contents May 2014 TheEdge55 Front Cover.pdf
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Business Interview: QIIB CEO Abdulbasit Ahmed A. Al Shaibei
Vol. 6 No. 5 - Issue 55 - May 2014
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- QATAR’S BUSINESS MAGAZINE - Vol. 6 No. 5 - Issue 55 - May 2014
cover story
WHEN DOMINOES FALL Russia, Europe, Qatar and a new paradigm in global gas geopolitics
PLUS:
Qatar’s sovereign rating retained by S&P Will the increase in global energy demand work out in favour of Qatar? 20,000 hotel keys by 2022 Social health insurance covers all Qataris
UK-based Ukrainians demonstrate outside the London headquarters of Gazprom in late March 2014. The Russian government controls a large stake in Gazprom and the protesters were demanding the British government place immediate sanctions on the energy giant. Natural gas exporting leaders Qatar and Russia have in recent years managed to share world gas markets, but as Jamie Stewart reports, as events in Ukraine evolve and continental borders are redrawn, the global geopolitics of gas may usher in a new paradigm. (Image Corbis)
62 Rashid Al Mansoori, CEO, Qatar Stock Exchange, says that maintaining a strong focus on the local market and investors does not contradict with the bourse’s international outlook in attracting regional and international investors.
features
52
Business Interview: Retail-focused and value-based banking 48
In an interview with The Edge, Abdulbasit Ahmed A. Al Shaibei, CEO, Qatar International Islamic Bank, talks about the future of Islamic banking as an industry, and the impact that proposed sovereign sukuk issuances will have on traditional sukuk issuers.
Feature Story: Rethinking our waste
52
The increase in consumption by consumers is diverging with the earth’s ability to provide raw materials to satisfy our growing needs. Organisations need to reconsider a fundamental rearrangement of the economy if they are to keep up with demand.
Business Interview: Exception to the rule
58
As an expatriate and perhaps one of the few female CEOs in the country, The Edge spoke exclusively with Ghada P. El Rassi, MEEZA’s CEO, about her role, achievements and plans to lead the company into the future.
Feature Story: Investing in the Qatari stock market
62
The upgrade to Emerging Markets status will give the Doha bourse access to a wider investor base, but what does the upgrade mean for investors based in Qatar? Will it bring new and diverse investment options?
Renault’s remanufacturing plant in France refurbishes material from old cars sold at 50 percent of the original price, and still manages to turn a net profit due to a reduced cost in materials and energy use.
The Edge | 3
Contents page
sectors
Finance & Markets 23
Qatar recently approved its biggest budget, up 3.5 percent from last year. Expenditure has been projected at QAR218 billion with increased spending in education, healthcare and infrastructure.
Energy & Sustainability 27
Global energy demand is expected to increase, but Qatar will face many challenges if the country is to capitalise on the growth of the LNG market.
Real Estate & Construction 31
Increased business activity ahead of the 2022 World Cup boosts Qatar’s hospitality sector, set to grow hotel keys from 14,000 to 34,000.
Tech & Communications 35
Increasing access to high-speed broadband could open up new markets for both content creators and platform owners in traditional mediums such as TV.
Healthcare & Education
39
The latest stage in Qatar’s national health insurance scheme rollout sees all nationals covered under a newly launched brand, Seha.
Business Insight 69
Deep Marwaha, group director for Cityscape, in conversation with The Edge, speaks about the highlights of Cityscape Qatar, to be held in June, and the emerging trends in the sector in 2014. Amelia Fawcett, chairman of the Hedge Fund Standards Board (HFSB), London, talks to The Edge about the activities of the board, its relevance to the region and what she expects from her Qatar visit.
With increasing liquidity and investment choice, it is very likely that more hedge funds will establish a presence in the GCC, says Amelia Fawcett, chairman of the Hedge Fund Standards Board, London.
regulars From the Editor 8 Photo of the Month 12 Business News 14 Qatar Perspectives 18 Products 75 4 | The Edge
publications director mohamed jaidah m.jaidah@firefly-me.com general manager joe marritt j.marritt@firefly-me.com managing editor miles masterson m.masterson@theedge-me.com senior business editor aparajita mukherjee a.mukherjee@theedge-me.com deputy editor farwa zahra f.zahra@theedge-me.com digital editor/editorial asst. shehan mashood s.mashood@theedge-me.com international sales director julia toon j.toon@firefly-me.com | +974 66880228 head of business sales manu parmar m.parmar@theedge-me.com | +974 33325038 sales manager adam kynnersley a.kynnersley@theedge-me.com | +974 66079716 area sales manager UAE roger cousin r.cousin@firefly-me.com | +971 508716076 distribution & subscriptions azqa haroon/joseph isaac a.haroon@firefly-me.com/ j.issac@firefly-me.com art director sarah jabari senior graphic designer niveen saeed production coordinator ron baron 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 The Edge is printed monthly Š 2014 Firefly Communications. All material strictly copyright and all rights reserved. Reproduction in whole or in part, without the prior written permission of Firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by The Edge or Firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in The Edge. The publisher (Firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Shutterstock and/or iStock Photo or Firefly Communications.
6 | The Edge
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AMBUSH MARKETING AND THE FIFA 2022 WORLD CUP
FIERCE COMPETITION ON AND OFF THE FIELD What is Ambush Marketing? Precisely what ambush marketing is and whether or not it is contrary to the law are two questions at the heart of the short but storied history of guerilla advertising. Broadly speaking, ambush marketing is the attempt, usually by a competitor of a licensed sponsor, to (i) associate itself or its products with a major event in a manner misleading to consumers (“Ambush by Association”) or to (ii) interject itself or its products in close proximity to an event to gain brand exposure (“Ambush by Intrusion”) without paying for the privilege. Not all ambush marketing is illegal. Legality will depend on the particular activity and applicable law in the relevant jurisdiction. Why should we care? The FIFA World Cup reaches a larger, more diverse audience than any other single-sport event. For the organisers of a World Cup, revenues generated from advertising make up the lion’s share of budgeted income. Staging the tournament, welcoming the world in the manner that Qatar deserves and paying for the event, are partly premised on the ability to properly market (i) corporate sponsorship packages, (ii) television broadcast rights and (iii) merchandising opportunities. Commercial sponsors are entitled to legal protection for their vital investments. Ambush marketing can compromise the value proposition in any one or all three of those areas. For sponsors who pay millions of dollars for a share of those rights (and in a number of cases significantly more than that in the activation of those rights) ambush marketing jeopardises that investment. Unchecked, this weakens the product the organisers are offering, dilutes the value and ultimately reduces the ability of an event to attract future sponsors.
2022 one of the most geographically compact FIFA World Cups ever). This means exclusion zones could be policed very effectively to combat Ambush by Intrusion. In respect of Ambush by Association, elements of laws concerning Intellectual Property including new eventspecific legislation, consumer protection and the Civil Code (for tort and contract remedies) can all be used to defend against these guerilla tactics. • Task Force. Qatar should have a task force in place to prepare the best possible legal framework to deter ambush marketing well before 2022. This must be complimented by a flexible and dynamic ability to enforce that framework of legal rights and restrictions to maximise sponsor value and protect the short and long-term value of the event, while taking into account public sentiment. We have seen a continuing trend for opportunistic and creative advertisers to attempt to exploit major events. The level of fairness required of competitors on the pitch will not be observed by advertisers off it. Enjoy Brazil and keep an eye on the games outside of the games as we look a little farther forward to 2022.
What can we expect from recent trends? The stakes are high and the potential for global exposure has been a temptation many advertisers, including a number of market heavyweights – who arguably should know better - cannot resist. For example, while Coca-Cola will be the official drink of the FIFA 2014 World Cup in Brazil, it is likely that rival Pepsi will be positioning itself and its recently expanded catalogue of top players in a manner that could grasp some glow of association. Nike (Atlanta/London), Bavaria (South Africa), Beats by Dr. Dre (London) and Zippo (Sochi), amongst many others, have previously benefitted from ambush marketing campaigns. How can Qatar achieve robust preparedness? • Don’t reinvent the wheel. Event-specific local legislation protecting sponsors is now commonplace - even mandatory in the case of any Olympic host nation. FIFA is amongst the best and most effective bodies at protecting sponsors’ rights. Incremental improvements in such laws are made before each new mega competition and consideration should be given to preparing the best possible statutory solution for Qatar, accounting not only for the event but also for Qatar’s unique cultural and legal environment. Lessons learned from experiences in South Africa, London and Sochi should be adopted; and, an eye should be kept on Glasgow and Brazil, amongst others, to incorporate effective developments in law and to account for market trends. • Take advantage of the playing field. The 2022 bid process capitalised on the compact World Cup (the close proximity of playing venues will make Qatar
STEVE BAINBRIDGE Regional Head of Sports Law & Events Management Al Tamimi & Company s.bainbridge@tamimi.com Follow us on Twitter @AlTamimiCompany Join us on LinkedIn – Al Tamimi & Company www.tamimi.com
editor’s letter The global oil and gas sector has seen some volatility of late. Most significant has been the rise in oil price, a key benchmark for Qatar’s budget and state revenues, to more than USD100 (QAR364) per barrel. At the time of writing, this had been due to the return of a portion of Libyan oil to the market in April, as well as a surge in United States (US) crude stockpiles, but most significantly due to the political situation in Ukraine. Here, Russia has of course recently assumed control of the Crimean peninsula and seems to be spreading its influence through the remainder of the region, much to the chagrin of Europe, the US and most of the United Nations. The oil and gas prices are of course linked, and it is with the latter – as we examine in our cover story on page 42 – that the greatest effects of the ongoing saga between Europe and Russia could potentially be felt in Qatar. While it is highly unlikely that Russia and its mostly state-owned gas firm, Gazprom, will cut off its gas export supply to Europe (half of which is pumped in pipelines running through sovereign territory of the as-yet independent Ukraine), that Russia will use its influence as a major energy supplier to the West is inevitable. Facing increasingly strict sanctions from most of the world, it is one of the few solid geopolitical advantages Russia holds at present, hence the influence on world hydrocarbon prices. This has all occurred in the year that Qatar has released its most expansive budget in the country’s history, one that is based on a conservative oil price per barrel of USD65 (QAR237). No matter what the root cause, with a projected surplus of QAR7.3 billion, an oil price of more than USD100 (QAR364) would be positive for Qatar’s state coffers – or so it might at least seem. However, as cover story writer Jamie Stewart discusses in his feature When Dominoes Fall,
historically Russia and Qatar – currently the world’s two leading natural gas exporters – have ostensibly achieved a compromise of sorts when it comes to dividing up the world market, with Russia focusing on its exports to Europe (as opposed to Qatar’s 10 percent stake), and with the Gulf state sending the majority of its natural gas – mostly in the form of LNG – to markets across Asia. Should Russia’s gas supply westwards decline, either due to Gazprom’s price becoming too high or Putin simply turning off the pipeline valves, Europe will have to fill its energy needs elsewhere, making Qatar a logical alternative source. Yet, this would potentially place pressure on Qatar to produce and deliver more gas than it currently does – and shift attention away from its important and growing Asian client base. Doha may possibly also have to quickly invest more in its gas industry than immediately planned for, in order to handle the extra capacity. Moreover, as energy editor Stewart reported in our April edition, if the unfolding drama in Ukraine and its immediate region increases demand for its North Field gas, Qatar may even be forced to consider lifting its moratorium on increasing further extraction from the Gulf. It is a story that will continue to develop and on which The Edge will continue to focus from the Qatari perspective. Unfortunately, from next issue onward, it will not be Jamie Stewart who will be offering this particular coverage, as this month’s cover story will be his last article for The Edge. Stewart will be replaced on our oil and gas beat by financial and energy markets journalist Simon Watkins, who, as former head of global fuel oil products for Platts and a writer for Oil and Gas Middle East among many others, is more than qualified to take over this important position. Long-time readers will know that Stewart has been a stalwart contributor to The Edge from its first issue in July 2009, but sadly will no longer be writing for us as he has assumed a demanding new position in the energy sector. The Edge would like to thank him for his support over the years and wish him well in his new endeavour. So please enjoy his final feature for us – and the rest of the magazine, naturally.
Should Russia’s gas supply westwards decline, Europe will have to fill its energy needs elsewhere, making Qatar a Miles Masterson logical alternative source. Managing Editor 8 | The Edge
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Qatar has a vision, whether this is the world cup of 2022 or beyond, wherever one turns you cannot avoid noticing the intensity of construction and infrastructure projects in the region. Stakeholders on construction projects strive to achieve ‘value for money’, which is often measured against clients’ expectations on time, cost and quality. Of these parameters, we firmly believe that the ability to define costs from inception of a project, the development and refining of these costs as the design develops, adopting an appropriate procurement strategy and to control costs throughout the construction phase is fundamental to achieving success. QQSS are characterised by robust commercial;
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Peter Locks, Mangaing Director QQSS Quantity Surveying sevices
experience in their field of expertise. Selective recruitment enables QQSS to deliver the appropriate expertise to our business partners and clients.
What is the future for QQSS in Qatar.
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photo of the month
Burmese Business
A Burmese monk walks by an advertisement for Qatar’s Ooredoo telecom company, which began rolling out a 3G telecommunications network in April, in Yangon, Myanmar. Foreign investment in telecommunications is seen as crucial in order to bring Myanmar up to speed with the rest of the world opening up the cellular phone network. Norway’s Telenor is the second company to obtain a license behind Ooredoo. Further major international brands have started doing business in the country, taking advantage of the promising market and the country opening up to investment. Both Chevrolet and Ford recently opened car dealership there, joining Nissan and Suzuki, who want to manufacture cars. In addition, Coca Cola already has a local bottling plant outside the city centre. (Photo by Paula Bronstein/Getty Images) 12 | The Edge
The Edge | 13
news business
Qatar’s sovereign rating retained by S&P
Standard & Poor’s (S&P) has retained Qatar’s long- and short-term foreign and local currency sovereign credit ratings on Qatar at ‘AA/A-1+’ with a stable outlook. S&P has said Qatar’s general government net asset position will remain strong, averaging around 82 percent of gross domestic product (GDP) during 2014 to 2017. Qatar’s strong net external and fiscal asset positions balance the concentration risk related to the economy’s reliance on the oil and gas sector, S&P stated, while also affirming the ‘AA’ long-term senior unsecured debt ratings on the bonds issued by Qatari Diar Finance and SoQ Sukuk. Trevor Cullinan, S&P sovereign analyst, told The Edge that the ratings on Qatar reflect S&P’s view of its high economic wealth and strong fiscal and external balance sheets. Cullinan added, “We assume Qatar’s net external asset position will remain strong, reaching above 100 percent of current account receipts in 2014. Qatar has accumulated considerable foreign assets over the past decade as a result of its resource development.” S&P’s rating retention is based, Cullinan said, on their estimate of the general government net asset position, which will remain strong. The pace of asset accumulation will depend on how hydrocarbon production and prices alter. He added, “We expect Qatar’s assets to provide many decades of production at current levels.” However, the ratings were constrained Trevor Cullinan, S&P sovereign by Qatar’s limited monetary policy analyst, told The Edge that the flexibility, still-nascent public institutions ratings on Qatar reflect S&P’s view of its high economic wealth and limited disclosure, particularly and strong fiscal and external with respect to government assets and balance sheets.
