The Edge - Oct 2012 (Issue 37) by Firefly Communications

2012

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

ContentS FinanCE & eConoMiCs

.34. market watCh

Dheeraj Shadhadpuri discusses the US Federal Reserve and European Central Bank’s bold move to reintroduce quantitative easing.

.36. BalanCe Sheet

Aftab Gumani provides an overview of the global communication sector and what GCC operators are doing to compete.

.38. SPeCial rePort

Thomas Bacon looks at Qatar’s rising shari’ah-complaint industry.

.40. PerSonal finanCe

Adrian bliss writes why it is vital to hold a wide selection of different assets.

FEaTUrEs .44. in the SPotlight

Erika Widén reports on how Silatech is helping an entrepreneurial Arab generation to achieve their business dreams.

on the Cover

Jamie Stewart takes a closer look at Western Europe’s tallest building: The Qatari backed The Shard, a 310 metre mixed-use skyscraper that has transformed the south-eastern corner of central London. (P.52)

knowlEDGE & eXPErTisE .62. human reSourCeS Robert Madronic writes about poor customer service standards in Qatar.

.64. legal inSight

An overview of the new Qatari tourism law.

.66. BuSineSS management

Julian Birkinshaw examines whether the American hegemony of management style will ever be challenged.

.48. BuSineSS interview

Dr. Dirar Khoury discusses Qatar Foundation’s Annual Research Forum to be held in Doha in October.

.56. on the PulSe

Shehan Mashood takes a closer look at Qatar’s future in robotassisted surgery.

44 TheEDGE

CONTENTS

48 BUsinEss InsiGhT InTErViEws .69. TheEDGE spoke with Nimer Ghazal, country manager

for Brocade Qatar about cloud based applications and the challenges in managing data. Moreover, TheEDGE spoke with the founder and managing director, Mohamed Bitar and Fadi Malas, chief executive officer of Just Falafel about their global success.

76 REGUlars .06. .07. .10. .12. .20. .23. .30. .75. .80. 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 Manu Parmar m.parmar@theedge-me.com +974 3332 5038 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 DeSIGNeRS Teja Jaganjac FINalISeR Michael Logaring PhOTOGRaPheR Herbert Villadelrey PRINTeD BY Ali Bin Ali Printing Press, Doha, Qatar

ThE EDITOR

Thanks to its oil and gas riches, Qatar has developed at a rapid rate in recent years. But for all the positives that this has garnered, it has brought with it numerous obstacles. Qatar is also now far more recognisable globally than ever, thanks in main to the 2022 World Cup bid win and its diplomatic interventions in the MENA region. That awareness is good for business, trade and tourism – yet it places Qatar in the world spotlight and arguably increases pressure for Doha to solve its complexities faster and with more transparency. Indeed, in 2012 Qatar has faced many news stories leading to negative press, prompting some world media to opine that despite its best intentions, the country has a slight international profile problem at present. An example of this is reported bad publicity that has affected Qatar’s international standing recently: the debate over whether the Qatar-backed The Shard building is a blight or boon. Those who feel that it has destroyed the skyline of London or opened it for more of the same and are laying at least some of the blame on Qatar, clearly do not know that The Shard was planned long before Doha’s backing, which we examine in our cover story on page 52. But it is the ongoing saga of the deaths in the Villaggio fire and whether anyone will be held responsible for this tragedy looms largest, at the very least emotionally, for many. With some of those for whom the most serious questions need to be asked having ostensibly missed a court appearance recently, people both inside the country and beyond are wondering if Qatar is in fact going to pass what could be construed as an ultimate test, whether real accountability is pervasive here. As in other countries, cases of such magnitude take time to resolve, but it would of course help Qatar’s profile if this were done as

swiftly and as fairly as possible. Beyond these issues are other pressing challenges to its world image the country faces, such as labour rights and its road accident rate to name but two. But the truth is that while Qatar, like anywhere, does have downsides that need to be addressed and perhaps to a degree a global ‘brand’ problem, it must be remembered how quickly progress has come to Qatar, and the country has many positives – foremost the highly motivated and hard working Qataris and expatriates succeeding in improving every level of society here daily. The research being done by the Qatar Foundation is a prime example, which we discuss with Dr. Dirar Khoury, director of the organisation’s Research Division, as well as programme chair of the upcoming Qatar Foundation Annual Research Forum, in our Business Interview on page 48. Linked to this is Qatar’s embracing of robotic surgical technology, under Dr. Abdulla Al Ansari, and its plans to become a future leader in this field. Silatech is another Qatari entity making a telling contribution, particularly in the backing of young Arab entrepreneurs, highlighted on page 44. Indeed, as Qatar evolves towards a knowledge-based economy, it is arguably its people who are the country’s most valuable resource, and without a doubt as a balance, their stories need to be heard more loudly worldwide. While performing its editorial duty in discussing Qatar’s ongoing challenges, TheEDGE, of course, will continue to contribute to that effort by also focusing on and highlighting their many achievements. 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

PG. 23 jamie stewart International Correspondent London, United Kingdom

P. 34 Dheeraj Shahdadpuri Analyst Dubai, UAE

P.36 Aftab Gumani Senior Manager KPMG Doha, Qatar

P. 38 Thomas Bacon Analyst Oxford Business Group Istanbul, Turkey

P. 40 AdrIAN BlIss Senior Financial Consultant Guardian Wealth Management Doha, Qatar

P. 62 Robert Madronic Marketing Instructor College of the North Atlantic Doha, Qatar

P.64 Fouad Haddad Senior Associate, Corporate and Commercial Law Clyde & Co. Doha, Qatar

P. 64 Feras Alkasab Associate Clyde & Co. Doha, Qatar

P. 66 Julian Birkinshaw Business Management Consultant London Business School London, United Kingdom

P. 76 Victoria Scott Journalist Doha, Qatar

About TheEDGE: TheEDGE is an ambitious business magazine targeting professionals operating within Qatarâ&#x20AC;&#x2122;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

wondering why your magazine did not cover the Villaggio fire or the lack of safety standards in Qatar, especially in public spaces. Claire, Doha Thanks for writing to us Claire. We are currently working on a story about the state of health and safety in Qatar, and what has changed post the Villaggio ﬁre. However, it seems people are very tight lipped or do not yet know what is going on. We hope to have something in the next issue, as we believe it is a deﬁnite concern that needs addressing. – Miles Masterson, Managing Editor

DOha’S RaIl ReVOlUTION

I cannot seem to wrap my head around the idea of having a rail network in Qatar. While I am sure it will be a great source of business for local companies, I fail to see how people are going to benefit from it in the long run. Train stations are usually some distance apart so anybody using it will have to walk a considerable amount in the heat (which is most of the year) to get to where they want. Do we really think people are going to trade in their cars for public transport? Praveen Chadalavada, Doha A serious concern Praveen. The way we see it, an increasing population and congestion within cities will force people to use a mixture of public and private transport, whatever the weather. – Miles Masterson, Managing Editor

The BUSINeSS OF ReSPONSIBIlITY

I appreciated Kamahl Santamaria’s article on the responsibilities of childcare but was

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a Tale OF TwO SYSTemS

It is refreshing to see an alternative financial system talked seriously about rather than the tired back and forth of Keynesian policies and proponents of unfettered free market capitalism. Brian Stevens, Doha Islamic ﬁnance is a fast growing industry and we look forward to covering its rise, including in this month’s issue – Miles Masterson, Managing Editor

TheeDGe ONlINe SURVeY sEPTEMbEr 2012:

Is customer service in Qatar really as bad as some people say?

70% YeS 30% NO

Follow ThEEDGE anD WIN A NOKIA N9 sMarT PhonE Send us a letter or email correspondence, or follow TheEDGE on our Facebook page, Twitter feed or LinkedIn group in October 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.

ThIS mONTh’S wINNeR OF The NOkIa N9 SmaRTPhONe IS RaNIa aISSaOUI. *Open only to readers resident in Qatar.

FOllOw TheEDGE ONlINe FOllOw US ON TwITTeR: @TheeDGeQaTaR lIke OUR FaCeBOOk GROUP: WWW.FACEBOOK.COM/ QATARTHEEDGE jOIN OUR lINkeDIN GROUP: TheeDGe maGaZINe QaTaR

NEWS ETCETERA

TO OF THE MONTH O H P

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E D G E M A G A ZI N E

YEMEN ONE YEAR ON Boys posing with the victory sign are silhouetted against Yemen’s national flag at a rally in the capital city Sana’a on September 18, 2012, commemorating people killed during last year’s unrest against former Yemeni president Ali Abdullah Saleh. Last month marked the first anniversary of a major clash between opposition protesters and Saleh’s security forces, which ended with at least 26 people shot dead and hundreds wounded. But despite the political freedoms gained since then, Yemen’s economy remains in a precarious position, exemplified by President Abdrabuh Mansur Hadi, who on his first tour of Western nations in late September, was ardently soliciting funds from donors to assist in the vital rebuilding of the country. (Image Arabian Eye/Reuters)

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NEWS Etcetera

NEWs Etcetera Qatar tops GCC with US$41.8 billion (QR152 billion) in rail projects By Asif Iqbal “Across the GCC as a whole, rail projects worth as much as US$149 billion (QR542 billion) are in the planning or construction stages over the next decade”, according to a recent Zawya report. The report has highlighted the rail projects that include national and innercity railway systems, some of which will ultimately converge to form part of the ambitious GCC rail project, which will enhance connectivity and freight movement across the bloc and help

unification. The region has one of the lowest density rail networks in the world, with just under 34,000 kilometres of track over a landmass of 15 million square km. As reported in last month’s edition of TheEDGE, the boom in the construction of railway infrastructure is expected to double the track network and create huge opportunities for local and international businesses – from consultancy and design services to track, rolling stock and communication systems.

Qatar Railways Company (Qatar Rail) recently signed contracts worth US$406.4 million (QR1.4 billion) for execution of the first phase of its planned US$36 billion (QR131 billion) metro project. The project is expected to employ more than 20,000 workers during peak construction period. Qatar Rail aims to be an essential part of the urban infrastructure and be recognised as one of the most successful, safe and environment-friendly railway systems across the world.

Learning from London’s olympics what can Doha take from the London 2012 experience? By Jamie Stewart The bid – Never give up: throughout the bidding process, the French capital Paris was considered the favourite to land the 2012 Games, with London an outsider. Qatar will find itself in a similar position, with such areas as climate working against it. The message for Doha is simple – keep going. The International Olympic Committee (IOC) prides itself on bringing sport to new locations and cultures – the positive publicity surrounding Qatar’s first Olympic female track athlete Noor Al Malki in London as part of the Qatari team (pictured right) being a case in point. Qatar may not therefore be the outsider many assume it to be. The build-up – Ignore the critics: Many news outlets happily ran stories predicting impending doom for the London Games in the months before the opening ceremony. Costs, security, transport – all were apparently disasters waiting to happen. But the

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GBP9.3 billion (QR54 billion) budget was stuck to, security was tight but not intrusive, and the transport system had never run smoother. Qatar, should it win the rights to host the Games, will experience similar. Ignore the furore. The games: As London 2012 was billed as ‘everybody’s Games’, and it was the huge support, with even venues hosting the most niche of sports

packed to the rafters, that caught the positive attention of the world. “Your enthusiastic cheers energised the competitors and brought a festive spirit to every Olympic venue,” IOC president Jacques Rogge told the crowds. If Qatar can fill its stadiums, the spirit of success will spread way beyond the confines of the venue.

NEWS Etcetera

Strong outlook for reinsurance markets in qatar and the region

According to the Qatar Financial Centre (QFC) Authority’s 3rd GCC Reinsurance Barometer, market sentiment remains upbeat among reinsurers and brokers operating in the countries of the Gulf Cooperation Council (GCC). The impact of last year’s near-record burden of global catastrophe losses, the aftermath of the Arab Spring and growing primary insurance markets will translate into an improved pricing and profitability outlook. Based on strong economic fundamentals, confidence in the prospects of the reinsurance

sector in the GCC and in Qatar remains high as the region continues to be perceived as one of the world’s most attractive (re)insurance growth markets, benefiting from a relatively low exposure to natural perils. “A healthy reinsurance industry is an important facilitator of economic progress in Qatar and the GCC region. We, therefore, feel encouraged by the most recent Barometer’s finding that the attractiveness of Qatar and the GCC as a marketplace for reinsurers continues to increase,” said Shashank Srivastava, the CEO of QFC.

RasGas, Qatar’s second largest Lng producer works to get their systems online after POSSIBLE cyber attack A virus rcently affected RasGas, the second largest liquefied natural gas (LNG) producer in Qatar, crippling their computer systems. A spokesperson from RasGas confirmed that “an unknown virus affected the company’s office computer systems on Monday August 27. The key impact remains in the administrative IT system” and added that “a specialist RasGas IT team, in collaboration with technical experts, is working to resolve the issue as soon as possible.” Operational Systems on site and offshore are secure and the production and supply of LNG, pipeline gas and associated products have been uninterrupted. It is not yet clear the extent to which RasGas systems were affected. After a similar breach at Saudi Aramco, the world’s largest oil company, ‘hackivists’ posted the e-mail address and password of the CEO, Khalid A. Al Falih and passwords for the companies Internet service routers online. Stephan Berner, managing director at Help AG, an information security consulting specialist in the Middle East, tells TheEDGE that attacks can be mitigated. “If an organisation implements the correct security roadmap. Furthermore, security breaches have become more a question of when rather than if. Having the right procedures in place can help organisations react better to an attack and thereby minimise the impact.”

NEWs IN BRIEF Doha Climate Change Conference 2012 (COP18) The 18th session of the Conference of the Parties to the UNFCCC and the 8th session of the Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol will take place from Monday, 26 November to Friday, 7 December 2012 at the Qatar National Convention Centre in Doha, Qatar. Annual HSE Forum in Energy The HSE Forum in Energy, themed “Refining the Vision: Turning Commitment into Reality”, will stage its eighth edition from 8 to 10 October 2012 in Doha, Qatar. The conference boasts an annual participation of over 350 experts from the energy sector, advocating a commitment towards health and safety in workplaces with environmentally and socially sustainable deployment of oil and gas technology processes. The Comparative Law Triangle The College of Law and the Qatar Financial Centre Authority conference on Comparative Law is scheduled for the 7th and 8th October, 2012 in Doha, Qatar and will be held in the new library auditorium (117) at Qatar University.

Erratum In the article The Fast Track on Doha’s rail system in TheEDGE September Volume 4 Number 9, we incorrectly referred to Dohabased lawyer and SNR Denton managing partner Safwan Moubaydeen as Aswan Moubaydeen. TheEDGE regrets the error and apologises for any inconvenience caused to the parties concerned. TheEDGE

NEWS Etcetera

2012

events calendar october - Doha, Qatar

1–3

3rd Annual Global Petrochemical Technology Conference

2–3

ITS and Road Safety Forum Qatar

7–8

The Influence of Common Law, Civil Law and Islamic Law on each other

8 – 10

HSE Forum in Energy

8 – 10 Milipol

“The deteriorating situation in Syria will be the foremost on our minds…it is really troubling that this situation is continuing without any immediate end to this crisis.”

Ban Ki-moon, the United Nations (UN) secretary general said at a news conference recently. Syria took centre stage recently as some 120 world leaders converge on the UN General Assembly for what is sometimes called “diplomacy’s annual trade fair”.

“I think this situation could be very dangerous, we are letting a foreign country choose its investments with regard to the religion of this or that part of the French population or of French territory.” Marine Le Pen, far-right French presidential election candidate, speaking about Qatar’s interest in investing some US$65 million (QR236 million) to stimulate an economy where unemployment is up to 40 percent. Current President Francois Hollande has been critisised from both the left and right wing commentators as the government plans to unblock the funds.

“The right to protest can neither be used as a pretext nor as a justification for resorting to any sort of violence or committing terrorist acts against innocent civilians... The perpetrators of such violent acts, who exploit and misuse the discourse and the symbols of Islam, actually do the greatest harm to the Muslims.”

15–16

Prime minister of Turkey, Recep Tayyip Erdoğan speaking at the Yalta European Strategy Annual Meeting held in Ukraine about the recent spate of protest across the region to a blasphemous film about Islam.

16 – 18

“We will have a (primary) deficit equal to that which has been budgeted in nominal terms. As a ratio to gross domestic product, it will be a bit higher because of the recession.”

Qatar International Businesswomen Forum

Diyafa Hospitality and Food

21 to 23

Qatar Foundation Annual Research Forum

For a full and comprehensive calendar of events in Qatar please visit www.theedge.me/events 16

NEWS IN QUOTES

TheEDGE

Greek finance minister Yannis Stournaras said, explaining that this year’s primary deficit would be 1.5 percent of gross domestic product (GDP), compared to a target of one percent. Athens recently admitted it will slightly overshoot its deficit targets this year, due to the deeper recession.

