Dubai, United Arab Emirates
Situated on the Persian Gulf, next to the Gulf of Oman, the city of Dubai is a renowned global city whose importance to the global economy is almost unparalleled. Because of its strategic position, actively-diversifying economy, and excellent trade relations and prestige, Dubai is an excellent location for any businesses looking to expand or invest, especially into Middle Eastern, North African, and Central and South Asian markets, or anyone looking to do business in the Middle East region.
Dubai has established itself as an emirate and city on its oil industry and through that industry has fueled its current success as a cosmopolitan metropolis. However, in regards to total GDP, which reached 90.9 billion USD in 2012 and has increased roughly 10% over the past two years, oil and gas only contributes around 8%. The largest sources of revenue currently are real estate and construction, various financial services, and information technologies. As a result of a construction boom which instigated the construction of the Burj Khalifa, the world’s current tallest building, Dubai boasts state-of-the-art infrastructure and also benefits heavily from extensive telecommunications and widespread connectivity.
If you are wanting to start a business in Dubai, there are a few things to be aware before proceeding. Firstly, as a result of ownership laws in the UAE, foreigners cannot hold majority ownership of any businesses in Dubai and must have an Emirati partner who holds at least 51% ownership of the venture. Notable exceptions to this ownership rule are Dubai Internet City and Dubai Media City, in which non-nationals can own 100% of a business. Secondly, the process to start a business can be daunting for someone who does not know how to navigate the tricky business registration process, so it would be best to have someone who has gone through the process before as a guide. Thirdly, Dubai is tax-free, but does not hold a free trade agreement with the US, so tariffs can still be raised when engaging in trade between the two nations. However, there is an Investment Framework Agreement (TIFA) between the two nations, which offers local business a 10% preferential price in government procurement. UAE is also a member of the World Trade Organization (WTO).
If you’re curious about how to start a business in Dubai and all of the other cities mentioned in this article, please follow the link at the bottom of the page for more information.
Doha, the capital of the peninsula and state of Qatar, is another sound option when selecting a place to do business in the Middle East and North Africa (MENA). Qatar currently has the third largest GDP per capita in the whole world with 1.8 million citizens as of 2013, 1.3 million of which live in Doha. All of Qatar’s top trade partners are Asian nations (Japan, South Korea, and India), making Doha a prime location for business targeting Asian markets.
The economic wealth of Doha and Qatar, as a whole, is due entirely to the discovery of oil in the peninsula in 1940. Before this event, the primary revenue source for Qatar was pearl hunting, an industry which all but collapsed soon after Japan entered the scene with cultured pearls. Petroleum and natural gas production accounts for the majority of the country and city’s revenue, but the government is seeking to move away from oil dependence and expanding its income source. Doha, in particular, has been expanding in the real estate industry and in construction, particularly in preparation for the 2022 FIFA World Cup which will be hosted in Qatar. The extensive construction in Doha could be seen as a negative, due to the clutter, or as a positive sign of growth and expansion.
In order to start a business in Qatar, you must first go through a lengthy registration process at the Ministry of Trade and Business. Knowing Arabic or having a business partner who knows Arabic is imperative, as part of the registration process is submitting articles of association which must be prepared and written in Arabic before being accepted. As in UAE, foreigners are not allowed to have majority ownership of enterprises in Qatar, so you must also find a business partner who is a national to own at least 51% of your company. The partner is not legally obliged to contribute financially to the enterprise or to assist in the daily operation of the company and, as majority owner, can terminate operations at any time. The partner must either be an individual Qatari or a local company which is 100% owned by Qataris. Qatar is also a member of the World Trade Organization.
Abu Dhabi, United Arab Emirates
Located a mere 147 kilometers (91.3 miles) from the first city on our list, the city and emirate of Abu Dhabi is another great choice for potential locations to do business in the Middle East. As the capital of the UAE, Abu Dhabi is the seat of the Emirati government and is home to the President of UAE, Khalifa bin Zayed Al Nahyan. The emirate independently has one of the highest GDPs per capita in the world and is currently the richest emirate in the country. Abu Dhabi is also a city of great economic importance. Currently, there is over one trillion dollars globally invested in the city, making it a hotspot for investors seeking new markets and entrepreneurs from all over the globe.