“We expect Qatar’s assets to provide many decades of production at current levels.” - Trevor Cullinan, S&P sovereign analyst. 14 | The Edge
investment income. “We estimate trend growth, which we define in our criteria as a weighted 10-year average of real GDP per capita growth, at around -0.5 percent,” S&P stated in a report, projecting an average around six percent annual growth in population until 2017. “In our view, Qatar’s high wealth levels mean that its relatively weak economic growth performance is not an immediate concern for the ratings. However, beyond our twoyear outlook, Qatar’s economic risk position could deteriorate relative to faster-growing economies,” it said. S&P said its base-case scenario assumes that oil prices will continue to decline to about USD95 per barrel (QAR345.8) over 2014 to 2017 from about USD105 (QAR382.2) in 2013, as output from maturingfields contracts. “We expect an average annual decline in crude oil production of seven percent over 2014 to 2017. Gas output and condensates are both projected to grow by two percent over the same period,” the report further added. Given the oil and gas production assumptions, S&P stated, it expects general government revenues to decline to about 32 percent of GDP by 2017 from about 39 percent in 2013. “We note that the government’s recently announced 2014 to 2015 budget indicates expenditure growth of 3.5 percent year-on-year. By contrast, during the five years to 2012, government expenditure grew by an average 20 percent a year. This slowdown in spending is in line with our previous expectation that expenditure would slow to an average of six percent for 2014 to 2017, to enable the government to maintain a fiscal surplus,” it stated.
news business
Qatar to increase its waste management capacity
According to a report released by Qatar Development Bank in 2013, Qatar generates one of the highest amounts of waste in the Gulf. (Image Corbis)
As Qatar’s waste quantities continue to grow, the country plans to upgrade and expand its waste management facilities. by Farwa Zahra Waste growth rate in Qatar stands at 10 percent. In 2013 alone, the country generated approximately 2600 to 2700 tonnes of solid waste per day, revealed Oon Ee Heng, general manager, operations and maintenance at Domestic Solid Waste Management Centre (DSWMC), during a presentation at Qatar Projects held recently in Doha. The figure excludes industrial, construction and demolition waste, as well as other hazardous wastes. To deal with the country’s growing waste problem, the Prime Minister and Interior Minister HE Sheikh Abdullah bin Nasser bin Khalifa Al Thani has asked the Ministry of Environment to conduct a feasibility study for expansion of the waste management
centre. Increasing the capacity would also mean an upgrade in the currently operating systems. The DSWMC was also the first integrated solid wastes management project in the Middle East, according to Heng who had earlier proposed the expansion of the facility, stating, “DSWMC’s full plant capacity is not able to treat all domestic waste currently generated…DSWMC expansion is proposed to cater for the treatment of the excess domestic waste now and into the future.” According to a report released by Qatar Development Bank in 2013, Qatar generates one of the highest amounts of waste in the Gulf. The report further states that private investment leaves the highest impact on the success of waste management, followed by policy incentives. In its research study, the Ministry of Environment will also explore ways to increase the involvement of private sector in projects related to waste management.
Number of the month
Qatar’s approximate annual waste growth rate.
10%
Survey finds lack of competition among many business sectors in the GCC A recent survey by TNS, a global market research firm, revealed that 75 percent of market share in the fast moving consumer goods (FMCG) market across the Gulf Cooperation Council (GCC) is controlled by just three brands. by Shehan Mashood According to findings in the study, which analyse consumer decisionmaking with a specific focus on Middle Eastern brands, most business categories in the region in fact are dominated by three major brands. The Brand Health Norms programme findings are based on more than 300,000 consumer conversations according to a TNS press release. Steve HamiltonClark, the CEO of TNS MENA, explains that often there is one market leader with only two other challengers vying for larger market share. Hamilton-Clark believes the main reason for over reliance on a few brands is due to a lack of information that would allow customers to make decisions. “The emergence of market share inequalities, with market leaders taking more than their fair share seems to indicate that marketers must work differently to get the message right,” he said adding, “They
must ensure that the message is relevant, timely and present at the right point on the consumer’s path to purchase.”
Steve Hamilton-Clark, the CEO of TNS MENA says that marketers must work to ensure their message gets to consumers in a relevant and timely manner to alter current customer choices.
The Edge | 15
news
business in brief Words & Numbers
Doha City Center to get facilities management solution from MAF Dalkia
1.5
Students form around the world attended the Fourth Annual Undergraduate Conference.
million
The number of economically active people in Qatar in Q4 2013, up from the 1.48 million in Q3 2013, according to the Labour Force Sample Survey released by the Ministry of Development Planning and Statistics. “Qatar is a very important partner for Turkey... Over the last 10 years, bilateral trade has witnessed substantial growth, but we think it is not enough.”
MAF Dalkia will support City Center Doha’s redevelopment plans.
MAF Dalkia, regional service provider of multi-technical and energy management services, has secured a three-year contract with Doha City Center. MAF Dalkia will be responsible for providing a complete facilities management solution, encompassing all engineering services, mechanical and electrical systems, air conditioning, civil works and all soft services including cleaning and landscaping. In planning for the future, MAF Dalkia will also support Doha City Centre’s redevelopment plans.
Qatar Rail awards projectwide construction and liability insurance
Nihat Zeybekci, Turkey’s Minister of Economy, on boosting bilateral economic ties between the two countries.
6.5%
Qatar’s real GDP growth in 2013 on the back of strong investment and higher population.
“Private sector is the mainstream of creative initiatives, competitiveness and the fast achievement.” HE the Minister of Culture, Arts and Heritage, Dr. Hamad bin Abdulaziz Al Kuwari speaking at the inaugural session of the Total Alreyada: Connecting Young Leaders Summit. (Image Corbis)
16 | The Edge
Carnegie Mellon University in Qatar co-hosts conference
The National Insurance Consortium will provide Construction All Risks and Third Party Liability insurance to Phase 1 of Doha Metro Project.
Qatar Railways Company, which is overseeing the construction of the integrated railway network, has awarded one of the largest ever single project tunnelling and rail construction insurance policies to a six-member consortium of Qatari national insurance companies, led by Qatar Insurance Company, with additional capacity from international reinsurers and Qatar Financial Centre registered insurers. This is said to be the largest insurance programme for an infrastructure project in Qatar.
Carnegie Mellon University in Qatar co-hosted the fourth annual Undergraduate Conference in Information Systems alongside Carnegie Mellon University and the Qatar Association
for Information Systems (AIS) chapter. Attracting nearly 50 of the world’s brightest students as well as internationally renowned experts, the conference highlighted how technology can be used to improve an organisation’s business models.
Qatargas completes 12 years without a Lost Time Incident Qatargas recently completed 12 years of operations on its offshore facilities without a Lost Time Incident comprising nine offshore platforms, the Qatargas offshore facilities supply gas and condensate to the onshore liquefaction plant at Ras Laffan, the largest in the world, with a production capacity of 42 million tonnes per annum of liquefied natural gas.
Silatech, Maersk Oil host career development forum Human resource professionals from throughout Qatar’s public and private sectors gathered in Doha for the second annual Qatar Career Development Forum, held on April 16 to 17. Co-organised by Silatech and the Bedaya Center for Entrepreneurship and Career Development, and sponsored by Maersk Oil, the event focused on attracting, developing and retaining employees from the early stages of their careers. The theme of this year’s Forum was “Help Them to Grow”.
Commercial Bank launches self-service card kiosk in Qatar Commercial Bank of Qatar has announced the launch of the first self-service card kiosk in Qatar, in an attempt to enable and empower its customers. Commercial Bank’s self-service card kiosk is situated at the bank’s D-Ring Road branch allowing customers to get their debit or credit cards produced, delivered and activated, instantly, at the touch of a button.
events business
Qatar, May 2014
event of the month 12 - 15 May Project Qatar
Project Qatar, returning for its 11th year, is one of Qatar’s biggest events, and will be held for the first time at the Qatar National Convention Centre. Organised by IFP Qatar (International Fairs & Promotions). Project Qatar this year will have 27 pavillions spread across 41,500sqm of indoor and outdoor exhibition space, with more than 2100 participating companies and guests from over than 50 countries. Rawad Sleem, project manager at Project Qatar, says, “The international pavillions have been fundamental to the success of Project Qatar, which has a long history of attracting many global exhibitors and visitors. The pavillions offer international exhibitors a central platform to showcase their expertise, products and services.” Project Qatar 2014 is also set to unveil an advanced business-to-business matchmaking platform for companies to meet potential partners and suppliers. This exhibition management software will be a simple way for visitors to register and navigate through the hundreds of exhibitors that make up Project Qatar and facilitate a connection between exhibitors and visitors who share similar interests and backgrounds.
UPCOMING EVENTS 26 - 28 May
QITCOM
The organising committee of QITCOM 2014 recently announced that more than 80 percent of the space dedicated to the exhibition held alongside the event is booked.
Qatar’s largest ICT event, QITCOM, returns for a third year. It will feature a three-day exhibition and conference, focusing on the challenges and opportunities of ICT in Qatar, the role ICT plays in the country’s significant economic and social development and how ICT gives Qatar a competitive advantage by fuelling entrepreneurship and innovation. QITCOM 2014 is organised by fischerAppelt Qatar, in collaboration with the Ministry of Information and Communications Technology (ictQATAR). It is set to become one of the region’s pre-eminent ICT events and also includes an exhibition and regional awards programme.
26 - 28 May
Power and Desalination Summit
Project Qatar is one of the country’s largest and most visited exhibitions each year.
The summit will serve as a platform for the convergence of key players and decision makers from around the world to discuss and debate the regional challenges in a competitive landscape. This is the third edition of the summit organised by Fleming Gulf and will cover a wide area of the economics of how new technologies that could impact the desalination industry. Other topics that will be discussed include looking at how desalination technologies affect cost and demand, future projects in the sector throughout the Gulf Cooperation Countries, and sustainable desalination methods to reduce the environmental footprint. The Edge | 17
qatar perspectives
Liberalising trade in green goods and services 2014 is turning out to be a fruitful year for the International Chamber of Commerce Qatar (ICC Qatar) and for ICC, according to Remy Rowhani of Qatar Chamber. Both bodies are advocating a better business climate, striving hard to inject a sense of urgency among governments of the world in placing business at the centre of global economic policymaking and dialogue. Recently, the ICC voiced its strong support for a new initiative that pursues the conclusion of a deal to liberalise trade in green goods and services, and called for more countries to join the drive for a deal. The initiative was tabled at the World Economic Forum gathering in Davos, Switzerland, last January Launched by Australia, Canada, China, Chinese Taipei, Costa Rica, the European Union, Hong Kong, Japan, Korea, New Zealand, Norway, Singapore, Switzerland, and the United States, the initiative is the latest step to move global trade talks out of the Doha Development Agenda, ‘Doha Round’ deadlock. There is a call to build on momentum following the successful outcome of the World Trade Organization (WTO) Ministerial Conference in Bali in December 2013, now called the Doha Victory and a result of the ICC World Trade Agenda (WTA). Nothing could be more important to both developed and developing economies than to increase the trade in goods and services that contribute to their economies, create jobs and sustain their resources to the benefit of all citizens. ICC’s WTA initiative – launched in 2012 by ICC and Qatar Chamber – has highlighted fostering ‘greener’ economic activity through trade as a salvageable element of the stalled Doha Round trade negotiations. The set of ICC business recommendations called for concrete progress to be made in lowering trade 18 | The Edge
“Opening trade in environmental goods will promote investment, and hasten the spread of green technologies worldwide.” barriers for all goods to foster global value chains, including lowering trade barriers for environmental goods and services, building upon the Asia Pacific Economic Cooperation (APEC) initiative to discuss at the WTO an agreement to eliminate barriers to trade in environmental goods and services. It also encouraged cooperative approaches and alternatives to unilaterally imposed environmental rules that are trade restrictive or create barriers to trade. ICC’s commitment to multilateral approaches to international trade agreements is reflected in the work of its G20 CEO Advisory Group and in the ICC’s WTA in response to calls from WTO members and G20 leaders for fresh approaches from business following a 12-year impasse in multilateral trade negotiations. ICC’s continuing extensive consultations with business on trade negotiation priorities, an essential component of the WTA, aim to help establish a new agenda for international trade negotiations. As well as being an opportunity for ICC leaders to voice business priorities for the G20, the Davos gathering was also the first occasion for business and government representatives to discuss a WTO post-Bali agenda. Qatar Chamber hopes that the plurilateral effort could become the basis for a broader WTO agreement on sustainable energy trade. As part of the ICC global network, the chamber continuously encourages WTO members to keep the options open about such achievable deals and maintain the newfound momentum of the WTO in advancing world trade, and
follow this initiative with others such as negotiations of an International Services Agreement, within the WTO. As part of Qatar Chamber, we know by now that opening trade in environmental goods and services will increase trade, promote investment, and hasten the spread of green technologies worldwide. It will further growth at a time when the world much needs to grow in a sustainable way. Not least, it will sustain and strengthen the momentum of the WTO in building on its recent success in Bali. The numbers are there; the global business community simply needs to strengthen the resolve to materialise them.
Remy Rowhani is the director general of the Qatar Chamber and the CEO of the International Chamber of Commerce Qatar (ICC – Qatar).
qatar perspectives The formula for a successful IPO in Qatar Last year saw announcements that several Initial Public Offerings (IPOs) would be launched in the Qatari stock market though in the IPO race, only Mesaieed Petrochemical Holding Company (MPHC) managed to go ahead. Dani Kabbani of Eversheds writes about the careful planning and a number of issues that need to be taken into consideration ahead of an IPO to minimise delays. Companies such as MPHC, Doha Global Investment, Barwa Bank and Qatar First Bank announced their intention to raise capital and list their shares on Qatar Stock Exchange (QSE), though only MPHC finally listed on February 26, 2014. The United Arab Emirates (UAE) also recently announced the launch of a series of IPOs following a five-year lull. Cash constraints among investors on the one hand and successful subscriptions on the other mean that no two IPOs can be launched at the same time, or at least that would not be encouraged. Allowing at least 30 to 60 days between two IPOs from the date trading starts and oversubscribed amounts are returned to investors is normally advised. It is also known that the offering and listing of shares is a highly regulated activity that requires interaction with various authorities such as the Qatar Financial Markets Authority (QFMA), QSE and the Ministry of Economy and Commerce. In addition, if the offering or listing entity is a regulated one such as banks, the approval of the relevant regulatory bodies also needs to be obtained. The process also involves the appointment of an offering manager or a listing adviser (as the case may be), one or two valuation advisers and two law firms, one representing the issuer and the other representing the offering manager or listing adviser. In addition, the QFMA requires the company to provide various documents 20 | The Edge
“Offering and listing of shares is a highly regulated activity that requires interaction with various authorities such as the QFMA, QSE and the Ministry of Economy and Commerce.� and issue internal approvals, such as a shareholders’ resolution approving the issuing or listing of shares. But perhaps the most important document the company needs to prepare is the prospectus, in which the company provides to investors a description of its business, its major shareholders, financial statements, biographies of directors and officers, details of any litigation, properties, projects and other information deemed material by the QFMA. The QFMA will review the prospectus and before approving it, may request that further information be provided or be disclosed in a way that is clearer to investors. The prospectus is a key document to investors as they will need to make their investment decision on the basis of the information disclosed therein. Only public shareholding companies can offer shares to the public and list on the QSE. Private shareholding companies and limited liability companies need to convert to a shareholding company first. In order to convert, three years must have lapsed from the date of registration of the company and these entities must have achieved, within the two fiscal years preceding request for conversion, net profits that are not less than 10 percent of its capital. When raising capital, companies need to offer new shares to existing shareholders first in what is referred to as a rights issue. Any shares that are not subscribed to by the shareholders can be offered to the public. Nevertheless companies can, subject to obtaining relevant approvals, issue a number of shares to be subscribed to by the existing shareholders and another tranche of shares to be subscribed to
by the public. This requires the existing shareholders to waive their pre-emption right to subscribe to the shares offered to the public. The surge in financing offers to investors by local banks to subscribe to the IPO and which sometimes reached 100 percent finance no doubt helped in the successful launch of the MPHC IPO, but it is recommended that measures are taken in the future by participating banks to make sure they can cope with the number of investors approaching them, often at the last minute before closing.
Dani Kabbani is a partner with Eversheds Qatar, heading the corporate and commercial department with extensive experience with government entities and international companies.
This section is brought to you by Qatar Financial Centre Contents: Qatar’s QAR225.7 billion budget to focus on role of private sector 23 Middle East organisations report less fraud 24 QFCA launches online tax manual 26
finance & markets Qatar’s QAR225.7 billion budget to focus on role of private sector
HE the Minister of Finance Ali Sharif Al Emadi said that the new budget reflected the government’s ambition of achieving sustainable growth while controlling inflation through the implementation of balanced financial policies.
