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Markets The Future is Bright
Dubai to Become Smartest City in the World
Also in This Issue Salaries in UAE Expected to Increase by 5% in 2016. Global Islamic Finance Industry to Undergo First Comprehensive Assessment.
Contents
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4 Latest News from Across the Middle East Region 10 Profile ACWA Power 12 Understanding Local Partners Key to Success in Middle East Markets Western corporations and investors have long enjoyed lucrative business in the Middle East - despite the political turmoil which has characterised the region, but knowing how to assess and manage the risks has always been key to success.
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16 Middle East and North Africa Makes Progress on Gender Equality, But Severe Barriers Persist Saudi Arabia, Egypt and Lebanon have enacted reforms to advance women’s economic advancement, although women in the Middle East and North Africa region face the most hurdles in getting a job or starting a business, says the World Bank Group’s Women, Business and the Law (WBL) 2016 report. 18 Dubai to Become the Smartest City in the World 5th Smart Grids and Smart Meters Summit, being held between 28-29 October 2015 at the Madinat Jumeirah in Dubai, is a unique conference-led exhibition, bringing together the MENA region’s smart grid and energy authorities. 22 Global Islamic Finance Industry to Undergo First Comprehensive Assessment of Its 40-Year History This December As industry marks key milestone, a line-up of global powerhouses to gather at 22nd World Islamic Banking Conference to take stock of Islamic finance’s achievements and shortcomings and to forge roadmap for the future. 28 Salaries in UAE Expected to Increase by 5% in 2016 A GCC-wide survey of 600 multinational companies and locally-owned conglomerates - the largest study of its kind in the Gulf region - has forecast that salary increases will average 5% in 2016, down from an anticipated 6% in 2013, 5.5% in 2014, and 5.1% in 2015. 32 Dubai Watch Week Supports Educational Initiatives and Forges Major Partnerships for Its Inaugural Edition The key objective behind Dubai Watch Week (DWW) is to support the watch industry and raise awareness on the art of watchmaking.
Cover Image: Anna Omelchenko / Shutterstock.com
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Capital Market Stakeholders Highlight the Strategic Value of Investor Relations at the 7th Middle East Investor Relations Society Conference and Awards
kets, the benefits and consequences of the Saudi bourse opening, and the latest trends in integrated financial reporting to improve transparency and disclosure. “We are thrilled about the success of the Annual IR Conference and the growth of the Society,” said Oliver Schutzmann, Chairman, Middle East Investor Relations Society. “The rising number of companies with IR departments across the Middle East is a clear sign that the profession is gaining more importance, which will benefit all market participants.”
Influential market players from listed and unlisted companies, investors, family offices, government, exchanges and regulatory bodies will take part in the 7th Middle East Investor Relations Society Conference and Awards on the 16th of September, at the Address Dubai Mall in Dubai. The growing need for investor relations (IR) professionals in the Middle East reflects a maturing of capital market activity across the region. The conference aims to drive change through collaboration of Middle East market participants, as well as educate them on the importance of IR, encourage dialogue and support the implementation of best practice, while providing members with a networking platform.
The conference will also see the 2015 IR Awards Ceremony where regional companies will be recognised for their contribution to developing and raising IR standards across the region. A full list of nominees can be found on the Society’s website. MEIRS independent non-profit organisation dedicated to promoting best practice IR in the region. The Society benefits from the support of its sponsors, partners and members.
Keynote speakers are Karim Karoui, Chief Financial Officer of FGB and Oliver Schutzmann, Chairman of the Middle East Investor Relations Society, followed by other distinguished speakers from the Middle East capital market community. Karim Karoui, CFO of FGB , said: “The capital market landscape is rapidly changing in the region. Impacted by global macroeconomic trends and paired with a changing regulatory environment, investor relations is increasingly a strategic management function that cannot be overlooked.” “Regional markets are attracting significant interest from foreign investors and with that comes a level of scrutiny from stakeholders, who expect high standards of transparency and investor engagement in line with international principles.” said Alex MacDonald Vitale, Head of IR MENA, HSBC. Conference topics will include the increasingly stringent regulatory framework and enforcement, the impact of Middle East macroeconomic, geopolitical and regulation environment on financial mar-
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Omantel Voted the Most Trusted Brand in the Telecom Sector Christopher Hinn
Florida Seeks to Boost Ties Further with the UAE More ties between the United States and the United Arab Emirates are imminent in the areas of real-estate, hospitality, medicine, entertainment and enhanced trade and immigration facilitation for businessmen. These views were echoed by Christopher Hinn, CEO and Managing Director, C-7 International, a leading consulting practice and business development partner focused on connecting US businesses to the Middle East. “The recent Dubai-Florida Link Expo has contributed substantially to the US-UAE bilateral relationship and elevated it to a strategic partnership, specifically with the introduction of new direct Emirates flights from Orlando to Dubai,” Hinn said, adding that “we look forward to enhancing this series of tie-ups further in the months to come. As co-organiser of the event, the businessman mustered the support of associations like the US-UAE Business Council, Dubai Chamber, Capital Assured, Dubai Sports City and The American Business Council of Dubai earlier this month. The two-day exhibition dealt with investments in real estate, commercial investments, business opportunities, schools and universities, lifestyle and travel destinations, immigration and EB-5 visas etc. The core aim of C7 International is to develop global sourcing for the Middle East through a mutually benefiting investment partnership along with the protecting the interests of both parties. “Every activity is driven by relationships and doing things the right way. Every transaction must be a win-win for all involved and we hope to deliver just that to investors from Florida and those from Dubai as well,” he added.
