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Since its foundation in 1999, Gulf Finance House (GFH) has established itself as one of the world’s most innovative Islamic investment banks. For more than a decade now, GFH has been unlocking value in some of the world’s most dynamic emerging economies. Its strategy is based on identifying and delivering investment opportunities in the Islamic financial services, infrastructure development, private equities and capital markets in the MENA, Asia and Europe. GFH has established some of the leading region’s leading financial institutions including First Energy Bank, Khaleeji Commercial Bank, QInvest and First Leasing Bank. GFH has created number of unique projects like the Financial Harbour in Bahrain and Tunis, and Energy Cities in Qatar and India. The bank have a diversified portfolio including industrial investments in Balexco Aluminum Extrusion and Falcon Cement Company in Bahrain and listed in the Kuwait, Bahrain, Dubai Financial Market and London Stock Exchange.
GULF FINANCE HOUSE BSC. Bahrain Financial Harbour PO Box 10006 Manama, Kingdom of Bahrain Tel: +973 17 538538 Fax: +973 17 540006
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Editorial
At the very beginning of 2013…
ARABIAN LANSDS Magazine
Issue ONE DECEMBER 2012
from London
Noora Albadri Editor-in-Chief
Welcome to 2013; we hope all can achieve their wishes and celebrate the launch of ARABIAN LANSDS Magazine, issued through our new company, ARABIAN LANDS BUSINESS Ltd, specialising in public relations, organizing events, publishing and media in London. 2013 sees the journey continue with all its challenges and achievements. We continue to support existing routes and invent new ways to serve our partners. Working among countries, we will offer you whatever is new and significant, innovating and exciting. We will give you all the news, images and events to keep our clients in touch with one another as we remain the key point of contact between everyone. ARABIAN LANSDS Magazine will be published both in Arabic and English to help both investors and investments. The magazine focuses on the key sectors that steadily witness a rapid growth in various parts of the world: namely, oil and gas, Islamic economy, green economy, trade and industry, transport, communication and information technology, tourism and Takaful insurance. In addition, we will concentrate on forging links between various economic sectors where we believe in their reliability and importance around the world. This will enable us to share information and opportunities to promote successful business development to the benefit of all our customers. Our journey began yesterday, our development continues today, and tomorrow will see our growth. We will serve you as both individuals and business institutions; we are proud of our relationship with all our customers. For us, work is style, achievement is a march, and success is an objective. Through our offices in London, Saudi Arabia, UAE, Bahrain and Jordan and through the magazine’s both paper and electronic versions (www.arabianlands.net – www.arabianlands.com) we will be more than pleased to completely serve you because your contact with us is the secret of our permanent success. We wish you all the best and a happy and successful 2013.
Published by ARABIAN LANDS BUSINESS LTD London Company Number . 8209728 Westgate House – Level 7 Westgate Road – Eailing London W5 1YY
Chairman Professor Ahmad Al-Zoabi Editor-in-Chief Noora Albadri Consultants Team: Ibrahim Al-Ghamri – KSA Luna Madi - London Suad Albadri – Bahrain Suzanne Almani – UAE Mohammad Al-dwairi - Jordan Publisher & CEO Dr. Bassam Al-Zoubi Head Office: UK Tel: +44 (020) 8991 3372 Fax: +44 (020) 8991 3373 Mobile: +44 (07) 440 574 019 Regional Office - Bahrain: Tel: +973 1 7322 516 Fax: +973 1 7322 516 Mobile: +973 3960 7616 Saudi Arabia Office: Tel: +966 504 134 326 UAE Office: Tel: +971 504 532 281 Jordan Office: Tel: +962 6 5511 680 Fax: +962 6 5528 035 Mobile: +962 796 770 790
www.arabianlands.net
ContantS 6 News
UK expresses keenness on exploiting new investment opportunities in the Gulf
8 News
Abu Dhabi 2011 economic growth fastest in seven years
12 News
UAE team reveals World Expo 2020 site master plan
14 Reports
Recovery of investments in Arab Spring countries
17 Countries
20 Reports
Bahrain is world leader in urban development
Development and Free Zones Commission Jordan Your Key to Investment in The Land of Opportunities
27 Reports
28 Reports
Opportunities in Libya
Wealthy Arabs buy right to live in Britain
news
Morocco in process of drafting sukuk law Morocco is drafting a law to allow the sale of Islamic bonds to lure more investors to their debt after global sukuk offerings surged to a record.
Gulf investors fund the expansion of Bank of Khartoum Gulf investors announce their plan to fund the expansion of Sudan’s oldest bank, Bank of Khartoum, to triple its capital, its general manager Fadi Faqih said. Since Sudan agreed to end hostilities with the now independent South Sudan, firms from Kuwait and Qatar announced forming joint venture banks and making mineral exploration. Investors in Bank of Khartoum, mostly owned by Gulf banks decided to increase the lender’s capital within two years to 1bn Sudanese pounds (around $225mn) from 300mn pounds. “We will be expanding our retail and corporate business. There is a huge potential in agriculture, livestock and minerals, gold.” Faqih told the Reuters Middle East Investment Summit recently.
UK expresses keenness on exploiting new investment opportunities in the Gulf British Prime Minister David Cameron expressed that the ambitious development plans which Gulf countries are presenting represent a wealth of new investment opportunities for British businesses. Describing the Gulf as one of the UK’s key economic partners Cameron told Oxford Business Group (OBG) that bilateral trade between the two had increased by 39 per cent over the last two years to reach £29.8 billion ($47.8bn). He added “We have got to redouble our commitment ... All of this will provide opportunities beyond the established oil and gas sectors - including infrastructure, transport, education, science and innovation.” Cameron stressed that his government will continue to work with the sovereign wealth funds of the Gulf and UK financial institutions to attract investment.
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The government will put the bill to parliament as soon as the draft is completed. Tunisia and Egypt, two other countries ruled by Islamist parties, are also drafting laws to pave the way for possible sukuk sales in 2013. Selling Islamic bonds helps issuers “reach conventional debt investors and sukuk investors at the same time,” Elhassan Eddez, deputy director of treasury at Morocco’s Finance Ministry, said on Nov.20th .“The sukuk market has a wider investor base”.
