Cost of Doing Business in Bahrain

Transcription

1. Cost of Doing Business in Bahrain Financial Services December 2013
2. Contents 1 Executive Summary 1 2 Licensing & Registration Costs 3 3 Renting Commercial Office Space 4 4 Occupancy costs 7 5 Manpower costs 8 6 Cost of Utilities 10 7 Communication Costs 11 8 Corporate Taxes 13 9 Renting Residences 14 10 Education Costs 15 11 Total Costs Summary 16 Appendix 17
3. 1 Executive Summary This report looks at the typical costs associated with operating a financial services firm in Bahrain , Dubai, and Qatar. The report analyses the cost of licensing and registration, commercial rental rates, manpower costs, communication and utility expenses, as well as corporate taxes across these jurisdictions. In addition to analyzing the costs of operating a financial services firm in these jurisdictions, the study also presents an overview of the average cost of living, focusing on the cost of education and the cost of renting residential properties. These cost heads have been categorized into three distinct categories: cost of operations, cost of set-up, and living costs. Overall, the total cost of doing business in Dubai and Qatar is almost twice that of Bahrain. Rental rates of commercial properties in Bahrain remain considerably lower than Qatar and Dubai, where office rents are almost three times the rates in Bahrain. Similarly, occupancy cost is lowest in Bahrain when compared to Dubai and Qatar, where it is higher by 73% and 184% respectively. Although communication and utility expense vary upon consumption, telecommunication companies in Qatar charge the highest tariffs for local calls, while Dubai has the highest average cost for internet services. With respect to the cost of utilities, both electricity and water tariffs for commercial consumption are most affordable in Bahrain. Residential rents in addition to the cost of schooling are the higher in Dubai and Qatar, making the Bahrain the most affordable country to live in. On average, education in Bahrain is lower by an estimated 90% and 100% than Dubai and Qatar. While the average rent for a 2 bedroom apartment in Bahrain is lower than the rents for similar properties in Dubai and Qatar by 67% and 94% respectively. Bahrain also has the lowest manpower costs when compared with Dubai and Qatar, where UAE nationals working in the finance sector earn approximately 30% more than expatriate employees, while nationals in Qatar earn an average of 55% more than expatriates. The following tables outline the overall costs of operating a business, in addition to the average living costs across Bahrain, Qatar and Dubai: Figure 1: Indicative Cost of Operations 1 Average Annual Cost of Operations (USD) Cost Head Bahrain Qatar Dubai 2 Business Set Up 39,285 17,500 32,500 Commercial Rent 81,900 235,800 241,200 120,600 164,380 148,520 2,950 4,910 2,460 4,320 5,280 8,760 260 280 650 249,315 428,150 434,090 Manpower 3 4 Telephone Services 5 Internet Services Utility (electricity & water) Total Cost Source: KPMG analysis 1 For an office size of 300sqm which is occupied by a total of 20 employees 2 Reflects the average annual cost of licensing (see Section 2 for more information) 3 Reflects the manpower costs of 6 local employees and 14 expatriate employees, and includes occupancy costs. 4 Charges for telephone services are rounded off to the nearest 10 and includes monthly rentals charges 5 Reflects the corporate rates for 8Mbps packages 1
4. Figure 2 : Indicative Costs of Living Average Annual Cost of Living (USD) Cost Head Bahrain Qatar Dubai 20,100 39,360 43,080 Education 4,970 10,020 9,520 Total Cost 25,070 49,380 52,600 Residential Units Source: 6 6 KPMG analysis The annual cost of residential units is calculated based on the average rental rate of 2 bedroom apartments and 3 bedroom villas 2