Omantel Voted the Most Trusted Brand in the Telecom Sector Omantel, the Sultanate’s most valuable brand in Oman according to the annual brand survey of Brand Finance, has been voted as the Most Trusted Brand in the telecom sector in the Sultanate. The selection was announced by Oman Economic Review, a renowned local English magazine in its September issue as part of the brand survey conducted by the magazine in collaboration with the Arab Research Bureau. Moreover, all the participating categories have named Omantel as the most trusted brand in the telecom sector. The participants at the survey have been divided into two main groups (senior management and executives) and six sub groups. The senior management group included two categories namely the Omanis and expats. The executive group included four main categories namely Omanis, expats, males and females. When it comes to telecom services, there has been a consensus among all groups that Omantel is the most trusted brand in the Sultanate; up to 10 points higher than the first runner up. The selection reflects the confidence vested by more than 3 million customers in Omantel products and services. Commenting on this achievement, Talal Said al Mamari, CEO Omantel said: “This is another milestone achievement that reiterates Omantel’s leadership of telecom sector in the Sultanate. The achievement is s result of accumulation of confidence that has been reinforced and integrated over the past decades. “We are delighted to learn that there has been a consensus among all groups that Omantel is the most trusted brand in telecom. This is itself a strong evidence of our customers’ confidence in our products and service. The selection will urge us to double our efforts to ensure that all our customers enjoy good experience with us,” he said. “Our new strategy is focused around capitalising on the opportunities generated by digital transformation to provide an experience that exceeds our customers’ expectations. Omantel has already launched a number of initiatives that contributed to the enhancement of the services provided to Omantel customers”. Al Mamari concluded. Over the last few years, Omantel brand received a number of regional and international awards. Besides maintaining its position as the most valuable brand in Oman since 2010, the brand has been selected as the best brand in the telecom sector as per the outcomes of the annual survey conducted by Business Today magazine. Omantel also captured a number of other prestigious regional and international awards.
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Dubai Courts Launches ‘Elite Program’ for Middle-Level Managers in Judicial and Administrative Bodies
H.E. Expert/Tarish Eid Al Mansouri, Director General of Dubai Courts , has inaugurated the ‘elite program’ for middle-level managers in the judicial and administrative bodies in a bid to drive excellence in the judicial sector. The ceremony took place at the Etisalat Academy - one of the most important training centres in the Gulf, the Middle East and North Africa regions - where the training sessions will be conducted. The ‘elite program’ meets the highest quality and standards of excellence and is in line with Dubai Courts ‘ aspirations to build creative and efficient human resources and continuously consolidate Dubai’s global status. Al Mansouri said: “Training the first batch of Dubai Courts ‘ middle-level managers is particularly important given the critical need to enhance their leadership, work skills and attitude for them to keep up with the accelerated developments within the highly competitive legal and judicial sector. The sector’s transformation is due in part to Dubai’s move towards ‘smart’ governance and rapid progress. The ‘elite program’ focuses on ensuring equity and equal opportunities as well as determining the strengths, areas for improvements and essential job skills to ensure high performance and leadership within Dubai Courts. We will soon implement similar development programs for our other employees. The training programs are in accordance with a comprehensive methodology based on theoretical and practical training, team building, role-playing and simulation.” Al Mansouri added: “The ‘elite program’ is a big boost to our efforts to achieve our strategic objectives of focusing on knowledge management, promoting an environment of creativity and innovation, and developing and empowering our human resources to achieve excellence in their
performance. We also aim to make a positive impact in terms of providing the best services and attaining the community’s happiness and welfare. Our goals are aligned with the vision and guidance of H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai.” Stages and functions The program will be held in two phases. The first stage includes the assessment of personal capabilities to identify the areas for development, while the second phase covers a series of eight training programs delivered in Arabic with each session to be conducted for more than three days. The training programs are designed based on the functions of the middle-level managers; the trainees are subjected to an integrated development program consisting of a set of developmental workshops that meet the actual needs of the judicial and administrative authority. The program’s eight key areas are ‘Strategic Planning,’ ‘Change and Innovation Leadership,’ ‘Team Leadership,’ ‘Financial Management,’ ‘Institutional Performance Development Measurement,’ ‘Management and Development of People,’ ‘Problem-solving and Decision-making,’ and ‘Conflict and Negotiation Management.’ Advanced training methodology The ‘elite program’ training methodology is aligned with the rapid developments in the judicial sector. It comprises 40% theory and 60% workshops, with a special focus on the practical applications of theoretical information. The program’s distinctive ‘team building’ sessions encourage teamwork and create a friendly environment to nurture trust among team members. The ‘roles and simulation play’ sessions, meanwhile, are regarded as the most prominent of the practical training activities and are aimed at strengthening the employees’ decision-making and problem-solving capabilities, among others. At the end of the ‘elite program,’ detailed reports will be prepared to share the results of behavioural and technical evaluations and recommendations for each trainee. The reports will also contain an overview of the level of performance and participation of each trainee during the theoretical and practical training sessions. The program will train 15 to 20 trainees per batch.
