The Edge - Oct 2010 (Issue 15) by Firefly Communications

From The Editor

Without a doubt, the economic downturn, coupled with a retraction in oil prices, has turned the once flourishing real estate sector into one of the hardest hit sectors of the Middle East economy. However, within the Gulf region, distinctions abound and the impact at which the real estate sector has been hit by the crisis varies across the Middle East. While the United Arab Emirates property market remains in a state of flux, real estate in the region’s emerging and frontier markets such as Bahrain, Egypt, Lebanon, Qatar and Saudi Arabia continue to demonstrate fundamental stability and long-term investment potential. In a bid to drive both international and domestic investment in challenging times, a number of regional governments have led the charge with the implementation of forward-thinking strategies aimed at stimulating an economic revival, encouraging foreign capital into local markets, promoting healthier levels of corporate governance and transparency, and establishing more sophisticated capital markets structures. Industry experts see affordable housing as the new frontier for the Middle East and North Africa (MENA) real estate industry. According to A.T. Kearney, a leading global management consulting firm, the affordable housing market in the MENA region is estimated to be worth as much as US$125 million (QR455 million) every year. In Saudi Arabia alone, it estimates there is an annual shortage of 150,000 units and in Egypt of 280,000 units. However, to successfully serve the middle-income segment in the Gulf region, government agencies and developers must alter their masterplans and rethink their business models, particularly in regard to land prices and profitability, to maximise volume and optimise margins. In order to avoid vulnerably exposing projects, many developers agree that land prices should represent no more than 30 percent of total development costs. However, in a number of Middle East locations land speculation has escalated prices and made middle-income housing difficult to pursue. To combat this governments and municipalities will have to get involved from the onset to ensure real estate ventures adhere to balanced urban development plans, as well as establishing equilibrium between short-term and long-term interests. Additionally, in terms of profitability, investors and shareholders must take a more realistic approach to market demand. While in parts of the regional real estate sector confidence may be returning to the market, constraints

persist, particularly on the availability of credit. Further, certain government policies, and finite opportunities for liquid investors to acquire high quality, performing assets have delayed the process of price discovery that is a necessary condition for the global real estate market’s return to its full measure of health. More specifically in Qatar, some developers are starting to show the first signs of strain from an oversupply of projects and have announced plans to delay projects due to sluggish market conditions. The country’s largest property developer by assets, Barwa Real Estate, recently announced its plans shelve planned projects in the cities of Doha and Al Khor worth US$9.2 billion (QR33.5 million) until the market improves. Driven by rising values, a sprawling expatriate population and a massive undersupply of commercial and affordable residential spaces five years ago, the government decided to amplify its development and construction ambitions, which resulted in a flurry of new properties flooding onto the market just as the financial crisis sunk its teeth in. This resulted in an investment slump in the latter half of 2008, leaving the city of Doha with an abundance of vacant space. Referring to oversupply in Doha’s West Bay, the capital’s new business hub, Ian Gladwin, the chief executive of Cluttons Middle East, told TheEDGE that the total office stock in Doha stood at 3.2 million square metres of which, 15 percent remained vacant. Additionally, by the end of 2010, he said there would be another 192,000 square metres of office space rolling onto the market. Various market sources have noted the 30 percent fall in Doha’s rental rates since the downturn hit and have forecast rents to fall by a further 10 to 15 percent by the year end. This, coupled with what was witnessed in Dubai, has caused developers and investors to put the brakes on certain developments in the state. Additionally concerning, is that some developers are not responding to Qatar’s slowing urban population sprawl and building is continuing apace. Earlier this year Ibrahim Ibrahim, the Emir’s advisor, warned that Qatar might only add 500,000 people over the next 20 years after doubling its population in the past six years to 1.6 million. While Qatar’s real estate sector did not witness the same flawed speculative building model as Dubai, there is oversupply in Qatar, most notably in the commercial segment. Therefore, it would not be frowned upon if a few more developers eased their foot off the accelerator and onto the brake for the immediate future.

Kelly Lewis Managing Editor

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WHO WE ARE

Managing editor Kelly Lewis k.lewis@firefly-me.com +974 55067574 Acting editor Miles Masterson m.masterson@firefly-me.com +974 66080447 Senior business journalist Megan Masterson megan.masterson@firefly-me.com +974 55348748 REGIONAL SALES DIRECTOR Julia Toon j.toon@firefly-me.com +974 66880228 SENIOR SALES manager Emma Land e.land@firefly-me.com +974 33197446 Marketing administrator Azqa Haroon a.haroon@firefly-me.com +974 55692471

About TheEDGE: TheEDGE is an ambitious business magazine targeting professionals operating within Qatar’s multi-sector business landscape. Printed monthly, TheEDGE was launched in July 2009 to fill the market void and to provide the business community with insight into the latest business trends and market developments. TheEDGE is distributed 12 times yearly to a readership base of more than 7500 professionals, providing advertisers with the needed additional reach and frequency to their most important audience. TheEDGE is an authoritative business resource serving both large and small business operators.

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

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TheEDGE

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

CONTENTS

CONTENTS www.theedge-me.com

.9.

October 2010

Contributors

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

.10. NEWS IN BRIEF

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

.13. NEWS IN QUOTES & NUMBERS

Powerful statements and important statistics that made an impact.

.14. ON THE EDGE

Miles Masterson takes an overview of the upcoming US mid-term elections, the rise of the far right and why the outcome should interest the rest of the world.

.16. Business Insight

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

.25. In the spotlight

Christine Toner looks at how the new Australian coalition government came to be and what policies it might be likely to implement.

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CONTENTS

.42. ECONOMIC BAROMETER

Karim Nakhle dissects the findings of an exclusive TheEDGE study by Inventure, which shows that OwnerManaged Businesses tend to be more profitable, more resilient and have more committed staff.

.45. ON THE PULSE

Edward Jameson weighs up the impact of the departure of United States forces from Iraq on the Gulf region’s overall economy.

.48. GREEN BUSINESS

Qatar could be poised to lead the world in the arena of truly green vehicles, says Sam Pickering.

.28. MARKET WATCH

How can governments meet ballooning infrastructure investment needs following the economic crisis? We discuss the World Economic Forum’s report findings.

.32. INSIDE EDGE

The tightening of fiscal policies worldwide have ignited investor uncertainties, but Rajesh Mirchandani reports that a double dip recession can be avoided.

36. COVER STORY

From overnight fortunes to total collapse, regional real estate has been on a 24-month rollercoaster. Jamie Stewart asks: what comes next, in an uncertain, post-recession world?

.51. ENTREPRENEUR

Qatar’s integrated electronics installation industry is developing rapidly with Doha-based TechnoQ at its forefront. Miles Masterson spoke to the company’s managing director, Zeyad Al Jaidah.

.55. SPECIAL FEATURE

Rachel Morris examines Qatarisation, and the gap between the concept’s theory and practical application.

.59. BUSINESS VIEW – REAL ESTATE

Edd Brookes takes a look at some of the country’s most ambitious projects.

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CONTENTS

Leader in Electrics & Automation

.62. SPECIAL REPORT

Oliver Cornock on how many sectors in Qatar are benefitting from the country’s increased focus on improving its industrial capacity beyond hydrocarbons.

.68. BRAND BEAT

Get Everything You Want for Industrial Networking. * http://www.lsis.biz

Colours are particularly powerful at producing an emotional customer response, reports Charlotte Stubbs, and agencies have developed and perfected many strategies for using colour theory in their design, marketing and branding.

.71. BALANCE SHEET

With a decrease in private demand, the construction industry is hoping for public investments to offset declines in commercial and residential work. Indranil Goswabi looks at how companies should optimise their costs in this sector.

Do you think we can catch up?

To advance to the next level, LG Industrial Systems is reborn as LS Industrial Systems. LS Industrial Systems will continue to lead the future of industrial electrics and automation by providing Total Solution, a core essential for competition in the 21st century industrial era.

Manual Motor Starter

Contactors Thermal Overload Relays

Starvert iS7

.74. LEGAL INSIGHT

Ray O’Connor and Nikk Bond investigate the common issues facing construction professionals looking to establish themselves in Qatar.

XBC

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XP 30/50/70/80

.77. BUSINESS KNOW-HOW

Wassim Karkarbi unlocks the code to achieving sustainable hires, at executive and leadership levels, through the means of executive search firms.

CONTENTS

80 .80. Health and safety

In the first of our new regular feature, Mark Kenyon investigates the concept of regulating health and safety in the workplace, and discusses where the Qatari employerâ&#x20AC;&#x2122;s responsibility begins and ends.

.84. INDUSTRY FOCUS

Adam Lorenc reveals how the needs and realities of commercial construction architecture and office design are helping to reshape the modern workplace.

84 .100. EVENTS & Conferences

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

.102. qatar projects

An update on projects taking shape in Qatar.

.103. tenders

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

.88. HOW-TO GUIDE

VeriSign instruct on how to harness the power of digital signatures to mitigate security risks and mitigate the expense of paper processes.

.92

TECH TOOLS

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

.93. LIFE & STYLE

Thomas Woolf uncovers the growing danger of obesity in the Gulf region and Megan Masterson travels to New York to take a bite out of the Big Apple.

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CONTRIBUTORS

The Usual Suspects...

p.25 Christine Toner Economic Correspondent London, United Kingdom

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

p.74 ray oâ&#x20AC;&#x2122;connor Senior Legal Consultant DLA Piper Qatar, Doha

p.32 RAJESH MIRCHANDANI CEO Dun and Bradstreet South Asia, Middle East

p.55 Rachel morris Freelance Journalist Middle East and North Africa Region

p.74 Nikk bond Senior Legal Consultant DLA Piper Qatar, Doha

p.36 JAMIE STEWART International Correspondent London, United Kingdom

p.42 Karim Nakhle Senior Business Strategist Doha, Qatar

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

p.62 Oliver cornock Regional Editor Oxford Business Group Gulf Cooperation Council Region

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

p.71 Indranil goswami Director, Advisory Services KPMG Doha, Qatar

p.80 Mark Kenyon Health and Safety Group Leader URS Qatar LLC Qatar, Doha

p.84 Adam Lorenc Design Director Bluu Qatar Qatar, Doha

All contributors to TheEDGE are wellregarded leaders in their respective industries. If you are interested in joining the esteemed panel of contributors, please contact the managing editor, Kelly Lewis at k.lewis@ firefly-me.com

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NEWS IN BRIEF

LOCAL NGL OUTPUT TO EXCEED A MILLION BARRELS PER DAY Samba Financial Group has said that Qatar’s natural gas liquids (NGL) output is set to exceed one million barrels per day by 2011, with revenues from the associated condensate to compensate for weak gas prices. NGLs are liquid products separated from natural gas and include propane, butane, ethane and natural gasoline. According to Samba, Qatar’s NGL output averaged 822,000 barrels per day through June, an increase of 14 percent more than the 2009 average. PLANS AFOOT FOR EDUCATION CITY-BAHRAIN RAILWAY LINK Sultan Bakhit Al Enazi, project manager at Qatar Railway, recently revealed plans to build a high-speed rail link between Qatar’s Education City and Bahrain. The project is said to be part of a QR133 billion railway, which will include a metro network within Doha, an inter-Gulf Cooperation Council rail link, and a rail freight network. The Education City-Bahrain rail link will feature trains travelling at speeds of up to 350 kilometres per hour, so that “it would take 51 minutes straight between Education City and Bahrain”, said Al Enazi. The railway link is expected to be in operation by 2017. QATAR TOPS MENA REGION IN COMPETITIVENESS According to the World Economic Forum’s Global Competitiveness Report 2010-2011, Qatar – ranked 17th overall – is the most competitive country in the Middle East and North Africa (MENA). With a projected growth rate of 18.5 percent for 2010, the country is the fastest growing economy in the world, as well as one of its wealthiest, the report said. Switzerland remains in the top spot, while the United States has fallen from second to fourth spot, behind Sweden (second) and Singapore (third). Qatar’s high-quality institutional framework ranked 10th overall, and this, combined with its stable macroeconomic environment (ranked 8th) and efficient goods market (12th), helped it enter the rankings in the top twenty. Saudi Arabia took second

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place in the MENA region, followed by the United Arab Emirates, Tunisia, Oman, Kuwait, Bahrain, Iran and Egypt. Lebanon, included for the first time, ranked 92nd. BARWA EXERCISES CAUTION, HALTS PROJECTS Barwa Real Estate, Qatar’s biggest property developer by assets, has halted planned projects worth US$9.2 billion (QR33 billion) until the market improves. Though the company is going ahead with projects already started, it will not start new projects in Doha and Al Khor because of a surplus of residential and office space in these cities. Instead, Barwa will be focused on reducing its debt by improving cash flow and increasing efficiency, a company spokesperson said. NEW SHARI’AH-COMPLIANT ASSET MANAGEMENT FIRM Qatar First Investment Bank (QFIB) and Gulfmena Alternative Investments are planning to set up a Shari’ah-compliant asset management firm to tap into the rising demand for Islamic investment products. The new firm will be majority-owned by QFIB,

while Gulfmena will manage investments, and is set to launch at the end of 2010. It will seek to be regulated by the Qatar Financial Centre Regulatory Authority after an initial temporary offshore establishment, and will provide a full range of compliant products and services across all asset classes. MENA BEHIND IN ONLINE SHOPPING A survey published by online research company, Effective Measure and Spot On Public Relations, found that just three in ten Internet users – 32 percent – in the MENA region purchase goods and services online. The survey of almost 7000 users across the region showed that the Gulf Cooperation Council leads with 43 percent of Internet users making online purchases. Yet overall the region lags behind developed markets such as the United Kingdom, where 62 percent of all Internet users shop online. Nevertheless, Brendan Ogilvy, vice president of digital insight at Effective Measures, said, “At 32 percent of Internet users, that still represents a market of more than 20 million online shoppers across the Arab world.”

NEWS IN BRIEF

INTERNATIONAL GULF STATES IN QR447 BILLION ARMS BUYING SPREE According to the Financial Times, the Gulf states have embarked on one of the largest re-armament exercises in peacetime history, ordering United States (US) weapons worth US$123 billion (QR447 billion). The purchase of new weaponry comes at a time when many Middle Eastern countries are alarmed by Iran’s nuclear ambitions. Saudi Arabia accounts for the largest single component of this military build-up, having ordered a package of US arms worth more than US$67 billion (QR243 billion). The United Arab Emirates (UAE) has signed contracts to buy up to US$40 billion (QR145 billion) worth of military equipment. Oman is expected to spend US12 billion (QR43 billion) and Kuwait US7 billion (QR25 billion) until the end of 2014. EDINBURGH’S CAIRN ENERGY STRIKES OIL OFF GREENLAND Edinburgh-based exploration firm, Cairn Energy, has discovered oil off the coast of Greenland. Chief executive, Sir Bill Gammell, said it was “extremely encouraging” to find evidence of an “active working petroleum system” in the Arctic Sea. The firm has found two types of oil in its Alpha well at depths of between 300mm and 500mm, and they are currently being analysed. Meanwhile, Cairn faced attempts by Greenpeace to stop it deep drilling. Four of the organisation’s activists were arrested after boarding a Greenland drilling rig last month. RBS TO MANAGE GULF BOND SALES The Royal Bank of Scotland Group (RBS) expects to manage US$7 billion (QR25 billion) to US$10 billion (QR36 billion) of Gulf Arab bond sales next quarter. The bonds will be sold by governments, staterelated companies, financial institutions and companies from “across the region, but dominated by the UAE”, Simon Penney, chief executive officer for the Middle East and Africa at RBS, stated. The six countries, comprising Saudi Araba, Qatar, the UAE, Kuwait, Bahrain and Oman, have raised US16 billion (QR58 billion) so far from 30 bond issues this year.

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SAUDI ARABIA REVEALS LARGE UNCONVENTIONAL GAS RESERVES The Financial Times reports that Saudi Arabia has large reserves of unconventional gas that could help the Kingdom meet its soaring domestic energy needs, leaving more crude oil available for export. Khalid Al Falih, chief executive of Saudi Aramco, told the newspaper that the Kingdom could hold hundreds of trillions of cubic metres of unconventional resources such as shale gas. Having reached Saudi Arabia’s oil production target of 12.5 million barrels a day, well above current production of about 8.3 million barrels per day, Saudi Aramco is now investing more in natural gas than in oil production. PALESTINIAN FISCAL GROWTH A new World Bank report on the Palestinian economy indicates financial good news from the occupied West Bank and the Gaza Strip. In the first quarter of 2010, the economy grew at 11.5 percent compared to the same quarter in 2009. Real gross domestic product growth in the Gaza Strip was 15 percent, while the West Bank saw a more modest 10 percent increase. The World Bank reported that the impressive growth has been driven by financial aid from donor countries, and while there has been a slight increase in the amount of private investment, the report indicated that this “remains well below what is needed to replace donor aid as the main source of growth”. The Palestinian territories will reportedly remain donor dependent until the economic and security restrictions in place are lifted, including

allowing exports out of Gaza, and allowing for a greater and freer flow of raw materials in both territories. HEAD OF VATICAN BANK IN LAUNDERING INVESTIGATION The head of the Vatican Bank, Ettore Gotti Tedeschi, is under investigation in a moneylaundering inquiry. Prosecutors reportedly seized EUR23 million (QR111 million) from the bank’s accounts after two suspicious transactions were reported between Vatican Bank and two seperate Italian banks by the Bank of Italy’s financial intelligence unit, to tax police in Rome. Reports say the Vatican Bank failed to inform financial authorities where the money had come from. Tedeschi, an expert on financial ethics, has been in charge of the bank for a year, and was formerly head of Spanish bank Santander’s Italian operations. HALLIBURTON AND PETROFAC WIN IRAQI CONTRACTS The Iraqi government, in conjunction with the Netherlands’ Royal Dutch Shell and Malaysia’s Petronac, awarded a contract to American company, Halliburton to drill 15 oil wells in the Majnoon oilfields in southern Iraq. The United Kingdom’s Petrofac, meanwhile, secured a twoyear contract to build two new crude processing plants with a capacity of 50,000 barrels per day each, and to rehabilitate the existing one. Majnoon’s current output is 45,000 barrels per day, but the aim is to eventually increase production to 1.8 million barrels per day, as per official statements regarding plans to develop the oilfields over the next two years.

NEWS IN QUOTES AND NUMBERS

News in Numbers

#66

Professionals from the United Arab Emirates (UAE) are among the most active users of social and professional networking sites, such as Facebook, LinkedIn and Twitter, according to the results of a global study by Robert Half, the world’s largest specialised recruitment firm. The survey – of more than 3000 managers across 13 countries in Europe, South America and the Middle East – found that 66 percent of UAE respondents use such sites a minimum of two to three times a week, compared to the global average of 49 percent. “As this survey demonstrates, the bulk of professionals in the UAE turn to social and professional networking sites to keep in touch with colleagues, learn about developments in the profession and for recruitment,” says James Sayer, associate director at Robert Half UAE. Interestingly, 54 percent of UAE respondents are forbidden from accessing social media sites at work, making the UAE the most restrictive of all countries surveyed, and 17 percent more restrictive than the global average of 37 percent.

Pic of the Month

News in Quotes “The Saudi aim is to send a message especially to the Iranians – that we have complete aerial superiority over them.” An unnamed Saudi defence analyst commenting on reports of a QR240 billion arms spending spree by Saudi Arabia.

“The emergency is far from over. Large numbers of women and children have not been reached with the assistance. The risk of malnutrition looms large, with the very young extremely vulnerable.” Marixie Mercado, spokeswoman for the United Nations Children’s Fund, warns that the aid effort for flood-ravaged Pakistan needs to be sustained and scaled up more urgently to reach the 10 million children affected.

“Last year, compared with our European neighbours, we were miserable but rich. This year we’re miserable and poor.” Ann Robinson, director of consumer policy at uSwitch.com, comments on findings from a uSwitch survey, indicating that the United Kingdom and Ireland are the worst places to live in Europe based on variables such as net income, cost of essential goods and valueadded tax.

A demonstrator carries a grammatically incorrect and misspelt sign protesting the presidency of Barack Obama during a march in Washington D.C. Several thousand people gathered for the march to support the conservative, right-wing Tea Party, which has emerged as a force in American politics. The party recently pulled off the biggest United States electoral upset of the year, when relative unknown Christine O’Donnell, won a surprise victory in Delaware over a favoured Republican candidate.

“Football is for everyone. When I think of all the youth of the Middle East, what they’re missing is an event like the World Cup.” Former France midfielder, Zinedine Zidane, after his apppointment as ambassador for Qatar’s 2022 World Cup bid was announced.

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ON THE EDGE

Ah… Ah… AMERICA! “When America sneezes the rest of the world catches a cold.” This cliché apparently began circulating during the stock market crash of 1929 that resulted in the Great Depression. However, it is probably as pertinent now, if not more so – you just have to mention the word ‘subprime’ to know that – and what occurs in American politics and economics still seems to directly affect most of the world… By MILES MASTERSON

hile the upcoming United States (US) mid-term elections in early November should be of little interest to the citizens the world, it nevertheless makes for fascinating observation, like a bloody boxing match where neither opponent can quite deliver a knock out blow. Yet, on a more serious note, with fears of a ‘double dip recession’ and uncertainty regarding the future of their foreign policy, as the country’s two political parties duke it out, the outcome will ostensibly have a marked effect on many countries, especially those with nascent democracies. Indeed, the discourse between the Republican and Democratic parties (comically and appropriately represented by an elephant and a donkey respectively), on their various differing beliefs, often borders on the ludicrous. These issues include overseas military campaigns, fiscal policies, immigration, abortion and health care, not to mention the building of mosques in the country. Arguably, these and a long list of other topics continually polarise Americans and the destructive petty politicking they often cause (as opposed to affecting useful legislation), is increasingly exposing noticeable flaws in the self-styled ‘greatest democracy on earth’. Moreover, these differences serve to create a constant cacophony of combative voices, reflected in the newspapers, websites and television channels, many of them subjectively sympathetic with one of the parties. It could be countered that the right to offer an opinion in any forum is a cornerstone of the US. But it could also be argued that the extreme Republican right in particular (Tea Party, anyone?), is threatening to undermine the legitimacy of the entire US electoral process, the repercussions of which will quickly be felt worldwide, should they return to govern. Republican party candidates who would have in the past been censured by their more centrist leaning peers and media, have been permitted to utter headline-making volatile statements: accusing the US President of a “Kenyan colonial” mindset and not being born in the US; that Muslims should be banned from the military and not allowed to immigrate; that Hispanics be targeted and asked for their papers on demand; or that America’s health care system be constricted. The party, often labelled as the champion of the rich elite, also supports other conservative fiscal and tax policies that some feel will continue to reward the wealthy and threaten the welfare of America’s growing number of unemployed and poor. However, the current Democrat Obama administration is not without criticism. To be fair, they inherited a legacy of financial and military liabilities, some going back decades, and have been thwarted by Republicans, who have have been accused of blocking senate bills for political aims.

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Nevertheless, even with the above taken into account, to the average American, the Democratic incumbents have not proved nearly as effective as they promised during their ‘Vote for Change’ campaign of 2008, and are battling a perceived weakness on many social and fiscal policies. This is in part thought to be fuelling the rise of bigoted American religious Christian far right candidates, and in many ways threatens the stability and objectivity of the country’s government, which could shift conceivably should the extreme Republicans begin to gain a grasp on power. Unfortunately, the rise of similar rightwing political sentiments and parties in Europe, coupled with the growing ineffectiveness of similar – mainly – two party democratic systems (resulting in ‘hung’ parliaments and shaky coalitions in well established democracies such Britain and Australia), has done little to engender confidence in the US-lead system. Both the attitude of the West towards other cultures and concept of rule ‘by the people for the people’ are now being questioned by those many in other parts of the world, most of whom are in some way affected by American investment, military occupation or international policies. Therefore many discerning pundits outside that country wait in anticipation for the result of November 2, 2010 – with some cough mixture and a tissue at the ready, perhaps?

BUSINESS INSIGHT

Carbon Neutrality

Green practices in property and construction Whilst internationally, the concept of corporate social responsibility (CSR) ‘carbon neutrality’ is fairly widespread, it is relatively new to the Middle East, particularly Qatar, where despite a growing recognition of the need to ‘go green’ there are few companies – either local or international – that can truly be considered as operating as such. However, two companies in the real estate sector, Dubai-based Sabban Property Investments (SPI), and Doha-based LS Homes and Properties, are leading the way, with the former having opened a carbon neutral headquarters in Dubai more than two years ago. Under the advice of United Kingdom (UK) based Carbon Neutral Company, they also instigated a carbon neutral approach to their developments on the Pearl-Qatar. As a company associated with Sabban, recently re-branded LS, are also coming close to achieving carbon neutral status in their new headquarters in the Tornado Tower, Doha. Miles Masterson interviewed LS managing director Arron Browne, and Nicola Clarke, environmental advisor to SPI, about the motivations, challenges – and rewards – of carbon neutrality in the property business and beyond. Arron Browne, LS Properties Where did the idea to strive toward carbon neutrality originate? The carbon-neutral aspect came from Sabban Property Investments, which is the development on the Pearl. We started off very slowly, it was just an effort in-house in our office here and in Dubai, for every member of staff or every single company that worked for us, any stakeholders, to be more environmentally friendly, and to that end we employed an environmental advisor Nicola Clarke. It started off very slowly, just by being more energy efficient. So you began the process in your offices and then extended it to the construction? It was purely in the office, and it escalated from there, from having recycling bins, to looking at how we can make our project on the Pearl more environmentally friendly. You are fairly limited on The Pearl, because there are certain materials you have to use, ways that you have to build, especially on a

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master development. There are Pearl-Qatar regulations, there has to be a uniform aspect of the Pearl, and it makes sense for the aesthetics of the island. Our environmental advisor found ways that we could offset all of the emissions throughout the construction phase of the project and calculate every emission that goes out from the construction, which involves a huge amount of statistics. You are looking at the environmental cost of transporting all of the raw materials, the cost of the energy used on site, so that was really the best we could do, because it is a freehold project, we don’t have any ownership afterwards, so we fitted out everything with, for example, energy efficient light bulbs. Does that all include the manufacturing of the materials you use? No. As soon as we have actually purchased it, that is when we begin the calculations. It took about two or three months to calculate all of the emissions, right from the start of the project to the end. Then we sent that to the Carbon Neutral Company and they basically

look to offset that total amount. Then they then offered us projects that we could invest in that will repair the environment to the extent that we have damaged it…anything that Carbon Neutral recommended from their Gold Standard of projects that we knew would be sustainable. What was the main reason your company was motivated to do this? Does it save money, is there a CSR aspect or do you use it for marketing? I don’t think there is any company in the world that would invest a substantial amount of money into being environmentally friendly without it having benefits to the company. It makes sense and it is part of the actual strategy that we were taught by the Carbon Neutral Company. You have to take your environmentally friendly policies and benefit from it and then educate everyone, all your stakeholders, purchasers, etcetera, on that. We were the first carbon neutral developer and project in the Middle East, it made us look responsible and gives us a reputation for being caring, but it didn’t necessarily have a direct

BUSINESS INSIGHT

correlation to sales. Nobody is going buy from you just because you are carbon neutral. Are all your offices paperless? In Dubai it is paperless. The office here is also paperless as much as we can manage, we cut down on any courier costs, we hardly ever use couriers; we do everything online. We have all of our data stored in online systems, so as far as possible we don’t use unnecessary amounts of paper. Any paper we do print on and then might be discarded, we will turn that paper into a scrapbook we can use for jotting down notes, so we don’t need to purchase notebooks and pads. Is your Doha office carbon neutral? No, but we will be making it carbon neutral. We are at the calculating stages now, so I will have to calculate how much fuel is used by everyone by getting their petrol receipts, finding out how much they spend on petrol, how many miles they travel, how much energy we consume at the office…I can’t work for one company that has that policy and then not the other. How far does the reach of your carbon neutrality ideal extend, to your travel, vehicles or any out of office components of the businesses? Everything in the business is offset where possible, including air travel. In fact in the last two years we have cut down on air travel a lot, setting up [online] conference facilities whereby board meetings don’t have to take place with people flying in from Saudi Arabia, London or Qatar. Do you think, ultimately, this will be something that every company has to do? I think within a decade it will be regulation. Take us through some of the other aspects of your efforts to make your office more ecofriendly so far? In terms of carbon neutrality, you can’t calculate things like toiletries and washing up products, but we do source everything from an eco-friendly provider; for example, all of the goods in the kitchen are eco-friendly, there are bio-degradable plastics used, bio-degradable washing up liquids…all of the paper we use, such as business cards, which you have to have, are recycled paper, printed using soya ink; so every single facet of the office that we can create or use in an environmentally friendly way, we will. Any brochures we print; all recycled, all on soya ink. But there are so many more ways you can change your home, office, etcetera, into being environmentally friendly. For example here we

“We were the first carbon neutral developer and project in the Middle East, it made us look responsible and gives us a reputation for being caring.” have no light switches, everything is on sensors so if a room is not used for a few minutes the lights go off…if someone turns on a normal bathroom light and walks out it will stay on all day, but in this office it goes on when you go in and it goes off when you go out. It is the small things. It might not make a huge amount of difference in a day, but over five years it will.

ideas…and if that knowledge passes to us, it is going to pass to anyone else we are dealing with, it is going to pass to our clients. The advantage of that, advertising the fact that we are doing that, then those other businesses might choose us, or those buyers or renters that come through us, they might say, ‘That’s a great idea, we are going to do that’.

