editor’s letter
FROM THE Managing editor Kelly Lewis k.lewis@firefly-me.com +974 5067574
EDITOR
DEPUTY EDITOR David Poort d.poort@firefly-me.com +974 6155908 Sales & marketing manager Emma Tapper e.tapper@firefly-me.com +974 3197446 marketing coordinator Laura Bridges l.bridges@firefly-me.com +974 5573324 Creative director Roula Zinati Ayoub Art & DESIGN Lara Nakhlé Rena Chehayber Rana Cheikha Charbel Najem Finaliser Michael Logaring DISTRIBUTION & SUBSCRIPTION Michael Javier +974 5262089 m.javier@firefly-me.com Dan Louie Javier +974 6975087 d.javier@firefly-me.com printed by Gulf Publishing & Printing Company W.L.L. PO Box 533, Doha, Qatar
Firefly Communications PO Box 11596, Doha , Qatar Tel: +974 4340360 Fax: +974 4340359 www.firefly-me.com
HAVE YOUR SAY As we round the gate and head towards our first anniversary, it is time to reflect on the impact TheEDGE has had so far on Qatar’s business community. While TheEDGE has quickly gained a solid editorial reputation and continues in its dedicated approach to serving professionals operating within Qatar’s multi-sector business landscape; to stay on top of the game, to follow business developments accurately and to ensure the highest quality of independent editorial content, TheEDGE is inviting active participation from all players of Qatar’s business community. Throughout the duration of 2010, TheEDGE will expand its focus to cater for the broader business community and dedicate regular sections to highlight what business ventures and practices neighbouring and local countries are undertaking or investing in. But to ensure TheEDGE is able to provide fair, current and in-depth knowledge of Qatar’s business landscape the publication requires active input from those who know the industry the best – our readership. It is the aim of TheEDGE in the next 12 months to actively build its current rapport or establish a relationship with companies and individuals in which TheEDGE has had little or no dealings with in the past, which will ensure greater transparency and awareness for all. It is not all about us and we realise that often our readers are in the right place at the right time resulting in great stories. Is there a story that you want TheEDGE to cover? Are we delivering our readership with the content it demands? Are there new sections that you would like to see implemented in the magazine? To ensure TheEDGE is holistically serving the business community I would like to introduce a more flexible forum within the magazine and give our readership an active voice and opportunity to participate in how and what content reaches the reader base. I am open to receiving contributions/comment articles on topics, including current issues, concerns and challenges for Qatar as it expands its economic reach, industry trends, market activity, hot topics, opinion pieces as well as comment on any other relevant topics. But again, to ensure TheEDGE achieves these objectives it requires your help, support and active participation. If you have something to say or report then contact TheEDGE, or if you simply want to make a comment, send your letters to the editor at:
letters@theedge-me.com
Kelly Lewis
Managing Editor
TheEDGE is printed monthly © 2009 Firefly Communications. All material strictly copyright and all rights reserved. Reproduction in whole or in part, without the prior written permission of Firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by TheEDGE or Firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in TheEDGE. The publisher (Firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Getty Images and/or iStock Photo.
APRIL 2010
1
contents
APRIL 2010
.12.
.34.
.44.
.23. .55.
Contributors .6.
A brief introduction to the specialised team of contributors, who regularly lend their expertise and insight to TheEDGE.
NEWS IN BRIEF .8.
A snapshot of the latest business developments affecting the business landscape within Qatar and the GCC region.
NEWS IN QUOTES & NUMBERS .12.
Powerful statements and important statistics that made an impact.
BUSINESS INSIGHT .14.
Karim Nakhle asks if companies’ recent bad experiences are going to see risk management adopted as the investment tool of choice as recovery gets underway.
ON THE PULSE .44.
Edward Jameson reports that the export of Qatari liquified natural gas to the East is on the rise as the emerging economies are identified as the customers to covet.
GREEN BUSINESS .48.
TheEDGE speaks with key professionals from in and around the region to uncover the latest news on the business front.
Sam Pickering explores the importance of understanding the sources of carbon emissions, measuring the output and the need for better education on the topic.
In the spotlight .23.
BUSINESS VIEW – REAL ESTATE .52.
INSIDE EDGE .30.
SPECIAL REPORT .55.
Leen Qablawi examines the relevance of soveriegn debt to the nascent global economic recovery. Rajesh Mirchandani examines the global economic recovery and finds the emerging markets best placed to take advantage.
COVER STORY .34.
Energy efficiency has moved to the top of the global political and business agenda – this month TheEDGE turns its attention to the topic. 2
ECONOMIC BAROMETER .40.
APRIL 2010
Edd Brookes posits that life in Qatar does not begin and end at the outskirts of Doha. There is plenty more out there... Daniel Moore looks at the ambitious plans to develop an integrated rail infrastructure in Qatar.
Sustainability inspires our every step
Development means taking clear, thoughtful actions towards investing in a brighter tomorrow — for our customers, communities, staff, shareholders and the world around us. As a future-focused property investment company and developer, we are deeply engaged in ensuring every step we make is connected to our unwavering commitment to people and nature.
It’s simple, We stay connected
Find out more by visiting www.sabban-pi.com
Connects to Life
contents
APRIL 2010
.57.
.69.
.80.
LEGAL INSIGHT .57.
Clyde and Co’s David Salt and Fouad El Haddad discuss directors’ duties and liabilities from the Qatari prespective.
BUSINESS KNOW-HOW .60.
Wassim Karkabi identifies the seven key management competencies for the coming decade.
SPEAK EASY .64.
Sara Gourlay gives us her take on the art of communicating.
BEHIND THE WHEEL .66.
Tim Stevens reaches for the redline as he takes a look at Qatar’s growing need for speed.
INDUSTRY FOCUS – GREEN SOLUTIONS .69. David Poort investigates how individuals and businesses can make changes in the workplace to lower their carbon footprint.
HOW-TO GUIDE .73.
Why social media in the workplace needs careful handling.
TECH TOOLS .76.
TheEDGE looks at the latest gadgets hitting shelves this month.
LIFE & STYLE .80.
Zikreet is this month’s destination for a spot of Kite-surfing.
EVENTS & CONFERENCES .81.
Key industry events taking place in April and early May.
QATAR PROJECTS .82.
An update on projects taking shape in Qatar. APRIL 2010
5
CONTRIBUTORS
CONTRIBUTORS Nathalie Martin-Bea Project director PM Communications MIDDLE EAST NORTH AFRICA region
>P.20
Karim Nakhle Senior business strategist Doha, Qatar
p.40< LEEN QABLAWI TRAINEE SOLICITOR London, United Kingdom
>p.23
Edward Jameson Senior business journalist Middle East North Africa region
p.44< Rajesh Mirchandani CEO Dun & Bradstreet South, Asia Middle East Dubai, UAE
SAM PICKERING
>p.30
Managing director Bluu Green London, United Kingdom
p.48< 6
APRIL 2010
CONTRIBUTORS
Fouad El Haddad Senior associate Corporate and Commercial Clyde & Co Doha, Qatar
Edd Brookes Director DTZ Middle East Operations Doha, Qatar
>p.52
p.57< Wassim Karkabi Managing partner Stanton Chase International Qatar and UAE, and regional practice leader Industrial, EMEA
Daniel Moore Editorial manager Oxford Business Group Doha, Qatar
>p.55
p.60< Sara Gourlay General manager Hill & Knowlton Qatar and Kuwaiit
David Salt
p.64<
Partner Corporate and Commercial Clyde & Co Doha, Qatar
TIM STEVENS
>p.57
Automotive correspondent Doha, Qatar
p.66< APRIL 2010
7
News in Brief – local
NEWS IN BRIEF – Local Qatari GDP to grow 16 percent in 2010-2011 Qatar’s economy is expected to grow by 16 percent in 2010-2011, according to Qatar’s Sheikh Hamad Bin Jassim Al Thani. In an investment forum held in Paris this month, he drew attention to the fact that “despite the unfavourable headwinds at the global level, the Qatari GDP has grown 11 percent in 2009 and we are forecasting a growth of 16 percent in 2010-2011.” Qatar will be expanding its gas facilities on a massive scale, thereby making it likely to outperform neighbouring oil-producers in the coming years. The International Monetary Fund (IMF) expects Qatar’s GDP to grow by 18.5 percent this year whereas analysts polled by Reuters have stated that Qatar should expect the growth to be around 16.1 percent. Gulf Inflation pressure drops Inflation in the Gulf Cooperation Council (GCC) countries has eased significantly, but has not disappeared, Kuwait’s central bank chief, Sheikh Salem Abdul-Aziz Al Sabah said. Kuwait’s top banker expects his own economy to turn around this year, forecasting Kuwaiti gross domestic product to grow by four to five percent after an expected contraction in 2009. The global downturn slashed inflation across the Gulf from 2008 record peaks with some countries such as the United Arab Emirates and Qatar experiencing deflation last year. Dubai’s $9.5 billion debt deal Dubai revealed its long-awaited debtrestructuring plan, putting US$9.5 billion (QR34.5 billion) into the troubled state conglomerate Dubai World. It will also repay property unit Nakheel’s bonds in full, promising creditors all their money back in up to eight years. The plan is Dubai’s attempt to restructure some US$26 billion (QR95 billion) in debt held by Dubai World, owner of the Queen Elizabeth 2 liner and Cirque du Soleil assets, which fell on hard times when Dubai’s property boom went bust. 8
APRIL 2010
index funds for foreigners Saudi Arabia will launch stock market index funds accessible to foreigners in a bid to open up the Arab world’s biggest bourse, the market regulator’s chief said in remarks published in the Saudi press. “We want to study experiences of many countries, which have allowed foreign investment in an organised way,” Abdulrahman Al Tuwaijri, head of the Capital Markets Authority (CMA), was quoted as saying. Tuwaijri said in a newspaper interview that Saudi Arabia was considering exchange-traded funds (ETFs) without giving a timeframe. Qatar Airways to lease eight new Airbus A320 aircrafts Standard Chartered Bank has arranged and underwritten a US$200 million (QR720 million) lease facility for Qatar Aviation Lease Company. The finance will be used to lease eight Airbus A320 aircraft, which will be operated by Qatar Airways. Two of the aircrafts were delivered to Qatar Airways in February. The remaining six aircrafts are expected to be delivered later this year. Qatari Porsche investors to gain VW board-votes during merger As Porsche restructures itself as a brand name of the Volkswagen (VW) group next year, Qatari investors are expected to gain boardroom-voting rights as a result. Qatar, which is a part owner of VW, is starting to play
and increasingly important role in the boardroom of the German-based conglomerate as the restructuring occurs. Qatar Holding announced its intention last year to acquire 17 percent of VW’s voting shares. Furthermore, the German newspaper Handelsblatt reported that Qatari investors are likely to occupy two of 10 seats on VW’s supervisory board. Qatar Holding board-member, Hussain Ali Al Abdulla, is expected to be voted in as a VW board-member on April 22 to replace German board-member, Roland Oetker. Qatar wants 27-4 weather channel Meteorology chiefs in Qatar are looking to launch a new round-theclock satellite television channel dedicated to weather reports and forecasts. Speaking at an event to mark World Meteorological Day, Ahmed Abdullah, director of the Meteorology Department said a feasibility study on the project was under way. Kempinski to open new hotel in Doha A new Kempinski hotel is set to open in Doha this month. Kempinski Residences and Suites will be the first hotel of the world-famous chain to operate in Qatar. The hotel will be located in one of the tallest buildings in Doha, a 62-storey skyscraper, and will provide 370 rooms and suites for short-term rental and long-term accommodation.
News in Brief – local
NEWS IN Brief – International Former DIFC head detained for fraud The former governor of the Dubai International Financial Centre (DIFC), Doctor Omar Bin Sulaiman has been detained for allegedly diverting QR50 million in public funds to his own account as “performance bonuses”. The Dubai government said that the Financial Audit Department of the Ruler’s Court found violations that occurred during Sulaiman’s tenure as governor. Sulaiman, who was dismissed from his position as governor of DIFC in November by Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai, is accused of abusing his position to spend public funds for personal use. This comes as Dubai struggles to restructure billions in debt and rebuild investor confidence. Chinese companies cut ties with Google Google’s prospects of retaining a footing in China have taken a hit after two major companies cut their ties with the search giant in the aftermath of its decision to close its Chinese search engine. Google is still hoping to retain many of its other operations and services in China after its clash with the government over censorship. China’s second-largest mobile operator has announced it will not include the company’s search function in new handsets using Google’s Android operating system. China Unicom said the handsets’ manufacturers would select alternative search engines to replace Google. EU leaders agree on rescue plan for Greece’s economy European leaders were torn by disputes early this month over rescuing Greece from financial collapse. At a European Union (EU) summit in Brussels, frantic efforts were being made to agree on whether or not to save Greece’s economy. The single currency’s woes mounted when another weak link in the euro, Portugal, had its credit rating downgraded by Fitch because of pessimism over its economic recovery 10
APRIL 2010
prospects. Worries about the effects of the European political and financial response to the Greek crisis on the eurozone and market pushed the euro to its lowest level against the dollar in 10 months. Negotiations eventually culminated in French President Nicolas Sarkozy and German Chancellor Angela Merkel reaching an agreement to go through with the rescue.
Russia drops two time zones to boost economy Russia reduced the number of its time zones from 11 to nine after President Dmitry Medvedev said this could help to breathe new life into business activity. Medvedev had previously pointed to China and the United States as examples of large countries operating more efficiently under fewer time zones.
China’s Geely acquires THE Volvo BRAND for $1.8 billion Zhejiang Geely Holding Company agreed to buy Volvo Cars from Ford Motor Company for US$1.8 billion (QR4.8 billion) in the biggest overseas acquisition by a Chinese automaker in history. Geely Chairman Li Shufu and Ford’s Chief Financial Officer Lewis Booth signed the deal at the Volvo’s headquarters in Gothenburg, making Geely full owner of Volvo Cars. Geely paid less than a third of the US$6.4 billion dollars (QR23.3 billion) Ford paid for Volvo Cars in 1999.
MURDOCH’S TIMES STABLE to charge for Web content News International, the British division of Rupert Murdoch’s News Corporation, announced last month that two of its newspapers, The Times and The Sunday Times, are set to begin charging readers using its websites in June. The two papers have been offering their content in a combined news website called Times Online. Under the new plan, however, News International would introduce new, separate sites for each publication.
Rio Tinto employees get up to 14 years in jail Four Rio Tinto executives have been found guilty of fraud by a Chinese court and have all been handed lengthy jail terms. Australian Stern Hu was handed a 10-year sentence. Wang Yong was given 14 years, Liu Caikui seven years and Ge Minqiang eight years. The four colleagues were found guilty of bribery and secrets theft by a court in Shanghai.
Iran of critical concern to G-8 G-8 ministers gathered in Canada recently to discuss nuclear proliferation as US Secretary of State Hillary Clinton said China would play a role in efforts to forge sanctions against Iran at the United Nations. Clinton was quoted in an interview with Canadian television, affirming that Beijing recognized the threat of Iran’s nuclear programme.
NEWS IN QUOTES & NUMBERS
news in quotes
news in numbers
126
“Japan clearly mobilised massive efforts to keep fisheries out of the 175-nation Convention on International Trade in Endangered Species.” Mark Roberts, senior counsel and policy adviser for the watchdog group Environmental Investigation Agency.
“I don’t know exactly how long it [buying a stake in French nuclear power producer Areva SA] will take but certainly there is an interest from the Qatari side…it’s under discussion.”
100
50
150
Qatar Investment Authority board member Hussain alAbdulla and Minister of State for Energy Mohammed Al Sada said during a press conference in Paris.
“In terms of the investment strategy of the Arabian side, first of all they are said to be very long-term investors, secondly very patient investors, and thirdly they only invest in the head company. It was originally Porsche who invited the Qataris to invest.” Christoph Stuermer, an auto sector analyst at IHS Global Insight told Deutsche Welle.
“The EMEA headquarters has the potential, over time, to become a full-fledged global centre. This would make Qatar one of our [Mobile Entertainment Forum] global centres.” Andrew Bud, co-founder and vice-chairman of the forum, told Emirates Business.
“The prequalifications and representations to the relevant ministry have been completed, and we are in line to obtain documents for the first tender.” Al Habtoor-Specon (AHS) managing director Thrasos Thrasyvoulou said – AHS is in the final stages of clinching a QR3 billion contract for a series of substations in Qatar.
“The co-operation between Moscow and Doha is refining and covering new fields… we appreciate the interaction in regional and international issues. We hope that these negotiations will help bring our positions closer and take our co-operation to a higher level.
As Earth turned and clocks clicked to 20:30, lights went dark on the world’s monuments: Australia’s Sydney Opera House, London’s Big Ben, New York’s Empire State building. At the end of last month’s fourth annual Earth Hour, aimed at raising consciousness about global warming, more than 4000 cities in 126 countries had participated, shutting off lights for up to one hour. Beijing doused lights at the Forbidden City; Dubai, on the world’s tallest building, the 828-metre-high Burj Khalifa; Athens, on the Acropolis; and Paris, fleetingly on the Eiffel Tower. The action started in the Chatham Islands, about 800km east of New Zealand, where 600 residents shut off their diesel generators. In Berlin, Christine Kolmar of the World Wide Fund for Nature (WWF) helped turn off the switch at the Brandenburg Gate. “We want to send a signal to protect the climate and show that every one of us can do something,” Kolmar said. “But we also demand that the governments do more against climate change.”
Pic Of the month
Russian Foreign Minister Sergei Lavrov told AFP.
“We have decided to invest together in Africa…this concerns production projects. This is...a partnership, which consists to decide to invest together without specifying ahead which project in Africa. Qatar decided to invest in foreign countries to diversify, but also to boost their presence. There is a political aspect to this move.” Total SA’s CEO Christophe de Margerie told Reuters.
12
APRIL 2010
- Indian labourers sleep between mounds of mosambi citrus fruits at The Gaddiannaram Fruit Market in Hyderabad. Agriculture is one of the strongholds of the Indian economy and accounts for 18.5 percent of the nation’s gross domestic product (photo courtesy of Noah Seelam/AFP/Getty Images). -
ON THE EDGE
POSITIONS VACANT: ASTRONAUTS WANTED Kelly Lewis reports.
N
ASA’s shuttle fleet is scheduled for retirement at the end of this year, with no successor craft on the near horizon, which is expected to leave thousands of workers without a job. However, if astronauts are worried about their future with NASA, they need not: a private company is hiring. Bigelow Aerospace, a Las Vegas-based firm headed by hotelier Robert Bigelow, owner of Budget Suites of America, has become the first commercial company to advertise for professional astronauts, posting a recruitment notice for astronauts on its website. Only professionals with space flight experience need apply, which limits the global pool of possible applicants to little more than 500. Applicants must also have completed a training programme with a government or recognised space agency, such as NASA, and to have flown a space mission. Bigelow already has two test models of his inflatable space modules in orbit around the Earth, launched by Russian rockets. He plans to build orbiting hotels to provide “out-of-thisworld holidays”. But his ambitions do not stop there, has his sights set on the Moon and Mars as well. Bigelow’s modules, which can be linked together sausage-style to form a space station, are launched in compact form and then expanded to full size.
Space duties as detailed in the job offer include: * Performing as a professional astronaut aboard the Bigelow Aerospace Station Complex, * Managing all on-board aspects of employee and customer astronaut personal safety, * Maintaining the space stations inside, but with some spacewalks too, and * Helping clients with payloads or experiments. Back on Earth’s turf the space personnel will train new astronauts and operate mission control. The ad made no mention of salary and the job description also includes working with the marketing department to secure government and corporate clients. Bigelow, who made his fortune from Budget Suites of America, is aiming to bring the cost of a ticket to space down to GBP30,000 to GBP60,000 (QR167,000 to QR333,000), United Kingdom-based Telegraph newspaper reported. Other grand ideas include a cruise ship capable of carrying 100 passengers and 50 crew on a trip around the moon. In addition to the unspecified number of astronauts’ positions, the company has listed 44 other job offers on its website. The positions are likely to appeal to NASA staff uncertain about the future after United States President Barack Obama cancelled any return to the Moon.
APRIL 2010
13
BUSINESS INSIGHT – MEDIA
MURDOCH ON MEDIA
Rupert Murdoch, the chairman and managing director of News Corporation, has never been viewed as a taciturn figure in the media landscape. He has, very vocally, made headlines the world over for his controversial stance on paid news content. He has also challenged governments about “arbitrary and contradictory regulations”, which he claims prevent investment into the business of media, and he has called into question the legitimacy of cross-media ownership rules in the 21st century. Last month he was in the headlines again, but for a different reason this time – the inaugural Abu Dhabi Media Summit, where he was a keynote speaker. During his address, while the words that rolled from his tonge spoke of optimism, they also rang out with warning as he asked the Middle East to reconsider its approach to media freedom and copyright laws. Kelly Lewis attended the Abu Dhabi Media Summit to report first-hand Murdoch’s take on media in the region.
