contents May 2015 AlJassim FP TheEdge67.pdf
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Business Interview: Sheikh Mohammed bin Faisal Al Thani of Al Faisal Holding
Vol. 7 No. 5
- May 2015
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- QATAR’S BUSINESS MAGAZINE - Vol. 7 No. 5 - Issue 67 - May 2015
cover story
REACHING CRITICAL MASS Examining the link between fast food and obesity in Qatar and the GCC
EXPATRIATE GAMES
What is the future of the foreign workforce in Qatar? Should they stay or should they go?
100% Qatari
Obesity and diabetes in the Gulf Cooperation Council has reached epidemic proportions and is becoming an increasing burden on public healthcare and overall gross domestic product (GDP). Therefore, medical experts are focusing on the root causes, which include cultural reasons and a prevalence of fast food outlets over healthier options, writes Abed Ayyed.
On the overall direction of geographical diversification for Al Faisal Holding, Sheikh Mohammed bin Faisal Al Thani, vice chairman of the group, believes that the group is “always looking for opportunities that can add value to the group and provide synergies with existing operations”. (Image Al Faisal Holding)
features
Business Interview: Confident in growth
48
Sheikh Mohammed bin Faisal Al Thani, vice chairman of Al Faisal Holding, in an exclusive interview with The Edge’s Aparajita Mukherjee, talks about the overarching philosophy of holding the diverse entity together, and its journey into the future.
Feature Story: Do foreign workers have a future in Qatar? 54
What is the evolving talent landscape for expatriates in Qatar, and indeed do they even have a place in the future of the region? The answer is yes, but with some serious caveats, writes David Jones.
Business Interview: Worth the freight
60
According to Ulrich Ogiermann, chief cargo officer of flagship-carrier Qatar Airways, the opening of Hamad International Airport’s new cargo terminal in December 2013 – five months before passenger operations began at the gateway – was a ‘game-changer’ for the country’s wider freight-forwarding operation, writes Martin Rivers.
60 Qatar Airways’ cargo division is an important contributor to the growth of Qatar and a vital component of its logistics and supply chain matrix. (Image Qatar Airways).
The Edge | 3
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Finance & Markets 27
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From the Editor 8 Photo of the Month 12 Business News 14 Qatar Perspectives 24 Products & Reviews 73
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firefly communications PO Box 11596, Doha , Qatar Tel: +974 44340360 / Fax: +974 44340359 www.firefly-me.com The Edge is printed monthly Š 2015 Firefly Communications. All material strictly copyright and all rights reserved. Reproduction in whole or in part, without the prior written permission of Firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by The Edge or Firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in The Edge. The publisher (Firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Shutterstock and/or iStock Photo or Firefly Communications.
The Edge | 5
Special advertiSement
GWC to Develop Key Logistics Hub by Group CEO, Ranjeev Menon 1. Gulf Warehousing Company (GWC) was recently awarded the US $188 million contract to develop the Bu Sulba Logistics Hub in South Central Doha amid stiff competition. Why do you believe GWC was the recipient of this deal? I think our ascent up the ladder of industry leadership within the past ten years has been nothing short of exceptional, and has definitely contributed to the confidence that Manateq and the National Logistics Task Force (NLTF) has placed in us when awarding the Bu Sulba contract. We are very proud of our achievements within this time frame, but also thoughtful and reflective of what it took to get here. The spirit and attitude with which we approach our mandate is what truly sets us apart. 2. GWC has had a long and successful track record of developing and managing bespoke logistics hubs in country including Logistics Village Qatar, Ras Laffan Logistics Hub and Mesaieed Logistics Hub. How significant is this project vis-a-vis its other established peers and how will it complement the latter? This project is a crucial part of our long-term strategy, as we seek to satisfy the gap in the logistics infrastructure. By our own estimates, the country will require between 5.5 – 8 million square meters of additional logistics infrastructure if it aims to meet the deadlines it has set for itself for both the World Cup 2022 and the Qatar National Vision 2030. 3. Put into perspective the infrastructure in place at the Bu Sulba Logistics Hub? By Q1 2017, the Bu Sulba Logistics Hub will feature a variety of different operational and recreational facilities in its aim to create a fully self-contained community. For our clients’ warehousing needs, we will offer them a choice of distribution centers and multi-purpose warehouses, which will provide dry, chilled, frozen, temperature controlled, and bulk warehousing. In addition to the warehouses, we will put in place open yard storage areas and a container yard. We will ensure proper access to these facilities through a system of roadways that will guarantee smooth access of all vehicle types. Moreover, clients will be able to manage these facilities on-site in the office and administrative buildings we will build throughout. All our warehouses will also be powered by our state-of-the-art IT infrastructure, which will offer on-demand services the moment the client occupies a warehouse. These services will offer client the access to fiber-optic
network, IP telephone lines, internet access, and all other data services. We will also make available to our clients the latest warehouse management system (WMS) in-order have the optimum monitoring and tracking of their storage operations. 4. What role do SMEs play in Qatar’s logistics (and supply chain) landscape and how will they benefit from this project? How will the proposed Bu Sulba Logistics Hub alleviate the shortage of and support businesses clamouring for additional storage space? Small and Medium Enterprises (SMEs) have become a crucial component in the State of Qatar’s larger plan to diversify its economy beyond hydrocarbons. With World Bank statistics showing that SMEs represent around 60 percent of MENA GDP, and as recent numbers showing non-hydrocarbon growth head-to-head with the hydrocarbon sector, it has never been more important to ensure that the nation’s infrastructure caters to the SMEs as well as it caters to the larger corporations. Price is definitely a concern for companies starting up, but other factors also play equally important roles in ensuring the success of an SME. Access to immediately available assets that are scalable enough to grow as the operation grows is one such factor, as is instant control and transparency in regards to such infrastructure. 6. How is this iconic project a big leap for the company and how does it bring the country closer to the realization of the Qatar National Vision 2030? As previously stated, the Qatari government fully appreciates the role that SMEs and startup will play in diversifying the nation’s economy, filling in the gaps and taking advantage of opportunities that larger players may overlook or not have access to. This directly serves the mandate of the Economic Development pillar of the Qatar National Vision 2030. It will also contribute to the social development of the nation, as many of these enterprises will serve the needs of clients both locally and internationally that are working to create a just and equitable society. Therefore, the project will work to enable SMEs to complete their missions and maintain their trade, removing all bureaucratic and operational obstacles in their path, and allowing them to grow and thereby allowing the nation and its economy to grow as well.
editor’s letter In this edition, we cover two issues that are relevant across the entire region, but are arguably largely more acute in Qatar than many other countries. The first is one of the Middle East’s most pressing social challenges: the epidemic of diet- and lifestyle-related diseases, especially the twin spectres of obesity and diabetes. While individual choice is at the core of the problem, the ubiquity of processed food outlets in Qatar is a major enabler. In our cover story Reaching Critical Mass on page 42, Doha-based writer Abed Ayyad examines the link between the proliferation of fast food chains in Qatar, the presence of questionable ingredients in their food and its effect on the nation’s physical health. Ayyad then takes a look at the social and societal influences surrounding the fast food culture in the region, such as eating at Western take-aways being a status symbol for some, or these shops becoming the new gathering where young people meet to socialise over food, replacing more traditional venues. He also reveals some interesting figures and facts regarding the size and ownership of mainly US in origin recent Gulf Cooperation Council (GCC) fast food franchises and other particular factors that contribute to their dominance of the food retail space, including subsidies and regulations. Nobody is saying that fast food does not have a place in Qatar. They have as much right to trade as anyone else. Rather a conclusion that can be drawn from this, is that more effort perhaps is needed to maintain a balance. A wider array of healthier options, even in the fast food space, would certainly be a good start, and indeed this is a trend that is rapidly growing in the West and slowly entrenching itself here. Education, particularly of young people, in making better diet choices and shaking off the trends and influences of the past is another route. As these diseases are wholly preventable a leaner, fitter Qatari population – both national
and expatriate – is an attainable goal. However, this will only be achieved if a real effort to eat healthier is made by people themselves. The subject of expatriates, in reference to our other feature this issue, by David Jones, The Edge’s regular regional human resources expert, Expatriate Games on page 54, delves into the challenges facing Qatar and its GCC brethren when it comes to its migrant workforce. Indeed, during a recent regional summit the issue of the ‘expatriate problem’ in the region was raised. Perhaps there was something lost in translation and one might assume that the ‘problem’ was how to evolve the manner in which migrant workers and professional sojourners can be accommodated in Gulf workforces and societies, rather than the people themselves. Indeed, as a phenomenon which is traceable back to the first oil and gas discoveries, and with its roots firmly in ‘old economy’ values and generally archaic social mindsets, the transient nature of the region’s labour force has always been a given. For the time being , the majority of expatriates in Qatar will continue to be migrant workers in construction and to a lesser degree oil and gas and other labour-intensive sectors. But clearly, this is not a sustainable model for the ‘knowledge economy’ of the future, which will be dominated by professionals. It is clear that an evolution here must take place and most GCC nationals would, I am sure, agree that the region will continue to need its foreign workforce for the foreseeable term in whatever form. Therefore, as Jones writes, issues of workplace development and economic and social factors such as long-term residency and property ownership, all while retaining local cultural hegemony, need to be addressed in order to encourage more foreign nationals to commit to the region more long term. Arguably, as in the past, its very future may yet depend on it.
Qatar and the GCC will continue to need its foreign workforce for the foreseeable Miles Masterson future in whatever form. Managing Editor 8 | The Edge
12 | The Edge
Nepal earthquake
photo of the month
A collapsed house in Kathmandu, after a 7.8-magntitude quake hit Nepal on April 28, 2015, killing over 5000 people in one of the strongest earthquakes in the region in more than 80 years. A number of aftershocks were felt in the following days across the region, including India, Bangladesh and Bhutan. (Image Reuters/Arabian Eye). The Edge | 13
news
business news
Qatar sovereign credit ratings retained
Qatar managed ratings retention for its sovereign credit ratings, with all of the big three international agencies – Moody’s, S&P’s and Fitch – affirming their ratings on the back of the country’s extensive hydrocarbons resources, well-managed economy, and large international investment portfolio, writes Oliver Cornock.
main story
This was a notable achievement in these times of falling hydrocarbons prices, global economic uncertainty, and regional political turbulence – all of which have been having an impact on the Gulf economies. A young, growing, yet still relatively small population with a high per capita income, also added to factors for the retention of the ratings. There were, therefore, some very solid foundations holding up the agencies’ ratings decisions. Yet the big three also drew attention to some challenging aspects for the years ahead. Indeed, while Qatar can quite rightly feel confident about its current ratings performance, they also highlight that the State should keep a close eye on the balance between revenues and project roll out, in the months ahead. Moody’s was first to give its re-affirmation, announcing back in January that it was continuing with its ‘Aa2’ rating for Qatari sovereign debt, with a ‘stable’ outlook. In February, S&P’s announced an ‘AA’ long-term and ‘A-1+’ short-term foreign and local currency sovereign credit rating, also along with a ‘stable’ outlook. Fitch’s decision came in March, also giving Qatar an ‘AA’ with ‘stable’ outlook, while hiking the grades of seven Qatari banks. The banking sector upgrade was strongly linked to the ability of the State to back up the banks in case of need, an ability demonstrated convincingly after the 2008 global financial meltdown. Indeed, it was government capital injections back then that gave the State its significant current stake in the banks. The government backing that the banking sector enjoys does, however, illustrate the continued centrality of the State in the wider economy. Indeed, much of the economic growth at present revolves around public works, with government funding a crucial factor, given the large-scale nature of many infrastructure projects – initiatives that would otherwise not have the internal rates of return (IRRs) necessary to attract purely private-sector financing. The key question addressed by the agencies was that of how well funded the government itself is – a question that in Qatar’s case has not often had to be asked in the past, given the large budget and current account surpluses, major revenue streams
S&P’s has also predicted that the government’s net asset position will remain at around 100 percent of gross domestic product during the 2015-18 period. 14 | The Edge
from hydrocarbons, and large-scale international investment portfolio the country has long enjoyed. The question is being asked now, though, because of the collapse in oil prices since June last year, and the knockon effect that is beginning to have on Qatar’s main hydrocarbon revenue earner, liquefied natural gas (LNG). LNG is becoming a much more competitive market internationally too, as Australian and United States LNG exports expand. In 2014, Qatar’s share of the global LNG market fell for the first time since 2006, down from 32.9 percent to 31.9 percent, according to the International Group of LNG Importers. Spot prices, meanwhile, fell 61 percent between a February 2014 peak and the end of March 2015, with the fall linked both to increasing supply and falling oil prices. Yet Qatar’s position, while negatively impacted, will likely still be a strong one. Long-term delivery contracts for LNG have offered some protection so far, while Qatar’s LNG is also highly cost effective. S&P’s has also predicted that the government’s net asset position will remain at around 100 percent of gross domestic product during the 2015-18 period, while its funding of the National Development Strategy 2011-16 will continue to power economic growth – this hit 6.7 percent in the fourth quarter of 2014 – and improve future productivity and competitiveness.
Oliver Cornock is the regional editor, Middle East, for Oxford Business Group.
by the numbers Diversification provided us the opportunity to succeed Diversification has been the key to the success of Al Sraiya Holding Group, which completes four decades this year. In an exclusive interview with The Edge, the group’s vice chairman Rashid Sraiya Al Kaabi reveals what it takes to build a trusted company that offers ‘one-stop’ solution for all construction needs. Do you think that diversification strategy has been the key to your success? Diversifying our businesses and joint ventures are both contributing factors to the success Al Sraiya has achieved so far. Expanding into different fields has provided the group with an opportunity to gain experience and recognition, echoing the brand name as a one-stop solution for all construction needs, which is the idea we have been working to own in the customers’ minds. Expansion allows us to work with many different customers and we have strived to maintain strong relations with, even after the projects are complete. We also continuously forge new ties with international companies and worldwide chambers because it allows us to invest in technologies and increase the efficiency of our production facilities. These are necessary to create a strong core industry and a highly-trusted brand in the market. Being a local company, what do you bring to the table? We bring value to the market through 40 years of management expertise, accumulated operational competence, and added resources such as capital, corporate staff services, local-market intelligence, and knowledge. As we are a diversified group, we offer a range of integrated services that are delivered through one brand name – Al Sraiya. Furthermore, resources are distributed between the sister companies, which eliminates issues that could arise due to the lack of resources or connections. How confident are you about the sector’s preparedness to deal with the surge in construction projects? Qatar’s economic sector in particular has gained significant strength in recent years due to growing projects and investments. This has caused a rise in the market’s competition, and because of this, resources are no longer only offered locally but also internationally (through investments and joint ventures).