QATAR ImpACT

AND ITS IMPACT ON THE ARAB WORLD With only a short time left until the 2012 US presidential election, Al Jazeera English news anchor Kamahl Santamaria looks at how it might impact this part of the world.

our years ago I remember being at work, on-air in the middle of the night, watching Barack Obama win the 2008 United States (US) presidential election. It was ‘a moment’ – not just for Americans who had elected their first African-American leader, but also for countless other countries around the world looking for a new direction from the most powerful country on earth. And because of issues like the Iraq war, Afghanistan, finding Osama bin Laden and closing Guantanamo Bay, foreign policy was a big part of that win. But of course the economic crisis in the US has taken centre-stage since then, and really that is the platform the 2012 American presidential election will be won and lost on. So perhaps it is a bit selfishly we wonder: what is in it for us in the Middle East? What will a Romney win or an Obama re-election mean for Qatar and the Middle East’s relationship with the US? One thing to note is that foreign policy has barely made a mention in the election campaign so far, so we are operating a little blindly here. First, Mitt Romney. The key with his would-be foreign policy is that it probably will not be his. The advisors around him will craft it, and already there are shades of the George W. Bush era. Neoconservatives, such as former United Nations

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ambassador John Bolton and former secretary of homeland security Michael Chertoff – people who, broadly speaking, do not favour the Obama canon of talking and negotiating. Remember these are political veterans of the immediate post-9/11 era that took the US into wars in Iraq and Afghanistan. So under a Romney presidency we could expect the clock to run down a lot faster on Iran and any response to its nuclear programme, coupled with even more support for strong ally Israel, which Romney said Obama had “thrown under the bus”. So far, so predictable. But where would four more years of Barack Obama leave this region? There is no doubt Obama has personally tried to engage more with the Muslim and Arab world (how many American presidents have begun a speech with “assalam alaykum”?), but arguably it has had limited success. Even if Mitt Romney believes Obama has deserted Israel, the Middle East peace process is still completely stalled. The country of Palestine is no closer to being realised and the Gaza Strip is still essentially locked in. Similarly, Syria remains in a stalemate. The US, through the president and secretary of state Hillary Clinton have made all sorts of noises about the illegitimacy of Bashar Al Assad’s rule, but no concrete steps have been taken to bring about a resolution to what is now a civil war. On a local level, Qatar’s relationship with the US is practically assured regardless of who wins the election.

If you – as I did recently – type ‘Al Udeid Air Base’ into Google Maps and see the size and scale of the US air force presence here in Qatar, you will see very quickly how important this tiny peninsula is to the Americans. Having said that, there have been some revealing moments in the last few years where the Qatar-US relationship is concerned. President Obama was caught telling reporters (in reference to HH the Emir Sheikh Hamad bin Khalifa Al Thani): “Now, he himself is not reforming significantly. There’s no big move towards democracy in Qatar. But you know part of the reason is that the per capita income of Qatar is $145,000 (QR526,000) a year. That will dampen a lot of conflict.” And a US diplomatic cable published by the Wikileaks website made this frank assessment of the country: “Qatar will soon – literally – have more money than it knows what to do with.” It sounds slightly disparaging, but the US also knows how important it is to have a strong and ever-more politically active ally in such a volatile region. More broadly, what started out as so much promise for a new era in relations with the US has been eroded over the past four years. If the Arab world could vote in this election, they would possibly still vote for Obama, but only because they would no doubt see him as the lesser of two evils.

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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ENERGY & RESEARCH

EUROPEAN COURT

RULES AGAINST QATARI

GAS COMPANY In September, Qatar’s finances took a hit when Italian company Edison won a court ruling allowing it a discount on the price it had paid Doha for gas. The decision could be the first of many for Qatar, Edison said. But, if it wishes to minimise the risk of contagion spreading to further European clients, Doha has options open to it, reports Jamie Stewart

While a recent European court ruling might affect Qatar’s liquefied natural gas (LNG) exports to Western European countries, other locations such as Asia and Turkey, pictured here receiving Qatari LNG from the Qatar LNG vessel Al Sahla, remain lucrative options for the sale of Qatari gas. (Image Courtesy RasGas)

FLASHBACK Doha, 2001: Qatar takes its first steps into an industry that, over the next two decades, will drive its astounding pace of development. As an exporter of liquefied natural gas (LNG), the Gulf state is beginning to expand on a global scale. RasGas inks a 25-year deal to supply LNG to Italian energy company Edison for the supply of 3.5 million tonnes per year of LNG. It is the first deal of such magnitude that a Qatari gas exporter has ever signed with a European company. Following the deal, a new energy landscape is in the process of being defined for the next two decades, with gas – and Qatar in particular – at the forefront. In 2009 a second contract, upping deliveries to Italy’s Edison to 4.6 million tonnes per year is signed, helping to cement Qatar’s status as one of Europe’s most important hydrocarbon suppliers, and Europe’s status as one of Qatar’s most lucrative clients.

ENERGY & RESEARCH

Three years on however, in September 2012, a court ruling takes place that could throw into question the nature of Qatar’s energy relationships with European companies, and could drastically alter the terms around which the Gulf state will be willing to negotiate hydrocarbon supply deals in future. A NEW REALITY Paris, France, September 2012: The Court of Arbitration of the International Chamber of Commerce France ruled in favour of Edison in arbitration proceedings with RasGas regarding the price that the Italian company was forced to pay for Qatari LNG over the preceding 12 months. “The court decision has accepted the merits of Edison’s positions,” the Italian company said in a statement, estimating the amount it had saved at around EUR450 million (QR2.1 billion). The arbitration began in March 2011 within the renegotiation of Edison’s long-term contract, the company stated. The controversy came to a head later that year when Edison earnings plummeted by 27 percent year on year, leading the company to point the finger at the comparatively high price of gas delivered under its contracts with Qatar. In a practice said to be adopted by many gas exporting countries, these contracts were linked to the price of oil, which was pushing towards historically high levels. “The natural gas market is still facing a critical period, both in Italy and internationally, due to the availability of huge quantities of spot gas [for immediate delivery] on the European hubs,” the company explained. This led to the premium on gas prices purchased under oil-linked long-term contracts to grow and grow – hurting Edison in the pocket, while allowing Doha to enjoy financial security. It marked the first time a European customer had taken RasGas to arbitration and won. As comment on the ruling, a RasGas representative forwarded TheEDGE the following statement: “Ras Laffan Liquefied Natural Gas Company (II) acknowledges that an ICC (International Chamber of Commerce) Arbitration Award was issued in relation to its long term Liquefied Natural Gas Sales and Purchase Agreement with Edison S.p.A. allowing a decrease in the contract sales price for the price review period. The terms and conditions of the Award are subject to a confidentiality agreement between the parties.” Though further specifics are vague at the time of writing, the thinking behind the Court of Arbitration ruling – to allow Edison to compete on a level playing field – is clear. The ramifications for Qatar’s gas providers, however, could be severe. future Ramifications The value of Qatar’s gas exports stands at around QR140 billion annually, according to the most recent figures published by the Qatar Central Bank, therefore, a hit of QR2.1 billion, although substantial by any country’s standards, is not about to break the nation. Yet it could be a precursor to further such actions: “It’s a breakthrough win as it paves the way for other European companies in the same situation to renegotiate the gas price with Qatar,” Edison insisted in a

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In recent months, a very clear trend has emerged for Qatar to target Asian growth markets, as opposed to the European nations. second statement released after last month’s ruling. “The price review success has the potential to reduce the final gas sale to businesses and households in Italy and also Europe as other companies might follow the same path in renegotiating contracts with their suppliers,” the company concluded. In short, therefore, the foundations on which Qatar will have based its assumptions of income could prove to be no firmer than the shifting sands that make up the nation. Doha has two options open to it if it wishes to avoid repeating an economically and politically damaging repetition of the Edison row, both of which it is in the process of undertaking. Firstly, more of its gas can be sold via the short-term spot market as opposed to through long-term contracts that are more exposed to price disputes. According to The LNG Industry in 2011 report, published by the Group of Liquefied Natural Gas Importers, Qatar’s exports grew 35 percent last year, to 75.4 million metric tons. Of this, a substantial 27 percent was sold on a spot and short-term basis. Secondly, Qatar must continue the diversification of its customer base. This has been a firm policy adopted by Doha as it has continued to increase its global share of the LNG market. Last year, Qatar reinforced its leading position, supplying 31 percent of global LNG, according to the importers’ group report. Qatar accounted for 67 percent of global LNG trade growth in 2011, supplying LNG to 23 countries across Europe, the Americas, Asia and the Middle East. And in recent months, a very clear trend has emerged for Qatar to target Asian growth markets, as opposed to the European nations, which, if the Edison situation is anything to go by, are more likely to wind up at arbitration. Fortunately for Doha, in line with free market principles, those places where LNG is needed the most also happen to be those places where the short-term price is the highest. Footnote: RasGas recently delivered a spot cargo of LNG to EgeGaz in Turkey. The fully loaded cargo was supplied on board RasGas’ long-term chartered Q-Flex vessel, Al Sahla to Aliaga Terminal in Turkey. RasGas executive, Khalid Sultan Al Kuwari said “We are happy to continue to build our relationship with an important market like Turkey. This is another example where we demonstrate our ability to deliver a secure and reliable supply of LNG across most consuming regions.”

Energy & Research

QATAR’S ATOMIC FUTURE Nuclear energy analyst POST provides evidence of Qatar’s atomic power ambitions By Jamie Stewart

vidence has emerged that the Qatar Ministry of Energy and Industry is moving forwards with its programme to develop nuclear power in the country. State-owned energy giant Qatar Petroleum is seeking to employ a senior nuclear energy analyst, with responsibilities including playing a key role in “developing and implementing a comprehensive nuclear energy strategy for the government”. The development of a nuclear power programme has long been planned in Doha. According to the Qatar General Electricity and Water Corporation’s 25-year plan, the state’s programme should lead to the installation of 5.4 gigawatts (GW) of nuclear power generation capacity by 2036. Today the country has an installed power generation capacity of around 8.7GW, almost all of which is produced by gasfired plants. Few details have emerged regarding a set timeline for Qatar’s nuclear construction programme, although in Doha’s view, the sooner its reliance on fossil fuel fired power generation can be cut, the better. Nevertheless, Badr Jafar, president of United Arab Emirates (UAE)-based Crescent Petroleum, warned last month that states across the region must not focus on investment in nuclear – or any other technology – at the expense of the fossilfuel sector. “While such diversification is likely to offer benefits, it is essential that regional policymakers not neglect oil and gas industry investment as a result,” he said. “Nuclear is only ever likely to supplement, not replace the region’s core oil and gas energy system.” The Qatari ministry appears to have heeded this advice, calling for an analyst with “an expert technical understanding of

Few details have emerged but Qatar’s atomic programme should lead to the installation of 5.4GW of nuclear power generation capacity by 2036. nuclear energy technologies, the policies used to promote these technologies and the impact of these technologies on fossil fuels markets”. Demand for electricity is forecast to rise by around six percent per year through to 2020, according to official estimates, underlining the importance of a major drive to diversify supply and meet demand if the industry is to keep up with the nation’s economic growth. Doha has signed deals with France and Russia for training, R&D, construction and operational assistance with its nuclear power programme. Qatar will follow the UAE, which is in the process of building the Gulf region’s first nuclear power plant. Construction of the four unit Barakah nuclear power plant began in July. Unit 1 is slated for completion in 2017, with the remaining three units expected to be completed in 2018, 2019 and 2020 respectively.

Badr Jafar, president of UAE-based Crescent Petroleum, warned last month that states across the Gulf region must not focus on investment in nuclear – or any other technology – at the expense of the fossil-fuel sector. (Image Getty Images)

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ENERGY & RESEARCh

QaTaRGaS DEliVErs CoMMissioninG CarGo To ZhejIaNG lNG TeRmINal IN The PeOPle’S RePUBlIC OF ChINa

n late September, Qatargas delivered the first cargo of liquefied natural gas (LNG) to China National Oil Corporation’s (CNOOC) Zhejiang LNG Terminal. The cargo delivered by Qatargas’ Q-Max LNG vessel Zarga will be used to commission the newly constructed LNG terminal. The arrival also marks the first Q-Max LNG Vessel, the largest class of LNG carriers in the world, to one of CNOOC’s owned and operated terminals in the People’s Republic of China. To mark the occasion, CNOOC Gas and Power Group, with senior officials from Qatargas and Zhejiang LNG Terminal shareholders attended the arrival of the commissioning cargo at Ningbo, Zhejiang Province. “This is an important milestone for Qatargas, Khalid bin Khalifa Al Thani, Qatargas chief executive officer said. “We are very pleased LNG from Qatar continues to contribute towards meeting the growing demand for energy in the People’s Republic of China. This achievement highlights Qatargas’ capability to supply LNG to customers around the globe safely and reliably. This delivery will further strengthen the relationship between both companies over the long term.” The Zhejiang LNG terminal, located in Ningbo in China’s Zhejiang province, will have a first phase receiving capacity of three million tonnes per annum, adding to CNOOC’s operating

Qatargas and China’s CnOOC have an existing Sales and Purchase Agreement signed in 2008 for the supply of a total of two million tonnes per annum of liquid natural gas. LNG terminals in Shanghai, Fujian and Guangdong provinces, thus maintaining its position as China’s largest LNG importer. Qatargas and CNOOC have an existing Sales and Purchase Agreement signed in 2008 for the supply of a total of two million tonnes per annum of LNG. The first delivery of LNG from Qatar to China with CNOOC was made in October 2009. Qatargas anticipates that the People’s Republic of China will become one of the world’s largest gas markets.

Increasing volumes of Qatargas liquefied natural gas (LNG) produced at the firm’s Ras Laffan facilities will end up in China, as the country becomes one of the world’s largest gas markets. (Image courtesy Qatargas)

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Country Focus

Greece and Qatar: Fruitful Cooperation Greece is on the verge of a great depression, as the Greek government recently predicted a 25 percent fall in the gross domestic product (GDP) by 2014. However, despite the crisis Greece has strong economical ties with Qatar, and there is a strong presence of Greeks in the Qatari public workforce. Erika Widén reports further.

reece, officially called the Hellenic Republic, is a country in southern Europe. In 1981, Greece became a member of the European Union (EU) and in 2001 part of the eurozone. In 2011 the Greek gross domestic product (GDP) was US$298.7 million (QR1 trillion). In late 2009, Greece was greatly affected by the global economic and financial crisis and requested EUR240 billion (QR873 billion) in loans from the EU institutions. Prior to the crisis, GDP growth was at an annual rate of four percent from 2004 to 2007, one of the highest rates in the eurozone. The tourism sector stands as the highest source of foreign revenue, and Qatar Airways has flown to Athens twice daily since 2004. Her Excellency Helen-Elsa Zorbala, Greek ambassador to Qatar said “Despite the difficulties our country has encountered during the last few years, Greece remains a popular and classic travel destination, around five hundred Qataris apply for a visa per year.”

The Greek Embassy in Doha opened in February 2007, and the Qatari Embassy opened in Athens in November 2007. Approximately 5000 Greeks reside and work throughout the Gulf Cooperation Council (GCC) States. In Qatar there are around 1000 Greeks, working mainly in the construction field as civil engineers and architects. There is also a significant Greek presence in the fields of academic activity, health and medicine, and in the Qatari public sector. Zorbala said that around 60 Greeks work for Qatar Airways and Amiri Flight as pilots and stewardesses, and as administrative staff at the Doha International Airport. Furthermore, around 30 to 40 Greeks are employed at Aspetar, Qatar Foundation, Qatar Museum Authority, Qatar Olympic Committee and other sports assocations. “A lot of Greeks were hired by Qatari authorities before and during the Asian Games that took place in Doha in 2006, and due to their successful performance and appreciated contribution, a large number of them kept on working here in respective fields of activity ever since,” said Zorbola. There are a number of memorandums of understanding (MOU) signed between Qatar and Greece. In October 2008, ministers of foreign affairs representing each country signed in Doha an agreement of Avoidance of Double Taxation and Tax Evasion. In May 2010 the Air Transport Agreement, MOUs in the field of health and medicine, economic and technological operations, energy and tourism were signed in Athens, in addition to contracts of news exchange between Athens News Agency-Macedonian Press Agency and Qatar News Agency. In September 2010 an MOU was signed in New York to set up a joint committee between the Qatar Investment Authority (QIA) and the Greek government regarding Qatari investments in Greece. According to Zorbola, in Qatar there are several Greek companies that are mainly active in the construction sector, such as Aktor, Archirodon, Salfa and Terna. “We are talking about well-established companies whose expertise, experience and reliability could support the huge ongoing public work in Qatar,” the ambassador added. There are also small businesses in the domain of clothes, dining and delicatessen. Greece imports from Qatar mainly plastic in primary forms such as polyethylene, while Greece exports to Qatar electrical machinery and parts, metals and appliances. However, according to Zorbola a lot more could be introduced to Qatar such as olive oil, olives and other

country focus

Greece imports from Qatar mainly plastic in primary forms, while Greece exports to Qatar electrical machinery and parts, metals. agricultural products, and shoes. “Commercial exchanges between Greece and Qatar are not at the desired level yet. Our bilateral trade volume has been formulated as follows in the recent year,” added Zorbola. “Imports to Greece are around US$44 million (QR160 million), exports to Qatar around US$14 million (QR50 million).” Zorbola said that the Greek embassy in Doha strongly believes in the superior quality of Greek products and strives to promote them

at any opportunity. The embassy tries to attract Greek companies to participate in the various exhibitions that take place in Qatar. Greek businessmen find in these exhibitions a reliable channel of networking, where they get acquainted with similar businesses and prospective sponsors. Moreover, the embassy facilitates their visits by arranging meetings with the competent authorities in Doha. Zorbola concluded by saying that both the Greeks and the Greek government have the ability to turn difficulties faced into challenges. With the Greek government’s firm decision to face current problems with courageous decisions and bold reforms aiming to boost competitiveness in the economic field. “ [Greeks] will manage to present their country with the honour it deserves” she said.

GREECE AT A GLANCE Population: Around 11 million GDP: US$298.7 billion (QR1 trillion) in 2011 Capital: Athens Government: Hellenic Republic

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

PERSONAL WEALTH DIVERSIFICATION (P.40) Adrian Bliss discusses why it is vital to hold a wide selection of different assets, and how equities offer the greatest potential for achieving solid returns.

