The Edge - Apr 2012 (Issue 32) by Firefly Communications

CoNTENTS

w w w. t h e e d g e . m e

2012

contents FinancE & Economics

.40. Market Watch

2012 is looking bullish for financial markets.

.42. balance sheet

Richard Kohing analyses the priorities of business leaders.

.44. special report

on the cover

KONY 2012, the online “clicktivism” campaign was viewed by more than 100 million people in two weeks and the number keeps on increasing. The digital campaign was designed to cast global infamy on an African warlord and bring him to justice. Mark van Dijk writes further about the recent online phenomenon. (Page 56)

Qatar’s insurance sector.

.46. personal finance

How secure is your medical cover?

.48. econoMic baroMeter The pros and cons of the Greek bailout agreement.

FEaturEs .52. in the spotlight Qatar’s 2020 Olympics bid.

.60. on the pulse

Erika Widén reports on Qatar’s tower technology.

knowlEdGE & ExPErtisE .66. productivity and Wellbeing

What is an engaged employee?

.68. legal insight

Qatar’s Environmental Law. TheEDGE

CoNTENTS

BusinEss InsiGHt

.72. TheEDGE spoke with the recently voted ‘world’s most

powerful woman in banking’. Karen B. Peetz visits Qatar and discusses local, regional and international financial sector.

.74. The sixth MultaQa Conference was held recently in Doha. TheEDGE spoke with Qatar’s Financial Centre Authority, acting CEO and director of strategic development about the topics discussed.

rEGulars .08. .09. .14. .22. .24. .27. .32. .77. 4

TheEDGE

froM the editor contributors neWs etcetera Qatar iMpact Middle east Matters energy and research country focus travel & lifestyle

FRoM ThE EDiToR

FROM PuBlICATIoNs dIrECTor Mohamed Jaidah m.jaidah@firefly-me.com mANAgINg EdITor Miles Masterson m.masterson@theedge-me.com dEPuTy EdITor Erika Widén e.widen@theedge-me.com rEgIoNAl sAlEs dIrECTor Julia Toon j.toon@firefly-me.com +974 66880228 hEAd oF BusINEss sAlEs Emma Land e.land@firefly-me.com +974 33197446 sAlEs mANAgErs Achraf Mannai a.mannai@theedge-me.com +974 55127480 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 ArT dIrECTIoN Lara Nakhlé dEsIgN CoordINATIoN Sarah Jabari FINAlIsEr Michael Logaring PhoTogrAPhEr Herbert Villadelrey PrINTEd By Ali Bin Ali Printing Press, Doha, Qatar

ThE EDiToR

Activism and marketing in an age before social media is almost inconceivable. How did humans ever spread a message – be it altruistic, political or just downright commercial – before Facebook, YouTube, Twitter and the multitude of other online and digital conduits springing up these days existed? The truth is people did it, sometimes effectively, sometimes not – through television, video (the VCR kind), telephone, fax (remember that?) radio and print – albeit comparatively slowly. Now, nothing quite compares to the sheer speed of the Internet for spreading information, good or bad, faster than you can click ‘like’ or ‘share’, for better or worse. This is no better, exemplified more than ever in the short history of the world wide web by the recent Kony 2012 viral video sensation, which at last count was at more than 100 million hits and growing. For as much positivity that can be drawn out of exposing this vile African murderer to a wider audience, as much negativity has been drawn and focused on the video’s creators, questioning their accuracy and motives, with unfortunate consequences. As Mark van Dijk concludes on page 56, from the way this phenomenon panned out there are fairly stark warnings and cautions for anyone, activists or marketers, plotting to disseminate information via the web and hoping that it goes viral. You just may get what you wish for. To change tack somewhat, getting what we wished for at TheEDGE in the digital realm took on a different flavour for us in March when we launched our new website www. theedge.me. It was a lot of very hard work and is still a project in progress, but we are very happy with the result and proud to present it to the world. Our website was a

long time in the works and something we hoped would if not go viral, at least be well received, and the feedback from readers and members of our growing Facebook and Twitter communities has been nothing but positive. Fortunately, no one has questioned our motives just yet, though we will be happy to tell you that the main aim is to service our readership further, reflect the Qatari business community in a positive light, and replicate the print version of TheEDGE online as best we can. The website is only the beginning of an online digital strategy that we will be rolling out in 2012, so stay tuned. Please also see our new feedback space on page 10 for more information about our digital media activity for the month. Moving back from a world of bytes to the a world where reality (sometimes) bites, elsewhere in this issue Karim Nahkle ponders the real cost of Greece’s most recent bailout package on page 48; Edward Jameson takes a look at Qatar’s Olympic aspirations on page 52; and on page 64, Erika Widén climbs the elevator to the top floor of some of Doha’s tallest commercial buildings. Rounding out the April edition, in the Business Insights on page 75, TheEDGE interviews BNY Mellon’s Karen B. Peetz, who was recently voted the most powerful woman banker in the world, about regional markets and their place in the world; and Shashank Srivastava and Akshay Rendeva of the Qatar Financial Centre, about the growing insurance sector in Doha. Enjoy the issue. Miles Masterson, Managing Editor

Firefly communications Po Box 11596, doha , Qatar tel: +974 44340360 Fax: +974 44340359 www.firefly-me.com

theEdGE is printed monthly © 2012 Firefly communications. all material strictly copyright and all rights reserved. reproduction in whole or in part, without the prior written permission of Firefly communications, is strictly forbidden. all content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by theEdGE or Firefly communications. no responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in theEdGE. the publisher (Firefly communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of shutterstock and/or istock Photo or Firefly communications.

TheEDGE

CoNTRibUToRS

CoNTrIBuTors

Pg.27 JAmIE sTEWArT International Correspondent London, United Kingdom

Pg.32 rAChEl morrIs Journalist MENA Region Doha, Qatar

Pg.40 dhEErAJ shAhdAdPurI Analyst Dubai, UAE

Pg. 42 rIChArd kohINgA Director, Head of Markets KPMG Doha, Qatar

Pg. 44 ThomAs BACoN Analyst Oxford Business Group Istanbul, Turkey

P.46 AdrIAN BlIss Senior Financial Consultant Guardian Wealth Management Doha, Qatar

Pg. 48 kArIm NAkhlE Senior Business Strategist Doha, Qatar

Pg.52 EdWArd JAmEsoN Senior Business Journalist MENA Region London, United Kingdom

Pg.56 mArk VAN dIJk Journalist Cape Town, South Africa

Pg.66 lAurEN PENNy CEO & Partner Art of Abundant Living Doha, Qatar

Pg.68 BrENdA hIll Senior Legal Consultant DLA Piper Doha, Qatar

Pg. 78 VICTorIA sCoTT Journalist Doha, Qatar

FolloW tHEEdGE oNlINE FolloW us oN TWITTEr: @ThEEdgEQATAr JoIN our FACEBook grouP: WWW.FACEBOOK/QATARTHEEDGE JoIN our lINkEdIN grouP: ThEEdgE mAgAzINE QATAr

About TheEDGE: theEdGE is an ambitious business magazine targeting professionals operating within Qatar’s multi-sector business landscape. Printed monthly, theEdGE was launched in july 2009 to ﬁll the market void and to provide the business community with insight into the latest business trends and market developments. theEdGE is distributed 11 times yearly to a readership base of more than 7500 professionals, providing advertisers with the needed additional reach and frequency to their most important and affluent audience. theEdGE is an authoritative business resource serving both large and small business operators. Please e-mail info@theedge-me.com should you wish to contribute.

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Reader Feedback

FEEdBACk

ThEEdgE’s NEW WEBsITE

THIS MONTH WE INTRODUCE OUR FIRST PAGE TO INCLUDE REACTION IN THE FORM OF LETTERS AND EMAIL FROM READERS FOR THE FIRST TIME, AS WELL AS RANDOM INFORMATION FROM OUR WEBSITE AND SOCIAL MEDIA PAGES.

BACkChAT – lETTErs From ThEEdgE rEAdErs gENErATIoN NExT Dear TheEDGE, I really enjoyed reading your interview with Sheikh Mohamed bin Faisal Al Thani, vice chairman of Aamal Company from February. It is actually great to see an example of a young Qatari being groomed to take the reigns of a business like that as many in not just the country but the region feel that of the older heads of family businesses are holding on too long or not preparing someone to take over. JM, Doha, via email

ExPATCENTrIC? Hi TheEDGE I really enjoy reading your magazine it is the best in Qatar but I have one problem. It seems your coverage is more focused on Westerners and other expatriates and not enough on local Qataris and Qatari news. Can you please include more information about Qatar businesses and local people? – Tarek, West Bay

Thanks for the constructive criticism. We do our best to balance expatriate and local coverage and hopefully you will see more of the latter in the future. – Miles Masterson, Managing Editor If you have any feedback for TheEDGE please email us at info@theedge-me.com

ThE EdgE oN FACEBook smAll rooTs Thank you for your article in the March edition of TheEDGE on entrepreneurs in Qatar. I myself am a small business owner and it was interesting to read about all the activity going on here. Often we entrepreneurs become so involved in the daily running of our business that we don’t find the time to connect with similar people and learn about what they are doing and the support groups available. It is very hard to run a small business in Qatar but it is getting easier thanks to the support of everyone involved and I say to anyone who wants to start their own business that they should go for it! Mohamed, Al Waab

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TheEDGE recently launched a dedicated Facebook Page, on which we loaded photos and covers from the magazine, links to our website and more. Favourite Photo of the Month (so far) is cleaners at Tornado Tower from December 2011. Favourite Cover of 2011 is our Travel Cover from July (left). We are going to start loading 2012 covers soon, so be sure to log on and join to vote for your favourite cover. Like TheEDGE on Facebook at www.facebook.com/theedgeqatar

Our newly launched website has been getting excelling daily traffic. Log onto website www.theedge.me for online exclusives, breaking news about Qatar’s business world and back issue content across all Doha’s business sectors. On the website you can also sign up to subscribe to the magazine and have it delivered free to your door 11 times a year.

www.theedge.me

ThEEdgE oNlINE surVEy mArCh 2012 In March 2012 we ask our website visitors and Facebook group members:

WIll QATAr WIN ThE 2020 olymPICs BId?

The outcome was close, with 57 of our group followers and website visitors feel that Doha will be the venue of the 2020 Olympics while 43 do not.

yEs: 57%

No: 43%

Log onto our website or visit our Facebook page to vote in April’s survey.

NEWS ETCETERA

TO OF THE MONTH O H P

The

E D G E M A G A ZI N E

iPATIENCE

Customers wait on a set of stairs to get into the Apple store to purchase the new iPad 3 as they went on sale on March 16, 2012 in New York City. Simply called the iPad, the new tablet replaces the iPad 2 and features a high-pixel-count ‘retina display’ among many other improvements on its predecessors. Hundreds of people waited in line all night to be the first into the flagship Apple store on Manhattan’s Fifth Avenue, a scene that was replicated in many cities around the world as the popular tablet computer went on sale globally, including the Middle East. (Photo by Spencer Platt/ Getty Images)

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NEWS Etcetera

NEWs Etcetera More than US$20 billion (QR73 billion) Qatar Projects Claim Industry Honours Five of Qatar’s biggest projects, valued at more than US$20 billion (QR73 billion), have been declared National Winners by the MEED Quality Awards for Projects 2012, the only awards programme in the Gulf Cooperation Council (GCC) to recognise completed quality projects. The national winners in Qatar include the US$19 billion (QR69 billion) Qatar Petroleum and Qatar Shell’s Pearl GTL joint venture project, which is also being considered for the GCC HLG Leighton Contracting Oil and Gas Project of the Year award in May this year. The US$500 million (QR1.8 trillion) extension to the Qatar National Convention Centre project jointly undertaken by the Qatar Foundation and ASTAD also made the winners’ list and is vying for the Leisure and Tourism Project of the Year through the GCC. Barwa Real Estate’s US$411 million (QR1 trillion) Barwa Village is the other national winner and is in contention for the Metito Social Project of the Year Award; as well as United Development Company’s US$62 million (QR225 million) sea water desalination Plant for The Pearl Qatar; and Salam Bounian’s US$123 million (QR447 million) The Gate Project, which is also eyeing the GCC Emirates Steel Building Project of the Year Award. Besides Qatar, national winners were also selected from among projects completed in Bahrain, Kuwait, Oman, Saudi Arabia and the UAE. GCC winners will be announced at the annual MEED Quality Awards for Projects on May 21, 2012 at The Westin Abu Dhabi Golf Resort and Spa, United Arab Emirates.

IQ doing study to set up marketing arm

Industries Qatar (IQ), which reported net profit of QR8 billion in 2011, is undertaking a feasibility study to establish a marketing company for its products. This was said by the minister of energy and industry, HE Mohammad bin Saleh Al Sada while addressing shareholders at the ordinary and extraordinary general assembly meeting in March. Al Sada, who is also the chairman of IQ, said a technical committee has been set on the directives of the government to explore the possibility of setting up a marketing company for IQ. However, he did not give further details on the subject. For the export marketing of regulated goods and non-regulated goods, the country already has Qatar International Petroleum Marketing Company Ltd (Tasweeq).

TheEDGE

Regulated products comprise of liquefied petroleum gas (LPG), refined products, condensates and sulphur. Tasweeq also markets non-regulated products like crude oil and GTL entitlements on behalf of Qatar Petroleum under an agency agreement. Speaking about the future plans, Al Sada said the group has released its five-year business plan for the period from 2012 to 2016. “Consideration should be made, however, for a number of pipeline projects and investments that are still under study that are expected to eventually further enhance the company’s position through the added values to its operations. Once approved, the market and shareholders will be notified,” he said.

Salam Bounian’s US$123 million (QR447 million) The Gate Project is one of five biggest projects in Qatar and is among the national winners of the MEED Quality Awards for 2012 projects.

by ASIF IQBAL

HE Mohammad bin Saleh Al Sada, minister of energy and industry addressed shareholders at a general assembly meeting of IQ recently.

NEWS Etcetera

Mazaya likely to invite tenders for QR1bn Marina Mall later this year by ASIF IQBAL Mazaya Qatar Real Estate Development Company plans to invite tenders for its QR1 billion Marina Mall this year, a top company official has said. “We have the detailed design for the project and we are likely to invite tenders soon,” chief executive officer Seraj Al Baker said recently. In 2010, Mazaya Qatar had entered into a 30-year build, operate and transfer (BOT) agreement with Qatar Foundation for the development and management of Marina Mall Shopping Centre at Lusail. Seraj al Baker, chief executive officer of Mazaya Qatar Real Estate On completion, the mall will have an area of 57,605 Development Company talks to square metres spread over two floors comprising retail areas, TheEDGE about the QR1 billion Marina Mall. food courts and leisure facilities. As for the Sidra residential project, al Baker said he expects to hand over the 1165 residential units, including 658 one-bedroom apartments of approximately 50 square metres each, and 507 two-bedroom apartments of approximately 85 square meters each to Qatar Foundation by the summer of 2013. Mazaya Qatar has also signed a 20-year BOT agreement with Qatar Foundation to build and maintain the Sidra Medical and Research Centre’s residential project. “Recently, we awarded China’s Sinohydro a contract worth QR473 million (US$130 million) for the Sidra Village project and we are hopeful of completing it by next year,” Al Baker said. According to Al Baker, as per the contract, Sinohydro will complete the project in 20 months. Giving an update on the Qatar National Convention Centre’s (QNCC) residential compound, Al Baker said it would be ready for handover by the end of this month. Under the memorandum of understanding (MoU) that Mazaya Qatar has signed with the Qatar Foundation, the real estate company is to provide 324 housing units for the QNCC over a ten-year period. On the expansion plans, Al Baker said: “There is no better market than Qatar in the Gulf or the Middle East today. From the expansion point of view, our focus will be to strive for excellence in Qatar. If there are any other opportunities, we will not let them go.”

Sri Lanka eyeing Qatari investments in tourism, infrastructure and banking sector by ASIF IQBAL Sri Lanka is eyeing investments from Qatar in the field of infrastructure, tourism and banking sector, as it expects its economy to grow eight percent in 2012, a top official of its central bank has said. “After the end of the 30 year conflict in 2009, there has been a lot of interest in our country from the outside world, and Qatar is in top of our list as a potential investment partner,” governor of the Central Bank of Sri Lanka, Ajith Nivard Cabraal told TheEdge. He said his country has identified a few areas for investments, and Qatar with its financial might be able to take advantage of the wide investment opportunities available there. “We will be meeting the Qatar Investment Authority (QIA) in the

next couple of days where we will put forward investment proposals to them. We are seeking investments mainly in tourism and infrastructure, though investment opportunities exist in the other sectors as well,” Cabraal said in late March. Commenting on the banking sector in Sri Lanka, Cabraal said all the banks in Sri Lanka are well capitalised. He said the banks have a capital adequacy of 14 percent, which is well above the 10 percent benchmark set by the central bank. Asked if Sri Lankan banks have any plans to have operations in Qatar, Cabraal said they (the banks) could first look into exchange houses as there are about 100,000 Sri Lankans working in Qatar.

NEWs IN BRIEF Bloomberg Doha Conference The conference will be held on the 16th of April till the 17th at the Ritz Carlton, West Bay Lagoon. As part of Qatar’s vision in becoming a hub for the region’s dynamic asset management industry, Bloomberg Doha conference will showcase Qatar as one of the fastest-growing and most diverse economies in the Middle East. The event will be officially inaugurated by HE Sheikh Abdullah Saoud Al Thani, governor, Qatar Central Bank. Topics will include operating strategies for global asset managers, investment opportunities in the Middle East, investing in emerging markets, Qatar National Vision 2030 and other important topics. Speakers will include fund managers, global banks, key investors, regional notables and economists from around the world who will explore each asset class. Influential speakers will help to highlight opportunities in a global market that remains full of uncertainties. An audience of corresponding echelon will convene from Asia, the Middle East, Europe and the United States. More than 200 CEOs, asset managers, CIOs and prominent Qatari and regional decision makers and investors from funds, investment banks, private banks and government owned investment funds will gather. For further information log on to www.bloomberglink.com Cityscape Qatar May 23 to 25 Cityscape Qatar will debut in Doha in late May as the latest addition to Cityscape’s portfolio of events. Cityscape Qatar will serve as a platform to bring together international, regional and local investors, architects and 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. For more information please email info@cityscapeqatar.com

TheEDGE

NEWS ETCETERA

2012

EVENTs calEndar APrIl doHa, Qatar

2–3

Qatar Alternative Energy Investors Summit

15 – 20

Carpet Exhibition 2012

16 – 19

Exhibition of Small and Medium Industries

15 – 16

City Solutions Expo and Conference

16 – 18

Stadium Build Middle East

16 – 17

Bloomberg LINK/QFC Global Asset Management Conference

21 – 26

United Nations Conference on Trade and Development

23 – 24

Arab Future Cities Summit For a full and comprehensive calendar of all upcoming Qatar-based business related events, please log on to our events page at www.theedge.me

TheEDGE

NEWs IN QuoTEs

“Not sending a female athlete to the Olympics (in the past) was because we didn’t have anyone qualified…Women in Saudi Arabia or Kuwait prefer to come here and be trained. We understand their culture. Qatar will lead and once we do it others will follow.” Noora al Mannai is the chief executive of the Doha 2020 bid and recently spoke with the media highlighting Qatar’s bid to host the 2020 Olympics. The International Olympic Committee (IOC) has offered Qatar invitations for two female athletes to compete in the London Games later this year, swimmer Nada Arkaji and sprinter Noor Al Malki (pictured).

“We have extended our reach to yet another underserved market with today’s launch of flights to Kigali…The direct daily air link between my home city of Doha and Kigali is further testament to Qatar Airways’ commitment to expanding our presence in Africa and East Africa in particular, a dynamic region to where we already fly twice daily to both Nairobi and Dar es Salaam, and daily to Entebbe.” Akkar Al Baker, chief executive officer of Qatar Airways, addressed ministers, local dignitaries, business leaders, airport officials and media during the recent inaugural service from Doha to Kigali, Rwanda.

