Description
International financial are financial institutions that have been established by more than one country, and hence are subjects of international law. Their owners or shareholders are generally national governments, although other international institutions and other organizations occasionally figure as shareholders.
FINANCIAL STUDY ON INTERNATIONAL FINANCE - BUSINESS
Criteria
• • • • • • • • Starting a business, Obtaining construction permits Employing workers Registering property Getting credit Paying taxes Trading across borders Enforcing contracts
BACKGROUND INFORMATION
Lebanon:
Demographics
Region Income Category Population GNI Per Capita (US$) Middle East & North Africa Upper middle income 4,259,405 9,110
The capital, Beirut, is the largest city in Lebanon. In July 2011, the population of Lebanon was approximated to be 4,140,289. A large number of individuals of Lebanese descent live outside Lebanon in areas like Latin America, Australia and Brazil. Age structure consists of 23% of the population lies in between the ages of 0 and 14 years old, 68% lies in between 15 and 64 years old and 9% of the population is above 65 years old.
Education
Education in Lebanon is very crucial. 1.8% of the GDP is spent on education. Following secondary school, Lebanese students either choose to continue their educational path at a university, a college or a vocational training institute. The time period required to complete any of the program is dependent on the program chosen. Lebanon encompasses over forty nationally accredited universities, some of which are internationally recognized such as The American University of Beirut, which was one of the first universities to open in Lebanon. Lebanon is known for having the largest proportion of skilled labor among Arab States. However, although the Lebanese educational system presents a relatively high quality and international class of education, it seems that local employment markets lack adequate job opportunities, therefore encouraging a large percentage of the young and skilled to travel abroad. The Lebanese workforce mainly acquires jobs in the services sector which in turn amounts to around 67.3% of the annual Lebanese GDP. Nevertheless, reliance on sectors such as the tourism and banking sectors leaves the economy defenseless to political instability.
Economy
The Lebanese economy tends to be categorized as a laissez-faire economy. Not only does the government impose limited restrictions on the flow of capital across its borders, it also has minimal intervention in foreign trade. Despite the global recession, the Lebanese economy has been growing. The Banque du Liban projected read GDP growth to reach 4% in 2012 with a 6% inflation rate. However, the political instability in the Arab world, specifically Syria, is anticipated negatively affect the domestic business and economic environment. Tourism remains a large source of revenue to this day. Lebanon was named the number one travel destination worldwide by the New York Times due to its exclusive nightlife and well-known hospitality From a debt point of view, Lebanon faces major financial difficulties. It has an extremely high level of public debt and large external financing needs. It has been declared by the Finance minister Mr. Mohammad Chatah that the debt is valued at $47 billion in 2008 and would keep increasing if the privatization of the two telecom firms, Alfa and MTC touch, did not take place.
Language
Lebanon’s first language is the Arabic language. English and French tend to be used as secondary languages. English tends to be used very often when conducting business interactions. A minority also speaks the Armenian language.
Ranking (Internationally)
Topic Rankings DB 2013 Rank DB 2012 Rank Change in Rank Starting a Business 114 111 -3 Dealing with Construction Permits 172 161 -11
Topic Rankings Getting Electricity Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Resolving Insolvency
DB 2013 Rank DB 2012 Rank Change in Rank 47 46 -1 108 111 3 104 97 -7 100 98 -2 37 36 -1 95 94 -1 121 121 No change 131 131 No change
United Arab Emirates
Demographics
Region Income Category Population GNI Per Capita (US$)
Middle East & North Africa High income 7,890,924 40,760
The capital is Abu-Dhabi has around 666,000 individuals. In July 2012, the population of the United Arab Emirates was approximated to be 5,314,317. A large number of the population tends to be foreigners living in the UAE for business purposes. Age structure consists of 20.4% of the population lies in between the ages of 0 and 14 years old, 78.7% lies in between 15 and 64 years old and 0.9% of the population is above 65 years old. Al-Ain, Sharjah, and Dubai are some of the major cities in The UAE. Dubai is known to be the most populated city in the UAE, with around 1.7 million individuals. Approximately 88% of the population of it is urban, whereas the other 12% tend to be inhabitants of towns scattered throughout the country.