ALSO IN THIS SECTION: • Market Watch: Dheeraj Shahdadpuri reports on the United States Federal Reserve and the European Central Bank’s bold monetary tool to reintroduce quantitative easing. (P.34) • Balance Sheet: Aftab Gumani provides an overview of what is happening in the global telecommunications sector, including some insights on what Gulf Cooperation Council operators are doing to stay competitive. (P.36) • Special Report: Thomas Bacon looks at Qatar’s shari’ah complaint finance industry, which is on the rise. (P.38)

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MARKET WATCH

Fed and ECB on spending spree Fearing hyperinflation, the United States (US) Federal Reserve and the European Central Bank (ECB) have long avoided pressure from financial markets to reintroduce one of the boldest monetary tools, quantitative easing. But given the recent state of economic affairs on either side of the Atlantic which have given rise to global economic slowdown concerns, both the central banks finally gave investors exactly what is required to address their fear by announcing their respective bond buying programmes. Keeping up with the recent pledge to save the Euro currency, the ECB president, Mario Darghi was the first to announce that the Central Bank will resume sovereign bond purchase of short and medium term maturity in the secondary market worth an unlimited amount. The new programme, termed as Outright Monetary Transaction, however will come with conditions, and will intervene if a government has already asked for help with financing through European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM), and the country is working as per the macroeconomic adjustment agreement. The latter fund ESM also recently cleared a major hurdle in Germany, where the lower court approved Germanyâ&#x20AC;&#x2122;s participation with initial capital limited to EUR190 billion (QR893 billion). With the resumption of quantitative easing, ECB has hinted to financial markets that it will continue to play a proactive role in fighting the debt crisis, and this can be least argued given the stipulation that the Central Bank could stop buying bonds of a country under the programme if the country fails to comply with economic adjustments which are necessary to balance their sovereign balance sheet. This stipulation is in contrast to the similar bond buying programme that ECB launched earlier, known as Securities Market Programme, under which the Central Bank bought around EUR210 billion (QR987 billion) debt securities of distressed economies. Despite this caveat, the announcement of potentially unlimited bond purchase in itself is something more than what investors had asked for and has come as a positive surprise for the financial markets. This programme, to a great extent, has also addressed the concern that the euro area leaders lack collective willpower to fight the debt crisis. And with the latest announcement, the ECB has rightfully once again proved that probably everything would be done to avoid a dreadful breakup of the euro area, which can dent the regional economic prospects. From a timing perspective, resumption of bonds buying is also very significant, given the fact that euro area gross domestic product (GDP) contracted in the second quarter and further downside was expected, as recently implemented austerity

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by Dheeraj shahdadpuri

measures would have taken a further hold on the economic activity of the region. To add to the misery, grim investorsâ&#x20AC;&#x2122; sentiments have already damaged the investment climate in the region. On the other side of the Atlantic, the US Federal Reserve has also announced a similar quantitative easing programme (dubbed as QE3) under which the Central Bank will be buying Mortgage Backed Securities (MBS) worth US$40 billion (QR145 billion) each month. The new quantitative easing programme will work in parallel with the existing Operation Twist Program, which was extended some time ago. Combining both programmes, the Fed is estimated to be buying securities worth US$85 billion (QR309 billion) each month until the end of 2012 when Operation Twist is expected to expire. However, what is surprising is the active tone adopted by the Fed which has stated that if the outlook of the labour market does not improve substantially until this year end, it will continue its purchase of mortgage backed securities to support economic activity. The Fed also extended its low interest rates outlook, citing that they will be kept low until end of 2014 or mid-2015. Undoubtedly, the programmes announced by the respective central banks are quite bold in a sense that they directly target at keeping the pressure on interest rates intact, which should spur lending and eventually help consumers and businesses. Following the latest bond buying announcement in euro area, the yield of Italian and Spanish bonds have already declined, and over the coming few months financial markets would closely focus on what future course economic activity takes both within the euro region and in US. The positive momentum may very well get a further boost if economic activity in China also starts firming up, for which it is widely expected that the countryâ&#x20AC;&#x2122;s Central Bank will turn its monetary policies to become more accommodating.

market watch

Qatari Credit Ratings

By Asif Iqbal

Qatar Central Bank (QCB) governor Sheikh Abdullah bin Saud Al Thani addressing the Capital Markets Conference in Doha recently.

Qatar Central Bank (QCB) plans to set up a domestic credit ratings agency, its governor Sheikh Abdullah bin Saud Al Thani has said. He also said that the bank is comfortable with the prevailing interest rates and predicted that the inflation rate in Qatar will continue to hover around two to three percent this year. “Inflation rate in Qatar is much lower compared to its peers and the QCB is very comfortable with current interest rates. It is not concerned about hot money inflows,” Sheikh Abdullah told reporters on the sidelines of Capital Markets conference in Doha recently. QCB said earlier in September that it wanted to keep interest rates low to support lending to the real economy. According to the QCB governor, the Central Bank will set up a credit ratings institution in association with Qatar Holding Company as soon as possible. “This process is on going and is part of our initiative to set up a domestic credit ratings mechanism for domestic non-government debt issuers and institutions,” he said adding that the company would be launched in 2013. Speaking earlier at the conference he said, the country is also setting up a clearing house for share market settlements in association with Qatar Exchange (QE) by the end of this year. On the subject of setting up a common Gulf Cooperation

Council (GCC) market for bonds and equities, the QCB governor said, “Most central banks in the region are working towards achieving a uniform system for government and non-government bonds and equities. We can tackle this by organising a listing system among others.” Developing capital markets is not just a question of listing; it is an all-round package development, Sheikh Abdullah Al Thani said. “It should take care of the interests of both local and foreign investors,” he added. Meanwhile, General Secretariat for Development Planning (GSDP) secretary-general Saleh al Nabit told the conference that the country must be able to mobilse and efficiently deploy financial resources. “As our small businesses grow, they will require access to a more diverse set of financing options, covering both debt and equity,” he pointed out. “Meeting long-term financing needs instruments with better matching maturity and should help improve cost-benefit ratios of our investments and allow better management of risks,” the GSDP official said. He added financial deepening can also help to create opportunities for private sector participation in infrastructure projects, with the efficiency and other benefits that this might bring.

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BALANCE SHEET

Telecommunications is a tough business in the 21st century Telecommunication companies the world over are cutting costs to protect profits by reducing staff, outsourcing networks and restructuring operations. With declining revenues from traditional income sources such as wire line and wireless voice, the pressure is on to look for new products and services, but many are struggling. Aftab Gumani provides an overview of trends in the global telecommunications sector, including the steps Gulf Cooperation Council (GCC) operators are currently taking.

etwork costs are on the rise. An insatiable appetite for more data is forcing telecommunication companies to invest heavily in next generation networks. At the same time competition has gone global creating, enormous price pressure in most markets. According to a February 2011 study by United States (US) based network equipment maker Tellabs, if the current trend continues, network costs for operators in various regions across the globe may exceed revenues by 2013 to 2015. The study forecasts that network costs are likely to exceed revenues in North

America by the fourth quarter of 2013, in the developed markets of Asia Pacific such as Australia, Japan and South Korea by the third quarter of 2014, and in Western Europe by the first quarter of 2015. To survive, telecommunication companies really only have three options, to expand, to create economies of scale, identify and develop new revenue streams or create leaner operations. For Gulf Cooperation Council (GCC) operators, the focus has been on expansion. In 2004, GCC telecommunication companies were operating in only six markets outside their home countries. Today they operate in close to 80 countries. In the last five years alone, GCC telecommunication

companies have invested more than US$33 billion (QR120 billion) in cross-border deals. But most other regions do not have telecommunication companies with this kind of cash. The focus in most markets is on reducing costs without impacting service quality. Thus key cost optimisation strategies include networking outsourcing, organisational restructrucing and rationalising asset porfolios. Network outsourcing Recent examples of networking outsourcing abound. In November 2011, Zain Iraq entered into a strategic five-year network outsourcing and optimisation agreement with Ericsson.

BALANCE SHEET

In July 2011, Vodafone Italy outsourced the management of field service operations of its fixed and mobile networks, as well as the fixed core network nodes to Ericsson. As per the deal, about 300 of Vodafone Italy’s employees were transferred to Ericsson. In the same month, Australia’s Telstra announced plans to outsource its administrative functions such as capital expenditure accounting and account activation, eliminating about 300 jobs. And in June 2011, Clearwire outsourced a part of its customer care operations to TeleTech Holdings, a leading US-based business process outsourcing (BPO) services provider. Under the deal, about 700 Clearwire employees were transferred to TeleTech. Organisational restructuring In a prime local example of organisational restructuring, in January 2012, Qtel announced a major corporate transformation in Qatar, which will enable Qtel to focus on core functions that are essential for future success and sharpen the level of support for customers. Similiarly, in June 2012, the Vodafone Group rolled out ‘Evolution Vodafone’ a programme to transform global processes by creating Shared Service Centres, a global procurement centre and a single unified information technology (IT) system to take advantage of economies of scale and unified global processes. Then in September 2011, Spanish multinational Telefónica announced an organisational restructuring, to streamline its operations and pursue growth opportunities in digital services. One of the major changes in the restructuring includes creation of a Global Resources unit, designed to ensure the profitability and sustainability of its business by leveraging and unlocking economies of scale. Rationalising asset portfolio Many large operator groups, including Deutsche Telekom, France Télécom and Vodafone are re-evaluating their asset portfolio, and are pursuing mergers or disposals of their underperforming assets to increase group profitability. In August 2011, Vodafone Group entered into talks regarding a potential merger

Since 2007 GCC telecommunications companies have invested more than QR120 billion in cross-border deals. of Vodafone Greece with Wind Hellas Telecommunications, a Greece-based integrated telecommunications provider. The merger is projected to help Vodafone gain substantial cost savings from synergies in operations and increased scale. In January 2011, Qtel also acquired an additional 25 percent of Tunisian outfit, Tunisiana and now holds a 75 percent stake in the company and in 2012 Qtel acquired additional stakes in existing subsidiaries Asiacell Iraq and Wataniya Kuwait. Increasing collaboration Interestingly, telecommunication companies are increasingly collaborating to optimise costs. Focus areas for collaboration include network sharing, joint network deployments and joint sourcing of equipment. For a typical mobile operator, network costs represent between 20 to 30 percent of operating expenses, and about 60 to 70 percent of capital expenditure. With rising data traffic requiring increased network investment, network sharing is becoming popular among telecommunication companies to reduce network expenses. Usually, only the radio access networks (RAN), including the antennas, towers and transmission equipment, are shared while the companies’ core networks are kept separate. In August 2012, ictQatar issued guidelines for technical standards on infrastructure rollout network and exchange sharing between service providers in Qatar. ictQatar has, from the outset, supported and emphasised infrastructure sharing between telecom operators for the benefit of the customers and the public at large. In August 2012, Vodafone entered into a partnership with Zain group to synergise their roaming agreements and brand names to improve network coverage and trim costs. By June 2012, Qtel has expanded its

roaming agreements with more than 625 various international partners to offer customers better roaming rates/connectivity. In July 2011, France’s Bouygues Telecom and United Arab Emirates (UAE) Etisalat joined the Telefónica Partners Program. The programme allows joint procurement of network equipment and handsets through Telefónica’s global procurement unit, Telefónica Global Services. In April 2011, France Télécom’s Orange and Deutsche Telekom agreed to form a 50:50 procurement joint venture by combining their respective procurement operations covering purchases of customer equipment, network equipment, service platforms and IT infrastructure. In May 2011, Orange Austria and T-Mobile Austria announced plans to start network sharing and joint network deployment in the fourth quarter of 2011. Although their initial focus is expected to be on expanding 3G-network coverage, the cooperation could be expanded to 4G networks as well. Perhaps counter-intuitively, collaboration between competitors is helping to improve network coverage and quality. So how much more can telecommunication companies do to reduce costs? The pressure on cost is not going to just disappear. The smart operators will focus on creating sustainable cost-efficiencies through ongoing and continuous cost management efforts. The challenge is to do this while at the same time investing in new business models and innovation to grow the business. Most GCC operators are well placed to compete locally and abroad, but the most successful will be those operators that can successfully expand and grow while at the same optimise their costs.

Aftab Gumani is a senior manager at KMPG Qatar. TheEDGE

SpECIAl REpORT

iSlamiC finanCe tO tHE FORE By thomas bacon

he successful launch of the world’s largest-ever, dollardenominated Islamic bond is a notable milestone in the rise of Qatar’s shari’ah-compliant finance industry. An ambitious infrastructure investment programme and growing per capita wealth are supporting the growth of Islamic financial services, as the authorities look to continue regulatory reform. Qatar’s U$4 billion (QR14 billion) sukuk issue on July 11 was more than six times oversubscribed, drawing an order book of more than US$24 billion (QR87 billion). The two-tranche bond was the Qatari government’s first venture into the Islamic debt markets for almost a decade and will be used to supplement public coffers. Each sukuk was valued at US$2 billion (QR7 billion). The fiveyear bond sold at a yield of 2.09 percent and the 10-year at 3.24 percent, according to international press reports. The low yields are indicative of a strong demand for Qatar’s sukuk, due to their perceived stability during international economic uncertainty. Across the Gulf Cooperation Council (GCC) member states, bond spreads have narrowed in recent months, as investors have taken note of the countries’ solid budgetary positions, bolstered by high oil prices. Sukuks have drawn in cash from Islamic investment funds, particularly those based in the Gulf and Southeast Asia, as other opportunities for shari’ah-compliant financing have become less appealing, given the economic climate. International press reports suggested that the yields on Qatar’s sukuks were 18 basis points lower than if they had been conventional bonds – a fact that may be attributable to the strong interest in Islamic funds. Qatar certainly stands to benefit from its decision to launch a sizeable sukuk at this time. The country is undertaking around US$100 billion (QR364 billion) in infrastructure investments over the next five years, both to support continued economic growth and to lay the foundations for the 2022 World Cup. While the country’s budget surplus tripled to US$12.2 billion (QR44 billion) in the fiscal year ending March 2012, the extra cash provided by the sukuk will help support public investment. The issue was also designed to help cool inflationary pressures by mopping up excess liquidity. The sukuk is also a vote of confidence in Islamic financial instruments from the government of the world’s richest country, in terms of per-capita gross domestic product (GDP). Qatar’s shari’ahcompliant financial sector has grown strongly in recent years, as it

TheEDGE

has worldwide. And, as elsewhere, growth brings with it challenges of regulation in an industry that has only reached global prominence relatively recently, and in which definitions of what constitutes shari’ah compliance sometimes differ. Islamic banks and shari’ah-compliant ‘windows’ of conventional institutions accounted for around 30 percent of all banking assets in 2010, according to the International Monetary Fund (IMF). Since then, the Qatar Central Bank (QCB) has introduced a new legislation, implemented at the end of 2011, closing conventional banks’ Islamic windows. The change was designed to prevent the possibility of crossover between non-Islamic and Islamic products, though promoting the growth of fully shari’ah-compliant institutions may have been another goal. The ongoing development of infrastructure and private real estate offer substantial scope for growth. “There is a lot of room for growth in the banking sector as a large number of projects are expected to come online, and project financing offers very good opportunities,” Moataz El Rafie, the chief executive officer of Ahli Bank, told Oxford Business Group. With shari’ah-compliant financing such an important force in Qatar and across the world, the authorities and the private sector are keen to ensure that the regulatory infrastructure keeps pace. The ongoing consolidation of financial regulation in Qatar to a single body has been widely welcomed as bringing greater clarity and preventing contradictory or overlapping rules being drawn up. The Islamic financial service sector is one of the most dynamic in the world at the moment, with growth levels that are particularly impressive given the cloudy international economic outlook. In Qatar, corporations, individuals and now once again the government are turning to shari’ah-compliant instruments. The state’s wealth, investment plans and its rising importance on the global stage all bode well for the industry.

Thomas Bacon is an analyst at Oxford Business Group.

PERSONAL FINANCE

A Winning Strategy

We all take different approaches to building a portfolio, but with money constantly moving in and out of different asset classes, depending on economic conditions, it is vital to hold a wide selection of different assets. So if one does not want to score an own goal when it comes to investments then diversifying oneâ&#x20AC;&#x2122;s portfolio is the key, advises Adrian Bliss

xpatriates, like any investor, need to adopt a good game plan when it comes to investing. The aim should be to generate the highest possible risk-adjusted returns over the long term, based on your risk

profile and time horizons. To achieve this you need a winning strategy that takes into account the flow of money moving around the globe as different economic conditions dictate. Echoing the National Vision of Qatar, diversification is the best way to capture these

movements is by spreading your investments across a wide selection of different asset classes, with a keen eye on the fact that preservation of capital is key. The good news is there is a wider choice of assets than ever to select from â&#x20AC;&#x201C; bonds,

PERSONAL FINANCE

equities, cash and money market instruments, pooled funds as well as alternative investments. And within each of these asset classes there are sub-categories to choose from. Each asset class has its own risk-return characteristics, and it is important to get to grips with where these sit in terms of your own risk tolerance. Of course, your personal tolerance for risk will be determined by a number of factors. As well as the amount of money you have available to invest, other considerations include any other assets you may hold, such as property, current financial commitments, whether you are single or have dependents, current employment outlook, as well as how near you are to retirement. Once you have determined your risk profile, you can then decide on the best mix of assets to achieve the right level of diversification. As far as possible your asset mix should include investments that are not correlated. And while this involves understanding how asset classes work in relation to each other, any adviser worth his or her salt will be able to help you with this. Getting this element as watertight as possible will help reduce the impact of volatility and ensure your portfolio grows in a steady pattern. So what are the major asset classes on offer? Equities Equities offer the greatest potential for achieving solid returns. But such rewards means they sit at the higher end of the risk spectrum. They also offer the greatest choice, as there is a wide range to choose from including large cap blue chips, smaller companies, sector specific, as well as a wide range of international equities in developed and emerging markets. Focusing on one particular type of equity increases risk,

whereas having a spread across sectors, size and country enhances diversification and so reduces the overall risk in your portfolio. For example, having too many United Kingdom equities in your portfolio is a risk, as is pinning all your hopes on the latest emerging market hot spot. And within each country there are sectors to consider such as retail, technology or health services. Again, a good spread is essential. Fixed Income Bonds or fixed income investments are often used to reduce portfolio volatility and smooth out returns, which is why they are recommended in the run up to retirement. The performance of bonds is linked to interest rates and inflation, as well as the quality of who issues the bond. There are government issued bonds, called gilts, as well as company issued or corporate bonds. Bonds are issued as a way of raising finance, and in return you are paid an annual return and, hopefully, some capital gain. The risk is in the quality of the company or country issuing the bond. Ratings agencies such as Standard & Poors and Moodyâ&#x20AC;&#x2122;s regularly update ratings. As a general rule the higher the yield on offer, the riskier the bond is deemed to be. Bond funds generally offer a good spread of different types of bonds, yields and maturities. Cash and Money Market Instruments Cash and money market funds are the most liquid of asset classes and are therefore considered the least risky. Returns you achieve from this asset class are based on the current interest rates. Your allocation to this will depend on how much of your assets you need easy access to. It is worth pointing out that any investment in cash is not totally risk free.

