Global - RAISING THEIR GAME GULF ECONOMIES LOOK TO THE FUTURE - UHY-Wahlen.de
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
global
I S S U E 10
RAISING
THEIR GAME
GULF ECONOMIES
LOOK TO THE FUTURE
COOL AND CONNECTED
SMART CITIES GO TO NEXT LEVEL
NOTHING VENTURED The network
MARKET TRENDS IN GOING PUBLIC
for doing
MAKING THEIR MARK business
EMERGING ECONOMIES TO WATCH
2 UHY GLOBAL August 2020 WORD OF WELCOME
IN THIS ISSUE
3
BIO-LOGICAL
17 WORD OF
Natural science
makes perfect sense
MEXICAN WAVES
Blue biotech
feeding our future
WELCOME
4
Welcome to the 10th issue of Our feature Joining the Club
UHY Global, our magazine considers which emerging-market
for international businesses. economies are shaping up to
MAKING CITIES
It is something of a landmark, become this decade’s foreign direct
SMARTER
representing a full five years of investment favourites, and why.
Metropolitan hubs
insightful reporting on global
18
use tech to connect In the third of our growth-
topics that matter to our clients,
with expert commentary from themed features, we look at
JOINING THE CLUB our experienced people around new opportunities for small and
Spotlight on the world. It is also available as medium enterprises in the Middle
emerging economies an interactive online publication, East, which according to the
without the constraints of paper, World Bank is fast becoming one
of the best places to do business.
8
bringing our readers additional
narratives, including video, In Widening the Gulf, we ask
and a rich resource of source our UHY experts on the ground
GOING PUBLIC to explain what is changing.
material just a click away.
Do IPOs have
21
a future? A word on Covid-19. When I Also, in this issue you will find our
introduced our previous issue in behind-the-scenes view on quality
COGS AND January and forecast a year of management and our regular
WHEELS change, this is not quite what I – Perspectives report, this time
Focus on network or anybody – had in mind. Experts looking at the current climate for
quality still disagree on the depth and IPOs. In All Around The World we
longevity of its impact, but even look at what is happening with
11
GLOBAL NEWS 22
though the likelihood of global
recession remains at or near 100%,
global bioscience, and our Serving
Clients, Serving Communities
news celebrates the achievements
I have no doubt we will, as people,
Roundup of world’s PARALYMPIC of some of our remarkable
and as a connected economic
big stories HOPES LIVE ON people across the network.
ecosystem, bounce right back.
Shelly Woods keeps
On behalf of UHY and all of our
12
Games dream alive As always, I hope you enjoy
member firms and professionals this issue of UHY Global – and
worldwide, I wish our readers safe if you would like to read more
POWERING passage and healthier times ahead.
AHEAD and dig deeper on the topics we
New UHY chairman Indeed, our key features in this have featured, then browse our
takes the reins issue are all about opportunity and expanded digital edition, at uhy.
growth. In Making Cities Smarter, com/publications. Meanwhile,
23
SERVING CLIENTS,
we explore the development
of the smart city concept.
please let me once more wish
you safe, healthy and prosperous
times ahead and much success.
Driven by social, economic and
SERVING environmental needs, and enabled
COMMUNITIES Dennis Petri
by vision and new technology,
14 Celebrating our Chairman, UHY International
connected urbanisation has a
inspirational people lot to offer. We look at what
WIDENING is happening, and where.
THE GULF
What next for Another question at the forefront
Middle East of international expansion for
business? ambitious businesses, governments
and investors, is where the next
investable growth will come from?
ALL AROUND THE WORLD UHY GLOBAL August 2020 3
BIO-LOGICAL
LOOKING TO NATURAL SCIENCES AND TECHNOLOGY
FOR A HEALTHIER FUTURE MAKES PERFECT SENSE
If one thing can bring become pre-eminent, are recognised moral questions under the spotlight -
optimism to solving some as real societal issues. As a result, but today’s advances, breakthroughs
pan-governmental organisations and and discoveries continue to build a
of the world’s pressing thinktanks are engaged in building ethical healthier future for millions of people.
challenges, it is the marriage and legal safeguards to minimise risk.
of biology and technology.
This follows years of controversial headline-
The rate of advance in the mainstream of making by biotech pioneers. Most people
technology that we hear about everyday
– artificial intelligence (AI), robotics,
remember Dolly the sheep, who was born
Biotech is a
in 1996 and became the world’s most
quantum leaps in computer power, famous clone, the first mammal to be critical cog in the
the internet of things – is also reflected successfully created from the DNA of an
in the natural sciences. In particular, adult cell. Fewer people know that Dolly’s
wheel that keeps
breakthroughs in biotechnology, though research programme yielded breakthroughs human life turning.
less understood in the broader global in how to manufacture potential
population, are by no means fewer or less treatments for muscular dystrophy.
dramatic. On the contrary, they are the
building blocks of a sustainable future
for nine billion people and counting.
DIGITAL DIAGNOSTICS
MORE THAN BEER AND BREAD The rise in popularity of the personal
In its simplest form, ‘biotech’ is about fitness tracker or smartwatch, is
using biological processes for industrial evidence of a sea change in future
purposes, most prominently in medicine healthcare, enabled by technology.
and agriculture. Early and familiar examples Consumers looking after their own
of biotech in action would include brewing health and wellbeing can do so with
and bread-making, which create products a sophisticated range of wearable
from the manipulation of microorganisms. devices that will monitor and record
exercise, heartrates, oxygen capacity,
Today, biotech scientists are called on ACCELERATING THE SCIENCE sleep quality, nutrition, weight and
to ensure the future security of our
There is no doubt that data-driven more besides. The potential for
global food and fuel supply, protect
diagnostics and the role AI is set to play in predictive diagnostics is clear.
the environment, eradicate disease
drug discovery and targeting, for example,
and create a bio-economy based on Increasingly, consultations with
will accelerate progress in biotech,
sustainable natural resources. Biotech doctors and specialists will be
genetics and biosynthetic engineering.
harnesses innovation and imagination conducted remotely. This is in
Massively complex human machinery
with biology and technology, to create large part dependent not on the
will eventually be capable of replication.