5. 2 Licensing & Registration Costs Financial services institutions operating in banking and investment activities are regulated by the Central Bank of Bahrain (CBB) in Bahrain, the Dubai Financial Services Authority (DFSA) in the Dubai International Financial Centre (DIFC), and the Qatar Financial Centre Regulator Authority (QFCRA) in Qatar Financial Centre (QFC). In particular, this study looks at financial institutions that are permitted 7 8 in dealing with investments (as principle) and dealing with investments (as agent) . Licensing and registration costs are presented in the form of non-refundable application fees, in 9 addition to annual fees depending on the type of license held, provided that the application is successful. Figure 3: Licensing and Registration Fees of Financial Services Institutions Annual Fees & Application Fees (USD) Regulator 10 CBB DFSA QFC Source: Category Application Fees Annual Fees Dealing with Investments (as principle) 270 14,910 (min) – 63,660 (max) Dealing with Investments (as agent) 270 14,910 (min) – 63,660 (max) Dealing with Investments (as principle) 40,000 40,000 Dealing with Investments (as agent) 25,000 25,000 Dealing with Investments (as principle) 25,000 25,000 Dealing with Investments (as agent) 10,000 10,000 Central Bank of Bahrain Rulebook: A Guide to the CBB’s Licensing Process, The DFSA Rulebook: Fees Module, Qatar Financial Centre Regulatory Authority: A Guide to the Application Process 7 Dealing in investments as principle refers to the buying, selling, subscribing for or underwriting of financial instruments on own account, including the underwriting of public offerings and private placement of third parties 8 Dealing in investments as agent refers to the buying, selling, subscribing for or underwriting of financial instruments on behalf of a client 9 Annual fees payable to the CBB are variable, and are based on a percentage of the institution’s adjusted operating cost base (subject to a minimum and maximum amount). Furthermore, the DFSA charges an annual fee of 0.1% for each USD 1 million in turnover 10 The application and annual fees charged by the CBB are rounded off to the nearest 10 3
6. 3 Renting Commercial Office Space Bahrain Rental rates for commercial office space have fallen by an estimated 3 % between 2012 and 2013. This is largely due to the price-sensitivity of the current prime office market, which continues to operate on adjusted rental rates or high vacancy rates. The table below reflects the rentals for the Net Internal Area (NIA). Typically, an additional 15% of the rent would be charged as maintenance charges for the common areas, such as staircases and lobbies. Figure 4: Prime commercial asking rental rates in Bahrain Asking rental rates in Bahrain by office locations (USD per sqm per month) Location 2011 2012 2013 Bahrain World Trade Center 24 24 24 Bahrain Financial Harbor 22 24 24 21 22 21 24 24 22 11 Seef Area Diplomatic Area / Manama Source: Primary Research, KPMG analysis Both Bahrain World Trade Center and Bahrain Financial Harbor offer furnished and non-furnished office space options. In addition to the base rent, the Bahrain World Trade Center charges ~USD 4 per sqm per month as service charge, while electricity and air-conditioning are charged as per consumption. Furthermore, the Bahrain Financial Harbor applies a 15% service charge rate. Figure 5: Typical prime commercial asking rents Bahrain asking rents in 2013 (USD per month) Location 50 sqm 100 sqm 200 sqm 300 sqm Bahrain World Trade Center 1,200 2,400 4,800 7,200 Bahrain Financial Harbor 1,200 2,400 4,800 7,200 Seef Area 1,050 2,100 4,200 6,300 Diplomatic/Manama 1,100 2,200 4,400 6,600 12 Source: Primary Research, KPMG analysis 11 CBRE Bahrain Office & Residential MarketView Q2 2013 12 As above 4