“Anyone who goes abroad to follow ideological courses that lead to terrorism will be criminally punished. The response will be prison.” French President Nicolas Sarkozy promised a crackdown on French citizens found to have trained in terror camps abroad. Dozens of French Muslims are training with the Taliban in northwestern Pakistan, raising fears of future attacks after the shooting deaths of seven people in southern France, allegedly by a man who spent time in the region, Pakistani intelligence officials said.

“The contrast between South Korea and North Korea could not be clearer, could not be starker, both in terms of freedom and in terms of prosperity.” United States (US) President Barack Obama has visited recently US troops stationed on South Korea’s border with North Korea in a show of solidarity with Seoul, ahead of a global summit there on nuclear security.

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QATAR’S CATALYST FOR BUSINESS

TheeDGe Magazine Home

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This month TheEDGE Magazine, Qatar’s Catalyst for Business, is proud to announce the launch of our comprehensive website www.theedge.me Featuring current and archive feature and news content, breaking news and online exclusives, www.theedge.me will extend the invaluable service TheEDGE print magazine provides Qatar’s bustling multi-sector business community, and is set to become the one-stop online portal for business-related content and information in Qatar. The vast website, populated with archive and current material from the magazine, includes interviews with top Qatari businessmen and sector experts, in-depth, world-class coverage of the latest business and socio-economic topics from Qatar, the Middle East and the world; as well as opinion and commentary columns, practical advice on human resources and management challenges, events and much more. Like the print version, business sectors and segments covered on our website will include Finance and Economics, Insurance and Banking, Trade and Industry, Hydrocarbons, Water and Energy, Construction and Real Estate, Innovation and Research, IT and Communications, SMEs and Entrepreneurism, Business Management and Human Resources, Transport and Aviation, MICE and Tourism, Retail and Commerce, Legal Insight, plus the business aspects of Marketing, Media Healthcare, Sport Business, Education, Food Security, Sociopolitics etcetera. In addition, www.theedge.me will feature online exclusive interviews, articles and event coverage as well as multimedia links to TheEDGE Magazine’s digital and social media portals as well as other unique features. The website will also offer businesses the perfect digital marketing solution means with which to align their brands with and gain exposure in the rapidly expanding Qatari business landscape. www.theedge.me is Qatar’s new digital business sensation. For more information contact info@theedge-me.com

JOIN THE CONVERSATION TheEDGE online Twitter: @TheEDGEQatar

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QATAR iMPACT

BUSINESS ‘Alfardan’ is a name synonymous with business in Qatar. Kamahl Santamaria met three generations of the family, and found the original pearl and jewel business is still very much at the heart of their billion dollar empire.

ith the huge amounts of cash splashing around Doha these days it would be easy to assume that good old-fashioned business values have been sidelined by the quest for massive acquisitions and expansion plans. But to succeed, those good old-fashioned values need to be at the core of any sort of business, no matter how much money or influence you might have. Case in point: the Alfardan family, who I had the pleasure of interviewing recently for Counting the Cost, the business show I host on Al Jazeera English. It is rare to get access to people who are not only high up in the company but are actually ‘the name’, so I was pleasantly surprised to be able to speak to three different generations. What I gleaned from them was an obvious desire to evolve and grow – the family is worth US$3.4 billion (QR12 billion) according to Arabian Business Magazine’s Rich List – but also to never forget where the whole operation came from and that it remains, at heart, a family business. The patriarch is Hussain Alfardan, who effectively saved the business after the pearling industry declined during World War Two. While everyone else went looking for newly created oil jobs in Qatar, Hussain

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persevered with what he knew – pearls and jewels – and opened a sole jewellery store in Doha, along with a currency exchange. Today there are dozens of such outlets, which still hold the Alfardan name. In interviewing him, I found a man with a true passion for pearls and the original way pearl trading was conducted. He proudly showed me and our viewers how the pearls were sorted, weighed, priced, and taken to market. I almost got the feeling he would be quite happy going back to that sort of humble business, even in the frenetic business world of 2012. So upon meeting his son Ali I expected a more hardened, modern businessman. Make no mistake – he is that man. But the family thread is still there, even for someone in charge of a portfolio, which includes BMW, Rolls Royce, Kempinski Hotels, Chopard and Longines, to name just a few. When speaking of the core jewellery business, he said: “All the others, you could have a system and it’s running. You have management, which you assign – for example, St Regis or Kempinski – and they take care of the management. But this part of our business, your own touches have to always be there. You have to be present there. You cannot have it as a system or management to deal with that. You have to have your input.”

As if to underline that, his daughter Noor is having direct input into the company too. Rather than simply join the family business and have to dodge the regular preconceptions of nepotism, Noor went to Sharjah and London and got herself a degree in gemmology. She told me: “I wasn’t just going to go into the company and just continue everything the way it was. I want it to expand, I want it to grow.” The result is ‘Noudar’ – her self-designed Arab-inspired jewellery, which forms part of the Alfardan stable. She is a businesswoman in her own right, but still with strong links to the family. In the end, what I took away from the Alfardans was a sense that the obvious signs of their wealth and business – the marquee brands, the high-rise towers – are a product of what they do, not necessarily the end-goal. Again Ali spoke fondly of the original jewellery business when he said: “This is the most important for us. That’s why we enjoy our business, because of those touches.” And therein lies a lesson for anyone in business – enjoy what you do, and it will never truly feel like work. 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.

MiDDlE EAST MATTERS

LEADERSHIP

he obsession across the region continues to be on growth, and not ordinary growth, but rapid growth. So what is rapid growth? Simply stated it is growing out of line positively with how the organisation performed yesterday. For example, if a business is growing 12 percent year-on-year and next year grows at 13 percent year-on-year, in practice they are growing more rapidly than before, so some may define this as rapid growth. But there are other factors to consider before drawing this conclusion such as, but not limited to, the market growth and sector growth rates. If the market is experiencing rapid growth, does that mean every one is a rapid growth business? Not necessarily. Even if a business is growing at market rate, it does not mean they are a rapid growth business. Let’s assume a company is growing at market rate and return to the simplistic definition from above. If the rate of growth grew by five percent year-on-year and the gross domestic product (GDP) also grew by five percent, is that rapid growth? Growth in line with other factors – previous performance, GDP or sector growth is not rapid growth. As soon, as the market and or sector growth rates shift downward, the true profile of a company’s growth will be revealed. The global financial crisis was a mirror of this. Business publications are ripe with examples of business that were once considered engines of growth, but the change in the market was a

TheEDGE

Across the Middle East region there seems to be an obsession with rapid growth. Tommy Weir discusses the facets of expansion in business and how regional firms need to be smarter when it comes to growth. mirror for the absence of growth leadership. In the three years leading up to the financial crisis, the Ralph Lauren corporation’s stock doubled in value to US$75 (QR273) per share. While their stock was recognised for its performance, the market was as well. Then when the crisis broke, they took a hit for two quarters before their true growth profile emerged to amaze Wall Street. Since spring of 2009, they have been on a continuous growth path reaching US$170 (QR618) per share and eclipsing the positive growth returns in the luxury retail space. Rapid growth is when a business outpaces the metrics they choose to measure. Ideally they will use a formula that takes into account the three areas highlighted, ensuring a realistic examination of growth. To be accepted as a rapidly growing business, the rate of growth needs to be high enough to celebrate and gain attention. While a growth rate of 10 percent or beyond is headline worthy, EMLC considers the base line to be a rate of five percent or more beyond what was achieved in the past, while taking overarching industry performance levels into consideration. So, where does rapid growth come from? Conventional thinking focuses on asset utilisation, cash flows, operational excellence, customer and market understanding and product/service mix. While these are important, the goal remains growth – whether top line, bottom line or market share. And in order to grow, it comes down to the ability

and approach of leadership. In the absence of rapid growth leadership there will not be sustained growth. If an organisation wants to impact performance, increase its customer base and loyalty, and achieve organisational success the focus needs to be on rapid growth. Common leadership approaches which were appropriate for simpler times and a simpler global economy, cannot manage the escalation in complexity, customer requirements, commoditisation and competition that businesses in the emerging markets are facing. Certainly doing more of something that is not working in the first place is not the way to compete more effectively and deliver rapid growth. Businesses in the emerging markets need a smarter way to bring their value to exploring opportunities and transform it into scalable, sustainable, and profitable growth. They need a platform and a process that is specifically designed for the complex emerging markets arena, one that offers a system, skills, mental discipline and a rapid growth mindset needed to execute it. We are convinced that Rapid Growth Leadership is the best way to create, connect and quantify business value in the current climate. The right leadership approach is the constant in contributing to rapid growth. Dr. Tommy Weir is an authority on fast growth and emerging market leadership, and an advisor and author.

SUBSCRIPTION

SUBSCRIPTION FORM 2012 TheEDGE is Qatar’s dedicated monthly business magazine.

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ENERGY & RESEARCH

The Middle East: A Nuclear family?

Jordan has often had its energy industry overshadowed by its hydrocarbon-richer Middle East neighbours. But all that could change, as the nation joins the UAE in spearheading the wider region’s drive for nuclear power – with Qatar’s backing. Jamie Stewart reports reports.

ack in 2009 the world’s foremost nuclear energy authority sent missions to assess developments in the field of nuclear power generation in three countries – Jordan, Indonesia and Vietnam. The three countries were selected because their respective governments had indicated to the International Atomic Energy Agency (IAEA) that they were prepared to move forward with nuclear power, but in order to do so, they were in need of independent advice in areas such as infrastructure development. The thorny issue of security was one that, in all three cases, also required further consideration. The IAEA team observed that there was strong commitment in Jordan to pursue a nuclear power programme, but five “critical issues” for successful deployment of the first plant were identified. These included site issues, electricity grid connection issues and appropriate business model designs. Today, just three years on from this review, Jordan has emerged as the nation with the second-most advanced nuclear power generation programme in the Middle East behind the United Arab Emirates (UAE). Later this year it is expected to award the tender to supply its first nuclear reactor to the successful bidder.

According to the World Nuclear Association, in the Middle East and North Africa (MENA) region, nuclear power is “under serious consideration” in Iran, Saudi Arabia, Qatar, Kuwait, Yemen, Israel, Syria, Jordan, Egypt, Tunisia, Libya, Algeria, Morocco, and Sudan.

The Bidders and Backers Last year the Jordan Atomic Energy Commission (JAEC) said it had short-listed France’s GDF Suez, Rusia’s Rosatom, China’s Datang International Power and Japan’s Kansai Electric Power as “possible

ENERGY & RESEARCh

strategic partners to operate and invest in the new plant”. At the time of writing the chosen firm was yet to be revealed In addition, the country has support from some cash-rich backers. In March Russia, which sits on the world’s largest proven natural gas reserves, revealed it had offered to strike a deal with Jordan under which it would construct no less than four nuclear reactors via state-owned Russian nuclear energy giant Rosatom. The deal is separate to the tender for the first plant. Furthermore Qatar, the country with the world’s third largest gas reserves, is reportedly in talks to help finance the first plant, which comes with a QR18 billion price tag, via the Qatar Islamic Bank. The fact that two of the world’s richest countries in terms of energy reserves are more than willing to back Jordan’s nuclear ambitions is a boon not only for Jordan, but for the development of nuclear power across the Middle East, and potentially in Qatar itself. It also points towards Russia and Qatar’s clear belief that investing in nuclear power will produce returns, or at the very least spread investment risk, by diversifying of the two countries respective energyrelated investments. rEgIoNAl shIFT Jordan is one Middle East nation that desperately needs to boost its energy independence. The state imports over 95 percent of its energy needs, at a cost of about one fifth of its gross domestic product, according to the World Nuclear Association (WNA). It has 2400 megawatts (MW) of electricity generating capacity and expects to need 3600MW by 2015; rising to 5000MW by 2020 and subsequently to 8000MW by 2030 when it expects doubled electricity consumption. About 6800MW of new plant is needed by 2030. JAEC expects to start building a 750 to 1100MW nuclear power plant in 2013 for operation by 2020 and a second one for operation by 2025. Longer-term, four nuclear reactors are envisaged – which is where the Rosatom four-plant construction offer comes in. Jordan’s progress puts it within two years of the region’s most advanced nuclear programme: that of the UAE. In 2009 the UAE accepted a QR73 billion bid from a South Korean consortium to build four commercial nuclear power reactors, totalling 5,600MW in generation capacity, by 2020. Only last month the Emirates Nuclear Energy Corporation (ENEC) was granted approval by the UAE Federal Authority for Nuclear Regulation to begin civil works at the proposed site in the western region of Abu Dhabi.

Jordan has the second-most advanced nuclear power generation programme in the Middle East behind the United Arab Emirates. 28

TheEDGE

The World Energy Council released a report last month stating that most nuclear programmes around the world were placed under immediate review following the Fukushima disaster in Japan slightly more than a year ago. Here members of the media are escorted to the location in February 2012 for the first time since the tsunami-induced 2011 meltdown. (Image Corbis)

Elsewhere in the Middle East and North Africa (MENA) region, nuclear power is “under serious consideration” in Iran, Saudi Arabia, Qatar, Kuwait, Yemen, Israel, Syria, Jordan, Egypt, Tunisia, Libya, Algeria, Morocco, and Sudan, according to the WNA. ThE JAPAN EFFECT In early March 2011, a “nuclear renaissance” was well underway across the globe. Sixty-five nuclear power reactors were under construction totalling 62,862MW, equivalent to 17 percent of what was then existing nuclear capacity, while more than 159 reactors were planned, equivalent to 47 percent of then-installed capacity. But on 11 March that year a huge earthquake and resulting tsunami ultimately triggered a partial meltdown at the Fukushima nuclear power plant on Japan’s east coast. “The Fukushima accident prompted an immediate review of the safety of nuclear energy in most countries with nuclear programmes,” the World Energy Council says in the report One Year After Fukushima, published in March. “Many of these countries announced comprehensive safety reviews, which could lead to regulatory changes that would slow or even eliminate plans for expansions of and investments in nuclear power,” it said. However, policy across the Middle East remained relatively unchanged despite the Fukushima tragedy. Saudi Arabia, which is planning a mammoth 20,000MW of nuclear development “affirmed that using nuclear power is still under consideration,” the report said. The UAE announced “no change” to its plans to build its first nuclear power plants. And Jordan said that its “commitment to the future of nuclear energy was strong”. Despite the Fukushima incident, the MENA region remains on the verge of an unprecedented nuclear drive – and it could not have come at a more important window in many Middle Eastern country’s development plans. Jordan is a country with rapid growth expectations that could potentially outstrip its ability to import enough electricity to sustain its seemingly inevitable growth, and the Middle East has every right to pursue a peaceful nuclear programme. Investment in power generation is crucial for Jordan’s development, and for the wider region.

ENERGY & RESEARCH

Iran power exports could threaten Qatar renewable energy industry Jamie Stewart explains the impact of an underwater electricity transmission cable linking with Iran could have on Qatar’s renewable power generation sector.

he growth of Qatar’s renewable power generation sector could slow if plans for a huge under-water electricity transmission cable linking the Gulf with Iran come to fruition. The project, which would incorporate the power grids of Qatar, the United Arab Emirates (UAE) and Oman, would open up the Gulf to the trade of electricity with Iran for the first time. News of the planned link was broken by Iranian news sources, citing an energy ministry official, last month. The link would have a transmission capacity of between 1.5–2.0 GW, the official said, which would theoretically allow Iran to export up to four percent of its power production every year based on current installed generation capacity of 53 GW. But Qatar’s power generation capacity stands at just 3.5 GW, which, despite being markedly lower than the Iranian total, still lends the nation a generation surplus when its relatively small population is taken into account. This fundamental oversupply has placed a ceiling on electricity prices on the peninsula, and the resulting market forces have stunted the growth of renewable power generation. “In spite of considerable solar and wind power potential, renewable will not feature in the Qatari power generation mix for the foreseeable future,” research firm Business Monitor International said in an industry report. “Much higher-end user power prices would be needed to justify the high build costs of renewable energy plants.” But, should Iran press on with the transmission link, the potential for Qatar electricity prices to rise would be slashed in light of the additional supply flexibility. Iran exports Iran already trades power over cross-border electricity cables linked to a host of Asian nations including Pakistan and Afghanistan to the east, Turkmenistan to the north, and Turkey and Iraq to the west. Going forward, Iran plans to add 5 GW of generation capacity to its national grid annually, on top of the 53 GW already in place, providing more potential export volume.

TheEDGE

However, despite Qatar’s oversupply, Iran may not find favour elsewhere with its plans to sell power. The UAE’s second city, Dubai, has an excess power generation capacity of 30 percent, according to the Dubai Electricity and Water Authority. And its neighbouring emirate and capital city Abu Dhabi is also a net exporter of electricity, according to the Abu Dhabi Electricity and Water Authority. Despite the barrier to renewable energy growth presented by the oversupply situation however, Qatar could still export any technological expertise in renewable energy that it is able to accumulate, particularly in the field of solar power. In recent months Doha has unveiled a raft of renewable energy research and development schemes, many overseen by the Qatar Environment and Energy Research Institute (QEERI), with a focus on solar power. “We are fortunate to have the human and capital resources that will allow us to further develop clean energy technologies in the region,” QEERI executive and founding director Rabi Mohtar said last month.

Despite the fact that the renewable power generation sector growth plans could slow if plans for a huge underwater electricity transmission cable linking the Gulf with Iran come to fruition Qatar Environment and Energy Research Institute founding director Rabi Mohtar, pictured here centre signing an MOU with Spanish Research Centre for Energy Environment and Technology in late 2011, is optimistic the region will further continue to develop clean energy technologies.

Country Focus

Sleeper State

t first glance, there should be little in common with Azerbaijan and Qatar. With a concerted restoration programme bringing back the once palatial buildings built by the likes of the Nobel family in the capital Baku to their former glory, wide boulevards and Parisian-style café culture, Azerbaijan is every bit the European capital. But dig a little deeper and you will see two countries bursting with ambition and with more than a passing resemblance to each other. Azerbaijan is a Muslim country sitting as a gateway between east and west. Its workforce educated and growing in affluence. Skyscrapers and cranes dominate its capital’s skyline. Its government is keen to host some of the world’s biggest events, including the blockbuster Eurovision Song contest in 2012 and regards itself as a cultural capital. In March the country won the right to hold a temporary seat at the United Nation’s National Security Council. And finally, more than two thirds of the land itself is rich in oil and gas. “It would be once that you could scratch the ground in Azerbaijan and you would find oil,’ says Eldar Salimov, Azerbaijan’s ambassador to Qatar to TheEDGE. “Azerbaijan was one of the first countries to export its oil.” Indeed, Azerbaijan, with its location on the Caspian Sea, was the home to the world’s first oil well and the first oil boom. More than 100 years ago the country was the epicentre of Europe’s first oil rush, with Russian, British and Dutch companies and “oil baron” families – including the Nobels and Rothschilds – moving to the state and fuelling the boom. At the turn of the 20th century, the country accounted for more than half of the world’s oil production. However, production declined following the 1991 breakup of the Soviet Union, until foreign investment provided the capital for new development, turning this trend around in 1998. Azerbaijan currently has arrangements with

With abundant natural resources and a highly educated workforce, Azerbaijan, one of the stops along the famed silk road, is a country poised to take off. Rachel Morris, who visited Azerbaijan in February, looks at the rising fortunes of this former Soviet state.

