus, expertise and technology solutions, today’s emerging-market organisations can take charge of their own transformation, and position themselves effectively against global competitors,” he said.

According to the International Data Corporation (IDC), by 2018, 70 per cent of siloed digital transformation initiatives will fail due to insufficient collaboration, integration, sourcing, or project management; while by 2020 more than 30 per cent of existing IT vendors will not survive in their current forms, requiring customers to realign their preferred vendor relationships.

Avaya executives outlined how the company has aligned itself with customers’ needs–software and services now account for 73 per cent of revenue–with half of all sales coming from new and cloudenabled technologies.

Every business, regardless of its size, has its customers as its focus; and every business has a process to start producing either a product or

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Generally cloud solutions are built for large enterprises, we are building cloud solutions for the SME sector.

– Mohammed Areff, Vice President, Middle East, Africa and Turkey

a service to meet the end objective of the customer, according to Mohammed Areff, Vice President, Middle East, Africa and Turkey.

He added that Avaya understand the customer’s business process and embeds communications through its technologies into that process to increase efficiencies. Therefore, as much as Avaya is in the enterprise business, it is in the SME business.

“We firmly believe the SME sector is the economic barometer of a country, so if that sector does well then the country does well. SMEs have similar challenges to larger businesses, managing costs and acquisition of new customers. Our technology just enables the business processes that the customer has,” he said.

Avaya has seen the strongest demand for solutions based on an operational expenditure model, posting 16 per cent year-on-year growth in its managed services business, as enterprises increasingly look to cloud-based, customisable solutions. As one of the only companies specialising in complex business communications, built on

open and mobile software platforms, and supported by a robust underlying network infrastructure, Avaya is wellplaced to help drive customers’ digital transformation strategies.

Areff said that what sets Avaya apart from competitors, and makes its technology viable for SMEs to implement, is that the company uses incremental solutions. He said when an SME starts with 10 people and grows to a team of 50, that 500 per cent growth comes with its own complexities and challenges of how to grow sustainably, how to keep costs low and how to maximise revenue.

“The solutions we provide do not just work for 10 people, then 100 people, then 1000 people. We offer a solution for 10 people that can accommodate 50. For example, we have elastic networking–the application drives what the network infrastructure should be, not the other way round. That means a business is not dependent on how much bandwidth is built onto its network. The network that is built for 10 users is smart enough to accommodate 25, 30, 50 users.

Generally cloud solutions are built for large enterprises, we are building cloud solutions for the SME sector,” he said.

AVAYA OFFERS CLOUD SOLUTIONS TO SMES TWO WAYS 1. It has partners focused on the SME sector and Avaya enables the partner with the right technology to be able to provide solutions to their SME customers.

2. In some countries, Avaya likes to provide the solution directly. For example in a continent like Africa, the retail customers that are small and medium and the company provides the cloud solution and hosts the technology for them.

Source: Mohammed Areff, Vice President, Middle East, Africa and Turkey

WWW.FINANCEMIDDLEEAST.NET

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TECH FOCUS

Un-clouding THE ISSUE

Monzer Tohme, Country Manager Middle East, Infor, gives five reasons why companies should make the move to the cloud

Monzer Tohme

T

he cloud has evolved from an emerging technology that enterprises can leverage to gain a competitive advantage, to a critical business enabler that enterprises need to leverage if they want to stay competitive. Now admittedly there are still some concerns in the region around cloud that have slowed the rate of adoption, but all signs point to this changing in the near future. In fact, according to the Cisco Global Cloud Index, cloud traffic in the MENA region is expected to grow from 31 exabytes in 2013 to 262 exabytes in 2018 at a

compound annual growth rate (CAGR) of 54 per cent and cloud workloads are expected to grow at a CAGR of 39 per cent for the same time period.

The same report found that by 2018, Software-as-a-service workloads will make up close to 59 per cent of all cloud workloads, representing a CAGR of 33 per cent from 2013-2018.

It is not hard to understand the attractiveness of the cloud, particularly for SMEs. A cloud-based ERP solution, for example, can help free up capital, provide the flexibility to meet evolving operational needs and allow a business to respond to opportunities in growth markets.

Also, in today’s ‘dog-eat-dog’ world, mergers and acquisitions happen very rapidly, and very frequently. Unfortunately, when two organisations merge, integration of the software, hardware, infrastructure and processes is usually an afterthought. The cloud provides a safe, efficient, and economical way to avoid disruption and creates a smoother path to synching all the IT services and applications.

FIVE REASONS TO USE THE CLOUD First, numerous studies show that moving to the cloud can significantly reduce costs.

According to Nucleus Research, cloudbased implementations typically require less development and testing resources and cloud vendors usually provide much of the application support and maintenance. As a result, organisations that deploy cloud-based applications spend 40 per cent less on consulting and 25 per cent less on support personnel than organisations that deploy on-premise applications.

In addition, cloud-based solutions are typically more cost effective than on-premise solutions–a study by Strategy& found that “overall, the total cost of ownership for a cloud-based solution can be 50 to 60 per cent less than for traditional solutions over a 10-year period.”

By freeing up capital expenses that would otherwise be devoted to implementing and maintaining an on-premise solution, business owners have the flexibility to re-invest these savings in to IT infrastructure, services and applications that can have tangible business value and positively affect the bottom line.

The second reason to move to the cloud is that deployments are faster. There are fewer work slowdowns during implementation and there is no need to invest capital in upgrading infrastructure. Particularly in today’s hyper-competitive world, rapid

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A cloud-based ERP solution can help free up capital and allow a business to respond to opportunities in growth markets.

– Monzer Tohme, Country Manager Middle East, Infor

response is critical when unforeseen events take place. Unlike cloud solutions, on-premise applications are not easy to structure rapidly, expand, and scale up, which can put a company at a decided disadvantage.

