Middle East Risk Update2
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The document discusses challenges facing markets in the Middle East, including a lack of reliable credit data, high dependence on foreign workers, and over-indebtedness fueled by excess banking liquidity. Specific risks mentioned are the lack of credit bureau information, prevalence of post-dated checks, potential for various types of fraud, and the "skip menace" of expatriate workers defaulting on loans and being difficult to trace due to poor legal infrastructure and a floating population between many countries and nationalities in the region. Verification of income and creditworthiness is challenging given the lack of statutory income tax filings and cultural diversity.
Middle East Risk Update2
- 1. Emerging markets challenges M iddle East 2007 EMEA Lisbon, November 1
- 2. Agenda Middle East Market view Some key Risk challenges Lack of reliable data Skip menace Resource availability/capability
- 3. 油
- 4. Boom fuelled by high oil prices Huge dependence on foreign workers New entrants (e.g Barclays) raising the stakes High price elasticity Cash Junkies! Over indebtedness fuelled by excess banking liquidity Middle East Market Landscape Burgeoning Growth willing lenders and debtors
- 5. Lack of reliable data Speedy decisions demanded by the market Nascent/Limited credit bureau information High dependence on documents Post dated Cheques abound (PDC) Direct Selling agents DSA dominance Spectre of Fraud first party, application and document fraud Get adequate data for informed credit decisons
- 6. Skip Menace Expatriate workers dominate more than 130 nationalities! Poor legal and regulatory infrastructure Lack of bureau and public register compounds the problem No early warning systems Defaulters scattered around the world Tracing is expensive Get them before they go!
- 7. Verification challenge Customer level DIR Income documents, salary certificates, pay slips Lack of income taxes means no statutory filings. Floating population caused by inflation Cultural challenge diverse nationality, language composition No bureau score Trade off question costs versus benefit Validate and prove credit worthiness