The Edge - May 2013 (Issue 44) by Firefly Communications

contents may2013 w w w.t h e e d ge. m e

cover story 58

Entrepreneurial organisations are recognised as job creators and in both Qatar’s National Vision 2030 and the National Development Strategy 2011-16, the nation is creating a path for diversification of the economy by supporting the ‘entrepreneurial ecosystem’, along with many other entities. But is it enough? The Edge’s Aparajita Mukherjee investigates. At an Enterprise Qatar Professional Series event, participants prepare feedback at the end of a training session. The series is designed to provide local SMEs with expert knowledge to assist them in the development of their businesses.

features Feature Story: Human Capital

As competition and demand for skilled workers increases among Gulf countries, how will Qatar fare in the regional battle for talent? asks Matthew Lewis.

Business Interview: Creating a Smart Qatar

The majority shareholder in the Orange Business Services joint venture in Qatar, Sheikh Fahad bin Ghanim Al Thani tells Shehan Mashood that the company’s ambitions of working on large-scale projects match those of the country.

Business Management: Pursuit of haplessness

The board of directors (BOD) has been a particular focal point for reform around the world. The London Business School’s Harry Korine, Marcus Alexander and Pierre-Yves Gomez believe that more, not less, leadership at board level could avert many future corporate crises.

Sheikh Fahad bin Ghanim Al Thani is at the head of the Orange Business Services joint venture in Qatar.

The Edge | 3

contents page

sectors Finance & Markets

Predicting the future of bonds markets is difficult as governments around the world are struggling with high debt levels, writes Dheeraj Shahdadpuri.

Energy & Sustainability 33

Qatar continues to focus on the Asian LNG market, but must not forget Europe, says Jamie Stewart.

Construction & Real Estate 37

Increasing rents and shortage of residential units are two key problems in Qatar, writes Farwa Zahra.

Tech. & Communications 43

Shaheen Haque explains why automating business processes within a company can create efficiency.

Business Insight 79

Justin Doo, the cloud and security practices director at Symantec, discusses what makes for strong IT security. Ananthakrishnan Prasad, IMF mission head Qatar explains the role central banks must play in inflation and Midhat Salha, partner Deloitte & Touche Middle East, talks about its recent CFO report.

84 Various high-profile attacks in the MENA region recently have heightened awareness of cyber security threats.

regulars From the Editor 08 Photo of the month 12 Business News 14 Qatar Impact 20 Country Focus 48 Products Page 90 10 Things 92 4 | The Edge

publications director mohamed jaidah m.jaidah@firefly-me.com managing editor miles masterson m.masterson@theedge-me.com senior business editor aparajita mukherjee a.mukherjee@theedge-me.com deputy editor farwa zahra f.zahra@theedge-me.com digital editor/editorial asst. shehan mashood s.mashood@theedge-me.com regional sales director julia toon j.toon@firefly-me.com | +974 66880228 head of business sales manu parmar m.parmar@theedge-me.com | +974 33325038 sales managers adam kynnersley a.kynnersley@theedge-me.com | +974 66079716 joseph issac j.issac@firefly-me.com | +974 33675301 distribution & subscriptions azqa haroon a.haroon@firefly-me.com | +974 55692471 creative director roula zinati ayoub design coordinator sarah jabari finaliser michael logaring photographer herbert villadelrey proofreader geoff instone printer ali bin ali printing press Doha, Qatar

firefly communications PO Box 11596, Doha , Qatar Tel: +974 44340360 / Fax: +974 44340359 www.firefly-me.com The Edge is printed monthly ÂŠ 2013 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 The Edge 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 The Edge. 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 Shutterstock and/or iStock Photo or Firefly Communications.

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editor’s letter As part of our editorial focus, The Edge magazine has committed to featuring and supporting various aspects of entrepreneurism and small businesses in Qatar regularly. This inclusion is mostly not premeditated, but takes place naturally as start-ups and small firms are an integral part of the domestic economy. Indeed, in many developed and emerging nations such as Qatar, small and medium businesses (SMEs) are recognised as important sources of growth and employment. Expansion in this area is of course also an aim of this country’s National Vision 2030, as it moves toward the ultimate goal of making the contribution of the non-hydrocarbon private sector to the economy outweigh that of the oil and gas sector. Yet besides our regular organic coverage of SMEs – in both the success stories and obstacles they face –The Edge has undertaken to publish at least one major feature a year dedicated to the subject. This is our annual snapshot of what is now commonly referred to as the ‘entrepreneurial ecosystem’, or in plainer terms, all of those involved in forming, running, augmenting and regulating SMEs in Qatar. In our first such offering, in March 2012, we looked at the status quo of the local ‘ecosystem’ as a whole, profiling and obtaining the perspective of a selection of prominent national and Doha-based expatriate entrepreneurs on their triumphs and challenges, as well as outlining all of the organisations involved. At the time, the concept of entrepreneurism was arguably enjoying an unprecedented high profile in Qatar, with many new entities entering the market intending to support SMEs,

institutions such as banks facilitating finance packages, and other assistance at a level unheard of previously. The impression The Edge received from the small business owners in early 2012 was one of enthusiasm and great potential, bound only by the limitations of the arduous and expensive company registration process (CR) and requirements, access to funding and a sentiment of limited general support. Indeed, with regard to the latter, one conclusion that The Edge drew from delving into this realm last year was that the perceived level of activity around SMEs in Qatar was to a degree overhyped. Though there were well-publicised and well-intentioned competitions and many initiatives for entrepreneurs, it was ostensibly not being translated into tangible results and successful start-ups, it seems, are not as widespread in the country as a casual observer of the SME scene here might be led to believe. To be fair, the entrepreneurial movement in Qatar is still in its infancy, and it might have been too early to judge. Which is partly why we focused this issue’s SME feature, compiled by senior business editor Aparajita Mukherjee on page 58, mostly on the entities supporting and nurturing Qatari SMEs. And this time we relied instead on feedback from a small selection of established Qatari entrepreneurs, to see if they feel enough is now being done to sustain SMEs in their country in the long term. Without giving away their answers, I can tell you that there is far more activity in this realm than there was when we featured it in The Edge just 14 months ago. The opinions of the entrepreneurs were also more pragmatic and varied more greatly on whether what is being done is effective, and how conditions for small businesses in Qatar could still be improved. But can an organised and well run start-up – with a good business idea and solid work ethic – grow into a strong corporation of tomorrow, something Qatar’s economy will increasingly require as it moves away from dependence on its depleting natural resources? That, it turns out, is a good question.

The opinions of the entrepreneurs we interviewed varied greatly on whether enough is being done to improve the conditions for small Miles Masterson businesses in Qatar. Managing Editor 8 | The Edge

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photo of the month

Earthquake Season

A man surveys his store after an earthquake in Saravan, about 1400 kilometres southeast of Tehran, Iran, last month. A powerful magnitude 7.8 on the Richter scale, the earthquake struck a border area of southeast Iran on Tuesday April 16, killing at least 35 people in neighbouring Pakistan, destroying hundreds of houses and tremors being felt as far away as India and Gulf Arab states, including Qatar, Bahrain and the United Arab Emirates. It was the second such devastating earthquake to hit Iran in less than a week, following a magnitude 6.1, the epicenter close to Bushehr, on Iran’s Gulf coast, which killed at least 37 people. The events prompted international calls for a safety review at Iran’s nearby nuclear reactor (which Iranians claimed is undamaged) and prompted authorities in Doha and other regional cities to review building codes, to include more provisions to withstand what seems like an increased global frequency in earthquakes – with tremors above 6.0 being recorded in Indonesia, Papua New Guinea, Russia and China during April 2013. (Image Reuters/Arabian Eye). The Edge | 13

news business

Qatari travel industry to reach QAR28 billion in 2014

Avsar Koc, Kempinski’s regional director of sales and marketing says that Qatar tourism is now seeing the payoff of its investment strategy.

Qatar’s travel market is expected to grow steadily from USD5.4 billion (QAR19.66 billion) in 2012 to USD7.7 billion (QAR28.03 billion) in 2014, signifying a healthy economy backed by the government’s focus on investing in tourism development, a new research released by Global Travel Market Research firm PhoCusWright has revealed. According to projections by PhoCusWright, the online travel market in Qatar will undergo a significant boost, rising from USD944 million (QAR3.44 billion) in 2012 to an estimated USD1.6 billion (QAR5.52 billion) in 2014, taking 9.9 percent of the Middle Eastern online market share. The Edge spoke to André Jacques, director of sales and marketing at St. Regis Doha on his take on the report and he said, “The outlook is very positive, but it is paramount that all stakeholders work together to ensure we are targeting the right sectors both from a regional and international standpoint to capture this demand.” Another representative of a hospitality player, Avsar Koc, Kempinski’s regional director of sales and marketing said, “Qatar has obviously invested a lot of resources into developing a world-class destination for business and leisure travellers, and we are now seeing the payoff. The growth of Qatar Airways, the presence of top hotel brands, and globally recognised museums, film festivals, and other cultural attractions reflect the strength of the destination. All of these elements have laid a good foundation for growth in Qatar’s travel industry. On what it means for his business, Farukh Sundar, general manager of Mannai Air Travel said, “The billing and sales plan for 2013 has shown a growth of 11 percent so far year-on-year, and if we are to take into consideration the expected surge in number of new workers coming to Qatar, we may grow by, say, 18 percent over last year; so we would end up at QAR4.5 billion to QAR5 billion.”

Draft law on health insurance provides growth opportunities in Qatar

Sheikh Faisal bin Qassim Al Thani, chairman Aamal Company’s Ebn Sina Pharmacy feels that in addition to the national health insurance programme, deregulation and free market competition will significantly aid the Qatar healthcare market.

Qatar’s state cabinet recently ratified a draft law on mandatory health insurance, one that has now been referred to the advisory council for 14 | The Edge

its recommendations. The country’s Social Health Insurance scheme, to be launched in phases, is expected to be fully implemented by the end of 2014. The draft law states that premiums for Qatari citizens will be paid by the government, and managed by a new company called National Company for Health Insurance. The law will also cover residents and visitors to the country under its scheme. With the implementation of mandatory health insurance at a national level, Qatar is likely to see a boost in demand for healthcare services in the country, according to Alpen Capital’s recent report. Sheikh Faisal bin Qassim Al Thani, chairman of Aamal Company Ebn Sina Pharmacy was quoted in the report by Alpen Capital on the GCC pharmaceutical industry saying, “The pharmaceutical sector in Qatar is poised for growth over the next few years in line with the growth trend in GCC, which is the wider market segment. The industry is also looking forward to the proposed national health insurance programme, as this is perceived to be a catalyst to growth of the pharma industry in Qatar.”

news business

Qatar to host first infrastructure library Doha will be the centre of Qatar’s first infrastructure library, a data centre that will serve as a global reference point for the country’s growing infrastructure industry. While some of the data projects will be publically available online, access to the others will require membership on the part of the organisations and individuals interested in Qatar’s infrastructure sector.

Mayor of London, Boris Johnson, speaking at the launch of the Institute for Infrastructure Studies in Doha, Qatar.

The content generated by this database will focus on public and freight transportation systems, ports, social infrastructure and stadiums. By analysing the infrastructure problems, particularly the ones emerging near completion, the research sudies will offer practical methodologies to avoid failures in the future. The database will include both in-house studies and commissioned research work. The news was unveiled at the launch of the Institute for Infrastructure

Qatar’s exports rise by 16 percent Number of the month

According to a recent report released by Qatar National Bank, Qatar has seen a 16 percent rise in its exports in 2012, bringing the total value to USD133 billion (QAR484 billion). Much of the increase came from a rise in the overall prices of liquefied natural gas (LNG), stated the report. With ongoing efforts to diversify its economy, Qatar also showed improvement in its non-oil exports. From QAR1.3 billion in 2010, the country now aims to quadruple its exports close to QAR3.8 billion by 2016, revealed Qatar Export Development Agency Tasdeer. Tasdeer aims to diversify Qatar’s economic portfolio. Stressing the importance of diversification for the hydrocarbondependent economy of Qatar, executive director of Tasdeer, Hassan Khalifa Al Mansoori said, “It is important for the Qatari exporters to be competitive in the global market.” Aiming to promote the non-oil exporters, a two-day workshop was hosted in Doha by Qatar Development Bank and the International Trade Centre. The event focused on marketing, branding, quality maintenance, packaging and supply chain management solutions for the exporters of Qatar.

The amount of non-oil exports Qatar aims to reach by 2016.

QR3.8 billion

“I see the extraordinary skyline [in Doha], and it wasn’t there 15 years ago.” – Boris Johnson, mayor of London.

Studies, a Doha-based think-tank founded by infrastructure project delivery firm British Consulting. Speaking in Doha in April about the rapid infrastructure developments carried out in Qatar, chief guest mayor of London Boris Johnson said, “I see the extraordinary skyline [in Qatar], and it wasn’t there 15 years ago.” Highlighting the importance of research corpus on infrastructure, he added, “Any organisation that can provide the insight and the know-how to reduce costs and help speed up the delivery of landmark projects has to be warmly welcomed.”

Calls for FIFA to rerun 2022 World Cup vote The International Trade Union Confederation (ITUC) has called on FIFA to rerun the vote for the Qatar 2022 World Cup. Speaking to The Edge, Sharan Burrow, general secretary, ITUC said, “There have been promises of reform to labour laws, including the Kafala sponsorship system for around five years now, but no real action has been taken.” At a recent conference held in Doha, Dario Cadavid, assurance and integration senior manager for the Qatar 2022 Supreme Committee announced a Workers Charter which all contractors and sub-contractors working on World Cup projects will have to abide by. Burrow said they were “deeply disappointed with the process and the content.” The provisions she noted were meaningless, without a fundamental reform of the sponsorship system. Cadavid however in his speech said, “All workers involved in projects directly or indirectly [to the World Cup] have the right to be treated in a manner that ensures their wellbeing and security.“ The Edge | 15

news

business in brief Words & Numbers

“If our two countries are communicating frankly...and pursuing common strategies, that can be a force for good in the region.”

US President Barack Obama, after his meeting with HH the Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, who visited the White House in April.

68%

The percentage of voters in The Edge online survey who thought bureaucratic red tape was the biggest challenge facing Qatar’s start-ups.

“Talk about buying and selling (Suez Canal) is ridiculous. It is a joke. There is no secret deal between Egypt and Qatar.” Egyptian president Mohammed Morsi in an interview with Al Jazeera.

8.4

QAR8.4 billion is the equity issuance raised by Middle Eastern companies from six issues during the first quarter of 2013, more than five times the amount raised during the same period in 2012.

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Aamal signs joint venture agreement with Germany’s largest hospital group Aamal Company announced recently that it has signed an agreement to create a joint venture with German company, Vivantes International Medicine to build an outpatient medical centre in Doha. The centre, will offer a clinic with doctors in different fields, a diagnosis centre and visiting professors from Germany to consult with patients in Qatar. His Excellency Sheikh Faisal bin Qassim Al Thani, chairman of Aamal Company said, “This contract is another successful agreement between the government of Berlin and Aamal Company, building on the already strong mutual business foundations that are in place. I look forward to us working together in the future.”

Vodafone Qatar announces new CEO appointment in June Kyle Whitehill will join Vodafone Qatar from Vodafone Ghana where he has been chief executive officer since 2010. Whitehill has worked for Vodafone Kyle Whitehill will transition in as Group since 2001 and the new CEO of Vodafone Qatar in has previously held a June 2013. variety of senior roles. Commenting on the appointment of Whitehill, HE Sheikh Abdulrahman bin Saud Al Thani chairman of Vodafone Qatar said, “I and the entire board of Vodafone Qatar are delighted to welcome Kyle and his family to Qatar. I am sure that Kyle’s deep experience in enterprise and fixed line services will ensure the continued success of Vodafone in Qatar.”

Jaidah Industrial Supply brings portfolio of ABB low voltage products to Qatar The Jaidah Group has announced an agreement that would make Jaidah Industrial Supply one of the authorised distributors of ABB Low Voltage products. “Thanks to this recent partnership with ABB, Jaidah Industrial Supply Division shall be able to cater to the ever-increasing demand for quality low voltage products in Qatar,” said Jaidah Group COO, Bengt Schultz. “We’re all excited about this development and are confident that this shall benefit all concerned parties, most importantly, the end consumer,” he added.

Reyada volunteer programme announces winners The Social Development Center (SDC) held a ceremony recently to announce the winners of its two most celebrated awards programmes – The awards were presented to the Reyada Award for the winners by Her Qatari Entrepreneur Highness Sheikha Al Mayassa and SDC’s Volunteer bint Hamad bin Awards. Commenting Khalifa Al Thani, chairperson of on the occasion, Amal Qatar Museums Authority (left). Al Mannai, executive director at SDC, said, “Today is an exceptional day for SDC. We are so honoured and excited to recognise some of the brightest entrepreneurs as well as highly committed and motivated volunteers in Qatar.”

St. Regis Doha celebrates its first anniversary Since its official opening, the hotel has welcomed thousands of guests, including government diplomats for international conferences, celebrities, business executives and professional athletes. This year the hotel was awarded the Gulf Connoisseur Best Luxury Hotel and Resort Middle East 2013. Omar Hussain Alfardan, president and CEO of Alfardan Group, said, “The St. Regis Doha has raised the bar in the region’s luxury hospitality domain. Looking ahead, I am confident that the management and staff of the hotel will be focused on taking The St. Regis Doha to new heights of excellence.”

