contents january 2013
w w w.t h e e d ge. m e
cover story
>44
Prime minister of Qatar, HE Sheikh Hamad bin Jassim bin Jabr Al Thani gave a keynote speech at the inaguaral Euromoney Conference in December. (Image Euromoney)
Qatar’s financial sector has seen numerous changes recently, among them a muchtouted new law that aims to bring the various regulatory authorities under a single umbrella. As Qatar seeks to grow its financial sector through liberalisation, The Edge takes a look at the risks and challenges this might bring in 2013 and beyond.
Business News 8 Qatar Impact 16 Country Focus 40
Finance & Markets 19
Simon Watkins asks if Qatar and China are doubly inscrutable in their increasing financial relationship.
Energy & Sustainability 25
Jamie Stewart asks what the recently held COP 18 meant for Doha’s hydrocarbon sector.
Construction & Real Estate 29 Adrian Camps previous Qatar’s 2013 property market.
features Feature Story: Migrant Workers 50
Erika Widén examines challenges Qatar faces in regard to the alleged mistreatment of its construction workers.
Business Interview: Akbar al Baker 56
Erika Widén discusses the expansion plans of Qatar Airways with its CEO, Akbar Al Baker.
Feature Story: Arabic Content 60
Ramy Khalaf discusses the benefits of developing Arabic digital content in Qatar and the MENA region.
Business Interview: Hassan Al Dehaimi 66 Ramy Khalaf takes a look at Qatar’s award winning tower .
Business Management: CEO Narrative 70 Freek Vermeulen explains why good leaders must be storytellers.
Tech. & Communications 35
Rishi Saha explains why social media should become a C-Suite priority in 2013.
Business Insight 73
The Edge talks hospitality with Andreas Searty, GM of Hilton Doha; construction sector with Omar bin Ladin, CEO of the newly formed firm Qatar bin Ladin Group; and residential property with Munibullah Mani, COO of Alfardan Properties
Products Page 82 10 Things 84 The Edge | 3
publications director mohamed jaidah m.jaidah@firefly-me.com managing editor miles masterson m.masterson@theedge-me.com deputy editor erika widĂŠn e.widen@theedge-me.com digital editor/editorial asst. shehan mashood s.mashood@theedge-me.com regional sales director julia toon j.toon@firefly-me.com | +974 66880228 head of business sales manpreet parmar m.parmar@theedge-me.com | +974 33325038 sales manager adam kynnersley a.kynnersley@theedge-me.com | +974 66079716 sales manager joseph issac j.issac@firefly-me.com | +974 33675301 distribution & subscriptions azqa haroon a.haroon@firefly-me.com | +974 55692471 creative director roula zinati ayoub design coordinator sarah jabari designers teja jaganjac finaliser michael logaring photographer herbert villadelrey printer ali bin ali printing press Doha, Qatar
firefly communications PO Box 11596, Doha , Qatar Tel: +974 44340360 / Fax: +974 44340359 www.firefly-me.com TheEDGE is printed monthly Š 2012 Firefly Communications. All material strictly copyright and all rights reserved. Reproduction in whole or in part, without the prior written permission of Firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by TheEDGE or Firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in TheEDGE. The publisher (Firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Shutterstock and/or iStock Photo or Firefly Communications.
4 | The Edge
editor’s letter Welcome to the all-newThe Edge, Qatar’s Catalyst for Business, version 2.0, overhauled and redesigned for 2013. We hope you will agree it has been worth the effort and the revamped look of our 40th issue is a positive step forward for The Edge into the new year. The Edge has of course always striven to reflect economic activity in all sectors in Qatar. And our primary reason for existence has always been to, hopefully, provide information that will assist serious businessmen, specifically decision makers – investors, entrepreneurs, managers, directors and C-suite executives – in the country and beyond to improve results and profits for their firms. The whole point of changing our design has been to enable us to better present our content and achieve these aims. Apart from that, it was also motivated by a recalibration of our editorial. Though you will see that some of our more longstanding editorial sections, such as Country Focus, Business Insights and 10 Things on the back page remain, there have been some marked adjustments too. Among the most noticeable changes is our new ‘Sectors’ component. Here we will now feature news and topic-driven analysis in easy-to-digest portions, in the four economic segments that we feel dominate Qatar’s overall business landscape. Starting on page 19, we will cover Finance & Markets, Energy & Sustainability, Technology & Communications and Real Estate & Construction in the same format and location every issue from now on. There are of course other business sectors that merit inclusion in the magazine and these you will find in the news, features and interviews. Dispensing with the restrictive old format, our fresh approach has enabled us
to open up in presentation, be more creative in our design and include more photography, interviews, and interesting and topical articles across Qatari business activity. With reference to the latter adjective, this issue our feature story on page 60 takes a look at a growing trend in regional digital media: the Arabisation of content. Bridging this cyber divide in the Gulf is a cultural imperative. But it is also something that MENA businesses – be they multinational or homegrown – cannot ignore if they hope to remain locally relevant. Another highly current and far more controversial subject is the treatment of Qatar’s migrant workforce, which we examine on page 50. Highlighted in Human Right Watch’s (HRW) critical June report and again at Doha’s first ever protest march during COP 18, just how pervasive ill treatment is here (particularly in the construction industry), is an ongoing debate. Ostensibly some must be transgressing. or HRW should have no basis for their claims. But for those unscrupulous, any quick gains made by poor treatment of the migrant workforce must be measured against the negative impact on the country, economically and in reputation. With all eyes on rapidly growing development efforts in preparation for 2022, Qatar has certainly received some considerable negative publicity over this issue globally (and increasingly, locally) and at the very least faces a challenge to recover its world image in that respect. For their part, the Qatari authorities have vowed to eliminate all abuses by better enforcing existing legislation and taking additional preventative measures. On a more positive note, although analysts are less bullish on growth and indications are that inflation will increase in Qatar in 2013, focus on liberalising the country’s economy and opening up its small but wealthy market, discussed in our cover story on page 44, has made many in the financial sector here optimistic about the new year. Which is good news for The Edge, and our readership, the Qatar business community. Here’s to a prosperous 2013 for all.
Welcome to the all-new The Edge magazine, also our 40th issue. We hope you will agree the effort we have put into Miles Masterson our fresh look has been worth it. Managing Editor
The Edge | 5
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8 | The Edge
photo of the month
Emiri Walkabout
His Highness the Emir Sheikh Hamad bin Khalifa Al Thani waves to his loyal subjects next to members of a security team as he arrives with his entourage to attend Qatar’s National Day celebrations on Doha’s Corniche on December 18, 2012. Apparently unscheduled, much to the surprise and elation of those present, the Emir walked some distance along the waterfront, talking to and shaking hands with his people and expatriates alike and even embracing small children. Such gestures are usually rare in the Arab world, with most leaders opting to err on the side of caution behind bulletproof glass or a wall of heavily armed bodyguards, and most choosing to keep some distance between themselves and the masses – and would-be assassins. The fact that HH the Emir had the confidence to get so close to the public leant a special flavour to the 2012 National Day celebrations and perhaps also says a lot about him and the stability of the country that he rules. (Image Corbis/Reuters Fadi Al Assad) The Edge | 9
news business
Qatar’s attorney general addresses the Qatar Law Forum in London
The attorney general of Qatar, His Excellency Dr. Ali bin Fetais Al Marri recently spoke at the Qatar Law Forum (QLF) symposium, held in London, United Kingdom (UK) on the Rule of Law and anti-corruption. The QLF brought together leaders in law from around the world to discuss challenges in enforcing the Rule of Law and other legal and economic-related issues. Other speakers at the event included current attorney general for England and Wales, Dominic Grieve, and the former attorney general Baroness Scotland. The QLF, which is organised by the Qatar International Court and Dispute Resolution Centre (QICDRC), was held for the first time outside Qatar. QICDRC president, Lord Phillips noted, “The nature of the special relationship between Qatar and UK, and the recognition that much of the world’s expertise in Rule of Law development and anticorruption is to be found within the City of London.” In recognition of the need to move beyond dialogue and instigate change on the ground, the QLF is involved in the coordination of, and assistance in a number of Rule of Law projects, and the recent symposium was, the first in a series of events. According to the Illicit Financial Flows from Developing Countries: 2001 – 2010 report, Qatar ranks 15th with US$5.6 billion (QR20.4 billion) of average annual illicit financial flow. Roger Gifford, lord mayor of London, also in attendance, added, “The UK is recognised globally as a world leader when it comes to the Rule of Law. This event showcases our commitment to enhancing the mutually beneficial HE Dr. Ali bin Fetais Al Marri, attorney general of Qatar, speaking at the recent QLF symposium held in London. partnership between our two countries.”
Bringing Qatar’s petrochemical sector under a single organisation
Number of the month
Muntajat, a newly formed company in Qatar, will have the sole rights to market and distribute Qatar’s chemicals and petrochemicals, which produces 10 million tonnes of chemicals, polymers and fertilisers a year. Qatar will also be investing around US$25 billion (QR91 billion) in its chemical and petrochemical HE Mohammed bin Saleh sector over the next eight years. His Al Sada, chairman of the board of directors of Excellency Mohammed bin Saleh Al Muntajat Sada, minister of energy and industry, and chairman of the board of directors of Muntajat, explained, “Muntajat’s activities will consolidate chemical and petrochemical marketing and distribution efforts into a single entity to provide adroitness in doing business and better serve global demands.”
According to Abdulrahman Ahmad Al Shaibi, vice chairman of the board of directors and chairman of the technical committee that oversaw the establishment of Muntajat, by consolidating the distribution and marketing channels of the different chemical and petrochemical products, Muntajat immediately becomes one of the largest entities in the global chemicals and petrochemicals marketing industry. The establishment of the new company comes parallel with the industry inaugurating several new plants, with more facilities planned to go operational in the coming few years. It is expected that the investments made will boost Qatar’s competitiveness in global markets.
10 | The Edge
The amount to be invested in Qatar’s chemical and petrochemical sector over the next eight years.
91billion QR
news business
QFIB to develop Qatar’s first private cloud infrastructure. Qatar First Investment Bank (QFIB) will be developing a private cloud infrastructure in partnership with Microsoft Gulf, to upgrade QFIB’s core IT infrastructure. Once completed the private cloud model will be the first of its kind in Qatar’s financial sector. According to recent reports by Gartner, an IT research firm, 44 percent of chief information officers (CIO) working in the financial services industry expect more than half of their transactions will be supported through cloud infrastructure by 2015. Explaining the technical aspects of the project, Mahmood Shaker, CIO at QFIB said, “We are confident Left to right: From Microsoft, Mowafak Kowatly, account manager financial services, and Samer Abu Ltaif, regional general manager. From QFIB, Slim Bouker, that this project will reshape our chief operating officer, and Mahmood Shaker, chief information officer. IT infrastructure. By leveraging the private cloud capabilities, QFIB will introduce automation which will save on banking technologies and datacentres expansion costs, improve IT service availability and enhance stakeholder experience.”
The main reasons for traffic accidents in Qatar were due to negligent driving followed by the lack of awareness when it comes to traffic laws.
Percentage of CIOs
44% in the financial services sector that expect half their transactions to be supported by cloud infrastructure by 2015.
Traffic safety survey reveals major causes of accidents in Qatar A public survey on traffic safety, conducted by the Qatar Ministry of Interior in coordination with the Statistics Authority and the National Committee for Traffic Safety showed the main reasons for traffic accidents in Qatar were due to negligent driving followed by the lack of awareness when it comes to traffic laws, and the use of mobiles while driving. The high number of roadworks and closures, and a significant increase of vehicles on the road were also contributing factors. Beyond major health and societal impacts, traffic accidents also impact the nation’s economy. In April 2012, experts in the United Arab Emirates calculated the economic burden of traffic accidents on the country’s gross domestic product (GDP) to an estimated 2.3 to 2.9 percent. The medical costs, damage and loss of property, insurance costs and legal costs all contribute to significant GDP loss in a nation. The findings of the 4300 person survey led to recommendations of increasing traffic police on the roads, and the engagement of organisations in civil society to raise traffic awareness among the public. The recommendations also emphasise the importance of better coordination between the various agencies when designing and engineering roadworks. The Edge | 11
news
business in brief QAPCO platinum sponsor of Imagine Cup Qatar 2013
Microsoft Qatar and Qatar Petrochemical Company (QAPCO) recently signed an agreement making QAPCO the platinum sponsor of the forthcoming Microsoft Imagine Cup Qatar 2013. QAPCO entered into this agreement to support youth competing in the world’s premier student technology challenge.
New look for London’s South Bank as Shell Centre development plans unveiled London’s South Bank will be transformed by a unique mixed-use development with the famous Shell Centre Tower at its heart. Joint venture developers Canary Wharf Group and Qatari Diar unveiled their proposed plans (below), which will re-vitalise the area with high quality architecture and much improved public spaces. A mix of offices, homes and retail space will integrate with open and attractive public areas, while new pedestrian routes will connect nearby Waterloo Station with the South Bank of the River Thames.
Aamal sole distributor of Energizer automotive batteries in Qatar Aamal Company Q.S.C., one of the Gulf Cooperation Council’s fastest growing diversified companies, has recently announced the further expansion of its automotive operations by securing sole distribution rights for Qatar to supply Energizer automotive batteries to Qatar, through its fully owned branch Aamal Trading and Distribution.
QInvest sells its stake in ABEC, India’s trade exhibition organiser QInvest, Qatar’s leading Investment bank, has sold its stake in Asian Business Exhibitions and Conferences (ABEC), India’s leading trade exhibition Tamin Hamad Al Kawari, organiser, to ITE newly appointed chief plc, the Londonexecutive officer of QInvest. listed global trade exhibition organiser focused on emerging markets. Commenting on the transaction, Tamim Hamad Al Kawari, QInvest’s newly appointed chief executive officer said recently. “QInvest’s successful realisation of its investment in ABEC shows the firm’s capability in private equity, and its ability to manage and profitably exit investments in a difficult economic environment.”
Fitch Ratings affirms Al Khaliji Bank at A- rating Al Khalij Commercial Bank’s (al khaliji) QSC, credit rating was recently affirmed by Fitch. Fitch maintains the bank’s long-term Issuer Default Rating Robin McCall, al khaliji group chief executive (IDR) at ‘A-’ with officer. a stable outlook. This rating reflects al khaliji Group’s robust strategy and ability to manage its operations. Given the strong overall prospects for the Qatari economy, Fitch believes the bank will expand and perform better over the rating horizon.
UAE Exchange launches the first six-currency prepaid travel card UAE Exchange, recently unveiled the Middle East’s first six-currency prepaid travel card, gocash, which will allow travellers to move around the world, with a power-packed plastic currency that can be used across 34.3 million merchant locations and 1.5 million ATMs. The gocash travel card is now available to UAE Exchange customers across 122 branches in the United Arab Emirates and roll-out of the new product will continue through the remaining branches in Bahrain, Kuwait, Oman and Qatar.
Words & Numbers “Consumer price inflation has edged up in 2012 and is expected to accelerate some more over 2013. Authorities will continue to deploy regulatory powers to prevent unjustified hikes on consumer prices.” His Excellency Dr. Saleh Al Nabi, secretary general of the General Secretariat for Development Planning.
12 | The Edge
39
Barwa Commercial Avenue has reduced the rents for commercial space from QR125 per square metres (sqm) to QR39 per sqm.
“While I will negotiate over many things, I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up.” United States (US) president Barack Obama about increasing the debt ceiling at a White House press briefing.
679 Counterfeit goods cost the Gulf states more than SR700 million (QR679 million) annually.
“Sheikh Hamad bin Khalifa Al-Thani, the Emir of Qatar has postponed his December visit to Ramallah until the end of January. The reason for the delay was not known.” Riyad Al Maliki, foreign minister of the Palestinian Authority announced to the media.
events business January 2013
event of the month 29 - 3
Qatar Automotive Show
Qatar Motor Show is an event that will bring together some of the most notable international carmakers showing their latest models. Exhibitors will include many sports, luxury and economy car dealers as well as different car accessory organisations showing the latest auto and performance trends. For a full and comprehensive calendar of events in Qatar visit www.theedge.me/events
1 - 10
Doha Trade Fair
The DTF is one of the region’s prime trade shows, and will feature more than 570 renowned exhibitors from 29 countries, showcasing and selling a wide range of products varying from household items. toys, and gadgets to electronics, perfume, clothing and food.
16 – 18
Made in Qatar
High-profile international brands will exhibit their finest products in the region, at one of the largest exhibitions of its kind in the world that will promote the State of Qatar as a first-rate destination for conducting business, industry conferences and other major events.
13 – 15
World GTL Congress
The inaugural World GTL Congress is a prestigious global platform gathering international energy leaders, decision makers and experts to further shape the GTL industry and address international sustainable development initiatives.
14
Fatca Symposium
The purpose of the symposium is to discuss the regional implications of the coming United States Foreign Account Tax Compliance Act (FATCA) and bring together senior government officials from the Gulf Cooperation Council and abroad, including international tax and accounting experts.
21 “We have a line-up GCC Economic Forum 2013 The second such forum, which will be held in that will definitely Doha, aims to encourage the investment in the Cooperation Countries, and achieve a number cause a stir, including Gulf of basic goals, most importantly opening up new horizons for partnership and investment. the unveiling of neverseen-before models from renowned car brands, 21 - 23 Offshore Middle East said Yousif Al Khater, CEO An annual conference and exhibition dedicated the advancement of the offshore industry, and of q.Media about the Qatar totechnological challenges associated with safely and cost effectively developing subsea resources. Automotive Show. The Edge | 13
Qatar Impact |
COP 18 OR COP OUT? Plenty of questions were asked about Doha’s readiness and even its suitability to host the United Nations COP 18 Climate Change conference last month. Kamahl Santamaria assesses what was actually achieved at COP 18.
Y
ou just could not miss them last month. All those big mintgreen buses on the roads of Doha, ferrying delegates to and from the United Nations Climate Change Conference, or COP 18. What really caught my eye though was the slogan splashed across many of them: ‘Sharpening Emissions Targets’. It was like an admission – or perhaps an acceptance or understanding – that COP 18 was never going to come up with a binding agreement on cutting carbon emissions, and that it was only about trying to make those targets a little better than they were. And anyway, was not the talk of cutting carbon emissions just a little rich coming from the country with the worst levels in the world per capita? Of course, the organisers would never admit to such thoughts. But with such large divisions between developed and emerging countries over who pollutes more, who has been polluting the longest, and who should therefore be paying the most for it...well, they must have known that reaching a strong agreement was never going to be easy. In the end, COP 18 brought about an extension of the existing Kyoto Protocol which – while better than nothing – only covers 15 percent of global carbon emissions, so could hardly be considered groundbreaking. Leaving that aside though, what did COP 18 do for our city? Did its purpose rub off or leave any lasting legacy? Well, at the very least (and I am back on the buses here) it proved that public transport does have a place in Doha when implemented effectively. There were certainly some heavy traffic days, but imagine how much worse it could have been if everyone had been driving their cars to the Qatar National Convention Centre (QNCC)? As it happened only the head delegates were allowed in cars – everyone else had to hop on a shuttle bus and it largely worked. The bigger achievement though was the awareness about climate change that COP18 brought to its host country. It resulted in Qatar’s first ever climate-change demonstration – and indeed one of very few demonstrations at all. Make no mistake,
16 | The Edge
this was no delayed ‘Arab Spring’ in the Gulf – only about 800 people attended and it was heavily regulated – but all movements have to start somewhere. What was notable was the presence of 100 youth activists from the Arab Youth Climate Movement, calling specifically on Arab leaders to take a leading role in the talks. They brought controversy too, with reports of two activists later deported after holding an unregistered protest in the QNCC main hall. Will any of this have a lasting effect? Not immediately, I think. Climate protests are not going to become a regular feature, nor are people going to suddenly give up their gas-guzzling Landcruisers and other SUVs. And once summer comes along there will be no choice but to turn on the air conditioning units again. And in the end, governments are good at talking but not so great on actually finding the money and implementing their promises. So perhaps the onus lies with the business world. After all, climate change action needs to come from entities that have money and the incentive (for example, making more money) to use it – and that is big business. Think about cars. The technology for non-polluting electric cars is already out there but financial returns are low for the investment, and as long as oil is relatively cheap they are not going to take off in a huge way. However, if oil prices go up or supplies go down – and that will happen one day – then the incentive will be there for companies to really invest in the technology to make it viable. In the end, these climate change conferences have been going on for 18 years. The Kyoto meeting that brought about the only major agreement was 15 years ago. I think it is safe to say that talking has had limited success. Action, from those who can make it happen, the private sector businesses just might be the key. Kamahl Santamaria is a Doha-based news anchor with Al Jazeera English and host of the channel’s business and economics programme Counting the Cost.
