The Edge - Dec 2010 (Issue 17)

From The Editor

farewell from the editor The number stood out immediately: 803 That is the number of stories that have been published in TheEDGE since I launched the publication as its founding editor in July 2009. However, this will be my final Editor’s Letter to you as I am moving on to new endeavours.

A little over a year and a half ago I walked into the office of Firefly Communications to begin this job.

Working with skeleton staff and no ‘inventory’ as the magazine business calls for stories in the pipeline that are ready to be published, an 80-page magazine needed to be produced in just a few weeks for its summer 2009 launch.

Talk about a challenge! But it was a challenge that was embraced and soon TheEDGE had a small but dynamic team assembled, and we did it, debuting with a cover story on Human Capital. We have now grown into a 104-page publication, which houses some of the most compelling editorial content in the region. Additionally, there have been numerous milestones along the way including the accomplishment of our first year of publication earlier this year.

This amazing group of editors, contributors, freelancers, artists and illustrators has been responsible for the past 17 issues of the magazine and without their tireless support, insight and professionalism TheEDGE would not be the outstanding publication that it is today.

TheEDGE was created to keep professionals operating within Qatar’s multi-sector business landscape abreast of the latest business trends and market developments. The model was complex and many were sceptical as to what success TheEDGE would achieve in its early days. But without fail, each month, TheEDGE continues to strive for excellence and throughout the issues, literally dozens of people have participated as authors making TheEDGE a product by and for its own audience.

From editorial relationships to supporting advertisers, I would like to take this opportunity to acknowledge and

thank each and every individual that has had a hand in crafting the success of TheEDGE. Since its humble beginnings, I believe TheEDGE has achieved great editorial diversity. The team at TheEDGE has worked proactively to deliver lively, compelling and informative content month after month, and in doing so has raised the bar for the Qatar media landscape.

Additionally, judging by the increased circulation and the growing number of new subscribers, I see that readers have both embraced the seasoned voices in the magazine as well as the new ones and this is just but one positive affirmation that TheEDGE is on track for a fruitful future.

TheEDGE launched with zero subscribers. Now, the magazine has grown to reach more than 8000 loyal readers each month and this will only continue to grow.

The job is not done. TheEDGE will be left in strong hands. The publication will now exist under the direction of new managing editor, Miles Masterson. He is sharp and ready, and he will introduce himself to you in the next issue. Please welcome him with all the support and consideration that you gave me.

And do not worry; I will stay in touch. I will read TheEDGE to stay on top of it all and I ask you all to be in touch as well. This publication grew and transformed thanks to your readership.

For that, I will always be grateful and proud.

Kelly Lewis can be reached at lewis.kelly78@gmail.com

Kelly Lewis Managing Editor

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

letters@theedge-me.com

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WHO WE ARE

MANAGING editor Kelly Lewis k.lewis@firefly-me.com +974 55067574 editor Miles Masterson m.masterson@firefly-me.com +974 66080447 COPY EDITOR 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 Sales Executive Giuseppe Ciccarello g.ciccarello@firefly-me.com +974 33842744 Marketing administrator Azqa Haroon a.haroon@firefly-me.com +974 55692471 Creative director Roula Zinati Ayoub Art AND DESIGN Lara Nakhlé Rena Chehayber Rana Cheikha Charbel Najem Hadeer Omar

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.

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

Photographer Herbert Villadelrey

printed by Ali Bin Ali Printing Press, Doha, Qatar

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Finaliser Michael Logaring

DISTRIBUTION and SUBSCRIPTION Azqa Haroon a.haroon@firefly-me.com +974 55692471

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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

December 2010

FEATURES .18. A SPECIAL TRIBUTE

52

Remembering the legacy of Grahame Maher of Vodafone.

.30. In the spotlight

The unconventional age of gas extraction.

.34. market watch

Key risks and opportunities for MENA countries.

.37. inside edge

The state of the GCC monetary union.

.40. cover story

A look back at the stories that defined 2010.

.46. Economic barometer

What the new pension reforms mean for France.

.49. on the pulse

Russia’s gas shortcomings could mean a Qatari windfall.

.52. special feature

Where the smart money will be investing in 2011.

.56. green business

Why Conference of the Parties is facing an uphill battle.

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CONTENTS

Visit Our New Showroom Located in Al Khor opposite side of Al Khor Mall

.60. business view – real estate Qatar’s property market prospers.

.64. special report

Qatar is on target for growth.

.66. brand beat

Unleashing the power of creativity to encourage innovative problem-solving.

.68. balance sheet

The new cost of global business.

.71. legal insight

Summarising the Human Resources Management Law.

.73. special SECTION: qatar health 2010 Interviews with leading health sector figures.

.81. health and safety

Implementing an effective management system.

.84. industry focus

Educating the entrepreneurs of the future.

REGULARS

Opening Hours: Saturday - Thursday 7am-5pm Friday Closed P.O.BOX 150 Doha, Qatar T +974 4421 8601 F +974 4417 0351 E isd@jaidah.com.qa

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.08. .10. .12. .13. .14. .15. .16. .20. .26. .28. .87. .91. .94. .96.

Contributors Local News International News News in Numbers News in Quotes Web Watch Burning Question Business Insight Opinion Thinker’s Corner Tech Tools Life and Style Events and Projects Tenders

CONTRIBUTORS

The Usual Suspects...

p.18/P.40 Rachel morris Freelance Journalist Middle East and North Africa Region

p.30 Jamie Stewart International Correspondent London, United Kingdom

p.37 Phil Strange Chief Financial Officer Dun and Bradstreet South Asia Middle East

p.46 Karim Nakhle Senior Business Strategist Doha, Qatar

p.49 Edward Jameson Senior Business Journalist Middle East and North Africa region

p.46 SAM PICKERING Managing Director BG2 Global Solutions London, United Kingdom

P.60 Mark Proudley Associate Director DTZ, Middle East Operations Doha, Qatar

p.64 Greg Harris Editorial Manager Oxford Business Group Doha, Qatar

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

P.68 Mark Lindley Senior Tax Manager KPMG Doha, Qatar

P.71 David Salt Partner Corporate and Commercial Clyde and Co Doha, Qatar

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P.71 Emma Higham Associate Corporate and Commercial Clyde and Co Doha, Qatar

p.81 Mark Kenyon Health and Safety Group Leader URS Qatar LLC Doha, Qatar

p.91 Thomas Woolf Founder PTX Performance Training Doha, Qatar

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 editor, Miles Masterson at m.masterson@firefly-me.com

NEWS IN BRIEF

LOCAL QATAR WORLD’S NUMBER TWO FOR TAX According to the report, Paying Taxes 2011, Qatar is the second easiest country in the world for paying taxes. Qatar retained its position for the second consecutive year, in a survey compiled by PricewaterhouseCoopers, the World Bank and International Finance Corporation. The survey measures efficiency and cost of taxes in 183 different countries worldwide. Dean Rolfe, Middle East tax leader at PricewaterhouseCoopers, said, “Paying taxes in the Middle East has traditionally been, and continues to be, relatively straightforward,” although he said the light tax burden in the region is unlikely to continue indefinitely. “As governments increasingly need to source revenue to support economic diversification, tax will increasingly be seen as a suitable and effective solution to fund governments’ financial needs,” Rolfe warned. Topping the rankings was the Maldives, with Hong Kong (third), Singapore (fourth), the United Arab Emirates (fifth), Saudi Arabia (sixth), Ireland (seventh), Oman (eighth), Kuwait (ninth), and Canada and Kiribati (join tenth), rounding out the rest of the top 10.

FRANCE’S TOTAL EYES QATAR Qatar has entered into talks with France’s Total Petrochemicals to build a petrochemical plant in the Arab country. The talks are related to a petrochemical plant that Qatar is planning to build at Ras Laffan, a project initially valued at US6 billion (QR21.8 billion).

The proposed complex includes a 1.6-milliontonnes-per-year (tpy) steam cracker and associated units, including two 650 tpy polyethylene plants and a 700 tpy ethylene glycol facility.

END OF THE SPONSORSHIP SYSTEM? Qatar is seriously considering scrapping its sponsorship system, potentially following in the footsteps of Bahrain and Kuwait. “The government is studying very carefully the issue to ensure that the rights of Qatari citizens, employees and those who come to

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work in Qatar are all preserved,” said prime minister, HE Hamad bin Jassim bin Jabor Al Thani. Under the system, foreigners are not able to enter or leave the country, or enter new employment unless they have the approval of their sponsor.

NAKILAT SHIP FACILITY OPEN FOR BUSINESS The 43-hectare Nakilat-Keppel Offshore and Marine ship repair facility is officially open for business, and has signed a threeyear fleet servicing agreement with Shell International Trading and Shipping Company for ship repair services. The facility, a joint development by Keppel Offshore and Marine and Qatar Gas Transport Company, is located within the Ras Laffan Industrial City, and has been designed to undertake the entire spectrum of repair, conversion and construction for a wide range of marine and offshore vessels and structures. Situated close to the liquefied natural gas (LNG) terminals and Ras Laffan port, the facility will serve the Nakilat fleet of LNG carriers and undertake work for other shipowners, as well as the conversion of tankers to various configurations for offshore production, storage and offloading.

LIBYA-QATAR JOINT VENTURE YIELDS DEVELOPMENT Work has begun at The Waterfront, a luxury residential and resort development near Tripoli, under the stewardship of Al-Libya

Al-Qataria (ALAQ), a joint venture between Oyia, a subsidiary of Libya’s Economic and Social Development Fund, and Qatari Diar Real Estate Investment Company. Chairman of the ALAQ Board of Directors, Abdul Aziz Al Theyab, said, “Libya is one of the fastestgrowing business and tourist markets in the region” while vice-chairman, Wesam Eledrisi, confirmed, “This vision is being achieved with an emphasis on innovation, partnership and raising the standard of living in the Tripoli area.” Scheduled for completion by the end of 2012, The Waterfront will be a gated, mixed-use community with a five-star resort hotel, serviced apartments, luxury villas and an upscale retail village.

A NEW PLANT FOR DOHA General Electric (GE) has entered into an agreement with Al Farraj to meet the region’s growing electricity needs. Under the agreement, Al Farraj will assemble and supply GE electrical equipment to Qatar, the United Arab Emirates, Kuwait, Oman and Jordan, and to support the requirements of the relationship, Al Farraj inaugurated a manufacturing facility in Doha. Al Farraj is a licenced GE electrical distribution panel builder and will assemble GE’s low voltage switchgear, critical for the reliability and safety of the distribution of electricity. The new facility will also manufacture electrical equipment, including electrical distribution boards and sub-main distribution panels equipped with GE electrical components.

NEWS IN BRIEF

INTERNATIONAL DUBAI CONSIDERS SALE OF BIGGEST ASSETS With Dubai World “now on sound financial footing”, according to chairman of Dubai Supreme Fiscal Committee, Ahmed bin Saeed Al Maktoum, the emirate may consider selling parts of government-owned companies. Prized assets such as DP World, the Atlantis Hotel, and casino operator, MGM Resorts International, were presented as part of a restructuring that could be sold to the public to raise cash. Other state-linked assets such as Emirates airlines and Dubai Electricity and Water Authority have also been subjects of interest. Despite improving balance sheets among Dubai’s state-owned companies, financial services firm, Dubai Group, recently missed two payments on separate loans, indicating that the emirate’s debt troubles are far from over.

INCREASED SPENDING ON AIRPORT SECURITY Leading consultants, Frost and Sullivan, has confirmed that spending on modernising Middle East airports will increase to US$57.7 million (QR209 million) by 2015. The increase in new airport construction has boosted spending in this sector, with the Middle East Airport Security Market Assessment Report stating that spending in the sector has a compound annual growth rate of 7.5 percent from 2008’s US$34.7 million (QR126 million). According to the report, Middle East Market for CCTV and Video Surveillance 2010 edition, the region’s market for video surveillance equipment will grow by more than 10 percent in 2010.

IRAN IN MAJOR OIL DISCOVERY An Iranian state energy firm has announced a major discovery of approximately 34 billion barrels in associated oil reserves at an offshore gas field in the Gulf. Ali Vakili, managing director of Pars Oil and Gas, said that an oil layer was discovered near the southern port city of Bushehr, confirming, “this is one of the biggest layers of oil in the country and it is under the reservoir of the Ferdowski offshore gas field”. Iran’s proven oil reserves have

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risen by nine percent to 150.3 billion barrels, partly driven by new discoveries, said oil minister, Masoud Mirkazemi. Mirkazemi also announced the discovery of a new gas field in southern province, Hormozgan, one that contains “70 billion cubic metres of gas, 72 percent of which can be exploited”.

IRELAND’S BAILOUT Debt-crippled Ireland joined Greece in a step that was unthinkable only a few years ago when it was the economic envy of Europe.

The country has been brought to the brink of bankruptcy by its 2008 decision to insure its banks against all losses. At the time of going to press, a draft agreement had been reached between international negotiators and Ireland on a bailout worth US113 billion (QR411 billion), loaned to Ireland by the European Union and the International Monetary Fund. A four-year austerity programme, key to securing the bailout, comprises US$13.2 billion (QR48 billion) in spending cuts and US$6.6 billion (QR24 billion) in tax hikes. The programme includes cuts to 25,000 jobs, public sector pay, pensions, and social welfare, a reduction in minimum wage, and a new property tax.

FINANCIAL PROBLEMS CAUSE DUBAI SUICIDES Financial problems are the biggest cause of suicides in Dubai, Dubai Police data revealed.

A total of 477 people have committed suicide in the emirate since 2006, with 2008 having the highest number of suicides. Eighty percent of cases were people aged between 20 and 40 years. Doctor Ashraf Ibrahim Hassan, forensic medical examiner of Dubai Police’s Forensic Medicine Department, said that as many as 60 percent of cases were due to “financial reasons”.

RUSSIA’S STATE ASSETS DRAW FOREIGN INTEREST Foreign investors have expressed interest in buying into Russian stateowned companies, Vladimir Dmitriev has told the BBC. Dmitriev, head of Russia’s state-owned development bank, Vnesheconombank, said that US$64 billion (QR232 billion) could be raised in the next three years as a result. Russia wants to sell stakes in major banks such as Sberbank, the hydroelectric power operator, RusHydro, shipping giant Sovkomflot, Russian Railways and oil giant, Rosneft, in a privatisation drive to reduce its budget deficit. Finance minister, Alexei Kudrin, confirmed that Russia aims to reduce the state’s share in top companies and banks to 50 percent plus one share. “After three years, we think we will go further,” said Kudrin. “On most stakes, we will reduce them by a further 25 percent.”

NEWS IN NUMBERS

News in Numbers

£620,000,000

According to Verdict Research, a retail analysis unit of Datamonitor, the wedding of Prince William and Catherine Middleton may add GBP620 million (QR3.5 billion) to the economy.

The event, set for April 29, 2011, will see consumers spending on celebratory treats and memorabilia, as well as an influx of tourists to the United Kingdom (UK).

A British retailer has already started selling a GBP16 (QR90) version of the designer dress Middleton wore at the engagement announcement, while the QVC shopping channel saw dramatic increase in sales of the ring resembling that of Middleton’s, overnight.

History shows that royal events have contributed to the economy in the past, including the coronation (1953), the silver jubilee celebration (1977), and the royal wedding (1981). With the royal family already prompting tourists to spend GBP500 million (QR2.8 billion) a year, VisitBritain’s Paul Eastham says, “In a royal wedding year, that figure is going to be massively exceeded.” The UK economy could do with the boost. The Bank of England predicts 1.8 percent growth in 2010 and 2.6 percent growth in 2011.

Pic of the Month

This Month in History The Al Thani family become the rulers of the State of Qatar.

The last Rolls-Royce Silver Ghost is sold in London, England.

1924

President Herbert Hoover asks the US Congress for a US$150 million (QR545 million) public works programme to stimulate the economy.

1930

General Electric announces that all communist employess will be discharged from the company.

1953

Abu Dhabi, Ajman, Fujairah, Sharjah, Dubai and Umm Al Quwain form the United Arab Emirates.

1971

Time magazine’s Man of the Year is, for the first time, a non-human, the personal computer.

1982

Exxon announces a US$73.7 billion (QR268 billion) deal to buy Mobil, creating ExxonMobil, the world’s largest company.

1998

Enron files for Chapter 11 bankruptcy.

Freezing temperatures reached record-breaking lows in Britain before spreading to Europe, making it the chilliest month since 1985, and causing major problems to transport links across the continent.

1878

2001

Bernard Madoff is arrested and charged with securities fraud in a US$50 billion (QR181 billion) Ponzi scheme.

2008

On his final trip to Iraq as American president, George W. Bush narrowly avoids being struck by two shoes thrown at him by an Iraqi journalist.

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NEWS IN QUOTES

“Those who make short term bets against Spain will be making a mistake…We have a deficit reduction plan which is being carried out scrupulously. We are going to be one of the countries that is best at meeting its deficit plan.”

“We have exhausted all the terms of negotiations with the Canadians over six years.”

“We will put our feelings of rage and animosity in our bones.”

“It seems they couldn’t resist “The right goal is not to cut the temptation to turn a our carbon emissions in half. simple one word slip-ofThe right goal is zero.”

Bill Gates, talking to Rolling Stone magazine the-tongue of mine into a about his investment in tackling energy issues. major political headline.”

Spanish prime minister, José Luis Rodriguez Zapatero, rules out an Irish-style rescue plan for Spain. The country has an unemployment rate of 20 percent and saw zero economic growth in the third quarter of 2010.

South Korea’s marine commander, Lieutenant General Yoo Nak Joon, who vowed a “thousandfold revenge” on North Korea. The Korean peninsula is locked in its worst crisis in decades, triggered by North Korea’s bombardment of the small border island, Yeonpyeong, killing two marines and two civilians.

Sultan bin Said Al Mansuri, minister of economy of the United Arab Emirates (UAE). The UAE, which currently has three flights a week to Toronto, had their request for daily flights denied by the Canadian government. The UAE then forced Canada to close a military base in Dubai, and denied a plane carrying the Canadian defence minister permission to use its airspace.

Sarah Palin condemns the media in a Facebook post for seizing on a gaffe she made on a radio show, when she suggested North Korea was an United States ally.

CARTOON CORNER

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“When you put a company in the hands of accountants, you will always get garbage out, because you are always doing sums on how to save money.”

Qatar Airways chief executive officer, Akbar Al Baker, after Boeing announced that it would revise the 787 Dreamliner’s schedule following a fire on a test version of the jet. The 787 is already almost three years behind schedule.

Gates, with a personal fortune of US$50 billion (QR181 billion), has invested millions in an array of efforts to halt global warming.

WEB WATCH

TheEdge’s guide to websites in the region and around the world of interest to the Qatar and Middle Eastern business community. www.qfba.edu.qa

What is it? The Qatar Finance and Business Academy is aimed at enhancing the knowledge base of the country’s business community, through both extensive training and shorter courses, and this easy to navigate website contains information on the QFBA. Why should you log on? Positioning itself not only as a Qatar institution, a mission statement of the QFBA is to strive not only to bring global relevance, but also serve as a networking platform, therefore any local businesses looking to improve their productivity would do well to investigate their site and offerings further.

www.i360institute.com

www.forbes.com

www.upstartnation.biz

www.kippreport.com

What is it? The brainchild of Kamal Hassan, Innovation 360 Institute “works with companies and government entities throughout the Middle East to bridge the gap between innovation strategy and execution”.

Why should you log on? This website contains a incredible depth of information in blogs, video blogs, case studies, insights and research data, etcetera, centered around the topics of innovation strategy, execution and leadership.

What is it? Upstart is a United States (US)-based website aimed at entrepreneurs between the ages of 20 and 40 years old and claims to focus on nurturing the “emerging leader”, in other words the CEOs and moguls of tomorrow.

Why should you log on? With the highly developed American entrepreneur spirit, this website contains scores of articles and blogs that might regardless be of interest to the Middle Eastern start-up entrepreneur or SME business owner, such as ‘How to Sell a Small Business’ and ‘How to lead like Oprah’.

What is it? Broken down into three regions – the US, Europe and Asia – this website is the central portal for all of the Forbes companies’ vast enterprises and describes itself as the “home page for the world’s business leaders”.

Why should you log on? The sheer volume of information on this website is staggering, from stocks and market news, to investment advice, sports news and political coverage; you name it, it seems to be on www.forbes.com What is it? Positioning itself as the Middle East’s only online business magazine – ostensibly as opposed to those that have print versions duplicated on the web – Kippreport contains a comprehensive overview of the region’s business environment.

Why should you log on? While hyper-local coverage is somewhat lacking on the site – case in point the Qatar page – Kippreport’s strength nevertheless lies in its extensive and information rich news and opinion, and the site maintains a level of objectivity arguably above that of many regional online media outlets.

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BURNING QUESTION

Q:

How will innovation play a role in your company in 2011?

SUBSEA CABLE OPERATIONS Ahmed Mekky Board Member & CEO Gulf Bridge International Innovation is critical for Gulf Bridge International (GBI). We thrive on innovation; we drive innovation and are driven by innovation. When we officially launch in 2011, we will facilitate innovation across the region benefiting consumers and businesses alike.

As a business, GBI is committed to creating an innovative business model. As the first carrier neutral regional submarine cable operator in the Gulf, we are promoting an open access approach, which will provide greater choice and flexibility to our customers.

All companies are impacted by the environment in which they operate and GBI is no exception. Innovation in domestic telecom regulations around the Gulf will drive demand for greater international bandwidth connectivity. New business sectors, such as financial services and media – that are investing in the region – require faster and more resilient communications links, and to address this need, GBI will invest in innovative technology which will enable us to quadruple the capacity of our network in the future.

GBI will facilitate the delivery of the content and applications for the innovative products and services that consumers use.

Two years ago, few people owned a smartphone, now they are increasingly common and the applications that have been created to run on these phones are bandwidth hungry. Data centres, which historically have resided in the United States are now looking to be establish regional presences. This innovative approach creates opportunities for GBI. In summary innovation is the lifeblood of our industry, we are creating new business models and investing in new technologies, which are facilitating greater innovation across the region.

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INFORMATION TECHNOLOGY Mohammad Hammoudi Country Manager Microsoft Qatar

Technology is a powerful engine of economic growth and competitiveness. By enabling innovation, technology can create new companies, industries, opportunities, and jobs.

In addition to its societal benefits, technologyled innovation is a fundamental driver of our business and is a core driver for Microsoft in Qatar. Microsoft was founded on innovation and we continue to rely on it to grow and strengthen our business.

Some of our recent products and solutions exemplify this innovation-led approach. For example, our latest smartphone, Windows’ Phone 7, breaks the current smartphone convention to help people quickly and easily find and consume information and services from the Internet and applications.

In such competitive times, there are greater expectations for rapid collaboration and knowledge-sharing on a global scale with employees, external business partners and customers across a variety of devices. Our innovation-led approach has driven us to develop a comprehensive cloud computing solution portfolio to benefit customers. This has enabled us to offer the strongest product line-up, which taps both the power of the cloud and the desktop.

At Microsoft we are not just about all work and ‘no play’. The fantastic response we received about our Kinect for Xbox 360 is another instance of our innovation-led approach.

In 2011, we will continue to further Microsoft’s mission of “helping people and businesses throughout the world realise their full potential”. We will be working hard to enhance and improve technologies to make IT accessible for our customers with innovation being a pivotal element to make all of this possible.

ENERGY AND RESOURCES Joseph Anis President GE Energy Middle East

Qatar is developing its infrastructure to support a knowledge-based, diversified economy and looking to meet its energy demands, while promoting sustainability. GE is committed to support Qatar achieve energy and water use efficiency with innovative solutions that will also promote environmental sustainability.

At GE, we view innovation as redefining what is possible. It drives the development of our products and services for the energy sector.

Our strategy is to support customers’ growth through delivering GE’s advanced energy technology solutions, and being closer to our customers through our 11 offices, 13 facilities and 1500-strong workforce in our Middle East Energy business.

On the power side, GE is working closely with customers in Qatar and around the region to deliver advanced technology solutions that are tailored to the region’s needs, and benefit from its available natural resources.

In our water business, GE is developing water management solutions, including wastewater reuse, to ensure that this precious resource is managed efficiently. This is in line with our global commitment to invest in cleaner technology, with an additional US$10 billion (QR36.3 billion) investment announced towards research and development by 2015.

We are committed to constantly evolving our technology and delivering innovative solutions – which can meet the region’s challenge of creating a sustainable energy future – while building on our 35-year successful heritage as a growth partner to Qatar.

IN MEMORIaM

GRAHAME MAHER Doha was stunned at the death last month of Vodafone Qatar’s CEO Grahame Maher, after a short illness. Rachel Morris looks at his legacy and the future of one of the country’s biggest brand names.

G

rahame Maher burst onto the Qatar telecommunications and business scene in his typical dynamic but unassuming style in 2008. Rarely seen wearing a traditional business suit, he was affectionately known by some in the media as “the man in the t-shirt”. Maher was an active sportsman and member of his adopted community, which soon embraced him back.

Maher headed Vodafone’s New Zealand operations in the 1990s and early 2000s, after joining Vodafone in Australia in 1996. Following his stint as head of Vodafone New Zealand, he returned to Australia in 2001 to take on the role of chief executive officer (CEO), before heading up Vodafone in Sweden and the Czech Republic, and then Vodafone Qatar.

A key figure in Vodafone’s international operations, Maher headed to Qatar in 2008 after the company and its partner, Qatar Foundation (QF), won the contentious auction for the second telecoms licence in the country.