HH the Emir Sheikh Tamim bin Hamad Al Thani recently approved Qatar’s biggest budget which is 3.5 percent up from last year. Expenditure has been projected at QAR225 billion and gross domestic product in 2014 is expected to grow by six percent. by Aparajita Mukherjee
H Brought to you by:
E the Minister of Finance Ali Sharif Al Emadi said that the 2014-2015 budget will see a continuation of the programmes and projects set out in the Qatar National Development Strategy 2011-2016. Al Emadi continued that the new budget also reflected the government’s ambition of achieving sustainable growth while controlling inflation through the implementation of balanced financial policies to increase the efficiency of government spending. The increase in the 2014-2015 expenditure estimates was directed to complete and implement development projects. Al Emadi added that QAR87.5 billion was allocated for key projects, an increase of 16.8 percent, compared to that The Edge | 23
sectors | finance & markets
QAR
664 billion
Total project expenditure during the upcoming five years, excluding oil and gas projects and projects in the private sector. of 2013-2014 budget, pointing out that total projects expected to be implemented during the upcoming five years would reach QAR664 billion, excluding oil and gas projects and projects in the private sector. Al Emadi also stressed that the government would continue to encourage and support the private sector, adding that the next period will see the private sector playing a strong role in the sustainable development process. Commenting on the industries that could see more private sector participation in the next five years, Robin Butteriss, head of financial advisory services, Deloitte Qatar, said that developing the non-oil sectors are of fundamental importance to Qatar’s longterm sustainable economic growth. He added, “Private sector participation in the real estate, construction and financial services sectors will diversify the economy, and create a more balanced yet competitive landscape which will nurture local enterprise (and SMEs) for sustainable economic development.”
Social sector spending
Al Emadi also pointed to an increase in investments in the health, education, infrastructure and transport which rose 54 percent in the 2014-2015 budget as compared to 48 percent last fiscal year. Investment in education increased 7.3 percent to QAR26.3 billion from QAR24.5 billion in the 2013-2014 budget. The increase is mainly because the government aims to build 85 new schools in the next 18 months. As for the health sector, investment increased to QAR15.7 billion this year versus QAR14 billion last year. Investment 24 | The Edge
in infrastructure and transport increased from QAR62 billion last year to QR75.6 billion this year, an increase of 22 percent when compared to last fiscal year. Commenting on the social sector spending, Butteriss said, “Healthcare, education and infrastructure are essential building blocks in a balanced economic and socio-economic structure in any developed and developing country.”
Infrastructure projects
A major part in the budget went to infrastructure projects in order to complete some schemes that are under way and to start construction of new stadiums for the 2022 World Cup tournament. Work will start on seven new fields in Wusail, Wakra, Al Khor, Al Rayyan, the new airport, Khalifa Stadium and Qatar Foundation, Al Emadi said. In the transportation sector, funds have been set aside for completing the Hamad International Airport and the new Doha Port, the rail and metro projects and completing roads. The present
Education Spending
24.5 billion
to
26.3 billion Healthcare Spending
14 billion
to
15.7 billion Infrastructure and Transport Spending
24.5 billion
to
26.3 billion *All figures in QAR Source: Qatar News Agency
electricity and sewage system network is being upgraded to cope with growing urbanisation, the minister noted. Furthermore, some QAR3.3 billion was set aside for houses for citizens, an increase of 18 percent from last year, to complete the construction of 3700 units and build new 2300 units for 6000 citizens. Estimates for the 2014-2015 budget show a surplus of QAR7.3 billion, Al Emadi said, despite a rise in expenditure and a conservative oil base price of USD65 per barrel (QAR237). The surplus will be used to support the reserve of Qatar Central Bank and to help Qatar Investment Authority explore investment opportunities in world markets.
Economic crimes
Middle East organisations report less fraud
A recent Global Economic Crime Survey, conducted by PwC, shows fraud reported by 21 percent of organisations in the Middle East compared with 37 percent globally.
The study added that 71 percent of reported crimes involved asset misappropriation, 37 percent cybercrime, and 35 percent bribery and corruption. The study states that while the level of reported incidents of economic crime has increased globally to 37 percent, the Middle East has experienced a decrease. The level of reported incidents now stands at 21 percent according to PwC’s 2014 Middle East Economic Crime Survey, a decrease of seven percentage points since 2011. How does PwC explain the figures of economic crimes in the Middle East, compared to global averages? James Tebbs, director of PwC’s forensic services, Qatar said, “It is interesting to note the difference between the Middle East and the global results – the Middle East is notably below every other region in our global survey in terms of the number of respondents who
sectors | finance & markets
reported suffering economic crime, and has been so in both 2011 and 2014. It has to be remembered in considering this number though that this is the minimum – there will always be a level of economic crime, which is undetected, and similarly a level of economic crime, which is detected but unreported. The true figure is therefore somewhere above 21 percent.” Tebbs added that although the survey results do not directly address this difference from the global results, one key factor was the difference in the level of fraud risk assessments undertaken in the region – 42 percent of Middle East respondents indicated that a fraud risk assessment was conducted at least annually, compared to a global average of 51 percent. “In our view Middle Eastern organisations could do more to conduct targeted fraud risk assessments and to build the results of these assessments into their control environment and internal audit cycles. Doing so may increase the level of fraud detection as a result of improved internal controls,” Tebbs said. Does the PwC survey give any specific data with regard to economic crimes reported in Qatar? The survey, Tebbs said, included a range of responses from Qatar-based organisations and from many others with operations in Qatar. The level of development and growth in Qatar is among the highest in the region, and PwC has invested in Qatar by building a dedicated forensic team in Doha, focused on helping businesses prevent, detect and respond to economic crimes of all types because PwC recognises the appetite of local organisations to combat fraud risks. PwC’s experience has been that organisations in Qatar are aware of the fraud risks locally and in the region, and the state itself is committed to combatting economic crime - a good example of this is the Administrative Control and Transparency Authority established in 2011, he said.
42%
Percentage of Middle East respondents who indicated that a fraud risk assessment was conducted annually. 26 | The Edge
Called the QFC Tax Manual, it is intended to help payers of corporate tax and their agents interpret the rules and regulations, to provide them with greater certainty, and clarity, and assist in preparing tax computations and returns. This is the first time that all the QFC’s tax guidance material has been published together. Ian Anderson, chief financial officer and director of taxation, QFCA, in an exclusive conversation on the features of the manual, with The Edge, said that the tax manual is a guide to how the QFC’s tax department interprets the QFC tax regulations and administers the regime. He added, “The issue of reducing complexity was addressed when drafting the regulations back in 2009. We attempted to use as much clear English as possible and avoided articles becoming too technical. This meant that, rather than cover every possible eventuality in the regulations, some elements were left to interpretation when the regulations came into use at a later date. The manual was helpful here as we have been able to set out what we believe each regulation meant, and have provided worked examples, which help the taxpayer, understand the issues.”
Tax regime
QFCA launches online tax manual
Ian Anderson, chief financial officer and director of taxation, Qatar Financial Centre Authority, said that the tax manual is a guide to how the QFC’s tax department interprets the QFC tax regulations and administers the regime.
The Qatar Financial Centre Authority (QFCA) recently published its entire in-house tax guidance manual online, marking a first in the Middle East and North Africa (MENA) region.
Qatar Real GDP Growth ( 2012-2014)
(Real GDP: % year-on-year growth; shares shown for sectors) Non-hydrocarbon (Left Axis) Hydrocarbon (Left Axis)
60
Real GDP (Right Axis)
55
6.5
50
6.0
56.8
54.4 50.8
40
30
6.5
6.2
45
35
7.0 6.8
43.2
2012
Source: MDPS and QNB Group analysis
49.2
45.6
2013
5.5
2014f
5.0
Contents: Will the increase in global energy demand work out in favour of Qatar? 27 Industries Qatar to explore alternative growth strategies 28 . Texas A&M research natural gas monetisation 30 .
energy & sustainability Will the increase in global energy demand work out in favour of Qatar? Global energy demand will increase 41 percent between 2012 and 2035, and almost 90 percent of such growth is expected to be driven by emerging economies such as China and India. Presumably good news for the world’s largest exporter of LNG, Qatar? Maybe, maybe not writes Simon Watkins, The Edge’s editor of the Energy and Sustainability Sector.
E
nergy analysts predict that the fastest growth among the fossil fuels sector will be coming from gas. On the one hand, Qatar’s natural gas production exceeded seven trillion cubic feet in 2013, including 77 million tonnes of LNG exported to more than 25 countries. Little wonder then that HE Dr. Mohamed bin Saleh Al Sada, Minister of Energy and Industry, while delivering the keynote address at the two-day Brookings Doha Energy Forum 2014, said Qatar’s prominent position in the global energy market is set to remain for years to come. Al Sada added, “The State of Qatar is well placed to meet the increasing demand for gas, and we are also committed to continue meeting our obligations as a reliable energy producer, as a partner in development, and as an active player in ensuring market stability.”
The overall demand for LNG, which is growing at an average of about five percent per annum, is expected to almost double from around 240 million tonnes per annum in 2013 to 465 million tonnes by 2025, according to BP. (Image Reuters/Arabian Eye)
The Edge | 27
sectors | energy & sustainability
Energy consumption by region Billion tonnes of energy 18 15 Other
12
India
9 China 6 3
OECD
0 1965
2000
2035
Source: BP Energy Outlook 2035
Having said this, however, Qatar will see a number of existing market participants looking to pose a serious challenge to its dominance of the sector in the coming years that the country has ever seen, according to analysts. “The global LNG market is going to loosen, and that has a big impact for Qataris,” says Trevor Sikorski, oil, gas and carbon analyst at consulting firm Energy Aspects, in London, “and pressure will mount through the rest of this decade: first, you have the Australians, and then you have the United States.” Indeed, with almost 90 percent of growth in primary energy expected to come from non-Organisation for Economic Cooperation and Development (OECD) countries, led by emerging economies such as China and India, Australia, to begin with, does look extremely well-positioned to exploit its geographical advantage in exports, given the vagaries of global shipping freight rates. Moreover, it is currently constructing liquefaction plants that will more than triple its annual LNG-manufacturing capacity to 85 million tonnes by 2018, surpassing that of Qatar, according to industry data. Similarly, and taking advantage of new production from hydraulic fracturing, are US companies which have sought United States Energy Department approval for 37 new LNG export projects, which may well be 28 | The Edge
just the beginning of the threat to Qatar, as noted by Al Sada himself. The Minister recently noted that a double digit price per barrel of oil is unlikely in the future, and that America’s growing production of shale gas and crude oil will reshape the US energy economy, when crude oil production reaches 9.6 million barrels per day by the end of 2016 – the historical high achieved back in 1970. A double challenge for Qatar, not just of increased competition in the LNG market may also come from lower prices, as already signalled by Al Sada, as LNG spot prices in northeast Asia – to where Qatar shipped just over 60 percent of its LNG in 2012 – are predicted by Energy Aspects to fall to as low as USD12 (QAR43.7) per million British thermal units by 2016, as this new supply enters the market. This would represent a near 40 percent decline from the record high in February of USD19.70 (QAR71.7) in February, according to the New York–based Energy Intelligence Group’s World Gas Intelligence publication. Having said this, of course, Qatar has been in the business for a very long time, and both issues have been addressed by Al Sada; and, quite aside from anything else, the overall demand for LNG, which is growing at an average of about five percent per annum, is expected to almost double from around 240 million tonnes per annum in 2013, to 465 million tonnes by 2025, according to BP.
A challenge for Qatar may come from falling LNG spot prices in northeast Asia, one of the dominant destinations for Qatari LNG.
465 million tonnes
The expected demand for LNG by 2025. Product diversification
Industries Qatar to explore alternative growth strategies
Industries Qatar (IQ), on the back of minimal organic expansion in the coming five years, will concentrate instead on maximising its current operating assets, exploring international opportunities, and on selective diversification of its products’ base.
The new business approach of IQ was underlined recently with the announcement that Honeywell will supply a new integrated control and safety system for the Qatar Fuel Additives Company (QAFAC) – a joint venture between IQ, Overseas Private Investment Corporation Middle East, LCY Group and International Octane – which will help QAFAC’s Mesaieed Industrial City plant, 50km south of Doha, reduce operating costs and improve efficiencies for the production of methanol and methyl tertiary butyl ether, a key gasoline additive replacing lead and reducing tailpipe emissions. As an adjunct to this, the start of commercial operations of a new QAR1.2 billion steel melt shop in Mesaieed Industrial City, means that, “The EF5 project will boost the group’s billets capacity by an additional 1.1 million tonnes per annum (mtpa), ensuring that, as Qatar continues
sectors | energy & sustainability
IQ’s investments
QAR
QAR
1.2
291
Value of steel melt shop in Mesaieed Industrial City.
QAFAC’s carbon dioxide recovery project.
QAR
QAR
billion
million
4
600
IQ’s investment in the Al Sejeel Petrochemical Complex.
Size of IQ’s equity in Algerian Qatari Steel Company.
billion
its ambitious construction programme in the run-up to the 2022 World Cup, Qatar Steel will maintain its position as the country’s predominant steel supplier,” said HE Dr. Mohamed bin Saleh Al Sada, Minister of Energy and Industry. A similar strategy can be seen in QAFAC’s plan this year to commission a USD80 million (QAR291.2 million) carbon dioxide recovery project to capture 500 tonnes of CO2 a day for reinjection into the production cycle, helping to increase output, which, in turn, should help QAFAC realise its plans to become one of the top five international producers of methanol and butane derivatives by 2020. In terms of diversifying the firm’s current product portfolio, the Al Sejeel Petrochemical Complex (currently IQ’s largest ongoing investment, with an estimated total cost of nearly QAR4 billion), Al Sada said that this joint venture between Qatar Petroleum and the Qatar Petrochemical Company is anticipated to significantly boost the group’s linear low density polyethylene capacity and add new products like high density polyethylene and polypropylene. “Upon its completion towards the end of 2018, the project is expected to also reinforce Qatar’s position as a major regional petrochemical producer,” Al Sada underlined. Looking further forward, the incorporation of the QAR7.6 billion Algerian Qatari Steel Company in January 2014, in which IQ has 30 | The Edge
The Al Sejeel Petrochemical Complex is currently Industries Qatar’s largest ongoing investment.
million
an equity investment of QAR600 million, is expected to be completed in the first quarter of 2018, and will see the construction of the 2mtpa integrated steel mill in Algeria. “This joint venture with the Algerian
government is one of IQ’s largest overseas investments to date, and marks an important and highly positive development in the strong relations between Qatar and Algeria,” confirmed Al Sada.
Energy R&D
Texas A&M researches natural gas monetisation Texas A&M University Qatar (TAMUQ) is looking to integrate capabilities to advance natural gas monetisation research in the United States (US) and Qatar.
Gas and Fuels Research Initiative (GFRI) is envisioned to be a multidisciplinary research centre involving 17 professors from Texas A&M University’s main campus in College Station and the University of Qatar’s campus, and represents different engineering programmes, including chemical, petroleum, and mechanical. “This initiative will lead to the establishment of a world-class research centre advancing natural gas exploration, production, treatment and processing,” said Dr. Nimir Elbashir, director of Texas A&M Engineering Experiment Station Gas and Fuels Research Initiative and associate professor of chemical engineering at Texas A&M at Qatar. He added, “The centre will
also support the United States’ shale gas evolution, and will be a part of Texas A&M at Qatar’s Research Strategic Plant to support Qatar National Vision 2030.” The workshops aim to explore possible collaborations between academia and industry in this field that is so important to the future of energy in the US and worldwide. “Besides the tutorials, this workshop will be leading scientists and researchers from industry and academia to share their insight and expertise on the future of natural gas in the energy market and its potential to become a major source of ultra-clean fuels and value-added chemicals,” Dr. Elbashir added. The workshop will also highlight the importance of Qatar’s successful experience in natural gas utilisation and the lessons to be learned while boosting the US natural gas role in the fuels and energy market, specifically after the shale gas discovery.