Saudi Arabia’s mining investments amount $ 50 bn “The volume of Saudi investments in mining had so far amounted to $ 50 billion” stated the Saudi Minister of Petroleum and Mineral Resources Ali AlNaimi. The minister who was addressing the 14th session of the Arab mineral resources conference in Khartoum, Sudan, said mining licenses awarded to exploit mineral wealth in the Kingdom had totaled 1,700, covering an area of 73,000 sq. km. The industry based on the extraction of mineral ores has witnessed a rise in terms of quantity. He explained that Arab lands enjoy enormous geological riches and contain a variety of metallic and nonmetallic minerals.
On a daily basis, Sudan’s new gold refinery produces 900 kilograms According to the state news agency SUNA Sudan’s new gold refinery has built up a daily production capacity of 900 kilograms, only two months after it was launched. The government’s aim for the new refinery in Khartoum is to produce gold to international standards and help reduce the amount of ore smuggled overseas. Sudan’s mining minister told an Arab mining conference that Sudan expects to produce 50 tones of gold worth $2.5 billion this year, after $1.5 billion last year. He added that Sudan wanted to start cooperating with neighboring countries to refine their gold in the Khartoum refinery.
Sudan expects to produce 50 tones of gold worth $2.5 billion this year
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news
Abu Dhabi 2011 economic growth fastest in seven years
South Amman to house GBP3b industrial city
Abu Dhabi’s economy grew 6.8 percent in inflation-adjusted terms in 2011; the fastest rate since 2004 and more than double the pace of the previous year, due to strong activities in both the oil and nonoil sectors, according to government data.
The real GDP of Abu Dhabi, one of the seven Emirates, rose 3.0 percent in 2010. Abu Dhabi, which accounts for most of the UAE’s crude oil output and about 65 percent of the GDP of the second largest Arab economy, released detailed inflation-adjusted GDP data for the first time this year, instead of the usual nominal GDP data only. The hydrocarbon sector, soared 9.4 percent in 2011, the strongest expansion since 2004 and well up from 2.0 percent in 2010. Growth in non-oil activities was more moderate at 4.1 percent last year, slightly above the 3.9 percent clip in 2010 and roughly half of the average rate over the past decade. Analysts believe the UAE, the world’s third largest oil exporter, benefited last year due to boosted oil output to help cover production shortfall in civil war-torn Libya. As a result, Abu Dhabi’s economic growth is likely to slow to 3.9 percent this year, but is expected to pick up in the next few years, helped by diversification away from oil, according to the Department of Economic Development in September. Analysts polled by Reuters in September forecast economic growth in the whole UAE would slow to 3.2 percent in 2012 from 4.2 percent last year. 8
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Growth in non-oil activities was more moderate at 4.1 percent last year
The Madrid Industrial Company is planning to establish an industrial city exclusive for European factories on approximately 317 acres of private property transformed into a development zone, south of the capital, Amman. The investment will be worth GBP3 billion and will generate 9,000 job opportunities. The industrial city will start receiving factories by the end of 2013 and will be operational by the end of 2017. The city will include factories manufacturing consumer goods, foremost of which food, garments, furniture and carpet, noting that these companies are already working in Europe and have their markets. The Madrid Industrial Company is one of the first European companies that work on establishing and developing industrial cities in Europe and Asia.
Bahraini lender launches $22m housing project in Qatar Bahrain’s Khaleeji Commercial Bank has launched a $22m luxury mixed-use development in Qatar’s Lusail city. The project, expected to house up to 15,000 residents, offers a combination of low-rise residential housing, retail outlets, international schools, world-class medical services and a 146-room five-star hotel. Since early 2012, the Qatari market has shown clear signs of recovery, with overall project values growing at a compound annual growth rate of 40% between 2005 -2011. Additionally, the impact of the forthcoming World Cup 2022 has been positive on Qatar’s real estate market, said the lenders’ head of investments, Ozan Korkut Benlioglu.
US firm wins deal for $3.3bn Dubai solar park US-based First Solar has won a contract from Dubai Electricity & Water Authority (DEWA) to construct the first phase of the $3.3bn Mohammad Bin Rashid Al Maktoum Solar Park. The 13MW power plant, set to start operations by the end of 2013, is expected to generate over 22 million kilowatt hours of electricity yearly, enough to meet the average annual electricity needs of more than 500 households. The Solar Park is expected to eventually cover 48sq km and produce 1,000MW of clean energy. The solar park is to be implemented by Dubai’s Supreme Council of Energy (SCE) and managed and operated by DEWA, the stateowned power company, as part of the Dubai Integrated Energy Strategy 2030. First Solar recently opened an office in Dubai and is in an advanced stage of establishing an office in Saudi Arabia as well.
Dubai’s Damac signs Iraq joint venture deal Dubai-based Damac Properties has signed a memorandum of understanding with Al Fao General Engineering Company, a unit of the Iraqi Ministry of Housing and Construction, to further develop projects in Iraq through a joint venture company. During Cityscape Global 2012 in Dubai, the Iraqi Minister of Housing and Construction, Mohammad Al Darraji, said $10.4bn worth of construction and infrastructure projects are expected to be approved next year, with 65 projects worth $3bn already under construction. The company currently has projects under development in Dubai, Abu Dhabi, Saudi Arabia, Qatar, Jordan, Egypt and Lebanon. Work on the Ministry of Housing and Construction projects is expected to begin early next year after a full assessment of the land and development mix has been completed.
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news
Mazaya Qatar inks GBP 66.9 m ($106m) financing deal Mazaya Qatar Real Estate Development Company announced a GBP66.9m ($106.7m) eight-year syndicated facility to finance the development of the Sidra Village residential project.
Qatar JV get $2bn Algeria steel plant deal Qatar International, a joint venture by Qatar Steel and Qatar Mining, secured a deal to build, own and operate a $2bn steel plant in Algeria, state media said, which would help the country meet domestic demand and cut imports. Qatar International will hold 49 percent and Algerian state firm Sider 51 percent in the plant, which will start production from 2017 with an initial capacity of 2 million tonnes per year and increase to 5 million tonnes over time. Qatar Steel is a wholly owned subsidiary of Industries Qatar.
