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Cost of
Doing
Business
Logistics December 2016
Contents
1 Introduction 4
2 Company Formation 6
3 Land Rental and Construction 7
4 Utilities 8
5 Manpower 10
6 Visa and Labor 12
7 Ports and Customs 14
8 Storage, Handling & Transportation 17
9 Taxes in the GCC 20
10 Office Rentals 20
11 Overall Cost of Doing Business 25
12 Cost of Living Indicators 29
Appendix 34
3
Disclaimer
The information contained herein is of a general nature and is not intended to address the
circumstances of any particular individual or entity. Although we endeavor to provide accurate and
timely information, there can be no guarantee that such information is accurate as of the date it is
received or that it will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough examination of the particular situation. KPMG
does not guarantee that the use of the guidance in the report will lead to any particular outcome or
result. KPMG shall not be liable to anyone in respect of any business losses including, without limitation,
loss of or damage to profits, income, revenue, use, production, anticipated savings, business, contracts,
commercial opportunities or goodwill.
4
1 Introduction
The report discusses and compares a wide range of typical costs involved in setting up and operating a logistics business across specific jurisdictions within each of the Gulf Cooperation Council (GCC) countries. The cost items include one-time costs related to the setting up of the business and supporting infrastructure, as well as annual recurring costs pertaining to the operations and recurring regulatory requirements.
The key information presented and analyzed in this report pertain to:
Charges and fees for company formation and to procure the necessary licenses
Office rental costs (including costs for temporary renting of serviced offices)
Land rental, construction cost benchmarks for warehouses and costs of renting pre-built warehouse facility
Utility charges
Visa costs and eligibility of on-arrival and e-visas to various nationalities
Costs for obtaining residency permits
Manpower costs including salaries and benefits across a comprehensive list of standardized designations
Blue collared labor accommodation costs
Various applicable operating fees and taxes
Ports and customs duties and fees, including airport charges
Storage, handling and transportation
Guidelines on the mandatory recruitment of national workforce in the logistics sector
Costs of expatriate living, including residential rental cost, cost of education, utilities, telecommunication, etc.
Additionally, the report also presents key aspects of conducting business in the region, including:
Summary of the US Free Trade Agreements present in the GCC region (currently, only applicable for Bahrain and Oman)
Overview of the various operational incentives
The above information has been benchmarked across specific locations that permit logistics activity, within each GCC country – and are primarily in the form of Investment Parks / Cities or Free Trade Zones (FTZs). The benchmarked locations include:
Investment Parks / Cities:
– Bahrain Logistics Zone, Hidd, Bahrain (BLZ)
– King Abdullah Economic City, Jeddah, KSA (KAEC)
Free Trade Zones:
– Jebel Ali Free Zone, Dubai, UAE (JAFZA)
– Khalifa Industrial Zone, Abu Dhabi, UAE (KIZAD)
– Sharjah Airport International Free Zone, Sharjah, UAE (SAIF Zone)
5
– Ras Al Khaimah Free Trade Zone, Ras Al Khaimah, UAE (RAKFTZ)
– Sohar Port and Free Zone, Sohar, Oman (Sohar FTZ)
– Kuwait Free Trade Zone, Kuwait City, Kuwait (KWTFTZ)
Upon comparison, Bahrain exhibits the lowest values for the majority of the cost components, thereby presenting an optimal case for establishing logistics businesses. At an overall level, the cost for operating a logistics business in the GCC is lowest in Bahrain (BLZ), being 50% lower than the most expensive location, KAEC in Saudi Arabia.
Figure 1: Estimated total cost of business set-up1
Figure 2: Estimated annual operating cost2
1Cost estimates have been based on assumptions, as detailed in chapter 11 of the report
2As above
2.352.51 2.48 2.49 2.48
2.89 2.792.66
2.412.59 2.56 2.56 2.56
2.95 2.862.74
BLZ JAFZA KIZAD SAIF Zone RAK FTZ Sohar FTZ KAEC Kuwait FTZ
Minimum costs Maximum costs
1.48
2.762.56 2.65 2.61
1.69
3.11
2.34
1.71
3.092.88 2.97 2.94
1.95
3.42
2.64
BLZ JAFZA KIZAD SAIF Zone RAK FTZ Sohar FTZ KAEC Kuwait FTZ
Minimum costs Maximum costs
6
2 Company Formation
Businesses undertaking logistics activities in the Free Trade Zones (FTZs) in countries such as the UAE, Oman and Kuwait, are regulated by the respective FTZ authorities. Businesses not operating within the FTZs (in countries such as Bahrain and Saudi Arabia) are regulated by the countries’ specific Industry and Commerce Ministries.
Company formation requirements typically comprise of three key components:
Application / registration fees to form the company, usually non-refundable
Annual license renewal fees, depending on the type of license held
Minimum capital requirement represents the mandatory paid up capital for starting the
business; however, this is not required by some FTZs and Investment Parks / Cities. Moreover, there is usually no restriction on the usage of the capital once the company has been legally established.
BLZ and KWTFTZ have significantly lower Registration Fees and Annual License Renewal Fees compared to the rest of the FTZs and Investment Parks / Cities.
The figure below includes the costs for registering a limited liability company with multiple corporate shareholders, and the corresponding annual license renewal fees.
Figure 3: Licensing and Registration Requirements
Annual Fees & Application Fees (USD)
Cost Head BLZ JAFZA DLC3 KIZAD SAIF Zone
RAKFTZ Sohar FTZ
KAEC KWTFTZ
Application Fee (One-time fee) Nil Nil Nil 1,360 Nil 95 Nil Nil Nil
Business Registration (One-time fee)
133 4,080 Nil 2,040 2,720 1,904 2,727 6,675 330
License/Registration Renewal Fee (Annual)
133 8,160 2,720 1,360 2,720 993 1,000 1,335 165
Minimum Capital Requirements Nil Nil 81,600 40,800 40,800 27,200 51,940 Nil
3,298 for LLC and
32,980 for PLC4
Other Charges Nil Nil Nil Nil Nil 326 Nil Nil Nil
Source: FTZ Authorities, Investment Park/City Authorities, Bahrain Investor Center, World Bank Doing Business Report, Qatar Ministry of Energy and Industry
In certain cases, additional fees may be included to the requirements stated above. Although JAFZA, for example, has no requirement for minimum capital, JAFZA mandates an Industrial License fee varying between USD 1,500 to USD 2,500 (based on the number of products) and an additional annual payment of 2% of rent (up to a maximum of USD 27,200) as Public Health Levy (PHL) fees. JAFZA additionally charges USD 130 as immigration card fees annually.
3Dubai Logistics City
4Limited Liability Company (LLC) and Public Limited Company (PLC)
7
3 Land Rental and Construction
All the FTZs and Investment Parks / Cities considered in this report provide land plots on mid to long-term lease, for constructing a warehousing unit.
The significant variation in costs can be attributed to the supply and demand characteristics in each country, maturity level of the individual FTZs and Investment Parks / Cities, as well as location of the particular land plot.
In terms of land rentals for warehousing, KWTFTZ and JAFZA are among the most expensive, while KAEC offers the most competitive rates.
Figure 4: Warehousing Land Rental Rates
Land Rental & Construction (USD)
Cost Head BLZ JAFZA DLC KIZAD SAIF Zone
RAKFTZ Sohar FTZ
KAEC KWTFTZ
Land Rental for a Warehouse Facility (per m2 per year)
9.5 12 – 145 10.3 – 12.0
8.2 9.52 9.5 7.0 4.4 10 - 11
Service charge (per m2 per year)
1.4 3% of annual
rent 0.7 0.8 1,088.0 Nil Nil 1.0 Nil
Pre-built warehouse with office space rental (per m2 per year)
82.8 – 111.4
95.2 – 163.2
190.4 117.0 93.0 66.6 85.701.0 –
93.5 66.7
158.3 – 257.2
Service charge (per m2 per year)
12.5 – 16.7
2% of annual
rent Nil Nil Nil Nil Nil 20% Nil
Construction Cost for warehouse
620 - 651 630 - 662 630 - 662 630 - 662 630 - 662 630 - 662 780 - 819 740 - 777 690 - 725
Source: FTZ Authorities and Investment Park/City Authorities, KPMG Research & Analysis
Warehouse units are available for rental through private developers or directly from FTZs and Investment Parks / Cities.