Contents: Qatar to add 20,000 hotel keys by 2022 World Cup 31. Qatar’s cement production to meet demand 32.
real estate & construction
The Marsa Malaz will add to the list of five-star hotels in Doha in Q4 2014. Designed and supervised by Arab Engineering Bureau, the hotel is a joint project of Alfardan Hospitality and Kempinski Hotels, located in The Pearl-Qatar. (Image AEB)
Qatar to add 20,000 hotel keys by 2022 World Cup Increased business activity ahead of 2022 World Cup boosts Qatar’s hospitality sector - one of the three key drivers behind the country’s GDP growth in 2013 – set to grow hotel keys from 14,000 to 34,000. by Farwa Zahra
A
ccording to EY’s Middle East Hotel Benchmark Survey Report, Doha’s hospitality market recorded a nine percent growth in January 2014, compared with the same month last year. With average occupancy levels standing at 70 percent, Yousef Wahbah, MENA head of transaction real estate at EY, attributed this increase to Qatar’s rapidly
growing business market. With Qatar Tourism Authority (QTA) planning to invest USD20 billion (QAR72.8 billion) in projects to support Qatar’s tourism industry, the country is set to further boost its hospitality sector. Oxford Business Group in its latest report on Qatar, stated QTA’s estimates that the country currently has 14,000
hotel rooms, with another 5000 under construction. “An additional 15,000 rooms will be added based on demand, bringing the total to 34,000,” stated the report. “The increase is primarily due to the growth in business travel to the country, as several project tenders have been issued in relation to the Qatar World Cup in 2022,” said Wahbah, adding, “Doha The Edge | 31
sectors | real estate & construction
International Airport announced a record 2.2 million passengers travelling in January 2014, up by approximately 18 percent from January 2013.” The hospitality sector was also one of the three key drivers behind Qatar’s GDP growth in the last quarter of 2013 accompanied by construction and wholesale trade, showing doubledigit growth during the same period, stated Qatar National Bank’s economic commentary. The bank further expects hotels in Doha to flourish in order to cater to the growing population.
“There is a significant pipeline supply for hotels, with 35 developments under construction.” – Mark Proudley, DTZ.
143%
Distribution of Hotels
Growth in the number of hotel keys by 2022 World Cup.
23٪
30٪
19٪
7٪ 21٪
Distribution of Hotels by Rooms (no. of hotel rooms)
4200 315 2253
7411
6762
5-Star
4-Star
2-Star
Serviced Apt.
3-Star
Source: AREDC Research
Yousef Wahbah, MENA head of transaction real estate at EY, says the growth in Qatar’s hospitality market is primarily due to the growth in business travel to the country.
32 | The Edge
According to Al Asmakh Real Estate Development Company’s report on Q4 2013, in six years, Doha is expected to have 29 more hotels, which would deliver nearly 8300 rooms in the premium hospitality segment. Mark Proudley, associate director for consulting and research at DTZ Qatar forecasts, “There is a significant pipeline supply for hotels, with DTZ noting 35 developments under construction that it is anticipated will increase supply by around 10,000 keys over the next three years.” Hotels near completion include the Marsa Malaz Kempinski, a joint project of Alfardan Hospitality and Kempinski Hotels located in The Pearl-Qatar. Designed
and supervised by the Arab Engineering Bureau, the five-star hotel, which faces water from all sides, is set to open in Q4 2014. “Marsa Malaz Kempinski - The Pearl, Doha will truly set itself as an iconic waterfront destination…enhancing the international reputation of Qatar as a fast-emerging luxury tourist destination,” said Omar Alfardan, president and CEO of Alfardan Group. Another major project adding 270 rooms to Doha’s hospitality sector is Mondrian Doha. With its opening in 2015, it will be Morgans Hotel Group’s first property in the Middle East. Despite the occupancy rate of 70 percent, EY’s survey also reported a revision of daily room rates increasing the average room rate from USD230 (QAR837) in January 2013 to USD243 (QAR884) in January 2014.
Building materials
Qatar’s cement production to meet demand A recent report reveals Qatar’s production capacity of cement will match the material’s growing demand by 2018. Dubai-based financial services firm Arqaam Capital, in a recent report, forecasted Qatar’s cement demand
real estate & construction | sectors
to double in the next three years, considering the government’s plan to invest USD208 billion (QAR757 billion) on infrastructure developments by 2018. With significantly large quantities of cement procured through imports at present, Qatar will be able to increase its production capacity to meet the growing demand in the future, the report further forecasts. “We expect production capacity and demand levels to reach equilibrium by 2018,” it states, further revealing, “Our forecasts are on the conservative side as Qatar’s Ministry of Development and Planning’s most recently published survey suggests demand for limestone is set to increase by 131 percent in 2014 and 127 percent in 2015.” Earlier in April, Qatar National Cement Company (QNCC) contracted with Fives FCB to build its fifth cement plant line with a clinker production capacity of 5000 tonnes per day. Once completed, the fifth plant is expected to increase QNCC’s production capacity to 17,000 tonnes per day of clinker and its grinding capacity is forecasted to rise to 20,000 tonnes per day.
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For sales enquiries please contact: Qatar Head of Business Sales: Manu Parmar Tel: +974 33325038 | Email: m.parmar@theedge-me.com
United Arab Emirates Area Sales Manager : Roger Cousin Tel: +971 508716076 | Email: r.cousin@firefly-me.com International Sales Director: Julia Toon Tel: +974 66880228 | Email: j.toon@firefly-me.com International Sales Representatives Sonney Media Networks - Asia Tel: +852-2783-1603 / +852-2151-2351 Email : hemant@sonneymedia.com Media Star Pvt Ltd - India: Tel: +91 22 42202103 Email: ravi@mediastar.co.in The Media Machine - Australia & New Zealand Tel: +61 89 447 2734 Email: okeeffekev@bigpond.com IMV Internationale Medien Vermarktung GmbH - Germany: Tel: +49 8151 550 8959 Email: w.jaeger@imv-media.com
The Qatar National Cement Company’s Umm Bab plant is located on the west coast of Qatar.
The Edge | 33
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Contents: How will on-demand television impact the GCC? 35. Are smart cars the next personal device? 36 .
tech & communications
Video streaming represents over half of all downstream capacity in North America, much of this is now due to the success of subscription video on demand services such as Netflix.
How will on-demand television impact the GCC? According to Deloitte’s Middle East Technology, Media and Telecommunications predictions report, content producers in the region should consider how improving broadband speeds might not only open up new markets for them, but also mean they no longer have to deal directly with platform owners to reach viewers. by Shehan Mashood
C
ontent owners should, however, be aware of the implications of selling directly to the end user. While cutting out a distributor may increase margin, it could come at a cost to the addressable market, states the Deloitte report. Countries such as Qatar are in the midst of a highspeed fibre rollout to the country, and while many areas have already been upgraded, the rollout is not yet complete. This is also an opportunity for television channels and other platform owners who can benefit from the growing demand for
additional pay-TV subscriptions to increase their market share, by offering content over the top to those who do not subscribe to their platform service. “On-demand subscribers are likely to pay smaller monthly sums than subscribers paying for the platform package,” states the report. “It will be important to balance pricing such that both sets of customers feel they are getting value for money and over-the-top solutions do not cannibalise the platform base.” Broadband providers tapping into the growing demand for subscription video on The Edge | 35
sectors | technology & communications
demand services (SVOD) such as Netflix in the United States, should be aware of viewing patterns, which are likely to resemble those for broadcast TV, and build their networks to meet capacity peaks cost effectively. Video already represents the bulk of capacity usage in many markets, and can impact quality of service on the network. For example, video streaming represents over half of all downstream capacity in North America. Therefore, platformbased TV services may always have an advantage when it comes to delivering consistent quality of service to the majority of homes. Although many of the additional pay-TV subscriptions will be delivered via broadband, the need for platform-based service is likely to remain. The markets for both platform payTV and SVOD in the region are evolving in tandem. This is unlike other regions, according to the Deloitte study, where television developed in a linear fashion, as platform pay-TV came first, followed by video on demand services as new innovations. “In terms of penetration, both pay-TV and SVOD services are in their infancy, and both hold growth potential,” states the report. In fact, a recent survey conducted by Northwestern University Qatar (NUQ) on entertainment media use in the Middle East showed that 45 percent of respondents said they watch films online, and 57 percent said they watched other video content online. In Saudi Arabia, more than half (59 percent) of people surveyed said they would even pay to download entertainment content. There are also opportunities for broadcasters and telecom operators to partner with each other to offer a better service overall for customers. While operators can manage the quality of the customer experience and provide an extensive distribution footprint, broadcasters can leverage access to their vast library of content. Local content providers need to strengthen the appeal of their offerings by expanding their range of exclusive content if they are to attract a wider subscriber base. Partnerships with content developers to address content gaps and to build online exclusive content could be a competitive advantage. In fact, the NUQ survey showed that two-thirds of adults surveyed preferred films that portray their own culture. “International SVOD players namely Netflix and Hulu with existing expertise 36 | The Edge
Watching films on the Internet 45%
AVERAGE
36%
QATAR SAUDI ARABIA
61%
UAE
46%
Source: Northwestern University Qatar, mideastmedia.org
and experience could enter the region quickly with market offerings that could dominate the market,” states the Deloitte report. Local SVOD players should be wary
of this and use their presence in the market to offer the best content and bolster their positions in the Middle East before international players enter.
Are smart cars the next personal device?
The Internet of Things is well on its way to becoming the new buzzword in the tech industry, if it is not already. An expert in connectivity solutions looks at what a smart transportation eco-system can bring to Qatar.
Anyone who has spent a few hours in Qatar will see that people here are passionate about two things in particular – automobiles and smartphones. One has a touch screen, voice prompts, GPS navigation, an online app store and Internet search. The other is a phone. Indeed, the emergence of cars as fully connected smart devices is one of the biggest trends in technology today. At the recent Mobile World Congress (MWC) in Barcelona, a number of connected cars were on display, including an in-car TV
demonstration by United States carmaker Tesla. A new in-car user interface from Apple, named CarPlay, was also revealed recently. It is estimated that by 2020, 90 percent of the vehicles on the road will be connected, while the connected car market will hit USD600 billion (QAR2.2 trillion) globally – making it the single largest market for connected devices and services. The new-generation of smart cars do more than just play music on demand. They schedule their own maintenance and repairs, they check weather and traffic conditions and even tell you the best routes to take to work. They unlock the front door of your home and turn on the air-conditioning when you are 15 minutes away. Earlier this month, Vodafone announced a new agreement with Volkswagen and Audi in Europe to provide automotive
George Galica, head of business solutions at Vodafone Qatar, writes that deploying fleet management technologies for taxis and buses and even trains will help create a more reliable public transport system that everyone will want to use.
sectors | technology & communications
connectivity, starting with new Audi models from 2015. The global SIM cards will be widely installed in vehicles in future and will use the Vodafone network and global machine to machine (M2M) service platform to provide customers with high-speed Internet access on the road. All these developments are part of a global revolution in transportation services that is being driven by a combination of consumer demand and rapid advances in modern technology. Powered by what we call M2M communication, cars are able to ‘talk’ to other mobile devices, social networks, and transportation systems. M2M technology is already in use in Qatar, in areas such as fleet management and vehicle tracking. They allow fleet owners, managers and operators to improve driver productivity and reduce costs. Fleet management technology also helps manage driver behaviour and encourage safer driving habits, plan routes better and save money on fuel and maintenance. If we put this technology into Qatar’s fleet of taxis and buses ahead of the 2022 World Cup, we will have a super-intelligent transport system that sends information about its locations and speeds. This will allow control centres to regulate the intervals between buses and tell passengers exactly when they can expect the next bus, taxi or even train. It will be a public transport system that will lead to reduced traffic congestion, less fuel usage and reduced pollution – not to mention happier commuters. We are merely at the start of this new chapter in transport, though. Connectivity in the automotive industry has untapped potential. We are entering an era where we will see a host of entirely new services being offered through the mass of new data which is being made available. It is not about cars that drive themselves. The major change in driving will be in using this newfound connectivity between drivers and other cars. With vehicles using mobile networks to communicate with each other to proactively detect accidents, road congestion and to work out the perfect route, we will see a host of benefits, including greater road safety, better traffic management and a greatly enhanced passenger experience.
George Galica is the head of Business Solutions at Vodafone Qatar.
38 | The Edge
Contents: More progress for social health insurance in Qatar 39. Can the 2022 World Cup bring long-term opportunities to Qatar? 40.
healthcare & education More progress for social health insurance in Qatar Qatar’s National Health Insurance Company (NHIC) recently announced they would be extending the mandatory health insurance coverage as it continues a rollout plan to cover the entire population. The scheme, which had thus far covered Qatari women, aged 12 and over for gynaecology, obstetrics, maternity and related women’s health issues, now extends to all nationals. by Shehan Mashood
T
he scheme now includes Qatari nationals of all ages, both men and women, with comprehensive health insurance coverage for a range of basic health services through a network of public and private providers. Qatari citizens have previously only been able to gain access to free healthcare through government-run hospitals. Coverage includes both in- and out-patient services including preventative care, emergency treatment, physiotherapy, occupational therapy, speech therapy, long-term care, radiology, ophthalmology, laboratory testing and prescription medicines. The costs of insurance for nationals will be borne by the government. However, in future stages of the rollout, which will cover expatriates, employers will
The latest phase of Qatar’s social health insurance scheme will cover both Qatari men and women, giving them access to a network of healthcare providers that include private providers. (Image Corbis)
The Edge | 39
sectors | healthcare & education
be required to purchase insurance through the NHIC. The NHIC also revealed at the press conference that the insurance scheme would be provided under a new brand, Seha. In an effort to communicate the scope of the new insurance scheme, Seha has also opened a customer service centre alongside an existing call centre to assist in the uptake. Dr. Faleh Mohamed Hussain Ali, acting CEO
Dr. Faleh Mohamed Hussain Ali, acting CEO of NHIC says, “The national health insurance scheme is open to all providers in Qatar who want to join, provided they meet our strict rules criteria to ensure the best service possible for the scheme’s beneficiaries.”
of NHIC said, “We are working with the healthcare providers to ensure the expansion of services is as smooth as possible and to make the transition to Seha seamless for the scheme’s beneficiaries. Our aim is to ensure the highest level of service when a member visits a Seha network provider.” A recent patient satisfaction survey carried out by the Qatar Statistics Authority on behalf of the NHIC indicated that Qatari women, who had received treatment for maternity and women’s health related issues under the scheme since July 2013, were mostly satisfied with the scheme and its service. 84 percent of respondents stated the scheme had met or exceeded their expectations. An overwhelming majority of 90 percent of respondents rated very highly the women’s health benefits received under the scheme, while 84 percent said the scheme offered them greater freedom of choice when seeking healthcare. Four-fifths of the respondents also rated the hospital experience under the health insurance scheme very favourably. Dr. Ali previously told The Edge, “Similar
to any new large-scale national initiative, a crucial element is to educate and inform providers, patients, and other stakeholders about the scheme. By carefully evaluating patient and provider behaviour, we decided that the healthcare landscape can best be developed by introducing changes in stages, thus allowing people to adjust to these changes and ensuring that the services, quality and people are all supported through the process of development.” The increase in scope is however still likely to add pressure on the eight healthcare providers currently under the Seha scheme. “The key benefits for people are access and choice,” Dr. Ali told The Edge, “As a social health insurance plan, everyone, including patients with pre-existing conditions, will have access to public and select private healthcare providers when they are members of the NHIS. In the larger context, information gathered on the types of healthcare services used and the kinds of illnesses being treated will help the government better plan for the future healthcare needs of Qatar.”
Legacy events
Can the 2022 World Cup bring long-term employment opportunities to Qatar? Legacy events often provide employment initially in sectors such as construction, tourism and infrastructure, as we are currently seeing in Qatar, but can often fall short on promises of delivering longer-term opportunities.
Once the audiences have left, efforts to maintain the drive and enthusiasm to continue the legacy commitments can often stagnate. While Qatar might have the 2030 National Vision to look forward to, post 2022 World Cup, the state needs to be mindful of equipping and motivating Qatari youth to contribute to its future society. In order to solve such challenges, the Itijah venture, which encourages creating links between the Middle East and North Africa, held a four-day event to discuss how for every EUR10 million (QAR50.3 million) invested in legacy events, 100 direct jobs could be generated for young people in business. 40 | The Edge
“The 1992 Barcelona Olympics is the gold standard in regeneration, transforming post-industrial areas to facilitate a dramatic development of the city as a tourist destination.” said PwC Qatar’s senior partner, Stephen Anderson. In fact, according to the Organisation for Economic Co-operation and Development study, the Barcelona Olympic legacy included the establishment of numerous firms in the high-tech industry and a major expansion of the higher education sector. In the lead up to the Olympics, the unemployment rate also fell from 18.4 percent to 9.6 percent. Anderson explained that the 2012 London games helped transform a derelict area of east London, whereas the Germany 2006 FIFA World Cup had a softer legacy of changing global perceptions of Germany. “In the Middle East, mega events – as a catalyst for change – is a new phenomena,” he added. Sir Graham Boyce, a senior adviser at Bank of America Merrill Lynch and the
Chair of Itijah Advisory Group said, “Youth unemployment is an increasing issue for both regions, and as cities invest heavily in large scale events, there is a potential for them to generate employment and help to address youth unemployment in particular.”
