Middle East Risk Assessment

Why Middle East?

Middle East economies present extreme

differences from very poor to very wealthy,
however, all of them are growing.
Combination of growing economies and
political issues in Middle East seems to be a
challenging and could have hidden
opportunities.
Political Environment
Egypt
-Some degree of democracy
- Current situation in Egypt,
President Mubarak stepped
down
- Future president and what
will this mean for Egypt
- Muslim Brotherhood and its
antidemocratic ideology
Turkey
-Stable, democratic
government
- Connections of turkey with
European Union
- Kurdish people issue
-Turkey reliable as trading
partner, already in custom
union with EU and joined
many FTA
- Common regulations with
EU
Israel
-Some traits of democracy,
but government not fully
developed
-Coalition government, and
its instability
- Conflict with Palestinians,
and problems with peace
making process
- Deals with strong markets
such as US or UK
Political Environment
Egypt Turkey Israel
-Political stability was a -Government welcome
priority which could slow foreign investments
down economic growth
-Technologically advanced
- Egypt as a reliable trading economy
partner
6

4
Egypt
3
Turkey
2 Israel

0
stability internal conflict external conflict gov intervention trading partner
Political Environment
Egypt Turkey Israel
-Investing and improving -Strong regulatory -OECD principles of
local investment framework for corporate Corporate governance
-Encouraging the private governance member
sector by supporting small -OECD principles of -Modern and developed
businesses ,competitive Corporate governance banking system
capabilities, financing member -Foreign trade
projects dependency
-Trade policy
• Trading partners :
European Communities
and the United States
and EFTA
• Other trade
agreements with
Canada, Turkey, Czech
Republic, Slovak
Republic, Hungary,
Poland and Slovenia,
Mexico, Romania and
Bulgaria.
Political Environment
Egypt
-High unionization in the
public sector and not
popular in the private sector
-Wages and benefits set by
the government, therefore
there is no collective
bargaining -Religious
tensions between the
government and banned
Islamist groups
-Poor human rights
-Government relationship
with US and Israel is facing
domestic opposition
Turkey
-Public-sector workers
strongly unionised
-Turkey has over 800 labour
unions by the mid 1970s
-Kurdish groups desire for
autonomy
-Serious threats from
Islamist government and
secular institutions like
judiciary
Israel
-Voluntary trade union
membership
-Collective agreement is
determined by law
-4 wars against Israel
initiated by the Arab nations
-Orthodox and Jewish
communities
International Economic Environment
Egypt
-Growing copyright piracy
-Imposes restrictions on
imports and services market
-Reduced taxes by 50%
6
Turkey Israel
-Encourage FDI -Maintains a center that
-Cumbersome bureaucracy provides investors with
-Maintains Free Zones with information
exemption from corporate -Preferential tax treatment
taxes for foreign investors
-Restricts importation of
economically sensitive
products