7. Dubai Rental rates for commercial properties in Dubai remain high when compared to Bahrain , and have increased during 2013 as a result of a rising demand for commercial properties. However, rental rates at the DIFC have remained steady between the years 2011 and 2013. Figure 6: Prime commercial asking rental rates in Dubai Asking rental rates in Dubai by major office locations (USD per sqm per month) Location 2011 2012 2013 DIFC – Gate Village 62 62 62 DIFC – Gate Precinct 67 67 67 DIFC – Gate Building 72 72 72 Source: Primary Research, KPMG analysis While rental rates at the DIFC have remained constant, additional charges in the form of utilities, service charges and community fees have increased by 15% from ~USD 14 per sqm per month in 2012 to ~USD 16 per sqm per month in 2013. Typical rents for occupying at the DIFC are as below: Figure 7: Typical prime commercial asking rents Dubai asking rents in 2013 (USD per month) Location 50 sqm 100 sqm 200 sqm 300 sqm DIFC – Gate Village 3,100 6,200 12,400 18,600 DIFC – Gate Precinct 3,350 6,700 13,400 20,100 DIFC – Gate Building 3,600 7,200 14,400 21,600 Source: Primary Research, KPMG analysis 5
8. Qatar Rental rates remained static across commercial properties in Qatar , with marginal increases in certain areas only due to demand for prime offices. Qatar is still experiencing an oversupply in the commercial office real estate market, and rents may face an adverse impact of 8-10% as new supply 13 arises. Figure 8: Prime commercial asking rental rates in Qatar Asking rental rates in Qatar by major office locations (USD per sqm per month) Location Qatar Financial Center (QFC) Diplomatic District / West Bay (average) Source: 2011 2012 2013 69 69 69 54 54 55 14 Primary Research, KPMG analysis The rental rates in the QFC have remained stable, while average rates for commercial properties in the Diplomatic District/West Bay area increased by a meager 2% from 2012. Figure 9: Typical prime commercial asking rents Dubai asking rents in 2013 (USD per month) Location Qatar Financial Center Diplomatic District / West Bay (average) Source: 50 sqm 100 sqm 200 sqm 300 sqm 3,800 7,600 15,200 22,800 2,750 5,500 11,000 16,500 15 Primary Research, KPMG analysis 13 Al-Asmakh Qatar Real Estate Report Q2 2013 14 As Above 15 As Above 6
9. 4 Occupancy costs Occupancy costs per employee workstation are arrived based on average workstation area per 16 employee and the prime rental rate for the location . As illustrated below, the occupancy cost per workstation in Bahrain continues to be significantly lower than QFC in Qatar and the DIFC in Dubai. Dubai has the highest overall occupancy costs compared to Bahrain and Qatar, largely due to the recent rise of the service charge rate applied across the three office towers. Figure 10: Average annual occupancy costs per workstation 17 Total occupancy costs (USD per workstation per annum) Country 2011 2012 2013 Bahrain 4,780 4,780 4,780 QFC 13,662 13,662 13,662 DIFC – Village Gate 13,680 13,680 14,040 DIFC – Precinct Gate 14,580 14,580 14,940 DIFC – Building Gate 15,480 15,480 15,840 Source: DTZ Occupier Perspective Global Occupancy Costs – Offices 2013, KPMG analysis 16 DTZ Occupier Perspective Global Occupancy Costs – Offices 2012 & 2011; average workstation area per employee adopted as 15.0 sqm gross area (i.e. including staircase, lobbies and other common areas). Bahrain’s rate for utilities and service charge of commercial properties is 15% of the rent per sqm, while the DIFC’s utilities and maintenance charge is USD 16 per sqm, and the QFC’s rate for utilities and service charge is 10% of the rent per sqm. 17 Please refer to the Appendix for a detailed explanation of the calculations and methodology adopted 7