8.8%
The drop in unemployment in Barcelona in the lead up to the 1992 Olympics.
When Dominoes Fall Could Russia’s annexation of Crimea and recent events in Ukraine usher in a new gas export paradigm? And what could this mean for Qatar? by Jamie Stewart
cover story | politics of energy
Natural gas exporting giants Qatar and Russia have in recent years managed to comfortably share the gas markets of the northern hemisphere, but as events in Ukraine pan out and continental borders are redrawn, the geopolitical sands are also shifting. As Jamie Stewart reports, Doha may soon be defined by a new accord, one that is less about cutting ribbons, as cutting deals.
I
n February 2013, state-owned Russian energy company Gazprom cut the ribbon at the opening of its new office premises in Doha, Qatar. “The representative office will contribute to stronger partnership ties and will provide an additional impetus to closer mutually beneficial cooperation with the states of the region,” the company’s chairman and former Russian prime minister Viktor Zubkov said at the ceremony. Merely one year later, at an April meeting of the United Nations (UN) Security Council, the global body charged with the maintenance of international peace, is told that Russia has amassed 40,000 troops close to its border with Ukraine. This comes on top of the 25,000 troops that moved into Crimea during and after the land grab of late-February and early-March. The ongoing situation on the fringes of Eastern Europe, which has its roots in the Molotov cocktail of violence, fire and aggression that was February’s Ukraine revolution, has heightened tensions between that country and Russia. This in turn has led to threats regarding the flows of Russian natural gas upon which Ukraine is so dependent and through which half of Russia’s gas exports to Europe flow. As recently as the beginning of this year, it seemed difficult to believe that an aggressive, Cold War-style standoff laced with street-level violence involving Russia and its pro-Western neighbour Ukraine – one that has dragged in the United States (US), the European Union (EU) and the UN – could be allowed to develop in 2014. After all, this is the same year in which Russia hosted the Winter Olympics just 300km south of Crimea in Sochi and in which Western forces are due to pull out of Afghanistan following a 10-year conflict. 2014 also marks 25 years since the fall of the Berlin Wall, and the end of the Cold War. The standoff has threatened the fragile balance of global energy economics and geopolitics, a broad, fluid dynamic that never ceases to evolve. Qatar will no doubt be watching with interest as its complex, intertwining energy relationships with Russia and the rest of the world slowly shift to adopt what could be an entirely different form than the current paradigm, as events unfold in the volatile territories between Europe and Russia and its extensive network of gas pipelines.
Physical division
It is a little-acknowledged fact that the physical side of the energy relationship between Qatar and Russia, as opposed to the contractual side, is one that has until now been built not so much on direct competition as on mutual complementation. This has been characterised by the partial division of the vast northern hemisphere gas market – North America withstanding – to suit the geographic position and infrastructural make-up of both nations. Russia supplies around 30 percent of Europe’s consumed gas, or 130 billion cubic metres (bcm) according to BP’s 2014 Statistical Review of World Energy, via a network of pipelines. Around half of this gas transits through pipes laid across Ukraine, while the remainder flows through pipelines either crossing Belarus to the north and, further north still, the Baltic Sea. Qatar on the other hand supplies around 10 percent of Europe’s gas, all of which is imported via tanker in the form of liquefied natural gas (LNG). As will always be the case, these two sources of supply, alongside a number of other options including Europe’s 44 | The Edge
Qatar and Russia have been able to develop highly profitable, mutually sustainable, long-term economic enterprises from the export of gas to Europe. But that might soon change.
politics of energy | cover story
indigenous reserves (primarily found in Norway), North and East African LNG and, from 2015, LNG imports from the US, compete for the right to supply Europe’s states and largest companies, applying downward pressure to the price the market is prepared to pay. And further afield, the global market has also been nicely divvied up in a manner that suits both countries. Russia supplied 15bcm to the Asia Pacific markets last year in the form of LNG, the vast majority of which went to Japan. Qatar, meanwhile, supplied 67bcm of LNG to the region, almost five times the Russian volume. Analysis of the physical gas export split between Qatar and Russia does not allude to the premise that the market leaders might be in collusion. Indeed a longrunning fight has been waged between Russian state-owned behemoth Gazprom, which favours long-term contracts index linked to the oil price, and those of any rivals – such as Qatar – prepared to offer contracts linked to gas fundamentals. As the latter option has emerged as the cheaper, a series of legal wrangles has taken place as companies locked into deals with Gazprom have suffered: “A raft of European players are doing everything they can to get Gazprom and other upstream suppliers to revise the terms of their longterm contracts,” says energy and political risk analyst from the European Energy Review, Matthew Hulbert. Yet despite the ongoing legal machinations, both Qatar and Russia have been able to develop highly profitable, mutually sustainable, long-term economic enterprises from their stakes in the export of gas to Europe. But that might soon change.
Major gas exports in 2012
Trade flows worldwide (billion cubic metres)
105.5
56.0
20.9
24.5 12.2
34.6
10.4
23.4
29.8
7.9
Qatari exports
16.7
Russian exports Source: Includes data from Cedigaz, CISStat, GIIGNL, IHS CERA, Poten, Waterborne.
Price spikes
Indeed, this status quo could become unsustainable in the face of Russia’s aggressive behaviour in the first quarter of this year, which could see the physical side of the market, which has until now been characterised by mutual cooperation masquerading as global competition, go the same way as the contractual one, mired in dispute. By global standards, Europe operates a highly liberalised energy sector built on a foundation of market forces and competition, although the creep of regulation has become more prevalent as the region has rebuilt its financial
Qatar’s Minister of Energy and Industry HE Mohammed Al Sada and Gazprom chairman Viktor Zubkov cut the ribbon at the opening of Gazprom’s office in Doha in February 2013. (Gazprom)
The Edge | 45
cover story | politics of energy
By global standards, Europe operates a highly liberalised energy sector built on a foundation of market forces and competition, although regulation has become more prevalent. operations in the wake of the 2008 economic crisis. The forces that drive the all-important aspect of pricing across that market were laid bare for all to see as the Ukraine crisis unfolded. Every threat to cut gas flows from Russia into Ukraine, as Ukraine capital Kiev struggled under the weight of a USD2.2 billion (QAR8 billion) debt owed to Gazprom, resulted in sharp price spikes on European gas markets. These price spikes, rather than flatten back out when supply cuts failed to appear, instead gradually reverted to pre-threat levels over the course of days, resulting in a higher average price over time than would otherwise be the case. As such, there seems to a pressing need for Europe’s energy policy makers, ultimately overseen by the supra-national body of the EU, to lessen Timeline3.pdf dependence 1on 4/28/14 Russian 9:29 gas AMso that the liberalised market is more able to
absorb acts of aggression and threats from Moscow to close the pipelines. As the geopolitical situation in Europe and Russia shifts, Qatar’s position of strength is in having the capacity to act quickly if need be, as has been demonstrated in the recent past in the aftermath of the Japanese earthquake. For the immediate future, Doha can direct supplies of gas to Europe’s shortterm market, although for the coming summer at least, this is not going to be necessary. Thanks to an unusually mild winter across much of the continent, Europe’s gas storage sites are relatively full for the time of year, and as such it is unlikely that a cut in Russian gas into Ukraine would threaten European supply security in the short term. However, as the market price-spikes reflected, every action has a knock-on effect. Although Europe’s immediate
supply security would not be threatened, they were forced to call upon storage stocks over the summer months – the period when it needs to replenish them for the next winter – this would lead to increased demand later in the summer to make up for the lost replenishment period. And should the Russian threat still be a factor in Ukraine while debt payments are outstanding, Europe may have to turn to alternative sources of energy supply, including Qatar LNG. Longer term, the outlook is unclear, because ostensibly there is much to be gained for Qatar in maintaining the status quo. The Qatar-Russia market division has been economically sound, industrially suitable and, until recent events, was politically secure. In fact, Qatar-Russia cooperation had reached the point where Gazprom opened its office in Qatar to further cooperation with the Gulf Cooperation Council’s (GCCs) energy exporting countries. However, pressure to adapt to a new reality may rear its head regardless of Doha’s will to maintain its current position, as Europe seeks to lessen its dependence on, and ultimately exit entirely from an aggressive, fractious relationship over its eastern border with Russia. The nature of existing ties between the GCC countries including Qatar, and Europe, indicate that a possible recalibration of the
How the annexation of Crimea impacted European gas prices. Pro-Russian gunmen seize key buildings in the Crimean capital, Simferopol.
64٫000
Putin threatens to cut off supplies to Ukraine
62٫000
60٫000
58٫000
56٫000
54٫000
52٫000
In one of its worst days of violence, at least 88 people are killed in 48 hours in Kiev.
50٫000
48٫000
06/02/2014
13/02/2014
Gazprom warns Ukraine of price rises if it does not pay mounting bills
20/02/2014
Source: ICIS Energy: Value of gas for delivery at Europe's NBP market, bbc.co.uk
46 | The Edge
27/02/2014
06/02/2014
13/03/2014
2/03/20
politics of energy | cover story
The situation on the fringes of Eastern Europe has led to threats regarding the flows of Russian natural gas upon which Ukraine is so dependent and through which half of Russia’s gas exports to Europe flow.
Russian forces pictured in Crimea in March. Russia’s show of strength could have ramifications for Qatar’s position in the eyes of Europe (Getty Images)
supply market could occur in the future due to the Ukraine-based tensions between the West and Russia, as highlighted by the Gulf Research Center in an April paper entitled The EU and the GCC in Global Governance: Limitations and Future Potential. “Bearing in mind the importance of natural resources and the tendency for conflicts to arise
EU leaders condemn EU leaders Russia’s condemn Russia’s ‘annexation’ of Crimea ‘annexation’ Both the of Crimea US Both the US and EU extend sanctions. and EU extend sanctions.
over limited resources, it is evident that economic ties between both organisations [the GCC and the EU] are prioritised over other issues of global governance,” the think-tank said. Europe is in the midst of forcing through longer-term policies partially aimed at relieving its dependence on Russia. The subsidised development of renewable energy sources is the dominant policy instrument, but it will still require gas for a long time to come, decades at least, and maybe more. Should it come to Doha’s door seeking a new accord, then the opportunity for Qatar to grab market share – in a more amicable manner than Russia’s Crimea land grab of February and March, of course – will have to be acted upon.
Deadline passesDeadline with no passes with Putinno warns thatPutin delayed warns that delayed payment of debtpayment from of debt from Ukraine gas payments Ukrainehave gas payments have Ukraine to Russia Ukraine to Russiacreated a "critical created situation" a "critical situation"
0142/03/2014 27/03/2014 27/03/2014 03/04/2014 03/04/2014 10/04/2014 10/04/2014
50%
The percentage of gas exported by Russia to Europe that flows through pipelines across Ukraine. The Edge | 47
Abdulbasit Ahmed A Al Shaibei, CEO says that the QCB’s decision on the closure of Islamic windows of conventional banks has helped Islamic banks exercise their mandate, develop their skills and expertise and focus on areas of specialty.
48 | The Edge
islamic banking | business interview
Retail focused
&
value based banking AN INTERVIEW WITH INTERNATIONAL ISLAMIC’S CEO
In 23 years, Qatar International Islamic Bank (International Islamic) has traversed the journey from a local bank to become a regional player. In an interview with The Edge, Abdulbasit Ahmed A. Al Shaibei, CEO, talks about the transition, the future of Islamic banking as an industry, and the impact that proposed sovereign sukuk issuances from countries such as Britain, Luxembourg and Hong Kong will have on traditional sukuk issuers. by Aparajita Mukherjee What have been the achievements in these 23 years and your business lessons during this period? What, if anything, has changed about International Islamic in the past 23 years? A major achievement for us at Qatar International Islamic Bank (International Islamic) in the last 23 years is the journey from a small local bank to one that is known regionally and beyond. There have been many reasons for that. Our excellent range of products and services, our debut sukuk issuance that is in the international market, our participation in international Islamic papers and the overall growth we have achieved in the last two decades, gave us a solid name in the international financial landscape which is evident in our 2013 results with a net profit of QAR750 million as of 2013, a growth of 10.5 percent compared with 2012. Given the separation that Qatar Central Bank (QCB) brought into effect in 2011 between Islamic and conventional banking, what impact has it made on your business? The QCB’s decision on the closure of Islamic windows of conventional banks was a very good one. This is because it helped banks The Edge | 49
business interview | islamic banking
exercise their mandate, develop their skills and expertise and focus on areas of specialty. Be it an Islamic bank or a conventional bank, if we focus on our core business, we can develop it better. The QCB decision ensures that banks stay focused on their core business. If conventional banks provide Islamic banking, some people will obviously have questions about the legitimacy of Islamic banking. Hence, the QCB’s decision was good from a social point of view, supervisory point of view and accounting point of view. With regard to accounting when conventional banks had Islamic banking windows, it used to be a kind of mixture, something the regulator was uncomfortable with. The core responsibility of Islamic banks is to develop shari’ah-based products. Islamic bankers need to be specially trained, because their way of doing business is entirely different from that of conventional banking. For example, in Islamic banking, there is no concept of interest, but only profit. So, one must know the clear distinctions. Unless the institution focuses on Islamic banking, products cannot be properly defended. We have often seen people, not wholly trained, saying there is not much difference between Islamic and conventional banking. As they market Islamic products without training, they say, ‘’These are almost the same” though in fact they are not. Clearly, this sort of perception will harm Islamic banking. On whether the volume of business has gone up after the QCB decision, it depends on which side you are looking at – retail or corporate. On the retail side, we have definitely gained in good measure. Retail customers are driven by faith. But a majority of corporate customers are driven by service and pricing. So, we have not made as much headway on the corporate side as we have on the retail business. In terms of the future of Islamic banking, what financing instruments – Murabahah, Musawamah, Mudarabah or Istisna - do you think will become more prevalent and widespread and why? Musawamah is still number one, because it is the most secure product for Islamic banking. But as an Islamic banker, I believe Islamic banking should be more involved in Musharaka, which is about partnership 50 | The Edge
“Musawamah is still number one. Because, it is the most secure product for Islamic banking.”
International Islamic’s CEO, Abdulbasit Ahmed A. Al Shaibei, says that retail customers at Islamic banks are driven by faith-based decisions, but a majority of corporate customers are driven by service and pricing.
