The Edge - Dec 2011 (Issue 28) by Firefly Communications

CONTENTS

w w w. t h e e d g e - m e . c o m

2011

Contents .30. oPinion

Why Smart Building technology needs to be taken seriously.

.32. sPeCiaL foCus

Are bonds the key to a diversified investment portfolio?

fINANcE & ecoNomIcS .36. market watCh

World and regional market, commodities and financial sector update.

on the CoVer

Erika Widén takes a look at the Qatar real estate market, now more bullish since Qatari legislators issued laws to open the market for foreign investment. Widén also examines how the market has evolved and become more appealing for neighbouring nations and reviews the progress of various highprofile real estate developments in the country. (Page 52) Cover image: An artist’s impression of the final Musheireb development in Doha courtesy Musheireb.

.38. inside edGe

Qatar: From fishing nation to a leading global player.

.40. sPeCiaL rePort

Doha: Prepared for economic growth.

.42. baLanCe sheet

Dealing with changes within current IFRS standards.

.44. eConomiC barometer The potential downside of recent MENA region salary increases.

fEATURES .48. in the sPotLiGht

Qatar Airways expands to the ‘Pearl of Africa’.

.58. on the PuLse

Why Qatar’s hydrocarbon industry must go downstream.

KNowLEDGE & eXPERTISE .62. business manaGement

Identifying high-potential staff, part 2.

.64. smaLL business know-how

Why customer service and retention is paramount to SMEs.

.66. LeGaL insiGht

What joining the QFC Regulatory Authority requires.

.68. information teChnoLoGY

Qatar’s communication boom is moving towards the cloud. TheEDGE

CONTENTS

BUSINESS INSIGHT

.71. Business Insight Interviews

Miles Masterson speaks to Tom Freyberg about the WaterWorld event to be held alongside the PowerGen Exhibition and Conference in Doha in February 2012 and the topic of water shortages and conservation in the Middle East in general; he also talks exlusively to the worldwide CEO of Tag Heuer Jean-Christophe Babin about the luxury watch brandâ&#x20AC;&#x2122;s expansion in the Middle East and on the Indian subcontinent; and Rachel Morris meets Tareq Derbas, general manager of the soon-to-open St Regis five star hotel in Doha, about the bespoke services on offer and how Qataris should be brought into the hospitality industry.

REGULARS .06. .07. .08. .16. .18. .20. .25. .79. .84.

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from the editor Contributors News Etcetera QATAR IMPACT DOHA DIARY MIDDLE EAST MATTERS ENERGY AND RESEARCH TRAVEL & LIFESTYLE 10 THINGS

FROm ThE EDITOR

FROM PuBlIcatIonS dIRectoR Mohamed Jaidah m.jaidah@firefly-me.com ManaGInG edItoR Miles Masterson m.masterson@theedge-me.com dePuty edItoR Erika Widén e.widen@theedge-me.com ReGIonal SaleS dIRectoR Julia Toon j.toon@firefly-me.com +974 66880228 SenIoR SaleS ManaGeR Emma Land e.land@firefly-me.com +974 33197446 SaleS ManaGeRS Pierre Le Bourdonnec p.lebourdonnec@theedge-me.com +974 55997802 Joseph Issac j.issac@firefly-me.com +974 33675301 dIStRIButIon & SuBScRIPtIonS Azqa Haroon a.haroon@firefly-me.com +974 55692471 cReatIve dIRectoR Roula Zinati Ayoub aRt dIRectIon Lara Nakhlé deSIGn cooRdInatIon Charbel Najem deSIGneRS Sarah Jabari fInalISeR Michael Logaring PhotoGRaPheR Herbert Villadelrey PRInted By Ali Bin Ali Printing Press, Doha, Qatar

ThE EDITOR

As 2011 winds down and we find ourselves inexorably moving towards another year, it is inevitable that some reflection will surface in one’s mind. This year has been an absolute humdinger in the news and business world, with enough natural disaster, war, and political and financial upheaval to fill five years. As I search for some meaning, or at least some editorial inspiration, in all that has happened around the world this past 12 months – tsunamis, nuclear disaster, floods, Arab uprisings, civil wars and economic failures and the deaths and births of nations and leaders either real or merely in rulership, ad infinitum – the only thing that really strikes me as resonant is that as human beings we absolutely need to cooperate with one another. Indeed, as we recently passed seven billion in population and the world becomes more and more overcrowded, perhaps this is truer than ever. Solid, trustworthy relationships are the very lifeblood of our existence, whether in a personal, business or political capacity (and often the lines between all three are inevitably blurred), and usually the primary indicators of one’s success or failure. Indeed, despite all the conflict, chaos, failed agreements and disarray in 2011, there have been some incredible moments of spirited human cooperation. These have ranged from how the world rallied to assist the Japanese after their astounding trifecta of earthquake-tsunaminuclear fallout, the grassroots networking through social media of the Arab youth across the Middle East, or bringing it home, Qatar’s early gamble to support the freedom fighters of Libya against the scepticism of the Arab League and countries such as China and Russia. In fact, Qatar itself, under the astute leadership of the Emir His Highness Hamad bin Khalifha Al Thani has excelled (and yes,

sometimes not) at political diplomacy and through its clever management of relationships in both world politics and business (helped of course, by Doha’s incredible hydrocarbon wealth) has strengthened its position and profile in the world. Though its positions are not without detractors, competition or risk, arguably Qatar has put itself out there and set an enviable example. As the end of my own first full year living and working in this fascinating state, I can draw personal analogies too. Most of us who operate in this country’s business and social landscape must deal and communicate with people from dozens of different cultures every day and exhibit a patience and decorum we otherwise might not at home. I suppose the point is that as human beings we are often hardwired to see the negatives instead of the positives, and for every broken promise and failed friendship or thwarted business deal there will be at least one more that will succeed and bear fruit, Inshallah. There are also examples of this in this edition of TheEDGE, from the return from bearish to bullish for the Qatari real estate market, which has seen its own challenges in 2011, to the country’s increasing involvement and influence in regional information technology, especially in cloud computing, to the expansion of the local carrier Qatar Airways into Africa and the growth of the downstream hydrocarbon industry. In fact, it seems for us in Qatar there is a lot to be thankful for from 2011, and, indeed, much to look forward to in 2012. Miles Masterson, Managing Editor

firefly communications Po box 11596, Doha , Qatar Tel: +974 44340360 fax: +974 44340359 www.firefly-me.com

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 Shutterstock and/or iStock Photo or firefly communications.

TheEDGE

CONTRIBUTORS

featured contributor Manjeet Chhabra Manjeet Chhabra, who holds a Masters in Finance, CPIM and an engineering qualification, is a senior corporate executive with 20 years of diverse experience ranging from managing global information technology (IT) to economic analysis and data businesses. He is currently the general manager for Dun and Bradstreet (D&B) South Asia and Middle East. Chhabra started his professional career with Reliance Industries in India and went on to establish a footprint for Columbus IT across the Middle East. Equipped with strong strategic sales and general management skills, Chhabra was at the helm of Columbus IT for eight years before taking on D&B’s core business of risk management and sales and marketing solutions.

PG.68 Manu Bonassie Regional Sales Director Brocade Dubai, UAE

PG.25 jamie stewart International Correspondent London, United Kingdom

PG.30 Martin á Porta Chief Executive Officer Siemens WLL Doha, Qatar

PG.32 Howard Kitson Country Head Mashreq Doha, Qatar

PG.36 Dheeraj Shahdadpuri Analyst Dubai, UAE

PG. 40 Matt Ghazarian Editorial Contributor Oxford Business Group Istanbul, Turkey

PG.42 Omar Mahmood Partner Financial Services KPMG Doha, Qatar

PG. 44 Karim Nakhle Senior Business Strategist Doha, Qatar

PG.58 Edward Jameson Senior Business Journalist MENA Region London, United Kingdom

PG. 62 Jay Conger Visiting Professor of Organisational Behaviour London Business School London, United Kingdom

PG.64 Brenda Lockyer Instructor, School of Business Studies College of the North Atlantic-Qatar Doha, Qatar

PG. 66 Emma Higham Associate Corporate and Commercial Clyde & Co Doha, Qatar

PG. 66 David Salt Partner Clyde & Co Doha, Qatar

PG. 72 Rachel Morris Journalist MENA Region Doha, Qatar

PG. 80 Victoria Scott Journalist Doha, Qatar

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 11 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. Please e-mail info@theedge-me.com should you wish to contribute.

TheEDGE

NEWS ETCETERA

NEWS ETCETERA LIFESTYLE

TO OF THE MONTH O H P

The

E D G E M A G A ZI N E

A TOWERING TASK

Now that the blistering hot desert winds of summer have been replaced by more mild weather conditions (including some welcome rain in late November), polishing the facades of Dohaâ&#x20AC;&#x2122;s many gleaming skyscrapers has become much easier and the cityâ&#x20AC;&#x2122;s business district is just a bit more shiny. Here a window cleaner abseils down the 52-story Tornado Towner in West Bay, which was built by Munich-based SIAT Architekten and is one of the few buildings of its kind in the Qatari capital city at almost full occupancy. (Image Getty Images)

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NEWS Etcetera

NEWs Etcetera Students from Minia University in Egypt wIn

the first-ever Siemens Student Award of Sustainability The Siemens Student Award 2011 asked for the best answers to one of the world’s toughest questions, “How can you build sustainable cities in the desert?” 10 final ideas were chosen from 630 ideas submitted by university students in the Middle East. The Siemens Student Award Ceremony took place in Doha, where the final ideas were presented to a high profile international jury. The jury selected the winner, a team of three students from Egypt, who were awarded US$25,000 (QR91,000), the first runner-up from Saudi Arabia, who was awarded US$15,000 (QR54,600) and the second runner-up from Egypt who was awarded US$5000 (QR18,200). All finalists will be offered internship opportunities at Siemens. At the Siemens Student Award ceremony last month the ten final ideas were presented to an international jury and the winners were selected. The jury consisted of high-profile individuals from various institutions and organisations that are significantly involved with sustainability initiatives. The winning team from Egypt, The Green Thinkers Group, comprising of Rofayda El Emam, Ahmed Abd Alaziz and Bahaa El Deen Khatter from Minia University, Egypt won for their idea of a Spiral Power Plant. The focus of this idea is to build a spiral plant inspired by the shell shape of the snail, using glass as a main construction material to raise the temperature inside the plant, the airflow driving turbines and producing electricity. The guest of honour at the Siemens Student Awards 2011 Ceremony, Her Excellency Sheikha Hanadi Bint Nasser Al Thani, said, “Education is a key focus

for Qatar as we recognise the critical role that it plays in unlocking human capital. We are delighted that the Awards Ceremony has been hosted in Qatar, and I am very pleased to be associated with such initiatives that invest in our future. “The students,” Her Excellency added, “have showcased a lot of creativity and innovation in trying to find solutions to the challenges we face today. I’d like to congratulate all the winners and the participants on their accomplishments.”

Middle East’s Largest Luxury Multi-Brand Store,

Fifty One East Lagoona, Opens in Qatar The State of Qatar welcomed recently the Middle East’s largest luxury multi-brand store, as Fifty One East in Lagoona Mall West Bay, opened its doors. The grand opening of the country’s latest lifestyle extravaganza was held under the patronage of HE Abdullah Bin Hamad Al Attiya, deputy prime minister and chief of Amiri Diwan in the presence of a host of high-profile government, business, and media, as well as the world’s top designers and showbiz personalities. Recently named Best Retail Project of the Year by Arabian Business magazine. A retail brand built from a Qatari family heritage for close on 80 years, Fifty One East aims to deliver to their clientele an exceptional offering that defines true luxury. Fifty One East at Lagoona will be the main anchor store of the

TheEDGE

Lagoona Mall and a world-class retail destination as the largest multi-brand superstore in the Middle East. Fifty One East presents its guests with a refined shopping ambience and approximately 13,500 square meters of retail concepts that are aligned with the lifestyle of Doha’s savviest shoppers. It is the first retail superstore to feature exclusive Rolex and Boucheron Boutiques and to offer signature spa treatments and a host of exclusive services it hopes will be unparralleled in the region.

NEWS Etcetera

MEDIA TOUR TO MSHEIREB DOWNTOWN A media tour was organised recently by Msheireb Properties to showcase local journalists the construction status being developed in four phases of their QR20billion development, Msheireb Downtown Doha project. Phase 1A, which consists of Diwan Amiri Quarter (Diwan Annex, Amiri Guard and National Archive), heritage buildings and amenity and infrastructure (district cooling plant, substations and service corridors). Phase 1B/1C is comprised of offices, Qatari town houses, apartments, amenities, hotels, civil buildings, schools, cultural centre and mosques. Phase two mainly comprises retail, offices, apartments, amenities, cinemas, departmental store and hotels. Phase 3 is mainly comprised of retail, offices, apartments, amenities, urban spa, a day care centre and hotels. Finally, phase four mainly comprises of retail, offices, apartments, amenities, post office, medical clinic and hotels. Upon completion it will revive the old commercial heart of the city through new architectural language that is based on community living, across a 31 hectare (76 acre) site.

20th World Petroleum Congress EXHIBITION

The organising committee of the 20th World Petroleum Congress said there has been a steady stream of exhibitor announcements connected with the World Petroleum Exhibition, which is being held in parallel to the Congress from 4 to 8 December 2011. The exhibition, which has been sold out for months, is set to become one of the biggest attractions for trade visitors in the region and the organising committee expects a large number of trade visitors from the region to visit the exhibition halls of the Qatar National Convention Centre this December. The World Petroleum Exhibition which is held in parallel to the 20th World Petroleum Congress and is set to be the preeminent show of its kind in the region and will be a highlight for many trade visitors seeking opportunities to keep abreast of the most advanced technology and service solutions in the world today.

Emir calls for parity in oil and gas prices Speaking at the opening of the Gas Summit held recently, His Highness Sheikh Hamad bin Khalifa al Thani, the Emir of Qatar, underlined the need to protect the interests of gas exporters along the lines of protection and support given to coal and oil industries. “We have to act seriously to realise these interests without leaving a passive impact on the interests of gas consumers,” His Highness added. To highlight the assets of natural gas, the Emir said, “Though the hydrocarbon resources have contributed to economic and social development, they have a negative impact on the environment. In contrast, the natural gas has a preferential advantage over all other types of fossil fuel, as it is one of the most important clean energy sources.” The Emir added that this advantage has, in recent years, led to its increasingly widespread use in power generation, petrochemical and metallic industries, as well as household consumption.

NEWs EtC. IN BRIEF

REAL ESTATE TRANSACTIONS According to Century 21, Qatar recent real estate report transactions in the first week of October were recorded at approximately QR750 million. Second week decreased by seven percent with transactions value recorded at QR696 million the third week further dropped by 22 percent with a transaction value recorded at QR542 million. The last week of October recorded and increased by 113 percent at approximately QR1.15 billion. Transaction values in Doha were recorded at 28 percent in the first week, increasing to 57 percent in the second week, decreasing to 25 percent in the third week and further reducing to 83 percent in the fourth week. Al Rayyan transactions recorded 14 percent in the first week, 22 percent in the second week, increasing to 38 percent in the third week and only nine percent in the fourth week. 64 percent of the total transactions were vacant land transactions, 17 percent accounted for villa and house transactions, two percent for the buildings and only one percent for the residential compounds. The highest number of transactions was recorded within the municipality district of Doha with 134 transactions valuing approximately QR1.80 billion, which accounted for 63 percent of the total transaction value. Doha stood with the highest transactional value of nearly QR1.80 billion accounting for 57 percent of the total transactions, followed by Al Rayyan municipality with 17 percent, Al Wakrah with 14 percent, Al Khor with five percent, Umm Salal with four percent and Al Da’ayen with only two percent. Nine percent of the total land transacted was recorded in Al Rayyan district followed by Doha with 58 percent and Al Wakrah with 56 percent. 92 percent of the land area was associated with vacant land transactions, four percent with houses, three percent with villas and only one percent with buildings and residential compounds. Al Wukair with 12 percent of transactions recorded the highest number of transactions when compared to individual areas followed by Al Khor at 10 percent, whereas Al Thumama, Umm Qarun, Ab Al Zalouf and Maeedhar at seven percent. Approximately 50 percent constituted to other different areas of Doha.

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NEWS Etcetera

2011

events calendar DECEMBER DOHA, QATAR

4-8

World Petroleum Council (WPC)

9-10

Opening Arab Games

9-23

Arab Games Doha

The Future of Project Bonds in the Arabian Gulf

11-13

The Fourth Forum of the Alliance of Civilizations

13-23

Doha 22nd International Book Fair

16-20

Qatar Health 2011

Qatar National Day

The Arab Games Exhibition

TheEDGE

NEWS IN QUOTES “Building democracy is a complex process. Elections are only a starting point but if their integrity is compromised, so is the legitimacy of democracy.” Kofi Annan, chairman of the Global Commission spoke last month at a meeting in Doha of the Global Commission on Elections, Democracy and Security. The Global Commission, jointly created by the International Institute for Electoral Assistance (IDEA) and the Kofi Annan Foundation, works to highlight the importance of the integrity of elections, toward achieving a more secure, prosperous and stable world.

“This is the first time where I think most leaders in the Middle East don’t have a clear answer on Syria. If Bashar was to step down, he needs to step down with changing the way the system deals with its people, so if he was to say ‘I’m going to step down but let’s have new elections, let’s reach out to the people, let’s get this as a national dialogue’, then it would work. But if you’re just going to remove one person and put another person in, I think that you’ll continue to see more of the same.” King Abdullah of Jordan recently said Syrian President Bashar Al Assad should step down in the interest of his country.

“We have expanded our economic territory to cover 61 per cent of the world’s gross domestic product. This means that we’re moving one step ahead of any other country we compete with. If we seize this opportunity and unite our strength, we can overcome the (global economic) crisis and make a leap.” South Korea is overtaking competitors thanks to its free-trade deals, President Lee Myung-Bak declared recently, a day after a major agreement with the United States was ratified amid chaos in parliament.

NEWS techdesk

techdesk website reviews

www.menafn.com Most news and business websites on the Internet devoted to the Middle East are merely aggregators of news from other sources and quite average, while some set themselves apart by generating exclusive content and useful insights. Menafn.com straddles both avenues, and thought it features much dated content, its strengths seem to be in its current business news and up to the minute market data, currency conversions and sheer depth of relevant information. www.alifarabia.com Though its slogan is “Middle East oil makes the world go round”, this quirky business-orientated site is also devoted to more than just the oil sector and promises “to offer a brutally frank analysis on the Middle East region’s business and political issues”. While it also comprises an ‘aggregator’ type of status with many stories sourced on other websites, the content on offer in part has a more analytical emphasis than hard news, with a ‘Chart of the Day’ and more. www.arabgames2011.qa One of the largest sporting events in the Middle East and certainly the largest featuring athletes from Arab-only countries, the 11th Arab Games will be, for the second time, held in Doha from December 9 to 23. This site offers those wishing to attend all the information they might need regarding the games’ proud history, venues and schedule etcetera. DESTINATION: MARS

This artist’s concept shows the sky crane manoeuvre during the descent of NASA’s Curiosity rover, which blasted off from Cape Canaveral in the United States in late November, and is set to land on the surface of Mars in August 2012. (Image Corbis/NASA/Jpl-Caltech/ Albuquerque Journal)

Web and Tech News VISA and IMRG Launch E-Commerce Study Global payment solutions provider Visa has partnered with Interactive Media in Retail Group (IMRG) International, the industry body for global e-Retail, to launch a new quarterly overview of the burgeoning e-commerce market across the Gulf Cooperation Council (GCC). The detailed study identified current levels of e-commerce performance and potential by assessing the breadth of existing research undertaken in the region. It covers trends, data and forecasts concerning e-commerce in the GCC as part of a world-class comparison to key markets. With its booming economy and ambitious ICT investment programme, Qatar, where Internet usage has risen 1600 percent in the last decade, is expected to be the fastest growing IT market in the region from 2011 to 2015. Moreover Qatar’s 2010 e-commerce spend was valued at US$375 million (QR1.3 billion), but is expected to grow by 60 percent at the end of 2011. QATAR EXCHANGE JOINS BT RADIANZ British Telecom (BT) h as announced that Qatar Exchange’s (QE) market data feeds will be accessible by the BT Radianz Cloud community of banks, brokers and investment managers. This will provide investors globally with access to investment opportunities in the Middle East. QE is the latest in a series of MENA exchanges to join BT Radianz. Others include Dubai Financial Market (DFM), Nasdaq Dubai, The Dubai Gold & Commodities Exchange (DGCX) and the Egyptian Exchange (EGX). Andre Went, CEO of QE, said: “By joining this community of over 15,000 member sites, QE can now offer investors fast and secure access to information about the high-growth Qatar market.”

TECH GADGET: Barnes

and Noble NOOK Simple Touch

Released in the United States in late November by the leading book retailer, the Barnes & Noble Nook is a brand of electronic-book reader based on the Android platform, of which this is the latest version. The device has been rated by many pundits as the best of its kind in the market. It costs US$99 (QR360). barnesandnoble.com

TheEDGE

Why Banking is Changing for Good control of their money than ever before. For banks, however, they represent one of the biggest and most fundamental shifts in the rules of engagement that we have seen in a lifetime. In the future the basis of competition for banks will not be products or channels, but how well they understand the needs of their customers. It will be about how much value they can add to people’s lives. We live differently now. Together, technology and customer demand are driving a complete transformation of how banking is done. There is a growing global tribe of consumers who want anytime anywhere access to services and banking is no exception. These consumers are looking for personalised experiences and they want to be treated as individuals, not aggregated together.

he way we manage money is about to change beyond recognition. Banks who fail to embrace this are in for a rough ride, predicts Steve Bertamini, CEO of Consumer Banking at Standard Chartered

Imagine having instant and total control of your money. To spend, save, invest and pay whenever you need to just by tapping your finger or saying the word. Today, by and large, you still have to come to your financial service provider, be it online, on a mobile phone or in the branch. But mobile device sophistication, network speed and innovation are converging to place banking straight into your hands.

