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Bahrain launched rules in February for cryptocurrency companies such as trading platforms, including rigorous customer background checks, governance standards and controls on cyber security risks
When Belarusian President Alexander Lukashenko met entrepreneur Viktor Prokopenya in March 2017, their discussion was scheduled to last for an hour but went on for three times that long.
The meeting, Prokopenya said, ended with Lukashenko asking him to propose regulations to boost the country's tech sector. Prokopenya worked with IT firms and lawyers to draft guidelines to cash in on an emerging digital industry: cryptocurrencies.
Some two years later, the rules are in place. Investors can trade bitcoin on an exchange run by Prokopenya, while other companies are launching their own cryptocurrency platforms.
"The idea was to create everything from scratch," Prokopenya told Reuters in an interview in London. "To make sure that it is free in some of the aspects it needs to be free, and very stringent in other aspects."
Contacted for comment, Lukashenko's office directed Reuters to an account of the meeting on the president's website.
Belarus is among a handful of smaller countries coming up with specific rule books for digital currencies. Their efforts could help shape the development of the global market and the growth of industry players, from exchange platforms to brokers.
So far, cryptocurrency companies have often had to choose between two extremes when deciding where to set up shop.
Major financial centres like London and New York, which apply traditional financial services rules to the sector, might be attractive to big institutions seeking safety but the compliance complexity and costs preclude many of the startups at the heart of the fledgling industry.
Conversely, lightly-regulated jurisdictions like the Seychelles and Belize allow far easier market access. But states with light rules can offer less protection for investors and have looser checks on money laundering, lawyers say.
The likes of Belarus and other newer entrants - including Bahrain, Malta and Gibraltar - are seeking to offer a third way: crafting specific rules for the cryptocurrency sector, betting they can attract companies by providing regulatory security as well as perks like tax breaks.
While there is no guarantee of success, cryptocurrencies represent a rare chance for these states or territories to grab a slice of an emerging market, potentially attracting investment and creating jobs, at a time when big financial hubs are adopting a more conservative, "wait-and-see" approach.
"There are jurisdictions in the see-no-evil, hear-no-evil camp," said Jesse Overall, a lawyer at Clifford Chance in New York specialising in crypto regulation. "On the other end there is the U.S., UK, EU. In the middle, that's the juicy part of the spectrum."
Overall said both countries and companies could benefit from the emergence of frameworks specifically for cryptocurrencies. But states that get the rules wrong could fall foul of global rules to stamp out illicit use of digital coins, he added.
Indeed, there are major questions over whether these nations will be able to consistently prevent the hacks and illegal activities, such as money laundering, that plague the opaque sector and could hammer their reputations as secure centres.
Another risk of building rules for an unpredictable and rapidly evolving industry is that they could soon become outdated.
'CARROTS WITH NO STICKS'
ZPX, a Singapore-based crypto firm, will launch a cryptocurrency trading platform, Qume, next month catering to institutional investors such as high-frequency proprietary trading firms and hedge funds.
It has decided to base the business in Bahrain's capital Manama - and the considerations it faced are emblematic of the quandary confronting many players across the industry.
ZPX's CEO Ramani Ramachandran said it decided against operating in a so-called offshore jurisdiction with low or no regulation. Such a base could deter big investors as scrutiny of digital coins heats up from global regulators and politicians, he said.
"As the market matures analogous to traditional capital markets, mainstream institutional capital will increasingly look to come to regulated exchanges such as Qume as opposed to 'light-touch' venues in offshore jurisdictions."
Bahrain launched rules in February for cryptocurrency companies such as trading platforms, including rigorous customer background checks, governance standards and controls on cyber security risks.
It's also usually far cheaper in terms of compliance and administration costs to set up in smaller locations like Bahrain than in major financial hubs, said Ramachandran.
ZPX estimates such costs would come to around $200,000 a year in Bahrain, versus at least $750,000 a year in London.
Another advantage of setting up in a smaller country, said ZPX co-founder Aditya Mishra, was the close communication companies could have with regulators, something that would be difficult in a big financial centre. Bahrain also offered good access to Gulf markets, he added.
Another cryptocurrency trading platform, iExchange, began operating in the Belarusian capital Minsk this month, aiming to attract investors from the CIS market of Russia and the former Soviet states.
Co-founder Igor Snizhko said Belarus was the best option because it had a regulatory framework that other countries in the region lacked.
Belarus demands audits of issuers of digital coins and details of the projects underpinning any issuance. For trading platforms, the rules include keeping tabs on suspicious transactions to meet international money laundering standards.
"For many the CIS market is very promising and very dangerous at the same time," he added. "Many large and accomplished players are still afraid of one factor - a lack of transparency. We didn't want to work in any 'grey' jurisdiction."
Sweeteners offered by Belarus include tax breaks for companies mining or trading cryptocurrencies. The rules, described by PwC as "carrots with no sticks," also give firms looser rules on currency controls and visas.
In the United States, by contrast, digital coin transactions are taxable. In Britain, capital gains taxes apply.
iExchange said it had also initially looked at other countries including Estonia and Malta, but chose Belarus because of its proximity to its target market.