Mazaya Qatar signed a 20 year Build, Operate and Transfer (BOT) agreement with Qatar Foundation for Education
Mazaya Qatar, through its wholly owned subsidiary Qortuba Real Estate Investment, is developing the Sidra Village, to provide quality accommodation facilities to the employees of the Sidra Medical and Research Centre. Upon completion, the project will offer 1,165 residential units. Qatar Islamic Bank took the investment agent and mandated lead arranger roles and was joined in the facility at MLA level by a group of regional financial institutions comprising ABC, National Bank of Abu Dhabi, and First Gulf Bank, with Ahli United Bank taking a lead arranger role. Mazaya Qatar said in January that it awarded a $130m construction contract to China’s Sinohydro for construction of the Sidra Village project and delivery in 20 months. Mazaya Qatar signed a 20 year Build, Operate and Transfer (BOT) agreement with Qatar Foundation for Education, Science and Community Development to build and manage the Sidra Medical and Research Centre’s residential project.
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“This project will provide an industrial base in our country,” the official APS news agency quoted Cherif Rahmani, Algerian Industry and Investment Promotion Minister as saying. The construction of the plant, in the Jijel province in eastern Algeria, is due to start in 2013. ArcelorMittal, the world’s largest steelmaker, is so far the only steel producer in Algeria, with a 70 percent stake in a plant in the eastern town of Annaba. Sider holds the remaining 49 percent. The Annaba plant produces around 1 million tonnes of flat and long steel, much less than domestic demand, forcing Algeria to spend about $10bn on steel imports, according to official figures.
news
UAE team reveals World His Highness Sheikh Mohammed’s directives were to speed up the project’s implementation so that it can be completed before the end of 2015.
Dubai’s ruler approves fourth phase of GBP426m Madinat Jumeirah expansion project Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, launched the fourth phase expansion of Madinat Jumeirah tourism development in Dubai, which will cost Dhs2.5bn (GBP426m) The expansion, facing the Burj Al Arab area, will include a luxury five-star hotel, villas complex, restaurants, a commercial centre featuring retail stores and an open walking area. Sheikh Mohammed said the project was slated to be completed before the end of 2015; and that the development of tourism infrastructure in Dubai 12
must match the UAE’s growing position as an international tourist hub. The luxury hotel in the project will have 420 rooms with sea views and will also feature a range of international restaurants. The group of 45 luxury villas and hotel apartments in the project will be run by Jumeirah Living, one of the subsidiaries of Jumeirah Group. Jumeirah Group, which runs Madinat Jumeirah, operates a world-class portfolio of hotels and resorts around the world. Jumeirah Group also plans to launch a number of projects in the city of Baku, Azerbaijan, and Kuwait in the near future.
Arabian lands MAGAZINE issue ONE - DECEMBER 2012
Expo 2020 site master plan
The Expo 2020 team of the UAE’s 2020 World Expo campaign has revealed the master plan for Dubai Trade Centre-Jebel Ali, the proposed site to host the six-month event if the country’s bid is successful. The site was selected due to its strategic location, halfway between Dubai and Abu Dhabi and nearby the Dubai World Central airport and Jebel Ali Port, providing easy access for the millions of expected international and local visitors. The unveiling took place in Paris, France, during a presentation at the 152nd General Assembly of the Bureau International des Expositions (BIE), the intergovernmental body in charge of overseeing the bidding, selection and organization of World Expos. The site master plan, which was designed by HOK, Populus and Arup, is a demonstration of the country’s Expo bid theme: Connecting Minds, Creating the Future. At the core of the site is an open plaza called Al Wasl “the connection” - a historical name for Dubai, and branching out from the plaza are three main zones that symbolize the bid’s sub themes of sustainability, mobility and opportunity. The winning city will be announced in November, 2013 following a vote by the 161 member nations of the BIE.
Emaar appoints Arabtec Construction LLC to expand the Arabian Ranches Development Arabtec Construction LLC, announced its appointment by Emaar as the official contractor for the construction of 33 new villas and 62 townhouses at the Arabian Ranches Development -Dubai, UAE. The project’s duration will be 18 months, with commencement to be agreed soon. Total value of the project is approximately 18.3 million pounds. (107million AED). “Arabtec Holding is pleased with the award and thanks Emaar Properties PJSC who are considered one of Arabtec’s many important customers where the two companies have a long history together where the Company has built many iconic projects for Emaar starting from Burj Khalifa”.
Kuwait sends
$50m
Kuwait, the governments of Australia, France, Norway, and the UK regularly contribute to (PRDP)
for Palestinian projects Kuwait has contributed another $50m to support the ongoing Palestinian Reform and Development Programme (PRDP).
The amount is in addition to the $180m that Kuwait has provided to the PRDP World Bank-administered multi-donor trust fund since 2008. The contribution will help support urgent budgetary needs facing the Palestinian Authority on education, healthcare and other vital social services. The World Bank PRDP Trust Fund was established on April, 2008 through an agreement signed between the World Bank and the Palestinian Authority. The PRDP is a central component of the World Bank’s effort to support the ongoing Palestinian Reform and Development Plan. In addition to Kuwait, the governments of Australia, France, Norway, and the UK regularly contribute to this Fund. With the new contribution from Kuwait, the trust fund will reach nearly $900m, of which approximately $850m has already been disbursed.
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Reports
Recovery of investments in
Arab Spring countries Less than two years after Arab Spring uprisings erupted across much of the Mena region, countries affected by the unrest are again starting to attract foreign capital for securities portfolios and for direct investment in factories and property.
The process is hesitant and incomplete, with economic conditions still grim in many countries. Egypt, for example, is struggling with a balance of payments deficit that may cause a depreciation of its currency and is forcing Cairo to seek a $4.8 billion loan from the International Monetary Fund (IMF). But in some countries - Bahrain, Egypt, Libya, Morocco, Tunisia and Yemen - there are signs that investors feel that sufficient political stability has returned for them to begin looking for business opportunities. When Al-Futtaim Group and Emaar Properties said they had reached a preliminary agreement to spend about $820 million on building the “Cairo Gate” complex, it was a sign of a revival of cross-border investment in the region. The Arab Spring took a heavy toll of investment in the worst-hit countries. Egypt’s stock market was down about 50 per cent last year and the country suffered a $483 million outflow of foreign direct investment. 14
Arabian lands MAGAZINE issue ONE - DECEMBER 2012
The Arab Spring took a heavy toll of investment in the worst-hit countries
That compared with a $6.39 billion inflow in 2010, according to the Arab Investment & Export Credit Guarantee Corp.