Construction costs vary significantly between the GCC countries, and the same trend continues for these costs within the respective FTZs and Investment Parks / Cities. Bahrain offers the lowest construction costs for a warehouse, with Oman being the most expensive.
5Prevalent land rates applicable for a logistics unit
8
4 Utilities
Electricity and water are key utilities in the logistics sector. Electricity and water tariffs for industrial consumption can vary based on multiple factors including total number of units consumed, as well as peak, off-peak and seasonal rates. Bahrain commands the lowest rates for water, while Kuwait offers the lowest rates for electricity. In contrast, the UAE charges the highest industrial tariffs for the utilization of both electricity and water. At an overall level, utility charges in Bahrain are less than half of those in the UAE.
Cost of utilities across the GCC has seen a steady rise in the last couple of years as governments look to reduce strain on fiscal budgets due to the low oil prices by gradually reducing subsidies on utilities.
For a typical warehousing facility, the utility cost at BLZ is around 61% lower than SAIF Zone, which is the most expensive location.
Figure 5: Cost of Utilities
Cost of Utilities (USD)
Utility BLZ JAFZA6 KIZAD SAIF Zone RAKFTZ Sohar FTZ7
KAEC SMSIA KWTFTZ
Electricity (per kWh)
0.04 – 0.08
0.08 - 0.12 0.04 – 0.08
0.13 0.12 0.05 – 0.06
0.05 0.04 0.03
Water
(per m3) 1.06 -1.99
2.45 – 3.11
1.09 3.35 3.30 2.40 2.14 1.49 1.81
Source: Respective electricity and water authorities, KPMG Research & Analysis
Industrial utility tariff in Bahrain is structured as tariff slabs based on the total monthly consumption of water and electricity. No seasonal or peak rates are applicable under the country’s current tariff structure. The below figures indicate the cost per unit for electricity and water in the GCC across the multiple slabs of consumption.
Figure 6: Electricity and Water Tariff Structure in Bahrain
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
0 – 5,000 0.04
5,000 – 250,000 0.05
250,000 – 500,000 0.06
> 500,000 0.08
Figure 7: Electricity & Water Tariffs for Saudi Arabia
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
Any Quantity 0.05
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
Any Quantity 2.14
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
0 – 450 1.06
451 – 1,000 1.33
> 1,000 1.99
6Tariff for the UAE includes a surcharge of between USD 0.01 and 0.02 as per FEWA / DEWA / SEWA tariff structures. Applies
to JAFZA, SAIF Zone and RAKFTZ
7Sohar FTZ electricity tariff is calculated as a weighted average of seasonal tariffs
9
Figure 8: Electricity & Water Tariffs for Dubai, UAE
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
0 – 10,000 0.08
> 10,000 0.12
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
0 – 10,000 2.45
10,001-20,000 2.75
> 20,000 3.11
Figure 9: Electricity & Water Tariffs for Abu Dhabi, UAE
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
0 – 100,000 0.044
> 100,000 (Off Peak) 0.044
> 100,000 (Peak) 0.082
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
Any Quantity 1.088
Figure 10: Electricity & Water Tariffs for Oman
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
Any Quantity (Sep – Apr) 0.052
Any Quantity (May – Aug) 0.062
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
Any Quantity 2.402
Figure 11: Electricity & Water Tariffs for Kuwait
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
Any Quantity 0.033
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
Any Quantity 1.814
Figure 12: Electricity & Water Tariffs for Qatar
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
Any Quantity 0.036
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
Any Quantity 1.485
10
5 Manpower
For a comparison of the manpower costs, employees across different categories have been considered, ranging from blue collared staff to the senior management.
When comparing the average salary earned by employees working in the logistics sector in the GCC, Bahrain exhibits the lowest manpower cost for blue collar staff. It is also the lowest in terms of the cost incurred for the managerial positions.
Figures quoted below indicate gross annual salaries, which include housing allowance, transport allowance, schooling allowance and medical insurance. The allowances account for 25% to 50% of the total salary.
Figure 13: Manpower Costs
Manpower Costs (‘000 USD per annum)
Designation Bahrain Saudi Arabia Qatar Kuwait UAE Oman
CEO 106 - 132 135 - 167 148 - 183 141 - 175 152 - 188 121 - 150
PA 25 - 31 28 - 35 33 - 41 27 - 33 34 - 42 25 - 31
Operations Manager 48 - 59 55 - 68 58 - 72 56 - 70 56 - 70 49 - 61
Operations Coordinator 28 - 36 30 - 39 33 - 43 30 - 39 35 - 46 27 - 36
Logistics Manager 38 - 38 45 - 46 48 - 49 45 - 46 48 - 49 40 - 40
Logistics Officer 17 - 21 20 - 24 21 - 26 20 - 24 21 - 26 17 - 21
Machine Operator 14 - 18 14 - 18 15 - 19 14 - 18 15 - 19 13 - 16
Warehouse In-charge 16 - 22 16 - 21 18 - 24 17 - 23 19 - 25 14 - 19
Driver 10 - 13 14 - 18 15 - 19 14 - 18 17 - 21 13 - 16
Forklift Operator 14 - 17 15 - 19 16 - 20 15 - 19 17 - 20 13 - 16
Customs Clearance Manager
46 - 65 55 - 77 57 - 81 55 - 77 58 - 82 50 - 70
Customs Clearance Agent
18 - 22 20 - 26 22 - 27 20 - 26 22 - 28 18 - 22
Maintenance Coordinator
13 - 34 15 - 40 16 - 42 15 - 40 16 - 43 13 - 34
Sales Manager 56 - 69 55 - 68 63 - 78 54 - 67 61 - 75 50 - 62
Sales Executive 18 - 23 20 - 25 22 - 28 20 - 25 23 - 29 18 - 22
Finance Manager 78 - 96 95 - 117 97 - 120 95 - 117 104 - 128 86 - 106
Accountant 20 - 33 23 - 38 24 - 41 23 - 38 25 - 42 20 - 33
Source: GulfTalent, KPMG Research & Analysis
11
Analyzing for a typical range of manpower costs necessary for the operations of a logistics business in the respective FTZs and Industrial Parks / Cities, Bahrain along with Oman, come out as the lowest cost centers. A comparison of the minimum and maximum total costs for manpower is presented in the figure below.
Figure 14: Total Annual Manpower Cost8 for a Logistics Company (USD ‘000)
Figure 15: Localization requirement
Localization requirement at FTZs
BLZ JAFZA KIZAD SAIF Zone RAKFTZ Sohar FTZ KAEC
Localization requirement (%)
25% Nil Nil Nil Nil 15% 10% to 35%
Source: FTZ Authorities, LMRA
Figure 16: Blue Collared Labor Accommodation
Cost of accommodation per year9 (USD)
BLZ / BIW JAFZA KIZAD SAIF Zone RAKFTZ Sohar FTZ KAEC KWTFTZ
Blue Collared Accommodation Rent (Per Labor Per Year)
1,167 3,354 1,306 1,034 816 2,935 2,286
– 2,938
1,187 –
1,583
The blue collared accommodation cost reflects the cost of accommodating a blue collared staff at a facility either located within the free zones or at a designated facility within the respective city. RAKFTZ offers the most competitive rates for labor accommodation, at USD 816, per labor per year, followed by the SAIF Zone in Sharjah and the BLZ in Bahrain. JAFZA in Dubai is the most expensive to accommodate blue collared staff, costing USD 3,354 per labor per year. For companies operating at the BLZ, labor accommodation is available at Bahrain Investment Wharf (BIW), located adjacent to the investment park. JAFZA, SAIF Zone, RAKFTZ and KAEC offer labor accommodation facilities within the free zone. While for the other free zones, labor accommodation is available in areas in close proximity to the zones.
8Reflects the average annual manpower costs for 16 employees consisting of 7 semi-skilled workers, 4 skilled workers, 2
administrative staff, and 3 senior management members
9Includes cost for room rent and utilities only and excludes all other costs such as food and laundry.