What about staff, do you source new staff experienced in working in such an office? And what about existing staff, do they need to be trained in any way to learn how to deal with these differences? In this office we haven’t got an individual that is solely responsible for our CSR as yet. But I’m delighted that we are in Tornado Tower and they actually have recycling facilities downstairs. So as that circular came round the building, I said right, at the end of each day we have one of the guys, who is responsible for separating everything that is in the wastepaper bins into paper and plastics etcetera and we can recycle from there. I’ve also asked one member of staff to be an environmental leader. It is an unofficial title, but their task is to basically come forward with ideas about how we can be more environmentally friendly. It is just an ethical reward they get from being the person in the office that is going to promote that, and is going to educate staff.

Companies that might like that ethos might also be drawn to do business with you, indirectly? Exactly, and I think a lot of that happens subconsciously, from the client’s side; if a company is seen to be responsible there is an automatic instinctive trust to believe what you are being told.

Apart from the advice from the Carbon Neutral Company, is there some further sharing of information? Are you in any other organisations? We are a member of the Emirates Environmental Group and the Qatar Green Building Council. One of the reasons Sabban has joined all these groups, is the more you join them, the more you make an effort to meet with other companies that are trying to be environmentally friendly. It is basically a sharing of ideas at those meetings…and I would like to see that happen on a broader scale in Qatar. You can sit with your competitors, you can sit with other businesses that are in no way associated with what you are doing, and learn from what they are doing, share

Is supporting local suppliers part of this plan? Obviously this would be better from an air transport angle, but then again these materials or products might not be as environmentally friendly as those you might obtain overseas? It is something that you have to work through with someone like the Carbon Neutral Company, through the recommendations; and again, that’s where the environmental focus groups that you can attend anywhere in the region come in, where you can obtain information. But there is a certain amount of weighing up that you have to do. Do you choose a more sustainable source that might be elsewhere in the world? Or what is a local product that is not necessarily produced in a sustainable way? And it can be calculated; it is not necessarily something we would do internally, but it is something that we would contract out to someone else. Would Nicola Clarke perform that role? She would. Or whomever we use, we’ve had this office fitted out very recently and we have had an office in Dubai fitted out and we are having another office upstairs fitted out. Are there specialists who do that? We used Bluu Solutions. And as far as possible all the materials they use are either TheEDGE

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“Just having that belief in our company, translating to and educating our clients, we hope that that is going to have some kind of impact in the future” local or from sustainable sources. So you can pick your stakeholders, you can pick who you want to work with. And again that is the message I was trying to put across earlier, that we are not necessarily using them because of that, but it is certainly an added bonus that we will go to a company that will fit out our offices in a manner that reflects our CSR. How does recycling fit in when it is so poorly developed in Qatar? I think that is something that will happen very quickly in Qatar. There are recycling facilities, as I said at the Tornado Towers. I honestly believe that other offices and residential apartments will come online or will take that into account, it is a growing trend around the world and anyone that doesn’t will be left behind. And then it is only once you have got it on the residential and commercial side, then you start getting it in public places, so even the car parks of City Centre, a space is reserved there for people to go and put their recycling in. At the moment it is probably pretty isolated in Qatar though? Yeah, and you have to consider as well that it is a fairly large, logistical task for the government to set up those bins…there has to be a back up support from the government and their infrastructure, and their ability to collect it and actually do something with it. How does all of this impact on your customers and clients? Is there any way they might benefit? It terms of Sabban property investments and developments, just take our Sabban site on the Pearl, I can’t say there is a direct benefit for anyone living there, because the carbon neutrality we’ve invested in was during the construction period. However, the benefit that they do have is that we are going to maintain the emphasis on being environmentally friendly, so as far as possible. We have delivered information, newsletters on PDF, to educate anyone who is living there on how you can become more environmentally friendly at home. So just having that belief in

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our company, translating to and educating our clients, we hope that that is going to have some kind of impact in the future. There’s not a great deal more we can do with that development, apart from encourage people to use less water, to not leave taps dripping, to use energy efficient light bulbs, etcetera. Have you had any feedback on what you have been doing? We were invited to the inaugural meeting of the Qatar Green Building Council, and that was fascinating. We sat there with some huge developers and huge government bodies and very influential people, and it was great to show our ideas at that stage, because we had just launched the carbon neutral office at Sabban Towers in Dubai. It was great to sit there and say well we’ve done this, and also listen to what other people were doing or planning on doing in the future. We actually got recognition from the Emir’s office congratulating us on our carbon neutral status. So that was a good boost for us, that we were doing the right thing and it wasn’t just a marketing tool, it actually had some kind of effect. Also you wouldn’t have been exposed to that kind of dialogue? Exactly, and in sense of the brand it is fantastic. It’s not something that you would necessarily say - Sabban Properties is a green company – but you would know the name Sabban because of that; and so in a business sense that is fantastic for any company, to have branding that sticks out for a good reason. How great do you think the impetus is really there to make the construction, development and real estate sectors more environmentally friendly? How do you see it unfolding in Qatar in coming years? Well, let’s talk about the construction industry in Qatar, because that is obviously all around you. You see cranes and building sites everywhere. In terms of projects that have already started it is going to be very difficult for a government to say it must be done; retrofitting is highly expensive. But I think if they slowly

roll out some ground rules for any new projects that are announced – if you want to have this project approved by the government, then you need certain aspects of environmental policy in there…not necessarily enforcing the lead indicators straight away, but slowly bringing that in. I think the Qatar Foundation will also have a huge role to play, because one of the things we found is that when we went to various schools and we did a couple of presentations, there is a high level of awareness among schoolchildren and they naturally pass that on to their parents. Do you believe there is scope for someone to form a company like the Carbon Neutral Company in Qatar or the Gulf region? There are a multitude of business opportunities in recycling, consulting, managing it, etcetera? Absolutely. Especially the stage Qatar is at now, the economy has kept its head above water, especially when others are not doing so well. It is on the world map, its energy exports are relied on by a lot of other countries; you have got the new airport and the 2022 bid, which is a huge environmental consideration. I would say carbon offsetting is their best option in that case. But going back to your question, yes, because there is no one else doing it. It’s actually a necessity, because there would be nuances here that would be better serviced by a local organisation rather than one from another country? And they wouldn’t necessarily have regional knowledge either, because if we use a carbon neutral company based in London, they will recommend that we invest in projects all around the world, not because we favoured any particular country, but because the projects were recommended. At that time they didn’t have any projects in the Middle East that we could invest our money into that offset our carbon emissions. As soon as we went to them, they started looking into them, and I do hope they have some now. So these companies would then keep the money in Qatar and spread it to local organisations? Yes, again it goes to the spreading of knowledge. If you are investing in projects locally, there will be people involved in that that will spread the word that this project is going ahead here. But you should also note that Carbon Neutral is CSR-based and focuses on countries that wouldn’t benefit from being as wealthy as Qatar, where you would hope the government here would push a lot of that.

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Nicola Clarke, Sabban Property Investments Of course, having spoken to Arron, the motivation to become carbon-neutral and paperless, it is understood, comes from within CSR-minded companies such as Sabban. But how did you originally implement these policies? When I joined Sabban Property Investments the company already had strong values but no formal CSR programme. I was bought in to help make the company environmentally friendly. We are proud to say that SPI has been a carbon neutral company for several years in a row and we have built the first carbon neutral development in the Middle East, the Sabban Towers, which are carbon neutral in their construction. The biggest hurdle with new ideas is the perceived extra cost, the change in practice when people are stuck in their ways or too frightened to try new things. But ultimately being environmentally friendly is about reducing waste, and when explained and embraced, everyone was keen to join in. That can be as simple as reducing waste at the photocopier or reducing the amount of unnecessary concrete and steel in a building. Thankfully the management at Sabban is very receptive to new ideas and we created our policies together. Another big challenge is educating our staff and clients and reinforcing the messages so that we don’t go astray and fall back into old habits. What process goes into choosing a company like the Carbon Neutral Company to advise and manage the process? Do they for example specialise or have experience in assisting real estate or property developers and consultants or the construction industry? When were constructing the Sabban Towers and we made the decision to become carbon neutral, we had to find a company with experience that could lead us through the process smoothly. We knew, even with the best will in the world, that in the Middle East it would be impossible to bring our carbon footprint to net zero without investing in a carbon project to balance out the CO2 emissions we couldn’t reduce. For example, offsetting our criteria involved finding a company who would focus on the reduction of our footprint, before offsetting was even considered, and who could absolutely guarantee that the carbon we offset would be delivered. We needed a company that would do what they promised and have a credible scientific process. After an extensive search in 2006 we chose the Carbon Neutral Company mainly because of its outstanding quality assurance programme. Its successful track record with other

clients and within the industry was backed up when we went to meet up with several of their previous clients in London for references. Their third party scientific carbon footprint assessment is also extremely reassuring. Ultimately we know that we can trust the Carbon Neutral Company to do what they promise, and they work well with our people in making our company and the Sabban Towers carbon neutral. Can you explain how the process of calculating carbon offsets in an office works? Our office/company assessment is much simpler to calculate than the Sabban Towers. All businesses that successfully claim carbon neutral status must go through a process of measuring their carbon footprint, making targeted reductions internally and then reducing externally, in other words, offsetting what you can’t reduce. The most complicated part of the process as far as we were concerned was the data collection, which has to involve several departments. Thankfully the Edinburgh Centre of Carbon Management, who are our independent advisers, helped us through the process. The main categories we had to collect data for for our footprint assessment, were energy and water use, fuel use in commuting and travelling and transporting goods as well as waste to recycling and landfill. Then what about the offsets in construction projects such as Sabban Towers and The Pearl in Doha. Can you explain how this works and provide some examples of these calculations? The Sabban Towers carbon neutral project was very exciting for Sabban as it was a first for the region and the actual process of construction and environmentalism is still very much neglected, so it really felt groundbreaking. Again data collection was complicated and a huge task for such a big project. Phase one was the completion of our independent third party assessment of the baseline emissions (in other words, before any environmental changes were made). Our assessment calculated that the greenhouse gas

(GHG) emissions arising from the construction phase of the Sabban Towers on the Pearl-Qatar development was 75,900 tonnes of CO2, which was broken down between: • Materials/life cycle emissions: 82 percent. • Site equipment: 15 percent. • Deliveries: 2 percent. • Commuting: 1 percent. Secondly, we set scientifically significant reduction targets: to reduce all CO2 emissions to net zero. Next we met the targets most cost effectively through internal reductions and carbon offsets. During construction, SPI reduced the steel and concrete used in the development, which resulted in an overall 14.4 percent reduction in the emissions associated with the embodied energy of materials. External reductions were reduced to net zero in the form of high quality, robust and permanent carbon offsets and Sabban chose these offset projects: • Bushenyi forestry sequestration project in Uganda. • Te Apiti wind power project in New Zealand. • Energy efficiency in tourism sector project in Jamaica. • A number of verified emission reductions projects. The last stage of the process was to actively communicate to stakeholders what we had done. What is your perspective on Arron Browne trying to duplicate what Sabban has done with LS, in planning to make his offices in Doha carbon neutral and paperless, and using Bluu to outfit them in the most environmentally friendly way? Were you involved with that at all? Of course I think it’s fantastic that LS has green credentials and I know our green policies at our headquarters here in Dubai will filter through the whole Sabban group. Arron and myself instigated a recycling programme, but the credit for using environmentally preferable products in the fit out goes to Arron and the LS team. I am currently working with LS on the data collection for their carbon footprint assessment, which should be complete soon.

“Another big challenge is educating our staff and clients and reinforcing the messages so that we don’t go astray and fall back into old habits” TheEDGE

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Property Market

Weaving the urban fabric As one of the leading chartered surveyor and property consultancy firms in the United Kingdom, Cluttons also boasts a network of offices in Europe, the Middle East, South Africa and the Caribbean, with a total staff complement of more than 400 people. In the Middle East since 1976, Cluttons asserts a strong presence in the Gulf region and has a growing number of established offices throughout the region. Kelly Lewis met with Ian Gladwin, the chief executive of Cluttons Middle East to discuss the company’s third quarter Property Market Report for the Middle East. What has the uptake in retail office space been in 2010 as compared to figures from 2007/08/09? Are we witnessing a return to the market, or is the rise in tenancy slower than anticipated? The return to market has been very slow in Doha. Rents are still perceived to be high and an adjustment does need to take place on headline rents. Generally, rental rates were increasing from 2006 to 2008, but have dropped off, I would say by approximately 25 to 30 percent in mid-2009 to date. There has been a repositioning in looking at where the market is, and where it is going with this vast amount of supply coming on-stream. Office demand in Doha has been driven mainly by government institutions and organisations, combined with international companies that have an interest in interacting with the government institutions and departments – the new central business district (CBD) area (West Bay) has been very much driven in uptake by those sectors. Along with that, the Qatar Financial Centre continues to move forward positively, but uptake this year has been very slow. What is the current occupancy rate for the Doha office market? Where does that rate stand in comparison to global standards? Currently in Doha the total office stock stands at 3.2 million square metres, of which 15 percent remains vacant. Additionally, by the end of 2010 there will be another 192,000 square

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metres of office space rolling onto the market. In terms of which sectors occupy the majority of office space in Doha, the government and hydrocarbon sectors account for approximately 70 percent of the office space demand. In contrast to global figures, Doha’s vacant office space remains reasonably high. For example, both London and Hong Kong have a seven percent vacancy rate, while New York has nine percent and Beijing a 12 percent vacancy rate. As Qatar, and the Gulf region, are seeking to diversify away from economic reliance on the hydrocarbon sector, has there been enough done by governments and law enforcers to strengthen the architecture of the industry in line with needed policy change? I think diversification is an objective of a number of Gulf Cooperation Council (GCC) states. The need perhaps in Doha is not so great as in some other states, but diversification certainly is a positive one. I think a reasonable amount is being done in terms of increasing communication, but now it is about working out what the value of that communication is to ensure that the urban fabric of the next 10 to 20 years reflects the needs of a diversified state. Therefore, I think the Gulf has come some way, but there is still some way to go, and the key to it will be government departments communicating with the private sector, both in terms of operational needs and development

requirements for the future urban fabric. What is likely to be the impact of Qatari laws that will be imposed on businesses operating in villas, which the government wants moved to commercial premises starting in November? I view it very positively actually. I think with the vision going forward, a rebalance of occupation is going to take place by seeing this through. What I mean by that is that there is going to be greater transparency on stock and operational property in the city, and if you like, this move from residential into commercial space can be viewed as an upgrading. It is happening in other GCC capital cities and it is vital as a starting point for Doha. In terms of going back to my previous point about diversification away from traditional fossil fuels, diversification means attracting talent to the city, a pool of employment talent and business talent. For future talent, both in terms of individuals and companies, these companies cannot function in villas anymore; there are networking issues, configuration issues, standards within companies and needs within the office environment for future thinking and future progress. Therefore, I think the two key elements to achieving this will firstly be rental levels; rental levels on new commercial buildings need to be realistic so that new entries coming into Doha, and also local embryonic businesses, can grow and thrive and, therefore, drive the diversification. The second point is the operational requirements of companies that will drive the diversification through the new urban fabric, and that is ease of entry and ease of trading in Doha; this will drive the commercial stock and uptake of offices in the new CBD. Cluttons’ report shows that by year-end there will be 1.3 million square metres of lettable office space, with future supply expected to grow by 50 percent from 2010 to 2012, to 1.65 million squares metres. What is the economic impact of this market oversupply – is this viewed as being a short-term or long-term oversupply?

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I think, very clearly, the economic impact is going to be twofold. Firstly, the landlord/owner market will need to be market facing to ensure market demand as a financial option of taking up space. Currently there is an imbalance between what people can actually afford and what initial rents are being pitched at. Secondly, I think the government needs to continue to communicate with the development sector to ensure a full comprehension of the requirements of the city and its genuine demand levels. This leads on to another key point, which is, in order to rebalance the commercial occupied profile of the city, rental levels must be objective. This means that building capital value with a medium- to long-term vision is going to be key, rather than the desire for short-term gains, which will ultimately hold back the vision for the diversification of Doha. Capital value will only accumulate by building up from an achievable, sustainable base…currently there is a feeling in the market that perhaps the new commercial stock is being pitched with a short-term vision for short-term gain. So the key is building the framework of CBD stock, for example, the building of the stock must go hand in hand with the policy to drive the diversification vision in line with the occupancy demand. How is the lack of well-planned developments and infrastructure-rich properties (access, parking and appropriate levels of retail) affecting the market potential? Without doubt, things must improve…it is the key to the diversification vision. As a general comment on a macro basis, the working habits of the business workforce have changed massively and this is filtered into the GCC. I would say in the last six or seven years the traditional working hours have changed and employees are now working longer hours. As a result of this, employees need an environment that holds them to their destination a lot longer and the key to that is ancillary lifestyle facilities, which are gymnasiums, restaurants, and breakaway areas that hold staff within an area for a longer period of time. Additionally, as we all know, global trading and business has changed and people are working in the office for softer, but longer hours. The developments in Doha at the moment have

“Currently in Doha the total office stock stands at 3.2 million square metres, of which 15 percent remains vacant. Additionally, by the end of 2010 there will be another 192,000 square metres of office space rolling onto the market.” not been incorporating those ancillary facilities and will need to reflect the profile and the type of business the country is trying to attract in the medium- and the long-term to diversify the economic base of the state. The future way of thinking and working within the office environment is very different to what we have been used to and human beings need facilities these days. A key point, certainly in the Gulf, is for an employee to be able to drive to work and park one’s car. Another point to this is that the capital value in the medium-term of the asset of the building will be reflected by market demand for the building, and if the ancillary facilities are plugged into the development, the asset value will only reflect positively in the median-term. Can you discuss the importance of urban planning and how zoning permits are linked to infrastructure projects in the country? Well, it is certainly not my area of expertise, but very clearly it is a vital part of the city’s vision going forward and the key to that will be getting professionals involved in the very early stages. Firstly, future operational functionality of the city will be based on good core values of town planning. Secondly, as I said earlier, asset and capital value of existing stock and future stock will be based on planning, and if asset value is protected then people and businesses will be assured of their investment being secured in Doha. However, it is really important that town planning is well executed; the key to that is having professionals onboard. Do you foresee an expansion of ownership rights in Qatar’s freehold areas? Well I think the lessons that we learnt in Dubai are actually key…we are no closer to finding a good solution yet in Dubai, although it

is positive work in progress. However, standing back and seeing what has happened in Dubai is going to be very clearly a vital part of Doha’s freehold development going forward, which is giving it the appropriate attention and decision making to ensure that the business community attracts the right type of [customer] profile. Can you discuss the significant implications of Qatar’s ambitions to host the 2022 bid? The country will be need to build a number of real estate and hospitality projects to meet the event’s capacity requirements, but will such projects be able to be converted into economically viable, mixed-used developments after the event? It’s a very good and vital question. I was recently on a plane coming into London and travelled over the Olympic City that they are building for the 2012 Olympic Games. My immediate impression was that this is actually quite a niche development in London, which is focused on urban regeneration rather than on an initial development to host just a single event. The case for Doha, of course, is somewhat different. It is not only going to be a fantastic opportunity to host one of the great sporting events of the world, but combined with that, it is a vital springboard for showcasing Qatar as a country of enormous progress and opportunity. One of the many criteria the bid will be made on is infrastructure and urban fabric, and hence Qatar’s aggressive plans to build world class, mixed-used developments in the business and leisure sectors, which we are all aware of. I believe there are 19 new malls in the planning at the moment…the key to these being economically viable post-2022 will be the current need to rebalance the urban fabric and communicate the true operational requirements of the city. TheEDGE

BUSINESS INSIGHT

Serviced Residences

Property operator shares market insights The Ascott Limited, a wholly-owned subsidiary of CapitaLand, is the world’s largest international serviced residence owner-operator, with more than 20,000 operating serviced residence units in key cities of Asia-Pacific, Europe and the Gulf region, with a further 6000-plus units under development. The company operates three brands – Ascott, Citadines and Somerset. Its portfolio spans over 70 cities across more than 20 countries. Headquartered in Singapore, Ascott pioneered Asia-Pacific’s first international-class serviced residence in 1984 and established the world’s first Pan-Asian serviced residence real estate investment trust, Ascott Residence Trust, in 2006. Kelly Lewis spoke with The Ascott Limited’s area manager for the Gulf region, Melvin Quah, about the company’s expansion plans.

“The 200-unit Somerset West Bay, Doha, is located in the heart of Doha’s diplomatic area, nestled among embassies, key government ministries and headquarters of international corporations. The serviced residence is also a short walk away from the City Centre mall, one of the largest shopping and entertainment destinations in the Gulf .” What is Ascott Limited’s current portfolio of properties in the Middle East and how many brands are represented as part of this portfolio? Currently, Ascott has over 300 operating serviced residence units in two properties in the Middle East. In Manama, the capital city of Bahrain, Ascott operates its 118-unit Somerset Al Fateh, which is located in the exclusive Juffair residential area that is home to many

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expatriates. It is minutes away from the central business district, diplomatic area and Bahrain financial harbour and close to Adliya, one of the finest dining locations in Bahrain. The residence also overlooks the scenic Arabian Sea. Somerset Al Fateh offers one-, two- and three-bedroom apartments including four two-bedroom penthouse suites. Facilities include two swimming pools, a fully equipped

gymnasium, children’s indoor playroom, sauna and steam rooms. The 200-unit Somerset West Bay, Doha is located in the heart of Doha’s diplomatic area, nestled among embassies, key government ministries and headquarters of international corporations. The serviced residence is also a short walk from the City Centre mall, one of the largest shopping and entertainment destinations in the Gulf region. Somerset West Bay has twoand three-bedroom apartments, complemented by facilities including a restaurant, fullyequipped gymnasium, indoor swimming pool and children’s indoor playroom for residents’ use. Ascott has plans for a 200-unit Ascott Bahrain. Ascott Bahrain will be a premier serviced residence, which will be part of the iconic Raffles City Bahrain, located at Bahrain Bay. The bay area has been slated to be the new city centre of the Kingdom of Bahrain. Guests at Ascott Bahrain will experience exclusive waterfront living with a beautiful view of the kingdom’s skyline.

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Ascott recently announced its global expansion plans to span 40,000 apartment units by 2015, up from 26,000 currently. What plans for expansion does Ascott have for the Middle East region? We will continue to expand our presence in the Gulf region. We are looking to add a minimum of three to five properties year-onyear to our existing portfolio. This will help us achieve Ascott’s target of 40,000 apartment units globally by 2015. And what will be the key areas in the Middle East that you will be targeting? As we are in the serviced residence business, we cater to a lot of business clientele, people looking to relocate, or those who are on short- to long-term business assignments in the city. We will continue to build upon our existing presence in Bahrain and Qatar to leverage economies of scale. Qatar, for example, is an interesting market with tremendous growth potential. With the economy of Qatar continuing to perform much better in comparison to other countries in the Gulf region in the wake of the economic crisis, we see the need to expand further into Qatar. Will Ascott look to expand its presence in the Middle East by means of new development projects and by acquisition of existing hospitality titles? We are looking to expand our presence in the Gulf region through management agreements. You have spoken about Ascott’s ambitions for

“We are in the serviced residence business, we cater to a lot of business clientele, people looking to relocate or those who are on short- to long-term business assignments in the city. We will continue to build upon our existing presence in Bahrain and Qatar, for example, which is an interesting market with tremendous growth potential.” Qatar, but what about the company’s expansion plans for other Gulf countries? At this point in time, Ascott is considering a number of possibilities in the region. Ascott has received a great deal of interest from a number of parties wanting it to enter into markets such as Bahrain, Kuwait, Saudi Arabia and the United Arab Emirates, so we are exploring the options. Now that Ramadan has passed, we will intensify the discussions with these parties and see what evolves from there. Ultimately as part of Ascott’s global expansion plans, how many properties would the company aim to target in the GCC region – how many new properties would you hope to have established by 2015? In real terms, Ascott would be looking to achieve at least a minimum of ten new properties in addition to the current portfolio it has in the Gulf region.

“We look for credible partners to work with so obviously as potential partners come to us, we have to evaluate the opportunities. To grow our business in a sustainable fashion we are committed to building long term relationships with our partners.”

Who will Ascott look to partner with for financing and development contracts in the GCC – are there preferred financial institutions and developers? We currently do not own any equity in the serviced residences we operate in the Gulf region. The contracts to manage Somerset Al Fateh and Somerset West Bay were awarded by Nuzul Holdings, which owns the properties. As for Ascott Bahrain, it will be part of Raffles City Bahrain, CapitaLand’s integrated lifestyle development. We look for credible partners to work with so obviously as potential partners come to us, we have to evaluate the opportunities. To grow our business in a sustainable fashion, we are committed to building long term relationships with our partners. Will the Ascott look to list any new private equity funds in the Middle East as it has done with its Singapore-listed (REIT) Ascott Residence Trust? We will explore the opportunity and announce should there be any transaction. How has your occupancy level in the wake of the economic downturn with the properties that you have in the Gulf region? As the guests in our serviced residences are mostly on extended stays, we have enjoyed a healthy average occupancy of around 80 percent in our properties in the Gulf region in the first half of this year.

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IN THE SPOTLIGHT

THE NEW AUSTRALIAN COALITION After weeks of confusion and uncertainty over an election so close it resulted in a hung parliament, in September Australia’s incumbent Labor Party signed an agreement with independent MPs and the Green Party, forming the country’s first coalition government in almost 70 years. By Christine Toner

In the country’s August 2010 elections, Australia’s first female prime minister Julia Gillard held onto her position and her Labor Party held onto power, albeit by forming a coalition government, Australia’s first in almost 70 years.

IN THE SPOTLIGHT

ollowing the election on August 21, Australia was faced with the same disarray that the United Kingdom (UK) awoke to following its election back in May. Just hours after the votes were cast, and with over three quarters of the votes counted, it became clear there was not going to be a definitive result. Initial reports showed the conservative Liberal-National Coalition had 73 seats and Labor had 72 seats. This meant neither party would reach the 76 seats needed to claim victory. There are 150 seats in the House of Representatives and only 76 seats or more could take control. The battle was on to form a minority government. In order to do this both the LiberalNational Coalition and Labor had to attempt to get four independent MPs (members of parliament) and one Green Party MP in the House of Representatives on side. As in the UK, it was thought this would not be achieved in a day. Indeed, it took until September 7, more than two weeks after the election, for an agreement of this kind to be met. This agreement, made between Labor and the Green Party, meant Julia Gillard would remain the country’s prime minister. Reports published following the agreement said the move had been made “to ensure stability for Labor in Government,” adding that “the Greens will ensure supply and oppose any motion of no confidence in the Government from other parties or MPs.” Of course, in offering their support and loyalty to the Labor Party, the Green Party wanted something in return and therefore, unsurprisingly, climate issues will feature heavily in the government’s future plans. Janice Dudley, a politics lecturer at Murdoch University in Western Australia, says the agreement between the two parties will lead to more climate issues being raised. “The alliance between the Labor Party and the Greens has meant that the Labor Party has had to make climate change more central to their political agenda,” she states. “The Liberal-National coalition is lead by climate change skeptics/deniers, so they are free to focus on development and jobs and ignore climate change.” Dudley says the agreement between The Greens and Labor commits a Labor government to establishing a committee to deal with the issue.

Australia’s Green Party leader Bob Brown (centre), one of the new ‘kingmakers’ in the Australian coalition government, speaks to the media in Melbourne as the new federal member for Melbourne, Adam Bandt (left), and new Green senator, Richard Di Natale (right) look on.