10. 5 Manpower costs When comparing the average salary earned by an expatriate working in the financial sector , Bahrain continues to have the lowest manpower cost in comparison to Dubai and Qatar. The gross salary earned by both local and expatriate employees in Bahrain remains generally the same, while significant disparity exists between the average gross salary earned between locals and expatriates in Dubai and Qatar. The salaries quoted below include the basic and House Rent Allowance (HRA) components, but do not include the other expatriate benefits. Figure 11: Average finance sector salaries (expatriate) 18 Average Annual Finance Sector Salary (2013) Country Local Currency USD Bahrain BHD 21,330 56,570 AED 218,510 59,490 QAR 232,800 63,940 Dubai Qatar Source: KPMG analysis Figure 12: Indicative local vs. expatriate salaries Indicative Annual Expatriate Salary Vs. Local Salary in Finance Sector 19 (USD, 2013) Country Expatriate Salary Citizen Salary Bahrain 56,570 56,570 Dubai 59,490 77,340 Qatar 63,940 99,110 Source: KPMG analysis The tables below outline the overall annual costs of hiring in Bahrain, Dubai and Qatar. Each table 20 provides past and future trends of the wages, occupancy costs , housing rent allowance, and additional benefits of expatriate employees working in the financial sector. Figure 13: Overall costs of hiring in Bahrain (expatriate) Average Annual Cost in the Financial Sector for Bahrain (USD) Overall costs 2011 2012 2013 2014 (E) 2015 (E) 2016 (E) 33,410 35,240 37,070 39,110 41,260 43,530 Occupancy Cost 4,780 4,780 4,780 4,880 4,970 5,070 HRA component 19,030 19,220 19,500 19,890 20,290 20,690 Expatriate Benefits 10,620 10,730 10,890 11,110 11,330 11,560 Total Cost 67,840 69,970 72,240 74,990 77,850 80,850 Salary Source: KPMG analysis 18 Including only basic and HRA components, other expatriate benefits and occupancy cost are not included 19 As above 20 Occupancy costs presented in the overall cost of hiring reflect the average cost of occupancy across each location and are not specific to individual properties. (Source: DTZ Occupier Perspective: Global Occupancy Costs – Offices 2013) 8
11. Figure 14 : Overall costs of hiring in Dubai (expatriate) Average Annual Cost in the Financial Sector for Dubai (USD) Overall costs 2011 2012 2013 2014 (E) 2015 (E) 2016 (E) 32,760 34,570 36,260 38,250 40,360 42,580 Occupancy Cost 9,230 8,570 8,270 8,430 8,590 8,760 HRA component 22,660 22,890 23,230 23,670 24,170 24,650 Expatriate Benefits 13,660 13,800 14,010 14,290 14,580 14,870 Total Cost 78,310 79,830 81,770 84,640 87,700 90,860 Salary Source: KPMG analysis Figure 15: Overall costs of expatriate hiring in Qatar (expatriate) Average Annual Cost in the Financial Sector for Qatar (USD) Overall costs 2011 2012 2013 2014 (E) 2015 (E) 2016 (E) Salary 36,400 38,410 40,520 42,750 45,100 47,580 Occupancy Cost 12,510 12,510 13,590 14,130 14,840 15,580 HRA component 22,850 23,080 23,420 23,890 24,370 24,850 Expatriate Benefits 15,180 15,330 15,560 15,870 16,190 16,510 Total Cost 86,940 89,330 93,090 96,640 100,500 104,520 Source: KPMG analysis The following graph illustrates the trends in employment costs between 2011 and 2016. Based on projected inflation and salary growth, the overall cost of doing business in Bahrain is expected to remain substantially lower than that of Dubai and Qatar. 120,000 100,000 80,000 60,000 86,940 78,310 89,330 67,840 93,090 96,640 100,500 104,520 90,860 84,640 87,700 79,830 81,770 74,990 80,850 72,240 77,850 69,970 2015 (E) 2016 (E) 40,000 20,000 Bahrain Dubai Qatar 0 2011 2012 2013 2014 (E) 9
12. 6 Cost of Utilities Electricity and water tariffs for commercial consumption differ in accordance to the total number of units utilized . When compared, Dubai charges the highest commercial tariffs for the utilization of both electricity and water. Figure 16: Electricity & Water Tariffs Electricity & Water Tariffs for Commercial Consumption (USD) 3 Country Electricity Tariff per kWh Bahrain 0.04 0.80 Dubai 0.10 2.10 Qatar 0.04 1.43 Source: Water Tariff per M www.mew.gov.bh, www.dewa.gov, www.qewc.gov The charges quoted compare the commercial tariffs applied for utilizing more than 30,000 kilowatt3 hour (kWh) units of power, and less than 450 cubic meters (M ) of water. The table below outlines indicative charges for electricity and water consumption for typical prime commercial office sizes across Bahrain, Dubai, and Qatar. Figure 17: Indicative Utility Charges Electricity and Water Charges Scenarios (USD per month) Location Bahrain Dubai Qatar Source: 50 sqm 100 sqm 200 sqm 300 sqm Electricity 40 70 140 220 Water 10 20 30 40 Total 50 90 170 260 Electricity 90 180 350 530 Water 20 40 80 120 Total 110 220 430 650 Electricity 30 70 130 200 Water 10 30 50 80 Total 40 100 180 280 KPMG analysis 10