819
1,153 1,153 1,153 1,153
9271,023 1,0301,049
1,475 1,475 1,475 1,475
1,185
1,308 1,317
BLZ JAFZA KIZAD SAIF Zone RAK FTZ Sohar FTZ KAEC Kuwait FTZ
Minimum costs Maximum costs
12
6 Visa and Labor
Visa and labor charges represent the costs associated with employing foreign workers, and typically include the following key components:
One-time entry visa
Work / Residency permit
Medical fees
ID card creation
While all the four components mentioned above are required for employing a foreign worker in the GCC, in Bahrain, a separate one-time entry visa and medical test are not required as the work permit includes these components.
The annual residency permit renewal constitutes the larger portion of visa and labor related costs, and varies significantly across the GCC, with Saudi Arabia being the most expensive. In the UAE, the renewal process also requires the medical test and ID card issuance to be repeated, thereby increasing the overall work permit renewal cost substantially.
Figure 17: Visa and Labor Costs
Visa and Labor Costs (USD per employee)
Cost Head Bahrain UAE Oman Saudi Arabia Qatar Kuwait
Entry Visa 77 112 99 540 55 33
Work Permit10 (per year) 265 20511 391 67512 335.5 198
Medical Fees13 (per year) 191 150 780 675 27.5 165
ID Card Nil 100 29 230 Nil 17
Total first year cost 533 567 1,299 2,120 418 413
Source: Respective foreign affairs and manpower ministries, KPMG Research & Analysis
10All reported work permit figures are annual and are calculated by dividing the renewal fees by the duration of visa in years and
include stamping fees for passports
11The reported figure is the calculated annual cost for a 3 year visa available at the FTZs
12A work permit in Saudi Arabia is called a labour card and does not imply residency status which is only applicable after being
issued an ID card (Iqama). The reported figure can be lower if localization targets are met.
13Cost for medical insurance to access government hospitals and health centres. In Oman and Saudi Arabia, government
hospitals cannot be accessed by expatriates. Hence, cost of private health insurance has been taken.
13
Figure 18: Visa on Arrival and e-Visa
Nationalities eligible for visa on arrival and e-visa
Bahrain UAE Oman Saudi Arabia Qatar Kuwait
Number of nationalities eligible for visa on arrival
67 47 68 None 33 52
Number of nationalities eligible for e-visa
114 47 68 None 33 52
Source: Respective foreign affairs and manpower ministries, KPMG Research & Analysis
Oman and Bahrain offer visa on arrival to the largest number of nationalities, compared to the other
GCC countries. Also, Bahrain offers e-visa to the largest number of nationalities. Saudi Arabia, on the
other hand, does not offer visit visas or e-visas to nationals of non-GCC countries – business, religious
and family visas, however, are offered on specific needs basis. The full lists of nationalities currently
offered visas on arrival and e-visas in each of the GCC countries are presented in Appendix A.
Figure 19: Cost of entry visa
Cost of entry visa (USD)
Visa Type Bahrain UAE Oman Saudi Arabia Qatar Kuwait
Single entry visa 13 68 52 534 28 10
Multiple entry visa 66 150 130 801 330 N/A
Source: Government websites, KPMG Research & Analysis
Bahrain and Kuwait offer the most competitive visit visa costs compared to the other GCC countries.
Visa cost for visiting Saudi Arabia is several times higher than the other countries.
14
7 Ports and Customs
Sea Port charges are indicative costs of handling, clearing, documentation and last mile transportation charges for standard items. The table below represents the sea port charges applicable in GCC countries. Comparatively, Bahrain offers the best rates in the region.
Figure 20: Sea Port related Costs and Time
Sea Port Costs and Time
Location Bahrain UAE Oman Saudi Arabia Qatar Kuwait
Port
Khalifa bin
Salman Port
Jebel Ali Port, Dubai
Port Khalid, Sharjah
Saqr Port, RAK
Khalifa Port, Abu
Dhabi
Sohar Port
King Abdullah
Port, Jeddah
King Abdulaziz
Port Dammam
Doha Port
Shuwaikh Port
Charges applicable for 20-foot containers (USD)
Terminal handling
93 250 250 250 120 105 100 100 125 400
Clearing, documentation and transportation
290 310 310 350 310 320 330 400 390 350
Charges applicable for 40-foot containers (USD)
Terminal handling charges
153 360 340 375 320 145 180 180 175 550
Clearing, documentation and transportation charges
350 500 475 550 525 450 750 750 450 450
Source: 3PL service providers, KPMG Research & Analysis
Port Storage Charge is the cost associated with storing containers at container terminals. The tariff
structure for container storage at the ports includes a ‘free time allowance’ during which no charge is
levied. Following the expiry of the free time allowance, storage charges are levied on a per container
per day basis, with progressive increase in tariff as per the applicable slab. Typically, importers limit
storage at ports to the free time period to avoid the tariff.
15
Illustrated below are the storage charges for container imports applicable to the relevant sea ports for each of the benchmarked FTZs and Investment Parks / Cities:
Figure 21: Port Storage Charges
Port storage charges for container imports (USD)
Storage costs (per day per container)
BLZ JAFZA SAIF Zone
RAKFTZ KIZAD Sohar FTZ KAEC Dammam SMSIA KWTFTZ
Khalifa Bin
Salman Port
Jebel Ali Port
Port Khalid
Saqr Port Khalifa
Port Sohar Port
King Abdullah
Port
King Abdulaziz
Port
Port of Doha
Shuwaikh Port
Free Time 11 days 10 days 10 days 7 days 14 days 10 days 7 days 7 days 3 days 10 days
20-foot container
4.0 (Day 12 to 21)
22.3 (Day 11 to 15)
20.4 (Day 11 to 15)
4.1 (Day 8 to 14)
21.8 (Day 15 to 19)
3.2 (Day 11 to 20)
80.1 (Day 8
onwards)
80.1 (Day 8
onwards)
16.5 (Day 4 to 6)
9.9 (Day 11 to 20)
5.3 (Day 22 to 31)
4.5 (Day 21 to 30)
16.5 (Day 21 to 30)
8.0 (Day 32 to 41)
41.6 (Day 16
onwards)
38.1 (Day 16
onwards)
8.2 (Day 15
onwards)
40.8 (Day 20
onwards)
33.0 (Day 7
onwards) 13.3 (Day 42
onwards)
6.5 (Day 31 onwards)
23.1 (Day 31
onwards)
40-foot container
8.0 (Day 12 to 21)
44.6 (Day 11 to 15)
40.8 (Day 11 to 15)
6.8 (Day 8 to 14)
43.6 (Day 15 to 19)
6.5 (Day 11 to 20)
80.1 (Day 8
onwards)
80.1 (Day 8
onwards)
33.0 (Day 4 to 6)
16.5 (Day 11 to 20)
10.6 (Day 22 to 31)
9.1 (Day 21 to 30)
26.4 (Day 21 to 30)
16.0 (Day 32 to 41)
83.2 (Day 16
onwards)
76.2 (Day 16
onwards)
13.6 (Day 15
onwards)
81.6 (Day 20
onwards)
66.0 (Day 7
onwards) 26.6 (Day 42
onwards)
13.0 (Day 31
onwards)
36.3 (Day 31
onwards)
Source: Port authorities, KPMG Research & Analysis
The Khalifa Port in Abu Dhabi offers the highest free time of 14 days for storage of import container at the port with Bahrain being the next most lucrative, offering 11 days of free time.
Port storage charges are the highest for ports in Saudi Arabia as the charges are levied per ton rather than per container. The Sohar Port in Oman offers the most competitive port storage charges while Bahrain’s Khalifa Bin Salman Port offers the next most competitive tariff rate.
16
Figure 22: Airport Terminal Charges
Airport terminal handling charges14 for cargo imports (USD)
Airport
BLZ JAFZA SAIF Zone RAKFTZ KIZAD Sohar FTZ KAEC Dammam KWTFTZ
Bahrain Int’l.
Airport
Dubai Int’l. Airport
Sharjah Int’l.
