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Signature of Memorandum of Understanding between Geneva Chamber of Commerce, Industry and Services and the Federation of Chambers of the Gulf Cooperation Council01 Jan 2018 Written by Admin SAE
Several decades of cooperation between Switzerland and the Arab states of the Gulf cooperation council led to the signing of a Memorandum of Understanding (MoU) between Geneva Chamber of Commerce, Industry and Services (CCIG) and the Federation of GCC Chambers of Commerce and Industry (FGCC).
Mr. Abdulrahim Hassan Naqi signed the MoU on behalf of the Federation of GCC Chambers of Commerce, whereas Mr. Vincent Subilia, Member of the Board of Directors of the World Federation of the International Chamber of Commerce.
The memorandum of understanding provides for cooperation between the two sides to help members of both sides to communicate with each other. A forum for economic cooperation between the two sides is expected to be held for the first time in 2018.
The Secretary General of the FGCC Chambers, Abdul Rahim Naqi, expressed the importance of signing this MoU as a necessary step to boost the cooperation between Switzerland and the Gulf Cooperation Council, which will help facilitate the communication between the two sides and develop the economic relations, so that will serve the common interests.
The signing of the MoU was attended by H.E. Mr. Adel Essa Al-Mahri, Ambassador, permanent observer of the Gulf Cooperation Council (GCC) delegation, and the representative of the Ministry of Economy of the Government of Geneva, as well as representatives from Swiss private sectors such as health and education, banking and wealth management, in addition to other entrepreneurs.
It’s worth mentioning that the Geneva Chamber of Commerce and Industry pays particular attention to the Arabian Gulf region and has carried out several economic trips to the Gulf region during the last period to consolidate the economic links within the business community. The last visit was made in November 2016 by an economic delegation headed by the Mayor of Geneva, also a member of the Swiss National Parliament, Guillaume Barazzone. The delegation has visited several countries of the Arab Gulf States; where we had an interview with the Deputy Director of the Chamber, Vincent Subilia, on this occasion (click here).
Trade data between the two sides indicate the economic importance of the bilateral relations. The Gulf Cooperation Council is the first partner of Switzerland in the Middle East. In the past 10 years, we witnessed a steady increase in trade between the two sides. Trade volume (exports and imports) increased from about $2.5 billion in 2000 to about $25 billion in 2016. The UAE is the largest trading partner of Switzerland, followed by Saudi Arabia. Main commodities exchanged are Gemstones and Precious Metals, pharmaceuticals, watches and electrical machinery.
Mr. Abdulrahim Hassan Naqi presented a fascinating presentation on the economic developments witnessed by GCC countries in the last years, including the main projects and the needs of investment in different sectors.
The GCC has a population of around 47 million, with a GDP per capita of about $33 million. While the gross domestic product of the GCC countries all together was estimated at about 1.6 billion dollars. The oil reserves of the GCC countries accounts for 33% of the world's reserves, compared to 21% of the reserves of gas.
The oil and gas sector is one of the pillars of the economies of the Gulf States, contributing 42% of the GDP and 70% of exports.
The GCC countries are attracting large foreign investments, which have doubled since 2005 to reach $431 billion. In contrast, the GCC countries make many investments abroad, amounting to about $248 billion; this does not include the sovereign wealth funds, which worth about $2.7 trillion.
The Gulf Cooperation Council (GCC) states are attractive environments for foreign investment due to its political stability, young population, advanced infrastructure, liquidity and broad markets with high levels of purchasing power and the availability of capital.
During his presentation, Mr. Naqi has reviewed investment-stimulating policies in the GCC countries. He pointed out that although the laws on investment stipulate that the foreign investor's share does not exceed 49% of the total investment in the project, the percentage can reach 100% in certain circumstances, especially for projects of developmental importance, serve strategic plans at the national level or projects based on the exploitation of the local raw materials.
Other advantages include the free movement of capital and profits outside the GCC, and the lack of customs duties on commodities in application of the Gulf common market. This applies also to intermediate goods used by the industry such as raw materials, machinery and equipment. GCC market offers is also another advantage, which is the lack of customs on trade with other Arab countries in application of the Arab Free Trade Area Agreement. Also it offers a wider labor market, which provides a variety of competencies from several countries and in all sectors.
In the GCC countries, there are more than 40 industrial zones and free trade zones for industrial and commercial products and services. These zones offer the possibility to fully own the projects and to employ non-national skills; they allows saving time and necessary effort to do business.
With regard to the investment opportunities offered by the GCC countries, several economic sectors offer the following opportunities:
- Construction projects, with investment needs estimated at about $2.43 trillion.
- Telecommunications projects with investment needs estimated at about 893 billion dollars.
- Transportation projects with investment needs estimated at about 387.6 billion dollars.
- Oil and gas projects with investment needs estimated at about 337 billion dollars.
- Electricity projects with investment needs estimated at about 313 billion dollars.
- Industrial projects with investment needs estimated at about 178 billion dollars.
- Projects of banks and insurance with investment needs estimated at about 160 billion dollars.
- Real estate projects with investment needs estimated at about 117 billion dollars.
- Health projects with investment needs estimated at about 71 billion dollars.
In his presentation Mr. Naqi has gone through Saudi Vision 2030 plan. This plan is particularly important because Saudi Arabia is the largest economy in the Gulf region. It will generate significant changes toward openness to foreign investors.
Finally, the major projects in GCC countries were presented as follows:
- King Abdullah Economic City ($93 billion) project: It aims to establish a new city near the city of Rabigh (about 100 km north of Jeddah). The project includes a new port of 14 km², an industrial area of 62.5 km², a business center with an area of 13.5 km², housing projects with an area of 48 km², as well as luxurious resorts and residences with an area of 27 km².
- Lusail City project (45 billion dollars): It aims to establish a modern city in north of the city of Doha, the capital of the State of Qatar. The total area of the city of Lusail is 38 km². It has 4 islands and 19 commercial, residential and recreational areas. The city has a population of about 200,000 and employs about 170,000 employees, it can accommodate 80,000 visitors, i.e. it has a capacity to accommodate up to 450,000 people. It includes a number of facilities, residential units and office space. It also includes 22 hotels of the highest quality; Lucille includes both a city of energy and a city of soft entertainment.
- Oman Railways Project ($30 billion): It is part of the Gulf railway network, which aims to connect Oman with the United Arab Emirates, Saudi Arabia, Qatar, Bahrain and Kuwait. The project starts from Salalah in the south to Burimi in the north, passing through the port of Duqm.
This MoU is an important step in light of the significant efforts being made by the GCC countries to diversify their sources of income in order to build a healthy and strong economy. Strengthening the export sector and strengthening trade relations at the international level is therefore important for GCC countries. It contributes to the efforts in developing the industrial and agricultural sectors, increase local added value and joint ventures, support trade exchange and facilitate links between the two sides.
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