“The QCB’s decision on closure of Islamic windows helped banks to exercise their mandate, develop skills, and focus on areas of specialty.”
between a bank and any partner. Having said that I am seeing growth in Ijara (leasing), and in sukuks and there is a good prospect for Islamic banks to grow in these areas. Mudarabah is a great product; it helps us finance the overhead of contracting companies. Since many major projects are on the fast track in Qatar, the best product to enter into those deals is Mudarabah. This is because it is a very flexible instrument, especially for big contractors. Istisna, on the other hand, is a turnkey management product. Usually, Istisna is with retail customers. When they want to get involved with individual contractors to build their own property, the bank does the contractual agreement with the contractor concerned. It is basically a turnkey arrangement between the client and the bank. Here the bank takes the full responsibility of delivering the project at the end of the period. With Qatar witnessing more competition in the Islamic banking space, what is the bank doing differently? International Islamic is a customer-centric bank. Our customer service is quality-driven
islamic banking | business interview
“We look at technology not as a cost, but as an investment.” as much as our banking is value-based. Our bouquet of products and services is another differentiator. We have a range of products and services that suit our huge retail customer base. Retail banking is clearly an area of strength for us though for some Islamic banks, a majority of their portfolio is with the corporate segment. We believe retail banking is our bread and butter. We have a great variety of products for our retail customers with a good network of branches and ATMs conveniently located across the country. This is in addition to our electronic delivery channels and our 24x7 customer centre. We have been able to successfully accommodate new customers. We see competition as healthy, because competition helps us to always gear up and provide better service to our customers. It leads to creativity. I do agree, the market is tough – it has never been easy. We have many banks in Qatar and that includes four Islamic banks. Then there are entities at the Qatar Financial Centre and many other financing companies within this small market. Between your retail and corporate arms, which is the greater contributor to the bank’s bottom line? What level of crossselling prevails at International Islamic? We do focus on corporate, especially with lots of large projects coming to Qatar. We are now trying to have a better share of the corporate segment also. In terms of cross-selling, sometimes we take our retail customers to the level of small businesses. They continue to grow with us, and many of our customers have grown from a small business to being part a corporate segment. So, it is a process of evolution. In that journey, we are with our customers always. How has technology and innovation changed the character of banking? And how has this improved the service standards of International Islamic? Technology is something ongoing; it never stops. We need to keep abreast with technology. At International Islamic, we have adopted the latest technology. This
is why we always create new software and packages that facilitate convenient and secure banking. We fully believe in state-of-the-art technology. This will make the bank more attractive, efficient even as it helps reduce costs. We look at technology not as a cost, but as an investment. If you have the right technology, you can see the return on investment. Similarly, when you have the right human capital that drives technology, you get the optimum result, and that too at a very fast pace. Risk management is an area which is successfully deploying technology with a human interface. This has obviously helped us minimise risks to
“We see competition as healthy, because competition helps us to gear up and provide better service to our customers and leads to creativity,” says International Islamic CEO, Abdulbasit Ahmed A. Al Shaibei.
QAR
750 million
Net profit of International Islamic in 2013.
our operations. Especially since our card business has been growing, we need to actively combat fraud and eliminate all the risks and possibilities. Our systems and processes have helped us significantly in achieving these objectives. What are the main HR philosophies of International Islamic? What staff retention policies do you follow? We always encourage local people to join the bank. We believe in providing proper training and job satisfaction so that we can nurture the seeds of loyalty in our bank. At International Islamic, we have many Qataris who have been with us for many years. For us, it is important. We run many programmes to spot Qatari talent and develop them. We have joined hands with the Ministry of Labour and Social Affairs and other institutions to develop the Qatari manpower in our bank. We recruit Qataris and put them in different educational institutions; we support them during their studies and sponsor them through scholarships. Britain, Luxembourg and Hong Kong have joined the issuance of sovereign sukuk. What is International Islamic’s take on this? Sukuk is on the top of the market trends these days. Sukuk has proved to be a reliable instrument, an instrument that can really work well with conventional bonds. This is why many non-Muslim countries and institutions have either issued or are preparing to issue sukuks. Of course, Muslim countries have issued many sukuks at the sovereign level as well as at the institutional level. The United Kingdom is expected to issue sukuk in the second quarter of this year. Many other countries are expected to follow suit. This shows the growing acceptance of sukuks everywhere. And it also underscores the fact that many countries are keen to tap the liquidity available with Islamic investors through Islamic instruments. For banks, top-rated sukuk issuances, especially from the sovereign, are high-quality assets and help them meet the Basel III ratios. From a liquidity management perspective, an Islamic bank will prefer toprated sukuk issuances, which are tradable even as the risk is minimal. The Edge | 51
Rethin waste
nking nking ee Can Can the the ‘CirCular ‘CirCular eConomy’ eConomy’ redefine redefine the the age age ofof Consumption? Consumption?
feature story | sustainability
The drastic increase in consumption in the daily lives of consumers is diverging with the earth’s ability to provide raw materials to satisfy not just our growing needs, but our growing population which can expect an additional three billion middle-class consumers by 2030. If organisations are to keep up with this overwhelming demand, they need to reconsider a fundamental rearrangement of the economy from one that discards waste, to one that sees it as one of its most valuable commodities. by Shehan Mashood
T
he industrial revolution, which began in the 18th century, set in motion the formation of a linear economic model, one where companies harvested raw materials and moulded them into products for consumers who discarded them without much thought once their usefulness wore out. As economies grew, and consumers wanted more, manufacturers increased production. In fact, according to the SERI Global Material Flow Database, if companies continue to extract natural resources at their current rate, by 2030, almost a 100 billion tonnes of raw material will be extracted each year, twice of what was harvested in 2005. However, many companies have recently started to realise that a linear economic model will not sustain their long-term growth or visions. Raw materials are finite, and current levels of consumption have created higher resource prices, and the commodities markets are beginning to reflect that. The McKinsey commodity price index shows that since 2000, average resource prices have doubled, erasing real price declines of the last 100 years. The average annual volatility of prices over the past 13 years has also increased to three times more than it was in the 1990s. This has led to many organisations thinking about how to create sustainable growth agendas that would decouple revenue from material input. One company that is looking at implementing such sustainable policies is averda. A family-owned business from Beirut that operates in waste management across the Middle East and Africa, including Qatar. Their chief operating officer (COO), Jeroen Vincent, tells The Edge their business is not just about driving trucks and collecting waste, “it is a business which is evolving to place material management as a priority.”
Rethink your waste
Waste management companies such as averda are often the last stop in a product’s life, either disposed in landfill or incinerated. “But this is actually not a smart way of handling a valuable product,” says Vincent, “because when you look closer at what is thrown away as waste, you see a lot of valuable materials like plastic, which can be reused in the manufacturing of other products. These materials, however, lose their value when they are bundled together. The idea is to manage materials in such a way that the raw materials are circled back to the economy,” explains Vincent. The idea is to manage materials in such a way that the raw materials are returned to the economy, explains Vincent. This is part of a model known as the circular economy aimed at upending current linear methods of production and consumption. The economic model has been around since the 1960s but has made a resurgence following the commodity price shocks. According to the Ellen MacArthur Foundation, a charitable organisation focused on the Amount of raw material that circular economy, it “replaces the end-ofcould be extracted per year in life concept with restoration, shifts towards 2030 if no change is made in the use of renewable energy, eliminates management of raw materials. the use of toxic chemicals, which impair
100 billion tonnes
Unfortunately, waste flows to the lowest and cheapest point, Jeroen Vincent, the COO of averda, tells The Edge, and in the Middle East landfill prices are almost negligible compared to those in Europe.
54 | The Edge
sustainability | feature story
Rethinking Manufacturing: The circular economy explained Mining/materials manufacturing
1 Farming/collection
Biochemical feedstock Restoration
Technical materials
Parts manufacturer
Biological materials
Product manufacturer
Recycle
Biosphere
Service provider
Refurbish/
remanufacture Reuse/redistribute Biogas
Maintenance
Cascades 6 2803 0006 9
Anaerobic digestion/ composting
Consumer
User
Collection
Collection
Extraction of biochemical feedstock2
Energy recovery
Leakage to be minimised Landfill
1 Hunting and fishing 2 Can take both post-harvest and post-consumer waste as an input Source: Ellen MacArthur Foundation - Adapted from the Cradle to Cradle Design Protocol by Braungart & McDonough
A potential consumption time bomb will lead to inevitable resource constraints Dramatic shift to packaged products
1.1 billion more people
Food: Caloric consumption
+24% Food spending
RICE
1.8 billion more middle-class consumers
FLOUR
Much greater waste at end of life
SUPER
$
$$$
+57% Packaging
+47% End-of-life materials
Source: World Bank. Ellen MacArthur Foundation circular economy team
+41% The Edge | 55
Renault’s manufacturing plant in Choisy-le-Roi, France refurbishes parts from old cars, some of which are sold at 50 percent of their original price. The company generates a net profit from the venture and has also reduced energy use by 80 percent in the factory. (Image Corbis)
The readiness of the GCC countries to incorporate best practices of sustainability into civic and commercial usage of materials has been great.”– Ghassan Barghouth, Schneider Electric. 56 | The Edge
reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems and business models.” The sustainable management of waste for a city such as Doha could have many benefits. Vincent explains that 60 percent of all waste in the city comes from food waste, which is either incinerated or ends up in landfills, producing methane gas which is bad for the environment. This however is unfortunate says Vincent, because the nutrients found in organic waste that include phosphates and potassium are very valuable and could be used as fertiliser in the country. Instead, Qatar imports them from other countries, an inefficient model of raw material use. Unfortunately waste flows to the lowest and cheapest point, says Vincent, and in the Middle East landfill prices are almost negligible compared to those in Europe for example. “So we need a good combination of economic modelling of what could be the beneficial value chain, and secondly, legislation that could actually help motivate and encourage the business to evaluate adopting a smarter model.” Europe, for example, has a landfill ban going into effect in 2020, so both governments and corporations are preparing for that. Companies must realise that if they want to be a cost price leader, they need to have a cheaper source for materials, explains Vincent. “We are moving from
traditional waste collection to an integrated waste management service provider. So that means that we can manage the whole value chain.”
The business case
The MacArthur Foundation, which is focused on creating tangible economic cases for the circular economy, in its most recent report, found that costs of remanufacturing mobile phones for example could be reduced by 50 percent per device if manufacturers made phones easier to disassemble, and offered incentives to return devices when they are no longer needed. Vincent says there are already many big firms that have remanufacturing sites. “Renault for instance are refurbishing parts from their cars so they don’t use new materials,” he says. Renault’s plant re-engineers parts to be sold at 50 percent to 70 percent of the original price according to the MacArthur Foundation. While the process requires more labour, Renault still generates a net profit because no capital expenses are incurred for machinery and there is a better yield on materials. Renault has managed to reduce 80 percent of its energy use, 88 percent of water, and 77 percent from waste after switching to remanufacturing. Another example is Philips. In the European Union it holds stakes in 22 collection and service organisations that
sustainability | feature story
“When you look closer at waste, you only see valuable materials but together it is called waste.” Jeroen Vincent, averda.
Ghassan Barghouth, tells The Edge that resource management is crucial, especially in countries such as Qatar, which has a water scarcity problem.
collect 40 percent of all mercury-containing lamps on the market, recycling more than 95 percent of that. The company also recently started to sell lighting as a service, another non-traditional way to manage raw materials says Vincent explaining that changing lighting can be a big investment for companies and households. “Phillips lighting has repackaged lighting as a service, rather than selling lighting products. Recognising that there is a lot of mercury in light bulbs, Phillips uses a leasing model so that they remain the owner of this valuable resource.” An added benefit of leasing, for customers, is that they do not have to invest a lot of money upfront to get a more environmentally friendlier product, which in today’s market often means paying a premium. The MacArthur Foundation found that if high-end washing machines were leased to households instead of being sold, customers could save around a third per wash cycle, and manufacturers would earn a third more profits. “A negative agenda will not move us to change our ways of dealing with waste, that is proof for the past,” says Vincent, “We highly believe the time has come, where we are forced to think of how to do things smarter.” Part of the circular economy is also about reducing and managing use of resources such as water. Schneider Electric’s country
60%
Of all waste generated in Doha comes from food waste.
president for Qatar, Kuwait and Bahrain, Ghassan Barghouth, tells The Edge that resource management is crucial, especially in countries such as Qatar, which has a water scarcity problem. “We can reduce water by 15 percent,” he says, explaining that a smart water management network will take advantage of real-time data from pumps, tanks, valves and other vital distribution network points, to create savings. Barghouth believes that while the initial cost of deploying technologies for conserving, recycling and energy management can be expensive, in the long run the savings are much higher, and make up for the initial investment as even the operational costs can be reduced.
Changing attitudes
“The time frame that we are living in looks like the 1980s and 1990s of the waste management industries in Europe, the United States and Australia,” says Vincent adding, “That is when legislation for sustainable waste management came into place in those regions, and businesses moved from traditional waste collection to a productive model with a focus on recycling, smarter ideas for waste treatment, directives for take back systems, and regulation for e-waste.” Bargouth adds that while the Middle East was late in adopting sustainability standards, they have caught up on several fronts. He says “The readiness of regional governments, especially in the GCC countries to incorporate best practices of sustainability as basic requirements into civic and commercial usage of materials has been great.” Vincent is also positive about the prospects of moving towards a more waste and material conscious economy, “This region is actually really close to make that change. The Middle East will benefit from the lessons learned in Europe, and the US. In parts of Europe, there currently is a massive over-capacity of energy generated from waste because back in 2005, people were concerned about an under capacity of waste incineration, which is big money. Now waste is flowing to the lowest point, which is the incinerator. We don’t want that imbalance here, and that is why we are really delighted to see that sustainable waste management is on the agenda of cities in the region, and that they are really thinking of advanced models and operations.” The Edge | 57
Excep to the
rule A conversation with one of Qatar’s only female expatriate CEOs
58 | The Edge
tion MEEZA, a Qatar Foundation joint venture that is an information technology services and solutions provider, appointed Ghada P. El Rassi as its new chief executive officer from deputy CEO last November. As an expatriate and perhaps one of the few female CEOs in the country, The Edge spoke exclusively with El Rassi about her role, achievements and plans to lead the company into the future.
O
f Lebanese origin, Ghada P. El Rassi moved to Qatar 16 years ago, initially working in the banking sector, and eventually moving on to the oil and gas industry. While she worked in various sectors, there was one common denominator that remained constant: her roles always involved information and communication technology. “I always had the focus and passion to work in my line of specialisation, which is IT in business,” she says, attested by the fact that El Rassi has been working within the ICT industry for the past 23 years. “Technology back in 1988 was nowhere close to how it is today. Information Science then was a new topic that was being introduced at universities in Lebanon,” and it coincides with the birth of the World Wide Web, which ushered the dawn of the Information Age in early 1990s. “The rapid pace in the development of Information Technology simply caught my interest, and kept me challenged since then,” she continues. The ability to immediately apply the things one had just learned, to innovate something new was captivating to El Rassi. “I actually majored in a couple of disciplines, business and Information Technology,” she adds, “but I was always leaning towards working in IT.” At the start of her career, El Rassi preferred not to look into immediate financial gain and accepted lesser-paying roles in exchange for the opportunity to work in the IT field. After working for nine years between RasGas and Qatar Petroleum, she was headhunted by the now chairman and previous CEO of MEEZA, Rashid Al Naimi to join the MEEZA team in early 2008.
Ghada P. El Rassi, CEO of MEEZA tells The Edge that when creating new job openings, firms need to make sure that any added gratuities as part of the position are offered irrespective of whether the employee is a man or a woman.
“The key to success is one’s intellectual capacity and courage. And I consider men and women to be equal in this regard.” The Edge | 59
business interview | information technology
Women in the workplace
While there are few women who hold senior positions within companies and organisations in the state, it is certainly the case that even fewer expatriate females are seen leading large and prestigious companies. “To me, when you aim for something and you are willing to work hard for it, gender is irrelevant,” she says. “Some people consider me privileged and some may say I am fortunate. However, the people who know me say that I deserve it because I worked really hard for the past 16 years,” she adds. In addition, she says, “We all need to be assertive and know where we want to steer our careers from the beginning and this is exactly what I did.” Her attitude might have something to do with the way she was raised. “My father didn’t treat me differently from my brothers, and I was asked to take on the same level of responsibility.” As a result, El Rassi shunned the idea of “living precariously” and decided to be independent. Having observed women in the workplace, El Rassi is of the opinion that majority of women are not as aggressive as men in aspiring for more. “Perhaps some still lack patience, courage, confidence or endurance. Hence, I noticed that the majority tend to give up easily,” she says. When asked what added value she thinks women who achieve higher positions in firms can bring to the workplace that men cannot, she spurns the question, reiterating a point she makes throughout the interview by saying that, “The key to success is one’s intellectual capacity and courage. And I consider men and women to be equal in this regard.” That being said, she says it is important that both men and women are treated equally in the workplace as treating them differently tends to make women think that they are indeed different, if not less capable. When creating a job opening, make any added gratuities part of the position, says El Rassi and “target to attract the best talent that can assume the position and don’t differentiate the position by gender. This is my hope.”