Airport
Ras Al Khaimah
Int’l. Airport
Abu Dhabi Int’l.
Airport
Muscat Int’l.
Airport
King Abdulaziz
Int’l. Airport
King Fahad Int’l.
Airport
Kuwait Int’l.
Airport
Airport cargo handling charges (per kg)
0.06 1.65 1.65 1.65 1.88 0.06 2.1 2.0 0.89
Source: KPMG Research & Analysis
The airport cargo handling charges are lowest at the Bahrain and Muscat international airports, at USD 0.06 per kg of imported cargo.
Figure 23: Customs Fees
Customs fee (USD per container)
Type of declaration Bahrain UAE Oman Saudi Arabia Qatar Kuwait
Import 85 75 65 75 90 85
Export 85 65 65 80 130 85
Re-export 85 55 65 100 130 85
Temporary import and export
85 65 65 100 130 120
Transit 80 125 125 135 100 130
Certificate of origin 135 175 165 145 200 50
Source: KPMG Research & Analysis
While the customs fees varies across the region at an aggregate level, Oman offers the most competitive rates with Bahrain and Kuwait marginally behind. Qatar had the highest overall customs-related fee.
14 Charges as levied by the respective airport authority.
17
8 Storage, Handling & Transportation
Bahrain has the lowest storage and handling costs across the GCC. Storage and handling costs are highest in the UAE and Saudi Arabia at roughly 20% higher than in Bahrain while Oman was the next most competitive market for warehousing with storage and handling costs about 10% higher than in Bahrain.
Figure 24: Storage and handling costs
Storage and handling costs for pallets (USD)
Pallet type Bahrain UAE Oman Saudi Arabia Qatar Kuwait
Ambient pallet storage cost (per pallet per day)
0.58 0.70 0.64 0.70 0.67 0.68
Ambient pallet storage cost (per pallet per week)
3.50 4.20 3.85 4.20 4.03 4.10
Cold pallet storage cost (per pallet per day)
0.84 1.01 0.92 1.01 0.97 0.98
Cold pallet storage cost (per pallet per week)
5.10 6.12 5.61 6.12 5.87 5.97
Handling out cost (per pallet)
2.90 3.48 3.19 3.48 3.34 3.39
Source: 3PL service provider, KPMG Research & Analysis
When exporting goods into the Saudi market, Bahrain (Khalifa bin Salman Port) and Dubai (Jebel Ali Port) are the most competitive in terms of cost, while it takes the lowest number of days to export from Bahrain to Dammam by sea.
Figure 25: Sea freight cost and duration to Dammam
Sea freight cost and duration for exporting from GCC seaports to Dammam, Saudi Arabia
Location Bahrain Dubai, UAE Sharjah,
UAE
Ras Al Khaimah,
UAE
Abu Dhabi, UAE
Sohar, Oman
Jeddah, Saudi Arabia
Doha, Qatar Shuwaikh,
Kuwait
Port
Khalifa bin
Salman Port
Jebel Ali Port
Port Khalid Saqr Port Khalifa Port Sohar Port King
Abdullah Port
Doha Port Shuwaikh
Port
Sea freight cost (USD per 20' container)
350 350 N/A 500 500 500 475 500 600
Sea number of days
1 to 2 3 to 4 N/A 9 to 17 6 to 9 7 to 10 8 8 to 15 9 to 16
Sea freight cost (USD per 40' container)
600 600 N/A 900 900 900 650 900 1000
Source: 3PL service provider, KPMG Research & Analysis
18
When exporting goods into the Saudi market by road, Bahrain is the most competitive in terms of cost due to its geographical proximity to Dammam.
Figure 26: Trucking cost
Trucking cost from GCC entry point (seaports) to Dammam, Saudi Arabia (USD per container)
Location Bahrain Dubai, UAE Sohar, Oman Dammam, Saudi
Arabia Doha, Qatar
Shuwaikh, Kuwait
Freight type Khalifa bin
Salman Port Jebel Ali Port Sohar Port
King Abdulaziz Port Dammam
Doha Port Shuwaikh Port
Trucking cost (USD per 20' ambient container)
530 1450 3500 350 2000 600
Trucking cost (USD per 20' refrigerated container)
650 1600 4000 450 2200 740
Trucking cost (USD per 40' ambient container)
820 2250 5400 540 3100 950
Trucking cost (USD per 40' refrigerated container)
1000 2500 6150 700 3400 1170
Source: 3PL service provider, KPMG Research & Analysis
Figures 25 and 26 provide an overview of the freight cost when exporting from Bahrain to the rest of the GCC by air and road respectively.
Figure 27: Air freight cost and duration
Air freight cost and duration for exporting from Bahrain to other GCC countries
Location UAE Oman Saudi Arabia Qatar Kuwait
Air freight cost (USD per kg)
3.2 4 3.2 3.2 3.2
Source: 3PL service provider, KPMG Research & Analysis
Figure 28: Road freight cost and duration
Road freight cost and duration for exporting from Bahrain to other GCC countries
Location UAE Oman Saudi Arabia Qatar Kuwait
Road freight cost (USD per kg for loose truck load)
0.28 0.67 0.56 0.94 0.94
Source: 3PL service provider, KPMG Research & Analysis
19
Figure 29: Sea freight cost and duration from Bahrain
Sea freight cost and duration for exporting from Bahrain to other GCC countries
Location UAE Oman Saudi Arabia Qatar Kuwait
Port Jebel Ali
Port, Dubai
Port Khalid, Sharjah
Saqr Port, RAK
Khalifa Port, Abu
Dhabi Sohar Port
King Abdullah
Port, Jeddah
King Abdulaziz
Port Dammam
Doha Port Shuwaikh
Port
Sea freight cost (USD per 20' container)
150 500 650 450 538 580 400 488 513
Sea freight cost (USD per 40' container)
205 650 700 550 700 700 600 650 650
Source: 3PL service provider, KPMG Research & Analysis
20
9 Taxes in the GCC
Bahrain and the UAE – with no levy of corporate taxes – offer the most attractive tax regimes among the GCC countries. On the other hand, Qatar and Saudi Arabia provide this exemption only to companies owned by GCC nationals. Zakat is applicable only in Saudi Arabia and Kuwait.
Figure 30: List of taxes
List of taxes across GCC
Tax category Bahrain UAE Oman Saudi Arabia Qatar Kuwait
Corporate income tax
None None
No tax on profits up to OMR
30,000. 12% tax on profits above
OMR 30,000
No tax on companies
owned by GCC nationals.
20% tax on profits under
foreign shareholding
No tax on companies
owned by GCC nationals. 10%
tax on non-GCC share of profits
1% tax on Kuwaiti shareholding
company. 15% tax on non-GCC share
of profits
Employer’s social security contribution
12% for nationals 15% for nationals 10.5% for nationals
9% for nationals 10% for nationals 11.5% for nationals
3% for expatriates
None for expatriates
None for expatriates
2% for expatriates
None for expatriates
None for expatriates
Municipal tax
10% of commercial and residential rent for expatriates
5% of the specified rental
index
3% on property rents
None None None
Withholding tax
None None
10% for foreign companies that do not have a
permanent establishment in
Oman
5% to 15% on the foreign
shareholding component
5% on royalties and technical
services and 7% on any other payments for
services carried out wholly or
partly in Qatar
None
Other taxes Summary
None None None
Zakat of 2.5% is levied on
companies owned by GCC
nationals, on the company's Zakat
base
None
Zakat of 1% is levied on all
publicly traded and closed Kuwaiti
shareholding companies on the
profit
Companies with a workforce of less than 50%
Saudi nationals have to pay
SAR 200 per expatriate
employee per month
National Labor Support Tax -
companies listed in the KSE are
required to pay an employment tax of
2.5% of annual profits
Source: IMF, KPMG Research & Analysis
Bahrain and UAE offer the most lucrative tax regimes in the region. The highest liability for tax exists in Oman, largely due to its requirement of 12% taxation on any annual income above OMR 30,000 (USD 78,020).
The tax regimes discussed here highlight the overall taxation at the country-level. However, FTZs in these countries often offer tax exemptions in order to incentivize investment.