THE GATE
sector name | banner heading
18 | The Edge
This section is brought to you by Qatar Financial Centre Contents: China and Qatar’s lucrative new fiscal alliance 19 . Qatar Exchange 2012 Performance 21 . Qatari banks raise capital for expansion 22 . Islamic banking’s assets surge 24 . Qatari saving sentiment lowest in GCC 24.
finance & markets
Under the guidance of Ahmad Mohamed Al Sayed, managing director and chief executive officer at Qatar Holding, Qatar has been granted a QR 3,64 billion quota to invest in China’s capital markets. (Image Corbis/Reuters)
China and Qatar: A new and lucrative fiscal alliance?
Are Qatar and China doubly inscrutable in their ever-increasing financial relationship? asks Simon Watkins
G
iven their economic strategy of diversification, Qatari authorities were no doubt delighted in December 2012 that Qatar Holding - the investment arm of its US$120 billion (QR 436 billion) sovereign wealth fund, the Qatar Investment Authority (QIA) – were granted a US$1 billion (QR3.64 billion) quota to invest in China’s capital markets. Qatar was also likely to be pleased, according to Sam Barden, chief executive officer (CEO) of SBI Markets investment fund in Dubai, that four days later China
upped the quota in general to US$5 billion (QR18 billion) under its Qualified Foreign Institutional Investor (QFII) scheme, the main channel for foreign investment in Chinese stock and bond markets. “This is a perfect marriage for both countries,” said Barden. “China is in desperate need [to] boost its ailing stock markets, both in cash and reputational terms, while Qatar wants to align itself more firmly in the Far East now, especially accessing China’s financial markets and its technological know-how.” Even looking at its recent Western-oriented
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The Edge | 19
sectors | finance & markets
investments, the five percent currently owned by the QIA in Royal Dutch Shell (with a declared intention of raising this to at least seven percent) is in large part a function of its desire to expand its presence in China through any vehicle available, explained Roger Nightingale, a global strategist for Pointon York investment fund, in London. “Not only does this stake allow Qatar great access to Shell’s resources and technology expertise around the globe, including planned explorations in the United States (US) Arctic, but Shell also appears to have exclusive access to shale gas development in China, estimated to be the largest in the world,” he said. Nightingale added that actively becoming involved in China’s capital markets under the QFII scheme – and he is sure that Qatar will shortly be granted another increase to its investment cap – will allow the country not only to gain from highly likely straight investment gains. As China liberalises its markets, and permits its CNY currency to become more freely convertible, this will allow Qatar access its technical capabilities in renewables.
Solar projects
China has a deserved reputation as the world’s greatest polluter, but it leads in solar photovoltaic (PV) panel manufacturing. It is the presence of these Chinese firms that has driven down the price of PV panels by 75 percent in the last five years, forcing competing US firms into bankruptcy. “China has quadrupled its solar capacity target to 50GW by 2020, and is addressing the oversupply of panels through accelerated domestic installations, which may help it weather the storm of import duties coming from the US,” said Tom Whitehouse, chairman of the London Environmental Investment Forum. Consequently, with the G-77 (of which Qatar is a member) having imposed a 2020 target by which to reduce greenhouse gas emissions by varyingly significant amounts (in Qatar’s case, 20 percent) it is a good move for Doha to have China (and its low PV pricing and technical experts) on side for its plans to tender its first solar power project in Q1, 2013. Currently, Qatar Solar Technologies (QSTec) will drive the project (a venture between Qatar Foundation, Germany’s SolarWorld and the Qatar Development Bank), but the likelihood is, says a senior analyst at a Doha investment firm, that China will play a large role in in the future. 20 | The Edge
Source: Bloomberg Jul
Aug
Sep
Oct
Nov
Dec
In December 2012, at its lowest point of trading in six months of Shanghai Stock Exchange (above), China permitted US$1 billion in capital market investments quota for Qatar Holding. Mutual investment
“Increasing Qatar/China co-operation frankly knows no bounds,” underlined Barden, highlighting a cross-exchange tieup that went largely unnoticed when it was announced in November 2012. That date marked a statement from Jiang Yang, vice chairman of the China Securities Regulatory Commission (CSRC) and Yang Maijun, chairman of Shanghai Futures Exchange (SFE), who had been in Doha for a week discussing future relations between the two bodies and Qatar Exchange (QE). “At the end,” said Barden, “was the same anodyne statement of enjoying a long and mutually beneficial working relationship between the SFE and the CSRC, and the QE, that we saw after similar meetings with the NYSE Euronext, and we know what happened there.” Indeed, shortly after a similar a visit in 2009, NYSE Euronext acquired 20 percent of QE for US$200 million (QR728 million). Even more interesting is the announcement of Qatar’s China quota came just one week after it was quietly announced that NYSE Euronext had reduced its ownership level to 12 percent, thus opening up the possibility of another foreign investor buying a stake in the bourse from the new owner: which is none other than Qatar Holding, the SWF that has just been awarded the China quota. “The word on the street is that a little more mutual bonding might emerge with, for example, China’s sovereign wealth fund, China Investment Corporation (CIC), taking a stake in the Qatar Stock Exchange through its investment arm The CITIC Group,” furthered Barden. “And who [recently] bought a 22 percent stake in CITIC? Qatar Holding, of course.”
Simon Watkins is a freelance financial journalist based in London in the United Kingdom.
“China is in desperate need to boost its ailing stock markets, while Qatar wants to align itself more firmly in the Far East.” – Sam Barden, CEO of SBI Markets.
finance & markets | sectors
Stock Market
Qatar Exchange: mixed results in 2012
Qatari bourse performance does not reflect economic momentum of the past year, writes Dheeraj Shahdadpuri
Financial markets the world over performed strongly last year despite prevalent economic uncertainties. The upturn in investor optimism was undoubtedly driven by the decisive steps taken by the United States (US) Federal Reserve (Fed) and the European Commercial Bank (ECB), both of which have used an extraordinary monetary arsenal (dubbed as quantitative easing) to revive economic growth. On the back of renewed risk appetite and supply concerns, crude averaged nearly US$111 (QR404) for the second consecutive year. Although such a high price is detrimental to economic activity of oil importing countries, it nevertheless has always been a boon for oil producing countries, specifically the Gulf Cooperative Council (GCC). Within the GCC, Qatar’s economic momentum by far outweighs its peers. Economic activity has continued to surge on the back of massive investments being taken up in both public and private sectors. However, in a stark contrast, the positive economic mood was not equally reflected on the Qatar stock market, Qatar Exchange (QE) last year. The benchmark QE Index lost 3.8 percent (year to date performance as of 20 December, 2012), as any major upside movement in index heavyweight companies was largely absent. Due to the poor performance, market capitalisation of QE increased only marginally by US$1.1
billion (QR4 billion) to US$127 billion (QR462 billion) during 2012. Shares of Dlala Brokerage and Investment Holdings were the top gainers last year with massive returns of 141 percent. This primarily was a result of strong profitability posted by the company for the first nine months, where its earnings per share inched higher to QR1.05 as compared to QR0.8 during the same period of previous year. The next top gainer for the year was Qatar Meat and Livestock Company. Share price of the scrip rose 92 percent on the back of strong earnings and an announcement made by the company that it will look at increasing its business operations in near future. The third top gainer for the year was Qatar-German Medical Devices Company, which was followed by Medicare and Al Khaleej Holding. On the other side of the spectrum, Al Ahli Bank lost 37 percent of its share price, which was partially due to the distribution of 60 percent bonus shares in March. To some extent share price also drifted lower on account of rights issue under which one share was offered for every five held by existing shareholders, at QR30 per share. But on the financials front, comparatively lower net interest income than the previous year made investors wary, due to which the scrip remained under selling pressure. The next down for the year was United Development Company, which declined 30 percent. But again this was largely due to price adjustment on account of 40 percent bonus share distribution. The company reported a decline in its profitability for the first nine months of the year, but this was due to lack of revaluation gains on Top Gainers
29-Dec-11
% change
Dlala Brokerage
35.00
14.55
141%
Qatar Meat & Livestock
61.00
31.85
92%
Qatar German Medical
14.30
8.46
69%
Medicare
38.25
24.45
56%
Al Khaleej Holding
23.00
15.33
50%
Top Losers
20-Dec-12
29-Dec-11
% change
Doha Bank
The performance of QE did not reflect the state of the world economy this year, says The Edge’s analyst.
20-Dec-12
Qatar’s economic momentum continues to outweigh its peers in the GCC. This however was not reflected on the Qatar Exchange in 2012.
51.10
64.10
-20%
Qatar Telecom
103.90
140.80
-26%
Qatar Cinema
57.80
81.80
-29%
United Development Co.
17.20
24.48
-30%
Al Ahli Bank
53.00
84.00
-37%
The Edge | 21
sectors | finance & markets
its investment properties as compared to previous period. The third biggest loser for the year was Qatar Cinema, at 29 percent lower. However, the company continued to post a healthy financial performance during the first nine months of the year where its earnings per share inched up to QR2 as compared to QR1 during the same period of the previous year. Shares of index heavyweight, Industries Qatar, rose 17 percent. A continuous buying momentum was witnessed on the scrip throughout the year, which was supported by positive earnings growth. However, share price of the second biggest index heavyweight, Qatar National Bank, declined 14 percent, despite healthy earnings performance. This more or less curbed gains on the headline QE index despite appreciation of Industries Qatar. 2013 looks to be another year of continued growth in corporate profits given the underlying strength of the country’s economic fundamentals. However, whether an uptrend in investor risk appetite is witnessed towards Qatari equities or not, will remain dependent the global investment environment.
Dheeraj Shahdadpuri is a financial analyst currently based in Dubai in the United Arab Emirates. Qatari Banking Sector
Local banks raise capital for expansion
Qatari banks are turning to the capital markets to finance expansion for growth both in the domestic market and overseas, writes Thomas Bacon.
In November 2012, Qatar National Bank (QNB), the country’s largest bank by assets, successfully completed a US$1 billion (QR3.64 billion) bond issue on the international markets through its Euro Medium Term Note (EMTN) programme. 22 | The Edge
– and to build up its presence overseas. QNB is also expected to bid for French bank Société Générale’s 77.2 percent stake in its Egyptian subsidiary, NSGB. QNB is already operating in more than 20 Following its latest successful bond issuance, QNB is looking to bid for a stake in French bank Société Générale’s Egyptian subsidiary. countries through its own network, The tranche, launched on November 7, subsidiaries and associate companies, matures in February 2018 and carries and benefits from the strong backing of a coupon of 2.125 percent, the lowest the Qatar Investment Authority (QIA), the rate ever for a bond issue by a financial country’s sovereign wealth fund, which owns a 50 percent of the bank, the other institution in the region. The low coupon reflects the perceived 50 percent held by the private sector. While QNB has turned to conventional security of the QNB’s issue, important at a time when some institutions and countries debt markets to bolster its capital, are spending increasing amounts to service counterparts have turned to shari’ah their debt. The issue was several times compliant (Islamic) instruments – oversubscribed, and QNB’s strong domestic particularly Islamic institutions. In October 2012, Qatar Islamic Bank position (with a 45 percent market share) and profitability will have contributed to the (QIB), the country’s largest shari’ahcompliant bank, issued a US$750 million enthusiastic international interest. The bank has raised nearly US$4 billion (QR2.7 billion) five year Islamic bond or (QR14.5 billion) in 2012 through the most sukuk aiming to leverage high levels of recent issue, plus a US$1 billion (QR3.64 liquidity and demand for issues in the billion) bond launch in February and a region. The sukuk was the first launched US$1.8 billion (QR 6.5 billion) syndicated by QIB, in which the QIA has a 10 percent loan in August. Local media has said QNB stake, for two years, and represents half of is planning to use the extra capital both a planned $1.5 billion (QR5,46 billion) in to expand lending on the fast-growing sukuk issues. The same month, Qatar International domestic market – which has seen loan growth reach 32 percent in the year to Islamic Bank successfully priced a US$700 August, supported by major public projects million (QR2.5 billion) five-year sukuk, its first international capital market bond launch, which reportedly attracted an order book of US$2.7 billion (QR9.8 billion). Recent reports suggest that the Qatari banking sector is poised for growth and modernisation. The expected investment surge over the coming years should also provide opportunities for foreign lenders, as not all Qatari banks have the capacity for costly projects and are limited to leveraging a relatively small domestic market.
While QNB has turned to conventional debt markets, its counterparts have used shari’ah compliant instruments to raise capital.
Based in Turkey, Thomas Bacon is an analyst at Oxford Business Group (OBG).
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sectors | finance & markets
Islamic Banking
Shari’ah Surge
Asher Nazim of Ernst & Young in Dubai says that though Islamic banking is growing fast, it still faces a number of challenges in regulation, risk and retail.
Global Islamic assets should reach US$1.8 trillion by 2013, with Qatar entreched in the core largest seven markets, reveals a recent Ernst & Young report.
This is up from the US$1.3 trillion (QR4.7 trillion) assets held in 2011 and significantly higher than some of the earlier industry estimates. Globally, the Islamic banking industry continues to record robust growth, with the top 20 Islamic banks registering a growth of 16 percent in the last three years. Ashar Nazim, partner, Global Islamic Banking Centre of Excellence at Ernst & Young in Dubai, said, “The top 20 Islamic banks hold 57 percent of the total global Islamic banking assets and are concentrated in the seven core markets for Islamic banking which include: Saudi Arabia, Kuwait, United Aran Emirates (UAE), Bahrain, Qatar, Malaysia and Turkey.” According to the report, in 2011 the Islamic banking industry in Saudi Arabia, with an estimated US$207 billion (QR754 billion) of Islamic assets, ranked first. Malaysia ranked second with total assets of US$106 billion (QR386 billion) in 2011 and UAE ranked third with total assets of US$75 billion (QR273 billion). The report stated there are also many new fast-growing markets on the horizon, such as Indonesia, Egypt, Iraq and Libya. Egypt has been actively investigating issuing sovereign sukuks as well as the development of a new regulatory framework for Islamic banks, as several banks in Egypt are expected to launch shari’ah-compliant products. Iraq is contemplating Islamic banking legislation while Libya prepares to implement its Islamic banking framework. A 24 | The Edge
number of both established and new banks are considering introducing Islamic banking operations in these markets - highlighting the continued growth and development of Islamic banking throughout the Middle East and North Africa. Nevertheless, despite the projected asset growth and the introduction of new Islamic initiatives in a number of countries, the profitability of Islamic banking continues to lag behind that of conventional banking in the same markets. Over the period 2008-2011, the leading return on equity (ROE) for Islamic banking was only 11.6 percent, against 15.3 percent for conventional banking. Islamic banks, the report added, continue to face challenges. These include sub-scale operations, a very basic risk culture, incomplete market segmentation, limited engagement with clients, and an absence of technologically oriented value propositions. “Discussions with management and boards of leading Islamic banks suggest that major transformation is happening around Regulations, Risk and Retail Banking or the three Rs,” explained Ashar. “There are also meaningful developments on the regulatory front although a lot more needs to be done to create the right enabling environment for Islamic banks to implement the reform agenda,” With the successful implementation of these transformation agendas over the next two to three years, Islamic banks are aiming to close the performance gap that currently exists with the overall banking industry. According to Ernst & Young’s report, successful transformation could see the profit pool of Islamic banks rise by an additional 25 percent by 2015.
The top 20 Islamic banks hold 57 percent of the total Islamic banking assets, concentrated in seven core markets, which includes Qatar.
Personal Finance
Qatari saving sentiment lowest in GCC
Gulf Cooperation Council Savings Index examines regional attitudes towards saving.
The 2011 National Bonds Gulf Cooperation Council Savings Index was released in late 2012 by National Bonds Corporation PJSC, a United Arab Emirates (UAE)-based Shari’ah-compliant investment company. According to the index, residents of Saudi Arabia demonstrated the biggest increase in savings sentiments, followed by Kuwait and Oman. Bahrain and the UAE regressed, displaying slightly more negative savings sentiments than last year, while Qatar was last with a relatively large decline. The majority of respondents (64 percent) said that they save less than a fifth of their monthly income but most have plans to start or increase their savings in the next six months. The biggest contrast among residents in the same country was Qatar, which, despite having the highest percentage who claimed to have saved more that they did last year (29 percent), also had the highest percentage of people who saved ‘significantly less’ (28 percent). The savings instruments being used the most by residents of the Gulf Cooperation Council were current bank accounts or bank savings accounts. Bahrain had the highest percentage of people using a savings scheme linked to a prize draw (34 percent), seven times higher than KSA (four percent) and Qatar (five percent). In addition, Qatar had the most people using gold for savings (16 percent), double the average of the other markets. Another difference in savings was products designed for nationals. For Qataris this ranked first in choosing a savings instrument, while for Bahrain and Kuwait it did not feature in the top 10.
16%
The percentage of people in Qatar using gold as a savings instrument, double the GCC average.
Contents: Affecting Emissions: COP 18 Outcomes and Qatar 25 . Qatar Solar’s dust challenge 26 . Doha firm’s carbon storage plan 27 . Qatar enters South-East Asian LNG market 27 . Qatar’s multi-billion power and water plans 28.
energy & sustainability
UN executive secretary Christiana Figueres and Qatar deputy prime minister Abdullah bin Hamad Al Attiyah chaired COP 18 in Doha in December 2012. (Getty Images)
Affecting Emissions: COP 18 Outcomes and Qatar
What does the result of the recent Doha talks mean for Qatar’s hydrocarbon sector? The Edge Energy & Sustainability Sector editor Jamie Stewart reports.