Contactless payments via smartphone will become ubiquitous, meaning you won’t have to carry cash in your wallet. Virtual agents, enabled through Artificial Intelligence, will be able to fulfill your every banking need around the clock. Mobile technology will allow you do more and more banking on the go using features such as speech recognition. For consumers these developments are good news as they will have greater

The implication of this is that banks cannot continue as before and expect business to stay the same. To put it bluntly, the industry has to start thinking less like banks and more like Apple, Google or Facebook. Banks have to become not only innovators, but also proactive in coming up with solutions that meet customers’ needs, predicting those needs before customers know they have them. This means banks have to transform from utilities into service organisations that offer a great lifestyle experience. Design and usability is no longer a nice to have in financial services, but a core requirement. This doesn’t just apply to the digital channels – though these are set to dominate banking in the next decade – but to the entire distribution chain. Branches, too, must offer an experience similar to those on offer in the retail industry, not just function and efficiency. Plenty of new players are lining up to offer what banks will not or cannot provide. The core of consumer banking – lending, wealth management and protection – is still heavily regulated

with strong barriers to entry for new competitors. However, in areas such as cash transactions and the user interface, there is no denying that banks are confronted by increased competition. Look at Africa where telecommunication companies such as Airtel and Safaricom have by-passed the need for bank accounts or Internet connections to provide mobile wallets for millions in the space of just a few years. Airtel money for example – for which Standard Chartered has held funds in trust since 2008 – is now used by over 20 million people to make or receive payments in real time. I believe that banks now face a choice. Either to continue as they are and see new competitors infringe upon their core business – or innovate and become market disruptive, expanding those same boundaries to take banking into new territory. There is real scope in the next few years for banking to evolve beyond the basics of savings and lending to a much broader set of services. One obvious example is unlocking data in order to offer customers personalised, value-added services – alerting them to nearby deals or new and better ways to grow their wealth. There is no point pretending a transformation on this scale is going to

be easy. Banks are large and complex organisations not traditionally focused on innovation or speed-to-market. Today, many face issues getting the right technology for their customers. It is a long leap from there to the brave new world of banking. In the future, banks will have to become serial innovators, move with the urgency of start-ups and look for ideas everywhere. The task is not only to meet customers’ needs but to capture their imagination. It is a challenge but – in an increasingly digitised world – not one exclusively faced by banks. Other sectors have gone through similar transformations, a very good example being the electronics industry where companies such as Samsung have led the way. For banks, this means changing their approach to innovation, recognising that the best ideas won’t necessarily come from the top or even from bankers. At Standard Chartered our mobile banking platform Breeze was developed bottomup by a small staff team of mobile and social media enthusiasts – not by senior executives or people with a long experience in banking. It also means changing the approach to the customer, offering financial services in ways that matter to people’s lives. When we developed Wishlist, a savings feature

Plenty of new players are lining up to offer what banks will not or cannot provide for Breeze, we integrated it with Facebook and bulk discount aggregators to let people share their saving goals with friends and get great deals on what they are saving for, be it a new pair of shoes or a trip around the world. You don’t even have to be a customer of the bank to benefit. Some of our most recent innovations let us engage broadly with consumers in ways that aren’t just about banking. Breeze Living, for example, is an augmented reality Smartphone application that we developed to let people capture and share merchant discounts on the move. The point is innovation now is about adding value to customers’ lives, not about what products we can offer. Going forward, the industry has to pay more attention to how banking fits into different contexts – what it lets people do. In many ways, we have only just scratched the surface of how banking is going to change. As the boundaries of consumer banking become increasingly blurred, banks will need to forge new partnerships to meet customer demand. Banks need to study not so much each other, but other industries more adept at engaging and inspiring consumers. They will need to be prepared to form strategic alliances outside of the traditional confines of banking to reach people in the spaces where life is now led. As I see it the changes now underway in technology and consumer demand represent not so much a threat but a great opportunity for banks to move to an unprecedented level of closeness with the customer. If we embrace it now, more than ever, we have the chance to make banking a true enabler in people’s lives, helping to change the industry for good.

QATAR ImPACT

COMPETITION

big talking point recently was the pay rise received by state-employed Qatari nationals – 60 percent for most, and 120 percent for those in the armed forces. It provoked debate, obviously because of the size of the increase and why it happened – after all, no official reason was given – but also what it might do to the future of business in the country. It was that last point which caught my interest. Because even though Qatar has made moves to privatise its business sector, this one decision seemed to work in the opposite direction. The simple story is ‘why would someone want to work longer hours for less reward in the private sector, when public jobs have become even more attractive?’ And at that most simplistic level, it is difficult to find a counter-argument. These days the ideas of job security and providing for one’s family are top of the priority list, and a government job delivers all of that. Plus this is a society built mostly on government or government-backed work. The private sector is expatriate-dominated, and if you read Qatar Impact last month you’ll have learnt about what it takes to enter the Qatari business market as a foreigner. While

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Public Private Partnerships are a major part of creating a business landscape outside of the government in Qatar. but are they enough, especially when walking in the public sector is so financially attractive, asks Kamahl Santamaria such ventures do open up opportunities, the country will inevitably need a growing indigenous private sector too. So perhaps there could be more consideration to the private sector as well – specifically, increased investment in PPPs (Public Private Partnerships). PPPs could act as a major stepping-stone towards a stronger public sector, and as such they need to be nurtured. According to a Kuwaiti study, the value of Qatar’s PPPs in the last 10 years has been around US$7.8 billion (QR28 billion). Sectors like waste management, seaport management and health have seen the most investment. But that figure of almost US$8 billion (QR29 billion) pales in comparison to Saudi Arabia’s USD$16.5 billion (QR60 billion), and the United Arab Emirates’ $20 billion (QR73 billion). Also, the idea of “opening up to competition” can be ambiguous. Take Qatar’s first private taxi company which, according to current operator Mowasalat, will be up-and-running in a year. More than 20 private companies applied to bid for the new service, but the winner will still have to operate under the ‘Karwa’ banner and charge the same rates. That’s not really true competition, which in the end is what the private sector thrives on.

It seems, all told, there is a clash of ideals. On the one hand, the Qatar National Vision 2030 which wants 15 percent of nationals in private jobs instead of the current five percent. And on the other, 60 percent government pay rises that make private sector work appear less attractive. How do the two visions work together? I did find it interesting though to read HH The Emir of Qatar Sheikh Hamid bin Khalifa Al Thani’s comments on the subject. He reminded people: “Do your best at workplace and work in a perfect way to help the country achieve its development-related goals and targets.” But he also added laziness wouldn’t be tolerated and that anyone found not doing his work properly would be taken to task. In the end, Qatar can clearly afford the pay rise move. Double-digit growth and a budget surplus up above 10 percent indicate the cash is there. But, as always, the long-term effects have to be considered. A competitive private sector is vital to business and the work ethic of a country, so that good business practice grows and the people reap the benefits. Kamahl Santamaria is a Doha-based news anchor with Al Jazeera English, and host of the channel’s business and economics programme Counting the Cost.

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OUTLOOK FOR 2012 This month TheEDGEâ&#x20AC;&#x2122;s real estate expert edd Brookes summarises Qatarâ&#x20AC;&#x2122;s 2011 dynamic year and the positive market stability on commercial and residential rents.

011 was a busy year from a real estate prospective, both rents and capital values appeared to stabilise over the 12 months with some positive gains, notably in residential rents on The Pearl-Qatar and also in a number of areas from a land value prospective. Commercial Rents: Despite the addition of a further 490,000 square metre (sqm) of office space in West Bay over the past 30 months bringing the total inventory up to 1.3 million sqm, rents have stabilised for prime property at QR190 sqm/month level, (excluding service charge). There are one or two notable exceptions to this rental level such as Tornado Tower, of which, all its 52,000 sqm is let where rents average over QR220 for multiple floors and QR250 for partial floors. Apart from its iconic design, the excellent parking ratio of one space per 34 sqm of leasable area makes it particularly attractive for occupiers. Al Fardan Towers also commands premium rents. Both regional and international demand is well evident and increasing. The government continues to be the biggest occupier within the prime business district, having taken up five buildings over the last 12 months While pipeline supply will soften commercial rents generally and have a short term impact on absorption rates, I would still

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expect to see prime buildings maintaining current rental levels. New developments coming in the new year will include The Gate, featuring some 52,000 sqm of high quality office space, Al Baker Twin Towers (aprox. 80,000 sqm), Abdul Ghani Commercial Tower (36,ooo sqm), Samrya Twin Towers (aprox. 70,000 sqm), Doha High Rise (45,000 sqm) and Doha World Trade Centre Tower (45,000 sqm). West Bay continues its dramatic rise both upwards and outwards. With the commencement of construction of the metro system and the inevitable short-term disruptions, it will be interesting whether this pushes demand in the secondary areas, which are offering an equal plethora of attractive quality stock. Residential Rents: Despite softening through all major classes throughout last year as the impact of a swathe of new developments came onto the market, residential rents have stabilised over the past six months with some areas seeing increases. Due to the delays on a number of towers at The Pearl-Qatar, demand has kept up with the existing supply, despite the fact that nine towers in Porto Arabia and The Pearl are expected to hand over during the new year. It will be interesting to see whether developers will look to the leasing market as opposed to sales. The Central Bank decision in 2010 to reduce debt equity ratios for retail mortgages to a 30 percent cap has reduced the number of local expatriate purchases.

This is will be revisited in due course as new developments in Al Khor and around the various districts of Lusail become reality. The impact of the requirement for all real estate brokerage companies to become suitably licensed is long overdue. Despite there being some real developments in terms of market transparency, as the publication and availability of data and printed transactional evidence, the market still has some way to develop to reach the level of sophistication of, for example, that seen in Dubai. West Bay residential rents have also stabilised over the past three months, as September and October witnessed a large number of new arrivals, dominated as one might expect by the construction market. The total population passed the 1.7 million mark in May according to the Qatar Statistical Authority and shows no sign of abating. This also accounts for the increasing demand for compound villas. This would suggest an increase in the number of family expatriates which had been decreasing over the past couple of years as international and regional employers tightened their belts and reduced housing allowance packages. However dynamic 2011 was, I have no doubt that 2012 is going to be considerably up a gear. Edd Brookes is a director and head of valuation, Middle East, at DTZ in Doha.

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SUBSCRIPTION FORM 2011 TheEDGE is Qatar’s dedicated monthly business magazine.

TheEDGE incorporates a mix of industry news and analysis, in depth features, special interviews with key business decision makers, economic insight and market activity reports, and tips for how you can improve your day-to-day business operations. TheEDGE is delivered straight to the door of the targeted business community. To ensure you keep up-to-date, with what is happening in Qatar’s business landscape, please fill in the subscription form (below) to receive TheEDGE on a monthly basis. Subscription is FREE (in Qatar). Forms are to be addressed to the Subscriptions Department at: TheEDGE Subscriptions Department Firefly Communications 11th Floor, Jaidah Tower PO Box 11596 Doha, Qatar

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mIDDLE EAST mATTERS

TIME ON THE ROAD

ourism, trade and travel are core parts of the economic model for the future expansion of Qatar and the region. With eyes set on rapid growth, we need to pause and think of the consumer and employee mix. The integration of people is like observing a busy global airport complete with confusion and frustration. During the past three years, I have spent considerable time travelling across a half million kilometres on 200 plus flights. Even though I live in the Gulf Cooperation Council (GCC), I still managed to rack up 80 trips across the region. There are some key insights that matter when trying to grow your business in the region. Not long ago, I stood watching a customer lose his cool at the money exchange because he did not feel like he was being served adequately. In front of him was the attendant serving a client â&#x20AC;&#x201C; and I do admit the transaction was taking a bit too long. It seemed like they were having a casual conversation. So the gentleman in the queue started berating him for not serving his obviously urgent need. The other worker, however, just ignored him. Perhaps, he was the money supervisor and not allowed to work at the window. That is my guess, given there is always someone sitting behind and just monitoring. Nonetheless, the

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Many sales in the MENA region are happening as a result of overall market growth rather than a specific business sales acumen. Dr. Tommy Weir explains the risk for Qatari business in the long term as the trap of merely ordering instead of actually selling threatens to take over. gentleman did not know this and felt like he was getting substandard customer service. The first insight is that customer service is not universal. There are large degrees of variance in acceptable service quality from one nationality to another and from one company to another. A friend of mine was flying on one of the national carriers recently and they acted as if he was fortunate to be their customer. This raises the second insight: do you sell or are you just an order taker. Given the rapid growth in the region in a condensed period of time, many businesses have grown without having to put in the effort. They knew that if one person did not buy, there was a long line behind them and it was likely that the next person would. In the middle of rapid growth, it is easy to confuse selling with order taking, believing the latter is actually selling. In reality, the sales are happening as a result of overall market growth rather than a specific business sales acumen. This is a considerable risk for business in Qatar. As Qatar expands, the trap of order taking may take over, but this is not a sustainable sales model. So ensure sales expertise. One of my personal frustrations is travelling with people who are not seasoned travellers. Because travelling is rich with ambiguity and it can be very frustrating for people needing clarity. Navigating from gate to gate, hotel to hotel and so forth comes

naturally to the road warrior, but given that most people do not have this level of experience, it can be paralysing for them. This insight is true when the first time expatriate joins a company as an employee. General trade as an economic pillar is tourism and this means many people will be having first time experiences in the middle of considerable ambiguity. Businesses need to provide clarity â&#x20AC;&#x201C; not what you think is clear but what is clear, to your employees, customers or stakeholders. Many people do not know what to expect and it creates a level of panic. Remove this frustration by being clear. The final insight comes from the unexpected. In travel, this can be a change of aircraft or flight delay due to weather. When this happens, the airline works diligently to fix the problem, but it is rare that they focus on the consumer. When the unexpected happens, a business needs to concentrate in two areas: servicing the client and fixing the problem. Given that the GCC market will continue to be ripe with travellers it is time that business learns from the tried and true and give world-class service, excel at sales, provide clarity and serve the customer when the unexpected happens. Dr. Tommy Weir is an authority on fastgrowth and emerging market leadership, and an advisor and author.

The ideal corporate address Alfardan Properties has been credited for contributing significantly towards accelerating the growth of Qatar’s luxury property sector, having created some of the most iconic real estate projects in the country. Even when it comes to commercial properties, the company has been developing ideally located high level luxury offerings that cater to the demands of the most discerning corporate and business clients. Established as a brand synonymous with luxury and excellence, Alfardan Properties has been able to successfully capitalise on the company’s extensive experience and expanding professional expertise to pursue new and innovative projects that are in line with the changing dynamics of Qatar’s property market. Being a long-time market leader and

innovators in real estate solutions with a broad range of residential and commercial properties, Alfardan Properties has stood out with its ability to fully understand client requirements and respond to market demands with its luxurious and uniquely designed developments. Alfardan Properties, an innovative leader in Qatar’s real estate industry, has set new benchmarks towers at its commercial state-of-the-art facilities, top quality finishing and eye-catching design. Be it the Alfardan Towers, Alfardan Centre, Burj Al Gassar or the Alfardan Plaza, each of these towers have generated a great deal of interest among Qatar’s corporate sector. Alfardan Properties, understands the requirements of both astute businessman and mega corporations;

the corporate solutions offered from office designs, space distribution, technical provision, building management systems (BMS), extraordinary finishing and professional property management, has shown to be successful due to careful analysis of the commercial market requirements and various business preferences. The Alfardan Towers, well-known for being one of the finest commercial towers in Doha, soar 30 storeys above the West Bay commercial district and are a symbol of Alfardan Properties’ continuous efforts towards luxury and excellence. Exuding an air of lavishness and exclusivity, the Commercial Tower has a commercial podium at its base, which is home to several boutique outlets; not to mention a couple of cafe’s and a

gourmet restaurant which cater to the staff and employees of the Commercial Tower at Alfardan, the Residence and West bay area. The 30-storey Commercial Tower offers up to 1,084 sqm of office space per floor; private secured access for employees and visitors; eight high-speed elevators; raised flooring for maximum flexibility; building management systems, 24-hour security, ample parking, and maintenance service among others.

market and the City’s famous Corniche. The Alfardan Centre offers excellent finish, dedicated parking, professional maintenance, property management not to mention the option of leasing fitted offices with full fledged furnishing. The 6-storey Alfardan Plaza is a modern day landmark with a fusion of traditional motifs blended with clean post-modern lines. Strategically located in the heart of Doha city in the vibrant Al Sadd area, Alfardan Plaza office building is home not only to the prestigious Alfardan Premier Motors and Land Rover Showroom, but also to several prominent companies and enterprises. These commercial towers from Alfardan Properties reflect the company’s expertise in knowing the pulse of Qatar’s corporate market, and ensuring that they continuously offer developments that are designed after taking into consideration prime factors such as location, current corporate market requirements and contemporary design.

Burj Al Gassar, built on a sprawling 4,052 square meter plot in the famous West Bay district, is a true testament of excellence, stature, and prestige. With stunning panoramic views, the tower is also conveniently located near Doha’s magnificent Corniche. The refined architectural design of Burj Al Gassar only emphasizes the level of luxury this tower boasts. Spanning over 24 floors, with 2-storey underground parking, the Tower offers companies state-ofthe-art office area requirements, with extraordinary facilities, furnishing and professional service. Amenities at Burj Al Gassar include eight elevators; Building management System (BMS); raised flooring and false ceiling; dedicated parking slots; hi-tech fire protection system; state-of-the-art security system; professional property management; and 24/7 Maintenance call centre. Alfardan Centre, located at the beginning of Doha’s Bank Street, serves as the Alfardan Group’s Head Office as well as being home to Alfardan Exchange and Alfardan Jewellery branches. Renowned for being one of the first buildings in the area, Alfardan Centre is located adjacent to the historic souq Waqif, one of Doha’s biggest cultural attractions; is considered a true landmark still maintaining its excellence in providing competitive business solutions and office space. In addition to being nearby major banks, financial institutions, the Doha Securities

With its commitment to excellence, Alfardan Properties continues to raise the bar in developing unique commercial and residential properties that exceed expectations of clients with its quality, luxury and of course location.

ENERGY & RESEARCH QATAR AND SCOTLAND:

SHARED ENERGY VALUES Qatar and Scotland are two countries separated by 6000 kilometres, social, cultural and linguistic distinctions and roughly 30 degrees Celsius average temperatures. Yet, as Jamie Stewart reveals, an unlikely relationship is emerging between the two nations.

Scotland is the location of Europe’s largest wind energy farm, Whitelee, and is indicative of the country’s ambition to decarbonise its energy sector, one of many traits in the field Scotland shares with Qatar. (Image Getty Images)

wenty minutes drive from the centre of Glasgow, Scotland, spread across an exposed, grassy, Northern European moor, is the continent’s largest operational onshore wind farm. The Whitelee project, which at 322MW can generate enough electricity to power 180,000 homes, is representative of Scotland’s ambitious push to decarbonise its energy sector. At first glance, the cold, weather-beaten country, exposed to the harsh North Sea on its east and the vast Atlantic Ocean on its west, appears poles apart from the dusty, desert landscape of Qatar: the climate of the first is temperate and changeable with high average rainfall; the climate of the second is subtropical, hot and dry with barely a drop of rain all year. Yet an unlikely alliance formed last month between the two nations, based on a mutual understanding of the energy challenge facing each. Both Qatar and Scotland have developed their economies around the extraction and export of hydrocarbon resources – and both are now embarking on the task of realigning their economies for a long-term future in which renewable sources of energy will play a much greater part in the mix. Speaking on the first day of the three-day Energy Security Research Symposium in Qatar in November, Qatar Environment and Energy Research Institute executive director Rabi Mohtar said,

ENERGY & RESEARCH

Scottish first minister Alex Salmond, pictured here visiting a wind farm in Scotland, visited Qatar recently and highlighted the many similarities and partnership opportunities for the two countries in the energy sector. (Image Getty Images)

“The consumption of oil and electricity is rapidly rising in the Gulf Cooperation Council (GCC) because of low prices in the domestic market. Qatar and the GCC have enjoyed exceptional economic growth and prosperity and significantly contributed to the energy security in the world. This, however, came at a cost to the vulnerable ecosystem of the region. The GCC needs to take a global and comprehensive look at the energy system for [better] energy security.” SUSTAINABLE TRANSFORMATION According to research director at the United Kingdom’s Oxford University Chris Llewellyn Smith, speaking at the same event, “most of the remaining fossil fuels [globally] will be burnt in one hundred years unless we develop a cost-competitive alternative at large scale.” The comments from both parties point towards the need for Qatar to gradually transform its domestic energy sector for a changing international market place, and alliances with unlikely nations such as Scotland may go some way to making that happen. “As nations, we both have considerable expertise in oil and gas production but as we look to the future and a low carbon economy, we must increasingly develop new technologies,” Alex Salmond who, as first minister of Scotland is head of the country’s government, said on a visit to Qatar at the end of October. “Although both Scotland and Qatar have common strengths in the oil and gas sector, we are both seeking to develop our low carbon energy industries.” Qatar has wasted no time in communicating its long-term ambitions to the rest of the world. Doha is ploughing cash into solar power water desalination technologies, in order to tackle both the water shortage experienced by any desert nation while allowing its desalination process – which is highly energy intensive – to operate on a sustainable footing. Furthermore, numerous research and development centres have been established to look into sustainable energy, including a number of bodied within the Qatar Foundation, such as the Qatar Environment and Energy Institute, and Qatar Solar Technologies, which is in the process of constructing a polysilicon production plant for use in solar power generation in Ras Laffan Industrial City – right at the heart of the hydrocarbon industry.

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“Scotland shares many similarities with Qatar. We are innovative, determined and forward-thinking...” – Chief executive of Scottish Enterprise, Lena Wilson. Such moves are born out of Doha’s will to position itself for a change in the global energy economy – a will shared by Scotland. Like Qatar, Scotland has built a highly profitable hydrocarbon export industry, allowing it to cash in on the world’s long-unquenchable thirst for fossil fuels. As chief executive of state-funded promotional body Scottish Enterprise Lena Wilson explains: “Scotland shares many similarities with Qatar. We are innovative, determined and forwardthinking and we both realise the importance and economic benefits of developing low carbon technologies while continuing to support our world class hydrocarbon sectors.” EXPENSIVE PRIZE Earlier this year, Scotland put in place the industrialised world’s most ambitious low-carbon target for its power generation sector – to generate the equivalent of 100 percent of its annual electricity consumption from renewable sources by 2020. The aim is for the country to generate twice the volume of energy as it requires, just over half of it from renewable sources, with just under half coming from conventional sources, allowing Scotland to become a net exporter of electricity, exporting as much power as it consumes. The country is already a global heavyweight in renewable energy, having generated over a quarter of its consumed power from clean sources in 2010. But the real and abiding prize for Scotland – a genuinely sustainable, world-leading energy sector – is an expensive one. Generating 100 percent of a nation’s consumed power from renewable sources is no small task – which is where the importance of trade links is not lost on Scotland, which could potentially have much to gain from an alliance with Qatar. Writing in the Gulf Times last month, Alex Salmond said: “One of the key challenges faced by the world, as it continues to expand in population and wealth, is sustainable energy. Together, I see Qatar and Scotland as pioneers in this power revolution, as we combine our legacy experience and diversified investment in alternative sources of energy.” Partnerships between Scotland, with a world leading renewable energy sector in need of investment; and Qatar, positioning itself at the forefront of research and development in the renewable energy sector, and cash to invest, could prove that opposites do indeed attract.

