Methodology
The Arab Business Legislative Framework Report is based on the results of an assessment of the current business legislative climate in the region, which examines legislation related to the business environment. The assessment integrated a selection of best practices into the tool design in order to ensure that the outputs were informative and objective, and that they take into account context-specific issues, and can be easily utilized by stakeholders.
Evaluating
Anti-corruption
Anti-corruption legislation constitutes a critical framework designed to prevent, prosecute and deter corrupt practices within the public and private sectors. These laws aim to promote transparency, accountability and integrity, often encompassing regulations that criminalize bribery, embezzlement and other forms of illicit behaviour.
Components
This component evaluates systems and measures designed to promote integrity and combat corruption within the public sector.
This component evaluates the laws and regulations designed to combat bribery and protect whistleblowers who report corruption-related activities.
This component evaluates the legislative standards and practices related to budgeting and public spending, while focusing on transparency and accessibility.
This component evaluates the legal frameworks and practices related to privacy, data security protection, and accessibility of Government-held data by different stakeholders.
This component evaluates the legal frameworks, policies and institutions in place to promote openness and transparency in the public sector.
This component evaluates the legal frameworks, policies and institutions in place, as well as the involvement of national anti-corruption agencies, non-government institutions, and training programmes to ensure transparency, fairness and efficiency in the public procurement process.
Competition
Competition Legislation constitutes the legal framework designed to enhance fair market competition and prevent monopolistic practices that could hinder consumer choice or innovation. These laws aim to regulate mergers, acquisitions, pricing strategies and anti-competitive behaviors, promoting a level playing field among businesses.
Components
This component evaluates the existence and quality of competition laws in a country, taking into account their ability to deter market distortions, abuse of market dominance, and other anti-competitive practices.
This component evaluates the legal provisions that address market dominance and monopolization and examines the effectiveness of these laws in preventing firms from acquiring excessive market power and engaging in anti-competitive behaviour.
This component evaluates the legal framework designed to address cartels and the established penalties for those who engage in this anti-competitive practice.
This component evaluates the autonomy and independence of competition authorities and the enforcement mechanisms that govern competition policy.
This component evaluates a country's engagement with international trade agreements, and examines its alignment with global competition policy standards.
This component evaluates the legal provisions and protection mechanisms related to labor protection that are incorporated within the competition framework.
This component focuses on the balance between liberalization and competition intervention in regulated sectors such as telecommunications, energy and transport.
This component evaluates a country's legal provisions, procedures and enforcement mechanisms for reviewing and approving economic concentration transactions.
Consumer Protection
Consumer protection legislation establishes the legal safeguards and rights designed to shield consumers from unfair or deceptive practices in the marketplace. These laws encompass regulations governing product safety, advertising standards, fair pricing, warranties, dispute resolution, and e-commerce, with the aim of ensuring consumer rights and enhancing confidence in markets.
Components
This component evaluates the legal frameworks and enforcement mechanisms to safeguard consumer rights, privacy, and safety when engaging in online transactions.
This component assesses the various domestic and international mechanisms available for consumers to pursue redress, including alternative dispute resolution methods, specialized complaint procedures, and the involvement of law enforcement.
This component focuses on the legal frameworks and measures established to ensure the physical safety of consumers, and the existence of institutions or bodies to assess and monitor compliance with these regulations.
This component evaluates the efforts made by countries to establish legal frameworks, policies and measures to encourage sustainable consumption practices.
This component evaluates the legal frameworks and mechanisms in place to safeguard the consumers' economic interests, which include clear definitions of who consumers are, as well as the rights and protections afforded thereto, and the enforcement mechanisms to protect their interests.
Foreign Direct Investment (FDI)
Foreign direct investment legislation forms the regulatory framework governing the inflow of capital from foreign entities into a country's economy. These laws outline the rights, restrictions and obligations of foreign investors, with the aim of encouraging economic growth, technology transfer and job creation while safeguarding national interests.
Components
This component delves into the mechanisms and entities involved in granting authorization for foreign direct investment across different sectors.
This component focuses on the prerequisites and procedures necessary to obtain licenses and registrations for engaging in foreign investment activities.
This component focuses on the legal safeguards and provisions aimed at protecting the interests and rights of foreign investors.
This component examines the limitations or constraints imposed on the extent of foreign ownership within specific sectors.
This component revolves around the prerequisites or conditions mandated by the host country on foreign investors.
This component evaluates the incentives extended by the law or Government to attract and encourage foreign investment.
This component explores the existence of regulations governing the conversion of local currency into foreign currency when foreign investors intend to repatriate their invested capital or profits.
This component examines the existence of regulatory frameworks governing the exit of foreign investors from their investments within the host country.
Corporate Law
Corporate legislation serves as the legal foundation that defines the structure, operations, and responsibilities of companies within a jurisdiction. These laws encompass regulations governing corporate formation, governance, shareholder rights, financial reporting and compliance standards, to ensure transparency and accountability.
Components
This component assesses the legal framework and procedures for registering businesses and obtaining necessary approvals. It considers whether the commercial registrar has offices in different regions, and the transparency of registration records.
