The Edge - Feb 2011 (Issue 19) by Firefly Communications

CONTENTS

February 2011

CONTENTS www.theedge-me.com FINANCE & ECONOMICS

FEatures

.24. market watch

Mark Recardo sees reason for equity investors to feel bullish about 2011.

.28. Inside edge

Phil Strange examines the financial repercussions of previous World Cups and outlines what Qatar can expect in 2022.

.30. special report

Greg Harris’ look at Qatar’s transport masterplan.

.32. balance sheet

Strategic workforce planning can have a direct and tangible effect on your company’s bottom line, says Kanchan Ghoshal.

.36. economic barometer

.40. in the spotlight

Qatar’s global partnerships have proven an invaluable tool to diversify the country’s economy. A new alliance between Germany and Qatar has emerged, and both are set to reap the rewards. Jamie Stewart takes a closer look.

.44. cover story

Cloud computing is the new buzzword in information technology. Rachel Morris finds out how companies and organisations around the world are using the technology and questions data security in this brave new world.

.50. on the pulse

As Iran’s controversial nuclear power plant at Bushehr begins generating electricity, Edward Jameson reports on a nuclear renaissance that is spreading throughout the Gulf nations.

Gold continues to be an investment success story, as evidenced by its performance over the last year.

KNOWLEDGE & EXPERTISE .56. BUSINESS KNOW-HOW

Kamal Hassan has reason to believe that the tried and tested approaches to strategic planning may be extinct.

.58. HOW-TO GUIDE

Lonnie Croal on how coaching can benefit entrepreneurs.

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CONTENTS

.61. LEGAL INSIGHT

Qatar updates its anti-money laundering and counterterrorism financing legislation. David Salt and Emma Higham outline the facts.

.64. BRAND BEAT

Charlotte Stubbs investigates how ‘infographics’ increase the effectiveness of brand communication.

BUSINESS INSIGHT .68. BUSINESS INSIGHT INTERVIEWS

Exclusive interviews with Qatar Financial Centre’s Robert Musgrove on the new Civil and Commercial Court, Capitas Group’s Naveed Siddique on Qatar’s entrepreneurial sector, and leading German surgeon, Marita Eisenmann-Klein on the rise of cosmetic plastic surgery in the Middle East.

REGULARS

P.O. Box 150, Doha - Qatar | www.jaidah.com.qa Tel: (+974) 4463 8777 | Fax: (+974) 4460 4286 E-mail: shell-lubricants@jaidah.com.qa

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.07. .08. .14. .16. .18. .20. .77. .80.

Contributors News DOHA DIARY MIDDLE EAST MATTERS COUNTRY FOCUS THINKER’S CORNER LIFE & STYLE 10 THINGS

FROM THE EDITOR

Publications director Mohamed Jaidah m.jaidah@firefly-me.com MANAGING editor Miles Masterson m.masterson@firefly-me.com +974 66080447 COPY EDITOR Megan Masterson megan.masterson@firefly-me.com +974 55348748 REGIONAL SALES DIRECTOR Julia Toon j.toon@firefly-me.com +974 66880228 SENIOR SALES manager Emma Land e.land@firefly-me.com +974 33197446 Marketing administrator/ DISTRIBUTION & SUBSCRIPTION Azqa Haroon a.haroon@firefly-me.com +974 55692471 Creative director Roula Zinati Ayoub Art Direction Lara Nakhlé Design Coordination Charbel Najem Designers Rena Chehayber Rana Cheikha Sarah Jabari Finaliser Michael Logaring Photographer Herbert Villadelrey Melissa Schober

ZIN

MA CYC LE TH IS

Our new regular segment, Country Focus, will take a monthly look at the state’s relations with emerging economies, such as that of our first focus, Brazil. Should you have any comments about our changes and content, or suggestions for future topics that you feel we should include in TheEDGE, please email me at m.masterson@firefly-me.com Thanks for the support. Miles Masterson, Managing Editor

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

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

CT PA

SE PLEA

OUT YOU R

In my previous editorial, I alluded to some of the adjustments we are intending to make in TheEDGE in 2011, and as you will no doubt observe in this issue, these are now visibly beginning to come to fruition. Many of these were inspired by a recent telephonic survey we conducted of a random cross-section of our subscriber base. As a result, we have refined our editorial focus as well as our presentation. Upon paging through the magazine you will immediately notice that we have increased the signposting of our articles to ease navigation, and that we have grouped similar content in clearly identifiable and relatively self-explanatory sections. These sections of the magazine are: Finance and Economics; Knowledge and Expertise; Business Insight; and finally, Life and Style. The latter makes a comeback after a brief hiatus, redefined as an area of relevance to the associated interests of our readership, which is largely dominated by upper-level management and C-suite executives. Here you will find the latest in technological gadgets, business and leisure travel, sartorial advice and tips on navigating the executive lifestyle. This month, look out for our advice on golfing with the boss, as well as the top business lessons to be gleaned from The Godfather. On the business side, we have focused more on Qatar itself and specifically its international trade and commerce relations with countries around the world.

printed by Ali Bin Ali Printing Press, Doha, Qatar

from the editor

TheEDGE

TheEDGE is printed monthly © 2011 Firefly Communications. All material strictly copyright and all rights reserved. Reproduction in whole or in part, without the prior written permission of Firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by TheEDGE or Firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in TheEDGE. The publisher (Firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Getty Images and/or iStock Photo.

CONTRIBUTORS

The Usual Suspects...

P.24 Mark Recardo Chief Executive Officer International Financial Services Doha, Qatar

p.28 Phil Strange Chief Financial Officer Dun and Bradstreet South Asia Middle East Doha, Qatar

p.30 Greg Harris Editorial Manager Oxford Business Group Doha, Qatar

P.32 Kanchan Ghoshal Director Financial Risk Management KPMG Advisory Bahrain, Manama

P.36 Karim Nakhle Senior Business Strategist Doha, Qatar

p.40 Jamie Stewart International Correspondent London, United Kingdom

p.44 Rachel morris Freelance Journalist Middle East and North Africa Region Doha, Qatar

p.50 Edward Jameson Senior Business Journalist Middle East and North Africa region London, United Kingdom

p.56 Kamal Hassan President and CEO Innovation 360 Institute Dubai, United Arab Emirates

p.58 Lonnie Croal Faculty Member/ Executive Coach College of the North Atlantic Doha, Qatar

p.61 David Salt Partner Corporate and Commercial Clyde & Co Doha, Qatar

p.61 Emma Higham Associate Corporate and Commercial Clyde & Co Doha, Qatar

P.64 CHARLOTTE STUBBS Client Services Creative Action Design Doha, Qatar

All contributors to TheEDGE are wellregarded leaders in their respective industries. If you are interested in joining the esteemed panel of contributors, please contact the editor, Miles Masterson at m.masterson@firefly-me.com

TheEDGE

NEWS IN BRIEF

QP moves forward with gas projects Qatar’s largest foreign investor, Doha Shell, has signed a Memorandum of Understanding (MoU) with Qatar Petroleum (QP) to jointly study the development of a petrochemicals complex at Ras Laffan Industrial City worth QR21.8 billion. The project will include a mono-ethylene glycol plant of up to 1.5 million tonnes per annum, using Shell’s Omega technology and other olefin derivatives to yield over 2 million tonnes of finished products. Similarly, QP has signed a landmark MoU with the ExxonMobil Corporation to develop the stalled Barzan Project at a cost of QR31 billion. It is expected to supply 1.4 billion cubic feet per day of gas when the first plant goes on stream in 2014.

Opec to hike oil output? The oil minister of the Kingdom of Saudi Arabia (KSA), Ali Al Naimi, has said that the Opec producers’ group may increase oil output by approximately two percent to meet rising demand for crude oil in 2011. At the time of going to press, the cost of crude oil neared US$100 (QR364) a barrel, and raising output could rein in further price increases. Although recent indications from Opec members have been that output would not increase, KSA is the group’s most powerful member. The International Energy Agency has described the current price of oil as a risk to global economic recovery.

Green conference to set environmental agenda The first ever Green Building Solutions Conference and Exhibition is set to take place in Doha, and aims to find new ways of creating sustainable development in the construction industry. Qatari prime minister, HE Hamad bin Jassim bin Jabor Al Thani, will oversee the event which is organised by the Barwa and Qatari Diar Research Institute in collaboration with Qatar Expo Event Management and Grey Doha. Qatar has committed to “creating a green legacy for generations to come” and the conference aims to bring together experts across various fields including property developers, architects, ministers and energy company executives in order to discuss ways of upholding the commitment. The event, which will feature over 500 speakers, will include workshops and exhibitions on waste and water management technology, noise pollution technology and environmental measuring systems. Green Building Solutions (March 2-4), Doha Exhibition Center. www.greenbuildingsolutionsdoha.com - Christine Toner

Action needed to avert global hunger The Foresight Report on Food and Farming Futures, a study commissioned by the United Kingdom government into food security, says the current system of food supply is unsustainable and requires urgent action to adequately tackle global hunger. The two-year study, which involved 400 experts from 35 countries, emphasises changes to farming and recommends that the most resource-intensive types of food are curbed, and that waste is minimised in food production. Professor Beddington, who commissioned the study, was among the first to warn of “a perfect storm” of a growing global population, climate change and diminishing resources for food production.

UAE raises expat retirement age Expatriate workers in the United Arab Emirates (UAE) will now be able to work until they are 65 years old, according to a new law. Currently work permits are only available up until the age of 60, but this is the latest in a series of changes made to the country’s labour market. Expats will also no longer have to provide a no-objection certificate when applying for a new job – previously workers were forced to leave the country for six months before being able to apply for a new job, if they could not produce a certificate. The changes come after the UAE government announced it wanted to maintain expat workers, calling them an “asset” to the country. - Christine Toner A surge in optimism for 2011 According to the Business Optimism Index, conducted by Dun and Bradstreet Middle East in association with the Qatar Financial Centre, many economic analysts believe the global economy will post strong growth in 2011. Although the predicted four percent would be at a slightly slower pace than that of 2010, the likelihood of a double dip recession has receded. While challenges remain – such as the European debt crisis, continuing currency tensions and the fragility of the banking sector in some countries – the overall opinion is that the economies of Brazil, Russia, India and China will be the engines of global growth in 2011, with countries such as the United States, United Kingdom and Western Europe nations facing more modest growth.

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Toyota recalls 1.7 million cars Japanese car manufacturer, Toyota, is recalling 1.7 million vehicles worldwide over concerns about a possible fuel leak. Japan’s transport ministry said slight cracks could appear in fuel pipes, although no accidents have been reported because of the flaw. Approximately 1.2 million cars are being recalled in Japan, and 421,000 from other countries, and include the Avensis and Lexus models. These are the latest in a long line of recalls at Toyota, and will further damage the carmaker’s reputation as a producer of quality cars. In September 2009, the company recalled four million cars over fears that the accelerator pedal could become stuck to the car’s floormat. In January 2010, a further 2.3 million cars were recalled to repair potentially faulty accelerator pedals. Overall, Toyota has recalled approximately 12 million cars in the past 18 months, and agreed to pay a record fine of US$32.4 million (QR117 million) in the United States, following a US$16.4 million (QR59.7 million) penalty over its handling of the recalls. UK economy suffers shock contraction The Office for National Statistics (ONS) has released figures showing that the United Kingdom suffered a shock 0.5 percent contraction in its economy in the last three months of 2010. Although the severe weather was blamed for the contraction, the ONS stated that even if weather impact had been excluded, the economic activity would have been “flattish”. The figures are likely to raise concerns over the economy’s prospects, with large spending cuts expected in 2011. The contraction follows four consecutive quarters of growth, and forecasts indicate expected growth of between o.2 percent and 0.6 percent. The construction industry was a large contributor to the fall, with activity decreasing by 3.3 percent in the quarter.

NEWS EVENTS

EVENTS CALENDAR

This Month in History Massachusetts issues the first paper money in the United States.

1690

Arabian Drag Racing League

February 3 –18 Doha, Qatar

The Qatar Racing Club presents this international drag racing competition featuring world record-breaking drivers and the world’s fastest cars and bikes. Although there is free admission to the grandstands, QR100 will get you a VIP Pit Pass which includes access to pits to see the cars up-close and meet the drivers. The event also offers a free children’s play area, so why not make a family day of it? www.QRCZone.com

Edwin Land demonstrates the first ‘instant camera’, The Polaroid Land Camera, in New York City.

1947

Egypt and Syria merge to form the United Arab Republic, with Gamel Abdel Nasser nominated as the first president.

1958

7th Annual Middle East Insurance Forum

February 7 – 8 Ritz Carlton, Kingdom of Bahrain

Held in partnership with the Central Bank of Bahrain, this event will likely set the stage for critical discussions that will chart development for the regional insurance and re-insurance industry. http://www.megaevents.net/insurance/

The 5th Annual GCC Regulators’ Summit

February 16 - 17 InterContinental Abu Dhabi, Abu Dhabi, UAE

The region’s leading regulatory, compliance, risk and corporate governance event will provide a platform for discussing challenges, proposing solutions and sharing best practices. www.complinet.com/gatherings/gcc/summit/2011/

The GCC Retail Summit

February 21 - 22 Yas Island Rotana Hotel, Abu Dhabi, UAE

Join more than 200 of the region’s senior retail executives and take part in panel discussions, watch inspiring presentations and learn from case studies and workshops. www.aimevents.net/retail/index.html

Tasmeem Doha International Design Conference

March 21 - 24 Virginia Commonwealth University in Qatar, Doha, Qatar

Titled ‘Synapse: Designer as Link’, this year’s Tasmeem conference is interdisciplinary and collaborative, featuring 12 speakers, 12 workshops and four days of bringing participants together to discuss critical design issues. The conference will include student-driven teams investigating the role of design as a problem-solving activity, as well as a unique student design challenge. www.tasmeemdoha.com

The United States bans all Cuban imports and exports.

The People’s Republic of China lifts a ban on the works of Aristotle, William Shakespeare and Charles Dickens.

Nelson Mandela is released from prison after 27 years. Barings Bank collapses after a securities broker loses billions speculating on the Singapore International Monetary Exchange using futures contracts.

Facebook is founded by Mark Zuckerberg.

YouTube is launched.

Sachin Tendulkar scores the first double century in One Day International cricket.

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2010 TheEDGE

NEWS IN QUOTES

News in Quotes “In Iran, with support of the Islamic regime, fertility has fallen more than 70 percent since the early ‘80s. In Catholic and democratic Brazil, women have reduced their fertility rate by half over the same quartercentury. ‘We still don’t know why fertility has gone down so fast in so many societies, cultures and religions,’ says Hania Zlotnik, director of the United Nations Population Division…’[But] the population as a whole is on a path to non-explosion.’”

A report from the January 2011 edition of National Geographic magazine outlines the fact that, while the world’s population will reach a staggering seven billion people this year, in many places growth rates are inexplicably slowing down considerably.

“The launch is being carefully sees Qatar as an ‘anchor watched as a litmus test for investor’.” Gulf Times reports on the visit of David McAllister to Qatar in his capacity the financial health of the world’s super-rich and their as a Volkswagen supervisory board member. The German premier was set to be joined by appetite for London in the chairman, Ferdinand Piech, and Porsche wake of the financial crisis.” board major shareholder, Wolfgang Porsche.

The Daily Telegraph reports on the official unveiling of One Hyde Park, which includes the world’s most expensive apartment, priced at GBP140 million (QR812 million). The residential development is a joint venture between the Candy brothers’ CPC Group and Waterknights, a company owned by HE Sheikh Hamad bin Jassim bin Jabr Al Thani, with 60 percent of the 86 apartments said to have already been sold to business leaders from the Middle East, Africa, Russia, China and India.

“Qatar is of ‘major significance’ for Volkswagen and Lower Saxony, the German state’s Premier David McAllister said in a statement. McAllister

CARTOON CORNER

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“Our region is not shielded against the impact of the currency war because our currencies are pegged to the dollar. This [currency war] will impact the Arab economies, especially with regard to (higher) inflation and other problems. If the dollar continues to slide, it may force countries in the Gulf region to appreciate their currencies.” Jassiem Al

Mannai, director general of the United Arab Emirates-based Arab Monetary Fund, talking to Quantum magazine.

QATAR RACING CLUB presents

Arabian Drag Racing League International drag racing competition at QRC! Features world record-breaking drivers in the world’s quickest and fastest cars and bikes!

Round 6 – February 3-4, 2011 Round 7 – February 10-11, 2011 Round 8 – February 17-18, 2011

www.qrczone.com Event Time Table Thursday 2:00 pm – Round 1 Qualifying 4:00 pm – Round 2 Qualifying 6:00 pm – Round 3 Qualifying

Friday 2:00 pm – Round 4 Qualifying 4:00 pm – Eliminations 8:00 pm – Finals

• Free children’s play area! • 100QR for VIP Pit Pass includes access to pits to see cars up close and meet the drivers. • Purchase a VIP Pit Pass in February and receive a free meal coupon for Johnny Rockets.

52nd St. Intersection with East Industrial St., Industrial Area, Doha, Qatar

FOR INQUIRIES | ‫ﻟ ﺳﺘﻔﺴﺎر‬ + 974 4450 9357

NEWS WEBWATCH

Webwatch

www.qpwn.org

What is it? The Qatar Professional Women’s Network (QPWN) is a self-explanatory informal group built around the premise that, as the website states, “aims to support the development of future women leaders and contribute to the sustainability of the local community.” Why should you log on? If you are a working female in Qatar then this online resource, supported by some of the most influential professional women in Qatar, is an vital source of information, debates and when and where QPWN events are taking place.

News in Numbers

#500,000,000,000

Approximately half a trillion dollars was spent on plastic surgery procedures in the Gulf in 2009. Doctor Ali Al Numairy, secretary general of the Gulf Cooperation Council Association of Plastic Surgeons (GCCAPS), recently told the Qatar Tribune, “With the demand for plastic surgery greatly increasing in the region, more and more international cosmetic surgeons are coming to the Middle East to reside and practice.” The demand for plastic surgery has grown significantly, and the Gulf – where procedures cost less than they do in the West – is rapidly becoming a destination for medical tourism. According to Al Numairy, liposuction and abdominalplasty are the two most common procedures performed, followed by nose and breast surgeries. In addition, “everyone has become crazy about the new filler and Botox use,” says Al Numairy. “We have one of the highest numbers of obesity cases in the world,” cites Al Numairy as a reason for the growth in demand. “Moreover, everybody wants to look beautiful as beauty has become one of the primary requirements for job application these days.”

Pic of the Month

www.qatarisbooming.com

What is it? A clever name that in many ways sums up how many feel about Qatar at the moment, this website is aiming to become a one-stop news portal for news and information about the country. Why should you log on? Though most of the information seems to be presented in the form of press releases, the site is simply designed in a blog-like manner and, should it live up to its promise, could become an invaluable online resource for the country.

www.tradearabia.com

What is it? Trade Arabia is positioned as a business news information resource for Saudi Arabia and the region and contains a vast amount of information, from local and international financial news to more topical hard news stories. Why should you log on? As the Saudi economy continues its growth, this site, which also includes job listings and market reports, could prove highly useful for those doing business in the country and the wider region.

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Sebastian Suria, number 23 for the Qatar national team, celebrates a goal with his teammates at the AFC Asian Cup quarterfinal match between Qatar and Japan at the Al Gharafa Stadium. Although the Maroons ulitmately lost 3-2, they held a 2-1 lead in the match at one stage. (Getty/Gallo Images).

COLUMNIST

DOHA DIARY

to buy

atar’s property landscape is divided into areas where expatriates are permitted to buy land, areas that are available on 99-year (Usufruct tendure) lease, and those that are for Gulf Cooperation Council (GCC) residents or solely Qataris. To understand the legal mechanisms which created the current property ownership environment, one has to go back to 1963 and chart its evolution. Originally, the ownership of land in Qatar was effectively restricted under Law No.5 of 1963 to Qatari nationals and companies. One exception was where permission could be granted by Emiri Decree for foreigners to own land, provided that the purpose was to facilitate the rendering of a public service or the realisation of a public utility. Since the original law was enacted, further revisions have taken place, namely: Law No.2 of 2002 permits GCC nationals to own up to three pieces of land in designated residential districts which do not exceed 3000m² and which, crucially, are to be used for residential purposes by the owner and his family, without exploiting it for any other purpose. This law was revised in 2006 to allow nationals an unlimited number of real properties which may be disposed of, used and utilised in any way. Law No.17 of 2004 introduced Usufruct, which permits the possession of real estate and residential units by non-Qataris for an initial term of 99 years, thereafter renewable

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As expatriates, GCC residents and locals begin to consider possible personal investment strategies to capitalise on the 2022 World Cup, Edd Brookes examines Qatar’s laws about property ownership. for a further 99 years only. Article 2 of the Law states that expatriates (including GCC citizens) are permitted to possess real estate in pre-defined investment areas. These investment areas include Mushaireb, New Doha, Al Salata, Bin Mahmoud, Al Mansoura and Bin Dirham, and Al Saad, among others. Article 4 of the Law also provides that non-Qataris may own freehold interests in the following three areas: The Pearl, West Bay Lagoon and Al Khor Resort. In terms of granting residency permits to expatriates who purchase completed property, the unit has to have a minimum (salable) area of 65 square metres. Residency permits are granted in renewable batches of five years and are limited to the purchaser and his or her immediate family. The permit covers only occupation for the purpose of residence and does not include a working visa. Originally, units of 50 square metres were covered by the law. However this was revised during 2008 to the current minimum size. While most types of units tend to be larger than 65 square metres, it is worth noting that a number of studios of less than 65 square metres were marketed in various residential developments at The Pearl and Lusail. It is also worth noting that despite the widely held view that Lusail is a freehold zone, it is (currently, at least) not. The increasing demand for land in Qatar has been influenced by the influx of major multi-nationals, primarily in the fields of oil and gas and infrastructure.