- Rupert Murdoch. -
“W
hat is a Kindle or an eReader worth without books or newspapers or magazines to read on them? What is a cell phone without access to email, the photos of your children or your favourite websites? What is the most advanced high definition television without the 14
APRIL 2010
dramas, comedies, news and sport to watch on it? The answer is, without creative content, these electronic devices are merely extensive playthings,” Murdoch stated. Murdoch spoke about the importance of generating locally produced creative content and encouraged media players to let go of old-school mentalities, and to let youth lead the new generation of media with their own creative contributions. He warned, “left alone, these creative talents remain constrained by arbitrary boundaries”. “To make this talent bloom, you need businesses willing to invest in creativity, to nurture talent and to build audiences that will buy and enjoy the fruits of this enterprise.” He continued, “this takes the right incentives, by unlocking the creativity of your people you can diversify your economy, provide millions of jobs for your rising generation, give the Arab people a global voice and influence commensurate with your importance.” Murdoch highlighted the “critical importance” of having good copyright laws, which protect the value people create. Additionally, he drew attention
to the need to incentivise investment into Middle East media. He said fair competition was an essential ingredient for a healthy media industry, which would help make local media companies strong. But he called on Arab governments to remain vigilant to the fact that the creative sector flourishes “best in societies where governments interfere with a light hand.” In regard to content, Murdoch raised some very valid points: “Right now, the world does not think of the Middle East when it thinks of creative content.” He continued, “even your own citizens often look elsewhere for a film or television show or news sites, as a result, many of your own citizens prefer Hollywood movies and American television shows to local production. You can change this.” To highlight his point Murdoch drew on the example of another Muslim country: Indonesia. He spoke of the economic value of a flourishing creative sector. Murdoch said the creative sector of Indonesia now accounts for more than 5.4 million jobs and six percent of the country’s economy, and it is Indonesia’s fifth largest source of
BUSINESS INSIGHT – MEDIA exports. Indonesia’s trade minister recently told Murdoch the government had established a target that would nearly double the contribution to gross domestic product (GDP) by 2025. “Think of the millions of stimulating new jobs that were made for the Indonesian people. Now think what growing the creative sector would mean here,” Murdoch stated. “A recent Arab Human Development report suggests that this region will create 50 million new jobs in the next 10 years. A thriving creative industry will contribute many of these jobs, most of them environmentally friendly, well-paying and contributing to a better quality of life for all. The good news is that the geographic borders that once limited your potential are today largely irrelevant.” Murdoch said that the Arab world was fully capable of making its own contributions to this “fast growing global industry,” but needed to remember the things that foster a creative sector; money, high quality content and market transparency. “Obviously, you need money. High quality content is expensive. The single fact is if you want quality content, you need to encourage a marketplace where money flows to those, who invest and create that content,” said Murdoch. “Take television, right now television is still a young market in this part of the world. The potential, however, is huge. If you want higher quality television, you need a transparent market that helps ensure that people will receive a fair price for the value that they created. “A more transparent advertising climate is absolutely necessary. In short, protectionism is as distractive as other types of protectionism. It’s expensive, it’s unfair, and guarantees that local companies coddled by protection will never be strong enough to compete outside their own borders. “By contrast, if you can open up your creative market to competition, your companies can challenge the biggest players. I have seen it done. “Most of you think of News Corporation as an American company, because now we are based in New York. We did not start out that way. We started in a provincial Australian city called Adelaide. When we brought our company to America, we were a still a small Australian firm. We had a few media properties in Britain and a single newspaper in Texas. We succeeded
because the open American economy led us complete on our talents, so we grew, and as we grew, we expanded our reach to other parts of the world and created thousands of jobs. “Today News Corporation has 64,000 people working for us around the globe and many thousands more, working for us indirectly. I have every confidence that Arab companies can do the same and more. I also believe that Abu Dhabi can lead the way.” Murdoch acknowledged the emirate’s vision and that of the Gulf region; he said, “Your plans will transform this desert city into a gleaming capital of the future”. He added that by opening up the Gulf media industry to foreign competition, the region and its people would be able to cultivate a “world-class industry”. However, Murdoch did not end his speech without drawing on the essential, yet sensitive, topic of media freedom and regulation. “This city [Abu Dhabi] is one of the Middle East’s most cosmopolitan societies, your people have one of the highest GDP per capita in the world and every day you continue to grow in size, sophistication, in wealth and in the attention of the global press,” he noted. With increased global attention, Murdoch said the occasional inconvenient or unwelcome story would also arise. Speaking from personal experience, Murdoch said that throughout his life he had endured his share of “blistering newspaper attacks, unflattering television coverage and books that grossly distort my views of business or both”. He said he learnt that this kind of coverage was a fact of life in a modern media society and that it was the price that one pays for success. “For a nation, the stakes are even higher, and in the face of an inconvenient story, it could be tempting to resort to censorship and enforce civil and criminal laws to try to bury it. This is not only a problem here, in France; a criminal defamation law remains in place and in occasional use. In the long run, this is counterproductive,” Murdoch reinforced. “Markets that distort their media end up promoting great panic and distress, which they had hoped to control. Certainly each nation and culture has the right to insist that the people they allow into their countries to do business, respect their national values and traditions. This is best administered, however, with a gentle touch.”
He called on the regional media bodies and governments to remember, “human creativity flourishes in freedom”. While other media outfits have scaled back operations in the wake of the financial crisis, News Corp has reinforced its presence in the Middle East media scene. “I am sure there is no shortage of experts, who fly in here and give you nice words. It is very easy to chatter-on about that talent and creativity, for our company, this is more than talk. We have been here for sometime and we are expanding our presence,” he confirmed. “Our presence here cuts across many forms of media. We have had reporters for The Times, The Australian, The Wall Street Journal and Dow Jones newswires for decades. We have opened up a branch of HarperCollins. Some of our Fox International channels are broadcast here.” However, more recently News Corp stepped-up its Middle East media relationship, with an investment stake in the world’s largest producer of Arab music, Rotana. “To be frank, Rotana doesn’t really need our financing, we are partnering with Rotana for someone more ambitious, to tap into Arab talent and ultimately produce original Arab content to market both here and abroad,” Murdoch confirmed. During the summit, News Corp further extended its presence by announcing a strategic partnership between Fox International channels’ and Abu Dhabi’s Twofour54. Murdoch confirmed that the new venture would see his company relocate some satellite channels from Hong Kong to Abu Dhabi, establish an Abu Dhabibased production office for one of his documentary film making companies, and extend operations to include the opening of News Corp’s Middle Eastern headquarters for its global online advertising network business. To close his speech Murdoch left these words to linger: “Creativity is the one economic resource that is truly inexhaustible. Your people are eager, they are talented, they are young, and they have aspirations in common with their peers in other parts of the world, yet they hold fast to the traditions that make them so unique. Give them a society that rewards creativity, when you do, you will breathe life into your blueprints and build a future worthy of your grand boulevards and glistening skyscrapers.” APRIL 2010
15
BUSINESS INSIGHT – INTERNET
RIDING THE
INFORMATION HIGHWAY
Between the year 2000 and the end of 2009, global Internet usage has grown from 361 million to more than 1.7 billion – a growth of more than 380 percent, according to international website Internet World Stats. So what does this rapid growth mean for a company such as Google? The company’s chairman and CEO, Eric Schmidt made an appearance during the Abu Dhabi Media Summit to shed some light on the matter. Kelly Lewis reports.
“E
- Google chairman and CEO Eric Schmidt, addresses the audience at the Abu Dhabi Media Summit last month. -
16
APRIL 2010
ssentially every assumption that we have made about the way technology works and the way the media industry will work, are in the process of being abandoned,” that is what Schmidt travelled to Abu Dhabi to talk about. So, what is going on in the Arab Middle East?” he questioned. “The fact this area has the fastest growing Internet usage in the entire world and has done for the last three or four years – at 100 percent a year, that is incredible.” Schmidt optimistically spoke about the future of the Internet in the Arab world, which he said would be driven, year-on-year, by the vastly youthful population. “One third of the Arab population is under of age of 14; in five years they are going to be 19, trust me in the next five years they are only going to live on the Internet, because that is what teenagers do.” He highlighted the changes that are taking place globally and in the region, both in regard to technology and Internet uptake. He spoke about Abu Dhabi’s ambition to become the first Middle East city to be fully served by fibre to the home and what that would mean for the emirate. “Now the changes that are going on in the Internet itself, something which I spend an awful lot of time on, are in
fact just as interesting as those that are going on in the media,” Schmidt noted. “Historically we think of the Internet as you turn it on and you go to a web page, but that was the ‘old Internet’, that was the Internet from five or 10 years ago, it was the one that we all sort of grew up with. But in fact there is a set of trends, which I want to highlight, that show how the Internet itself has change over time.” The first and most obvious one, Schmidt pointed out, is mobile. “I have been struck by the explosion in mobile computer technology. A typical example; when we announced one of our more recent social products, the best and most interesting features were on the mobile version of the products, further, our smartest engineers are now building mobile enabled applications. They start with a mobile centric application, not a desktop application.” So why is this important? Well Schmidt said it was important because it symbolised “a huge shift from my generation of computer scientists, executives and corporations, to mobile first”. Schmidt said the current numbers for mobile web adoption were “staggering” and were growing at the equivalent of 0.8 times faster than the same statistic 10 years ago for the personal computer,
BUSINESS INSIGHT – INTERNET so not only is it bigger, he said it was occurring faster. Schmidt raised an interesting point when he noted there were more smartphones “right now” than there are personal computers. Further, he said that half of all the new Internet connections were with mobile devices. “It is interesting that in many countries, mobile is now the primary way to access Google. For example, Indonesia, South Africa, Nigeria, Brunei and Liberia, which have relatively new Internets, the trend is mobile first, very interesting,” he noted. “It is interesting that here, more than 100 percent of the citizens have mobile phones, everybody has at least one, maybe more. Eastern Europe has a 130 percent penetration of mobile phones. So all of a sudden, the mobile device is not just a phone and this has a lot of implications for what we are doing. “Mobile phones, people think of them as a phone, but what they really are is they are a pretty powerful computer, the Nexus One has that one gigahertz processor – equal to 1000 Sun Workstations that I worked on 20 years ago and I remember what it took to install 1000 workstations in a corporation – you now literally hold that capacity in your hand and this technology will continue to grow on a yearly basis.” So all of a sudden, people now have the power, literally of a supercomputer, in their hands. “So what can you do with that supercomputer?” Schmidt asked. “Well, of course you can take pictures, you can make movies, it knows where you are, you can do maps, you can get lost, all the things that we all do with our phones today, but you could do something else, which is you can run powerful computer software that uses the network to do things that are phenomenal,” he continued, “now the most interesting way in which you see this is in the social sites. One out of every six minutes online is now spent on a social network.” It is interesting, Schmidt noted, that Russia has the highest percentage use of social networking in the world. So when you consider this in the social area, Schmidt asked “does this matter to marketeers?” You bet. One study, which Schmidt quoted, said that roughly 19 percent of all the tweets and twitter messages mentioned a brand or a product in some form.
“That is an advertising opportunity for somebody, who can figure out how it is going to work,” Schmidt stated. So among the entire “mobile explosion” Schmidt said there was the “back end” – cloud computing and the new model that was evolving. “The old model of cloud computing was you had a powerful computer on your desk and by the way that computer was expensive, hard to maintain and full of viruses, unfortunately. The new model is these mobile devices, which everybody knows and uses, but your mobile devices are connected by the Internet to a very powerful set of servers, servers from Google, but also from eBay, Facebook, Microsoft, you name them, Amazon and so forth,” he said. “What can you do with all those servers?” Schmidt asked. “Well remember your phone is not lonely anymore, it is talking all the time to
than anyone else in the world.” Schmidt said if people want to understand the future of the Internet, they should not think of it as pipes and tubes, but rather think of it in terms of a mobile device with scale. “Between the dawn of the world and 2003, the world constructed five exabytes (EB) [one EB is equal to one billion gigabytes] so it is a big amount of information – today we produce the same amount in two days,” Schmidt informed. “No wonder we are tired, no wonder we are exhausted, and no wonder we are confused. “Okay, by the way Google sees this as a search opportunity, so trust me, we love all of this, but you wonder why is it so hard to know anything, because there is so much to know? Well the answer is we have been producing more information than we have, at a rate that is just extraordinary. “Now, it is then that you go, okay
“Between the dawn of the world and 2003, the world constructed five exabytes...today we produce the same amount in two days.” - Eric Schmidt these literally millions of servers.” Schmidt said, one thing that this allowed people to do was to utilise translation tools. For example, he said Google translates 160 million web pages per day in more than 70 languages – Google is now on its march to reach a 100. Basically, Schmidt said that people could now, literally, read anything. “But what does that mean with your mobile phone? It means that you can text to somebody that you cannot talk to. For example, if you are in a restaurant and you cannot read the menu, you can simply take a picture of it and we’ll do optical character recognition, translate the menu, and tell you whether you will like that food or not,” he said. “What about voice translation? What about hearing your voice?” Schmidt further questioned. “It used to be that when you were talking to your phone, you had to have all that knowledge, well now when you dictate into your phone, it sends the information to the servers and 100 computers in parallel do the translation, and give you the text – we do it better
five EB in two days, okay, well the current forecast for 2013 is 667 EB per day. So not only is it unmanageable today, it will be even more unmanageable in three or four years.” There are many estimates of the size of the Internet, Schmidt noted. He said that at one point he was concerned about the possibility of running out of devices, and IP addresses. However, the new standard for the Internet – Internet Protocol version 6 (IPv6) – was created, which allows “two to the 128th devices”. Schmidt said, “for those, who do not know the math, it is an extraordinarily large number. It is a number that is on the order of the number of atoms in the universe. So trust me, we can connect Internet devices to your shoes, to your watch, to figure out what you are up to and so on – all the things that people want to do, we can now do with the Internet.” “The rate of expansion of information and the Internet is not slowing down, two years from now, five years from now, 10 years from now, it will be enormously greater, there may be some limits, but we are not anywhere near them yet.” APRIL 2010
17
BUSINESS INSIGHT – FINANCE
A NEW FISCAL YEAR, A NEW FISCAL AMBITION
As April marks the beginning of the new fiscal year in Qatar, Nathalie Martin-Bea, the project director for PM Communications, spoke directly with Qatar’s Minister of Finance, Yousef Hussain Kamal, to gain some insight to Qatar’s economic footing.
- Qatar’s Minister of Finance, Yousef Hussain Kamal. -
18
APRIL 2010
BUSINESS INSIGHT – FINANCE
Today in Qatar the economy is doing well and there are many positive indicators. Growth has been very impressive in the past few years and is expected to be close to 16 percent in 2010. How do you ensure sustainable growth for the years to come? To answer the question, I think the best thing to do is go and read the report that was recently issued by the International Monetary Fund (IMF). Expectations for 2010, according to the IMF, are actually higher than the figure that you mentioned. Now they are talking about almost more than 30 percent. It depends on which price of oil you take into consideration. If you take the price of oil today it will be very close to that. As you know with the increase in capacity of the production of liquefied natural gas (LNG) and adding more petrochemicals and gas to liquid (GTL) within this year, I think the growth will be high. Until the year 2014 we will have average double-digit growth. I think that parallel to this amazing growth, which is boosted by the revenues of the oil and gas sector as you mentioned, Qatar is doing much to diversify its economy and stimulate foreign investment. You recently opened three sectors to allow 100 percent foreign ownership, consultative and technical work services, information and communications technology (ICT) and distribution services. Can you tell me how you expect this to affect the Qatari economy? As you know our main sector is oil and gas. I think that it takes up at least 60 percent or more of our gross domestic product (GDP). But the oil and gas industry needs a lot of services such as insurance, banking, transportation, housing and telecommunications. The employees that come to run the oil and gas industries need services, houses, restaurants, hotels and retail shopping. The catalyst itself is the oil and gas. This is one thing. The other factor is that we actually have
a good environment for anyone, who wants to come and invest. Not just in Qatar, but for them to have their hub in the state. If you take Iran, Iraq, part of India, part of Pakistan and the Gulf Cooperation Council (GCC) itself, more than 200 million people surround us. Additionally, the tax regime has become much easier. It is a flat 10 percent for everyone. In the spirit of liberalisation and diversification, will you be allowing more sectors to be wholly foreign-owned? Why not? If an investor is coming and doing business, according to our rules and regulations, they are most welcome. If they are going to pay me a tax of 10 percent, why should I close the door and not welcome them? I know that the private sector is a major factor of growth in a diversified economy. It is a big priority to attract those foreign investors as well. Can you tell me how you will make sure that those companies are really seduced by the Qatari model and how you will bring them here, in sectors that have been traditionally dominated by government owned companies? First of all we have to be very clear about which sectors are welcome to Qatar. On many occasions I have mentioned education and health. We need a lot in these sectors and there are many opportunities. Then you have the services as you mentioned. But, the most important thing is that we have the feedstock for many small and medium industries. We already have decisions from the Emir’s Cabinet to establish an organisation within the Ministry of Business and Trade to encourage the participation of public and private together, to encourage them to be involved in small and medium industries. I think there are many opportunities for farmers within these small and medium sized industries, but I have to say that this should be capital intensive, not labour intensive. If it is labour intensive, they are not welcome.
Which sectors specifically do you believe will experience the most growth, as in what they bring to the GDP? I can say that all of the sectors should increase their contribution to the GDP. In 2007 you spoke about a possible deregulation in the financial sector. When do you envision a full deregulation, with one regulator? I believe this will be within this year. What are the next measures you would like to implement to further improve the investment climate in Qatar? One of the measures is a single regulator. The second thing is to finish our infrastructure. We still have bottlenecks in the airports, ports, schools and hospitals. All of these things should be done within the coming three years. I think I also mentioned a year ago, that we are in appropriation of having what we call an ‘economic zone’, a free zone. This is almost 82 square kilometres with a channel connecting to the sea for almost five kilometres. Both sides of this channel have been done to be ready for any factories that would like to have a direct outlet to the sea. What would be your message to the international investment community? A very simple one; they have to look at the map, see where the best environment for their investment is and go there, including Qatar. I do not just say ‘come to Qatar’; I say choose what you think is right for you, but you will find that Qatar is the best one for your investments. The size of our economy is expected to be more than US$150 to US$160 billion (QR546 to QR583 billion). If within five years the economy is growing close to 60 or 70 percent, this means that other sectors have got to grow by 100 percent. These are the opportunities that I think the foreign investors can look for. APRIL 2010
19
BUSINESS INSIGHT – SUSTAINABLE DEVELOPMENT
MEASURING
CULTURAL ADDED VALUE Sustainability in Qatar has a newly added dimension. Barwa and Qatari Diar Research Institute (BQDRI) recently launched a new rating system, which is set to evaluate all new construction projects in Doha – not only on their environmental sustainability, but also on their cultural sustainability and added value to the city’s heritage. The new system, Qatar Sustainability Assessment System (QSAS), will award ‘stars’ on a scale from one to six to all new buildings in Qatar. David Poort spoke to Doctor Yousef Al Horr, chairman and managing director of BQDRI about QSAS.
- Doctor Youssef Al Horr. -
20
APRIL 2010
Why does Qatar need another sustainability rating system if it already has systems like Leadership in Energy and Environmental Design (LEED)? QSAS is tailor made for the Qatari construction industry. Too many developers still think only of shortterm goals. They develop, construct and then sell or rent, regardless of whether a building consumes more energy or water than is strictly necessary. This negatively impacts the environment. Many developers in Qatar still use materials that no longer conform to international standards. Therefore, we need such a tool to judge practices based on long-term, rather than short-term goals. Having such a system in place would tell us whether a building is adding value to the scene or if it has an adverse impact.
rating? This depends first and foremost on the sustainability awareness of this generation. If the carrot doesn’t work, we will use the stick. We will implement legal acts, which will impose pressure on developers and owners to think long-term rather than short-term.
Do you think construction companies will care about their rating in yet another system? It is not the construction companies that should care about the rating, but the owners and developers. There are a whole bunch of benefits, either on the short-term or on the long-term to operating a sustainable building. However, would they take action to prevent themselves from getting a bad
How would you go about rating these buildings? There are several aspects that we need to take into consideration if we look at a building. First of all we look at the urban connectivity; how a building is situated in its neighbourhood. We look at the site itself, and the effect of the site on the building and vice versa. Then we look at the energy and water
What are the benefits to the owners and developers? On average these ‘green’ buildings have 14 percent less operational costs, there is a 10 percent increase on return on investment, a six percent increase on rent and a 10 percent increase on re-sale value of the property. Besides that, we all know that productivity increases if we work and live a pleasant environment. So these are very clear benefits that owners or developers can gain.