BESPOKE APPROACH
The size of the global cryptocurrency sector is hard to gauge because of its complexity and lack of transparency. Still, Ireland-based Research and Markets reckons the sector will grow to $1.4 billion by 2024 from $1 billion this year. Other estimates see a faster rate of growth.
Crypto regulations vary through the world. While Facebook's unveiling of its Libra coin has prompted signs of a coordinated backlash against cryptocurrencies by major economies, a patchwork of approaches still rules from country to country.
China has even banned cryptocurrencies outright, while an Indian government panel last week recommended a similar measure.
Sui Chung of Crypto Facilities, a London-based cryptocurrency futures exchange, said there were clear benefits to being in a major financial hub, including having access to highly skilled employees.
"You need to be in place where you can get the staff," he said. "Our product teams, development teams have financial institution experience."
Being regulated in an established centre can also allow companies access to deeper, more liquid markets and provide greater certainty on securities law, said Ann Sofie Cloots, one of the authors of a Cambridge University study on cryptocurrency regulation.
"It may mean you have a more sophisticated investor base, greater access to capital," she said. "It's also a reputational thing."
To be sure, it is not just the likes of Belarus and Bahrain that have coined their own crypto rules: Some larger countries like France and Japan have also made moves in that direction.
But it's the smaller countries that have tended to launch the most sophisticated "bespoke" approaches, according to the Cambridge University study.
That could bring clarity to both cryptocurrency companies and related services like banks previously wary of the sector's unclear legal status, said Cloots.
Belarus entrepreneur Prokopenya, whose Instagram posts of sports cars in Cyprus and beaches in Dubai are followed by 5.6 million people, acknowledged the risks that came with blockchain technology, including the potential for money laundering.
But he said these could be mitigated with clear regulation, and that countries like Belarus should not miss out on a chance to grab a slice of an emerging market.
"The biggest risks come from not taking any risks," he said.
Source: zaway
The main difference between traditional trade activity and e-commerce in the market. The market in essence is the space that provides information about the goods or services available by the producers.
Here lies the difference and importance of e-commerce at the same time. The consumer does not need the physical presence of the spatial space in which information is available about the item or service he wishes to purchase.
The "cash for product or service" deal between the product and the consumer can also be done via digital tools. This e-commerce feature provides the hassle of moving to the market, which may be in another country, and provides the ability to identify products that are much broader than those offered by the market Traditional Which is limited to limited geography while the electronic market is a global market without limits, but one of the most prominent obstacles to the electronic market appear in the reliability, in the sense that is the guarantor of the consumer that the product or service that will pay for it will be identical to what is displayed on the electronic platform, The case for the product provider, which wishes to receive the amounts due for its producer from the problem of reliability, which still hinder the expansion of e-commerce in the Arab region.
Saudi Arabia's Ministry of Commerce and Investment has issued a new law regulating the electronic commerce process to enhance the reliability of electronic commerce in order to increase its contribution to the national economy to achieve the objectives of the vision of the Kingdom in 2030, according to the ministry's statement.
As for article 26 of the new law, the service provider is required to use the means necessary to protect the consumer data and not to keep it. And the responsibility to maintain the confidentiality of personal data declared by the consumer and to prevent any process of disclosure to any other entity without the consent of the consumer, as regards data on the service provider, Article VI requires the service provider to disclose the procedures B on the buyer to take to the conclusion of the contract and data relating to the service provider, the basic characteristics of the products or services, in addition to the total price, which includes all additions of fees or taxes and arrangements for payment, delivery and implementation.
The law also guarantees the right of the consumer to cancel the purchase of the "contract termination" within seven days from the date of contracting or receipt of the service, if not benefited from it, and to ensure the refund of payments in case the service provider delayed delivery of the goods / service for more than 15 days.
The details of the new law’s articles mentioned above and other articles indicate the possibility of expanding e-commerce exchanges in the Saudi market , while providing more reliability and transparency in electronic activity, which are essential requirements in the market ranked among the top ten countries in terms of growth of the e-commerce sector, The growth rate of e-commerce in the Kingdom to more than 32%, with a total volume of trade amounting to 80 billion Saudi riyals (about 21 billion dollars) in 2018.