TheEDGE

Indeed the agreement includes several measures aimed at improving the country’s attitude towards climate change, including: • A climate change committee. • A full parliamentary debate on Afghanistan. • A commitment to work with the Greens on dental health care investment. • Completion of a multimillion-dollar high-speed rail study by July 2011. • Legislating for truth in political advertising. • A leaders’ debate commission. • Establishing a parliamentary integrity commissioner. • Establishing a parliamentary budget office. • Restrictions on political donations. • A move toward full three year governments. • Specially allocated time for debate and voting on private members’ bills and a fixed and fair allocation of questions for independent and minor party members in parliamentary question time. • Referenda for constitutional recognition of indigenous Australians and local government. • A commitment for reform to provide above-the-line voting in the senate. • Better processes for the release of documents in the public interest in both houses of parliament. • Access to relevant departments, including treasury, finance and deregulation for Green election policies. But, whilst the ‘green’ issues are a given, considering the nature of the new government, they are not the only issues that will be looked at. While climate issues form a big part of the Green Party’s manifesto there are other areas that the party will be likely to push with Labor. One of these is immigration. “Once again, the Greens are pushing Labor to a less punitive means for dealing with asylum seekers,” says Dudley. “The Labor Party has presented immigration as related to economic need, so they are less willing to set a low immigration party than the Liberal-National Coalition. The Coalition promised to ‘stop the boats’ (referring to vessels containing asylum seekers) and want to reintroduce the ‘Pacific Solution’, sending asylum seekers to [the Pacific island of] Nauru for processing, and something like the temporary protection visas used by the Howard government to allow them to send asylum seekers back to their place of origin.” One area that will also be under close scrutiny is that of Australia’s foreign trade relationships. However, Dudley does not believe the Green Party’s involvement will have any effect on trade relations. “It won’t have much effect,” she says. “Trade is always more important than humanitarian or other concerns, so if we can sell it, we will. The exception is uranium, which the Coalition will be much more willing

IN THE SPOTLIGHT

to export than the Green-influenced Labor Party.” During the election campaigns and indeed just after the hung parliament result, it was announced that Gillard was keen to express the way the country had handled the recent global economic crisis under her party’s guidance. “We emerged from this global economic crisis, the worst global economic shock since the Great Depression, stronger than any other major economy in the world,” she said. “We emerged with low unemployment, inflation under control, interest rates more than two percentage points lower than when [the previous conservative government] left office.” Indeed, figures have shown the Australian government survived the crisis well and, figures revealed last year, showed the country had avoided falling into recession. In the first three months of 2009, while the rest of the world was brought to its knees, Australia’s economy grew by 0.4 percent. Increased consumer spending and exports were credited with the increase. Dudley believes this may not continue to be the case. “We rely very heavily on exports to China and the strength of the Chinese economy has helped to keep the economy out of recession,” she says. “The Labor government’s stimulus spending is starting to run out; though it would have been ended quicker under a Liberal-National Coalition government.” “The most recent balance of payment figures are good and the economy is growing faster than expected – and consumer spending, etcetera, is picking up. We would certainly be affected if the United States (US) went into a double dip and also if Europe were to falter, but if China continues to surge, then we will probably weather any financial storms reasonably satisfactorily.” The fears for a double dip in the US were allayed somewhat last week as US non-farm data offered some reassurance to investors, prompting experts to claim the possibility of a second recession was becoming increasingly unlikely. However, that is not to say it definitely cannot happen. As financial journalist, Rick Newman, claimed, “After a three-year skid, housing prices seemed to be bottoming out last fall. But those cheering a ‘recovery’ overlooked the fact that government tax credits were fuelling many purchases, and that two insolvent government agencies – Fannie Mae and Freddie Mac – were responsible for the vast majority of new mortgages issued. Plus the Federal Reserve was helping push mortgage rates artificially low with its own mortgage purchases.” For now though, Australia has to hope Gillard and her government are able to continue to steer the country through the aftermath of the financial meltdown and help its economy continue to grow.

A divisive and controversial political issue in Australia, one vocally supported by the Green Party, is the fair fate of the hordes of asylum seekers who come to the country from the Asia-Pacific region, most of them by boat.

AUSTRALIA’S POLITICAL HISTORY 101

The Australian Labor Party has been the leading party in Australia since 2007. Its leader Julia Gillard is the country’s first female prime minister. The Labor Party is in power in each state except Western Australia. The party was founded in 1891. It is the oldest political party in Australia, and older than the Labor party in both the UK and New Zealand. The party’s main competitor in Australia is the Liberal-National Coalition. It has now formed its own coalition with the Australian Green Party. The Liberal-National Coalition consists of centre-right parties in Australia. The parties grouped together back in 1922 under the coalition agreement. The Coalition is the main rival of the Australian Labor Party, itself now party of a coalition. If the Coalition party is in power it is the Liberal leader who assumes the role of prime minister while the leader of the National Party will become deputy prime minister. The Australian Green Party was formed in 1992. However, many believe the party’s history actually goes back much further, linking it to the United Tasmania Group, which is thought to be the first green party in the world, dating back to 1972.

Though Australia’s opposition Liberal Party leader Tony Abbott seemed confident after the country’s elections, he had to endure more than two weeks of discussions with undecided independent and Green Party MPs, only to be denied power by the new Gillard-led coalition government.

TheEDGE

MARKET WATCH

Bridging the funding gap One of the big challenges facing many governments around the globe is how they will meet ballooning infrastructure investment needs while still cutting costs following the economic crisis. Max von Bismarck, James Bilodeau and Anuradha Gurung discuss the findings from the World Economic Forumâ&#x20AC;&#x2122;s (WEF) Paving the Way: Maximising the Value of Private Finance in Infrastructure report.

MARKET WATCH

n early 2009, the subject of infrastructure financing came to the fore as many countries announced infrastructure spending as part of fiscal stimulus programmes. Yet, in many respects, the focus on stimulus spending detracted attention from the fact that countries need to develop sustainable, long-term models to fund the development, expansion, replacement, or renewal of their national and regional infrastructure. Estimates of global infrastructure needs range as high as US$3 trillion (QR10.9 trillion) per annum. Current spending on infrastructure is well below this threshold even when fiscal stimulus is considered. Unless governments radically shift their budget priorities or increase taxation, a large financing gap will continue to exist. Against this backdrop, the role of private financing is becoming increasingly critical to ensure that inadequate infrastructure does not become a bottleneck for economic growth and social progress. Although private participation in the provision of infrastructure has grown in recent years, in many markets and sectors, growth has been relatively limited and could even reverse in the face of greater demand. This has occurred despite considerable attention being paid to the role of private financing in infrastructure over the last two decades. We believe this is because of another serious and persistent gap with respect to the funding of infrastructure: that of perception between the public and private sectors. A primary purpose of the WEF report is to help close this ‘perception gap’ by providing a common reference point as to what considerations are important to providers of private capital and how the public sector can develop its capacity to address them. Key findings from the report are summarised here. Defining Infrastructure It is important to define the term infrastructure since there are many different types, not all of which are appropriate for private funding. From a financing perspective, infrastructure opportunities are usually capital intensive, there is a tangible asset to operate and maintain, and the asset is expected to generate cash over the long-term. Yet, there are other important distinctions from a financing perspective

such as the type of project (for example, social versus economic infrastructure); contractual approach (partnership, concession, privatisation, etcetera); phase of physical development (greenfield versus brownfield); and stage of market development (new and innovative versus new and tested). These characterisations more precisely address the chief concerns of private financiers as to whether they will achieve forecasted returns and the likelihood of loan repayment. A focus just on greenfield or brownfield designations or sector (energy versus transportation) is too limited from a financing perspective. Laying the Foundations: Requirements for Private Finance Even when infrastructure is considered ‘too important to fail’, private finance can still be an option. For private finance to be an option one needs to evaluate the robustness and sustainability of the different financing options throughout the asset life. It is also necessary to consider what sort of failure might occur – whether it is a gradual erosion of service, the financial collapse of the private-sector party, or the sudden and complete shutdown of the asset – and how to mitigate the impact of such a failure. The tradeoff between the level of fees or charges for the infrastructure and the robustness of financing should be analysed explicitly. Given the long life of many infrastructure assets, parties must explicitly address all the tradeoffs within different commercial, contractual, and financing approaches. It is often very difficult for both the private and public parties to forecast costs and revenues over the long-term, particularly when those costs and revenues depend on public usage. But the consequences of getting this wrong may be considerable. Governments risk incurring the public’s wrath if the concessionaire makes too big a profit, while the concessionaire risks going bankrupt if it loses too much money. Contract or concession length should be determined by consumer and investor considerations – not necessarily the life of the asset. Three key factors should be considered when setting contract or concession policy. First, if the infrastructure is monopolistic, how should the protection of consumers be balanced with maintenance of any necessary capital investment? While a monopoly might

lead to a shorter contract, the protection of consumers might lead to a longer one. Second, if debt is being raised to fund infrastructure development, over what period will it be repaid? Forcing repayment over a short period could result in higher, potentially unaffordable, fees or user charges. Third, how long will investors need to achieve an ‘acceptable’ level of return – and what is ‘acceptable’? Private financiers will not invest in infrastructure without institutional certainty. Whether or not private financiers choose to invest is also determined by the wider political, legal, and economic environment, including any uncertainties about how governments themselves may act at any stage. This is as much an issue in developed economies as in emerging ones, and seeking private-sector participation is no substitute for developing the institutions that create an environment conducive to investment. Understanding and managing public perception are integral to the success of any deal. Both public and private parties may not always fully appreciate consumer sentiment. In fact, public sentiment can make or break a deal – and responses vary depending on the nature of the infrastructure. People are used to the idea of mobile phone networks being in private hands, for example. However, they often regard other forms of infrastructure, especially social infrastructure, as the exclusive domain of governments. It is important to involve the public in every stage of the process, to articulate the options clearly, and to ensure that transparent methods for measuring and maintaining operational quality exist. Mechanisms such as profit sharing may mitigate concerns about excessive profits for the private party. Building the Structure: Developing the Market for Private Finance Investment by the public sector in a comprehensive programme of prioritised opportunities can attract more private capital. Those countries that have been most successful in attracting finance have established programmes of prioritised investment opportunities with a number of features, including clear political support, a proper legal and regulatory structure, a procurement framework that can be understood by both procurers and bidders, and TheEDGE

MARKET WATCH

a credible project timetable. These country programmes are more than just marketing – they eliminate key frictions such as long project lead times and unclear political risk, which directly impact the viability of the business case for investment. Building transactional capacity within government bodies underpins all successful procurement programmes. Even countries with years of experience in completing complex public-private deals may find it difficult to sustain the necessary commercial expertise and ensure that they get value for money. The recent economic turmoil has exacerbated the situation, highlighting the need to be able to react quickly to changes in the financial environment. To tackle this challenge it is important to maintain dedicated procurement teams that are well trained with career paths that will encourage them to stay. The development of national and regional networks of practitioners to share knowledge and experience can be important as well. Investing in these transactional capabilities can be as important as investing in the infrastructure assets themselves. Multilateral banks continue to move beyond their role as direct funders of infrastructure to helping to build transactional capacity and provide risk mitigation. Adequate finance is only one of the conditions that must be met for an infrastructure project to succeed. Essential skills and improved conditions in the country’s market environment are also crucial, and multilateral banks are able to support transactions by providing political cover and resources to assist in these areas. It is important for countries to become aware of and know how to utilise these resources most effectively. Public and private parties will both benefit from collaboration in land procurement and valuation. The procurement and valuation of land for new infrastructure is always a controversial subject. The issue is not so much who has the power to assemble land – this usually rests with public parties – but rather who pays for and receives the benefit of the change in land value resulting from the infrastructure development, how the change is calculated, and at what point in the transaction timetable it is calculated. Several instances exist in which land has been effectively monetised to pay for

TheEDGE

infrastructure. One such example is the supplement the Greater London Authority will levy to contribute to the funding of a new train link across Britain’s capital. Planning for the Future: The way forward for private finance Many policymakers believe that private financiers are only really interested in investing in projects that already generate an income and do not want to invest in building new infrastructure. This is an oversimplification. There is little about the design, construction, operation, or revenue structure of some new infrastructure that cannot be mitigated through contracts based on established practices. Securing private finance is a problem only when a project is very innovative or unusual, or involves new technology or markets, making its operational and financial performance difficult to predict. Explicitly recognising and communicating these distinctions can attract private finance to new categories of infrastructure in the future. Higher prices, shorter terms, and reduced capacity for large underwriting by banks may extend well beyond the current financial turmoil. Overall commercial bank lending for infrastructure projects proved remarkably resilient in 2008 and 2009, despite the global economic crisis. But there was reduced lending in some sectors that rely on long-term lending, particularly concessions and public private partnerships. For all debt, there have been material changes to terms and cost. As a result, many transactions have proceeded with a ‘club’ of banks collectively arranging the debt rather than using the traditional underwrite-andsyndicate process. Shortened terms may make bank lending more suitable for the construction phase of many projects. Capital markets may help fill the longterm infrastructure finance gap – if several key obstacles can be overcome. While there remains a market for well-structured transactions, overall demand for longterm infrastructure bonds has declined dramatically, despite the apparent attraction of such products for long-term investors, such as pension funds, that aim to match their assets with their liabilities. This decline is particularly noticeable in the bond market for public-private partnership and concession-type projects, largely because

of the collapse of the monoline insurers. Apart from providing insurance against defaults and enhancing the credit rating of the underlying investments, the monolines supplied the transaction skills and due diligence that many capital markets investors were unable to supply for themselves. The challenge now is to reinvigorate the capital markets for infrastructure. This may include changing the risk profile to raise the underlying rating, encouraging the development of substitutes for the guaranteed bonds the monolines offered, or building transaction skills in the banks involved in infrastructure bond issuance. Applying a regulated asset-based approach such as those often used by utilities may mobilise more private investment. Regulated infrastructure utilities have been successful in continuing to issue bonds in the current economic climate. This raises the question whether the regulated price and asset-based approach that underpins the utilities’ business model should be adapted for other types of infrastructure, such as those projects more typically employing a concession-based approach. A regulated approach reduces longterm risk transfer to the owner or operator in exchange for limiting the upside of investment return. This may be attractive to many investors though governments will have to consider the risks they themselves will then incur. The specifics of each project and the policy priorities of governments will determine whether this approach will be appropriate. Specialisation will be important to the development of infrastructure funds. There is currently a prevalence of general and private equity-type funds that focus on a range of different sectors in developed markets. Many also do not differentiate between transaction approach such as concession contracts and privatisations. By contrast to the general nature of many funds, the economic crisis has highlighted the variation between infrastructure types as some subsectors have been largely immune to the economic turmoil, while others (such as those that rely on user demand) have been more exposed. We believe these variations in the performance and specific characteristics of infrastructure types will lead to the development of more specialised funds that will help investors discriminate between different opportunities. This may be an important factor in channelling the massive

MARKET WATCH

amounts of uncommitted capital that has been raised in recent years into viable investment opportunities. The uneven availability of offerings in different markets may accelerate fund activity and investment in emerging markets, particularly the countries of Brazil, Russia, India and China. As the full effects of budget deficits materialise, there may be fewer opportunities to invest in established markets. Conversely, there may be more opportunities to invest in emerging economies that have increasingly stable political, legal, and economic regimes. This push/pull effect may be dampened by the desire to offset budget deficits through asset sales that could maintain interest in established markets. Retail participation in infrastructure projects is likely to grow. Retail investors in infrastructure projects have experienced very mixed fortunes to date, and several serious obstacles must be overcome before involving them more widely. Nevertheless, there have been some successful examples of retail participation in the infrastructure markets. We think that retail participation will increase over the next few years, as understanding of the infrastructure offering improves. Pension funds may not invest as much as many believe until key obstacles are overcome. Many believe that the amount of money that pension funds invest in

infrastructure will increase significantly in the short-term. This may be true for some of the larger pension funds that have an established position in the infrastructure market. However, many pension fund managers, often from smaller funds, still regard infrastructure as a specialist investment. Moreover, there is a geographic mismatch between the places in which most pension funds are held and the places in which there are infrastructure investment opportunities. The infrastructure community must, therefore, help to develop a better understanding of the asset class within the wider pension fund manager and trustee community to promote a broader mobilisation of institutional capital in the future. Governments may increasingly become financiers as well as procurers of infrastructure. The role of governments as financiers grew in the recent financial crisis as the amount of longterm debt available was severely constrained. Different countries have taken different approaches, and the means they have adopted to stimulate private finance vary accordingly and range from capital contributions to co-lending and debt guarantees. However, one common issue is how and when government support will be withdrawn. A second is whether countries should set up state-owned infrastructure banks. Several such banks already exist, operating at both national and regional levels, and we anticipate that more will be established in the next few years.

The combination of pressing need for infrastructure investment as an economic and social priority and government budget pressure means that the private financing of infrastructure projects is more important than ever. With this urgency, it is imperative that the public and private sector work closely together to overcome any gaps in understanding and then implement this common vision to mobilise the massive amounts of private capital that are needed. Even as parties from the public and private sector address the exigencies of the current economic environment they must look ahead in defining sustainable long-term roles (for each of them), which maximise the value of private investment for all stakeholders in the decades to come.

The Paving the Way: Maximising the Value of Private Finance in Infrastructure report was authored by the World Economic Forumâ&#x20AC;&#x2122;s Investors Industry Partnership led by Max von Bismarck, director and head, Investors Industry, in association with James Bilodeau, associate director, Financial Institutions, and Anuradha Gurung, associate director, Investors Industry. Download the full report at: http://www. weforum.org/pdf/FinancialInstitutions/ Infrastructure2010.pdf TheEDGE

INSIDE EDGE

Just as confidence in the global economy began to build in early 2010, the recent eurozone crisis and tightening of fiscal policies worldwide ignited investor uncertainties. Yet, as Rajesh Mirchandani reports, a double dip recession is likely to be avoided.

INSIDE EDGE

Road to recovery

he global economy has made worthy progress from the troughs witnessed during the back end of 2008, and the recovery so far has surpassed even the most aggressive estimates. However, uncertainty has resurfaced with the recent government debt concerns in Greece, Spain and Ireland, and the announcement by the United Kingdom government of a GBP6.2 billion (QR35.2 billion) austerity programme to cut record deficits that equal 11 percent of gross domestic product (GDP). These developments have troubled the eurozone and threaten the course of recovery. What may be seen as premature tightening of fiscal policies in a number of eurozone economies, and measures taken by Chinese authorities to cool down their economy, have all boosted the perceived risk of a slowdown in global economic growth. The recently announced United States (US) GDP growth rate of 1.6 percent for the second quarter as compared to the first quarter rate of 3.7 percent, gives rise to further jitters. In the midst of these developments, speculation is also running high that the global economy might even experience another recession, as the fiscal consolidation measures introduced by many advanced nations will affect the growth rate across the globe, as private sector investment has still not shown any considerable improvement. Just as confidence among consumers and investors was returning in the beginning of 2010 amid expectations that the worst for the global economy was over, the reaction of financial markets to the eurozone crisis ignited fears of another round of liquidity tightening. Investors have shifted their focus to the ballooning costs of rescuing developed

countries from the worst recession since 1930. Distress in the financial markets has sent the credit default swap rates of most troubled nations sharply higher over the past few months. Investors are already bracing themselves for more headwinds in the short term as most international bourses are trading in a narrow range, and flight to safe haven, gold, has resumed. Amid such concerns, everyone seems to be questioning whether the growth rate will take a significant hit or the global economy will fall into another recession, given the fact that the balance sheets of many nations are overstretched and the scope for incremental action to address a further slowdown will be limited. The United States forges ahead Authorities in the US are denying possibility of another recession but are not ruling out chances of a slowdown in the growth rate, and there are reasons to believe them. Historically speaking, it could be argued that the concerns of another US recession are clearly overblown. The only time the countryâ&#x20AC;&#x2122;s economy fell into a double dip recession was in 1982 when the Central Bank pushed its benchmark interest rates higher in order to contain spiralling inflation. This drained liquidity from the financial system and affected most of the frontline economic sectors of the country. However, the situation is somewhat different this time as inflationary pressures are muted and the Federal Reserve has already indicated that it is ready to keep interest rates low for an extended period of time. Further, while Europe is tightening its fiscal policies, the US is expected to pursue an expansionary fiscal stance. Additionally, many blue chip companies

in the US have reported robust results for the second quarter, a sign that all is not bad and a significant slowdown may not be experienced anytime soon. This also indicates that we may see some improvement in the job market as we enter 2011. The reported unemployment rate, which currently stands at 9.6 percent, is often given a great deal of emphasis and many are concerned that until the unemployment situation improves, recovery will remain dull. But unemployment data is seldom a reliable measure in the early stages of recovery, as the method used to calculate such data excludes discouraged workers (the unemployed who have stopped looking for a job) from being counted. As economic recovery gains momentum, more discouraged workers join the labour force and start looking for jobs, which will initially push the headline unemployment rate higher. As recovery gains further momentum, the unemployment rate starts easing with more people finding work. Europeâ&#x20AC;&#x2122;s big lessons In its latest report on the world economic outlook, the International Monetary Fund (IMF) has upped the projection for global economic growth to 4.6 percent (from an earlier forecast of 4.2 percent), but has also highlighted that the downside risks to the global economy have increased in recent times as financial markets are starting to become uncomfortable with the fiscal burden many nations are carrying. Although the IMF has increased the growth forecast of many developed nations, it has kept the growth forecast for the eurozone unchanged at 1 percent, citing weakness emerging from the recent cutbacks announced by some nations to curtail excessive public debt. But many economists in fact support the actions taken by authorities to cut down spending in order to achieve long-term sustainability. They have reiterated that such short-term fiscal consolidation measures are inevitable and would assure nervous investors. Further, the European Central Bankâ&#x20AC;&#x2122;s decisive action to provide EUR750 billion (QR3.5 trillion) in emergency funding has helped to prevent contagion from spreading, as it has cut down dependence of countries such as Greece, Portugal and Spain on international markets to borrow fresh funds. TheEDGE

INSIDE EDGE

“Blue chip companies in the US have reported robust results for the second quarter, a sign that not all is bad and slowdown might not be expected soon.”

On the other hand, Germany, the biggest eurozone economy, reported GDP growth rate of 2.2 percent for the second quarter, the strongest since East and West Germany were reunified in late 1990. This has given hope to markets that the recovery in the eurozone will continue, primarily driven by Germany which is experiencing continuous growth in its exports due to the weak currency. Citing a strengthening recovery despite introduction of austerity measures, the European Central Bank is also sticking with its projections of achieving a 1 percent growth rate in the current year, and has downplayed any significant risks emerging from the recent debt crisis of peripheral economies. Exercising caution in the East A lot of attention is also being given to the monetary tightening steps taken by China since the beginning of the year. Speculators are voicing concerns that these measures may harm the country’s growth in the short- to medium-term and will add to a slowdown in the global growth rate. However, policymakers believe that it is

TheEDGE

important for Chinese authorities to curtail mounting speculation – especially in its real estate sector – to avoid a boom and bust cycle. Many have shown support for the tightening measures and are comfortable with China growing at anything approaching 10 percent, rather than moving towards the overheated zone. The Indian economy is also experiencing a healthy turnaround and has avoided concerns of a slowdown. The recently announced 8.8 percent GDP growth for the first quarter is confirmation of sound fundamentals at work. The same mood is reflected in the country’s stock market, which is still holding most of its yearly gains and has not experienced a significant bear market, which is the case with most other international bourses. Business as usual Despite the fact that many expect global economic growth to lose momentum, there are only a few who foresee a risk of a double dip recession. Many economists and analysts are expressing that the short-term slowdown in the growth rate is mainly driven by nervousness in the financial markets, which

is quite normal as investors become easily susceptible to negative news. The former Federal Reserve chairman, Alan Greenspan, who laid the growth platform for the US economy after the dot com bubble burst of 2001, sees the current slowdown as a soft patch and expects the global economy to strengthen further as markets receive assurance from authorities over the debt burdens of a few economies. Past recessions tell us that it is very rare to experience a straight recovery from any recession. Stock markets generally experience a strong rally during the initial phase of recovery as there is a sudden rush to meet demand for most durable and capital goods, which in turn boosts the outlook for many industries. As the recovery enters a mature phase, investors brace themselves for more moderate growth rates and it is normal to experience minor bear or stagnant stock markets during this period. It is this phase where investors generally revisit valuations of companies as the initial run-up of liquidity-driven boost out of the recession fizzles, and the expectations of market returns become more realistic.

COVER STORY

By Jamie Stewart

From fortunes made in minutes, to markets on the brink of collapse, regional real estate has been on a 24-month rollercoaster ride. So what next in an uncertain, postrecession world?

COVER STORY

he current market is one of great confidence,” said Jade El Khalil, sales chief of Dubai Properties, at Cityscape Dubai in early October, 2008. Little could he, or anybody else, have known the force with which the global financial crisis would strike Dubai. El Khalil was not the only one espousing confidence in the property sector at the time. As a then-construction journalist based in the city, countless interviewees of mine would repeat the mantra in their own style: “Talking as a local, if this was a normal market I would say ‘it will stabilise, there will be a correction’. But I have been hearing about a correction for the past five years and it has just not happened,” Dubai-based GIO Developments boss Rashid Galadari said. Even a man whose surname positively emanated real estate, United States (US)-based Trump Organization executive vice president Eric Trump, gave the mantra his take, albeit with a note of caution: “Will there be an adjustment in Dubai? I think any developer who denies there will be is very foolish,” Trump said. “But do I think they will get hit hard and for a very long time? No, I don’t.” But the city did get hit, and hit hard. The financial crisis arrived on the shores of the region, having crossed the Atlantic from its US origins, making quick work of Europe on the way. And it sunk its teeth into Dubai with a zeal that none had foreseen. Real estate value crashed by up to 60 percent. The construction boom ground to a halt. And speculators’ fortunes, the seeds of which were sown by being first in the queue for a new apartment – before selling it immediately to those at the back of the queue – crumbled into the desert. A ray of light IN 2010? Real estate markets across the Middle East, despite their disparities, have one thing in common: they rely, more so than most regions do, on an inflow of foreign cash and a continued

The financial crisis enveloped some regional cities, and especially the real estate sector, with the speed of a desert dust storm.

influx of foreign nationals. The glut of properties raised during the boom is the most definitive factor in the industry today. The construction boom left in its wake a collective skyline of empty buildings waiting to be filled, so for the fine balance between supply and demand that is a prerequisite of sustainable growth to be restored, the inflow of expatriates and cash must continue. The global economic recovery, the first stages of which have begun to emerge within economies from the US to Europe and Japan, is therefore a ray of light for the regional sector. Abu Dhabi’s oil wealth may have been adequate to protect Dubai when the crisis moved into its latter stages, but the United Arab Emirates’ (UAE) regional icon of modern progress is eager to spur its construction industry back into life, and rebuild a reputation that in 2008 had the great names of global real estate battering down its doors. The rest of the region will be hoping, to an equal extent, for the restoration of foreign investment. A return to the heady days of pre-crisis gung-ho optimism, however, would be decid TheEDGE

COVER STORY

edly premature at this stage, according to the Paris-based Organisation for Economic Cooperation and Development’s (OECD) most recent interim economic assessment: “The world economic recovery may be slowing faster than previously anticipated,” the assessment says. “Growth [in the seven largest developed countries] is expected to be around 1.5 percent on an annualised basis in the second half of 2010 compared with the previous estimate of around 2.5 percent in the May Economic Outlook.” The organisation adds that the loss of momentum in the recovery is temporary, although uncertainty has increased. “The uncertainty is caused by a combination of both positive and negative factors,” OECD chief economist Pier Padoan says but, he adds encouragingly, “it is unlikely that we are heading into another downturn.” The details of the OECD assessment constitute a mixed message for the Middle East. Although consumer spending is set to remain weak among the globes seven largest economies – which will mean a continuation

“The recession hit Dubai with a zeal that none had foreseen. Real estate value crashed by up to 60 percent. The construction boom ground to a halt. And speculators’ fortunes crumbled into the desert.“ of depressed visitor numbers to the region – a combination of “robust corporate profits and low business investment” suggest that capital spending is unlikely to weaken further. This, over the mid-term, could point to resurgence in the number of businesses that decide to seek out new opportunities, which will come as some relief to the region’s commercial and residential real estate sectors. The outlook for the European countries, also vital to the health of Middle East real

estate, is more optimistic however. Four days after the publication of the OECD report, the European Union (EU) published its interim economic forecast: “The EU economy, while still fragile, is recovering at a faster pace than previously envisaged,” the assessment says. For 2010 gross domestic product (GDP) is forecast to grow at 1.8 percent. “This represents a sizeable upward revision compared to the spring forecast of one percent,” the EU says.