ENERGY & RESEARCH

QATAR AND RUSSIA: ALLIES IN GAS? Talks are underway between Qatar and Russia as an allegiance between the two nations, which together control 38 percent of the world’s proven gas reserves, could shore up their gas exports. Jamie Stewart explains further. atar and Russia are in the process of strengthening ties in relation to natural gas production and exports. A partnership between the two countries, who between them control a mammoth 38 percent of the world’s proven gas reserves, could have vast implications for the balance of power among the globe’s energy exporters. According to a flurry of reports that emerged in the Russian media last month, Qatar is looking to acquire a share in Novatek, Russia’s primary independent natural gas producer. Furthermore Doha is bidding for a participatory role in Russia’s Yamal liquefied natural gas (LNG) project, according to the reports. Russian energy minister Sergey Shmatko said after a meeting with his Qatari counterpart Mohammed Saleh Al Sada that Yamal LNG stakeholders, including French hydrocarbons giant Total, will be instructed to finalise the process of including Qatar in the Yamal project “as soon as possible”. “We are interested in Yamal as well as Novatek, and we are engaged in the discussion on these two projects at the same time,” Al Sada confirmed at a meeting of the Gas Exporting Countries Forum in Doha in mid-November. Novatek is the second largest gas producer in Russia behind stateowned behemoth Gazprom. The Yamal project, which is aiming to tap into the huge gas reserves on the Yamal peninsula, a vast spit of land in northern Russia, is being developed by Novatek, which holds an 80 percent share. Novatek chief executive Leonid Mikhelson also confirmed at the Doha forum that talks are underway with Qatar. Statement of intent Obtaining a stake in both Novatek and the Yamal project could at a stroke greatly extend Qatar’s reach into the gas industry beyond its own borders. Russia has for many months now been losing gas export market share in Europe to Qatar, due to Doha’s huge investment in LNG production over the past decade. A move into the Russian sector, as an investor with a noncontrolling share, would see Doha shore up its international relations with its largest natural gas competitor. It would also be a firm statement of intent to the global market, signalling that Qatar has

Qatar and Russia are reported to be considering stronger ties in natural gas production and exports. Pictured is a refinery in Russia’s Yamal project, which Qatar is purported to be considering purchasing a stake in. (Image Corbis)

The Yamal gas project in Russia is being developed by Novatek and chief executive Leonid Mikhelson recently confirmed in Doha that talks are underway with Qatar. no intention of releasing its hold on the European market, despite anticipated demand growth in Asia and South America (see news brief). Ineed, the going looks good for Qatar. Novatek wants to hold on to a controlling 51 percent stake in the Yamal project, but has previously stated it plans to bring in two or three international partners by early 2012. However Doha could yet have a battle on its hands. According to the Russian media reports, talks are also ongoing with Japanese and Indian companies, as well as Qatar. TheEDGE

ENERGY & RESEARCH

Qatar Petroleum recently signed an MOU with Qatar University aimed at improving cooperation on energy and environmental issues. (Image Getty Images)

Energy And Research briefs APIC foresee resumption in energy spending Energy sector investments made by Middle Eastern and North African (MENA) oil producing countries are set to take off as a result of relatively high oil prices, the Arab Petroleum Investments Corp (APIC) has predicted. Oil-producing MENA nations will invest US$525 billion (QR1.91 trillion) on energy projects from 2012 to 2016, the group said. Saudi Arabia, the United Arab Emirates (UAE), Iran and Algeria have increased projected spending on energy projects over the next five years as oil prices allow them to resume projects that were delayed as a result of the financial crisis. In Qatar, investment was less curtailed because Doha was better protected from economic turmoil by its gas export industry. According to APIC, Saudi Arabia will top the list in the region with committed investments of US$141 billion (QR513 billion), followed by the UAE with US$76 billion (QR277 billion) in the same period. LNG demand will tighten global market A period of rapid supply growth in the liquefied natural gas (LNG) industry “is over”, an official at Qatar energy giant RasGas claimed last month. Speaking at the World LNG Summit in Rome, RasGas shipping executive Khalid Sultan Al Kuwari said gas consumption in emerging markets in Asia and South America would underpin future global demand growth and be at the centre of a sustained shift in supply and demand. “The name of the game over the next few years is strong demand growth,” Al Kuwari said. He added that, while Japanese demand growth was expected define the market over the coming months, long-term demand driven by expected consumption growth in India and China would outstrip growth on the supply side. inevitably pushing up global LNG prices.

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QP offers researchers real Time experience Downstream hydrocarbons giant Qatar Petroleum is to work alongside Qatar University (QU) on a project aimed at improving cooperation on energy and environmental issues. The signing of a MoU between the two parties coincided with the launch last month of the Forum on Energy and Environmental Law at QU College of Law. QU president Sheikha Abdulla Al Misnad said the deal represented “a good opportunity for our law faculty to gain significant industry exposure which will benefit our students and the state”. The forum is intended to offer a platform of interaction between industry, academia and governmental entities in the fields of energy and environmental law, the parties said in a joint statement. It will conduct research into the challenges of increasing global energy demand and environmental degradation by examining comparative policy and potential implementation in Qatar and the wider Gulf region. Pearl project to spearhead diversification Revenues from the giant Pearl gas-to-liquids (GTL) project in Qatar’s Ras Laffan City will be pumped directly into the country’s national economy, energy minister Mohammed bin Saleh al Sada said last month. Speaking at the opening of the QR67 billion project, Al Sada said production at the site would increase gradually to reach maximum capacity of 260,000 barrels of oil equivalent per day by early 2012. The giant downstream hydrocarbons scheme is one of the largest single projects that can contribute to the diversification of the Qatari economy, the minister said in a statement. Qatar’s downstream hydrocarbon sector is a vital stepping stone between its gas export industry, growth in which is expected to plateau in 2013, and its non-hydrocarbon sector, which the state is in the process of developing on a mass scale.

Opinion

Smart Technology

to Save Energy Use

The terms ‘intelligent building’ and ‘smart technology’ are bandied about in the media. However Martin á Porta explains how it is not only important to be aware of this technology but also to implement it for a greener future.

Opinion

e continually hear about new innovations to save energy in the news, documentaries, grassroots activism and global discussions. However, does everyone truly understand the value behind this kind of technology, especially in buildings? Buildings consume 40 percent of total electricity in developed countries. These are mainly commercial buildings, which are full of power hungry machines such as, data centres, air conditioning units, heating systems and lighting systems. Most buildings tend to turn on all their equipment at the same time, which in turn elevates the power consumption and puts an overload on the systems. This leaves the utility suppliers struggling with the task of managing supply and demand and leaves the tenants and building owners to cope with high electricity bills. The worst case scenario would be the inability to manage the demand, resulting in a shortage, which could potentially leave thousands of people in businesses and homes in a complete blackout. ENERGY SAVING Developing countries, like India and China in particular as well as countries across the Middle East have faced numerous occasions over the last five years where outages at power plants during the summer have left residents without electricity for hours. The surge in electricity from residents during the sweltering heat puts too much strain on the power grid, causing these outages. Awareness and energy saving campaigns have been implemented by the governments of these countries to combat the misuse or wasting of energy by residents as well as saving energy by reducing lighting on streets, for example. Innovative smart building technology can help in the energy saving process through the intelligent management of commercial buildings, residential buildings and residential homes. Installing intelligent building and automation systems allows for efficient management of energy consumption. For example: motion-sensor lights, which turn off when there is no activity and automatic temperature control, which regulates

temperature at certain points during the day and night. Open office concepts, like the one implemented in Siemens new office in Dubai and set to be rolled out by the company in the region, uses strategies to not only improve employees productivity and work and life balance, but ensures sustainability through leadership in energy and environmental design (LEED) certification, evaluation of carbon footprint and intelligent choice of materials. It is not only important to consider this as an investment into the life cycle of a building, but it is also a consideration to the environment. Companies are now seeing energy and sustainability as a core business issue that must be addressed. Businesses can justify energy efficiency investments based on proven savings and reduce the impact that volatility has on their business. Of course it is important to utilise Smart Building Technology for cost efficiency and for a “greener” future; but how easy is it? Turns out, not very. There is a strong relationship between the wealth of a country and its overall standing as a “green” city. The 2009 European Green City Index stated that nine out of Top Ten City’s within the Index have a gross domestic product (GDP) per head of more than EUR31,000 (QR155,000). Not surprising, since the wealthier cities have more money to invest into energy efficient infrastructure. On the flip side you have the poorer developing nations who need to grapple with an increase in population, urban development and yet they cannot think of building green because it requires more money. And although money may be great, there are still difficulties in turning everything into a more energyefficient environment. Most of the wealthier nations who are focused on a “green”

initiative have a pre-developed infrastructure that has been in place for years, if not hundreds of years. This creates a hardship of having to renovate buildings into “green” standards, which are harder to implement. QATAR CHALLENGES Then there are nations like Qatar, which have the advantage of creating new developments and cities with energy efficient technologies from the moment of conception, along with the financial ability to build high quality sustainable infrastructures. However, at the same time Qatar is being pushed into a short timeframe that most modern cities never faced when building their infrastructure. Qatar’s time constraints are from their winning bid to host the World Cup 2022. However, this comes with other challenges such as traffic planning; security issues, healthcare facilities, and of course ongoing sustainability. Other challenges, that currently exist in Qatar and the rest of the Gulf region, is that about three quarters to over 90 percent of the region’s population already lives in cities – and the numbers are rising. Around the world, about 80 percent of greenhouse gases, 75 percent of the energy consumed, and 60 percent of water consumption can be attributed to cities. Especially in arid regions, an efficient water supply is crucial. To face the challenges arising from urbanisation and demographic change, cities are looking at the many ways to improve the efficiency of their infrastructures. With the right technology, sustainable cities can increase the quality of life for their residents, while also becoming more environmentally friendly. Martin á Porta is the chief executive officer of Siemens, WLL, Qatar.

Nations such as Qatar have the advantage of creating new developments and cities with energy efficient technologies from the moment of conception. TheEDGE

SPECIAL FOCUS

TO BOND OR NOT TO BOND are bonds the key to DIVERSIFYING? Recently, investors sold treasury bonds of troubled sovereigns and directed their resources into safer treasuries such as Germany and France. Howard Kitson, country head of Mashreq, explains how bonds are positive for diversification in Qatar.

s the eurozone is working hard on agreeing towards a concrete mandate as part of deeper restructuring of Greeceâ&#x20AC;&#x2122;s debt through a bailout package, the strategic talks come down to creditors deciding to go along with a proposal calling for a significant haircut in the value of Greek bonds in private ownership from the total of several hundreds of billions owed. In lieu of that, investors have already sold typically safe haven treasury bonds of troubled sovereigns and instead directed their resources into safer treasuries like Germany and France. How worthwhile are bonds to invest in? For starters, global rating agencies like Moodyâ&#x20AC;&#x2122;s, S&P and Fitch group rate issuers as investment grade, non-investment grade and speculative grade. Anyone browsing the financial pages, however fleetingly, knows that the credit rating of Greek debt has been lowered by rating agencies, meaning that the prices of existing issues have gone down significantly making the yields on them go up drastically. For the new issues, Greece now has to pay higher interest rates as compared to other eurozone nations.

SPECIAL FOCUS

In spite of this turmoil, there are specific sectors that Greece has operative plus in, such as the renewable energy sources market for favourable pricing and financial incentives. Bonds are a good way to bring diversification into one’s portfolio. They are a core element of any financial plan to protect and grow wealth. Given Qatar’s unique position with a strong sovereign rating, and the huge amount of personal wealth due to high per capita income of Qataris and expatriatess living in Qatar, it pays to take a few risks. Investors in this market increasingly understand the potential, and warm up to bonds, especially since some bond issues return as much as seven to 12 percent while fixed deposits offer only two percent on average. A bond is a debt security similar to fixed deposits in a bank, as they pay a fixed rate of return as interest, have a definite maturity, pay the principal back on maturity date, and also provide liquidity through a secondary market. Typically, bonds pay interest at regular intervals like half yearly, which means they can provide a predictable income stream for the investors. Simultanously, bonds help investors grow their purchasing power above the rate of inflation. Common knowledge is that asset allocation exists in four forms – equity, commodity, bonds, fixed income securities and real estate. Bonds can be issued in any currency; however, the most common globally tradable bonds are generally issued in United States (US) dollars, and the changes in the interest rates in the US economy affects the yields on the doller denominated bonds globally. New bonds offer higher interest rates The US Federal Reserve Board (Fed) manages the interest rate environment through monetary policy. During recessionary periods, the Fed tends to lower interest rates to encourage people to take out loans and invest money. At this point, prices for existing bonds tend to increase. Conversely, if the Fed drives interest rates higher to shield a growing economy from inflation, new bonds will offer higher interest payments, while old bonds lose value. In the current scenario, with Fed rate at an all time low (between zero to 0.25 percent), the overall returns on fixed income securities have gone down drastically. In August 2011, the Fed released a statement that it expects to keep interest rates near zero for at least another two years in an effort to put downward pressure on long-term borrowing costs. In this environment, the interest rates on bank deposits and the yields on high grade fixed income

Given Qatar’s unique position with a strong sovereign rating, and the huge amount of personal wealth due to high per capita income of Qataris and expatriates living in Qatar, it pays to take a few risks. securities have come down drastically and are expected to remain low. Also, with lingering concerns on sovereign debt in the eurozone, it has become difficult for an investor to find the right mix of risk and reward. With bonds, the prevailing interest rate environment is central to the yield, or total investment returns. In a falling interest rate scenario, newer bonds pay out less money in interest leading investors to pay premium prices for the older bonds that make the higher interest payments. Alternatively, bonds that are already in circulation lose value when prevailing interest rates move higher. Newer bonds then pay higher interest rates compared to the old bonds, and the old bonds sell for a discount. Good Credit Rating It has become all the more imperative in today’s uncertain economic environment that one should look at bond issuers who have good credit rating and reputation. There are some good choices available in the market, which can give an investor higher returns than the normal fixed deposits or savings accounts. For investors based out of Gulf Cooperation Council (GCC), who understand the Asian and Middle East and North Africa (MENA) markets, some of the good sovereign and corporate issues offering investors considerably high returns over the fixed deposits are Dubai Government Bonds, Arab Republic of Egypt, Republic of Turkey, Mubadala, Mumtalakat, DEWA, Emirates Airlines, Bank of India, ICICI Bank and so forth. Apart from interest risk there is always a chance that the bond issuer may default on its debt obligations. Therefore, it is important that investors of corporate bonds know how to assess credit risk and its potential yield while rising interest rate movements can reduce the value of your principal and a default can almost eliminate it. A sensible investor shops around and does research before taking up an investment in bonds. Every issue has a different rating. For the benefit of the customer, an individual prospectus is designed encompassing all queries pertaining to risk profiles that considers and balances the client’s time horizon and general tolerance for risk. This will help determine the coupon income and capital gain expectations from an investment portfolio. The profiles of consumers approaching us for advice on bonds-issuances range from those requiring stable interest income with little or no capital gain to those with little coupon income or zero coupon bonds and large capital gain expectations. At the end of the day, banks work towards designing a wealth management plan with the right mix of investment assets that allows us all sound sleep at night, regardless of the state of the stock market. TheEDGE

FINANCE & ECONOMICS

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

ECONOMIC BAROMETER (P.44)

Many employees throughout the Middle East have received a salary increase, however Karim Nakhle highlights the negative effect it may have on inflation and everyday spending.

ALSO IN THIS SECTION: • Market Watch: Updated measures to tackle the Euro debt crisis, commodities and financial sector (P.36). • Inside Edge: Manjeet Chhabra writes about Qatar’s transformation from a fishing nation to a global player (P.38). • Special Report: Matt Ghazarian looks at how Qatar’s economy is geared to grow (P.40). • Balance Sheet: Omar Mahmood explains the effect of revising and updating existing IFRS accounting standards (P.42).

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MARKET WATCH

Global MARKET WATCH

COMMODITIES

CORNER

by Dheeraj shahdadpuri

Gold regains some shine

New measures to tackle Euro debt crisis Euro area leaders have once again come up with some extraordinary measures to put a cap on their spiralling debt crisis, which has now brought Italy and Spain under scrutiny. In a positive surprise, the region’s leaders announced that an agreement has been reached with the bondholders to accept 50 percent write down on Greek debt, which was earlier negotiated to be 21 percent. This will ensure that Greek’s debt is brought down to a more sustainable level and reduce chances of a painful sovereign default which otherwise has potential to bring recession in the region. The new programme also includes a EUR130 billion (QR650 billion) official aid package, up from the EUR109 billion (QR545 billion) agreed under the second bailout in July. As far as the European Financial Stability Fund (EFSF) is concerned, an accord has also been reached to raise the fund’s capacity to EUR one trillion (QR five trillion) from the existing EUR440 billion (QR2 trillion) which was increasingly being believed to be insufficient to fight the rapidly growing crisis. Although full details are yet to be announced on how the EFSF will work, it seems that the amount available could be used to insure the sovereign bond sales as one of the options. New funds will be added by creating a special investment vehicle that would raise money from foreign public and private financial institutions. Policymakers have also struck an accord to recapitalise regional banks by increasing the core capital reserves requirement to nine percent after writing down their sovereign holdings. Banks have been given to June 2012 to create a capital cushion in their balance sheets. This would mean that an estimated EUR106 billion (QR530 billion) must be raised. And if banks fail to do so, they can tap their national governments first and then money in EFSF will be used as a last resort. To make broader financial conditions more accommodating, the new European Central Bank’s chief, Mario Draghi, in a separate move also unexpectedly lowered the benchmark interest rate by 25 basis points to 1.25 percent. The interest rate was previously increased twice this year to tamper inflationary expectations. Overall, the debt deal has created a positive mood in markets, which enjoyed a relief rally. This rally received further support from better than anticipated economic growth rate of the United States (US) for the third quarter, which was recorded at 2.5 percent, the highest in more than a year and nearly double the previous quarter. Some uptick has also been recorded in jobs creation and orders for US durable goods, which rose by 1.7 percent in September, the most in last six months. Although, economic indicators in the US may have improved only a little, these positive developments In what has been described as a bold move, newly appointed have nevertheless put unprecedented European Central Bank chief Mario Draghi unexpectedly speculation of a renewed world lowered the bank’s benchmark interest rate by 25 basis points to 1.25 percent in November. (Image Getty Images) recession partly to rest.

The overall impact of the positive euro area accord was also witnessed in gold, which reversed its biggest monthly drop in September since the global financial crisis began in late 2008. The gold price climbed nearly six percent ending the month of October at US$1724.5 (QR6, 277) per ounce. The performance of the yellow metal was more or less in line with global equities, which experienced a relief rally on reduced fears of the 17 nation eurozone collapsing. The recent trend reversal in Gold price, has to some extent, addressed fears of the commodity entering into a bear market trajectory and has also suppressed concerns on the safe haven status, which recently came under investor scrutiny. However, it still remains to be seen that whether the gold price will surpass its recent peak any time soon or investors will be required to wait for an extended period of time given the strength of the US dollar. The Brent crude price also moved in line with global equities and gained nearly nine percent in the month of October. However, some weakness is lately being witnessed in base metals (steel, aluminium and copper etcetera) amid signs of a slowdown in China, which is one of the highest consumers of these commodities. For the third quarter, the Chinese economy expanded at 9.1 percent rate, which is the slowest pace in two years. The manufacturing Purchasing Managers’ Index (PMI) reading of China slipped to its lowest in almost three years, to 50.4 (a reading above 50 denotes expansion of the sector).

TheEDGE

MARKET WATCH

qatar

QATAR FINANCIAL MARKETS

EXCHANGE

QFMA finalises draft listing and IPO rules for SMEs

BY ASIF IQBAL

Qatar Exchange in New york A dozen Qatar Exchange (QE) listed companies, representing nearly half of the QE market capitalisation, took part in a two day forum in New York in late November for the further development and practice of QE’s listed companies’ (having recently signed strategic partnership with NYSE Euronext) as an exciting investment opportunity. The forum, organised by Qatar Exchange in cooperation with Morgan Stanley, aimed at complementing the companies’ ongoing investor relations activities through providing an opportunity for the senior management of listed companies to meet key decision makers from a number of the world’s largest international fund managers. Despite difficult market conditions around the world, portfolio investors continue to view Qatar. The companies that took part in the forum included Qatar National Bank, Doha Bank, Qatar International Islamic Bank, Masraf Al Rayan, Al Khaliji Commercial Bank, Qtel, United Development Company, Gulf Warehousing, Qatar Insurance, Qatar Navigation, Qatar Electricity & Water, and Vodafone Qatar. Listing director at Qatar Exchange Abdulaziz Al Emadi said, “Despite difficult market conditions around the world, portfolio investors continue to view Qatar as an exciting investment opportunity.There is competition for attracting investments in the international capital markets and we expect that our listed companies will benefit from the opportunity to better informed about their corporate strategy. For fund managers the benefit is unrivalled access to the decision makers who are driving the growth of some of Qatar’s largest companies and contributing in a significant way to Qatar’s growth. The forum was an opportunity for Qatar Exchange to outline to the local and international investors the significant achievements of the Qatar Exchange.”

In a bid to boost small and medium enterprise (SMEs) in the country, the Qatar Financial Markets Authority (QFMA) has finalised the draft listing and initial public offering (IPO) rules for SMEs. The draft has been made on the basis of study conducted by the QFMA to assess the needs of these companies and to identify the means and mechanisms that can be used to help them grow and develop through listing on capital markets. The study covered benchmarking with regional and international experiences in respect of IPO and listing similar companies on various capital markets, as well as their monitoring and supervising framework in order to assure protection of the shareholders’ interests. The draft rules are being presented for consultation with the concerned stakeholders, which is expected to come into force soon after approval. The draft IPO and listing rules completes the various regulatory initiatives that QFMA is currently undertaking in order to support the objectives of the capital market in the state and increase its role in driving the cogs of economic development in Qatar. The project is in line with the decision issued by the Supreme Council for Economic and Investment Affairs, and is thought of as a leading step forward in achieving the goals of Qatar National Vision 2030. Commenting on the draft, QFMA chief executive officer Nasser Ahmed al Shaibi, said: “The project of listing small and medium enterprises on the capital market aims to support these companies by providing them access to the adequate financing to help them grow, expand and develop. This goal can be achieved by listing these businesses on a dedicated market in Qatar Exchange, under flexible regulations that fit the structural and legal situation of these enterprises, while maintaining a strong level of supervision to protect the interests of shareholders.”

