The Edge - Aug 2010 (Issue 13)

From The Editor

Well, the past year has been a busy one for TheEDGE. Since its launch in July 2009, TheEDGE has witnessed the continued transformation of Qatar’s business and investment landscape.

The country’s economic position has continued to evolve at a rapid pace, so much so that the country now boasts the fastest growing economy in the world.

While there is a bevy of locally-based companies that have continued to thrive in the midst of the economic recession, undoubtedly, coming in as the biggest headline grabber for the past year is the Qatar Investment Authority (QIA).

The QIA has poured money into a number of assets. To mention just a few: the recent US$2.8 billion (QR10.2 billion) stake in the Agricultural Bank of China initial public offering; the purchase of a plush development on London’s Oxford Street for GBP270 million (QR1.5 billion); the acquisition of London’s famous Harrods department store and the largest portion of Canary Wharf. Not to forget its hefty stake in the Porsche/Volkswagen deal last summer.

Among other things, the astounding development of the Qatari economy is testimony to the sustained expansion of its gas sector. In fact, Qatar continues to consolidate its position as the largest exporter of liquefied natural gas (LNG). The most recent available statistics place output at 54 million tonnes, up from 38 million tonnes per year just three years ago.

Yet, nonstop efforts are being exerted to reach the goal of producing 77 million tonnes a year of LNG by 2012.

The International Monetary Fund (IMF) forecasts the economies of the Gulf Cooperation Council (GCC) to grow by 4.9 percent in 2010 and rise to 5.2 percent in 2011.

The IMF mainly attributes improved economic prospects in GCC economies to the robust growth

level of the Qatari economy. The Qatari gross domestic product is projected to grow by 18.5 percent in 2010 and 14.3 percent in 2011. Undoubtedly, this is an exceptional achievement, reminiscent to performance of few economies like those of China and India.

In the current economic climate rating upgrades may be as rare as hens’ teeth, but Standard and Poor’s recent award of a double-A long-term grade to Qatar has continued to drive confidence into its economic standing.

Soaring oil and gas sales will bring more than US$76 billion (QR276) into the finance ministry’s coffers this year, and expand the country’s economy by almost a fifth, according to the IMF. This has propelled Qataris to the top of the table of the world’s wealthiest people – impressing rating agencies, economists and bankers alike.

As Qatar continues to drive its economic diversification plans forward – from roads to LNG plants to financial centres – there is an estimated US$34 billion (QR12.3 billion) of projects coming online in 2010.

In less than a century Qatar has transformed its economy from subsistence on pearling to the multifaceted landscape it boasts today.

As TheEDGE transitions into its second year, without sounding clichéd, we would like to take the time to thank all our contributors, readers and supporting clients as none of this would have been possible without you, and your continued support.

The past year has been a big year for us at TheEDGE and, rest assured, we are working hard to make sure that we continue to diversify our content and its delivery, and to make the next 12 months even better.

Kelly Lewis Managing Editor

Do you have something to say? It is not all about us and we realise that often our readers are in the right place at the right time resulting in great stories. Is there a story that you want TheEDGE to cover? Are we delivering our readership with the content it demands? Are there new sections that you would like to see implemented in the magazine? Or do you simply want to make a comment? If so, send your letters to the editor at:

letters@theedge-me.com TheEDGE

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WHO WE ARE

Managing editor Kelly Lewis k.lewis@firefly-me.com +974 55067574 Acting editor Miles Masterson m.masterson@firefly-me.com +974 66080447 Senior business journalist Megan Masterson megan.masterson@firefly-me.com +974 55348748 REGIONAL SALES, MARKETING AND PR DIRECTOR Julia Toon j.toon@firefly-me.com +974 66880228 SENIOR SALES manager Emma Land e.land@firefly-me.com +974 33197446 Creative director Roula Zinati Ayoub

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 12 times yearly to a readership base of more than 7500 professionals, providing advertisers with the needed additional reach and frequency to their most important audience.

TheEDGE is an authoritative business resource serving both large and small business operators.

Art AND DESIGN Lara Nakhlé Rena Chehayber Rana Cheikha Charbel Najem Finaliser Michael Logaring Photographer Herbert Villadelrey

Firefly Communications PO Box 11596, Doha , Qatar Tel: +974 44340360 Fax: +974 44340359 www.firefly-me.com

DISTRIBUTION and SUBSCRIPTION Michael Javier +974 55262089 m.javier@firefly-me.com Dan Louie Javier +974 66975087 d.javier@firefly-me.com

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printed by Ali Bin Ali Printing Press, Doha, Qatar

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TheEDGE

TheEDGE is printed monthly © 2010 Firefly Communications. All material strictly copyright and all rights reserved. Reproduction in whole or in part, without the prior written permission of Firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by TheEDGE or Firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in TheEDGE. The publisher (Firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Getty Images and/or iStock Photo.

Happy Birthday TheEDGE As TheEDGE celebrates its first year of publication we would like to thank all of our readers, contributors and advertisers for their continued support.

- Thank you, TheEDGE team

To help build your success contact us on: T. +974 4434 0360 | F. +974 4434 0359 | info@firefly-me.com

CONTENTS

CONTENTS www.theedge-me.com

August 2010

25 .9.

Contributors

A brief introduction to the specialised team of contributors who lend their expertise and insight to TheEDGE.

.10. NEWS IN BRIEF

A snapshot of the latest business developments affecting the business landscape within Qatar and the GCC region.

.13. NEWS IN QUOTES & NUMBERS

Powerful statements and important statistics that made an impact.

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.14. ON THE EDGE

Miles Masterson reports on the quirky names given to South African newborns in honour of the FIFA 2010 World Cup.

.16. ANNIVERSARY SPECIAL

A behind-the-scenes look at the numbers that shaped TheEDGE in its first year.

.17. Business Insight

TheEDGE speaks with key professionals from in and around the region to uncover the latest news on the business front.

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CONTENTS

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.36. COVER STORY

What were the top issues and stories that challenged the growing economy of Qatar in the past year? Jamie Stewart looks back.

.42. ECONOMIC BAROMETER

Karim Nakhle outlines the FIFA 2010 World Cup’s true winners...and its surprising losers.

.45. ON THE PULSE

With Iran facing its fourth round of sanctions, what knock-on effects can the rest of the region expect?

Edward Jameson investigates.

.25. In the spotlight

48

The big spill, Christine Toner looks at how the BP spill has jeopardised the organisation, and how the disaster squares up to spills of the past.

.28. MARKET WATCH

Professor Sir David King discusses the impact of the biofuel revolution on the globe.

.32. INSIDE EDGE

Dheeraj Shahdadpuri recommends the regulatory steps that need to be taken now to avoid another global economic crisis.

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.48. GREEN BUSINESS

How much planning is needed in light of adapting to climate change? Sam Pickering reports.

.52. ENTREPRENEUR

Miles Masterson talks to Mohamed Jaidah and AbdulSalam Abu-Issa about the creation of their media brainchild, Firefly Communications.

.56. SPECIAL FEATURE

The first in TheEDGE’s two-part series explores the link between genius and autism. By Joseph Glenn Jessome.

TheEDGE

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CONTENTS

.61. BUSINESS VIEWS – REAL ESTATE

Edd Brookes questions the influence and value of credit agencies considering their recent shortcomings and failures.

.64. SPECIAL REPORT

Oliver Cornock outlines how well positioned Qatar is to become the logistics centre of the region.

.68. BRAND BEAT

How do brands ensure that they remain relevant as they make the leap into the digital world? Charlotte Stubbs finds out.

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.70. BALANCE SHEET

While joint ventures remain a strong strategy for growth, Doug McPhee outlines the possible pitfalls and important considerations.

.73. LEGAL INSIGHT Industrial Area St. No: 24 P.O.Box: 150, Doha, Qatar Tel: +974 446 387 77 Fax: +974 446 042 86 Email: isd@jaidah.com.qa

www.jaidah.com.qa 6

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Charbel Neaman and Emma Higham examine the acquisition of companies in Qatar.

.76. BUSINESS KNOW-HOW

New managers, take heed. Wassim Karkabi sets out the three steps to providing great value to the organisation, even if you are new to the job.

CONTENTS

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.80. SPEAK EASY

What does the financial services industry need to do to build its brands in the Middle East? Stephen Davie makes some suggestions.

.82. BEHIND THE WHEEL

Miles Masterson reports on the first of a series investigating Qatar’s excessive road accident statistics.

.85. INDUSTRY FOCUS

Doctor Tommy Weir examines how investing in employee training will affect a company’s bottom line.

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.89. HOW-TO GUIDE

Simplify corporate network operations with convergence and the cloud. By Ali Ahmar.

.93. TECH TOOLS

TheEDGE looks at the latest gadgets hitting the shelves this month.

.94. LIFE & STYLE

Get in the Muay Thai ring, and discover the best of Chinese city, Beijing.

96 .100. EVENTS & Conferences

Key industry events, conferences, courses and exhibitions taking place in August.

.101. qatar projects

An update on projects taking shape in Qatar.

.103. tenders

Your monthly go-to list for the latest business opportunities in Qatar.

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CONTRIBUTORS

The Usual Suspects...

p.25 Christine Toner Economic Correspondent London, United Kingdom

p.32 Dheeraj Shahdadpuri Analyst Dun and Bradstreet South Asia, Middle East

p.36 JAMIE STEWART International Correspondent London, United Kingdom

p.42 Karim Nakhle Senior Business Strategist Doha, Qatar

p.45 Edward Jameson Senior Business Journalist Middle East and North Africa region

p.48 SAM PICKERING Managing Director BG2 Global Solutions London, United Kingdom

p.61 Edd Brookes Director DTZ , Middle East Operations Doha, Qatar

p.64 Oliver Cornock Regional Editor Oxford Business Group Gulf Cooperation Council region

p.68 CHARLOTTE STUBBS Client Services Creative Action Design Doha, Qatar

p.70 Doug McPhee Partner KPMG Corporate Finance Secondment to Qatar from London, United Kingdom

p.73 Charbel Neaman Lawyer Corporate and Commercial Clyde and Co Qatar, Doha

p.73 EMMA HIGHAM Associate Corporate and Commercial Clyde and Co Doha, Qatar

p.76 Wassim Karkabi Managing Partner Stanton Chase International Qatar and UAE, and Regional Practice Leader, Industrial, Europe, Middle East and Africa

p.80 Stephen Davie Regional Director, and Head of Financial Communications Hill and Knowlton Middle East

All contributors to TheEDGE are wellregarded leaders in their respective industries.

If you are interested in joining the esteemed panel of contributors, please contact the managing editor, Kelly Lewis at k.lewis@firefly-me.com

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NEWS IN BRIEF

LOCAL QATAR SHIPS LNG TO BRAZIL Qatar loaded its first shipment of liquefied natural gas (LNG) to Brazil, expanding sales to South America as forecasts show reduced demand in the United States (US), Bloomberg reported.

RasGas sold a cargo of the fuel to Petroleo Brasileiro SA, the company said in an emailed statement. The gas, cooled to a liquid, was loaded on the LNG tanker Express and is bound for either the Pecem LNG terminal in Ceara or Guanabara Bay LNG terminal in Rio de Janeiro, the company said.

The shipment comes two months after RasGas said it loaded a spot cargo to Argentina and seven months after the company said it shipped its first LNG to Chile.

MERGER DRAWS NEAR Al Khaliji Bank’s valuation for the planned merger with the International Bank of Qatar may be completed by the end of August, Al Khaliji’s acting chief executive officer Robin McCall told Bloomberg late last month.

The merger may be completed this year or in 2011, McCall said at a news conference.

FIFTH OF GULF PRINT TITLES SHUT LAST YEAR One fifth of all print publications in the Gulf Cooperation Council (GCC) region have closed since the height of the global financial crisis at the beginning of last year, the National reported.

It said analysts warned that the media industry could be hit by further cuts and declines in advertising revenue. Since the start of 2009, 171 Gulf-based magazines and 11 newspapers have either suspended or discontinued publication, according to figures from the data supplier, MediaSource.

Of the Gulf countries, the National said the United Arab Emirates publishing market had been hit the hardest.

RESEARCH PANEL TO STUDY MIDEAST CLIMATE CHANGE An Indian research foundation has announced the launch of a dedicated programme to study the impact of climate change in the

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Middle East and the health problems it poses, Khaleej Times reported.

Scientists at the Shantigiri Research Foundation of Kerala have initiated the study on the environmental and health issues faced by the region, which is home to millions of expatriate workers.

IT SECURITY SPENDING GROWS AT FAST PACE IN GCC According to a recent research report by RNCOS: Global IT Security Market Forecast to 2013, demand for IT security products and services is expected to grow at a robust pace throughout the world in the coming years.

RNCOS said that Gulf countries were one of the fastest IT security solutions spenders in the world, which was due in large to the recent spike in cyber attacks. As per its estimates, RNCOS said spending on IT security software and appliances by Gulf countries would grow at 25 percent from 2010 to 2013 on the back of increasing Internet penetration among households.

SAUDI ARABIA BOOSTS ITS MILITARY MATERIAL The United States (US) is considering an arms sale package for Saudi Arabia, with a potential value of close to US$30 billion (QR109 billion), according to the director

of the US Defense Security Cooperation Agency, Navy Vice Admiral Jeffrey Wieringa.

The package is said to include 84 new Boeing F-15 jet fighters, 72 UH-60 Black Hawk utility helicopters and the refurbishment of 70 F-15s already in Royal Saudi Air Force service, as well as spare parts, training and support.

NORSK HYDRO EXPECTS SIGNIFICANT EARNINGS FROM QATALUM, VALE ASSETS Norsk Hydro ASA, Europe’s third-largest aluminium maker, expects a “significant” contribution to profit and sales next year from higher output at its Qatar plant, and assets it agreed to buy from Vale SA, Bloomberg reported.

“With full production of Qatalum next year, that will have a significant effect on the revenues and the bottom line,” chief executive officer Svein Richard Brandtzaeg told Bloomberg in an interview.

He added: “Also the Vale acquisition, the aluminium in Brazil, will contribute significantly.”

On May 2, Hydro agreed to buy Vale’s mining and refinery assets in Brazil for US$4.9 billion (QR17.8 billion), securing a century’s worth of bauxite and access to the raw materials used in aluminium production to become less reliant on mining companies.

NEWS IN BRIEF

INTERNATIONAL AUSTRALIA THE QATAR OF THE PACIFIC Australian liquefied natural gas (LNG) projects are poised to benefit from surging demand in Asian markets, making the country the “Qatar of the Pacific” in the next decade, research firm Sanford C. Bernstein said.

China, India, Thailand and Singapore are set to drive consumption of the fuel, along with nations in the Middle East and South America, and supply is likely to grow slowly, Bloomberg reported Neil Beveridge, a Bernstein analyst in Hong Kong, as saying.

Australia will account for about 60 percent of new global LNG production capacity added in the next five years, he said.

EASYJET INCREASES FUEL HEDGED FOR NEXT FISCAL YEAR EasyJet, Europe’s second-biggest discount airline, increased the amount of jet fuel hedged for the next fiscal year as it seeks to reduce earnings volatility, Bloomberg reported.

The Luton, England-based company arranged 70 percent of its anticipated fuel needs using forward contracts priced at US$734 (QR2671) a metric tonne for the year ending September 30, 2011, it said in a statement late last month.

EasyJet also said it hedged 80 percent of its jet-fuel requirements for the three months ending September 30, 2010 at US$726 (QR2642) a tonne. EasyJet said it usually hedges between 50 percent and 80 percent of its jet fuel needs one year forward. The company’s policy is to hedge 20 percent to 50 percent for the second year forward.

BILLIONAIRE EYES INDIA BOURSE STAKE Billionaire financier George Soros is in advanced talks to buy a four percent stake in India’s Bombay Stock Exchange (BSE) for US$35 to US$40 million (QR127 to 145 million), sources with direct knowledge revealed late last month.

Soros Fund Management will buy the stake in Asia’s oldest stock exchange from Dubai Financial, part of sovereign fund

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Dubai Holding, the sources, who declined to be named, as they were not authorised to speak to the media, told Reuters.

The Financial Times first reported the news.

“Dubai Financial has been looking to sell its four percent stake for quite some time now,” said one source. “The talks with Soros are now in almost final stages and a formal transaction is expected shortly.”

AFRICA-ME ‘AGRICULTURAL TIEUP IDEAL’ Africa’s untapped agriculture potential makes it an ideal partner for resource-constrained Middle Eastern countries that seek to improve their food security, a new report from Standard Chartered Bank said.

The African continent is relatively landabundant, land utilisation rates are low, and – contrary to widespread perception – has plenty of water.

Given its potential Africa, therefore, appears to be a natural destination for agricultural investment by Middle Eastern countries, but there are valid concerns about whether it can play a significant role in addressing the Middle East’s food security issues, the report added.

INTERNET ADDRESSES ‘TO RUN OUT SOON’ The world will run out of Internet IP addresses in less than a year due to the explosion in smartphones, experts have warned.

Inaction by Internet providers could lead to broken applications and more expensive Internet connections, according to a report

published in the Gulf Daily News.

IP addresses do not refer to website domain names, but the unique sequence of numbers used to identify each computer, website or other Internet-connected device.

The protocol used by the majority of web users, known as IPv4, provides only about four billion IP addresses. Currently there are only about 232 million IP addresses left, which is enough for about 340 days only.

QATARI DIAR, UK DEVELOPER SETTLE ROW Qatari Diar, the property arm of Qatar’s sovereign wealth fund, has settled with British developer CPC Group in their dispute over a failed US$1.5 billion (QR5.4 billion) London apartment scheme, the companies said in a statement.

Qatari Diar bowed out of its plans after Prince Charles wrote privately to Qatari Prime Minister Sheikh Hamad bin Jassim Al Thani last year to protest about the Chelsea Barracks project’s “brutalist” contemporary design.

CHINA PLANS TO INCREASE COTTON OUTPUT China’s cotton output, the world’s largest, may rise 3.9 percent to 7.06 million metric tonnes this year on higher yields, the China Cotton Association reported. Yield may increase by 4.8 percent to 91.6 kilograms per metric unit (0.1 hectare), the industry group said in a report on its website, citing its own survey of growers. The crop area fell 0.9 percent from last year to 77.1 million metric units.

NEWS IN QUOTES AND NUMBERS

News in Numbers

#112

The recent World Investment Report 2010 issued by the United Nations Conference on Trade and Development, commended Qatar for attracting foreign direct investment (FDI) flows, which declined in all other countries of the world.

The report, under the banner of Investing in Low-Carbon Economy, said that Qatar had achieved high growth rates in 2009, reaching 112 percent higher than countries such as the United Arab Emirates and Turkey, which was due to the robust growth of its liquefied natural gas and real estate sectors.

The report referenced the Qatari sovereign wealth fund and its measures in stepping up investment opportunities in Europe, Asia, and the United States. Measures that the report said would attract more FDI flows into the emirate – unlike other countries and governmental entities that focused their efforts on their domestic economies.

Pic of the Month

News in Quotes It is worrisome that all the seizure of fake medicines made in recent past originated from China and were transported by Qatar, Emirate and Lufthansa airlines in clear violation of the National Agency for Food and Drug Administration and Control’s (NAFDAC) preshipment of imported goods.

The NAFDAC of Nigeria said it may sanction Qatar, Emirate and Lufthansa airlines for transporting fake medicines from China to Nigeria.

We believe that Qatar will be a key part of the global trend, which is seeing a shift in the economic balance of power towards the emerging world, especially the BRICS, but also towards the Middle East and Africa.

Shashank Srivastava, acting CEO, Qatar Financial Centre Authority.

It [Boeing 777] is in its first few months of operation. The 777 Freighter is performing as promised by Boeing and as we expected…it’s meeting operating-economics targets and is well on its way to helping us grow the freight transport piece of our business.

Akbar Al Baker, Qatar Airways’ CEO said following the announced of an order for two additional Boeing 777-200LRs during the Farnborough International Airshow.

An amphibious vehicle navigates the Nantes to Brest canal near Redon, southwestern France, for the opening of the Amphib 2010 event – an international amphibious vehicles gathering in Peillac. About 50 vehicles from 12 countries take part in this event annually (photo courtesy of Damien Meyer/AFP/Getty Images).

The licensed operators [Qtel and Vodafone] have participated enthusiastically in the dispute resolution process. This is a welcomed sign of growing maturity within the Qatar telecommunications sector and the regulatory framework, generally.

Doctor Hessa Al Jaber, ictQatar secretary-general said in relation to Qtel and Vodafone Qatar’s dispute resolution proceedings.

TheEDGE

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ON THE EDGE

MY NAME IS FIFA South Africans take their enjoyment of the 2010 World Cup a step too far with their choice of baby names.

Miles Masterson reports

N

ow the final whistle has blown, debate rages on in South Africa whether the 2010 Fédération Internationale de Football Association (FIFA) World Cup will eventually prove to be good for the country – through increased tourism, investment and self-confidence – or whether the huge cost of the event will further cripple an already struggling economy.

Nevertheless, on a far lighter note, one less loaded, but far more curious legacy of the 2010 World Cup will definitely be felt by those affected for at least the next five or six decades: The commemorative naming of children born during the event – such as ‘Fifa’, a girl reportedly named by one mother who gave birth to her following the opening match at Soccer City in Johannesburg. * Indeed, many South African hospitals have disclosed that popular first names awarded to bouncing newborns during the tournament have included ‘Kick Off’, ‘2010’, ‘Soccer City’, ‘Goalkeeper’, ‘Offside’, ‘Red Card’ and ‘Half-time’. ‘Tickets’? ‘Ball’? ‘Vuvezela’? Yes, all names given to bundles of joy welcomed into the world throughout the month-long competition.

Other classics are ‘Coach’, ‘Substitute’, ‘Park ‘n’ Ride’ and ‘Stadium’.

Countries, too, were included in the naming frenzy, the most popular being ‘Cameroon’, ‘France’, ‘Brazil’, ‘Denmark’ and ‘Italy’. The clash of Bafana Bafana and Mexico was also commemorated by a couple, who reportedly named their twins after the two teams as she was born during the opening match.

Strange as it may seem, in southern Africa it is actually a custom in many ethnic groups to name children with the type of words that most

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would not consider appropriate, at least not in the English-speaking world. It is not surprising to meet people called ‘Patience’, ‘Goodwill’, ‘Gladwell’, ‘Fortune’, ‘Blessing’, ‘Firstborn’, ‘Goodluck’, ‘Happiness’ and maybe ‘Xylophone’. Even ‘Surprise’ itself is not uncommon (and somewhat self-explanatory). You might meet a ‘Psychologist’ or a ‘Portfolio’ tending your hotel garden, advising you at the bank, or even at the head of a boardroom table.

There are various reasons for the origins of this custom in the various tribes of South Africa, (such as Sotho, Xhosa, Zulu etcetera), but most often these names are direct translations of tribal names and/or reflect the mood and aspirations of the parents at the time of birth. Obviously this has now adapted to include commemorating current events, and let us face it, none come bigger than the FIFA World Cup. Of course, when looked at from a broader perspective, the custom is no more bizarre than the current trend in Hollywood and pretentious circles in the West, where it is de rigueur to your kid anything but ‘John’ or ‘Mary’. Consider the schoolyard credibility of ‘Pirate’ Davis (son of rock singer Jonathon); ‘Audio Science’ (son of actress Shannyn Sassomon); or what about ‘Poppy Honey and ‘Daisy Boo’ (the unlucky daughters of celebrity chef Jamie Oliver)? ‘Satchel’, ‘Scout’, ‘Pixie’. ‘Moon Unit,’, ‘Reignbeau’. ‘Pilot Inspektor’?

All Hollyweird names. Google them. In fact, they make ‘Fifa’ or ‘Vuvezela’ or even ‘Red-Card’ seem downright normal, when you think about it. * Apparently Fifa, usually quite protective of their brand, have opted not to sue the infant for copyright infringement.

ANNIVERSARY SPECIAL

TheEDGE in numbers While there are many things our readers do know about TheEDGE, we have included a few quirky facts that you may not know:

Number of coffees that have been consumed, while putting TheEDGE together in the past year:

8250

Number of magazines that are printed each month:

Number of kilometres travelled by the distribution van to deliver copies each month:

The average number of words in each issue:

51, 240 TheEDGE

17, 710

825 324

Number of interviews that have been conducted in the past year:

Number of hours worked by ‘all involved’ to produce each issue of TheEDGE:

16

Metres of paper reel produced for each print run:

8320 Amount of ink in kilos used to produce each print run:

40

Number of times the words ‘economic recession’ were mentioned in TheEDGE in the past year:

1070 1052

BUSINESS INSIGHT

Finance

An eye for wealth While the teeth of the global economic crisis have started to retract and clients regain their appetite for risk, the economic ripples have not yet fully subsided. In its Global Wealth Report 2010 – Regaining Lost Ground: Resurgent Markets and New Opportunities – the Boston Consulting Group (BCG) warns that wealth managers need to play the game smarter and with extra vigilance.

Kelly Lewis speaks one-on-one to BCG’s partner and managing director, Douglas Beal about the report’s findings.

Offshore versus onshore wealth management – what trends are being witnessed at present and what are the associated risks?

The amount of wealth being managed offshore – commonly defined as assets booked in a country where the investor has no legal residence or tax domicile – while still increasing, is actually decreasing as a percentage of overall wealth being managed – from about seven percent in 2009 to an expected six percent in 2014. There are three general factors driving this decline, two of which are most applicable to the Middle East.

The most obvious cause of this decline comes from the regulators. The United States (US), perhaps most notably, has ramped up its monitoring of offshore wealth and this is true of many European countries as well. As a result, it is becoming more and more difficult to attract and service clients in these countries.

A second factor – more applicable to offshore wealth from the Middle East – can be described as a loss of confidence from many clients of their international, offshore banks. While researching BCG’s 2010 Global Wealth Report we conducted several dozen interviews with wealthy individuals in Qatar and across the Gulf Cooperation Council (GCC). While many of the individuals surveyed still have offshore accounts, some expressed disappointment in their performance.

Some described they were offered (and bought) products that their relationship manager didn’t fully

understand – and only later found out about some hidden “catch”, which prevented them from selling once performance began to decline, or of some counterparty risk that they didn’t understand.

A third factor, which is also quite applicable in the GCC, is that many international and local banks are beginning to launch more complete and sophisticated onshore wealth management offerings, creating a viable alternative to sending more assets offshore.

What developments are being observed within the markets of the GCC – are clients and wealth managers increasingly eyeing these markets as new pockets for wealth?

Yes, wealth managers are looking increasingly at the GCC as growing sources of assets to manage. As mentioned earlier, regulatory pressures are making traditional offshore centres, like Switzerland, more difficult to access for US and European clients. Clients from the GCC are now seen as an attractive source to make up for some of these lost assets.

Most traditional European ‘private’ banks have usually served GCC clients remotely – either by having the relationship manager travel to the region on a regular basis to visit clients, or by meeting in Europe – often during the summer. We now see that international banks are setting up locally based operations in order to serve their clients more closely – often in banking centres such as the Qatar Financial Centre or

the Dubai International Financial Centre. Even if the assets are booked offshore a locally based relationship manager can still serve them.

Are onshore investments in the GCC growing in popularity? What countries in particular are experiencing the greatest advancement in this field?

Yes, onshore investments in the GCC are growing in popularity. As the depth and liquidity of the capital markets continue to increase, this provides more options for GCC residents to invest onshore. In addition, there are a number of Middle East and North Africa (MENA), or GCC equity funds. These funds are being created by international and local institutions in a bid to provide a lower risk way of investing in the region than through individual stock investments. Further, the GCC is beginning to be looked at as an ‘asset class’ in itself by international fund managers and, therefore, is attracting flows of capital onshore.

When it comes to onshore wealth management, banks in many of the GCC countries are advancing in sophistication.

Bahrain has been considered a banking centre for the region since the 1970s. More recently, banks in Saudi Arabia, Kuwait, and the United Arab Emirates have been building up their wealth management offerings. Qatari banks are slightly behind, which is mainly due to the comparatively small population and relative recent growth in the country’s wealth.

The percentage of assets under management (AUM) owned by the ‘established wealthy’ (households with more than five million in wealth) was found to be highest in the Middle East and Africa (MEA) where they account for one third of all wealth. Why are the figures more concentrated and much higher for the MEA region as compared to Europe and Japan where these households account for only 14 and eight percent of AUM, respectively?