Ooredoo appoints new chief new business officer Ooredoo has announced that it has promoted Sheikh Nasser bin Hamad bin Nasser Al Thani to chief new business officer. In his new Sheikh Nasser has role, Sheikh Nasser a Bachelor’s degree will be responsible in Business and Economics from for overseeing the Qatar University, and development of new after working in the government sector opportunities in the for five years, he completed an MBA corporate sector. He from the University of will also be responsible Wales in 2011. for customer satisfaction achievement across all sectors, including government and education, finance and energy, and public services.

events business Qatar, May 2013

event of the month 6-9

Project Qatar

Project Qatar will be back for its 10th edition in Qatar. The long name for this show is the International Trade Construction, Building, Environmental Technology and Materials Exhibition. The event attracts key buyers and industry leaders looking for the most up-to-date technology and state-of-the art equipment available in the market. Project Qatar’s 2012 edition surpassed all expectations, including its previous edition in 2011, thanks to an overwhelming response from both exhibitors and visitors. Within Project Qatar, there will be other exhibitions and events such as Energy Qatar and Stonetech Qatar that will focus on specific sectors within the construction industry. www.projectqatar.com

27-29 May Cityscape Qatar

Cityscape Qatar is geared to support the continued real estate growth in Qatar by providing a platform that will highlight high-growth investment opportunities, showcase innovative products and underline sustainable developments. Cityscape Qatar will bring together international, regional and local investors, architects, designers, real estate developers, governmental authorities and senior executives involved in the design and construction of public and private real estate developments from Qatar and internationally. www.cityscapeqatar.com

27-29 May

MEED Qatar Transport

MEED’s annual Qatar Transport conference has developed successfully over the years, bringing in companies in the transportation sector to provide project updates, make announcements and share developments made in Qatar’s rail network . The event will focus on local initiatives and major road programmes, highway projects, intermodal transport networks facilities and tunneling developments. www.qatartransportconference.com

Upcoming event 2-5 June

World Stadium Congress

upcoming event 4-6 June

CHRVI Qatar

The Cooling, Heating, Refrigeration, Ventilation and Isolation International Exhibition is a three-day event aimed at offering ways to achieve sustainable development in the construction sector. Exhibitors will include manufacturers, importers, wholesalers and distributors, advertising their products and services. www.htsxpo.com/chrvi.aspx/

18 | The Edge

After its 2012 edition, the World Stadium Congress returns to Qatar. It will focus on the development of world-class stadiums, as part of the massive preparation needed to deliver major global sporting events such as the FIFA World Cup 2022. Bringing together the industry experts, the event will feature development dimensions such as climate control, approaches to multipurpose utilisation and the use of sustainable materials. The World Stadium Congress is the fifth annual conference in the stadium design and development series. www.worldstadiumcongress.com

Qatar Impact

ARE THE BRITISH COMING? Of all the international relationships Qatar has, its bond with the United Kingdom is one of the most prominent. Kamahl Santamaria’s chat with a leading British businessman reveals more about how the relationship needs to evolve. atar Airways has many fans. I just did not expect Willie Walsh to be one of them. Walsh is the CEO of International Airlines Group, a company that incorporates the Spanish airline Iberia and Britain’s national carrier British Airways. In other words, the competition. And yet a recent interview I conducted with Walsh here in Doha revealed a man who does not reflect the European trend of enmity towards Qatar Airways and the other Middle Eastern carriers, Emirates and Etihad. “I welcome the work that the Middle East carriers are doing,” he said. “I think there’s been significant development, and I really admire what Akbar Al Baker has achieved here in Doha. The growth of aviation in Doha in 2001, 2.8 million people were through Doha International Airport. Last year it was 21 million people.” Those are the kind of statistics Walsh cannot argue with, so he does not. Plus he is apparently confident that British Airways can hold its own in the region, given it also flies to Doha, Abu Dhabi and Dubai, plus Bahrain. But when singling out Qatar Airways performance, Walsh says, “You don’t get that by accident. You get that because you have people who are determined, people who are ambitious, and people who want to develop aviation for the benefit of the economy in the long term. I’m all for it.” Qatar Airways flies to London Heathrow five times a day, plus flights to Manchester and soon (we are told) Birmingham. British Airways flies just once a day to Doha. That is almost a microcosm of the gap that exists between Qatari investment in the United Kingdom (UK) and vice versa. It is, right now, 20 | The Edge

a lopsided relationship which is something the likes of Walsh are trying to rectify. Qatar’s forays into London are big and headline-grabbing. Harrod’s, the Shard, Barclay’s Bank, Canary Wharf, and Sainsbury’s supermarket are just some of them. But aside from a collection of British high street stores occupying space in the malls of Doha, British participation here is not high. So Walsh, in his capacity as president of the London Chamber of Commerce, is trying to get more small-to-medium UK businesses to look seriously at Qatar as a business and export destination; to look past the Eurozone which currently holds eight out of Britain’s top 10 export markets. “Small businesses in the UK have been reluctant to look at exporting. We did some research last year which showed that only 35 percent of small businesses even considered export markets as an opportunity for them. We’re trying to give them the courage and the confidence to look at these growth markets,” says Walsh.

The biggest future opportunity is obviously the World Cup 2022, and not just because Britain is a football-loving nation. The country gained a lot of expertise in hosting the 2012 Olympic Games – the kind of expertise which could easily be transposed to Qatar, a country with no experience of any event on this scale. “You know you just can’t help but be in awe of what happened here in Doha. And we’re saying to businesses ‘come down here, look at the opportunity, get to meet people’. You know, you’re not going to get it overnight, but if you start establishing links, then who knows what is possible in the future.” Be it big things like organising a world cup, or everyday things like opening a supermarket, there is plenty the UK could offer to Doha and its large British expatriate population. It just needs to pick up the pace. Yes the European market will always be there, but almost certainly not with the strength it once had. So why not come here instead? At the very least, the weather’s just a bit warmer.

Kamahl Santamaria is a Doha-based news anchor with Al Jazeera English and host of the channel’s business and economics programme Counting the Cost.

Special advertiSement

Alfardan Properties strengthens focus on social networking and enhancing tenants’ experience

them through a range of interactive initiatives such as neighborhood community gatherings, informative newsletters, competitions, among others. Moreover, the customer service team of Alfardan Properties is available round-the-clock to cater to all tenant requirements, underlying the company’s customer-centric approach.

lfardan Properties sets a new benchmark of luxury in the real-estate industry in Qatar, as it focuses on exceeding the expectations of its high-end clientele by creating a social interactive atmosphere amongst them. In line with that, Alfardan Properties goes beyond fulfilling the tenants’ needs by taking a close look at the small details of their luxurious stay through the professional customer service team and creating a homely atmosphere with the seasonal events conducted throughout the year.

Over the years, Alfardan Properties consistently exceeded the satisfaction level of the tenants by ensuring comfort and well-being through their stay in all its properties and actively engaging with tenants and communicating with

Muhibullah Mani, COO, Alfardan Properties, said: “The various private social events being organized are part of annual activities under Alfardan Properties’ social initiatives that encourage interaction and create a sense of belonging among the tenants where they can meet their neighbors and the Alfardan Properties team. We strive to create a homely atmosphere for the tenants as we understand that they are away from their families and friends and seek to have a familiar social experience at times. We therefore constantly strive to provide the best and unique experience for all residents not only through the wide range of luxurious amenities and value-added services, but also through the warm and hospitable environment that we cultivate in our residential communities. We believe that this is a very important initiative that distinguishes Alfardan Properties as a truly innovative company; setting the bar for high-level standards in Qatar’s luxury real estate industry through focus on the customer-oriented experience.” Customers can communicate any requirement they have, whether feedback on the events or maintenance needs or any request, through the Alfardan Properties’ 24-hour customer service desk who take every

Special advertiSement

single customer service observation seriously and immediately push for the necessary satisfactory actions. Alfardan Properties has conducted a series of social activities for tenants, including the Easter Events which were held recently at Alfardan Gardens and Alfardan Towers. As part of its overall efforts to boost tenant relations and create a favorable social setting for the tenants, Alfardan Properties prepared special buffets in addition to games for children and a host of other funfilled activities for the tenants, during the event. The unique and customized newsletter “The Signature” also takes part in adding value to the luxury lifestyle, as it shares the moments of joy and happiness the tenants experience, not to mention the exciting photos, articles and tips it provides.

Established in 1990, Alfardan Properties has dominated Qatar’s premium and luxury property segment for the past 20 years. Recognized as a brand synonymous with luxury and excellence, Alfardan Properties is part of the continuously expanding Alfardan Group of Companies, Qatar’s most successful conglomerate over the past 50 years known for its unyielding commitment to provide the Qatari market with the finest products and services.

ContaCt details PO Box 26660 Tel. 44408308 Fax 44427623 Website www.alfardanproperties.com

This section is brought to you by Qatar Financial Centre Contents: Is bond investment still relevant amidst equity rally? 25 . QFC releases the first Asset Management Barometer 26 . Qatari banks profitability on a par with regional banks 27 . Asia to drive economic and business growth 28. Qatar invests additional finance into Egypt 28. Qatar: Major boost for chemicals production 30.

finance & markets

Sheikh Abdullah Saud Al Thani, governor of the Qatar Central Bank, announced plans to create a ratings agency, a first step towards establishing a debt capital market. (Image Reuters/Arabian Eye)

Is bond investment still relevant amidst equity rally? Is equity as an investment option over debt coming back to prominence? Or is it still debt that is a better option? Dheeraj Shahdadpuri asks these questions on the back of the fact that economic growth the world over is not set to improve anytime soon.

uring the peak of the financial crisis, equities were relatively a weaker investment option compared with bond investment which provided better risk-return tradeoff for many investors. This phenomenon, to some extent, still holds true as many experts believe that the investment in equities is overstretched and further scope of capital appreciation looks limited. But many market participants say the same for bond markets. In their view, bond

markets are nearing the bubble trajectory and equities should be favoured, given the underlying low valuations. But is this really the case for bonds going forward? There are many factors still in favour of bond investment. The first and foremost is the monetary policy of the central banks in advanced nations. Until interest rates remain at low levels, bonds will surely provide better returns in the fixed investments realm. The pledge to keep rates low by federal reserves until

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sectors | finance & markets

the unemployment rate reaches 6.5 percent in the United States will continue to support bond investments. Moreover, the economic growth rate the world over is unlikely to improve anytime soon. With growth remaining below the historical average, central banks will not be tempted to increase their benchmark interest rates anytime soon, which invariably supports the case for bond investments. Another major factor is inflation. Under a low inflation scenario, even the record low bond yields should be able to provide returns that beat inflation. Deficit financing of various governments is also one of the key factors that makes bond investment still an attractive bet. To bridge the gap between revenues and expenses, many advanced nations will continue to tap international bond markets for financing purposes. If we talk about equities versus bonds, what can favour the former is the belief that since benchmark bond yields are so low, it is impossible to replicate the returns that bonds have given in the recent past. As corporate earnings continue to improve, there is a high likelihood that dividend yields can become relatively attractive even if no major swing is witnessed in equities that determine the capital gains or losses. Moreover, when money moves out of bonds and chases equities, benchmark bonds will see their yield improving, but then this flight of money also exposes investors to capital loss, which experts advise to be cautious of.

Qatarâ&#x20AC;&#x2122;s steps to develop its debt capital market

Since the recent financial crisis, the Gulf region has realised that it should look at further developing the domestic debt capital market to broaden the scope of its finance industry. Historically, companies in the region have relied on banks to finance their capital needs. But the financial crisis changed the dynamics of the banking industry, which is now operating under

more stringent controls. For the Gulf region, a sound debt capital market will certainly uplift transparency as corporate governance will demand more disclosures from the issuers. A developed debt market will also go a long way in improving financial efficiency in the region and will enhance the monetary policy operations of the central banks. To get started, regional governments will be required to establish the benchmark yield curve for the private issuers. Although it takes several years to establish an efficient debt capital market, one of the major steps that Qatar recently took was the establishment of a local credit ratings agency. Last September, the Qatar Central Bank governor Sheikh Abdullah Saud Al Thani announced plans to create a ratings agency (to be formed jointly with Qatar Holding) which will help the country to fund its multi-billion investments required to host the FIFA World Cup 2022. In March this year, the Central Bank of Qatar also issued QAR4 billion worth of bonds and sukuk in an attempt to support its banks in meeting the new stringent requirements of the Basel III norms. In fact, the plan is to issue local currency debt every quarter. The overwhelming response from investors helped push the yield curve even lower. This year, we are most likely to see the trend continuing as domestic entities strive to take advantage of lower financing cost. And equally likely is the fact that new issuance will not be limited to banks that raised up to QAR16 billion in conventional bonds and sukuk last year to support credit growth, but will also expand to various local companies that are playing a key role in driving the wave of economic expansion.

QR billion

The amount rasied in conventional bonds and sukuk in 2012 in Qatar. 26 | The Edge

Dheeraj Shahdadpuri is a financial analyst currently based in Dubai in the United Arab Emirates.

A developed debt market will improve financial efficiency and enhance the monetary policy operations of the central banks in the Gulf. Financial services

QFC releases the first Asset Management Barometer The annual survey related to asset management is about feebased income of the players, marked by a risk-on approach of the managers, reports Aparajita Mukherjee.

The Qatar Financial Centre Authority (QFC Authority) published the first edition of its MENA Asset Management Barometer at the Bloomberg Link event in April 2013, offering a comprehensive portrait of current market sentiment to be tracked over time, based on 45 Barometer interviews. Over 70 percent of Middle East and North Africa (MENA) asset managers remain confident about 2013 based mainly on the attractiveness of the GCC countries. This sentiment benefits from increased government investment and dynamic local equity markets, stated the first edition of QFC Authorityâ&#x20AC;&#x2122;s MENA Asset Management Barometer. The Barometer, which is intended to be published annually, found that asset managers are showing an increasingly riskon attitude towards the growth potential in local equity markets. Additionally, asset managers are united by the need for clearer regulation and better distribution opportunities.

finance & markets | sectors

Shashank Srivastava, chief executive officer and board member of the Qatar Financial Centre Authority said, “The QFC Authority is proud to launch its inaugural MENA Asset Management Barometer, providing industry practitioners with detailed insight into the regional asset management industry. The Barometer is a ground-breaking piece of research, which exemplifies the QFC Authority’s commitment to thought leadership, serving the financial services industry in the MENA region as well as in Qatar. The Bloomberg Doha Conference, which brings many leaders of the asset management industry under one roof, is a fitting occasion for sharing the Barometer’s findings.” Qatar and the UAE seemed to offer the most potential the Barometer has stated. The findings were based on interviews with senior bankers, fund management firms, sovereign wealth funds and pension funds across the GCC countries, Egypt and Morocco. The respondents said that the countries’ infrastructure spending programmes and successful attempts to build hubs for financial service firms would continue to pay off in 2013. The risk-on approach was chiefly characterised by asset managers moving from fixed income to equities, or at least reweighting portfolios to an equity parity or bias. Different geographies agreed on the impact of regulation, with all participants predicting that new rules would have a measurable effect on MENA’s asset management sector. Though respondents strongly supported the region’s shari’ah-

Banking sector

Qatari banks profitability on a par with regional banks In an interview with The Edge, Dr. Reinhold Leichtfuss, senior partner and managing director in BCG’s Dubai office and leader of BCG’s financial institutions practice in the Middle East, shares what the company’s study has to offer to Qatari banks, reports Aparajita Mukherjee.

Other 10% New regulation 8%

Increased spending of local governments 42%

A resolution of the political situation in the Middle East 16%

Global inequities 24% Which factors could have the largest positive impact on the markets in 2013? Source: Asset Management Barometer

compliant sector, managers also said that the lack of unified regulation across MENA was damaging distribution and investment opportunities, as well as pushing up asset management overheads. Commenting on the Barometer’s findings, Yousuf Mohamed Al Jaida, chief strategic development officer of the QFC Authority said, “The Barometer paints an optimistic yet realistic picture. It reveals confidence in the continued expansion of the GCC and MENA markets in 2013. Fund managers expect more weighting towards equities and away from fixed income, encouraged by government investment and progress in developing financial centres around the region. They would also like to see more regulatory convergence.

A recent study by The Boston Consulting Group (BCG) of the banking sector suggests Qatari banks benchmark to compare themselves to other banks in the respective countries in the GCC. “Qatari banks have outgrown other banks in the region for the entire duration of the index to date (2005 to 2012), with a rate of 24 percent as compared to an average revenue growth of 11 percent. In 2012, Qatar banks’ revenue growth exceeded the GCC average by five percentage points,” said Dr. Leichtfuss. While profit growth for the regional banks is eight percent, the profit growth for Qatari banks was the same as the overall GCC average in 2012. “Since the rollout of the Index in 2005, Qatari banks have enjoyed an overall profit growth of 19 percent per year, which is significantly higher than the GCC average,” he added.

Regulation is seen as having the biggest impact on the conduct of business and as the major cost. There is strong support for shari’ah-compliant finance, but again fragmented regulation is a hindrance.”

Key findings from QFC Authority’s MENA Asset Management Barometer include: • 70 percent of managers are confident about the continued growth of MENA financial markets. • 38 percent believe political unrest to be the largest negative impact on local markets.

Dr. Reinhold Leichtfuss is the senior partner and managing director in The Boston Consulting Group’s Dubai office.

The Edge | 27

sectors | finance & markets

Loan loss provisions (LLPs) have grown in Qatar, but it is worth noting that this growth came from a very low base. In 2012, the LLP growth of five percent exceeded the average of two percent. According to Dr. Leichtfuss, the retail banking sector is a stable contributor to the banking systems for all countries. It has indeed experienced a further growth across the GCC in 2012, with the exception of the biggest Qatari banks, which saw a decline of eight percent as profits declined by 14 percent. “This must, however, be considered in the context of the very high profits the big Qatari banks achieved in the year before and a very healthy double-digit growth over the entire period.”

Foreign investment

Qatar invests additional finance into Egypt

Global economy

Asia to drive economic and business growth

“In 2012, Qatar banks’ revenue growth exceeded the GCC average by five percentage points.” 28 | The Edge

Standard Chartered Bank’s (SCB) recent media briefing Transformation, Rebalancing and Outperforming was led by Marios Maratheftis, head of macro research at SCB, Samiran Chakraborty, head of research SCB, India, and Sayem Ali, senior economist SCB. They discussed the implications of world transformations on the business environment in the MENA region. Marathefitis said that the drivers of economic development would be Asia (led by China), Africa and the Middle East. “The growth that the Chinese market is going to see in the next seven to 10 years will be more than what the UK had seen in the early 19th century,” adding that the rebalancing of the economy in China will be led by urbanisation with a lot of Tier 2 and 3 cities growing into Tier 1 cities which, “will translate into a growth of seven percent for the next 12 years for China.” There is also a growing possibility of seeing the Chinese yuan relegated to the status of a reserve currency, added Maratheftis. All of this will lead to a transformation of the Middle Eastern economies including Qatar, “on the back of the massive investments in the region and the pattern of trade.” Maratheftis further stated that China was responsible for 19 percent of total exports in 1990 but in 2012 clocked a figure of 42 percent.

In its latest round of funding to Egypt, Qatari prime minister Sheikh Hamad bin Jassim bin Jaber Al Thani announced that Qatar would buy an additional USD3 billion (QAR10.92 billion) of government bonds, on top of the USD5 billion (QAR18.2 billion) the country has already pumped into Egypt. What Qatar wants in return for its rather generous support is as yet not clear. At a news conference, the prime minister was quoted in the media as saying, “[Qatar], has asked nothing of Egypt in return.” The question then is, how long can Qatar continue to support Egypt, especially since the IMF mission left Egypt after the much talked about loan failed to materialise. This has left both Qatar and Egypt in a precarious position. Egypt could have benefitted from the proposed USD4.8 billion (QAR17.5 billion) loan that it desperately needed and which would have made them eligible for up to another USD15 billion (QAR54.6 billon) in lending according to a Reuters report. Michael Stephens, a researcher at the Royal United Services Institute, Qatar, in an article for openDemocracy notes, “Qatar is locked into a difficult spiral that it cannot get out from. And the country’s [Egypt] inability to stabilise politically means requiring countless of billions every month to simply stop it accruing more debt.”

The Qatari prime minister, Sheikh Hamad bin Jassim Al Thani says, Qatar has asked for nothing from Egypt in return for their financial investment. (Image Reuters)

sectors | finance & markets

Downstream hydrocarbons

Qatar: Major boost for chemicals production

According to CEO Abdulrahman Ali Al Abdulla, the consolidation of logistics for petrochemicals under Muntajat will mean reduced lead times and reliability of supply to meet demand, benefitting customers.

A move to bring the marketing and sales side of Qatar’s chemical, fertiliser and polymer operations under one umbrella is an indication of the country’s plans to build a larger and more vibrant downstream petrochemicals sector, writes Thomas Bacon.