Spectacular real estate projects – some corralled by ‘cowboys’ – assumed a primary spot among Dubai’s economic drivers before the recession.

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COVER STORY

Regional Powerhouses Towards the end of 2009, Saudi Arabia, the Middle East’s largest economy, unveiled its 2010 budget. It was the biggest budget in the Kingdom’s history, with revenue projected at SR470 billion (QR456 billion), while the government foresaw mammoth spending of SR540 billion (QR524 billion). This resulted in a projected deficit of SR70 billion (QR67 billion). “A series of surpluses since 2002 allows the Kingdom...to run an expansionary fiscal policy to sustain its domestic economy in a challenging global environment,” Saudi Arabia-based investment bank NCB Capital explains. In total, around 48 percent of the budget was allocated for capital investment projects. The figure included a ring-fenced allocation for real estate development. Saudi Arabia occupies much of the same economic space as Abu Dhabi: blessed with the financial safety net that is rich oil deposits, combined with a free-market export industry, the regional powerhouses have been able to accrue great pots of wealth that have seen them through the tough times and allow for the running of budgetary deficits as a means of stimulating growth. The challenge, which each state is facing up to today, is that alternative sectors such as real estate must be developed so as to be sustainable, to protect from the long-term paradigm shift in the regional economies post peak-oil. Saudi Arabia has begun this process, as has Abu Dhabi, Qatar and, to a lesser extent, Egypt (the latter two via the income from healthy natural gas exports). However, unlike Dubai, in Saudi Arabia, Abu Dhabi and Qatar time constraints are a little more forgiving due to extensive fossil fuel deposits. If the right supply-demand balance can be met in the coming years, sustainable real estate sectors may emerge and the region could discover a wider path to prosperity beyond energy exports. Global jitters A good indicator of how the region is shaping up, is to compare the Middle East industry with the rest of the world. The US sector remains gripped by the aftermath of the

The recovery of Kuwaiti real estate has been sluggish at best so far.

recession. The roots of the global financial crisis, after all, can be traced to the collapse of the US subprime mortgage market. According to California-based real estate analyst group Clear Capital, US residential property price gains are on the slide, and are poised to continue their descent, with lows below those of 2009 expected in 2011. “As we head into the final months of this year it will be interesting to see how markets respond to an environment without any buyer incentives,” says Clear Capital senior statistician Alex Villacorta. “Recovery in the housing market will occur segment by segment in micro markets around the country.” The UK market, a key driver of domestic wealth and by extension vital to the flow of foreign investment into the Middle East, saw prices fall for the second consecutive month in August, according to the Royal Institute of Chartered Surveyors (RICS) monthly index. Moreover, the future appears uncertain: “Looking forward, our price indicators are telling a mixed story that is consistent with the uncertainty hanging over the economy,” says RICS spokesperson Jeremy Leaf. Furthermore, with the country teetering on the brink of mammoth spending cuts that are expected to bite into all sectors of the national economy, the path back to sustained growth is

looking long and hazardous. And so to the Middle East: Kuwait saw its biggest month-on-month decline in real estate sales for five months, according to the National Bank of Kuwait, which it says “comes as some surprise after four straight months of very solid sales”. The figure was nine percent up on 2009’s monthly average, but a substantial 19 percent down on 2008’s pre-financial crisis average, an indication that the Kuwaiti market’s recovery is sluggish at best. In Qatar, the signs are not good. The country is suffering from a severe excess of property supply over-demand, and the imbalance has tipped inflation into negative territory, according to government statistics. Qatar recorded an annual deflation rate of 2.9 percent in July, following a 2.8 percent fall the previous month. As a mark of the entrenched impact of the real estate glut, in 2009 Qatar recorded its first full-year of deflation since 1993, indicating that deflation has been running for well over 18 months. In Dubai, meanwhile, still the touchstone for Middle East real estate in the eyes of much of the globe, concern continues. The latest sales price index from property information service REIDIN shows a 0.9 percent month-on-month fall in residential property prices in July, although this did amount to a TheEDGE

COVER STORY

A glut of available property in Doha contributed to Qatar recording its first full year of deflation for 16 years in 2009.

1.3 percent increase year-on-year – hardly surprising considering the lows of 2009. The market, however, remains a pale imitation of its bullish pre-crisis self. Dubai October 2008 In early October 2008 Dubai positioned its real estate sector as an alternative to its dwindling oil reserves. The market was buoyed by foreign direct investment, channelled into the city by one of the greatest global marketing campaigns the modern world has seen. But the explosion of new Arab wealth had a vicious sting in its tail: when the river of foreign cash ran dry, Dubai found itself on the rocks. The impact of the financial crisis was

magnified in the city, more so than in Abu Dhabi, Doha or Riyadh, due to the emirate’s extreme exposure to the global economic cycle. The foundations of the city’s economy suddenly looked no steadier than the shifting sands of the surrounding Arabian Desert. It was not the fault of the industry that no warnings were given; it was not the fault of Jade El Khalil, Rashid Galadari, or Eric Trump. The Dubai real estate bubble was inflated for many years by assurance, confidence and bluster. The complexity of global economics means convictive forecasting is virtually impossible, yet the bullish pronouncements were there until the end, right up until Cityscape Dubai 2008.

“Real estate in Dubai, and the wider Gulf, has an uncertain path to tread on the way to sustainable growth. But the bursting of the bubble that everybody was blind to has gone and it is too late to panic.“ 40

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The Middle East region was struck as a whole by the recession; each nation and state was left with its own story to tell. But it was Dubai, the endearing beacon of regional prosperity during the boom, that when the crisis hit, became suddenly representative of a headlong rush for post-oil wealth via unsustainable pipedreams. It is only now, two years later, that we can look back at what should be a wiser, more mature and, dare we say it, more sustainable Middle East real estate sector. So just what steps has the industry taken to reclaim the path to growth, post-financial crisis? October 2010: Goodbye gunslingers Ronald Hinchey is a partner with real estate giant Cluttons. He was based in Dubai through the good times and the bad. He played his part in the boom, weathered the storm that followed, and as a result, knows the market inside-out. “Projects that haven’t started are virtually unsalable,” he says. “The activity is taking place within completed property, which has recovered to some extent.” Hinchey says that Cluttons was processing 280 mortgage valuations a month at the peak of the boom. Within three months that number crashed by 80 percent to 40 valuations a month. Today, in the third quarter of 2010, the figure stands at 150. Forty-six percent short of the peak, but 275 percent greater than the

COVER STORY

The US property market is expected to dip in 2011 to levels last seen in 2009.

trough. The figure stands as a solid barometer of the market, and the reason for the upswing is three-pronged. Firstly, the global banking recovery has gone some way to galvanising buyer interest. “Bank finance has changed significantly,” Hinchey says. “They initially lowered their loan to value [LTV] ratios, but they have come back up again now.” The tightening of lending regulations in the wake of the crisis was a natural reaction from the banking sector. Gone were the days of 95 percent LTVs, which Hinchey calls “a speculator’s dream”. LTVs, which fell to around the 70 percent mark, are today somewhere in the 75 to 90 percent bracket, according to property services firm Colliers International. The more stringent world of Islamic finance is also playing its role in the recovery having assumed a position of greater merit following the credit crunch. Secondly, a greater element of trust is present in the market. During the regional boom every real estate cowboy with his eye

on a quick buck rode into Dubai. But the projects they hastily announced ground to a halt the moment liquidity left the system, leaving a trail of empty bank accounts and unpaid contractors, their investors’ cash having been blown on glossy advertising campaigns. Today, however, the most trustworthy operators have survived, the cowboys have been driven out, and the market is reflecting this shift in its gradual recovery. And thirdly, a factor that is beyond the influence of even the most experienced businessman: the cyclical nature of the global economy. The Gulf States had for some time been living with double-digit growth, and double-digit inflation to match, but the recession struck, which led to the cost of living being clawed back to within people’s grasp. “Dubai, because of the correction, has become affordable again,” Hinchey says. “We corrected mid-cycle here. Most emerging markets run for eight to 10 years and then correct, and when they do, they do it big-time. But this region corrected mid-cycle because of the credit crunch. That helped because we didn’t go the

whole hog. We got a 50 percent reduction off the peak, instead of an 80 percent reduction, which would have been catastrophic.” So will the gunslingers be back? In a word – no. Which is good news for the long-term sustainability of the regional market. “Dubai is not going to return to what it was. That is not going to happen,” Hinchey says. “The recovery is going to take a number of years. We are looking for stability in 2011. But in terms of rising prices – it’s going to take some years before we notice that.” When the region was booming it was once foolishly proclaimed that 30 percent of the world’s construction cranes were in Dubai. Thirty percent of the world’s speculators, maybe. But cranes? Hardly. Real estate in the city, and the wider Gulf, has an uncertain path to tread on the way to sustainable growth. But the bursting of the bubble that everybody was blind to has been and gone. It may be too early to celebrate, but on the plus side, it is too late to panic. Welcome to real estate in the global economy, post-financial crisis.

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ECONOMIC BAROMETER

More profit for

owner-managed

businesses

New research shows that Owner-Managed Businesses tend to be more profitable, more resilient and have more committed staff. The findings of this study, prepared exclusively for TheEDGE by Inventure and Karim Nakhle, were based on the latest survey of more than 50 senior executives, and financial data from more than 100 firms from the Middle East and North Africa.

he term, Owner-Managed Businesses (OMB), also often referred to as ‘employee-owned business’, is gradually being replaced by the term SME, or small- or medium-sized enterprises. These are companies where the people who own a controlling interest in the shares are substantially the same set of people who run the company, in contrast to companies where the ownership and the management are clearly separated. As mentioned above, these OMBs tend to be more resilient, that is, they have an increased ability to sustain employment and growth during difficult economic conditions. Resilience is a crucial aspect of company performance that has been neglected over the past two decades. Instead, business strategy and public policy have been dominated by an unremitting focus on maximising share value. In the current economic conditions, business leaders and policy makers are looking again at the resilience associated with the OMB model – and how it could benefit economies as a whole. While there is no panacea for coping with a downturn, the organisational structure, values and outlook of the OMB can certainly provide a strong foundation for coping with difficult economic conditions. WHAT THE OMB OFFERS According to the study, businesses owned by their employees have proved more resilient than other

companies in the downturn, and employee-owned businesses tend to create new jobs more quickly and typically outperform those companies in which employees do not have an ownership stake. The study also reveals some key barriers to the growth of OMBs, including how to retain the advantage of a potentially more committed workforce, as the business grows bigger and more complex. The advantage for OMBs comes from taking a stakeholder rather than a shareholder view of management. According to the study, employees who have a stake in the company they work for are more committed to delivering quality and more flexible in responding to the needs of the business. There are certain attributes that make such businesses resilient and advantageous in today’s challenging environment. Firstly, the OMB has a long-term perspective and is not subject to the short-term demands of external investors in the way that listed businesses are. Secondly, the OMB tends to be financially conservative, and does not employ leverage to the same extent as many other companies. Thirdly, there is a close alignment between ownership and control in an OMB, which helps to prevent the ‘principal agent’ problem, where a separation of ownership and control can lead to managers pursuing opportunities that are not in the interests of the company and its shareholders.

ECONOMIC BAROMETER

Finally, an OMB has a close network of members who control the business, usually family or founders. A DIFFERENT APPROACH TO GROWTH The study shows that OMBs are much more committed to the longer-term and are not driven to maximise returns from one quarter to the next, which means that family businesses can exercise prudence during both upswings and downswings in the economy. Overall, the goal for an OMB is not about making a quick buck and this deters it from seizing the short-term opportunities that many listed companies pursue. On the contrary, OMBs focus on a wider range of values than just the pure financials. They are less likely than listed companies to pursue adventurous growth strategies to satisfy short-term investors during a boom. Some chief executive officers have argued that they are more likely to invest through a downturn, giving them a sustainable advantage over companies for whom there are wider swings in performance and investment. John Turf, general manager for Corporate and Investment Banking at Almal Capital says, “Owner-managed businesses pride themselves with the reputation of their SME that they are trying to build. Their name is on the door, they have a reputation and standing in their community. “So it’s rarely just about making money. They tend to care about the longer-term standing of the brand and business, and about their legacy. These owners have a dream of passing on a business to the next generation, hoping that they too will be hard workers, ready to succeed.” Jonathan Forman, director of Private Banking at the Royal Bank of Scotland states, “Certainly in an owner-managed business, the management (or owners) can have more time to see the results of their action and there is less external pressure on them. “But I would add that external pressure is not always negative – sometimes it forces companies to do the right thing sooner rather than later, so it’s not black and white.” The study revealed that OMB members who represent service-based companies (such as financial services, media and professional services firms), and those who represent industrial or manufacturing companies (such as chemicals, automotive or natural resources firms), tend to have different perceptions when it comes to time horizons. As per the

data in the report, while service companies may, in general, have a time horizon that spans one or two years, industrial companies must take a longer view because of their greater requirement for capital expenditure and fixed investment. For service companies, the ability to look beyond their traditional time horizon is naturally a greater advantage. THE OMB IN THE MIDDLE EAST In the United Kingdom (UK), businesses wholly or substantially owned by their staff are estimated to turn over GBP25 billion (QR142 billion) a year, or about two percent of the UK gross domestic product. In the Middle East, employee-owned businesses are less common due to the local ownership regulations. However, international companies such as consultancies, the ‘Big Four’ audit firms, and law firms have extended their OMB model to the region, where they are experiencing much success.

When the global crisis emerged on the shores of the Middle East in 2008 and 2009, publicly-owned companies were under stress. Decision making processes were stretched even more, and they were not in a position to take rapid action, even as, in some cases, their shares, stock prices and market positions were in the process of melting. The size of these public companies and the nature of their structure meant a seal of approval from the board and shareholders was needed on all major decisions. In contrast, OMBs were flexible, able to manoeuvre and adapt rapidly to the degrading situations and market crisis. OUTPERFORMING WHEN (AND WHERE) IT MATTERS Despite its challenges, the study suggests that the strengths of the OMB model – such as accountable management, a happier workforce, closer alignment of risk and reward, and a fairer distribution of

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ECONOMIC BAROMETER

“Although an exit is a goal for some, the majority prefer to remain in family ownership. This reflects the strong family values in Middle Eastern society, where business is seen as an asset to be passed down the generations, rather than one that can be sold to make a return.” profit – could help to build a ‘fairer form of capitalism’ with a greater culture of responsibility and trust. According to the study, OMBs create jobs faster than traditionally structured businesses, with an average increase in employment of nearly 7 percent per annum from 2005 to 2008, compared with 3 percent in non-OMBs. This rate escalated during the recession (2008 to 2009), with 11.2 percent employment growth in OMBs, compared with 2 percent in non-employee-owned businesses. The study also shows that OMBs are more resilient, with more stable performance over business cycles and less sales variability. From 2005 to 2008, non-OMBs experienced higher average sales growth per annum than OMBs (11.1 percent vs. 9 percent). However, the average sales growth of OMBs during the recession was 10.08 percent, significantly surpassing that of nonOMBs at just 0.82 percent. It was also highlighted that OMBs are relatively less willing to sell the business, adding to their long-term goals. Just 10 percent of OMB owners say that they have or would consider selling their business,

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compared with 22 percent of other business owners in the survey. Although an exit is a goal for some OMBs, the vast majority, it seems, prefer to remain in family ownership. This reflects the strong family values in Middle Eastern society, where business is seen as an asset to be passed down the generations, rather than one that can be sold to make a return. It might also reflect the relatively earlier stage of capital markets in the region, which mean that there are fewer opportunities for exit. Compared with non-OMBs, OMBs are more likely to consider the opportunity to beat the opposition as an important motivation to amass and protect their wealth. They are also fairly confident about their ability to compete with listed companies. Almost four in 10 OMB respondents believe that they are able to compete with listed multinationals. There is, however, a difference between service-based companies and industrial or manufacturing businesses. Among the family business respondents, those from service companies believe that they are much better placed to compete than those from manufacturing or industrial companies.

THE DRAWBACKS Nevertheless, despite the many advantages that OMBs may have, there are certain drawbacks or difficulties, especially when trying to raise funds or obtain financing from banks, institutions or investors that are more accustomed to dealing with listed companies and their ownership structures. What is interesting, however, is that the very factors that give an OMB the edge – for example, the strength of owner relationships and their close-knit leadership team – can also be their downfall. Some factors such as founders’ rivalry or sibling rivalry, succession, the misalignment of strategic objectives and internal power struggles, are old problems that plague many OMBs. Conflict between owners, founders or members of the family that are involved in the business and those that are more distant is another problem. To some extent, conflict is inevitable in an OMB, just as it would be in any other kind of organisation. But the danger is that disagreement occurs not just between individuals who work together, but people who share other aspects of their lives. For this reason, conflicts can be far more pernicious and difficult to solve than in other companies. The key is to keep family and business disagreements separate. Another drawback of the OMB is that, even though most employees have shared values and ethos, inevitably, differences of opinion and perspectives are likely to grow as more individuals become directly or indirectly involved in the business. Divergence of perspectives can lead to disagreement, and this can further fester into conflict, which can be the undoing of the OMB model. IN IT FOR THE LONG HAUL These problems, however, do not undermine the successful model of the OMB in the Middle East, where it has aided the growth of companies, and provided more resilience during the economic downturn. Companies who have been able to support their clients through these difficult times, with a view to long-term business relationships, have benefited the most, and have the highest chance of survival, success and growth, now that the economy is showing a more positive outlook for the future.

ON THE PULSE

The Economics of War The departure of United States troops from Iraq will surely impact on the regional economy. But, as Edward Jameson discovers, any shortterm negative effects will probably be far outweighed by the positive ones that accompany peace, provided it lasts... As US forces depart Iraq it is worth noting that trade in military hardware is worth hundreds of billions of dollars to the US economy.

ON THE PULSE

f there is one thing that the United States (US) is known for globally, it is an ability to spend money. Since its inception the nation has assumed a position at the centre of the free market economy. Boasting a gross domestic product (GDP) almost three times as large as its nearest rivals China and Japan, the country’s penchant for spending was brought into stark focus when the creditfuelled spending spree of the past decade triggered a financial crisis that swept the globe and was widespread in its detrimental impact on national economies from Asia to Europe and the Americas. US spending has a macroeconomic purpose: the flow of liquidity through a national economy, and subsequent growth and wealth-creation, is dependent on spending. Just look at how governments the world over introduced stimulus packages hitherto unforeseen in their size in order to kickstart growth at the height of the great recession, with massive public spending plans forming the cornerstone of those packages. And so it stands to reason that the gradual withdrawal of US troops from combat zones around the world, along with their spending power, is going to have an impact on those nations’ economies. But the impact is difficult to quantify. It will vary in magnitude over time – while the immediate short-term impact may have its detrimental aspects, the long-term impact could prove to be either a blessing, or a curse. Much will depend on the ability of the nations in question to rebuild, remake and re-emerge as nations worthy of trade on the global stage, free of sanctions, and with the framework to begin creating their own wealth. According to Pentagon figures, US troop numbers in Iraq have fluctuated between 100,000 and 150,000 throughout most of the seven year conflict. Latest estimates put that number at around 58,000. Around 96,000 troops are believed to be stationed in Afghanistan at present, the figure having surpassed the number in Iraq in May of this year, while across the rest of the Middle East outside of Iraq, around 13,000 troops call the region their temporary home. THE TRUE COST? Troop numbers have been such over the years that entire towns have sprung up from the dust and rubble to host military personnel. In

Increasing violence in Afghanistan saw US troop numbers surpass those in Iraq in May of this year.

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Manama, Bahrainis have become familiar with the wealth of Western fast food joints and bars that do brisk business catering to the homesick troops located just outside of the capital at the Juffair naval base. In order to spend money, however, a nation first has to earn it – something that the US has become very adept at doing. And one of the sources of this earning potential is through its arms trade with the Middle East. In a report entitled Cross Cultural Understanding, produced by Arabic news network Al Jazeera, Rick Rozoff says that “Middle East countries will spend an estimated US$100 billion (QR364 billion) on arms from the US by 2014”. Further, any short-term boost to the economy that may be attributable to the presence of troops is far eclipsed by the cost to the region of war. A study conducted by the India-based Strategic Foresight Group concluded that “conflict in the area over the last 20 years has cost the nations and people of the region US$12 trillion”. This is a figure so vast it is virtually impossible to accurately comprehend. The figure equates to QR44 trillion, or a mammoth QR31.4 million for every man, woman and child in Qatar, according to World Bank population estimates. A further shocking conclusion reached by the Strategic Foresight Group study is that “individuals in most countries [in the Middle East region] are half as rich as they would have been if peace had taken off in 1991”. Nations such as Qatar and the United Arab Emirates (UAE) may fall outside of this conclusion, having been able to develop their hydrocarbon export industries free of sanctions, but countries including Iraq and Iran fall firmly within the report’s findings. THE PRICE OF SECURITY On April 29, 2003, during the first stage of the Iraq war, the US announced the end of its 12-year military presence in Saudi Arabia, shifting its 10,000 personnel, for the most part, to Camp Doha, Qatar, just two days prior to the fall of Baghdad. Arguably Camp Doha has for many years provided Qatar with a degree of security. Indeed, a small, thinly populated state with some of the planet’s richest deposits of natural resources beneath its territory, at the centre of the world’s most battle scarred region, may appear to be more vulnerable than most. Unless, of course, you have a deployment of the world’s most powerful military force. The question of security by proxy, however, has mutated greatly today since the days when Saudi Arabia was the US’s primary headquarters in the Middle East region. The cataclysmic and long-running aftermath of the invasions of Iraq and Afghanistan, and the resulting collapse of US political authority on a global scale, mean that the political cost of hosting US forces has in many cases eclipsed the security that they are able to provide. Yet in the case of Iraq, despite US president Barack Obama’s declaration that US combat operations in the country have ended, many analysts and politicians believe that the country is years away from achieving a state of national security, and therefore its economy will likely remain depressed for many years. “The US may be announcing the ‘withdrawal’ of its combat forces although 50,000 men may remain up to the end of 2011. The fact is, however, that the US withdrawal is far from over, the Iraq War is not over, it is not ‘won’, and any form of stable end state in Iraq is probably

ON THE PULSE

Two Iraqi boys hold plastic flowers in their hands as US soldiers stand guard during the inauguration of a US-funded project to support small businesses in a suburb of Baghdad in late 2009.

impossible before 2020,” says Washington-based Center for Strategic and International Studies chairholder and national security analyst, Anthony Cordesman. “In fact,” he continues, “Iraq is at as critical a stage as at any time since 2003. Regardless of the reasons for going to war, everything now depends on a successful transition to an effective and unified Iraqi government, and Iraqi security forces that can bring both security and stability to the average Iraqi. The creation of such an ‘end state’ will take a minimum of another five years, and probably [a decade].” This is a view held not just by Western analysts and think tanks. It is a view also held by Iraqi defence minister Abdul Qader Obeidi. When asked how long US support may be necessary to ensure the effective use of military equipment and weaponry that Iraq is buying from America, Obeidi replied: “Maybe endlessly. As long as I have an army and I’m a Third World country, and I can’t pretend that I’m better than that, I will need assistance.” Obeidi added that the Iraqi air force would require assistance “at least until 2020” to ensure an adequate defence of its own airspace. THE POWER VACUUM There is more to the US’s vast troop deployment numbers however, than the much-vaunted will to keep the peace that has become the mantra of the US defence department, according to many political commentators. Writing on behalf of the Centre for Research on Globalisation, United Nations Association of Canada president Jules Dufour makes no bones of the US’s historic role in global politics, cemented through its military presence: “The worldwide control of humanity’s economic, social and political activities is under the helm of US corporate and military power,” Dufour says. “Underlying this process are various schemes of direct and indirect military intervention. These US-sponsored strategies ultimately consist in a process of global subordination.” The continued presence of American troops in the region is therefore a sharp double-edged sword. The fear today is that, should the US depart and leave an Iraq in its wake that is not seen as fit to defend itself,

An orange merchant in Baghdad sells his wares as the rest of the world wonders what the impact of the US troop withdrawal will have on the stability and economy of Iraq and indeed the entire Gulf region.

the resulting power vacuum could be an open invitation for other states to increase efforts to exert influence over Iraq, and to continue efforts to erode US power in the region. “The continuing violence and the absence of a strong central government in Baghdad have certainly created a political vacuum,” says Prasanta Pradhan, an associate fellow at the India-based Institute for Defence Studies and Analyses. “This leaves room for intervention by the regional powers keen to spread their sphere of influence and increase their national influence. Among the regional powers Iran, Saudi Arabia, Turkey, and Syria are at the forefront of playing a proactive role in Iraqi affairs.” Pradhan goes on to name one of these states, over all others, as holding a particular interest should the US pack up its bags and go home – a name that would make dim reading for the US. “Iran has an advantage over others in the internal affairs of Iraq,” he says. “And Iran is also the biggest beneficiary of the US withdrawal from Iraq.” The economic impact of the US withdrawal from the region will therefore depend on the state of the nation it leaves behind. It may mean a slowdown in business for the fast food eateries of Manama, but a stable government will always preside over a healthier national economy in the long-run, than a government that needs to be propped up by a military force, particularly one with its roots firmly planted half a world away. TheEDGE

GREEN BUSINESS

INTRODUCING ELECTRIC

cars TO QATAR

GREEN BUSINESS

Electronically powered transport is gaining momentum in a world already searching for more sustainable energy solutions, and if the country plans ahead adequately to accommodate these kinds of vehicles, Qatar could be poised to lead the world in the arena of truly green vehicles. By Sam Pickering

he transport links and infrastructure within Doha are notorious for two reasons. The first being the sheer amount of traffic and the subsequent congestion; the second the pollution associated with these volumes of traffic. The types of vehicle driven in Qatar in particular further exacerbate this pollution. Inefficient, high polluting cars, mostly sports utility vehicles (SUVs) are the norm, with no thought given to the environmental affects of their high kilometres per litre (km/l) consumption and emissions. Indeed, in any other fairly affluent country where fuel is relatively inexpensive and the distances required for road travel are not vast, such as the United Kingdom (UK), where cheap fuel allows a huge engine with low km/l consumption, the temptation to purchase an SUV is ever-present. However, the sustainability movement is gaining momentum and with it a change in mindset is beginning, although one should not be optimistic enough to think this will be immediate. People will not suddenly be turning in their five litre 4x4s for an efficient little hatchback overnight, for instance. Yet the master planning that is going on within Qatar and Doha in particular is ensuring that all future developments are â&#x20AC;&#x2DC;sustainableâ&#x20AC;&#x2122;. Transport and infrastructure are also being upgraded to launch a metro system and cycling facilities, to name a few. This, therefore, seems the perfect opportunity to introduce the systems and infrastructure that would lead the country into the era of the electric car. Many might feel this is idealistic, though it is already believed in some circles that this is the inevitable future of vehicular transport, especially public transport. In London charging points are appearing and electric cars can be seen being plugged in. Yet, it is not only the UK where such schemes are being introduced and this can be seen throughout Europe. In fact, Spanish prime ministerÂ Jose Luis Rodriguez Zapatero, whose country currently holds the rotating European Union (EU) presidency, has presented a European-wide plan for the development of electric cars. TheEDGE

GREEN BUSINESS

Now is the perfect time to lay the foundations and incorporate the charging points to accommodate AN electric vehiclefriendly system to be introduced to Qatar, which will save a huge amount of costs and further congestion in the future. The initiative is supposed to form part of a new economic strategy for 2020, which EU leaders agreed in June 2010. Even more interesting is the fact that the large car manufacturers, particularly in Japan and the Far East, are investing in electric car technologies in order to continue to grow and adapt to ever-changing consumer demand. Hyundai Motors has announced that will launch its second pure electric car in 2011 based on a small SUV made by its affiliate Kia Motors. This comes on the back of the launch of BlueOn, Hyandaiâ&#x20AC;&#x2122;s first â&#x20AC;&#x2DC;highway capableâ&#x20AC;&#x2122; electric vehicle, which is now being sold in Korea. In addition Mitsubishi and Nissan are also developing ranges of electric cars, some of which can already be bought around the world. The issues with the range electric cars can (or more specifically cannot) cover have been well documented, but recent advance have improved these significantly, extending range to more than 150 kilometres. Put into a local context, the average car journey is nowhere near this in Qatar. Nevertheless, a major difficulty with such a technology is the changes to infrastructure that are required to ensure such an idea works and is accessible to all. A major hindrance for such a project in a large, well-established and crowded city such as London for example, is the cost and disruption that is involved. For Qatar this is less relevant, as many changes and advances are happening already in arterial routes through the city. This is driven by the exciting bids for the 2022 World Cup and the 2030 Olympic Bid. Now is the perfect time to lay the foundations and incorporate the

TheEDGE

charging points to accommodate an electric vehicle-friendly system to be introduced in the future, as it surely will. This will save a huge amount of costs and further congestion in the future. The environmental benefits are great. The pollution from cars, especially given the climate is often debilitating and causes health issues for those who have to endure any period of time near a road where congestion is a problem. Electric cars will remove this pollution both from the living and working communities, and reduce noise significantly. This could be further enhanced by the wonderful potential resource that Qatar has in solar energy. If fully harnessed and the latest technologies utilised, then such a scheme should be self sufficient in terms of energy production, following the initial capital cost. It will also elevate Qatar to the pinnacle of innovative thought and put the country very much ahead of the curve in this realm. Realistically, however, the population of Qatar is not ready to swap SUVs for small electric vehicles en masse, but to implement at least the infrastructure for such a development toward electric cars should surely form part of the master planning for Qatar. It will also show the world that Qatar is serious about tackling climate change and is a real force in the world of sustainability. The opportunities for business in this arena are also great. The research and development centre that it is hoped Qatar will one day become for these kinds of technologies will only occur if the world sees the country as innovative. And if they do, this idealistic scheme may not be as crazy as it might seem.