Like the rest of UAE, Abu Dhabi built its wealth from its oil resources, which currently account for around 60% of its GDP (estimated around 165.9 billion USD). Abu Dhabi is currently undergoing an extensive shift from an oil/gas-based economy and is diversifying itself through an increased focus on tourism and real estate projects. As a result of the new real estate properties, Abu Dhabi frequently appears on “Most Expensive Cities in the World” lists.
Abu Dhabi is a tax-free and duty-free city, making it optimal for extensive trade, especially because the Emirate of Abu Dhabi repatriates all of the profits from a foreign venture to the owners without holding any of the revenue. This makes Abu Dhabi extremely competitive option when picking a new place to do business. The process for starting a business and restrictions on businesses are the same throughout all of UAE, so, as a non-national, you will need to have an Emirati partner to own the majority of the business (51% or more).
Home to one of the oldest civilizations in human history, the country of Egypt has undergone drastic change, with revolutions and social movements toppling regimes and causing massive upheaval and discontent all throughout the nation. The recent election of Abdel Fattah el-Sisi ascended him to the presidency and slightly-flared tensions in the capital. Cairo is currently the largest city in Egypt, Africa, and the whole Arab world and its cultural significance is immeasurable to both past and contemporary civilization. It is also the current economic center of Egypt. Because of its economic significance and cultural renown, along with several more tangible reasons, Cairo is one of the best places to do business in the Middle East.
The largest portion of Cairo’s revenue comes from the service industry, particularly tourism. In addition to that, Cairo also has a sizeable construction and heavy industry sector, meaning hydrocarbons, textiles, etc. The latter industry benefits from Cairo’s Qualifying Industrial Zone (QIZ), which is a tax-free industrial park. The zone, made in collaboration with Israel, allows businesses in Cairo to benefit from the US and Israel’s free trade agreement. Because of the way the zones were devised, a portion of all zone-produced goods must have Israeli input, but almost all items produced in the QIZ can reach US markets without having tariffs imposed upon them and without quotas attached to them.
There are, however, a few downsides to expanding your enterprise in Cairo. The most apparent one is, as with the UAE and Qatar, non-nationals cannot hold majority ownership of a company in Egypt and foreign ownership can only reach 49%. In addition to that, foreigners are restricted from employment in certain sectors, such as customs and tourism, and there are restrictions on the percentage of non-Egyptians that can be employed by companies based in Cairo. This is particularly true in computer services, where 60% of upper-tier management must be Egyptian three years after start up. Despite this things, Cairo is still an excellent selection for where to start your business. Egypt is also a member of the World Trade Organization.
In the heart of the northern Middle East, between Iraq, Israel, Palestine, Saudi Arabia, and Syria, sits the country of Jordan. The capital, Amman, has been occupied by the Assyrians, Romans, Turks, Umayyads and many more great civilizations and has been given many names throughout its long history, stretching at least back to the 13th century BC. Currently, Amman is a major tourist hub, particularly to citizens of the Persian Gulf countries, and is one of the most visited cities in the World. There are several multinational companies expanding into Amman and operating there with regional bases. It is an excellent location for anyone looking to do business in the Middle East, particularly in the Levant area (Israel, Jordan, Lebanon, Palestine, Syria).
Despite a heavy surge of refugees from the ongoing conflicts in Syria and increasing instability in Iraq, the country of Jordan has remained relatively peaceful, meaning a stable, safe environment to do business. The largest source of income for the country of Jordan and Amman is in the service industry. The focus service is tourism, due to Jordan’s abundance of popular tourists destinations, including the city of Petra, which was named one of the Seven Wonders of the Modern World in 2007. Of particular interest, is the kingdom’s abundance of medical tourism, as Jordan has one of the best healthcare and educational system in the Middle East. Another large contributor to Amman’s economy is heavy industry, which receives benefits due to the presence of a Qualifying Investment Zone. Just like in Egypt, zone-produced goods are not subject to tariffs and imposed quotas as a result of the US and Israel’s trade agreement and in addition to that Jordan has an actual trade agreement with the US and several other nations which it could benefit from.
