The Edge November 2014 Issue 61 by Firefly Communications

Interview: QAFAC CEO Nasser Jeham Al Kuwari talks eco-driven initiatives

- November 2014

Vol. 6 No. 11

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contents November 2014 w w w.t h e e d ge. m e

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Interview: QAFAC CEO Nasser Jeham Al Kuwari talks eco-driven initiatives

- November 2014

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- QATAR’S BUSINESS MAGAZINE - Vol. 6 No. 11 - Issue 61 - November 2014

Vol. 6 No. 11

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Tweeting is becoming increasingly prominent as a communication activity in international business. But even with recent increases in usage, the Twitter community remains comparatively small in Qatar. So what opportunities exist here for businesses to reach out to their customers through this social networking service? Roisin Bailey finds out.

54 Nasser Jeham Al Kuwari, CEO of Qatar Fuel Additives Company Limited (QAFAC), in an exclusive interview with The Edge, talks about the GCC’s importance as a global energy, downstream chemicals hub is increasingly having a greater influence on a globally connected and integrated economy.

features

Focus on adding methanol to the global fuel matrix 54 Nesser Jeham Al Kuwari, CEO of Qatar Fuel Additives Company (QAFAC), in an exclusive interview with The Edge’s Aparajita Mukherjee, talks about how the upcoming Middle East Methanol Forum, will shape industry dialogue in the region and help broaden export markets for the company.

The psychology of an entrepreneur

Start-up failure rates are high, and only one percent of those getting past the first stage receive funding. So what makes an entrepreneur want to risk a steady job and a regular paycheck, and more importantly, what makes them successful? Shehan Mashood asks.

Business Interview: The journey of an influential driver of Arab youth employment, Dr. Tarik M. Yousef 66

More than three years in, as chief executive officer of Silatech, Dr. Tarik M. Yousef, in an exclusive in-depth interview with The Edge talks about his transition from academia to driving and executing youth upliftment programmes across the Arab world.

24-year-old Moroccan shopkeeper Hicham Bouchtat dreamed of expanding his shop, but financing it was always out of reach. After taking a loan through the Silatech-supported Boudour youth loan programme, Hicham has expanded his shop and continues to grow his business.

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contents page

sectors

Finance & Markets 27

Project funding is likely to adopt the bond route, with companies such as Qatar Petroleum having expressed support for this instrument.

Energy & Sustainability 33

The USD2 billion (QAR7.3 billion) Golden Pass joint investment by Qatar, ExxonMobil, and ConocoPhillips in the US has lain dormant for nearly three years as the advent of cheap shale gas there has reduced demand.

Real Estate & Construction 39 Market dynamics determine the business focus in Qatar, opines Cameron Gillanders of GHD in an exclusive interview with The Edge.

Tech & Communications 43

Vodafone Qatar recently announced its intent to purchase the entire share capital of Qatar National Broadband Network. If this deal materialises, what impact will it have on customers?

“Competition in the restaurant business – in any part of the world – is fierce, and the Middle Eastern markets are certainly among the most competitive,” says Daniel Del Olmo international president of the Applebee’s franchise chain.

Business Insight

The Edge talks with Daniel Del Olmo, the United States-based president of International of DineEquity, Inc., the company behind the successful and popular Applebee’s chain; and Richard Turner the vice president of FireEye for Europe, the Middle East and Africa (EMEA) tells The Edge that cyber security has gone from an issue specific to the IT department to something that executives are concerned about.

regulars From the Editor 10 Photo of the month 12 Business News 14 Qatar Perspectives 22 Products 81 6 | 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

Your brain generates enough electricity to power a lightbulb. Together, we can power cities. Our ideas have brought power to Doha for the past 17 years. Jaidah Electrical is Qatar’s connection to a bevy of products and services, including management systems, and an array of Low Voltage products and solutions. Here’s to bright ideas!

senior business editor aparajita mukherjee a.mukherjee@theedge-me.com deputy editor farwa zahra f.zahra@theedge-me.com special projects editor roisin bailey r.bailey@firefly-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@firefly-me.com | +974 33325038 sales manager adam kynnersley a.kynnersley@firefly-me.com | +974 66079716 deputy sales manager komal bharadava k.bharadava@firefly-me.com | +974 33036245 senior advertising manager UAE nesreen shalaby n.shalaby@urjuan-me.com | +971 507199707 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

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editor’s letter According to the International Labour Organization, as much as 40 percent of the world’s under-25s – also known as millennials – are without permanent employment. Some are highly qualified but simply cannot find gainful work and are forced to sit idle while the global economy passes them by. And it is not just a problem in the developing world. European countries have some of the highest figures of youth unemployment, with Greece leading at 61.5 percent, followed by Spain, Croatia, Italy and Cyprus, ranging from 56 down to 37 percent. Even France, the United Kingdom and Sweden have more than 20 percent youth unemployment, with the regional average at 23.7 percent. Clearly, something needs to be done globally, and the problem - which affects up to 300 million young people on every continent, some of whom it has been said may never find a job - has become so acute that a recent conference, Generation Jobless, was held in New York in the United States to address the situation. Here in the Middle East, youth unemployment is exacerbated by a recent population explosion resulting in higher than global average numbers of people under the age of 25 (who incidentally now number more than half of the world’s population). With a total youth unemployment rate of 27.2 percent, the rate is the second highest by region in the world. North Africa is the only other region above 20 points at 29 percent; both are more than double the global average. Arab youth unemployment has thus been the centre of much concern and attempts at finding solutions in the wider Middle East North Africa (MENA) region, with most emphasis placed on the struggling economies of Egypt, Tunisia, Palestine, among others, coming from bodies such as International Monetary Fund (IMF) and World Economic Forum (WEF) to name two. And yet for the most part, the Gulf Cooperation Council (GCC) states have been left out of this

conversation due to the economic cushion their hydrocarbon wealth has provided in the form of almost guaranteed employment from the state. However, a recent paper published by WEF entitled Rethinking Arab Employment: A Systematic Approach for Resource-Endowed Economies has highlighted the need for a focus on the immediate and long-term future of youth employment in the GCC. As part of the WEF’s New Vision for Arab Employment Initiative, the report highlights the fact that while overall numbers are still lower in the GCC states than most other Arab countries, youth unemployment rates are twice as high as the overall global rates. Qatar has the lowest overall youth unemployment ratio due to its small population (0.6 percent overall to 1.7 percent youth) and whereas in immediate neighbour Saudi Arabia, the difference is five to one. The stats for women under 25 are even more alarming, standing at 10.4 percent for women in Qatar and 55.5 percent in Saudi (in both categories most other GCC states rank somewhere in between). Rethinking Arab Employment is the result of engagement between business leaders, government, civil society, academia and the WEF, and underlines the complexity of the issue. Most of these countries have two economies, one run by the state and one by expatriate labour, and the potential repercussions of not preparing the current and future generations of nationals to adequately engage in the workforce are stark. Two of the main challenges in achieving this are to attract more young nationals into the private sector workforce and to facilitate entrepreneurship, both of which we touch on in this edition of The Edge. On page 60 Shehan Mashood takes a look at what it means to be the kind of person that drives a start-up and on page 66 Aparajita Mukherjee interviews Dr. Tarek M. Yousef, head of Qatar’s Silatech, an important stakeholder involved in and promoting youth employment and entrepreneurship in the region. While it asks many questions and provides many perspectives, the WEF report provides few answers. Obviously it is only the beginning towards solving this problem, a serious challenge affecting millions of under-25s the world over and jeopardising the future of the global economy.

While their numbers are lower in the GCC than most Arab countries, MENA youth unemployment rates Miles Masterson are twice the global level. Managing Editor 10 | The Edge

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Syrian sunset 12 | The Edge

photo of the month

People are silhouetted on the top of a hill close to the border between Turkey and Syria near Mursitpinar border gate in Sanilurfa, Turkey as they watch United States-led airstrikes over the Syrian town of Kobani in mid-October. Kurdish fighters in the Syrian city of Kobani pushed back Islamic State (IS) militants in a number of locations as the airstrikes on IS positions continued in and around the city. Since mid-September, more than 200,000 people from Kobani have fled into Turkey. (Image by Gokhan Sahin/Getty Images) The Edge | 13

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Caution has been advised for oil-producing states, as Qatar heeds recent International Monetary Fund (IMF) warning on plunging prices anyway, reports Simon Watkins The price of benchmark West Texas Intermediate (WTI) crude oil has fallen from around USD107 (QAR389) per barrel (pb) at the beginning of July to around USD81 (QAR295) pb at the time of writing, with the other benchmark – Brent – falling from about USD116 (QAR422) pb simultaneously to USD86 (QAR 313) pb. Questions have thus inevitably arisen about the ability of major oil producers – and by dint of the correlation between the two, gas producers, including Qatar – to withstand a sustained period of lower prices. Indeed, IMF managing director Christine Lagarde has warned, “Oil-dependent Gulf states will face budget shortfalls if the recent decline in oil prices persists,” adding that a sustained decline of USD25 (QAR91) pb in the oil price would reduce revenues of Gulf countries by eight percent of gross domestic product (GDP), “and put many of them into a fiscal deficit.” Despite initial balance sheet appearances, though, Qatar – the gas output prices of which are largely only a simply function of the global oil price - still has a lot of room to manoeuvre before it finds itself in fiscal difficulty. The fact is that from a fiscal sustainability point of view, what actually matters is not the level of debt, but the relative size of debt to GDP. “Countries with very low debt-to-GDP ratios [such as Qatar, with 34.25 percent at last reading] might be able to afford running primary deficits for a few periods without compromising their position, Damien Courvalin, senior commodities strategist for Goldman Sachs, in New York, tells The Edge. Although the IMF estimates that Qatar needs oil prices to stay above USD77.60 pb to continue running a budget surplus, Deutsche Bank’s Londonbased EMEA chief economist, Robert Burgess, is even more optimistic, highlighting that the emirate’s fiscal break-even price (for Brent) is an average of USD71.3 (QAR 260) pb for 2014 and USD76.8 (QAR 280) pb for 2015, the lowest level among the GCC states. This adds to the cushion built in to Qatar’s most recent budget, in which an oil price (WTI) of USD65 (QAR237) pb was assumed, but HH Emir Sheikh Tamim bin Hamad Al Thani has promised to cut government spending. The government has also reportedly rescheduled some further spending, with a 15 percent of scaling back of some its development projects earlier this year after government expenditures were more than nine percent (QAR21 billion) higher than budgeted in the 2013/14 accounting period, according to the Qatar Central Bank.

Q: Will the recent alarming drop in oil price affect Qatar’s economy?

The Kingdom of Saudi Arabia’s oil minister Ali Al Naimi was quoted at a recent meeting of GCC energy ministers that he is confident the oil price will soon recover. (Image Arabian Eye/Reuters)

8% The percentage by which the revenues of Gulf states could be reduced if the current decline in the oil price is sustained. 14 | The Edge

A: No. Qatar still has room to manoeuvre before it finds itself in fiscal difficulty due to falling energy prices.

by the numbers Qatar on the verge of economic boom driven by strong business activity

news

recent survey reveals Online paradoxes of MENA Internet use MENA Internet users are less concerned than others in the world about their personal information being collected online

MENA

33% showed little concern

Global

23% Marios Maratheftis, managing director and head of macro research, Standard Chartered Bank (above) spoke to The Edge on the global economic performance trends as the year draws to a close and what one can expect to see here in 2015. How would you sum this year up overall? 2014 was predicted to be a year when the emerging markets party would be over and they would be experiencing an economic crisis. To a large extent, and contrary to predictions, the emerging markets became much more resilient. Global growth is likely to be better in 2014 than in 2013, by a marginal degree, say around 0.5 percent and it is all because of the growth in emerging markets...2014 was predicted to be a year when the United States (US) would have revived economically which has not happened...Europe has underperformed and this is a pattern we need to get used to. The Gulf Cooperation Council (GCC) countries were expected to deliver very healthy rates of growth, especially Saudi Arabia fuelled by strong investment in infrastructure. Abu Dhabi was expected to deliver strong investment-led growth, as was Dubai because of the logistics and hospitality sectors. What will growth in Qatar look like in the coming years? Qatar right now is on the verge of starting another economic boom but this time it will be driven by the non-hydrocarbon sector largely led by the construction sector... This means that there are concrete delivery schedules which is slowly filtering through into other sectors of the economy. The main triggers are infrastructure projects, power projects, rail and metro projects, stadia, and these will add up to the logistical challenges that the country is likely to experience [and] construction sector cost inflation rate between 15 percent and 20 percent between 2016 and 2018, till the New Doha Port becomes fully operational. How much of the growth in regional economies has been result of the government policies? With the exception of Dubai where growth has been the result of logistics, hospitality and retail, in the rest of the GCC, the growth has been led by infrastructure investments which has been done at the behest of the government, in their effort to steer growth away from the hydrocarbon sector.

showed little concern

However, they oppose the reuse of their personal online data more than the global average

41%

27% World Average

MENA

50%

of MENA Internet users claim to be ‘very careful’ in their online behaviours

However

they are the most likely users in the world to open attachments, documents and emails from senders they don’t know. They are also among the least likely to scan computers and mobile devices for viruses.

They are among the most likely to accept to be ‘friends’ and make connections with people they do not know in person. Source: Rassed, Exploring Digital Impacts on Society. www.ictqatar.qa/en/rassed

The Edge | 15

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“Given that our markets are mainly in the US and Australia, there is a growing demand for environmentally-friendly fertilisers, and this is something we are working on now and want to develop.”

“This healthy growth demonstrates Qatar’s transformation into one of the GCC region’s top business, family and leisure destinations. We have to look beyond mere numbers and make a strategic shift towards quality tourism.” Hassan Al Ibrahim, chief tourism development officer at Qatar Tourism Authority, commenting on the H1 2014 increases in visitors to Qatar (eight percent) and hotel occupancy (seven percent).

Business News in Brief Euromoney set to examine Qatar’s funding opportunities QAPCO CEO Khalifa Al Sowaidi, speaking to Reuters reporters in late October on the company’s increase in ecofriendly products for export.

“We are trying to balance aid to West Africa and protection and the public health of New Yorkers. From an operational, efficiency point of view and from a safety point of view, the preferred option is to ask them to stay home.” New York governor Andrew Cuomo on the controversial decision in the United States (US) to quarantine medical professionals returning from Africa for the full three-week incubation period of the disease after a US doctor tested positive, the first case in the city.