“T
his is a gateway to the future, even beyond 2020,” United Nations (UN) Climate Change Conference chairman Abdullah bin Hamad Al Attiyah said at the conclusion to the gruelling negotiations on climate change held in Doha in December 2012. “We hope it will be a gateway for the whole world.” A global agreement or rather, the conclusion of the first stage of negotiations that could in time lead to a global agreement, may have been the result – hard fought, controversial and unpopular in
some quarters as it may be – of COP 18, as the conference is known. But what does this mean for the country that hosted the fortnight-long talks – and one with the unsavoury position of the world’s highest per capita emitter of greenhouse gases – Qatar? And more specifically its hydrocarbon industry? Well, firstly, the outcome can be broken down into three areas: The Doha gateway agreement, which paves the way to an extension of the Kyoto Protocol; secondly, a financial pledge from rich
nations to assist developing countries with the cost of adapting to the changing climate; and finally an agreement on the ‘loss and damage’ fund, which will in effect insure the most vulnerable nations against the potentially damaging physical effects of climate change. The second two areas – the financial pledge and the ‘loss and damage’ fund – will extend a negligible impact on Qatar. As a party to the UN Framework Convention on Climate Change, Qatar will be required to contribute to the adaptation The Edge | 25
sectors | energy & sustainability
C
Rest of the world 40%
a hin
24
Russia 6%
rm
Japa
6%
Ge
8%
India
an y3 % n 4%
US 1
%
and mitigation fund for developing countries, but the size of its contributions will be minimal, and Doha has the hydrocarbon dollars to fund its share. Similarly, the ‘loss and damage’ mechanism could involve a nominal contribution from Qatar. It is the Doha gateway agreement that should have a tangible impact on the Qatari economy. The Kyoto Protocol sets emissions reduction targets for a number of countries. Qatar ratified the protocol in 2005, but is yet to set a binding emissions reduction target. The Kyoto Protocol only covers 15 percent of global carbon emissions. But the important point for Qatar is that a number of the state’s major liquefied natural gas customers, such as Japan, the United Kingdom and the rest of the European Union, are covered by the protocol and do have binding targets. All of these bodies have said that gas burn in their power generation sectors, as opposed to more polluting coal, is among the most efficient means of pulling down their emissions. This means sustained demand for Qatar’s number one export from its already established customers, and more hydrocarbon dollars flowing into Doha’s coffers that can be reinvested in the state’s economic diversification programme. The time in which cuts must be achieved is a further factor, with the extension to Kyoto due to be signed in 2015. In the larger framework of things, the world has a has very little time in which to act: “The UN has endorsed a target of restricting global temperature rises to less than two degrees Celsius but the window is closing in on us,” UN executive secretary Christiana Figueres said at the close of COP 18. 26 | The Edge
CO2 emissions by country The Kyoto Protocol covers 15 percent of global carbon emissions. The United States, which alone accounts for around 18 percent of emissions, is a signatory to the protocol but has no plans to ratify it. The chart on the right shows the six countries with the highest CO2 emissions accounting for 60 percent of overall, while the world remainder totals for 40 percent. Building gas-fired power plants is the quickest means for any industrialised nation to plug a power generation gap when closing coal plants. Mass investment in renewable energy is an alternative, but gas-fired power plants will still be required to back up energy systems when the wind stops blowing or the sun stops shining. So either way, Qatar stands to benefit. Nevertheless, notes of caution regarding the gateway agreement were sounded after COP 18. “The bad news is the level of ambition and the number of countries who have signed on has gone down quite a lot,” International Institute for Environment and Development senior fellow, Saleemul Huq said. “But this keeps the show on the road, and we can continue the negotiation towards a new treaty.”
“There are some effective solutions to clean solar panels from dust such as self cleaning robots or antidust coating.” - E & Y cleantech executive manager, Nimer AbuAli on the dust challenge Qatar’s nascent solar industry faces.
Solar Power
Qatar Solar’s dust challenge
Qatar’s solar ambitions could trigger a business boom in Doha. But will the city’s solar panels lead the way or disappear under a cloud of dust?
The truth is that solar power could more than just diversify Qatar’s energy sector. To a large extent, it is part of the future itself. Doha plans to not only enter the Middle East solar industry – but to drive it. The scale of Doha’s proposed drive into the sector is immense. It is being spearheaded by Qatar Solar Technologies (QSTec). The firm’s flagship project, a sprawling plant in Ras Laffan Industrial
energy & sustainability | sectors
City, will produce 8000 metric tonnes per year (MTPY) of polysilicon, the material used to manufacture photovoltaic panels. This is sufficient to generate around 1.4 gigawatts (GW) of electricity – the same as a modern day nuclear power station. The country’s first large-scale solar power plant, a gigantic 1.8GW facility, will be built in stages with completion expected in 2018. The first construction tender will be issued in 2014, reporters were told at this year’s COP 18 climate conference in Doha. A substantial level of polysilicon production above the 8000 MTPY planned by 2018 – and QSTec has plans to raise this to 45,000 MTPY, or 6.5GW worth – would produce enough raw material to satiate domestic demand, with ample supply to export across the Middle East and beyond. And business opportunities should abound. Chief executive officer (CEO) Khalid Klefeekh Al Hajri has pledged to collaborate and partner with key local and international organisations. In the Middle East, regional demand looks set to boom. Dubai is building the 10 megawatt Mohammed bin Rashid Al Maktoum Solar Park, which it plans to increase to 1GW by 2030. Saudi Arabia, meanwhile, has unveiled plans for a mammoth 41GW of solar power generation by 2032. Demand for Qatar’s immense volume of planned polysilicon production therefore looks set to materialise. But Qatar’s ambitious proposals deserve scrutiny, with questions being asked as to the suitability of the desert environment to the mass-development of solar power generation. “The dust is a problem for many solar technologies, and especially for photovoltaic panels, mainly due to its impact on the efficiency of [power] production and the water consumption required to clean the panels,” Ernst & Young cleantech executive manager Nimer AbuAli told The Edge. Dust can cut power generation from solar panels by up to 25 percent. So what can be done to ensure the viability of Qatar’s solar power plans? “There are many solutions to overcome this problem, however, it depends on the location and the severity of the impact,” AbuAli said. “There are some effective solutions to clean solar panels from dust such as dry cleaning, self cleaning by robots or anti-dust coating.” Work is ongoing at a number of research and development institutions, AbuAli added, the success of which could define whether Qatar leads the global race in solar technology.
Carbon Sequestration
Doha firm’s new carbon storage plan A large Doha-based construction firm has unveiled ambitious plans to offset its last three years worth of carbon emissions – by storing the equivalent amount of carbon in brown algae off the west coast of the country. The hope is that, should the scheme prove successful, more Qatar-based firms will follow Qatari Diar Construction’s (QDVC’s) lead “We believe that our initiative will attract more companies to join us,” said sustainable development manager Sheikha Athba Al Thani.
Gas Exports
Qatar enters S. East Asian LNG market
Qatargas recently secured its first longterm liquefied natural gas (LNG) supply agreement with a South-East Asian nation, Thailand. The deal is significant because Doha has long been targeting the heavy growth markets of Asia - with the city state of Singapore next – to offset diminishing LNG demand in the West, as the United States pushes for gas self-sufficiency via unconventional sources and European economies stagnate.
The project could potentially provide Doha with scientific knowledge that can be marketed to other countries globally that have the algae resources available, unlocking opportunities for Qatar firms. The algae will be analysed through to the end of February by experts from QDVC and France-based marine consultancy Creocean to determine its potential for the storage of carbon. The project will begin with an evaluation of the resources on the west coast, Creocean said in a statement. QDVC began calculating the carbon production from its operations in 2009 and has determined that, since the end of that year, around 8000 tonnes has been produced. “Plans are now in place to offset these emissions through the new algae carbon sequestration project,” the company said in a statement.
Qatargas said in a statement that it sees Thailand “as an evolving LNG market and recognises its potential within South-East Asia to absorb significant quantities of LNG in the future”. Under the deal, Qatargas will deliver two million tonnes per annum (MTA) of LNG for 20 years beginning in 2015 to Thai stateowned energy company PTT, the firm’s first long-term LNG supply contract. Qatargas CEO Khalid bin Khalifa Al Thani said the deal was “a momentous occasion”, because it was Qatargas’ first in the region. He added he was “very happy that discussions with PTT regarding a long-term agreement have come to fruition”. Qatargas gained the advantage over rival suppliers through the delivery of
Alongside neighbour Thailand the city-state of Singapore is to become a consumer of Qatari LNG (Image Getty Images)
The Edge | 27
sectors | energy & sustainability
47%
Utilities Infrastructure
Qatar’s multibillion power and water capacity plans
In 2011, Qatar exported 47 percent of its LNG to the Asia Pacific region commissioning cargoes prior to signing the deal. Those cargoes allowed the Thai firm to ensure the smooth running of its new import facility. “In our initial preparation for LNG imports, Qatargas supported us,” PTT CEO and president Pailin Chuchottaworn said. He added that, in particular, Qatar’s LNG delivery had proved helpful in 2011 when one of the Thai company’s transmission pipelines faced problems. This indicates that the South-East Asian market could open up even further for Qatargas in 2013 because, just a fortnight before the Thailand agreement was signed, Qatargas inked a deal to supply a commissioning cargo to a Singapore terminal – the first ever to enter the citystate – mirroring the approach that the company took in its dealings with PTT. The Singapore-bound cargo, to be delivered in early 2013, will be used to commission Singapore LNG Corporation’s first importation terminal. Al Thani confirmed the deal would help Qatargas build relationships with new customers. LNG exports are the cornerstone of Qatar’s domestic economy and are essential to the government’s spending plans. According to Qatar National Bank (QNB) Group, in 2011, Qatar exported 47 percent of its LNG to the Asia Pacific region, while 42 percent went to Europe. A number of potential long-term supply agreements are currently under discussion with India, Pakistan and Turkey, according to QNB.
Qatargas will deliver two million tonnes per annum (MTA) of LNG for 20 years beginning in 2015 to Thai state-owned energy company PTT.
Almost half of all Qatari LNG exports were delivered to Asia 2011, including China as pictured here aboard the Qatargas carrier Zarga. (Image courtesy Qatargas)
28 | The Edge
Construction contracts worth a total of US$3.2 billion (QR11.7 billion) are set to be awarded within the Qatar power and water sector in 2013, according to a major research firm. The figure ranks Qatar fourth among the six Gulf Cooperation Council (GCC) countries (see below) Ventures Middle East revealed in December. The combined GCC figure of US$32.4 billion (QR118 billion) represents a resurgence in investment following the Arab Spring-related political tensions of 2012, which dampened appetite for public spending. The bounce-back is being driven by infrastructure developments backed by both governments and public private partnerships, which are “surging ahead”, according to a Ventures report. This is particularly the case in Qatar, which will begin to roll out infrastructure contracts in preparation for the 2022 World Cup – a considerable chunk of which will be in the electricity sector as it seeks to power its new facilities. Planned GCC power and water sector investment for 2013 (QR billion) Saudi Arabia
61.9
UAE
15.3
Kuwait
15.3
Qatar
11.7
Oman
9.8
Bahrain
4
Jamie Stewart is a freelance journalist and oil and gas industry researcher and analyst based in the United Kingdom.
Contents: 2013 Market outlook 29 . Construction overdrive 31 . Qatar’s first Passivehaus experiment 32 . Qnbn to install highspeed fibre optics in Msheireb Downtown 32
real estate & construction 2013 Market Outlook Qatar’s real estate market displayed stability throughout 2012, but what will 2013 bring? Adrian Camps reports.
D
oha experienced a correction in 2009 in common with most world property markets. It was however not as pronounced or sudden as some other Middle Eastern markets, which is perhaps a reflection of the less leveraged market and the lower proportion of foreign property investment. Qatar has therefore been partially insulated from defaults by investors exposed to the European and American banking crises. The market has been extremely active, with transaction volumes increasing from 5949 in the year ending November 2011 to 7012 in the year ending November 2012, an increase of approximately 18 percent. The value of transactions has increased from QR78.7 billion to QR98.6 billion in the same period. Due to the variety of property types, it is difficult to interpolate precise growth rates, but we have seen significant capital growth in some sectors, particularly development land.
Residential market
Seventy percent mortgage finance for residential purchasers has generally been available, but the large deposit requirement deters some investors. The three tier residential market is divided by the ownership laws as follows: The majority of land and buildings within Doha are available to purchase only by Qatari The Edge | 29
sectors | real estate & construction
Property value transactions in 2012 QR9 billion
Source: Asteco Qatar
QR29 billion
QR25 billion QR33 billion
on rents. Rents have remained relatively static over the period although there has been some growth, demonstrated in the letting of some Grade A towers. The majority of demand is for small suites of below 400 sqm, with a preference for fitted property. We have not experienced significant drops in rent, because many owners have choosen to keep the offices empty, rather than negotiate on price.
Retail
citizens, but Gulf Cooperation Council (GCC) citizens are permitted to own land in designated investment areas. This sector has been the most active. The second sector comprises the areas designated for GCC or foreign ownership, where nonQatari or GCC nationals may own a usufruct or 99-year renewable leasehold title. This includes a number of areas including the Lusail master development, located to the north of The Pearl–Qatar. Market activity in this sector has been limited, due to the lack of availability of completed stock. Thirdly, there are designated freehold areas, where foreign owners may purchase a freehold title, including The Pearl-Qatar, which has established itself as one of the preeminent residential locations in Doha. There has been significant activity in the residential letting market, where transaction volumes have increased considerably in the last two quarters of 2012, stimulated by the opening of local facilities. Rents in this location fell slightly in Q2 and Q3 of 2012 through increased supply, but in Q4 2012 we have seen rents increasing. A number of projects are set to hand over in 2013, increasing supply, so there is unlikely to be significant rental growth in 2013. Sales
transactions in the period have been limited and have mainly been confined to local buyers purchasing distress properties. In the villa sector demand outstrips supply on The Pearl-Qatar and in West Bay Lagoon as investors are holding on to their properties in anticipation of capital growth.
Offices
The office market has been relatively static over the period with new supply being added at a faster rate than absorption. The current stock is estimated at 3.4 million square metres (sqm) of which approximately 55 percent is considered of a Grade A quality. The bulk of new Grade A offices estimated at around 1.3 million sqm have been developed in, and around West Bay which has more than 70 percent of the current Grade A stock. Office vacancy in West Bay CBD is significant, and our research indicates a vacancy rate in excess of 20 percent in comparison with 14 percent one year ago. There is a significant amount of space in the pipeline for delivery in 2013 and 2014 and at present it is anticipated that new space will be added faster than current absorption levels, so this will add further pressure
Number of transactions in 2012
The underprovision of retail space in Doha is slowly being addressed as a number of new malls are opening or under construction. The 51,000 sqm Lagoona Mall, close to The Pearl-Qatar, opened during 2012. IKEA, which is the first phase of the Doha Festival City development, will open in Q1 of 2013, with the remainder of the 260,000 sqm project anticipated to open in Q1 2014. 2013 will see the opening of the Medina Centrale shopping development on The Pearl-Qatar comprising 52,575 sqm net lettable space and Barwa Commercial Avenue with a net leasable retail area of 236,134 sqm. There are a number of new malls under construction of differing sizes throughout Doha and on completion of all shopping facilities, this may have a depressing effect on retail rents, but we feel this will mainly affect developments, which are perceived as secondary due to size, tenant mix and location.
2013 overview
In 2013, Qatar is likely to experience more moderate gains than those seen in some other Middle Eastern markets as it is not yet perceived as a tourist destination, but the recent high profile conferences and government initiatives are seeking to change this. The recent award of the QR2.3 billion Msheireb construction contract will stimulate market confidence and there is anticipation that the award of large government infrastructure contracts in early 2013 will stimulate all market sectors.
Source: Asteco Qatar
163 1569 5260
Adrian Camps is a chartered surveyor and head of research, valuation & consultancy at Asteco Qatar (L.L.C.). 30 | The Edge
real estate & construction | sectors
Future Projects
Construction overdrive Edd Brookes examines the largest infrastructure projects underway in Qatar, which will have an impact on residents and visitors once completed. Doha Port
The QR19 billion New Port Project site stretches more than 26 square kilometres (km2), is located south of Doha City, east of Wakrah, and will be operational in 2016. It will have an enormous annual capacity, best appreciated by the numbers: • 1,000,000 tons of bulk grain • 750,000 livestock • 500,000 vehicles • The port basin will be 3.8 kilometres in length and 17 metres deep. The excavation has meant removing enough material to fill 25,000 Olympic swimming pools. Doha Port will also be the location for Qatar Economic Zone Three – providing an economic hub around the port for manufacturing, logistics and trade across a range of industrial sectors. The facility is much needed and coupled with the extra capacity; it will have the added bonus of being located outside Doha, a vast improvement on the current port, which has to move all its freight for distribution via the Corniche.
Lusail Express Way
Construction of the QR3.5 billion fourlane dual carriageway road system from Rainbow Roundabout through to Lusail commenced in November 2012 and is anticipated to be completed in November 2015. The three main interchanges connecting The Pearl-Qatar, Katara and Lusail will also feature the West Bay tunnel link providing an alternative route to the New Doha International Airport from the St. Regis Hotel. This improvement is desperately required to serve The Pearl-Qatar and Lusail, as local populations increase rapidly in the new districts over the coming years. The additional West Bay link will also be much appreciated by residents and visitors. Other ventures apart from these huge infrastructure projects, mean shoppers will have much to look forward to in terms
Phase I of The Pearl-Qatar, Porto Arabia.
of increased retail offerings. Some of the larger projects include: Northgate Mall – Located off Al Shamal Road, when completed in 2015 the mall will provide more than 130,000 sqm of gross leasable area (GLA) with a wide offering of leisure, food and beverage, and retail outlets. Six buildings will provide a further 66,000 sqm of office space (something which Doha is not short of). Festival City – Due to be completed in 2015, this huge mall will provide an additional 240,000 sqm GLA of top class retail space together with a choice of hotels and themed entertainment areas. The project is well on track with Doha Festival City signing a QR3.7 billion syndicated facility in June 2012. Marina Mall – This three storey mall will be the largest in Lusail at 60,000 sqm. It is designed to provide a suitably coastal themed experience and its design
is a result of combining parametric design techniques and building information modelling. The property will be owned by Qatar Foundation who have joint ventured the development with Mazaya Qatar. Despite a publicised opening date of 2015, given the delays experienced elsewhere within Lusail this most probably will be extended by up to 18 months. Apart from the above, local developer Ezdan Real Estate, anticipate the opening of Gulf Mall 1 in Al Gharafa during (80,000 sqm GLA), which will also be joined in 2013 with the completion of Markhiya Mall (55,000 sqm GLA) and Mirqab Mall (36,000 sqm GLA). Outside Doha, the master planned development of Urjuan Al Khor stretches to 5.5 km2 and will provide a range of villa, apartment and hospitality offerings within one of the most picturesque locations in Qatar and will no doubt ease the commute
Barwa Commercial Avenue comprises a retail area of 236,134 sqm and The Pearl-Qatar offers 52,575 sqm lettable space. The Edge | 31
sectors | real estate & construction
for those residents working within Ras Laffan as well as offering some excellent accommodation for the anticipated visitors to the Al Khor football stadium. Vital delivery What remains to be seen is whether the majority of these projects will be delivered on time and provide the quality of construction, which in so many projects of the first few years of the new century was clearly lacking. Ongoing planned preventative maintenance will also play a key role in ensuring the residential and retail projects remain economically and environmentally sustainable in operation.
Edd Brookes is a director and head of valuation, Middle East, at DTZ in Doha.
Green Buildings
Qatar’s first Passivhaus experiment The Edge spoke with Dr. Alex Amato, head of sustainability at Qatar Green Building Council about the concept behind Qatar’s first ‘passivhaus’.
Qatar is expected to have its first energyefficient passivhaus by February 2013. Passivehaus in German refers to the rigourous voluntary, passivehaus standard for energy efficiency in a building. The Qatar Green Building Council (QGBC) partnered with Barwa Real Estate (BRE) and Kahramaa recently to launch a groundbreaking experiment in the region’s green building industry. The passivhaus boasts an ultra low energy, airtight building design that requires little energy for space cooling, reducing its environmental footprint. Dr. Alex Amato, head of sustainability of QGBC explained to The Edge that the passivhaus concept originated in northern Europe and central Europe to retain heat indoors, whereas in Qatar it will be tasked with retaining the cool indoors. The conventional villa will be built to one-star rating of the Global Sustainability 32 | The Edge
Assessment System (GSAS), developed in Qatar while the country’s first passivhaus is expected to consume at least 50 percent less energy, water and operational carbon dioxide. Once the 225 square metre villas are completed, Amato says that the two villas will be monitored in terms of energy, water consumption, and also the comfort within the two villas for a period of one year. The project aims to educate the public about the passivhaus concept. It will promote discussions about green living and sustainable practices for Qataris to implement in their daily lives. Moreover, the project will work to obtain a Passivhaus Building Certification and GSAS Certificate, and establish a benchmark for all future buildings in Qatar. “Another important outcome is that much of the techniques the passivehaus uses, such as the insulation and the windows, and perhaps one or two other aspects that control ventilation can be applied to existing buildings and residential buildings,” said Amato. Texas A&M University in Qatar, Siemens, AECOM, Global Sustainability System and EPS Qatar have also joined the project as scientific partners. The passivhaus concept remains the same for all of the world’s climates. A building fulfilling the passive house standard will look different from area to area. The number of Passivhaus buildings around the world as of August 2010 was approximately 25,000.