Education
The education system tends to be monitored by the Ministry of Higher Education. 1.2% of the country’s GDP is spent on education purposes. This in turn led to a decrease in the illiteracy rate in the UAE and is now accounting for only 7%. The launching of various programs and initiatives in order to improve the quality of education at schools and across the country has been done by the government.
Economy
The UAE has a somewhat open economy, consisting of one of the highest per capita incomes in the world and a sizable yearly trade surplus. Today, its GDP per capita is the seventeenth in the world and the second in the Middle Eastern region, following Qatar and Kuwait. Over half of UAE’s money is generated by the nation's capital, Abu Dhabi. Oil and natural gas exports are the base of the country’s economy, with more than 85% of it depending on this sector; hence it plays a major role in the country’s economic health.
Languages:
People living in the UAE tend to mainly speak the Arabic language. However, since there are large numbers of foreigners, other languages are spoken as well such as Hindi, Urdu, English and Persian.
Ranking (Internationally)
Topic Rankings DB 2013 Rank DB 2012 Rank Change in Rank Starting a Business 22 46 24 Dealing with Construction Permits 13 14 1 Getting Electricity 7 10 3 Registering Property 12 12 No change Getting Credit 83 80 -3 Protecting Investors 128 124 -4 Paying Taxes 1 7 6 Trading Across Borders 5 5 No change Enforcing Contracts 104 108 4 Resolving Insolvency 101 105 4
Criteria:
1- Starting a business Lebanon
Starting a business in Lebanon requires various procedures. To begin with, each newly formed business entails an attorney on an annual basis with a minimum annual payment of US $1500. Furthermore, the owners should deposit capital in a bank in
order to obtain the certificate of deposit. Registering the company is the next step, this takes place at the Ministry of justice, where the individual submits the a set of standardized documents consisting of the articles of association, commercial circulars and the minutes of the first general meeting of the partners, the registration application and a draft of the registration certificate to be issued, a document attesting the capital deposit, the partners identity cards or passport copies, and documents proving that the organization is entitled to occupy the premises where It will be exercising its activities. The total charge will amount to approximately US $1277 and will take around 3 days to be completed. Following the registration procedure, the company should submit a declaration to the ministry of finance within 2 months of its incorporation, so as to be subject to the income tax. Last but not least, registration at the national social security fund should take place. This is where a file for each new employee is submitted at the NSSF regional office. The whole procedure should not take longer than 10 days to be completed and should cost an estimated number of US $ 2800.
United Arab Emirates
Starting a business in the United Arab Emirates on the other hand tends to be less/more time consuming and costly. The first step would be reserving a company’s name, and submitting the company’s registration request to the department of economic development. Following the registration application submission, the company’s memorandum of association should be notarized in the department of economic development. The trade license, the Dubai chamber of commerce and industry membership should be obtained after filing the company documents with the department of economic development. This tends to take around 3 days and cost approximately US $ 1498. Finally, the last steps would be applying for the establishment card at the ministry of labor, registering any native workers at the ministry of labor and with the general authority for pension and social security. The whole procedure tends to take around 8 days and would cost roughly US $2097.
2- Dealing with Construction Permits
Lebanon
Dealing with construction permits tends to be a very time consuming and costly procedure especially in Lebanon. It consists of 19 steps. Firstly, the company should obtain two documents, a recent planning certificate and a topographic study. Furthermore, the company should attain an approval of file by the order of engineers and submit the building permit application to the urban development department. A pre-approval inspection should take place where the urban development department checks the property and the plans to ensure that they are consistent with the construction laws and regulations. Paying building permit taxes to municipality would follow the pre-approval inspection which in turn determines whether a building permit will be acquired or not. After obtaining the building permit, a starting order permit from the order of engineers should be attained and submitted to the police, and a request for inspection from the ministry of public works for water and sewage and telephone should be fulfilled. Furthermore, an occupancy permit should be applied for and approved by the order of engineers and the department of urban planning. Also, on-site inspection by urban development department should take place. Additionally, an occupancy permit, a water connection and a phone connection. Finally an onsite inspection from the ministry of finance should take place in addition to obtaining an estimate of leasing value of the warehouse. Following this procedure, the building should be registered with real estate registry. This process tends to cost around US $28577 and consume a little over 250 days.