This influx has affected the demand for industrial and commercial land for factories, refineries and commercial office use, especially to the north in Ras Laffan and Al Khor, but also to the south in Wakra and Messiaeed. Similarly, the growing expatriate population continues to demand housing, as well as retail and leisure facilities, and these requirements have placed added pressure on the market within central Doha and areas immediately to the north and west. While there is generally consensus, and indeed market evidence, that land prices peaked in the second quarter of 2008, the start of the recovery is subject to further investigation. From our own records of land transactions, it would seem that prices bottomed out in the third quarter of 2009, with between 10 percent and 20 percent reduction in values. Since then prices have gradually been experiencing growth. Transactional evidence suggests a recovery of prices of between seven percent and 10 percent since the third quarter of 2009. This gradual process was marked by an initial ‘spike’ following the historic 2022 announcement, particularly in areas that will be the focus of stadia development and proposed transport nodes. While this initial growth in prices can be attributed mostly to emotional responses, it seems certain that the next five years will see steady growth as local and expatriate purchasers alike eye the potential of 2022 and its associated infrastructure projects, and strategise for diverse property investments.

COLUMNIST

MIDDLE EAST MATTERS

to lead in

2 011

The second decade of this century belongs to the GCC, believes Dr Tommy Weir, and local business leaders are well placed for a period of capitalising on growth and innovation, requiring only a few tweaks to their leadership style.

t is the dawn of a new decade, one that should prove to be promising for Qatar and the region. With the world watching where the East connects with the West, here are ten areas that every business in the Gulf Cooperation Council (GCC) region needs to give attention to: • It is the decade for opportunity. Businesses across the region are eyeing aggressive expansion plans, so it is time set your targets for market share and operating margins. But as you switch to growth mode, maintain your recessionary frugality to ensure you are well poised for this new decade. • The customer is right (or, at least, needs your attention). Redirect your top management team’s focus on delighting your customer. With each passing year, the customer has more options and demands more from you – this year, exceed their expectations. • Improve quality. With the passing of time, come changes in the market, advances in innovation and greater competition. You will not win your

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market share targets if you are driving an Oldsmobile (a car that is now extinct). Improve or die a slow death. • Employees are the real asset. Business leaders spend much time worrying about employee matters such as performance, retention, engagement and remuneration. This decade, commit to making talent your top priority. • Be careful about raises. With growth will come the temptation to participate in the compensation and benefit game of the last decade that resulted in pay inflation. Exercise extreme caution, as pay inflation is extremely damaging to a growing business. • Practice makes perfect. If you want your team (employees) to remain with you for longer, create an environment where they can improve their skills. I like to refer to training and development as practice, which is when employees and leaders take time to focus on improving their efforts. You cannot over-invest in employee development.

• Be social. Every business leader must be active in today’s social media, so open a Twitter account and start tweeting, and get active on Facebook and/or LinkedIn. Do not leave social media to the marketing department. • Be multi-lingual in one language. The GCC has the most diverse workforce in the world. As a result, leaders need to understand what it means to lead where the West meets the emerging markets, and how to communicate, and drive performance and customer focus across an extremely diverse market. • Use imagination this decade. Creativity defined the 1990s, and innovation underscored the last decade. This decade will take it step further andbe all about imagination, rewarding leaders who are inventive in how they tackle modern business’ challenges. • Use the right vehicle for the right environment. Choose a leadership style that is necessary for the market you are operating in and for the diversity of your team.

COUNTRY FOCUS

Encompassing an incredible seven million square kilometres, the Amazon rainforest includes territory belonging to nine nations, the majority of which is contained within Brazil. Brazil, rich in natural resources, is an attractive investment option for Qatar.

atar’s

Brazilian beat Qatar has a surprising ally in the colourful country of Brazil. Both countries are considered the economic success stories in their own regions and both have an abundance of natural resources. Rachel Morris talks to the Brazilian ambassador to Qatar, Anuar Nahes, about the economic, political and social ties that bind the two countries.

“B

razil’s ties with Qatar are stronger than ever,” says the ambassador, who is now entering his third year in Qatar. “Brazil is booming and of course Qatar is booming.” And booming Brazil is. The nation is now the eighth largest economy by nominal gross domestic product and the ninth largest by purchasing parity. According to the World Economic Forum, Brazil was the top country in “upward evolution of competitiveness in 2009”, gaining eight positions among other

countries, overcoming Russia for the first time, and partially closing the competitiveness gap with India and China among the Brazil, Russia, India and China (BRIC) emerging economies. To add to its gold star status, Brazil has one of the most diversified economies in the world, perhaps a characteristic that Qatar can use as a prototype. With a strong domestic market, the country exports everything from planes to biofuels and much in-between, including manufactured goods

COUNTRY FOCUS

and agribusiness. In 2010 alone, more than 2.5 million new jobs were created in the country once blighted by a bloated public sector and unemployment. The country’s populace is also one of the most educated in South America with almost universal basic education achieved. “It’s a very rich country in many ways,” says Nahes. This was not always the case. In the 1990s Brazil and its neighbouring country of Argentina were considered struggling economies, if not outright failures. Brazil took the first step towards change, instituting a radical and at times painful economic reformation that saw the economy liberalised and opened up to foreign investment. “This (the reform process) was a very important process for our country,” says Nahes. “It gave us new life.” Qatar is fast emerging as a key political and economic destination for Brazil, but until just two years ago, trade between the two countries was minimal. However, between 2003 and 2008, commercial trade between Brazil and Qatar grew more than elevenfold, from US$37 million (QR134 million) to US$438 million (QR1.5 billion). Despite this, Qatar continues to be a minor destination for Brazilian exports in the Middle East. In 2008, 83 percent of the Brazilian exports to Qatar (US$294 million or QR1 billion) were accounted for by two main groups of products: iron ore and by-products (44 percent) and meat (39 percent, beef and poultry). In 2008, Brazilian imports from Qatar (US$144 million or QR524 million) were composed almost entirely of urea for fertilisers (80 percent) and fuel for aviation (17 percent). The turning point came in late 2009-early 2010. Aside from the economics of the relationship, Nahes singles out 2010 as a “major milestone” in the growing relations between Qatar and the South American nation. “There is a high level of interaction between officials of both the countries, and in 2010, the visits by HH the Emir Sheikh Hamad bin Khalifa Al Thani to Brazil in January last year, and former [Brazilian] president, Lula da Silva to Qatar in May, contributed to further cementing relations between our two countries,” he says. Indeed there is evidence that Qatar now sees Brazil not just as a player, but a partner. In late 2010, Qatar Holding acquired a five percent stake in Brazil-based Banco Santander through an agreement to purchase US$2.7 billion (QR9.8 billion) of mandatorily exchangeable bonds to be issued by Banco Santander. Qatar Holding said the investment in Santander was the beginning of a long-term strategic partnership with the bank and a commitment to the growing economy of Latin America and specifically Brazil. At the time Doctor Hussain Ali Al Abdullah, the vice-chairman of Qatar Holding, said, “This acquisition accomplishes our objective this year of increasing our exposure to fast growing emerging markets like Brazil.” Brazil is also on the radar for Qatari companies including Hassad Foods, who, in 2010, invested in a sugar project in the country. Qatar, like other Gulf states, imports the majority of its food requirements, and securing future food supplies is seen as a priority by the government. Around 70 percent of the sugar is earmarked to

be shipped to Qatar for domestic use, while the remaining 30 percent will be used to produce bio-fuels. There are also indications that Hassad could make other investments in the vast country. In addition, perhaps Qatar’s most famous export, TV network, Al Jazeera, is also set to open a bureau in the colourful Brazilian city of Rio De Janeiro. Qatar Airways has further entrenched the relationship with the start of a daily direct route between Doha and South America, specifically Sao Paulo.

Between 2003 and 2008, commercial trade between Brazil and Qatar grew more than elevenfold, from QR134 million to QR1.5 billion. To facilitate the flow of passengers between the two countries, Qatar has relaxed visa rules for Brazilians visiting Qatar on Qatar Airways flights, to encourage them to stay longer. In the future, Nahes says there are three “significant” Brazilian companies looking to move to Doha. “Now, with these high level ties, people in Brazil are starting to see the potential of a country like Qatar,” confirms Nahes. The Embassy receives regular inquiries from Qatar-based companies interested in Brazil. “Brazil has a lot of offer companies looking to invest or partner with other companies,” he says, highlighting the high tech sector as well as agribusiness and manufacturing as growth industries. Brazil’s success in the high tech sector is illustrative for Qatar, which is seeking to diversify its economy beyond dependence on oil and gas revenues. The so-called “knowledge-based economy” and the hi-tech sector have been earmarked as one that the country could establish a presence and excel in. Nahes says his country’s new president, Dilma Rousseff, “is expected to carry on what Da Silva had done during his career” and states that the retirement of Brazilian President Lula in 2011 would have no bearing on the strength of the relationship between the two countries. “She (Rousseff) was a fine choice by the President,” he explains, saying that the new president had been originally handpicked by Lula to “clean up” the Brazilian legislature. “She is a tough lady and she put her life at risk cleaning up the house.” Unknown to many is Brazil’s strong Arabic heritage. More than 12 million Brazilians have an Arabic background, mostly from the Levantine countries of Syria and Lebanon. The ambassador himself is a fourth generation Brazilian, his family originally hailing from Syria. “This of course helps the two countries understand each other,” says Nahes. “But now the Gulf, and specifically Qatar, is a priority.” TheEDGE

THINKER›S CORNER

Hooked

up Internet access may give young Arabs an advantage in the job market.

By Julie Ray and Ahmed Younis

n the tough competition for quality jobs, young Arabs with Internet access – either at home or in their communities – may have an edge over those who do not. In fact, more than one in three young Arabs with Internet access say they are aware of services or organisations that help people find jobs, but awareness drops to roughly one in five or less among those who do not have access. Overall, the majority of 15- to 29-yearolds across most of the 19 Arab League member states that Gallup surveyed in 2010 for the Silatech Index remain unaware of services and organisations that help connect people with jobs. Just three in 10 overall say they are aware of these services. This suggests that despite serious efforts around the region to connect young people with market-demand specific skills, a significant barrier exists, preventing these institutions from reaching those who need them most. The few exceptions are young people in Bahrain (where 84 percent say they are aware), Morocco (61 percent),

Tunisia (63 percent), and the United Arab Emirates (53 percent). Organisations that help match young people in the region with the jobs or skills they need, however, may find they have a better chance of connecting with young people who are online. These organisations may want to take their cues from advertisers who are starting to take advantage of the trend in growing Internet use in the region. Young people’s reported access to the Internet – and where they are getting it –

varies across the Arab League, and identifies where additional investment in technology has been made and where more is needed to improve the flow of information. Young Arabs in high-income countries, such as Kuwait, Saudi Arabia, and the United Arab Emirates expectedly are the most likely to be connected at home (68 percent) and in their communities (85 percent). Nearly all young Emiratis (98 percent) say they have Internet access in their communities and nine in 10 have access at home.

THINKER›S CORNER

mobile phones are aware versus 22 percent without. However, young Arabs with mobile phones are no more likely to be aware than those with any type of Internet access; rather, they are slightly less likely than those with Internet access to be aware.

This is a stark contrast to the nine percent of those in low-income countries and areas – such as the Somaliland region, Comoros, and Yemen – who say they are wired at home and the 32 percent who say they have community access. The relatively low percentages in low-income countries who say they have home access may point to a need for making computers more available for home use (perhaps by offering lower price points or donations of new or refurbished computers). Young Palestinians stand out as the exception among the region’s low-income populations; 86 percent report access in their communities and 38 percent say they are online at home. Young people’s tendency to be more likely to say they have access in the cities or areas where they live than to be hard-wired in their homes, highlights the important role that schools, Internet cafés, and other hotspots are playing within the region. This is particularly

evident in middle-income and low-income countries where young people are more than three times as likely to say they have access in their communities. As such, public and private sectors that “wire” as many locations as possible with wi-fi access can help those in search of skills or placement. Internet access within the community tends to be more available to young people in highincome countries and demographic groups that tend to be better off financially. However, the data show that job services and organisations can potentially reach young people in most demographics. Although young Arab men are more likely than young Arab women to say they have access to the Internet in their communities, the majority overall (67 percent versus 58 percent, respectively) report access. In addition, the majority of young Arabs who work part time or those who are not students and not in the workforce say they have access in their communities. There is far more equity in young people’s reported access to mobile phones, through which social enterprises such as Souktel and others are using text messages to connect young jobseekers and employers in the region with some success. Strong majorities of young people in high-income (96 percent), middleincome (85 percent), and low-income (82 percent) countries and areas say they have mobile phones at home. Equal percentages of young Arab men (86 percent) and young Arab women (84 percent) say they have mobile phones. Gallup finds that young Arabs with mobile phones are also more likely to be aware of job services or organisations that help people find jobs than those who do not; 31 percent with

BOTTOM LINE Taken together, the data suggest that the target audience for these services and organisations is available online and on their mobile phone – they just have to log on or dial them up. The data further reinforces how important these investments in technology are in creating innovative solutions that reach young people and connect them with better information and the jobs they need. This highlights the potential need for public-private partnerships that give young people access to the technologies that are most apt to connect them to solutions that lead to jobs. There are many macroeconomic discussions underway in the region about the varying realities of young people and entrepreneurship, young people and skills development, labour force nationalisation projects in the Arab Gulf states, as well as new realities of social entrepreneurship throughout the region. All of these and many more rely on one area of development. It may require a concerted effort to raise awareness of the publicly available access points to institutions that young people need, be they technological or otherwise. Unfortunately, the narrative of jobs for young people in the region is laced with discourse of insurmountable odds. However, the Gallup findings indicate there exists tangible, straightforward, and concrete steps for change. This Silatech Index analysis is conducted by Gallup scientists and researchers pursuant to the Silatech-Gallup partnership. In addition to systematically measuring the perceptions of young people across the region on the challenges related to employment and entrepreneurship, Gallup analysts lead the effort in disseminating the findings of the Silatech Index to regional and global leaders and institutions engaged in addressing the challenges surrounding young people and employment in the region. TheEDGE

FINANCE & ECONOMICS

Market Watch • Inside Edge • Special Report • Balance Sheet • Economic barometer

All That Glitters… (P.36)

The value of gold has risen steadily for months now with some pundits predicting its value will exceed US$2000 (QR7280) per troy ounce by the end of 2011. Wherever it ends up price-wise, gold should nevertheless form a part of any investment portfolio, says Karim Nakhle.

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ALSO IN THIS SECTION: • • • •

Market Watch: Mark Recardo, CEO of International Financial Services Qatar, sees reason for equity investors to be bullish in 2011. (P.24). Inside Edge: Phil Strange examines the financial repercussions of previous World Cups and comes to some encouraging conclusions for Qatar 2022. (P.28). Special Report: Greg Harris files an update on the current realities of Qatar’s transport sector ambitions. (P.30). Balance Sheet: KPMG human resources expert, Kanchan Ghoshal, explains the intricacies and importance of strategic workforce planning. (P.32). TheEDGE

FINANCE & ECONOMICS

MARKET WATCH

FeelinG

in 2011

bullish

With the curtain having fallen on another successful year in 2010 for equity investors, what will be the outlook for 2011? Mark Recardo sees reason for a positive attitude.

FINANCE & ECONOMICS

MARKET WATCH

quities remain the most attractive asset class as we head into 2011, as they are relatively cheaply valued and, to a certain extent, are still unloved and under-owned by international investors. Increasing evidence of economic recovery could prompt more investors to climb on board the rally, which started in March 2009 with the S&P 500 returning 85 percent in the first week of 2011 (see Figure 1). The majority of private investors have stayed away from the stock markets these last few years and continue to hold their wealth in both government and corporate bonds, and as this money starts to flow out of bonds and back into stocks, it gives markets a boost. This may serve to push valuations well past fair value into an accelerating environment fuelled by liquidity and expectations for better times ahead. The resilience of equity markets over the last few months has been impressive. They showed no significant signs of weakness despite a news backdrop of soaring bond yields, European Union contagion fears and the uncertainty of North Korea. Such resilience is indicative of a fundamentally strong technical position and suggests higher levels in 2011. The global economic backdrop should be supportive and this year’s growth should be well above

its long-term average. Figure 2 (see next page) illustrates the projections for the S&P 500 by the major brokers confirming that many are bullish for 2011, with Deutsche Bank leading the way, followed closely by Goldman Sachs. Asian and emerging markets will continue to lead the way and account for well over half the world’s growth. China should continue to grow at a rate approaching double digits with India not far behind. The West, as expected, will be considerably more subdued. There has been much growth in Asia in a very short space of time, explaining recent Chinese authority measures to put the brakes on and ease the concerns of many that China’s growth story is not sustainable. Inflation in Asia is becoming a problem fuelled by rising commodity and labour prices, and this is likely to persist for the foreseeable future. Although commodities appear overbought, there is sufficient global demand to sustain the cyclical uptrend in prices. Yet, we could see the majority of commodities pull back to a realistic pricing range before heading higher. While one cannot deny the increasing global demand for commodities, especially agriculture, one also has to remember that markets look forward and tend to adjust to events in advance. A good example of this would be silver. While the focus of many

Figure 1

private investors is gold, there has been a massive move in silver prices since August 2010 of 60 percent, so any pull back would be normal while still sustaining a longer-term upward trend. Oil prices also look likely to rise and it may not be long before a US$100 (QR364) per barrel price will appear. Inventories have fallen recently, notably in the United States (US) where recent cold weather increased demand. A look at the financials Last year proved to be one of challenges for the financial sector in the developed world, even though the emerging markets saw gains in operational earnings, and rode the momentum of good economic fundamentals combined with a low penetration of financial products and a rising middle class looking for more banking products. This year should prove to be a constructive one for financials in the US and Europe as the uncertainties of 2010 start to dissipate. A further improvement in credit quality is expected, provided the global economy continues to recover. However, the key driver for higher valuations would be credit growth and the degree of appetite for credit from both households and corporations. Clarification on the regulation of the sector with regards to capital adequacy should also be forthcoming, which would improve the outlook for dividends. The first few months of 2011, however, may prove a testing time as sovereign debt fears linger while markets await firm policy action from the European Central Bank to tackle the debt crisis in the region. Financial firms in core European countries with low macroeconomic risk and strong currencies should continue to outperform. In emerging markets, good long-term fundamentals and reasonable valuations make a compelling investment case, although investors need to be mindful of the risk of significant policy action to halt inflationary pressures. In conclusion, there is a very good chance that 2011 – or, at least, the first half of the year – will provide a third consecutive year of positive returns. Indeed there is every TheEDGE

FINANCE & ECONOMICS

MARKET WATCH

A multitude of options The good news for investors wishing to take advantage of the opportunities that may lie ahead is that it is becoming easier to gain exposure to a wide variety of asset classes – numerous open ended funds, investment trusts, exchange traded funds (ETFs) and structured products, hedge funds – offering investors exposure to equities, bonds, property, commodities, and hedged or unhedged currency. With such an array of investment options, the average investor may be wondering which to choose: Open-ended funds are collective investment schemes that can issue and redeem shares at any time, and an investor generally purchases shares in such funds directly from the fund itself instead of from existing shareholders. The price at which shares in an open-ended fund are issued or can be redeemed vary in proportion to the net asset value of the fund, therefore reflecting the fund’s performance. Open-ended funds are available in most developed countries, though

terminology and operating rules vary. Examples are US mutual funds, United Kingdom unit trusts and open-ended investment companies (OEICs), Spain’s sociedad de inversión de capital variable (SICAVs), hedge funds and exchange-traded funds. Mutual funds are professionally managed collective investment schemes that pool money from many investors and invest typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals). A mutual fund will have a fund manager that trades the fund’s investments in accordance with its investment objective. Exchange-traded funds (ETFs) are investment funds traded on stock exchanges and the most popular type of exchange-traded product. An ETF holds assets such as stocks, commodities or bonds, and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. ETFs are attractive

investments because of their low costs, tax efficiency, and stock-like features. A hedge fund is a lightly regulated investment fund typically open to a limited range of investors who pay a performance fee to the fund’s investment manager. Every hedge fund has its own highly individualised investment strategy that determines the type of investments it undertakes. As the name implies, hedge funds often seek to hedge some of the risks inherent in their investments using a variety of methods, notably short selling and derivatives. In most jurisdictions, hedge funds are open only to a limited range of professional or wealthy investors who meet criteria set by regulators, and are exempted from many of the regulations that govern ordinary investment funds. The net asset value of a hedge fund can run into billions of dollars, and the gross assets of the fund will usually be higher still due to leverage. Hedge funds dominate certain specialty markets such as trading within derivatives with highyield ratings and distressed debt. possibility of acceleration in the equity bull market adjusting valuations from their present value to levels that might even be deemed expensive. Dangers obviously remain, and investors have to accept volatility is likely to remain very high for the foreseeable future. Any hiccups will likely come from any signs of a slowdown in China or the rebirth of problems in the Eurozone that could once again test investors’ nerves and patience.

