Oman Economic Forum - iktissadevents.com Strolla.pdf · 6 Deloitte PowerPoint timesaver – March...
Transcript of Oman Economic Forum - iktissadevents.com Strolla.pdf · 6 Deloitte PowerPoint timesaver – March...
Al Bustan Palace, Muscat March 18th, 2014
Oman Economic Forum
Investing in Oman
2
Presentation Overview
Oman Overview
Global and Regional Investment Trends in the Omani Context
Investment Incentives in Oman
Sectors and Industries Driving Inward Investment
Where to Invest in Oman?
3 Deloitte PowerPoint timesaver – March 2011
Oman Overview
4
Geographic Advantages
• Located on the axis of the GCC, Asia and Africa on the Indian Ocean
• More centrally located than Persian Gulf, 2 days closer than UAE or KSA
• Direct trade routes to growing GCC market as well as India and Africa
• Resource abundant (oil, natural gas, copper, marble, limestone, gypsum, chromium)
Modern Infrastructure
Political & Economic Stability
Favorable Business
Environment
• Continued political stability since 1970- WEF rated
top 10 most secure countries • Total population of 3.7 million including approx. 1.5
million expatriate • Strong Economic Growth (GDP growth of 5% in
2012 and 2013) • National economy based on the principles of justice
and the free market • Large trends towards privatization, even in public
goods such as utilities • Low public debt (3% of GDP) and low inflation
• Ranked above regional average in Economic Freedom, Ease of Doing Business, Transparency and Economic Competitiveness
• 3 Free Zones and 9 Industrial Estates • WTO member, TRIPS (IP) • World Intellectual Property Organization (WIPO) • 7th out of 144 nations in Gov’t services for
improved business performance (WEF)
• $34bn allocated for infrastructure 2011-2016 • Project spending of $7bn per on average year over the
last decade • 4 new airports and 2 expansions (2014) • 5 large-scale modern ports with accompanying logistics
and industrial zones • $15bn rail project to connect 9 cities to GCC • Over $3bn will go into improving connectivity through
highways
Oman - Overview
Oman is the ideal location for businesses looking for a stable vantage point to access the booming
Middle East, African and Asian markets
5
Economic Freedom Index
59.6 60.6
61.8
68.1
545658606264666870
World Avg. Saudi Arabia Regional Avg. Oman
WEF Global Competitiveness Rankings 2012-2013
Indicator Rank/144
Macroeconomic Environment
5
Gov’t services for improved business performance
7
Protection of minority shareholders interest
14
Quality of infrastructure 20
Ease of access to loans 11
Indicator Oman MENA OECD
Procedures (number) 5 8 5
Time (days) 8 23 12
Cost (% of income per capita) 2.6 29.8 4.5
Starting a Business in Oman
Oman in International Rankings
Oman has earned top rankings in the international community on competitiveness, economic
freedom, and doing business indicators, while maintaining multiple cost advantages
6 Deloitte PowerPoint timesaver – March
2011
Global and Regional Investment
Trends in the Omani Context
7
Investing in Oman – The Regional Context
While the Middle East & Africa region has witnessed recent declines in foreign direct investment activity, Oman has been able to defy the trend, boasting notable growth in FDI activity
12%
43%
49%
23% 5%
Decline in the # of FDI projects into the region
Decline in capital investment
Decline in job creation
As a result of the economic and political turmoil caused by the global recession and the Arab Spring, the MEA region saw a marked decline in investment
Source: fDi Intelligence, Financial Times Limited
FDI in the MEA Region, 2012 FDI in Oman, 2012
Increase in the # of FDI projects into Oman
Oman’s regional market share of FDI, up from 3%
9% Compound annual growth
rate of FDI into Oman 2009-2012
Oman proved to be an exception, as it has attracted new investors and taken new market share in the region
Source: Oman National Centre for Statistics and Information
8
23.6 21.0 17.1
13.5
6.5 5.9
5.5
5.1
30.0 26.9
22.6
18.6
2012201120102009
Foreign Investment as a Growth Driver in Oman
Oman’s economy has exhibited high double digit annual growth since 2009, partially due to inflows of foreign investment. This trend will likely increase with the coming infrastructure and Free Zone expansions
Source: Oman National Centre for Statistics and Information, Foreign Investment Report (June 2013)
Contribution of Foreign Direct Investment to GDP, OMR
21% 22% 24% 27% FDI as % of GDP
GDP from FDI
GDP excluding FDI
9 Deloitte PowerPoint timesaver – March 2011