The fact that the percentage of assets under management owned by the established wealthy is highest in the MEA is a reflection TheEDGE

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BUSINESS INSIGHT

of the region’s relative income and wealth disproportion. Income and wealth disparities often tend to be greater in rapidly developing countries, as well as those cultures with a strong entrepreneurial culture. Both these factors apply to the Middle East, Asia-Pacific and Latin America are other regions where the wealthy hold a high percentage of assets under management.

Europe and Japan have relatively slower growth, higher tax and more mature economies, which tend to be aligned with lower disparities in income and wealth.

Three of the six densest millionaire populations were found to be in the Middle East – Kuwait, Qatar and the United Arab Emirates. What does this rise in density present for the region?

This presents an opportunity. This density of millionaires, which is also reflected in places like Hong Kong and Singapore, presents tremendous prospects for wealth managers, as they will be able to manage a relatively large amount of wealth by working with fewer clients.

In particular, this presents a break for local banks to grow in sophistication in their wealth management offerings along with their clients.

There are several key success factors that local banks should follow in order to serve these clients. First, they should focus on what they do best. Wealthy individuals will always maintain relationships with several banks – both onshore and offshore – and so local banks should determine their more appropriate place in the ‘portfolio’ of a client’s needs. Second, they should create a ‘client centric’ organisation and value proposition, and train their staff to deliver it. Third, identify the specific needs of certain groups – such as women and entrepreneurs, and learn how to serve them in a special way.

This is where local banks that understand their customers better will have a real chance over international banks.

What is the outlook for Qatar and the GCC in terms of increasing its share of global wealth?

It should continue. As gross domestic product (GDP) in the region is growing at high single digits – or even double digits in the case of Qatar – the stock of wealth in the

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“The entrepreneurial spirit and rapid growth of the GCC countries is reflected in many characteristics of how clients in the GCC manage their wealth, which differs from many other parts of the world.” region will continue to grow along with it. We estimate that between 2009 and 2014, assets under management from the GCC will grow at eight percent annually, compared to less than six percent for the world as a whole.

What trends are being witnessed in the way Middle East clients position their assets as compared to clients in Europe, Asia-Pacific or North America?

The entrepreneurial spirit and rapid growth of the GCC countries is reflected in many characteristics of how clients in the GCC manage their wealth, which differs from many other parts of the world. It is also important to distinguish between the citizens of the GCC countries versus the expatriate population.

First I will focus on the citizens of the GCC. The most notable characteristic is the very high percentage of assets that are held in real estate – many Gulf Arabs have most of their wealth tied up in real estate. This has an impact on the wealth management business model of local banks, which often include real estate financing into their value proposition.

Second, personal wealth and business wealth tend to be tied very closely together. Often when a client has a relationship with a bank they see it as a single relationship – both for personal and business needs. Banks need to take this into account when designing their business model.

Third is the importance of the family business. Many GCC families build businesses, real estate and so on, over the course of multiple generations. As a result, extended families often have complicated matrices of shareholdings across the individuals within the families. Many families now are looking to ‘corporatise’ their

family wealth to make it more transparent, liquid, and easy to trade.

Expatriates in the Gulf tend to manage their wealth in very different ways – most tend to export a large majority of their liquid wealth back to their home countries as they expect to move back there someday.

Do Middle East clients take more or less risk with their wealth on average?

It’s hard to say if they take more or less risk – let’s just say they take different risks, risks that they are more comfortable with. As mentioned earlier, many clients in other parts of the world would consider tying up the majority of one’s wealth in real estate as risky. However, in the context of the growth of the GCC region and the culture, real estate could actually be less risky than more ‘international’ investment strategies that might be less familiar to a local client.

Are regulatory pressures less intense in the Middle East, therefore, making it more attractive for clients to invest in the region?

Actually, sound regulations usually result in regions being more attractive to invest in, not less attractive. Good regulations help ensure consumer protection, liquidity of equity markets and good corporate governance, all which are factors that investors use when considering where to invest.

In general, the regulatory environments in most Middle East countries are still under development. Many countries need to continue developing their environments to ensure truly independent and world-class regulators, enforce minimum free-float requirements on stock exchanges, refine existing foreign ownership

BUSINESS INSIGHT

laws (which restrict capital inflow from overseas), and adjust other environmental factors.

How is the wealth management sector positioned in Qatar as compared to the broader GCC market?

Qatar’s banks are beginning to look at wealth management as an attractive way of diversifying their earnings and make more fee revenues, however compared to international banks and even other GCC banks they are still in the nascent stage, with some limited exceptions.

What measures could be taken to transform risk management in the GCC in light of the economic downturn?

Risk management played a decisive role in how wealth managers fared during the economic downturn. Many lost significant amounts of money for both their clients and themselves owing, in part, to a lack of adequate safeguards. Most importantly, they lost their clients’ trust – often because they failed to tell their clients about potential counterparty risks that were then realised.

Many advisors also failed to conduct proper know-your-client profiling, or pushed products that were an obvious mismatch with the client’s risk profile.

In addition, some transactions were executed without the client’s explicit consent, and some advisors neglected to review portfolio performance with their clients, even as losses mounted.

Many of these problems stemmed, at least in some part, from risk management systems that were overwhelmed and struggled to keep up with the proliferation of new financial instruments and markets.

Going forward, wealth managers will need to make improvements ranging from the thematic to the operational. At a high level, the risk

function needs to be imbued with values such as integrity, independence and critical judgement – values the bank’s leadership must live. At a more practical level, the risk management function – in close collaboration with the business – needs to design processes for managing the risks throughout the business. There are many, but I will highlight three: First, when sourcing products, wealth managers should not rely solely on rating agencies when assessing third party products – they should conduct their own independent due diligence.

Second, relationship managers, as first line of defence, should be highly trained to understand their clients’ risk profiles as well as the range of products they have to offer, to avoid mismatch.

Third, relationship manager incentives can play a big role. Longer-term wealth appreciation of clients, instead of short-term profits to the bank, can better align the relationship managers’ goals to that of their clients.

The report finds that the crisis intensified the flow of assets into perceived ‘safe havens’ (largely cash or money management products). However, the report states this to be only a temporary move. What trends do you expect to see in asset positioning in the coming 12 months?

Already we see the share of wealth held in equities increasing from about 25 percent in 2008, to around 30 percent in 2009. However, this is still lower than the 36 percent witnessed in 2007. As investors continue to regain confidence, we expect the percentage of wealth held in ‘safe havens’ to continue to decline. However, investing in products they didn’t understand has burnt many investors and we expect these products to maintain a lower profile – at least among individual investors going forward.

“As investors continue to regain confidence, we expect the percentage of wealth held in ‘safe havens’ to continue to decline.”

What is the current percentage of wealth that women control in the GCC and what influence do they have in where money is invested?

We estimate that women control 22 percent of wealth in the GCC, which is only slightly lower than the global average of 27 percent. Based on interviews with wealth managers and many high net worth women in the GCC, we find that most women have a very high degree – even full – influence over where the money is invested. That is why it is very important for wealth managers in the GCC to understand their women clients and their potential unique needs.

As women are increasingly climbing the corporate ladder and obtaining larger salaries in the Middle East is the percentage of wealth held by women increasing?

Yes, like in all parts of the world, the percentage of wealth held by women seems to be increasing. This is driven by many factors, including their increasing role in business and the overall trend towards greater gender equality in many regions.

How do the requirements of wealth management differ between male and female clients, and, do these requirements fluctuate between regions?

This is a great question. Many wealth managers do not currently meet the needs and expectations of many of their female clients. In fact, more than half the women in a recent BCG survey feel that wealth managers could do a better job of meeting the needs of female clients.

Even wealth managers that recognise the opportunity to target women often underestimate the complexity of reaching female clients. Their overtures, which include pre-packaged products and targeted marking, sometimes lack special treatment. Many of the women we surveyed, however, told us they do not want special attention, much less any kind of ‘women labelled’ product, pitch, or promotion that comes across as superficial or patronising.

Wealth managers need a more nuanced approach that is grounded in a simple truth: most female clients want to be treated the same way as any client. Most importantly, they want to be understood, rather than prejudged or stereotyped.

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BUSINESS INSIGHT

Media

Making headlines For the first time, in June, news wire Thomson Reuters launched its Arabic News Service, combining news and business information from their financial terminals in Arabic. In addition, this new service coincided with the creation of a post within the organisation of managing editor, Middle East and Africa (MENA), filled by Caroline Drees. Drees is a seasoned journalist and editor fluent in Arabic, who has spent 16 years working at Reuters and most of her life in the MENA region. Miles Masterson spoke to Drees to find out more about what motivated the creation of the service, as well as the current media environment in the region.

While other agencies and news services already offer such information in the regional language, Reuters’ initiative coincided with the implementation of its MENA expansion plans, which, thanks to its extensive network, will boost the availability of news and financial information available in Arabic in Gulf Cooperation Countries (GCC) and beyond.

Enter Drees, who has been Reuters’ bureau chief in Cairo, and while on secondment to Reuters Foundation project in 2006-07 helped to set up the first independent news agency in Iraq, Aswat Al Iraq. Prior to her recent promotion, she spent the past 18 months in Reuters’ Dubai office as editor Middle East. Based in Cairo – from where Reuters has been operating for 165 years and the word is, in fact, local slang for a ‘know it all’ – with a large team of editors and journalists, Drees will now oversee all of the news service operations in the region.

Though media in the MENA region has been identified as a growth area, Reuters’ expansion comes against a backdrop of a global media decline. At least in the context of newspapers for example, which have formed a large part of the traditional income for news wires. However, Drees says Reuters’ ambitions make sense considering that their client base is diverse and includes tax, medical and financial institutions, the latter of whom mostly subscribe to a special

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Reuters terminal installed in their premises.

“Predominantly our financial clients have a desktop machine,” she says, “on which they can get [news], real-time data, analytics, graphics, and all kinds of other exciting tools that are useful for the financial sector.”

Arabic-speaking Reuters’ clients will now be able to consume information in their mother tongue, including expanded coverage from 22 MENA stock exchanges and 2000 banks connected to the Reuters trading system.

However, though this kind of service has been available for some time in various languages, as with many of these, Arabic speakers might still read shorter news or stock market data items in English.

“They might like reading a longer feature or an analysis in Arabic,” adds Drees. “Everybody

is different…but having that choice is very attractive for subscribers.”

Reuters has also spread its news and data gathering network extensively in the region, appointing a new Arabic service chief, Munir El Boweti, and a new position of business editor, held by Nadia El Gowely.

“We have added native Arabic speakers and fluent Arabic speakers throughout the Middle East and the north of Africa,” says Drees, “to continue to expand our footprint and enhance our coverage across the financial news, and multimedia coverage, [and] everything from commodities to energy news, to treasury, equities, economic news, and various specific sectors like real estate, transportation, telecoms.”

Of course, the MENA area is also of great interest to the wider business community.

Global investors are looking beyond countries or regions once regarded as financial “safe havens”, as Drees calls them, particularly to Africa, which she feels has seen many recent developments outside its traditional commodity and energy sectors.

“Rapidly developing economies are very much in the forefront of news,” qualifies Drees.

“The other thing we know is that our clients are interested in the tie ups between the Middle East countries and Africa, and other emerging markets such as China and India. Or changes in dynamics between emerging markets such as the Middle East and BRIC (Brazil, Russia, India and China) countries, and the G-7 or the European Union (EU), or other industrialised

“Arabic-speaking clients will be able to consume information in their mother tongue, including coverage from 22 MENA stock exchanges and 2000 banks connected to the Reuters trading system.”

BUSINESS INSIGHT

countries, which have been hit hard by the global economic downturn.”

Drees is also bullish about the state of the media in the Middle East.

“We’ve seen a real surge in the number of Arabic language television channels available, radio stations and newspapers across the Arab world reporting on the Arab world,” she says, “so I find people in the Arab world as a whole extremely well informed.” Growing demand for news about the region in Arabic, explains Drees, is the most important aspect of the new service. “[Through] the continued of growth of appetite for news and the continued professionalisation here in the MENA region,” adds Drees, “our services will be continued to be needed in my opinion, and why we believe the expansion of the Arabic service will be met with a lot of interest.”

Moreover, Drees adds this interest will not just be with Reuters’ current clients, but with financial clients, even more so when Insider, Reuters’ on-demand video financial news platform, part of its Thomson Reuters New Era, New Tools Innovation Programme, is also translated into Arabic in the near future.

Launched worldwide in 2010, Insider goes beyond the regular stream of consciousness news and, describes Drees, is far more versatile.

Users can, for example, search for exactly what they are looking for at the exact point in any news clip – as well as the transcript – and email or sms it to an associate or colleague. “It is a much more interactive tool than traditional television,” she enthuses.

Discussing these new platforms and digital media in general, Drees says she feels people in the Middle East are as tech-savvy as anywhere, thanks to the large youth population in particular, and that Reuters is adapting and adding to its service to accommodate this shift.

While she feels the recent rise of citizen journalism is relevant and certainly not a threat to traditional media, Drees opines the latter will still be relevant for a long time to come.

“Citizen journalism is quite exciting I think,” she explains. “It allows people to voice their opinions and to get out there with issues they feel need to be addressed. But, at the same time, I feel our clients still need the services of organisations such as Reuters, which for 160

“There is a big focus on telling news in different ways...consumers are changing, they are younger, they are quicker, they are wanting news and information in different ways.” years has been providing very well respected, balanced, fair and reliable news. But the story formats have certainly changed over the years.

We still have the traditional news stories, but we also have journalists blogging, we provide graphics, we have live news feeds, such as from the FIFA World Cup in South Africa, if you can’t watch the game, you can watch a live news feed with journalists at the game putting up commentary, putting up pictures of the game; it’s quite like watching the game. I was stunned how exciting it was, so we do use our own network in many different ways.

“We have reporters on television, sometimes on Insider, sometimes on Reuters Video News,” she adds. “There is a big focus on telling news in different ways...consumers are changing, they are younger, they are quicker, they are wanting news and information in different ways, and Reuters is making sure that – while other employers are laying off hundreds if not thousands of people, or in some cases are having to shut down, we are making the changes that are needed.”

Thompson Reuters chief executive Tom Glocer, Drees goes on to tell, often uses a story to highlight how the industry has changed: in 1865 it took the news of the death of Abraham Lincoln 10 days to reach Europe. Now in the age of Twitter it would take less than 10 seconds.

The kind of information required, Drees adds, is also morphing constantly, thanks in main to the global economic downturn.

As mentioned, the Reuters Arabic News Service will also increase the volume of news stories circulating in the MENA region. Of course, arguably apart from not only increasing coverage within the area it should also increase coverage emanating into the wider world.

“As part of this expansion,” explains Drees, “there will be more news stories from the Middle East and Africa available to our clients globally, out of dozens of journalists writing about the Middle East and Africa, covering all asset classes, including political and financial news, so there is certainly a greater number and a greater depth and breadth available through our Middle East and Africa growth plan.”

Thanks to the volatile global economic climate, people, Drees points out, are very interested in things that will affect their future, and this is no different in the region.

“Issues like the regulatory environment, the future of the banking industry – where is that going to go?” she says. “Issues such as investment, investment flows, economic growth.

For example, here in the Middle East, most places are still booking economic growth and will continue to grow quite substantially this year, including Qatar.”

In fact, while most Gulf countries, closes Drees, are seeing their gross domestic product (GDP) grow in low single digits, Qatar’s GDP – set to be in the mid-teens for 2010 – will keep expanding well ahead of the rest of this important zone, and, she says, the country presents exciting business opportunities.

“People across the globe are interested in reading about Qatar,” Drees explains. “Qatar is a regional player, no question, and I think this is one of the many reasons we are interested in increasing our coverage out of Qatar… we have a full time correspondent now in Qatar and in addition we travel into Qatar with our correspondents regularly for specific events.

“For us and our clients, news about Qatar is always of interest and we look forward to continuing focus on that.”

TheEDGE

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BUSINESS INSIGHT

Health

Playing to win In a bid to bring a fullyfledged orthopaedic and sports medicine hospital to the Gulf region, Aspetar was founded in 2007.

Servicing the needs of professional athletes, both locally and from afield, the hospital boasts stateof-the-art facilities and is staffed by some of the world’s leading sports medicine practitioners and researchers.

To find out more about Aspetar’s operations, Kelly Lewis spoke with former National Basketball Association professional and Aspetar’s senior male physical coach, Barry White.

With Qatar’s ambition for the 2022 World Cup, there is a shift in focus to the state of the nation’s health. What is Aspetar doing to improve some of the health-related issues in Qatar?

Aspetar is a leading specialised orthopaedic and sports medicine hospital with a strong focus on research. To that end, we are collecting a lot of data from the athletes we manage. Although this information has been gathered from athletes, it has wider application, particularly with reference to sports science, and can be used to help improve the health of the general public.

With this data we can better inform people, for example, how they should work out, how to eat healthier and improve their sleeping habits.

We can also advise people on how to handle

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stress in the workplace, as well as talk about vitamin D issues and other areas of health, which are specific to this region.

It is important for Aspetar to continue to gather this type of information and do the research. This will enable us to identify any potential health risks or trends, which we can then communicate to the public and advise accordingly on the necessary steps required.

In terms of the amount of athletic clients you are actually working with, what is the breakdown between national, local expatriate and foreign athletes? Are you seeing an influx of international teams and individuals coming to Aspetar?

Firstly, we receive both international athletes as well as many local athletes. In my area alone we have had close to 35,000 or 40,000 visits from athletes in just the past three years, so we are very busy.

Secondly, it is really important for Aspetar and for Qatar broadly, that we plant the seed for the nation to become more athletic. This does not just apply to athletic performance, it also pertains to educating younger generations; teaching people how to eat better, how to work without stress, how to improve sleep quality and how to generally live their lives better.

Every country goes through the same process and I am happy to see that Qatar is moving forward with this by bringing international sporting events to Qatar. Aspetar is taking a leadership role in response to these opportunities and in doing so, is helping create greater momentum.

I understand that Aspetar is currently undertaking studies into the use of sport psychology in the corporate world, as well as the importance of health and nutrition in the workplace. Can you discuss this?

Definitely. I come from a background working with many corporations in the Western world and at Aspetar we know that with today’s lifestyle, people’s stress levels

“Aspetar is a leading specialised orthopaedic and sports medicine hospital with a strong focus on research. To that end, we are collecting a lot of data from the athletes we manage. Although this information has been gathered from athletes, it has wider application...” are higher – people are sleeping worse, their cardiovascular health is poorer, and so on. We want to help provide solutions to people that struggle with these situations.

With the country witnessing such remarkable growth, we are going to see a rise in the number of corporations being established here and, therefore, an increase in the number of corporate employees.

Despite the fact that we are a sports medicine hospital, we also look at broad health problems throughout the country.

We know that corporations are going to present greater health problems. Therefore, we can…adapt solutions from what we are learning at the hospital to help companies with problems that you might find within a corporate environment.

BUSINESS INSIGHT

resources, we have the knowledge and we have the skills to give you the best advice possible.

“Aspetar is unique in what it offers. We have already received accreditation from the FIFA-Medical Assessment and Research Centre, making us a FIFA Medical Centre of Excellence.”

What are some of the links between sport psychology and business strategy?

No matter what the scenario, if the component of stress is removed, people will communicate their ideas more effectively.

I think people can be more valuable supervisors and better managers when obstacles to effective communication are removed.

Sport psychology and the processes we apply to manage the health of athletes has direct application both to companies that are going to be working in Qatar, as well as to those which are already here.

In considering the sprouting of sports and training hubs in the region, can you discuss the need for more sports medicine care and the growing demand on the industry?

If we look at today’s lifestyle, the typical athlete is not just the professional one. We have athletes who are managers, supervisors, or just regular employees in a corporation.

When you wake up in the morning, you have to count on your body to get you through the day.

I think it is important that the hospital educates people on how to take care of themselves, how to get their lives in the best possible shape and be active – I think that is one of the roles that will be demanded of us the most.

Being in Doha, what does Aspetar offer the local market and the wider region?

Aspetar is unique in what it offers. We have already received accreditation from the FIFA-Medical Assessment and Research Centre, making us a FIFA Medical Centre of Excellence. We are a young organisation that is constantly evolving. Currently, we are learning new techniques, which include solutions both for athletic and non-athletic problems.

If one were to walk around the hospital they’d see a lot of equipment that is used nowhere else but at Aspetar. Aspetar’s strength is that it does not look to the past, but to the future.

The nature of health problems is going to change; they are going to either get worse or improve. We are looking into these trends today and preparing for these health situations in advance for tomorrow.

Is Aspetar finding itself as a source of medical tourism?

Aspetar has a huge demand, which is driven by athletes that come from different countries.

When I first joined Aspetar, it was relatively unknown. However, we now have a lot of players coming from Algeria, Greece, England, Italy and other countries. These athletes come to Aspetar because our reputation is starting to grow outside of Qatar. People are beginning to know and understand what we do, and how we work.

There is a constant demand to be excellent and this drives the professionals working in the hospital today.

While Aspetar is an established brand in Qatar, there remains a general lack of awareness of what Aspetar offers to the average person on the street, as well as to the athletic population. What are the different approaches that Aspetar takes?

Our primary focus will always be on athletes, but the information we are gathering from our athletic clients can be applied to the general public, although that takes time.

We need to communicate our role as educators.

Our role is also to provide life examples and show that we can give people results. I think these are the things that will convince people in the country to improve their lifestyle. If you are looking to improve, if you are looking to get better, we have the

With regard to your athlete care, obviously Aspetar has many athletes from abroad, but specifically in terms of Qatari or Gulf nationals, are they more prone to certain types of injuries?

Are you gathering these types of findings from your research?

I come from a sporting environment where you are pretty much educated on how to avoid any type of injury. Therefore, I always like to come back to teach this because you have to continually go into clubs, into communities, into schools, to tell people exactly what they need to do.

We commonly see cases of high blood pressure, stress or obesity problems.

Even in the Western world, we know that every Monday there are 1500 people that die from heart attacks. This is stress related to returning to work. However, we are in an environment where a lot of these concerns are new, but this is a growing country and we also know that through technology, through communication, you can catch these problems early on.

Can you tell me more about the technology that has been employed at Aspetar?

We have a state-of-the-art machine called Ultra-G and Aspetar is the first hospital to use one of these in the Middle East. In fact we found it when we were in Los Angeles and visiting the LA Lakers. We were investigating how to get athletes back after an anterior cruciate ligament injury operation, and doctors recommended this machine because it removes gravity and you are running on air, which removes any pressure. So we do research around the world and pick the best to ensure that we continually improving.

What is the relationship between sports leaders becoming leaders in business?

The transition of a sports leader into a successful business leader should be commonplace – once you belong to a team, you learn how your body works, understand how to communicate, and know how to run and work with people, it’s a normal progression to become a leader. This process can help athletes look towards their future in terms of what they can do after they have peaked within their sporting careers.

TheEDGE

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IN THE SPOTLIGHT

The BIG Spill As talk of bankruptcy and hostile takeovers surround BP, and beleaguered chief executive, Tony Hayward, steps down, Christine Toner looks at how the Gulf of Mexico spill squares up against oil disasters of the past.

B

Fishermen contracted to assist collect oil use a boom to contain the oil spill in Barataria Bay, Louisiana.

P’s catastrophic oil spill may have been capped, but far-reaching consequences of the disaster will be felt by the company and the oil and gas industry throughout the world for years to come.

The environment has been devastated and those whose livelihoods depend upon the Deepwater Horizon offshore drilling rig have been brought to their knees.

Inevitably, the disaster has battered share prices.

BP’s share price has dropped by around 50 percent since the spill occurred on April 20, rising only when the market anticipated the announcement of BP Oil chief executive, Tony Hayward’s departure. To date, the spill has wiped around GBP50 billion (QR277 billion) off BP’s market value, and whispers of a takeover are now being openly discussed.

It also caused an ongoing dispute between United States (US) President Barack Obama and Hayward.

Hayward, finding himself a ‘dead man walking’, has been assigned to a new position in Russia, which he will fill after stepping down from BP in October.

However, it is not just Obama who gunned for the chief executive. Shareholders have become fearful of their investment since the announcement by BP that it must suspend dividend payments in order to ease political relations. Understandably shareholders are concerned – this move marks the first time in 18 years

IN THE SPOTLIGHT

world, as well as the business sector, this is not the worst disaster of its kind. Back in 1979, the Ixtoc spill resulted in three million barrels leaking into the Gulf.

In 1909, an oil spill occurred in Kern County, California, widely acknowledged to be one of the worst spills in history. An exploration well named Lake View Gusher accidentally punctured an oil reservoir causing the oil to spill over into the surrounding areas, destroying the environment, and leaking around 11 million barrels. Eventually, some 12 months later, it caved in.

On the local front, the Middle East is no stranger to oil spills either. The Gulf War spill off the coast of Kuwait is considered by many to be the worst disaster of its kind.

The disaster occurred on January 23, 1991, when the Iraqi government deliberately released more than 400 million gallons of crude oil into the Persian Gulf from tankers 16 kilometres off the coast of Kuwait in an attempt to ward off the American Navy.

The disaster severely damaged the surrounding areas, Adam Koch protests against BP on July 6, 2010 in Chicago, Illinois.

Shares of BP have climbed over 10 percent from their low after losing most notably in Kuwait. Wildlife habitats were destroyed, about half their value following the start of the April 20 oil spill in the Gulf of Mexico. which had drastic effects on the environment.

The spill affected an estimated area of 160 by 64 kilometres and in some parts the spillage was around 12 centimetres thick. that the company has been in the red. Reports claim Some years later, in a study sponsored by the United Nations Education, Scientific investors have agreed to the suspension of dividends and Cultural Organization, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, in order to soften relations with Obama, but have the United Arab Emirates and the US claimed the long-term damage from the Gulf demanded that the company does not bow down to any War spill was relatively small. It was maintained that the majority of the oil had more orders and seek reassurance from the US. evaporated in the Persian Gulf’s warm waters.

There have been suggestions that the suspended However, a number of years after the study was released its findings were dividend could be given back to investors once the clean up has been carried out. Of course, first and foremost, BP disputed by experts, who claimed that in the disaster’s aftermath the environment was still suffering from the effects and indeed, it would continue to do so for some must also pay compensation to those whose livelihoods years to come. have essentially been ruined by the disaster – the total Early this year, geochemist Doctor Jacqueline Michel, told a radio station that the claims could be an unfeasibly high sum.

Adding to BP’s problems, the firm is also facing the issue of insurance. The oil giant must insure its debt.

However, given the recent crisis, the cost of doing so has gone through the roof. Figures show that early last month default swaps were over 470 basis points.

In monetary terms this means it would cost GBP47 (QR260) insuring GBP1000 (QR5528) bonds. Before the disaster this figure stood at just GBP5 (QR28). A hike of GBP42 (QR232) is hardly small change.

To make matters worse, reports claim the cost of cleaning up the spill could be around US$3 billion (QR10.9 billion) over three months.

For the first time in its history the phrase bankruptcy has been bandied about in relation to the company.

OIL SPILLS AS FAR AS THE EYE CAN SEE

The Gulf of Mexico disaster has to date resulted in one million barrels of oil spewing across the surrounding areas. It is the second time in recent years that the area has been hit.

While the BP spill has attracted the spotlight of the global media and sent shockwaves through the political

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Workers clean tarballs from a beach in Waveland, Mississippi.

According to reports, scientists are concerned that oil is leaking from the BP well cap and could possibly make the sea bed unstable, causing the well to collapse.

IN THE SPOTLIGHT

impact of the spill was still “very significant”.

“There was no shoreline cleanup, essentially, over the 800 kilometres that the oil affected in Saudi Arabia,” she said. “And so when we went back in to do quantitative surveys in 2002 and 2003, there was a million cubic metres of oil sediment that remained 12 years after the spill…the oil penetrated much more deeply into the intertidal sediment than normal because sediments there have a lot of crab burrows, and the oil penetrated deep, sometimes 30, 40 centimetres, you know a couple of feet, into the mud of these tidal flats.

There’s no way to get it out now. So it has had long term impact.”

One reason for the poor attempt at a clean up is the fact the ongoing war made it difficult to access the leak and plug it. With the conflict continuing, the leak was left to worsen and ultimately caused more damage than it should have.

The war – and the fact that the spill was deliberate – affected the amount of money eventually spent on the clean up. Estimates claim this should have cost around US$550 million (QR2 billion). As it was, however, only a small amount of money was allocated for the clean up operation. In fact, to this day, the exact figure spent remains unknown.