According to Strategy&, cloudbased implementations can be up and running in as little as four to eight months as opposed to 12 to 36 months for on-premise solutions. Because cloud launches require less internal support– in terms of both physical infrastructure and human resources—organisations typically experience little business disruption during implementation, and without the physical infrastructure that on-premise solutions require, it is unnecessary to invest capital in new IT equipment.

Third, the cloud allows for businesses to establish and expand operations. Cloud deployments do not require installation of any physical infrastructure, and as such, it is significantly less expensive and less time consuming to establish a business presence in new and remote locations.

If a business venture is successful, the solution can be quickly and easily scaled to meet expanding needs; and if the venture is a bust, the minimal investment in the cloud deployment for that location represents a much smaller loss than would be incurred by opting for an on-premise solution.

A cloud-based ERP solution is also much easier to update than an on-premise solution. With on-premise, the bills don’t just stop after finally building and finishing the data centre.

Annual maintenance is required; there is a need for upgrades, power bills, as well as cooling and administrative costs. In most cases, the cloud ERP vendor will automatically apply any patches or updates. This means that the solution will always be current and able to meet business needs, processes, regulations, and requirements, as they evolve over time.

The fourth reason to make the move is an increase in efficiency.

Business growth is only profitable if it’s balanced with increased inventory turns, streamlined processes and other operational cost savings. Cloud solutions are ideally suited for improving the efficiency of manufacturing operations because they can help automate many of the typical steps in business processes, replace manual activities and virtually eliminate the need for duplicate data entry.

For instance, automating new product development and introduction (NPDI) processes can help get products to market quicker. A cloud-based ERP solution can also provide a platform to allow easy collaboration between departments within the organisation, as well as externally, with suppliers

and distributors. An enterprise-wide, cloud-based ERP system can also provide early detection capabilities and real-time access to information about capacity, availability, qualifications and material data. As a result, access to the information needed to adjust schedules and avoid potential disruptions is available immediately.

Finally, a cloud-based ERP system provides complete visibility across the entire organisation. For instance, with access to information about plantfloor resources, a business owner can make the most effective usage of constrained resources, find areas to increase efficiency and promote better material and asset management.

Being able to see how all of the pieces fit together, in real time, ultimately helps a business owner operate more efficiently and to make better, faster decisions. A cloud-based ERP solution also provides access to robust collaboration tools, enabling potential problems to be more quickly and accurately identified, more thoroughly analysed and for solutions to be recognised.

As a business gears up to seize new growth opportunities, it will need capital to invest and the infrastructure to support the organisation’s new direction. A cloud-based ERP solution delivers everything needed to free up capital and to respond swiftly to any surprises that may occur.

WWW.FINANCEMIDDLEEAST.NET

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LAST WORD

Superior service

Zander Muego, Regional Director of international construction and property consultancy, Thomas & Adamson, explains about why managing projects in the UAE is a challenging, but dynamic profession WHAT IS YOUR BUSINESS AND WHAT IS YOUR ROLE?

We specialise in project and cost management for clients of all sizes and help clients create financially viable built assets, whether in a new or existing space. We work on diverse projects from food and beverage fitouts, to residential complexes or large government projects.

My role as regional director is to oversee all of the company’s activity in the region. Thomas & Adamson differentiates itself through providing a more attentive, personalised service than many of the multinationals we compete against, which we can deliver being a medium-sized business.

Bassam Alkasser

WHAT DO YOU ENJOY THE MOST ABOUT YOUR POSITION? I enjoy the variety, as we operate across a broad range of sectors with a diverse pool of clients, from SMEs through to large government entities, making the experience very different from day-to-day. Also, our team has a great mixture of experience and I enjoy the way we operate.

WHAT IS THE MOST CHALLENGING ASPECT OF BUILDING YOUR BUSINESS IN THE REGION? At the moment there are liquidity issues in the market and, as a result, we have to help our clients obtain non-traditional

sources of finance to ensure their projects can continue. The process can be a significant additional challenge, but it helps us sustain the projects and along the way we end up understanding the clients better and ultimately providing a better service.

Another challenge is when we are brought in too late on a project because being involved from the beginning helps the project manager fully understand the objectives involved, select the best team and drive it in the right direction from the outset.

WHAT ARE YOUR BUSINESS PLANS FOR 2016?

Thomas & Adamson has a great opportunity to build the business in Dubai while consolidating its strong position in Abu Dhabi, where we continue to work on some impressive public and private projects. Continuing to develop our portfolio and build our reputation as being a flexible and dependable option for all project management and cost consulting needs will always be of paramount importance.

HOW DO YOU STRIKE A WORK-LIFE BALANCE? Well this is easier said than done sometimes, as our industry involves a great deal of multi-entity coordination and pressure on my time can be significant. Only through having the

Zander Muego

support of a strong team locally and the wider organisation in terms of strategic elements, can this be possible. I know the job inside out and can always find the right support when I require it.

WHO HAS BEEN THE GREATEST INFLUENCE IN YOUR CAREER? I was given the opportunity to work with Thomas & Adamson while studying for my degree part-time. A guidance counsellor at school recognised my skill set and had a connection to a partner in Thomas & Adamson and the rest is history. His name was Jack Lyall and I really appreciated the opportunity to be part of their trainee programme, where I learned the practical side of the industry, giving me a head start over my peers.

What is your favourite film?

Pulp Fiction–the way Tarantino’s films are put together is usually a cut above the rest.

What are your hobbies?

We are regular cinemagoers, which is why the Cinema Akil project is of particular personal interest.

What book are you currently reading?

I am studying for my MBA, so course workbooks are my only reading for the time being.

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