Turkey (there is a pipeline directly to the country) as well as with most of the major oil companies. Oil fields dot the landscape just outside of Baku, and it is estimated that the country currently has proven oil reserves of around 14 billion barrels. Like Qatar, gas has been on the ascendancy in recent years, with Ukraine and Iran in talks with Azerbaijan. Like Qatar, this abundance of natural resources has had a flow on effect. As the first country in the region to exploit its immense energy potential more than a century ago, Azerbaijan is again poised to become a super-economy, with its fast-tracked development of infrastructure and petroleum assets. This spectacular energy renaissance is reflected by per capita income for Azeris of US$10,900 (QR39,676) today compared to US$509 (QR1,852) in 1997 in a country of more than nine million. Gas production in the country rose by 22 percent in the first two months of 2012 and is tipped to rise steadily throughout the year. Most of the oil and gas is shipped directly to Russia and other former Soviet states, which Azerbaijan considers as “domestic” market. “Russia and other countries are very close to us,” explains Ambassador Salimov. “This is our primary market, but we are looking to build cooperation with other countries like Qatar. Azerbaijan can be a hub between Europe and Asia.” Trade between the two countries is currently almost negligible, but this could change very soon. His Highness Sheikh Hamad bin Khalifa Al Thani visited Baku last month, his second visit in as many years. “The two countries are looking at how to work together more closely,” says Salimov, a case in point being a possible joint venture between Qatar Petroleum (QP) and Azerbaijan. According to the ambassador, a scoping party from QP has already made a trip to Baku to investigate options.

country focus

Most of the oil and gas is shipped directly to Russia and other former Soviet states, which Azerbaijan considers as “domestic” market. “We are also looking at some kind of cooperation in the area of food security,’ says the ambassador. He says Azerbaijan is still an agriculturally based society and produces a variety of fruit, vegetables and grains as well as livestock and other produce. At the moment most is used for internal purposes or shipped to Russia and other countries in the region. Like Qatar, Azerbaijan realises the country’s oil and gas is a finite resource, and is looking to other industries to create new markets and maintain the impetus. Currently, mining and oil and gas account for around 95 percent of the economy of Azerbaijan – a heavy burden for one industry. “Diversification is important to Azerbaijan,” says Salimov. The country’s foreign trade increased by 14 percent in 2011 as Azerbaijan looked further afield for new opportunities. Another area of mutual interest is the information and communications (ICT) sector. Like Qatar, Azerbaijan has great ambitions in this area. Azerbaijan is building an “ICT Superhighway”. The grand ICT project similar to the Arab ICT Highway is called the Trans-Eurasian Information Super

Highway (TASIM). The international community backed the project during the United Nations’s General Assembly meeting in December 2009. In Doha recently for the Connect Arab World Summit at QITCOM 2012, Azerbaijan’s minister for communications and information technology, Ali Abbasov said the project aims at bridging the information gap between the West (United States and Europe) and the Asia Pacific region. “This will be achieved through building new networks in the region that will provide more Internet traffic for the nonwest users, allowing them to produce more content,” Abbasov said in Doha. The Minister also revealed that there will be another ICT project that aims to create an information highway starting from Germany all the way to the Sultanate of Oman. The project aims particularly at overcoming the weakness of connectivity in that area, as well as for providing more content from that region. Abbasov also said that the Azeri government is planning to spend US$3.5 billion (QR12.7 billion) on developing the country’s ICT sector over the next decade to develop the country as an information technology hub in Europe. Meanwhile, Azerbaijan is hoping to launch its first satellite later this year, and is embarking on a project to fully link and integrate technology into its education system by 2020 to create a “technology literate” society. Tourism is another area that Azerbaijan is hoping to capitalise on. The Eurovision song contest – a Europe wide talent contest beamed around the world – is slated to bring more than one million visitors to the country in 2012 and create thousands of jobs in the hospitality sector. Azerbaijan currently attracts about two million foreign tourists, and this is expected to rise to five million by 2015. Nahid Bahirov, head of the Azerbaijan Tourism Association said the country was looking to tourism from countries in the Middle East to boost the industry and diversify the economy. In February Qatar Airways began direct daily flights between Doha and Baku (and neighbouring Tblisi in Georgia), opening up the route for movement between the two countries on the business and tourism front. “We are working to position Azerbaijan as a short-haul destination catering to Arab and expatriate couples and family holidays,” Bahirov said.

AZERBAIJAN by the numbers Population: Nine million Income per capita: US$10,900 (QR39,676) Independence from the Soviet Union: 1991 In 2007, mining and hydrocarbon industries accounted for well over 95 percent of the Azerbaijani economy. Diversification of the economy into manufacturing industries remains a long-term issue for the government.

TheEDGE

OPINION

ISLAMIC

BANKING ON THE RISE

Islamic financing is rapidly evolving from a niche market, as demand for Shari’ah compliant investment products grow, and rising disposable incomes in the high growth economies of the Middle East. James Caan explains how it creates a deep pool of private wealth that has not adequately been served by conventional financial services.

ith a fifth of the world’s seven billion people now followers of Islam, the demand for financial services complying with the faith’s requirements is growing by the day. However, the penetration of Islamic financing remains very small, with only a fraction of the US$80 trillion (QR291 trillion) global funds under management complying with Shari’ah law. There is a vast and growing pool of investable wealth in the global Muslim community. According to a recent report by Ernst & Young, the addressable universe for Islamic fund managers exceeds US$500 billion (QR1.8 trillion), and still growing by at least 10 to 15 percent annually. In the Middle East, in particular, high growth achieved by many of the region’s economies have raised the level of individual disposable income, stimulating the demand for personal investment vehicles as

part of wealth creation and management, and estate planning. Ernst & Young reports that in the Gulf Cooperative Council (GCC) states alone, liquid wealth with Shari’ah-sensitive investors (investors who only want Shari’ah compliant products) will add more than US$70 billion (QR254 billion) to this pool by 2013. Yet Muslims in these and other countries remain underserved. Islamic financing is undergoing significant change. Last year, the Islamic funds industry grew to US$58 billion (QR211 billion), representing 7.6 percent growth, and 23 new funds were launched. The Islamic fund universe comprises about 100 fund managers, and favoured asset classes remain equities property, commodities, Sukuk and some alternatives. For Sukuk assets in particular, 2010 was a record year, with a total of US$50 billion (QR182 billion) in new offerings. A driver of change is coming from investors themselves, with a quarter of Muslims now

OPINION

restricting their investment activities solely to Shari’ah compliant products, and a further 33 percent saying they would also invest in these vehicles provided the return matched or exceeded conventional investment funds. This has been a particularly important point for Muslim investors, as historically the lack of knowledge about and availability of Shari’ah products meant that these investors often did not enjoy the same returns as they would have, had they invested in conventional products. Shari’ah compliant investing is a concept that has not often been well understood, however the magnitude of this market has encouraged financial institutions and private equity funds around the world to begin offering structures that meet Islamic requirements. Muslims are increasingly able to access financing and investment products that are in keeping with their faith, and on similar terms and costs to investors who choose conventional products. There are a number of key elements to Shari’ah investing. Financial institutions that offer these products do not need to be owned by Muslims, but their products must adhere to the restrictions. Islam forbids investing in any industry or asset that is involved in gambling, pornography, weapons, alcohol and tobacco. In the case of our new business, 90 North Real Estate Partners LLP (90 North), which is a Shari’ah compliant investment advisory firm focusing on real estate, we carefully screen the tenants of any of the properties in which we invest, as earning interest is also prohibited in Islam and so property deals are financed using Islamic structures, which an increasing range of financing institutions now understand and embrace. While property is an obvious candidate for Shari’ah compliant investing, many industries

lend themselves to this model. Real estate, however, is a major growth area in the Gulf and wider Middle East, and 90 North has identified its significant potential. The Founder Partners have a wealth of experience, having concluded over GBP1 billion (QR5.7 billion) in Shari’ah compliant transactions in the past decade. The new company will partner with Gulf-based financial institutions, sharing fees generated by its properties under management throughout their life-cycle. Although the company was only recently established, it is close to closing its first transaction. 90 North’s value proposition is to offer attractive United Kingdom (UK) real estate assets, and the first investment opportunity product that is being marketed is in the student accommodation sector – now very familiar to some GCC investors. The asset will be structured to allow investors to make a regular cash return from rental income estimated at approximately eight percent per annum over a three-year lifespan. This is significantly more than the return one would achieve on cash deposits, one which is resistant to market fluctuations, and of course there is the additional prospect of capital value gains as the properties are asset managed, and cash flow and value increases. We believe that Gulf investors will be convinced of the potential to invest in secure and attractive UK real estate via Shari’ah compliant vehicles. Britain is familiar territory for Muslims in the Middle East. For example, in 2010, one quarter of Kuwaiti nationals visited the UK, and spent on average GBP3000 (QR 10,920) per head, representing a GBP750 million (QR4 trillion) bonus to the British economy. The value of investment from GCC nationals in the UK is many multiples of that amount, given the attractions of the UK’s long established property system and law, a

Last year, the Islamic funds industry grew to US$58 billion (QR211 billion), representing 7.6 percent growth, and 23 new funds were launched.

strong legal system that offers redress and transparency, and a currency that is not part of the eurozone and has thus escaped most of the volatility currently occurring in Europe. Gulf investors are also attracted to the long, stable ‘triple net’ leases available on property investments, let to well-known global brands. These various factors, combined with the goodwill towards the UK that we have personally experienced, has resulted in strong inflows into Shari’ah compliant financial services in Britain, especially as the breadth and depth of products expand to cater for this market. The success of Shari’ah finance companies and future growth in the industry rests on a few key factors. Track record is essential, and 90 North has brought together broad and deep experience of Shari’ah finance and acting for Middle Eastern investors to produce attractive risk adjusted returns. According to Ernst & Young, another important factor is the fee structure. Off-market or private equity funds have to achieve a specific hurdle rate or profit for the investors before the fund managers can charge a profit fee. In typical Shari’ah funds, that hurdle rate starts at eight percent per annum (pa) – in other words, any profit earned over and above six percent pa is subject to the fund manager’s profit fee, and is usually applied in the case of riskier ventures that require a significant hand-on involvement and value add from the fund manager. The upper end of the scale is 15 percent, where the fund manager only gets a cut after the investors have achieved a profit of 15 percent or more. This is normal in safer investments where little management input is required. At 90 North, our hurdle profit fees vary between eight percent and 10 percent depending on the characteristics of the transaction. As Shari’ah compliant investing becomes part of the mainstream financial services environment, investors in the Middle East and elsewhere will benefit from a growth in the spectrum of products and services. The opportunities are almost unlimited at this nascent stage of the industry’s development.

James Caan is one of the UK’s most successful entrepreneurs and the host of television programme Dragon’s Den. TheEDGE

AlfArdAn ProPerties AwArded iso 9001:2008 certificAtion on QuAlity MAnAgeMent systeM

Certification reaffirms company’s commitment to develop property solutions that are luxurious and deliver optimum value for money March 20, 2012 Alfardan Properties, an innovative leader in Qatar’s real estate industry, has announced that it has recently been awarded ISO 9001:2008 certification on QMS (Quality Management System), reaffirming the company’s commitment to quality project development, leasing and property management services. All eight departments of Alfardan Properties – Leasing, Marketing & Communications, Project Development, Engineering & Maintenance, Finance & Administration, Hospitality & Services, Safety & Security, Facilities Management Audit

& Compliance – headed by their respective managers were involved in the rigid certification process, which was completed from April to November 2011. The certification was awarded to Alfardan Properties by Lloyd’s Register Quality Assurance, a world-renowned certifying body, who conducted the final audit to ensure that the management system meets the requirements of ISO 9001:2008 standards. Throughout the certification process, Alfardan Properties management and staff conducted numerous brainstorming sessions with the

goal to streamline and improve its management system and documentation procedures while properly training all members of the organization on the benefits of the ISO certification. The certification is in line with Alfardan Properties’ strategy of encouraging a team-oriented approach on all business processes and to focus on the best interest of tenants, stakeholders, staff, contractors and management. Alfardan Properties further revealed that it will conduct a regular review of policies and ensure

that employees undergo regular competency training to ensure continuous suitability towards the business approach and the Quality Management System; keeping its track record of providing 360-degree turnkey solutions that encompass project development, leasing and property management.

Alfardan Properties’ commitment to offer unique residential and commercial property solutions that are both luxurious and deliver optimum value for money. The ISO 9001:2008 certification certainly positions us at Alfardan Properties strongly so as to realize our core mission which is to satisfy the needs of our tenants and exceed their expectations. This also shows that Alfardan Properties is not just a real estate company; as Alfardan Properties provides its tenants a unique living experience through holistic turnkey solutions handled by true professionals and experts for each domain.”

Omar Alfardan, President, Alfardan Properties, said: “Quality excellence and innovation has always been the core objective of all our operations. The ISO 9001:2008 certification is therefore an important reaffirmation of our commitment to quality and our continuing pursuit of excellence through a globally recognized Quality Management System. Alfardan Properties has held true to its brand promise and continues to explore more innovative ways to deliver quality-driven luxury real estate solutions and value-added services in light of the evolving needs of our customers and changing dynamics in the regional markets. It also adds momentum to our efforts to continuously innovate and set new standards of excellence within the marketplace, which help maintain and enhance our reputation as the property market leader in Qatar.”

Basem Obay, Area Manager, Lloyd’s Register Quality Assurance, said: “ISO 9001 standard for quality management systems has become an international framework for managing and assessing organizations against accepted management best practices, to help them achieve their objectives and to better serve their customers. We are delighted to award Alfardan Properties with ISO 9001 certification and we believe this is the beginning of a long-term partnership where we work together to continually improve Alfardan Properties management system to meet and exceed the ever changing needs of their customers.”

Muhibullah Mani, COO, Alfardan Properties, said, “The ISO 9001:2008 certification clearly demonstrates

Established in 1990, Alfardan Properties has dominated Qatar’s premium and luxury property segment

for the past 22 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. Alfardan Properties has been behind several iconic landmarks in Qatar such as the Alfardan Towers, a fusion of residential and commercial amenities in a luxurious development; Kempinski Residences & Suites, which has been credited for establishing new benchmarks for luxury residences. Adhering to its core business values of integrity, trust and premium service, Alfardan Properties has also been involved in many of Qatar’s prestigious residential and commercial destinations, including Alfardan Plaza, Alfardan Centre, Al Sadd Residence, Al Jazeera Building and One Porto Arabia on ‘The Pearl Qatar,’ an iconic man-made island; not to mention Laguna Beach, the exclusive villa compound in the West Bay Lagoon; and the residential Alfardan Gardens villa compound. Building on the success of its business interests, Alfardan Properties has ventured into a new domain with the creation of a new high-end spa at Alfardan Towers “Guerlain Alfardan Spa”, introducing a wide selection of products from the renowned Guerlain brand.

FINANCE & ECONOMICS

Market Watch • Balance Sheet • Special Report • PERSONAL FINANCE • Economic barometer

QATAR EXCHANGE SURVEILLANCE GOES LIVE (P.41) Doha’s Qatar Exchange has successfully taken its new market monitoring system, Scila Surveillance, into production. Asif Iqbal writes further about this new modern and effective market surveillance tool.

ALSO IN THIS SECTION: • Balance Sheet: Richard Kohinga analyses the priorities of Qatar’s business leaders in comparison with those of their regional and European counterparts. (P.42) • Special Report: Thomas Bacon looks at Qatar’s insurance sector for 2012 and predicts strong growth and profits. (P.44) • Personal Finance: Adrian Bliss gives advice on what to look for when applying for a medical health cover in Qatar. (P.46) • Economic Barometer: Karim Nakhle looks at the pros and cons of the latest Greek bailout agreement, and if this deal is really for better or worse. (P.48)

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MARKET WATCH

GLOBAL MARKET UPDATE BULLS LEADING IN 2012

2012 has turned out to be substantially different for financial markets than many had anticipated a couple of quarters back, when the euro area debt crisis was at its peak and concerns were running high that the economic bloc was heading towards collapse. But A 20 percent rally in the Japanese Nikkei stock market by March 2012 has fortunately, driven by heralded the comeback of the Japanese economy to a background of bullish market sentiment across Asia, Europe and the United States. (Image Corbis) some non-standard measures taken by the European Central Bank, investor confidence the world over has seen a substantial improvement. Apart from this, the recent agreement on restructuring the privately held debt of Greece, which has also qualified the country to avail its next bailout package (for more see Economic Barometer on page 48), has further calmed the nerves of investors and has raised hope that the much dreaded extreme case scenario of the euro area’s breakup has been avoided, at least for now. These positive developments are equally reflected in the global financial markets, which have sharply rebounded from the troughs witnessed last year. Leading this global rally is the benchmark index of United States’ (US) Dow Jones Industrial Index, which has once again recovered to the key 13,000 points mark after a gap of almost four years, and was up eight percent this year (until 15 March 2012). This renewed strength has come on the back of improving economic conditions, which has made many believe that the US has to an extent isolated itself from the euro area and is moving toward sustained recovery. The positive mood is reflected in euro area as well, where Germany’s DAX has gained a substantial 20 percent and France’s CAC is up 13 percent to date. In Asia, Japan’s recovery from last year’s natural disaster has lifted the investor mood and the benchmark index, Nikkei, has gained nearly 20 percent so far this year. This rebound is also driven by a recent move by the Bank of Japan of boosting the asset purchase program that has helped the domestic currency recover above JPY80 (QR3.54) against the US dollar, a level which was breached in July last year. A strong yen has been one of the key problems for the country that has weakened the economic activity by making exports less lucrative. Stock indices of the two fast emerging economic powers, China and India, have given good returns (China eight percent, India 13 percent) so far this year, but are however lagging behind their peers from major developed countries. This is because slowing economic growth in both the countries has compelled investors to withdraw a part of their investments, and the money is now being deployed in advanced nations where policymakers have continued to take strong initiatives to protect the economic recovery. But in all possibility this trend can last only in the short term as even with slowing economic growth, the expansion rate of both the countries will continue to outperform that of advanced countries.

by Dheeraj shahdadpuri

GCC Stock Indices Rebound The positive global economic mood is also reflected on the stock markets of the six nation Gulf Cooperation Council (GCC) bloc. Leading this year’s rally is the Dubai’s DFMGI which has gained a massive 24 percent after underperforming against its regional peers for the few years. This strong rebound has come on the back of improving performance of the Dubai’s core sectors (trading, transportation and logistics) and growing confidence that the Government Related Enterprises (GRE) will be able to manage their debt obligations in the coming years. Next in line is the Saudi’s Tadawul All Share Index (TASI), which has given investors a return of 18 percent. This has undoubtedly come on the back of a strong crude oil price that drives the revenues of the country, which is the biggest oil producer within the Organisation of Petroleum Exporting Countries, and second biggest in the world. The Qatar market is lagging behind its GCC peers this year as the benchmark index is trading nearly flat with marginal decline of 1.4 percent. This underperformance is due to the fact that the Qatar market has already enjoyed good returns over the last two years and in relative terms other regional peers have become more attractive at their current valuations.

MARKET WATCH

QATAR EXCHANGE QATAR EXCHANGE SURVEILLANCE GOES LIVE BY ASIF IQBAL Doha’s Qatar Exchange (QE) has successfully taken its new market monitoring system, Scila Surveillance, into production. The system, delivered by Cinnober, is customised to the needs of QE in terms of new alerts to detect abnormal market behavior and conditions that are specific to the exchange’s rule book, integration with the exchange’s trading engine, post-trade system and news feed, and new reports and screen features. The implementation of the project was started in March of 2011 when Scila Surveillance was selected as the preferred solution following a competitive bid involving multiple international vendors. The project involved a team from QE operations and IT departments working with the Scila team. The rollout of the application was achieved in two phases, with an initial standard release being implemented in August 2011, followed by a fully customised version that now has been launched. “The implementation of the Scila Surveillance system is another milestone in the development of Qatar Exchange. It allows the Exchange to fully monitor the market, guarantee transparency and fairness in the marketplace, and increase investors’ trust and confidence when trading,” said Jassim Bukashisha, IT director of QE. The Swedish-based technology supplier Cinnober is the leading independent provider of marketplace and clearing technology, delivering solutions for trading, market data distribution, market surveillance, clearing and real-time

A modern and effective market surveillance tool is a key component for obtaining confidence in a trading venue.

Qatar Exchange recently implemented the final phase of its market monitoring system, Scila Surveillance. (Image courtesy QE)

risk management. The Scila Surveillance system is utilised by leading trading venues such as Deutsche Börse, Eurex and Oslo Börs as well as new assertive initiatives such as Burgundy, Hong Kong Mercantile Exchange and Turquoise Derivatives. “Confidence is perhaps the single most important asset for any trading venue. A modern and effective market surveillance tool is a key component for obtaining this,” said Nils-Robert Persson, executive chairman of Cinnober. “Qatar Exchange has set off on a remarkable journey, where they have aggressive targets while building a marketplace in the region with leading infrastructure.” Scila offer a rich graphical interface for the surveillance of the market, and is built around three components: real-time display

of trade data and related information in full detail both in tabular and graphical formats; a set of alerts designed to detect abnormal trading activity on the market in real time; and a set of reports designed to provide analytical statistics for selected users and securities. “We’re proud to take part in Qatar Exchange’s ongoing project to build one of the most competitive trading infrastructures in the MENA region,” said Mats Wilhelmsson, chief operating officer of Scila. “Our customers rely on Scila for leading surveillance technology that delivers more than it promises; no one beats us at supplying innovative and effective solutions with a low total cost of ownership.”

