Leading global law firm Baker McKenzie recently hosted workshops in Dubai and Abu Dhabi on how companies operating in the Middle East can manage increasingly complex trade compliance risks and optimize supply chains in the context of constantly evolving geopolitical and macroeconomic landscapes.
The workshops were led by senior Baker McKenzie lawyers and centred around regulatory and commercial challenges facing local and multinational companies conducting trading and logistics activities in the region and how they are rethinking their supply chain model across multiple jurisdictions. Over 110 executives from leading corporates and major financial institutions joined in discussions around:
• the impact of global trends on businesses and supply chains in the Middle East;
• challenges in the supply chain;
• the impact of embargoes and trade sanctions;
• mitigating third-party risk;
• planning and optimizing supply chains; and
• managing customs and tax compliance (including the recently introduced VAT regime in the UAE and Saudi Arabia).
A survey of the participants revealed that the majority found selecting intermediaries and screening third parties and users to be the greatest challenge faced in the supply chain, followed by regulatory approval and imports and exports.
“Businesses in the Middle East are heavily impacted by an increasingly complex global environment and are trying to keep up with constantly-evolving regional regulatory frameworks,” said Borys Dackiw, UAE Head of Compliance at Baker McKenzie Habib Al Mulla. "Our clients are grappling with the extra-territorial reach of US and EU sanctions regimes, embargoes, demands for additional transparency from banks at the forefront of sanctions compliance, and greater government scrutiny with the introduction of value added tax in the GCC. Accordingly, businesses have to think more holistically about trade and supply chain risks and think of it in the context of overall enterprise risk."
Mattias Hedwall, Baker McKenzie's Global Head of International Trade, based in Stockholm, added, "Given that 90% of all goods that enter the UAE do not stay there, it is particularly important that companies in this region proactively manage the complexities of moving goods across borders. The third party relationships that businesses rely on heavily in the GCC can result in cost-savings but are frequently also a source of compliance risk. Having access rights to audit and monitor your supply chain will greatly mitigate your third party risks."
The workshop panellists comprised corporate/compliance partners Borys Dackiw (UAE), Zahi Younes (UAE/KSA), Mattias Hedwall (Sweden) and Ryan Fayhee (US), as well as Senior Tax Counsel Reggie Mezu (UAE).