16 | The Edge

Qatar is set to spend as much as USD205 billion (QAR 746 billion) on infrastructure by the end of 2018, prioritising sectors such as housing, transport infrastructure, power, water and sewerage facilities. The economic opportunities generated by this investment boom – for local, regional and international banks – will be under scrutiny at the upcoming Euromoney Qatar Conference, set to run in Doha from November 24 to 25.

Novo Cinemas Expands its Qatar Footprint Novo Cinemas, the Middle East’s largest chain of cinemas and a subsidiary of Qatar Media Services, Novo Cinemas’ first has announced property in Qatar came the signing of an with the launch of its flagship theatre at The agreement with North Pearl-Qatar in July. Gate Mall, Doha, Qatar. The deal represents Novo Cinemas’ second property in Qatar following its flagship launch at The Pearl-Qatar in July this year. The move comes as part of Novo Cinemas’ strategic growth plan in the region, and in Qatar in particular, as the cinema chain sets out to expand its reach to over 200 screens by the end of 2015.

The Edge | 17

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business in brief

Flagship store for Bosch home appliances launched in Doha

Darwish Technology and the German home appliance giant Bosch have announced the Bosch home launch of its premium appliances store in Doha will offer a flagship showroom in full range of major Doha. The showroom domestic appliances such as dishwashers, is located on Salwa washing machines, fridges, cooking Road. The opening of products. this showroom comes one year after Bosch appointed Darwish Technology as its exclusive distributor for the brand in Qatar. Bosch is a full-range manufacturer offering major domestic appliances such as dishwashers, washing machines, fridges, cooking products.

Qatar residents can now enjoy Mashreq’s banking services in the United Arab Emirates Mashreq Qatar is now making it possible for existing Mashreq Qatar customers (Qatari nationals and expatriates) to open current and savings account with Mashreq, United Arab Emirates (UAE). This non-resident service is aimed to enhance the banking experience of customers as they can use this account to invest in real estate and other investment products in the UAE. Gulf nationals can now open current accounts and receive an ATM/debit card and a cheque book. Customers from other nationalities can open savings account and transact through an ATM/debit card.

Aamal Company Establishes Aamal Optical Supplies Aamal Company QSC and Qatar Optics have announced the establishment of Aamal Optical Supplies WLL. Aamal Optical Supplies will be involved in the import, manufacture and distribution of prescription lenses, the import and distribution of contact lenses and other eye care products and services. The companies have also revealed plans about the opening of a specialised optical medical centre in the near future. The new company has no debt funding. Its capital of QAR 1 million has been contributed in cash by both parties to the partnership agreement. 18 | The Edge

Start-up Watch

Few details have emerged about Magic Leap’s ‘game-changing’ virtual reality product. However, many expect it to be a light-weight wearable device unlike the Oculus Rift which Facebook recently purchased for USD2 billion.

New US venture Magic Leap The idea that a secretive company based out of Florida claiming to be building hardware and software that will bring “cinematic reality” to augmented reality technology sounds far-fetched at best, even in the current tech focused craze we are in. However, what has lent credence to this venture is its most recent round of funding, where it raised a whopping USD542 million (QAR1.97 billion). by Shehan Mashood The level of secrecy highly unusual when raising such a large round of funding. The company’s corporate website is just as cryptic as their chief executive office (CEO). However, the few details that have emerged show the product is a lightweight wearable device. Enigmatic CEO Rony Abovitz seemed quite keen to point this out, which if true would significantly differentiate it from the cumbersome design of other virtual reality technology in the market, such as the Oculus Rift that Facebook bought for USD2 billion last year. Magic Leap has also released a few videos that show how the technology blends the physical space with the virtual, and if it can in fact replicate those videos, it could signal dramatic shift in the way we engage with technologies. “When you see this, you will see that this is computing for the next 30 or 40 years,” proclaimed Abovitz. This is not Abovitz’s first venture, his previous company a surgical robotics company sold for USD1.65 billion (QAR6 billion).

Magic Leap’s almost unbelievable rounding of funding is only made more impressive by the investors. Google has led the funding round, not Google Capital or Google Ventures but the parent company itself, which is very rare. Sundar Pichai, a rising senior vice president within Google in charge of Android, Chrome and recently Search and Ads, will also sit on the board. Magic Leap also attracted funding from some of the largest venture capitalists in Silicon Valley. And those that have had a chance to see the product have been fawning over it. Graeme Devine a gaming developer told Polygon, “I went out there and had lunch with the CEO. He was drawing pictures of black holes and deep physics on the paper napkins. I thought, this has been a waste of my time. Then I went to the offices and I saw something that I did not think was possible. I like to think I know technology and I am not easily impressed. I worked at Apple, but when I saw what they were doing, I just said, immediately, ‘how can I help?’.”

news

events

3–5 November

17–18 November

HSE Forum in Energy

Solar Qatar Summit

Events Listing 3-5 November Doha Goals Forum 4-6 November WISE Education Summit

Workforce, capital, government policies and brand image are among the main factors driving HSE policies, says John Paul, business development director at Fleming Gulf. (Image Corbis)

The Middle East is investing heavily in sustainable energy sources, and alternatives such as solar energy can work to reduce domestic consumption of hydrocarbon reserves. (Image Corbis)

This is the 10th anniversary of Fleming Gulf’s HSE Forum in Energy. The event serves the oil and gas industry by developing forums which tackle the latest technical and strategic HSE concerns in a way that is both relevant and practical to current issues faced by the industry. Through a series of in-depth presentations, case studies and panel discussions alongside an exhibition area, the forum will drill down to all levels of HSE practices that can be implemented successfully. The forum aims to serve the energy community and align an organisation’s goal with the management’s vision towards HSE. To meet the growing challenges of the industry, experts will discuss strategic approaches to achieving business goals without compromising on HSE.

According to organisers, the event is expected to attract over 300 senior level engineers, architects, project managers, developers, utilities operators, sustainability consultants and municipal authorities. It offers a unique opportunity for Qatar to discover the latest solar energy technologies from leading local and international suppliers. Research and development is essential in combating the harsh elements impacting the performance of solar technologies and through the deployment of innovation and effective government policy, Qatar will be able to harness its solar energy potential. The event will serve as a platform for project updates, knowledge sharing and high level networking for the solar industry.

17–23 November

Global Entrepreneurship Week

For the third year running, Qatar is participating in Global Entrepreneurship Week (GEW). On November 17 to 18 at the Marriott Marquis Hotel, there will be free workshops on a range of topics such as: How to pitch your business idea, the importance of PR and marketing, social entrepreneurship, how to successfully start your business, developing an entrepreneurial mindset, opportunities for entrepreneurs in the sports and leisure industry. There will also be a hackathon later in the week, hosted by Qatar Science and Technology Park and as part of the first International Women’s Entrepreneurship Day, there will be a gala evening event hosted by Qatar Chamber to celebrate Qatar’s Women Entrepreneurs. 20 | The Edge

3–4 December

Future Drainage Networks Qatar

Driven by Qatar’s premiere construction related event, Future Drainage Networks Qatar is a specialised conference for drainage and sewerage networks. The programme has been designed in collaboration with an expert conference advisory board to meet the requirements of designing, constructing, refurbishing, operating and maintaining effective sewerage and drainage networks in Qatar. Significant opportunities exist in the market including Ashghal’s Local Roads and Drainage Programme estimated to be worth QAR7.2 billion over the next five to seven years. The conference programme will feature leading case studies from across Qatar and the Gulf Cooperation Council.

10-11 November Middle East District Cooling Summit 10-12 November Brand Italy 11-15 November Qatar International Boat Show 16-19 November Strategy Leaders Qatar 18-19 November Middle East Smart Cities Summit 24-25 November Euromoney Qatar 26 November QAFAC-MI Middle East Methanol Forum 26-27 November MENA Public Transport for Large Events Summit and UITP Taxi Conference 1-3 December CSR Qatar 7-10 December ITU Telecom World 10-11 December World Innovation Summit for Health

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The Edge | 21

qatar perspectives

Qatar’s infrastructure programme faces ‘project indigestion’ challenges With investment in infrastructure acquiring a place of importance in global economic policy, insufficient capital stands in the way of meeting the demand. Anthony Holmes asks if Qatar, given its financial resources, is immune to the challenges facing such investments. Investment in infrastructure has become the policy du jour of economic development globally. Growing populations and increased urbanisation mean that every country needs an infrastructure programme. However, for most nations, their wish list of projects and, for some, even their vital needs remain aspirational. Qatar is privileged to have the financial resources to instigate a programme, which, in absolute scale and relative to its economic size, exceeds the dreams of most countries. But while the availability of finance is the determining criterion of most national infrastructure plans, it is not the only constraint. Historically, financial limitations have moderated the scale of a nation’s infrastructure and only in this era in the Gulf has this constraint been immaterial. Consequently, Qatar has been able to construct almost every vision of the facilities a modern, vibrant, international country might require. Is it possible that this lack of restraint has enabled Qatar to embark on an infrastructure programme that requires too much to be accomplished in too short a time? Is this what might be called ‘project indigestion’?

A key indicator is whether sufficient construction material is available given the demands of other regional development programmes and, if it is, does Qatar have the physical capacity to import so much material? Even if the required volume of material can be purchased, the pressure of regional demand will increase construction costs significantly, with materials inflation estimated to rise to 18 percent per annum by 2018. This will feed into the general economy increasing the cost of living and doing business, which will make Qatar a marginally less attractive place to invest. In the future, obtaining labour and professional expertise may also prove more difficult than previously. As global demand increases, the best technicians will recognise their international market value and offer their services to the highest bidder. We must also remember that the dominant feature of large complex infrastructure projects is that they tend to be delivered late and substantially over budget. Qatar has already experienced the problem of delays and cost increases associated with Hamad International Airport. The capital markets want the projects to which they are financially exposed to use the best management available to minimise delays and cost increases. Consequently they will be a driving force in enticing skills away from Qatar’s programme. It is a marginal cost for Qatar’s competitors to pay a much higher price for technical competency if securing these skills becomes a critical factor in obtaining the finance necessary to expedite their nation’s programme. Being able to afford these cost increases does not immunise Qatar from the problems

The capital markets want the projects to which they are financially exposed to use the best management available to minimise delays and cost increases. 22 | The Edge

of large-scale infrastructure development. The question that no one wants to ask is whether Qatar is approaching or has already exceeded these limits. A natural but crude process of prioritisation is built into the system, but it relies on the emergence of unexpected problems to delay some projects and thereby release resources for others. Muddling through in this way may be what will happen, as there is no institution with the mandate to evaluate the programme in its entirety or with the authority to decide which projects will be rescheduled to ensure available resources are optimally distributed. Perhaps the most challenging issue is that large projects always engage one or several prominent individuals emotionally. Each person or committee believes that their project is necessary and will advocate for it to be given priority. When these issues have been addressed, it will be necessary to consider how the infrastructure programme will create the vibrancy and diversification it was designed to serve.

Anthony Holmes is the co-founder and director of the Institute for Infrastructure Studies in the United Kingdom.

qatar perspectives Solving complex issues in Qatar’s healthcare sector Recent news of the imminent opening of Hamad Medical City – a three-hospital complex re-purposing the 2006 Asian Games’ Athlete’s Village in Doha – has been welcomed by many in Qatar’s public and private health services. But faced with one of the fastest growing populations in the world, alongside a government pledge to provide ‘health for all’, Qatar has much work to do when it comes to investing in health, writes OBG’s Oliver Cornock. The private sector is playing a key part in this new expansion too, with its role set to increase in the years ahead, as the new, National Insurance Health Scheme rolls out. A more competitive – and costefficient – health sector should result, if private providers can fully take up the challenge and target those areas where the public schemes do not often reach.

Growing needs

By June 2014, the population of Qatar reached 2.15 million, with a forecasted 7.3 percent growth from 2014 to 2016. In order to tackle this growing demand, the government has instituted a major overhaul of the health system, as well as the insurance sector. Under the new scheme, basic health needs for Qatari nationals – around 13.5 percent of the total population, according to QNB data – are being covered by the state, via Seha, the public provider for the National Health Insurance Company (NHIC). Meanwhile, the employers of non-Qatari residents will have to pay health insurance premiums to Seha for their employees, starting with white-collar workers in Q1 2015 and then blue-collar workers by the end of 2015. Visitors get accident and emergency cover, on possession of a health card, which can be purchased on arrival. Complicating this are several issues – primarily the adequacy of the medical 24 | The Edge

In order to tackle growing demand, the Qatari government has instituted a major overhaul of the health and insurance systems. infrastructure itself and its ability to handle what will be a universal health care system. In the overall strategy there is a clear move by national health planners towards boosting primary care – which takes a lot of the pressure off hospitals – and preventive care, with the National Preventive Committee organising awareness programmes to combat illnesses such as diabetes and cardiac-related disease.

Government support

There has also been a major investment in physical infrastructure. The country’s principal public health care provider, the Hamad Medical Corporation (HMC), is currently rolling out its Facilities Master Plan, which includes the development of Hamad Bin Khalifa Medical City (HBKMC). In recent years, HMC has opened three new hospitals, among other expansions at Hamad General Hospital and elsewhere. A wide range of tertiary care facilities is also being either constructed or expanded. At the same time, the Primary Health Care Corporation (PHCC) has been busy implementing the National Primary Health Care Strategy, 2013-2018. Under this programme, 17 new health centres are to be opened, nationwide, in addition to the 21 already established. Two of the new centres have been opened this year so far, five more scheduled to open in 2015. With basic health cover essentially provided by Seha, the private sector has been largely confined to providing additional, non-basic cover, along with services that Seha may contract out to specialist private facilities. This has led to some disappointment among insurers, who were hoping that the new scheme would allow them to offer competing policies.. Yet despite this, the scheme does

give patients the ability to choose the provider, public or private, who will treat them – potentially opening up further opportunities for private health care outfits. Another area of potential private sector growth will be in human resources . HMC is hiring some 3000 new staff for its three new hospitals, with a surge in demand for nurses, doctors, specialists, administrators and many other professionals underlying the health care reforms. Training and developing these staff will also be a major area for investment, with the private sector likely to be a prominent provider. “There is…a growing demand for more primary and sub-acute care,” Dr. Hanan Al Kuwari, HMC managing director, recently told OBG. “Private sector investment in these areas will help alleviate some of this demand, which is being handled by acute care hospitals. More capacity is also needed in the areas of skilled nursing facilities, psychotherapy, physiotherapy and related services.”

Oliver Cornock is regional editor, Middle East, for Oxford Business Group.