“QUOTATION CORNER” “For an internationally respected publication such as Global Investor to award ‘Best Financial Centre in the Middle East’ to the Qatar Financial Centre Authority is both an honour and a significant achievement. Clearly we are all delighted that these efforts have been acknowledged. Looking forward, we aim to build on our successes to date and to attract still more business to Qatar in 2012, particularly across our three core hubs of asset management, reinsurance and captives insurance.” - Yousuf Al Jaida, Director of Asset Management and Banking QFCA, commenting on a recent top honour bestowed on the organisation by a Middle East magazine.

TheEDGE

INSIDE EDGE

a fishing nation to A leading

global

player atar’s economy in the last decade has been spectacular, propelled by its oil and gas wealth. The country may be small in terms of geographical area and population, but holds the third largest reserves of natural gas in the world, which has made it an important global trade partner. Its reform-minded government is using proceeds from this hydrocarbon wealth to transform the nation. The succesful bid to host the 2022 World Cup has also marked the country’s arrival on the global landscape. High profile The government’s foreign policy stance has been to position itself as a neutral

Qatar is underpinned by a stable political environment, the government’s foreign policies and strong economic fundamentals; Manjeet Chhabra, takes a closer look at Qatar’s transformation from a tiny fishing and pearling nation to an emerging player on the global stage.

negotiator in some of the Middle East’s conflicts, from political stalemates in Lebanon to rebel talks in Yemen. It maintains friendly relations with Iran and at the same time hosts a major air force base for the United States (US). It has aided Libyan rebels in terms of training, equipping, and funding and is now helping to mediate a political transition by signing a Memorandum of Understanding with Libya’s National Transitional Council and will be actively involved in shaping Libya’s oil and gas policy. Moreover, the State-backed Al Jazeera media outlet has also served as a voice for protesters across the Arab world. Recently, Qatar decided to give refuge to the Palestinian exiles that have been released from prison in Israel.

The Qatari government has successfully avoided any domestic protests over politics or economics, since its political environment is stable under the leadership of the Emir. Largest LNG exporter The government recently announced significant salary, pension and benefits increases for its state and military employees, ensuring its citizens also get a share of the wealth that the country has amassed over the past decade. Qatar’s hydrocarbon sector has been the driver of the country’s growth witnessed in recent years. Until the 1930s, the main sources of income were the pearling and the fishing industry. However, the discovery of oil and gas has propelled a previously

INSIDE EDGE

impoverished emirate to a country with one of the highest per capita gross domestic growth (GDP) in the world. GDP per capita in real terms is expected to go up from QR137,844 in 2001 to QR190,748 in 2011 (International Monetary Fund figures). Qatar is the world’s leading liquefied natural gas (LNG) exporter, possesses the third largest natural gas reserves in the world. It has expanded its LNG production capacity to 77 million tonnes per year. Ambitious moves have allowed Qatar to leap ahead of Russia and Iran, seizing new opportunities to export the fuel to markets in North America, Europe and Asia. Qatar is also an important export market for these countries for gas field drilling and support machinery, construction equipment, machinery and electronics. The education, information technlogy and communications and power sectors in Qatar also present ample opportunity for foreign investment. Host to 2022 World Cup By transforming hydrocarbon wealth into modern health facilities, tourism infrastructure, and western-style education institutions, the Qatari Government aims to engender a forward-looking and highly skilled population. The country is working on several large projects worth around US$100 billion (QR364 billion) on infrastructure and massive developments. Qatar will now host the region’s first World Cup in 2022, which for the next decade Qatar will get huge publicity, and in turn will give a boost to all its institutions, financial and commercial. Sovereign Wealth Fund Qatar’s global investments have grown by leaps and bounds through its Sovereign Wealth Fund, which has continued to grow, due to strong oil prices and strong sales of other types of gas, such as liquid petroleum gas and gas to liquids. As a result, Qatar will continue to expand its massive foreign investment portfolio. It is estimated that Qatar has around US$ 75 billion worth of investments outside the country. In the process, the once-quiet trading outpost has accumulated vast economic and political power.

The Qatari government has successfully avoided any domestic protests over politics or economics, since its political environment is stable. Most competitive country Qatar has also been very successful in attracting foreign investment by providing a business friendly environment. Qatar is one of the fastest growing economies in the world and is also the most competitive country in the Middle East and North Africa. In competition with its pro-business neighbour, the United Arab Emirates, Qatar is striving to make the country attractive for trade and investment through economic reform, transparency, and business-friendly policies. The World Economic Forum’s (WEF) Global Competitiveness Index 2011-12 ranks Qatar as the region’s most competitive and the 14th most business friendly country in the world. The WEF has highlighted Qatar’s competitiveness rests on solid foundations made up of a high-quality institutional framework, a stable macroeconomic environment and an efficient goods market. Low levels of corruption and undue influence on government decisions, high efficiency of government institutions, and high levels of security are the cornerstones of the country’s very solid institutional framework. According to the World Bank’s Doing Business 2012 report released in October 2011, Qatar ranked as the 36th most businessfriendly country out of 183 economies worldwide and third in the region. It ranks the world in the category Paying Taxes, given its simple tax system and low rates—there are no personal taxes and foreign companies pay a flat 10 percent tax on locally sourced profits. It also performed well in Dealing with Construction Permits, a critical area given the ongoing construction boom. Three Qatari companies have made it to the FT Global 500 list, with rankings based stock market valuation of the company: Qatar National Bank, Industries Qatar and Ezdan.

The Qatari economy is well insulated from the economic difficulties facing other regions, presenting Qatari companies with good opportunities for growth and high profitability. Qatar’s Outlook Qatar avoided the recession in 2008 to 2009, and its economy surged ahead in 2010 because of the global recovery and the domestic boost provided by a near doubling of LNG production. However, growth will drastically come down from 19 percent in 2011 to six percent in 2012, mainly because the current round of investment in the country’s gas export capacity has been completed. Even though Qatar is quite well insulated from the turbulence that the rest of the world faces, the country cannot be decoupled from global economy. If Europe and the rest of the world go into recession, their production levels will drop and they will reduce imports of commodities and energy. Also, the expansion of Qatar’s gas programme was undertaken on the assumption that global demand for gas would continue to grow. While demand continues to go up, the global gas market has witnessed a rapid rise in supply, particularly shale gas in the US. Prior to 2008, when US shale gas became a reality, the Gulf region, supplied around 20 percent of the US’ gas consumption. This has fallen to less than 10 percent, leaving Qatar concerned about future buyers for its gas. However, following the earthquake, which destroyed much of Japan’s nuclear industry, Japan turned to Qatar for gas. Qatar will continue to draw world attention not only as an exporter of oil and gas, but also as an investment destination with major infrastructure projects, booming tourism and financial services sectors. TheEDGE

SPECIAL REPORT

Qatar geared for

growth By Matt Ghazarian atar’s economy is set to post near record growth again this year, after leading the world in 2010, though there are some concerns that this rapid expansion could lead to overheating. Meanwhile, Doha will be keeping a wary eye on the economic health of its major trading partners. The Qatari economy expanded by a staggering 41.8 percent year-on-year (y-o-y) in the second quarter of 2011, with nominal gross domestic product (GDP) rising from US$29.7 billion (QR108 billion) in second-quarter 2010 to US$42.2 billion (QR154 billion) in the April to June term this year, according to data released by the Qatar Statistics Authority (QSA) at the beginning of October. This massive increase came on top of an 8.8 percent rise in the first quarter of the year. “Rising levels in the quantity of gas-related products and high energy prices have been the main drivers of nominal y-o-y quarterly GDP increase,” the QSA said in a statement. “The main contributor was the increase in liquefied natural gas (LNG) and other gas-related products. Condensates and other natural gas liquids showed a major jump following the operation at full capacity of the two new LNG mega trains.” While the rate of expansion seen in the second quarter is not likely to carry through the rest of the year, Qatar will still record the fastest growth rate of any economy around the world. In late September, the International Monetary Fund (IMF) predicted that the Qatari economy would expand by 18.7 percent this year, falling back to a more moderate six percent in 2012. This high rate of growth will also allow the government to build up its cash reserves, with estimates of the current budget surplus for 2011 at US$8.5 billion (QR31 billion), the equivalent of 4.9 percent of GDP in financial year 2011/12, according to a report issued on October 4 by QNB Capital, a unit of Qatar National Bank. This surplus will ease to US$7.5 billion (QR27.3 billion) in the 2012/13 fiscal year, mainly due to increased outlays, the Qatari budget is forecast to remain well in the black for an extended period, with GDP set to increase by 10 percent in 2012 and beyond. An earlier study conducted by QNB Capital, carried out in late September, said that the national economy would be worth US$173 billion (QR630 billion) this year, rising to US$197 billion (QR717 billion) in 2012.

TheEDGE

Though a strengthening economy is to be welcomed, Qatar could experience high levels of liquidity, further fuelling inflation. The recent decision by the government to raise government employees wages and allowances by 60 percent, with a 120 percent rise for military personnel, could also prime the inflationary pumps, though the Qatar Central Bank (QCB) has said it will take whatever measures are necessary to drain excess liquidity out of the market to rein in demand-based inflation. While working from a position of fiscal strength, Qatar is already aware of the possible fallout from a return to global recession. The country’s growth and surplus figures are based on the premise that the world will continue to buy that which Qatar has for sale, mainly gas and oil. At least one IMF official has sounded a note of caution over the potential for an economic downturn in other regions having an impact on Qatar and the other Gulf Cooperation Council (GCC) member states. However, Qatar is better placed in terms of financial reserves than some of its neighbours, even though it may have to take measures to protect its economy from any ills suffered by the global banking sector, sovereign debt market or a weakening of emerging markets. The Qatari government has the tools and funds in hand to counter any blips on the economic radar. Having already announced state-backed investments of US$95 billion (QR346 billion) between now and 2016, and with expectations that the private sector will also come to the party with up to US$130 billion (QR473 billion) more over that time, Qatar will be looking to keep its own economy moving forward, even if those elsewhere stall. Matt Ghazarian is an editorial contributor at Oxford Business Group.

BALANCE SHEET

Existing

accounting standards to be replaced

The International Accounting Standard Board is continuing its process of revising the accounting requirements for financial instruments to fully replace the existing standard, IAS 39. Omar Mahmood explains how these changes will impact banks currently applying and converting to the International Financial Reporting Standard, IFRS.

he International Accounting Standard (IAS) 39 replacement project, and in particular its timeline, has been driven in part by requests for reform from the G20. The existing standard has been criticised heavily from all quarters for inconsistent treatment of financial instruments and some have blamed the standard for escalating the financial crises. The G20 and other constituents including institutional investors have strongly encouraged the International Accounting Standards Board (IASB) and its United States (US) counterpart, the Financial Accounting Standards Board (FASB) to work urgently with supervisors and regulators to improve standards on fair value measurement and achieve a single set of high-quality global accounting standards. For IASB’s part, the IAS 39 replacement project has been divided into three main phases at varying stages of completion,

but with a common theme of aligning the accounting for financial instruments with entities’ business models and risk management policies and objectives. Classification and measurement of financial instruments “As the standard setting process currently is quite front loaded… possibly an approach that calibrates the principles as new information becomes available is worth consideration.” The first chapters of IFRS 9 (2009) were published in November 2009 and addressed financial assets. In October 2010 the IASB updated the IFRS 9 , through publication of IFRS 9 (2010), to address financial liabilities. IFRS 9 still retains IAS 39’s mixed measurement model with financial assets and financial liabilities measured either at amortised cost or at fair value. The distinction between the two measurement

BALANCE ShEET

models for financial assets is driven by the business model of a bank, supplemented by a requirement to assessment of the cash flows. This business model approach is a fundamental building block of the standard and aligns the accounting with the way that management deploys assets, while also reflecting the characteristics of the assets. Adoption of these changes will require consideration of, among other items, classification of available for sale securities, whether it is non recourse lending arrangements meet the ‘solely payments of principal and interest’ requirement, and how to treat hybrid financial assets. Banks also will have to assess how their objectives for managing asset portfolios fit into the business model approach. aMoRtISed coSt and IMPaIRMent of fInancIal aSSetS The exposure draft on amortised cost and impairment was published in November 2009. The supplement to this exposure draft was issued to address the operational difficulties of implementing its proposals, particularly in relation to assets managed as part of open portfolios. The IASB continues to redeliberate the initial exposure draft, including amortised cost measurement and the measurement of impairment losses. Under the supplement, expected credit losses would be recognised separately for the good book and bad book. The differentiation between the books would be based generally on internal credit risk management, subject to a principle that financial assets should be transferred to the bad book if their collectability becomes so uncertain that the entity’s credit risk management objective changes from receipt of contractual payments to maximising recovery. Expected loss estimates would be based on all available information, including expectations of future changes in economic and market conditions based on reasonable and supportable information. These proposed changes would require recalibration of banks’ impairment models, considered selection of assumptions and additional disclosures in the financial statements. This is a complete reversal from IAS 39’s

incurred loss model, which was blamed for uncertainty on measurement of financial assets and aligns the IFRS requirements with capital calculation requirements of Basel framework generally preferred by regulators around the world. hedGe accountInG The exposure draft on hedge accounting proposed significant changes to the current hedge accounting requirements, but retained some of the existing guidance in IAS 39. The proposed requirements aimed to create a hedging approach that integrates hedge accounting more closely with risk management policies and objectives, including some net position hedging. The IASB continues to discuss macro and portfolio hedge accounting. The proposals align fair value hedging with the cash flow hedging model and eliminate the 80 to 125 percent effectiveness assessment threshold and retrospective hedge effectiveness testing. They would allow banks to rebalance and continue certain existing hedging relationships that have fallen out of alignment based on an optimal hedge ratio, instead of having to restart the hedge in a new relationship. This is consistent with the process banks often follow to ensure that their hedging strategies continue to follow their risk mitigation strategies. The application of IFRS 9 and the exposure drafts as issued also may have regulatory implications for banks as their adoption would impact retained earnings, which is a key component of Tier 1 capital in the Basel requirements. Recently, the IASB published for public comment an exposure draft of proposals to adjust the mandatory effective date of IFRS 9 Financial Instruments. The exposure draft proposes an effective date of 1 January 2015 (currently 1 January 2013) for IFRS 9 .

In lIne wIth BuSIneSS ModelS “A consistent pattern of linking accounting to an entity’s business models and risk management processes is emerging from the IASB. This should allow

management the opportunity to align two critical processes: internal risk management and financial reporting.” A consistent pattern of linking accounting to an entity’s business models and risk management processes is emerging from the IASB. This approach seeks to have accounting reflect the economics of entities’ business models and how they manage their businesses. The development of standard setting in the area of financial instruments is expected to be welcomed by banks. Such changes should allow management the opportunity to align two critical processes, internal risk management and financial reporting, which historically may have been managed separately. However, the accounting standards do not allow fully open application of the principles provided, as specific rules often are supplied to support the principles, and implementation of the standards may require significant changes in a bank’s processes. Possibly there is scope to change the final standards to allow even greater alignment of accounting with how entities manage their businesses, thus permitting markets to define the implementation of the principles. The development of industry-specific practice therefore could be the function that replaces the provision of specific rules to support the general principles. However, it is unclear whether standard setters and their constituents would be willing to support such a position or allow this to be the process for development of accounting guidance going forward. It is, however, also possible that industry practice may not provide the needed balance between general principles and specific rules. As the standard setting process currently is quite front loaded, given that it attempts to foresee future implementation and application issues, possibly an approach that calibrates the principles as new information becomes available is worth consideration. The alternative approach could be for standard setters to provide a ‘bare bones’ set of accounting principles, allow market practice to develop and then adjust, supplement or re-direct as necessary. TheEDGE

ECONOMIC BAROMETER

TIPPING THE

BALANCE

Salary Rises Versus inflation in The Gulf While many employees and public sector workers in the Middle East have recently celebrated the few extra dollars they received on their latest payrise and salary increases, what has not been considered is the possible consequences on the inflation and their everyday spending. Karim Nakhle looks at the pros and cons this growing trend of pay increase in the regionâ&#x20AC;&#x2122;s economies and more essentially where it could all lead.

ECONOMIC BAROMETER

THE MIDDLE EAST’S PAY RISE CRAZE Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer of these goods and services. Consequently, inflation also reflects erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. Recent global macroeconomic events appear to have affected the Gulf Cooperation Council (GCC) and the broader Middle East less than other parts of the world, when looking at expected salary rises, which may be due to the Arab Spring revolution. According to the latest pay data Survey (analysed from 406 subsidiaries of multinational organisations and approximately 1400 companies participating across the Middle East), companies in the region have implemented widespread executive pay rises, averaging 5.7 percent in 2011. Employees in managerial roles have received higher pay rises than those in executive positions. Broadly, with consumer spending picking up, salary increases were higher among the retail sector, which saw the highest pay rise at 6.4 percent, followed by companies in the service, consumer and high-technology industries and lower amongst the financial services and energy organisations, while education had the smallest increase at 3.8 percent. However, an estimated 55 percent of professionals did not receive any pay increase at all. The average pay increases in the Middle East remains far higher than those received by executives in Western Europe averaging 2.5 percent. Qatari executives received pay rises of four percent, followed by executives in Kuwait (4.5 percent), Saudi Arabia (five percent) and the United Arab Emirates (five percent). Executives in Bahrain received the highest average pay rise at six percent. Companies in the GCC are projecting average salary increases in 2012 of 5.4 percent. Across the broader Middle East region, companies in Egypt, Yemen, Jordan and Lebanon anticipates the highest rises in 2012, with Egypt projecting salary increases of 10 percent, nearly double the average of 5.4 percent in the GCC.

Average pay increases in the Middle East remains far higher than those received by executives in Western Europe, averaging 5.7 to 2.5 percent respectively. That’s the good news, but where’s the catch? The catch is in the basic cause of inflation: Rising labour costs, caused by wage increases, which exceed any improvement in productivity. This cause is important in various industries as we rely heavily on human capital. Firms may decide not to pass these higher costs onto their customers but in the long run, wage inflation tends to move closely with price inflation, because there are limits to the extent to which any business can absorb higher wage expenses. Higher salaries mean an increase in people’s purchasing power, since Middle East nationals lack a culture of saving. As people get more money, this may result in price hikes on everyday consumer prices, commodities, goods, food prices, cars, clothing, rent, transport, fuel and more. Some prices will increase immediately, but others are staggered and will take more time. Case Study: Lebanon The minimum wage in Lebanon has twice been increased since the end of the 1975 to 1990 civil war, most recently in 2008. In October this year, Lebanon’s cabinet increased the minimum wage by 40 percent from LL500,000 to LL700,000 (QR1212 to QR1700). The government also ordered a wage increase of LL300,000 (QR728) on all salaries between one and LL1.8 million (QR4,368), and raised the daily transportation allowance to LL10,000 from LL8,000 (QR25 from QR18) while the education allowance for children jumped to a maximum of LL1.5 million (QR3,640). Ostensibly this was all in a last minute bid to avert a strike that was planned by a handful of partisans of the General Labour

Confederation, and to please a few potential voters in the next elections along the way – while ignoring the crippling effect it could have on the Lebanese economy. In addition to it being unfair for those earning more than LL1.8 million (QR4368) per month and who will not receive a raise, the decision is set to dislocate the pay scale and lead to serious economic issues. However, the uncalculated, unprecedented, and random decision was immediately rejected by the Shura Council, the Economic Council, the Traders Association and the Private sector employers, warning it could lead to inflation (which currently stands at 5.5 percent), refusing to implement the measures until they are reassessed. The Lebanese minimum wage could definitely have done with a boost: However, rather than taking the easy way out by just raising the minimum wage, and putting more burdens on the economy and increasing the public debt, the government should embark on numerous measures to sew the torn pockets of the minimum wage holders, without triggering the risks of unemployment that is now looming on the horizon. Arguably, the government should have looked at improving the competitiveness of the Lebanese economy by reducing the operating costs of companies. Indeed, the government should strive for success by stimulating growth, attracting foreign direct investment and capital, creating jobs, lowering unemployment, strengthening its industries, supporting the private sector, implementing tax reforms, offering subsidized loans, lowering trade barriers and barriers to entry, stopping monopolies, privatising public entities that are incurring losses, encouraging small business start ups and entrepreneurship TheEDGE

ECONOMIC BAROMETER

and creating the economic conditions in which wages can start to rise, and the economic situation can improve. Although the country witnessed record growth rates in recent years, the projections for 2011 have dropped following a protracted government crisis earlier this year and amid political unrest in neighbouring Syria. Salary increases were not keeping pace with the rising cost of living, and employees are finding it difficult, as yet again, the economic situation is still volatile so organisations are being cautious with their fixed costs, such as salaries. Consequently, prices in Lebanese consumer markets have greatly increased amid speculation that the government may soon reach a consensus on raising wages nationally. All markets are naturally responsive to public policy, but in Lebanon’s poorly regulated economy, businesses exploit every opportunity to increase their profits. The wage increases have been overtaken before they were even implemented. The ensuing inflation is a result of poor regulation, the absence of market controls, and the prevalence of monopolies in all market sectors. The new measure could lead to a rise in tuition fees, as if rises in price of consumer goods was not enough. Current statistics indicate that for every dollar increase in wages, the market responds with a two-dollar increase in prices, leaving the consumer as the major loser. QATAR’S QR30 BILLION PUBLIC SECTOR SALARY HIKES As of September 1st, Qatari government announced a 60 percent increase in the salaries of Qatari nationals working within state departments, a 120 percent rise in the basic salary of military officers, and a 50 percent increase in the basic salary and social allowance of military personnel of other ranks. In total, the new salaries and benefits will cost Qatar some U$8.2 billion (QR30 billion). Although the move was seen by some as an attempt to help preserve stability in the wealthy Gulf state, Qatar has been spared by the unrest brought elsewhere by the Arab Spring. The closest Qatar has come to a protest movement in recent months has been

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a modest, one-hour boycott of Qatar Telecom organised on social media website, Twitter. Whatever the reason, this measure obviously pleased Qatari citizens, and the benefits have been widely felt among them – less than 10 percent of whom work in the private sector. Qataris constitute about 20 percent of the population of 1.7 million, and only about six percent of the workforce. Inflation returned to the world’s top liquefied natural gas exporter in December 2010 after a long period of falling prices. Qatar has the lowest rate of unemployment of the GCC – by some estimates it is as low as 0.7 percent. The country’s gross domestic product (GDP) per capita for 2011 is forecasted at US$109,881 (QR400,000) – and wealth is fairly evenly spread among the citizens. Notwithstanding huge infrastructure projects in the pipeline, Qatar is expected to generate double-digit gross domestic product (GDP) growth and a budget surplus of 10.3 percent in 2011/12 before the additional spending measures were announced. Export revenues from energy alone are expected to total $80 billion (QR291 billion). While Qatar’s current inflation rate rose from 2.1 percent in August to 2.2 percent in

September, it is still much lower than many neighbouring countries, with Saudi Arabia and Kuwait for example facing rates as high as five percent. Nevertheless, the generous decree prompted inflation fears and had the business community concerned about the rising cost of living in Qatar, many feeling the private sector is bound to suffer as prices shoot up further due to the state’s salary raise move. Therefore the private sector will either have to raise salaries, pushing inflation even higher, or maintain the status quo, which could foment discontent. Recent research has shown that new payouts might bring average inflation to around 2.5 percent in 2011 and just above three percent next year. To tackle the prospect of rising inflation, Qatar set up in early November a special committee at the Ministry of Business and Trade, to monitor prices of commodities and services. The move is part of efforts being exerted by the Emirate to control prices of goods and services, which have witnessed a rise following the significant increase in salary, pension and social benefits for government and military employees.