BUSINESS INSIGHT – SUSTAINABLE DEVELOPMENT
consumption of the building. We look at the indoor quality of construction, and whether it provides the optimum living or working conditions. Based on international statistics, an average person spends more than 90 percent of their time indoors. So it is very important to ensure that the time we spend indoors is taken care of. However, what is so unique about QSAS is that it is a rating system that is culturally attached. We believe that this component – not available in any other international rating system – can serve as a source for preserving our cultural identity. It will preserve Qatari architecture. Look at the highrise buildings in the West Bay area, for example. You feel that you are detached from the context of Qatar. It could be in Chicago or Singapore. We are not against modern design, but we would like to look at the blend between both, looking forward, but not forgetting the past. This is how London, for example, is now resituating itself. How do you grade the buildings? The buildings’ features are divided into eight categories. Every category has different criteria, each of which has its own weight. At the end of the test, the weights of all those criteria
are summed together to get a final score. The final score will show a certain certification level. The levels go from one star to six stars. One star is equivalent to being certified in LEED. Two stars are equivalent to silver (in LEED), three to gold. This is a very rough comparison because the criteria are different. Would a project like Energy City in Doha get a six-star rating in QSAS? No, it will not. I presume that this particular project aimed for Silver based on the LEED rating system. That means that they would get two or three stars on our scale. It will be very difficult to get a six-star rating on the QSAS scale because every criterion has to be perfected. This is the optimum that we all try to achieve. Then it seems to me that no one will get a six-star rating from you. (Laughing) Qatar still needs a lot of work, but nothing is impossible.We are considering setting up a demonstration project, so people can actually see how it’s done. Will you send out inspectors with a checklist to judge these buildings sites? The consultant should have an approved assessor that can work
with the QSAS system. After the design is finished, it is handed to BQDRI for verification. So we have external verifiers that look into the details and make sure that all the requirements are met. At this stage, the building will be given a provisional certification until the construction is finished. After finishing the construction a third party checks whether what was designed was really implemented. Only then will the certificate be issued. How do you measure cultural added value in an objective way? The system and most of its criteria are performance based; they are measurable with our computer model. The cultural aspect is a completely different story. It is very difficult to apply objective or measurable criteria to this category. To overcome this subjectivity in decision-making we have formed a jury of Qatari experts and expatconsultants who have great knowledge about Qatari architecture. They will collectively evaluate buildings and give a unified score for the cultural criteria. We will be starting with four judges whose names we will announce soon. APRIL 2010
21
BRAND COMMUNICATION Clear and strong communication is key for the success of any company. The core responsibility of our brand communication team is to create and maximise the awareness of the company/product/service, all while building a strong brand identity for it; this is achieved by developing a coordinated and strategic marketing plan, in line with the main preset objectives. Strategy is then taken to another level, by developing all the creative and communication elements and tactical activities required. Contact us to help build your success: 4340 360 / 4340 356 - info@firefly-me.com
IN THE SPOTLIGHT
- Demonstrators clash with riot police during a protest outside the Greek parliament in Athens last month. Greece has frozen pensions and raised a string of taxes to cut spending by EUR4.8 billion (QR23.5 billion) in a frantic bid to persuade its EU partners and the markets that it can dodge bankruptcy. -
DEFICITS, SOVEREIGN
DEBT AND A BIT OF
COMMON SENSE Despite positive signs in recent months, the world economy is tormented with nightmares of unanticipated shocks that could derail its nascent recovery. Leen Qablawi reports.
IN THE SPOTLIGHT
N
early two years since the implosion of the subprime mortgage crisis, which brought the financial order to the brink of collapse, nerves still remain jittery and the slightest sign of abnormality sends jolts throughout the system. Enter sovereign debt. From Athens to Washington DC, the latest trend seems to be a concurrent worsening of public finances with significant levels of sovereign debt leading to worries about the possibility of national economies defaulting. This has prompted calls for greater scrutiny over deficit spending by governments and the viability of such high debt levels. Are we about to witness sovereign entities default on their debt, one after another? Should we be alarmed by unprecedented deficit levels? And should debt-laden governments stop with the spending and focus on some balance sheet shakeup? The answer to all three questions, put simply, is no. But then again, when has a cigar ever been just a cigar? We are facing a multifaceted situation with different implications for the countries involved, depending on, among other things, the journey that brought them here in the first place. Some governments consciously increased their indebtedness in response to the downturn through bailouts and fiscal stimuli, while others, after years of fiscal irresponsibility and aggressive growth assumption, found themselves short-funded, over-leveraged and under attack from their lenders and credit rating agencies. What is particularly interesting is that unlike the usual debates about sovereign default crises, this one is, for the most part, a phenomenon affecting advanced rather than emerging economies. However, in any event, the potential ramifications of a sovereign default, if not prevented in time, could affect the entire global economic order. Naturally this has provided the necessary fodder for pundits and prophets of economic gloom and doom to cry foul. Yet, dealing with this crisis requires a sober understanding of the root causes of the surge in sovereign debt, cross country differences and a serious application of common sense.
- European Central Bank president Jean-Claude Trichet was left scratching his head after trying to figure out the most plausible way to tackle Europe’s debt woes during the Committee on Economic and Monetary Affairs of the European Parliament last month. -
24
APRIL 2010
HIGHLY INDEBTED
The current sovereign debt explosion is the result of stimulus actions taken by governments in the wake of the 2008-09 global financial crisis and reflects falling output, coupled with higher spending, resulting in massive budget deficits. At the height of the crisis, governments rushed to rescue banks and other financial institutions as fast as possible. Huge bailouts were handed out in the United States (US) and Europe and the excessive debt accumulation of private households and banks was effectively spread throughout the economy, so that main street took the hit for Wall Street. The ‘socialisation’ of toxic debt combined with a recession and lower tax revenues meant more money had to be raised through the issuance of debt. According to Moody’s, the credit rating agency, sovereign debt jumped from 62 percent of world gross domestic product (GDP) in 2007 to 85 percent in 2009. Meanwhile, the average fiscal deficit in the G-20, the leading industrialised economies, rose from one percent to 7.9 percent of GDP. This stark rise could be explained by the cash injection into banks by governments reaching a high of nearly four percent in mid-2009. Today, more than 40 percent of global GDP rests in countries running fiscal deficits of 10 percent of GDP or more, with the overwhelming majority being advanced economies. European economies alone will borrow a record EUR1.466 billion (QR7.2 billion) in medium and long-term bonds. On the other side of the Atlantic, US sovereign debt has reached an unthinkable 20 percent of total GDP since 2008. The future trend looks even grimmer. A recent staff paper by the International Monetary Fund (IMF) states that debt in advanced G-20 economies will rise to 118 percent in 2014. While faster economic growth can help hamper that rise, an ageing populace, greater pressure on publicly financed programmes and high unemployment rates can very well push the targets floated about even higher. The effects of the debt rush have been more severe on those countries that operated a loose fiscal structure and ignored the basic tenets of fiscal responsibility. Greece, for one, has become the poster child for worrisome sovereign debt. The country’s fiscal woes have seriously shaken up relations within the eurozone as major players like France and Germany, have come head-to-head about potential ways of bailing out the country and fending off pressures on the euro. Greek politicians have employed all the tools at their disposal. They have offered high return bonds (six percent yields, twice the level on German bonds), introduced unpopular austerity packages aimed at cutting spending, and threatened to turn to the IMF for cash if the European Union (EU) fails to put forward an acceptable bail-out plan. For all the media focus on Greece, this is not a one-country show. Other eurozone countries like Portugal, Ireland and Spain have also come under scrutiny for their ability, or lack thereof, to raise capital in the markets. Such peripheral economies are not growing fast enough and do not have the necessary budget discipline to ward off a rise in their debt burden. The situation is more complicated since these countries issue debt in Euros, but cannot print the currency independently; or in economic jargon are not able to monetise their debt. Moreover, eurozone countries may face a loss of
IN THE SPOTLIGHT
GIVE UP THE GHOST?
Going through the statistics, its easy to feel the urge to throw in the towel and wait for the global economic system to come crumbling down, one debtridden sovereign state at a time. Alas, there is a flip side. All indicators suggest that investors are not yet losing confidence in major economies such as the US and the UK. The dollar is still a preferred ‘safe’ currency and US Treasury bills have a long way to go before losing their appeal, just ask the Chinese. Japan, another power past its heyday, has been managing the highest level of peacetime debt for nearly a decade, without facing a debt crisis. - Spanish Finance Minister Elena Salgado arrives in Brussels last month ahead of an Economy and Finance Council meeting at EU headquarters. In addition to Greece, Spain, Portugal and Ireland have also come under economic scrutiny in recent months. Only recently have its yield levels risen, given investor competitiveness as a strong currency pushes the price on their worries regarding continued sluggish growth prospects and exports. Adding to this, falling population levels limiting the once again its ailing population levels. Moreover, studies have potential for economic growth and wage levels unaligned shown that investors look beyond the short-term consequences with productivity levels, also eat into the comparative of higher debt levels expectation of tax hikes and falling advantage of those economies compared to emerging markets consumer confidence when making a decision about buying – and the plot thickens. Without growth, the fiscal problems a bond issued by Tokyo or Washington. They tend to value become more pronounced and enacting strict measures, such the integrity of a country’s past economic performance, the as raising taxes and cutting spending, will become even less stability of its political system, and its ability to deal with feasible for elected governments. Without sustainable growth economic difficulties. The crisis will be coming down hard on countries such and an exit strategy from the public finance trap, the risk of public debt default rises leading to debate and concern about as Ireland and Greece. But they still have the benefit of a stable and strong Euro, in the absence of which their debt a potential exit from the eurozone club. The situation is far from perfect for the US and the yields would have been even higher. They have to make some United Kingdom (UK), which have their own currencies and serious and considerably painful changes including changes can theoretically monetise debt running the risk of higher to wage levels and government spending levels. But clearly their previous way of business was not inflation. Both governments had to stimulate the economy, keep interest rates down and carry out quantitative easing sustainable and certainly not in their best economic interests. The fallout over the different routes to bailing measures that led to record deficit spending. Now they face pressure from the markets to cut down on out Greece could also prompt a healthy debate about the their deficit spending as bond traders and credit agencies alike, role EU institutions can and should play in such events. It have started sending distress signals over the high deficit levels. can enforce monitoring mechanism and provide innovative Recently Moody’s and Standard and Poor’s warned the prevention policies. Only through a crisis can institutions, so eloquently US government about the viability of its AAA bond rating if it did not take serious measures to balance its books. In discussed on paper, actually come to fruition. In a highly globalised economy the impact of one nation’s a cruel twist to the plot, the very same markets that reacted favourably to all the cash being pumped into the economy fiscal troubles will clearly impact the rest of the system. If we can reap the benefits of globalisation we should be might turn against the proverbial hand that fed them. The situation gets messier when debt levels impact yield prepared to pay the price of exposure as well. Moreover, the payments. As the supply of bonds increases the price of sovereign debt explosion has once again shown that previous bonds can be pushed down, which will push up the interest categorisations no longer hold. Emerging economies are doing remarkably well and they required on them to entice the investor. The US government estimates that interest payments will increase threefold from can draw upon lessons learnt today for similar situations in the future. 2009 to 2019 reaching 3.4 percent of GDP. APRIL 2010
25
IN THE SPOTLIGHT
SELECTIVE FRUGALITY? NOT JUST YET
That brings us to the scapegoat of the month, government deficits. The classical conclusion drawn from reading about high debt levels is that governments should cut down expenditure and raise revenue. It is a line of argument that pundits and politicians alike argue zealously. Yet, focusing on cutting down deficits with zeal, as in the case of the surging Tea Party movement in the US, fails to address the underlying reality. In order to spark economic growth, which can lead to higher tax revenues to the state and by extension diminish government expenditure, either the government needs to spend or private financial institutions need to lend. In a situation where there is high unemployment throughout the economy and banks are still reeling from a credit crunch, the option for government spending does not seem too illogical. In the absence of private lending, private income generation and collateral that can actually be put up in order to obtain a private loan, the government has no choice, but to spend in order to generate economic growth. Surely, this is easier for say the US, which has full sovereign control over its currency and which can technically never go ‘bankrupt’ since it can simply print more money. But even for other countries faced with a different set of factors, stimulus efforts aimed at bringing the economy out of the slump and on the road to recovery are the most sensible objectives at this stage. Once a sustainable economic
recovery looms on the horizon, the government can take measures such as increasing taxes, so it can balance its debt-to-GDP ratio. Naturally the likes of Greece and Portugal, whose reckless accumulation of debt has brought them to such dire circumstances, must make the tough decisions today. Deficit spending is not the cure to all the problems facing the world economy now. High levels of sovereign debt are not sustainable forever. Yet, in the absence of a functioning private lending sector that can provide the necessary cash flows for economic growth, it is not insensible. Moreover, the focus should be on the type of deficit governments are running and the policies they are implementing. Are they tackling unemployment or simply putting the unemployed on the state’s welfare bill? Finally, we need to be serious about financial reform and remember what landed us here in the first place. We need to resolve the glitches in the system that allowed private banks heaping so much toxic debt that required governments to get involved or risk an all out breakdown. We need to have a global private lending system that employs common business sense rather than risky behaviour. In the meanwhile, governments should employ policies aimed at growing the economy, while remaining cognisant of the systemic risks that lie ahead. Beneath all the murkiness one thing is certainly clear: the tale of sovereign debt is about to take a very interesting spin.
- Greek pensioners demonstrate in Athens last month in protest of the government’s austerity measures. -
26
APRIL 2010
INSIDE EDGE
The Multi-Speed
Recovery Rajesh Mirchandani, CEO of Dun and Bradstreet South Asia Middle East, investigates how emerging markets are driving the global economic recovery.
30
APRIL 2010
SECTION INSIDE EDGE
APRIL 2010
31
INSIDE EDGE
F
ollowing some hesitation at the beginning of the year, on external bond issuance for banks and continued expansion the global economic recovery appears to have gained of special policy support for small and medium enterprises, pace in recent months. Sentiments among consumers, which were hard hit during the crisis. businesses and investors alike have continued rising, Moreover, on the monetary policy front, Asian central and the latest reading of JP Morgan’s Global All-Industry banks have been very proactive in reducing their key Output Index suggests global gross domestic product (GDP) interest rates, helping to maintain adequate liquidity in the is currently expanding at an annualised rate of around three financial system despite withdrawal of funds by foreign to four percent. Advanced nations appear to be progressing investors. This in turn has aided business establishments much more slowly than emerging markets and concerns about and individuals to avail funds at reasonable rates, avoiding the eurozone in particular have kept investors across the world the worst of the credit crunch witnessed in most of the at bay. The International Monetary Fund (IMF) estimates developed economies. It also helped that many of the major indicate that the European economy will grow by about one banks were less exposed to the so-called ‘toxic assets’, and percent this year and the United States (US) by three percent. did not have to undergo the long and painful process of In telling contrast, China could grow by 10 percent and India recapitalising their balance sheets. by eight percent. Secondly, the manufacturing Asian economies have sector has recovered quicker shown remarkable resilience than expected, providing a during the past years’ welcomed thrust to the economy. economic downturn. The financial crisis and the “In the wake of the great For much of the second subsequent fall in consumer recession, emerging markets half of the 20th century, confidence brought a sharp fluctuations in global slowdown in the production seem to have become the output typically reflected of consumer durables like driving force of worldwide developments in powerhouse automotives and electronic economies such as the US goods, and the rippling recovery, suggesting a clear or Germany. But in the effects were also seen on shift in economic prowess.” wake of the great recession, the production of capital emerging markets seem to machinery as manufacturers - Rajesh Mirchandani have become the driving stalled their output in force of worldwide recovery, anticipation of a sudden suggesting a clear shift in decline in demand. These economic prowess. were the typical goods on Undeniably, China and India are at the forefront of the which Asian exports had relied over the last decade. However, current revival in growth and most projections show these the demand for durable products is reviving, which in turn is economies are bound to gain further importance in future years. driving industrial productivity in most Asian economies. Three main factors have contributed to emerging According to IMF estimates, industrial production in Asia’s rapid recovery in the wake of the financial crisis. export dependent emerging Asia has regained around 90 Firstly, swift policy stimulus measures provided a solid percent on average since September 2008. boost. Many Asian governments have historically been In China, the closely watched Purchasing Managers’ Index reluctant to engage in significant countercyclical policies, has been continuously improving in the last few months but the response this time around indicates a change in with the new orders component pointing towards sustained attitude. Also, years of relative fiscal prudence had put demand levels going forward as well. In India, the recently Asian economies in a better position to fight the downturn. released Index of Industrial Production (IIP) numbers showed Indeed their response to the recent slowdown has been growth in excess of 16 percent in December 2009, a 16-year more pronounced this time than ever before. IMF estimates high, which signifies that the economic activity is gaining that average fiscal stimulus in Asia in 2009 amounted to solid traction. 2.75 percent of GDP, compared with about two percent in Thirdly, stabilising domestic and international financial G-20 nations. markets have also played a major role in injecting growth Specifically in India and China, regional governments have back into the regional economies. continued to support and invest in infrastructure projects, an Beginning September 2008, capital started flowing out of important enabler of long-term growth. In addition to the the region as most of the international institutional investors obvious fiscal route to mitigate the ill effects of the crisis, withdrew funds to cover up their losses back in their home regional governments have also used some unorthodox steps countries. This in turn placed severe pressure on reserves, like providing domestic guarantees on deposits, guarantees currencies and asset prices in the region. However, the
32
APRIL 2010
INSIDE EDGE
emergence of the so-called ‘green shoots’ by mid-2009 helped revive confidence back into the Asian economies. Since then, improving capital inflows and rebounding exports has caused regional reserves and currencies to strengthen from their post crisis lows. The most pronounced effects of improving liquidity can be gauged from the performance of regional stock indices, which rallied during the second half of 2009 and are showing no signs of giving back these gains. The encouraging revival in the secondary market is also bringing most of the stalled initial public offerings (IPO) back once again for financing the planned expansion of various companies. The results of most blue chip banking stocks have highlighted the solid state of the banking industry. One of the most important banking performance indicators, non performing loans (NPL), might already have peaked as loan growth among many banks has returned back on track. Going forward, this improved credit availability will further strengthen the economic activity and will provide a much-needed thrust to the next wave of investments cycle. With extraordinary measures taken during the downturn coupled with current economic revival seen at the global level, most Asian economies are well positioned to return to pre-crisis growth levels. In China, for instance, output growth has been so robust throughout the last few months that some concerns have already started emerging over the creation of possible asset bubbles especially in the real estate sector. In reaction to such concerns, the Central Bank of China has already increased reserve requirements and its benchmark interest rate twice this year. This indicates that the focus of the authorities has now shifted from crisis management to ensuring balanced and sustainable growth going forward. India also recently followed suit by increasing the cash reserve requirement of its commercial banks by 75 basis points. This again signifies that the Reserve Bank is confident that economic growth is back on track and decision makers are now more
comfortable to slowly withdraw some of the monetary and fiscal stimulus support. It appears that the long predicted eastward shift in economic power appears to have been accelerated rather than held up by the global economic crisis. As the multi-speed recovery will allow fast-growing Asian economies to focus on maintaining rather than regaining momentum, foreign companies should – more than ever – start considering the implications of the fast-growing domestic markets of India and China, even for the short-tomedium term.
APRIL 2010
33 35
COVER STORY
ACT TODAY FOR A
COVER STORY
BETTER TOMORROW
Despite its crucial role in the world’s energy strategies, energy efficiency is often misunderstood and is in need of ‘rebranding’ to match its potential. The relative intangibility of energy efficiency also presents a challenge to a greater understanding of this potential. Companies and individuals tend to invest in assets and products that they can see, feel and touch, while governments tend to support programmes that generate jobs and create technologies for export. Energy efficiency is not a ‘thing’, but a process and a way of thinking. The World Economic Forum’s Energy Vision Update 2010 – Towards a More Energy Efficient World report explores the importance of energy efficiency to meet the world’s energy demands. Written in partnership with IHS Cambridge Energy Research Associates, the report argues that, of all the energy options available, efficiency can contribute the most energy ‘supply’, while reducing costs and greenhouse gases, and also increasing energy security. By Daniel Yergin, chairman IHS Cambridge Energy Research Associates and Robert Bocca, senior director, head of Energy Industries, World Economic Forum.
APRIL 2010
35
COVER STORY
E
nergy efficiency has moved to the top of the global political and business agenda. Both governments and industry are turning to energy efficiency as a critically important ‘energy source’ in the quest to meet the world’s growing energy demands, while also addressing climate change and energy security concerns, and supporting economic growth. Energy efficiency was one of the main themes at the Copenhagen climate conference and one on which there was widespread agreement. Of all the energy options, it can provide the biggest ‘amount’ of energy in the near and medium term, while contributing to reductions in greenhouse gas emissions. It meets major objectives of both developed and developing countries, whether importers or exporters of energy. The long-term trend of rapid economic growth in the developing world gives additional urgency to energy efficiency. A major surge in world energy consumption is at hand. Emerging market nations and the traditional industrial countries both recognise that increased emphasis on energy efficiency is a requirement for accommodating the scale of this economic growth. Energy efficiency is essential for the world’s energy strategies, yet it is often misunderstood or underappreciated. The energy vision report seeks to provide a framework and perspective for harnessing this highly prospective energy source.
36
APRIL 2010
To begin with ‘energy efficiency’ is really shorthand for increasing energy efficiency beyond the status quo. Energy efficiency means getting the same benefit, while using less energy – reducing the energy input required by a process without changing its output, either in quality or quantity.
“The energy vision report seeks to provide a framework and perspective for harnessing this highly prospective energy source.” - World Economic Forum
It may actually provide an improved benefit. Efficiency means that consumers use less energy, while not sacrificing their lifestyles. However, encouraging efficiency requires a thoughtful discussion among policy-makers and business leaders, and a broader understanding among the public. We hope to contribute to the discussion with this report.
