Gulf Regional Legal Environment of Business - Coursework Example

? Gulf Regional Legal Environment of Business Insert Insert Grade Insert Insert Business Law Law is defined as any ruleor regulation that has to be followed in any society (Emerson, 2004). Therefore, business law are the rules and regulations that guide business operations between individuals in a country and between countries and other countries. Business laws are important in regulating unethical behaviours in business transactions. The importance is in terms of organization, commerce and occupation. Antitrust laws are commerce laws that prohibit companies producing similar products or in the same industry coming together and forming “trusts” to control prices. Trusts normally lead to monopolization of the market and higher prices. Consumer safety laws are another category of commerce legislation. These laws ensure that products and services do not harm the consumers. Commercial laws also ensure environmental protection. This mainly has to do with the disposal of harmful wastes from industries. If companies are not regulated by laws they are likely to dispose off their wastes without consideration of the negative environmental effects. Laws ensure that such wastes are disposed off safely. In so doing they protect the environment from degradation. Commerce laws also ensure that the general welfare of the public is catered for. Law makers normally weigh the benefit that will be gained by individual businesses against the welfare of the general public and if they find that the welfare of the general public is compromised then they might outlaw such business activities or prosecute whoever engages in them. The business laws also regulate occupations. The laws specify the skills and qualifications for various positions. This ensures that people are recruited on merit and not whom they know. This reduces unethical hiring behaviour in the business environment. Business laws also promote diversity. This is necessitated by laws that bar discriminatory practices based on age, gender, race or ethnicity. Laws require that companies should employ deserving employees and not do so based on gender, age, race or ethnicity. There should also be no discrimination during promotions and layoffs. This promotes equity in the society. Business laws also ensure that businesses take care of the health and safety of their employees (Stone, 2004). Several governments have put down rules and regulations that firms must abide to in terms of health and safety of their workers. This ensures that employees are not at risk while at work. Laws also ensure that the companies give their statements to the public before selling their shares. This ensures that the public know the state of the companies in which they invest their money in. Laws normally protect businesses. There are laws that offer property rights to inventions of companies. These laws ensure that there is no unauthorized use of inventions of companies or individuals. This is done through patent rights, trademarks and copy rights. The laws normally also protect home industries or businesses from external competition. These are normally referred to as protectionist laws, which set conditions of operation for foreign companies or businesses. Such laws set tougher conditions for foreign businesses hence reducing their competitiveness in the local business environment. Laws need to be amended from time to time in order to suit the prevailing conditions. This enables laws to satisfy the economic and people needs. Laws may be amended to liberalize the economy of a country or protect it from foreign competition. Examples of amendments in Oman are the amendments in the Oman labour laws in 2012. Initially, the Ministry of Manpower stipulated the percentage of Oman workers that each company should employ but with amendment to this law a fine was introduced for those companies that do not meet this percentage. The working days were also reduced from six days a week to five days a week hence reducing the maximum working hours a week from 48 hours a week to 45 hours (Jahn, 2012). Free Trade Agreements in Oman Oman is a member of the Gulf Cooperation Council (GCC) free trade agreement. GCC was established on May 25, 1981 at Riyadh (Salazar& Low, 2009; Rizvi, 1982). The member states of this agreement are Saudi Arabia, United Arab Emirates (UAE), Oman, Qatar, Kuwait and Bahrain. All these are countries of the gulf region. This is an economic and political integration agreement. GCC has a secretariat which oversees political, security, economic, environment and military issues. In the 1981 agreement, the countries agreed to treat all nationals of the GCC equally. It was also agreed that there will be free trade in all commodities and that a common policy to be adopted in terms of imposition of external tariffs. The strategies, laws and regulations in financial cooperation, technical cooperation and industrial development are also unified among the GCC countries. The agreement also promotes the connection of infrastructure such as gas, electricity, transport and communication. It also promotes joint ventures in business. The agreement has developed key trade regulations that control business in the region. With the 2001 trade agreement there is an effort for creation of a common currency, a common market and a customs union. The main intention of this agreement is to remove legal barriers in trade between member countries and protect their block from foreign threats through imposition of trade tariffs to non members (Rettab & Istaitieh, 