The Edge - Sep 2012 (Issue 36) by Firefly Communications

2012

w w w. t h e e d g e . m e

ContentS fiNaNcE & EcoNomics .32. mARket WAtCh

Dheeraj Shadhadpuri discusses the European Central Bank’s proposal to ease euro market conditions.

.34. BAlAnCe Sheet

on the CoveR

Edward Jameson takes a closer look at how in the coming years Qatar and the Gulf Cooperation Council (GCC) might be entering a golden age of railway development that will change the face of the region. (P.40)

Newton De Niese explains the constant changes in International Financial Reporting Standards.

.36. SpeCiAl RepoRt

.56. BuSineSS inteRvieW

.38. peRSonAl FinAnCe

.60. on the pulSe

Thomas Bacon looks at Qatar’s growing tourism sector. Adrian Bliss explains how to review property and asset allocation in your investment portfolio.

fEatuREs

An exclusive interview with Khalid Al Jaber, serial entrepreneur. Jamie Stewart investigates whether Qatar Investment Authority might invest closer to home.

kNowlEdgE & ExpERtisE

.44. SpeCiAl FoCuS

.66. pRoDuCtivity AnD WellBeing

.48. FeAtuRe StoRy

.68. legAl inSight

.52. FeAutRe StoRy

.70. BuSineSS mAnAgement

Erika Widén reports on the Visual Art Center’s determination to engage the Qatari community in art. Shehan Mashood takes a closer look at the rise of the Big Data industry and its future implications. Simon Watkins reports on Islamic Finance versus Western banking.

Lauren Penny highlights the four main workplace individual character traits. Anti-Corruption and Anti-Bribery Laws in Qatar.

Mike Richardson argues why organisational agility is important. TheEDGE

CONTENTS

44 BusiNEss INsight INtERviEws .73. TheEDGE spoke exclusively to Sachin Bountra, business

development director for VISA in the Middle East about the new transactional services emerging in the region. TheEDGE also spoke to Farooq Burney and Naser Faqif about the Al Fakhoora Scholarship programme, which awards students in Gaza the oppurtunity to receive a higher education.

80 REgulaRs .06. .08. .12. .14. .20. .23. .28. .79. .84. 4

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FRom the eDitoR ContRiButoRS FeeDBACk neWS etCeteRA QAtAR impACt eneRgy AnD ReSeARCh CountRy FoCuS tRAvel AnD 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 DIGITAL/EDIToRIAL ASSISTANT Shehan Mashood s.mashood@theedge-me.com REGIoNAL SALES DIRECToR Julia Toon j.toon@firefly-me.com +974 66880228 HEAD of BuSINESS SALES Emma Land e.land@firefly-me.com +974 33197446 SALES MANAGERS Joseph Issac j.issac@firefly-me.com +974 33675301 Johanna Romero j.romero@firefly-me.com +974 55007108 DISTRIBuTIoN & SuBSCRIpTIoNS Azqa Haroon a.haroon@firefly-me.com +974 55692471 CREATIvE DIRECToR Roula Zinati Ayoub DESIGN CooRDINATIoN Sarah Jabari Teja Jaganjac fINALISER Michael Logaring pHoToGRApHER Herbert Villadelrey pRINTED BY Ali Bin Ali Printing Press, Doha, Qatar

THE EDITOR

As the long hot days of August begin to fade into memory, Doha wakes up to an autumn of business events. Qatar’s capital has long been attempting to establish itself as a globally recognised venue for the MICE industry (meetings, incentives, conferences and exhibitions), a quest culminating in the opening of the vast floor space and world-class facilities of the Qatar National Convention Centre in late 2011. It seems the strategy is working, as for the remainder of this year and into the early part of 2013, we go from a summer slumber to backto-back business happenings into the cooler months, the calendar full of events of various kinds across most sectors in Doha. These include import/export and trade, construction, the small to medium enterprise (SME) sector, interior decorating, the energy sector, defence and arms, hospitality, finance, education, sport, film making and more. Indeed, whatever sector you are involved in, there will probably at least one businessrelated event occurring in Qatar that will be of interest to you over the next few months. Of course, the biggest one is in late November: COP 18, the United Nations’ Climate Change Conference, which at the time of writing is touted to coencide with a Qatari environmental and green energy sector conference and exhibition. It is in fact fitting that Doha is more ready than ever to host the annual COP 18 event, as the world’s attention is being focused on Qatar’s often criticised environmental track record, in areas such as C02 and water, where the country tops global per capita emission and consumption lists respectively (whether this criticism is justified or not is another debate). Though many companies in both the hydrocarbon sector and others in Qatar are

making great strides in “going green” there is ostensibly much that can be done to improve the situation in Doha, from recycling and reducing the amount of waste, to lowering carbon and other airborne emissions, as well as educating the public, who must also take responsibility in areas such as recycling and water and energy consumption reduction. Like all events of its ilk, it is hoped that COP 18 will draw sharp domestic attention to the environment. This period will also enable the country’s private and public sector organisations to showcase the positive steps they are taking in this regard (and perhaps prod those that are lagging to become more proactive), as well as the cutting edge green and alternative energy technologies being developed here. It will therefore be no coincidence that you will see more than usual “green” coverage in TheEDGE in the lead up to COP 18, as well as much other content relating to the further various business events taking place in Doha. Nevertheless, venues and dates of some of these events can change momentarily and new events are always being added to the roster. Thus we have also made a special effort with the calendar on our website (www.theedge.me/ events), striving to make it the most up-to-date and comprehensive online reference for MICE happenings in Qatar. So please have a look at our website events page if you are searching for the latest, most accurate schedule of Qatar’s business events. 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 © 2012 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.

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CONTRIBUTORS

CoNTRIBuToRS

pG. 23 JAMIE STEWART International Correspondent London, United Kingdom

p. 32 DHEERAJ SHAHDADpuRI Analyst Dubai, UAE

p.34 NEWToN DE NIESE Senior Manager in Accounting Advisory Services KPMG, Qatar

p. 36 THoMAS BACoN Analyst Oxford Business Group Istanbul, Turkey

p. 38 ADRIAN BLISS Senior Financial Consultant Guardian Wealth Management Doha, Qatar

p. 52 SIMoN WATkINS Freelance Financial Journalist London, United Kingdom

p. 66 LAuREN pENNY Human Resource Wellness and Engagement Consultant Freelance Doha, Qatar

p.68 NADINE NAJI Lawyer (Lebanon) SNR Denton & Co, Qatar

p. 70 MIkE RICHARDSoN MBA Graduate London Business School London, United Kingdom

p. 80 vICToRIA SCoTT Journalist Doha, Qatar

TheEDGE

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 10,000 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.

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READER FEEDBACK

fEEDBACk FEEDBACK LETTERS FROM THEEDGE READERS

REACTION IN THE FORM OF LETTERS AND E-MAILS FROM THEEDGE READERS, AS WELL AS SURVEY

FEEDBACK FROM OUR WEBSITE WWW.THEEDGE.ME

while good in the short term it might turn my investment into a risky one in the long term. Steven, United Kingdom

WATER oppoRTuNITY

Thank you to TheEDGE for the insightful article that appeared in your Ramadan issue. It is clear that Kahramaa have their work cut out, and it was interesting reading about their multibillion dollar projects and activities. Initiatives such as Tarsheed should influence consumer behaviour (over time) and an embracing of entrepreneurship, innovation and partnership should ensure that while the future is far from easy, it at least has a clear purpose: After all, what would we, and Qatar, be without water? Your article led me to look at Kahramaa in a fresh light – as one of the most important players in delivering the Qatar National Development Strategy – and will certainly change how I feel when I open my monthly water and electricity bills in the future. Iain Webster, Doha Iain thank you very much for writing in to us. After this we too plan on being more mindful when it comes to water usage. – Miles Masterson, Managing Editor

IS QATAR oN THE vERGE of A pRopERTY BuBBLE?

As a property owner in Qatar I read this article with much apprehension but was glad to see plans in place to curb certain channels of inflation. It certainly is a double-edged sword where average rent rates have gone up,

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Hi Steven, Thank you for writing in to us all the way from the UK. Glad to hear from readers around the world. We too certainly hope inﬂation rates can be curbed. – Miles Masterson, Managing Editor

Too MuCH of A BAD THING

The article by Kamahl on Qatar’s diabetes and obesity epidemic really struck me, and I agreed with a lot of what he was saying. However, I think the problem also extends to what we eat at home. A big problem is that most organic produce in Qatar is severely overpriced in comparison to regular imported produce. Perhaps that is something government and business organisations should also look at addressing. Reem, Doha A very good point Reem, perhaps due to low demand in Qatar, prices are high. Hopefully a change in culture leads to affordable healthy alternatives for us all. – Miles Masterson, Managing Editor

THEEDGE oNLINE SuRvEY JulY/august 2012: SYRIA We asked our website readers and online followers: ‘Do you think Arab League plans of giving Bashar alAssad safe exit in return for stepping down is a good idea?’

60% YES 40% No

follow THEEDGE aNd WIN A NOKIA (mobilE phoNE) Send us a letter or email correspondence, or follow TheEDGE on our Facebook page, Twitter feed or LinkedIn group in September and stand in line to win a Nokia N9 smart phone pictured here*. Each month one such reader will be drawn to receive this great prize. July’s winner of the Nokia N9 Smartphone is Philippa Stewart. *Open only to readers resident in Qatar.

foLLoW theEdgE oNLINE foLLoW uS oN TWITTER: @THEEDGEQATAR JoIN ouR fACEBook GRoup: WWW.FACEBOOK.COM/ QATARTHEEDGE JoIN ouR LINkEDIN GRoup: THEEDGE MAGAzINE QATAR

QATAR’S CATALYST FOR BUSINESS

Now Read TheEdge Online www.theedge.me is the Qatar business community’s new digital sensation. www.theedge.me contains current and archive feature and news content from our print magazine, breaking news and online exclusives, and extends the invaluable service TheEDGE magazine provides Qatar’s bustling multi-sector business community, making it the onestop online portal for all aspects of business-related content and information covering Qatar, The Middle East and the rest of the world. Visit TheEDGE magazine’s website for the best coverage of the Qatari business world available on the Internet.

www.theedge.me

NEWS ETCETERA

TO OF THE MONTH O H P

The

E D G E M A G A ZI N E

CELEBRATING THE SHARD Amid both praise and controversy, the latter spurred by some naysaying purists who feel it has negatively altered the skyline of London, the Qatari-funded The Shard tower – at 310 metres, Europe’s tallest building – was inaugurated in a spectacular laser show in the British capital in July 2012. The event, which was streamed live on the Internet, was attended by throngs of people who lined the Thames, as well as by European and Qatari dignitaries, including the building’s designer, Italian architect Renzo Piano, British developer Irvine Sellar, Prince Andrew of the British royal family – who praised the construction as a huge boost to London’s economy – as well as Qatari prime minister HE Sheik Hamad bin Jassim bin Jaber Al Thani, the governor of the Qatar Central Bank, HE Sheikh Abdullah bin Saoud Al Thani, and QNB Group chief executive Ali Shareef Al Emadi. (Image Getty Images)

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NEWS Etcetera

NEWs Etcetera Reforms set to boost Qatar capital markets By Asif Iqbal With the recent reforms that attempt to clarify oversight, broaden access and simplify transactions, Qatar’s capital market is set for rapid growth, a new report has said. Authorities as well as private sector players hope this will result in greater liquidity and activity in the market. According to the Oxford Business Group (OBG), Qatar’s capital market has a great deal of potential, and keeping this in mind, the authorities recently announced the longawaited financial sector reforms, including those that pass regulatory authority from

the Qatar Exchange (QE) to the central bank, increase the settlement time for stock trades and allow banks to create brokerage divisions. “A circular issued by the Minister of Economy and Finance (MEF) confirmed that the Qatar Central Bank (QCB) would be replacing the Qatar Financial Markets Authority (QFMA) in overseeing the stock exchange, a further move toward creating a single regulatory body for the market,” the OBG report said. The MEF circular also contained a provision to expand the timeframe for trade settlements, allowing

“trustworthy establishments and individuals” to pay brokers three days after a trade, as opposed to the upfront payments previously needed. The QFMA will decide which organisations and individuals are “trustworthy” based on brokers’ recommendation, the OBG report added. Analysts expect the measure to encourage Qatari firms and individuals to engage more actively in the market. This should help increase liquidity, which has long been a priority for the authorities and the private sector alike.

Global Entrepreneurship Week Planned for Qatar Qatar will join over 100 other countries in participating in Global Entrepreneurship Week (GEW), a worldwide initiative that celebrates the innovators and job creators who launch start-up businesses and drive economic growth. This will be the first year in which Qatar has had a formal Global Entrepreneurship Week campaign. First held in 2007, GEW is led by the Kauffman Foundation, a non-profit organisation that works to promote job creation, innovation and economic advancement through entrepreneurship. In 2012, Global Entrepreneurship Week will be held on November 12 to18. In Qatar, GEW is being organised by the GEW Qatar Board, a group of local organisations involved in the promotion of entrepreneurship and economic development in the country. Participating organisations include Bedaya Center, Enterprise Qatar (EQ), Entrepreneurs’ Organisation (EO), ICT Qatar, Ministry of Business and Trade, Qatar Chamber of Commerce & Industry, Qatar Development

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Bank (QDB), Qatar Science & Technology Park (QSTP) and The Youth Company. Silatech is the official host organisation for Qatar, and chairs the GEW Qatar Board. Saleh Al Khulaifi, manager of Bedaya Center told TheEDGE, “What we’re planning to do at GEW is really to raise awareness about entrepreneurship, as we did last year when we got 13 start-ups, two investors, and nine ideas

were pitched, we will focus more this year and grow these numbers. We believe that business plan competitions are the catalyst that ignites the spirit and challenges the entrepreneurs to build proper business plans and be ready to pitch them in 60 seconds. We will definitely be preparing them to be ready by providing workshops and awareness sessions.”

A participant in Global Entrepreneurship Week in November, Bedaya Center is located at the heart of Katara’s cultural village.

NEWS Etcetera

TEDxYouth@Doha inspiring Qatar’s youth TEDxYouth@Doha will be held in Qatar for the second time on November 17 2012, in commemoration of United Nations Universal Children’s Day, and is being organised by the youth in Qatar and for the youth of Qatar. According to its promoters, TEDx is more than just a series of talks covering topics speakers are passionate about, it is more than the TEDx tag line ‘Ideas Worth Spreading,’ rather TEDx events are about inspiring people to live their lives and do something that could change the world, even if only a little. This is especially The audience listens attentively to the inspiring young speakers participating at the TEDxYouth@Doha last year. true of the TEDxYouth events, which aim to encourage youngsters not only to speak about their achievements to their peers, but also to prove to older generations that the young can do great things if given the opportunity. Co-curator of TEDxYouth@Doha, Uzair Mohammad, said: “We wanted an event that was about more than young speakers. As part of how we organise the event, we have recruited youngsters from across the nation to help develop this annual event. Through TEDxYouth@Doha, we wish to teach young people skills they will need in the future; we do this by making them an intrinsic part of the process, whether it is being an organising team member, a speaker, an audience member, or a live stream viewer. High school students find a voice at TEDxYouth@Doha, and that is the most important milestone we can aim to achieve. The theme we chose for our event is the hashtag ‘failbetter’. Through this year’s event, we want Qatar’s youth to shed their fear of failure, and to realise that trying will teach them more, make them stronger, and will help them succeed in the future.”

A BCG Study Identifies the Barriers to Career Advancement for Women Most executives see a connection between diversity and corporate success. Eighty five percent of leading organisations view gender diversity as a top priority relative to other diversity issues. However, only about one in five companies have a targeted recruiting strategy for female talent, and only one in four offer job-sharing opportunities in management positions. Moreover, in many Gulf Cooperation Council (GCC) countries, basic measures such as women’s networks, mentorship programmes, or diversity trainings for managers – Dr. Sven-Olaf Vathje, partner and managing that have emerged widespread in more mature markets – are director in BCG’s Abu Dhabi office. deficient. However, even in countries where they are present, such as in the United Arab Emirates (UAE), these measures alone will not turn gender diversity into a competitive advantage. The BCG study shows that the majority of the companies analysed view diversity management in the context of ethical and social aspects. “GCC countries like the UAE could play a leading global role in the full integration of women in the work place. Statistically, young UAE women are better educated than their male peers, and they often demonstrate a strong work discipline,” explains Dr. Vathje. “Also, unlike their Western peers, UAE women typically marry and have children early in their lives; they could re-join the workforce as management talent without further family break, given the strong domestic support system in most GCC countries.”

NEWs IN BRIEF Aamal Company QSC Financial Results Revenues at Aamal’s Industrial Manufacturing division rose by 82.8 percent for the first six months of 2012 compared to the same period in 2011 and now make up 62.1 percent of total company sales (versus 50.9 percent in 2011, before the elimination of intra-company sales). This rate of growth indicates a strong endorsement of Aamal’s decision to reposition the company in recent years to be predominantly an industrial one, in order that it may participate fully in the rapid and continuing industrialisation of Qatar. This revenue growth has been driven by both organic and acquisition means, the company reports.

Qatar bin laden group opens Qatar Bin Laden Group (QBG) was established recently in Qatar. Omar bin Laden brings his Saudi experience of building residential complexes, bridges, roads and internal finishing, demolition, restoration, to name a few to Doha. Among the important projects he was involved in Saudi Arabia was the Jamarat Bridge in Holy Mecca and the Waqaf of King Abdul Aziz Tower.

The 6th MENA Investment Management Forum (MIMF) Global and regional investment strategies and opportunities will be discussed during the 6th 2012 MIMF from November 11 to 14 at the Grand Hyatt Doha.

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NEWS Etcetera

2012

events calendar

SEPTEMBER - Doha, Qatar

5–8

Made in the USA Qatar

Linden Boarding School Tour

17 – 18

NEWS IN QUOTES “Now is the time to stop this bloodshed and for the Syrian people to regain their full rights, and for this regime that kills its people to disappear from the scene.” Egypt’s President Mohamed Morsi recently told Reuters in his first interview with an international news organisation before embarking on a trip to China and Iran.

“The most effective way to unlock the Qataris’ coffers is to appeal directly to the prime minister, Sheikh Hamad bin Jassim Al Thani, who is also chairman of Qatar Holding and chief executive of the QIA, or to Ahmad Mohamed Al Sayed, the young chief executive of Qatar Holding.” Stated in a recent report in Financial Times on Qatar’s sovereign wealth fund. HE the prime minister and foreign minister Sheikh Hamad bin Jassim bin Jabr Al Thani (pictured).

Construction Leaders Forum Qatar

21 – 26

World Philatelic Exhibition

Business Forum on SME’s and Finance

25 – 28

INFDEX Interior Decorating

24 to Oct 15 World Postal Congress

26 – 28 Pools and Spas

For a full and comprehensive calendar of events in Qatar please visit www.theedge.me 18

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“They fired on the ground to scare me, hit me with the butts of their guns and tore my shirt as they kidnapped me. They blindfolded me and later put me in a dark place and chained me.” Essam Al Houti, the Kuwaiti oil engineer abducted in Lebanon recently, has been freed without ransom. The Gulf states have urged their citizens to refrain from travelling to Lebanon.

“We dispatched several LNG cargoes to Japan immediately after the tragic event. Only Qatar could have done that because of our production capabilities and fleet of LNG vessels we own.” HE Abdullah bin Hamad Al Attiyah, chairman of administrative control and transparency told the Gulf Times recently at the 37th Japan Cooperation Center for the Middle East.