While not considered a major asset class, investing in art, antiques or classic cars gives enjoyment as well as the possibility of achieving a good return.

When interest rates are low, inflation can eat into the value of your money. For example, if inflation is two percent and the interest rate you can achieve on cash is 0.5 percent, then your money will buy less than it does now. Bear in mind that the longer you can afford to leave your money untouched, the higher the rate you will receive. Alternative Investments While not considered a major asset class, alternative investments are not only a good diversifier, they are fun. Investing in art, antiques or classic cars gives enjoyment as well as the possibility of achieving a good return. They are generally uncorrelated to traditional investments such as equities and bonds. However, they are subject to the vagaries of supply, demand and emotion, so care needs to be taken. As such it is generally advisable to allocate a small proportion of your portfolio to this type of investment. Do not forget alternative investments will have extra financial responsibilities such as insurance cover, storage and maintenance to ensure your investments stay in prime condition. How much you allocate to each asset class will depend on your own risk profile and what your investment goals are. Equity investments in particular need to be viewed over the long term if they are to provide a good return on your investment. Flexibility is also important. While a well diversified portfolio offers the best chance of keeping your overall investment plans on track, a change in financial circumstances may see your risk tolerance change, which could necessitate a shift in your asset allocation strategy. You may, for example, change employment, get married and have children, all of which could bring your portfolio risk profile down a notch or two. Lastly, a disciplined savings programme should underpin any well-diversified investment portfolio strategy. It is an oftenoverlooked factor, but an important one if you want to give yourself the best chance of reaching your investment goals.

Adrian Bliss is a senior financial consultant at Guardian Wealth Management Qatar. TheEDGE

IN THE SPOTLIGHT

An Entrepreneurial

Arab Generation

How Qatar’s Silatech is helping an Entrepreneurial Generation of young arabs achieve their business dreams across the Middle East and North Africa

26-year old Bashir worked in a nut shop in Sana’a, Yemen, but dreamed of opening a small business of his own. A Youth Fund loan from Silatech partner Al Amal Microfinance Bank allowed him to start and expand his own spice shop. Silatech works with Al Amal Microfinance Bank and other financial institutions throughout the region to design youth-focused financial products and services for young Arabs such as Bashir.

Silatech’s mission is to connect young Arabs,18 to 30 years old with employment and enterprise opportunities. Its commitment is to mobilise interest, investment, knowledge, resources and action to drive large-scale comprehensive employment and enterprise development programmes. Erika Widén writes about the challenges Silatech faces, and their innovative initiatives to ensure that the Arab youth can pursue their small business aims.

IN THE SPOTLIGHT

ilatech is a Qatari social enterprise that derives its name from the Arabic word ‘Silah’, meaning ‘your connection’. It was established in 2008 by Her Highness Sheikha Moza bint Nasser in order to address the growing need to create jobs and economic opportunities for the young Arab generation. The Middle East and North Africa (MENA) has the highest unemployment rate in the world. In the Gulf region alone unemployment rates among young nationals exceed 35 percent. KIVA ARAB YOUTH In one of its most recent initiatives, in March 2012, Silatech partnered with Kiva (a United States based micro-lending platform) to launch Kiva Arab Youth. The online non-profit allows anyone to donate or lend US$25 (QR91) to an entrepreneur. Since Kiva Arab Youth launched, more than 1100 youth businesses in Palestine, Lebanon, Iraq, Jordan and Yemen have been founded. In total, more than 35,000 lenders around the world have provided US$1.5 million (QR5.4 million) in loans to fund these businesses. To double the impact for borrowers, Silatech is funding a total of US$375,000 (QR1.3 million) in matching loans and is working to increase the amount. Loans funded through Kiva have a 98 percent repayment rate and as the loans are repaid, Kiva recycles the matching funds in order to finance more loans for young Arab business owners. (See box out overleaf.) These young Arabs include Lebanese Hussein, an 18-year-old living with his parents. He discovered a talent for painting at a young age, and uses it as a means of providing for his family. He needs a loan of US$1000 (QR3640) to buy supplies for and hopes his profile on the Kiva Arab Youth website will enable him to do so.

However, Hussein’s creative business is the exception rather than the norm. According to Justin Sykes, director of microenterprise at Silatech, the largest sub-sectors for which Kiwa Arab Youth borrowers are applying and requesting funding are for street food businesses and small stores in particular. Within the retail sector there are a large numbers of youth, requesting loans to start-up, expand, and or improve their stores. When a young entrepreneur has received a loan to start-up their business, Kiva Arab Youth often offers further nonfinancial support services, such as business management training, mentorship, and assistance in finding new markets for their products and services, to help them grow their businesses. CHALLENGES AND ATTITUDES Kiva Arab Youth aside, for the past four years Silatech has been involved in a number of workshops and initiatives throughout Arab countries, and has faced a number of challenges. Sykes explains further, “The main challenge but also a source of opportunity has been the political and economic instability that the region has faced in 2011 to 2012.” Sykes adds that the recent revolutions, changes in government, and open conflicts in some countries have slowed the progress of Silatech’s initiatives, while others have been completely put on hold. “Our microfinance field partners have had to adjust their lending volume and amounts, but as countries have stabilised their activities have ramped up again. Significant opportunities now exist with countries having come through the Arab Spring.” Sykes says that on one hand governments, whether they are new ones trying to demonstrate a quick impact or

Recent revolutions in some Arab countries have slowed the progress of Silatech’s initiatives in the region.

Justin Sykes, director of microenterprise of Silatech explains some of Silatech’s challenges in targeting the region’s youth.

old ones showing that they are responding to the requirements of the people, are much more open to initiatives that target the youth. On the other hand he feels that there is also an increase in the interest and level of support from the international community in the youth agenda. Both factors are supportive to Silatech’s work and impact in the field of youth economic opportunities. “The challenge is not only within many institutions in the MENA, but globally, is one of the entrenched negative attitudes towards young people and their potential,” says Sykes, “This is particularly problematic when it comes to perceptions of financial institutions towards the viability of youth as clients. Young people are typically viewed as irresponsible and therefore a poor investment. Silatech’s work is to convince financial institutions that this is not the case by presenting concrete evidence, sometimes using these institutions’ own client data.” Dr. Nader Kabbani, director of research and policy of Silatech tells TheEDGE, “The situation [adding to worsening youth employment] has persisted for more than twenty years and to date, policies and programmes introduced across the region to address the youth employment challenge have proven to be largely unsuccessful. Silatech works with partners across the region to design and implement innovative solutions aimed at generating economic opportunities for young people.” In July 2012, Silatech organised a TheEDGE

IN THE SPOTLIGHT

28-year old Abed is an auto mechanic in Jenin, Palestine, who dreamed of starting his own repair shop, but could not afford the startup costs. After taking a loan through the Silatech-UNRWA ‘Mubadarati’ fund, Abed now owns and manages his own workshop. Photography by Nabil Darwish

workshop on youth employment outcomes in the Gulf. “The aim of the workshop was to delve deeper into the realities of youth employment in the region and to take stock of what has been done and what has been learned,” continues Kabbani,“The workshop offered an opportunity for nearly twenty academics from across the world to share their most recent research into the youth employment challenge, and for other conference participants, both scholars and practitioners, who attended the workshop to provide their own feedback and insights.” ENTERPRISE ACCESS Microfinance is fundamental as a financial service to entrepreneurs and small business, who mostly lack access to banking due to high transactional costs serving these client categories. Among Silatech’s aims is to ease financing for young entrepreneurs in order to facilitate them to start and grow enterprises. Once Silatech has successfully changed the mind set of financial institutions towards the youth to be seen as viable clients, then they partner with them to create and implement an enterprise support service. Currently Silatech is working with Foundation Banque Populaire for MicoCredit

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(FBPMC), and Al Barid Bank in Morocco to create and launch the Bodour youth loan product, meaning “seed” in Arabic. It will be a youth loan that will open access to financing young entrepreneurs in the country. “Morocco is the second largest microfinance market in the MENA after Egypt. Their conducive policy environment and the presence of strong and capable financial partners are eager to target the youth sector,” says Sykes, “this made it an obvious choice to explore programme opportunities.” Both partnerships are in their design phase with staff training, product design and youth focus groups testing still underway. It is expected that both partners will unveil their youth focused products by the end of 2012. Another loan initiative is the Mubadarati loan programme in

partnership with the United Nations Relief and Works Agency (UNRWA) for young Palestinian entrepreneurs in the Levant region. “The Mubadarati loan programme is currently in its pilot phase,” says Sykes, “with approximately 30 youth run start up businesses fully funded since its launch in summer 2012.” Sykes explains that there are certainly unique problems those young entrepreneurs in Palestine face due to the political insecurity, limited mobility, security closures, and difficulties in importing and exporting goods, as well as limited purchasing power in the economy. However, despite these challenges, he continues, “The youth are proving that with access to this unique start-up loan product that they are managing to start and grow viable

Continued on page 68.

Silatech’s aim is to ease financing for young entrepreneurs in order to facilitate them to start and grow enterprises.

IN THE SPOTLIGHT

1.6

the percentage of Internet penetration in nonGCC Arab countries

MOBILE EMPLOYABILITY FOR ARAB YOUTH An innovative platform service Silatech is currently working on is to provide mobile employability services to the Tunisian youth. According to Jo Aggarwal, director of access to skills and employment of Silatech there is a 75 percent mobile penetration in non-Gulf Cooperation Council (GCC) countries and only 1.6 percent Internet penetration, meaning that mobile remains as the sole access for most of the region’s youth. “Tunisiana, our partners in Tunisia received an overwhelming response for their mobile English language practice service launched earlier this year,” says Aggarwal, “with more than 500,000 subscribers. Young Arabs today live on their mobile, so if we want to reach them we need to develop services on this platform.” Aggarwal explains that the mobile platform will be able to offer the rural youth personalised connections to job opportunities, training and microenterprise support. In addition to ensure that grant funded projects implemented with local partners disburse funds efficiently and inclusively. “We are hoping to launch this service in the end of 2012 as a part of a larger strategic initiative that uses appropriate technology to bridge the opportunity divide for the marginalised youth,” adds Aggarwal.

WHAT IS KIVA?

Partnerships with socially conscious fund managers like TunInvest allow Silatech to invest in sustainable, high quality jobs. With funding from TunInvest, the Clinique Internationale Hannibale (CIH) has created around 400 jobs, provides a model for paramedical employment, and offers health services for the region. Photography by Aziz Tnani

Unemployment rates among young nationals in the Gulf region exceed 35 percent, which Silatech seeks to change.

• Kiva teams up with field partners from a range of entities, including microfinance organisations (MFIs), social businesses, schools and non-profit organisations. • These field partners disburse loans as soon as they are needed. The field partner also collects borrower stories, pictures and loan details, uploading them to Kiva.org. • Lenders browse loan requests and select which ones they would like to fund. They can lend as little as US$25 (QR91) or the entire amount of the loan. • Kiva disburses lenders’ funds to the field partner who uses the funds to replenish the loan they have already made to the borrower. • The field partner collects repayments from Kiva borrowers as well as any interest due and lets Kiva know if a repayment was not made as scheduled. • Kiva provides repayments to lenders and if there is already money in the field partner’s account, or once their payment is received, Kiva uses these funds to credit the lenders with their loan repayments. • Lenders can re-lend their funds to another borrower, donate their funds to Kiva (to cover operational expenses), or withdraw their funds via PayPal. Source: www.kiva.org TheEDGE

Business Interview

MASTER OF

RESEARCH How Dr. Dirar Khoury is helping to manage Qatar Foundations’ research and development goals ahead of the organisation’s Annual Research Forum in October

Dr. Dirar Khoury is director of institutional research and acting executive director of the Research Division at Qatar Foundation (QF) for Education, Science, and Community Development, and programme chair of Qatar Foundation Annual Research Forum (ARF), which takes place in Doha in late October. TheEDGE spoke to Dr. Khoury to discuss the agenda of the ARF, at which the Qatar National Research Strategy 2012 is due to be released, and the topic of research and development in Qatar in general. You have been involved in research in both the health and technology sectors and have also registered some patents in the

United States? I was a scientist. My background is biochemical engineering, focused on cardiovascular research. The patents I have are related to developing new heart catheters for detecting an abnormal heartbeat, as well as imaging the heart from the inside of the body. I have been in Doha about four years, working with the management at Qatar Foundation’s research divisions. Now I am wearing a different hat, but it helps a lot that I have done research and been involved in science and understand what it is all about, and I am able to field and address the needs of our researchers and stakeholders.

to help achieve their goals?

Absolutely, I work in overseeing our research and development entities, and that includes the Qatar Biomedical Research Institute, the Computing Research Institute and the Qatar Energy and Environment Research Institute, in addition to the Qatar National Research Fund and the Qatar Science and Technology Park (QSTP). We help provide them with support in strategic planning and evaluation and issues related to operations, such as human resources or finance and communications, as well as issues relating directly to research. What is the history and main purpose of the QF ARF? Research has been growing in Qatar, and it was Her Highness’s [Sheikha Moza bint Nasser, chairperson of Qatar Foundation]

recommendation back in 2010 to form the ARF to help celebrate the accomplishments by both established and young scientists, as well as by students conducting research in Qatar. And to bring the various stakeholders, whether they be scientists, universities, research centres, companies, policy makers all under one roof to help foster the exchange of networking amongst them, as well as bring out further opportunities for collaborations both at the local and international level, but also by inviting key international participants in the forum. Research is catered for in the 2030 National Vision. How important is involving international partners? First and foremost this event will feature the launch of Qatar National Research Strategy 2012, which is a major national work that was spearheaded by our president

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Business Interview

Faisal Al Suwaidi when he came into office in January. By bringing all the main stakeholders in Qatar together, those who participate in research in one way or another – whether actively or as policy makers – and bring in an alignment among them in terms of strategic direction. That was a very critical step inasmuch as now the stakeholders feel a sense of ownership of this strategy, which is a wonderful thing because the whole country is in tune with the strategic research initiatives. That is at the local level, but also several of the strategic objectives are international in nature, whether it is the recruitment of the international research capacity or collaboration in specific areas of research. So the forum really fosters both the national interest and the international collaboration. the Qatar National Research Strategy

2012 will be unveiled at October’s ARF. Is

this a new document or a progression from

previous incarnations?

It is new in the sense that all of the stakeholders in Qatar are coming together with a comprehensive engagement and endorsement. It spells out the priorities for Qatar, what the country should be focusing on, what it should be spending money on, which is an important step rather than trying to pursue a long list of opportunities. How involved were all the key local stakeholders? That is the strength of this initiative, they were all very much involved from day one. Universities, branch campuses in Education City, Qatar Foundation centres and institutes, industry, ministries and leadership participated in a series of workshops in an analytical manner to get to a consensus that was generated for 74 strategic objectives. What are the top priorities? The priorities are under four pillars: Health and Biomedicine, Energy and Environment, Computing and Information Technology, and the fourth pillar is Humanities, Social Sciences and Arts. We cannot do everything under these four pillars, so we focus on specific tasks to be pursued, for example when we talk about Health and Biomedicine the strategy will focus

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“It is amazing for a country to have a strategy at the national level that addresses a national vision. It shows you the alignment between the leadership and stakeholders to the people on the street.” on issues that are a priority to Qatar, such as diabetes and cardiovascular disease. Of course in energy oil and gas are low hanging fruit but also we will be putting focus on alternative kinds of energy, solar being the most obvious. Under computing we will be focusing on issues that are a priorities, such as Arabic language technologies and social computing. In the social sciences we are addressing very high powered subjects such as the transformation of the Qatari culture with the evolution of the country and social issues related to that. Would you say this strategy now really puts Qatar in the front if not in the lead of research, this way of thinking, in the Arab world? Absolutely. I think it is amazing for a country to have a strategy at the national level that addresses a national vision. It shows you the alignment between the leadership and stakeholders to the people on the street. We wrote the strategy and the vision so that the layman can appreciate it.

and of priority to Qatar. Number two, we have to have the human capacity in the immediate present or in the short term that will be able to conduct the research. And number three, that the research has to be of high quality for us to implement. Then we can activate various programmes to support the research’s strategic objectives. In principle many of our strategic objectives will be funded through the Qatar National Research Fund. We are also looking at perhaps enacting new mechanisms that would support industry-based initiatives, as well as initiatives that would address specific priorities, all in the hope that we have an alignment with our national strategy.

academia, the public sector or the private

Can you list anything in recent years that have occurred at Qatar Foundation that might exemplify the new strategy? For example, our Qatar Computer Research Institute has been striking important partnerships and conducting initiatives in social media, in for example a collaboration with Al Jazeera. Many other examples are also taking place at QSTP, such as Rasad, which is being implemented in Rome. Rasad is an ICT platform developed and owned by QSTP and Aspetar. It enables real time remote monitoring using wireless sensors, and is the first technology developed in Qatar outside the energy sector to be commercialised and exported. We have several successful stories of companies that are now beginning to showcase their products.