Unfortunately, Jordan does not have the oil resources present in the Gulf, so its economy hasn’t experienced a giant boom from them, but many startup companies are flocking to Amman, particularly for technology and internet-based companies, as the majority of web content in the Arab World comes from Jordan. If this trend continues, the world could see the development of a new Silicon Valley, following the path of Bangalore, referred to as the Silicon Plateau, to become “Silicon Hills”.
Located on the beautiful Mediterranean, the capital and economic hub of Lebanon, Beirut, is renowned for its nightlife and is a central facet of contemporary Arab pop culture. Because of its colonial history, you’ll find a diverse menagerie of foreign expatriates and frequently encounter people speaking English and French, despite the official language being Arabic. Despite a bloody civil war which lasted about 15 years (1975-1990) and a recent war with Israel (2006), the infrastructure, and economic and cultural landscape of Beirut are rapidly changing, creating a business environment which competes heavily with the other business giants in the region.
The largest component of Beirut’s GDP is in banking and finance. Beirut benefits from a free banking zone, which was established to allow the free exchange of currencies, making the Lebanese Pound an incredibly flexible currency. The second largest component is tourism: Beirut’s excellent positioning on a peninsula jutting into the Mediterranean makes it a hotspot destination for Arabs, Europeans, and people all over the world.
While Lebanon does not have a free trade agreement with the US, it does have several trade agreements with other Arab nations and its location on the Mediterranean gives it quick access to the maritime trade markets of North African and South European markets. Beirut is critiqued for having extremely slow internet and the cost of living and land prices in the city are infamously high throughout the region. These are some potential drawbacks to doing business there, especially if you have an internet-based technological service, or if you’re doing something that requires an extensive amount of land property.
Riyadh, Saudi Arabia
The capital of one of the world’s richest nations, Riyadh is an economic titan and the most prosperous city in Saudi Arabia. With an average GDP per capita equating to approximately 32 thousand USD, it is an excellent choice for selecting where to do business in the Middle East.
The economy of Saudi Arabia is mostly based on the oil industry, which is no surprise considering that the country holds the largest oil reserves in the whole world, and Riyadh benefits immensely from this oil industry, accounting for about 55% of Saudi Arabia’s overall GDP. As a direct result of its oil resources and industry, KSA is one of the leading members of OPEC. In addition to this, Riyadh and all of Saudi Arabia are going through a construction boom, meaning the heavy industries in the nation are on the rise. In terms of trade, the Kingdom imports a great deal of produce and other goods such as textiles and machinery, due to a lack of arable land and the weakness of non-oil industries.
Riyadh benefits from trade agreements with several nations, including the US. In fact, Saudi Arabia is the United States’ biggest trade partner in the Middle East. One major potential drawback of doing business in Riyadh, depending on the business, is a lack of seaports or ocean access, due to the city being landlocked. It does however have relatively quick access to the city of Jeddah, which sits on the Red Sea to the West, and Dammam, which sits on the Persian Gulf.
The nation of Oman sits on the tip of the Arabian Peninsula and its lovely capital of Muscat offers businesses a plethora of advantages to businesses looking to expand, but also comes with its own drawbacks. The economy of Oman is, just like almost all of its neighbors in the Persian Gulf, based on petroleum and natural gas production and refinement. The second largest industry is cement production. The main commercial activity of Muscat, historically and contemporarily, is trade and the recent importance of oil has made trade extremely profitable in the area.
Unlike the other cities on this list, Muscat has direct access to the Arabian Sea, meaning it does not have to deal with the Strait of Hormuz in the Persian Gulf, which is currently a choke point of international trade. Muscat’s main port, Mina Sultan Qaboos, is a major trading hub, linking the the Persian Gulf with the markets of the Indian subcontinent and far east and south east Asia. Unfortunately, the increased prominence of Dubai for the global economy has taken business away from Muscat and into the UAE.