solutions that meet our global needs. technology itself, but on its adoption
There are already ground-breaking
by people who are cautious about
developments which would suggest the
PUSHING BOUNDARIES sharing personal health data with a
question of artificial kidneys and bionic
In healthcare, the dangers are clear and medical support network online. It is
eyes is not a matter of if, but when.
present. Some populations are living likely to be a behavioural shift driven
longer while others are still emerging Biotech in this sense is a critical cog by more informed, more demanding
from health poverty. Disease is a persistent in the wheel that keeps human life and ultimately more trusting patients.
threat. The global search for a successful turning. The vast majority of bioscientific
But looking past issues of privacy
Covid-19 vaccine is a topical example, on work, of course, is conducted with
and the need for patients to control
top of longstanding effort to find effective transparency and integrity within existing
their own data, the future of
treatments for cancers, organ impairments ethical and regulatory frameworks
preventative health provision is one
and neural disorders, among many others. and guidelines. Technology helps this
of digitally-enabled opportunity. n
happen faster, and more effectively.
Biological science is not without other
challenges. The fears of biological Undoubtedly, pushing the boundaries of
Dolly the Sheep photo courtesy of The Roslin
warfare, or a future in which robots what is possible will increasingly bring Institute, The University of Edinburgh.
4 UHY GLOBAL August 2020 MAKING CITIES SMARTER SMART CITY INITIATIVES ARE SPROUTING ACROSS THE GLOBE, WITH THE AIM OF CREATING TRULY CONNECTED CITIES FOR LIFE AND WORK
FEATURE – MAKING CITIES SMARTER UHY GLOBAL August 2020 5
In January 2020, Japanese car manufacturer Toyota revealed
plans to build an entire city from scratch near the foot of Mount
Fuji. Named for its integrated design, Woven City will not be
large, but it will be smart. Around 2,000 residents will live and
work in the 175-acre site initially, surrounded by some of the
most sustainable and connected technology currently available.
Woven City streets will hum with the Paul cites the example of his own
sound of electric and driverless vehicles. city, Eindhoven, which is creating a
Renewable energy will power its 32-kilometre-long cycle loop around
sustainably designed homes. Everything and through the city, currently in its final
– people, vehicles, buildings – will be stages of construction. “The route is
digitally connected, with inhabitants an example of a sympathetic initiative
acting as the pampered lab rats of that has a positive combined impact
a real-world experiment in ultra- on mobility (reducing congestion), the
efficient, AI-assisted urban living. reduced use of fossil fuels, public health
and parking problems,” he says.
“With people, buildings and vehicles
all connected and communicating with Dubai, meanwhile, has long embraced the
each other through data and sensors, concept of technology-driven urban living.
we will be able to test connected AI Now, its Smart City 2021 initiative boasts
technology, in both the virtual and the ambition of demonstrably improving
physical realms, maximising its potential,” happiness. It aims to embed technology
said Akio Toyoda, Toyota’s president. into every element of public life, helping
to create more satisfying interactions
PRESSURE ON INFRASTRUCTURE between inhabitants, businesses and
The concept of a smart city is not new, but government bodies. There are currently
growing concerns about climate change 545 planned or ongoing smart city
and overpopulation are driving ever-more initiatives, harnessing AI, blockchain and
ambitious projects. Scores of nations paperless technologies to drive efficiency.
around the world are piloting their own
interpretations of smart urban design, as
authorities react to growing pressure on
public amenities and city infrastructure.
Dubai’s Smart City
The Netherlands, for example, has
2021 initiative aims
adopted a nationwide Smart City
Strategy, with the aim of developing to embed technology
projects that will create healthier, greener,
into every element
more liveable urban environments. Paul
Mencke, partner at Govers Accountants/ of public life,
Advisors, UHY’s member firm in the
helping to create
Netherlands, says the need is obvious.
more satisfying
“The ambition of the government
arises from global developments such interactions between
as urbanisation, climate change, labour inhabitants,
participation, digitisation, mobility and
natural resources becoming rare. These businesses and
global developments have a disruptive government bodies.
impact on societal systems, and they
put pressure on cities to create new
business models,” he explains.
6 UHY GLOBAL August 2020
“The basic premise for smart city Overcrowding is not unique to India, “With technology, we hope we
adoption is to ensure every aspect of course. Combined with overall can improve security systems,
and transaction of daily life in the city population growth, urbanisation is communication and telecommunication,
adds to the happiness quotient of its likely to add another 2.5 billion people electricity provision and clean
residents, from a smart technology to cities globally over the next three water supplies,” says José.
standpoint,” says James Mathew, CEO decades. But a number of India’s cities
SMART MONEY
and managing partner of UHY James, have reached saturation point already,
based in Dubai, United Arab Emirates. accelerating the need for smart city Smart city initiatives aim to improve
initiatives. The aim is to improve quality quality of life, and by doing so confer
While smart city technologies do not of life in India’s biggest urban centres, real economic benefits. For a start,
have to be digital – the Eindhoven while at the same time making smaller they make doing business easier.
cycle track is a case in point – many towns and cities more economically viable, A connected network of Internet of
inevitably are. Dubai is a leader in slowing the pace of internal migration. Things (IoT) sensors could alter traffic
blockchain adoption, for instance, with light timings in response to changing
a blockchain community 5% larger than “Accordingly, the purpose of the Smart needs, making commutes quicker and
the global average. And innovation does Cities Mission is to drive economic growth smoother. Sensors on lampposts might
not stop there, as James explains: and improve quality of life by enabling guide vehicles to free parking spots.
local area development and harnessing
“By 2030, Dubai is set to have the first technology, especially technology that
smart police station with 25% of its leads to smart outcomes,” says Sunil.
workforce being ‘robocops’,” he says.