Investment Incentives in Oman
10
Recent Improvements in the Omani Landscape
Strong government spending and an improved business climate are both factors driving investors to Oman
Political & Economic Stability
• Top-10 most secure countries (WEF – 2013/2014) • Top-5 favorable macroeconomic conditions (WEF – 2013/2014) • 5% economic growth in 2012 • Strong government spending and privatization efforts
Improvements in the Business Environment
• 7th in Gov’t services for improved business performance (WEF – 2013/2014) • Rated by the World Bank above regional average in:
- Economic Freedom and Economic Competitiveness - Ease of Doing Business and Transparency
Government Incentives
• 9 industrial estates with fully developed plots available at nominal charges • Subsidized utility charges for manufacturing facilities • 5-year tax holiday on profits • 5-year import duty holiday on machinery, spare parts and raw materials
11
The Changing Landscape – Key Infrastructure Investments
Roads: Highway access to GCC markets $1.1 billion worth of contracts
awarded in 2011 in Oman for the road sector to develop modern transport infrastructure
Rail: $15bn investment program to
develop a national railway ‘Oman Rail’: A 2,244-km rail
network being built to link major ports, industrial areas, free zones at Sohar, Salalah, Duqm & GCC
Airports: Expansions (passenger capacity/yr): Muscat: 12 Mn Salalah: 2 Mn Airports in construction (passenger capacity/ yr): Sohar: 500K Duqm:500K Ras al Hadd: 500K Adam: 250K
Major developments in shipping, air transport, rail connectivity and road transit is turning Oman into a transport and logistical hub for the region
6182
3207
1305
0
2000
4000
6000
8000
Airports Roads Ports
Planned & Projected Transport Spending (USD Mn) 2011-2015* (Total spending for 2011-2015 is estimated at USD 78bn)
12
Oman has 7 ports in total, taking advantage of its coastline along the Strait of Hormuz, Arabian Sea and Greater Indian Ocean
The Changing Landscape – Port Infrastructure
Port of Khasab: A small harbor in the Musandam area for tourism and trade
Port of Sohar: A growing port servicing the Metals, Agro-bulk, Food Processing, Logistics and Petrochemicals industries
Port of Mina Al Fahal: Operated by PDO; it has an oil processing facility
Port Sultan Qaboos: Muscat’s main port currently being re-outfitted to focus mainly on tourism
Port Qalhat: This port and LNG terminal near Sur is owned by Oman LNG
Port of Duqm: Oman’s newest port city will serve the oil and gas industry as well as fisheries, logistics and industry
Port of Salalah: Handles processing, warehousing, re-export and logistics; fasted transit times to Europe and Asia
Iran
Qatar
Saudi Arabia
Egypt
UAE
Oman
Iraq
Turkey
Syria Cyprus
Lebanon
Bahrain
13
Connecting to the World through Oman
Located on the strategic axis of the Indian Ocean and Persian Gulf, Oman boasts accessible trade routes and fast transport times to the worlds most attractive emerging markets
• Regional Market worth more than 5 trillion USD and global reach to 1.2 trillion of imports
• On main international shipping routes within 2 weeks of major ports
• Modern infrastructure transport facilities and business environment connected to key markets in India and East Africa
• Abundant and competitive access to natural resources, energy, financing and labor
14
49
618
220 210
372
54
653
241 228
427
58
684
260 245
485
GCC SE. Asia W. Asia N.Africa E. Africa
2013 2018 2023
Investing in Growing Regional Markets Within close proximity to Oman, neighboring regions account for 21% of the world’s population 15% of total world imports, both of which continue to grow above global averages
Combined account
for c.21% of the world
population
Population forecasts at Oman’s neighboring regions, millions (2013-2023)
318
727 557
159 52
350
953
644
179 61
427
1,153
787
195 74
488
1,220
849
218 83
GCC SE. Asia W. Asia N.Africa E. Africa
2009 2010 2011 2012Combined
account for c.15%
of the world
imports
Imports by Oman’s neighboring regions, USD billion (2009-2012)
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Deloitte PowerPoint timesaver – March 2011
Which Sectors are Driving Inward Investment?
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World Economy Total FDI
Which Sectors are Driving Regional and Global Investment?
Globally manufacturing, business and finance are driving FDI, which is true in developed and developing economies
23% 23% 20%
9% 9%
4% 4% 3% 3% 1%
3%
Man
ufa
ctu
rin
g
Bu
sin
ess
Act
ivit
es
Fin
anci
al In
t.
