Middle East

Bahrain (top)

A Free Trade Agreement exists between Bahrain and the United States. 100% of bilateral trade in consumer and industrial products became duty free. Bahrain will phase out tariffs on the remaining handful of agricultural product lines by 2015. Textiles and apparel trade is duty free, promoting new opportunities for U.S. and Bahraini fiber, yarn, fabric and apparel manufacturing.
As a member of the Gulf Cooperation Council (GCC), which is political and economic union, Bahrain applies the GCC common external tariff of 5 percent for most non-U.S. products, with a limited number of GCC-approved country-specific exceptions. Bahrain's exceptions include alcohol and tobacco. Some 432 food and medical items are exempted from customs duties entirely.

In 2005, the U.S. government approved a free-trade agreement with Bahrain. Bahrain is one of six Gulf countries planning for monetary union as early as 2010 .

With its tradition of shipping and commerce, the government has been more successful than other Gulf States in developing manufacturing and commercial services. The country has adopted a policy of openness and diversification. Therefore it has become one of the most advanced economies in the region with liberal exchange rates, trade, and investment regimes.

The country has recently completed a US$900 million modernization program, which will increase overall capacity. The government's long-term plan includes the target of doubling household income by 2030.

The government welcomes foreign investment, except in cases involving competition with established local enterprises or existing government-owned companies. Even better, foreign-owned companies may operate in some cases without a Bahraini partner.

Bahrain has more than 400 financial institutions, which account for approximately a quarter of the GDP. It is generally seen as the region's best financial regulatory environment. The country has been successful in attracting international banks with tax-haven facilities. The offshore banking sector presently has assets in excess of US$90 billion .

Comoros (top)

Foreign exchange earnings stem from exports of cloves, vanilla, perfume essence and remittances from the Comoran diaspora. Fishing and tourism are operating well below potential. The islands have inadequate transportation links, a young and rapidly increasing population and few natural resources. This opens up opportunity for foreign investment.

Comoros has a large natural forest that offers substantial scope for timber exporting but is not developed. This offers opportunity for development in infrastructure in areas such as tourism when foreign investment is received.

Israel (top)

A Free Trade Agreement exists between Israel and the United States. Each country has agreed to implement phased tariff reductions culminating in the complete elimination of duties on all products.

Agreement on Trade in Agricultural Products (ATAP) with Israel and the United States provides U.S. food and agricultural products access to the Israeli market under one of three different categories: unlimited duty free access, duty free tariff-rate quotas (TRQs), or preferential tariffs, which are set at least 10% below Israel's Most Favored Nation (MFN) rates. The agreement also provided for annual increases in the in-quota quantity under the TRQs.

Israel has made some progress towards privatizing government-owned companies, including banks, the state telecommunications company, the national airline and others. The government plans to privatize ports, utilities, and oil refineries. The VAT rate was temporarily raised in 2009. Also to stimulate credit, public-private funds are being used to purchase corporate bonds.

Macroeconomic policies and structural reforms have opened up the economy, improved the degree of competitiveness, and attracted foreign investment. Other drivers of the economy include improving internal security and productivity. The field of life sciences is especially strong, attracting considerable foreign investment.

Jordan (top)

Jordan has free-trade agreements with the U.S. and most of its Arab neighbors, a peace treaty with Israel, a partnership agreement with the EU and membership in the WTO.

With the idea of improving their economy, the government has managed to attract more than US$6 billion around the port of Aqaba. Authorities offer a flat 5% tax rate, no duties, 100% foreign ownership and the right of companies to employ up to 70% foreign labor .

The manufacturing sector is diversified with production of cement, steel, glass, paints, plastics, fertilizers, food products and pharmaceuticals being prominent. Officials hope that the creation of several new industrial parks will provide a new growth impetus for manufacturers.

Kuwait (top)

It is a member of the Gulf Cooperation Council monetary union, which is political and economic union.

Kuwait is a member of the Organization of Petroleum Exporting Countries (OPEC), which secures an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital to those investing in the petroleum industry.

The government relies on its Trade and Investment Agreement with the USA as a means of encouraging foreign investment in its industries and pushing diversification. Implementation of the Foreign Investment law still requires clarification of areas open to foreign investment including 100% foreign ownership .

Kuwait is open to some types of foreign investment, but there are restrictions in others. Foreign investors may own 100% of investments in areas such as water, energy, transport, tourism and urban development but foreign investment in the upstream petroleum and downstream gas and petroleum sectors remain restricted. Kuwait has no income tax but corporate tax rates on foreign businesses are high.