(Then) BP chief executive Tony Hayward testifies before the Oversight and Investigations Subcommittee during a hearing on The Role Of BP In The Deepwater Horizon Explosion And Oil Spill in Washington in June. BP agreed to place funds into an escrow account managed by a third party to pay out claims resulting from the oil spill and also said it will not pay out additional dividends to shareholders for the remainder of the year.

LESSONS LEARNED

BP could have looked to another Middle East oil spill for ideas on how to stop the leak and rectify the situation. The spill in question was in fact a secret for many years and many believe this is largely because of the swift action taken to clean it up.

In 1993, an accident at the Saudi Aramco rig in the Middle East led to nearly 800 million gallons of oil spilling into the Persian Gulf. The spill was kept under wraps and the company deployed empty supertankers to remove the oil from the waters.

Shareholders, local residents and politicians will be looking back at previous disasters in an attempt to find some guidance going forward. Gulf Times recently reported that Barry Samria, an operations manager for Celerant in Qatar, said that organisations are reviewing their processes and systems to avoid incidents similar to that of the BP disaster.

“It inevitably has to affect the way organisations work, in the same way that the Texas City [industrial explosion of 2005] had an immediate effect on how companies execute shutdowns,” Samria said.

“We have already spoken to organisations that are assessing their current management processes and how they work with their contractors.”

As Obama, the Gulf of Mexico and shareholders alike wait with baited breath to see how the BP disaster will play out, and while BP struggles to keep a hold on the situation, all would do well to revert back to the Gulf War incident and others like it in an attempt to learn from the past in order to help protect the future.

Plaquemines Parish Coastal Zone Management Director P. J. Hahn holds up an oil-stained Sandwich Tern in Long Bay, west of Port Sulpher, Louisiana. The bird was reported and delivered to the Louisiana Department of Wildlife and Fisheries for rehabilitation. The BP oil spill has been called one of the largest environmental disasters in American history.

Workers place absorbent material on to the beach as oil residue washes ashore from the Deepwater Horizon oil spill in the Gulf of Mexico in Orange Beach, Alabama. Millions of gallons of oil have spilled into the Gulf since the April 20 explosion on the drilling platform.

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MARKET WATCH

THE

BIOFUEL

REVOLUTION Professor Sir David King discusses the findings from the World Economic Forum’s The Future of Industrial Biorefineries report.

MARKET WATCH

T

he world is facing many serious challenges. A fast-growing human population and the consequent growing demand for food, energy and water are the most serious. In addition, anthropogenic climatic change is a severe threat to mankind and requires that we significantly reduce our current greenhouse gas (GHG) emissions to avoid detrimental consequences for the globe. Only the use of new technologies will allow us to bridge the gap between economic growth and environmental sustainability in the long run.

Over the course of many multistakeholder discussions driven by the Chemicals Industry Community at the World Economic Forum (WEF) in 2008 and 2009, industrial biorefineries were identified as one potential solution that may help mitigate the threat of climate change and the seemingly boundless demand for energy, fuels, chemicals and materials.

Biorefineries are facilities that convert biomass – biological materials from living or recently living organisms – into fuels, energy, chemicals and materials (and feed).

To date, the industry is still in a nascent state, with most second-generation biorefinery plants (using cellulosic material) only expected to be ready for large-scale commercial production in a few years. The landscape of active players is rather scattered and fragmented, with many relatively small technology players. However, there are an ever-increasing number of large players starting to invest.

Two of the main industry drivers, in addition to energy security and environmental concerns, are mandates and policies. Fuel regulations, such as the Low-carbon Fuel Standard introduced in California in 2007, are examples of potential industry drivers.

The standard requires fuel providers to reduce GHG emissions of the fuel they sell, to achieve a 10 percent reduction in the carbon intensity of transport fuels by 2020. Additionally, the Renewable Fuel Standard introduced in the United States (US) in the same year, sets an emissions threshold that includes direct and indirect emissions from land use changes.

Regardless of these legislation-based

regional differences in the status quo of industrial commercialisation, generally the markets for bio-based products are expected to grow very strongly globally over the next few years due to four underlying, irreversible trends.

First, the economics of fossil-based products are deteriorating since conventional crude oil resources are getting scarce. Second, the need for national energy security and geopolitical security is growing. Third, public pressure for environmental sustainability is increasing due to an increasing environmental awareness. Last, but not least, rapid demographic growth will drive demand supported by rising economic aspirations of developing countries.

These fundamental trends triggered a vast interest in bio-based products and placed them high on the strategic agenda of most players in a variety of industries. In agriculture, for example, new economic opportunities will emerge from the rising demand for biomass. In the chemicals industry, bio-based innovative products outside the conventional petroleum-based product family trees will confer an advantage to players, who manage to find the right molecules and insert them into existing, or new value chains.

In the automotive and aviation industries, corporations are looking at biofuels as an important means to reduce the GHG emissions of their fleets to comply with regional or national regulations, while utilities are making high investments in the expansion of their renewable power generation assets, with biomass coming third after solar and wind investments.

Despite the great relevance of bio-based products for many industries, experts still see numerous technical, strategic and commercial challenges that need to be overcome before any large-scale commercialisation of the industry can succeed.

Most importantly, biorefineries will have to employ the best possible technologies (for fermentation, gasification and chemical conversion, and also for pre-treatment and storage) to ensure that bio-based products break even. This will require the concerted action of many non-traditional partners – such as grain processors, chemical companies, and technology players – to cover all aspects of

the complex biomass value chain, from feedstock production to end-user distribution.

Another significant challenge is to establish the necessary infrastructure (supply chain and distribution infrastructure) and raise the high capital costs required. The latter are typically beyond the financial reach of individual private companies, and may therefore require public funding.

In the US, a recent report from Sandia showed that the US could produce 90 billion gallons of biofuels to replace oil (total use today is around 110 billion gallons). With improvements in mileage, this means that the US could run solely on biofuel in 2030 to 2050. The limitation is not the supply of biomass, but rather a complete infrastructure built around oil, expected low oil prices at least between now and 2020 and a lack of political decisions.

To overcome these challenges, various stakeholders need to play different roles in the industrialisation process of biorefinery systems. Governments interested in supporting biorefineries for reasons of environmental protection and energy security should make significant investments in research and development (R&D), supply chain and distribution infrastructure as well as conversion capacity, while carefully regulating the implementation process to ensure food security and avoid land-use change.

Companies highly exposed to fossil feedstock and fuels will need to develop petroleum-replacement strategies to manage their risk, and explore the new business opportunities created by innovative conversion technologies and novel molecular outputs.

Retail and business consumers need to be better educated about the benefits of bio-based products, both from an environmental sustainability and business opportunity perspective.

Finally, non-government organisations (NGOs) and public authorities must be involved from an early stage to ensure development of the industry in a manner compatible with the highest environmental and social standards. Without the latter, broad public acceptance and the adoption of bio-based products will be hard to accomplish.

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Current Status of Industrialisation UNITED STATES In the US, the biofuels industry has undergone significant expansion in recent years. The focus has been on achieving increasing efficiencies of first-generation biofuels production, which invariably means reductions in the use of energy and other resources. The majority of facilities in the US run at an efficiency rate of some 60 percent, with improvements derived, as in all processes, through knowledge and experience over time.

Furthermore, the US has in many instances been at the forefront of developing sustainability standards for biofuels. The active role played by the US Department of Energy has made the country a leading player in the emerging biofuel industry. This has been achieved by a large number of public technology grants, not just to domestic companies, but also to investors worldwide.

The US government has also committed to high targets for the replacement of fossil transportation fuels – 36 billion gallons of biofuels by 2022 in the following proportions: 15 billion corn-based, 16 billion from cellulosic ethanol and five billion from advanced processes (in 2008, US biofuel and ethanol production amounted to nine billion gallons).

There are, however, no subsidies for other biobased products so far.

BRAZIL In Brazil, the promotion of the sugar cane industry has led to the highest penetration worldwide of flex-fuel vehicles (FFVs) that can run on any mixture of bioethanol with gasoline. However, while domestically a tremendous success, the export of ethanol or sugar is still very limited due to tariffs imposed on these products by other regions, for example, the US and the European Union (EU).

The highly developed sugar cane and ethanol industry is now attracting additional investments in bio-based plastics, for example via the conversion of bioethanol into ethylene and subsequent processing to materials such as high density polyethylene and polyvinyl

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choride. Second-generation technologies making optimal use of the biomass generated in sugarcane farming (conversion of the bagasse into ethanol instead of burning it) are also seeing strong growth, despite the wide availability of sugar cane. With Braskem about to start a new biorefinery, and more in the pipeline, the industry is expected to gather pace in Brazil and globally.

Brazil has also instigated a policy of agricultural zoning for sugar cane, which will block the expansion of sugar cane production on native vegetation. There are also moves to mechanise the harvesting of all sugar cane by the middle of this decade.

The Brazilian bioenergy industry is working within the framework of a voluntary agreement with the Government of the State of São Paulo – home to the vast majority of sugar cane production in Brazil – to achieve this goal. To date, some 55 percent of sugar cane is now harvested mechanically and a separate programme to retrain workers into other positions is also underway.

EUROPEAN UNION In contrast to the leading positions of the US and Brazil, the EU’s ambitious goals for the establishment of renewable energies and transportation fuels have so far been met only to a moderate extent, and have not effectively positioned the EU in a leading role globally, despite public policy incentives, direct investments and research grants. This is because, on an industrial level, fewer biorefineries are being established in the EU than in the US. This is partly due to the fragmented nature of the EU’s R&D efforts and insufficient funding and resources for large demonstration plants.

As a result, a large portion of the knowledge on biorefinery technologies generated

by European universities, research institutes and industry players is currently being shifted overseas because of the lack of development projects in Europe.

By 2020, the EU expects 20 percent of its power to come from renewables, part of which

will have to be delivered by power derived from biomass. Additionally, 10 percent of all transportation fuels should come from renewable sources, which will require a substantial increase in penetration of biofuels.

ASIA The situation is similar in Asia. Despite declarations of ambitious biofuel plans and repeated support for biofuels by many Asian governments (for example, India), actual achievements have been modest so far. Inconsistent implementation of biofuel policies also makes it impossible to forecast whether the biofuel targets announced will be achieved.

China, however, is an exception. It appears intent on injecting large sums into biorefinery projects due to the importance assigned to biomass-derived energy production in its latest five-year plan. With regard to bioethanol, for example, China has licensed five fuel ethanol plants (mostly state refineries) for operation, all of them based on starch crops. China’s fuel ethanol production was consequently forecast to rise to 1.70 million metric tonnes (MMT) in 2009, an increase of eight percent compared to 2008.

That said, food security concerns have recently led the Government of China to restrict ethanol production from grain processing and to turn to supporting non-grain-based fuel ethanol production instead.

While limited feedstock supplies and competition with land use for grain production may still be an issue, several lignocellulosic biofuel plants are being developed, for example, by China National Cereals, Oils and Foodstuffs Corporation (COFCO). Indeed COFCO, Sinopec and Novozymes recently announced plans to construct the largest cellulosic biofuel demonstration facility in China by 2011.

Chinese biodiesel production plants, on the other hand, are small scale and often use waste cooking oil instead of dedicated oil crops, operating only a few months of the year due to the lack of sufficient feedstock supply. Therefore, while overall 2008 biodiesel production

MARKET WATCH

capacity in China (four plants, mostly private ownership) was estimated at three MMT, actual biodiesel production in 2008 was only 250,000 MT due to a feedstock deficiency.

Compared to China, India’s national biofuels policy is still under debate. However, drafts of future blending targets have already been drawn up that aim for five percent penetration of biofuels in India by 2012, 10 percent by 2017 and 20 percent long-term (2017 plus).

AFRICA Africa has recently come into focus as a potential production hub for biorefineries, particularly biofuel production. This is mainly due to the strong raw materials position that many African countries could have, provided four main challenges are addressed. One is their low agricultural productivity caused by suboptimal agricultural practices, such as lack of fertilisers, deficient crop protection, shortcomings in the education and know-how of farm workers, insufficient irrigation and the dominance of smallholder subsistence

farming. Another is the scarcity of food in some regions, with concomitant social/ethical concerns about food security (for example, the food versus fuel debate).

Infrastructural limits to the production and transportation of bio-based goods (roads and harbours, for instance) also play a major role.

Additionally, there is political instability in some African countries, which makes investments less attractive. However, some African countries have recently strongly encouraged investments in biotechnology, particularly biofuels. This has led to a large number of projects in Mozambique, Tanzania, South Africa, Ghana and other African nations. The predominant type of bio-based company produces biofuels – especially bioethanol – from sugar cane, and biodiesel from jatropha.

While some investments have been made by foreign companies with the long-term goal of exporting biofuels to Europe, most projects target domestic markets.

Irrespective of these regional and national

differences, it is expected that the markets for bio-based products will grow very heavily over the next few years. Biofuels markets are estimated to more than triple by 2020.

The combined sales of biodiesel and ethanol will surge to around US$95 billion (QR245 billion) in 2020 due to mandates alone. The resulting combined US and EU demand for biomass in the fields of heat and power is also expected to more than double by 2020.

Finally, bio-based chemicals are expected to grow significantly and increase their share in overall chemicals production to some nine percent of all chemicals. However, this growth will be less than in biofuels and biopower because (as mentioned previously) there are no mandates and no incentive schemes in place in the chemicals arena.

Professor Sir David King is the director for the Smith School of Enterprise and the Environment at the University of Oxford, United Kingdom.

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INSIDE EDGE

The crisis of the past two years has seen the global economy virtually grind to a halt and policymakers are now in a position to make the regulatory changes needed to avoid a dĂŠjĂ vu situation.

Dheeraj Shahdadpuri makes his recommendations for the way forward.

INSIDE EDGE

N

ot since the Great Depression of 1929 has the global economy faced as tough a challenge as rallying itself out of the current crisis. Despite early signs of recovery, many countries still face the challenges of unemployment, failing businesses and falling house prices. Governments have taken extraordinary measures to revive their financial systems so that normal economic activity could be quickly resumed. However, what is evident from this crisis is that it will leave its mark on the psychology of consumers and investors for many years to come, and that it will require policymakers to continue their efforts to restore stability to the financial system.

One of the key triggers of the current crisis was a regulatory regime that did not keep pace with the increasing complexities of modern-day financial products. With credit flowing virtually without limitations during the pre-crisis era, it was deemed unnecessary to intervene and hamper the prospects of the financial industry. Never was it imagined that the repercussions of the resulting hyper growth would be borne by millions of taxpayers who are at present suffering the most.

While there are many factors that led to the crisis, in hindsight, governments could have done more to prevent a slew of these problems from growing out of proportion.

Policymakers are now not only pressed to restore lost confidence, they are also working to ensure that the practices of the past are not repeated, and that we are not led to another such crisis that could threaten the global financial system.

TOO BIG TO FAIL? The foundation of this cumbersome and complex task has to begin by overhauling the regulatory framework, and by revisiting the capital and liquidity requirements of financial institutions.

Before the crisis, there was no stringent requirement for financial institutions to hold sufficient capital to cover their trading assets and high risk loans, or to hold increased capital should they face troubled times.

Regulators did not mandate firms to plan for a scenario where the availability of liquidity was sharply curtailed.

WHAT NOW?

A REMEDY

FOR THE FUTURE? The regulatory regime was also illequipped to deal with organisations that were interconnected and highly leveraged, and which could harm the overall economic environment if they failed.

One of the key gaps in today’s global financial regime that needs to be addressed is the provision for the possible failure of firms that are considered ‘too big to fail’, because their failure could in turn have a major impact on the whole financial system. The belief that a firm is too big to fail indirectly causes many problems, the most obvious of which is that it encourages such firms to take excessive risks and reduces market discipline. In a scenario where such a firm suffers a huge failure, authorities would then have to step in and help it restore its finances.

For this reason, a close supervisory oversight must be enabled to check a firm’s risk taking and risk management practices, and be given licence to mandate that it maintain high capital and liquidity standards.

shed the exposure that had once blighted their balance sheets.

Through a complex process of securitisation, risky mortgages and other loans could be sold in tranches to a large, and diverse pool of investors with different risk appetites.

Through such products, most financial institutions were able to transfer their risks to third parties without actually selling the underlying loans. It was the lack of transparency at the originator’s front that, in many instances, overshadowed the underlying risks associated with such complex products.

Apart from these pitfalls, it has been widely noted that the current regulatory regime in most nations is procyclical. In other words, it allows financial institutions to ease credit in booms and tightens the availability of loans in downturns by more than what is required. The need for prudent supervision is now required as authorities have to ensure a proper balance between the need for caution and the benefits of maintaining profitable lending norms.

DODGING RISK The current financial crisis occurred after a long and remarkable period of growth for international financial markets. New financial instruments allowed credit risk to be spread widely, enabling investors to diversify their portfolios and giving banks an opportunity to

A LOSE-LOSE SITUATION Over the past two years, the United States’ financial system has been repeatedly threatened by the failure or near-failure of some of the largest firms. Although procedures and expertise to handle the failure of banks exists, the regulatory regime still lacks a credible TheEDGE

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INSIDE EDGE

solution in case of the failure of non-banking financial institutions.

The only option for such non-banking firms is to either raise more capital, or file for bankruptcy. However, raising fresh capital becomes next to impossible due to the low risk appetite in hard times. This puts pressure on the authorities to use taxpayer’s money to bail out entities, which hold a prominent position in the nation’s financial system. The other option, filing for bankruptcy, has proved widely devastating, as seen in the case of Lehman Brothers’ collapse, which had a cascading effect and actually fuelled the dwindling confidence in the global financial system.

HOW TO FIX IT In order to create a credible financial environment, authorities the world over should firstly work towards establishing an entity that would identify key emerging risks in the financial system. Such an entity should also be mandated to identify firms growing at a pace that could possibly be classified as too big to fail.

Secondly, the securitisation markets should be brought under close scrutiny and firms that are using such products must not be allowed to pass on the entire risk to a third party, virtually cleaning their balance sheets of such risks. This mechanism would indirectly induce financial institutions to take the utmost caution and provide for capital reserves in case high risk securities or loans fail, as such losses would impair their own performance.

Consumers that have bought such complex products must also be protected from advisors who fail to disclose the risks associated with the structure of securities. The suggested new regulatory or supervisory entity must address the issue of disclosure, an issue that was almost ignored pre-crisis. Investors of complex financial products must be educated and trained on the nature of returns. Further, financial institutions must be discouraged to use their own funds for placing bets in the markets and their exposure to risky financial securities must be limited. This measure would ensure that the prime objectives of banks – to provide finance to consumers and to make money through proprietary investments – are not in conflict.

Although countries are encouraged to

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take the necessary steps to revive their regulatory mechanisms, the global economy also requires an international watchdog to ensure that the rules and regulations of the financial system are well managed across different boundaries.

As evident from the current crisis, financial stress spreads quickly across various nations, but the regulations are still set largely with only a national agenda. During the last decade we have witnessed capital virtually flowing freely from advanced nations to emerging nations considered to be the next engine for global growth. However, this has geographically diversified the risks and it has become a difficult task to manage uncertainties in case of a global liquidity crunch.

An international supervisory board would keep a close watch on international capital flows and would coordinate with different na-

tions on setting similar rules, and procedures to govern the global financial system.

REFORMS FOR A NEW FUTURE In the midst of the global financial crisis, governments responded swiftly to establish a wide range of programmes to support financial markets and foster credit availability. However, these measures should be accompanied by appropriate regulatory reforms that would curtail the possibility of a systematic failure.

Although economies the world over will continue to face cyclical growth scenarios, what needs to be addressed is that the frequency of a downturn, like the current one, is limited. Policymakers must build a new foundation for financial regulations that is more effective with modern day financial complexities and protects the interests of investors.

COVER STORY

Nation Building:

Through Doha’s window of wealth

By Jamie Stewart

Throughout the past year, two economic stories have emerged out of Doha. The domestic version: one of growth; the international version: one of contraction and recovery. Qatar has much to take pride in following its expansion in spite of global recession, which left Qataris much to learn about the world – and the world much to learn about Qatar.

COVER STORY

“Qatar was given a sharp reminder that no region was immune... when, 375 kilometres away, Dubai gave notice to the world that its economy may have been built on shifting sands...“

W

hen taking an overall, retrospective look at the highs and lows of the Qatari business scene since publication of TheEDGE’s debut issue, and the forces that have driven the defining economic events over the past year, two factors appear to dominate. Two factors, which, unusually, contradict one another, so placing a great paradox at the centre of the Qatari economic story, which in turn sheds light on many other aspects of Doha. The paradox is as follows: In line with the rest of the post-modern Middle Eastern story, the economic boom of Qatar has been reliant partly on the mass influx of foreign direct investment, as private sector cash has come pouring into the peninsula to help raise the Doha skyline; to haul natural gas from the depths of the ocean and the folds of the desert; while people and businesses from all corners of the globe have established operations in Qatar, eager to make the most of the opportunity presented by new Arab wealth.

Such a reliance on the vagaries of the present-day globalised financial system, and its inherent cyclic exposure to recession, would in any other case be laden with danger. With the global economy in its current state, one would not be surprised to see a Qatar, if not mired in recession, then at best, nurturing the fragile green shoots of an uncertain economic recovery – just look at the case of Dubai.

This, however, is not the Qatar that people see around them. Not once has the economy recorded a three-month period of contraction, despite the global financial crisis arriving as it did on the shores of other Middle Eastern states, sinking its teeth in with a vengeance. On the contrary, Doha has continued to boom against all the odds. And the underlying reason is, of course, energy exports and Qatar’s ability to capitalise on the unimaginable riches that nature saw fit to deposit beneath its land and water.

The past 12 months have, therefore, been defined globally by the emergence of a shaky economic recovery, one that, in parts of Europe in particular, still threatens to lurch back into a recessional state. In Qatar, however, despite its apparent exposure and its willingness to open its doors to the world via both physical and financial markets, the period has been characterised by resilience, robust growth, and, to date, unyielding optimism.

So what can people learn from the events that have driven Qatar’s – and the world’s – economic story since issue one of TheEDGE went to press back in July 2009? And, more importantly, what might such lessons reveal about the coming 12 months, and beyond, for Qatar, the region, and the globe?

DUBAI WILDFIRE Qatar was given a sharp reminder that no region was immune as the financial crisis lurched into a dangerous new phase when, 375 kilometres away, Dubai gave notice to the world that its economy may have been built on shifting sands, as opposed to firm foundations. The New York Times reported that Dubai “could be the canary in the coal mine for heavily indebted TheEDGE

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countries”, a reference to the old mining habit of carrying a caged canary into new coal seams which, if exposed to dangerous gasses, would drop dead due to its extreme susceptibility, in a pre-warning to the miners themselves.

It was the single most defining event not only in Middle Eastern economic terms, but global economic terms, of the past 12 months. Around the world billions were wiped off financial markets as fears over the exposure of major banks to Dubai’s debt spread like wildfire.

“The market reaction shows how vulnerable some economies are to the aftermath of the debt binge,” said Gerard Lyons, chief economist with financial services giant Standard Chartered. “This highlights how fragile confidence is.”

Dubai was forced to borrow US$20 billion (QR73 billion) from Abu Dhabi to allow state-owned entities to service their debts. The aftermath for Qatar, however, has been far from negative. As recently as June, British-based banking giant Barclays revealed

“We continue to see Qatar as the fundamentally strongest credit in the region and see value in the longer dated bonds in particular.“ that it rated Qatar’s long-term state bonds as favourable to Dubai’s. In fact, the bank went even further: “We continue to see Qatar as the fundamentally strongest credit in the region and see value in the longer dated bonds in particular,” Barclays said.

The vigorous economic safety net that is the state’s fossil fuel reserves has allowed Qatar to leapfrog Dubai in the foreign investment influx queue, casting Doha in a very healthy light, albeit at the expense of the emirate city. Even oil-rich saviour

of Dubai, Abu Dhabi, was cast aside by Barclays in favour of Doha: “We see more upside potential for Qatar here and would recommend overweighting Qatar versus Abu Dhabi,” the bank said.

HOT PROPERTY? One barometer of the state of the Qatari economy that operates, to an extent, outside of the influence of the energy industry – although in Qatar, all facets of society are linked in some way, however tenuous, to

Financial markets around the world crashed as fear over exposure to Dubai’s debt spread like wildfire.

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COVER STORY

the nation’s gas-fuelled engine room – is the property sector. And the story is eerily familiar to the above.

Despite the cash-flow misery that has afflicted countless property projects across the Gulf in the wake of the financial crisis, Qatar is paddling against the tide and pressing on with the vast majority of its audacious schemes. The flagship Pearl Qatar continues to reclaim land from the waters beyond the West Bay, with rings of towers now rising from the Persian Gulf.

But despite the energy-fuelled abilities of the state to plough public money into projects that otherwise may have faltered if left exposed to private sector sentiment, property prices across the peninsula have not escaped unscathed...far from it.

According to property consultants CB Richard Ellis, rents at the high-end office towers that populate the growing Doha skyline have fallen 25 percent from their pre-financial crisis peak recorded in 2008.

Further, occupancy rates have fallen from 95 to around 85 percent in the same period, as the commercial construction boom has outpaced the inflow of potential occupants due the ongoing fragility of the global economic system.

Despite this, population growth estimates remain bullish across the country which, if accurate, will spur belief in the ability of Qatar’s property sector to bounce back, which may, in turn, inspire an upward trend in speculation, creating firm upward momentum and boosting the market as a whole.

Whether the forecast influx of people and businesses can balance supply and demand fundamentals at a rate that justifies any speculation-fuelled price rise, however, remains to be seen. Either way, property prices look set to move in one direction. The questions are, how steep will the increase be, and for how long will it last? The business community will be hoping for a sustainable rise; the speculators, on the other hand, will no doubt be harbouring more short-term preferences.

Ease of access to mortgages remains a problematic thorn in the potential speculator’s side, as is the case the world over, but the situation in Qatar looks likely to ease somewhat, gradually relaxing the hold that

The tip of the Pearl Qatar, one project that continued despite the global property downturn (photo courtesy of Medco).

has choked the market over the past 12 months, particularly in the case of high-end property, such as The Pearl: “Major banks in Qatar have started to promote retail mortgage products aimed at Qataris and expatriates looking to buy property at the Pearl Qatar,” says Jed Wolfe, an associate director at Middle East real estate services firm, Asteco.

MERGE – OR ELSE Among the inevitable symptoms of a global recession is a sudden surge in merger and acquisition (M&A) activity. In the depths of any financial crisis, activity is likely to fall dramatically, as inherent uncertainty on global markets adds a large

– if not insurmountable – element of risk, thus nipping most potential M&A activity in the bud. However, as the dust begins to settle, and the winners and losers start to emerge from the wreckage, a new playing field begins to materialise.

It is at this point, when previously undetected chinks in a company’s armour have become visible cracks for all to see, that M&A activity will flourish. Just look at energy giant BP in its current predicament: the previously invincible firm, as a result of the Gulf of Mexico oil-spill disaster, now finds itself the subject of whispered takeover plans from the United States (US) to the Middle East to China and back again.

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COVER STORY

“The amalgamation of the offshore businesses creates increased efficiencies and enhances the competitive positioning.”

The contraction of business within those Qatari sectors most exposed to the global slowdown resulted in a number of mergers and acquisitions throughout the past 12 months, as firms within the sectors in question sought to drag the overriding supply and demand balance back to an even kilter.

In April, Qatar Navigation, the country’s primary shipping operator, announced that it had completed the acquisition of the Qatar Shipping Company after shareholders voted to approve the transaction. The acquisition had been ordered by the government back in November 2008.

Qatar Navigation chairman and managing director Sheikh Ali bin Jassim Al Thani said at the time that the acquisition “offers investors the unique opportunity to take full advantage of the long-term potential of our industry and subsidiary markets”.

He continued: “The amalgamation of the offshore businesses creates increased efficiencies and enhances the competitive positioning.”

The move came in the wake of government calls for consolidation in the face of the economic slowdown, as the authorities led by example. The shipping sector was hit by the recession, and hit hard. The health of Qatar’s national economy could do little to support the industry which, by its very nature, is continually exposed to the vagaries of the global economy. The sector was a victim of the collapse in world trade as nations looked to consolidate their fiscal positions – hence the need for the acquisition of one Qatari shipping giant by the other.

More mergers swiftly followed. In early 2009, Gulf Warehousing announced it was to merge with Agility Qatar, the peninsula branch of Kuwaiti firm Agility, the biggest logistics group in the Gulf. And weeks later, the government ordered the Qatar Meat and Livestock Company to join forces with Al

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Meera Consumer Goods.