ENTREPRENEUR

SWITCHED ON

In recent years, the Qatar integrated electronics installation industry has been developing rapidly, with the country’s leading company in this sector, TechnoQ, at its forefront. Yet, as managing director Zeyad Al Jaidah tells Miles Masterson, his enterprise’s evolution has been an ongoing challenge, requiring flexibility, dedication and a hands-on approach.

TechnoQ provides and fits a plethora of electronics products in Qatar. Among others, these comprise sound and theatre systems, audiovisual installations and video conference facilities, closed circuit television cameras, electronic swing tags, lighting, fire and safety systems, and a range of integrated systems, including building management solutions.

t is redundant to state that all successful businesses emerge from a good idea. However, it is important to mention this fact when examining the entrepreneurial case study of Doha-based company, TechnoQ, which, since its inception in 1995, has become Qatar’s oldest and most well-established electronics supplier and installer, in the field now termed ‘system integration’. Indeed, this becomes most relevant when the original concept of TechnoQ is taken into consideration and one sees how the company has subsequently morphed to suit the changing needs of its target market. This is because while TechnoQ was originally conceived in the mid-90s primarily to provide the nascent luxury of home theatre systems to affluent Qataris, it later only outfitted these for larger commercial clients.

In fact – as far as managing director Zeyad Al Jaidah can recall – they have not installed one of these systems in a private residence in Qatar to date. That TechnoQ subsequently endured and indeed thrived, is testament to the adaptability and quick thinking of its founders, Al Jaidah and executive director Abdullah Alansari. It also exemplifies their willingness to do what it takes to succeed and to embrace emerging technologies (sometimes before their clients even knew they needed them). Qatari nationals Al Jaidah and Alansari met while studying mechanical engineering at Texas University in the United States (US). Returning to Qatar first, Al Jaidah joined Qatar Petrochemical Company (QAPCO) as an engineer in order to complete the terms

ENTREPRENEUR

“We really want to distinguish ourselves and offer a world class service,” says Zeyad Al Jaidah. “Our vision is that we should be able to take this business model anywhere in the world and be competitive. Our goal is to build the company to a significant size.” of his scholarship programme, courtesy of Qatar Petroleum. When Alansari graduated and returned to Qatar to work for the same company soon afterwards, the friends and colleagues discovered they a mutual interest, one that would ultimately provide them with a career path neither had originally anticipated. “I had a hobby of surround systems and home theatre equipment,” says Al Jaidah, “and at that time it was really booming in the US and they had specialised shops for home theatre. After I graduated, I had the idea to create a shop here dedicated to home theatre. I thought we have so many rich people that we would be able to sell a lot of equipment.” When Alansari returned and Al Jaidah visited him at his home, he noticed a few home theatre magazines, and for the first time they realised they shared an electronic affinity. “I told Abdullah my idea to create a home theatre shop here in Qatar, and he said he had the same idea. So we thought, well, let’s then work together and convert this idea into a business. We started with a small shop on Salwa street,” explains Al Jaidah, who co-founded TechnoQ with Alansari, while they were both still working at QAPCO, obtaining finance from banks and involving Al Jaidah’s four brothers as stakeholders. A steep learning curve However, the entrepreneurs had severely over-estimated the desire of their compatriots to install expensive high-end in-home theatres. Despite showing their products to a wide variety of Qataris, including the Emir’s family and the then-minister of Foreign Affairs Sheikh Hamad bin Jassim (now prime minister), who were impressed but declined to purchase, they realised they might be on the wrong track. “We had a demonstration room which still exists,” adds Al Jaidah, who also says the technology was also ahead of the curve, as at the time few Arabic movies were filmed in the Dolby surround sound that their products featured. “Unfortunately not too many people wanted to spend money on a home theatre system, they wanted to buy the simple all in one system… so we started to think about something else.” Fortunately in 1996 a mutual friend, Omar Alfardan, provided them with a crucial break. Alfardan was opening his new BMW showroom at the time and asked TechnoQ to install a high quality surround sound system on the premises. Though they had practically no experience in commercial audio systems, intrigued by his request, the partners

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researched what would be required and installed a system, which Al Jaidah proudly adds, is still in operation today. Around the same period TechnoQ began to investigate adding home automation services as another line to its offering. While demonstrating the home theatre system to Sheikh Hamad bin Jassim, he asked them if they could instead install an automated system, similar to one he had seen in a New York hotel room. This piqued the curiosity of Al Jaidah and Alansari once more. Again they conducted the necessary research and became the first company to introduce the concept of home automation to Qatar, starting with the minister’s residence, which became their second notable accomplishment. “At the time we scratched our heads,” explains Al Jaidah. “We didn’t know that such a system existed, it was at that time really early stage of the technology, so we did the research and we did a quotation and we installed it for him. It was really a big achievement, so we went into the home automation from there.” These systems, he adds, can now be set up to control all the electronic equipment in a residence, from the air-conditioning and television to lights and electric shades, all from a central touch screen. Though Al Jaidah says that he rarely uses the technical aspects of his mechanical engineering degree in the electronics installation business, he reveals that it did come in useful was when researching and interpreting technical product information. Still, as in the mid-90s the Internet was not the convenient desktop research tool it is today, it was not easy for the partners to find out about new technologies without spending a lot of time on the telephone and even more travelling overseas. “We had to go to trade shows and attend specialised exhibitions. It takes a very long time to go there and at the time we were small, suppliers were not really willing to work with us – big suppliers – so we had to go to small companies, mainly in the US, as the control systems were American and cables that we brought were all American.” managing growth Securing products from large electronic brands was a challenge the company would face for a time yet. Yet despite making a small loss in their first year of business, thanks to a growing list of clients, TechnoQ continued to expand throughout the late 90s and as its reputation grew, they began to secure international suppliers, such as Panasonic. Moreover, both through requests from customers and characteristic opportunism, they embraced and introduced further technologies such

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as closed circuit television (CCTV) and security swing tags (used by clothing stores to deter shoplifting) to Qatar. “We thought, we are selling them audio systems, so we might as well sell them these too,” reasons Al Jaidah, who left QAPCO in 1997 to run TechnoQ full time (Alansari only did so 2006). Two further contracts then took TechnoQ to a new level, but also brought with them additional hurdles. One was a turnkey auditorium solution for the Ministry of Interior in 1999 and the other TechnoQ’s first hotel project, the Intercontinental Hotel. The latter proved both a boon and a big ask for the company, which had not installed a largescale system in the hospitality industry until then. Al Jaidah describes the process of procuring the latter from the contracting company enlisted to build the Intercontinental as anxious, but also as one of the contracts that proved their worth on a large scale and truly propelled their business into the major leagues of system integration in Qatar. Though TechnoQ had by then secured an association with the brand Micros-Fedilio, which is the preferred hardware and software solution for most of the hotel industry worldwide, it still took the partners much persuasion and hard work to ensure they got the job. The contractor was sceptical they were not sufficiently experienced to be able to deliver on a project of the scale of an Intercontinental. In fact, the contractor was about to close the deal with another company, yet he conceded to give TechnoQ less than a day to pitch for the work. “He said, ‘If by tomorrow morning if I don’t have a quotation, you will lose the job’,” smiles Al Jaidah, adding that they worked through the night in preparation. “Though we had most of the equipment listed, we didn’t know the prices, and had never dealt with such equipment. Believe me, we had maybe 24 hours for that quotation and somehow we got the job and the client was happy. And from that we received many other offers.” However, positive as it was, this contract and those that followed provided a new challenge for TechnoQ: managing their ever-expanding workforce, which had already almost tripled from six staff in 1995 to 16. This is underscored perfectly by one of their next large projects, outfitting the Weil Cornell Medical College Liberal Art and Science building’s entire AV system in 2002. “When we got that, the number of staff exploded to 50-something,” recalls Al Jaidah. “There was a chain of big projects coming up and we thought we have to really be prepared and we have to have the right manpower. And at that time the contractors were really reluctant to give it to us because were small and didn’t have any experience, so we had to go the extra mile to get the business.” Future Forward From that point TechnoQ has racked up an impressive list of Qatari clientele – including education and government institutions, commercial enterprises, from malls and stadiums to retailers, as well as private homes – and consolidated their position as a market leader. Most recently this included large-scale building management systems (BMS) for construction projects, which mostly manage air-conditioning and lighting systems from a central control room, and are a vital component of any building’s development from the planning stages. “BMS is really focused on energy management and conservation,” furthers Al Jaidah. But TechnoQ’s growth has not been without difficulties. As per most businesses, it experienced a period of consolidation during the

The secret to becoming a successful entrepreneur, advises TechnoQ’s managing director Zeyad Al Jaidah, is to be 100 percent involved in every aspect of the business. “When we started we did all our own installations. While my partner Abdullah (Alansari) was installing the speakers, I was holding the ladder for him, taking the orders, we did everything ourselves. Even today we check every order that goes to the suppliers.”

global downturn, which for one thwarted a tentative expansion into other Gulf markets, such as Dubai (though they are considering this again soon, adds Al Jaidah, particularly if they can partner with IT companies on projects in which they specialise, such as universities). Thanks to increased competition from local, Dubai-based and international companies, TechnoQ has had to reduce its margins somewhat. But Al Jaidah is philosophical about the new challenge this competition presents, saying TechnoQ emphasises the quality of their products and service. In fact, as far back as 2000 they were awarded Infocomm Gold Status (a global AV industry standard) and an ISO 2000:9000 rating, which has lead to all of the company’s procedures being thoroughly documented and standardised. “We really want to distinguish ourselves and offer a world class service,” rationalises Al Jaidah. “Our vision is that we should be able to take this business model anywhere in the world and be competitive.” While he reveals business has at times been slow over the past 18 months, and it is a constant challenge to manage a project-based company of around 200 employees, with overheads of more than QR2 million a month, Al Jaidah is confident about the future. Following the Qatari budget released in April, contracts with government institutions have picked up, and thanks to the growth of the construction industry, TechnoQ has many projects underway or in the planning stages. “We are taking the opportunities, as a boom like this does not come around often,” Al Jaidah sums up. “Our goal is to build the company to a significant size so that it can be listed on the stock market, so that part of the shares can be sold to the public. That is our dream.” TheEDGE

SPECIAL FEATURE

THE FUTURE OF

Q ATA RI S AT I O N

When Qatar’s Labour Market Strategy, of which ‘Qatarisation’ is a key component, was initiated in 2005, it aimed to develop opportunities for citizens across all sectors of the nation’s economy. Rachel Morris looks at the present and future of Qatarisation and the gap between the theory and putting it into practice.

atarisation is also known as nationalisation or quotas. In Qatar, this is inextricably linked to the well-meaning Qatar National Vision, which strives to create a diverse and vibrant economy without being overly reliant on the hydrocarbon industry, and to ensure the wellbeing and future of its citizens. In a nation where almost 80 percent of the workforce hails from outside its borders, in the early days Qatarisation was seen as the only way to redress the huge imbalance and more importantly, create employment opportunities for new generations of Qatari graduates. The first serious push for Qatarisation was led by Abdullah bin Hamad Al Attiyah, deputy premier and minister of energy and industry, who almost a decade ago, announced Qatar’s goal of achieving least 50 percent employment of Qatari citizens in the hydrocarbon sector. Al Attiyah remains a strong advocate of the policy and the success that is measured

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in its implementation by the Qatari workforce of companies such as Qatar Petroleum and QatarGas. However, think-tank RAND-Qatar Policy Institute, based at the Qatar Foundation (QF), revealed in a recent study of human capital in the Gulf Cooperation Council (GCC) countries, that for Qatar there is a looming economic imperative to encourage young Qataris into all sectors. “Qatar’s leadership recognises that to promote economic stability, it must encourage the employment of Qataris in the mixed and private sectors,” the 2009 report states. “Although Qatar will remain one of the richest nations in the world in the coming decades, it will not be able to compete in the knowledge economy of the 21st century if its public sector remains the largest employer of nationals. Until Qatar’s young nationals receive the education and training needed to equip them with the appropriate skills for the market, the pool of Qatari human resources entering the market will be unqualified. This could threaten Qatar’s long-term economic viability.” Some Qatari organisations, most notably QF, have met their own internal targets. In April 2010, QF announced it had achieved what many companies are struggling with, 50 percent of its workforce being Qatari almost a full two years ahead of schedule. Other major employers such as Qtel claim to be on the way to meeting their Qatarisation targets by 2012. These success stories are thus far limited to government entities and joint ventures. But there are indications, despite the success stories especially in government entities – and the so-called ‘Q’ companies, which have government affiliations – much still needs to be done, in attitude as well as practice.

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Others are struggling, especially those in the service sectors, with many Qataris ostensibly reluctant to take ‘low paid and low status’ jobs. As the policy moves slowly from theory into practice, many are questioning whether Qatar as a nation, and more specifically, whether its young emergent workforce, is ready to take up the challenges it faces. To look at the success and failure of socalled ‘nationalisation’ programmes, Qatar’s neighbours provide insights. Oman, which is not as blessed as Qatar with natural resources, has had an Omanisation programme in place since 1988. Emerging from a period of what the country termed “darkness’” the Sultan of Oman sought to create a sustainable workforce. The government’s workforce is almost 80 percent Omani and the banking sector has achieved almost 90 percent Omanisation. Meanwhile, unemployment has dropped from a high of more than 16 percent in the mid 2000s to 3.9 percent in 2009. Certain job categories, including taxi drivers, are ‘Omani Only’ positions. In Saudi Arabia, progress has been limited only to government institutions, and unemployment reached 10 percent this year. With a total population officially at 27.1 million, Saudi Arabia offers its nationals social benefits, but these are considered well below those granted by other GCC countries such as Kuwait and Qatar. Many Saudis are therefore forced to work as taxi drivers, private security guards or other low-paying jobs to make ends meet. “It is impossible, whether in the Kingdom of Saudi Arabia or in the rest of the countries of the world, that the government employs all young people, but jobs in governmental or private sectors should be occupied by citizens,” Prince Nayef bin Abdul-Aziz, an influential member of the Saudi royal family said, in August. In the United Arab Emirates (UAE) around 800,000 new jobs are created every year, yet there are 36,000 UAE nationals

seeking jobs with more than 15,000 fresh university graduates entering the workforce every year. So acute is the perceived ‘failure of quotas’ that the UAE’s National Human Resources Development and Employment Authority, Tanmia, issued a report analysing nationalisation policies of GCC governments, and found the quota system to have more negative effects than positive. UAE minister of labour, Dr Ali bin Abdullah Al Ka’abi, recently declared the quota system to be ineffective, saying the ministry’s focus would now turn to the ‘Emiratisation’ of professions, including doctors. The somewhat unaddressed issue with nationalisation programmes is that they are integrally linked with hot button issues such as identity, population and discrimination. Professor of economics at Qatar University Ali Khalifah al Kuwari likens the experience in GCC countries to those in Asia. “When nationals become minority groups in their countries, when their cultural, productive and administrative roles are subordinate to those of foreigners, when their living conditions are dependent on donations, administrative decisions, and on an ever-diminishing legal protection, they are left helpless in an unfair competition against an elite of immigrants who come from different parts of the world,” he says. “In such a competition, the status of nationals in Qatar and the UAE in particular would be similar to that of the Malay in Singapore, who has been politically, culturally, socially, and economically subordinated to the Chinese immigrants.” Professor al Kuwari further places his concerns in a political context: “National choices and public decisions seem to be unaffected by the demographic

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imbalance, and disrespectful of the rights of citizens, including the need to safeguard their language, identity and existence. Construction expansion – a nationally unjustified choice – spearheads the so-called development that I describe as ‘the development of loss’; the loss of the homelands, the disintegration of the national communities, and the endangerment of the future of the coming generations.” Meanwhile, back in Qatar, since May 2010 a draft law has been before the Qatari cabinet. Long debates and delays in legislative changes are not unusual in the GCC, but this change has been cause for concern. It would see the fines

for companies and organisations for noncompliance with government-set Qatarisation targets double to a prohibitive QR100, 000. It would also see ‘flying visits’ by Ministry of Labour representatives to check employment records and adherence to the policy within the letter of the law, creating further unease. While Qatar’s official unemployment rate sits just below an enviable 0.5 percent, youth unemployment for those aged 15 to 24 years is 14.6 percent, although many of those in this age category are still at school or tertiary education institutions. Until the 1990s, Qatari university graduates could expect their government to subsidise them until they found a job. Not so in 2010. And there are indications that merely getting an education

may not be enough anymore. In an editorial in September 2010, The Peninsula newspaper articulated one of the issues that continue to plague the practical application of Qatarisation. “Practically, the Qatarisation policy dangerously dances across a thin tightrope...the main threat posed by Qatarisation is the potential to create a sense of entitlement amongst its citizens, particularly, impressionable fresh graduates seeking employment...For such complacency to take shape would be a great disservice to the national economy and the citizens themselves. Of course, that is certainly not the case or the intended purpose of Qatarisation. It is, however, a reasonable

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potential outcome of this policy if it is not carefully monitored and objectively evaluated,” the editorial stated. The RAND-Qatar Policy Institute, in its 2009 paper, Facing Human Capital Challenges of the 21st Century, found that in Qatar inappropriate educational background and lack of training were major obstacles contributing to the limited improvement and development of workers’ competence and performance in the workplace. Qatar’s current per pupil expenditure as a percent of gross domestic product (GDP) per capita is still relatively low. In fact, countries with similar GDP per capita levels invest on average twice as much on their students. “This suggests that Qataris will join the labour market with less preparation than their counterparts from other countries,” the report says. The issue of lack of preparedness is also being hotly debated within the Qatari community. Recent statistics reveal that Qatari female university graduates outstrip

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their male counterparts ,leading to claims that some are just not interested in working, or at least not interested in taking ‘low status’ jobs. “Qatarisation seems to be the hottest topic these days and it also seems to be deeply related to the tension between foreigners and Qataris,” says a Qatari blogger in an April post about the contentious policy. The outspoken blogger, a university graduate goes on to say that Qatar’s social attitudes and cultural norms are excluded and not considered in Qatarisation policies and objectives, and this is a major reason why many industries and sectors are failing in their targets. And she says, more importantly, there is a failure to get the necessary buy-in from Qataris themselves. “For example, many Qatari women are reluctant to work in jobs that require them to spend long hours at work and away from their families or that involve working in a mixedgender environment,” she says. Private companies have been set the more modest target of 20 percent Qatarisation, but many are still struggling to meet this, especially

in the hospitality and banking sectors. There is evidence, though, that Qatar is looking to redress the imbalance between the desirability of jobs in the hydrocarbon industry, as well as in the government and the lower status service jobs, and that there has been a shift in thinking. The recent opening of Qatar’s first Community College (QCC), focusing on trade-based skills and education, initially offers a two-year associate degree, equivalent to a diploma, in a range of subjects including accounting, banking and finance and surveying. The college aims to catch those high school graduates who are unable to obtain admission to university, and initial enrolments in 2010 will be 350, set to grow to 1000 in coming years. Dr Ibrahim Alnaimi, chair of the CCQ steering committee, said the students would be able to study strands not offered in other educational institutions in Qatar: “Students will be able to earn a certificate or two-year associate’s degree in a select number of fields critical to Qatar’s economic growth.” Nevertheless, some private companies in Qatar, such as Mashreq Qatar, Exxon Mobil Qatar and Maersk Qatar have had great success in attracting qualified and enthusiastic Qatari graduates thus far. But for some senior executives in Qatar, the road will continue to be challenging, with many reporting difficulty in reaching Qatarisation targets because they cannot compete with government salaries and working conditions. “For some sectors, it is just not possible to match the salaries and benefits government and joint venture companies are offering fresh Qatari graduates and even those with work experience,” says one C-suite executive, adding that hiring a young Qatari graduate is a difficult goal for many private companies in Qatar.

BUSINESS VIEW REAL ESTATE

A city of records By Edd Brookes

BUSINESS VIEW REAL ESTATE

t does not take much time to conjure up the achievements a geographically small country like Qatar can be proud of. Apart from its highly developed gas and oil industries, Qatar has managed to retain centuries-old traditions and customs, all still an important part of modern life, and offers its citizens a virtually crime-free society that we all enjoy safely living in. The country is also on the global map for all kinds of records: • Sheikh Hassan bin Jabor Al Thani and Abdullah Al Sulaiti made it into the Guinness World Records after setting the Trans-Gulf speed record. They sailed a speedboat from Abu Dhabi to Doha in just one hour, 55 minutes and 14 seconds, covering the 315 kilometres (km) by reaching speeds of up to 218 km per hour. • Qatar International School proudly holds the record for the longest Pi chain. They calculated to an incredible 10,000 decimal places. • The KFC outlet at Villaggio recently set the record for the largest KFC basket weighing in at an amazing 300 kilograms (kg) of chicken and standing 1.2 metres in height. • Mowsalat achieved the longest parade of busses, with 325 buses in a 4.8 kilometre parade. • RasGas created the largest handprint painting measuring over 2500 square metres. The record books also feature Qatar’s real estate-related accomplishments, such as the world’s longest chandelier, housed at the dramatic Al Hitmi building in Doha. The chandelier, known as ‘Reflective Glow’, weighs 19,900kg and consists of 2300 individually hand-ground crystals. It uses 55,000 light emitting diodes (LED), making it the world’s largest interactive LED light sculpture as well. Then there is the incredible construction feat which was achieved at the Barwa Financial District development in the West Bay area. This magnificent project, being developed by Barwa off Majlis al Tawoon Street, will feature, when complete, 229,400 square metres of office space, 9500 square metres of

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retail space, 35,960 square metres of hotel and hospitality space and 5288 car parking spaces. Completion of the ambitious project is likely to be phased, with the initial phases ready for occupation in 2013. As reported recently in the Gulf Times, Qatar Petroleum (QP) has already indicated a strong interest in occupying the landmark development. Despite the development’s grand numbers in terms of square meterage, records are being set at a much more fundamental level. In July 2010 an operation which had taken

weeks of planning was put into effect. Over 11,000 cubic metres of concrete was poured over a period of 47 and a half hours. This involved some 1400 truckloads of cement, which, in turn, required 2600 tonnes of reinforcing steel. In total, eight pumps were working continuously along with five others on standby (three were at the batching plants). To continually pour up to 280 cubic metres of cement an hour for such a long period is an incredible feat accomplished by Bouygues Bâtiment International.

BUSINESS VIEW REAL ESTATE

To illustrate the conditions under which the accomplishment took place, temperatures hit 46 degrees centigrade during the pour, and the curling time was three weeks. GREEN CREDENTIALS The development will be one of the first certified sustainably designed developments in the Middle East and fully complies with Barwa’s strict Barwa Qatari Diar Research Institute’s Qatar Sustainability Assessment Scheme. To show its commitment to sustainable development, Barwa Financial District has incorporated cutting-edge design features that minimise its environmental impact. Each tower has been submitted to a thorough solar impact study resulting in individual façade treatments to optimise shading effectiveness. The occupancy-based lighting throughout the project makes better use of energy resources, while a grey water recycling system

collects rainwater and condensation for re-use. With so many major design aspects of the project in compliance with Leadership in Energy and Environmental Design and European standard EN 13779, Barwa Financial District is an international model for sustainable development, and sets the green benchmark for future developments in the region. POTENTIAL TENANTS TAKE A CLOSER LOOK The Barwa Financial District development will undoubtedly become a major landmark nestling beside the other shining towers which now dominate the West Bay skyline. In the event that the development is not occupied by QP, the project’s phased delivery over a period of four years will minimise any possibility of it remaining vacant for very long. Yet it is interesting to note that in the last 18 months, it has become clear that, despite the

regional and multinational companies who are eyeing Doha as a possible location from which to conduct their Middle East business, they are not inclined to lease new premises off-plan. This stems from delays in completing various office projects to the point of Civil Defence sign-off which allows occupation. This hopefully will change as projects are delivered on time and occupiers regain confidence in developers’ ability to deliver. What is apparent is the strong potential demand from companies currently based within the region (notably Dubai) who are once again re-examining their occupational and location requirements. It is notable that Qatar is perceived as an extremely stable location that welcomes regional and multinational businesses and provides a strong legal framework that both encourages and enables businesses to grow. What is also apparent is that Qatar is not shy about breaking records whatever and however diverse they may be.

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SPECIAL REPORT

Qatar: Out in front By Oliver Cornock

One of the first Gulf states to build up its industrial capacity as part of an effort to diversify the economy, Qatar is now reaping some of the benefits. Manufacturing has been a key factor in a shift which last year saw hydrocarbons relegated to second place as a contributor to gross domestic product (GDP). According to a recent report released by financial services firm Qatar National Bank (QNB) Capital, the country’s non-oil and gas sector overtook hydrocarbons for the first time in 2009, contributing 53.8 percent of total GDP. Of this, the manufacturing sector contributed just less than 10 percent, representing a healthy US$7.6 billion (QR28 billion) out of last year’s US$100 billion (QR364 billion) total. It is not surprising that the non-oil and gas sector has taken the lead, as since the 1970s the government has been working to broaden the economy’s base, with manufacturing the first vehicle chosen. That focus has recently been widened, encompassing finance, logistics, tourism and services. The country has significant competitive advantages in many of its industries, largely based around its abundant and inexpensive energy supplies, and many of the major industrial companies operating in Qatar are reliant on hydrocarbons for their basic feedstock. Firms such as the Qatar Fuel

Additives Company Limited (QAFAC) – a leading producer of methanol and methyltertiary-butyl-ether, or ammonia and urea manufacturer the Qatar Fertilizer Company (QAFCO), are prime examples of the enterprises that have developed in the downstream sector. Other leading industrial concerns such as Qatar Steel, one of the region’s largest integrated steel manufacturers, rely heavily on natural gas for their production processes. Gas also supplies the power needed for the generation of electricity and the desalination of water, both crucial to industrial production and indeed daily life in Qatar, as in much of the Gulf region. Projections of Qatar’s GDP growth for this year range from around 11 percent to as much as 15 percent or more. While the forecasts may vary, there is little disagreement as to what will be driving that expansion. Increased production and export of hydrocarbons, and in particular liquid natural gas (LNG), mean the energy sector may well regain its crown as the leading economic activity in 2010. While it is home to the third-largest natural gas deposits in the world, and is about to become the leading LNG exporter globally, there are limits to how long hydrocarbons will be able to power the growth of the Qatari economy at present rates of expansion.

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The government has set a production target of 77 million tonnes a year, a target that is set to be achieved with the completion of new processing facilities. With production about to plateau, albeit at a high altitude, Qatar will have to look beyond hydrocarbons to maintain the phenomenal GDP growth it has experienced over the past decade, with industry again set to come to the fore. Both state and private sector organisations are working to raise the profile of Qatar’s industrial sector and to encourage wider investment from both domestic and foreign firms. One of these efforts is the Made in Qatar exhibition, to be held in January next year. Organised by the Qatar Chamber of Commerce and Industry (QCCI), the objective of the trade fair is promote the country’s industrial sector, according to the chamber’s chairman, Sheikh Khalifa bin Jassim Al Thani. “The exhibition aims to market these highquality industrial products and encourage businessmen to engage more in small and medium industries,” he told reporters on August 30. While some 175 companies have already put their names down to take part in the exhibition, according to QCCI data, around 70 percent of the firms that have confirmed their bookings are linked to the petroleum industry, again underscoring the interdependence between industrial production and the energy sector in Qatar.

