Firms upbeat on Middle East

22 October 2012

DUBAI: Over 70% of companies believe the Middle East will be a more attractive place to do business in three years' time, not least because of its favourable consumer demographics, a study has found.

Ernst & Young, the advisory network, polled 355 executives, 75% of which said the region would offer greater opportunities by 2015, whereas only 6% predicted a deterioration on this metric.

Some 46% of respondents argued that one of the "world-class" features of the Middle East from a corporate perspective was its market size and the purchasing power of shoppers.

The study stated there are 175m people in the region, with a median age of 25 years old, versus 28 years old in Latin America and 29 years old in Asia, rising to 36.9 years old in North America.

Certain nations also boast affluent populations, with the UAE, Qatar and Kuwait all reporting a mean level of wealth topping $100,000 per adult in 2011, it added.

More broadly, 37% of the survey panel agreed infrastructure development and government investment schemes deserved this status, as did 30% when discussing access to natural resources.

"The Middle East has many of the qualities that companies look for in an FDI destination: solid investment fundamentals, strong demographic trends and vast natural resources," said Jay Nibbe, Ernst & Young markets area managing partner for Europe, Middle East, India and Africa.

Less positively, only 7% of the sample thought the area boasted impressive research and innovation capabilities, and 6% asserted that it possessed a high level of "technological readiness".

The GCC nations – Bahrain, Kuwait, Qatar, Saudi Arabia and the UAE – were seen as the most promising area for investment by 75% of those polled. Northern Africa was a distant second on 10%.

Among the organisations already trading in the Middle East, a 27.3% share suggested that developing education and skills would boost its attractiveness, with greater political stability on 25%.

Where the corporations represented were yet to establish a local presence, the score for improving political stability rose to 40.4%, pointing to the existence of a large "perception gap", the study said.

Brand owners from the US made the largest number of investment in the Middle East in 2011, on 180. The UK posted the next highest total for overseas nations on 100, with India on 76 and France on 61.

Data sourced from Ernst & Young; additional content by Warc staff