When a partnership such as that of Vodafone and QF pay QR7.7 billion for the rights to operate a mobile phone network, the expectations are always going to be high, especially when it was openly stated that the company aimed to be the “number one brand in Qatar” within three years of launch.

But in his typical down-to-earth style, after a few bumpy patches, Maher won over the country and insiders speak of him being welcomed into majlis and into the inner sanctum of the business society in Doha, an honour few expatriate businessmen have experienced.

“He was not only well regarded as an astute businessman, people saw him as a friend, [and] there was a lot of respect for him as a person,” said one respected Qatar business figure.

While much has changed in Qatar, it was rare to hear someone of Maher’s standing talk openly about the effects of monopolies on customers and business practices. The company’s ‘Bye Bye Qtel, Hello Vodafone’ mantra ahead of their official launch in March 2009, which saw Vodafone staff tie their Qtel sim cards to balloons and symbolically ‘release’ them, unsurprisingly raised hackles in some sectors. This kind of stunt, put in context, was mild but unusual in Doha, and typical of Maher’s confidence.

In response to what it saw as negative campaigning, Qtel said, “Although Qtel has welcomed the new entrant, based on its support for the liberalisation of the communications sector for the benefit of the country and customers, the company was surprised at the statements and slogans made by the competitor. Qtel has pledged to avoid resorting to such tactics, which surprised and offended a large section of the community.”

In one of the last markets still dominated by one player, establsihing the Vodafone brand – even with the backing of QF – was always going to be an uphill task.

IN MEMORIaM

REST IN PEACE Nevertheless, in a sense, up until his passing, Vodafone Qatar was very much a reflection of Maher’s character. Each product launch had to be ‘different’ than the last, in keeping with the theme of “making a world of difference”, keeping the media, if not consumers, entertained.

In the interim, chief financial officer (CFO) and board member John Tombleson will be the acting chief executive of the company that is still reeling from the loss of its charismatic leader.

As acting CEO, Tombleson, a New Zealander, has 25 years of experience in the business and financial transformation sector and will lead Vodafone Qatar in the interim. In the next 12 months, Vodafone will have to deal with not only new leadership at the top, but also the commercial reality of operating a second telecoms license in Qatar.

On Tombleson’s team’s plate for 2011 is the hopeful resolution of the impasse over the entry of Virgin Mobile Qatar (VMQ) into the local market.

Vodafone and Maher were vocal opponents of the launch of VMQ, which ictQatar ruled in July 2010 had breached several sections of the Telecommunications Act. “We are taking legal action for the damages this has caused our shareholders,” said Vodafone Qatar chairman, HE Sheikh Abdulrahman bin Saoud Al Thani, earlier this year.

Also on the company’s agenda is growing its customer base. At the time of Vodafone’s entry into the market, Qatar was already a mature market, with a whopping 169 percent mobile penetration as of September this year, making growth potential difficult for an operator trying to add new subscribers.

Mid-2010, Vodafone Qatar reached the milestone of 600,000 subscribers, and is expected to have more than 750,000 by the end of 2011, thanks mainly to population growth and their targeting of the ‘pay-as-you-go’ market.

Vodafone Qatar initially launched their products by targeting the labour and service workers with generous free minutes and flexible payment plans, but is moving towards strategies to lure the ‘top end’ of the market, namely Qataris and expatriate professionals.

Vodafone already has a 22 percent share of the mobile customer market, with 37 percent of the population of Qatar now connected to Vodafone. The company has a 19.5 percent share of the mobile revenue market for the September quarter, and saw average revenue per user increase by seven percent to QR112 compared to the previous six-month period.

With a US$1 billion (QR3.6 billion) initial public offering in 2009, Vodafone Qatar’s share performance has been slightly disappointing, with its price down 3.5 per cent since the end of June this year, but

In his typical downto-earth style, after a couple of bumpy patches, Grahame Maher won over the Qatar business community, and insiders speak of him being welcomed into majlis and into the inner sanctum of the business society in Doha, an honour few expatriate businessmen have experienced. shareholders will be expecting a stronger performance in 2011 as the company moves beyond its brash ‘start-up’ status.

Grahame Maher’s death was and still is being mourned not just by his team members at Vodafone Qatar, but also by the wider Qatar business community.

He will be remembered as someone who literally changed the business landscape of Qatar. His loss is understandably especially keenly felt in the company in Qatar he built from scratch.

Only days before his passing, he led a Vodafone training seminar, typically throwing himself into the task.

“Grahame himself made a difference to the lives of everyone he touched,” the company said in a statement the day the shocking news was announced. “He was a great CEO, coach, mentor, and friend. We will all sorely miss his inspiration and vision, his passion and energy, and his love for all the people he worked with.”

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BUSINESS INSIGHT

Banking Sector

Banking on the Middle East As we enter into a qualitatively different phase of banking Kelly Lewis spoke with Doctor Reinhold Leichtfuss, senior partner and managing director for Boston Consulting Group (BGC) in Dubai, and leader of BCG’s Financial Institutions practice in the Middle East, to discuss the findings from the BCG Middle East Banking Performance Index.

Can you give an overview as to the revenues, profits and loan loss provisions for the Gulf Cooperation Council (GCC) and evaluate why some countries have fared better than others in 2009/10?

For many years, we have seen a very strong growth in revenues and profits in the Middle East. An exception to this was last year and in the first half of 2010, when we witnessed a period of slower growth, most definitely in revenues, and even a decline in profit. It appears as if we are more or less stagnating now in the revenues, which leads to our thesis that we are facing a new market reality and one of a slow growth environment, which will present new challenges for the banks. Overall we are still seeing a few differences between the countries... all the various countries [surveyed] had, in general, very strong roles and almost all of them over a five-year period witnessed double digit growth…Qatar actually recorded the highest with 22 percent. However, in 2010 it looks like we are clearly entering the pace of single digit growth. Still, Qatar continues with quite a high growth rate of around seven percent. With regards to profits, profits have become more stable in most countries, but in some countries profits have been declining, however, Qatar is still on a good upward trend.

Venturing into 2011, is there an air of optimism for Qatar and the broader GCC market in general?

Actually we see that in most of the countries a number of banks were able to reduce their loan loss provisions in the first half of 2010 as compared to the first half of 2009. This has been one major factors that has left people in the region optimistic and assuming that the worst of the crisis is behind us. Therefore, especially in those countries where we see the strongest gross

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domestic product (GDP) growth, we are indeed cautiously optimistic that things are getting better in the financial sector again.

The report highlights that operating expenses are decreasing in Kuwait, Bahrain and Oman, are stable in United Arab Emirates (UAE), but are increasing in KSA (Saudi Arabia) and Qatar.

What is escalating the operating costs in some countries as opposed to the countries that are witnessing a decline?

Quite a number of banks are working on the cost side of business…they want to get their operating expenses under control, especially in markets where continued growth is expected.

If you look at Bahrain, for example, where we see quite a decline, we do have a number… maybe the highest share of investment banks and they have had to re-structure quite a bit in the course of the financial crisis. Still, in Qatar, we expect to see continued high growth and banks are preparing to capture that market share. Additionally in Saudi, the government is spending quite a lot in large-scale projects and in infrastructure, therefore, banks will compete against each other to win these projects, which means there needs to be investment into such capabilities, which in turn will increase the operational costs. Ultimately this means that there will be some slight differences between the banks in the various countries.

Can you discuss why international banks’ revenues have recovered faster this year as compared to Middle Eastern banks, but yet still remain at a lower revenue and profit index level their Middle East counterparts?

We must be aware that Middle East banks performed much better during the global financial crisis and that overall, they have been

much less affected because they had lower, if at all, exposure to the derivatives markets, or to the United States (US) real estate markets.

Therefore, during the years 2007/08/09 Middle East banks continued to grow, whereas Western banks have been hit hard since 2007. Western banks are now recovering. For us, if we look at 2008 and 2009, it is not surprising that they are coming up strongly as this is the result of a much lower base index.

From the report, what trends have you identified for the GCC public and private banking sector?

On the one hand we are seeing slowing revenue growth, which is largely driven by reduced growth in finance, both in corporate banking as well as in retail banking. Keeping in mind that this growth has been extraordinarily high in the past especially in the years from 2003 to 2008 – it was very high and it could not continue like that. At the same time the profit pressure began, we also witnessed another large trend in the form of robust growth in loan loss provisions in line with strong credit growth. Additionally, comparing the various markets, this is not surprising after periods of strong loan growth as you always experience, at some point in time, increasing loan loss provisions. I think even when we look to the future, it is becoming more interesting because we are now entering into a phase of a slow growth environment – overall, slow in this region still means single digit growth, which maybe higher than in most mature markets.

Therefore, we may witness single digit growth rates in the range from five to 10 percent, which is quite a decline compared to past years, but still higher than in mature markets like Europe or the United States. What this means for banks is that the intensity of the

BUSINESS INSIGHT

competition will increase quite significantly because in the past when markets were growing strongly, every bank could more or less grow with the tide, but in a slow growth market, banks have to fight much stronger for market share because if they want to grow over proportionately, they have to steal market share from their competitors.

The report finds that revenues and profits remained relatively stable for banks in KSA, while banks in the UAE and Oman experienced a decline in profits, and banks in Kuwait, Qatar and Bahrain increased their profits. Can you discuss the reason for the contrasting figures between countries and banks?

Actually this has always to do with where the banks are coming from and how the developments were in previous years. For example, in Saudi we must be aware that the financial sector had achieved very high profits especially in 2006 when there was the ‘brokerage boom’. Since then, profits have basically remained more or less stable, with maybe a slight decline as Saudi had reached such profits in 2006 already. Additionally, in the UAE, profits kept growing until 2008... Kuwait on the other hand experienced revenue growth until 2007 followed by a sharp decline in 2008, which was largely driven by one or two banks. Kuwait is now coming again back from a pretty low level in the past two years. Meanwhile, the most stable development we are seeing is in Qatar.

This is being driven by the plentiful resources of the country and in the past few years we have been witnessing a continuous increase in profits.

While the industry is recovering steadily from the economic crisis, the times of strong growth in the region are over. In a slow growth environment what are the competitive advantages that are required to succeed?

Banks have to become better at sharpening their capabilities and their positioning. It starts with competitive positioning in the markets.

Most banks traditionally have tried to deliver everything to everyone through intensified competition. More and more we are seeing it a necessity that banks communicate to their customers convincingly why they should bank with their bank and not with other competitor banks. Additionally, to fully win-over customers, banks must be superior to their competitors by exercising spirited sales power and a paramount service culture. However, banks need to consider their cost position and the cost position is very much driven by the quality of processes. Quite

“Once you enter a slower growth environment, banks have to think more intensively about their option of mergers and acquisitions, rather than just their organic role if they want to increase shareholder value.” a number of banks are already entering into projects and programmes on how they can increase their productivity and improve their overall processes end-to-end.

As the GCC banking sector remains an overcrowded market, will we likely see merger and acquisition (M&A) activity and alternative revenue streams as playing are larger role?

We have observed that in many markets globally, once you are entering a slower growth environment, banks have to think more intensively about their option of M&A rather than just their organic role if they want to increase shareholder value. Therefore, we think that over the next three to five years we will see intensified M&A activity in Middle Eastern countries.

As pressure on revenue pools will endure, it is inevitable that further cost reduction measures will be unavoidable. Where do you anticipate to see bulk of the cost reduction measures carried out?

I think it will be across most cost categories.

Let’s consider the productivity of labour in the Middle East banks…for example, more can be done with the same number of employees in most of the regional banks, which would increase cost efficiency. Assuming there is a growing asset stock and growing revenues, even at lower staffing levels, this would increase productivity for banking operations, which would ultimately be visible in both in the front and back office as well as in the corporate centre.

Should the GCC revisit the mission of public banks to emphasise their catalytic and countercyclical leveraging capacity?

Overall I am not so sure as to what extent they act counter cyclically. We hear of this discussion taking place in a number of countries – be it in the area of granting more loans, rethinking performance during a downturn as well as employment levels to act counter cyclically. Actually…partially banks are doing that and at the same time we think that

banks always have to act economically. So in many countries we are observing, as well as in the Middle East, that banks should grant more loans, this is right on the one hand, but on the other banks have to look at risks very carefully – they can’t just make provisions on loans because somebody is demanding them…they can’t run open-eyed into losses two years after that. However, as economic entities they have to act very carefully at the same time when granting loans.

On another note, we are also seeing a few public banks that are quite actively pursuing new loan growth and granting more loans than they did in the past, and by that also contributing to the economy.

In the wake of the financial crisis, many government and regulatory bodies globally have sought after solutions to address lessons learned in order to create a more robust, risk-aware financial sector. How are the resulting changes in both the structure and requirements of regulatory supervision playing out in the GCC banking sector, and what will the impact likely be on stakeholders?

Well, the most visible and the important measures are certainly in the area of the minimum capital requirement. Actually, it may have also been that quite a number of banks were going through the capital markets in order to collect more capital to weather the economic storm better because requirements will be higher in the future. The Middle East banks in comparison always have quite a good capital-toadequacy ratio, whereas most of the European banks or American banks where capital-toadequacy ratio is around 10 percent, many Middle East banks had 12, 14 or even 16 or more percent, so overall they had a higher cushion, but nevertheless few will also need more capital.

In addition, the conditions to do derivatives business, etcetera will also be changed, but that will affect Middle Eastern banks to a somewhat lower degree because they have not been as engaged into these business areas as most global banks have been in the past.

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BUSINESS INSIGHT

Private Investment

Private equity power The private equity (PE) industry in the region has grown at an unprecedented rate in recent years. However, on a global scale PE remains a relatively young and small asset class in the Middle East. Kelly Lewis spoke one-on-one with Ahmed Youssef, a partner with Booz and Company (B&C) Middle East, to discuss the company’s recent report Global Private Equity Initiative and to establish how PE in the Middle East is a growing contender in emerging markets.

How many PE funds are there in the Gulf Cooperation Council (GCC) region and which counties have raised the most capital through their PE funds in the region to date?

As of June 2010, there were 140 registered PE firms in the region. Typically the PE funds were raised to target the GCC and the broader Middle East North Africa (MENA) region, so you cannot really separate them in terms of countries. But, if you are talking about the source of capital that is a different story…the source of capital is something that is definitely not published, but I would assume the largest contributor is probably Saudi Arabia in terms of where the capital is coming from, given simply the sheer size and the country’s gross domestic product (GDP).

How much does the PE industry contribute to the GCC financial sector annually?

It depends how you count contribution, typically you look at the contribution as funds raised and investments. Therefore, if you consider, for example, PE activities as a percentage of GDP it is very low. If you look at the investments as a percentage of total GDP in GCC countries it probably ranges from 0.2 to 0.3 percent as a maximum. The percentage of total GDP to GCC countries is quite low if you compare it to say the United States (US) and some European countries where the contribution is actually between two to three percent and sometimes more in active years.

Therefore, contribution has been very limited over the past few years and much less so in 2009, and of course for 2010, where we have not seen a lot of transactions.

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Are you seeing PE transactions starting to increase and recover now?

Definitely, I think we are going to see transactions increase going forward and we are already starting to see it in the market now.

I think in 2011 and 2012 we will see more and more transactions due to several reasons. One reason is that there is capital, sometimes the PE firms have the capital to invest, at least the ones that still have good relation with the investors. The second reason is due to the fact that PE capital is becoming more attractive for sellers, previously PE capital was either already in abundance in a business, or companies would approach the banks where capital was abundant and cheap. Now that capital is expensive and scarce with the banks, it is much more challenging to get a loan and it puts more strain on a business’s cash flow. Equity capital becomes more attractive and hence PE capital becomes more attractive, and then finally there are good businesses in the region and the long-term fundamentals of the region are good. There is a growing wealthy population, there is a lot of infrastructure spending, which is creating the need for companies to continue to grow and in turn requires capital. Therefore, the future for PE capital buying and for PE banks looks bright.

What are the key differences in the way that PE funds operate in the GCC as opposed to PE funds in Europe or the West?

Firstly there are some structural differences in the way many of the PE firms in the region have been established…this is more a technical matter, but still an important one. Various PE firms have been setup more like investment companies and hence, they do not have

close-ended funds and debt is taken at the investment company level, therefore, there is no real clear timeline for exits. But in general, PE investing in the region is very similar in terms of what PE firms do globally. However, in some cases it is different, for example, one of the differences within this region is in the ability to get a controlling share in the business, so here most of the sellers are family businesses and many times these family businesses do not want to be controlled.

Secondly, the use of leverage, I think here, unlike in many Western markets where you can utilise the leverage capacity and where there are developed financial institutions, you cannot really take as much leverage, and typically regional countries tend not to take as much leverage as they do internationally on their operating companies. Thirdly, it is the level of transparency of the markets. In Europe, for example, there is available and transparent information about the state of the market and about companies operating in the market, whereas here there really is no transparent information made readily available.

Without transparent information is makes the due diligence process definitely more expensive and of course it exposes a business to more risk. Additionally, another challenge exists in the availability of good management.

Typically, once PE comes into a business in the West they have a tendency to push the management team very hard, they try to squeeze the management team and if they do not perform they change them. Here it is not as easy to change a management team, the human capital market regionally is not that fluid and it is not as developed.

BUSINESS INSIGHT

To what extent do the gaps in the region’s legal and regulatory frameworks, and the difficulty in obtaining transparent economic data, hold back the development of the region’s PE firms?

There are two parts to this, the transparency in general, which is not always the fact that you cannot get transparent transactions, but it is more so a question of does transparency exist? Many of the private companies that operate in the region do not necessarily have very developed financial systems to be able to provide the most accurate, and the most up-to-date financials. But in general, in regard to the overall regulatory framework, I think the GCC has come a long way and I don’t think that the regulatory legal framework could have been established any faster. We have to give credit to the GCC countries for that, but at the same time there are still areas, particularly in regard to ownership rights and the various ownership levels, which can be further improved in a bid to develop the PE environment. For example, if there is a legal dispute to be settled or an agreement to be enforced, in some GCC countries it could take years to be able to resolve such an agreement. This is detrimental for a PE firm, which has a close-ended fund and wants to exit the business within a certain period of time. Therefore, the issue of how disputes are managed is an important one.

Another issue is bankruptcy, having a clear and fast bankruptcy process, which enables PE firms, in the case where they face risky exposure to companies that have not performed well, to be able to liquidate assets and to recoup some of their returns.

Which sectors have been identified as the largest growth areas for PE in the region?

PE firms have to consider more the long-term fundamentals. One fallacy that various PE firms had conviction in was that they invested in short-terms sectors in the past few years. However, looking forward there are a few obvious fundamental themes that will come into effect such as a growing, wealthier population, which will in turn translate into new demand for consumer services across multiple sectors. Another theme, which is more driven by government spending on infrastructure and development, is the demand for services and materials.

However, the danger here is not to enter into too many cyclical types of services, but rather

“Many of the private companies that operate in the region do not necessarily have very developed financial systems to be able to provide the most accurate, and the most up-to-date financials. But in general, in regard to the overall regulatory framework, I think the GCC has come a long way…” develop bespoke services such as specialised building and construction materials, and more operation and maintenance services for large infrastructure and developments requirements – these are areas where PE firms can continue to look at moving forward.

How has PE activity changed in the Middle East in light of the economic downturn?

It has changed, but I do not think it is just because of the economic downturn. In the period of 2007/08, there was a frenzy where we witnessed a lot of fund raising for PE funds, which was happening irrespective of how the markets were performing – this produced an oversupply of funds compared to the size of the market demand. So the economic downturn resulted in the clean up of a lot of these oversubscribed funds. However, that’s the negative take, but overall the positive outcome from the downturn has been in the grounding of both investors’ and sellers’ expectations, which have been draw closer together if you like in regard to being able to make deals happen.

Sellers expected perpetual growth, looked at the multiples in the equity market and then expected very high valuation. The buyers on the other hand, were seeking low valuation because they expected also very high returns. So now the sellers are expecting much lower valuation and the buyers are actually expecting more reasonable returns. So the gap between them has shrunk, therefore, we are hopefully going to see more transactions, which will revive the PE markets moving forward.

Prior to the economic downturn in the region, Gulf Investment House said fundraising activities were at their peak estimating that between 2005 and 2008 US$20 billion was raised by Middle East funds. However, more than half of that has not been invested and constitutes around US$11 billion in ‘dry power’.

What impact could this un-invested capital have on the market?

The uninvested capital is a bit misleading in a way because investors have committed, but not all of it has been called. Therefore, investors might relinquish on their commitment. But let us assume they do not, this availability of capital could place pressure on PE firms to invest very quickly over the next two to three years, which might actually lead to an increase in PE activity and hopefully not result in a rise in valuation, and in increased competition between PE firms.

The report finds that in 2009 there were around 40,000 high net worth individuals (HNWI) in the Middle East and that their wealth shrunk from a peak of US$1.7 trillion in 2007 to US$1.4 trillion in 2008, recovering to US$1.5 trillion in 2009. In the GCC, Qatar featured among the five countries whose wealthy were worst affected by the downturn. Why did the HNWI in Qatar suffer greater than many other GCC countries?

Actually it depends, any economy, regardless of Qatar or not, that has been very small by itself and then is exposed to a lot of international investment has probably been affected the most. Let’s compare investing in the local GCC markets where the financial impact has been less as compared to investing in international markets, therefore, you are likely to be impacted more if you are more exposed to international markets…Qatar by nature is a smaller economy and it is smaller in terms of its concentration of HNWI and hence, a lot of the investments have most likely been directed outwards.

So there were not any specific trends that were happening with those HNWI in Qatar?

No. It has more so been is the simple factor that GCC economies were impacted less than foreign economies, but HNWI that invested abroad suffered a greater financial impact as a result…we found that while Qatar has a lot of domestic wealth, the options for investment were limited and, therefore, HNWI chose to invest abroad and were also ultimately exposed to more risk.

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changING Customer Service Customers can help shape an organisation, therefore there is nothing more important for a company than for it to understand the true value of its customers. Many entrepreneurs say cash is king, but it would be more accurate to say customers that bring cash are king.

Customer service has often been described as “the provision of service to customers before, during and after a purchase”. The phrase is often looked at as one word, yet it is only when the words ‘customer’ and ‘service’ are linked together in the mind that it brings any real meaning, one greater than the sum of its parts.

The world has changed drastically of late. Falling oil and real estate prices and tightened credit have created shock and uncertainty among the public and organisations alike. Now more than ever, companies need to deliver customercentricity and focus on their needs and wants. We have experienced the most challenging operating environments in the region in more than 30 years and as a result, customers have become immeasurably significant, arguably like never before.

“Standard Chartered’s new brand promise called Here for good is about the bank’s commitment to its customers and people”

A company’s success eventually depends on how it generates and offers a superior level of service. Time and again, it has been proved that retaining an existing customer is always more profitable than creating a new one and it is now clearly understood that it is much more costly to establish business with an unknown potential client.

As customer requirements keep changing and become more sophisticated, there is a need for companies to adapt and pursue their customers in order to retain the opportunity to serve them on an ongoing basis. If a company fails to serve the customer to their satisfaction in a competitive environment, the customer will shop elsewhere. Simply put, customer service is about satisfying the ever-changing expectations of the customer in order to keep their loyalty. This is where adaptation comes in to play and why research must be a continuous part of the business cycle, so companies can continuously learn this changing behaviour and attitudes of customers, and act quickly to outperform their competition.

A company’s success eventually depends on how it generates and offers

a superior level of service to its customers beyond what is offered by the competition.

Time and again, it has been proved that retaining an existing customer is always more profitable than creating a new one and it is now clearly understood that it is much more costly to establish business with an unknown potential client.

of customers first. This is an expensive short-term endeavour but works out in the end to be more beneficial for an organisation.

Customer loyalty is attained through long-term partnerships solidified over time and this is important for all organisations.

Understanding customers’ needs and anticipating what is required will give a company a competitive edge and allow them to stay ahead.

Many of the most successful companies, including Standard Chartered Bank and Toyota, have survived local and global downturns because we kept changing product offerings and strategies according to customers’ changing needs.

It is important to make customers feel different and feel appreciated and this can always be done through customer service or through offering some unexpected services or features. It is about providing what no one else does and offering a level of service, which exceeds the needs of customers. The day of product focus has all but been outpaced by customer focus and putting the needs

Change is inevitable and is bound to happen as time passes by. It is up to companies to decide how to adapt to the changing trends of customers in order to sustain themselves in this ever-changing business environment.

There are no guidelines for a business to remain successful and customers ultimately determine success. The larger the target market, the more a business should grow. It is for this reason that companies should use customer service as a unique tool to win over customers and steal market share from the competition.

Failing to meet customers’ needs and wants will most certainly ensure a company’s downfall.

By Haya Mashhood

sustainability agenda in country, while liaising with external analysts and the media.

She joined Standard Chartered Bank in 2006. Before her appointment, Mashhood gained nearly a decade of experience with another international bank, holding various positions within personal financial services, customer relations, service quality and corporate affairs.

Haya Mashhood Head of Corporate Affairs

Mashhood is currently studying for her MBA degree specialising in human resource management.

About the Author: Haya Mashhood was appointed Head of Corporate Affairs for Standard Chartered Qatar in July 2008. Before this appointment, she was the Head of Shared Distribution for the Consumer Bank at Standard Chartered.