Utilities
Qnbn to install high-speed fiber optics in Msheireb Downtown
Msheireb Properties, Qatar’s leading sustainable developer, has signed an agreement recently with Qatar National Broadband Network (Qnbn) to deliver a nextgeneration high-speed communications network to the world’s first sustainable downtown regeneration project, Msheireb Downtown Doha. Qnbn is mandated to develop a national fibre optic infrastructure network, in line with the development goals of Qatar’s ICT Strategy 2015 of building a sustainable digital future, improving connectivity throughout the nation, boosting capacity and fostering economic development, as well as enhancing public service delivery to provide benefits for all. Built on a 31-hectare site, Msheireb Downtown Doha will revive the old commercial centre of Qatar’s capital using advanced technologies and processes in sustainable development and traditional building practices and architectural designs.
Qatar first passivhaus experiment is expected to be completed in February 2013.
Contents: It is time for grown-up social media 35 . Expanding Internet freedoms in Arab states 36 . Facebook growth in the Qatar in 2012 37 . Challenging software piracy 38 . App reviews 38
tech & communications It is time for grownup social media The new information hierarchy must become a C-Suite concern in 2013, writes Rishi Saha, a Gulf based digital communications expert.
S
ocial media is transforming the way organisations interact with all who have a stake in them. Senior executives, marketers and corporate communicators are no longer the sole gatekeepers of public information exchange between companies and their most important stakeholders. And in this ‘court of public opinion’, hard-earned reputations can be trashed in minutes. Yet rational decision making about the true role, goal and ROI (return on investment) of social media is often obscured by hyperbole. Social media strategies turn into boilerplate checklists espousing the same array of well intended but superficial sentiments around engagement, relationships and ‘Likes’. All are important, but their over-use has stripped them of real meaning. But this is the unfortunate consequence when junior staffers are tasked with overseeing the function. The tendency to equate social media with youth has made many organisations believe that The Edge | 35
sectors | technology & communications
Many firms bemoan the historic lack of clarity and impact in their digital operations, and feel a pressure to ‘do’ social media, even though the business case is confused.
an active Twitter profile and iPhone 5 are qualification enough to design a rigorous social media strategy. Many firms in the Middle East – including large multinationals and government organisations – bemoan the historic lack of clarity and impact in their digital operations. Many feel a pressure to ‘do’ social media, even though the business case is confused. And many feel the lack of due diligence, legal compliance and risk management underpinning their social interactions leaves them vulnerable. So what is the solution? Here are three thought-starters:
Return to first principles
Social media is just a way of describing people’s expressed interactions and experiences with each other. This principle can be applied to many business functions: sales, marketing, internal communications, PR, R&D, data insights, recruitment and much more. Establish a strong business case for social media first, then choose the appropriate channel. All too often, creating a Facebook page or Twitter profile becomes the core objective in its own right, rather than the method to achieve a specific goal.
Operational set-up
Organisations are weighed down with cumbersome approval processes that limit real-time interaction. The war room, common in political campaigns, is a
useful operating model to replicate. This high-tempo environment embraces rapid decision-making is by far the leanest, quickest and most reliable method of managing mass communications.
Data analytics
Too often, the focus is some arbitrary number of Twitter followers, Facebook likes or YouTube views. As social media matures, more sophisticated data modelling techniques will be required to aggregate output alongside more robust datasets. Without this, ROI becomes impossible to discern, and strategy is replaced by gimmickry and tactics. Let us hope that 2013 is the year that corporate social media grows up and finally takes its place in the C-Suite. Without this shift, it will continue to overpromise and underdeliver at an organisational level.
Middle East-based Rishi Saha is the regional director for Hill+Knowlton Strategies. He previously led digital communications for the UK Conservative Party and Prime Minister David Cameron in 10 Downing Street.
Internet Regulation
Expanding Internet freedoms in Arab States The last time the ITU met to regulate telecommunications was in 1988. So what did the latest ITU conference in Dubai mean for the Internet and its users in the Arab states? By Stuart Brotman.
With the conclusion of the United Nations’ (UN) International Telecommunication Union (ITU) World Conference on International Telecommunications (WCIT) in December, the question whether the 193 countries that comprise this body 36 | The Edge
would expand the ITU’s authority remains unsettled, at least for now. It Is fair to conclude that with over 50 countries leaving the vote in protest – including the United States (US), United Kingdom and India – there was no real consensus reached regarding whether there will be ITU legal language that individual governments will be able to cite if and when they expand their reach over Internet network functions and content. Countries such as Saudi Arabia and the United Arab Emirates will continue to do so,
technology & communications | sectors
Facebook growth in Qatar in 2012
165%
of course, under the guise of cybersecurity. They will point to the ITU language ratified by a slim majority at the Dubai conference, which sanctions their ability to implement tighter Net controls to deal with ‘unsolicited bulk communication’. But this phrase provides a very thin legal basis, and it certainly does little to change the picture that existed before the conference took place. Sovereign states always have had, and always will have, the ability to control the Internet within their geographic borders, regardless of what the UN or any other international body might say. The ITU really has no power under international law to alter this picture. So, the central issue that countries must continue to confront after the WCIT is how much they want to tip the digital development scales through assertively exercising their own domestic political powers. Although tight control of the Internet can be accomplished – think Syria – it also exposes countries to condemnation from much of the rest of the world, notably Western democracies led by the US. Given the dynamics of the Arab Spring, and the large populations of digital natives that many Arab states have, there also is the possibility that any barriers to the Internet that governments try to impose may be broken down by the young, tech-savvy, information-hungry masses. In light of this, it might be a better approach for the Arab states to assess how much progress they have made in recent years as they expand fixed and mobile broadband infrastructure within individual borders and across the region.
They then should act in ways that promote further growth and prosperity through policies that support Internet expansion. For example, about 93 percent of residents in Oman now utilise broadband in their fixed telecommunications infrastructure. Foreign ownership has also been liberalised, with the cellular industry Jordan, Sudan and Bahrain now controlled by foreign private sector interests rather than by their governments. Cellular competition is also being fostered by allowing more companies into countries such as Egypt and Yemen, which will stimulate greater mobile broadband offerings. These examples illustrate that many Arab states are sending positive signals to the global financial community and to potential market entrants that they will be creating the types of open, light-touch regulatory environments that encourage substantial investment and the build-out of broadband networks. Any moves now, away from this sense of liberalisation in favour of more authoritarian controls may produce a number of bad outcomes. Funding, particularly from outside investors, may begin to dry up, and outside telecom operators may think twice about committing to joint ventures in the Arab states with a regulatory environment that may shift radically depending upon which ways the political winds are blowing. United States Federal Communications Commission Chairman Julius Genachowski noted that an important reason for Internet openness is economic opportunity. “[As] the world’s greatest platform for innovation, the Internet has unleashed an
The percentage of increase in Facebook users in Qatar since 2011.
37%
The percentage of Facebook penetration as of September 2012.
Age Breakdown
53% 15-29
47%
over 30
Gender breakdown
70% Male
30% Female
Source: Spark Digital, Internetworldstats. com, Dubai School of Government The Edge | 37
sectors | technology & communications
enormous wave of entrepreneurship, job creation, and economic growth in both developed and developing countries.” Greater regulation to protect incumbent telecommunications companies through mechanisms such as ‘sender pays’ cannot help but be counterproductive. Since most Arab states sided with the likes of China and Russia at WCIT in pushing for tighter global control of the Internet, they will come under increasing scrutiny as the debate moves on to other important international venues. With the 2013 World Telecommunications Policy Forum in Geneva, then the ITU Plenipotentiary Conference in South Korea in 2014, there will be ample opportunities for individual Arab states, such as Qatar, to put forward a more expansive vision of what they Internet freedom should look like in the coming years.
Stuart N. Brotman is a professor of communication in residence at Northwestern University in Qatar.
Intellectual Property Rights
Challenging software piracy How much is Qatar losing in opportunity cost due to software piracy? By Shehan Mashood. The lack of adherence to intellectual property (IPR) laws in Qatar’s information Technology sector might be costing the nation a lot of money. The current ICT sector which is valued at US$2.1 billion (QR7.6 billion) according to Commercialbank capital economic research, could be significantly higher. At a recent press conference the Ministry of Justice announced that it is stepping up efforts to protect IPR and reduce software piracy in the country. Abdulla Ahmad Qayed, Intellectual Property Centre Director from the Qatar 38 | The Edge
50%
The percentage of pirated software being used in Qatar. Ministry of Justice said, “Resellers and end-users in Qatar need to realise that high levels of software piracy and counterfeiting activitiy seriously harm a country’s innovation and ability to continuously produce intellectual property, which eventually reduces overall economic activity.” According to data from the Intellectual Property Protection Centre of the Ministry of Justice, a total of 416 arrests have been made with regards to software piracy between 2000 and 2010. A report by the Business Software Alliance, a leading advocate of anti-software piracy, shows figures have declined marginally from 54 percent in 2007 to 50 percent in 2011. Adobe Systems, an international software company has been partnering with numerous ministries in the region to strengthen anti-piracy initiatives. Naser Samaenah, head of anti-piracy and license compliance for the MENA region said at the press conference with the Ministry of Justice, “given the impact of software piracy on the economy, there is still much that needs to be done through the combined efforts of the government, software industry, resellers and end users.” Studies have shown that significant reduction in software piracy can generate millions of Qatari riyals worth of additional
revenue for the government, explained Samaenah. And that is to say nothing of the loss in opportunity cost from piracy, in the potential lost jobs to investment opportunites in the IT industry. Software companies like Adobe face numerous challenges. The lack of awareness in understanding the negative consequences of software piracy and the widespread social acceptance are some of the biggest they have to counter.
App reviews Qatar Exchange
This app shows you all the necessary market information from the Qatar Exchange. The opening splash shows you yesterday’s stock index and the current index. There is also a tab for equities and another for debts. In addition you can also create your own list to monitor your choice of listings on the Qatar stock market.
CardMunch
Turn your business cards into address book contacts and then add them as connections to your LinkedIn profile. Take a picture of your business card with the app and in under an hour the data will be returned to you with a link to their LinkedIn profile.
CloudOn
This app allows you to run Microsoft Word, Excel and PowerPoint on your smartphone or tablet device with almost all the functionality of the Windows environment. It also integrates to popular cloud storage services around today such as Dropbox and Google Drive.
country focus | poland
Qatar and Poland: Improving Ties
Erika Widén spoke with Robert Rostek, Polish ambassador to Qatar about how Warsaw and Doha can take advantage of Qatar Airways’ new direct flight between the two cities, and the economic potential in improving relations for both nations.
T
he Republic of Poland is the largest central European country in the European Union (EU). Poland’s economy is one of the strongest of the post-Communist countries and the only European nation to have avoided the global economic crisis. Robert Rostek, ambassador of Poland to Qatar tells The Edge, “So far we have the fastest growing economy in Europe. We are in the EU and in the Schengen group but we did not complete all the necessary measures to join the euro market. I think it was an important [and wise] decision from our prime minister [and] this is why we are still distant from the crisis.” 40 | The Edge
Poland’s gross domestic product (GDP) in 2011 was US$525 billion (QR1.9 trillion), which compared to other European countries indicates a stable and strong economy. According to Rostek, Poland’s GDP was noted by His Highness the Emir Sheikh Hamad bin Khalifa Al Thani during his first official visit to Warsaw in 2011 and suggested that Qatari businessmen investigate the market for possible future investments. During HH the Emir’s visit, a bilateral tourism agreement was signed, and subsequently Qataris invested in real estate projects. “It is clear from both sides that Qataris are ready to invest and we are
ready to cooperate,” says Rostek. In 2006 the Polish embassy opened in Doha and two years later a Qatari embassy opened in Warsaw. At the time there were only 75 Poles living in Doha and today there are approximately 450 and counting. The majority of Poles working in Doha are engineers, doctors, and information technology and finance experts. Furthermore, there are Polish pilots working for Qatar Airways (QA), in addition to ground staff and stewards. “Because of Qatar’s visibility and booming economy, more Polish citizens are willing to work here,” says Rostek. “Especially in
poland | country focus
the last few months we have observed the increasing number of Polish families and citizens coming to Doha.” In June 2009, Poland signed a contract with Qatar to import one million tons of liquefied natural gas (LNG) annually for a period of 20 years. The shipments are scheduled to commence in 2014, once the new LNG terminal is finalised in Swinoujscie. Rostek adds that the import of Qatari gas will put an end to Poland’s energy dependency on Russia. “That is something we really appreciate, it is a big achievement,” says Rostek. He also highlights that the LNG contract is significant as it indicates that both nations want to further develop their relations for the long term. During the prime minister Donald Tusk‘s official visit to Doha, the Avoidance of Double Taxation Agreement was signed. Coincidently QA announced in October 2012 that the European multilingual customer contact centre will be based in the Polish city of Wroclaw near the German and Czech Republic border by February 2013. The customer contact centre will initially serve Poland, United Kingdom, Germany, France, Spain, Italy, Switzerland and Austria. Rostek expresses his gratitude, as the call centre will create job opportunities in Poland. “Each passenger calling Qatar Airways from Europe will be transferred to Wroclaw and in the beginning, they are going to provide four languages...and hire 100 people, later up to 250.” Akbar Al Baker, chief executive officer (CEO) of QA said during the announcement, “Following a rigorous search for a suitable location, we found the city of Wroclaw to be the most suited for our European contact centre in providing excellent customer service solutions to our customers in the region. The skill set here is huge in customer service and languages.” Al Baker further expressed that QA is making a major investment in the local economy and will create of jobs, that will provide Polish citizens an opportunity to work for the airline. Rafal Dutkiwicz, mayor of Wroclaw, said, “ I am delighted that Qatar Airways has chosen my city of Wroclaw to be their prime centre for customer service for the whole of Europe.” Rostek informs The Edge that after three years of discussions, direct flights from Warsaw to Doha and vice versa was finally achieved last year. “I am very
happy that on the fifth of December we succeeded and I was invited by the CEO of Qatar Airways, Al Baker, to fly with him on the inaugurating flight,” continues Rostek, “Such flights are important. Now you can leave early in the morning and come back the same day. Having direct connections will increase the trade level, and speed up relations.” Currently the Polish embassy is preparing for the Polish president, Bronisław Maria Komorowski’s first visit to Doha on the first quarter of 2013 and Polish businessmen will accompany him on the trip. “We will have separate meetings for them, such as the Polish Qatar Forum for Investment,” adds Rostek. During the president’s visit, a number of agreements and memoranda of understanding are likely be signed which are currently being finalised. Rostek points out that some agreements require prior approval from Brussels as Poland is a member state of the EU. He further explains that a delay is not due to Poland’s lack of interest, but due to the EU’s special regulation process. In 2013 Polish companies will also visit Doha and eventually establish the Polish Qatari Business Council in order to connect business opportunities between Poland and Qatar. Rostek says that Poland and Ukraine, prior to hosting the 2012 UEFA European Football Championship, finalised six stadiums, and therefore sport could also be an important relationship consideration with Qatar. Additionally, the Qatar Olympic Committee visited Poland and HH the Emir visited the Warsaw National Stadium last year. “I believe that Poland has experience to share with Qatar…we have a good infrastructure and good prices...we also have a lot of possibility with agriculture, although the problem was transport, but now, with direct flights, we will have one less problem,” concludes Rostek.
Poland at a glance Government: The Republic of Poland Capital: Warsaw Population: More than 38.5 million GDP: US$525 billion (QR1.9 trillion) in 2011
Robert Rostek, ambassador of Poland to Qatar discusses with The Edge how Qatar and Poland can improve their bilateral relationship.
In June 2009 Poland signed a contract with Qatar to import one million tons of liquefied natural gas annually for a period of 20 years. The Edge | 41
country focus | poland
BUSINESS TRAVEL INSIDER: WARSAW The Edge provides you an insight into what not to miss in the Polish capital. GETTING THERE: Qatar Airways (www.qatarairways.com) flies to Warsaw four times a week. An economy return fare costs from QR3370 and QR15,380 in business. The flight time is around five hours. Currency: Polish Zloty. PLN1 = QR1.18 (Exchange rate as of December 2012) WHERE TO STAY: Le Meridien Bristol (www. starwoodhotels.com) is 110 years old. The Bristol was a top address in the decadent Warsaw of the 1920s and 1930s, and features in the spy novels of Alan Furst. Boasting a private garden and one of Warsaw’s poshest cafes, it is the perfect starting place for a stroll along the two kilometres of Krakowskie Przedmiescie and Nowy Swiat, known as Europe’s longest catwalk. A double room costs QR388 per night excluding breakfast WHERE TO PLAY: Polska Rózana (www.restauracjarozana.com) Rózana is a cosy, elegant, yet unpretentious restaurant known for its choice of delicate and light meals from traditional Polish cuisine. Fresh flowers, embroidered tablecloths, soft lights and unobtrusive piano music create a very special atmosphere. The magical garden, where you can appreciate birdsong, the murmur of a fountain, and the sound of guitar, adds to the exceptional character of this place. After the sunset, soothing candlelight and romantic torchlights deepen the intimate atmosphere of this place. SPLASH YOUR CASH: At Benedicite, visitors can purchase delicious Polish traditional food and craft products. Hard candies, preserves, spirits and honey are available here and are sold alongside
42 | The Edge
wooden mugs, handmade baskets, and beauty and health products made from natural ingredients. CULTURE VULTURE: The Old Town Square Market (Rynek Starego Miasta) is located in the heart of Warsaw. Beautiful seventeenth and eighteenth century merchants’ houses surround the Old Town Square, which is filled with street vendors, cafes, shops, galleries and some of Warsaw’s top restaurants. INSIDER TOP TIPS: Do not hail your taxis from the rank – ask someone to phone for one – it is 30 percent cheaper. During winter it is difficult to move around the city on foot. Taxis are great, unless you are watching your wallet. You can also invest in an unlimited public transport pass: 24 hours for PLN7.20 (QR13), three days for PLN12 (QR22) and one week for PLN24 (QR43).
Liberalising
Qatar’s
Financial Sector Qatar’s financial sector has seen numerous changes recently, among them a much-touted new law that aims to bring the various regulatory authorities under a single umbrella organisation. As Qatar looks to grow its financial sector through a process of liberalisation – a topic highlighted at the first Euromoney conference held in Doha recently, The Edge takes a look at the risks and challenges this might bring. By Shehan Mashood
cover story | financial sector
“There are risks to internationalisation and there will be shocks to the system. It is how Qatar reacts is its biggest test.” – Richard Banks, director, Euromoney Conferences
H
er Excellency Dr. Zeti Akhtar Aziz, governor of Bank Negara Malaysia (The Central Bank of Malaysia), one of the top financial experts at the inaugural Euromoney Qatar Conference, held in Doha in December, has overseen the liberalisation of Malaysia’s financial sector since 2000. It is a system that now ranks alongside the most advanced and resilient systems among emerging nations. This is a goal that Qatar itself is looking to achieve, as it pursues financial sector liberalisation as part of its larger plans to diversify the economy. Dr. Akhtar noted in her opening remarks that the global financial crisis, although felt by economies around the world due to a decade of financial internationalisation, has not turned emerging economies away from opening up their markets. This topic was a main point of discussion at the two-day event, which also addressed issues ranging from the impact of the global financial, and economic crisis to the role of regulation in developing local securities markets. The event was held under the patronage of the prime minister of Qatar, HE Sheikh Hamad bin
What are Euromoney Conferences?
The Euromoney Qatar Conference, the first of its kind in Doha titled ‘Global finance re-designed’ is part of a three-year project to see how the global financial system is evolving and changing. Focusing entirely on finance, the event brought together delegates from different regions including numerous central bank governors and many local stakeholders to discuss perspectives for the future. While events of its kind have varied in their quality in Qatar, the first Euromoney event hosted in association with the Central Bank of Qatar was a resounding success according to attendees.