“The first robot officer was launched “Growth and development will
in 2017 to patrol Dubai streets.” enable smart cities to use technology,
information and data to improve With technology,
TECHNOLOGY FOR LOCAL NEEDS infrastructure and services.”
we hope to improve
Around the world, cities are promoting
smart technologies that best meet their Mexico, meanwhile, has seen the creation security systems,
specific needs. According to Sunil Hansraj, of ‘smart zones’. “They are ‘little cities’
in or near a major city,” says José Carlos communication and
joint managing partner, Chandabhoy
& Jassoobhoy, Mumbai, India’s Smart Villegas, partner at Mexican member firm telecommunication
UHY Glassman Esquivel y Cía. “In addition,
Cities Mission was created to help ease
the Mexican technology firm Netcity is systems, electricity
overcrowding in the country’s biggest
cities. “Its aim is to provide the burgeoning creating smart initiatives in Mexico City.” provision and clean
middle class with an aspirational lifestyle These smart zones are testbeds for water supplies.
in their own hometowns, rather than technology that might eventually be
have a large population continually rolled out across the country and, again,
migrate to the larger cities – which are are aimed at helping to solve some of
bursting at the seams,” says Sunil. Mexico’s most pressing urban challenges.
UHY GLOBAL August 2020 7
At the same time, blockchain technology says. “The Covid-19 crisis is not going demonstrate their capabilities to contribute
could be used to speed up bureaucratic to hasten the progress of these projects to the futuristic vision of Dubai.”
processes and cut red tape, while data and so for now the smart cities concept
gleaned from thousands of IoT devices may remain just that – a great concept.” Retail is a major contributor to Dubai’s
could lead to better evidence-led business economic success, and James says the
decisions. Smart buildings, meanwhile, In Mexico, too, government inertia city’s move to enhance data collection
can reduce energy costs while maintaining is slowing the pace of change. and analytic capabilities is providing the
optimum conditions for creative work. And “For example, despite the fact that sector with new and valuable information.
truly digital cities make home and remote businessmen and investors are aware “The end objective of leveraging data and
working easier and more productive. of the importance of clean energy analytics in the retail sector is to gauge
initiatives and are willing to invest, the retail trends, analyse the performance of
Even before the first IoT sensor has been government is less proactive in promoting the sector and improve the environment
installed, the creation and management the use of clean energy,” says José. for doing business in the city,” he adds.
of smart city initiatives offers a significant
opportunity for companies in a range of Paul says the current situation in the Dubai’s high-end retail sector may be
sectors. Telecoms providers, software firms, Netherlands is also a scattered picture of unique, but it is one example of what
construction companies and component sympathetic initiatives. “While there are smart initiatives can do for business
manufacturers are all scrambling to be quite a lot of projects, they seem to be on when targeted at local needs. In the
involved in the first wave of smart city a local level, and relatively small in size.” meantime, the fully connected city
projects. Some forecasters estimate may be some way off, but it is on the
that the global smart cities market A CONNECTED FUTURE? way. When companies like Toyota start
could exceed USD 2.5 trillion by 2025. Nevertheless, while the development building entire neighbourhoods from
That is an enormous figure, and the of smart cities is haphazard at best, scratch just to test their technology,
excitement around smart cities is real. the direction of travel is set. Increasing you can be certain that the momentum
pressure on urban environments will behind the adoption of smart city
SLOW PACE OF CHANGE initiatives is only going to increase. n
force authorities to act. Big business
For the moment at least, hype might be is eyeing an opportunity. Few cities
For more information on
outpacing reality. While mega projects like are as far down the path to a fully
UHY’s capabilities in the media and
Woven City create interest and publicity, connected future as Dubai, and the city
entertainment sector, email the UHY
in many cases the push towards smart is already seeing economic benefits.
executive office,
cities is piecemeal, local and relatively
“Smart technology initiatives are info@uhy.com, or
small scale. In India, Sunil points out that
expected to account for savings worth visit www.uhy.com
the Smart City Mission was first discussed
in 2014. Six years later, only 50% of the almost USD 1.2 billion through shared
budget for projects has been allocated, government infrastructure and services,”
of which about 75% has been released says James. “And Dubai has become
and an even lesser proportion utilised. a playing field for startups – the smart
“There is still some distance to go before initiatives provide startups with a
the physical benefits will be visible,” he platform to scale their business and
8 UHY GLOBAL August 2020
GOING PUBLIC
INITIAL PUBLIC OFFERINGS ARE OUT OF Image: iStock.com/Pgiam
FASHION AS PRIVATE FINANCE BACKS
GROWING BUSINESSES – BUT MOST COMPANIES
STILL WANT TO GO PUBLIC EVENTUALLY
W hen the Wall Street The trend is global. According to data UBER NEEDS A LIFT
from Dealogic, the number of new listings
Journal called 2019 the Dominik points to local factors, like
fell by one fifth in 2019, and the trend has reform of the Polish pension system and
‘Year of IPO Disappointment’, been gently downwards for two decades. economic scandals, for contributing to
it raised a few eyebrows. After Globally, companies raised a combined the decline. Steven Pinsky, consulting
all, this was the year that highly USD 188 billion from IPOs last year, a principal for UHY Advisors NY, Inc.,
regarded firms like Uber, Lyft three-year low. Hopes for an upswing in US, sees larger forces at play behind
and Slack made stock market 2020 have been dashed – like so much the modest number of recent IPOs.
else – by the coronavirus pandemic.
debuts. December brought “The public markets are subject to
the first public listing of oil Dominik Biel, partner at UHY ECA, a plethora of external micro and
giant Saudi Aramco, the most Poland, confirms the trend from a local macroeconomic factors which affect
perspective. “We have seen a declining
valuable initial public offering both regular and irregular fluctuations
number of companies debuting on the in market liquidity,” he says. “There
(IPO) on record. Warsaw Stock Exchange since 2015,” are times at which the market is just
he says. “In that year 30 companies not susceptible to new offerings. Some
So why the Wall Street gloom? Because,
conducted the IPO process, while only of the fluctuations are typical market
according to some commentators, a
seven did in 2019. It’s worth noting cycles while others are impacted
few high-profile exceptions masked a
that in 2007 the number was 81.” by external market influences. The
far less positive picture. According to
investment bank Renaissance Capital, coronavirus crisis is a perfect example.”