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Dubai business school S P Jain in Forbes top 10
S P Jain ranked number one in Dubai, India and Australia and grabbed the second position in Singapore. A Dubai-based business management school has been ranked number 10 in the world by Forbes in its Best International one-year MBA programmes. The Global MBA programme of S P Jain School of Global Management won the distinction in Forbes 2015 -16 ranking. S P Jain ranked number one in Dubai, India and Australia and grabbed the second position in Singapore. In a Press release, Nitish Jain, President, S P Jain School of Global Management, said: “In the last five years of our 11-year old history, we have consistently featured in top rankings by Forbes, Financial Times and Nielsen.” “This is exciting and a tribute to the excellent performance of our alumni around the world. We are a young, innovative business school that has tailored its MBA programme to enhance the global employability of its graduates. Last year alone, we had over 100 graduates placed in countries like Australia, Singapore, Malaysia and the UAE.,” Jain said. S P Jain’s full-time undergraduate and postgraduate business programmes offer students the unique benefit of studying in any three world-class cities. “We believe that this global exposure develops young students in a manner that a single-city campus cannot. Not only does it add vital international experience to their resumes, it also enables them to develop important global skills. These skills have proven to lead to better jobs, salaries and better graduation results,” stated Jain. Nitish Jain
Dusit Continues Expansion into Oman
In keeping with its expansion strategy to launch in exciting world destinations, Dusit International announces its latest project in the Sultanate of Oman. Executives from the Bangkok-based hospitality group Dusit International, led by Managing Director and CEO Mr. Chanin Donavanik, joined executives from the Al Jarwani Group to ink a management agreement on a new dusitD2 hotel in Muscat, Sultanate of Oman. The dusitD2 Palm Mall Muscat, scheduled for completion in 2017, will be located within the mixed-use Palm Mall development that will offer unique attractions including Oman’s first snow village and the Sultanate’s largest aquarium. The upscale hotel will offer approximately 150 guest rooms and 100 suites with an enticing culinary offering. Select rooms will offer stunning views of the mall’s aquarium and snow village. Leisure facilities will include a gym, spa and pool, while meeting rooms and a ballroom will cater for business guests and special events. Despite being a desert country, Oman possesses a diverse geography, making it an excellent destination for adventure travellers keen to explore its rugged mountains, beautiful coastlines or awe inspiring sand dunes. Cultural tourism is also a major highlight in Oman which boasts multiple UNESCO World Heritage Sites, such as the ruins of the necropolis of Bat, dating back to 3,000 B.C. “We are excited to add Oman to our list of international destinations, further strengthening Dusit’s presence in the GCC region,” commented Mr Donavanik. “The dusitD2 Palm Mall Muscat will offer the Dusit brand’s signature warm, gracious service, combined with local hospitality customs and world-class entertainment facilities to provide a truly unique experience. We are confident that alongside our partners at Al Jarwani Group, we will be able to make this hotel a great success and a new landmark in the region.” Chairman of Al Jarwani Group, Mr. Mahmood Al Jarwani, also added, “We are very happy to join hands with Dusit International. The Sultanate of Oman will soon experience the unmatched hospitality and service that is the signature of the Dusit Group. We intend to take this strategic relationship forward, creating more unique projects that add value to the growing Omani tourism sector.”
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Private Capital Increasingly Flowing to Saudi Arabia as Stock Market Opens to International Investors
The opening of the Tadawul, Saudi Arabia’s stock market, to international investors in June this year, was eagerly anticipated by participants and seen by many as a first step towards market liberalisation and future reforms. Many expect this change to be a key driver of medium term capital inflows, even if it would only have a relatively small impact on capital flow in the short term.
The opening of the Saudi Stock Exchange to foreign institutional investors in June 2015 has contributed significantly to the direction of private capital flows in the GCC region, according to Invesco’s sixth annual Middle East Asset Management Study1, which launched today - an in-depth market study based on 167 interviews with sovereign wealth funds, state pension funds, local insurance companies, family offices, banks and IFAs across the region. Last year’s study found the United Arab Emirates (UAE), with its perceived “safe haven” status and strategic position as a hub between Asia and Africa, to be the main beneficiary of inflows of private capital into the GCC region. However while the UAE remains popular, with 73% of respondents saying that investable assets and people are in net inflow into the UAE (compared to 89% last year), this year’s study reveals a remarkable turnaround in the net respondent view scores on the direction of capital flow to Saudi Arabia, from -17% last year to +61% this year. This is a significant finding in the context of low global oil prices and declining government surpluses in Saudi Arabia (see figure 10). Bahrain has also seen a notable turnaround in sentiment on capital flows, moving from a 73% net negative view score last year to a positive score of 27% for 2015. There is a causal link here to Saudi Arabia as a key regional partner and although the stabilisation of Bahrain’s local political environment was a contributing factor to this sentiment, participants recognised that Bahrain is no longer a major financial centre and its fortunes are dependent on its neighbours. Saudi success The primary driver of inflows in Saudi Arabia was positive perceptions of the economy and the opening of Saudi capital markets (see figure 11).
Stock market performance and opportunities to participate in IPOs were named as the second most important drivers behind positive perceptions of capital inflows in Saudi Arabia. Respondents cited strong medium term performance for the Saudi stock market and a relatively robust recovery to the market shock following the OPEC announcement on oil production levels in December 2014. Furthermore, 2014 saw some of the largest IPOs in the region, notably National Commerce Bank in Saudi Arabia2 and Emaar Malls in the UAE3. Figure 12 shows that the overall deal value for IPOs on the Saudi Arabia stock market rose significantly in 2014 and is approaching the levels seen in 2007 before the global financial crisis. Some family businesses in the region now see an IPO as an excellent way to raise capital, improve governance and resolve succession planning issues in one go. Nick Tolchard, Head of Invesco Middle East, noted: “Our conversations in the region show that whilst there has been optimism surrounding the regional economy and capital markets, concerns such as the oil price and government finances persist. Whilst things can change quickly in the Middle East, it will be interesting to see if positive sentiment amongst local, especially Saudi, investors translates into reality over the next 12 months and whether the anticipated effects of the opening of capital markets take hold.” Declines in inflows from Emerging Markets, including Russia, offset by growth from MENA and the GCC An example of a rapid year-on-year reversal in sources of capital inflows is the decline in private capital coming into the UAE from Emerging Markets, including Russia. Last year’s study showed inflows from Emerging Markets at 58%, dropping down to 41% this year. Flows from Russia in particular are thought to have been affected by the decline in the rouble reducing the buying power
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Power Tools Market to Witness Highest Growth in Middle East and Africa North America is the largest market for power tools globally; however, FMI forecasts Middle East and Africa (MEA) to witness the highest growth rate. North America will account for over one-fourth of the overall value of the global power tools market by 2025, according to a new research report from Future Market Insights (FMI). The report, titled, “Power Tools Market: Global Industry Analysis and Opportunity Assessment 2015-2025”, provides key insights on the power tools market globally. of affluent Russians in the UAE real estate and tourism sectors. Nick Tolchard commented: “This decline in Russian capital inflows, may be cyclical given the strong and ongoing ties between Russia and the GCC. Furthermore, in 2015 greater capital inflows from MENA and other GCC markets have offset declines from Emerging Markets. “These findings underline the diversified nature of the UAE economy, especially with capital flowing increasingly from MENA and the GCC. This could be transformational for the UAE given the longer term profile of GCC capital inflows and is a much more stable and sustainable source of capital than relying on negative events in international markets causing short-term capital flight.” Nick Tolchard concluded: “The opening of capital markets is certainly an encouraging development that has the potential to impact positively on investment in the region. Looking across retail and institutional investor segments, we have seen that sovereign investors are viewed as leaders on investment strategy and asset allocation so smaller institutional investors and family offices often follow their example. Sovereign investor participation in stock markets, IPOs and bond issuances has helped to create the GCC financial markets for other investors and the scale of sovereign assets contributes to the confidence levels of retail investors in the region. It will be fascinating to keep monitoring how these developments and relationships will drive capital flow and asset allocation decisions in the region.”