How the recent statewide salary hikes in Qatar’s public sector will affect the economy, and in especially formal and informal retail prices – either negatively or positively, particularly in locations such as Souq Waqif, pictured – remains to be seen. (Image Corbis)

IN THE SPOTLIGHT

Qatar Airways chief executive officer Akbar Al Baker addresses media at a packed press conference after the airline’s launch of flights from Doha to Entebbe, Uganda

QATARI Airline Carrier EXPANDS SERVICE TO THE ‘PEARL OF AFRICA’

Behind the Arabian Oryx logo lays the youngest fleet worldwide. Qatar Airways, in just 14 years, has been lauded as an airline with the highest standards of service and excellence and is embarking on a continuing growth strategy. Erika Widén looks at the airline’s achievements and its recent expansion to the Uganda, also known as the ‘Pearl of Africa’.

IN THE SPOTLIGHT

ince the beginning of 2011, Qatar Airways has added new routes to 15 countries worldwide, recently including further operations in Uganda, also known by some as the ‘Pearl of Africa’. Uganda is situated in the eastern part of the continent and has substantial natural resources, regular rainfall, gold, copper, coffee, recently discovered oil and gas reserves, and red fertile soils, and a ripe abundance of fresh fruits and vegetables. Agriculture is the primary source of its economy, employing more than 80 percent of the country’s workforce. As per an estimate conducted in 2010, the country’s gross domestic product (GDP) is US$16.386 billion (QR60 billion). Last month, Qatar Airways’ Airbus A320 landed in Entebbe International Airport, near the capital city of Kampala to a water salute. Entebbe becomes the 16th destination in the Qatar Airways African network. “Since we announced plans to serve Uganda with daily passenger flights, this new route has been highly anticipated by the travel trade, business community and the travelling public. I would like to stress that we are here to stay, building strong relationships with our business partners for the long term,” said Akbar Al Baker, chief executive officer (CEO) of the airline.

A packed press conference in Uganda’s capital Kampala listened to the airline’s expansion plans.

Akbar Al Baker is greeted at Entebbe International Airport by the honourable Stephen Chemoiko Chebrot, Uganda’s minister of state for transport, pictured right.

“These are exciting times for Qatar Airways, with 14 new route launches so far this year, and there will be further expansion over the coming months that will include additional routes and capacity increases to many other destinations worldwide offering passengers from Uganda even more choice of travel options.” Uganda is considered ‘The Pearl of Africa’ for its natural greenery, wildlife and rich culture. Among its popular leisure attractions for visitors are its safaris and precious mountain gorillas. In parallel, Kampala is a fast growing business hub, offering a variety of incentives to overseas investors. From now on, Ugandans do not have to travel north or south in order to reach east, Qatar Airways has meticulously studied its new routes and has provided a new air gateway, which will open business opportunities and attract investors of both nations. “Africa has been our focus this month [November] with start-ups to both Benghazi and Entebbe and we look forward to even more over time,” added Al Baker, “It’s premature to say where we plan to

operate, as we don’t want to give heads up to the competition, but there are plenty of opportunities across Africa, which remains largely underserved by international airlines.” Moreover, twice a week, the Qatar Airways freighter arm flies to Entebbe using an airbus A300 aircraft, exclusively transporting a variety of goods, including flowers and produce. “Qatar Airways has been growing its cargo operations gradually and launching a dedicated freighter route to coincide with the start of the airline’s commercial passenger service signals what promises to be a fruitful air link between Qatar and Uganda,” said Al Baker. Carrier success His Highness the Emir of Qatar outlined his vision to turn Qatar Airways into a leading international airline with the highest standards of excellence and service in 1997. Just three years later it began its operations as a small regional carrier serving various routes around the region. Currently, Qatar Airways is 50 percent government-owned with the remaining 50 percent in the private sector. Under the TheEDGE

IN THE SPOTLIGHT

Since early 2011, Qatar Airways has expanded new routes to 15 countries worldwide, recently including further operations to the central African state of Uganda.

Qatar Airways’ brand new Airbus A320 arrives in Entebbe, the airline’s newest destination, to a traditional water salute welcome.

Expansion Qatar Airways has orders worth more than QR146 billion for more than 200 aircrafts, including Boeing 787s, 777s, Airbus A350s, A380s, A320 Family aircraft and Bombardier corporate jets. The rapid expansion of Qatar Airways prompted Qatar to embark on one of its biggest projects, the construction of a new international airport in Doha, scheduled to open in 2012. Safety Qatar Airways was the first airline in the world to pass the International Air Transport Association (IATA) Operational Safety Audit with a maximum 100 percent compliance in 2003 and passed the test again during the two year renewal period in 2005, 2007, 2009, and in June 2011.

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leadership of Al Baker, CEO since 1996, the airline has developed into a global awardwinning carrier and is considered one of the best across the world. Fourteen years later, Qatar Airways, though known as the youngest fleet in the world, has expanded to 109 destinations in its worldwide network across Europe, Africa, Asia Pacific, Middle East, North and South America, and recently won Airline of the Year 2011 at the annual Skytrax World Airline Awards. Skytrax an independent aviation industrymonitoring agency that reinterred the airline as Best Airline in the Middle East for the sixth consecutive year and Best First Class Lounge for its Premium Terminal situated in Qatar’s capital, Doha, a lounge exclusively for first and business class passengers. Moreover, in October of this year it received its 100th aircraft. “The Premium Terminal goes one step further by exceeding passenger’s

expectations. It is innovative, unique and truly one of a kind. The terminal is designed to create an inviting ambience, allowing passengers to unwind and enjoy the excellent facilities such as a spa, jacuzzi, sauna and wonderful duty free shopping, all in the serene surroundings of fantastic water features,” said Al Baker, “ For business travellers, we have a conference room with audio visual facilities and meeting rooms together with secretarial services, all available free on a first-come, first served bases.” The 10,000 square metre Premium Terminal was built in nine months and fully operational shortly before the start of the Asian Games in 2006. In 2009 it expanded to an additional 80 percent in order to accommodate its rapid expansion. The approximate cost of this élite terminal was QR364 million, achieving a world’s premiere benchmark in premium class travel. SUSTAINABLE AIRLINE As part of Qatar’s national vision of sustainability, Qatar Airways is committed to leading environmental sustainability and corporate social responsibility. It administers an innovation called ‘Five Pillar Corporate Social Responsibility Strategy’, which embraces change management, communication, environment, integrated fuel management and sustainable development. The concept of the five pillars is to have a less negative impact on the global environment. This includes climate change, noise, local air quality, waste and nonrenewable resources. By 2013, Qatar Airways intends to offer more than 120 destinations worldwide with a fleet of more than 210 aircrafts. Al Baker has been key in Qatar Airways’ success in assisting its development to what it has become today. In addition to leading the development of the multi billion dollar New Doha International Airport the CEO has been instrumental expanding into its airline division Qatar Airways Holidays, Qatar Aviation Services, Qatar Duty Free Company, Doha International Airport, Qatar Distribution Company, Qatar Executive, Internal Media Services and Qatar Aircraft Catering Company.

COvER STORY

hot PRoPeRty

hOW QATAR’S REAL ESTATE AND CONSTRUCTION SECTOR IS LOOkING UP

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before the financial crisis, Qatar real estate was at a peak. but it has surged back, especially since Qatari legislators issued laws opening up the property market to foreign investors. erika Widén, looks at the current bullish status of the sector, examines some of the major developments in Qatar and investigates whether the local market is becoming more appealing to neighbouring nations rather than Western investors. atar is considered one of the most stable economies in the Middle East with the International Monetary Fund (IMF) forecasting the highest growth in the Gulf Cooperation Council (GCC) of 18 percent this year. “Qatar’s property market is receiving a boost from the successful World Cup 2022 bid. While there has been much emphasis on temporary accommodation for the expected one million football fans, there is also the need for a large build-up of permanent residences in the lead up to the games,” says Niall McLoughlin, senior vice president of DAMAC Properties, “Qatar will need to accommodate an influx of expatriate workers including construction engineers, architects and project managers. The surge of expatriates heading to Qatar will provide lucrative rental returns for property investors over the next decade and beyond.” econoMIc GRowth Qatar’s economic growth is partially attributed to its real estate sector. Major real estate projects are either in the planning stage, under construction or completed, which has prompted Qatar legislators to issue laws in order to attract foreign investment in the local market. Foreigners are entitled to purchase a property in Doha under Article 4 of the law, which states that non-Qataris are permitted to purchase freehold properties in certain development areas such as The Pearl-Qatar, West Bay Lagoon and Al Khor Resort. In addition, Law No.17 of 2004 introduced Usufruct, which means non-Qataris are allowed of possession of real estate and residential units for an initial of 99 years, with the possibility to renew for an extended 99 years in 18 highlighted areas (see box overleaf). “Qatar is booming, the government is spending on infrastructure, and the World Cup is just around the corner. Global real estate services firms Jones Lang LaSelle is predicting the property sector may record up to US$14 billion (QR51 billion) of growth over the next 10 years, which could see prices rise by 30 percent in the next five years and 50 percent in the years leading up to its hosting of the World Cup,” adds McLoughlin. There has been some hesitation about the long term viability of Qatar’s real estate market, due to the potential for the World Cup event to distort long term supply and demand. However, McLoughlin feels that Qatar’s growth is likely to be strong and sustainable in spite of whether the country hosts the event or not, since Qatar is the world’s largest producer of natural liquefied gas (LNG) and with the increasing reliance on the cleaner burning fuel globally, Qatar’s future is all but assured. Another incentive to attract non-Qataris to invest is the right to have a residence visa upon ownership of a property, either on a freehold or leasehold basis. It is issued for five years and renewable only if the property is still under the same ownership name, however it is not applicable as a work visa. Current foreign owners are anxiously waiting for a near future change in the law in order for the residency visa to be validated as a working one as well.

luSaIl cIty One of Qatar’s major attraction developments under construction is Lusail City, situated on the east coast, approximately 15 kilometres north of Qatar’s capital, Doha. The masterplan is comprised with 37 square kilometres of waterfront land and planned into 19 integrated and diverse mixed use districts. Its name is retained from the historical name for the area in the north of Qatar. Upon completion in the near future, Lusail will attract residents, business and visitors for its distinct 21st century iconic development city, which embraces the cultural and geographic heritage of Qatar. It will compromise residential, commercial, hospitality and retail, in addition to community needs such as schools, medical, sport, entertainment and cultural facilities and shopping centres. Non-GCC citizens are entitled to purchase in Lusail City for a period of a 99-year leasehold. However, freehold is permitted to GCC nationals upon purchasing

Business Square Tower, located in Lusail, comprises offices and residential units, developed by DAMAC properties and with completion expected in 2013.

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The final view of the main entrance to Doha’s New International Airport, forecasted for maximum development from 2015 onwards.

Qatar is considered one of the most stable economies in the Middle East with the International Monetary Fund (IMF) forecasting the highest growth in the Gulf Cooperation Council (GCC) of 18 percent this year. within DAMAC properties. The only disadvantage in Lusail is that the land is only available on 99-year-leasehold and many international investment funds need to purchase on a freehold basis. DAMAC properties are currently developing low rise residential units called The Piazza in addition to the Business Square Tower, which is of mix use and it is anticipated to be fully completed in 2013. The average price per square foot is QR1500 for commercial and retail units and QR1100 for residential apartments. “Business Square is ideally situated close to the West Bay area, within the Marina District, and The Piazza is conveniently positioned close to the planned metro station, which will be important come the World Cup in 2011,” says Mc Loughlin. QATARI REAL ESTATE BROKERING LAW In late July it was published in all local newspapers a new norm issued regarding Qatar’s real estate brokerage, the Law No, 13 of 2011 requires only Qatari nationals to practice in the real estate brokering business and in case of any violation of any of the provisions of the law, a firm’s license will be suspended from three to six months and a fine of QR50,000 will be imposed on firms engaging in business without a license. A company applying for the brokerage license can have a foreign partner stake not exceeding 49 percent. A prominent local businessman, Ahmed Al Khalaf, commented to a local newspaper of the decision that, “the situation in the real estate sector is chaotic and there are cases where several middlemen try to sell a single property, now things

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would be organised and unscrupulous middlemen would be out the brokerage business.” Qataris also commented on local social networking websites, expressing support towards to the new law as they hope thanks to it, real estate prices and rentals would stabilise. Qatar’s initiative to enforce the new law has also been praised not only by real estate licensed companies but also residents, as the law will ensure that the real estate market will run fairly and will be profitable for investors, tenants and property owners. “The real estate market is full of illegal middlemen and unlicensed real estate brokers that are ruining things for respectful companies who pay high expenses to keep there business running and professional,” says Anthony Awkar, general manager of Capstone Property Services. SECONDARY MARKET 2008 it was a good year for purchasing residential units in major developments offered around Qatar. But this of course was before the global financial crisis, which has left a high speculation that secondary sales are relatively high. Mirco Alexander Maurer, head of real estate at Engel & Völkers emphasised that many developers have also reduced their prices as well. It has also been claimed that some developers on the same price level offer units of differing quality and substance, although some investors have reduced their price significantly from the original purchasing price due to problems in getting finance. “It is normal in emerging markets that people speculate on real estate. Most Qataris bought properties at an early point and are still in profit on current price levels or they have even sold with profit a long time ago,” says Maurer, “It’s more the foreigners who bought around 2008 at the peak of the market. These price levels will not be reached for a long time and that is why the investors try to get [out of] their investment, even with a high loss.” According to Maurer people who can afford their investment and have a long term view rather than just a making a quick profit, are keeping their properties or renting them to cover their monthly costs and are looking forward positively to the upcoming market, which will require a few more years to recover. SUPPLY Versus DEMAND A few years ago there was a high demand for residential units, which were still under the construction phase, but comprise now most of the current availability. However many ostensibly are not up to the expectations of the clients, at least not at the asking price. On average

COVER STORY

18 LEASEHOLD AREAS IN QATAR

Major real estate projects are either in the planning stage, under construction or completed, which has prompted Qatar legislators to issue laws in order to attract foreign investment in the local market. a housing allowance given to single Westerners is from QR8,000 to QR12,000, whereas to Western families approximately is allocated QR15,000, for senior staff possibly rising to above QR20,000 a month. â&#x20AC;&#x153;Singles and couples without children are struggling in finding a nice flat of adequate quality. There are two to three owners which have seen this demand years ago and can provide this, including nice facilities, but sad to say most properties are

1. Musheireb (Area #13) 2. Fareej Abdul Aziz (Area #14) 3. Doha Jadeed (Area #15) 4. Ghanem Al Qadeem (Area #16) 5. Al Rifa Al Hitmi (Area #17) 6. Al Salata (Area #18) 7. Bin Mahmoud (Area # 2) 8. Bin Mahmoud (Area #23) 9. Rawdat Al Khail (Area #24) 10. Al Mansoura and Bin Dirham (Area # 5) 11. Najma (Area #26) 12. Umm Ghuwailina (Area #27) 13. Al Khulaifat (north and south) (Area #28) 14. Al Sadd (Area #38) 15. New Mirqab and Al Nasser (Area #39) 16. Doha International Airport (Area #48) 17. Al Dafna, Onaiza & Al Qitar (Area #60, 61 & 63) 18. Lusail, Al Kharij & Jebel Thiya (Area #69 & 70)

The Pearl-Qatar, a QR50 billion man-made infrastructure island is situated off the east coast of Qatar within close proximity to the West Bay Lagoon area and short commute to the West Bay business district, is the first development in the country to offer freehold purchases to foreign investors.

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COVER STORY

The Pearl-Qatar ECO Facts dredging The Pearl-Qatar (TPQ) used techniques which have not been used elsewhere in the Gulf to reclaim land. A coffer dam (or bund) was built around the development to ensure that all dredging run off was captured. The areas were re-examined and it was discovered that the once disturbed sea grass beds are now between 60 – 90 percent re-vegetated. Pollution TPQ monitors noise, dust, exhaust fumes and the quality of water surrounding the Island. Twice a year TPQ conducts full ecological surveys in the marine environs. Water is tested for quality every two weeks Waste Management [ENVAC System] The Pearl-Qatar is a ‘trash free island’. Waste is sucked at a speed of 70km/ph to the central disposal centre where it is compacted into circular containers of 10 tonnes each. The network consists of 36 kilometres of 500mm diameter piping buried two meters underground across the Island linking each residential cluster and building with the solid waste disposal system and the waste is sent to a landfill site 60 kilometres from Doha.

Abdulrahim Al Ibrahim, director of The Pearl-Qatar Central Authority Directorate says the development is the kind of community residents will want to call home.

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Another incentive to attract nonQataris to invest is the right to have a residence visa upon ownership. built ‘cheaply’,” adds Maurer. “It’s a shame for our agents to show these to clients, who know what great apartments they are renting in their home cities like Paris, London or Frankfurt. If you spend EUR2000 (QR10,000) for an apartment, you get really nice units, good finishing and layouts, in central locations.” In the commercial division, there is a minimal interest according to Maurer, which is witnessed in small offices and small medium budgets. The overall market figures might prove different, mainly because some government divisions and semi government companies have taken huge areas of office space. In the private sector the request for office space is much lower though and due to the increasing numbers of universities, relocation of oil and gas companies in parallel to new contracts in the construction sector, the demand is higher for residential units. The popular areas for commercial leasing include C and D Ring road, West Bay, Dafna and Airport road. On average per square metre the commercial rent in C and D Ring and Airport road is QR120 to QR150. In the prime towers located in West Bay and Dafna on average QR180 to QR210 per square metre in addition to a 15 percent service charge. THE PEARL QATAR “When completed The Pearl-Qatar will be populated by 45,000 residents and we are making sure that all communities on the Island are operated effectively and efficiently. The Pearl-Qatar is and will continue to be the kind of community residents want to call home,” says Abdulrahim Al Ibrahim, director of The Pearl-Qatar Central Authority Directorate. United Development Company (UDC) is the master developer of the total man made Infrastructure Island, The Pearl-Qatar situated off the east coast of Qatar within close proximity to the West Bay Lagoon area. It is the first development to have offered freehold properties to all nationalities. The project consists of 10 precincts residential districts, supporting amenities will include schools, clinics, recreation, five star hotels, retail, shopping areas, restaurants and cafes. The Pearl-Qatar is known to have the world’s longest promenade of 3.6 kilometres. Currently the total commercial area is completed with more than 125 retail currently operational and most of the residential areas are mostly developed. It is estimated to be fully completed by 2015. The Pearl-Qatar is becoming the most glamorous address in the Middle East. According to UDC, the current occupancy is more than 70 percent. The average selling price per square metre is at present in the region of QR10,000 to QR12,000. GCC INVESTORS “There has certainly been very strong interest from GCC nationals in the Qatari property market. GCC investors are comfortable with property as an investment vehicle, and have traditionally been more attracted to property as an asset class than less tangible vehicles such as bonds and shares,” says McLoughlin. “ Investors from the Middle East find a sense of security in this particular aspect of property investment. They like to be able to see and touch their investment, and in many ways a property portfolio is a symbol of status amongst their peers.”