2.83
NUMBER OF THE MONTH
The number of visitors who came to Qatar in 2014, up 8.2 percent on the previous year and nearly double the number who visited in 2009, according to Qatar million Tourism Authority (QTA). In 2014, QTA unveiled its new strategy to attract up to 7.4 million annual visitors to the State by 2030 by trying to alter the demographic mix by attracting people from outside the region. The 2030 target is more than twice the number of tourists who currently come to Qatar.
news
Value of announced mergers and acquisitions (M&A) transactions with Middle Eastern involvement reached
QAR34.6 billion in Q1 2015
Middle Eastern investment banking fees reached
Middle Eastern equity and equityrelated issuance totalled
in Q1 2015
during the Q1 2015
QAR662.5 million
Middle Eastern debt issuance reached
QAR23.7 billion
QAR9.1 billion
Compared to the same period in 2014, Middle Eastern Equity Capital Market (ECM) increased
179%
during the Q1 2015
Outbound M&A drove activity, up 161 percent from the same period in 2014 to reach Initial public offerings raised
QAR817.5 million
and accounted for nine percent of activity in the region
QAR14.5 billion
the highest first quarter total since 2011
Fees from completed M&A transactions totalled
QAR268.6 million
a 13 percent increase from last year and the best annual start since 2009
Industrials was the most active sector, accounting for
33%
of Middle Eastern involvement in M&A Source: Thomson Reuters
The Edge | 15
news
business in quotes
“The launch of the region’s first renminbi clearing centre in Doha creates the necessary platform to realise the full potential of Qatar’s and the region’s trade relationship with China.” Qatar Central Bank’s governor, HE Sheikh Abdullah bin Saud Al Thani, on the occasion of the opening of the Qatar Renminbi Centre, the first such clearing centre in the Middle East and North Africa (MENA) region. This is predicted to decrease the transaction costs for trade and investments between China and the MENA, and provide a window for domestic banks to expand their product portfolio.
“The congress has provided a solid platform for the international community to recognise the tangible links between the rule of law and sustainable development.” Yuri Fedotov, executive director of the United Nations Office on Drugs and Crime told the 13th United Nations Congress on Crime Prevention and Criminal Justice, held in Doha last month. Fedotov continued, “The challenge we now face is turning the historic Doha Declaration into action. I am encouraged by the determination of our hosts to make Doha the point of departure, and look forward to working with them and other partners, on translating the inspirational words of the declaration into concrete, tangible results.”
16 | The Edge
Business News in Brief OMD opens office in Doha
In order to meet growing demand from its clients, OMD has officially opened a new office in Doha. The media network was until now servicing its Qatari clients from their Dubai office. It took the decision to open a local office after being appointed by three advertisers in the past 12 months, including the Qatar Foundation’s Sidra Medical and Research Center. OMD’s Qatari accounts currently include the Doha Film Institute and beIN Sports. The new operation is headed by Mark Soufiar, a former business unit director in Dubai with over 12 years of experience at OMD United Arab Emirates.
Mark Soufair (second from left) will head the operation in Qatar.
Lagoona Mall expands its offerings
With the launch of Avenue, Lagoona Mall has made a new addition to its premium shopping destination. Located on the first level, Avenue will offer customers a unique retail experience with a wide choice of high-end fashion brands, some of which make their Middle East debut at the new location. Dedicated to fashion and accessories outlets for men, women and children, Avenue includes Michael Kors, Karl Lagerfeld, Marc by Marc Jacobs and Juicy Couture, to name a few. The Avenue will also host the first ever Chanel Fine Jewelry outlet in Qatar.
Avenue will also host the first ever Chanel Fine Jewelry outlet in Qatar.
Special advertiSement
Common Mistakes when Drafting Arbitration Agreements When drafting an arbitration agreement, the intention of the parties to settle their potential dispute arising from their legal relationship by arbitration and thereby avoiding the jurisdiction of the national courts must be clearly expressed. If such intention is vague, then the drafting of the arbitration agreement is improper and inappropriate. Drafters of arbitration agreements typically make certain common mistakes when drafting the agreements which create problems of ambiguity as to the intention of the parties to submit to arbitration and the agreed upon procedures. It is advisable to avoid making the following common mistakes when drafting the arbitration agreements: 1. Misnaming an Institute When referring to an institute of arbitration, such as the Qatar International Center for Conciliation and Arbitration (QICCA), the parties must ensure that the arbitration clause refers to the official name of the chosen institute. Otherwise, a party that is reluctant to resolve the dispute by arbitration may argue that the clause refers to another institute rather than the one intended at the time of negotiating the agreement. 2. Use of “may” versus “shall” The use of certain terms such as “may” and “shall” can also lead to problems of interpretation. For example, an arbitration clause that has been referred to the QICCA provided: “Any dispute of whatever nature arising out of or in any way relating to the Agreement or to its construction or fulfillment may be referred to arbitration.” The problem with this clause is that it is not clear whether the arbitration is mandatory or optional. Furthermore, the clause is unclear as to who can decide whether to refer the dispute to arbitration. 3. Failing to Name the Place of Arbitration According to most institutional rules, the parties are free to determine the place of arbitration. However if the parties fail to specify the place of arbitration, then the arbitral tribunal will select one on the parties’ behalf. Parties should be careful when selecting the place of their arbitration as the applicable legislations in the chosen place will determine the extent of involvement of the national courts in the arbitration proceedings and affect the enforceability of the arbitral award. Also, unless the parties have agreed otherwise in the arbitration agreement, the law of the place of arbitration determines the procedural law to be applied to arbitration. 4. Submission to Arbitration Conditional Upon a Later Agreement In a recent judgment rendered by a Qatari court, the court decided to consider a case filed by a sub-contractor against a contractor inadmissible due to the existence of an arbitration agreement. Such arbitration agreement was very vague as to the intention of both parties to submit disputes to arbitration. The arbitration agreement read, “If any dispute arises between the contractor and the subcontractor in connection with or arising out of this subcontract […] shall be referred to the arbitration and final decision of a person agreed between the parties of failing such agreement, the dispute shall be submitted to the jurisdiction of the courts”.
In this case, the subcontractor filed its case before the national court, and the contractor objected to the filing before the court and invoked the arbitration agreement. The court decided to deny its jurisdiction to hear the case based of the existence of the arbitration agreement. From a legal point of view, this arbitration agreement sets out a condition for the submission of disagreements to arbitration which is the consensual agreement between the parties to resort to arbitration. In accordance with the above arbitration agreement, if should the parties fail to reach such agreement, then they may file their dispute before the Qatari courts. Therefore, the submission by the subcontractor of the dispute before the national court reveals – undoubtedly its intention to waive the arbitration agreement. Accordingly, the court should have honored the subcontractor’s intention to submit the case to the court given the parties’ disagreement about the submission of disputes. However, the court decided to consider the case as inadmissible. The case is now before the appeal court. It is thus highly recommended to use straightforward language in the arbitration clause that avoids subjecting the arbitration agreement to any condition precedent in order to ensure its enforceability or problems with future interpretation. In a nutshell, drafting an arbitration agreement usually is given no due consideration by the parties unless after the occurrence of the dispute. As noted above, improper drafting can have the effect of the parties’ original intentions being disregarded or misinterpreted. Hence, proper drafting of the arbitration clause could save the parties from facing substantive and procedural obstacles.
Hazem Hussien Senior Associate – Arbitration Al Tamimi & Company h.hussein@tamimi.com
Follow us on Twitter @AlTamimiCompany Join us on LinkedIn - Al Tamimi & Company www.tamimi.com
news
business in brief
Avaya receives industry recognition Avaya has won two prestigious awards from independent industry organisations for its contribution towards transforming customer networks around the Gulf Cooperation Council countries, and for its innovative channel enablement programme. Avaya was voted by Network World readers as the Middle East’s Networking Vendor of the Year. It has been recognised for the recently-launched Avaya Fabric Networking technology, Avaya SDN Fx.
Start-up Watch eSouqQatar
New book on project management
Global publisher Routledge recently released a new pocket book, titled Project Management Made Easy, providing a good insight for any project manager. Written by Duncan Cartlidge, who is a fellow of the Royal Institution of Chartered Surveyors, the book covers typical activities associated with the role in the order they occur on real projects, making the book exceptionally accessible and easy to follow. This up-to-date book discusses the key industry trends with reference made to the Royal Institute of British Architects Plan of Work as well as how Building Information Modeling has changed the responsibilities and requirements of project managers.
Rolex unveils gem-set version Oyster watch
Rolex has introduced new gem-set versions of the Oyster Perpetual Datejust Pearlmaster 34 in 18 carat (ct) yellow, white and Everose gold. The company says the new offering is combined with the captivating charms of gold and the purest of diamonds. The dials of these exquisite 34-millimetre watches are entirely paved with diamonds. The nobility of the time display is enhanced by the bezel adorned with baguette-cut pink sapphires on the 18 ct yellow gold version, or with baguette-cut blue sapphires on the 18 ct white gold version.
Oyster Perpetual Datejust Pearlmaster 34 comes in 18 ct yellow, white and Everose gold.
18 | The Edge
Launching early in May, eSouqQatar is a shopping portal targeting local microbusinesses. The company is based on an idea of Youssif Al Musleh, and has been in development at the Qatar Business Incubation Center (QBIC) since December 2014. “One way this project is different from other businesses in Qatar is that it is a social entrepreneurship project,” says Al Musleh, “So our aim is also to have a positive impact on the society with what we are doing.” by M. Iqbal How did you come up with the idea of eSouqQatar? I came up with the idea for my Executive MBA capstone project early in 2014. Later, I came across QBIC and pitched my idea to them. After a 10-week lean programme, they offered to incubate the business. What were the challenges you faced? The technology itself is not very challenging and we are outsourcing the development to an offshore company. However, it is not easy to get hold of microbusinesses, because they operate from homes. The challenge is to track them down. What we did was approach the Social Development Centre, and contact businesses being supported by their Badr Wa Int Gadr programme. How does the process work? The website is a two-sided platform. On one side is the seller, the other side is the buyer, and we are in between. The sellers upload their products to the platform with a description and price and the customer can buy them just like any other online shopping network. We manage the payment and delivery of the product. Our driver will pick up the item from the seller and deliver it to the customer. What is your business model? A standard seller can register on the website free of charge. The revenue we
generate will be from our commission on each product. The standard seller is limited to 25 products. To list more products, they will have to upgrade to a premium account with an annual subscription fee. This will also allow them to place advertisements on the main page of the portal. Microbusinesses are our primary target, but our aim is to help them grow into small and medium businesses. We hope to grow along with them. That is why we are not going to exclude small businesses from the platform. I don’t think we are in the right position to attract large businesses, but eventually we do have a plan to scale up our operations to suit their needs as well. What are your plans for the future? We see a huge growth in this segment. Microbusinesses have limitations in their distribution channels. They rely on Instagram, Twitter, Facebook and Whatsapp. But these tools are not designed as online shopping portals and they have their limitations. Our next step after the launch will probably be to develop our own mobile apps. In the long term, the portal will become the definitive platform for microbusinesses in Qatar. It will provide them a one-stop selling solution. We also have plans to expand to other countries in the Gulf Cooperation Council.
news
events
Business Events Calendar May– June 2015
Events Listing
11-13 May Cityscape Qatar 2015
Cityscape Qatar has already announced a vast list of exhibitors who will participate in this years’ show. The high-profile three-day event will have participation from some of the leading local companies such as the United Development Company (UDC), Al Bandary Real Estate, United Developers and Retaj Qatar International (Retaj Group). One of the biggest real estate development and investment events in the region, Cityscape Qatar is expected to host close to 8000 visitors. There will also be a number of regional and international companies participating, including Azizi Developments and Dubai Properties from the United Arab Emirates, MENA Real Estate from Kuwait and the Turkish company, Bosphorus International Real Estate Investment.
May 4-5 May LightingTech Qatar 2015 4-7 May Project Qatar 4-7 May Qatar StoneTech 4-7 May Heavy Max Machinery Exhibition Latest heating, ventilation, and air conditioning technologies will be displayed at CHRVI, during June 1-3.
1-3 June CHRVI Qatar
The three-day real estate development and investment event is expected to host close to 8000 visitors at the Doha Exhbition Center.
20 | The Edge
As Qatar is increasing its focus on sustainable development, Cooling, Heating, Refrigeration, Ventilation and Insulation (CHRVI) International exhibition, could be an ideal platform for the industry stakeholders and construction companies to share their knowledge and experience in the field. CHRVI Qatar is expected to have specialists and manufacturers participating from over 20 countries. They will be displaying their latest technologies in heating, cooling, refrigeration, ventilation and insulation systems. The event will also present the latest technologies related to industrial insulation availing the importance of this field in the control of CO2 emissions and green, protected environment. The exhibitors comprise different sizes of national and international manufacturers, importers, distributors and agents.
6-7 May HVACTech Qatar 6-7 May Future BIM Implementation Qatar 6-7 May World Refining and Petrochemical Technology Summit 18-21 May World Stadium Congress 26-28 May Qatar International Medical Congress 2015 31 May-03 June Underground and Deep Foundation Qatar
Special advertiSement
Business English in the Workplace
by Ibrahim Khan
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For corporate training advice contact: Ibrahim Khan: 7754 6003 @gmailbekbasha
qatar perspectives
How robust human resources can impact business performance Many of today’s businesses are facing the twin challenges of high-profit growth expectations and increasing cost pressures. In other words, having to do more with less. To do this, you need an engaged, productive workforce, and businesses need to ensure that their people practices are able to meet this challenge, writes Erika Maree
Corporate Leadership Council research states that providing strategic HR support to the business can increase revenues by up to 10 percent and profitability by up to 12 percent.
Last year, the Minister of Energy and Industry, and chairman of Qatar Petroleum, HE Dr. Mohamed bin Saleh Al Sada, emphasised the need to align Qatar’s human development strategy with the demands of the Qatar National Vision 2030 and the National Development Strategy 2011-16, and stressed that only the best people practices will get Qatar to this point. Clients often ask us for advice on how to develop great people practices. We tell them to look within. Start by looking closely at the human resource (HR) function, which should be an organisation’s engine for attracting top talent, training and developing them well, getting them to deliver with quality and making them want to stay. Why? According to the Corporate Leadership Council, a HR thinktank, providing strategic HR support to the business can increase revenues by up to 10 percent and profitability by up to 12 percent. This leads to the obvious question: Are the HR functions in Qatar getting this right? The first step in being better is realising where you are currently. This demands being brave enough to ask for honest feedback from the business, to get a comprehensive understanding of how the HR function is contributing to business performance. It can often help to get feedback from an outside impartial source, and to go through a structured approach to determine both the strengths and weaknesses of the HR function. Once this is done, a short- and long-term roadmap can be created focusing on activities that drive effectiveness.
In our experience in Qatar, there are typical barriers to overcome before HR is able to fully contribute to the bottomline: • Aligning the HR strategy to business strategy: This is the main reason why HR strategy initiatives fail and why managers do not want to partner with HR on strategic challenges. The solution: HR needs to understand business, reset expectations of their role and effectively implement the HR strategy. • The use of data and analytics in the HR function: Organisations invest heavily in technology to analyse their information, but not in HR. The solution: talent metrics aligned to business strategy need to be tracked and reported on. HR needs to be able to analyse data, come up with business-focused insights and follow up with action plans. • The design of the HR structure: In Qatar, the HR function typically falls under finance or administration. Because of this, it is not always clear how to leverage the structure for increased efficiency. The solution: organisations should update their HR processes to support changing business needs and improve coordination within HR. • Improve HR team effectiveness to drive performance: HR people need to use business insights to shape people strategy and drive performance. The solution: design HR roles for maximum impact and support HR skills development by identifying and addressing skills gaps.
22 | The Edge
Clients often believe that their HR functions are delivering optimally, until they see what HR in better practice organisations is delivering. Organisations in Qatar can consider getting HR function health checks using a purpose-made tool to measure performance across objectives and discrete activities. These checks assess the current state of the HR function performance, maturity and any limitations affecting performance and lead to clear articulation of HR’s value to the business, leading to improved efficiencies and potential reduction in functional costs.