Nor was the small number of debuts
there were 159 IPOs in the US with offset by the value of the shares offered, While coronavirus is negatively affecting
a value of USD 50 million or more in Dominik confirms. The combined value IPO numbers in 2020, last year Brexit
2019, down from 192 the previous of both existing shares and new issues and the China-US trade standoff
year. Historical comparisons paint an on the Warsaw Stock Exchange was helped dampen investor enthusiasm.
even starker picture. Between 1980 25 times higher in 2017 than 2019. And while some smaller IPOs did well,
and 2000 an average of 310 companies That is a dramatic decline. So why one highly anticipated listing flopped.
went public in the US every year. has the popularity of the IPO waned?
PERSPECTIVES UHY GLOBAL August 2020 9
Uber’s stock market debut lost
more in dollar terms than any other
American IPO for over 40 years.
Robert Kidson, managing director of
corporate finance in the London office
at UHY Hacker Young, UK, agrees
that enthusiasm for IPOs can ebb and
flow with wider market conditions.
“Companies will choose to list their
shares if the market is conducive to
listings – i.e. there are investors wishing
to put funds into an IPO and there is
adequate liquidity in the market – and
if not they will probably look at other
alternatives or simply wait,” he says.
Companies considering public listings According to data from Pitchbook and A lot of private investment comes with
refuse to be rushed into decisions. the National Venture Capital Association the promise of business expertise,
Rumours of Saudi Aramco’s IPO (NVCA), the venture industry ploughed also known as ‘smart money’.
had been circulating for years USD 136.5 billion into US-based
companies in 2019. In the same year, “In many cases, financing sources such as
before its eventual debut.
Crunchbase projects that, globally, private placements or private equity come
roughly USD 294.8 billion was privately with financial and operational expertise
invested in nearly 32,800 deals. to assist companies in achieving and
managing growth,” he says. “Partnering
Venture capital has become a huge with a reputable private equity fund
Some fluctuations contributor to company growth, or family office gives you access to
especially in the technology and biotech resources such as financial advisors,
are typical market sectors. Similarly, angel investment operational advisors, buying groups,
cycles while others (individuals who back startups at an and business improvement consultants.”
early stage) has helped create a startup
are impacted by culture, allowing a generation of VENTURE CAPITAL CAVEATS
external market entrepreneurs to turn good ideas into Venture capitalists also offer business
viable businesses. Private equity funds support, and that can be invaluable to
influences – are seeing record levels of fundraising, some growing businesses. But the venture
while family offices are accelerating capital route is not for everyone, as Mark
coronavirus is a investments in private companies. Nicholaeff, UHY Board member, chairman,
perfect example. UHY Haines Norton, Australia and
The advantage of all these channels is New Zealand, and partner, UHY Haines
that they can offer quite significant funds Norton (Sydney), Australia, explains:
while shielding firms from public scrutiny.
“Companies that list obviously have to “Most venture capitalists impose onerous
report their figures more regularly and financial conditions and depending
WAITING FOR THE MOMENT are subject to the ups and down of the on the quantum of the investment
And that, perhaps, is the crux of the stock market, whereas private equity may require close involvement in the
issue. Growing businesses always need backed companies are not subject to company. Some companies do not
finance, whether to move into new the same public scrutiny,” says Robert. want a venture capitalist looking over
territories, invest in infrastructure, or their shoulder all the time,” he says.
buy out competitors. One reason for Steven agrees, suggesting that, for
some companies, remaining in private “On average, however, a company will
the slowing rate of public listings is that
ownership has competitive advantages, always take this route first, assuming it
so many alternative channels of finance
especially during the scaling phase of is not too onerous, as the shareholders
now exist. They allow companies to
business growth. “Private companies do not want to dilute a company that
remain privately owned while achieving
can shield competitive information that has a good future, as the value may
many of their early business goals. If
public companies may not be able to, significantly increase in the short term.”
the IPO environment is not optimal,
companies can and will wait until it is. such as acquisitions, known risks and
executive compensation,” he says. Dominik agrees that venture capital often
comes with strings attached. “Companies
While private finance channels have
He also pinpoints another wishing to benefit from venture capital
always been an option, the sheer volume
advantage of delaying an IPO. support must take into account the
of venture capital out there is new.
10 UHY GLOBAL August 2020 GLOBAL
PERSPECTIVES
NEWS
partial loss of control over managing the “The companies that don’t IPO are Robert says that for companies that
enterprise, because these funds have a the ones that have minimal probability have not listed before, UHY Hacker
very active management policy,” he says. of successfully listing or do not want Young provides a ‘hand-holding’ service
the regulatory burden. Otherwise IPOs throughout the process. In Poland,
Entrepreneurs may resent such are still the preferred route for most UHY ECA also provides a complete
interference. Luckily for them, technology established businesses,” says Mark. service, including preparing businesses
has also sparked the creation of completely for the rigours of reporting as a public
new channels of business funding. Robert mentions that private investors will company, while Steven says UHY
eventually be looking for a return, often Advisors provides ‘comprehensive
While not common everywhere,
realised by an IPO. Indeed, growth stage attest and compliance services’ as well
instruments like crowdfunding and
investment is sometimes offered in the as a full menu of ancillary solutions.
Initial Coin Offerings (ICOs – a type
implicit understanding that a successful
of funding using cryptocurrencies), IPO numbers have declined in recent years,
business will eventually float. As Steven
are increasingly popular in some as companies tap into other sources of
explains, private equity funds are seeing
jurisdictions. Crowdfunding is usually finance to meet initial business goals.
record levels of fundraising in part because
more appropriate for businesses at a But for companies that make it that
they offer business owners cash now
relatively early stage of development. far, an IPO can still be the ultimate aim.
and the promise of more cash later –
the proverbial second bite at the apple. The UHY network is ideally placed to
“The growth of financing platforms
help companies thrive as they transition
such as Kickstarter and GoFundMe are
“It lets them take money off the table from private to public entities. n
creating an alternative financing source
while still maintaining both operational
for growing companies,” says Steven. For more information about UHY’s
control and enough of an equity stake
“The cost of alternative sources is often capabilities in corporate finance services,
that they benefit significantly from a
less expensive and intrusive than IPOs. email the UHY executive office,
future liquidity event, be it sale or IPO,”
The downside is that many of these info@uhy.com, or visit www.uhy.com
he says. “The alternative crowdsourcing
funding sources have limitations on the
options are also allowing companies
size of funding realistically available.”
to delay the expensive IPO process or a
dilutive PE investment with a less dilutive
or less expensive option until larger
growth investment capital is needed.”