Let me first emphasise that there are three criteria for us to pursue a certain research topic. Number one, the research has to be important

But research is not only about new inventions, but also other kinds of knowledge?

It also means that instead of having all these fields and streams working independently

in a silo or vacuum mentality, they are now aware of what others are doing?

There is cross-fertilisation in interdisciplinary research. Absolutely that is also an important component of the strategy. how is the research done? Is it driven by sector?

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Research is not always about the pure science, such as in computing, energy and health. In fact the social science and the humanities are very important. We have had some activities to study the way people lived in the past here in Qatar and the region, to learn how they were able to sustain their living and take some clues as an example of how we can make our modern cities more sustainable, in the way you build the buildings and the way you orient the buildings, the streets, everything. What is the private sectorâ&#x20AC;&#x2122;s involvement in the various kinds of research done in terms of actually commercialising discoveries or patents?

In fact this is why the Qatar Foundation set up the new office of the President for Research and Development, so as to foster this communication, not just within the Qatar Foundation, but also among all the research and development entities in Qatar. To help in exchange of the outputs, for example, one of the strategic objectives is to develop a repository that will house all the science and technology outputs. And that repository is being developed in close co-ordination with the Qatar Statistics Authority, which in turn will be the mouthpiece for the country with the United Nations and the rest of the world, to demonstrate our results and outcomes.

And you do not want researchers to pursue short term profits when there are many other very important avenues to be

followed?

We foster innovation not just purely for money, but mainly for the development of the country and diversifying the economy. What specific outcomes do you expect at the 2012 QF ARF, what does the event hope to achieve now there is this kind of output, and how might this benefit Qatar moving forward? There are several objectives, number one is to start discussing the implementation of the national strategy in a co-ordinated and cohesive way. One thing we did not mention is that we are inviting about 100 of the Arab expatriate scientists from outside Qatar. This is for various reasons, of which one is perhaps to try and reverse the brain drain and then maybe entice some of them to work with us in Qatar.

And if they would like to stay in their home institutions, we would like to encourage them to collaborate with Qatar at the international level. These are very senior people who will also participate in various workshops of the forum and in different capacities. So solidarity among Arab researchers is also to be a focus of the forum and in fact is represented in an official organisation?

Yes. You have the Arab Expatriate Scientist Network. All the credit goes to Her Highness Sheikha Moza bint Nasser in fact, she started this initiative in 2005 when she invited several Arab scientists to a conference here in Doha, to start discussing initiatives that are pertinent to Qatar and that is how the design and the launch of the Qatar National Research Institutes came about, which is also now lead by Arab expatriate scientists.

The Qatar Foundation Annual Research Forum will take place from October 21 to 23, 2012.

How do discoveries and inventions transfer

through to the private sector?

This is precisely why we have the QSTP, this is where we build the infrastructure to help incubate new companies, by bringing the ideas from the basic and translational research partners in Education City into the technology development and the commercialisation phase. So it is a continuum of stakeholders working together. Would any revenue find its way back upstream to the researchers? Absolutely, so the research labs can be sustained and self-sufficient. However we have to be careful that universities and research centres do not profit or get rich from patents. What is more important is dividends in terms of know-how, new ideas, new training and development of innovators.

The research done by academics and students at the various campuses at Qatar Foundationâ&#x20AC;&#x2122;s Education City are but one of many components covered in the Qatar National Research Strategy 2012, which will be released at the foundationâ&#x20AC;&#x2122;s Annual Research Forum in Doha in late October. (Image Corbis)

TheEDGE

COVER STORY

THE STORY OF

THE SHARD IS THE QATARI-BACKED SHARD BUILDING IN LONDON AN ICON or an EYESORE?

As Qatar’s investments have grown larger, so has the controversy surrounding some of its actions. And with its largest investment to date – at least in reputational terms – Doha must once again tread a fine line between diversifying wealth and maintaining relations. Jamie Stewart reports

COVER STORY

n early July, on the south bank of the river Thames in the United Kingdom (UK), construction was officially completed on the exterior of Western Europe’s tallest building: The Shard, a 310 metre, 95-storey, mixed-use skyscraper that has transformed the south-eastern corner of Central London, in an area that had long stood in the shadows of the city’s financial district on the north bank of the river – to the extent that those at the top of The Shard can now look down across the river on its contemporaries. Yet the towering monument to what can be achieved in the middle of a financial and economic crisis, would not have got off the ground were it not for some wealthy backers 3000 miles away in Doha, Qatar. “The Shard will be one of the tallest buildings in Western Europe. For me however, the height of The Shard is only secondary,” Qatar Central Bank governor HE Sheikh Abdullah bin Saud Al Thani said at the building’s inauguration. “What is special is the solid and continuing relationship between two nations – Qatar and Britain – which has been an important factor in completing this project.” Today, the state of Qatar is the economic driving force at the top of The Shard, a force that can now look down across the city of London. And the purchase bears all the hallmarks of the brave new Qatar: a financially solid investment with some guarantee of healthy returns, while simultaneously raising the profile of the country on the global stage. “The Shard has already become an important symbol for London, a symbol of our close relationship, rooted in the foundations of economic growth, social development and mutual trust and goodwill,” Al Thani said. But not all agree. COURTING CONTROVERSY Ever since its design was first unveiled, The Shard has been an object of disagreement. At the planning phase, English Heritage, the body responsible for protecting historic sites across England, slammed the design of the building, and in particular, the manner with which it intruded upon views of

To some Londoners, The Shard is incongruous. It shoots skyward in an area where old juxtaposes new, at odds with its neighbouring buildings. Others love it.

At the inauguration of the London building in July, Qatar Central Bank governor HE Sheikh Abdullah bin Saud Al Thani lauded how The Shard represented the best of the relationship between the United Kingdom and Qatar. (Image Corbis/Reuters)

TheEDGE

COVER STORY

The old and the new: Wherever Londoners sit on the ‘hate it or rate it’ spectrum there is no doubt the The Shard has altered the UK capital’s skyline forever. (Image Corbis)

both the Tower of London – a world heritage site – and Saint Paul’s Cathedral. London-based art critic Jonathan Jones said of the tower: “This is an architectural catastrophe for London. Forget what this ethereal spike would look like in a city of towers, a financial district already soaring. Stabbed into the historic fabric of a city that has never built especially tall...it seems a lunatic attack on London.” To some, the tower is incongruous. It shoots skyward in an area where old juxtaposes new in the architectural sense, but in a manner that unleashes a new scale of development, one completely at odds with its neighbouring buildings. Others love it. Quoted in London’s The Guardian recently, architect Piano rationalised and defended his creation against its many critics, saying the building simply had to be located where it is. “This building is not made with the intention to be aggressive or powerful,” Piano told the London-based newspaper. “This building is telling a completely different

TheEDGE

story. It is celebrating a shift – in the idea that growth in a city should not happen by building more and more on the periphery… Would you expect hostility? Of course. You have to accept as an architect to be exposed to criticism. Architecture should not rely on full harmony. If everyone is agreeing, then you made a big mistake.” For Qatar, interestingly, the controversy also puts the tower in the same light as another London property development, and one that also involved a major Qatari investment – the Chelsea Barracks site – illustrating the tightrope of sensitivities that Qatar must tread as it spreads its wealth around established cities. Five years ago, Qatari Diar, the property arm of Doha’s sovereign wealth fund the Qatar Investment Authority, purchased London’s Chelsea Barracks site for QR5.6 billion. Qatari Diar put forward a planning application to construct 552 flats across 17 blocks on the site, but the plan met with fierce opposition – from none other than

Prince Charles, heir to the British throne. Prince Charles, long a traditionalist in the architectural sense, labelled the contemporary design “brutalist”. But the Prince’s intervention itself became a source of controversy, as the post-modern architectural community gathered its tanks on Prince Charles’ well-manicured lawn, branding him a “meddling Prince”. Qatari Diar had gone to some trouble before hand to pre-empt any objection from the Prince. E-mails released by the UK court that looked into the application withdrawal “show that the Qatari royal family was concerned as much, if not more, about the Gulf state’s reputation as about profit on its development projects,” according to reports. For Qatar, global investment would appear to be more a case of reputation enhancement, than a case of profit. THE BACK STORY But to full tell the story of The Shard, we must divert to where it all began 12 years ago, way prior to Qatari involvement in the project.

COVER STORY

“This iconic, sparkling new addition to the capital’s skyline will act as a huge commercial magnet, pulling in scores of new businesses.” – Boris Johnson, mayor of London. Billion Qatari riyal view: London mayor and The Shard architect Enzo Piano check out the London skyline from on high in The Shard. (Image Corbis)

Legend has it, Italian architect Enzo Piano sketched the outline of an iceberg-like structure on the back of a menu during a lunch meeting with UK-based property developer Irvine Sellar, chairman of the Sellar Property Group and the man who undertook to redevelop the London Bridge area of the city. Despite heavy opposition from numerous groups, the UK government granted planning permission to the Sellar Property Group in 2002 citing, much to the chagrin of many of the development’s opponents – and its architectural critics were many – to the “exceptional design” of the building. However, there was one factor that no property developer could have hoped to plan for looming on the horizon – the 2007/8 credit crunch, and resulting financial and economic crises. The convergence of construction and dual-crises could not have been more unfortunate for the Sellar Property Group, but all was not lost. Like many across the West at that time, Sellar turned to the recession-proof economy of Qatar in a bid to get his project, quite literally, off the ground. It was December 2007 when Irvine Sellar announced to the world that his flagship project had been saved by the hydrocarbon riyals of Qatar. A consortium of three Dohabased banks – Qatar National Bank, Qatari Islamic Bank and QInvest, alongside Qatar property giant Barwa – each purchased 20 percent of LBD. Today, The Shard is owned by LBQ (London Bridge Quarter) Limited, a body made up of the State Continued on page 68.

TO RENT… IF YOU CAN AFFORD Qatar’s investment in The Shard, a mixed-use development boasting office space, a hotel, restaurants and high-end residences, though primarily one of reputation building, is also about cold, hard cash. The state has a responsibility to its citizens to ensure money is spent in a manner that will guarantee returns as Doha aims to diversify its economy over the long term. And already, the huge amount of capital that was injected into The Shard looks like it could generate financial returns as well as reputational ones. According to commercial real estate consultancy Jones Lang Laselle, London is today the most expensive city in the world for renting prime office space, at almost QR6200 per square metre per year. At 2,926 square metres, the largest floor in The Shard could in theory command rental income of more than QR18 million on an annual basis. A second real estate consultancy, CBRE, backs this assessment “London’s strategic and geographic advantages to Europe have helped the market command high rents. The limited supply of large and new product will continue to support rents,” the company says in its most recent study of the office rental market. In addition, London is pulling in more than its fair share of foreign investment – from the Middle East, among other regions – into real estate, ensuring a comparatively buoyant economy, Jones Lang Laselle says: “Favoured destinations among Asian investors included New York, Miami Beach and London, while Middle Eastern investors acquired in Chicago, Budapest, Dublin and London,” the group says in its Global Market Perspective report into the third quarter of this year. “Asian investors seem particularly cautious about the Eurozone, and therefore only concentrated on London; Middle Eastern investors generally seem more comfortable, and continued their strong focus on several other cities in Europe, especially Paris and Geneva,” the study adds.

QR18 MILLION The annual rental income the

largest office space in The Shard could theoretically command.

The UK’s Prince Andrew, the prime minister of Qatar HE Sheikh Hamid bin Jassim bin Jabr Al Thani and property developer Irvine Sellar at the official opening of The Shard in July 2012. (Image Corbis/Reuters)

TheEDGE

on the pulse

ARE ROBOTS THE FUTURE OF

HEALTHCARE?

Dr. Abdulla Al Ansari is chairman of surgery at Hamad Medical Corporation and clinical director of the Qatar Robotics Surgery Centre.

ON ThE pUlSE

In a utopian science fiction future, human beings are a blend of man and machine that will not require the delicate care our bodies do today. While that might be a far ways away, some of the healthcare problems facing humans are solved today by machines that function like humans. Shehan mashood talks to surgeon Dr. Abdulla Al Ansari about Qatar’s role in the field of robot-assisted surgery and asks if they can really be the future of healthcare.

ealthcare challenges that people living in the 21st century have to confront will be numerous. Rises in cases of heart disease, cancer, strokes and diabetes are only a few of the most prevalent, exacerbated by a large ageing population that will also require access to healthcare for injury related issues and degenerative diseases such as Alzheimer’s. Qatar is not immune to these global trends in healthcare. According to a World Health Organisation (WHO) report from May of 2012 obesity in the country is considerably higher than global and regional averages. There is a definite concern and a significant commitment in line with the country’s National Vision 2030, under the branch of human development, to develop quality healthcare in the country. The same WHO report shows while regional per capita expenditure on health is around QR364, Qatar spends around QR5460 per capita. Ballooning healthcare costs for governments and patients, and great divides in the quality of healthcare one can be exposed to depending on where you live, could mean the difference between life and death, a sad reality for many around the globe. One positive however is that robotics technology could be the solution to some of these problems. At a car assembly plant today almost all work is automated, robotic arms work tirelessly to shape, weld and bolt all the parts that make up the final product that rolls off the assembly line, all done with a certain level of autonomy on the part of the robot with minimal human interference. The automated assembly line was the great gift to all manufacturing industry, being able to produce a result quicker and

Dr. Abdulla Al Ansari demonstrates the da Vinci Surgical System, his movements are replicated by the robotic arms to perform a suture.

cheaper, all while maintaining certain standards, and has been able to sustain global consumerism needs. The question now becomes, can robotics technology meet the growing demands of the healthcare industry and are there innovative solutions currently being developed? The prevalent application of robotics in healthcare today is in the field of minimally

invasive surgery. First approved in the United States (US) in early 2000, the da Vinci Surgical System (see box out) right now has a monopoly in the robotics surgery market. Hamad Medical Corporation (HMC), Qatar’s leading government healthcare provider has many of these robots and uses them to perform a range of surgeries. TheEDGE

ON ThE pUlSE

Leading this drive to integrate robotics into the healthcare system is a Qatari, Dr. Abdullah Al Ansari, chairman of surgery at HMC. He informs TheEDGE that “more than a 150 patients underwent different surgeries in HMC performed with the aid of the robot, among them being heart bypass, urology, general and paediatric and even ear, nose and throat (ENT) surgeries.” According to Dr. Ansari when it comes to radical prostate surgery and cancer removal the da Vinci surgical system is used for around 70 to 80 percent of surgeries in the US. The main advantage being an ability to perform a customarily complicated procedure with ease, thanks to robotics. “The pelvic bones are narrow and fixed so it is like working in a small cabinet,” says Dr. Ansari, “when working with your hands sometimes it is difficult to see things so you use feeling, the robotic arm provides freedom of movement and precision to work quickly.” The benefits to surgeons in using the surgical robot over traditional approaches are numerous. The robotic arms only moves when a direction is applied, removing the occurrence of tremors during surgeries. An increased range of motion, up to seven different directional movements can be made to the robotic arms improving dexterity and access, all advantages to surgeons working in delicate and tight places. Enhanced visualisation is also a key factor, like the robotic arms that move the surgical instruments, the camera can be moved. “If I am looking at something that is hidden, I can move my field of vision without having to move myself or the patient,” points out Dr. Ansari. “I can create a different perspective. In real life this is difficult, the camera can take you to edges or corners that you could never reach in the past,” he adds. While the system aids surgeons, there are definite benefits for patients too. Surgeries such as a coronary heart bypass surgery require large incisions that destroy skin and muscle on the way to the organ, but now three small incisions of around 1.5 centimetres between the ribs is all that is required. Patients can be up and about in one to two days after surgery. This is a significant advantage to hospitals in certain countries says Dr. Ansari, “People don’t

TheEDGE

A robot-assisted surgical operating theatre at the Hamad General Hospital.