COVER STORY
Companies and individuals tend to invest in tangible assets, while governments tend to back programmes that spur new employment and technologies that can be exported. Energy efficiency does not necessarily meet these criteria – at least not directly. Energy efficiency is a process or a way of thinking or an approach that leads to new technologies, new jobs, new revenues and even new export markets. But these are not the immediate drivers. How can energy efficiency be converted from an intangible attribute to a visible and central factor for decision-making across the energy value chain? How can we close what is described as the “efficiency gap” – the difference between available cost-effective efficiency options and those that are actually implemented?
the Drivers and Barriers to Energy Efficiency
Four key factors influence efficiency decisions: consumer behaviour, competition for, and availability of, capital, energy price and price volatility, and technological innovation. • Consumer behaviour is central to understanding the efficiency gap. To implement efficiency opportunities, energy consumers require knowledge about those opportunities as well as the motivation and ability to implement them. However, consumers do not always have the information they need to make the best energy efficiency decisions and the analysis is often difficult. Consumer preference for the status quo and familiar technologies can sometimes tilt them against energy efficient choices. • What is referred to as the investment grade test is important for sustainable investment in energy efficiency. Competition for, and availability of, capital is a key factor in energy efficiency decisions. A household may not have the capital available to purchase a more energy efficient product, even though it would save on operating costs in the future. For corporations, efficiency investments must have a high enough rate of return to compete with other potential uses for capital – they must be ‘investment grade’. This question of choice and trade-offs in efficiency investments compared to other allocations of capital is often overlooked. • Variation in energy prices and the unpredictability of future prices make the returns from energy efficiency investments uncertain.
Government policies can reduce the uncertainty, but also risk unintended consequences. For example, market pricing or higher taxes on energy can help promote energy efficiency. Subsidies that shield consumers from energy prices may meet some social objectives and protect consumers from volatility. However, they discourage energy efficiency investments and reduce, or remove, the incentive for consumes to be ‘energy thoughtful’ in their daily decisions. • Innovation is crucial to improving energy efficiency. The ongoing revolution in lighting technology – from incandescent to compact fluorescent bulbs to light emitting diodes (LEDs) – is a clear example. Although breakthrough technologies capture the headlines, continuous improvement in existing technologies also plays a significant role. For example, the average refrigerator in the United States (US) today uses three-quarters less energy than in 1975, despite being 20 percent larger. Fast growing economies have the opportunity to build greater efficiency into their infrastructure. The Chinese government’s recent decision to commit to lower energy intensity targets illustrates the understanding that energy efficiency improvements can be made much more effectively at the front end. India plans to establish efficiency targets for industrial processes by the end of 2010. These decisions also demonstrate the important role that governments can play in setting the framework for energy efficiency investments.
APRIL 2010
37
COVER STORY
“Despite the central role that improved energy efficiency must play in the future, barriers to efficiency investment exist.” - World Economic Forum
Despite the central role that improved energy efficiency must play in the future, barriers to efficiency investment exist. Three of the most common are asset life and capital turnover, split incentives and disaggregated investments. • Asset life is a significant issue in energy efficiency. After investments are made, they are typically ‘locked-in’ for the life of the product. The useful life of computer equipment is approximately three years, a cell phone even less. However, cars are generally on the road for 10 years or more and many power plants operating today are more than 50 years old. Through regular maintenance, facilities often become more efficient, but retrofits tend to be more expensive and less effective than building in efficiency in the first place. • Split incentives, also known as principal-agent problems, arise when a second party makes efficiency decisions on a consumer’s behalf. A classic example is a home builder that focuses on cosmetic touches to sell a home, while skimping on efficiency investments that are hard for the buyer to evaluate – or may even be invisible to the buyer – including windows, heating and cooling systems and insulation. Builders do not have the incentive to spend available capital on energy efficiency unless they are confident they can recover the capital and make a profit. • The problem of disaggregated investments occurs in both industry and households. Many efficiency opportunities do not involve one large investment with a substantial return. Instead, they consist of large numbers of small actions that add up to significant energy savings. Steam leaks in industrial facilities are a classic example. Each leak is likely to be incidental, but a programme to eliminate all steam leaks can add up to major savings.
Energy Efficiency across different Sectors
Opportunities for energy efficiency savings occur in every energy-consuming sector – industrial, building, household and transportation. • Industrial firms aggressively pursue energy efficiency as a way to improve profitability. For companies in energy-intensive industries, energy is a significant operating cost. Long-lived assets and disaggregated efficiency opportunities are recurring themes in the industrial sector. Many companies set specific energy efficiency goals and embed them into the performance objectives of managers. • Buildings represent 40 percent of energy use in the European Union and the US and one-third of the world’s primary energy. Because buildings can last 50 to 100 years or more, the rate of capital turnover is working against efficiency in the building sector. Although 38
APRIL 2010
COVER STORY
the disaggregated nature of the building sector, as well as split incentives, can work against energy efficiency improvements, certification programmes offer promising opportunities for both new and retrofit building. • For households, energy may, or may not, be a significant cost and energy efficiency is not ‘front of mind’. As a result, energy efficiency standards and labels are often used to guide consumers towards higher efficiency products. More than 50 countries globally have energy efficiency standards or labelling programmes. Technologies like the ‘smart grid’ or ‘intelligent buildings’ that automate efficiency can help overcome behavioural barriers. Programmes that help low-income consumers pay for efficiency investments can overcome lack of access to capital. • The transportation sector represents another major opportunity for reducing energy use through efficiency improvements, and through changing transport policy to focus on movement of people and goods, not simply movement of vehicles. Commercial transport providers, such as airlines and freight haulers, have strong incentives to invest in energy efficiency because fuel is a large part of their variable costs. On the other hand, transportation efficiency is not nearly so central or constant in the decisions of many individuals. They tend to focus on convenience, comfort, cost and status when they choose an automobile or other modes of transport if fuel prices are relatively low. Governments establish vehicle efficiency standards to nudge consumers towards more efficient vehicles. However, changing the way individuals think about transportation is a much larger efficiency opportunity, avoiding unnecessary trips and shifting transport to more efficient modes. The new emphasis on increasing efficiency – and the forces driving it – has energised a growing business sector that delivers energy efficiency in the form of both products and services. Companies focused on efficiency have existed since the 1970s, but the sector is now
growing rapidly in a diversified way into a much larger sector, applying a wide range of technologies and building on new business models. Supporting and facilitating the effort toward greater efficiency are new communication and information technologies that were not available even a decade ago. The expansion of this sector will help to provide a foundation for increasing efficiency in the future and develop the distinctive ‘infrastructure’ of energy efficiency. This report was provided by the World Economic Forum form its Energy Vision Update 2010 – Towards a More Energy Efficient World report. To see the full report visit: http://www.weforum.org/en/ip/energy/index.htm
APRIL 2010
39
ECONOMIC BAROMETER
RISKY BUSINESS Risk management has emerged as the pinnacle issue post crisis. This latest trend is seen as the adversary of the ‘out-of-thebox’ approach, which companies excelled in during 2008 and the first quarter of 2009. No more room for spending; nowadays ‘let us go with what we know’ has a good return on investment (ROI), but make sure it is safe, make sure it is not going to backfire, make sure it is risk free. Karim Nakhle asks the question: Will effective risk management give companies in the Middle East the competitive advantage?
ECONOMIC BAROMETER
R
isk management departments are suddenly popping up like mushrooms; companies, on both a regional and global level, are viewing them as the new ‘must have’ in-house department. Financial Institutions and companies alike highly regard risk management practices, and are applying thorough measures and strategies to ensure they are prepared to overcome the challenges that lie ahead. Following the global financial crisis, the Middle East is enduring tighter financial conditions in all markets along with the rest of the world. This has brought many lessons to light in view of the regulators, including the significance of a sound risk management framework. The Middle East faces some unique risk management challenges. Addressing issues of good governance, compliance, operational risk and the effects of Basel II are fast becoming a priority in the Middle East. As a result, formulating an advanced and competent risk management framework is a high priority in every
institution’s business strategy today. Consolidating its position as one of the world’s major financial hubs, the Middle East region continues to grow and influence foreign investors toward its attractive investment landscape. It is expected to be at the forefront of the latest developments in risk management. This will undoubtedly provide financial institutions with a competitive advantage in today’s market. Traditionally, risk has been viewed in terms of financial loss, but recent events have identified a new dimension of risk, relating it to business activities, strategic objectives and reputation. Risk will no longer be confined to the detached silos of an organisation’s departments – correlation and collaboration are inherent for a holistic perspective of risk and its implications for business strategy. In addition, the major facets of risk – operational, credit, liquidity and market – have to be integrated to achieve functional synergy that allows for efficient contingency responses and that optimise business potential. Risk management has been practiced as a professional discipline in financial institutions that have maintained derivative dealerships for at least a decade. The fundamental goal of this function is to improve the quality of business decisionmaking at all levels of the firm and thereby to increase shareholder wealth. It executes this responsibility through activities that clarify the firm’s exposure to all forms of risk to its future
earnings and analyses them on a sound economic foundation. One decision that emerges from this analysis is the amount of capital that an institution should hold to absorb future losses, which can occur in the course of its trading activities. Since trading income is uncertain, though, an important risk management activity focuses on the risk measurement problem – estimating how large future losses could be. Complementary activities involve the monitoring and enforcement of riskbased trading limits, thereby facilitating the risk adjusted performance evaluation of individual trading desks. These two aspects of the risk management role turn the capital allocation decision into an optimisation problem: Too small of an amount exposes the firm to excessive levels of risk, but too large an amount raises funding costs and reduces profitability. A real dilemma is it not? Businesses appear quite bullish about the potential impact of global risks or major global events on their dayto-day activities. However, it is vital that international organisations ensure their risk management plans cover all eventualities – including risks that can generate from epidemics, terrorism or even water security – no matter how unlikely the risk seems. Risk management should be seen as an opportunity to stimulate growth and liberate innovation by keeping the flow of ideas going, but simply assessing and reassessing its risk factors, rather than putting a halt on innovation and portraying it as a chore or an unnecessary expense. It is certainly a challenging and exciting time to be a risk manager, old
APRIL 2010
41
ECONOMIC BAROMETER
assumptions are being challenged and revised, and we are amid a changing regulatory environment. The level of sophistication within which the risk management function is performed, has advanced significantly in recent years. In this issue of TheEDGE, we have interviewed key industry players from across the Gulf Cooperation Council (GCC) to provide our readers with a complete overview about risk management in the current economic context. 42
APRIL 2010
RISK MANAGEMENT IN THE MIDDLE EAST
Talking to Omar Sayed, Head of Operational Risk for Arab Banking Group, I asked him: What are the main drivers behind the rise to prominence of risk management strategies in the Middle East region in 2010? “The main driver has been the need for compliance from the financial services industry,” Sayed replied. With the implementation of stronger regulation across the region,
a higher level of risk management was required. Prior to this, with the exception of some of the financial industry, the risk management function within numerous organisations was at a highly-reduced level. “All industries have been deeply affected by recent events from the financial crisis, the Dubai World debt issue, as well as the main conflicts in the region and the economic crisis. Businesses are now beginning to realise that the risks of doing business with external organisations, and the financial, physical and reputation risks that they can attract, can be as critical as the direct risks that the business has identified as part of its own specific assessments.” To understand more about the main challenges organisations (financial and non-financial) face today when assessing risk, I asked Aidan Walsh, Head of Risk Advisory, Inventure, Middle East and North Africa region. “Part of the problem stems from a lack of understanding of this business function. There are also biases and perceptions of risk that affect not only the process of assessment, but also the decision making process that follows can be ingrained within an organisations culture,” Walsh stated. “This is one of the reasons that a consultant, from the outside looking in, can often identify risks that have become part of the business culture and may not be readily identifiable by those within the organisation. “Possibly the greatest challenge is for those in charge of the risk management function to provide a clearer understanding of their function and value to their management, and not to see the unit solely as a cost centre. This is essential if they are to be taken seriously and included as an integral part of the business process in the future rather than being sidelined and potentially exposing the organisation to increased risks.” I spoke to Kunouz Capital’s Chief Risk and Compliance officer, Oliver Johnson and asked him: What affect has the global economic crisis had on risk management strategies for both businesses in the region and overseas that are looking to invest? “The risk management function in many organisations has been sidelined and in some cases ignored altogether
ECONOMIC BAROMETER
throughout the past decade,” he replied. “This was quite bluntly confirmed during recent workshops and seminars that took place in the region where managers of these functions expressed frustration at their organisations’ inability to accept, and understand the risks to their business. “We know from working with other clients that this is a global phenomenon and not restricted to the region. What we are seeing now is a renewed focus on risk management as compliance process force businesses to provide a specific and auditable risk management process and the affects of the economic crisis fuel deeper analysis of the business risks. This is true for business in the region and foreign investment where the increased demand for due diligence is evident.” Ibrahim Jammal, Head of Group Risk and Capital Strategy at Abu Dhabi Financial Group, was asked why he believed clients operating in the region can benefit from risk management? “We have noted a rapid increase in the amount of due diligence and risk analysis being conducted within the region,” confirmed Jammal.
“While one may comment that this increase is necessary given the current crisis, it could equally be said that it should have been at this level prior to the crisis. The past year has witnessed numerous clients renewing their risk assessments in the region and conducting increased due diligence on vendors, partners and other third parties involved in their business process.” As one of the most established financial centres in the region, Bahrain leads in a broad cross-section of financial activities from risk management, fund management to Islamic finance. The country also has a mature service infrastructure and skilled talent base, both of which have flourished around the finance sector, which today represents 27 percent of the economy – the most diversified in the Gulf. Khalid Hamad, executive director of Banking Supervision at the Central Bank of Bahrain – the only single regulator in the Middle East and widely acknowledged as the best in the region – presented the Corporate Governance Code of the Kingdom of Bahrain and took part in a panel discussion on the
evolving regulatory landscape, during the Third Annual Middle East Risk Management Forum, which took place in Manama earlier this year. For him, this provided an opportunity to share the legal and regulatory measures, which have been central to creating an environment conducive for doing business in and from Bahrain; and which are now central to achieving the ambitions of the Bahrain future economic vision and its National Economic Strategy. Companies in the Middle East are actively hiring adequate resources to perform risk management activities, some have taken the matter seriously and acted on this by hiring a boardlevel corporate security officer (CSO) or corporate risk officer (CRO), viewing this as a valued investment. So if you can master the changing face of risk management as resistance to volatility in today’s market trends, it is time to dig out, review and send out your resume, because you are a rare commodity and hopefully will be a good investment to many companies in the region in 2010. APRILAPRIL 2010
43
ON THE PULSE
LOOK
EAST
Western involvement in the Gulf Cooperation Council’s hydrocarbon industries is gradually being replaced by Eastern promise. Edward Jameson looks at Qatar’s pivotal position in a rapidly shifting world.
- Chinese LNG tankers are becoming commonplace at Qatar’s Ras Laffan port. -
ON THE PULSE
“I
was in Ras Laffan Industrial City last week, in the port area,” Durham University lecturer and economist Christopher Davidson explains. “And virtually every singe boat docked at the port bore an Asian flag. What we are witnessing is the Asianisation of Asia.” Ras Laffan port, on Qatar’s northeastern shores, is the world’s largest liquefied natural gas (LNG) exporting facility. The North Field, off the northeastern tip of Qatar in the Gulf, is by far the world’s largest natural gas field, with 900 million cubic feet of reserves and it is from Ras Laffan that this gas is exported to the globe. But where once, ships bearing the flags of European or North American nations would have been docked at the port, today, it is a different story: It is the story of Asia’s unilateral rise to power. “In the last six months we’ve seen many indicators,” Davidson says. “Qatari gas has been redirected to China from the United States (US), because China is a better long-term customer to keep sweet. We are also seeing Asian companies buying up Asian assets in order to send fuels to other Asian markets; all of a sudden there is no Western involvement at all.” On February 25, a major new study: The Ascent of Asia, commissioned by Japanese financial services giant Nomura and produced by renowned global economist Doctor John Llewellyn, was published. The study estimated that gross domestic product (GDP) growth in India could be boosted to 10 percent per annum throughout the coming decade if policymakers persist with infrastructure investment projects and tough domestic structural reforms. “Given that India has a rapidly growing labour force, supported by high savings levels, it is argued that the country has the basic ingredients needed to become an economic powerhouse,” the study said. China also came under Llewellyn’s microscope. The report stated that domestic demand in the country was positioned to make a greater contribution to economic growth, which was, it continued, extremely important given the recent slowdown in global
demand for China’s export goods. The smaller economies of the East were also considered, the study concluding that they were set for rapid development “as the driver of regional economic growth shifts away from a dependence on exports to the West and re-focuses on servicing regional demand”. Llewellyn suggested that trade liberalisation and an increase in intra-Asian trade agreements were important factors that would drive the pace and manner of economic development in the region, and that by linking themselves through trade, smaller Asian nations could expand and transition away from being chiefly based on Western demand. “Some in the West fear the rise of Asia. However, a region which is rich offers more to its neighbours than one which is poor,” Llewellyn stated. “The challenge for Western economies will be to adapt and thereby benefit from the evolving opportunities that a rapidly growing Asia affords. The potential rewards are huge and Asia has everything to play for.”
A GLOBAL SHIFT
If Western economies will be required to adapt in order to benefit from this apparent global power shift, then the same must be said for the GCC states, which lie at a pivotal point on the map to take advantage of
booming economies, be it in the East, or the West. The hydrocarbon boom across the Middle East can be traced as far back as 1932 with the discovery of oil in Bahrain. A year later the Saudi Arabian government struck a deal with Standard Oil of California allowing the oil major to prospect for oil in the kingdom. To cut a long story short, Aramco was formed in 1944, which later became Saudi Aramco – alleged to be the planet’s most profitable company. Aramco is, no less, an acronym for Arabian American Oil Company. It is only now, however, at the tail end of the worst recession to hit the globe since the Great Depression, that Western involvement in the Middle East’s hydrocarbon industry is beginning to curtail, as Asia prepares to go it alone. Qatar’s stock-in-trade, unusually for the GCC, is not oil, but gas. The mining and quarrying sector accounted for around 43 percent of GDP in Qatar in 2009, according to British Petroleum’s Statistical Review of World Energy report. Further, as Davidson attested, following his visit to Ras Laffan, Qatar’s new favourite partner in trade is China. According to the World Bank, China is today poised to overtake Japan to become the world’s second largest economy, behind only the US. Just four short years ago it was in fifth place. This
- Coal is the dominant fuel behind China’s rapid physical and economic expansion. -
APRIL 2010
45
ON THE PULSE
A CLIMATE OF CHANGE
- Sites such as these wind turbines in Copenhagen, Denmark, have already seen Europe lessen its reliance on Qatari gas. -
figure reflects the astonishing durability of the Chinese economy, when you bare in mind that the country bought and sold its way up through the rankings in the midst of the global financial crisis. The country’s energy consumption, the physical driver of such unrestrained growth, is understandably immense. Although the country relies on coal for the majority of its energy consumption – coal-fired power generation in the country is expected to triple between now and 2030, according to the US Energy Information Administration (EIA) – LNG will still have a vital role to play. This role is further emphasised by long-term oil price projections. Global oil prices are expected to rebound from early 2009 levels, as the global economy recovers from the downturn, before continuing to grow through to 2030, which, the EIA says, will see 46
APRIL 2010
governments opt “for comparatively less expensive natural gas for their energy needs whenever possible”. The agency continues: “As a result, natural gas remains a key energy source in the industrial sector and for electricity generation.” To focus on an intra-Asian angle, total energy demand in the non-Organisation for Economic Co-operation and Development (OECD) countries, which includes all Asian nations bar Japan and South Korea, is forecast to increase by 73 percent, compared with an increase of just 15 percent in the OECD countries. This will equate to a huge, unprecedented upturn in demand across the vast Asian continent. Qatar is not only geo-politically positioned to take advantage of this, but it is already on the path towards developing the necessary infrastructure to do so.
“The climate change agenda in the West has already been a strong driver of the Middle East’s change in direction of trade,” Davidson says. “The Asian nations need to grow, and they don’t have the same reservations that have developed in the West over the past decade when it comes to how that growth is fuelled.” As this column explained last month, the European Union (EU) has set itself a tough target of generating 20 percent of its collective energy consumption from renewable sources by 2020, and across Europe, countries have taken the bull by the horns in pursuit of their individual targets as decreed under the EU Renewable Energy Directive. One of the consequences of such a policy will be a gradual shift away from a reliance on LNG. The emergence of an economically viable carbon capture and storage (CCS) industry may go some way to safeguarding the LNG industry in the West, and the West’s status as a vital customer for Qatari exports, however, current CCS research and development is focused on coal-fired power generation. The evolution of this curve will, over the mid- to long-term, point to a downward trend in Western LNG demand, before any hope of a longterm rebound materialises. Asia, on the other hand, has repeatedly stressed its right to pursue economic growth free from the constraints of legally binding carbon emission targets. The Asian nations want to exercise their right to provide their people with the same degree of prosperity as enjoyed by the industrialised nations in the West, an insistence, which has already led to the presence of endless rows of boats bearing the Chinese flag at Ras Laffan. There has been of late a gradual shift towards some degree of middle ground, at least from a bureaucratic standpoint. On March 9, China and India formally agreed to join the international climate change agreement, reached at the close of the chaotic Copenhagen conference last December. They were the last two major economies to sign on to the accord.