Almost 40% of Kuwaiti nationals are under the age of 25, and around 90% of employees in the private sector are currently non-Kuwaitis. Authorities have formally implemented a Kuwaitization policy to generate employment opportunities for Kuwaiti workers in the private sector. The policy imposes quotas for percentages of Kuwaiti workers to be employed by individual non-government entities but the policy is being employed in a flexible manner .

Despite its strong macroeconomic position, including sizable fiscal and trade surpluses, Kuwait would like to diversify its economy away from its near-complete dependence on oil revenues and state subsidies. Currently, the country relies on oil revenues for around 90-95% of total export earnings and about two-fifths of GDP .

Lebanon (top)

Lebanon's banking sector contributes almost 10% to GDP and most of the sector is profitable despite considerable fragmentation. The banking sector remains well capitalized and liquid making the country attractive to foreign investment .

Manufacturing makes up more than two-fifths of GDP and is concentrated around the coastal urban areas . The more important industries include textiles, cement, chemicals, refining and light industries making goods for the domestic consumer market. The construction industry has continued to expand.

Tariff duties on food items were cut during 2008 and the minimum wage was raised. Both measures were aimed at boosting domestic demand and attracting more foreign investment.

Oman (top)

It is a member of the Gulf Cooperation Council monetary union, which is political and economic union. In 2005, Oman and the US reached agreement on a new free-trade pact. Movement continues towards an eventual customs union amongst the Gulf Cooperation Council states.

Oman has no income tax on individuals and the corporate rate is just 12%. The process of privatizing selected state-owned industries continues. Foreign investment incentives include a five-year tax holiday for companies in certain industries, an income tax reduction for publicly held companies with at least 51% Omani ownership, and soft loans to finance new and existing projects .

Oman became a member of the World Trade Organization in 2000. The reforms associated with membership have helped to further reduce the barriers to entry faced by foreign firms.

Government reforms are focused on broadening the privatization program, encouraging foreign direct investment, and accelerating the Omanization of the labor force by modernizing the educational and training system.

Oman has large mineral and metal deposits, including silica, dolomite, copper and gold. In 2008, the government completed a new aluminum smelter which will be able to produce 350,000 tonnes of aluminum annually. Other projects being implemented are several natural gas investments, a petrochemicals plant and a urea fertilizer plant .

Qatar (top)

Qatar now rivals Luxembourg as the world’s richest economy in per capita terms and is expected to claim that title for its own in the next few years.

The country is a member of the Organization of Petroleum Exporting Countries (OPEC), which secures an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital to those investing in the petroleum industry.

The government hopes to join the Gulf Cooperation Council monetary union, which is political and economic union, by 2010.

The government's desire to develop an up-market tourist sector appears to be making progress. In addition to luxury hotels, Qatar is spending freely to create attractions that will appeal to rich tourists. The government plans to build a new waterfront city for 200,000, known as Lusail, and to develop a reclaimed island for luxury living. An international airport will be opened in 2011 at a cost of US$14 billion. New port and roads are being built along with a rail system linking Doha to Lusaid .

The government is pushing legislation to encourage foreign businesses. It has opened up three areas: consultancies, information and technology distribution for 100% foreign ownership. The foreign portion of these businesses have faced a tax of 35% in previous years but the government plans to cut that to 10% in 2010 .

Qatar has twice the natural gas reserves of either Saudi Arabia or Abu Dhabi, unlike these countries, its gas is clean and easy to exploit. Qatar aims to become the world’s leading producer of LNG by 2010 .

Qatar's policy of economic diversification has led to a surge in investment in projects for the export of liquefied natural gas (LNG) and petrochemicals.

Saudi Arabia (top)

Saudi Arabia is a member of the Organization of Petroleum Exporting Countries (OPEC), which secures an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital to those investing in the petroleum industry.

It is a member of the Gulf Cooperation Council monetary union, which is political and economic union. In general, Saudis and citizens of the Gulf Cooperation Council pay no income tax. For foreigners, there is a flat 20$ income tax .

Economic reforms began in earnest when Saudi Arabia joined the WTO at the end of 2005. In 2008, foreigners were allowed to trade in domestic stocks on the Saudi stock exchange through intermediaries.