United Arab Emirates
The process of obtaining a building permit in the United Arab Emirates is much easier compared to Lebanon. The procedure basically consists of 14 steps compared to the 19 steps it takes in Lebanon. Attaining all no objection certificates online through the road and transport authority is the first step. Obtaining civil defense approval and a building permit online from the building department of Dubai municipality is the next step. Furthermore, foundation work inspection from the building housing department of Dubai municipality and the civil defense should take place. Acquiring a building completion certificate and a building occupancy permit would comprise the next step. To finalize, inspection and approval from DEWA for septic tank installation, for final water supply and connection should be attained before building a septic tank if opted to. The whole procedure takes around 15 days and will cost around US $4216. Compared to Lebanon this process is less costly and requires less time to be approved.
3- Employment
Lebanon
Employment in Lebanon is not problematic due to the high level of skilled workers available. The minimum wage for a 19 year old worker amounts to a little below US $440 per month. The working hours range from 8 to 9 hours a day including Saturdays. Working hours tend to be very ridged for instance, premium for night work incase of continuous operation amounts to 0%, however, premium on work performed during rest days (Sundays in Lebanon) amounts to 50%.Also, there are no core
limitations on work performed during a weekly holiday or night work in case of continuous operations. Every worker is entitled to a paid annual leave of 15 days.
United Arab Emirates
Employment in the United Arab Emirates is slightly more problematic due to the lower level of education available. There is no fixed minimum wage for workers working in the UAE. The working hours range from 8 to 9 hours a day in normal months and 6 hours a day during the holy month of Ramadan. They tend to have the same level of rigidity as in Lebanon, for example, no premium is paid for night work incase of continuous operation amounts and a 50% premium is paid on work performed during rest days (Fridays in UAE). There are no core limitations on night work in case of continuous operations. However, unlike Lebanon there are limitations on work performed during weekly holidays. Every worker is entitled to a paid annual leave of 26 days.
4- Registering property
Lebanon
Registering property in Lebanon takes place at the land registry. It has the tendency to be somewhat time consuming, taking up to 50 working days and costing around US $800. Procedure is divided into eight steps. To begin with, one should obtain an updated real estate certificate, an official cadastral map, an urban plan certificate, an official estimate of the rental value of the property and a tax clearance. Preparation of the sale agreement should take place in the presence of an attorney and finally the application for registration at the land registry where the contract with the necessary documentation is presented.
United Arab Emirates
Registering property in the UAE on the other hand, is a less complicated procedure consisting of only 2 steps. This procedure is likely to take around 14 working days and cost around US $5921. The required documents are usually prepared by an escrow trust company and then registered at the customer service department.
5- Getting credit
Lebanon
In relation to getting credit to finance operations in Lebanon, positive or negative data on both the firm and the individuals credit history is available in the public credit registry and the private credit bureau. The depth of credit information score Lebanon received is 5 out of 6. As for the strength of legal rights score, Lebanon was got 3 out of 10.
United Arab Emirates:
Regarding the United Arab Emirates, getting credit was ranked slightly higher than Lebanon. Data on both the firms and the individual’s credit history is available in the public credit registry and the depth of credit information score UAE received is similar to the score Lebanon received, a 5 out of 6. As for the strength of legal rights score, UAE got a 4 out of 10 compared to the 3 Lebanon achieved.
6- Paying Taxes
Lebanon
Lebanon is ranked the 37th country in the world in terms of tax payment. The amount of yearly tax payments paid in Lebanon is equal to 19 tax payments. The total tax rate amount to 30.2% of the businesses profit and is divided into 6.1% profit tax and 24.1% Labor tax and contributions.