Guidelines Version 1 â&#x20AC;&#x201D; Work in progress

Contents: Project sukuks beat maturity mismatch, lower risks. 27. Qatari companies expect growth in headcount.30.

finance & markets

Project sukuks beat maturity mismatch, lower risks Project funding is likely to adopt the bond route, with companies such as Qatar Petroleum having expressed support for this instrument, according to Stuart Anderson, managing director, Standard & Poor’s (S&P) Ratings Services. In an exclusive interview with The Edge’s Aparajita Mukherjee, Anderson explains their outlook for the banking sector which, despite high liquidity, is not keen to fund infrastructure projects because of maturity considerations.

“

ur outlook on the banking sector,” Anderson told The Edge, “is that it is likely to see a slightly slower growth this year and into next. But we think that this just reflects some slowdown in terms of projects, though we see a very competitive and liquid banking sector. We’ve reached a point of sort of normalised margins.” As far as banking consolidation goes in the Qatar market, Anderson says, “I think from an analytical perspective it seems logical and/or possibly desirable, but depends on what the policy objective is with these banks.” In business segments, Anderson touched on retail and small and medium enterprises, both of which have witnessed recent competition in the banking sector. Commenting on the volume of core infrastructure projects that are in the pipeline in the Gulf Cooperation Council (GCC), Anderson outlined that, excluding leisure, tourism, shopping malls etcetera, it The Edge | 27

sectors | finance & markets

As far as many of the GCC countries go, S&P have clearly flagged lack of disclosure as one of the issues that does not affect the longterm sovereign rating of a country. touches USD1.2 trillion (QAR4.37 trillion). Anderson added, that though governments could afford to fund that themselves, “they’re not, and they won’t and they’ve communicated that. They are looking for independent financing, non-recourse financing, and private sector participation, but that is not happening.” This, according to Anderson, is creating a climate of successful project sukuks or bonds, which clearly will become more common in the days to come. “The trend has already begun in Saudi Arabia. In Qatar, companies such as Qatar Petroleum have made it clear, that they’re very supportive of project bonds, though detailed work on how to structure a bond, when there is a high degree of completion risk is still awaited. The main question is: on what basis does a bondholder underwrite the start of construction? So, everyone looks to how sovereign support can be structured into these instruments.”

Sovereign rating

Anderson also commented on the factors that S&P assesses while a country is on surveillance. “[This] is very much around any event that may occur which may IMF Global Commodity price Indices (Jan.2013 = 100)

105

100

85 1/13 5/13 Total

9/13

1/14

Energy

Sources : IMF and QNB Group analysis

28 | The Edge

5/14

9/14

Non-Energy

impact the rating, and this is true not just for a sovereign rating such as the State of Qatar,” he said, “but even for a corporate or bank rating, it could be an event specific to the rated entity. Or it could be an external event, which is going to impact the rating.” Anderson continued by explaining that from the day a rating is assigned, there is the lead analyst who is responsible for ongoing and continual surveillance. “In most cases that surveillance doesn’t warranty any action to be taken, but it’s always a case of constantly monitoring, distilling market information and understanding whether that has any substantive impact on the particular ratings they’re responsible for,” he said. Anderson added that there is an annual effectual review of the rating, which involves a management meeting. “In the case of a sovereign rating, it is with the government,” adding, “it’s an interesting point that so far as many of the GCC sovereigns go, we’ve clearly flagged lack of disclosure as one of the issues which does not affect the longterm sovereign rating of a country.” Commenting on the factors contributing to the rating affirmation, Anderson said, “I think the entry of Qatar into the MSCI emerging markets’ index has certainly helped market development. I think the development of stock market indices is a very supportive element for debt markets.” Anderson continued that another good example of a sound capital market is the Kingdom of Saudi Arabia, which is likely to open up its equity market to international investors. “Between now and 2020, we see that as accelerating the Initial Public Offering (IPOs) climate in Saudi Arabia which may see the 165 listed companies today comfortably touch 250 by 2020, though they should have a target of 300. It is clear that there are a lot of companies there which are potentially capable of going down the IPO route.” Anderson furthered that when the countries’ stock markets either open up or

Stuart Anderson, managing director, Standard & Poor’s Ratings Services told The Edge, “In Qatar, companies such as Qatar Petroleum have made it clear, that they’re very supportive of project bonds, though detailed work on how to structure a bond, when there is a high degree of completion risk is still awaited.”

are being introduced to important indexes, one sees more companies, which are disclosing their financials, which helps the cause of transparency. Discussing the predominance of familyrun enterprises and if non-disclosure acts as a deterrent, Anderson said that it is always relatively easy to rate a listed company. He continued, “We do have quite a few confidential ratings on private companies, and they’re happy to stay confidential and maybe they’ve gone down the private placement route. You know, it’s always tougher to convince a private company, especially in this region who has never disclosed their financials that they should go for public disclosure.” Anderson also hinted at an interesting scenario when he mentioned that the larger cap stocks could opt for dual listing in the region’s bourses. In this context, Rashid Al Mansoori, CEO of Qatar Stock Exchange has been quoted as saying that a large number of private companies have expressed their interests to get listed. There is a huge focus on familycontrolled businesses, closed Anderson, a sector that contributes to 80 percent of the national economy outside of hydrocarbons.

QAR

4.3

trillion

Volume of core infrastructure projects that are in the pipeline in the GCC.

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sectors | finance & markets

Employment market

Qatari companies expect growth in headcount Employment Trends and Managing End of Service Benefits in the Middle East, an annual report published by SEI brings out data relevant to the job and employment market. In an exclusive interview with The Edge, Jahangir Aka, managing director, SEI Middle East spoke about the Qatar findings. According to Aka, Qatar was one of the leading regions in terms of growth expectations with 89 percent of companies expecting growth in headcount, boosted in part by the positive expected impact of the 2022 World Cup, as 37 percent of Qatari companies surveyed expect to see a direct positive impact due to this event. In terms of human resource objectives, the two most common objectives for Qatari companies were talent management (74 percent) and employee performance and productivity (71 percent), emphasising the focus on maximising the productivity of existing staff. Qatari companies, said Aka, continue to use traditional and expensive methods of reward such as bonus and incentive schemes, with 69 percent of respondents companies doing so in Qatar. The downside of bonus-centric remuneration packages is that they frequently overlook a critical component of a reward strategy: a mechanism to encourage employee retention, besides the additional goodwill.

2014 findings

The report has highlighted the continued growth in regional economies and demonstrated the impact this is having on employment figures. Of the total respondents, 86 percent (as opposed to 80 percent in 2013) expect to grow headcount in the coming three years. A significant part of this growth is expected to come from smaller companies (with employees less than 200), with 55 percent of small 30 | The Edge

It is evident, said Jahangir Aka, managing director, SEI Middle East, that the concerted effort by governments in the region to diversify their economies by encouraging small and medium enterprises to set up through an assortment of free zones and other business friendly structures is working.

companies planning for annual headcount growth of 10 percent or more, compared to 35 percent at larger companies (with employees more than 200). It is evident, said, Aka, that the concerted effort by governments in the region to diversify their economies by encouraging small and medium enterprises to set up through an assortment of free zones and other business friendly structures is working. Additionally, 72 percent (as opposed to 68 percent in 2013) of companies surveyed expect salary increases above five percent per year and staff attrition rates continue to

69% of Qatari companies use bonus and incentive schemes to reward employees

74% of Qatari companies emphasise talent management

71% of Qatari companies emphasise employee performance and productivity

37% of Qatari companies expect positive spirals because of 2022 World Cup

89% of Qatari companies expect growth in headcount

The downside of bonus-centric remuneration packages is that they frequently overlook a critical component of a reward strategy – a mechanism to encourage employee retention besides the additional goodwill. drop. These three factors are leading to an exponential increase in the company’s end of service benefit liabilities. “Interestingly,” said Aka, “the number of companies that participated in the study grew significantly from 90 companies last year to over 140 in 2014. The growth in these figures not only points to an increase in companies’ liabilities, but also demonstrated the increasing interest in the end of service benefits and the maturing of the regional employment market.” This year, he added, the report focused on understanding the objectives of chief financial officers (CFOs) and human resources (HR) of companies around the region. “We found that they are under increasing pressure to improve ‘dollar cost productivity’ for their existing staff.” Aka revealed. “88 percent of respondents this year reviewed housing allowances, in light of the significant increase in rents across the GCC. With the rising costs, CFOs are under pressure to maintain profitability and as such are encouraging their HR counterparts to look towards total rewards rather than the traditional cash basic and bonus payouts.”

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Contents: Golden Pass terminal to be repurposed 33. GCC joins global electricity network 34. Return of Iran could change world gas industry 34.

energy & sustainability Reversing fortunes: this 2012 file photo shows the facility at Golden Pass (QP), originally planned for offloading Qatari gas America, GP may now be reversed to export US shale gas.

Qatar looks to convert Golden Pass import terminal in the US Necessity has become the mother of improvisation in the matter of the giant Texas Golden Pass (GP) natural gas import terminal, writes Simon Watkins. Originally intended to be a key conduit to bring Middle Eastern gas to the United States (US), the USD2 billion (QAR7.3 billion) GP joint investment by Qatar, ExxonMobil, and ConocoPhillips has lain dormant for nearly three years, as the advent of cheap US shale gas has dried up any gas demand from abroad.

atar Petroleum is now requesting permission to undertake a fiveyear conversion in excess of USD10 billion (QAR36.4 billion) of the import facility into an export one, from which it can facilitate the outgoing delivery of United States (US) gas, in alliance with ExxonMobil (original partner ConocoPhillips has bowed out of the potential export project). More specifically, the two companies propose to reverse some pipelines, using the existing gas storage tanks and docks, and adding three refrigerant plants to the complex. According to industry figures, GP could potentially export two billion cubic feet of gas a day (nearly three percent of current US

production), a nice bonus for ExxonMobil, especially as Qatar is scheduled to put up 70 percent of the conversion costs. Currently, this imbalance is not surprising as Qatar is arguably in a much more tenuous position than ExxonMobil in the gas market. Not only has the US shale gas completely usurped Qatarâ&#x20AC;&#x2122;s position in the North American gas market, but Russia has ostensibly stymied any significant expansion that Qatar may have envisioned in China (with the recent signing of the QAR1.45 trillion gas supply deal), and large Asian and European buyers are increasingly bargaining to buy gas at prices that approach the low American

Golden Pass could potentially export two billion cubic feet of gas a day, nearly three percent of current US production. The Edge | 33

sectors | energy & sustainability

The number of potential LNG export facilities coming online in the US in the near future. gas price, frequently on the spot market. This is far below Qatar’s preferred price, which is indexed to higher global oil prices. Moreover, the future for Qatar as the world’s swing producer of gas looks increasingly under threat of competition from Australia, for one – most notably in Asia, given the shipping advantage that its geographical position affords it – currently constructing liquefaction plants that will more than triple its annual LNG-manufacturing capacity to 85 million tonnes by 2018, surpassing that of Qatar. Moreover, US companies have sought US Energy Department approval for 37 new LNG export projects, much of whose output will marginalise any plans that Qatar has in the European market. The reversal of the GP facility should therefore be a welcome development for the country in the near future.

Power generation

GCC joins global electricity network The Gulf Cooperation Council Interconnection Authority (GCCIA) recently decided to link to the GO-15 Reliable and Sustainable Power Grids, which represents 80 percent of total global demand on electricity, potentially saving the GCC USD1.8 billion (QAR6.4 billion) annually in fuel operating costs over the next 25 years. Besides this saving and the added benefit of reducing power outages, the body’s decision to join the network looks entirely logical, according Daniel Dobbeni, chairman 34 | The Edge

Regional delegates at the Third Regional Power Trade Forum in Abu Dhabi discussing the GCC’s entry to the global electricity organisation, GO-15.

of GO-15. “The vision and missions of GCCIA are consistent with our vision of innovative thinking, technology advancement and industry leadership,” he highlights, “and we believe that the GCCIA joining GO-15 will be beneficial for a wide range of consumers in the six GCC States.” The GCCIA ranks 16th globally in terms of the size of the energy exchange, and the GO-15 provides electricity to 3.4 billion consumers on six continents and is responsible for integration of 2518 gigawatts of generation capacity into the grid, 21 percent from renewables. The announcement, made at the Third Regional Power Trade Forum in Abu Dhabi recently, aligns the GCCIA with GO-15’s global network coverage, which includes two in the US, the United Kingdom’s National Grid, REE in Spain, RTE in France, Terna in Italy, Eskom in South Africa, and networks in Brazil, Australia, India, China, South Korea, Japan, Russia and Belgium, Matar Al Neyadi, chairman of the board of directors of the GCCIA, added that since 2009, the GCC grid had prevented over 1072 incidents of power blackouts through direct instantaneous transfer of required power across the grid, thus avoiding losses that could have been triggered due to full and partial interruptions. Moreover, a recent GCCIA economic report, submitted to the Electricity and Water Cooperation Committee (which comprises GCC electricity and relevant water ministries), highlighted that based on the actual rate of savings already made, overall savings in fuel operating costs over the next 25 years may well be more than the amount projected in the initial feasibility study of the project, which thus far stands at around USD5 billion (QAR 18.2 billion) worth of investment. Aside from this, the Third Regional Power Trade Forum’s 2nd GCC Executive Roundtable Meeting on Power Trade was noteworthy for further key recommendations. These include setting common and cost-effective pricing for

all power trade transactions in light of the differences in the inputs and model for calculating energy prices in each of the GCC countries and making optimal use of the interconnection grid by exploiting economical opportunities for all member states.