The North America power tools market is dominated by the US, which accounts for nearly 85% of market share in terms of value. In contrast, Canada power tools market, valued at US$967m in 2015, is expected to expand at a single-digit compound annual growth rate (CAGR) during the forecast period 2015-2025. Resurgence in the housing market is expected to provide an impetus to the demand for power tools, according to FMI. Incorporation of modern tools in the agriculture sector is also anticipated to fuel the power tools market in North America. The North America power tools market is valued at US$7,317.1m currently, and FMI expects it to expand at a CAGR of 4.7% during the forecast period 2015-2025. The power tools market is expected to witness the fastest growth in the Middle East and Africa. The region has witnessed frantic construction activity in the last five years or so, as the oil-rich economies in Gulf Cooperation Council look to develop alternative revenue models to reduce their dependency on oil exports. The spending on infrastructure in sub-Saharan Africa is expected to expand at a rate of 10% annually, exceeding US$180bn by 2025. Middle East is a growth market for automotive market, thanks largely to the markets in the GCC. The period of relative geo-political stability in Egypt is expected to augur well for the automotive market in Middle East and Africa, which in turn, will create higher demand for power tools. According to FMI, rapid urbanisation in the Middle East and Africa has provided a boost to the construction sector, which in turn, has created growth opportunities for power tools market. The Middle East and Africa power tools market is expected to expand at a CAGR of 6.6% between 2015 and 2025.
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Profile
ACWA Power ACWA Power is the leading international developer and operator of water and power projects. The company, which in business for around nine years, boasts a portfolio of 26 assets with a capacity of almost 16,000 MW of power and 2.4 Million m³/ day of desalinated water. The portfolio has an investment value in excess of US$23 billion, and provides employment to more than 2,400 people in eight countries. ACWA Power is single-mindedly focused on being the lowest cost producer of water and power as a reliable supplier to its clients. Based on this core philosophy we focus firstly on maximizing the economic benefit to the client in terms of savings vis-àvis its alternate sources of supply, and secondly on ensuring a dependable and uninterrupted supply of utilities. Thirdly we focus on a “win-win” balance by concentrating on credit-worthy off-takers to mitigate against any payment issues. The year in review was a remarkable one in ACWA Power’s history, as we successfully closed the largest concentrated solar power (CSP) project in Morocco under a financing structure that imposed unique challenges in terms of its risk sharing framework. Equally enterprising was the financial close of the 50 MWe CSP in South Africa, a market renowned for its high entry barriers to non-recourse financing imposed by a closely-knit and an inward focused banking sector. The feather in the cap was in having successfully preserved the financing put in place for the 2,062 MW gas-fired Rabigh 2 independent power project
in Saudi Arabia, while overcoming the challenge imposed by the off-taker’s decision to change the fuel post bid submission. ACWA Power’s culture is punctuated by its core values of integrity, rigour, fairness and ingenuity. These values are instilled among our staff, who recognise these being the key performance indicators against which they are continuously evaluated. As a result, our colleagues apply these values in their dealings with clients a well the results of which are evident from our successful growth. Furthermore, ACWA Power believes in hiring and retaining the best talent and by creating a dynamic transactional oriented, out of the box thinking environment we are able to further foster the growth of talent. The only constant in ACWA Power’s strategy is the focus on improvement for the better. Our track record of winning bids is also made possible by our creativity in implementing ground breaking technical and financing solutions, fostering a trust based relationship with partners and stakeholders leading to setting of new benchmarks time and again.
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Understanding Local Partners Key to Success in Middle East Markets Western corporations and investors have long enjoyed lucrative business in the Middle East - despite the political turmoil which has characterised the region, but knowing how to assess and manage the risks has always been key to success. Much of that comes down to finding a reliable local partner, but with US and other key countries clamping down on corruption, the wrong tie-up can prove a costly and embarrassing liability.
The latest market that is exciting investors from all sectors is Iran, amid expectations that it will open up to foreign corporations after apparently resolving its differences with the international community over its nuclear programme. But early entrants into the Iranian market will have to tread carefully: the pitfalls include remaining US sanctions, state involvement in the economy, a complicated bureaucracy and widespread corruption. One risk in particular is the number of companies which have links to Iran’s Revolutionary Guards, a paramilitary force and still the subject of strict US sanctions. These ties will typically be obscured through “bonyads” – the webs of charitable trusts that control up to a quarter of Iran’s economy. Such opaque ownership structures are also a problem in other countries, where prominent sheiks often seek to mask their relationship to a business.
Across almost all of the Middle East, finding a local partner with which to work is essential for corporations and investors considering an opportunity. Indeed, outside free trade zones, it is usually mandatory to conduct business in a manner that involves a local partner. A good partner will be able to offer knowledge of local culture and business practices, make introductions and help guide the JV through the necessary bureaucratic hurdles. It is often desirable or even necessary for the local partner to have political contacts and clout, but this is a fine line beyond which the main dangers regarding western anti-corruption legislation lie. Most companies set out to win and retain contracts and clients without the slightest intention of acting unscrupulously. However, many that commit unethical business practices do so inadvertently, because they fall prey to relationships with the wrong third parties.