QATAR IMPACT

RESPONSIBILITY With childcare practices in Qatar in the spotlight, Kamahl Santamaria asks if the care of our children is becoming too much of a business.

s I wrote in Qatar Impact a few months ago, the Villaggio fire made us think about a lot of things. The obvious one was fire preparedness, and how safe our homes and public buildings are. The weeks-long closure of City-Center Doha seemed like something of a knee-jerk reaction and was clearly an inconvenience for people, but it was probably a very necessary one. At the time of writing there was no word on other malls being shut down for safety inspections, but it would not surprise me if it happened. But because of the tragic deaths of 13 children in a children’s activity centre in the Villaggio fire, other such facilities and nurseries have had to take a good look at their setups. Children in Qatar inevitably go into childcare from a very young age. That is not to say all of them do, but things like limitations on maternity leave – compared to other countries – mean it is sometimes more of a necessity than parents would like. Places at these nurseries are highly sought after. Waiting lists can be very long, and when a child does get a position there is

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usually a lot of money to pay in upfront and ongoing fees. Now in all fairness to the nurseries, they are businesses. They have costs to cover and employees to pay like any other business. But unlike many other businesses, they have the unique responsibility of looking after other peoples’ families. The situation at Gympanzee in Villaggio – while not technically a nursery – highlighted acute safety issues, and raised questions about why children were in a facility on the second floor with no independent fire exit. There were reports of a directive from the Ministry of Social Affairs more than a year ago requiring all classrooms be on the ground floor. Some nurseries complied; others did not and continue not to. Some, during downtime periods over the summer, promised to add fire escapes to their upper floors where by now only playing areas were supposed to be. Others instead opted to move all activities downstairs – which is now believed to be the requirement – and leave upstairs areas for administration. This highlights two things. Firstly, these changes should have been put in place a long time ago. It should not have taken the deaths of 13 children to prompt such action. And secondly, a lack of clarity over exactly what the requirements are and the apparent selective compliance and enforcement. Is money or funding an issue? A term of nursery fees can be as much as QR7000 so it would appear there is plenty of money coming in. And with not all employers

in Qatar covering nursery fees, a lot of this money comes directly from parents’ pockets. The question is – be it regarding safety improvements or simply the overall standard of care – are those parents getting what they pay for? There is also the issue of legal responsibility. One nursery, upon registering a child, included a clause which tried to exclude liability for negligence – something which would be illegal in many other jurisdictions. Again, it goes back to responsibility. Should a business, which by its very nature is to look after other people’s children be trying to exclude liability for any possible neglect by its own staff? In the end it remains the parents’ decision whether or not to send their children to nursery. If they do, they will surely realise that they are handing responsibility for their own children to someone else. Not just that, they will also have to realise that a nursery is a business and therefore has to operate like one to make enough money to stay viable. But the business of childcare comes with more responsibility than perhaps any other. There is no room to cut corners. Not when we have all seen first-hand what is at stake.

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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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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ENERGY & RESEARCH Qatar and the great shale shift The global natural gas market is in a state of flux, and as the transition gathers pace, Qatar could see the value of its most prized commodity fall over the coming years â&#x20AC;&#x201C; which is why Doha is at the forefront of the United Statesâ&#x20AC;&#x2122; shale gas export drive. Jamie Stewart reports.

The existing Golden Pass facility on the Sabine-Neches Waterway in Texas, which Qatar Petroleum hopes will soon be exporting Liquefied Natural Gas (LNG) to the global market. (Image courtesy Golden Pass Products)

ENERGY & RESEARCH

ast month, the great American shale gas revolution became less a domestic United States (US) affair and more a matter of global energy economics – one that threatens to pressure the very source of income – natural gas – that to date has funded Doha’s spectacular growth, and helped to elevate the city onto the world stage. On 17 August 2012, US-based liquefied natural gas (LNG) company Golden Pass Products, a joint venture between Qatar Petroleum and US energy giant Exxon Mobil Corporation, submitted an application to the US energy department to export LNG from an existing receiving terminal in Sabine Pass, Texas, in the southern US. Qatar Petroleum’s interest in the immense US$10 billion (QR36 billion) project is no small deal. Doha controls a 70 percent stake in Golden Pass Products, and would therefore be exposed to the tune of QR25 billion as cost projections stand. But the potential prize for ensuring a place at the forefront of the global shale gas revolution is worth many times this. Shale gas has dramatically altered energy economics within the US, and it could do the same to the global market, potentially denting Qatar’s income at a time when Doha’s economic diversification plans will be in need of a stable and consistent revenue stream. So Qatar has chosen to put some of its conventional hydrocarbon revenues into unconventional gas projects. The availability of abundant unconventional gas resources has created a historic market opportunity to sell LNG globally. The price is likely to be forced down over time, no question, whether Doha is in receipt of the income or not. But rather than combat the shale gas charge, Doha is spearheading it. THE PROJECT The proposed Golden Pass project has the capacity to send out almost 16 million tonnes of LNG per year, according to the company. New infrastructure required to export will be located on the existing import site, which can accommodate two LNG tankers, while containing five storage tanks with access to the Golden Pass pipeline. “The expanded facility would have the capability and flexibility to both import and export natural gas,” the company stated in a press release. To put the figure into perspective, Qatar, the world’s largest LNG exporter, is capable of producing 77 million tonnes of LNG per year. The 16 million tonnes that could be exported from Golden Pass represents a considerable volume, at 21 percent of Qatar’s maximum annual production. And it may not be long until the global market is awash with LNG of US origin, partly exported by Qatar Petroleum: “A final investment decision will be made once federal approval has been given. We then anticipate a five-year construction period,” a Golden Pass Products spokesman said. “The proposed expansion of Golden Pass is an opportunity to capitalise on America’s abundant natural gas resources,” the company added in its statement. “The [US] Energy Information Administration’s (EIA’s) Annual Energy Outlook 2012 shows that the US has substantial gas supplies that can support gas exports, including LNG exports, over the longer term.” Since the technology

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It may not be long until the global market is awash with LNG of US origin, partly exported by Qatar Petroleum. to remove previously trapped gas from the ground has become abundant, the price of the commodity has collapsed in the US, falling to its lowest level for over a decade. The EIA’s estimates of technically recoverable shale gas resources in the US jumped 134 percent in a single year between 2010 and 2011, underscoring the vast potential that technological advancements have when it comes to hydrocarbon supply in what is, in energy industry terms, a blink of an eye. This marked a welcome change, the Institute for Energy Research (IER) says, because as little as 10 years ago, analysts and politicians were of the opinion that the US could not drill its way out of a natural gas shortage, and it would therefore continue to rely on LNG exporters such as Qatar for its hydrocarbon supply. “But, with new technology and investment, we did just that,” the IER said. The race is now on to shift that gas from the domestic market to the international one, where the impact, over time, could be very similar. And by playing a leading role in that race, Doha can reinvest the income from its own shale gas interests back into its domestic economy. GLOBAL TRADE The Golden Pass Products application will allow the natural gas to be shipped to users in countries with free trade agreements (FTAs) with the US. Nineteen countries have FTAs in place with the US, including Bahrain, Jordan, Oman and one of Qatar’s largest and most important gas customers, Korea. However, a number of nations that are vital to Qatar’s gas export industry do not hold such agreements. These include the gas-hungry markets of China, India and Japan. But Golden Pass Products is in the process of filing another application seeking the US government’s permission to sell LNG to non-FTA countries. This would allow trade with all other countries not covered by the FTA, with the exception of those under economic sanction by the US. In addition, the US is in negotiations regarding a regional, AsiaPacific trade agreement, known as the Trans-Pacific Partnership, with the objective of shaping a ‘high-standard, broad-based regional pact’. This could potentially unlock the door for Qatar Petroleum to trade with a host of southeast Asian and Australasian nations through the Golden Pass Products joint venture. Even if such deals could not be hammered out, Doha would retain the right to supply any nation of its choosing with its own domestically sourced LNG, regardless of international trade agreements in the US.

Energy & Research

CLOSER TO THE SUN

Doha’s solar power export goal edges nearer By Jamie Stewart

atar’s largest solar power company has signed a deal with a giant industrial gases firm. The conclusion of the negotiations is a major step for Doha towards its endgame – the building of a world-leading solar energy industry in the peninsula. The deal, which was concluded in mid-August between Qatar Solar Technologies (QST) and Doha-based Gasal, will mark the latter’s investment in a series of high purity hydrogen production units, specifically to supply QST. Gasal will also extend its gas pipeline system in Ras Laffan Industrial City, allowing QSTec to connect to an existing nitrogen network. Access to the industrial gases is essential to QST’s business plan. The firm, which is part of the Qatar Foundation, is in the early stages of building a sprawling QR3.6 billion polysilicon manufacturing plant. The facility, which will produce the material used to build solar panels, will roll out 8000 metric tons per year (MTPY), which is enough to generate 1.4 gigawatts of electricity – the same capacity as a modern day nuclear reactor. The plant will require pure hydrogen and nitrogen gases in order to make the “very highest quality” of polysilicon: “The essential building block of the world’s most efficient solar technologies,” as QST chairman and chief executive Khalid Klefeekh Al Hajri said. Full operations at the plant are expected to begin early in 2014, but Qatar’s solar power ambitions do not stop there. Doha seems intent on making hay while the sun shines, because the QST plant is designed to expand as global demand for its product grows. Eventually, the QST plant will be able to produce more than 45,000 MTPY of polysilicon spread over 1.2 million square metres of the Ras Laffan location, with the module manufacturing equipment on site. This will make six gigawatts of solar energy once converted along the value chain – equivalent to four new-generation nuclear reactors. The long-term intention is to diversify Qatar’s domestic energy sector by providing a sustainable alternative source of energy while also conserving and protecting Qatar’s natural resources – namely oil and gas – for the future. In the not too distant future, QST said in a statement, it aims to build solar modules in Qatar made from its own polysilicon, for local use and for export across the world. Gasal chief executive Christian Last unequivocally welcomed the deal, saying his company was “very proud to be associated with QSTec and Qatar Foundation in this joint undertaking to support the renewable energy sector”.

QSTec’s new facility will produce enough material to generate 1.4 gigawatts of electricity – the same capacity as a nuclear reactor.

With the construction of a plant producing material for solar panels in Qatar in the near future, the country will rapidly move forward in its plans to build a leading solar energy industry here.

TheEDGE

Country Focus

PERU

Increasing trade Ties with Qatar and The Middle east The government of Peru has taken initiatives recently to promote and enhance bilateral trade in the Middle East. Erika Widén reports on how a Latin American nation, which is geographically far apart from the Arab world, is taking steps to showcase its business potential.

he Republic of Peru, a South American country, was once the home to one of the most ancient cultures in the world, called the Caral-Supe civilization dating back to 3,000BC, and the Inca Empire, also known as one of the oldest civilizations in history. Peru is the 20th largest nation in the world and geographically far apart and little known in the Middle East. In 2011, the government of Peru, as part of their foreign policy, opened embassies in Qatar, Kuwait and recently in Saudi Arabia, and a General Consulate and Trade office in Dubai, United Arab Emirates (UAE). In Qatar the Peruvian community is relatively small, with a total population of around 120 Peruvians working mainly in the oil and gas, commercial aviation and construction industries. Julio Florian, Peruvian ambassador to Qatar told TheEDGE, “The first steps are focused on cultural promotion. The reason is simple: we need to build a bridge between the two countries. Therefore, the embassy addresses efforts to show Peru as the cradle of the Inca civilization,” he said, “along with this priority, while Peru is positioned

in the social awareness of Qatari authorities and citizens, we are also working to increase the bilateral trade and awareness of Peru as an investment destination.” Peru exports to Qatar medicines for veterinary use, marquetry, machine parts, wooden tables plus kitchen items and mirrors. Meanwhile exports from Qatar to Peru include polythene, ethylene and propane. “We have identified agro-industrial exports as the sector with the highest potential to enter the Qatari market. This includes organic products, spices and natural dyes, and processed marine products and its derivatives such as canned fish,” said Florian. Florian added that another potential sector, which could be of interest to Qatar is Peru’s consultancy services in the agribusiness field, in addition to Peruvian textiles, mainly cotton, alpaca and the vicuna wool (known as the finest fibre in the world). “Both the food and the textile sector are Peru’s most renowned products after mining, due to the quality of products and raw materials. Most of Peruvian exports hold international certifications and are recognised in demanding and strict markets such as the United States, the European Union and Asia,” said Florian. The Peruvian embassy is currently promoting the Third Summit of South American-Arab Countries (III ASPA) that will take place in the capital Lima in early October 2012. It is a bi-regional political event with the presence of all heads of states and governments representing both regions. In 2009 the II ASPA was held in Doha. In parallel to the III ASPA Summit, a Business Forum will be the main platform in 2012 for Qatari businessmen who are interested in doing trade with Peruvians and other Latin American partners. There will be hundreds of entrepreneurs and businessmen representing 22 Arab countries, and 12 from South America. The III ASPA Business Forum will allow participants to establish business contracts and serve as a bi-regional trade platform, where

country focus

According to the forecast of the Peruvian Central Bank, Peru will attract around US$8 billion (QR29 billion) of foreign investment in 2012. business leaders from the Arab and South American countries will meet and create new investment opportunities. The Summit also aims to act as a platform where businessmen from both continents can make proposals for economic co-enterprise. “South America is an excellent place to do business. Its countries are rich in natural resources and have a better economic situation in comparison to Europe or the United States of America. Peru has been a country with the fastest growth in the region in the last decade, including the years of the world economic crisis,” said Florian. Florian also added that Qatari businessmen will find many opportunities to invest in Peru. “According to the forecast of the Peruvian Central Bank, Peru will attract around US$8 billion (QR29 billion) of foreign investment in 2012, which means that the country expects to equal the success of last year.” Florian also told TheEDGE that Peru is among the fastest growing

economies in the world and will continue to lead regional growth. Despite the negative impact of the crisis on the global economy, the Peruvian gross domestic product (GDP) grew 0.9 percent in 2009, after an outstanding 9.8 percent the year before, the highest in Latin America. In 2011, the Peruvian economy grew almost seven percent and the forecast for Latin America’s growth for 2012 to 2014 highlights that Peru will continue to top regional growth with an average annual rate of six percent. “Peru has been working to become a globalised economy, with preferential access to the world’s largest markets. Peru has pursued an active commercial integration policy with the world, and through different integration schemes it has assured access to important markets which the foreign investors in Peru can access,” added Florian. Annually, Peru hosts two highly regarded international fairs. Expoalimentaria exhibits food and beverages, machinery, equipment, containers and packages, services, restaurants and gastronomy, and is worth more than US$470 million (QR1.7 billion) in business transactions. The upcoming Expoalimentaria 2012, which will be held in September, expects the participation of Qatari companies. Peru Moda and Peru Gift Show is another prominent fair that focuses on the textile industry. In April 2012 it was visited by six UAE companies, which lead to business trade worth around US$1million (QR3.64 million). Cultural exchange between the two nations is crucial, and it is a bridge to expose the different cultural traditions and a gate that will led to bilateral trade. Florian believes that it is important to focus on cultural exchange. “During our first year in Qatar we showcased in Katara two photographic exhibitions, one in June 2011 highlighting incredible views of Machu Picchu – one of the new seven wonders in the world and another in May 2012 showing the beauty and majesty of Peruvian Paso Horses. The embassy also hosted last April a Peruvian Gastronomy Festival, during that week hundreds of local and foreigners enjoyed the tastes of our worldwide renowned cuisine,” concluded Florian. PERU AT A GLANCE Population: 29.5 million multi-ethnic including Ameridians, Europeans, Africans and Asians. GDP per capita (2010): US$10,589 (QR38, 543) Capital: Lima Government: A representative democratic republic divided into 25 regions.

TheEDGE

FINANCE & ECONOMICS Market Watch • Balance Sheet • Special Report • PERSONAL FINANCE

DOIng THE MATHS ON PENSIONS (P.38)

In Qatar, expatriates are entitled to an end of service gratuity benefit equivalent to one month’s salary for every year they have worked. Adrian Bliss writes how such a generous entitlement often means some might take their eye off their retirement savings plan.

ALSO IN THIS SECTION: • Market Watch: Dheeraj Shahdadpuri reports on the European Central Bank’s hint it might make a bold move in quantitative easing to alleviate euro market conditions. (P.32) • Balance Sheet: Newton De Niese explains how International Financial Reporting Standards are constantly exposed to changes and interpretations. (P.34) • Special Report: Thomas Bacon looks at Qatar’s growing tourism sector and the urgent need for infrastructure to accommodate them. (P.36)

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MARKET WATCH

Will the European Central Bank go the fed way?

by Dheeraj shahdadpuri

In its hard fought battle to keep the euro area afloat, the European Central Bank (ECB) over the past two years has taken many extraordinary measures aimed at creating sufficient liquidity in its domestic banking industry. Unfortunately, most of these steps have barely been able to contain the crisis from growing out of proportion, rather than finding a solution to abate the debt menace completely. As a latest policy tool, the ECB president, Mario Darghi, has hinted that the bank may look at launching a full-fledged quantitative easing programme, providing that funds under the two rescue packages, European Financial Stability Fund (ESFS) and European Stability Mechanism (ESM), will be utilised in tandem. Similarly, the United States (US) launched two rounds of quantitative easing during the peak of the recession through which the Federal Reserve injected new money into the economy to cater the liquidity crunch US banking industry was facing then. The measure was aimed at creating a wealth effect, which indeed became a success in the ailing economic activity of the country. The ECB, until now, has resisted severe pressure from the financial market to buy large amount of debt of troubled nations, which are finding it hard to raise additional money at sustainable interest rates. Instead of a full blown quantitative easing, the ECB recently took a softer approach like when it injected around a trillion euros into the ailing regional banking industry through its two rounds of Long Term Refinancing Operations (LTRO). Under this operation, rather than purchasing sovereign bonds as long term assets onto its balance sheet, the bonds were used as collateral that kept the amount of risk the ECB would be required to take relatively lower. In the short term the LTRO enabled the ECB to achieve essentially the same results as the outright debt purchase (through quantitative easing) would have had in easing the credit market

Mario Darghi, president of the European Central Bank has hinted recently that the Central Bank may launch in the near future a full-fledged quantitative easing programme.

TheEDGE

conditions. But, given the fragile condition of the euro area, even the short term impact of LTRO has begun to wear off as bond yield of troubled nations has once again started to climb, especially Spain, which is currently being forced by the market to pay nearly seven percent interest (a level which triggered bailouts for Greece, Portugal and Ireland) on its long term bond issuance. Certainly the frustration of policymakers is justified to some extent, because the bond yields have continued to create fiscal pressure despite many of them implementing new austerity measures to balance their sovereign balance sheet. In the middle of such a situation, it is being greatly highlighted that in order to calm the markets, the ECB and the euro area leaders should focus on launching a full blown quantitative easing, whereby the ECB once again starts buying sovereign bonds directly from the markets, but this time around at a much larger scale and without sterilisation effect. Critics of such a bold move by the Central Bank have in parallel also argued that launching a quantitative easing programme may not yield all positive results. Benefits of such a move have to be carefully weighed against the potential for inflicting inflation in the medium to long term. Also, by purchasing assets, the ECB would inject new money into the banking industry, and how much of this money directly flows down to the real economy will be a key concern given the fact that during the times of crisis even commercial banks, to a great extent, shy away from lending money to businesses and individuals to curtail their risk. And supposedly, if a large part of this money ends up being directed into the financial markets, especially the commodities space, the risk of global inflation would run high. In contrast at the time when the Federal Reserve launched its quantitative easing programme asset prices were relatively depressed, and the risk of inflation was not running too high. Apart from the inflation factor it has been also argued that the traditional role of a Central Bank is to be a lender of last resort to the banking system, and to support troubled banks that are facing liquidity shortfall. The role of a Central Bank said to be limited when the same banks are touted to be insolvent, and this probably is also the case with their governments, which are potentially unlikely to generate revenues that could pay off their debts. The euro area leaders have religiously stated that breaking the single currency union is out of question for them and extraordinary measures would be taken in future also to support the economic recovery. Given such a stance and growing international pressure, investors would continue to desire that ECB uses the boldest move, quantitative easing, to really ease the market conditions.

market watch

Investment IN CHINA Qatar investment authority picks up 22 percent stake in China’s top investment fund By Asif Iqbal

Qatar Investment Authority has selected recently 22 percent stake in CITIC Capital, one of China’s top investment funds.

Qatar Holding, a unit of Qatar Investment Authority (QIA), has picked up a 22 percent stake in CITIC Capital, one of China’s top investment funds. Though no financial details were made available, it is estimated that Qatar is paying tens of millions of dollars for the stake. Founded in 2002, CITIC Capital Holdings Limited is an alternative investment management and advisory company. The firm manages over US$4.4 billion (QR16 billion) of capital from a diverse group of international and Chinese investors. Core businesses include private equity, real estate, structured investment and finance, asset management and venture capital. CITIC Capital currently employs more than 200 staff members throughout its offices in Hong Kong, Shanghai, Beijing, Tokyo and New York. CITIC Capital is partly owned by China Investment Corporation (CIC), China’s sovereign wealth fund, which manages US$482 billion (QR1.7 trillion). CITIC International Financial Holdings Limited (CIFH) and Hong Kong-listed CITIC Pacific Limited are both part of CITIC Group, the largest and most comprehensive conglomerate in China. Qatar in recent years has been showing interest in investing in China, and this deal allows it greater access. Qatar is applying for a US$5 billion (QR18 billion) quota under China’s Qualified Foreign Institutional Investor (QFII) scheme, the main channel for foreign investment in the Chinese stock and bond markets, the official China Securities Journal reported recently.