In Saudi Arabia, Zakat is levied on Saudi and GCC nationals, and on companies that are wholly owned by those individuals or have their equity interests in companies. There are certain rules that apply to the method of calculating the Zakat liability. In general, Zakat is levied at a fixed rate of 2.5% on the
21
higher of the adjusted taxable profits or the Zakat base. Zakat base is calculated as follows:
Figure 31: Additions and deductions to arrive at the Zakat Base
Additions and deductibles to arrive at Zakat base
Additions Deductibles
Current year adjusted profits Current year adjusted losses
Share capital Net book value of fixed assets
Retained earnings Approved accumulated losses brought forward
Reserves / provisions Long term investments in Saudi companies
Loans, current accounts credit balances Dividends paid during the year
Incentives offered by the Free Trade Zones
The following table provides an overview of the different incentives offered by the benchmarked FTZs and Investment Parks / Cities.
Figure 32: Incentives Offered by FTZs and Investment Parks / Cities
Incentives
Incentive Type BLZ JAFZA KIZAD SAIF Zone RAKFTZ Sohar FTZ KAEC KWTFTZ
Exemption from tax15,16
100% foreign ownership
100% repatriation of capital/profits
Duty Free Imports of raw materials and equipment17
Subject to approval
Duty Free access to GCC markets
Source: FTZ Authorities, Investment Park/City Authorities and KPMG Research & Analysis
15Tax exemptions are only guaranteed at BLZ and Sohar FTZ for a period of 10 years and 25 years respectively
16FTZs in the countries offer tax exemption as part of their incentive package.
17Exemption on import duties do not apply in Qatar; however, transit importation is permissible whereby imported
material/equipment is exempt from import duties if they are deposited in a free trade zone or exported within six months
22
10 Office Rentals
Cost effective and conducive office spaces are a key requirement towards undertaking successful business operations. While regular offices are required during the operational phases of a business, during the initial phases, serviced offices often provide the necessary support in quickly setting up of a business presence in a particular geography. This chapter assesses the cost for renting office spaces either within, or in close vicinity of, the FTZs and Industrial Parks / Cities within each country. The costs for renting serviced offices is also discussed in this chapter.
An overview of the prevalent rental rates across the office locations in the GCC (situated in proximity to the FTZs and Industrial Parks / Cities) shows Bahrain and Oman to have the lowest effective rental rates. On the other hand, Qatar and JAFZA have the most expensive rental rates for offices.
23
Figure 33: Office Rentals
Annual Rental of Offices (USD)
Cost component
Bahrain UAE18 Saudi Arabia Qatar Oman Kuwait
Bahrain Financial Harbor
World Trade Centre
Seef Area
Dubai Inv. Park
DAFZA Dubai Log. City
Dubai Science
Park
Dubai Internet
City JAFZA
Dubai Silicon Oasis
JLT DIFC Al
Khobar Riyadh Jeddah Doha Muscat
Kuwait City
Office Rental (per m2 per year)
250 192 192 205 – 349
503 – 530
440 322 468 544 – 707
435 176 – 410
792 200 – 254
320 – 454
267 – 401
720 276 435
Service Charge (per m2 per year)
Nil 96 10% of annual
rent 58 – 73
12.5% of annual
rent 82 58 88 Nil
Included in rent
Included in rent
10% of annual
rent
10% of annual
rent
10% of annual
rent
10% of annual
rent
10% of annual
rent Nil 20
Effective rent paid (per m2 per year)
250 288 211 263 – 422
566 – 596
522 380 556 544 – 707
435 176 – 410
871 220 – 279
352 – 499
294 – 441
792 276 455
Rent Deposit 3
months’ rent
3 months’
rent Nil
1 month rent
Nil 10% of annual
rent Nil Nil
10% of first year contract
10% of first year contract
10% of first year contract
10% of first year contract
10% of annual
rent
10% of annual
rent
10% of annual
rent
1 month rent
1 month rent
1 month rent
Agency Fee19 10% of first
year contract Nil
1 month rent
5% to 10% of
first year contract
5% to 10% of
first year contract
5% to 10% of
first year contract
5% to 10% of
first year contract
5% to 10% of
first year contract
5% to 10% of
first year contract
5% to 10% of
first year contract
5% to 10% of
first year contract
5% to 10% of
first year contract
5% of first
contract
5% of first
contract
5% of first
contract
Two weeks rent
Nil Nil
Municipal Property Tax20
10% of rent
10% of rent
10% of rent
10% of rent
Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 5% of rent
Nil
Source: Primary Research, KPMG Analysis
18The common practice in the UAE is to pay 12 months’ rent in advance.
19Agency fee is only payable in case the tenant leases a property through an agent.
20Municipal property tax is not levied in free zones in Dubai. For commercial properties outside the free zone, a municipal property tax of 10% of the annual rent is levied.
24
The cost for serviced offices have been assessed considering the cost for renting an area suitable to accommodate two individuals (the most prevalent practice in renting similar properties). Rental rates for serviced offices vary significantly across the major cities in the GCC. Bahrain offers the most competitive serviced office market in the GCC costing about USD 1,430 per month. Dammam and Muscat are the next most competitive cities with serviced offices typically costing over USD 1,600 per month. Serviced offices are most expensive in Doha costing USD 4,390 per month.
Figure 34: Cost of renting serviced office across major cities in the GCC21
Rental rates for serviced offices (USD per month)
Country Bahrain UAE Oman Saudi Arabia Qatar Kuwait
Manama Abu Dhabi Dubai Muscat Dammam Jeddah Riyadh Doha Kuwait
City
Monthly rent
1,430 3,460 3,320 1,660 1,630 2,110 2,070 4,390 3,390
Source: Primary Research, KPMG analysis
Serviced offices are typically managed by professional serviced office management companies which lease office spaces to businesses or individuals. A serviced office is equipped with furniture, shared meeting rooms, shared receptionists and pantry, and provides access to internet, and shared printer, scanner and photocopier. Charges for using meeting rooms, kitchen consumables, phone calls and photocopies are often billed separately, based on usage.
21 Serviced office suitable to accommodate two individuals
25
11 Overall Cost of Doing Business
11.1 Overall Cost of Setting up
The following tables outline the overall set-up costs and cost of operating a logistics business within the various countries of the GCC. In order to compare, we have considered an illustrative example with the following assumptions:
Size of land: 5,000m²
Built-up area: 3,000m²
Number of employees in the set-up phase: 3
Number of employees in the operating phase: 45
Overall, cost of set-up at BLZ is around 19% lower than the most expensive location Sohar FTZ.
Figure 35: Cost of setting up22
Average Cost of Setting up (USD)
Cost Head BLZ JAFZA KIZAD SAIF Zone
RAKFTZ Sohar FTZ
KAEC KWTFTZ
Company Formation 265 12,240 4,760 5,440 3,318 3,727 6,675 495
Land Rental23 54,917 63,036 – 70,040
44,880 48,688 47,600 35,060 27,074 49,470 – 54,417
Construction Cost for Warehouse / Light Duty Factory24
2,046,000 2,079,000 2,079,000 2,079,000 2,079,000 2,574,000 2,442,000 2,277,000
Manpower25 231,450 –286,400
311,940 –385,900
311,940 –385,900
311,940 –385,900
311,940 –385,900
256,050 –316,800
285,000 –352,600
292,170 –361,500
Visa Cost25 1,599 1,701 1,701 1,701 1,701 3,897 6,360 1,239
Serviced Office Rental26 17,160 39,818 41,551 39,818 39,818 19,914 25,308 40,724
Total Cost 2,351,391
– 2,406,341
2,507,735 –
2,588,699
2,483,832 –
2,557,792
2,486,587 –
2,560,547
2,483,377 –
2,557,337
2,892,647 –
2,953,397
2,792,417 –
2,860,017
2,661,097 –
2,735,374
22The period of setup has been assumed to be one year
23Total land rental has been assumed for a land parcel of 5,000 m2
24Total construction cost has been assumed for a factory unit with a built-up area of 3,000 m2
25Manpower and visa costs have been calculated for 3 senior management staff for a period of one year
26Serviced office rental has been assumed for the rental of office space for two employees for the period of one year
26
11.2 Overall Cost of Annual Operations
The following table outlines the overall cost of operating a logistics business within the various countries of the GCC. As above, a standard warehousing unit of 3,000 m² built-up area, situated on a land of 5,000 m² area, and a manpower strength of 45 has been considered. Overall, annual operating cost at BLZ is around 50% lower than the most expensive location KAEC.
