Page 94 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

78 Dubai & Co.

initially began in 1990. The EU is the GCC’s top trade partner and
the GCC is the sixth-largest trade partner for the EU. 27 That the
negotiations are taking place at the level of the GCC secretary-gen-
eral and not of the individual countries is a sign of things to come
and reflects the increased maturity of the GCC as a common
economic bloc.
Other trade agreements in the works include GCC-India,
GCC-China, and GCC-Japan, all of which can have major conse-
quences in aligning the region more closely with Asia. GCC-
Singapore talks are also under way: one interesting fact is that much
of Saudi Arabia’s crude oil passes through Singapore on its way to
East Asia, creating some interdependence between the economies. 28
Ties with Australia and New Zealand are being deepened by both
the GCC and the UAE, and negotiations of agreements are report-
edly under way.

Privatization
Another area in which regulatory changes are creating significant
opportunity is privatization. Throughout the GCC states, govern-
ments are rapidly privatizing firms across a wide range of sectors.
Privatization is expected to bring greater efficiency and higher per-
formance to previously state-owned enterprises and will also have
the effect of increasing the scope in which international companies
can operate. Privatization has also been seen by governments—and
by rulers personally—as a way of sharing the country’s wealth with
private business families and individual shareholders. At the
height of the recent GCC stock market boom, I was a consultant to
a private-sector investment firm in one of the GCC countries that
saw as one of its key roles to invest in privatizations in order to
bring wealth into the hands of the common citizens who composed
its shareholder base.
Investment firms such as the Dubai-based Abraaj Capital
expect between $300 billion and $400 billion worth of assets to be
transferred from governments to the private sector in the coming
few years. 29 In Saudi Arabia alone, no fewer than 20 state-owned
enterprises are in the process of privatization according to a WTO
report. In fact, 30 percent of the lucrative utility Saudi Telecom has
already been sold to private shareholders. Private contractors have