However, other Egyptian asset classes are also showing more strength. Consultants Jones Lang LaSalle said that the election of President Mohamed Mursi has provided a boost across a number of sectors. “With a return to a more politically stable environment, under a business-friendly government, we are seeing increased investor and consumer confidence,” it said in an October report. Foreign direct investment is recovering in many countries. Tunisia attracted $931 million in the first nine months of 2012, up 27 percent from a year ago, its investment promotion agency said. The total was down only one per cent from the same period of 2010, before the Arab Spring. Masood Ahmed, the director of the IMF’s Middle East and Central Asia Department, said that some investors expect the Arab Spring would strengthen economies in the longer term as new, democratic governments worked harder to create jobs and reduce poverty. One of the biggest developments in the wake of the Arab Spring is the emergence of Gulf States as top investors in North Africa, partially offsetting a drop in Western investment because of economic woes in Europe and the United States. High oil prices - will help the Middle East’s oil exporters to post a combined current account surplus of about $400 billion this year, close to a record high, the IMF estimates. Some of that is now being recycled to the Arab Spring states in the form of aid and investment.
countries
The airports will be capable of handling 12m and 2m passengers per a year
US firm takes over
Oman Project management firm Hill International has taken over expansion work at Muscat and Salalah airports after Omani authorities cancelled the contract of a joint venture currently involved in the upgrades.
Oman airports expansion projects
Cowi-Laursen, which has been involved in the project for the last five years, will see its current deal to provide the works end in December, according Arabian Aerospace. Following a statement from the Omani government barring Cowi-Laursen from re-bidding for the contract, Oman’s Ministry of Transport and Communications has instead handed responsibility for completing the projects to US-based Hill International, the site said. The development of Muscat International Airport is said to be worth GBP1.1bn (US$1.8bn) and Salalah Airport GBP 510m (US$765m). Other contractors interested in the bidding process for the works were Dar al Handasah, AECOM Middle East and Arcadis, Arabian Aerospace reported. When the expansion of Muscat and Salalah is completed in 2014, the airports will be capable of handling 12m and 2m passengers per year respectively.
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The Ministry is keen to support urban growth by developing plans for different areas in the kingdom
Bahrain is
Bahrain Bahrain has been ranked first in the Arab world and seventh globally in the area of easing the issuance of building permits, according to a report issued by the World Bank for 2013.
world leader
in urban development Municipalities and Urban Planning Affairs Minister Dr Juma Al Ka’abi said such achievements highlight the government’s efforts towards strengthening a distinctive investment climate in Bahrain. The Ministry, in co-operation with municipal councils and other government agencies, aims to continue to reinforce the role of the comprehensive municipal centre, in issuing building permits. According to Bahrain’s strategic data and structural plans, several building permits were obtained for residential, investment, industrial, administrative and service facilitates. Moreover, as part of the government’s strategic plans for the enhancement of Bahrain’s leading position, the Ministry is also keen to support urban growth by developing plans for different areas in the kingdom.
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countries
Qatar The huge volume of construction projects underway in Qatar in preparation for the 2022 FIFA World Cup has helped make it the most expensive country to build in the Middle East, according to the 2012 International Construction Costs Report released by EC Harris.
Construction costs
The Qatari government allocate a budget to improve both transportation networks and social infrastructure across the country
in Qatar now The highest in the Middle East The annual study, which benchmarks building costs in 53 countries across the globe, found that the volume of construction activity taking place in Qatar to prepare for the 2022 FIFA World Cup and to deliver the country’s National Vision, had caused the country to jump three places in the overall rankings, rising from 16th position in 2011 to the 13th most expensive country in which to build in this year’s report. According to the report one of the primary reasons for this is the focus on large scale infrastructure projects with the Qatari government reported to have allocated 40% of its overall budget between now and 2016 to improving both transportation networks and social infrastructure across the country. Careful planning and a more strategic approach to supply chain management will be key to ensure companies do not become overstretched and are able to plan ahead so they can source additional labour, plant and materials before construction demand begins to peak. Regionally, the UAE moved up one place to 17th overall from 18th in 2011 as the construction sector begins to improve following a string of government announcements. However, the report raised one concern for the UAE, suggesting that the need to compete with Saudi Arabia and Qatar for both labour and materials could lead to a further price escalation in the coming years. Whilst construction costs in Saudi Arabia were markedly cheaper than in UAE or Qatar, Saudi Arabia rose eleven places in the league table moving from 36th place in 2011 to 25th in this year’s report. Overall, the study found that Switzerland was the most expensive country in which to build, followed by Denmark, Australia, Japan and Sweden.
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Reports
(DFZC) is the Jordanian governmental entity; fully autonomous, responsible for creating, regulating, facilitating and monitoring
HE Eng. Amer Al-Majali, Chief Commissioner – Development & Free Zones : With over 60 Development and Free Zones spread across Jordan and over 55 bilateral and multilateral trade agreements, we invite you to explore new dimensions for investing in a supportive environment that embraces innovation, human talent and technology.
Development and Free Zones Commission - Jordan
Your Key to Investment in The Land of Opportunities The Development and Free Zones Commission (DFZC) is the Jordanian governmental entity; fully autonomous, responsible for creating, regulating, facilitating and monitoring the Development and Free Zones in Jordan. Established in 2008, the DFZC aims at increasing investments into the Kingdom, creating an advanced investment environment for economic activities, empowering the private sector to lead in the Zones’ development and management, stimulating the economic growth and enhancing the local living standards. DFZC’s mandate is directed and supervised by a Board of Commissioners and supported by a highly qualified team that works in partnership with Master Developers, charged with managing the establishment, development and operation of the Development and Free Zones.
One Stop Shop:
As the only point of contact for investors, DFZC carries out the Development and Free Zones Law mandates through its One Stop Shop that expedites business entry and operations, offering highly efficient, streamlined services and transparent implementation through simplified steps; all in one place.