As if three mergers in the space of two months were not enough, before January was out, property giant Barwa Real Estate had been ordered by the government to merge with the Qatar Real Estate Investment Company. The firms said the move was designed to “enrich the national economy, while supporting economic development in the state of Qatar”.

The thirst for M&A activity in Qatar throughout 2009, and the reason behind its surge, was spelled out by accountancy giant Deloitte.

A study released by the firm, entitled M&A in Troubled Times, said: “The recent financial crisis has created unexpected strategic opportunities for mergers and acquisitions for companies with strong cash positions that are prepared to act – and quickly – since this opening could close as signs of a recovering economy become more evident.”

The importance of acting quickly was not lost on the government of Qatar. With states the world over once again recording gross domestic product (GDP) growth quarter by quarter – for now – the Qatari government appears to be happy to consolidate its assets, allowing them to evolve and grow in tune with the wider economy.

STRONG FOUNDATION For Qatar’s economy, 2009 provided something of a rough ride as the M&A activity early in the year proved, despite the energy safety net that was continuously in place. Meanwhile, 2010 has to date been considerably smoother. Regardless of the sector-specific ups and downs, however, if one area of any developed economy can be counted on to plough ahead during a downturn, it is education.

There exist a number of reasons for this.

Firstly, education will always be allowed to evolve and must always prove capable of growth, because it is too important in the long-term plans of any serious government to be left on the sidelines. Whether democratic or autocratic, any responsible government has a duty to its people to provide them with the means to educate themselves, not just for the good of the individuals – although this is obviously an important stand-alone factor – but also for the good of the collective state.

Secondly, as the downturn begins to negatively impact on the private sector, cutbacks in staff numbers will be inevitable; more full-time workers may move to parttime positions; some may choose voluntary redundancy and embrace the opportunity for a career change or to travel. All of which can only be good news for the education sector as those impacted by contractions in the private sector may eventually look to improve their qualifications in preparation for a return to work. At such times, the education sector is more likely to have trouble finding the funds to expand in order to meet demand – a stark reversal of fortunes in the private sector during a downturn.

All of which was evident in Qatar. As recently as July, Qatar Foundation, the government-run entity that boasts the 14 square kilometre spread named Education City as its flagship project, unveiled plans to increase the capacity of the city to accommodate an everexpanding number of students.

BUILDING NATIONS The resilience of Qatar has been presented to the world throughout the past 12 months. If the peninsula’s economy can grow while all around it – the Gulf hydrocarbon giants, such as Saudi Arabia and Abu Dhabi, withstanding – are contracting sharply, then what do the coming 12 months, and beyond, have in store?

COVER STORY

As with so many things related to the economy of Qatar, the story ends, as it began, with energy. With economies in the West returning to growth, and economies in the East continuing to boom, the global thirst for hydrocarbons is continuing, and will surely only grow in the coming months.

This growth in demand, however, will not be exclusively limited to one fuel – far from it. Many major economies, particularly those in the West, and to an increasing degree, those in the East, are turning to natural gas as opposed to coal to fuel their expansion plans for environmental reasons. The long paradigm shift to renewable energy is underway, but will take many years to complete. In the meantime, gas is becoming an increasingly important fuel in the world’s energy mix.

The situation is one of incredible fortune for Qatar, as it continues to take advantage of a huge window of opportunity in its development cycle, accruing capital and constructing the infrastructure to build a nation – a nation that is set to get bigger.

A recent high-profile report by research firm Euromonitor International predicted that Qatar’s population would increase by a third

“...The only guarantee of lasting prosperity lies in the ability of people to learn, adapt and innovate.“ in the next two decades. This amounts to a population of 2.4 million by 2030.

Qatar Foundation, established in 1995 as “a vehicle to convert the country’s current, but temporary, mineral wealth into durable human capital”, puts the nation’s present standing very well: “At the current stage of its history,” the foundation says, “Qatar is blessed with oil and gas reserves that have brought it relative wealth for the foreseeable

future. But this situation will not prevail indefinitely. The only guarantee of lasting prosperity lies in the ability of people to learn, adapt and innovate.”

Learn, adapt and innovate, in a temporary window of wealth: Something that Qatari firms and institutions have been forced to do throughout 2009, into 2010, and something that they must continue to do over the months, and years, ahead.

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FOOTBALL’S WINDFALL The impact of the Fédération Internationale de Football Association (FIFA) World Cup on the global economy is not an assumption – it is a fact, proven every four years.

Karim Nakhle teamed up with leading management consulting firm, Inventure, to report on the 2010 World Cup’s biggest economic winners and losers.

T

he 19th World Cup captivated the hearts and minds of people the world over. Whether you love or hate football, the impact that this month-long tournament had on businesses this summer cannot be denied.

People throughout the world gathered in bars, cafés and public parks, sipping on their drinks, dressed in their favourite Adidas and Nike football shirts, cheering on their national teams.

In the United States (US), the games drew the attention of millions of National Football League and National Basketball Association lovers who were not in the habit of watching ‘soccer’ games, but tuned in nevertheless because of the hype. In fact, US viewership of the first four games of the 2010 World Cup was double that of the 2006 event.

Town squares throughout Middle Eastern cities were swathed with flags from Brazil, Argentina, Paraguay, Ghana, Algeria and Uruguay and fans applauded their favourite teams – France, England, Italy, Germany – countries that are usually politically resented when it comes to regional issues.

But this is what makes the FIFA World Cup so unique. It is a month of festivities and celebrations that unites the world – an average global audience of 1.2 billion viewers – once every four years, and the tournament’s sponsors benefitted plenty from all that goodwill.

A NEW SPONSORSHIP MODEL FIFA’s reworked World Cup sponsorship strategy has been hugely successful, with the tournament generating US$1.6 billion (QR5.8 billion) between 2007 and 2010, a significant increase on the US$584 million

(QR2 billion) between 1999 and 2002.

In the US, the 1994 World Cup host country, 65 percent of total sponsorship money is invested in sports. In Germany, the 2006 host country, this figure is closer to 63 percent. While in South Africa, the site of the 2010 World Cup, sports receives 80 percent of sponsorship money.

To this end, FIFA reportedly engaged IEG Valuation Services after the 2002 World Cup to develop a new three-tier sponsorship system.

The top tier, for FIFA partners, offered exclusive marketing assets and marketing rights for an annual fee of between US$24 million (QR87 million) to US$44 million (QR160 million). Partners included Adidas, CocaCola, Emirates Airlines, Hyundai-Kia, Sony and Visa.

The second tier, FIFA’s World Cup sponsors, acquired rights to the event at a worldwide level, secondary media exposure and the assurance of category exclusivity. Brands such as Budweiser, BP Castrol, Continental Tires, McDonald’s, MTN, Mahindra Satyam, Seara and Yingli Solar, paid between US$10 million (QR36 million) and US$25 million (QR91 million) in annual fees for this sponsorship tier.

National supporters formed the third tier, and BP Africa, First National Bank, Neo Africa, Prasa and Telkom, all paid between US$4.5 million (QR16 million) to US$7.5 million (QR27 million) for the right to promote an association with the World Cup in their host country.

Massive viewer ratings made the event tempting to television broadcasters as well. Those looking to boost revenues knew that they would be able to sell premium-priced advertising slots around the games.

ECONOMIC BAROMETER

Broadcasters paid up to US$2 billion (QR7 billion) in television rights, a figure that increased by an astounding 50 percent on the 2006 World Cup in Germany.

THE WINNERS On July 11, two teams stepped into the global spotlight for the 2010 FIFA World Cup final, Spain and The Netherlands. Victory was only possible by the Spanish in the final five minutes of an extended game. Not only did the Spanish win the respect of the football-loving world, the Spanish economy received a great boost from their national team’s victory in the world’s most watched football match (800 million people tuned in for the final). The champions took home prize money paid out by FIFA to the value of US$31 million (QR112 million).

The total prize money on offer for the tournament was confirmed by FIFA as US$420 million (QR1.5 billion), a 60 percent increase on the 2006 tournament. Before the tournament, each of the 32 entrants received US$1 million (QR3.6 million) for preparation costs. Once at the World Cup, the prize money was distributed as follows: • US$8 million (QR29 million) – To teams exiting after the group stage (16 teams) • US$9 million (QR32.7 million) – To teams exiting after the round of 16 (eight teams) • US$14 million (QR50.9 million) – To teams exiting after the quarter-finals (four teams) • US$18 million (QR65.5 million) – Fourthplaced team (Uruguay) • US$20 million (QR72.7 million) – Thirdplaced team (Germany) • US$24 million (QR87 million) – Runner up (Netherlands) • US$30 million (QR109 million) – Winner (Spain) The Spanish Football Association promised to share its cheque with each of its 23 players in the form of a EUR600,000 (QR2.8 million) bonus.

FOOTBALL’S RIPPLE EFFECT The all-European final gave people something to cheer about in the middle of the sovereign-debt crisis which has rocked the continent. Both the finalists needed it.

The Dutch, still wrestling with the bailouts of the nation’s biggest financial services companies, saw their government fall in February, while one in five Spaniards is out

of work – the highest jobless rate in Europe.

The Dutch economy is set to expand by 1.25 percent this year, the government forecasts, while Spain projects a 0.3 percent contraction. In May, the European Union (EU) estimated that the Spanish gross domestic product (GDP) would fall by 0.4 percent this year, while The Netherlands would see 1.3 percent growth.

In comparison, Italy’s triumph over France at the 2006 World Cup led ABN Amro Bank to raise its forecast for growth in the Italian economy that year by 0.2 percentage points to 1.7 percent, saying “happier consumers spend more”. In the end, GDP expanded two percent in 2006, a six-year high, according to EU data.

Becoming football’s world champions gives a good collective feeling, that leads to more consumer spending, which could have a positive impact on the economy.

Spain’s victory could mean expansion this year instead of the projected contraction, with an expected annual economic growth of as much as 0.5 percentage points, largely thanks to increased consumer spending. This could help drag them out of the country’s worst recession in decades.

According to ABN Amro Bank, the runners up, The Netherlands, leaned on restock-

ing and exports while domestic demand was lagging. However, the Dutch economy has taken a very positive turn with increased consumer spending due to the World Cup. Forecasts now indicate that the country may witness a boost in Dutch consumer spending

by EUR500 million (QR2.3 billion) – approximately 0.2 percent. The Dutch Soccer Association also received US$24 million (QR87 million) prize money from FIFA, which it shared with its players, handing out a EUR300,000 (QR1.4 million) bonus to each.

SOUTH AFRICA MAKES BANK South Africa, the host of the 2010 FIFA World Cup, was the focus of the international community, not only watching the action on the pitch, but also witnessing a country that continues to emerge as a competitive 21st century economy, a unique nation that teeters between the first and third worlds.

This major global event was a catalyst for South Africa to begin much-needed infrastructure improvements, increase national pride and, most importantly, receive a major boost to its economy – interest and trust from foreign investors grew due to its ability to host a successful event of that magnitude.

The expected total direct economic value for the country’s GDP was approximately TheEDGE

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US$21.3 billion (QR77.5 billion). Subsequently, foreign direct investment (FDI) in South Africa has clearly outpaced the performance reported by any other African country. fDi Magazine named South Africa the top African Country of the Future for the third time in 2009/10. The United Nations Conference on Trade and Development World Investment Report (Unctad) indicated that South Africa recorded FDI inflows of US$9 billion (QR32.7 billion) during 2008, and US$5.7 billion (QR20.7 billion) in 2007, in preparation for the 2010 World Cup. On the job front, thanks to the event, 160,000 new jobs, including full- and parttime jobs, both permanent and temporary, were created. The government spent millions on upgrading stadiums and building new international airports. And with the tournament hosting 32 teams, with an average of 50 people per team, 15,000 dignitaries, 500 officials, 12,000 members of the media, and half a million foreign visitors (who stayed an average of 15 days), visited South Africa.

AND NOW…THE LOSERS Interestingly, the negative impact of poor performance during the World Cup is also significant. Defending World Cup champions, Italy, exited the tournament surprisingly early and the team’s failure proved costly to Italian business.

Italian restaurants and bars could have made as much as US$82 million (QR298 million) in extra sales had the team advanced, as reported by the Chamber of Commerce of Monza, northern Italy.

The report estimated that another US$86 million (QR312 million) may have been spent by public institutions and private associations to rent and set up outdoor screens in squares and parks, bringing the potential blow to the sagging Italian economy to nearly US$170 million (QR618 million).

England’s early exit came at a hefty price too. Failing to qualify for the knockout stages produced a commercial blow and inflicted huge damage to the nation’s self esteem. The most affected sectors were food, alcohol, media, leisure and sportswear industries. The drinks industry made an extra GBP37 million (QR210 million) per day, in addition to the usual GBP100 million (QR569 million) per day, during England games, totalling around nine million more pints than usual, according to a spokesman for the British Beer and Pub Association.

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The English Football Association (FA) will also have had to be satisfied with their US$9 million (QR32.7 million) prize money, rather than the larger amount it was likely hoping for. There will also likely be a knockon effect on the sales of football shirts, merchandise and tickets for home games, starting with this month’s friendly against Hungary at Wembley Stadium.

Yet the real commercial impact of England’s early elimination will be felt later this year when the FA attempts to sign a new commercial partner for the Team England brand, one that is now seen as ‘damaged goods’. Currently England is sponsored

by Nationwide for around GBP20 million (QR113 million) over four years, with the building society now unwilling to increase its offer to renew for another four years.

However, the biggest loser in every sense of the word is France. The 1998 world champions and 2006 runners-up, were in shambles before and after their first round elimination.

Their disastrous World Cup campaign dominated news coverage worldwide and drew criticism from French President Nicolas Sarkozy, Finance Minister Christine Lagarde and a host of former team members.

Sponsors have distanced themselves from the fallout. Credit Agricole Bank suspended its advertising campaign, and hamburger chain, Quick Restaurants, halted a poster and television campaign featuring player, Nicolas Anelka.

Nike will replace Adidas next year as the French national team’s shirt supplier, having agreed in 2007 to a EUR42.7 million (QR203 million) contract, but speculation is now rife that Nike will not go through with the deal. Société Télévision Française 1 (TF1), the French television channel that spent EUR87 million (QR414 million) on exclusive rights and another EUR6 million (QR28.5 million) to EUR7 million (QR33 million) on production, has taken a hit of EUR40 million (QR190 million) due to the team’s early exit.

THE RED CARD RULES ALL A study, carried out by academics from the universities of Leeds and Newcastle, examined whether returns from the Stock Market Index changed significantly the day after a national team plays an international football game. On average, the Index falls the day after a defeat or a draw, and rises if the team wins. It was found that the largest gains and falls in the stock market happened after tournament games such as the World Cup. Stockbrokers, it seems, feel as depressed about their team’s losses as anyone else.

Who would have imagined that a red card could stop the business, both on the pitch and off it too? And we thought sport was just a form of entertainment…

ON THE BANNER HEADING PULSE BANNER HEADING

Iran sanctions: Unity or division?

United Nations (UN) sanctions have been imposed against Iran since 2006, and with the fourth round introduced last month, events continue to move beyond the control of any nation.

Edward Jameson delves into the topic to establish what the knock-on effects may be for the countries of the Gulf Cooperation Council (GCC).

Asking: Can any positive aspects be found? Or is the future somewhat more ominous?

Iranian President Mahmoud Ahmadinejad at a Tehran news conference on June 28, less than three weeks after Resolution 1929 was introduced.

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ON THE PULSE

O

n June 9, the UN Security Council voted to impose a fourth round of sanctions, Resolution 1929, against Iran. The biting sanctions, aimed at the state’s struggling economy, its freedom of trade and in particular its energy sector, were supported by 12 of the 15 Security Council members.

All five of the permanent members – the United States (US), China, Russia, the United Kingdom (UK) and France – voted in favour of the text.

Only Brazil and Turkey voted against, while Lebanon chose to abstain.

The text of Resolution 1929, seen in full by TheEDGE, underlines what it terms the risk of proliferation posed by Iran’s nuclear programme and its “continued failure to cooperate” with the International Atomic Energy Agency (IAEA).

Iranian officials, from president Mahmoud Ahmadinejad on down, continue to contend that the country is pursuing its nuclear programme with strictly peaceful purposes, relating to power generation and atomic medical research, in mind.

The first round of UN sanctions, Resolution 1737, was imposed against Iran back in 2006, with the second and third rounds, Resolution 1747 and 1803, following in 2007 and 2008.

The position of flat denial has been the Iranian one for a number of years: the defiance of the state against the wave of perceived hostility from the UN predates the introduction of the first round of sanctions.

“It is of course not easy for some to accept the fact that our nuclear programme is exclusively peaceful,” the Permanent Mission of the Islamic Republic of Iran said in a 131-page letter to the IAEA dated September 12, 2005.

“Those who have for long set their policy and approach on the false perception that Iran seeks weapons of mass destruction cannot change course with ease. Their negation is naturally a first psychological reaction before accepting the truth. Yet the truth remains the same. Iran’s nuclear programme is exclusively peaceful.

“There is no evidence of diversion today; there will not be such evidence tomorrow, nor will there ever be such evidence or indication of diversion in the future.”

THE FOURTH ROUND Specifically, Resolution 1929 is designed to expand an arms embargo and tighten up restrictions on financial and shipping enterprises related to “[nuclear] proliferation-sensitive activities”. The calls from the UN for Iran to comply with all relevant council resolutions and to “cooperate fully” with the IAEA to resolve what it termed “all outstanding issues” also grew louder.

A spokesperson for UN secretary-general Ban Ki-moon said in a statement issued immediately after the fourth round vote, that such moves were viewed by the organisation as “the essential steps to restore the international community’s confidence in the exclusively peaceful purpose of Iran’s nuclear programme”, adding that the secretary-general “continued to support a comprehensive and negotiated political solution to this issue”.

The resolution specifies that all states shall prevent the sale, supply

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or transfer to Iran of combat aircraft, attack helicopters, warships, missiles and missile systems, battle tanks, armoured combat vehicles or large calibre artillery systems. It also asks states to take “all necessary measures” to prevent the transfer to Iran of technology or technical assistance related to ballistic missiles capable of delivering nuclear weapons. Additionally, it establishes a panel of experts, which will report to and work under the UN, to help monitor and enforce sanctions implementation.

THE ENERGY EFFECT Iran sits on the world’s second richest natural gas supplies – with even more reserves beneath its sands and its waters than Qatar – and its third largest oil reserves, according to the US Energy Information Administration.

However, the state has for years been stuck in an energy cul-de-sac: despite its rich natural deposits, it lacks the infrastructure to extract those reserves, and, therefore, cannot lay the foundations on which to build a robust and prosperous energy sector. Further, even those very foundations will be hugely expensive: Iran’s deputy oil minister in charge of international affairs Hossein Noghrekar Shirazi has said that the state requires US$25 billion (QR91 billion) of investment in its oil and gas sector.

As Resolution 1929 details, access to diverse, reliable energy is critical for sustainable growth and development, a path which Iran desperately needs to pursue for the good of its people. Yet the text remains somewhat unclear over the existence of any link between Iran’s revenues derived from its energy sector and the funding of its “proliferation sensitive nuclear activities” – the resolution merely refers to a “potential link”.

It also points out that chemical process equipment and materials required for the petrochemical industry have much in common with those required for certain “sensitive nuclear fuel cycle activities”.

In simple terms, how is Iran to develop its energy sector, when the required actions can bear such close resemblance to those required for nuclear activities?

THE KNOCK-ON EFFECT So what of the effect on the rest of the Gulf and its energy sector – the engine room behind the region’s economic diversification plans – the vitality of which cannot be overstated?

Far from harming the regional sector, sanctions that focus on Iran’s energy sector may paradoxically benefit the GCC. Author and lecturer on Middle Eastern affairs, Doctor Christopher Davidson, explains: “It is a double-edged sword. There is no doubt that the GCC hydrocarbon exporters benefit, at least in the short-term, from Iran’s inability to get product to the market,” he says.

“Prices are easier to control as the region’s export capacity more or less still remains in GCC hands.”

However, as Davidson is careful to point out, this is a short-term take on matters. In the mid- to long-term, enforced commercial limitations will eventually begin to hurt the people. And at that point, Davidson says ominously, things can become considerably more dangerous:

ON THE PULSE

Brazilian President Luiz Inacio Lula da Silva hopes to tie down Iran to the fuel-swap deal he helped to broker.

What Iran insists it is all about – inside the cooling tower of a nuclear power plant.

“The tightening sanctions threaten to rattle the cage further, increasing resentment in Iran towards its neighbouring hydrocarbon producers. This raises the likelihood and severity of future conflict,” he says.

Frank Verrastro, director of the Energy and National Security Programme at the independent US-based Center for Strategic and International Studies, agrees that sanctions aimed at inhibiting economic growth, though not on the surface directed at the people, will eventual hit the man on the street, with potentially damaging consequences.

“Proponents of the legislation argue that the bill will hit Iran where it hurts most and, therefore, persuade Iran’s leaders to abandon their plans to develop nuclear capabilities,” he says.

But, as Verrastro notes, despite US President Barack Obama’s insistence that sanctions should be directed at the government, and not at the Iranian public, “In reality, this legislation is likely to achieve the opposite outcome”.

He continues, “Gasoline sanctions will ultimately hurt the Iranian people, both at the pump and through the economic impact of the sanctions. A convincing case can be made that the sanctions will serve as a unifying event and allow the [Iranian] leadership to direct the public’s anger at the US.” THE BRAZIL-TURKEY RESOLUTION? The Brazilian capital Brasilia, a touch more than 12,000 kilometres away from Tehran in the depths of the South American interior, may seem an unlikely destination from which to offer up a potential resolution to the Iranian sanctions issue. However, it was Brazil working in tandem with Turkey, which in May brokered a potential solution that was deeply commended by none other than UN leader Ban Ki-moon.

Under the agreement brokered by Brazilian President Luiz Inacio Lula da Silva and Turkish Prime Minister Recep Tayyip Erdogan, Iran would ship its low-enriched uranium out of the state in exchange for high-enriched uranium – to be delivered within 12 months and for use at a civilian nuclear research site in Tehran.

Doctor Chandra Muzaffar, president of the Malaysia-based International Movement for a Just World, says the proposal represents “the clearest example so far of two middle powers working closely with a third to resolve the latter’s problem”.

He goes on: “The emergence of middle powers prepared to defend their interests and to uphold certain principles that serve the larger good of humanity is an important historical development.”

The proposal was signed by Iran, Brazil and Turkey on May 17. The following day the US-endorsed text of Resolution 1929 was submitted to the UN Security Council and five days later, on May 23, the US rejected the Brazil-Turkey initiative. Brazil and Turkey were, of course, the two countries, which went on to vote against Resolution 1929 on June 9. Which reveals, in no uncertain terms, the true extent of US influence over the Security Council and its processes.

And so the international game of cat and mouse continues. Iran, as is to be expected, remains outwardly bullish in the face of its powerful antagonists: “The recent round of the UN Security Council sanctions will not hurt Iran. Such moves are aimed at safeguarding the West and defending the existence of Western powers,” Ahmadinejad said in the wake of the sanctions being approved, according to local Iranian media.

But, despite such blusterous rhetoric, Resolution 1929 is designed to bite, and bite it will. The sharp teeth of the resolution will no doubt eventually work its way through the affected layers of government and begin to hurt the Iranian people. It will be at that stage when relations with the wider GCC may be tested, unless a mutually acceptable resolution can be found, and found soon.

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GREEN BUSINESS

Adapting to climate change

GREEN BUSINESS

Understanding the effects of climate change on one’s own business can be useful in forward planning, but is it an unnecessary luxury? Sam Pickering reports

A

s we all come to terms with the fact that climate change is a reality, many want to know how it will affect them. Indeed, ignoring the possible changes in climate patterns in Qatar and having a ‘head in the sand’ mentality could be disastrous.

It is in this capacity that consultancy firms offer analysis of how a change in the temperature will affect their clients. The service, known as climate change adaptation and mitigation, has a two-fold approach in the way it personalises the effects that climate change has on an individual business.

The first – the adaptation element – is defined by the International Panel for Climate Change (IPCC) as the “adjustment in natural or human systems to a new or changing environment. Adaption to climate change refers to adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm to exploit beneficial opportunities. Various types of adaptation can be distinguished, including anticipatory and reactive adaption, private and public adaption, and autonomous and planned adaptation.”

The second – mitigation – tackles the steps taken to reduce or eliminate the risk and dangers of climate change. In very general terms, the more the mitigation, the less the impact that will have to be adjusted to.

Highlighting the changes a firm can make to reduce the potential of future problems is highly desirable, and taking such a personal ‘company by company’ approach is a start in the right direction.

However, it is also hoped that mitigation will be led by a global agreement and reached at the Conference of the Parties to the United TheEDGE

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“The reality is...such studies are strewn with caveats and tend to be generic in form.”

Nations Framework Convention on Climate Change (COP 16) in Cancun, Mexico, this December. Companies offering these analytical services have numerous ‘tools’ at their disposal and they are able to provide a detailed prediction of the likely effects that a two-degree change in temperature would have on the operational nature of a company. This can be useful, but it can also be expensive.

The reality is, with so many unknowns, such studies are strewn with caveats and tend to be generic in form. Spending many thousands of dollars on such studies not only increases the expense of adaptation, but it can also delay businesses from implementing strategies to reduce their greenhouse gases (GHG). A pragmatic approach to changes in climate is what is needed.

To this end, there are several companies and opportunities in Qatar that now offer consultation services to help reduce carbon emissions (which is more the mitigation of climate change, rather than adaption to it).

Indeed, those with foresight realise that to attract new business, there are advantages in providing infrastructure, which can cope with potential climate fluctuation. Understanding how climate change mitigation can benefit your company and attract new business to the region is crucial. New companies operating in Qatar demand buildings that possess longevity and are known to seek assurances from landlords, and developers that the structure will endure possible climate changes. Likewise, when taking energy usage and cost cutting (both in terms of carbon and fiscal cuts) into consideration, efficient

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buildings will be a great motivator for most new businesses.

When considering the changes that one can make to reduce carbon emissions, mitigation can be great for business. At present it might seem a difficult process, as it requires a change in the thought process of design teams, construction teams, organisations and individuals. However, it will not be long until those with foresight will reap the benefits and keep apace of future legislation, which will regulate carbon emissions, while also allowing for potential fluctuations in energy prices.

Climate change adaptation models are globally becoming commonplace across many sectors of business, and are now driving the strategies of large organisations.

These strategies go far beyond incorporating logistics, supply chains and the infrastructure considerations, and look at every element of a business. Those acting on such predictions can hope to fare better when the predicted changes in climate occur and when the world is thrown into a new balance.

In spite of some sceptical members of the press alleging that scientists have exaggerated the effects of climate change, the science of climate change has been proven. Hopefully in the near future, there will be global legislation that will force companies and individuals to take responsibility for their carbon emissions.

Adding an extra level of ‘analysis’ does not actually lead to a reduction in GHG – for this, firms need to consider the present, changes that can be made today.

A RELIABLE PARTNER TO QATAR’S GROWTH

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Soaring achievements and high profile projects mark REDCO Construction – Almana and affiliates as a leader in general contracting around the nation.

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P.O. Box: 23300 Doha, Qatar | T: (974) 4469 0276 / 4469 0639 | F: (974) 4469 0734 | E: info@redcoalmana.com www.redcoalmana.com

ENTREPRENEUR

multi-media

ambition As TheEDGE celebrates its first year of publication, we turn the spotlight on the masterminds behind the creation of its parent company Firefly Communications, Mohamed Jaidah and AbdulSalam Abu-Issa.

By Miles Masterson

N

ecessity is the mother of invention, or so the saying goes. Perhaps that is not exactly how Firefly Communications (Firefly) – or indeed TheEDGE itself – came to be, but it is arguably close enough.

In 2004, Mohamed Jaidah, Firefly’s founder and chief creative officer (CCO), returned home to Doha after studying overseas, and was tasked with the responsibility of creating a marketing department for his family business, the Jaidah Group.

Feeling somewhat restricted by the absence of local media options and realising there was a dearth of promotional opportunities for audience delivery within Qatar, Jaidah recognised the potential for a turnkey communications company, and Firefly was born.

Today, Firefly is recognised as a leading Qatar-based media house comprising publishing, digital media, branding and communications, and technology development divisions. Under the publishing banner a range of magazine titles are produced and in Firefly’s digital media stable, a network of digital platforms operates throughout Villaggio Mall.

Jaidah says he began “feeling frustrated [with regards to local media] because in reality, marketing was reduced to advertising in the newspapers”.