46 | The Edge
Prime minister of Qatar, HE Sheikh Hamad bin Jassim bin Jabr Al Thani stressed the utmost importance the State places on developing a suitable investment climate through developing its institutions, and the writing of new laws and regulations. (Image Euromoney Conferences)
financial sector | cover story
Richard Banks, director Euromoney Conferences, thinks there is a sense of realism in the development plans for Qatar’s financial sector that is lacking elsewhere. (Image Euromoney Conferences)
Jassim bin Jabr Al Thani, who expressed hope during his keynote speech that “this conference would lead to the formulation of futuristic mechanisms and visions whereby we can consolidate the role of the financial sector in enhancing the stability of the international economy and contributing to its growth.”
Liberalising the financial sector
As Qatar, like many other nations, moves towards building a more progressive economy through financial liberalisation, with it comes risks and challenges. The risk of contagion for example is significantly amplified as a result of internationalisation. “Contagion can result from external events and developments,” said Dr. Akhtar, “[they] can range from failure of large and important financial institutions, to the eruption of wars or political incidents that have regional and global repercussions.” As the eurozone falls back into recession in the third quarter of this year, and uncertainty looms with regards to the United States solving its fiscal issues, the ramifications can be felt in financial markets around the world. Qatar’s banks and financial institutions while limited in their exposure
to eurozone assets, (five percent of the domestic banking sector assets, according to a report by the Qatar Central Bank) will be indirectly affected by a weakening of global demand and the softening of oil prices. Liberalisation unchecked, could also contribute to widening income disparities and the marginalisation of domestic financial institutions if they are unable to perform in a competitive environment, pointed out Dr. Akhtar in her speech. Richard Banks, director of Euromoney Qatar Conference, tells The Edge that institutions in Qatar functioning within the domestic financial sector will be able to stay competitive in an increasingly liberalised environment, if they employ a clear strategy and good risk management. While those organisations, whose current competitive advantage is cheap funding, will not. While there is no clear escape from the interconnectedness of the financial sector, it is possible to protect against for example, leveraged exposure to assetprice bubbles, says Banks. “Regulatory oversight and good risk management can limit the contagion effect even to very open economies,” he adds. Open economies such
as Singapore, while hard hit by financial and economic crises, also bounce back faster. However, Qatar should be concerned, not about contagion says Banks, but about overexposure to regional and domestic assets such as real estate – which is incorrectly valued, illiquid and potentially dangerous to the economy. Witness the experience of Dubai, he warns. Discussing the benefits afforded by financial sector liberalisation, Dr. Akhtar pointed out that an increase in foreign participation in the domestic financial markets would also contribute to increased liquidity, competitive pricing and also encourage a more efficient allocation of capital within the economy. “The increase in capital inflows following capital account liberalisation would be another source,” continued Dr. Akhtar, “that could contribute towards increased investment and growth. The development of strong cross-border financial linkages could also create potential for enhancing international trade and investment.” A liberalised environment, argued Dr. Akhtar, leads to greater market discipline, in turn promoting financial stability within the domestic financial sector. This The Edge | 47
cover story | financial sector
however hinges on a sufficient level of disclosure and transparency to allow efficiently functioning markets. The level of transparency is increasing though, says Banks, a positive sign for Qatar.
The new law
A new law mandating the Qatar Central Bank (QCB) as ‘supreme regulator’ is an attempt to advance the legal financial framework within the country by increasing cooperation between the regulatory bodies, and has been welcomed by all. Previously, mainstream banks, financial services companies and exchange houses were regulated by the QBC, while the Qatar Exchange was regulated by the Qatar Financial Markets Authority (QFMA). The Ministry of Business and Trade regulated insurance and reinsurance companies while foreign banks and other financial services firms were under the ambit of the Qatar Financial Centre Regulatory Authority (QFCRA). The new law decrees the establishment of a Financial Stability Committee – under the QCB – that will be tasked with supervision of all financial services and markets and framing policies for regulation. “It is a necessary step towards the development of the financial sector,” furthers Banks. It must however, be combined with others such as bond market development, risk-management tolls and institution building, he also notes. Building a bond market is key to developing Qatar’s capital markets over the next few years, as they are at the core of finance globally, and are currently very underdeveloped in the Middle East. Although Qatar has made some steps in that direction, there needs to be a regular sovereign issuance programme, and the development of secondary market liquidity and a robust yield curve to go with it, adds Banks. A conference workshop discussing the impact the new QFMA regulations will have on securities markets nevertheless revealed that Qatar had in fact some ways to go in developing its domestic securities market. Regulations aimed at bringing transparency are key in the cases of small markets, pointed out Sami Boujelben, acting director, securities and issuers affairs with QFMA in a panel discussion at Euromoney. A core strategy of the QFMA, he explained, is creating an education programme for all market participants to build a knowledge base and increase liquidity and market activity. “It is the responsibility of everyone,” noted Boujelben, “to understand the benefits of investment, [and] work towards achieving the national vision goals.”
A conscientious approach
Questions linger with regards to unifying the regulatory bodies, such as how the different regulatory laws will be merged. The panel discussion, which also included Rym Ayadi, a senior research fellow from the Centre for European Policy Studies, and Nadeem Mujtaba from the Directors Counsel showed the education of local investor class, in best practices, is a long-term initiative. 48 | The Edge
HE Dr. Zeti Akhtar Aziz, Malaysia’s Central Bank Governor, warned that hastily pursuing liberalisation can increase financial instability and create income disparities. (Image Euromoney Conferences)
“A liberalised environment promoting financial stability hinges on a sufficient level of disclosure and transparency.” – Dr. Akhtar, central bank governor of Malaysia.
financial sector | cover story
And a pragmatic and conscientious approach is the requisite in pursuing financial liberalisation. “There is no one approach to the liberalisation and internationalisation of financial systems,” underlined Dr. Akhtar.“Its success depends on the prevailing circumstances and the state of readiness of financial systems and the economy and its capacity to manage its associated risks.” Qatar can indeed learn a lot from countries like Malaysia in this regard. Making decisions that are appropriate to the situation and development of Qatar, and not some ideological benchmark is key, agrees Banks. Developing regulatory and institutional frameworks and skills will help Qatar achieve its goals he notes. Dr. Zeti Akhtar, in her speech also warned that premature internationalisation could result in highly destabilising conditions, and that a pragmatic approach must be considered. Banks however feels that there is realism in Qatar’s financial sector that is lacking elsewhere. “There are risks to internationalisation,” says Banks “and there will be, inevitably, shocks to the system, losses and problems. It is how Qatar reacts to those, which will be its biggest test.” Banks explains how, in 2008 to 2009, when the financial crisis hit the world, it was clear that Dubai-based entities would be heavily affected. “Re-finance risk and over-exposure to real estate were two major concerns,” he says. “Dubai did not address those concerns immediately. It continued with its pre-crisis economic strategy even when it was clear to others that the strategy would need revision. This led directly to the Dubai financial problems of 2009 to 2010 and a great loss of credibility in the global markets.” How the financial sector manages bad times is the real test of its maturity and depth, added Banks. If the problem
“Institutions in Qatar functioning within the domestic financial sector, whose current competitive advantage is cheap funding, will not be able to stay competitive.” – Richard Banks from Euromoney. had been acknowledged immediately, and actions taken sooner, then the credibility of the creditors would at least have remained intact, he furthers. In concluding her speech Dr. Akhtar noted, “With sufficient development of the financial infrastructure, the safeguards and the buffers, emerging economies have every potential to participate in a more internationally integrated financial system that will facilitate mutually reinforcing global growth and development.” The financial sector today in Qatar is nascent, and its influence still limited due to the hydrocarbondriven economy. As the country moves towards building a more liberalised financial environment, the overall sentiment expressed at the Euromoney Qatar Conference was that the financial sector be able to contribute significantly to the development of employee skills in the country, private sector expansion, and the nation’s gross domestic product as a whole.
It has been a slow year for the Qatar Exchange (pictured above) according to an Oxford Business Group report, even though it saw the Gulf’s largest equity capital markets transaction with a US$1.9 billion (QR6.9 billion) bid by Qatar based telecom operator, Qtel for shares in Kuwait’s national telecom carrier, Wataniya. However, it is expected that reforms to simplify transactions are expected to boost capital markets in Qatar in the coming year. (Image Corbis/Arabian Eye)
The Edge | 49
Qatar’
Labour Challenge
In June 2012, Human Rights Watch published a controversial report regarding alleged poor treatment and working conditions for migrant labourers in Qatar. Attention in particular was paid to the construction sector in the lead up to the World Cup 2022, which the organisation says should be called into question, should Qatar not more rigidly enforce improve labour rights in the country, reports Erika WidĂŠn
50 | The Edge
During 2012 the plight of migrant workers and their treatment in Qatar was repeatedly focused on, in main due to a report by New York-based organisation Human Rights Watch, which issued a controversial report on the situation in the country in June. Picture are cramped sleeping quarters at one of the Doha’s many workers acommodation compounds (Image by Matilde Gattoni, courtesy Human Rights Watch)
The Edge | 51
feature story | migrant labour
O
n the first day of December 2012, while Doha was hosting the COP 18 Climate Summit, for the first time in Qatar’s history campaigners and activists were permitted to take part in a demonstration rally on the Corniche. The march was largely aimed at calling attention to climate change issues in the country, but also focused on labour rights in Qatar. International trade union representatives that took part in the rally, which was called ‘Climate Justice, Workers Justice’ and wore masks of two Nepalese migrant workers who, according to New York-based private nongovernmental organisation Human Rights Watch (HRW) had been grossly mistreated in the country. Funded by United States billionaire George Soros, HRW is one of the world’s leading independent organisations, dedicated to defending and protecting human rights by drawing international attention to where human rights are violated. In June 2012 HRW published a report outlining various alleged abuses of human rights of mostlySouth East Asian expatriate labourers in Qatar, particular in the construction sector, who HRW claims, following interviews with many such workers, had been denied their wages and lived in squalid conditions, and made to work in temperatures exceeding 40 degrees. Moreover, the average gross annual income in Qatar is US$80,000 (QR291,000), whereas migrant workers earn as little as US$3600 (QR13,104), according to an Equal Times Special Report Qatar, published by the International Trade Union Confederation (ITUC). Sharan Burrow is the general secretary of the ITUC and attended the demonstration in Doha. “For the first time in Qatar, unions were able to give migrant workers a voice and make sure they are not forgotten,” she tells The Edge. “If Qatar wants to be respected in the global community and host international events they must ensure that migrant workers have rights.” According to Burrow, Qatar must ratify and implement International Labour Organisation standards including freedom of association and the right to collectively bargain. These encompass independent trade unions formed by workers and not those imposed by companies or governments. These issues are increasingly being raised to prominence as Qatar’s construction sector prospects become increasingly positive following its successful bid in 2010 to stage the World Cup 2022. The country is set to spend more than US$150 billion (QR546 billion) on infrastructure projects in the next five to six years in the preparation for the World Cup. Yet despite the affirmative outlook, a 2012 report by the Commercial Bank of Qatar entitled Qatar Construction Sector highlights that the country is likely to face growing challenges. The government will continue to remain under pressure to complete the projects on time, and to meet the deadlines and guidelines set by the FIFA authorities. Additionally, 52 | The Edge
the report states that Qatar is not completely immune to the global uncertainty in the economy could feasibly have further effect on Qatar’s economy in general and thus its construction sector plans. Any global slowdown could also impact private sector participation, as the credit environment becomes tighter. The report adds that hydrocarbon prices may also decline with additional potential impact on Qatar’s gross domestic product. Ostensibly, rising construction costs and inflation could also further influence bottom lines within the sector. As far as human resources are concerned, another pressing issue is a predicted increasing scarcity of both technical and labour staff, which some pundits feel will continue to be one of the biggest challenges for the construction sector and beyond. The report adds that though companies in construction sector have learned from their previous experience with events such as the Asian Games, the scale and magnitude of the projects for the World Cup 2022 will be a whole new experience for most companies here, as well as for Qatar itself.
Qatar’s labour challenge
Mohammed Al Obeidly, head of the Labour Ministry’s Legal Affairs Department said during a meeting with HRW earlier in 2012 that he estimates the number of additional workers required to complete the World Cup and related infrastructure projects range from 500,000 to more than one million migrant workers. This is placed in context when considering the HRW report, published in June last year, entitled Building a Better World Cup: Protecting Migrant Workers in Qatar Ahead of FIFA 2022. The report outlined the deeply problematic working conditions of migrant workers, claiming that realising Qatar’s World Cup vision may depend on their abuse and exploitation unless, immediate measures are taken to address the human rights problems, it says, are widespread in Qatar’s construction industry. The HRW report also states that Qatar does not publish information on worker injuries or fatalities, and alleges discrepencies between official figures and numbers in causes of injury and deaths on site and those released by various embassies, and suggested by their own anecdotal research says that many of these deaths are due to heart attacks caused by stress and heat stroke. Priyanka Motaparthy, HRW Middle East and North Africa researcher and author of the report said to the local media at a press conference in Doha in mid2012 that Qatar’s private sector is the largest employer of migrant workers. And it is widely felt that establishing a union or unions for these workers would go a long way to ensuring their rights are upheld and Qatar’s labour laws, (which the HRW admits are adequate), are adhered to. As part of Burrow’s recent visit to Doha, she met with the acting minister of labour Nasser Abdullah Al Hemedi, Qatar’s National Human Rights Committee (NHRC), the Qatar 2022 Supreme Council Committee and Qatar’s minister for Social Affairs. “After a full and frank discussion, Qatar’s labour minister said to me that he would not see any worker punished for joining a union. I hope he stands by his commitment,” continues Burrow. “We are putting the planning in place to have a presence in Doha, and the first is for the workers to form a construction union to engage with major companies building the World Cup stadium and infrastructure under contract from the FIFA 2022 Supreme Committee.” Beyond workplace issues, the HRW report also states that construction workers paid fees up to US$3, 651 (QR13,289) to get their jobs and even take loans at high interest rates and mortgaged family property just to finance their journey to Doha, which often takes months and even years of working in Qatar to pay back. According to the report these fees are for the recruiting agencies in their countries of origin. Moreover, a Bangladeshi private recruitment agent recently told the Equal Times that in the official contract it is written that the recruitment agents have to pay the airfares of the migrant workers to travel to the country of destination, and the employers must pay the return fares. But in reality, the workers told HRW they have to pay both fares by themselves. The reason, according to the report, is that unofficial parties such as middlemen continue to dominate the recruitment process as multinational corporations and local sponsors who do not want to take responsibility for the process, and wish to avoid recruitment fees.
migrant labour | feature story
Hundreds of people marched up the Corniche in a coordinated public demonstration on the sidelines of the COP 18 UN Climate Change Conference held in Doha in December 2012, a first for the country. Motivated by the International Trade Union Confederation, a contingent joined in the march to protest Qatar’s migrant labour human rights standards, which were cast negatively in a June 2012 report by Human Rights Watch, a US based non-governmental organisation. (Image Omar Chatriwala)
Moreover, a World Bank study suggests that local recruiting agents receive a substantial portion of these fees in hidden money transfers, designed to bypass Qatari Law which prohibits Qatari agencies from charging fees. Past HRW reports in the Gulf region stated that these fees trap workers in jobs, even when employers abuse their rights, defined by United Nation’s sanctioned International Law as forced labour.
“For the first time in Qatar, unions were able to give migrant workers a voice.”– Sharan Burrow, general secretary of the International Trade Union Confederation, who was at the firstever protest march in Doha in late 2012.
Existing labour law
Qatar’s Labour Law, issued in 2004, highlights the maximum work hours per week, paid annual leave and end of service bonuses, requires employers to pay salaries on time, bans recruitment agencies licenced in Qatar from charging workers fees and contains provisions for workers’ health and safety. It also bans employers from confiscating passports, sets strict requirements for worker accommodation, and prohibits midday work during the intensive high heat of the summer months. Nevertheless, according to the HRW report, inadequate implementation and oversight of current legal provisions mean they rarely translate to worker protection in practice and that employers pick and choose what protection to offer, with relative impunity. Burrow adds that the laws are stacked against migrant workers, the courts are costly and the labour ministry has a only handful of labour inspectors, a hotline and an e-mail address to handle thousands of complaints from workers. “A proper grievance procedure must be in place, which workers can access and have their cases heard quickly,” says Burrow. “Reputable recruitment agencies must be encouraged to set up in Qatar to clean up the recruitment process. Workers are not given the jobs or salaries they are promised. Their accommodation does not meet the requirements of the Qatar Labour Law and they have deductions taken from their salary to meet the costs of flights, which is supposed to be provided by the agency.” Burrow reiterates that workers must be given the right to form and join trade unions, so they are able to stand up to their employers and protect their rights and now that the attention of the world The Edge | 53
feature story | migrant labour
The living and working conditions that many migrant workers face in Qatar have been cast into doubt by firsthand accounts published in the HRW report, leaving many to feel that the country’s construction industry needs to improve the situation in the lead up to Qatar hosting the FIFA World Cup in 2022. (Image by Matilde Gattoni, courtesy Human Rights Watch)
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migrant labour | feature story
US$300/
QR1092
the average monthly salary of a migrant worker in Qatar.
is focused on the issue due to Qatar 2022, it is the time to begin mobilising them to do so.
Qatari Reaction
The Qatar 2022 Supreme Committee, lead by secretary general Hassan Al Thawadi, were unable to meet with the organisation’s representatives while they were in Doha due to a prior committment with the Union of European Football Associations (UEFA). But before the report was published, in reaction to the HRW findings, they released a statement (which was also included in said report): “We do realise there is much work to be done...We will work closely with other government departments...who like the Supreme Committee are committed to improving the conditions and rights of migrant workers, ensuring they are treated with dignity and respect, and providing a safe and secure working environment. “In light of this, we are currently in the process of determining the requirements that companies competing for contracts relating to the work of the Qatar 2022 Supreme Committee must adhere to concerning living and working conditions for migrant workers.” In further reaction to the HRW report, a Qatari lawyer was quoted in local media as saying that the Gulf region has involuntarily opened itself up to these accusations of violating workers rights and other exaggerated claims. He continued by saying that it goes back to the Gulf states being so relaxed about importing labour and opening the gates of immigration to foreign countries and stating that no society has ever seen such a concentration of expatriate workers being welcomed with open arms. Mohamed bin Ahmed Tawar Al Kuwari, vice-chairman of Qatar’s Chamber of Commerce and Industry was also quoted in the local media. “The countries that are asking us to comply with international human rights norms, themselves, need to repair their record on that front,” he said. Speaking of allegations of substandard living conditions at labour accommodations, Al Kuwari countered that such criticisms are baseless because Qatari labour inspectors conduct regular raids on labour camps and that the Labour Ministry does not issue work visas unless workers’ lodgings comply with specified standards. In May 2012 local media cited Labour undersecretary Hussein Al Mulla in saying that the government is considering the establishment of a Qatari-led labour committee to advocate for workers’ rights, and that the government would replace the sponsorship system with a contract between the employer and the worker. At the time of writing the Qatari authorities had not yet offered any further comment or specific indication of when this may be implemented.