United Arab Emirates
The UAE is ranked the number one country in the world in terms of tax payment. The amount of yearly tax payments paid in the UAE is equal to 4 tax payments. Taxes and obligatory contributions on labor paid by the organization as a percentage of profits it equal to 14.1% yearly. Also, there is a small percentage listed as “Other taxes” which amounts to 0.8% of the company’s profits. Adding the mentioned taxes would equal the, the total tax rate which in turn equals to 14.9% and measures the amount of taxes or contributions paid by the business following the second year of operations. No taxes are paid on the profits the business generates yearly.
7- Trading Across Boarders
Lebanon
Trading across borders between Lebanon and foreign countries is ranked 95 th worldwide. Exports require 5 documents, 22 days to complete and US $1,080. Imports tend to require more paper work, 7 documents, 30 days to complete and around US $1400.
United Arab Emirates
Trading across borders between UAE and foreign countries is ranked 5 th worldwide, which indicates easier trading and less paper work than trading across borders in Lebanon. Exports require 4 documents, 7 days to complete and US $630. Imports tend to require more paper work, 5 documents, 7 days to complete and around US $590.
8- Enforcing Contracts
Lebanon
Internationally, Lebanon is ranked 121st in terms of enforcing contracts. It tends to take around 721 days compared to the average of 625 days it takes generally in the Middle East and North Africa. Cost amounts to around 31% of the claim and it generally takes around 37 procedures to complete compared to the average of 44 procedures across the Middle East and North Africa.
United Arab Emirates
On an international scale, UAE is ranked number 104 in relation to enforcing contracts. It usually takes around 524 days to complete in comparison to the 652 days it usually takes around the Middle East and North Africa. Costs fall around 20% of the claim and the process usually consists of 49 procedures to be completed successfully.
9- Resolving insolvency: Lebanon
Resolving insolvency in Lebanon tends to take up to 4 years with a cost of 22% of the estate. Recovery rate is equal to around 20.9 cents on the dollar compared to the average of 33.7 cents on the dollar in the Middle Eastern region.
United Arab Emirates:
Resolving insolvency in UAE on the other hand, tends to take less time, an average of 3 years usually. Also it costs less, with a percentage of 20 of the estate rather than 22%. And finally, recovery rate tends to be higher with 29.4 cents on the dollar. However, compared to the average recovery rate in the Middle Eastern and North American region this tends to be lower.
Conclusion
To sum up, each country suffers various market challenges. However, in terms of the ease of starting and conducting a business, it seems that the UAE provides easier, shorter and less costly procedures, and tends to tax less than Lebanon. Also, the running expenses such as electricity and phone usage are likely to be less in the UAE compared to in Lebanon. Furthermore, as a result of many complaints from foreign countries about obstructions such as high telecommunication charges, slow and unreliable internet services, and different interpretations of the law, Lebanon is ranked number 134 internationally on the corruption perception index. This in turn affects its ranking against other countries in relation to conducting business. The gulf region seems to provide all the necessary aid an individual needs in order to start and operate a business. It definitely seems less difficult and problematic to run a business in the UAE rather than in Lebanon due to many factors as discussed earlier. However, one disadvantage of running a business in the UAE region would be the lack of skilled local workers. If foreign workers are to be hired then this would most likely increase the costs due to paying higher wages and residency fees. Nevertheless, an individual interested in doing business in Lebanon, and that is willing to disregard the previously mentioned drawbacks, should appoint a Lebanese agent or distributor, due to the fact that he/she would be more familiar with the market and the market strategies used.
Bibliography
(n.d.). Retrieved from Doing Business: http://www.doingbusiness.org/data/exploreeconomies/lebanon/#enforcingcontracts (n.d.). Retrieved from Wikipedia: http://www.wikipedia.org/ (n.d.). Retrieved from Doing Business: http://www.doingbusiness.org/data/exploreeconomies/united-arabemirates/#resolving-insolvency (n.d.). Retrieved from PF: http://www.pkf.com/media/131854/doing %20business%20in%20the%20uae.pdf
doc_541136183.doc
International financial are financial institutions that have been established by more than one country, and hence are subjects of international law. Their owners or shareholders are generally national governments, although other international institutions and other organizations occasionally figure as shareholders.