يكمن الاختلاف الرئيسي بين نشاط التجارة التقليدية والتجارة الإلكترونية في السوق، والسوق بجوهره هو الحيز الذي يوفر المعلومات حول السلع او الخدمات المتوفرة من قبل المنتجين، وهنا بالذات يكمن اختلاف واهمية التجارة الإلكترونية في آن، فالمستهلك ليس بحاجة للحضور الفيزيائي للحيز المكاني الذي تتوفر فيه المعلومات حول السلعة او الخدمة التي يرغب في شرائها، كما ان عملية انجاز الصفقة (النقد مقابل السلعة او الخدمة) بين المنتج والمستهلك هي الاخرى يمكن ان تتم عبر أدوات رقمية، هذه الميزة للتجارة الإلكترونية توفر عناء الانتقال الى السوق، الذي قد يكون في بلد اخر، كما توفر إمكانية التعرف على منتجات أوسع بكثير من تلك التي يوفرها السوق التقليدي الذي ينحصر بجغرافية محدودة، بينما السوق الإلكترونية هي سوق عالمية بلا حدود، إلا ان احدى ابرز معوقات السوق الإلكترونية تظهر في الموثوقية، بمعنى ما هو الضامن للمستهلك ان السلعة او الخدمة التي سوف يدفع ثمنها سوف تكون مطابقة لما هو معروض على منصة البيع الإلكترونية، كذلك الحال لمقدم المنتج، الذي يرغب من جهته بتلقي المبالغ المستحقة مقابل منتجه. انطلاقا من مشكلة الموثوقية التي مازالت الى الان تحد من عملية توسع التجارة الإلكترونية في المنطقة العربية، أصدرت وزارة التجارة والاستثمار السعودية قانوناً جديداً ينظم عملية التجارة الإلكترونية الذي اتى ليعزز موثوقية التجارة الالكترونية بهدف زيادة مساهمتها في الاقتصاد الوطني لتحقيق اهداف رؤية المملكة لعام 2030، وذلك حسب بيان الوزارة.
اما عن اهم ما جاء في المواد الـ 26 المنظمة للتجارة الإلكترونية، فكانت تتمحور بمجملها حول الشفافية والافصاح في النشاط الإلكتروني وحماية البيانات الشخصية للمستهلك، حيث جاء في المادة الخامسة من القانون الجديد إلزام موفر الخدمة (مقدم الخدمة) استخدام الوسائل اللازمة لحماية بيانات المستهلك وعدم الاحتفاظ بها، وتحميله مسؤولية الحفاظ على سرية البيانات الشخصية المصرح عنها من قبل المستهلك ومنع أي عملية افصاح عنها لأي جهة أخرى دون موافقة المستهلك، اما بخصوص البيانات المتعلقة بموفر الخدمة فتلزم المادة السادسة موفر الخدمة على الإفصاح عن الإجراءات الواجب على المشتري اتخاذها لابرام العقد والبيانات المتعلقة بموفر الخدمة، والخصائص الأساسية للمنتجات او الخدمات، بالإضافة الى اجمالي السعر التي تشمل جميع الإضافات من رسوم او ضرائب وترتيبات الدفع والتسليم والتنفيذ.
كما يضمن القانون حق المستهلك في إلغاء عملية الشراء (فسخ العقد) خلال سبعة أيام من تاريخ التعاقد او تسلم الخدمة، في حال لم يستفد منها، وضمان استرجاع المبالغ المدفوعة في حال تأخر موفر الخدمة عن تسليم السلعة/الخدمة لمدة تزيد عن 15 يوماً.
تشي تفاصيل مواد القانون الجديد الواردة أعلاه، والمواد الأخرى، عن إمكانية توسع تبادلات التجارة الإلكترونية في السوق السعودية، وذلك مع توفير المزيد من الموثوقية والشفافية في النشاط الإلكترونية، وهي متطلبات أساسية في سوق يصنف من بين اعلى عشر دول من حيث نمو قطاع التجارة الإلكترونية، حيث وصلت معدلات نمو التجارة الإلكترونية في المملكة لأكثر من 32%، بإجمالي حجم تداولات تصل الى 80 مليار ريال سعودي (اي حوالي 21 مليار دولار) وذلك خلال عام 2018.
تعتبر القدرة على الوصول الى خدمة الانترنت من اهم محددات التحول الرقمي، اذ لا يمكن الحديث عن نمو الاقتصاد الرقمي دون التوسع في انتشار خدمة الانترنت، اي انه يوجد ارتباط رئيسي بين مدى انتشار خدمة الانترنت وامكانية التحول الرقمي. ولقد شهد العالم العربي في السنوات الاخيرة نموا كبيرا في معدلات انتشار الانترنت وتدفق البيانات. كما وصلت كل من قطر والامارات العربية المتحدة إلى قائمة أفضل عشرة دول من حيث سرعة الانترنت.
يوضح الجدول التالي اعداد مستخدمي الانترنت في العالم عام 2019 ونسبة المستخدمين الى عدد السكان، ومستخدمي موقع "الفيسبوك" الذي يتصدر مواقع التواصل الاجتماعي من حيث الانتشار في العالم العربي.
تعد نسبة انتشار خدمة الانترنت في العالم العربي الى اجمالي عدد السكان مرتفعة لاسيما اذا ما قورنت باقاليم اخرى، كدول افريقيا جنوب الصحراء، فيما تعتبر نسبة انتشار الانترنت في دول الخليج العربي من اعلى النسب في العالم، فهي توزاي تلك النسبة الموجودة في اكثر الدول تقدما، كالولايات المتحدة الامريكية (96%) وفرنسا (92 ٪) وألمانيا (96 ٪) وغيرها من الدول المتقدمة. إلا أن انتشار الخدمة الانترنت لا يعني بالضرورة ازدهار الاقتصاد الرقمي، فالامر مرتبط بمجموعة من المحددات المتصلة بهذه الخدمة، كمدى جودة خدمة الانترنت نفسها، ومدى تفعيل الخدمات الحكومية الرقمية في الصحة والتعليم والخدمات العامة، والى اي حد تنتشر ثقافة التعامل الرقمي بين المنتجين والمستهلكين، كل تلك المحددات وغيرها تلعب دورا في ادخال عملية انتشار خدمة الانترنت في اطار التحول الرقمي، اي تجعل منها عملية اقتصادية.