Gas markets

Expert: lifting of Iran sanctions a ‘game changer’ for global gas sector An agreement between Iran and the five permanent United Nations Security Council members: the United States, the United Kingdom, France, Russia, China plus Germany (P5+1) on the Islamic republic’s controversial nuclear programme could prove to be a disruptive force in global gas markets, the secretary general of the Gas Exporting Countries Forum (GECF) said. “The lifting of sanctions on Iran would be a game changer for world gas markets. Iranian gas will be needed, both economically and politically,” Dr. Seyed Mohammad Hossein Adeli, secretary general of the GECF told the 4th Gulf Intelligence Energy Markets Forum in the United Arab Emirate (UAE) of Fujairah in late September. Global gas demand is seen more than doubling by 2050, driven partly by economic

energy & sustainability | sectors

2.000

Largest proved reserve holders of natural gas, January 2014 trillion cubic feet

1.500

1.688

1.000

1.193

265 291

372

Russia

Iran

Qatar

United States

Saudi Arabia

Turkmenistan

Venezuela

United Arab Emirates

Algeria

Nigeria

159 181 196 215

500

885

Source: EIA

growth but also a trend towards greater diversification of the world’s energy mix, Adeli said. He added that the share of gas in the global energy mix was expected to double to about 26 percent in the future. The 13-member GECF, whose members include Russia, Qatar, the UAE and Iran, was set up in 2001 to foster closer cooperation between gas exporting states. Iran, holder of the world’s second-largest proved natural gas reserves after Qatar, has been badly affected since United Nations’ and international bilateral sanctions were imposed on the country in 2006 and 2010 on top of existing US sanctions, hampering the country’s efforts to gain access to oil and gas technology and international expertise. However, after years of isolation, Iran is now positioning itself for the potential lifting of international sanctions, a move that would revive the Islamic republic’s ailing hydrocarbons sector, pave the way for its return as a major oil and gas exporter, and provide much-needed stimulus to the domestic economy, and potentially alter the global gas industry paradigm.

Dr. Seyed Mohammad Hossein Adeli, secretary general of the GECF, hosted the recent 4th Gulf Intelligence Energy Markets Forum in the UAE.

The Edge | 37

Contents: Differences between Qatar’s construction industry and developed markets 39. Should Qatar’s hospitality sector diversify into themed hotels? 40.

real estate & construction Drivers of Qatari construction industry differ from developed markets

The main workload for GHD in Qatar comes from the property and buildings sector, which is reflective of the local needs. GHD provides complete design and construction supervision services for building projects such as the Oryx Rotana hotel in Doha, pictured here. (Image courtesy GHD)

Market dynamics determine the business focus in Qatar, in the opinion of Cameron Gillanders, who, in an exclusive interview with The Edge’s Aparajita Mukherjee focuses on how the drivers of the construction business in Qatar are different compared to more mature economies.

he drivers behind construction in most of the mature economies of the world are quite different compared with those in Qatar, according to Cameron Gillanders, operating centre manager, Qatar, GHD. Elaborating on the differences, he continued that in Qatar it is about national development, national image, the projection onto the world stage. “Thus, projects are ambitious and driven by long-term national imperatives; and consequently, decisions are made differently,” Gillanders offered. “The great challenges in the construction sector relate primarily to the complexities of delivery, which exist all

around the world,” Gillanders explained, “A challenge for Qatar, however, is to be able to draw on the experience that exists elsewhere, but not necessarily within the country. And that creates, I think, a range of challenges, for locals, for expatriates, for contractors, for clients, for consultants, across the spectrum.” Being a global company, operating in Australia, China, Qatar, the United Kingdom, Canada, New Zealand, the United Arab Emirates, Chile, the Philippines and the United States, GHD has wide experience in handling clients in a range of sectors. What is the one learning that the company has gathered that can help to serve the local

clients? “Probably the one learning that is applicable anywhere we work,” Gillanders answered, “is that our clients are seeking relationships, irrespective of whether they are in the public or private sector.” GHD, according to Gillanders, has learnt from its experiences that the best business is done between organisations that know each other deeply, understand each others’ business drivers and have respect for each other. That is something GHD tries to bring to its business relationships around the globe. He added, “Our clients here notice that we live the corporate values that we believe in, and work in an environment of trust, commitment and collaboration.” The Edge | 39

sector name | banner heading

Travel and tourism sector

Should the Qatar hospitality sector diversify into theme park hotels?

Cameron Gillanders, Qatar operating centre manager, GHD, said challenges in the construction sector relate primarily to complexities of delivery.

Business for local needs

Having started as a water-focused consultancy in Australia, GHD has developed other areas of practice such as environment, transportation, energy and resources, property and buildings. Commenting on the business drivers here in Qatar, Gillanders says that the main workload for GHD comes from the property and buildings sector, which is reflective of local needs. “We foresee that this trend will continue as the local economy will need hotels, stadium projects, railway stations and other categories of public-built infrastructure,” said Gillanders. Talking about the current pipeline of local business, Gillanders mentioned, infrastructure in roads, water, sewerage, “and we have a growing business in the environmental services, which is very exciting, as we watch the authorities in Qatar become more conscious of the impact of development on the environment”. Citing a case in point, Gillanders said, “It is exciting to see the likes of Lusail for instance, being very focused on the performance of their contractors, and being able to report positively to their stakeholders, that they are protecting the valuable marine environment around the coastline.” He added that projects such as the New Port Project are positive examples of environmental stewardship. The government is leading many of the efforts to drive environmental change, and there are also positive signs across the property and buildings sector more generally. The reason behind this difference in mindsets seems to be because the property buildings sector remains very cost and image driven, Gillanders furthered. 40 | The Edge

With 125 hotels under construction to add to Qatar’s current base of 108 hotels and serviced apartments, can diversifying the hospitality sector with theme park hotels boost Qatar’s tourism sector? by Farwa Zahra According to a Q3 report recently published by DTZ Qatar, about 85 percent of the 108 hotels and serviced apartment properties in Qatar are either four or five star. With a current number of 16,700 available hotel keys, Qatar is expected to add 21,812 more keys once the 125 under-construction projects are complete. The country is estimated to increase hotel rooms by about 25 percent in the coming 12 months. With an increasing number of tourists, hotel occupancy rates have improved while the average daily rates have gone down. Furthermore, DTZ forecasts that “despite recent performance, and increases in demand over the medium to long term, the large supply pipeline of hotel developments will continue to put pressure on performance metrics in the hospitality sector”. For hotel developers and owners, this pressure would also mean dealing with competition through innovative strategies. While there is oversupply in Qatar’s hospitality sector, much of the current stock is patterned on conventional hotel practices. One way of diversifying away from traditional city hotels is through theme park hotels. According to a report released by Colliers International, DNA of Theme Park Hotels, within the Gulf Cooperation Council, Qatar and Oman have the lowest number of such attractions. “Even though the region is not lacking in amusement and entertainment

25%

Estimated growth rate of Qatar’s hotel keys in the next 12 months.

centres, the concept of having lodging facilities within or close to the destination is still underdeveloped,” states the study. According to Colliers, global research suggests that theme park hotels located within the theme park itself have an average occupancy level of two to 10 percentage points higher than city hotels. But are theme park hotels favourable for Qatar’s growing MICE (meetings, incentives, conferences, and exhibitions) tourism? While predominantly aimed at families, theme park hotels also offer opportunities within the MICE sector if equipped with specific facilities. Colliers’ study suggests that “all major theme parks are catalysts for MICE tourism”, providing evidence that Singapore, Anaheim, Orlando and Seine-etMarne experienced a rise in MICE tourism due to theme parks and attractions. “Having visitors stay within the vicinity can extend visitors’ length of stay and increase the tendency of repeat visits,” agreed Filippo Sona, head of hotels at Colliers International, Middle East and North Africa, “which generates significantly larger returns than from theme parks alone.” By focusing on this untapped market, theme park hotels could thus create a competitive edge locally and regionally.

Hotels located within a theme park can have an average occupancy level of two to 10 percentage points higher than city hotels.

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Contents: Bringing competition to Qatar’s broadband network 43. Addressing customer service in healthcare with technology 44.

tech & communications

Bringing competition to Qatar’s broadband network Legend

West Bay Lagoon

The-Pearl Qatar

Al Duhail

Doha Al Waab

Al Rayyan

Old Airport

Hamad International Airport

Abu Hamour

Ooredoo fibre available Ooredoo fibre announced Qnbn fibre available Qnbn fibre announced Choice of two operators Industrial Area

This map shows the rollout of fibre in Qatar according to website data as of October 2014.

Al Wakrah

Vodafone Qatar recently announced its intent to purchase the entire share capital of Qatar National Broadband Network (Qnbn). If this deal were to go through, what impact will it have on customers who are in most cases forced to go with a single service provider? by Shehan Mashood

n late 2013, the Ministry of Information and Communications Technology (MICT) launched the Qatar National Broadband Plan. One of the milestones of the ambitious 10-year plan was to give every resident the ability to choose from two broadband providers irrespective of where they lived, by 2016. The driving force would be to foster competition between the two current service providers. The Qatar National Broadband Plan states, “Robust competition is a key driver of consumer welfare and innovation. It lowers prices, improves quality of service.” However, at present there is limited competition in the

fixed-line market. Most residents only have access to one service provider in their area. The 2016 deadline corresponds to the completion of a national broadband network deployment. This was supposed to be the function of Qnbn, which would roll out a passive infrastructure that would then give equal and open access to both service providers. The potential acquisition of Qnbn by Vodafone Qatar, however, would alter the dynamics completely. The strategy pursued by creating Qnbn was to foster competition in the market based on service, where the two companies would compete on price and services offered. With the purchase

of Qnbn, Vodafone Qatar would compete with Ooredoo on two levels - rolling out its own physical infrastructure in addition to competing on service. However, the rolling out of broadband network infrastructure in Qatar is fraught with challenges. Gaining access to rights of way to existing infrastructure is complex and time-consuming, states the MICT report. Kyle Whitehill, CEO, Vodafone Qatar told The Edge, “These are challenges that Vodafone has faced in a number of other markets where there is an overwhelmingly dominant incumbent fixed-line service provider,” adding, “We are working together The Edge | 43

sectors | tech & comms

with both the Ministry at a policy level and the Communications Regulatory Authority to address these concerns in a way that will provide a level playing field for competition and support the national objectives.” It is also proving to be a major challenge in newer real-estate developments, where developers working to tight deadlines are opting to partner with operators on an exclusive basis. This creates additional problems, for example, Qnbn has secured contracts with developer Barwa Real Estate and are in the process of or has already completed the roll-out of fibre. This of course meant that Ooredoo would potentially have had access to these areas, but the new deal would mean Vodafone would exclusively own the infrastructure, again creating less competition in certain areas unless new regulation is introduced. However, Whitehill says, “We expect intervention should only be necessary in some instances to address market imperfections arising on account of the anti-competitive behaviour of dominant

service providers.” Ooredoo, is in a far better position, having much of the fixed-line market to itself. The company is currently in the process of rolling out its own fibre network. The former monopoly which owns the copper network installed through most of the country is using its existing access to convert rapidly to fibre. Whitehill explained that one of the key drivers behind the proposed acquisition of Qnbn was speed to market. Newer areas and projects are, however, proving to be a challenge. The broadband plan states, “While regulatory instruments are being developed to avert this, the complexity behind the enforcement of regulatory decisions means that such instruments are not always implemented, leaving the door open to a situation of monopoly in these developments. This will ultimately affect both investment sustainability and the establishment of true competition.” There are many details that need to be worked out before the Vodafone and

Qnbn has had limited success with rolling out its broadband network in Qatar. (Image Flickr Qnbn)

Qnbn deal goes through, not the least of which being the price, which according to a Vodafone Qatar press statement is valued at QAR210 million. It is clear that whether the deal materialises or not, the market is in need of more regulatory intervention if the goal of providing every resident with choice is to become a reality.

Healthcare

Addressing customer service in healthcare with technology According to a recent report by Alpen Capital, Qatar will experience a 14.4 percent growth rate in terms of rising costs and demand for healthcare related services from 2013 to 2018. The healthcare sector in Qatar is also expected to be the fastest growing across the GCC. The technology sector could offer significant opportunities, writes Shaheen Haque The healthcare industry has had to react quickly to new innovations. While employing the most skilled professionals and investing in the latest facilities goes a long way in establishing a brand image, there are today many more factors that play a role in drawing in patients. Through the Internet and social media, patients make choices about a healthcare provider, they research their options through various channels in an effort to ensure they make the most educated decision. Once this is done, the customer experience helps guarantee future business with both them and their peers. The expectations of patients continue to change in an effort to get quicker 44 | The Edge

access to information they require. The idea of patient engagement is providing patients with access and allowing them to communicate with the provider at the time and in a manner they prefer. The downfall for many providers is waiting for patients to reach out to them before they provide information. Cost-cutting measures, penalties and potential loss of business are creating an increasing need for automation around engagement practices. Healthcare providers have to be able to provide a secure, efficient and effective process to engage with patients if they hope to attract and retain their business. Through increased integration, improved customer service strategies and

assessment of current business processes, organisations in Qatar can make the decision to move to a more innovative and proactive strategy for patient engagement. What separates the healthcare industry from others is the idea that healthcare providers are dealing with real people, their health and wellbeing, and trying to do what is best for them. The services being rendered and sold are much more sensitive in nature, so a quality patient journey can be the perfect place to add personalisation and care to services. And the contact centre can serve as a great starting point and central location for this change.

Shaheen Haque is the territory manager, Middle East and Turkey, at Interactive Intelligence.

to tweet or not to tweet ?

social media | cover story

How businesses can harness Twitter effectively in Qatarâ&#x20AC;&#x2122;s competitive environment

Tweeting is becoming increasingly prominent as a communication activity in international business. But even with recent increases in usage, the Qatar Twitter community remains comparatively small. So what opportunities exist here for businesses to reach out to their customers through this social networking service? Roisin Bailey finds out.

ccording to ictQatarâ&#x20AC;&#x2122;s report, Social Media Use in Qatar â&#x20AC;&#x201C; Key Insights from 2013, at 88.1 percent, the country has the highest individual Internet penetration rate in the Middle East. The Arab Social Media Report 2014 also shows that Qatar now has the highest percentage in terms of Facebook penetration in the region, with 61 percent of its population using the popular social network. And although Twitter has a much smaller penetration in Qatar than Facebook (at only 5.59 percent), this still indicates a high usage of Twitter relative to other Arab countries. Moreover, Twitter and Facebook usage among Qataris is equal at 65 percent, while younger people in Qatar (under 25s) have a 45 percent penetration on Twitter, according to Entertainment Media Use in the Middle East, a 2013 six-nation survey conducted by Northwestern University in Qatar, in partnership with Doha Film Institute. The Arab Social Media Report 2014 also reveals that Twitter usage in the Arab World has increased by 54 percent since May 2013 and estimates Qatar has around 112,000 active Twitter users. The average person in Doha has at least two mobile phones, broadband coverage has improved and WiFi is widely available. With a near certainty that these numbers will increase, is it time for Qatar-based businesses to join the conversation? Twitter launched in 2006, but it is only in recent years that businesses have embraced its power as a means to The Edge | 49

sectorstory cover name| |social banner media heading

retweet There were more than 5.7 million active Twitter users in the Arab World as of March 2014 publishing on average 17 million tweets a day. (Image Reuters)

“Many companies, small and large, have been gaining tremendous success due to managing Twitter well and, at the opposite side, large corporations have suffered due to mismanaging Twitter.” - Indica Amarasinghe, project manager at ictQATAR’s Digital Industry Development Department.