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US authorities in particular have made increasingly clear that they will hold corporates responsible for the behaviour of third parties. Most sizeable corporations have dealings in the US, so will fall within the remit of the Foreign Corrupt Practices Act. Meanwhile, the UK Bribery Act is also intended to hold to account those firms with operations in Britain. Companies therefore need to be careful that the local third parties they work with are not using untoward means to gain business for the partnership. This does not just refer to cash bribes and would include using family ties or favouring companies with which they have connections. The UK Bribery Act makes clear that ignorance is no excuse – but there is a defence based upon having made all possible attempts to ensure there is no corruption taking place in a local partnership – in other words, a robust internal compliance programme that can be demonstrated to have left no stone unturned.
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As well as the hidden dangers of third parties exposing a company to allegations of corruption or breaching sanctions, financial firms in particular must note the dangers surrounding terrorist financing. A number of banks have been caught out and suffered fines and significant reputational damage, but most major financial firms have now tightened their due diligence programmes. Those wishing to launder money or use it for nefarious purposes are therefore looking for new conduits for their funds, while regulators and intelligence agencies are working hard to expose them. For example, Western firms considering a partner in Saudi Arabia should be aware that a number of prominent Saudi business families have been accused of funding terrorism, with varying degrees of evidence. However, these links at the very least have the potential to cause major embarrassment, and a thorough search of US court filings relating to 9/11 would be prudent before agreeing a business deal. Indeed, it is critical to gain a clear understanding of the reputations and track records of all local third parties that will be involved in a venture, so that the risks can be identified and mitigated. A firm considering doing business in the Middle East should therefore put in place an enterprise-wide anti-corruption framework. Deploying an effective top-down compliance programme and anti-bribery strategy is crucial. This must permeate every aspect of the company’s day-to-day operations. The anti-corruption framework should be geared to evaluating all third parties a firm is contemplating working with, insisting on full accountability and transparency from potential partners and placing the highest level of scrutiny on the riskiest relationships. A robust due diligence operation can remove elements of a deal likely to lead to difficulties further
down the line and allow a company to enter a lucrative new market with a minimum of risk. Indeed, it is not just dangers from sanctions, terrorist associations and corruption that may be unearthed. A firm may find its proposed partner is worryingly litigious, has a track record of incompetence or lacks the political clout it claims to have. Carrying out due diligence checks is rarely straightforward – Middle Eastern countries often do not have reliable financial and political news reporting, archives may not be publicly available or digitised, and business ownership structures and political ties can be deliberately obscured. Often, discreetly interviewing sources “on the ground” is the only way to build a true picture of the situation. What action a company eventually takes having procured a thorough due diligence report will ultimately depend on its risk appetite and the other options available. Often, a number of potential partners will be vetted and considered together before a decision is made. These are exciting times in the Middle East, and although some markets have closed, others are opening. Nobody wants to miss a good opportunity or be late to the party, but due diligence and a careful approach is more important than ever to ensure trouble-free trade and investment. Ben Higgins is a director in the Due Diligence practice of Stroz Friedberg, an investigations, intelligence and risk management company. He specialises in the Middle East and Africa, where he has extensive experience running complex multi-jurisdictional investigations, enhanced due diligence cases, strategic research and asset traces for multinationals, law firms and financial institutions. www.strozfriedberg.com
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Middle East and North Africa Makes Progress on Gender Equality, But Severe Barriers Persist Saudi Arabia, Egypt and Lebanon have enacted reforms to advance women’s economic advancement, although women in the Middle East and North Africa region face the most hurdles in getting a job or starting a business, says the World Bank Group’s Women, Business and the Law (WBL) 2016 report.
Laws protecting women from domestic violence were issued in Saudi Arabia and Lebanon, bringing to 4 – along with Jordan and Malta – the number of economies in the region with legal protections for women against abusive partners. Egypt criminalised sexual harassment in public spaces and introduced a 25% quota for women on local councils and 10% quota for women in Parliament. Saudi Arabia introduced a 20% quota for women on the Shura Council and Tunisia’s new electoral law mandates a 50% quota for women on candidate lists. Other reforms in the region include an increase in paternity leave in Lebanon. The report, published every two years, examines laws that impede women’s employment and entrepreneurship in 173 economies throughout the world. In the Middle East and North Africa region, the report examines 19 economies, with Bahrain, Djibouti, Iraq, Malta and Qatar covered for the first time in the 2016 edition.
It finds that women in the Middle East and North Africa face the most wide-ranging legal constraints to their economic activity. Laws that prohibit married women from becoming head of household, applying for a passport or getting a job without permission from the husband affect their access to economic opportunities. Of the economies in the region, only in Algeria, Djibouti and Malta can a woman confer citizenship to her children and her husband in the same way as a man. And in 18 economies in the region, there are restrictions on which jobs women can do. Restrictions on women’s employment can lead to a higher gender wage gap, relative to men. The region is home to 11 of the world’s 15 most restrictive economies, namely Saudi Arabia, Jordan, Iran, Yemen, Iraq, Bahrain, United Arab Emirates, Oman, Syria, Qatar, and Kuwait. Along with Afghanistan, Sudan, Mauritania and Brunei, these
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are the 15 most restrictive economies in terms of women’s ability to work or establish a business, as measured by the report. Lower gender legal equality is associated with fewer girls attending secondary schools, fewer women working or running businesses, and a higher gender wage gap. Where laws do not provide protection from domestic violence, women are likely to have shorter life spans. Maternity leave is available to women in all the economies in the region. But only 8 economies in the region have paternity leave, with durations ranging from1 to 3 days. The exception is Iran, where fathers are entitled to 14 days of paternity leave. Parental leave, which can be shared between the mother and the father, is still rare. Only Malta provides this benefit.