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While the majority of the investors derive from the GCC countries, there are also investors from Asia and the Western countries. Westerners seem to be interested, but due to the recent global recession are quite hesitant to sign purchasing contracts and therefore would rather wait and observe whether the market is stable to invest. Moreover, most banks lend money primarily to Qatari citizens, whereas foreigners require permission from their sponsor to obtain a loan. The current interest rates in Qatar is relatively high in comparison to England, Germany and the United States of America, were the mortgage interest is at three percent. Various sources in the real estate industry have mentioned that there are some additional fees that were not anticipated by the loan structure of Qatar, which seems to be slightly different in comparison to the West. The current down payment to purchase a property in Qatar is at 30 percent, which is high in comparison to Western countries. MuSheIReB downtown Among the major high end developments around the Arabian peninsula, lays the Msheireb Downtown project, located in Mohamed Bin Jassim District, central Doha. A mixed use QR20 billion development which will comprise more than 100 buildings with a combination of commercial and residential properties, retail, cultural and entertainment areas. The project is intended to blend traditional Qatari heritage and aesthetics with modern technology, and focus on sustainability and harmony with the environment. Upon completion in 2016, Musheireb Downtown will be the landmark in Doha. “ It’s expected, that Qatar remains the fastest growing economy in the world. Fifa’s decision to host the 2022 World Cup in Qatar has boosted confidence in the local property market, but of course, investors are careful while investing in the local market property market and are looking more for long-term investments rather than any short-term speculations,” says Maurer. new aIRPoRt Finally, the New Doha International Airport is forecasted for maximum development from 2015 onwards. It is situated approximately four kilometres east of the existing airport and will be the world’s first airport to accommodate unrestricted operations by all commercial aircrafts including the A380, which is the largest passenger aircraft ever built. Phase one is expected to be completed by next year and host an initial capacity of 24 million passengers a year, to double to approximately 50 million when the airport is fully operational. Qatar’s economy has remained stable despite the recent global crisis, in addition the upcoming World Cup is an exciting and prosperous event for Doha’s future and history, and many new developments are either in the planning, construction or completion stage. New real estate rules have been enforced to ensure a fair and professional real estate market. No income tax is also an added incentive, which should also attracts foreign workers and investment. Indeed, despite ongoing challenges in the global economy and in the Qatari real estate and construction industries, the country seems to be set to continue be hot property in the coming decade and beyond. TheEDGE

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ON THE PULSE

SWIMMING DOWNSTREAM

ON THE PULSE

Qatar, a nation used to gas export-driven double-digit growth – may next year experience its behemoth upstreamhydrocarbon industry plateau. If the economy is to thrive, something must take up the reigns of growth. As Edward Jameson finds out, what went up... must come down.

major change is looming with regards to the Qatari economy – a change that will be, quite possibly, the most radical shift which the national economy has undergone in decades. Since 2004, Qatar’s gross domestic product (GDP) has grown at an annual rate in excess of five percent. In fact, growth peaked in 2007 when an extraordinary annual rate of 26.8 percent was achieved. The driving force behind this growth, which in 2011 is anticipated by the General Secretariat for Development Planning (GSDP) to come in at a very respectable rate of 15 percent, is Qatar’s immense upstream hydrocarbons industry. And it is here where the economic evolution is about to take hold. Qatar, so used to swimming upstream, must shortly learn to swim downstream. Qatar’s mid-term goal for its upstream hydrocarbons sector was to reach a production capacity of 77 million tonnes of liquefied natural gas (LNG) per annum. That immensely challenging target was achieved in December 2010. Therefore, the last of the GDP growth realised as a result of the Qatar’s giant LNG trains being brought online will be felt this year – the first throughout which full production capacity has been operating. Some semblance of GDP growth due to upstream LNG may well be felt in 2012, as the trains overcome any teething problems, the operating staff gains in experience and expertise and, as a result, efficiency

improves. However, if sustained growth is to take hold beyond 2012, progress must be made in other areas of the economy – because upstream LNG will have reached its limit in terms of volume. The downstream hydrocarbons sector has the potential to be a key industry beyond 2012; as the GSDP explains in the Qatar Economic Outlook 2011–12: “Expansion of downstream hydrocarbon-processing activity supports growth, as does [the] vigorous expansion of services. Historically, economic outcomes in hydrocarbons and the rest of the economy have been quite closely correlated.” To define the split between the two economic sub-sectors, the upstream hydrocarbon industry refers to the import and export of the unrefined material or feedstocks, such as the LNG or crude oil markets. The downstream industry refers to any product that result from the raw material once it has entered the refinery. This includes gasoline, diesel and other fuels, jet fuel, heavy fuel oil, asphalt and lubricants among thousands of other products (see box). Mammoth facilities such as petrochemical plants and oil refineries are also included within the sub-sector. The Gulf Petrochemicals and Chemicals Association (GPCA) – the region-wide trade body for the industries it is named for – agrees with the Qatari based GSDP, while underlining the importance of extending the hydrocarbon sector onto a more long-term, sustainable footing: “Having capitalised on feedstock advantage, GPCA member companies in the coming decade will be challenged to capture further, sustainable value creating opportunities,” the association stated as it prepared for its sixth annual forum in Dubai in December. “These lie downstream and are linked to the development of industrial clusters across the region, particularly those being established to provide materials for the automotive, flexible packaging and appliances sectors. Petrochemicals provide the essential building blocks for further industrial and social development.” There is consensus across the industry and economists alike that, when the upstream hydrocarbon sector begins to plateau in Qatar, the non-hydrocarbon sector is unlikely to be sufficiently mature to take up the slack. Therefore, a stepping stone approach must be taken – with the downstream industry the natural candidate for that support position. MAIN PLAYERS In 2003 Industries Qatar (IQ) was established as a holding company. The sprawling group, 70 percent of which is owned by downstream giant Qatar Petroleum, consists of five major firms. Among them are a further two large downstream entities: The Qatar Petrochemical Company (QAPCO), which includes a number of hydrocarbon plastics manufacturers and the Qatar Fuel Additives Company. Last month Industries Qatar was assigned a stable long term outlook by credit ratings agency Moody’s. The agency cited “the compelling industrial rationale and the strong competitive position that IQ’s subsidiary and joint ventures enjoy as worldclass low-cost producers” as the reasoning for the healthy outlook. It also pointed to IQ’s long term feedstock arrangements with Qatar Petroleum, which it said “mitigate IQ’s exposure to hydrocarbon price risk”. The agency concluded “this implies that IQ has a high degree of resilience to various potential down cycles in the markets in which it operates”. The comments point to the potential for downstream industries to take up the baton from those upstream and potentially spearhead GDP growth in Qatar in the mid to long term. They also reinforce the fact that Qatar and the region as a whole, is blessed with what the GPCA terms “sustainable value creating opportunities”. TheEDGE

ON THE PULSE

Downstream hydrocarbon industries represent an opportunity to shift the wider fossil-fuel sector to a more sustainable footing. Elsewhere in the wider region, the potential for the downstream sector to take up the reigns of growth is being explored and exploited. According to the Gulf Organisation for Industrial Consulting (GOIC), QR266 billion was invested in the chemicals industry and chemical products in the Gulf Cooperation Council (GCC) last year. Of this, a mammoth 70 percent of the total was in Saudi Arabia, followed by Qatar in second, with Kuwait and Oman surprisingly ahead of the United Arab Emirates and Bahrain bringing up the rear. In total, GOIC estimates that over 1000 industrial facilities are operating in the field of chemicals and chemical products in the GCC countries. TROUBLE AHEAD? The outlook is therefore decidedly bullish for Qatar which, as the nation sitting on the third largest proven gas reserves in the world and the twelfth largest proven oil reserves, is surely in no danger of running low on feedstocks – or so you would think. As far as the GSDP is concerned, the continuation of growth post2012 is by no means a formality. “In 2012 and for the foreseeable future, overall economic growth will hinge on the performance of the non-hydrocarbon sector, but growth in downstream hydrocarbonprocessing industries will be constrained by feedstock availability,” the authority says. “Slower forecast growth reflects limits on the expansion of downstream hydrocarbon processing industries as demand for feedstock absorbs available supply.” This potential cap on supply, despite the immensity of Qatar’s reserves, must been seen in the context of Doha’s huge export industry. The country has amassed its vast riches via exports, which does not leave much raw material for firing the domestic downstream sector. There is a solution to the conundrum and it is called the Barzan Gas project. According to energy minister Mohammed bin Saleh Al Sada, who is also chairman and managing director of Qatar Petroleum, the investment in the huge downstream natural gas facility in Ras Laffan City comes in at a touch with more than QR37 billion.

A potential cap on supply must be seen in the context of Doha’s huge export industry. Qatar has vast exports, which does not leave much raw material for the domestic downstream sector. 60

TheEDGE

DIVERSITY OF PRODUCTS The petrol you pump into your car on the way to work in the morning; the asphalt that forms the road you drive your car along; even the plastic box you carry your lunch in as you journey to work; all are products of the downstream hydrocarbons sector. It is the sheer and overwhelming diversity of products that lend so much value to the industry in terms of its potential to spearhead economic growth on a sustainable footing via the dispersal of products in their thousands into the wider economy. “Petrochemicals provide the essential building blocks for further industrial and social development,” the Gulf Petrochemicals and Chemicals Association (GPCA) says. In the plastics sector alone, according to the GPCA, the Gulf region produces over 25 million tonnes of plastic resins annually out of which close to three million tonnes is converted into finished and semi-finished industrial and consumer plastic products. This is big business. But is it big enough to drive growth in Qatar post-2012? “Within the sector, opportunities exist to capture much of the added-value that is currently exported, and to create the building blocks for major downstream conversion industries offering rewarding and sustainable employment opportunities for local youth,” explains GPCA secretary-general Doctor Abdulwahab Al Sadoun. “This in turn would lead to more sustainable growth through the multiplier effect of economic growth,” he concludes. From jet fuel to fertilisers, pesticides to antifreeze, and synthetic runner to heating oil, the downstream sector touches the everyday lives of consumers across Qatar in ways that many do not even realise. The Barzan Gas project will be completed in two phases, with train one due to become operational in 2014 and train two expected to follow in 2015. Among other products, the project will produce ethane, which will be used as feedstock in the local petrochemical industries. The Laffan refinery will use condensates to produce diesel, gasoline and other products. RasGas is the developer behind the Barzan Gas project. According to recent reports, more than 30 banks are involved in what is a highly complex financing structure for the scheme, giving some indication of how vital the project’s successful conclusion is to every level of business and government in Qatar. If the forecasts of the GSDP are to ring true, Qatar could potentially be facing a 12 month period somewhere between 2013 and 2014 where GDP growth is uncharacteristically low, if present at all – an almost alien state of affairs for the nation. However, when the Barzan project comes online, there should be no danger of a shortage of feedstocks for domestic use. Qatar must find a way to diversify if growth is to be ensured – and the downstream sector could well prove to be the stepping stone between the hydrocarbon industry, which has served the nation so well, and the non-hydrocarbon industries that will one day be required to prove their worth to a growing nation.

KNOWLEDGE & EXPERTISE

BUSINESS management • small business know-how • legal insight • Information Technology

QATAR FINANCIAL CENTRE TRAINING AND COMPETENCY (P.66)

David Salt and Emma Higham highlight the legal aspects of the latest move by Qatar Financial Centre Regulatory Authority to improve training and competency.

ALSO IN THIS SECTION: •

•

Business Management: In the second of the two part series, Jay Conger, Doug Ready, Linda Hill and Emily Stecker define the importance of identifying, developing and retaining top talent to lead an organisation. (P.62) Small Business Know-How: Brenda Lockyer explains how paying concerted effort to customers can ensure a fruitful business in all sectors. (P.64).

•

Information Technology: With the wide adoption of Unified Communications in the region, Qatar must prepare for an upcoming boom, as the technology is shifting to cloud hosting, says IT expert Manu Bonanassie. (P.68).

BUSINESS MANAGEMENT

ACTING ON

THE FACTORS IDENTIFYING ‘HIGH POTENTIAL’ EMPLOYEES In the second and final part of the high potential employees series, thanks to research Jay Conger, Doug Ready, Linda Hill and Emily Stecker emphasise the importance of discovering, developing and retaining top talent to lead an organisation in the future, by identifying ‘x-factors’.

ast time we identified these four factors as being a drive to excel, catalytic learning ability, an enterprising spirit and dynamic sensors for career navigation. We do not mean to suggest that you adopt the x-factors as a new competency model or as a one-size-fits-all profile for high-potential employees. However, given that companies place disproportionate attention on the people they think will lead their organisations in the future, it is worth considering what these x-factors could mean for your company in terms of identifying, developing and retaining top talent. We suggest you consider the questions that we have posed to other business leaders. PROCESS REVIEW First, review your process for spotting high-potential employees. How might the x-factors be considered as part of the process? In what ways and how might you begin to make changes in your identification process? Is it possible that you are currently overlooking some employees that might have great potential? Again, we are not proposing an x-factor competency model, but we do urge you to think a bit more creatively about what the x-factors might mean for your company’s high-potential employees identification process. For example, you may have automatically eliminated someone from your highpotential track simply because he or she may have made a misstep in a prior role. This misstep might very well have happened because the person you are potentially overlooking was the only one willing to take on a challenging project outside of her comfort zone. One of the rising stars we met in our studies was a young consultant who was offered a country manager job in a rapid-growth emerging market for a telecom company. He was 31 at the time, unusually young for such a role. Though it was a big promotion, this young man took weeks to consider the offer. While it aligned with his career ambitions and offered tremendous opportunities for impact on a new scope and scale, he felt that others might see him as lacking sufficient experience for the role. Plus, he thought, failure could brand him as a poor candidate for a future chief

BUSINESS MANAGEMENT

Becoming a high-potential employee is not about being anointed; it is about being tagged for intensive development. executive officer (CEO) role, to which he aspired. He accepted the post — but only after giving himself a set of challenging goals that he believed would redefine the company’s position in his country. Fortunately, the company’s leaders, understanding the decision required due diligence, were willing to wait. In other settings, could ostensible ambivalence lead a company to conclude an employee lacked drive? Maybe. This example shows, however, that when identifying high-potential employees, it is important to look closely at the reasons for any delays. Second, weigh the importance of your development process. Consider how your company develops its high-potential employees. Do the executives in your company believe that continually developing high-potential employees is everyone’s job, not just human resources (HR)? Do they demonstrate commitment to developing top talent though frequent coaching and feedback? High-potential employees are enterprising people who are driven to succeed, but they still crave more guidance than many suspect. Do you provide them with a variety of role models and teachers so they can eventually come to terms with their own special leadership brand? Do you help them to gain exposure to a range of relationships and networks to bolster their visibility and credibility? Are you providing them with stretch assignments that let them test how great they can be — by pursuing opportunities for excellence and not just filling performance gaps? Are you providing experiences in which the x-factors get exercised? And are you connecting your high-potential employees with each other so that they can learn from one another? Placing someone’s name on a high-potential list is not the end of the process. That should be the beginning of a cultivation procedure that assures that each person’s potential grows to the point where it can be leveraged for the good of the company. Becoming a high-potential employee is not about being anointed; it is about being tagged for intensive development. Lastly, examine your retention process. Your company may be identifying and developing high-potential employees quite well yet still failing to retain many of its most talented managers. Many of the companies we surveyed were concerned about their leadership pipelines, and retention of high-potential employees proved particularly tough. It is easy to see why. For starters, such star employees have more options; and you can bet that competitors are eager to offer incentives, both economic and non-economic, to lure them away. But that raises a poignant question that must be asked when high-potential employees leave prematurely: are they being pulled away or, perhaps, might your company be doing things that inadvertently push them away? Do not assume that, because someone’s been identified as a high-potential worker, he or she is fully engaged in the assigned work and is eternally loyal to the company. While 85 percent of the companies we studied informed their high-potential employees of their status, it is important to recognise that this increases the pressure

on a company to actually do something with those on the list. If you tell someone she is a future leader, then be prepared to back that up with tangible progress in her professional development. If you do not, you risk her feeling manipulated or, over time, losing motivation. High-potential employees are going to feel ‘played’ if they view their status is merely a retention tactic as opposed to a real plan to grow their career potential. A critical question, then, is: what are you actively doing to retain every high-potential employee on your list? Thinking about your best employees is not enough. Such workers must be regularly made aware of the importance you place in their growth. Virtually all of the high-potential employees we met were driven to excel, eager to learn and be entrepreneurial. Does your company provide an environment that is appealing to most or all of the people with these qualities? KEYS TO SUCCESS Your company’s game changers are indeed your keys to success, and these high-potential employees do require to have extra attention bestowed upon them. However, do not forget about the other 97 percent of your employees. Developing high-potential talent should not be fashioned as a zero-sum game. Our research has led us to believe that the four x-factors are what truly distinguish the game-changing high-potential employees from the value creators. Consider this insight a starting point, not an end point. When you coach or mentor any of your employees, strive to include these factors in your counsel. Think about stretch assignments for your workers that might test whether some value creators can make the transition to game changers. Take steps such as these and you will soon be well on the way to building the next generation of talent to lead your company into the future. What differentiated high-potential employees was rarely a result of an individual’s capacity to develop the skills from his or her company’s competency profile more effectively than their colleagues could, but rather something a bit more difficult to define. Performance is essential; but, if an employee’s success came at the expense of someone else, she was out of the running for high-potential status. While many workers might possess the above traits, these criteria are just the baseline for admittance onto a high-potential list. Jay Conger is the Henry R. Kravis Professor at Claremont McKenna College and Visiting Professor of Organisational Behaviour at London Business School. TheEDGE

small business know-how

The competitive advantage behind customer service A commitment to customer service is more than a statement in your company’s vision or mission statement, it is an integral marketing strategy for the success of your business. Brenda Lockyer explains further how important customers are to any business.

customer is the most important visitor on our premises, he is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.” – Mahatma Gandhi. Providing excellence in customer service is a common differentiation strategy, but is also a means of building a competitive advantage that is achievable for even the smallest companies. Today’s internetsavvy consumer has already done price comparisons and read about your company before they even consider purchasing your product or service. These customers are more empowered than ever and have high expectations. The ability to deliver exceptional customer service is often the difference between being profitable or going out of business. If you are not still convinced that customer service is critical to your company’s success, read on. Customer Retention: A satisfied customer is a loyal customer. If the customers are happy with the service they receive, they will keep coming back and it is no secret that it is much

cheaper and easier to keep a customer than it is to get a new one. The lifetime value (LTV) of a customer is the dollar value associated with a customer relationship over a period of time. For example, if a customer buys eight cars in their lifetime from the same dealership – it is obvious why keeping this customer is important. Competition: If you do not look after your customers, your competitors will. Today, the marketplace is more competitive than ever, resulting in customers having more choices. If they are not happy with how your company treats them, they have no qualms about going to your competitor – they may even tell you they are leaving and the reason why. This relationship can still be salvaged – the customer that leaves and does not tell you

can have the greatest impact on your business. Your company has to be better at satisfying customers than your competitors. This takes a strong commitment to customer service and meeting or exceeding customer’s expectations. Publicity: There is lot of truth in the adage “the only thing that travels faster than good news is bad news”. Word of mouth can kill a business, as customers are very willing to share their bad experiences. Businesses also have to contend with “word of mouth”, the negative experiences shared on the Internet and social networking media. This can take the form of feedback on your website, Twitter, Facebook or a customer might just be compelled to post a video rant on YouTube or start their own blog so they can cyber-complain. A great example of this

If the customer is happy with the service they receive they will keep coming back and it is no secret that it is much cheaper and easier to keep a customer than it is to get a new one.

small business know-how

is an enterprising young man who thought it would be a good idea to write a song and post a video about his bad experience with an airline. Last check, there were 11,063,241 views. The Internet has provided customers with a 24-hour instant outlet for feedback, so ensure your customers have a reason to make positive comments about your company. Customer Care Continuum: Customer service is more than a one-time initiative or short-term campaign it is part of your business processes and the responsibility of every employee. A customer’s perception of service quality is formed during the first and every subsequent contact with your employees. Every customer has different expectations of their service experience and they change. You need to know your customers and know them well. Frontline employees well trained in customer service are your key to developing relationships. Beyond your employees building these relationships personally, a customer relationship management programme (CRM) is invaluable for collecting, tracking and managing customer interactions and further information about them. Delivering on your customer’s service expectations is not the responsibility of one person – it is a team effort in your company. Much more than employees being courteous and smiling, it is creating a culture in your company where employees are proactive rather than reactive in meeting customers’ needs. Business owners play an integral role in the development of a customer service culture, since actions speak louder than words. They must demonstrate a commitment

to deliver exceptional customer service in order to motivate employees to do the same. Regardless of the size of your business, you can create a customer service culture at very low cost. Here are a few suggestions: Recruitment: When hiring employees responsible for customer service, you want to focus on their attitude rather than skills. Employees who excel at customer service truly enjoy dealing with people and solving their problems. You need competent, motivated employees with a positive attitude who are interested in meeting or exceeding the needs and wants of your customers. You can provide training for customer service skills. Rewards: Rewarding your current employees for delivering excellence in customer service will go a long way towards building loyalty and increasing job satisfaction. You do not have to pass out gifts or certificates, just single them out and thank them for their commitment to your customers. Make sure employees know how much you appreciate them looking after your company’s most important asset — customers. Feedback: Encourage feedback from your customers regularly. You might think your customers are happy, but have you ever asked them? Customers are also your best source of information on how to improve your products or services. Invite customers to complete customer service surveys at your business or online. If you have a website, be sure to be responsive. Make sure customer comments (especially complaints) are addressed in a timely manner. Customer Service Standards: Clearly state your commitment to delivering

excellence in customer service to your employees as well as your customers. Companies need to determine customer service standards or benchmarks so employees can maintain and improve on service delivery. A great way to demonstrate how important customers are to your organisation is to engage employees in the process of developing these standards. These suggestions can help companies demonstrate a commitment to customer care, but as mentioned in a previous section, it begins with the owner. The business environment in this region is very unique in that one individual or family may own a number of small or medium-sized businesses. Inherently, the running of the business is left to the manager leaving owners significantly removed from day-to-day operations. This is not necessarily a bad thing, however; you have to be confident that your manager and employees are delivering on your commitment to customer care. The best way to find this out is to experience it yourself. Drop by and see how your employees are taking care of customers. Too often, businesses go under and owners have no idea that the reason sales are declining is because customers are dissatisfied and have taken their business elsewhere. Customer service can be your company’s competitive advantage—remember that a happy and loyal customer is essential for the profitability and growth of your business. Brenda Lockyer is the lead instructor, centre for marketing studies at the College of the North Atlantic-Qatar. TheEDGE

LEGAL INSIGHT

Qatar FINANCIAL CENTRE: TRAINING AND COMPETENCY By David Salt and Emma Higham LICENSED FIRMS The Qatar Financial Centre (QFC), in the same way as the majority of international financial centres, has been keen since its inception in 2005 to establish appropriate admission criteria for both entities licensed by the QFC Authority (Licensed Firms) and those licensed entities which will be authorised and regulated by the QFC Regulatory Authority (Authorised Firms). In addition, to the admission criteria established for Authorised Firms, the QFC has also sought to ensure that the individuals working for such firms are competent. The QFC has largely delegated the competency of those individuals

employed by Licensed Firms to the internal selection policies and processes of those firms themselves; competency is however reviewed as part of the QFC Authority licence application process. In relation to Authorised Firms however the Rules and Regulations of the QFC Regulatory Authority seek to ensure that those individuals (Approved Individuals) employed by Authorised Firms, especially those in responsible roles (Controlled Functions) are competent. The number of Controlled Functions, which an Authorised Firm needs to satisfy and the number of Approved Individuals who will be registered for each Controlled

Function will depend on the business, which an Authorised Firm undertakes. Authorised Firms are expected to make an initial assessment as to an individualâ&#x20AC;&#x2122;s fitness and propriety before asking the QFC Regulatory Authority to approve them. The principal criteria for this initial assessment are honesty, integrity and reputation; competence and capability; and financial soundness. Competency will be determined by the QFC Regulatory Authority on a case by case basis. The Controlled Functions (10 in all) are listed in the QFC Regulatory Authorityâ&#x20AC;&#x2122;s Individuals (INDI) and Controls (CTRL) Rulebooks, both of which have been up-dated reasonably regularly since first issued.