“Although multi photo ionisation (MUPI) street poles – then new to the country – were available through Q-Media (a company providing media tools for promotional purposes), these were too expensive for small- or medium-sized businesses to utilise in the long-term.

“When you are a bank or a large stock listed company and you have a few tens of millions to invest in marketing,” Jaidah reasons, “it

ENTREPRENEUR

makes sense. But when you are a smaller private business, you do not have the same amount of marketing expenditure.”

FIREFLY TAKES SHAPE In 2007, Jaidah joined forces with AbdulSalam Abu-Issa, Firefly’s chief operating officer (COO), to investigate the opportunity of starting a communications company in Qatar. They began by looking at progressive means for local brands to promote themselves, beyond the traditional options of outdoor, television, radio, and print media.

While they were researching digital screens as an innovative marketing tool, the opportunity to publish a Middle East version of the international magazine franchise, Sur La Terre (SLT), presented itself through a mutual acquaintance.

Nevertheless, establishing a communications company in Qatar was no easy task.

The fledgling business faced a myriad of early obstacles. The team had to deal with daunting bureaucratic processes in qualifying for the necessary business licences. They faced a reticent corporate culture, where advertising was seen as an unnecessary expense; they faced doubt over whether their magazines would make an impact or even survive; and market resistance to the digital signage network.

As if that was not enough, they also had to deal with the economic downturn, which peaked just a few months after Firefly had officially opened for business.

Like most businesses at that time, the company was forced to tighten its budget, and the Abu Dhabi and Dubai versions of SLT were closed after a few editions each.

Despite this, Jaidah and Abu-Issa remain positive about the challenges and recognise that the company’s demanding early days served to strengthen its brand and reinforce its position within the market.

Abu-Issa reasons that the protracted process of building Firefly gave them a company of value.

“In Qatar there are so many challenges when setting up a business of any nature, and there are also a number of processes that have to be followed, which can involve lengthy periods of time. By this I mean obtaining business licences and forming the architecture of your operational strategy. In regard to Firefly, by the time we were ready to open our doors, we already had the foundations of an efficient and streamlined company.”

Jaidah concurs, confirming there were many challenges they faced.

“I believe if we were to create this company today, we would be facing far fewer hurdles.”

“Qatar, we need to not forget, is a young country, and if you look at what has happened in the past year, Qatar has identified…the need for entrepreneurship, and the role that young entrepreneurs play in establishing their own companies, to create local intellectual property, as well as pushing new services and technologies.

“We were venturing into a completely new field,” he continues, “so we pioneered in that sense.

“Yes, there were already established magazines in the local market, but they had a less locally tailored and sophisticated approach…there was a void for original content. Instead, what you found in its place was content driven by advertising and clients’ demands.

“As a company we’ve worked hard to ensure all of our brands employ credible and independent editorial. This ambition was at first hard to apply, as it was a new concept for the media and communications industry in the country. However, we are now in a position where TheEDGE

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our readership is aware of the value of our titles and appreciates the editorial integrity we ensure.”

A MODERN MEDIA OFFERING Today, the partners feel Firefly and its various divisions have proven that their instincts and direction were correct.

And while the owners persist to change the narrow mindsets regarding the importance of good marketing, while still facing the everyday issues of running a business, they are embracing the challenge.

The aim of all of Firefly’s magazines is to provide businesses with a more affordable, localised option of advertising to the Qatari market than what was initially available. At the same time, there has been a conscious strategy to publish print magazines that are sophisticated and that are aligned with international standards, thereby exposing brands to a higher echelon of readership in the country.

“We realised the advantageous opportunity to present advertising clients with the right platform in which to reach their ‘local’ target audience, while at the same time creating a platform with added value for our readership base.”

“If you consider the media industry on a regional scale,” explains Jaidah, “there are a variety of media platforms, both in Arabic or in English.

“However, in a country as small as Qatar and for companies that operate locally, whereby their target market is the Qatari population, it doesn’t make financial sense to pay the price for regional media coverage when you want to specifically target the local marketplace.

“We realised the advantageous opportunity to present advertising clients with the right platform in which to reach their ‘local’ target audience, while at the same time creating a platform with added value for our readership base.”

THE INCEPTION OF TheEDGE TheEDGE, celebrating its first year of publication this month, is a business magazine, which transitioned rapidly from a visual concept to a tangible reality.

Firefly’s partners moved quickly when they realised there was an opportunity for such a magazine in Qatar.

“With Qatar’s sprawling business landscape, we realised not only the opportunity, but the need to deliver a product, which would transform the way locally-based professionals were receiving and interact-

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ing with business information,” Jaidah states.

“We felt that the already existing publications were not responding to the needs of the readership and were definitely not purveying the right amount of information.

“We believed that we could develop a title, which was of a higher calibre, and I believe we achieved this in a very short time.”

EDITORIAL WITH INTEGRITY Arguably, as the sole monthly title in the Firefly stable, TheEDGE is the primary ambassador for the company, particularly in the business realm.

A regular traveller to commerce’s capitals all over the world, Jaidah confirms the positive feedback he receives about the magazine in the United States, South Africa, Europe and elsewhere.

“In the space of a year, TheEDGE has achieved great recognition as a Qatari business magazine,” he confirms.

“In regard to feedback, a key point that readers make is in reference to the quality of journalism. They respect the fact that our editorial staff work hard to ensure the highest quality of independent editorial content, rather than relying on copy driven by press releases or content fed by the news wires.

“In many ways, this vindicates the risks that Firefly has taken in positioning its business title, which is considerably different to that of our local competitors.

“After a year of successful publication, we feel that we have delivered the right product to the market and it is a brand that we will continue to build on.”

The original thought component of the magazine is arguably setting a new publishing standard in Qatar, though one on its own terms, and that might still take time to fully penetrate.

“TheEDGE’s content reads more on a macro economic level. It does not really go into the micro economics,” Jaidah expands.

“We are not trying to compete with the content of magazines such as Fortune, which are more concentrated on how business works.

TheEDGE is much more macro economic, it looks at what is happening on a country level; it explores the bigger picture and examines the economy on a larger scale. It’s an insightful magazine designed for a broad audience – people operating on all level of business can appreciate it.”

THE GREAT DIFFERENTIATORS For a small publishing company, Firefly boasts a healthy stable of magazines, including custom magazines such as Villaggio (a bi-monthly publication for Villaggio Mall), Dana Jewels (a quarterly title for Dana Motors) and Escape (for Ali Bin Ali Travels).

Yet a hurdle that the company faced early on and continues to be challenged by, is communicating the value of the work and effort of the magazines.

“In the beginning,” says Abu-Issa, “potential advertising clients would question why Firefly’s rates were higher than that of its competitors.”

The Firefly team would have to explain the rationale of the additional value, firstly in terms of distribution to the market (due to the lack of effective channels in Qatar, Firefly has its own department dedicated solely to distribution), and secondly, in terms of comparing the lower advertising rates of publications that, he says, often inflate circulation.

“At Firefly we guarantee a real distribution,” confirms Abu-Issa.

ENTREPRENEUR

“Most people don’t publish true to market figures, because the industry is not audited in Qatar. We, at Firefly, stand by our claims and actually print the number of copies we assert to our clients, which, therefore, makes our overheads more expensive and this price is reflected in our rates.

“Additionally, we invest heavily in quality staff – we recruit professional editors from various media backgrounds, and house a number of different nationalities of staff. This grants Firefly with a wealth of knowledge and experience, which is reflected in the quality and professionalism of its brands.

“When people look at one of our publications and compare it to another magazine, or, for example, a local newspaper, they know that it is of better value. And better value through higher quality is the philosophy that Firefly is committed to stand by.

“As such, for what it costs to buy a standard half page advertisement in one of the local daily newspapers, advertisers, for example, could purchase a month of advertising on our digital network, which consists of nearly 100 screens spread across a mall that receives a footfall of more than one million visitors per month.”

Quality and good service, adds Jaidah, is something that Firefly prides itself on as it is what he says will help to differentiate the compant from it competitors.

For example, TheEDGE’s editorial consists primarily of articles written by handpicked business professionals and industry experts, who combined boast a bevy of both local and international expertise.

This professional approach to business filters right down to quality of selected paper stock and printing press. Additionally, Firefly’s video screens only utilise brands with the most visual clarity and longevity, and a highly innovative creative team produces all of Firefly’s communications and branding.

A LOOK INTO THE FUTURE As the branding and communication division (which Jaidah says was born out of necessity as brands saw what a good job Firefly was doing with its magazines and screens and asked them to assist with their marketing) gains more anchor clients, all the components of Firefly are growing from strength to strength.

For Jaidah and Abu-Issa, their ambitions for Firefly include relaunching SLT Abu Dhabi and Dubai and expanding their other operations in the region in the future.

As far as the future of TheEDGE is concerned, Jaidah feels this is wrapped up with the fortune of the whole company.

“We believe we are creating brands, whether it is SLT or TheEDGE, these are really much more than just magazines. We are building up the brand equity for these titles, and we believe there is much more to our future. These titles can transform from being portals to creating communities around them, whether it is a business community in regard to TheEDGE, or a lifestyle community for SLT. “The strategy is to create brand equity and to use these names to become real platforms, which encompass much more than the magazines.”

In closing, Abu-Issa confirms his commitment and passion for the media and communications industry in Qatar: “While all industries have had to endure the severity of the economic downturn, we are looking to what the future holds, both for Firefly and for the media industry at large. We continue in our optimism for the growth of this industry, which will inevitably grow in line with Qatar’s expanding and bountiful business landscape.”

Firefly publishes TheEDGE, Sur La Terre as well as custom magazines such as Villaggio, Dana Jewels and Escape.

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SPECIAL FEATURE

GENIUS AUTISM

THE OF

Albert Einstein once said, “Every child is born a genius.” And while every person has untapped potential, this simple statement is loaded with meaning and misunderstanding when discussing the often contentious, and not yet fully understood, subject of autism.

Joseph Glenn Jessome explores the myth and reality of the genius of autism in the first of TheEDGE ’s two-part series.

I

t is widely accepted that the human being is comprised of mind, body and spirit, and while the connectedness between the brain and the mind has always been of keen interest, it is not yet fully understood.

Albert Einstein’s statement that “Every child is born a genius” is supported by various studies suggesting that people use only a very small percentage of the vast mental capacity and potential that their human brain affords. While not all individuals develop to become recognised as academic, musical, physical, social or spiritual geniuses, this unreached potential

and giftedness lives in every person. For those with autism, statements such as this are loaded with significance.

The word ῾autism’ was first used in 1944

by Doctor Leo Kanner and Doctor Hans Asperger. The term was coined to describe a specific group of children, who were first mistakenly thought to be schizophrenic.

The most noticeable distinguishing feature of the ῾non-typical’ behaviour exhibited by the children was a desire to be alone. The word has since grown and morphed, and is now widely used as a term to describe a developmental disorder in individuals who possess a wide range of behaviours, TheEDGE

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characteristics, idiosyncrasies and social issues that deviate from the norm.

In our increasingly negative world, focus has been on areas where people with autism seem to be deficient, and some autistics are incorrectly viewed as suffering from a physical illness or disease, due their diagnosis of a psychological disorder. In reality, as with everyone, they have areas of strength and weakness, varying in degree of ability and disability, with merely more noticeable variances.

Deciphering autism As no two people on the planet are exactly alike, so too is it true, that no two people with autism are exactly alike. Most diagnostic professionals place individuals on the ῾autism spectrum’, from low functioning to high functioning, using behavioural analysis and various tests. In toddlers, trouble acquiring speech and social skills, and issues with self stimulating behaviour and tantrums, are some of the main concerns. Adolescents with autism have trouble acquiring and maintaining friendships due to idiosyncrasies, which often lead to teasing and misunderstandings with their peers. Adults with autism are often very bright and high functioning on many levels, but socially awkward and naive.

Such individuals prefer to call themselves ‘neurologically diverse’ or ‘Aspies’, which is short for Asperger’s Syndrome.

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It has been suggested that Einstein had Asperger’s Syndrome, but his well developed social skills would not be in keeping with a typical diagnosis of Asperger’s, despite his many idiosyncrasies.

There is no doubt that he possessed an ability to focus, similar to other highly intelligent people, but he also enjoyed many successful lifelong relationships and often collaborated with others. His thoughts and writings on human relationships, interactions and emotions were incredibly insightful, and he displayed nothing in keeping with a diagnosis of autism.

In contrast, the American television series, House, features as its main character a doctor who is brilliant with respect to medical matters, but cursed with extremely low social skills and a seemingly diminished emotional intelligence. The quirky doctor can be verbose, insensitive, downright offensive and rude, and is based on the characteristics that would be displayed by an individual who is diagnosed with Asperger’s Syndrome, which many consider to be a condition that is a high functioning form of autism.

Autism on the ascent A document released by the United States (US) Government Accountability Office (GAO) titled Special Education: Children with Autism (GAO-05-220) states that the incidence of autism rose by 300 percent

SPECIAL FEATURE

“The World Health Organization’s latest numbers indicate that autism is now occurring in one in 110 births worldwide...” from 1985 to 1995, and 500 percent from 1995 to 2005. The study states that increased diagnostic techniques and a broadening of the criterion for being placed on the autism spectrum may indeed account for some of growing figures. However, regardless of the exact rate of natural increase, the sheer number of diagnoses is still staggering.

The incidence of autistic births is approximated to have been one in 650,000 worldwide, around the time word ῾autism’ was first coined. The World Health Organization’s latest numbers indicate that autism is now occurring in one in 110 births worldwide, while more recent numbers from the Center For Disease Control And Prevention in the US indicate that autistic individuals account for one in 91 births.

The specific causes of the large number of individuals falling under this classification, remain relatively unknown. There are several theories regarding causation and much evidence points to genetics, yet there is no conclusive, definitive or widely accepted cause for autistic tendencies and differences.

There are many suggested triggers for the onset of autism that appear to have factual scientific bases. Among the top triggers being studied are poor diet, exposure to chemicals in diet and vaccines, too much exposure to television and computers, and emotional disturbance.

However, these supposed triggers are factors that inevitably lead to poor health in all children and adults. Some sources have pointed out that the increased prevalence of autism seems to, in fact, be occurring in children who are not exposed to these suggested triggers.

Meanwhile, some respected researchers point out that the increase is global, and, with the exception of a few pockets of higher concentration, appears to be growing at nearly the same rate in all locations worldwide, regardless of socio-economic

class or environmental conditions. It is also widely accepted that autism is four times more prevalent in males than females, but the cause of this gender discrepancy has also not been definitively determined.

An unwanted ‘cure’ A study out of New England by Doctor Deborah Fein indicated that with good early intervention, 10 percent of people with autism are indistinguishable from their ῾non-autistic’ or ῾neuro-typical’ peers by the age of nine. Although Fein’s numbers are controversial to some, there are many success stories where parents of children with autism have used various methodologies, therapies and strategies to greatly improve what were once problem areas. This is in keeping with the thought that many of the negative attributes of autism are developmental and that one can develop out of them.

Yet some of the defining behaviours of individuals with autism are actually more natural than what society has come to consider ῾normal’. Many of those diagnosed with Asperger’s Syndrome, for example, cannot, or choose not, to be untruthful. This is why so many ῾Aspies’ view their condition as a gift. They feel if cheating, lying, stealing, killing, warring and other such behaviours are considered normal, then they would rather have autism and not have to mimic neurotypical people who partake in these activities.

This feature of open and honest behaviour in people with autism makes one wonder if, given the number of unethical individuals in the world, the increasing number of people with autism might not be such a terrible thing. Yet, in a lecture at the University of California (UC) Davis Medical Investigation of Neurodevelopmental Disorders (M.I.N.D.) Institute in California, Doctor Uta Frith, a professor of Cognitive Development from the University of London discussed, among

other topics, methodologies for teaching people with autism how to be untruthful.

Frith believes that such a ῾skill’ should be taught to people who are not naturally deceptive or aware of those who are, in an effort to help them protect themselves.

Autism = Genius?

Studies have discovered that one percent of the population is considered ῾gifted’ in a particular area such as academia, the arts, athletics, and other intellectual and kinesthetic pursuits. At the same time, it is widely held that 10 percent of individuals with autism are considered ῾gifted’, so there is presently an accepted numerical link between autism and increased giftedness.

The 1988 movie, Rain Man, featured Dustin Hoffman as a middle-aged savant with astonishing mental abilities. The movie helped put a global spotlight on the subject of autism, as the main character was loosely based on Laurence Kim Peek.

Peek was an American ῾megasavant’ known for his photographic (or eidetic) memory.

He was able to read two pages of a book simultaneously – one with each eye – at a rate of eight to 10 seconds per page, regardless of whether the book was held sideways or upside-down, and mentally added columns of seven-digit numbers in telephone directories until he reached figures in the trillions.

Although many of Peek’s behaviours were consistent with the autism spectrum, his brain was not consistent with those of autistic individuals. He lacked a corpus callosum and was effectively a huge databank, giving him his incredible memory. Yet, in keeping with the inherent honesty and integrity displayed by people with autism, one of the most noticeable differences between the real Peek and his Rain Man character was Peek’s refusal to use his astounding mental arithmetic gift to ῾beat the house’ as Dustin Hoffman’s Raymond Babbitt does in a casino.

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“...considering that this particular group of statistically honest and gifted people is increasing worldwide, imagine their profound potential for positive societal contributions.”

Peek refused to even enter a casino, saying he thought it would be unethical to use his gift in such a manner.

In light of this, and considering that this particular group of statistically honest and gifted people is increasing worldwide, imagine their profound potential for positive societal contributions.

Uplifting humanity If any one person can be held up as the quintessential autistic savant and demonstrate what a person with autism can do, look no further than Serbian-born Nikola Tesla.

Outside scientific circles and his homeland, Tesla is relatively unknown to those of much lesser accomplishment. Yet Tesla’s works include designing the modern electric motor, the invention of the radio, developing hydroelectric power generation and many more incredible ideas, inventions and works. He did pioneering work with remote control, x-rays and neon lighting, and attempted to design technologies he thought could prevent war.

Tesla permeates all of modern business because he was responsible for the development of key concepts involving alternating current, the power source that recharges our mobile devices and laptops, as well as all of the world’s computers. The wireless word permeates business today, and all the wireless transmissions that have ever occurred are at least partly the result of Tesla’s labour.

The reason Tesla is not better known, as either a scientist or businessman, has to do with both the misunderstanding of

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his autistic condition, and the corrupt business practices of his time. Although he is in the history books as an engineer and inventor, Tesla was involved in many business ventures, but chose to stay out of the boardroom and courtroom as much as possible. He refused to sign contracts that would have made him the world’s first billionaire because it would have complicated his life and distracted him from his objectives.

Tesla stated that his main purpose in life was “uplifting the condition of humanity”.

When considering his achievements and success within the framework of this statement, Tesla is one of the ultimate advocates for corporate social responsibility. Indeed, Tesla was a genius who knew that we are all connected, and conducted himself accordingly.

Far too often, the perpetrators of corrupt and unethical practices exonerate themselves and others by proudly declaring, “It’s only business.” Tesla, who was profoundly altruistic, could not understand how people could conduct business with no regard for how their unscrupulous deeds might negatively impact others.

Indeed, if Nikola Tesla is the perfect example of the uniquely ethical stance of people with autism, then they will inevitably change business and social environments of the future for the better.

Joseph Glenn Jessome B.Sc., A.Ed. involved in an international autism research and development project based in California with contributors from around the globe.

BUSINESS VIEWS REAL ESTATE

DO WE GIVE THE CREDIT AGENCIES TOO MUCH CREDIT? Edd Brookes investigates

BUSINESS VIEWS REAL ESTATE

T

his month, I thought that it would be useful to look closely at country credit ratings, a system that has come under scrutiny in recent months, especially since it failed to predict a number of banking failures, including the collapse of the Icelandic banking system.

Why is this relevant? Country credit ratings are the benchmark by which entire countries suffer or benefit. They are hugely influential in terms of a country’s access to affordable credit facilities, investor confidence and basically filter down to the feelgood factor of individual citizens.

The big three credit agencies – Moody’s, Fitch, and Standards and Poor (S&P) – are all organisations steeped with history. Moody’s, for example, was founded in 1909 by John Moody who, in his book Analyses of Railroad Investments (not sure it was a bestseller), devised a series of decreasing letter grades to assess the risk of the various railroad securities. The idea was simple and Moody judged the obligations rated AAA to be of the highest quality with the “smallest degree of risk”.

The scale then dropped down from AA1, AA2 and AA3, through BAA1 to BAA3, all the way past CAA1 to CAA3, landing at C, which Moody judged “the lowest rated class of bonds and are typical in default” where “potential recovery values are low”.

HEREIN LIES THE RUB However, when considering entire countries as opposed to corporations, there are added complexities, not least because of the historical nature of economic data and the variances in making effective predictions.

There is also the added complication that a country can simply abandon various rating agencies, which do not portray the same favourable story that a government is trying to sell.

For example, last November, Moody’s downgraded six Dubai government-related firms to junk status because of the lack of support they would receive from the government in case of default, yet creditors were shocked when the Dubai government refused to honour

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“Qatar’s own credit rating of AA2 (Moody’s) and AA- (S&P) would seem to reflect the speed of its own emergence onto the world stage. This is expected to improve over time as market legislation catches up with the speed that the country has been developing.” the debts of Dubai World, or any of its subsidiaries during troubled times. Bonds issued

by Nakheel, the beleaguered real estate unit, had been trading at more than their face value as investors were willing to pay a premium for what they perceived to be a de facto state guarantee. This withdrawal of state support cast a question mark over the creditworthiness of other government-related businesses.

Recently, the government has undertaken much more comprehensive research in an attempt to stem the various corporate defaults.

This, it hopes, will have the effect of restoring

confidence in the Emirate as a whole.

Interestingly, Qatar’s own credit rating of AA2 (Moody’s) and AA- (S&P) would seem to reflect the speed of its own emergence onto the world stage. This is expected to improve over time as market legislation catches up with the speed at which the country has been developing.

ONE FAILURE AFTER ANOTHER In general, country credit ratings are a snapshot in time, a view of where a state has been, and not necessarily where it is going.

BUSINESS VIEWS REAL ESTATE

Having not foreseen the global financial crisis at all, the ratings agencies also failed to predict the fall of Iceland´s two largest banks. Other such credit rating failures have led to huge losses for some investors. Perhaps the agencies’ reports should be given far less creditability in the future. Confidence in their accuracy is certainly not based on history.

Perhaps by now, we should be skeptical about judgements from any international authority dealing with our money. Formerly lauded financial gurus, such as Alan Greenspan, and organisations like the International Monetary Fund, have consistently failed when meddling with nations´ economies.

Yet, it is the ordinary people of these nations that suffer the consequences of such meddling the most.

Let us be honest, none of the large financial institutions, their advisors, or any regulating authority, predicted the present financial crisis. Yet all the evidence was there.

Economists, who did see it coming, were ignored and even derided.

These credit rating reports, scandalously

wrong far too often, do not just affect the stock markets and bankers, but also huge numbers of the impoverished all over the world, and now the poor of Europe are threatened with more of the same. Critics note that the agencies gave safe ratings to the very same high risk United States (US) mortgage investments that later imploded, triggering the financial crisis and a deep recession.

A CONFLICT OF INTEREST How ratings agencies are remunerated is also coming under close scrutiny. The money they earn is derived from the same institutions whose products and debt they rate — a point of contention in the US and Europe. At a hearing in April, on the agencies’ role in the financial crisis, US senator Carl Levin called the remuneration system an “inherent conflict of interest”.

New legislation in Congress to overhaul the financial regulatory system could change how the agencies do business. Yet despite the poor publicity, the agencies are still generating big money. S&P earned US$451.5 million

(QR1.6 billion) in revenue in the first quarter, up 15 percent from a year ago.

Moody’s first quarter profit jumped 26 percent to US$113.4 million (QR412 million) as more companies issued debt during the quarter, particularly junk bonds. Warren Buffett’s Berkshire Hathaway remains the largest shareholder of Moody’s. However, since March 2009, it has reduced its stake from 48 million shares to 30.8 million shares.

Not surprisingly, the profits and outsized influence of the rating firms have rankled European governments.

We are told that it is easy to be clever in hindsight. With respect to the financial crisis, if you take all the information into account, and not just information from those who have a financial stake in the outcome, it is not quite so hard to predict the future so inaccurately.

After all, is that not what these agencies are being paid for?

Perhaps in future, they will be rather more circumspect when making judgements that carry such weight and influence the lives of billions worldwide.

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Qatar:

Transport keeps on moving

By Oliver Cornock Qatar is well placed to achieve its goal of becoming a logistics centre for the Gulf, with a recent report noting buoyant confidence in the country’s planned expansion of its transport sector.

Rising optimism in Qatar’s economic outlook for the third quarter of 2010 was particularly strong for the transport and communications sector, according to a survey conducted

by Dun and Bradstreet (D&B) South Asia Middle East in June.

The transport sector’s index scores for sales, orders and profitability outlook jumped from 17 points in the second quarter to 46 for the third as outlined in D&B’s Business Optimism Index for Qatar, which was released on July 12.

The survey, conducted in association with the Qatar Financial Centre Authority (QFCA), found that overall confidence score for nonhydrocarbons sectors of the economy also climbed, with a rise of 12 points to 39.

These rising expectations for non-hydrocarbons sectors are a testimony to the resilience of Qatar’s business environment and its robust economic fundamentals, said Shashank Srivastava, the acting chief executive officer of the QFCA. “Given that this survey was conducted as the leading economic indicators globally are showing signs of strain amid increasing fears of a ‘double-dip’ recession, it is particularly encouraging that our latest index concludes that optimism levels increased within the last quarter,” he said.

With the rapid expansion rate of Qatar’s economy – the International Monetary Fund predicts a real gross domestic (GDP) growth rate of 18.5 percent in the current year – the increasing demand for goods and services, and a series of new logistics projects in the pipeline, there seems good reason to be confident in the future of its transport sector.

The government has been steadily investing its earnings from the hydrocarbons industry into building new infrastructure projects for transport, as well as other sectors that were identified as having the potential to broaden the base of the economy.

The investments are starting to pay off, though many big-ticket items such as the New Doha International Airport, highway upgrades and a major new deep-water port are at varying stages of development.

While it was the hydrocarbons sector that led the way as Qatar posted a 22.7 percent year-on-year increase in GDP for the first quarter, the transport and communications sector expanded by 14.7 percent, according to data issued on July 1, by the Qatar Statistics Authority.

Perhaps even more significant was the 7.89 percent growth recorded by the transport sector during the last quarter of 2009, which was well in excess of the economy’s mainstays of energy and manufacturing.

Though the economy’s health remains robust, a recent report compiled by the Saudi American Bank Group (Samba) suggested that Qatar’s expansion could slow after 2012,

SPECIAL REPORT

following the completion of the majority of the large-scale natural gas projects currently being planned or implemented.

The study, issued at the end of June, said that Qatar – like all other hydrocarbons-based economies in the Gulf Cooperation Council (GCC) – would face long-term diversification challenges once gas production peaks.

However, the Samba study said that increased revenues from gas exports would provide the government with an opportunity to focus on its diversification strategy. Additionally, it highlighted Qatar’s focus on the expansion of transport and services.

“Over the next three to five years, the pursuit of this diversification agenda will generate strong growth momentum as large-scale infrastructure projects are implemented – such as the Doha airport and port, Qatar-Bahrain Causeway and integrated rail networks,” the report said.

Seeking to cash in on momentum in the transport sector, the publicly listed shipping and transport management firm Qatar Navigation is planning to call tenders for a US$250 million (QR910 million) logistics centre in August. The centre is to be located at Al Thumama near Doha’s industrial area – close to the new airport and deep-water port – and will cover an area of some 500,000 square metres when completed within the next two years.

With solid economic fundamentals, doubledigit growth rates and a raft of major projects underway, the outlook for the sector looks strong. While competition is undoubtedly heating up across the region, Qatar seemingly has the capital and determination it will need to ensure its place as a centre for transport and logistics in the Gulf.

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Kempinski Residences and Suites, Doha

The Lobby

Epicurean chic…

With the opening of the Kempinski Residences and Suites, Doha, Qatar’s bustling capital welcomed not just the most unique Suite living concept in the country, but also a new lifestyle hot spot.

Soaring high above the city skyline, the Kempinski Residences and Suites is ideally located in the heart of Doha’s bustling West Bay commercial and residential district. A stone’s throw away from the Qatar Financial Centre and within minutes of many other major landmarks in the city, it epitomises executive chic and offers gastronomic indulgence with a twist, served up in Qatar’s most tantalising new social hotspot.