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Dubai to Become the Smartest City in the World 5th Smart Grids and Smart Meters Summit, being held between 28-29 October 2015 at the Madinat Jumeirah in Dubai, is a unique conference-led exhibition, bringing together the MENA region’s smart grid and energy authorities. The confex will turn its attention towards implementation of smart grids to enhance the use of energy efficient and renewable technologies, M2M technology, renewable sources and sustainable technology-led solutions. The event will support the integrated and coordinated strategies needed to meet the energy sufficiency objectives. “A range of new demand-side technologies and strategies is currently being explored by a multi-entity taskforce, involving Masdar Institute and coordinated by the Executive Affairs Authority of Abu Dhabi. As part of a broad programme, this includes initiatives such as the modelling and simulation of energy use in buildings and cities, to developing an optimal control strategy for district cooling plants and looking at demand response and adaptive energy generation for smart grids,” said Dr. Nawal Al-Hosany, Director of Sustainability in Masdar, a keynote speaker of the Smart Grids and Smart Meters conference. “With smart grids expected to play such an important role in unlocking both demand side response and options for energy management, it is encouraging to see Dubai leading the way in terms
of their actual roll-out. A total of one million smart meters are to be installed in apartments and villas across the emirate over the next five years by the Dubai Electricity and Water Authority (DEWA), with an impressive 100,000 already in place,” added Dr. Nawal Al-Hosany. DEWA has introduced three initiatives to support the vision of HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, for Dubai to become the smartest city in the world. These three initiatives will bring greater utility and awareness to Dubai’s citizens and residents. The first initiative will support installing solar panels to generate own electricity. Work on this step has already started and is expected to be completed before the close of 2015. The second stage is to transform the existing electricity and water meters into smart meters to better control their consumption. This data will be available through smartphone applications to enable customers to make informed decisions about how they can further reduce their
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bills. The third initiative will see the construction of vehicle charging stations for electric vehicles to provide the required infrastructure to encourage the use of non-polluting vehicles in Dubai. These measures will directly contribute towards Dubai’s transformation to become the smartest city in the world. Continuing on the energy note, but crossing the UAE borders, the Summit will also examine Egypt’s and Qatar’s strategies. During an interview with the Smart Grids and Smart Meters Summit organisers, Fleming Gulf Exhibitions, Sabah Mashaly from the Ministry of Electricity and Renewable Energy in Egypt talked about Egypt as a country with a huge potential for solar, water and wind energy generation: “The Egyptian electric power system is almost entirely integrated, with thermal stations in Cairo and Alexandria and generators at Aswan. Solar availability rises with installed photovoltaic systems. They are used in remote areas for water pumping, desalination, rural clinics, telecommunications, rural village electrification, etc. Egypt has also a high potential for wind energy, especially in the Red Sea coast area. In 2009 430MW of wind power were installed, with a target to reach 7200MW by 2020 (12% of national electric capacity installed and contributing to the 20% renewable electricity target by 2020).“ The demand for electricity in the State of Qatar has increased in the recent years. Mohamed Nagib Omara from the Qatar General Electricity & Water Corporation (Kahramaa) will be talking about energy efficiency and conservation with smart grid implementation: “We plan to construct a new distribution control center to meet the great expansion of distribution network. Development and expansion of transmission network projects in Qatar draw the attention of major international companies. KAH-
RAMAA projects are among the largest electricity projects in the world.” The conference-led exhibition which is being fully supported by the UAE Minister of Energy - H.E. Eng. Suhail Mohamed Faraj Al Mazrouei, will gather the key decision makers involved in major utility infrastructure projects not only in the UAE but Saudi Arabia, Jordan, Qatar, Bahrain, Oman, Kuwait, Lebanon and Egypt as well. Smart Grids & Smart Meters Summit & SUME Expo plays an important part in strengthening the UAE’s position as ‘the’ business hub for all energy and water related products and services. A number of high ranking government officials and representatives from around the region have been invited to speak at the event, including Marco Christiaan Janssen as an active director of DEWA; Scott Minos, Senior Policy & Communications Specialist from the US Department of Energy; Sabah Mashaly, Undersecretary For Developing Performance And Political Communication at Ministry of Electricity & Renewable Energy; Mohamed Nagib Omara, a Technical Advisor to The Presidentat the Qatar General Electricity & Water Corporation; and many more. Running alongside the conference is an exhibition accommodating more than 30 exhibiting companies that is divided into four themed zones: Smart Grids, Power, Water and Waste Solutions. The exhibition is likely to attract in excess of 1,000 trade visitors. The exhibition has already got key support from the SASIA, EGBC, CEBC and OSGP. WIPRO, NEEDS, PETRA, SENSUS are the Gold Sponsors of the Summit, while CESI and G3-PLC Alliance are the Silver Sponsors and Baer is the Bronze Sponsor. Position of the Associated Sponsor is held by ANSES, SEWA is on board as the event’s Government Partner.
For more information, please visit www.smartgrids-expo.com
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Global Islamic Finance Industry to Undergo First Comprehensive Assessment of Its 40-Year History This December As industry marks key milestone, a line-up of global powerhouses to gather at 22nd World Islamic Banking Conference to take stock of Islamic finance’s achievements and shortcomings and to forge roadmap for the future.
As industry marks key milestone, a line-up of global powerhouses to gather at 22nd World Islamic Banking Conference to take stock of Islamic finance’s achievements and shortcomings and to forge roadmap for the future. The World Islamic Banking Conference (WIBC), considered by many as the Islamic financial services industry’s compass for over two decades, continues to live up to its reputation after officially announcing today that its 22nd annual edition will provide industry leaders with a unique opportunity to critically assess Islamic finance’s 40-year history. This coming December, regulators, CEOs, scholars and other leaders from the Middle East, East Asia, Africa and Europe will assess and reflect upon the achievements, challenges and opportunities in the rapidly growing Islamic finance
industry, currently amounting to US$2 trillion. Whilst it cannot be denied that Islamic finance has grown tremendously in the past 40 years from a very small base, there is a growing belief that the industry’s progress should not be assessed purely on asset growth. As such, the industry is being called to address several questions. Should there be a shift away from asset and profit growth towards other variables such as Islamic authenticity and social & economic value? How can Islamic finance advance a truly profit and loss sharing system in parallel to complying with global prudential standards (e.g. Basel III)? How can the industry develop a new regulatory architecture to support small and medium sized enterprises (SMEs), as well as asset-backed financing in order to complement asset-based structures and public infrastructure investment financing?