Figure 36: Comparison of operating costs
Average Annual Operating Costs (USD)
Cost Head BLZ JAFZA KIZAD SAIF Zone
RAKFTZ Sohar FTZ
KAEC KWTFTZ
Annual License Renewal Fees27
133 8,160 1,360 2,720 1,319 1,000 1,335 165
Land Rental28 54,917 63,036 – 70,040
44,880 48,688 47,600 35,060 27,074 49,470 – 54,417
Manpower29 819,150 – 1,049,300
1,153,440 –
1,475,200
1,153,440 –
1,475,200
1,153,440 –
1,475,200
1,153,440 –
1,475,200
926,700 – 1,185,441
1,022,600 –
1,307,800
1,029,770 –
1,316,800
Visa Cost26 23,985 25,515 25,515 25,515 25,515 58,455 95,400 18,585
Utility Cost30 9,775 19,741 10,160 25,844 25,293 11,604 10,233 7,539
Blue Collar Accommodation31
40,856 117,382 45,696 36,176 28,560 102,711 79,993 – 102,842
41,555 – 55,406
Ports & Customs 476,820 1,309,134 1,214,256 1,292,112 1,270,036 496,080 1,816,622 1,131,930
Storage and Handling 51,235 61,482 61,482 61,482 61,482 56,359 61,482 59,945
Total Cost 1,476,871
– 1,707,021
2,757,890 –
3,086,654
2,556,789 –
2,878,549
2,645,977 –
2,967,737
2,613,245 –
2,935,005
1,687,969 –
1,946,709
3,114,740 –
3,422,788
2,338,959 –
2,644,788
Source: KPMG Research & Analysis
27Reflects the annual cost associated with renewing a license for logistics activity
28Reflects the average annual cost of renting a 5000 m2 plot of warehousing land (including service charge) within each FTZ and
Investment Park / City
29Manpower and visa costs have been calculated for 45 employees across a range of key designations
30Reflects the annual utilities cost based on a 3,000 m2 built-up area consuming 65.64 kWh per m2 per year and 30m3 of water
per month
31Blue collar accommodation cost is for a total of 35 blue collar staff
27
11.3 US Free Trade Agreement
Among the GCC countries, only Bahrain and Oman have signed a Free Trade Agreements (FTA) with the USA. The FTA has resulted in the reciprocal elimination of duties on virtually all current bilateral trade in consumer goods, agricultural goods and industrial products. The FTA also contains provisions that are expected to expedite the movement of goods and the provision of services between the countries and further improve the regulatory climate for bilateral trade and investment.
Figure 37: US-Bahrain Free Trade Agreement
US-Bahrain FTA
Key highlights
• The US-Bahrain Free Trade Agreement (FTA) was signed on 14th September, 2004 and came into force on 1st August, 2006. The FTA made Bahrain the first country in the GCC and third among the Arab countries (other being Jordan and Israel) to have an FTA with the US.
• The FTA was established with the intention to boost trade flows between the two countries through the elimination of trade tariffs on imports and exports of goods and services. It further aims to bilateral investments.
• A vital objective of the FTA for Bahrain is to increase trade flows, stimulate inward flow of investment, expand major manufacturing and services sectors, and encourage the exchange of expertise to create employment opportunities in Bahrain.
• Another aspect of the FTA is that the administrative fees (e.g., for such consular transactions as document verification) have been either eliminated or reduced.
• The FTA also provided a preferential tariff treatment, through a transition period of ten years following entry into force of the FTA, for textile and apparel goods that do not meet the rules of origin requirement. This was to provide time to the US and Bahrain textile producers to develop and expand business contacts. The transition period ended in 2015.
• The specific rules of origin of the FTA ensure that only Bahrain and the US goods benefit from the preferential duty treatment. As such, goods originating in Bahrain or USA and goods that underwent a substantial transformation with at least 35% value added in Bahrain or USA qualify for the preferential duty treatment.
• Some of the other areas of commitment as part of the FTA are related to intellectual property rights (IPR), local labor laws, environmental protection through sustainable development and transparency in business regulations.
Source: MoICT Bahrain; Office of the United States Trade Representative
28
Figure 38: US-Oman Free Trade Agreement
US-Oman FTA
Key highlights
• Oman and the US signed a free trade agreement which came into effect on 1st January 2009. The agreement made Oman the second country in the GCC (after Bahrain) and one of the 20 countries in the world to have an FTA with the US.
• While most of the text in the US-Oman FTA is similar to that in the US-Bahrain FTA in terms of the extent of tariff concessions and rules of origin, some FTA obligations deal with the specific aspects of the bilateral trade relations between US and Oman.
• Like Bahrain’s FTA with the US, the US-Oman FTA also involves commitment in areas of intellectual property rights, local labor laws, environmental protection and transparency in business regulations.
Source: MoICT Bahrain; Office of the United States Trade Representative
Figure 39: Comparison between Bahrain and Oman’s FTA with the USA
FTA details US-Bahrain FTA US-Oman FTA
Agreement name US-Bahrain Free Trade Agreement US-Oman Free Trade Agreement
Implementation date 1st August, 2006 1st January, 2009
Sectors covered • Agriculture
• Consumer goods
• Industrial goods
• Financial services
• Textiles and apparels
• Telecommunications
• Computer and related services
• Healthcare
• Education
• Advertising
• Tourism
• Transportation
• Engineering
• Construction
• Audiovisual
• Express delivery services
• Agriculture
• Consumer goods
• Industrial goods
• Financial services
• Textiles and apparels
• Telecommunications
• Computer and related services
• Healthcare
• Energy services
• Construction
• Environment and Information Technologies
• Audiovisual
• Express delivery services
Source: MoICT Bahrain; Office of the United States Trade Representative
29
12 Cost of Living Indicators
12.1 Cost of Schooling
Costs for schooling and education are the lowest, overall, in Bahrain and Kuwait. An analysis of the relevant costs are presented below, considering typical expenditure for a school with a British curriculum. At an overall level, Bahrain and Kuwait are the most cost effective education destinations. Bahrain is also around 25% less expensive than Doha and 30% less expensive than Dubai, the most expensive destination in terms of schooling.
Figure 40: Cost of Schooling across Major Cities in the GCC32
Typical annual fees for a British Curriculum school (USD)
Stage of schooling Bahrain UAE Oman Saudi Arabia Kuwait Qatar
Manama Abu Dhabi Dubai Muscat Dammam Jeddah Riyadh Kuwait City Doha
Pre-School 7,940 - 10,380
13,030 - 13,030
11,170 - 14,070
9,040 - 10,990
7,860 - 11,130
7,930 - 13,220
9,900 - 13,880
6,120 - 9,570
9,630 - 13,200
Primary (Years 1 to 6) 10,380 - 11,430
15,260 - 15,260
14,070 - 14,070
11,840 - 12,430
11,130 - 11,600
13,220 - 13,220
13,880 - 14,850
9,810 - 11,240
14,520 - 14,520
Secondary (Years 7 to 13)
13,810 - 19,120
15,610 - 17,190
19,400 - 24,310
16,560 - 22,010
16,220 - 22,390
16,500 - 20,510
16,220 - 22,390
13,610 - 16,810
16,830 - 18,160
Source: Primary Research, KPMG Analysis
12.2 Cost of Accommodation
Cost for accommodation has been assessed across various residential types in the major cities in the GCC. Bahrain and Saudi Arabia are comparatively the most cost effective locations in the region. The UAE, Qatar and Kuwait are the most expensive locations, with property rents typically being between 40% and 80% more than Bahrain.
