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Business climate survey

Business climate survey. UNITED ARAB EMIRATES 2018. 28 November 2018. Team Sweden in the UAE. FOREWORD.

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Business climate survey

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  1. Business climate survey UNITED ARAB EMIRATES 2018 28 November 2018 Team Sweden in the UAE

  2. FOREWORD The United Arab Emirates (UAE) have experienced rapid modernization due to the wealth derived from oil revenues. Today, the country is Sweden’s second largest trading partner in the Middle East and North Africa (MENA) with more than 200 Swedish companies directly or indirectly represented in the market. In addition to the role as a trading partner, the UAE is also an important regional hub for Swedish companies. Many regional business opportunities are generated in the UAE and a significant part of trade with Swedish products goes through the country. In an ever-changing world it is important to understand how the business environment affects the operations in order to adapt and stay competitive. Team Sweden in the UAE has therefore conducted a survey on how Swedish companies present in the UAE perceive the business climate to further understand market characteristics, challenges and key success factors and future outlook. We often read forecasts and reports based on statistics and macro indicators, this report offers an important complement with insights from those who knows it best – companies with local presence. This presentation is a summary of the results of the study. We hope it will bring insights to both companies currently operating here as well as those who are planning to establish themselves here. H.E. Mr. Henrik Landerholm Ambassador of Sweden to the UAE Mr. Massoud Biouki Trade Commissioner of Sweden to the UAE Business Sweden

  3. The UAE and Sweden have an established trade relationship THE UAE SNAPSHOT SWEDEN & THE UAE 9.4 MILLION FEDERATION OF SEVEN EMIRATES 6.3 BILLION SEK (2017) POLITICAL SYSTEM SWEDISH EXPORTS TO THE UAE POPULATION 0.8% $40 698 374 MILLION SEK (2017) GDP PER CAPITA GDP GROWTH (2017) IMPORTS FROM THE UAE TO SWEDEN • Bordering countries: • Land: Oman, Kingdom of Saudi Arabia (KSA) • Sea: Iran, Qatar ~ # 200 SWEDISH COMPANIES ARE PRESENT IN THE UAE* Largest trading partners: China India USA KSA Germany The UAE is located in the south-eastern corner of the Arabian Peninsula * BASED ON TEAM SWEDEN’S KNOWLEDGE AND DEFINITION OF SWEDISH COMPANY

  4. EXECUTIVE SUMMARY The uae is an attractive market for doing business and the future outlook is optimistic 1 Advantages 82% of respondents find the UAE as an excellent, very good or goodplace to do business Current Situation – 2018 • Growth of the UAE business operations • Growth of MENA business operations • Profitability increase • Increase of the number of employees • Geographic location • Infrastructure investment and PPP projects • Ease of doingbusiness • Market size • Expo 2020 52% 55% 26% 38% Future Outlook – 2019 Challenges • Growth of the UAEbusiness operations • Growth of MENAbusiness operations • Profitability increase • Increase of the number of employees 67% • Rough competition • Bureaucracy • Business environment • Trade complexity 69% 50% Excellent Very good Good 55% Business Sweden

  5. ABOUT THE RESPONDENTS THE RESPONDENTS ARE FROM MANY SECTORS AND are mainly established in free zones MARKET PRIMARY AND REGIONAL ACTIVITY REVENUE Q: What is your primary activity in the UAE? Q: Which is your most important market in the UAE?* Q: What is the total annual revenue from your office in the UAE? Q: What customer segment is your main customer group? Q: What is your type of establishment? • Respondents aremainlyactive in the Emirateof Dubai (74%) and established in a freezone (74%) • Respondents are from various sectors, the top 3 sectors, except from “Other” are: construction (13%) followed by manufacturing sector and ICT (10% each) • The companies are mainly performing marketing and sales activities in the country (60%) with other businesses as their main customers (68%) • The UAE functions as a regional hub office for 90% of the respondents • 45% of respondents have an annualrevenueofaround 6-45 million AED from the office SECTORS Respondents indicatethat the UAE officeacts as a regional hubheadquarter 90% 13% 10% 10% Top countries managed by the UAE office Oman (87%) Kuwait (81%) Saudi Arabia (78%) Qatar (67%) Construction Manufacturing ICT B2B 8% 8% 8% Security & Defense Engineering Products Energy & Environment 68% Top markets indicated with most growth potential: Saudi Arabia UAE Egypt Kuwait 18% 5% 5% Consumer Goods Healthcare & Life Science Other *SUM SURPASSES 100% WHEN RESPONDENTS CHOSE MORE THAN ONE AVAILABLE OPTION Business Sweden

  6. THE UAE HAS A FAVORABLE LIVING ENVIRONMENT AS COMPARED TO OTHER GCC COUNTRIES. THE MARKET IS EASILY ACCESSIBLE FROM ALL AROUND THE WORLD. FOR REGIONAL OFFICE, TO COVER THE GCC COUNTRIES, IT IS AN IDEAL LOCATION. - Respondent of the survey