Standard Chartered Bank Doha State of Qatar

Mashhood’s key responsibilities include internal and external communications, shaping the strategy for the bank’s

Address: Standard Chartered Bank Abdullah Bin Jassim Street PO BOX 29, Doha, Qatar.

Phone: +974 44248450 Fax: +974 44248110 Email: Haya.Mashhood@sc.com

The world has changed, now more than ever we need to deliver customer centricity and focus on the needs and wants of our customers as we have experienced the most challenging operating environments in the region in over 30 years.

Opinion

Solving global

century challenges in the

By Matthias Catón

M

any of the world’s challenges, such as climate change, trade liberalisation and development, seem stuck in inadequate international institutions. However, we can solve them if we focus on people rather than states, and expand our understanding of international relations to be truly multidimensional by including business and non-governmental organisations in the equation.

The world is facing a substantive number of challenges. An agreement on how to stop

climate change seems far off, despite no shortage of international meetings. The next Conference of Parties (COP) of the United Nations (UN) Framework Convention on Climate Change will take place this month and it remains to be seen whether it will yield more results than the last meeting in Copenhagen in 2009, which raised hopes, but failed to deliver.

Meanwhile, bickering over trade imbalances and currency interventions continues. The positions are clear: the United States (US) wants countries with a large

surplus to reduce it and accuses China of artificially keeping its currency, the renminbi, low. China and other surplus countries, including Japan and Germany, oppose the idea of an international framework.

The Millennium Development Goals were adopted with much fanfare by the UN Millennium Summit in 2000 and were hailed as a great achievement of the international community: A firm commitment towards the developing world to enhance living conditions around eight specific, measurable goals.

However, four years before the 2015 target

Opinion

year, progress on many fronts looks bad, particularly in Sub-Saharan Africa.

And the list goes on. The international community is unable to solve the problem of a potentially nuclear-armed Iran and nuclear proliferation in general, the conflict between Israelis and Palestinians lingers on, the critical overfishing of the seas and other global challenges remain unresolved.

AN INADEQUATE FRAMEWORK OF INSTITUTIONS A great part of this inability is due to inadequate institutional arrangements. This is most obvious with the UN. The Security Council with its five permanent members – US, France, United Kingdom, Russia and China – reflects the geopolitical reality after World War II, not that of the 21st century.

Similarly, voting rights in the Board of Governors of the International Monetary Fund (IMF) gives Western countries an advantage at the expense of emerging countriest.

Yet, the problem is not just about outdated institutional arrangements. The G-20 was created as a new informal body to overcome shortcomings of other institutions that were either too exclusive, such as the G8 group of leading economies, or too unwieldy such as the UN General Assembly.

Yet, with the exception of a few agreements in 2009 in the middle of the financial crisis, the group did not make concrete progress on any issue, except for some fairly vague declarations of intent.

FOCUSING ON PEOPLE By solving global challenges, we are trying to improve the conditions of life for billions of people and to ensure the future of humanity. It is about people, but most of the discussion is about states.

This is where the concept of human security comes into play. Human security focuses on the human being and aims to protect it from vaious threats.

It was defined in the 1994 UN Development Programme Human Development Report as “freedom from fear” and “freedom from want”. The report defined seven dimensions of human security: Economic, food, health, environmental, personal, community and political security.

Critics have argued that this is too broad a definition to be useful, and that human security should deal with protecting populations from

direct physical violence only, such as genocide, ethnic cleansing and war crimes.

This is the narrower idea behind the “responsibility to protect”, an international norm that was triggered by the genocide in Rwanda in 1994. It stipulates that states have a responsibility to protect its citizens from violence and that the international community is obliged to assist countries in doing so and ultimately intervene if a country fails to provide protection.

Canada, for example, is an advocate of this narrower concept, whereas Japan – which is traditionally much more reluctant to talk about military intervention – sees the broader concept of human security as a pillar of its foreign policy.

Ultimately, though, the usefulness of a concept is determined by the question of whether it contributes to the solution of a problem. To remind you, the problem is an increasing amount of global challenges – problems that no single country can solve on its own – against the backdrop of inadequate institutions and mechanisms of international cooperation.

THE GLOBAL REDESIGN INITIATIVE Over the past 18 months the World Economic Forum (WEF) has embarked on an ambitious undertaking, the Global Redesign Initiative. We reached out to global leaders from business, governments, international organisations, academia and society, and asked them how they would reform the global cooperation system to help solve the challenges outlined above and others. Some 1500 experts participated in this endeavour, resulting in 58 concrete proposals across nine thematic areas from economic issues to security, development and the environment.

The proposals address issues as diverse as how to protect the world’s oceans and how to give incentives to private enterprise for investing in clean-energy products. What many of them have in common is that they go beyond traditional international relations. It is no longer just the sovereign state that is a legitimate actor – business and non-governmental organisations have a crucial role to play, too.

MULTIDIMENSIONAL GLOBAL COOPERATION Richard Samans, Klaus Schwab and Mark Malloch-Brown from the WEF have identified four building blocks for a reformed, extended system of truly multidimensional international cooperation: (1) High-level political commitments and objectives, such as the UN Millennium Development Goals; (2) Multilateral legal

frameworks and institutions, such as the Nuclear Non-Proliferation Treaty; (3) plurilateral coalitions involving different groups of stakeholders, both public and private; and (4) information metrics to assist with prioritisation and decision making. An example for the latter is the Intergovernmental Panel on Climate Change (IPCC), a body of international experts set up by the UN to provide independent, reliable information about climate change. The IPCC’s role was recognised with the Nobel Peace Prize in 2007.

While international cooperation needs to be improved in all of these four dimensions, plurilateral coalitions are the least developed.

This is where most progress can be made.

Having smaller groups of countries move ahead on a specific issue with the help and active involvement of other actors, such as business and non-governmental organisations, can help unblock stalled processes. The Global Redesign Initiative has a number of proposals that would enhance human wellbeing and human security through this kind of arrangement.

For example, ‘Sustainable Energy Free Trade Areas’ (SEFTAs) would create special free-trade areas for clean energy products and thereby give incentives to business to invest by offering a larger, easy to reach market. The ‘New Humanitarian Business Model’ would bring business, governments and community organisations together to provide assistance to countries in emergency situations.

The ‘Global Civilian Nuclear Fuel Cycle Partnership’ would be a global public-private partnership to manage the civilian nuclear fuel cycle as a means of reducing the risk of nuclear weapons proliferation.

We have a good chance to solve the key global challenges that we are confronted with today. But to do so we need to move away from the traditional, state-centred concept of international cooperation. A focus on human beings through the lens of human security and a new perspective through multidimensional international cooperation, which includes nonstate actors in the equation, will help break the deadlock that we are currently facing.

Doctor Matthias Catón is associate director for the Global Redesign Initiative at the WEF in Geneva. He is writing in a personal capacity and the views expressed in this editorial do not necessarily reflect those of the WEF and its members. Catón can be contacted at matthias.caton@weforum.org or through his website at http://www.caton.de TheEDGE

27

THINKER’S CORNER

YOUNG ARABS’

MINDSET AND ACCESS SCORES DRIVEN MORE

BY ECONOMY THAN GENDER

by Sofia Kluch and Jessica Stutzman Since 2007, Silatech has aimed to address the main challenges facing young Arabs in their entry into the labour market. Its efforts are organised across three pillars: Access, Mindset, and Policy.

The Mindset axis aims to improve society’s recognition of and support for young people’s contributions to society’s economic and social capital. Towards this end, the Mindset Index measures the perceptions of young Arabs and the general public across the Arab world that relate to Silatech’s Mindset axis.

Across the Arab League, when young Arabs aged 15 to 29 years are surveyed, the same variables drive Silatech Mindset scores for young men and women.

When education levels are high (in other words, some secondary and post-secondary education) and a country’s economic conditions are positive, the factors boosting the Mindset scores are nearly identical for both young men and women. However, within middle- and low-gross domestic product (GDP) countries in the region, differences in the factors that impact young men and women’s Index scores become readily apparent.

To compare Silatech Index scores across countries, Gallup grouped countries into categories according to 2010 estimates of GDP per capita provided by the International Monetary Fund (IMF). Countries fall in one of three GDP categories: high GDP (GDP per capita of at least US$23,000, or QR83,000), middle

MINDSET High-GDP country Middle-GDP country Low-GDP country GDP (GDP per capita ranges from US$2600 to US$23,000, or QR9400 to less than QR83,000), and low GDP (GDP per capita of less than US$2,600, or QR9400).

In the high-GDP group, 90 percent of young men and 93 percent of young women agree that boys and girls should have equal access to education. Taking a closer look at middle- and low-GDP countries, however, it is only among young women that equal access to education is a predictor of higher Mindset scores. While the region has succeeded at narrowing the gender gap in enrollment at all levels of education, there is still ample room for improvement in some countries in the quality of education received.

Given that equal access to education is a predictor of higher Mindset scores for women, one could theorise that awareness of job-hunting services and organisations might similarly positively affect Access Index scores.

Silatech has focused its efforts along the Access pillar aiming to improve young people’s access to demand-driven and market-oriented skills training and job placement services, and to improve micro-,

Young Men

Young Women

61 70 60 61

61 72 60 62

small-, and medium-sized enterprises’ access to capital, business development services, and markets. Young women across all income and education groups are less likely than young men to be aware of such job-hunting services or organisations.

This awareness, or lack thereof, could foreshadow barriers for women aiming to enter the job market.

Overall, countries within the Arab League have some of the lowest female labour-force participation rates in the world, coupled with high unemployment rates among young people and women in general.

Though several factors explain labourforce participation differences across genders in this area, it is clear that young women lack awareness of job-seeking resources more so than their male counterparts. Challenging economic conditions all but erase the gender gap in the low-GDP country group, where awareness of such services is lowest. Fifteen percent of young men and just 10 percent of young women are aware of job-seeking services, compared with 39 percent of young men and 24 percent of young women in highGDP countries.

THINKER’S CORNER

100% 90% 80%

Yes, Aware No, Not Aware

60%

74%

60%

64%

84%

88%

39%

24%

37%

32%

15%

10%

70% 60% 50% 40% 30% 20% 10% 0%

High-GDP countries men

High-GDP countries women

It is worth noting that young women with higher levels of education are more likely to score higher on the Access Index if they are also aware of job-hunting services and organisations.

Looking ahead In the face of conventional wisdom, it is not gender, but economic conditions that predict whether young men and women in the region have similar Mindset and Access scores. It is only when examining middle- and low-GDP countries that differences in these scores and predictors are found.

To move forward and raise scores, particular attention must be paid to the importance of equal access to educational opportunities for both genders.

To increase Mindset scores, having equal access to education is paramount, especially for women in middle- and low-GDP countries.

In addition, organisations and support networks addressing the needs of young people in the region should focus their efforts on increasing awareness about job-seeking resources among all young people.

Ultimately, the findings indicate that the keys to increasing scores on the Mindset and Access Indexes are based on having a strong economic foundation on which to grow, as seen in the high-GDP countries. Countries in the Arab League can make progress toward that goal by emphasising the importance of equal education for both genders, and increasing awareness of job-seeking services and organisations, particularly among young women.

Middle-GDP countries men

Middle-GDP countries women

Low-GDP countries men

Low-GDP countries women

MINDSET INDEX SCORES High-GDP countries Qatar UAE Kuwait Saudi Arabia Bahrain

Middle-GDP countries 83* 79 77 70 69

*Index score from 2009

Algeria Tunisia Syria Jordan Morocco Libya Lebanon Egypt Iraq

Low-GDP countries 69 68 66 65 63 61 60 55 45

Djibouti Somaliland (region) Sudan Mauritania Yemen Palestinian Territories Comoros

73* 69 66 65 53 52 50

ACCESS INDEX SCORES High-GDP countries UAE Qatar Kuwait Saudi Arabia Bahrain *Index score from 2009

Middle-GDP countries 68 67* 66 59 53

Tunisia Algeria Morocco Jordan Syria Iraq Libya Lebanon Egypt

Low-GDP countries 49 44 38 35 34 26 25 24 22

Djibouti Somaliland (region) Sudan Mauritania Palestinian Territories Comoros Yemen

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52* 51 41 32 28 25 19

29

IN THE SPOTLIGHT

the unconventional age What was once unconventional gas is becoming increasingly conventional due to huge advances in extraction technology. As a result, the global energy landscape is changing drastically. Jamie Stewart questions what the role of Qatar will be in the new hydrocarbon economy.

T

he Anadarko Basin is a 130,000-square-kilometre (km²) geological feature that straddles the southern states of the United States (US). Prior to 1978, natural gas that was known to lurk deep underground in the basin remained untouched.

It was not purely a long-term strategic decision to leave such a huge reserve underground. Successful extraction of the fuel would have resulted in a considerable income stream for both the individual states and the nation as a whole. But the technology simply did not exist to force such an extraction at a cost-effective price. The industry had not evolved far enough to take such a step, and the incentives were not in place to encourage the breakthrough.

The reserves were, at the time, what we have come today to label ‘unconventional natural gas’. However, post-1978, the landscape, both from a metaphorical market perspective and the literal Anadarko Basin perspective, began to change.

The development of energy-bill regulations and the introduction of the US Natural Gas Policy Act, provided the economic spark that the industry needed to search for and extract unconventional sources of natural gas.

Previously unseen levels of investment into deep exploration and drilling materialised, and the first shipments of gas from within the Anadarko Basin made it to the market.

Today, the energy landscape looks remarkably different. The continued development of unconventional gas extraction techniques has already had a huge impact on the global market – including in Qatar, which sits on the world’s third most generous gas reserves behind Russia

and Iran – with the gradual development of a supply glut. And the impact is set to be considerably greater in the years ahead.

According the International Energy Agency (IEA), the glut of global gas supply capacity is forecast to exceed 200 billion cubic metres (Gm³) next year, and persist for longer than previously forecast.

“We expect the global gas glut to peak sometime soon, but we think the glut itself will continue for around 10 years,” said IEA chief economist, Fatih Birol, speaking at last month’s launch of the consumer nation watchdog’s long-term World Energy Outlook (WEO).

The IEA report contained three potential roads down which global climate change legislation may progress, each more stringent in terms of carbon reduction than the previous. The impact of the overhang, which Birol attributed to a surge in US unconventional gas production and LNG capacity, is such that gas is the only fossil fuel for which demand is projected to be higher in 2035 than in 2008 in all three of the IEA’s climate-change legislation assumptions.

But not all within the industry would agree. Qatar energy minister, Abdulla Al Attiyah has suggested that the glut could end as early as 2013 – which would be great news, of course, for Qatar.

Global competition Qatar has, over the previous decade, pumped billions of riyals into its natural gas industry, becoming in the process the world’s foremost producer and exporter of liquefied natural gas (LNG) – natural gas that has been converted into liquid form. The sector has for some years been the driving force, the engine room, behind the Qatari economy.

The collapse in oil prices in late 2008 and the financial crisis cut the country’s budget surplus and slowed the rate of investment and development projects in 2009, as was the case in

The arrival on the energy scene of unconventional gas could prove more of a threat to Qatar’s growth than the financial crisis did.

IN THE SPOTLIGHT

almost every industrialised nation that year.

But gross domestic product (GDP) growth in Qatar still registered over nine percent for the year, thanks to the ability of the government to protect the banking sector via the overflowing income from LNG exports.

But the arrival on the energy scene of unconventional gas could prove even more of a threat to Qatar’s growth and long-term economic diversification plans than the financial crisis did.

The country continued to invest in its LNG infrastructure, albeit at a reduced rate in 2009, and state-owned giant QatarGas is hoping to begin production from its LNG Train 6 before the end of this year, and from its Train 7 by early next year. But will these shiny new facilities be utilised to their full capacity?

The development of recovery techniques of unconventional gas has moved at such a pace since the late-1970s, that what was unconventional is no longer classed so.

Economic factors, alongside technological ones, play a role in determining what is considered ‘unconventional’. The Natural Gas Supply Association class unconventional gas into sub-categories: deep gas, tight gas, gas-containing shales, coal-bed methane, geopressurised zones, and Arctic and sub-sea hydrates – six types of unconventional gas that have the potential to depress Qatari hydrocarbon export plans for some time to come.

Add to this the gradual increase in competition in the conventional gas sector, and the potential supply glut increases in severity.

Last month, Australia granted energy major, Shell, environmental approval to install a floating LNG plant that will, in effect, become the world’s largest shipping vessel. The Prelude, as the 600,000-tonne vessel is named, will be stationed off the north-west coast of the country.

The Prelude Project is an LNG breakthrough of a different kind. It plans to be the first offshore gas field to process gas at the site of the field itself, rather than piping the gas hundreds of kilometres to shore.

Shell Australia country chair, Ann Pickard, explains that the technology “removes the need for offshore compression platforms, long pipelines to shore, nearshore works such as dredging and jetty construction, and onshore development such as building roads, laydown areas and accommodation facilities”.

Gas will be the only fossil fuel for which demand will greater in 2035 than in 2008.

The project is now in the front-end engineering and design phase of development, and Shell hopes to produce 3.6 million tonnes per annum (mtpa) of LNG. This remains only 46 percent of the 7.8mtpa capacity of QatarGas’s Train 6, but the Shell investment will nonetheless contribute to any growing supply glut.

Diplomatic tightrope If there is one aspect of foreign policy that Qatar appears to have down to a fine art, particularly when comparisons are made with the rest of the Middle East region, it is that of diplomacy. The strength of Qatar’s bilateral relations far outshines those of the other states across the region in many areas.

For example, it has long been necessary for the Qatari government to tread perhaps the world’s most perilous diplomatic tightrope: that between the US, which controls its military operations from the Al Udeid air base in Qatar; and Iran, with which Qatar shares its single most valuable natural

Shell’s 600,000-tonne Prelude, the floating LNG plant stationed off the north-west coast of Australia, is just one of the projects changing the global energy landscape. (Shell)

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31

IN THE SPOTLIGHT

It is hoped that energy demand centred in Beijing, China, will soon offset any global LNG supply glut. (Getty)

Gas will play an important role in the European energy mix for some time to come. resource, the world’s largest undersea gas field.

Qatar’s foreign policy is one of complexity, based around ensuring the security of its natural resources, with the overt approach being to keep potential trouble well beyond the horizon. This policy should stand the nation in good stead in the years to come.

Despite the uncertainty around the depth of the gas glut, there remains a chance that relations will become strained between Doha and its rival LNG suppliers, particularly in light of the fact that Qatar, as a state, remains so heavily reliant on its gas export industry.

However, there are signs that the potentiallystrained situation is easing. In 2009, official figures show that the non-hydrocarbon sector in Qatar overtook the hydrocarbon sector for the first time in its share of GDP, a remarkably

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significant breakthrough, spurred by the government’s diversification policies, according to the Qatar Financial Centre Authority.

“Business optimism in Qatar remains robust at very healthy levels, displaying an ability to rise above the economic uncertainties that are rife in the majority of the world’s economies at present,” said Dun and Bradstreet regional chief financial officer, Phil Strange.

This step in Qatar’s economic development was achieved partly due to a fall in LNG income in the latter half of 2009, but can also be attributed to growth in the non-hydrocarbon sector. Should such growth continue, and with the government set on extending its economic diversification programme over the coming decades, a cushion will be created that will go some way to protecting the national economy

should the gas supply glut turn out to be as severe as Birol warned it may.

As always, going hand-in-hand with issues of supply, comes its close friend, demand.

According to the IEA, further building on its forecast that gas will be the only fossil fuel for which demand higher in 2035 than in 2008, the growth will be based on demand from countries outside the Organisation for Economic Development (OECD). These account for 84 percent of the increase between 2008 and 2035, the IEA said.

China is expected to be the main driver, with the country’s demand forecast to increase at an average of six percent per year from 2008 to 2035.

Despite the building of LNG export capacity in countries such as Australia, which may one day be in a position to compete with Qatar to supply the Asian markets, the rapid increase in demand from the giant Asian economies should eventually offset any supply glut.

Europe’s weaning off of fossil fuels in favour of renewables may offer a further complication, but gas will play an important role in the European energy mix for some time to come.

Qatar, with its intricate and balanced foreign policy approach, need not be concerned. At least not for some time.

MARKET WATCH

Nicholas Davis, Sherif El Diwany, Kristel Van der Elst, Miroslav Dusek, Stephan Mergenthaler and Stéphane Oertel discuss the findings from the World Economic Forum’s (WEF) Global Risks 2010 report.

T

he WEF’s Global Risks 2010 report highlighted three trends that characterise the global risks landscape: high and increasing levels of global risk interconnectedness; the power of ‘creeping’ or chronic factors; and the growing challenge of governance deficits.

These trends are all highly visible in the Middle East and North Africa (MENA) region and are particularly evident in the three global risks discussed in detail in the report: water scarcity, energy security and underinvestment in infrastructure. These all manifest as chronic risks, acting as limits to growth and exacerbating other risks. In addition, all three risks directly influence one another and are powerfully driven by population and economic growth trends as well as other regional contextual factors. These characteristics mean that response strategies need to be highly integrated.

Despite significant regional disparities, in particular between the prosperous Gulf Cooperation Council (GCC) countries and the rest of the region, and additionally between oil-exporting countries and oilimporters, several overarching trends emerge for the MENA region: • As one of the world’s driest regions, water scarcity critically affects the MENA region’s socio-economic condition. By 2050, the

amount of water available per person is expected to fall by more than half due to growth and climate change trends. With agriculture accounting for more than 85 percent of freshwater withdrawals and energy-intensive desalination being the only scalable source of water supply in the region, more integrated approaches to water management are required, particularly in linking water scarcity to food and energy security, • While the MENA region looks energy-rich, holding 56 percent of the world’s proven oil reserves, it is on a downward trend in terms of energy security. MENA countries are approximately 60 percent more energy-intensive than member countries of the Organisation for Economic Cooperation and Development (OECD). Environmental degradation, resource depletion, limited conversion capacities and unbalanced regional distribution of fossil fuel resources, therefore, have strong constraining effects on MENA economies. Interlinkages with the region’s water supply because of heavy reliance on desalination will impose increasingly tough choices on resource allocation. The renewable energy sector still has a long way to go to contribute to energy security and the private sector’s willingness to invest in new technologies is currently lacking,

MARKET WATCH

the GCC, there are fears that military conflict in the region could lead to contamination of Gulf waters which are a key source of freshwater through desalination. And, across the region, geopolitical factors play heavily into the issue of the physical security of water, energy and infrastructure installations.

• Underinvestment in infrastructure poses direct barriers to growth in MENA countries, for example through a 20 percent shortfall in installed electricity capacity across the region.

The legal and regulatory environment in the MENA region, or ‘soft’ infrastructure, often contains significant barriers for private sector participation in infrastructure projects, making it difficult to match supply with the requisite levels of demand. Developing regionally focused infrastructure (particularly for energy, water and transport) could create economies of scale, opportunities for investment and increase the region’s resilience to acute failures.

While enhanced regional multistakeholder coordination could significantly enhance the resilience of individual countries and the region as a whole, institutional capacities for such initiatives are currently lacking. Existing regional institutions, such as the GCC, have so far failed to address the above risks in a comprehensive manner. The report, therefore, aims to help leaders from the private and public sectors to consider ways of building resilience through increased cross-sector and cross-country collaboration.

The importance of the geopolitical context Latent geopolitical tensions spanning the region create complex uncertainties that impact water scarcity, energy security and infrastructure investments. First, they inhibit far-reaching regional cooperation on all these issues. Second, they also create direct physical threats. For the Gulf countries, Iran influences energy security both as a potential supplier of gas and as a potentially destabilising force given its power over the Strait of Hormuz. For water security in

Global risks, regional concerns The report noted that global risks are increasingly interconnected. Shocks and vulnerabilities are truly global, even if impacts can still differ at the local level.

Therefore, there is an ever-greater need for integrated and more systemic approaches to risk management and response by public and private sectors alike, as well as greater focus on risk context.

The report further highlighted that despite the huge impact of sudden shocks, such as economic crises, terrorist attacks or natural catastrophes, some of the biggest risks facing the world today may be from slow failures or creeping risks. These failures and risks, emerging over a long period of time with their potentially enormous impact and long-term implications in limiting growth and increasing the probability of acute failure, can be vastly underestimated. As a recurring theme from previous years, the report also stressed the increasing risks arising from global governance gaps.

Increasing insights and awareness about these trends in the global risks landscape is key to building more resilient systems.

This is particularly important for the MENA region where these overall trends of highrisk interconnections, creeping risks and governance deficits are particularly prevalent.

By analysing three highly interconnected global risks – water scarcity, energy security and underinvestment in infrastructure – the current report intends to shift the focus of decision makers towards greater resilience at the regional level.

THE REGIONAL CONTEXT FOR GLOBAL RISKS It is important to understand the contextual factors that influence the way global risks emerge within the region, how global risks impact the region and how stakeholders can respond to them. For MENA nations, three contextual factors have a particularly powerful influence on global risks: high rates of economic and population growth; concerns TheEDGE

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MARKET WATCH

regarding economic, social and geopolitical tensions and stability; and shortcomings in regional institutions to govern common challenges. All three factors heavily influence the three risks examined in the remainder of the report and therefore set the common stage for systemic regional risk management.

EXPLORING THREE HIGHLY INTERCONNECTED GLOBAL RISKS Water scarcity, energy security and underinvestment in infrastructure are highly interrelated risks. Figure 1 illustrates these interconnections at the highest level. As the diagram shows, all three risks (and their associated risks such as food security) are heavily influenced by growth – in terms of underlying economic output, increases in population and shifts in industrial intensity.