Erika Maree is a senior manager and HR consultant at KPMG Qatar.
qatar perspectives The risk of targeted sanctions The removal of United States sanctions against Yassin Kadi, a Saudi businessman, last November following a 13-year legal battle highlights the risks faced by those under threat of targeted sanctions, and how to manage them. There are more sanctions regimes now than at any other point in history, and individuals and businesses throughout the Middle East should be aware of the challenges they present, writes Guy Martin The European Union (EU), United Nations (UN), United States (US) and other countries increasingly rely on targeted sanctions to achieve foreign policy aims. Increasing geopolitical instability means this trend will continue, posing significant risks for individuals and businesses engaged in international trade and finance, as well as charities operating globally. Targeted sanctions are used for different reasons: to support states in recovering misappropriated state assets (such as Arab Spring countries), improve the conduct of a repressive government (such as in Myanmar), combat terrorism, or prevent nuclear proliferation. Yet the ways in which sanctions are imposed are remarkably similar. First, financial restrictions are placed on those believed to be responsible for the offending behaviour, and their bank accounts are frozen without prior notice. Second, it becomes a criminal offence to provide financial resources to those targeted. This includes any economic assistance, from paying sums due under contracts, to providing non-cash resources such as food or electricity. A travel ban may also be imposed. The risk of an individual unwittingly finding themselves subject to sanctions is considerable. Sanctions not only target offending governments or terrorists but also individuals, businesses or charities who are suspected of supporting or associating with them. 24 | The Edge
Although they are not criminal measures, stringent banking compliance standards mean that major banks will cut off relations with a listed person. The impact of sanctions can be devastating. Although they are not criminal measures, stringent banking compliance standards mean that major banks will cut off relations with a listed person or refuse to conduct banking transactions for them. With ever-larger fines being imposed on banks, they are increasingly cautious. Without access to accounts or credit cards, daily life becomes a struggle. Successful businesses can flounder as they are deprived of banking facilities. Additionally, the reputational damage to a listed person and their family can take years to repair. However, the stated reasons for listing are often vague and lack supporting evidence, which presents enormous difficulties to persons wishing to challenge the sanctions in court. Critical evidence may also be withheld for security or public policy reasons. Nevertheless, successful challenges are possible. In 2001, Yassin Kadi was made the subject of US sanctions, and subsequently sanctions imposed by the UN, the EU, the United Kingdom and other countries. The allegations against Kadi were as serious as they were nebulous and vague. CarterRuck, on behalf of Kadi, challenged all of these sanctions through various court actions and legal petitions. In 2008, in a ground-breaking judgment, the highest EU Court annulled the EU’s sanctions against Kadi. For the first time, the European Court of Justice held that EU legislation must comply with fundamental human rights even if it implements a UN Security Council Resolution. Kadi subsequently succeeded in removing all sanctions against him, culminating in the removal of his US listing in 2014, and his case paved the way for other
successful challenges and the improvement of judicial safeguards for persons subject to sanctions. Once listed, the key is to act quickly. The deadline to challenge a listing is often short: in the EU, a person has just two months from publication of the listing to file a challenge with the court, and considerable evidence gathering and preparation must be done in that period. It is crucial to instruct lawyers with experience of challenging sanctions. Listed persons often spend critical weeks trying to remove their listing through contacts. The result is often (considerable) wasted costs while the person risks missing the deadline for filing a formal challenge. Back channel discussions can be helpful, but are most effective when conducted in tandem with a legal application.
Guy Martin is head of International and European Law at Carter-Ruck.
Special advertiSement
CITYSCAPE Cityscape Qatar 2015 Announces Huge List of Exhibitors at the Country’s Leading Real Estate Development Event
Key exhibitors at Cityscape Qatar 2015 include the United Development Company, Cityscape’s Foundation Sponsor, along with Al Bandary Real Estate and Retaj Qatar International deep marwaha, Group director on behalf of cityscape Qatar, said: “cityscape Qatar is the ideal opportunity to showcase real estate development opportunities and upcoming projects, as these projects will in turn deliver vast investment and growth in transportation, residential and commercial real estate. this year we have a great calibre of exhibitors who will show both their brand as well as their projects to the industry’s most influential stakeholders.”
Doha, Qatar: 19 April, 2015 – cityscape Qatar 2015, one of the middle east’s leading real estate development and investment events, has announced a vast list of exhibitors who will participate in this years’ show. the high profile three day event will take place under the patronage of H.e. Sheikh abdullah Bin nasser Bin al thani, prime minister and minister of the interior for the State of Qatar, on 11-13 may 2015, at the doha exhibition center, Qatar. cityscape Qatar 2015 has already confirmed a number of exhibitors from local companies, including the United development company (Udc), al Bandary real estate, United developers and retaj Qatar international (retaj Group), who will be greeted by an expected 8,000 visitors. there will also be a number of regional and international companies participating, including azizi developments and dubai properties from the Uae, mena real estate from Kuwait and the turkish company, Bosphorus international real estate investment. cityscape Qatar offers the ideal platform and opportunity for real estate developers to engage with different stakeholders, as the government of Qatar embarks on a number of real estate, construction and infrastructure projects.
also, al Bandary real estate will be showcasing their huge projects at cityscape Qatar, and one of their latest development projects is “amwaj”, a brand new tower which will feature a charming aqua park inside it. in addition, al Bandary real estate will also be discussing other upcoming projects that have been planned for both West Bay and in lusail, two key hubs in Qatar. the esteemed three-day conference and exhibition is expected to attract over 8,000 visitors and will showcase a wide range of real estate investment opportunities and services to private and professional investors as well as key industry professionals from Qatar, the region and from around the globe. Further, cityscape Qatar 2015 will explore diverse projects and potential opportunities in delivering upon Qatar’s national vision 2030.
Udc, Foundation Sponsor for cityscape Qatar 2015, is one of Qatar’s leading companies that work to identify and invest in long-term projects that contribute to Qatar’s growth. Udc has confirmed it aims to showcase the pearl-Qatar as a world-class mixed use urban development and to highlight the role it plays in promoting Qatar’s growing perception as a destination for luxury developments and investments. meanwhile, retaj Group, one of the leading business houses in Qatar with esteemed divisions that focus on building and developing in the realty division, will focus on a number of projects related to the real estate and hotel sectors during cityscape Qatar 2015. the retaj Group will be introducing a number of its remarkable projects during the summit, including their buildings and apartments in lusail city, a futuristic project which will create a modern and ambitious society. Other ground breaking projects include its land selling trading project in the UK, and the villas, apartments and suites resort project in Sarajevo, Bosnia and Herzegovina.
To find out more about Cityscape Qatar 2015, please visit: www.cityscapeqatar.com
Contents: Doha as a renminbi clearing city. 27. QFCA introduces new legislations. 28.
finance & markets China has chosen its global renminbi clearing cities with astuteness. The fact that Doha has made it to that list indicates the importance of the Qatari capital in Chinese economic priorities, writes Salman Gulzar.
B
eijing has been deliberate in choosing cities to represent their currency, constantly following trade flows with the mainland. Trade arrangements and informal alliances that were embedded in history are being challenged. Australia, one of the largest economies in the world based on mining, has opened up to China to encourage exports in their own currency. Canada, in the backyard of the United States (US), is joining the ranks of renminbi clearing domiciles to further their financial market ambitions in South America. In the Gulf Cooperation Council (GCC), a hydrocarbon partner to a myriad of Western oil companies now has Doha as a renminbi clearing city. The economic divergence China is creating was most evident when the United Kingdom (UK) defied the US, its closest ally and expressed their desire to join China’s Asian Infrastructure Investment Bank and also its intent to issue a renminbi bond. It was evident that the rationale for this was to place London at the front of the queue of European cities hoping to become ‘the’ offshore financial centre for Beijing and the renminbi. It is no coincidence that Beijing did not accord a city in Europe the privilege of sole representation for renminbi interests and has Germany, France and Luxembourg competing to ensure innovation.
Turbulence ahead
While there are questions being raised on macro domestic economic growth and possible property bubbles for the renminbi to become global, China not only needs cross-border trade flows, it also needs to open their domestic capital markets to allow renminbi to flow freely between China and
Analysts have raised questions around macro domestic economic growth and warned about possible property bubbles. But for the renminbi to become global, China not only needs cross-border trade flows, but also to open its domestic capital markets to allow its currency to flow freely between China and the rest of the world. Pictured here is the Beijing skyline. (Image Corbis)
Doha as a renminbi clearing city
sectors | finance & markets
In late 2014, Doha was appointed as the regional centre for renminbi clearing in the GCC region and the two central banks signed a QAR20.75 billion currency swap line. the rest of the world. This will facilitate the emergence of the renminbi as an investment currency and bring parity between its onshore and offshore markets. Innovations continue, however. Interest rate and currency weakness is attracting Chinese and American companies to access Eurozone issuances, which will challenge onshore renminbi and dim sum issuances (bonds issued outside of China but denominated in the renminbi, rather than the local currency) this year.
Synergies with GCC
Both the GCC and China face a uniquely similar situation of protecting their interests in an anaemic global economy. GCC embarked on a strategy to lower oil price and in the past few months the renminbi has weakened, raising concerns that China is also joining the currency war to protect their market share. Beijing’s focus on the GCC is not only evident by their corporates executing key projects in the region but is coupled by
the Chinese tapping and developing these markets both for clearing and capital markets. In September 2014, the Agricultural Bank of China listed a RMB1 billion (QAR593 million) bond on Nasdaq Dubai, the first Middle Eastern listing of a bond by a Chinese issuer. This was closely followed by the signing of a Memorandum of Understanding appointing Doha as the regional centre for renminbi clearing and settlement in the region. Under this agreement, the two central banks signed a RMB35 billion (QAR20.75 billion) currency swap line. In an economic environment where GCC-China trade grew faster than any other trade partner in the last decade, the country will have the largest share of GCC exports by 2020. China today is the largest non-oil trade partner of the United Arab Emirates (UAE) with flows exceeding USD175 billion (QAR637 billion). Qatar’s flows are set to cross USD50 billion (QAR182 billion) in 2015, largely based on hydrocarbon exports. Chinese shores are also the second largest destination for Saudi oil and if the fracking
industry continues to develop in the US, Beijing will become even more strategic for Riyadh. In the months to come, Qatar will have a unique opportunity to lead development of one of the most exciting currencies in the world and become a centre of excellence in the regional financial markets for renminbi-denominated trade, not only for GCC but the Middle East and North Africa region which is predominantly Arabic speaking. Finance teams in the region cannot continue to look at Chinese imports denominated in US dollars and will have to start considering a more dynamic risk management strategy for renminbi. The opportunities around making renminbi the preferred currency for settlement of hydrocarbons between GCC and China is now a theoretical possibility, however, there is no longer any excuse to let US dollar volatility define imports from China.
Salman Gulzar is the head of Corporate Banking, Mashreq Bank Qatar.
financial regulation
QFCA introduces new legislations The Qatar Financial Centre Authority (QFCA) has introduced legislative expansions to its Companies Regulations and Rules. This update aims to further diversify the QFCA platform to welcome Companies Limited by Guarantee, a new legal entity that will broaden the QFC environment and facilitate a wider range of business activities. The latest alteration to the QFC Companies Regulations and Rules will enable structures such as social enterprises, non-profits and 28 | The Edge
non-governmental organisations to set up in Qatar’s rapidly-growing and diversifying economy. Yousuf Mohammed Al Jaida, deputy chief executive officer of the QFCA, said: “Tasked with ensuring the consistent diversification of the Qatari private sector, the QFC has endeavoured to enlarge its offering to best address the key private sectors needs of the Qatari economy. We will continue to strategically explore new entities and structures that will positively impact Qatar’s diverse economic plans and pursue their implementation in Qatar.”
Yousuf Mohammed Al Jaida, deputy CEO, QFCA, said, “Tasked with ensuring the consistent diversification of the Qatari private sector, the QFC has endeavoured to enlarge its offering to best address the key private sectors needs of the Qatari economy.”
sector name | banner heading
Contents: Global oil storage crisis in focus at Dubai industry gathering. 31. Qatar’s QAR18 billion China deal timely. 32.
energy & sustainability Global oil storage crisis in focus at Dubai industry gathering
Oman and the United Arab Emirates are well-placed to benefit from the trend towards more oil and gas being stored, rather than delivered immediately due to low prices. This boosts Oman’s Sohar (pictured) and Fujairah’s facilities, both of which have the key natural geographical advantage of being located outside the politically-hot zone of the Strait of Hormuz. (Image Getty Images)
With the gathering in Dubai of leading figures in the world’s oil and gas storage industry, at no time in its three-year history has this year’s Tank World Expo in April been more apposite or welltimed. As many companies are buying physical oil stocks and immediately selling futures, oil and refined gasoline storage levels are way above their respective five-year averages, according to the latest figures from the Energy Information Administration (EIA) in the United States (US). by Simon Watkins
T
he circa 50 percent fall in the spot oil price since last June combined with a lower price drop in furtherdated futures contracts, has led to the biggest contango market the world hydrocarbons’ market has seen since 2008 and 2009, meaning that storing hydrocarbons has become a key strategy for major oil and gas firms. In fact, according to the latest figures, traders in Europe and Asia have filled up virtually all available onshore storage space for crude oil and products, despite a 30 percent increase in capacity over the last five years, leading to a further 40 million
barrels of ship-borne capacity having also been taken out and products being shipped out to as far as the US, where there is a modicum of available extra land storage capacity still remaining. “In terms of storing oil on the high seas, this is an option that presents both benefits, as well as challenges,” said Edwin Lammers, executive commercial manager of the Sohar Port and Freezone in Oman. “From towards the end of last year, the spot price for oil was lower than in the futures market and this is one of the reasons why crude oil is being stored at sea, as companies currently see a greater benefit in buying up physical oil
stocks and immediately selling futures.” Oman and the United Arab Emirates (UAE) are extremely well placed to benefit from this trend towards more oil and gas being stored, rather than delivered immediately, boasting Oman’s Sohar facility and the UAE’s Fujairah facility, both of which have the key natural geographical advantage of being located outside the politically-hot zone of the Strait of Hormuz. Indeed, since 2012, when Iran last threatened to close the Strait (through which around a fifth of the world’s crude oil supplies pass), there has been much talk that Sohar and/or Fujairah might become The Edge | 31
sectors | energy & sustainability
one of the world’s great oil storage and trading hubs, alongside the Far East’s Singapore hub, Europe’s ARA (AmsterdamRotterdam-Antwerp) in the Netherlands, and Cushing in the US. It is true, of course, as Lammers also added, that incremental rises in interest rates or storage costs may result in the cost of storing oil out at sea eclipsing any future profits that may be had from the practice. As it currently stands, according to the Londonbased EA Gibson Shipbrokers, to simply cover the costs associated with storing oil at sea (ship hire, fuel, insurance, and finance) the cost per barrel needs to be at least USD6.5 (QAR23.7) per barrel, which it is for contracts three months and more. However, it is also true, as Hendrik Schaake, business development manager at Endress+Hauser, highlighted: “Many projects are still ongoing since the price drop is not a result of a decrease in demand, and furthermore, we see a strong increase in interest for optimisation solutions for existing installations to streamline product and business information flows, reduce losses, and assure safety.” Consequently, plans afoot both in Sohar and Fujairah look extremely well thought through. In Sohar’s case, this involves USD15 billion (QAR55 billion) in expansion projects centred around the Duqm port, including the construction of the world’s largest crude oil storage facility at Ras Markaz, 70 kilometres away from Duqm, which will have a capacity of nearly 200 million barrels of oil, in addition to the Sohar facility.
the Strait of Hormuz – by their business Traders in environments. Christopher Gunson, an Abu Dhabi-based energy lawyer for Europe and international law firm Pillsbury Winthrop Shaw Pittman, informed The Edge. “They Asia have filled afford international oil companies direct unhindered access to their major markets up virtually all in the east and the west, and share the available onsame transparent and non-corrupt legal framework found across the UAE.” shore storage They also benefit from trade flows coming out of the Dubai Multispace for crude Commodities Centre (DMCC), he added, more storage capacity allowing traders oil and products, with greater flexibility in their deals, and a financial infrastructure created despite a 30 per- supportive by the relevant authorities. cent increase in capacity over the LNG exports Qatar’s QAR18 last five years. In Fujairah’s case, Mousa Murad, general manager of the port of Fujairah, recently said that oil storage capacity in the port is now expected to rise by around six million cubic metres (mcm) by 2018 to 2020, from the current eight mcm or so, to around 14 mcm, given the realisation of the next phase of various planned expansion projects, up from the previous 12 mcm total storage projection. Both Sohar and Fujairah are made even more attractive as go-to destinations for oil and gas storage and trading – over and above their geographical location, outside
OPEC Middle East producers: IMF forecast 2015 current account breakeven crude prices, USD/bbl Libya Algeria Iraq Iran Saudi Arabia UAE Qatar Kuwait
Source: IMF
32 | The Edge
0
50
100
150
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billion China deal timely
Although Qatar does not suffer to quite the same degree as some of its Middle Eastern neighbours from the current low crude oil price – and corollary lower global liquefied natural gas (LNG) price – with a 2015 current account breakeven Brent oil price of around USD60 (QAR219) per barrel, it is, nonetheless, continuing to promulgate relatively value-added business in the petrochemicals sector, especially in its target markets abroad, such as China. Indeed, a major private-sector deal was announced recently, between Qatar’s Suhaim Bin Hamad Enterprises Group and Qatar Investment and Development Group (QID). The USD5 billion (QAR18 billion) agreement is to acquire 49 percent of China’s petrochemical giant Shandong Dongming Petrochemical Group. “In the long term, investment in the petrochemicals sector provides countries with more employment and generates alpha returns over and above plain hydrocarbons product yields,” Richard Mallinson, geopolitical analyst for global energy consultancy Energy Aspects in London, told
energy & sustainability | sectors
According to Qatargas’ CEO, Khalid bin Khalifa Al Thani, China is centre stage of Qatar’s Asia investment focus.