While Qatar is already the world’s top exporter of liquefied natural gas (LNG), the government is keen to add value downstream and reduce the country’s economic dependence on gas and oil revenues in line with the state’s National Vision 2030. The country’s petrochemicals sector is expected to see increased revenues from plans to more than double production by 2020. The Qatar Chemical and Petrochemical Marketing and Distributing Company, Muntajat, which was launched in December 2012, is expected to consolidate the marketing and sales activities of the country’s nine producers by mid-2013. The minister of energy and industry, Mohammed bin Saleh Al Sada told local media that the new company would “position Qatar as the world’s preeminent chemical and petrochemical hub.” Muntajat will hold exclusive rights to purchase, market, distribute and sell Qatar’s chemical and petrochemical products. Under its long-term plans, the government is looking forward to boost production of petrochemicals from 10 30 | The Edge

million tonnes per year to 23 million tonnes by 2020 on the back of a QAR91 billion investment in the industry, Al Sada said at Muntajat’s launch. The country will also use its hydrocarbon reserves to increase the focus on producing more complex chemicals and petrochemicals. Data from the Gulf Petrochemicals and Chemicals Association shows that Qatar boosted its capacity for the production of both petrochemicals and fertiliser by 13 percent and 15 precent between 2007 and 2011, respectively. The industrial state giant, Industries Qatar (IQ) announced record revenues of QAR18.7 billion in 2012, up 13 percent year-on-year, which was attributed mostly to growth in the fertiliser sector. Competition is growing in the global chemical and petrochemical industry, following a boom in US shale gas production and a move towards self-sufficiency in China. However, readily available, competitively priced gas and full state offers have given Qatar an edge in the field. “We have embarked upon a major expansion of our downstream sector to ensure greater diversification in monetising Qatar’s abundant natural gas resources,” Al Sada said in a speech at the Meed Qatar Projects 2013 conference. Qatar Fertilizer Company (QAFCO), IQ’s joint venture with Norway’s Yara International, saw profits for 2012 rise 34 percent from the previous year’s results, driven largely by the completion of two new production facilities, the local media reported. The new developments enabled QAFCO to increase its global market share of urea production to 15 percent and become the world’s leading producer of the chemical. However, Qatar Petrochemical Company (QAPCO), a subsidiary of IQ, reported flat revenues and a six percent drop in profits for the year ending December 31, 2012. The company cited weak demand for the low-density polyethylene (LDPE) used in thermoplastic processing, lower pricing and sales volumes at the group’s fuel-additives joint venture as the reasons for the results. The future, however, looks promising for Qatar’s petrochemicals industry on the back of rising demand. Industry analyst ChemSystems Global expects worldwide demand for polyolefins, which includes LDPEs, along with other Qatar-produced compounds, to reach 200 million tonnes in 2020, up from 111 million in 2006. A wave of new petrochemical projects currently under construction will also support growth. In a separate initiative, for example, Qatar Petroleum has embarked on a joint venture with Shell to construct a

QAR23.7 billion petrochemical complex in Ras Laffan, local media reported in March. Meanwhile, Qatar Fuel Additives Company (QAFAC), another IQ subsidiary, recently began putting plans in place to roll out one of the world’s largest commercialscale carbon dioxide (CO2) recovery plants. The facility, which is scheduled for completion next year, will break new ground in Qatar by capturing CO2 and injecting it into the existing methanol process to increase production capacity. By 2017, Qatar will have invested QAR61.9 biliion of the QAR91 billion earmarked for the petrochemicals sector, adding about 1.6 million tonnes of intermediate products and about 1.5 million tonnes of final products to current production capacity levels, according to QNB. “Qatar is moving up the value chain from basic petrochemicals to more complex products,” the bank stated. Muntajat’s CEO, Abdulrahman Ali Al Abdulla, told The Peninsula that he expected Muntajat to increase efficiency, reduce lead times and build strong relationships with customers. The firm assumed responsibility for the global marketing of QAFAC’s products in February, before completing the integration of marketing activities for QAFCO in March. Having now also taken over the sales and marketing of SEEF Limited and Qatar Vinyl Company (QVC) in April, Muntajat’s consolidation plans look to be well on track.

Based in Turkey, Thomas Bacon is an analyst at Oxford Business Group (OBG).

By 2017, Qatar will have invested QAR61.9 billion of the QAR91 billion earmarked for the petrochemicals sector.

The Edge | 31

32 | The Edge

Contents: Qatar LNG: Keep looking east but remain ready for Europe 33 . Excess gas capacity casts doubt on Qatar solar 34 . Qatar’s attempt to capture carbon debuts at Lusail Marina 35 . Improvement in Qatar’s freshwater intensity 36 . Qatar furthers push into petrochemicals 36.

energy & sustainability

Singapore has become the latest country to receive commission-based liquified natural gas (LNG) from Qatargas and with demand from regional countries such as Thailand and China set to increase, Qatar is set to capitalise on current long-term negotiations. However, says the author, Doha must remain prepared for spikes in demand from Europe, particulalry the UK, during winter. (Image RasGas)

Qatar LNG: Keep looking east but remain ready for Europe Qatar entered the Southeast Asian LNG market recently with the delivery of its first cargo to Singapore and with an increase in Chinese demand, Doha should maintain its Asian focus, but not forget European clients such as the United Kingdom, says The Edge energy editor Jamie Stewart. atar has successfully extended its reach into the burgeoning energy markets of South-East Asia with the delivery of Doha’s first ever cargo of liquefied natural gas (LNG) to Singapore, energy company Qatargas confirmed in early April. The development “will help to meet the growing demand for energy in Singapore and help us build our relationship with a new customer,” Qatargas chief executive officer Khalid bin Khalifa Al Thani said. The move comes as Qatar seeks to increase the volumes of LNG that it sends to the east and south-east Asian markets

amid a fundamental slowdown in demand from North America and stagnation in Europe – Doha’s two more traditional markets. Exports of LNG are by far Doha’s dominant source of income. Doha has recently pursued a strategy of supplying commissioning cargoes – volumes of LNG that are used for ensuring the safe and reliable operations of untested terminals – to new, potentially booming markets. In June 2011, Qatargas delivered a commissioning cargo to Thailand’s Map Ta Phut LNG Terminal. The company said it has developed “considerable expertise” in

supporting the commissioning of new LNG terminals globally. To date, Qatargas has provided commissioning cargoes to nine LNG terminals, with Singapore being the 10th such arrangement. And these arrangements have allowed Qatargas to secure an early advantage when it comes to long-term supply contract negotiations, which could now, in this case lead to a very profitable deal with Singapore. In addition, the latest news from another market that is of increasing importance to Qatar – China – is encouraging. As the country’s new administration The Edge | 33

sectors | energy & sustainability

takes over and begins planning for the future, Qatar National Bank (QNB) Group has said that the economy “is on a firm footing and fears about the risk of a sharp slowdown have mostly abated.”

Energy demand

In particular, international banking group HSBC’s purchasing managers index survey for the critical manufacturing sector reached its highest level in two years in January, QNB Group stated. Energy usage is another lead indicator of economic activity, with electricity consumption showing firm growth. According to QNB Group, at the end of March, China completed the final formal stage in its transfer of political leadership. At the ceremony, new prime minister Li Keqiang said that sustaining real gross domestic product (GDP) growth at around 7.5 percent over the coming decade, his planned term in office, was his “top priority”. This target growth rate is slightly lower than the 7.8 percent achieved in 2012, and well below the 10.4 percent seen over the last decade. However, it would still represent a major achievement as it would be twice the International Monetary Fund’s forecast for global growth over the next five years and would nearly double the real output of the Chinese economy by 2022 – all of which is bullish news for the country’s fossil fuel demands going forwards. China’s future growth trajectory is of significant importance for Gulf Cooperation Council countries, because its rising demand for oil and gas is expected to be an important driver for global energy prices, the bank said. China is also a major source of imports and a destination for investment by the GCC companies and funds, and QNB Group expects that these economic ties will further strengthen in the coming years. Should Qatar commit more volumes of LNG over the long term to the Asian nations? Questions may be raised regarding the country’s ability to react to distressed markets when the price signals are potentially beneficial for Doha to do so. One such example in March saw LNG storage stocks in the UK diminish alarmingly quickly during a late-winter cold snap that took much of the market by surprise in its length and intensity. It was tankers from Qatar that were able to race to the UK on the back of extremely high, market-driven short-term gas prices, boosting the value of the cargo carried by the Qatari boats and Doha’s income. 34 | The Edge

The Singapore delivery is the 10th time Qatar has provided a commissioning cargo to a new LNG terminal.

Renewable energy

Excess gas capacity casts doubt on Qatar solar

Electrical engineering professor Haitham Abu-Rub led the Texas A&M at Qatar University team, that was awarded a research grant for a solar project.

Qatar is weighing options like electricity exports to Bahrain and Kuwait, but such excess supply may challenge the nation’s drive into solar power.

Qatar has been forced to put on hold a giant solar power generation project in light of over-capacity in its electricity production sector, the state-owned General Electricity and Water Corporation (Kahramaa) conceded in early April. According to the body, work might resume after 2015 as part of its longterm electricity generation capacity building plan. Because of rapid expansion in power generation capacity, Qatar has comparatively very high reserve margins approaching 40 percent, which will allow the state to export power to other Gulf Cooperation Council countries. “Qatar could look forward to electricity exports through the Gulf Cooperation Council Interconnection Authority (GCCIA)

energy & sustainability | sectors

power grid,” said Markaz, the Kuwait Financial Centre, in a statement. According to the centre, Bahrain and Kuwait “have reportedly shown interest in purchasing electricity from Qatar.” As a result of the capacity surplus, Kahramaa will undertake no further capacity building plans until 2014. Instead, it said, it will focus on the transmission and distribution sector, ensuring that the infrastructure is adequate to support the transition from gas-fired power plants to a more solardriven mix over the long term. Despite the setback for the scheme there was positive news for the solar sector in April, as Texas A&M University at Qatar revealed that it had been awarded QAR16.7 million by the Qatar National Research Fund for a project that aims to improve solar power conversion. The proposal, led by electrical engineering professor Haitham Abu-Rub, will aim to solve problems with integrating up to one megawatt of power from solar conversion systems into the national transmission grid using a silicon carbidebased inverter.

Major role

The project has been granted a relatively large amount because power electronic converters are expected to play a major role in the conversion of alternative energy sources and the interfacing of this with power grids, the university said in a statement. “Funding of such research projects is not easy even in most industrialised countries,” Abu-Rub said. “Fortunately, this is possible in Qatar.” According to Markaz, Qatar is one of the few countries in the Gulf where power generation has grown considerably in the last decade. Because of high GDP growth rates and population explosion, power consumption in the country increased by almost 10 percent in the 10 years between 2001 and 2011, the group said. Yet at the same time, Qatar saw its installed power generation capacity doubled in just two years, from 2009 to 2011, on the back of a major gas-fired power plant construction programme. The capacity build-out has more than outpaced growth in consumption – hence the slowdown in the nation’s renewable energy development plans. The decision casts doubt on Qatar’s ambition to generate 20 percent of its energy from renewable sources by 2024.

The region has the financial firepower to make this happen. However, the development of renewable energy relies on more than investment. For the new assets to be put to use, the balance between the supply and demand of energy must be appropriate, and in Qatar today, there is little fundamental need for an increase in power capacity.

16.7

QR 16.7 Million, the amount Texas A&M University, Qatar has been awarded by the Qatar National Research Fund for a project that aims to improve solar power conversion.

Carbon sequestration

Qatar’s attempt to capture carbon debuts at Lusail Marina Qatar is pushing forward an environmentally sustainable carbon capture project that could be exported across the globe’s tropical and subtropical areas.

If the project proves successful, floating mangroves – a means of capturing carbon within plants that can be grown on a huge scale in salt water – “could be employed everywhere in the world’s oceans where the temperatures are high enough,” Benno Boer, the ecological sciences advisor for UNESCO Arab Region, told The Edge in April. The comments came after Qatar unveiled its ‘totally unique’ floating mangroves project at Lusail Marina. The experiment is a first-of-kind bid

The floating boxes pictured here, which were developed specifically for the project by Mourjan Marinas, will house the mangrove trees.

to investigate the use of the flora for capturing carbon, a process known as carbon sequestration. The experiment could eventually open the door not just for an innovative and environmentally sustainable means of capturing and storing carbon, but for a new industry, and Qatar could export its knowledge, Boer added. According to Boer, floating mangroves “can be developed into large-scale cash crop systems in the sub-tropical and tropical coastal oceans of the world generating jobs, income and profit.” The project first began in March 2012 with a series of observations, seed collection, preparation and planting in floating boxes developed specifically for the project by Mourjan Marinas.

“Floating mangroves can be developed into large-scale cash crops, generating jobs, income and profit.” – Benno Boer, ecological sciences advisor, UNESCO. The Edge | 35

sectors | energy & sustainability

21.8 %

Water security

Improvement in Qatar’s freshwater intensity Qatar has improved its freshwater intensity over the past decade, according to new figures released by the government-run Qatar Statistics Authority (QSA) at the end of March.

According to the numbers, from 2002 until 2011, average GDP growth was 15 percent per year, whereas demand for freshwater rose about 14 percent per year on average (see graph). The use of one litre of water in 2002 contributed to the creation of QAR0.83 of GDP, whereas in 2011 this figure improved to QAR0.87. Due to limitations in renewable freshwater resources, Qatar’s source of freshwater is mainly desalinated. The existing groundwater aquifers are overexploited, mainly for agricultural purposes, according to QSA. Further water management measures over the coming years will include plans for better re-use of wastewater and increased recharge of aquifers as well as raising awareness among the population.

Rainfall

Qatar is one of the countries with the lowest rainfall in the world, around just 80mm

The percentage of water saved in 2011 by investment in existing infrastructure to help reduce loss of desalinated water during transport, according to the General Electricity and Water Corporation, Kahramaa.

per year, and as such, sustainable water management is one of the priority targets identified in the National Development Strategy 2011-2016. The QSA is now preparing the release of its final water statistics, and will be publishing its first national report about water statistics and water accounts later this year. “First results show that Qatar’s rapid economic development and population growth still result in a significant increase of demand for freshwater. Economic growth, expressed as GDP in constant 2004 prices, is strongly coupled with the amount of freshwater used,” the authority stated. Yet production capacity for desalinated water still has to be increased to address rising demand for freshwater across the country. Investment in existing water infrastructure helped to reduce losses of desalinated water during transport from about 30 percent to 8.2 percent in 2011, according to the General Electricity and Water Corporation, Kahramaa.

Growth of Qatar’s GDP and population to use of freshwater (Index, 2002-2011) 400 350

Manufacturing

Qatar furthers push into petrochemicals

Qatar’s energy and industry minister Mohammed bin Saleh Al Sada sees chemicals and petrochemicals industry as a key driver of Qatar’s growth. (Image Reuters/Arabian Eye)

Qatar is on course to become the world’s fourth largest chemical and petrochemical producer within the next decade, according to energy and industry minister Mohammed bin Saleh AlSada. The news is a boon for the state’s increasingly vital downstream industries. Al Sada’s comments came as the newly launched Qatar chemical and petrochemical marketing and distribution company Muntajat revealed it has become responsible for exporting almost 70 percent of Qatar’s chemical and petrochemical products within just three months of its launch. Al Sada, who is also chairman of the board of directors of Muntajat, called the industry a “key driver” of Qatar’s growth. “The downstream products created by gas feedstock are delivering value by diversifying Qatar’s export portfolio beyond LNG,” he said.

300 250 200 150 100 50 0 2002

2003

2004

2005

GDP (constant 2004 prices)

36 | The Edge

2006

2007 Water use

2008

2009

2010

Population

2011

Jamie Stewart is a freelance journalist and oil and gas industry researcher and analyst based in the United Kingdom.

Contents: Doha: No place to live? 37 . Indian property show in Doha 39 . Qatar supports green buildings 39 . Real Estate Summit returns to Qatar 40.

real estate & construction Doha: No place to live? Increasing rents and shortage of residential units are two key problems facing Qatar’s residential real estate sector. Complicating the issues further are the loopholes in planning and management of these units, writes Farwa Zahra.

The increasing number of expatriates in Qatar has resulted in residential demand outstripping the supply. (Image Corbis/Arabian Eye)

f you go through the classified section of major newspapers circulated in Qatar, you will most probably find at least one full page dedicated to the real estate sector. Such is the state of Qatar’s residential real estate market. Qatar has a residential yield of 10 percent – the highest in Middle East – owing to the increasing number of expatriates. While the occupancy rate of residential buildings is very high, those that are vacant are because of the owners’ preference to rent it to a single company, according to some real estate agents. Part of the reason behind high customer demand is also the shortage of quality apartments. While the recently constructed buildings feature better finishing, split A/Cs, swimming pools and gyms, such buildings are very small in number and are considerably more expensive. In an attempt to control the costs, however, most of the new apartments show owners’ compromise on spatial dimensions. The increasing demand has led to escalating rents which have outpaced Qatar’s inflation rate, believes the managing partner at Mannzili, Qatar, Aziz Sharif, who said that “tenants will experience this during their next rental rate increase.” Many of the contracts for mid-range apartments finishing this year are upgraded by an increase of at least QAR500 per month with no change in facilities whatsoever. Hence, many fully furnished two-bedroom apartments in Najma previously rented out for QAR7500 are now upgraded to a rate of QAR8000. The Edge | 37

sectors | real estate & construction

The increasing rents have led to apartment sharing by people who cannot afford it independently – an emerging trend in real estate, according to Sharif. Al Asmakh’s leasing team leader, Roy Francis Samuel, revealed that such illegal practices often lead to lawsuits when the tenants are unable to pay their rents upon one of their member-tenants leaving the apartment. As a proactive measure, Samuel explained, some agencies also require a tenant’s salary certificate to ensure their income is reasonably higher than the rent. The situation, however, is not the same across Qatar. There are cheaper and wellmaintained options outside Doha. “Barwa and Ezdan have been involved in a number of large-scale development projects that are aimed at the middle income demographic, though these tend to be found on the outskirts of Doha in locations with lower land values,” said Mark Proudley, associate director DTZ Qatar Properties. However, because of increasing inhabitation in suburban cities and concentration of offices and schools in Doha, the limited routes available are leading to increased traffic congestion during the peak hours. An emerging trend in the Qatari residential market is the preference of building owners to provide fully furnished apartments. Currently, the occupancy rate of these apartments in Doha is 99 percent. While these apartments provide ready solutions for customers, the lack of customisation makes them less preferable for many. The dearth of storage spaces inhibits the removal of any item not liked by the tenants. For bachelors, however, fully furnished apartments remain a more attractive option. Similarly, client preferences vary greatly depending on where they come from. Ostensibly, some nationalities are more inclined to save money, and do no want to spend too much on accommodation. Westerners, on the other hand, are more concerned about the quality of life and are willing to pay much more. Similarly, the location preferences for the two groups are also different. While the former prefer inhabiting in a location close to their offices and schools, the latter demand peaceful areas away from the city centre. The shortage of residential units and their escalating rents, however, are not the only problems in Qatar’s residential market. With a fixed commission of half a month’s rent from the tenant, informal agents sometimes also get owner’s commission in case they close a deal for big real estate companies like Al Emadi and Ezdan. 38 | The Edge

“Informal brokers have a significant market share, but there are risks in dealing with them.”- Adrian Camps, Asteco.

Speaking about the role of these agents, Adrian Camps, chartered surveyor and head of research, valuation and consultancy at Asteco Qatar, said, “Informal brokers have a significant market share, but there are risks in dealing with [them], especially where cheques or cash are handed over for rental or the purchase properties.” There are no compliance rules maintained by real estate companies on the eligibility of an informal agent. Hence, a single apartment is dealt by many agents, resulting in increased competition for tenant’s commission. Ironically, the trend can make things more difficult for the tenants when some agents have arrangements with the buildings’ watchmen who avoid showing the vacant apartments to any other’s clients, revealed a market insider. Considering the cheap cost of putting a brief ad in the newspapers, these brokers often post misleading ads to attract more customers. Ads for attractive but unavailable properties are used to later negotiate the deals for otherwise less preferred areas. When Amer, an informal agent, was contacted about an ad he posted for 38 apartments, he claimed they were all rented out. The ad, however, continued to reappear for many days. Many times, agents post online ads on platforms like Qatarliving.com. Like any other marketing website, Qatarliving is not free of scams. As a guiding principle, any accommodation ad which offers a very attractive rate, does not reveal any contact number and uses email address as a medium of communication is most probably a scam.

The seasonal nature of residential business

500

The amount in Qatari Riyals of residential rent increased per month in Najma, Qatar.