Towards 2022
According to the HRW, if Qatar is to avoid human rights abuses while building a world class stadiums, ambitious transportation links, and upscale hotels within a
It is estimated the number of additional migrant workers required for the 2022 World Cup will range from 500,000 to more than one million. tight timeframe then it should meaningfully enforce their current laws protecting workers’ rights, and should amend laws to meet international labour and human rights standards by allowing migrant workers to exercise their rights to free association and collective bargaining. In November 2011, Jerome Valcke, secretary general of FIFA stated after a meeting with the ITUC. “FIFA upholds the respect for human rights and the application of international norms of behaviour as a principle and part of all our activities…FIFA and ITUC will work jointly in the next few months to address labour issues with the Qatari authorities.” Valcke also agreed to add labour-related criteria to the bidding process of future FIFA World Cups, in addition to FIFA’s corporate social responsibility commitment to include the aim to use its influence to help make “positive impacts” through football. At the time of writing, more than a year hence from the above statement, there has been no further public recognition from FIFA on the matter that The Edge could get access to. FIFA President Sepp Blatter, visited Doha as recently as last month, and according to an article on the organisation’s website the sentiment was expressed that all was still on track for Qatar 2022. Ultimately, whether or not the migrant worker human rights abuses in Qatar are as widespread as the HRW says they are in its report will remain topical for some time. However, what is clear that Qatar, and especially its construction industry, faces a challenge, in either resolving any issues there may be on the ground, or in convincing the world that it is doing all it can to ensure that international standards here are being adhered to in the lead up to its hosting the world largest sporting event in less than decade. The Edge | 55
Managing ambitious expansion From humble beginnings in 1994, Qatar Airways has become one of the world’s premier and most ambitious carriers and is still expanding at a rapid rate. Erika Widén interviewed CEO Akbar Al Baker to find out how he is managing its fast growth and discussed the airline’s most recent developments, including joining the OneWorld Alliance, and taking legal action against a UAE firm over construction delays at the New Doha International Airport.
56 | The Edge
aviation | business interview
atar Airways (QA) began operating in 1994 with just four aircraft serving a handful of regional routes. In 1997, the small regional carrier was relaunched under the mandate of His Highness the Emir, Sheikh Hamad bin Khalifa Al Thani, who outlined a vision to turn QA into a leading international airline with the highest standard of service. In the same year, Akbar Al Baker was appointed chief executive officer (CEO) of QA. In 2003, the airline grew to a fleet size of 28 aircraft and then to 50 aircraft by 2006. Al Baker recalls, “I started my career as a civil servant in the Qatar Civil Aviation Authority. I worked at various levels until I was appointed CEO, and it was my mission to transform QA from a regional carrier to a world-renowned airline. Today QA flies almost 120 aircraft, and counting, covering more than 120 destinations
Qatar Airways CEO Akbar Al Baker in the business class cabin of the new Boeing 787 Dreamliner after it arrived on its inaugural flight to Heathrow Airport, west London in December 2012. (image Reuters/Corbis)
Qatar Airways is filing a QR2.1 billion legal claim against a GermanEmirati company for causing a delay to the opening of the new airport. The Edge | 57
business interview | aviation
on six continents. That is a huge leap from where we were 15 years ago.” Al Baker tells The Edge that today’s QA is a world leader, not because it overcame the challenges but because of a clear vision of what the airline is and what it wanted to attain. “We have spent the last 15 years focused on achieving all the goals that we set out to accomplish. I do not see that as a challenge, I see it as a natural progression.” Al Baker’s vision was to become the best in the world, which it achieved twice in 2011 and last year, winning the Skytrax award for Airline of the Year, “My next priority will be the challenging part, which is to maintain this position.” Moreover, Al Baker is certain that once QA joins the Oneworld Alliance it will be on the advantage of their loyal customers, “we will give passengers more opportunities, more options and more access to partner airlines.”
Qatar Airways expansion
Al Baker speaks with The Edge about Qatar Airways plans to join the Oneworld Alliance, and the recent decision to commence legal action against a construction company for their alleged failure to complete airport lounges at the New Doha International Airport on time. (image courtesy Qatar Airways)
Al Baker explains that the achievements of expansion of 30 percent growth every year is based on confidence and credibility, which originates from the vision and a desire to connect the world with Qatar and vice versa. “We have focused on all facets of the business to make this vision a reality. Our significant annual growth is representative of all the new routes, new employees, and our constant stream of new aircraft joining the fleet. We are currently taking delivery of new aircraft every 15 days on average.”
Qatar Airways’ Achievements
2003: The first airline in the world to pass the International Air Transport Association (IATA) Operational Safety Audit with a 100 percent compliance and passed again during the two year renewal period in 2005, 2007, 2009, and 2011. 2009: Launched the longest flight in its global network– scheduled daily services from Doha to Houston marking its third US destination. 2010: Launched flights to 10 new destinations including: Bengaluru, Tokyo, Ankara, Copenhagen, Barcelona, Sao Paulo, Buenos Aires, Phuket, Hanoi and Nice. 2011: • Reached 100 destinations in its global routes. • Named Airline of the Year 2011 at the annual Skytrax World Airline Awards. • Launched flights to 15 new destinations with an expansion focus on Europe. • Received its 100th aircraft. 2012: Named Airline of the Year 2012 by Skytrax for the second consecutive year. For 2013: Expansion to serve Gassim, Najaf, Phnom Penh, Chicago, its fourth gateway in the US, Salalah and Chengdu.
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Al Baker says that QA intends to join the Oneworld Alliance, which will allow the airline to fly alongside some of the biggest and best brands in the industry.
aviation | business interview
50%
Qatar Airways is 50 percent government owned and 50 percent owned by the private sector. Under Al Baker’s custodianship, the airline compiled one of the industry’s youngest fleets with the average aircraft under four years old, including various types of Airbuses, Boeings, and corporate jets. “We are proud to be the first airline in the Middle East to take delivery of the Boeing 787 Dreamliner, which we fly to destinations including Dubai, Kuwait, and daily to London Heathrow, with more 787s being introduced into our fleet during the year,” continues Al Baker. “We also expect to take delivery of Airbus A380 aircraft, 13 in total, starting from January 2014. We have orders worth more than QR182 billion for more than 250 aircrafts…It doesn’t mean we will operate 250 aircraft by the time the World Cup starts. We focus on renewing our fleet with new planes coming in, and older ones leaving.” On November 12, 2012, QA received its first Boeing 787 Dreamliner at a special ceremony held in Seattle, United States. Al Baker says QA Dreamliners are the world’s first fully connected 787s with wireless facilities. “We chose the 787 Dreamliner as it is a revolutionary aircraft, its fuel efficiency, spacious interior and sound reduction, all in all, create economic efficiency and improved passenger experience.” Furthermore, Al Baker tells The Edge that it is the airline’s philosophy and belief that all passengers receive five-star service and that it is not limited to customers in business and first class. “Travelling should always be a pleasant experience, and we want our customers to know that when they travel with us, whether it is economy or premium cabins, they will receive the best service. Our customers always come first, and as a result we are always looking for ways to improve.” Al Baker adds that the recently introduced Boeing 787 Dreamliner offers economy class passengers substantial leg room, an award winning android touchscreen entertainment system, dynamic mood lighting, an air purification system and less cabin pressure, which allows for less fatigue. “And the one feature that seems to be quite popular with passengers is the large dimmable windows, which are more than 30 percent larger than those in similarly sized airplanes, and larger than anything planned by the competition,” explains Al Baker. With regards to QA contemplating an Initial Public Offering (IPO) in the near future, Al Baker responds to The Edge, “We are not planning to issue an IPO due the current state of the global economy, perhaps this will be something to consider in the future.” However, Al Baker says that QA intends to join the Oneworld Alliance in the near future, which will give them the opportunity to fly alongside some of the biggest and best brands in the industry. “When QA becomes part of Oneworld, our customers will gain access to the alliance’s global network. In addition, our Privilege Club frequent flyer programme, members will be able to earn and redeem rewards on any of oneworlds’s other carriers, and our network will be covered by oneworld’s market leading range of alliance fares.”
Qatar Airways takes legal action due to New Doha International Airport delays In late December Qatar Airways announced it intends to is file a QR2.1 billion legal claim against German-Emirati joint venture construction company, Linder Depa Interiors (LDI), for causing what it said were a significant delays to the opening of the New Doha International Airport (NDIA), according to a recent press release by QA. The press release stated that LDI had undertaken to complete the construction of 19 airport lounges at NDIA by the summer of 2012 in a contract worth more than US$250 million (QR900 million), but had failed to complete the project on time. The airport was due to open in December 2012, but this has been postponed to mid-2013. “We are extremely disappointed by the poor performance of LDI, which has failed to carry out the contract in a timely manner,” stated Al Baker. “We have been badly affected as an airline with the delay impacting QA expansion plans…in addition to revenue losses to the airline and its subsidiaries.” Al Baker added that the current airport is already operating at capacity with virtually no room to grow. “We have relied on moving to our new home, the NDIA this month [December], but this has not happened,” he said. In response to LDI’s in a subsequent press release that it was denied full access to the project site for the first nine months of the 16 months project, Al Baker exclusively told The Edge. “They had full access to the site...after they signed the notification to proceed.” Al Baker added that the airport has surveillance cameras to prove them wrong. “We have evidence that LDI were never there...They know very well that what they are saying is not correct,” he said. “And in addition to this, they should also know that this is a government project, QA is a government airline, and their future business prospects including the prospects of their parent company will be seriously affected when it comes to government contracts.” Al Baker also confirmed that further claims against LDI are expected from other related entities affected by the delay at NDIA. Overall, More than QR3.6 billion is being invested in infrastructure enhancements at the New Doha International Airport. Among the improvements are a new transit terminal, extension of the existing premium terminal for QA’s first and business class passengers, new arrival terminal for international airlines and additional aircraft parking. Doha’s current airport handles almost 20 million passengers a year with more than 80 percent of the passenger traffic generated by QA alone. Consequently, QR56 billion is the average total cost for the New Doha International Airport (NDIA) located four kilometres from the existing airport, scheduled to open in 2013. “The terminal will initially have a capacity of 28 million passengers a year with an eventual capacity of 50 million passengers beyond 2018,” said Al Baker. More than half of the 2,200 hectare airport site is built on reclaimed land from the Arabian Gulf. Other facilities explained Al Baker include a new Emiri royal terminal for VIP flights with additional hardstands, cargo terminal buildings and aircraft hangars, which can accommodate 13 different types of aircraft at any time.
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Bridging the Arabic language gap on the web Digital content will soon supecede traditional media, this much is clear. As the number of people referring to the web as a source of information increases, content creators are adapting their production methods to optimise material for online accessibility. In the middle of this global evolution to move beyond traditional media, the presence of Arabic digital content is severely lacking. Ramy Khalaf discusses the benefits of developing Arabic digital content both within Qatar and the greater Arab world.
feature story | digital content
Arabic is one of the fastest growing languages on the Internet. (Image Corbis)
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he explosion of Internet growth in the Middle East North Africa (MENA) region in the past decade has left a divide in the experience Arabic speakers can expect on the web. Internet World Stats, an organisation that tracks Internet usage puts the growth of the Arabic-speaking audience on the web at 2500 percent between the years 2000 to 2011, an impossible pace for content creators to keep up with. Arabic is the seventh most spoken language by Internet users but only three percent of digital content on the web comprises of Arabic material. However, this is changing as more people within the region realise the importance of a locally relevant web with Arabic content for them to function within. Such significant shifts in the media landscape have inevitably resulted in noticeable changes in the means through which businesses communicate with each other and their consumers. Where radio and television were once the norm for mass marketing, businesses now use alternative media channels such as social media to reach their market. 62 | The Edge
Changing online demographics
In the MENA region people aged between 15 and 35 make up 40 percent of the population, and according to a Booz & Company report, Understanding the Arab Digital Generation, they are increasingly technologically adept with more than 80 percent using the Internet daily and 78 percent preferring Internet to traditional media such as television. According to the report more than one-third are also unhappy with the availability of Arabic websites. While studies show online reading declining, other mediums of communication are flourishing on the Internet, 260 million videos are watched on YouTube every day in the MENA region. Google – who bought YouTube in 2006 – recently launched Arabic Web
digital content | feature story
Yazen Al Safi from ictQatar says, “Arabic content is gaining traction on social media, and it is obvious Arabic speakers are interested in a specific format of digital information.”
Days, a month-long initiative in an attempt to boost Arabic web content. Maha Abouelenein, head of communications for Google in the MENA region tells The Edge that they are investing in Arabic digital content because they believe the Internet needs to be more relevant for users who speak Arabic. Digital content, regardless of the language, requires a vast amount of time and effort to produce and keep up to date. ictQatar’s Yazen Al Safi, in charge of service enhancement and quality assurance, explains that when assessing whether to provide Arabic content, organisations take into account if the Arabic speaking audience is sizeable enough to justify investing in its creation. The changing demographics of Internet users are increasingly making it more feasible and indeed necessary. The challenge is creating unique and relevant Arabic content to meet the needs of a burgeoning Internet population. Localising web platforms is the next step in growing Arabic content on the web. Generic translation tools available to the public are inadequate in conveying the meaning of content in a manner that is coherent to a native speaker. Taghreedat, a crowdsourcing initiative which started in Doha and now based in Abu Dhabi, uses its network of volunteers to help translate and
1billion
The number of tweets written in Arabic every two months.
“Do we want the global media to define who we are in the Middle East or should we take control of the flow of content and information?”– Kaveh Gharib, Twitter. The Edge | 63
feature story | digital content
localise popular web platforms – that is, translate the interface so that non-English speakers can use them – such as Twitter, TED, Storify and even Wikipedia. Dr. Ahmed K. Elmagarmid, executive director of the Qatar Computing Research Institute, speaking at the Arabic Web Days Tweetup held at the Qatar National Convention Centre in December, said they are also working on improving methods to break the language barrier, and advanced programmes are in place that translate to Arabic from 26 different languages. The QCRI also has a joint initiative with Wikimedia aimed at enriching Wikipedia content in Arabic by translating and creating new material. “It is our civilisation and our material, who else can we expect to do the job?” said Dr. Elmagarmid passionately. “We must make the Arabic language a first class citizen of the web.” Another problem facing Arabic content on the web for consolidating and indexing for search engines is the use of Arabizi, a practice that most in the field of localising are vehemently against as it creates a fracture of Arabic content. A language that developed out of necessity when Arabic alphabets were not available – it uses Latin characters and European numerals – and is extremely popular among youth in the region. To further develop Arabic content ictQatar is working toward developing Arabic domain names and making them available to the public. “Obtaining an Arabic domain name that ends in what translates to ‘.Qatar’ is as simple as filling out a form,” Al Safi explains. This means that businesses can register their brand name to an Arabic domain and have a website made accessible purely through the use of Arabic. A concurrence of domain names and content makes reaching their target audience much easier for Arabic-based businesses, as it eliminates any reliance upon the user’s grasp of the English language or the need for Latin characters.
Adapting content
Speaking at the Arabic Web Days event held in Doha in December 2012, Kaveh Gharib, localisation project manager for Twitter in the MENA region said the next step after localising English content is to start creating content for a global audience. Disrupting the traditional flow of information, why not then translate from Arabic to English he asked, “Do we want the global media to define who we are in the Middle East or should we take control of the flow of content and information?” Observing the behaviour of Arabic speakers online can be very useful in understanding what type of content would be beneficial for businesses to produce. “Considering that Arabic content has been significantly gaining traction on social media sites in recent years, it is obvious that Arabic speakers are interested in a specific format of digital information,” explains Al Safi. “Interactive content such as smartphone applications and social media sites are stepping into the spotlight as the main platform for the exchange of ideas and data.” “Instead of taking to websites to attract consumers, marketers targeting Arabic consumers should exploit their avid use of social media to their advantage,” adds Al Safi. According to Gharib there are more than 17 million tweets a day in Arabic, making one billion 64 | The Edge
Maha Abouelenein, head of communications for Google MENA, believes the Internet needs to be more relevant for users who speak Arabic.
digital content | feature story
MENA digital media growth
• The Middle East and Africa will have the strongest mobile data traffic growth of any region at 104 percent. • Middle East and Africa will experience the highest compound annual growth rate in mobile data traffic usage, increasing 36fold by 2016. • The total number of Facebook users in the Arab-speaking world stands at 45,194,452 (as of end June, 2012), having increased by about 50 percent since the same time last year. • Arabic is now the fastest growing language on Facebook in the region, with an increase in the number of Facebook users who predominantly use the Arabic interface. • English and Arabic are the dominant languages for Twitter users in the Arab region, with Arabic tweets almost double those in English.
Sources: Dubai School of Government and Cisco Visual Networking Index
tweets every two months, and these numbers are continually rising.
Local start-ups
There is certainly no shortage of young entrepreneurs interested in creating Arabic digital content. What is missing, points out Al Safi, “[is] a business idea that has never been pitched before. The key to boosting the production of Arabic content is having ambitious entrepreneurs who are able to create an original idea and, more importantly, devote all their resources to materialising a functioning, profitable business from what was originally numbers and charts on a drawing board.” Stuart Brotman, professor of communication at Northwestern University in Qatar, agrees. “There are all sorts of opportunities for pan Arabic applications, particularly because many of the applications are not in Arabic and don’t reflect the culture. I think there really are some interesting business opportunities, the questions is whether these opportunities can start in Doha and be adopted through the region.”
Arabic is the seventh most spoken language by Internet users but only three percent of content on the web comprises of Arabic material. It is important to have an education infrastructure to support this, but not all the development needs to necessarily come from the region, Brotman adds. “India for example has a very robust application development environment but that does not mean that you cannot have individuals in Doha who are starting businesses that then utilise applications from developers around the world. Silicon Valley has done it so there is no reason that cannot be done here as well.”
Cultural preservation
Although developing Arabic content might not be of operational importance to every organisation, this is not the case with culture. There is a noticeable void where culturally relevant Arabic content is concerned. “We want to inspire users to develop content,” says Google’s Abouelenein, “and we are not just talking about translating, but in creating content. We just need to give them the tools.” Masmoo3 for example is an Arabic audiobook portal founded by Ala Suleiman from Jordan in 2011. Telfaz11 based in Riyadh, Saudi Arabia create wildly popular web shorts on YouTube that appeal to young Arabs. An alternate approach could involve satisfying a gap in Arabic content that has yet to be catered for which is what Bylens, a stock photo production company did in Qatar, providing a locally relevant service that also documents modern Arab culture. Bearing this in mind, it may not seem imperative that Arabic content be produced when focusing on businesses but this does not hold true when taking a step back and realising that preservation of Arab culture is equally important. The digitisation of print is essential to the rich history and culture that lies within Arabic texts. As Arabic speakers become more inclined towards the use of interactive content, there is no doubt that converting traditional text into searchable digital material is the right way to go. In relation to this, Al Safi explains that the promotion and preservation of Arabic digital content is also society’s responsibility. “In order for Arabic digital content to be seen more frequently, online society must drive its creation as a collective force,” he says, “One entrepreneur or business cannot single-handedly aim to do this but with innovation, digitisation of content, and better translation tools, Arabic speaking society can collectively push towards the creation of widely accessible Arabic digital content in its many different formats.” The Edge | 65
Tower Innovation Qatar’s award winning building
There is no doubt that Qatar is on the receiving end of more international attention than ever before. Contributing to this bid for recognition is one of Doha’s most prominent architectural pieces, which recently won a prestigious award in the United States. General manager Hassan Al Dehaimi offers an insight to what this means for Doha Tower. By Ramy Khalaf 66 | The Edge
tower construction | business interview
T
he Doha Tower, says Al Dhaimi, was set out for distinction from the moment the project was conceived by HE Sheikh Saoud Al Thani. It was recently named the Best Tall Building Worldwide by the Council on Tall Buildings and Urban Habitat (CTBUH). Prestigious as it is, this award is a testament to the sheer determination that made the tower’s challenging construction possible, he adds. Bearing this in mind, there is no doubt that the newly awarded title of Best Tall Building Worldwide is one that largely impacted the tower’s reputation as one of the most remarkably unique of Doha’s ever-growing skyline. “As we think back to the challenges faced during the tower’s construction,” says Al Dehaimi, “it is safe to say that the building’s existence here today is a feat in itself. Seeing the tremendous amount of effort that has been invested into the tower culminate in this award is very rewarding.” He goes on to add how the award is not only of importance to the Doha Tower but also signifies the determination and drive within the region. “We believe that this title is one that does not belong to us personally, but is rather a reflection of Qatar’s unfaltering ambition. The construction of this tower was heavily dependent upon the support of HH The Emir, Sheikh Hamad bin Khalifa Al Thani, as part of the 2030 vision. This support for a better future for Qatar, and the Middle East as a whole is ultimately what made this award possible. For these reasons we believe this to be an accomplishment for the Arab world and are extremely proud to be able to contribute to the ever-growing initiative in the region,” explains Al Dehaimi.