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BALANCE SHEET

EXECUTIVE INSIGHTS Business leaders reveal their top priorities The findings of a major European and Middle East business survey provide some interesting insights into what our top executives are focusing on in 2012. Richard Kohinga analyses the studyâ&#x20AC;&#x2122;s key findings and compares the priorities of Qatarâ&#x20AC;&#x2122;s business leaders with those of their regional and European counterparts.

he KPMG survey Succeeding in a Changing World incorporates feedback from over 2700 chief executive officers (CEO) and chief financial officers (CFO), from 31 countries, including 200 executives in the Middle East (17 from Qatar). Business leaders were given a list of 15 business issues, which they were asked to prioritise. Their responses give us a sense of what they intend to focus on in 2012 as well as their overall economic outlook. As one might expect, the survey reveals some interesting variations in regional priorities and economic perspectives. Priorities across Europe Similar to last yearâ&#x20AC;&#x2122;s survey, European business leaders express heightened anxieties around the eurozone, the challenging economic environment and the state of the world economy. The survey reveals that cost optimisation and cash management are their

top priorities. A quarter of CEOs and CFOs are looking at major business model changes and this is in line with the activities observed around business operations (such as removing back office duplication, creating leaner supply chains and more efficient locations). A second Great Depression is on the cards, according to half of European respondents. The recovery in the advanced world has been the slowest on record, with output in many countries still below pre-recession peaks. The United Kingdom (UK), for instance, is four percent down, while in Europe, many economies are forecast to re-enter recession in 2012. The boom and subsequent bust left household, bank and government balance sheets damaged, and so, as the private sector retrenches and as the public sector imposes austerity measures, demand is likely to be depressed further. While business leaders are acknowledging the severity of the crisis, they struggle to

BALANCE SHEET

pinpoint where future growth might come from. So far, we have seen countries muddle through the euro crisis. Yet the fundamental problems – elevated debts and deficits, coupled with a general lack of competitiveness – are yet to be stemmed with lasting measures. An large majority, 79 percent, believe that at least one eurozone country will default on its sovereign debt obligations in 2012. Whether respondents are identifying an economy other than Greece – with its long awaited restructuring – is uncertain. What is clear is that any unplanned default would risk triggering a banking crisis in Europe and a possible breakup of the currency. While economies struggle to get back on their feet, governments are pushing through austerity measures to cut spending and rebalance budgets. Yet respondents are split on the effects, with just 34 percent feeling their businesses are adversely affected and 37 percent claiming that they are, as yet, unimpeded. Of course, there are more austerity measures to come and so, six months from now, respondents may feel the consequences more keenly. Elsewhere, in the Middle East for instance, government spending is expansionary, accounting perhaps for a more positive outlook from respondents, although there are some clear regional variations. Priorities IN the Middle East Egypt, Libya, Syria, Tunisia, Yemen and to a lesser extent Morocco have been impacted by domestic disturbances and social unrest. The Gulf Cooperation Council (GCC) countries have been largely immune from these demands, except of course the well-documented protests in Bahrain. Given the political changes taking place in several Middle East countries (and the flow on effect from the economic instability in other markets) it is not surprising that ‘improving cash and working capital management’ tops the agenda for many senior executives in the Middle East as well. In many counties banks have tightened the lending criteria after well-publicised loan defaults and in others there is a general concern about economic and financial instability. At the same time the ‘Arab Spring’ has provided substantial income for the region’s large oil and gas exporters as a result of the rise in oil prices. Countries such as

Qatar in particular is growing aggressively due to its increase in natural gas exports, along with Saudi Arabia and Iraq. Saudi Arabia and Kuwait have also increased their production to cover the loss of Libyan and Iranian oil supplies on the market. Gulf leaders continue to announce multi-billion dollar packages of investment for infrastructure, healthcare, education, job creation and welfare programmes to improve standards of living. Despite the political turmoil therefore in some countries, real gross domestic product (GDP) growth was healthy at four percent in 2011 and is projected in 2012 to be around 3.6 percent, according to International Monetary Fund (IMF) estimates. The Gulf region grew by seven percent in 2011 and as a result, the current account surplus of GCC countries has surged by 71 percent to US$279 billion (QR1 trillion), according to the IMF. Qatar in particular is growing aggressively due to its increase in natural gas exports, along with Saudi Arabia and Iraq. Billions of dollars are being invested to diversify the economy away from oil and gas and to increase the role of the private sector in economic development. Where ‘improving cash and working capital management’ is a major priority for some Middle East countries, GCC countries are more interested in ‘exploiting growth opportunities through successful transactions’ with 39 percent of senior executives listing this as a priority compared to 30 percent of the survey average. This shows the optimism that many GCC countries feel about the future. ‘Addressing risk throughout the organisation’ is another important issue for Middle East business leaders with 33 percent of senior executives listing it as a top priority compared to 21 percent as a survey average. This is primarily because a large number of organisations across the Middle East are represented by family-owned businesses and a new generation of managers keen to put in place robust initiatives towards risk management and compliance processes.

Priorities in Qatar Like other GCC countries, Qatar-based business leaders place a major focus on expanding their operations through strategic acquisitions. According to the survey the number one priority for Qatar business leaders is ‘exploiting growth opportunities through successful transactions’ (48 percent compared to 30 percent as a survey average). When compared to European business leaders, it is clear that local government entities and private sector businesses are in a better position to leverage their strong capital and cash flow position. The appetite for transactions or re-financing deals to generate growth is a priority for other GCC countries as well: Qatar (48 percent), United Arab Emirates (UAE) (45 percent), Oman (43 percent) and Kuwait (42 percent). Similar to their regional and European counterparts, many Qatar business leaders place a high importance on ‘transforming business operations’, including ‘changing business operations to realise cost efficiencies’ – but perhaps for slightly different reasons. Government institutions and agencies in Qatar are looking at rolling out transformation programmes primarily to better utilise the country’s substantial financial resources. This means getting their business systems and processes in order, developing clear strategic objectives and better managing risk. Qatar-based respondents, for example, also place a far greater emphasis on ‘addressing risk throughout the organisation’ (40 percent compared to 21 percent as a survey average), demonstrating the increasing emphasis on corporate governance and financial risk management.

Richard Kohinga is the director and head of markets for KPMG in Qatar. TheEDGE

SPECiAl REPoRT

A PREMIUM ON

InSURAnCE by Thomas Bacon

s the overall economy continues to pick up steam, Qatar’s insurance sector looks set to benefit greatly, with strong growth and profits predicted for 2012 and beyond. However, for the sector to truly grow the industry is conscious that it needs to encourage greater uptake of policies. According to Shashank Srivastava, the acting chief executive officer (CEO) of the Qatar Financial Centre Authority (QFCA), there is a strong potential for expansion in the country’s insurance sector, which posted 12 percent compounded annual growth in premiums between 2006 and 2010. Premiums for the life insurance segment increased by 58 percent in this period, and by 11 percent for non-life policies, though overall coverage was still low, said Srivastava at a seminar on asset management in late January 2012. “Despite this growth, penetration rates in Qatar remain low: 0.05 percent for life and 0.75 percent for non-life, particularly when compared to the global averages of 3.9 percent for life and 2.79 percent for non-life,” he said. There are a number of reasons for the low penetration rates in Qatar, including the state’s solid social security system that provides for pensions and other support services through the General Retirement and Social Insurance Authority. Another factor contributing to the low pick-up rate for policies in the non-life sector is that with the exception of automotive and engineers’ professional liability, insurance in other segments is not mandated, though there have been calls for compulsory insurance for property and health, as is the case in some other Gulf Cooperation Council (GCC) states. “The insurance sector in Qatar accounts for less than one percent of gross domestic product (GDP),” Farid Chedid, CEO of SEIB Insurance and Reinsurance, told Oxford Business Group (OBG). “This is very low compared to the United Arab Emirates (UAE), for instance, where insurance stands at 2.5 percent and to the average for emerging markets, which is approximately six percent. This, of course, does mean that this segment will continue to grow, due to the very low penetration.” Akshay Randeva, the QFCA’s head of insurance and reinsurance, believes there will be an increase in policies taken out over the coming years, with growth being driven by Qatar’s rapid economic expansion. “Qatar’s insurance sector is projected to have the second-highest growth in the GCC region, with insurance premiums forecast to grow at 12 percent between 2012 and 2016,” he said in the MENA Insurance Review journal in February. “The GCC has a forecasted average growth of nine percent for the same period, a high growth market in itself.” Indeed, with total investments on infrastructure projects in Qatar alone projected to be US$150 billion (QR546 billion) over the next

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five years, there are strong growth opportunities for insurers in diverse non-life segments. “With infrastructure development set to get under way, engineering insurance products are going to be an important driver of growth,” Jamal Abu Nahl, the CEO of Qatar General Insurance and Reinsurance Company (QGIRC), told OBG. “Mandatory health insurance is expected by 2013, [and] this will inevitably further boost the industry.” Increasingly, Qatar’s banks are recognising the potential presented by the insurance sector, particularly after new banking regulations introduced last year forbade conventional banks to offer Shari’ah-compliant services. With these new regulations now in force, a number of lenders have looked to insurance to fill the earnings gap, with a few banks already seeing results. At the beginning of February 2012, the QGIRC announced a 42 percent jump in net profits for 2011. However, while overall profits hit US$46.7 million (QR169 million), there was a slight decline in net premiums, which eased by eight percent over the year to US$51.1 million (QR186 million), attributed to a rise in outlays to reinsurers. Doha Insurance Company (DIC) also reported a solid increase in net profits, up by nine percent for 2011 to US$18 million (QR65 million), according to a statement issued at the end of January. The firm posted a 13 percent increase in gross written premium types of insurances, while total underwriting revenues rose four percent to US$32.28 million (QR117 million), with earned insurance premiums rising four percent, though DIC also saw reinsurance costs rise. As long as they can keep costs in check and continue to widen their appeal, Qatar’s insurers should enjoy a profitable few years, with the situation likely to improve if the proposed broadening of the compulsory insurance pool is adopted. Thomas Bacon is an analyst at Oxford Business Group.

PERSONAL FINANCE

How healthy is your medical cover?

All expatriates landing in Qatar to work must undergo and pass a health test in order to qualify for residency. Adrian Bliss gives advice on what to look for when applying for medical health cover.

PERSONAL FINANCE

t is hard not to be aware of health matters when living and working in Qatar. To begin with, even before stepping foot in the country, expatriates are required to undergo a health test to check for diseases such as HIV. Anyone failing this medical check-up, which includes a chest x-ray and blood tests, will not be granted residency. Such preparation often sharpens the mind on giving health and medical needs for you and your family a thorough overhaul. The figures are compelling. Were a wife or partner to endure a complicated labour and birth, for example, the bill could run up to QR427,500. A relatively straightforward transplant operation will leave you QR855,000 lighter. In return for such sums you can expect first class medical treatment and well-equipped hospitals in Doha, where most expatriates are based. Outside the capital, however, expatriates should be aware that there is not the same level of medical facilities. To minimise costs, expatriates with a full residency permit can apply for a health card, which entitles the holder to certain free services at health clinics. While this is subsidised by the government, expatriates will find they can be charged if they are then referred to a hospital consultant and require subsequent treatment. So while researching the extent of cover available may sound like a tedious undertaking, the above should nudge many expatriates into the task. To help, we have compiled some handy pointers that will help check that your cover offers the vital signs of life essential in a good health plan. Assess your familyâ&#x20AC;&#x2122;s needs by drawing up a list of which benefits you perceive to be essential. Pay particular attention to the benefits you need rather than paying for some you do not require. For example, if you and your partner know you will not be adding to the family with more children, do not sign up to a plan which includes pre and post natal care, for which you may pay a premium but do not need. Instead look for the benefits that you may well need to call upon â&#x20AC;&#x201C; a typical case for parents is the inclusion of the costs of a parent accompanying a sick child in need of an operation in another country.

Pay attention to the small print that puts terms and conditions around your own responsibility in avoiding accidents and injuries. Do not overlook any private health insurance cover offered by your employer as part of your remuneration package, but bear in mind it may fall short of covering all types of emergencies, injuries and illnesses you and your family may feel more comfortable in having included. For example, does it provide a wide range of medical treatment or does it only provide cover for an emergency hospitalisation? If it is the latter, you are going to need to find out about top-up cover you may need. Think about living and the health consequences of the environment you are living in. Consider treatments, which may be needed for sunstroke and intensive heat. Pay attention to the small print that puts terms and conditions around your own responsibility in avoiding accidents and injuries. Beware modular extras. Some medical matters are quite hard to get cover for. Dentistry falls under this area. Some plans will cover dental treatment which is necessary due to an accident. Generally, however, routine or elective dentistry is not covered in basic healthcare plans. And in Qatar, expatriates do report that they find the dental treatment available expensive and not of the highest standard. One expatriate recently told the story of a fairly routine visit to the dentist setting him back QR4275. The same goes for insurance cover for eyesight treatment. However, if you think you may need these sorts of treatments, then it is worthwhile checking to see whether you can buy a bolt-on option to cover such requirements. For example, if your time in the Middle East calls for you to work in remote locations you may wish to bolt-on emergency evacuation cover to ensure you can get to a hospital or clinic that provides the appropriate medical treatment when you need it.

Pre-existing conditions will be one of those terms of cover that need careful thought. If you have such a condition, always own up to it. It would be foolish to write off all your policy rights just when you need the cover the most because of some unnecessary ambiguity at the outset. Although it is worth bearing in mind that more enlightened healthcare companies are offering cover for pre-existing conditions for an extra cost. Some plans even cover cancer treatment as part of their standard package. Note benefit limits. Most plans have a limit on the amount of benefits you are covered for on an individual treatment basis. Check that the individual allowance for each treatment is in line with typical costs for treatments in Qatar. When it comes to treatment choice, how flexible is your plan in terms of where you can obtain treatment? You may find that the hospital recommended to you for the treatment you require is not on the list of recognised providers offered by your plan. A good plan will offer a wide choice of reputable and medically recognised hospitals and clinics. The last thing you want when an injury or illness occurs is to find that the authorisation and claims process slows things down. Your chosen health insurance provider should make life as simple as possible for you and not place unnecessary obstacles in your way at the least convenient time. And, by way of the final step, check the full list of excesses and exclusions. Some policies offer a choice of excess you pay. The higher the excess, the lower the premium you pay. So careful assessment of how much you can afford to pay out of your own pocket can often save on annual premiums.

Adrian Bliss is senior financial consultant at Guardian Wealth Management Qatar LLC. TheEDGE

ECONOMIC BAROMETER

For Better or For Worse

Greece’s Marriage of Necessity to the Eurozone European political and financial leaders met recently to thrash out a second bailout agreement for the belueagured Greek economy, which has been floundering for some time now, threatening to sink much if not all of the eurozone – and potentially the world’s economy – with it. Karim Nakhle looks at the pros and cons of the latest Greek bailout agreement, and if this deal is really for better or worse.

atching the Greek bailout meetings of leaders in the European Union (EU), the viewer can be transcended, just like in the movie My Big Fat Greek Wedding, down memory lane into just the magical moments: the first kiss (in Greece’s case, the first default), and the first side by side picture of the bride and groom (recall the picture of the EU leaders during the first bailout). This is shortly followed by pre-recorded testimonials

from the best friends – here it is the new ‘Troika’ of the European Central Bank (ECB), The International Monetary Fund (IMF) and the EU, wishing the bride and groom a great future, financial health and prosperity. Similarly to a Greek wedding reception, at the Greek bailout party, the guests – most prominent among them Angela Merkel, German Chancellor, Mario Draghi, president of the ECB, Christine Lagarde, head of the IMF and Jean-Claude Juncker, Luxembourg president and head of the euro group of

finance ministers, are on their best behaviour, laughing and cheering on, as Greece gets another round of easy money. Indeed, the second bailout for Greece finally became a reality on March 14 when the eurozone nations formally approved the plan, tying yet another knot with the Greek government, administered by the Troika, which authorised the release of the first multibillion-euro loan instalment. But let us stroll down memory lane and remember what led to this sacred union

ECONOMIC BAROMETER

between the eurozone countries. From late 2009, fears of a sovereign debt crisis developed among investors as a result of the rising government debt levels around the world, together with a wave of downgrading of government debt in some European states. Concerns intensified in early 2010 and thereafter, leading Europe’s finance ministers on 9 May 2010 to approve a rescue package worth EUR750 billion (QR3 trillion), aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility (EFSF). To restore confidence in Europe, EU leaders also agreed to create a common fiscal union including the commitment of each participating country to introduce a balanced budget amendment. How each European country involved in this crisis borrowed and invested the money varies. For example, Ireland’s banks lent the money to property developers, generating a massive property bubble. When the bubble burst, Ireland’s government and taxpayers assumed private debts. In Greece, the government increased its commitments to public workers in the form of extremely generous pay and pension benefits. Iceland’s banking system grew enormously, creating debts to global investors – so-called

As the world economy cooled in the late 2000s, Greece was hit especially hard, because its main industries — shipping and tourism – were highly fragile. “external debts” – several times gross domestic product (GDP). The interconnection in the global financial system means that if one nation defaults on its sovereign debt or enters into recession, putting some of the external private debt at risk, the banking systems of creditor nations face losses. For example, in October 2011 Italian borrowers owed French banks US$366 billion net (QR1 trillion). Should Italy be unable to finance itself, the French banking system and economy could come under significant pressure, which in turn would affect France’s creditors and so on. This is referred to as financial contagion. Another factor contributing to interconnection is the concept of debt protection. Institutions entered into contracts

European Commission representative and head of the Greek ‘Troika’ bailout mission, Matthias Mors, talks on March 16, 2012 during the presentation of the Troika’s Second Compliance Report for Greece at the EU headquarters in Brussels. (Image Corbis)

called credit default swaps (CDS) that result in payment should default occur on a particular debt instrument (including government issued bonds). But, since multiple CDSs can be purchased on the same security, it is unclear what exposure each country’s banking system now has to CDS. GREECE’S FRAGILE ECONOMY In the early mid 2000s, Greece’s economy was one of the fastest growing in the eurozone and the government took advantage of this by running a large structural deficit, partly due to high defence spending amid historic enmity to Turkey. But as the world economy cooled in the late 2000s, Greece was hit especially hard, because its main industries – shipping and tourism – were especially fragile and sensitive to changes in the business cycle. As a result, the country’s debt began to increase rapidly. On 23 April 2010, the Greek government requested an initial loan of EUR45 billion (QR211 billion) from the EU and IMF, to cover its financial needs for the remaining part of 2010. A few days later Standard & Poor’s slashed Greece’s sovereign debt rating to BB+ or ‘junk’ status amid fears of default, in which case investors were liable to lose 30 to 50 percent of their money. Stock markets worldwide and the euro currency declined in response to this announcement. On 1 May 2010, the Greek government announced a series of austerity measures to secure a three-year EUR110 billion (QR517 billion) loan. The Troika (EU, ECB and IMF), offered Greece a second bailout loan worth EUR130 billion (QR611 billion) in October 2011, but with the activation being conditional on implementation of further austerity measures and a debt restructure agreement. TheEDGE