Figure 2

TheEDGE

Mark Recardo is the CEO of IFS Qatar (www.interfs.com). This article represents the opinion of the author and should not be interpreted as investment advice. Before making any investment decisions, consult a qualified financial adviser. International Financial Services (Qatar) LLC is authorised by the QFC Regulatory Authority.

FINANCE & ECONOMICS

INSIDE EDGE

Profit or

loss Based on previous FIFA World Cups, what can Qatarâ&#x20AC;&#x2122;s economy expect from 2022? Phil Strange takes a closer look at the numbers that matter.

substantial amount of investment is required in order for any country to be able to host a mega sports event such as FIFAâ&#x20AC;&#x2122;s World Cup. Costs of hosting the event differ significantly depending on the current state of infrastructure in the host nation, and of course Qatar will have to incur significant capital expenditure in preparation for 2022. Twelve stadiums will be required by 2022, at a cost of nearly US$3 billion (QR10.9 billion), and the small country will have to provide an additional 84,000 hotel rooms, many of which, one anticipates, will be privately funded.

FINANCE & ECONOMICS

INSIDE EDGE

But World Cup or not, Qatar’s investment in infrastructure had already been planned for the broader economy, as announced by Qatar’s minister of economy and finance, HE Yousuf Hussein Kamal, in June 2010. Indeed many of the hotel rooms will be built in the next decade to satisfy the growing business and leisure needs of Qatar’s expanding and diversifying economy. The announced US$100 billion (QR364 billion) multi-year investment, financed 40 percent by government and 60 percent by government subsidiaries, will provide the majority of the required infrastructure. Approximately 25 percent is to be spent on urban metro and a rail network, 25 percent on increasing the capacity of the existing road network, and the remaining 50 percent on the completion of the new airport, port improvements and housing. The direct cost of preparing for the World Cup will then likely represent a relatively small percentage of infrastructure spending already committed, a figure of approximately seven to 10 percent. South Africa 2010 South Africa, hosts of the 2010 World Cup, spent approximately US$4.2 billion (QR15.2 billion) to prepare for the event. Of this, an estimated US$3.1 billion (QR11 billion) was spent on transport and telecommunication infrastructure, and the country saw the generation of approximately 695,000 jobs in the infrastructure, service and hospitality sectors. The long-term benefits of investing in infrastructure is likely to be felt by the African nation for a while to come. For example, the improvement in the road and rail network has created an opportunity for better business efficiency and productivity. The impact of the World Cup on South Africa’s gross domestic product (GDP) is estimated to be close to US$12.3 billion (QR44.7 billion), 62 percent of which was generated before 2010, and 38 percent of which was generated during the course of the year. But, as nearly 71 percent of this amount came from government spending, the net benefit for the country can be valued at approximately US$3.5 billion (QR12.7 billion). The net benefit is equivalent to a 1.1 percent rise in the annual GDP, a significant figure given the 2.5 to three

percent growth expectation for the South African economy in 2010. It is also worthwhile to note that FIFA generates revenue through the sale of television broadcasting rights and instadium advertising and product-licensing arrangements, sharing a portion of this revenue with the host country. In South Africa’s case, this amounted to approximately US$130 million (QR473 million). In addition, South Africa generated US$1.6 billion (QR5.8 billion) in other sponsorship revenues. Among the list of indirect benefits of hosting the World Cup is the effect it has on the country’s image as a tourist destination. The tourism and retail industry saw turnover of US$3 billion (QR10.9 billion) resulting directly from the World Cup, but the positive image of South Africa as a result of the tournament will generate incremental tourist spend in coming years. Other hosts Germany, host of the 2006 World Cup, spent nearly US$6.5 billion (QR23.6 billion) on stadiums, media facilities and transport infrastructure. Unsurprisingly, given that European nations are keen followers of football, Germany drew in excess of a million foreign visitors. According to a study by the GWS Institute of Economic Structures Research, the 2006 World Cup encouraged inbound tourism consumption of US$1.25 billion (QR4.5 billion), which increased the German GDP by 0.07 percent that year. At the 2002 World Cup, the estimated cost of constructing football stadiums, support facilities and accommodation in South Korea alone was US$3.2 billion (QR11.6 billion) and created approximately 220,000 new jobs. An estimated 316,000 foreigners visited the country during the event, creating economic activity to the tune of US$1.5 billion (QR5.8 billion), creating a further 130,000 new jobs. The impact the investment in the construction sector and visitor spending had on the GDP, was estimated at US$10.2 billion (QR37 billion). Looking ahead The 2014 World Cup to be hosted by Brazil has an approved budget of US$13 billion (QR47

billion), the bulk of which – US$6.4 billion (QR23 billion) – will be spent on upgrading the public transport system in hosting cities. Qatar’s 2022 World Cup costs include US$3 billion (QR10.9 billion) for building and renovating stadiums, and the construction of additional hotel rooms. According to the Qatar Tourism Authority, approximately 8000 hotel rooms across the three-, four- and five-star categories were available in 2009, and more than 4500 rooms were scheduled to be added in 2010, leaving a deficit of 71,500 rooms still to be added. Such construction costs are likely to be in the region of US$5 billion (QR18.2 billion). The proximity of the Gulf nation to Europe and Asia – and with the many European and Asian nations to be featuring in the 2022 World Cup – will certainly mean a large influx of visitors from these regions. According to the 2022 bid evaluation document, Qatar could potentially sell 2.8 million tickets to the event. At an average price of US$100 (QAR363) per ticket, and a 100 percent sell-through of tickets, ticket revenue could be in excess of US$290 million (QR1 billion). Direct sponsorship revenue and FIFA profit share agreements are likely to add another US$2 billion (QR7 billion) to the coffers. If 40 percent of tickets are sold to nonQataris, World Cup tourist numbers could reach 1.15 million. Should each tourist spend approximately US$1500 (QR5460) during their stay, the economy will receive a US$1.7 billion (QR6 billion) injection. Qatar will also receive a global boost to its image by dismantling some stadiums and shipping them to developing nations after the World Cup. It is clear that hosting nations have reaped both tangible and intangible, direct and indirect benefits, from their involvement with the World Cup. South Korea and Japan exuded confidence in 2002, just after the South East Asian financial crisis, and South Africa was recognised as an economically powerful state on the African continent. Qatar is in the enviable position of utilising the 2022 World Cup to showcase its status as a diversified economy, and to position itself as a tourism and business destination, not only in the Middle East, but for the world. TheEDGE

FINANCE & ECONOMICS

SPECIAL REPORT

Qatar: 2022 TRANSPORT MASTERPLAN By Greg Harris Road, rail and sea infrastructure projects in Qatar are to be fast-tracked to ensure the efficient movement of fans at the 2022 World Cup. Integral to the plan is a US$13 billion (QR47 billion) new international airport by 2013, though US$20 billion (QR72.8 billion) is also slated for road and highway projects and US$5.5 billion (QR20 billion) for a new deepwater port. Up to US$40 billion (QR145 billion) will be invested in rail construction, with a 340-kilometre, 98-station metro line for Doha and its outskirts, and a high-speed connection linking Qatar to other Gulf states. According to credit ratings agency Standard and Poor’s (S&P), Qatar is well-placed to fund the vast infrastructure programme through oil and gas revenues. “We believe the World Cup will have a substantial impact on Qatar’s already promising economic growth over the next few years as the country readies itself to host this major sporting event,” said Luc Marchand, a credit analyst with S&P, in December 2010. While the transport infrastructure programme will undoubtedly spur economic growth in the lead-up to the World Cup, Doha will also need to make the most of its investment after the tournament’s final whistle. Qatari officials have stressed that the infrastructure built for 2022, along with further investments in targeted sectors such as tourism and logistics, will continue to pay dividends after the end of the football spectacle.

One problem the country may face is sourcing skilled labour. Some of Qatar’s neighbours have also announced largescale transport infrastructure programmes, including multi-billion dollar light and mainline rail projects in Saudi Arabia, Oman, Kuwait and the United Arab Emirates (UAE). Regional demand will also increase for building materials and equipment, as well as the technology needed by modern airports and ports, possibly leading to rising costs. Shortages and delays could put pressure on what may become tight deadlines.

There is also a risk, at least with the proposed international rail links, that neighbouring nations may not complete their components, affecting World Cup fans considering making use of the train for travel to the UAE. While Qatar has a head start with its transport scheme, with its transport master plan drafted almost five years ago and 12 years until the World Cup, intense international scrutiny of its preparation for the event means it will need to leave nothing to chance.

Greg Harris is the editorial manager at Oxford Business Group.

FINANCE & ECONOMICS

BALANCE SHEET

• Can the company demand more and hold the service providers more accountable when outsourcing? EMPLOYEE RETENTION Statement: “Workforce rationalisation is risky; it affects employee morale: we lose the good people while the average and poor performers tend to stay on.”

Strategic Workforce Planning ensures an organisation has the right kind of people at the right time to deliver on its business strategies and to adjust to changing market circumstances. It also has a direct and tangible effect on the bottom line. Therefore, writes Kanchan Ghoshal, companies need to exercise due diligence in following this strategic human capital management process when hiring new staff or considering outsourcing services. The following is a selection of thoughtprovoking comments from human resource (HR) managers and other business leaders in the Gulf region on the subject of obtaining and retaining quality staff, and ensuring their optimum productivity. These statements lead to questions about strategic workforce planning and how it can be implemented. SKILLS AND TALENT Statement: “Acquiring and retaining the right kind of talent required responding to growth and downward trends in the business cycle, and to technology changes, are substantial challenges.” Questions: • Does the company regularly identify and update the critical skills required as differentiated from overall requirements? • What measures does it take to manage talent related to critical skills related requirements, including career and succession planning, contingency plans

for attrition, lead time planning for new recruitment, compensation and rewards? • Does the firm think medium- to long-term when it approves hiring plans or does it always follow a bottom up approach without moderation or justification? • Does the company question new staff requisitions and assess cost impact of full time hiring versus outsourcing for a specific need on a time bound basis? HIRING AND OUTSOURCING Statement: “We hire full time employees from a baseline staffing perspective and we manage the cyclical highs and lows in staffing demand by multi-skilling our people and suitable outsourcing.” Questions: • Does this help better forecast and manage operational costs? • Is this approach useful in preventing idle workforce or reducing complications in organisational managerial processes?

Questions: • Should a company hire on a growth curve and cut the workforce when business is down? • Can it not plan for these exigences when hiring? • Does the company communicate adequately with employees to remove insecurities, especially those with critical skills, when it undertakes workforce rationalisation? COSTS AND REQUIREMENTS Statement: “We want to manage our operational costs by managing our workforce related costs and define full time equivalents (FTEs) required for the various functions in the organisation.” Questions: • Have any exercises been conducted to understand the workforce requirements linked to our strategic business plans to and to further understand and define how this is impacted by technology, the contractors whose workforce is deployed to support our business, and medium to longer term market considerations related to economic cycles? • Is each member of the workforce required all year round or their work is relevant only at particular times in the year and if so can we assign alternative roles to them in lean periods if their roles are strategic enough to warrant it? WORKFORCE EFFICIENCY Statement: “Our organisation could do without half of its workforce – while some work hard throughout the year, others are busy only during certain periods while some are undoubtedly inefficient - yet we always have extensive outsourcing.”

FINANCE & ECONOMICS

BALANCE SHEET

example of the key steps required for effective workforce planning: STEP 1: ASSESS A clear understanding of an organisation’s strategic direction in the short-, medium- and long-term and the related core competence model to assess and articulate a workforce planning philosophy is useful and essential. This in turn helps in ascertaining the essential functions that the organisation wants to develop and the kind of personnel and their education, experience and competencies required. Case Study: A leading Qatar-based real estate company believes that its corporate office should be lean and outsource work to a number of specialised subsidiaries and contractors. As profit centres, each one of the subsidiaries manage their staffing and associated costs from a business demand/ supply perspective.

Questions: • Couldn’t better management of our workforce help the company perform better while managing its workforce costs? • Is outsourcing really necessary? Can we outsource more to save costs? NATIONALISATION Statement: “We address our nationalisation objectives by creating a separate cost centre for young and bright fresh graduates amongst nationals – while they work with the various departments as developees, their costs are not loaded onto the departments.” Questions: • Is the commitment to nationalisation seen as an investment or as a response to a government directive? • Is the progress of our nationalisation initiatives assessed or is a shadow

employment situation being created where expatriates continue to do the work for our national employees without a handover deadline and empowerment plan? ANSWERS AND OUTCOMES None of the above questions above have easy answers. However they do allude to the potential pitfalls involved in adopting an ad-hoc approach to addressing workforce requirements and, more importantly, not reviewing them regularly. Fortunately, some companies Qatar and other countries in the Gulf Cooperation Council have several examples of leading practices followed, exemplifying how a structured approach to workforce planning results in strategic advantages related to human asset management (managing the employees in the organisation), operational costs and related risks. An annual step-by-step approach like the simplified generic illustration cover is a good

STEP 2 – PLAN Identifying skill gaps in current and forecasted workforce is important. While internal HR initiatives like training and development, career and succession planning and internal job postings are useful, tracking attrition rates and expected retirements assists in making appropriate projections. This step also involves assessments of the talent market, macro-level demand and supply, which form the basis for advanced planning and fair assessments of success rates in workforce acquisition efforts. Government directives and the organisations objectives towards nationalization are also considered at this stage. Case Study: An organisation in Qatar believes in progressing the number of Qatari employees in its workforce. The organisations strategy and organisation structure has been geared toward ensuring adequate knowledge transfer and grooming of bright young nationals as compared to a profit-based motive that might ignore this. A group of Qatari graduates are treated as developees and assigned to functional units on time bound programmes, their cost accounted for separately to ensure that the workforces of all centres accounted for separately. TheEDGE

FINANCE & ECONOMICS

BALANCE SHEET

Assess

Plan

Articulate a workforce planning philosophy Understand the ratios of staff in senior and junior management Understand positional requirements Identify skills and capabilities required

What will drive the demand? What volumes of staff are required and within what time frame? What does the talent market look like for these requirements? Have nationalisation targets been considered?

STEP 3 – FINALISE This step involves detailing of workforce requirements for the coming year and over an extended period, which could be from three to five years. This assists in advance planning of workforce acquisition options across a variety of needs. An organisation also has the option of exploring options for rationalising certain functions within the group, through centralisation, to reduce functional overlaps, evaluating options for shared services based on service level agreements, and focusing workforce related expenses in nurturing and rewarding critical organisational resources.

• planning to or that have recently completed a merger or acquisition, • looking to rationalize or better leverage their current labour model, • that have recently redefined their business strategy or wish to improve profitability and/or performance through productivity and efficiency, • implementing new technology, • considering offshoring or outsourcing a portion of their workforce or requiring specialised external contractors to take on a part of the workload.

Case Study: A Qatar-based service organisation includes workforce planning in its annual budgeting exercise. Each business unit compiles its workforce plans based on gross margin targets (total revenues minus operating costs) set by its board of directors. Estimated cost of the workforce is a key indicator. Since delivering on the gross margin target is linked to annual incentives for the managers involved, care is exercised in planning for workforce and smarter options of short-term sub-contracts and use of contractor workforce for specific assignments are considered. The HR function plays a key role and uses a staff ratio based approach to build and manage its support services workforce. THE NEXT LEVEL Appropriate workforce planning interventions beyond the more regular annual exercises can often be planned to respond to further requirements of organisations, such as those: • embarking on a growth and expansion plan,

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Top management endorsement, backed by an analytical HR team asking the right questions and providing alternative decision making scenarios, can go a long way in ensuring effective workforce planning. A strategic approach to workforce planning based on the broad principles discussed above can be expected to lead to various positive outcomes in an organisation. Some of these could be improved, analytical data to support workforce decisions and increased understanding of the current supply and demand of key workforce segments and maximisation of return-on-investment on workforce spend. Scenario plans also to allow an organisation to keep pace with changing external market factors and to utilise information to implement effective, efficient people and talent development programme and to support HR and recruitment representatives’ efforts to engage organisational decisionmakers in strategic planning. It encourages a ‘talent driven’ mindset where managers and HR professionals think about future

FINALIsE

High level workforce numbers across key organisational functions Core business functions Support functions Document workforce support expected through outsourcing

talent and workforce needs proactively, forecast demand for talent and assessing the actual or projected supply of available talent to enable more efficient staffing. Early forecasting of attrition, retirements and workforce movement to provide sufficient time to hire and train their replacements (reduce lost opportunity costs) is another benefit, as of course is increased productivity and positively impact the bottom line. CONCLUSION Though included in the domain of HR, workforce planning is in fact a highly strategic exercise. Certain organisations in the GCC have chosen not to mix the competence this function requires with HR administration or related functions. Those involved in this work need to have a strategic mindset with strong analytical ability. Often, while work of this nature continues to be conducted from a budgeting perspective through internal teams, organisations look for an external advisor to assist them in carrying out detailed workforce planning exercises. This kind of third party exercise may provide objectivity to the initiative and help in benchmarking. With the effectiveness of any organisation depending so heavily on its human assets and their performance, strategic workforce planning is indeed an indispensable process that organisations can and should leverage and continuously improve on.

Kanchan Ghoshal is a director with KPMG, leading the People and Change Advisory Practice of the firm in Qatar and Bahrain.

FINANCE & ECONOMICS

ECONOMIC BAROMETER

ALL THAT

GLITTERS…

FINANCE & ECONOMICS

ECONOMIC BAROMETER

Gold has enjoyed its fair share of investor headlines this past year, with prices reaching all-time highs. Karim Nakhle investigates the factors affecting the precious metal’s price fluctuation, and outlines what we can expect in the near-future.

all it what you will – gold, aurum, oro or zlato – its meaning is the same the world over. From the beginning of time and the earliest of cultures, gold has symbolised wealth and power. Today, as gold flirts with all-time highs, investors are wondering whether the price of gold is likely to surge yet higher, or if we are merely witnessing a bubble. In 2010, the price of gold sold between US$1100 (QR4000) and US$1200 (QR4370) per ounce. What can we expect from gold prices in 2011? An overview of gold Before launching into a price forecast, let us take a closer look at the factors affecting gold. Like most commodities, the price of gold is driven by supply and demand, as well as speculations. Fifty percent of annual mined gold is used in jewellery, 12 percent is used in applications such as dentistry, medicine, a range of electronic devices, electricity conductors, industrial connectors and others, and the remaining 38 percent as investments by governments, banks and/or hedge funds and individuals. In the past five years, it is the latter category that has greatly impacted gold prices, and demand for gold has subsequently allowed prices to almost triple to around US$1400 (QR5000) an ounce.

Global political unrest, economic depression and rising inflation contributed to the volatile nature of paper currencies, leading individuals, market traders and hedge funds to invest in gold instead. Some countries sold off major gold reserves, while others loaded up on it. In fact, during the 2007 to 2010 financial crisis, gold became almost a currency of its own, and arguably one of the strongest and most robust. According to the World Gold Council, 165,000 tons of gold have already been mined from the earth throughout human history. Since gold does not oxidise, evaporate or dissolve, much of that gold still exists. How much is anyone’s guess, but we can assume that the vast majority of gold mined in the 20th century has been preserved, whether in depositories or in private safedeposit boxes. Gold used for industrial applications is often salvaged, but in many instances, an industrial piece of equipment with gold in it sits in a junkyard (and bodies with gold teeth lie six feet under). As gold prices rise ever higher, it becomes less attractive to jewellery buyers and industrial users, some of which can substitute other metals with similar properties. Furthermore, the gold price spike is leading many gold mining firms to re-open mines that were no longer cost-effective when gold was worth US$500 (QR1800) an ounce.