The circumstances which resulted in the tower, might be impossible to recreate, says Hassan Al Dehaimi The Edge | 67
business interview | tower construction
Loved by some, reviled by others. There is no doubt the standout design of the Doha Tower will be a talking point of the nation’s developing skyline.
The process
The CTBUH awards the title of Best Tall Building Worldwide on an annual basis. Given the nature of this award, the ceremony was preceded by a rigorous process. “Being considered for this award meant flying out to Chicago, to present Doha Tower to a selection of renowned architects. After a stringent process that had Doha Tower subjected to meticulous scrutiny, the building was officially recognised as The Best Tall Building in the Middle East and Africa,” says Al Dehaimi. This means that the tower was in the running alongside three other regional winners for the title of Best Tall Building Worldwide. A lineup of buildings that stretched the limits of architectural possibility with complex designs made for challenging competition. The Absolute Towers in Mississauga, One Bligh Street in Sydney, and the Palazzo Lombardia in Milan were the astonishing pieces of design the Doha Tower was ultimately able to outshine in its bid to win. “The demanding process involved in being awarded this title along with the outstanding buildings we were up against made receiving it all the more rewarding,” adds Al Dehaimi.
Standing out
According to the awarding body, CTBUH, one of the major factors which played a role in Doha Tower’s newly received title was the striking facade which is constructed of multi-layered patterns invoking ancient Islamic screens designed to shade buildings from the sun. Doha Tower’s outer cladding features an oriental design
The destination control system ensures employees are not left waiting for an elevator any longer than 20 seconds. 68 | The Edge
that reflects traditional Islamic architecture while protecting the building from solar penetration. “Behind the Islamic-inspired design was the need for a perfectly positioned tower in the Doha skyline that has the perfect combination of tradition and modern design,” explains Al Dehaimi.“We feel that the ‘mashrabiya’ design used in the outer cladding maintains the authenticity of traditional values while proving to be a functional component of the tower’s technology.” Al Dehaimi says that the cladding is instrumental where heat protection is concerned as it shields the building from sunlight and therefore helps reduce thermal penetration. In addition to this, the openings of the cladding vary in diameter depending on their position in relation to the sun to enhance heat protection. These factors resulted in the oriental design seen on the building today, which adds to its prominence among other buildings in the Doha skyline. Viewing Doha Tower’s external design, it is reasonable to assume that beneath the unique façade lie features that are equally if not more impressive. “We have incorporated the latest technology into Doha Tower in order to provide facilities, which are consistent with the image the building conveys to onlookers,” says Al Dehaimi, explaining the most notable feature being the use of reinforced concrete diagrid columns that rid the building of the need for a central core. The columns span the outer edges of the tower, maximising the office space for occupants on any of the building’s 49 floors. To transport occupants to any of these floors, Doha Tower has been fitted with a total of 23 elevators, some of which reach speeds of up to eight metres per second. This, coupled with a destination control system, ensures employees are not left waiting for an elevator any longer than 20 seconds. The tower, says Al Dehaimi, also adds an element of efficiency with its electronic control systems that allow tower staff to control everything from lighting to building access. This system ensures employees are only allowed access to their respective floor through the use of identification cards scanned into the system at every access point. These features serve to enhance productivity by streamlining the working environment and minimising lost time. “Current tenants are making full use of the technology we have in place. The wait for the elevators is near to nothing for the time being although this may change as occupancy rises,” explains Al Dehaimi.
tower construction | business interview
“These are a few of the many different technologies in place to help businesses and employees be as productive as possible.”
Industry challenges
There is no doubt that Doha has seen an influx in the supply of real estate in recent years, as office towers flood the West Bay area offering rental spaces for businesses. The spaciousness of Doha Tower’s office areas, the technological aid at the tenants’ disposal, and reputable image it provides allows it to target larger businesses as potential occupants. The concrete used in Doha Tower, which accounts for 60 percent of the building’s structure, was locally produced. However, given the huge demand for construction materials in Qatar along with other factors, Al Dehaimi looked to Europe to source the best possible materials. “In order to construct a tower with an innovative design and state of the art structural reinforcement,” explains Al Dehaimi, “we needed to ensure that the quality of materials was consistent with our vision. Cutting corners on costs was never a viable option since this would sacrifice the integrity of the building. For these reasons we sourced our materials from a variety of companies in Europe to be able to attain the level of quality we were aiming for.” These components largely contribute to Doha Tower’s prominence among other buildings in the skyline where the LED (light emitting diode) lighting system, for example, which was imported from Europe, makes the building outshine others at night.
New possibilities
Doha Tower was constructed over seven years and has become an integral part of the Doha’s skyline. The success of the tower in addition to the recent award leave much to the imagination with regard to what HE Sheikh Saoud Al Thani may decide to build next. “Doha Tower receiving this award makes us stop and think how a project of this magnitude seemed near impossible at the time.” The circumstances which came together and resulted in
“Doha Tower’s outer cladding features an oriental design that reflects traditional Islamic architecture while protecting the building from solar penetration.” – Hassan Al Dehaimi
the tower you see today are very difficult if not impossible to recreate, continues Al Dehaimi, “As the West Bay area slowly but surely becomes fully occupied, the chances of creating another building with a location as unique as that of Doha Tower are becoming slimmer.” Bearing this in mind, it is reasonable to conclude that Doha Tower is a truly unique project that required ample determination and support. Al Dehaimi concludes by saying, “We are extremely proud to be able to hold such a prestigious title for Qatar and hope for continued success in the Arab region.”
The concrete diagrid columns that twist upwards along the sides of the building rid the need for a central core creating more open space.
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70 | The Edge
leadership strategy | business management
Storyteller In Chief Why narrative is the new modern business leadership imperative It may not be in the job description for most CEOs, but in the modern age, a good leader must arguably also be a good storyteller, writes the London Business School’s Freek Vermeulen
S
tevie Spring, former chief executive officer (CEO) of Future PLC, a specialty magazine publisher in the United Kingdom (UK), once told me, “I am not really the company’s CEO, what I really am is its chief storyteller.” What Spring meant is that she believed telling a story was her most important task as the company’s leader. Actually, she insisted, her job was to tell the same story over and over again. And when she said ‘a story’, she meant that her job was to tell her representation of the company’s strategy: the direction she wanted to take the business and how that was going to make it prosper and survive. She felt that a good CEO should tell that kind of story repeatedly, to all employees, shareholders, fund managers and analysts. For, indeed, a good strategy does tell a story.
Not fiction but fact
All successful CEOs whom I have seen were great storytellers. Not necessarily because of their oratorical skills, but because the characteristics of the strategy they put together, lend themselves to being told like a story – and a good one. The most important thing for a CEO to do is to provide a coherent, compelling strategic direction for the company, one that is understood by everyone who has to contribute to its achievement. For that, a story must be told. When I say this, I am not implying that CEOs need to engage in fiction, nor do they need to be overly dramatic. In my view, a good business strategy story
has three characteristics. First, the story must provide clear choices. Stevie Spring’s choices were as clear as her forthright language: “We provide specialty magazines for young males, in British.” Hence, it was clear what was out: there were to be no magazines on, say, ‘music’ (that is too broad), no magazines in German (although that could be a perfectly profitable business for someone else) and no magazines on pottery or vegetable gardens (unless that has recently seen a surge in popularity among young males in the UK without my knowing it). A good strategy story has to contain a set of genuine choices. Moreover, it has to be clear how the choices made by the company’s leaders hang together. For example, Frank Martin, who as a CEO orchestrated the revival of the British model-train maker, Hornby, by turning it from a toy company into a hobby
The most important thing for a CEO to do is to provide a coherent, compelling strategic direction for the company. For that, a story must be told. The Edge | 71
business management | leadership strategy
Without a good story, a leader will find it impossible to combine people and resources into a forceful strategic thrust. company, put his strategy story in just 15 words. “We make perfect scale models for adult collectors, which appeal to some sense of nostalgia.” He decided to focus on making perfect scale models because that is what collectors look for. Moreover, people would usually specifically collect the Hornby brand because it reminded them of their childhood, and with it a nostalgic, foregone era. Frank Martin’s choices were not just a bunch of disconnected strategic decisions – they hung together, and, combined, made for a logical story. Second, the story must tie to the company’s resources. Importantly, the set of choices has to be clearly linked to the company’s unique resources, those that can give them a competitive advantage in an attractive segment of the market. Although Hornby had been hovering on the brink of bankruptcy for a decade, it still had some valuable resources. First of all, it possessed a valuable brand that was very well known and appreciated by people who had owned a Hornby train as children. Additionally, the company had a great design capability in its hometown of Margate. However, these resources were not worth much when competing with the cheaper Chinese toy makers. The children who wanted a toy train for their birthday did not know (and could not care less) about the Hornby brand. The precision modelling skills of the engineers in Margate were not of much value in the toy segment, where things mostly had to be robust and durable. However, these two resources, an iconic brand and a design capability were of considerable value when making perfect scale models for adult collectors. It was a perfect match of existing resources to strategy.
Clarity of purpose
I observed a similar thing at the Sadler’s Wells theatre in London. Ten years ago, before the current CEO Alistair Spalding took over, the theatre put on all sorts of grand shows in various performing arts. Yet, the 72 | The Edge
company was in dire straits, losing money evening-on-evening. Then, Spalding took over and highlighted his leadership with a clear story. He started telling everyone that the theatre was destined “to be the centre of innovation in dance”. He did this because the company was blessed with two valuable resources. One, a historic reputation for dance (although it had diversified outside dance in the preceding years) and two a theatre once designed specifically with dance in mind. Spalding understood that, with these unique resources, he needed to focus the theatre on dance again. Beyond that, he made it the spider in the web, a place where various innovative people and dance forms came together to create new art, a place where stars were formed. Third, the story must create a competitive advantage. The story must not only provide choices that are linked to resources, it must also explain how these choices and resources are going to give the company a competitive advantage in an attractive market, one that others cannot easily emulate. For example, Hornby’s resources enabled it to make perfect scale models for adult collectors better than anyone else, but those adult collectors also happened to form a very affluent and growing segment, one in which margins were much better than in the super-competitive toy market. It is not much good to have a competitive advantage in a dying market, you want to be able to do something better than anyone else in a market that will make you grow and prosper. Thus, it has to be clear from your strategy story why the market is attractive and how the resources are going to enable you to capture the value in that market better than anyone else. The story of the CEO of Fremantle Media, Tony Cohen, for example, was that his company was going to make television productions that were replicable in other countries, with spillovers into other media. Because of their worldwide presence, Fremantle Media were better than their national competitors at rolling out productions such as The X-Factor, Pop Idol, game shows and sitcoms. While their local competitors could also develop attractive and innovative shows, Fremantle’s multinational presence enabled it to reap more value from them. Therefore, that is what they focused upon: shows that they could replicate across the globe. It was their competitive advantage, and they built their story around it.
Only a beginning
Of course, a good story alone is not enough. A leader still needs good products, people, marketing, finance etcetera. But, without a good story, a leader will find it impossible to combine people and resources into a forceful strategic thrust. A good story is necessary – although, alone, not sufficient – condition for success. The message for leaders is thus, if you get your story right, it can be a very powerful management tool indeed. It works to convince analysts, shareholders and the public that where you are taking the company is worth everyone’s time, energy and investment. Perhaps even more importantly, it can provide inspiration to the people who will have to work with and implement the strategy. If employees understand the logic behind a company’s strategic choices and see how it might give the company a sustainable advantage over its competitors, they will soon believe in it. They will soon embrace it. And they will soon execute it. Collective belief is a strong precursor to success. Thus, a good story can spur a company forward and eventually make the story come true.
Freek Vermeulen is associate professor of strategy and entrepreneurship at the London Business School and the author of Business Exposed: The Naked Truth About What Really Goes On In The World Of Business.
Inside the minds of leading business figures
business insight Innovative projects in the upscale residential sector >80 Chief operating officer, Munibullah Mani of Alfardan Properties explains to The Edge how their long term vision is to develop innovative projects in Qatar.
also in this section Opportunities abound in the Doha hospitality sector >74 Andreas Searty, general manger of Hilton Doha spoke with The Edge about how the hospitality sector in Doha looks promising.
Utilising European know-how in new Qatari construction firm QBG >77
The Edge spoke with Omar bin Ladin, CEO of the Qatar bin Ladin Group about how his new company plans to leverage the skills of international firms in order to pitch for large construction projects in Qatar.
business insight | hospitality industry
HOSPITALITY INDUSTRY
More opportunities than challenges in Qatar’s hotel industry Hilton Doha is the first Hilton Worldwide property in Qatar, home to the famous Trader Vic’s restaurant and bar, and the first eforea spa in the Middle East. Erika Widén spoke with Andreas Searty, general manager of Hilton Doha, about how he believes the forecast looks promising for Hilton’s future expansion in Doha and the region.
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hospitality industry | business insight
Hilton Doha opened to the public in May 2012. How many guest rooms and suites, business centres, meeting rooms and grand ballrooms does the property have to offer? What are the unique features Hilton Doha offers in comparison to other upscale hotels available in Doha? We have 309 sea view rooms and suites. Our strategic location is an excellent added value to business and leisure guests alike. The hotel also has seven meeting rooms, a grand ballroom which fits up to 740 people, and the first eforea spa in the region. The eforea spa has eight spacious treatment rooms, and we also offer a variety of dining options, from our all-day dining restaurant, Mawasem, to Qatar’s first Trader Vic’s. I think Hilton Doha has established itself as a hotel of firsts. How is the hospitality business in Qatar, and how do you think it will grow? In comparison to our competition, Hilton Doha has maintained and exceeded the average occupancy rate. I see Qatar as a country with many opportunities and there is a great deal of projects within the infrastructure, and many investments taking place over the next few years in preparation for the World Cup. We see that all hotels and especially the Hilton Doha will benefit from the influx of business people coming into the country and using the facilities of the hotel. The advantage of Hilton Doha is that people come here for leisure and business. We like to be a hotel that attracts business people who benefit from Hilton’s business facilities and strategic location in the heart of Doha city, but at the same time, extend their stay for a day or two to enjoy our leisure facilities. eforea spa at Hilton, as well as our recreational areas and prime location at the beach, helps us by complementing the leisure part of their stay in Doha. What aspects and/or factors have made Doha an important market for Hilton? And are there any other expansion developments Hilton has for the future? Qatar is a nation that is expanding and developing rapidly. Its strategic location and position within the Gulf and its significance within the Gulf Cooperation
Council and the Middle East makes Qatar an attractive destination as a whole. Therefore, we felt that we needed to be a part of it and its development. Hilton Doha was a matter of the right time with the right partners, and here we are, open to the public and doing very well. Hilton is a worldwide and international hotel company with 10 hotel brands and more than 3000 hotels around the world, 56 of which are in the Middle East and Africa. More importantly Hilton Worldwide has acknowledged the importance of the region and its expanding economies and has planned to sign more than 100 Hilton properties within the next five years in Europe, Middle East and North Africa Region. Qatar has established itself as the wealthiest nation in the world, and we have several other Hilton brands coming to Qatar soon. According to reports, approximately 75 percent of hotels in Doha are upscale five-star hotels, which may be a negative in the long run since it means there is not a lot of diversity. What is your opinion in this regard? Are the figures exaggerated, and do you feel this will eventually change? I believe that with supply and demand things are changing, and the market is the key factor in determining what sort of hotels are required and what sort of level of hotels, and what kind of brands are required. The market dictates that and whatever the demand is, supply will have to adjust accordingly.
Hilton Worldwide acknowledges the importance of the region and its expanding economies and plans to sign more than 100 Hilton properties within the next five years in the EMEA Region.
Hilton Garden Inn Doha Al Sadd is expected to open in 2013. How does the property differ to Hilton Doha? And why choose the Al Sadd area? There are more than 500 Hilton Garden Inns around the world, Hilton Garden Inn Doha Al Sadd will actually be the second in the Middle East, and the first is in Riyadh, Saudi Arabia. It is a very unique business hotel in its segment, which will be located in Al Sadd district, a booming commercial area. It will target and cater to a different business sector, including smaller businesses and middle management, providing all necessary facilities of a business hotel while being affordable. We felt expanding the Hilton The Edge | 75
business insight | hospitality industry
name into the Al Sadd area was necessary and would give us a competitive edge as well as giving our loyal Hilton guests and members an alternative. Hilton Doha has recently launched six restaurants. Why open so many restaurants within one property? Surely it must be a challenge for Hilton Doha to attract people to those restaurants with the hotel’s close proximity to Katara Cultural Village? At Hilton Hotels and Resorts, our most important value is to make sure every guest feels valued, cared for, and respected. We believe it is our responsibility to cater to all our guests’ needs and that is why we like to offer a choice for every palate. Mawasem, our all-day dining, has a variety of cuisines from around the world as well as theme nights. La Sahtaine is for the more sophisticated palate with French Mediterranean cuisine, and a spectacular beverage cellar. Trader Vic’s, which is the first to open in Qatar, offers an Asian Polynesian fusion cuisine as well as signature cocktails. Zawaya Lounge is the perfect lounge for happy hour or watching sports games with a classic bar menu. Ya Hala our lobby lounge and Bab Al Baher our pool and beach bar have classic favourites to accommodate clients. We have received very positive feedback and results from in-house guests, locals and residents using and enjoying our dining facilities. It is always a good sign when guests come back. What is Hilton Doha’s unique selling point? Our strategic location, services, extensive facilities and the quality of service we offer to all of our guests are our unique selling points in addition to being a hotel of firsts. We are approachable people, we are there for everybody for all of our guests and for our entire expatriate and local guests here in Qatar. What are some of the challenges Hilton Doha might face as being part of Qatar’s dynamic hospitality industry in the future? 76 | The Edge
I see that there will be more opportunities than challenges. In fact, the first signs and the first indication that we have noticed since our opening a few months ago is that there is a lot of interest in Hilton. A lot of interest in the facilities and the style of our approach and being available to all segments within the business sectors. We see the future in Qatar as very positive. What other projects does Hilton have in the pipeline? A Hilton Resort in the future? A Hilton expansion beyond Doha? We are keeping all options open, in fact several discussions are taking place as we speak and therefore we will have several other Hilton brands within Doha. All options are possible. What special offers does Hilton Doha offer local residents? We have special prices and packages for the local and Gulf Cooperation Council market on night stays and restaurants. Some of our offers, in fact, include weekend stays and Eid Holiday stays during the festive season, which gives a fresh alternative for a family stay. My advice to guests is to keep their eyes on our website, on our Facebook page and check out our marketing offers, promotions and events which we announce regularly to all our customers locally and abroad, providing incentive to use our facilities. Could you elaborate on Hilton’s unique eforea spa? How does it differ from other upscale spas? The eforea spa at Hilton is a global spa experience from Hilton that combines three distinct ranges of treatments focused on organic, natural and scientific, results-driven practices, giving every type of traveller the unique therapeutic journey they seek. How does Hilton Doha train their employees for any emergency circumstance, such as a fire etcetera? We take safety very seriously, we have our own dedicated safety teams within the
hotel. We have our own control systems in place and we do regular training and emergency drills for all of our employees with regards to any type of crisis or emergency situation. What projects and or events will Hilton Doha have in 2013? And what is Hilton Doha’s vision for the next five years? We are still conducting research and basic preparations. We will be making announcements very soon. Moreover, our vision is to be the best hotel in this region, we have already begun very well this year since our grand opening.