Oil
& G
asEx
plo
rati
on
Trad
e
Uti
litie
s
Un
spec
ifie
d
Re
al E
stat
e &
Co
nst
ruct
ion
Tran
spo
rt
Ho
tels
&R
est
aura
nts
Oth
er (
less
than
1%
)
Developed 22% 21% 27% 6% 8% 4% 5% 2% 2% 0% 2%
Developing 25% 24% 13% 11% 8% 3% 2% 4% 4% 1% 4%
Transition 18% 22% 11% 17% 17% 2% 0% 4% 5% 0% 4%
Oman (2012) 21% >1% 14% 48% 3% >1% N/A 6% 3% 3% 2%
Source: UN conference on trade and development, Estimated world inward FDI flows, by sector and industry 2009-2011, (2013); Oman National Centre for Statistics and Information, Foreign Investment Report (June 2013)
Global FDI contribution by sector, % (2009-2011)
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Foreign Investment into Omani Industries
While Oil & Gas still accounts for the highest percentage of foreign direct investment, the fastest growing sectors are manufacturing, transport and tourism
0
500
1,000
1,500
2,000
2,500
3,000
Oil
& G
asEx
plo
rati
on
Man
ufa
ctu
rin
g
Fin
anci
al In
t.
Re
al E
stat
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Co
nst
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ion
Trad
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Tran
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rt
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est
aura
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Oth
er
2009 2010 2011 2012
1.3% 9.4%
9.4% 8.9%
4.9%
13.4%
Source: Oman National Centre for Statistics and Information, Foreign Investment Report (June 2013)
2% 3% 14% 48% % of FDI 2012
21% 6% 3% 3%
FDI growth and Contribution by Sector
11.7%
18.5%
High growth sectors
18
4.85
5.08
5.19
5.32
5.4
4.5
4.75
5
5.25
5.5
2007 2008 2009 2010 2011
Growing Sectors for Investment: Logistics
The country’s vision is to become the main logistics gateway in the region, capitalizing on its strategic location on the Indian Ocean and numerous ports and airports
Oil & Gas, Infrastructure and Trading industry segments are the leading contributors for the logistics sector in the region
Note: WEF (1-Extremely underdeveloped to 7- Well developed and efficient by international standards )
Quality of Port Infrastructure in Oman
As a result of Oman’s ongoing port upgrades, the World Bank annual Port Infrastructure survey has consistently increased Oman’s rating between 2007 and 2011, a trend which is likely to continue
Source: Datamonitor
Government policy has stressed the desire for more Public Private Partnerships (PPP) with foreign firms with expertise and technology
This has prompted major multinational logistics players such as DHL, TNT and Agility to establish freight forwarding and international transport operations in the GCC
Oman, Saudi Arabia and the UAE account for around 85% of the GCC Logistics sector, estimated to be worth around USD35 bn (~6% of the global logistics market)
19
In Oman, various tourism expansion plans include increased in hotel capacity, a conference center and plans to transform Muscat's port as a hub for tourists and cruise liners
Growing Sectors for Investment: Tourism
0.97 1.04 1.05
1.10 1.18
1.26
1.36
1.46
0.0
0.5
1.0
1.5
2010 2011 2012 2013 2014 2015 2016 2017
Business Monitor International estimates that Oman’s tourist arrivals is expected to reach 1.5 million by 2017, a 36% increase over 2013 tourist arrivals
Visitors’ spend in Oman is expected to grow by 6.5% annually until 2023 to reach USD 3.2bn, from 2012’s USD 1.6bn
Tourist Arrivals in Oman 2010 – 2017 (millions)
The World Economic Forum (WEF), estimates that Oman's Travel & Tourism market is projected to exhibit 5.2% average growth between 2013-22
Travel & Tourism contribution to GDP is estimated to nearly double over the next decade to 10bn by 2022
Oman has consistently improved its ranking in Travel and Tourism Competitiveness Report , jumping 11 spots from 2009-2012
20
Opportunities for Investment: Food Processing
Rising income together with a growing population in in the GCC will contribute to increased food consumption for the region, making food processing an attractive investment opportunity
Sources: Alpen Capital, GCC Food Industry, 2013; WESGRO, Oman Food & Beverages Sector Fact Sheet
• Imports account for ~80% of Oman’s total food needs
• Food imports to Oman and the GCC are expected to double over the next decade
• The region has made food production and security a strategic priority
Agro-processing developments in Oman:
42.1 43.6
46.3 49.1
2012E 2013E 2015E 2017E
GCC Food Consumption
28.4 36.3
53.1
2011E 2015E 2020E
GCC food import estimates (US $ bn)