During the 2007 to 2010 financial crisis, gold became almost a currency of its own, and arguably one of the strongest and most robust.

As those re-opened mines begin to operate again, increased supply sets the stage for falling prices if it is not followed by an equivalent rise in demand. Yet with more political and economic turmoil on the cards for the foreseeable future, investors and governments continue to grab their share of gold, which will likely remain in high demand. The big gold owners It is no surprise that governments, central banks, and investment funds are the world’s largest holders of gold reserves. These organisations know gold is a safe haven during times of economic and geopolitical turmoil. The top largest owners of gold in the world are reported to control a total of 24,258.3 tonnes, or over 855 million ounces. At current spot prices, this gold would be worth approximately US$900 billion (QR3.2 trillion) and represents about 16 percent of all the gold ever mined. The top 20 ranking of the largest holders of gold reserves is as follows: 1. United States (8133.5 tonnes) 2. Germany (3401.8) 3. International Monetary Fund (2846.7) 4. Italy (2451.8) 5. France (2435.4) 6. China (1054.1) 7. Switzerland (1040.1) 8. Russia (775.2) 9. Japan (765.2) 10. Netherlands (612.5) 11. India (557.7) 12. European Central Bank (501.4) 13. Taiwan (423.6) 14. Portugal (382.5) 15. Venezuela (363.9) 16. Kingdom of Saudi Arabia (322.9) 17. United Kingdom (310.3) 18. Lebanon (286.8) 19. Spain (281.6) 20. Austria (280) TheEDGE

FINANCE & ECONOMICS

ECONOMIC BAROMETER

The top producers Given the huge quantity of gold stored above-ground compared to annual production, the price of gold is mainly affected by changes in sentiment, rather than changes in annual production. According to the World Gold Council, annual mine production of gold over the last few years has been close to 2500 tonnes. In 2007, China overtook South Africa to become the world’s top gold producer. China leads the world in gold mining output, having upped its production to approximately 300 metric tonnes per year or 12.8 percent of global production. China is followed by Australia, which reported production of 220 metric tonnes or 9.4 percent of the global total. South Africa, no longer the world’s preeminent gold producer, had a yield of 210 metric tonnes or 8.9 percent. The United States (US) and Russia, both lead producers in the past, trail behind. The US accounted for 8.9 percent of the world total with its output of 210 metric tonnes, and Russia followed with 185 metric tonnes of 7.9 percent. Peru’s production of 182 metric tons placed it in sixth position, accounting for 7.7 percent of the global total. Indonesia is in seventh place, Canada in eighth, Uzbekistan ninth and Ghana tenth. Egypt recently announced the production of quarter-tonne of gold every week, bringing the total output to 12 tonnes of gold annually, propelling it to fifteenth place on the Global Producing Countries map. A few other Arab states feature in the top 75, with Saudi in thirtyfifth place (approximately six tonnes annually), Sudan comes in at thirty-seventh (4.5 tonnes), Morrocco ranked sixty-second (1.5 tonnes), and Algeria seventy-first (0.5 tonnes). The world’s gold reserves When assessing gold reserves, South Africa still and will certainly throughout this decade lead the pack, having in excess of 30 percent of the world’s explored yet untapped, un-mined gold resources. Russia follows with seven percent, followed by Indonesia and Australia, each with six percent, and Canada and China, each with four percent. Yet these figures are subject to change annually, as

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In the 1990s, the money chased tech stocks. In the last decade, it was housing. Both options ended badly, so now, to regain some of what has been lost, investors, governments and hedge funds are playing it safe, and chasing gold. more sites are mushrooming in China, Australia and on the African continent. With gold at an all time high, such explorations make sense, and may even be cost effective, despite being seen as costly a mere seven years ago when gold hovered around the US$500 (QR1800) per ounce. Gold versus other commodities Is gold still a better investment than other commodities? In a word, yes. On July 20, 1999, gold bottomed at US$252.8 (QR920). Six years later, on May 12, 2006, gold peaked at US$730 (QR2600) per ounce, and it has been rising ever since. If you are given the option to invest, your portfolio should include gold. Silver is a more affordable metal, however it fluctuates too rapidly. Since the mid-1980s, the price has only gone up a few dollars per ounce. Priced between US$15 (QR54) and US$30 (QR109), silver has not risen above that mark. Though considered by some as a steady benchmark, it does not offer the long-term growth that a portfolio needs. Other precious metals like rhodium, palladium and platinum are by far more expensive per ounce, ranging up to more than US$12,500 (QR45,500) per ounce. They are also more volatile as far as value is concerned, making them overall a risky venture for anyone but the professional investor. This leaves us with gold, which has nearly always seen a steady rise in price. Investors who purchased their gold in the 1970s will have seen the value double many times over, outperforming most stocks and bonds. It is a

safe investment for any portfolio, referred to as a purchase-and-forget portfolio addition, making it a reliable performer for long-term growth for any investor. In the 1990s, the money chased tech stocks. In the last decade, it was housing. Both options ended badly, so, in this decade, to regain some of what they had lost because of their greed, investors, governments and hedge funds are playing it safe, and chasing gold. Fresh highs in 2011 The gold market put in a solid performance in 2010, hitting a multitude of new records, including its all-time high of US$1431.30 (QR5213) an ounce in early December. Although it is impossible to predict the exact future of the precious metal, according to analysts, gold is perceived more as an alternative currency than as a commodity. This will be of continued benefit to the metal, as investors will continue to use gold to protect against an uncertain outlook for Western currencies and the risks associated with European and US sovereign debt and inflation. With Central Bank purchases and Chinese imports emerging to support gains, analysts and traders say they expect the metal to quickly reach as high as US$1700 (QR6000) an ounce – or even US$2000 (QR7000), according to forecasts by some of the industry’s more bullish participants – before the tide turns slightly in 2012. Regardless of predictions, one thing is certain: gold will remain highly precious and its allure eternal.

IN THE SPOTLIGHT

Doha Brains,

Global partnerships have proved an invaluable tool with which Qatar has sought to diversify its economy. Today, as a new alliance spearheaded by Dohaâ&#x20AC;&#x2122;s sovereign wealth emerges between Germany and Qatar, both parties stand to reap the rewards, writes Jamie Stewart.

IN THE SPOTLIGHT

The skyline of Potsdamer, which is considered by many as the heart of Berlin, and is home to the headquarters of many of Germany’s largest business organisations, including Deutsche Bahn (right), with which Qatar has signed a lucrative deal to construct its railway network over the next 15 years.

n Germany, we have only just begun,” Qatar finance minister, Yousuf Hussein Kamal, told German national newspaper FTD in mid-December. The bold statement was a bullish indication of Doha’s intentions when it comes to Europe’s largest economy and bedrock of the continent’s single currency, the euro. The Qatar government has spoken of its German investment plans in the billions. Doha is serious, or, as they say in Berlin, “Doha meint es Ernst”. Qatar’s primary overseas investment vehicle is its sovereign wealth fund, the Qatar Investment Authority (QIA). Founded in 2005, the QIA’s self-declared ‘noble mission’ is to strengthen the national economy through economic diversification, and to complement the state’s immense wealth of natural resources. Like many sovereign wealth funds, the QIA is tight-lipped when it comes to financial information, but its value has been estimated by the independent Sovereign Wealth Fund Institute at QR309 billion, with other estimates pushing the figure up to QR364 billion. This makes the QIA the 12th largest sovereign fund in the world, and the fourth largest in the Middle East, behind Abu Dhabi, Saudi Arabia and Kuwait.

The QIA makes no bones of its investment strategy. “The criteria are based on the imperative of generating a strong financial return,” it says, adding that it “takes a flexible approach to investing and has interests across a wide range of geographies”. Europe calling With a no-nonsense approach to securing Qatar’s economic future, the state-owned and managed QIA has been circling troubled European nations of late. Throughout 2010 and early 2011, rumours circulated of a potential bid for soccer giant Manchester United, cash injections into distressed economies including Ireland and Portugal, and a massive investment in debt-laden Greece’s natural gas import infrastructure. The increased QIA interest in Europe has arisen for two reasons. Firstly, the opportunity has arisen to snap up a share in assets at relatively depressed prices, guaranteeing a long-term revenue stream. Secondly, beyond the fire-sale mentality, Qatar has a vested interest in a stable eurozone. Last year’s dramatic slide in global oil and gas prices – the lifeblood of Qatar’s economy – was attributed to panic in the eurozone. “Prices are volatile,” former Qatar

Berlin Brawn TheEDGE

IN THE SPOTLIGHT

If Germany’s model is one of brawn and raw expert-led output, then Qatar’s is one of brains, with mutually beneficial partnerships at the centre. energy minister, Abdullah bin Hamad Al Attiyah said. “There is uncertainty, and we are nervous.” A stable Europe means increased stability in energy prices, which in turn means a stable revenue stream for Qatar. And a stable Europe in which Qatar is building up its own ownership interests is all the better from Doha’s perspective. However, when the QIA sets its sights on Europe, it must bear in mind that purchasing assets at depressed prices can be a poisoned chalice. In Europe, the assets were relatively cheap because the wider economy was in shock, which means that the investment itself was likely to be fraught with uncertainty. In recent weeks, however, an option has emerged that appears to offer the QIA the best of both worlds: investment in Europe as it struggles back to its feet, and partnership with the eurozone’s most stable and trustworthy member-state. Reliable Partner Germany, with a population approaching 82 million, is the largest nation in Europe. It boasts the continent’s largest gross domestic product (GDP), at around EUR2.56 trillion (QR12 trillion) – the fourth-largest in the world – according to the International Monetary Fund’s 2010 estimate. The German economy has long been regarded as a model of resilience. Its powerhouse services sector accounts for around 70 percent of its GDP, with industry

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responsible for 29 percent. It is the world’s second-largest exporter behind China, ahead of the United States (US) even. Alongside France, Germany was the first European country to emerge from the 2008/9 recession. As business partners go, Qatar could do much worse. Prior to the emergence late last year of Germany as a prime target on the QIA’s radar, Qatar already had a considerable stake in the country’s private sector. In August 2009, the QIA purchased a 17 percent stake in German car manufacturer, Volkswagen Group, becoming the third biggest shareholder in the firm.

The following month a 10 percent share in luxury car manufacturer Porsche Automobil Holding followed. Both deals offer the companies a simplified route to the Qatar and wider Middle East market, and the timing could not have worked out better for the German firms – in January car manufacturers reported a major surge in sales across the Gulf states in 2010. As the result of a proposed merger between Porsche and Volkswagen, Qatar is lined up to become the third anchor shareholder of the combined company along with the German state of Lower Saxony and the Porsche family. The QIA has also signed a deal with German rail operator Deutsche Bahn to build a railroad network over 15 years in Qatar and Bahrain. The firm is now planning a bid to build four railway stations along the 450 kilometre Haramain Railway project in Saudi Arabia, linking Mecca and Medina to Jeddah. At the end of last year, global energy major Total, not slow to spot an opportunity, pledged to assist small and medium businesses in Europe to set up bases in Qatar. And in December, a week prior to finance minister Kamal’s “we have only just begun” statement, the QIA snapped up a nine

The Qatar Investment Authority recently purchased a nine percent stake in Hochtief, Germany’s largest construction company.

IN THE SPOTLIGHT

percent stake in Hochtief, Germany’s largest construction company. The immediate future for the firm is uncertain – it is the subject of a takeover offer from 30 percent shareholder ACS, a Spanish construction group – but Qatar’s show of faith is indicative of its newfound alliance with Europe’s economic giant. And the benefits, both parties intend, will be two-way. Qatar prime minister Sheikh Hamad bin Jassim bin Jaber Al Thani said in a statement that the acquisition would “further enhance the deep relationship between Germany and Qatar” and that it would “facilitate the transfer of advanced technology and know-how to Qatar”. MUTUAL BEnefit Viewed in the context of Qatar’s recent 2022 World Cup bid victory, the potential benefits for all parties begin to emerge. Hochtief is now part-owned by Qatar, a nation with five state-of-the-art soccer stadiums to build over the next decade – all of which were designed, incidentally, by German architectural firm Albert Speer and Partners. And Qatar, as Kamal indicates, is not finished there. The QIA is already eyeing further investments in Germany, with a focus on the information technology sector. Going into partnership with Qatar, Kamal says, would offer such firms the opportunity to “expand their customer base” beyond their traditional markets. For many across Europe, and indeed the world, the Middle East’s major economies harbour massive potential for growth despite the troubles of recent years. And grow they shall. Qatar is on the road to developing a successful economic model capable of operating in a globalised economy, one that, like Germany’s, has an inherent degree of resilience to the cyclical behaviour of global markets. But if Germany’s model is one of brawn and raw export-led output, then Qatar’s is one of brains, with mutually beneficial economic partnerships at the centre. Working alongside Europe’s undisputed powerhouse economy can only be positive for Doha and its global image. The coming decade will be an interesting one on the peninsula as Qatar’s star, in the eyes of Europe and the world, continues to rise.

Deutsche Bahn’s experience and expertise constructing its ultra-modern high speed rail network in Germany should mean a state of the art system will be built in Qatar in the coming years.

Sovereign wealth fundS Sovereign wealth funds (SWFs) are estimated to manage around QR11 trillion in assets globally. The SWF Institute ranks the Abu Dhabi Investment Authority as the world’s largest,followed by Norway’s fund and Saudi Arabia’s fund. The Qatar Investment Authority (QIA) is ranked 11th largest in the world with assets of at least QR309 billion under management across the globe. Some funds are viewed as relatively transparent but others have been the target of criticism because of their perceived secrecy. “It is hardly surprising that opaque governments tend to operate opaque SWFs,” says India-based Public Interest Research Centre’s Kavaljit Singh. “Though both Saudi Arabia and Norway operate SWFs, their transparency, governance and accountability standards are hugely different due to their distinct historical, cultural, political, legal and institutional contexts.” The QIA explains that it does not publish financial information “as is usual with many global investment institutions which are not listed on the public markets”. But it would appear that steps towards a more transparent model are being taken by SWFs. “Many of them are conducting external audits, hiring external managers and regularly publishing financial information,” Singh says. “However, improvements in the transparency and governance will come gradually and organically. One should not expect all SWFs to adopt higher standards of transparency and governance overnight.” Despite the calls for transparency and accountability, Singh points out that the demands “lack credibility”, on the grounds that big private investors are often permitted to operate with poor levels of transparency and questionable governance standards.

The QIA’s major movements iN 2010 December 2010 – Formed part of a consortium that bought out US film production firm Miramax from The Walt Disney Company for QR2,4 million. Miramax came with a back catalogue of some 700 movies, and has no less than 300 films in production. October 2010 – Purchased a five percent stake in the Brazilian unit of Spain’s biggest bank Banco Santander for a cool QR9.8 billion. Vice-chairman of QIA investment arm Qatar Holding, Hussain Ali Al Abdulla, said that the acquisition “accomplished our objective this year of increasing our exposure to fast growing emerging markets like Brazil”. June 2010 – Invested QR10.2 billion in the initial public offering of the Agricultural Bank of China, making it the biggest single investor in the world’s largest stock market floatation. May 2010 – Purchased 100 percent of London luxury department store Harrods for QR8.4 billion. Qatar prime minister Sheikh Hamad bin Jassim bin Jaber Al Thani said the store would generate “good and stable returns as a business”.

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COVER STORY

TheEDGE looks up into the virtual sky and investigates the latest information technology trend taking the world by storm

COVER STORY

All of a sudden everyone in the world seems to be talking about being ‘in the cloud’. Cloud computing – or ‘the cloud’, as it is more generally known – is the latest phase in cutting edge information technology (IT) and data storage. This is no different for many established, emerging and startup companies in the Middle East and, in fact, Qatar has strategically placed itself at the forefront of this cloud computing vanguard. But there is more to living and working with cloud computing than hi-tech data storage solutions, as the platform affects even the most mundane activities. RACHEL MORRIS looks at whether cloud computing is more than just hot air and what implications it has for the security of our data. TheEDGE

COVER STORY

Cloud computing is used by top technology companies such as Google and Apple, and is Internet-based computing in which shared servers provide resources, software and information to computers and other devices. (Getty Images)

THE RISING CLOUD When the first branch of Doha’s newest consumer bank opens its doors in Qatar later this year, ostensibly their premium customers will no longer need to fill out a deposit or withdrawal slip. Nor will they need to fill out cumbersome forms for other banking services. Instead, on arrival, they will be greeted by a ‘butler’ and will be handed a ‘beeper’ style device in place of a numbered slip of paper. They will know it is their turn when the device goes off. This is not the only difference. The customer interface is completely transformed at Barwa Bank’s latest branch. “Everything is done on a device that works like an iPad,” says the bank’s marketing director Hussein Fakhri. “It’s a touchscreen with a thumbprint reader. It will eventually do away with paper.” The customer can ask for their forms to be printed but all notifications are received via SMS. This new kind of customer banking is also web-based and will offer mobile banking. Fakhri says this is not just about employing the latest technology, but also responding to the needs and lifestyles of their key consumers. “Our customers are not numbers. It is a competitive market in Qatar, [where] there are 18 banks operating,” he says of the unique

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customer service model offered by the newest bank on the block. Barwa’s first paperless branch, catering to premium customers, will be open later this year. According to Fakhri, this innovative bank model is a response to the demographics of their customer – aged 25 to 45 years with monthly incomes in excess of QR30,000 – who are tech savvy and enjoy their gadgets. Moreover, the move towards this hi-tech future is also spurred on by technological developments, the need for consumers to have all their information at their fingertips when and how they want it. Welcome to the world of cloud computing. This is a generation that can access friends on the other side of the world virtually with the tap of a Blackberry key or via Facebook and Twitter. Along with other Qatar-based companies such as insurance technology provider Qatarlyst, the country is fast becoming a booming industry with companies here proving to be fast adopters. But what exactly is cloud computing and how is it different from other IT-related services already on offer? One would be forgiven for being a somewhat cynical, especially those whose idea of information technology is using a Blackberry.

On a personal day-to-day level it relieves the need to store information on your computer, mobile device or gadget with the assumption that the information can be quickly and easily accessed via the Internet at any time. For businesses and governments, the advantages are far wider and more tangible. Microsoft recently launched its own attempt to ascend into the cloud with the business-focused launch of Microsoft Office 365. This version takes all of its widespread and popular Office applications, including SharePoint and Office Professional, and utilises cloud technology. One of the key points is it includes Outlook in the cloud, so you can use the Web-based version of Outlook to access your email from any computer anywhere in the world. According to recent findings by research firm, IDC, cloud-based IT services are currently worth QR61 billion globally, and that figure is estimated to grow to around QR154 billion by 2013. In Europe, enterprises are beginning to embrace the business opportunities offered by virtualising assets and accessing applications through the cloud. qatar at the forefront Qatar’s cloud computing revolution started in a high-profile way with MEEZA.

COVER STORY

Established at the Qatar Science and Technology Park (QSTP), MEEZA, Arabic for ‘advantage’, has taken cloud computing to a new market. According to a MEEZA representative, “Cloud services deliver technologies and applications over the Internet. Small and medium businesses have been among the most aggressive adopters of cloud services; by purchasing software as hosted- or subscription-based services, businesses reduce upfront costs and are freed to focus on their businesses without requiring large in-house IT expenditure,” MEEZA report that the Middle East region, led by Qatar, is a prime place to cultivate cloud computing. MEEZA itself offers clients “scalable” managed IT solutions from the “foundation for start-ups not wanting to invest in costly IT infrastructure, right through to sophisticated systems for thriving enterprise.” And it also has a hi-tech super secure data centre at QSTP to service client’s needs. “The potential savings and benefits of the new cloud computing paradigm are exciting for business, especially in the Gulf region. IT applications and services that run ‘in the cloud’ are becoming increasingly popular as they enable access to robust IT infrastructure and the latest applications while removing the need to bear the high costs of ownership and maintenance. The fast growth rate of companies here means they are unable to make timely investments in the necessary IT infrastructure to scale rapidly. Added to that is the challenge of a lack of IT skills which, although a global phenomenon, is more acute in this region,” adds MEEZA. Qatarlyst is another Qatar-based company taking the cloud to the wider audience, most notably the insurance industry. Established by the Qatar Financial Centre (QFC), who saw the demand for insurance continuing to grow apace, the greatest potential is currently being seen in the Middle East where US$1.1 trillion (QR4 trillion) is being invested in high value projects alone. This exponential rise in insurable assets is transforming the Gulf Cooperation Council region into a new frontier for the global insurance industry.

CLOUD COMPUTING 101

For the uninitiated ‘Cloud Computing’ is literally storing information and data in a virtual ‘cloud’. In broader terms, it is essentially location-independent computing, where shared servers provide resources, software, and data to computers and other devices on demand, much like an electricity grid. That is, data is stored off site and ‘up in the cloud’. It sounds extremely technical, but the truth is that many of us already are in the cloud. Apple has its own cloud for those who subscribe to its e-mail system. And on a bigger scale, anyone who has a G-mail account or has used Google docs has already benefitted from cloud technology. The key difference being, we don’t currently think of them as being cloud because we are holding the device that is giving us the information or we are accessing it via our laptops, but the terms applies to these services as well any form of more complex data storage and information technology applications.

