Bogoljub Karic On How the Coronavirus May Impact Middle Eastern Economies

Bogoljub Karic shares his thoughts on the coronavirus's effects on the Gulf economies' oil prices, capital markets, and tourism. So far, the global pandemic has found its way to 110 countries and has infected about 121,000 people. Iran is the most hit among the Middle Eastern countries with 9,000 confirmed cases of OOVID-19 and about 350 fatalities. Bahrain, Saudi Arabia, Oman, and the UAE have also reported several cases of infection. The impact of the disease on the economies of these countries are pronounced in these aspects:

Oil Prices

Oil is one of the major exports of the Middle east. Bogoljub Karic notes that its price plunged tremendously last week as the Organization of the Petroleum Exporting Countries and its allies fell short of reaching an agreement to trim output. This is an obvious problem for Gulf countries, which depend heavily on crude revenues.

Travel and Real Estate

Foreign spending in Saudi Arabia and the UAE is likely to be impacted by the outbreak as well. On average, 20 million tourists travel to Saudi Arabia annually, mostly for religious reasons. Because of COVID-19, all flights to and from the Kingdom have temporarily been suspended. Meanwhile, the UAE averages about 16 million visitors yearly, with 25 million expected this year in anticipation of the Expo 2020 Dubai, which is slated for October. Bogoljub Karic stresses that as of now, it is still uncertain whether the world expo will be affected by the virus as well. As for real estate, Chinese buyers made up 1% of Dubai's property transactions in 2018. The psychological effect of the COVID-19 outbreak may put off purchasing decisions despite plunging interest rates.

Capital Markets

Capital markets have been experiencing extreme volatility. Companies with weak credit scores will experience a hard time coping with the market. This means that Oman, Bahrain, and some UAE corporations may find it difficult market-wise this year. In light of these forecasts for the region, Bogoljub Karic encourages business owners and the public to keep calm and remain vigilant. Things are expected to be on an upward trend once the COVID-19 pandemic is contained.

Bogoljub Karic: Retailers Call On Mall Management For a Stimulus Package During Coronavirus Outbreak

Bogoljub Karic shares that retailers from Dubai are asking mall management to review their rental arrangements. This is a consideration for the blows the retail industry has taken because of the pandemic.

So far, the Dubai government has declared a stimulus package for businesses. The Central Bank has requested local banks to be more tolerant of loan recovery while the Jebel Ali Free Zone has cut admin and licensing fees for tenants. Retailers are hoping that their landlords could follow suit.

This plea was preceded by news from Singapore that circulated last week among UAE retailers about a major mall owner giving its tenants a rebate for the coming months to counter losses incurred during the worst of the virus. According to Bogoljub Karic, the mall owner, CapitaLand, offered a 50% rebate on the one-month gross rent of its tenants. Mall managements in Hong Kong have also made similar moves, giving their tenants a drastic cost break by cutting their February rent costs by up to 60%.

So far, UAE malls have not had talks with tenants yet on how best to handle the virus-caused slowdown in sales and visitor traffic. These conversations will most likely happen in April, says head of UAE operations of F&B brand Nando’s, George Kunnappally. Hopefully, the mall owners will be supportive, especially to tenants who are long-time partners and also pay turnover rent. Yet Bogoljub Karic acknowledges that it remains to be seen if mall owners will consider giving a stimulus package for tenants. Dubai malls have already brought rents down by as much as 10 to 15% last year as a way to provide relief to tenants who had experienced a sales slowdown due to a tightening economy.

At a time like this, Bogoljub Karic is counting on malls everywhere to be reasonable and understand that no business, shopping or otherwise, is exempt from being hit by a worldwide virus outbreak.

Business with Bogoljub Karic: The UAE’s Employment and Employee Benefits

For Bogoljub Karic, having a business in the UAE comes with certain perks. If you want to expand your business in the gulf, you’ll need to know these benefits that your employees will expect to be provided to them according to law. The practical issues of employment and benefits must be handled to ensure that the move and the hiring of the personnel to staff your offices will go as smoothly as possible.

All employees are subject to the Labor Law 

All employees working in the UAE’s free zones, and that includes foreign nationals, are subject to the Labor Law and its regulations, says Bogoljub Karic. The UAE implements this law to protect the interests of employees, mainly the UAE nationals. One of the grants and incentives for UAE nationals include lower transaction fees for employment permits.

Employees receive minimum paid holidays

Under the Labor Law, employees are entitled to two calendar days of paid leave per month for each year of service. There are also 30 calendar days paid leave annually given to employees with over a year of service. If they have carried out approximately 90 days of service, they are entitled to 20 days of paid vacation.

They receive a mandatory minimum wage

Expatriates don’t have a mandatory minimum wage, but Bogoljub Karic says UAE nationals do. The employee’s educational attainment determines the minimum wage. Employees without a high school certificate receive a minimum of 3,000 AED a month, while employees that have a high school certificate get 4,000 AED. For employees with a college degree or higher, they are entitled to at least 5,00 AED.

According to Bogoljub Karic, the UAE has several great benefits and incentives for employees, both foreign and for UAE nationals. You need to check with the local government about regulations about both to make sure you’re providing your employees the right benefits by law.

Adapting in the World of International Business

I, Bogoljub Karic, believe that when you enter the scene of international business, everything may seem to be possible. This includes being too much or being lacking when it comes to exhibiting some essential skills or characteristics. For many international business owners, success means adjusting to unfamiliar environment and situations. However, “overadjusting” has been proven before to cause damage to the cross-cultural success of many businesses and organizations.

As a part of the world of international business, you travel to different places to reach out to more of your target audience. One day may come when you will realize, or other people will make you realize that you are trying too hard to adopt the culture of other places. You are overdoing it and it may look inappropriate to others, especially your foreign clients. This may lead to negative consequences such as proposal rejections. One key insight I, Bogoljub Karic, learned when I was working around the world, is that you have to recognize that if you are not prepared to listen to others, you will surely miss out and you would not understand the details of another culture. Also, make sure that you acknowledge that no matter how much cultural intelligence you develop, you should always have room for more learning. No matter how much of an expert you think you are, there will always be times when you will make mistakes, because you are not perfect – no one is.

Instead of adopting another culture, I, Bogoljub Karic, want you to adapt. When you finally learn to adapt to the culture of other countries you visit for your work, you will look more professional and less of a try-hard foreign “wannabe”. Make sure that no matter where you go and who you are with, do your best to listen, learn, and improve.