Qatar’s steel industry is one of the many sectors in the country’s economy that both rely on natural gas for production and are benefitting from the country’s increased focus on improving its industrial capacity beyond hydrocarbons.

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Introducing The Gate Unique Location, Vision and Facilities The Gate is located in West Bay, the new business district of Doha, and is very unique in the region in terms of the cluster of high-rise buildings that offer high-end offices, luxury hotels and apartments as well as some food and beverage (F&B) outlets. It is a typical cosmopolitan area, similar to any other modern and developed central business district (CBD) in the world. Located at the spine of West Bay facing the low-rise exhibition centre, The Gate site is large, unlike other plots in West Bay, and straddles the iconic Salam Plaza with more than 30 years of luxury retail heritage. The unique location and attributes lent itself to Salam Bounian developing a concept of a unique mixed-use development that provides multidiscipline and complementary services within walking distance to all users, tenants, and operators working and living in West Bay. The office component is positioned on top of the mall, offering dedicated entrances, with drop off areas located at each entrance and managed parking that provides many advantages to the office tenants. Salam Bounian has created a special office environment for its tenants, where they will enjoy facilities of various types such as health clubs, F&B outlets, meeting points and state of the art technologies for office use.

Comprising three office towers, two of which are connected through a bridge forming a distinctive gate shape and situated above four levels of luxurious retail space which constitute “The Gate Mall”, “The Gate” development in Doha is destined to become the cosmopolitan, sophisticated shopping and commercial hub of the city, effortlessly combining futuristic design, with the best infrastructure to create an innovative new concept in mixed used development in Qatar.

Office Space Options The three office towers offer a total of 52,000 m² of superior grade space with a floor plate ranging from 1000m2 to 1400m² each. 45,000m² of this space is A-grade space and is located across 10 floors of each office tower, whilst 7000m² is premium A-grade VIP executive accommodation located at the top three floors of the connecting bridge that links two towers together, forming The Gate structure. The latter will feature a six-metre slab-to-slab floor height and premium executive corridors and lobbies. They will also enjoy the best views of West Bay.

transmitting characteristics and minimising the heat gain within the building during the day and consuming less energy in cooling the space. Ample Parking The Office parking comprises of three floors of basement levels covering an average area of 20,000 m² per level in addition to street level bays. A unique bay status indicator system will alert customers to available bays and ensure optimal bay utilisation and appropriate parking traffic management. Access to the parking is via three entrances into the basement floors to manage the traffic in a way that will not cause queues outside the building and will ease of the traffic flow in and out of the parking lot in a smooth and efficient manner.

VARIOUS Attractive Lease Options Salam Bounian offers flexible leasing options to their office tenants to suit their requirements. This includes lease period, fit-out options and furnishing offered through sister concerns that deal with interior design, fit-out works, furniture supply and manufacturing. All these options can be contained in a unique lease contract according to the tenant’s requirements. Other Unique Attributes The entire Gate development will be unique in Qatar in that

it will be a true boutique luxury lifestyle destination. The concierge services on offer to The Gate customers and the quality finishes and ambiance will make every visit to The Gate memorable. It will also feature a CISCO-backed ‘Converged IP Network’ that is going to provide a reliable, resilient and a secure IP backbone and services to meet the most stringent information technology requirements. These include: Core IP Backbone; IP Telephony Systems; Digital Media System; and Wireless Local Area Network. The glass curtain walling System specified and used at The Gate project is also a high performance glass that has high UV filtering and considerably low heat

Focus on Health and Safety For health and safety reasons the 16 floors of the buildings are in fact considered low-rise buildings. When Salam Bounian decided to split the commercial aspect of the mall to three units instead of a single and tall building, they specifically wanted to have low rise buildings to facilitate ease of evacuation in cases of emergencies and to reduce the number of tenants per floor and per building for the same purpose, as the higher the building the higher the risk.

The Offices also have camera controlled entrances with individual, isolated and secured lobbies for each office building, which additionally facilitates evacuation. Further health and safety measures include: • State of the art fire monitoring, fighting and prevention and management system; • Building Management System (BMS); • 200 cameras monitored on 36 screens through closed circuit television security; • Fully controlled carpark; Evacuation Plan and training; • On-site certified health and safety personnel; • Implemented physical site 24 hour security; • Isolated entrances for the offices from the mall entrances with controlled entrances; • Lifts are equipped in such a manner as not to allow mall shoppers to wander into the commercial office floors. Eco-Friendly Innovation For the environmentally inclined, apart from having a CISCObacked ‘Converged IP Network’, which is second to none in the region and capable of energy saving due to its technology of replacing multiple installations in various systems with a single source, there are many further eco-friendly technologies that have been implemented at The Gate:

“The three office towers offer a total of 52,000 m2 of superior grade space with a floor plate ranging from 1000m2 -1400m2 each. 45,000m2 is A-grade space and 7000m2 is premium A-Grade”

Introducing The Gate A. Water consumption systems and materials have been used during the construction period to establish greater water efficiency: • During the construction period the contractor used a water curing agent instead of conventional water curing to prevent rapid drying of the concrete surface during the curing phase of freshly poured concrete thus minimising the need for and consumption of water. • Post tensioning concrete methodology has been used in concreting the slabs in order to minimise the volumes of concrete cast and reduce the consumed amounts of water and other construction resources. B. Comprehensive light, heat, water and recycling conservation: • Chilled water pumps are equipped with variable frequency drives. • High efficiency motors have been considered during the equipment selection. • Smoke and ventilation fans of the parking area are of variable speed type to minimise energy consumption during offpeak times. • Two-way control valves have been used to minimise the chilled water consumption. • Fresh air requirements as per the American Society of Heating, Refrigerating and Air-Conditioning Engineer (ASHRAE) standard 62 have been considered.

• A building management system (BMS) has been used to cover most of the electromechanical systems, maximising the use of energy in an efficient way. • Toilet flush valves have been equipped with infrared sensors to control the water consumption. • All mixers used in the entire building have been equipped with infrared sensors. • Urinals are the waterless type which vastly reduces the overall water consumption. • Glazing shading coefficiency was considered during the selection of the glazing panels, maximizing the use of daylight to reduce the electrical consumption for lighting for example the glass box and central core.

• A water efficiency system for landscaping has been considered. • Approximately 70 percent of the light fixtures are energy saving. • Power factor correction to minimise the reaction power has been considered. C. Shaded and underground parking: Three basements of parking spaces below ground level efficiently preserve cars from excessive heat for less consumption of AC power. D. Curtain walling system: The glass system specified and used at the Gate project is a high performance glass that has high UV filtering

“The Offices at The Gate feature a Cisco-backed converged IP network that provides a secure IP backbone and services that meet the most stringent information technology requirements, including a core IP backbone, IP telephony systems, digital media networks and a wireless local area network.”

and considerably low heat transmitting characteristics and minimises the heat gain within the building during the day and consumes less energy in cooling the spaces E. District Cooling: District cooling provided by Qatar Cool has reduced the energy consumption and minimized the volume of water cooling needed when it is leveled and balanced in the larger quantities. Not having its own chillers enables the Gate to reduce the level of noise and carbon emission on-site. For further information please contact: Isabella Ibrahim Marketing Department Salam Bounian Salam Plaza Tower, 2nd Floor Maysaloun Street, West Bay, Doha, Qatar T: +974 4493 25 24 F: +974 4493 25 26 i.ibrahim@salam-bounian.com www.salam-bounian.com

BRAND BEAT

COLOUR By Charlotte Stubbs

motion is a key motive for human impulse. We live our lives surrounded by a sea of brands. Every minute we make decisions based on instantaneous subconscious impressions – emotive responses induced by our own personal reactions to visual or sensational ‘happiness’. Colours are particularly powerful at producing an emotional customer response. As children we were often asked what our favourite colour was, and we were generally expected to have one. We paint our bedrooms in our favourite colour, they become a major decision point when purchasing a car, and are heavily discussed when planning our weddings. Colour is an integral part of everyone’s life, and they have become an extremely important facet of design.

Many design agencies concentrate on understanding and appreciating the value of colours – what they are, the feelings they evoke in people, and the ways they can and should be used together in design to create a particular feeling or stir up an emotion in the target audience. When a logo or brand for an organisation is designed, colour is one of the key areas considered in the initial research and design processes. The research into colour use within design must cover the target audience, and whether the selected colour complements the mission and vision of the organisation. Angus McLachlan, designer at Creative Action Design says, “Colour, when applied in the design or arts environments, has the ability to simulate emotion. This amazing human adaptation to create a ‘synthetic’ experience before we have experienced the

“We paint our bedrooms in our favourite colour, they become a major decision point when purchasing a car...colour is an integral part of everyone’s life.”

brand, product or service is a key driving tool for many marketers.” Research conducted at the Seoul International Colour Expo in 2004 found that 92.6 percent of people said that they put most importance on visual factors when purchasing products. Research by the Institute for Colour Research found that people make a subconscious judgement about a person, environment or product within 90 seconds of initial viewing, and that between 62 percent and 90 percent of that assessment is based on colour alone. To understand the impact and importance of colour in design, we first need to understand what colours actually are. Primary colours are the core at which all colours can be created. The two main combinations of colour are the digital red, green and blue (RGB) and print version cyan, magenta, yellow and black (CMYK). Colour interacts with differing light sources; it is for this very reason that digital colours are composed of RGB, due to the light source being projected through or behind the spectrum, as in a computer screen or television. In CMYK the colour is not projected by a light source (as in RGB), but is a solid which absorbs differing light waves from a light source. Each colour has its own distinct appearance, based on four key elements: hue, chroma, saturation and value. Hue is how we

BRAND BEAT

THEORY perceive an object’s colour, and the hues used in your design convey important messages. A chroma is the vividness or dullness of a colour – in design you should opt for hues with chromas that are either the same or are a few steps away from each other. Saturation refers to how a hue appears under particular lighting conditions. In design, colours with similar saturation levels make for more cohesive-looking designs. As with chroma, colours with similar but not identical saturations can have a jarring effect. The final element is value which is the degree of lightness of a colour. When applying colour values to your designs, you should favour colours with different values. High contrast values generally result in more aesthetically pleasing designs. Colour selection will depend on the intended emotive response. There is a reason why Google uses a vibrant, diverse colour scheme and why a majority of security companies are royal blue, and fast food outlets red. We continually make subconscious decisions based on a predefined visual message. There are also further design tools that can be utilised using colour. Tones are created when grey is added to a hue. Tones are generally duller or softer-looking than pure hues. Depending on the hues, they can also add a sophisticated or elegant look. A shade is created when black is added

to a hue, making it darker. The word is often incorrectly used to describe tint or tone, but shade only applies to hues made darker by the addition of black. In design, very dark shades are sometimes used instead of black and can serve as neutrals. Combining shades with tints is best to avoid too dark and heavy a look. A tint is formed when white is added to a hue, lightening it. Very light tints are sometimes called pastels, but any pure hue with white added to it is a tint. Tints are often used to create feminine or delicate designs. Pastel tints are especially used to make designs more feminine. They also work well in vintage designs and are popular with brands targeted at a mature audience. Different combinations of colours can be used in design to achieve a design objective. Three important groupings of colours to be aware of are warm colours, cool colours and neutral colours. Warm colours include red and yellow, with orange falling in the middle, meaning that warm colours are all truly warm and are not created by combining a warm colour with a cool colour. Use warm colours in your designs to reflect passion, happiness, enthusiasm, and energy. Blue is the only primary colour within the cool colour spectrum, which means the other colours are created by combining blue with a warm colour (yellow for green and red for

purple). Greens take on some of the attributes of yellow, and purple takes on some of the attributes of red. Use cool colours to give a sense of calm or professionalism. Neutral colours often serve as the backdrop in design. They’re commonly combined with brighter accent colours. But they can also be used on their own, and can create very sophisticated layouts. The impression of neutral colours is much more affected by the colours that surround them than are warm and cool colours. Windows, Google, eBay and the original Apple brand all feature vibrant spectrums rather than a single dominant brand colour. Whilst they all provide a completely different product, their identity or customer perception is one. The use of saturated and vibrant colours creates a diversity, which is united under the brand name. The way we have evolved as a society means that we rely heavily on our sense of sight for survival, so the use of colour is extremely important. If a brand or product wishes to evoke a certain reaction in someone – for example make them remember a brand or purchase a product – then colour needs to be used cleverly and effectively to increase the likelihood of creating the desired reaction. Studies have indicated that one’s perception and interpretation of colour can be highly subjective. TheEDGE

BRAND BEAT

In October 2000, Heinz launched a green version of one of its most famous products, tomato ketchup, in a bid to tap into the younger market. However, while the company’s focus groups indicated that children wanted to see ketchup in a new colour, the change was a shock to many. The very public experiment raised the issue of how we perceive food and what we associate with different colours. Nigel Hemmington, Head of Bournemouth University’s School of Service Industries, said at the time that people’s senses are sent into disarray when confronted with such unexpected stimuli. “Certainly when something doesn’t look the colour we expect, it changes our perception of how it tastes.” Ten million bottles of the green Heinz ketchup were sold in the first seven months, but was this colour change simply a novelty factor? Indeed, the range was discontinued in 2006 and Heinz now only sells the original red ketchup. Dan Gilbert, author of Stumbling on Happiness, emphasised the discourse of subconscious responses in his Technology, Entertainment and Design (TED) lecture, stating that “freedom, the ability to make up your mind and change your mind, is the friend of natural

TheEDGE

happiness, because it allows you to choose among all those delicious futures and find the one you would most enjoy”. Colour is one such cognitive mechanism which has the ability, when applied correctly to ‘make up and change your mind’ seeking happiness. The RED brand campaign, started by U2’s Bono and Bobby Shriver to raise awareness of Aids in Africa, utilises the powerful messages that the colour red conveys. Red has the property of appearing to be nearer than it actually is, and therefore it grabs our attention first. The effect of the colour red is a physical one rather than a psychological one. It stimulates us, raises the pulse rate, and it can activate our ‘fight or flight’ instinct. Pure red is the simplest colour. It is stimulating and lively but can also be seen as demanding, aggressive, and important. Perhaps a good choice then for a campaign which is designed to provoke a strong reaction from people and encourage, or perhaps persuade, them to give money to a charitable cause. Creative Action Design embraced colour in its work for the Qatar 2022 bid. In designing the ‘confetti man’ and building a look

and feel for the bid brand, the design agency used a number of different hues in unison. The presence of all these different colours in the ‘confetti man’ and the ‘confetti’ was itself used to accentuate the design and indicate a sense of celebration. The use of many pure hues together can add a fun and playful look to a design, which was the intended message with the bid promotion. It was designed to attract and catch the eye of all the residents of Qatar and to encourage them to get involved and engaged in the bid. The use of a dominant colour can be a powerful tool in creating an identity, as seen by the increase in national branding worldwide. Qatar is one such nation, building its own brand around the national flag colour, maroon. Qatar is building equity around this colour, which acts as the primary identity or visual representation for all that Qatar promises. The distinctive maroon has seen itself evolve not only across the nation’s international promotions, but also in the many local organisations wishing to identify with the heritage, culture, attitudes and ambitions which the Qatari colour now represents. This popularity translates online where maroon is found as a key colour in many local websites. The Qatari people are proud to be building local and national organisations and are proud to fly the flag colours. With more and more Qatari organisations moving abroad through the acquisition of foreign opportunities, and the increasing global focus on the country and its many business opportunities, the importance and significance of this colour to contribute to a national brand will only increase.

What do colours represent? Red: Passion, Strength, Anger Orange: Energy, Frivolity, Fun Yellow: Optimism, Creativity, Anxiety Green: Harmony, Refreshment, Nature Blue: Calm, Intelligence, Aloofness Purple: Spirituality, Royalty, Wealth Black: Mystery, Glamour, Evil Grey: Depression, Neutral, Formality White: Purity, Cleanliness, Efficiency Brown: Nature, Wholesomeness, Dependability Beige: Conservative, Piety, Dullness Cream or Ivory: Calm, Elegance, Purity

BALANCE SHEET

Cost Optimisation in the GCC Real Estate Sector By Indranil Goswami

ith a marked decrease in private demand, the construction sector is hoping for continued public investments to offset declines in commercial and residential work. This expectation has come at an encouraging time, with Gulf Cooperation Council (GCC) governments announcing several large investment and infrastructure requirement plans for the years ahead. The overall trend is definitely pointing to an increase in prospects for the GCC real estate sector, although the risks of global economic factors such as trade and exports, currency fluctuations and credit pose a continued risk for the region. COST OPTIMISATION: LOOKING INWARD FOR ECONOMIC IMPROVEMENT Emerging from the downturn, the GCC

real estate sector will be faced with having to steer towards profitability while controlling its oil wealth-fuelled hunger for additional construction opportunities. The need for this delicate balancing act comes at a time when, as with all great economic downturns, the market presents the perfect opportunity for companies to look inwards for improvement. In order to mitigate the effects of the economic downturn, real estate companies need to focus on the most important economic factor that is within their control – cost. Given the gravity of the economic damage and the rate of its recovery, market forces will continue to dictate oil prices, the financial services industry will regulate the flow of cash, and other socio-economic and political factors will play a role in determining real estate demand. In such a scenario, the best improvement investments that GCC real estate companies can make will be in optimising their development, project management and

implementation costs. Developers are currently looking to cash in on low input costs. While there is no doubt that developers can use this period to secure the best possible price in the pre-contracting stage, there are a whole set of hazards that await real estate projects in the postcontract phases that can adversely affect the developer’s costs. As a result, the advantage gained through leveraging low entry prices are often negated at the end of a project, unless the developer takes holistic and integrated measures to optimise project costs to actively manage the development outcome THE BUSINESS CASE FOR COST OPTIMISATION The cost of conducting and managing a real estate project is the one economic parameter that is within the developer’s sphere of influence (as opposed to market-led factors such as demand, growth, resource availability and inflation). In the absence of encouraging market sentiments, investor belief and a supporting regulatory environment, the developer’s best bet is to look inwards and focus on enhancing project management and development cost optimisation potential. The case for cost optimisation has never looked stronger. After all, nearly 95 percent of the costs incurred by most real estate operating companies in the region have been found to be locked up in the actual projects themselves, and are directly linked to the management of these projects. Table B

BALANCE SHEET

shows a cross-section of global construction costs for different types of building and their equivalent GCC costs. The traditional problem with cost optimisation, however, is that it has predominantly been viewed as a post-facto and necessary evil rather than an integrated and fulfilling project effort. In the rush to cash in on project opportunities and with pressure from investors and competitors, developers seldom focus on cost optimisation as being part of their project lifecycle. Sources of cost increase include scope change, or risks that may not necessarily have been removed from the project. Excessive transfer of risk can also increase the likelihood of cost escalation and additional transaction costs, often with contractors needing to adopt increasingly commercial stances to protect themselves from risk, and

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also to recover any entitlements that emerge during the construction phase. Figure A shows the cyclical nature of real estate development projects, the waning effect of project and cost control that the developer has over a period of time, and the various determinants of cost optimisation across the real estate development lifecycle. It becomes clear that the only time that a developer really has the requisite control and opportunity to optimise costs is during the pre-contracting phases. Developers must take care to avoid cost landmines from the very beginning and guard against cost-related issues that surface after an opportunistic and sentiment-driven project entry is made. The problem for most developers begins once development contracts have been signed, contractors are taken on board and the construction work begins. Once this â&#x20AC;&#x2DC;point of no returnâ&#x20AC;&#x2122; has been crossed, developers have

little choice or opportunity in matters of cost management and project delivery control. In the emerging struggle to balance project objectives with crippling costs, developers are often forced to crash their contractual obligations and quality standards. This reactive and myopic approach to cost management can result in the vicious cycle of poor execution and delivery which further leads to decrease in sales, margins and additional investment. KEY FACTORS TO CONSIDER FOR COST OPTIMISATION Some key aspects of cost optimisation for developers to take cognisance of, across the project lifecycle are: A. Project planning: To ensure that projects are viable and saleable and that there is a justified basis for the project to exist. Where multiple projects are being rolled out, the timing and scheduling of these projects becomes an important factor. This will help ensure timely bi-directional cash flows and avoid developers becoming cash strapped, more levered and subsequently increasing financing costs. B. Unique treatment: The nature of real estate projects is fundamentally heterogeneous. No two projects in the world are truly the same. This makes it all the more important for the optimisation effort to be highly tailored to the project in question.

BALANCE SHEET

A lean and project-centric organisational structure and partnership model is also essential to serve the highly specific needs and realise the end-purpose of the project. C. Feasibility and rationalisation: Developers must tread carefully where projects are driven strongly by market sentiments, political pressure, larger corporate aspirations and other factors apart from pure demand. Those projects that are taken on board as being feasible must be rationalised for their cost of materials, construction design and delivery timelines. Architects may sometimes overexaggerate the designs (and consequently the material quantities and development timelines) of a project. These have to be kept in check at the outset by engaging the contractor (as an independent, yet accountable party) to conduct a paid value-engineering service and rationalise the development effort. D. Partner engagement: It is also essential to keep business partners in the development value-chain (designers, contractors and marketing agencies) engaged in cost optimisation throughout the project and make them accountable as service providers to lend their perspective and best effort on optimisation of project costs. E. Effective strategies: The clear and intelligent definition of specific development strategies such as procurement of materials, scheme of funding and repayment, selection of contractors, flexibility of contractual terms and obligations and the implementation of postcontract change management mechanisms are also important factors from a cost optimisation perspective. Above all, cost optimisation calls for an important cultural and mindset shift which developers need to be imbibed with as part of their core business. For cost optimisation to be truly effective, it must be a holistic exercise that is integrated with the core real estate development strategy and downstream project management. THE ROAD AHEAD The scale of damage caused by the current economic downturn leaves the GCC real estate sector with little or no prospect OF demand returning to levels seen in 2007 and 2008. Gulf states and the real estate sector, in particular, must guard against inflation due to

â&#x20AC;&#x153;In order to mitigate the effects of the economic downturn, real estate companies need to focus on the most important factor within their control: cost.â&#x20AC;? the rise in commodity and building material prices, loss of capacity in the region and rapid economic re-growth. The expectations from real estate development companies are to focus on tender prices and contractual terms and conditions (especially factoring in the varied types of project delay and quality issues that can affect the region). Industry reports also point to interest in real estate investment within the Middle East and North African region in order to boost real estate growth. The larger need of tomorrow is a

concerted effort by GCC governments to focus on remedying the real estate sector in a holistic manner. There is a definitive requirement to reduce GCC dependence on imported materials and enforce better regulations in a market where investors, financers, developers and contractors are well informed, more accountable and transparent across the value chain. In the meantime, both the onus and the opportunity for building an edge through cost optimisation is very much in the hands of individual real estate development companies.

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LEGAL INSIGHT

ENGINEERING AND

QATAR LAW Ray O’Connor and Nikk Bond investigate the common issues facing construction professionals looking to establish themselves in Qatar.

n the last ten years, Qatar has seen an enormous level of development and this continues at pace. The considerable number of projects – all at different development phases – are apparent everywhere throughout the country, especially in Doha and the various industrial areas. These projects are extremely varied, ranging from complex process engineering plants, to large-scale infrastructure and new community projects. As a result, there have been and continue to be opportunities for skilled professionals to become involved in the design, supervision and implementation of these projects. In light of the influx of expatriate professional construction and engineering firms, Qatar has understandably sought, through relevant legislation, to protect the position of its local engineers, and to ensure that the quality of those entering the market is maintained. We will explore several of the options available to engineering companies looking to set up in Qatar and some of the laws they need to be aware of.

LEGAL INSIGHT

Qatar Engineering Law Requirements All professional consultants practising within the State of Qatar need to consider whether they must be licensed under Law No. (19) of 2005 - The Organisation of the Practice of Engineering Professions (the ‘Engineering Law’). It is important to note that the Engineering Law is not just concerned with engineers. It defines ‘Engineering Professions’ as “the engineering activities practiced by those qualified in the divisions and branches of the specialisations of architecture, civil, electrical, mechanical, and chemical engineering, mines and mining and the various other fields of engineering”. The regulations issued pursuant to Decision No (1) of 2006 of the Engineering Law (‘Decision No. (1)’) provide further clarity. It introduces the following ten categories of specialisations: 1. Civil Engineering 2. Architectural Engineering 3. Mechanical Engineering 4. Electrical and Electronic Engineering 5. Chemical and Petroleum and Gas Engineering 6. Quantity Calculation and Cost Estimation 7. Projects Management 8. Industrial Engineering 9. Security and Safety Engineering 10. Communications Engineering Together, the Engineering Law and Decision No. (1) seek to provide strict, specific and robust requirements for foreign entities wishing to practice and establish a regulated presence in Qatar (although they also apply to local entities). There are a number of different offences for non-compliance but practising without a licence is punishable by imprisonment and there are substantial fines. The process of obtaining a licence can be lengthy and demanding, so foreign parties intending to set up in Qatar need to consider if they can meet the requirements of the licensing process and a potentially long leadin time. The three registers The Engineering Law creates three separate registers: (i) the Register of Engineers; (ii) the Register of Local

Engineering Consultancy Offices (the ‘Local Engineering Register’); and (iii) the Register of International Engineering Consultancy Offices (the ‘International Engineering Register’). All individual engineers are required to be registered on the Register of Engineers. Every individual must be an engineer and have the ‘necessary experience’ as defined by Decision No. (1). In order to have the ‘necessary experience’ the applicant must: • be a Qatari national or a resident in the State of Qatar; • hold a Bachelor of Engineering, or equivalent, degree from a recognised university or institution; • enjoy full civil capacity; • be of good reputation and character, and not have been convicted of a crime or punished with imprisonment for crimes relating to morals or honesty; and • pass the technical skills tests in accordance with Decision No. (1). Establishment Options There are fairly limited options available to a foreign party seeking to establish a professional engineering entity in Qatar and the most common are (i) to set up a local engineering office, or (ii) establish an international engineering consultancy office. (i) Local Engineering Office Unless there is a relaxation by the Board of the Admission Committee (‘Admission Committee’) established under the Engineering Law, to register on the Local Engineering Registry, the following requirements must be met (among other things): (a) the office must be owned by Qatari nationals either personally or through a legal entity. If the office is a company, 51% of the capital must be owned by a Qatari (Article 6); (b) the engineers working for the office must be on the Register of Engineers and have the ‘necessary experience’ as defined by Decision No. (1) (including being in practice for at least five years); and (c) the office must appoint at least one engineer with responsibility for overseeing compliance with the provisions of Decision No. (1).

(ii) International Engineering Consultancy Office Unless there is a relaxation by the Admission Committee, to register on the International Engineering Register, the following requirements must be met (among other things): (a) the office in Qatar must be a branch of a foreign main office which is itself licensed to practice the relevant profession. The licence for the main office must have been issued in the country in which it practices and the licence must have been held for at least ten years, during which time, the main office must have been continually licensed and practicing; (b) the main office must give a properly certified undertaking to support the branch office and be responsible for all obligations of the branch office. It must also provide official documents evidencing the incorporation of the main office, the work it has performed and its financial viability. Decision No (1) requires (i) valid certificates of licenses for branches of the main office in at least four countries other than its homeland, and (ii) a list of ten projects in countries other than the homeland of the main office where at least QR100 million has been earned; and (c) the engineer responsible for the branch office must have at least 10 years’ professional experience, have all the relevant qualifications and also undertake to remain in Qatar permanently. This type of international consultancy is designed for established international firms which have a continuous operating track record of at least ten years and can clearly show that they have been involved in significant transactions. It is definitely not an option for smaller professional practices. Some additional considerations LICENCE RENEWAL – The period for enrollment in the register is two years and it must be renewed within thirty days from its expiry date, otherwise it will lapse. CATEGORIES – Decision No. (1) contains the criteria for grading the experience of engineers and local engineering offices. For example, a category one office may require a minimum number of engineers, indemnity insurance and a minimum office TheEDGE

LEGAL INSIGHT

area. The lower categories (categories two and three) have restrictions on the size of projects which they can undertake and work on. In contrast, international offices only have one classification. Currently, they require a minimum office area of 200 metres square, QR2 million liability insurance, three or more permanent engineers and annually audited accounts. DECENNIAL LIABILITY – Under Article 711 of the Civil Code, an engineer is jointly liable with the construction contractor for defects which threaten the safety or structure of a building or installation. This liability lasts for 10 years from completion unless the parties intend the life of the building or structure to last for less than this period. This is a strict liability offence which cannot be excluded by contractual terms and applies regardless of the ground conditions. As a result, it is irrelevant that the design, although flawed, was not negligent. This is significant since professional indemnity insurance is unlikely to cover this liability.