Challenges in the workplace
According to El Rassi, throughout her experience, she has faced a myriad of challenges and one that clearly stands out is the challenge to work from a technical perspective rather than from a marketing 60 | The Edge
At the GCC Digital Security Forum organised by MEEZA recently, topics such as securing critical infrastructure data and advanced strategies to combat cyber threats for enterprises were discussed.
and sales perspective. However, she explained that this is not a challenge that was imposed on her, but rather, one that she challenged herself to face. An example of this is when, while working in the oil and gas industry, when she had to travel offshore and stay for two days on a rig to complete her task, “Among the 400 employees, I was the only young girl that had the courage to stay on the rig in the middle of the sea for 48 hours. This was something that I am extremely proud that I was able to do. It was indeed a great challenge and experience that I benefited from. Looking back, I would probably regret it if I didn’t do it.” However, she explains that she has never experienced or felt resistance from her colleagues or from her line management. Her biggest challenge today, she says, is how to maintain the momentum and make MEEZA more successful and widen the company’s horizons. El Rassi says, “Being a deputy CEO was different from being the CEO itself, in that a CEO carries more challenges and increased responsibility” – a challenge that she said she is willing and eager to take on. “This is why I am determined to prove that the company will continue on its path to success, grow bigger and aim higher in the state of Qatar and in the Gulf region.”
The business
The conversation invariably turns to MEEZA, which has grown, and perhaps
Among those in attendance at the GCC Digital Security Forum included HE Dr. Hessa Al Jaber, the Minister of Information and Communications Technology (second from right), Dr. Hamadoun Touré, ITU Secretary General (far left) and Rashid Al Naimi the chairman of MEEZA and CEO of QF Investments (far right).
“Target to attract the best talent that can assume the position and don’t differentiate the position by gender.”
Ghada P. El Rassi, CEO of MEEZA tells The Edge it is important that both men and women are treated equally in the workplace, as treating them differently tends to make women think that they are indeed different, if not less capable. (Image Corbis)
mostly out of necessity in the changing technological landscape, now also focuses on cyber security. As a company that manages infrastructure and data for other organisations, it is critical that they are able to protect sensitive information stored in their data centres. The recent years have seen cyber security become a prominent issue among organisations, not just in Qatar but across the Middle East. Incidents such as the revelations from former National Security Agency contractor, Edward Snowden has driven people to contemplate this, says El Rassi. “This recent exposure of what big countries allegedly do to gain competitive advantage is not something new. Espionage is simply being taken to a different and higher level by utilising more advanced and sophisticated technology to their benefit.” El Rassi is of the opinion that the Middle East and Qatar have benefited from what has happened. “We have now started to think and look outside the box,” she explains, “not only within the ICT sector but also within the government and different private industry sectors.” MEEZA recently hosted a GCC Digital
Security Forum, an event supported by the government through The Ministry of Information and Communications Technology. When asked to clarify the role of government, she says, “The government will surely and always play a key and steady role not only in the creation of policies, but promoting awareness on digital and cyber security as well, and it is evident that they have already started on this important journey.” However, she cautions that, “We need to be more proactive to find the right combinations and solutions that can address all possible scenarios which, with close cooperation and open channels, would allow us to overcome all of these impeding threats. We should always be mindful that IT and related technologies revolving around the Internet evolve at a very rapid pace and so, in the same way, we need to increase our level of vigilance and collaboration.”
The future
MEEZA is a relatively young company, launched only in 2008, but El Rassi is proud of the company’s various achievements.
“We did absolutely great in 2013 in terms of our targets and outcomes,” she says, “We have doubled our service portfolio and we equally did well from a profitability standpoint. Our plan is to expand to the nearest regions in 2014 and 2015, and also be specialised as systems integrators,” she says adding, “We are growing at a very fast pace as a service provider and we are being recognised as a reputable systems integrator. In parallel, we are also developing our expertise on smart cities as well as introducing disaster recovery and business continuity services. Aside from these, MEEZA is the only entity in Qatar that commercially offers security operations centre services in the market and we already have clients on board taking advantage of these services”. In addition, cloud services offered by MEEZA are already implemented locally, but El Rassi says they are working with one of their partners to expand cloud services outside of Qatar. However, El Rassi maintains that all these initiatives are focused to align with Qatar’s 2030 National Vision and make advances that continue to help the Qatari society. The Edge | 61
feature story | stock trading
Qatar Stock Exchange: MSCI upgrade and investment sentiments Coinciding with the May 2014 semi-annual index review, Qatar and the United Arab Emirates (UAE) will be reclassified as Emerging Markets (EM) from Frontier Markets (FM). This will give the Doha bourse access to a wider investor base and hence deeper pools of capital, estimated at an additional QAR5 billion of foreign money. What exactly does the upgrade mean for investors based in Qatar? Will it bring new and diverse investment options? asks Aparajita Mukherjee
T
he vision and mission statement of the Qatar Stock Exchange (QSE) stresses that the bourse’s objective is to develop a successful regional and international exchange with strong domestic roots. When the announcement of the MSCI upgrade for Qatar and the United Arab Emirates (UAE) was made by the MSCI mid-June last year, Rashid Al Mansoori, CEO of QSE had said that it reflected the changes implemented in the bourse in recent years. In the context of the MSCI upgrade, it is crucial to see how well QSE balances creating a vibrant equity trading climate while increasing foreign ownership limits (FOL), a key criteria of the upgrade. In an exclusive interview, Al Mansoori tells The Edge that the QSE would benefit from the strength of the national economy, while maintaining its strategic 62 | The Edge
objectives aiming to develop a successful regional and international exchange and therefore, he adds, “Maintaining a strong focus on the local market and investors does not contradict the bourse’s international outlook and interest in attracting regional and international investors.” Despite the MSCI upgrade, the majority of QSE investors remain Qatari nationals and corporations, says Al Mansoori, “We will endeavour to serve them as best as we can. Additionally, all our issuers and listed companies also remain Qatari.” The MSCI upgrade, in his opinion, will give them the opportunity to raise capital from foreign investors as the upgrade would not only ensure increased visibility of existing listed companies before foreign financial powerhouses, but would also entice other entities, including family-owned companies, to go
Rashid Al Mansoori, CEO, QSE, says that maintaining a strong focus on the local market and investors does not contradict with the bourse’s international outlook in attracting regional and international investors.
The Edge | 63
feature story | stock trading
“We have already seen an increase in account opening with the exchange by foreign institutions.” – Rashid Al Mansoori, CEO, QSE.
public. Al Mansoori adds, “We have already seen an increase in account opening with the exchange by foreign institutions and gradually these will increase their investments in the market, especially the stocks that will be included in the MSCI EM index.” This, Sebastien Lieblich, executive director, index research, MSCI, based in Geneva says, puts the Qatari equity market in a place of prominence in the eyes of global institutional investors who can be characterised as long-term investors. Commenting on the increase of FOL, Al Mansoori says that there are a number of companies in Qatar that already exceed that limit, such as Ooredoo and Vodafone, and Al Salam International which allow for almost 100 percent capital equity stemming from foreign investment, and Masraf Al Rayan that allows up to 49 percent foreign ownership. Al Mansoori adds that ultimately, it is in the companies’ own interest to attract foreign investment. “Under Qatari law, they are allowed to have 25 percent foreign investment on the shares that are available for trading, which has been interpreted as free float. Many companies have expressed readiness or even the desire to change this to 25 percent of the company’s capital rather than the free float, something that is governed by corporate law and the articles of association of the companies rather than the rules that are set by QSE. Our role is to exchange views with the companies and express guidance as to what they should do if they want to take that step.” Lieblich tells The Edge, that the MSCI is hopeful to see further increases in FOL in the short term, given that three companies have announced increases: Commercial Bank of Qatar, Doha Bank and Al Khalij Commercial Bank.
Impact of the MSCI upgrade
Rashid Hashim Al Saeedi, a trader on QSE says that they expect greater liquidity to enter the market not only because of foreign portfolios but also by local investors who would be encouraged to invest in the market when they see high trading volumes.
64 | The Edge
Local and international analysts have argued that companies most likely to benefit from EM status will be distinguished by the extent to which they take the initiative to up their game when communicating with the market, as Qatari companies become more international in their outlook and accessible to overseas investors. This is a sentiment shared by Akber Khan, director of asset management, Al Rayan Investment, who says that over the medium term there will also be more pressure on Qatari companies to improve transparency, investor communication and corporate governance.
11%
Percentage of foreign investors in the total investor pool of the QSE.
25%
Percentage of foreign investment on the shares that is available for trading, known as free float.
49%
Percentage of foreign ownership allowed for by Masraf Al Rayan.
USD
146 billion
Total market capitalisation of QSE.
Mohammad Athar, partner, Markab Advisory, a management consulting firm headquartered at Dubai, is of the opinion that the MSCI upgrade will be a key milestone in the evolution of the capital markets in the region. Citing examples from the UAE, Athar says that companies are already taking measures in which they can position themselves for a higher share of EM funds such as raising the FOL, such as Deeyar and Mashreqbank. “But,” says Athar, “we do not expect a sudden spike in prices or volumes on the day of the upgrade. However, it will be very interesting to see reception of the EM funds on the day.” “With this upgrade, all stakeholders, particularly the regulators bear huge
With the MSCI upgrade, two crucial changes that will be expected on the QSE are an increase of foreign ownership limits and the listing of family-owned businesses, though investor preferences clearly point in the direction of government-owned companies.
responsibility to demonstrate that the markets are worthy of this title. Although being in the same league as Brazil, India and Russia is a proud achievement, there will be enormous pressure to enhance transparency, improve corporate governance, introduce further diversity to the asset mix, and raise limits on foreign ownership,” adds Athar. Khan says that the volume traded on the exchange will increase and one can expect the reduction in the bid-offer spread (the difference between the prices quoted for an immediate sale, bid, and an immediate purchase, offer, and is one measure of the liquidity of the market) on a number of stocks, in turn attracting greater volumes. Khan adds, “Some of the new investors will have very long-term investment horizons providing greater stability to share prices.” “I believe we will see a cash inflow of around USD500 million (QAR1.8 billion) into Qatar due to the MSCI upgrade from frontier to EM status during Q2 of 2014. This inflow is expected to come from index tracking funds but also from emerging market investors,” says Robert Pramberger, acting head of asset management, TFI. Talking to The Edge, Rashid Hashim Al Saeedi, a trader on the floor of the QSE says that they expect greater liquidity to enter the market not only because of the entry of foreign firms but also by local investors who would be encouraged to invest in the market when they see high trading volumes. Saeedi adds, “International and regional brokerage firms can benefit from the Qatari market because of the high performance
of stocks and the gradual increase of the value which is an indication of stability and guaranteed profits.”
Number of listed securities
Afa Boran, head of asset management, Amwal, is of the opinion that liquidity is very low in most stocks possibly because many people and institutions have never traded or reviewed their portfolio since their initial investments, which is natural given the rapid economic growth seen in the country.
Mohammad Athar, partner, Markab Advisory, a management consulting firm headquartered at Dubai, says, “We do not expect a sudden spike in prices or volumes on the day of the upgrade. However, it will be very interesting to see reception of the EM funds on the day.”
Commentators have said that with just 43 listed securities, there is not enough diversity for investors on the QSE. Lieblich of MSCI says, “The more sizeable the number of Initial Public Offerings (IPOs) that we witness, the better it will be for the international institutional investors as it will expand their investment opportunity set.” When asked about the prospects of more companies getting listed on the QSE, Al Mansoori of QSE says that with the growth in the economy and the awareness that QSE is helping private and even familyowned companies move forward, this will raise interest among companies for IPOs. Mansoori adds, “After an event that we organised this year for family-owned companies in cooperation with the Qatari Businessmen Association, we had positive feedback from participants who expressed interest in the listing process and asked for more information on the regulatory aspects and requirements that have to be met. We are in serious ongoing talks with a number of them with respect to potential listings.” Commenting on the inclusion of expatriates in primary trading, Al Mansoori says that the QSE has a large investor base and of this, 11 percent are foreigners. He adds that the exchange aims to raise the ratio of non-Qataris in the investor base by attracting at least 100,000 expatriates in the higher income categories who would The Edge | 65
feature story | stock trading
“One of the key impediments to new companies raising public equity is the ease with which they can raise debt from banks.” – Akber Khan, director of asset management, Al Rayan Investment.
Foreign Ownership Limits on Stock Exchanges 100%
80%
60%
40%
20%
0%
Qatar
Saudi
Abu Dhabi
Bahrain
No foreign ownership Companies with ownership limits of 25% or less be keen to invest in Qatari stocks for both dividend income and capital gains over the long or medium term. Indicating investor preferences, Muhammad Al Darwish, a trader on the QSE, says that most local investors prefer the subscribing in government company IPOs, an opinion shared by Saeedi, another trader, who cites the recent Mesaieed Petrochemical Holding Company, as an example of the kind of gains that the local investor expects.
Continued on page 79
66 | The Edge
Kuwait
Muscat Nasdaq Dubai
More than 25% less than 100% 100% ownership
Source: Zawya
Performance of Qatari stocks in 2013 (% increase year-on-year)
Trading volumes
There is likelihood of an increase in investor traffic on the back of the MSCI upgrade, and the volume of trade will increase automatically, some feel. For others such as Afa Boran, head of asset management, Amwal liquidity remains an issue in Qatar. He explains that, in terms of total size, the market is not small - total market capitalisation is around USD146 billion (QAR533 billion), and free float at about 25 percent, a respectable size even by EM standards. However, Boran adds that liquidity is very low in most stocks. Some stocks only trade a couple of hundred thousand dollars
Dubai
Consumer Goods & Services
Banks & Financial Services
Real Estate
13.2%
6.3%
27.5 %
9.7% Total year-on-year growth of Qatari stocks
Transportation
Industrial
Telecommunications
5.6%
2.0%
8.1%
Note: Data based on corporate earnings in 2013 Source: Gulfbase & Global Research, Data until March 19, 2014
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Inside the minds of leading business figures
business insight Cityscape to bring important industry stakeholders under one roof >70
Deep Marwaha, group director for Cityscape, in conversation with The Edge, speaks about the highlights of Cityscape Qatar, to be held in June, and the emerging trends in the sector in 2014.
Increased transparency to enable better investment decisions 72 Amelia Fawcett, chairman of the Hedge Fund Standards Board (HFSB), London, talks to The Edge about the activities of the board, its relevance to the region and what she expects from her Qatar visit.
70 With 2022 World Cup-related development coming increasingly under the international spotlight with record projections for 2014, Cityscape Qatar, now in its third edition, to be held in June, will feature around 100 exhibitors from real estate developers to service providers such as architects and consultants. (Image Corbis)
business insight | event management
REAL ESTATE
Cityscape to bring together important industry stakeholders
With 2022 World Cup related development in Qatar coming increasingly under the international spotlight, Cityscape Qatar, now in its third edition, will be held in June to bringing together international and local investors and developers. Deep Marwaha, group director for Cityscape, in conversation with The Edge, speaks about the highlights of the event and the emerging trends in the sector in 2014.