50 | The Edge

communicate information relating to products, brands or company reputation. The medium still poses challenges, however; for many, it is unknown ground while for others, the uncertainty of how to properly engage with a community in just 140 characters remains a formidable barrier. In order to learn more about Twitter penetration and usage in Qatar and the challenges and opportunities it presents, The Edge spoke to Qatari national Ammar Mohammed, digital marketing advisor and trainer at Social Media Solutions and the highest Twitter influencer in Qatar, according to social media ranking Klout. We also met Damian Radcliffe, the Digital Impact and Emerging Technologies section head at ictQATAR’s Digital Society Department and Indica Amarasinghe, project manager at ictQATAR’s Digital Industry Development Department. Mohammed believes Qatar-based businesses should be taking advantage and building awareness through Twitter. He maintains that being active on Twitter can provide companies with a captive audience. “You can increase your followers and you can build your brand – as yourself or as a company,” he says. Amarasinghe agrees: “This offers a captive audience to small and medium enterprises (SMEs) that wish to use this platform effectively. As of now, we see some of the industries such as retail, restaurants, automotive, fashion use Twitter as a part of their campaigns.” When using Twitter, it is important to be aware of who can be reached through the platform and to understand its limitations. Radcliffe enforces this, stating, “In terms of Twitter, this remains a very popular platform amongst certain demographics, but it punches above its weight too. Given the media headlines that the platform often generates, it is easy to forget that Instagram is actually a more popular platform amongst United Arab Emirates and Qatari nationals, or that much of the region’s activity on Twitter originates from Saudi Arabia, rather than across the region as a whole.” Amarasinghe highlights the importance of targeting the right demographics. “In order to reach out to your specific audience, SMEs need to use some tools to help connect with people who are in their local area. Targeting your Tweets to a specific location ensures that you are only interacting with potential leads.”

The challenges

According to Mohammed, professionals are not always up-to-date on what is trending and so are often unsure as to what themes to Tweet about for their business purposes. He explains that in order

social media | cover story

“The conversation in English and Arabic is totally different. We live in one country and we need to understand each other, respect each other and engage with each other through multiple languages.” - Ammar Mohammed, digital marketing advisor and trainer at Social Media Solutions and the highest Twitter influencer in Qatar.

understand these kinds of updates to technology”. The Arabic/English language divide, according to Mohammed, is very apparent on Twitter in Qatar. “The conversation in English and Arabic is totally different. We live in one country and we need to understand each other, respect each other and engage with each other through multiple languages,” he says. The incidence of Arabic Tweets has increased significantly in recent years, and as of December 2013, Arabic shared fifth place with Portuguese as the most popular language on Twitter, with a six percent share. “That said,” adds Radcliffe, “we are seeing more and more Arabic content on Twitter, and the relatively low penetration levels of the network also mean that there’s scope for the network to grow too.”

Twitter etiquette

to overcome this, a business needs to know what is happening both in the world around it and online so it can be in a position to lead the conversation. Another challenge Mohammed maintains is keeping abreast of the regular updates to social media channels, citing the recent addition of the Twitter Analytics Dashboard as an example. While it can be a useful tool for companies, Mohammed also explains, “It’s a headache for the end user to

Social Networking Sites Used Sites used (%) Facebook

Twitter

Google

Instagram

100% 80% 60% 40% 20% 0% Qatar

Bahrain

Egypt

Jordan

Source: Media use in the Middle East, Northwestern University Qatar

KSA

Some companies prefer more traditional methods for communicating with their customers, and there are many guidelines and policies in place regarding social media use, particularly in larger corporations. The Edge asked the experts how the technologically-challenged business can effectively join the online conversation. “Don’t get into it if you are not fully aware of its power both positively and negatively,” Amarasinghe advises first. “Don’t get carried away with a fad that you have to be on Twitter. It could do you more harm being in it if not managed well. Join up when you are ready with your Twitter strategy. Many companies, small and large, have been gaining tremendous success due to managing Twitter well and, at the opposite side, large corporations have suffered due to mismanaging LinkedIn Twitter,” he adds. Reflecting the statistics about youth penetration on Twitter, Mohammed believes it is important to focus on this younger generation. He explains that they must be related to in a way that reflects their attitudes and interests. “A lot of companies use formal language so the end user cannot engage with this kind of content. For example, most social media users are younger, so if you don’t speak in their language they will not engage with you.” Mohammed becomes frustrated when he sees UAE companies using Twitter when they are not up to date with the latest trends. Omitting the company’s The Edge | 51

cover story | social media

Twitter handle or other social media icons in advertising collateral and not using the latest version of logos are common failures. He believes that different teams within a business need to work closer together to avoid these errors. “They failed because they didn’t understand how the design can work with marketing, communications, public relations and social media.” Amarasinghe continues, “There are hundreds upon thousands of Tweets going live every minute, so cutting through the clutter has to be a top priority. Selecting the right Twitter handle and hashtags is also important. This has to reflect who you are and what are your messages.” When asked for his top tips on using Twitter for business purposes, Amarasinghe outlines four points: “Be real, always be there, [customer relationship management] is key and monitor your competitors”. Similarly, Mohammed summarised it into three main steps – build good content that reflects the customers’ needs, package the content with the most appropriate style, and understand the trends.

Social Media in Qatar Insta

76% of people in Qatar use social networks

Use of social media by businesses in Qatar

Overall: 24% Small: 19% Medium: 30% Large: 34% Very large: 47%

Twitter penetration in the GCC (as of March 2014)

What next?

The social media space is constantly evolving with new players emerging. Different networks are gaining popularity in different countries and this is the same in the Arab World, where social network penetration is increasing year on year. For example, Doha has become the region’s biggest ‘selfie taking’ city in the Middle East and Instagram is one of the most popular social networks here. So how do the experts see the future developing? According to Radcliffe, the challenge will be to see if Twitter can grow in an increasingly competitive social media environment, or if people will become what he terms “Twitter tired” and start to migrate more towards newer platforms such as Path and Snapchat. Or are users going to continue to supplement their Twitter usage with increased levels of activity on more closed networks such as WhatsApp and Viber? “It’s hard to say, he offers, “but it’s going to be interesting to watch and find out.”

2.7% Oman

4.5% Bahrain

6.1% UAE

5.6% Qatar

8.1% 11.4% Saudi Arabia

Kuwait

Average time spent socialising online in Qatar (In hours)

“We are seeing more and more Arabic content on Twitter and the relatively low penetration levels of the network also mean that there’s scope for the network to grow too.” - Damian Radcliffe, the Digital Impact and Emerging Technologies section head at ictQATAR’s Digital Society Department.

3.9

3.2

2.9

2.8

Qatari nationals

Asian expats

Arab expats

Western expats

Source: Media use in the Middle East, Northwestern University Qatar and ictQatar.

52 | The Edge

social media | cover story

you are what you tweet 10 Tips For Small Businesses Using Twitter In Qatar

by Peter Ganney, digital campaign director, Hill + Knowlton Strategies. 1. Have clear objectives – Establish a focused objective and stick to a strategy that seeks to achieve it. Being present on Twitter for the sake of it is not a strategy. Are you looking to be a thought leader? Do you want to provide better customer service? Are you trying to drive more sales? Figure out what you want to do and then do it. 2. Create a great profile - Your profile ultimately defines your brand image on Twitter. Make sure it reflects everything that your company is about, from the profile picture to the biography. Your first impression can make a lasting impression. 3. Be visible - Make sure there are clear links on your homepage to your Twitter account. Use share and follow buttons on individual pages or pieces of content. In addition, look to drive people offline to online with your handle printed on all marketing material.

6. React - Keep an eye on Twitter trends. Tailor the trends according to your location and include the emerging hashtags in your Tweets to get more visibility. However, you must be sure to use the hashtags intelligently and make them part of your Tweets. Using irrelevant hashtags at the end of every Tweet will only make you look like a spammer and, obviously, hurt your brand’s image. 7. Engage - Start retweeting interesting posts from others. Participate in discussions. Search on your company name and find customers with problems – then solve them. 8. Repeat yourself – If it is worth saying once, it’s worth saying again and again and again. Not everyone is online all the time so you need to make sure that your best Tweets are seen by as many of your followers as possible. Spread similar messages throughout the day so that they appear in all your followers’ timelines.

4. Follow those who matter – If it is your customers who mean everything to you, then they are the ones who you should be following, as well as the most influential people in your industry.

9. Analyse – Ensure your analytics function is switched on for your Twitter account (go to analytics.twitter.com). There is a lot of data available to help you identify which Tweets got the highest engagement rates, how many people saw them and what time of day works best for you. Use this data to tweak what you post going forward, from the type of content you use to the days of the week you make big announcements.

5. Be distinct and personal – Develop a distinct voice in your Tweets that encapsulates your business and can help your followers relate with you in a better way. Your personal interaction with customers and clear passion for your products will win over users. In many ways this personalisation will be what consumers seek your business out for, and set you apart from the big brands.

10. Know the law - Just because you say it on Twitter, does not mean it is outside the law. There have been numerous instances globally of people falling afoul of the law for what they said on Twitter and the same is true in Qatar with the Cybercrime Law. Like anywhere, provided you remain respectful and honest, you should not encounter any legal issues.

The Edge | 53

Eco Driv

o ven QAFAC’sfocus focuson on QAFAC’s addingmethanol methanol adding tothe theglobal globalfuel fuel to matrix matrix

Anexclusive exclusiveinterview interviewwith withNasser Nesser An JehamAlAlKuwari, Kuwari,CEO CEOQAFAC QAFAC Jeham

56 | The Edge

downstream hydrocarbons | business interview

The first-ever Middle East Methanol Forum (MEMF) will be held in Doha this month under the patronage of HE Dr. Mohammed Bin Saleh Al Sada, Minister of Energy and Industry, State of Qatar. On the eve of the forum, Nasser Jeham Al Kuwari, CEO of Qatar Fuel Additives Company Limited (QAFAC), in an exclusive interview with The Edge, reveals how the forum will shape industry dialogue in the region and help broaden the export markets for the company. by Aparajita Mukherjee

“As a transportation fuel, DME can be burned in compression engines and is thus a potential substitute for diesel fuel,” says Nesser Jeham Al Kuwari, CEO of QAFAC.

“QAFAC felt that it was timely and very important to initiate the MEMF as a platform for the Gulf region.”

s a global hydrocarbon player, Qatar is home to many of the industrial products that act as feedstock for industry, including methanol. It is a clean energy source used as both transportation fuel and in electricity generation. Within the petrochemical industry, methanol is used as a raw material in solvent manufacturing. On the world stage, with production facilities in Asia, North and South America, Europe, Africa and the Middle East, over 90 methanol plants worldwide have a combined production capacity of about 100 million metric tonnes (almost 33 billion gallons or 90 billion litres), says Nasser Jeham Al Kuwari, CEO of QAFAC. As far as methanol’s usage and consumption is concerned, more than 100,000 tonnes of it is used as a chemical feedstock, or as a transportation fuel equivalent to 60 million gallons or 225 million litres each day. “As a truly global commodity, methanol is currently ranked second in the world in amount transported, with more than 80,000 metric tonnes shipped daily from one continent to another,” says Al Kuwari. Explaining the factors that prompted the need to hold the first-ever MEMF, Al Kuwari says, “With these staggering figures, QAFAC felt that it was timely and very important to initiate the MEMF as a platform for the Gulf region. The Gulf Cooperation Council’s importance as a global energy and downstream chemicals hub are increasingly having a greater influence on a globallyconnected and integrated economy.” Al Kuwari adds that methanol plays an essential role in the future of a wide spectrum of business sectors that affect our daily lives and so the time has come for Qatar and the region to showcase methanol’s value to the global economy. “Through open and continuing discussions and the sharing of knowledge and expertise by key industry leaders from around the world, the importance of the product can be highlighted. Undoubtedly, at a time of rapidly evolving technologies, such discussions will have far-reaching implications on the methanol industry and on our lives as end-users of energy and the wide range of products that are produced out of methanol,” stresses Al Kuwari. The Edge | 57

The methanol plant of QAFAC with an annual production capacity of 982,350 tonnes per annum, which adequately meets the domestic demand and has a growing export market.

Industrial utility

As a key industrial product, especially in the oil and gas industry, numerous applications transform methanol into vital products and commodities that drive modern life. Methanol is also used on its own in a number of applications. For instance, its high octane rating allows for superior vehicle performance compared to gasoline. According to Al Kuwari, as a number of countries have adopted or are seeking to expand methanol fuelling programmes – making it the fastest growing segment for the use of methanol in the marketplace today – such use could also be adopted in Qatar. Methanol’s price is low compared to gasoline or ethanol, and vehicles can be modified quite easily to run on blends of methanol fuel, for incremental costs of as little as USD100 (QAR364) per vehicle. Al Kuwari goes on to explain that, “methanol fuel blends also produce less toxic emissions than reformulated gasoline, including lower particle matter, sulphur dioxide and related smogforming emissions. All of these benefits make methanol a viable alternative for domestic transportation fuel”. Dimethyl ether (DME), one of the solvents that is produced using methanol, has a number of uses in products and is most commonly used as a replacement for propane in liquid 58 | The Edge

petroleum gas (LPG), but can also be used as a replacement for diesel fuel in transportation. Al Kuwari explains that DME is water soluble, non-toxic and biodegradable in the event of a spill. It can be readily made from natural gas through a refining process that converts natural gas to syngas, syngas to methanol, and methanol to DME. Water is the only significant byproduct of this refining process. “As a transportation fuel,” he adds. “DME can be burned in compression engines and is thus a potential substitute for diesel fuel. Diesel engines require only minor modifications to run on DME [it] preserves the 30 percent greater efficiency of compression engines that burn diesel over spark ignition engines that burn gasoline.” Commenting on the non-energy sector use of methanol in Qatar’s economy, Al Kuwari points out that it will largely depend on the growth and development of its manufacturing sector, as well as in national policies formulated and promulgated by the government. Al Kuwari says however, “Through QAFAC’s existing methanol plants, which has a production capacity of 982,350 tonnes

“The GCC’s importance as a global energy, downstream chemicals hub is increasingly having a greater influence on a globally-connected and integrated economy.”

downstream hydrocarbons | business interview

per annum of methanol, we can provide the domestic market with sufficient product to meet local demand.”