Welcoming Qatar as its new shareholder CITIC Capital chief executive officer (CEO) Yichen Zhang said, “Not only will Qatar Holding provide us with an enlarged capital base to fund our business expansion and investments, its significant backing will strengthen our brand positioning meaningfully as the most preferred and committed partner to invest with, both in and outside China.” He said the expanded shareholder base will further strengthen business network and resources for the investment fund. “We look forward to working closely with Qatar Holding, in addition to our existing shareholders, China Investment Corporation and CITIC Group, who will continue their commitment and strong support to us,” Zhang said. “After issuance of the new shares, CITIC Pacific Limited and CITIC International Financial Holdings will jointly hold a 42.78 percent stake in CITIC Capital; China Investment Corporation another 31.11 percent; and the management and the trustee of the share scheme of CITIC Capital the remaining 3.89 percent,” CITIC Capital said in a statement recently. The QIA is a global investment institution, and it is envisaged that the already significant investment portfolio of Qatar Holding will continue to grow. Key investments of Qatar Holding include Agricultural Bank of China, Barclays plc, Canary Wharf Group (via Songbird Estates), Credit Suisse Group, Harrods Group, Iberdrola SA, J Sainsbury plc, London Stock Exchange, Lagardere, Porsche, Qatar Exchange, Qatar Telecom, Qatar National Bank, Santander Brasil and Volkswagen AG.

TheEDGE

BALANCE SHEET

Changing world of consolidation and venture accounting International Financial Reporting Standards have constantly been exposed to changes. Newton De Niese explains further the steady flow of new standards, plus interpretations and how the trend of change will continue.

ompanies that fall under the International Financial Reporting Standards (IFRS) framework have been continuously exposed to changes in the existing standards, along with a steady flow of new standards and interpretations introduced over the years. IFRSs have undergone some significant changes over the past few years and the trend is likely to continue in the foreseeable future. The nature of the changes range from significant amendments of fundamental principles to some minor changes as part of the annual improvement process. These changes are likely to affect different areas of accounting, such as the presentation of financial statements, financial instruments and consolidation etcetera. Furthermore, these changes may also impact business decisions, such as designing joint arrangements or structuring transactions, therefore, for the preparers of the financial statements under the IFRS framework, to

gain an understanding of what is coming up next is a challenge. Moreover, when a standard or interpretation has been issued, but an entity has yet to apply it, the entity is required to disclose any known or reasonably estimable information relevant to understanding the possible impact that the new standard or pronouncement will have on the financial statements when it is initially applied. As a result, an understanding of the standards issued but not yet adopted becomes all the more important. Coming out of the financial crisis, concerns were raised in different aspects of financial reporting like financial instruments, consolidation and fair valuation. As a consequence, the International Accounting Standards Boards (IASB) initiated various projects to address these concerns. This article briefly discusses the key projects that the IASB has undertaken post the financial crisis, along with the corresponding standards that will be effective subsequent to December 2012 yearends relevant to those projects.

There are new standards, which would be effective from 1 January 2013 in relation to consolidation, joint venture accounting, and fair valuation requirements. Companies will therefore need to assess the impact on their financial statements and their business in the next few months. IFRS 10: Consolidation The standard introduces a single consolidation model for all entities, based on control and irrespective of the nature of the investee (for example whether an entity is controlled through voting rights of investors or through other contractual arrangements as is common in â&#x20AC;&#x2DC;special purpose entitiesâ&#x20AC;&#x2122;). IFRS 10 does not change the consolidation procedures required to be performed. Control might exist when an investor has power over the investee, exposure, or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the returns.

BALANCE SHEET

Impact: IFRS 10 creates a new, and broader, definition of control, which may result in changes to consolidation requirements – more or fewer entities required to be consolidated as compared to the current situation. Assessing control will require a comprehensive understanding of an investee’s purpose and design, and the investor’s rights and exposures to variable returns, as well as rights and returns held by other investors. This may require input from business, operational, legal departments and not only the finance and accounting function. It might also require external information to the entity, and would entail significant judgment of the facts and circumstances. JOINT VENTURE ACCOUNTING IFRS 11 has gone some way to addressing what the IASB felt were the shortcomings of the old standard. Its effect might prove unpopular in those sectors that use joint arrangements to a significant degree, and in which the old proportionate consolidation option was extensively used. Under IFRS 11, there could be major effects whereby extensive activities, which were previously shown gross in the financial statements, now shrink down to a one line item – a change in the opposite direction from that intended by the companion standard on consolidation. Impact: IFRS 11 represents a significant change for parties currently accounting for interests in jointly controlled entities using proportionate consolidation, if such arrangements are classified as joint ventures under IFRS 11. It is also possible that arrangements that were previously considered jointly controlled entities will be considered joint operations under IFRS 11, which would affect the accounting for such entities. Since the definition of control in joint control refers to the new concepts in IFRS 10, it is possible that what is considered a joint arrangement under IFRS 11 will change. Significant judgment of facts and circumstances may be required to assess whether joint control exists and determine the classification of the arrangement.

IFRS changes range from significant amendments of fundamental principles to some minor changes as part of the annual improvement process. IFRS 12: Disclosure of Interests in Other Entities IFRS 12 requires the extensive disclosure of information that enables users of financial statements to evaluate the nature of, and risks associated with, interests in other entities and the effects of those interests on its financial position, financial performance and cash flows and to help the users of financial statements understand the following: • The effects of an entity’s interests in other entities on its financial position, financial performance and cash flows. • The nature of, and the risks associated with, the entity’s interest in other entities. Impact: The new disclosures will assist users to make their own assessment of the financial impact were management to reach a different conclusion regarding consolidation. Procedures and changes to systems may be required to gather information for the preparation of further disclosures. Fair Valuation The issue of fair value in financial reporting has also been a matter of great discussion and some controversy in the recent period of the financial crisis. Concerns were expressed over a number of areas, including measurement of fair value in the absence of active market and the use of market prices below the company’s estimate of long-run intrinsic value of an instrument. The IASB’s project on fair value measurement seeks to consolidate fair value measurement guidance dispersed over different standards into one. IFRS 13: Fair Value Measurement Fair value under IFRS 13 is defined as ‘the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date’ (for example an ‘exit price’). The standard provides clarification on a number of areas, including the following: • Concepts of ‘highest and best use’ and ‘valuation premise’ are relevant only for nonfinancial assets and liabilities. • Market participants are assumed to transact in a way that maximises value in situations where the unit of account for the item being measured is not clear from other IFRS. • The impact of blockage discounts is prohibited in all fair value measurements. • A description of how to measure fair value when a market becomes less active. New disclosures related to fair value measurements are also required to help users understand the valuation techniques and inputs used to develop fair value measurements and the effect of fair value measurements on profit or loss. Impact: Entities are required to make various disclosures depending upon the nature of the fair value measurement (for example whether it is recognised in the financial statements or merely disclosed) and the level in which it is classified. Specific requirements relating to the highest and best use and the principal market may require entities to re-evaluate their processes and procedures for determining fair value, and assess whether they have the appropriate expertise. Companies must start assessing the impact these standards could have on their financial statements and the changes required to their reporting and accounting systems.

Newton De Niese is the senior manager in accounting advisory services for KPMG in Qatar. TheEDGE

SPECIAL REPORT

momentum in touRiSm By Thomas bacon

s the country’s hosting of several major international sporting and business events has brought growing numbers of tourists to Qatar, it has also highlighted the need for infrastructure to accommodate them. Tourist arrivals from the other Gulf Cooperation Council (GCC) member states rose by 22 percent year-on-year (y-o-y) in the first quarter of 2012, the Qatar Tourism Authority (QTA) announced in May. This followed a 50 percent increase in 2011, when more than 845,000 visitors from the region came to the country. Visitor numbers from other areas are up as well: though the QTA did not release overall tourist numbers, it said that arrivals from Europe were up 15 percent y-o-y, tourists from the Arab world increased by 19 percent y-o-y, and visitors from the rest of Asia were up by 58 percent y-o-y. Business travellers make up the majority of visitors, accounting for 72 percent of all arrivals. Qatar attracts business tourists for several reasons: its own thriving economy, one of the fastest-growing in the world in recent years; its position as a base for business (and international organisations) across the Middle East; and its growing status as a destination for meetings, incentives, conferences and exhibitions (MICE). The MICE segment in particular has benefitted from Qatar’s geographical location, international connectivity, and a growing range of venues. The country’s new flagship space is the Qatar National Convention Centre (QNCC), opened in December last year, with an exhibition area of 40,000 square metres (sqm) and a capacity of 10,000 visitors. After business tourism, Qatar is perhaps best known as a destination for international sports events, particularly after it won the right to host the World Cup 2022. The country has already hosted tournaments including the 2011 AFC Asian Cup finals, the 2011 Arab Games, the 15th Asian Games in 2006 and the annual Qatar Open, as well as MotoGP and golf events. According to Saoud bin Abdulrahman Al Thani, the general secretary of the Qatar Olympic Committee, the country is also planning a bid to host the 2024 Summer Olympic Games, international press reported in late June. The state would continue to bid for the games despite having been turned down for the 2016 and 2020 events, Al Thani said. The World Cup tournament is expected to attract 500,000 visitors to the state over just a few weeks, a substantial fillip for the sector, as well as a major infrastructural challenge. Projects valued at between US$80 billion (QR291 billion) and US$100 billion (QR364 billion) are in the pipeline or under construction, including an inter-city rail

TheEDGE

network, a metro system, the Doha New Port Project and the Doha New International Airport. The influx of visitors will also require a considerable expansion in hotel capacity, which is already under way. The country aims to have more than 90,000 hotel rooms by 2022. With the opening of eight new hotels in 2011, existing capacity almost doubled to 11,341 rooms, from 5974 in 2010. Occupancy rates were 64 percent in the first-quarter 2012, down from 68 percent in 2011, according to the QTA. Much of the development so far has been in the luxury end of the market, with recent developments including a Mandarin Oriental Hotel, Shangri-La Hotel, St Regis Hotel and a second InterContinental. In fact, revenues of four- and five-star establishments reached QR734 million (US$201.6 million) in the first quarter 2012, a QR32 million (US$8.8 million) increase from the same period last year, the QTA reported. The QTA has already given approval for the construction of 100 more hotels, Abdulla Malalla Al Bader, the director of tourism at the QTA, told local media in June. He added that the authority has worked with the Qatar Development Bank to allow investors of any nationality to obtain loans for tourism development. As more rooms are built, however, hotels may be faced with lower revenues and occupancy rates, at least in the short term, as the current influx of visitors will likely not be able to fill all the new available capacity. Of equal concern, particularly in Doha, is a belief that the city still has some way to go in developing an urban space that combines this new infrastructure and the city’s core identity. While business visitors continue to remain at the heart of Qatar’s tourism sector, the sports segment is slowly establishing itself on the global stage. Building up the infrastructure necessary to accommodate these diversification efforts will go a long way to supporting the sector’s long-term future.

Thomas Bacon is an analyst at Oxford Business Group.

PERSONAL FINANCE

Doing the maths on pensions

PERSONAL FINANCE

In Qatar expatriates are not eligible for the state pension scheme. They are instead entitled to an end of service gratuity benefit equivalent to one monthâ&#x20AC;&#x2122;s salary for every year worked, up to a maximum of two yearsâ&#x20AC;&#x2122; salary. This is paid in cash when they leave the country. However, such a generous entitlement often means they might take their eye off the retirement savings ball, Adrian Bliss explains.

hile the service gratuity benefit is, in effect, designed to replace a state pension, few will have the resolve to put such a lump sum into a retirement savings scheme. After all, when the time comes, there may be a number of other priorities. You may need it for a house purchase back home, or necessary living expenditure until you start a new post in a new country, or possibly school fees. Neither is relying on a retirement lump sum payable in the future a wise strategy, as there is always the threat of the Qatari government reducing or even stopping the benefit. Property should also be viewed in a similar way. The past 20 years has witnessed an unprecedented rise in property prices worldwide, which has lured many savers to opt for bricks and mortar as the basis for their retirement plan. But these days, the property market is too volatile, the mortgage sector too restrained, rental income too insecure, and property management too expensive to depend solely upon such a strategy for your pension needs. Relying on one or a few single assets to provide a suitable nest egg is at best unrealistic and at worst foolhardy. The mathematics is startlingly simple. In order to generate a decent retirement income, your retirement pot needs to be equivalent to 20 times the amount per annum you would like to have at your disposal. So if you calculate you will need GBP60,000 (QR336,000) gross per year to achieve your retirement dreams, your retirement pot needs to be GBP1.2 million (QR6.7 million). If you are shocked by the figures, then you are not alone. Around half of British

people aged between 30 and 65 are not saving enough for their retirement and as many as one fifth of the population are not putting any savings into a retirement scheme of any description, according to research by the investment firm Scottish Widows. With such sums at stake, relying on a lump sum such as the Qatari service gratuity benefit or property alone is too risky. A more reliable strategy to provide a financial cushion plump enough to actually enjoy your retirement is to apportion a regular amount from your salary into a well-diversified, long-term savings plan. And while it is never too late to start your retirement planning, the sooner you put a regular retirement planning solution in place, the better. As a starting point, expatriates who already have a company pension scheme may want to check that contributions are at a sufficient level and have been consistent enough over the years to support your current retirement plans. Expatriates who are working on short-term contracts are particularly vulnerable to missing pension contributions and may find they have a number of lost contribution years to make up. On assessment, any company scheme that is unlikely to produce the required income can be supplemented by setting up a private savings plan to run alongside your company scheme. Once you have assessed your retirement requirements you can then get started using our five stepping-stones on building up a successful retirement savings strategy. Step 1: Calculate how much you can comfortably afford to put away into a longterm regular saving scheme. Ideally, this will be a monthly payment. Take into account current financial commitments as well as big commitments

you may have in the future, such as a property purchase or wedding to pay for. Step 2: Assess your investment options. When looking at plans to invest in, choose a well-balanced, well-diversified portfolio of equities and bonds across a range of sectors and geographies. This is the most efficient way to preserve and grow your wealth, as it is a strategy designed to deliver consistent and smooth performance results. The asset classes chosen should match your tolerance for risk. Step 3: Choose investment products that make the most of your current tax and residency status, as this can help boost returns. International retirement plans are often based in regulated financial centres that are designed to ensure your savings stay as tax neutral as possible while you are away from your normal country of residence. Step 4: Think about flexibility. It is important to ensure that any long-term savings plan does not lock you into a strategy that does not allow for changing circumstances. Will your chosen plan allow you to alter investment strategy to suit any lifestyle changes, for example, as you get closer to your retirement age? Can you increase, pause or stop contribution levels if your employment status changes? Does it offer a good spread of investment choices and a range of currency options? Step 5: Take into account your eventual retirement location. Are there any currency exchange implications to consider? Also what are the tax implications of receiving your retirement income in your chosen country of retirement? Building up an adequate retirement pot is never easy, but the sooner you get started on dealing with the details, the sooner you will be on the road to your retirement dreams. TheEDGE

IN THE SPOTLIGHT

The Fast Track Doha’s Impending Rail Revolution

In coming years Qatar and the Gulf Cooperation Council (GCC) are set to enter a golden age of railway development that will change the face of the region. The work will be tough, the timetable demanding, but the result should put local businesses – with Doha weeks from a QR30 billion multi-contract announcement – on the right track. Edward Jameson takes a closer look.

IN THE SPOTLIGHT

he next few years will be very exciting. The country will experience an unprecedented transformation, with Doha becoming a truly world-class city,” Hyder Consulting’s Middle East rail director, Geoff Leffek, said in the company’s recent Global Rail Market Report. “There is determination and the resources to achieve the ambitious targets that Qatar has set itself.” Doha today, as everybody living in, working in or visiting the city cannot fail to realise, is a city on the move. The capital is planning a massive infrastructure development programme with a strict 2022 deadline, set in stone by the obtainment of the rights to host the soccer World Cup a decade from now. However, the deadline represents a herculean task if Doha is to put in place the required infrastructure to host the world’s largest single-event sporting contest. The city must undergo one of the largest, most intensive and transformative development programmes in modern history if it is to welcome the world – and at the heart of that programme lays rail transportation. And with the clock ticking, the first contracts to construct phase one of the Doha Metro project look set to be awarded in late September. Tenders have been received by the Qatar Railways Development Company (QRDC), which is overseeing the work. An announcement regarding the successful firms has already been pushed back, and the private sector is on anticipating it eagerly, although those companies involved will not have long to wait: “In a couple of months we should have some visibility on the process,” Aswan Moubaydeen, a Doha-based lawyer at SNR Denton, which is working closely with QRDC, told TheEDGE.

A smattering of engineering consultancy contracts was awarded in early August, but six major construction packages remain available, among these four contracts, covering tunnelling and underground station build, are each valued at QR7.4 billion, with the remaining two packages covering station excavation works only. THE GRAND PLAN Qatar’s grand plan for rail development is centred on Doha over the next decade, with the overarching strategy – to open up the wider peninsula via rail transportation through to 2030 – already on the table. The proposal is to traverse the peninsula with a QR55 billion, 270 kilometre (km) high-speed passenger rail network linking Doha with Port Mesaieed to the south, Ras Laffan and Al Shamal to the north, and Dukhan to the west. A link to Bahrain via the Friendship Bridge, pending completion of the bridge itself, will be included, as will a route south into Saudi Arabia. A 325km freight railway network will also be constructed. But before concentrating on the big picture, the race is on to fast track the elements of the scheme centred on the capital. The four-line Doha Metro will connect the New Doha International Airport with the city centre via a high-speed line, also pushing out to the World Cup stadia. Phase one of the Doha Metro will include 216km – 95km through bored tunnel beneath the city streets, with 91km at ground level – and must meet its 2022 deadline. Phase two will extend the network to 300km, with completion expected in 2026. Like the national network, the metro also demands investment of QR55 billion. In addition, a further two light rail systems

Phase one of the Doha Metro will include 216km of rail – 95km through bored tunnel beneath the city streets – and must meet its 2022 deadline.

Within the next decade the transport system of Doha and indeed many outlying parts of Qatar is set to be transformed by a railway network that will also be linked to the rest of the GCC. (Image Corbis)

are in the pipeline. Construction is already underway on the first, the 30km Lusail Light Rail Transit System (LRT), which is being developed by Qatari Diar Vinci Construction (QDVC), a joint-venture between Qatari Diar Real Estate Investment Company and Vinci Construction Grands Projects. It is set to be the nation’s first fully operational rail network, with completion expected in 2016. The QR8 billion, 10km Doha West Bay People Mover completes the picture, with handover expected in 2018. The total estimated bill for Qatar’s rail ambitions is believed to be in the region of QR130 billion. A number of smaller projects are also in the pipeline. At the end of July, Qatar Foundation awarded a contract to a consortium including German company Siemens and United Arab Emirates (UAE) -based Habtoor Leighton Group to supply an energy-efficient tram system at the science and technology hub. As part of its long-term plan, Siemens plans to double its workforce in Qatar over the next two years, contributing to the growth of the nation in the process. PROGRESS SO FAR Qatar’s journey into the rail world as it is recognised today began in November 2009, when Qatari Diar signed a joint venture with German passenger and logistics giant Deutsche Bahn to establish the QRDC. The organisation is charged with unifying all planned railways in Qatar, as well as connecting the network to Bahrain and Saudi Arabia. TheEDGE

IN THE SPOTLIGHT

The key to Qatar’s long-term rail system is “legacy”. Can the country put in place the infrastructure to facilitate economic growth and economic diversification?

Aswan Moubaydeen, a Doha-based lawyer at SNR Denton, which is working closely with Qatar Railways Development Company, told TheEDGE that the tender contract phase of the Doha Metro project will be awarded imminently.