feel it here because it’s free but a night’s stay in the hospital ward can be as much as QR4000 to QR5000. A lot of developing countries don’t have an understanding of bed costs in government hospitals or they would be investing in high technology for increased patient recovery time.” hOw SaFe IS IT? The current system is however not without its detractors. While there are legitimate concerns as to the effectiveness of robotics over traditional methods, Dr. Ansari, a strong proponent for the implementation of robotics tools in surgery alludes to the “people who either don’t know how to use robotics tools or do not have access to a robotic surgical system yet, discourage patients from certain types of procedures in an attempt to alter the market towards services they can offer.” The ability to play on the fears of patients can be a serious factor when it comes to presenting patients with surgical options. Speaking from experience Dr. Ansari says there is a tendency for some to think “you are experimenting on them. These are their words, not mine. They don’t understand that this is equipment and not a drug trial. I have

to explain that I am using more advanced tools to perform their operation.” Surgical robots are also an expensive investment. Professor Lord Darzi is head of the division of surgery at Imperial College London where he specialises in the field of robot assisted surgery and also sits on the Supreme Health Council (SHC) of Qatar. He tells TheEDGE that robot assisted surgery will only become affordable to a degree “It depends on how you cost a procedure,” he explains. “If the robot is saving time or if it is reducing trauma of the surgery then there is the likelihood the patient will go home earlier, not just saving hospital costs but also surgeon costs,” adds Lord Darzi. Surgeons need to find unconventional ways of justifying the cost of these devices, the da Vinci surgical system is around US$1.75 million (QR6.4 million) with the disposable instruments costing anywhere from US$1500 (QR 5460) – US$2000 (Q7280) per surgery. “Cost effectiveness is not the reason we employ these tools,” concurs Dr. Ansari. “We buy cutting edge technologies to give the patient the highest quality of care possible. If you work for a private company and you want

“Cost effectiveness is not the reason we buy cutting edge robotic technologies, we do it to give the patient the highest quality of care possible” says Dr. Ansari

ON ThE pUlSE

“Bio-inspired platforms like the robotic snake we are developing could be future” says Professor Lord Darzi. to make a profit then yes, maybe the more operations you do you can drive down the cost and justify it.” Dr. Ansari then explains that not every operation that can be done using a surgical robot should be. “We have about five or six cases everyday, but I don’t use the surgical robot, I can use the natural opening and perform the surgery to provide a better quality for the patient. I think it is unethical to use it when regular surgery can provide a better outcome,” he adds. QUalITY TakeS PReCeDeNT Speaking with doctors in the field of robotic surgery research, it seems the priority of healthcare technology is not to develop cost effective solutions but to create systems that will be able to deliver the best patient care possible. The Qatar Robotic Surgery Centre (QRSC) is a joint initiative of Hamad Medical Corporation and the Qatar Science and Technology Park (QSTP) that was established in 2010, with the directive of being a training institute in robotics and minimally invasive surgery and a research centre for advanced surgical technologies. Since its conception the QRSC has trained more than 250 surgeons in different specialities, and become one of the busiest training centres in the region. Dr. Abdullah Ansari is also the clinical director of the QRSC, and meeting us at the high tech offices in QSTP, which is estimated to cost around US$65 million (QR235 million), outlines their mandate for the research. The three main areas of focus are improvement of instrumentation and preciseness of tools, image-guided navigation, and simulation. One of the disadvantages in the current robots is the lack of feedback, so you cannot tell how hard you are gripping tissue or how hard you are cutting.“With 3D video and the high levels of magnification

in the robot you develop something I like to call ‘visual feeling’ so you can see how much you are cutting,” says Dr. Ansari, “but we are doing a lot of research in this field.” NO aUTONOmY FOR FUTURe ROBOTS A pressing question for most is whether surgical robots can and will perform operations autonomously. Lord Darzi seems to think that this will not happen in surgical practice but will become prevalent in other facets of healthcare like assisted living, and areas of rehab, he however adds the caveat that “you may see some degree of autonomy in surgery in scenarios where you can repeat the same procedure using imaging, so you can practice and record the best practice run and repeat the procedure by playing the tape over and over again.” Dr. Abulaban, surgical training manager at QRSC, questioned the ethics behind having an autonomous robot perform the operation. “What if something went wrong-who would be held accountable? At the end of the day it is a human life that is being put in your hands,” he says. It seems that doctors and researchers in the field of robot-assisted surgery firmly believe that robots for the near future are a tool to better augment surgeries and not a device that can work on its own.

QRSC is involved in numerous joint projects with leading robotic research organisations in the world, that include the Imperial College London’s Lord Darzi (also the chairman of the QRSC International Surgery Panel) and Professor Guang-Zhong Yang. They have been working on ‘flexible access bio-inspired platforms’ like a robotic snake that can enter through natural orifices and perform surgeries. This is the immediate future of what robotics in healthcare will look like. Lord Darzi comments “what we have today (da Vinci surgical robot) is probably equivalent to the first car ever built for the road,” he says “They are big, cumbersome and have their limitations. What we are designing are bio inspired robots that will really take us into a new era of smaller, cheaper robots that will also allow for improved access during keyhole operations.” Robot assisted surgery is a relatively new field with the scope being rather restricted. Dr. Ansari states that with organisations like the QRSC “Qatar can play a leading role in the region and at the world level in this field. Clinical applications are growing very fast and robot-assisted surgery could become the standard to perform certain types of surgeries.” The plan, he went on to say was to develop QRSC in line with the vision of Qatar. “The aim in Qatar is mainly to identify unmet clinical needs, with the ultimate goal of improving the quality of healthcare.” The future of robotics in surgery seems as promising as the human drive to invent new ways of performing surgeries.

The Da VINCI SURGICal SYSTem The da Vinci Surgical System like all medical robots today, operates on a master-slave basis. Unlike the certain level of autonomy robots in other fields are afforded, in the medical field its movements are strictly controlled and only work on mirroring the movements of a qualified surgeon. The system consists of three main components; the surgeon console is where the surgeon sits with his or her head immersed in a viewing area that shows them a high definition 3D image inside the patient’s body, the master controls are operated using fingers as you would do regular surgical instruments, the robotic arms and camera replicates the movements made by the surgeon and finally the ‘vision system’ that renders the video from the camera.

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of Qatar, which is the majority shareholder with 80 percent, and Sellar Property Group, which holds the remaining 20 percent. Additional, non-equity funding was put up by Qatar National Bank. And the investment is already shaping up to be a sound one (see box on page 55). A TOWERING ILLUSTRATION Speaking at the inauguration of the building, Mayor of London Boris Johnson gave a typically glowing appraisal: “The Shard is more than just an amazing feat of engineering,” he said. “It is a towering illustration of London’s determination to beat the recession and spur economic growth.”

Despite the colourful prose, Johnson’s words opened a door on the motivation behind Qatar’s move. For Qatar, The Shard marks one investment in a long line of prestige purchases designed to put the tiny gulf state on the world map. The Shard joins London department store Harrods, legendary car manufacturer Porsche, and a host of luxury brands and high-end developments across the world under the umbrella of Qatari ownership. It is about financial buying power, and such investments, collectively, could one day prove to be worth infinitely more than the price tags attached. The boost to international relations between the two countries is reflected at grass-roots business level, with UK firms eyeing Qatar and the wider Middle East as a swiftly emerging region – one with potential that has perhaps seeped out of markets closer to home, namely across the troubled eurozone. Only last month, the Qatar Luxury Group, a subsidiary of the Qatar Foundation, acquired a 38 percent stake in UK-based luxury goods manufacturer Hindmarch. And as early as the start of September, Hindmarch announced its

intention to open an outlet in Kuwait as early as October, as well as investing elsewhere across the Middle East. The deal may sound small, and Hindmarch may not be on the scale of The Shard when it comes to prestige, but the willingness of the company to invest in Middle East is reflective of the great shift in capital that has taken place since the financial crisis from west to east. And although the flow of investment is to an extent two way – “This iconic, sparkling new addition to the capital’s skyline will act as a huge commercial magnet, pulling in scores of new businesses and offering vital employment opportunities for thousands of people,” as Johnson said of The Shard and the surrounding area – it is Qatar that stands to gain over the long term. Yet financial returns are one thing, but the boost to income that can be garnered through good international relations is another, and in Qatar’s case, the story of The Shard illustrates that the line between the two is growing ever finer.

Awad explains that without access to career guidance programmes, young people lack the self-awareness, exposure, and the labour market information required to make informed career decisions. This leads to a number of employment challenges, including poor decision-making, a gap between youth skills and labour market requirements, and an overall mismatch between individuals and jobs. According to Awad, where guidance services do exist, the service provider suffers from a lack of valid and reliable tools. “The provision of career guidance services in North America and Europe for example generally include the administration of psychometric assessments,” says Awad, “ The feedback from [these] provides key tools in the career decision making process. These scientific tools used to support career guidance in much of the world have not been available in the region until now.”

Silatech has thus developed its Tamheed TM initiative for career guidance in the Arab region. It has partnered with a British assessment company called MindMill to develop a set of tools and resources to support the provision of quality career guidance services for the Arab youth. Tamheed TM includes psychometric assessments, a framework for local institutions to provide career advising services, and a comprehensive training programme for career advisors. “With proper guidance, young people are making career decisions that are based on their own skills and ambitions as well as the labour market realities in their own communities,” concludes Awad.

Continued from page 46

businesses, which both meet the needs of their communities and provide viable livelihoods for them and their families.” CAREER GUIDANCE Silatech also has career guidance programmes in Qatar, Syria, Egypt and Palestine. Dr. Rachel Awad, senior programme manager of Silatech says, “Our career guidance programmes emerged out of growing realisation that career guidance in the Arab world is a fledgling concept, and that the capacity to delivery career guidance services to the region’s youth remains extremely underdeveloped.”

60 56

TheEDGE

FOR REFERENCE www.silatech.com www.kiva.org/arabyouth

KNOWLEDGE & EXPERTISE HUman Resources • LEGAL INSIGHT • BUSINESS management

American Management Ideology (P.66)

Julian Birkinshaw examines whether American hegemony of management thinking and business management will ever be replaced by a more international approach.

ALSO IN THIS SECTION: •

Human Resources: Robert Madronic writes about the importance of customer service and how it seems that the service industry in Qatar has not developed to an international standard. (P.62)

•

Legal Insight: Fouad Haddad and Feras Al Kasab provide an overview of the new Qatari Tourism Law (P.64)

HUMAN RESOURCES

THE CONSUMER IS ALWAYS RIGHT

PART 1: THE IMPORTANCE OF CUSTOMER SERVICE One of the advantages of living in Qatar is a growing variety when it comes to shopping, entertainment and dining. With choices ranging from the inexpensive to the internationally competitive, options abound. Unfortunately, it seems that the quality of customer service has not kept up with other aspects in the development of the Doha consumer market, writes Robert Madronic in the first of a two part series.

nfortunately, conversations about customer service in Qatar tend to take on a familiar pattern. A customer decides to take a chance on a new restaurant based on a highly professional advertising campaign and a fantastic decor. The food is generally very good but service is often notably sub-par and staff sometimes rude. Alternatively a consumer purchases a product that is substandard or damaged, or not what they paid for and is met with indifference in or incompetence when they complain. Or finally, a promised service or delivery is not done properly or on time, and it is impossible to ascertain by phone in or person why, or even when it might take place. With the increasing cost of doing business in Qatar and the ever-growing competition as the market continually opens up, it seems odd that in a seemingly modern, sophisticated business environment such as Doha, that any business would take the risk of ignoring such an important aspect of their marketing efforts.

Whether a firm sells products or completes specific tasks for a customer, almost any business involves some measure of service or person-to-person interaction. Poor service, stories of which abound in Qatar, can range anywhere from slow employees to failure to perform the agreed tasks promptly, to outright hostility from the very staff employed to assist with customer complaints.

39%

The percentage for which firms in Qatar customer engagement is a top concern; third place behind increasing revenue (41%) and improving governance and compliance (50%). Source EMC.

PREPARATION AND TRAINING There are a variety of reasons why customer service can be a challenge for businesses in Qatar, and arguably foremost of these is the varied nature of the countryâ&#x20AC;&#x2122;s population, which leads to customers and staff from different countries, where the ideas of what constitutes good service and levels of service training may differ. Since service is, essentially, the human aspect of the transaction, the often-diverging experience of people from different cultures can lead to unmet expectations and frustration. This is why it is so important for firms to train their staff in globally accepted best practices of service to ensure they meet all the expectations of all their customers, regardless of their origins. Another issue that affects service is that the performance of a service and the consumption of said service often take place simultaneously. This poses a significant problem as mistakes happen in front of the customer, limiting the recovery to apologising

HUMAN RESOURCES

and trying again. When producing a product, you can either repair or dispose of unsatisfactory goods before you send them to the client. Unfortunately, if you make a mistake while cutting someone’s hair, they will know immediately. A related problem is when you are very busy and you do not have enough staff to effectively handle the temporary increase in traffic. Firms need to ensure that dealing with problems serving customers is everyone’s primary task so that even the managers get up from their desks and help out when necessary. It can be very frustrating for a customer to wait in a long line at your store while staff are doing other tasks, such inventory or taking phone calls. Any business owner, even those who run of the most efficient firms, can anticipate problems and the damage control that must follow. Thus one of the most common service failures is a lack of preparation and consistency. Customers expect that your staff, especially those tasked to deal with customer comebacks or complaints, will perform the same way on every visit, and as they are human and from varied backgrounds with different levels of training, this can be difficult. But not impossible The key is to provide training that includes detailed and sensible steps for every process that needs to be completed for every encounter. For example, if you service computers, you must ensure that your staff complete the same steps in the same order each time so that repetition leads to greater efficiency and consistency. When delivering services, the customer is often a participant in the process. For example, at a restaurant, it is common for customers to ask for changes to menu items to personalise their order. They may ask for extra pickles on their sandwich or vegetables instead of fries as a side dish. This is the type of situation where your employees must ensure that they make the necessary modifications when ordering the food, and checking to ensure the changes were made before taking the food out to the customer. Again, avoiding this type of service failure necessitates strong employee training. Finally, your staff attitudes are one of your most valuable tools in creating good customer

There are many reasons why customer service can be a challenge for businesses in Qatar, and foremost of these is the varied nature of the country’s population. service, so it naturally pays to pay and treat them well, and conduct exercises in promoting morale. A simple smile or kind word can work wonders to create a positive attitude and ensure repeat business. Unfortunately, apathetic staff with poor attitudes – which usually emanate from poor treatment by employers – can just as easily lead to the perception of poor service, destroying a business’s reputation. the CUSTOMER COMES FIRST Anyone exposed to marketing has heard that it costs many times more to get a new customer than it does to keep an existing customer, and all times they must come first. A new customer has to be attracted through advertising, public relations and sales efforts to create awareness, interest and desire in their minds. These activities cost money, and in Qatar the costs of marketing continue to climb while it is becoming increasingly difficult to directly target and monetise specific market segments. Some firms, especially those operating in a low-competition niche or with high profits at present may not consider this a priority in Qatar, but no company is immune to the bad word of mouth – and increasingly, Internet based–publicity bad service can generate. If you offer good service, you build trust and a stronger relationship with your customers, ensuring that they will return and perhaps bring others with them. Indeed, while it is much easier to keep existing customers, for a business to grow it must also attract new ones. Good service helps to attract new business through positive word of mouth. Potential new customers are more likely to take a chance on an unfamiliar

business if they have heard positive reviews about the service from a reliable source, such as friends or other people like them. Customers are also likely to check online review sites to see if others have enjoyed their experiences with a firm. The drawback is that a poor service encounter is much more likely to be publicised. Remember that customers can be a free source of advertising if you treat them well. Another reason businesses should focus on high quality service is that it is consistent with a higher price point in the minds of consumers. If you offer consistent, superior service you can charge a premium, which your clients will happily pay. Think about the differences between the price and service at a fast food restaurant and those of a hotel restaurant. The price at a hotel is significantly higher, so the expectation is that the service will be as well. This is why so many people in Qatar will buy higher priced brand name items from well-established businesses, because they know these firms can be trusted to provide the good service they deserve and are willing to pay for. Service is the part of your business that connects with people and so it is vitally important that you take steps to ensure that both you and your staff make it a priority. As explained, good service will lead to more business and higher profits and generally does not involve any extra investment, a smile costs the same as a frown. Remember, good service does not cost a business anything, but bad service can cost a reputation and countless customers.

Robert Madronic is marketing instructor and corporate training facilitator at College of the North Atlantic-Qatar. TheEDGE

LEGAL INSIGHT

An Overview of the New Qatari Tourism Law By Fouad Haddad and Feras Alkasab

n August 7, 2012, Qatar passed a new Tourism Law No. 6 of 2012 (the Tourism Law) superseding Law No. 7 of 1982, which was limited to regulating travel and tourism agencies. The new law covers the hospitality industry, including hotels and resorts, as well as tourism facilities, tourism activities and tourist guides. In part, the Tourism Law requires all hotels to be licensed by the Qatar Tourism Authority (QTA) and the Ministry of Business and Trade, and imposes a classification regime for hotels based on the facilities and services they provide to be evaluated every January. Hotels will be licensed for three-year period while tourism facilities will receive one-year licences. The law also provides for a new profession of â&#x20AC;&#x2DC;Tourist Guideâ&#x20AC;&#x2122; and imposes a one-year licence requirement on the profession. Fines for violating the law could reach QR100,000 for unlicensed tourism facilities

or activities. Implementing by-laws and/or executive regulations are to be proposed by the head of the QTA. Until such time, the existing by-laws remain in force. Defining Hospitality categories The new Tourism Law defines and regulates different categories of hospitality installations and activities. The first is the Hotel Installations category, which is defined to include hotels, tourist resorts, hotel apartments, tourist camps, floating hotels and tourist cruise liners. The Tourism Installations category includes entertainment installations and clubs, in addition to offices providing tourist services and transportation, tourist guides and timeshare services. On the other hand, the Tourism Activities category covers tourist transportation activities and related specialised tourist transportation methods (including by land and sea) and tourist guides.

Licensing requirements The Tourism Law prohibits the unlicensed construction of any hotel or tourist installation or practice of any tourism activity. The required licensing is handled by the QTA, which is tasked with evaluating and ruling on licence applications within 30 days of application. Following a temporary provisional licence, a non-provisional licence is issued for three years in the case of Hotel Installations and one year for Tourism Installations and Activities. The licence can be renewed for one or more periods of the same duration with licence fees to be set by the Ministry of Business and Trade. Article (7) of the Tourism Law notes that the Minister of Business and Trade has the discretion and authourity to suspend the issuance of new licences for periods of up to six months with additional six-month suspension periods being subject to the approval of the Counsel of Ministers.