يمكن العودة إلى سلسلة " العالم العربي خطوات نحو التحول الرقمي" لمعرفة المزيد من الاحصاءات والمعلومات حول واقع الاقتصاد الرقمي في العالم العربي وخطوات التحول.
تواصل الإمارات العربية المتحدة بخطوات ثابتة وسريعة المضي قدماً في عملية التحول الرقمي فقدت حققت قفزات مهمة خلال العامين السابقين فقط ويظهر ذلك في مؤشرات دولية عديدة لعلى أهمها مؤشر التنافسية الرقمية (world competitiveness center) الصادر عن مركز التنافسية العالمي التابع للمعهد الدولي للتنمية الإدارية بمدينة لوزان السويسرية، حيث قفز ترتيبها حسب التقرير الأخير (2018) من المرتبة ال25 (2016) الى المرتبة ال17 متفوقةً بذلك على العديد من الدول المتقدمة أهمها ألمانيا واليابان وفرنسا.
كما يبرز التقدم الاماراتي في عملية التحول الرقمي من خلال تطوير البنى التحتية الرقمية لاسيما في مجال الإدارات الحكومية المختلفة التي وضعت استراتيجية طويلة الأمد تهدف الى انجاز عملية التحول الرقمي بمواصفات عالمية عبر خطة "نموذج الامارات لنضج الحكومة الرقمية" التي تم الإعلان عنها في ابريل/نسيان 2018 وتأتي هذه الخطة في اطار استراتيجية عامة وشاملة للتحول نحو الاقتصاد الرقمي الى جانب الخطط الاستراتيجية الأخرى في مجالات الثورة الصناعية الرابعة والذكاء الاصطناعي والتعاملات الرقمية (بلوك تشين) والاستراتيجية الوطنية للابتكار ويظهر اهتمام وجدية العمل الحكومي والخاص عبر الانفاق الضخم في القطاعات الرقمية الذي وصل في عام 2018 الى 17 مليار دولار امريكي(بنسبة نمو 3% عن عام 2017 ) و يعادل الانفاق الاماراتي في القطاعات الرقمية 27% من اجمالي انفاق دول الخليج مجتمعه وهي بذلك تحتل المرتبة الخامسة في الانفاق الرقمي بين دول منطقة الشرق الأوسط.
انعكس التخطيط السليم والانفاق الكبير على حجم مساهمة الاقتصاد الرقمي في إجمالي الناتج المحلي الإماراتي الذي بلغ 4,5% في عام 2018، وتطمح الحكومة الإماراتية حسب الاستراتيجية الموضوعة بأن تصل مساهمة الاقتصاد الرقمي في إجمالي الناتج المحلي الـى 5% بحلول عام 2021، ومن المرجح أن يحقق الاقتصاد الرقمي في الامارات نمواً أكثر من المخطط له في عام 2021 فهو ينمو بأضعاف عن نمو الاقتصاد التقليدي حسب دائرة التنمية الاقتصادية في أبو ظبي، وتأتي خطة الامارات للتحول نحو الاقتصادي الرقمي بهدف زيادة الفرصة الحقيقية للاستثمار الأجنبي والمحلي على اعتبار ان الاقتصاد الرقمي اليوم هو الركيزة الأساسية للاستثمارات الأجنبية المباشرة، فبيئة الاعمال الرقمية تساهم في نقل رؤوس الأموال البشرية والمادية، ولقد حققت الامارات نجاحا كبيرا في تحولها لنقطة استقطاب للشركات الناشئة لاسيما تلك الشركات التي تعتمد على البنية التقنية الحديثة في تقديم الخدمة و التفاعل مع الزبائن، اي وفقا لنموذج الاعمال الرقمي لذلك لا عجب بان تستحوذ الامارات على 35% من اجمالي عدد الشركات الناشئة في العالم العربي في عام 2018 اختيرت منها 21 شركة ناشئة من اصل 100 شركة عربية من قبل المنتدى الاقتصاد العالمي كشركات تمثل الثورة الصناعية الربعة في العالم العربي.
اما على صعيد التجارة الإلكترونية فقد بلغ حجمها حوالي الـ 16 مليار دولاراً في عام 2018 ومن المتوقع أن يصل إلى 27.1 مليار دولاراً بحلول عام 2022 وفقا لمؤشر وكالة "فيتش" للتجارة لإلكترونية حيث توقعت الوكالة نمواً سنوياً للتجارة الإلكترونية في الإمارات بمعدل 28%.
