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.
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.”