$200mn sugar processing plant in Sohar, scheduled to open in 2016, using unprocessed sugar from Brazil, Thailand, India and Australia
$250mn to develop an integrated fisheries center at Duqm’s Special Economic Zone
Development of an agro-bulk terminal to facilitate exports and handle grains, agro-commodities, sugar and other food-related cargo
21
Opportunities for Investment: Construction Equipment
2.9%
4.7%
4.8%
5.1%
6%
8.3%
North America
Central & South America
Eastern Europe
Western Europe
Africa/Middle East
Asia/Pacific
Construction equipment demand – growth rates (2012-2017F)
0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
2011 2012e 2013f 2014f 2015f 2016f
Co
nst
ruct
ion
ind
ust
ry %
of
GD
P
Co
nst
ruct
ion
ind
ust
ry v
alu
e
USD
bn
Estimated construction growth – Oman
Construction industry value, USD bn Construction industry, % of GDP
Source: Deloitte Construction Report; Alpen Capital
Increased spending on construction and infrastructure projects in the GCC is driving demand for construction equipment in the region
The Global Construction Equipment market is expected to grow at a 6% over the next few years, reaching nearly USD 200 bn by 2017
Global manufacturers can supply the growing GCC and African construction markets from industrial and free zones in Oman
The heavy construction equipment segment accounts for the majority of the market share
Material handling equipment is the fastest growing segment and is estimated to grow at 7% over the next 3 years
22
Foreign Investment Overview - Foreign Investors who have Chosen Oman A host of international companies that are leaders in their industries have already selected Oman as a premiere location for their businesses
Transport
Tourism
Foreign Investors in Oman
Manufacturing
Agriculture & Fisheries
Healthcare
Retail
Utilities & Env.Technol.
ICT &Telecoms Education
Construction
Insurance & Financial Services
Energy
Note: MOU for a future project
GE has been active in Oman for 4 decades
SMI Steelmor
23
Deloitte PowerPoint timesaver – March 2011
Where to Invest in Oman?
24
Investment Opportunities – Free Zones
Strategic Location: Fastest transit times to Europe and Asia Incentives: Free Zone benefits with 100% foreign ownership, 0% customs, 0% taxes Opportunities: Chemical and Material Processing, Manufacturing and Assembly, Logistics and Distribution
Duqm Special Economic Zone: Largest free economic zone in the Middle East Integrated Zone: Sea port, industrial area, new town, fishing harbor, tourist zone, logistics center, education and training zone Opportunities: Oil & Gas and Mineral Extraction & Processing
Al Rusayl Industrial Zone: Well established zone (since 1983) undergoing capacity expansion Barka Logistic Hub: Large-scale logistics hub to serve the Muscat capital area Muscat Port: Government intends to transform Muscat’s port to a tourism hub
Strategic Location: Industrial port outside the Strait of Hormuz which reduces insurance premiums Connectivity: Connected to Muscat & GCC countries; will receive Muscat’s cargo and industry Opportunities: Metal Steel, Agro-bulk, Food Processing, Logistics and Petrochemicals
Duqm
Muscat Sohar
Salalah
UAE
KSA
Yemen
Gulf of
Oman
Arabian
Sea
Strait of
Hormuz
Salalah
Muscat
Duqm
Sohar
Oman offers business numerous advantages in any of its Free Zones or Industrial Estates
25
Deloitte PowerPoint timesaver – March 2011
Thank You (Q&A)
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence. Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities. About Deloitte & Touche (M.E.): Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence for over 85 years. Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with over 2,500 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region (International Tax Review World Tax 2010, 2011 and 2012 Rankings) and was recognized as the 2010 Best Consulting Firm of the Year in the Complinet GCC Compliance Awards. In 2011, the firm received the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).
27
Deloitte PowerPoint timesaver – March 2011
Annex: The Omani Investment Promotion
Roadshow to the United States
28
Overview of the MoCI Roadshow Objectives
The purpose of developing this study was to provide analysis into Oman’s economic sectors and identify targeted opportunities for investment by American companies
Following up the United States-Oman Free Trade Agreement which went in to effect in 2009, the Ministry of Commerce and Industry in Oman decided to embark on a roadshow to the US.