“The market is the key factor in determining what sort of hotels are requried and whatever demand is, supply will have to adjust accordingly.”
construction | business insight
CONSTRUCTION SECTOR
Qatar Bin Ladin Group combines family experience and European know-how Overnight technology sector miracles aside, the process of building a company can take several years or even decades. But with a fixed deadline in a highly competitive sector – such as construction in Qatar in the lead-up to the 2022 World Cup, for example – this luxury of time is not an option. One solution, though, is to form an umbrella company that combines Gulf construction expererience with the readiness of large international firms, explains Omar bin Ladin, chief executive officer (CEO) of the recently formed construction firm Qatar bin Ladin Group (QBG) to The Edge’s Miles Masterson.
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business insight | construction
“I
f you try to set yourself up now for the World Cup, of course you are not going to be on time,” said bin Ladin in his quiet and measured manner. “It is not even 10 years to go now. It is impossible. But on the positive side, there are many international companies who would like to come to Qatar under a group umbrella.” This is why, bin Ladin revealed, he has set up QBG rather as a collective of related international companies. He explained how he has been working since 2011 towards creating a Dohabased conglomerate that will be able to handle any project as well as offer services or equipment locally through its affiliates. Under the guidance of bin Ladin, QBG hopes to compete for the scores of lucrative public and private sector contracts set to be tendered in Qatar from 2013 onwards, both in preparation for the World Cup 2022, as well as for the country’s general infrastructure plans. The foundation of QBG is a partnership with Spanish construction giant Coprosa, who have a 51 and 49 percent stake respectively in Bin Ladin Company Group (BCG). This is then augmented by partnerships with a number of other firms, many from Europe, but also other parts of the world, across a spectrum of construction sector specialties. “We looked for general construction partners, electrical and mechanical engineering companies and heavy machinery rental companies etcetera,” Miguel Angel Sanjuan, a Spanish national who is QBG’s business development manager, told The Edge. Sanjuan added that the past year has been one of much travel – most of it to Europe – and negotiation for bin Ladin and his associates to vet potential companies and secure partnerships with the best. “It takes a long time. We spent about one month over there talking to companies, and have been developing our business for the past year.” “We have been creating a foundation,” bin Ladin added. “There were many companies interested in doing business with us, but in the end we chose the ones with more than 30 years’ experience, at least. They needed to be powerful and right to do the job.” Coprosa, explained Sanjuan, has been involved in building railways, roads, 78 | The Edge
underground developments, public buildings as well as large residential and other general construction projects in Europe and around the world. Other partners, Sanjuan added, include a heavy material rental company from Europe that he says already is operating in Saudi Arabia and is poised to enter the Qatar market through QBG. “We are bringing in one hundred pieces of machinery here to start off with,” he added, “to support ourselves and to provide for the market.” The idea, Sanjuan reiterated, is to create a web of companies that QBG manages and enables them to “take hold of the opportunities around us.” Apart from Qatar, bin Ladin explained, he is also looking to spread the affiliated network of construction firms he has created to other locations, including Sudan and Malaysia. But for the time being their main focus, and urgency, remains local. “Because of the World Cup the time we have in Qatar is short,” furthered bin Ladin. “You need to be ready to join this race, but you cannot build your company like in Saudi Arabia where you have a lot of time. You have to be ready in this country to do something fast.” The reputation of the bin Ladin family name in the construction sector on the Arabian Peninsula of course precedes Omar bin Ladin. In 1931 the patriarch of the bin Ladin family Mohammed bin Ladin – his grandfather – left home in rural Yemen for the newly formed Kingdom of Saudi Arabia (KSA). Here he befriended the country’s founder, King Abdul Aziz Al Saud, founded Saudi bin Ladin Group (SBG) and was awarded numerous contracts to extend and restore most of the holy Islamic sites across the country. This lead to Mohammed bin Ladin landing deals to extend a network of highways across KSA and numerous other large and lucrative public sector contracts, which formed the basis of a multinational, multibilliondollar construction conglomerate that now employs more than 180,000 staff and has a presence in various guises in Qatar, including in the form of Qatari Diar Saudi bin Ladin Group (QD-SBG). However, in creating QBG, Omar bin Ladin insisted that he is wholly independent and any ties are in name only to the KSAbased bin Ladin construction businesses.
“You cannot build a construction company in Qatar like in Saudi Arabia, where you have a lot of time. You have to be ready in Qatar to do something fast.”
Omar bin Ladin is also and will be forever famous for being the fourth son of former Al Qaeda leader Osama bin Ladin. He spent a short time with his father, whom he described as a “war person” in the organisation’s camps in Afghanistan. But while he has professed to loving and respecting his father like any good son and grieving his recent death, he is also equally famous for distancing himself from Osama bin Ladin’s extreme views. “This is nothing to do with my business,” at first he reacted sharply to The Edge and then added that much of his life has been a learning process, leading him to the point he is at now, where he ultimately realised he wanted to contribute to the world and his adopted country in particular, by being a businessman and building things rather than breaking them down. “I am doing this because my father taught me this, my uncle, my grandfather so this is something that is our job,” he said of construction. “This is what I know how to do in order to make a living. I am Qatar-based, so this is also my duty to my country now.” Qatar, explained bin Ladin, is in desperate need of capable construction skills and said his companies can potentially bring fresh ideas and provide innovative
construction | business insight
approaches to pressing problems. As an example, he cited a potential solution for issues such as traffic congestion and safe passage for pedestrians. “We have some new ideas to cut the traffic down 50 percent at the roundabouts,” he said. “We came with an idea to build special bridges with our partner Coprosa. The same thing might normally take two or three years to solve, but we can do it in around eight months, with very low costs and without disruption to traffic.” Though, thus far QBG has only completed one small project in Qatar and has yet to secure a large contract, with his family’s solid reputation in construction and international partners, coupled with ideas and solutions such as the above – which Omar bin Ladin said have been well received – he is confident that they will soon land their first big deal. “The timing right now is very good and now we are comparable to a lot of companies,” he continued. “I have been doing this for 10 years now and I have no problem in handling it. This not difficult, you just need to have the right company and the right people to do the job.” Nevertheless, setting up his business in the manner that bin Ladin has done so has not been without challenges, some of them ongoing. Apart from the time it has taken to set everything up, another of the reasons he went the umbrella route rather
than build everything up organically, Omar bin Ladin explained, that small construction companies find it hard to fit into the large project-based construction environment in Qatar – unless they are happy to fight for subcontracting scraps. He also feels that many international companies, without the protection and experience afforded to by a local umbrella partner such as BCG, struggle to gain a foothold in Qatar and as a result often pull out after a few months, which in turn is not favourable for the local industry. Omar bin Ladin opined that this, added with well-publicised reasons such as the price of materials and labour recruitment, means the Qatari construction industry as a whole faces many challenges. Overall, as an industry construction in Qatar, Bin Ladin says, can be sometimes be disorganised and needs to improve its efficiency as a whole sector, if it is to meet its goals of well-constructed and integrated projects for 2022 and beyond. Nevertheless, he remains optimistic and is hoping his company will ultimately secure larger projects in the future. When it comes to his own management style as CEO of a multinational construction company, Omar bin Ladin says it is not all about deals and industry politics, and he can often be found on-site in a hard hat. “Sometimes you have to do that,” he closed, smiling for the first time in our
conversation. “If there is a problem or difficulty you need to be there, you cannot just sit in an office. We have to check everything, you go to everything, every area, and make sure things are working the right way. Sometimes you will see things that your own people may not see. This is one of the responsibilities that I have. No one will succeed if you don’t visit the site sometimes and take care of these sorts of things with your own hands.”
“This is what I know how to do to make a living. I am Qatarbased so this is also my duty to my country now.” The Edge | 79
business insight | residential sector
REAL ESTATE
Developing upscale projects in Qatar’s real estate sector
Munibullah Mani, chief operating officer of Alfardan Properties discusses with Erika Widén how Alfardan Properties develops innovative projects. What current or future towers and developments does Alfardan Properties currently have? Alfardan Properties constantly strives to introduce new and innovative projects that can set new benchmarks in the market. We do not aim to generate interest just out of sheer project size, we also want to emphasise the strategic importance and value of our offerings. All of our projects take into consideration the benefits of location, state-of-the-art facilities, topquality finishing and eye-catching design. Through this approach, our highprofile projects such as One Porto Arabia, the first luxurious building on the man-made island in The Pearl-Qatar, the Kempinski Residences and Suites, and Alfardan Towers, to name a few, have quickly emerged to become the most iconic property developments in Qatar. The quality and stature of these properties strongly reaffirms Alfardan Properties’ uncompromising commitment to excellence in developing commercial and residential properties that exceed expectations in terms of quality, luxury and location. What other projects or develpments do Alfardan Properties have? Other notable projects that have achieved considerable success in the market include Laguna Beach, Alfardan Centre, Al Jazeera Residences, Alfardan Gardens, Al Sadd Residences, Alfardan Plaza, Bin Mahmoud Building, and Meydan Al Azaibah in Oman. Among our new projects
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residential sector | business insight
includes are a residential development at Doha’s Bin Mahmoud area that will deliver two-to-three bedroom apartments. The Kempinski Hotel Marsa Malaz on The PearlQatar, which will include 250 rooms and suites and will feature a design inspired by traditional Arabic themes, and another luxury residential project at Al Sadd in the heart of Doha. How specifically does Alfardan Properties differ from other upscale real estate developers? Through the years we have nurtured a name associated with aesthetics, high luxury, and service excellence. We have been able to maintain our leading industry stature through various differentiating elements, including our strategic locations, uncompromising design elements, unique luxury themes, focus on lifetime experiences through our services and facilities, and our trained personnel who provide world-class service around the clock. However, the main difference of Alfardan Properties in comparison to other real estate developments is our concern for our customers regardless of their age by creating customer-oriented services, social events and activities. The set-up of Alfardan Properties earned the ISO 90001; 2008 certification for its standards in facilities management and Customer Service. Is there a high demand for upscale residential and commercial properties? Definitely, and the demand is steadily rising. Qatar is pursuing a long-term development strategy that aims to address the future real estate demand of the country. The projects we are undertaking and planning at the moment are thus aimed at complementing future requirements, particularly for the upcoming 2022 World Cup and then beyond. The government of Qatar has been positioning the country as a leading destination for business, leisure and lifestyle, an initiative that will naturally result in a tremendous population growth and a corresponding surge in demand for commercial and residential properties. Qatar is currently one of the best investment destinations in the region given its excellent infrastructure, political stability, strong government support and investment-friendly policies. The many
individuals and groups who want to take advantage of this favourable environment will of course need residential and commercial spaces, and Alfardan intends to help support this demand. Since Qatar is developing at a fast pace, what are the challenges Alfardan Properties faces to keep up with growth? In our work we faithfully follow the vision, mission and strategy of the company. We constantly strive to provide high-end projects that are top-of-the-line and that sustain Alfardan Properties’ image as a market leader. Moreover, all our projects are carefully developed with a keen eye on location, state-of-the-art facilities, quality finishing and visually appealing design, and all are focused on quality management. We intend to follow the same path in all our upcoming projects to maintain our market reputation and keep up with the fast pace of Qatar’s development. Do expatriates prefer to live at The PearlQatar rather than Dafna? Which areas are there currently a demand for and why? Expatriates who are looking for a calm, beautiful, relaxing place are drawn to The Pearl-Qatar, where they can avail of several high-end services and facilities located directly on the waterfront. The development is an island experience, purely residential with many high-level retail outlets all located on the waterfront. Al Dafna, which is adjacent to the West Bay area, has a mix of commercial and residential components and is close to many commercial landmarks and the popular Doha Corniche. These two areas both offer vibrant areas and warm communities. Do clients prefer to live in residential villa compounds or residential towers? And why? There will always be some who prefer villa compounds and some who prefer residential towers. Each has its own unique characteristics and differentiating services and facilities. Towers provide unique facilities, offer beautiful, scenic views, and are suitable for small families, where villas are for larger families who are looking for more space and garden facilities. It all comes down to personal taste. Why are luxurious amenities important
in Qatar and seem to be in high demand? There is an on-going trend towards luxury properties supported by modern facilities and services that is really tempting to a lot of tenants seeking a unique living experience. The tremendous demand for luxury-themed space is important as it can differentiate a firm such as ours from the competition. It is significant to Qatar, which is pursuing a long-term development strategy that aims to address the future real estate demand of the country. The projects we are undertaking and planning at the moment are geared towards future requirements, particularly those for the upcoming 2022 World Cup, and then beyond. The Government of Qatar is positioning the country as a leading business, leisure and lifestyle destination, an initiative that will naturally result in tremendous population growth. What is Alfardan Properties vision for the next five years? For the next five years, Alfardan Properties will continue to lead the way as one of the most dynamic and successful companies in Qatar. We will remain fully committed to delivering high-quality projects that satisfy market demands and exceed customer expectations. We also look forward to launching various major projects that will further reflect the prominent image of Alfardan Properties in the Qatari market.
Alfardan Properties constantly strives to introduce new and innovative projects that can set new benchmarks in the market. The Edge | 81
products and reviews
Bose store launches the new VideoWave II system
Read it: Like A Virgin: Secrets They Won’t Teach You at Business School Understandably, as one of the world’s most famous and successful college dropouts made good, Richard Branson suspects that he may not have had quite such an impact on the business world if he had completed his formal education. Instead, at 16 he left college to start a magazine, mail order business and record label, which in turn lead to the numerous ventures started up or inspired by Branson under the Virgin banner, including of course an airline. This book, Branson’s sixth, is solely aimed at entrepreneurs, as he says he has never worked for anyone else – though he does add in the foreword that he hopes people working within companies will also benefit from his advice. The book, Branson explains, was inspired by the continual stream of questions he gets from entrepreneurs and small business owners and contains answers to many of their queries, as well as further content he describes as “written ramblings that have appeared in various publications around the world.” Branson reveals that his key to success is “People. People. People.” This is echoed throughout the book, as most of its content relates to human interaction, emotions, sentiments, feelings and opinions and managing behaviour. Some of it comes across as a little simplistic – such as the first piece of advice he offers: “if you don’t enjoy it, don’t do it”. Chapter II is fittingly called ‘People Power’ and again truisms abound, such as people not just being crucial to business but being the business itself. However, when a man of Branson’s calibre waxes about what he knows of starting up businesses, it is best to read on through all 78, short, smart and snappy chapters – some with quirky titles such as ‘Nice Guys Can Finish First’ or ‘The Chinese Plate Trick’, others more conventional such as ‘Be a Leader’ or ‘Great Customer Service’. There is no doubt that as Branson alludes to in the first pages, there is definitely something to learn from his experience for everyone, business school graduate or not.
Available at Virgin Megastore. 82 | The Edge
Bose Store, an affiliate of Darwish Technology, introduces the new Bose VideoWave II system, an entertainment system that combines a high-definition TV, home theatre sound system, and music system into one revolutionary product. The VideoWave II system is available in 55-inch and 46-inch screen sizes, featuring a 1080p LED backlit display for clear images, a new, more refined industrial design, and an updated click pad remote for more intuitive control of home entertainment system.
Available at all Fifty-One East department stores.
Fujifilm launches the XF1 Lifestyle Camera
Fujifilm is proud to introduce the XF1, the first lifestyle camera from the acclaimed X-Series range. The XF1 was launched following the highly anticipated X-E1. With its matched lens and sensor, careful attention to detail on appearance and design, and accessible technology, the XF1 extends the X-Series range to a much wider audience. “The XF1 is very special because it targets the general public, especially those who are fashion conscious. This camera with its premium quality and compact body will fit in very well as a lifestyle accessory,” said Keitaro So, general manager of Fujifilm Electronics Imaging Division, Middle East and North Africa. “The XF1 is also available in three colours: black, red and brown, offering the user to a variety of colour choices.”
Toshiba’s All-InOne desktop PC, LX830, now in the Middle East
Toshiba Gulf FZE All-In-One desktop PC was unveiled recently in the Middle East. The LX830 is a slim and space-saving device, an all-round PC suitable for family use or for small home offices. The 23-inch desktop PC is powered by the third generation Intel Core i7 processor. It features a large hard drive of up to 3TB, and memory of up to 16GB. The LX830 offers touchscreen functionality for an increased level of control through direct interaction with the display, allowing easy navigation.
Salam Studio & Stores celebrates 50 years with Canon in Qatar Salam Studio & Stores celebrated 50 years of business partnership with Canon in Qatar. A high profile event including the guest of honour, the Japanese ambassador Kenjiro Monji, business partners, delegates and members of the media was held in December to commemorate the occasion. “Salam Studio & Stores has been instrumental in pioneering the Canon brand among local consumers and has yielded significant results in terms of our market share and reach,” said Anurag Agrawal, managing director of Canon Middle East. “Through our partnership with Canon,” confirmed Issa Abu Issa, chairman and CEO of Salam International, “we have had excellent sales growth since our inception and we are very optimistic about this trend continuing. This has been a result of the collaborative approach provided by Canon Middle East and our hardworking channel partners within the country’s robust consumer electronics sector. We will continue to build on our success by introducing innovative new products and providing unrivalled customer satisfaction when it comes to value added support and service.” The Edge | 83
10 things
Stories that will make headlines in 2013 The Edge takes a look at the biggest stories that made the headlines in 2012 and we think will continue to do so in the year 2013. By Shehan Mashood
US fiscal crisis
Whether the American economy declines depends on the actions of its leaders in 2013. Though the ‘Fiscal Cliff’ crisis was temporarily averted, the United States economic outlook is still highly uncertain with the only given being that if it falls into a recession the effect will be felt globally.
Euro crisis
10 things
With the eurozone sinking into depression in the latter part of the year, questions linger whether contagion from Greece will spill over to other European countries. As the world’s largest economy, whatever attempts made to stimulate the eurozone will have repercussions on the rest of the world, and continue to make headlines
Syrian civil war
Qatar’s preparation for 2022
Mega-projects such as Lusail City and Qatar Rail will all continue to be stories in 2013, as challenges in sourcing construction materials, rising costs and labour challenges are all risk factors to the timely delivery of projects.
The Arab spring
Two years since the self-immolation of Mohamed Bouazizi in Tunisia that ignited protests around the Arab world, changes still continue and will do so into the next year. While countries such as Egypt and Libya struggle to establish stable governments and economies, others such as Bahrain and Syria are stil making headlines.
2012 saw Syria devolve further toward civil war, and the death toll topping 40,000 according to some Human Rights reports. While Bashar Al Assad shows no signs of stepping down and a clear exit strategy for him is not in sight, the story is likely to continue making headlines.
The Villaggio fire
Emerging economies
Shale gas fracking
For years emerging economies such as China and India were hailed as the future economic superpowers, poised to shift dominance away from the West. Growth has however, slowed in large emerging economies, and their rise to the top might be a longer road than many thought. Emerging nations will still be talked about in 2013, the question now becomes, will it be for the right reasons?
Qatar’s foreign investments
Qatar investments in foreign markets always seem to garner interest in both local and
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foreign media and will likely continue in this fashion into 2013. The nation’s sovereign wealth fund made headlines opening The Shard, the largest tower in Western Europe, and numerous investments including Paris Saint-Germain, Tiffany’s and Porsche among others.
The tragic fire that took the lives of 19 people, including 13 children will continue to be a story in 2013. As court proceedings are finally underway, families of the deceased are hoping that those who are criminally negligible be held responsible, and that safety measures are made a prime concern in public spaces in Qatar. The controversial new method of extracting shale gas, known as fracking is being increasingly considered by numerous countries to extricate themselves from foreign energy dependency and has been covered extensively the past year. Its direct impact on Qatar’s number one export, natural gas, will keep it firmly in the news over the coming months.
Iranian nuclear programme
Over the past year, Iran has threatened to block off the Strait of Hormuz in response to tougher sanctions. Exacerbating the issue has been the Israeli prime minister’s eagerness to attack nuclear facilities within Iran. While president Obama has taken a softer line, calling for negotiations. Tensions in the region remain high.