This month, we introduce you to three unique destinations:

Gourmet House Gourmet House is every gourmand’s dream. It was established with the overriding ambition of bringing you the finest epicurean delicacies from the most elusive corners of the world.

One of the most distinctive features of the Kempinski Residences and Suites, Doha, and the only such dedicated high-end retailer in any hotel property in Qatar, Gourmet House brings you freshly sourced, not to mention exquisite and rare, artisanal foods that suit the lifestyles

Inspired by centuries old traditions of European culinary expertise

and gastronomic desires of the Kempinski’s elite clientele.

Take these treasures home with you to share with the entire family, or settle down with a freshly brewed cup of fine-roasted Arabica, while you savour some of our delicacies with friends.

Whether you are looking to make your morning rituals special, add character to dinner with the family, or perhaps even prepare for a picnic on the beach, at Gourmet House you will find everything you need to create a five-star experience.

The Lounge A meeting place with character, The Lounge is an all day grazing venue for those who enjoy the simple things in

life – good company, great ambience and exemplary service.

During the day, kick back and enjoy great European traditions such as afternoon tea, or make it a brainstorming destination to share with business associates and friends.

After a long day, settle into a comfortable chair and indulge in a selection of reinvigorating elixirs, while savouring light culinary delights or a selection of exquisite cigars.

The Lounge is where the city’s cosmopolitan movers and shakers come to relax and unwind with friends, but with light piano music wafting through the air, ringside seats for one can be equally fulfilling.

Aroma

Aroma With delicious business lunches for the executive on the move and an innovative and contemporary menu, Aroma brasserie serves breakfast, lunch and dinner experiences throughout the week.

Inspired by centuries old

traditions of European culinary expertise, Aroma’s unique open kitchen concept creates an atmosphere of unique flavours and olfactory sensations that will tantalise your tastebuds even before you see the menu. And the menu is just as dynamic

as the ambience at Aroma, evolving with the season and using only the freshest ingredients.

For the diet conscious, this one of a kind brasserie offers succulent made to order grills, gourmet greens

and more. Whether it is a special occasion, a chance encounter, or a power lunch with business associates, the numerous little touches that go into every Aroma experience will make you want more.

G BRAND BEAT

oing digital

Charlotte Stubbs discusses designing in the digital age.

I

n the modern day and age the Internet has become a key way in which customers, or potential customers, engage with a brand.

It is becoming increasingly common for people to ῾Google’ a new product or service they hear about, to look up contact details online rather than consult a directory, to contrast prices on an online comparison website, to glean insight from reading reviews, as well as to voice their own experiences in the form of a review.

An individual’s experience with a brand must be consistent across all forms – as the Internet is increasingly becoming the first point of brand contact for a variety of consumers, it has also become the most important.

Nowadays, consumers expect brands to have an online presence. Smart organisations have capitalised on this by transforming traditional brand identities into digital brands.

A digital brand differs from a traditional brand in that it lives and breathes in the online arena. It incorporates all online customer points of contact – from websites (that talk at you) to social networking sites (that talk to you). A digital brand is an extension of an organisation’s traditional offline brand identity, but there is the potential to do much more with it.

A digital brand: • Is an extension of a traditional brand; • Occupies the online arena; • Responds to individual’s digital behaviour; • Adapts to changing communication channels; • Delivers one brand experience across all platforms.

For example, high street brands such as Zara and Next have created iPhone applications. These may appear as cut-down versions of their websites, but they are literally putting their product catalogues into the palm of their customer’s hand.

The basics will always remain the same – when creating or developing a brand you still need to consider what your brand is all about – the ‘look and feel’ and the ‘tone of voice’.

However, these days one of the key things to consider is how these brand components will translate onto the web.

Traditionally, designers designed for print, but things have changed. To become a digital brand, the way your brand is represented online needs to be considered. For example, the high-resolution graphics that a company may opt to use in its print media will not translate on the web due to the associated lengthy download time. This is an essential point of concern because in the time that the graphics take to download, a potential customer could come and go.

Generic ῾web safe’ fonts also need to be employed – such fonts will ensure that these elements of a brand’s design are portrayed consistently and with uniformity.

Additionally, the purchasing process needs

to be considered. It must be smooth and hassle free, right through from the process of searching for a brand’s website, to submitting credit card details and receiving the purchase in the post. Whereas in the ῾human realm’ a poor transaction may be blamed on an individual salesperson, when something does not go smoothly in the ῾online realm’ the blame always lies with the brand.

Given the transforming nature of the way people interact, communicate and engage with brands in the current day and age, it has become essential to transcend traditional brands into digital brands.

Today, it is not enough to simply ensure brand consistency across selected items such as brochures and business cards, and the way employees communicate face-to-face with customers. In the digital world there is a whole new realm of communication points to consider. Some of these include interaction with customers through websites, social networking sites, search engines, email conversations and mobile device applications among others. These all need to be evaluated properly and integrated into a digital branding plan. When considering this, it could be argued that brands today cannot survive without an online presence.

BRAND BEAT

One product that provides a prime example of how to harness the communication power of a digital brand is the British-based chocolate bar line, Wispa. Due to online petitions and demand driven through social networking sites such as Facebook and Bebo, the confectionery giant Cadbury UK decided to re-launch the chocolate bar from its ‘80s heyday into the 21st century. Thousands of fans campaigned across scores of websites to get Wispa back on supermarket shelves. At the time Cadbury’s spokesperson Tony Bilsborough said, “We have noticed the web interest for some time and the consumer passion has undeniably swayed our opinion to re-launch Wispa. This is the first time that the power of the Internet has played such an intrinsic role in the return of a Cadbury brand.”

Being a classic digital brand since its relaunch into existence in 2007, this year Wispa has allowed fans to personalise the Wispa website and suggest how it should look. The strategy behind the revamped website is to share ownership of it with the individuals that were instrumental in putting the brand back on the shelves in the first place. In doing so, Cadbury’s has successfully secured Wispa’s place as a much-loved digital brand.

In considering the status of digital brands in the Arab region, digital brands are starting to make their own footprints in the online world.

At the end of 2009, the Internet was transcended for Arabic users when the introduction of Arabic script web domain names

enabled web addresses to be entered in their native tongue. The Internet Corporation for Assigned Names and Numbers (Icann) announced the change, which it hopes will “remove an inbuilt cultural bias at the heart of the Internet’s infrastructure”. This should allow Arabic speakers to integrate with Arab digital brands in a more cohesive fashion, due to the fact that the core values of the brand can be conveyed in their native language. It also reduces the potential impact of the ‘lost in translation’ issue – brands have a hard enough time representing themselves and their values online, without undertaking the feat in a second language.

While the uptake of new domain names has been relatively slow – with only Egypt, United Arab Emirates and Saudi Arabia beginning to use them – it is likely that as the importance of embracing digital brands grows

in the region it will become a core component of an organisation’s digital branding plan. Additionally, for organisations where their brand embodies Arabic heritage and tradition it will become increasingly important – an Arabic domain name serves as a great first introduction to an Arab brand.

A word of caution about digital branding: be careful not to let the lure of online ‘quick hits’ demean the brand strategy – a good brand strategy is a core fundamental, which will be a driving factor for the long-term success of any digital brand.

Just remember, it is not all about how many followers a company/brand has on Twitter, how many people ‘like’ its Facebook page, or how many people ‘click’ onto its website homepage. The danger with measuring the success of a digital brand through statistics such as these is that they do not measure the value of people’s interactions with a brand, but rather how many interactions take place.

There are various examples where organisations have posted messages to stimulate conversation, or found ways of getting people to visit their websites using methods and language that is not consistent with the brand they are promoting. This can be extremely damaging to a brand. It is a common mistake to forego traditional brand and marketing strategies, and instead end up diluting a brand in the process of going digital. With the everincreasing saturation of the online space, it is becoming progressively more difficult for brands to be prominent. To achieve distinction, there must be consistency in a brand’s message and this must be carried across all online, and communication platforms.

With this in mind, and in the digital realm, it is crucial that a brand remains true to it market position, especially with regard to communicating its values.

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BALANCE SHEET

The Increasing

Use of Joint Ventures to

Create Value

By Doug McPhee

J

oint ventures play an important role in the execution of growth strategies for governments and global corporates, especially during an economic downturn when equity and debt capital markets are challenging for the raising of new capital. Thinking on a global scale, there are a few recent examples that come to mind: In financial services, JP Morgan/Cazenove in the United Kingdom (UK) has proven a very successful joint venture. In 2004, JP Morgan entered into the partnership whereby it jointly operated and learned about the business for a number of years before recently buying out its partner; In industrial markets, last year’s Fiat/ Chrysler joint venture is a prime example of one party gaining access to technology (engines) and the other party, market access (United States); and In the telecommunications sector, joint venture activity is gaining momentum. This upsurge is most notable in terms of the sharing and development of networks with the likes of T-Mobile, Orange and Vodafone.

Key findings from KPMG’s analysis of Thomson data on joint ventures include: Until 2008, while mergers and acquisitions (M&A) activity experienced a substantial spike in number and value during the ‘bubble’, joint ventures entertained steady growth for four years;

Recent trends have shown that energy, chemical and pharmaceutical companies, and banks favour joint ventures to access new overseas markets and natural resources; Cross border joint ventures are most prevalent in Japan, closely followed by China, Germany and the UK; and Between 2005 and 2008, the energy sector experienced the largest increase in joint ventures, with, specifically, the number of mining deals tripling as companies looked to take advantage of soaring commodity prices.

Interestingly, in the early ‘90s, joint ventures became popular for companies looking to access low-cost manufacturing bases in countries such as China and India.

However nowadays, global companies are pursuing joint ventures in a bid to tap into the buying power of these markets.

For companies in sectors such as energy and chemicals, joint ventures enable them to tap into the global resources essential to their growth.

In the Middle East, joint ventures have been prominent for many years. While once primarily the purview of the oil and gas sector, in the form of production sharing agreements, joint ventures are now experiencing growth across many sectors in the Gulf Cooperation Council (GCC) region, most notably in the financial services, telecommunications, medical and IT sectors.

It is no longer just about using joint ventures to gain access to markets.

Increasingly it is about Middle Eastern governments and companies gaining access to intellectual property, technology and distribution networks to develop private enterprise, local private sector employment and career opportunities in the GCC. In spite of this, many in the business community continue to think of joint ventures as a last resort when growth strategy cannot be implemented otherwise through outright acquisition or merger.

However, research illustrates that joint ventures can be more effective at increasing shareholder value. KPMG recently conducted a study* with the IESE Business School in Barcelona, Spain, examining companies in the Fortune 500, Standard and Poor’s Global 1200 index and the IESE alumni.

The study was predominantly based on the views of chief executives and revealed: While the number of joint ventures in 2009 fell 75 percent compared with the same period in 2008, more than half of global companies surveyed said they planned to undertake joint ventures within the next two years; Joint ventures have a high success rate with 52 percent delivering to expectation or more. In contrast, a recent KPMG survey on M&A indicated a 34 percent success rate; • Entering new markets is the most popular motivation for a joint venture: the majority of new collaborations will be cross-border in nature; and

BALANCE SHEET

• More than 40 percent of respondents cited a desire to reduce costs through the use of joint ventures.

Before deciding whether to proceed with a joint venture and undertaking a partner search, it is important to take into consideration other options available to achieve your business objectives where the collaborative partner spectrum includes: Organic growth; Insourcing/outsourcing/offshoring (management contracts: turnkey/contract manufacturing/franchising/licensing); Partnerships (strategic alliances/cross shareholding networks/joint ventures); and M&A.

value of assets, and operations contributed to the joint venture by each party – generally believing they are contributing more than their 50 percent share and, therefore, deserve some form of cash compensation.

These are the type of issues that need to be considered and agreed on at an early stage. If you think you are bringing more to the table than the other side in a 50/50 joint venture, be open and transparent with your partner from the start. M&A may be about ‘winning’ during the negotiations, but joint ventures are all about trust as there will be a working relationship going forward once the operations are established.

In many ways, joint ventures are trickier

“Agree how profits will be distributed and, perhaps most importantly, how the joint venture will be separated at the end of the agreement.”

Joint ventures can be useful in: Boosting revenues and/or reducing costs; Avoiding barriers facing M&A or entry into emerging economies; Reducing reputational risk of an existing business when entering new markets; and Protecting value created by founders and encouraging new joiners.

Once established, they can also be spunoff into local market initial public offerings (IPOs) allowing local investors to participate in the GCC private sector value creation.

Joint ventures are built on trust and the vast drop in joint venture numbers in 2009, shows just how much the collapse of Lehman Brothers destroyed trust in the marketplace.

Recent high-profile joint venture announcements though suggest that trust is returning. However, aside from this issue, companies also feel undervalued and, therefore, are pursuing joint ventures rather

than M&A to access the benefits of current synergies and future increased value.

Accessing new markets is essential to many global businesses, but the cost involved in a merger or acquisition is a burden that many are reluctant to bear in the current uncertain market. Often, with lower premiums to claw back, joint ventures are at a considerable advantage from day one.

Even when one has determined that a joint venture is the right option to pursue, failure to launch is common. Personally, I have seen a number of situations where two chairmen agree that it makes sense to form a joint venture – a 50/50 basis seems appropriate to avoid disagreements and a working team is put in place to develop a joint venture business plan on the basis a deal has been ‘agreed’.

However, a few months down the road, one party may raise the question of relative

than acquisitive transactions because there is a buy and a sell happening on both sides of the equation. Both companies need to have their interests aligned; agree how profits will be distributed and, perhaps most importantly, how the joint venture will be separated at the end of the agreement. While unromantic, the sensible joint venture involves a robust prenuptial agreement.

Certainly too many joint ventures have failed where both parties fail to consider every issue, hampering the actual delivery of the benefits envisaged.

Governance and structure are particularly important in terms of the sale and purchase/ joint venture agreement drafting phase, which require significantly more time than in the outright acquisition of a business.

Getting it wrong can cost you dearly, due to the ongoing trading nature of the shareholders with the joint venture once it is established.

Issues to address early on include: • Formal documentation of the strategic goals of the joint venture; • What is in/what is out (assets/operations being contributed to the joint venture) and quantum of synergies and ownership/ sharing thereof; • Stewardship, strategic and operational control (does 50/50 mean joint control?); • Appointment rights over key management positions (CEO, CFO, COO, CIO); and • Related party transactions: successful joint ventures derive value through the profits and returns generated by the joint venture – not through margin generated for an individual shareholder through provision of goods, services or management.

From a regional perspective, it is important to be prepared for the ‘wall of agreements’, particularly if you are entering into a joint venture with a party from western Europe or the United States.

Speaking from personal experience, I have been involved with a joint venture where the contributions, values and operating principles were agreed on in a matter of weeks, with the expectation that the legal agreements finalising the venture could be drafted and firmed up within a few weeks – only to be still wading through the details two or three months later.

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BALANCE SHEET

The number of agreements governing a joint venture can be daunting. With intellectual property, licensing, working capital, funding, management services, secondment and other schedules ancillary to the sale and purchase/joint venture agreement often running into 50 or more pages – each. So, be realistic about whether you have the internal resources to undertake the legal and commercial review of various drafts of these agreements – and if not, line up advisers so you are not outgunned by the other side during negotiations.

Someone once said to me that the key to joint ventures was planning for the marriage... and the divorce. Very few joint ventures are formed with the intention of operating on an indefinite basis. Additionally, the invoking of the exit clauses of a joint venture agreement can be particularly nasty in terms of time, management focus and cost – even in the Middle East region where, at least until recently, there has been a lower propensity to litigate.

Having undertaken a number of projects determining who gets paid what in a joint venture break-up (be that due to change in control, a divergence of goals between the parties or a bad leaver situation) what I can say is it is critical that exit clauses are not glossed over during the drafting of the joint venture/shareholder agreements. Generally, when joint ventures break up, the situation is confrontational and often with heated tempers. Everyone will focus on what they have to pay/what they will receive.

Therefore, all parties need governing agreements to be clear on the basis of value (market value, fair market value, fair value or formula driven), the application of control premium or minority discounts (which can move value/price by 50 percent or more) as well as the payment terms for a bad leaver.

There are other considerations when a shareholder departs a joint venture, either amicably or not, which include: • Ownership of intellectual property and

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brands developed by the joint venture; • Ownership of any customer won by the joint venture; and • Transitional provision of goods/services by the departing shareholder whilst alternative suppliers are found.

This is important in order to ensure the joint venture will be capable of operating going forward and that there is no diminution in the value of the remaining shareholder’s investment in the joint venture.

Basically, you need to get it right at the agreement drafting phase as it is pretty tough to change things later on.

In conclusion, joint ventures can create

substantial value, but they can take up a lot of time to establish and manage. Considered analysis at the pre-decision making phase is absolutely crucial for success and if I can leave you with one thought, try to see the forest through the trees, and focus on being able to answer three simple questions very early on: What do I put in; what do I get; and how do I get out? * KPMG’s full study is available to view at www.kpmg.com/Global/en/IssuesAndInsights/ ArticlesPublications/Pages/Joint-Ventures-atool-for-growth.aspx

LEGAL INSIGHT

Playing

the Acquisition

Game

Charbel Neaman and Emma Higham discuss the acquisition of commercial companies in Qatar.

LEGAL INSIGHT

O

n March 31, 2010, a new Law No. 3 of 2010 (New Law) amending the Commercial Companies Law No. 5 of 2005 (Companies Law) came into effect.

The New Law incorporates provisions on the acquisition of companies into Part 9 of the Companies Law. It establishes a set of comprehensive procedural rules and details the conditions to be satisfied in relation to any acquisition.

The New Law applies to the acquisition of private companies. For example, limited liability companies and private, or closed Qatar stock companies, and listed companies – Qatar stock companies, which are listed on the Qatar Exchange.

Insofar as acquisitions of public companies are concerned, the New Law provides that Law No. 33 of 2005, which established the Qatar Financial Market Authority (QFMA) shall apply.

A summary of the main procedural features, which the New Law provides to validate an acquisition is set out below: Definition of Acquisition The New Law defines an acquisition as: A direct or an indirect possession by a company (Acquiring Company) of all or

part of the share capital of another company (Acquired Company); or The possession by the Acquiring Company of the majority of voting rights in the Acquired Company as a result of purchasing the whole, or part of its shares or through a public offering. Or according to the terms of an agreement between the shareholders of the Acquired Company, in such a way not to conflict with the interests or the purpose of the Acquired Company.

Acquisition of Private Companies The New Law establishes the following procedural rules, which must be satisfied by the Acquiring Company and the Acquired Company: Resolutions should be passed at an extraordinary general meeting of the Acquiring Company approving the Acquisition. Such resolutions should be ratified by the Ministry of Business and Trade (MBT). Following ratification, the resolutions should be published in two local Arabic daily newspapers at the expense of the Acquiring Company.

At the same extraordinary general meeting, the Acquiring Company should pass a resolution increasing its share capital and approving an amendment to its Articles of Association to reflect such increase following the Acquisition. In addition, the allocation of the

“The New Law has been established to clearly identify the Qatari legal and regulatory framework relating to acquisitions.”

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new shares to shareholders pro-rata to their existing shareholding should be approved.

The Acquiring Company should submit the resolution(s) for approval by the MBT. It is worth noting that the Companies Law provides existing shareholders of a company, with a pre-emption right over any new shares issued following the increase of capital in the company.

If the Acquisition of the Acquired Company is by way of an offering of Acquiring Company shares to the shareholders of the Acquired Company, the existing shareholders of the Acquiring Company (at the date of passing the resolution approving the Acquisition) shall waive their pre-emption rights to subscribe for the new shares to allow the transfer of such shares to the Acquired Company. The Acquiring Company should notify the Acquired Company of the availability of the new shares in order for the latter to allocate them to its shareholders.

If the Acquisition is by a purchase of shares, the Acquiring Company should pay the value of the obtained shares to the Acquired Company’s shareholders. This can be done by depositing the same in a special bank account for subsequent distribution to the Acquired Company’s shareholders, who, or which, are registered as shareholders at the time the extraordinary general assembly of the Acquired Company approves the sale of shares.

The extraordinary general meeting of the Acquired Company should pass a resolution approving an amendment to its Articles of Association. The amendment should reflect the new shareholding in the company following the acquisition and appointment of a new board of directors for the company in accordance with its constitution. The Acquired Company should submit this resolution for approval by the MBT. Subject to obtaining all the approvals set out above and the various additional approvals required from, for example, the tax department where one of the shareholders is a non-Qatari entity, the Acquiring Company

LEGAL INSIGHT

and Acquired Company may submit a request to the MBT for new Commercial Registrations to be issued. This will reflect the new share ownership in the Acquiring Company and Acquired Company.

Protection of minority shareholders’ rights The New Law protects rights of minority shareholders in the Acquired Company by stating that the Acquired Company should adopt all available protections, including, but not limited to, an offer to purchase the remaining shares or the voting rights of the minority shareholders. Such a provision will require the approval by the Minister of Business and Trade.

In certain circumstances, an extraordinary general meeting of the Acquired Company may pass a resolution to compel the minority shareholders, who have not accepted the offer of acquisition by the Acquiring Company, to sell their shares. Such resolution shall also be subject to approval by the Minister of Business and Trade.

Acquisition of Listed Companies The internal executive regulations of the QFMA (Executive Regulations) provide that

no person (individual or corporate entity) is allowed to acquire a listed company, or, to enhance or reduce its control in such company without the prior approval of the QFMA. The listed company shall inform the QFMA about the acquisition or the change in control 30 days prior to such acquisition or change of control.

According to the Executive Regulations, a person is deemed to acquire a listed company if: They own 10 percent or more of the company’s shares or its voting rights; or They own 10 percent of the shares or voting rights of its parent company; or They are able to exercise an influence on the management of the company due to its shareholding in the company, or, due to a contractual arrangement with the managers or shareholders of the company.

The QFMA shall give a decision approving or disapproving the acquisition of a listed company within 30 days. This will be done from either the date it receives notification of acquisition, or, the date it receives all information it may require regarding such acquisition. The QFMA shall notify the listed company of its decision.

If a person acquires a listed company without the prior approval of the QFMA, the

QFMA is entitled to cancel the listing of a company, restrict the transfer of the shares to be acquired, or, restrict the voting rights in the shares to be acquired. Furthermore, the QFMA may rescind its approval if the acquisition is in contravention of the conditions and standards which the QFMA requires.

Conclusion The New Law has been established to clearly identify the Qatari legal and regulatory framework relating to acquisitions. Indeed, the passing of this New Law is a serious step forward toward the normalisation of the corporate legal system in Qatar. This New Law and many others, which have been recently enacted, display an awareness by the legislative body to respond to the fast financial and economic development recently witnessed in Qatar.

Note: This article is of a general nature only and is not legal advice and, therefore, should not be relied upon as such. Any person or entity requiring legal advice should consult a lawyer and obtain advice specific to their individual circumstances. For any information in respect of legal issues, please contact Emma Higham (emma.higham@cydeco.com.qa) or Charbel Neaman (charbel.neaman@clydeco.com.qa) TheEDGE

75

BUSINESS KNOW-HOW

CONNECT, ALIGN AND SCORE Wassim Karkabi discusses the three steps which will help new managers add personal value to an organisation.

BUSINESS KNOW-HOW

I

f you have recently been promoted to a new leadership position, or you just accepted a leadership role at a new organisation, your most worrying thought is probably how you are going to succeed in this new role.

Of course, that will also come with a number of other questions. Such as, how long do you have to prove yourself in the role? What does success here look like?

How do you start pouring value back into the organisation as a new manager?

In essence, one of the most important issues that you need to consider and aim for, is an objective that could be termed the ‘personal value point’ or PVP. This is the moment when you start contributing positively to the organisation, after that initial period when they have invested in you to prepare you for your new role.

For obvious reasons, the perception may be that difficult-to-get new leaders join an organisation and immediately become optimally efficient and familiar with every nuance of how the company works. In fact, despite all the technical knowledge and previous experience that any new leader might have in the field, and in other competitive organisations, it is practically impossible. This is of course mainly due to the difference in organisational cultures between the previous and new employer; the new people that you need to get to know and align with in order to achieve your successes such as your boss(es), your peers, and your team. You wiIl also need to take into consideration the differences in the organisation’s strategic goals and the tools, and resources available in order to steer the organisation in the right direction.

By following three simple steps (and a number of underlying provisos), with a broad overview in mind, and leaving room for creative execution –

which are key to having an overall strategy that will work for you in almost any environment – you will succeed in your objective to impress and win the trust of your new colleagues and superiors.

These are the three steps that you need to keep in mind: 1) connect, 2) align, and 3) score, within a framework of operational, tactical, strategic and at a pace of step, stretch and leap.

CONNECT WITH INFORMATION AND PEOPLE Your prime goal on your first day – or in some specific cases, before you even join the organisation – is to connect with information and people. You need to gather as much intelligence as possible about the organisation, the product, the market, the numbers, the competition, the people that are running the organisation and the talent that is competing with these people in other organisations. Additionally, you need to identify the people within the organisation that are in your 360-feedback scope, as per your role’s description. While your official evaluation is probably 90 days down the line, do not doubt your real time evaluation will start on day one. So if you can even commence this connection process a few days, or even weeks beforehand, if you have the opportunity to create a great impression even before you walk through the door by all means do so.

Make sure to gather any further information you will need before you connect with people, other types of information can wait until afterwards.

Connecting with people can also be, in itself, a source of information if you know how to ask the right questions. This will help you understand some raw data, or incidents, or past failures or even successes of the organisation at different points in time. Learning about the organisation’s past

performances and the reasons for its successes and failures will later help you learn what subjects and strategies your new employer is sensitive to.

GETTING ALIGNED WITH THE PEOPLE AND THE ORGANISATION A simple connection, though, is not enough. Getting aligned with the company, and aligning with the key people are how you will envisage your way forward for the company or even just within the division or department.

It is a critical step that requires a lot of careful discussions with key individuals.

These are the people who will either support your cause and follow your lead, or will try to stubbornly block your authority and initiatives. Depending on the role that you will be taking, as a leader, you will have different kinds of people, to align yourself with, but inevitably this will be a number of people who will vary between peers, team members and bosses. Expressing your vision, and aligning it with the strategic direction of the organisation will be key.

Getting people to buy into your way forward is instrumental to your new role’s success.

However, people are not the only element that you need to become aligned with. Every organisation has a set of unwritten rules, codes of conduct and procedures of getting things done effectively without breaking them.

The new leader will need to align with those unwritten rules. Indeed, because most organisations will take a long time to bend to the will of the new manager or leader, this individual needs to learn ‘the way’ of the organisation in order to navigate their strategic plans to where he or she

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ultimately wants them to go.

With reference to this, one of the most important elements that the new leader also needs to align with is an organisation’s elasticity to change.

Elasticity to change is the breaking point to which you can apply change on an organisation before it – or at least its people (see above) – begin to resist you. You can learn about this elasticity to change by finding out about previous initiatives and changes implemented by your predecessors. What worked? How long did it take to achieve? And who was involved in negotiating these changes?

Align yourself with these people, they will be a source of invaluable

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collaboration, coaching and mentoring throughout your tenure. Under the title of change, you also need consider any minor or major initiative that you want the organisation to sustain – this could be detrimental to your, and the organisation’s, success and failure.

This could be as small as buying a new office desk, or as large as firing or hiring individuals or a whole team of people.

TIME TO SCORE Once you have learnt and aligned, now you need to start scoring. Early on, you will need to take on and win small successes, even in your first 90 days with the organisation.

You need to score, with people and with the organisation as a whole. Remember that

no one is expecting radical change in 90 days, but they need to be reassured that you as a leader, are capable of making sound decisions on the organisation’s behalf and that your decision will affect the company positively. In the beginning this will be on small, operational matters, but eventually on tactical issues and finally on strategic initiatives.

Remember, the key steps are operational, tactical and then strategic.

Your key objectives are to connect, align and score, and the pace at which you should do this should be to step, stretch and leap. Keep in mind this three-level trilogy strategy of success in a new role when you join your next employer.

SPEAK EASY

Up close

and personal Stephen Davie gets personal on personal finance and discusses building brand value in the Middle East financial services industry.

T

rusted, caring, knowledgeable and big enough not to fail – all key attributes of a professional, or personal finance brand. So what went so badly wrong in the financial services (FS) industry?

Today, many of the leading brands have been discredited, inextricably linked to the global financial crisis. They have alienated their customers and lost the trust they had gained. How can these companies rebuild their reputations? Or will they have to take drastic steps and, like the insurance company American International Group, rebrand parts of their operations?