2 Egypt
Turkey
0
Israel
Domestic Economic Environment
Egypt
-GDP 2010 est. 6.200 USD
-About 7% economic growth
on average, based with non-
oil manufacturing,
wholesome trade,
communication and tourism
- Last years economic growth
has improved outcomes and
living standards
- 18% of the population still
live below the poverty
- Food price crisis and the
fuel price shock led to higher
inflation
Turkey
-GDP 2010 est. 12.300 USD
- Unbroken economic growth
over the last 5 years
- Had developed into a
reliable partner for foreign
investors
- Turkish economy has
moved from a protected
state-directed system to a
market-oriented free
enterprise system.
- from 1980  reduced the
role of the public sector in
the economy, liberalized
foreign trade, removed
capital transfer, exchange
controls and encouraged
foreign investment.
Israel
-GDP 2010 est. 29.500 USD
- Despite of global crisis,
Israel’s economy continued
to grow during 2008.
- Further rises in industrial
production together with
foreign trade.
- The country’s economy has
been shifting from
agricultural and traditional
manufacturing to more
knowledge intensive
industries.
- Success has been based on
the one major comparative
advantage  the availability
of a large pool of highly
skilled engineers and
technicians
Domestic Economic Environment
Egypt
- Egypt’s economic growth is
seen edging up over the next
two years  according a
survey of 11 economists, the
country would grow 5.2% in
June 2011.
-6% plus needed to create
enough jobs for its growing
workforce.
- Egypt’s economy has
benefitted from more than 5
years of tariff cuts, the sale
of state companies, the
liberalization of investment
regulations and other
reforms.
-GDP could grow as much as
5.3% this year and 6% in the
year ending June 2011
Turkey Israel
- by the end of 2010 - Positioned for economic
Turkey’s growth figure hit growth over the next 10
6.8%, thus creating 1.5 years
million jobs - GDP is forecast to grow at
- the growth rate has been an average 3.5% per year for
increased to 6.8% the next 10 years
- the growth in domestic
product is expected to reach
4.5% in 2011, 5% in 2012
and 5.5% in 2013, according
to OVP (a road map for the
next 3 years of Turkey)
- OVP expects the
employment rate to increase
to 42% of the total
population
Technological
Egypt
-Attracts foreign
investments in IT
outsourcing such as: local
employment subsides
-Technology offers a new
way of communication with
consumers via banners, CRM
-Small expenditure on R&D
-Significant developments in
ICT sector
Turkey Israel
-Less technically advanced -Centre of global attention-
than Western Europe leading centre of technology
-Poor electronic -Highest rate per capita of
development R&D investments
-R&D- low expenditure -The biggest leader in
-Rapid increase and innovation
development in ICT sector -Development of high-tech
-Turkish technology cannot industry
offer to a business more -Impressive patenting
innovative products and performance in science
services
Domestic Economic Environment
Egypt
-One of the fastest growing
country in Middle East
-High quality multilingual
workforce
-Relatively underdeveloped
infrastructure
-Plenty of evidences of high
availability of mineral and
energy resources
-Transportation and
communication
6
in need of
3
upgrade.
0 Egypt
Turkey
-Young, dynamic, high-
quality experienced local
labour force
-High availability of energy
resources also nuclear power
plants, geothermal power.
-Low level of motorisation
-Massive need for efficient
and environmentally friendly
transport system.
Israel
-Highly skilled and well
educated local labour force
-Medium availability of
energy resources(relied on
external imports)
-“Egged” bus company-
second largest bus system in
the world.
-One of the world leaders in
mobile communication
Turkey
Israel
Legal System
Egypt
-Corporate tax has been
reduced to 20%
-Inefficient judicial process
-Human Rights Violations
-Corruption Perception Index
-Starting business 7 days
Turkey
-Corporate tax reduced to
20%
-Foreign Direct Investment
Law
-Labour Laws and market
regulations
-Overall freedom to start ,
operate or close business
-Starting business 6 days
Israel
-Corporate tax 25%
-Starting business 34 days
-Foreign investment
permitted without
government approval
-Foreign company :branch or
subsidiary
Social Factors
Egypt
-Good social security and
welfare system
-Big income gap
-Investments in health
system
-New law could come to
power –compulsory
contributions to pension, if
new government agrees with
it
Turkey
-Problems with improvement
of social benefits and quality
of life
-Increasing level of young
population
-High level of unemployment
-Bad social security system
-Problems with education
and creating positive social
climate for women
Israel
-Created positive climate for
women
-Well developed skilled
workforce
-Very good health care
facilities
-Poverty and income gap,
however, government plans
to provide policies to deal
with it
Environmental Factors
Egypt
-Main environmental
problems: eridity, uneven
population distribution,
shortage of arable land and
pollution
- Beaches, coral reefs and
wildlife are threatened by oil
pollution.
- Heavy use of pesticides,
inadequate sewage disposal
and uncontrolled industrial
effluents has created major
water pollution problems.
- Cities produce 3.0 million
tons of solid waste/year.
- Only 79% of the population
have adequate sanitation
facilities.
Turkey
-main problem is air
pollution in Ankara and other
cities.
- smog grew worse after
1979 in the capital due to
the banning of oil heating
systems in new buildings
- in 1983 the government
banned the conversion of
heating systems to coal.
- the same year, an
antipollution program was
introduced to reduce air
pollution level by more than
50% within a year.
Israel
-in the first 25 years period
following its independence,
Israel accorded to intensive
development programmes:
new towns, modern
agricultural program, water
sources, new roads and
airports.
- in 1973 the Cabinet at the
Stockholm Conference
established the
Environmental Protection
Service (EPS) as Israel’s first
environmental government
body.
Environmental Factors
Egypt
- Half of Cairo’s raw sewage
is carried to the sea in open
sewers.
- With recent improvements
about 97% of the population
have access to pure water
- Less than 1% of Egypt’s
total land area is protected
- In 2000, about 59 of the
nation’s 2.076 plant species
were threatened with
extinction.
- The National Committee for
Environment, within the
Office of the Prime Minister,
is the principal agency with
environmental
responsibilities.
Turkey
- program was also called
for: strict traffic controls, the
closing of the worst
industrial polluters, a
prohibition on the import of
high-sulphur fuel oil, special
emergency hospital wards
for smog victims and the
building of green areas and
parks.
- in 1992, world’s highest
level of industrial carbon
dioxide emission, totalled
145.5 million metric tons.
- in 1996, the total rose to
178.3 million metric tons.
- The 1980’s a $220
million project to clean up
the polluted water from
industrial chemicals
Israel
- In 1988, the government
established the Ministry of
the Environment positive
change in the national
determination to tackle
environmental issues.
- In recent years Israel has
been taking steps toward
sustainable development
development that meets the
needs of the present without
compromising the ability of
future generations to meet
their own needs.
Conclusion