Companies wishing In many scenarios an IPO is still the
to benefit from default destination, even if it is a little
further down the road than in the
venture capital past. And before the pandemic, some
support must experts were predicting that 2020 might
see a bounce back in IPO numbers,
take into account as market conditions improved. That
might now be delayed till 2021.
the partial loss
of control over TAILORED SUPPORT
When normality resumes, the good
managing the news is that UHY has the expertise to
enterprise. help companies navigate the complex
IPO process and make successful stock
market debuts. Expert professional advice
is crucial for companies considering public
listing, tailored to local circumstances.
DELAY – NOT REPLACE
“In Australia, an operating company
While alternative financing channels are requires three years of audit and an
increasingly popular, most are designed Independent Accountants Report (IAR)
to delay the need for an IPO, rather than to be included in the prospectus,”
replace it entirely. And while many eligible says Mark. “We can provide both
companies may wait for exactly the services. Due to our experience with
right market conditions, they are many listings we can guide a company
unlikely to abandon the idea of through the listing process and
going public altogether. For established introduce the company to the other
businesses with a stable market required service providers, like lawyers,
position, IPOs remain a potent form underwriters, promoters and so on.”
of both financing and publicity. Image: iStock.com/andykazieGLOBAL NEWS UHY GLOBAL August 2020 11
TOP PRIORITY OLYMPIC HOPES REMAIN
FOR COVID John Coates, chair of the International The costs associated with rescheduling
TAX SUPPORT Olympic Committee’s (IOC) coordination
commission has said that the postponed
the Games are likely to be significant,
with estimates ranging from USD
Tokyo Olympics and Paralympics 2–6 billion. The estimated real cost to
should stand as a beacon of hope Japan was already twice the official
with the Olympic flame being ‘the budget of USD 12.6 billion prior to the
light at the end of the tunnel’, despite postponement, primarily due to the
ongoing uncertainty as to whether construction of secondary infrastructure.
the Games will take place in 2021. Although these costs have largely been
borne by the Japanese government,
The 2020 Olympics have been domestic companies – including
rescheduled for 23 July to 8 August Nomura, Toyota, Canon and Panasonic
2021 and the Paralympics for 24 August – have supported the Tokyo Olympics
to 5 September 2021, in the hope to an extent unmatched in previous
that this will allow sufficient time for Games, committing over USD 3 billion
health authorities and the organisers in sponsorship revenue. The TOC is
to address the changing landscape and hopeful that this support will continue.
disruption caused by the coronavirus
pandemic. But health experts have The rescheduling of what had
warned that the Games may still be in been referred to as the ‘Recovery
doubt due to uncertainties around the Olympics’, representing a huge
ability of the host nation and countries rebuilding effort after the 2011
around the world to control Covid-19. Fukushima earthquake and tsunami,
marks the first time in history that
Planning for the rescheduled Games the Games have been postponed.
is being led by two new task forces
– the Tokyo Organizing Committee’s
(TOC) ‘New Launch’ and the IOC’s
‘Here We Go’. Toshiro Muto, CEO
of the TOC, said that although there
Image: iStock.com/JohnnyGreig is no guarantee that the Games will
go ahead in 2021, they will continue
The Organisation for Economic to work hard to make preparations,
Cooperation and Development (OECD) adding, “We sincerely hope that come
has prioritised work on targeted next year mankind will manage to
and temporary tax policy and tax overcome the coronavirus crisis.”
administration measures related to the
coronavirus pandemic. As well as the
ongoing publication of key fiscal and
monetary policy responses, this includes a
toolkit and summary document outlining SOMALIA SET TO REJOIN
measures taken by governments around
the world to support taxpayers GLOBAL ECONOMY
in response to Covid-19.
Following a range of broad economic community, providing greater access
As work patterns have changed, and reforms, the International Monetary to financial resources that will help
some cross-border workers and individuals Fund (IMF) and the World Bank have strengthen the economy, accelerate
have found themselves stranded in announced that Somalia is eligible growth, improve social conditions
jurisdictions that are not their country for debt relief through the Heavily and raise millions out of poverty.
of residence, the OECD has advised that Indebted Poor Countries (HIPC) initiative
coronavirus-related tax concerns should – enabling the country’s reintegration Kristalina Georgieva, Managing
be treated as exceptional. It has also into the global economy after 30 years. Director of the IMF praised the Somali
highlighted the importance of countries government’s successful reform
working together to mitigate potentially Under the HIPC initiative, Somalia’s efforts, which have laid the foundation
significant compliance and administrative debt will be reduced irrevocably from for inclusive economic growth.
costs, and to alleviate the unplanned tax over USD 5 billion to USD 557 million “I am confident a more resilient and
implications and any other new burdens in three years’ time if the country prosperous future lies ahead for
arising as a result of the Covid-19 crisis. sustains its commitment to reform. the people of Somalia,” she said.