They also feed back into these trends, creating and enabling growth as critical input factors.

All three manifest themselves primarily as chronic risks and are tied into the broader socioeconomic system of the MENA region.

The strong interconnections between these three risks exacerbate the challenges of the global risk landscape for the MENA region.

Shortfalls in one or more of them act as a direct limit to growth, trigger other risks and may limit the response capacity of the affected stakeholders. Furthermore, the three risks are based on complex networks and structures that can endogenously produce acute interruptions, which can easily spread to other parts of the system. Increasing fragility in one or more of them also increases the risk that external events could cause significant damage to the

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TheEDGE

entire system through severe interruptions or shortages. Taken together, these risks represent a systemic threat to regional resilience that can only be addressed in an integrated manner.

Conclusion The complexity, scale and interconnectedness of global risks in the MENA region illustrate that all stakeholders must be concerned about effective risk management. This applies at the regional level and also to individual countries and organisations.

While GCC countries are currently less affected by acute and direct impact on growth when compared to the rest of the MENA region, the trends and trade-offs outlined here indicate that all countries face the challenge of managing the chronic, long-term effects of these risks and concurrent threats to regional resilience. In addition, the prospect of acute failures of water and energy systems or essential services remains a major concern for the public and private sectors alike.

While regional governments have a crucial role to play in developing effective responses, particularly through policy interventions that improve capital flows, human capital and infrastructure investments, it is also clear that these challenges cannot be solved by the public sector alone. Private sector participation is critical, not just in providing capital and knowledge, but also through its role in catalysing the social behaviours required to increase resource efficiency.

For the private sector, therefore, three complementary responses emerge from the

discussion above. For corporate risk managers, the report hopefully sheds light on the dynamics of global risks that have the potential to impact business operations in the region, providing useful insight on operational risk mitigation.

However, the nature of risk is such that it also presents a range of opportunities.

Therefore, for senior executives interested in business and strategy development, the report can also be seen as foreshadowing a range of beneficial investments that markets and populations will demand to alleviate the acute and chronic challenges increasingly presented by water, energy and infrastructure risks.

Most importantly, however, for all leaders in the private sector across the region and, indeed, also for their counterparts in government and civil society, the WEF hopes this report might in some small way contribute to shifting priorities further towards the benefits of building regional resilience through increased cross-sector and cross-country collaboration.

The report was authored by: Nicholas Davis, Associate Director, Scenario Planning and Global Risks, Sherif El Diwany, Senior Director, Middle East.

Kristel Van der Elst, Director, Scenario Planning and Global Risks, Miroslav Dusek, Associate Director, Middle East, Stephan Mergenthaler, Project Manager, Scenario Planning and Global Risks and StĂŠphane Oertel, Associate Director, Scenario Planning and Global Risks. To download the full report, please visit: http://www3.weforum. org/docs/ME10/WEF_ME10_RiskReport.pdf

INSIDE EDGE

INSIDE EDGE

T

he formation of the Gulf Cooperation Council (GCC) in 1981 was a landmark event for regional integration in the Gulf.

A monetary union, though not an implicit thought, was to be a logical outcome if the six GCC nations were to make their impact felt and secure a larger portion of the global economic pie.

Two years later, in 1983, the six nations signed a crucial agreement that involved the creation of a customs union followed by a common market culminating in a monetary union.

Though talks of a monetary union began early, the 2010 target has not materialised.

What happened?

Decision making surrounding the move for closer economic integration has been hampered by bureaucracy and lack of agreement among the parties, leading to delays, and the onset of the global recession in late 2008 further derailed the integration progress of the union.

It should be noted that the first concrete step toward the setting up of a common market happened only in early-2008, and a central governing body, the Gulf Monetary Council was formed in March 2010.

For oil-driven economies sharing similar cultures, language and history, the economic integration for the benefit of all nations may have been thought to be not that arduous a task. But the journey leading to a union has been anything but a smooth ride, with Oman opting out of the union in 2006, while Kuwait de-pegged its dinar and opted for a basket denominated currency valuation in 2007.

Earlier, it was not contemplated that the formation of a single currency would be a thorny issue, as the six currencies were pegged to the United States (US) dollar, implying that there was a proxy single currency already in existence. But Kuwait’s de-pegging in 2007 added a new dimension to the talks that had, up to that point, been discounted.

A major blow came in the form of the GCC’s second largest economy, the United Arab Emirates (UAE), pulling out of the talks in 2009 when it was decided to base the Gulf central

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bank in Saudi Arabia. Progress toward monetary union has been severely affected by the UAE – an important GCC and global trading hub – withdrawing its support, despite the continued commitment of Saudi Arabia, Kuwait, Qatar and Bahrain. Since the formation of the Central Council in March, high-profile meetings have been held to discuss the unification process but progress has been slow.

Had the European members not acquiesced to setting up a bailout fund, the economic bloc and its single currency may have failed under the sovereign debt pressures.

With the reality of such a scenario being played out, Gulf decision makers need to evaluate what went wrong and what lessons they can learn in the formulation of future policy decisions.

External concerns As decision makers grappled with their internal issues, major events being played out in the eurozone further impacted the talks.

The European Union, which may be seen to some extent as the inspiration for the Gulf union, was on the verge of seeing its single currency, the euro, dismantled early this year, as news of sovereign debt crises in Greece, Spain, Portugal and Ireland shook the fundamentals of the union.

The reality of a multi-speed eurozone economic recovery severely tested the fundamentals of the single currency. This led to a sharp correction in the euro and has severely dented the possibility of the euro emerging as the most powerful currency in the global economic scenario – at least in the short term.

Crucial considerations Two of the key questions facing the union are, firstly, how to arrive at the initial exchange rate entry point for participants in the single currency of the union, and secondly, what should be the pricing mechanism for the single currency after its launch.

On the basis that the majority of GCC countries are currently pegged to the dollar, it ought not be too difficult to arrive at the conversion rates.

There are options in response to the second question. One thought on the pricing mechanism would be to continue having a dollar peg for the common currency given the fact that oil is denominated in dollars.

However, the movement in the price of oil upwards in recent months is thought by many

Qatar Central Bank governor, HE Sheikh Abdullah bin Saud Al Thani, met with other GCC bank chiefs in March to discuss the region’s progress towards a monetary union.

INSIDE EDGE

In the past few years, the region has witnessed a significant shift in economic power, with the UAE and Qatar now making up more than a third of the GCC’s GDP. economists to be caused by a de-linking from the fall in the value of the dollar, as opposed to being based on just the economic fundamentals of supply and demand. If this is the case, would it be prudent to tie the single currency to the dollar going forward?

Furthermore, under such a peg, the union will not unlock the actual value of its economic strength, and thus currency, and may continue to suffer from imported inflation if the dollar continues its long term decline.

An inability to exercise an independent monetary policy separate from US policy decision making is also a significant deterrent to this course of action.

A second alternative could be a basket mechanism wherein the weighted value of a portfolio of currencies is used to determine the exchange rate of the domestic currency.

But, according to Mohsin Khan, senior fellow at the Peterson Institute for International Economics, the basket mechanism does not provide compelling advantages as compared to the dollar peg.

A third alternative is to allow the common currency to float and establish its value from the demand and supply forces in the open market, making it independent of the performance of the currencies against which it could be pegged. This has the tremendous advantage of independent policy formulation enacted in response to various economic situations, with the aim of best supporting the economics of the Gulf region.

The GCC region will then be exposed to open market currency value fluctuations, making it imperative that the region’s central bank has a fully developed and approved range of powers, reliable information, agreed policy on exchange rate and inflation parameters, a robust currency hedging system and other fundamental pillars of good governance, which will take some time to develop.

Torchbearers of the unification process could also mull the option of a managed float, where the common currency could be allowed to float freely within a defined bandwidth. If the common currency breaches the defined limit, the union could take appropriate steps for managing the value of the currency.

Simultaneously, efforts to bolster the hedging system could be carried out on which could lay the foundation for a free float in the future.

However, this should be an introductory phase to a fully floating currency and not a long term mechanism of choice.

An economic union is not just about a unified currency and seamless movement of goods and resources – human and non-human – among member nations. A set of welldefined central policies and the ability to take prompt action when situations warrant so is an inevitable mark of a robust system.

A union also calls for a common legal infrastructure, customs duties, payment system mechanisms and the adoption of several market standards for, for example, real time payment settlement systems within the union. Member nations may also have to give up some of their rights pertaining to domestic policy decisions, but the benefits of a single currency and single market should outweigh these domestic concerns.

Another hurdle in this region, which needs to be overcome, is the lack of reliable and timely economic data. In order to achieve success with a unified bloc, Gulf nations need to develop independent data collection and reporting systems which can be relied upon to accurately reflect economic reality and trends.

Also, in the past few years, the region has witnessed a mild yet significant shift in economic power, with the UAE and Qatar now making up more than one third of the GCC’s GDP, compared to less than 30

percent in 2005. Policymakers will have to be sensitive to these shifts so that none of the member nations perceive themselves to be compromised by the entry mechanism and ongoing operational mechanisms of the central bank.

Advantages of a union A monetary union brings with it a host of advantages including, but not limited to, a reduction in foreign exchange transaction costs, synergistic advantages from a common currency as against an individual currency, enhanced price transparency resulting in healthy competition and the fostering of trade, investment and growth.

Fiscal discipline is one of the pillars of a lower interest and inflation regime in any economy. The common currency has the potential of long term impact on regional banks by promoting efficient use of capital, and the costs of hedging against exchange rate fluctuations would be reduced.

This will also help in building a large and liquid capital market with a better ability to attract portfolio and private investors without the additional currency exchange risk.

Moving forward Gulf nations are home to approximately 40 percent of the world’s proven extractible oil reserves and nearly 20 percent of the world’s natural gas reserves. Of late the region has taken steps to reduce its dependence on oil earnings and expand the economic base to other sectors due to the exhaustible nature of these resources.

The time is ripe for economic cooperation among the Gulf nations for sustained economic prosperity of the region. The delay in the GCC monetary union’s inception could be a blessing in disguise as policy makers could use this time to profoundly evaluate various options before placing their stamp of approval on the final agreement. There is a need to display a strong political will in making the union and common currency a reality considering the fact that this has been a long cherished dream in the Gulf region. Perhaps it is just a matter of time before we start exchanging the Gulf common currency.

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was The year that

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From high-profile spending sprees that swept up just about everything but the Crown Jewels, to the doldrums of the Dubai World debt restructuring, 2010 was always going to be an interesting year. With the dust yet to settle on the global economic upheaval of 2009, many businesses and governments spent 2010 shoring up their foundations and looking inward. Again one of the top-performing Gulf states, Qatar remained in the global spotlight – the losses were less, the investments unprecedented, and business as usual resumed. Rachel Morris looks back on biggest stories of the year.

Shares in supermarket chain, Sainsbury’s, increased sharply in July amid talk of a full-blown takeover by Qatar Holding. The retailer’s Qatari investors already hold a 26 percent stake.

Photographers crowd around Porsche shareholder, HE Sheikh Jassim bin Abdulaziz bin Jassim Al Thani during the annual general meeting of the luxury sports car maker.

Qatari Diar added Singapore’s Raffles Hotel to its portfolio in 2010. The iconic hotel, which has hosted guests such as Ernest Hemingway and Queen Elizabeth II, carried a price tag of US$275 million (QR1 billion).

SHOPPING SPREE It is the ultimate status symbol – buying the very icon of British high society. The investment arm of Qatar’s seven-year-old sovereign wealth fund bought Harrods, the legendary London department store from Egyptian-born businessman Mohamed Al Fayed in a deal reported to be worth around GBP1.5 billion pounds (QR8.7 billion).

“What I can assure you is Qatar Holding will do their best to upgrade this monument, to make it even greater and better for the tourism and also for the British people,” Qatar’s prime minister, HE Sheikh Hamad bin Jassim Al

Thani, promised when the headline-making deal became public.

Cashed-up Qatar Holding, which has stakes in United Kingdom (UK) supermarket chain, J Sainsbury, Raffles Hotel in Singapore, the London Stock Exchange, Credit Suisse and in Porsche and Volkswagen, is certainly garnering the attention of the financial world in the wake of the 2009 international shake-up.

In 2012, Qatar is expected to produce 77 million tonnes of natural gas a year, the equivalent of about eight million barrels of oil a day, pumping more cash into an already-

BP’S ANNUS HORRIBILUS The gaping hole left by the sea floor gusher in the Gulf of Mexico may be capped, but the impact of Deepwater Horizon will live on for decades. BP bungled their public relations and crisis strategy, and chief executive, Tony Howard, displayed a dismissive attitude that angered Barack Obama, the United States Congress, and the public, and got him fired.

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Richard Branson partnered with Qtel to launch Virgin Mobile Qatar. This year, the British entrepreneur also announced plans to headquarter the Virgin Health Bank, a national public stem cell storage bank, at Qatar Science and Technology Park.

bulging investment portfolio. As 2010 ends, Qatar Holding is said to be eyeing more high profile assets, including a US$1.6 billion (QR5.8 billion) investment in three luxury London hotels. By all accounts, 2011 looks to be another bumper year.

QATAR CALLING This was the year that entrepreneur Richard Branson made another trip to Qatar, this time jet skiing across the bay on The Corniche in one of his trademark stunts.

Branson’s May visit to Doha was to launch Virgin Mobile Qatar, a “brand partnership agreement” with Qtel, where Virgin Mobile is a sub-brand within Qtel’s existing operations and licence.

It was seen as a bulwark against Vodafone Qatar, whose distinctive branding and highenergy public image garnered nearly 600,000 subscribers in its first two years of operation, and who has set the agenda in customer service.

But all did not go well for the youthfocused Virgin launch, as confusion surrounded whether this was, in fact, a third mobile phone operator by proxy and without the required licence or imprimatur of the country’s telecommunications regulatory body, ictQatar.

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It is worth considering that Virgin Mobile was one of the bidders for the second licence three years before, losing out to Vodafone, which so successfully entered into one of the last remaining mobile phone monopolies in the world.

Virgin’s offering was simple – all-day tariffs and various top-up options. The issue ended up before the regulator and in court, with Vodafone Qatar claiming the new player was actually a third operator. In July, ictQatar ruled that Virgin Mobile had in fact breached several sections of the Telecommunications Act, including “misleading conduct” and “unfair dealing”.

They were ordered to pay an unspecified fine and significantly change their offering and other arrangements, but they were permitted to continue operating. Vodafone is still pursuing the matter in the courts, going after ictQatar for breach of licence by allowing Virgin Mobile to continue operating. As they say in the classics, the story continues…

BULGING BUDGET It is the biggest budget on record.

Qatar’s government will boost spending by a whopping 25 percent to QR117.9 billion in the 2010 to 2011 fiscal year. In 2009 to 2010, Qatar earmarked QR94.5 billion for

Up to 30 percent of Qatar’s budget allocation has been set aside for infrastructure projects, including new hospitals, schools and the upgrading of current facilities.

budget spending. In line for the cash injection are major infrastructure projects and the education and healthcare sectors, including new hospitals, schools and the upgrading of current facilities.

Revenues were set at QR127.5 billion for the 2010 to 2011 fiscal year compared to QR88.7 billion in 2009 to 2010. The increase is fuelled by the rise in liquefied natural gas production. A lion’s share of the allocations – QR35.5 billion, or 30 percent of the overall budget spending – has been set aside for infrastructure upgrades, injecting cash into the economy, and creating investment and jobs.

There is also a provision for a “housing loans fund” for nationals. “The state focuses its attention on this sector due to its importance as the basis for all service and development projects,” finance minister, HE Yousuf Hussein Kamal, said earlier this year.

Kamal said the general budget was issued this year in the wake of a global economic crisis and the recovery had not yet been confirmed.

“However, our rational leadership and its high directives enabled us to face the crisis and contain its negative effects swiftly and seize some positive investment opportunities.”

Kamal said the overriding directive for Qatar’s economy was “sustainable development”.

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ENTERPRISING IDEA Much has been made about Qatar’s future beyond reliance on oil and gas revenues. The work being done at Education City and other entities is a testimony to this drive. But one key feature that has been missing until now has been development of the country’s small and medium enterprise sector, seen in other economies as the “engine room”. Created within the Ministry for Business and Trade, Enterprise Qatar was established in 2010 to address this. The new entity’s mission is to act as a supporting partner to help Qatari SMEs gain access to all areas of business, while working with the government to enable a positive business environment.

According to HE Sheikh Mohammed Abdul-Rahman Al Thani, head of the ministry’s Public Private Partnerships, Enterprise Qatar “will empower new and innovative Qatari companies and young Qatari entrepreneurs, providing them with access to the services and support they need”.

But this is not about handouts. Rather, the new body acts as a “clearing house”, connecting entrepreneurs with finance providers and banks, business service providers, education networks, incubators and even business mentors. The strategy will focus on technology start-ups.

This is a long term strategy in line with the National Development Strategy, the implementation of the Qatar National Vision 2030, which is charging along. The programme was launched by the prime minister, HE Sheikh Hamad bin Jassim bin Jabor Al Thani in April with QR2 billion in capital. The first “graduates” of the new strategy are in the very early stages of development, and Saudi Arabia’s Capitas Group, a business management and advisory company, has been engaged to drive Enterprise Qatar’s platform and projects and develop it into a flagship institution.

FOOTBALL FEVER At the time of going to press, Qatar was sweating on the official decision as to whether this tiny country would host the world’s biggest sporting spectacle in 2022. One would have to be completely oblivious not to notice the billboards, posters, flags and car stickers exhorting us to “Expect Amazing” in 2022.

The FIFA delegation – who, on December 2, voted who among Qatar, the United States,

Russia, Australia, South Korea or Japan would host the World Cup in 2022 – visited Doha in September to discover what this Arab country has to offer. Air-conditioned, recyclable stadiums that will benefit the world’s impoverished football nations and an integrated transport network are among the selling points for the bid, along with a multicultural populace.

Qatar’s bid called for US$43 billion (QR156 billion) in new infrastructure, plus US$3 billion (QR10.9 billion) for stadiums equipped with outdoor cooling systems.

Beyond this, Qatar pulled out all the stops to sell the bid, from hiring French megastar Zinedine Zidane as a bid ambassador, to flying delegations and officials to Doha to see the city and the plans in person.

Winning the bid meant more to Qatar than just sporting credibility. But whatever the outcome, the bid cast a spotlight on the country’s true potential as an event location.

LIGHTS, CAMERA, ACTION! This is a classic case of culture meets the world of big business. The second edition of the Doha Tribeca Film Festival (DTFF) showcased the new Katara complex (previously known as Cultural Village) with its amphitheatre and traditional Qatari designs. The festival drew Hollywood stars Robert De Niro, Kevin Spacey and Salma Hayek, plus a raft of Arab and Bollywood stars.

Earlier this year, in an effort to put Doha on the filmmaking map, the DTFF established the Doha Film institute (DFI), bringing

The second Doha Tribeca Film Festival attracted Hollywood big names, as well as Arab and Bollywood stars.

Legendary French footballer, Zinedine Zidane, was appointed ambassador of the Qatar 2022 bid. While on a visit to Doha, Manchester United manager, Sir Alex Ferguson, called the bid “realistic” and one that he would back, adding, “Addressing the hot climate issue and transporting the stadia to other countries is a very clever idea.”

WORLD CUP - AFRICAN-STYLE Despite the naysayers and fear of mass crime wave on visiting fans, South Africa put on a World Cup that exceeded all expectations and earned them nine out ten from FIFA for their efforts. Africa’s largest economy enjoyed a tourism boost that is estimated to last for years to come.

Football fans blow the controversial vuvuzela at the 2010 World Cup in South Africa in support of Spain. Spain beat the Netherlands in a fiercely contested final that resulted in five yellow cards for the Spanish and nine yellow cards for the Dutch.

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THE US FANCIES TEA What started as protests against Barack Obama’s controversial healthcare reforms and economic recovery measures, grew into a legitimate political movement with Sarah Palin as its keenest public supporter. The Tea Party stunned the Republicans with their victories in the US midterm elections.

Tea Party protestors gather in Washington D.C. during the midterm elections.

US WITHDRAWAL FROM IRAQ With more than half of the US population believing their invasion of Iraq was a mistake, the armed forces began their phased withdrawal from the country, leaving a transitional force of less than 50,000 troops and training Iraqi troops and police to maintain order. The war cost US taxpayers an estimated US$900 billion (QR3.2 trillion).

77 MILLION 2010 marks a significant milestone for Qatar as it fulfils the promise made by oil minister, Hamad bin Abdullah Al Attiyah, to boost its liquefied natural gas (LNG) output to 77 million tonnes a year, making it the world’s largest exporter of LNG.

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Qatar’s myriad of burgeoning film initiatives under one banner. It is umbrella organisation for events including the film festival, as well as new vehicles like film funding, production and education.

The DFI announced it will be allocating significant funds for film financing and coproduction activity in Qatar, with the goal of investing in 10 new Arab films a year. In January, the first international feature film to be shot in Qatar will start filming in Doha as part of the new fund.

Funds will also be available for international productions and regional projects, although DFI executive director, Amanda Palmer, stressed that the main aim of the organisation is educational.

“We want the people we work with to give back to us by helping with training and passing on their knowledge and expertise,” Palmer said at the time of launch. DTFF is yet to firmly carve its place in the international film lexicon, competing in the glamour stakes and for media attention with the Abu Dhabi Film Festival which falls in the same month and which, at this stage, appears to attract bigger Hollywood names and films. Plans are already underway for the third year of the DTFF, as well as a many new education initiatives.

COUNTING THE NUMBERS It was a massive undertaking in a country as diverse as they come. Thousands of Census workers from the Qatar Statistics Authority fanned out across the country, knocking on doors of palaces, villas, apartments and portacabins, trying to count the number of people in this growing country.

The results would flavour government policies and laws in years to come and recognise the infrastructure and services that need to be developed or boosted to cope with the changing face of the country. The Census also offers a picture of what the country looks like and a tangible look at what we already know – that Qatar has changed…a lot.

The results were stunning. It was revealed that Qatar’s population has nearly doubled since 2004 from 744,029 in 2004 to 1,696,563 this year. Results showed that 76 percent of the population is male and just 24 percent female.

Buildings have increased by 50 percent from 99,217 in 2004 to 148,532 in 2010, with residential houses numbering 254,309 – an increase of 102 percent over the 2004 figure. The number of apartments rose by 146 percent to a total of 92,901 and studios by 243 percent to 10,415.

In terms of the workforce, Qataris work primarily in the professional, clerk and associates occupational sectors, and nonQataris work primarily in the crafts and machine operator occupations. Jobs in the private sector grew 356 percent since 2004 and jobs in the government grew by 125 percent over the same period.

CHELSEA MOURNING Qatari Diar’s deal to redevelop Chelsea Barracks in London was mired in controversy from the start. It was a case of a partnership made in heaven gone bad and curiously included the intervention by a member of the UK royal family.

The real estate investment arm of Qatar’s sovereign-wealth fund was forced to settle a lawsuit with UK developer, CPC Group, controlled by entrepreneur Christian Candy, after Candy accused Qatari Diar of wrongfully backing out of a deal to avoid upsetting Prince Charles, who had complained about the plan’s controversial design.

The Chelsea Barracks development was planned to include mixed-use buildings of between five and 13 stories, comprising 638 residential units, as well as hotel space, a community centre, retail units and restaurants.

A joint venture between CPC Group and Qatari Diar paid GBP959 million (QR5.5 billion) for Chelsea Barracks in January 2008. In November of that year, Qatari Diar bought out CPC’s stake for an initial payment of about GBP38 million (QR221 million) and agreed to make GBP81 million (QR471 million) in deferred payments.

Qatari Diar was forced to pay damages of around US$121.1 million (QR440 million) to Candy’s company.

GREEK TRAGEDY It is the laughing stock of the European community and continues to face bleak economic times. It has been bailed out

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FEELGOOD STORY of 2010 Like the script of a made-for-TV movie, a cave-in at the San Jose copper-gold mine in Chile left 33 men trapped 700 metres below ground. The miners survived underground for a record 69 days and all were brought to the surface after a high-tech and often emotional rescue operation.

Unfortunately, a second mining disaster in New Zealand in November did not have a happy ending – all 29 miners at the Pike River coal mine were killed when a build-up of methane gas led to two deadly explosions.

FED-EXED TERRORISM Following a tip-off, two parcel bombs were intercepted and defused before they reached their destinations, synagogues in Chicago. The bombs, which originated in Yemen, were intercepted in Dubai and in the United Kingdom.

A woman begs for change in Dublin, as Ireland suffers a debt crisis and asks the European Union for a bailout.

by European friends and has watched investments once earmarked for its shores, head to the investor-friendly Balkan states.

But Greece has been handed a lifeline by the most unlikely of suitors.

In September, Greece and Qatar signed a framework deal that paves the way for the Gulf emirate to invest up to a whopping US$5 billion (QR18 billion) in energy, banking and other areas, giving a much needed boost to the crisis-hit country.

The Qatar Investment Authority and Greece will set up a joint committee to identify possible deals, mainly in real estate,

tourism, energy, banking, ports and airports.

The investment deal was sealed in New York and is non-binding. Qatar’s prime minister, HE Sheikh Hamad bin Jassim bin Jabor Al Thani first expressed interest in investing in Greece during a visit to Athens in May, during which he signed nonbinding agreements to build an liquefied natural gas terminal and a power station in western Greece.