لا تقتصر مظاهر التحول الرقمي في الإمارات العربية المتحدة على الجانب الاستثماري والتجاري بل يمتد إلى العمل الحكومي حيث تشير الإحصاءات الرسمية بأن 40% من الإماراتيين يستخدمون خدمات الحكومة الإماراتية مرتين على الأقل أسبوعياً حيث تسعى الاستراتيجية التي تقودها الحكومة الإماراتية بالتشارك مع القطاع الخاص لنقل خدمات الحكومة الإلكترونية إلى الهواتف الذكية حيث تصل نسبة مستخدميه إلى 100% وهي النسبة الأعلى في العالم.
تشير المعيطات السابقة إلى البيئة الاعمال المشجعة على الاستثمار في عملية التحول الرقمي و الإمكانيات الواعدة مستقبلاً للاستثمارات المحلي والاجنبي في الاقتصاد الرقمي الاماراتي.
Building a business in the modern world can be hard due to the fierce competition in all industries. This competition often forces small-scale businesses, who lack funding, to shut down.
We all know the commonly told statistic that around 90% of startup companies fail within their first few years. Although this may sound daunting, it does not mean that all innovators need to abandon their business dreams—quite the opposite really.
Those individuals who are interested in the business world simply need to understand how much it costs to start up a business.
By knowing the relative costs, they will be able to spend their money wisely and hopefully turnover more profits. This, in turn, ought to allow them to survive in this harsh business climate.
Quite often we see businesses failing as they have failed to pay attention to the finer details. As such, I would like to explore the costs of these finer details which, more often than not, can determine the success or failure of a newly founded firm.
The first thing that any startup business will need is a good website and domain. A website enables you to provide a source of information about your company which is easily accessible for potential consumers. Moreover, a website is easily shareable therefore meaning that it can enable your business to gain more attention from all around the world. Quite often we see websites being created by web designers—individuals who specialize in creating attractive websites.
These individuals are responsible for setting up, designing, building and maintaining your website. The best thing about such individuals is that they can give you a unique design which will make your website stand out. The downside is, however, that they can be quite expensive which can make life tough for startup business owners. According to Website Builder Expert, a web designer has the potential to charge you around $7000 in your first year, however, in my experience, a decent website for a startup is around £750-1500.
Alternatively, you may decide to use a website builder which is far cheaper. These sites offer you templates from which you can build your website and organize your content as you so please.
The issue here is that you will be required to do more work, and your website could come across as far more generic and potentially less professional. Nonetheless, it could be a good strategy for individuals that are interested in bootstrapping in order to save as much money as possible and get the business going.
Another potential cost could be that of business cards. Business cards are an excellent way of spreading the word about your services in a personal manner. They are also useful because they enable potential clients to know exactly how they could contact you.
Just like websites, business cards can be intricately designed or make use of basic templates. Hence, they can cost anywhere in the range of £10-£40 per 100 cards. The important thing to remember about business cards is that they should be straightforward and easy to interpret. You could, for example, outline your basic services and contact details (use a professional email address with your business domain) and then go into greater detail by using a LinkedIn page or through your website. Whichever you go, remember to stick to a clear and precise message.
But I would add as a note, that a business card is a reflection of you and your brand so it makes sense to invest in a designer and a good quality print and card. It says a lot about you!
When you’re starting up your business you may also wish to spend time with a business mentor who will guide you through the early stages of your businesses’ development. Business mentoring is a useful tool to invest in because it can enable business growth, prevent mistakes and develop your knowledge of the business world. According to The Business Mentors, mentoring programs can cost anywhere in the range of £400-£4000 depending on the level of input required.
Consultancy is another essential service that all business owners will require because it means that businesses can receive more expert advice. Consultancy firms often charge large sums of money for their services, but are well-known for providing a good service.
I believe in a consultative mentoring experience with the mentees that I support because want to be able to share my experience, expertise and embed them into a community of like-minded people. Who you surround yourself with in business, is an essential part of your business development. The wrong people, the wrong advice or no advice–can end up costing your £000s.
With all of this in mind, the question is: can you afford a business simply through bootstrapping? Could you, for example, start your business from your kitchen with the aim of spending as little as possible? Although it may be somewhat tougher than starting your business in the regular fashion, I believe that you could bootstrap and start your business from home.
This will, however, require you to do lots of research beforehand. It may also require you to develop some sort of side hustle, in order to accumulate enough funds to build your business. I strongly believe in starting on the journey with a survival budget spreadsheet so that you know exactly how much money you need to have saved or coming in to ‘survive’ during the business development process.
There will, of course, be other expenses but these are the ones which you will have to take care of right at the beginning. There are also other elements required for the business that don’t cost anything to set up like social media but can still be very time consuming and therefore costly–so use it wisely!
It will inevitably be a difficult thing at first; however, through hard work you will be able to succeed. Just like anything else, success in the business world is reliant on four key things: determination, hard work, a decent idea and passion!
source: forbes
Entrepreneurs are frequently thought of as national assets to be cultivated, motivated, and remunerated to the greatest possible extent. Great entrepreneurs have the ability to change the way we live and work. If successful, their innovations may improve standards of living, and in addition to creating wealth with entrepreneurial ventures, they also create jobs and contribute to a growing economy.