DFZC OSS provides the following services:
Registration of projects and enterprises. Issuing licensing approvals for the start-up of projects. Issuing visas, residency and employment related permits. Collection of fees, taxes and customs. Issuing planning and environmental approvals Exercising municipal affairs powers. Providing friendly and streamlined interface with related government agencies.
DFZC OSS also provides investors and stakeholders with all the necessary information about business opportunities in the development and free zones in Jordan, together with all services and procedures to facilitate all matters pertaining to your investment.
Incentives:
In accordance with the Development and Free Zones Law for the year 2008, where no restrictions on Foreign Direct Investment (FDI) are imposed, allowing 100% ownership of enterprise; a number of competitive investment incentives and customs & tax exemptions are provided. 20
Arabian lands MAGAZINE issue ONE - DECEMBER 2012
Development Zones: Income Tax
5%
On income generated from activities within the Development Zone, with the exception for economic activities in industrial estates within the boundaries of Amman Greater municipality. Whereas the income accruing to the banks, financial companies, insurance and reinsurance companies, and land transport companies operating in the Development Zones shall be subject to the income tax law in effect.
0%
On goods and services purchased into or imported for use in economic activities, with the exception of vehicles, tobacco and its products, alcoholic beverages, liquor and beer.
7%
On the value of the sale of services determined in accordance with a regulation issued for this purpose, collected upon the sale for consumption within the Development Zone.
0%
On all materials, instruments, machines, and appliances used for establishing, constructing and equipping and furnishing all kinds of projects in the Development Zone.
Sales Tax
Custom Duties Dividends Tax
0%
On all income accrued within the Zone.
Free Zones: 0%
On profit accruing from the following economic activities: the selling or transferring of goods inside the free zone, export of goods or services outside the Kingdom, transit trade, as well as sale or assignment of goods within the free zones whereas profits accruing from goods when placed for domestic market shall be excluded from such exemption.
0%
On salaries and allowances of non-Jordanian employees in projects established in the free zone
0%
On goods and services purchased into or imported for use in economic activities.
7%
On the value of the sale of services determined in accordance with a regulation issued for this purpose, collected upon the sale for consumption within the Development Zone.
Custom Duties
0%
On all imported goods or exported there from to parties other than domestic markets, except for services charges.
Social Services Tax
0%
On salaries and allowances of non-Jordanian employees in projects established in the free zone
Licensing Fees, Buildings and Land Tax
0%
On buildings and real estate construction built in the free zone
Income Tax
Sales Tax
Development Zones in Jordan:
1. King Hussein Bin Talal Development Area in Mafraq: attractive for industries, logistics with its unique border location. 2. Irbid Development Area in Irbid: attracting ICT, Research and Development, Business Process Outsourcing and Health Care services. 3. Maan Development Area in Maan: perfect for Solar Projects, Industries and includes a new Hajj Oasis. In addition, the Area incubates a vocational training center and students dormitory. 4. Dead Sea Development Zone: its builds on the Dead Sea treasures to attract tourism, therapeutic tourism, and Convention/event tourism. 5. Jabal Ajloun Development Zone: the green capital of Jordan attracts tourism and eco tourism projects. 6. Business Park in Amman: Knowledge & Innovation, ICT Park.
And recently, all Jordan’s Industrial Estates have become Development Zones under the law including 4 major public Zones in Sahab/Amman, Irbid, Karak, and Mowaqar incubating various types of industries including metal, textile, wood, cardboard, chemicals, electronics, food & beverages, etc.
Free Zones in Jordan:
Six major public Free Zones exist hosting industrial, logistics, services and commercial activities in Zarqa, Sahab/Amman, Karak, Airport area, and Karama.
www.dfzc.jo Arabian lands MAGAZINE issue ONE - DECEMBER 2012
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Reports
Dr. Loay Sehwail General Manager of Jordan Industrial Estates Company says that (JIEC) is a financially and administratively autonomous company responsible for managing, marketing and developing industrial estates in Jordan. Striving to promote and encourage the establishment of industrial investment projects within its industrial estates, JIEC creates developed and specialized industrial estates with its state-of-the-art infrastructure and services.
Jordan Industrial Estates Company (JIEC)
Renewable environment incubating industrial investments
Jordan Industrial Estates Company (JIEC), was established in 1980 with a vision to emerge as a competitive industrial investment tool and a driving force for the economic growth of Jordan. Today, and after Three decades of excellence, this vision is being realized through a combination of progressive strategies and proactive development efforts. (JIEC) today is one of the most flourishing industrial estates developers in Jordan through adopting the concept of modern industrial estates and ensuring the provision of world-class infrastructure and services. The JIEC vibrates with inspiring ideas, expertise and boundless ambitions, qualifying it for an ISO certificate and His Majesty’s King Abdullah II Award for Excellence.
Industrial Estates:
Industrial Estates offer cost-effective developed land plots and standard factory buildings, at a competitive selling prices and rental rates in Jordan and in the region for both land & Standard Factory Buildings (SFBs), a reasonable cost for utilities; including electricity and water, investor’s choice of either owning or renting the property, state-of-the-art infrastructure, road networks, and basic & ancillary services.
Basic Services:
An Internal Roads Network, An Electricity Network, Road Lightening, Telecommunication, Network, Water Network, Sewage Network, Rainwater Drainage, System, Water Treatment Plant, Agriculture.
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www.jiec.com Other Services:
Customs Center, Vocational Training Center, Labor Office, Civil Defense, Banks and Temporary Bonded, Free Zone, Gas Station, Maintenance Workshop, Customs Clearance Offices, Clinic, Liaison office for the Ministry of Industry and Trade, Liaison Office for the Royal Scientific, Society, Liaison Office for the chambers of industry, Liaison Office for the Jordanian, Armed Forces.