Opening the way for more investment from countries like Qatar, Greece has moved to cut red tape and bureaucracy for international entities wanting to invest in the country.

IRISH EYES ARE NOT SMILING Once dubbed the ‘Celtic Tiger’, the socalled ‘Emerald Isle’ lost its lustre this year.

Late last month the Irish government finally asked for a one-minute-to-midnight European Union (EU) bailout. The deal is worth an estimated EUR80 billion (QR400 billion) after Ireland conceded it needed outside help to fund the budget deficit and the prop up the struggling banking system haemorrhaging from their loan portfolios. Ireland’s leadership had been resisting calls for them to ask for intervention, but was finally cajoled into accepting the deal with stringent conditions.

German finance minister, Wolfgang Schauble, said many eurozone countries had been pressuring Ireland to ask for the bailout because “the risk of contagion is rising, the longer it takes”. Germany, the United Kingdom and the International Monetary Fund are expected to provide a bulk of the funds.

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Pension reforms:

France’s victory or defeat?

From September to November 2010, France was rocked by ongoing strikes and demonstrations protesting the controversial 2010 French pension reforms. Karim Nakhle takes a closer look.

ECONOMIC BAROMETER

T

he 2010 French pension reform strikes involved union members from both the private and public sectors, protesting in cities such as Bordeaux, Lille, Lyon, Marseille, Paris, Toulouse and Strasbourg, against a proposal by the French government to raise the normal retirement age for public pensions from 65 to 67 years. The National Assembly approved the proposal, as well as to raise the early pension age from 60 to 62 years.

At the same time, temporary pre-crisis tax cuts are being maintained for the benefit of the richest individuals and companies.

The strikes led to a reduction in public transport services, motorway blockages by lorry drivers and disruption to oil deliveries to refineries, leading to a national fuel shortage.

French students joined workers in the protests, erecting barricades around 400 high schools across the country to prevent fellow pupils from attending classes.

French union leaders organised six days of nationwide strikes, the second of which saw the cancellation of as many as half of all flights at airports in Paris and other cities. Up to 50 percent of the country’s long-distance trains were cancelled, and a prolonged strike by garbage collectors led to a build-up of trash around the port of Marseilles. All 12 fuel refineries on the French mainland have been affected by the strike. At the time of going to press, one in four fuel stations across the country had run dry.

To save the French pension system, French president, Nicolas Sarkozy, could no longer postpone the decision on reform until after the next presidential election in 2012, as he had originally hoped. The global downturn has forced the issue into a top spot on the political agenda.

The need for reform France is at a turning point. Its growing national debt level means the government must cut spending, and it wants to reduce the pension burden on the state.

One option has been to raise the retirement age, a move that unions oppose and that has always proved unpopular among the French as a whole. The retirement age in France is currently 60, significantly lower than in other European countries. In Germany and Denmark, the retirement age is 67, while Britain is planning to increase it to 68.

The French government has said its pension deficit will be EUR32 billion (QR154 billion) this year, and will rise to EUR114 billion (QR550 billion) by 2050.

To compound the problem, French demographics have hurried along plans for reform, as those citizens born between 1945 and 1955 are about to retire, delivering a large pension cost to the government.

Taxes on high earners, investors and capital gains The top rate of income tax will be raised to 41 percent from 40 percent to help fund the pension regime. Taxes on capital gains and investment income will also rise by one percentage point. Employers’ contributions on stock options will increase from 10 percent to 14 percent, while employees’ contributions will increase from 2.5 percent to 8 percent.

Capital gains tax-free allowances, currently set at EUR27,000 (QR133,000), will be abolished. These measures will bring in an additional annual EUR3.7 billion (QR18.2 billion) in revenue in 2011.

Raising retirement age Raising France’s statutory retirement age is the lynchpin of the reform plan.

The retirement age will rise gradually for people born after 1950 by four months a year to 62 in 2018. This measure will kick in from July 2011. It overturns a landmark socialist policy introduced by the late President François Mitterrand in 1983.

Workers who began work aged 18 or younger will still be able to retire at 58 to 60.

People in physically arduous jobs who have suffered health damage will be allowed to retire at 60. Public sector security personnel who have a right to earlier retirement at 50 or 55 will see this rise gradually by two years up to 2018.

Minimum social security contributions To receive a full pension, workers will have to accumulate 41.5 years of contributions by 2020 instead of the current 40.5 years, an age that was due to increase to 41 years in 2012.

The age at which workers who have not made full contributions can receive a pension without penalties will rise gradually to 67 from 65 in 2018.

Aligning public and private sector pension regimes Private and public sector pension contributions will be aligned gradually over a decade. Civil servants, who now pay 7.85 percent of their salary in contributions, will see

their deductions rise to the 10.55 percent that is paid by private sector employees by 2020.

Public sector workers will continue to retire on 75 percent of their final six-month salary. Private sector workers get 50 percent of their 25 best contribution years, plus additional benefits.

From 2012, the government will close the loophole that allows new female civil servants with three children retire after working just 15 years, but existing civil servants who have three children by 2012 will retain that right.

Arduous work The government has altered its assessment of arduous work, making it harder for people to retire early. At present, whole categories of workers can draw pensions early because their jobs are deemed especially tough. In future, workers will have to show ‘professional wearand-tear’, industrial injury or a 20 percent disability on an individual basis.

Balancing retirement accounts in 2018 Labour minister, Eric Woerth, said the reform would make it possible to balance the accounts of the pension system in 2018 and register a surplus of EUR100 million (QR493 billion) in 2020.

The forecasts are based on the assumption that the unemployment rate will be 6.5 percent by 2018. The unemployment rate is currently 10 percent.

With the pension deficit said to reach EUR32 billion (QR154 billion) this year, and likely to have risen to EUR114 billion (QR550 billion) in 2050 without reform, half of this gap will be closed by raising the retirement age and the other by extra revenue measures.

To cover the accumulated deficits between 2010 and 2018, the government will draw on a fund created almost a decade ago by former prime minister, the Socialist Party’s Lionel Jospin, which was not meant to be used until after 2020 to meet the anticipated pensions shortfall. It currently contains some EUR35 billion (QR172 billion).

Why the strikes?

In 1983, François Mitterrand’s government reduced the retirement age from 65 to 60.

The French government undertook a general review of its public policies in 2007, and one of the key proposals made in order to reduce government expenditure included postponing the national retirement age.

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The current government’s plans to raise the normal retirement age and early reduced pensions, may allow for a reduction in public spending, but the strikes, organised by workers’ associations reflect a broader discontent with Sarkozy. Dissatisfaction with and mistrust in the government have arisen for several reasons, among which are: • Tax reductions In recent years, despite the financial crisis, the government has maintained tax cuts for the richest households and companies. French citizens find themselves frustrated by the government’s reasoning that a financial crisis means that social spending

should be cut, while pre-crisis special tax cuts are being maintained for the wealthiest companies and taxpayers.

The 2005 precrisis Copé tax cut generated a EUR22 billion (QR108 billion) loss in revenue over three years, to the benefit of major companies, as opposed to the EUR1 billion (QR4.9 billion) initially expected.

A report by the Conseil des Prélèvements Obligatoires calculated the real tax rate for major companies – claimed to be approximately 33 percent – to be approximately 13 percent, thanks to tax deductions. The cancellation of some of those tax deductions for companies could put EUR15 billion (QR74 billion) to EUR29 billion (QR143 billion) a year back into French public finances.

• Youth There are concerns the proposals may have a negative effect on the job market, particularly for young workers. The reform

A protestor holds up a placard reading, “Sarko, look at your Rolex, it is time for the revolt.”

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may reduce job opportunities by a million and is the reason that many students have joined the protests.

Due to demographic and economic history, the younger generation is in a specifically difficult situation. The jobless rate for youth (in other words, those under the age of 25 years) in France has been higher than 20 percent since 1980, reaching 26 percent in 2009.

Despite the promise than the job market would expand when babyboomers retire from 2005 to 2020, the arrival of the global crisis and retirement reforms will keep a million more workers on the market.

In addition to this, poorly paid internships, job instability and lower income have fuelled the anger. An everincreasing demand for more sophisticated qualifications and skills require more education and financial investment, a status quo that further postpones savings and contributions to the retirement insurance system. Moreover, rental costs for housing and lower incomes have reduced the quality of housing conditions.

Is Sarkozy collateral damage?

Since the strike action began, the French economy has lost up to EUR400 million (QR1.9 billion) per day, not to mention suffered damage to its international image.

The biggest cost, however, has been to the image of the president himself. Opinion polls suggest that Sarkozy’s approval ratings have plummeted to record lows of below 30 percent, a mere 18 months before the next presidential election.

A recent poll showed that 71 percent of the population is unhappy with his policies, with only five percent of those surveyed saying they are fully behind him.

The controversial and unpopular pension reform plan has become official law in France, after the country’s constitutional court rejected a challenge to it.

Sarkozy wasted no time in signing the bill, hours after the court ruling. He stated that it was his “duty” to ensure the pension fund’s integrity, despite the concerns raised.

“With this law, our redistributive pension system has been saved,” he reasoned, despite his growing unpopularity. “French citizens can now be assured that they can count on their retirement and that pension payments will be maintained.”

ON THE PULSE

A new study has cast doubt on the capability of Russian gas reserves to meet European demand in the coming decades. As TheEDGE exclusively reports, the findings could have a dramatic impact on European energy policy – not to mention the Qatari economy. By Edward Jameson

A world away from Doha: Welding a gas pipeline in sub-zero temperatures near the Arctic Circle in far-northern Russia (AFP/Getty Images).

ON THE PULSE

T

he European market for natural gas has been on a rollercoaster ride of late. Demand shot up before diving viciously down when the credit crunch morphed into the financial crisis, bringing with it job losses in the millions and violently shrinking economies. The net result was a white-knuckle ride which the European nations would rather not have boarded in the first place.

There were, however – as is the paradoxical nature of macroeconomic shocks and events – positive aspects to the recession that tapped into every major economy on the planet.

The destruction of demand for gas in the European market saw energy prices, which had hit record-breaking, eye-watering peaks prior to the crash, ease to more affordable and sustainable levels. A glut of supply capacity formed, able to meet consumption patterns with comfort, as opposed to a shortage of capacity that was constantly in pursuit of ever-increasing demand. In short, the energy bubble burst. But economic bubbles, by nature temporary, have to burst eventually.

Of all the nations that felt the impact of the bursting of the European gas bubble on their economies, three felt it above the others: Qatar, Russia and – inside Europe geographically but outside of the European Union (EU) – Norway. Each has a significant reliance on exports of natural gas to keep the cash pouring into its domestic coffers. In the case of Russia and Norway, via pipeline to the EU countries, and in the case of Qatar, via liquid natural gas (LNG) shipments to the ports of Western Europe.

The under-construction NEL pipeline will carry natural gas from Russia across Germany to other countries in Europe (Sean Gallup/Getty Images).

The direct impact of the recession on each of these countries was, of course, negative. Less demand meant less income, and, although supply flexibility naturally improved, this was hardly adequate compensation for the loss of earnings.

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Today, however, with the European market climbing out of recession, demand for gas for both heating and power generation is again on the up. This is positive news for the EU’s principal suppliers.

Although in the case of Qatar, TheEDGE can exclusively reveal that news of a far greater magnitude could be on the horizon...

An Uppsala story Seventy kilometres north of the Swedish capital Stockholm is the city of Uppsala. Sweden’s fourth biggest city boasts a population of just 144,000, and is an unlikely location from which to base a study that may have immense implications for Qatar, Russia, and the long term energy policy of the EU. But, unlikely as it may seem, it is the case. Kjell Aleklett, Bengt Söderberg and Kristofer Jakobsson are professors at the highly respected Department of Physics and Astronomy at Uppsala University. The team has produced a report, accepted by an authoritative academic journal for publication and seen prior to this

by TheEDGE, that casts doubt on the capability of Russia – which boasts the largest gas reserves in the world – to supply the EU over the long term.

The Uppsala team applied a model developed at the University to each of Russia’s significant natural gas fields. “We are getting back exactly the production levels that we expected after we applied the model,” Aleklett said. The model was pre-tested on Norway’s fields with similarly accurate results.

“The widening gap between EU gas production and consumption may require an 87 percent increase of import volumes between 2006 and 2030, and there are great uncertainties regarding the amounts of gas that can be expected from new suppliers,” the study says. “The potential of increased production from Norway and Algeria [another principal supplier] is limited; hence, Russia is likely to play a crucial part of meeting the anticipated growing gas demand of the EU.” The Uppsala team applied their proven field-by-field methodology to Russia’s natural gas hotspots with dramatic results. “The maximum export increase to the European and Commonwealth of Independent States (CIS) markets amounts only to about 45 percent for the period 2015-2030,” the study found. “The discourse surrounding the EU’s dependence on Russian gas should thus not only be concerned with geopolitics, but also with the issue of resource limitations,” it said.

Prior to this statement, the issue of Russian supply volumes had not been raised as a troublesome factor, due to assumptions of their sufficiency – assumptions which Aleklett is now challenging for the first time.

The supply gap According to BP’s Statistical Review of World Energy 2009, Russia has 23 percent of the world’s total gas reserves, and Russian production equals 20 percent of global production. About 30 percent of the Russian gas production is exported. This amounts to a lot of gas, and a steady depletion rate.

The EU is the world’s second largest energy market, and it is Russia’s most important gas export market. Demand for natural gas has significantly increased in Europe over the last 15 years, and it is set to increase greatly, as the Uppsala study recognises, due to the

ON THE PULSE

two-pronged boost of economic recovery and environmental concerns.

Gas – compared to coal – emits significantly less carbon when used as fuel for power generation.

“Furthermore, increased use of intermittent power generation sources, such as wind power, will require supplementary regulating power sources, of which gas is one of the most efficient,” the Uppsala report adds.

Aleklett dismisses the impact that a sharp uptake in renewable power generation will have on European gas demand. The EU is aiming to produce 20 percent of its consumed power from renewable sources by 2020, but, Aleklett tells TheEDGE, “You must think of energy. You do not need a supply of energy that ebbs and flows, one that is only present when the wind is blowing or the sun is shining. Instead you need power.

I have long advocated the need to discuss power policy, as opposed to energy policy. When we discuss power policy we realise that wind and solar is just flowing energy.” Consequently, Aleklett asserts, a reliable and comparatively low-carbon back up is required – a back up such as gas.

Gas production within the EU itself entered a steady state of decline from 2004, inevitably leading to an ever-increasing reliance on imports from outside the bloc. The current and potentially increasing European dependency on Russian gas has spurred intense debate on the subject of the energy security of the EU. “A fear has emerged among many Western policy analysts and commentators that gas might be used by the Russian elite as an ‘energy weapon’ in the international geopolitical game,” the Uppsala report says.

A further factor that must also be taken into account does not include any of the vagaries of geopolitics. It is far more simple – Russia’s immense size.

It is easier and more profitable to send the gas that is produced in the south and east of the country, for straightforward logistical reasons,

to Eastern and Central Asian markets – after all, the cold, hard cash of China, India and Japan is of the same value to Russia as that of Germany, France or the United Kingdom.

The Uppsala study agrees. “It has been assumed that all production from East Siberia and the Far East will be exported to the Asian and Pacific Rim markets, and therefore will be unavailable to European consumers,” it says.

Qatari windfall The maximum export increase to the European markets amounts only to about 45 percent for the period 2015 to 2030, according to the Uppsala team. In real numbers, a mere increase of about 70 billion cubic metres (Gm³) of Russian export volumes to the EU can be expected.

However, domestic production within the EU is expected to fall by 126Gm³ for the period 2006 to 2030.

The study also points to the potential for Chinese growth. “There should be further research on how much demand for gas the fast growing economy of China may yield in the coming 20 years,” it says, presenting the following figures: The UK has about 61 million inhabitants and its gas consumption amounts to 94Gm³. China has approximately 1.3 billion people, and only consumes 81Gm³, due to its heavy reliance on domestically produced coal. “There is clearly a vast potential for a significant growth of Chinese gas demand, especially since it is a more environmentally friendly fuel than coal,” the study says.

All of which opens the door for a politically stable nation to plug the impending gap between supply and demand that, should the Uppsala team’s results prove accurate, will inevitably open up. Enter Qatar.

Doha is aiming to reach a LNG production capacity of 77 million tonnes per annum, which, when attained, will be by far the largest LNG capacity in the world – and the target is not far from being met.

Qatargas is due to begin production from its Train Six before the end of the year and from Train Seven by February next year. Indeed, output from the two trains has already been sold into the global market, according to energy minister, Abdullah Al Attiyah. The installation of both trains will pull Qatar’s production capacity up to the magic 77 million tonnes per annum target.

The achievement is to be marked with a lavish celebration at the Ras Laffan production facility on 13 December, to be shared with a global audience via the world’s media – but it could put Qatar in a position to benefit for a long time after the party has ended.

With European demand set to drive upwards and Russian supply looking insufficient to meet it according to Uppsala, the coming decades in Qatar could potentially be the most profitable in the history of the nation. It will then be up to the authorities to ensure that the windfall is invested wisely. In education, in projects to drive economic diversification, and in a sustainable The Doha skyline continues to evolve as LNG revenues are invested in the state’s long-term economic diversification programme (Sean Gallup/Getty Images). future for Qatar.

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SPECIAL FEATURE

Glenn Freeman rounds up expert opinions on where the smart money will be investing in 2011.

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ext year will be a watershed year for investors as the gradual growth of global financial markets continues amid the climate of steady recovery.

One of the most important macroeconomic factors impacting global markets is the tentative recovery of the United States (US), still the world’s largest economy, as its gross domestic product (GDP) edges into positive territory. In November, the Federal Reserve announced it would add an extra US$600 billion (QR2.1 trillion) into the US economy over the next eight months in an attempt to accelerate growth and cut unemployment.

Gary Dugan, chief investment officer of private banking at Emirates NBD, identifies the Federal Reserve’s quantitative easing and ongoing fiscal policy as having a huge impact on international markets, which is keeping US interest rates low and flooding markets with liquidity as a result of government purchases of treasury bills and government bonds. With the intent of stimulating renewed corporate activity and rejuvenating the GDP of the US, “if the US economy doesn’t see profitable GDP figures in the range of 3 to 4 percent in 2011, this may be considered to have not paid off,” says Dugan, suggesting this may

Who will fortune favour in 2011? lead to a new fall in US equity values. On the upside, Dugan believes a positive impact of the US fiscal policy and the liquidity it creates will be realised in emerging markets, particularly in bonds. He expects the recent quantitative easing will lead to further gains in these markets – including the economies of Brazil, Russia, India and China (BRIC), and countries in the Middle East and North Africa.

“A significant part of this excess cash will be channelled to the emerging market economies, as these countries are better positioned than their developed counterparts in terms of economic growth, superior corporate profits and more secure long-term prospects,” he says.

Dugan points to Emirates NBD figures showing that emerging market fixed income markets had attracted US$32 billion (QR116 billion) by the end of October, and believes international investors’ search for higher yields and further quantitative easing will support further price growth regionally.

“We strongly believe that many emerging markets have emerged, and therefore warrant a higher percentage of investor portfolios,” he confirms.

GLOBAL EQUITY MARKETS Dugan and others expect the year to be as good for global equity markets.

Kashif Arbab, managing director of Killik and Company Middle East and Africa, part of the United Kingdom-based private wealth advisory firm, believes next year holds good potential for global equities.

He highlights the period from November to December 2009, when equity markets saw a sharp rise, fluctuating throughout 2010 before stabilising around July into a period of relative stability from September.

“Overall I think there’s huge potential for the equity market...there is a lot of money that has been set aside by many investors, who have been waiting out the uncertainty we’ve seen over the last couple of years,” says Arbab.

“We are at a juncture where equities should attract both income- and growthfocused clients. Prospects for growth are very good over the coming year, while prospects for equity yields are also quite positive, which will also suit those looking for investment income.”

Dugan concurs, “In general, we believe

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(equities) are still cheap across the world, representing good value for shareholders.”

However, of concern to Dugan is that much of the growth in profitability brought about by US corporations in the last 12 months has been the result of slashing costs rather than through productivity gains. “Companies can’t keep cutting costs forever, this is not sustainable…in 2011, they will be much more reliant on organic growth of their businesses.”

BOND MARKETS & OTHER SECTORS Dugan and Arbab agree on global bond markets, expecting their high prices and low yields to continue into 2011. Says

Arbab, “Bonds are looking increasingly expensive, yields are compressed and there is a growing concern that the market could implode at some point.

“In the early 90s the 10-year gilt yield was 12 percent, and with the expectation of rising inflation and the likelihood of rising interest rates in the next few years, we should be aware of the length of maturity of bonds and bond funds.”

Dugan is bullish on oil and mining-related stocks, some consumer goods, and energy, gold and agriculture.

He believes that while agricultural stocks are tipped to perform strongly in 2011, “we are also somewhat concerned on food

manufacturing companies, with higher prices of agricultural goods negatively impacting their performance”, pointing out this affects investors who have invested in general commodities-based exchange traded funds and agriculture funds. “(Investors) should ensure they invest in those where they are closer to the commodity itself rather than to the end-user,” he states.

Dugan expects gold to remain popular.

“I think there will continue to be problems in European economies, with high debt levels, and there will still be downward pressures on the US dollar – this all plays into a positive outlook for gold.”

Macroeconomic factors are driving growth TheEDGE

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of energy-based investments. “We definitely see a lot of popularity ahead for energy.

For example, if you look at China, energy consumption has almost doubled in the last 10 years, (China has) become the biggest energy consumer in the world,” says Arbab.

An area where the two diverge somewhat is on anticipated growth of the finance sector.

“We are still worried about the financial sector – we are of the more cautious view, along with many international analysts, that financial corporations in the developed countries still need to improve their balance sheets significantly...this is one of the primary sectors where investors need to remain cautious,” he says. On the other hand, Arbab finds financial companies represent good value in at least the shortto medium-term. “The finance sector led the market down in 2008, but during the recovery period it was the first to bounce back. The health of the financial sector speaks volumes…It’s fantastic value at the moment.”

Apart from equities and bonds, Arbab looks to other assets such as hedge funds, along with commodity-focused, energyrelated funds, global macro-based funds, funds with currency overlay.

“I would take into account client objectives, and if they wanted minimal currency risk, I would purchase funds denominated in the same currency which match the underlying objectives. For instance, if the client is paid in US dollars and has a United Arab Emirate-dirham-based mortgage, the priority would be to invest in US dollar-denominated assets to minimise the currency risk.” Dugan believes hedge funds have the potential to do well next year. “2011 is not going to be just another relatively straightforward year [for markets] – it will be noisy, there will be pluses and minuses, and hedge funds can make money during this volatility – if investors can find a good hedge fund, these can provide good value in giving a more risk-controlled investment than equities,” he says.

In particular, he expects hedge funds with exposure to emerging markets, in currencies and bonds, and from larger, trusted corporations, should be attractive to investors.

It is said that the race is not always to the swift, nor the battle to the strong – but it is certain that 2011 and beyond will show if this is the right way to invest or whether fortune will favour the brave.

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American president, Barack Obama, visited Jakarta in 2010 to meet with his Indonesian counterpart, Susilo Bambang Yudhoyono. The United States has identified the emerging powers of Asia, including India, as the cornerstone of its economic growth strategy.

EMERGING MARKETS 2.0 With emphasis being placed on the emerging BRIC economies, investors are looking to tap newer frontiers for opportunities.

The ‘Next 11’ (N-11) is a term coined by Goldman Sachs chief economist, Jim O’Neill, in 2005 in reference to markets such as Mexico, Korea, Indonesia, Turkey, the Philippines, Egypt, Vietnam, Pakistan, Nigeria, Bangladesh and Iran. Named after O’Neill’s phrase, the Next 11 from UK-based fund manager, Castlestone, is one of these. Arrash Zafari, fund manager of emerging market equities, visited the Middle East recently to talk to independent financial advisers about the fund. The fund is launching with around 30 stocks and a heavy focus on Korea, Mexico, Indonesia, Turkey and the Philippines. Those five countries should account for 75 percent of the exposure.

Zafari expects the most compelling investment propositions to be in those countries with strong domestic fundamentals, including good population growth and high GDP per capita, without excessive reliance on export markets. For this reason, he believes China’s reliance on export markets is a significant risk. With similar characteristics, yet without the export emphasis, countries such as Turkey, Indonesia and the Philippines are ripe for investment.

“We have seen these markets materially outperforming, even though the Morgan Stanley Capital International emerging markets index is down two percent this year,” says Zafari. Yet, of investing in newly-emerging funds such as the Next 11, Gary Dugan warns, “Never make it 100 percent of your portfolio”, explaining that Emirates NBD looked at the potential of adding some Mongolian stocks to offered portfolios earlier in 2010 – in the end, due diligence ruled that the risks outweighed the potential rewards. “More frontier markets will come onto the scene, but we advise that clients should never overexpose themselves to these,” he says.

At the suggestion that some of the appeal of emerging markets may have gone, for investors seeking higher returns in what were previously considered higher-risk economies, he says this is not the case: “(Emerging markets such as BRIC economies) are still a long way from becoming developed and boring.“People have a better appreciation of emerging markets’ place (in global economies), in accounting for around 50 percent of global output. But people still aren’t appreciating just how much growth we could see here over the next five years... over the longer term, we could see many of these markets, such as China, at growth of more than 10 to15 percent per annum.”

GREEN BUSINESS

AN UPHILL

BATTLE

Following the disappointments of Copenhagen in 2008, can the Conference of Parties in Mexico really achieve anything?