FINANCIAL STUDY ON INTERNATIONAL FINANCE - BUSINESS
Criteria
• • • • • • • • Starting a business, Obtaining construction permits Employing workers Registering property Getting credit Paying taxes Trading across borders Enforcing contracts
BACKGROUND INFORMATION
Lebanon:
Demographics
Region Income Category Population GNI Per Capita (US$) Middle East & North Africa Upper middle income 4,259,405 9,110
The capital, Beirut, is the largest city in Lebanon. In July 2011, the population of Lebanon was approximated to be 4,140,289. A large number of individuals of Lebanese descent live outside Lebanon in areas like Latin America, Australia and Brazil. Age structure consists of 23% of the population lies in between the ages of 0 and 14 years old, 68% lies in between 15 and 64 years old and 9% of the population is above 65 years old.
Education
Education in Lebanon is very crucial. 1.8% of the GDP is spent on education. Following secondary school, Lebanese students either choose to continue their educational path at a university, a college or a vocational training institute. The time period required to complete any of the program is dependent on the program chosen. Lebanon encompasses over forty nationally accredited universities, some of which are internationally recognized such as The American University of Beirut, which was one of the first universities to open in Lebanon. Lebanon is known for having the largest proportion of skilled labor among Arab States. However, although the Lebanese educational system presents a relatively high quality and international class of education, it seems that local employment markets lack adequate job opportunities, therefore encouraging a large percentage of the young and skilled to travel abroad. The Lebanese workforce mainly acquires jobs in the services sector which in turn amounts to around 67.3% of the annual Lebanese GDP. Nevertheless, reliance on sectors such as the tourism and banking sectors leaves the economy defenseless to political instability.
Economy
The Lebanese economy tends to be categorized as a laissez-faire economy. Not only does the government impose limited restrictions on the flow of capital across its borders, it also has minimal intervention in foreign trade. Despite the global recession, the Lebanese economy has been growing. The Banque du Liban projected read GDP growth to reach 4% in 2012 with a 6% inflation rate. However, the political instability in the Arab world, specifically Syria, is anticipated negatively affect the domestic business and economic environment. Tourism remains a large source of revenue to this day. Lebanon was named the number one travel destination worldwide by the New York Times due to its exclusive nightlife and well-known hospitality From a debt point of view, Lebanon faces major financial difficulties. It has an extremely high level of public debt and large external financing needs. It has been declared by the Finance minister Mr. Mohammad Chatah that the debt is valued at $47 billion in 2008 and would keep increasing if the privatization of the two telecom firms, Alfa and MTC touch, did not take place.
Language
Lebanon’s first language is the Arabic language. English and French tend to be used as secondary languages. English tends to be used very often when conducting business interactions. A minority also speaks the Armenian language.
Ranking (Internationally)
Topic Rankings DB 2013 Rank DB 2012 Rank Change in Rank Starting a Business 114 111 -3 Dealing with Construction Permits 172 161 -11
Topic Rankings Getting Electricity Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Resolving Insolvency
DB 2013 Rank DB 2012 Rank Change in Rank 47 46 -1 108 111 3 104 97 -7 100 98 -2 37 36 -1 95 94 -1 121 121 No change 131 131 No change
United Arab Emirates
Demographics
Region Income Category Population GNI Per Capita (US$)
Middle East & North Africa High income 7,890,924 40,760
The capital is Abu-Dhabi has around 666,000 individuals. In July 2012, the population of the United Arab Emirates was approximated to be 5,314,317. A large number of the population tends to be foreigners living in the UAE for business purposes. Age structure consists of 20.4% of the population lies in between the ages of 0 and 14 years old, 78.7% lies in between 15 and 64 years old and 0.9% of the population is above 65 years old. Al-Ain, Sharjah, and Dubai are some of the major cities in The UAE. Dubai is known to be the most populated city in the UAE, with around 1.7 million individuals. Approximately 88% of the population of it is urban, whereas the other 12% tend to be inhabitants of towns scattered throughout the country.