Bridge financing has been provided by
For further information on OECD’s Norway, Italy, the UK and the European Somalia is also planning to hold
Covid-19 tax guidance, see Union (EU). Debt relief will normalise its first democratic elections since
www.oecd.org/tax/tax-policy Somalia’s relations with the international 1969 in late 2020 and early 2021.12 UHY GLOBAL August 2020
POWERING
AHEAD (left to right), Sean, Chris, Danielle, Dennis
W hen Dennis Petri, partner, UHY LLP and managing director of Dennis quickly established himself as
UHY Advisors MI, Inc, became chairman of UHY at the end an ambitious new employee at Follmer
Rudzewicz & Co. who he joined straight
of last year, the world was blissfully unaware of the fear, personal after graduating in 1983. He was there
losses and economic impact that Covid-19 would bring in 2020. when they merged with five similar sized
The challenges at work and at home continue, but Dennis is certain CPA firms in the United States. One of
that UHY as a business is on course to be stronger than ever. the firms was the New York firm Urbach
Kahn & Werlin. When Urbach and Hacker
“I have been thrilled by the as a ‘natural optimist’, he is used to Young in London, UK, decided to work
overwhelming support and resilience turning disappointments into victories. together and establish an international
of our member firms across the world Having originally wanted to study network, UHY International was
right from the start of this pandemic,” medicine he diverted to accountancy launched and Dennis has stayed at the
says Dennis. “At every level of our when his excellent grades were not firm since its conception, 34 years ago.
network, new leaders have emerged quite good enough for medical school.
and established ones are still proving “Loyalty and enterprise have always
their weight in gold. This is the value “I just missed out on the necessary been important to me. I was looking for
of UHY’s global team and I am so straight As across all the sciences,” opportunities to grow professionally and
proud to be part of it. For us it is says Dennis, “but both my father and bring something valuable to the firm.
business as usual and we will continue grandfather had been accountants I became interested in the international
to manage the situation until things so it was an obvious decision for me aspects of business so when the US was
finally settle back into a new normal.” to follow in their footsteps. I have looking for partners to participate in UHY
never looked back. It is a wonderful International, I jumped at the chance
This tenacity was obvious in Dennis profession to be involved in.” and have been involved ever since,”
from a young age. Describing himself says Dennis.PERSONAL PROFILE UHY GLOBAL August 2020 13
“At my first UHY International meeting, “We will also be reviewing when and
over 15 years ago, I was introduced to how we introduce more use of artificial
Steve Fisher, one of our now-retired intelligence (AI) which is nascent in our
chairmen. He saw something in me, industry, particularly in the compliance
became an informal mentor and has area, but we are constantly looking
been instrumental in my lifelong at how best it will work to enhance
belief that taking an international our client offer,” says Dennis. “Board
view and striving for a global reach members have been tasked with coming
is imperative in our profession.” forward with ideas. I am a great believer
in staying ahead of the game and being
“Thanks to Steve I understood that there innovative, responsive and dynamic.”
was room for me to help the network Dennis with his twin grandchildren
build a world-class reputation. Four Outside work Dennis is an avid reader,
years ago I was appointed by the US a keep-fit fan and passionate about “I think that at the height of the
firm to serve on the Board and that was playing golf. In lockdown he treated pandemic many of us realised how
a wonderful milestone,” says Dennis. himself to a driving range net which important people are to us. At UHY we
“I have always kept up with the ‘day job’ he set up in his garage – “It will go on continued to ‘meet’ virtually and we
supporting my clients and particularly giving me pleasure long after all the even organised happy-hours online,
since my appointment as chairman I have impact of Covid-19 is over,” he says. but nothing can equal the value of
many new commitments, but I relish talking face to face,” says Dennis.
them all and am privileged to be in the Dennis and his wife Chris have six
children between them. All adults now, Despite, or perhaps because of, the
position I am within this network.”
they are spread across many regions of recent confines of Covid-19 and
A big priority for Dennis is to produce the US. “We have two of our children its repercussions, Dennis is more
UHY’s new five-year strategy for 2021-25. and two grandchildren living locally and determined than ever to concentrate
“The strategy will be built from, among we absolutely love seeing them. We are on the things that are most important
other things, a cross-network survey also fortunate to be a very close-knit to him – “Building the strongest UHY
to review member firms’ satisfaction family and even through lockdown we network and celebrating the wonders
levels, together with Board input. We all stayed in touch virtually. I hope it of friends and family. My wife Chris is
are planning a robust new strategy has made us all think differently about my rock and my sounding-board and
that considers everyone’s opinions and the importance of family, as well as our our children and grandchildren are a
will form strong foundations for our regional and global communities.” constant joy. We are very lucky.” n
network to thrive for generations.
“Some of our top priorities are that we
will continue to encourage cross border
referrals so we can offer our clients the
widest choice about which countries
they can operate in with the guarantee
of a seamless, quality UHY service.
As chairman I
have many new
commitments, but I
relish them all and
am privileged to be
in the position I am
within this network.14 UHY GLOBAL August 2020 WIDENING THE GULF GULF NATIONS ARE SYNONYMOUS WITH OIL, BUT FORWARD-THINKING GOVERNMENTS ARE MAKING BUSINESS EASIER IN A WIDE RANGE OF SECTORS
FEATURE – WIDENING THE GULF UHY GLOBAL August 2020 15
A ccording to the World Fund for Small and Medium Enterprise The oil and gas sector contributed
Development, the Industrial Bank of only 25.9% of GDP in 2018, and
Bank’s Doing Business 2020
Kuwait, the Kuwait Direct Investment that is expected to reduce to less
study, economies in the Middle Promotion Authority and others.” than 20% in the next few years.
East and North Africa (MENA)
are doing more than ever SMEs have become a chief focus of “Going forward, we do not see the oil
economic activity in the region for a and gas sector playing a major role in the
before to improve the business number of very good reasons. Populations future economic development model of the
climate for small and medium are growing at a significantly faster rate UAE,” says Anand. “Once the contribution
sized enterprises (SMEs). in the Gulf Cooperation Council (GCC) from oil and gas drops below 20%, it will
To emphasise the point, area (Bahrain, Kuwait, Oman, Qatar, become just one of the sectors contributing
four Arab nations are in Saudi Arabia and the UAE) than the to GDP, alongside trade and the financial
global average, and young people make services and manufacturing sectors.”
the study’s top 10 countries up a larger proportion of the total than
globally for improving elsewhere in the world. Governments In that regard, the UAE is unusual in
conditions for business. hope SMEs will absorb large numbers the region. In Kuwait, which controls
of young people entering the labour 8% of global oil reserves, it is difficult
These findings are not down to luck. market over the next few years. to overstate the importance of oil to
Collectively, governments of the MENA the economy. But even here, the need
region enacted 57 business climate for diversification is widely accepted.