  7. FACTORS HAVING POSITIVE IMPACT ON BUSINESSES IN THE UAE 82% OF RESPONDENTS VIEW uae as AN EXCELLENT, VERY GOOD OR GOOD PLACE TO DO BUSINESS INFRASTRUCTURE, MARKET SIZE AND EASE OF DOING BUSINESS ARE KEY FACTORS • 82% of respondents believe that the UAE is an excellent, very good or good place to do business. None of the survey participants have indicated that it was a bad or a very bad place for business. Q: Generally, is the UAE a good place to do business? OVERVIEW OF BUSINESS ENVIRONMENT • 40% of respondents found it easy to establish a company in the UAE, whereas 26% of survey participants have indicated that this process was difficult or very difficult • The highest availability of competent local staff was indicated for positions within administration (57% respondents indicated very high or high), logistics (52%) and service (54%) fields, the lowest – within the production (24%) segment. Generally, availability of competent local staff is seen as moderate within most of the indicated fields Q: What factors have a very positive or positive impact on your business operations in the UAE? VOICES OF THE MARKET • Dubai is a hub and suits well to cover other markets from. But it starts to be expensive to operate from and the location will be questioned in the future if this trend does not change. As revenues are failing its difficult to defend Dubai as a location for our business unit. • Very easy place to live and do business across the region. Half way between regional headquarters in Singapore and headquarters in Sweden. • Many global clients have operations in Dubai and this is increasing. • Infrastructure investment and PPP projects (65%), market size (54%)and ease of doing business (53%)were indicated as the key factors having very positive or positive impact on business operations in the UAE Business Sweden

  8. CURRENT SITUATION AND FUTURE OUTLOOK MAJORITY OF RESPONDANTS HAD A POSITIVE YEAR 2018 AND ALSO FORECAST 2019 AS A YEAR OF GROWTH Current AND FUTURE REVENUE AND PROFITABILITY GROWTH ARE INDICATED Revenue growth • 52% of survey participants have recorded revenue growth between 5–20% in the UAE as compared to 2017. The same revenue growth rate in MENA was indicated by 55% of respondents • 26% of companies have indicated negative growth rate of operations in the UAE this year as compared to last year. The same negative growth rate in MENA was indicated by 23% of survey participants Profitability • Almost half of the survey participants – 46% – are anticipating stable profitability in 2018 • 26% of respondents have indicated expectations on the increase of their companies’ profitability this year • Whereas 28% said that their profitability in 2018 will decrease Investments • 42% of respondents have indicated investments in the UAE this year. Most of them – 63% – have invested in OPEX • Companies have indicated investments from 300 kAED to 10 mUSD CURRENT SITUATION FUTURE OUTLOOK Revenue growth • 67% of companies anticipate that their business operations in the UAE in 2019 will grow at the rate of 5–20% as compared to this year. The same growth rate of their operations in MENA is anticipated by 69% of respondents. • 9% of survey participants foresee negative growth rate between -5% and -20% of their operations in the UAE next year. The same view is shared by 11% of respondents in terms of their operations in MENA in 2019. Profitability • Companies are optimistic in terms of profitability in the UAE in 2019: Half of the respondents – 50% – expect their companies’ profitability next year to increase and a third - 36% - believe that the profitability will stay stable Investments • Investments are foreseen in 2019, however on a slightly smaller scale comparing to 2018: next year 40% of respondents plan investments, majority of them will also invest in OPEX • In 2019 companies plan to invest from 200 kAED to 12 mUSD Business Sweden

  9. CONCLUSION & FINAL WORDS Swedish companies active in the UAE perceive this market as a good place to do business. The country is mainly valued for its strategic location in the region but also for the ease of doing business, access to skilled local employees, infrastructure investment and private public partnership projects, among other reasons. Although there are obvious challenges the Swedish companies are facing, among which – fierce competition, bureaucracy, trade complexity, payment terms – we are pleased to see the positive view the Swedish companies share on the future outlook. As illustrated in this study, half of the respondents anticipate growth of their business operations in the UAE, foresee profitability growth in 2019. Sweden has a good reputation in the UAE, is associated with quality, trust and innovation and the Swedish companies find it beneficial for their businesses to highlight Swedish origin. The footprint of Swedish companies will hopefully increase as the UAE continues to grow and more companies start realizing the country’s and the region’s potential. We would like to thank the companies and people that took their time to participate in the study and share their insights from doing business here. We hope the study is interesting and the insights will help Swedish companies in the UAE to grow further. Mr. Massoud Biouki Trade Commissioner of Sweden to the UAE H.E. Mr. Henrik Landerholm Ambassador of Sweden to the UAE Business Sweden

  10. Contact us Business Sweden – The Swedish Trade & Invest Council Concord Tower, 26th floor, Office 2607, Media City P.O. Box 25906, Dubai, UAE T +971 4 429 8600 E uae@business-sweden.se www.business-sweden.se

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