Corporate executives from the Gulf Region believe their countries are on target for strong economic expansion in the coming years, a study has found, suggesting Canadian companies would be wise to seek out their own growth opportunities in the region.
Some key findings include 31 per cent of respondents expect growth in the GCC to flow from a strengthened global economy, while 23 per cent see stabilized oil prices as the key to expansion.
Meanwhile, 18 per cent believe growth in non-oil industries will be the driving force behind overall economic expansion. Respondents identified telecommunications and natural resources or transportation-based infrastructure as sectors that will enjoy the most growth. And, at 46 per cent, joint ventures are expected to be the dominant deal structure in the region over the next 12 months.
Dan Fournier, the Bahrain-based chairman of Blakes’ practice in the Gulf, says it’s clear Canadian businesses could benefit from opportunities in GCC countries.
Infrastructure projects involving water management, power, hospitals, roadways, and sewage continue to pop up throughout the region, he says. Of course, companies offering oil and gas services will also find their expertise in high demand, particularly in Saudi Arabia and Qatar.
But Fournier doesn’t stop there. He says Canadian educational expertise and technology relating to renewable resources are also highly valued. It may be surprising for some that this oil-rich part of the world is keen to develop alternative energy sources. But times are changing, says Fournier.
“Renewable energy is getting on the agenda of many GCC countries,” he says. “Even countries like Saudi Arabia, where solar and wind power projects are starting to see the light of day.”
Daniel Desjardins, senior vice president and general counsel of Bombardier Inc. in Montreal, says in-house counsel must visit the region to best advise company leadership when considering opportunities in GCC countries. He has learned that first-hand through his company’s presence in the United Arab Emirates, where Bombardier has line maintenance and parts distribution centres.
“It’s all about understanding their legal environment, but beyond the legal environment is also about understanding the local culture,” he says. Part of any winning strategy in the Gulf, adds Desjardins, is the establishment of strong local management that understands and buys into your own corporate identity.
Desjardins adds that Bombardier is considering expanding its presence in the region.
“We are looking at opportunities in the Gulf region, absolutely. There are large infrastructure projects coming on line right now in the Gulf region, and we surely intend to be there.”
Fournier, whose firm opened its office in the Gulf in July 2009, adds a number of additional considerations for in-house counsel. First, it’s crucial to join management teams when they travel to the Gulf. That will allow them to meet with various organizations that seek to attract foreign capital to the region.
At the same time, Fournier urges in-house counsel not to expect the North American legal system to translate to their projects in the Gulf. That means it’s important to understand the different ways of doing things in this part of the world, while being satisfied that the work still meets standards for due diligence, enforcement of rights and remedies, documentation, and so on.
Counsel must also get a handle on the legal rights their company can exercise if things go wrong, says Fournier. It’s necessary to spend some time, for example, figuring out the level of access to courts, binding arbitration, and other dispute-resolution mechanisms.
“I would urge them to get involved with their various business development or project development teams when they’re considering the Gulf,” he says. “And you have to be in the Gulf to appreciate the differences.”
The complete study is available online at blakes.com/english/GCCreport.