Sam Pickering searches for answers.

GREEN BUSINESS

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Conference of Parties (COP) – held this year in Cancun, Mexico – is purposed with finding an agreement for an international reduction in carbon emissions. This agreement is to replace the Kyoto Protocol, which committed the richest countries in the world to reducing their carbon emissions by 2012.

With Kyoto about to expire, it is essential that the Mexican conference reaches favourable conclusions. But, once again, obstacles threaten to turn the event into another unconvincing debacle like that of COP 15, Copenhagen.

The COP is made up of 192 countries that initially met at the 1992 Earth Summit in Rio de Janeiro. From the outset there have been positive results from the meetings. Having so many international parties under one roof to discuss the future of the environment is a step in the right direction, after all. International scientists use the conference to highlight their concerns and communicate their findings, and publicity broadcasts the climate change agenda across the globe.

However, with every conference there seems to be a waning in public attention and the perception is that there is less possibility of an agreement being reached.

At COP 15, numerous heads of state attended including President Obama. However, COP 16 does not have any heads of state scheduled to attend. Likewise, Ban Ki-moon has indicated that he does not expect a binding agreement from Mexico. Other officials have outlined that their expectations for a positive outcome are low, including the European Union commissioner for climate action, Connie Hedegaard, and executive secretary of the United Nations Framework Convention on Climate Change, Christiana Figueres.

One question that must be asked is ‘Why can no agreement be drawn up?’ There are several answers, the first and most important is the issue of ‘burden sharing’. It seems no country wants to feel like they are giving up more than their neighbour. The least developed countries, small island states and African countries need to feel confident that the agreement will actually help them. It is expected that when an agreement is finally drawn up, developed countries will be responsible for helping fund developing nations to build advanced green technologies and sustainable infrastructure.

Other obstacles to agreement include the political pressures at home for the developed countries and the question of financing the changes. United Nations climate chief, Yvo de Boer, highlighted the immediate problems with financing and hopes that “the focus should be on getting short-term financing moving through existing institutions and clarifying the mechanisms for long-term finance”.

He continues, “If we can create some kind of supervisory mechanism, which maybe doesn’t manage all the money, but does determine the criteria of what should or should not be considered as eligible for financial support, we will make some steps forward.”

In short, the difficulty is determining where the money comes from to implement the changes agreed on and how to compensate those who lose out. Should the financing come from private or public money?

An alternative to balance the burden could be to implement legislation and use public finance to change the investment parameters of the private sector. The markets will ultimately determine the success of the agreement but governments and the COP can work to manipulate market forces to move in the right direction.

The financial crisis has not aided the situation and the political arena is particularly precarious for many countries at the moment, especially the United States (US), whose buy-in is likely to be a catalyst for other countries such as Australia, Korea and Japan. Australia and the US were the only countries not to ratify the Kyoto Protocol, claiming they would be bad for their economies. This argument is now surely inappropriate and is the legacy of politics in that politicians and governments tend to have a very short-sighted approach. The irony of is that the major players are not the countries that will be seriously affected and it is, in fact, the poorer countries that will.

There are positive signs that an agreement will soon be reached, if not by the close of COP 16, then within the next few months or possibly year. The public are now fully aware of the effects of climate change and the science is proven. In addition the private sector is beginning to take on the mantle both in terms of adaption to the effects and reductions in emissions. In addition recently there have been a number of breakthroughs including the self-imposed constraints in terms of carbon emissions of some major developing countries. China for instance has committed unconditionally to carbon reductions; Indonesia has linked their reductions to the provision of financial support, although it has signed up to a minimum level of unconditional reductions as well.

It was not long ago that the likes of China and Brazil would have been resistant to carbon emission reductions, arguing that as the developed world has emitted for years as their economies grew, they should not be forced to reduce now that they are growing.

Although China has started to make changes they still feel that there is a large divide between the rich and poor nations. Senior Chinese climate negotiator, Su Wei, the head of the climate change office at the National Development and Reform Commission, said, “Rich nations were still putting the emphasis on creating market mechanisms to supply fund and transfer technology, and have been ignoring government responsibilities.” He accused richer nations of ignoring the issue of adapting to climate change.

There is much less fanfare and publicity around COP 16 than that of its forefathers, but the importance of an agreement being reached has not dissolved. The ramifications of yet another COP occurring with no agreement could be disastrous for the environment. With no agreement there is no legal accountability for the emissions of countries to be cut and the effects of climate change will become ever more serious, especially for the developing, poor countries. However, as the Earth Summit and Kyoto have shown, agreement is possible. We all have a part to play and pressurising our own governments is surely a good start.

This column will provide a detailed up date of the conclusions of COP 16 in the next edition.

TheEDGE

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BUSINESS VIEW REAL ESTATE

PROPERTY

By Mark Proudley

D

espite a continued threat of oversupply, rentals in Qatar’s real estate market have shown signs of stabilising in 2010, following the significant decreases recorded in the latter half of 2008 and over 2009.

The foundation for this trend is the relative increase in demand for all types of real estate, which can be attributed to the strong economic environment. Qatar is forecast to achieve real gross domestic product (GDP) growth of 16 percent to 23 percent over the course of 2010, and currently has one of the world’s highest per capita GDPs and best performing economies in the Gulf Cooperation Council.

The local economy has been bolstered by the government’s continued commitment to invest the revenues derived from the energy sector into economic diversification, through public spending on transportation projects such as the New Doha International Airport, Bahrain Causeway, Inter Gulf Rail Network and a local metro system.

Other areas identified for major investment include healthcare, sports, education and housing projects.

This spending has created a knock-on effect on the rest of the economy. Historically, shifts in real GDP have shown strong correlation with population growth in Qatar and contribute to increased consumption and demand for better quality housing, office and retail facilities.

Demand levels in 2010 suggest renewed occupier confidence. In the office market, DTZ registered demand totalling 162,800 square metres in the first half of 2010, compared with just 137,580 square metres for the whole of 2009. Research conducted by DTZ highlights that government-related bodies account for 63 percent of the registered demand.

Government ministries lease several towers in the Diplomatic District, equating to in excess of 100,000 square metres of supply. This has been a key factor in preventing office vacancy rates reaching detrimental levels over the year.

Financial and professional services and technology companies are the most active private sector companies seeking new

PROSPERS

space. Again, these sectors are supported and attracted by several government-backed initiatives, such as the Qatar Financial Centre Authority, Qatar Science and Technology Park and Qatar Foundation.

Similarly, demand for residential property has shown signs of potential improvement, with increased economic activity creating new jobs and attracting people to Qatar to seek employment, although population growth is not expected to reach the heights witnessed between 2005 and 2008. Despite this, new

supply continues to outstrip demand in the luxury apartment market, where rents have declined further over the year.

A new trend that emerged in 2010 in the residential sector has been the creation of individual investors and landlords. Previously, each apartment tower in Doha was under the single ownership and control of either a local investment and/or development company or wealthy individual.

The completion of apartments at The Pearl and Lagoon Plaza has led to the formation of

BUSINESS VIEW REAL ESTATE

from property investors in the residential freehold sales market, which is currently dominated by The Pearl.

However, there is a more positive outlook for the freehold market, with signs that investor confidence is returning. This is reflected by a greater number of banks offering retail mortgage products and existing lenders promoting their products.

Demand for hotel accommodation remains strong in comparison to other international markets, driven by business tourists visiting Qatar for meetings, conferences, exhibitions and events. However, there has been a sharp increase in the number of hotel rooms, which over time could impact levels of occupancy and average room rates.

The organised retail market outlook remains fundamentally sound with demand continuing to outstrip supply and growing tourism giving a boost to this sector. The greatest demand is for malls in good locations with high footfall and as such, these command the highest rents.

2008 to 2009: Development of a multi-tier market Sizeable development in Doha was initiated in response to growing demand, driven by the expansion of the energy sector industries. The hosting of the Asian Games at the end of 2006 was another catalyst for

development, as apartment and hotel blocks were built to accommodate participants, officials and spectators.

In 2007, further construction commenced with developers attracted by rising rentals and the financial returns on offer. DTZ recorded average rental growth of 30 percent to 40 percent per annum between 2006 and 2008.

At this time, the real estate market was very much in the favour of landlords. Occupiers seeking residential and commercial stock available to lease had very limited choice and were often in the position of having to secure accommodation, which did not necessarily fulfil their requirements. Rental rates were typically non-negotiable and did not reflect location or quality of the stock offered.

There was little differentiation in price between what were considered prime locations, such as the Diplomatic District and secondary areas like C-Ring road.

Most occupiers’ actively seeking space had a preference to secure accommodation in the Diplomatic District. Due to a lack of availability they were forced to consider alternative locations. In summary landlords were able control the market and make money with limited regard to occupier requirements.

The market in Qatar has transformed substantially over the last two years. The office and residential sectors have both become more favourable for tenants. A number of

towers with multiple owners, which in turn has created a far greater number of landlords in the market actively seeking tenants.

Investors, including those owning single or, in some cases, several apartments in the same tower, are now competing with each other to secure tenants and this has been a factor behind the rental declines witnessed in 2010.

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new schemes, which developers commenced construction on in 2007 and in the first half of 2008 attracted by the financial returns on offer, have now reached completion. That has resulted in a significant increase in the levels of stock that have come to the market. As an example, supply of Grade A office accommodation in the Diplomatic District increased from 680,000 square metres to 1.15 million square metres between the end of 2008 and 2010, equating to a 60 percent increase over two years.

In parallel with increased levels of supply, demand fell in response to the global economic crisis. The level of population growth in Qatar slowed dramatically in 2009. This was in contrast to the previous three years, when, from 2006 to 2008, the population in Qatar increased by 28 percent

per annum from 900,000 to 1.6 million. In 2009, population growth fell below five percent for the year.

It was a combination of the shift in these two market dynamics, which led to declining rents and increased incentives being offered to tenants over this period.

In summary the Qatar real estate market entered into the downward phase of a property cycle. Property cycles are the culmination of a number of factors, but a key element is the inability of supply to react to changes in demand due to the time lag caused by lengthy construction periods. This is a trend prevalent in all major global real estate markets.

The first downward trend recorded since the momentous expansion of the real estate market in Qatar, as well as the decline in rentals, have

had a long-term impact, which is the emergence of a mature, multi-tier real estate market. The increased vacancy rates across the asset classes have produced more choice for tenants. The result is greater differentials in pricing between prime and secondary stock.

As the markets mature, good quality, modern properties, designed and built to meet occupier requirements are in demand and able to command prime rents, while secondary stock and/or locations suffer from increasing levels of vacancy and reduced rental rates to attract interest.

Pricing has also adopted a higher level of sophistication with landlords offering discounts from prime rentals to occupiers with larger space requirements, good covenants and a willingness to commit to lease terms in excess of the market norm.

2011: A demand-led approach In the medium term, increases in demand will soak up new supply. These trends will lead to further stabilisation in rental rates, particularly across the prime markets.

As rental inflation is expected to be limited, real estate investors will need to adopt proactive asset management to drive and enhance real estate values. This can be achieved by undertaking an audit of existing real estate portfolios and then developing a strategy for each asset.

Proactive property and facilities management initiative must be implemented – this includes seeking to build longer term relationships with occupiers, ensuring their requirements are being considered and carrying out preventative maintenance checks and works at properties. Professionally drawn up tenancy agreements, which create proactive asset management opportunities, are likely to become more commonplace.

Future development should be less speculative and more demand-led. Developers will need to focus on the core fundamentals of real estate – undertake market research, identify their target markets and deliver a product that meets the requirements of the end users in terms of design, build quality and pricing.

The market also offers opportunities to occupiers over the next 12 months, who can take advantage of the depressed market by either relocating or renegotiating lease terms at existing premises.

In summary, the market transformation over the last two years means that a “build it, and they will come” attitude will no longer be successful.

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SPECIAL REPORT

Qatar: On target for growth

By Greg Harris

Recent reports from the International Monetary Fund (IMF) and Qatari authorities confirm that Qatar is on track to be the fastest-growing economy in the Middle East, and may be among the fastest growing in the world.

Qatari officials are well aware though that the broader global economic environment remains volatile and are therefore looking to make adjustments to secure steady growth. A primary part of this will be preventing a sudden surge in interest that could cause the economy to overheat.

The economies of many countries have faced the challenge of a slower than desirable recovery from the downturn of 2008 to 2009. However, having expanded by 8.6 percent last year, local officials estimate the Qatari economy will expand by between 16 percent and 21 percent this year. The IMF and other agencies support these expectations, with projections of gross domestic product (GDP) approaching an increase of 18.5 percent.

The most pertinent issue facing the Qatari economy is volatility in oil and gas prices. Any significant decline in hydrocarbons prices would result in a

parallel drop in earnings – the country remains very reliant on these reserves for the bulk of revenue generation.

Qatar’s diverse client list includes importers from Western Europe and the Far East, providing some insulation from fluctuations in the hydrocarbons market.

However, the market for Qatar’s oil can also change given the macroeconomic factors at play in clients’ economies. The nation’s hydrocarbons production is set to peak in 2012, with liquid natural gas output expected to reach 77 million tonnes per annum.

The impact of future fluctuations, it is hoped, will also be mitigated increasingly by the growing diversity of the economy.

While hydrocarbons remain the largest single sector in the economy, there has been a significant shift away from this historic dependence on oil and gas, to the extent that last year, the industry contributed only 45 percent of GDP, down from 60 percent in the five years up to 2008.

State spending has helped increase the projected growth of GDP, and the focus of the spending is to stimulate the economy within the parameters of broader

diversification aims. The government is looking to make investments of more than US$123.5 billion (QR449 billion) over the next ten years in the country, with additional investments abroad building on the extensive progress already made.

While central banks around the world have been forced to slash interest rates in order to encourage borrowing, Qatar’s reserve bank lowered its base rates in August in an attempt discourage high levels of capital inflow, seen as having the potential to fuel overheating.

In mid-October, the central bank said it was essential to manage liquidity and maintain stable conditions in the financial market, with any large interest rate differential between Qatar and advanced economies potentially encouraging these heavy inflows of capital.

In response the bank said it had adopted a “flexible approach in the conduct of monetary policy…complementing it with measures that strengthened financial stability”. Included, a part of this approach was the 50 basis point reduction in its overnight interest rate, which took its key rate to 1.5 percent, the first cut since May 2008.

SPECIAL REPORT

There are concerns that inflationary pressure could be fed by this strong growth and rising consumer demand.

Recent figures suggest the baseline figure, while not currently rising, could reverse and increase. Data issued by the Qatar Statistics Authority in late October showed that the consumer price index fell by just 0.9 percent year on year in September, the slowest rate of deflation in 2010 to date.

According to John Sfakianakis, chief economist at Banque Saudi Fransi, while inflation may be negative for the

year, due to the strong deflationary trends in the first half of 2010, there will be a flattening out of any pricing troughs.

“Deflation should now begin to bottom out, given that we are seeing two consecutive months of no deflationary trends,” he said in an interview with the Reuters news agency on October 27.

Though price increases may occur in 2011, Qatar’s measured handling of what was the worst economic crisis in 60 years has showcased its strong fiscal management credentials.

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BRAND BEAT

By Charlotte Stubbs

“C

reativity”, as defined by Sir Ken Robinson, international advisor on education in the arts, is “the process of having original ideas that create value”.

In today’s world we are confronted with issues and problems that require the development of new approaches and new solutions, and creativity is a valuable tool no matter the field you work in. It is the ingredient that helps you stand out in a crowded marketplace, solve that impossible problem, win an elusive business deal, and overcome the odds to bring success and growth.

In the Emir Sheikh Khalifa bin Hamad Al Thani’s 2030 vision, “innovation and creativity” were listed as one of four key outputs required from the national network of education programmes as important skills to equip Qatari children with. Creativity was recognised and seen to be an essential building block for Qatar’s future development. However, creativity does not just spring up overnight, it requires training and exercise to develop and reach its potential.

In one of the all-time most-watched Technology, Entertainment and Design (TED) talks, ‘Schools Kill Creativity’, Robinson argues that a complete re-understanding of how we approach modern education, and learning across the board, is required.

Traditionally, the emphasis has been on the final result, but Robinson argues that it is better to develop a more rounded educational learning experience instead – one that is not about reaching the correct answer, but rather

about creative problem solving along the way.

In October 2010, software firm, Adobe, released results of a research report, revealing the high value placed on creativity skills in school leavers by employers and university lecturers. Of those surveyed, 77 percent cited creativity as an essential or important skill, in addition to core skills such as numeracy and literacy.

Creative education, however, is not just the remit of schools, colleges and universities alone – industry and the business community must also embrace it. Encouraging staff to embrace creative thinking, as well as employing external creative services, can have an incredible effect on business, especially when such thinking can utilised to get through difficult times such as a recession.

While marketing is often one of the first business sectors in jeopardy during an economic downturn, studies have shown that investing in marketing and design during tough times is highly successful. The Training and Establishment Survival Report of 2007 confirmed that “companies that don’t invest in growth, research and development during a recession are 2.5 times more likely to fail than those that do – the latter often emerging stronger and more competitive than before the recession”. Yet business and education are not alone in reaping the rewards of creative investment. Investing in creativity is a great way, for example, to inspire, train and retain local talent. With London or New York often considered the world’s creative centres, many

young designers seek to relocate towards these largely glamourised cities, with the intentions of seeking a better education and cultural inspiration.

However this need not be the case – investing in the creative sector and providing places of inspiration for local people is important if countries and companies want to retain creative talent and participate in the industry’s local and regional growth. And such local and regional talent is certainly essential. With its unique perspective, it is able to harness the history, values and culture of a country and combine it with a modern outlook.

Not only is it important to ensure educational establishments promote the value of creativity, but this drive should be equally supported by the funding of cultural and creative developments, such as the Mathaf:Arab Museum of Modern Art. Qatar is heavily invested in the development of its future, both of the built environment and its people. The continuation of such investment and the development of creative education will see not only the external benefits to education, business and the wider culture, but also tangible internal benefits. Investing in ‘internal creativity’ develops a pride and creates clarity of purpose, reinforcing the mission and vision of an organisation. Having a strong brand allows people to engage and embrace a vision, company or country and become real-life ‘extensions’ of it.

BRAND BEAT

An example of this is the recently completed branding for one of Qatar’s leading education providers, Doha College.

Doha College embraced a new visual identity, realising the benefit it will give them in a competitive marketplace.

Chris Evans, creative director of Creative Action Design says, “Consumers in today’s society interact with a brand in a multitude of touchpoints and experiences.

It is therefore imperative that a company, institution or organisation must ensure its own brand must evolve and remain relevant in the modern marketplace”. A new brand unites students, staff and parents in hoping to achieve this goal while ensuring the identity is a contemporary reflection of the current mission and values of Doha College. Mark Leppard, principal at Doha College, states, “A rebranding project can be extremely challenging, as our former logo was synonymous with so many things.

However, I am delighted with the outcome of this project and feel that it has captured where we want to be placed: in the position of one of the leading international schools globally.”

We have seen companies enjoy great success through investment in creativity.

The world’s most successful companies are able to adapt and invent. By highlighting ‘creativity’ – the ability to create something new and of value – successful companies create better products and services.

One such leading brand investing in creativity since the 1930s is 3M. The company allocates 12.5 percent of their engineers’ time to innovation, where employees undertake personal projects in their field. The company’s most successful products – the 3M sticky tapes and sticky notes – were developed during this time.

By investing in ‘creative’ development, 3M became the leader in their market.

Similarly, Google, who ranked first on the

2010 list of CoolBrands, an annual survey of the best brands in the United Kingdom, enables their software developers 20 percent of their work time to pursue their own creative projects.

Creativity is becoming an increasingly important tool with which to embrace the challenges of a changing world.

Whether in education, business or the wider culture, creative education needs to be developed in people and in the values of organisations.

The value assigned to creativity will be a defining characteristic in the longterm success of any organisation. It will be an important element in the continued building and shaping of Qatar, allowing for innovative solutions across a wide range of challenges, allowing opportunities to spring from problems, and inspiring the next generation to ensure that Qatar continues to grow and thrive.

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BALANCE SHEET

THE NEW COST OF GLOBAL BUSINESS Mark Lindley outlines how the real and potential risks of transfer pricing audits and adjustments can be managed, and what taxpaying multinational organisations need to consider when making strategic decisions.

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s business globalisation widens the reach and ambition of multinational enterprises (MNEs), chief financial officers (CFOs) and tax directors face a plethora of new tax risks in a growing number of tax regimes with different rules and requirements. In particular, the adoption of transfer pricing rules all over the world has created a new class of tax risk for MNEs. A transfer price is the amount paid by the recipient when a company in one country (A) provides goods or services or intellectual property to a company in another country (B). The transfer price determines where tax is paid and, ultimately, the extent of the tax liabilities arising in the tax jurisdictions of the two companies involved.

The amount of tax paid by a company impacts on shareholder value because the greater the tax burden, the lower the profits that would be available for distribution by way of a dividend. For this reason, transfer pricing has become an increasingly important issue to many organisations.

Risks facing MNEs If the companies in the illustration were members of the same MNE they could, if permitted, set artificial transfer prices with the intention of shifting profits from one tax jurisdiction (usually a high taxing country) to another tax jurisdiction where the corporate tax rates are lower. Such a mechanism would allow an MNE to reduce its overall global tax exposure.

However, this strategy carries risk, particularly reputational risk, and in

COUNTRY A

COUNTRY B

COMPANY A

COMPANY B

GOODS, SERVICES, IP

TRANSFER PRICE

recent years there have been a number of high profile cases in this regard featured in the media. For example, in 2006, pharmaceutical giant, GlaxoSmithKline paid US$3.4 billion (QR12.3 billion) to the United States (US) Internal Revenue Service in the biggest tax settlement in US corporate history. Earlier this year, United Kingdom (UK)-based AstraZeneca paid approximately GBP500 million (QR2.9 billion) to Her Majesty’s Revenue & Customs, the UK’s tax authorities.

But these jaw-dropping payments are not confined to the UK and the US, with many other similar notable cases from around the globe. Since the early 1990s there has been exponential growth in the number of countries adopting and enforcing transfer pricing legislation, and countries in the Middle East and South Asia are no exception.

Tax authorities are increasingly focusing their limited resources on areas where they perceive there is most tax leakage, and they are designing transfer pricing rules which prevent diversion of profits and which protect their countries’ tax bases.

Evidence suggests that tax authorities with variant forms of transfer pricing rules within the Gulf Cooperating Council region (including Qatar) are policing transfer pricing compliance with ever-increasing vigilance, and this is reflected in an increase in the quantities of transfer pricing documentation demanded by certain tax authorities.

BALANCE SHEET

Although the vast majority of tax authorities adhere to the principles set forth in the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines to evaluate transfer prices, interpretations vary. Additionally, because transfer pricing rules have been introduced quite recently in many countries, institutional experience in transfer pricing administration has not yet been established in such countries.

These factors can create uncertainty for the taxpayer because they can lead to adjustments well outside the range considered normal in more mature transfer pricing regimes.

Managing the risk Since every cross-border inter-company transaction potentially requires dealing with at least two different tax authorities – each of which may look at the same transaction in different ways – it is impossible to eliminate transfer pricing risk entirely. However, it can be mitigated by exercising good risk management principles. Some of the key steps to effective management of transfer pricing risks include: • developing controls that allow taxpayers to identify significant inter-company transactions and capturing the information needed to assess potential risks, • assessing such transactions to determine if they carry any red flags likely to attract the attention of tax authorities, • identifying options for resolving disputes that may arise and • developing documentation needed to comply with requirements and establishing a starting point for the risk management process.

Note that documentation comes at the end, rather than the beginning, of this process. Given the proliferation of local rules, preparing comprehensive documentation for a MNE with complex international operations can be very costly

and should be done in conjunction with a risk assessment process. This will ascertain that the money spent on documentation goes to those areas where it can be most effective.

A failure to think through risk management issues upfront can lead to inconsistent or poorly argued reports. This could increase risk by assuming positions at odds with each other or with the MNE’s global policy.

Controls and red flags A set of controls that allows a taxpayer to identify and assess risks systematically should include: • a list of material inter-company transactions ranked by size, • a description of the policies used to price the transactions and the steps used to document

that these policies are followed and • estimates of the financial results of these transactions in each country.

Once the significant inter-company transactions are identified, they should be screened for red flags that could attract the attention of tax authorities. Perhaps the most common of such red flags is an unusual profit result in either direction. In the case of unusually high profits, each tax authority is likely to focus on factors that support a large claim to those profits.

In the case of losses, each tax authority may assert that the local entity is in business to make money, and is being charged too much or paid too little by related parties if it incurs losses over a prolonged period.

RED FLAGS

Persistent losses or low operating profits

Sharp changes in profitability from prior year(s)

Different prices/markups charged between (i) related and unrelated parties for similar transactions (ii) various related parties for similar transactions Lack of (sufficient) documentation

Absence of or non-adherence to inter-company agreements

High royalties with licencee exhibiting low profits or operating losses

Royalties charged for soft intangibles, that is, intangibles that are not legally protected, such as business process/systems/methods Significant inter-company management fees

Transactions with a group company in a tax haven

Significant asset impairment charges, restructuring charges, inventory write-offs Significant year-end adjustment to inter-company prices

Actual behaviour not consistent with documented transfer pricing policy Closing costs (especially when the company was making profits)

Separation of functions and risks that does not make sense from a business perspective As well as the red flags illustrated here, a lack of a clear identification of which legal entity has developed, and thus owns, key intangibles can lead to disputes with tax authorities.