The residential rental business in Qatar is seasonal, said an informal real estate agent, which escalates in March and April when he is able to close seven to eight successful deals a month. December and January, on the other hand, mark a period of low activity with only two to three successful deals since most expatriates are on vacation. The Islamic month of Ramadan again provides good business as many people find it more convenient to move into new places because of short work hours.

Farwa Zahra is the deputy editor of The Edge.

real estate & construction | sectors

Realty market

Indian property show in Doha

Chief Guest, Sanjiv Arora, Ambassador of India to Qatar inaugurating the Doha Indian property show.

Aparajita Mukherjee reports on the trends of the Indian property market during an exhibition that had several brackets

of exhibitors appealing to different categories of buyers in the Qatar market.

With the objective of selling Indian property in Doha, Indian Property Show, the flagship brand of Sumansa Exhibitions, was held here recently. The exhibition was one of the biggest and most diversified displays of Indian properties in Doha showcasing properties worth QAR10 billion by more than 50 developers exhibiting more than 300 projects and 1000 plus properties. These properties ranged from budget homes to multi-million rupee investments from across India. The exhibition was officially inaugurated by chief guest, Sanjiv Arora, ambassador of India to Qatar along with Sunil Jaiswal, president and CEO of Sumansa Exhibitions, organisers of the show, who said, “There is an increased demand for properties [with pre-launch prices]. The primary advantage of investing in a pre-launch deal is the price, as the entry point is low and property yields 18 to 25 percent during the project implementation stage itself.”

“The fall of the rupee is encouraging more investment by Gulf-based nonresident Indians into the realty market which offers relatively higher returns. Properties continue to be a preferred choice for expatriate Indians for investment and asset creation. What they look for is a good brand to invest in and a price point which is good to enter,” added Santosh Tandel, regional head, MENA region, Indiabulls, another exhibitor.

“The fall of the rupee is encouraging more investment by Gulf-based non-resident Indians into the realty market.”

Sustainable construction

Qatar supports green buildings In the past, Qatar planned green building projects like QNB Tower, which though designed, were never built. By Farwa Zahra

Qatar’s ongoing construction projects ahead of the World Cup 2022 has raised concerns about the impact of these developments on the natural environment. The country, therefore, has lessons to learn from Australia that emerged as an expert in energy efficient projects with low resource uptake around the 2000 Sydney Olympics. Considering Australia’s success in green building projects, Qatar Green Building Council (QGBC) hosted a joint seminar with the Australian Trade Commission (Austrade) to address the aspects of green building in the context of Qatar’s hot arid climate. Drawing a connection between the climates of the two countries, executive director advocacy and business services for Green Building Council of Australia (GBCA) Robin Mellon said, “Australia has incredibly diverse

Qatar Science and Technology Park is one of the few green building projects in Qatar.

The Edge | 39

sectors | real estate & construction

Qatar’s Property sector efforts to Real Estate Summit returns to reduce waste Qatar materials in its latest projects like The Pearl were greatly appreciated by the Australian experts.

Cityscape Qatar will highlight the emerging opportunities and challenges in the real estate market of Qatar.

climatic zones. What that means is there is particular skill in tailoring solutions to these extremes.” Apart from the future green building projects in Qatar, the seminar also introduced opportunities to upgrade the older buildings by incorporating green building technologies. Qatar’s efforts to reduce waste materials in its latest projects like The Pearl were greatly appreciated by the Australian experts. Ibrahim Mohamed Jaidah – board member for QGBC and founder of Arab Engineering Bureau (AEB) mentioned the incentives offered by Lusail for environment-friendly developments in Lusail city. Representative of Kahramaa, engineer Bazeeth Ahamed highlighted the company’s efforts to lower the water consumption levels considerably by 2016. Operating in Qatar since 2009, QGBC seeks to promote health and sustainability of the environment, the people, and economic security in Qatar. The organisation commenced as a reaction to the rapid urbanisation projects in the country over the last few years. The concept of ‘Green Building’ is based on the incorporation of construction techniques that takes environment into consideration by the use of environment-friendly materials, reducing waste and increasing energy efficiency.

40 | The Edge

After its debut in Qatar last year, Cityscape Qatar returns with the Real Estate Summit.

Considering the rapid development of real estate and construction sector in Qatar over the last few years, the country has attracted a great deal of attention in the Middle East. Reflecting this growth, last year Doha hosted the debut of Cityscape – one of the largest real estate event brands globally, which seeks to promote the industry by bringing together investors and industry experts from the region and beyond. This year, Cityscape Qatar is set to make a comeback accompanied by the Real Estate Summit to be held simultaneously from 27 to 29 May. The summit will facilitate prospective investors of Qatar’s real estate market by providing them with strategic solutions and investment opportunities available in one of the world’s fastest growing economies. Inviting local and international experts, the event will not only look at the financial aspects of real estate investments, but will also delve into the legalities and challenges related to them in the context of Qatar. More than 150 local and international senior investors, real estate developers and keynote speakers are expected to attend the summit. “Having been based in the Middle East for many years, I have witnessed the continued development of the Qatari real estate sector and can foresee the opportunities for global real estate development firms to invest in Qatar,” said Kareem Shamma, CEO Doha Festival City.

The event will be followed by the postsummit Retail Masterclass focusing on retail and mall development in the country. This special session is aimed to promote the retail sector, which is currently facing undersupply. “Hosting the Qatar Real Estate Summit for the second consecutive year reflects the confidence and optimism of the international business community in Qatar,” said Iman Eissa, conference producer, Informa Exhibitions.

“Hosting the summit for the second consecutive year reﬂects the confidence of the international business community in Qatar.” - Iman Eissa, Informa Exhibitions.

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Contents: Automating business processes for efficiency 43 . Qatar rises in world networked readiness 44 . Ethernet fabrics essential for advanced virtualisation 45 . A new approach to deploying wireless networks 46.

tech & communications Automating business processes for efficiency Shaheen Haque, an IT solutions expert in the Middle East, explains how automating business processes within a company can create efficiency, and provides some tips to consider when implementing them.

hen most companies hear the term business process automation (BPA), they think about customer facing or production processes. However, fundamentals of this methodology can just as well be applied to a variety of other internal departments in order to increase efficiency throughout the organisation. Among the processes ripe for BPA are industry-specific practices such as insurance claims processing, healthcare patient scheduling, or financial services and loan originations. The benefits of BPA in such applications are especially pronounced when enterprises hope to achieve growth with minimal increase in staff strength. Many companies will find that they can maximise the efficiency of their workforce by using BPA solutions to streamline processes. A prime area is any type of approval process, since this is something that is widely employed by most companies. These approvals tend to waste a lot of time as papers and folders, either physically or via email, circulate and re-circulate through the office for approvals or signatures, occasionally getting lost and delaying processes and projects. By automating these types of internal processes, companies can The Edge | 43

sectors | technology & communications

Organisations should refine and improve processes to create sustainability, where savings in one area could fund the next initiative.

increase visibility and improve tracking, which can reduce the amount of time needed to receive an approval. To greatly increase their chances of success by adopting BPA solutions, organisations must have four considerations in mind in the early stages

Align BPA objectives

with

business

It is not uncommon for organisations to go through an extensive technology selection process before finalising the goals they would like or need to achieve with business process automation. High-level objectives may focus exclusively on cost reduction or cost containment targets, or, under the right circumstances, on increasing revenue generation potential. In either case, the process efficiency improvement should translate into quantifiable return on investment (ROI).

study of idle versus processing time for workin-process revealed that, for the average process, actual working time comprises only 0.05 percent to five percent of total elapsed time. In today’s business environment, both the challenge and opportunity remain in improving processes that involve people.

Start small and grow

Demonstrable results matter. Look for BPA opportunities that allow you to start small, expand and continuously improve. Because BPA can have such a significant impact on process efficiencies, organisations may opt to initiate BPA implementations that focus on a mission-critical business process in its entirety. Ideally, organisations should be able to continually refine and improve processes to create sustainability, where savings in one area could potentially fund the next initiative. BPA can have a viral aspect if done well. One successfully automated process with demonstrable ROI can lead to another. The application of BPA to a wider range of processes within the organisation will lead to unmatched efficiency of the workforce. The time and effort recovered can take the pressure off overworked employees while freeing up resources to focus on new streams of revenue growth ultimately helping organisations do more with less.

The World Economic Forum (WEF) recently released its Global Information and Technology Report 2013, in which Qatar ranked 23rd in the network readiness index, up five places from last year, and ahead of the rest of the Arab world. By Shehan Mashood.

Having IT management on board is critical to BPA’s technology implementation aspects, and the business owner should provide the equally critical process knowledge. But a successful path to BPA requires involving multiple internal stakeholders, particularly where a process traverses multiple departments. It is important to involve the end-user to consider their perspective for a potential technology solution’s ease-of-use in order to facilitate adoption.

There are significant benefits to removing non-value adding work from a process. One 44 | The Edge

Qatar rises in world networked readiness

Dr. Hessa Al Jaber, secretary general of ictQatar has overseen the liberalisation of the telecommunications market in Qatar. (Image ictQatar)

Get the right people involved

Identify the right process for automation

Economic report

Shaheen Haque is territory manager for the Middle East at Interactive Intelligence, a technology solutions provider.

The report’s network readiness index (NRI) that was first started more than 12 years ago was an attempt at evaluating the ICT readiness of countries on a global level and to benchmark its impact on economies. Qatar’s overall high ranking stems from the government’s commitment – which is ranked second - to rapidly develop ICT within the country to aid the diversification of its economy. The report points out Qatar’s efforts in expanding its offerings of online

technology & communications | sectors

services (27th) and helping to increase the online participation of citizens (22nd). It also notes, “Going forward, in order to translate the existing good ICT uptake into stronger economic impact, the country should continue investing in increasing the level of university enrollment (108th in the world) so it can benefit from a higher local talent pool and strengthen its overall innovation system.” According to Bruno Lanvin, coeditor of the report, “This analysis shows how matching investments in ICT with investment in skills and innovation can help economies cross a ‘magic threshold’, beyond which return on investment increases significantly. Individual countries need to identify what separates them from reaching that threshold if they have not reached it yet in order to fulfill long-term growth, competitiveness and innovation targets.” Dr. Hessa Al Jaber, the secretary general of the Supreme Council for Information and Communication Technology (ictQatar) who has overseen the liberalisation of the telecommunications market since taking over, has ushered in competition and modernisation to Qatar’s ICT infrastructure. Speaking at the Arab regional INET conference held in Qatar last year, she noted that, “The Internet is already transforming Qatar and the Arab region. We all must help ensure that the

Qatar’s networked readiness index benchmarked Political and regulatory environment 7

Social impacts

Business and innovation environment

6 5 4

Infrastructure and digital content

Economic impacts

2 1

Government Usage

Affordability

Business usage

Skills Individual usage

Qatar

High-income group average

Source: Global Information and Technology report, 2013

transformation continues, but that it continues in an inclusive manner that makes our society better. Change and transformation do not mean that we have to forget our identity or heritage. It simply means we must advance them in a way that respects who we are and improves the quality of our lives.”

Network architecture

Ethernet fabrics essential for advanced virtualisation The growing popularity of ethernet fabric amongst IT managers in Qatar will help drive virtualisation in companies says Nimer Ghazal, the country manager for Brocade Communications.

In today’s IT environment, more devices, a deluge of data, the decreasing costs to transfer data, and server virtualisation have triggered a transformation in the data centres which will no doubt lead to multiple data centre advancements during the next five

Server virtualisation, an emerging trend in the market, is making data centre architects in Qatar rethink their current designs.

years. Earlier exclusively deployed by large enterprises, it is now common in Qatar to see small and medium organisations with their own data centres. Last year, network managers in Qatar witnessed the growing popularity of ethernet fabrics. The trends that were the driving force behind this are set to remain valid though 2013 as well. According to IMS Research, 22 billion devices will be connected to the Internet by 2020 with an ability to create and consume data. Alongside these devices creating data, organisations are digitising and

storing an incredible amount of raw data. IDC and EMC forecast that by 2020, the world will have 35 zetabytes of data on hand. Such an astronomical growth is possible because the cost of transferring data has decreased while the speed to transfer it has continued to increase. Another driving trend, server virtualisation, has been brought about by the desire to control costs and increase utilisation. The increasing use of server virtualisation, which removes the hardware dependency, is causing data centre architects to rethink the The Edge | 45

sectors | technology & communications

“Consumers and organisations no longer respond to the concept of being shackled to specific vendor offerings.” current network designs. Mix this with one of the overriding trends for 2013, migrating to the cloud, and you can see why network architects are looking for ways to build more powerful, flatter networks that can support higher traffic loads. Flatter networks also reduce complexity, which lowers overhead costs and reduces risk. Ethernet fabric allows external servers to link to data centre networks on a payper-port need, negating the need for customers to maintain a separate switch environment. Customers no longer have to maintain external switch environments and data centre operators are creating a less complex, reduced cost service in the cloud minus the redundant layers of management and manpower. The growing popularity of ethernet fabric from a commercial perspective is that it also directly addresses the biting back on vendor lock-in. Ethernet fabric does not require a rip and replace of every part of an existing network. Consumers and organisations alike no longer respond to the concept of being shackled to specific vendor offerings. They are looking forward to the trusted vendors to deploy flexible and scalable solutions, even within multi-vendor environments. In the networking space, choice has become imperative and integrated offerings continue to break into the mainstream.

Nimer Ghazal is the country manager, Qatar at Brocade Communications, a global networking solutions provider. 46 | The Edge

Telecom infrastructure

A new approach to deploying wireless networks In a major technology improvement for the mobile industry, Ooredoo in collaboration with CommScope, a multinational that produces infrastructure hardware for ICT needs, have announced a new approach to building wireless networks, a technology that could have serious benefits for operators all around the world.

Paul Salmon, group chief technology officer, Ooredoo and Randy Crenshaw, executive vice president and chief operating officer, CommScope (pictured), presented the new factory-assembled network tower tops.

The two companies have developed what is believed to be the world’s first factory-assembled tower tops for base station remote radios, assembled according to a single global standard. The aim of the tower top development is to create and maintain a future-ready network that is radio vendor agnostic, and does not require significant modifications for future upgrades. Existing cellular site structures have usually been very time-consuming and expensive for operators to maintain. The new tower top solution aims to ensure that building cell sites is done right the first time. According to Ooredoo the new preassembled tower tops provide greater network capacity, and also provide better coverage and faster broadband data speeds. The new design will also significantly reduce installation time by as much as 50 percent, meaning safer working conditions and reduced downtime for customers. In addition, by installing the radio equipment on tower tops instead of the typical large air-conditioned shelters, Ooredoo expects to halve electricity costs. Paul Salmon, group chief technology officer, Ooredoo, explained, “Ooredoo is embarking on a radical plan to upgrade network sites. We believe this is a first for our industry, and it is a source of considerable pride that it was designed and developed within the region to serve our customers.” The tower top solution is expected to become Ooredoo’s standard cell site design across its markets in the Middle East, North Africa and Asia, in line with the company’s innovative network modernisation strategy of upgrading or replacing 15,000 of its base stations over the coming years. As the demand for data by customers across emerging markets grows, the new tower top solution will provide simplicity in optimising networks, especially for customers living in remote areas and rural communities.

country focus | japan

Qatar and Japan: Looking beyond energy Japan recently celebrated 40 years of diplomatic relations with Qatar and Kenjiro Monji, Ambassador of Japan to Qatar emphasised efforts on both sides to step up nonhydrocarbon components in the bilateral relations and complement it with efforts at humanitarian cooperation. It is towards this end that the Qatar Friendship Fund has been created. Aparajita Mukherjee reports.

Japan has been one of the largest trading partners of Qatar and the total volume of trade between the two countries reached QAR134.7 billion in 2012.

48 | The Edge

japan | country focus

rade figures do give an essence to bilateral relations, but that clearly is just one aspect of the relationship. None agrees more with this than Kenjiro Monji, Japan’s Ambassador to Qatar. Monji does talk to us about celebrating Girl’s Day (which is celebrated every year on March 3 and is marked by displaying dolls which began in the Edo period and started as a way of warding off evil spirits, with the dolls acting as a charm) but he also tells The Edge about the the place of energy in the relations between Japan and Qatar. Monji is emphatic about the Qatar Friendship Fund, something which started off with the direct involvement of HH the Emir Sheikh Hamad bin Khalifa Al Thani, and something that has already rolled out projects in Japan. Commenting on energy and its place in the matrix of bilateral relationship, Monji says, “Energy constitutes one main pillar of relations between Japan and Qatar.” He mentions that Japan has been the biggest trading partner of Qatar and the total volume of trade between the two countries reached USD37 billion (QAR134.68 billion) in 2012. “Qatar has been a major supplier of energy to Japan and its importance is increasing,” he adds, “Actually, Japan imported about 16 million tonnes of LNG from Qatar in 2012, which is the double of Japan’s 2010 import just before the great east Japan Earthquake, making Qatar our second largest LNG supplier, almost tying with Australia, each with a share of 18 percent.” Monji reiterates that Qatar is the third largest supplier of oil to Japan with a share of 12 percent.

an effective framework to foster a qualified young generation that would be capable of taking charge of the future of Qatar.” As for human resource development, Monji is of the view that Japan can share its own experience in the area of education, science and technologies, culture and sports, which are now considered as Japan’s soft power. Monji adds that the two governments confirmed their intentions to work towards diversifying their economic relations on various occasions including the annual joint economic committee meetings. Commenting on the aspects of QatarJapan relations that stand out when compared with other GCC countries, Monji says, “Japan enjoys good relations with all GCC countries, and Japan-Qatar relations are also based on trust and friendship.” Monji adds that Japan has contributed greatly to the development of Qatar, especially in the area of liquefied natural gas (LNG) since the 1990s. Chubu Electric, a Japanese company, made a long-term LNG sales and purchase contract and both public and private sectors of Japan participated in the projects by financing, investing, building the plants and shipping the products, etcetera. “In fact,” Monji says, “the Qatari leadership never forgets these instances and appreciates Japan for its contribution. And Qatar was one of the first countries to extend help to Japan after the disaster of March 11, 2011, and its contribution was among the largest in the world – something for which the Japanese are very thankful.”

Knowledge-based economy

Qatar Friendship Fund

In the context of the fact that Qatar is fast diversifying its economy to a knowledgebased one, there will be an impact on the way Qatar relates to other countries, primarily those like Japan that have a prominent energy component. Monji is convinced that Japanese companies can contribute to the diversification of the Qatari economy with their technologies, experience and expertise. He says that he is sure that human resource development is most important area to the diversification of the Qatari economy. “It is quite obvious that HH the Emir is stressing the importance of human development, which is the first of the four pillars of Qatar National Vision 2030,” adding, “I understand that the development of Japan has been based on its human resources. Japanese companies have been inviting many Qatari technical and administrative staff to Japan under training programmes, which are

Relations between countries take shape from the intentions of its leaders, and Qatar and Japan have the highest degree of support from the respective leaderships, one instance being the Qatar Friendship Fund. Talking to The Edge on the fund, Monji elaborates that the Qatar Friendship Fund was established by the contribution of USD100 million (QAR364 million) on the initiative of HH the Emir to support various reconstruction projects. “The first mega project under the QFF was the Fishery Processing Center in the town of Onagawa in the devastated area which was inaugurated in October last year. Six other projects are already implemented or in progress.” (See box out on Qatar Friendship Fund)

Japan at a glance Government: Parliamentary system, Unitary state, Constitutional monarchy Capital: Tokyo Population: 127,817,277 (2011) GDP: USD5.984 trillion (QR21.78 trillion)

Kenjiro Monji, Japanese Ambassador to Qatar says that the Qatari leadership does not forget the instances of Japanese assistance in building the LNG industry here.

