Scribd
Upload
208 views13 pages

Country Risk Analysis

The document analyzes the country risk of investing in the United Arab Emirates (UAE) through a PEST analysis. It finds that the UAE has a medium overall risk level, with low economic risk due to strong GDP growth and a diversifying economy, medium political and legal risks, and high social and cultural risks due to its Islamic culture. The UAE aims to attract foreign investment through policies like free trade zones and no corporate or income taxes.

Uploaded by

rianjames
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
208 views13 pages

Country Risk Analysis

The document analyzes the country risk of investing in the United Arab Emirates (UAE) through a PEST analysis. It finds that the UAE has a medium overall risk level, with low economic risk due to strong GDP growth and a diversifying economy, medium political and legal risks, and high social and cultural risks due to its Islamic culture. The UAE aims to attract foreign investment through policies like free trade zones and no corporate or income taxes.

Uploaded by

rianjames
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 13

Country Risk Management

Country Risk Management

In
In
Presented
Presented by
by - -
Sandeep Vaishya 54
Sandeep Vaishya 54 UAE
UAE
Vikas Waghmare 57
Vikas Waghmare 57
Under the guidance of Prof. S.B. Chaughule
Under the guidance of Prof. S.B. Chaughule
UAE

PEST Analysis
POLITICAL RISK
 U.A.E. has no political parties. The rulers hold power on the basis
of their dynastic position and their legitimacy in a system of tribal
consensus.
 UAE is a Federation comprised of seven separate emirates. Each
emirate retains a high amount of political and economic independence
within the federal system.
 Regional political risk is obliviously a major issue here, as foreign capital
could well take flight in the event of greater instability
 Favorable tax laws and political stability also assist in making the UAE
a prime business location.
 UAE government policy recognizes that the private sector is of major
importance in the drive for diversified economic growth and full
employment for nationals.

Medium Political Risk - B


ECONOMICAL RISK
 UAE currently has one of the fastest growing economies in the world
 UAE has a highly industrialized economy that makes the country one
of the most developed in the world based on various socioeconomic
indicators such as GDP per capita, energy consumption per capita and
human development index.
 In 2009, its GDP, as measured by purchasing power parity, stood at
US $200.4 billion. The GDP per capita is currently 14th in the world
and 3rd in the Middle East
 The UAE has an open economy with a high per capita income and a
sizable annual trade surplus.
 Oil and Natural gas exports play an important role in the economy,
especially in Abu Dhabi
 The government increased spending for infrastructure and job creation,
and there is a greater opportunity for private sector Investment.
>>
 A massive construction boom, an expanding manufacturing base, and a
thriving services sector are helping the UAE diversify its economy.

 Dubai is rapidly growing tourism industry.

 UAE's economy, particularly that of Dubai, was badly hit by the financial
crisis of 2007–2010. In 2009, the country's economy shrank by 4.00%.

Low Economic Risk - C


Socio & Cultural Risk
 Rooted in Islamic culture, the UAE has strong ties with the rest of the
Arab and Islamic world.
 Nearly all citizens are Muslims
 Discrimination in the workplace is common, prospective employers will
specify religion, nationality
 The government is committed to preserving traditional forms of art and
culture, primarily through the Abu Dhabi Cultural Foundation
 Dubai is the only emirate of the UAE with both a Hindu temple and a
Sikh gurudwara, Christian churches are also present in the country.
 Womens are seen as equals and are protected by rights and privileges laid
down by Islam

High Social & Cultural Risk - A


Legal Risk
 UAE does not have any enforced federal income tax legislation for general
business.

 The key risk comes from a potential US-Iran military confrontation.

 UAE as being less corrupt than almost all of its regional peers.

Medium Legal Risk - B


Logistics risk
 A challenges is emerging to Dubai and the UAE’s role as the region’s key
transport and logistics hub.

 Dubai Logistics City, Jebel Ali international airport will have the capacity to
handle 12mn tones of cargo annually.

 Strong investment in transport, infrastructure and the global ambitions of


companies like Emirates airlines and DP World will be strong positive factors.

 For the 2007-2011 forecast period, it is expected that transport and


communications sector to continue outpacing the economy as a whole. It will
achieve average annual growth of 6.3%, versus 5.8% for overall GDP.

 The total value of transport and communications GDP will rise to US $ 18.14
bn in nominal terms by 2011, representing 6.8% of the UAE’s GDP.

No Logistic Risk
SWOT Analysis
 Strengths
 Free Trade Zones, relative ease of business start up
 Weaknesses
 One needs a network of people in order to expand opportunities
 Trust must be gained before any business transaction occurs
 Opportunities
 Large export market
 Trade missions
 Threats
 Sandstorms and dust storms occur frequently.
Advantages in doing business UAE
 At present time the economy is booming – GDP having risen by
20.4 % in 2000

 UAE supports a liberal economy and is committed to free trade,

 UAE currency is secure and freely convertible

 There is no restrictions on profit transfer of capital repatriation.

 Import duties are low (i.e. 4%) and in the case of foodstuffs,
medicine, agricultural products, and items imported for use in the
free zones are non-existent.

 UAE has one of the most liberal business environment in the region
and foreign investment is actively encouraged in many sectors.
>>
 Labor costs are competitive and corporate tax and personal taxes are
nill.
 BOP- surplus.
Entering the Market
 A local sponsor or service agent
 Trade license
 Register with the local Chamber of Commerce and Industry, the Economic
Development Department, and with the Minister of Finance.
 Company can function only within the emirate where the license was granted
 Separate license must be obtained to open a branch in other emirates
 Free Trade Zones
 100% foreign ownership is allowed with no recruitment or sponsorship problems
 Corporate tax and customs duty exemption on imported raw materials and
equipment
 No levy on exports and imports
 The Free Zone Authority gives a questionnaire to assess the company's
requirements and whether it can be met.
 Once the company submits the questionnaire, it will be given a license
application, a list of invoices required for planning, consumer request for
electricity and Form B for environmental concerns (if applicable).
Analysis of risk
 Low economic risk – C
 Medium political risk – B
 Medium legal risk – B
 High social & cultural risk – A
 No logistic risk

Hence, there is medium risk to invest in UAE

You might also like