Figure 41: Cost of Accommodation
Typical monthly cost of accommodation (USD)
Accommodation type Bahrain UAE Oman Saudi Arabia Kuwait Qatar
Manama Abu Dhabi Dubai Muscat Dammam Jeddah Riyadh Kuwait City Doha
Apartment - 1 BR 1,060 - 1,460
2,450 - 2,720
2,180 - 2,580
1,690 - 1,950
610 - 670 670 - 930 890 - 1,470 1,980 - 2,140
2,060 - 2,340
Apartment - 2 BR 1,590 - 2,120
3,400 - 3,670
2,720 - 2,990
1,950 - 2,860
850 - 850 1,090 - 1,200
1,560 - 1,890
2,310 - 2,800
2,340 - 2,610
Apartment - 3 BR 1,720 - 2,390
4,220 - 4,620
4,080 - 4,350
2,080 - 3,900
890 - 1,130 1,340 - 1,520
2,000 - 3,070
2,800 - 2,970
2,890 - 3,440
Villa - 3 BR 1,990 - 3,980
4,620 - 5,030
4,620 - 5,030
3,380 - 4,160
1,340 - 1,740
1,600 - 1,740
3,340 - 3,940
3,300 - 5,280
3,550 - 4,210
Villa - 4 BR 2,520 - 3,980
5,300 - 5,580
5,030 - 5,580
4,540 - 6,490
1,870 - 2,270
1,870 - 2,400
4,270 - 4,810
4,290 - 8,250
4,370 - 5,340
Source: Primary Research, KPMG Analysis
32 Considering schools with British curriculum
30
12.3 Vehicle Cost
Cost of purchasing vehicles is fairly comparable across the GCC countries, with minor price variations. Overall, Bahrain and Oman offer vehicles at the cheapest prices, and the prices in Kuwait and Qatar are the highest.
Figure 42: Car Purchase Price
Car make & model (in USD)
Bahrain Saudi Arabia UAE Oman Kuwait Qatar
BMW 3-Series 2017 35,005 35,195 35,938 34,286 36,341 36,250
Ford Fusion 2017 21,215 21,330 21,781 20,779 22,135 21,970
Toyota Camry 2017 22,541 21,197 22,843 22,338 23,456 23,618
Source: Primary Research, KPMG Analysis
12.4 Residential Electricity & Water Tariffs in the GCC
This section presents the residential tariffs for electricity and water in the respective GCC countries. Unlike in the case of industrial tariff, all the GCC countries have implemented a stratified tariff structure, whereby the rates are consistently increased with the increase in consumption.
For a typical household, the utility costs in Bahrain are around 79% lower than Dubai, which has the highest tariffs.
Figure 43: Residential Electricity & Water Tariff in Bahrain
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
0 - 3000 0.016
3001 - 5000 0.034
> 5000 0.050
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
0 - 60 0.212
61 - 100 0.531
> 100 0.796
Figure 44: Residential Electricity & Water Tariffs in Saudi Arabia
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
0-2000 0.013
2001-4000 0.027
4001-6000 0.053
6001-8000 0.08
>8000 0.08
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
<15 0.027
16-30 0.267
31-45 0.801
46-60 1.07
>60 1.60
31
Figure 45: Residential Electricity & Water Tariffs in Dubai, UAE
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
0-2000 0.08
2001-4000 0.094
4001-6000 0.105
>6000 0.121
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
0-6000 2.45
6001-12000 2.75
>12000 3.11
Figure 46: Residential Electricity & Water Tariffs in Abu Dhabi, UAE
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
Up to 600 0.057
> 600 0.087
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
Up to 21 1.62
> 21 2.87
Figure 47: Residential Electricity & Water Tariffs in Oman
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
0-3000 0.026
3001-5000 0.039
5001-7000 0.052
7001-10000 0.065
> 10000 0.078
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
< 5000 1.371
> 5000 1.714
Figure 48: Residential Electricity & Water Tariffs in Kuwait
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
0-1000 0.017
1001 - 2000 0.033
> 2000 0.049
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
0 – 10000 0.725
10001 – 20000 1.451
20001 – 30000 2.177
> 30000 2.902
32
Figure 49: Residential Electricity & Water Tariffs in Qatar
Electricity Tariff (USD/kWh)
Electricity Consumption (kWh) Tariff
0 – 2000 0.022
2001 – 4000 0.025
4001 - 6000 0.028
6001 – 8000 0.033
8001 – 15000 0.049
> 15000 0.061
Water Tariff (USD/m³)
Water Consumption (m³) Tariff
0 – 20 1.21
21 – 70 1.49
71 – 150 1.76
151 - 250 2.04
> 250 2.59
12.5 Telecommunication Costs
At a consolidated level, telecommunications costs are the cheapest in Bahrain and Qatar. Comparatively, mobile and landline costs are the most expensive in Saudi Arabia and the UAE, where the effective costs could be more than double than that in Bahrain.
Figure 50: Cost of Telecommunications
Cost for purchasing ‘basket’ of telecommunications services (USD per month)
Country Bahrain Saudi Arabia UAE Oman Kuwait Qatar
Residential PSTN33 (fixed voice)
16.86 28.44 15.02 22.29 Not available34 18.54
Mobile calls35 45.77 101.30 133.82 104.88 43.80 56.44
Source: Strategy Analytics. Telecommunications Retail Price Benchmarking for Arab Countries 2015. December 2015. KPMG Research & Analysis
12.6 Fees for Domestic Help Visa
Oman is the most expensive country for securing visa for housemaids, while Saudi Arabia, followed by Kuwait, is the cheapest. Qatar, Bahrain and the UAE offer visas for domestic help for a price range of around USD 85 to USD 100. However, while Bahrain, the UAE and Oman provide visas with a two-year validity, Saudi Arabia, Kuwait and Qatar only provide visas with a validity period of one year.
Figure 51: Domestic Help Visa Fees
Cost for Domestic Help Visa Fees (USD)
Bahrain Saudi Arabia UAE Oman Kuwait Qatar
Visa fees 90a 15 109a 366a 33 83
Source: Nationality, Passports & Residence Affairs Bahrain, Ministry of Interior Qatar, Ministry of Interior UAE, Ministry of Foreign Affairs Saudi Arabia, Primary Research, KPMG Analysis Note a: Visa provided for two years
33For a typical usage of 60 calls per month per user
34In Kuwait, fixed line charges are heavily subsidised, costing USD 198 for installation, USD 17 for service charge and just an
annual USD 99 for subscription renewal
35For a typical usage of 900 calls and 2GB data per month per user
33
12.7 Salary for Domestic Help
Prevalent salary ranges for domestic helps are fairly comparable across the GCC, with salaries varying from USD 400 to USD 450 in all the countries.
Figure 52: Domestic Help Salary
Salary for Domestic Help (USD per month)
Bahrain Saudi Arabia UAE Oman Kuwait Qatar
Monthly salary 400 430 430 415 390 430
Source: Primary Research, KPMG Analysis
12.8 Fitness Club Membership
Membership at fitness clubs is an important lifestyle component, especially among the white collared employees. Annual fitness clubs membership fees, even for clubs providing standardized and comparable services, vary significantly in the region – with Saudi Arabia on the cheapest, and Qatar, the UAE and Kuwait on the most expensive ends of the spectrum. Prices in Bahrain are largely midway, being around 35% cheaper than Kuwait, where prices are the highest. Since major global fitness club chains are yet to be established in Oman, it has not been included in the table below.
Figure 53: Fitness Club Annual Membership Fees
Cost for Fitness Club membership
Bahrain Saudi Arabia UAE Kuwait Qatar
Annual fees 1,110 930 1,360 1,490 1,350
Source: Primary Research, KPMG Analysis
34
Appendix
A. Eligibility for e-Visa and Visa on Arrival
All countries, apart from Saudi Arabia offer e-visas and visas on arrival to certain selected foreign nationalities. Among the GCC countries, Bahrain has by far the highest number of nationalities eligible for either e-visa (114 nationalities) or visa on arrival (67). Following Bahrain, Oman offers e-visa / visa on arrival to members of 68 nationalities.