Education
The education system tends to be monitored by the Ministry of Higher Education. 1.2% of the country’s GDP is spent on education purposes. This in turn led to a decrease in the illiteracy rate in the UAE and is now accounting for only 7%. The launching of various programs and initiatives in order to improve the quality of education at schools and across the country has been done by the government.
Economy
The UAE has a somewhat open economy, consisting of one of the highest per capita incomes in the world and a sizable yearly trade surplus. Today, its GDP per capita is the seventeenth in the world and the second in the Middle Eastern region, following Qatar and Kuwait. Over half of UAE’s money is generated by the nation's capital, Abu Dhabi. Oil and natural gas exports are the base of the country’s economy, with more than 85% of it depending on this sector; hence it plays a major role in the country’s economic health.
Languages:
People living in the UAE tend to mainly speak the Arabic language. However, since there are large numbers of foreigners, other languages are spoken as well such as Hindi, Urdu, English and Persian.
Ranking (Internationally)
Topic Rankings DB 2013 Rank DB 2012 Rank Change in Rank Starting a Business 22 46 24 Dealing with Construction Permits 13 14 1 Getting Electricity 7 10 3 Registering Property 12 12 No change Getting Credit 83 80 -3 Protecting Investors 128 124 -4 Paying Taxes 1 7 6 Trading Across Borders 5 5 No change Enforcing Contracts 104 108 4 Resolving Insolvency 101 105 4
Criteria:
1- Starting a business Lebanon
Starting a business in Lebanon requires various procedures. To begin with, each newly formed business entails an attorney on an annual basis with a minimum annual payment of US $1500. Furthermore, the owners should deposit capital in a bank in
order to obtain the certificate of deposit. Registering the company is the next step, this takes place at the Ministry of justice, where the individual submits the a set of standardized documents consisting of the articles of association, commercial circulars and the minutes of the first general meeting of the partners, the registration application and a draft of the registration certificate to be issued, a document attesting the capital deposit, the partners identity cards or passport copies, and documents proving that the organization is entitled to occupy the premises where It will be exercising its activities. The total charge will amount to approximately US $1277 and will take around 3 days to be completed. Following the registration procedure, the company should submit a declaration to the ministry of finance within 2 months of its incorporation, so as to be subject to the income tax. Last but not least, registration at the national social security fund should take place. This is where a file for each new employee is submitted at the NSSF regional office. The whole procedure should not take longer than 10 days to be completed and should cost an estimated number of US $ 2800.
United Arab Emirates
Starting a business in the United Arab Emirates on the other hand tends to be less/more time consuming and costly. The first step would be reserving a company’s name, and submitting the company’s registration request to the department of economic development. Following the registration application submission, the company’s memorandum of association should be notarized in the department of economic development. The trade license, the Dubai chamber of commerce and industry membership should be obtained after filing the company documents with the department of economic development. This tends to take around 3 days and cost approximately US $ 1498. Finally, the last steps would be applying for the establishment card at the ministry of labor, registering any native workers at the ministry of labor and with the general authority for pension and social security. The whole procedure tends to take around 8 days and would cost roughly US $2097.
2- Dealing with Construction Permits
Lebanon
Dealing with construction permits tends to be a very time consuming and costly procedure especially in Lebanon. It consists of 19 steps. Firstly, the company should obtain two documents, a recent planning certificate and a topographic study. Furthermore, the company should attain an approval of file by the order of engineers and submit the building permit application to the urban development department. A pre-approval inspection should take place where the urban development department checks the property and the plans to ensure that they are consistent with the construction laws and regulations. Paying building permit taxes to municipality would follow the pre-approval inspection which in turn determines whether a building permit will be acquired or not. After obtaining the building permit, a starting order permit from the order of engineers should be attained and submitted to the police, and a request for inspection from the ministry of public works for water and sewage and telephone should be fulfilled. Furthermore, an occupancy permit should be applied for and approved by the order of engineers and the department of urban planning. Also, on-site inspection by urban development department should take place. Additionally, an occupancy permit, a water connection and a phone connection. Finally an onsite inspection from the ministry of finance should take place in addition to obtaining an estimate of leasing value of the warehouse. Following this procedure, the building should be registered with real estate registry. This process tends to cost around US $28577 and consume a little over 250 days.