Just like in neighboring nations, foreigners are not allowed to own more than 49% of companies based in Oman. In fact, without special permissions, it is nearly impossible to open a business in Oman and Muscat if you are a non-national. However, exceptions are sometimes made allowing for 100% ownership with special permission from the Council of Ministers. This is the result of a trade agreement the government has with the US which provides American investors and entrepreneurs with slight preferential treatment when conducting business in the country.
The coastal city of Jeddah in Saudi Arabia is the Kingdom’s gateway to the Red Sea, and perhaps yours as well. Jeddah’s strategic and economic importance to KSA is evident by increased investment in the city on behalf of the Saudi government to develop a newer port and transform the city into a more powerful regional trading hub that can compete with the increasingly-more prominent Persian Gulf trade. It is also evident by the current construction of Kingdom Tower, which will be the world’s largest building once it reaches completion, and Kingdom City, which is a construction project designed for the economic and social development of the country. It is planned to be built in north Jeddah. The city is also the site of the Big 5 Saudi, an annual forum for Saudi and international construction companies to gather, trade, and exchange ideas. There are many other similarly-devised events, such as Concrete Zone and the LEED Workshop, which is focused on pursuing “greener”, more ecologically-friendly ventures.
Because of Jeddah’s close proximity to Mecca and Medinah, respectively the first and second most holy cities in all of Islam, many pilgrims participating in the Hajj, the obligatory visit to Mecca and the Kaaba all able-bodied Muslims must perform at least once in their life, must first pass through Jeddah on their way.
Jeddah boasts the same advantages as Riyadh, but benefits from being on the lucrative Red Sea and not being landlocked.
Coasting in the Persian Gulf, the tiny, island nation of Bahrain stands out as another beneficiary in the Gulf Coast oil boom. In fact, Bahrain was the first place in which oil was found on the Arabian side of the Persian Gulf. The nation is only connected cia King Fahd highway to Saudi Arabia by land and by no other countries. Manama, Bahrain’s capital, is another excellent option for where to do business in the Middle East. It offers ownership rights more extensive than the regional norm, allowing for foreigners to unexceptionally fully own their companies. Non-nationals are still not allow to own land or property except in certain designated zones. Fortunately Manama, and Greater Manama, is one of these zones so you could purchase real estate there.
These make Manama one of the easiest places to do business, without having to go through the hurdle of having a business partner who is a national. Bahrain currently has a trade agreement with the US along with other nations all throughout the world, particularly those in Asia.
Aqaba, Jordan (Honorary Mention)
Being the sole seaport of the country of Jordan, the city of Aqaba has a unique setting and offers unique opportunities for those doing business here. Aqaba is in a special economic zone, meaning its purpose is the promotion of Jordanian market participation and development of the economy of Jordan. As a consequence of this, Aqaba’s economy grows slightly higher than the average of the nation per year. Since it is Jordan’s only seaport, basically all exports leave through this city.
The major components of Aqaba’s economy are tourism, transport and logistics, and heavy machinery production. Investors have taken an interest in Aqaba, fueling the construction of Saraya Aqaba, which will be a giant luxury resort once it is completed, and many other attractions meant for tourists, both local and foreign. The logistics industry is propelled by the ships passing through the Gulf of Aqaba which separates four different nations, Egypt, Israel/Palestine, Jordan, and Saudi Arabia. In fact, due to its close proximity to the Suez Canal, Aqaba could be the perfect spot for business targeting African, Asian, or European markets.
The same kind of benefits and restrictions that are present in Amman exist in Aqaba, however due to special economic zone status, there are no taxes or duties on exported goods. Aqaba is not in a qualifying industrial zone, however, and does not benefit from US-Israeli trade relations, despite its close proximity to Israel via the Gulf of Aqaba, Jordan’s only ocean access point. Aqaba is a duty-free zone with a flat rate 5% tax exemption on all net profits. Another amazing benefit is the lack of restrictions of foreign equity in certain sectors, particularly tourism, retail, and other commercial services, meaning foreigners can own 100% of a business venture without needing a Jordanian partner. In addition to that, there are no restrictions of profit repatriation. Aqaba is truly a great selection if looking for a place to do business in the Middle East.
For information about how to start a business in any of these cities or anywhere in the world, please visit: www.doingbusiness.org.