The value chain for an iPhone includes components from suppliers in 43 countries, which get shipped to manufacturing facilities in a few key locations and then back out to warehouses and retailers around the world.
That might be an extreme example, but most complex products these days have complex global value chains (GVCs) — the set of activities required to bring a product from conception to customer. And GVCs are changing in ways that create opportunities for the Middle East region.
Previously, GVCs — a dominant feature of global trade — focused primarily on cost. Today, companies are reconfiguring them to be more resilient, agile and sustainable.
GCC countries are well placed to capitalise on this opportunity, as they possess an abundant and cost-competitive supply of green energy. The region is also geographically attractive, with strong industrial and logistics infrastructure, including ports and airports.
Yet the opportunity could be fleeting. Gulf nations must move fast.
Several factors are changing the GVC landscape. Supply concentrations and shortages, often due to logistical bottlenecks, are more likely to cause production disruptions.
Volatility in energy prices is also a hindrance, considering that natural gas prices in Europe increased tenfold from 2020 to 2022.
Environmental sustainability and net-zero aspirations are pushing companies to move their manufacturing to places that can enable that, especially in hard-to-abate sectors such as steel and aluminium.
Government regulations also are reshaping supply chains. In the US, the Inflation Reduction Act includes financial incentives to grow the green manufacturing base. Europe’s recently announced Net Zero Industry Act has similar aspects. Both will reshape GVCs for global manufacturers.
However, keeping in mind the fundamentals of competitive advantages, the GCC is in the best position to become a global centre for GVCs that are carbon- or energy-intensive.
Electricity tariff and gas prices have remained stable across the region and are far lower than in other markets. That advantage carries over into renewable energy.
The GCC also has comparatively low energy production costs. By 2030, the region is projected to generate 12.2 million tonnes of green hydrogen each year. Rather than exporting that hydrogen, it could develop circular and green manufacturing clusters to attract industries.
There are 11 priority GVCs for the region. These include silicon wafers, recycled plastic, green steel, titanium aerostructures, and more disruptive plays such as precision fermentation, which can convert energy and some ingredients into protein and other food sources with little environmental impact, among others.
Attracting companies to manufacture these products in the GCC could generate $300 billion in foreign direct investment, create 150,000 jobs, and unlock $25 billion annually in non-oil exports — and potentially offset 75 million tonnes of carbon dioxide-equivalent emissions.
Stakeholders in the GCC region should take the following steps to seize this opportunity.
Governments should partner among themselves to reinforce each country’s competitive advantages and develop agile, resilient and sustainable GVCs. They should join with business to develop targeted measures for each priority GVC component. These can include financial incentives such as capital investment grants, subsidised inputs, financing and demand guarantees.
For instance, in April last year, Saudi Arabia signed an agreement with car maker Lucid Group, guaranteeing the purchase of at least 50,000 electric vehicles over a 10-year period.
Government-to-business partnerships can lead to a more agile regulatory environment. Such partnerships can fast-track the development of human capital in the region, for example, through vocational training and reskilling initiatives.
Governments can also fund innovation efforts and develop circular, technology-enabled industrial cities and special economic zones centred on priority sectors.
They can bundle these initiatives into large-scale programmes, such as the EU’s Green New Deal, to manage interdependence among various programmes and generate a bigger environmental impact.
Along with enabling investments, sovereign wealth funds (SWFs) can also move to ensure a secure and steady supply of the critical raw materials needed for key sectors. These include lithium, cobalt, nickel and copper.
SWFs may need to invest in large mining companies that have significant shares in multiple target metals to ensure that local companies have a reliable supply, given the limited availability of such metals in the region.
Private sector companies in the GCC can also take a number of steps to increase their participation in GVCs. They can pursue joint ventures and partnerships with OEMs (original equipment manufacturers) and their tier one suppliers in the 11 major product categories.
The objective of these efforts is to make low-risk investments through technology transfer and technical offtake arrangements.
Companies worldwide are already redesigning GVCs and seeking opportunities. The GCC region can become a GVC hub across industries, leading to significant economic development and diversification, but the time to act is now.