2007). One of the advantages of free trade is that it increases production. Since there are no trade barriers between member countries, each country can specialize in the production of products that it is best at. This enables companies to enjoy the economies of scale and increase their outputs. These outputs are also sustained by the availability of external markets. The countries can specialize because other products can be sourced from partner countries. Free trade also increases competition in the home economy leading to companies coming up with more efficient means of production, distribution and marketing. The consumers can also get a variety of products and services at a competitive price. The free trade also increases the real income leading to economic growth among the concerned countries. Trade agreement may, however, lead to structural unemployment due to removal of trade barriers. Citizens of other countries may also come in as experts flooding the job market leading to employment crisis (Naufal & Genc, 2012). Free trade agreements lead to increased domestic market instability cycles because the economies rely on the global markets. Free trade agreements may lead to destruction of local industries if they are not protected by the government. More developed economies may use efficient technologies and produce low cost goods that they may sell in less developed economies (Sally, 2006). The less developed economies may not be able to measure up to the competition and may wind up. Measures Taken by Oman Government to Protect Home Companies The measures taken by the Oman government to protect home industries include banning of some products from importation. All goods imported into Oman must be licensed by the Ministry of Commerce and Industry. Some products such as pharmaceuticals, explosives, firearms and alcohols require a special license for importation. Higher import duty is levied on products that offer competition to Oman products such as cast iron, paints, cement, glass fibre, PVC, vitrified clay and pipes. Agricultural products depending on seasonal decisions are charged a duty tax of 50%. Alcoholic beverages are charged a customs duty of 100 percent while tobacco products attract a duty of 50 percent (BDO World Wide, 2013). The directorate general of customs and the Oman Police are responsible for inspection of goods imported and also prevention of smuggling of goods and importation of banned goods. Despite there being disadvantages, the free trade agreements are good and I would recommend that Oman continues to participate in these agreements. However, measures must be taken to protect local industries from being thrown out of business. Conciliation and Reconciliation Committees in Oman Conciliation and reconciliation committees play a key role in settlement of disputes in the society. This is normally important in the settlement of commercial disputes between parties. The proceedings are normally free and therefore affordable to all parties. The proceedings can also be initiated without civil and commercial procedures law. The proceedings are normally held in an amicable atmosphere that is different from the antagonist environment of courts. Parties also have an opportunity for their disputes to be resolved without attracting the public attention. This is important especially in maintaining the business reputation. The resolution that is reached by this committee is normally final just like the court judgement. The effectiveness and role of Conciliation and reconciliation committees in Oman has been increasing every year. In 2009, 15,586 disputes were settled through conciliation and reconciliation committees in Oman while 1,111 disputes failed to be resolved. This indicated 93 percent success. In 2010, 22,036 disputes were resolved by conciliation and reconciliation committees while 1,391 (six percent) failed to be solved (Kamoonpuri, 2011). This shows how important these committees are in settlement of disputes especially in the business environment. The citizens of Oman are peaceful and they would prefer to settle their disputes in a less acrimonious environment. Bibliography BDO World Wide, 2013, Doing Business in Oman 2013, Brussels: Brussels Worldwide Services Emerson, W.R. 2004, Business Law, USA: Barron’s Educational Series, Inc. Jahn, H. 2012, “Omani Labour Law – Recent Changes and Amendments”, Genesis Framework, Retrieved 27/5/2013 from http://lexarabiae.meyer-reumann.com/issues/2012-2/vol-xvi-january-2012-1st-issue/omani-labour-law-recent-changes-and-amendments/ Kamoonpuri, H. 2011, “Reconciliation committees play a key role in delivering justice”, Oman Daily Observer, Retrieved 28/5/2013 from < http://main.omanobserver.om/node/40422> Naufal, G & Genc, I. 2012, Expats and Labor Force: The Story of the Gulf Cooperation Council Countries. Palgrave Macmillan Rettab, B. & Istaitieh, A. 2007, GCC Economic Integration in Focus with Special Reference to the UAE, Dubai: Data Management and Business Research Department Rizvi, H. 1982, Gulf Cooperation Council, Pakistan Horizon, Vol. 35, No. 2 (Second Quarter 1982), pp. 29-38 Salazar, C. L., & Low, L. 2009, The Gulf Cooperation Council, Institute of Southeast Asian Studies Sally, R. 2006, Free Trade Agreements, and the Prospects for Regional Integration in East Asia, Asian Economic Policy Review, Vol. 1, pp. 306–321, Retrieved 28/5/2013 from < http://graduateinstitute.ch/webdav/site/political_science/shared/political_science/1849/sally_regionalintegration_jcer.pdf> Stone, A. 2004, Putting Teeth in Corporate Ethics Codes, USA: Business Week Online Read More