James Sutherland, chief executive officer of Qatarlyst says the company was established in 2008 and opened for business in 2009. Its technology operates in Doha as well as from an outside location. “Qatarlyst provides a web-based solution for regional brokers and insurance firms to negotiate, place and accept large commercial insurance risks electronically,” he says. Sutherland explains that the platform allows for a “structured workflow” and the company is one of the few in the world offering this unique way for brokers and re-insurers to do business. Users log on to a central platform with all processes integrated into it. The insurance company recently bought out RI3K, the London-based pioneer and innovator of technology that supports paperless transactions for the commercial insurance and re-insurance industry, which makes the Qatar-based firm the market leader in this technology. RI3K provides a global ‘Platform as a Service’ (PaaS) that replaces the paper-based processes that support the transactions of all types and classes of large commercial insurance and facultative and treaty re-insurance. The service has been developed to support the way that buyers, brokers and

carriers around the world conduct business. It allows them to collaborate, create contracts, distribute risk and transact in a way that is faster, more accurate, more efficient and cheaper than the paper- and email-based processes that currently support commercial insurance negotiations. Qatarlyst is now the key player in this game. With QFC’s focus on the insurance and re-insurance industry, the establishment of Qatarlyst and its use of technology have placed Qatar in a unique position. “This is a significant move for us,” says Sutherland. “Qatar really had an extraordinary vision...this isn’t an industry that offers the quick returns.” Indeed, Qatar is in prime position to make inroads into the nascent industry. With the Qatar National Vision 2030 and the National Development Strategy seeking to move the country away from its dependence on oil and gas revenues, the cry has been for a “knowledge-based economy”. Hi-tech companies have been encouraged to spread their wings or move their headquarters to Qatar and the government, and to a certain extent private enterprise, have all been keen to invest and think innovatively. Another firm working in the cloud is Qatari company Mannai, which opened TheEDGE

COVER STORY

its own data and service centre in Doha. The centre, says Mannai, will “focus on consultancy and integration for the cloud infrastructure helping customers on their journey to the private cloud”. SECURITY CONCERNS One understandable concern, raised by those sceptical of cloud computing, is that of security. To counter this, Sutherland says Qatarlyst runs regular security checks and has an off-site consultant run regular reviews of vulnerabilities. He is utterly convinced of the integrity of the sensitive information it holds. This is a valid point though, as according to recent research, there will be 15 billion mobile devices in use by 2015 and by 2020 over 35Zb (Zettabytes) of data will be generated by users globally. That is a lot of data. Fujitsu recently released its global research report, Personal Data in the Cloud: The Importance of Trust. The report finds that trust will be the key to unlocking the personal data needed to realise the future benefits of cloud computing, but the degree to which governments and businesses are trusted to look after personal data varies greatly from country to country. The research, polling 6000 people in 12 countries across the globe, investigated the extent to which consumers do – or often do not – trust governments and large corporations to protect their privacy. Around 46 percent of total respondents found to be sceptical may well hold the key to cloud computing adoption rates in the future. They are pulled in two directions: positive about the benefits of cloud computing, but concerned about data privacy. “Where data controls were once simple and highly visible, technology has created complexity and the security of systems – effective or otherwise – [that are] often obscured from us. Meanwhile our daily activities rely more on electronic transactions and we generate ever more personal data,” the report, released in November 2010, reveals. “89 percent of the consumers we surveyed said they were concerned about who had access to their data, and a similar number said they were becoming more security

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COUNTING THE COST

Used sagely, cloud can save companies and governments millions of dollars. Google United Kingdom (UK), for example, by moving all of its email ‘into the cloud’ saves its coffers millions of pounds each year. On the flipside, consider that the United States (US) Federal Government, which does not currently utilise this kind of service, spends more than US$70 billion (QR255 billion) on information technology infrastructure and more than US$20 billion (QR73 billion) of that is on hardware alone. Prudently in this age of austerity, The City of Westminster in the UK is planning to soon relocate its entire IT infrastructure off-site and into the cloud, saving millions of pounds of taxpayers’ money. Their aim is to achieve a 100 percent infrastructure-free environment for the council by 2015. The council is already way ahead of its schedule, with about 60 percent of the infrastructure already outsourced. Of the 60 percent of Westminster’s infrastructure now in the cloud, 10 to 15 percent is in the public cloud, with the remainder being run privately. Also in the UK, the University of Westminster has moved its IT services for staff and students into the cloud, utilising Google Apps and Google Docs. The Google Apps Education Edition will give staff and students across the organisation, access to free communication tools including email, shared calendars, instant messaging and collaborative word processing, all delivered and managed under the institution’s identity and management. Chairman and chief executive officer of cloud computing company, salesforce.com, Marc Benioff, addresses the audience at the Digital Life Design conference in Munich. The company distributes business software on a subscription basis and hosts the applications offsite.

COVER STORY

The Microsoft booth at the 2011 International Consumer Electronics Show in Las Vegas. Microsoft is planning to invest approximately US$2.5 billion (QR9 billion) to develop cloud computing networks in Indonesia, with Chris Sharp, the regional cloud strategist for Microsoft Asia Pacific and Japan, stating that the company could potentially generate US$75 million (QR273 million) from cloud computing services in that country.

conscious,” the report continued. “However, almost three-quarters were worried that there was nothing they, as individuals, could do to control what happens to their data. In this context, people expect governments and large companies to act responsibly, although they don’t necessarily trust them to do so.” This is of course, a major consideration for companies looking to engage the services of organisations such as MEEZA. “As more and more businesses are driven by data and the ability to share information, security and compliance have come to the forefront of challenges in moving to the cloud”, assures MEEZA. “Clients must work to identify missioncritical and sensitive data and match them to the appropriate system, or delivery model. In turn, working with providers that have adopted industry best practise will provide a more reliable security ecosystem for the delivery of cloud services. It is also important to ensure third-party audits for security, performance and availability are in place.

“There is a perceived loss of control within IT professionals as they move workloads to a cloud delivery model. However, they must recognise that a loss of control will typically result in increased availability of the service. We encourage our clients to find an appropriate engagement model to identify the must-have and the ‘can lose’ controls with the ultimate goal of delivering a better service to their end users. Transparency is key to managing the cloud services relationship – companies must ensure that they are provided with easy-to-use management tools with full transparency to service levels.” Despite doubts, those interviewed see a positive trend towards cloud computing and virtualisation of assets, especially for the Middle East. Qatarlyst’s Sutherland sees “huge growth potential” for cloud computing over the next 10 years and sees Qatar as the country to exploit that. “It’s starting to gain momentum…enabling the cloud is great for all,” he enthuses.

According to MEEZA, small and medium enterprises (SMEs), which have been identified as one of the key drivers for Qatar’s future economic growth, will move to adopt cloud computing. “Over the course of the next few years we should expect to see quite significant increases in the adoption of cloud services in SMEs and slightly later, from larger and more established businesses,” adds MEEZA. “Companies will start with basic, commodity services where there is little or no advantage in being different from other competitive businesses. E-mail and document management are obvious examples where, given that data security and reliability are provided for, minimising the cost per user and avoiding large scale investments, are key advantages.” So, it seems, having one’s head – and business technology – in the clouds these days may actually reap some real benefits. TheEDGE

ON THE PULSE

The new generation

Iranâ&#x20AC;&#x2122;s Bushehr nuclear power plant is on the verge of completion, a step that will mark the end of a hard-fought journey for the Gulf nation. With a nuclear renaissance afoot, can the GCC assume an active role in one of the most controversial industries of modern times, while learning from Iranâ&#x20AC;&#x2122;s story? Edward Jameson reports.

ON THE PULSE

ne-thousand-two-hundred kilometres south of the Iranian capital Tehran, between the unassuming fishing villages of Bandargeh and Halileh on the northern shores of the Gulf, lies the city of Bushehr. In 1975, on a spot 17 kilometres south of the city centre, construction began on a building that would find itself at the centre of a heated global geopolitical debate for the next 35 years: the Bushehr nuclear power plant. On August 21, the Russian Federal Atomic Energy Agency (Rosatom), which since 1995 has been working as main contractor with the Iranians to pull the project through to completion, began loading nuclear fuel into the first of the plant’s two planned reactors. From this point, the plant would become an operational nuclear power plant – the first in the Middle East. The plant is set to begin generating electricity in February 2011, and indeed, by the time you read this, it may well already be doing so. From the Iranian point of view, and for many across the Middle East, the Bushehr nuclear programme is something of a success story, albeit one that took considerably longer to bear fruit than had originally been hoped. Globally, the nuclear power industry is going through a renaissance at present. Demand for low-carbon electricity generation continues

to gather pace despite the increasing air of uncertainty surrounding global-warming policy worldwide. As populations grow, demand for energy, in particular electricity, is climbing, and the rapid industrialisation of some of the most populated nations on earth is intensifying the increase in energy consumption in those regions. Efforts towards instilling energy efficiency measures in many industrialised states are doing much to restrain the growth in demand. According to International Energy Agency (IEA) estimates, global primary energy demand is set to increase by an average of 1.2 percent annually until 2035, which compares with two percent average annual growth over the past 27 years. But still, the drive to decarbonise the power generation sector remains resolute, for reasons of both climate change mitigation and security of energy supply. Says IEA executive director, Nobuo Tanaka, “We need to wean ourselves off fossil fuels by adopting technologies that leave a much smaller carbon footprint.” Nuclear politics in the Middle East On the last day of 2010, backing for the Middle East region’s right to development of a peaceful nuclear programme came from the very top in Qatar. HH Emir Sheikh Hamad bin Khalifa Al Thani told reporters in

The reactor building at the Russian-built Bushehr nuclear power plant in Iran. The plant has taken 35 years to build due to a series of sanctions imposed by the United Nations. (Getty/Gallo Images)

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ON THE PULSE

Austria that the Gulf Cooperation Council (GCC) countries, alongside Iran, were entitled to acquire nuclear power for peaceful purposes. The completion of Iran’s Bushehr nuclear power plant is a milestone in the Middle East nuclear development story, a milestone which a collection of global powers –most notably the United States (US) – would rather had never been reached. Most reasonable people would countenance the region’s right to a peaceful, civilian nuclear programme, which Iran has insisted since 1975 is its only objective. However, the severe climate of distrust between the US and Iran has forced the latter to remain obdurate to US pressures, choosing to press on regardless. Elsewhere across the Gulf, however, resolutions to allow development of a peaceful nuclear programme have been sought, proposed and, in one case, accepted, signed and sealed. Central to the development of a civilian nuclear industry across the Gulf is the emergence of reliance on international nuclear fuel cycle services – based on a deal inked with between the US and the United Arab Emirates (UAE) – with the West maintaining a pivotal position in the negotiations. “The United States is continuing its efforts to establish a global precedent for nuclear cooperation agreements based on the UAE model,” says Centre for Strategic and International Studies proliferation prevention programme director, Sharon Squassoni. “In short, [this would] require all new cooperation agreements with non-nuclear weapon states to preclude domestic enrichment and reprocessing,” she explains. The UAE model, which the West hopes to transpose into future deals with states across the Middle East including Qatar, the Kingdom

Iran’s Mahmoud Ahmadinejad and foreign minister, Manouchehr Mottaki, attend the United Nations 2010 High-Level Review Conference of the Parties to the Treaty on the Non-Proliferation of Nuclear Weapons. Despite opposition from the West, Iran has fulfilled its nucelar power objective. (Getty/Gallo Images)

TheEDGE

of Saudi Arabia (KSA) and Jordan, clears the way for the Gulf state to buy US nuclear power equipment, fuel and technology. The UAE, for its part, must open its nuclear facilities to international inspections and must import its reactor fuel, as opposed to acquiring expensive fuel-cycle technology as Iran, after many years, was eventually able to do. “Nonproliferation advocates, and energy experts worldwide have called the UAE approach a gold standard for countries interested in exploring nuclear energy for the first time,” a statement released by the UAE Embassy in Washington says. In short, the deal is likely to pave the way for many across the Gulf to follow. Big industry, big business The successful development of a nuclear power industry in the Middle East would bring with it big business. Firms from Asia, the US, France and Korea bid for the main construction package in the UAE, with Korea Electric Power Corporation, a consortium made up of Korea’s Samsung and Hyundai, and Japan’s Westinghouse Electric, awarded the US$20.4 billion (QR74.3 billion) contract. It is assumed that the contract represents just the first in a large fleet of reactors across the UAE. The World Nuclear Energy Association (WNEA) published low and high estimate scenarios in its nuclear century outlook report (see table on next page). According to its forecasting model, the six nations of the GCC could see a nuclear capacity of 175 gigawatts (GW) by 2100. Today’s most advanced commercially available reactors are rated in a range up to 1.7GW, meaning that the WNEA’s high estimate translates into around 100 individual reactors across the GCC which, even discounting inflation, equates to a construction contract value of $ US20 trillion (QR74 trillion). Although initially contracts will be awarded to overseas-based firms, as dictated by disparate rates of progress in the nuclear development of different countries, opportunities exist for Gulf states to secure profitable bilateral deals with a wealth of partners. For example, South Korean, president Lee Myung-bak, welcomed the deal with the UAE, explaining that, because his country is a major net-importer of oil, the deal with the UAE – the world’s third-largest oil exporter – would do much to bolster energy security in his country. From a domestic standpoint, Doha has expressed an interest in developing a nuclear power sector. Plans are still in the feasibility study stage. The government is “looking at whether nuclear power will be good for Qatar [unilaterally], or whether it will be a collective project, with all other GCC countries”, Qatar General Electricity and Water Corporation acting general manager, Essa bin Hilal Al Kuwari, told a Middle East

ON THE PULSE

The first fuel is loaded at the reactor building at the Russian-built Bushehr nuclear power plant, on August 21, 2010, in southern Iran. The nuclear power station has taken 35 years to build due to a series of sanctions imposed by the United Nations, but the facility’s uranium fuel will fall well below the enrichment level needed for weapons-grade uranium (Getty/Gallo Images)

nuclear power: Where the GCC stands UAE – Has signed a US$20.4 billion (QR74.3 billion) construction contract for its first plant, to be built on the Gulf coast in Bakra, by the Korea Electric Power Corporation, a consortium of big-hitting Korean and Japanese firms. Due to be operational by 2017. Qatar – A feasibility study is ongoing to determine whether Doha should pursue a nuclear programme unilaterally, or if it should look to work alongside its GCC partners. KSA – Has for some years been “seriously considering” development of a programme, according to the World Nuclear Association. In April 2010, the government announced that an under-construction section of the capital Riyadh would be powered solely by nuclear power. Kuwait – Revealed plans in 2010 to have its first nuclear power plant operational within seven years. However, no site has yet been selected, and it is unlikely that the proposed sevenyear deadline will be met. Bahrain – Has also announced plans to have its first plant operational within seven years. This date, however, also looks doubtful. Oman – Signed a cooperation agreement with Russia in 2009 to conduct research into a potential Omani nuclear programme. In 2010 the country reaffirmed a prior commitment to work with the IAEA on the future development of its programme.

GCC combined nuclear power plant forecasts until 2100 YEAR

2008

2030 (low)

2030 (high)

2060 (low)

2060 (high)

2100 (low)

2100 (high)

GCC

175

Capacity in gigawatts (today’s most advanced plants = 1.7 gigawatts) Source: World Nuclear Association energy conference in October. Any Qatari developmental deal would likely be based on the UAE international fuel cycle services model. The bridges between Doha and Washington are firm as a result of Qatari support for the US military presence in the Middle East. And Qatar’s increasing prominence on the world stage – underscored by the awarding of the 2022 World Cup – will do its emerging global ambitions no harm. The world is positioning itself for a nuclear resurgence, one which the Middle East has every right to be a part of. The UAE looks set to proves itself a worthy torch-bearer in the decade ahead, which could ultimately repair any bridges that have been damaged between the US and the Middle East as a result of the Iran issues, and prepare the path for the Gulf – and Qatar – to take part in the nuclear renaissance of the next decade and beyond. TheEDGE

if you innovate,

they will come

Learn what it takes to design an innovative business model that differentiates you from the competition and attracts new customers.

KNOWLEDGE & EXPERTISE Business know-how • how-to guide • legal insight • brand beat

FUTURISM (P.56)

As organisations plan for the year ahead, Kamal Hassan makes a strong argument for abandoning tried, tested and somewhat tired approaches to strategy, and adopting a progressive and innovative mindset for better results instead.

ALSO IN THIS SECTION: •

How-To: In the second instalment of their 12-part series on entrepreneurism, the College of the North Atlantic’s (NCA-Q) Lonnie Croal looks at how coaching and can help small and medium business operators achieve success. (P.58).

• •

Legal Insight: Qatar’s revises its laws on laundering and the funding of terrorism organisations. (P.61). Brand Beat: Charlotte Stubbs investigates how ‘infographics’ increase the effectiveness of brand communication. (P.64). TheEDGE

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BUSINESS KNOW-HOW

Predicting the Future why good, old-fashioned Strategic Planning Is extinct

It’s that time of year again. Budgets are being drawn up and strategic planning teams all over the world will be gathering behind closed doors in a vain attempt to predict the future – except for the visionary ones who are saying ‘Enough!’ They have realised that doing the same thing over and over again and expecting different results is, well, simply crazy. By Kamal Hassan

KNOWLEDGE & EXPERTISE

BUSINESS KNOW-HOW

emember the first James Bond movie you ever watched? Regardless of who was playing 007, you could not help but be swept up in the action as he outgunned and outsmarted the bad guys and saved the day. Now think of the last James Bond movie you saw. Did it give you the same thrill? Or did you almost fall asleep? It is not the actor, or the mind-numbing car chases and explosions that are to blame. It is the fact that we’ve seen it all before, year after year, and we know how it ends. We are left feeling vaguely unsatisfied, hoping for something more substantial. It is the same with strategic planning. In the old days, executives could sit in a room and, armed with a battery of spreadsheets and presentations, devise a strategy that would beat down the competition. But over the years, the strategic planning process has become formulaic, and companies have come to rely too much on what worked in the past. Like 007, they try to recapture the old glory each year, knocking off ‘strategic’ objectives like expendable thugs. In the end, they may succeed in cutting costs by five percent, or increasing customer satisfaction by 10 points, but these incremental improvements never amount to the substantial game-changers they were hoping for. NEW CHALLENGES, NEW TOOLS A recent IBM survey of more than 1500 chief executive officers (CEOs) from around the world revealed that more than half are struggling with the quickening pace of globalisation, technology, the economy, customer expectations – everything is more complex these days. And 79 percent of the executives surveyed expect things to get even more complicated over the next five years. New challenges call for new tools, especially when it comes to planning organisational strategy. Many of the strategic planning methods in use today have been around for decades. Management by Objectives (MBO) was introduced by American, Peter Drucker, in his book The Practice of Management in 1954 (eight years before the first James Bond movie, incidentally). MBO’s

successor, Balanced Scorecard, has been widely used since the early 1990s. Now, how many CEOs do you think would admit they have not changed their approach to strategic planning for the past 20 years? Or worse, that they run things just like they did in the 1950s? Not many. But that is exactly what they are doing. Both MBO and Balanced Scorecard enable organisations to consistently track strategic objectives to make sure they were being met. That is a good thing to do. But, in today’s complex and changing business environment, tracking is all they are good for. You cannot use these methods to devise the type of strategy that is needed today. THE BEST TEACHER IS NOT JUST HISTORY Another problem with traditional strategic planning is that it relies primarily on historical data. Strategists study the past to plan for the future. The problem is that focusing on the past emphasises what has worked before, instead of new ways of thinking and doing (the ‘James Bond’ syndrome). The result is incremental improvement – not game-changing innovation. As business and innovation strategist, Idris Mootee, puts it, “Many strategists are obsessed about yesterday’s competitive advantage (remember best practices are for those who do not know what their customer needs are or have no idea of where the future is going). There are no best practices. Only good practices and next practices.” The other drawback to relying on the past is that we cannot assume the future will be similar, at least these days. Given the pace of change, current trends provide a more reliable basis for planning. Yet traditional strategic planning falls short when it comes to leveraging trend spotting tools such as ethnographic research, focus groups, useranalysis, social media, etcetera. Historical data, while it cannot be ignored, simply does not provide the whole picture for the future. PLANNING USING THE WHOLE BRAIN Traditional strategic planning is rooted in cold, hard, statistics. If you are a left-brained,

analytical type, you will not see this as a problem. But these days our creative right brains need a seat at the table, too. In fact, 60 percent of the CEOs in IBM’s aforementioned survey named creativity as the most important quality for leaders in today’s complicated business environment. Creativity, as these executives define it, means not only encouraging innovation, new ideas and risk-taking, but also making ‘deeper business model changes’ that result in disruptive and breakthrough innovation. Innovation on this scale requires a different type of strategic planning. It requires an approach that is insightful, resourceful and forward-looking, and one that balances objective analysis with subjective discovery. DO NoT PREDICT THE FUTURE, INVENT IT In order for a company to let go of its overdependence on objective historical data, it must become adept at capturing and interpreting subjective data (customer surveys, competitor strategy, trends, gaps, etcetera). This type of subjective data scares the typical business owner. They would rather make decisions based on spreadsheets than a crystal ball, and that is understandable. Fortunately, we do not have to rely on a crystal ball. There are many techniques that exist today for gathering and analysing subjective, current data. Trendspotting, scenario planning, strategic foresight, technology roadmaps, data mining, voice of the customer, crowdsourcing, open innovation, outcome expectations – all these techniques help you uncover valuable data that you can use to plan an innovation strategy that leads to competitive new products, services and even business models. It is a changing and complicated world. And the pace is getting faster. Businesses must innovate or die, and in order to do this we must act quicker, deliberate less, take risks, let go of the old, embrace the new, and be more creative. Then we will not have to worry about predicting the future, we will be inventing it.