Master Developer: (JIEC) was established in 1980
As part of the recent Government of Jordan reform policy aiming at unifying the regulatory framework for the various investment platforms, Jordan Industrial Estates Corporation (JIEC) was transformed into a private shareholding company, to act as a Master Developer for the Public Industrial Estates under the umbrella of Development and Free Zone Law, whereby, the Industrial Estates became Development Zones within which registered companies are entitled of the package of incentives and sales tax & customs exemptions granted by the law
Target Industries:
Food Industries, Pharmaceutical, Engineering (Metallic and Electric), Plastic and Rubber, Chemical Industry, Cotton and weaving, Furniture, kitchen and doors, Printing, packing and tissue paper, Leather Industries, Construction and building materials.
Operational Projects:
1. Abdullah II Bin Al-Hussein Industrial Estate (AIE)/Abdullah II Development Zone – Sahab/ Amman. 2. Al-Hassan Industrial Estate (HIE) / Al Hassan Development Zone/ Irbid – QIZ. 3. Al-Hussein Bin Abdullah II Industrial Estate (HUIE)/Al Hussein Development Zone / Karak – QIZ. 4. Al Muwaqar Industrial Estate/Al Muwaqar Development Zone – Muwaqar. 5. Aqaba International Industrial Estate / Aqaba – QIZ.
Future Projects: 1. Zarqa Industrial Estate. 2. Madaba Industrial Estate.
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Reports
Abu Dhabi Islamic
tests market for Gulf hybrid Islamic Bond “sukuk” Abu Dhabi Islamic Bank is set to become the first in the Gulf to issue a hybrid Islamic bond this week.
If ADIB’s issue is successful, it could pave the way for other banks in the region to follow suit, although the jurisdiction in which the bank is located will be important. The ADIB sukuk is callable at year six, according to an investor presentation seen by Reuters, and on every periodic distribution date after that. It will carry a fixed profit rate of six-year midswaps over the initial margin. Investors agree that ADIB, rated A+, will have to pay much higher yields than it would for a fixed-term, plain vanilla sukuk. It is expected to appeal mainly to international investors familiar with the structure, rather than investors within the Gulf.
ASIAN PRIVATE BANKS
As with other recent bank capital offerings from emerging markets lenders, especially perpetuals from Banco do Brasil , VTB and Gazprombank, the Asian private bank bid is expected to be key in determining ADIB’s success. Private banks in Malaysia, which are familiar with sukuk, are expected to play a big part. ADIB last tapped debt markets for a $500 million, five-year sukuk in November last year; it carried a profit rate of 3.78 percent. The sukuk was bid at 105.2 cents on the dollar on Tuesday, yielding 2.4 percent. Yields will have to reflect the dividends which shareholders can typically expect. ADIB shares ended flat on Tuesday, but have gained 4.8 percent year-to-date. ADIB last tapped debt markets for a $500 million, five-year sukuk in November last year it carried a profit rate of 3.78 percent
The bank is expected to raise at least $500 million to shore up its core capital, to comply with tighter Basel III global standards for Tier 1 capital which will be introduced in the UAE in coming years. In recent years, Gulf lenders including Commercial Bank of Qatar, Burgan Bank and Saudi Hollandi Bank have sold instruments to raise Tier 2 capital. But ADIB’s Tier 1 sukuk structure is different: it does not have a maturity date - hence it is “perpetual” and the principal is repaid at the discretion of the issuer. 24
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DEBT VS EQUITY
Several features of the ADIB sukuk qualify it more as an equity instrument than a plain vanilla sukuk, which is usually classified as senior debt. The upcoming perpetual sukuk will be classed as deeply subordinated, with proceeds used to strengthen ADIB’s core capital rather than booked as a liability on its balance sheet. ADIB shareholders approved the capital-boosting measures at a meeting last month. The bank had a Tier 1 capital ratio of 13.45 percent at the end of June 2012, and said in its second-quarter results that it aimed to raise this to above 15 percent in the near term. The bank has mandated itself, HSBC Holdings, Morgan Stanley Inc, National Bank of Abu Dhabi and Standard Chartered Plc to arrange the deal.
Abu Dhabi named one of world’s
‘Cities of Opportunity’ Abu Dhabi has been ranked amongst the world’s top 27 “cities of opportunity” based on a range of key factors including finance, commerce and culture, in a new report by PricewaterhouseCoopers (PwC). With the highest number of hospitals per capita, the emirate – the only city in the Middle East to make the list – took the top spot among 27 emerging economies for health, safety and security, on a par with Tokyo, and ranked second for the cheapest public transport. The UAE capital also scored highly in other key indicators, which included cost of business occupancy (6th), consumer price index (9th), and came 15th in the auditor’s iPod index, which measures the number of working hours required to afford an Apple iPod Nano. “We have always perceived the UAE as a positive environment for growth and we have selected its capital, Abu Dhabi, as one of the 27 cities to be part of the Cities of Opportunity due to its position as a financial, commercial and cultural centre that continues on a path of growth and development,” said Jacques Fakhoury, a senior partner at PwC, Abu Dhabi. “At PwC we have repeatedly discussed talent as core to developing an economy and we are proud to see that Abu Dhabi’s workers continue to add great value to its economy, with the city’s productivity topping the chart ahead of New York, San Francisco, and Los Angeles,” he added. New York’s high scores in categories such as intellectual capital and innovation and ease of doing business secured it the top spot overall, followed by London, Toronto, Paris and Stockholm. Abu Dhabi, which was ranked 22nd overall – just behind Mexico City and ahead of Buenos Aires – lagged significantly behind its competitors in areas related to sustainability. The emirate scored the lowest of the 27 countries in the sustainability and the natural environments indicators, mainly due to finishing bottom in two variables: public park space and recycled waste, said PwC. It also ranked third from the bottom in thermal control and air pollution.
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Reports
Experts address sustainable Petrochemical industry issues in GCC
At the7th Annual Forum hosted by the Gulf Petrochemicals and Chemicals Association (GPCA) in Dubai, Senior industry experts addressed ways to sustain a competitive regional petrochemicals industry.
