The Technology Small and Medium-sized Enterprises (SMEs) in Middle East Region
The Small and Medium-sized Enterprises (SMEs) are companies whose headcount or turnover falls below certain limits. What exactly an SME is depends on who’s doing the defining. Some uses the term SME to refer to businesses with fewer than 500 employees, while classifying firms with 500 or more employees as "large" businesses.
When discussing the Middle East, there are several regional breakdowns to consider. The Gulf Cooperative Council (GCC), includes Saudi Arabia, Bahrain, UAE, Qatar, and Oman. The larger area consisting of the Middle East and North Africais known as MENA.
The GCC is in a major transition - a dramatic and powerful shift on the new business formation is spurring the mass incubation of new SMEs all over the region. Dubaiis a dynamic place unmatched by other regions. Information and Communications Technology (ICT) is the prime example of activity fueling the SME growth, and its success has taken economical confidence to new heights.
Business Opportunities for International Corporation
Currently, GCC countries are offering golden business opportunities to the international firms. The business activities in the region are increasing at record pace every day. Dubaiis setting the standard, and every other country in the region wants to catch up with that trend.
Dubai International Exhibition Center, the largest convention center in the Middle East, has 365 days of bookings for major fairs, exhibitions and conferences. Millions of people are coming in to interact and form alliances. Exporters from all over the globe are converging in search of business opportunities in this rich region.
ICT Business Opportunities in the GCC
Saudi Arabia- ICT accounts for 45% of ICT spending in the GCC, according to IDC. This has prompted a number of regional and international companies to establish a Saudi market presence and pursue lucrative development opportunities in its ICT sector. Saudi Arabiaremains both a strong driver of the wider regional ICT market, with strong growth in both computer sales and associated services growing strongly led by high oil prices and strong spending in such lead sectors as banking, manufacturing automation, transportation, and telecommunications.
Overall, the value of the Saudi ICT market is estimated to rise to $3.8 billion by 2010. The Saudi government has also made significant investments in the country's communications sector. Planned mega projects include EconomicCity, which the government hopes will attract foreign investment, and make ICT a technology hub. In 2006, the Kingdom's desktop, notebook and software sales reached $1 billion. This was fuelled by rising Internet access across the region.
UAE - With development of the ICT sector a key element of the UAE government's economic development strategy, a number of major initiatives together with regional economic and trade liberalization ensure strong growth. The UAE government is encouraging the development of 'smart cities' - another regional hot point. ICT is expected that the total size of the UAE ICT market to increase from $1.3 billion in 2005 to around $2.6 billion in 2010, with the ICT services sector at the forefront of growth.
Recently, the UAE government announced that ICT is targeted 90% of businesses online by the end of 2007. One of the key non-oil sectors driving the economy is real estate, which is experiencing a massive investment boom in the past five years. Banking sector is one of the single largest industry vertical in terms of ICT investments over the next five years.
Kuwait - Kuwait has a high penetration of consumer technology and ambitious plans for digital integration. ICT is the 3rd largest information technology market in the GCC region. ICT is also the fourth most penetrated telecommunication market in the Middle Eastand has one of the highest revenues per customer in the region. The total size of the ICT market is expected to increase from $406 million in 2006 to around $875 million in 2010.
Kuwait government's diversification plan from oil revenues to non-oil sectors is in part being directed to the development of the country's ICT sector. The Kuwaitgovernment is also welcoming bids from local and foreign firms as ICT seeks to introduce a 3rd mobile operator in the region.
Qatar – The Qatar economic conditions provides strong support for ICT spending going forward. With high oil prices and growing economic diversification combined with growth in construction and real estate industries, we expect that Qatar's total ICT market to reach $270 million in 2007 and $398 million by 2010.
At the forefront of this growth will be the ICT services market, which is expected to surpass a value of $100 million by 2010. The financial services, communications, and oil industry sectors are expected to invest in ICT solutions to meet strategic objectives. Overall ICT market is expected to be around 9%, with high oil prices boosting the economy and encouraging future large-scale ICT investments and infrastructure developments. Measures to introduce telecommunications liberalization should provide a renewed boost to ICT development.
Qatar has the highest per capita income in the world and the ICT sector continues to grow particularly strongly, with software and ICT services 41% of total spending. Strong economic growth and the high price of oil should fuel spending by both public sector and private enterprises to bring their ICT levels up to international standards.
Oman - The US-Oman Free Trade Agreement (FTA) is expected to open the gateway to more ICT imports while local spending is also being boosted by the benefits of recent high oil prices and improved performance of the non-hydrocarbon economy. As a consequence of these developments, Omanis having increasing amount of vendors increasing their investment in direct presence in the Sultanate, attracted by the strong economic growth. Many are focused on the emerging SME sector, as well as opportunities created by telecom and e-government initiatives.
Oman remains one of the regions' more fledgling ICT markets. However, the government's emphasis on diversification is encouraging a wave of large infrastructure projects in sectors ranging from tourism to ports, with ICT as a key component. The total size of the ICT market is forecast to increase from $230 million in 2005 to $400 million in 2010. The government is stepping up the information society drive with implementation of a 'Towards Digital Oman' and e-government strategy, led by the National Committee on Information Technology.
Bahrain - With a projected ICT market of 6% in 2010, Bahrainis expected to continue to be a lucrative market for technology products and services, benefiting from FTA, strong demand from the financial sector, and government ICT procurements and broadband initiatives. Among some of the factors making Bahrainone of the region's more advanced markets is a robust and developing capital market underpinning financial hub and regional e-government leader status.
The prospects remain good for the ICT sector with the total size of the ICT market expected to increase from $231 million in 2005 to around $375 million in 2010, and software and services displaying the fastest growth. The government has stated its determination to invest budget surpluses associated from oil revenues in supporting its program of economic diversification, all of which will fuel demand for IT hardware, applications and services. Aside from government, and the oil and gas industry, the banking sector will account for a significant and growing portion of investment in IT.
Meanwhile, plans are underway to further open the telecom sector to competition. Recent legal changes allowing nationals from other GCC countries to own property in Bahrain, have also spurred on the booming real estate market in the country, creating opportunities for vendors to provide services. With ongoing initiatives to create a GCC free trade zone, similar benefits should be felt by other sectors.
A show of strength
All this suggests that the GCC countries are investing huge amounts in gearing up their ICT infrastructure in order to be at the forefront of the technology evolution cycle. IDC predicts that ICT spend across the region will rise from the current $30 billion to $45 billion by 2010.
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