13. 7 Communication Costs Telephone Services The cost of telephone services has been calculated based on the corporate rates offered from leading telecommunication providers in Bahrain , Dubai and Qatar. The table below compares the average call rates applied for business telephone lines for both international calls and local calls: Figure 18: Indicative Local vs. International Call Rates Average Local vs. International Call Rates per Min (USD) Local Call Rate Bahrain 0.02 0.64 Dubai 0.01 0.61 Qatar 0.05 0.54 Source: International Call Rate 21 Country www.batelco.com, www.menatelecom.com, www.du.ae, www.etisalat.ae, www.ooredoo.qa, KPMG analysis Telephone charges are presented in the form of fixed rental fees and an estimate of call charges 22 (based on average employee utilization) . The costs quoted below compare the average charges for 23 business telephone packages . Figure 19: Indicative Telephone Charges Average Telephone Charges per Month (USD) Country Rental Charges Call Charges Bahrain 6 12 Dubai 25 9 Qatar 9 20 Source: www.batelco.com, www.menatelecom.com, www.du.ae, www.etisalat.ae, www.ooredoo.qa, KPMG analysis 21 International call rates are shown as the average of Peak Rates and Off-Peak Rates 22 Call charges are presented per employee with an estimated utilization of 300 minutes (local calls) and 10 minutes (international calls) per month 23 Please note that the features and added benefits vary between the packages offered by each telecommunication company across Bahrain, Dubai and Qatar, excluding connection fees (one-off) 11
14. Internet Services Similar to calculating the cost of telephone services , the cost of internet services are based on corporate rates offered by telecommunication companies across Bahrain, Dubai and Qatar. The costs 24 quoted below are for an 8Mbps Business package , suitable for moderate internet utilization of a commercial office of 25-50 employees, and exclude set-up fees and installation charges (one-off). As outlined in the table below, Dubai has the highest cost for internet services when compared to Bahrain and Qatar. Figure 20: Average Cost for Internet Services 25 Rental Charges for Internet Services (USD per month) Country Rental Charges 26 Bahrain 360 Dubai 730 Qatar Source: 440 www.batelco.com, www.menatelecom.com, www.du.ae, www.etisalat.ae, www.ooredoo.qa, KPMG analysis 24 Please note that the features and added benefits vary between the packages offered by each telecommunication company across Bahrain, Dubai and Qatar 25 The average cost for internet services has been rounded off to the nearest 10 26 Reflects the monthly rental for a 1-year contract 12
15. 8 Corporate Taxes In Bahrain , there is no corporate tax for most companies, while speculation on the introduction of VAT on transactions in the future is yet to be confirmed. Qatar, Dubai and Bahrain apply different quantum of taxes on corporations operating in these locations, ranging from social security contributions, training levies, and municipality taxes. The following tables outline the corporate taxes applied in Bahrain, Qatar and Dubai. Figure 21: Corporate Taxes in Bahrain Overview of Corporate Tax Category Description Municipality Tax 10% on the rental of the commercial property Social Security Contribution 12% of salaries for local employees, and 3% for expatriate employees 27 Training Levy Source: 1% of the salaries for