As things stand today, only the LRT has broken ground. In February, the Qatar Railways Company (Qrail), a subsidiary of Qatari Diar, signed a QR1.95 billion contract with Qatari Diar Vinci Construction (QDVC) for the current phase of works on the project, building on works it had already carried out. This year, QDVC says, additional partners are expected to come on board to cover the rolling stock and power supply areas of the project. Despite the LRT heading the pack, the Doha Metro is not far behind, with the number of firms to have expressed interest in the initial tendering round believed to have numbered in the hundreds. The wider crosspeninsula network has passed the initial study stage, a Deutsche Bahn spokesman confirmed, and the Qatar side of the QRDC joint venture will carry construction work forward, with Deutsche Bahn involved only in a consultancy capacity. “We see that as important, but in terms of moving the project forward on the ground, the Qataris will oversee the work” the spokesman confirmed. The sheer size and scale – combined with the demanding timetable – means that opportunity will abound for private sector firms from a diverse range of economic sectors. The question that the Qatar business community should now be asking itself is, how best to ensure it is positioned to snap up a share of the work?

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In terms of most recent developments, Qrail appointed seven major law firms, including SNR Denton, to its legal panel for a two-year period and, despite the fact that the task of building a railway is a decidedly international one – with no such project having ever been built in the country previously – not all of the contracts were awarded to international firms. Qatar Rail, acting general counsel Rashid Al Saad says the company selected firms that would “provide essential international experience to projects that will facilitate the improvement of Qatar’s transportation infrastructure throughout future generations”. Doha-based Al Sulaiti Law firm was among the seven, while GCC-based Al Tamimi was also selected from a competitive bidding process. Allen & Overy, Clifford Chance, K&L Gates, and White & Case completed the list. The fact the Qatar side of the QRDC joint venture is in charge of the contracting arrangement is a further encouraging sign for local business, demonstrating that if work can stay inside of Doha, it will most likely do so. LOOKING BEYOND 2022 The need to establish Doha, and its transportation infrastructure, as being worthy of hosting a major international sporting event is driving the demanding 2022 metro timetable. But Qatar is looking well beyond this date as it lays out plans for its wider rail network. The overarching project is one that has the potential to open up the peninsula, paving the way for sectors such as leisure, tourism, business travel and logistics to grow and expand into previously inaccessible parts of the country. The key word on planners’ lips at this early stage in Qatar’s long-term railway

journey is ‘legacy’. Can the country now put in place the appropriate infrastructure to facilitate the economic growth and, more importantly, the economic diversification that will be so important in coming years? The necessity to consider the issue of legacy when developing major infrastructure programmes is an often preached, yet impalpable topic, one that is impossible to measure until years after the event, but is rightly considered vital. Ezzat Ragab is chief operating officer (CEO) of Qatari project management company QPM. The firm – Qatar’s first dedicated project management company – is seeking to play a major role in the development of the railway network. From his comments it is clear the legacy issue is one that private sector contractors are very aware of, as well as those at the planning stage. “We need to look inside these projects and ask: what are we doing to increase the probability of achieving the expected benefits from our projects?” says Ragab. “Are we deploying our resources appropriately and selecting the right projects in order to maximise benefit? Are we developing the capacity to understand, and learn from, our project failures,” he continues, “and do we have a framework for institutionalising program and project management best practices?” Beyond 2022, Qatar’s development path is set by principles laid out in the National Vision 2030 document. While Doha Metro must arrive at its final destination by 2022, the remainder of the network is aiming for completion sometime between 2026 and 2030. The work will be tough but potentially lucrative, and Qatari businesses must not get left standing at the station as the express pulls away.

IN THE SPOTLIGHT

THE GCC RAIL REVOLUTION Qatar is far from alone across the region in its drive to develop railway infrastructure. The entire GCC is in the midst of a rail revolution, with the eventual aim being to connect each state’s domestic system to form an inter-GCC rail network. The potential economic benefits are well documented. According to a study into the GCC rail sector released by consultancy giant Frost & Sullivan, one freight train can on average carry 1000 tonnes of freight, replacing the movements of around 50 trucks; rail transport uses about 60 to 80 percent less energy per kilometre travelled than road transport; rail travel is considered to be nine times safer as a mode of transport than road; and perhaps most importantly for a region seeking to diversify its economy while ensuring the continuation of economic growth, rail-based cargo transport is at least 30 percent cheaper than road. A network connecting the region, Frost & Sullivan said, would “offer immense efficiencies in transportation, apart from furthering the vision of a closely-integrated regional community”. Yet according to the report, there are a number of reasons why the GCC countries have not previously focussed on rail transport. These include the small geographic size of nations in all cases bar Saudi Arabia; the volatile ground surface characterised by shifting sand dunes across the region; and the availability of relatively cheap fuel for road transport. The plan is for a sprawling, 2200km line hugging the northern coast of the region from the Omani capital Muscat, running through the United Arab Emirates (UAE) and Saudi Arabia to Kuwait City.

30% – The amount by which rail transportation is

cheaper than road.

A branch line will run to Doha and onto Manama via the Friendship Bridge, before rejoining the main line in Saudi Arabia. Of the GCC nations, Saudi Arabia has reportedly earmarked investment of SAR96 billion (QR93 billion) spread across 23 separate rail projects. The country does have previous rail experience – the Mecca Metro has been fully operational for almost two years. Like Saudi Arabia, the UAE also has some experience under its belt, with the opening of the Dubai Metro. And more is to follow. Last October, the AED3.3 billion (QR3.27 billion) construction contract for the first phase of the UAE’s Etihad Rail project was awarded to a consortium led by Italy’s Saipem. The remaining GCC nations, however, will be building rail from a position of no previous experience. The successful completion of Saudi Arabia and the UAE’s initial projects, however, point to the region remaining on track.

The UAE’s experience with rail projects such as the Dubai Metro will stand it in good stead for further rail projects, which will ultimately link the entire region by train. (Image Corbis)

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SPECIAL FOCUS

a cultuRal lEgacY HOW KATARAâ&#x20AC;&#x2122;S vISUAL ART CENTER IS BRINGING ARTISTIC SENSIBILITY TO QATAR AND FOSTERING A FLEDGLING ART INDUSTRY

Katara Cultural Village in Doha is home to the Katara Visual Art Center, which is in part focusing on encouraging Qatari artists and raising the profile of the domestic commercial art scene in Qatar. (Image Corbis)

SPECIAL FOCUS

Katara Cultural Village is home to many of Qatar’s artistic and cultural organisations, such as the Qatar Philharmonic Orchestra and the Doha Tribeca International Film Festival. The village was created to help position Qatar as an international cultural lighthouse through theatre, literature, art, music, conventions and exhibitions. Erika Widén reports on the Visual Art Center’s determination to engage the local community in art, and its commitment to developing Qatari artistic talent.

or the past two years The Visual Art Center (VAC) has been committed to encouraging the practition of art, and provide adequate facilities such as galleries, workshops, educational programmes and venues for artistic performance in Qatar. Located in the heart of Katara Cultural Village, it currently has 11 art galleries where local, regional and international contemporary artists can exhibit their artwork. VAC also invites international artists to teach their medium and artwork to Qatari artists in order to support the development of local artistic talent. Sa’id Costa, curator of the visual arts exhibitions and educational programmes.“We have a Dutch, British and Argentinian artist,” he says, “What we do is try to get these foreign artists to engage with Qatari artists that don’t travel to engage with other artistic practices. Different languages, aesthetical views of art and what art is. It is about bringing other realities in the art world into the fold of the Qatari reality and building bridges, but also look at how the Qatari art scene and its artists can improve their skills.” Costa highlights the fact that Qatari artists are learning through this kind of exposure. At the same time, expatriates and foreign artists that visit the VAC are also learning how to reconstruct perceptions they may have of art in the Gulf region, and what type of art they would like to see. Of course adds Costa, art is not just about understanding the medium and concept, but it also comes down to taste. For example, if someone from the region has only seen Arabic

Sa’id Costa, curator of the visual arts exhibitions and education programmes speaks to TheEDGE about the importance of engaging Qatari artists with international artists.

calligraphy and sees an abstract contemporary painting, he or she might think it is not art. “It is a question of cultural context and the possibility of exposure when they travel,” he says. Although most Qataris love to travel a lot throughout the year, they tend to do so with a different mindset, such as shopping in Paris

instead of visiting the Louvre. Due to the country’s efforts of displaying local, regional and international exhibitions, there seems to be a high level of Qataris interested in buying art. However, according to Costa they do not know where to find and buy it. Qataris may purchase as Costa expresses what he dubiously terms art in a mall. “There TheEDGE

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Qatar purchased a Paul Cézanne painting, The Card Players, for more than US$250 million (QR910 million), a record price for an artwork in the modern market. have been very desperate things appearing in malls and supermarkets and outside markets that label themselves as art…a painting is not an object until it is on a wall in a gallery or museum, it needs validation.” Costa feels that the dynamic part about Qatar is that they are trying to change that. There are now new structures that legitimise artwork and exhibit it in the appropriate context. The Souq Waqif Art Centre is another legitimate art venue that recently re-opened after a two-year closure. “You don’t need to go to Dubai, London, New York to buy artwork. In Doha there are exhibitions where real pieces of artwork are acquired,” says Costa. In the past Qatar has had some minor auctions, and there is a possibility of hosting a major auction house by next year. “The thing with auctions is that you need clients, and while Qatar has been voted by the arts newspaper as the country that buys the most art in the world, it isn’t buying from within its own market,” explains Costa, “having an auction here means securing clients because it is all about selling. The auction house engages itself with the client, with the consignee of the work that they will sell the artwork, but sell

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One of five in a series of paintings entitled The Card Players by French painter Paul Cézanne. (Image Corbis)

to who.” On the other hand, the Qatari royal family has been an active buyer at Christie’s, Sotheby’s and other auction houses of a wide collection of artworks, which will be displayed at the National Museum scheduled to open in 2014. In 2010, the Emir, HH Sheikh Hamad bin Khalifa Al Thani said he might be interested in acquiring Christie’s, reported by the Financial Times, after months of speculation about a possible Qatari bid. However, nothing has yet been disclosed. Meanwhile, Edward Dolman, former chairman of Christie’s International has left the auction house to join the board of the Qatar Museums Authority. He is now the executive director for the office board of Sheikha Al Mayassa bin Hamad bin Khalifa

Al Thani. According to Forbes magazine Sheikha Al Mayassa bin Hamad bin Al Thani, is the most powerful woman in the art world today. Forbes estimates that she controls an annual art-buying budget of US$250 million (QR910 million). Last year, Qatar purchased a Paul Cézanne painting, The Card Players, for more than US$250 million (QR910 million), setting the record for the highest paid artwork in the modern market. THRIVING INDUSTRY Despite Qatar’s efforts in displaying various artworks, it is not yet a profitable career for an artist. “It is becoming one and this is one of the things that we are struggling to achieve through the exhibitions that we have with Qatari artists for instance, which

The Qatari Royal Family’s Interest in Art In 2007 the Emir, HH Sheikh Hamad bin Khalifa Al Thani, purchased Damien Hirst’s pill cabinet (filled with 6,136 painted, bronze cast pills) Lullaby Spring at Sotheby’s for US$19 million (QR69 million), setting an auction record for a living artist. The Emir’s daughter, Sheikha Al Mayassa bin Hamad bin Khalifa Al Thani chairs the board of the Qatar Museums Authority and his son, Sheikh Hassan bin Mohammad bin Ali Al Thani, founded the museum of modern Arab art Mathaf.

SPECIAL FOCUS

According to Forbes, Sheikha Al Mayassa bin hamad bin Al Thani is the most powerful woman in the art world today. is giving an opportunity to them to not only exhibit but to also sell their artwork, enabling them to live as artists,” says Costa. VAC is trying to motivate and create a dynamic ambiance for the artists – such as producing, exhibiting, selling and collecting art, so there is a cycle. Abdulla Salem Desmal Al Kuwari, art workshop supervisor of the VAC tells TheEDGE, “Qataris are not so keen on buying art, especially works that are considerably expensive, because they are searching for what is on offer and the market has only originals from big names. I can see that artists are rarely selling their work.” Nonetheless, Al Kuwari feels that when there are large construction projects underway then there will be more demand. A Qatari artist might be commissioned to provide certain art pieces to decorate the interior of a new or existing hotel and organisation, among other venues.

However, the local concept of art is still a work in process. Al Kuwari mentions that Qataris are more interested in realism art, meaning a painting that looks as real as a photograph. “It is very difficult to sell abstract art. We may have a demand for calligraphy art such as mixing calligraphy with other mediums. Otherwise it is difficult for Qataris accept other kinds of art.” On average the price for a painting may range from QR5000 to Q20,000. The price varies depending on the artist’s experience and stature. Al Kuwari adds that in the near future, VAC will document the works of every Qatari artist. The purpose is to have an official record of Qatar’s art history and how it has developed. He mentions the importance of the workshops and exhibitions being held at the centre as the force behind the cultural movement that Qatar wants to achieve. In addition educating Qataris and the community – it is the key to further

The Visual Art Center, located in Katara Cultural Village offers art workshops for the local and expatriate community throughout the year.

Abdulla Salem Desmal Al Kuwari, art workshop supervisor of the Visual Art Center speaks to TheEDGE about how the local concept of art is still a work in process.

understand art and its value, and to expose Qatari artists internationally. The National Development Strategy 20112016 foresees a vibrant community of artists living and working locally, but a thriving culture sector needs to be supported by a highly qualified talent pool. There are several aspects of the arts workforce that present challenges to professional development, such as limited opportunities for specialised training and a negative public perception on the value of an arts career. Through the National Development Strategy 2011-2016, the government will develop high quality artistic talent to inspire and stimulate growth by expanding its knowledge of the arts industry, and by implementing a comprehensive artist development project to create a more enabling environment for aspiring artists. “I want to see the day when Qatari artists can really work without worrying about selling his or her artwork. We should encourage more artists to reach that goal, and there will be more demand so those artists can work and be assured that their artwork will be purchased,” concludes Al Kuwari. TheEDGE

FEATURE STORY

Big Data was once the domain of a few high tech research labs, running data through supercomputers for mostly scientific applications. But now, thanks to new technologies and crucially, much cheaper hardware, software and network infrastructure, the dwindling cost of producing and transporting data has allowed everyone to take part in what is quickly becoming a data revolution, one that promises to change the way decisions are made in business. Shehan Mashood takes a look at the industry and its future implications.

ith every technological revolution there comes invariably an ethical quandary, and Big Data is no exception. The by now infamous example of how Target, a discount retail chain in the United States (US) started sending coupons for baby related items to a pregnant teen girl before her father knew is a prime example of how Big Data can overstep its bounds. The irate father turned up at Target demanding they “stop encouraging his daughter to get pregnant” only to find out that she was due a few months later. Having data and using it are two completely different things, the fact that Target identified the girl as being pregnant without her giving any indication of being so, is both fascinating and worrying. An interview in the NY Times with Target statistician Andrew Pole, who was responsible for developing their rather intrusive data mining operation reffered to above, revealed the ugly underbelly of guesswork and questionable practices when it came to data mining at some companies. The monetary incentives though seems too good to pass up, Target financials reported the company revenue had grown US$23 billion (QR84 billion) since hiring Pole in 2010, most of which is attributed to their capture of the baby products market. The fears many have about the personal data businesses are collecting on us are legitimised by such events. The temptation is simply too high with the amount of

information out there, and as more and more people readily share their information online, the ethics of Big Data is turning into a somewhat dubious area that many Information Technology (IT) experts feel is in dire need of legislation. In the future it will be imperative that commercial usage of Big Data be balanced with civic responsibility. ENTER BIG DATA Legislative and ethical responsibilities aside, the seeping of Big Data practices into business was in hindsight, inevitable (see Moore’s Law) and has led to an enormous amplification in our ability to process and store data. Indeed, the by-product of this has been increased processing and storage of data, which has led to the creation of even more data. Thanks to the proliferation of the World Wide Web, their connected data processing power has yet again multiplied exponentially.

The amount of data being created every day is simply staggering. The precursors for a high growth tech sector are all there in Big Data; a recognisable problem in the complexity of manipulating massive data sets, the tools for tackling it and manpower required for analysis, the decision making challenges for management and a fundamental change in IT strategy for organisations. The International Data Corporation (IDC), a global market intelligence provider, forecasted the Big Data industry to be a US$16.9 billion (QR61.5 billion) market by 2015. As an example of how Big Data can be beneficial to business: 2011’s Moneyball, an Academy Award nominated film last year, followed the rise of a Major League Baseball (MLB) team, the Oakland Athletics, that used Big Data to build a competitive team despite being one of the most financially disadvantaged sides in the league.

WHAT IS BIG DATA? The Digital Age, which is sometimes referred to as the ‘third Industrial Revolution’ seems to birth smaller technological revolutions every few years, and Big Data looks to be the latest frontier. The promise is to deliver insight by processing large sets of raw information (commonly misconstrued as big data itself ) that is quickly making regular database systems obsolete. The data explosion we are currently experiencing has created the need for both monetisation of that data to justify the costs of storage and the tools to enable monetisation within organisations. The complexity of problems Big Data will handle is staggering, millions and billions of pieces of information are processed to derive insights that organisations did not have access to before and can be used in many beneficial ways.

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FEATURE STORY

Using what is now called ‘sabermetrics’ the management set about throwing away every established rule of picking players and instead used the massive amounts of data collected about players to make smart buys based on what was previously either unused data sets or information deemed too complex by others to analyse. Their approach to the game has since been adopted by numerous clubs in baseball and is catching on in other sports. If we take a holistic view, adopting and integrating Big Data into businesses promises to alter the dynamic between organisations and customers. This is perhaps nowhere more obviously presented than in the field of customer relationship management

(CRM). Marketers have adopted social media strategies and tools to develop customer relationships used counting methods to measure engagement. These can include how many followers you have or posts you get and so on, but with the introduction of Big Data analytics, organisations are able to gather much more interesting and useful information about their products and campaigns. Insights such as sentiment analysis and real-time customer engagement data allows marketers to realise the true effects of their actions. The prospect of change is not just limited to the private sector, but extends to the public sector too. A paper written by Hal Varian, Google’s chief economist in 2009 entitled

Predicting The Present With Google Trends outlines a project where Google search data could possibly be used as an economic indicator. Three years on, The United States Federal Reserve and the central banks of numerous countries including Spain and Turkey are all running studies to see if Google search data correlates with economic trends, according to a BusinessWeek report. COMPLEXITY IN SIZE The promise of Big Data is to help companies innovate beyond their competitors, reduce costs, grow revenue, circumvent risk and become more agile. The problem, however, is that the complexities of

The amount of digital information created in Zettabytes* In 2010 we were creating as much information as we did from the dawn of civilization up until 2003,

2020

2014 2010 2005

0.13

1.2

34.6

*1 Zettabyte equals 1 Trillion Gigabytes Source: International Data Corporation (IDC)

IMPORTANCE OF MOORE’S LAW In 2010 we were creating as much information as we did from the dawn of civilization up until 2003, every two days. 1,200,000,000,000,000,000,000 bytes (1.2 zettabytes) of information created in 2010. 7,000,000,000,000,000,000,000 bytes (7 zettabytes) of information expected to be created in 2014 Figures according to the International Data Corporation (IDC) In 1965 Gordon Moore, co-founder of Intel Corporation noticed that the number of computer circuits in processors were doubling each year and by extension doubling the processing power. This led him to make the bold prediction that the trend would continue for the next decade. It has been four decades since, and the law still holds true. The historical accuracy of this ‘law’ has set the pace for innovative development and has made us as consumers expect an endless stream of faster, smaller and cheaper electronic devices.