Could you tell us about Cityscape and its major functions? Cityscape organises a series of business-tobusiness (B2B) real estate investment and development events in emerging markets that facilitate business between senior level real estate professionals globally. It provides a platform for key industry decision makers, international investors, developers, government and investment authorities, leading architects, designers, consultants and all senior professionals involved in the real estate industry, to do business all under one roof. Cityscape first took place in 2002 in Dubai and in a little over a decade, the brand has grown to be the largest real estate event globally. 70 | The Edge
Deep Marwaha, group director for Cityscape, says that it is important they understand the market dynamics and tailor the marketing campaign in accordance with them.
event management | business insight
What are you doing differently this year? The event this year is significantly larger in terms of size, number of exhibitors and expected visitor numbers, illustrating the high expectations for the real estate market in Qatar and the growing profile of Cityscape in the country. The theme this year is seizing opportunities. We have also added to the event programme some knowledgesharing and networking events while also expanding our marketing distribution further outside Qatar. What are some highlights of Qatar Real Estate Summit in the Cityscape event? The Qatar Real Estate Summit features over 40 Qatari and international experts who are leaders in their respective fields. Some of the high level speakers include Joannes Mongardini, head of economics at QNB Group, Hamad Bin Ali Al Hedfa, CEO of Mazaya Qatar, Eng. Abdulla Al Subaie, group CEO of Barwa Real Estate, Christopher Knable, COO of Katara Hospitality and Shem Krey, deputy managing director of Mall of Qatar. In addition, there are more than six networking breaks offering delegates and speakers an opportunity to interact, a dedicated retail forum to focus on investment opportunities in the booming retail sector and project update sessions
“The event will feature around 100 exhibitors, real estate developers and service providers such as architects.”
with special focus on major infrastructure and real estate mega projects. What has Cityscape done this year to ensure there is more participation (both in terms of visitors and exhibitors) compared to last year? As the event grows year after year and gains momentum, our marketing spend, distribution and expertise improves substantially, and this is having a direct impact on exhibitor numbers and visitor numbers. It is always important that we understand the market dynamics and tailor our marketing campaign to attract those who are most interested in Qatari real estate, and we put a lot of resources into being well informed about the industry. Fundamentally though, no amount of marketing can substitute product quality. Cityscape is positioned as the leading real estate brand in the world and the quality of our events reflects that. What are some of the major issues to be discussed at Cityscape Qatar 2014? The Qatar Real Estate Summit will tackle all the pressing issues and challenges facing the Qatari real estate market, with a focus on how participants can best unlock the opportunities at hand. Most importantly, the summit will discuss the development and investment climate in Qatar from an economic perspective, examine market drivers and opportunities in the different sectors, focus on securing finance and overcoming the challenges of construction standards and regulations affecting procurement and award processes for major projects. How have you made sure that all subsectors of the real estate industry are covered in the event? Building on our database, our international marketing campaign capitalises on one of the world’s largest B2B real estate networks and ensures participation from regional and international real estate investors and financiers, developers across all asset classes, architects and urban planners, consultants, representatives from investment and economic agencies and cities. The main focus of the event without doubt is geared towards real estate companies and associated businesses. The Qatar Real Estate Summit covers
three days, with the first day focusing on key trends and developments in the market from a general perspective, while the second day focuses on booming market sectors such as residential, hospitality, mixed use, office and mega projects updates. The third and final day, aptly titled the Retail Forum looks at the growing retail market in Qatar, with a focus on the real estate development side as well as the retailers’ perspective. How does organising a real estate event in Qatar differ compared to the rest of the Gulf? Qatar is quickly becoming a hub for prominent events of all kinds. The Qatar Tourism Authority has also been instrumental in bringing the best business events to Qatar. For Cityscape, the experience of organising one of our events in Qatar has been very smooth and the interactions with the relevant authorities have all been professional. We have good existing relationships with the major players in the Qatar real estate industry, and our strategy is to treat these key companies as partners to create the best event possible. What are some of the major real estate trends emerging in the Qatar in 2014? How does it compare to 2013? Firstly, the population is growing at a fast rate. According to Knight Frank, and the Ministry of Development Planning and Statistics, the estimated population for Qatar has risen to 2.116 million as of February 28, 2014, which is an increase of 10.39 percent in the last year. This increase in the expatriate population is likely to be sustained for the next six to seven years, as workers migrate to Qatar to participate in the infrastructure and construction boom as the country readies itself for the 2022 World Cup. This influx of workers is stimulating property demand particularly in the residential rental sector at all levels. In the last quarter of 2013, residential rents for apartments in premium areas such as The Pearl-Qatar were rising rapidly, due to a constrained supply and an influx of expatriate workers looking for rental accommodation. Rental increases of up to 15 percent were seen in some cases, but a significant amount of new supply has been released in the first quarter of 2014 and rents are stabilising. The Edge | 71
business insight | investment standards
Hedge funds
Increased transparency to enable better investment decisions Amelia Fawcett, chairman of the Hedge Fund Standards Board (HFSB), London, was in Qatar recently to build awareness of the board with investors and fund managers. The HFSB was set up in London to promote high standards of practice in the hedge fund industry, covering areas such as disclosure, risk management and governance. In conversation with The Edge, Fawcett talks about the activities of the board, its relevance to the region and what she expects from her visit to Qatar. Tell us about the HFSB. The HFSB is the international standardssetting body for the hedge fund industry which addresses key investor and regulatory concerns in relation to transparency, valuations, risk management, governance and shareholder conduct. Leading hedge fund managers accounting for more than USD600 billion (QAR2.18 trillion) in assets under management have signed up to the standards. This includes some of the largest managers in the world, as well as start-up managers. The majority of signatories are in Europe, the United States (US) and Canada, but with a growing number in Asia and the Middle East. In addition, many large institutional investors support the adoption of the standards, including sovereign wealth funds, pension funds, endowments, private banks and others. How applicable are your standards across countries? The Hedge Fund Standards are globally applicable. Although many hedge funds operate across national borders, different regulatory jurisdictions mean regulation is inevitably fragmented. But managers in 14 countries have adopted the standards that apply globally. The key to this global applicability is the ‘comply or explain’ approach, which is flexible enough to 72 | The Edge
accommodate very different types of managers, different regulatory regimes and also take account of financial innovation, while at the same time providing investors with the information they need. Did the HFSB alter any of its standards post-recession? The Hedge Fund Standards have been updated three times since the financial crisis. In 2009 to 2010, the board addressed global concerns about how investor redemptions were handled in times of liquidity distress. The board has also strengthened the standards to put greater importance on having independent administration. In 2011, the standards were modified to make them more internationally applicable and strengthened investor protection and disclosure requirements. How has the recession affected the way hedge funds across the world operate? The financial crisis has been a catalyst in driving better operational practices. Investor expectations have significantly increased, and many of the practices enshrined in the standards have now become the global norm, including the need for independent administration and better disclosure of operational and investment risks. However, there are still many areas which need further work, including fund
“With increasing liquidity and investment choice, it is very likely that more hedge funds will establish a presence in the GCC.”
investment standards | business insight
improve their own risk management of hedge fund portfolios. The standards focus on disclosure in a number of areas, including valuation processes, commercial terms and investment policy, as well as risk management and governance. Better transparency and understanding by investors means better investment decisions. What is your take on the prospects of hedge funds in the Gulf Cooperation Council? Hedge funds play an important role in improving the quality of capital markets and in attracting other investors. The presence of hedge funds in a marketplace tends to increase liquidity and improve the quality of market price formation, thereby giving confidence to mainstream and less sophisticated investors to access these markets. Ultimately, this helps companies that want to access these markets by reducing the cost of capital. Hedge funds also bring other benefits to financial markets by creating sophisticated jobs, including jobs in service providers and investment banks. Broadening the existing capital markets and making them accessible to international investors, ensuring market integrity, and having a sound regulatory regime (which can include using our standards to complement local regulation) are key success factors for attracting both more hedge fund managers and investors. With increasing liquidity and investment choice, it is very likely that more hedge funds will establish a presence in the GCC. Will the MSCI upgrade of Qatar and the United Arab Emirates (UAE) bourses impact their hedge funds’ operations? The upgrade of Qatar and UAE from Frontier into Emerging Market (EM) status helps to raise investor awareness and will get the attention of specialist EM managers, who have the expertise to assess these opportunities. With Qatar being the richest country in terms of per capita income, will that positively impact hedge funds here? Qatar has signalled its ambition to develop as a thriving financial centre for asset management. There are a number of factors that encourage managers to locate in particular centres, including open and accessible markets and a good regulatory system, but access to a significant pool of domestic capital is certainly another attraction. Amelia Fawcett, chairman of the Hedge Fund Standards Board, says that with the upgrade of Qatar and UAE from Frontier to Emerging Market (EM) status helps to raise investor awareness and get the attention of specialist EM managers, who have the expertise to assess these opportunities.
governance, where the HFSB has just launched a Standardised Board Agenda, to help fund directors, investors and managers improve the quality of board meetings. Another key development since the crisis is the increase in regulation and regulatory scrutiny. How important is transparency in effective management of a hedge fund? The increased due diligence requirements of institutional investors goes together with much better disclosure. One area that is currently developing quickly is better risk transparency. Regulatory efforts to collect data from hedge fund managers are a catalyst for standardised risk disclosure. There are also industry initiatives to standardise risk data, and hedge fund investors can
Many of the regional sovereign wealth funds invest sizeable amounts. Do they look promising for hedge funds? Many leading institutional investors complement their portfolios with hedge funds for diversification or return enhancement purposes. The regional sovereign wealth funds are therefore an attractive audience for hedge fund managers. The HFSB Investor Chapter brings many of these players together with the managers to discuss how to improve our standards. What do you hope to achieve in your Qatar visit? We hope to have a good exchange of views and gain support from local investors for the mission of the HFSB to drive better standards in the industry around the globe. We also want to hear from investors in Qatar about their views on the next steps that need to be taken to improve standards in the industry, to the benefit of both investors and the managers. The Edge | 73
automotive | product reviews
Reviews
Porsche
Macan
A
t a casual glance it is easy to mistake it for a Cayenne, but Porsche’s new Macan – the Indonesian word for tiger - is its announcement of entry into the compact luxury SUV market. It is obvious that many of the design elements have been taken from previous Porsche models and integrated into the Macan’s design - the side-view window silhouette and the sloping roofline at the rear and the rear fenders, are a clear nod to the iconic 911 design.
All three models, the Macan S, Macan S Diesel and Macan Turbo are available in Qatar following its launch in late in March. The Macan S is equipped with a threelitre V6 twin-turbo engine, delivering 340 horsepower (hp), while the Turbo delivers an added 60hp through a 3.6-litre engine. The three models also come with all-wheel drive as standard. The Macan also has the recently developed Porsche Doppelkupplung, which transfers power as required and
almost free of interruption in tractive force. This enables the Macan S to accelerate from 0 to 100 kmph in 5.2 seconds, and when equipped with the optional Sport Chrono package, reaches a top speed of 254 kmph. Salman Jassem Al Darwish, chairman and CEO of Porsche Centre Doha, said, “Last year the Cayenne, our luxury SUV, proved our most popular model range and we are excited to expand our SUV offering, reaching a new group of customers.” The Edge | 75
products & reviews
Read it:
Smarter than you think: How technology is changing our minds for the better The debut book from well-known United States (US) technology journalist Clive Thompson, the title of Smarter Than You Think: How technology is changing our minds for the better is sufficiently self-explanatory. But from the very first chapter, entitled ‘The Rise of the Centaurs’ it is clear this book – which is of course essentially about how computers have changed the way humans think – is much more than it seems. Thompson starts his analysis of the overall subject with an analogy: the rise of computerised programmes in chess and how they have not only beaten some of the greatest grandmasters when pitted against them, but coupled with weaker players in man/machine competitions, have enabled the weaker players to also beat the world’s best with the help of artificial intelligence. This combination of the human brain and technology, writes the author, is a powerful concept, one that is not just enabling humans to achieve feats of the mind once thought impossible, but is also changing and expanding the very nature of human intelligence. One of the first examples he uses is writing itself. Before the gasoline of the Internet was ignited by the flames of the information explosion, Thompson argues that average people generated very few words. Now in the age of email, blogging and social media, we produce by his estimation about 35 million books worth of words a day – more than the entire US Library of Congress. All this writing, the author postulates, is helping to organise our thoughts and make us smarter. The book takes a look at studies on how search engines have affected human memory and recall and how gaming may have improved the human capacity for solving problems on a grand scale. On a social level, Thompson looks at studies on the concept of ‘ambient awareness’, whereby humans are said to be developing a new form of extra sensory perception about what their friends are doing and feeling influenced by their online activity. Using many examples from the Arab world and the Arab Spring, the political and social repercussions of social media on mankind are also examined in detail by Thompson with some surprising conclusions. In summary, if any of this sounds vaguely appealing to you then you should consider this easy to read and interesting book. Available at Virgin Megastores in Doha. 76 | The Edge
Read it:
Everything you need to know about making serious money trading the financial markets Following the trend of debut books with long titles this month, our second review focuses on a recent offering by The Edge contributor Simon Watkins. Simon is a former financial sector professional (he was director of Forex at Bank of Montreal and head of Forex at Credit Lyonnais) turned journalist. In life, of course, there are two kinds of people: those that make money from buying and selling currencies, stocks, commodities, bonds, etcetera. And those that don’t. Some of the latter, perhaps, aspire to be part of the former group, but don’t know where to start. This book, a comprehensive guide to playing currencies and the stock markets, would be an excellent place to do so. The intricacies of trading are clearly explained in a logical sequence, and though slightly heavy on technical terminology, augmented with many charts (something that would be impossible to escape in such an endeavour), Watkins’ smooth writing style keeps the reader engaged. Indeed, popular culture references such as fictional character Gordon Gekko’s quote “Greed is good” from the movie Wall Street and fascinating insights into the origins of the euro currency, for example, provide equal parts entertainment and useful background information for any aspirant trader. Referencing Gekko, Watkins also considers the moral implications of trading, sternly advising against greed; doing plenty of research before making trades; and on another level considers implications such as loneliness and other psychological pressures those taking on this fast-paced and stressful vocation might experience. In the final analysis, information is power and it’s all about the numbers, and the more you know about trading, the better at it you will become, deduces Watkins. Absorb the content of this helpful guide and you will certainly be in the category that could potentially make a fortune this way – rather than standing on the sidelines, wondering forever what this trading lark is all about. Available on Amazon.com.
products & reviews
Fujifilm X-T1 The X-T1 features a 16-megapixel lens, 1080p full HD video recording, a magnification ratio of 0.77x and a shutter lag time of just 0.005 seconds. The model also has an inbuilt time-lapse mode. The body of the camera is constructed with die cast magnesium making it very light.
Portuguese Sony Xperia Chronograph Z2 Classic
App
Reviews Evently
A locally developed app, Evently aims to curate a list of conferences, seminars, talks and other social events taking place in Qatar. A simple app with a straightforward user interface allows the user to browse by type of event. You can also sign up for their newsletter at www.evently.qa.
Documents
The Xperia Z2 tablet features a 10.1-inch display that delivers optimal colours and sharp images. The tablet is one of the slimmest at just 6.4 millimetres, weighs around 426 grams and comes in a WiFi only or an LTE and 3G enabled model. The Xperia Z2 has a Qualcomm Snapdragon 801 processor with 3GB of RAM.
In support of the Laureus Sport for Good Foundation, IWC Schaffhausen has released a limited-edition run of 1000 pieces of a new watch. One of the hallmarks of the special edition is the engraving on the back, that features the drawing by a 16-year-old Masha Nikulina which shows children skiing and playing in the snow. A portion of sales goes to towards the Laureus Sport for Good Foundation.
Acer K137
The K137 is a lightweight and portable projector weighing in around one pound with dimensions smaller than an A4 sheet of paper. Inputs for the device include a Micro SD slot, USB port and an HDMI port for connecting other devices. The projector also has the ability to play 1080p full HD and the option to stream from mobile devices.
While this is an old app, a recent huge update to its user interface to bring it in line with the iOS 7 design makes it a stand out among file managers. If you are a Mac user, the colour-coded folder function is also likely to be a plus. The app also allows you to sync your files with some of the biggest cloud services around.
Mailbox
When Dropbox bought Mailbox for USD100 million, the mobile app had not even been made available to the public. The app has proved popular because it changes the way people see email on their devices. Simple gestures such as swiping left and right allows the user to quickly go through their mails and sort the most urgent tasks from the rest.
The Edge | 77
Spillover Continued from page 66
Qatar Stock Exchange: MSCI upgrade and investment sentiments
Rashid Al Mansoori, CEO, QSE, says that the growth in the economy and awareness of the QSE is helping private and even family-owned companies move forward, and raising interest among companies for Initial Public Offerings.
a day mostly because many people and institutions have not traded or reviewed their portfolios since their initial investments which is natural given the rapid economic growth seen in the country. Lack of diversity in instruments is one reason for the lack of liquidity on the QSE. With the trading of government bonds commenced in June 2013, what has the impact on the investor community been? Is there a chance of listing of corporate debt instruments on the QSE? Government bonds offered a new asset class for investors that are significantly different from equities (both in terms of risk and return profile), according to Al Mansoori of QSE. “Regarding corporate debt instruments, most of them that are issued by Qatari corporations are denominated in US Dollars. We will consider them if they are issued in Qatari riyals,” says Al Mansoori who closes by laying out his plans for the exchange in the next two years by saying, “We will have grown the number of listed companies and have expanded our product range with bonds, Exchange Traded Funds and Real Estate Investment Trusts, but potentially also with derivatives.” The Edge | 79
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