To grow, we need to remain competitive in an ever-changing market place
Attended by over 1,600 delegates from the GCC, Europe, the US, Brazil and Thailand to debate strategies for sustaining competitiveness in a rapidly changing world. In his welcome address, GPCA chairman Mohamed Al Mady emphasized that regional chemical industry must be flexible and responsive to the latest development for maintaining the position of a leading player on the global stage. “To grow, we need to remain competitive in an ever-changing market place. This will require us to be more focused on advancing technologies and offer even more innovative solutions,” Al Mady added. Dr. Rashid bin Fahd, UAE Minister of Environment and Water, opened the conference during a plenary address in which the minister focused on the rapid evolution of the petrochemicals industry in the Arabian Gulf with emphasis on Abu Dhabi and the key drivers enabling the industry in Abu Dhabi. Dr. Rashid began by addressing the economic challenges the global market is facing in both the US and emergent Eastern markets and the effect it has had on the petrochemicals industry. “Such developments could adversely impact the global as well as the regional petrochemical producers resulting in lower revenues. Though in our region, the economy is more stable, the economy’s downturn represents a key concern for all of us due to the accompanying uncertainties about future growth and the subsequent impact on our strategic hydrocarbon industries,” the minister said. 26
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Professor Choon Fong Shih, President of King Abdullah University of Science & Technology (KAUST) gave the keynote address on the forum’s theme ‘Sustaining competitiveness in a rapidly changing world’. The economic growth East Asia is experiencing, including Japan, South Korea, Singapore and China was a starting point of his address focusing on the comparative and competitive advantages present in various countries. Professor Shih also shed light on how the Kingdom’s industry can sustain its competitiveness through building on already existing advantages. Also presenting were Dr. Moayyed Al Qurtas, vicechairman and chief executive, National Industrialization Company (TASNEE); Peter Huntsman, president and CEO, Huntsman Corporation; Klaus Engel, Chairman of the Executive Board, Evonik Industries AG; Olivier Alexandre, Refining and Petrochemicals, Eastern Hemisphere, Total; Anon Sirisaengtaksin, CEO, PTT Global Chemical PLC. Topics of discussion during day one of the forum included ‘Building innovation and technical capabilities in the Middle East – a key route to maintaining competitiveness’; ‘The US Resurgence: A Huntsman view’; ‘Keeping European players competitive: challenges and sustainable solutions for the chemical industry’; ‘Investing in Partnerships: Total’s View’; Boosting competitiveness in South East Asia.
Oil & Gas
There is an immediate demand for electricity and power in Libya as power stations are brought back online and oil & gas flows are increased in order to meet domestic demand, and to generate export revenues. There are UK companies that specialize in supplying temporary power generation. Representatives of these companies are known to be on the ground in Libya already, building local contacts and reviewing the market.
Education and Skills
This area presents excellent opportunities for UK universities and commercially run educational organizations. There are also strong demands for vocational training in the oil and gas, healthcare, and telecoms sectors. Opportunities stem from the Arab Open University’s plans to significantly expand its curriculum into health and social care, English language tuition, and computer engineering. The provision of distance learning courses is anticipated to resonate well in Libya.
Technology (ICT) Power stations are brought back online and oil & gas flows are increased in order to meet domestic demand
Opportunities in
Libya Libya is a country undergoing a transition with many commercial opportunities arising out of its reconstruction process.
The emerging opportunities have been designated as High Value Opportunities (hvo) by UK Trade and Investment (UKTI). The overwhelming characteristics of Libya as a new state with modern democratic ambitions, enormous infrastructure needs, historical ties with the UK, huge capital reserves, and a large quantity of unpumped high quality oil (and probably gas) reserves, Combine to reaffirm just what a significant opportunity the market is to UK companies with serious ambitions.
At present, Libya’s ict infrastructure is dated and unreliable. The technology underpinning operations outside of the pure ict sector are equally dated; for example, banking systems are in desperate need of modernizing, and medical technology in public hospitals requires investment. However, there is a growing view that Libya may have a future as a regional technology centre. Increasingly, ict-related degrees in computer sciences and other applicable subjects are being considered.
Business & Financial Services
The current administration in Tripoli has publically announced that it plans to tackle regulation of the financial services sector to enable the levels of foreign investment required to meet Libya’s growth plans.
Benghazi Infrastructure
Some recent investment is known to have taken place such as airport rebuilding as part of the wider airport rebuild strategy. A number of opportunities have been highlighted through UKTI office in Tripoli via “Team Maghreb” in Benghazi. This article is based on information contained in the report published by UKTI, High Value Opportunities in Libya.
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Reports
Wealthy Arabs buy right to
live in Britain
Rich Arabs are increasingly making use of investor visas that allow wealthy foreigners to live in the UK in return for buying at least £1m (US$1.6m) of gilts or shares and bonds in British companies. “We have seen a rapid growth of Middle Eastern clients investing in the UK and taking advantage of the UK immigration opportunities available under the Investor and Entrepreneur visa categories,” said Carl Thomas of Visalogic. “We have served a significant number of Middle Eastern clients during the past five years, however since the Arab Spring we have certainly seen a significant increase in new enquires from throughout the region,” he added. The UK government introduced new visa regulations aimed at encouraging wealthy individuals to invest in the country in March 2011.
Middle Eastern investors accounted for nine percent of sales in central London last year
The number of Arab millionaires investing in Britain in exchange for permanent residency has increased in the wake of the Arab Spring as investors look to flee political turmoil in their home country, financial advisors have told Arabian Business.
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Under the new rules, foreigners that invest £5m are allowed to settle in the country after three years while those that invest £10m or more are allowed to settle after two years compared to a previous minimum requirement of five years. Entrepreneurs are able to fast-track the process if they create ten jobs or turn over £5m in a three year period. More than 400 people applied to use the investor visa scheme in the 12 months ending June, up from 331 people in 2011 and fewer than 200 in 2009, according to Home Office statistics. Middle Eastern investors accounted for nine percent of sales in central London last year, up from five percent in 2010, making them the second largest group of foreign investors behind nationals from Asia Pacific, said JLL. The UK has long been seen as a safe haven for wealthy Middle Eastern investors, with London-based property being a popular choice. In 2011 property purchased in London increased by four percent, according to property consultants Jones Lang LaSalle (JLL). With property exempt from the regulations, many Arabs are opting to invest in government backed-bonds and companies with synergies to the Middle East such as renewable energy, said Mark Pihlens, CEO of Invest UK.
