Since 2002 business, political, and thought leaders have gathered annually to discuss and debate the most pressing issues facing the broader Arab world. The forum, modeled on the annual meetings of the World Economic Forum at Davos, was known as the Dubai Strategy Forum but since 2004 has become the Arab Strategy Forum (ASF).
Leaders attending the forum, from within the Arab world and from outside it, have included Malaysian Prime Minister Abdullah Badawi, former US President Bill Clinton, Google CEO Eric Schmidt, and of course Shaikh Mohammed of Dubai. This year’s Forum brought together more than 600 participants including more than 20 governmental heads and 30 global industry leaders. |
image: moutamarat.com
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Last year, the ASF became the venue for the introduction of the first Arab Business Intelligence Report (ABIR) whose goal was to act as a point of reference serving insights on economic matters to regional business leaders.
ABIR is published by PriceWaterhouseCooper (PwC) and Moutamarat, a joint venture created in 2005 between Tatweer and Saudi Research Company.
The 2nd ABIR report findings were released Decmeber 2006 and was based on 568 surveys conducted in 18 countries.
As Michael Stevenson, Middle East Senior Partner of PwC writes, “the report is designed to be used by any individual or organization with an interest in the Arab world’s growing economic confidence and the huge opportunities that the region offers.” |
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Expanded Coverage
The 2nd Arab Business Intelligence Report (ABIR II), released at the Arab Strategy Forum in early December 2006, studied the opinions and perceptions of over 550 Arab business leaders – versus 140 in 2005 - through telephone interviews. This methodology allowed the authors of the ABIR II to create a set of unique indices including the CEO Arab Confidence Index, Labor Market Index, and the Arab Innovation Index. These indices were not a major part of the ABIR II but did inform some of its results.
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Arab Business Intelligence Report
KEY FACTS |
| Produced by: |
Moutamarat, PriceWaterhouseCooper |
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| Survey of: |
568 Senior Executives - typically Chairman, CEO or President |
| Countries covered |
18 - UAE, Saudi Arabia, Egypt, Jordan, Morocco, Oman, Algeria, Bahrain, Kuwait, Tunisia, Lebanon, Qatar, West Bank & Gaza, Yemen, Iraq, Sudan, Syria, Libya |
| Sectors covered: |
20.0% Financial Services
14.3% Energy, Mining and Metals
13.6% Engineering, Construction, Real Estate
11.6% ICT
9.9% Travel and Tourism
9.7% Healthcare
8.8% Retail and Consumer Goods
6.0% Entertainment and Media
5.6% Transport, Logistics and Storage
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In order to access a wider data base for its survey, the ABIR II expanded its geographical reach to encompass Morocco in the West to Oman in the East and Sudan in the South to Syria in the North. The ABIR II also covers an expanded set of business sectors which can be reviewed in the accompanying box.
Report Highlights
As stated by Moutamarat, in today's world, knowledge has become a vital competitive factor and the key to economic and social progress.
ABIR serves as an important benchmarking tool that should influence senior executives’ decision making to exploit growth, open new markets and create opportunities to secure the future of their own businesses and the regional economy.
DinarStandard’s own DS 100 ranking, in its third year, has served as another such tool providing business leaders across the Arab and broader Muslim world a competitive benchmark.
This years DS100 -companies' overall year to year growth of 37% in revenues mirrors the sentiment noted by the executives surveyed by the ABIR. |
79% senior executives believe that economic conditions are better than 12 months ago.
81% believe conditions will improve over the next year
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ABIR II reported that confidence about economic prospects among Arab business leaders grew from 79% last year to 81% this year. Arab business leaders were 40% more confident in their business prospects over the next 12 months than US business leaders. And most important, 79% of business leaders reported an actual improvement in business conditions over the last year.
Focus on Human Capital
One of the key findings of the ABIR II was that Arab leaders overall are aware that there are certain key challenges which affect their business’ development in the foreseeable future. Foremost among these is how to improve the condition of human capital in the Arab world.
Of the 568 executives interviewed, 68% responded that raising educational levels in the work force was important for business development. The survey identified this as their most important challenge. |
The 2006 DS100 companies' overall year to year revenue growth of 37% mirrors executive responses noted by the ABIR.
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Interestingly though, business leaders in the UAE did not see this as a challenge; possibly because the UAE has no shortage of expatriate talent.
Among the other challenges cited by Arab business leaders, in order of importance were, the improvement of infrastructure, implementation of stable and sound economic policy, embracing innovation and reducing entrenched bureaucracies.
Planning for Growth
As companies in the Muslim world look to compete globally they have to identify well thought out strategies to gain a share in international markets.
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Perceived Strategies Responsible for Driving Growth |
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Which of the following strategies will be responsible
for driving growth at your organization this year? |
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Source: Arab Business Intelligence Report
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55% of the respondents to the ABIR II survey identified alliances and joint ventures as the primary growth strategy in the near future versus 47% who identified organic growth as their primary expansion method.
Joint ventures and alliances will expose Arab companies to international markets while allowing them to take advantage of the knowledge and established expertise of their partners as well as share the costs and risks associated with business development. These deals should also open up possibilities for technology transfer and contribute to the overall improvement of Arab companies’ own knowledge bases. Since a majority of Arab business leaders have identified strategic alliances as their primary method of achieving growth, 2007 promises to be an interesting year to watch.
Asked to identify which country was the most important growth market in their respective industries 18% answered Saudi Arabia and 12% answered the UAE.
Not surprisingly then, executives were also asked which country they saw as offering the most potential for forming commercial alliances or partnerships 24% answered that the UAE offered the most potential; up from 13% last year. Following the UAE was Saudi Arabia with 14% of executives saying it offered the greatest potential for commercial alliances or partnerships.
Identifying Threats
The ABIR II also asked its participants to identify the greatest threats faced by their businesses over the next 6 months and in the long term. 78% of executives responded that oil price movements were the greatest threat over the next 6 months. This was followed by cost of capital issues, currency fluctuations, inflation, corporate governance issues, and stock market volatility.
The issue of Human Capital was important in the medium and long terms. In the next 12 months over 80% of executives expect the cost of labor to increase. In the long term 73% of executives answered that the lack of available talent and trained resources presented the greatest challenge to their businesses.
Looking Forward
There is little doubt that the ABIR II builds on the findings of the original ABIR. It gives its reader a close view of the types of issues business leaders are facing today as well as what they anticipate in the future. The survey highlights their differences and agreements in an objective manner. In other words, the diagnoses are real. Where the report leaves room for readers is in one major area.
Namely, the ABIR II makes only passing references to the level of corruption in Arab businesses by mentioning that corporate governance issues are an important obstacle impeding growth. The report needs to do more in a manner similar to the Arab Business Council of the World Economic Forum which, in its meeting of November 2005, adopted the Partnering Against Corruption Initiative (PACI) of the World Economic Forum. In the very least the survey used to gather information for the report should ask some direct questions about their perception of corruption in the business community across the Arab world.
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