LEGAL INSIGHT

The Tourism Law has introduced for the first time provisions covering licensing and regulation of the tourist guide profession. obligated to provide the QTA with copies of any agreements with other hotel and tourism installations within or outside Qatar. A number of other obligations relating to prominent display of licence certificate and price schedules (in Arabic and English) in addition to accurate bookkeeping are also required under the law. Classification of Hotels and Tourism Facilities Under the new law, hotels and tourism installations will be classified into different grades based on a classification guide to be issued by the QTA President. Each installation must prominently display the grade it has been given. Reclassification requests can be made to the QTA each January.

Licensee Obligations The Tourism Law sets out a number of obligations with which a licensee must comply. For example, a licensee may not make any changes to the licensed facilities or installations without QTA approval. Additionally, a licensee may not make any changes to a licensed installation’s trade name, ownership or management without first notifying the QTA. Other licensee obligations include providing customers with line item bills, taking necessary environmental protection measures and obtaining any required licences from other government entitles with respect to on-premises activities. Notably, the law requires licensees to provide the QTA with their tourism marketing and promotional programmes and related implementation details no less than 15 days prior to the publication of such programmes (the programme details are to be kept confidential by the QTA). Licensees are also

Tourist Guides The Tourism Law introduced for the first time, provisions covering the licensing and regulation of the tourist guide profession. The new law requires all tourist guides to be licensed with the licensing procedures, terms and requirements to be set out by the QTA. Initial and renewal licence fees together with tourist guide salaries and the number of licences to be issued per tourist area are to be set by the Minister of Business and Trade. Penalties An issued licence may be suspended for a number of reasons including any of the following: • Failure to conduct the licensed activity for a continuous six month period. • Operating outside the scope of the issued licence. • Failure to meet one of the licence conditions. • The total or partial destruction of the building housing the installation.

• Relocating the installation without notifying the QTA. • Final court order closing the installation. As noted above, in addition to closure of the offending installation, the penalties for violating the provisions of this law include imprisonment of up to one year, a fine of up to QR100,000 or both. QTA decisions may be appealed to the QTA President within 30 days of receiving such decisions, with the President ruling on the appeal within 15 days of filing. The QTA President’s decision is final. The new Tourism Law marks a significant addition to the existing laws and regulations covering tourism with specific licensing and classification requirements that the tourism industry will need to take into consideration. Current reports indicate that implementation of the Tourism Law will begin during the second quarter of 2013. Existing hotel and tourism installations will have six months from the implementation date to comply with the provisions of this law.

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 used as such. Should you have any questions in connection with this article or the legal issues it covers, please contact Fouad Haddad or Feras Alkasab of Clyde & Co LLP at fouad.haddad@clydeco.com.qa or feras.alkasab@clydeco.com.qa. TheEDGE

BUSINESS MANAGEMENT

Management Ideology The last bastion of American hegemony?

BUSINESS MANAGEMENT

Here is a tricky question: How many living management gurus did not learn their trade in North America? The London Business School’s Julian Birkinshaw, who has presented this condundrum to many of his esteemed international colleagues, writes that it is not easy to come up with a list of top experts who are not American, and examines whether American hegemony of management thinking – the fundamentals of the profession of business management – will ever be replaced by a more global approach.

n the years following the Second World War, the United States (US) dominated the global business world completely – it was the major source of capital, the home of advanced manufacturing, and the source of most major technological developments. It provided the best quality management education, and it was the source of all the latest management thinking. Today, we live in a more complex, more plural world. The US is now the world’s largest debtor nation, and the biggest sources of capital are the large Sovereign Wealth Funds of the Middle East, Russia and China. Leadership in advanced manufacturing is spread across such countries as Japan, Korea, Germany and US. Technological innovation is dispersed across the world, in countries like India, China, Singapore, Israel, Sweden and the United Kingdom, as well as North America. Top-quality business schools exist in every major market. In short, the rest of the world has caught up. North America no longer holds a clear advantage in any of these fields of accomplishment it used to lead. With one exception: management ideology. But what is meant by management ideology? It is the basic frameworks and assumptions we use to talk about the practice and profession

of management – our underlying beliefs about what management is trying to achieve, and how it goes about achieving it. There is a management ideology in existence today that took shape 100 years ago, primarily through the ideas and practices of US-based management thinkers, and which continues to dominate the way we think about management. Its key features are: • Setting and delivering of objectives according to the demands of shareholders. • Coordination of effort and activities through professional bureaucracy. • An emphasis on efficiency and productivity as the key measures of success. Of course this ideology is not without its detractors. There is an ongoing debate (among academics) about each one of these principles, and there have been periodic challenges to this way of thinking from other parts of the world (for example the Japanese quality movement in the 1960s, and the European Quality of Working Life movement of the 1970s). But the point is, this ideology is the mainstream – it is the primary way of thinking about, teaching, and executing management. For those studying management, or applying its methods, any nuances to the debate are entirely lost.

It is no surprise that American companies score best on the measures of success that they developed.

THE LAST BASTION This management ideology, with its North American roots, endures primarily because there is no viable alternative. Consider a few basic facts. At London Business School, one of the most prominent business schools outside North America, more than 90 percent of the faculty gained their PhDs in North America. The same is essentially true at Insead (France), IESE (Barcelona), the Indian School of Business (Hyderabad), and CEIBS (Shanghai). The top management journals, from Fortune to Harvard Business Review to Administrative Science Quarterly, are all based in North America. The top management consultancies, from McKinsey to BCG, Bain and Booz Allen, all have deep American roots. One consequence of this dominance is that other perspectives get suppressed. There are strong traditions of management writing in both the French and German languages, but they are being marginalised. The up-and-coming scholars in continental Europe are increasingly writing for English-language journals, and large French and German companies are increasingly bringing in North-American trained consultants and academics to advise them. As for the developing world, there is no better way of proving that you are an ambitious, progressive company, than by hiring ‘professional’ managers and advisors that cut their teeth in the North American system: look at Ambev (Brazil), Infosys (India), Huawei (China), DTEK (Ukraine) or Korea Telecom. The entire business world is seemingly in thrall to the dominant American ideology of management. Arguably, America may have lost its lead in other areas of business, but it still holds sway in this one, vital area. TheEDGE

BUSINESS mANAGEmENT

But is the reason everyone wants to adopt the American model, because the American model is better? Well, there is some truth to this argument. An influential set of studies on cross-national management practices conducted by Stanford Professor Nick Bloom and colleagues sought to get to the bottom of things. These studies showed, essentially, that American firms outperformed all others. “Why American Management Rules the World” was the headline on their blog post from June 2011. (blogs.hbr.org) There are two responses s to this argument. First, the methodology used by Bloom and colleagues, while painstaking and rigorous in its execution, was itself a product of the ideology described above. In other words, the evaluation of success was based on such metrics as productive efficiency, consistent use of incentives, professional training, and so on. We should not be too surprised to see that American companies score best on the measures of success that they themselves developed. Second, even if the American model is genuinely better today, why would we assume that it will still be so 10 or 20 years from now? Many observers have commented on America’s declining influence over the world. And as we know from history, it is often the imperial power’s worldview that is the last thing to decline. Hegemony can be defined as ‘a state of affairs where the dominant class impose their world view as if it were natural, inevitable, and beneficial to every social class.’ Management ideology is, in essence, the last bastion of American hegemony. We continue to see the principles of shareholder capitalism, professional bureaucracy and productive efficiency as natural, inevitable and beneficial. But they can – and should – be challenged. aN eaSTeRN eVOlUTION So how might our thinking about management evolve? There are already plenty of ideas about what an alternative to the traditional American model might look like: • In terms of setting of objectives, why do we not put a greater focus on higherorder purpose or vision, rather than short-term financial returns? And what

TheEDGE

about giving equal emphasis to multiple stakeholders, rather than focusing singularly on shareholders? • In terms of coordination, can we imagine putting a greater focus on self-organisation and collective wisdom, rather than bureaucratic rules and procedures, as a way of getting things done? • In terms of outcomes, should we put a greater emphasis on innovation, creativity and employee engagement, rather than just productivity and efficiency? Each of these ideas has its own body of adherents – management thinkers pushing a particular point of view, and practising executives experimenting with a different way of working. But there is no coherence to these points of view, and there is not sufficient evidence of success for the established ways of thinking to be challenged. But here is where it gets interesting. Everyone can see that the balance of power in the business world is shifting to the East. We now look to Asia as a source of finance, for advanced manufacturing, for technological innovation and for welleducated workers. Is it likely that we will in future look to Asia as a source of management ideology? Up to now, most Asian companies have been happy to play catch-up, by incorporating the best of the American model of management into their working environment. But once they are competitive, there is no reason for them to stop there. India and China have highly distinctive cultures and rich traditions on which their own distinctive management ideologies might be built. Already, there is some evidence of a distinctive Indian model of management emerging. US Wharton School of Management academic Peter Cappelli and his colleagues recently published a book, The India Way. In it they focus on “holistic engagement with employees”, “improvisation and adaptability” and “broad mission and purpose” as the defining features that make the Indian model different to the American model. These features, they claim, are inspired partly from ancient writings, such as the Bhagavad

Gita, and partly from the experience Indian executives had growing up in the chaotic post-war years. And it seems surely just a matter of time before a ‘Chinese Way’ emerges. Chinese companies now have a level of selfassurance and success on the world stage that is allowing them to experiment with their own ways of working, and they are well placed to bring together the best of the American model with the best of their own cultural heritage. And one final observation to emphasise this point further. Culture is a complex thing, but we do know a few things about how to characterise the cultures of different countries. For example, the Anglo-American world is relatively individualistic and it has a relatively shortterm orientation. Most Asian countries, in contrast, have a more collective orientation and a relatively long-term orientation. So if we go back to the elements of the ‘alternative’ model sketched out above, with its emphasis on purpose and a stakeholderbased approach to capitalism, it seems pretty clear that these elements have a natural affinity with the Asian cultural norms around collectivism and long-term orientation. To the extent that the American management ideology is going to be challenged, Asian companies, with Asian values, are well placed to be the ones doing the challenging.

Julian Birkinshaw is professor and faculty chair of strategic and international management and senior fellow, Advanced Institute of Management Research at London Business School.

BUSINESS INSIGHT Inside the minds of leading business figures

The challenges in the data management industry and the virtualisation of businesses (P.70) TheEDGE spoke with Nimer Ghazal, country manager of Brocade Qatar about the move to cloud based applications and the challenges this presents for companies.

ALSO IN THIS SECTION: â&#x20AC;˘

Just Falafel - A global brand from within the Middle East. An exclusive interview with the founder and managing director of Arab fast food franchise Just Falafel, Mohamed Bitar and CEO Fadi Malas. (P.72)

BUSINESS INSIGHT

Virtualising Qatar’s Businesses

The virtualisation of business organisations and the challenges in the networking and data management industry TheEDGE spoke exclusively with Nimer Ghazal, country manager for Brocade Qatar about the virtualisation of business functions, the move to cloud based applications and the challenges for companies in managing their data in a time of information explosion. What is Brocade? And what services do you provide? To give you an idea of how critical our infrastructure is, over one third of the world’s Internet traffic relies on Brocade to get from point A to point B everyday. Our hardware and software is currently running in more than 90 percent of the Global top 1000 companies. Our vision is to be the industry leader in providing reliable, high performance network solutions that will help the world’s leading organisations transition to a virtualised world where applications and information reside anywhere. Since we were founded in 1995 in San Jose, California, United States (US). Brocade has grown to approximately 4000 employees worldwide, serving a wide range of industries and customers in more than 160 countries. What do you mean when you say businesses are moving towards a virtualised world? Enterprises are using a combination of their own distributed resources, outsourced providers, and outsourced cloud

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providers, mobile users. Making businesses run on top of this fully distributed infrastructure is what it is all about. This is the reality of information technology for most enterprises today. There are a lot of examples from our daily lives. A lot of organisations for example are using outsourced e-mail providers in the cloud. Let us say you are a company that does not want to setup your own e-mail infrastructure because it is costly, so you go to companies like Google or any number of other e-mail providers and tell them, you have a 100 or 200 users and you want them to provide e-mail for your organisation. This is e-mail in the cloud. This is basically what cloud computing is. Collaboration tools, for example SharePoint is another one, a lot of customers have a resources working in remote locations. You might have a construction company that has offices in Doha, offices in Dubai, offices in the US, so how do you make sure these guys collaborate with each other? They use technologies such as Microsoft SharePoint where they work on a project at the same time and everybody puts their requirements, and they can discuss back and forth. Administrative applications is another, you see some of the companies host their human resource portals on the cloud, so if you want for example to take a vacation you go online

BUSINESS INSIGHT

fill an application form. These are some of the applications that are running on the cloud. At the same time, similar types of applications are running inside the enterprise infrastructure. However, both sets of applications need to work together to achieve the business goals and objectives. Are organisations in Qatar also moving towards virtualised business functions? Yes, For example, a lot of government entities in Qatar today depend on the Hukoomi infrastructure to streamline their work. You can pay your speeding tickets from the Hukoomi online portal. You can renew your residency, renew your health card, register your business, etcetera. This is what we are talking about. Information resides internally and on the cloud. Why is that? Because enterprises realised that users are looking for this comfort plus they can reduce their overheads like staff costs, salaries and buildings, which leads to better profitability and better economics. So given all of this, the industry has decided that cloud architectures are the answer. The goal of the virtual enterprise is for you to take advantage of any combination of private and public data centre infrastructure to place your computing, storage and applications where is makes the most sense. What are the most critical objectives for organisations that want to move into a virtualised workspace? The simplicity factor to overcome today’s complexity is vital. Non-stop networking is required to maximise business uptime. Optimised applications are needed to increase business agility and gain a competitive edge. There is also the investment protection to provide a smooth transition to new technologies, while leveraging existing infrastructure. How has this changed the role that information technology (IT) services play in an organisation? The traditional focus of IT and the chief information officers (CIO) has historically been around the hardware infrastructure

“Over one third of the world’s Internet traffic relies on Brocade to get from point A to point B everyday.” and applications running on top, and how to provide better connectivity between all users and these applications. However, recently this focus has started to change. CIOs are now more focused on the users, who are the greatest assets to any organisation. These users would need not only to interact with local applications residing inside the data centre but also remote employees, partners, and customers so the system of engagement has changed. What this has done is put a big load on the networks. The demands are high as networks have to be up and running 100 percent of the time with great speeds. It has to be resilient, fast, disaster independent, cost-effective, highly automated, distance independent, multi-vendor, and above all that, it has to be simple in terms of devices and their management. Has this lead to drastic restructuring of data centre architecture, can you speak a little more about how that has changed? The culmination of these trends in data growth is resulting in a deconstruction of the traditional hierarchical data centre IT model. In order for data centres to be able to accommodate the rigorous requirements of virtualisation and cloud computing, they must migrate to what is known as a fabric-based solution. Unlike classic hierarchical architectures, fabric-based networks enable far greater reliability, scalability and utilisation. One of the benefits of our approach is the ability to optimise for the network requirements and behaviours that are unique to the virtualised data centre. Our systems have been optimised for both scalability and latency, two variables that often require trade-offs to be made. Exponential growth in Internet usage, especially through mobile devices is putting a lot of demand on network

“Our hardware and software is currently running in more than 90 percent of the Global top 1000 companies.”

traffic, will companies be able to find a balance between costs and providing a high quality service? While a lot of attention is focused on data centres, traffic patterns in the service provider core are going through major changes. We see exponential traffic growth, which is frequently dominated by highly unpredictable and a rapid transition to IPv6 (the latest Internet Communications Protocol). As a result, network operators are faced with increasing operational complexity and cost, and they are finding that investment at the current level is not sustainable. Using solutions like Brocade’s SuperCore routing system will enable operators to scale capacity while driving down cost per bit in their core networks. How does network analytics play into this? The increasing importance of network analytics is driven by the growth of mobile networks, cloud computing and virtualisation. Network analytics is complicated by massive real-time and unstructured data, as well as the existence of virtual resources and hybrid environments. We believe network analytics is now a critical component of any cloud infrastructure because of its impact on automated orchestration of service delivery. For example our real-time network analytics solution provides a real-time weather map for global networks. Are companies in Qatar actively looking to integrate these solutions into their firms? In Qatar we are working with leading customers and enterprises, we are going into large banks and organisations and providing demo trials for these customers because, it seems too good to be true to be frank with you, so they would like to see how our system works and we are eager to help those customers achieve their goals. The first thing that comes to their mind is can we see it, can you bring us equipment can we try this at our labs? And it is actually exciting to see this kind of interaction with these kinds of customers. TheEDGE

BUSINESS INSIGHT

Building Arab Brands

Just Falafel CEO and founder discuss developing a global food franchise in the Middle East TheEDGE spoke exclusively with Mohamed Bitar, founder and managing director, and Fadi Malas CEO of Arab fast food chain Just Falafel about the global success of a brand that started in the Middle East.