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every two days

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Once the basic concept of Big Data is grasped the possibilities for business application can be limitless. integrating Big Data into business is about as complex as the data itself. According to Steve Bailey, regional operations director at Commvault, a data management company in the Middle East, data levels are growing 80 percent year on year in the region, making unstructured data a nightmare for firms without the proper tools to manage. Legacy data storage solutions like Enterprise Data Warehouse (EDW) systems used by companies are buckling under the strain of the sheer volume and amorphousness of incoming data. Companies that spend too long devising systems to perfectly manage huge data, lose whatever competitive advantage they had in processing the information in the first place. According to Bailey the solution is “to adopt a unified data management strategy into a single solution enabling the copying, indexing and storage of data in an intelligent, virtual repository that provides an efficient and scalable foundation for e-Discovery, data mining and retention.” INTEGRATING BIG DATA INTO BUSINESS FUNCTIONS To truly integrate Big Data into an organisation there needs to be a ‘data comes first’ ethos instilled in the company. This can be a very difficult change, especially if the company is not prepared to properly manage and ask the right questions of the data it has. A recent Oracle report that surveyed 333 C-Level executives from North America showed most firms are ill equipped to dealing with Big Data challenges. Nearly all organisations admitted change is required in information optimisation over the next few years, and almost half of those found translating the insights into actionable intelligence the most difficult. That is not to say that firms have been

completely unable to leverage insights to deliver their companies leads that outshine their competitors. According to IBM’s Institute for Business Value, companies in certain fields out performed their competitors by applying an analytics-driven approach to decision making in sectors like operations, production and marketing. The problems Big Data is asked to tackle are usually complex with numerous parameters that require an optimal solution. The development of trust in data scientists is key to leveraging insight. If the data cannot be trusted then it is unlikely it will ever be acted upon, and becomes a cost drain within the organisation. The influx of data is constant and multiplying, and to the make the most of it, iterative data analysis (a repetitive process to get closer to the solution) is the key. Once an insight is identified and turned into an action, the key for a business is to use Big Data analytics to measure how this change affects their clients and develop further insights. Perhaps the most mature field in terms of Big Data analytics today is online marketing, thanks mainly to the ubiquitous nature of social media. Marketers today can measure social media campaigns in real time and calibrate them in accordance with what resonates most with engaged users. Real time data analysis allows for swift response and strategy alteration that would otherwise have been much slower having to depend on standard business intelligence practices. CULTURE SHIFT There is always resistance to change, especially in places where the mantra is “if it ain’t broke don’t fix it”. The key in these situations is developing use cases that prove the effectiveness of Big Data that can be presented to effect top down change

US$ 16.9 billion

The value of the global Big Data industry by 2015. within organisations. The application of Big Data practices turn IT departments from a cost centre to a revenue-generating centre. Investing in data scientists that ask the right questions of data and decision makers that trust it enough to able to translate these into actions is what will give firms an edge over competitors in the future. For example, as one of the largest car rental brands, Hertz, with operations in more than 146 countries working with IBM employed Big Data to try and identify customer problems in real time. Using highend content analytics software they were able to manipulate a voluminous and varied stream of information that included customer data, surveys, e-mails and text messages. The new system uses linguistic rules to categorise incoming data and flag issues by importance, doubling customer satisfaction, according to Hertz managers. The requirement of Big Data is that you embrace it completely, integrating it into the core of the business. The next few years is likely to see heavy investment in the fields of Big Data tools and its practices become ubiquitous in the years to come. TheEDGE

FEATURE STORY

A TALE of two sYstEms

IS ISLAMIC FINANCE ASCENDING THANKS TO THE DECLINE OF WESTERN BANKING? Compounded by recent LIBOR and money laundering scandals, the tawdry financial scandals and â&#x20AC;&#x2DC;casinoâ&#x20AC;&#x2122; style of trading that have characterised conventional banking in the West in recent years are well-publicised and are widely blamed as being the cause of the global financial crisis that exploded in 2007. Juxtapose this with Islamic banking, which is growing at an unprecedented rate all over the world, there is little wonder that the latter system is being increasingly utilised by non-Islamic and Muslim organisations alike. But is it just a case of Islamic versus Western banking? Not quite, Simon Watkins writes that while such comparisons are inevitable, the reality is not that simple.

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slamic banking forbids speculative investing, the payment or collection of interest, and prohibits investments that are unjust to participants, or involved in the prohibited – haram – businesses such as gambling, alcohol, pornography and the sale of certain foodstuffs. Indeed, as it stands, Islamic banking industry assets are growing twice as fast as those of conventional banks, and are estimated to reach US$1.1 trillion (QR4 trillion) by the end of 2012, up 33 percent from 2010, according to a recent report by Ernst & Young. In the same positive vein, the Islamic finance industry as a whole has grown in size from around US$10 billion (QR36.4 billion) of total invested assets in 1975 to just over US$2.2 trillion (QR8 trillion) at present, according to figures from 1st Ethical a charitable trust in London, that provides Shari’ah-compliant financial advice. The key questions here are whether this trend will broadly continue, and what changes can be expected in global Shari’ah investments? Islamic Finance Fills The Gap It is reasonable conjecture that if this concept of sharing risk and reward alike had underpinned the conventional investment banking market, then the new global ‘casino’ banking that emerged in the United States (US) and Europe in the early 1980s would not have over-extended credit, at least not to the degree that fuelled the sub-prime housing crisis in the first place, underlines Sam Barden, chief executive officer (CEO) of SBI Markets in Dubai. “Local bank managers in the US and the United Kingdom (UK) used to know who their customers were on a personal basis,” he says, “and they regarded the bank’s depositor money as being their personal responsibility. Can you imagine anyone in that position lending 120 percent or more of the purchase price of a house to somebody who doesn’t have a job, and possibly even no shoes? But that’s exactly what happened…in the run-up to 2007.” Compounding this was over-extended credit from the base of society, permeated through the rest of the financial system and found its apotheosis in collateralised debt obligations (CDOs). CDOs were, and remain,

Islamic finance has filled an increasing gap left in the global banking market since 2008. lots of fundamentally worthless pieces of credit cleverly bound up through the alchemy of financial mathematics into AAA-rated credit structures. Unfortunately for everyone, these then wound up on the balance sheets of the world’s major financial institutions and corporations. And then, after 9 August of 2007 – when French bank BNP Paribas stated that it would not be able to retrieve money from two of its funds due to “the complete evaporation of liquidity in the market” – it started to become worryingly clear that even major banks around the globe did not trust each other’s ability to pay back each other’s liabilities, and from that point the confidence in the whole system had collapsed. Therefore it certainly seems that Islamic finance has increasingly filled the gap left in the global banking market that emerged, postfinancial crisis 2008 as conventional banks moved away from their most basic banking model. This involved taking in deposits and then lending them out again to individuals and businesses, based on the specific knowledge of a bank about said individual or business (much in the same way as many Islamic banks still operate). For decades, in the US and the UK this was the main method of banking, until those at the top of the industry decided that taking some of these customer deposits and investing them on behalf of the bank – by itself and for itself alone – would generate greater incremental returns. Thus, investment banking (or ‘casino banking’) was born. Islamic banking was Shari’ah-bound not to follow this route, highlighting a fundamental ethical difference between the two. Nevertheless it is true, underlines Khairul

Nizam, assistant secretary general of the Accounting Auditing Organisation for Islamic Financial Institutions (AAOIFI), in Bahrain, there is nothing to preclude the ultimate financial results or effects of a Shari’ahcompliant banking product being exactly the same as those of a conventional one. However, Nizam adds: “The key consideration in this respect is that although the financial effects of, say, an Ijara contract may be identical as those of conventional leasing, mortgage or loans, whether it is Shari’ah-compliant or not depends on how such a product is structured.” A key point in terms of the psychology of the business approach (and, morality, some might say), is that an Islamic banking or financial product which may be structurally similar to the speculative punts in Western banking must, by definition, still be based on the concept of partnership, which involves the sharing of risk and reward equally.

In late 2011 Qatar Central Bank governor Sheikh Abdullah bin Saud Al Thani announced that Qatari commercial banks were required in December last year to transfer accounts from their Islamic divisions into a portfolio to be held by the central bank until they mature, under a rule separating the two kinds of finance.

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Reform Vs. Pressure Having said this, in the Western banking realm, pervasive public paranoia about ongoing counterparty credit risk issues, spectacular trading losses, and sleazy financial scandals sparked the mandate from the 2009 G20 meeting in Pittsburgh. This was broadly aimed at enhancing trade transparency and central clearing for all major financial asset classes in conventional banking. Perhaps the most noticeable key impact of this brave new financial world for treasuries everywhere will be on capital and margining requirements for trading, both of which are set to dramatically increase, and the regulation of which will be much tighter in both the US, and Europe, for example. For its part, in a similar move to segregate assets, Qatari commercial banks were also required in December last year to transfer accounts from their Islamic divisions into a portfolio to be held by the Central Bank until they mature, under a rule separating the two kinds of finance. “These will be carried in a portfolio, outside the activity of their business,” said Qatar Central Bank governor Sheikh Abdullah bin Saud Al Thani at the time, “as we are not in the business of mixing the Islamic with the non-Islamic.” This followed a central bank directive in February of that year to stop commercial lenders from taking new Islamic deposits immediately, and shutting Islamic branches by year-end due to concerns they may be using funds from the conventional bank for Islamic loans. This tighter regulatory regime for conventional banking and finance – if stringently enforced – would return Western financial institutions more into the market niche occupied solely for a long time by their Islamic counterparts. Interestingly here, despite their virtual monopoly position in this financial segment for years, Islamic banks have in many ways failed to fully capitalise on their advantage. To begin with there has sometimes been a blurring of the Shari’ah code: at around the same time as the conventional financial system was going into full crisis mode – 2008 – the AAOIFI stated in February of that year that the repurchase undertakings found in many apparently

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last five years from Malaysia and the Gulf Cooperation Council (GCC) countries, due to the lack of true Shari’ah-compliance of these products. “In the run-up to 2008 the exceptions to the rule of Shari’ah-compliant products became the rule, and for Islamic banking to move forward it needs to go back to the book and focus on doing the basics of Islamic banking properly,” furthers Barbour.

Bernard Barbour, head of legal and Shari’ah affairs for QInvest in Doha feels that “for Islamic banking to move forward it needs to go back to the book and focus on doing the basics of Islamic banking properly.”

Shari’ah-compliant bond structures violated the Islamic duty to share risk, particularly in ‘mudaraba’- and ‘musharaba’-based sukuks (see box right). Bernard Barbour, head of legal and Shari’ah affairs for QInvest, in Doha feels that there is an issue exacerbating the difficulty for investors in assessing the relative Shari’ahcompliance of these two vehicles and other related products. And that is although most Islamic market participants are aware that sukuk should grant the investor a share of an asset or business venture (along with the cashflows and risk commensurate with such ownership), many sukuk structures in the past in reality had more in common with conventional debt instruments from a risk/ return perspective. In this context, the latter usually represents non-asset backed interest-based funding for general corporate purposes (see box out). Indeed, Barbour adds, as a result of attempting to seek greater profits, and of a lack of innovation in Shari’ah/ legal structuring, and of the fact that some Islamic banking products are still mirroring conventional products in all aspects, there was a drift by some supposedly Islamic banks more towards conventional banking offerings, albeit under the guise of Islamic finance. As a result, he says, since 2008 there have been at least 20 defaults on sukuk in the

A Crucial Crossroads The key to challenging a newer and improved conventional banking system in the West, says AT Kearney’s Cyril Garbois, head of Middle East Financial Institutions Practice, in Dubai, comes down to two basic choices for Islamic banking. The first is to more fully exploit the Shari’ah-compliant niche, while the second is to compete with conventional banks head on. In terms of the former, he underlines, it is vital to target potential customers who care most deeply about Shari’ah compliance in their financial dealings, as well as offering products and services that meet not only general financing but also Muslim-specific customer needs. In retail banking, target customer segments may include religious conservatives, muftis, awqaf employees, or employees of ministries of Islamic affairs. A good example of a Muslim-specific retail banking product is financing for the pilgrimage to Mecca. The latter approach, meanwhile, requires identifying customer segments least open to Islamic banking (for exclusion), those with needs not fully met in a Shari’ah-compliant manner (to address shortfalls), and those open to ethical banking to tap into a wider audience of both Muslims and non-Muslims. Of, course, there can be scaled-up Islamic banks that attempt to straddle both strategies, with a notable recent example being the creation of a new ‘mega Islamic bank’ to be headquartered in Qatar. The memorandum of understanding for this new venture with a paid up capital of $US1 billion (QR3.6 billion) was signed in April between the Islamic Development Bank, Dallah Albaraka, and the Qatari government. “It will provide liquidity-management solutions in an effort to create an Islamic interbank market,” says

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SHARIAH MUDARABA AND MUSHARAKA INVESTMENTS In ‘mudaraba’-type investments an investor provides capital to an entrepreneur for an investment activity, and the ‘profits’ (notionally, cashflows generated from underlying assets) are shared at a preagreed ratio while the losses are borne by the investors alone, although many Shari’ah scholars maintain that any risk should be shared out equally. Meanwhile, in ‘musharaka’-type instruments, all partners in the joint venture are entitled to a share in the profits at a mutually agreed ratio (with excess income taken as an ‘incentive fee’), and losses are shared out in proportion to the amount invested.

The 2009 G20 meeting was broadly aimed at enhancing trade transparency and central clearing for all major financial asset classes in conventional banking. has not been matched in profitability, with several small Islamic banks in the GCC having struggled for years. Nonetheless, the report underlines that overall banking penetration in many of the industry’s core markets is still low. For example, GCC countries have not yet

achieved the banking penetration levels of countries such as France or the UK. Thus is theoretically ample room for growth for Islamic banking, given that it rarely exceeds a third of total market share, and that several potential markets with large Muslim populations remain largely untapped.

SHARI’AH NON-COMPLIANCE? The AAOIFI, at the time of publishing its six guiding principles relating to true sukuk structures, posited that 85 percent of the supposedly Islamic bonds (excluding Ijara-type sukuk) in circulation at that point were not in compliance with Shari’ah ideals at all. The organisation maintains that investors in genuine asset-backed sukuks should have rights over the bond’s assets, that they should be sold legally, and that the originating company should transfer these assets at the outset to the investors. The logical extension of this approach, then, would be that, even if the sukuk originator were to default and go bankrupt, then investors in the bond should be in a good position to recover much of their investment, depending on the quality of the underlying asset. Ahmad Mohamed Ali Al Madani, chairman of IDB, in Doha. In broader banking terms, Islamic banks have witnessed asset growth rates surpassing their conventional peers in most markets. However, it is also the case that this outgrowth is waning in key geographic regions, including the Middle East, cites a recent report by AT Kearney Middle East. Additionally troubling is that this outperformance in asset-growth terms

AT Kearney’s Cyril Garbois, head of Middle East Financial Institutions Practice, says it comes down to two basic choices for Islamic banking. The first is to more fully exploit the Shari’ah-compliant niche, while the second is to compete with conventional banks head on.

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Business Interview

AN INNOVATIVE MIND THROUGH hIS COMPANY INNOVATION GROUP 35-YEAR-OLD QATARi KHALID AL JABER IS INFLUENTIAL IN MANY SECTORS OF INDUSTRY IN DOHA, INCLUDING MAKING the Country’s First ever HORROR AND SCIENCE FICTION FILMS

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As CEO of Innovation Group, Khalid Al Jaber is a 35-year-old Qatari who is involved in all four of his company’s divisions, in the information technology sector and filmmaking, as well model building for the construction, real estate and oil and gas industries, through the German-based Innovation GmbH. Al Jaber is also executive director of Ertibat International, specialising in construction and business consultancy, and is completing his PhD. TheEDGE managed to speak to serial entrepreneur Al Jaber recently about his many current projects, which include the production of two of Qatar’s and the region’s first horror and science fiction films, and an upcoming feature film in an Innovation partnership with US production company Waterstone. Coming FROM a prominent in QatarI business family, has that helped or hindered your progress? Al Jaber has been in business in Qatar for more than 100 years. But when I started my own business, I avoided getting any financial support from my grandfather Jaber Al Jaber, who has worked in real estate and construction since the late 1950s. However, I was always hoping to reach my goals the same way my grandfather did, as I have always seen him as a positive influence. My father Mohammed Al Jaber was ambassador of Qatar in many countries, such as Japan, Australia, New Zealand, Germany...but he has always been aware of all my plans and decisions. When I started my business in Germany in the 1990s, he gave me many tips and feedback, which encouraged me. Living in different cultures, thanks to my father’s job, enabled me to have a clear vision how I want to run my businesses locally and internationally. how do you manage your time? It is all about priorities. A couple of years ago I noted down where I plan to be in the next five years. I began my PhD as first priority, and concentrated on Innovation Productions and Innovation Technologies; however I also found myself dragged toward many other projects, such as joining Ertibat International. I also got many offers to start in other fields of businesses, which I am sure would have been an added value, but due to my priorities in what I am currently doing, I rejected them. I even received a promising job offer recently...but I knew it would take most of my time from working on Innovation Group and my PhD so I declined. what does Innovation Technologies do? Innovation Technologies specialises in model making, of towers, construction projects, and oil and gas and petrochemical plants. We have done lots of interesting projects all around the world, especially in Middle East, such as Dubai and Saudi Arabia. We did an expansion project for Mecca and a huge project in the south of Sudan and in Libya as well. One of the most interesting projects that we did was the Al Koora project, which was collaboration between seven special

My father’s job as an ambassador for Qatar has enabled me to have a clear vision of how I want to run my businesses locally and internationally. needs organisations and a number of Qatari artists. We wanted to make some artwork as a gift for His Highness the Emir of Qatar at a gala dinner, that was organised by Reach Out for Asia in December 2011. It was given the highest value [US$1.45 million (QR5.3 million) and] was sold to Prince Al Walid bin Talal Al Saud in Saudi Arabia. Where does Ertibat International fit in? I recently joined them as executive director. It is a group of seven companies that are involved in construction, project management, consultancy and electricity infrastructure. They are doing huge projects, and we have partnered with big name companies such as Blair-Anderson, a British project management and construction consultancy company. There is also plant engineering, which has a lot of projects. We have more than 3000 labourers working for us and are in the process of opening a branch in Frankfurt, along with all of the Innovation Technologies. How DID INnovation Productions come about? Ahmad Al Baker was the director of the previous movies that we have done and he is also a relative, so at the beginning when I formed Innovation Productions it was just to support him when it came to TheEDGE

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paperwork and the legal aspects. Innovation Group existed before that, with Innovation Technologies, which was founded in Frankfurt where I studied and used to live, before I moved back to Qatar. It is still run by myself and a German partner in Frankfurt. In 2010 we started Innovation Productions where we introduced ‘The Package’, a science fiction movie for Innovation Productions. Ahmed Al Baker was speaking at TedX Doha in 2010 and he introduced the movie at the time, but it took a lot longer to be launched officially because of various enhancements that we have been working on. We plan to officially launch the movies soon, but for now we are concentrating on the movie ‘Lockdown’ and when we are going to officially launch, it especially after we premiered it at the fifth edition of the Gulf film festival this year. The zombie horror, ‘Lockdown: Red Moon Escape’ is the first Arab and indeed Qatari produced motion picture, is that correct? Yes, we launched ‘Lockdown’ at the Gulf Film Festival in the United Arab Emirates. It is a story of two guys who are driving down the highway in Qatar who get caught by zombies and they get taken to a prison, and their main priority is to escape. It is an interesting movie, it was already launched in Dubai and we will be releasing it in Doha by the end of this year. this year You also formed a partnership with Waterstone Films from the US? We had a representative from Innovation who was at the Cannes 2012 Film Festival, and there we announced a partnership between Innovation Films and Waterstone to make a movie that was inspired and based on a bestseller book, ‘The Greatest Salesman’. We are going to start on the filming of this movie around spring 2013. Both Waterstone and Innovation Films will produce it. You also run workshops for young aspiring filmmakers in Qatar? Do you see this being a way to further promote Qatari-made films? We have workshops in Qatar with young people, where these kinds of ideas pop out. We have Scandar Copti managing these workshops and if you go there and watch those guys who are acting, or practicing how to act, you will see the ideas that are coming forward on the spot. We are looking for more talent…filmmakers, scriptwriters and actors. We have a big database so far, all of them young Qataris. They are willing to give time, even to volunteer in our movies, just to hold a camera or a light. Just to get experience. Another thing is that during the filming of ‘Lockdown’ the majority of people that were working for the film were locals. We did have support from some of our partners, such as Speed of Life Studios from Hollywood, who assisted us with editing and monitoring our performance of how the film was progressing. Do you think Qatar can develop itself as a regional hub of filmmaking? How could Innovation be able to help develop this? We have had some circles of discussion with younger generations

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to find out what is on their minds. Even if they don’t know how to make it in a film, we can develop their ideas. For example there are lots of issues that the younger generation are facing, such as the gap between expatriates and locals, they can’t get involved with them as friends and so on. [And] especially when it comes to work, expatriates for example have their own events and the locals have their own. Plus, organisations here always look at expatriates as more trustworthy when it comes to business and work and locals need more experience. Those younger generations, all they are asking to be given the chance to prove themselves…so all of these issues, they want them to be made into movies. Another thing is the labour issues. Nobody has talked about the labourers in the industrial areas, the issue of human rights and what the conditions are. To make these movies we would have to go through a lot of procedures with our government. We can’t just take our cameras and go there and film. So these are the issues that we are going through, yes we did have support from some of the executives and families, but we still need to be more flexible on to how we can transfer their ideas into short films, trying to help them how to make their own films or short movies, supervised by Innovation. Dubai is fairly well established though and Abu Dhabi is also a step ahead of Doha with its film festival. Do you think there is a sense of competition between these locations? Yes, there is some competition, especially when it comes to Dubai because there is a lot of movement among the young and youth with Innovation in Dubai and they are doing very well. Yesterday I had a meeting with a young girl from Dubai who offered to cooperate when it comes to making a films that are coproduced by Qatar and one UAE organisation, and some percentage of it would be going to the communities for old or disabled people. We always talk about competition, but when we meet at an event you feel that you just want to partner with them and do something together. The competitive spirit goes away and partnership comes in. This was not how it went during the previous events in Qatar, Dubai or Cannes. The good thing about Cannes is that we met

There is always talk about competition between Doha, Dubai and Abu Dhabi film making, but when we meet now you feel that you just want to partner with them.