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An engineer who has designed but is not supervising the works may be able to avoid liability if the defect is solely attributable to the workmanship. However, if the employer engages the engineer to supervise the works, the engineer will also be responsible for defective workmanship. LAW OF ORGANISING PREMISES – Under Ministerial Resolution No. (1) of 1989, the engineering office may not make changes to drawings and specifications which have been approved by the relevant governmental authority without obtaining further approvals. The engineering office also undertakes to be responsible for any damages arising from any error in its designs or execution that fall on others – especially adjacent real estate owners. DESIGN AND BUILD ARRANGEMENTS – Article 17 of the Engineering Law prohibits (amongst other things) owners and partners of engineering practices (and engineers working in them) from engaging in carrying out contracting works or trading in building materials or other

materials. This is essentially a prohibition on the carrying out of design and construction by a single entity. It is however fairly common to have contracts in Qatar which are structured so that one entity is responsible for design and construction even though the actual design is, in fact, carried out by another party (for example, a sub-consultant). Parties tendering in order to provide design and construction solutions should take legal advice as they may inadvertently infringe the Engineering Law.

Note: This article is only a general introduction to some legal issues and laws in Qatar. It is not legal advice and should not be relied upon as such. If any reader requires legal advice, this should be obtained from an experienced lawyer who can provide advice which is tailored to the relevant facts and circumstances. For any information in respect of legal issues, please contact Nikk Bond (nikk. bond@dlapiper.com) or Ray O’Connor (ray.o’connor@dlapiper).

BUSINESS KNOW-HOW

THE LEADERSHIP

KEY

ASSESSMENT

Unlocking the code to achieving sustainable hires, at executive and leadership levels, through the means of executive search firms. By Wassim Karkabi

BUSINESS KNOW-HOW

henever an employer approaches an executive search firm to engage them in an assignment to hire a leader at executive level, there are a number of expectations of that search firm. That list can be quite loaded in terms of process, deliverables and particulars. Indeed, in any executive search assignment, the desired result is to hire the right person, who will exceed the expectations of the organisation and drive it forward, and remain in that role long enough to bring back value to the organisation that brought them onboard. If we delve deeper into the various deliverables, we identify a number of other items that are included in what is expected of a search firm: • The actual search and name identification process; • the ability to engage executives at the relevant level; • a streamline assessment process that covers the candidate requirements; • due diligence reports; • candidate evaluation reports; • onboarding and coaching services;

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• and sometimes even market finding reports with a variety of content. The list can go into more detail as you delve into each one of those points. Probably the most important of all of these, and probably the single most important differentiator between executive search firms today, is not the ability to search the market and identify names, as that is not rocket science, nor to write in an appropriate language a report that will impress that employer to hire a specific candidate. The differentiator is in the assessment. A consultant’s ability to first of all understand the client’s requirements and flexibilities, and then eventually transfer that understanding into an assessment mechanism that ensures that the delivered candidates have been screened, interviewed and assessed properly vis-à-vis the employer’s requirements, is likely to be the single most important part of the whole service. This part unfortunately is not done by an organisation, but rather by one individual in an organisation, who has been chosen by the client to conduct and run the search and assess the people. The client has to trust the ability of that individual to understand the role and assess the candidates accordingly.

In fact, the single differentiator among firms comes down to the capabilities of this one consultant or partner. When it comes to the deliverables that require the input and intellect of the individual consultant or partner, the brand of that individual is sometimes much more important that the brand of the organisation they work for. Of course, it helps that the organisation would have put in place standards and best practices relevant to the brief collection and assessment process. Those best practices, procedures and standards must impress on the consultant to follow through on specific items when conducting assessments, both in the macro and the micro sense. While employer preferences vary, and legal norms related to discrimination also vary between countries, some key elements remain the same, especially in the macro part of the assessment. In essence, the structure of the assessment will need to cover two areas: one, a curriculum vitae (CV) based interview and assessment; and, two the competency based (CB) interview and assessment. While it is obvious that the CV refers to the technicalities

BUSINESS KNOW-HOW

“Employers need to remember that the real price of a bad hire, discovered long after the fact, can cost the organisation an exponentially high amount far beyond the cost directly related to the compensation of that individual.” of the role, the experiences, and history of performance and achievements of the individual, the CB part of the interview is arguably more important. Granted, often they can both be as valuable, but typically the weight of the latter assessment is usually higher than that of the CV, and grows gradually as the role becomes more senior, and begins to depend more and more on leading people, rather than

performing tasks. The phrase “you will get hired for your hard skills, and will get fired for your soft skills”, at this senior level, is an absolute truth. While considering a candidate for a role can depend on whether that candidate actually can speak in grammatically correct language, despite the candidate’s ability to perform the elements of the job correctly, other candidates already selected may be

let go six months after hire or in a worse case scenario, longer than six months, due to the fact that he is unable to integrate culturally and behaviourally with the organisation’s culture. Employers need to remember that the real price of a bad hire, discovered long after the fact, can cost the organisation an exponentially high amount far beyond the cost directly related to the compensation of that individual, but that is a totally different subject altogether. In conclusion, it is important that employers choose their executive search consulting firms properly, explore their best practices and standards in their candidate assessment. Then they must meet in person and be comfortable that the consultant they will be working with can bring on board the required understanding required to conduct proper technical screening and behavioural interviews at executive and leadership levels.

Wassim Karkabi is managing partner and regional practice leader, Industrial EMEA at Stanton Chase International, Doha, Qatar.

TheEDGE

HEALTH AND SAFETY

A REGULATORY FRAMEWORK FOR HEALTH AND SAFETY In the first of our new regular feature, Mark Kenyon investigates the concept of regulating health and safety in the workplace, and discusses where the Qatari employerâ&#x20AC;&#x2122;s responsibility begins and ends.

n many circles, health and safety is a topic that people discuss when someone has been hurt or more tragically killed at work. All too often an organisation either waits until a tragic event has occurred or until an enforcing authority has visited them and taken enforcement action against them, before they begin to manage health and safety. Many enlightened businesses have taken a view that good health and safety makes sound business sense. Invariably though those that have taken this view tend to have originated from within a well-regulated health and safety climate. WHAT IS A REGULATORY FRAMEWORK? The health and safety standards in many

countries have developed around that nationâ&#x20AC;&#x2122;s legislative requirements, and while legislation emanates from the government of a country, it has historically been the enforcing authority that guides its legislators. In the United States (US) this is the Occupational Safety and Health Administration (OSHA), while in the United Kingdom (UK) the Health and Safety Commission (HSC) performs this role. Contrary to popular belief health and safety is not an entirely new concept. Legislation in the UK, for example, dates back more than 200 years to when the first piece of industrial safety legislation was introduced, known as the Health and Morals of Apprentices Act of 1802. But it was not until the introduction of the Health and Safety at Work Act of 1974 that the HSC was formed.

HEALTH AND SAFETY

In 1972, Lord Robens headed a committee established to review health and safety regulation in the UK. The committee advocated the doctrine of self-regulation since it concluded that prior to their review, the legislation it found did not apply to all people at work and was too prescriptive. Regulation by nature is designed to control industry, and as a country’s industrial base diversifies, so too should the legislative framework that regulates it. As a consequence of these regulatory regimes, the foundations upon which many health and safety professionals base their work is the regulatory regime of the country that they live or work in. The effect of this evolution has been that compliance with legal requirements has become for many businesses their primary driver, and not the implementation of best practice or the development of their management systems. The framework for international regulation of health and safety is based on the International Labour Organisation’s (ILO) Convention Number 155 on Occupational Safety and Health (C155). This has been ratified by some 56 countries around the world. The ILO convention establishes a regulatory framework upon which countries should base the development of their health and safety standards. The aim of the convention is to establish a national policy to prevent accidents and injury to health

arising out of, linked with, or occurring in the course of work, by minimising, so far as is reasonably practible, the causes of hazards inherent in the working environment. C155 outlines employers’ and employees’ duties, as well as establishes a regime for reporting accidents and ill health, and the enforcement necessary to facilitate compliance. HEALTH AND SAFETY IN QATAR Qatar Labour Law 14 of 2004 is the legislative instrument upon which businesses in Qatar must base their compliance, and there are several published examples of successful prosecutions of both individuals and companies for breaches. Indeed it is neither the volume nor the quality of the legislation that determines the extent of compliance, but the willingness of business to implement the standards together with the effectiveness of the enforcement regime. One only needs to look at companies that have implemented a quality management system (in other words, ISO 9001) as an example of how a willing volunteer is as effective as ten pressed men. No enforcement regime exists for ISO 9001, yet the results achieved by those who have implemented it are there for all to see. What sections 10 and 11 of Qatar Labour Law 14 of 2004 may lack in detail, it makes up for with many of the components that

C155 outlines as necessary for effective reduction and control of workplace accidents and ill health. It may not contain the prescriptive detail of OSHA Code of Federal Regulations 1910 or the structure of UK health and safety legislation, but it has the essential requirements. Much of the recent health and safety legislation in the UK and indeed OSHA 1910 require employers to undertake risk assessments of their activities, or a Job Safety Analysis (JSA) in OSHA parlance. So too does Qatar Labour Law. Article 99 states, “the employer or his representative shall on the commencement of every worker’s engagement inform him of the hazards of the work and the hazards which may occur thereafter and shall inform him of the safety measures to be taken for the protection there from and shall post up in a conspicuous place his detailed instructions concerning the means of observing vocational health and safety for protecting the workers from the hazards to which they are exposed during performance of their work”. Interpretation of this article indicates a requirement for employers to identify the hazards of their activities and the measures necessary to control them and to communicate this to their employees. It may not state explicitly that employers should undertake a risk assessment, but, as many safety professionals will TheEDGE

HEALTH AND SAFETY

attest, hazard identification is the first stage of a risk assessment and is certainly an implicit requirement. A review of published prosecutions indicates that the judiciary have taken the view that the identification and control of workplace hazards is the responsibility of both the employer and management. Article 100 states, “the employer shall take all precautionary measures for protecting the workers during the work from any injury or disease that may result from the work performed in his establishment or from any accident, defect or breakdown in the machinery and equipment therein or from fire”. The law goes on to establish a mechanism for the enforcement of these standards where an employer must implement precautionary measures through the partial or total closure of the place of work, or stoppage of one or more machines from work, pending the elimination of the causes of the danger. The identification and control of hazards is the basis of a safe system of work. Together with basic environmental controls and the provision of suitable emergency arrangements in the event that an accident should occur, these are essential elements of a safe place of work. Article 103 states, “the employer

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shall take the measures capable of securing the hygiene and good ventilation in the places of work and shall provide it with the suitable lighting and potable water, hygiene and drainage, in accordance with the regulations and decisions to be issued by the competent authorities in this respect”. Subsequent to these provisions, Article 104 requires the provision of certain first aid and medical facilities that are determined by the number of employees engaged at an organisation. The framework contained within the ILO convention outlines actions necessary at a national level, at the level of the undertaking (employer) and for the employee. Qatar Labour Law 14 Article 101 states, “the worker shall not commit any action or omission with the intention of hampering the execution of the instructions of the employer concerning the conservation of the health of the workers or securing their safety or with the intention of damaging or breaking down of any appliances or equipment prepared for this purpose. The worker shall use the protection devices and the uniform provided to him by the employer and shall obey all instructions of the employer aiming at protecting the worker

from injuries and diseases”. In order to develop the framework of regulation, there needs to be a provision for reporting of workplace accidents. The ILO convention requires the establishment and application of procedures for the notification of occupational accidents and diseases by employers. Article 115 goes on to require the employer to provide the department with statistics of workplace injuries and occupational diseases every six months in accordance with the forms prepared for this purpose and the procedures prescribed by a Decision of the Minister. MAKING IT WORK For those safety professionals who learned their trade in the UK, Europe or the US and now choose to work in Qatar, the framework within which they now work may not be as well developed as they have grown used to. Nonetheless a structure does exist. While it is neither as voluminous as OSHA nor as diverse as UK legislation, when read carefully it contains both the components necessary for establishing standards and for regulation of the same.

INDUSTRY FOCUS WORKPLACE DESIGN

DESIGN INNOVATION IN THE MODERN WORKPLACE By Adam Lorenc

nnovation is one of the key driving factors of economy. It is a source of competitive advantage and a proven way of increasing wealth. Innovation involves a deliberate application of information, imagination, and initiative in deriving greater value from resources. The goal of innovation is positive change, to make someone or something better. Unlike invention, an idea made manifest, innovation means ideas applied successfully in practice. Designers, especially when it comes to modern commercial workplace architecture, constantly scrutinise and challenge the built environment, products and practices and strive to create new alternatives and solutions which are smaller, lighter, smarter, more inspirational, efficient, cost effective, productive, abundant, socially responsible and sustainable. THE KNOWLEDGE ECONOMY Indeed, since the final decades of the 20th century, workplace planning has become one of the most notable frontlines of innovation in design, partially because it is subject to a multitude of variables, such as market forces, labour relations, legislation, culture and sustainability â&#x20AC;&#x201C; all of which define the rapid changes of the modern society. Yet workplace design also stands out because of the scale and depth of the developed worldâ&#x20AC;&#x2122;s shift towards a knowledgebased economy and resulting demographic and cultural changes. White collar workers have long been replacing blue collar workers. So the most important currency today is the capacity to retrieve, handle, store and generate

INDUSTRY FOCUS WORKPLACE DESIGN

information and knowledge, and office buildings are where such activities occur. The office building is perhaps the most evocative evidence of this in our time. Just as factories were the symbol of the industrialisation at the start of the 19th century, offices are emblematic of the current post-industrial era. Offices dominate the contemporary city and accommodate more than half the working population of the Western world. Recent figures show that as much as 70 percent of the European Union population in productive age is office-based. The skylines of global cities of Europe, Middle East, Asia and the Americas are no longer dominated by places of worship, palaces or government buildings, symbolic of society’s submission to deity, ruler or citizenship, but by tall commercial buildings, reflecting the power of the modern corporation. They are today’s most visible and tangible index of economic activity, of social, technological and financial progress. In countries such as Qatar, the pace of the transition from traditional trades to office-based activities is unprecedented. Qatar’s 2030 vision of a diversified, knowledge-based economy generates demand for new workplace design, responding in quantitative and qualitative terms to local needs, culture and climate.

“White collar workers have long been replacing blue collar workers. So the most important currency today is the capacity to retrieve, handle, store and generate information and knowledge, and office buildings are where such activities occur.”

NEW CONCEPTS In the past, office design may have been generally regarded as something lucrative but otherwise relatively dull. Disdain for the office block was common among architects and critics, who believed that the commercial nature of the building was separate to the art of architecture. However, in the last two decades office design has become a respected discipline in itself, with its own magazines, conferences, awards, and gurus. Triggered by development in information technology and management theories, architects, consultants and researchers have developed visionary ideas about the ‘new office’, ‘tomorrow’s office’ and the ‘re-invented workplace’. New office concepts overwhelm the market. ‘Shared offices’, ‘virtual offices’, ‘non-territorial offices’, ‘hotelling’, ‘freeaddressing’, ‘hot desking’ and ‘telepresence’ are just a few more buzzwords from the last decade’s growing diction of office design. These new office concepts tell us how offices are becoming meeting places for a more mobile workforce, where nomadic employees are equipped with laptops and smart phones, and how the office will become a more diverse and informal environment; or how in the near future offices may no longer be necessary because we can work anywhere and anytime. DRIVING FACTORs One of the main factors driving this workplace innovation globally is also cost efficiency. In the United Kingdom (UK), developers, rather than users dominate the market. One of the underlying reasons for this is what is known as the UK’s ‘shareholder capitalism’. Organisations are reluctant to invest in long-term resources, such as office buildings, which do not yield direct profits for shareholders. As a result, British organisations traditionally lease ‘speculative’ buildings rather than build their own, which would be the preferred choice in Germany or the Scandinavian countries for example. Cost efficiency is then often achieved by creating deeper floor footprints (in other words, floor plans with a higher area-to-facade ratio), which also enable flexible space layouts. This translates into less money spent on the building envelope. Deep floors can achieve higher gross-to-net ratios than narrow ones. The gross-to-net ratios of modern buildings in the United States (US) and the UK are about 85 percent against about 70 percent in continental Europe and often less than 60 percent in the Middle East. These ratios are crucial to the bottom line, and as developers continue to generate more rentable space within a building, designers will need to create buildings of greater efficiency and flexibility.

Structural and mechanical innovations further help reduce the size of cores and improve the slenderness ratio of structural members leading to decreased weight and usage of materials. Deeper footprints have dramatically lower solar gain whilst the use of internal atria can enable ingress of controlled daylight into the deeper parts of the building. At the workplace level, the craving for costefficient design explains the popularity of the open plan. In the open plan office the average space usage per worker can be as low as seven square metres. If people are clustered in groups of four or six, the figure decreases even further. Moreover, open plan facilitates change. When employees move, there is no need to move walls, making change easier and cheaper. For a few years now organisations have been experimenting with new workplace concepts such as teleworking, non-territorial offices and club offices. Generally these innovations are driven by technological and organisational change. It is clear, however, that particularly in cities with the highest rents cost savings are equally important. SHIFTING CULTURES The push for increased efficiency has been a challenging quest and no example is more symptomatic of this than the ongoing debate on open plan versus cellular offices. In many American and British organisations, where hierarchy is reminiscent of the 19th and 20th century class system, employees tend to be deferential towards their superiors and this requires keeping the appropriate distance, both figuratively and literally. As a result, in a great majority of companies, managers are still accommodated in cellular offices and their staff in open plan. The popular practice of using glass partitions offers a transitional, but very important compromise. It supports the TheEDGE

INDUSTRY FOCUS WORKPLACE DESIGN

trend towards a more open and transparent management style, in which employees can see their supervisors and vice versa, improving the quality of internal communication. Many firms have also abandoned such status symbols as corporate dining rooms and reserved parking bays. Commensurately, organisations are changing their corporate standards for workplace design. As the character of the office work therefore shifts from hierarchical towards egalitarian and communication-oriented, the space allocation in an office building also changes and the emphasis shifts from the individual to team-based activities. Coupled with a need for space efficiency, the allocation of personal space per employee is reduced, but instead a very elaborate programme of shared spaces and facilities is offered. Breakout areas, brainstorming rooms, quiet zones, café areas, wellness centres, roof gardens, etcetera, effectively increase internal communication, promote teamwork and facilitate idea generation. They are also great devices that help create a sense of common purpose amongst staff, project brand values internally and improve staff retention through motivation and inspiration. Creative use of colour, materials, light and acoustic ambience creates visual interest, which stimulates people far beyond how the traditional office environment used to. A more dynamic and diverse working environment also encourages physical movement of employees promoting a healthier lifestyle and preventing common health complaints such as repetitive strain injury or back problems. At the same time the overall quota of space required per employee is reduced. THE CONTEMPORARY ARAB OFFICE In the era of globalisation, one might not expect many international differences in office design. Corporations expand into new markets and often emulate solutions and standards from their home countries to the new locations. However, contextual factors such as culture, labour relations, regulations and market conditions vary enormously from country to country, leading to some marked international differences in office design. Most of traditional offices found in the Middle East can be typified by characteristics such as a strict status hierarchy, reflected in size, location, orientation and décor of predominantly cellular offices; elaborate and controlled access; regard for privacy and gender separation and minimal presence of shared facilities. However, there is currently a growing interest in some of the latest international workplace concepts, including

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those involving cultural change, while preserving the rudiments of the local heritage. And although financial pressures towards greater efficiencies might be lesser or differently distributed, we are beginning to see more open plan layouts and more transparency. A great majority of middle and uppermiddle level management offices currently specified in the region have glass partitions as a way of both increasing visibility as well as allowing ‘borrowed’ daylight into deeper parts of the building, typically occupied by lower rank employees. Use of shared facilities such as breakout areas is also on the rise as the executives recognise that acommunal way of working and exchange of ideas, which these facilities encourage, is essentially very close to traditional Arab values. The countless modern versions of Majlis, informal places of gathering as well as comfortable prayer and washroom facilities, are beginning to become commonplace in the contemporary Arab office. A trend towards a more inclusive workplace can also be observed: disabled facilities and nurseries are specified in a growing number of buildings, in order to promote equal opportunities and family values. All these developments, together with the use of region-specific modern materials and finishes, and the contemporary Arab graphics and calligraphy, promise the emergence of a new vernacular Arab style in office design, which use locally available resources and traditions to address local needs and circumstances in a manner that is not only innovative, but also in step with modern trends.

how-to guide

HOW-TO HARNESS THE POWER OF DIGITAL

SIGNATURES

HOW-TO GUIDE

HARNESSING THE POWER OF DIGITAL SIGNATURES TO MITIGATE RISK AND ELIMINATE THE EXPENSE OF PAPER PROCESSES By VeriSign

utting ink to paper in the form of a signature has long been the premier way to acknowledge consent and identify the person giving that consent. Now, in the age of the Internet, the digital signature is evolving – and bringing with it more power as an authentication method, and streamlining the document handling process.

“A digital signature delivers a significantly higher level of trust and security [than an electronic signature].”

WHAT ARE DIGITAL SIGNATURES AND HOW DO THEY WORK? Frequently the terms ‘electronic signatures’ and ‘digital signatures’ are used interchangeably. But they do not deliver the same level of trust and authentication. An electronic signature can be any legally recognised electronic means that indicates that a person is executing an intent to sign the document or record. A faxed signature or entering a PIN can be considered an electronic signature. While these are considered a legally acceptable way to execute a contract, it is not a secure method. Going well beyond consent and identifying the person giving consent, a digital signature delivers a significantly higher level of trust and security. Because digital signatures use sophisticated cryptography, they have the power to verify the signer’s identity and the integrity of the document, ensure non-repudiation (the signer cannot claim that he or she did not sign the

document), timestamp the document, ensure confidentiality and privacy, and mitigate the risk of forgery or tampering. The underlying technology needed to deliver the full gamut of these capabilities is a public key infrastructure (PKI). PKI is essentially the fundamental difference between an electronic signature and a highly secure digital signature that helps protect against fraud and document tampering. The following example shows how digital signatures work using a PKI-based solution: Person A digitally signs a document using PKI-enabled software. A unique digital signature is created for that particular document. This is a ‘fingerprint’ of the document, so that even the slightest change to the document would create a different ‘fingerprint’. The signature is then appended to the document. Person B receives the document. Their software authenticates the signature and ensures that no changes were made to the

document after it was signed. If the document has been changed, the signature would be voided and the recipient would not be able to authenticate the document. BEYOND CONTRACTS: COMPELLING USE CASES FOR DIGITAL SIGNATURES Of course, current business processes that require a signature are obvious candidates for moving to a digital signature process. Forms, contracts, proposals, letters, and other financial and legal documents can be digitally signed to improve process efficiency and strengthen security and trust. However, there are many industries that could benefit from digital signatures. Electronic exchanges where acceptance, authenticity, and/or receipt need to be confirmed are logical candidates. And industries that have legal, security, and compliance requirements over and above the average enterprise. Heavily regulated

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how-to guide

“Handling documents electronically can

reduce transaction and wait times, which can improve customer service and satisfaction.” industries such as financial services and biopharmaceutical, aerospace and defence, and sectors such as government and healthcare with highly sensitive data – all of these need a way to communicate and sign content that delivers high levels of compliance, security, and legal validity. ACHIEVE GREATER SECURITY AND SAVINGS BY IMPLEMENTING DIGITAL SIGNATURES Organisations that switch to digital signatures stand to reap considerable benefits such as: • Stronger security. Digital signatures offer greater protection against forgery and fraud than electronic or paper-based signatures. • Gains in process efficiency. By eliminating the need to physically print and sign documents, companies can speed business processes – resulting in productivity gains that can deliver enhanced competitive advantage. • Measurable cost savings. The costs and overhead of printing, signing, copying, scanning, indexing, and storing signed, paper documents can be substantial. Eliminating paper can reduce operating costs by a significant sum – particularly in those industries with heavy compliance regulations. • Environmental responsibility. Moving to paperless processes enables organisations to reach goals for sustainability initiatives. Given the increased emphasis investors and consumers now place on corporate social responsibility, going paperless as part of a green initiative can deliver competitive advantage in addition to a reduced environmental impact. • Improved customer service. Handling documents electronically can measurably reduce transaction and wait times, which in turn can improve customer service and satisfaction.

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IMPORTANT CONSIDERATIONS FOR SELECTING A DIGITAL SIGNATURE SOLUTION When considering a digital signature solution, organisations should base their decision on the following criteria: • Trust. The foundation for trusting digital signatures is known as the ‘chain of trust’. Trusted third parties called certificate authorities (CA) issue digital certificates after verifying the authenticity of the certificate holder. If a trusted third party has certified the person digitally signing a document, the recipient can then trust that the signature and the person are authentic. The highest-ranking CA in the chain of trust has a certificate called a ‘root certificate’ that is self-signed. Root certificates are the final step in the trust chain and as such must be issued under extremely stringent security conditions. That is why choosing a trusted third party CA is an essential criteria for selecting a digital signature solution. • Ease of use. PKI has a reputation for complexity and there is much more involved than simply installing the technology. For this reason, organisations should consider a vendor with a digital signature solution based on a managed PKI infrastructure. • Seamless integration. Organisations should look for a solution that is broadly supported across commercial applications so that it integrates into the existing architecture without expensive custom programming. • Low total cost of ownership. To reduce the expense and resources of implementing and managing a digital signature solution, organisations should consider a managed PKI service instead of an in-premise implementation. A managed PKI solution lowers capital investments, delivers scalability and reliability, and relieves the burden on IT. • PKI-based. PKI is the gold standard for

trusted, secure interactions. Organisations should ensure that a digital signature solution is based on PKI for higher confidence in document integrity and legal compliance. • Complete solution. An end-to-end solution should include the software, hardware, integration, consulting, best practices and policies. A REAL WORLD EXAMPLE: JUDICIAL ORDERS On August 26, 2009, the Honourable John M. Facciola, United States (US) Magistrate Judge in the US District Court in the District of Columbia, executed the first digitally signed judicial order in the US. The implementation and acceptance of digital signatures by this district court ushers in a new era of efficiency and secure electronic delivery of legal judicial orders. The US magistrate judge chose a digital signature solution to enable a fully electronic filing system that improves efficiency and cost-effectiveness by eliminating paper, while helping to foil attempts to use forged, electronically created documents. Judge Facciola received a high assurance signing credential issued by the National Notary Association and using services and technologies developed by Science Applications International Corporation (SAIC), VeriSign, Adobe Systems, SafeNet and ChosenSecurity. Adobe Acrobat software and the PDF were used to support the signing process, with both the time stamp and digital certificate rooted under the Adobe Certified Document Services and Adobe Approved Trust List programs. CONCLUSION Digital signatures deliver far greater security than electronic signatures. By implementing digital signatures and replacing paper-based processes, organisations can improve productivity, reduce costs, enhance customer service, and reduce the impact on the environment. As organisations pursue a strategy to deploy a digital signature solution, selecting a PKI-based solution from a trusted third party is critical to achieving the level of security, usability, and affordability companies need to reap the full benefits of the technology.