ECONOMIC BAROMETER

In February 2012, an IMF official negotiating Greek austerity measures admitted that excessive spending cuts were harming Greece. Some economic experts argue that the best option for Greece and the rest of the EU, would be to engineer an “orderly default”, allowing Athens to withdraw simultaneously from the eurozone and reintroduce its national currency the drachma at a debased rate. However, if Greece were to leave the euro, the economic and political impact would be devastating. According to analyst an exit would lead to a 60 percent devaluation of the new drachma, hyperinflation, military coups and possible civil war that could afflict a departing country. To prevent this from happening, the troika (EU, IMF and ECB) eventually agreed to provide a second bailout package worth EUR130 billion (QR611 billion), conditional on the implementation of another harsh austerity package (reducing the Greek spending with EUR3.3 billion (QR15 billion) in 2012 and another EUR10 billion (QR47 billion) in 2013 and 2014). For the first time, the bailout deal also included a debt restructure agreement with the private holders of Greek government bonds (banks, insurers and investment funds), to voluntarily accept a bond swap with a 53.5 percent nominal write-off, along with lower interest rates and the maturity prolonged to 11 to 30 years (depending on the previous maturity). It is the world’s biggest debt restructuring deal ever, affecting some EUR206 billion (QR968 billion) of Greek government bonds. The debt write-off had a size of EUR107 billion (QR502 billion), and caused the Greek debt level to fall from roughly EUR350 billion (QR1 trillion) to EUR240 billion (QR1 trillion) in March 2012, with the predicted debt burden now showing a more sustainable size equal to 117 percent of GDP, somewhat lower than the originally expected 120.5 percent. A RECIPE FOR SUCCESS? Greece has been in a recession for five consecutive years. The hope is that the so-called EUR130 billion (QR611 billion) bailout package (or potentially EUR173.6

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Demonstrators shout slogans during a protest against austerity measures, in front of Parliament in February in Athens, Greece. As finance ministers across the eurozone were calling for greater scrutiny and oversight of Greece’s proposed budget cuts in order to approve the latest EUR130 billion (QR611 million) bailout package. (image Getty Images)

billion (QR815 billion) as some estimate (see box out) will be enough to keep Greece funded until 2014-2015. However, talk of a third Greek bailout has already started with the ink still wet on the second one, especially following a report by EU experts highlighting the risks to structuralreform implementation and predicting “at best stagnation” for 2013. Furthermore, the austerity programmes set in place by the Troika on Greece are savaging other incomes that drive aggregate demand. Firms will not increase output when there is no sustainable growth in demand nor will they expand investment (to build more productive capacity), if the current stock of capital can adequately meet the current (declining) demand for goods and services. The IMF hopes that the recovery will not come from domestic demand but rather that the lower unit labour costs will improve international competitiveness of the Greek

economy and allow for a trade-driven recovery. However with many of Greece’s trading partners also now plunging back into recession as a consequence of the flawed fiscal austerity being imposed upon them by the Troika, there would appear to be little hope of an export-led recovery. The IMF however always presents an optimistic projection to accompany their demands for austerity. In reality, the latest EU bailout will not end the uncertainty, neither will it be the final bailout. Greece will not be able to withstand a decade of repressive economic policies. The reality is that this ‘deal’ only buys some more time. In the meantime, the real situation in Greece will continue to worsen. The new bailout would stave off bankruptcy, which was imminent in a formal sense, at the end of March 2012. After studying the full report issued following the meeting and thinking about the underlying economics of the situation, it does not take long to realise is that

ECONOMIC BAROMETER

On 23 April 2010, the Greek government requested an initial loan of EUR45 billion (QR211 billion) from the EU and IMF.

Like all eurozone political and financial leaders, no doubt aware what serious repercussions a Greek default could have for the region and indeed world economy, German Chancellor Angela Merkel cast her ballot during a vote over a second EU-aid package for Greece in the Bundestag in February in Berlin, Germany. (Image Getty Images)

the potential caveats that are involved with the deal make it a temporary solution that will hopefully ease some uncertainties for Greece, and the eurozone as a whole. Following approval of the second bailout package, credit agency Fitch has upgraded Greece’s new government bonds, from ‘Restructed Default’ to B-, which might signal that things seem to be looking up for the euro area. Nevertheless the new B-rating, which applies to the new bonds issued under Greek law, is still junk status, meaning they are not investment grade despite the huge cut to Greece’s debt pile. Securities not eligible for the bond exchange were also upgraded

Is the latest Greek bailout really worth just EUR130 billion? Things do not get easier in a wedding, and you always have to end up spending more than what you have hoped for…same goes for any bailout. According to a recent 190-page report by EU and IMF monitors, the current bailout is actually larger than the declared value. Here is our attempt to explain why the figures have gotten so confusing and the bailout is probably larger than the EUR130 billion (QR611 billion) anticipated…better described as a EUR164.5 billion (QR773 billion) rescue. Or maybe it is EUR173.6 billion (QR815 billion). The key thing to remember is that the first EUR110 billion (QR517 billion) Greek bailout was originally supposed to run through to the middle of next year and its remaining funding will be folded into the new package and added to B- from C rating. Fitch kept a C rating on foreign-law bonds as the settlement date for their swap is not until April 11. The situation in the financial markets is slowly improving in response to the ECB’s measures, but also in response to the progress made by euro area governments. Nevertheless, we will not have an outburst of optimism for the time being, as this is a bit premature, especially since the eurozone’s recovery will be slower and harder than expected. Meanwhile just like in all marriages, we wish the Greek bride and her European groom all the best, hoping that they live happily ever after.

to the EUR130 billion (QR611 billion) in new funding. According to the report, EUR73 billion (QR343 billion) of the first bailout has been disbursed, leaving about EUR37 billion (QR173 billion). Again, to complicate it even more, the IMF has changed its Greek programme from a ‘stand-by arrangement’ to an extended fund facility. The differences are rather esoteric, but the main consequence is that IMF loans will be distributed over five years instead of the previous three. So of the EUR28 billion (QR131 billion) in IMF money, only EUR19.8 billion (QR93 billion) will be used over the course of the new three-year programme. By that calculation, the new bailout will be EUR164.5 billion (QR773 billion). If you include payments stretching into 2016, however, the number gets bigger. Elsewhere in the report, it is quoted that the total EU-IMF assistance covering needs over the next five years totals EUR173.6 billion (QR815 billion).

Parsing of details in the European Troika’s Second Compliance Report for Greece, seen on March 16, 2012 during the presentation of the at the EU headquarters in Brussels, Belgium, indicates that the total EU-IMF assistance covering Greek needs over the next five years may total EUR173.6 billion (QR815 billion) and not EUR130 billion (QR611 billion).

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IN THE SPOTLIGHT

BIDDING NATION Qatar sets its sights on the 2020 Olympics and more

IN THE SPOTLIGHT

The 2022 World Cup could change the image of the Middle East in the eyes of the globe. But Doha is not satisfied with a single event, indeed, securing the Olympic Games would be more than another image boost – it would also make perfect economic sense. Edward Jameson reports.

delegation from Qatar, led by Doha 2020 vicechairman Sheikh Saoud bin Abdulrahman Al Thani, formally submits its bid, two days before the deadline, to host the 2020 Olympic Games in Doha. The Qatari capital faces stiff competition in its battle to host the world’s most prized sporting event. Also in the race are Tokyo, Japan; Madrid, Spain; Rome, Italy; Istanbul, Turkey; and Baku, Azerbaijan. The International Olympic Committee (IOC) says it will conduct a so-called “technical review” and decide in Quebec, Canada, in May, which nations to accept into phase two of the process, and which ones will fall by the wayside.

The trend being set is an aggressive breed of bidding, one that sends a clear signal to the world that Qatar has come of age. The successful city will be announced in Buenos Aires, Argentina, on 7 September 2013. Doha’s entry into the Olympic community marks a historic step, not just for Qatar, but also for the IOC itself. For the first time the committee is being asked to consider hosting its summer Olympics in October, the intention being to quell fears over the Middle East summer heat.

HE Sheikh Saoud bin Abdulrahman Al Thani, Doha 2020 vice chairman, member of the Doha 2020 bid committee for the Olympic Games and Paralympic Games, hands over the official Doha 2020 document to Jacqueline Barrett, International Olympic Committee Head of Bid City Relations in early 2012. (Image Getty Images)

In addition, as details of the bid are unveiled by Qatar a week later, it emerges that the nation is to send female athletes to the Olympic games in 2012 for the first time. Swimmer Nada Arkaji and sprinter Noor Al Malki are set to compete at the London, United Kingdom (UK), summer Olympics in July and August, at the invitation of the IOC. “Both Qatar and the Middle East are changing,” Al Thani says. “Look at what is happening across the region. Change is in the air, and we see Doha 2020 as a way to change for the better.” Coming of Age Doha’s Olympic bid, which carries with it a budget of US$73 million (QR266 million), marked the latest in a long line of high profile events that Qatar has elected to bid for. Alongside its successful bid to host the 2022 soccer World Cup, the nation was also in the running – against 2012 Olympic hosts London – to stage the 2017 World Athletics Championships, which Doha lost to London in November 2011. A previous bid to host the Olympics in 2016 also proved unsuccessful when Qatar was eliminated at the first hurdle and, parallel to its 2022 World Cup bid, Doha also sought to host the 2018 tournament, which was awarded to Russia. However, the trend being set is an aggressive breed of bidding, one that sends a clear signal to the world that Qatar has come of age. The state is determined to put not just itself, but the whole of the Middle East, on the international map. “Sport is one strategic tool TheEDGE

IN THE SPOTLIGHT

we use to promote Qatar,” a Qatar Olympic Committee (QOC) spokesman explained. By bringing major sporting events to Doha, the Qatari government also intends to promote the uptake of sport among the general public. But the harsh climate of the region acts as a barrier to the uptake of many sports, particularly outdoor pursuits. That said, there is already evidence to suggest that the Qatari population is perhaps beginning to get bitten by the sporting bug. Is BIG BIDDING becoming A regional trend? Qatar is not alone across the region in its quest to stage international events. Another state, which happens to be in the same historical economic position as Qatar – where economic diversification is a necessity as opposed to a luxury – has not been shy about promoting its global ambitions. For example, Dubai is in the bidding race to host the World Expo in 2022. The massive event, staged once every five years, is a platform on which nations promote themselves and their development plans giant pavilions. The United Arab Emirates (UAE) second city, which is initially budgeting up to AED15 billion (QR14.9 billion), faces stiff competition from Ayutthaya, Thailand; Izmir, Turkey; Sao Paulo, Brazil; and Yekaterinburg, Russia. The winner will be announced in November 2013. Dubai’s legacy plan is already in place. The event, according to the organising committee, would be staged at Exhibition City, a sprawling development to be built in phases next to Al Maktoum International Airport. The development would then be put to use as a regional conference hub. Such events have already a proven money-spinner for Dubai, and the development’s location in the shadow of the immense airport, coupled with Dubai’s geographical position linking east with west, could work in both Dubai’s favour, and that of its intended legacy.

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A survey conducted last month in Doha by the QOC found that 89 percent of respondents took part in some form of sporting activity on a regular basis. Impressively, 29 percent of participants practiced an active sport at least three times a week. Nathan Pillai, chief executive officer of Doha-based sports marketing firm NOVO, does not view factors such as climate and sporting reputation as barriers to Qatar’s bidding plans: “Qatar’s leadership views such factors as opportunities to demonstrate the country’s ability to innovate, develop and promote the Arab world,” he says. The business case The bidding frenzy is not purely motivated by a will for prestige and as an act of good-reputation building, and there is more to it than the health of a nation – Doha will also be hoping that its bidding makes very sound business sense. Principally, the right to host major international sporting events is the most efficient and guaranteed means by which Qatar can accelerate the process of economic diversification. Pillai agrees: “The stature and scale of the events that Qatar is bidding for underscores its intention to use them as a platform to elevate the country’s

international profile, accelerate infrastructure developments and stimulate social change,” he says. Take the 2022 World Cup for example: nine stadiums are to be built from scratch, with three to undergo major renovation programmes. Estimates of the total investment required to put the stadia and related infrastructure in place vary wildly. Recently German analyst and financial adviser Nicola Ritter made headlines the world over when she estimated the total cost at more than QR800 billion. Qatar for its part has pledged QR75 billion in expenditure so far with that number likely to rise as the tournament draws closer. By comparison, the pre-tournament estimation of costs at the last World Cup in South Africa (see box), including construction and upgrading of stadia, infrastructure, airport and transport facilities, was pegged at just QR2.1 billion by the South African government, reflecting the massive amount of new build that Qatar must undertake. The impact on the national economy began to bear fruit the minute that Qatar’s name emerged from the envelope containing the successful bidder in Switzerland at the end of 2010, as mass construction plans were immediately put into place.

As seen in this 2006 file photo of Khalifa Stadium at Aspire taken during the closing ceremony of the Asian Games, Qatar has the experience in putting on large scale sports events and the facilities, many of which will be newly built or upgraded for the 2022 FIFA World Cup. (Image Getty Images)

IN THE SPOTLIGHT

According to consultancy firm STR Travel, 35 hotels opened for business in Qatar in the third quarter of last year, the most recent date for which figures are available, comprising more than 6,000 rooms. In total, the country is hoping to build almost 120 hotel buildings and apartment complexes. In addition, the transport infrastructure bill is expected to come in at QR21 billion. However, the intended boost to the country’s economic diversification will rest on more than expenditure – Qatar’s economic clout is in no question. But what it must ensure is that the legacy created by its World Cup investment is an economically effective one. In the short term, securing other tournaments can create part of this. With infrastructure, hotel and stadia spending already earmarked, the cost of hosting additional major sporting events is dramatically cut, yet the potential benefits remain the same. “Hosting an Olympic games presents a host of different organisational challenges and benefits compared to the World Cup,” Pillai says. “One very smart argument for hosting the Olympics is that further utilisation of transport systems and leisure infrastructure will increase the return from those investments.”

The government of South Africa put the boost to the national economy from the 2010 tournament at South African rand 38 billion (QR18 billion) – roughly equivalent to the cost of staging the tournament. In Qatar’s case however, the state must be prepared to expect an initial loss due to its new-build requirements. The true success of the tournament will therefore rest on what lasting, sustainable improvements are evident after the last of the fans have taken their wallets home. The 2022 World Cup will mark the first time that the world’s richest sporting event has been held in an Arab nation. Should Qatar succeed with its bid for the 2020 Olympics, it will be the first time an Arab nation has played host to that tournament. A successful bid for the 2017 World Athletics Championships would have also proven Qatar is capable of outbidding one of the global heavyweights in status terms, London, but it was not to be. Doha 2017 bid team stated: “The competition was carried out in a civilized and competitive spirit, a friendly atmosphere and a great desire by both bids to serve the sport of athletics across the world...The Doha 2017 team respects the IAAF decision, and knows that they will continue developing athletics around the world. Athletics is a strong part of the Olympic movement and Qatar looks forward to continuing its work on expanding athletics for future generations.” Qatar’s bidding frenzy is motivated by a number of factors; some financial, some economic, some cultural and some social. But perhaps the richest legacy that can be created will be the potential boost to the Middle East in the eyes of the world: arriving as an Giant Olympic rings are towed on The River Thames in site of the established region in the wider O2 arena and Canary Wharf financial district in late February 2012 in London.. Should Qatar be awarded the 2020 Olympic Games it will learn global community has been a long much from cities such as the British capital in how to host the games and time coming. what they might cost – and earn, the country. (Image Getty Images)

The Qatari capital faces stiff competition in its battle to host the world’s most prized sporting event.

The London Experience In its push to host the 2020 Olympics, Qatar has the opportunity to learn from the experiences of 22 past event hosts in order to prepare itself for what may lie ahead. The next games, to be staged in London, begin on 27 July. The UK’s capital city is considered relatively well prepared in terms of infrastructure build compared to the recent experiences of other cities, most notably Athens in 2004. While London’s Olympic stadium is today complete, Athens’ primary venue was famously completed only two months before the start of the games, while some related infrastructure projects were completed just days before the opening. As has been proved by the rapid rise of Doha, Qatar is capable of managing major construction projects to deadlines. Much of the related infrastructure, however, will see its deadline immediately cut by two years should Qatar secure the 2020 Olympic Games. London’s preparations, however, have fallen foul of the more traditional hurdle: cost overruns. A committee of UK parliamentarians in March estimated that the city’s costs will come in at £11 billion (QR63 billion), almost £2 billion above its £9.3 billion budget and almost five times the original £2.4 billion estimate. Four years earlier, in 2008, a mammoth tag of CNY198 billion (QR114 billion) was attached to the Beijing games. Costs-wise however, hosting the 2020 Olympics is perhaps the best thing that could happen to Qatar economically. Its new infrastructure programme will go ahead regardless in preparation for the 2022 Soccer World Cup. The additional cash boost from the Olympics would far exceed any additional expenditure required for that tournament in relative terms.

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CoVER SToRY

KONY

2012 hoW ThE iNTERNET’S MoST ViRAl ViDEo CoUlD ChANGE SoCiAl MEDiA ACTiViSM FoREVER

Kony 2012, the online ‘clicktivism’ campaign designed to cast global infamy on an African warlord and bring him to justice, has once more turned the spotlight on social media – and on the profits and pitfalls of viral marketing. Mark van Dijk takes a close look at the recent online youTube phenomenon and what bearing it might have for both branding and activism, particularly in the context of the ‘Arab Spring’.

CoVER SToRY

oNE huNdrEd mIllIoN ClICks On 22 June 2004, American filmmakers Jason Russell, Bobby Bailey and Laren Poole screened a 55-minute DVD at the University of San Diego in the United States (US). The film, titled Invisible Children: The Rough Cut, documented the filmmakers’ travels to Africa, and highlighted the human rights abuses committed by the Lord’s Resistance Army (LRA) in Uganda. Only a handful of students saw the film. After five years and about 10,000 screenings, about five million people eventually got to see it – but, given that it was shown at schools, university campuses and rock concerts, it is impossible to tell how many of that audience were actually paying any attention. And that is where the Invisible Children story might have started and ended, with copies of the DVD changing hands and with a few thousand American students grumbling among themselves about the injustices of the world and the evils of the LRA. But then, on 5 March 2012, Russell, Bailey and Poole – now working as the non-profit organisation Invisible Children,

Inc. – posted a second film on the file-sharing websites Vimeo and YouTube. This 30-minute film was titled Kony 2012, and its sole purpose – as Russell intones in voice-over narration in the film – “is to stop the rebel group The LRA and their leader Joseph Kony”. Within just two weeks, the film was viewed by more than 100 million people. somEThINg lIkE A PhENomENoN Kony 2012 became an overnight phenomenon. By far the most viral video in history, it has succeeded in at least one of its aims: to make Joseph Kony famous.

“He’s not famous,” Russell laments in the film. “He’s invisible. Joseph Kony’s invisible. Here is how we’re going to make him visible. We are going to make Joseph Kony a household name not to celebrate him, but to bring his crimes to the light.” At first glance, Kony 2012 appears to be an unqualified success as a marketing exercise. Massive penetration, worldwide exposure, viral reach…it ticks all the boxes, and that despite the film’s unusually long halfhour running time (the average duration of a YouTube clip is four minutes and 12 seconds). Salman Shaikh, director of the Brookings Doha Centre and fellow at the Saban Centre

Within just two weeks, Kony 2012 was viewed by more than 100 million people, making it by far the most viral video in history.

Simba, 14, is one of thousands of children who had been kidnapped by Joseph Kony’s Lords Resistance Army (LRA) and used as slaves, at a half-way house for child victims of the LRA that is run in partnership with Doctors Without Borders (Medecins Sans Frontieres) on January 13, 2011 in the town of Yambio, south Sudan. The viral YouTube video sensation Kony 2012 has highlighted the plight of such African youngsters but not without contronversy and angst for its creators. (Image Corbis)

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COVER STORY

Uganda, child soldiers and the LRA.” Shaikh agrees: “It’s very slick film making, and like all good media, the video simplifies things, which is to its advantage and to its disadvantage as well. Social media can be a very indiscriminate and very blunt tool, and it’s important to filter this kind of thing. You can’t take it as gospel, you have to formulate your own opinions based on a wide variety of information sources and knowledge. Social media can help you with that: for example, I look at my Twitter and I can get a number of articles, and then I process the information and I decide for myself.” As two demographics the Kony 2012 video is most popular among are females aged 13 to 17 and males aged 18 to 24 – suggesting that great parts of the intended audience are not as quite discerning as Shaikh.