Kamal Hassan is the president and chief executive officer of Innovation 360 TheEDGE

KNOWLEDGE & EXPERTISE

HOW-TO GUIDE

Coachin breaking your secret code

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HOW-TO GUIDE

ng:

“C

Lonnie Croal presents a strong case for professional coaching and questions whether it is a viable contributor to entrepreneurial success.

oach?” you may be asking. To many, coaches are those competitive sportsmen who settle scores against opposing teams on the field, and they are rarely, if ever, to be found in a boardroom. Yet the word ‘coach’ has taken on a new meaning in the business world, and for many, success would not have been possible without the insight provided by a seasoned entrepreneurial coach. The invaluable support gleaned from According to entrepreneurial coaches. the strategies that entrepreneurs seek almost always rest within themselves, based on personal experiences and lessons learned from business, family, friends and the media. Every entrepreneur has a ‘secret code’, their own human capital. Entrepreneurial coaches help reframe reality and produce strategies that have their foundation in the entrepreneur’s mind. Based on what we know about current global trends and that the number of emerging businesses that implode within their first months, motivation and mental health is a significant factor in any businessperson’s success. Entrepreneurs that have made use of coaching know that it works, helping them to realise goals and tame the doubt and sleepless nights that come when pondering reality versus the possibilities of business. Business has certainly changed since our fathers’ days. Before, hard work, trusting no one and playing your cards close to your chest, and sealing deals on a handshake characterised the entrepreneur’s world, and helped launch new ventures. Today the conversation is, ‘What is the best method to reach success and how can I use a coach to help me realise my success?’. The power of questions The world of coaching has progressed in the last generation. Professional, performance-oriented, executive coaching has matured in its 15 years of formal existence with the International Coach Federation. It is a career choice for the highly educated, well-read, and experienced – it is for those who do not hold all the answers, but rather ask all the right questions.

Predicting the future is, at best, haphazard, likely to bring with it an array of potential collateral damage. Changes in our world happen moment by moment and the modern business world can be an unforgiving reality. The entrepreneurial coach pitches powerful questions that the entrepreneur ponders and formulates responses to, based on personal history, passions, commitment, prejudices, and the ‘gaps’ in how he or she views the world. Such questioning unlocks an entrepreneur’s ‘secret code’, bringing invaluable information to the surface. With much more at stake than merely a conversation, such skilled coaching allows one to see potential in their every response. Coaching a different ballgame Coaches are necessary because business – and our world – has changed. Information and services are instantly accessible, and no longer does it pay to be the smartest person in the room. An example of why coaching is needed can be found in my experience with Nathan. Raised in a family of entrepreneurs, Nathan took a keen interest in sports and business at an early age, and eventually applied what he knew in sports to a new business venture. Yet he did not enjoy his relationship with his business partners, who often offered him unsolicited advice, secondguessed him, and put him in a position of conflict avoidance. At the time, Nathan’s own sports coach was the powerhouse controlling the play on the football field through a series of communication techniques. Players and the team captain were under the direct control of this coach. In fact, if you have ever been professionally coached, ask yourself: ‘Who has all the control of the play of the ball? Was there room for my previous experiences and education to innovate ideas on the field?’ If your answer is so much as a ‘Well, maybe...’, then your coach held your growth at bay. Off the football field, this was how Nathan felt about his business partners. Unlike sports coaches, the entrepreneurial TheEDGE

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HOW-TO GUIDE

coach does not provide advice, hold any power or dictate the ‘play’ in your career or business. The entrepreneur holds all of the power, and is supported by the coach. Yet the two types of coaches do share one commonality: if your coach – football or entrepreneurial – is getting less sleep than you are, he should be quickly fired. In this kind of relationship, the entrepreneur cannot afford a coach that takes on a paternal or maternal role. There is no room for therapy or counselling in such a relationship either. The coach’s role is to facilitate the success of the entrepreneur through powerful questioning and ‘hard fun’, paying close attention to motivation factors and even body language. Accompanying this, as previously mentioned, is the coach’s ability to provide all the right questions rather than the answers. Good coaches have the amazing ability to reframe context, unlock motivations, and reflect back to the entrepreneur. Before beginning his work with an entrepreneurial coach, Nathan had a series of mentoring relationships. The advice he obtained from these mentors sometimes worked, but he often felt that he was missing the value of the lesson. Although well intended on the part of his mentors, mentoring itself was not enough. Nathan often found himself in ‘here we go again’ cycles, unable to make effective longterm change, which ultimately altered the way he thought of himself as an entrepreneur in a negative way. Mentorship can certainly be valuable for emerging businesspeople, but there is a clear difference between a mentor and a coach. A mentor will provide advice from the perspective of a variety of stories with a ‘This is how I did it...you may want to give it a try’ flavour. Coaching, meanwhile, is focused on generating ideas, strategising a plan and helping the entrepreneur hold him- or herself accountable to those affirmations. The challenge with advice being doled out by a mentor is that the information is often outdated and lacks creativity, and does not acknowledge that the business path has likely shifted – or changed completely – in our rapidly moving world.

TheEDGE

Based on current global trends and the number of emerging businesses that implode within their first months, motivation and mental health is a significant factor in success. Critically, when Nathan was being mentored, he did not understand that doing the business was not the same as being the business. A frustrated Nathan was asked by a mentor if he had considerd the services of a coach. He then discovered that it is available in every region around the globe. Taking the first step in searching for a good coach was the beginning of Nathan achieving meaningful long-term personal and professional growth. Having empowered himself through the new insights reached in his coaching relationship, Nathan has an opportunity to reframe and morph his personal and entrepreneurial secret code. Who needs coaching? Nathan was initially concerned that coaching was for those who were at the end of their professional rope, for those were seen as ‘subpar’ entrepreneurs. What he in fact soon discovered was that the opposite is true and that entrepreneurial coaching is designed for winners. Coaching is for those who want to make a significant contribution, achieve success, and to be able to do so in a trusting relationship – coaching is not individuals who have ‘reached rock bottom.’ As this illustrates, one of the more challenging realities for a entrepreneurial coach is separating incorrect perceptions of the profession from that of the reality. Entrepreneurial coaching does not follow a hear-see-do model and nor is it merely a conversation, similar to that of therapy.

Many businesspeople – especially entrepreneurs – face self-doubt and sometimes even self-pity. They may spend many a sleepless night stewing over a potentially great idea. Coaching is the process of building action into those thoughts and ideas. Active listening, asking powerful questions, reframing, and determining motivating factors are applied to help the entrepreneur reach their own ‘Ah ha!’ moments. The core of this relationship is trust, complete confidentiality, and a strong sense that the coach is present in the moment. They are there, working for you to help make sense of the clutter, and reconfiguring that ‘secret code’ within you that you may have deemed irrelevant, or not even considered at all. A good coach will build a safe space with empathy and compassion, enabling you to answer tough questions. As Nathan discovered, while the process was challenging, rather than simply being handed the playbook, he was able to come up with his own action plan for success. Now imagine your entrepreneurial coach standing in your corner, giving you every benefit, as you break the secret code to realising your full potential. Lonnie Croal is a faculty member and executive coach at the College of the North Atlantic-Qatar.

KNOWLEDGE & EXPERTISE

LEGAL INSIGHT

takes

aim at money laundering Qatar has updated its anti-money laundering and counter-terrorism financing legislation. David Salt and Emma Higham investigate.

KNOWLEDGE & EXPERTISE

LEGAL INSIGHT

lthough itself not a full member of the Financial Action Task Force (FATF), Qatar, as an individual member country of the Gulf Cooperation Council (GCC) – one of FATF’s two regional members (the other being the European Commission) – is committed to implementing the anti-money laundering and counter-terrorist financing measures agreed to by the thirty-six FATF members. FATF’s 40 recommendations and nine special recommendations, together with their interpretative notes, provide the international standards for combating money laundering and terrorist financing. As part of this commitment Qatar’s new Law on Combating Money Laundering and the Financing of Terrorism, Law No.(4) of 2010, became effective on March 18, 2010, repealing Law No.(28) of 2002, as amended by Decree (Law No.(21) of 2003). The new law augments Qatar’s existing legal framework for combating money laundering and terrorist financing which includes the Penal Code (Law No.(11) of 2004 as amended), the Code of Criminal Procedure (Law No.(23) of 2004 as amended by Law No.(24) of 2009) and the Customs Law (Law No.(40) of 2002), together with the various rules and regulations issued from time to time by government agencies, including the Qatar Central Bank, the Qatar Exchange and Qatar Financial Centre. Here we seek to explain, and put into context, some of the terminology of the new law, before providing an overview of its provisions. Terminology The new law defines Financial Institutions, Non-profit Organisations, Politically Exposed Persons, Shell Banks, Designated Non-Financial Businesses and Professionals (DNFBPs), Beneficial Owner and Legal Person widely, to include almost every person and/or entity with which a customer may have a business relationship. Funds and Money Laundering are also widely defined as assets and property of any kind and the conversion or transfer, concealment or disguise, or, possession, acquisition or use of such funds, respectively.

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A terrorist act is defined as any act which constitutes an offence according to any one of 10 listed agreements including the Convention for the Suppression of Unlawful Seizure of Aircraft (1970), the International Convention for the Suppression of Terrorist Bombings (1997) and the Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms located on the Continental Shelf (1988); a Terrorist, as any person undertaking one of these acts; and a Terrorist Organisation, as a group of terrorists. The new law provides for a Committee, the National Anti-Money Laundering and Terrorism Financing Committee; the Unit, the Financial Information Unit; a Competent Authority, being every administrative or law enforcement authority concerned with combating money laundering and the financing of terrorism; and a Supervisory Authority, being a Competent Authority with licensing responsibilities for, or responsibilities to ensure the compliance of, Financial Institutions, DNFBP’s and Nonprofit Organisations in relation to anti-money laundering and non-terrorism compliance. Legal Provisions The new law prohibits the laundering of any funds generated from felonies, or series crimes; crimes committed under international conventions to which Qatar is a party; and/ or swindling, illicit trafficking in narcotic drugs and psychotropic substances, fraud, forgery, extortion, theft, trafficking in stolen and other goods, counterfeiting and piracy of products, smuggling, sexual exploitation, environmental crime, tax evasion, sale and trade in archaeological movables, market manipulation and insider dealing. Also prohibited is participation in money laundering by association, aiding, abetting, facilitating, counselling in, cooperation, contribution, conspiracy to commit or attempting to commit. Terrorist acts and any association with the same are likewise prohibited. Also prohibited are acts which may constitute money laundering and terrorist financing, including intentionally failing to identify a customer or verify a customer’s identity, together with any such offences committed outside Qatar which

constitute offences in the jurisdiction in which they were committed. The new law sets out the provisions and powers of the Committee formed at the Qatar Central Bank under the presidency of the bank’s Deputy Governor with fourteen members drawn from the main Qatar government agencies. It also sets out the provisions and powers of the Unit to which the new law gives the authority to obtain from any entity or person information it deems useful to achieve its function, subject to the professional obligations and limits stipulated in the Advocacy Law (Law No.(23) of 2006 as may be amended). The Unit is permitted to share its information with foreign counterpart agencies that are subject to similar confidentiality provisions in circumstances of reciprocity or where bilateral or international treaties apply. Specific disclosure requirements to custom’s officers on entry and exit from Qatar are also included. The new law provides that financial institutions, DNFBPs and non-profit organisations, and the personnel of each, shall report any suspicious financial transactions, or attempts to perform the same, promptly to the Unit where they suspect, or have reasonable grounds to suspect, that the transactions include funds linked to criminal or terrorist activity. However a material caveat to this provision is that independent legal professionals have no obligation to report such transactions where they receive the information from a client when advising or representing that client, including information gathered before, during and/or after judicial proceedings. It should be noted that this caveat does not appear in other international antimoney laundering and combating terrorism legislation or in the Qatar Financial Centre Regulations, and so it will be very important for legal professionals to determine what legislation and regulations apply to them before seeking to avail themselves of the new law’s non-disclosure protection. Neither customers nor third parties should be informed that information has been provided to the Unit.

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LEGAL INSIGHT

terrorism is not suspected. It also provides for financial institutions, DNFBPs and non-profit organisations to reply on the introduction of customers by other financial institutions, DNFBPs and non-profit organisations, subject of course to satisfactory due diligence in relation to the introducer’s systems. All systems which are developed and implemented in Qatar should also be ‘mirrored’ as a minimum in the systems of any associated foreign investor.

The Governor of the Qatar Central Bank has the right to freeze any suspected funds for a period of up to 10 days. The investigation of reported transactions may be undertaken by the Unit, the Public Prosecutor’s Office (PPO) and/or authorised advocates. The new law gives the PPO the right to seize associated public and private communications and documents for a period not exceeding ninety days, unless such period is extended by the order of a competent court. The Governor of the Qatar Central Bank has the right to freeze any suspected funds for a period not exceeding 10 days unless extended by the PPO for a period not exceeding three months. The PPO must be informed of the initial freezing order within three days of it being issued to ensure its validity.

The new law details the preventative measures which financial institutions, DNFBPs and non-profit organisations should put in place to combat money laundering and the financing of terrorism, being in summary, the development and implementation of appropriate systems to ensure, to the extent possible, that the identity of a customer is initially established through effective due diligence and updated regularly. Where this is not possible, then a business relationship should not be established and/or maintained. The new law does provide for a relaxation of due diligence in circumstances where money laundering and the financing of

Penalties The main penalties provided for by the new law include: for committing, or attempting to commit, the financing of terrorism, imprisonment for a term not exceeding ten years and a fine not exceeding QR2 million; for money laundering, imprisonment for a term not exceeding seven years and a fine not exceeding QR2 million; and for various lesser offences referred to in the new law, including, not maintaining proper systems and informing a customer or third party that information has been passed to the Unit, imprisonment for a term not exceeding three years and a fine not exceeding QR500,000. Penalties may be doubled where the crimes are committed by more than one person or are associated with other crimes. A fine of not less than QR5 million, or the equivalent in value to the proceeds of the criminal acts committed, may be issued to any individual who benefits from those crimes, or any individual who holds a senior or controlling position within a legal entity which benefits. The penalties provided for in the new law are in addition to any other penalties which may be provided for in any other law. All Qatari Laws (save for those issued by, for example, the Qatar Financial Centre to regulate its own business) are issued in Arabic and there are no official translations. Therefore for the purposes of drafting this article we have used our own translation and interpreted the same in the context of Qatari regulation and current market practice. If you would like further information please contact David Salt (david.salt@clydeco. com.qa) or Emma Higham (emma.higham@ clydeco.com.qa). TheEDGE

KNOWLEDGE & EXPERTISE

BRAND BEAT

Six ways to simplify your brand message through visual communication By Charlotte Stubbs

KNOWLEDGE & EXPERTISE

BRAND BEAT

t the heart of all successful communication and design is the process of simplifying complex information, data, concepts and offers, into an accessible message that people can interpret, engage with, and understand. As the complexity and amount of information we are exposed to on a daily basis continues to increase, there has never been a time when ‘simplicity’ has had a greater importance, where clear, effective communication has been such a recipe for success. The process of ‘simplification’ is an important tool in any business. Simplification within marketing communications is of critical importance to the success of your marketing campaign, design or promotion to your targeted audience. Areas to consider Here we present six areas where simplicity can be utilised to great advantage. By working alongside creative companies to develop some of these elements, you should begin to see the benefit that simplification can bring to your communicaion efforts, both internally and externally. 1. Visual The adage, ‘A picture is worth a thousand words’, is accurate. The human brain processes and reacts to images at a far greater speed than it does to a paragraph of text. Utilising images, a visual language and a set style for your business can go a long way in communicating the values, outlook and ethos of the business to potential and existing customers. A high impact, ‘on brand’ image – either on the front of a corporate brochure, website, or as part of an advertising campaign – can stop people in their tracks and help them to engage with it on a deeper level. 2. Copy Your brand communicates both visually and non-visually through services and experiences. If the right person does not hear your communication or does not understand your message, then you have failed in your objective. A common mistake made in today’s information-cluttered world is that a

message is often too long or complicated to be understood or even considered. All great messages are simple: ‘Just Do It’ (Nike), ‘Think Different’ (Apple), ‘Change’ (Barack Obama presidential campaign). Effective messages remove all secondary information and succeed in targeting the focus to a single concept. Take, for example, the humble ice cream. Who has not bought a tub of Ben & Jerry’s and not checked what ingredients have been included? The clever and humorous way that the ingredients are listed conveys the brand personality, and enhances the brand experience for people. Or, consider ‘Expect Amazing’ – one line that summed up the anticipation and hopes of a nation in the bid to host the 2022 World Cup. Develop a simple tone of voice to give your brand continuity and recognition across all brand touchpoints, and create taglines and calls to action that will inspire, drive sales and add value. 3. Design Good design should by definition seek to create a hierarchy of information that makes the output, or message, accessible to the target audience. It is important that you ask yourself whether your design presents information to your target audience in a way that is easily understood, not confusing or misleading, and that encourages them to find out more about what is being offered, or to make contact with your organisation. This is what good design accomplishes for a business. When you have a complicated product, service or business, strong design is even more essential. Information graphics, or infographics, is a concept that has grown in popularity recently. Infographics are graphic visual representations of information, data or knowledge and can be very effective to simplify a solution or a process. Use infographics when you have a large amount of complex or numerical data that you need to display in an attractive way, and in a format that people can easily understand and digest. Financial tables and graphs used within annual reports should be designed using infographics to ensure the information presented will be understood by the readers. TheEDGE

KNOWLEDGE & EXPERTISE

BRAND BEAT

A great example of infographics can be found at airports, where millions of people from different cultures and speaking different languages all require timely and essential information. In this instance, infographics uses icons and graphics to inform people in a way that does not rely on language comprehension – infographics quickly and efficiently tells them where to check in, where to collect their luggage and which route to take to get to their gate. Says Lynne Drury of Creative Action Design, “Infographics is the term coined by designers to simplify complex information into a visual illustration. A powerful educational tool, infographics highlights the primary information to demonstrate a range of events, products, services or processes with both clarity and visual appeal.” 4. Advertising Advertising relies heavily on ensuring that all campaigns, print or digital, are produced with clarity, allowing the greatest spectrum of audience to engage with the concept and your brand. In the 1950s, car manufacturer Volkswagen ran a print advertisement that changed the very nature of advertising. Still ranked by Ad Age magazine as the best advertising campaign of the 20th century, the print campaign featured a small visual of the Volkswagen Beetle car surrounded by white space, with the tagline, ‘Think Small’. The campaign employed both copy and visual simplicity to emphasise the minimalism of the vehicle. American sales rocketed after the launch of the new Volkswagen and the advertising campaign highlighted a new direction in product persuasion. How could this benefit your business? For your business to connect with your target audience you need to be understood by that audience. Communication is key, but not all communication is clear and understandable. Your communication must eliminate secondary information and focus a direct message, one that minimises irrelevant detail – but as Van Gogh once said, “How difficult it is to be simple”.

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Infographics can be found at airports, where millions of people speaking different languages all require essential information. With a competitive and cluttered commercial marketplace, it is often the simple messages that grab our attention. You need not look far to find examples of successful companies that have utilised the laws of simplicity – Apple has become synonymous with digital innovation, its brand message clearly stated as ‘Think Different’. The brand’s ability to innovate has elevated Apple beyond computer manufacturing to becoming an online

music empire (iTunes), product manufacturer (iPod) and mobile developer (iPhone). Think about your business’s communication. Are your messages and brand values simple and easy to comprehend? Do you utilise design tools such as infographics, and if not, could these be implemented within your marketing material to better communicate your product, service or marketing message?