Business Interview

As executive director of construction sector consultancy Ertibat International and as CEO of Innovation Group, highly motivated and ambitious entrepreneur and businessman Khalid Al Jaber is determined to make his mark in many industries, including Qatari film making, which he clearly is passionate about.

with big companies, and when we introduced Innovation they were very encouraged and wanted to know more about this young and recently formed company in this part of the Middle East, Qatar. What is it all about? Let us know about ‘The Package’ or ‘Lockdown’… why did you come up with the science fiction movie? Why not something cultural or political? There are a lot of questions that needed to be answered. Where do you see the future going in terms of more productions like yours? Do you really think it is going to grow? Yes, actually it is growing. When I browse Twitter on a daily basis, I get followed by young filmmakers, film producers, and a university students. That makes me feel comfortable and happy, and that would be a big revolution with filmmaking. The great thing is that most of the young filmmakers or a producers is that they know what they want. With the young lady that I was chatting with yesterday, she said that I am a documentary film director… I said why documentaries and she said ‘because I know how to work with documentaries; I am more comfortable with documentaries’. Others could say that their aim is to do a 3D movie, another girl that I met a few months back; she wanted to do an animation movie…I asked her why don’t we talk about something like a real movie or like a comedy movie…and she said, ‘no I am only focused on animated movies and I am in the process of studying how to propose an animation institute’. This was good because all of them had vision. It is not just about becoming famous or to have the title of a film producer or filmmaker. It is that they know exactly what they are going to do and what their plans are.

So there is a lot of ambition? Yes, and the good thing here is that the government introduced festivals like Tribeca. That is why Doha Film Institute (DFI) is here. To change the idea of making films. In the past year in Qatar, people were ashamed to be seen on TV or appear in a series or in a movie. Now when you go to the Qatar Foundation you will see a girl who is spending five hours making a time lapse of a building. Or interviewing someone on the Corniche for example, I have seen a lot of guys walking with their cameras for the tragic incident that happened in Villaggio when I was there. This makes me comfortable when it comes to the future of filmmaking in Qatar. What is your perspective in terms of value of producing English or Arabic film content? Well, if you see ‘The Package’ promo, we used both English and Arabic. When it is an Arabic person speaking, you will see English subtitles and vice versa. Nowadays everybody speaks English and I know that that the younger the generations, the better English that is spoken. If you want to reach the world, you need to have a strong grasp of English. But there is definitely something to be said for creating productions in Arabic? Of course, and we are working on that too. ‘Lockdown’ was in Arabic. We used our local accent in it as well. It is different from a series that you might watch on television. It is something different. It is a new era of filmmaking. We haven’t had a Qatari film in Qatar for something like 35 years. So I think that this is the time that we should show the world what we can do. TheEDGE

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THE QIA AN

ASSERTIVE STRATEGY

The Qatar Investment Authority continues to rank among the most active sovereign wealth funds, with assets spread across the world. But could the flow of income also soon be invested a little closer to home? Jamie Stewart investigates

Ahmad Mohamed Al Sayed, managing director and chief executive officer (CEO) at Qatar Investment Authority subsidiary Qatar Holding, which has increased its global investment activity in 2012 and has announced some ambitions plans moving forward. (Image Reuters/Arabian Eye)

he [Qatari] government is expected to continue to accumulate external assets with fiscal surpluses invested abroad through the Qatar Investment Authority,” credit ratings agency Standard & Poor’s stated in its latest state credit rating report in July 2012. “Qatar has accumulated considerable foreign assets over the past decade, the product of its high resource endowment, improving terms of trade, and long-term investment planning.” The Qatar Investment Authority (QIA) is one of the most active sovereign wealth funds (SWFs) in the world today. It is not the largest – according to most recent SWF Institute rankings, the QIA is the twelfth largest SWF, with assets of around US$100 billion (QR364 billion) under management, compared with top-ranking Abu Dhabi Investment Authority’s US$627 billion – but the QIA punches comfortably above its weight in terms of activity. The fund invests domestically and internationally to curtail Qatar’s reliance on energy price volatility, with gas and oil exports being responsible for roughly 70 percent of the country’s income during the fiscal year ended in March. Over the longer term, an assertive stance on the QIA’s part today can open up new income channels that may flow back into Qatar for a long time to come, allowing the state to focus on inward investment and grass-

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roots economic diversification – breathing life into sectors on the ground in Qatar. And according to experts, such a trend will become more common over the coming decade. But first, those income streams must be planned for, executed and then nurtured before any liquidity begins to flow – a lengthy process but one that is well underway. Qatar has begun to flex its financial muscle on the global stage, it is not afraid to assert itself, and the QIA can boast recent deals and announcements that reflect this. FLURRY OF ACTIVITY In July, Qatar Holding, a subsidiary of QIA, unveiled major plans to open a chain of hotels under the Harrods brand, one of the world’s best-known luxury goods and services firms, based in London, United Kingdom, which the QIA purchased in May 2010. Alongside a hotel in London, “the target plan is to open Harrods hotels at sites in key cities such as Kuala Lumpur, New York and Paris, as well as in China,” Qatar Holding stated, adding that it “ultimately intends to grow Harrods into a global enterprise that defines the luxury retail and leisure sectors”. In fact the first Harrods hotel looks set not for London, but for Malaysian capital Kuala Lumpur. Qatar Holding and Malaysian property developer Jerantas Sdn Bhd will jointly invest QR2.3 billion to build a Harrods Hotel in the city, with construction set to begin in 12 months’ time. The QIA’s faith in the luxury market is telling, especially in that it comes at a time when much of Europe remains mired in the latter stages of a double-dip recession, and growth in the United States economy begins to slow. This explains the fund’s decision to target first Malaysia and then China, alongside the more traditional locations of London and New York, as it looks to expand its brand. And the fund’s Malaysian interests will not end there. “Qatar Holding will invest more, especially in Malaysia’s natural resources, due to the country’s political stability and economic growth, [which is] expected to average five percent,” the company’s vicechairman Hussain Ali Al Abdulla said. According to reports, the QIA is looking at expenditure of QR110 billion in 2012,

The QIA’s faith in the luxury market is telling, especially when much of Europe stays in recession and US growth is slow.

Qatar Holding, which owns Harrods, recently announced plans to extend the brand to the hotel industry, with a construction date set for the first establishment in Malaysia in 2013. (Image Getty Images)

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an increasing appetite to invest Gulf Cooperation Council (GCC) sovereign wealth in local markets or towards local objectives,” the study says. “If commodity prices remain stable or decline, we would expect new SWF assets reaching asset managers via diversification vehicles to reduce...this is particularly relevant because there are plausible regional and international scenarios which would significantly increase commodity prices,” it says. “However commodity prices are highly volatile,” the study continues, “and under any scenario GCC SWFs, and particularly diversification vehicles, will remain fundamental to the asset management industry.

Hussain Ali Al Abdulla, (pictured right) board member-executive of Qatar Investment Authority and vice chairman of Qatar Holding recently stated that the sovereign wealth fund would be increasing investment in the Malaysian economy thanks to the general stability of the country and its economy. (Image Reuters/Arabian Eye)

which would boost its reported assets by a huge 33 percent in the space of 12 months. This could see it begin to challenge China’s National Social Security Fund for eleventh place in the global SWF rankings. Harrods aside, in recent months there has been a flurry of activity surrounding the QIA. In May the fund acquired what was described as a major stake in British–Dutch energy giant Royal Dutch Shell, believed to be in the region of three to five percent, although no financial details were published. The move came less than three weeks after the QIA raised its stake in Total, Europe’s third largest oil company, to three percent, which itself followed the purchase of shares in French media group Lagardère as well as further shares in luxury super-line Louis Vuitton, Moet and Hennessy (LVMH) also based in France – again reflecting the QIA’s faith that the wealthy are likely to remain immune to the recession gripping other parts of the globe.

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ARAB SPRING INFLUENCE Given the need for inward investment in Qatar, with the increasingly urgent – and hugely expensive – task of diversifying the national economy looming large, the importance of channelling hydrocarbon income into a range of other sectors spread across the globe is not lost on the QIA, hence the comparatively high degree of activity. But, according to regional financial services giant Invesco Middle East, the hydrocarbon-rich SWFs of the region could soon veer towards investing a little closer to home, as opposed to channelling money into the luxury goods markets of Europe, North America and East Asia. Invesco’s 2012 Middle East Asset Management Study, which defines the QIA as a ‘diversification vehicle’, cites the Arab Spring as the catalyst for this shift: “Local pressures in response to the Arab Spring, leading to increased government spending and sovereign allocations, show

RISK PROFILE As the Invesco report points out: “While GCC locals are generally wealthier and more content than locals in the Middle East North Africa (MENA) regions affected by the Arab Spring, GCC governments are still keen to demonstrate that the region’s large commodity-linked wealth is reaching the local population.” Shailesh Dash, founder of Dubai-based asset management firm Al Masah Capital, agrees. In research released at the end of July, Dash’s firm listed numerous examples of how countries across the region looked inwards, setting off a slew of incentive packages in response to the spreading threat of unrest. “Today, we are seeing evidence that these steps were pragmatic and sensible, and the consequences of their implementation can be quantified,” Dash says. This trend would indicate that the QIA could be called upon to ease the financial burden of funding the construction of the infrastructure required to host the 2022 World Cup, or to fill gaps in the funding of other projects that are vital to the nation’s development. But Gulf Research Center Foundation director Christian Koch says a push towards inward investment need not occur at the expense of the QIA’s international growth: “As far as Qatar is concerned, I believe we will see both – continued investment abroad as well as increased investment at home in

ON THE PULSE

According to Invesco Middle East, the hydrocarbon-rich SWFs of the region could soon veer towards investing a little closer to home. The QIA recently raised its stake in French energy company Total by three percent. (Image Getty Images)

order to show to the world that Qatar can pull off major events like the World Cup,” Koch says. “The QIA can do both given its ever increasing resources. I do not see that one has to lead to cutbacks on the other.” The study loosely defines the risk profile for diversification vehicles as a balanced approach, with target returns of six to eight percent over a rolling five to 10 year period. Using these figures as a base, the QIA can therefore expect any typical investment to translate to a flow on income equal to a little over 0.9 percent a year. Given that the QIA manages assets of around QR364 billion today, this equates to annual returns of around QR3.4 billion which can be reinvested via the QIA, or channelled into the state budget. To give some perspective, this is sufficient to fund around a third of Qatar’s proposed World Cup stadia works in one year alone, the combined cost of the 12 stadia projected to come in at around QR11 billion. Indeed, despite the high level of exposure of the Qatari economy to global oil and gas prices, the assets now held by the QIA are such that Qatar could potentially withstand any downward shock in energy prices, according to Standard & Poor’s: “These sizable assets balance the concentration risk of the Qatari economy, where oil and gas directly account for a substantial proportion of GDP, exports and government revenues.” And if the Invesco study is to ring true, the trend could be for an increase in inward investment, so benefitting the Qatar business community directly.

THE QIA: A NEW ASSERTIVENESS The new assertiveness being demonstrated by the QIA in its global dealings remains long after the deal has been concluded. Qatar’s SWF has recently been flexing its muscles in order to push for a more profitable deal with regards to its established assets. Earlier this year, a merger was proposed between multinational mining group Xstrata and its largest shareholder, commodities giant Glencore International. At the time of the announcement, the QIA held three percent of shares in Xstrata – but senior management at Qatar Holding were unhappy with the proposed terms of the merger, under which Glencore was offering 2.8 of its shares for each one Xstrata share: “In order to provide clarity to the market, Qatar Holding announces that it has informed Glencore that, whilst it sees merit in a combination of the two companies, it is seeking improved merger terms,” the company announced in a statement.

QR 364 billion, amount of QIA-managed assets to date.

Based in the Qatari capital Doha, Qatar Investment Authority has become more assertive in its interantional dealings recently. (Image Corbis/Arabian Eye)

“Qatar Holding believes that an exchange ratio of 3.25 new Glencore shares for every one existing Xstrata share would provide a more appropriate distribution of benefits of the merger whilst properly recognising the intrinsic stand-alone value of Xstrata.” Xstrata has since scheduled a shareholder meeting to vote on the proposals for early September 2012. Under financial regulatory rules, Glencore has until two weeks before the vote to alter the terms of its offer. The deal requires the support of 75 percent of Xstrata shareholders, but Glencore, which controls 34 percent, is not permitted to vote its stake. Therefore, 16.5 percent of Xstrata’s total share base voting against the merger would be enough to block it. Since the matter blew up, Qatar has aggressively and substantially increased its holding in Xstrata from three percent to 11.3 percent, and at the time of writing, shares were still being snapped up in the mining group by the QIA.

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KNOWLEDGE & EXPERTISE PRODUCTIVITY ANd WELLBEING • BUSINESS management • LEGAL INSIGHT

Anti-Corruption and AntiBribery Laws in Qatar (P.68)

Qatar has strict anti-corruption and anti-bribery provisions in the Penal Code. Nadine Naji outlines the law and how Qatar aims to be one of the world’s top 10 most transparent countries.

ALSO IN THIS SECTION:

• Productivity and Wellbeing: Lauren Penny writes • about the importance of sharing personality information to facilitate an effective working environment, by highlighting four main individual characteristics. (P.66)

Business Management: Mike Richardson argues why organisational agility is important in order to deal with rapidly changing circumstances while out-performing the competition and meeting stakeholder expectations. (P.70)

Productivity and Wellbeing

The team dynamics

of personalities Lauren Penny writes about the importance of sharing staff personality information, in order to facilitate an effective working environment, by highlighting four main individual characteristics.

hether it is a small retail outlet, a corporate giant, a private company, a not for profit organisation; any scenario that calls for teamwork to accomplish specific tasks will bring to the forefront the team dynamics and personalities of the individuals. Within the team there will be competitive energies, communication abilities and

thought processing mechanisms. All these factors will come into play and impact how effectively team members can work together. Teams are put together based initially on individual strengths and expertise to achieve the deliverables of the position, and similar to each member having individual expertise, they also have distinct personalities and different ways to approaching and solving problems. The application of those traits can be as important as the combined technical

knowledge to a teamâ&#x20AC;&#x2122;s success, and the opposite outcome may occur should the personality differences not be understood. One of the personality factors most commonly known, is whether a person is introverted or extroverted. This measures how an individual draws their energy â&#x20AC;&#x201D; internally (from their own thoughts and ideas) or externally (from their interactions with others). Introverts tend to be introspective,

Productivity and Wellbeing

analytical, and cautious team members. Extroverts are typically vocal, active, and comfortable expressing their ideas. Whereas introverted team members need extroverts to initiate spontaneous verbal discussions, extroverts value an introvert’s capability for problem solving based on careful reflection and consideration of all ideas. Research has shown that behavioural characteristics can be grouped together in four major divisions or styles. These are called DISC Personality Styles, and are the basis for the name of DISC. People with similar personality test/assessment scores tend to exhibit the specific behavioural characteristics common to the profile. Everyone possesses these personalities, and it is the percentage of the style that comes to the forefront in the different roles that we play, work, partner or friend. These four DISC factors are Dominance, Influence, Steadiness and Compliance, which can predict your behaviour in a given setting, towards others and each day in the workplace. Dominant and Influential are extroverted and Steady and Compliant are introverted personalities. Dominance Characteristics Usually a direct, decisive, high ego strength, problem solver. risk taker and a self starter. Value to Team: A bottom-line organiser that places value on time, is innovative and challenges the status quo. Possible Weaknesses: Overstepping authority, an argumentative attitude, dislikes routine and attempts too much at once. Greatest Fear: Being taken advantage of. Motivated By: New challenges, power and authority to take risks and make decisions, freedom from routine and mundane tasks. Changing environments in which to work and play. Influence Characteristics An enthusiastic, trusting, optimistic, persuasive, talkative, impulsive and emotional member. Value to Team: A creative problem solver, great encourager that motivates others to achieve, and has a positive sense of humour.