49%
The recent acquisition by Qatari interests in China’s petrochemical giant Shandong Dongming Petrochemical Group. The Edge, “although in the short term it uses funds from a government’s budget that are declining because of lower oil prices, so it’s a balancing act.” In broad terms, the China deal accords perfectly with the view that the next 10 years is set to be the ‘chemical and petrochemical decade’ for Qatar. More specifically, as frequently reiterated by Qatargas’ CEO, Khalid bin Khalifa Al Thani, China is centre-stage of Qatar’s Asia investment focus. In this context, the deal expands upon recent developments in the LNG supply field, which has seen Qatargas make its first LNG delivery to a private firm in China (a 64,000 cubic metre cargo sold to Jovo LNG Storage and Transportation), and its first cargo of LNG to China National Oil Corporation’s (CNOOC) Hainan LNG terminal. The latter was itself part of the existing sales and purchase agreement signed in 2008 for the supply of a total of two million tonnes per annum of LNG, with the first delivery of LNG from Qatar to China through CNOOC having been made in October 2009. With an estimated total asset of RMB26 billion (QAR15 billion), Dongming Petrochemical is China’s largest independent refiner, enabling the Qatari/ Chinese partners to construct 1000 mixed oil, nonoil, and LNG/Compressed Natural Gas stations within a 300-kilometre radius of Dongming’s Heze refinery. It also affords the Qataris access to the group’s entire product line, which includes crude oil processing, petrochemical manufacturing, and fine chemicals developments, among others. According to QID CEO, Ibrahim El Tenay, the deal when completed (expected to be finalised by fourth quarter of 2015) will include various new projects and expansion of current projects, the most important being the launch of an LNG storage facility with a capacity of three million metric tonnes.
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Contents: Qatar property market sees price rise in Q1 2015. 35. Doha Metro completes 20 kilometres of tunnelling work. 36.
real estate & construction
Qatar property market sees price rise in Q1 2015
New developments in The PearlQatar are expected to be released in the market over 2015, which will potentially ease rental inflation. (Image Fotoarabia)
Driven by economic growth and the creation of new jobs in non-oil sectors, the demand for properties continues to grow, causing an increase in real estate prices. by Syed Ameen Kader
D
espite the subdued effects of the weakening oil price that generated a degree of caution among investors, Qatar’s real estate sector has seen property prices rising in some areas due to a consistent growth in migrant population. According to Qatar Statistics Authority, the country’s population increased by 9.5 percent over the 12 months up to the end of March 2015. Driven by job creation in the non-hydrocarbon sectors, the population growth has resulted in increasing demand for family accommodation, mainly for fourand five-bedroom villas, where, according to DTZ’s Q1 2015 report, occupancy rates are currently high. The rental rise has also
been seen in the mid-range apartment segment, particularly around Al Sadd area. DTZ has observed a rental increase between five and 10 percent in selected developments in recent months. Mark Proudley, associate director, head of consulting and research, DTZ told The Edge, “Our view is that the falling oil prices have stabilised the market by introducing a degree of caution amongst investors, which is reflected in the Qatar Central Bank (QCB) Real Estate Index.” Proudley added that the initial impact is being felt within the occupational markets with a number of companies active in the hydrocarbon sector or government-related seeking to rationalise costs, reducing
employee numbers and increasing occupational efficiency. Though the recent price rise has been slightly contained by the restraint shown by oil and gas companies towards taking on new residential accommodation, the strong demand from other sectors kept the pricing index upwards. Nick Witty, director, Real Estate Advisory, Deloitte, added, “Short-term demand resulting from the significant economic diversification being witnessed in the country is primarily responsible for driving prices upwards.” He furthered new companies are entering the market to work on various infrastructure projects, and they require office and residential
The Edge | 35
sectors | real estate & construction
accommodation for their staff, and, as such, it is these two sub-sectors of the market which are experiencing rental inflation the most. The rise in both sale and rental housing prices are also being driven by high land cost that is making the construction of these properties more expensive. The growing land price has been a major concern, which was also highlighted by the International Monetary Fund (IMF) in their recent country report for Qatar. The global body has called for remaining vigilant about “overheating risks”. “Policymakers can take additional steps to ensure adequate supply of land and affordable housing. To reduce any speculative pressures by cash investors in the real estate market, consideration should be given to raising real estate transaction fees, which are at 0.25 percent low by international standards,” noted the IMF’s country report, released in March 2015. Industry observers feel that further land price growth is not sustainable for the market, as certain districts have already reached a level, which is not financially feasible for developers to build.
“Increasing prices will ultimately mean that development projects will become unviable and will not go ahead with investors withdrawing until market forces restore the equilibrium,” said Witty. According to Proudley, the main impact has been that high land prices are prohibitive to development of low-tomedium-cost housing in the traditional city centre areas such as Msheireb Downtown Doha or Bin Mahmood. New low-cost housing is now being developed on the outer suburbs of Doha in areas such as Wukhair and, Proudley felt, this trend will continue as Doha expands and matures as a city. Gaurav Shivpuri, head of capital markets, MENA for Jones Lang LaSalle, cautioned that rapid value spikes in any sector are usually unsustainable and create a risk of a market bubble. “Real estate is no different and the rapid value increases that have been witnessed in Qatar were a factor of the demand supply gap. As the gap diminishes the value increases will slow down to more long-term sustainable figures,” he said. Moving forward, industry experts have predicted, the outlook for all the market
segments is relatively positive in the short term, though longer-term prospects are more risky due to looming pipelines of supply across all real estate asset class sectors.
“Our view is that the falling oil prices have stabilised the market by introducing a degree of caution amongst investors.” - Mark Proudley, DTZ.
Urban infrastructure
Doha Metro completes 20 kilometres of tunnelling work Qatar Rail plans to complete tunnel-digging of 113 kilometres by the second quarter of 2017. Qatar Rail has announced the completion of nearly 20 kilometres of tunnels dug for the Doha Metro project as of late April 2015. With 21 tunnel boring machines (TBM) already been imported and pressed into work, Qatar Rail expects to finish the entire 113-kilometre tunnelling stretch by the second quarter of 2017. Engineer Saad Ahmed Al Muhannadi, CEO of Qatar Rail, said, “The tunnelling phase for the Doha Metro was successfully launched as we achieved great records of
36 | The Edge
Tunnel boring machines are at work at the Al Sudan Gold Line underground station. (Image Qatar Rail)
11,880 metres of tunnel dug at the Red Line, 6653 metres at the Green Line and 150 metres at the Gold Line.” TBMs, which are imported from the German manufactures Herrenknecht, are a critical component in implementing the ambitious metro project. In executing this mega project, a major challenge for Qatar Rail is to avoid any inconvenience to Doha’s residents. “We were keen to implement most of the metro project underground where TBMs interface very little with our vibrant city life through advanced technology and eco-
friendly mechanism,” said Engineer Abdulla Abdulaziz Al Subaie, managing director of Qatar Rail. Qatar Rail plans to complete the first phase of Doha Metro by the fourth quarter of 2019. This will involve laying a 86.5-kilometre long track and constructing 37 stations, including Msheireb, although not all stations will be immediately accessible to the public. The second phase of Doha Metro is expected to be delivered by 2026 with around 70 more stations.
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sector name | banner heading
Contents: Strong basis make for better security. 39. Qatar IT services market poised for strong growth. 40.
tech & communications
Strong basics make for better security Qatar’s State Cabinet recently strengthened the country’s position against cyber threats by approving the formation of two new bodies to monitor online threats: the National Center for Cyber Security and the National Committee for Information Security. (Image Arabian Eye)
One thing that many companies forget when it comes to securing their data is what happens to the physical devices once they are no longer in use, such as an old mobile phone or a hard disk. by M. Iqbal
T
he issue is not new, according to Samir Pawaskar, the head of the Cyber Security Policy and Standards at the Cyber Security Division of the Ministry of Information and Communications Technology in Qatar. “There are people interested in buying old mobile phones to see what data they can retrieve from them,” said Pawaskar in a panel discussion at the IT Security Roadshow 2015 organised by International Data Corporation (IDC), held in Doha recently. Around 160 security professionals attended the event to learn more about the latest IT security measures.
Responding to a question from the audience – where a security professional suggested filling a mobile phone or a hard disk with filler data before selling it – panellist Krishnakumar Kottekkat, head of IT Strategy and Governance at Aspire Zone Foundation, said there are “technologies that you can use to retrieve information” from hard disks that have been wiped. Sometimes though, he added, it can be as simple as forgetting to select an option while wiping off your data. Modern phones, for instance, save most of their data to the cloud. On some, if you forget to select the option to delete data from the cloud as well, the new The Edge | 39
sectors | tech & comms
“We don’t give Technology services devices away. When Qatar IT services we dispose off our devices, market poised for we literally dispose them strong growth off.” – Omar Al Smadi, Gulf Qatar’s IT services market had a strong year in Drilling International 2014, and will continue to grow at the fastest user may just need to check a box to get all of the data back on the phone. “There are apps available that can be used to retrieve deleted data from the phone [memory],” he said. Another panellist, Omar Al Smadi from Gulf Drilling International, suggested that perhaps the best way for a company to truly protect its data from theft is to destroy the devices. “For us, we don’t give devices away. When we dispose off our devices, we literally dispose them off.” Cloud computing is another area that businesses really need to look into before they take the plunge. A recent Oracle-sponsored International Data Corporation (IDC) study into Software as a Service (SaaS) found that process efficiencies, productivity and cost savings were the key benefits to businesses implementing cloud technology. More than half (58 percent) of survey respondents – chief information officers and decision makers from 160 organisations with 500 employees or more – said access to better technology and faster deployment of additional IT resources (53 percent) were the top two drivers for SaaS adoption. Delivering more projects without recruiting additional headcount (51 percent) and standardisation (50 percent) were the third and fourth key drivers. Other key reasons for adopting SaaS included access to better quality of IT skills (49 percent) and access to the latest software and techniques (48 percent). That said, many organisations “get away with the marketing hype, focusing on costs or ease of use,” said Pawaskar. “One of the key things to understand from security perspective is that you should know [exactly] the data that you are pushing to the cloud.” Then they need to think about where their data will be stored, particularly if they are going with a public cloud service. Many thirdparty cloud services have agreements with other companies, and the data may be stored in data centres governed by different laws. “The companies need to know about all companies that will have access to the data,” said Samir. SaaS adoption: Cost savings, productivity increases
58% 53% 51% 50% Access to better technology
Faster deployment of additional IT resources
Source: Oracle/IDC study
40 | The Edge
Delivering more projects without recruiting additional headcount
Standardisation
rate in the GCC region through 2018.
The International Data Corporation (IDC) recorded the IT services value in the Other Gulf Cooperation Council (OGCC) – comprising Qatar, Oman, Bahrain and Kuwait – at USD1.13 billion (QAR4 billion) in 2014, up 11.7 percent on 2013. It expects this growth to continue, forecasting the total value of the market to be USD1.8 billion (QAR6.6 billion) in 2018. IT services spending in Qatar will surpass Kuwait’s total by the end of Total value of the IT this year, according to IDC. Qatar’s services market in 2018, lead in IT services spending is fuelled according to IDC. by large-scale, infrastructure-driven and government-led projects in the transportation, healthcare and education sectors. “The willingness of [chief information officers] to procure outsourcing services is increasing across the GCC countries,” said Eric Samuel, a senior analyst for IT services at IDC Middle East, Africa, and Turkey. “And we are now at a stage where CIOs are actively evaluating the capabilities of ICT services providers to build and operate their ICT environments. Some organisations are already reaping the benefits associated with these technologies, such as improved operational efficiency, reduced capital expenditure, and enhanced ICT management. And as the outsourcing services offered by ICT services providers mature over the coming years, we expect the adoption of such services to increase notably.” The competitive landscape in Qatar is changing at a rapid pace. An increasing number of global ICT companies are now competing with local ICT providers, either directly or through partners, as they strive to capitalise on the myriad ICT opportunities present within the country, according to IDC. However, this increasing competition is exerting a downward pressure on project pricing, which is impacting the margins of many ICT providers in the region. ICT project pricing is also becoming more complex as more organisations expect their ICT partners to develop and implement solutions that are capable of solving their specific business challenges rather than merely meeting their operational requirements. “IT services maturity has significantly improved in the GCC countries, and both public and private sector organisations are looking at implementing complex IT solutions while addressing the challenges associated with finding and retaining experienced inhouse IT personnel,” said Samuel.
QAR
6.6
billion
Reaching cri Examining the link between fast food and obesity in Qatar and the GCC
s s a m l a c i it
cover story | food and health
Obesity and diabetes in the Gulf Cooperation Council (GCC) reached epidemic proportions and is becoming an increasing burden on public healthcare and overall gross domestic product (GDP). Therefore, medical experts are focusing on the root causes, which include cultural reasons, and a prevalence of fast-food outlets over healthier options, writes Abed Ayyed.