Entrepreneurship is important for a number of reasons, from promoting social change to driving innovation.
Entrepreneurs Spur Economic Growth
New products and services created by entrepreneurs can produce a cascading effect, where it stimulates related businesses or sectors that need to support the new venture, furthering economic development.
For example, a few information technology companies made up the IT industry in India during the 1990s. The industry quickly expanded and many other sectors benefited from it.
Businesses in associated industries, such as call center operations, network maintenance companies, and hardware providers flourished. Education and training institutes nurtured a new class of IT workers who were offered better, high-paying jobs.
Infrastructure development organizations and even real estate companies capitalized on this growth as workers migrated to cities where employment was growing.
Similarly, future development efforts in underdeveloped countries require robust logistics support, capital investments, and a qualified workforce.
From the highly qualified programmer to the construction worker, entrepreneurship benefits a large part of the economy.
Entrepreneurs Add to National Income
Entrepreneurial ventures help generate new wealth. Existing businesses may remain confined to existing markets and may hit the glass ceiling in terms of income.
New and improved products, services or technology from entrepreneurs enable new markets to be developed and new wealth to be created.
Additionally, increased employment and higher earnings contribute to better national income in the form of higher tax revenue and higher government spending.
This revenue can be used by the government to invest in other, struggling sectors and human capital. Although it may make a few existing players redundant, the government can soften the blow by redirecting surplus wealth to retrain workers.
Entrepreneurs Create Social Change
Through offering unique goods and services, entrepreneurs break away from tradition and reduce dependence on obsolete systems and technologies. This results in an improved quality of life, improved morale, and greater economic freedom.
For example, the water supply in a water-scarce region will, at times, forces people to stop working to collect water. This will impact their business, productivity, and income. Imagine an innovative and automatic pump that can fill people's water containers automatically. This type of innovation ensures people are able to focus on their jobs without worrying about a basic necessity like water. More time to devote to work translates to economic growth.
For a more contemporary example, smartphones and apps have revolutionized work and play across the globe. Smartphones are not exclusive to wealthy countries or people. As the growth of the smartphone market continues, technological entrepreneurship can have a profound, long-lasting impact on the world.
Moreover, the globalization of technology means entrepreneurs in lesser-developed countries have access to the same tools as their counterparts in richer countries.
They also have the advantage of a lower cost of living, so a young entrepreneur from an underdeveloped country can compete with a multi-million-dollar existing product from a developed country.
Community Development
Entrepreneurs regularly nurture ventures by other like-minded individuals. They also invest in community projects and provide financial support to local charities.
This enables further development beyond their own ventures. Some famous entrepreneurs, such as Bill Gates, have used their money to finance good causes, from education to public health. The qualities that make one an entrepreneur are the same qualities that help motivate entrepreneurs to pay it forward.
Is All Entrepreneurship Good?
Are there any drawbacks to cultivating entrepreneurs and entrepreneurship? Is there a limit to the number of entrepreneurs a society can hold?
Italy may provide an example of a place where high levels of self-employment have proved to be inefficient for economic development. Research has shown that Italy has experienced large negative impacts on the growth of its economy because of self-employment. There may be truth in the old saying, "too many chefs and not enough cooks spoil the soup."
The Role of Government
Regulation plays a crucial role in nurturing entrepreneurship. Unregulated entrepreneurship may lead to unwanted social outcomes including unfair market practices, pervasive corruption, and criminal activity.
Findings from the United Nations University also indicate the possible implications of “over-nurturing" entrepreneurship.
European economist Wim Naudé argues that “while entrepreneurship may raise economic growth and material welfare, it may not always result in improvements in non-material welfare (or happiness). Promotion of happiness is increasingly seen as an essential goal.”
Paradoxically, a significantly high number of entrepreneurs may lead to fierce competition and loss of career choices for individuals.
With too many entrepreneurs, levels of aspirations usually rise. Owing to the variability of success in entrepreneurial ventures, the scenario of having too many entrepreneurs may also lead to income inequality, making citizens more unhappy.
The Bottom Line
The relationship between entrepreneurship and economic development is important to understand for policymakers and business owners. Understanding the benefits and drawbacks of entrepreneurship allows a balanced approach to nurturing entrepreneurship to be taken, which can result in a positive economic and societal impact.
source: investopedia
Oman is upgrading its infrastructure – more specifically – ports, as a gateway to economic diversification. A steep decline in global oil prices between 2014 to 2017 weakened the Sultanate’s monetary funds. An alternative strategy applied to accelerate economic growth was to increase the role of private sectors and establish more SMEs. Imports and exports are essential cogs in the industrial wheel, and the Sultanate has been revamping its ports in Muscat, Duqm, Salalah and Sohar, to not just increase its industrial production, but also to exploit the Sultanate’s strategic location to its advantage in transforming Oman into a hub for foreign investment and international trade.
