Ford's tough UAE battle (page 2 of 2)

"What is preventing the UAE from doing the same? So much is being done to promote the UAE as a destination for overseas businesses that waiting until 2005 would be a glorious opportunity lost for the UAE. The Commercial Agency Law as it now stands rewards non-performance by the local company - if they are intent on doing nothing."
In the Gulf, Bahrain is the leader in dismantling its protectionist laws. Qatar and Oman, too, have recently made great strides. Bu in the UAE, some fear that major changes could spell doom for local businesses. And the creeping global recession may be another factor that could slow the pace of change.
Analysts also say that rather than increasing competition, a repeal of the Commercial Agency Law might be used by overseas companies to simply drop their current sponsor for another, offering better terms. "'If you don't do as I say, you're gone.' This will be the new language of the multinationals," according to the chairman of a local trading group.
The few multinationals - including Ford and Kenwood, the Japanese electronics maker - that have challenged the status quo have had to contend with the UAE courts. The Dubai courts are, by common consent, seen as more lenient than their counterparts in Abu Dhabi. This has led to inevitable delays and conflicts. "There is no uniform interpretation of the Commercial Agency Law in the UAE, which is to the singular disadvantage of the overseas company," says a lawyer specialized in local commercial laws. "The two-tiered legal process ensures that such cases will drag on for years."
While the current system protects local businesses, it has clearly dissuaded some foreign companies from setting up shop in the UAE. And others, already present in the country, are frustrated with the pace of change. "It is unfortunate that the UAE is the sole Gulf market where we cannot have a second distributor," says one senior executive in Dubai. "We are just waiting for WTO rules to come into effect to make the changes we feel are necessary to expand our presence here."
For the Ford Motor Company, however, 2005 proved too long to wait. And $4 million may have seemed a very small price to pay to get back in business in the UAE. "This is part of a whole new beginning," says Jim Benintende, the managing director of Ford MENA. "It's full-steam ahead for Ford here, from now on."