United Arab Emirates
The process of obtaining a building permit in the United Arab Emirates is much easier compared to Lebanon. The procedure basically consists of 14 steps compared to the 19 steps it takes in Lebanon. Attaining all no objection certificates online through the road and transport authority is the first step. Obtaining civil defense approval and a building permit online from the building department of Dubai municipality is the next step. Furthermore, foundation work inspection from the building housing department of Dubai municipality and the civil defense should take place. Acquiring a building completion certificate and a building occupancy permit would comprise the next step. To finalize, inspection and approval from DEWA for septic tank installation, for final water supply and connection should be attained before building a septic tank if opted to. The whole procedure takes around 15 days and will cost around US $4216. Compared to Lebanon this process is less costly and requires less time to be approved.
3- Employment
Lebanon
Employment in Lebanon is not problematic due to the high level of skilled workers available. The minimum wage for a 19 year old worker amounts to a little below US $440 per month. The working hours range from 8 to 9 hours a day including Saturdays. Working hours tend to be very ridged for instance, premium for night work incase of continuous operation amounts to 0%, however, premium on work performed during rest days (Sundays in Lebanon) amounts to 50%.Also, there are no core
limitations on work performed during a weekly holiday or night work in case of continuous operations. Every worker is entitled to a paid annual leave of 15 days.
United Arab Emirates
Employment in the United Arab Emirates is slightly more problematic due to the lower level of education available. There is no fixed minimum wage for workers working in the UAE. The working hours range from 8 to 9 hours a day in normal months and 6 hours a day during the holy month of Ramadan. They tend to have the same level of rigidity as in Lebanon, for example, no premium is paid for night work incase of continuous operation amounts and a 50% premium is paid on work performed during rest days (Fridays in UAE). There are no core limitations on night work in case of continuous operations. However, unlike Lebanon there are limitations on work performed during weekly holidays. Every worker is entitled to a paid annual leave of 26 days.
4- Registering property
Lebanon
Registering property in Lebanon takes place at the land registry. It has the tendency to be somewhat time consuming, taking up to 50 working days and costing around US $800. Procedure is divided into eight steps. To begin with, one should obtain an updated real estate certificate, an official cadastral map, an urban plan certificate, an official estimate of the rental value of the property and a tax clearance. Preparation of the sale agreement should take place in the presence of an attorney and finally the application for registration at the land registry where the contract with the necessary documentation is presented.
United Arab Emirates
Registering property in the UAE on the other hand, is a less complicated procedure consisting of only 2 steps. This procedure is likely to take around 14 working days and cost around US $5921. The required documents are usually prepared by an escrow trust company and then registered at the customer service department.
5- Getting credit
Lebanon
In relation to getting credit to finance operations in Lebanon, positive or negative data on both the firm and the individuals credit history is available in the public credit registry and the private credit bureau. The depth of credit information score Lebanon received is 5 out of 6. As for the strength of legal rights score, Lebanon was got 3 out of 10.
United Arab Emirates:
Regarding the United Arab Emirates, getting credit was ranked slightly higher than Lebanon. Data on both the firms and the individual’s credit history is available in the public credit registry and the depth of credit information score UAE received is similar to the score Lebanon received, a 5 out of 6. As for the strength of legal rights score, UAE got a 4 out of 10 compared to the 3 Lebanon achieved.
6- Paying Taxes
Lebanon
Lebanon is ranked the 37th country in the world in terms of tax payment. The amount of yearly tax payments paid in Lebanon is equal to 19 tax payments. The total tax rate amount to 30.2% of the businesses profit and is divided into 6.1% profit tax and 24.1% Labor tax and contributions.