Japan Cooperation Forum

In 2012, the 37th Japan Cooperation Forum for the Middle East took place in Doha. The Edge | 49

country focus | japan

Talking of the achievements of the forum, Monji says, “Top Japanese business leaders, intellectuals, Japanese ambassadors to the Middle East and North African (MENA) countries, high ranking Japanese government officials and Japanese business representatives residing in the region participated in the forum. The number of participants was estimated to be around 300. It was the first time that the forum was held in Qatar. HE Abdullah Hamad bin Al Attiyah, president of the Administrative Control and Transparency Authority was a guest of honour and made the opening speech.” Free Trade Agreement (FTA) and bilateral investment have been points of interest for both Qatar and Japan. Commenting on this, Monji says that Japan values the importance of the FTA with Qatar. “The FTA negotiations between Japan and the GCC started in 2006. We understand that the GCC has been conducting a review of its FTA policy since the summer of 2009. Japan is awaiting its outcome and hopes to resume the negotiation as soon as possible. Japan hopes to further promote investment in order to strengthen the economic relationship between the two countries.”

Infrastructure spends

Spending on infrastructure will be very high in the run-up to the FIFA World Cup 2022 in Qatar. In that context, what kind of participation by Japanese companies does Monji foresee? He says that he has been encouraging Japanese companies to actively take part in the large-scale infrastructure projects towards the FIFA World Cup 2022, such as railway, metro, stadiums, bay crossing and other associated projects. “I am telling the Japanese companies that those gigantic projects in Qatar are not mere plans on paper under the long-term vision, but real projects that must be implemented before the FIFA World Cup 2022. And, in addition to the technology, expertise and experience that I mentioned earlier, the reliability of the Japanese companies to observe the difficult terms and condition at all times should be highly appreciated.”

Projects of Qatar Friendship Fund The following is a list of seven projects under the QFF which focuses essentially on community living. Mega project 1 (April 2012): The project aimed at the fisheries rehabilitation sector, was a partnership with Nippon Foundation. It began in mid-April 2012 and was completed in October the same year in Onagawa, Miyagi Prefecture, with a budget of USD24.3 million (QR88.45 million). Project objectives included construction of a multifunctional 7760m2 fishery processing centre in Onagawa with sorting, refrigeration, and storage facilities, to support more than 7500 fishermen directly employed in the fisheries industry in Onagawa. Yukinko project (January 2012): The first activity of the Fund was ‘The Yukinko Project, Fun in the Snow Camp’. In January, some 1400 children and their families from Fukushima, Miyagi and Iwate Prefectures were invited to a skieducation programme in Yubari City in Hokkaido Island, Northern Japan. During the trip, the participants also enjoyed an excursion to Asahiyama Zoo in Asahikawa City, Hokkaido. Cell membranes implementation project (November 2012) in Kamaishi city: This is aimed at introducing a system that freezes marine products without destroying cell membranes, to fishing villages in Kamaishi city. This will allow the integration of primary, secondary and tertiary sectors through value-added products and nationwide direct sales. The scheduled completion is August 2013. Building a healthy community in Tohoku (November 2012) at Iwate,

Miyagi and Fukushima Prefecture: This aims to support children, including those with disabilities, in areas with significant radiation levels and provide playground equipment and offer outdoor activities for children with disabilities. The scheduled completion is June 2014 Farming to regain livelihood (November 2012) in Kesennuma city: This focuses on workshops on growing vegetables; creation of family dialogues through growing practice; sales of the resulting produce; development of local companies to buy and sell the produce, which will, in turn, create jobs. The scheduled completion is October 2014. Regional community revitalisation project in Minami-soma city: This project has been set up with the task of developing a community facility to foster sports, culture, exchanges, childcare support, healthy living and protective care for people living alone and children who have limited opportunities to play. The scheduled completion is December 2014. Qatar-funded student city/Finance park (April 2014) in Iwaki city, Miyagi Prefecture, Sendai city, Fukushima Prefecture: This experience-based educational programme will develop an institution that teaches the foundations of a productive co-existent society. Students will learn how to help each other through their jobs, and how to become ideal citizens in an on-site training institution that simulates reality. The scheduled completion is December 2014.

“I am telling the Japanese companies that those gigantic projects in Qatar are not mere plans on paper under the long-term vision, but real projects that must be implemented before the FIFA World Cup 2022.” 50 | The Edge

Hum Capital

man As competition and demand for skilled workers increases among Gulf countries, how will Qatar fare in the looming regional battle for talent? By Matthew Lewis

feature | human resources

During the economic crisis – and with the awarding of the 2022 FIFA World Cup – the appeal of Qatar for global job seekers rose, just as projects and jobs elsewhere in the Gulf began to disappear. But as business confidence is now back in countries such the United Arab Emirates, demand for human capital is returning. Will this spur a regional recruitment war, asks Matthew Lewis, and if so how will Qatar attract and retain much needed talent?

egionally, nobody doubts that Qatar has the vision, willpower and financial and political clout to deliver on its ambitions. However, one part of the equation less discussed is how will Qatar attract, recruit, retain, house and school the significant numbers and requisite calibre of highly talented people required to deliver on that vision. An added dimension of complexity is that many of the soonto-be-booming sectors in Qatar require expertise that was not previously needed. Excellence in sports, medicine, education, food security and transportation infrastructure are not arenas that the Gulf has previously excelled in or developed local talent in. Moreover, the traditional sectors of the economy such as hydrocarbons, security, trade and government do not nearly develop the requisite specialist knowledge and expertise in the numbers that the future Qatar economy will depend on. In addition to this mismatch, the numbers of graduates from both domestic and international universities will arguably not enter the market fast enough or at a senior enough level to impact on the country’s development plans, as per its National Vision 2030 and beyond. But there may be one issue that is key above all others: Qatar’s neighbours. Attracting specialist skills and experience into the Qatari economy is an already formidable challenge that could be compounded by a resurgent broader Gulf market economy, driving demand for human resources again in other expanding markets, such as Saudi Arabia and the United Arab Emirates (UAE). A great example is the railways sector. Not since colonial times has there been a regional need for expertise in what is essentially – despite advances in technology – arguably now a traditional industry, and a shrinking sector for many decades in developed countries. Most of these economies have long built their rail infrastructure, and the expertise in this respect historically was located in the Europe or North America. Now major economies in the Gulf require this critical infrastructure. The expertise that used to exist in abundance is in short supply and thus is in high demand and at high cost. A similar scenario can be said to exist in healthcare and education, as well as food security and production, which are all just coming to the fore regionally. Securing the right people in sufficient numbers at the right time for Qatar in all of these sectors will be dependent on Qatar’s ability to attract talent ahead of neighbouring Gulf states.

What are expatriates looking for?

What do expatriates consider when making a commitment to move to the other side of the world? Tax-free salaries are common across the Gulf, so there is no competitive edge there to be gained for 54 | The Edge

Qatar. Very often it is the other elements of a job offer or location that can make the difference: • The availability, quality and affordability of accommodation is a key consideration and a lack of supply in the Qatari market is compounding already inflated prices. This can put pressure on housing allowances and could make Qatar less attractive. • The availability and cost of high-quality education is another concern. School places are already in short supply and a long waiting list the norm. This may discourage families from moving, meaning they may take a shorter-term view on Qatar. • The cost and overall standard of living is a major factor, especially when someone maybe moving to the region for the first time. Qatar scores highly on quality of life, but perhaps less so on cost of living, recreational facilities and things to do, both for single people and families. According to Qatar Statistics Authority’s data for 2012, Qataris form only six percent of the country’s total employed population of 1,341,193. This is compared to 1,258,380 expatriates who fill the remaining 94 percent of the job pool. So while Qatar has managed to avoid any boom and bust cycles, a tiny Qatari population, with around 80,000 in employment, means that Qatar could need more than 500,000 professionals, workers and consultants over the coming years to ensure a successful 2022 World Cup and create the diversified economy and thriving nation it is striving to become.

Lessons to be learned

When it comes to rapid development – and emerging challenges, failures and success and parallels – Dubai in the UAE is the obvious example of a nearby location from where real lessons can be learned for Qatar. Dubai grew dramatically and explosively from 2004 to late 2008. In 2007, at the peak of its rise, 15,000 professionals were moving into Dubai from all over the world every month for more than a year. Thus the UAE faced major labour and people issues. The city-state had to rapidly revise and revamp its labour law from 1982 and adapt and react to allow a free market economy for

94%

Of the employed workers in Qatar are expatriates.

human resources | feature

Attracting specialist skills and experience into the Qatari economy is an already formidable challenge compounded by regional competition.

Qataris form six percent of the country’s employed population filling approximately 82,000 out of more than 1,333,426 jobs in 2012, according to the Qatar Statistics Authority. (Image Arabian Eye)

its most critically needed and fluid resource - human capital. Until 2007, a sixmonth ban on people changing jobs still existed. However, the establishment of free zones effectively made this ruling largely redundant, so it was dropped. This allowed people in the country to move much more freely and choose where and whom to work for. It forced employers to work harder and smarter to attract and retain staff. Human resources (HR) became a ‘strategic function’ and top-level talent and human capital were traded in with a reference akin to gold and pearls. This was not necessarily a bad thing for those being recruited, though it had a detrimental impact overall. Salaries rose rapidly, as did property prices and inflation moved into double digits. Newcomers and existing staff in Dubai began expecting and demanding 20 percent annual pay rises to move or stay, and they got it, and more. Greed took over and hiring became ruthless and mercenary. Senior executives around the globe were promised amazing career opportunities in companies and projects that a year earlier did not even exist. For all of the good intentions, and good hires, some mistakes were made, much money was wasted – and Dubai also attracted some dubious people best rather forgotten. What it did mean for Dubai though, is that the vision that was promised and planned largely was delivered.

Tips for HR managers and employers

• Understand the career and personal needs of your current and potential employees. • Look to retain staff for the right reasons and not out of fear of not being able to find other employment. • Ensure that current staff have personal development plans, regular appraisals and are being developed to their highest potential. • Pay, benefits and long-term incentive plans are all critical but equally important is someone’s ability to develop their careers and commit to Qatar for the long term. • When hiring from outside the country, be honest and transparent about current regional and local labour laws and practices, and paint a realistic picture about earning potential, cost and living standards.

Despite the global financial crisis, or in fact due to it, many expatriates decided to make Dubai their permanent home and take a long-term view by purchasing property, setting up businesses and schooling their children, many of whom will ostensibly grow up to remain in the only home they have ever known.

What next for Qatar?

If inward immigration at Doha airport is a measure of economic prosperity, it is boom time already. Tellingly, numerous flights into Doha on a Sunday morning and leaving on Thursday are packed with suitcase bankers, consultants and commuting workers and the traffic continues to worsen. This would suggest that the demand for the skills and expertise required in Qatar is not available in sufficient numbers within the country or indeed within the Gulf region. However, Qatar also features many positives for for local recruiters: • Major projects such as Hamad International Airport will assist with access into the country and allow Qatar Airways to expand at a pace and attract international employees. • Qatar is developing a high-end tourism market with high quality hotels and restaurants on a par with the best in the world. • The real estate sector is booming and has already attracted many gulf expatriates. The Pearl and the Lusail projects will become fantastic luxury developments in which to live. • Local entities such as Qatar Airways and Qatar Foundation are fast becoming globally recognised brands and world-class organisations. • Domestic development in culture, retail, sports, education and healthcare make Qatar a very The Edge | 55

feature | human resources

Number of employed workers in Qatar in 2012 Agriculture, forestry and fishing

18,014

Mining and quarrying

83,065

Manufacturing

102,511

Electricity, gas, steam and air conditioning supply

7,665

Water supply, sewerage, waste management and remediation activities

1,271

Construction

496,967

Wholesale and retail trade; repair of motor vehicles and motorcycles

167,022

Transportation and storage

37,732

Accommodation and food service activities

32,084

Information and communication

11,417

Financial and insurance activities

11,277

Real estate activities

9,093

Professional, scientific and technical activities

24,970

Administrative and support service activities

41,234

Public administration and defence; compulsory social security

81,419

Education

30,087

Human health and social work activities

23,293

Arts, entertainment and recreation

7,746

Other service activities

4,975

Activities of households as employers; undifferentiated goodsand services-producing activities of households for own use

139,904

Activities of extraterritorial organisations and bodies

1,680

Total

1,333,426

appealing place to carve out a career. The growing social infrastructure developments in Qatar provide opportunity for individuals to accelerate their career and work alongside bright, educated Qataris in rapidly growing and dynamic companies. As long as the prospects, opportunity and income exist, people will come. But how will this evolve for Qatar as it faces a similar conundrum? How does Qatar fulfil all of its potential and ambitious plans, whilst still retaining its charm and heritage? How does Qatar learn from â&#x20AC;&#x201C; and compete with â&#x20AC;&#x201C; its Gulf neighbours and develop its own centres of excellence? And do all of this in the context of a reliance on historic visa, passport and labour law practices designed for a different pace of development in another era? To attract the best human capital in sufficient numbers and retain them beyond their initial employment, there needs to be a system of modern labour practices that allows people to be confident in the long-term aspirations of the country and to support them and their families. For example, for how much longer will the two-year employment ban continue, especially considering that countries competing for top calibre recruits, such as the UAE and Bahrain, no longer perform this practice? Free movement of labour and talent does not always come at a great price, but is more of a great return on investment in the talent that a company or country has already invested in attracting, which then remains with the country â&#x20AC;˘

56 | The Edge

and continues to add value to the economy. This is where Qatar can excel and provide attractive long-term career and living prospects to a regionally or globally mobile workforce.

Matthew Lewis is director Middle East and North Africa at Boyden Global Executive Search.

SMALL BUSINESS SUPPORT Is enough being done to nurture growth in Qatar’s SME sector? By Aparajita Mukherjee

The entrepreneurial movement has been underway for some years in Qatar. As part of our annual focus on the small and medium business sector, this year The Edge chose to pay attention to the organisations, entities and individuals within Qatar’s ‘entrepreneurial ecosystem’ in order to find out to what extent they are contributing to the development of SMEs in the country – and indeed, whether the sector here is growing at all.

cover story | entrepreneurship

At the Enterprise Qatar Professional Series, participants prepare feedback at the end of each session. (Image EQ)

60 | The Edge

n a public sector dominated economy such as Qatar’s, where the predominant employment trend still is to take up government jobs – primarily in the hydrocarbon sector – and where the contribution of the non-hydrocarbon sector is lower compared with the hydrocarbon sector, sustained private sector growth is only possible through inculcating a spirit of entrepreneurship. The Edge investigates the entrepreneurial ecosystem and talks to entrepreneurs who have gone in pursuit of their dreams. This is especially pertinent given the fact that entrepreneurial organisations are job creators and with both the National Vision 2030 and the National Development Strategy 2011-16, one common thread that the State of Qatar does is to lay down the path for diversification of the economy (see box-out for a snapshot of the complete ecosystem done by Silatech in the following pages). Abdulaziz Al Khalifa, executive director, strategy and business development, Qatar Development Bank (QDB), says, “When economies develop, they migrate from natural resources dependent economies to manufacturing and then to valueadded products or services and then into the knowledge-based economies.” So in the entire value chain of facilitators of entrepreneurship, there are institutions like the QDB (which operates through 15 partner banks and financial institutions) and was founded in 1997, as an accelerator for the private sector. Then there are institutions like SILA, a Qatari-headquartered consortium of entrepreneurship ecosphere stakeholders seeking to catalyse start-ups. Shareef Batata, associate director of SME programmes, Silatech says, “Founding partners Silatech, Enterprise Qatar, Qatar Development Bank and Bedaya launched this initiative in October 2012 to convene entrepreneurs – both individuals and institutions – who can support new ventures both financially and in-kind. SILA hopes to mobilise not only capital, but also counsel in the form of angel investments.” Batata added that SILA recently hosted the first Qatar Angel Investment Roundtable at the Arab Youth and Entrepreneurship Summit. “During the roundtable, seasoned and emerging angel investors and network representatives shared their perspectives and approaches with the local community.” On another point, and clearly in the knowledgebased domain that Al Khalifa mentioned, is the Digital Incubation Center of the Supreme Council of Information and Communication Technology (ictQatar) which, says Ahmed Laiali, Digital Incubation Center manager, was created to help aspiring digital entrepreneurs grow their businesses into thriving enterprises. “We recognise that there are tremendous opportunities for business innovation when it comes to digital content and technology, especially for Arabfocused endeavours. The Digital Incubation Center

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Apart from this triumvirate of QDB, SILA and the Digital Incubation Center of ictQatar, there are banks which have SMEs as a focus.

According to Saleh Al Khulaifi, Bedaya Center manager, one aspect that is lacking in the Qatari entrepreneurial ecosystem is a venture capital fund.

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helps start-ups by providing expert mentoring, seed capital, office space and support services. These locally developed start-ups will serve as a catalyst for economic growth in Qatar, create knowledgebased jobs and build the ICT sector.” Apart from this triumvirate of the QDB, SILA and the Digital Incubation Center of ictQatar, there are the banks, which are not part of QDB’s partner network but nevertheless have small and medium enterprises as a focus, such as Standard Chartered Bank (SCB). “Our strategy is to focus on SMEs that have trade in our network countries or have a well established business in Qatar, or both,” says Amani Sallakh, SCB’s head of SME. “Thanks to our trade expertise and the extensive international network, our trade finance and working capital teams are able to offer a full range of customised solutions for any growing business. One of our major strengths is Straight 2 Bank (S2B), which is a comprehensive global working capital e-channel that allows our customers easy access to a complete range of transaction banking services — cash management, trade and security services,” added Sallakh.

Why are entrepreneurs needed?

Entrepreneurs like Zeyad Al Jaidah, managing director of TechnoQ, or Khalifa Al Misnad who has launched Mycoreo.com, among others, that The Edge spoke to were unanimous on one thing – self-starters like them are needed in an economy, not only to give them the satisfaction of seeing their dreams come to fruition, but also for aiding in economic diversification, though some point out that the state may not need them now, given its reliance on oil and gas driven riches. Khalifa Al Misnad, who has launched multiple start-ups says, “In order to diversify Qatar’s economy from the hydrocarbon sector, it’s important to support the private sector,” adding that, “local entrepreneurship is an important aspect to the private sector as it will flourish with local ideas and innovation. The technology sector is definitely an interesting and flexible sector that the younger generation of entrepreneurs can understand and connect with.” Owner of Doha beauty salon start-up Blue Brush, Sheikha Muneera Al Thani, feels that Qatar needs to see more entrepreneurs on the rise to strengthen its private sector and to increase the competition in the market: “We still have a lot of business areas that are either untouched or with no competition.” She feels that a nation

Abdulaziz Al Khalifa, executive director, strategy and business development at QDB mentions that the bank has identified seven main industry segments.

