Nav­i­gat­ing CHOPPY WA­TERS

Amid the COVID-13 pan­demic, EY has risen up to come up with new so­lu­tions and ini­tia­tives in sup­port of its clients in all sec­tors.

The Business Year Special Report - - Kuwait: Resilience & Management In Times Of Crisis - Alok Chugh PART­NER, MENA GOVERN­MENT & PUB­LIC SEC­TOR TAX LEADER, EY

How has the COVID-19 pan­demic im­pacted EY, and how are you work­ing with clients to guide them through this pe­riod?

Like the rest of the world, EY has been im­pacted by COVID-19, and in Kuwait we have been in a lock­down sit­u­a­tion since the sec­ond week of March; how­ever, there is an ad­van­tage of be­ing global firm, and we have been able to parse out syn­er­gies dur­ing this time. We have been work­ing closely with our global lead­er­ship and our EMEA sup­port part­ners as well as our large team in In­dia, with a large fo­cus on in­te­grat­ing tech­nol­ogy and set­ting up ev­ery­one to work from home. This pro­gressed into es­tab­lish­ing new pro­to­cols in en­gag­ing with the clients grad­u­ally and com­ing up with the top lead­er­ship that you are see­ing in the mar­ket right now to sup­port our clients. There are some large projects, up­ward of tens of mil­lions of dol­lars, that con­tinue pro­gress­ing, and we, in turn have to en­able our teams to main­tain client en­gage­ment. We are also look­ing at new op­por­tu­ni­ties that are be­ing pre­sented to help our clients im­pacted by COVID-19.

Which sec­tors are be­ing the most im­pacted, and how has EY re­sponded to this?

We have iden­ti­fied the dif­fer­ent sec­tors and the ways in which they were im­pacted to ad­dress the needs of our clients un­der the cir­cum­stances. The fi­nan­cial ser­vices sec­tor is one of the sec­tors that was most im­pacted, largely in good ways; on the other end of the spec­trum we have hos­pi­tal­ity; tourism, par­tic­u­larly air­lines and ho­tels; and trans­porta­tion. Then there is the pub­lic sec­tor, which is my forte, and the en­ergy sec­tor. Amongst these sec­tors, I have been in­volved closely with the fi­nan­cial ser­vices, govern­ment, and oil and gas sec­tors in the MENA re­gion. This re­gion specif­i­cally is fur­ther in­flu­enced by other fac­tors, which have been am­pli­fied by COVID-19, such as the de­cline in oil prices. Ev­ery­thing com­bined has led to a need to re­think busi­ness strate­gies and cre­ated more space for EY to of­fer our ser­vices and so­lu­tions.

Start­ing with the govern­ment, what work are you do­ing with the pub­lic sec­tor?

The govern­ment sec­tor has been im­pacted in nu­mer­ous ways. Its first and fore­most pri­or­ity is to en­sure the health and safety of its peo­ple and main­tain the sup­ply chain. Then comes sup­port­ing busi­ness through fi­nan­cial and eco­nomic stim­u­lus to avoid com­pound­ing fi­nan­cial cri­sis. Reg­u­la­tors have be­come more ac­tively in­volved in try­ing to make all the nec­es­sary leg­isla­tive changes to fol­low and man­age the sit­u­a­tion ef­fec­tively. The govern­ment sec­tor is do­ing a won­der­ful job at the mo­ment, and we are as­sist­ing in de­vel­op­ing such poli­cies and frame­works. The govern­ment sec­tor needs hands-on help in terms of build­ing its ca­pa­bil­i­ties and be­com­ing bet­ter at deal­ing with these ex­cep­tional cir­cum­stances. This in­cludes train­ings for sup­port­ing dig­i­tal trans­for­ma­tion and in­te­gra­tion of tech­nol­ogy. We pro­vide the tech­nol­ogy so that it can in­ter­act with ci­ti­zens and busi­nesses as well as across pub­lic bod­ies. We also help in terms of de­vel­op­ing the fi­nan­cial and eco­nomic stim­u­lus pack­ages to achieve var­i­ous ob­jec­tives, whether it is cre­at­ing more liq­uid­ity or pro­vid­ing more fund­ing in terms of lend­ing. An­other im­por­tant area is data, par­tic­u­larly when it comes to sup­port­ing SMEs. With proper data on the num­ber and size of SMEs, the govern­ment can bet­ter for­mu­late mea­sures to sup­port them. This has been a huge chal­lenge but is get­ting in­creased at­ten­tion.

Mov­ing onto the fi­nan­cial ser­vices sec­tor, what response is EY fa­cil­i­tat­ing in this space?