A
l Nasr is an area that occupies less than a square kilometre, roughly seven kilometres from the centre of Doha, and where ubiquitous flashing neon lights have earned it the pejorative epithet cholesterol corner. The prominent signage here includes some of the main favourites, such as Burger King, Chili’s and Applebee’s, while a nearby Korean restaurant, founded at a time when South Koreans flocked to work in Qatar’s oil and gas fields, has become famous for affordable kimchi and sushi. Even Yee Hwa, the mom-and-pop operation which became a gentrified hit for health-conscious professionals, however, illustrates a point about eating in the GCC, and particularly about Qatar. The dining choices available to you, and the prices you pay for them, often bear little or no relation to the surrounding human and physical geography. Indeed, arguably in the GCC, globalised food brands such as TGI Friday’s and Applebee’s, with the more pedestrian options – KFC, Pizza Hut, McDonald’s and Burger King – following behind, have now established themselves firmly as local eateries. Taken together, the high-
Notwithstanding the huge variety of food on offer, the GCC market is clearly dominated by globalised American chains that have a reliance on one ingredient in particular: high-fructose corn syrup, lovingly known as HFCS. (Image Corbis)
USD
2
BILLION
The combined annual revenue of the region’s two largest fast food conglomerates, Saudi Arabia’s Olayan Group and Kuwait’s Americana, the local partners of Burger King and KFC respectively, equalling QAR7.28 billion annually.
The 2006 data published by Professor Abdulbari Bener, formerly head statistician at Qatar’s Hamad Medical Corporation, indicated that more than 30 percent of Qatari school-age boys were reported as either overweight or obese. The situation has not changed much today.
Native American reservations are the focal points of obesityrelated diseases, and prevalence of overweight and obesity among Native American children is similar to that among Qatari children. 44 | The Edge
volume throughout fast food restaurants (or ‘quick-service restaurants’ as they like to be called) accounted for nearly 58 percent of the USD16.5 billion (QAR60 billion) restaurant sector in the GCC, according to 2012 figures. The clout of the slightly more sophisticated ‘casual dining’ establishments – such as Chili’s and TGI Friday’s – is more difficult to estimate, but likely accounts for a further USD1.5 billion (QAR5.5 billion) to USD3 billion (QAR11 billion). With an estimated population of 51 million, this would mean that per capita annual spending at restaurants in the GCC is estimated at USD300 (QAR1100, or about QAR90 per person a month), a figure that is a quarter of, say, the United Kingdom, where the comparable figure is about USD1400 (QAR5000 or QAR425
food and health | cover story
per person per month). But this hides an important point: most of the population of the Gulf countries is made up of migrant workers from South Asia with little or no disposable income, whereas the spending figures reported above ostensibly come from a small clientele of well-heeled, and very well-fed, restaurant patrons.
Corn addicts
Notwithstanding the huge variety of food on offer, the market is clearly dominated by globalised food chains that have a reliance on one ingredient in particular: high-fructose corn syrup, lovingly known as HFCS. Thanks to the trailblazing work and advocacy of people such as Dr. Robert Lustig, we know that HFCS – a sweetener that is based on a novel isomer, combining both fructose (fruit sugar) and glucose and developed in the late 1950s – is arguably a toxin, and might be one of the ingredients responsible for the epidemic of obesity and diabetes in the United States (US). A number of facts about HFCS stand out for particular concern. Firstly, the fact that its production has been effectively subsidised by the US government means that food distributors can use it as a cheap additive. This has allowed for it to be rolled out in almost every food item imaginable, sometimes turning up in very non-intuitive items such as the bread in hamburger buns and even in beef patties. This combination has helped to ensure that some of the pockets with the least amounts of disposable income, such as Native American reservations, are also focal points of an epidemic of obesity-
Combatting diet- and lifestyle- related illness is an express strategy of the Qatari authorities, who along with the private sector have increased awareness through various programmes. related diseases. In fact, the prevalence of overweight and obesity among Native American and Alaskan Inuit children is similar to that among Qatari children. By 2006, fully nine years since the World Health Organization (WHO) designated obesity as an epidemic, data published by Professor Abdulbari Bener, formerly head statistician at Qatar’s Hamad Medical Corporation, indicated that more than 30 percent of Qatari school age boys were reported as either overweight or obese, closely mirroring the statistics for Native American populations. What is
GCC food service market size (2012) Food service market by country Bahrain 2% Oman 6%
Food service market by category Qatar
7% Kuwait 10%
Saudi Arabia 47%
Full service 32% Fast food 57%
UAE 28%
11%
Cafes, bakery Source: Al Masah Capital: GCC Food Service Sector (2013)
Fast food fast facts In January 2015, the Qatar Biobank released results of its two-year operational pilot phase, and revealed that of
1200 participants 70%
76% of males
of females in Qatar are either overweight or obese, and
52.7% of male participants and 31.7% percent recorded prehypertensive or hypertensive blood pressure
80% of this sample population reported No level of moderate physical activity per week
Other research has shown that
39.5% of men and
17% of Qatar’s population suffer from type 2 diabetes and
43.2% of women are obese
Source: Qatar Biobank and World Obesity Federation
striking here is that these numbers might be counterintuitive when compared to another set of data, on the GDP per capita of the Gulf states. At the complete opposite end of the wealth spectrum, Qatar’s GDP estimates, at around USD94,000 (QAR324,000) per capita annually, make it the wealthiest country in the world (when median income is taken into account, the picture becomes more complicated, but it remains true that Qatar is home to some very rich people). It is far removed from the pockets in post-industrial countries such as the US in which obesity is rife. In fact, although obesity had previously been thought to be a First World problem, trends over the past 30 years have shown that it affects the poor more than the wealthy, at least in the industrialised world. Ironically, in the GCC states, by contrast, particular fast The Edge | 45
cover story | food and health
Without a doubt, the public’s consumption habits play a big role in health issues. If people want to eat more calories than they expend in physical activity, then the obvious conclusion is that they will become overweight. (Image Corbis)
food chains, which are generally associated with the underclass in North America, have arguably become fashionable among many moneyed citizens of the Gulf. According to Zahra Babar, a Dohabased academic and one of the editors of Food Security in the Middle East (Oxford University Press, 2014), this can often create a problem for public health experts, who are used to Western societies, trying to solve problems in Qatar and the Gulf. The difficulty, as Babar points out, is that it was not that long ago when eating at Western chain restaurants, and being seen to eat there, was the height of class. Enjoying Pizza Hut or a KFC held out the cache of eating “like they do in London”, a perception which stuck even as the West became health conscious and trendsetters jettisoned their fast food addiction. Further occluding the view, says Babar, is that the data available, when it is there, is often unreliable. She cites the work of Salman Rawaf, a public health expert at Imperial College London, who has repeatedly cast doubt on the veracity of data in Qatar and other Gulf states, largely because of the lack of a fully-fledged infrastructure to record the relevant metrics across all sections of the population. A colourful idea that Babar uses to illustrate this point is that, in reality, the “typical Qatari”, if measured properly, would be a malnourished South Asian labourer working on a construction site and not a well-fed citizen in an air-conditioned car. Indeed, even today, cereals comprise more 46 | The Edge
If people want to eat more calories than they expend in physical activity, then the obvious conclusion is that they will become overweight.
than 44 percent of the food consumed in the GCC, compared to seven percent for meats – a characteristic more typical of poorer communities.
Big problem, big business
Yet, like anybody who lives in Qatar knows, the country is meticulously measured, with much fanfare made out of the publication of data relating to the size, shape and well-being of the population. More to the point, and as Babar herself points out, the problem is clear for all to see: stand in a food court in one of Qatar’s shopping malls,
and the girth of a typical waistline will leave an impression on you. The anecdotal evidence goes further still: Qataris often speak of friends, relatives and colleagues who have had gastric bypass surgery, who suffer from hypertension and diabetes at an early age, or who have had to undergo some major medical intervention or the other to be able to function as adults. So if we can all agree that there is a crisis, even if the scale of it remains unclear, then who is to blame? Without a doubt, the public’s consumption habits play a big role here: if people want to eat more calories than they expend in physical activity, then the obvious conclusion is that they will become overweight. An interesting idiosyncrasy in the Middle East is the way in which Western diets have supplanted – but not entirely replaced – the dining habits which are grounded in generations of tradition: one striking observation about the consumption of fast food in the Gulf is the way in which people partake in it communally, in kinship groups and shared out as equals. Unlike the way that the import of coffee chains completely altered the consumption patterns of coffee, turning it from a ritualised, slow affair into a morning rush-hour pick-me-up, hamburgers and pizzas did not change the rituals around food consumption – people make a show of being generous with their food, insisting that others sit down and share their meals. Clearly, consumers are not doing enough by way of exercising their judgement and free will. Yet, as the work by Lustig shows, such a simplistic reading of the situation is unfair in the way it assumes so much responsibility is even possible on the part of the individual: especially in countries such as Qatar, where the variety of food is limited, the ability of consumers to make a choice seems like a sleight of hand. Indeed, as several of the gleeful and optimistic reports on the food industry and catering sectors in the Gulf make clear, the GCC food market is dominated by a small group of corporate players with incredible clout. Some regional giants that represent this fact are some of the oldest in the region, and are dominated by well-established patrician merchant families. They benefit from a local regulation system that makes their participation in the business chain a
food and health | cover story
necessity, but they also have mutated in size as business concerns, turning the fast food franchise business into a behemoth in the process. Business regulations in the Gulf allow for largely unhindered trading of Gulf-owned business across the borders between the countries, as well as ensuring that all local branches of a global chain need to be controlled by a single franchisee. Plain and simple economies of scale do the rest of the work to make sure that a small group of family-controlled conglomerates, which are the local partners of international fast food restaurants, have economic clout.
accelerating levels of obesity over the past three decades. That is also the same time frame that corresponds with the arrival of food subsidies that were rolled out to cushion the blow of Anwar Sadat’s massive economic liberalisation programme in Egypt. Here again, the imperative was to put calories into people’s plates, and not worry about the health benefits of the ingredients used. In the end, the Egyptian public, just as those in the Gulf, display high levels of both obesity and micronutrient
Subsidised starch
Another feature of the food market in the Gulf is the effective, blanket subsidies on food items. This is a hangover from an earlier time, when the populations in the Gulf had to contend with the very real spectre of famine, a periodic visitation before the large incomes now bestowed by hydrocarbon wealth. One consequence of this is that the price of a hamburger you buy at Johnny Rocket’s – a mid-level, casual dining experience with an American 1950s theme – is impacted by government subsidies on bread, cooking oil and meats. It might also provide another clue for the link between specific food items and the rapid increase in obesity rates across the broader Middle East. While it has an income profile completely different from the Gulf states, Egypt has also suffered from rapidly
Zahra Babar, a Doha-based academic and one of the editors of Food Security in the Middle East, points out that, in reality, the “typical Qatari”, if measured properly, would be a malnourished South Asian labourer working on a construction site and not a well-fed citizen in an air-conditioned car.
GCC food service market size in value term (2012) Values in USD bn
0
0 Quick-service restaurants
Full-service restaurants
Source: Al Masah Capital: GCC Food Service Sector (2013)
0.1
0.3
1.0
0.3
1.3 0.5
1.0
0.2
2.0 0.6
2.0 0.7
3.0
1.0
3.0
2.7
4.0
2.9
4.0
Saudi Arabia UAE Kuwait Qatar Oman Bahrain
5.0
4.2
5.0
58%
The percentage of fast food outlets in the GCC’s restaurant sector.
deficiencies, the same problems which one finds in American inner cities and on Native American reservations, amongst groups reliant on foodstuffs distributed by the US government, and highly reliant on HFCS. So welcome to the Gulf, where the wealthiest people on the planet suffer the same health epidemics as found among some of the world’s most downtrodden. While the dominance of a small group of family conglomerates over the food sector continues for the moment, it does seem that the empire is striking back. Qatar is in a particularly difficult place if it ever aims to become food independent. Besides the heat and extremely limited fresh water reserves – domestic water consumption is met entirely by desalination – the lack of top soil makes the idea of large-scale agriculture difficult. This has not stopped brave individuals from trying to turn the tide. For example, one such intrepid soul is Qatari Mohammed Khamis Al Sulaiti, an electrical engineer who left a government position to attempt a world first – the farming of local truffles. If Sulaiti’s plan works out, he will have introduced a new source of fresh non-animal protein to the food market, possibly at a reduced price. Another effort involves governmentsubsidised greenhouses, which provide consumer cooperatives, dotted across Qatar’s residential districts with fresh, organic produce. Indeed, combatting diet- and lifestylerelated illness is an express strategy of the Qatari authorities, who along with the private sector have increased awareness through various programmes. But there is clearly a long way to go. With time, one can be optimistic and hope that the people of Qatar will ditch fast foods dripping with HFCS that are poisoning its people and shake off the stranglehold of the fast food chains in favour of healthier choices. The Edge | 47
confid
gro On the overall direction of geographical diversification for Al Faisal Holding, Sheikh Mohammed bin Faisal Al Thani, vice chairman of the group, believes that the group is “always looking for opportunities that can add value to the group and provide synergies with our existing operations�.
48 | The Edge
dent in
owth What began more than 40 years ago as a small automobile spare parts business, has transformed into a holding group with a large number of consumers, involved in diverse sectors – including real estate, commercial and industrial activities. Al Faisal Holding has over 20 established and successful companies operating under its umbrella. Sheikh Mohammed bin Faisal Al Thani, vice chairman of Al Faisal Holding, in an exclusive interview with The Edge’s Aparajita Mukherjee, talks about the overarching philosophy that keeps the diverse entity together and its journey into the future.
T
he corporate website of Al Faisal Holding reads: “Al Faisal Holding has many divisions under its umbrella: property, hospitality, construction, trading, transport, entertainment, education, services and IT division.” With the diversity of the group’s business portfolio, prioritising one over another calls for an overarching philosophy that, in business management language, goes by the name of corporate vision. For Sheikh Mohammed bin Faisal Al Thani, vice chairman of Al Faisal Holding, it boils down to one simple dictum: balanced portfolio diversification, which strengthens the group’s position and “reduces our exposure to the impact of market conditions on any one individual sector at any one particular point in time”. Explaining the strategy of diversification, Sheikh Al Thani says, “Each subsidiary is managed as a standalone entity, optimising the management’s operational focus. Our vision is to be recognised as a market leader in each geography and sector in which we operate, delivering excellence through the professionalism and quality of our people, our products and our services.” Al Faisal Holding started off from Sheikh Faisal bin Qassim Al Thani’s avowed entrepreneurial spirit back in the 1960s. Now that the transition from an
entrepreneurial venture to an international diversified industrial group has been achieved, is the spirit of entrepreneurism no longer relevant? Sheikh Al Thani is of the opinion that, to achieve success, businesses need to have a vision and the cornerstone of “the Group’s continued growth is the vision, guidance and drive of its founder, Sheikh Faisal himself”. In that sense, the continuity is not only intact but relevant. Reflecting on the roots and origins of Al Faisal Holding, Sheikh Al Thani says, “Despite its current stature as one of Qatar’s leading private companies, Al Faisal Holding’s origins were very modest indeed. However, driven over the past 50 years by Sheikh Faisal’s entrepreneurial zeal and reflecting the rise of Qatar itself, the group’s growth has been rapid.” He adds that Al Faisal Holding has, in the process, “played – and continues to play – a significant role in the development of Qatar’s economy and infrastructure, attracting sizeable foreign investment and generating numerous career opportunities”. Al Faisal Holding, according to Sheikh Al Thani, has developed in line with the increased prosperity and growth of Qatar, capitalising on business opportunities to become a significant player at the local, regional and international levels. Commenting on the key success factors The Edge | 49
business interview | business practices
Over the years, the group’s professional belief in ethics and quality has evolved into a set of corporate standards and practices which Al Faisal Holding uses as its benchmark for excellence.
that have brought the group to where it is today, and the extent of continuity in business planning that analysts foresee for the next three years, Sheikh Al Thani says, “We believe that to build a successful business, one has to have a clear vision, an ambitious dream, honesty, patience and perseverance. These are more important than financial capital.” Al Faisal Holding will continue with its development plans for the coming years and, adds Sheikh Al Thani, “I am confident that you will see more growth and success in each and every business line in which Al Faisal Holding operates.”