Ugandan Evelyn Apoko (third from right), 22, listens to testimony during a hearing of the US House Foreign Affairs Committee about the Obama Administration’s decision to send 100 Special Forces soldiers to Africa’s Great Lakes Region to advise troops there on the killing or capture of Joseph Kony in late 2011. Apoko was kidnapped from her village near Gulu, Uganda, in 2001 by the LRA and forced into child slavery before she escaped three years later. Her face was mutilated during a battle between the LRA and government forces. (Image Getty Images)

for Middle East Policy, believes that the campaign’s success is an indication of the power of social media. “This is the most watched viral video in a record amount of time,” he says, “and I don’t think they could have predicted that with any confidence. Of course it’s a dream of these kinds of advocacy groups to be able to hit on that, and certainly there are a few in the Middle East who will be looking at it with envy.” But that success has brought with it a massive wave of criticism. Ugandan prime minister Amama Mbabazi attacked the video for giving a “false impression”, while critics around the world pointed out that the LRA was forced out of Uganda years ago, and has not been active in the country since 2006. Invisible Children was forced to post a long and detailed response to the criticism, and in the midst of the media firestorm, Russell suffered an embarrassing breakdown involving public nudity, which led to his arrest and hospitalisation. Arguably, therein lies the warning for any organisation – be it a business or a non-profit – that hopes for this kind of marketing success: just because

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people are talking about you, does not mean they will say what you want to hear. “With these 15 minutes of mega fame come responsibilities,” says Shaikh. “And this may be the thing that people will have to learn, both in terms of being able to project this kind of stuff, and then also being able to live with it.” “I think it’s beyond question how powerful this sort of campaigning is, given how far Joseph Kony’s name has now spread,” agrees Omar Chatriwala, a journalist, social media expert and consultant for the Doha Centre for Media Freedom. “But it does depend what your aim is. The Kony 2012 campaign has raised a great deal of awareness about the issue, but it’s also oversimplified many of its complex moving parts, leaving participants less informed than if, for example, they’d read a well-received book on Uganda’s recent history. “Again, I don’t think you should underestimate hype – that’s how politicians win ‘hearts and minds’ the world over, not with facts,” continues Chatriwala, “And I’m sure that heightened awareness has led some, if not many to take more tangible steps to get involved or educated about the issues of

CULTURE VULTURES The marketing campaign – because, after all, that’s what Kony 2012 is at its core – involved enlisting 20 “culture makers” and 12 policymakers to help spread the message. These culture makers included pop star Justin Bieber, whose own career was launched when a talent scout discovered him – ironically enough – on YouTube. By targeting policymakers (in other words, US politicians), Invisible Children were aiming to flip the American political system on its head. “There are different avenues now to influence policymakers and broader public debates,” says Shaikh. “Before it was a few select people, but now it’s a much wider audience - and in fact the man with the camera and the slick production can have as profound an impact as anybody who’s been toiling away on this issue for the past two or three decades. There’s a serious edge to this in terms of having an impact on the decisionmakers themselves.” But when you listen to the language of the Kony 2012 video, it becomes very clear very quickly that the activists want more than just a seat at the debate table. “It’s always been that the decisions made by the few with the money and the power dictated the priorities of their government and the stories in the media,” Russell says in his narration.

COVER STORY

“We are going to make Joseph Kony a household name not to celebrate him, but to bring his crimes to the light.” – Kony 2012 creator Jason Russell. “They determine the lives and the opportunities of their citizens. But now there is something bigger than that. The people of the world see each other and can protect each other. It’s turning the system upside down, and it changes everything. We have reached a crucial time in history where what we do or don’t do right now will affect every generation to come. “Arresting Joseph Kony will prove that the world we live in has new rules, that the technology that has brought our planet together is allowing us to respond to the problems of our friends. We are not just studying human history. We are shaping it.” The echoes of the Arab Spring – which was fuelled in no small part by social media, and which Kony 2012 cites as an example of

A staff member works on her computer at the headquarters of Invisible Children, the charity activist group behind the Kony 2012 viral video, in San Diego in the United States. The resultant unexpected and indeed unprecedented views, more than 100 million views at last count, place enormous media attention and public pressure on the organisation on a scale never seen before, questioning its motives and integrity. (Image Corbis)

the kind of activism they’re looking for – are unmistakable. But while the methods may be similar, there’s a key difference between the Kony 2012 campaign and the series of social uprisings across the Arab world. “They’re very much different in the way that Invisible Children played out almost like a political campaign, aiming to generate momentum through social engagement,” says Chatriwala. “The Arab Spring, I think, has been organised more in person on the ground, with those in the respective countries tapping into already existing frustration to get people mobilised and protesting on the street. “Social media has been important to the Arab Spring in terms of spreading awareness and garnering support internationally, as well as learning from activists going through the same thing in other countries. But where the Kony 2012 campaign had to leverage social media to make people aware of what the LRA has been doing, in places such as Tunisia, Egypt, Libya, etcetera, the citizens were already very well aware of what their governments had and hadn’t been doing.” Chatriwala adds that while there was a fair amount of clicktivism in the Arab Spring, the real momentum for those uprisings came from the people on the ground demanding their rights. “The millions of Egyptian that filled the streets of Cairo and elsewhere did not do so because they watched a YouTube video,” he points out, “but because they were tired of waiting for change.” ARAB SPRING CONTEXT But could something like Kony 2012 happen in the Gulf? Certainly there’s more freedom on the Internet than there is in other

media… but neither Chatriwala nor Shaikh believe the online airwaves are entirely clear. “I suspect there are more people watching and listening to social media than there were even a year ago,” says Shaikh. “Certain Gulf states are going after a select number of individuals who may have tweeted or said something against the monarchies or threatened them in some way. But they’re not stopping people getting online.” “To date, there remains more freedom online in Arab Gulf States than there typically is in print,” adds Chatriwala, “with major magazines and newspapers often being state-regulated or at least monitored. And as a result, we see a lot of self-censorship on critical issues in traditional media. “Online, it’s evident individuals feel less restricted, and are more willing to air their opinions on political issues, although often this is done somewhat anonymously through the use of pseudonyms. It isn’t unrestricted, mind you, with potentially controversial websites typically being blocked in respective Gulf countries.” The Kony 2012 campaign has been criticised for, as the old saying in journalism goes, not letting the facts get in the way of a good story. But for businesses, non-profits and individuals in Qatar and the Gulf region, that story is less about an infamous African warlord, and more about the impact social media can have in spreading a message across the world. “Social media is a very important information dissemination and social activism organising tool,” says Shaikh. “Perhaps sometimes it’s overdone, but certainly in the case of Kony 2012 the filmmakers have hit on a formula which has captured the world’s imagination rather quickly. For those of us of an older generation who were perhaps ignoring social media a year ago, we’re certainly not ignoring it anymore.” And how can we? As Russell says in his opening line of Kony 2012: “Right now there are more people on Facebook than there were on the planet 200 years ago.” And in his mission to bring one of those people to justice, Russell has inadvertently cast the virtual spotlight on the collective power of all the others. TheEDGE

On The Pulse

Burj Khalifa holds the title of the tallest free-standing structure with the highest number of floors, occupied floor space, and outdoor observation deck, with the longest travel distance elevator in the world. Neighbouring Qatar plans to to build in the near future an even bigger and taller tower development. Erika WidĂŠn investigates what it takes to build such large structures.

Qatarâ&#x20AC;&#x2122;s

Technology

Towers

On The Pulse

ne year ago, several local newspapers pubished that Qatar intends to construct the tallest building in the world. Sheikh Thani Bin Abdullah Al Thani, chairman of Ezdan Real Estate stated to the local media at the time, “We have plans in the pipeline to build the tallest tower in Doha, however it is subject to obtaining land from the concerned authorities.” Recently TheEDGE contacted Ezdan Real Estate to ask about the progress of the company’s earlier announcement, and they reiterated that once they receive the land allocation from the government, they will make a formal announcement. But it leaves one wondering…what is the obsession with building the “tallest” towers both in the Middle East and elsewhere? And what is really entailed in building these mega tall structures? Striking Architecture Previously known as Aspire Tower, The Torch Doha (left) is the tallest structure and building in Qatar, standing at 300 metres. Shaped to symbolise a colossal torch, which for the duration of the 2006 Asian Games held its symbolic flame within the lattice shell that forms the topmost part of the structure. The Torch Doha includes 17 floors of luxury accommodation, featuring 167 rooms and suites. A local attraction for the public is its unique Three Sixty revolving restaurant on the 47th floor, which rotates 360 degrees up to one and a half hour, offering panoramic views of the city and the Aspire Zone surroundings. The main structural elements of the tower were completed within a record time of 21 months in terms of design and construction. “The tower is the result of a comprehensive architectural, engineering and technical design,” says Sherif Sabry, director of sales and marketing of The Torch Doha, “therefore The Torch is Doha’s iconic landmark, with a cutting edge structure due to dedicated effort and leading technical expertise of an international design and engineering team.” “The tower housed the Asian Games flame during the games and holds the record for the tallest ever games flame, which was visible

Previously as Aspire Tower, The Torch Doha is the tallest structure and building in Qatar, standing at 300 metres. throughout Doha for the duration of the games,” adds Sabry. Since October 2011, The Torch Doha has been operating as a five star hotel, conveniently located near the main sports facilities. “During the 2022 World Cup The Torch Doha will be the main hub for hosting sports teams and personalities,” adds Sabry. Tornado Tower is another striking structural development in Doha. The 200 metre tower houses 52 floors of office space. The project was completed in 2008 and its planning and construction phase aim was to minimise the effects on the natural environment through proper site utilisation, innovative use of materials, energy reduction, reduced emissions and water consumption. TheEDGE speaks with one of Tornado Tower’s first tenants, Arron Brown, sales and marketing manager of LS: Keep Moving about his perspective of Qatar’s trend to develop tall, technology-heavy towers in Doha.

Sherif Sabry, director of sales and marketing of The Torch Doha talks to TheEDGE about Qatar’s iconic Torch Tower.

Brown tells TheEDGE that Qatar has launched itself into the world arena and boasts business tourism as one of its key attractions. As a result, Qatar needs to offer worldclass office spaces for all new and existing businesses. As the country’s economy grows and expands, so does the number of commercial towers. Therefore, developments must compete to attract small, medium and large business to take up residency in those towers. “Cutting edge and technology integrated commercial towers have a certain unique selling point (USP) which can attract tenants in a competitive market. This drive to compete for commercial tenants works both within the technical workings of the tower and the façade,” says Brown, “Tornado Tower and its surroundings, equally impressive developments, look and operate like a 21st century business hub that would stand out in any other, perhaps more established economy. Qatar’s cutting edge developments will be synonymous with the likes of London Gherkin or Canary Wharf and Dubai’s Burj Khalifa.” Tornado Tower is a commercial structure and does not have residential units, but it does host some retail spaces such as coffee shops in addition to a state of the art gym and soon to be announced high-end restaurant. Brown explains to TheEDGE what makes Tornado Tower unique besides its impressive architecture and exterior colourful night-lights highlighting its façade contour, viewable from as far as the corniche. “The lobby is modern, with large plasma screens showing international news and stock market updates and the elevators are operated from an interactive touch pad. It is little surprise that some of the most renowned business in Qatar have taken up residence in Tornado Tower,” adds Brown. West Bay Residences Kempinski Residences and Suites Doha tower was introduced to Qatar with the grand TheEDGE

On The Pulse

opening on June 2010, nestled in the heart of West Bay, known as the central business district and is considered the tallest standing building in Qatar. “For more than a year and a half we still have the privilege to be the tallest tower of the country, from where all our guests can enjoy panoramic views of the city and the feeling to be on top,” says Emel Atikkan, general manager of Kempinski Doha. Atikkan adds that wherever one may be throughout the city of Doha, there is no chance to miss the distinctive shape in the skyline. “It’s the only square-shaped tower in town, reminiscent of the wind towers of bygone days. The distinctive design, with sand and blue colours on the exterior of the building reflects the desert and the crystal clear waters of the Arabian Gulf. The building was constructed with the highest and latest standards in technology, security, finishing and is equipped with the most sophisticated building management system (BMS) system in the city. The interiors bear the signature of the interior architect, Giampiero Peia.” The 62 floor Kempinski Residences and Suites hosts a total of 370 units, broken down into one, two and three bedroom suites and residences. They are all fully furnished and equipped with the intention for the guest and or tenant to simply move in with their suitcase and start enjoying Doha. “We are ideally positioned to cater to the business people, due to our strategic location in the diplomatic, financial and central business district and the close proximity to the Exhibition Centre…coupled with our business centre, which houses posh boardroom and our sky villas for exclusive launches, press conferences, business meetings and stylish cocktail receptions, Kempinski Residences and Suites is fully geared to address the needs of the discerning business life,” says Attikan. MixED-use Towers Mirco Mauer is head of real estate of Engel and Völkers and gives their perspective of the current and future cutting edge towers in the city. Mauer is pleased to see that there is an improvement, and how some Qataris are willing to spend more money on construction to build towers with interesting architecture and new technological developments. “If you look

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Mirco Mauer, head of real estate of Engel and Völkers gives his perspective of Qatar’s trend in building tower technology developments.

to London, Hong Kong, Singapore and other fully developed cities, we still see that there is much more possible and achievable for Qatar in the future, especially in regard to green building possibilities and automated systems, and we expect to see huge improvements soon with the upcoming developments in Lusail.” Mauer highlights how green buildings are of high interest and even higher construction costs, but those buildings will rent quickly once completed and for higher rents than the towers currently available in the market. “Tenants of certain industries like these kind of buildings because of prestigious reasons. Most international tenants prefer these towers as they are already used to this from their home countries.” According to Mauer, mixed-use towers are very convenient. “Office space combined with a retail area and or a hotel offers many advantages. The office user has short ways to get a coffee or their lunch…as well they can set up meetings with clients in the restaurants offered in the building, accommodate clients in the hotel next to the office and use the offered facilities like the gym or pool after work.” Brown believes there seems to be a kudos attached to being a tenant of an iconic development. “I cannot speak for other organisations, but for LS: Tornado Tower represents the heart of the thriving capital

On The Pulse

Muhibullah Mani, chief operating officer of Alfardan Properties Why is there a concept to develop cutting edge and tower technology in Alfardan Properties’ constructions? It has been our mission to develop real estate masterpieces that evoke the warm hospitality and unique character of Qatar, while integrating all the essential amenities of a modern society. This is the kind of luxury concept that has long been associated with the Alfardan Properties brand. We constantly find ways to leverage our technical superiority, creativity and cutting-edge technology for the benefit of the communities we serve. Is there a demand for such developments in Doha, if so, why? Qatar is fast emerging as an economic hub in the region as it continues to open exciting possibilities to entrepreneurs and business organisations from around the world, which influences the demand for more sophisticated, luxurious property developments, making Qatar one of the most attractive real estate markets in the world. What towers and developments does Alfardan Properties currently have? Porto Arabia, the first property available for lease on “The Pearl Qatar”; Laguna Beach, the exclusive villa compound in the West Bay Lagoon; Kempinski Residences & Suites, which has been credited for establishing new benchmarks for luxury high-rise residences; and the Alfardan Gardens residential villa complex. In addition to several iconic landmarks in Qatar such as the Alfardan Towers, a fusion of residential and commercial amenities in a luxurious development; Alfardan Plaza, located at the heart of Doha City and home to several prominent companies and enterprises; and its flagship project Alfardan Centre, one of the first state-of-the-art buildings to rise in Doha’s Bank Street. What is the unique selling point of Alfardan’s Towers? The Alfardan Properties brand is characterised by world-class workmanship, service excellence and lavish lifestyle. These qualities set the company apart as on innovative leader in Qatar’s property and real estate industry, and a driving force in the growth of the luxury property segment. Tallest Towers in Doha Completed Building name

Height (Meters)

Stories

Use

Year completed

Aspire Tower

300

Hotel/office

2006

Doha Media Center

286

Office

2008

Al Fardan Residences

254

Residential

2009

Emel Atikkan, general manager of Kempinski Doha explains to TheEDGE how Kempinski tower is distinct and stands out in the central business district of Doha.

Doha. It is easily recognisable, distinctive and stands out among its neighbours,” he adds, “ all of these traits echo through our own business practice…leasing a space in a commercial tower gives you the option to transform a ‘shell and core’ space into something completely unique of your design.” Most commercial towers in Dafna and West Bay area are available for monthly rates between QR180 to QR220 per square metre, while the popular commercial areas such as C-Ring, Al Sadd and Airport Road seem to remain in high demand since they offer space of 200 up to 400 square metres, and available for QR180 per square metre. Another striking tower seen in West Bay Lagoon is the ZigZag twin tower, known as the tallest leaning tower in the world. It has a height of 136 metres and it is a mixed use development of residential and commercial. On average rental rates for a one bedroom up to a three bedroom starts at QR7000 up to QR12,500 a month. DOHA SPACE There is a great deal of space for cities to develop outwards rather than upwards in Doha says Brown to TheEDGE. “But where is the fun in that?,” he adds, ‘Big’ projects are something a country can boast about, promote themselves with and compete on a world scale with. If you ask anyone to name the development with the ‘biggest square metre footprint in the world’, I doubt they would know. If you ask anyone to name the ‘tallest tower in the world’ that person would likely know what and, more importantly, where it is…because the region is thinking big.” TheEDGE

KNOWLEDGE & EXPERTISE • PRODUCTIVITY ANd WELLBEING • legal insight

Qatar’s Environmental Law (P.68)

Qatar’s commitment to environmental issues has grown extensively in the past two decades and Qatar is now a signatory to a number of international environmental conventions.