62 | The Edge

like Qatar can benefit from the ‘serial impact’ of entrepreneurs. “I hope that my success can filter through society and encourage potential entrepreneurs to jump on the bandwagon.” Zeyad Al Jaidah, managing director of TechnoQ, says that every economy needs entrepreneurs. “If there were no entrepreneurs in the world, many great ideas and inventions would never come to see the light of day”, adding that at this point in time Qatar’s economy does not need entrepreneurs per se in order to maintain rapid growth because it is mainly dependent on the oil and gas sector. “But in the interest of our country realising its visions and long-term goals, people need to start actively participating in the progress and growth by pursuing and developing their own ideas and businesses.” Stefan Lindberg Jones of ThinkBigQatar.com, which makes promotional corporate videos, agrees with Jaidah and says, “At the moment, if I’m being honest, I don’t think the economy itself needs entrepreneurs. It’s still heavily reliant on oil and gas and there are years and years of that income ahead. But for Qatar to flourish as a diverse and dynamic place to do business, entrepreneurs are absolutely necessary. Smaller companies create a buzz. They have the drive because they really want the business, they really need the business, so they push boundaries and they innovate to make sure they get it.” In terms of what can additionally be done to assist entrepreneurs, especially financially, Saleh Al Khulaifi, Bedaya Center manager (which was set up by QDB and Silatech to help youngsters network and get career guidance) says, “What we are lacking in Doha is a venture capital fund, someone who comes here and says I will give you the money and I will be your partner.” He adds that Qatar still does not have policies in place to support start-ups. “Getting the company registration (CR) is one thing, but finishing all of the steps of a commercial licence, there are a number of legal documents you need to get and it is a very long process. A multi-millionaire in Doha told me that when he sees a company that finishes the CR and gets all of the government documents, he considers them only 50 percent successful in just getting through the doors of the Ministry of Business and trade. In most cases, we have a number of players where there is no clear map for entrepreneurs when they come in.” To sort out this confusion, Al Khalifa of QDB talks about the various support initiatives of the bank, in conjunction with the International Finance Corporation (IFC) of the World Bank Group, based in Washington DC. “We launched the SME toolkit in

“The Digital Incubation Center helps start-ups by providing expert mentoring, seed capital, office space and support services.” – Ahmed Laiali, Digital Incubation Center manager, ictQatar.

entrepreneurship | cover story

“SILA hopes to mobilise not only capital, but also counsel, in the form of angel investments.” – Shareef Batata, associate director of SME Programmes, Silatech. association with IFC, based on five months of data gathered from various support agencies, legal and human relations agencies – that may be part of launching a business – for company registration, for setting up of the business entity and the various processes thereof. Very recently, we have launched an iPad application – Business Plan Creator – which is quite useful for the entrepreneurs to develop their initial business plans. This application is also widely used by universities in Qatar that are teaching entrepreneurship.”

Diversification of economy

Explaining the role of QDB and its mandate for diversification, Al Khalifa says that being an accelerator of the development of the private sector is in essence ensuring that the private sector has all the tools and the facilities to play its role (and it is a very essential role that the private sector plays in the overall economy) in diversification. “Qatar, being primarily a hydrocarbon dependent nation, started rethinking our strategy of diversification. We believe that diversification is enhancing the contribution of the non-hydrocarbon industrial sector in the economy, and the strategy is well laid out in both the National Vision 2030 as well as in the National Development Strategy 2011-2016.”

Mohammed Arif (second from left) from the Learning and Development team at EQ at one of the EQ Professional Series events.

SME Support: Carnegie University Qatar

George M. White, associate teaching professor of entrepreneurship, Carnegie Mellon University in Qatar

Mellon

When it comes to coaching for entrepreneurs, what do you emphasise? I emphasise ‘making meaning not making money’; I also emphasise nonverbal communication skills and body language; committing to ideas that serve a social need and to which you can form a long-term personal commitment.

In your view, what do the authorities need to ease up on, in order to make it easier for people to go the entrepreneurial way? It is always the case that government ‘red tape’ needs to be minimised. There should be no minimum bank account requirement, no physical address requirement, no restrictions on gender, race, nationality, age, education or wealth in order to get into business. Of course, there will be practical restrictions in all these areas, but the government should let the marketplace impose them, rather than the government itself. What has the West got to offer when it comes to teaching Qatar to create a better climate for entrepreneurship? Certain areas, like the Silicon Valley to be sure, have a good track record of creating new businesses. Of course, those of us from that part of the West can tell Qatar what worked, and we can help Qatar understand what gave rise to the apparent regional advantage that Silicon Valley seems to enjoy. It turns out that there is not a single answer.

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Qatar Entrepreneurship Ecosystem Education Institutions

An Infographic snapshot of Silatechâ&#x20AC;&#x2122;s Qatari entrepreneurial ecosystem that captures the various stakeholders in the country.

Flat6Labs

Support Organisations

ASSOCIATIONS

Skills Academy

CIEC

GEW

CMU CNA-Q

Stenden

SME EQ Evolution Al Fikra

Bedaya

CCQ

COLLEGE/UNIVERSITY

CRDF/G

EVENTS Startup Weekend

Texas A&M

ACCELERA

QBWA

WISE

VOCATIONAL

VCUQ

QBA

Business Start Up

Silatech

Distinction Distinction

Georgetown QMIC

SUPPORT CENTERS

TechWadi QU

CONSULTING

WCMC-Q

Stratagem SDC

Roudh

Golden Seeds Tataowar QIB

QDB

Reyada

TYC

Khaliji Barwa Bank

Qatar Foundation

CBQ

SME FINANCING

Al Fikra

FOUNDATIONS

Finance

ibq

Doha Bank

HSBC

Angels Den

Draper

VENTURE CAPITAL

SILA

Wamda

Think Big

ANGELS

PROMO

QPB

Media infodev

PRIVATE EQUITY

Qinvest

Tfour

BLO

February 2013

Geographical Reach Local Regional Global

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Organization

Training Program & Award

Acronym Glossary

Corporations

Education Institutions

Finance

E&Y: Ernst & Young PwC: Price waterhouse Coopers Qnbn: Qatar National Broadband Network UDC: United Development Company

CCQ: Community College of Qatar CMU: Carnegie Mellon Qatar CNA-Q: College of the North Atlantic Qatar QMIC: Qatar Mobility Innovations Center (Qatar University) QU: Qatar University VCUQ: Virginia Commonwealth University in Qatar WCMC-Q: Weill Cornell Medical College in Qatar

CBQ: Commercial Bank of Qatar ibq: International Bank of Qatar infodev: International Finance Corporation QDB: Qatar Development Bank QIB: Qatar Islamic Bank Qinvest: Qinvest / EFG Hermes QPB: Qatar Promotion Board

entrepreneurship | cover story

Government

MEI

QCCI

Flat6Labs

POLICY

Oasis500

ACCELERATORS

MBT TIEP

CRDF/GIST

SCEAI

Qatar 2022

EECP

QSTP

EQ ion Al Fikra

QEVM

mena apps EQ

daya

REGULATION

INCUBATORS

ictQ

QFC/A

ictQ Injaz

SUPPORT CENTERS

QBI

EOY

E&Y QLC

Exxon Mobil

Deloitte EO

Microsoft

ENTREPRENEURSHIP INITIATIVES

Cisco

Roudha

ENTREPRENEUR MEMBERSHIP

Innovative Achievement

Intilaaqa

Shell iHorizons UDC Vodafone

Brookings

Al Fikra

POLICY & RESEARCH

Corporations

Qnbn

Barwa

PwC Aramex

Jaidah SoS

q.Media Think Big

oration

SPONSORS

Google

Qatar Gas

PROMOTION PSQ

Qatar Petroleum

Katara

Qatar Today

QatarAir

Intel Visa

Qtel

MAINSTREAM

RasGas

Virgin

Qatariat Tfour.Me

Zawya

BLOGS

Government

Media

Support Organisations

Training Programmes & Awards

MBT: Ministry of Business and Trade MEI: Ministry of Energy and Industry QCCI: Qatar Chamber of Commerce & Industry QEVM: Qatar Exchange / Qatar Exchange Venture Market QFC/A: Qatar Financial Center / Authority SCEAI: Supreme Council for Economic Affairs and Investment

CRDF/GIST: Civilian Research Development Foundation/ Global Innovation Through Science & Technology PSQ: Private Sector Qatar SoS: Stars of Science

CRDF: Civilian Research and Development Foundation EO: Entrepreneurs' Organization Qatar EQ: Enterprise Qatar GEW: Global Entrepreneurship Week Qatar QBA: Qatari Businessmen Association QBI: QDB Qatar Business Incubator QBWA: Qatari Businesswomen Association QLC: Qatar Leadership Center QSTP: Qatar Science and Technology Park SDC: Social Development Center TYC: The Youth Company WISE: World Innovation Summit for Education

CIEC: Corporate Innovation & Entrepreneurship Certiﬁcate Program EECP: Executive Entrepreneurship Certiﬁcate Program EOY: Ernst & Young's Entrepreneur of the Year Award Innovative Achievement: Award for Innovative Achievement TIEP: Technology Innovation and Entrepreneurship Program

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Curtis Avery, entrepreneurial mentor, College of North Atlantic in Qatar

SME Support: CNA-Q

Khalifa Al Misnad has launched multiple start-ups in Qatar including Mycoreo.com (a real estate company with an online presence) and feels that innovative local entrepreneurship is an important contributor to the private sector.

“QDB has identified seven main industry segments that the bank is mandated to support – manufacturing, health, tourism, education, agriculture, fishery, livestock, and added a sector recently, which is value-added services,” says Al Khalifa. Al Khalifa explains, “The total loans approved has grown substantially during the last three years, in 2012; the approved loans crossed QAR1.5 billion, to register a significant growth of 129 percent with over 60 project clearances. Then again, for Al Dhameen programme, the guarantee amount registered its highest value on record in 2012 when it stood at QAR67.5 million as guarantee value, 23 percent above the 2011 value with a high partner banks’ satisfaction level.” QDB is also looking at developing the chances of entrepreneurs to participate in tenders from the hydrocarbon players. Towards this aim, it has tied up with Qatar Shell Companies. Wael Sawan, managing director and chairman, Qatar Shell Companies told The Edge that the purpose of “this collaboration is to drive business to Qatar’ SMEs and to support Qatar Petroleum and Qatar Shell’s business practices through developing local content which further benefits the local economy. The partnership with QDB will open the doors for local SMEs to win contracts for Shell business in Qatar. This not only provides them access to new business opportunities but also helps them raise their operating standards.”

Collaborative ventures

As part of the ecosystem, there is Enterprise Qatar (EQ) which is mandated with enabling “entrepreneurs and SMEs to achieve greater success by developing a positive ecosystem for start-ups and SMEs.” Recently, under a new initiative called the EQ Professional Series, they held four sessions within a month with their partners such as Qinvest, Deloitte, PwC and KPMG. This might be repeated with a second series in autumn, according to Mohammed Arif from their learning and development department. Talking about the initiative, he says, “The Professional Series is a collaboration between EQ and our professional partners, designed to give SMEs in the early stages of development access to expert knowledge through real world scenarios and role-plays to help develop and grow their business. The workshops were carefully structured to cover the key issues in establishing a business: finance options, business planning, corporate governance and debt and equity financing of expansion. A wide range of SME owners and senior staff participated in the workshops, with many attending all four workshops.” Workshops like these are welcome change for TechnoQ’s Al Jaidah, and he says that it is a great thing that these days there are organisations and programmes advocating entrepreneurial aspirations, but it is not enough. “More time and attention needs to be spent engaging with the policy makers through discussions with stakeholders on real issues affecting SMEs. We just feel like there is no defined authority where our input and concerns can be raised and 66 | The Edge

What has the West got to offer when it comes to teaching Qatar to create a better climate for entrepreneurship? I believe that Qatar has already learned a lot from the West and has applied much of this knowledge in developing the various recently established entrepreneurial support organisations. Efforts are already underway to pioneer the concept of ‘entrepreneurship as a career’ in the community. Business plan competitions at the secondary, postsecondary and professional levels are already taking place and there are a number of entrepreneurship related events that aspiring entrepreneurs can attend. What qualities do you look for in candidates while you mentor for entrepreneurship? I look for common entrepreneurial traits such as being energetic, self-motivated, persistent and visionary as well as having a passion for their idea, a tolerance for ambiguity and risk and possessing critical thinking and problem solving abilities. What role does drawing up a business plan play when it comes to entrepreneurship? A business plan is usually a must if one wants to obtain external financing ,as creditors and investors will base their decisions on the plan. Doing a business plan for a start-up company is a very useful exercise, as it forces the entrepreneur to do proper in-depth market research, assess feasibility and think both strategically and holistically about their business idea. Entrepreneurs should be aware, however, that their original strategy and plan may change as they get out into the market and face roadblocks and/or identify other opportunities. They need to be ready to adapt quickly.

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SME Support: 3 Day Startup When it comes to coaching for entrepreneurs, what do you emphasise upon? The biggest approaches we Cam Houser, CEO, 3 Day push for student entrepreneurs Startup are an understanding that execution is more valuable than ideas and that the best way to learn is by doing. What is it, in your view, that the authorities need to ease up on, in order to make it easier for people to go the entrepreneurial way? We generally believe in a ‘less is more’ approach regarding the structure and content of government programmes to drive entrepreneurship. It’s difficult to quantify progress in start-ups in the way that other domains can be quantified. 3 Day Startup, while it follows a well developed and proven model, is honest about the uncertainties and challenges facing young start-ups. Is there any benchmark that you follow while mentoring candidates for entrepreneurship? We track fundings, revenues, and prestigious incubator/ acclerator acceptances of the student start-ups that emerge from 3 Day Startup. Owner of Blue Brush, Doha beauty salon start-up Sheikha Muneera Al Thani, says that though she has not worked with Enterprise Qatar, but she believes that their presence in the Qatari society is critical.

“We feel there is no defined authority where our input and concerns can be raised and addressed.” – Zeyad Al Jaidah, managing director, TechnoQ.

What has the West got to offer when it comes to teaching Qatar to create a better climate for entrepreneurship? The West – the United States at least – has a strong benefit in how that culture perceives failure. In the US, you can fail at a start-up and still get another chance at a start-up or landing a job. In many cultures we have seen, there is less likelihood for getting a second chance after a first failure.

addressed. Plain and simple, it is very difficult to gain access to high-level decision makers to get our point across, to talk about the reality of things.” Clearly people like Al Jaidah want more from the ecosystem, something that is echoed by Al Khulaifi of Bedaya, “We need agile start-ups, we need competition to come so that quality of products and services go up. We need people working on different entrepreneurial projects and don’t want to see the same company working on everything. It is always healthier to have different start-ups to come and develop different sectors of the economy. It not only makes the system more broadbased, it also ensures competition.” The question remains whether the Qatari entrepreneurial ecosystem is ready to provide more opportunities to budding entrepreneurs, with more guarantees so that people who do not succeed at the first attempt have something to fall back on? Only time will tell. The Edge | 67

Creating a

Smart

Qatarâ&#x20AC;&#x2122;s plans to incorporate smart technology into its cities, and transportation sectors amongst others, has opened up significant market opportunities within the ICT sector that Orange Business Services, which recently launched in Qatar, hopes to capitalise on. The Edge spoke with Sheikh Fahad bin Ghanim Al Thani, the majority shareholder in the venture, and Antoine Farah, the local general manager about the scope of the projects they aim to tackle. By Shehan Mashood

Qatar How Orange can play the role of technology integrators in large scale projects in the country.

business interview | technology infrastructure

range Business Services is a subsidiary – and the business services arm of the multinational France Telecom – which recently announced the launch of a joint venture company in Qatar. While the company has been operating in the Middle East and Africa for over 50 years, playing the role of a network services provider, this most recent company will be the first of its kind to address large and complex projects that require system integration skills and processes.

The partnership

The concept behind the partnership came about two years ago, says Sheikh Fahad bin Ghanim Al Thani, the majority shareholder of the company. “I think we started it at the right time, we discussed it for almost two years, and that is a long time to set up a company like this here in Doha,” he says. Part of the reason why the deal took so long might be because this is the first time Orange has ever partnered with an individual, and also the first time that the France Telecom group has accepted to enter a country with a majority shareholder that is not themselves. Considering the company operates in over 220 countries, it is significantly new territory that the company has stepped into. In other firsts, this is also the first time that Orange’s large project services have been provided in the Middle East and Africa. The general manager of Orange Business Services in Qatar, Antoine Farah, explains to The Edge that they were fortunate when they started exploring the market to have met Sheikh Fahad bin Ghanim. “We were not even convinced that we needed a partnership at the beginning. It was an open question, but the more we got to know the market, we thought that it was fundamental and necessary to have a solid long-term partnership in Qatar, with a Qatari with some very specific characteristics, since this is a long-term association,” he says. What they were looking for, says Farah, was someone whose interest went beyond the technology in the business itself – a person that had a strong interest in the development of the country. “And the reason for that is,” he explains, “we believe, of course, beyond our trust, and our faith in our partner is that this is an essential step to show willingness to the large organisations in this country that we are engaging on the long term and with a strong willingness to transfer knowledge, and to transfer technologies to Qatar. So it was very symbolic, and it was not a cosmetic step, it was a fundamental step for us to translate our vision of long-term commitment.”

Supporting large projects

As previously mentioned, Orange has been in the region for decades, and according to Farah, they already support companies such as Exxon and Total in Qatar. They are also involved in the Hamad International Airport through one of its partners SITA, but these are only for very specific needs. So it might be appropriate to ask

“The idea is for us to capitalise on large projects like smart cities and smart transportation that Qatar is embarking upon.” – Sheikh Fahad bin Ghanim Al Thani. 70 | The Edge

technology infrastructure | business interview

The number of years Orange Business Services has been in the Middle East.

Sheikh Fahad bin Ghanim Al Thani, majority shareholder in the Orange Business Services joint venture in Qatar, tells The Edge that the companyâ&#x20AC;&#x2122;s ambitions of working on large-scale projects match the ones of the country.

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why pick Qatar as a foray into large-scale ICT system integration solutions? Because to put it simply, there are many projects that match the sort of business services and specialisation that Orange can offer, says Sheikh Fahad bin Ghanim. “I can count on my hand the companies that can offer this service, I think four or five companies in the world, and Orange Business Services is one of them.” There was a good fit between the 2030 National Vision of the State of Qatar and the ambitions and the capabilities of Orange, specially the large project division, he furthers. Farah also adds that they identified very early on in the investigative stage of the venture that the ambitions of Qatar and the capabilities and the long-term vision to build very advanced technology infrastructure make it eligible to the type of services they offer. “If you look at the Middle East and Africa, there is a lot of business and a lot of activity, but this type of activity requires not only very strong technologies and the capability to offer network services but also the capability to play a system integrator role,” notes Farah, “which means basically that the company needs not only the ambition but also the capability to take on the full responsibility of designing, building and operating services in the long term. That is our ambition and the country’s ambition today.” The idea, says Sheikh Fahad bin Ghanim, is for the company to capitalise on the large projects like smart cities and smart transportation such as smart rails and trains that Qatar is embarking upon. What Orange identified was that there are some sectors that are very dynamic and very ambitious in Qatar, explains Farah, “Sheikh Fahad bin Ghanim mentioned the new cities, that is one of them, and if you look at the range of new cities that are developing today like Msheireb, Lusail City, Al Waab, these are the areas. If you look at their characteristics, they are very large projects in terms of size and duration over time.” They are very complex projects because they require the integration of many technologies, not just one technology and they are very advanced projects because the smart cities are not a classical mature market, he furthers.

Project complexity

There are very few references in the world for projects of such scope, notes Farah, and there are very few players, but for Orange, having already worked on projects such as these in Asia, South America and Europe, it gives them a distinct advantage. However, smart cities are only one of many opportunities that Orange sees in Qatar, the oil and gas industry is probably one of the most promising, points out Farah, and while it is a very mature market as opposed to the likes of smart cities, it still requires capabilities to help develop better cost control and improve their overall technologies and the services. “There are many other sectors,” adds Sheikh Fahad bin Ghanim, “education, media, banking, I mean we can list a lot of them.” The defining criteria for taking on a project, says Farah, is that it be “large and complex”. 72 | The Edge

This is the first time Orange partnered with an individual, and also the first time they will enter a country with a majority shareholder that is not themselves.

Antoine Farah, general manager of Orange Business Services in Qatar, explains there are many opportunities in the large projects field such as the oil and gas industry which can benefit from better cost control and improvements in their overall technologies and services.