LEGAL INSIGHT

PROFESSIONAL STANDARDS In November 2009 a preliminary paper (Preliminary Paper) was issued by the QFC Regulatory Authority entitled A Regulatory Regime for Training and Competence for QAC Authorised Firms which sought to expand and strengthen the INDI Rules, introduce professional standard examinations and continuing professional development. The Preliminary Paper was followed in May 2010 by the launch of the Qatar Financial Centre Rules and Regulations professional standards examination in partnership with the Chartered Investment and Securities Institute. This was in turn followed in September 2011 by the QFC Regulatory Authority’s recommendation that individuals performing certain insurance related client facing functions take one of the examination options offered by the Chartered Insurance Institute. MISCELLANEOUS AMENDMENT The latest move by the QFC Regulatory Authority to raise the bar in terms of the competency of the individual employees working for Authorised Firms has been issued in the form of a Consultation Paper entitled Proposed Training, Competency and Miscellaneous Amendment Rules 2011 which was issued in September 2011. The Consultation period ended in November 2011. The Consultation Paper does propose changes other than to the QFC Regulatory Authority current training and competence regime, for example, to allow the QFC Regulatory Authority to charge a fee rather than impose a financial penalty for the late filing of reports and returns, however its main focus is directed towards the development of professional standards to ensure that financial services professional have appropriate skills, knowledge and experience to competently perform their roles. Proposed amendments include: • The introduction of five overarching principles which govern how Authorised Firms should meet their training and competence requirements, being senior management responsibility; training and competence programme; assessment of competencies; as well as training and record keeping;

The latest move by the QFC Regulatory Authority to raise the bar in terms of the competency of the individual employees working for Authorised Firms has been issued in the form of a Consultation Paper. • The expansion of the current INDI requirements to introduce requirements for Authorised Firms to design, implement and maintain training and competency programmes for Approved Individuals; • The requirement for Authorised Firms to review, on an ongoing basis, an Approved Individual’s competencies over an appropriate period to ensure continued competency using continuing professional development (CPD) and record keeping; and potentially a requirement for an Approved Individual’s training and development needs to be reviewed at least every 12 months; • The expansion of the current INDI and CTRL provisions to clarify specific roles and responsibilities for each Controlled Function and the minimum competency requirements which an Approved Individual would need to satisfy focussing on skills, knowledge and experience; the incorporation of a mandatory qualification requirement is also referred to; and • The introduction of conditional approvals where by junior employees may undertake Controlled Functions under supervision for a period of 12 months pending them acquiring appropriate competencies, for example professional qualification. Depending on the outcome of the Consultation Paper the new training and competency regime will commence on 1 January 2012. The Consultation Paper confirms that the QFC Regulatory Authority will consider all Approved Individuals competent to perform the Controlled Functions for which they

are approved on 1 January 2012 which will mean that Authorised Firms and Approved Individuals will not be immediately subject to the new competency assessments; they will however be subject to the ongoing requirements of the regime, for example training, CPD, record keeping, any professional examination requirements, . The Consultation Paper makes it clear that Authorised Firms and Approved Individuals are expected to undertake steps to assess their own competencies after 1 January 2012 to ensure that they are in compliance with the new regime; active supervision and enforcement will not start until July 2012. Any applications submitted on or after 1 January 2012 for individuals to undertake Controlled Functions will be subject to the full requirements of the new regime.

Note: All Qatari Laws (save for those issued by the Qatar Financial Centre (QFC) to regulate its own business) are issued in Arabic and there are no official translations, therefore for the purpose of drafting this article we have used our own translation and interpreted the same in the context of Qatari regulation and current market practice. This article should be used for information purposes only. It is not legal advice and should be relied upon as such. If any reader requires legal advice, this should be obtained from an experienced lawyer, who can provide advice, which is tailored to the relevant fact and circumstances. For any information in respect of legal issues, please contact David Salt (david.salt@clydeco.com.qa) or Emma Higham (emma.higham@clydeco.com.qa). TheEDGE

INFORMATION TECHNOLOGY

QATARâ&#x20AC;&#x2122;S COMMUNICATION Organisations in Qatar must prepare for the unified communications boom, says expert Manu Bonanassie. The trend is moving away from premises-based Unified Communications towards technology hosted in the cloud, since it is more affordable, accessible and scalable.

BOOM Unified Communications With the wide adoption of Unified Communication (UC) in the region, the right infrastructure is critical or else the entire system will break down. Adoption of Unified Communications technology is reaching critical mass, corroborated by a report from In-Stat earlier this year that predicted small office spending on Internet protocol (IP) telephony would grow by 83 percent in 2011. The trend is moving away from premises based UC towards technology hosted in the Cloud, as consumers become aware of the benefits and the technology becomes more accessible, affordable and scalable. According to research by Frost & Sullivan last year, the UC market in the Middle East is expected to reach US$235 million (QR855 million) by 2014. UC brings benefits to businesses that only a few years ago were in the realm of science fiction, enabling uninterrupted, highdefinition video conferencing and real-time collaboration for remote workers in disparate cities, countries or continents â&#x20AC;&#x201C; a revolution in work comparable to or even exceeding email. Workforce productivity, better customer and staff interaction and lower costs through reduced travel are just three areas where UC is beginning to bring enormous value to organisations, from small to global. These benefits are only realised, however, if communications are delivered with uninterrupted service quality, reliability, security and compatibility for IP-based devices, video and converged multimedia desktop applications. Users simply do not tolerate high latency, dropped packets or service interruptions as they are for more traditional methods of communication. Since voice, video and audio are very data rich traffic, the pressure being placed on networks to support these services is growing at an exponential rate.

INFORMATION TECHNOLOGY

Organisations in Qatar seeking to deploy unified communications services face several infrastructure-related challenges, including rigorous latency requirements for voice and video conferencing. Qatar Challenges These findings are not surprising. Organisations in Qatar seeking to deploy UC services face several infrastructure-related challenges. To begin with, the network must meet the rigorous latency requirements for voice and video conferencing; meanwhile, the infrastructure must support power delivery to IP phones and other UC devices. Communications are absolutely critical for business continuity and as a result, downtime is intolerable. Networks must therefore be able to guarantee the utmost levels of availability. Similarly, security is a key concern for users, and IP video and audio communications must be protected against threats – while still being able to work across firewalls. If left unchecked, these factors can have a significant impact on UC success and the end user experience. Delivering voice and UC solutions requires more than just basic network connectivity, but a complete set of switching and routing solutions help organisations implement these services while leveraging their existing network infrastructures. These infrastructure requirements are all necessary for a reliable UC-enabled network, and over the next few months we will see more data centres upgrading their facilities so that they can reap the rewards from the burgeoning market for UC and IP-based voice services. It is, however, important to stress that these technologies are not germane only to UC and VoIP services; rather, they form the building blocks of next-generation data centres. Ethernet Fabric Technologies such as ethernet fabric are fundamental not only for UC and VoIP, but also for the day-to-day demands of the fully virtualised data centres of the future. Broadly speaking, Ethernet fabrics represent a move away from a hierarchical, and thus unwieldy, architecture, toward a flatter, more flexible design. Key features like logical chassis, distributed intelligence and automated port profile migration make Ethernet fabrics more attuned to operate in a highly virtualised data centre to support techniques such

as VM mobility within a fabric and across data centres, and provide the resilience to run applications like UC. Ethernet fabrics simplify network design and management to address the growing complexity in IT and data centres today They deliver the enabling technology for convergence of storage and data networks if customers choose to migrate to this architecture For the company, the benefits of this technology are two-fold: technical and commercial. By enabling the virtual data centre, Ethernet fabrics ensure ‘always-on’ availability and simplify the network management, which in turn increases end-user productivity while reducing operational costs – the perfect solution UC. As far as the data centre is concerned, if virtualisation revolutionised computing, Ethernet fabrics are revolutionising networking. In time, like the evolution of the Walkman to the iPod and VCR to Blu-Ray, Ethernet designs will evolve into Ethernet fabrics. Ethernet fabrics represent the next step in the evolution of Ethernet solutions, are purpose-built to support high-bandwidth services such as UC, and the data centre of the future. TheEDGE

P.O.Box 11596, Doha-Qatar - Tel: +974 44340360 - Fax: +974 44340359 - E-mail: info@firefly-me.com - www.firefly-me.com

business insiGht InsIde The MInds of leAdIng BUsIness fIgUres

a BeSPoKe PRoMISe (P.72)

Due to open in January 2012, The St Regis Hotel and accompanying Al Gassar Resort in Doha promise to offer bespoke luxury service few if any other similar locations in Qatar or indeed the Middle East can. TheEDGE spoke exclusively to the general manager of the resort, Tareq Derbas, about how St. Regis and Al Gassar plan to change the future of hospitality sector in Doha and his plan to attract Qataris into the industry.

alSo In thIS SectIon: • wateRwoRld 2012 In February 2012 Doha will serve host to the allied PowerGen and WaterWorld conferences, which hope to cover comprehensively the energy and water sectors in the region and attract delegates and exhibitors from all over the world. TheEDGE interviewed Tom Freyberg, WaterWorld conference director, about the event. (P.74)

• taGGInG luxuRy Swiss luxury watch brand Tag Heuer is currently rolling out an extensive marketing and distribution plan in the Middle East and Asia, including in Qatar. TheEDGE discussed exclusively with CEO Jean-Christophe Babin this how this strategy fits in with the company’s global view as well as various aspects of purveying luxury brands in an age of austerity. (P.76)

BUSINESS INSIGHT

Hospitality Sector

St Regis aims to enhance Qatar’s luxury hospitality market and include more Qataris in industry Qatar’s hotel market will early next year see a new challenger in the already crowded luxury hotel market. Rachel Morris spoke to general manager of the St Regis Doha resort, Tareq Derbas about the Qatar hospitality sector and his plan to lure more Qataris into the industry.

he month of December will go down as a landmark month for Qatar’s crowded hotel sector. Many are predicting it to be one of the busiest months on record with the Pan Arab Games as well as the mammoth World Petroleum Congress. Both events will see an injection of around 7000 visitors into Doha over the first two weeks of December, with not a single spare five and four star room. This is indeed a boom time for the hospitality sector in Qatar. Although the new St Regis development, part of the global Starwood chain of hotels, will not open until January 2012, Tareq Derbas, general manager of the gleaming new property, believes this is an exciting time for the hospitality industry. “We are on the final home run,” he says of the project, which sits on a prime piece of real estate on the shores of the Arabian Gulf. The St. Regis Doha, which is part of the Al Gassar Resort, features 336 guest rooms, including 70 suites and two presidential suites. All guest rooms and suites boast sea views. There is a 170 metre beach and a slew of food and beverage outlets including a branch of the vaunted Jazz

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BUSINESS INSIGHT

at the Lincoln Center and a Gordon Ramsay’s Michelin star offering. The Al Gassar complex also has luxury apartments, managed by St Regis. “The St Regis Doha will be redefining luxury,” Derbas states. “Nowhere else in Qatar offers the kind of bespoke service we can. The St Regis has a legacy of offering bespoke service and this will give us an edge in the market.” By ‘bespoke’, Derbas refers to the individual butler service, a hallmark of the St Regis brand internationally, which he says resonates with the affluent Qatar and Gulf markets. Butlers will be available for guests around the clock, instantly accessible by page from the guest’s room or through the E-Butler service, which enables guests to e-mail their butler with their requests anytime, either from the hotel or even off-property. Derbas also says that the local market is looking for something beyond the “expected”. “The only other property offering this service is the Burj (Al Arab) in Dubai,” he says. “We aim to offer the finest address in Doha, with bespoke luxury and service available for our guests whenever and however they require it.” While many view St Regis as a ‘boutique’ brand, according to Derbas, selling it to the market has, so far, not been a challenge, as there is already knowledge of their offering especially among the well travelled Qatari population. “People in Qatar know the brand. On average I get at least two bookings per week from Qatar for our other properties,” he says. While much is being made of the growth of Qatar’s tourism industry over the next decade, with the FIFA World Cup in distant view and the country bidding for large scale events, is this a good time to enter the market. St Regis Doha will most likely enter in direct competition with Four Seasons Doha, Ritz Carlton Doha and Grand Hyatt Doha hotels, the majority of the leading five star hotels in Doha having more than 75 percent corporate traffic and the rest divided between leisure and events. Overall, a vast majority of visitors to Qatar, around 90 percent, come for business – buoyed by the country’s oil and gas sector. Recognising

St Regis Doha will most likely enter into direct competition with the Four Seasons Doha, Ritz Carlton Doha and Grand Hyatt Doha hotels, the majority of the leading five star hotels in Doha having more than 75 percent corporate traffic and the rest divided between leisure and events. this, Derbas is looking both close to home and further a field for guests. He says he has focused on the neighbouring Gulf countries including Saudi Arabia to attract leisure clients. With unrest in many parts of the region, Qatar has reaped the benefits, recording a 30 percent increase in tourists from the Gulf Cooperation Council (GCC) region in the third quarter of this year alone. He has also headed to Asia for business, recently visiting China, which is, as yet a fairly untapped market for Qatar but easily accessible with Qatar Airways flying to Beijing, Shanghai and new in 2011, the industrial and commercial powerhouse city Chongqing. “Qatar has so many mega plans and projects, I believe the best is yet to come,” Derbas says. “Doha is also developing into a hub for the region.” He believes hotels need to be flexible with their offerings, pointing to the complex’s large conference and meeting facilities, which will target the lucrative meetings, incentives, conferences and exhibitions (MICE) market. The hotel will offer more than 4,000 square metres of meeting and conference space. “We have the second biggest conference and meeting facilities in Doha,” he says. As St Regis continues to grow globally, opening eight hotels around the world in the next six months with three in the Middle East. In the final phases of recruitment, when at full strength the hotel will have 700 staff, making it one of the biggest corps in Qatar, with 30 percent of that number female. “It’s a very multicultural team, we have people from all over,” he says.

Butlers will be available for guests around the clock, instantly accessible by page from the guest’s room or through the E-Butler service, which enables guests to email their butler with their requests anytime.

Derbas says when recruiting staff, he and his team are very transparent about moving to the Middle East, giving full cultural briefings as well as detailing to new joiners what they can expect in terms of climate and conditions. “We want to make sure that they mesh well and feel comfortable. We work hard to create a healthy work environment,” he says, pointing to the fact that his staff accommodation is just seven minutes from the hotel. “This is very important,’ he says. Derbas is also differentiating the St Regis from other hotels and targeting Qataris in his recruitment plans. “We have very ambitious Qatarisation goals,” he says. “In fact, we have mega-Qatarisation plans. It is our goal to education Qatari and the community about careers in hospitality.” He has already made good on these plans, hiring their first Qatari, the hotel’s security manager. This plan also involves interaction with schools and annual internships for students in universities and schools and of course fresh graduates. “We plan to offer 10 internships per year,” he says. The internships would see them working in the hotel, experiencing all aspects of the industry from finance to front office through to guest services, up to 10 to 15 hours per week. Derbas admits that this is a challenge as the packages often offered in private sector companies and operations like the St Regis are below what the government and other sectors can traditionally offer. “We want Qataris to see hospitality as a rewarding career, to see that they have a career pathway,” Derbas says. “We need to make it interesting for them. It’s our goal to educate students and graduates when they are making a decision about their career.” In the hot seat for 15 months, according to Derbas, he has seen Qatar and the hospitality industry blossom in that time. “When I first started, I would probably get just one CV (from potential employees) a week. Now I get 20 to 30 a week. That’s a big change,” Derbas says. TheEDGE

BUSINESS INSIGHT

WaterWorld Highlights

Dealing with the Water Crisis in the Middle East and World at upcoming WaterWorld Event

In an exclusive interview with TheEDGE, Tom Freyberg, conference director for the WaterWorld Middle East conference and exhibition, which is scheduled to be held in Doha in February 2012, talks to Miles Masterson about the seriousness of water in the region and what topics will be covered at the event next year, including desalination water management, tariffs, waste water and general development of the industry. Describe the genesis of WaterWorld Middle East (WWME)? Pennwell’s PowerGen franchise has been successfully operating in the Middle East region for a decade now. It was in 2008 when the event was held in Bahrain that a water track element was added. The event then moved to Qatar in 2010, with the water track and partnering exhibition developing quickly. For the 2012 event, we will launch a separately branded co-located conference and exhibition, WaterWorld Middle East (WWME). This is a new venture for PennWell International and we adopted the company’s strategic plan to develop the conference. A

“Many countries across the Middle East have renewable freshwater sources less than 1000 cubic metres, per person, per year – a level that defines ‘water scarcity’.”

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conference committee, involving the region’s top water and wastewater experts, was put together and met in April 2011 to review abstracts and start planning the event. We now have a comprehensive conference and exhibition near completion, ready to launch in February 2012. How serious really are water shortages in the world and the region? Many scenario planners are convinced that this is a looming crisis that is not being taken seriously enough, and it has often been said that in the future world wars will be not fought over hydrocarbon resources, or religious or territorial disputes, but over fresh water. The water crisis is serious not just in the Middle East, but also globally. People blessed with a continuous water supply will not start taking the situation seriously until they turn on the tap and there is no water. As an example of the situation, many countries across the Middle East have renewable freshwater sources less than 1000 cubic metres, per person, per year – a level that defines “water scarcity”. As far as utilities go, water is fundamental to not only economic and social growth, but life. Starting globally and then moving into the Middle East and North Africa (where the situation is arguably as dire as it can get around the world?), what do you think the main causes of this problem are? The main causes of water scarcity, especially in the Middle East, are a lack of fresh water sources to start with. For example, Qatar sources over 90 percent of its water from desalination sources. And the country only receives 75mm of rainfall, on average, per year. Agriculture is almost completely dependent on irrigation from pumped groundwater. With withdrawal rates far exceeding recharge rates, estimates such Qatar’s aquifers will be depleted in as little as 20 years. As has been witnessed by other countries in the region, such as Dubai in the past and now Abu Dhabi, populations are growing at an alarming rate. For example, Qatar was cited by the BBC as the fastest growing country, with on average 514 people per day. Another worldwide problem is unnecessary household usage, with people taking multiple showers daily, leaving taps running and generally being irresponsible with water. This all accumulates to exacerbate already dwindling water supplies.

BUSINESS INSIGHT

Is poor management of existing resources, especially wastage, not also to blame in some cases? Or is it simply a case of too many people using too much water? Population is a big factor affecting water demand but it has been said that there is an abundant supply of water on earth, sufficient for its population. However, it is mismanagement and lack of infrastructure and inefficiency meaning that supplies are not being directed, as they should be. Advanced water meters, Geographic Information System (GIS) and new software are collectively helping water companies to identify water network weaknesses and fix them. Collaborations with international consultants and experts are helping to share knowledge on an international level. The topics of climate change, energy, food and water security are frequently documented in national media around the world. The real challenge stems from the price charged for water, which is often too cheap and does not cover the real cost of production. Also, education campaigns on water usage are taking place, but these are also competing for “classroom space” against subjects such as carbon footprints and energy usage. I assume the above topics will form part of the first track Strategic Water use, where the MENA region will be in the spotlight? What other issues do you think will be discussed in these sessions? There will be two strategic sessions for the MENA Spotlight papers. These will include papers addressing regulatory changes, financing and water and wastewater infrastructure improvements in the different countries. This year, with KAHRAMAA as Partner and Qatar Electricity and Water Company (QEWC) as co-host and platinum sponsor to open the conference proceedings with a presentation to discuss the latest developments to Qatar’s growing industry. Last year, when the Water Track was part of POWER-GEN Middle East (PGME), we hosted QEWC’s General Manager, Fahad Hammad Al Mohannadi, who spoke about seasonal demand for water, and the potential for separately located, membrane-based desalination methods to supply future water for Qatar and cooperation between regional countries will inevitably be discussed. The Qatari government is currently looking to import water from Iran. Supplies would be used to increase remaining groundwater reserves through artificial recharge. Reports suggest as much as five cubic metres per second (160 million cubic metres per year) could be delivered from Iran’s Kraun River. We always allow sufficient time after presentations have finished for audience questions by inviting our high level committee members and contacts to chair sessions. Can you explain what the session ‘Bridging the Gap: Tariff Structuring’ will entail? The topic of water tariffs is politically sensitive and will continue to be so. Many people believe water is a human right to survive, so should be provided free of charge. Yet, to desalinate drinking water from seawater has been an expensive process. This money has to come from somewhere. Despite the political and physical challenges of introducing charges for water, countries in the region have successfully managed this task. For example, in Egypt, the Alexandria Water Company introduced a clever tariff system whereby the first 10 cubic metres remain at a low price. In Dubai the water and electricity authority introduced a slab tariff a few years ago. This session will address the topic full on, including an opening presentation from WWME partner association, the Arab Countries Water Utility Association (ACWUA), looking at the entire region.