local employees, and 3% for expatriate employees Bahrain Ministry of Finance Figure 22: Corporate Taxes in Dubai Overview of Corporate Tax Category Description Municipality Tax 10% on the rental of the commercial property Social Security Contribution 12.5% of salaries for local employees only Corporate Tax Income is taxed at 20% only on branches of foreign banks Source: United Arab Emirates Ministry of Finance Figure 23: Corporate Taxes in Qatar Overview of Corporate Tax Category Description Social Security Contribution 10% of salaries for local employees only Corporate Tax Income is taxed at 10% for QFC entities that are wholly owned by Qatari or GCC nationals Withholding Tax 7% on interest paid to non-residents 5% on royalties paid to non-residents 7% on technical service fees paid to non-residents 7% tax is applied on commissions, brokerage fees, directors’ fees, and fees from other services performed in Qatar Source: 27 Qatar Ministry of Finance – Public Revenues and Taxes Department, Qatar Financial Centre Only applicable for companies with more than 50 employees that do not provide training to their employees 13
16. 9 Renting Residences Bahrain A comparison of residential rents between Dubai , Qatar and Bahrain reveals substantially lower rents for Bahrain. Residential rents in Bahrain continue to decrease compared to 2012, with the average rent for 2 bedroom apartments and 3 bedroom villas decreasing by 5% and 10% respectively. Although there is sufficient demand for residential units in Bahrain, it did not help drive up rents due to the surge in residential supply as several major developments were brought to the market. Figure 24: Average monthly rents in Bahrain Average Monthly Rents in Bahrain (USD) Residential unit sizes 2011 2012 2013 Average Rent for 2 BD Apartment 1,650 1,500 1,430 Average Rent for 3 BD Villa 2,250 2,130 1,920 Source: CBRE Middle East, KPMG analysis Dubai Dubai’s real estate market continued to grow throughout the year, and is not expected to slow down as improving market conditions fuel residential demand. In Dubai, the year-on-year growth for apartment and villa rents amounted to 20% and 14% respectively. To meet the rising demand, Dubai is expected to see another 31,400 residential units and 6,500 villas to be added by 2014. Figure 25: Average monthly rents in Dubai Average Monthly Rents in Dubai (USD) Residential unit sizes 2011 2012 2013 Average Rent for 2 BD Apartment 1,830 1,990 2,390 Average Rent for 3 BD Villa 3,487 4,200 4,790 Source: Asteco Dubai Report H1 2013, KPMG analysis Qatar The residential market in Qatar has witnessed higher occupancy levels, particularly in residential apartments, which has placed an upward pressure on rental levels. Qatar is still experiencing a demand-supply gap where units in prime areas are being pre-booked prior to the existing tenants vacating. On average, rental rates grew by 7% between 2012 and 2013 throughout the residential market, compared to a 2% increase between 2011 and 2012. Figure 26: Average monthly rents in Qatar Average Monthly Rents in Qatar (USD) Residential unit sizes 2011 2012 2013 Average Rent for 2 BD Apartment 2,470 2,510 2,780 Average Rent for 3 BD Villa 3,570 3,640 3,780 Source: Asteco Qatar Report Q2 2013, KPMG analysis 14
17. 10 Education Costs An indicative analysis of the total cost of education across Bahrain , Dubai and Qatar is presented in local currencies and USD in the table below. Overall, the annual cost of education in Bahrain is substantially lower than in Dubai and Qatar, where education costs are higher by 92% and 102% 28 respectively. Figure 27: Indicative Education Costs Average Education Costs per Annum (2013) Country Local Currency USD Bahrain BHD 1,870 4,970 Dubai AED 34,970 9,520 Qatar QAR 36,480 10,020 Source: www.expatwoman.com, KPMG analysis The cost of education in Bahrain is significantly lower than Dubai and Qatar across all three