Now available for rental and exhibitions

TECH Tools

TECH

FOR EXECS

The latest gadgets and tech’ toys for the busy executive A USER-FRIENDLY NETWORK SCANNER

Canon has responded to increased demands for network scanners with the new ScanFront 300 and 300P models. The super-compact and user-friendly design and enhanced functionality make the scanners perfect for desks where space is at a premium. Offering scanning speeds of up to 30 pages per minute in black and white, and 25 pages per minute in colour, the new range can also distribute and share documents to a combination of e-mail, shared folders, USB devices, fax server, printers and file transfer protocol. Thanks to this one little scanner, businesses will be able to capture and manage documents, and streamline processes through sharing, saving and accessing information more efficiently. Available in the Middle East. Price unavailable at the time of going to press. www.canon-me.com

SMALL GADGET, BIG DIFFERENCE

At less than 15 millimetres thick at its widest point, Microsoft’s new Arc Touch Mouse was designed for portability, and can be easily slipped into a bag, purse or even pocket. The mouse goes from curved to flat in one simple movement, so working on the go is as easy as collapsing it to turn it off, and popping it up to turn it on. With its user-friendly touch strip, users can control scrolling with the flick of a finger. Using a capacitive sensing technique and sensor pads, the strip corresponds to each position change, even at speed, so the user enjoys complete control no matter how fast or slow the movement. Meanwhile, BlueTrack technology allows the mouse to be used on virtually any surface, and only two AAA batteries give it more than six months of battery life. Two-colour battery life indicators let you know when power is running low. Available in the Middle East at the end of 2010 for approximately AED279 (QR276). www.microsoft.com

THE WORLD’S FIRST DUALBOOK

Pitched as the perfect device for students, we think the Entourage Edge dualbook offers terrific possibilities to the executive as well. As the world’s first dualbook, it is an e-reader, a tablet netbook, notebook and audio and video player and recorder in one. The WiFi-enabled device opens like a book or laptop, with two screens facing the user. The left offers a display where you can read e-books, draw diagrams and take notes. The right side, a liquid crystal display screen, offers web surfing, e-mail and instant messaging, and video player. Both screens work together, so you can pull up pages and images from books on the left, dragging and dropping into the browser on the right to find more information. There is also a noise-cancelling microphone and a 1.3 mega pixel camera. The downside is the size and weight of the Entourage Edge. Slightly smaller than a laptop, it weighs just over 1.3 kilograms. Although the Entourage Edge is not available in the Middle East, shipped deliveries can be made to the region. Priced at US$549 (QR2000) excluding shipping and handling fees. www.entourageedge.com

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LIFE AND STYLE

TOOLS FOR LIVING

Product Of The Month

WATCH OUT IPAD If initial reports are to be believed, despite the numerous tablets being launched on the market, only one is likely to come close to challenging the dominance of Appleâ&#x20AC;&#x2122;s iPad, and that is the Samsung Galaxy Tablet. The device, at just under 18 centimetres (the iPad is almost 23 centimetres in size) and only 380 grams, is very portable and perfect for people on the move. Powered by Android Operating System 2.2, the Galaxy Tablet gives users the chance to browse the web, enjoy all forms of multimedia content, including films and e-books, and communicate by e-mail, voice and video call. Supporting the latest Adobe Flash Player 10.1, the tablet ensures fast, seamless viewing. A unique e-reading application, Readers Hub, provides access to a vast digital library with more than two million books, 2500 magazines in 20 languages, and 1600 newspapers. Meanwhile, Media Hub is the userâ&#x20AC;&#x2122;s gateway to films and videos. Access to Android Marketplace allows users to download other applications and personalise their tablet further. A front-facing camera offers video telephony, while a rear-facing camera captures still images and video that can be edited, uploaded and shared. Available in the Middle East this month for approximately AED3010 (QR2983) for the 16 gigabyte (GB) version, and AED3560 (QR3528) for the 32GB model. www.samsung.com

WHAT YOU SEE IS WHAT YOU GET The iPod nano has been completely redesigned with multi-touch, the same technology used on the iPhone, iPod and iPad. Now the nano is half the size and even easier to enjoy, as a mere tap or swipe will take you from one music choice to another. The display, at just under four centimetres, offers 240 x 240 pixel resolution, so tiny though it is, the screen will show off your album art, photos and wallpaper to perfection. Clip the nano to your sleeve, jacket, pants or bag with the new built-in clip, or plug it into your car stereo system, speakers at home or other products made for iPod. Available in the Middle East in seven bright colours for approximately QR550 (8GB model) and QR620 (16GB model). www.apple.com TheEDGE

HEALTH AND FITNESS

THE GLOBESITY IMPERATIVE Obesity is becoming one of the worst global maladies of the post-modern era, particularly in the Middle East, where half of all teenagers and two-thirds of the entire population is either overweight or obese. In the first of a new series on matters related to health and fitness, TheEDGE takes a look at the repercussions of this phenomenon and the stringent measures that have to be taken to rectify the situation. By Thomas Woolf

t is a shocking thought, but there are now more obese and overweight people in the world than there are those suffering from malnutrition or lacking of access to clean drinking water. Indeed, it is ironic that many are happy to attend a lavish banquet to raise money for those millions that are starving, while at the same time ignoring the giant elephant (or perhaps that should read elephants) in the room: the growing numbers of overweight people, especially in affluent societies in the West, and Middle and Far East. Quite simply, we are consuming too much food and arguably have lost perspective. Point in case: according to Qatari government US$250 million (QR909 million) more was spent on food during the Holy Month of Ramadan than like-for-like sales during this same period last year. It is estimated that we throw away and spoil approximately half of this food. Thatâ&#x20AC;&#x2122;s US$125 million (QR455 million) wasted, not to mention the food that could have been redistributed to those that need it most. This doesnâ&#x20AC;&#x2122;t take into account the impact on global food supply systems that are already significantly over-stretched, or the detrimental impact that vast overconsumption has on health. Some might be aware of the food security initiatives being developed by various Middle East governments, but what is becoming a far more

HEALTH AND FITNESS

relevant and pressing national and financial security issue is obesity. For example, the estimated cost in monetary terms of obesity to one of the region’s governments – in a nation of approximately one million adults, such as Qatar – could be up to US$25 billion (QR90 billion) in medical and related costs over the next 10 years. And this does not even cover the further socioeconomic impact. Nevertheless, a third of global deaths (more than 20 million people annually) are linked directly to being overweight, followed by lack of exercise and smoking. In the Middle East it is estimated that more than 50 percent of teenagers, and two-thirds of the regional population are either overweight or obese. Therefore the very future success of the Middle Eastern society is being seriously undermined and jeopardised by the vast array of cheap fast food outlets, heavily processed foods, lack of nutrition and shocking paucity of regular exercise. Obesity is not simply an issue of getting our population moving a little more either (although that would be a great start), it is in a large part actually

a matter of national security for countries across the region. As Qatar looks to transfer its economy from a ‘natural resource’ to a ‘national resource’ based model – which is really a model of intellectual thought leadership and knowledge capital – so the country must ensure that the nation as a whole is fit for duty, and capable of delivering the aspirations of its leaders. However, It is abundantly clear that if obesity levels continue as they are and we do not take significant interventions with regard to the most endangered individuals then we risk the longevity of our financial, social and moral security. It is not a case of laying blame on any particular quarter though. We all have a collective responsibility to contribute towards solving and making a change for good. It is however, no surprise when the information and support that is publically available seems to be driven by short-term profiteering rather than the long-term interests of its consumers. A chain of self-appointed experts on diet and nutrition in Qatar and several other Middle Eastern countries, are arguably a prime example of this. Over the course of several visits to their stores it was advised that the best TheEDGE

HEALTH AND FITNESS

and only way to lose weight was to walk three times per week, and that in fact one could lose up to 20 kilograms within three months doing so. To really guarantee achieving these results one would need to purchase their sugar-laden, highly processed cakes, biscuits, bread, pastries and other assorted pre-packaged foods. We tried their food and while it did not taste awful, it was clear that it lacked considerable high quality nutrition as well as being far too processed to be of any value. The staff continued to advocate that the lower calorie content was their unique selling point. In my opinion, offering customers a marginally lower calorie alternative to a high street pizza, hamburger or cheese manakish doesn’t make it good for them or in their interests. A pizza is still a pizza and a hamburger is still a hamburger, etcetera. What should be a far more common sense approach for anyone looking to lose weight or improve their health should firstly include seeking independent medical advice, then embarking upon a vigorous regular programme of physical activity, and trying to eat as many fresh, nutritionally balanced, unprocessed, unpackaged foods as possible. The issue goes well beyond a small high street outlet and these chains can be applauded for their entrepreneurial vigour, but their mission and the reality surely need to be more responsibly aligned. We can all do more and from a business perspective, providing a more wholesome and socially responsible solution may well see them increase their client acquisition, retention and turnover. The purpose of the above is to highlight a case study that shows that even those some might regard to be trusted sources of advice should be scrutinised and appraised thoroughly and not just taken at face value. Furthermore, the root causes of the issue run much deeper than the above example. Market forces and demand are the driving impetus behind the dozens of high-fructose corn syrup-fuelled, over-processed, gooey, artificially enhanced, cinnamon scented outlets that line our malls. The authorities, landlords, entrepreneurs and parents all have a collective responsibility to ensure that that there is a balanced offering for all consumers and there is more information widely available regarding the dangers of a fast food-based diet. On a visit to the average mall, one can purchase half a dozen fast food, super-charged meals from all the usual suspects for under QR20, with unlimited soft drinks and a free cookie or mega fries. Yet, a fresh apple and carrot juice costs as much as QR20 from a juice bar – without even a salad or main meal. The stark reality is that freshly produced juices or foods cost more in the short-term, but the long-term effects both, on the individual and a nation consuming highly processed

TheEDGE

“It is abundantly clear that if obesity levels continue as they are and we do not take significant interventions with regard to the most endangered individuals, then we risk the longevity of our financial, social and moral security.” fast food, is significant. So how do we reverse this trend? Do we let those that are already obese continue with their lethargic ways and become a drain on the economy, whilst we simply focus on educating the young and next generation? There are a variety of strategies being adopted by governments and businesses around the world. Some have proven to be a resounding success, others are simply a public relations or pseudo corporate social responsibility exercise. What is clear from experience on the ground is that it is never too late to take action, never too late to make a positive change. We have seen firsthand that changing the habits of a small number of individuals can have a dramatic transformational effect on people’s lives and empower them to inspire their families, their colleagues and their surrounding communities. We hope that over the coming months TheEDGE will be able to inspire a few more of you to stand up against the global pandemic of obesity, to make a positive change to your lives and help to secure your future health and that of your children.

Thomas Woolf is the founder of PTX Performance Training, one of the Middle East’s leading fitness and wellness specialists. If you have a question for Thomas please e-mail theedge@ptxqatar.com

LIFE AND STYLE

I NY

As acclaimed novelist Truman Capote once said, “New York City is the only real city.” Forget London, Paris and Tokyo – if you want a taste of skyscraper life, where the streets are filled even at four in the morning and life moves at twice the speed of anywhere else on the planet, intoxicating, loud, brash New York City is it.

he problem with visiting New York City for the first time is knowing where to begin. Then again, even if you do not immediately rush off to see the sights and icons, just being in this dynamic city is enough. The wonder of New York is in the energy and diversity that emanates from its streets and people. On this relatively tiny island, where cultures and languages collide, there is something to amuse and stimulate everyone. Whether watching the world go by while eating a Gray’s Papaya hot dog on a Central Park bench, or looking at up at the Statue of Liberty from the deck of the Staten Island Ferry, many visitors are struck by an almost constant sense of déjà vu, simply because the city has been immortalised in movies and television shows. New York City is made up of five boroughs – Staten Island, The Bronx, Brooklyn, Queens, and Manhattan – but many visitors never leave Manhattan.

There is a lot packed into this tiny area: Little Italy’s 24-hour pasta restaurants, designer shopping on Fifth Avenue, ice-skating at Rockefeller Center, taking in Bethesda Fountain in Central Park, Greenwich Village’s jazz clubs, and the shows of Broadway. Then, of course, there are the iconic sights – the Statue of Liberty, the Empire State Building and Times Square. For culture vultures, the city is home to incredible museums such as the American Museum of Natural History or the Metropolitan Museum of Art. Here we have broken down all the must-dos and have-to-sees to help you make the most of even the shortest trip.

See

Empire State Building: located between 33rd and 34th Streets in midtown, this iconic building is impossible to miss. The last elevators to the observatory go up at 1:15am, so make sure you enjoy the panoramic views

LIFE AND STYLE

from 320 metres above the ground. Rockefeller Center: grab a great photo opportunity, take an interesting tour of the building, or simply grab coffee and a seat to watch the ice-skaters. Statue of Liberty: the national monument that captured the imagination of millions of immigrants entering New York harbour since 1886, the Statue houses a museum and offers visitors the chance to climb all the way to the top of ‘the lady’. Guggenheim: one of the world’s greatest modern art museums, offering all the greats, from Pablo Picasso to Wassily Kandinsky. Central Park: take a breather from the city, go rollerblading, or people-watch. The park has a wealth of interesting sights of its own and special spots you will recognise from movies such as One Fine Day and Ransom (Bethesda Fountain), Serendipity (Wollman Rink) and When Harry Met Sally (The Mall and Literary Walk). Other top choices: American Museum of Natural History, Museum of Modern Art, Times Square, St Patrick’s Cathedral.

Broadway: a visit to this legendary musical and theatre district is almost obligatory. Try to book tickets online before arriving in the city, as the best shows are sold out far in advance. Sport: be it basketball (the Knicks take on the Boston Celtics and Detroit Pistons in October at Madison Square Gardens), baseball (the New York Mets have an October game scheduled in Flushing, Queens), ice hockey or gridiron football, this is a thoroughly entertaining way to spend time in New York, and a thrilling way to experience Americana. Tickets for sporting events can be obtained online at the Ticketmaster website. Other top choices: take the free Staten Island Ferry for the best photos of the city skyline, walk the Brooklyn Bridge, catch the Macy’s Thanksgiving Day Parade (November 25), take a helicopter tour of the city, get tickets to the taping of a television show, take a television and movie sights tour.

Shop

Kiehls: for cult beauty products that are a favourite with celebrities. Jeffrey New York: achingly hip shopping sensation in the Meatpacking District. FAO Schwarz: even if you do not have children, this toy store has featured in so

many movies (remember Tom Hanks playing the piano with his feet in Big?), it is now one New York’s top tourist destinations. Bloomingdales: everything you could need under one roof, from designer clothes to interiors. Seize Sur Vingt: the place to find Italian cotton shirts, men’s cashmere shirts and jackets. The women’s range is heavily influenced by menswear, and the bespoke shirts are a favourite with Leonardo DiCaprio. Macy’s: the biggest department store in the world, Macy’s Herald Square is the home of fashion, furnishings, personal shopping and even a multilingual visitors centre. Takashimaya: a one-stop shop for stylish gifts, from antique silver, to Japanese writing paper. Other top choices: ABC Carpet and Home, Agent Provocateur, Saks Fifth Avenue.

Eat

21 Club: once a Prohibition-era speakeasy, this institution offers comforting favourites. Japonais: a gigantic, glamorous restaurant complete with semi-circular booths along one wall, serving Japanese-French fusion food. Enjoy the veranda in summer or head upstairs to the lounge for lighter fare. Buddakan: a former cookie factory that has been transformed into a vast maze of dining rooms, with a two-storey-high Chinoiserie hall with oak-covered walls at its centre. DB Bistro Moderne: when an ordinary hamburger just will not do, enjoy DB’s famous gourmet burger – ground sirloin stuffed with braised short-ribs, foie gras and truffles. Nobu: the flagship restaurant of chef Matsuhisa offering South American-Japanese fusion cuisine. This Tribeca spot is usually crammed with celebrities and reservations must be made far in advance. The Spotted Pig: another celebrity favourite, this English gastro pub is situated in the West Village. The British chef spent four years at London’s River Café with Jamie Oliver and serves up a delicious smorgasbord of British and Italian dishes. Other top choices: The River Café, Dean & Deluca, Ceci Cela Patisserie, Burger Joint, Balthazar, Pastis.

has a 23-metre lap pool. Featured on the Condé Nast Traveler Gold List in 2010. Gramercy Park Hotel: after a US$210 million (QR764 million) renovation, this luxurious hotel now offers Andy Warhol, Damian Hirst and Jean-Michel Basquiat art in the lobby. Guests have exclusive use of Gramercy Park, the city’s only private park. St Regis Hotel: for the visitor looking to enjoy the high life in the city. Put a suite on the black American Express, and you will be staying in the same hotel that once housed Marlene Dietrich and Salvador Dali, and is the birthplace of the Bloody Mary cocktail. Gilded, grand and blissfully quiet, this hotel is legendary. The Plaza Hotel: one the world’s most iconic hotels and with all the ambience of old New York, right down the butler assigned to each guest, Baccarat chandeliers, acres of marble, mosaic bathrooms and Louis XV-style beds. This place is sheer opulence. Other top choices: The W New York, The Carlyle, The Peninsula, The City Club Hotel, The Bowery Hotel, The Mercer Hotel, The Pierre, and 60 Thompson.

Sleep

The Mandarin Oriental: a few minutes’ walk from Central Park, all rooms and suites have floor-to-ceiling windows, and the spa TheEDGE

EVENTS AND CONFERENCES

OCTOBER 4 – 6 POWER-GEN MIDDLE EAST 2010 Qatar International Exhibition Centre, Doha, Qatar

This conference and exhibition provides a forum for industry leaders to address technical issues, introduce pioneering technology and share lessons learned about the region’s power generation, transmission and distribution and water industries. The conference will take three different tracks – strategic power, technical power, and water – with each focusing on topics such as fuel flexibility, gas turbine augmentation, desalination technologies, power trading and exchange, renewable energy and water management. Attendees will also be able book a place on tours of the Mesaieed Independent Power Plant and Ras Laffan B and Ras Girtas Power Company.

www.power-gen-middleeast.com

OCTOBER 4 – 6 MIDDLE EAST HEALTH, SAFETY, SECURITY AND ENVIRONMENT CONFERENCE AND EXHIBITION Gulf Hotel, Manama, Bahrain

Combining a world-class technical conference with an international exhibition, this event will be themed Striving for HSE Excellence in a Changing World: Capacity, Energy Demand, Security, World Economy and Social Responsibility. Organised by the Society of Petroleum Engineers, this is the perfect opportunity for industry leaders to discuss health, safety, security and environmental issues and corporate social responsibility. Expected attendees will include oilspill contingency planners, waste disposal experts, safety managers, loss prevention engineers and sustainable development professionals, among others.

www.spe.org/events/mehsse/2010/index.php

OCTOBER 5 – 6 MANAGED SERVICES FOR EMERGING MARKETS CONFERENCE 2010 Traders Hotel, Dubai, United Arab Emirates

A two-day conference that will bring you completely up-to-speed on the landscape and challenges of managed services and help you transform your business by identifying new opportunities and key success drivers. Attendees will take a closer look at the Indian telecommunications market, as well as Vodafone International, in intensive case studies, learn how to provide managed services to vertical markets and discover how emerging markets can take advantage of these services. The event will end with a panel discussion and brainstorming session.

www.neo-edge.com/events/

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OCTOBER 10 – 12 THIRD SAUDI ARABIA INTERNATIONAL OIL AND GAS EXHIBITION AND CONFERENCE Dhahran International Exhibition Center, Dammam, Saudi Arabia

Established as an oil and gas show for the largest oilproducing country in the world, this exhibition and conference attracts high level technical experts, key industry professionals, specialists and decision makers in various sectors of the petroleum industry. Hosted by Saudi Aramco, the event has, in the past, been supported by 207 exhibiting companies and more than 5000 attendees. The high profile three-day conference will present the latest discoveries and technologies, cover major operational aspects and discuss current hot topics in the oil and gas industry.

www.saoge.org

OCTOBER 12 – 14 OFFSHORE MIDDLE EAST 2010 Qatar International Exhibition Centre, Doha, Qatar

International delegates will gather for three days to collaborate, conduct business and experience exploration and production in action, at this key conference and exhibition. Topics on the agenda for discussion include field development, fixed and gravity-based platforms, mobile offshore drilling units, data collection and communication, flowlines and pipelines, well construction and completions. A technical session will focus on gas production challenges and solutions, asset management and monitoring, safety and environmental concerns and reservoir monitoring and control.

www.offshoremiddleeast.com

OCTOBER 13 – 14 WHAT IS NEXT IN MARKETING 2011? CONFERENCE FEATURING PHILIP KOTLER The Atlantis, Palm Jumeirah, Dubai, United Arab Emirates

World renowned marketing guru, Philip Kotler, will outline his latest ideas on strategic and tactical marketing, showing attendees how to manage risk and uncertainty, and exploit opportunities. This two-day conference promises to help you outperform competitors, improve branding power, identify new business opportunities, and will help you cope with major business challenges in times of turbulence. Learn how to apply the effectiveness of product differentiation and conduct new sustainable marketing audits that will help you achieve beyond the bottom line.

www.philipkotlerinuae.com

CONSTRUCTION AND TENDERS

QATAR PROJECTS UPDATE CHIYODA TO BUILD WORLD’S LARGEST HELIUM PLANT Chiyoda Al Mana Engineering will participate in the Qatar Helium 2 project, which calls for the construction of the word’s largest helium production facility. The facility will boast an annual capacity of approximately 40 million cubic metres of helium gas. Chiyoda will build the facility’s extraction units, which will recover helium generated as a by-product at six large liquefied natural gas plants in Qatar. The company will also oversee piping and other ancillary work. The total contract is worth QR5.4 billion. QATAR STEEL SIGNS AGREEMENT WITH GASAL Qatar Steel Company, the first integrated steel company in the region, has signed a long-term agreement with Gasal, Qatar’s leader in industrial gas supply. Gasal, a subsidiary of Qatar Petroleum, Air Liquide and Qatar Industrial Manufacturing Company, will supply all new industrial gas requirements – oxygen, nitrogen and liquid argon – of Qatar Steel plants located in Mesaieed Industrial City. The agreement is for a period of 20 years. EGYPT’S OCI WINS QATAR PROJECT A unit of Egypt’s Orascom Construction Industries (OCI), Six Construct Qatar, in a joint venture with Qatar’s Midmac Contracting Company, has won a US$675 million (QR2.4 billion) contract to build an additional phase of the Doha Convention Center and Tower. Six Construct Qatar is fully owned by construction group, Besix Group, itself a joint venture between OCI and Besix. The group previously worked on an earlier phase of the project and will now complete the project by the end of October, 2012, for the Qatari Diar Real Estate Investment Company. UAE CONSTRUCTION SALARIES DOWN Salaries among construction sector employees in the United Arab Emirates have declined by up to 25 percent this year due to the delaying of projects and a slowdown in demand for workers, including engineers, architects and project managers. Demand for management-level construction professionals has reportedly dropped by around 30 percent in Dubai and 25 percent in Abu Dhabi. The biggest decline is in non-salary benefits or perks, such as housing allowances and return tickets home for expatriates, at around 40 percent. Approximately 842 projects with a total value in excess of US$350 billion (QR1.2 trillion) are on hold, and a further 111 projects valued at US$14 billion (QR50.9 billion) have been cancelled. UNDERGROUND CAR PARK FOR SHERATON Qatari Diar Vinci Construction has been awarded the contract to design and build an underground car park and landscaped gardens fronting the Sheraton Doha hotel in West Bay. The contract, worth QR1.2 billion includes the design and construction of a car park with approximately 2000 spaces for the hotel’s guests and general public, and will feature an electronic system to guide drivers to vacant spaces, a first in Qatar. Work will include construction of a maintenance depot and command centre for the future Doha light rail system, three electricity substations, as well as a tunnel between the car park and the Doha Convention Center.

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QATAR TO SUPPLY ELECTRICITY TO BAHRAIN Qatar will supply 150 megawatts of electricity to Bahrain. The deal was signed in collaboration with the Gulf Cooperation Council Power Grid Authority, which helped both parties fix pricing and agree on related terms and conditions. The Qatar-Bahrain deal is part of a move to get the regional power grid operational in phases. Earlier this year, Bahrain faced a severe power outage which affected the country for more than five hours, and the country said it welcomes the help to resolve its power crisis. QATAR TO SPEND QR14 BILLION ON STADIUMS In a bid to become the first Arab country to host the 2022 World Cup, Qatar plans to spend US4 billion (QR14 billion) on stadiums. The plans include building nine stadiums and upgrading three in the Gulf state. Designs were recently shown to a delegation of Fédération Internationale de Football Association inspectors. Four of the stadiums will be constructed regardless of whether Qatar wins the bid, with work on one facility, Education City Stadium, said to be tendered next year. The stadiums will feature revolutionary solar-powered cooling systems, and most will include an upper section that can be dismantled and shipped to developing countries at the end of event. AL FUTTAIM GROUP TO BUILD DOHA CENTRE Al Futtaim, one of the largest family-owned conglomerates in the Gulf, and the company behind Dubai Festival City, has joined forces with Qatar Islamic Bank and Qatar’s Aqar Real Estate Investment to build a retail and leisure complex in Doha. The project includes an entertainment park and two hotels and is worth US$1.6 billion (QR5.8 billion), making it Al Futtaim’s biggest project since the onset of the financial crisis. Retailers, including IKEA, ACE, Toys “R” Us and Marks and Spencer – all part of the Al Futtaim Group – are confirmed to anchor the development. Construction is due to begin in 2011, with completion of the first retail phase expected in 2012, with the two remaining phases scheduled for 2015.

CONSTRUCTION AND TENDERS

QATAR TENDERS SUPPLY AND INSTALLATION Description: Supply and installation of umbrellas for office building. Closing date: October 3 Client: Ministry of Municipal Affairs and Agriculture Phone: +974 4437 8143 Fax: +974 4443 9360 E-mail: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender no: 57/2010-2011 Bid bond: QR10,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha. ROOF WATERPROOFING RENOVATION Description: Renovation of roof waterproofing for Education Center building in Al Khor community. Closing date: October 11 Client: Qatargas Phone: +974 4473 6000 Fax: +974 4473 6666 E-mail: infos@qatargas.com.qa Website: www.qatargas.com.qa Tender no: STC-A-664-10 Bid bond: Undisclosed Tender documents can be obtained from: QatarGasOffice, 6th Floor, Salam Towers, Corniche Road, West Bay, Doha. PACKAGE TREATMENT PLANT REVIEW Description: Post-contract professional design review, general and site supervision, quantity surveying, management and administration for package treatment plants. Closing date: October 12 Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/GTC/018/10-11 Bid bond: QR276,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha. LARGE-SCALE BASMATI RICE SUPPLY Description: Supply of 600,000 sacks of super basmati silky polished rice. Closing date: October 18 Client: Central Tenders Committee

Phone: +974 4437 8143 Fax: +974 443 9360 E-mail: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender no: 576/2010-2011 Bid bond: QR2.7 million Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha. UPGRADING WORKS Description: Refurbishing and upgrading works for various pumping stations in Phase 8 of Civil Project C729/2. Closing date: October 19 Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/GTC/027/10-11 Bid bond: QR4 million Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha. DRAINAGE SYSTEM CONSULTANCY Description: Pre-contract professional design and quantity surveying consultancy services for surface and groundwater drainage system for West Muaither area. Closing date: October 19 Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/ITC/013/10-11 Bid bond: QR75,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha. ENVIRONMENTAL IMPACT CONSULTANCY Description: Consultant for offshore environment impact assessment including marine environmental baseline services. Closing date: October 24 Client: Rasgas Phone: +974 4473 8000 Fax: +974 4473 8480 Website: www.rasgas.com Tender no: RLSHE-517

Bid bond: QR72,000 Tender documents can be obtained from: Register at www.rasgas.com to download tender documents. UNDERWATER INSPECTION Description: Underwater inspection services for a liquefied natural gas company. Closing date: October 24 Client: Rasgas Phone: +974 4473 8000 Fax: +974 4473 8480 Website: www.rasgas.com Tender no: RLOC-515 Bid bond: QR3.6 million Tender documents can be obtained from: Register at www.rasgas.com to download tender documents. CONSTRUCTION OF MOSQUES AND IMAM HOUSES Description: Construction of mosques and imam houses, comprising four mosque complexes at four different locations. Includes all associated finishes and services, including boundary walls, gates, paving works and landscaping. Closing date: October 26 Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/ ITC/012/10-11 Bid bond: QR193,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha. SEWAGE CONSULTANCY Description: Pre-contract professional design and quantity surveying consultancy services for Al Shamal Sewage Treatment Works. Closing date: October 26 Client: Public Works Authority Phone: +974 4495 000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/ ITC/007/10-11 Bid bond: QR100,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha. TheEDGE

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SUBSCRIPTION

SUBSCRIPTION FORM 2010 TheEDGE is Qatarâ&#x20AC;&#x2122;s dedicated monthly business magazine.

TheEDGE incorporates a mix of industry news and analysis, in depth features, special interviews with key business decision makers, economic insight and market activity reports, and tips for how you can improve your day-to-day business operations. TheEDGE will not be available on the news stands, but will be delivered straight to the door of the targeted business community. To ensure you keep up-to-date, with what is happening in Qatarâ&#x20AC;&#x2122;s business landscape, fill in the subscription form (below) to receive TheEDGE on a monthly basis. Subscription is FREE (in Qatar). Forms are to be addressed to the Subscriptions Department at: TheEDGE Subscriptions Department Firefly Communications 11th Floor, Jaidah Tower PO Box 11596 Doha, Qatar

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