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BALANCE SHEET

Options for resolving disputes The first step in resolving disputes is to identify objectives. Is the objective to: • minimise conflicts with tax authorities, • manage predictability for financial statement purposes and/or • manage the effective tax rate, and/or • meet cash-flow goals?

The taxpayer can then decide what technical positions to adopt and, in view of these positions, how it plans to resolve issues that arise, bearing speed and cost in mind. The vast majority of transfer pricing, and virtually all routine issues, are addressed locally. In other cases, resolution may need bilateral negotiations between two tax authorities, which is usually more expensive and time consuming. However, one important advantage of the bilateral solutions is that they greatly increase the likelihood that double taxation may be eliminated, particularly where binding arbitration is available.

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Documentation The documentation should be contemporaneous and include the functions and risks of the entities engaged in the intercompany transactions, pricing methodologies considered and, where available, third party comparable prices. The core documents should clearly demonstrate that the global or regional transfer pricing policy applies the so-called “arm’s-length standard” (in other words, the transfer price that would prevail if the parties to the transaction were unrelated and independent) and is adhered to.

Conversations with tax authorities A well-written, tightly-argued transfer pricing policy statement can have considerable power. It can be evidence of serious and careful thought, confidence in the product of that thinking, and a willingness to defend it against any

challenge. It can transform the nature of the conversation with the tax authority from an argument to a discussion. If the taxpayer has a good working relationship with the local tax authorities, documentation can provide a basis for reaching a mutually agreeable settlement of the issues.

The continued and growing interest of tax authorities in transfer pricing and the proliferation of local rules have made the assessment and management of transfer pricing risk a key role of MNE CFOs and tax directors. It is a role that takes them far beyond the confines of traditional tax planning, into vital business areas such as organisational structure and the configuration of the supply chain. MNEs should, therefore, have in place effective tools for identifying and measuring risk, as well as a familiarity with both technical and procedural approaches for dealing with transfer pricing issues raised by tax authorities.

LEGAL INSIGHT

managing Human resources

David Salt and Emma Higham summarise the Human Resources Management Law, which governs the employment of Qatar’s civil servants.

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aw No.(8) of 2009 promulgating the Human Resources Management Law (‘Law’) became effective on April 1st, 2009, and governs the employment of the civil servants of Qatari Ministries, other government agencies and public authorities and institutions (each a government entity).

The Law, which repeals all previous laws governing such employment, specifically excludes from its jurisdiction various members of the judiciary, employees of the Amiri Diwan, State Audit Bureau, diplomats and consular corps, university lecturers and Qatar Petroleum employees, to the extent that their various internal employment systems and arrangements

may or may not incorporate the Law or its various provisions.

Here we focus on certain material provisions of the Law which may be of general interest.

Planning and organisation The Law sets out, in detail, the way in which each government entity should organise itself in relation to, among other things, budgets, job creation, job description, categorisation, grading structures, start dates, recruitment including nationality and gender priority, appointment and the approval processes in relation to each.

In addition the Law sets out an overriding framework or context within which the government entities should plan and organise

their employees, for the optimal use of available human resources to achieve the entity’s objectives, development of the individual capabilities of the entity’s employees, creation of a secure and fair work environment for employees to motivate productivity, creativity and cooperation, and to use the same to develop – through engagement with employees – appropriate work practices.

Appointment Appointment of employees can be achieved in various ways, including by Amiri decree or a decision of the authority concerned with such appointment, a standard or usual form contract, a special form contract, a

LEGAL INSIGHT

renewable provisional lump sum contract for a period not exceeding six months, or any other arrangements to be put forward by a government entity, and approved by the competent body for such approval.

Non-Qatari employees are appointed under an employment contract.

To be appointed, an employee must be a Qatari national, not less than 18 years of age, appropriately qualified, including having satisfied the individual government entity entrance requirements, be reputable, medically fit and must not have been previously dismissed from a position or guilty of a crime.

It is worth noting that in some circumstances, the latter requirements relating to dismissal and sentencing can be waived by the competent body of a government entity, and that where an appropriately qualified Qatari national is not available to be appointed, alternative individuals will be considered being in order of priority – sons of Qatari women married to non-Qataris, non-Qataris married to Qatari nationals, Gulf Cooperation Council nationals, Arab country nationals and finally all other nationals.

Probation Probation will initially be for a three-month period. This initial period can be renewed for further three-month periods until the employee is considered competent. Where an employee is not considered competent, his or her employment will be terminated. Once competence has been confirmed, an employee will be deemed permanently appointed and may qualify for end-of-service benefits after he or she has worked for a full year, the probation period being included as part of such qualification.

During the probation period, an employee may terminate his or her employment by giving at least 15 days notice.

Compensation Once permanently employed an employee will receive a compensation package commensurate to his or her grade. The law sets out the various components which make up employee compensation packages.

Each component, its applicability, value and frequency of payment will depend on various factors including an employee’s grade, job title, marital status and number of dependant family members.

The main components of an employee compensation package include basic salary which may be increased as a result of

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good performance over time, performance evaluation percentage increment, social bonus, housing allowance, transportation allowance, supervisory role allowance.

Furniture allowance (one-off), representation allowance, and per diem payments for employees representing the government entity outside Qatar, to include study days allocated to the employee before and after such representation, flight tickets, luggage allowance, overtime allowance, honesty allowance, and telephone allowance.

It is important to note that the payment of some components will result in the non-payment of others and/or net payments being made.

End-of-service benefits are payable and provided for in the Law. Employee pension benefits are provided for under separate legislation and regulations.

Holiday The Law sets out the various periods of leave which employees may either take as of right (for example, periodic or holiday leave); by virtue of their gender (for example, nursing and iddah or waiting leave); marriage status (for example, marriage or marriage accompaniment leave); or religion, (for example, pilgrimage leave).

Additional leave periods include casual, sick, condolence, spouse or patient accompaniment, exceptional or emergency, study, examination and unpaid.

All leave, with some exceptions (for example, unpaid leave), is compensated in full.

No leave may be taken during probation.

Periodic or holiday leave is probably the largest leave component, although iddah or waiting leave may be for a period up to four months and ten days. Iddah is where a Muslim female employee is given leave on the death of her husband.

Employees, depending on their grade, can take between 30 and 45 days’ periodic leave.

Employees must take at least half their annual leave each year – taking full leave entitlement is encouraged by the payment of a periodic leave bonus equal to one month’s salary.

Leave should not be taken in more than three tranches. Any festival or sickness leave which falls within an employee’s periodic leave shall be compensated for by an equal number of days being added to the employee’s basic periodic leave allocation. Ultimately an employee’s leave will be governed by the work requirements of the government entity that employs him or her.

Resignation An employee may resign from his or her employment in writing. The competent authority to which the employee resigns will consider the resignation within a 30-day period.

If no answer is provided within that period, the notice will be deemed to have been accepted. Acceptance may be deferred within the 30-day period for work matters.

An employee will remain employed until such time as his or her resignation is accepted.

Discipline and termination The Law sets out the internal disciplinary processes that the various government entities should adopt, develop and implement.

Processes include internal investigations that may involve interviews and/or the review of written evidence, penalties that may include deductions from an employee’s salary, a reduction of grade, temporary suspension and ultimately dismissal.

Notwithstanding these internal processes which may or may not lead to termination, the Law provides for termination on the basis of an employee reaching 60 years of age, the expiry of an employee’s employment contract, resignation or termination other than for disciplinary reasons, if an employee becomes medically unfit, by Emiri resolution for reasons of public interest, if an employee is sentenced for a crime (provided that no waiver is applied by the government entity), cancellation or withdrawal of Qatari nationality, cancellation of an employee’s job, and/or the death of an employee.

Conclusion The Law provides considerable incentives to encourage high calibre employees into ministry, government agency, public authority and institutional roles which will expose them to opportunities to assist and advise on the future shape, direction and development of Qatar.

Note: all Qatari Laws (save for those issued by, for example, the Qatar Financial Centre) to regulate its own business, are issued in Arabic and there are no official translations. Therefore, for the purposes of drafting this article, we have used our own translation and interpreted the same in the context of Qatari regulation and current market practice.

If you would like further information please contact David Salt (david.salt@clydeco. com.qa) or Emma Higham (emma.higham@ clydeco.com.qa).

Q ata r H e a lt h

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Special Section QATAR HEALTH 2010

TheEDGE magazine is proud to be associated with one of the Middle East’s most prominent medical and health sector exhibitions and conferences, Qatar Health 2010.

In this special section:

“I have a great affection for Qatar.

This is a very progressive country.

It is determined to reform its education and health systems.”

– Lord Darzi, keynote speaker QH 2010.

Exclusive Interview Professor The Lord Darzi Keynote Speaker Qatar Health 2010 Plus, Q&as WITH HMC Deputy Medical Director Dr AbdulWahab Al Musleh on the Origins and Aims of Qatar Health 2010 HMC Hospital Administrators Colene Daniel and Nish Patel on The Qatar Health 2010 Management Track

Special Section QATAR HEALTH 2010

Keynote Speaker Professor the Lord Darzi Professor the Lord Darzi of Denham KBE, is one of the United Kingdom’s (UK) most distinguished physicians and surgeons, and is a strong advocate and supporter of advancement in the health sector in the Middle East. Knighted for his services to medicine and surgery in 2002, Lord Darzi holds the Paul Hamlyn Chair of Surgery at Imperial College London, among other important consultancies and fellowships at leading UK medical institutions and academies.

In 2007 he was introduced to the House of Lords in London and appointed Parliamentary Undersecretary of State at the UK Department of Health, where he lead a major review of the UK National Health System (NHS). Appointed Chairman of The Institute of Global Health Innovation in July 2010, Lord Darzi is also the author of more than 500 peer-reviewed papers, and along with his team is internationally respected for his innovative work in the advancement of minimal invasive surgery and the development and use of allied technologies in healthcare. In November of this year Lord Darzi was appointed to Board of Directors for Qatar’s Supreme Council of Health.

You have been to Qatar before?

Many times; I have a great affection for Qatar. I first came here about four to five years back and over the last three years roughly I have been working quite closely with the Qatar Science and Technology Park (QSTP) and also the Qatar Foundation (QF) in setting up a centre for robotic surgery, and my experience getting that off the ground and launching it was remarkable. We set up the training laboratories… developed the curriculum [and] set up an advisory board for the robotic workshops, which I share. Then over the last year we aligned the education, training and research with Hamad Medical Corporation (HMC), so the surgeons from Hamad are more or less providing that leadership required at a local level to drive full medication training, research and translation of that into clinical practice.

What is your general impression of the health care sector here?

This is a very progressive country and that is reflected in most of the healthcare sector. Qatar is determined to reform its education and health systems. The Education City is one good example of that, some of the most world-renowned universities are here; they are working in partnership with Qatar and on the health side…I have interacted with Hamad Medical Corporation, which is a very progressive healthcare provider, largely down to the leadership of the organisation. Importantly, Doctor Hanan Al Kuwari, the managing director, is determined to ensure Qataris are given the best that modern healthcare has to offer.

To add to that there is a huge amount of talent here generally, local Qatari talent, which is highly trained, highly qualified and is highly ambitious [in] the way they are transforming their services to become an excellent hospital provider.

“The infrastructure in Qatar is being built for the future to deliver the human capital needed in the health sector.”

What do you think are the biggest challenges for Qatar and the region going forward?

A lot of the most common clinical challenges here are not unique to Qatar or the Gulf, but are shared by large parts of the global health sector …for example some of the lifestyle diseases like diabetes and obesity are on the rise.

Many of my colleagues here are trained at the same medical school that I came from so they can identify with these shared problems…and the infrastructure that is being built is very much aligned with what this country needs as far as the health service is concerned, to deliver the human capital needed for the future, whether they are doctors, nurses, managers, engineers. There are many similarities between the challenges facing healthcare in Qatar and some other emerging economies, but in Europe and the United States (US), some of the lifestyle diseases like diabetes and obesity are also on the rise.

These are presenting new challenges for healthcare here?

Of course, However, I think it is worth remembering that the Qatar population is very young, so that could actually could work to their advantage because if you are going to tackle these lifestyle illnesses, you need to tackle them at a young age; the only way you are going to do that is to have a strong focus on a ‘wellbeing service’ rather than a ‘sickness service’. I see an expanded role for primary care, and I see quite a big role for even non-healthcare providers, otherwise how do you align and how do you champion role models for people who play sports, for example? That is really the strongest manner in which to capture the imagination of the young, in relation to a healthy lifestyle and well-being.

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Special Section QATAR HEALTH 2010

Continued from page 75

So being proactive is a big part of advancing health care?

Absolutely, it has to be proactive…[it] is a behavioural change, it is a mindset change and I think Qatar is in a good place to do it because its population is young.

Increased focus on research and development will also play a big role?

Definitely, if you go to Education City, you will see the different universities, the different companies who are putting a significant amount of their assets and knowledge-base in Qatar…I certainly have learnt a lot from spending time being here and I think some of the resources that will be available here will provide tremendous opportunities to expand Qatar as a regional and world leader in a wide range of important research.

The research into robotics is also interesting?

[At] HMC, you will see a quite a big programme of robotically assisted radical prostatectomy, treating prostate cancer. You already see a programme in robotics in cardiovascular disease. So it is: how do you get the alignment between science and the discovery and those who will translate those discoveries into clinical practice?

That is our next big project…and Qatar Health 2010 is all about this translation: how do we bring these big discoveries to the bedside?

Obviously events such as Qatar Health facilitate this kind of communication?

One of the most important things in continual professional development is to maintain that knowledge-base, that evidence base, which is constantly changing. Quality is a moving target because every day, every week, every month there is a new technology, whether it is a new drug or a new device or a new evidence-base or a new policy that transforms the care you provide to your patients. A doctor, going to a big meeting like this, where we have recruited and attracted some of the best people in their field to talk…whether they are in Qatar – a lot of the speakers are Qatari – or from elsewhere, that is a wonderful opportunity to have engagement, an exchange of information, and of evidence-base, and a very important part of networking.

Hamad Medical Corporation Deputy Medical Director Doctor AbdulWahab Al Musleh Among a long list of directorships and other influential positions, in both his native Qatar and the Middle East, as Deputy Medical Director at Hamad Medical Corporation (HMC), Doctor AbdulWahab Al Musleh is one of the local health sector’s pre-eminent minds, and a key figure in the creation and evolution of the Qatar Health concept.

Moreover, Dr. Al Musleh was the originator of the Hamad International Training Centre (HITC) in 1999, which has subsequently achieved great strides in bringing medical training in line with global standards. Dr. Al Musleh has also developed ADAMS (Advanced Disaster Administration and Management Support), a unique training course dealing with all aspects of disaster planning, preparedness and response, and in 2000, he established the Arab Board Residency Programme, which he considers one of his best achievements.

Public involvement and attendance at Qatar Health 2010 is also part of that?

Very much so…this paternal relationship that existed historically between the patient and the doctor, in other words, doctor says patient does, that is all changing, because patients are becoming more informed. This is a new era that we live in…people have information, the patient needs to be increasingly involved and HMC is leading the way in that, getting patients and the public to be involved in the design of their healthcare systems. These are very, very good progressive reforms [and] I am sure the benefits will be much more fruitful if you are informing your customer, the patient.

Thank you Lord Darzi. Anything else to add?

I think we are already living through a very exciting period…every time I come to Qatar, there is a new building or a new development, and for me it is a great privilege to be part of this and to be involved with Qatar Health 2010.

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Dr. AbdulWahab Al Musleh

Special Section QATAR HEALTH 2010

Would you say Qatar is leading the Arab world in many ways in the healthcare sector?

If we start with emergency and EMS services, Qatar is really the leader in the region. If there are countries that developed… they [did so] because of assistance from ourselves. When we developed, for example, HITC, people used to come to us from the region. Now we also go to all parts of the region and beyond, such as Yemen, Sudan and Libya to conduct training. We aim not to just provide one or two courses, but to provide a legacy, a continuation of the training. Therefore, we train the trainer and we establish a training centre. Another part of what we do is relief and…healthcare missions to areas where there are conflicts or natural disasters, [where] we also provide long-term care and even training when the circumstances allow.

What other advances are occurring in the sector here?

There is a huge development in many areas. One new area, which is becoming of high interest…is the development of the cancer [field], which involves several aspects, including screening women for breast cancer and improving the health of cancer patients. We have also focused a lot on trauma.

We now we have very well established Level 1 Trauma Centre, which provides integrated multidisciplinary and interdisciplinary services for trauma patients from the EMS until they are out, including rehabilitation. It is a highly developed and well-known system in North America that we have focused on here in the last two years, and it is a reality now.

In future, we are planning several new facilities, service development and enhancement to existing systems, a cardio hospital and a rehabilitation centre.

Coupled with this, there is interest in the care of children and women, such as the dedicated Sidra (Medical and Research Facility) paediatric facility and women’s hospital. We are also focusing on systems, have done the JCI [Joint Commission International, a global healthcare accreditation standard] and are focusing on clinical services, recruitment and training, improving systems and new equipment, as well as increasing ward space.

Another great development at HMC is upgrading the hospital system, turning

Hamad into a paperless entity and modernising it?

We introduced the Clinical Information System (CIS), which is a globally recognised, health information system. We have been planning this for a long time and are implementing corporation-wide improvements that will soon result in a completely paperless computer-based system.

How does the Qatar Health Expo fit into all of this development? How has the expo grown and improved from last year, in terms of participants, speakers, and tracks discussed?

In the past, in the wider region and in Qatar, there have been many individual conferences and workshops scattered over the year. Managing director of Hamad, Dr. Hanan Al Kuwari and I had been to some of these in Dubai and saw need for a congress that is not business orientated. So we planned to do our own version of a medical care conference that focuses on science – because HMC is a not for profit organisation – to enhance medical care in general and improve the knowledge of the people who work in sciences in Qatar and region. I hope it becomes a big event.

We are also making changes every year to the tracks; it started with medicine, surgery and paediatrics, this year we are including basic healthcare but also focusing on science and research...we are trying to increase knowledge and include public participation, for example in the plastic surgery track, and trying to include new tracks. The existing ones are also growing, such as the nursing track. Last year the highest reach was 1500. We expect another 1500, double the attendance, this year.

How it might Qatar Health benefit the Qatari and regional medical sector as well as those who attend from elsewhere?

Including the international visitors, there is a very wide spectrum of participation from all parts of the world, a lot of them leading figures

in their fields, plus 16 workshops involving a lot of discussion, including the public, on topics like breast exams and cancer prevention, which is the first time we’ve had that track and this type of activity.

In the past, these have only been in available in places such as North America, which is expensive to travel to, and political pressure sometimes makes it difficult to get into these countries, so definitely having a major event here is cheaper.

We are only charging a nominal fee for the event, unlike some neighbouring countries, where this can cost up to US$2000 (QR7300), here all the tracks are not more than US$150 (QR550) each, which is a huge difference. We are not in the business to make a profit, we make a bit of return, but only about 25 percent; but we want to encourage people to come this year, it will be a great event and will involve a lot of interaction for a lot of people.

Why should those not in the medical profession attend Qatar Health? Are there business opportunities that entrepreneurs and businessmen could explore or investigate?

Qatar Health does include a variety of participants, big businesses who exhibit.

Small businesses come too, small clinics and private hospitals, to get referrals and patients.

[There are also companies] that sell medical supplies and equipment. Any discipline is welcome to take part in the exhibition...now we are maybe 90 percent local businesses, but this will change in the next five years, as we move the event into bigger premises.

This year we did not focus on international business, as we did not have the space capacity, but from next year, we will be moving to a larger premises and try to move focus in the health sector from the Far East and China, and we hope this will work.

Our ambition is to become the largest event of its kind in the whole world, to start in region and then the world.

“This year we are including basic healthcare at Qatar Health, but also focusing on science and research and trying to increase public participation.”

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Special Section QATAR HEALTH 2010

Management Track Colene Daniel, Executive Director of Hamad General Hospital and Nish Patel, Executive Director of Hamad Women’s Hospital Often the subject of derision, or the source of conflict between administrators and doctors on television hospital dramas and sitcoms, hospital management has evolved into a vital component of healthcare, arguably as specialised as the medicine practiced in hospitals themselves. Two of Qatar’s most experienced and qualified hospital administrators, Colene Daniel, Executive Director of Hamad General Hospital, and Nish Patel, Executive Director of Hamad Women’s Hospital, comment on the topic, which is one of the primary tracks at Qatar Health 2010.

How does hospital administration have a direct bearing on the health of patients?

Daniel: Just suppose the executive director of a 240-bed hospital has not been trained in business and financial management. You may have to control to manage the entire budget, so you have to have good financial knowledge in order to be successful. You have to have organisational behaviour knowledge. This is because what doctors want is different from what nurses want, which is different from techs want…which is different from what support want. You have to bring them all together and articulate the vision and mission and get people to work together as a group.

Patel: [If] the profession is not this carefully regulated, hospitals are at the whim of the physicians. Whatever they want, they get at the detriment of healthcare community. For example, if it is a multispecialty hospital and the orthopaedic surgeon is the one with the biggest voice, the hospital coverts into an orthopaedic hospital, but without any checks and balances. So, the needs of the other patients will not be the first and you are doing a disservice to that patient community.

So it is not quite how it is displayed on television shows?

Patel: That is why our training is on integrated care being the best healthcare delivery system and the partnership that is formed between administrators, physicians, and nurses as the three pillars of hospital administration, and so yes, the TV series do not give the actual facts. For example, if you look at House, nothing is further from the truth.

Daniel: Every hospital has specialties and at Hamad, we have medicine, surgery, emergency medicine, paediatrics, anaesthesiology, laboratory and radiology. Now under all of these there are about 14 heads, and all of them want money. All of them will say, “My programme is must or patients will die, we are the most important”. So what you have to do is get them to work together, as a governing body.

Information technology is also becoming a big part of healthcare?

Daniel: IT and healthcare as a whole right now is fundamentally changing. We are going from paper records to electronic records, to having a card…that will have a barcode imprinted and the whole medical record will show up in any computer; your scans, lab work, and pharmacy prescriptions. That is really exciting and is changing the dynamic of healthcare.

Nish Patel

Colene Daniel

What does it take to be an effective hospital administrator?

Nish Patel: The training of a hospital administrator is really two years at the master’s level, after undergraduate, and a lot of the training focuses on the science of delivery…it could be the design of processes, it is statistical work, business management, epidemiology, how organisations work, and the whole issue of team building and personal management. Plus now, there is increased focus on information systems. So really, at the end of the two years, students coming out are very knowledgeable technically.

Colene Daniel: Today hospital administrators have to be trained not only in the science of medicine, to understand it enough to have a conversation with physicians and make good judgment, but they also have to be trained to make good business decisions…good leadership decisions and financial decisions.

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The key speaker at the management track is Mr Steven Smith. Mr Patel, you have worked with him at Mayo Clinic in the US; what is the value of having someone like this at Qatar Health 2010?

Patel: It sets the tone for what to expect for us as a country to move towards…or the least to reflect upon and ask: how do we focus our energies and our attention in the next few years, as all this rampant change in healthcare in Qatar goes on? With his background, he has been through many changes both system-wise and in integrated medical care system, so he is very well positioned to give us good advice.

So, this is why this is a primary track at Qatar Health 2010?

Daniel: Yes. We hope many students, particularly in IT, or those in business can come, understand the business of healthcare and become interested.

Patel: I think it not only for us, it will bring all the different areas of healthcare in Qatar together, but I also it will bring more awareness to our citizens here that healthcare is something that we take very seriously.

HEALTH AND SAFETY

HEALTH AND SAFETY

A

ccording to the British Standards Institution, “a management system is a proven framework for managing and continually improving your organisation’s policies, procedures and processes”.

Through the continual improvement of their health and safety performance, organisations are able to improve the effectiveness of their policies and procedures, improve client/customer and stakeholder satisfaction, promote innovation and involvement, and reduce accidents, injury and ill health.

Occupational health and safety (OHS) management systems are designed to manage an organisation’s safety and health risks, accident incident data and records, resulting in an incident-free workplace. The primary goal of the system is to prevent or reduce illnesses and injury, for both employees and contractors, by identifying workplace hazards as well as assessing and controlling all the risks that an employee may face.

Not all companies adopt such systems though, possibly because there are so many versions available, both certifiable and noncertifiable. To date, the International Organization for Standardization (ISO) has adopted standards for quality (ISO 9000) and environmental (ISO 14000) management, but not, as yet, for OHS. Depending on the origins of an organisation, there are numerous options available (BS 8800:2004, BSI OHSAS 18001:2007, Z1000, Z10, AS/NZ4801:2001, and ILO-OSH 2001, to name but a few).

The myriad of standards and requirements for occupational health and safety has hindered progress rather than assisted it. Organisations are unsure of which standard to adopt and may be unaware of the benefits of adopting an OHS management system. As a result, many choose to do nothing until there is a specific legal requirement, or until a client, stakeholder or their corporation requires them to implement a management system.

A STARTING POINT For those looking to implement an OHS management system, BS8800 is a good starting point.

BS8800 is essentially a guide to occupational health and safety management systems, intended to assist in developing a framework for managing OHS. It explains how the various elements in developing such a system can be integrated into daily management activities, and how the system can be maintained as OHS evolves, responding to internal and external influences.