Figure A.1: Nationalities offered e-Visa and Visa on Arrival to Bahrain
Nationalities offered e-Visa and Visa on Arrival – Bahrain
Nationalities offered e-Visa (114) Nationalities offered Visa on Arrival (67)
Andorra Dominican Republic
Kazakhstan Saint Martin Andorra South Korea Chile
Anguilla Ecuador Kenya Saint Vincent and the Grenadines
Australia Spain Columbia
Antigua and Barbuda
Egypt Latvia San Marino Austria Sweden Ecuador
Argentina Estonia Liechtenstein Senegal Belgium Switzerland Paraguay
Aruba Falkland Islands Lithuania Seychelles Brunei Thailand Peru
Australia Finland Luxembourg Singapore Canada The Netherlands Suriname
Austria France Macau Saint Maarten China Turkey Uruguay
Bahamas French Guyana Malaysia Slovakia Denmark UK Falkland Islands
Barbados Gabon Malta Slovenia Finland US Venezuela
Belgium Germany Martinique South Africa France Vatican City
Bolivia Ghana Mauritius South Korea Germany Bulgaria
Brazil Greece Mexico Spain Greece Croatia
British Virgin Islands
Grenada Monaco Suriname Hong Kong Cyprus
Brunei Guadeloupe Montserrat Sweden Iceland Czech Republic
Bulgaria Guyana Morocco Switzerland Ireland Estonia
Cameroon Haiti Mozambique Taiwan Italy Hungary
Canada Hong Kong New Zealand Thailand Japan Latvia
Caribbean Netherlands
Hungary Norway The Netherlands Kazakhstan Lithuania
Cayman Islands Iceland Pakistan Trinidad and
Tobago Lichtenstein Malta
Chile India Paraguay Turkey Luxembourg Poland
China Indonesia Peru Turks and Caicos
Islands Macau Romania
Columbia Ireland Poland UK Malaysia Slovakia
Croatia Isle of Man Portugal U.S. Virgin Islands Monaco Slovenia
Cuba Isle of Wright Puerto Rico Uruguay New Zealand Mexico
Curacao Italy Romania US Norway Argentina
Cyprus Ivory Coast Russia Vatican City Portugal French Guyana
35
Nationalities offered e-Visa and Visa on Arrival – Bahrain
Nationalities offered e-Visa (114) Nationalities offered Visa on Arrival (67)
Czech Republic Jamaica St. Barthelemy Venezuela Russia Bolivia
Denmark Japan St. Kitts and
Nevis San Marino Guyana
Dominica Jordan Saint Lucia Singapore Brazil
Figure A.2: Nationalities offered e-Visa and Visa on Arrival to the UAE
Nationalities offered e-Visa and Visa on Arrival – UAE
Nationalities offered e-Visa (47) Nationalities offered Visa on Arrival (47)
Andorra Hungary Portugal Andorra Hungary Portugal
Australia Iceland Romania Australia Iceland Romania
Austria Ireland San Marino Austria Ireland San Marino
Belgium Italy Seychelles Belgium Italy Seychelles
Brunei Japan Singapore Brunei Japan Singapore
Bulgaria Latvia Slovakia Bulgaria Latvia Slovakia
Canada Liechtenstein Slovenia Canada Liechtenstein Slovenia
Croatia Lithuania Spain Croatia Lithuania Spain
Cyprus Luxembourg Sweden Cyprus Luxembourg Sweden
Czech Republic Malaysia Switzerland Czech Republic Malaysia Switzerland
Denmark Malta The Netherlands Denmark Malta The Netherlands
Estonia Malta United Kingdom Estonia Malta United Kingdom
Finland Monaco United States Finland Monaco United States
France New Zealand Vatican France New Zealand Vatican
Germany Norway Germany Norway
Greece Poland Greece Poland
Figure A.3: Nationalities offered e-Visa and Visa on Arrival to Saudi Arabia
Nationalities offered e-Visa and Visa on Arrival – Saudi Arabia
Nationalities offered e-Visa (0) Nationalities offered Visa on Arrival (0)
None None
36
Figure A.4: Nationalities offered e-Visa and Visa on Arrival to Oman
Nationalities offered e-Visa and Visa on Arrival – Oman
Nationalities offered e-Visa (68) Nationalities offered Visa on Arrival (68)
Andorra Germany Paraguay Andorra Germany Paraguay
Argentina Greece Poland Argentina Greece Poland
Australia Hong Kong Portugal Australia Hong Kong Portugal
Austria Hungary Rumania Austria Hungary Rumania
Belgium Iceland San Marino Belgium Iceland San Marino
Bolivia Indonesia Seychelles Bolivia Indonesia Seychelles
Brazil Ireland Singapore Brazil Ireland Singapore
Britain Italy Slovakia Britain Italy Slovakia
Brunei Japan Slovenia Brunei Japan Slovenia
Bulgaria Latvia South Africa Bulgaria Latvia South Africa
Canada Lebanon South Korea Canada Lebanon South Korea
Chile Liechtenstein Spain Chile Liechtenstein Spain
Colombia Lithuania Suriname Colombia Lithuania Suriname
Croatia Luxembourg Sweden Croatia Luxembourg Sweden
Cyprus Macao, SAR of
China Switzerland Cyprus Macao, SAR of
China Switzerland
Czech Rep. Macedon Taiwan Czech Rep. Macedon Taiwan
Dar al-Salam Malaysia Thailand Dar al-Salam Malaysia Thailand
Denmark Malta Turkey Denmark Malta Turkey
Ecuador Moldova United States Ecuador Moldova United States
Estonia Monaco Uruguay Estonia Monaco Uruguay
Finland Netherlands Vatican Finland Netherlands Vatican
France New Zealand Venezuela France New Zealand Venezuela
French Guiana Norway French Guiana Norway
37
Figure A.5: Nationalities offered e-Visa and Visa on Arrival to Qatar
Nationalities offered e-Visa and Visa on Arrival – Qatar
Nationalities offered e-Visa (33) Nationalities offered Visa on Arrival (33)
Andorra Hong Kong Norway Andorra Hong Kong Norway
Australia Iceland Portugal Australia Iceland Portugal
Austria Ireland San Marino Austria Ireland San Marino
Belgium Italy Singapore Belgium Italy Singapore
Brunei Japan South Korea Brunei Japan South Korea
Canada Liechtenstein Spain Canada Liechtenstein Spain
Denmark Luxembourg Sweden Denmark Luxembourg Sweden
Finland Malaysia Switzerland Finland Malaysia Switzerland
France Monaco UK France Monaco UK
Germany Netherlands USA Germany Netherlands USA
Greece New Zealand Vatican Greece New Zealand Vatican
38
Figure A.6: Nationalities offered e-Visa and Visa on Arrival to Kuwait
Nationalities offered e-Visa and Visa on Arrival – Kuwait
Nationalities offered e-Visa (52) Nationalities offered Visa on Arrival (52)
Andorra Hong Kong Portugal Andorra Hong Kong Portugal
Australia Hungary Romania Australia Hungary Romania
Austria Iceland San Marino Austria Iceland San Marino
Belgium Ireland Singapore Belgium Ireland Singapore
Bhutan Italy Slovakia Bhutan Italy Slovakia
Brunei Japan Slovenia Brunei Japan Slovenia
Bulgaria Laos South Korea Bulgaria Laos South Korea
Cambodia Latvia Spain Cambodia Latvia Spain
Canada Liechtenstein Swaziland Canada Liechtenstein Swaziland
Cyprus Lithuania Sweden Cyprus Lithuania Sweden
Czech Luxembourg Switzerland Czech Luxembourg Switzerland
Denmark Malaysia Turkey Denmark Malaysia Turkey
Estonia Malta UK Estonia Malta UK
Finland Monaco USA Finland Monaco USA
France Netherlands Vatican France Netherlands Vatican
Georgia New Zealand Vietnam Georgia New Zealand Vietnam
Germany Norway Germany Norway
Greece Poland Greece Poland
39
©2016 KPMG Fakhro, a Bahrain partnership registered with the Ministry of Industry, Commerce and Tourism (MOICT), Kingdom of Bahrain and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Printed in the Kingdom of Bahrain.
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