Primary export markets

QAFAC’S export markets span countries in Asia, the Far East and Europe. Al Kuwari offers the reason why these countries prefer buying the product from QAFAC and not some other company, either in their domestic economy or from another country. “Among the reasons why such markets prefer our products is mainly due to our focus and emphasis on high quality, world-class standards,” he says, adding that QAFAC’s commitment to such standards is reflected by constant quality upgradation, implementation of operational excellence programmes to elevate the operational standards and the ISO 27001 certification for Information Systems Security. More importantly, says Al Kuwari, QAFAC offers added value through Muntajat, its strategic partners primarily tasked with purchasing, marketing, distributing and selling methanol and methyl tertiary butyl ether (MTBE) produced by QAFAC to over 120 countries worldwide. By making full use of its 36 offices spread around the globe, and a number of logistics establishments and warehouses that support all of Muntajat’s activities, QAFAC ensures an efficient supply chain through reduced lead times and enhanced customer experience, while retaining continuity of supply and world-class quality that customers demand.

Environmental protection

As an energy player, environmental protection is a priority for QAFAC. Al Kuwari states that the company strictly adheres to global standards of environmental protection. At the same time, QAFAC also stringently complies with and implements Qatar’s environmental sustainability regulations and policies as contained in the National Vision 2030. “QAFAC’s EMS was awarded the ISO 14001 certification in 2005, which has been renewed up to now, reflecting our commitment for environmental issues,” says Al Kuwari. Commenting on the initiatives that QAFAC has taken on its own, Al Kuwari

QAFAC Revenue Generated (USD - millions) 1,000 950 900 850 800 750 700 650 600 550 500

2010

2011

QAFAC Production in tonnes Methanol

940,963 up 6.6% from 2010

MTBE

648,022

2012

2013

Sales by product 2013 (in USD millions)

Methanol

MTBE

Pentane

227 632 7 MTBE sales have grown in the Middle East

up 21% from 2010

Pentane

8513

up 41% from 2010

2010

2013

2.6% 44.7%

Source: QAFAC company reports

mentions, “Stepping up the climate change challenge and playing our part in fulfilling the vision, we looked for ways to reduce our greenhouse gas emissions into the atmosphere.” Al Kuwari adds that the Carbon Dioxide Recovery Project (CDR) in partnership with Mitsubishi Heavy industries is an innovative solution that reduces QAFAC’s total greenhouse gas emissions. “CDR meets a business need by reusing the 500 tonnes per day of recovered CO2 in the methanol plant, enhancing the annual production by 90,000 additional tonnes. In addition to this, the plant recovers 35 cubic metres of water per hour from the

flue gases and reuses it in the process cycle,” says Al Kuwari. Moreover, QAFAC is the first industrial operation to obtain the Environmental Permit from the Qatar government after submitting a formal and comprehensive Environmental Impact Assessment Report. Al Kuwari concludes, “Therefore, as part of the steps we take towards environmental protection, we focus on the production and promotion of clean fuel products, as well as strict Health, Safety and Environment (HSE) policies within our plants in order to safeguard not only our personnel from any harm or incident, but also the environment.” The Edge | 59

What does it take to build a successful business?

The psychology of an entrepreneur

feature story | entrepreneurship

A roller coaster ride, that is the common analogy entrepreneurs choose to describe their journey of starting and running a business. Only a lucky few of them go on to build something successful. However, for every John D. Rockefeller, Mark Zuckerberg and Sergey Brin and Larry Page, there are hundreds of those that do not succeed. In fact, startup failure rates are high, and roughly one percent of those getting past the first stage receive funding. And for that lucky one percent? Well a study by a Harvard senior lecturer, Shikhar Ghosh, of 2000 companies that received venture funding in the United States between 2004 and 2010 found that as many as 75 percent of start-ups failed. So what makes a successful entrepreneur? By Shehan Mashood

esearch into codifying the unique qualities of successful entrepreneurs is not something new. In fact, one of the first psychological studies that looked into the traits of entrepreneurs was conducted in the latter half of the 20th century by three researches that look at achievement motivation in the United States (US), and this field of research has been built upon since. David Jones from the Talent Enterprise in the Middle East, however, argues that when it comes to advice on how to cultivate entrepreneurship, there is very little academic research on the topic. “Without any credible academic substantiation, most advice available is analytical and theoretical in nature, with many business schools in particular conceptualising entrepreneurship studies as another form of MBA, explains Jones.

62 | The Edge

The founder of Virgin, and serial entrepreneur Richard Branson often talks about overcoming fear and taking risk. “The key to bouncing back is to learn whatever lessons you can from the experience so that you can avoid making the same mistakes in the next launch. This will help you to overcome your fear, take a leap of faith and try again.” (Image Corbis)

“The irony of course is that some of the most famous entrepreneurs from history, Richard Branson, John D. Rockefeller, Bill Gates, Steve Jobs for instance, all either never went to university or dropped out before graduation,” he adds. So what is it that makes people want to leave the relative comfort of a nine to five job and a regular paycheck, sometimes risking their life savings to start a business? What drives the entrepreneurial spirit? And perhaps more importantly, what qualities make a successful entrepreneur?

Trait #1: Risk taking

Numerous studies have found that one of the core traits of entrepreneurs is their ability to take risk. Risk taking in many studies was found to be a necessary first step to the realisation of an objective, in this case, starting a business. This is rightly viewed as a risky endeavour, says Jones. “This is true anywhere in the world,” he adds, “although when placed in the context of our sclerotic and segmented local labour markets, the comparative risks of failure appear even higher and the incentives and potential rewards, even lower.” In fact, research conducted by the Talent Enterprise shows that entrepreneurship is a low priority for nationals. The Talent Enterprise’s annual Labour Market Confidence Index shows that entrepreneurial skills are one of the lowest development priorities for all Gulf Cooperation Council (GCC) nationals,

Many of the individual characteristics researchers have identified in successful entrepreneurs are deeply interrelated.

entrepreneurship | feature story

An Apple board member at the time said of him, “back then he was uncontrollable.” However, Jobs returned to the helm of Apple a few years later and grew the company to one of the most succesful in history. (Image Corbis)

including Qataris. “How can you hope to attract, retain, motivate and develop a generation of entrepreneurs, when it often involves less pay, more work and more risk, all for the potentially higher reward at some point in the future?,” asks Jones. Psychologists contended that an entrepreneur’s risk-taking ability is linked levels of high self-confidence, which allows them to execute ideas. However, studies also show this is a double-edged sword, an excess in self-confidence could lead to ignoring certain risk factors, of which there are many in Qatar. However, others argue that risk-taking is not in fact a trait of an entrepreneur. Ian MacMillan and Murray B. Low, two professors in the US doing research in the field of entrepreneurship argued that risk taking was not the key characteristic of an entrepreneur but that they were instead extremely good risk managers.

Trait #2: Innovation

Innovation is perhaps one of the traits most commonly associated with entrepreneurs. Encountering a problem and creating a solution is how many of the best entrepreneurial ventures were created. Two psychologists, Christopher Peterson and Martin Seligman from the US, argued that it was a necessity for

entrepreneurs to introduce novel ideas, ones that they saw contributed positively to their life and the lives of others in a positive way. Thomas Edison said, “I never perfected an invention that I did not think about in terms of the service it might give others... I find out what the world needs, then I proceed to invent.” Today’s tech entrepreneurs embody this aggressive stance and are looking not just to out innovate traditional business models and solve problems but to disrupt entire market segments. Uber, the car-booking service has done that to the taxi industry, as has Airbnb to the hotel industry.

Trait #3: Determination and patience

These are two essential qualities identified in entrepreneurs by numerous studies. Psychologists have found that perseverance among entrepreneurs is related closely to an individual’s belief in their own ability. Perseverance was seen in studies as a strong cognitive element in handling and overcoming unexpected difficulties and obstacles. One of the biggest challenges local entrepreneurs face is access to funding, both in that there is too much and too little available, says Jones adding that “Banks in

the region are infamous for their aversion to funding start-ups, and many insist on deposits to open a business account, labelled as for SMEs, of a million riyals or more.” On the other hand, Jones counters, the numerous government backed funding agencies that provide ample support to GCC national SME applicants can result in the loss of productivity and efficiency that need to be embedded in the culture of the business. “This often prevents many local SMEs ever breaking out of their domestic subsidised comfort,” he adds. Indeed, against the odds, perseverance has been the key to success of some of today’s most well known entrepreneurs. Billionaire James Dyson, the inventor of the bagless vacuum cleaner spent 15 years perfecting his first product, building 5127 prototypes before it made it to market. Bill Gates’ first company was called Traf-O-Data, a software company that read raw data from road traffic sensors and created reports for engineers that would optimise traffic and end road congestion. Their first demo failed and the company was not a success, but, Gates persevered and it proved valuable experience for when he built Microsoft. Other notable entrepreneurs such as Steve Jobs and Richard Branson have had to deal with failures, yet their determination The Edge | 63

entrepreneurship sector name | banner | feature heading story

and patience paid off, and their ability to handle failures and overcome obstacles has been pointed to as an important part of their success.

Trait #4: Optimism

Many of the individual characteristics researchers have identified in successful entrepreneurs are deeply inter-related. Self-confidence and the belief in their ability to overcome difficult situations stems from optimism, a study in 2007 found. Another study that looked at the factors determining social entrepreneurship found that creativity, self-confidence and optimism were deeply interrelated in successful entrepreneurs. Entrepreneurs do not usually make excuses for why something cannot be achieved, and instead focus on the problem because they are opportunity oriented. Numerous studies also found that optimism and self-confidence led to entrepreneurs choosing innovative and risky options to solve problems and create opportunities. A separate study in 2007 that focused on determining entrepreneurship properties of university students went so far as to say having self-confidence was a compulsion among entrepreneurs.

Trait #5: Empathy

The strong individual characteristics associated with successful entrepreneurs does not necessarily mean they are selfcentred or selfish. One of the main reasons entrepreneurs are successful is their ability to empathise with people suffering from problems or see an idea that can benefit larger society.

David Jones, managing director, The Talent Enterprise tells The Edge that focusing on character strengths is one the three most crucial drivers (along with managing emotions and aligning purpose) for increasing entrepreneurial workplace productivity.

“When large, private sector organisations struggle to compete with the public sector on pay and benefits, then how can the prospect of going out on your own hope to attract more young Qataris?” - David Jones, managing director, The Talent Enterprise. Studies show that other entrepreneurial traits alone are not enough to achieve success. “We discovered that the most successful entrepreneurs with the most sustainable business models in our region, took the step to branch out on their own because they wanted to be more engaged and satisfied in their work, in a way that they couldn’t achieve simply as an employee, or even a manager, of another organisation,” says Jones. This level of self awareness is important because cognitive neuroscience research has found a strong link between those that are mindful, and those with the ability to empathise. In addition to this, entrepreneurs with empathy are also able to better predict competitors’ moves giving them an edge over those that might lack the skill.

What organisations can learn

Studies focused on employee relationships with firms uncovered that not only do organisations impact individuals, but individuals also affect organisations. When the characteristics of individuals were studied, it was wondered whether individuals with entrepreneurial characteristics could affect enterprises more strongly, and this led to organisations wanting to find the entrepreneurs within their business. Jones believes that there is compelling evidence on the benefits of focusing on individual strengths at the workplace. “The use of a strengths-based approach can have lasting impact on employee performance, productivity and engagement in addition to supporting personal and professional development,” he says, “Our research indicates that people who use more of their signature strengths have more positive work

experiences and greater connection to work than those who don’t use their strengths as frequently.” Retaining this talent is becoming a key challenge for many organisations that need entrepreneurial thinkers who bring skills such as problem-solving to innovate and keep their business relevant. Jones believes that technology and increased global competition is encouraging a more flexible, personalised and atomistic approach to work, even within large organisations. This, he explains, means that an individual’s (and an organisation’s) psychological capital – their resilience, resourcefulness – is increasingly recognised as critical for their performance and productivity. Thus, argues Jones, more sustainable, strengths-based and psychometric approach to entrepreneurship will be a key part in the organisations success. “From a psychological perspective, our research in the region, points to the answer as to why entrepreneurs choose to start their own business is that it is more engaging on average,” he says, adding, “just as levels of workplace engagement are higher in the private sector compared to the public sector across the GCC and in Qatar, despite the better pay and benefits in the former, average engagement is also higher in the SME sector than in both the larger organisations of the public and private sector.” According to The Talent Enterprise’s research in the region Jones says, being optimistic, confident, having a sense of self control, self-efficacy, resilience, grit, zest, and being more resourceful than average will be the skills necessary to run and grow a successful business. The Edge | 65

“We translate a lot of Qatar’s commitment to the region into a concrete activity,” Dr. Yousef tells The Edge. “Silatech plays multiple roles really in supporting that vision.”

Mentally Motivated The journey of Dr. Tarik M. Yousef, CEO of Qatarâ&#x20AC;&#x2122;s Silatech, from an academic to an influential driver of Arab youth employment

More than three years in as chief executive officer of Silatech, Dr. Tarik M Yousef, in an exclusive in-depth interview with The Edgeâ&#x20AC;&#x2122;s Aparajita Mukherjee, talks about his transition from academia to driving and executing youth upliftment programmes across the Arab world. Apart from his own journey, Dr. Yousef also discusses how Silatech has undergone transformations as an organisation, given that many of these nations have seen civil and political unrest, which has dramatically altered youth expectation levels and created new and unexpected challenges for the Qatar-based organisation he leads.

business interview | employment generation

efore joining Silatech, Dr. Tarik M. Yousef was involved primarily in academic roles at the International Monetary Fund, Georgetown University, Dubai School of Government, and Harvard Kennedy School of Government, among others. Ostensibly, this is far removed from the world he now inhabits, but it is a gap, which as CEO of Silatech, Dr. Yousef has been able to successfully bridge. “The present stint of three years plus has been very exciting but also very challenging,” he says. “Prior to Silatech, most of my life I had worked in the academic or policy-making arena, which is far removed from applied fields of knowledge such as the one that Silatech is concerned with. The transition involved was in the mental orientation to think more practically in terms of products and deliverables; but the challenge I think comes from the mandate of the organisation and the region in which this mandate is situated.” Silatech is engaged in empowering young people, creating or helping to facilitate employment of potentially employable young people and working with them directly and with the institutions that affect them. It operates in Algeria, Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia and Yemen. Discussing the Arab world in the last four or five years, Dr. Yousef says, “The Arab nations have been going through a lot of tumult, volatile changes which have made the region unstable and at times very resistant to change, even though the opportunities are there for young people to be supported and empowered.” This has had huge ramifications for policymakers, policy focus, policy coherence, programming, stability and sustainability that have manifested in a number of ways adds Dr. Yousef. “This happens ironically while these countries are, at the same time, countries where you see the biggest opportunities,” he continues, “and thus, this agenda is now alive, there’s a demand for it, there’s an opportunity to do something but the tumult has also created challenges that make realising these opportunities a lot harder than meets the eye initially.” Dr. Yousef mentions other dimensions of the challenge, in the context of the Arab Spring, saying that the lack of continuity in policy in the policy-making community creates challenges for their partners in the corporate world or in the civil society. “As these countries go through cycles of political instability, one inevitably sees financial dislocation, economic recessions, and also more importantly because these transitions have given rise to the emergence of new actors, new coalitions and new priorities. You have to really invest quite a

68 | The Edge

24-year-old Moroccan shopkeeper Hicham Bouchtat dreamed of expanding his shop, but financing it was always out of reach. After taking a loan through the Silatech-supported ‘Boudour’ youth loan programme, Hicham has expanded his shop and continues to grow his business.

bit of time in building relationships that would be durable and resilient in the face of this constant instability,” adds Dr. Yousef. Describing Silatech’s structure as more flat (as opposed to top-down), Dr. Yousef mentions that during his academic career, he had invested his research and analytic life into thinking about precisely those issues that Silatech handles. “I have been thinking about the kinds of policy interventions, the appeal, the foundational requirement, the policy impact and how to measure it before I came here. Silatech gave me the opportunity to bring my academic and analytical perspective and actually apply it in concrete, real-life situations,” he says.

