Notes Management and Entrepreneurship

US RELATION WITH SAUDI BASED ON COMMON INTEREST NOT COMMON

VALUE.

SAUDI changes

November 2017

Saudi Arabia Arrests 110 Princes, Including Billionaire Alwaleed Bin Talal

• Trump Tells Saudi King That He Supports Modernization Drive

• Saudis Intercept Missile Fired From Yemen That Came close to Riyad

•

October 2018

Saudi physicist and political dissident Mohammad al-Massari analyzes Turkish

• president Erdogan's speech on Tuesday.

Turkish President Recep Tayyip Erdogan said the "savage" killing of Saudi writer

• and critic Jamal Khashoggi inside Saudi Arabia's consulate in Istanbul was

"planned" days before his murder on October 2. Addressing the Turkish

parliament in Ankara, Erdogan raised several questions that he said still needed

answering from officials in Riyadh but stopped short of accusing the kingdom's

royals of playing any part in the assassination.

Gulf cooperation Council/Countries

The Cooperation Council for the Arab States of the Gulf is intergovernmental

• political and economic union consisting of all Arab states of the Persian Gulf,

except for Iraq founded 1981.

Its member states are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the

• United Arab Emirates.

All current member states are monarchies, including three constitutional

• monarchies (Qatar, Kuwait, and Bahrain), two absolute monarchies (Saudi

Arabia and Oman), and one federal monarchy (the United Arab Emirates,

composed of seven member states, each with its own emir).

There have been discussions regarding the future membership of Jordan,

• Morocco,

In 2011 proposal to transform the GCC into a "Gulf Union" with tighter

• economic, political and military coordination has been advanced by Saudi

Arabia, a move meant to counterbalance the Iranian influence in the region. 5

Objectives

Formulating similar regulations in various fields such

• as religion, finance, trade, customs, tourism,

legislation, and administration

Fostering scientific and technical progress in

• industry, mining, agriculture, water and animal

resources

Establishing scientific research centers

• Setting up joint ventures

• Unified military (Peninsula Shield Force)

• Encouraging cooperation of the private sector

• Strengthening ties between their people

• Establishing a common currency

• All GCG economies are Peg to the USD

• What Happens if GCC Members Drop the Dollar Peg?

• The GCC countries have reasons to drop their peg to the dollar. However, the

• GCC official policy is that members will retain the peg until the Council has

created a monetary union, similar to the European Union.

The peg fixes the exchange rate of each country currency to the dollar.

• When the dollar fell 40% between 2002 and 2014, it created an inflation rate of

• 10% in these countries.

It forced the price of oil and other commodities to increase.

• If they no longer peg to the dollar, they will not need to buy so many Treasuries

• to stabilize their exchange rate. That would cause the dollar to decline further,

causing more inflation in the United States.

On the other hand, it would also mean that oil is no longer priced in dollars.

• That could result in lower oil prices.

The ease of doing business – World Bank Group

Higher rankings (a low numerical value) indicate better, usually simpler,

• regulations for businesses and stronger protections of property rights

The ease of doing business index is meant to measure regulations directly

• affecting businesses and does not directly measure more general conditions

such as a nation's proximity to large markets, quality of infrastructure, inflation,

or crime. A nation's ranking on the index is based on the average of 10 sub-

indices:

1. Starting a business – Procedures, time, cost and minimum capital to open

a new business

2. Dealing with construction permits – Procedures, time and cost to build a

warehouse

3. Getting electricity – procedures, time and cost required for a business to

obtain a permanent electricity connection for a newly constructed

warehouse

4. Registering property – Procedures, time and cost to register commercial

real estate

5. Getting credit – Strength of legal rights index, depth of credit information

index

6. Protecting investors – Indices on the extent of disclosure, extent of

director liability and ease of shareholder suits

7. Paying taxes – Number of taxes paid, hours per year spent preparing tax

returns and total tax payable as share of gross profit

8. Trading across borders – Number of documents, cost and time necessary

to export and import 6

9. Enforcing contracts – Procedures, time and cost to enforce a debt

contract

10.Resolving insolvency – The time, cost and recovery rate (%) under

bankruptcy proceeding

GCC – Gulf cooperation council

GCC countries benefited from some of the world’s strongest growth rates since

• the financial crisis hit in 2008 mainly due to high oil prices.

Between 2008 and 2013, the real GDP of GCC countries grew by 24%, while that

• of the Eurozone shrunk by 2%.

Between 2008 and 2013, Qatar’s economy performed particularly strongly by

• 67% and that of Saudi Arabia by 30%.

Significant efforts for diversification of all GCC countries away from oil and gas

• revenues are creating substantial opportunities for foreign investors to set up

and provide their services in the region.