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The momentum for historic discussions on these matters is building up to December’s WIBC, which will include a much anticipated power debate between some of the industry’s preeminent leaders. They will address the core question of how the current system can converge with its original proposition. Datuk Professor Rifaat Ahmed Abdel Karim, CEO of International Islamic Liquidity Management Corporation (IILM), Noor Abid, Board Member of Kuwait Finance House Group, and Tirad Al-Mahmoud, CEO of Abu Dhabi Islamic Bank (ADIB), are only a few of the pioneers who will address the landmark gathering of more than 1500 attendees. With regards to the question of convergence, Noor Abid, a leading advisor to the Islamic finance industry for over two decades, stated: “Islamic financial institutions (IFIs) need to structure their business models in such a way that the socioeconomic objectives go hand in hand with commercial and profitability goals.” Acknowledging WIBC as the definitive platform for shaping industry dialogue, he explains further: “There are now conclusive studies suggesting that doing good to the society you serve, has the potential to generate positive long term economic performance. It is time that IFIs calibrate their objectives and performance measures such that they are able to serve their communities in a positive manner, while aiming for high quality returns.” He concludes by suggesting next steps: “one way forward for the development of Islamic finance based on its true principles would be to adopt some of the leading practices from the impact in-
vestment communities and incorporate integrated reported initiatives.” International standard setting organisations such as the Accounting and Auditing Organisation for IFIs (AAOIFI) and the Islamic Financial Services Board (IFSB) have been formative in helping the industry develop a more “integrated” approach, coupling profitability and values. However, while the relevant standard setters may issue appropriate frameworks or standards, it is essential to secure joint commitment from all stakeholders within the system. This is partly because of the sheer challenges of adopting both international and industry standards. There is growing concern about a disconnect between what is required by international prudential standards (e.g. Basel III) and the principles of Islamic finance. For instance, Islamic financial institutions have an affinity towards investment management, as well as credit provision to underserved segments (e.g. micro and small and medium sized enterprises (MSMEs)). Financing of MSMEs and the risk charges imposed on profit and loss sharing assets by Basel III regulations mean that Islamic banks, while benefiting from greater prudential stability, will drift further away from credit provision to the real sectors. WIBC 2015 is set to gather all the key stakeholders - government, regulatory bodies, central banks, leading Islamic banks, IFIs and multilateral bodies – to better understand how to marry standards to ensure global compliance with adherence to core values. Another key discussion point to be touched upon this December is financial inclusion. Indeed,
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Islamic finance has an opportunity at its hands given that the vast majority of the Muslims do not have access to the banking system. Tirad Al-Mahmoud, CEO of ADIB, spoke to the fact that “Islamic finance can also serve to increase financial inclusion for the 72% of the Muslims who are unbanked. The challenge that lies ahead is that there has been no significant plan to reform Islamic banking with the aim of increasing financial inclusion.” Making the case for tapping into this market segment, he continues: “Given that the global Muslim population represents at least a quarter of the global population and Sharia compliant assets of US$2 trillion represents only a small fraction of the total global financial assets, there is tremendous opportunity for Islamic banks to target this population thereby increasing financial inclusion.” In Tirad’s view, the way to increase financial inclusion is for Islamic banks to expand their “reach outside major urban centres by investing in microfinance initiatives and through alliances with the relevant governmental institutions.” Resolutions of the critical matters that the Islamic finance industry faces will be moderated by Dr. Sayd Farook, Vice Chairman and CEO of Middle East Global Advisors, the conveners of WIBC throughout its 22-year history. As such, it is perfectly apt that this year’s WIBC, focusing on the industry’s assessment of its 40th anniversary, will take place under the theme ‘New Realities, New Opportunities’. WIBC will take place on the 1st, 2nd and 3rd of December at the Gulf Hotel in Manama, Kingdom of Bahrain.
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Salaries in UAE Expected to Increase by 5% in 2016 A GCC-wide survey of 600 multinational companies and locally-owned conglomerates - the largest study of its kind in the Gulf region - has forecast that salary increases will average 5% in 2016, down from an anticipated 6% in 2013, 5.5% in 2014, and 5.1% in 2015. Among the participating GCC organisations, UAE firms projected a 5% increase in pay in 2016, up from the 4.8% projection made for 2015. In terms of actual increases for 2015, the UAE recorded a 4.8% increase. According to the latest GCC Salary Increase Survey conducted by Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), GCC states have seen GDP levels drop due to weak global oil prices, with less foreign direct investment being recorded amidst security concerns in the region and struggles amongst large economies such as Russia and China. The situation, however, has clearly had a somewhat limited effect on firms, with most by leading employers still planning to increase the salaries of their employees by a good amount next year.
and operating costs for organisations. Despite this, the GCC is faring much better than other oil producing countries in the Middle East and predicted increases in compensation will also help to ease inflationary pressures on employees while markets rebound.
Clearly, the impact of lower oil prices can be felt across the region, with governments cutting back on subsidies, reducing spending on larger projects and thinking about introducing some form of taxation. All these factors will have a direct or indirect effect on industry sectors, and will continue to put pressure on profit margins
Companies based in Bahrain predicted the lowest increases in the Gulf region at 4.7%, which is slightly higher than last year’s predictions of 4.5%. In 2015, Bahrain-based firms reported actual salary increases at 4.7%.
Meanwhile, Kuwait-based companies gave the highest salary increase projection for 2016 at 5.2%. This is a slight decrease on 2015’s 5.3% predicted raise. Kuwait’s actual salary increase figure for 2015 stands at 4.7%.