The mindset of Arab youth

Reflecting on how the youth today are different from the time when he was growing up, Dr. Yousef adds, “Clearly young people today are much more communicative, they’re much more interactive, they’re much more integrated with the external environment. When I was a young person I had snippets, I had perceptions, I had stereotypical impressions of people in cities nearby let alone in other countries and had no way of accessing their information, or benchmarking myself, my needs, my capabilities. Young people are much more able to situate themselves.”

employment generation | business interview

Youth Engagement in Numbers Silatech has Financed and supported

78,000 businesses

Created or sustained

103,000

youth employed/jobs Engaged

668,000 youth through its programmes

Trained

2350

youth-focused NGO staff As they compare themselves with the youth of the rest of the world, they realise very quickly the gaps between them and the rest of the world, according to Dr. Yousef. “The transition from school to the labour market, the viability of being an entrepreneur or a business owner, the relationship between the youth and their societies relative to what happens elsewhere, all of it is driven by the technological revolution that has collapsed the traditional barriers of geography,” he says. But is this change positive or negative? “Both,” says Dr. Yousef. “It is a blessing because it allows young people to learn very quickly, absorb and update and import experience from elsewhere, but it’s also a curse since they become aware of the yawning gaps between them and the youth in other parts of the

world, and I think it is not too much of a stretch to argue that part of the tumult that took place in the Arab world in the last few years is driven by that realisation.”

Reached

6.6

million

people through their campaigns

Promoting employment

Commenting on Silatech’s roles in sensitising a culture of entrepreneurship, when social norms dictate taking the safer route of public sector jobs, Dr. Yousef says that this is a work in progress that requires operating at multiple levels, of which maintaining the mindset is one of the more challenging. “It means you’re going against parental guidance sometimes; you’re going against structural forces of society. How do you steer them away fundamentally? You have to invest in [and] promote the alternative and you have to make the alternative a

Raised

QAR

721

million

in partner co-funding Source: Silatech

The Edge | 69

business interview | employment generation

“Silatech gave me the opportunity to bring my academic and analytical perspective and actually apply it in concrete, reallife situations.” viable one,” says Dr. Yousef, adding that just in the space of entrepreneurship education, “we’ve come a long way in the last five years. Five, six, seven years ago, entrepreneurship was discussed as typically a tangential subject, and the focus was pretty much with private sector formal jobs, as opposed to selfemployment.” Coming to the situation on the ground in Qatar and in response to The Edge’s observation that quite a few entrepreneurs still prefer to hold on to their regular public sector jobs while continuing to engage in their passion after work, Dr. Yousef says, “I think the situation in Qatar and perhaps the United Arab Emirates is exceptional and that it permits this to happen.” In Saudi Arabia, according to Dr. Yousef, this is no longer a viable scenario as it is a bigger country, the public sector is bloated and a significant number of nationals are not even thinking about the public sector anymore, but are taking up private sector jobs, or running their own businesses, as opposed to doing both. “In countries such as Egypt, Morocco, Tunisia, Yemen and Libya, there are very few choices now in the public sector,” adds Dr. Yousef. “You Afrah Ali Tilha has opened her first savings account, thanks to a Silatech partnership with Yemen’s Al Amal Microfinance Bank. According to Ali Tilha, “I never thought a bank would welcome someone like me, someone who’s not rich. But now I have a savings account and I can see my money grow.”

70 | The Edge

really have to create your own work, and this combination of fiscal constraints and already over-bloated public sectors, which is indirectly sensitising the youth to entrepreneurship.”

Women-specific initiatives

Addressing youth employment remains incomplete without making special initiatives for women who may face greater issues of familial and societal controls on their career choice, in the Gulf Cooperation Council (GCC) and the Arab World. Dr. Yousef agrees. “I think this is the next frontier for us and others in the same policy-making space, though I think gender neutrality in programming is still the way to go. But some gender-specific interventions are not only desirable, but I would say increasingly viable and imperative.” In the past, policy-makers observed a lot of differences, but may not have been in a position to act on them because they were not clear about the intervention options. Dr. Yousef adds, “With a lot of the innovations in the space of creating livelihoods, we think there are important opportunities for us to think of interventions that are specifically designed to overcome some of the social and economic barriers that impact the ability of young women to be employed and realise their economic potential and contribute to their societies.” Citing an example, Dr. Yousef says that sometimes, social norms in the region constrain female mobility and interaction with males in the public space. Elucidating further, he says,

“There are also a lot of restrictions on the ability of women to access financial products – loans, savings – and some of these restrictions are embedded in social norms that are difficult to overcome. So rather than think of changing the norms, which is a long-term process and might build resistance, perhaps one can think of ways of accommodating these norms while addressing women’s needs to help them to be more economically productive.” Providing transportation solutions, home-based finance, or crafting microfinance products that cater to women specifically who want to work out of their homes, for example, in places like Morocco and Egypt, outside the urban setting might go a long way to facilitating the integration of women into the labour market.

Achievements and goals

Founded in 2008 by Her Highness Sheikha Moza bint Nasser, Silatech is a regional social initiative based in Doha. Dr. Yousef says, “Silatech translates a lot of Qatar’s commitment to the region into a concrete activity, embodying the philanthropic intentions of decision makers and transforming them into real impact.” He adds, “I cannot think of any regional activity that takes place anywhere in the Arab world that deals with young people without us being considered as a potential contributor in any number of potential ways.” Dr. Yousef commented on the benefit of being located in Qatar, stating “Very

employment generation | business interview

“The tumult that took place in the Arab world has partly been driven by the realisation of the gap between the Arab youth and the rest of the world.”

Silatech’s CEO tells The Edge, “I cannot think of any regional activity that takes place anywhere in the Arab world that deals with young people without us being considered as a potential contributor in any number of potential ways.”

few development organisations in the Arab world can count on the level of patronage and government support that Silatech has received.” However, he noted that regional political dynamics unavoidably affect Silatech’s operations. “The Arab world is very polarised right now, which means that where you are based can also determine how people perceive you. We have been largely successful at remaining focused on our work and that alone.” As of March 2014, Silatech had created approximately 103,000 youth jobs, and financed and supported more than 78,000 youth-run businesses. Yet this is only the beginning, according to Dr. Yousef. “Silatech has gone through several phases – from the startup phase to one of transformation and lesson learning, and now we are shifting gear into the next phase – one of growth and expansion. “We will be scaling up the things we believe will work and what we want to do, based on past lessons, he adds in closing. “For instance, rather than work with five microfinance institutions in a given year, we would now want to set up a facility and make it available for all the microfinance institutions of the region, and use not only our own resources, but pool the resources of other people. We believe this approach maximises both the impact and sustainability of our programmes.” The Edge | 71

ONE DAY, ONE CROWD, ONE STYLE

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Inside the minds of leading business figures

business insight Success in regional restaurant franchise business requires business acumen, warm hospitality, excellent service and local relevance > 78 The Edge talks with Daniel Del Olmo, the United States-based president of International DineEquity, Inc., the company behind the successful and popular Applebeeâ&#x20AC;&#x2122;s chain.

Cyber security is mission critical > 76 Richard Turner, the vice president of FireEye for Europe, the Middle East and Africa, tells The Edge that cyber security is something that has changed in the last five years, from where once it was something only industry insiders thought about, to something executives consider.

Pictured here is one of six Applebeeâ&#x20AC;&#x2122;s restaurants located in Qatar, with the company planning to open a seventh location here within a year.

business insight | cyber security

Information technology

Cyber security is mission critical Richard Turner, the vice president of FireEye for Europe, the Middle East and Africa (EMEA), a company that is focused on solving a new and advanced kind of security threat known as APTs (advanced persistent threats), spoke to The Edge about the company’s mission to protect their clients against some of the biggest cyber threats today. Can you tell us about advanced persistent threats? APTs are typically perpetrated by three different types of threat actors. Most nation states have, or are building significant cyber warfare capabilities. They are a group of perpetrators, whether you are talking about the United Kingdom government, Australian government, Chinese government, United States (US) government, the Israeli government, etcetera, who have the capability or are building it. They do it for different reasons, to be perfectly honest. Then there are organised crime groups, who are out for financial gain, either by directly defrauding financial institutions or by stealing intellectual property and selling it to other organisations. The third group typically tries to promote particular issues or support particular regimes, which we call ‘hacktivists’. Most traditional security technologies that customers have do not address this problem. Oftentimes, we see a type of attack once and only once. And it is targeted towards a particular organisation, whether it be a nation state, a commercial organisation or whatever else. And that is what we occupy our time with. A FireEye report shows that hackers in the region seem to focus on using social engineering in the Middle East. Why is that? Well, I think it varies. The report actually details activity in the first half of this year. I think that it happens to be the current flavour. You have to look through the history of activity in the region as a whole, and then it tends to be a little more broad than that. So a particular kind of threat actor group will develop a particular kind of technique in order to achieve their ends. It might be social engineering or other advanced attacks. The key thing is that they are the enemy [and] we are at war with these people, are not what Hollywood would have you believe; that they are kids in bedrooms drinking coke and eating pizza. They do exist, but we are really talking about divisions of the army, parts of nation states, very organised and very well funded. Or hacktivists that mobilise people with similar feelings on a particular issue from around the globe. 76 | The Edge

“Over time, I am confident that we will have a local presence here in Qatar,” says Turner, “and that we will have a blend of commercial personnel, plus also technical personnel who are required to support our customers.”

How do companies view cyber security changing? Generally speaking, when I talk to customers today, we have a conversation that involves a handful of things. We have a discussion about how important they think security is, with most people today saying that security is mission critical. It is a matter of shareholder value in a business, and thus is a high-level issue. That is something that has changed in the last four to five years. It went from being something people in the business thought about to being something that executives think about. So the issue has now moved to the front of our minds. The discussion then tends to be, is it a core competency in your business, if you are an energy company, it probably isn’t. I spent time at a large bank the other day that has over 500 people in security, but even with 500 people they do not consider it to be a core competency. The conversation then comes back to how we address this problem, which is critical but non-core. And that is about partnerships. What we tend to be talking to organisations about is how we form partnerships to mitigate the risks that are specific to them. We have seen various different types of attacks. Look at Stuxnet, which was deployed in Iran to disrupt their nuclear programme. That was perpetrated by nation states, we believe the US and Israel were implicated and it was designed to impact the operational performance of logic controllers that governed centrifuges, which basically caused them to damage. So that is one kind of attack, there is no financial gain in that. Other attacks we see are targeted at stopping people from operating their infrastructure; so maybe to manipulate a market for example. Sometimes we see cyber attacks on financial institutions that are directly trying to steal money. Can you talk about protecting intellectual property within companies? How should they look at it? Intellectual property is frequently a target, but why people steal it and why people defend it are slightly different. If you spend a load of money developing a particular technology, most organisations

cyber security | business insight

that do research and development (R&D) write off some of that money. Not every invention makes it to market. It’s not really about protecting the R&D and the investment, it is more about protecting the revenue that might be associated with that product or technology reaching the market and therefore what sales they can make. Obviously that is a bigger quantum, plus the reputational damage if they were to be breached. So does the type of protection you offer differ based on the type of business you are serving? Well, no, not really. We are myopically focused – in a good way – on this advanced threat problem, which has become synonymous with the market. We tend to look for behaviour and indicators of compromise as we call it, as opposed to a particular, sort of known attack. It is hunting through the haystack to identify, using intelligence to point us to something that might be the beginnings of an attack that may be about to happen. The way we do that and the techniques that we use to do that are the same whether we are trying to defend against nation states, an organised crime group, or a group of hacktivists. It seems companies today still feel cyber security should protect against every eventuality, and tend to not think about what to do if they were breached. Can you talk about that? Well there has been this progression right? People bought products because of the way that security solved problems in infrastructure. There was a security product for every single infrastructure product, and some of it was more built-in than the rest. So there was a proliferation of security products, and all of those security products create noises, alerts that say “look at me, this is going on”. People built security operations centres to try and monitor the alerts, then they got snowed under with alerts. Then they bought something called a SIM which effectively gives you a single pane of glass that assembles various different alerts from around the business. The problem with that is the SIM does not have any context of threats. It does not understand threats, it aggregates alerts. So what we are now seeing with customers is that they have gone through a cycle of maturity. So we help by being able to add intelligence to