ALSO IN THIS SECTION: •

Lauren Penny uncovers how undetected leaks in profits, which are often not picked up in monthly key

performance indicators, invariably involve poor staff performance and she offers tips for managing employee engagement. (P.66)

LEGAL Productivity INSIGHT and Wellbeing

Leaking Budget? How tools of engagement can help! Most organisations monitor performance by monthly key indicators and financial budgets. However is there often a leak that goes undetected and financial reports do not reveal expected results? Wellness and engagement consultant, Lauren Penny takes a look at where the invisible drains from your budget might be.

ave operational costs increased? Has a new building opened? Have organisation expansion costs exceeded projection? Are new competitors entering the market, impacting sales? Has there been an increase in workforce numbers? Are we looking at the right things? Is there a leak undetected that with the right tools can be fixed? These are common questions raised around the boardroom when a company seems to be inexplicably losing money. But before any of those questions are answered, wise executives would do well to consider the financial impact of human capital. In the mid 1990’s, the new age of ‘war for talent’ challenges organisations to constantly adapt so as to attract and retain the best talent. Talented employees are in demand, thus presenting a ‘demand versus supply’ ratio. Key Performance Indicators (KPIs) reflect employee turnover, vacancy duration, absenteeism, to name just a few. Billions of dollars are lost yearly by turnover costs alone, and Saratoga Institute estimates the average cost of losing an employee is one times annual salary. However, this said, just addressing turnover is not addressing the undetected factors that are causing the leak in the performance budget. Long before an employee leaves, the company is losing money through the ‘invisible’ leaking budget. This is disengagement. Disengaged employees are less productive, frequently absent and underperforming compared to their capability. Such employees often present with health issues, have negative opinions of their managers, perform at lower levels and are less committed and satisfied with their jobs. A disengaged workforce can often cause a disruption to the flow of teamwork. A Gallup study (2010) reports an average organisation has 68 percent of employees who are actively disengaged, reflecting billions lost in productivity the leaking budget. On the flipside, a top performing organisation clearly understands that employee engagement is the force that drives business outcomes. An engaged employee is customer

Productivity and Wellbeing

focused, highly productive, goes the extra mile to solve issues and strives on creativity and innovation. These employees lead an organisation to sustainable growth, return on investment and increased profit margins. The ‘employee engagement’ buzz has now been around for some time, however until this day, some managers do not take time for employee engagement as they fail to see the value, which is the same as saying “I don’t have time to put fuel in my car”. It becomes clear the best reason to be concerned about understanding the root causes of turnover and disengagement is an economic one, a reason for all organisations to give this subject top priority. Engagement touches on everything we do, everything within an organisation. Business success relies on the success of the workforce, and knowing how to engage employees can be the difference between success and disaster. EMPLOYEE ENGAGEMENT A variety of tools are available to improve employee engagement: Engagement survey: Organisations can conduct internal surveys or engage with a professional survey provider. The survey works best when employee feedback is confidential. Survey tools can accurately measure employee feedback on job satisfaction, employee morale and organisational values, to improve business results. Treat the employee as a whole person: Learn about the employee. Gain an understanding of what their specific interests are, not only in the work place but also family, sports, interests and hobbies. Communication: Remain transparent to employees and establish trust by open and

honest communication, being clear about where the organisation is and where it is going. Performance management: Clear performance expectations outlined to the employee with regular feedback on where he/she is going well and areas to improve. Support them in stretching their performance in both strength and development areas Recognition: Employee recognition is one of the keys to successful employee motivation.Recognition follows trust as a factor in employee satisfaction with their manager and their work place. Informal recognition and formal recognition tools are valued, valuable and motivational. This can range from a simple thank you to an award, a day off, lunch out, cinema tickets and public recognition. A key is to find out what the employee values as their preferred recognition method. Work/life balance: Balance is a different term for each employee, as an engaged manager it is important that you support your employees work life balance, including career aspirations, family commitments, and personal time. An engaged manager will also recognise when the employee is under continuous stress and strain by observing performance such as long working hours, eating at desk, inability to think quickly, short temper or conflict arising between colleagues. An engaged manager not only needs to understand each employee’s work/life balance value but alsoplace preventable measures to avoid an employee heading towards the burn out stage. Wellness: Increase productivity and motivation by educational wellness workshops, which engage staff. Educate employees on nutritional, healthy meals and ways to improve general health. A great team activity is to encourage regular physical activity such as

An engaged employee is customer focused, highly productive, goes the extra mile to solve issues and strives on creativity and innovation.

walks, jogs, gym sessions and team sport activities. Include healthy topic workshops with lunch to motivate and reward employees. Sports Day: Initiate a ‘sports day’. This can engage, motivate and unite teams by hosting an organised sports day or sports tournament. Sports events can foster teamwork and morale while increasing communication, proactiveness, can-do attitudes, reduces stress levels and is a tool to continually engage employees. Career development: Discuss the employee’s career aspirations and work together to align key learnings and opportunities for the employee. On the job learning is the leading percentage of learning methods, and the key is for the manager to consistently provide scope to allow the employee to stretch. An engaged manager works with the employee to map out career pathways and development opportunities. Connect: Connect with the employee, learn what motivates them, and draw the connection of their role to the overall department’s strategy and organisation purpose. Allow the employee to understand the value and importance of their role and how it impacts on the overall direction of the company. Re-enforce their worth. Create friendly spaces: Encourage employees to take lunch in spaces that are light, fresh and allow the employee to rest and relax. Bring in comfy chairs, televisions, play stations to encourage teams to relax and play together. This down time is valuable, as it also contributes to the employees productivity level when they return to their workspace. Make it fun: We spend five of our seven days at work and we are all human. Allow for laughter; make the environment fun, at least within the context of business premises. An engaged manager needs to believe in their team, in their capability and performance. Investing in employee engagement strategies is a powerful tool to boost your organisation’s performance and turn the leaking budget to a flourishing performance report. Lauren Penny is CEO and partner of Art of Abundant Living in Qatar. TheEDGE

LEGAL INSIGHT

Qatar’s Environmental Law

By Brenda Hill

LEGAL INSIGHT

atar’s commitment to environmental issues has grown extensively in the past two decades, and Qatar is now a signatory to a number of international environmental conventions. A Supreme Council for the Environment and Natural Sanctuaries was created to monitor, alongside the Ministry of Environment, the protection of the State against the environmental hazards that might endanger it. Since 1974, a series of environment related laws have been enacted in order to ensure that the State of Qatar complies with international standards of environmental protection. The Supreme Council for the Environment and Natural Sanctuaries The Supreme Council for the Environment and Natural Sanctuaries (“Council”) was established in the year 2000 by virtue of Law No. (11) of 2000 to seek environmental conservation and to promote the protection of endangered wildlife. The Council is tasked with a wide range of environmental roles and responsibilities including (but not limited to): • Establishing public policy for environmental protection and drafting associated legislation; • Evaluating studies for environmental protection prior to planning development projects; and • Proposing the annual budget to the Council. The staff of the Council is granted judicial powers in relation to crimes that are committed in violation of the Law and subsequent resolutions: there is the potential for imprisonment for up to one year and a monetary fine. Council staff also have the right to confiscate materials and implement the closure of places of work responsible for an act in violation of this law for up to three months. Law of Environment Protection The Law of Environment Protection, Law No. (30) of 2002 (“Environmental Law”) is the primary source of environmental law in the State of Qatar. The objective of the Environmental Law is to protect the environment and to maintain

natural balance. The Environmental Law contemplates that balance as the prevention of damage by pollution and environmental interference connected to development works. It commits to sustainable development for future generations and to protecting the environment from the damaging effects of activities that are performed outside the State of Qatar. Furthermore, it mandates that all administrative bodies shall take measures to ensure that the objectives are met and that such bodies respect these environmental considerations at all levels of planning. All local and foreign agreements entered into by an authority are compelled to include a condition in all contracts relating to the protections mentioned above. Licensing and permissions The Council, in conjunction with the competent administrative authorities, is tasked with establishing regulations which identify (i) categories of public and private development that may, due to their nature cause damage to the environment, and (ii) locations of environmental importance. The Council will establish the necessary standards, specification and basic controls which apply to such enterprises/areas and will evaluate (and ultimately enforce) plans submitted for approval by reference to such standards. All parties in control of potential development, both public and private, must submit plans to the Council, who will then evaluate the development Every development project will be considered by the relevant licensing authorities (for example, the municipality

authority and the urban planning authority) and will also be considered by reference to the scientific and other standards and procedures identified in the by-law. The licensing bodies are not permitted to issue a license for developments listed in the bylaw, except where an environmental study has been undertaken and the Council has approved the same. Some examples of such development activities under the by-law include: 1. Oil related projects (i.e. drilling, production, recycling); 2. Petrochemical plants and oil refineries; 3. Steel and welding factories; 4. Plastic production factories; and 5. Animal slaughterhouses. Endangered species The Environmental Law grants the Council (in conjunction with competent authorities) the right to issue a list of endangered species and prohibits the hunting of such species and the destruction of certain vegetation. Responsible individual and duty to mitigate The Environmental Law requires the nomination of an individual in respect of each project who will be responsible for environmental compliance. The Environmental Law in respect of environmental damage imposes a duty of proactive mitigation. Waste and dangerous substances The Environmental Law provides that it is illegal to (inter alia) import, throw, bury or store dangerous waste without a license

Since 1974, a series of environment related laws have been enacted in order to ensure that the State of Qatar complies with international standards of environmental protection. TheEDGE

LEGAL INSIGHT

from the competent authority. The by-law outlines those administrative bodies that are deemed competent to license such activities, and contain detailed provisions covering aspects such as licensing, administrative and technical requirements, storage and disaster management in relation to dangerous wastes and substances. The Environmental Law also states that unless the relevant authority has issued a proper permit it is illegal to allow ships to carry such materials across cross-regional seas/free economic zones. Protection from air and noise pollution The Environmental Law and the by-law are concerned with airborne pollution and associated damage, together with noise pollution. Among other things, it: • Prohibits aerosol pollution in excess of permitted limits (the by-law states the acceptable limits); • Refers to the by-law to stipulate where an enterprise may dispose/burn waste; • Compels electricity enterprises which burn fuel to remain within the permitted limits of pollution and to actively seek to reduce emissions (the by-law states the acceptable limits); • Requires that any matter found underground must be contained so as not to allow for evaporation and subsequent pollution; • Requires noise emission from machinery to remain within the acceptable limits (the by-law states the acceptable limits); and • Requires employers to take measures to protect workers from harmful aerosol pollution, to maintain acceptable climatic conditions and to provide adequate work clothing. The Environment Law is a wide provision, which prohibits the use of chemical compounds, although this is further regulated in the by-law. Protection from water pollution The Environment Law refers to the preservation of underground and superficial water sources. It provides that the use of such water sources is subject to the approval of

TheEDGE

The Environmental Law provides that it is illegal to (inter alia) import, throw, bury or store dangerous waste without a license from the competent authority. the competent administrative authority. More broadly, the pollution of such water sources and/or watercourses is prohibited. The Environmental Law provides specific regulations with respect to the protection of marine environments. The objective is described as the protection of the State of Qatar’s waters, shores and harbours. There is also a duty to proactively prevent such pollution. There are regulations prohibiting the discharge of oil (or other oil mixtures) into Qatari waters. There are particular laws relating to the owners/captains of ships, with particular emphasis on the discharge of oil. There are also laws, which extend the protection of the marine environment to pollution resulting from land resource, for example outlets and pipelines, which flow to the sea. While pollution resulting from the above is prohibited, a license may be obtained upon the execution and approval of an environmental impact study. Reclamation works Law No (4) of 1983 prohibits any work, which may affect the nature of the natural line of the shores without obtaining approval from the relevant competent authority (in conjunction with the Council). The procedures for obtaining such an approval are contained within the by-law. Enforcement and penalties The Environmental Law establishes the administrative and judicial procedures and the various powers available to search and demand reports etcetera. Any entity that violates the provisions of the Environmental Law will be subjected to

the penalties relating to the relevant provision. These can vary from a sentence imposing a fine of not less than QR1000 (US$275) to up to 10 years imprisonment and a fine of not more than QR500,000 (US$137,370). It should be noted that there is potential for these to be increased in the future. Among other rights available to the Qatari Courts, they can close the offending enterprise, deport a foreigner and/or confiscate the tools and equipment which caused a violation. An order of rectification may also be made. The owner of the ship, its captain, equipper and owners of establishments are considered jointly responsible for all the damages resulting in breaking the provisions of this Environmental Law. Furthermore, such parties are also jointly liable for any fines and indemnities under the Environmental Law and for the cost of any remediation works that might be required as a result of a breach of this Law.

Note: All Qatari Laws (save for those issued by the Qatar Financial Centre (QFC) to regulate its own business) are issued in Arabic and there are no official translations, therefore for the purposes of drafting this article we have used our own translation and interpreted the same in the context of Qatari regulation and current market practice. This article should be used for information purposes only. It is not legal advice and should be relied upon as such. If any reader requires legal advice, this should be obtained from an experienced lawyer, who can provide advice, which is tailored to the relevant facts and circumstances. For any information in respect of legal issues, please contact Brenda Hill (Brenda.Hill@dlapiper.com).

BUSINESS INSIGHT Inside the minds of leading business figures

THE WORLD’S MOST POWERFUL FEMALE BANKER (P.72) Recently voted as the most powerful woman in banking by American Banker, Karen B. Peetz is a vice chairman with responsibility for the financial markets and treasury services group within BNY Mellon, which is the corporate brand of The Bank of New York Mellon Corporation. TheEDGE spoke to Peetz, who visited Doha recently, alongside BNY Mellon’s Dubai-based regional chief executive officer (CEO) Tarek Elrefai, about the firm’s interests in the region.

ALSO IN THIS SECTION: • QFCA EXPERTS DISCUSS MULTAQA AND THE INSURANCE SECTOR Following the sixth successful MultaQa Conference in Doha recently TheEDGE spoke to Shashank Srivastava, Acting CEO at Qatar Financial Centre Authority (QFCA) and

director of strategic development Akshay Rendeva about the current state of this segment of the financial services sector in Qatar, and the region, and the topics that were discussed at MultaQa 2012. (P.74)

BUSINESS INSIGHT

Investment Banking

The world’s ‘most powerful woman in banking’ visits Qatar and discusses local, regional and international financial sector Recently voted as the most powerful woman in banking by American Banker, Karen B. Peetz is a vice chairman with responsibility for the financial markets and treasury

services group within BNY Mellon, which is the corporate brand of The Bank of New York Mellon Corporation. TheEDGE spoke to Karen B. Peetz, who visited Doha recently, alongside BNY Mellon’s Dubai-based regional chief executive officer Tarek Elrefai, about the firm’s interests in the region and where they see the growth potential local markets and economies, where they fit into the region and BNY Mellon’s global operations and the international financial sector as a whole. Where does Doha and the region fit into BNY Mellon’s operations? Karen B. Peetz: We visited some large clients this morning, and I am getting a better understanding for the domestic market. Looking at what is going on here in Qatar is just fascinating. Being able to leverage a relatively small population to this kind of growth and development is amazing. Our largest clients around the world are banks, as we don’t compete with them locally. We bring services that they don’t typically offer and our focus is around the entire asset life cycle, meaning we can help whether they are issuing debt or equities, all the way to custodising, through to asset management. We are an investment management and investment servicing company, that is our business model. Two of the three clients we called on in Qatar were banks, providing a good way to get a snapshot of what the economy is doing, how they are expanding and how we can help. The meetings we had were very good. The companies are doing stunningly well, which is good for the country and of course, as a client, us too.

TheEDGE

Where do you feel most of the growth might be here? Karen B. Peetz: In developing markets, you tend to start with cash and trade, because that is the first thing the economy gets involved with; then comes issuance of equity; then, or simultaneously, debt. So the three big products we have in the region at the moment are cash and trade, depository receipts – the issuance of equity for our international investors – and corporate trust, which is for debt issuance. We then start to see custody products, and we have a number of relationships in custody, and then you start getting into things like collateral management, hedge fund services and private equity, that kind of thing. That is usually when the economy has developed even further, and then finally we typically see asset management and wealth management. So what we find is that by having this flag in the ground, where we cover all the key cities in the Middle East, then we can follow that development spectrum. So it usually takes the same pattern? Would you say due to the rapid growth here, that Qatar is showing a super-fast trajectory or

BUSINESS INSIGHT

steep curve on this spectrum? Perhaps even too fast some might say? Karen B. Peetz: It usually takes the same trajectory, yes. I would say it is moving quickly. It is important to move carefully though. It is important not to get too far ahead of yourself. We typically track the generation of wealth all over the world and it is normally quite predictable. What about the upgrading of the Qatar and United Arab Emirates (UAE) markets from frontier to emerging status, that is something that many people would like to see happen and would certainly further speed up the growth process you describe above? Karen B. Peetz: We would like nothing better than to see that kind of designation, because it seems to be that when you are in frontier, investment is more spotty, but when you make it into emerging market status there is more legitimacy. Tarek Elrefai: We rallied with the market here, and tried to get both countries onto the emerging list last year. We were hoping that it would happen. We believe that the two markets are mature and developed and would qualify for the emerging list, but they didn’t make it and we are ready to rally with the markets here again and are sure it will happen soon. We are working with training and knowledge transfer to develop the markets and provide a lot of infrastructure for the two markets to meet with emerging status requirements. We will be happy to see the upgrade happen and are investing in that. What is your overall viewpoint on where these kinds of markets stand in the world? Karen B. Peetz: My take is that the story of the Middle East region is so compelling, and the oil price is making it more compelling. I have travelled in the region and I have an understanding of it, and I think the story will come through. I think that confusion among investors as to what Arab Spring really means is the only detractor, because the countries and companies really have so much to offer.

“Our largest clients around the world are banks, and we don’t compete with them locally. We bring services that they don’t typically offer.” – Karen B. Peetz. Are there any other advantages that you can see once the upgrading happens? Karen B. Peetz: I think it will certainly open up to more investors, especially internationally. Although, when you have a concern about some regional issues, some people see it more negatively than there really is. This can impact the whole region for investment. But then again you have a lot of money here that can be invested anyway. But the upgrading will of course all go towards making the local market more conducive to external investment? Tarek Elrefai: Economies work in cycles, and if we look at markets here they have passed the stage of cash and trade and they are clicking into the capital markets cycle. It is not as active as it should be or as much as it is in Saudi; which is not open for foreign investors yet, and the legal infrastructure is not so open, but we see the tendency to open more on the regulatory side to increase the appetite for foreign investors. The debt market side is more active and opening up nicely, especially in the UAE. We are in a great location with our products to help the cycle as per the clients’ needs. What about the banking sector? Many local and regional analysts feel that there are too many banks in Qatar and there needs to be some consolidation? Tarek Elrefai: I feel it is coming and it is part of the cycle, something the economy has to go through. The economy is growing and there are many banks, and the regulatory requirements will force the banks to merge and consolidate. But we would prefer to see consolidation coming from demand and the

“Economies in the Middle East have passed the stage of cash and trade and are clicking into the capital markets cycle.” - Tarek Elrefai.

market asking for it rather than enforcement, although we foresee it happening this way. We feel very comfortable with the creditworthiness and the credit ratings of the banks here. Their balance sheets are very solid and we are happy to deal with them. Does the movement towards diversification in economies such as the UAE and Qatar have bearing on your business model? Karen B. Peetz: I think that for the whole region having some diversification is a really good idea. We have other countries that are like this region; Russia is a good example, it is often incredibly impacted by gas and oil prices. That is not a good thing, because it is too concentrated. So I think absolutely, any economy here or anywhere else that can become more diversified is a good thing. Moving internationally, the eurozone situation seems finally to be settling. This region and especially Qatar have been somewhat immune or at least a lot less affected or cushioned by the financial downturn. How do you see things playing out for the rest of 2012? Karen B. Peetz: We are hopeful they will keep the spigot open. It seemed to make a difference when they flooded the market with liquidity, which I think was needed to stabilise the situation. If they keep that it will be good. Is it going to be a great growth story? No. But we are not expecting big growth, but we are hoping that it stabilises. Where do other emerging markets, such as the BRICS countries fit in? And also those in Asia like Malaysia linked to the Middle East via Islamic banking etcetera? Karen B. Peetz: Just as we have a set footprint here in the Middle East, we have had a presence for a 100 years in many of the countries mentioned. Through this we can map the sophistication and the development of the markets. Our push at the moment is across the Middle East and India, China, Brazil, Australia and Germany. It is different based on where the capital markets maturity is. TheEDGE

BUSINESS INSIGHT

Insurance and Reinsurance

QFC Authority experts discuss local and regional insurance and reinsurance industry following MultaQa event in March 2012 Following the sixth successful MultaQa Conference in Doha recently TheEDGE spoke to Shashank Srivastava, Acting CEO at Qatar Financial Centre Authority (QFCA) and director of strategic development Akshay Rendeva, about the current state of this segment of the financial services sector in Qatar and the region and the topics that were discussed at MultaQa 2012. This time in 2011 TheEDGE reported that going forward the QFC hoped that less premiums will be ceded to international reinsurers, creating pools of capital within the region, sufficient to ensure that a larger part of this risk remains here. Has any progress been made to this end? Akshay Rendeva: This process needs time, as underwriting and risk management capabilities do not improve overnight. However, we are witnessing a clear and encouraging trend towards decreasing aggregate cessions rates in the Gulf Cooperation Council (GCC) region, from 49 percent in 2006 to 43 percent in 2010. Domestic insurance companies retain more and cede less of their premium base to reinsurers, primarily international players. This suggests that they increasingly feel comfortable managing risk on their own balance sheet. There is still a long way to go for GCC insurers though. Their average cession rate is four times the average of countries with a comparable gross domestic product (GDP) per capita. But again, the trend towards more risk retention is unambiguous and underpinned by the abundance of capital in this part of the world.