Qatari and Omani firms, on the other hand,
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estimated 5.0% salary growth for 2016, lower than 2015 predictions which stood at 5.2% and 5.4% respectively. Actual salary increase figures for 2015 stand at 4.7% and 4.6% respectively. Firms in Saudi Arabia forecasted a 5.1% figure for 2016 -- down by 0.3% on this year’s 5.4% projection. In terms of actual increases for 2015, however, Saudi Arabia recorded the highest level of actual pay rises at 5.2% for this year. Robert Richter, GCC Compensation Survey Manager, Aon Hewitt Middle East, said: “Salary increases typically take into consideration a number of other factors which go beyond the general economic climate. These include company performance, the need to reflect promotions and the need to ensure that employees at the same grade remain within a single pay band. Overall the outlook for 2016 may not be as positive as recent years, but the news that employers are predicting salary increases in the 5% range next year should come as a comfort to employees, suggesting that there is still optimism in the market.” Aon Hewitt has been conducting a global salary increase survey on an annual basis across the globe for 29 years and launched it in the Middle East for the first time in 2012. The report is free to participating organisations and available at a price of $1,000 to others. The survey is part of Aon Hewitt’s suite of evidence-based, research-led studies including Qudurat, Best Employers Middle East (BEME), Total Compensation Measurement (TCM™) and Top Companies for Leaders.
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Dubai Watch Week Supports Educational Initiatives and Forges Major Partnerships for Its Inaugural Edition The key objective behind Dubai Watch Week (DWW) is to support the watch industry and raise awareness on the art of watchmaking. To encourage and continue the growth of horology in the region and to bring the public closer to the world of , Dubai Watch Week’s (DWW) organiser Ahmed Seddiqi & Sons unveils the special educational programmes especially developed for the inaugural event, taking place 18-22 October, and the prestigious partners supporting this initiative.
Premiering for the very first time during DWW are the Seddiqi educational initiatives including the Seddiqi scholarship, the Swiss Watch Services (SWS) internship and a rare mentorship programme, all of which are now open to registration on the DWW site, as well as registration for the Art of Horology forum. The Seddiqi Scholarship: Seddiqi Holding Ahmed Seddiqi & Sons’ holding company- in association with Dubai Watch Week has partnered with Watchmakers of Switzerland Training and Educational Programme (WOSTEP), one
of the highest regarded and globally recognised watch schools in Switzerland. A $35,000 scholarship will be offered to one potential watch enthusiast to complete a comprehensive watchmaking course and obtain a coveted WOSTEP degree in watchmaking. One of the key objectives of the week is to ultimately identify and introduce the first UAE based watchmaker to the Swiss watch industry. Swiss Watch Services Internship: A member of Seddiqi Holding and the after-sales service provided for Ahmed Seddiqi & Sons, Swiss
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Watch Services- the only facility of its kind in the region launches the first-ever internship programme during the Dubai Watch Week (DWW). The maximum three-month programme is aimed at current and fresh graduates from international watch schools, looking to develop their talent in the unique, state-of-the-art service centre. Dubai Watch Week (DWW) Mentorship: Designed to encourage upcoming curators and writers from the region to further develop their understanding of horology, this programme aims to provide a talent with the opportunity to be mentored by the experts, journalists and writers in the watch industry. This year’s mentors made up of distinguished writers from around the world will select one protégé for a one-month, who will be mentored by the industry experts. Upon completion of the mentorship, DWW will publish the editorial work developed as part of the programme. Celebrating and sharing the history, achievements and tradition of master craftsmanship in the world of horology, Dubai Watch Week will collaborate with select local and international partners that share DWW’s vision of innovation, prestige and significance to support this momentous five-day event. In continuing to engage the Emirati community within the world of watchmaking, Dubai Culture will lead the scholarship programme under the patronage of Her Highness Sheikha Latifa bint Mohammed bin Rashid Al Maktoum, Vice Chairman of the Dubai Culture & Arts Authority. The works produced by Emirati artists and designers will use watch components as inspiration from DWW.
“Promoting Emirati talent and providing them significant platforms to showcase their skills and creativity is a core commitment of Dubai Culture,” said HH Sheikha Latifa. “The scholarship programme will serve to encourage and inspire Emirati and Dubai-based talent to explore the creative potential in the world of horology. The event is a strong statement on our concerted efforts to promote public private sector collaboration and achieve the goals of the Dubai Plan 2021 to develop a city of happy, creative and empowered people. We are confident that Dubai Watch Week, a home-grown initiative, will add to the reputation of our city in fostering creativity and nurturing talent.” Internationally supported by the Grand Prix d’Horlogerie de Geneve (GPHG), who follow a vision to promote Swiss watchmaking and its values around the world, this year, GPHG will be showcasing one of its five global exhibition during the event- making this the very first exhibition of this magnitude in the region since 2013. This year, Dubai Watch week will be supported by Emirates Airline, the official carrier of the event. Dubai Watch Week is another channel of sponsorship which allows the airline to engage with its existing customers as well as offer an opportunity to support the growth of the creative industries in Dubai. “Education and awareness-building is a critical element of Dubai Watch Week, and our objective is to foster skills development in the emerging generation of watchmakers, service people, and the media who cover this sector,” said Melika Yazdjerdi, Director, Dubai Watch Week and
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Head of Corporate Communication, Ahmed Seddiqi & Sons. “Organizations including Dubai Culture, Christie’s, and The Dubai Mall share our commitment to expand the community of watch enthusiasts in the region, and their support of the inaugural Dubai Watch Week in invaluable.” Regional partners include the world’s largest and most visited shopping mall, The Dubai Mall. Through collaboration with Ahmed Seddiqi & Sons, key retailer partners and unique exhibition featuring timepieces from 10 luxury brands that include Audemars Piguet, Bulgari and Tiffany. The timepieces will be displayed across the mall with an exclusive exhibition in areas including the Souk atrium located in the mall. Also supporting the global drive, exposure and initiative of Ahmed Seddiqi & Sons to establish Dubai as a vital destination for the global watch community, Christie’s, one of the world’s leading platforms for avid collectors, is the exclusive auction partner for the inaugural edition of DWW. “Dubai Watch Week will be the centre point of attention for the entire watch industry as of mid-October and Christie’s is thrilled to be part of it. To underline the importance of this event Christie’s will be showcasing alongside the 160 watch strong Dubai sale content, highlights from the other three main auction rooms - New York, Hong Kong and Geneva. Dubai Watch Week will offer an important platform for sharing ideas, building partnerships, and literally making Dubai the centre of the watch world for this sure to be memorable event,” says John Reardon, International Head of Christie’s global watch department.
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