Our main aim is to en­sure the fis­cal and eco­nomic stim­u­lus pack­ages are ef­fec­tive in what they are try­ing to achieve. For ex­am­ple, the govern­ment’s mea­sures have buoyed the stock mar­kets a fair bit. With these stim­u­lus pack­ages, the fi­nan­cial ser­vices sec­tor has played an im­por­tant role. The cen­tral banks of var­i­ous govern­ments, in­clud­ing Kuwait, have done a great job. The Cen­tral Bank of Kuwait was the first one to come up with a di

rec­tive an­nounc­ing new norms to al­low more liq­uid­ity to the banks to sup­port the economy. One of the changes that came about was an ad­di­tional KWD500 mil­lion to banks that al­lows them to lend to busi­nesses and im­prove cash flow. It has also re­duced the liq­uid­ity ra­tio for banks, thus al­low­ing them to lend more into the mar­ket. In the be­gin­ning of April, it made a fur­ther an­nounce­ment to ad­dress the needs of SMEs, pass­ing on this stim­u­lus and sup­port through the Kuwait SME Fund. We are ex­tend­ing our sup­port to the sec­tor through data and tech­nol­ogy, in­te­grat­ing these with the kinds of pro­ce­dures that busi­ness should en­act to an­a­lyze the ef­fec­tive­ness of such stim­u­lus pack­ages. We are also ex­tend­ing sup­port in terms of man­ag­ing the work­force while ev­ery­body is work­ing from home. The bank­ing ser­vice sec­tor also needs to ben­e­fit from the stim­u­lus pack­ages. This means if there is a tax ex­emp­tion be­ing granted, then the banks, as tax­pay­ers, also need to take ad­van­tage of that ex­emp­tion. In line with this goal, we have de­vel­oped a real-time tracker tool that al­lows us to see the tax and fis­cal changes govern­ments world­wide are in­tro­duc­ing. We are able to share that tracker with clients across sec­tors. Fi­nally, for this sec­tor and oth­ers, we are in­volved in the con­trac­tual as­pects and help­ing clients amend con­tracts for work­ing with other busi­nesses.

See­ing as the re­gion is ex­pe­ri­enc­ing sev­eral shocks in the en­ergy sec­tor, how is EY help­ing this sec­tor in par­tic­u­lar face such nu­anced cir­cum­stances?

The en­ergy sec­tor in our re­gion has been im­pacted quite sig­nif­i­cantly. We never imag­ined prices would fall into the neg­a­tive range; those were ex­tremely in­ter­est­ing eco­nomic dy­nam­ics lead­ing to a unique sce­nario. Thank­fully, it was a short-lived phase, and oil prices have been hov­er­ing around USD25 a bar­rel, which for many coun­tries is still be­low their costs of pro­duc­tion. Con­se­quently, we have seen a sig­nif­i­cant change in the en­tire thought pro­cesses of na­tional oil com­pa­nies (NOCs) in the re­gion and oth­ers. Many dis­cus­sions fo­cus on cy­ber­se­cu­rity. We are as­sist­ing a few NOCs through a whole dig­i­tal and tech­nol­ogy frame­work, then tak­ing it one step fur­ther with cy­ber­se­cu­rity frame­work and sup­port­ing in­fra­struc­ture. These are mas­sive un­der­tak­ings that will keep us busy for a few years at least. The other fo­cus area is cost re­duc­tion man­age­ment. There are mul­ti­ple ways you can ad­dress this, such as re­struc­tur­ing sub­sidiaries and joint ven­tures for dis­tri­bu­tion and stor­age, ad­just­ing or­ga­ni­za­tion struc­tures, and cre­at­ing more ef­fi­cient syn­er­gies. There is an ac­tive dis­cus­sion with an­other NOC on how it can bring about syn­er­gies by merg­ing a few en­ti­ties and trim­ming costs. The third area is work­force ad­vi­sory and sup­port.

How can Kuwait and the re­gion lead the world fol­low­ing COVID-19?

De­spite the cur­rent chal­lenges in the oil and gas sec­tor, one ma­jor ad­van­tage that this re­gion has over the oth­ers is ac­cess to sig­nif­i­cant cash and liq­uid­ity. In this re­gion, dis­cus­sions about mov­ing to­ward trans­form­ing and di­ver­si­fy­ing economies is cre­at­ing sig­nif­i­cantly more op­por­tu­ni­ties for other sec­tors. The pan­demic will fast track this process and push coun­tries to think more se­ri­ously about other forms of rev­enue gen­er­a­tion. We have seen a big shift in Kuwait, for ex­am­ple. The govern­ment has cre­ated spe­cial com­mit­tees and sub-com­mit­tees to ex­plore how it can ad­dress the dif­fer­ent sec­tors, the nec­es­sary leg­isla­tive changes, and new projects. We will prob­a­bly see more timely and ag­gres­sive de­ci­sion mak­ing in the com­ing weeks and months in this re­gion.

“The govern­ment sec­tor is do­ing a won­der­ful job at the mo­ment, and we are as­sist­ing in de­vel­op­ing such poli­cies and frame­works.”

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.