Reports
Jordan to receive
aid
from Gulf countries Saudi Arabia is about to deposit $250 million with Jordan’s Central Bank as part of an $800 million planned contribution to help the country’s ailing economy, Jordan’s Prime Minister Abdullah Ensour said.
He explained that the money is part of a bigger fiveyear, $2.5 billion fund that the Gulf countries decided to set up last December at a summit in Riyadh to help finance development projects in the kingdom. Morocco received a similar commitment. Ensour said a Saudi delegation which held talks in Amman recently has agreed to finance $487 million worth of projects in the energy and water sectors and another $300 million worth of infrastructure projects would be approved by year-end. UAE foreign minister Sheikh Abdullah bin Zayed AlNahayan said the Gulf states were looking at more ways to help Jordan’s ailing economy after the government’s latest decision to cut fuel subsidies sent energy prices soaring and led to street protests. Jordan will also soon be getting $125 million from Kuwait to finance projects for this year, Ensour said, adding that the Gulf oil producer had already deposited $250 million with the country’s monetary authorities in development aid. Ensour confirmed that the kingdom had also reached a memorandum of understanding with Qatar to commit itself to extend up to $1.25 billion in project finance.
Jordan’s annual budget deficit now stands at over $3 billion or some 11 percent of GDP
Responding to a question on reports that the Iranian ambassador in Amman said his country was ready to provide Jordan with free oil for 30 years, Ensour explained that the offer was to exchange oil with Jordanian goods. Speaking on Iraq’s 100,000 barrels of oil grant to Jordan, the premier said the move is an important development that shows that Iraq seeks to activate bilateral ties with the Kingdom and hoped that it would be followed by more strong decisions by the Iraqi government. Jordan hopes the fuel subsidy cuts it recently made will help show its commitment to fiscal consolidation and win support from the International Monetary Fund, Western and Arab aid, and help it to tap capital markets in a Eurobond issue. Jordan’s annual budget deficit now stands at over $3 billion or some 11 percent of GDP, and the government has been forced to rely heavily on borrowing from domestic banks, having struggled to reduce its budget deficit in order to secure a $2 billion loan from the IMF. Total public debt has increased 19 percent since last year to $22 billion and is now 72 percent of GDP, while foreign reserves have fallen by 34 percent to $6.85 billion since the end of last year.
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Much will depend on the stability in and around the country. With regional conflicts in Iran, Syria, Palestine escalating, there is a danger Iraq may get caught up in the ensuing tensions. Also, Iraq has its own domestic political problems to contend with. Iraq will post a slightly lower but still impressive 8.2% growth in 2013
Iraq to emerge as the world’s fastest growing economy
The Wall Street bank’s data shows that among all the major economies it tracks, Iraq will be the only country that will post double-digit-growth in 2012 clocking a 10.5% improvement in GDP this year. China will emerge as the world’s second fastestgrowing economy this year, with 7.7% GDP growth. Meanwhile, the ten most important emerging markets will only grow at 5.5% this year, weighed down by problems in OECD economies, BAML data shows.
Iraq will emerge as the world’s fastest growing economy in 2012 and 2013, according to Bank of America Merrill Lynch (BAML).
Iraq will post a slightly lower but still impressive 8.2% growth in 2013, beating China once again (which is forecast to grow 8.2% next year), to emerge as the fastest growing economy again, according to BAML calculations. The Economist Intelligence Unit (EIU) has a slightly lower forecast for Iraq of 8.5% in 2012 and 8.2% in 2013, but expects even greater growth over the next few years. The pace of Iraq’s revival in the coming decades depends heavily on the oil sector: how quickly production and export are increased and how the resulting revenues are managed and spent, says the International Energy Agency. The IEA believes that Iraq will lead OPEC oil production growth over the next two decades. However, Iraq will need to overcome a set of challenges relating to investment in infrastructure, institutional reform and the legal framework for the hydrocarbons sector, enhance human capacity and consolidate political stability and security, said the IEA.
The federal government in Iraq is trying to resolve a long-standing dispute with the autonomous Kurdistan Regional Government, which is emboldened by the interest of foreign oil companies in its oil-rich deposits. Analysts are hoping that the government will finalize the hydrocarbon’s law and resolve its dispute with KRG to offer greater clarity to foreign oil investors who are key to funding Iraq’s growth. The country will also need to improve its financial and legal infrastructure to attract investment, especially the financial services sector. Equally crucial is the issue of corruption, which is said to be rampant in the country. Despite the challenges on many fronts, the economy is enjoying a revival which could raise the standard of living many Iraqis and bring them into middle class, which would secure domestic growth, rather than depending on oil exports.
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arabic ContantS 8 Cover Story Prince Alwaleed bin Talal.. Jeddah Tower Project, is progressing steadily and well thought out
10 Oil and Gas
Trillion cubic feet Saudi Arabia’s reserves of natural gas 2016
22 Islamic Economy
$19.4 billion is Sukuk issuance in the Gulf at the end of 2012
72 Trade and Industry
Development and Free Zones Commission – Jordan Your Key to Investment in The Land of Opportunities
42 Green Economy
110 Transportation
114 Communication and Technology
The fourth largest maritime transport in the world configuration
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$100 billion for water and energy projects in the Gulf States
SAMENA Telecommunications Council Building Digital Economies
118 Insurance
120 Tourism
Islamic Takaful insurance.. Concepts and applications
Jordan’s tourism sector to achieve growth through 2012
Arabian lands MAGAZINE issue ONE - DECEMBER 2012
As one we took the journey. As one we reached the destination.
Bab Al Bahr Rabat – Salé, Morocco
Marsa Zayed Aqaba, Jordan
The St. Regis® Amman and The Residences at The St. Regis Amman | Jordan
Al Waha Tripoli, Libya
In 2007, we at Al Maabar backed by Abu Dhabi’s leading development and investment companies saw potential in the landscapes around the region. We didn’t just see land. We saw empowerment of communities, nurturing of cultures and enrichment of heritage. Together with like-minded partners who were committed to economic growth, environmental sustenance and harmony with locals, we laid the foundations. Today, with every brick laid and opportunity discovered, we see the vision continue to come to life in Morocco, Jordan and Libya; we shape destinations together. To find out more about our projects in Jordan, please contact +962 6 5777000
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