Personal finance companies need to get

their branding right because, in the words of one of their strap lines, if they want to be ‘here for good’, they need to prove they can provide the services that people want. Or, paraphrasing another strap line, ‘the future may not have a bank’.

So what is a brand, and, how does a company maintain brand value, especially in the Middle East FS market?

The word brand is often over-used and under-appreciated. Brands matter, politicians and leaders work on their personal branding.

Indeed, many private individuals do also – with the onset of Twitter many people now have their own ‘brand’ to manage. That can extend to a quirky visual or bizarre use of ty-

pography, all done to differentiate themselves from the tweet next door.

So is a brand more than a differentiator?

People working in the communications and marketing disciplines understand that in the corporate world, especially one suffering a liquidity crisis, being seen as distinct from your neighbour does not cut it anymore. In a highly competitive, cash-strapped marketplace, companies need to be relevant for their customers.

The function of corporate brands is, at their basic level not just to identify, but to make the company more relevant for customers.

Delivering relevance is not something easily achieved in a one-off piece of marketing collateral. Relevance is something built up

SPEAK EASY

during an ongoing conversation with customers and clients, which can take many forms, and often a long time to achieve.

So the question remains: what has gone wrong in the FS industry?

For many years the brand proposition of many FS companies had been straightforward, based around the message of ‘trust’. Brands communicated market knowledge, customer service, sector experience and gave clients a sense of trust. The problem for the industry was that the market was becoming saturated and the products commoditised. In some countries, like Saudi Arabia, consumers are very loyal to their personal finance companies, but many banking, investment and insurance services are becoming a price-based commodity.

Before the global financial crisis, FS companies that wanted to grow had two main options: expand their geographies or increase the number of products they sold to customers. This was the start of the problem for these brands. Their relevance to their customers was being lost. Firstly, the move into new geographies meant that their experience and knowledge was diluted, and secondly, the branding needed to sell FS products was completely different. Consumers wanted aggressive, edgy, rewards-driven financial services products – branding that simply did not fit with the ‘trusted’ image of many traditional banks and insurance companies.

All the energy and money spent on communications training, brand statements and customer service activation is wasted if the brand behaves one way, but looks, feels and speaks another. Consistency in communications is absolutely vital to engender customer trust – and loyalty. By expanding the range of financial services products, again quoting a strap line, ‘from A to Z’, the original brand values of many of these firms were diluted.

So is the brand just a gloss coat, a graphic veneer, a logo, which adds fake lustre and questionable value to the organisation?

Brands offer many positive things and it can be argued that very little of that is concerned with the colours of the logo.

Brands collect and define a company’s attributes. When well-managed, brands provide promise, differentiation and clarity.

They can deliver comfort and certainty around the organisation, and reinforce its ability to be consistent, predictable and trustworthy. When seen through the prism of value-delivery, to clients, the brand lives or dies at the hands of the people whom deliver

the customer service experience. However, if the main corporate direction of the firm has changed, like the move to expand the range of FS products available, then there is very little that the frontline person can do to save the brand positioning.

In short, good, well-managed brands are good business. Word of mouth is essential.

While customers are unlikely ever to be evangelical about a current account or an insurance transaction, the moment you default on a promise, they will tell 10 of their friends and are likely to put it on Facebook. People trust other people and the function of the brand is to make that culture so tangible and positive that it is transmitted via the customer experience.

Therefore, the question becomes: how does communications support deliver trust to those engaging with a brand? Do customers believe in the integrity of the firm? Do employees believe what they tell their clients?

Do they believe the product offers customers best value? Or is this just a job; are they just in it for the money?

Astute companies realise that their biggest ‘brand fans’ are working in the next office and spend time planning how to use them best.

Employees who know what the company stands for and who are engaged with its brand – as it holds meaning for them as well as the customer – are highly prized examples of significant brand engagement effort. This is a happy outcome – where employees become brand activators – as it directs much of the work in internal communications.

People who ‘live the brand’ provide influence beyond the tangible; they imbue convenience, quality, service and systems with an intangible human element. They transport the experience into the realms of the truly valuable.

The customer-facing employees in the personal finance industry will inevitably need to impart credibility, reliability, customer intimacy and orientation in sometimes trying situations. Creating brand values on this spectrum – and ensuring employees understand how they express themselves through their corporate culture and behaviour – is the core of many internal communications programmes, no matter what the industry. The results of brand activation among employees, the way they communicate internally and externally is what, in the end, differentiates the client organisation.

Extrapolate this and we might surmise that brands determine fortunes in the FS sector as much as the product-mix. Further, in a reces-

sion this is perhaps even more of a reality.

An eye to the bottom line is where most FS companies go in a bid to meet budget, but once the rightsizing has been done, it is the top line that needs the most attention.

Financial, like all other professional services firms, would do well to better understand how their brand delivers this value. Additionally, to carefully plan what actions – internally and externally – should be prioritised to ready their brand ambassadors for next year’s market – and the years after that.

So what is the future for personal finance brands in the Middle East? Assuming that they can motivate their employees, customers and re-energise their brands; can they overcome the loss of trust that does exist in the market?

Shari’a compliant retail banking and Takaful insurance products are one area that has witnessed growth in its delivery, for example.

These Islamic finance products offer partnership, fairness and trust. By their nature, they do not allow for the excess profit making, overt greed, or the speculation associated with the large global personal finance groups. They are also products, which tend to be spread by word of mouth.

Shari’a finance has in many ways adopted the old branding position of the FS industry before it expanded and diversified – so is now a major threat.

The brand positioning of Shari’a finance is strong and the sense of trust, and honesty are key for today’s personal finance consumers. In the United Arab Emirates, the largest growth market for Takaful has been driven by the expatriate community. Expatriates have been quick to recognise the values they used to respect in their native FS providers. As Islamic finance grows, and the quality of people working in the sector continues to improve, it will be a major challenger to conventional banking and insurance companies.

So the challenges are many. Financial services companies have always believed in a strategy of brand awareness, with high profile sponsorship of sporting cars, yachts and golf tournaments. However, this needs to be supported by believable and well-communicated brand values. If the values are lost it will not matter how fast the car goes, the boat sails or the ball is driven. Consumers will not believe in the company.

To ensure their future, personal finance companies will need to think again about their brands and adopt a more personal, and personnel orientated approach.

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BEHIND THE WHEEL

A FATAL NEED FOR SPEED Qatar has an excessive road accident rate, resulting in a couple of hundred of deaths and thousands of injuries every year. In the first of a special series on the subject, TheEdge takes a look how Qatar compares to the rest of the world when its gross domestic product (GDP) and other factors are taken into account, and the potential effect the state of Qatar’s road safety figures has on the economy.

By Miles Masterson

L

ike many other countries in the Middle East and North Africa (MENA) region, when compared to international averages, Qatar’s roads are incredibly dangerous. Indeed, if a recent study on road fatalities in 139 countries, taken from figures up to 2007, and relating GDP to fatalities, is to be believed, Qatar occupies a unique position within global road traffic accident comparisons.

According to a 2009 study, GDP, Vehicle Ownership and Fatality Rate: Similarities and

BEHIND THE WHEEL

Differences Between Countries by Hungarian professor, Koren Csaba, and Doctor of Philosophy student, Attilla Borsos, when it comes to road accident fatalities, Qatar stands apart from every other country analysed.

The study was based in part on the findings of a study published in 1949 by British road accident research pioneer, R.J. Smeed. Called ‘Smeed’s Law’, it is an empirical rule that basically relates traffic fatalities to population numbers and the amount of vehicles on the road. According to Csaba’s study, while this law is most cited to emphasise that the increase of vehicle ownership in countries leads to a decrease in fatalities per vehicle, it also postulates that the increase of individual vehicle ownership leads to an increase in fatalities per population – up to a point in economic growth, after which fatalities again decline.

From this, one can draw the obvious conclusion that pedestrians must be at greater risk in most developing countries, as well as those using busses and other multiple passenger vehicles.

From the Csaba study, comparative figures, including each nation’s GDP, population, vehicle numbers and accident rates, were taken from a 2007 World Health Organization (WHO) global road safety survey, to determine any further developing trends, in part to help these nations formulate road safety initiatives. It was found within a few variables that the higher GDP of a country, the lower the road death rate seems to be.

The study then placed all 139 countries in seven clusters, ranging from high to low fatality.

While the fatalities per person in the poorest low number cluster countries – such as many African countries and Afghanistan, for example, in cluster one – were half of the average of all the countries, this was attributed to low vehicle numbers. As the numbers of vehicles per country increased proportionally, the comparison peaked in the middle clusters, such as cluster three, which had a GDP and vehicle fleets equal to the average of all the countries, but fatalities 2.2 times higher. This cluster included South Africa, Mexico, Russia – all countries world famous for their road carnage – as well as Gulf states such as Oman.

Cluster six on the other hand, featuring most of the older member European Union (EU) states, the United States (US), Canada and Japan, contained countries with a GDP three times higher than the world average, and fatalities of about 70 percent of the whole average – exponentially and significantly less than the worst offending countries.

From this it can be largely concluded that as a result of increasing prosperity and, as the study says, “many efforts in vehicle design, infrastructure safety, enforcement and education”, that the roads in the higher cluster countries are far safer than those in the lower.

The only nation to noticeably differ, to the degree where it even qualified for its own cluster – cluster seven – was Qatar, which the study described as an “outlier…with its very high GDP and moderately high fatality rate.”

“According to the available data, Qatar’s road safety situation is quite contradictious,” adds Csaba. “Although it has the highest GDP...among the 139 countries, its road safety indicator D/P (fatalities per population) is among the highest ones. The indicator of fatalities per vehicle shows a better situation, however, this is misleading due to the high number of vehicles in the country.”

QATAR ACCIDENT RATES With so much attention currently focused on Qatar’s huge GDP, the results of the above study (and others like it), while not justifiable, make more sense. More so when considering the rapid growth of Qatar in the last few years and the sheer amount of vehicles on its unprepared road system.

“There is disproportionate amount of cars here,” states Safedrive International’s Bob Coventry, an Australian expatriate who has been involved in ‘defensive driving’ courses in the Qatar oil and gas industry for the past four years, and has seen the population more than double in that time, particularly during the prerecession period.

“A couple of years ago there were 1000 cars a day joining the roads,” he adds, “just absolutely phenomenal.”

The facts back this up. According to a chart in

the 2007 WHO study, road deaths in Qatar doubled from around 15 deaths per 100,000 population in 2002, to more than 30 deaths per 100,000 population in 2006, which approximately matches that of the rise in population during this time.

Furthermore, according to the WHO study, in 2007, there were 199 reported road traffic fatalities in Qatar where there is a population of 840,635 (0.024 percent) with 605,699 registered vehicles (almost one per person). Compare this, for example, to the United Kingdom (UK), where in 2006 there was 3298 reported road traffic fatalities, in a population of more than 60 million (0.0054 percent) and with just over one vehicle to every two people.

That is a difference of about five times more road deaths between Qatar and the UK. To be fair, taking an historical imperative into account, the UK is a much older country with a road network that dates back to Roman times. It has less than half the vehicles proportionally (which as we have already seen, is a large contributor to Qatar’s problem). Even so, though on the WHO chart, deaths had dropped to below 25 people per 100,000 of the population in Qatar by 2007, fatalities seem to be climbing again. Some sources put the total figure at more than 220 deaths for 2009 in a population of more than 1.7 million. Recent figures released by the Qatar Traffic Department indicate a similar trend for 2010.

In the context of the large number of expatriates that departed Qatar following the economic downturn, many of them less skilled drivers, this must be considered. Of course, as anyone who lives in the region will tell you a high road accident rate is not a problem endemic only to Qatar. Indeed, an April 2005 study coauthored by Professor Abdulbari Bener, Head of the Department of Medical Statistics at Hamad Hospital in Doha, says that previous studies have shown that casualty and fatality rates in the United Arab Emirates and other Gulf countries are much higher than in developing countries with comparable vehicle ownership levels.

Nevertheless, there have been purported improvements in Qatar recently.

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According to more than one regional media report, the latest figures released by Qatar’s Traffic Department indicate a single digit percentage drop in traffic accidents and violations.* The same report also claims that the Traffic Department feel they are succeeding in their road safety initiatives, thanks to a corresponding small increase in population and single digit percentage increase in the number of cars in the road (which TheEDGE’s expert sources put at anywhere between 700,000 to 800,000 vehicles). However, these same reports also show a similar single digit percentage increase in fatalities, to slightly more than 100 for the first six months of 2010.

Moreover, Professor Bener – with almost a decade spent in Qatar crunching road statistic numbers and authoring academic articles on the subject, and who is understandably passionate about improving road safety here – feels these numbers can still be improved dramatically.

“They say 447, 000 violations,” he says.** “This is too much. You know what it means?

It means that a quarter of the population has gone through violations. Is that acceptable?”

Professor Bener also believes that road crashes, injuries and fatalities are also much higher than reported.

“I think there are a lot more accidents,” he says, adding that although this is something that is true to most countries in the world, due to its unique contributing factors, the incidences that go unreported in Qatar are probably proportionally higher than the global average for a number of reasons. These include hit and run accidents involving expatriate drivers (interestingly, studies and official data show more than 60 percent of reported accidents involve expatriates, roughly matching population percentages) and others without valid licenses, children driving underage or drivers who are uninsured, as well as inadequate and disparate data recording systems.

“There is a discrepancy between injuries, the hospital and the traffic department… sometimes they might not be reported because they don’t come to admission at the emergency accident department,” he affirms. “It should be

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Safedrive International’s Bob Coventry says an estimated 50 million people are injured in road accidents each year.

reported because they must have a case. But… if it is not reported to the hospital and police nobody will know about it.”

The hospitals too, says Bener, do not yet have adequate enough co-ordinated systems to record accurate numbers of injuries and fatalities, or whether they came from road accidents at all. Also whether they were adults or children, or indeed whether these were the result of being a vehicle or pedestrians, further skewing figures.

“It can be written down manually on paper and not put into the computer system,” he says. “It is not handled centrally…There is no comprehensive recording system. So you don’t know what all the causes of death are.”

THE COST TO QATAR When only taking the recorded fatalities and injuries only into account, Bener says the toll on the public-funded health system in Qatar is enormous. “Fatality estimate,” he says, “based on each one, costs you more than one million dollars (QR 3.6 million) each…so that is US$ 226 million (QR823 million). Then that many injuries – 3000 to 5000 injuries – hospitalisation more or less [amounts to] one billion dollars (QR3.6 billion).”

A 2003 World Health Organisation estimate puts the total annual worldwide economic costs of reported road deaths at US$518 billion (QR1.8 trillion), indicating how much this phenomena – set to grow in developing countries by more than 50 percent in the next 10 years – can impact an economy.

Some nations have done their own research on exactly how much road accidents affect their GDP, but a study of this magnitude in Qatar has never been conducted (though Bener, who

recently contributed to such a study in South Africa, is currently working on one).

“Worldwide 50 million people a year are injured in road crashes,” Bob Coventry says.

“Thus if there are four people in the average family and the breadwinner is injured, they are affected by the loss of income, kids can’t get educated, the wife can’t feed them. The effect on the GDP is huge.”

When you factor in the medical costs, third party compensation according to Shari’a Law, insurance – which can be up to QR100,000 third party per individual vehicle occupant depending on their injuries – thedeath of primary earners, lost jobs or work time, it is potentially an enormous toll.

Based on the world average and the country’s 2009 GDP of around US$92.4 billion (QR336 billion), road accidents could be costing Qatar’s economy a total of least US$1.5 billion (QR5.5 billion) every year.

In the next few issues of TheEDGE we will examine the underlying causes and issues of Qatar’s road accident problems, initiatives being undertaken by the public and private sectors to tackle the situation, including defensive driving courses in the oil and gas industry and student road safety education. *TheEDGE attempted repeatedly to obtain this and other information, such as the number of vehicles on the road, independently from the authorities but could not do so before our deadline. **The actual figure printed in various regional media was 447,906. Reported accidents were said to be 75,666, a 5.3 percent decline from 79,936 in the same period in 2009.

INDUSTRY FOCUS HUMAN RESOURCES

The Great Scramble

By Doctor Tommy Weir

INDUSTRY FOCUS HUMAN RESOURCES

T

he major employment issue that needs to be addressed is the ‘great employee scramble’. It is predicted that thousands of employees are now looking to ditch their current employer and move on. Consensus seems to be that employees are not satisfied with the way their employers are handling the management of the workforce.

As a result, employees are voting with their feet and the region is experiencing an exceptionally high attrition rate.

We are experiencing a talent shift; not a ‘talent war’ as McKinsey and Company has been espousing since 1997. Unfortunately for business in emerging markets, the ‘talent’ (employees) has won. This is going to be tough for businesses as what is not booming on the employment front is employee loyalty.

Let us pause and look at the great scramble from the employee’s perspective. What are the drivers that coerce valuable members of staff to resign from stable and often influential roles?

Below are the top 10 factors in the Gulf Cooperation Council (GCC) region that influence an employee’s decision to stay with or leave their employer: • Confidence in the organisation’s future • Safety is a priority • Promising future for one’s self • Opportunity to improve skills • Organisation supports work/life balance • Confidence in organisation’s senior leaders • Corporate responsibility efforts increase overall satisfaction • Quality and improvement are top priorities • Diverse people enabled to excel • Excited about one’s work Have you ever had a poor manager? If so, how motivated and engaged were you in your work? Although it is common sense, it is still mind-boggling how much impact the line manager has on the level of employee engagement and performance.

The substandard manager unintentionally does more to drive an employee to look for a new job than just about anything else. Consider the top 10 list for a moment – who is the picture of almost every one

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of the 10 items? The manager. I have watched very talented employees walk out the doors of top GCC businesses claiming that their managers were rubbish, and they (the employee) are not learning from them.

Younger employees are focused on continual personal development and if your company does not offer it, they will seek out an organisation that does. Employees in their 20s boldly question what their development will look like in the interview process. Meanwhile, the more seasoned employees may not be as quick to move to another employer, but they are often likely to withdraw discretionary effort if they believe their development opportunities are being hindered. However, when the opportunity arises for betterment, they will certainly make the move.

So what is it that organisations need to do to stop the great scramble of employees and to retain the talent needed for successful, and sustainable business growth?

Simply stated, companies need to revert to the traditional belief that employees are their most valuable assets.

This is definitely a very complicated subject matter, but to make sense of it, let us return to the top 10 list. Several of the items relate to what talented employees say when they walk out of the doors of a company, which generally carries the tone of ‘employee development is connected to skill enhancement and I was not learning anymore’, ‘not a promising future’, ‘lack of confidence and excitement in the workplace’. Employees should be an asset to a company and like any asset, they can appreciate or depreciate – this is determined by what the company does, or does not do.

So, what should a company do to improve its retention rate, employee engagement and the value coming from the employee?

One of the most significant factors is the genuine belief by an employee that their individual personal development is being taken seriously by the employer. This relates to several items from the aforementioned list – employees are longing for a secure future where they are able to contribute to the company’s success, while seeing their hopes and dreams come to fruition. Rarely is an employee satisfied to work their entire career with the same skill set they currently possess – they long for the opportunity to grow.

Being a specialist in learning and development, I have witnessed several sad myths that organisations allow to stand in the way of employee development: Myth one Cutting costs. Erringly organisations look to the training and development (T&D) items as a way to cut costs. This may save a few pennies on the income statement. However, in all honesty, T&D budgets tend to be minuscule in most companies and the savings turn out to be nothing more than a rounding error. Businesses that cut development budgets actually end up cutting development. This results in a workforce that is not skilled for the demands of the business and that feels the organisation is not committed to them.

Myth two Exclusively focusing on business delivery at the expense of development.

In fast growth times, it is very tempting to defer or cancel training and put personal development on hold. It is also during these times that organisations have trouble recruiting the right talent into the business as the demand exceeds the open market. As a result, organisations pro-

mote people that are not ready to move into bigger roles. Now pause and think logically about the repercussions of this – fast-growth times need more aggressive development efforts.

Myth three We hire employees for their skills. It is a unnerving thought process and practice to believe that because you hire people for their talent and expertise, that there is no need to train them. This myth assumes a person will be in their current role forever and has all of the skills needed now and into the future. With the rapid growth of the workforces in the region, organisations would be wise to invest heavily in skill and behavioural development for every employee that is a good fit for the culture, and future of the company.

Myth four Relying on education and not development. Education is extremely important, but it is not the same as development. Organisations should put in place a comprehensive development programme that includes executive education, but which should also include on the job training, managers coaching employees, personal development plans, and skills and behavioural training.

Myth five If you develop employees they will move to the competitor. If this is happening, a company will find that it has a larger and more significant management problem. Actually, if an organisation has this mentality, it is likely that it already has a misconstrued view of the value of employees. In this instance employee development needs to start at the most senior level of the organisation and focus on understanding the performance impact of employees, and how to maximise discretionary effort.

The benefits of developing employees are: • Higher levels of employee engagement • Appreciating the asset • Taking full advantage of discretionary effort • Achieving the maximum return on your employee investment • Higher performance output • Improved employee retention In conclusion, what can businesses do to mitigate against losing talented employees and to implement plausible training and development schemes? It is not rocket science – invest in staff development as this the key to retaining the talent needed for successful and sustainable business growth.

Employees, like everyone, regularly ask the question, ‘What is in it for me?’ Fortunately, it is positive that employees ask this question as it generally provides a business with a positive outcome. Employees want to improve and the benefactor of this improved employee performance and applied discretionary effort is the company. Improved employee performance has a proven impact on the income statement and organisational success.

Doctor Tommy Weir serves as vice president of Leadership Solutions at Kenexa. He is the author of ‘The CEO Shift’ and is a thought leader, who specialises in strategic leadership for fast-growth and emerging markets. For more information contact him at tsw@tommyweir.com TheEDGE

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HOW-TO GUIDE

HOW-TO Simplify network

operations

how-to guide

The Corporate Network of the Future: Convergence 2.0 Ali Ahmar discusses how convergence and the cloud can simplify network operations, but warns it will not happen overnight.

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hat do chief information officers (CIOs) and their teams want from the corporate networking technologies of the future? Lower latency, enhanced reliability and higher throughput are all high on the IT department’s wish list. But, above all, they say, what they would really like to see is a single network infrastructure capable of handling all data, clustering and storage traffic.

It sounds like a tall order, but it is hardly surprising that many CIOs are taking a long, hard look at their current network infrastructures and finding them wanting.

Today, their teams are typically managing two or three parallel networks; they have a storage network built for reliability, guaranteed data integrity and non-blocking performance.

Additionally, they have a data network which characteristics include best-effort performance and unpredictable bandwidth, coupled with often frustrating levels of complexity.

Separate switches, host bus adapters (HBAs), network interface cards (NICs) and cables are required for each network.

Such clutter imposes a significant burden on IT department time and budgets. It has environmental consequences too, as network administrators struggle to provide each network component, while managing the

“The race to consolidate servers and storage systems through virtualisation, while delivering considerable efficiencies, has only added to the demands imposed on the corporate network infrastructure.”

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power and cooling each requires.

The race to consolidate servers and storage systems through virtualisation, while delivering considerable efficiencies, has only added to the demands imposed on the corporate network infrastructure. By allowing multiple applications to run on a single server, IT teams have been able to reduce the number of physical servers required, slash the energy consumption and vastly increase operational efficiency.

However, a single server hosting perhaps 20 virtual machines (VMs) requires significant bandwidth to keep these services up and running. The dynamic movement of VMs between different physical machines, according to their processing requirements and users’ needs, poses further network-management challenges. If network connections do not travel smoothly with their associated VMs, or create unpredicted demands on physical servers during times of peak processing, network performance – and the end-user experience – rapidly goes downhill.

The next section of the journey will present further challenges for network administrators.

Increasingly, companies are capitalising on their early wins, with virtualisation to create internal (or private) clouds and where all IT

HOW-TO GUIDE

assets interact seamlessly to provide a single ῾pool’ of computing resource. Beyond that, companies plan to work towards a ῾hybrid’ cloud model. This is where a mix of both internal and external third-party resources provide applications and services. Either way, the cloud – where distributed applications, residing on different machines, all perform different parts of a vital business process – clearly means more traffic travelling across corporate networks and beyond the firewall.

As a result, CIOs expect tomorrow’s corporate networks to fulfil a wide range of what can sometimes be conflicting demands.

They want unprecedented scalability, but reduced management complexity.

They want seamless mobility, but tight orchestration, and they want emerging networking technologies to complement the investments they are making today, instead of forcing them to refresh the entire environment in a wholesale ῾rip-andreplace’ exercise. For these reasons, unified fabrics are creeping up the CIO’s agenda.

The promise of convergence Tomorrow’s networking environment will consolidate user-application traffic and storage-data traffic onto a single, highperformance and largely available network.

Such a network will have the built-in intelligence to identify different traffic types and handle them appropriately, according to pre-defined rules.

The benefits of the concept are clear in terms of time, cost, skills and procurement. Not to mention reduced cabling complexity. While the path may at first seem steep, an incremental approach can ensure that the journey need not cause unnecessary upheaval for the IT team and the end-users that they serve.

We are in the midst of a major innovation cycle in IT – moving from infrastructure designed to automate existing processes to services-oriented architectures, which increase the delivery of innovative new services. Adopting new technologies

“We are in the midst of a major innovation cycle in IT – moving from infrastructure designed to automate existing processes to services-oriented architectures, which increase the delivery of innovative new services.” means enabling new business models and transforming relationships with customers, partners and employees.

The days when the majority of computing power was in the data centre are behind us.

Today, we have incredibly smart end points, with lots of computing power that is remote, distributed and mobile. Information and applications are virtualised and can reside anywhere within the infrastructure that we refer to as the cloud.

The compute model has been reversed – both information and the consumption of that information are distributed. This shift dramatically drives the importance of the communications throughout the network. And because you have distributed the compute power and your information storage, in essence you have distributed the data centre.

As data centres become distributed, the network infrastructure must take on the characteristics of a data centre. Additionally, if the network becomes our data centre then the network is our business. In this highly distributed and dynamic environment, your commercial model, your customer experience and your employee productivity are all reliant on just how robust your network is.

An established and well-understood technology lies at the heart of the network

– Ethernet. It is already the predominant network choice for connecting servers to each other on the corporate local area network (LAN) for the purpose of transporting user-application traffic; the convergence 2.0 concept proposes that the separate Fibre Channel network, which typically transports storage-data traffic around a storage area network (SAN), be shifted to Ethernet, too – or Data Centre Bridging (DCB).

However, in order for this kind of SAN/ LAN convergence to work, DCB must offer the reliability and latency characteristics associated with Fibre Channel technology.

This is because storage networks require data to be delivered in sequence and intact – in industry parlance, a ‘lossless’ infrastructure is required. Ethernet, by contrast, falls short in this respect taking instead a ῾best effort’ approach, where data is not necessarily delivered in the right order and where some packets may be dropped altogether due to network congestion.

In response to these challenges, the essence of DCB lies in higher transmission speeds – based on 10 gigabit Ethernet (GbE) technologies and enhancements to the underlying Ethernet specifications – in order to replicate the reliability and class-of-service features seen in today’s SAN environments.

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“With the advent of the cloud and the drive to convergence underway, this paradigm shift is enabling the ability to selectively outsource, or extend, a significant portion of the IT infrastructure.”

Today, standards bodies representing some of the world’s foremost suppliers of storage and networking technologies are working on specifications to increase the performance of existing Ethernet networks, as well as to tunnel Fibre Channel traffic securely and efficiently through Ethernet infrastructures.

One of the most important of these is the Fibre Channel over Ethernet (or FCoE) standard. This is an encapsulation protocol that wraps Fibre Channel storage data into Ethernet frames, therefore, enabling it to be transported over a new lossless Ethernet medium.

Developed by the T11 technical committee of the International Committee for Information Technology Standards (INCITS), it relies on flow control to recognise when a buffer is almost full. It then requests the sender to cease transmission until the buffer has emptied and the transmission can then start again.

One of its major advantages is that FCoE will use the same FC drivers, switches, cabling and management applications already in use today.

This is allowing companies to start introducing concepts, such as unified fabric, within the first few metres of their data centre networks – using FCoE with DCB at 10 Gbps speeds to send both data and storage traffic to the first access switch it encounters. That traffic can then diverge to the corporate LAN, or to the existing SAN using Fibre Channel, accordingly, which immediately reduces the

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number of cables that need to be plugged into a server rack.