ON THE PULSE
- The growth of India’s labour force has seen it become another potentially valuable customer for Qatar. -
However, Qatar need not start fretting about where to ship its gas just yet. It looks likely that such a move purely equals global political posturing. The non-binding Copenhagen accord calls for limiting the rise in global temperatures to two degrees Celsius beyond pre-industrial levels, but it does not require legally binding targets to be adhered to by its signatories. The accord also calls for the pumping of up to US$100 billion (QR364 billion) a year into climate change adaptation measures in emerging countries, including the development of low-carbon energy industries. This may well open the floodgates for a glut of CCS funding, allowing the uptake of CCS equipped gas-fired power plants in emerging countries, as well as in the more developed Asian economies – resulting in a new batch of customers eager to strike deals for the gas beneath Qatar’s North Field. The Port of Ras Laffan may be dominated by Chinese ships for some time to come and there may well be a long line of tankers baring the flags of other Eastern nations behind the Chinese fleet – a queue that stretches all the way back to east Asia.
- A worker at Europe’s first CCS equipped coal-fired power plant. The technology could eventually pave the way for a new influx of LNG customers. -
APRIL 2010
47
GREEN BUSINESS
Low Carbon Economy:
- Sam Pickering, managing director of Bluu Green. -
The greenhouse effect is well documented and widely understood. It is a natural process that has operated in equilibrium for thousands of years. Since the industrial revolution, the amount of carbon dioxide (CO2) in the atmosphere has increased by 35 percent and is now at its highest concentration for 650,000 years. However, CO2 is the not the sole contributor to climate change. It makes up the largest percentage of the atmosphere, causing an imbalance of CO2, therefore elevating it to the most significant cause of climate change. Understanding the sources of carbon emissions, measuring our output and educating ourselves about solutions is the only way to achieve a low carbon economy. Sam Pickering, the managing director of Bluu Green, reports.
GREEN BUSINESS
The buzz phrase, but what does it mean?
A
bout three-quarters of the anthropogenic emissions of CO2, to the atmosphere, during the past 20 years, is a direct result of fossil fuel burning. This massive increase has meant that the natural regulation (the carbon cycle) of GHG and, in particular level of CO2, has become unbalanced. Taken from the United States (US) Energy Information Administrationâ&#x20AC;&#x2122;s International Energy Annual Report 2006, the table below illustrates the global CO2 emissions from the consumption of coal from 1980 to 2006. As can be seen, the consumption of coal has nearly doubled worldwide during the past two-and-a-half decades and this trend looks set to continue unless measures are implemented to curb this. Country
1980
2006
North America
1533.79
2306.42
Central & South America
39.35
77.30
Europe
1849.29
1365.94
Eurasia
1081.90
704.02
Middle East
2.52
36.09
Africa
210.75
389.30
Asia & Oceania
1864.00
7185.58
World Total
6581.60
12,064,64
Looking again at the table, it becomes apparent that Europeâ&#x20AC;&#x2122;s reduction in coal consumption has come about due to the adoption of nuclear energy as an alternative. The arguments as to whether nuclear is the best option for a low carbon economy are far reaching, both in terms of security, waste and the energy initially needed to build the plants. This article will not be tackling the nuclear issue, though, it is important to mention as a viable solution.
- Source: US Energy Information Administration. -
Indeed, there is a general consensus around the world that carbon emissions need to be monitored and reduced. The 15th Conference of Parties (COP15) in December last year failed to reach an overall agreement, but did establish there was a need to work towards a low carbon economy. It was agreed that measures must be put in place in the coming years to work towards this end, taking into account the differing stages of economic development throughout the world. The sources of carbon are numerous, but the main contributor is in the production of energy. Finding alternatives to burning fossil fuels can make significant reductions in emissions. APRIL 2010
49
GREEN BUSINESS
Understanding the sources of CO2 and being informed of one’s own carbon footprint is a crucial ‘next step’ in working towards a low carbon economy. It is clear, following myriad debates over the past two decades, that carbon foot-printing is inevitably going to become entwined with everything we do. Measuring and educating consumers on how much carbon is associated with particular products has already become the norm in many developed countries. Consumers are already able to choose products from supermarkets, with a clear understanding of the carbon associated with that product in terms of its manufacture and transportation. Measuring carbon is an established process. There are various carbon calculation methods around the world including the Department for Environment, Food and Rural Affairs (DEFRA) in the United Kingdom (UK); Ghg Worldwide; Bilan Carbone in France; in the US there is the Climate Registry, US Environmental Protection Agency (EPA) and Climate Leaders; National Greenhouse and Energy Reporting (NGER) in Australia. With numerous calculation tools in the market it is important to ensure that the most appropriate and accurate calculation methods are used. With software models available to measure consumer’s carbon consumption, it will be a natural progression for organisations to be taxed on their emissions. Likewise, with measurements of current practices in place, it will be easy to implement legislation limiting emissions and setting targets for carbon reduction. This has already happened in many countries. The UK is instigating the Carbon Reduction Commitment (CRC) to offset their carbon emissions by purchasing carbon credits at the beginning of the year. Those companies that use more than they have purchased will then need to buy 50
APRIL 2010
additional credits for those that have not used their allowance. Each carbon credit will initially be set at GBP12 (QR65) per tonne with credits then being traded on the open market from 2013. This carbon trading mechanism is likely to involve significant costs to those companies that do not reduce their CO2 emissions. Conversely it will provide a new revenue stream for those that take responsibility for the carbon they produce through their activities. In the US, the Department of the Interior, Environment, and Related Agencies Appropriations Clean Air Act 2008 requires the mandatory reporting of greenhouse gas (GHG) emissions. This is an EPA led programme making reporting of GHG emissions above appropriate thresholds in all sectors of the US economy compulsory. The EPA will determine the appropriate emissions thresholds and the frequency of report submissions. Now that we have techniques to measure CO2 emissions, it is far easier to work towards realistic goals in its reduction. As stated, reducing an organisation’s carbon footprint can only be done once the current sources and levels are understood. On an organisational level, the consumption of water; waste production; energy use; processes and products by a company needs to be monitored. Having established a baseline measurement, targets for improvement should be set that are both operationally and financially realistic. These targets should be set internally, although external targets for specific international industry standards must also be taken into account. This will allow an organisation to implement various scenarios, which will illustrate a CO2 emissions saving. It can seem a daunting process to comply with targets to reduce ones CO2 emissions, but this is generally due to a misconception that the only way to do so is to reduce all consumption. Instead, a simple switch to alternative technologies or sources of energy can make significant inroads to a low carbon economy. Changing working practices must be started at a grass roots level through educating people about alternatives. Simply understanding the benefits of changes to how meetings are carried out, for example, video conferencing; choice of fleet of vehicles being used; improvements to heating, ventilation and air conditioning (HVAC) systems; implementation of renewable energy sources, is essential. It should be noted that any reduction in a carbon footprint could provide significant operational cost savings. For organisations addressing their footprint the process will start with monitoring existing levels, which will then be followed by a strategic programme to reach the targets set. This programme should also consider the payback period and illustrate the potential savings over a longer period of time. Once the company chooses to implement the changes, a strict auditing process should also be engaged, illustrating the benefits gained for an organisation as a whole. For the Middle East, the beneficial cost savings for those
GREEN BUSINESS
working towards a low carbon economy are less “In Qatar , understanding the current levels of carbon evident as energy is so cheap and there are few consumption and working towards a lower carbon economy taxes on consumption. will not only make economic sense in the future, but might Therefore, there needs to be a real desire to well be essential to keep the country competitive in a world follow the ‘low carbon driven by the buzz phrase: a low carbon economy.” economy’ movement. In fact, it appears that - Sam Pickering this is on the agenda for Qatar. During last year’s United Nations COP15 in Copenhagen, Qatar’s Minister of Environment, Abdallah bin a full and immediate implementation of commitments under Mubarak Al Maadhadi, addressed the panel stating that climate the United Nations Framework Convention on Climate change was a key policy driver for the state. He also called for Change. He explained that Qatar has encouraged industry to develop renewable technologies that are appropriate to the local environment. About US$150 million (QR546 million) has been donated to the energy and research fund set up by Organisation of the Petroleum Exporting Countries (OPEC). Additionally, practical measures have been undertaken to reduce the effects of climate change, utilising modern techniques in oil and other industries to maximise production and processing. This has incorporated the use of the Japanese gas injection technique to reduce flaring in the Al Shaheen region of Qatar. It is therefore clear that Qatar is taking the reduction of CO2 emissions seriously. Carbon is the number one contributor to climate change and recent developments allow us to measure our output and make amends. In the construction industry, developers and organisations can now be held accountable for the amount of CO2 they produce and it is here, in a region where energy is so cheap, that we need to motivate people to reduce their footprint. With Western companies now placing additional importance on low emissions, investment must also be driven by CO2. Early implementation of CO2 auditing procedures will place properties, in particular, ahead of the competition. Those construction and service-based industries offering to monitor and reduce carbon emissions will be better placed in the tendering process. Carbon management is beginning to take hold throughout the world and early implementation of procedures to monitor and audit CO2 will provide the reductions that will not only improve the carbon footprint of an organisation but also provide significant costs savings. In Qatar, understanding the current levels of carbon consumption and working towards a lower carbon economy will not only make economic sense in the future, but might well be essential to keep the country competitive in a world driven by the buzz phrase: a low carbon economy. APRIL 2010
51
BUSINESS VIEW – REAL ESTATE
edd brookes IN SEARCH OF NEW DESTINATIONS When meeting new acquaintances, at any given social event in Doha, I find that I am always presented with a pretty standard set of questions: “what do you do”, “how long have you lived here” and “where in Doha do you live?” Edd Brookes reports.
R
ecently, I pondered these questions and they got me thinking about the near future. While there is a general perception, unless you are an engineer working in the oil and gas field or in the power and energy industry, the expectations are that you will live in Qatar’s capital city of Doha. In fact the last census highlighted that 90 percent of Qatar’s residents live within the greater Doha area. This is hardly a surprising fact given the various individual demands that effect us in our location making decisions, such as proximity to work, schools, shopping facilities, ease of access to leisure clubs and restaurants. However, the fact is that Doha will face some pretty stiff competition in the coming five years as other areas of Qatar reinvent themselves as a more attractive residential location option. Therefore, I thought it would be interesting to look at some of these upcoming areas to investigate what the advantages of living there may be and to find out the kind of facilities that one could expect.
AL KHOR
For those of you, who have not made the 30-minute drive north to Al Khor you really are missing out on this jewel of a town. Al Khor is already being transformed courtesy of the 5.45 million square metres (sqm) Urjuan development, situated around its waterfront. Al Khor (also spelled Al Khawr) means “sea on three sides” in Arabic. The town is older than Doha and is recognised as an important pearl fishing centre, however,
BUSINESS VIEW – REAL ESTATE
Al Khor is much smaller in its population as compared to Doha – in 2004, the municipality had a total population of 31,000, according to the last census. The history of Al Khor dates back thousands of years ago. Though habitation has not been continuous, excavations have found remains dating back to between 5600 to 5300 BC and pottery discovered has linked Al Khor to the Ubaid civilisation. Three thousand or so years ago, on the island in the nearby bay of Khor Shaqiq, the Kassite civilisation manufactured the royal colour of purple by crushing sea snails. There is already much to allure the day tripper for a visit – the mangrove swamps attract many ornithologists due to the native and migratory birds it plays home to, the Corniche, while smaller than its Doha contemporary, is perfectly formed and features the popular fish market on its southern side. There is a museum and the original family home of Sheikha Mozah bint Nasser Al Missned, the Consort of the Emir of Qatar, which is currently being turned into a museum. The famous Sultan Resort claims to house the largest swimming pool in Qatar and is perfectly situated for a long lunch on its beautiful terrace overlooking the plethora of fishing boats that keep the fish market stocked. Al Khor also features a 20,000-seat football stadium, home to a side, which in 2007 reached the final of the Emir’s of Qatar’s Cup, several English speaking schools and stateof-the-art hospital facilities. The plans afoot are massive and are of mixed use – with Urjan featuring: • 207,000 sqm of retail accommodation including a 47,000 sqm shopping mall • 65,000 sqm commercial offices • Three schools, a nursery, kindergarten and day care centre • An assortment of 157 villas, 96 chalets an unspecified number of townhouses and 23,000 apartments housing an estimated 63,000 residents • A luxury beach hotel and 40 beach chalets • A five-star business hotel • A golf course and three marinas • Golf course development including residential The scale of the project can be seen below, with the red
border indicating the extent of the master planned scheme. The golf course will be designed to rival the Doha Golf Club and will benefit from offering a variety of golf residences – one for those who want to live right opposite their favourite hole. The attraction of three marinas will also appeal to people, who love all things water and will also provide a pleasant transport alternative to visiting Doha. Work is actively underway with the first series of accommodation set to be delivered in 2011. Let us not forget that this has also been designated a ‘freehold zone’ for those who would prefer to buy rather than rent. The current population forecasts for the town are shown below: Year 2004 2008 2010 2015 2020
Al Khor Population 31,547 45,320 68,980 102,760 139,400
AL WAKRA
The fishing and former pearl centre, Al Wakra is located 10 minutes outside of Doha and is fast becoming a repository for Doha workers fleeing the high rental prices that exist in the capital city. The Al Wakra is renown for its long sandy beaches and a drive around some of the back streets can give an interesting perspective of past life in Qatar, with a number of old buildings still standing. In the future, plans for the area will include a wild life park, a country club and other recreational projects. There is will also be a continuous public waterfront offering activities for the public, two hotels (there are currently no major hotels in Al Wakra) and a golf course. A railway station will be located near the mosque and there will also be a climate controlled underground pedestrian area. The master plan envisages Al Wakra to be developed as a preferred waterfront destination and a vibrant city where people would want to visit and stay. Considering the city’s heritage history, a separate area will be developed as a heritage zone. Re-establishing Al Wakra city’s historic core, with a distinctive sense of place and traditional architecture is another proposal. Construction of quality villas, regional parks, waterfront public spaces are among other projects planned as part of the model township in both the cities. The southern area of Al Khor will be developed as large commercial area with high-end residential zone connected to waterfront. The west has been earmarked as a middle-income residential area. Within the Western Zone and on the eastern area, a special zone will be earmarked for housing complexes for single-family residences. The eastern area will be predominantly designed for singlefamily areas.
APRIL 2010
53
BUSINESS VIEW – REAL ESTATE
The northern area of Al Wakra has been reserved for the high-end residential area complemented with a bevy of upmarket games and recreations, including a golf course. Below is a summary plan showing the proposed redevelopment:
DUKHAN
Drive across Qatar towards the West Coast and you will reach Dukhan, home of strange limestone formations, Qatar’s highest peak (321 feet), and one of the largest gas fields in the world. To get to Dukhan you drive out of Doha on the Al Rayyan road and keep on straight until you get to Shahhinaya. Take the second exit; follow the road as it twists to the right. Then just keep on straight until you get to Dukhan. It currently takes a little more than an hour to get to Dukhan. Road works will slow you down: the road is currently being widened to four lanes, with camel underpasses being put in. When the work is finished the journey should be much more pleasant. Dukhan is of course famous as the location of the first oil discoveries in 1938. The town of Dukhan essentially features a compound with a few thousand residents – non-residents are not allowed to enter without a gate pass. There is a golf club, complete with 20-hole golf course. It is not quite up to the standard of Doha Golf Club – there is also a recreation centre, a cinema, several restaurants and shops. Qatar Petroleum (QP) is eager to develop the town into a more thriving community and with 193 projects under way the character of the compound is likely to change dramatically over the next few years. While currently off limits for those of us without gate passes, there are substantial development plans by QP to turn this oversized compound into the jewel of the west coast of Qatar.
square (ksq) real estate project of huge proportions – as seen in the map below:
Lusail features several districts including: Marina District Water Front District Commercial Complex Energy City 1 and 2 Fox Hills Palm Alees Island District Boulevard Commercial District Lusail North Residential District Sidra Golf District Education and Medical District Currently an ‘investment zone’ where expatriates can purchase a 99-year renewable lease (usufruct tenure), the city looks set to have some of the most architecturally attractive buildings in Qatar, as well as featuring world class entertainment facilities within the entertainment district. If you are looking for one of the most exclusive addresses in the Middle East, then Qetaifan Islands will no doubt be hard to ignore – shown circled in red on the plan below: • • • • • • • • • • •
LUSAIL
Unless you have just arrived in Qatar, or have had your head in the sand for the past few years, you should be aware of the ambitious plans for Lusail – or Doha City 2, set to house a population of 230,000 by 2020. Located just north of the Ritz Carlton, and west of The Pearl, Lusail is a 31-kilometre 54
APRIL 2010
So, in the not too distant future, when facing the same three questions from ‘fresh’ acquaintances, I do not believe Doha will be the assumed residential location.
SPECIAL REPORT – RAILWAY INFRASTRUCTURE
RAILROADING
ITS WAY TO THE FUTURE - Daniel Moore, OBG, Qatar. -
Qatar is to invest billions of dollars in the coming years to develop an extensive rail network serving local commuters, international travellers and the country’s growing logistics industry. Oxford Business Group’s editorial manager for Qatar, Daniel Moore, investigates.
SPECIAL REPORT – RAILWAY INFRASTRUCTURE
B
y 2016, Qatar will be crisscrossed, with a series of railways running through its core. Doha is set to have 350 kilometres (km) of rail infrastructure laid for its local metro and some 325km of broad gauge track. Most lines are to be dual purpose – carrying both passenger and freight services. The metro grid will consist of four separate lines and 90 stations, with the Red Route running from Mesaieed to the New Doha International Airport, and on to downtown Doha and Lusail, before extending to Al Khor and Al Shamal. Two additional lines: the Green and Yellow Routes, will connect east and west Doha, while the Blue Route will travel along the C Ring Road. The main line component of the rail network will include a high-speed link to Saudi Arabia, with branches tying Qatar’s railway to the planned Gulf Cooperation Council (GCC) regional rail grid, and a line connecting Ras Laffan, the centre of Qatar’s upstream hydrocarbons sector, to Messaieed, the hub of the country’s downstream gas and oil industries. Another rail project that will have a major impact on the local economy when completed some time after 2014, is the Qatar-Bahrain Causeway. It was first unveiled in 2006, with preliminary construction set to begin in 2008. However, work on the 40-km bridge project was rescheduled after the two countries agreed to add a main line rail link to the scheme – a proposal that understandably required extensive modifications to the original plan and budget, with the expected cost rising to an estimated US$3 billion (QR10.9 billion). Though adding the rail component delayed the start of work on the causeway, it should be worth the wait. Not only will Qatari producers have easy access to Bahraini markets, being able to move bulk freight to the kingdom quickly and at less cost than by road or sea, but they will also be able to make use of Bahrain’s logistics. When completed, passengers will be able to travel from Doha to Manama in well under an hour, meaning the 180km trip would be faster by train than by plane, allowing Qataris to commute to Bahrain. Ground will be broken on some of the preliminary developments this month, while tenders are being held for other stages.
56
APRIL 2010
In February, a joint venture consisting of United Arab Emirates-based Al Naboodah Contracting and South African firm Group Five was awarded the US$110 million (QR401 million) contract to build the station at the New Doha International Airport, which is scheduled for completion in mid-2011. Responsibility of the rail development has been given over to Qatari Diar, the state-backed property developer, working in partnership with German rail and logistics giant, Deutsche Bahn. The two formed the Qatar Railways Development Company (QRDC) late last year as the vehicle to carry forward the range of projects on the drawing board. Speaking at the launch of QRDC last November, Ghanim Bin Saad Al Saad, the managing director and chief executive officer of Qatari Diar, said the two companies were, “committed to advancing Qatar’s forward-thinking goals of becoming a first-class state that provides a high standard of living for all its residents and is an international destination for industry and tourism”. Many media reports have suggested that Qatar’s newfound focus on trains is directly linked to the country’s ambitious bid to host the 2022 FIFA World Cup. While it is true that any country bidding for high-profile sporting events must be able to boast a top-class transport network, such reports in the press can miss the point. Qatar is not developing a rail system based solely on a desire to host a month-long football tournament, but rather it plans to lay hundreds of kilometres of track, which will lay the foundation for the country’s economy. Estimates have put the total budget for Qatar’s rail programme at between US$25 and US$40 billion (QR91 to QR146 billon), money that will buy a sizeable people-and-freight-moving network, a goal worth scoring.