Ports and Free Zones
In line with Oman’s agenda to increase foreign investment, Oman has established free zones adjacent to some of its ports. These free zones will be the direct centers for the majority of Oman’s foreign direct investments (FDIs). International companies and investors will be allowed to establish their businesses within the free zones. Its proximity to ports is a calculated benefit – of ease in imports and exports – that will entice further foreign investment.
The various free zones established by Oman are:
- Salalah Free Zone
- Salalah Port
- Sohar Industrial port
- Sohar Free Zone
- Mazyona Free Zone
- Musandam Free Zone
- Duqm Port
- Duqm Free Zone
Oil Tanker Attacks and Significance of Duqm Port
The tanker attack allegedly carried out by Iran have led to a rise in U.S – Iran tensions. Subsequently, the Strait of Hormuz has become a volatile route for trade. Shipping companies may be wary of utilizing the trade route. This gives Oman the opportunity to present an alternative and safer trade route in the form of Duqm. With direct access to the Arabian sea, Duqm port’s tactical location may urge shipping companies to redirect their trade via Oman’s coastal line. This, in turn, will promote the Sultanate as a major player in foreign investment and trade.
Foreign Investment Regulation
Oman has issued several policies to encourage foreign investment, such as:
- Competitive service prices
- Exemption of tax for five years (extension may be granted in some cases)
- No income taxes
- Exchange of foreign currency at a fixed rate
- 100% Ownership of company within free zones
These incentives have been tailored specifically to allow for ease of trade, encouraging foreign investors to utilize Oman’s ports and free zones.
Foreign Investment vs. SMEs
While some may consider the growing number of foreign direct investments (FDIs) and companies as a threat to budding SMEs within the Sultanate, they pose none. In order to avoid competition between well-established foreign companies and the up and coming Omani enterprises, the country has limited FDI’s reach to its free zones, adjacent to its trading ports. FDIs within the main cities require the investor to find an Omani sponsor. Oman, as part of its economic diversification agenda, wants its SMEs and local industries to flourish, and carefully lays down policies that ultimately benefit its locals, whilst still managing to extend a fair offer to its foreign investors.
source: businessliveme
Africa escaped the global decline in foreign direct investment (FDI) as flows to the continent rose to US$46 billion in 2018, an increase of 11% on the previous year, according to UNCTAD’s World Investment Report 2019.
Growing demand for some commodities and a corresponding rise in their prices as well as the growth in non-resource-seeking investment in a few economies underpinned the rise.
While FDI in some large economies on the continent – such as Nigeria and Egypt – contracted, this was outweighed by a surge in flows to others, most significantly, South Africa.
“The African Continental Free Trade Area (AfCFTA) agreement will bolster regional cooperation. This, along with upbeat growth prospects, augurs well for FDI flows to the continent,” UNCTAD Secretary-General Mukhisa Kituyi said.
North Africa
FDI flows to North Africa climbed by 7% to $14 billion.
Investments in Egypt contracted (down by 8% to $6.8 billion), but the country continued to be the largest FDI recipient in Africa.
FDI to Morocco increased by 36% to $3.6 billion on the back of sizeable investments in finance and the automotive sector.
Sub-Saharan and Southern Africa
FDI flows to Sub-Saharan Africa climbed by 13% to $32 billion, recovering ground after successive contractions in the two prior years.
Southern Africa saw the biggest turnaround, with flows recovering to $4.2 billion after net divestment of $925 million the previous year.
FDI in South Africa more than doubled to $5.3 billion, although this was largely attributable to intracompany transfers by established investors.
Angola remained negative (-$5.7 billion), mainly as a result of oil and gas firms transferring funds to parent companies through intracompany loans.
East Africa
FDI held steady at $9 billion in East Africa, the fastest-growing region of the continent.
Ethiopia topped the region, even as flows to the country declined by 18%, to $3.3 billion.
Flows to Kenya swelled by 27% to $1.6 billion, due to investment in diverse sectors, including manufacturing, hospitality, chemicals and oil and gas.
West Africa
FDI to West Africa declined by 15%, to $9.6 billion, largely due to Nigeria where flows plunged by 43% to $2 billion.
Flows to Ghana also dipped, albeit by a more moderate 8%, to $3 billion.
Looking ahead
Multinational enterprises from developing countries are expanding their activities in Africa but investors from developed countries remained the key players.
Based on data through 2017, France is the largest investor in Africa, although its stock of investment has remained largely unchanged since 2013, followed by the Netherlands, the United States, the United Kingdom and China.
Growing demand and a corresponding rise in the price of commodities, of which Africa is a key producer, are expected to prop up FDI flows to the continent in 2019.
Closer regional integration aided by the AfCFTA can also draw additional FDI flows.
While investment in manufacturing and services is likely to be sustained, this is expected to be confined to a few countries in North and Southern Africa, and the emerging manufacturing hubs in East Africa.
Special economic zones buttress prospects
The growing number of special economic zones (SEZs) could become another factor in drawing investment to the continent in the coming years.
There are an estimated 237 SEZs in Africa, some still under construction, along with more than 200 single-enterprise zones (so-called free points).