Not family-held, but business entity
Al Faisal Holding, according to Sheikh Al Thani, has adopted a management strategy that views Al Faisal Holding “as a business entity and not as a family affair”. Over the years, the group’s professional belief in ethics and quality has evolved into a set of corporate standards and practices which Al Faisal Holding uses as its benchmark for excellence. Explaining this continuity in the corporate value paradigm and what it
has achieved for the entity, Sheikh Al Thani says, “This attitude of providing the highest standards of quality in all of our endeavours has paid off at every step of the way. Today, Al Faisal Holding prides itself on being a trustworthy name both in Qatar and beyond, a vital factor for any developing business.” The group has a declared ambition to build on the hospitality industry, both domestic and international, and manages the industry focus through its subsidiary Al Rayyan Tourism Investment Company (ARTIC) which is engaged in real estate development, acquisition and leasing with a primary focus on the hospitality sector and hospitality-related services both in Qatar and overseas. Commenting on ARTIC’s overseas acquisition strategy and the factors that the company takes into consideration while deciding on any acquisition, Sheikh Al Thani says, “All of ARTIC’s investments are in line with our long-term growth strategy focused on acquiring premium properties in key cities that meet our exacting standards of asset quality, location and architectural design.” On the overall direction of geographical diversification for Al Faisal Holding, Sheikh
Bridgestone, part of Aamal Trading, is a leading international brand in the portfolio of Al Faisal Holding. (Image Al Faisal Holding)
Al Thani believes that the group is “always looking for opportunities that can add value to the group and provide synergies with our existing operations”.
Market leadership
One of the core objectives of Al Faisal Holding is ensuring its market leadership in its chosen sectors. With expanding business portfolio, changing economic scenario and increasing competition, how does the group ensure a seamless market leadership? Sheikh Al Thani says, “Al Faisal Holding is a well-established entity, which has earned its trustworthy reputation through always offering the highest quality products and services. Another important part of our strategy is to be a first mover in every market in which we operate. We believe in introducing new and innovative products and services is a key element to becoming a market leader.” One primary area of interest for Al Faisal Holding is the education sector. Talking about his group’s focus on this sector, Sheikh Al Thani says that their interest stems from the overall objective that they have to improve the quality of education in Qatar. The group, in the words of Sheikh Al Thani, “does not regard education as a profit centre but rather as an opportunity to contribute to supporting the local community and the development of a knowledge-based economy in line with the Qatar National Vision 2030.” “Our loyalty to Qatar and our role in its development extends far beyond our business investments,” adds Sheikh Al Thani. Listing the most recent initiatives that Al Faisal Holding has taken in the education sector, Sheikh Al Thani says, “We have signed an agreement with DePaul University in Chicago to create an MBA programme in entrepreneurship for both Qataris and Americans in order to share our knowledge. We also have one of the best international British schools – the Gulf English School – as well as Stenden University in Qatar, which specialises in hospitality management and has its parent campus in the Netherlands.”
Business councils
Since 2012, Al Faisal Holding has been a member of the US-Qatar Business Council, which said in its press release at the time of the group’s inclusion, “…is pleased to welcome the Al Faisal Holding Group as its newest member. With a vast international
Marriott Marquis Doha is a prominent landmark in West Bay, and is owned by Al Faisal Holding. (Image Al Faisal Holding)
“Our loyalty to Qatar and our role in its development extends far beyond our business investments.” – Sheikh Mohammed bin Faisal Al Thani, vice chairman of Al Faisal Holding. The Edge | 51
sector name | banner heading
According to Sheikh Al Thani, “We have strong relations with the US and both the US and Qatari markets provide wide and diverse investment opportunities. The USQatar business Council creates a significant platform for business networking and understanding market opportunities.�
business practices | business interview
Pictured here is Aamal Ready Mix, part of Al Faisal Holding’s industrial manufacturing division. (Image Al Faisal Holding)
presence and with established partnerships that span the globe, the group is one of Qatar’s premier business institutions. Al Faisal Holding is involved in ventures across numerous sectors both in Qatar and abroad with subsidiaries in the areas of education, entertainment, hospitality, IT, construction, finance and real estate”. What benefits has the group derived out of its membership of the US-Qatar Business Council? According to Sheikh Al Thani, “We have strong relations with the US and both the US and Qatari markets provide wide and diverse investment opportunities. The USQatar Business Council creates a significant platform for business networking and understanding market opportunities.”
Quite a substantive portfolio of Al Faisal group pertains to property both commercial and residential; both compounds and towers. Given the competition in the sector, there must be a robust business model that the group has for the sector? Sheikh Al Thani is of the view that being able to offer a wide variety of housing options that cater to different lifestyles is Al Faisal’s key strength. Is there any chance of Doha having an excess capacity over what it needs? “With the continuously increasing population of Qatar, we expect the strong demand for housing to continue in the coming years,” Sheikh Al Thani tells The Edge.
Giving his take on the way the construction sector is developing in Qatar and the lessons that the sector needs to learn from the neighbouring real estate markets, Sheikh Al Thani says, “Qatar’s construction sector is developing strongly at all levels and will continue to do so, driven in part by the many State infrastructure projects which the Qatar National Vision 2030 is generating.” “While we always look to learn from international best practice in other markets, we believe that the unique opportunities and expertise which is driving the construction industry sector in Qatar puts the sector in a very strong position,” says Sheikh Al Thani. The Edge | 53
Expatriate
Games Do foreign workers have a future in Qatar?
Without achieving citizenship or even permanent residency, the identity of foreign nationals remains entrenched in their country of origin. But, asks the author, is this a sustainable way forward and the best thing for the region, and should more be done to develop and retain expatriate workers in Qatar and the greater Gulf Cooperation Council?
Just as demographic and labour market developments are driving changing approaches to employment for Qataris and their compatriots across the Gulf Cooperation Council (GCC), similar triggers are impacting nonnationals in the region’s workplaces. What is the evolving talent landscape for expatriates, and indeed do they even have a place in the future of the region? The answer is yes, but with some serious caveats, writes human resources expert David Jones, of The Talent Enterprise.
feature story | human resources
P
erhaps it is an anachronism to even use the word ‘expatriates’ to collectively describe all foreign workers in the GCC, as there are so many different types, whether they are globally mobile executives leading organisations in the region, migrant labourers or those in domestic or ancillary jobs, often with precarious or dubious legal status. Indeed, many of the latter are only in the region because decades of reliance on imported labour have generated deeply entrenched views about many such jobs as unattractive to nationals, precisely because they are associated with harsh working conditions and menial jobs, particularly in the private sector. In turn, many employers it seems expect higher output from expatriates than they would from nationals, at lower remuneration, contributing to a globally unique and arguably unsustainable labour market status quo. Research shows that foreign workers may tend to undertake a risk-averse and defensive position in terms of their orientation to their work, rather than taking calculated risks and operating at peak productivity. As a result, many expatriates display defensive ‘rent-seeking’ behaviour,
It is clear that the local population becoming more self-reliant and the expatriates becoming more permanently committed to their lives in the Gulf would have many benefits for all. ostensibly driven by a fear of losing their job, which typically represents a far greater earning opportunity than compared to their home country. Allied with this is the common phenomenon of ‘expat failure’, with return rates in the first year of appointment as high as 30 percent in some industries in
Decades of reliance on imported labour have generated deeply entrenched views about many kind of jobs as unattractive to nationals, precisely because they are associated with harsh working conditions and menial jobs, particularly in the private sector. (Image Arabian Eye/Corbis)
56 | The Edge
the region. Even with those who remain, there still may be significant issues, such as in Qatar, where overall labour productivity levels for both nationals and expatriates are at exceptionally low levels compared to international benchmarks. Another issue is that many professional expatriates in the region are often employed for their technical capability and experience but are not in positions of real leadership or authority. Unfortunately, this affects their ability and willingness to coach and mentor national staff, which is critically important if the region’s labour markets are to become more sustainable in the future. Finally, another challenge is that an already segmented labour market is further characterised by a largely transactional nature of relationships that exist between nationals and expatriates, or more accurately between sponsor and employee. This can be attributed to the lack of permanence of employment and long-term residency prospects. This sometimes impacts the sense of personal ownership, investment and accountability of expatriates as decision makers and business leaders across the GCC.
A challenging future
So where to from here? For one, a crucial
human resources | feature story
80%
The percentage of private sector jobs across the GCC held by expatriates. This increases to more than 90 percent in the United Arab Emirates and Qatar. aspect should surely be to acknowledge the changing role of expatriates in the future of the GCC. While the proportional increase of nationals in the workplace is clearly and correctly a policy priority in all Gulf states, it would be incorrect to assume that having more Qatari nationals in the workplace will mean fewer expatriates and fewer opportunities for their career development. Expatriates are clearly vital to the future of the region. Of the world’s 20 countries with the highest proportion of international migration, nine are in the Arab world. Expatriates hold more than 80 percent of private sector jobs across the GCC, and this increases to more than 90 percent in the United Arab Emirates (UAE) and Qatar. In Qatar, between 2004 and 2010 alone, more than a million non-Qatari workers boosted the population from 0.7 million to 1.7 million, and dependence on foreign workers is expected to continue. This is placed into sharp focus when you consider that the number of Qatari graduates is between 3000 and 3500 every year, insufficient to meet the current HR demand in most sectors. This has far ranging implications. Arguably, the challenge for policy-makers in Qatar is to increase local representation in the local job market while managing this growth. Qatar cannot currently afford to implement strict limits on the employment of expatriates in order to meet its growth ambitions. Yet a rapid decrease in the expatriate working population could have serious consequences over economic growth and the country’s standard of living. For example, one downside of the high influx of low-skilled foreign workers coming into Qatar is depressed labour productivity. One strategy could be to boost the proportion of Qataris in the labour force by diversifying into economic activities that relt on higher productivity, promoting capital investment and greater use of higher skilled labour. Another is to equip Qatari workers
Expatriate Games: Trends and opportunities in the changing regional talent landscape Changes in migration
As India and other South Asian countries continue to develop, proportionally fewer expatriates from these traditional sources of technical, managerial and manual labour will arrive in the GCC. In the last five years, the fastest growing numbers of expatriates are arriving from China and from Africa, with very different sets of skills, orientation to work and social impact on their host nations, such as Qatar.
‘Arabisation’ of the workforce As a first step in the nationalisation process, there is an increasing pattern of private sector organisations choosing to ‘Arabise’ their workforce. Multinational organisations are taking the lead in this regard, since they are moving from a relatively lower base. In addition, many are opting for a broader definition of nationals to include all GCC countries, instead of just their home country. GCC national talent will likely continue to be more attracted to the more managerial, professional and technical roles. Many of these are disproportionately held by Western expatriates at the moment, but this may start to change as Arab nationals are culturally closer to GCC nationals, and willing to work for less remuneration than many nationals.
Fostering relationships between expatriates and nationals Many expatriate managers are recruited for their technical and professional capabilities and not necessarily for their managerial or leadership capabilities. And yet, considering the nationalisation agenda, the prime role of expatriates should be to guide and mentor nationals as future leaders. Those can create appropriate incentives for expatriates to develop their GCC national colleagues and a culture of mutual trust and respect will be able to accelerate many of their talent initiatives.
Hiring senior expatriates as guides With ageing workforces across the rest of the world, there is an opportunity to better match older workers from elsewhere with local protégés in a more sustainable relationship. The mentor is unlikely to be considering a long-term career or sojourn in the workplaces of the GCC. Moreover, for those expatriates with scarce skills, extended periods or terms of residence could prove productive for all parties concerned.
Greater diversity and inclusion focus
There is a pressing need to create a culture and environment of inclusive growth – one that allows individuals, teams and organisations from diverse backgrounds to flourish and be wholly productive. Many nationalities work together every day across the GCC. However, research in the GCC indicates that having a diverse workforce is not the same as having an inclusive one. Working and thriving in a heterogeneous environment is a learned behaviour and requires focus.
The Edge | 57
feature story | human resources
with the skills required to attain their maximum potential, in both the public and private sectors. Discourse on the future of the region talks about the end of the oil and gas era and the impact of greater scarcity of fossil fuels on the continued development of the GCC. At least as important, if not more so, is the end of the era of cheap labour and how to prepare for a future when most of the jobs for national and expatriates are part of the much-touted ‘knowledge economy’. But that is in the long-term future. For the time being in Doha, certainly, as well as other rapidly developing hubs in the region, there is still a strong reliance on manual labour, so any changes in the supply could have a significant impact. In India, for example, domestic labour market conditions have been changing rapidly and impacting the potential supply of Indian talent into expatriate labour pools. Its domestic demand for labour is increasing and this will continue to restrict the supply, and increase the price, of Indian talent available, explaining in part at least the growth in the number of Nepalis or workers from African nations entering the region and particularly Qatar’s labour markets. The profile of Western expatriates is also changing, manifest for example in an increase in the average age of entrants into regional labour markets seeking to boost their retirement income. However, this is occurring alongside with a reduction
in the proportion of Westerners, as many domestic governments seek to tighten their tax regimes for expatriates, negating the previous attractions of a tax-free income in many cases. This is also reducing the average length of residence for many Western expatriates. The large-scale reduction in skilled expatriate labour from the region, whatever the cause, should therefore not be underestimated. One senior official within one of the public healthcare systems in the region recently stressed that they would not be able to run a single clinic or hospital with national staff, without the continued support of qualified professionals from other regions. Indeed, in the case of a major natural disaster, a diplomatic incident or regionwide conflict, which may cause the expatriate population to leave, even briefly, within a few days airports would close down, power would cease to be generated and food would not be delivered. If only from a risk management perspective, it is clear that the local populations becoming more selfreliant and the expatriates becoming more permanently committed to their lives in the Gulf would have many benefits for all.
A more fruitful co-existence
Our research with clients across the region, including Qatar, indicates that the employability strengths of nationals and expatriates are quite distinct in many ways
In Qatar between 2004 and 2010 alone, more than a million non-Qatari workers boosted the population from 0.7 million to 1.7 million. With the current construction boom, dependence on foreign workers is expected to continue. (Image Arabian Eye)
Local employers may have to be prepared to invest in the motivation and development of their expatriate staff in a far more concentrated fashion than they have to date. and yet similar in others. Nationals on average are more motivated, more concerned with how they are perceived by others and have a greater sense of control in their work than expatriates. This suggests that the latter have withheld some of their employability strengths, or their personal and professional productive potential as an adjustment to a situation where their control, learning and ambitions are restrained. The Talent Enterprise also found in our recent Future of Learning study, that expatriates and nationals had broadly similar learning needs and priorities. Nonetheless, we saw that 58 percent of employers prioritised ‘significantly’ or ‘exclusively’ their learning and development budgets for nationals. In such an environment, those expatriates who choose to work in the region clearly have to adjust their expectations, ambitions and willingness to provide their discretionary effort and emotional labour. In light of this result, we also saw the opportunity for learning and development activities to be more integrated in approach to the advantage of both nationals and expatriates.