Negotiates conflicts and is a peacemaker. Possible Weaknesses: More concerned with popularity than tangible results and is inattentive to detail. Overuses gestures, facial expressions and tends to listen only when it is convenient. Greatest Fear: Rejection. Motivated By: Flattery, praise, popularity, and acceptance. Thrives in a friendly environment that is free from many rules and regulations and other people around to handle details. Steadiness Characteristics Good listener; team player, possessive. steady, predictable, understanding, friendly. Value to Team: Reliable and dependable. Loyal team worker. Compliant towards authority. Good listener, patient and empathetic. Good at reconciling conflicts. Possible Weaknesses: Resists change. Takes a long time to adjust to change. Holds a grudge; sensitive to criticism. Difficulty establishing priorities. Greatest Fear: Loss of security. Motivated By: Recognition for loyalty and dependability, safety and security. No sudden changes in procedure or lifestyle and activities that can be started and finished. Compliance Characteristics An accurate, analytical, conscientious and careful personality. A fact-finder, precise with high standards and systematic. Value to Team: Perspective: ‘the anchor of reality.’ Conscientious and eventempered, thorough all activities. Defines a situation by gathering, criticising and testing information. Possible Weaknesses: Need for clear-cut boundaries for actions/relationships. Bound by procedures and methods. Gets bogged down in details and prefers not to verbalise feelings. Will give in rather that argue. Greatest Fear: Criticism. Motivated By: Standards of high quality. Limited social interaction. Detailed tasks. Logical organisation of information These are a summary of the traits and go into further detail. The assessment can reveal

the percentage of personality type in the workplace role for example:50 percent I, 30 percent D, 10 percent S and 10 percent C. By understanding these different personalities you become aware of how the members of the team may see a project in a different light – one member may see it as a grand electrifying vision, yet another may see the fine detail required. A member may want to start the project immediately yet others may need further research and analysis for a decision to be made. This is the balancing point as to whether the team draws from the personality types for the success of the project or the team fails to understand the differing member is viewpoints. Before a diverse team can be integrated into a cooperative unit they must not only cultivate openness to opposing opinions but also recognise the value of exploring a problem from various angles. Sharing personality information about each other facilitates this essential awareness, and is also a great team building exercise as each member learns the thought processing mechanisms of individuals’ behaviours and achieves a deeper understanding as to why or how individuals approach the same project. As any group is enriched by diversity, a variety of personalities can make for a stronger team. By nurturing the strengths of all participants, managers can increase performance, creativity, and harmony within the team. In summary the DISC profiles can assist you and your team to: • Increase your self-knowledge: how you respond to conflict, what motivates you, what causes you stress, and how you solve problems. • Learn how to adapt your own style to get along better with others. • Foster constructive and creative group interactions. • Facilitate better teamwork and minimise team conflict. • Develop stronger sales skills by identifying and responding to customer styles. • Manage more effectively by understanding the dispositions and priorities of employees and team members. TheEDGE

LEGAL INSIGHT

ANTI-CoRRupTIoN aNd ANTI-BRIBERY laws iN QATAR

By Nadine Naji

atar aims to be in the world’s top 10 most transparent countries. In 2011 Qatar was ranked 22nd in the Transparency International’s ‘Corruption Perception Index’, making it the highest ranked country in the Middle East, and placing it two places above the United States (US). Corruption is set out in, among other legislation, the Constitution of the State of Qatar, Decree no. 17 of 2007 ratifying the United Nations Convention Against Corruption, Law no 11 of 2004 issuing the Penal Code , Law no. 8 of 2009 issuing the Human Resources Administration Law, Law no. 26 of 2005 issuing the Tenders and Auctions Law, Law

no. 4 of 1995 issuing the State Audit Bureau, Law No 14 of 2004 issuing the Labour Law, QFC Employment Regulations no. 10 of 2006, Emiri Decision no. 75 of 2011 establishing the Administrative Control and Transparency Authority. It is worth noting that no definition of corruption is provided in the legislation detailed above. This comprehensive legal framework illustrates Qatar’s commitment to fighting corruption and adopting measures to address the consequences of acts of corruption. Companies and businesses operating in Qatar need to be aware of the legislation in order to comply with Qatar’s standards and international best practices. An example of a corrupt act is bribery.

puBliC SeCtoR in the penAl CoDe Qatar has strict anti-corruption and anti-bribery provisions in the Penal Code, enforced by the Qatar Public Prosecution Office. The World Economic Forum’s Global Competitiveness Index 2011 gave Qatar a score of 5.9 and a global ranking of 17 for the occurrence of irregular payments and bribes (a score of one indicates that irregular payments or bribes are very common and seven indicates that these payments never occur) . An explicit definition of bribery is not provided in Qatari legislation. However, from reading Articles 140 and 141 of the Penal Code, we may conclude that bribery is: • The acceptance or solicitation by a public official of money, benefit, or promise of

LEGAL INSIGHT

something which is intended to generate the conduct or omission of an act in his office; or the offer by a person (or any intermediary) of money, interest, or a promise to a public official who accepts the bribe. • Bribery offences relate to the bribing of public officials. For purposes of the Penal Code, the term ‘public officials’ includes : arbitrators, experts, receivers in bankruptcy, liquidators, boards of directors, heads and members, managers, employees in private institutions and associations, companies and co-operative associations if one of the governmental bodies participate in it, persons charged to do the public authority or do any work connected with the public service, heads and members of municipal and legislative councils and others who have public parliamentary capacity whether elected or appointed. Applicability includes penalties for both the person offering the bribe and the person receiving it. All forms of bribery are punishable and include offering bribery to an official who does not accept it, and serving as a facilitator between those offering and receiving a bribe. Penalties for bribery include imprisonment and/or a fine (usually not exceeding the amount of the bribe). Human Resources Administration Law The Human Resources Administration Law also deals with bribery and applies to employees employed in a ‘governmental body’ referred to as ‘public servants’. Governmental bodies include: ministries, corporations, authorities, public organisations and institutions. A public servant is prohibited from accepting directly or indirectly: presents, gifts, gratuities, grants, cash, or others in exchange of, or as a result of work related to his position in order to accomplish an interest for another. In this instance, the offence is committed by the public servant accepting the present, gift, gratuity etcetera and not the party who is giving it. Private sector The United Nations (UN) convention to which Qatar is signatory, deals with bribery in the private sector.

Qatar has strict anti-corruption and anti-bribery provisions in the Penal Code, enforced by the Qatar Public Prosecution Office. Qatar Labour Law and Qatar Financial Centre employment regulations state an employee cannot accept gifts, remuneration, commission, or sums in respect of the performance of his duties other than from his employer or consistent with the terms of his employment. If an employee were to accept a gift in breach of these provisions in the legislation, disciplinary action and dismissal may follow. dealing with corruption and bribery Article 57 of Law no. 26 of 2005 issuing Tenders and Auctions Law states that the contract shall be considered annulled in any tender or bid if bribery or collusion between the contractor and the government’s employee has been proved. State Audit Bureau Law no. 4 of 1995 audits the practices of governmental bodies and refers corruption cases and misuse of public funds to the public prosecutor. Article 127 of Decree-Law no. 31 of 2006 issuing Military Service Law stipulates that a military officer shall be deprived of his end of service pension if he was condemned of bribery Article 94 of Law no. 23 of 1993 regarding the Force of Police stipulates that a policeman shall be deprived of his end of service pension if he was condemned of bribery. Article 165 of the Board Resolution of Hamad Medical Hospital no. 5 of 2000 issuing the Schedule of Employees Affairs stipulates that an employee shall be deprived of his end of service pension if he was condemned of bribery Article 42 of the Board Resolution of Qtel no. 8 meeting no. 68/1/94 issuing and executing the Schedule of Bids and Tenders states that the company may annul the contract in any tender or bid if a bribery or collusion between the contractor and an employee has been proved Article 6 of Decision of the President of

High Council of Family Affairs no. 2 of 2000 issuing the Financial and Procurement Schedules states that the company may annul the contract in any tender or bid if a bribery or collusion between the contractor and an employee has been proved. Summary The establishment of an anti-corruption watchdog in November 2011 marked a significant step for the government in realising its ambition for Qatar to become one of the top 10 most transparent countries in the world. The Administrative Control and Transparency Authority (the Authority) has responsibility to track state ministries and agencies and to probe claims of abuses of power or public funds. The Authority’s tasks will include probing the misuse of public funds and investigating complaints against government officials. The agency may also have access to banking details, in cases that allege money laundering activities.

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 purposes of drafting this article we have used our own translation and interpreted the same in the context of Qatari regulation and current market practice. This article should be used for information purposes only. It is not legal advice and should not be relied upon as such. If any reader requires legal advice, this should be obtained from an experienced lawyer, who can provide advice, which is tailored to the relevant facts and circumstances. Should you have any questions in connection with this article or the legal issues it covers, please contact Nadine Naji at Nadine.naji@snrdenton.com. TheEDGE

BUSINESS MANAGEMENT

CASH AGILITY is kING

It used be said “cash is king”. Not any more, argues London Business School’s Mike richardson, who says agility is now king and cash is just a way of keeping score.

rganisational agility – the ability to deal with rapidly changing circumstances while being better at execution than the competition and meeting stakeholder expectations – is the core differentiator of businesses these days. It has always been important but now it sorts the best from the rest, separating those businesses which are accelerating their growth, leveraging their value and beating their competition from those that are not. For executives, agility is also the core differentiator of managers, executives and chief executive officers (CEOs) from their peers. Team agility is the core differentiator of functions, departments or business units from their peers, as those that seem to execute more proficiently, adaptively and dependably in a team context. And thus organisational agility is the core differentiator of businesses from their peers. The trouble is that outside of the domains of information technology (IT) and software, organisational agility is not well understood. DYNAMICALLY CoMpLEX So, what separates the agile from the fragile? The answer lies in dynamic complexity. In his book,

BUSINESS MANAGEMENT

The Fifth Discipline: The Art and Practice of the Learning Organisation, American author Peter Senge wrote: “The reason that sophisticated tools of forecasting and business analysis, as well as elegant strategic plans, usually fail to produce dramatic breakthroughs in managing a business – they are all designed to handle the sort of complexity in which there are many variables: detail complexity. But there are two types of complexity. The second type is dynamic complexity, situations where cause and effect are subtle and where the effects over time of interventions are not obvious. Conventional forecasting, planning and analysis methods are not equipped to deal with dynamic complexity. The real leverage in most management situations lies in understanding dynamic complexity not detail complexity.” In the modern world we live in a constant state of flux, in which everything has become real time, online, all the time. It is a world of hyper-competition, with the rules, the game and the field of play being continuously and disruptively reconfigured. Everyone is wearing multiple hats, serving a multiplicity of projects, clients, opportunities, change initiatives, sites and roles. We are constantly managing a portfolio of plans and replanning on the fly in response to moving objectives and reshuffling priorities. In these circumstances, traditional approaches to focus, time and priority management do not work very well any more. The challenge has become much more like an ongoing, dynamic process of triage. LEARNING TO DRIVE AGAIN In the driving seat of our cars, we have mastered and developed the higher order strengths required for driving and are able to triage our focus, time and priority management, in the face of dynamic complexity and the agility required. We are able to be strategic and operational, leaders and managers, long term and short term oriented, all at the same time, hardly giving it a second thought, at the same time as changing the channel on the radio, making a mobile phone call (hands-free, of course), talking to a passenger, and thinking about

AGILITY’S NEW ORDER Getting organised for agility is a higher order thinking challenge, for which business leaders need to develop higher order executive strengths, reflecting an understanding of the anatomy of dynamic complexity. There are three levels: Path Finding This is about understanding the anatomy of the road we are on, with the mental agility to reframe the landscape ahead and find paths of least resistance/highest reward for profitable growth. Emotional Intelligence, Intuition and Resilience This trifecta of executive traits is essential to remaining composed in the face of overwhelming complexity. It is about leveraging our intellect (IQ) to avoid cognitive overload, deepening our emotional fortitude (EQ) to be resilient and trusting our informed intuition at the intersection of our IQ and EQ. Execution Excellence In their 2002 book, Execution: The Discipline of Getting Things Done, Larry Bossidy and Ram Charan noted: “For all the talk about execution, hardly anybody knows what it is. They don’t have the foggiest idea of what it means to execute. Execution is not just tactics – it is a discipline and a system. Execution hasn’t yet been recognised or taught as a discipline, whereas other disciplines have no shortage of accumulated knowledge, tools and techniques. The leader who executes assembles an architecture of execution.” Therefore, we need a new architecture, system and framework of concepts, models and tools, uniquely integrated, aligned and attuned with the changing nature of our execution and agility challenge.

“We live in a constant state of flux, in which everything has become real time, online, all the time. ” life, usually arriving at our desired destination safely, on time and ready for what is next. Yet, do you remember when you first started learning to drive a car? We faced an unfamiliar, overwhelming and scary amount of complexity. But look at us now. We have mastered the complexity of driving. It is increasingly the same in business. As managers, executives and CEOs of any kind of organisation, our responsibility is to be in the driving seat, individually and collectively. Any shortfalls are increasingly likely to become very evident, very quickly, very fully, and very finally, with few second chances. Just look at the carnage we have seen in business in recent years – banks, retailers and automotive manufacturers among many others. We need to learn to drive again, developing new advanced driving skills for the new normal of business. This requires 13 disciplines: 1. Bringing journey orientation into focus. Agility requires a paradigm shift of focus, because change has changed, becoming much more like a dynamic journey on a shifting landscape. The longitudinal dimension of journeyorientation has emerged as a third and primary dimension around which we must reframe our focus and approach to translating agile strategy and agile execution into traction. If anything gets lost in translation, we experience wheelspin, which can cost us a fortune in lost revenue growth, profitability and cash flow. TheEDGE

BUSINESS MANAGEMENT

2. Reinforcing a mindset of operations management. Paradoxically, agile strategy and execution depend first and foremost on high reliability operations management. In continuous process businesses, errors unfold rapidly and propagate quickly, creating chaos and crises management, which can become increasingly chronic, often with disastrous consequences. High reliability operations management prevents chaos and crisis management. 3. Enhancing strategic productivity. We are used to thinking about productivity at an operational level but not so much at a strategic level. Our productivity at a strategic level depends on using an integrated framework and set of tools, to avoid overwhelm and formulate a progressive strategy work product. The test of good strategic tools is how quickly we can pick up the conversation next time from where we left off. Our agility depends upon it. 4. Accentuating short-range culture. More than ever before, the culture of execution and agility which we need to cope with, short-range pressures and performance expectations must be loud and clear to all, with leaders turning up the volume. 5. Keeping our flight planning envelope expanded. Agile executives spend the right time in the right place at the right time. Our flight envelope is prone to collapsing back to the short-range operational pressures, because of two conspiring forces: the tyranny of the urgent and our unconscious resistance to the important but more ambiguous and abstract work of long-range strategy. This leaves us flying blind; the kiss of death to agility. 6. Tackling operational productivity. Our productivity at an operational level is about handling day-to-day workflow among shifting priorities, problems and opportunities. It is about our time management, priority management, project management and many other related concepts, individually and collectively as a team, driving the fast-cycle communication, coordination and collaboration, which are essential for agility.

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7. Holding a recurring, rigorous and rallying strategy process. The essence of agile strategy is conversation; if you do not have much conversation, you probably do not have much strategy. Unless we hold ourselves fully accountable, a strategy process can easily become ill-disciplined, open-ended and laborious. 8. Re-engineering structures, processes and systems. The efficacy of our infrastructure of agile systems, processes and structures is a key, not just relating to our core business-processes, but also our infrastructure of other managementmechanisms, such as meetings, which are a mess in many businesses, subtracting from our agility. 9. Orchestrating a goal-setting cascade and review process. Agile alignment throughout our business depends upon a well-orchestrated cascade and review process of goal setting and performance feedback, balancing the over-engineered rigidity of too much and the organic open-endedness of too little. 10. Unlocking and challenging mental models. The paradigms, mindsets, assumptions and beliefs held by you, your team and your organisation are the mental models through which you interpret the world. Old, used-up and out of date mental models imprison our thinking and ability to see new possibilities and pathways. This is cancerous to agility. 11. Guiding leadership/communication skills and style. Our style and skills of agile leadership and communication set the tone for our agile culture, creating resonance (or dissonance) with the teamwork we desire. We are the role model that our team emulates, founded on our intellect, resilience, emotional intelligence and intuition. 12. Handling accountability for long-range culture. Our culture regarding the longrange thinking and commitment to advance strategic initiatives can often be very challenging and prone to excuses rather than results. Excuses are rife in many businesses, with everybody buying in at all levels, like a pyramid marketing Ponzi scheme. Dismantling this pyramid by how

â&#x20AC;&#x153;Old, used-up and out of date mental models imprison our thinking. This is cancerous to agility.â&#x20AC;? we handle excuses is crucial to sustain the accountability we need for agility. 13. Integrating enterprise execution capability and capacity. The execution capability and capacity of our enterprise is more than the sum of the above parts â&#x20AC;&#x201C; though often all of the parts are there but the whole has not emerged. Extraordinary integration is required, to combine the art and science of a unifying architecture of execution. This includes recognising and teaching execution as a system and a discipline, of accumulating knowledge, tools and techniques, broadly and deeply throughout the organisation. Our organisational agility depends upon it.

Mike Richardson is a chair of peer groups with Vistage International, speaker and author, a previous head of Aerospace Division of Spirent and holds an MBA from London Business School.

BuSineSS inSight inSide The MindS oF Leading BuSineSS FigureS

AL fAkHooRA SCHoLARSHIp pRoGRAMME ADvoCATES foR THE pRoTECTIoN of EDuCATIoN IN GAzA (P.76) Farooq Burney and Naser Faqif spoke to TheEDGE about the Al Fakhoora Scholarship, a programme that empowers Palestinians to receive a higher education, and was initiated in Education City.

ALSo IN THIS SECTIoN: â&#x20AC;˘

its potential in the both the public and private sectors and how payments are changing in both commercial and personal transactions. (P.74)

BUSINESS INSIGHT

Emerging payments space and the growth of the transactional service industry TheEDGE spoke exclusively with Sachin Bountra, business development director for VISA in the Middle East about the new transactional services emerging in the region, their potential in both the public and private sectors and how payments are changing in both commercial and personal transactions. transactions resulting from the adoption of the Internet. The addition of smartphones has also increased the amount of people conducting transactions online. Just to give you some idea, when we look at VISA transactions online in our region, and by region I mean the Gulf Cooperation Council (GCC) at this point, about half our total transactions come from overseas. That is cards issued here and used at overseas merchants, and about half within the relevant country. The other interesting thing is that this 50/50 ratio has held steady for a few years while both are growing significantly.

What does your role as business development director for VISA Middle East entail? My mandate since I joined VISA in April of 2008 was to drive relationships with both, traditional and newer non-traditional parties like government sector, telecommunications and money transfer operators in what we call the emerging payments sector. Traditionally

TheEDGE

our partners have been banks, the payments industry however has changed considerably and is still undergoing change, a fundamental part of that is the new players mentioned. Online transactions must be a big part of the emerging payments industry, where is the Middle East heading? There is no question about the rise of online

What is the mix of personal and commercial transactions online? I would say at this stage it is largely driven by personal products, but they may be commercial in nature, specifically by small and medium businesses. Having said that, given the kind of efforts being made specifically by government parties in our region we see the commercial side expanding as well. Enabling utilities payments drives a lot of the transactions, and we will see a lot of companies adopt this quickly. How do partnerships with government and other entities come about? It is very encouraging that many of these projects are driven by government at the highest level, especially in markets like ours. So, whereas five or six years ago we would primarily have focused on banks, we are now expanding

BUSINESS INSIGHT

our relationships to cover government and other similar entities who are actively playing a role in the payment space. You touched briefly on the importance of smartphones, how is this impacting the emerging payments field? I think it is needless to say, and has been said a lot before that mobile devices have become ubiquitous and are going to change the way payments are made. The change is already occurring, and I don’t think there is anyone in the payments industry that doubts that. We look at mobiles in various ways, one is the ability to use it to conduct what we call a proximity or contactless transaction. Our VISA payWave system allows you to load the system into a mobile device and pay by waving the device at any contactless terminal. The second is using your mobile remotely so even when you are not next to a till you can pay via the Internet or the terminal in your mobile wallet. We also see mobile as a device that enables card acceptance. Instead of all the terminals that you see in shops today, you could potentially add a small device to a smartphone and swipe or dip your card in that device. Do you think this sort of technology is the future of commercial and personal transactions? I do not think that it will replace all the terminals that are out there today for various reasons, mostly because large stores need to integrate these terminals into their back end system. But certainly it will help us expand our footprint, which is so critical for getting cards used. Maybe the shop around the corner that may not want to invest in a heavy terminal can take up this device and accept cards, or when a plumber comes to your house to repair a leak they can now accept a card payment. It will certainly help us reach out to a lot more merchants than before, these sorts of applications are in fact what we are really excited by. Money transfer between mobile devices is another interesting application. Do you see a market for that here? We call it person-to-person payment and the amounts can be large or small. If I send money to my mother’s phone in India it can be a large amount, but if I am paying a friend because we had lunch together and I didn’t have the money on me, it can be a small amount. Now VISA has the ability to not only

“Instead of all the terminals you see in shops today, you could potentially add a small device to a smartphone and swipe your card to complete the transaction.” use your card to pay but also to receive money. Again, a simple concept but with huge implications, if we link your card to a mobile account and back to mine, I could potentially send you money from my mobile to yours using our network. These are the types of capabilities that we are well down the path of implementing. Remittance services are a high demand transactional service in the Middle East, what does the emerging payments sector have in store for it? As I mentioned earlier we work with other players when appropriate, in this case money transfer operators. I can walk into a UAE Exchange (money transfer operator) today and give them your card number and they will send the money to your card. We are doing all of these things with non-traditional partners to bring new capabilities to drive activity in the emerging payments space. We are also working on a real-time remittance service with all of our bank partners. VISA connects with more than 15,000 to 20,000 banks so as you can imagine it is a bit of a task, but we have started working in key markets to enable them to process real time credits onto cards. A lot of our key card holders in markets such as Philippines and Russia have access to the system, and we are working with banks in India and Pakistan, who will all have the ability to send and receive credit on their VISA card in real time. When you approach banks with new ideas for transactional services is there a lot of push back or are they quite willing? I think its more the latter, banks are now looking for new areas for revenue growth and transactional banking has become a big driver of revenue growth. Their traditional model is under some constraint so banks are more receptive nowadays. The challenge is not so much whether or not people are willing to participate in these changes, I think the challenge is in establishing the eco-system.