The focus on business drivers is intended to help managers gain senior management commitment. It also offers guidance on issues such as promoting an effective safety management system, risk assessment/ control, and hazardous event management.

American corporations often report their accidents in line with the Occupational Safety and Health Administration (OSHA) requirements, yet stakeholder expectations and client requirements have seen some of these corporations adopt 18001 in preference to the American National Standards Institute standard for their OHS management system.

Many standards organisations worldwide have adopted 18001 and it has become the de-facto international standard.

The latest version of this management system is now a British Standard (BSI OHSAS 18001:2007). While the standard specifies the requirements of an OHS management system, it does not state specific occupational health and safety performance criteria, nor does it give detailed specifications for the design of a management system.

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WHY 18001?

Occupational Safety and Health Assessment Series (OHSAS) 18001:2007 was developed by the British Standards Institute in conjunction with numerous standards authorities (and other interested parties) around the world, to ensure that it was compatible with ISO 9001 (Quality) and ISO 14001 (Environmental) management system standards, so that it would easier to integrate the required procedures with an existing ISO 9001 and/or ISO 14001 management system.

In fact, the clause headings of OHSAS 18001 are virtually identical to those of ISO 14001.

The standard management system structure is based upon the methodology known as Plan-Do-Check-Act (PDCA). The PDCA cycle can be illustrated as follows: PLAN: DO:

CHECK ACT:

Design or revise business process components to improve results

Implement the plan and measure its performance

Assess the measurements and report the results to decision makers

Decide on changes needed to improve the process

ACT

PLAN

CHECK

DO

It is becoming more commonplace among organisations that have adopted formal management systems to opt for an integrated management system, and to seek external certification to 9001, 14001, and 18001 simultaneously.

BSI OHSAS 18001 Clause 1-Scope states: “The OHSAS standard specifies requirements for an occupational health and safety management system (OHSMS), to enable an organisation to control its OH&S risks and improve its performance. It does not state specific OH&S performance criteria, nor does it give detailed specifications for the design of a management system”.

This indicates that the purpose of the standard is to ensure that organisations have management systems in place, with objectives and policies that cause the necessary procedures to be developed and implemented, and their effectiveness monitored. This in turn will lead to improvements.

HEALTH AND SAFETY

It is a common misconception that organisations have to rewrite all of their systems and procedures in order to comply with the requirements of the standard. This is not necessarily true.

Before implementing a management system, an organisation must understand what its health and safety risks are and the level of its health and safety performance.

Such organisations may need to carry out an initial review that looks at present occupational health and safety systems (procedures and processes) including policy, risk assessments and documentation.

This will provide a baseline from which progress can be measured.

The types of questions organisations should ask are: • What regulations and legal requirements do we have to meet?

• How do we currently identify hazards, conduct risk assessments and implement the control measures?

• How do we report incidents and accidents?

• How do we deal with emergency situations?

• Are there any specific client requirements we have to meet?

• What are our stakeholders’ requirements?

OCCUPATIONAL HEALTH AND SAFETY POLICY OHSAS 18001 requires organisations to produce a policy statement that communicates its OHS values. This policy must be supported and authorised by top management and organisations must ensure that performance is consistent with this statement.

From this starting point, organisations are in a better position to develop an OHS management system compliant with OHSAS 18001.

The key elements in this process are: • Hazard identification, risk assessment and determining controls.

The complexity of these processes will depend on an organisation’s size, workplace situation, and nature and significance of the hazards. These activities must however be conducted continuously, • Legal and other requirements. Organisations need to develop a procedure that enables it to identify and access the legal and other OHS requirements. This procedure will enable it to know when a requirement changes and when a new regulation needs to be addressed, • Objectives and programmes. Organisations must establish OHS objectives to ensure that the policy is achieved. Ideally, objectives should be specific, measurable and timely.

IMPLEMENTATION AND OPERATION To implement and operate an effective OHS management system: • Define the roles, responsibilities and authorities of staff with regard to OHS, including the appointment of a member of the top management as a management representative, • Provide appropriate training to ensure people are competent, • Ensure that there is effective internal and external communication, • Describe how the management system is structured and develop the necessary OHS processes and procedures, • Ensure that documentation is controlled so that only current versions are in use, • Ensure that risk control measures are being properly managed, including the development of appropriate procedures and the maintenance of records, • Establish, maintain and test a process for dealing with emergency situations.

CHECKING AND CORRECTIVE ACTION Procedures are required for the handling and investigation of accidents, incidents and non-conformances in order to eliminate the actual or potential cause. OHS system audits are required to assess the system’s suitability and effectiveness. These audits – both internal and external audits – prove that a management system is working.

A process for monitoring and measuring is also needed. This process provides confidence that an organisation is in control of its OHS risks and provides a mechanism to determine progress towards achieving objectives.

PLANNING Completing an initial review and developing an organisational policy should help organisations to gain a better understanding of legislative and regulatory requirements, identify the OHS risks, examine all existing OHS management practices, processes and procedures, and evaluate feedback from the investigation of previous accidents, incidents and emergencies.

MANAGEMENT REVIEW Top management will need to meet periodically to ensure that the OHSMS is suitable and effective. This will include a review of the OHS policy and performance against the OHS objectives. The review will also consider the changing business environment and the future management programme.

In conclusion, the ultimate test of management is business performance. In order to control health and safety performance, an organisation must be able to measure performance and results against goals. Objectives are needed in every area where the OHS performance and results directly and vitally affect the prosperity of the business.

Implementing an effective OHSMS will enable an organisation to outshine its competitors in all aspects of business.

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INDUSTRY FOCUS ENTREPRENEURSHIP

ENTREPRENEURS

Tarek Kassar discusses traditional and non-traditional entrepreneurship education aimed at creating a complete ecosystem, where the entrepreneurial mindset, capabilities and readiness of young people in the region can be attained.

INDUSTRY FOCUS ENTREPRENEURSHIP

A

ccording to the Silatech Index, 15 percent of young people in the Middle East have expressed their desire to start a business in the next 12 months, a relatively higher proportion than their counterparts in North America and Europe, where only four percent of young people share this ambition.

Defining entrepreneurship education Entrepreneurship is defined as the ability to transform an idea into an implemented project. Accordingly ‘entrepreneurship education’ should be defined as the ability to develop and empower a young person’s entrepreneurial mindset and capacity.

While entrepreneurship is common in business ventures, it is not limited to this sphere. It can be applied in social and civic services, medical solutions and technologies, creative arts and production, innovative technologies and communications, etcetera.

For this reason, entrepreneurship education cannot be limited to business start-ups. It promotes a certain mindset and specific set of skills that interrelate with an individual’s attitude and behaviour towards ideas and their development.

Objectives of entrepreneurship education The role of teaching entrepreneurship is not widely recognised among governments, non-governmental organisations (NGOs), education and curriculum bodies, political and business leaders, or even successful entrepreneurs in the Middle East and North Africa (MENA) region.

While this type of education is a lifelong process, short-, mid- and long-term objectives can be achieved: 1. To unleash the young person’s spirit to innovate, initiate and become independent.

2. To increase awareness of how entrepreneurship can help an individual’s career move towards self-employment, and how entrepreneurship fosters achievement and prosperity.

3. To train individuals to evaluate entrepreneurial ideas and business opportunities, construct a business plan, create a venture, and develop set of skills that will equip them for success.

4. To promote entrepreneurship through success stories and true leaders.

5. To empower aspiring entrepreneurs with incubation, micro-funding, and business development services, while under mentorship.

Traditional and nontraditional methods In order to achieve an entrepreneurial ‘ecosystem’, we should start by applying traditional principles in order to achieve the most fundamental part of the process.

1. Promoting new policies Reform can be effected as a result of a change in market demand or culture. A reform of the education policy that embraces entrepreneurship should be promoted as being necessary for the 100 million young people who will be entering the region’s job market in the next two decades.

Ideally, institutions of influence and the region’s leading individuals should create an independent group that would promote reformed education policies to policy makers, such as Qatar University, American University of Beirut, King Abdullah University, Dubai School of Government, Silatech Knowledge Consortium, Injaz AlArab, etcetera.

With their access to such policy makers, other institutions and academics, they would be able to influence a regional change.

2. Inclusion in the national curriculum It should be pointed out that in many of the MENA countries, no national curriculum of entrepreneurship education exists. The inclusion of entrepreneurship in the curriculum is integral for developing knowledge, skills, attitudes and personal qualities appropriate to the age and development of young people.

Such an inclusion could begin at elementary level to create awareness about the role of entrepreneurship in benefitting the community, and, at a later stage,

entrepreneurship can be practiced through training courses and practical application.

Training teachers to deliver the correct message and models requires the involvement of teaching institutions, as well as the enthusiasm and involvement of the teachers themselves.

3. Commissioning NGOs The cornerstone of efforts to build a thriving entrepreneurship ecosystem is the establishment of NGOs that are focused on entrepreneurship education.

Such NGOs would research market dynamics, promote new policies, provide a training curriculum, monitor the quality of its execution, etcetera.

There are only few organisations in the MENA region that focus on this – for example, Injaz Al-Arab – and more are required.

While traditional methods of entrepreneurship education are being implemented in some MENA countries, they require huge effort and continuous commitment. Non-traditional methods, on the other hand, can be implemented by the individual or collective efforts of people with initiative and influence.

4. The learning-by-doing model This new model recruits a highly motivated group of developers, business managers, start-up enthusiasts, marketing gurus, graphic artists and others, to a 54-hour event that builds communities, companies and projects.

It connects young people with skilled individuals, perhaps even helping them find a partner or investor to transform their idea into reality.

The ‘startup weekend’ does not teach entrepreneurship in a classroom setting – instead, it is a fun, interactive and resultsdriven event. The non-profit organisation, Startup Weekend, has become one of the leading catalysts for startup creation and entrepreneurship education in startup ecosystems around the world and recently held such an event in Lebanon.

This initiative is attended by university graduates, but why not school students and university undergraduates as well? An event of this nature is as easy to organise as summer camps or graduation parties.

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INDUSTRY FOCUS ENTREPRENEURSHIP

5. The apprenticeship model A quick manner in which to inspire and empower entrepreneurship and self-employment among undergraduate young people, is to integrate independent entrepreneurship-apprenticeship courses into universities.

While the concepts of an apprenticeship, and of a businessman tutoring a session or two at a university are well-known, this suggested model is an apprenticeship with a twist.

Here, a successful entrepreneur oversees a complete course held as an intensive project.

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The concept allows for close mentorship and practical experience in evaluating and processing ideas, and assessing their viability.

It would be more advanced than what is currently offered at universities, and could be adjusted and applied at school-level as well.

6. The dissemination model Dissemination of ideas, knowledge and inspirational stories related to entrepreneurship will facilitate the change needed to build and sustain the ecosystem.

The dissemination mobilises young people,

institutions and companies. Technology, Entertainment and Design (TED) is committed to “Ideas Worth Spreading� and brings together people from worlds as diverse as science, business and the arts, using live presentions and videos that aim to spark connections.

Such a programme could be designed for entrepreneurship education to stimulate dialogue between entrepreneurs, institutions and NGOs, and young people in the region.

Tarek Kassar is Communications Manager at Silatech.

TECH TOOLS

TECH

FOR EXECS

The latest in gadgets for tech-savvy executives.

For the sports-loving photographer

Light as air

The powerful and top-of-the-line Panasonic DMC-FZ100 and DMC-FZ45 Lumix cameras have been designed specifically for sports photography.

The popular FZ series packs a strong optical zoom as well as creative options that include manual operation, and add high-definition (HD) movie recording capability. The FZ100 is considered a true hybrid, offering 1080 full high-definition recording, while the FZ45 offers ultra-wide angle and telephoto pictures in a stylish body. The 24x optical zoom can be increased to 32x-equivalent with the intelligent zoom function, all the while maintaining picture quality. Users can enjoy creative shooting not only in photo, but in movie as well, utilising a host of options including Creative Movie and My Colour mode. Available in the Middle East. Price unavailable at the time of going to press. www.panasonic.ae

Could the new MacBook Air be any thinner? We think not. This is easily the most portable MacBook that Apple has made, and may have you wondering whether you really need that iPad. A fully productive computer, the MacBook Air can do anything a Mac is capable of. The keyboard and trackpad are of a decent size, and the display has more pixels than a 33-centimetre Pro. While the 1.4GHz Core 2 Duo processor, two gigabytes of RAM and integrated graphics card are not impressive on paper, the Air can still be used in place of your usual computer without problems. The only restraint will be when you are editing photos or watching videos. Yet, weighing a mere kilogram and available in 28- and 33-centimetre models, the key to the Air’s popularity will be in its sheer portability. Available in the Middle East for approximately US$999 (QR3600). www.apple.com

Limited edition Versace

Versace is renowned for its flashy fashion, but the new Business watch is a study in sleek sophistication and understated glamour. Designed for a new generation of fashionable men, this is a timepiece for individuals with an original attitude.

The 43-millimetre round case is crafted in rose gold and encloses a white dial and the famous Medusa logo. On the inside is a La Joux-Perret 3513 automatic Swiss movement, visible through the see-through case back. The Big Date display, power reserve indicator and Roman numerals complete the look. The leather strap, fastened with a deployant clapset, adds a finishing masculine touch. Also available in a stainless steel finishing with a black dial, the new Versace Business watch is a limited edition.

Available in Qatar for approximately QR 8000. www.versace.com TheEDGE

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HEALTH AND FITNESS

HOW TO SURVIVE THE SILLY SEASON It is that time of year again. The social calendar is filling up and many are escaping to their respective home countries to enjoy the seasonal festivities with family and friends, and our waistlines and wallets are set to be stretched to the max. Thomas Woolf offers some tips on how to make it through the crazy year-end festive season in one piece.

We are also usually stretched financially at this time of year and the seasonal festivities bring with them untold pressures to spend pots of money. This can be great for businesses and economies, but it must all be paid for eventually.

With the average person adding an extra US $1500 (QR5500) to their credit card bills during December, there is also a danger that many people are unable to repay their additional debts, so watch those impulse buys.

We also must be aware of our impact and role within our local community as well as the wider environment, to collectively ensure that our overall net contribution is a very positive one.

As you will see from our survival tips, we would advocate everyone take some small steps to not only look after themselves and not spend more than they can afford, but also to ensure it is a month of social prosperity.

This is to ensure that they engage with their local community, recycle what they can and remember that what we consume has an impact on our bodies and our communities, and so choose wisely.

TheEdge’s Top 10 Silly Season Survival Tips.

1. Book Your Appointments Now. With everyone going out and celebrating the seasonal festivities, not only do restaurants and our social diaries fill up, but so do those of our beautician, babysitter and hairdresser, which can cause stress and extra expense. So get ahead of the game and make sure the kennels are booked to look after your pet pooch, and you book your flights and hotels etcetera (if you are travelling), the cheaper they will be.

HEALTH AND FITNESS

Did you know?

The average person can consume in excess of 7000 calories and a whopping 300 grams of fat during large festive season family meals. Coupled with the various parties, corporate entertainment events and New Year celebrations, a person can consume an extra 60,000 calories in December.

This excessive consumption can lead to a dramatic weight gain of three kilograms of fat, and remember it will require many lung-busting hours to work this excess fat off.

2. The Power of Relationships. Often during December, we are invited to a number of corporate festive events. This is a time to strengthen and solidify business relationships in a social context. Do not waste this opportunity, make sure you spend some quality time with your key business relations in a relaxed setting, and try if possible to establish one new relationship per event.

3. Choose a living Christmas tree. If you are going to go this route, a living tree can be planted in your garden and used year after year. If you, like many of us in Doha do not have a garden, then try to find an indoor plant that can double up as a Christmas tree and try to refrain from excessive plastic decorations. You can get the whole family involved and make wonderful gingerbread decorations, which children can eat over the month. Turn off the lights on the tree after you go to bed and while you are out. Try putting your indoor and outdoor lights on timers if you do not remember them by yourself.

4. Buy Locally Grown Food. Christmas is the ideal time to buy locally, so find out where the Doha wholesale market is and pay it a visit. The food will be fresher and the shorter transportation distance from field to fork will significantly cut down on carbon emissions. Avoid buying food that is overly packaged. Items bought loose or in bulk will taste just as good as those that are cellophane-wrapped.

5. Give the Gift of Time. Make sure you take time out to visit an elderly neighbour or someone you know of in your local community who may be on their own this December. Offer to help with the domestic chores.

A couple of hours of your time would really make the difference to someone else’s life.

6. Buying Cards Made From Sustainable or Recycled Paper. In the United Kingdom alone an estimated one billion cards end up in the bin, that is 17 cards per person. Alternatively, send electronic cards over the Internet or make your own cards from old magazines. The personal touch really goes a long way.

7. Go Easy on the Food. While it is tempting to stuff yourself all day, especially if you are off work and have little to do, try to limit your food intake. Choose the healthier options available at family get togethers and do not pile too much food on your plate first time around, there will always be time for seconds. Do spoil yourself a bit, but remember to go easy on the cake and cookies.

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8. Go Easy on the Alcohol. If you choose to consume alcohol, then try to limit your consumption to no more than two to three glasses of wine in any one day, and ideally not more than twice a week. You can also reduce the impact and strain on your system from alcohol by drinking a glass of water in between drinks and ensuring that you remain well hydrated.

9. Do Not Drink and Drive. However, tempting it may be. Simply make sure you have a driver or taxi arranged before going out, and leave the car at home. There really is no excuse.

10. Do Not be Lazy. The weather is wonderful in Doha at this time of year and there is no excuse not to get out and get active. So rather than waiting until January to dust off those training shoes, grab a bottle of water and your gym kit and get out to the Corniche or Aspire Park. Depending upon your fitness levels you should aim to walk, jog or run at least three kilometres, three times per week in addition to your normal exercise regime. This is the minimum everyone should be undertaking and those of you who are enjoying the seasonal festivities to the max need to add a couple of extra sessions. We are big believers in the philosophy of working hard and playing hard, but make sure you keep things in that order. Do not leave your workouts to the next day, so get your workout in first, before heading out to celebrate.

TheEdge December Healthy Eating Tip If you are looking for the perfect location for a staff party or festive celebration then look no further than Gordon Ramsey’s Maze restaurant located at The Pearl Qatar. Maze offers a wonderful set menu for lunch and at QR140 per head is excellent value for money and a great venue for a seasonal gathering. Having dined at both Maze London and Maze Doha, I have to say that Maze Doha wins hands-down not only for the quality of food, but also the setting which is incredible. Our top healthy choices on the set menu would be the sauté of octopus, confit potatoes, lilliput capers and paprika quinoa to start, followed by fillet of baby hammour, wholegrain rice pilaf, raisins and braised fennel.

As for dessert, if you have any room left, there isn’t anything particularly healthy on the menu, so pick what you want, enjoy it and just make sure you work extra hard in the gym beforehand or the next day.

EVENTS AND CONSTRUCTION

EVENTS & CONFERENCES DECEMBER 7 – 9 FIFTH ANNUAL GULF PETROCHEMICALS AND CHEMICALS ASSOCIATION FORUM Intercontinental Festival City, Dubai, United Arab Emirates Join the world’s chemical leaders and decision makers seeking new business opportunities, insight and information. This is the largest petrochemical gathering in the Middle East and is presented under the theme, Driving Value and Growth Through Innovation. www.gpcaforum.net

DECEMBER 8 – 9 SAUDI INVESTOR WINDOW 2010 King Faisal Conference Hall, Intercontinental Hotel & Resort, Riyadh, Kingdom of Saudi Arabia Billed as an investment, transfer of know-how and partnering event, this is an opportunity for direct communication, negotiation and deal-making with Gulf investors. The event will include investment presentations, panel discussions, networking sessions and investor meetings. www.siw.uciinternational.com

DECEMBER 7 – 9 WORLD INNOVATION SUMMIT FOR EDUCATION Sheraton Resort and Convention Hotel, Doha, Qatar Organised by Qatar Foundation, this two-and-a-half day conference will focus on improving educational structures and exploring innovative trends.

Plenary sessions and breakout sessions will be organised around these issues, with an additional plenary addressing how 21st-century education should be funded. www.wise-qatar.org

DECEMBER 13 – 14 SYNDICATED LENDING IN THE GCC 2010 Grand Millennium Dubai Hotel, Dubai, United Arab Emirates Billed as the definitive local loan forum since 2004, this event offers attendees a new programme in line with borrowers’ appetites for loans, bonds and equity.

Guest speakers from Mubadala, Emirates Aluminium, HSBC, Deutsche Bank, RBS, Credit Agricole CIB and Mizuho have been confirmed. www.informaglobalevents.com/event/syndicated-lending-in-theGCC-conference

QATAR PROJECTS UPDATE BARWA COMPLETES MASAKEN PROJECT Barwa recently completed its Masaken Al Sailiya and Mesaimeer project, with both phases comprising 31 buildings, including two- and threebedroom apartments, clubhouses, gymnasiums, basketball and tennis courts and green spaces and play areas for children. With market demand for high-quality affordable homes increasing, Masaken is Barwa’s award-winning solution. The project won the “Best Completed Development” award at the Affordable Housing Development Middle East Summit in Bahrain, and “Qatar Best Leading Community Serving Project” from the Ministry of Social Affairs. Some of the units have been allocated to needy families in collaboration with the Ministry of Social Affairs.

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ASHGHAL SUSPENDS DEVELOPMENT PLANS According to Al Sharq, plans to develop the Industrial Area have been shelved. The area is home to a number of small and medium industrial units, warehouses, showrooms, and has many low-income foreign workers.

Although the Public Works Authority (Ashghal) had recently announced plans to upgrade streets and the sewage system, as well as install street lights, plans have since been “suspended”.

GENERAL ELECTRIC CREATES JOBS IN QATAR General Electric (GE) has opened a manufacturing plant with Al Farraj (FTMC) to supply electrical equipment to five Middle Eastern countries, including Qatar, the United Arab Emirates, Kuwait, Oman and Jordan.

GE Energy has already installed 1000 turbines and has over 1400 employees across the Middle East. The new facility will create up to 150 new jobs in Qatar.

TENDERS

QATAR TENDERS PARK CONSTRUCTION AND MAINTENANCE Description: Construction and maintenance of a park at Industrial Area’s department location.

Closing date: December 6 Client: Ministry of Energy and Industry Phone: +974 4437 8143 Fax: +974 4443 9360 E-mail: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender no: 578/2010-2011 Bid bond: QR60,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha.

GRAVEYARD CONSTRUCTION Description: Construction of a graveyard at Al Wakra, including construction of masjid, offices, body washing area, staff accommodation, and shade car parking.

Closing date: December 7 Client: Public Works Authority Phone: +974 4495 0000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/GTC/052/10-11 Bid bond: QR473,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha.

SEWAGE PLANT MAINTENANCE Description: Operation and maintenance of four sewage treatment plants in Doha.

Closing date: December 7 Client: Public Works Authority Phone: +974 4495 0000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/GTC/051/10-11 Bid bond: QR915,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha.

MAINTENANCE Description: Three-year contract to maintain and operate Al Dhaayen municipality.

Closing date: December 13

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Client: Ministry of Municipal Affairs & Agriculture Phone: +974 4437 8143 Fax: +974 4443 9360 E-mail: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender no: 588/2010-2011 Bid bond: QR50,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha.

SEWER SURVEY PROJECT Description: Explore the condition of old sewer lines in different locations in Doha City using CCTV survey to help define suitable rehabilitation.

Closing date: December 13 Client: Public Works Authority Phone: +974 4495 0000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/STC/050/10-11 Bid bond: QR28,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha.

CONSTRUCTION Description: Construction of nine new kindergartens around Doha.

Closing date: December 14 Client: Public Works Authority Phone: +974 4495 0000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/GTC/037/10-11 Bid bond: QR6 million Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha.

MAINTENANCE OF PUBLIC GARDEN Description: Maintenance of garden and an irrigation network at the Land Mark intersection.

Closing date: December 20 Client: Ministry of Municipal Affairs & Agriculture Phone: +974 4437 8143 Fax: +974 4443 9360 E-mail: ctc@qatar.net.qa Website: www.ctc.gov.qa

Tender no: 603/2010-2011 Bid bond: QR258,000 Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha.

POST-CONTRACT CONSULTANCY Description: Post-contract professional site supervision and quantity surveying consultancy services for construction, completion and maintenance of new Al Wakra graveyard.

Closing date: December 26 Client: Public Works Authority Phone: +974 4495 0000 Fax: +974 4495 0777 E-mail: info@ashghal.gov.qa Website: www.ashghal.gov.qa Tender no: PWA/ITC/026/10-11 Bid bond: QR55,000 Tender documents can be obtained from: Contract Affairs, Public Works Authority (Ashghal), Doha.

LARGE-SCALE RICE SUPPLY Description: Supply of 24,000 tons of basmati rice, or 600,000 sacks.

Closing date: December 27 Client: Ministry of Municipal Affairs & Agriculture Phone: +974 4437 8143 Fax: +974 4443 9360 E-mail: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender no: 606/2010-2011 Bid bond: QR2.7 million Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha.

LARGE FARMING PROJECT Description: Large breeding farm project.

Closing date: December 27 Client: Breeding Farm Project Steering and Follow-Up Committee Phone: +974 4437 8143 Fax: +974 4443 9360 E-mail: ctc@qatar.net.qa Website: www.ctc.gov.qa Tender no: 604/2010-2011 Bid bond: QR21 million Tender documents can be obtained from: Central Tenders Committee, Rawabi Street, Al Muntazah, Doha.