Fadi Malas, chief executive officer of Just Falafel

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hen Mohamed Bitar, founder and managing director for Just Falafel first moved to Abu Dhabi from Lebanon more than a decade ago, he says the first thing he went looking for was a falafel sandwich, something he had been eating for years growing up. What Bitar found at local Lebanese restaurants was not the great experience he was used to. According to Bitar the falafel has been around for more than a 1000 years, essentially a fried ball made from either ground chickpeas or fava beans depending where in the Arab world you grew up. The origins of the falafel are contentious with varying stories, according to ‘Gastronomica: The Journal of Food and Culture’ its origins trace back to the Copts in Egypt who ate it as a replacement for meat during Lent. He says, “because it was a poor man’s food, nobody has given it the attention it deserves” and that is where the idea for Just Falafel originated. Bitar and his wife and co-founder Reema Shetty opened their first outlet in 2007 at a location in Abu Dhabi, and today they run a franchise with more than 450 locations. Fadi Malas, chief executive officer says the success of Just Falafel has been its uniqueness in being the first of its food category to appear in malls as opposed to the traditional way it was offered. From the outset Bitar was interested in developing the falafel concept beyond its humble origins. “The tahini and pickle that usually come with the falafel sandwich is a somewhat acquired taste. That’s why we started the Indian and Greek sandwiches, to have a

BUSINESS INSIGHT

“Our belief is that Just Falafel will be able to do to this food category what Starbucks has done to coffee.” says Malas CEO of Just Falafel Mohamed Bitar, founding partner and managing director of Just Falafel

different take and attract different nationalities,” says Bitar. From there on the aim, according to Malas was to develop a well-made menu to satisfy the palate of a 21st century lifestyle. The challenges inherent in their concept are numerous claims Malas, “They come from everything we touch. Our ability to convince people to buy our franchise, to our ability to convince mall operators and developers to give us locations to have people buy our food in such a diverse and competitive meal proposition continue to challenge us every day.” In a highly competitive food industry, their unique product helps them stand out, he adds. “We are continuously competing on meals, if you go to the food court, you can’t have your favourite meal three times in a row,” says Malas. “As a customer one wants to be able to know that there is an option to try different things, and Just Falafel is one of the unique options available across food courts today.” With two outlets already opened in Doha, Malas says the expansion into Qatar was a natural one. As a nation that has made its mark on the global level when it comes to retail Malas feels, “the dynamic economy and its high tolerance for new products” has been reflected in the overwhelming response to their outlets. Just Falafel works solely on a franchise model; they have completely divested themselves of managing any stores including selling off their first store to a franchisee. When asked why they decided to take this route, Malas explains, “At the rate we are growing we couldn’t do it ourselves without partnering up with people who will co-invest on the retail front while we invest on infrastructure in the back end.” Since taking over the daily operations of business in March, Malas has set a blistering pace with plans to open a Just Falafel outlet at an average of one a week this year. Malas feels that the most important thing to look for when filtering out potential franchisees is to find “someone who believes in the concept as much as we do. Somebody who believes our edge is that we are at the forefront of this food category,

and I mean globally.” As a company quite driven by their culture, believing in their story is what matters most to them when hiring. “Our belief is that Just Falafel will be able to do to this food category what Starbucks has done to coffee,” stresses Malas. When asked about the ambitious plans for opening a store every week this year Malas admits that it has been 15 months in the making since they first started franchising, as a large backlog of stores plan to come online this year. After having secured their first location in the United Kingdom, Just Falafel is working with Wolff Olins, the agency behind all the brand design for the recent London 2012 Olympics to develop their global image. “We are a global brand and we like to work with global advertisers that understand the complexity of cross-border propositions, and we try as much as possible to secure such partners,” explains Malas. When it comes to marketing, in a highly competitive and saturated market Just Falafel has managed to spread their brand extremely successfully through social media. “This was the only chance we had of exposing our brand at the local market and global market level,” says Malas. He explains that it would have been prohibitive for them to compete with the huge budgets of other established food operators. Their ability to market effectively is a result of a well-communicated brand image that connected with people using targeted ads on Facebook. The social media strategy which Malas tells TheEDGE was developed in-house, helped them secure numerous franchise opportunities, and as Bitar explains aided them in “covering their five year business plan, in one year.” Malas seems like a man extremely confident of his product, this is nowhere more evident that when he speaks about expanding to new markets. “For as long as I can remember, growing up they talked about globalisation.

Today I think you can comfortably say that we eat food from all over the world wherever we travel, and I think there is quite a high tolerance for trying food in different categories.” He mentions that in certain markets there is a definite gap for new food types, and that falafel has long been forgotten. “We are offering it in a fashion that would please today’s standards of living, if sushi can be popular then why not falafel?” points out Malas. Bitar says the success of Just Falafel can be attributed to a variety of different reasons and not just their marketing. “If you look today at the fast food sector, it’s all junk food and preservatives, we have chosen a niche that is extremely health conscious. “All the falafel shops will buy the cheapest ingredients so they call sell for cheap, we did it the other way around,” adds Bitar. “We bought the best ingredients and were gutsy enough to try and sell it at AED7 (QR7) while everyone else sold falafel at AED3 (QR3).” Just Falafel’s meal proposition is also one that appeals to vegetarians, with expansion plans for India, a nation with a significant vegetarian population this should play well in their favour. Their timing of when they started the franchising drive was also great, points out Bitar, due to the downturn in the economy “People didn’t want to keep money in the bank or buy real estate or put their money in the stock market.” Their shops, which are not capital intensive to set up at US$ 100,000 to 150,000 (QR 364,000 to 550,000), allow for great returns and a proven concept in other outlets make for a fairly attractive investment. Bitar takes pride in the fact that in a region with so many entrepreneurs, they are today the largest falafel franchise in the world. Bitar says they will not rest until they hit 15,000, maybe 20,000 locations. “If you look at the biggest franchise in terms of locations, Subway has some 37,500. With 450 stores we still have a long way to go, but we will get there.”

According to Malas, Just Falafel plans to open one outlet on average every week this year. TheEDGE

travel & lifeStyle VIeNNa BUSINeSS TRaVel INSIDeR (P.76) Victoria Scott guides you where to go and what not to miss in Austria’s fascinating capital city.

alSO IN ThIS SeCTION: • •

a guide to Doha: TheEDGE gives Doha’s music lovers an insight into Qatar’s new orchestra season. (P.77) Read It: The Undercover Economist: Tim Harford, award winning journalist, writes engagingly about how the world economic system is stacked and how to beat it. (P.78)

•

10 Things: Shehan Mashood takes a look at various initiatives established to develop Qatar’s potential. (P.80)

TRAVEL

Business Travel Insider: Vienna Its historic centre is on the UNESCO World Heritage List, but do not be fooled – Vienna is no museum piece. Victoria Scott tells you where to go and what to see in Austria’s exciting capital city. Getting there: Qatar Airways (www.qatarairways.com) flies daily to Vienna. An economy return fare costs from QR3790 in October, and QR15,470 in Business Class. The flight time is around five and half hours. European Union nationals do not need a visa to visit Austria, but Qatari nationals and nationals of many other countries do need to apply before they travel. Check with www. bmeia.gv.at for visa requirements. Vienna has a comprehensive public transport system, with 27 tramlines, an underground railway (the U-Bahn) and lots of buses. A journey anywhere within the central area requires one ticket, which costs EUR2 (QR9). These can be bought at machines in stations and in tobacco shops (Tabaks). Currency: EUR1 = QR4.7 (exchange rate as of September 2012)

Hotel Imperial Vienna (www. imperialvienna.com/en) The grand dame of Vienna’s hotels, this place is everything you want Vienna to be: historic, elegant and efficient. Built as the Vienna residence of the Prince of Württemberg in 1873, it enjoys pampering its guests. Personal butlers and ironed newspapers are just two examples of just how far this hotel is prepared to go. The cheapest rate including breakfast in October is EUR489 (QR2298) for a classic room with twin beds.

Where to stay: Hotel Sofitel Vienna Stefansdom (www. sofitel.com) Minimalist and monochrome, this hotel is for those who like to keep things simple. Its themed rooms (all white, all black or all grey) are well equipped for business travellers, with free Wi-Fi. Rooms cost from EUR423 (QR1988) per night in October, including breakfast. Hotel Sacher Wien (www.sacher.com) Fresh out of a complete renovation, this historic hotel fuses tradition with the best that modernity has to offer. It is in a great location, opposite the opera house and very close to the Albertina Museum. It is also a place to do business in style – the hotel’s Marble Hall, which seats 110, is steeped in history. A superior room in mid-October is EUR440 (QR2068) a night, or EUR470 (QR2209) including breakfast.

Splash your cash: Mariahilferstrasse is home to all of the major international brands, so head here if you need to stock up with outfits from Zara,

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Where to play: Cafe Central, Herrengasse 14 (www. palaisevents.at/cafecentral.html) Old school charm with cake – what could you not love about this place? This is one of the most famous cafes in the world, home to great food in a historic setting. Book in advance, as queues of hungry diners are common here.

H&M and the like. If you are looking for something more unusual, however, take a look at Vienna’s sixth and seventh districts, where you will find boutique shops selling one-offs and a fun, eclectic vibe. If you are in the city in December, make an effort to visit a traditional Christmas market. These have a great atmosphere and lots of great food and drink to try, and souvenirs to take home. Culture vulture: It is well worth buying a ticket to see the Vienna Hofburg Orchestra (http://www. hofburgorchester.at/). They perform three times a week at the Hofburg’s historic halls and hold world-famous New Year concerts the hottest ticket in town. Insider top tip: If you like an excuse to dress in your finery, then ball season is for you. Glamorous balls are held all over Vienna in elegant locations like the City Hall. Take a look at www.austria. info/au/people-and-traditions to find out if one is being held during your visit.

LIFESTYLE LIFESTYLE

TheEDGE Down time: Shangri La Barr al Jissah Resort, Muscat, Oman A luxury resort containing not just one but three separate hotels, the Shangri La Barr al Jissah offers you everything you need to relax. After a pleasantly short flight from Doha, you have just a 45 minute

drive ahead of you before you enter another world altogether – flanked by rugged hills, it is very easy to forget the rest of the world exists. The three hotels cater for three different markets. Al Waha (the oasis) is aimed at families; Al Bandar (the town) caters mainly for the business market; and finally Al Husn, (the fortress) is the resort’s most exclusive and luxurious address. Al Husn, which accepts bookings for adults only, has 170 rooms and suites, all among the largest in Oman. Guests have access to a private beach, a complimentary mini-bar, and free afternoon tea and pre-dinner cocktails and snacks. Service is exemplary, and guests can choose between any of the resort’s restaurants for their meals. A deluxe sea-view room in Al Husn costs QR1847 a night in mid-October. The rate includes complimentary breakfast and broadband Wi-Fi. Qatar Airways (www.qatarairways.com) flies to Muscat up to four times daily. The journey time is one hour 25 minutes. An economy return costs around QR1640 in mid-October. Business fares start at QR5370. Oman Air (www.omanair.com) flies between the two cities three times daily, and also offers a fare of QR1640 in mid-October. Business fares start at QR4400.

GUIDE to Doha: Music Lovers

TheEDGE speaks to the Qatar Philharmonic’s executive director Kurt Meister about the orchestra’s new season, which is getting underway at the Katara Opera House. How did the orchestra come about? Five years ago I was asked to create an orchestra from scratch. Despite being unknown, we were able to attract more than 3000 musicians to auditions. What has been your own personal highlight? A recent one was when we played in the United Nations General Assembly in June. Another was when we were invited to play at La Scala in Milan; who have invited us to play again. What sort of music do you play? Good music, of course. We have the privilege of not only playing from the wealth of music in the western tradition – Beethoven,

Mozart, Tchaikovsky, and so many others - but so much new Arabic music as well. We played seven world premieres last year, almost all in the Arab world. What has the orchestra got in store this season? We opened the season with Rachmaninoff’s Second Piano Concerto. The following weekend we played Dvorak’s Eighth Symphony. Check our website, www.qatarphilharmonicorchestra.org, for more details. Why should people come to see the orchestra? Apart from the great music and great musicians, I will add that sitting under the Opera House’s chandelier in red velvet chairs to hear them is very nice as well.

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LIFESTYLE

READ IT: THE

UNDERCOVER ECONOMIST

Said to be “one of the leading economic thinkers of his generation,” award winning journalist, columnist and book author Tim Harford takes what the economist magazine described as “a playful guide to the economics of everyday life.” Though Harford started the book in the early 2000s and it was first published in 2006, this 2012 edition is fully revised and updated. Changes include the replacement of the dotcom bubble burst with the banking meltdown of the past few years and numerous footnotes. But essentially, the purpose and message of the book is the same: that the world economic system is stacked and the only way to beat the system is to know how it works, that is where The Undercover Economist comes in. With chapter titles such as “Who pays for your coffee?” and sub headers such as “Prices are optional, which means they reveal information” and “Resource rents” Harford’s take on the world and the money that makes it go around is engaging, informative and often illuminating. Available at Virgin Megastore for QR72.

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SAMSUNG: ES9000 75-inch LED Smart TV

Samsung’s new TV delivers a unique design concept with an attractive rose-gold-coloured finish. The set’s design concept includes a slim 7.99mm curved bezel with no visible seams, complementing the TV’s square stand. The TV’s built-in camera is hidden within the top of the bezel, rendering it invisible when not in use. The ES9000 includes the complete suite of Samsung’s Smart TV features – Smart Interaction, Smart Content and Smart Evolution. It also includes Sound Share, the newest Smart TV feature that automatically and wirelessly connects TV audio to Samsung Series six and Series seven Wireless Audio with Dock Systems. It also has a new dual-core processor that allows consumers to download and use multiple apps while browsing the web. Available at Techno Blue showrooms and leading hypermarkets in Qatar.

OMEGA SKYFALL 007

In Skyfall, to be released in autumn of 2012, James Bond will take to the screen for the 23rd time with Daniel Craig reprising the role of the world’s favourite secret agent for the third time running. And once again, agent 007 will wear an Seamaster. To celebrate the launch of Skyfall, Omega is launching the Seamaster Planet Ocean 600M Skyfall Limited Edition watch. Like every Planet Ocean, the new watch is ready for underwater adventure. Equipped with a unidirectional rotating diving bezel and a helium escape valve, the watch is water resistant 60 bar or 600 metres or 2000 feet. The watch has a 42 mm brushed and polished stainless steel case and a matching patented screw-and-pin bracelet whose divers’ clasp is engraved with 007. Its matt black ceramic ring with a chromium nitride diving scale distinguishes the rotating diving bezel.

LG’S First QuadCore Smartphone LG has released its first Quad-Core Smartphone, the Optimus 4X HD, which is now available for purchase in Qatar. With its high performance and stylish design, the Optimus 4X HD raises the bar significantly for competitors to match. Tegra3 automatically activates all four cores when a maximum power is needed but defaults to the fifth, battery-saver core when less power is required, such as during standby mode or music playback mode. And via the exclusive Eco-Mode application, which will be provided with the software upgrade, users can manually shut down any of the Tegra 3’s cores for even more control over power consumption and performance. What is more, the battery in the Optimus 4X HD is able hold a greater charge without adding bulk to the clean lines of the smartphone.

10 TEN ThINGS

initiativeS to DeveloP Qatarâ&#x20AC;&#x2122;S potEntial

In an attempt to diversify the Qatari economy, social ventures and programmes have been created to aid people in Qatar develop their ideas, skills and realise their potential. Organisations provide valuable advice and support to a new generation of young locals and start-ups. Shehan mashood takes a look at 10 initiatives established to nurture these talents. ROUDhA CEnTER This non-governmental organisation (NGO) was set up to encourage female entrepreneurship in Qatar. They serve as a resource to both local and expatriate women who are looking to launch or even grow their existing businesses. The centre provides everything from legal advice to mentoring. KATARA vISUAL ARTS CEnTER A unique addition to the sphere of skill development, by supporting and developing the local artistic talent through training. The centre aims to develop a viable art culture in Qatar and help turn the profession into a sustainable one. EnTERPRISE QATAR Enterprise Qatar, unlike the other organisations, looks to help already established small and medium sized enterprises to scale up and think beyond the borders of Qatar. They offer advice on securing capital for expansion and advanced training programmes. ICTQATAR InCUBATOR CEnTER A government-established organisation that directs technological development within the country. Their incubator programme is aimed at developing ideas that can generate Arabic digital content. The incubator runs a two-year comprehensive programme at the

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end of which they hope to have helped build a successful tech start-up that cater to the lacking area of Arabic digital content.

programme based on card and points system to encourage young people to sign up and take part in events.

SILATECh Created with the intent of driving employment opportunities in the region for people between the ages of 18 to 30 years. The organisation works at every level, developing government policy to improve economic opportunities for young people in Qatar and the region, and helping create better access to capital for business growth for small medium enterprises.

BEDAyA CEnTER Co-venture between Silatech and QDB, the Bedaya Center was set up to encourage young people to figure out what they are passionate about and equip them with the tools to function in the private sector. Bedaya Center helps young people apply for loans through the QDB loan programme.

TEChnOLOGy InnOvATIOn AnD EnTREPREnEURShIP PROGRAm An advanced executive programme run by the Qatar Science and Technology Park (QSTP), this nine-month course is aimed at helping bring technology-based innovations to the marketplace. Support programmes at QSTP also provide venture capital for ideas that have proof of concept and have applications within the Qatari economy. yOUTh COmPAny QATAR They run numerous youth empowerment services that provide group programmes to develop ideas that take into consideration the environment, society and the economy they function in. They also run a rewards

InJAZ QATAR This non-governmental organisation operates in local schools and Qatar University with the help of corporate sponsors and volunteers. Corporate volunteers and teachers work with the students, their programmes include teaching students the basics of business and the skills that are required to succeed. SOCIAL DEvELOPmEnT CEnTER Established in order to promote traditional Qatari values of family in society and maintain social cohesion within the nation. The initiative has numerous aims that include research into cultural development, preserving the national heritage and raising the economic levels of low income families by providing opportunities for development.