Speaking of eco-systems, do you tailor your products to meet local needs? At the heart of it we are a network, but every product of ours needs to be suited to the local needs, a lot of the adaptation is done by the banks when they make their cards in a way that appeal to the local needs and requirements. From our perspective we do trials, for example, we are running a trail in the United Arab Emirates (UAE) with Etisalat and Emirates NBD; again a phone based usage trial. The objective is to try and understand what the technical challenges are in terms of production and the customer feedback. You have worked with the Dubai transit authority to develop a product for their metro, Qatar has similar plans for a metro system. What are the logistics involved in a project like this? The Dubai metro project was a result of our driving relationships with new entities, so we weren’t working with the bank but in large part with the transit authority to develop the concept and to help them deploy it in the marketplace. It is a new frontier but the good news is that we have a lot of experience to draw from internationally. We had done similar projects elsewhere, for example we had done this in Singapore and were able to draw on that experience and bring it here. As far as Qatar is concerned we would be very eager to partner with the transit authority the same way we have done in Dubai, and possibly expand on one of the projects we have done there. The Middle East is a region with a lot high disposable income households, does this make it a good place to test new transactional services? Some projects for example the payWave phone based payment, the cross model remittance service are some of the services that we are indeed testing in our markets. There are however, some other markets that are maybe more suited for certain services, for example places with higher Internet penetration. But with the disposable incomes and given the nature of the population in our markets, we bring a lot of projects to trial here first. TheEDGE

BUSINESS INSIGHT

Empowering Human Capital

Al Fakhoora Scholarship Programme advocates for the protection of education in Gaza and empowers them to receive a higher education Gaza is a Palestinian city with approximately 450,000 people. According to statistics, 80 percent of the population relied on humanitarian aid in 2008, and the number of families depending on food aid is increasing. Erika WidĂŠn spoke with Farooq Burney and Nasser Faqif about the Al Fakhoora Scholarship, a unique programme that initiated in Qatarâ&#x20AC;&#x2122;s Education City to safeguard education in Gaza, and awards Palestinian students with undergraduate and postgraduate scholarships, in order to break the cycle of economic dependency on aid.

Farooq Burney, director of Al Fakhoora (pictured left) and Nasser Faqih, leader for poverty reduction UNDP-Palestine spoke to TheEDGE about how their Al Fakhoora Scholarship programme is unlike other financial aid programmes available in Gaza.

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BUSINESS INSIGHT

l Fakhoora Scholarship Programme started three years ago as a campaign organised by students from Education City to advocate for the protection of education in Gaza. At the time there were marches conducted by students and the community youth at the Corniche and a telethon, in addition to other activities protesting against targeting schools during war. The name Al Fakhoora is symbolic as it is derived from a United Nations school in Gaza’s Jabaliya refugee camp that was shelled by Israeli tanks in 2009. The attack resulted in 43 fatalities and 100 victims suffered debilitating injuries. Farooq Burney, director of Al Fakhoora told TheEDGE, “The reason we took the name is that it is symbolic of an attack on a school. According to international law, educational institutes are meant to be protected during times of war and this is clearly a violation. We saw this kind of violation ongoing – universities and schools were hit and many young people killed during the war.” “One of our key partners in this is the Islamic Development Bank, and the United Nations Development Programme,” continued Burney, “we are working with Qatar Red Crescent, Islamic relief and we work with local organisations in Gaza, so the efforts of Al Fakhoora really evolve around young people and many of our partners are in Gaza, Qatar, Europe and North America.” The cost per each local undergraduate student studying for a bachelor’s degree in the sciences or arts is approximately US$2000 (QR7280) a year. In the field of engineering it costs around US$2700 (QR9828) and for students in the medical field around US$6500 (QR23,660) per year. For international post graduate scholarships the cost is an average of around US$40,000 (QR145,600) per year and usually the masters programme runs for two years. Unlike other financial aid programmes, the Al Fakhoora Scholarship Programme supports young people, but at the same time provides them with certain training for skills to enable them to grow as mature individuals, as leaders of tomorrow and also economically empower their families. The way the Al Fakhoora Scholarship Programme is structured is that they assist in higher education, and their partner United Nations Development Programme (UNDP) helps establish a business for the student’s family. According to Burney, the nominated

“For every scholarship Al Fakhoora provides, UNDP helps establish a business for their family, completing the cycle of economic empowerment.” - Farooq Burney. student goes through extensive media training, which is crucial in providing a voice for the Palestinian youth. “We are trying to help them redefine, to articulate a narrative for their cause and that can only be done if they understand the tools of the language and how to communicate to the west, so this campaign is geared towards an international audience and providing them with media training and language skills to help them communicate better to a much larger audience,” said Burney. For every scholarship Al Fakhoora provides, UNDP helps establish a business for their family, completing the cycle of economic empowerment. Burney added that some of the students also go through vocational training, and are provided with grants after the training to assist them to establish their own business. Other students are provided with internship programmes within the private sector in Gaza to help them become more independent and really utilise their education, towards earning a livelihood. The mission of Al Fakhoora is to advocate the lifting of the blockade on Gaza, which means that many of the basic materials are not allowed into Gaza, such as school materials, computers, books and stationary, among other necessities. In addition Palestinians are not allowed to travel freely within or outside Gaza, therefore students cannot leave easily to pursue a higher education. “Academics cannot come into Gaza to teach, and on top of that we saw the deliberate attack on education,” explained Burney, “we saw Gaza as a niche, or education being a niche for what Al Fakhoora wanted to do. As the programme is entering its fourth year now, we are also looking to expand to the West Bank and Jerusalem.” Burney added that one of the key problems being faced by the young people in Jerusalem right now is not just education and economic issues, but also issues of substance abuse and drug addiction. “This is a very pressing issue and we are hoping to expand some of our work in to Jerusalem now to address it on a similar model, but we will include it with

the substance abuse or addressing issues related to drug abuse, which young Arabs are suffering from,” said Burney. Nasser Faqih, leader for poverty reduction of UNDP-Palestine told TheEDGE, “The scholarships are given to students who come from families that are economically challenged, and are according to poverty data and statistics, ranked below the national poverty line. In Gaza, university education is relatively expensive and if this scholarship is not provided to a student, it means never being able to receive a university education. This programme aims to provide the student with a path that has all of the obstacles removed between them and a higher education.” The Al Fakhoora Scholarship programme works in unison with UNDP initiative DEEP (Productive Families Economic Empowerment Programme). DEEP started in Palestine in 2006, providing business development solutions to families that are currently classified as poor and beneficiaries of aid and relief services. “The programme intervenes with these families, provides the proper training, business design and financing to start a business,” said Faqih, “ Al Fakhoora and DEEP came together to focus their service towards the same recipients. We said if education is becoming one of the biggest burdens for families that want to send their kids to university then let’s partner together,” said Faqih. Faqih added that DEEP helps Al Fakhoora to target those that are most in need from a financial perspective, and also provides them with the means of education and the human capital development intervention, in order to help the family break the cycle of poverty, in parallel with the new young generation that will get the opportunity to receive a higher education. Al Fakoora Scholarship programme is about to enter its next academic year and will have a total of 400 students. “But up until now we have had 300. Every year we take 100 students and what is important to understand is that they are provided assistance throughout their academic years, three to five years is the duration. We are supporting each of these students for the next three to five years,” said Burney. TheEDGE

BUSINESS INSIGHT

The nominated students are enrolled in topnotch colleges and universities available in Gaza such as Al Asra University, Al Quds University, Islamic University of Gaza and the University College of Applied Sciences. There are also some students that continue their masters in the United Kingdom. However, there is also a plan in the near future to send some post graduate students not just to European universities, but to Arab institutions too and ultimately bring them also to Qatar Foundation. Burney told TheEDGE that what is unique about the masters programme is that Al Fakhoora Scholarship programme has selected relevant fields that are in demand

Palestinian students on their way to school in Gaza.

TheEDGE

“Palestinians are not allowed to travel freely outside or within Gaza, therefore students cannot leave Gaza easily to pursue a higher education.” - Farooq Burney. in the job market in Gaza. “We have done some basic studies, and that has brought us to evolve whereby we are looking at the upcoming professions within Gaza that are relevant in the next five year to 10 years. We are trying to channel students within those professions. Some of the students that have

gone abroad are studying things such as water and sanitation, subjects related to agriculture, communications and development, their education and knowledge is all very relevant to the private and public sector markets within Gaza and Palestine.” “One thing that I would like to add as a Palestinian myself,” shared Faqih, “is that we look at Gaza, we look at many of the organisations who are investing in the development of Palestine, we see that because of the crisis in Gaza and the closure, everybody is going towards relief, providing emergency aid, towards food and medical relief or rehabilitation, and in the middle of all these very traditional programmes you will see that this distinct programme is looking at human capital development that is purely developmental and in the most difficult area in the world,” shared Faqih. Faqih added that people are looking at how they can help Palestinians survive today and tomorrow, but that with the aid of HH Sheikha Mozah bint Nasser Al Missned office in the Al Fakhoora Scholarship programme, they are thinking how they can help the Palestinians build the state and represent Palestine as a leader in maybe the coming five, six to 10 years. “In this respect I think the programme is very admirable and well respected by Palestinians. Also it did not import a western idea of education and scholarship, it didn’t import an existing model and try and replicate it in Palestine. It actually took the time, effort and resources to invest in establishing from scratch a programme that is relevant for the situation in Gaza.”

TRAVEL & LIFESTYLE WASHINGTON DC BUSINESS TRAVEL INSIDER (P.80) TheEDGE guides you to some of the best hotels, restaurants and shops for travelling businessmen in the US capital.

ALSO IN THIS SECTION:

• •

A guide to Doha: TheEDGE recommends the best places to work out in Qatar. (P.81) Read It: Management in 10 Words: Recommended by many business leaders, an easy-to-read management book by a leading UK retail CEO. (P.82)

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10 Things: A ‘bring your own device to work’ culture, has generated a large market for a host of business related tools that are changing the way people work. TheEDGE takes a look at some of the best tools out there. (P.84)

TRAVEL

Business Travel Insider: Washington DC History, power and vibrant culture: America’s capital is a beguiling place. Victoria Scott has her tips for an enjoyable business trip to DC. Getting there: Qatar Airways (www.qatarairways.com) flies to Washington’s Dulles airport daily. An economy return fare costs from QR5340 in mid-September, and Business Class starts at QR16,580. The flight takes 14 hours on the outward leg, and about 12.5 hours on the return. United Airlines now offer flights from Doha to Washington DC via Dubai. Fares in mid-September start at QR3899 for an economy return, with business fares costing QR15,313. The flight time is 17 hours including the stop in Dubai. Qatari citizens and citizens of other countries not included in the visa waiver programme are required to obtain a visa for the United States of America prior to travel. Visit qatar.usembassy.gov for more details. Currency: US Dollars. US$1 = QR3.64 Where to stay: Hay-Adams (www.hayadams.com) This luxury hotel on Lafayette Square offers fabulous views of Lafayette Park and the White House. Its prime location means it is within walking distance of many of the city’s attractions. All of your business needs are taken care of, too – there is a business centre, 6000 square feet of meeting and banquet space and a private dining room. The best available rate in mid-September is US$425(QR1547) including breakfast for a superior room. The Jefferson (www.jeffersondc.com/) First opened in 1923 and re-launched in 2009 after a complete revamp. This historic small hotel is very classy indeed. Its 99 rooms and suites are decorated in luxurious Parisian style – there is marble and velvet galore. You will not need to stray far for a good meal either, the hotel’s Plume restaurant has the highest Zagat rating of any eatery in DC. A deluxe king room costs US$625 (QR

TheEDGE

2275) per night in mid-September including breakfast. Complimentary Internet access and telephone calls are included in the price.

your bank balance – lots of tempting shops, with chain stores and boutiques on both the luxury and budget sides of the spectrum.

Where to play: Zaytinya (www.zaytinya.com) Located on the corner of G and 9th Streets in Gallery Place and serving up world-class Turkish, Greek and Lebanese mezze, Zaytinya is hugely popular with DC’s foodies. And eating here does not have to break the bank, either – there is a great value four-course lunch menu on offer for US$22(QR80), perfect for combining business with pleasure. Old Ebitt Grill (www.ebbitt.com) – Moments from the Whitehouse and with a history going back to 1856, this place serves excellent traditional American bar food made from ingredients sourced from local farms. After dinner, head to one of Ebitt’s four bars, all serving signature (and naturally, historic) cocktails.

Culture vulture: Spy Museum (www.spymuseum.org) An antidote to traditional museums the Spy Museum, which examines the history of espionage from around the world, is interactive, fun and educational at the same time. National Air and Space Museum (airandspace.si.edu) Housing the largest collection of historic aircraft and spacecraft in the world and a short walk from the Capital, this is a museum that delights all ages. The 50 Years of Human Spaceflight exhibition is a real highlight.

Splash your cash: Georgetown, in DC’s Northwest quadrant, has a beautiful waterfront setting, a great deal of history, and crucially for

Insider top tip: Get a day pass for the Circulator (www. dccirculator.com). This bus service has five routes, with buses operating every 10 minutes. Each ride costs US$1(QR3.64), but a day pass costs only US$3 (QR10), great value if you are doing lots of sightseeing and want to give your feet a break.

LIFESTYLE LIFESTYLE

TheEDGE Down time: Baraza Resort and Spa, Zanzibar Consisting of just 30 deluxe villas, this resort invites you to relax in your own private paradise. All villas have a terrace and a private plunge pool, and are decorated in a style that fuses Arab, Swahili

and Indian design. Additional touches make this place special, such as handmade designs inlaid in every building, made by craftsmen from the island. Bazara is all-inclusive, so you can indulge yourself in the hotel’s restaurants without worrying about any additional cost. Activities are extra, but certainly worth splashing out for: the hotel has a dive centre, which offers courses for all levels, including beginners. Windsurfing, kitesurfing and sailing are also available. The hotel is not lacking in accolades. It was voted one of the Top 25 Luxury Hotels in Africa by Tripadvisor this year, and is situated on Bwejuu beach, voted by Conde Nast Traveller as one of the top 30 island beaches in the world. No one can argue with credentials like that. A standard garden villa costs from QR3330 a night in September, based on two people sharing a room on an all-inclusive basis. www.baraza-zanzibar.com. Qatar Airways has announced it will soon begin operating direct flights to Zanzibar. For now, however, you can book flights with Qatar Airways (www. qatarairways.com) connecting in either Dar es Salaam or Nairobi for a Precision Air flight to the island. The journey time, including connections, is around 8.5 hours. An economy return costs around QR4830 in September.

GUIDE to Doha: The ultimate ways to work out in Qatar

Indulged too much at brunch? And lunch? TheEDGE gives you our top tips for the best places to beat the bulge. Bootcamp Qatar Promising to “work you very hard”, boot camp is not for the faint hearted. Classes take place three times a week in two locations, the Corniche (at 6am) and at Education City in the evening, at 6pm and 7pm. Each class lasts 60 minutes, is for both men and women and class content constantly changes to keep you on your toes. www.bootcampqatar.com

Yama Yoga Now running at three locations in Doha (Garvey’s just off Salwa Road, Asas Towers in West Bay and Dana Club) Yama Yoga offers not only a full range of yoga classes but also modern dance, mindfulness and pilates, too. www.yamayogastudios.com

Sharq Village and Spa This hotel certainly has the wow factor, and its gym and spa are so lovely, you will not find yourself making excuses not to go. State of the art equipment, luxury facilities, a wide range of classes and little extras like meditation rooms make this place extra special. There is also a stunning beachfront pool. www.sharqvillage.com

Aspire Offering a huge range of classes for every ability level and taste, Aspire is a very popular choice. Want to try Tae Bo or Tabata? Offering separate male and female facilities and subsidised by the government, Aspire truly caters for the whole community. www.aspire.qa/ ASPIREACTIVE

TheEDGE

LIFESTYLE

READ IT:

MANAGEMENT IN 10 WORDS

Terry Leahy is the former chief executive officer (CEO) of the Tesco supermarket chain in the United Kingdom (UK), where he served successfully for 14 years, turning the company into the country’s largest retailer. His approach to doing so is summed up in this simply written and direct offering, which, largely free of business speak and MBA-isms, cuts straight to what Leahy feels are the 10 things that every effective manager must focus on, with a chapter on each. These are Truth, Loyalty, Courage, Values, Act, Balance, Simple, Lean, Compete and finally, Trust. Rich in background history of business, and particularly retail in the UK and the United States, and applied wisdom from Machiavelli to Napoleon – as well as obviously anecdotal reflections from Leahy’s tenure at Tesco – this is an easy-to-read and interesting management book, one that comes highly recommended by many business leaders, including the CEO of Proctor & Gamble and Sir Alex Ferguson. Available at Virgin Megastore for QR 94.00.

TheEDGE

Darwish Technology and B&O Unleash the wireless sound

Darwish technology, the technological arm of Darwish Holding, and the music brand Bang & Olufsen (B&O) introduce to Qatar’s music lovers the best of both worlds: outstanding audio quality from B&O’s extensive range of speakers and one-touch access to digital music collections without the wires. The new playmaker is available at the B&O store in Lagoona mall. Fans can just add Playmaker to any set of B&O active loudspeakers, and within seconds they will discover an improved smartphone sound, whether they want to share a playlist or explore a new online station. All B&O speakers are active with specially tuned amplifiers built into every cabinet to power all speaker drivers separately, making an outstanding sound systems as simple as ever. Music lovers can simply connect two BeoLab speakers to the new Playmaker and start listening to music from their phone or tablet with no extra amplifier necessary.

Crowne Plaza QATAR

The Trans Orient Establishment and IHG celebrated the opening of Crowne Plaza Doha recently. The Business Park welcomed its first guest, and hotel owner, HE Sheikh Mohammed bin Hamad bin Abdullah Al Thani. HE checked into the hotel after being welcomed at a ceremony attended by the hotel’s employees and representatives from the owning company and construction subcontractor. The hotel, the first in the region to launch under the new Crowne Plaza branding, is located in the heart of Doha’s banking district. Just two kilometres from Doha International Airport, it is part of the new Business Park area in Doha and features 378 rooms, including 288 hotel rooms and suites and 90 one to two bedroom resident suites.

Affordable Nokia Asha Touch Smartphones in Qatar Qatar has announced the local availability of the Nokia Asha 305 and 306 from its Asha Touch family of mobile devices, taking the full touch experience to new price points. The two new phone models – the Nokia Asha 305 and Nokia Asha 306 – further expand the successful Asha family, first introduced in October 2011. Today, there are 10 Asha devices available in more than 130 markets. The affordable touch smartphone is now available across all Consolidated Gulf Co (CGC) outlets and dealer stores for QR345.

10 TEN THINGS

Business

Apps

The recent rise of the ‘bring your own device’ to work culture, has generated a market for a host of digital business related applications that are changing the way people work. Shehan Mashood takes a closer look at some of the tools out there to bring the maximum productivity to your day. Wunderlist There is no shortage in app stores of ‘to-do list’ apps. While many of them provide unique functions that others do not, Wunderlist is one that stands above the rest, purely for its simplicity in design and functionality. Its ability to sync across numerous platforms is also a huge plus. Evernote Essentially an organising and clipping tool for mobile devices, this app is a great way to keep track of everything important you come across in your day. Whether it is a useful titbit from a report or a business idea that comes to you, simply tag it with keywords to recover it easily at a later date. Bump This is a great new way to share contact information with people you meet at business events. Instead of swapping business cards, ‘bumping’ your two phones together allows for swapping each other’s contact information. Linkedin While this might not be the social network that users visit often, it should be. A clean and simple interface makes the personalised news section worth reading. Additionally all your contacts in LinkedIn are synced with those in your address book.

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TheEDGE

Twist This inventive new app informs people when you will be arriving to a meeting. If by chance you are delayed, using GPS data the app will calculate your distance and estimated time of arrival and send it to the person you will be meeting. A self-learning program, it will teach itself who your most important contacts are and share information with them. (Currently in the United States but soon to be worldwide) Hootsuite An essential app for anyone managing their company’s social media accounts. A feature rich interface that allows the user to work across multiple social media platforms and accounts.

Take a photo of your receipt and let Proongo extract all the neccesary information.

Asana A brilliant collaboration tool, it allows companies to organise projects into a hierarchy of priority assignments. It helps save precious time writing administrative e-mails, as the interface dashboard provides real time feedback on where each person is on a task at any given moment. ProOnGo Expense The hassle of keeping track of business expenses and stuffing receipts into a bloated wallet during business trips are no more. The app allows you to simply take a photo of your receipt and throw it away while it extracts all the necessary information. Roambi This high-end enterprise app provides users with data analytics and dazzling visualisations, making it a nice departure from boring presentations. The app draws from various data sources such as SAP, Oracle and Salesforce. A premium monthly payment but highly customisable reports make it worth it. Flipboard If social media is where you get your daily dose of business news, this is the ultimate reading app. It turns the mundane Twitter and Facebook feed into a beautiful magazine format that you can flip through and read.