grade levels. The cost of education for Pre-School levels, Primary levels, and Secondary levels in Bahrain, Dubai and Qatar are compared in the table below: Figure 28: Average Cost of Education Annual Costs per Grade Level 29 (USD) Country Pre-School Level Primary Level Secondary Level Bahrain 4,030 4,740 6,130 Dubai 7,290 9,400 11,870 7,430 10,450 12,180 Qatar Source: www.expatwoman.com, KPMG analysis 28 Average education costs have been rounded off to the nearest 10 29 The average education costs takes into account the fees of American, British, and Indian Curriculums for all three grade levels. 15
18. 11 Total Costs Summary An indicative analysis of the total estimated employee related costs presented in the following table : 30 in Bahrain, Dubai and Qatar is Figure 29: Overall costs of hiring Estimated average employment costs in USD per month per employee Occupancy 31 cost Average Wages HRA Benefits Expatriate 32 Benefits Total Local 400 5,630 - - 6,030 Expatriate 400 3,090 1,630 910 6,030 Local 1,100 8,260 - - 9,360 Expatriate 1,100 3,380 1,950 1,300 7,730 Local 1,200 6,450 - - 7,650 Expatriate 1,200 3,020 1,940 1,170 7,330 Location Bahrain QFC DIFC Source: KPMG analysis Although HRA benefits are lower in Bahrain in comparison to Qatar and Dubai, expatriate employees continue to relocate to Bahrain due to its low living costs. To better compare the costs of doing business in Bahrain, QFC and the DIFC, a scenario highlighting the costs associated in operating an office with three local employees and seven expatriate employees is presented in Figure 29. Overall, the cost of doing business in Bahrain remains lower than DIFC and QFC. Figure 30: Office mix scenario Office mix scenario costs (USD per month) Occupancy cost Average Wages 3 Locals 1,200 16,890 - - 7 Expatriates 2,800 21,630 11,410 6,370 Total 4,000 38,520 11,410 6,370 3 Locals 3,300 24,780 - - 7 Expatriates 7,700 23,660 13,650 9,100 11,000 48,440 13,650 9,100 3 Locals 3,600 19,350 - - 7 Expatriates 8,400 21,140 13,580 8,190 12,000 40,490 13,580 8,190 Location Bahrain QFC Total DIFC Total Source: HRA Benefits Expatriate Benefits Total 60,300 82,190 74,260 KPMG analysis 30 House Rent Allowance (HRA) for expatriate workforce is shown as a separate entry. However, for local workforce, absence of a separate HRA would be compensated by other benefits, and is shown as a part of wages in the above table 31 Average occupancy costs per month, rounded off to nearest 100s 32 To include education, medical and annual flight fare for an expatriate family of four. 16
19. Appendix 1 . Calculations for Cost per workstation ■ Methodology of calculation cost per workstation: – 15 sqm space utilization standard per worker in the Middle East. – Rental rate of the building (in sqm per month). – Utilities and maintenance charges per sqm (10% of rent for QFC, and USD 16 for DIFC) – Calculation for annual cost per workstation= 15.0 sqm x (Rent + Service Charge) x 12 For example: Annual Occupancy Cost per Workstation for QFC in 2013 = 15.0 sqm x [USD 69.0 per sqm x (1+10%)] x 12 =13,662 2. Workforce benefits ■ The workforce compensations and benefits listed in the present study are only indicative in nature. In practice, companies often adopt varied compensation and benefit structures both for citizen and expatriate workforce. ■ Expatriate benefits calculated in the subject report assume educations benefit for two children, and additional for medical insurance and once a year home travel for a family of four. This does not include any end-of-service benefits. ■ Citizen benefits vary from country to country and can include marriage benefits, benefits upon birth of children etc. These considerations have not been included in this study. 17
21. ©2013 KPMG Fakhro, a Bahrain partnership registered with Ministry of Commerce and Industry (MOIC), Kingdom of Bahrain and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.