improving regulatory reforms in the
12 months to May 2019, up 14 on “Oil will continue to play a vital role in the
the previous period. Gulf economies economy,” says Wael. “But the non-oil
were responsible for 35 of those. Young people in sector has experienced a slight increase
and, with Kuwait and other countries
Saudi Arabia, Jordan, Bahrain and Kuwait
Kuwait want to in the region supporting projects aimed
all made the top ten improvers list, and be entrepreneurs, at broadening economic activity, we will
the United Arab Emirates (UAE) ranked certainly see an increase in non-oil projects
16th in the world overall for ease of and are supported and a wider spectrum in trading.”
doing business in 2020. In fact, the in that aim by Moomen Elsalawy, partner at UHY
UAE’s rise up the World Bank list over
the last decade has been impressive, the government. Ammo & Co, Qatar, says that, Covid-19
notwithstanding, the Qatari economy is
as Anand Ramani, corporate finance
likely to expand significantly in the next
partner at UHY James, UAE, explains.
decade, and that much of that expansion
“Our ranking today compares to a will come from non-oil sectors.
ranking of 46 amongst 181 countries a
The potential is certainly there. One study
decade ago. This is a direct reflection of
found that SMEs could be worth USD
the significant efforts taken by the UAE
920 billion to the wider GCC economy
government in improving the overall
by 2022, and employ 22 million people.
business environment in the country.”
Some countries are leading the charge
SMALL FIRMS IN FOCUS towards a more diverse and innovative
SME culture. The study noted that, in its
And it is not just the UAE. Governments
Vision 2021 initiative, the UAE had set
around the Gulf have been proactively
a target to increase the share of SMEs
liberalising economies, reducing red tape
in its non-oil GDP from 60% to 70%.
and inviting foreign investment. Qatar has
taken huge legislative strides towards a
goal of attracting more overseas capital. IMPACT OF OIL
Kuwait recently leapt 13 places in the ease In fact, there is a growing acceptance of
of doing business rankings in just one year. the need for economies to diversify away
from over reliance on oil and gas. Saudi
“The Kuwaiti government is supporting state-owned oil company Saudi Aramco
the private sector financially and non- was listed in the world’s most valuable IPO
financially,” says Wael Arafa, managing last year partly to allow the government
partner at Kuwaiti member firm UHY to plough funds into the country’s non-oil
Pillars. “Young people in Kuwait want sector. The UAE, while never as dependent
to be entrepreneurs, and are supported on oil as some Gulf nations, is already well
in that aim by the government through on the way to a more balanced economy
institutions like the Kuwait National and sustainable long-term prosperity.16 UHY GLOBAL August 2020 FEATURE – WIDENING THE GULF
“Recent economic policy is focused
on developing Qatar’s non-associated
natural gas reserves and increasing
private and foreign investment in
non-energy sectors, so I think that there
will be a range of sectors beside oil
that grow in importance,” he adds.
We do not see the
oil and gas sector
playing a major
role in the future
economic development
model of the UAE.
Image: elina/Shutterstock.com
The package includes a three-year freeze in response we have developed new
in government fees and proposals to services to cover the needs of our clients
allocate 20% of government contracts to and potential clients in this area.”
AMBITION BACKED WITH ACTION SMEs. In addition, the country is one of
In fact the pace of change in Qatar has the most digitally advanced in the world, UHY James in the UAE is also broadening
recently increased, alongside the level of fuelling the rapid emergence of a digital its expertise as new types of business seek
government support. Qatar is currently startup culture. And that is not all. its services, many from the technology
subject to a blockade by neighbouring and sustainability sectors. “We now have
countries, including Saudi Arabia, the UAE, “If we set aside the recent impact of clients from proptech, fintech, crypto
Bahrain and Egypt. They accuse Qatar coronavirus, which is having a global currency, specialised healthcare, AI,
of backing militant groups, something impact on travel, trade and tourism, vertical farming, hydroponics and more,”
the Qatari government denies. Moomen generally speaking the hospitality, says Anand. “In the past, our clients
says the blockade has forced Qatar to healthcare, education and fintech sectors were from manufacturing, real estate,
strive for economic self-sufficiency. have all registered significant growth in trading, healthcare and hospitality.”
the last few years in the UAE,” says Anand.
“New factories were set up following the SMEs across the region rely on high quality
blockade to secure self-sufficiency, and the In Kuwait, the financial services sector is professional advice of the kind offered by
number of plants has doubled in the first experiencing significant growth, and the local UHY member firms. While the non-oil
six months, compared to the same period Kuwaiti government is also channelling SME sector is growing, there are still real
the previous year,” he says. “New food, support towards the food processing and challenges to overcome. Chief among
cement, plastic and steel production plants construction industries. In addition, Wael these, says Anand, is access to finance.
have been developed at a particularly fast says UHY Pillars now works with a wide
portfolio of SME clients in the retail, real “Unfortunately, many of the financial
pace, and a total of 730 new industrial
estate, services and non-profit sectors, institutions still follow checklist-based
facilities have been registered.”
and that many small and medium sized banking and collateral-based lending,
Qatar’s SMEs are also encouraged by the companies are transitioning to fully exploit instead of cashflow-driven criteria.
government’s focus on foreign investment, the potential of the digital economy. SMEs, given the nature and size of
which includes generous incentives. their business, generally struggle to
Moomen says that, taken as a whole, offer these collaterals or satisfy the
MEETING NEW NEEDS
Qatar’s open market policy grants investors documentation requirements,” he adds. n
As the region diversifies, UHY members
the opportunity “to make good profits and
are upgrading skills and specialisms to For more information on UHY’s
benefit from the freedom of unrestricted
meet the needs of new business sectors. capabilities in the Middle East and North
travel and movement of funds.”
“At UHY Pillars we are trying to capture Africa, email the UHY executive office,
In the UAE, too, ambition has been backed clients’ needs and provide customised info@uhy.com, or visit www.uhy.com
with action. Anand mentions a recent services,” says Wael. “For example,
economic stimulus package aimed at the last two years have seen a boom
local businesses in Dubai and Abu Dhabi. in the food and beverage sector, andCLIENT STORY UHY GLOBAL August 2020 17
MEXICAN Our strategy is
to use specialists
WAVES
in every country
we are active in.