9
Of the world’s 20 countries with the highest proportion of international migration, nine are in the Arab world. 58 | The Edge
sector name | banner heading
Women in Indonesia go through the migration process to come and work in the GCC. More than 1000 female migrant workers a day apply for their passport to work in the Middle East countries per day. (Image Arabian Eye/Reuters)
When we look at the results of our research for national and expatriate youth in particular, in many ways representing the future workforce, we saw some very interesting reverse trends. For GCC nationals, including Qataris, we saw that on average, the employability strengths for those under 25 were higher than for their older compatriots. This gives a great sense of hope for the future local workforce and their capacity to enhance the productivity of local labour markets. However, when we examined the results for expatriate youth, we saw that only their conviction is significantly higher on average than their older counterparts, with every other employability strength being significantly lower. This suggests that not only will the available quantity of expatriate labour from traditional talent pools become a greater challenge in the future, but so will the average quality in terms of productivity, orientation to the workplace and employee engagement. Local employers may have to be prepared to invest in the motivation and development of their expatriate staff in a far more concentrated fashion than they have to date. Expatriates need to be encouraged to continue to provide
Interaction between nationals and expatriates in the form of mentorship and transfer of skills from the latter to the former is rare in the GCC, and at among the lowest levels in Qatar. (Image Arabian Eye)
30%
The percent of return-home in the first year of appointment. key skills and abilities required to steer the exceptional pace of development forward, and nationals need to continue to build their own capacities to become more self-sufficient and diversified with regards to their skills over a sustainable timeframe. Expatriates have been attracted to the region to build the physical infrastructure of the GCC in past decades. They will undoubtedly have an equally essential role in building the future human capital of the region over the next 50 years. This co-dependence and co-existence will continue for many years to come, should be accommodated as such, in Qatar and elsewhere. The Edge | 59
Worth the freight An exclusive interview with Ulrich Ogiermann, chief cargo officer of Qatar Airways on the airline’s growing cargocarrying capacity
As more freighters enter the fleet, Qatar Airways will increasingly look to so-called fifthfreedom stopovers to bolster existing trade corridors, the airlines chief cargo officer Ulrich Ogiermann tells The Edge. (Image Qatar Airways)
aviation | business interview
According to Ulrich Ogiermann, chief cargo officer of Qatar’s flagship-carrier Qatar Airways, the opening of Hamad International Airport’s (HIA) new cargo terminal in December 2013 – five months before passenger operations began at the gateway – was a ‘game-changer’ for the country’s wider freight-forwarding operation, writes Martin Rivers.
W
hile Qatar’s myriad infrastructure projects are as diverse as one would expect for a rising industrial powerhouse, they can nonetheless be united by one common denominator: freight, the oxygen of the global economy. Freight forwarding may not be the most interesting of sectors – it certainly garners less media attention than passenger transport – but with cargo traffic closely mirroring global trade, the industry serves as a litmus test for economic health. In the case of Qatar, it is the free flow of freight that enables the Emir His Highness Sheikh Tamim bin Hamad Al Thani to make good on the various promises outlined in the Qatar National Vision 2030 – building public facilities for a blossoming tourism sector; exporting domestically-produced chemicals and construction materials to reduce energy dependence; and importing high-end goods for an ever-expanding, increasingly well-to-do population. With Doha already established as one of the world’s busiest intercontinental hubs
for passenger traffic, it is little wonder that HIA is playing a pivotal role in developing this cargo-centric economy. Air freight may account for just 0.5 percent of global cargo volumes, but it captures more than onethird of goods by value. “We came from a completely manual environment to a quite sophisticated new facility which is fully automated,” Ogiermann, who formerly headed Cargolux, Europe’s largest cargo airline, explains to The Edge. “There were constraints at the old airport. With the growth we had obviously outpacing the full capability of the old warehouse. But now it’s a 1.4 million tonne [per year] facility, and we are already in the design phase for the extension of the cargo centre – bringing its capacity to at least 2.5 million tonnes.” Much of the freight arriving in Doha is a side-product of the flag-carrier’s ever expanding passenger fleet. Qatar Airways today operates 137 passenger jets, each of which has belly capacity beneath its main deck. Given that up to 10 percent of an
2.5
million tonnes
The planned capacity per year of Qatar Airways’ cargo terminal at HIA, which currently stands at 1.4 million tonnes per year.
Qatar Airways is continually expanding its main-deck freighter fleet and currently deploys 14 freighters – eight Boeing 777-200LRFs and six A330-200Fs. (Image Qatar Airways)
The Edge | 61
business interview | aviation
airline’s revenue will typically come from freight, leaving those holds vacant would put the Doha-based carrier at a major competitive disadvantage. Intensive efforts are therefore made to market the space to freight forwarding partners, with the company relying on the same intercontinental hub model that has fuelled rapid growth in its passenger business. The launch in 2014 of two services for high-yielding customers – Q Pharma and Q Fresh – underscored these efforts. Both products utilise specialisthandling facilities on the ground and containers in the air to ensure that temperature-sensitive shipments reach their destination in the best possible condition. “Take the example of our flower shipments from Nairobi to Europe,” Ogiermann says, referring to one of the world’s busiest floriculture trade corridors, which is increasingly being served with stopovers in the Gulf. “We have the facilities in place in Doha so that anything related to perishables or pharmaceuticals get transferred between the aircraft in [cooled] reefer trucks. “Other carriers in the Middle East have tried to work with thermal blankets that they put over the pallets,” he adds. “But once a pallet of flowers has somehow heated up, they start to cook, and you cannot stop the process of deterioration. Our temperatures are fully under control.”
Qatar Airways’ cargo division is an important contributor to the growth of Qatar and a vital component of its logistics and supply chain matrix. (Image Qatar Airways)
QATAR AIRWAYS BY THE NUMBERS Qatar Airways currently deploys:
14
freighters, and flies to
47
points around the globe with non-passenger aircraft. The airline added
11
freighter destinations in 2014 alone. HIA’s two-storey cargo terminal is
55,000
square metres, and features a seamless cool chain for pharmaceutical and perishable goods, and a live animals area. The facility currently moves
1.4
Partnerships and visibility are important in the world of trade. Ogiermann in a panel discussion at the recent The Air Cargo Africa 2015 conference in South Africa. (Image STET)
62 | The Edge
million tonnes of goods per year
aviation | business interview
Freight tonne km (millions) to March 2014 Freight tonne km (millions) to March 2014
5,000 4,000 3,000 2,000
2013 (16.4%)
2012 (15.9%)
2011 (17.8%)
2010 (50.1%)
2009 (32.2%)
2008 (26.2%)
2007 (44.3%)
2006 (4.6%)
2005 (85.1%)
0
2004 (66.1%)
1,000
The airline’s pharmaceutical offering was expanded this year with the launch of Pharma Express, an enhanced service that uses dedicated freighter aircraft rather than hitching a ride on passenger flights. Since January, this has involved twice weekly flights from Basel and Brussels to Doha, from where temperature-sensitive pharmaceutical goods are broken down and re-distributed to the East. At present only the Swiss and Belgian cities are designated as points of origin, but Ogiermann stresses that certification efforts are ongoing for additional trade lanes. With Indian pharmaceutical exports valued at USD15 billion (QAR55 billion) per year, the subcontinent is a prime candidate for expansion of the product. Alongside the seamless cool chain for pharmaceutical and perishable goods, HIA’s 55,000 square metre, two-storey cargo terminal also features a live animals area – providing comfortable accommodation and inspection facilities for creatures as diverse as camels, reptiles and fish – and a dangerous goods room complying with the stringent safety standards laid down by the International Air Transport Association (IATA). Transit times are kept as low as possible, allowing selfcontained cargo pallets to hop from one flight to another as quickly as passengers. In cases where freight containers need to be broken down and re-distributed to different destinations, layovers of six to eight hours are more common. But Qatar Airways’ early adoption
“We came from a completely manual environment to a quite sophisticated new facility which is fully automated. There were constraints at the old airport, with the growth we had obviously outpacing the full capability of the old warehouse.”
of IATA’s e-freight protocol ensures that the ground staff is well prepared for the handover. “Electronic airway bills clearly take the pressure away, because the [freight forwarding] information is entered just once into the system,” Ogiermann explains. “We know what kind of cargo is coming in, and we obviously prepare for the next flight…That’s an automatic process that runs in the background.” Qatar Airways does not release load factors for cargo, so it is impossible to know whether such services have allowed tonnage growth to keep pace with the massive increases in cargo capacity. Looking solely at the available traffic data, however, it is clear that business is booming. Whereas the flagship-carrier’s passenger traffic (as measured by Revenue Passenger Kilometres) has risen nearly sevenfold over the past decade, its freight traffic (Freight Tonne Kilometres) has expanded more than 11 times over. This is not solely due to belly capacity, as Qatar Airways is also continually expanding its main-deck freighter fleet. The airline currently deploys 14 freighters – eight Boeing 777-200LRFs and six A330-200Fs – and Ogiermann is positive on the need for more. Orders are already in place for another four 777-200LRFs and two A330200Fs, with at least one of the Airbuses due to arrive by the end of the year. “We want to run a very non-complex fleet,” adds Ogiermann, “so we’re very happy with maintaining the 777 and 330 freighters,” the cargo chief says. But he adds that the need to offer different weight brackets could yet see a larger 747400F wet-leased for “charter-orientated” activities. As more freighters enter the fleet, Qatar Airways will increasingly look to so-called fifth-freedom stopovers to bolster existing trade corridors. London, for example, presents an attractive opportunity for growing in the European market. At present the cargo division deploys a five-times weekly freighter to London Stansted Airport, as well as utilising space on its six daily passenger flights to London Heathrow Airport. By using the British capital as a stopover for onward flights to America – something that would require regulatory approval from both governments – Qatar Airways could spread the risk of US expansion, bundling its own Doha-origin The Edge | 63
business interview | aviation
Qatar Airways currently flies to 47 points around the globe with its fleet of 14 non-passenger aircrafts. (Image Qatar Airways)
“You cannot do everything alone. You can grow certain trade links together with a partner, and we are very interested always to work in partnerships. That’s clearly winwin for everybody.” 64 | The Edge
freight together with pre-existing UK-US transatlantic cargo flows. The fact that Qatar Airways now owns 10 percent of International Airlines Group, the parent company of Oneworld alliance partner British Airways, only strengthens the appeal of such an approach. Qatar Holding’s 20 percent stake in Heathrow further sweetens the business proposition. But Ogiermann is careful not to talk up any prospective deals, instead voicing general enthusiasm for broad-based partnerships. “Nothing is ever off the table, but we are very, very careful in what we are doing. The most important thing is the quality of every partnership,” he says. “You cannot do everything alone. You can grow certain trade links together with a partner, and we are very interested always to work in partnerships. That’s clearly win-win for everybody.” Even by itself, Qatar Airways already serves 47 points around the globe with non-passenger aircraft. It added 11
freighter destinations last year alone. While some rivals see this as an opportunity for cooperation, others consider the government-funded growth to be anticompetitive. As has been well publicised of late, several legacy airlines in America and Europe have accused Qatar Airways of distorting the global marketplace by building its business around international traffic flows that use Doha as a bridging point, rather than an end destination. The pace of growth, it is alleged, stems from political design rather than commercial success. Ogiermann is unmoved by such arguments, insisting that his mandate is simply to make Doha the centre of the world for freight forwarding. “It’s not that we aim for an impressive number of stations. We go where the business wants us to go,” he concludes. “We’re following the needs of our customers – they tell us where they want us to operate, and we go according to their needs.”
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Inside the minds of leading business figures
business insight Degrees specifically designed to fit with busy managers’ schedules 70 In an exclusive interview with The Edge, Michael Harris, regional director for the Middle East, GSM London in association with Plymouth University, speaks about the bespoke executive MBA (EMBA) and MSc programme that have been designed specifically for part-time students who have already begun a successful career. Harris focuses on the flexibility of the programmes and mentions that they have over 150 students.
We are eager to grow further as a brand through developing new ideas 68 In an exclusive interview with The Edge, Rawad Sleem, project manager, Project Qatar, talks about how the event has evolved over the years to become a household name in the Qatar construction industry.
70
GSM London Greenwich Campus, 25 minutes from Central London, in the heart of the Royal Borough of Greenwich. Speaking about the courses on offer, Michael Harris, regional director for the Middle East, G SM London in association with Plymouth University, told The Edge, “The EMBA degree is a rigorous programme commanding absolute commitment at all levels.”
The Edge | 67
business insight | event management
PROJECT QATAR
We are eager to grow further as a brand through developing new ideas In an exclusive interview with The Edge, Rawad Sleem, project manager, Project Qatar, talks about how the event has evolved over the years to become a household name in the Qatar construction industry. How pleased are you with the growth of Project Qatar so far? Project Qatar (PQ) is the largest construction event in Qatar. Since its inception in 2004, the show has been growing steadily – with regard to exhibition space, the extent of regional and international participation and, most remarkably, the number of visitors, who are a testament to our success and continuity. The event has around 66 percent of exhibitors coming in from all across the world, representing European, Middle Eastern and Asian countries such as China, Cyprus, Denmark, Egypt, Germany, France, Italy, India, Japan, Kingdom of Saudi Arabia, Malaysia, Russia, Sweden, and the United Arab Emirates. Such a number is indicative of the growth of Project Qatar and the vibrancy of its activities. We are especially pleased to have Cyprus joining Project Qatar 2015 for the first time as a country pavilion. Participating through its Ministry of Energy, Commerce, Industry and Tourism, Cyprus’ inaugural pavilion will have 10 companies representing the country as part of their efforts to engage more strongly within Gulf Cooperation Council countries, and Qatar in particular. What can we expect at this year’s Project Qatar? We are eager to grow further as a brand through developing new ideas, and adding more features to the show. This year, we have expanded and diversified our portfolio of exhibits by including various branches from the construction industry. In fact, we have also introduced a new set of specialised conference series that will showcase Project Qatar as a forum for dialogue and knowledge sharing. These conferences are organised in collaboration with our sister company, Advanced Conference and Meetings (ACM). We are collaboratively organising the Business Intelligence Series, a business-to-business (B2B) conference that connects industry professionals with decision makers and thought leaders. This year, Project Qatar Business Intelligence Series will feature LightingTech Qatar, HVACTech Qatar, Future BIM 68 | The Edge
Implementation Qatar, Future Interiors Qatar, Future Landscape & Public Realm Qatar, and Future Drainage Networks Qatar. Apart from these, we have initiated Project Qatar site tours, which will give our international exhibitors a chance to see activities of Qatar’s vibrant construction sector. This year, we will organise presentations and free site visits to two of the largest mega projects in the country – the new Hamad Port project and the Mall of Qatar. Moreover, Project Qatar 2015 is proud to introduce its new and improved B2B matchmaking platform where visitors can register on the platform through the PQ website and meet exhibitors that match with their products and work profile. Tells us more about the two concurrent events – Qatar Stones and Heavy Max? Industry estimates suggest that Qatar will be spending a staggering USD200 billion (QAR728 billion) on infrastructure over the next decade. Consequently, the stone industry has been booming in the country with hundreds of projects requiring all types of stones. Be it small house renovation projects or large luxurious hotels, stadiums and shopping malls, stone is an integral part of construction materials today. Qatar Stone Tech 2015 will bring together top distributors, suppliers, manufacturers and agents from all over the world. The event will offer several lucrative opportunities to companies who are looking to grow their client base. This will provide a dynamic environment for networking and sales alike. Heavy Max 2015 is set to attract a large number of manufacturers as Qatar is expected to invest around USD140 billion (QAR510 billion) for the development of transport infrastructure throughout the country. Since such corresponding projects require heavy equipment and machinery, this will enable new suppliers and manufacturers to enter the market, while increasing business opportunities for existing machinery companies.
event management | business insight
“This year, we have expanded and diversified our portfolio of exhibits by including various branches from the construction industry.”