SEZs operate in 38 of the 54 economies on the continent, with the highest number in Kenya (61).
The three largest economies of the continent – Nigeria, South Africa and Egypt – all have well developed SEZ programmes.
Many smaller economies have only established SEZ frameworks in the last decade and tend to have fewer zones.
Stronger regional cooperation also creates scope for more ambitious regional and cross-border zones.
In 2018, Burkina Faso, Côte d'Ivoire and Mali launched an SEZ spanning border regions of the three countries. Similarly, Ethiopia and Kenya recently announced their intention to convert the Moyle region into a cross-border free trade zone.
source:unctad
What is the best way to attract foreign direct investment to Egypt? Niveen Wahish sounds out the experts
Foreign direct investment (FDI) into Egypt fell to $6.8 billion in 2018, down from $7.4 billion the previous year, according to the UN Conference on Trade and Development (UNCTAD) 2019 World Investment Report.
However, Sherif Fahmy, a director at NGage Consulting in Cairo, believes that although the FDI was lower than expected in 2018, it is still the highest in the region.
The UN report showed that Egypt figured as the largest recipient of FDI in Africa that year. Fahmy said that global FDI flows had seen a 13 per cent decline in 2018, falling to $1.3 trillion. This had been attributed to US tax reforms in 2017, which provided tax incentives to US multinationals to repatriate foreign-held capital and invest it in the US economy, he said.
FDI into Egypt had reached around $8 billion in 2016, almost double the figure of 2014, prompting the government to target $10 billion in FDI. However, this did not happen despite multiple efforts.
Allen Sandeep, director of research at Naeem Holding, a consultancy, believes the government has done a decent job in laying the foundations for Egypt to be viewed as an attractive investment hub in the future by enacting bold economic reforms such as the phasing out of petroleum subsidies, taming inflation, and maintaining a competitive exchange-rate policy.
He said that measures such as the new investment law with the one-stop-shop to facilitate set up and the various incentives it offers in free zones had been important to changes in the balance of payments, drops in yields on treasury bonds, and levels of interest shown by investors in international bond issuances.
Fahmy added that the government intended to take further measures to accelerate the automation of procedures. It was also committed to policies designed specifically for value-added and technology-oriented sectors that contribute to overall economic growth and decrease unemployment, he said.
The government’s investment act in particular is designed to promote investment in less-developed regions to enhance living standards.
While Fahmy was optimistic that Egypt could attract more FDI to reach around $8-8.5 billion in 2019-2020, Sandeep believed that for FDI to pick up as a result of the reforms being enacted a time frame of five to 10 years was needed.
In the meantime, he stressed that the government must engage more in investor roadshows and strong PR and marketing impetus to improve awareness externally. Risk perceptions about Egypt, whether on politics, the economy or security, were a lot different outside than within the country, he said.
This had meant that risk premiums were mispriced, resulting in sluggish investor interest both for foreign portfolio and foreign direct investment. He suggested that new venues for investment needed to be prioritised in areas such as the services sector.
Business-process and knowledge-process outsourcing and IT-enabled services were good options for Egypt, he said, because it had a strong edge in terms of human capital.
Alexandria University economics professor Mohamed Abed agreed on the need to coax investment towards areas with potential for Egypt. He lamented the fact that around 60 per cent of incoming FDI poured into the oil-and-gas sector, while more was needed in manufacturing because that was what created jobs.
Around 10 per cent of FDI goes to manufacturing at present. This was mostly directed towards domestic consumption, however, whereas what was needed were export-oriented industries that could generate hard currency, Abed said.
Fahmy explained that according to the UNCTAD report, foreign investment in Egypt was skewed towards oil and gas, as significant discoveries of offshore gas reserves had attracted investment and the country became a net exporter of gas in January 2019.
British Petroleum, he said, had increased its investment stock in the country to more than $30 billion. Egypt also signed at least 12 exploration and production agreements with international oil companies in 2018.
However, Fahmy said the UNCTAD report also showed some large foreign projects had been announced in other sectors, such as a $2 billion Ukranian project by Nibulon to upgrade Egypt’s grain-storage infrastructure and a $1 billion Saudi project by Artaba Integrated Holdings for the construction of a medical city.
In addition, the Chinese Shandong Ruyi Technology Group had signed an agreement to invest $830 million in the construction of a textile area in the Suez Canal Special Economic Zone (SEZ).
Fahmy said that companies opening up in Egypt were not there just for the domestic market, but “for the entirety of the two billion people that represent countries that are part of free-trade agreements and encourage the flow of goods into international and regional markets.”
However, FDI into Egypt could also be affected by global conditions. Sandeep said that the ongoing trade war with China instigated by the US could have long-lasting global impacts, both directly resulting in the flight of capital out of emerging markets and indirectly because of the spillover impacts due to contagion.
Geopolitical risks due to tensions between Iran and the Gulf countries and the US could also affect the price of commodities such as oil and could impact trade, tourism, and Suez Canal receipts, Sandeep said.
source:ahram