LEGAL INSIGHT
E D LY
o C &
FR S E I ILIT B A D LI
O
HE T M
P ARI T A Q
ER
TIVE C E SP
, LLC an acts f o C case an LL tar. It he t a t r in tha in Q powe er, ed s t v r e a e o al d n w r l n e o g o e i n H ld b ge on reh that s ‘ a h u s a s ho it s ugh its holder inting mpany tion o e o si o c r s r p ’ a h p t o a sh he the po ed to t C e y h e t rr rn is run ough and refe aw, it atto ’ to t e h o t l d f o A of is n ger es L Cly ad El e, f ana behalf. nager mpani matter as o m r a u h o c a e r m o C er (as thei eneral he es nag artn , and F me offi p in t cepted ral ma sibiliti g f g y a o l n c n s e e s s i s a o n r c e e p g r exp nerally t the g nd res ana tre offi e in the directo vide a e a m of h g t , pro Cs, s n s t ) t e f t e i l e i c a e o t o r c i i n a u u L C c so the oes ract e d r L id S ancial or asso iabilities aw d ors fo anaged tory ities is No. p e sam ctor. v L u t a s t a e h i t l c t l i m i in D s dire Law pan dire liab (Law es are ry ar F , a sen es and t ima and s Law mpani e as a he Com ard of LLCs panies veral r a p Q e T m es panie ) (Co th bo The of dad that e Co are s duti duti d ny om Had ss the Qatar. mary directorercial Caosmamendne oting fergulationasll for ta provideasger’. Tehre ther’es Article‘bsoard n u r h u disc ating in vides a sulimabilitiese Com) mof 2002 is worthlaws andin Arabicia, l by bby a ‘meas that w compavniyde for a h t l e r c d ope article prtoies andctors of st of (5Law). thI at, as aplublisheadre unoffit becausiees provniagers tnh may pro et s tan an re ma ciatio ’. orm tari his he du o dire outs atar a slation impor Comp ribe s a n f t o t c n s e Ass anager i Q of icable commo r – Q and s a h e r in ish t his d in t to d lated a l t m T p ) a t f p . s l e C o a mo in Q (QS C). A Eng nature ord us laws) rans e t L w two ehicles anies ir te b e L r c a ( i e h v . t b h i p s pr e v nie Ara nd ot y also anager’ om the orat ing c compa ted) or sed) in a a ( p m ‘ r m s ld co lis as clo pted Law irector ably) a eho ility ic ( e d shar ed liab e publ red to rm ado gher g n a a t i o r erch limi may b so refe ly the f the h ents (int l l o SALT C m a t a S e c i r , Q p due requi isted is ty DAVID (unl re and entures tory v la natu arger egu . l ) d r for al an n LLC t a i p o ca tive t (rela
C D
TIES U D RS’ O T C IRE
T
ADDAD
AD FOU
EL H
AN
LEGAL INSIGHT
In practice, the general manager becomes empowered with the all the powers, duties and obligations of the board. The general manager is identified in the LLC’s commercial registration and is granted a high degree of authority to manage and operate the LLC. To avoid confusion, only the terms ‘director’ (for QSCs) and, where necessary, ‘general manager’ (for LLCs) will be used in the remainder of this chapter. Conveniently, the Companies Law provides that the General Manager of an LLC has the same duties and responsibilities as a director of a QSC.
DIRECTORS’ DUTIES
The main sources of duties and liabilities imposed on directors of a QSC are: (a) The Companies Law, and (b) The Corporate Governance Regulations of companies listed on the Qatar Exchange, which was issued by the board of the Qatar Financial Markets Authority on January 27, 2009 (Corporate Governance Regulations). This section only considers some directors’ general duties. It does not discuss whether a specific duty may arise under a particular law or regulation as a consequence of an activity undertaken in the course of a QSC’s day-to-day business. The general duties attaching to QSC directors are summarised below: • Duty to act in the QSCs best interests The directors must exercise their powers and carry out their duties in such a way as to serve the interest of the QSC and the shareholders. • Duty to avoid conflicts of interest and transactions with directors No director may participate in any act, which may compete with 58
APRIL 2010
the company, or trade for their own account or the account of a third party in any branch of the activities carried out by the company. The company may otherwise demand compensation from the director and consider the operations conducted as having been done for the company’s account. With the exception of state representatives in QSC and persons owning more than 10 percent of shares in a company, no person can be a director of more than three companies, or the chairman or deputy chairman of more than two boards of directors. No director may have a direct or indirect interest in any contract, project or other commitment involving the company unless a public tender takes place and the company in a general meeting approves the director’s involvement on an annual basis, if applicable. The director concerned must not be present in any board meeting or general assembly at which the director’s involvement is being considered. A company may not make any loans to a director or guarantee a loan made by a third party to a director, with the exception of bank or other credit providers where the loan or guarantee is given on the same terms and conditions as those applying to members of the general public. No person may simultaneously hold the office of auditor and be founder of the QSC, be a director thereof, or
perform any technical, administrative or advisory work for the company. • Duty to exercise reasonable care, skill and diligence A director must carry out its duties in a responsible manner, in good faith and with due diligence. • Requirement to own shares in the QSC A director must own such a number of the company shares as the Articles of Association may specify (Security Shares). The Security Shares must be deposited within 60 days into one of the accredited banks in Qatar The Security Shares are assigned for the security of the rights of the company, shareholders, creditors and third parties against the responsibilities assumed by the director, and remain non-transferable until the end of the director’s mandate as a director and the approval of the balance sheet for the last year of his mandate. • Prohibition on use of inside information No director must use any information obtained by virtue of their position for their benefit or the benefit of their partner, children or one of their relatives up to the fourth degree and/or have a direct or indirect interest in any party carrying out transactions intended to influence the price of financial instruments issued by the company. • Duties arising from the Corporate Governance Regulations Pursuant to the Corporate Governance Regulations, the board of
LEGAL INSIGHT
- In Qatar, directors may be subject to penalties under the Companies Law, which provide for imprisonment and fines up to QR100,000. -
directors have wide ranging corporate governance responsibilities, which include but are not limited to: (a) Drafting a corporate governance code for the company in line with the provisions of the Corporate Governance Regulations, amending it whenever necessary and make it available to the public, (b) Approving the strategic plans and main objectives of the company, (c) Appointing and revoking managers and ensuring a succession planning, (d) Ensuring the company’s compliance with the laws and regulations and its Articles of Association, and At least one third of the board of directors must be independent members. An independent member of the board of directors must be completely independent of the QSC and must not infringe the conditions of the Corporate Governance regulation, which includes but is not limited to the following conditions: (a) During the preceding three years, must not have been: (i) A senior executive of the company; or (ii) An employee, or director, or owner, or partner or shareholder in any company advising the QSC including the QSC’s auditors, (b) Must not be a relative of any of the senior executives of the company,
(c) Must not have been a board member of the company for more than nine consecutive years, or The majority of the board of directors must be non-executive members. A non-executive member of the board of directors must not have held a full-time management position at the company and must not receive a monthly or yearly salary except for the directors’ remuneration.
DIRECTORS’ LIABILITIES AND PENALTIES
All directors are jointly responsible for compensating the company, its shareholders and third parties for any damages resulting from fraudulent acts, abuse of power, breach of the Companies Law and the company’s articles and error of management (without, for example, for those made in good faith). Any indemnity by the company against such responsibility is considered invalid. Directors are held jointly responsible for compensation in these circumstances if the loss was caused by a decision, which was unanimously approved.
In the case of a resolution passed by a majority, the objecting directors are not liable to pay compensation provided their objection is recorded in the minutes of the company. Absence from the meeting where the relevant decision was taken will not be a reason to absolve a director from responsibility unless it is proved that the absent director did not know of the decision, or that the director could not object to it on becoming aware of the decision. A director may be liable to the company for a period of five years after the cause of the loss or damage to the company. The company in general assembly may not absolve a director of responsibility for loss or damage during their time in office. If the loss or damage was caused by an act, which was approved by the company in general assembly, the director’s liability would cease five years after the date of the general assembly. However this does not apply if the loss or damage may be attributed to a criminal offence.
DIRECTOR’S CRIMINAL LIABILITY
For completeness, directors may also be subject to penalties under the Companies Law, which provide for imprisonment up to a period of not more than two years and a fine of no less than QR5000 and no more than QR100,000, or by either punishment for any person that commits one or more of the acts listed in Articles 324, 325 and 326 of the Companies Law.
For more information regarding legal issues please contact Fouad El Haddad or David Salt at: fouad.haddad@clydeco.com.qa or david. salt@clydeco.com.qa
APRIL 2010
59
BUSINESS KNOW-HOW
The 7 ESSENTIAL
COMPETENCiES OF THE
BUSINESS KNOW-HOW
LEADERSHIP
2010-20 DECADE
By Wassim Karkabi, managing partner for Qatar and United Arab Emirates and regional practice leader of Industrial in Europe, Middle East and Africa for Stanton Chase International.
APRIL 2010
61
BUSINESS KNOW-HOW
W
hile the world is waiting for the markets to go back to ‘normal’, businesses throughout the Middle East have closed their eyes to the fact that there has been a complete paradigm shift – years in the making. This shift was going to happen at some point, but the crisis acted as a accelerant – one country at a time, from UAE to Qatar and even to Saudi Arabia. Ultimately this shift spurred a series of movements, which has changed the face of the business landscape. So much so, that organisations in the Middle East may not yet recognise that we have already arrived at what is the new ‘normal’. When I asked a variety of executives working in the Middle East and around the world about the competencies of the post-crisis leader for the next decade, many of them said: “Who said the crisis is over?” Some professionals in Doha responded by saying: “We didn’t really feel a fully-fledged crises”. The majority of executives complained about greed and that one of the most important competencies should be integrity. The general feeling was they were still waiting for things to go back to normal, not thinking that normal, back then, was characterised by the same things that they are complaining about now. The big little secret that people may be missing is that there is a new normal and we are smack bang right in the middle of it. McKinsey and Company’s managing director, Ian Davis, calls the changing of the business cycle “a restructuring of the economic order”. And a quick look at what has happened will reveal a new picture; a paradigm shift, a new normal that we are not used to, but one that may be here to stay. Despite the fact that Qatar may not have worn the full brunt of the downturn, it, and the rest of the Gulf Cooperation Council (GCC), will still need to lead the way in recognising what brought the world to its knees, while also implementing standards that will help it to rise up again. The world has started to surface its values. We are moving, obviously and visibly, from an era of conflict toward an era of synergy. ‘Green’ solutions are starting to become mainstream. Everyone is becoming more conscious of the way they use and waste energy, the way they pollute and the way they exhaust consumables. We are notably more conscious to the things that are damaging our world. People are fed up with abuse. Trust has become a major issue with consumers. People are turning in favour of brands that stand for something and which reflect this emerging world, whereas they are buying less of the products that do not uphold such values. Sustainability and longevity are now key. Two-year tenures are not enough for sustained growth. The success of General Electric came from CEOs that put forward strategies and saw them through, year after year. We now easily recognise the fakes and fads and question everything before we invest in it, even if we were just buying chewing gum. As investors and as consumers, we have become more
62
APRIL 2010
conscious of the pennies, and care about how money is being spent, or worse yet, squandered. Bonuses will not go back to what they used to be. If some do, they will be scrutinised all the way to the bank. We have become more logical and less emotional in our ways. Our ‘will’ is strong, and our ‘emotionality’ is unwavering. And most importantly, our vision has taken on a new life. As uncertainty becomes part of our new normal, we now strategise for uncertainty. We build strategies that have more than just a ‘Plan A’ and a ‘Plan B’, but a strategy that is live, and that changes and takes on a new life as it progresses, or evolves. Strategy now is a living thing. As former United States Major League Baseball player Yogi Berra once said, “the future isn’t what it used to be”, now imagine that you would say that every week. Picture yourself waking up every week, in some cases every day, revisiting your strategy, your plans and tweak it for the nth time…that becomes part of our new normal. What does this mean for leadership? It means that there is a new set of competencies, which leaders today need to develop for the coming decade – these competencies will need to be, revisited every year, if not twice a year. In some ways, the new competencies will make you feel as if we have come full circle to a complete turnaround. Leaders in the new normal need to develop seven essential competencies far and above the usual leadership skills that they have come to know: 1) Green, 2) Sustainable, 3) Connected, 4) Brand Activist, 5) Bottom-Up Master, 6) Grounded and 7) Live Strategist. While an elaboration on these competencies will be addressed in separate articles, they are, in my opinion, the battery of antibiotic behaviours that people need to live with and evolve through in the coming few years. They are the cure to an ill world, in need of a better treatment. Imagine if we ran our organisations and our nations, in the same way we did when we were in the eye of the crisis. Would we not have a more robust economy? Green is the law of the coming age. Everyone is going green, from Coca Cola to Hewlett Packard to British Petroleum; everyone is doing something to leads the ‘green initiative’ in their field. A green supply chain, greener manufacturing process, or investment into technology that will help operations become more energy efficient – how are leaders in Qatar, today, investing in these initiatives? Despite the fact that Qatar is a relative newcomer to the world energy market, it is a strong contender and must play a leading role in the ‘green effort’. Abu Dhabi has built a global brand around renewable energy using the Masdar City platform. All eyes are now on Abu Dhabi for sustainability. But will Masdar City be able to live up to its promise of being a zero carbon-emitting project? This brings us to the second of seven new essential competencies that leadership should be engaged in: sustainability. However, we are not talking about sustainability in reference to green practices, but rather a leader’s ability to stay the course for long enough to see
BUSINESS KNOW-HOW
their strategies through to execution phase, as well as being able to evaluate the results. Tenures have become so short that it has become rare to find leaders that are there for the long-term return and not the just for the short-term quick gains. The Middle East has experienced its share of job hoppers, even at leadership level. Qatar’s visa transfer laws have made it more difficult for leaders to move between companies within Qatar, but this has not stopped them from hopping in and out of the country. Being connected and being a brand activist in many ways go hand-in-hand. Today’s leaders can no longer live in high towers, separated from the world and disconnected from the community. They need to come out to play; they need to speak and be heard, and they need to voice their plans to the public, and to their customers and their shareholder. Today’s technology allows for easier connectivity, with business networks and social networks, and with blogs taking over the consumer insight world, there is no limit to how connected leaders can become. This is all about people building their own brand, a leader brand that communicates trust and one that people can invest in. Leaders today need to build their own personal brand as an extension of their company’s brand and company values.
For the last few years leading up to the crisis, organisations were hunting with diligence and employing leaders that could deliver the required growth in emerging markets, leaving profitability on the bench for a while. Sacrificing bottom line for top line is no longer acceptable. We have seen what this strategy has done to the world. It is now time to engage with leaders, who can balance the two powers of top line growth and bottom line profitability. Cash flow is important, but more important is the end of year profit. Sales growth is paramount, but not at the expense of a healthy margin. With this bottom line mentality comes a grounded leader that does not jump in excited at the thought of a multimillion dollar project. It is a leader that has the courage and foresight to say no if such a project looks only provide value on the growth end of the spectrum, while in the process may side track a complete organisation and derail it off its strategic tracks. Similarly, leaders need to be logical and grounded in the opposite situations when a crisis hits and use logical, and thick-skinned decision making skills to lead an organisation through rough waters. If we learned nothing else from the economic crisis, we must have, at least, learnt this. Probably the most difficult part of this new set of competencies is the last part of seven. To be alive and continuously live in your strategic thinking is not something that people learn in post-graduate education or in real life. However, this is the gist of the market today. This is what leaders need to master; a continuous sharpening of their strategic saw, a strategy that changes at the speed of technological advancement. No more three-year strategies. As technology impacts our lives, and daily business activities to a larger extent, and as technological advancements are continually moving at a faster pace, we need to build checks, balances and milestones into our strategic thinking and into our strategy implementation, which also takes this into consideration. If we add to that an unpredictable and a not so transparent market, more so in the GCC, with a not such obvious recovery timeline, managing live strategies becomes more and more crucial. There are a good handful of leaders in Qatar that are ready to take on this challenge, but the country is far from saturated in its leadership scale. There remains plenty of room for growth. This is the case for all emerging and growing markets. It is definitely true for the majority of Middle Eastern countries. This is not to say that the rest of the world is better off – far from it. We all need to learn a new set of rules to live by, and it will not be easy for us to change our habits.
APRIL 2010
63
SPEAK EASY
THE ART OF COMMUNICATING By Sara Gourlay, general manager of Hill and Knowlton, Qatar.
O
ne of my favourite childhood memories is of sitting with my Aunt Katie, with a rug curled around us and hearing her tell me a story. She was one of those wonderfully wise women, who could weave a magical spell in the most ordinary of rooms. It was only years later when I realised that she could also weave a lesson into the fabric of any story she choose. When I could not quite master riding a bike and gave up with a sulk, she told me the story of Robert the Bruce and how he watched that spider try, try, try and try again until it succeeded in building its web across the cave. She had her message down pat. We all love stories. We use narratives to inform, advise, engage and inspire. We each feel a connection to the stories we hear; we have an emotional or intellectual response depending on the story, and the teller, and the way in which we hear it. The more relevant and compelling the story, the more likely the reader or audience is to react. It is essential that companies, brands, governments or organisations tell their story. It sounds overly simple, but
in fact the single greatest challenge of any marketing or communications campaign lies in getting the story – or message, to use more corporate language – right. Think back some 18 months to a fresher faced, more youthful Barack Obama giving another of his winning stump speeches. What do you remember of what he said? Is it his detailed analysis of the Republican Party’s taxation policy? His defence of the Democratic Party’s healthcare policies? Or, like me, is your one abiding memory that phrase “yes we can”? The genius of the Barack Obama campaign was his ability to encapsulate the hopes and aspirations of his audience, whether die-hard Democrats or red-blooded Republicans into one simple clear and meaningful message: “Yes we can.” It gave his audience the reassurance of his passion, his commitment and his intent. And the Unites States (US) responded. Politicians are past masters at getting the message right, but it is not always as easy as it looks, particularly in the corporate world. We hear marketing messages every day of our lives,
SPEAK EASY
from an increasing number of sources. Some resonate with us instantly, while others never quite penetrate the defences. Some have tangible, measurable meaning, while others make us feel better, different, invigorated and good. If you are in business you had better have your message straight or there is no reason for someone to choose your product or service. Messaging is the bedrock of any communications campaign. It informs and directs the way a company communicates with all its stakeholders. In many ways creating a message house or message set, is about encapsulating the ethos and ambition of an organisation into a language that can be used by all. As consumers or businesses we want products and services that resonate with us. We want to feel a degree of ownership, certainty and reassurance when we make those crucial buying decisions. We want and need to like the story and the message to feel a sense of reassurance or excitement. How do you define your message? Put simply, your key message should be the one thing you want your audience to remember you for when you leave the room. It should represent you and your organisation, and encapsulate what you stand for. If we take the example of an airline, it may feel that its advantage over the competition is its safety record leading it to a key message of “Imaginary Airways: the safest way to fly”, while another airline might focus on its premium service or wide range of routes. Generally a company will have an overarching message – in the case Imaginary Airways it is “Imaginary Airways: the safest way to fly” – and then a small number of sub messages designed to appeal to specific audiences. These messages come from the business itself – when clients are defining their message it is essential that they spend significant amounts of time asking questions about their business. This is important for two reasons: firstly to establish the way the organisation talks about itself, the language it uses and the context it relates to, and secondly, to prompt debate. So, to recap – your messages should clearly and concisely articulate your identify and positioning, your offer and differentiation. They should also address the interests and concerns of your audiences. Imaginary Airways is focused on safety, which is a strong generic message, possibly resonating more with families and business travellers. However, it has a large proportion of transit passengers moving from Australia to Europe. These passengers tend to be cost conscious, so a secondary message might focus on pricing “we are competitive on price” which works for all the audiences involved. It is also worth considering what the functions of key messages are. I believe there are four main functions. Your message needs to get the right people to care (relevance), get people to understand (comprehension), get people to believe (credibility) and get people to take action (urgency). Where many companies fall down is in gaining that credibility of message. I worked in the technology sector during the dot.com era and, at that time; every company I spoke to identified itself as “the next Microsoft” or “the world’s leading…”. These are wonderful statements of ambition, but what was consistently lacking was any proof that such ambition was achievable.
This neatly brings us to my next point. Messages need to be backed-up with proof or they are simply meaningless. Let us look at Imaginary Airways again and re-examine that key message “the safest way to fly”. To ensure that is a valid message Imaginary Airways needs to have strong figures to show an exemplary flying records, the strongest pre-flight check routines, and mandatory checks on crew for fitness to fly and so on. If you cannot support your message to that level of detail then it is not the message for you. There is a kind of litmus test for messaging that is worth bearing in mind when looking at your own organisational messages.
“He said: ‘I’m Richard Branson and this is my company’. As messages go, that is pretty compelling.” - Sara Gourlay •
Are they true? Are they defensible? Do you have evidence to back them up? Is the message credible? • Are they compelling? Are they relevant? Do they get past the “so what” factor? • Are they succinct? Can you deliver these messages in one sentence? How about in an elevator pitch that last less than a minute? • Are they competitive? Does this message make you stand out? Does it present a better alternative than doing nothing? Properly used messages have many functions. They inspire media stories and creative marketing tactics, they inform the way salespeople engage with customers, they frame the discussions with interview candidates and they give the executive team confidence in front of the camera. They are worth taking time over and worth getting right. Poorly executed messaging will damage your business or organisational reputation and let the competition get ahead of you. Here is a simple exercise for the next time you and your colleagues feel the need to discuss your message. Try making an elevator pitch, or encapsulating your message in the 60 seconds it might take for a lift to ride from the ground floor to the chief executive’s office. You will find you each have a different take on what that pitch should be but it is a useful exercise to reveal the many different ways people talk about the same thing. If you have too many differences you may need to think again. There is an apocryphal story that does the rounds whenever someone talks about elevator pitches. It is said, and I have no idea how true this is, that Sir Richard Branson was once asked to take part in an exercise where people tried out their elevator pitches. One after another, worried executives stepped up and tried to deliver their business message in less than 30 seconds. Finally, as the story goes, Sir Richard stepped into the elevator. As the doors closed, he turned to the trainer, smiled and said: “I’m Richard Branson and this is my company.” As messages go, that is pretty compelling. APRIL 2010
65
BEHIND THE WHEEL
QATARâ&#x20AC;&#x2122;S nEED FOR SPEED Qatar has had a long history of rallying at the highest levels - more than 35 years - albeit not a widely published sport; sometimes it could be watched on the open ground opposite Toyota Tower. Given the love of speed and off-road driving here, this is hardly surprising and this was no doubt the start of the passion that Qatar has found for motorsport. With this in mind, Tim Stevens went to interview the president of Qatar Motor and Motorcycle Federation (QMMF) Nasser Khalifa Al Atiya.