Business Insight QFC COMMERCIAL COURT OPENS (P.68)

The Qatar Financial Centre (QFC) opened its Civil and Commercial Court in Doha in December 2010, a first for Qatar. QFC chief executive officer (CEO) Robert Musgrove reveals the aims, impact and aspirations of this court exclusively with the TheEDGE’s Miles Masterson.

Qatar Prime Minister HE Sheikh Hamad bin Jassim bin Jaber Al Thani strikes the ceremonial silver gavel in December 2010, to officially open the Qatar Financial Centre Commercial and Civil Court, as The Right Honourable Lord Woolf, President of the Court, looks on. Photo courtesy Adrian Haddad/Forbes Associates.

ALSO IN THIS SECTION: •

Qatar SME Sector: Capitas Group International CEO, Naveed Siddique, discusses his company’s involvement in the development of Enterprise Qatar and the country’s small medium enterprise and entrepreneurial sector in general. (P.72).

•

Plastic Surgery: Leading German surgeon and secretary general of the International Confederation for Plastic Reconstructive and Aesthetic Surgery, Marita EisenmannKlein, discusses the rise of cosmetic plastic surgery in the Middle East. (P.75). TheEDGE

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Qatar Commercial Court

Qatar Financial Centre opens new Civil and Commercial Court The Qatar Financial Centre (QFC) Civil and Commercial Court has been up and running for the past few months. But, following the opening of its new courtroom at QFC Tower 2 in Doha, presided over by Qatar’s prime minister, HE Sheikh Hamad bin Jassim bin Jaber Al Thani, the QFC Civil and Commercial Court, Tribunal and Alternative Dispute Resolution (ADR) centre has become fully operational, offering an international standard legal infrastructure for Qatar for the first time in the country’s history. Miles Masterson met with QFC chief executive officer (CEO), Robert Musgrove, to find out more. The court is brainchild of its patron Qatar’s Emir HH Sheikh Hamad bin Khalifa Al Thani, but what is the history behind the emergence of this court and what does it entail? The court had a fairly long gestation. The need for the court emerged in 2005 when QFC started to come on stream and, since then, the thinking on the purpose of the court has evolved quite considerably. Initially it was part of Qatar’s aggressive diversity programme to develop the international financial business centre and to have a fully independent world-class international commercial court, to protect the interests of foreign investors in the country… and to encourage confidence in them investing here. Any legal dispute that involves a QFCregistered entity has recourse to this court, as well as to a tribunal appeal that hears the regulatory decisions. But as thinking evolved, the aspirations of the court grew and moved into a second phase, which was that any QFC body should be able to use the court to resolve disputes with bodies outside the QFC. And again, as thinking evolved – the Emir and the Prime Minister are visionaries in this respect – the ultimate jurisdiction, which is where we believe we have landed now, is that if we are to develop a truly world leading international commercial court, it should be available to the world. Our jurisdiction provides that any body – it could be a Somali company working with

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a New Zealand company to build a bridge in Kenya – can write into their dispute resolution clauses the QFC court as their international court of choice. So there are really different levels or components to the court that have evolved just beyond disputes within the QFC. In a QFC-to-QFC dispute, or in a QFC dispute with a regulator, there is a law that makes it mandatory to use our jurisdiction. In the wider aspiration it is an opt-in, and this court may be used if parties consent to use it, so we have a much wider jurisdiction than our colleagues in the Gulf, in that we have a truly international jurisdiction. In turn, the government’s expectation is that we develop a world leading international commercial court. Would this be in competition with similar courts around the world? You could say that. It is certainly an argument, but we have a very traditional view of justice as being essential to protect and promote the rights of citizens and businesses within organisations and justice as a societal safeguard. But actually, I think in my view, the reality is that in terms of commercial litigation, it is a market and there are commercial courts around the world…all offering international commercial companies alternatives to resolve their disputes, and this is certainly a territory we are in. I do not think we are in a position where we are going to compete with the large bodies in London and New York or Paris, but there are definitely many international commercial companies in this part of the world, and looking east, who culturally might prefer to resolve their disputes in Qatar. On the international level, how binding would resolutions or decisions made by this court be? Jurisdiction and enforcement are two critical issues in attracting business. No law firm is going to provide the client to write our court or any other court into a dispute resolution clause if they do not think those decisions are going to enforceable. We will be making it very clear and we will be issuing guidelines on enforceability. Importantly, this is a Qatari court and the enforcement mechanism is through Qatari court, so the decisions go out in the name of the Emir and they are enforceable as a judgment of the national Qatari court. We are shortly to appoint a Qatari judge to be our enforcement judge, so we are a legitimate court of law, we are a Qatari court and the Qatari enforcement

“Initially the commercial court was part of Qatar’s aggressive diversity programme to have a fully independent world-class international commercial court, to encourage and protect the interests of foreign investors in the country. But as thinking evolved, the court moved into a second phase, which was that any QFC body should be able to use the court to resolve disputes with bodies outside the QFC.” mechanism is the vehicle we use. Qatar is also a signatory in the New York Convention, which is an enforcement protocol for arbitration decisions, so we also have the binding nature of that. This also aligns well with the Emir’s vision and Qatar’s positioning internationally as a political mediator? Yes. [The court’s] placement internationally in the wider jurisdiction is certainly in terms of marketing it as part of the Qatar brand. There are a number of unique features in this court. One, it is a new build. Every other court around the world has a long-standing legacy. It will be very reliable, [though] I do not think we are the cheapest court in the world. We do not charge fees to use it, but…we are going to promote it as a very cost effective court. We are also developing information technology (IT) case management to ensure that, where we can resolve elements of disputes virtually, we will do so. A lot of our judges are international so we will only bring them in when it is appropriate and cost effective to do so. The other thing we are offering is…a genuine multi-door courtroom; the first in the world that will offer not only full international common court services, but also we are developing an alternative dispute resolution (ADR) centre that will provide mediation and arbitration. It is very popular in commercial circles to resolve your disputes without recourse to a court of law. Ultimately there has to be a court of law and cases do go to courts of law for public adjudication. But many companies like to resolve their disputes in private, because they often have to continue their contractual relationship afterwards, and arbitration, which is a binding adjudication (but not court-based), and mediation are very popular means. What we are doing is bringing all of them together and offering anybody coming to the court a choice of the best and most efficient way to resolve their dispute.

So they can do as much as they can to stay out of the courts and making their case public? Absolutely and that is offered as a standalone. We may say, think about mediation, this is a better way, it is quicker, it is cheaper, it is consensual and if you are going to have to work together, this might be the best option. And indeed it is very Islamic, it is very Arabic, consensual dispute resolution is far more culturally ingrained here than court-based resolution. On the domestic front, it is conceivable that an international company based in Qatar might come into dispute with a Qatari company, and specifically an entity that is owned or part-owned by the government. How independent is this court going to be in such cases? It is incredibly important to the Qatari government. It is inevitably going to be a complex issue if the court hears cases that involve the Qatari royal family, because they are involved in lots of elements in Qatar. But I think that the Qatari government has made it very clear, by enshrining it in legislation, that this is an independent court. All the members of the court are independent international judges and there is a business set-up that means that we are treated as an independent entity. We are not beholden to the government and I think that Qatar has taken a very brave step in emphasising the independence. It has not been tested yet in the cases that have come before the court, [but] every indication that we have had in dealing with the Qatari government has preserved and promoted that as a strong point. It is absolutely essential for the confidence of international investors. That is very clearly recognised. What kind of law is the court’s legal system based on? The modern systems have been imported from the West. English law is a common law TheEDGE

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“I do not think we are in a position where we are going to compete with the large bodies in London and New York or Paris, but there are definitely many international commercial companies in this part of the world, and looking east, who culturally might prefer to resolve their disputes in Qatar.” system and the French law is a codified law system. The court itself uses international common law; it does not use [just French or] British kind of law. It uses any commercial common law cited, so it could be from common law in South Africa, Australia, Canada, the United States, etcetera; it would take from any leading international commercial common laws, so it in itself, it is not strait-jacketed. It can be very wide and imaginative and these are the commercial centres. At the same time, we can hear codified law. It will use the law whatever law party is conferred upon it. In QFC cases it uses QFC law, which is common law. It could hear Swiss law if the parties wish it to do so and the court will sit for the codified law…if it is asked to specify that law, but it is in principle an international common law court. Could it depend on the law of the home country of the business too? I think it depends on the nature of the dispute. If it is between QFC entities, the dispute will be based on QFC law and dealt within common law court. [But] there is no reason why any other recognised authoritative law cannot be used if parties would like our court to use it. We could hear a case with a Swiss jurisdiction, Swiss law; and certainly the actual leaning is towards an international common law and the emphasis is on the fact that internationally, it brings in the world leading precedent in commercial legal disputes. What are the kinds of disputes you have been seeing in the few cases that the court has been or is processing or that it is likely to see in the future? Certainly the areas of business that we do anticipate mirror the areas of business that Qatar is promoting, such as banking, insurance, re-insurance, asset management, oil and gas and construction. You cannot underestimate what 2022 means in terms of Qatar in the world and so we anticipate construction disputes. We have heard nine cases in the period of our ‘soft

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launch’. We have had the law to deliver, though we have not had the actual court facilities to do it and there have been, as you would expect, some teething cases. There are nine cases based on two major issues, but principally a banking collapse and the attendant disputes…there was the insolvency of the bank and there were disputes between officers at the bank. What would be the kinds of disputes you might see in the construction industry? Any dispute related to construction…the whole plethora of any disputes involving not meeting deadlines, failure to perform, nonpayment, quality of service or product provided, and mostly contractual related disputes, structural issues…anything that can go wrong between contractors and sub-contractors in the building of a tower block or a stadium is our potential jurisdiction. In terms of jurisdiction in terms of the types of cases you mentioned, what could potential outcomes and enforcements be? There was an end point in that case in terms of the bank being made insolvent, but there are attendant issues. In terms of the judgments, you get the judgment you would expect from an international commercial court. Everything is geared towards resolving the dispute as effectively as possible and they are decisions of the court…we are appointing a Qatari judge, as we are Qatari court, to deal with enforcements through the Qatari national system. Through their international convention, the judgments are internationally enforceable, but also nationally you are talking about QFC on QFC dispute. If there is a need for enforcement, then it will go to the nominated judge who is seconded from the Qatari court to make enforcement decisions, and the Qatari jurisdiction has, as far as I can understand it, everything that a common law jurisdiction has in terms of enforcement…these decisions are enforceable and there will be a mechanism to do it.

What about jail time, in cases of severe fraud or embezzlement perhaps? It is a very interesting point, one we have to deal with by way of a protocol, because the Qatari enforcement system has wider powers than Western enforcements and that does include imprisonment for debt. There are two issues here, one of contempt…where the court can actually put people in contempt, but it does have wider enforcement powers and I think that as part of the appointment of the Qatari enforcement judge, we will be working on a very clear protocol, on the parameters of enforcement, that anybody coming to the court can anticipate. That will be very clearly laid down, because I think that before international businesses sign dispute resolution contracts, naming our international commercial court, they will be want to sure of two things. One, that they accept the jurisdiction and we have that jurisdiction and two, that they understand what enforcement is and what enforcement means. So it is an area we will make absolutely crystal clear. Will there be access for QFC companies to information about how the court works and what their options are? There will be material on procedural processes and materials aimed at law firms and businesses to explain how the court works and the opportunities at the court. We [are] developing better legal education and in terms of the court, we have already commenced awareness programmes and mediation. In fact we are training mediators aimed at Qatari and Gulf lawyers and people associated with the law to try and build an established panel of Qatari and Arabic mediators. Again, that is awareness as well. There will [also] be a big campaign of mediation and working with the law schools and an international programme of legal exchanges. Another interesting aspect you mentioned earlier was the virtual court, which has taken guidance from Australian and Canadian courts and others that are at the forefront of this trend? This court is a modern court for modern business needs and we are very much aware of the efficiencies and the effectiveness of court processes that are now required in large commercial clients making their choices, and lawyers advising them on where to resolve disputes. This court also relies on the international judiciary – we have one Qatari judge and the rest are all international – so we have to fly judges in at a considerable expense and put them up to hear cases. At the moment there is great enthusiasm,

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them to be flown all around the world. We intend to minimise disruption for CEOs and for the directors. But having said that we are 20 minutes from the airport and if we do have to bring in people directly, there is a good infrastructure in Qatar to get them in and out as quickly as possible…but obviously it is a matter between the judges and the lawyers, whether it is in the interest of justice that they need to be physically present.

“We are shortly to appoint a Qatari judge to be our enforcement judge. This is a Qatari court and the enforcement mechanism is through Qatari court, so the decisions go out in the name of the Emir and they are enforceable as a judgment of the national Qatari court.” because the court is new and interesting, but if you start to have two-month trials in the middle of Ramadan the appeal starts to wear out, I would suggest. So we are looking at using the concept of virtual court as much as possible. This is a part of our being a case-managed court. The procedural judges will determine the best and most efficient and cost effective way of attaining justice and we very much anticipate that this will be backed up by state-of-the-art IT. It will mean that the judges only physically convene for hearings where it is essential for them to do so…and whether or not there has to be trial or element of trial that they agree with the parties, there has to be a physical presence. We use world leading IT document management and technology to make the court as virtual as possible,

so that hearings may take place all around the world simultaneously. We already have examples where evidence has been taken from other countries and there have been judges in Doha, lawyers in London and people giving evidence from around the world. So you could have witnesses testify from anywhere? One of the things that we have going for us, is that the banking CEO, for example, is paid a lot of money to make banking decisions, not sit around a courtroom waiting to be heard…spending weeks waiting in hotels to do so. In terms of the case management and use of IT, we very much hope to exploit that to offer that we minimise the need for

What are the future aspirations of the court? It is very much our hope and aspiration to become a world leading brand. For Qatar and for the world, we are offering a product that…will be able to be flexible and fairly fast moving. Because we are a start-up, we have got the advantage of learning from the world. We have got judges from all over the world. We have got the leading jurisdictions. We have got all that experience, but we have no legacy. We are starting and we can evolve the court and we do not have to go in with a fire hose, we can build from scratch around the needs of the client base. I have already spent considerable time with international law firms in London [and] New York…talking to international law firms about how they would like to us evolve. I want to them buy in to the technology, I want to know the platforms that they use, and what they would actually want from a state-of-the-art commercial court. Because we are a blank sheet of paper, we can design around the needs of those that are going to be using the court, rather than just design a system and just demand that everybody use it. You mentioned 2022 and naturally the two effects this court will have on improving business dealings in Qatar and thus making it more attractive, as you said, to international investors - even more so now Qatar have won the FIFA bid? This court has a fundamental role in the development of business in Qatar and at the moment we are focusing on 2022 as being an amazing achievement for the state, one that will bring incredible amounts of business. I think that having a genuinely independent world leading international court at the disposal of businesses that come into Qatar, building stadiums or putting in the roads or bridges or the air conditioning or all those kinds of businesses…there will be thousands of them. It is fundamental to the success. It will underpin the confidence in international bodies coming in to Qatar, knowing that they have world leading commercial court, if there is any kind of dispute. TheEDGE

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Qatar SME Sector

Capitas Group International signs up with Enterprise Qatar In late 2010, Capitas Group International (CGI), a business management and advisory company based in Jeddah in the Kingdom of Saudi Arabia (KSA) was awarded an exclusive contract to assist in the establishment of Enterprise Qatar (EQ), the country’s nascent small and medium enterprise (SME) business authority. CGI is a joint venture between the KSA-based Islamic Corporation for the Development of the Private Sector (ICD) – a member of the Islamic Development Bank (IDB) – and Capitas Group LLC, a an American Shari’ah-compliant holding company. CGI chief executive officer (CEO), Naveed Siddiqui, offered Miles Masterson his perspective on the local SME landscape. How did the arrangement between CGI and EQ come about? EQ was engaged in a thorough process to recruit experts to build a national SME authority. What differentiated us from the other firms was our practical build-operate-transfer (BOT) approach, whereby we allocate experienced practitioners and [help to] build the operation. The other important factor was to bring in international expertise but localise it to the Qatari social sentiment and expatriates that live here. To understand you just can’t have a cookie cutter approach. Comprehensively, that is what we deliver. What are the main obstacles facing entrepreneurs and SMEs in Qatar and how do these compare to the rest of the region? In emerging markets SMEs generally are concerned about access to finance and capital as they launch or grow. The dilemma is that SMEs [and entrepreneurs] in emerging markets generally look to friends and family for financing. But they soon realise that is not enough. The transition to actually use banks and financial institutions is tough for them, because of what we believe is a lack of an education process on how to use banks. They are not trained to ask the important questions - What do banks look for? How do you qualify to become a bank borrower? Do you have the proper skill sets on board that the banks will

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look for? Do you have the proper accounting in place that the banks will utilise to assess the risk? Do you have the right access to collateral that the banks need, and is there a regulatory and government framework to allow banks access to that collateral? By default then, this disconnect I described here causes banks to avoid targeting SMEs because they (the banks) assume that the SMEs are not mature enough to access financing. Organisations like EQ are developed to facilitate an environment that will foster both expansion and diversification of industry by addressing issues such as policy change, packaged services, training and development of entrepreneurs, and ease of access to finance. Regionally, many SMEs are owned by nationals but managed by expatriates. How does this compare in Qatar to the rest of the Gulf? It is no different in Qatar. The main question is how do you create an environment where expatriates are looked at as true coowners of the business, and the sponsors are connected to the business as real investors? For example who will give personal guarantees and be responsible for the final recourse in financing situations? What the government needs to answer is how do you develop that environment from a policy perspective? How do you create that confidence and change of mentality among sponsors to make them managing investors rather than silent partners or rent collectors? And how do you get the expatriates then in turn to involve their investors in corporate governance, legal and daily accountability frameworks? So an investor’s mentality has to be inculcated in local sponsors. Banks will then see these businesses as a properly managed entity, from an SME perspective. More communication between both parties, and certainly more involvement of the local sponsor, would also logically mean the businesses would perform better? It has been a culture of disengaged parties in SMEs. The expatriate runs the business today to his own whims and profitability goals, the sponsors generally feel very comfortable, because they are collecting the rent that they had agreed to, and so growth is limited. This is where customisation and localisation is important. The question is: is the expatriate really looking to build a business, or is it an easy way for him to buy a job for as long as he can

“Organisations like Enterprise Qatar are developed to facilitate an environment that will foster both expansion and diversification of industry by addressing issues such as policy change, packaged services, training and development of entrepreneurs and ease of access to finance.” legally stay in Qatar? What needs to be fostered is an environment of proper governance and trust, so that people who build SMEs have a sense of belonging, and sponsors actually get a good sense of ownership. Today there is a lack of that real sense of ownership, which translates into a lack of sense of belonging on the behalf of the expatriate to Qatar. How can this transformation be facilitated? Instead of coming up with the solution and coming up with programmes whereby all Qataris are going to be enticed with incentives to go run their own businesses, the question to be asked is do Qataris want to run their own small businesses? The transition should be to train them to become better investors, to learn how to create accountability in the business contracts, to be more involved in businesses by having an investormanager mentality, rather than requiring the expatriate to grow their businesses and be accountable. In turn, what that will do is create an environment that will enable more trust between expatriates and local sponsors. Our advice has always been, don’t force someone to do something they haven’t done and expect immediate results. As Qataris learn to become better investors instead of sponsors and more involved in their businesses, they will also learn about the challenges and needs of managing an enterprise. How can entrepreneurship be developed in Qatar? The sense of entrepreneurship has to be developed at a very early stage. Training and development programmes should start as early as the high school and university level...There should be programmes where entrepreneurship is encouraged. The entrepreneurship mentality develops at a very early age. Later that mentality has to be matched with opportunities for entrepreneurship. Having private and public sector institutions involved in entrepreneurship programmes at colleges and universities helps

breed a sense both of entrepreneurship and the opportunities that a country might have. In Qatar, the opportunities are not limited; they are out there. How would this transfer into the business environment? Entrepreneurs by nature are people who have ideas. Teaching them how to transfer those ideas to paper and then to implement them in a practical sense is a key aspect. Then they need to confidently access the required resources – such as finances, training, and partnerships with institutions, private equity and funds. That transition from paper to reality has to be created, it can’t just happen. Having a centralised SME authority that manages the process and brings all parties, in the private sector and educational institutions together is a model that has worked in many developed and emerging markets. Do you see Islamic banking playing a role in the financing of SMEs in Qatar? In the Islamic world and across Africa and Europe, the reason the International Development Bank is so focused on the SME world is because of the overwhelming demand for Islamic finance. Islamic finance has matured enough today that from an ultimate benefit perspective, its products and solutions offer the same price parities and features that conventional products offer. Adopting Islamic finance has not become a hurdle for institutions and banks. In fact it has become an attractive value offering. As long as countries can make sure that the price parity and product benefits are there, Islamic finance is the solution that is preferred by banks and institutions today. However, that does not mean that customers who may not have a specific preference cannot utilise an Islamic finance product. For example in Malaysia’s Islamic banks, 80 percent of their consumers are not Muslim. Therefore, acceptability of products is not an issue for non-Muslims [either]. TheEDGE