United Arab Emirates
The UAE is ranked the number one country in the world in terms of tax payment. The amount of yearly tax payments paid in the UAE is equal to 4 tax payments. Taxes and obligatory contributions on labor paid by the organization as a percentage of profits it equal to 14.1% yearly. Also, there is a small percentage listed as “Other taxes” which amounts to 0.8% of the company’s profits. Adding the mentioned taxes would equal the, the total tax rate which in turn equals to 14.9% and measures the amount of taxes or contributions paid by the business following the second year of operations. No taxes are paid on the profits the business generates yearly.
7- Trading Across Boarders
Lebanon
Trading across borders between Lebanon and foreign countries is ranked 95 th worldwide. Exports require 5 documents, 22 days to complete and US $1,080. Imports tend to require more paper work, 7 documents, 30 days to complete and around US $1400.
United Arab Emirates
Trading across borders between UAE and foreign countries is ranked 5 th worldwide, which indicates easier trading and less paper work than trading across borders in Lebanon. Exports require 4 documents, 7 days to complete and US $630. Imports tend to require more paper work, 5 documents, 7 days to complete and around US $590.
8- Enforcing Contracts
Lebanon
Internationally, Lebanon is ranked 121st in terms of enforcing contracts. It tends to take around 721 days compared to the average of 625 days it takes generally in the Middle East and North Africa. Cost amounts to around 31% of the claim and it generally takes around 37 procedures to complete compared to the average of 44 procedures across the Middle East and North Africa.
United Arab Emirates
On an international scale, UAE is ranked number 104 in relation to enforcing contracts. It usually takes around 524 days to complete in comparison to the 652 days it usually takes around the Middle East and North Africa. Costs fall around 20% of the claim and the process usually consists of 49 procedures to be completed successfully.
9- Resolving insolvency: Lebanon
Resolving insolvency in Lebanon tends to take up to 4 years with a cost of 22% of the estate. Recovery rate is equal to around 20.9 cents on the dollar compared to the average of 33.7 cents on the dollar in the Middle Eastern region.
United Arab Emirates:
Resolving insolvency in UAE on the other hand, tends to take less time, an average of 3 years usually. Also it costs less, with a percentage of 20 of the estate rather than 22%. And finally, recovery rate tends to be higher with 29.4 cents on the dollar. However, compared to the average recovery rate in the Middle Eastern and North American region this tends to be lower.
Conclusion
To sum up, each country suffers various market challenges. However, in terms of the ease of starting and conducting a business, it seems that the UAE provides easier, shorter and less costly procedures, and tends to tax less than Lebanon. Also, the running expenses such as electricity and phone usage are likely to be less in the UAE compared to in Lebanon. Furthermore, as a result of many complaints from foreign countries about obstructions such as high telecommunication charges, slow and unreliable internet services, and different interpretations of the law, Lebanon is ranked number 134 internationally on the corruption perception index. This in turn affects its ranking against other countries in relation to conducting business. The gulf region seems to provide all the necessary aid an individual needs in order to start and operate a business. It definitely seems less difficult and problematic to run a business in the UAE rather than in Lebanon due to many factors as discussed earlier. However, one disadvantage of running a business in the UAE region would be the lack of skilled local workers. If foreign workers are to be hired then this would most likely increase the costs due to paying higher wages and residency fees. Nevertheless, an individual interested in doing business in Lebanon, and that is willing to disregard the previously mentioned drawbacks, should appoint a Lebanese agent or distributor, due to the fact that he/she would be more familiar with the market and the market strategies used.
Bibliography
(n.d.). Retrieved from Doing Business: http://www.doingbusiness.org/data/exploreeconomies/lebanon/#enforcingcontracts (n.d.). Retrieved from Wikipedia: http://www.wikipedia.org/ (n.d.). Retrieved from Doing Business: http://www.doingbusiness.org/data/exploreeconomies/united-arabemirates/#resolving-insolvency (n.d.). Retrieved from PF: http://www.pkf.com/media/131854/doing %20business%20in%20the%20uae.pdf
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