Interview: Abdul Latif Al Zayani
What are the most significant challenges to further integration faced by GCC member states?
ABDUL LATIF AL ZAYANI: Any integration programme will face challenges, particularly if integration requires waivers by the member countries, given that each has its own legislative tools, laws and regulations. Moreover, some countries may find it difficult to implement some integration measures and may have to delay implementation in certain areas, because of technical and procedural constraints. To this effect, the Supreme Council decreed that a ministerial committee be established to follow up implementation of the resolutions already in existence.
The Supreme Council further endorsed the Economic Judicial Commission for Settlement of Trade Disputes.
Also, importantly, the Supreme Council endorsed the High Commission for Economic and Development Integration in May 2016 to undertake monitoring of all integration projects, implementation of existing resolutions, and enhancement of the whole GCC economic and development integration process.
GCC leaders endorsed the statute of the Economic Judiciary Commission – an independent body composed of 12 judges which convenes to resolve claims and other issues – in May 2016. The commission plays a pivotal role in resolving trade disputes arising from the implementation of the GCC Customs union and common market. It issues guidelines for implementation of the provisions of economic agreements between members and ensures their speedy application in a fair manner.
Activation of the commission will encourage private participation in the economic integration process. In what ways is the GCC working to limit its economic exposure to external conditions?
AL ZAYANI: Although GCC member states emerged relatively unscathed from the 2008-09 global financial crisis, they are not complacent. All members realise that each economy must be diversified to prepare for the day that energy resources run out or, as we are now seeing, there is a downward trend in prices. Regional instability is just one factor in economic exposure. The GCC states have adopted several development visions and economic programmes through which they hope to achieve economic diversification in sustainable sectors that meet the aspirations of their people towards balanced development. The GCC states have had some initial success in reducing their dependence on oil through the industrial sector’s increased contribution to GDP. They envisage increasing the industrial sector’s contribution to GCC GDP from 10% to 20% by 2020.
Integrated economic legislation, laws and policies have greatly contributed to increasing the industrial sector’s contribution to GCC economies. Non-oil sectors are continuing to grow at a rate of 6% and accumulated investment in the industrial sector now totals over $323bn, with more than 14,000 industrial enterprises and around 1.26m jobs created. The volume of GCC investment in the industrial sector is expected to reach $2trn by 2020 after completion of the GCC Industrial Cities project, which is under way.
How do you envision taxation being implemented among GCC member countries?
AL ZAYANI: Most nations of the world depend on levying various taxes for their budgets, whereas the GCC states have been known as tax-free countries open to the external world. However, because the GCC states intend to diversify their revenue sources and reduce oil dependence, they have found it necessary to levy low duties and taxes on certain services and commodities, trying not to prejudice the welfare and living standards of their citizens. This is in addition to certain taxes imposed on foreign companies and investment. The GCC states are considering imposing value-added tax in the region. The imposition of any taxes on nations not used to such measures will be a challenge, and each member will do what is necessary, knowing which way is the best for their own people and their budgets.
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