Dr Yahya Anouti and Georges Chehade are partners with Strategy& Middle East
UAE v Zimbabwe A
Results
Match 1 – UAE won by 4 wickets
Match 2 – UAE won by 5 wickets
Match 3 – UAE won by 25 runs
Match 4 – UAE won by 77 runs
Fixture
Match 5, Saturday, 9.30am start, ICC Academy, Dubai
UAE currency: the story behind the money in your pockets
Bert van Marwijk factfile
Born: May 19 1952
Place of birth: Deventer, Netherlands
Playing position: Midfielder
Teams managed:
1998-2000 Fortuna Sittard
2000-2004 Feyenoord
2004-2006 Borussia Dortmund
2007-2008 Feyenoord
2008-2012 Netherlands
2013-2014 Hamburg
2015-2017 Saudi Arabia
2018 Australia
Major honours (manager):
2001/02 Uefa Cup, Feyenoord
2007/08 KNVB Cup, Feyenoord
World Cup runner-up, Netherlands
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
Directors: Tarzan and Arab Nasser
Rating: 4.5/5
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
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The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
Global state-owned investor ranking by size
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Canada
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UAE currency: the story behind the money in your pockets
UAE%20set%20for%20Scotland%20series
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Representing%20UAE%20overseas
%3Cp%3E%0DIf%20Catherine%20Richards%20debuts%20for%20Wales%20in%20the%20Six%20Nations%2C%20she%20will%20be%20the%20latest%20to%20have%20made%20it%20from%20the%20UAE%20to%20the%20top%20tier%20of%20the%20international%20game%20in%20the%20oval%20ball%20codes.%0D%3Cbr%3E%20%0D%3Cbr%3E%3Cstrong%3ESeren%20Gough-Walters%20(Wales%20rugby%20league)%3C%2Fstrong%3E%0D%3Cbr%3EBorn%20in%20Dubai%2C%20raised%20in%20Sharjah%2C%20and%20once%20an%20immigration%20officer%20at%20the%20British%20Embassy%20in%20Abu%20Dhabi%2C%20she%20debuted%20for%20Wales%20in%20rugby%20league%20in%202021.%0D%3Cbr%3E%20%0D%3Cbr%3E%3Cstrong%3ESophie%20Shams%20(England%20sevens)%3C%2Fstrong%3E%0D%3Cbr%3EWith%20an%20Emirati%20father%20and%20English%20mother%2C%20Shams%20excelled%20at%20rugby%20at%20school%20in%20Dubai%2C%20and%20went%20on%20to%20represent%20England%20on%20the%20sevens%20circuit.%20%0D%3Cbr%3E%20%0D%3Cbr%3E%3Cstrong%3EFiona%20Reidy%20(Ireland)%3C%2Fstrong%3E%0D%3Cbr%3EMade%20her%20Test%20rugby%20bow%20for%20Ireland%20against%20England%20in%202015%2C%20having%20played%20for%20four%20years%20in%20the%20capital%20with%20Abu%20Dhabi%20Harlequins%20previously.%0D%3C%2Fp%3E%0A
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
Safety 'top priority' for rival hyperloop company
The chief operating officer of Hyperloop Transportation Technologies, Andres de Leon, said his company's hyperloop technology is “ready” and safe.
He said the company prioritised safety throughout its development and, last year, Munich Re, one of the world's largest reinsurance companies, announced it was ready to insure their technology.
“Our levitation, propulsion, and vacuum technology have all been developed [...] over several decades and have been deployed and tested at full scale,” he said in a statement to The National.
“Only once the system has been certified and approved will it move people,” he said.
HyperloopTT has begun designing and engineering processes for its Abu Dhabi projects and hopes to break ground soon.
With no delivery date yet announced, Mr de Leon said timelines had to be considered carefully, as government approval, permits, and regulations could create necessary delays.
Mental%20health%20support%20in%20the%20UAE
%3Cp%3E%E2%97%8F%20Estijaba%20helpline%3A%208001717%3Cbr%3E%E2%97%8F%20UAE%20Ministry%20of%20Health%20and%20Prevention%20hotline%3A%20045192519%3Cbr%3E%E2%97%8F%20UAE%20Mental%20health%20support%20line%3A%20800%204673%20(Hope)%3Cbr%3EMore%20information%20at%20hope.hw.gov.ae%3C%2Fp%3E%0A
COMPANY%20PROFILE
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