What Orange really wants to do in Qatar is to go beyond the offerings of its portfolio services and play the role of integrator as well. For example, while Orange has its own data centres, they are happy to provide network services for data centres even if they are not providing the data centre for the project. “We are capable of integrating the network to the data centre, says Sheikh Fahad bin Ghanim, “We are capable to work smart cities, if we have a provider supplying traffic light management or energy management in the smart city, we can integrate our technologies with external service providers.” Orange is not without its competitors here in Qatar. Choosing his words carefully, Farah notes that, “I don’t want to be arrogant, but I think one of the, how do you I say [this] to make it polite, one of the differentiators we can

technology infrastructure | business interview

Qatar’s largest ongoing projects Project: Qatar Rail Network Program Owner: Qatar Railways Development Company Cost: QAR156 billion

Smart cities such as those envisioned here in a rendering of Msheireb, which is currently being built will require the integration of a host of different technological applications from traffic management systems, waste management and a host of other technologies that will be used to operate and monitor the city.

have with our competitors is that we believe that we can bring two things. First is our capability to play a system integrator role so it’s not just pushing solutions but being able to integrate solutions and operate them in the long term. The second is that we believe in some sectors we have a pioneer position. Smart cities is one of them, again this is a very new market, it is not mature, and we believe we are amongst very few who can play this role today.”

Ahead of the competition

Farah hopes that these differentiators will help the organisation stand out in the market. In fact, he believes that the vast majority of the opportunities they see today in the market are as integrators. “We have to work in a very smart and comprehensive way whenever it brings value to the customer,” he says. “We partner with the major players whether they are IBM, Hewlett Packard, Cisco or Ooredoo. We are technology agnostic, we are partners with the major solutions providers in the world. We are one of IBM’s largest customers, one of Cisco’s largest customers in the world. We will work with all the technology solutions providers whenever it makes sense to our customer.” When probed about whether the company is currently engaged in any projects or future deals, Farah only offers that they are working on it, but adds that, “it is a little bit more complex and there is a maturity lifecycle for proposals because those complex services they require also need to have a very clear view from the customer on their business plan, on their business processes of their future ambitions, etcetera so it takes time for those proposals to mature.” It is clear that the projects Orange is looking to involve themselves in, at least presently, rest solely in the public sector. When asked if there are any opportunities in the private sector, Sheikh Fahad bin Ghanim says, why not, but perhaps only in the future. Farah is in turn positive, and notes that they are not in a hurry, and will be around for a long time. “Of course we want to deliver service and business but we want to deliver it in the long term. And we want to make perfect the examples of what we can do because we are confident that the better the service the more success we will have.” At this point, Sheikh Fahad bin Ghanim interjects to point out that his vision for the company is that it be very much a “local company with the experience that Orange brings from working in Europe.” For him, it is about creating a real local company that is able to absorb and transfer the experience and technology to the people of Qatar.

Project: Qatar North Development Owner: Qatar Petroleum Cost: QAR72.8 billion

Gas

Field

Project: Hamad International Airport Owner: New Doha International Airport Steering Committee Cost: QAR63.7 billion Project: The Pearl Qatar Owner: United Development Company Cost: QAR51 billion Project: Barzan Gas Development Owner: Qatar Petroleum/ExxonMobil Cost: QAR37.8 billion Project: New Doha Port Owner: The New Doha Port Steering Committee Cost: QAR30 billion Project: Msheireb Owner: Msheireb Properties Cost: QAR20 billion Project: Lusail City Owner: Lusail Real Estate Development Company Cost: QAR20 billion Project: Al Wa’ab City Owner: Nasser bin Khaled and Sons Cost: QAR11.6 billion Project: Qatar Entertainment City Owner: Abu Dhabi Investment House Cost: QAR11.6 billion Source: Zawya Projects Monitor

The Edge | 73

Pursuit of

haplessness? Examining the real role of a board of directors

corporate governance | business management

Widely seen as the key for ensuring quality in corporate governance, recently the board of directors (BOD) has been a particular focal point for reform around the world. But, The London Business School’s Harry Korine, Marcus Alexander and Pierre-Yves Gomez believe that more, not less, leadership at board level could avert future corporate crises.

ver the last decade, great efforts have been made to improve the corporate governance of publicly quoted corporations in the United Kingdom and United States as well as those in France, Germany, Switzerland and elsewhere. Nonetheless, as the financial crisis has shown, adequate corporate governance is not yet assured. Boards are still not working as they should. So why is it that less than 10 years after Enron, Worldcom and Parmalat, we are again mulling over corporate governance failures as significant as Lehman Brothers, RBS and UBS? In practically every major case of corporate governance failure in the last 10 years, the corporation’s survival was put at stake in the unreserved pursuit of often unsuccessful governance trends or ‘strategic fashions’. The past decade provided three transformative opportunities for growth: globalisation, the Internet and cheap and easy credit. Each of these opportunities also engendered its own strategic fashion: go global or go bust, the Internet changes everything, or play the leverage game. But these opportunities were not appropriate for all of the corporations that boarded the respective bandwagons. Rather than insisting on the essential question of how their corporation should respond to the transformative opportunity, directors of Ahold, Worldcom, UBS and others got caught up in the hype.

After a fashion

Policy makers and legal experts are trying to come up with new mechanisms for preventing governance failure. They worry that the regulatory push for more detailed compliance manuals or betterarticulated codes of conduct will not help boards prevent the next wave of corporate governance failures. Rather than putting the accent on the exercise of prudence, boards are being primed to focus on questions of financial and legal detail that reveal the signs of trouble only when it is far too late. The real job of the board consists of acting upfront to protect the corporation against strategic fashions. Not only should boards discuss long-term strategy, they should specifically focus on formulating appropriate responses to transformative opportunities.

Transformative opportunities for growth represent radically different conditions for doing business that have the potential to change the rules of competition in multiple industries. They invariably produce winners and losers. Both the highly successful Renault-Nissan alliance and the greatly disappointing DaimlerChrysler merger can be seen as responses to globalisation. Both the stellar performance of eBay-PayPal and the implosion of Vivendi-Universal are outcomes of the Internet transformation. And JPMorgan Chase and Citibank, in their very different respective current states, are the result of easy credit. In the face of such transformative opportunities, a corporation has to act, and the BOD cannot stay silent. However, a truly transformative opportunity is so large and so apparently obvious that it engenders strategic fashions. In fact, strategic fashions are perversions of the transformative opportunity. Under the hold of a strategic fashion, reasoned debate and careful choice go out the window. All that is heard is some variation of a mantra about joining the corporate bandwagon: “Everyone is doing it; we’ll get killed or downgraded if we don’t!” Consider, for example, how bank after bank moved into speculative buying and selling of mortgage bundles that lacked actual, valuable real estate underpinning their risk-taking. The publicly quoted corporation is especially prone to strategic fashions. While family-owned corporations can decide for themselves without concern for shareholders, there is always pressure on the management and the board of the publicly quoted corporation to adhere to a strategic path that all the different stakeholders can easily agree upon. Adding to that is the pressure from regulators. When there is broad stakeholder agreement, it is very hard to stand out from the crowd. Some industries are more prone to strategic fashion than others. Banks should be especially mindful of strategic fashions. In finance, strategic fashions almost always have double-whammy potential. As both makers and takers of strategic fashion, the publicly quoted universal banks have been particularly hard hit by the last 10 years of transformative opportunities turned into strategic fashions. On the one hand, globalisation, the Internet and cheap credit are all

Rather than putting the accent on the exercise of prudence, boards are being primed to focus on questions of financial and legal detail – and often too late. The Edge | 75

business management | corporate governance

networks and outside experience allow them to see trends that cut across sectors or countries. Fourth, their long-term focus enables them to resist the pressure for short-term gains that might compromise the longer-term success. In practice, however, the advantages may actually push boards towards strategic fashions. Focus on broader trends and lack of detailed operational understanding strongly support high-level pattern recognition that ignores granular difference; lack of feel for history and culture soon leads to overambitious change initiatives, and external networks can reinforce the essence of â&#x20AC;&#x2DC;fashionâ&#x20AC;&#x2122;, by lending credibility to the fashionâ&#x20AC;&#x2122;s apparent ubiquity. The process plays out differently for fashion leaders and followers. With fashion leaders, such as Enron, Worldcom or Lehman, the strategy appears to be successful for a time, and the corporation is idolised by the markets and the public. As a result, board members, as well as management, identify too strongly with the new strategy. Positive feedback and copying by competitors reinforces overconfidence. The high level of identification with the strategic fashion makes it increasingly difficult to pull back if, for any reason, current results or future prospects cast doubt on the strategy. With fashion followers, such as Daimler-Chrysler, Marconi or UBS, the board may add to the pressure on management to go with the fashion. In part, this is because the increasing importance of the non-executive director favours the cross-fertilisation of ideas, building pressure on corporations and on boards not to stand out. Arguing for the pursuit of a strategic fashion allows non-executives to feel they are bringing in something positive and valuable from their outside experiences. This is further exacerbated by the fact that the pool of available non-executives is small and highly interlinked; as such, these are ideal conditions for a fashion to grow rapidly.

The role of the board

apposite to the banking business; banks had to take a stand on all of these opportunities. On the other hand, banks were also directly involved, through lending and loan agreements, with client firms that followed all three strategic fashions of the decade. Citibank, for example, failed to profit from its own efforts at globalisation and the Internet. The pressure to pursue strategic fashions can also arise in industries that are not exposed to transformative opportunities of the type described above. With gradual globalisation, the Internet has had little effect on the business model, and cheap credit has not fundamentally altered the equation. The big drug makers also had their fling at following each other down a questionable strategic path in the last 10 years. Thus, there are many examples of forward integration through large-scale acquisition that were ill-considered and eventually had to be unwound at a loss.

Leaders and followers

In theory, independent, non-executive directors are in an ideal position to assess transformative opportunities for growth. First of all, being distant from day-to-day business, they are able to keep bigpicture, strategic questions in perspective. Second, they are less likely to be entrenched in the history and culture of the organisation and therefore can challenge accepted thinking. Third, their external

Standing up to a strategic fashion requires intellectual investment and personal fortitude. If preserving the long-term health of the corporation is the primary responsibility of the board, then prudence in the face of transformative opportunity and the attendant strategic fashions is its most important job. The most critical question BOD should be asking concerns the existence of a credible alternative. Without a choice between credible alternatives, one cannot speak of the board having real decision-making authority. It is natural, for boards in which outsiders and part-timers play important roles, to put more weight on the opportunities and threats side of the strengthsweaknesses-opportunities-threats analysis. In most of the cases of corporate governance failure we have studied, it is precisely the competence side that hindered the pursuit of a transformative opportunity for growth. In general, pursuing a transformative opportunity for growth either requires considerable development of existing competences or acquisition of entirely new competences. Moreover, the novelty of the Internet opportunity put traditional manufacturing and service companies before the question of how to obtain and master the new skills required to leverage the opportunity. Similarly, only very few of the banks and insurance companies had the needed derivative trading and risk management skills that should have been in place to handle such risk. Successful fashion leaders and followers tend to exploit a transformative opportunity by either building on existing competences or systematically

The unreserved pursuit of strategic fashion represents a failure of the board of directors to preserve the long-term viability of the corporation.

corporate governance | business management

developing the new competences required. The risk of collapse is particularly great if pursuing the transformative opportunity means destroying existing competences or making such a large investment in new competences that the corporation cannot continue if the new business does not pan out. The pursuit of a strategic fashion should be accompanied by unusual vigilance by asking key questions such as: How robust is the strategy to changes in macroeconomic assumptions (such as availability of easy credit)? To what extent are competitors copying each other? Have we scrutinised internal figures with an eye for overheating? Has the composition of revenues and profits changed dramatically in a short time? There is always an alternative to following strategic fashion, but it takes a clear head and the courage to stand against the mania of the moment. In such a case, the board has to be able to explain the reason, instead of operating outside of public view and scrutiny. In fact, boards are particularly well-placed to explain to the financial markets and to the public at large why it may not be in the long-term interests of the corporation to pursue a strategic fashion.

The best defence

The board of directors of the publicly quoted corporation, as it currently functions, is not likely to be good defence against strategic fashions. Recent reforms in board practice, although intrinsically commendable, are unlikely to alleviate the problem. Because of the new reporting requirements and emphasis on oversight, a great deal of time is spent by the board on financial and legal detail, to the detriment of strategic debate. In many corporations, boards see themselves as â&#x20AC;&#x2DC;the policeâ&#x20AC;&#x2122;, tempting the management to only tell boards what they want to hear. Corporate governance failure linked to the unreserved pursuit of strategic fashion represents a failure of the BOD to preserve the long-term viability of the corporation. In the special context of the transformative opportunity for growth, only the board can stand between the corporation and its various stakeholders and defend the case for prudence. Thus, practical wisdom may be what boards now need most.

Harry Korine teaches the Sloan Management Programme core module in corporate governance at London Business School. Pierre-Yves Gomez is a Professor of Strategic Management at EM Lyon and Director of the French Corporate Governance Institute (IFGE), Lyon. Marcus Alexander is an Adjunct Professor of Strategic and International Management at London Business School and a director of the Ashridge Strategic Management Centre in London.

78 | The Edge

Inside the minds of leading business figures

business insight Cyber security: A growing concern for MENA >84 Justin Doo is the cloud and security practices director for MENA, at Symantec, an information protection company that supports businesses with their information security and availability needs. In an exclusive interview with The Edge, he speaks about different aspects of a robust IT security system for companies operating in the region.

also in this section Qatari authorities must pay diligent awareness to economic realities >82

In an exclusive interview with The Edge, Ananthakrishnan Prasad, International Monetary Fund (IMF) mission head Qatar focuses on what the role of the central bank should be in containing inflation, and the impact of the huge infrastructure spend in the approach to the FIFA World Cup 2022 will have on Qatarâ&#x20AC;&#x2122;s economy.

Cautious optimism, say company CFOs >80 Midhat Salha, partner Deloitte & Touche Middle East, based in Qatar, in an interview with The Edge, tells that according to a survey, chief financial officers (CFOs) from companies of the Middle East are becoming more optimistic about taking risks on their balance sheets.

P 84 The Edge | 79

business insight | economic outlook

CFO Report

Cautious optimism, say MENA company CFOs

Midhat Salha, partner Deloitte & Touche Middle East feels that todayâ&#x20AC;&#x2122;s CFO have five different characteristics.

Midhat Salha, partner Deloitte & Touche Middle East, based in Qatar, in an exclusive interview with The Edge, says that according to a survey, chief financial officers (CFOs) from companies in the Middle East are becoming more optimistic about taking risks on their balance sheets. 80 | The Edge

If you were to sum up the findings that are relevant to the Middle East for the CFO survey, what would these be? The survey is conducted in the Middle East on a semi-annual basis, with the global version done every quarter. The last six months were actually interesting, because the results of the Middle East stand out compared to elsewhere in the world, with the overall current of optimism amidst international tension. If we delve a bit more into the micro level, five observations that merit discussion are: first, CFOs in the region are more optimistic primarily fuelled by steady oil prices. Definitely, we are talking about continuing mega-infrastructure projects and in particular within Qatar, Saudi Arabia and the United Arab Emirates (UAE), which is also showing signs of recovery. Second, the prevailing mood amongst CFOs is one of looking forward to an increase in business activity, which will be translated into an increase in revenue, operating cash flows and, of course, operating results of their companies. Third, is the fact that now a greater number of companies are

planning strategic alliances compared with the past. In fact, 47 percent of the CFOs say that their companies are planning strategic alliances and mergers and acquisitions (M&As) in the near future compared with 13 percent five years ago when the financial crisis hit the world. It is worth mentioning that the focus on the strategic alliances, as per the surveyed CFOs, is within the MENA region. Fourth, the results of the survey show that 74 percent of the CFOs believe that the competitive landscape will be tougher and tougher in the near future. This is a lucrative marketplace (especially with the background of the fact that the world is still facing its own challenges). We have seen a lot of companies coming to the Middle East in different forms, a lot of foreign investments flowing in, which have had the combined impact of creating significant competition for existing players. Fifth, CFOs are still a little cautious in taking more risks and the prevailing sentiment is more like: â&#x20AC;&#x2DC;We still hold back a little from taking more risks on our balance sheets.â&#x20AC;&#x2122; That is definitely cautious optimism. Now that there is relative stability in the region, what investment plans will be made? While talking about the investment climate, it is important to remember that the Middle East is a very diverse region, and what applies in Qatar for example, does not necessarily apply elsewhere. The natural order in addressing this point is by considering the main elements defining the investment climate. These are infrastructure, workforce, tax framework, the regulations, public transparency and accountability, and if you examine each one of those elements, you would have a very wide spectrum, which accounts for the difference in the investment climate across the entire landscape. As for the Arab Spring nations and the Levant area, these countries continue to

economic outlook | business insight

face various challenges, but of course there are a lot of opportunities to tap into. Coming to the most attractive or lucrative area in the region – the GCC region (and in particular the UAE, Qatar and Saudi Arabia), these countries share a lot of factors that will fuel the growth in the economic activity, like mega-infrastructure projects, supported by strong economies, availability of cash and funding, good depth and breadth of regulations, and relatively attractive tax regimes. If you take Qatar for example, it has seen significant moves by the government to boost economic activity, encourage investors and companies to do more business and attract them to invest in the country. The tax law, for example, was revised couple of years ago which reduced the tax rate significantly to attract foreign investors, with tax charged now at a flat rate of 10 percent, which is very favourable. Steady oil and gas prices,

“Qatar has seen significant moves by the government to boost economic activity, encourage investors and companies to do more business and attract them to invest in the country.”