OLMIX IS A BUSINESS THAT MIGHT
JUST CHANGE THE WORLD
T he company develops solutions for more natural, sustainable plant,
animal and human nutrition and health. Its ‘blue biotech’ focus on the
complete food chain – from sea to plate – might sound ambitious, but the
science behind the soundbites makes sense. So does the company’s decision
to appoint UHY member firms to help its expansion into South America.
Olmix marine solutions are based on operates in a heavily regulated sector. Esquivel y Cía,” he says. “We rely on the
macroalgae, a varied source of nutrients When the group prepared to open a cooperation and vigilance of the people
and bioactive compounds. Macroalgae Mexican subsidiary in 2014, it looked at UHY to give us the service we need.”
offers a range of innovative ways to for professional services providers that
reduce the need for pesticides in plants, also offered a wider advisory function. PERU CONNECTION
antibiotics in animal feed and chemical The partnership between Olmix Mex
additives in human food and healthcare. Olmix met with three local accountancy
and UHY Glassman Esquivel y Cía has
firms, and as a result UHY Glassman
been so rewarding that, when Olmix
The company is based in Brittany, France, Esquivel y Cía, UHY’s Mexican member
was considering opening a subsidiary in
but has now expanded into 28 locations, firm, was awarded the task of helping
Peru, it asked José Carlos Villegas for a
including the Americas. The group has Olmix develop a successful presence in the
recommendation. He had no hesitation in
a turnover of around USD 200 million country. Six years later, the UHY member
reaching out to UHY Blancas Sandoval &
and over 900 employees. It opened its firm – and specifically UHY’s José Carlos
Asociados, UHY’s member firm in Lima.
Mexico subsidiary – Olmix Mex – in 2014. Villegas and his team in Mexico City – is
still Olmix’s preferred accountancy partner. Olmix has now created a Peruvian
LOCAL KNOWLEDGE IS KEY subsidiary with the help of Carlos
Olmix faced the same challenges all RANGE OF SERVICES Sandoval at UHY Blancas Sandoval &
businesses encounter when seeking The team provides Olmix with Asociados. What is more, the company is
rapid international expansion. Each new accounting, tax, payroll, and invoicing considering opening further import and
location demands local knowledge. As services. Additionally, UHY Glassman sales offices in Central and South America.
a French company, Olmix needed local Esquivel y Cía provides legal support José would not hesitate to recommend
partners to steer the business through and business advisory services, and other member firms of the UHY global
the intricacies of national and regional prepares price transfer studies. network in future, as Olmix Mex continues
regulation, especially as it moved beyond to be delighted with the service it receives.
the familiar tax, accounting and legal “We chose UHY Glassman Esquivel y
regimes of the European Union. Cía because they gave us the complete “The quality service we get from UHY
set of services we needed,” says Robert. goes beyond a simple accounting
“Our group strategy is to use local “We were also attracted by reasonable service,” says Robert. “We have a
specialists in every country we are pricing and trustworthy people.” special relationship and we trust
active in – partners with knowledge them to make sure Olmix can keep
of local legislation, accounting and Since Olmix Mex was created six years developing in the right way.”
politics,” says Robert Bandner, regional ago, the company has significantly
manager for the Americas at Olmix expanded its activities in the country. For more information about UHY’s
Group. “We made a strategic decision Robert believes the partnership between capabilities in the health sciences,
long ago not to use the Big Four.” Olmix Mex and UHY Glassman Esquivel pharmaceutical and biotech sectors,
y Cía has been key to that success. contact the UHY executive office
As Robert implies, the role of an info@uhy.com, or visit
accounting firm, in this scenario, is “We have achieved our strategy in Mexico
thanks to the support of UHY Glassman www.uhy.com/sectors
about more than tax and audit. Olmix18 UHY GLOBAL August 2020
JOINING THE CLUB
WHAT ARE THE EMERGING ECONOMIES
TO WATCH IN THE 2020s?
T hey call it the ‘7% club’, and the figure has not been chosen advise clients looking for new and
at random. National economies that grow at seven percent are lucrative investment opportunities. The
most famous example is the BRICS group,
likely to double in size every decade, and if you make it into this an acronym coined by Goldman Sachs
exclusive club you might be on the fast track to a very bright future. economist Jon O’Neill in 2001 to cover
Brazil, Russia, India and China, with South
Or that, at least, is the theory. The 7% members’ fundamentals are sound, they
Africa added later. BRICS highlighted
club is not real, of course. There are no could still be on course for rapid growth
the economies best placed to surge in
perks of membership, no club outings, and over the remaining years of the decade.
the early years of the 20th century.
no seat at the top table. The club is the
invention of international banking group There is good reason to hope they are.
In 2005 the BRICS researchers introduced
Standard Chartered, who coined the term Standard Chartered researchers Madhur
the ‘Next 11’, a group of countries they
to categorise a group of economies that Jha and David Mann say, “Faster growth
believed would develop more slowly, but
it thinks will boast particularly impressive not only helps to lift people more quickly
were on course to become world economic
growth rates over the coming decade. out of absolute poverty, but is also
powers, nonetheless. South Korea,
usually accompanied by better health and
Mexico and Vietnam were all on the list,
As we all know, forecasts can quickly education, as well as a wider range of –
and South Korea has certainly lived up to
fall victim to events, and never more so and better access to – goods and services.”
expectations. Other forecasts have included
than now. The Covid-19 outbreak has
African nations like Nigeria and Ethiopia.
rendered economic crystal ball gazing BRICS AND PIECES
an especially hazardous pastime. But Are these predictions of economic
The 7% club is not the only high growth
Standard Chartered’s research, released take-off accurate? Vietnam is regularly
club in town, however. Economists
last year, may still have value. Almost touted as an emerging economy to watch,
are forever trying to predict where the
every country on earth is likely to miss and growth of well over 6% has been
lightning of fast and sustained growth
growth targets in 2020. But if the 7% club sustained for a number of years. Standard
is likely to strike next, so they can betterYou can also read