“What we are now seeing with customers is that they have gone through a cycle of maturity.” those threats, to enable it to create context and prioritise the stuff that they need to be focused on now. This is important because based on our experience, these are our early indicators of compromise. If you do not address them, you may be breached or you may already be breached. Customers are looking to have a relationship where they can leverage our expertise either on an ongoing basis or when they need us for a particular incident. How much of it is technology that you have developed, and how much of it is people working on the problem? So this is a big transformation in the security industry, largely because it existed for a long time; because infrastructure products were not very secure and networks were very easy to break into, so people needed firewalls to try and protect themselves from external threats. They had an antivirus to protect themselves from malware and worms and trojans. But they only address part of the problem and no one product alone will solve today’s security problem. So, technology is part of it, but we do not just use technologies to detect and prevent. We are also using technology for forensics because if you do not, if you have not seen an attack before or a particular type of exploit they are using, you have to forensically examine every incident that you see in order to build a body of knowledge that helps you understand how they work. Is that analysis automated? Or are there people working on the problem? Aggregation happens with technology, but - and this is why we are a leader in this field - you need a forensic expert, an intelligence expert who has the ability to go through the incidents and find out exactly what happens, documenting and creating data that can be referenced. This allows you to identify the kind of threat actor group and what their particular style of attack is. That is a combination of smart people with the right

skills poring over the data and then passing it to individuals who have the expertise to bring the intelligence and the technology together to build the strongest possible defence, or to minimise the consequences of an attack on an organisation by identifying it quickly. This can be done by containing it rapidly and then remediating it quickly, if you work on the basis that some amount of breaches are inevitable. Here we are in 2014 and we are spending more on security than we have ever done, yet we will probably see more breaches this year than last year and probably more next year than this year. That is because there are not a lot of security skills in the marketplace and just the technology alone is not enough. You need the expertise to deploy those technologies and manage them, and respond to the alerts in such a way that you contain the impact and the lifetime of the attack to an absolute minimum on any given organisation. Do you have teams here in Qatar? Or do they work remotely? Like a lot of companies, we built our hub in Dubai. We have about 70 people in the region, and currently we have offices in Dubai, Saudi Arabia and Turkey. We are building our business with a view to investing in the Qatari marketplace. And that will obviously mean sales and marketing because you have to have that, but we also need to invest in the skills. Over time I am confident that we will have a local presence here in Qatar and that we will have a blend of commercial personnel and technical personnel that are required to support our customers. That said, when a breach happens, everybody is happy when someone turns up on-site. It is a bit like the fire engine turning up when there is a fire, but a lot of the work can start remotely. So if we got the right relationship with customers wherever they are, we can bring resources to bear and start working on the problem immediately without being in their facility. The Edge | 77

business insight | hospitality

Franchising

Success in the regional restaurant franchise sector requires business acumen, warm hospitality, excellent service and local relevance

The Edge spoke with Daniel Del Olmo, the United States-based President of International DineEquity, Inc., the company behind the successful and popular Applebee’s chain, which plans to open seven new restaurants in the region within the year (including one in Qatar), about what it takes to succeed in the competitive family restaurant segment in the Middle East. What are the basic business principles of Applebee’s? Applebee’s has a long heritage of being a neighbourhood grill dating back to 1980, when it was a single restaurant – T. J. Applebee’s Edibles and Elixirs – in a small suburb of Atlanta, Georgia. Even then, it was a popular local place known for its friendly atmosphere, great burgers, steaks and other foods. From that single location, there are now about 2000 others in 49 states, and 16 countries. We opened our first location in the Middle East in 2000, and we now have a total of 36 Applebee’s restaurants in the region; in Kuwait, Jordan, Saudi Arabia, the United Arab Emirates, Egypt and Qatar. And in every one of them, we strive to provide our guests the authentic experience they would have had in the first Applebee’s: great food and great service in a warm, friendly environment. As a 99 percent franchised organisation, we’ve been very lucky to find franchise partners in the region [Food Vest, a division of Al Jassim Group] who share our commitment to excellence and to fulfilling those goals. How does your Middle East business model vary from that of the global model? In terms of a ‘global model’, there are certain consistent elements that our guests expect when they come to an Applebee’s – the logo, certainly, and a decor that creates an atmosphere that is warm and inviting. That’s a key part of our heritage. Another is the 78 | The Edge

“Competition in the restaurant business – in any part of the world– is fierce, and the Middle Eastern markets are certainly among the most competitive.” collection of menu items that have made the brand famous and are fairly consistent throughout the world: our great ‘smashed’ (not preformed) patty burgers that are cooked on the grill, for example, or our steaks and salads. Another key factor that we consistently look to provide our guests is friendly, welcoming service. But beyond those key items, the Applebee’s experience is very much localised, no matter what country you are in. ‘Neighbourhood’ is a key part of our identity, and our goal in every Applebee’s is to be an authentic American grill, but one that also provides items that both appeal

hospitality | business insight

the competition located? You will note that many of our locations in Qatar are based in malls, which meet all these specifications: but for every location, we and our franchise partners do a thorough study of these and many other factors before a location is approved. What is your take on the level of competition in the Middle Eastern markets? Competition in the restaurant business – in any part of the world – is fierce, and the Middle Eastern markets are certainly among the most competitive. But we feel that by offering our guests a differentiated alternative, in terms of the quality of food and service we provide, and by offering the best of an authentic grill combined with a menu that is developed for the region, we can distinguish ourselves from the competition. Applebee’s international president Daniel Del Olmo, who will be visiting the region soon, told The Edge, We recently conducted the most extensive international research study in our company’s history to determine what appealed most to our guests in different regions throughout the world.”

to the tastes of local guests, and embrace the unique flavours and ingredients that can be found in that region. For example, you’ll soon find more menu items that feature lamb in our Applebee’s here in Qatar. We recently conducted the most extensive international research study in our company’s history to determine what appealed most to our guests in different regions throughout the world. While burgers topped the list in almost every region, they came in second to steaks in the Middle East. As a result, working with our international chef, our most recent promotion featured two sizzling steaks. You have aggressive expansion plans in the region. What has driven that decision? While we have been an international presence for many years, DineEquity, Inc., the company that franchises both Applebee’s and IHOP – the world’s two leading brands in their categories – made a very strong commitment to international growth last December. For the first time, we combined the international operations and expansion of both brands under a single dedicated division, which I joined as president. This allows us to bring the best resources and experienced professionals to work with our franchise partners in each region for both brands. For example, we have a terrific team in the region here, starting with our regional vice president of operations, Gary Moore, as well as our operations services manager Motaz Gamal Eldin, Tanveer Hussain, who manages procurement in the region, and our regional marketing manager, Samer Hayek. I think our franchise partners value and appreciate the fact that we are not sitting in our headquarters in California, but are locally based and helping them build their businesses. And from a corporate standpoint, I think it shows a renewed appreciation for the global consumer interest in the kind of food and service our brands are known for. When you choose a location for a new outlet, what is it that you look at? We look at many factors, but the first is, as you say, location: is it accessible to our guests? Is it highly visible? Does the space lend itself to both the appropriate seating capacity and the footage needed for operations, so it can be a profitable location? Where is

From your global operations, what lessons have you learned and now apply to your Middle Eastern business? The importance of consistency in quality – to provide the same high quality of food and service and value to every guest, at every location and at every visit. That is what will keep our guests coming back, and encourage new guests to visit. We’ve also seen the importance of consistent innovation in the menu. In addition we find guests are excited to try new and different menu offerings, or different variations in some of our core categories. And we’ve also learned, worldwide, the importance – and the value – of respecting, and incorporating local tastes and flavours into our menu, so that we truly are satisfying our guests’ desires for great food. If you were to mention five achievements of the business in Qatar, what would you say? Finding the right franchise partner who will share, and commit to execute, the same standards of excellence in terms of food, service, decor, atmosphere and hospitality. Without that partner, nothing can be achieved. But in addition to that, we are very proud that we have reached a level of success and acceptance in the region and have a lot of guests who truly love their Applebee’s restaurant. We are also proud that we have incorporated some of the great flavours of the region into our offerings. Lastly, we are proud that in a very competitive market, we are not only thriving, but looking to expand. That’s quite an achievement, and again, all credit to our franchise partners, their teams, and our team members in the region.

“Our goal in every Applebee’s is to be an authentic American grill, but one that also appeals to the tastes of local guests and embraces the unique flavours and ingredients that can be found in that region.” The Edge | 79

product & reviews

Reviews

Jaguar XJ T

he Jaguar XJ, which first debuted in 2011, brought a distinctly sporty driving character to the large luxury sedan segment, giving it a unique position that distinguishes it from premium luxury competitors. The 2014 XJ range offers two wheelbase lengths and two supercharged engines. Coupled to the eight-speed ZF automatic transmission that was also new for 2013, the three-litre supercharged V6 provides performance comparable to the discontinued naturally aspirated fivelitre V8, but with better fuel efficiency. All

XJ engines feature an Intelligent Stop/ Start system for improved fuel economy. In dry-road conditions, the Jaguar allwheel drive system normally sends most torque to the rear wheels to preserve the agile driving feel and response of a rearwheel drive XJ. An active electronically controlled system, Jaguar Instinctive All Wheel Drive, constantly monitors grip levels, steering and throttle inputs. Using special control algorithms, the system can proactively predict rear-tyre slip. The XJ model line for 2014 includes standard and

long-wheelbase (XJL) versions, the latter offering 44.1-inches of rear seat legroom, 5.1-inches more than in the standardwheelbase model. The interior of the XJ also has a wide choice of leather and wood finishes with the latest infotainment technology. Even with a high level of luxury, the Jaguar XJ remains agile thanks to a lightweight aluminium construction and sophisticated suspension technology. The starting price of the XJ supercharged V6 is QAR335,000, while the supercharged V8 is priced at QAR399,000.

The Edge | 81

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Read it:

Alex Ferguson: My Autobiography Part of the reason we chose this book for The Edge book reviews is its relevance for Qatar – a country that has recently invested substantially in world football, particularly Paris Saint-Germain (PSG). Being the former football manager and player who managed Manchester United, Alex Ferguson’s autobiography has a flavour of both sports and management. Globally known for his management skills, Ferguson’s account in his book also offers thoughts on personal management in times of making and reversing difficult decisions, like resigning from Manchester United. The book clearly indicates the nature of football management, which is more vulnerable to media scrutiny. “The nature of the job is that the public will attack you when things seem to be going wrong,” Ferguson writes, sharing times he was pilloried by the British media. However, the author shows no hesitance in criticising players such as David Beckham, who he says, “could have the worst game possible and still not believe that he had underperformed in any way”. What adds to the book’s readability is an insight into what happened behind the scenes during some popular games, and of course some popular players. With chapters dedicated to Ferguson’s interaction and relationship with Beckham, Cristiano Ronaldo, Rio Ferdinand and Roy Keane, the author not only reveals

Read it:

the transformation of Manchester United under his management, but also unveils personal traits and reactions of some football legends. On the managerial side, the author discusses details of his relationship with direct competitors, such as Chelsea manager José Mourinho. Spread across 387 pages, Ferguson’s autobiography takes readers through a narrative filled with accounts of personal management, sports business, career choices, life challenges, publicity and fame.

Available at Virgin Megastores in Doha.

Creativity, Inc.

This book’s subtitle, ‘Overcoming the forces that stand in the way of true inspiration’, is just cryptic and alluring enough to spark an interest, hinting at the creative and business conflict that no doubt lies in await between its covers. And though you may never have heard of its author, Ed Catmull, you will no doubt have heard of the two companies over which he presides, Pixar and Disney Animation. And if not, but you are the parent of a young child and/or came of age with modern technology, you will be certainly familiar with the movies these studios have produced including among others, Toy Story, Monsters Inc., Finding Nemo, The Incredibles, Up and Wall-E.

An early collaborator at Lucasfilm, where he worked on Star Wars, in 1986 Catmull founded Pixar with John Lasseter and Steve Jobs (to whom this book is dedicated). Eventually they wound up collaborating with Disney on the world’s first ever animated full length movie created entirely by computer graphics: Toy Story. And it is here that the “forces” of conflicted alluded to earlier manifest as in Catmull describes the differences in vision regarding the plot for example, and back and forth between the two studios that became so excruciating it nearly killed the project. Luckily, it survived the process, and in 1995 Toy Story became the highest grossing animated movie of all time, receiving critical acclaim for its production standards. However, this book is more than just a history of Pixar though. Employing a highly engaging autobiographical style, Catmull documents his and the company’s rise to the top of the animation industry, and how he overcame all the challenges therein. Creativity, Inc. is a fascinating book for anyone who is a fan of American-style startup culture, technology, the personalities and politics of Silicon Valley and Hollywood’s entertainment industry. And fans of Toy Story, of course. Available at Virgin Megastores in Doha.

82 | The Edge

products & reviews

Sony Alpha 7S Sony’s new 7S model, part of the acclaimed 7 and 7R family of the world’s smallest full-frame interchangeable lens cameras, is now available in Qatar at Fifty One East. The new camera puts extraordinary sensitivity, low noise and improved 4K video quality into the hands of professional photographers and videographers. The new model is also the world’s first camera to utilise the entire width of a full-frame image sensor in 4K video acquisition, and does this without cropping or line skipping as it can read and process data from every one of the sensor’s pixels.

Panasonic Toughpad Panasonic has showcased its range of rugged Toughpad tablets, incorporating integrated features and options that enable a seamless workflow even in challenging conditions. From outside sales to healthcare to public safety, Toughpad provides powerful and extremely secure mobile computing solutions critical for enterprise and government. FZG1 tablet is designed with outdoor viewable display; UT-MB5 is ideal for visualising projects; FZ-M1 is meant for field workforces in challenging environments; and Toughbook CF-D1 is designed for automotive technicians.

Sony 4K LED TV Fifty One East has launched three new series of its BRAVIA 4K LED TV, which comprise of five models. The range includes the flagship X9500B, the X9000B and the X8500B series. The new line-up features Sony’s proprietary super-resolution high picture quality engine, and offers improved sharpness and crispness of original 4K images, boosting the contrast function and enriching the colours on screen. For real HD content instead of just increasing pixel count, 4K X-Reality PRO uses a content-adaptive database for up-scaling.

App Reviews Post-it Plus If you are someone that likes to brainstorm ideas using Post-it notes, this iPhone app will allow you to digitise your reminders instantly and take them with you. Open the app, use the camera to take a picture of your collection of Post-it notes and the app will separate each one, saving them on a virtual board that you can reconfigure as much as you want.

Storehouse Storehouse won an Apple design award this year for its beautifully designed app that allows you to create picture and video-driven short stories using only your mobile device. A well-executed publishing platform with clean animations and transitions, it displays usergenerated stories beautifully. It now also has a great user base, making it an excellent app even if you are only interested in browsing content.

Rego If you like to keep track of all the places you visit privately, Rego allows you to do just that. It is a way to journal where you have been and what you liked about a specific place. The redesigned app has a much better user experience and interface design. There is also an option to publish your bookmarks to the web to share with friends.

The Edge | 83

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