BEHIND THE WHEEL
W
hat is QMMF about? In May 2003, the Qatar government started the federation to promote, govern and run car-racing events, and to also integrate the sport of motorbike racing to Qatar. QMMF’s tenure commenced with the ambitious project to build a racetrack in the desert to host the MotoGP World Championship and the world championship event for the Blue Riband motorcycle class. This was achieved with the stone laying ceremony in December 2003, and on July 9, 2004 when Losail International Circuit (LIC) had its inaugural event – 13 months after construction commenced. This event took the shape of the local motorcycle fraternity being allowed to complete three laps of what was to become the start of a glorious path to international recognition. Later that year, in October, the inaugural MotoGP was held at LIC, more importantly it was the first MotoGP championship to be held in the Middle East. This went from strength-to-strength – QMMF and LIC won the right to hold the first round of the MotoGP and the second round of the World Superbikes each year – winning numerous awards and being the track of choice for many teams testing. There is now growing interest for the National Championship event, which consists of seven rounds per season and comprises the superbike class (1000cc). Three years ago, LIC hosted the final round of the World Endurance Championship, making LIC the only track in the world to host three major, international road racing events. Additionally, QMMF embarked on the next ambitious ‘first’; to run the first MotoGP at night. This ambition was achieved during the 2008 round of the MotoGP event, which required an illumination girth equivalent to 70 football fields. Car racing began to feature at LIC from 2006, when QMMF hosted the GP Masters – a series of races that featured past GP drivers such as Nigel Mansell. Following this, the culture of road racing was born in the state. LIC has hosted several championships including GP2 Asia, Speedcar
and single-seater racing. There is now a National Saloon car racing championship event run across seven rounds, with two classes, open and production. Prior to this, car racing was held in the form of sprint racing and of course, rallying. QMMF hosted a Qatar Championship for rallying and many international events, and it still continues to do so. The current champion of the FIA Middle East Rally Championship is Qatar’s own Nasser Al Attiyah, there are numerous other top-level rally drivers that hail from Qatar, which includes the team that took third place in the 2007 Tran Siberia Rally. QMMF set out to foster a culture of motor racing in Qatar and to unify the racing scene, a task in which it has been holistically successful in achieving. QMMF is now able to boast about running the MotoGP, World Superbikes, World Endurance, a national race series, motocross, quad racing, quad drag racing and involvement in various other series. QMMF has now turned its attention to developing local talent in the form of a go-kart and motorcycle racing academy for teenagers. This initiative follows the hugely successful Losail International Cup, now defunct, a series to discover and nurture local talent, and from which the current Qatari motorcycle racing aces found their place on the track. The two most notable being Tilal Al Naimi, who competed in the first round of the World Superbike Championship held in Qatar and his brother Mishal Al Naimi, now competing in the new class in the MotoGP championship, Moto2. During the past few years, Qatari riders have been competing in various European championships and two Qatari teams have competed in the World Endurance Championships for the last two years, having won both years. The future for Qatari riders is bright. A large part of QMMF’s role is safety, its mantra being to take “it” off the road and onto the track. This is being backed-up with more than words; QMMF gives regular access to LIC for both cars and motorcycles on both open track days or full blown racing. There are many, less intense
- (L-R) Britain’s James Toseland, Italy’s Marco Melandri and Andrea Dovizioso race during the 2009 MotoGP free practice at Losail International Circuit. -
APRIL 2010
67
BEHIND THE WHEEL
- The sun as it sets over the track at Losail Circuit before practice for the Motorcycle Grand Prix of Qatar. -
racing series also held, such as sprint racing. Rallying is still a major force in Qatar and a track school for cars and bikes, go-karting, motocross and supermoto is planned for the future. QMMF admits to having its work cut-out to get the speed off the streets and onto the organised track events, but with what has been achieved in the seven short years of QMMF’s existence, one has to believe that success is a given. QMMF is starting a major safety campaign in conjunction with many of the local education bodies and government departments. So when will this end? Well, not just yet; QMMF have found a compromise with the Fédération Internationale de l’Automobile (FIA) and Fédération Internationale de Motocyclisme (FIM), which allows LIC to be the first track to hold the highest licence in both organisations – it will allow the hosting of motorcycle and car racing events from the highest level downwards. For the moment, the track will be open for Formula One (F1) teams to test at LIC, which will give QMMF the experience needed for when it gets the phone call from FIM to run a round of F1. Of course, having this licence opens the door to many FIM run championships 68
APRIL 2010
and other sporting organisations, for example, touring cars, endurance racing and single-seaters to name a few. LIC has already hosted a test run by the Williams F1 team and the feedback was very positive. The tracks in Bahrain and Abu Dhabi would like to explore the hosting of motorcycle events, so the experience gained from this side of the motorsport in Qatar is being shared. On a smaller scale, literally, QMMF is planning a worldclass go-kart track to host a world championship class event. This will benefit all the budding car racers here. As a badge for Qatar, QMMF and LIC are doing a sterling job of promoting the brand. Outside of QMMF is the Qatar Racing Club, a newly formed organisation focusing on drag racing in the Gulf. The track has been in existence for several years, but has only recently been in a position to host the racing. Teams come from all over the Gulf to compete in what can only be described as a noisy exhibition of pure speed; the top cars achieve quarter mile times of zero to more than 200 miles per hour in a matter of seconds. This sport has set its foundations and is here to stay in Qatar.
INDUSTRY FOCUS – GREEN SOLUTIONS
SWITCH ON TO SWITCH OFF Sustainability has become an all too familiar buzzword in the Middle East in recent years, especially so in Qatar. According to the 2006 Human Development Report, Qatar ranked 60th globally for its total annual carbon emissions (CO2). However, when calculated per capita, Qatar comes in at the very top of the list. It is therefore no surprise that green technology and efficiency are gaining momentum in the Gulf. However, to really make a difference, efforts need to be made ‘per-capita’. David Poort attended the MEED conference on Building Sustainable Communities in Qatar last month to find out how individuals and businesses can make changes in the workplace to lower their carbon footprint.
G
ulf Cooperation Council (GCC) countries are heavily competing against each other to showcase their sustainability ideas, conferences and projects. The United Arab Emirates (UAE), which ranks 2nd per-capita for CO2 emissions, is in the final stages of completing its zero-emission city, Masdar. Abu Dhabi won a competition against countries, including Japan and Germany, to house the headquarters of International Renewable Energy Agency (IRENA). Abu Dhabi also hosts its own annual World Future Energy Summit, which showcases the latest in sustainable energy alternatives. The King Abdullah University of Science and Technology (KAUST) in Saudi Arabia offers energy efficiency majors –
managed by oil giant Aramco and partnered by Stanford University – employing 3rd generation sustainable technology. The Saudi government also sponsors a host of initiatives to install solar panels on rooftops in cities throughout the country. Oman, ranked in the top 15 for CO2 emissions, will complete its Sohar University project in 2011. The building design is set to meet the latest international standards of sustainability and energy efficiency. Sultan Qaboos recently emphasised the importance of exploring renewable energy sources during his opening speech at the Renewable Energy Development in Oman Forum ‘09. Oman is currently studying the feasibility of developing a large-scale solar power project in the country, with six pilot projects already under review.
INDUSTRY FOCUS – GREEN SOLUTIONS
Meanwhile, Qatar is developing its own sustainable city project: Energy City, which aims to be the largest energy hub in the region. The project will feature green buildings and solar energy systems built throughout the city. The Qatar Science and Technology Park (QSTP) is eyeing partnerships with Chevron, Cornell, ConocoPhillips, Texas A&M University and many other world-recognised companies to develop sustainable-energy initiatives in the country. Another example is the strategy for district cooling, as exercised by Qatar Cool, where electricity infrastructure is reduced and emissions are strictly controlled thus reducing their overall carbon footprint.
“By exporting all that gas, Qatar will reduce the global emissions of countries like India and China, which will switch from coal to LNG. So Qatar has been really involved in cleaner fossil fuels for a while, and all these new clean tech initiatives are a natural extension of that.” However, Al Kuwari acknowledges there is still much to be done before Qatar will see its carbon-footprint ranking drop. “We had to go through great lengths to find a printing house in Doha that was willing to use 100 percent recycled paper to print our business cards. I think that is indicative of the long road that is ahead of us,” he says.
SHORTAGE OF POWER
The road is not only long for Qatar. World leaders could not seem to reach an agreement on how to tackle global warming during the Global Climate Summit that took place last December in Copenhagen. As is the case with many world conferences, no agreement was reached among the world’s key players. It may seem as though individual impact is insignificant when compared to the impact of nations and industries like China and the United States (US), however, recent research conducted by Damon Matthews, a professor at the University of Concordia, shows a simple linear relationship between a person’s total individual emissions and temperature change. However small the emissions are, they do have an impact as proven by the study Matthews conducted. It is not easy on a day-to-day basis to weigh the impact of your daily energy usage on overall climate change. You would not think that leaving a lightbulb on would be of much harm, nor would taking the elevator to the office instead of the stairs. But, a simple yet effective tool – found at http://www.carbonify.com/ carbon-calculator.htm – can change your mind by calculating your total estimated CO2 emissions and converting that into number of trees needed to fuel your daily activities. By applying it to myself, 12 trees need to be cut monthly to provide for the energy I consume (hopefully not from my backyard).
These (above mentioned) initiatives have only kicked off within the past three years, which is indicative of the massive momentum behind the ‘green industry’ in the Gulf region. At the MEED conference, major developers, contractors, architects and engineers came together to discuss the key issues arising from sustainable development. One of the major players in this field is GreenGulf, a renewable energy business based in Doha. GreenGulf focuses on development and management of large-scale renewable energy assets in Europe, the Middle East and Asia. Omran Hamad Al Kuwari, CEO of GreenGulf prints his business cards on recycled paper, but does not describe himself as an environmentalist. He still eats meat and drives a six cylinder BMW.
“We had to go through great lengths to find a printing house in Doha that was willing to use 100 percent recycled paper to print our business cards.” - Omran Hamad Al Kuwari
“I don’t want to be one of those people who only promotes green technology, because as we all know, it does cost more,” says Al Kuwari “There will be a huge demand for energy in the region in the next 20 years. The Middle East and North Africa (MENA) region is forecasting more growth in its gross domestic product (GDP) and in its energy demand than any other area in the world. So, despite the availability of oil and gas, there will still be a shortage of power. Of course renewable energy can play a role here, but before that, we need to take a good look at energy efficiency.” Qatar will export almost 80 million tonnes of liquid natural gas (LNG) within the next few years, but despite this it will still have a positive effect on the world environment, according to Al Kuwari. 70
APRIL 2010
THE STAGGERING FACTS
WHAT YOU CAN DO
According to Time magazine: “Heating, cooling and powering office space are responsible for almost 40 percent of carbon dioxide emissions in the US and gobble more than 70 percent of total electricity usage. Computers in the office burn US$1 billion (QR 3.6 billion) worth of electricity annually – and that’s when they’re not producing a lick of work.” Adjusting the thermostat by three or four degrees Celsius, a temperature change that is barely noticeable, will reduce your energy consumption by 10 percent. According to the Portland Office of Sustainable Development, every computer left on after work hours is responsible for power plants emitting one tonne of CO2 per year. This could be reduced by 80 percent if people switched off computer monitors when they are not at their desk, and completely switched off their computer before leaving the office for the day. Furthermore, statistics show that a tonne of 100 percent recycled paper saves the equivalent of 4100 kilowatts (kWh) of energy, 7000 gallons of water, 60 pounds of air emissions, and three cubic yards of landfill space. However, the key is
INDUSTRY FOCUS – GREEN SOLUTIONS
not only in recycling your office paper waste or purchasing recycled paper, but also in reducing its consumption. Make sure you only print when necessary, and use both sides of the paper when doing so. According to a study by the US Department of Energy, lighting accounts for 29 percent of the energy consumption in a typical office. By switching from regular bulbs to fluorescent ones, there can be a 20 percent saving on energy consumption. The annual energy consumption of a standard light bulb that is switched on for eight-hours a day (or night) comes at the expense of five trees a year per light bulb. The question arises of whether the aesthetic value of the nighttime illumination of the high-rise office buildings across the West Bay in Doha outweighs the environmental costs associated with it.
ENERGY MANAGEMENT
Energy-management companies are budding in the Gulf to advise contractors and developers on best practice when it comes to energy efficiency and renewable energy sources. GreenGulf’s Al Kuwari had his input on this matter: “Qatar has a lot of rooftops that are not being utilised for solar panels. The reason why it hasn’t taken off yet is because until recently, the costs were just too high and the industry hadn’t caught up yet,” he states. “However, you can now see that efficiency is improving every year by a couple percent. Slowly people are realising the potential benefits of renewable energy.” There are a lot of sunlight hours in Qatar, but this advantage also comes with great challenges. Most technologies that exist today underperform in extreme conditions such as heat. Dust, a major issue in the Gulf-region, requires you to clean
the solar panels and for that you need water, which in Qatar is also a major problem because it is very expensive. So it is not a no-brainer. When you overlay the costs of solar power in the region, you quickly understand why it has not taken off yet. Another energy-management company that was present at the conference was Schneider Electric. Dusan Janjic, activity senior manager BAS for Schneider, explained that the company functions by carrying out energy audits, which assists developers in indentifying key energy issues, so they can improve their design and its implementation. “Firstly we discuss with our clients the actual products that go into the buildings. We give various energy-efficient options in terms of devices, their installation and their management. We also install meters that measure electrical usage across different areas of the buildings and integrate them into an automated system that takes action based on usage and historical data that is accumulated from the meter readings. It is a self-adapting and learning system that adjusts itself according to the collected data.” According to Schneider Electric, companies can save up to 15 percent in annual energy costs by adopting the appropriate technologies. Seventy percent of a building’s energy costs is associated with running and operating it, as opposed to just 30 percent, which is associated with building it. It is sometimes difficult to take the operating expenses into account early enough in the design process to ensure energy-efficiency in the operating stage. A building is not just green by the way it is constructed and commissioned, but also by how it is operated. “We would ideally want to be involved directly with endusers and customers at the initial design stage to make sure the later-stage operating costs are reduced to a minimum”, says Janjic.
‘HOT AIR’ CONTINUES TO BLOW
Qatar is on the right track with its ambition to reduce its carbon footprint and with the numerous initiatives it is employing. However, the fact remains that it remains ranked as one of the highest CO2 emitters in the world. It will continue to be high on the scale if individuals, businesses and the government alike do not take the necessary steps to drastically reduce energy consumption from a grass roots level. Conferences and showpiece projects are not enough. Environmental awareness and concrete country-scale initiatives need to be put into place to ensure a sustainable future for Qatar and the wider region. APRIL 2010
71
how-to guide
how-to guide
DON’T LET FACEBOOK DESTROY YOUR BRAND
By Karen Leland
Kristen Ruby, president of Ruby Media Group, was taking her client, the head of sales and marketing for a New York-based landscape company, on a tour of its recently created Facebook fan page. While showing the executive various employees, who were becoming fans of the Facebook page, Ruby landed on the headshot of an employee smoking what looked like an illicit substance. The executive was startled and embarrassed, but Ruby, a consultant, who helps companies use social media to market themselves, was not all that surprised. “This is a perfect example of what happens when employees use Facebook without understanding how public it really is, or realising the consequences of their actions in social media,” says Ruby. “That picture was potentially being seen by all the customers, who checked out the company Facebook. If you are going to join your company’s fan page, the professionalism of your headshot counts, since you are associating yourself with your company’s brand.”
74
APRIL 2010
Small businesses and their employees are embracing social media sites, such as Facebook, at record speeds. This requires every company to consider how to protect themselves from the perils of public posts gone bad. According to the most recent survey from FaceTime Communications, which advises companies on security and compliance issues across social media platforms, 95 percent of employees use social media on the job (up 14 percent from the 2008 survey), with 79 percent using social media for business and 81 percent for personal reasons. Among the top social media sites, Facebook is used at work by 36 percent of employees and at home by 93 percent. And while personal use of Facebook may be most common, small businesses have made their own missteps when it comes to corporate Facebook fan pages. Ruby recounts one client, a retailer in New York that set up a Facebook fan page and then did not look at it for several months. As it turned out, a customer had written something negative about the company on the fan page and then
how-to guide
other customers had started weighing-in – in agreement. “By the time the company got around to looking at its fan page, the damage was done and they needed to go in and clean up the mess,” says Ruby. The moral of the story? A Facebook fan page has to be regularly monitored, and the company needs to interact with the comments customers leave on it. Dianna Sheppard, president of Advantec, a human resources services firm, cautions that small business owners need to think of any Facebook activity, in-house or employee-owned, as an extension of their brand. “As with all things involving your brand, you need to control it,” says Sheppard. “Facebook can be even more damaging than negative traditional press, because it can go viral with record speed.” In fact, all it takes is one employee with a video camera and an “it seemed funny at the time” idea. Sheppard tells of one employee at an upscale restaurant located in southwest Florida, who videotaped a prank (involving cooked animal parts) played on the restaurant’s chef. The employee then posted the video on YouTube and pointed to it from his Facebook page. Unfortunately, the name of the restaurant was clearly visible in the video and the video went viral almost immediately. “Within a week, everyone in the city was talking about it. Customers would come into the restaurant and ask if the chef, involved in the prank, was working that night,” Sheppard informs. As a result, Sheppard’s company was called in to rewrite the employee handbook and the employment agreements to reflect the new rules necessary in a wired world. “We basically had to create a policy that employees were not allowed to put the company’s image or name into any public media, including their private social media sites such as Facebook,” says Sheppard. Ruby and Sheppard both agree that, in the end, promoting, maintaining, and protecting a company’s brand are the bottom line, and the best way to do that is by crafting a clear and concise social media policy. Renee Brown, chief executive officer of C.W. Brown, a
construction management services company in New York, says that as her company started to grow, it became apparent that it needed to embrace social media and create a policy to manage it. “Originally, we blocked Facebook from our office,” says Brown. “But as a part of our goal to achieve LEED (Leadership in Energy and Environmental Design) green certification and to attract a younger generation of employees, we needed to utilise social media.” Brown says in order to ensure that Facebook was a useful tool and not a problematic distraction; she worked with an outside consultant to create a very specific social media policy and trained all staff in the best practices for how to use it. Some highlights from the policy that may be helpful are below. • While employees can reply to comments left on Facebook, anything they officially want to post about the company on Facebook or other social media must go through marketing first, • Encourage employees to become a fan of the Facebook fan page, • Encourage people to post construction topics related to industry and green best practices, • Verify the information they post is accurate because it is representing the company – this includes comments on the Facebook fan page, • Keep personal and corporate separate, • Stick with a 30-minute time limit at work for Facebook or any other social media sites. So far, Brown says the policy is working: “We are still pretty new at this and still evaluating it,” she says. “We want to be open to all of it, but the jury is still out on what the benefits are for us overall.” One thing the jury is not out on is that social media is here to stay. Every small business will eventually find itself in the position of having to integrate a tool such as Facebook into its marketing mix. Whether they turn out to be a boon or a bust largely depends on how well the medium is managed and what content a business ultimately allows, and does not allow to be posted. But in any case, for everyone’s sake, post a headshot that shows your professional, rather than your recreational, side. APRIL 2010
75
TECH TOOLS
April spells an awakening from post-holiday blues and the search for the best office performers on the market. This month, TheEDGE picks some of the must have ‘tech essentials’. It’s here! (in the US, that is…) The pictures published after the launch of the iPad in San Francisco late January, made Steve Jobs look like a midget holding an iPhone. As it turned out, it was not Jobs who got smaller, but the device that got bigger. Still, Apple insists the iPad is in no way similar to the iPhone, (if for nothing else, it is not a phone). This month the iPad will become available in stores, albeit only in the United States (US) for now. True Mac-maniacs will receive their pre-ordered iPad through home delivery on April 3. According to Apple it is “hands down, the best way to experience the web, email, photos and videos”. It features a 9.7-inch touch-screen and several new built-in applications, all of which were designed from the ground-up to take advantage of the large screen and advanced capabilities of the iPad, and to make sure they work in any orientation. So you can do things with these apps that you cannot do on any other device. The iPad will become available in two versions: with or without 3G-connectivity. Both models will offer the choice of a 16GB, 32GB or 64GB hard-drive. The cheapest iPad model comes at US$499 (QR1820), while the most expensive model, the 64GB iPad with 3G will set you back US$829 (QR3020). It is not yet clear when the iPad will become available in the Middle East. www.apple.com/ipad
76
APRIL 2010
TECH TOOLS
Gadget-charging grand slam Every portable electronic device has its own power charger. We have all spent considerable time untangling the wires of the many devices, which we now consider to be daily necessities. Idapt is the only solution to this problem using a cordless system of interchangeable tips that allows you to charge several electronic devices simultaneously. The tips can be changed with a push of a button and replaced to charge different types of devices. The i4 is the latest in a long line of chargers from Idapt and it allows you to charge up to four gadgets at once (up from the three with the i3 and two with the i2). The i4 will charge just about anything, from iPods, Blackberrys and PSPs, to GPS systems, digital cameras, and Bluetooth products. It also features a USB port. It comes in shiny black or white and can be purchased for US$60 (QR220). www.idaptweb.com
PACKED WITH PUCH Sony’s latest VAIO laptop blends extreme power, with a stylish portable design making it suitable for business, games and multimedia alike. Very few laptops are able to combine power, portability and usability but the Sony VAIO VPCZ11Z9E does this with ease. The latest version of the laptop is an absolute powerhouse and boasts not only Intel’s Core i7-620M processor, but also 6GB of DDR3 RAM (the latest, fastest and most resource-light memory technology). With 1GB of dedicated video memory, it is more powerful than the Apple MacBook Pro. All this power means you can effortlessly run any application you want – from word-processing software right through to editing suites, multimedia applications and gaming titles for those, who use their laptops for work and play. The laptop is priced at US$2200 (QR8010). www.sony-mea.com/productcategory/it-personal-computer
GOOD THINGS DO COME IN SMALL PACKAGES HTC MAX Evo 4G is a smartphone created to take full advantage of the broad multimedia and telephony services that network operators can offer. With this new design you are truly ready to enjoy multimedia on the road. The ultrafast WiMAX technology lets you surf the web and download beyond broadband speeds, while the GSM capability gives you the reliability of staying connected wherever you may be. It features 8GB of onboard memory and a pixel-packed 3.8-inch WVGA screen. HTC’s Evo 4G is probably the best Android phone out there. Its combination of speed, size, and power mean that everyone else is officially playing catch-up. The Evo will not be available until summer at the earliest and the price has not yet been announced. www.htc.com APRIL 2010
77
LIFE & STYLE – TOOLS
This month TheEDGE takes a look at the most sought after products to hit the market, helping you make the most of your time abroad while staying in touch with home.