The purpose of this roadshow is threefold, mainly:
Branding Oman as a Place to do Business
Promoting Investment in target non-oil sectors
Improving Quality by attracting talent and
technology
Introducing Oman to the US market and emphasizing the
mutual benefits of investing in Oman, using the FTA and other
relevant incentives
Attracting American investment in key non-oil sectors to
encourage growth and economic diversification in accordance with
Omani development plans
Increasing the exchange of technology and expertise
between countries to broaden the capabilities of the Omani workforce and improve goods
and service offerings
In preparation for the Roadshow, MoCI in collaboration with Deloitte conducted a study of Oman’s economic sectors to identify optimal opportunities for investment from the US.
29
Process of Selecting Investment Opportunities
Before selecting the investment opportunities, MoCI undertook four key steps to understand the prospects for attracting investment into Oman, as well as the current investment landscape
1) Conducted Analysis: To asses the current investment landscape in Oman and identify future opportunities, we analyzed available data and information on Oman’s economic sectors
2) Developed Report: The results of each sector study were documented in a report which provides comparable and relevant information for decision-making based on a framework for investment selection
3) Consulted Stakeholders: The MoCI - Deloitte team met with nearly 20 stakeholders throughout Oman to discuss investment opportunities and ensure that the analysis is reflective of current and planned initiatives in the Sultanate
4) Scored Results: To synthesize the study and provide a quantitative view of the sector results, we scored each sector according to: benefits to Oman, alignment with government objectives, relevance to US investors and the comparative advantage of the sector in Oman
Ex) NCIS and Desktop Data Ex) Section of Sector Study Ex) Stakeholders Interviewed Ex) Scoring Mechanism
30
Sector Assessment Framework
Potential rev. generation/ Increased investment
Job creation for Omanis Competitive wages New technologies/
knowledge Economic diversification Value-added to industry Increased visibility of
sector
Meets 2020 Vision priorities
Aligns with 5 year plan goals
Supports existing or planned infrastructure investments
Aligned with sector or ministry objectives and plans
Market size & accessibility
Cost advantage (labor, rent, transport, utilities materials, feedstock)
Market advantage, Gov’t/ business incentives
Cluster development Relevance to value
chain Size and manageability
of risks Data availability Sector position in US
Geographic location Free trade agreements Potential ROI Market size/ growth/
accessibility Public sector services Laws, regulations, and
policies Taxes Overall ease of doing
business Infrastructure Stakeholder readiness
Benefits to Oman
Alignment with Omani
Government Objectives
Comparative Advantage of Sector
in Oman
Relevance to US Investors
We looked at four key criteria and a number of sub-criteria to map each sector against in order to determine the optimal investment opportunities for the Roadshow
31
0
10
20
30
40
50
60
70
80
90
100
Sector Scoring Results
We scored each sector comparatively on 4 criteria and a wide set of sub-criteria based on research and available data; sector scores did not determine those sectors chosen for the Roadshow, but contributed to the overall analysis
Sector Scores
* Insurance was grouped together with finance in scoring, but has a designated section in the sector study and analysis; Oil and gas was not considered as a sector to take forward
= Sectors selected for US Roadshow
32
Defining Viable Investment Opportunities
• 14 sectors analyzed for investment potential using available data and desktop research
• Sectors compared across a common framework and scored • 8 investment opportunities identified across 4 sectors
Sect
or
An
alys
is
• Each opportunity was evaluated to determine market potential and specific ‘selling points’
• We then identified the top branded American companies in each opportunity
• Opportunities and companies were mapped across the US to determine the optimal cities for the roadshow
Op
po
rtu
nit
y A
nal
ysis
~200 pages of analysis
• Developed an investors ‘ brochure detailing relevant information and opportunities for investment in Oman
• This brochure should act as a ‘one source’ investment document for Oman P
rom
oti
on
al
Bro
chu
re
Illustrative
It was essential to have an understanding at the macro and micro level of Oman’s economic sectors and the opportunities available for American investors
33
Outcome
The Omani delegation visited numerous cities, generating press and meeting with companies, potential investors, and conducting site visits
• Following the Deloitte- MoCI project, NUSACC arranged B2B meetings, conferences, events and site visits in the targets sectors and cities, generating press along the way
• This April Oman will receive a trade delegation of potential investors in Oman from the USA
• The Omani government is currently looking into how it can further grow its relationships with foreign investors through roadshows and related activities
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence. Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities. About Deloitte & Touche (M.E.): Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence for over 85 years. Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with over 2,500 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region (International Tax Review World Tax 2010, 2011 and 2012 Rankings) and was recognized as the 2010 Best Consulting Firm of the Year in the Complinet GCC Compliance Awards. In 2011, the firm received the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).