Qatar – the richest country in the world

Highest GDP per capita in the world in excess of $100k.

• Third largest gas proven reserves (885 tcf making up 13% of world reserves

• after Iran and Russia at 18% each), but by far the highest hydrocarbon reserves

and revenue per capita.

Largest exporter of LNG in the world since 2006.

• Substantial oil reserves as well (25 bl barrels).

• Growth drivers shift towards non-oil and gas sectors due to large-scale

• infrastructure spending as part of the build-up towards the 2022 World Cup in

Qatar and the 2030 Qatar National Vision investment plans.

Recently (January 2014) signed DTT with Cyprus.

•

Saudi Arabia – the largest economy in the Gulf

The largest economy in the Gulf (represents 25% of Arab GDP) and the 19th

• largest economy worldwide, which makes it a main player in the commercial life

of the world.

The largest oil reserves worldwide (267 bl barrels making 20% of world

• reserves).

Fifth largest proven natural gas reserves, but gas production remains limited.

• Huge unexploited shale gas reserves.

• Cheapest energy prices make it ideal location for projects that require energy

• consumption.

One of the world’s fastest growing economies with substantial opportunities for

• investments.

UAE – the most developed service economy in the Gulf

Successful economic diversification has made Dubai the regional center of

• finance, commerce, transportation and tourism.

Dubai’s successful bid to host the 2020 World Expo will compensate in the

• coming years for the slowdown in the oil sector and has already created an

economic boom with positive spillovers in Abu Dhabi and Sharjah.

Unlike Dubai that has oil about to run out, Abu Dhabi (the capital) is very oil

• reliant.

Abu Dhabi has taken important steps towards diversifying its economy towards

• tourism and financial services and is expected to grow faster than the UAE

average. 7

UAE Founded: 2 December 1971, The constituent emirates are: Abu Dhabi (which

• serves as the capital), Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and

Umm al-Quwain.

An absolute monarch governs each emirate; together, they jointly form the

• Federal Supreme Council.

One of the monarchs is selected as the President of the United Arab Emirates.

• 1970 Opening of Jabel Ali Port

• 1985 Emirates Airlines was Funded

• 1990 October - Sheikh Rashid Bin-Said Al Maktum dies and is succeeded by his

• son Sheikh Maktum Bin-Rashid Al Maktum as ruler of Dubai and UAE vice-

president.

1991 - UAE forces join the allies against Iraq after the invasion of

• Kuwait.

1991 July - Bank of Credit and Commerce International (BCCI) collapses. Abu

• Dhabi's ruling family owns a 77.4% share.

2000 Opening of DIC – Free Zone

• 2004 Opening of DIFC

• 2004 Opening of the Real Estate Market to foreigners

• 2009 Financial Crisis and Dubai Debt Crisis – Abu Dhabi intervention

• 2010 Burj Khalifa tower opens in Dubai as the world's tallest building and man-

• made structure.

2014 March - The UAE, Saudi Arabia and Bahrain temporarily withdraw their

• ambassadors from Qatar after alleging that it has been meddling in their

internal affairs.

2014 July - The UAE announces plans to send an unmanned spacecraft to Mars

• in what would be the first space probe by an Arab or Islamic country.

2014 August - UAE intervenes in Libya, targeting Islamist militants with air

• strikes, US officials report.

2014 September - The UAE and four other Arab states take part in US-led air

• strikes on Islamic State militants in Syria.

2014 November - Amnesty International accuses UAE of carrying out an

• unprecedented clampdown on dissent since 2011.

UAE publishes its list ''terrorist organizations'', including dozens of Islamist

• groups and charities.

2015 March - The UAE and four other GCC states take part in Saudi-led air

• strikes on Houthi rebels in Yemen.

What made GCC companies successful in the past 30 years

Minus

Plus 1. Governance model have seldom being

1. 0% Taxation has created a formalized

unique environment in the 2. MNC have always approach middle east

region according to the international moods, scaling

2. Ability to establish a company up and down their business opportunists

is less than 30 days 3. Very few MNC have done an effort to become

3. Strong Government drive in really routed in the culture of he country

building on the infrastructures, 4. Some entrepreneur have done investment

Port Airport, Roads that were based on temporary hype

4. Vison of investing on the high 5. These hype are reflected in the Gulf Stock

VAD industry segments ICT, Market volatility

Tourism, Banking, Retails, 6. Management skills at medium level will

5. Natural trading hub from become a must in the coming years.with

Fareast and Europe & Africa limited effort in truly improving efficiency

6. A culture of growing the customers experience and innovation 8

business 7. Rich private speculators as oppose to

institutional investors influence Stock Market.

With both low level of transparency. This

The Free Zone

Free-trade