Shashank Srivastava

TheEDGE

Last year you said: “If you look at the Western world, the vast majority of premiums are life (about 60 percent) but if you look at the region, the vast majority is non-life (about 88 percent)…this is another

reason we believe there is so much room for growth for insurance and reinsurance here.” Again, has this situation improved at all? Akshay Rendeva: Over the past few years, life insurance in the GCC has been growing somewhat faster than non-life insurance. The gap between the two sectors, therefore, has only slightly narrowed. One has to see the structural reasons behind this phenomenon. The GCC boasts one of the world’s most favourable demographic structures. Young populations, quite understandably have limited appetite for insurance-based old age protection, for example, annuity products which ensure that retirees do not outlive their savings. In addition, some governments still act as [so-called] “risk absorbers of last resort”, which clearly reduces incentives for taking out life insurance, be it against the risk of premature death, or longevity resulting in a shortage of retirement savings. This leads us to the most important consideration – conventional life insurance meets with significant religious reservations in the Muslim world. Shari’ahcompliant Takaful products, so far, have not yet proven capable of addressing the dichotomy you mentioned. Against this backdrop, it is not surprising that life insurance plays a rather marginal role in the GCC region. Shashank in your speech at MultaQa, you mentioned that Qatar has been rated the second most tax-friendly country in the

BUSINESS INSIGHT

world in a recent report. Can you elaborate a bit more on why might this be significant to the growth of the insurance sector here? Shashank Srivastava: Taxation is an important aspect of an insurance market’s international competiveness. In order to effectively compete with other aspiring regional and global insurance centres, we need to be able to offer an attractive tax environment. Having said this, it is important to understand that competitive tax rates may be a necessity but certainly not a sufficient condition for an insurance marketplace’s success. Take the London market as an example: The availability of talent in both underwriting and support functions, as well as a highly developed cluster of risk carriers and intermediaries, is arguably London’s main attraction from an insurance and reinsurance point of view. Bermuda, one of the world’s largest reinsurance marketplaces, is another example. Yes, it is highly attractive from a tax perspective, but Bermuda would not have grown into what it is today if it were not for its geographical proximity to the world’s largest insurance market, the United States (US). You also mentioned that the topic of the increasing boardroom relevance of risk management would be discussed, as well as that the QFC Authority is also strongly supporting the development of Qatar as a regional centre for captive insurance. Can you offer some further insight as to how this has been implemented and received? Shashank Srivastava: The QFC Authority is strongly supporting the development of Qatar as a regional centre for captive insurance. In July last year the QFC Regulatory Authority issued new insurance regulatory frameworks, the Captive Insurance Business Rules 2011 (CAPI) and Insurance Mediation Business Rules 2011 (IMEB), as you mentioned. These apply to captive insurers, captive managers, and insurance intermediaries and further encourage captive industry take-up. The changes include a new and more flexible class of captive insurance and a risk-based model for setting minimum capital requirements. The QFCRA IMEB rules ensure the presence of a dedicated rulebook for insurance mediation, including captive insurance management. How is this ensured specifically? It is pretty much related to productivity, and what we are really talking about is what are the drivers that make people want to come to work and do their best work and give out their best every day. We also talk about discretionary effort

“In order to effectively compete with other aspiring regional and global insurance centres, we need to be able to offer an attractive tax environment.” – Shashank Srivastava. which means that you are going to do it today or tonight, rather than wait until the next week. The MultaQa 2012 programme offered more than 12 speeches, presentations, panel discussions and case study clinics. Can you briefly discuss some of the topics mentioned in your speech and what bearing they have on the local/regional industry? a) The Middle East’s role in Lloyd’s of London’s international expansion strategy? Akshay Rendeva: Lloyd’s, as many other global insurers and reinsurers, does consider the Middle East an attractive growth market. Based on its extraordinarily low insurance penetration, the region offers huge potential, in the personal accident, health and motor lines in particular. In addition, its low exposure to natural disasters makes it an attractive place to be for international risk carriers. Lloyd’s is among those players who view the rise of the Middle Eastern markets as part of a bigger pattern of a shifting global economic landscape. An important response to this shift is an improved capital and talent diversity at the leading ‘Western’ players. It will not be sufficient to simply accelerate the expansion into the growth markets. Seeking a stronger integration in terms of human and capital resources, for example by taking on board experts and investors from Asia, was cited by Lloyd’s as another long-term key success factor for capturing the opportunities arising from globalisation. b) The outlook for the global reinsurance? Akshay Rendeva: Given the high reliance of the GCC region on reinsurance, this topic naturally played a major role at MultaQa, in particular after the catastrophe year 2011 which, with global insured losses of more than US$ 100 billion (QR364 billion), was the most expensive catastrophe year on record. Unprecedentedly, 2011 was an ‘Asian’ catastrophe year. The region’s share of global cat losses was close to 70 percent, as compared with a long-term average of about 20 percent. This regional concentration and the frequency of events such as the earthquakes

in New Zealand took stakeholders by surprise. Available reinsurance capacity in Asia could, therefore, shrink. Some reinsurers (including major ones) scale back their involvement or withdraw altogether. At the same time, there are new entrants, such as Berkshire Hathaway. They seek to take advantage of dramatic rate increases. Reinsurers will generally review their underwriting and risk management practices. Underwriting controls will have to be tightened. Maybe most important: Transparency on global risk accumulations (for example a tsunami in Japan disrupting car manufacturing processes in Germany and the US) needs to be enhanced significantly. Insurers and reinsurers must accept the reality of global interdependencies and ever more integrated and complex value and supply chains. In general, there is a real possibility that the global reinsurance market will be significantly reshaped over the next ten years. The economic balance of power seems to inexorably shifting towards the emerging markets. In 2000, these regions accounted for about 20 percent of GDP, at market exchange rates. Now, their share stands at approximately a third. By 2020, it is projected to have doubled to more than 40 percent, according to the World Bank. 70 percent of world growth over the next few years will come from emerging markets, with China and India accounting for 40 percent of that growth. Also, the emerging markets already attract almost 50 percent of foreign direct investment (FDI) global inflows and account for 25 percent of FDI outflows. The latter number is particularly interesting. It has shot up recently and suggests that globalisation is no longer a one-way road. This fundamental shift will, of course, also reshape global reinsurance. Emerging markets-based reinsurers do have the capital to challenge current incumbents from Europe and Northern America. Initially, those companies’ dominance in emerging reinsurance markets will wane. Longer-term, emerging markets-based reinsurers may even make inroads into advanced countries’ domestic markets, following in the footsteps of the New Multinational Corporations, especially from TheEDGE

BUSINESS INSIGHT

China, India and Brazil. In 2000, there was no emerging markets-based reinsurer in the global Top 20. By 2010, three companies (China Re, GIC of India, Korean Re) had made it to the Top 20. In ten years’ time there could well be two or three global Top 10 from emerging markets. c) The part played by the QFC Authority in the development of Qatar’s and wider region’s insurance industry? Akshay Rendeva: The QFC Authority have been working hard over the last seven years to develop a vibrant financial services industry in Qatar, serving both the country and the region. Based on these efforts, and of course helped by Qatar’s dynamic economic development and superior political stability, a large number of insurance companies and service providers have established at the QFC. In 2010 we further refined this strategy to focus on the creation of hubs in three niche sectors – reinsurance, captive insurance and asset management. In partnership with other industry and regulatory bodies – such as the Qatar Exchange (QE), the Qatar Financial Markets Authority and the QFC Regulatory Authority – we have been refining the legal and regulatory environment and developing the infrastructure needed to further enhance Qatar’s appeal to insurance and reinsurance operators from around the world. For example, the QE has been working hard to improve the Qatari market’s liquidity, accessibility and efficiency. The latest development from QE is widely expected to be a first step towards the listing of bonds and sukuks for trading on the QE. There have also been a number of specific developments this past year within the QFC. Firstly, as I already mentioned before, we enacted an attractive new tax and regulations regime in close co-operation with the Ministry of Economy and Finance and the financial services industry. Under the new regime, which took effect from 1 January 2011, all QFC registered companies are subject to 10 percent corporation tax to be charged on locally sourced profits. This compares very favourably with many other financial centres and Qatar now offers one of the friendliest tax regimes in the world. Moreover, reinsurance and captive insurance firms benefit from a concessionary zero rate of taxation. Importantly, the Organisation for Economic Cooperation and Development, or OECD, has recognised many of these benefits in its Global Forum on Transparency and Exchange of Information for tax purposes. This review found that Qatar fully met OECD standards on transparency and exchange of information

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“We have been refining the legal and regulatory environment needed to further enhance Qatar’s appeal to insurance operators.” - Akshay Rendeva. for tax purposes. The QFC Authority is also strongly supporting the development of Qatar as a regional centre for captive insurance, and a number of major regulatory steps were taken to further this aspiration. d) Strategic issues affecting the GCC insurance and reinsurance markets? Akshay Rendeva: At MultaQa a number of strategic opportunities and challenges for GCC insurance and reinsurance markets were identified [with] three prominent examples: The potential for personal lines business (for example personal accident and health) remains largely untapped in the region. Capturing this potential needs a concerted effort from governments (making more lines of business compulsory) and insurance companies (stepping up product innovation and distribution capabilities). One of the CEO speakers said that he sees no reason why the GCC markets’ insurance penetration (currently, premiums account for a mere one percent of GDP) should not reach the levels seen in other parts of the

Akshay Rendeva

world with similar GDPs per capita (eight to nine percent). Catching up to these levels would see the GCC insurance market [go] from a current US$15 billion (QR55 billion) premium volume to more than US$100 billion (QR364 billion). Another challenge is the region’s low risk retention. Domestic insurers are well capitalised but still prefer to transfer most underwriting risk to reinsurers. That could change though, as insurers can no longer rely on high yields from fixed-income and stock markets. They may increasingly turn to retaining more underwriting risk on their balance sheets to boost earnings from the core business of insurance. You also mentioned the September 2011 GCC Reinsurance Barometer. When can the industry expect the next edition? Akshay Rendeva: At the time of the last MultaQa we launched our first Reinsurance Barometer. This research is based on an in-depth survey of the attitudes, views and expectations of senior management from around thirty leading international and local reinsurance firms operating across the GCC. We will conduct and publish this survey on an annual basis and release it in time for the Monte Carlo Rendez-Vous in September, widely regarded as the world’s most important platform for insurers and reinsurers. The latest GCC Reinsurance Barometer research was published in September last year. It found that the outlook for the reinsurance industry in the GCC had improved significantly over the prior six months; the market has continued to grow, while capacity growth has slowed and pricing improved. Significantly, about two thirds of interviewees continue to expect that growth in reinsurance will outpace the rate of expansion of regional GDP, which is already one of the fastest growing in the world. I do not dare to predict the outcome of the next survey to be published this coming September but it will certainly reflect the major challenges ahead of the global reinsurance industry, for example the need to digest the most expensive catastrophe year on record (2011) and a more challenging investment environment. I am also pleased to announce we intend to extend our Barometer concept this year to an annual survey of the insurance industry in the GCC.

TRAVEL & LIFESTYLE

RABAT BUSINESS TRAVEL INSIDER (P.78)

Morocco’s capital and other historical towns have a great deal to offer to both business travellers and tourists.

ALSO IN THIS SECTION: •

A guide to: Qatar Airways recently opened their first luxury lounge at London Heathrow Airport, the airline’s most prominent route. TheEDGE takes a look at what it has to offer their VIP travellers. (P.79)

•

Summer Essential: In your effort to get fit for the summer, TheEDGE gives you some suggestions of what is healthy to eat in order to get back into shape. (P.80)

TRAVEL

Business Travel Insider: Rabat Rabat has been Morocco’s capital since its independence in 1956, but it is much less well known than the likes of Marrakesh and Fez. The country’s political centre, it has a great deal to offer business travellers and tourists alike. Victoria Scott gives you the low-down on this easygoing, surprising city. Getting there: There are no direct flights from Qatar to Rabat. The city is best reached via neighbouring Casablanca’s Mohammed V Airport. Qatar Airways (www.qatarairways. com) flies to Casablanca daily via Tunis. Economy fares start at QR2850 in mid April, and Business fares start at QR14,100. Emirates (www.emirates.com) flies to Casablanca five times a week with a connection in Dubai. Economy fares start at QR2610 in mid-April, business fares from QR15,430. The flight time (excluding connections) is around nine hours. To reach Rabat from the airport, catch a train to Casa-Voyageurs station, and then change for Rabat Ville station.Currency: (Exchange rate as of February 2012) Moroccan Dirham MAD1 = QR0.4 Where to stay: Riad Kalaa (riadkalaa.com) If you fancy getting away from the standard international chains, the Riad Kalaa could be just what you are looking for. With just 11 rooms, it is a piece of the city’s history combined with every modern comfort. All of the rooms have Wi-fi, and there is a swimming pool and terrace with spectacular views on the roof. The hotel also offers male visitors a traditional Moroccan shave from its very own barber. Rooms start at QR454 a night in midApril, including breakfast. Sofitel Jardin Des Roses, (www.sofitelrabat-jardindesroses.com) this five star hotel is in an excellent location near to the Royal Palace in the heart of the city. Set in eight hectares of beautiful grounds, the hotel fuses French style with Moroccan hospitality. The hotel’s Luxury Club rooms are excellent for business travellers, offering access to the

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club with its complimentary breakfast, snacks and drinks throughout the day. A standard room costs QR723 per night in mid-April, excluding breakfast. Clubroom rates from QR1117 a night. La Tour Hassan (www.latourhassan.com) With 138 newly refurbished rooms and suites; this hotel offers a slice of Moroccan tradition mixed with modern comfort. Highlights include the beautiful gardens and the hotel’s restaurants, which serve excellent traditional dishes and international favourites. Standard rooms start from QR942 a night in mid-April, excluding breakfast. Where to play: Le Bistrot Pietri (www.lepietri.com) Located on the ground floor of the hotel of the same name, this place has made a name for itself as a great music venue, which also serves excellent food. Expect live jazz on Tuesdays and Fridays and rock on Saturdays. Reservations recommended. Le Petit Beur/Dar Tagine Just across from Rabat’s parliament building is this little gem. Its delicious authentic Moroccan fare ensures its continuing popularity – locals recommend you order one of the excellent Tagines. Traditional music is performed most nights. Culture vulture: The Hassan Tower is the minaret of an incomplete mosque, the brainchild of Sultan

Yacoub Al Mansour in 1195. Both the tower and the mosque were intended to be the largest in the world, but construction was halted after the Sultan’s death, and the tower only reached 44 metres, about half of its intended height. It is still an impressive sight, and worth visiting along with the Mausoleum of Mohammad V, which is on the same site. Another must-see is Bab Oudaia, the principal gateway to the Kasbah. Also built by Sultan Yacoub Al Mansour, you will find the Kasbah’s souqs and the nearby Sultan palace inside its walls. You will also be able to visit the Kasbah Mosque, the oldest mosque in the city. It was built in around 1050. Splash your cash: For major labels, head to Rabat’s MegaMall (http://www.megamall.ma). Billed as Morocco’s first-ever shopping mall, it is home to some of the world’s biggest brands. For more traditional souvenirs, Rabat’s medina and kasbah offer fun shopping opportunities. You will find everyday wares like food and kitchenware alongside beautiful local handicrafts. Look out for ornate mirrors and plates, and intricately woven local carpets. Rabat has more of a relaxed vibe than many other Moroccan cities, so you should find you’re not subjected to such a hard sell, and bartering is a gentle experience. Insider top tip: Seek out the Andalusian Gardens on a hot day. These beautiful gardens are in the old Palace grounds in the Kasbah Oudaia. Although based on Andalusian traditions, they were actually designed and planted by the French in the 20th century.

LIFESTYLE LIFESTYLE

GUIDE to Doha: Guerlain Spa Doha Alfardan Properties recently entered into a long term partnership with Guerlain Paris that has resulted in bringing to Doha the first Guerlain Spa in the Middle East – Guerlain Alfardan Spa. Located at the residential building of the Alfardan Towers in the West Bay area, Guerlain Alfardan Spa offers more than 60 health and beauty therapies that nurture the skin, body and well-being, providing a unique spa experience in Doha’s most prominent business and entertainment district. The spa’s personalised services include a systematic analysis and precise skin diagnosis to tailor a therapy according to each customer’s needs and expectation. The spa also offers a selection of luxurious perfumery products and services such as make-up and the prestigious lines of Guerlain fragrances. In addition, Guerlain Alfardan Spa offers a wide range of treatment for customers, including massage therapies, facial therapies, hand and foot therapies, body therapies, body refreshers, men’s therapies, and a host of spa additions. Another main component is the customised fitness sessions suited for each body type, which is analysed by professional male and female fitness trainers, who will not only offer training packages, and weight loss programmes but also one-to-one sessions. Females also can enjoy exclusive ladies hours while their children play at Alfardan Towers Kid’s Club. www.alfardanproperties.com

Qatar Airways’ new luxury lounge at London Heathrow Qatar Airways has just opened its first premium lounge outside of Doha. TheEDGE finds out what it has to offer the airline’s VIP customers. Those who have travelled in business or first class on Qatar Airways will be familiar with the airline’s premium terminal in Doha. Setting a new standard for luxury travellers, we know people who check in ludicrously early for their flights just so that they can take full advantage of the delights on offer. Qatar Airways has now decided to expand the concept to one of its most important routes, London Heathrow. The airline will operate an extra daily flight to the airport from March, taking their daily flight tally to five. It is a big year for London, with the Olympics due to draw millions of visitors to the United Kingdom this summer. Plenty of passengers, then, to appreciate the new terminal lounge. As you would expect from an airline that prides itself as being ‘five star’, every detail has been taken care of. Designed to look like a private member’s club rather than a run-of-the-mill airport lounge, it is airy, chic and well equipped. The lounge has floor to ceiling windows, which make it an excellent place to sit and watch the frenetic activity of the world’s busiest airport. Qatar Airways has recruited staff from world class hotels and restaurants to work in the lounge’s brasserie, delicatessen, and elegant Martini bar, and banks of wine fridges ensure there is a wine list to please even the most discerning wine

connoisseur. Well-appointed shower rooms are also available if you want to refresh yourself before your flight (with complimentary luxury toiletries, naturally.) If it is all work and no play for you, you are well catered for, too. There is free Wi-fi throughout the lounge, a business centre, and each seat has a discreet power socket for your mobile devices. It is important to note that Silver and Gold Privilege Club members are not allowed to use the new lounge, but all is not lost: they will still be given access to the existing Sky Team lounge at terminal four instead. TheEDGE

LIFESTYLE

Eat this, not that

Prada Phone by LG 3.0

With a history of producing collaborative handsets, Prada and LG recently unveiled the partnership’s latest smartphone, the Prada phone by LG 3.0. This handset is the third phone to come from the collaboration and represents a key design venture for both companies. The Prada phone by LG 3.0 combines Prada’s style with LG’s technology, including one of the biggest and brightest screens in the world with 4.3inch and 800-nit screen. Incorporating with Prada’s design philosophy, the handset features a full glossy touchscreen to the front and Prada’s signature Saffiano pattern to the back. The phone also features a 1.0GHz Dual-Core/Dual-Channel architecture for high-speed performance, and dualband Wi-Fi, as well as an 8MP camera.

In your effort to get in shape for the summer by carefully considering what you eat, you may inadvertently make some of these common nutritional mistakes: Wholewheat bread Two slices of wholewheat bread can amount to as much as 40 grams (g) of carbs. Instead, wrap your sandwich fillings in iceberg or romaine lettuce. Yoghurt While this is a great source of protein and fat, it is also often loaded with sugar that increases the carb count to around 20g per serving. Pay attention to the sugar content the next time you purchase your favourite morning dairy snack. frozen vegetables Frozen vegetables – and fruit for that matter – can be just as nutritious as fresh and a lot more convenient in a city like Doha, where fresh goes bad alarmingly quickly. Cereal Even those brands marketed as healthy can have as much as 50g of carbs per serving. Look out for Special K Protein Plus which has just 14g instead. Brown rice Brown rice has roughly 35g of carbs per serving. Why not serve food atop a bed of sautéed kale, bok choy or spinach? No red meat Red meat supplies important musclebuilding nutrients that your body needs, so simply choose leaner cuts such as sirloin, and watch portion sizes.

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READ IT: Crisis

Economics

Coined in reference to economics by Lebanese American pundit Nassim Taleb, a Black Swan is an unpredictable event, such as – it has been said – the most recent global financial crisis, that has a devastating impact. However, American economist and author Nouriel Roubini disagrees, and in this fascinating book puts forward his case along with co-author Stephen Mimm, as to why there is no such thing and all economic crises are not just wholly predictable but are as inherent to cycles in capitalism as fires are to forests. An interesting and contrary view to world economics from a man alternatively known as a “seer” and “Dr. Doom” by his supporters and critics.

Available at Virgin Megastore for QR79.00.