‘Golden opportunity’ for reforms in GCC economies

Middle Eastern countries should not “waste” the ongoing coronavirus crisis, but should make changes to build up the resilience of their economies, the chief executive officer of a UAE-based retail giant told CNBC this week.

That could include addressing systemic issues and providing more support to businesses, said Alain Bejjani, CEO of Majid Al Futtaim.

“In the coming two to three years, we’re going to see, certainly, a very, very large impact that’s going to be asymmetric, depending on the readiness of countries,” he said, noting that private sectors in the region are “not as strong” and economies are “quite regulated” in terms of government intervention. He also pointed to the “big hit” in oil prices that would have an impact on countries in the Gulf.

“I think this is a golden opportunity to really change, to reform and to transform our economies into more resilient economies that have (the) ability to bounce back faster,” he told CNBC’s Hadley Gamble on Tuesday.

The coronavirus has infected more than 3.5 million people and killed at least 251,000 globally, according to data compiled by Johns Hopkins University. In the Middle East and North African region, Turkey and Iran have been the hardest hit.

While governments were right to inject liquidity initially, the next step needs to be regulatory change, he said.

“There will need to be a certain type of support, this cannot be debt … real financial support for companies that have the resiliency and the ability to make a difference post-Covid,” Bejjani said, adding that the efforts need to be “precise” because resources are not infinite.

“It’s a great opportunity for us not to waste this crisis … to fix some of the systemic issues that we have,” he said.

A separate impact of the global pandemic may be a shift in the world economy, said Bejjani.

It has brought a “day of reckoning” that shows the world “cannot continue to be led in a polarized manner,” he said. 

“We need to basically lift a bit of the … total reliance on a big economy like China, a big economy like the U.S., make sure that we have regional champions that are actually relevant,” he added.

While globalization was important and “made sense,” economies may now need to become more local and regional, he said. 

In such an environment, the UAE’s “friendly business environment” will stand the country in good stead moving forward. Dubai, in particular, will be in a “great place” because such openness is a “rare commodity” in the region and in the rest of the world, said Bejjani.

“Whatever happens, having a friendly business environment, having the agility to bounce back and having … the means in terms of financial solidity, will actually come in handy and will make a big difference going forward.”