Rawad Sleem, project manager, Project Qatar, said, “We have initiated Project Qatar site tours, which will give our international exhibitors a chance to see activities of Qatar’s vibrant construction sector.”
Which are the major conferences happening during Project Qatar? Three conferences will be held concurrently with Project Qatar at the Qatar National Convention Centre. Whereas LightingTech Qatar will take place from May 4 to May 5, HVACTech Qatar and Future BIM Implementation Qatar will unfold during May 6 and May 7. Among those speaking at LightingTech conference are Florence Lam, director and global lighting leader at Arup; Samer Rifai, lead lighting design engineer at KEO International Consultants; and Dr. Neil Kirkpatrick, head of sustainability Middle East at WS Atkins. Meanwhile, key speakers at HVACTech Qatar include Husam Mohammed, senior mechanical engineer at CH2MHill; Manveer Singh Yadav, director of engineering at Grand Hyatt Doha; and Lee Hall, head of operations – property design at Atkins Qatar. Lastly, Dr. Mohamad Kasseem, associate professor at Teesside University; Ahmed Al Naggar, acting head of facilities management at Qatar Foundation; and Hamoda Youssef, research specialist at Qatar Green Building Council, will be speaking at Future BIM Implementation Qatar, among others. What is the profile of Project Qatar visitors? We have a diverse range of visitors who are mainly highprofile investors, diplomats, high-ranking government officials and financiers. We also have civil, mechanical and electrical engineers; architects and interior designers; construction material wholesalers and distributors; real estate developers,
project managers, contractors and subcontractors. In addition, we have a large number of senior personnel such as chief executive officers, presidents and chairmen of government and private companies attending the event. Visitors can expect to source new products, learn about new technological innovations, and network with industry peers. What kind of institutional support have you got for Project Qatar 2015? Ever since its inception, Project Qatar is proud to have support of the Qatari government, which largely contributes to the success of the show. This year, Project Qatar 2015 will be held under the patronage of HE Sheikh Abdullah bin Nasser bin Khalifa Al Thani, the Prime Minister and Minister of Interior. Moreover, Project Qatar is honoured to count among its supporters several prominent governmental and semigovernmental bodies, including the Qatar Chamber, the Qatar Society of Engineers, the Middle East Facility Management Association, the China Council for the Promotion of International Trade, Dubai Exports, and Egypt Expo and Convention Authority. We also have received support from Enterprise Greece, the German Federal Ministry of Economic Cooperation and Development, the Gulf Organisation for Industrial Consulting, the Italian Trade Agency, and the Korea Trade Investment Promotion Agency. The Saudi Export Development Authority, the Trade Development Authority of Pakistan, the Trade Promotion Organization of Iran, UBIFRANCE and UK Trade and Investment are also extending their support for the event. The Edge | 69
business insight | management education
EXECUTIVE MBA
Degrees specifically designed to fit with busy managers’ schedules In an exclusive interview with The Edge, Michael Harris, regional director for the Middle East, GSM London in association with Plymouth University, speaks about the bespoke executive MBA (EMBA) and MSc programmes that have been designed specifically for part-time students who have already begun a successful career. Harris focuses on the flexibility of the programmes and mentions that they have over 150 students, adding that the programmes have been running for the last 18 years. Tell us about your role in the EMBA programme of GSM London in association with Plymouth University. I have a number of roles and responsibilities within the school though my key role is within the domain of student recruitment. As regional director for the Middle East, I make myself available to prospective applicants seeking detailed information about the school and the academic programmes available. The Plymouth University EMBA is one of our flagship degrees and attracts an eclectic mix of senior managers from both national and international organisations. In particular, we are attracting an ever-increasing number of managers from the Gulf Cooperation Council, with many seeking our EMBA degree from organisations within Qatar. I offer pastoral support from the initial application stage through to study and beyond. This approach enables further recruitment opportunities through student recommendations. Why should anyone choose this EMBA and not something else? The EMBA degree is a rigorous programme commanding absolute commitment at all levels. First, it requires a high level of organisational investigation through work-based research. Second, networking is key to sharing organisational best practice. The EMBA programme enables a rich teaching and learning environment and creates a sense of self awareness outside of students’ traditional organisational comfort zones. Studying alongside senior managers creates an environment that facilitates high-level debate, while at the same time, applies such debates within an academic context. The traditional 70 | The Edge
full-time or part-time MBA programmes do not necessarily draw from students’ own organisational experiences. Third, since time is a key factor of our EMBA students, with senior practitioners working for 60 to 70 hours per week and maybe travelling several months of the year, a programme that factors this in, is most likely the programme that they will always opt for. They would look for bite-sized teaching sessions with the ability to apply the learning immediately to their employing organisations. Our EMBA was designed with this type of student in mind. Our EMBA is highly flexible, not requiring students to be in attendance every weekend. The course allows students to join at any module weekend (eight per year) and with only six teaching weekends required in any one year, most senior executives can fit this into their busy schedules. This EMBA has a wide application of learning. With an EMBA, students are required to apply the theoretical concepts learnt in the classroom immediately to their organisations. This is achieved through work-based research projects. Many of our students have used these projects to develop strategic business plans for their employers and in addition, have changed policies and practices to enhance organisational behaviour and develop efficiencies. Why was it felt necessary to have an EMBA and an MSc programme? Any particular reason why these have been the fields that were chosen? We have both. Our executive weekend portfolio offers two EMBA degrees in management and the other in health
Michael Harris, regional director for the Middle East, GSM London in association with Plymouth University, told The Edge, “Our EMBA is highly flexible, not requiring students to be in attendance every weekend. Our EMBA allows students to join at any module weekend (eight per year) and with only six teaching weekends required in any one year, most senior executives can fit this into their busy schedules.”
management. We also have developed an MSc in health leadership and an MSc in strategic procurement management. The MSc degrees are designed for those students who are seeking a more targeted and specialised arena, with a more theoretical focus. Our degrees are developed in line with organisational needs and purely on the basis of student demand. What has been the experience so far for Qatari applicants? And what, in your opinion, are the common traits that you notice among Qatari students? Our student feedback has been extremely positive and I guess that is why we are attracting an ever-increasing number of professionals from this region. It is difficult to summarise traits from any one particular nationality, as all students are individuals with different ambitions and reasons for undertaking the EMBA. But from my experience, I find the Qatari students to be extremely well informed and with a sense of entrepreneurialism that far exceeds other students who are working for the European public or private sectors. This may be to do with the overall strategic ambitions of Qatar. The Qatari students really have bought into the Qatarisation agenda in a big way. Any EMBA is marked for its flexibility and tailor making. What can you tell us about this aspect of your courses? We have specifically designed our degrees to fit with busy
“Our degrees are developed in line with organisational needs and purely on the basis of student demand.” managers’ schedules. We were the first institution to offer the three-day teaching model back in 1997. Now many of our contemporaries are trying to imitate this model. We also ensure that our teaching weekends mirror the environments where our students are from. We have distinguished ourselves with our customer service and technology and allied services that senior managers expect within a competitive educational environment. Are there any plans of extending the number of programmes that you currently offer? If so, what would be the likely fields? Yes. We are just reviewing our post-graduate and executive curriculum with our partner Plymouth. We will be introducing more technology-based programmes, such as digital media management, leadership and innovation, alongside law and doctoral degrees. The Edge | 71
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product & reviews
Reviews Hyundai Veloster Turbo 2016
H
yundai’s new youth-focused Veloster Turbo 2016 offers the sportiness of a coupé with the roominess of a sedan. The 2016 edition comes with a highpowered engine and a selection of savvy specifications and technological infotainment features. It has a seven-speed dual clutch gearbox featuring shiftronic automatic technology for increased power. With a maximum output of 204 horsepower from a 1.6-litre turbo four-cylinder engine, the company feels this new model will take pole position on the region’s roads. The Veloster Turbo’s engine delivers reduced fuel consumption and frugal emissions. The engine is built from solid aluminium blocks and features ladder frame construction, for less weight with more strength. A comprehensive range of noisereduction techniques have been
used to counteract the effects of resonation, vibration and harshness. To deliver a sportier ride, Hyundai has modified front suspension, and it also combines gas-filled hydraulic monotube shock absorbers. The Motor-Driven Power Steering (MDPS) has also been tuned to increase steering response. When taking a corner, large front and rear stabiliser bars are in place to reduce body roll and improve handling and control. The car comes with some additional features such as Torque Vectoring Control (TVC), which enhances vehicle stability and safety, and the seven-speed EcoShift Dual Clutch Transmission (DCT) with steeringwheel-mounted paddle shifters. This new edition also features a stealth third door, striking LED headlight accents and raking contour lines. Standard features also include 18-inch alloy wheels with 10 mm-
wider-fitted tires, a chrome-tipped dual exhaust, sporty bodykit and a special wide-mouthed grille. The Veloster Turbo’s unique threedoor design with glass rear hatch and optional panoramic sunroof gives the interior a spacious feel. Once on board passengers can take advantage of advanced in-car technology via Hyundai’s class-leading multimedia seven-inch touchscreen, which allows easy access technology at the touch of a button. As with all Hyundai models, the Veloster Turbo has all the safety features as highlighted by the Vehicle Stability Management (VSM) system. This is in place so that when a driver accelerates or brakes on a difficult surface and the vehicle wants to pull in one direction VSM detects this condition and sends a signal to the MDPS to apply steering assist to counter this force.
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products & reviews
Read it:
Delivering Happiness Perhaps you have not heard of Delivering Happiness: A Path to Profits, Passion and Purpose, but there’s a pretty good chance you have heard of Tony Hsieh’s company, Zappos, the online shoe emporium which was successful before Hsieh sold it to Amazon for USD1.2 billion (QAR4.4 billion). Delivering Happiness was authored by Hsieh, and is part memoir, part entrepreneurship book. It delivers a well-rounded look at how a successful company was moulded in the initial years, and looks at how an entrepreneur can learn from the lessons he offers from his experience running Zappos. Hsieh also goes back through his childhood to offer funny and entertaining anecdotes that provide perspective on how he developed his unique business philosophy.
Read it:
Available at Virgin Megastores in Doha.
Scrum
Scrum projects a new work outlook born out of the belief that there must be a more efficient way for people to get things done. This book from Jeff Sutherland is a discursive, thought-provoking read about the management process that is changing the way we live. It already drives most of the world’s top technology companies such as Google. And now it is starting to spread to every domain where people wrestle with complex projects. Records have said that productivity gains of as much as 1200 percent have been noted, and all because the thorny problem Sutherland began tackling: people are bad at doing things quickly and efficiently. Best-laid plans go up in smoke. Teams often work at crosspurposes to each other. And when the pressure rises, unhappiness soars. Drawing on his experience as a West Point-educated fighter pilot, biometrics expert, early innovator of ATM technology, and the chief technology officer at 11 different technology companies, Sutherland began challenging those dysfunctional realities, looking for solutions that would have a global impact. In this book you will journey to a work system which transforms the standard approach to project management and team building which have an impact on the accountability, team interaction, and constant iterative improvement. Woven with insights from martial arts, judicial decision making, advanced aerial combat, robotics, and many other disciplines, Scrum is riveting. The method Sutherland talks about revoIves around the need to
74 | The Edge
Delivering Happiness is an easy and enjoyable read. While Hsieh might not “deliver happiness” to anyone in particular, he shows exactly how his business philosophy of creating a tight-knit, family-like atmosphere did deliver happiness for his employees, and for himself. He created a happy atmosphere at work which, according to him, is only going to make employees work harder and give more to the company. Hsieh regularly went out to drink with his employees, taking them on trips and throwing parties with them. In short, Hsieh made his employees his friends and it worked for him. Who knew that playing golf together could really lead to better team cohesion? Hsieh and Zappos offer a case study in employer-employee relationships, and Hsieh proves that you can be successful doing the exact opposite of what the experts say a boss should do. Hsieh’s philosophy of making your employees friends might not work for everybody, but the overall idea behind it – building good relationships with the people who work for a company – does.
have a ready backlog of work to do that is clear, prioritised, broken into small pieces, estimated, and testable. Second, it is helpful to have a cadence, a rhythm. Third, is a daily meeting to replan what work is to be done and who is to do it for the day. The goal is to get the team into the “zone” where “situation awareness” drives extreme performance. Fourth, is a review of work done at the end of the week which allows assessment of progress and staging for the next week. Last, a retrospective after the review allows us to identify the “Kaizen” or top process improvement to be implemented in the next sprint. Why we recommend reading Scrum is: it may just help you achieve what others consider unachievable – whether it be inventing a trailblazing technology, devising a new system of education, pioneering a way to feed the hungry, or, closer to home, a building a foundation for your family to thrive and prosper.
Available at Virgin Megastores in Doha.
products & reviews
SAMSUNG WA6700 WASHING MACHINE Samsung’s market researchers found that more than a third of consumers in the Gulf transfer wet clothes from a bathtub or a sink to a washing machine. Their response: a new top-load washing machine with a builtin water jet and gentle scrubbing surface, which let users pre-treat tough stains or hand wash delicate items.
CANON OCÉ COLORWAVE While graphic artists might look to the heavens for inspiration, Canon’s new printers look to the cloud for efficiency. The Océ ColorWave 500 (a printer designed for smaller workgroups) and Océ ColorWave 700 (a multifunctional unit for businesses with higher print volumes) both feature cloud integration, multiple user support, secure workflow and a range of integrated output options.
ACER LIQUID M220 Acer has expanded its horizons and joined the Windows Phone eco-system, with the launch of its first Windows 8.1 smartphone. The new Liquid M220 has 4-inch (10cm), 233 pixels per inch (PPI) display and fully supports Microsoft applications like OneDrive, Skype and MS Office. In a nod to the future, the phone also features upgradability to Windows Phone 10.
CHOPARD MILLE MIGLIA GTS COLLECTION For racing enthusiasts, the big story at the recent BaselWorld Watch and Jewellery Show was the relaunch of Chopard’s flagship motorsports-inspired Mille Miglia collection. For the first time, the new Mille Miglia GTS (Grand Turismo Sport) chronometer will be driven by a Chopard movement – designed, developed and assembled in their state-of-the-art Fleurier Ebauche workshops.
App Reviews Snapseed
By M. Iqbal
It has been a long time coming, but Google has finally gotten around to updating its powerful image editor for Android and iOS to Version 2, bringing with it new filters, brushes and a spot repair tool. The interface is simple but the tools available at your disposal are powerful. It definitely takes more time to get used to than Instagram, but if you are serious about the pictures you take, the time spent learning Snapseed may very well be worth it. And it is completely free to boot.
QR Code Reader
This QR Code Reader by Scan Inc does just one thing, and does it right. Booting up, you are taken directly into the camera. Point the camera to a QR code and it is read instantaneously. You can also use it to scan QR codes in images saved on your phone. The app takes appropriate action in the context of the info saved in the QR Code. Simple text, for instance, is displayed on the screen. A web address is opened in the browser, and a phone number will take you to the phone’s dial screen.
Drupe
Drupe takes the concept of Facebook’s chat heads to the next level. Three dots, representing Drupe, live on your screen at all times. Swiping them brings up a list of your starred and most contacted users on one side of the screen and the ways you can contact them on the other. Simply swipe the name of a person to the way you want to contact them – text, email, call, Facebook, Whatsapp, or something else – and it will take you to the relevant screen. The time savings are profound, especially for people using multiple communication platforms.
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