The new normal
The new normal
Abdullah Al Fozan, Chairman of KPMG in Saudi Arabia shares his thoughts on key developments, trends and opportunities in the region.
The MESA region and its significance in a global context
In KPMG’s map of geographic locations, MESA refers to the Middle East & South Asia region which comprises 14 countries. These include all of the Gulf Cooperation Council (“GCC”) countries, a number of countries from the wider Middle East and four countries from South Asia. The global significance of MESA is firstly because of its inherent location, almost at the center of the world map, and also between western and eastern economies. This together with advanced logistical infrastructure, convenient market access and an investor friendly atmosphere, has made the region a hub for global trade.
Most countries in the region benefit from a considerable base of natural resources. These resources and intellectual capital have helped propel economic development and led to considerable purchasing power in the more developed economies. The region is also home to over seven percent of the world’s population and is one of the most youthful regions in the world. This makes MESA an important market for most types of businesses, including those which are looking towards new markets for growth potential.
Key business trends
One of the main conversation areas in the region is around digitalization and customer experience which is now a strategic priority for most businesses. We are working alongside many of these companies, helping them to adopt digital models and thereby to tap the next generation of consumers. Businesses are also becoming more receptive to changing from conventional models to more agile alternatives.
In the Public Sector, we are assisting a number of State institutions to introduce e-Services and in simplifying processes through re-engineering. Economic diversification is the top priority in most of the Gulf countries, where the emphasis on building non-oil GDP has led to considerable opportunities across many sectors including tourism, logistics, retail, healthcare and education, to name a few. At the same time, businesses in the region are also confronted with new challenges.
Cyber security is among the key concerns. Businesses are also gearing up for the introduction of VAT, an area where readiness will be a key factor and also in aligning to more globally consistent reporting and accounting standards such as IFRS.
Let us first consider the Middle East part of the region. Recent volatility in oil prices has no doubt had an impact in some of the countries, particularly in those countries with a less diversified economic base. Having said that it is important to note that these economies are still growing and at a moderate pace. Taking into account the size of some of these economies, the growth in absolute value is also very significant. Our recent CEO outlook survey in the United Arab Emirates for example showed that there is optimism among business leaders and considerable investor confidence in the region. In my view, the region is poised for further growth with opportunities for both businesses which are operating here as well as those which are planning to enter these markets.
Considering South Asia, this section of the region ranked among the fastest growing economic regions in the world in the last decade and showed considerable resilience in the face of turbulent global markets. Today, many global corporations are looking at setting up operations, particularly targeting the provision of goods and services to the large population base. There are also opportunities for infrastructure development. Foreign investment is seen to play a major role which benefits both the investor and the local economy. The economic sentiment in most of these countries has been mostly positive with increases in exports and capital inflows. There have also been notable efforts by the Governments to improve the business climate and regulatory reforms focusing on the ease of doing business.
KPMG in the region
KPMG has had an active presence in the MESA region for over four decades. Today, we have member firms across most countries covering over 30 office locations. In terms of our people, we have over 7,000 professionals and associates across audit, tax, management consulting, risk consulting, deal advisory and central infrastructure functions. A key differentiator in our operating model is our strong local presence through established member firms in each country, supported by our regional and global network structure. In terms of performance, we achieved double digit revenue growth for the last three consecutive years and were ranked amongst the fastest growing regions within the KPMG network.
Today, we are proud to be working with clients across a broad spectrum of industries, including many multinationals, regional conglomerates, local companies and enterprise businesses. The broad suite of services offered by KPMG member firms, our client centric approach as well as functional & sector capabilities means we have a strong proposition- whether it be in helping clients to capitalize on market opportunities, to mitigate risk exposures or for assistance in fulfilling regulatory obligations.