RAK Ceramics, one of the world’s biggest producers of ceramics, is optimistic about growth in Saudi Arabia and other GCC markets following the introduction of anti-dumping measures to protect local ceramics producers.
"We are well positioned to boost our sales in Saudi Arabia and across GCC region," Abdallah Massaad, group chief executive of RAK Ceramics told The National in an interview.
“Anti-dumping duties being introduced by the governments on import of ceramics from India and China will help us to increase our market share. We are also exempted from customs duties as a GCC company that will help in our growth.”
In April, the GCC Industrial Cooperation Committee approved the imposition of anti-dumping duties on ceramic tiles imported from India and China. Imports from India face duties ranging from 17.6 per cent to 106 per cent, while duties on Chinese imports will range from 23.5 per cent to 76 per cent. The measures came into force on June 10.
Founded in 1989, RAK Ceramics exports its products, which includes sanitaryware and tiles, to more than 150 countries through a network of distributors in Europe, the Middle East and North Africa, Asia, North and South America and Australia. The company also has production plants in India and Bangladesh.
Mr Massaad is particularly optimistic about growth in Saudi Arabia, the Arab world’s biggest economy.
“We have a good market share, good reputation and already did many projects and therefore our sales in the first quarter have gone up in a big way,” he said.
Mr Massaad did not reveal the total sales in the first quarter in the kingdom. An earlier statement from the company said revenue in Saudi Arabia increased significantly when compared to the same period in 2019, driven by an 80.8 per cent increase in sales.
“We opened two showrooms in Riyadh and are opening two more showrooms in Jeddah. We are well set to grow in Saudi Arabia.”
The company is also implementing measures to mitigate the impact of Covid-19 on its business in different markets. It shut down production in India and Bangladesh and reduced its production in the UAE. It also took measures to manage its liquidity, including cutting discretionary expenses and placing non-essential capital expenditure on hold.
“We did what we all have to do to protect our company. We are very well in control and the company is in a good cash flow position. Every capex which is not needed now, we delayed it till after Covid.”
Capital expenditure is set to drop to Dh100-Dh125m this year, from Dh225m anticipated earlier, the company told analysts on an earnings call last week.
The company has also restarted operations in Bangladesh and at a plant in India in Andhra Pradesh. Its other India plant in the state of Gujarat remains shut.
RAK Ceramics, listed on Abu Dhabi Securities Exchange, reported an 18 per cent drop in its first-quarter net profit earlier this month as impairment losses climbed and revenue decreased amid the coronavirus pandemic.
Net profit for the three months ending March 31 fell to Dh30.2 million. Impairment losses on trade receivables and dues from related parties rose almost five-fold to Dh6m while revenue dropped 3 per cent to Dh593m.
“We are cautiously optimistic about growth in 2020,” Mr Massaad said. “We had a fairly good quarter and second quarter will be difficult for everyone. Starting from June, we can see [a] better market outlook and better demand as countries reopen their borders.”
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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