The road ahead In this regard, the technology – still considered to be in its infancy – is already starting to take shape at the network edge in the data centres of early adopters. Others will follow their example.

Richard Villars, vice president of Storage Systems at the market analyst firm IDC, predicted that 2010 would see an increase in converged networking pilot projects, with significant technology deployments expected in 2011.

According to figures from analyst firm Dell’Oro Group, approximately 10,000 FCoE ports were shipped in 2008, but the company’s analysts anticipate that this figure will rise to about one million in 2011.

Of course, mainstream convergence is also dependent on other factors. Storage device vendors must allow for FCoE adapters in their products. Network interface cards (NICs) for 10GbE must continue to drop in price and be incorporated into server motherboards. And, within end-user organisations themselves CIOs will need to reorganise. For example, they may wish to ensure that a single service desk can monitor storage, server and network operations.

Network and storage teams will need to work together far more closely than they do in today’s silos. Additionally, when data centre

switches are ready for replacement, they will need to ensure that whatever new solutions are bought, they can support the move to unified fabric.

Reporting on their findings, Forrester analysts described the use of Ethernet for both LAN and SAN as a concept with “significant momentum”, and one that is likely to provide considerable benefits for adopters.

“While there remain some questions about what it will look like and when most firms will move towards adoption, it makes good sense to gain further understanding of the concepts, and supporting technologies. And to begin evaluating Ethernet storage offerings now as a precursor to eventual fabric unification,” Forrester said.

Meanwhile, some industry folk would have end users believe the converging of storage and data networks is a relatively easy process, which should be done as soon as possible. However, this assertion must be challenged, as businesses will migrate in their own timeframe. The complexity of managing and deploying a network, and data centre is reaching unacceptable levels.

With the advent of the cloud and the drive to convergence underway, this paradigm shift is enabling the ability to selectively outsource, or extend, a significant portion of the IT infrastructure. Nowadays, businesses can adopt a wide-range of models depending on individual needs. Some may want to move rapidly to a ‘pay-as-you-go’ model, while others may migrate slowly to a private model built internally.

Either way, businesses are taking advantage of the convergence revolution by adopting new operating models and creating virtual enterprises. In doing so, they become more agile, flexible, efficient and less capital intensive, while also becoming more competitive. However, this can only be realised if the architecture is affordable and reliable.

Ali Ahmar is the regional sales manager, Middle Eeast North Africa for Brocade Communications.

TECH TOOLS

TECH

FOR EXECS

Add a dash of style to your daily comings and goings with the best in tech’ design.

WELL DONE, MR JOBS

The Apple iPhone 4 may be one of the few products launched in 2010 that actually lives up to its hype.

Aesthetically, it boasts high-end design that moves it far beyond its predecessors. Encased in two pieces of smooth, strengthened glass and a wraparound stainless steel band, the iPhone now houses a much larger lithium-ion battery, two new cameras (visual graphics array and five megapixels with a light emitting diode flash), and a second microphone to eliminate background noise while on calls. The ‘Retina Display’ – so called because of its incredible high resolution and pixel density – makes the iPhone visible in full sunlight, low light and at extreme viewing angles. The iPhone operating system (OS), IOS 4, carries loads of new features – a video call feature called FaceTime, folders to keep applications organised, and true smartphone multitasking, so you will be able to hold on to your global positioning system (GPS) signal, play music in the background, stay connected to a call and switch between applications, all at the same time. The Apple iPhone 4 in a word? Wow. Get the 16 gigabyte (GB) model for approximately QR725, or the 32GB model for approximately QR1000. Available in the Middle East this summer. www.apple.com

SCAN ON THE GO

In response to the demand for a high-speed portable scanner suitable for Apple Macintosh users, Canon has released the USB-powered ImageFormula P-150. Compact, lightweight and slim enough to slip into a laptop bag. This portable scanner comes bundled with a software package specifically for Mac systems. Also included in the software suite are BizCard Reader and PageManager for easy and improved filing, management and retrieval of business contact information and digital documents. With its quick scan times and sharp resolution (the maximum is 24-bit colour at 600 dots per inch), the ImageFormula is the perfect mobile office tool for the executive on the go. www.canon-me.com

SOME CULTURE WITH YOUR NOTEBOOK

Technically, the Sony VAIO Mystic Arabesque Notebook is a fully loaded EA Series laptop, but aesthetically, it features a design unique to the Middle East. Available in three colours – black, gold and pink – the Mystic Arabesque is embellished with a decorative pattern characteristic of the region. It comes with a similarly patterned pouch, VAIO Bluetooth mouse and mouse cover. As with all VAIO Notebooks, attention has been paid to what is under the attractive exterior as well. The new model comes with an Intel Core i5-520M processor, a 35-centimetre-wide LED-backlit display, 500 gigabyte (GB) hard disk drive and 1GB of dedicated video memory. Available in the Middle East for AED4995 (QR4951). www.sony-mea.com TheEDGE

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Product Of The Month BACK TO THE FUTURE

If you are getting a little tired of the supersonic speed of the tech’ world, this throwback to the 1940s will come as a welcomed respite. Based on the classic Wurlitzer-style jukebox, the QSonix Nostalgic Digital Jukebox combines the best of retro style with modern technology. Insert your CDs into the jukebox and it will display the cover art, musician, title and track information automatically. The unique drag-and-drop touchscreen allows users to select an album image on the screen and drag it to the ‘play’ area. The jukebox stores up to 9000 CDs (although the Series IV models have a hard drive of one terabyte, able to house up to 14,000 CDs), has four independent outputs, iPod transfer capability, CD burning, and even a Web browser interface. With its hardwood and richly veneered cabinet, and standing 1.55 metres tall, the QSonix jukebox will look entirely at home in a living room or den. Purchase can be made directly from the factory and there is delivery to the Middle East.

Purchase, and delivery queries can be sent to AKowalski@rock-ola.com. Prices start at US$7995 (QR29,100) for the Bubbler model, to US$8795 (QR32,000) for the Harley Davidson branded model. www.Rock-Ola.com

LIFE’S LITTLE LANDING STRIP

Stash this ‘landing strip’ near your front door and you will never be without a fully charged iPod, Blackberry or Bluetooth headset again. The Refresh charging station allows you to charge up to four devices at the same time and is compatible with most of the electronic devices on the market today. The mostly hidden connectors include two iPod or iPhone plugs, a mini-USB, a micro-USB and two standard-USB sockets. The station will help declutter and simplify your life, especially if you find yourself drowning in gadgets that need to be constantly charged with cables you cannot find at a moment’s notice.

The station is compatible with Apple, Blackberry, Creative, Garmin, HP, HTC, Samsung, Sidekick, Nokia, and many more. Available in white, black or pink in the Middle East, it retails for approximately US$90 (QR327). www.bluelounge.com

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TOOLS FOR LIVING

PURE LISTENING PLEASURE

Widely regarded as the ‘world’s best headphones’, the Sennheiser HD800 comes exceedingly close to meeting that claim.

With its tonal perfection, easy clarity, precise dynamics and coherent bounce, the HD800 is a feat of German engineering. The HD800 features a patented ring radiating transducer which is able to radiate a very large and coherent wavefront. By placing this ring in front of, and pointing slightly backward, at the ear, Sennheiser has given the headphones terrific detail retrieval and sense of depth. They are comfortable to wear with ample ‘ear room’, so that your ears do not touch the interior of the ear cup. Hand assembled and with a required registration process with every purchase, the HD800 goes far beyond what you would expect from a set of headphones. If you love music, put this pair on to come as close to audio perfection as possible. Available in Qatar for US$1499 (QR5455). www.sennheiser.com

LV YOUR iPHONE

Why not partner this year’s most wanted phone with a brand synonymous with style and luxury?

Sure, there are more ostentatious iPhone 4 cases (or skins) available, but we like the sleek look of this understated style by Louis Vuitton.

The high-end brand offers four different designs, including the classic Louis Vuitton Monogram Canvas, Alligator Skin, Taiga Leather and Epi Leather. Any one of these choices will look great wrapped around the new iPhone 4. Available in the Middle East, with prices ranging from US$225 (QR818) for the monogram canvas case, to US$1120 (QR4076) for the alligator skin case. www.louisvuitton.com

SIMPLY PERFECTION

Bang and Olufsen is the kind of brand that encourages slavish devotees, and the BeoVision 10 is the latest offering from its high-tech design stable. If you are a high definition television fundi with an eye for style, this skinny television is the one for you. The BeoVision 10 is a wall-mounted liquid crystal display flatscreen that boasts a brushed aluminium frame and bottom-mounted speakers available in a variety of colours. Billed as the slimmest screen Bang and Olufsen has ever made, the TV has a concealed wall bracket that allows you to swing the screen at an angle of up to 45 degrees. It also lives up to the sound standard you would expect of a product from Bang and Olufsen and features a custom-made bass port solution in the shape of a trumpet to eliminate any noise pollution. Available now in the Middle East for US$8700 (QR31,667). www.bang-olufsen.com TheEDGE

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FIGHTING FIT

Muay Thai is the kind of sport people start because they hear that it is a great way to lose weight and get fit. Soon enough, they realise that it requires focus and commitment, as well as tough body conditioning.

Go to enough classes and it will not be long before you can easily execute 50 push-ups with one hand. Or before you start possibly investigating what a real fight in a contest environment might be like. If you want to be fit, strong and have terrific stamina, this is the sport for you.

Muay Thai – Thailand’s national sport – demands so much physically because it is a martial arts discipline which makes full use of the body. It is a mixture of several different techniques and is often called the ‘science of eight limbs’, simply because almost all parts of the body are used during a fight. The fists, elbows, knees and feet are all weapons, using eight points of contact. This is unlike boxing, which uses two (the hands), and sport-

oriented martial arts, which use four (hands and feet).

By the same token, all parts of the body are considered fair targets.

Common hits include quick high kicks to the neck, elbow thrusts to the face and knee hooks to the ribs. In attacking and defending, fighters also use a bit of grappling, known as ‘the clinch’.

According to practitioners, the sport has been around for 2000 years.

In Thailand, Muay Thai evolved from muay boran (ancient boxing), an unarmed combat method that may have been used by Siamese soldiers after losing their weapons in battle. As well as being a practical fighting technique during wartime, muay boran also became a sport in which opponents fought in front of spectators as a form of entertainment. These contests eventually became part of festivals and celebrations, especially those held at temples.

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Muay boran’s most popular folktale involves a young man named Nai Khanom Tom. If legend is to be believed, in 1763, Burmese troops took over the Siam capital of Ayutthaya, and took a group of Thai prisoners, among them a large number of kickboxers. At a celebration, the king of the Burmese, Hsinbyushin, wanted to compare muay boran to the Burmese art, Lethwei, and selected prisoner, Nai Khanom Tom, to fight against the Burmese champion.

Word has it that Tom overwhelmed his opponent with punches, kicks, elbows and knees until he collapsed. The king asked Tom to fight nine other men to prove himself, which he did without a rest period between any of them. Tom was granted his freedom and his feat is celebrated every March 17 in Thailand as Boxer’s Day or National Muay Boran Day. Despite the Thais’ long history with the sport, it was not until 1921 that the first boxing ring was built in Thailand. Around the same time, the sport became codified, referees were introduced and rounds were timed by kick.

Today, years later, the sport has spread worldwide and much of the technique is unchanged from the days of Nai Khanom Tom. Almost all Muay Thai moves use entire body movement, rotating the hip with each kick, punch, elbow and block. There has been a degree of influence from Western boxing and martial arts, so that the full range of boxing punches are now used, for example, the lead jab, hook, uppercut, and others. But cross-fertlisation has happened the other way too – the Muay Thai angle kick, for instance, has been

widely adopted by practitioners of other martial arts and is similar to a karate roundhouse kick. In fact, Muay Thai, along with other disciplines such as karate and taekwondo, has heavily influenced kickboxing in Japan, Europe and the United States. Many even consider kickboxing a modified form of Muay Thai.

If you are interested in Muay Thai as a form of exercise, the sport is specifically designed to promote a high level of fitness. Training includes running, shadowboxing, ropejumping, body weight resistance exercises, medicine ball exercises, abdominal exercises and, in some cases, weight training. It can also include sparring and pad training, which involves practicing punches, kicks, knees and elbow strikes, while wearing thick pads that cover the forearms and hands.

Muay Thai is certainly a change from the usual treadmill-and-weights routine at a gym, but if you are looking to ‘mix it up’, are serious about getting fit, losing weight and becoming stronger, this may just be the sport for you.

In Doha, Muay Thai classes are available at The Champions, a martial arts club that provides training for contests, but also holds Muay Thai fitness-oriented classes for all levels of participants, as well as ladies-only and children’s classes..

The Champions is located near Abu Baker School on Ibn Seena Street.

Phone: +974 4443 1897 E-mail: thechampionsclub@hotmail.com

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The best of

BEIJING

Home to nearly 14 million people, Beijing is a bustling city brimming with a cultural heritage that spans millennia. For many, it is solely a business destination, so why not step out of the hotel and go exploring with our quick and easy guide? Beijing awaits…

Megan Masterson reports

I

n a city where the ancient world lives side-by-side with the trappings of modern life, there is a wealth of once-in-a-lifetime experiences for the average visitor.

From taking in the Great Wall of China to enjoying a traditional teahouse tasting, even a business traveller only based in the city for a short while will find ample opportunity to enjoy an unique adventure.

Until recently, Beijing (formerly Peking) consisted almost entirely of narrow lanes and single-storey buildings. Now, thanks to rapid modernisation, its sprawling atmosphere puts it in sharp contrast to nearby cities such as Hong Kong. The city is rich with gardens and imperial palaces that exemplify Chinese architecture, and the first port of call for many is the Forbidden City, which lies at the heart of Beijing.

For five centuries, this 9999-roomed palace complex served as the administrative centre of the country and imperial palace during the Ming, and Qing dynasties. Called ‘Gu Gong’ in Chinese, it is incredibly well preserved and is the largest palace complex in the world, having housed a succession of emperors, their families and concubines.

The Forbidden City overlooks Tiananmen Square, which, while not much to look at, attracts tourists because it is the scene of so many historical events and is the largest city square in the world. Although the square has an ancient past, modern history is what draws visitors. The square was the site of major ral-

lies during the Cultural Revolution when Mao Tse-Tung oversaw military parades of up to a million people, as well as the 1989 massacre of pro-democracy demonstrators.

Surrounding the square are several monuments and museums, such as the Chinese Revolution Museum and the Chairman Mao Mausoleum where China’s former leader lays preserved in state. Or maybe not. It is said that after his death, doctors pumped Mao’s body with so much formaldehyde that his corpse swelled excessively. After draining his body, they created a wax model of him in case his body did not recuperate. Today it is unknown whether it is Mao’s preserved body, or its wax model on display at any given time.

The incredible Summer Palace in northwest Beijing is on every tourist’s ‘must-do’ list. Visitors enter the site through the East Palace gate, passing through a courtyard into the Hall of Benevolent Longevity, the Hall of Jade Ripples and the Hall of Joyful Longevity.

Be sure to follow the Long Corridor alongside Kunming Lake’s northern shoreline to reach the marble boat, a two-storey structure of carved stone and stained glass.

After all the sightseeing, take refuge in the tranquil beauty of the Belhai Park, one of the most authentically preserved imperial gardens in China. Belhai Park was built over a period of a thousand years, spanning five dynasties, and is an emblem of the ancient Chinese art of landscaped gardens, temples and pavillions.

While these ancient attractions no doubt

LIFE AND STYLE

hold great appeal for the visitor, eye-catching, modern architecture is doing its bit to turn tourists’ heads as well. Among these are the Beijing National Stadium (better known as the Bird’s Nest) and the National Grand Theatre (known as the Eggshell).

But perhaps the greatest attraction in the entire country is the Great Wall of China, the man-made phenomenon, which was built in stages from the seventh century BC to protect the Chinese Empire from northern invaders.

The Wall stretches across eight provinces of northern China and there are recommended Great Wall sections to visit, such as at Badaling, the most popular section and closest to Beijing; Mutianyu, which is less crowded; and Shanhaiguan, where you can see where the Great Wall meets the sea. The best way to make sure you get the most out of your visit to the Great Wall is to sign up with one of the local tour groups.

Attractions and tours aside, a trip to Beijing would not be complete without sampling some of the city’s incredible cuisine. Beijing is an inexpensive city for food and some of the cheapest, and most delicious meals can be had on the streets.

Look out for savoury pancakes, one of the most popular street snacks sold from carts operating day and night. Carts selling noodle dishes also abound, while the more adventurous can sample silkworm, scorpion and various offal, all skewered and grilled to order. Naturally, you should not leave without trying the specialty, Peking roast duck served with thin pancakes and plum sauce, or mutton hotpot, a legacy of the Manchu people. Expe-

rience the many culinary treasures on offer by choosing a new venue and new style of food for every meal.

In the land of the Ming and Qing dynasties, Kublai Khan, The Forbidden City, food that will awaken your tastebuds and karaoke bars, adventure awaits around every corner.

Beijing, the capital city of the People’s Republic of China, is a tourist’s dream destination.

EVENTS AND CONFERENCES

AUGUST 1 – 5 ACCOUNTING FOR NON-ACCOUNTANTS Settec, The Training House, Cairo, Egypt

This programme is ideal for anyone who wants to brush up on the basics of accounting. It is aimed at individuals that have no background in accounting and related topics. Participants will learn the basic concepts of accounting, components of a business’ annual report, as well as how to read financial statements and how to extract important information from them. Budgeting, cost accounting and financial analysis are also all addressed, giving the participant a holistic overview. Training materials will be in English.

www.settec.org

AUGUST 3 – 5 JORDAN INTERNATIONAL MINING EXPO (JOMINEX) Amman International Motor Show Center, Amman, Jordan

This three-day event is billed as the most important mining trade show in the region. It will provide business and networking opportunities for all mining, and energy industry professionals. Visitors are expected from backgrounds such as construction technologies, environmental protection and monitoring consulting, reclamation, and handling and transportation. Exhibitors include names from mining machinery manufacturing, demolition, geotechnologies, hydromechanisation, aerology and ventilation, among many others.

www.biztradeshows.com/trade-events/jominex.html

AUGUST 1 – 10 GULF INTERNATIONAL TRAVEL AND TOURISM VIRTUAL EXPO World Business Chamber, Doha, Qatar

Visitors to this 10-day exhibition will include the public sector and members of the travel and tourism industry, from leisure and business travellers, and tour operators and tourism authorities, to travel agencies and corporate clients. The expo promises to be a comprehensive one, with exhibitors ranging from every sphere of the travel and tourism spectrum – insurance providers, hotels and resorts, car rental firms, foreign tourism boards, travel and tourism agents and promoters, banking and financial companies, as well as air charters and airlines.

www.biztradeshows.com/trade-events/gulf-traveltourism-expo.html

AUGUST 2 – 3

AUGUST 3 – 5 JORDAN INTERNATIONAL OIL, GAS, ENERGY AND MINING EXHIBITION (2010 JONERGY) Amman International Motor Show Center, Amman, Jordan

This is the perfect opportunity for all energy industry professionals to source new technologies, equipment and expertise, and seek out new business ventures in the oil, gas and energy sectors. The exhibition will focus on the entire span of the various industries, including exploration and production technology, construction and engineering equipment, oil and gas transportation systems, safety systems and equipment, environmental protection, exploration equipment and certification/ classification authorities.

www.biztradeshows.com/trade-events/jonergy.html

AUGUST 4 – 7

CREDIT MANAGEMENT AND COLLECTIONS STRATEGIES Radisson BLU Hotel and Resorts, Muscat, Oman

JORDANBUILD 2010 Amman Exhibitions Park, Amman, Jordan

www.jfpsgroup.com/kltrainings/CMCS/

www.jordanbuild.com

Debt retrieval is no easy task. It is essential that the key person responsible for this aspect of the business is knowledgeable about the entire spectrum of effective credit management. This course covers the crucial issues of credit policy, credit risk assessment, credit scoring, query resolution, key collection techniques and effective negotiation skills. This balanced course will help participants implement an effective credit policy and speed up the collections process.

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With 11,000 expected visitors, Jordanbuild 2010 is set to be the largest building show aimed at construction professionals in the region. With attendees as diverse as electricians, architects and contractors, the now-annual event provides the perfect opportunity to showcase and see new projects, products and services. Establish contacts and exchange experiences, information and technology with regional and international players. An ideal platform for those involved in construction, building, interiors, engineering and real estate development.

CONSTRUCTION AND TENDERS

QATAR PROJECTS UPDATE

DRAKE & SCULL AWARDED MUSHEIREB CONTRACT Dohaland awarded a QR182 million contract for district cooling plants at their Musheireb project to Drake and Scull Water and Power, a subsidiary of Drake and Scull International. The scope of work includes detailed design and construction of district cooling plants comprising chiller plants and cooling towers, and includes all equipment and services. The total capacity of the plants is 29,250 tonnage of refrigeration. The contract also covers the design and construction of a chilled water reticulation network, complete mechanical electrical and plumbing, testing and commissioning, and maintenance of the plants for a minimum period of five years.

CONVENTION CENTRE ON SCHEDULE FOR 2011 The Qatar National Convention Centre is currently under construction at Education City. Due for completion this December and earmarked to officially open in 2011, the planned six-storey convention and exhibition centre will consist of a 2500-seat auditorium, a 550-seat theatre, a 4000seat multi-purpose hall and smaller meeting rooms. The development includes construction of facilities for water and energy conservation, as well as an extension to the main convention centre.

Turkish contractor, Baytur, is responsible for the contract, valued at approximately US$615 million (QR2.2 billion).

ALIJARAH BEGINS WORK AT LUSAIL CITY National Leasing Holding (Alijarah) will embark on infrastructure works on the residential segment of Lusail City this month. Work is estimated to cost QR1.05 billion and is scheduled for completion within 36 months.

Alijarah has confirmed that 85 percent of the project’s land has been sold.

Lusail City, expected to be home to 200,000 people, is Qatar’s largest domestic real estate project and one of the most prestigious community developments currently being undertaken in the region.

MAERSK AND QP REACH AL SHAHEEN MILESTONE Although it was initially shunned as an uneconomical option, Maersk Oil and Qatar Petroleum announced that the Al Shaheen field has reached a production landmark of one billion barrels. Original estimates indicated that the field would be unable to produce more than 50,000 barrels per day (bpd), but the current figure is closer to 300,000bpd. The latest US$6 billion (QR21.8 billion) field development at Al Shaheen includes the installation of 15 new platforms, 163 new production and water injection wells, and 140,000 tonnes of new facilities.

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DOHALAND’S MUSHEIREB PROJECT ON TRACK Dohaland, a subsidiary of Qatar Foundation for Education, Science and Community Development, confirmed its Musheireb project was on schedule. The US$5.5 billion (QR20 billion) project aims to regenerate Doha’s original business district and will consist of offices, homes, hotels and schools. Dohaland confirmed raft concrete pouring for phase 1A of the 35-hectare project had started. In April, the construction contract worth QR1.56 billion, was awarded to a consortium led by South Korea’s Hyundai Engineering and Construction. Work is scheduled to be completed over five phases until 2016.

ARABTEC FOR QATAR WORLD TRADE CENTRE Arabtec has signed a deal with Qatar General Insurance and Reinsurance Company to build the Qatar World Trade Centre in Doha, expected to be the country’s tallest tower. The 50-storey tower will include a spherical auditorium, a multi-purpose hall for conferences and exhibitions, five floors of executive offices and a four-storey car park. Preparation work on the QR520 million project began in April with completion scheduled for 2012.

REAL ESTATE PROJECTS DOMINATE GCC Despite the global financial crisis the combined value of the 100 largest projects in the Gulf Cooperation Council (GCC) in the last two years totals more than US$1 trillion (QR3.64 trillion). According to a study conducted by Meed, Saudi Arabia and the United Arab Emirates account for a majority of the developments, with the real estate sector continuing to dominate. While the approximate value of transport projects across the GCC was US$164 billion (QR597 billion), oil and gas projects accounted for nearly US$131 million (QR476 billion). Approximately US$49 billion (QR178 billion) worth of contracts were awarded in the first half of 2010, a decrease on the US$60 billion (QR218 billion) worth of deals signed in the corresponding period last year.

ST REGIS ALL SET FOR DOHA IN 2011 Under construction and set for a grand opening at its West Bay location in January 2011 is the St Regis Hotel (West Bay Hotel and Residential Towers). The project involves construction of a commercial and residential development, which will include a circular tower featuring a basement car park, 125 apartment units and an outdoor swimming pool. Twin residential towers will offer an additional 296 apartments. A five-star St Regis hotel will include basement car parking, a ballroom, restaurants, shops, gym facilities and approximately 320 hotel units.

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CONSTRUCTION AND TENDERS

QATAR TENDERS TANKER RENTAL & OPERATION Description: Rental and operation of sewage tankers.

Closing date: August 9 Client: Ministry of Municipal Affairs and Agriculture Phone: +974 4437 8143 Fax: +974 4495 443 9360 Email: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender No: 553/2010-2011 Bid Bond: QR600,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha.

PUBLIC PARK INSTALLATION Description: Supply and installation of toys for special needs children at public parks.

Closing date: August 9 Client: Ministry of Municipal Affairs and Agriculture Phone: +974 4437 8143 Fax: +974 4495 443 9360 Email: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender No: 502/2010-2011 Bid Bond: QR38,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha.

PROJECT MANAGEMENT Description: Design review, site supervision, quantity surveying and project management for refurbishment of various pump stations.

Closing date: August 10 Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 Email: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender No: PWA/GTC/024/10-11 Bid Bond: QR1.6 million Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha.

TRAFFIC MONITORING SYSTEM Description: Design provision, construction, installation, operation and maintenance of traffic monitoring system (CCTV) in Doha.

Closing date: August 15

Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 Email: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender No: PWA/ITC/006/10-11 Bid Bond: QR200,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha.

SUPPLY OF CAMERA Description: Supply of corona camera for an electricity and water corporation.

Closing date: August 15 Client: Qatar General Electricity and Water Corporation Phone: Toll-free 991 Website: www.km.com.qa Tender No: LTC 395/2010 Bid Bond: QR15,000 Purchase tender documents online after registering in the business portal at www.km.com.qa CONSTRUCTION Description: Construction works for additional toilets and supply of lighting items for Al Hitmi Administrative Building.

Closing date: August 16 Client: Council of Ministers Phone: +974 4437 8143 Fax: +974 4495 443 9360 Email: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender No: 560/2010-2011 Bid Bond: QR45,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha.

SEWERAGE & CONSTRUCTION Description: Construction of new sewers to extend the sewerage network in various locations in Doha.

Closing date: August 17 Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 Email: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender No: PWA/GTC/026/10-11

Bid Bond: QR1 million Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha.

REFURBISHMENT & SEWERAGE Description: Refurbishment and upgrading of various pumping stations for public works authority.

Closing date: August 19 Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 Email: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender No: PWA/GTC/027/10-11 Bid Bond: QR4 million Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha BOAT CHARTER Description: Supply of two safe, fully equipped and properly maintained seaworthy vessels of reputed make and crew for use as platform support/safety standby.

Closing date: August 23 Client: Qatargas Phone: +974 4473 6000 Fax: +974 4473 6666 Email: infos@qatargas.com.qa Website: www.qatargas.com.qa Tender No: LTC/OPF/1466/10 Bid Bond: QR900,000 Tender documents can be obtained from: QatarGas Office, 6th Floor, Salam Towers, Corniche Road, West Bay, Doha.

CONSTRUCTION Description: Demolition of existing gate and boundary wall, and construction, completion and maintenance of office building with required electromechanical works, guardroom, substation, water tank and landscaping.

Closing date: August 24 Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 Email: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender N.: PWA/GTC/025/10-11 Bid Bond: QR534,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha. .

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SUBSCRIPTION

SUBSCRIPTION FORM 2010 TheEDGE is Qatar’s dedicated monthly business magazine.

TheEDGE incorporates a mix of industry news and analysis, in depth features, special interviews with key business decision makers, economic insight and market activity reports, and tips for how you can improve your day-to-day business operations.

TheEDGE will not be available on the news stands, but will be delivered straight to the door of the targeted business community.

To ensure you keep up-to-date, with what is happening in Qatar’s business landscape, fill in the subscription form (below) to receive TheEDGE on a monthly basis.

Subscription is FREE (in Qatar). Forms are to be addressed to the Subscriptions Department at: TheEDGE Subscriptions Department Firefly Communications 11th Floor, Jaidah Tower PO Box 11596 Doha, Qatar

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