PHARAOH HIDEOUT If you are looking for a great spring holiday escape, look no further than Alexandria in Egypt. The Arab Ministerial Council of Tourism has selected Alexandria as the Capital of Arab Tourism for the year 2010. The council aims to encourage Inter-Arab Tourism along with highlighting the customs and traditions of the city. Alexandria has a rich history and has many unique cultural sites, including Pompey’s Pillar, the Catacombs of Kom Al Shoqqafa, the Fort of Qaitbay and the Royal Jewelry Museum. Alexandria is also famous for many religious sites, such as El-Mursi Abul Abbas Mosque, and Saint Mark’s Church. The city is distinguished by its mild climate both in the summer and winter. So when the Qatari desert heat is getting too much to bare, visit one of Alexandria’s great hideouts along its Mediterranean shores. Qatar Airways offers direct flights to Alexandria. Tickets in April or May start at QR2070. www.egypt.travel
3D comes home Sony electronics recently announced its first three-dimensional (3D)-capable AV receiver. The STR-DN1010 allows for a full high-definition 3D signal to be passed from a 3D Bluray player through the receiver into a 3D-capable high definition television (HDTV). The device boasts four HD multimedia interfaces (HDMI), which can upscale standard-definition video to HD video, thereby almost doubling the resolution. The STR-DN1010 comes with a built-in digital media port input for hooking up iPods and other devices. The receiver can also be upgraded to include Sony’s S-AIR wireless technology which can support audio in up to 10 additional rooms. The STR-DN1010 retails at US$500 (QR1819) and will be available in the market in June. www.sony-mea.com
78
APRIL 2010
LIFE & STYLE – TOOLS
Soaking-Up the Sun For those of you who enjoy long chats while lazing on the beach, Novothink has just the gadget for you. With the combination of Solar Surge and Qatar’s blazing summer sun, you can now charge your iPhone battery while you tan. Solar Surge provides you with 30 to 60 minutes of talk time for every two-hours of exposure to the sun. It functions via an external case that encloses a solar-powered battery. All you need to do is surround your iPhone with the case and ‘let the sun shine in’. Novothink has also come up with an iPhone application that helps you calculate the charging time needed for various tasks, such as listening to music or watching video. By entering the weather condition and the time you intend to spend on the each of the tasks, the application tells you how much solar-charging is needed. Solar Surge is only available through the company’s website at US$79.95 (QR291) and is compatible with iPhone 3G and 3GS. www.novothink.com
Bright, Bulky Beast Samsung’s new TL500 is possibly the best pointand-shoot in the market now. It could even be the deathblow to the recently launched Canon S90. The TL500 features a 1/1.7-inch CCD sensor and has a 24-millimetre Schneider f/1.8 lens, which makes for very wide angles and extremely fast shooting. Like many other digital cameras nowadays, the TL500 scales back on the megapixels (MP) for better low-light performance, packing 10 as opposed to the 14MP offered by Samsung’s recently announced CL80. The TL500 offers a variety of shooting modes including full manual control, and it has Samsung’s Smart Auto 2.0 and Dual Image Stabilisation tech for recognising surroundings and keeping them sharp in your photos. The TL500 also has a swiveling 3.0-inch AMOLED screen, so you will be able to see your shot no matter what position you find yourself in. The TL500 will be available in spring and will be priced at US$450 (QR1640). www.samsung.com APRIL 2010
79
LIFE & STYLE – SPORT
HANGING BY A THREAD Kite-surfing (or kite-boarding) is a relatively young sport that has taken Qatari water sports by storm since it was first introduced in the mid 1990s. This extreme-sport activity has witnessed rapid growth in the region where kite-boarders were quick to find various ‘kiting’ locations along the shores of Doha and elsewhere on the peninsula. Despite their growing number, local kite-surfing enthusiasts are still struggling for the recognition of their sport by the Qatari government. Kite-surfing is not a licensed activity in Qatar, which means kite-surfers are regularly asked to move from their favourite kiting spots. Nonetheless, kite-surfers still manage to enjoy some pretty good sites along the Qatari shores. For beginners it is best to start in Zikreet, a large shallow bay on the west coast of Qatar. QATARkiteboarding is an outdoor-sports company based in Al Wakrah, a 15-minute car ride south of Doha. It offers kite-surfing lessons to enthusiasts of varying levels along the shores of Zikreet and in Al Wakrah itself. QATARkiteboarding is also the main distributor of kitesurfing equipment in Qatar. A typical beginner’s lesson starts off on dry land and consists of some theoretical information about the wind and weather, safety awareness and technical details about the equipment. The next step is learning to control the kite, while standing onshore. Soon after this is mastered, it is time to hit the water and learn how to stand on the board. The sea bottom at Zikreet is a bit rough in some places, so some kind of footwear is recommended.
80
APRIL 2010
Most beginners manage to stand on the board after two or three sessions with an instructor, and many manage their first jump during the first week of practice. Even though kite-surfing is easier to learn than windsurfing or regular surfing, it must still be regarded as an extreme sport with its share of danger. Therefore, good training is a must. You need a fair bit of wind to get you airborne from the water, so the best time to kite-board would be in the winter months when the winds can reach up to 25 knots. That is when professionals get to show-off their most spectacular leaps and jumps as the wind propels them high above the sea. However, kite-surfing does come at a hefty price. A week-long beginner’s course will set you back QR3000 (US$820), paid in cash up front. There are also advanced courses on offer, some of which focus on developing existing skills, while others concentrate on specific technical areas of expertise. For more information: QATARkiteboarding in Al Wakrah +974 3474176 or +974 5900300 Or visit: http://www.wix.com/ovidiustaicu/ Qatarkiteboarding Directions to Zikreet beach: From Doha, head west toward Dukhan. A few kilometres before reaching Dukhan, turn right at the exit to Zikreet. Go straight until you see the shore on your left and look for the kites. The trip takes around an hour from Doha.
EVENTS LIFE && CONFERENCES STYLE – SPORT
3rd Annual Geospatial Intelligence Middle East 11 –14 April, Radisson SAS Hotel, Manama, Bahrain This unique forum will allow you to assess the latest geospatial intelligence technology developments providing global expertise on military implementation, national security applications and crisis response. Hear from experts from the United States, United Kingdom, Asia and Europe. The event will focus on enabling effective interoperability to integrate civilian and military geospatial intelligence capabilities. www.geospatialdefence.com
2nd Annual Urban Transportation Summit 18 – 21 April 2010, Marriott Hotel, Doha, Qatar The 2nd Annual Urban Transportation Summit is the ultimate place for regional and global transport experts. Building on from last year’s success in Abu Dhabi and owing to high industry demand, this year’s installment has been moved to Doha, giving you the opportunity to be privy to the city’s plans, exclusive discussions and announcements. Nearly every country in the Middle East has announced huge investment plans for transport infrastructure to stimulate the economy, leading to global experts flocking to the region to enter this lucrative market. www.urban-transportation.com
Project Qatar 27 – 30 April, Qatar International Exhibition Centre, Doha Project Qatar is a key industry event for construction technology, building materials, equipment and environmental technology in Qatar. Qatar is experiencing unprecedented growth in all economic sectors and this exhibition is an important networking event, which will bring together a range of industry movers and shakers. Delegates, including architects, builders, building merchants, building and housing institutes and associations, civil and consulting engineers and financiers are encouraged to attend. www.ifpqatar.com
17th Arabian Travel Market Exhibition 4 – 7 May, Dubai International Convention and Exhibition Centre, Dubai, UAE The Arabian Travel Market Exhibition is four days full of intensive meetings, seminars, press conferences and social networking opportunities. It is the industry’s leading travel and tourism exhibition dedicated to unlocking the business potential within the Middle East region, bringing together key market players from six continents. www.arabiantravelmarket.com
Tradetech Middle East 10 – 11 May, Park Hyatt Hotel, Dubai, UAE Tradetech Middle East claims to be the largest trading summit in the region. Bringing together international asset managers, brokers, exchanges and vendors, this conference will address the challenges of low liquidity levels, regulatory complexity and fragmented and difficult to access markets. It will also focus on innovation in trading and trading technology in Middle East equities and other growing asset classes. www.wbresearch.com/TradeTechmiddleeast
APRIL 2010
81
CONSTRUCTION & TENDERS
Qatar Projects Update Al Habtoor-Specon closes in on major Qatar job Turnkey mechanical, electrical and plumbing (MEP) contractor Al Habtoor-Specon is in the final stages of clinching a QR3 billion contract for a series of medium voltage and high voltage substations in Qatar. “The pre-qualifications and representations to the relevant ministry have been completed, and we are in line to obtain documents for the first tender,” Al Habtoor-Specon managing director Thrasos Thrasyvoulou said recently. This follows the signing of a memorandum of understanding to enter into a consortium with Vinci Energies of France “to participate in projects in Qatar,” said Thrasyvoulou. Al HabtoorSpecon’s ongoing work includes a AED540 million (QR535 million) contract for Sheikh Zayed University in Abu Dhabi, in a joint venture with Hastie, and a AED320 million (QR317 million) contract for Paris Sorbonne University, also in Abu Dhabi. Completion Al Khor to Al Ruwais Road delayed The development of the Al Khor to Al Ruwais Road, that was due for completion last month, will not be finished before the first quarter of 2011. Tekfen Construction, that was awarded the contract last October, did not say why the project was running late. 82
APRIL 2010
The Al Khor to Al Ruwais Road is part of Qatar’s Public Works Authority (Ashghal) route programme that involves upgrading and extending around 150 kilometre of highways. The overall project will link Doha to Zubarah (north Qatar) and will be undertaken in four phases; the Doha expressway to Duhail (Phase 1), Duhail to Al Khor (Phase 2), Al Khor to Al Ruwais (Phase 3) and Zubarah to Ushairage (Phase 4). The road will include a four-lane dual carriageway with service roads, 11 multilevel interchanges, five camel crossing tunnels, a protection fence, two truck weigh stations, an Infrastructure network and landscaping works. Total, Qatar pair up for African oil production French energy giant Total signed a partnership deal with Qatar to invest in joint projects to pump oil out of West Africa. Total chief executive Christophe de Margerie said it was a first for the firm to pair with a Middle East country to develop oil production in Africa. “We have decided to unite our strengths,” said Margerie after signing an agreement with Qatar’s Prime Minister Hamad bin Jassem bin Jabr Al Thani at an investment forum in Paris. Total’s chief did not provide details on the new investment, but said it concerned countries on the Atlantic coast where the oil firm is already implanted. Total has operations in most African oil-producing countries.
CONSTRUCTION & TENDERS
Qatari Diar acquires 50% stake in Seychelles luxury resort Qatari Diar Real Estate Investment Company announced it reached terms with Tsogo Sun Holdings, a South African entertainment and hospitality group, to acquire a 50 percent stake in the MAIA Luxury Resort and Spa in Mahé, Seychelles. The agreement was announced at a signing ceremony at the 5th Finance and Investment in Qatar Forum in Paris, held in the presence of Qatar’s Emir, Sheikh Hamad bin Jassem Al Thani. MAIA Luxury Resort and Spa, which opened in September 2006, is a member of Leading Small Hotels of the World and stretches 30 acres on the southwest coast of the island of Mahé. Ghanim bin Saad Al Saad, Qatari Diar’s managing director, commented on the acquisition: “We are honored to be partnering with the Tsogo Sun Holdings, one of Africa’s premiere hospitality groups, and to further our investment and commitment to the beautiful country of Seychelles. We look forward to expanding our commitment to the people of Seychelles and throughout Africa in the years to come.” Launched in 2004, Qatari Diar is wholly-owned by the Qatar Investment Authority and currently has more than 35 real estate development projects active in more than 20 countries around the world. Tsogo, incorporated in South Africa in 2002, is a hotel, gaming and entertainment company with operations throughout Africa, the Middle East and the Seychelles. Second phase of Rayyan Bridge completed The second phase of the Rayyan Bridge at Khalifa bin Hamad Interchange opened to traffic last month. The bridge that represents a major phase of the February 22 Street and Amir Street project, stretches from Massila Petrol Station towards Rayyan City (Bin Zaben Roundabout) with two lanes. All the work related to infrastructure on the bridge has been completed including pavements, streetlights, drainage, traffic lights and landscaping. The opening of the bridge is expected to ease traffic between Rayyan and the Hamad General Hospital and in surrounding areas. It will also facilitate completion of the third bridge connecting North Road, as much construction work has already been completed. This phase represents the third level of Rayyan Bridge project, which includes four levels, including the 800 metres Rayyan Underpass with three lanes, the two-lane dual Rayyan bridge stretching 800 metres towards New Rayyan and the two-lane freeway along 380 metres between February 22 Street towards Rayyan Street. APRILAPRIL 2010
83
construction & tenders
Railway
Industrial & special projects
Maintenance/Construction
Description: Design, construction and operation of internal rail network, as part of Education City development. Closing Date: September 10 Client: Qatar Foundation of Education, Science and Community Development Phone: +974 4927000 Fax: +974 4821716 Email: info@qf.org.qa Website: www.qf.org.qa Tender No. SPR2610-Q Bid Bond: QR2 billion Tender documents can be obtained from: Contracts Department, Corporate Division Qatar Petroleum, Royal Plaza, G Wing, Fourth Floor, Doha, Qatar.
Description: Development of Polysilicon plant with capacity to produce 3660 tonne per year and near perfect purity for solar panels. Located in Ras Laffan Industrial City. Closing Date: May 9 Client: Qatar Solar Technology Phone: +974 4540000 Fax: +974 4806117 Email: info@qf.org.qa Website: www.qf.org.qa Tender No. ZPR021-Q Bid Bond: QR500 million Tender documents can be obtained from: Contracts Department, Corporate Division Qatar Petroleum, Royal Plaza, G Wing, Fourth Floor, Doha, Qatar.
Description: Carrying out civil maintenance and construction works for Qatar Petroleum. This project is at Mesaieed, Berth No. 6 and Abu Hamour. Closing Date: April 18 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 4831125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No. GT10103100 Bid Bond: QR500,000 Tender documents can be obtained from: Contracts Department, Corporate Division Qatar Petroleum, Royal Plaza, G Wing, Fourth Floor, Doha, Qatar.
Power Generation & Distribution Description: Carrying out operation and maintenance of electrical equipment for a municipal affairs and agricultural authority. Closing Date: April 11 Client: Ministry of Municipal Affairs and Agriculture Phone: +974 433 7777 / 433 7414 Fax: +974 443 4727 / 433 9104 Email: qpr@mmaa.gov.qa Website: www.mmaa.gov.qa Tender No. 92/2009-2010 Bid Bond: QR26,000 Tender documents can be obtained from: Ministry of Municipal Affairs and Agriculture Doha, Qatar.
QATAR TENDERS
APRIL 2010
85
SECTION CONSTRUCTION & TENDERS
Industrial & Special Projects
Industrial & Special Projects
Industrial & special projects
Description: Provision of cementing, light spot acid equipment and services for Qatar Petroleum. Closing Date: April 18 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 4831125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No. GT10103200 Bid Bond: QR1,850,000 Tender documents can be obtained from: Contracts Department, Corporate Division Qatar Petroleum, Royal Plaza, G Wing, Fourth Floor, Doha, Qatar.
Description: Carrying out calibrate, overhaul and testing of breathing air system for Qatar Petroleum. Closing Date: April 19 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 4831125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No. GT10101200 Bid Bond: QR15,000 Tender documents can be obtained from: Contracts Department, Corporate Division Qatar Petroleum, Royal Plaza, G Wing, Fourth Floor, Doha, Qatar.
Description: Supply and replacement of carpets for a municipal affairs and agricultural authority. Closing Date: April 11 Client: Ministry of Municipal Affairs and Agriculture (Qatar) Phone: +974 433 7777 / 433 7414 Fax: +974 443 4727 / 433 9104 Email: qpr@mmaa.gov.qa Website: www.mmaa.gov.qa Tender No. 91/2009-2010 Bid Bond: QR12,000 Tender documents can be obtained from: Ministry of Municipal Affairs and Agriculture Doha, Qatar.
Agriculture & Irrigation
Industrial & special projects
Sewerage & Drainage
Description: Supply of irrigation materials for the Public Garden Section of a municipal affairs and agricultural authority. Closing Date: April 11 Client: Ministry of Municipal Affairs and Agriculture Phone: +974 433 7777 / 433 7414 Fax: +974 443 4727 / 433 9104 Email: qpr@mmaa.gov.qa Website: www.mmaa.gov.qa Tender No. 92/2009-2010 Bid Bond: QR26,000 Tender documents can be obtained from: Tender documents can be obtained from: Ministry of Municipal Affairs & Agriculture Doha, Qatar. Qatar Petroleum, Royal Plaza, G Wing, Fourth Floor, Doha, Qatar.
Description: Engineering, procurement and commissioning contract for the relocation of 11K feeder at Dukan desalination plan of Qatar Petroleum. Closing Date: August 10 Client: Qatar Petroleum Phone: +974 4402000 Fax: +974 4831125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No. ST10101100 Bid Bond: QR8000 Tender documents can be obtained from: Contracts Department, Corporate Division Qatar Petroleum, Royal Plaza, G Wing, Fourth Floor, Doha, Qatar.
Description: Provision of consultancy services of surface and ground water master plan for public works authority. This project is at Doha, Wakrah and Khor. Closing Date: May 9 Client: Public Works Authority Phone: +974 4950000 Fax: +974 4950999 Email: info@ashghal.com Website: www.ashghal.com Tender No. PWA/ITC?051/09-10 Bid Bond: QR150,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal).
QATAR TENDERS
86
APRIL 2010
Classifieds
Main Office : 4489944 Airport office 24/7 4622563 email : hertz@qatar.net.qa A Member of Almana group.
Services We Provide Daily, Weekly & Monthly Rental Long Term Leasing at Competitive Price Chauffeur Driven Vehicle Comprehensive Insurance along with PersonalAccident Bar (PAB) Well Maintained Small, Medium & Fleet Cars
INVITING CORPORATES AND INDIVIDUALS TO GRAB A GREAT DEAL ON HIRING & LEASING FROM A WIDE RANGE OF CARS
Worlds # 1 car rental company 4x4 & saloon cars Daily, weekly & Monthly Rentals 1-3 year Lease specialists
Tel.: +974 4325500 - 4356463 - 4356468 Fax: +974 4375753 Logic Building, Sword Signal, Doha - Qatar E-mail: info@gorac.com.qa Call Sales: Mr. Ajesh - (+974) 5041580 Mr. Rahul - (+974) 7133653
APRIL 2010
87
SUBSCRIPTION
SUBSCRIPTION FORM 2010 TheEDGE is Qatarâ&#x20AC;&#x2122;s new monthly business magazine. TheEDGE incorporates a mix of industry news and analysis, in depth features, special interviews with key business decision makers, economic insight and market activity reports, and tips for how you can improve your day-to-day business operations. TheEDGE will not be available on the news stands, but will be delivered straight to the door of the targeted business community. To ensure you keep up-to-date, with what is happening in Qatarâ&#x20AC;&#x2122;s business landscape, fill in the subscription form (below) to receive TheEDGE on a monthly basis. Subscription is FREE (in Qatar). Forms are to be addressed to the Subscriptions Department at: TheEDGE Subscriptions Department Firefly Communications 11th Floor, Jaidah Tower PO Box 11596 Doha, Qatar
Last Name : First Name: Address: Company: Designation: P.O.Box: Area Code: City: Country: Tel: E-mail: Date and Signature: 88
APRIL 2010