mega-infrastructure projects plans and many other factors are also examples of the underlying landscape which makes Qatar enjoy a very positive outlook and investment climate. Similar factors exist in other GCC countries and make such countries attractive for investors. The report talks of stricter credit controls. Can you spell out what you mean? Stricter credit controls apply to everybody: they apply to companies and other business entities in dealing with their customers and other stakeholders, thus managing their credit risk and reducing such risk to acceptable levels under the circumstances. This is consistent with what the CFOs stated when they say that they don’t want to add additional risk to their balance sheets – they would rather put more effort and time in ensuring that their decisions are made on the basis of rather more calculated risks. Naturally, more emphasis on credit risk translates into more robust credit controls that financial institutions and other companies will put forth while dealing with their customers and other stakeholders in the market. Remember also that financial institutions have learnt significant lessons in the past few years from the challenges that they faced in local and regional markets and the failures of some of their counterparts around the world. Cost reductions are also forecast for 2013. How will these cost reductions be achieved? Well, that is a very tricky point and most of the issues are on how the reductions will take effect. It is not easy to let employees go and it is not necessarily the right way. It is not as simple and doesn’t work like that; it has to be a little bit more sophisticated, a little bit more scientific. I’d rather refer to it as to ‘costs control and efficiencies” rather than cost reduction, by focusing on how we are spending our money, where we are spending our money, and how our processes look like. It would have to be a step-by-step approach and gradually scaled up to a higher level. The first method of cost reductions would be a combination of reducing your operating expenses and the cost of supply

of material and services that you have. However, in achieving such a combination of cost reduction, organisations have to do their homework and not just follow the simple route. One thing to keep a tab on while reducing cost is never to compromise on quality. The second focus has to be on managing the working capital. What we have seen in the past couple of years is that companies have, to a certain extent, been building relatively higher levels of working capital and this includes higher receivables, higher inventories. Having higher levels of working capital comes at a cost. So one of the ways of reducing your cost is to make sure that you properly manage or optimise your working capital levels. The third is streamlining of processes, an important crux, which contributes a lot to a more efficient and effective organisation and adds to the value that customers derive. We strongly believe that the structure of the organisation and related process flows will most directly deliver that value. The idea is to arrive at an optimal combination to make the bottom line healthier and the gross profit better, even if your costs are higher. What, to you, is a CFO – in terms of characteristics – in 2013? There are four key roles and key characteristics of the CFO in today’s market. The first role of the CFO is that of a steward, so we are talking about accounting, control, risk management, asset preservation and taking care of the company’s compliance with financial reporting, control requirements and information quality. Number two, is the role of an operator – CFO wants to make sure that the finance department is properly operating with efficiency and that service levels within the organisation are at a satisfactory level. CFO is definitely now also a strategist, to an extent. Three, a CFO is like a director, focused on co-defining the future of the company to enhance business performance and shareholder value; a CFO doesn’t take the back seat any more. And fourth, (s)he definitely is a catalyst to doing business effectively. These are the four important roles of today’s CFO. The Edge | 81

business insight | economic policy

IMF MISSION HEAD QATAR

Qatari authorities must pay diligent awareness to economic realities In an exclusive interview with The Edge, Ananthakrishnan Prasad, International Monetary Fund (IMF) mission head Qatar focuses on what the role of the central bank should be in containing inﬂation, and the impact of the huge infrastructure spend in the approach to the FIFA World Cup 2022 will have on Qatar’s economy. What factors would you associate with handling inﬂation in Qatar? Inflation is not an issue of concern in Qatar. Despite the increase in public sector wages after September 2011, inflation is expected to remain low at three to four percent in 2013 to 2014 due to dampening effects of the supply overhang in the real estate sector. As infrastructure related construction activities pick up, as the demand-supply situation in the real estate market converges, and as the expatriate population increases, inflation is projected to increase gradually to five percent in the following years. Many of the drivers of inflation that were present in 2005 to 2008 - namely credit expansion, rising government expenditure, and population growth – are

still present now, but the growth of these drivers is currently lower. Also, during the 2005 to 2008 episode, shortage of raw materials, transportation bottlenecks and lack of storage capacity contributed by no small means to inflation. The authorities are making efforts to alleviate these bottlenecks now. The housing market is one cause you have mentioned. What needs to be done in the immediate term to ease the burden on middle-class locals and expatriates? In the current situation, there is an oversupply in the high-end luxury housing segment, and an undersupply in affordable housing. In that respect,

“The Qatari authorities have re-evaluated some of the major infrastructure projects with a view to reassessing their size, structure, financing and completion time.” 82 | The Edge

satisfying the expected growing demand from a growing expatriate population will ensure that the low-to-middle-end segment of the real estate market does not overheat. What role do you advise the central bank to play in this regard? Any signs of overheating should be managed by the central bank through a combination of liquidity management to absorb the liquidity surplus, and implementation of macro-prudential measures to help smooth excessive credit growth and mitigate pressures from excessive leverage or risk-taking in specific sectors. Regarding the real estate sector, collating and disseminating detailed price and volume data on Qatar’s real estate market segments would help enhance risk assessment. There is a role that the local banking community also has to play. What is your view on that? The local banking community can play a role by ensuring that they undertake proper assessments of risks while lending to real estate to make sure that they do not perpetuate speculative positions in the real estate market. With the huge infrastructure investments that are in the pipeline for the forthcoming FIFA World Cup 2022, what impact on the economy do you foresee? The government has now shifted its focus to economic diversification and growth in non-hydrocarbon sectors through targeted infrastructure investments. Such investments

economic policy | business insight

“Despite the increase in public sector wage after September 2011, inflation is expected to remain low at three to four percent in 2013 to 2014.” are expected to create financing and investment opportunities for the private sector and to have positive spillover effects on the domestic economy. This will also have positive global and regional spillover effects through expatriate workers’ remittances. With a large dose of hopes pegged on the FIFA 2022, what kind of thinking would you, as the IMF mission head, advocate the authorities in Qatar to do on the legacy issues of the event, mainly on the infrastructure initiatives that will be taken for the event? In view of the large FIFA 2022 infrastructure related expenditure, in last year’s IMF Country Report, we had encouraged the authorities to sustain efforts to strengthen public financial management to provide a coherent and rigorous set of procedures for project selection, appraisal, and programming that would enhance efficiency, accountability and governance. The authorities have re-evaluated some of the major infrastructure projects (such as the metro) with a view to reassessing their size, structure, and financing and completion time, which are in the right direction. These efforts will help address the legacy issues. You also have been quoted as saying that Qatar will need to actively manage external risks, particularly in light of the large investment programme. What exactly do you mean by this? We mean that the commitment to complete the infrastructure plan in time for the FIFA 2022 imposes a hard deadline and thereby

Ananthakrishnan Prasad, International Monetary Fund (IMF) mission head Qatar says that it is crucial to have a contingency plan against external risks.

increases Qatar’s vulnerability to external risks, and poses domestic macroeconomic management challenges. Despite Qatar having adequate financial cushions to mitigate potential risks, it is crucial to have a contingency plan against external risks to ensure timely and full implementation of the large infrastructure investment programme. We have discussed in detail some of these risks in our IMF country report – such as those that could emanate from a sustained fall in hydrocarbon prices and drying up of external financing. What do you have to say about the fact that Qatar is fast diversifying its economy away from a hydrocarbon-based and towards a knowledge-based economy? Qatar’s strategy will require a change of paradigm in the labour market. Qatar’s vision is to complete its infrastructure and subsequently move into high value-added sectors, which, in turn, require highly skilled workers. While Qatar relied on temporary and low-skilled migrant labour to build its infrastructure, it faces the challenge of attracting, training and retaining talents while creating job opportunities in new sectors. Continued progress with reform of the education sector, training, and improving the business environment are key to increasing productivity. Building the adequate institutional framework and identifying policies to encourage innovation should be pursued. Qatari citizens are highly concentrated in the public sector. Qatar should, therefore, encourage entrepreneurs to enter new industries and spur innovation through an enabling environment. The Edge | 83

business insight | it security

Software systems

Cyber security: A growing concern for Qatar Justin Doo is the cloud and security practices director for MENA at Symantec, a company that supports businesses with their information security and availability needs. In an interview with The Edge, he spoke about different aspects of a robust IT security system for companies operating in the region.

Justin Doo who is the cloud and security practices director for MENA, Symantec says businesses should secure and manage their information-driven world.

84 | The Edge

Can you tell us about Symantec’s operations in the region? The IT industry in the Middle East region is on par with the globe and facing the same megatrends: the threat landscape is evolving every minute; virtualisation, cloud computing and mobiles are changing the information technology (IT) organisation, and trends like data explosion or big data continue to drive the need for better planning. Symantec helps consumers and businesses from small businesses to large enterprise organisations secure and manage their information-driven world. What are companies in the region doing to protect their digital infrastructure? The Middle East is not immune to cyber threats, and Symantec’s monthly intelligence report highlights that markets like Saudi Arabia and Qatar have been globally ranked in the top five for virus and spam ratios in e-mail traffic. There is an increased need for organisations to adopt better protection strategies – this is not limited to security alone, but also to the appropriate storage of their information and protection of business critical applications. In addition, employees are increasingly relying on multiple devices with an explosion of mobile and cloud computing in the region, which leaves them and their companies more vulnerable to data breaches on these open platforms. Small and medium-sized businesses (SMBs) are increasingly targeted for their lack of advanced security solutions, as well as their connections into larger companies that might offer less secure access to those companies. In Symantec’s Middle East

it security | business insight

SMB Survey, conducted in 2011, the vast majority of SMBs believed that by copying data to a CD, DVD or hard drive, they were backing up that data. What is Symantec’s mechanism to track vulnerabilities? At the core of Symantec’s security technologies is the Symantec Global Intelligence Network, comprising research centres worldwide that analyse security risks and vulnerabilities. It monitors security devices in over 70 countries. Registered sensors in over 200 countries help identify if threats are localised, global, or targeted against a specific industry. Symantec’s 120 million virus submission systems determine if threats are new, variants of existing threats, or renewed activity. With personalised notification triggers and expert analysis, the system enables enterprises to prioritise IT resources in order to better protect critical information assets against a potential attack. For advanced levels of protection, businesses are often using Managed Security Services (MSS), which takes a comprehensive, ‘edge-to-endpoint’ monitoring approach to provide broad visibility of activity across an enterprise’s infrastructure, and leverages threat intelligence from the Symantec Global Intelligence Network. By outsourcing security monitoring and management, an organisation can maximise investments in security operations infrastructure and redeploy basic security operations staff to other mission critical operations. How has the Bring Your Own Device (BYOD) culture affected security in the workplace? What are some of the challenges it brings? The changing trends in mobile technology have led to enhanced accessibility to information across a number of different devices, including PCs, smartphones, and tablets. BYOD lends itself to more productivity and freedom for employees. However, organisations’ IT departments are challenged with the need to protect and control corporate information regardless of the device it is

on and without hindering the efficiency BYOD enables, or affecting the personal applications on the device. Concerns are wide-ranging, from lost and stolen devices, data leakage, unauthorised access to corporate resources and the spread of malware infections from mobile devices to the company network. With mobile devices now delivering critical business processes and data, the cost of security incidents can be significant. How can organisations deal with these challenges? As more employees connect their personal devices to the corporate network, organisations should modify their acceptable usage policies to accommodate both corporate-owned and personallyowned devices. Management and security levels will need to differ based on ownership of the device and the associated controls that the organisation requires. Having a BYOD-ready network does not require a complete redesign of IT infrastructure, but businesses should prioritise educating employees about mobile threats and protecting businesscritical information that employees are accessing remotely. Businesses can use mobile device management (MDM) and mobile application management (MAM) tools to help maintain an inventory of the devices connecting to company resources and also make sure employees are adhering to policies. Implementing BYOD without the proper tools is unsafe and puts the entire organisation at risk. With recent high-profile breaches (in the cases of Saudi Aramco and RasGas), has there been an increase in investment in these fields? Across the Middle East, 69 percent of inbound email is spam and one in 814 emails is infected with a virus. Recent highprofile attacks have heightened awareness around the cyber security threats that are prevalent in the Middle East, and are pushing IT and information protection up to board-level decision-making levels. These high-level attacks have not only driven a need for business to adopt defence-in-

“Markets like Saudi Arabia and Qatar have been globally ranked in the top five for virus and spam ratios in e-mail traffic.” depth security strategies, but to also think about the storage of their data and making this data highly available and recoverable in the case of data breach or data loss. According to Symantec’s 17th Global Internet Security Threat Report (ISTR), advanced targeted attacks are spreading to organisations of all sizes, data breaches are increasing, and that attackers are focusing on mobiles as a new platform for attacks. With companies virtualising many business functions and moving to the cloud, what sort of security challenges does this open them up to? Advanced cyber-attacks by governments and crime syndicates will likely target highly profitable data centres and high-profile clouds. In the face of these new challenges, organisations will need a rigorous cloud approach. When it comes to security, device and user authentication is increasingly needed for cloud solutions. Since devices are essentially the access points to the cloud, mobile and desktop devices need the same multi-layer protection we apply to other business endpoints In addition, Symantec’s recent Avoiding the Hidden Costs of Cloud 2013 Survey found that businesses are experiencing escalating costs tied to rogue cloud use, complex backup and recovery, and inefficient cloud storage. The Edge | 85

business insight | it security

security breach in a specific situation, setting up exact rules and regulations. So if and when an attack occurs, all employees know their place. Finally, organisations have to be sure that all their security softwares are fully updated and to be sure to remove any pirated software installed on endpoints.

One of the greatest concerns around cyber security is when user-specific data is gathered in an attempt to make unauthorised transactions. (Image Shutterstock)

Could you talk about some trends in mobile security? How big of a problem is malware? The most common feature among bad mobile apps is the collection of data from the compromised device. This was typically done with the intent to carry out further malicious activities. Rarer, but of greatest concern is when user-specific data, such as banking details, is gathered in an attempt to make unauthorised transactions. Another common threat is to track a user’s personal behaviour and actions. These risks take data specifically to spy on the individual using the phone. The third-largest group of risks is bad apps that send out content. These risks are different from the first two because their direct intent is to make money for the attacker. Most of these risks will send a text message to a premium SMS number, ultimately appearing on the mobile bill of the device’s owner. There are a small number of risks that focus on making configuration changes. These types attempt to elevate privileges or simply modify various settings within the operating system. The goal for this seems to be to perform further actions on the compromised devices. How important is it for companies to have an Internet security policy? What would it entail? Companies should change their mindset from the usual “we might be breached” to the clear mindset of “we will be breached.” This new mindset will change the organisations’ approach on how they handle their IT solutions as a 86 | The Edge

whole and will make sure they prepare for any attacks properly. Businesses must educate their teams and build security awareness into daily operations so that the organisation as a whole is working to prevent an attack. Companies should adhere to regular reviews and penetration testing by working with second and third party teams to assist in the testing. They should back up data on both servers and endpoints; and should run vulnerability tests and patch all vulnerabilities. Another tactic companies can deploy is a set process on how to handle a

“Companies should change their mindset from the usual ‘we might be breached’ to ‘we will be breached’.”

Nine ways Qatari companies can protect against targeted cyber attacks:

Justin Doo recommends the following best practices for businesses to protect themselves against cyber-attacks: 1. Create an internal corporate security task team to work with a trusted security vendor to perform a detailed analysis of the current risk. 2. Review security operations process and infrastructure, and design and implement an industry-compliant security operation centre. 3. Create a cross-functional response team that incorporates public relations, human resources, executive-level representation, IT and security personnel. 4. Procure products and services for all required software and infrastructure to implement critical recommendations and deploy optimised protection to secure all business environments. 5. Implement a Managed Security Service (MSS), supplemented by senior resident resources. Part of the MSS is the implementation of a 24-hour a day global intelligence monitoring service. 6. Ensure infrastructure security across all endpoints including mobile devices, ensure security products are up-to-date and avoid pirated software. 7. Have a disaster recovery plan in place; it is important to have data backed up, encrypted and secure. 8. Protect and educate users with identity and access control, two-factor authentication and conduct security awareness training.

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products and reviews

Toshiba Ultrabook

Read it: It’s okay to manage your boss “You need strong bosses, and you are going to have to help them get there.” This is the key idea of It’s okay to manage your boss. Written by Bruce Tulgan – founder of research and training firm RainmakerThinking – the book offers the readers a seemingly reverse approach to improve their work relationship with their boss. It begins by emphasising the need to have one’s boss managed. The idea behind this principal argument is that the under-management of a boss increases the workload of their juniors. Managing a senior, on the other hand, not only helps in promoting healthy working relationship but also leads to more concrete benefits due to the increased productivity. Building on case studies and interviews with business personnel covering over 200 pages, Tulgan provides a step-by-step practice starting from managing oneself personally and professionally before moving on to manage the senior. The author tends to disagree with some common managerial practices, such as group meetings more often. While useful for sharing ideas, one-to-one meetings, he argues, work better to manage one’s boss. The idea is to invest time in building rapport with the senior through regular discussions and by being open to their feedback and criticism. In case of having more than one senior, the author recommends customising the management strategy accordingly. But what if your boss is a jerk? That is where the book moves away from most manage-your-worklife accounts. The author here reverses the idea of accountability, suggesting to report one’s immediate boss’s attitude to someone holding higher authority.

Available at Virgin Megastore for QR120 90 | The Edge

Toshiba has launched its first convertible Ultrabook, the Satellite U920t, which brings the specifications of a laptop with a touchscreen. The conventional keyboard slides beneath the screen to switch to its touch functionality. With the operating system of Windows 8, the ultrabook is powered by third generation Intel Core i5 processors along with the Intel HD Graphics 4000, which enable smooth running of heavy graphic files. With a sixhour battery life and integrated solid state drive of up to 128GB, the U920t also features a display with anti-fingerprint coating.

New Canon printer range Canon has recently upgraded its home office printer range with four new additions. The PIXMA MX printer range is refreshed by four all-in-one devices – MX394, MX454, MX524 and MX924 – featuring print, copy, scan, fax and ADF functionality. With the USB port, PDF and scans and copies of faxes can be saved directly to a USB memory stick, and the built-in Wi-Fi allows these printers to be easily shared between multiple devices.

BlackBerry Q10 BlackBerry has launched its first QWERTY smartphone – BlackBerry Q10. The touchscreen comes with a wider keypad with larger frets between the rows to enable better typing experience, with the largest ever touchscreen on a BlackBerry QWERTY smartphone. Typing is faster with Q10’s personalised intelligent word suggestions and contextual auto-correction. Another timesaving feature, Instant Action, allows the users to type and perform tasks faster by using shortcuts. The use of lightweight materials in the phone’s composition has made the device lighter than it looks.

10 things

Successful Arab business ventures in the Middle East While Arabs are known globally for family businesses and government-backed projects – with brands such as Almarai, Al Jazeera, Qatar Airways and Emirates – many regional start-up efforts that began on an independent level have turned into success stories. Patchi

Aramex

Jarir Bookstore

Brownbook

Patchi started with a single chocolate shop in Beirut, Lebanon, by Nizar Choucair in 1974 and later turned into a leading chocolate brand in the Middle East. Providing customised packaging for its premium chocolate. Today, Patchi has more than 140 boutiques in more than 29 countries.

One of the leading publications from the Arab world, Brownbook magazine was started by Emirati twin brothers Ahmed and Rashid bin Shabib in 2007. With a print run of 15,000 copies per issue, Brownbook positions itself as an urban guide to the Middle East, covering lifestyle, design, architecture and travel.

Just Falafel

Kudu

10 things

In 1979, Jarir Bookstore was started by the Al Agil brothers as a small book shop in Jarir street, Riyadh. Though it started as a provider of office and school products, the company – which has expanded across the Middle East – has now stretched its product line to include electronics. Beginning with its first outlet in Abu Dhabi in 2007, the vegetarian fast food chain soon franchised across the Middle East under the leadership of CEO Fadi Malas. The company spread, with 25 outlets within the first two years. Expanded beyond Middle East with a branch in Covent Garden, London, Just Falafel now seeks to open 200 UK outlets by 2017.

The One

Furniture retail company The One started as a partnership among United Arab Emirates’ (UAE) Rashid Al Mazroui , Kuwait’s Shakir Abal Sadeq and Swedish entrepreneur Thomas Lundgren. With its first outlet opened in 1996 in Abu Dhabi, The One has expanded to Bahrain, Jordan, Kuwait, Lebanon and Qatar.

Gandour

Considered to be one of the top 40 Arab brands worldwide by Forbes, Gandour is a Lebanese confectionary company that started in 1857. Owned by Chafic Gandour and his family, the company sells cookies, chocolate candy bars and fruit drinks in more than 55 countries.

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A global name in the transportation and logistics services market, Aramex was established in Jordan by Fadi Ghandour (pictured) in 1982. Originally Arab American Express, the name was later changed to Aramex. Headquartered in Amman, Aramex reported a growth of 21 percent last year.

Owned by Abdulmohsen Al Yahya and Saleh Al Saleh, Kudu is a Saudi fast food chain which started its first branch in Riyadh in 1988. Now with 200 branches, the company has expanded its operations across the Gulf region with its presence into Bahrain, Qatar, Kuwait, Sudan and the UAE.

Rotana Hotels

Rotana Hotel Management Corporation started as a partnership between Nasser Al Nowais and Selim El Zyr in 1992. The joint venture saw its first project in 1993 with the establishment of Beach Rotana Abu Dhabi in the UAE. Today, Rotana has about 70 properties in 26 cities across the MENA region.

Zawya.com

Zawya began in 2000 as a database of business organisations in MENA, and later expanded its operations to include news and research data on the region’s business environment. It was acquired by Thomson Reuters in 2012. Today, Zawya.com has about one million visitors a month, reaching more than 120,000 registered members.