Economic impact of Expo 2020 ‘could spill over in region’
Dubai, April 15, 2014
Experts from Deloitte, a leading professional services firm, weigh in on the changes that will occur as a result of the Expo 2020 Dubai win, as well as the challenges facing senior management in the GCC countries and wider Mena region as the countdown to FATCA (foreign account tax compliance act) becomes more imminent.
Expo 2020 will be a major “game changer for Dubai” whereby it will create significant changes – whether opportunities or challenges – in most industries and market sectors that could spill over to other countries in the region, say the experts.
“It is clear that Expo 2020 will go beyond a local showcase of commerce, technology and infrastructure, however impressive these things may be,” explains Mutasem Dajani, Deloitte UAE regional managing partner.
“Dubai will itself become an agent for future global progress as securing sustainable energy and resources, connecting and moving people, goods and services across markets and exploring the intrinsic spirit of entrepreneurship come together in a location that is uniquely synonymous with achievement in each of these areas.”
Humphry Hatton, CEO of Deloitte Corporate Finance Limited (DCFL) regulated by the DIFC, addresses international investments in the region and adds that hosting Expo 2020 in Dubai will “further the attractiveness of Dubai as a base for overseas companies wishing to invest in the Middle East.”
Anis Sadek, Dubai managing partner at Deloitte points out that, “It only takes a quick analysis of the impact of an expected additional 20 million international visitors over a six-month period to see that significant investment in hospitality and retail infrastructure will be required.”
Rashid Bashir, head of the strategy practice at Deloitte Middle East cautions that “it would be beneficial to develop a dedicated legacy plan to ensure that the event’s potential as a catalyst to transform Dubai’s economy is maximised.”
Their views are grouped in the report "Expo 2020: A game changer for Dubai”, and “Countdown to FATCA” available in the spring 2014 issue of the Deloitte Middle East Point of View (ME PoV) publication which also includes the views of other Deloitte partners and industry experts Cynthia Corby, Akbar Ahmad and Jesdev Saggar on the impact of Expo 2022 in the construction, financial services, and infrastructure and capital industries.
Under the “Countdown to FATCA” topic, Ali Kazimi, international tax services leader at Deloitte Middle East provides an overview of FATCA including the compliance requirements and the 3 main pillars of the FATCA compliance program (classification, reporting and withholding).
“The changes brought on by FATCA will also undoubtedly cause major disruption in all companies as non-compliance could leave organizations and senior personnel open to significant financial and personal penalties”, Kazimi explains. “The complex regulations will require changes to internal systems, control frameworks and processes and procedures.”
Addressing challenges in the GCC countries in terms of education offerings is another feature of the latest issue of the ME PoV.
Richard Barrett, leader of education and skills consulting at Deloitte Middle East explains in School’s out, now what?: “GCC governments are committed to policies of nationalization, but young people still seem focused on public sector jobs and those with the required technical qualifications are in short supply”.
On the positive side, women in the region seem to be advancing as entrepreneurs ahead of other countries with the percentage of women entrepreneurs in the Middle East at about 15-20 per cent. These findings and other comparative analysis of women economic activities are tackled by Vanessa Borchers, global diversity leader and Linda Human, global diversity director at Deloitte Touche Tohmatsu Limited in their piece “Catching up to the west?”.
They explain: “To put this in perspective, a Global Entrepreneurship Monitor study found 10 percent of the UAE adult female population was involved in entrepreneurial activity in 2012, and 5 percent in Europe.”
Other topics covered include in the ME PoV publication include procurement fraud whereby major infrastructure activity is occurring over much of the Middle East with significant construction work being undertaken on behalf of government agencies in areas such as airport terminals, hospitals, port facilities and transport networks.
David Clements, principal director at DCFL explains: “The incentive to win major contracts can lead individuals and even companies to engage in corrupt and fraudulent behavior and staff within the procurement or project management divisions of contracting organizations may be exposed to inappropriate inducements such as bribes and corrupt offerings.”
Another issue affecting the region as GCC firms continue to grow through mergers and acquisitions is the requirement to invest in technology-driven innovations. “Involvement of Information Technology early and throughout the merger or acquisition process is often critical for effective execution and the subsequent realization of benefits,” explains Zaid Selman, manager in transaction services at DCFL in his piece, Deal maker or breaker? Technology in M&A transactions.
Munish Mohendroo, director in valuation and modelling services at DCFL cautions in “Some common mistakes” to avoid in estimating and applying discount rates that one of the most critical issues for an investor to consider in a strategic acquisition is to estimate how much the company being acquired is worth. – TradeArabia News Service