It is one of the world's fastest population growth rates, and the need for increased government spending. The country’s policy of "Saudiization" is intended to increase employment of its own citizens by replacing 60% of the estimated 5-6 million foreign workers working in Saudi Arabia .
Planners intend to buy large amounts of fertile land overseas and then develop it for the home market as an investment. The first of these projects will be in the country of Sudan.

Saudi Arabia's financial sector is highly profitable and virtually oblivious to the international financial crisis. Oil is a major reason but the banks are also benefiting from a boom in consumer banking. In addition, banks pay no taxes at all in Saudi Arabia. Saudi Arabia's banking industry continues to be profitable, in part because banks pay no taxes at all. The kingdom's strong regulatory environment means that Saudi banks have fared reasonably well.

Syria (top)

Private investors, with financial backing from the Gulf States, have been expanding into various sectors, such as textiles, pharmaceuticals, food-processing and other light industries. Policy makers have introduced a number of modest reforms to encourage private entrepreneurship, promote market mechanisms and open the economy. The government hopes that its structural reforms will accelerate growth to 7% by 2010, lower unemployment to 8% by 2010, and reduce poverty .

Farming, which is the main activity, is concentrated mainly on the Mediterranean coastline. Cotton and tobacco are cash crops, while wheat, barley and fruits are grown for the domestic market.

United Arab Emirates (top)

It is a member of the Gulf Cooperation Council monetary union, which is political and economic union.

It is a member of the Organization of Petroleum Exporting Countries (OPEC), which secures an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital to those investing in the petroleum industry. The overall performance of the UAE's economy is heavily dependent on oil exports, which account for 30% of GDP .

By 2010, almost one-third of the population will be between 15 and 29 years offering opportunities to foreign companies with this demographic as their target market .

The UAE has no income tax and no corporate tax at the federal level. There are different corporate taxes in various emirates however. The richer emirates have taken steps to encourage more private sector participation. Dubai's property law allows 100% foreign ownership of properties in specific fields. Sharjah has established a number of industrial free zones and has attracted numerous new small and medium-sized enterprises that are now expanding.

The standard of living in the United Arab Emirates is one of the highest in the world. The country also has one of the more diversified economies among the major oil-producing Persian Gulf states. Nevertheless, revenues from oil and gas account for about a third of GDP . The pursuit of a highly liberal, business friendly and market-oriented growth strategy continues to guide the evolution of economic development.

Abu Dhabi and Dubai together contribute about 80% of the UAE's income. Abu Dhabi accounts for more than half the country's GDP and plans to spend more than US$300 billion on infrastructure, tourist projects and energy-intensive industry hubs. Abu Dhabi's own GDP could still rise in 2009. Construction is the most dynamic industry in this part of the economy. The industry employs up to 700,000 foreign workers .

Key government entities, such as the Abu Dhabi National Oil Company, Dubai Ports Authority, and Dubai Aluminum Company, have massive investment plans to further increase the capacity of upstream activities in the petrochemicals sector, infrastructure in airports and ports, and new manufacturing plants in the metals sector.

Dubai aims to establish itself as the leading capital market for its region. Like other Gulf States, the UAE is trying to restrict the employment of foreign workers. As the number of foreigners grows, fears that they may demand more rights increases proportionally.

Categorized as a Tax Haven, the UAE offers tax incentives for individuals, along with the Jebel Ali Free Zone which offers business and tax incentives for corporations.

As part of its strategy to further expand its tourism industry, the UAE is building new hotels, restaurants and shopping centers, and expanding airports and duty-free zones. Dubai has probably been the most successful emirate in diversifying its economy; oil accounts for just 7% of GDP . Abu Dhabi has developed an offshore financial and commodity trade centre on Saadiyat Island, which includes storage facilities, a port, a freight centre and a financial and insurance centre to facilitate trading.

Yemen (top)

Yemen sits on the entrance to the Bab el-Mandeb strait, which links the Red Sea to the Indian Ocean. The strait is one of the busiest and most strategic shipping lanes in the world. Yemen has asserted traditional fishing rights to islands ceded to Eritrea.

A general sales tax has been implemented but applies to only a limited number of taxpayers. Tax exemptions are slowly being eliminated in preparation of a move to reduce the income tax rate.

Agriculture accounts for about 20% of GDP and employs a majority of the work force. The main agricultural products are fruits, vegetables, pulses, qat (a mildly narcotic shrub), coffee, cotton and livestock .