How to Start a Business in the Middle East? - Things to Know about Doing Business in Arab Countries

How to Start a Business Successfully in the Middle East

How to Start a Business in the Middle East? - Things to Know about Doing Business in Arab Countries
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Starting a business in the Arab world can be a very profitable venture. This article provides a detailed perspective on things you need to know about starting a business in the Middle East.

Over the years the number of foreign investors in the oil-rich Arab world has increased significantly. Several individuals that have started businesses recently have already built up sizable capital required for expansion plans. Resources are available in the Middle East easily. It is easy to hire laborers, contract workers for various business projects. With this in mind a number of individuals, organizations and corporate firms are setting up business in the Arab world. Credit facility and finance can be sought on major business proposals.

Although it’s a wise decision to start a business in the Middle East, doing your research on the place where you plan to establish your business is of essential importance.

The importance of Personal Relationships and Culture in the Arab World

Remember, like in any other place a friendly nature helps significantly in the Arab world too. Understanding the culture and tradition of the people in the Middle East is essential before starting a business. Arabs are friendly people that give personal relationships prime importance. In the Middle East, strength of business relationships is determined in accordance with you personal relationship.  

If you maintain cordial relations with Arabs, planning, implementing and starting a business become relatively easy. Knowing the culture, business etiquettes and negotiation methods of the Arab world is essential if you want to start a business or rake in foreign investment. Majority of the locals in different parts of the Middle East prefer to speak in Arabic even if they well versed with English. It’s a wise decision to opt for a short course that teaches the basics of Arabic.

Islam is the religion in the Middle East and all the locals are staunch in their faith. Every business in the Middle East is closed on Friday. On this day it is obligatory for Muslims (Men) to offer congregational prayers. If you are not used to lengthy handshakes, its time you start practicing. In the Arab world handshakes can last for a long time. In Islamic tradition it is customary to wait until the other individual withdraws their hand. Establish contacts in the Middle East. The more contacts you have, the easier it is to get sanctions and permissions. Mutual friendships also help in business relationships. Arab friends will go out of their way to help friends from a foreign land if they find them trustworthy.  

It is a known fact that Arabs treat personal relationships dearly. A friendly nature helps a great deal in the Middle East. If you want to start a business in the Arab world, it is beneficial to know influential people. Meetings and negotiations are agreed upon by rich Arabs if you have good convincing skills. Practice a few lines of Arabic, because Arabs love it when they see Westerners making an attempt to speak their language. It’s said the first impression is the best impression and that applies well and truly in the Arab World. Individuals that are able to impress influential Arabs in the first meeting are bound to get sanctions and easily acquire loans needed for business or projects.

If you are under the impression that doing business in the Middle East is similar to places in the West, you may be in for a shock. Although business principles are the same, individuals have to get familiar with the ways and protocols of business in the Middle East. You cannot expect to do business in accordance with terms that you find comfortable. To start with the laws of the region are stringent. Any individual that is found guilty of violating laws can face punishment in accordance with the law that governs the region.  

Licenses and Permits that need to be Obtained for Starting a Business in the Middle East

Most individuals are unaware of licenses and permits required to start different types of businesses. Individuals, companies or organizations are required to seek permission and obtain permits from various regulatory authorities in regard with the business they propose to start. There are several documents that have to be submitted in accordance with the type of business started. Individuals have to make sure that the proposed company name and the application for business registration is submitted to the Department of Economic Development (DED)

The best way to make sure you don’t have to run from pillar to post to acquire licenses or permits is by seeking the services of an agent. When you hire an agent all aspects pertaining to documentation and procurement of permits is done without wasting time. Company registration application and notarized Memorandum of Association has to be submitted to DED. One has to apply for an establishment card that is given by the Ministry of Labor. The number of local workers working for you has to be registered with the Ministry of Labor and also with General Pension and Social Security Authority. Building permits and construction permits are a requirement and need to be obtained. A ‘No Objection’ certificate has to be obtained from the Road and Transport Authority.  

If your business involves trading across borders, all the documents pertaining to import or export have to be in place. Tax payment is mandatory for every business. Vehicle registration fees and trade license fees have to be paid. The associated costs for registration and acquirement of permits or licenses vary. Completion time taken for documentation and acquiring licenses required for starting a business is rather quick if the entire procedure is handled by agents.

Maintaining cordial relationships with Arabs makes things easy when starting a business. If you are working with local partners make sure you maintain both a healthy personal and business relationship. Bureaucratic formalities that maybe required for setting up a business may take time depending on time schedules of Arabs.

Every business in the Middle East has to comply with regulations of working in accordance with Islamic law. All businesses and offices are closed on Friday. It is obligatory for Muslim men to attend congregational prayers in Mosques on Fridays. Traditionally Muslims are obliged to pray five times a day. Many Muslims pray during business hours at their place of work. Business activity is reduced during the month of Ramadan when Muslims fast refraining from eating and drinking water during the day. During Ramadan establishments and businesses remain closed and getting business sanctions and permissions, licenses, permits is not easy.

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