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“Instead of coming up with the solution and coming up with programmes whereby all Qataris are going to be enticed with incentives to go run their own businesses, the question to be asked is, do Qataris want to run their own small businesses? The transition should be to train them to become better investors.” Then as far as bureaucracy and legislation are obstacles to starting companies is concerned, this seems to be a problem in many Gulf Cooperation Council countries, particularly for companies starting in industries or sectors that are new to the region or a country, such as digital publishing or team building in Qatar, for example. That could be something that even dissuades people from starting these businesses? Diversification is an issue in any emerging market. There are critical questions, such as: how do you deal with the diversification of businesses at a policy level? The challenges are there because of the lack of diversification in the business sector in general. SMEs will create a forced diversification in the private sector, which will lead to an acceptance of that. At a policy level, therefore, regulators must continuously work as economies diversify to ensure that these hurdles are simplified. It is also important to differentiate between entrepreneurial ‘start-ups’ and established SMEs looking to grow their market share? That is why the incentive programmes needed are for companies of all stages, not just start-ups. This is a question of how one defines SMEs over time. The proper definition of SMEs has to be prescribed to by the financial sector overall, so they can continuously target companies through their life cycles and provide the necessary liquidity for growth, not just for start-ups. That environment has to be incentivised in the beginning by governments and managed by SME authorities, who are already working on those programmes and doing a good job of it. One has to define the different stages of an SME to ensure that they don’t just receive help through the start up phase, but through the growth phase, so they can have access to the capital and protect their intellectual property and grow as needed. At

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the end this is simultaneously a policy matter and a financial industry matter. The intellectual property is an interesting point, in terms of copyrighting and trademarks, as in most emerging markets this is not as refined or as sophisticated as the United States, the United Kingdom or Japan, for example? It is very important and has to be looked at very seriously. The success of companies, like the Googles and Yahoos of the world, is based on being able to protect their intellectual property at a very early stage. You mentioned the schools and universities, but there are also people, from their 20s even to their 60s, who might want to start business or someone who is already running an established SME looking for more capital. Should they be catered for in the education and support programmes? Absolutely. SME support mechanisms need to have a bundled product approach. A single product, where you might for example just incentivise banks to lend, is not sufficient. You can’t do that if the banks are going to come across an entrepreneur who wants to grow in a certain business, but does not have the management or the proper accounting mechanisms or skill sets to grow the business and does not have the ability to draw up a business plan based on that. One has to create the proper incentivisation programmes based on tertiary requirements that have to be met. These encourage sound business practices, but at the same time build confidence among the financial sector to continue to provide capital to SMEs. Should this include further support and advice, beyond management and accounting? For entrepreneurs, there has to be an attitude change. For example, in a country like

Qatar, where [much] of the country is employed by the government, when an individual becomes an entrepreneur he/she will have to learn to do it all. Questions should be asked, such as what is this business that you are taking on worth from a wealth perspective and from a life perspective? And then what is the true value of the business that you are building in the future? What is your plan? Are you going to do this for the rest of your life or build it up to sell it off? Any entrepreneur should have a business vision and address these questions. In short, one issue is a lack of the ability to evaluate, but as the SME sector progresses, it will be required.

“In a country like Qatar, where [much] of the country is employed by the government, when an individual becomes an entrepreneur, he or she will have to learn to do it all.” How much does encouraging entrepreneurism and SMEs in Qatar include forming companies outside of traditional industries, particularly in the hydrocarbon sector and moreover, creating local entities to compete regionally or even globally? It is very important. The Qatari entrepreneur should broaden him/herself and realise there is a big difference between big business and SME creativity. There will always be a need for big business, but you can’t rely on them to carry the economy forever. Qatar is a country, not a corporation. Qataris have an amazing knack for creating new businesses. For example, Al Jazeera [was] not just focused on the regional market but the regional and international market. Qataris should look at the larger region’s markets and respond – creating businesses in different sectors. Qatar can become a hub of regional retail and technology, and service large markets such as Africa and central Asia. These have real business prospects. CGI looks at the SME world as critical to Qatar and emerging markets in general. The results will show in the next five years and it will be interesting to see what happens.

BUSINESS

INSIGHT

Plastic Surgery

Cosmetic and aesthetic surgery in the Middle East A plastic surgery track was included Qatar Health 2010, held in Doha in December, the first time such a topic was included in this event or the region. With the incidence of ‘aesthetic’ plastic surgery on the rise the world over, it is understandable that this high-end and expensive medical field – which also covers reconstructive and burn surgery as well as other procedures – was one of the highlights. Guest speaker Professor Marita Eisenmann-Klein, a leading German plastic surgeon and secretary general of the International Confederation for Plastic Reconstructive and Aesthetic Surgery (IPRAS), spoke objectively to Miles Masterson about the rise of cosmetic plastic surgery in the Middle East. around the world to come to the region for a week or so to practice in these hospitals, and this mainly focuses on aesthetic surgery. So it is becoming very big, but right now many people from here [also] go abroad for aesthetic surgeries, I think because that is a status symbol. I see a lot of patients who have been operated on abroad or I have patients coming from this area.

Plastic surgery is growing fast in the region in places such as Iran, Lebanon, Qatar, Egypt and Syria, among others? Yes, [as well as] in Kuwait and Saudi Arabia. I have been working with the Saudi Arabians, who invited me to come to a private hospital to operate. They wanted a whole female team to work on patients, so they would feel more comfortable with, for example, breast surgery. Many people who come to this area and open offices for aesthetic surgeries seem to do well. There is also a trend to invite people from

Is there anywhere a budding plastic surgeon can receive training in this field in the Middle East? There is no specific training in the region except in Egypt, so they have to train abroad. I have three Kuwaitis, someone from Yemen and someone from Syria working with me [in Germany] to become plastic surgery specialists. Are you seeing a lot of interest from medical graduates from the region? Yes. I am working with Kuwait to bring trainees to Germany, not only for my field but also for other fields in general. The most desired training field is plastic surgery followed by orthopaedic surgery, ophthalmology, maxilla-facial surgery, neurosurgery, transplantation surgery and then the other fields, in internal medicine and psychiatry, etcetera.

As all surgeons that end up exclusively performing the more lucrative cosmetic surgery have to learn all forms of medical and reconstructive plastic surgery, which side of the equation do most students aspire to eventually practice on? Doctors who come from the Middle East usually are in a stable financial situation. [Some of] the people I have worked with, my trainees, their families are so wealthy, they really do not have to work. They do it because they love it and so the interest in purely aesthetic surgery only comes with experience. We do not want people who only want to do aesthetic surgery, because the training is very tough. They have to, for example, be on call for ‘replantations’; when someone cuts their hand or finger off, you spend hours in surgery. My longest operation was 22 hours, so you have to bear in mind that if you only want to do aesthetic surgery, you have to go through this kind of training. You really need the dedication for that and have to love this kind of work. Can you discuss the concept of plastic surgery ‘tours’ and spas – private hospitals and places that perform plastic surgery in the Middle East marketing themselves as destinations for people from elsewhere to have work done? At the moment most patients leave the TheEDGE

BUSINESS

INSIGHT

Middle East to be treated. There are plans though to establish centres of excellence here, this is the subject of some of my meetings here…I could imagine that this is going to be successful as you have wonderful weather here and the conditions are very good [for recovery]. In general we are ambivalent about this type of treatment for two reasons. One, you should remain in the area until you are fully recovered, and with a long flight there is always a risk of thrombosis, the risk of which increases even more if you underwent general anaesthesia, for example. Two is that you need someone to follow up the treatment and even if everything goes really well, patients sometimes become desperate if they still have swelling, they do not heal, sometimes they panic when fluids seep out of the wound, or something like that. So it is acceptable if the patient stays there long enough, it is also acceptable if the patient has enough time prior to the treatment to be properly prepared. Prepared in what way, psychologically? We have to build up confidence. Sometimes, you and the patient have not met before, and it soon becomes obvious you are not a good combination. In that case I will give the patient a recommendation for somebody else and tell them that I think they can fulfil their expectations better than I can, which is something that is not guaranteed if you go abroad for treatment. It seems the better-informed people are about the dangers, realities and intricacies of particularly cosmetic plastic surgery, the better. This was one of the purposes of the public forum at the Qatar Health 2010 plastic surgery track. How did these sessions transpire? I think it was quite successful. We did not have an awful lot of people there, but the ones who were there asked good questions. There was one mother there with a patient with a really severe ear deformity and she asked where she could go. The interpreter afterwards came and said that the first patient we showed on the screen with a breast problem looked exactly like her daughter, and she was so excited that something like fat grafting can be done… That showed me that we were on the right track, that they can get the information from us and then work out something individually.

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“Many of people who come to this area and open offices for aesthetic surgeries seem to do well. Then there is also a trend to invite people from around the world to come here for just a week or so to practice in these hospitals and this mainly focuses on aesthetic surgery.” From a business point of view, if this sort of industry or field of medicine does grow in the region, would there be downstream industries that would benefit, such as the supply of silicone implants, etcetera? Yes, all kind of filler materials are needed, like botox and implants. And now we also have the fat grafting, it is the tool now, but otherwise we do not need a lot of materials in plastic surgery. But there is also anti-ageing medicine. We are thinking about coming back next year with an inter-disciplinary programme alongside antiageing, because anti-ageing is so much more than taking hormones. It affects all the age-related diseases, all the regenerative diseases. The antiageing medicine is an industry much larger than plastic surgery, with all the nutritional supplements, vitamins and hormones. Plastic surgery is very expensive. Do you see the costs of the surgeries coming down in the future? I do not think that it can go down much more. Let us take a facelift, it takes minimum of three and a half hours…you need an anaesthesiologist, you need a nurse for that anaesthesiologist, you need a scrub nurse, a nursing assistant, a surgeon, an assistant, so that is minimum six people. The hospitals do not make an awful lot of money from that [and] if we want to keep the surgeries safe we cannot make it much lower. [However] surgery is done for less cost in the developing countries like India and in the former Eastern European nations, where the safety standards are lower. There is also the risk you might go to someone who is not conducting their surgery under the right conditions – for example, at an office instead of

at a hospital – or someone who is not adequately qualified. Perhaps not in a country as small as Qatar, but certainly this occurs in many countries? [IPRAS] have 40,000 plastic surgeons all over the world. You can imagine the different standards and we try to create the same ethical base, the same standards for safety for everybody, but that is not so easy. Sometimes people call themselves things like beauty surgeons and are not necessarily plastic surgeons. Many of them do not have a full training and that is the other catastrophe worldwide, that doctors can practice aesthetic surgery without training. So of course we cannot guarantee the ethical standards of all plastic surgeons in the world, but I think we have very good standards within the national societies. This is one of the major tasks of the international confederation, to recommend these standards [to ensure] the safety of patients and also to come up with regulations for informed consent, for example, which is not the same all over the world. What is the situation like in the plastic surgery environment in the Middle East? I think they are always in private hospitals and the ones I know in Kuwait and here in Qatar at Al Ahli Hospital and Hamad Medical Centre, they are excellent. Private hospitals here usually are well equipped, so I think in this area, most of the procedures are done under very safe conditions. I do not know about all the centres, I do not know so much about Dubai, but I think the trend here from the patient’s side is to have it done in the hospital. I do not think that the patients here go for outpatient procedures as much as they do in the United States, but there it is only for financial reasons…people here have enough money to spend a few days in the hospital.

LIFE & STYLE HIT THE SLOPES (P.78)

Head off to iconic Verbier for a snow holiday straight out of a James Bond movie.

ALSO IN THIS SECTION: • •

Fighter pilot fantasy camp: The ultimate gift for someone who craves once-in-a-lifetime experiences. (P.78). Golf with the boss: Our quick reference guide to making a good impression when the invitation to golf with your boss arrives. (P.79).

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10 business lessons from The Godfather: The sweeping Francis Ford Coppola classic is rich with valuable and insightful lessons for the business executive in the modern-day corporate environment. (P.80).

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LIFE & STYLE

TRAVEL

Head for the hills

New life in old Gstaad After nine months of renovation, Grand Hotel Park Gstaad reopened its doors in December in time for the ski season. The iconic chalet’s 94 rooms and suites have been modernised, while remaining true to its location by incorporating local pine, oak and stonework into its décor. In keeping with the Alpine theme are the new spa treatments, including Mountain Indulgence, which uses regional herbs to soothe sore muscles and prepare guests for another day on the slopes.

With its world-class terrain, chalet-style architecture and legendary après-ski, it is no wonder that Verbier is one of the top ski destinations in the Alps.

ituated in the Val de Bagnes (Bagnes valley) in southwest Switzerland, Verbier is an iconic, celebrity-riddled resort that would look at home in a James Bond movie. Picturesque and sunny, this Alpine village is a favourite with the beautiful, famous and moneyed, both during the summer and winter. The ski season runs from mid-November to late-April, and Verbier’s high altitude and superb snowmaking facilities ensure excellent snow cover throughout. A sophisticated network of cable cars provides easy access to 410 kilometres

of marked runs, and beginners and intermediates are well catered for with ski schools, nursery slopes and some easy runs at Savoleyres, La Chaux and Lac des Vaux. Verbier offers Europe’s best liftserved off-piste skiing, and experienced skiers and snowboarders will enjoy some of Europe’s steepest descents. Verbier itself is as well known for its mix of traditional and fashionable restaurants and nightlife, creating one of the most exciting après-ski scenes on the continent. Fashion boutiques, spas and art galleries provide plenty of day entertainment for non-skiers.

STAY: The ultimate in Alpine-chic is Richard Branson’s hotel, The Lodge, an exclusive moneyis-no-object hideaway that is both rustic and luxurious. The chalet-hotel is available for weekly hire for up to 18 guests, and boasts its own mini ice-rink, spa, indoor and outdoor pools, and on-call driver. EAT: Fuel up before hitting the slopes with a stack of breakfast pancakes and great coffee at the Offshore Café, near the Medran lift station. For lunch, the cosy Chez Dany in Chambin offers traditional Swiss cuisine and spectacular views. DO: Husky sledging and paragliding are both popular and exciting ways to discover the town from a different perspective.

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Fighter pilot fantasy camp Want to celebrate a special birthday this year? Or do you just have a hankering for one-of-a-kind experiences? Best book yourself in for the Dixie Wing Fighter Pilot Fantasy Camp in Atlanta in the United States, two days of flying in vintage airplanes from May 14 to May 15. No flying experience is necessary to participate, and attendees will fly the Stearman biplane, the PT-26 Cornell and a T-6 Texan, before graduating to the P-51 Mustang, the most famous of the World War II-era fighters. Learn about the history and operation of each plane from experienced pilots and veterans, and hear modern fighter pilots share their experiences and discuss the evolution of fighter tactics. The camp costs US$3200 (QR11,600), including meals and hotel accommodation. Book early to avoid disappointment. www.dw.squawk1200.net

LIFE & STYLE

LIFESTYLE

Golfing with the boss Seal the deal with the big guy on the links. Here’s how.

1. Be prepared. Find out about the venue – know how to get there so that you arrive on time, and have an understanding of how formal it is. Call the golf shop ahead of time to ask about locker facilities, the dress code

A touch of Versace luxury Designed in Italy and hand-assembled in France, the new Versace Unique phone offers up a full-featured multimedia experience in a luxury mobile phone.

and tipping. Tune up your game, and ensure that your clothing, shoes and clubs are clean. 2. Know what (and what not to) talk about. On the morning of the game, read a newspaper so that you are able to hold a Featuring the distinctive Medusa logo, the Unique handles all the functions of a phone, 3G network, e-mail, media player, five megapixel flash camera and netbook. With a glossy touchscreen (the largest single piece of this material ever produced for consumers) and LG Real Touch technology, the phone transitions between menus, screens and applications quickly, and holds 8GB internal memory that can be expanded to 32GB. Quad-band technology ensures connection across timezones, and built-in Bluetooth and Wi-Fi enable connection with wireless accessories and networks. In all, the Versace Unique marries the craftsmanship of an Italian couturier with the technology of the 21st century. Available in Qatar from QR26,900. www.versace.com/mobile

knowledgeable conversation about current events. Touch on sports and family, but by all means, do not gossip about the office, or try to bring up your big idea. Let your boss be the one to bring up work. And remember – just because you are in a social setting, your boss is not suddenly your best friend. Show respect, do not talk for the sake of talking, and do not crack endless jokes. 3. Do not panic. Avid golfers can tell much about a person from their reaction to pressure, so refrain from swearing and throwing a club. But it also includes basic manners, such as replacing divots. 4. Know the game. Let your boss decide if you will be playing a match and the format of the game, and obey the rules typically followed by weekend golfers. And be competitive – your boss got to where he is by being competitive and will expect you to be so too. The game should not be about a boss and his subordinate, but about golfers who enjoy the competition. Above all, win or lose with grace. 5. What next? Follow up. Send your boss a handwritten note that says something specific about what you appreciated that day. If your fellow colleagues ask about the day, treat it as if it were much like playing with anyone else. If the boss played a good game, say so, but refrain from an overly detailed description of the day. THE Galaxy Tab’s top 5 apps* Newspapers from Press Display (Samsung’s Readers Hub), with over 1700 full-content newspapers from 92 countries in 48 languages, including 30 Arabic newspapers from the Middle East. Books from Kobo (Samsung Readers Hub), that comes fully loaded on the Tab with over 1000 books from platforms such as Borders and Amazon. Noor Islamic App (Samsung Apps), which comes with the Hijri calendar, Prayer Times, Al Sunna, Al Doaa, Zakaty and more, to help sustain a healthy spiritual life. Wall Street Journal (Android Market), featuring daily articles, opinion features and real time updates. PicSay, for editing, uploading and sharing Picasa images. *As voted for by Samsung Galaxy Tab users.

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LIFE & STYLE

TEN THINGS

SS E N SI BU

LES FROM SO NS

R HE T FA D O EG H T

Francis Ford Coppola did not just create nine hours of cinematic history – he brought shrewd businessman, Don Corleone, to the masses. The Don and his underlings offer executives these invaluable business lessons.

Innovate “I believe in America. America made my fortune.” This opening line of The Godfather exemplifies the spirit of following your dreams and finding success. If we know anything about the commercial aspect of the American dream, it is that being better, faster and cheaper equals profits. Shake off old habits, find a new solution to an old problem, make innovation part of your corporate culture, and surprise and delight your customers and shareholders. 2. Inspire When Don Lucchesi tells Michael Corleone, “Our ships must all sail in the same direction”, he was underlining the importance of having a strong vision that inspires others. Communicate your vision so that you present a common mission, inspiring loyalty by focusing employees, shareholders and customers on the same objective.

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3. Think big Find a major theme to anchor and amplify your message to prevent it from being diluted and forgotten. Perception dominates, and if you want to compete with ‘the big boys’, put yourself in their category. This means changing the way you perceive yourself – act big, bold and brilliant, and chances are the world will see you this way too – a lesson Michael learned when told, “…We’re bigger than US Steel.” 4. Know yourself The Corleones relied on the wisdom that came with self-knowledge. Their values (both good and bad) formed the foundation of their vision. Values create a strong affinity with those who believe in your company, so determine which ones are revered and provide insight into your business’ character, and make them part of your vision. 5. Make it compelling In fact, make it so compelling, it will be “an offer [they] can’t refuse”. Time to motivate

your customers and your employees, making them all go, ‘Ah-ha’. Deliver the flawless presentation, and get the ‘yes’. 6. Know your competitors “Keep your friends close, but your enemies closer,” said Michael, illustrating the importance of strategic market intelligence. Who are your competitors and what are their strengths and weaknesses, their motivations and intentions? In business, positioning is in a constant state of flux, and by keeping an eye on the competitive environment, you will be able to adapt to survive. 7. Build relationships “I can’t remember the last time you invited me over for coffee…” is perhaps an innocuous statement to hear Don Corleone saying, but it underlines the importance of developing relationships in business, perfecting the art of giving before you need a favour. People help (and buy from) those they know and trust. 8. Honour before profit When faced with a request for protection so that an associate could traffic drugs, the Corleones refused, despite the profitable nature of the business. The Don was not willing to trade his honour by dealing with a shady business for a quick dollar, a lesson in integrity. 9. Control your message Whether you work in government, for a corporation or have your own business, your team will likely function best if they approach work as a ‘family unit’. The line, “Never tell anyone outside the family what you are thinking”, brings home that leadership’s strategic thoughts must stay internal. Communication outside of ‘the family’ must be controlled. 10. Make it personal Your customer is the centre of your business, not your product. “Leave the gun… Take the cannoli” is the phrase that emphasises keeping your promises and maintaining your commitments, so that it is an advantage to become and remain your customer.