Business Compliance in GCC countries
Although operating in the region offers a lucrative opportunity, it also carries some significant regulatory concerns, particularly for European and American businesses, due to the region's immature legal and regulatory structure.
With compliance and regulation gaining increasing importance at an international level, laws approved in one corner of the world can affect distant markets as they, by definition, feed down to a regional level. The Middle East is no exception.
The corporate culture in the Middle East does not follow generally recognized business standards. The region is home to a strong gift-accepting culture. In some circumstances, it is deemed important to give presents to forge relationships and sign contracts. It is also not uncommon for public officials to receive payments, often known as facilitation payments, to ensure the fast and trouble-free performance of duties that they are already required to execute.
Additionally, the distinction between private and public interests isn't always obvious. For instance, rules in the oil-rich Gulf States do not distinguish between being a public official and being a businessperson looking to maximize profit. Many people in high positions are well-known and wealthy sheikhs or businessmen who manage their corporations while serving in public government and have holdings worth millions of dollars. The evaluation of conflicts of interest is made considerably more challenging by tribal and familial ties.
Effective compliance benefits and protects businesses. Strong compliance policies and processes stop behavior that could put the company, its owners, and its employees in danger, including being criminally prosecuted locally or abroad due to compliance violations in the jurisdiction. Similar to this, a firm will be in good standing with banks, suppliers, customers, investors, and perhaps even people who would be interested in buying the business if it can demonstrate a robust set of compliance procedures.
Even after the formation of GCC, fragmentation in the regulation and law of different countries creates a barrier to compliance. For example, Qatar’s data protection policy is in line with European Union’s General Data Privacy Regulation, but in the case of the UAE, there is no formal law for data protection, except in their Special Economic Zones. This creates concerns for companies’ functionality in GCC countries.
Businesses must conform to local regulations as they grow if they want to operate there. Regulatory compliance gets more difficult and expensive as a group becomes more complicated. The regulatory plans, new legislation, and initiatives in the Middle East vary depending on the priorities of each nation. And when making any significant change, it is up to the locals to get the job done, which presents another challenge for many local organizations.
Additionally, to combat new dangers, firms in the Middle East, and GCC will need to use cutting-edge technology like blockchain, cloud computing, and biometrics. Small and medium-sized businesses (SMEs), which account for a sizable portion of the GDP in many Middle Eastern countries that are not oil-rich, will find it particularly challenging to address compliance-related issues and are more inclined than most businesses to turn to outsource.
GRC [governance, risk, and compliance] automation is one of the emerging technologies in this field since it helps firms overcome their lack of resources by automating most recurrent compliance tasks and distributing the job throughout the entire organization.
To remain effective, regulatory frameworks must be updated frequently, especially as the markets they govern develop. In addition to making sure that current regulations are understandable and enforced, this also entails identifying new regulatory needs for new market entrants.
Such efforts can be streamlined with a platform-oriented, all-encompassing approach to security. Enterprises can define a comprehensive set of controls and capabilities to meet these criteria rather than tracking the controls required by different legislation on a case-by-case basis. Business owners may make sure they comply with regulations by adopting a platform approach that makes use of a solid compliance foundation.
To develop realistic minimum standards that ensure industry standards and best practices are in place without impeding corporate growth, regulators must collaborate closely with industry leaders. To do this, governments should enlist the help of industry experts who can help them identify vulnerabilities in their regions and establish regulations to lessen the likelihood and impact of such threats.