This component examines the existence of legislation and the availability and accessibility of financial resources and incentive schemes that support and promote small and medium-sized enterprises (SMEs).
This component examines the existence of legal frameworks and regulations that protect and empower shareholders within a company, as well as the legislative provisions related to the Board of Directors' roles, responsibilities and transparency duties.
This component examines the legal frameworks and enforcement mechanisms that require businesses to adopt environmentally responsible practices and integrate sustainability principles into their corporate strategies.
This component evaluates the legal frameworks and policies in place to promote gender equality within corporate governance structures, explicitly focusing on board compositions and leadership roles.
This component evaluates the presence and quality of legislation addressing corporate restructuring, insolvency definitions, and procedural timeframes. It also examines the safeguards that exist to protect the rights of secured creditors, investors, and employees during insolvency proceedings.
This component evaluates any exemptions or special provisions in the legislation that may ease merger and acquisition (M&A) transactions in specific circumstances, such as bankruptcy. It also examines the existence of protection mechanisms within the legislation that safeguard the interests of creditors and investors during M&A transactions.
Elements
In assessing legislative frameworks, a structured methodology comprising seven key elements was adopted. These elements serve as categories to evaluate the various indicators under each main component, ensuring a consistent and comprehensive approach across all topics. By examining the relevant laws and policies through the lens of these elements, the assessment provides a thorough and systematic evaluation of the legislative landscape in each country. The seven elements are as follows:
- Accessibility/Transparency: Measure the accessibility of the legislation itself, and what modes of transparency and accessibility mechanisms are in place regarding the respective field.
- Definitions: Measure the types of legal definitions within the legislation that are clear and concise on the subject, and that match the definitions requirements suggested in model laws.
- Enforcement: Measure the modes of enforcement, whether positive or negative, including incentives, subsidies, fines, prison sentences or complaint mechanisms that are outlined by the legislation and that match the recommendations and guidelines of internationally recognized agreements.
- Exemptions: Measure if certain sectors or components within a sector are exempted from the legislation, and if their implementation and/or exemption appears within the legislation.
- Institutions: Measure the existence of bodies and/or authorities that are highlighted within the legislation, including their responsibilities, jurisdiction, independence and powers, as recommended by the international guidelines.
- International Agreements: Measure the existence of regional and/or international conventions, commitments, treaties or trade agreements that are noted to be enforced or complemented by national legislation.
- Laws/Decrees: Measure the existence of particular types of national legislation and/or regulations, royal decrees and federal laws, among others, as recommended by various indicators and international guidelines.
Converting
The assessment scoring system is designed to evaluate a country’s regulatory framework on a scale of 0 to 7, with 0 being the lowest score and 7 being the highest. This comprehensive scoring system aims to highlight the strengths and weaknesses of a country’s regulatory framework in a structured manner. The scoring process begins by assigning binary “yes or no” answers to individual indicators, each receiving a score of 1 for “Yes” and 0 for “No”. These scores are then used to calculate the main component and element scores, which are derived from the sum of their related indicators’ scores, weighted over 7. These calculations provide a more comprehensive picture of the overall assessment score, which ranges between 0 and 7.
Scoring
| Score | Value | Description |
|---|---|---|
| Very Strong | 6 - 7 | The “Very Strong” score specifies that the legislative frameworks match or are close to international guidelines and indicators. If a country has the “Very Strong” status on the main category, for example, “Merger Regulatory Regime”, this indicates that the merger regulatory regime is identical to the international indicators and model law templates. |
| Strong | 5 - 6 | Legislative frameworks that score “Strong” are the closest to the very strong standards as recommended by international guidelines and indicators. It indicates that the status of a main category or subcategory is strong |
| Developed | 4 - 5 | The “Developed” classification indicates that much of the legislative frameworks are in a developed stage, near the strong and very strong standards recommended by international measurements |
| Moderate | 3 - 4 | The legislative framework is at a developing stage in comparison to very strong international standards. The “Moderate” score indicates that the categories or sub-categories condition is in the middle between “Basic” and “Developed”. |
| Basic | 2 - 3 | The legislative framework in a country with this score is considered to be basic or sub-par compared to general international standards. The legislation categories and sub-categories with this score have the minimum structure or performance in comparison to very strong standards. For example, a country’s “Basic” score on enforcement indicates that the country’s law enforcement is at a minimum. |
| Weak | 1 - 2 | The legislative framework is weak and very far from very strong international standards. However, the “Weak” classification is the second-lowest score (between 1 and 1.99). It mainly indicates that the categories and sub-categories with this score are not effective, or exist but below the basic level. |
| Very Weak | 0 - 1 | The “Very Weak” classification is for the lowest scores within the scoring continuum (below 1). This score is for legislative frameworks that are super weak and very close to non-existing, or where there are no defined laws in the specified category. It mainly indicates that the legislation with this score barely exists and is far from very strong international standards. Having this score on the “Exemptions” sub-category, for example, indicates that the country has many exemptions from the law, and it does not match international standards |
| No Score | 0 | The “No Score” classification appears in case there is no law. This means that the legislative framework does not exist. Having this “No Score” on sub-category “Laws/Decrees”, for example, means that the country has not adopted or does not have the law. The “No Score” classification will be shown as blank |