“Qatar, as like many other countries in the region, has been a bastion of thermal desalination over the years.” During the October press conference you also mentioned that you feel that investment in desalination will be huge in coming years? A total of 39 million cubic metres per day of desalination capacity is expected to be added between 2010 and 2020 in the Middle East region alone. This translates to an approximate investment of between US$45-50 billion. The United Arab Emirates is expected to install 4.8 million cubic metres per day between 2008 to 2016, while in Qatar this figured has been pegged at 1.2 million cubic metres. Though the cost of desalination is high, technology improvements are helping to reduce economics and it remains the major source of water in the region. Qatar, like other countries in the region, has been a bastion of thermal desalination over the years. There will be more investment into seawater reverse osmosis technology, where forcing it through membranes purifies water. I recently read that Abu Dhabi – is planning to “change sides” and use reverse osmosis for its future desalination needs. Although a shift in power towards nuclear capacity is the main cause here; it could be leading the way with other Middle East nations following with membrane technology. The WasteWater track is also interesting, especially in light of the fact that a lot of this is already being utilised for industrial use. Do you foresee this trend continuing on the up and how do you think this should or will take place? As a key sign to how big wastewater processing is becoming, we have dedicated an entire track and day to this topic. Papers will be addressing how modern technologies such as ultraviolet lamps and membrane bioreactors are being used to help clean and recycle wastewater. In Singapore, wastewater is cleaned up to such an extent that it is being mixed in with drinking water supplies. This water has been branded by the utility as NEWater. While the rest of the world is a long way from this level of reuse, it demonstrates how advanced technology is progressing. Finally, there is the Industry Developments track. What will be discussed here and how important is the involvement of various industries in the event? We included the Industry Developments track to incorporate topics, which have not been given that much attention in previous events. Desalination is always a key focus, and wastewater reuse is getting more attention. We must remember that technologies being used today were once in the R&D stage, so it is important to discuss current research practices. For the industrial water session, the opening paper will provide an update of the CapWa project, a consortium of 14 international partners that takes water from industrial power production and processes it through a membrane to recover water. We aim to show how technology is being applied in the region. We will be expecting a mixture of CEOs, facility managers, and technical directors lead engineers to attend the event. With support from local partners KAHRAMAA and QEWC as well as ACWUA and Qatar University, we look forward to delivering what will become the region’s top exhibition and conference. TheEDGE

BUSINESS INSIGHT

Luxury Watches

TAG Heuer CEO discusses luxury brands and his companyâ&#x20AC;&#x2122;s ambitious expansion plans in the Middle East region

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BUSINESS INSIGHT

With many resilient economies as a result of an abundance of natural resources and a disproportionally high number of high-net worth individuals, the countries of Middle East and particularly the Gulf are attractive markets of luxury products. One such brand is Tag Heuer, Swiss maker of precision timepieces known for quality and innovative design. TAG’s worldwide chief executive officer

Jean-Christophe Babin spoke exclusively

to TheEDGE’s Miles Masterson about the luxury watch market in general and specifically his company’s recent rapid expansion in the Middle East, including Qatar. Tag Heuer is increasing its presence in the Middle East. Can you talk us through a few of the reasons why this is and how you plan to go about marketing and expanding the brand in the region in the near future? The Middle East has always been a very strategic market for TAG Heuer, having been one of the pioneering regions that opened one of the first boutiques for the brand. Take the United Arab Emirates (UAE), which represents for us one of our leading markets in this part of the world; we had to strengthen our presence considering the strategic importance of the country and the expansion plan to become the business hub for the region. In a more general aspect, we are today present in over nine countries with our stand alone boutique concept, which shows where we have placed the region in our roadmap. The marketing strategy follows the same trend as we are now becoming more and more visible and will continue to do so in 2012 onwards, through our new investment in TV, having launched our first Pan Arab campaign last November, reinforced our presence in airport Duty Free shops and last

“I think speed is key when leading any company during a crisis: react quickly, move fast. Another strategy in tough times is to continue to innovate, create, pioneer in order to be ready to come back strongly when times are better.” but not least continuing the boutique expansion, by opening our first boutique in Rashid Mall in Al Khobar in Saudi Arabia. It also seems that the greater Middle East to South East Asian region is part of the brand’s global growth strategy, particularly the Indian subcontinent, which you have said previously might well be the backbone of the company by 2020. Although it is understandable, given the high concentration of high net worth individuals in the Middle East, that this would be an attractive market, it seems somewhat counterintuitive that somewhere like India would be so integral to Tag Heuer, given that the country is not immediately thought of as a market for luxury brands? I do understand your point; however, if you look at India, as it is the main point of interest addressed here, we cannot ignore that the middle class has now grown considerably in the past 10 years, and we all know that this segment of the population is the driver for a country’s growth. Having noticed the same, TAG Heuer has to start building the brand image as early as possible to be able to gain and lead the market. Our brand ambassador Shahruk Khan is assisting us in working on the same. On the other hand, it is easily noticeable that the government is also trying to help the luxury segment to expand as the talk regarding the import tax on luxury goods is now being looked at closely. We are really hoping that they will reduce this in a short period of time, as it is the main bottleneck for us at the moment. With the whole global market place as uncertain and pessimistic as it has been since early 2008, how has this affected the luxury watch market in general and Tag Heuer’s individual share of sales worldwide? Or has it even been affected and is the luxury market somewhat insulated by the high net worth of its target demographic? The 2009 crisis hurt the whole economy, including the watch-making industry, but we

totally recovered and today the growth of Swiss watch exports is at more than 19.6 percent since January. TAG Heuer shares among the total exports is also increasing by 17 percent. We are growing within a growing market, which is extremely virtuous. However, this situation is partially due to China and Hong Kong, [which grew] at more than during the same period. Travel retail becomes also more and more important, and Dubai is an interesting example of this. Has the brand had to change any of its marketing strategies or other business operations to deal with the ongoing financial crisis (particularly in Europe)? What did you do when the problems started, and what do you feel many companies should be doing in these tough times, what is your as a general observation as a CEO who has worked in many different sectors over the past decades? As I said before, the watch-making industry has not been touched by the current financial crisis. But it might come if growth in China reduces. Therefore we have to be extremely cautious, and look at indicators such as sell-out each month, in order to make appropriate decisions, such as saving plans, if they show signs of recession. I think speed is key when leading any company during a crisis: react quickly, move fast. Another strategy in tough times is to continue to innovate, create, pioneer, in order to propose the best offer and to be ready to come back strongly when times are better. This is exactly what we did with TAG Heuer with breakthroughs such as the Monaco 24, which was launched at the Basel Fair 2009 and is still successful today. We also continued our investments in the new in-house chronograph movement in spite of the crisis and launched the Carrera 1887 in early 2010. In the increasingly international marketplace, ‘thinking local but acting global’ or similar catch phrases have been adopted by most multinational corporations, and there are many stories about how such companies TheEDGE

BUSINESS INSIGHT

have got it wrong. Has Tag Heuer even adopted this kind of strategy in its business operations and marketing campaigns worldwide, in particular to separate itself from its competitors who might be doing the same? Talking about products, we are in an industry where we cannot act too much locally. We propose the same prestigious collections of watches and chronographs everywhere, carrying our DNA made of innovation, performance and precision. However, we have five different major ranges: TAG Heuer Formula 1, AquaRacer, Link, Carrera and Monaco. The mix between these five pillars is different from one country to the next. For example, in the UAE, the [portion of sales] of the AquaRacer is at 39 percent, while in China only 10.5 percent of the volume is generated by this range. On top of that, we sometimes do tactically limited editions for one country. As an example, we did an Indian Racing limited edition to celebrate the first F1 Grand Prix in Delhi. It sold out during the weekend. I think a luxury brand has

“We have been one of the official sponsors of the Dubai Desert Challenge for the past five years and would definitely be looking at other suitable sponsorship in the future in the region and in Qatar specifically.” to carry the same image and products everywhere, but we can afford some local tactical operations. How much does digital and social media play a role in brand presence, PR, customer service and marketing in the luxury goods market for Tag Heuer? Are most customers in this market perhaps of an older age group and less likely to use digital/social media, or is your audience also comprised of younger people who are more inclined to interact with the brand that way? Today the world is turning digital, not only the young generation. Social media is key among our PR tools. We are the leading watch brand on Facebook with 350,000 fans. We were the first to launch a page on Google Plus. We also tweet during TAG Heuer events. We care about bloggers the same way we care about the printed press. T.A.G. means ‘Technique d’Avant Garde’ [so] with such a name, we can’t miss these new tools. This perhaps comes back to the Middle East, particularly countries such as Qatar and the UAE, which are renowned high volume YouTube, Facebook and Twitter users, many of them under 25 years old. What can people expect from the brand in this region in the future? The Middle East is not left behind in our International social media campaign, having launched in mid-October of this year our Facebook fan page for the region. In less than a month, we have already reached more than a thousand fans and we are aiming at reaching more than 40,000 fans by end of 2012. Our fans will be able to discover brand novelties, attend exclusive events and be rewarded for their affinity. New social media is giving us a more interactive platform to communicate and we will be more and more attracted to this very demanding audience for sure. Tag Heuer is quite involved in motor sports worldwide and in the UAE. Qatar is also a growing motor sports destination. Can we

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expect more involvement from Tag Heuer here in the near future? As you may know we have been one of the official sponsors of the Dubai Desert Challenge for the past five years and would definitely be looking at other suitable sponsorship in the future in the region and in Qatar specifically, considering that the country is really positioning itself as a strategic place for sport development their sport academy at Aspire and having won the bid for the 2022 FIFA World Cup. Having visited the region, what are your personal feelings towards the Middle East market and how optimistic and excited are you about the future growth of the Tag Heuer brand here? The region as always intrigues me by its ability to have united so well the East and the West, and by having placed itself as a major crossroads that no international brand can ignore. It has also shown to the world that it has the capacity to resist and adjust to a tougher environment and reboot itself after the crisis. We are undeniably not close to the figures we were realising in the peak of the growth, but we are definitely on a right track to match the same soon if no other external elements [affect us] such as the Greek or Italian debt crisis, which is currently shaking the market. People in the Middle East are also renowned for their appreciation of the finer things in life, how do you feel this links up with Tag Heuer’s reputation as a purveyor of quality timepieces and other products? What new products are coming on the market in the near future that people in the Middle East and Qatar can look forward to? Our latest novelties are now available in the whole Middle East, including Qatar, such as our in-house chronograph movement the Carrera 1887, winner of the Grand Prix de Geneve of Haute Horlogerie in 2010. For our feminine audience, we have just delivered a very high-end watch that match the taste of the Middle Eastern and international clientele the new TAG Heuer Formula 1 Ceramic Paved diamonds timepiece.

TRAVEL & LIFESTYLE FRANKFURT BUSINESS TRAVEL INSIDER (P.80)

TheEDGE gives you tips on where to stay and what to do while on business in Germany’s financial capital, Frankfurt.

ALSO IN THIS SECTION: • •

The Ultimate Doha Spas: Doha is the capital of luxury and relaxation. TheEDGE guides you to the most luxurious spas to remove stress (P.81). Keep Your Shirt on: Believe it or not, a shirt has the power to break or make a look – pick the best one to fit your style (P.82).

•

10 Things: 10 magic time efficient ways to make a business meeting meet its goal (P.84).

TRAVEL

Business Travel Insider: Frankfurt Frankfurt is Germany’s financial capital, and its influence spreads across Europe. As a home to the country’s biggest – and busiest – airport, it is a key gateway for international travellers. Victoria Scott gives you tips on where to stay, what to do and what to see in this diverse, buzzing city. Getting there: Lufthansa (www.lufthansa.com) flies direct from Doha to Frankfurt daily. A return economy fare in December costs QR2080, and the flight takes seven hours. Business class return fares start at QR11,480. Qatar Airways (www.qatarairways.com) also flies direct to Frankfurt, with economy fares costing QR3990 in December (Business Class QR14, 250). The airport is connected to the city centre by the S-Bahn, the fast commuter train network. The journey takes 14 minutes. Buy your ticket from the vending machines in the station before boarding the train – it is easy to get caught out and end up having to pay a fine on board. Currency: Euro. 1EUR = QR4.9 (exchange rate as of November 2011) Where to stay: Hessicher Hof, Friedrich-Ebert-Anlage (http://www.hessischer-hof.de/en/) Located only half a mile from the financial district and right next to the city’s Trade Fair venue, the Frankfurt Messe, this hotel is ideally placed for those travelling on business. Owned by the same family for 60 years, the hotel prides itself on luxurious touches like in room spa treatments and a VIP airport service designed to help you avoid the stress of modern air travel. A standard room is EUR235 (QR1152) per person, per night excluding breakfast in mid-December. Frankfurter Hof, Am Kaiserplatz (http:// www.steigenberger.com/en/Frankfurt) The city’s grand old dame of hospitality has been welcoming guests for 130 years. A high standard of traditional service (personal butlers are available) merges with a plethora of modern amenities, including free wifi throughout the hotel. Its 19 function rooms,

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including a 500 square metre conference room, should suit a meeting of any size. A standard room is EUR229 (QR1122) per night in mid-December, room only. Villa Kennedy, Kennedyallee (http://www. villakennedy.com) Located just off the south bank of the Main River, the five star Villa Kennedy is a haven of luxury and peace. The hotel is a fusion of the old and new: built around a traditional 1904 Villa, it has 163 rooms decorated in a modern minimalist style. Diners at the hotel’s award winning restaurant Gusto can sit out in the hotel’s lovely courtyard garden in the warmer months. EUR234 (QR1146) per night in December, room only. Where to play: Maingau Stuben (www.maingau.de) Attached to the Maingau hotel in the Sachsenhausen district, this restaurant has gained a reputation for exceptional fine dining in an elegant setting. Expect contemporary cuisine with a German accent. Whole sections of the menu are dedicated to goose and lobster, and waiters even carve your meat at your table. Taste Of Darkness (www.dinner-in-the-

dark.com) Completely off the wall, but extremely popular, the Taste Of Darkness restaurant offers you great food, but without the lights on. You will be served a four course “surprise” dinner, designed to “activate your senses.” All of the restaurant’s staff are visually impaired. Reservations essential. Splash your cash: Also known as “The German Fifth Avenue”, The Zeil is the street to head to for a spot of retail therapy. There’s a broad range of shops to choose from here, from small boutiques to department stores. The Zeilagalerie, a 10 story shopping centre, has a rooftop viewing area, which is well worth a visit. In the same area is Goethestraße, the home of Frankfurt’s designer shops. All of the major international fashion houses are represented here, as well as high-class jewellers like Cartier and Tiffany. Culture vulture: Oper Frankfurt (http://www.oper-frankfurt. de/en) This is the place to go if you have a passion for opera. Twice named Opera House of The Year, Puccini’s Tosca and Verdi’s Otello are highlights from its December programme. Insider top tip: Frankfurt’s annual festive market draws visitors from across Europe. Held from the 23 November to 22 December in the scenic surroundings of Römerberg and Paulsplatz, it is the place to go for the best of local cuisine and crafts, including sweet meats, carrot and cinnamon cakes and delicious gingerbread. Look out also for Bethmaennchen, traditional German marzipan cookies, which make great gifts to take home.

LIFESTYLE

A Guide To: The Ultimate…Doha Spas

Doha is full of luxury spas, all promising to take the pressure of the world off your shoulders. But which one to choose? We at TheEDGE share our favourites.

Six Senses, Sharq Village With a spa menu that stretches from East to West, customers at Six Senses can’t fail to find a treatment to suit them. This beautifully designed spa has 23 treatment rooms, a gym, prayer rooms, relaxation rooms and even private steam rooms. We’re particularly drawn to the traditional Hammam treatments – The Five Clays Heaven is divine. (974) 4425 6999, open 9 am to 9.30 pm. www.ritzcarlton.com/en/Properties/SharqVillage/Spa W Hotel Bliss The W styles itself as an urban sanctuary, and there’s no doubt that the hotel’s Bliss Spa is one of our favourite places to shut out the world and get down to the serious business of relaxation. Men are particularly well catered for here – as well as having a designated “Men-U” (geddit?), male customers are welcome to choose any treatment from the rest of the spa menu if they prefer. (974) 4453 5555, open 9 am to 11 pm. www.whoteldoha.com/en/bliss Marriott The Spa One of the better value hotel spas in town, we love the hot stone massage here. Or, for a change, we fancy one of the hotel’s spa packages, particularly the Spa Relax. For QR790, customers get three

and a half hours of dedicated pampering, including a massage, facial and a manicure and pedicure. (974) 4429 8520, open 9 am to 9 pm. www.marriott.co.uk/hotels/hotel-information/fitness-spa-services/ dohmc-doha-marriott-hotel Four Seasons Spa and Wellness Centre Set apart from the hotel in its own dedicated building, the Four Seasons Spa and Wellness Centre is a peaceful haven of feng-shui designed luxury. We particularly love the free private spa suite upgrade for mothers and fathers to be, with the treatment room decorated in blue or pink, if you wish. The spa has even designed a father to be massage, designed to relieve the stress of the impending bundle of joy. Call (974) 4494 8801, open 9 am to 9 pm. www.fourseasons.com/doha/spa

TheEDGE Getaway - The Malabar Escapes, Kerala, India Kerala, on India’s south west coast, is loved by many for its calm backwaters and lakes, lush greenery, and relaxing retreats. The Malabar Escapes, a collection of five elegant boutique hotels and one luxurious house boat, have a well-earned reputation for delivering the best the area has to offer. Boutique is something of an overused word in the travel business, but these hotels are the real deal. The largest, Malabar House, has 17 rooms; the smallest, Trinity, only three. Each offers rooms and suites with individual style and artwork, free wifi, gyms and swimming pools, and excellent cuisine – you can even take curry cooking lessons from the chefs. If you are feeling active, you can hire bikes to explore the beautiful countryside, take a ride on a buffalo cart, or spend a day with the hotel’s well-loved elephant. Alternatively, you can indulge yourself at the Malabar House’s Ayurvedic spa, whose massages promise to rejuvenate and heal. We rather like the sound of that.

A seven night package including two nights at Malabar House, two nights at Serenity, two nights at Purity and one night on the house boat, Discovery, costs EUR2100 (QR9660) until April 2012, for two people sharing a room. Price includes transfers, half-board and excursions. www.malabarhouse.com

TheEDGE

LIFESTYLE

Keep Your Shirt On A shirt has the power to make or break a look. TheEDGE’s guide to shirt styles will help you get it right. In theory, it sounds straightforward enough: pick colour, find suitable neck size, add vaguely matching tie – easy! The truth is that there is actually a lot more to consider when picking a shirt. The Fit An ill-fitting shirt will not only prove uncomfortable, it will also look messy and sloppy. Choose a fit that suits your body shape. • Slim: a contemporary narrow cut shirt suitable for slimmer builds. • Regular: the standard fit, looser fitting than the slim fit. • Full: a loose fit best suited to men with a broader stature.

The Collar There are around 15 different types of shirt collar but the four most popular are: • Buttondown: a long, wide turn down collar with buttons at the collar tips. The buttondown collar gives most shirts a less formal look. • Point: the most common shirt collar consisting of a wide neck and long V-shaped points that will flatter most face shapes.

• Spread (also known as Cutaway or Windsor): the points are pushed far apart leaving a wide gap at the neck of the shirt. It is considered an elegant, formal style. • Wing: found on dress shirts, the tips are folded down into small triangles at the centre of the collar. This shirt should only be worn with a dinner jacket. The Cuff • Barrel: the standard cuff style fastened by one or two buttons. • Double, or French: a more formal cuff style, which has additional material in the sleeve that is folded back on itself and fastened with cuff links. • Single: The most formal style. Worn on a dress shirt with eveningwear. The Fabric • Cotton: ideal for Doha’s hot climate as cotton breathes well and is very soft. • Cotton blends: different fibres woven together give double benefits. Cottonpolyester is less prone to crease and cotton-lycra is more stretchy.

READ IT: Think Big Make it Happen in Business and Life

This is a collaborative work between billionaire Donald Trump and Bill Zanker, founder of The Learning Annex. Bill Zanker was already successful, having grown The Learning Annex into a US$5 million (QR18 million) a year company from an initial US$5,000 (QR18,200) investment. However, after meeting Donald Trump and learning to Think Big, his business grew to US$100 million (QR363 million) a year in sales and shows no signs of slowing down. Learn the secrets of thinking big, including momentum (how to get it or get it back), revenge (how and when to get it, and why it is so sweet), and the importance of contracts in both your business and personal affairs. You will hear real-life stories from several people who have

TheEDGE

The Next Generation

of Pens

successfully incorporated BIG thinking in their everyday lives. Donald Trump says that only two percent of the population has the ability to Think Big. Learn how to join their ranks.

FromVirgin Megastore Doha for QR38

The breakthrough Parker 5TH Technology features a ﬂexible writing tip designed to interact with the engraved metallic hood. This new innovation creates an unparalleled writing experience featuring an effortlessly smooth and smart gliding feeling. The unique tip adjusts to your own writing style in just a few words producing pleasurable and beautiful penmanship. Available in size Fine or Medium and Black or Blue ink. It is a must have of contemporary accessory design for today’s business person.

10 TEN THINGS

Tips tO Enhance

MEETINGS Vitoria Scott looks at ways to make meetings faster and more productive.

PURPOSE Having a reason for holding a meeting seems obvious, but it is a rule that is often broken. How many of you, for example, have a weekly meeting every Sunday, whether you need to or not? When you are scheduling a meeting, examine your reasons; could you manage more effectively by e-mail, phone and video conferencing? If you make sure that your meeting really needs to be held, it will be taken more seriously. TIME IS MONEY Consider the salary of your attendees, and the amount of time each meeting takes up. Do the maths for one meeting and put the financial loss to those present. You will be surprised by how quickly business progresses once money comes into the equation. TIME MANAGEMENT Set a firm start and end time, and keep to it. If people are late, do not waste time helping them catch up – this way, they will learn to be on time next time. Knowing there is a time target can also help those who like the sound of their own voices (there is one at every meeting) to get to the point. If all else fails, consider appointing a facilitator whose job it is to keep the meeting on track. MAKE THE AGENDA WORK FOR YOU Circulate the agenda several days beforehand to let participants react to it and make any changes they would like to make. To encourage maximum productivity, note down who you expect to lead each part of the meeting, and how long you expect each point to take. INFORMATION Meetings are often prolonged because attendees have not done the necessary reading. To fix this, set a new rule that all

TheEDGE

supplementary information must be e-mailed to all participants before the meeting, and that everyone is expected to come prepared. INVOLVE EVERYONE A group decision is just that: make sure everyone present gives his or her opinion, whether you want to hear it, or not. This way, you can make a more informed decision. It also means people cannot allege they were not consulted on a decision they later decide they would like to disown. Make sure, of course, that all of this is recorded in the minutes. GROUND RULES Try introducing a list of ground rules. Obviously do not overdo it – too many rules and you will end up looking like a dictator – but some basic ones, like compulsory preparation time and the turning off of mobile phones, can go a long way to improve the quality of a meeting. Make sure you ask your team for their own ideas, and be prepared to hold people accountable if rules are broken. TARGET TIME WASTERS Have you ever been to a meeting where a completely irrelevant issue has been debated

to death? Yes, we have been there too. Lots. To combat this, store these distracting issues in a separate list of items to be added to the agenda of the next meeting. You never know, they might have disappeared by then. REVIEW Make sure there is room in your agenda for a review of the meeting. This way, you can make sure you have not left any items off the action list, and attendees get a chance to clear up any queries. It also gives you a chance to gauge the meeting’s success. After all, if there are no items to action, why did you bother meeting? THE IPad CHEAT If all else fails – cheat. Modern technology lends itself brilliantly to a little subterfuge. To carry this out successfully, you will need a genuine work-related document/app and your favourite magazine, newspaper or e-book app. We find that by putting our iPad (with work document) in full view for a bit, then pulling it towards us and appearing to be in deep thought (while switching to our favourite magazine) does indeed make meetings seem a little shorter.