A is for Amman: An Alternative Middle East business hub
For companies looking to enter new markets in a region, the choice of regional base or hub is an important one. A wisely chosen regional base acts as a springboard to other regional markets, a distribution centre, source of market intelligence and gives you a local address, which can provide an edge compared to those trying to access from a distance.
In the MENA region, Dubai has emerged in the past twenty years as the leading regional Middle East business hub. It has developed outstanding global transport links, logistics facilities, tax free zones and a supply chain for ancillary goods and services. But, Dubai is no longer the only choice as a regional hub and other cities are emerging as rivals driven in part by the need for economic diversification and in part by regional developments. Some cities such as Manama in Bahrain have long acted as regional hubs, especially for financial services. Oman is investing in port facilities in Salalah and Sohar to compete with Jebel Ali in Dubai. The boycott of Qatar by three of its Gulf neighbours and Egypt has closed access to Jebel Ali and forced it to seek new trade routes through Omani ports.
Elsewhere in the region, Beirut and Amman, two cities I visited recently, have aspirations to act as regional hubs. In the case of Beirut, it is attempting to re-assert its past role. Before Dubai, there was Beirut. In the 1950s and 1960s, it was the region’s transport and logistics hub. It was a convenient re-fuelling point for flights heading to and returning from Asia and Australia. Its Mediterranean port gave access via overland routes to the region. The Lebanese civil war and technology (e.g. planes able to fly further) forced it to relinquish its place and Dubai spotted an opportunity. Since the end of the civil war in the early 1990s, Beirut has rebuilt its infrastructure and has regained a little of its role as a financial and trading centre. The city (and Lebanon as a whole) has regained some of its political stability, but this remains fragile, especially under the burden of refugees from the Syrian crisis. Beirut’s position near regional trouble spots and its more liberal approach than many other states in the region, means it has become a magnet for non-government organisations, development professionals and journalists. So companies that serve those categories of customers should consider the opportunities that Beirut offers.
The Jordanian capital Amman is also a city that has a lost a role (in fact two roles) and is trying to find a new one, with some success, especially on the trade front. Amman traditionally acted as a bridge between its fellow Arab states and Israel with which it maintained relations, even before its 1994 peace treaty. Jordan also acted as a gateway to companies doing business with Iraq and thrived on the back of this trade. Over the past few years, both roles have become redundant. Other Arab states, particularly in the Gulf have opened direct contact with Israel. Qatar and Oman have done so with some openness while Saudi Arabia has done so covertly. The need for Jordan to act as an intermediary has gone. The conflict in Iraq sparked by the rise of so-called Islamic State (Daesh) has deterred investment and trade in Iraq.
There are signs that Amman is poised once again to act as Iraq’s bridge to the wider world. The success of the anti-Daesh campaign has sparked hopes in Amman that Jordan will benefit from renewed interest from international companies in doing business in Iraq. These hopes are starting to take concrete form. There are plans to upgrade the Amman-Baghdad highway, a vital artery for the flow of goods and people. These plans are more advanced on the Iraqi side, where new security measures and toll collecting facilities will be put in place. There is also a planned pipeline connecting the southern oilfields with Jordan’s only port, Aqaba on the Red Sea. In Amman itself, new hotels are being built in anticipation of the influx of business visitors. The city already boasts good infrastructure, including IT infrastructure and expertise and regional air transport links. Jordan has long had regulations in place to incentivise companies to use it as a regional base. Service companies, especially in the IT sector, find it increasingly attractive due to access to well trained local engineers and lower costs. The Kingdom is also emerging as a regional centre for the manufacture of solar panels and provision of associated engineering skills. On top of that, there are also opportunities in mega-projects as Jordan seeks investment to upgrade its roads and water infrastructure. The Red Sea to Dead Sea canal, long an aspiration of those seeking a peace dividend in the region, is back on the agenda as a serious project.
So, companies seeking a regional base in the Middle East should think carefully about their needs and which markets they want to service. They would be wise to look at some of the less obvious regional centres. These may offer lower costs and specialist skills along with good transport links and tax incentives. At the same time, choosing a different regional base to your competitors could help you stand out from the crowd and spot the business opportunities from a different perspective.
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Author: Michael Barron
Michael Barron has more than 25 years experience analysing, living and working in the Middle East and North Africa including engagement at the highest levels of government. He has more than 12 years experience working as a government and public affairs manger for the major gas company BG Group with assignments in Egypt, Oman and on the Gaza Marine project. He also has an in depth knowledge of transparency issues, particularly the Extractive Industry Transparency Initiative (EITI) and EU legislation in this area. Michael studied Arabic at the University of Edinburgh, including spending time in Cairo. He has also worked for Middle East Broadcasting, Control Risks Group and Eurasia Group. Michael has particular expertise in country entry (and exit) and navigating through complex political situations.