Transparency 'vital for ME firms' success'
Manama, September 4, 2013
Businesses in the Middle East need to embrace more transparency and public disclosure to continue being successful, said a top industry expert.
"Transparency is what will make business operate on a level playing field and this is an area where Saudi Arabia is leading the way and is already ahead of the curve," said Pearl Initiative executive director Imelda Dunlop during a visit to Bahrain yesterday.
The Pearl Initiative is a private sector-led not-for-profit organisation set up to improve transparency, accountability and business practices in the Arab world.
It is a growing regional membership network of business leaders committed to driving joint action and sharing knowledge and experience. It has been developed in co-operation with the United Nations Office for Partnerships.
"The Pearl Initiative aims to create a culture of greater transparency and accountability within the Arabian Gulf in order to positively impact the business environment and foster competitive economic growth and sustainable social development," said Dunlop.
"Family businesses make up about 80 per cent of the private sector in this region but they have a history of privacy and do not appreciate the need for public disclosure," Dunlop was quuoted as saying in the Gulf Daily News, our sister publication.
"The problem with this is that when they were set up by an individual they were well-structured and had corporate responsibility because that is the nature of people here. But when they are facing third generation family stakeholders, the control changes and there is no longer one person in charge," she stated.
"That causes problems and all family businesses face problems when they transform to third generation companies," noted Dunlop.
"There is a point where a family business develops so that it is no longer the family name but the balance sheet that matters," she added.
According to Dunlop, the family businesses are the major players but if they are to work with multinational operations, they are working with organisations that need a higher level of disclosure.
"If they need to raise capital from international banks, then it is necessary that they open their balance sheets and have a far higher level of transparency than what currently exists," she said.
"They need to have in place corporate standards and a code of conduct that addresses issues like corruption. That is what the Pearl Initiative is endeavouring to bring to business in the region," she said.
"Family businesses across the region are addressing these issues and are taking proper regulation into account," observed Dunlop.
"It is an important issue because regulation, transparency and corporate responsibility are what will drive the GCC economy forward," she added.-TradeArabia News Service